AGREEMENT AND PLAN OF MERGER BY AND AMONG CHARDAN ACQUISITION CORP., SHAREHOLDERS OF CHARDAN ACQUISITION CORP., CHINA DREDGING GROUP CO., LTD. AND SHAREHOLDERS OF CHINA DREDGING GROUP CO., LTD. Dated as of October 27, 2010
AGREEMENT
AND PLAN OF MERGER
BY
AND AMONG
CHARDAN
ACQUISITION CORP.,
SHAREHOLDERS
OF CHARDAN ACQUISITION CORP.,
AND
SHAREHOLDERS
OF CHINA DREDGING GROUP CO., LTD.
Dated
as of October 27, 2010
i
AGREEMENT
AND PLAN OF MERGER
This
Agreement and Plan of Merger, dated as of October 27, 2010, is made by and among
Chardan Acquisition Corp., a British Virgin Islands corporation (“Chardan Corp.”), ▇▇▇▇▇ ▇▇▇▇▇▇▇
and Chardan Capital Markets, LLC (collectively, the “Chardan Shareholders”), China
Dredging Group Co., Ltd., a company organized under the laws of the British
Virgin Islands (the “Company”), and each of the
Persons listed on Schedule
II hereto who are shareholders of the Company (collectively,
the “Shareholders,” and
individually a “Shareholder”).
BACKGROUND
WHEREAS, upon the terms and
subject to the conditions of this Agreement, the Company and Chardan Corp.
desire to enter into a business combination transaction pursuant to which
Chardan Corp. will merge with and into the Company (the “Merger”);
WHEREAS, the Merger is
intended to qualify as a tax-free reorganization under the Internal Revenue Code
of 1986, as amended;
WHEREAS, the Boards of
Directors and shareholders of both the Company and Chardan Corp. have determined
that the Merger is advisable and in the best interests of their respective
shareholders, upon the terms and subject to the conditions set forth
herein;
WHEREAS, such Boards of
Directors and shareholders of both the Company and Chardan have approved the
Merger, pursuant to which each of the 50,000 issued and outstanding ordinary
shares of Chardan Corp., $0.001 par value per share (the “Chardan Ordinary Shares”)
shall be converted into ordinary shares of the Company, no par value per share
(the “Company Ordinary
Shares”) as set forth below and no cash or other consideration shall be
delivered in conversion therefor; and
WHEREAS, following the closing
of the Merger (but concurrent with the Private Placement (as defined herein),
the shareholders of Chardan Corp. (the “Chardan Shareholders”) shall
own an aggregate of 500,000 Company Ordinary Shares (as defined herein),
representing 0.95% of the issued and outstanding Company Ordinary Shares of the
Surviving Corporation (as defined herein) and the Shareholders shall own an
aggregate of 52,177,323 of Company Ordinary Shares, representing approximately
99.05% of the issued and outstanding Company Ordinary Shares of the Surviving
Corporation; and
WHEREAS, such Merger shall
close immediately prior to an offering (the “Private Placement”) pursuant
to a Securities Purchase Agreement (the “Purchase Agreement”) by and
among the Company and named Purchasers (the “Purchasers”) therein in
connection with a private placement of an amount up to $50,000,000 or such
higher amount as mutually agreed (the “Offering Amount”) of
convertible preferred shares of the Company (the “Convertible Preferred
Shares”), each convertible into one (1) share of the Company’s Ordinary
Shares at a conversion price of $5.00 per share, subject to certain adjustments
from time to time (the “Conversion
Price”).
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NOW THEREFORE in consideration
of the premises and the mutual covenants, agreements, representations and
warranties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION
I
DEFINITIONS
Unless
the context otherwise requires, the terms defined in this Section I will have
the meanings herein specified for all purposes of this Agreement, applicable to
both the singular and plural forms of any of the terms herein
defined.
1.1 “Accredited Investor” has the
meaning set forth in Regulation D under the Securities Act and set forth on
Exhibit
A.
1.2
“Chardan Balance Sheet”
means Chardan Corp.’s balance sheet at September 30, 2010.
1.3 “Chardan Board” means the Board
of Directors of Chardan Corp.
1.4 “Chardan Ordinary Shares” means
Chardan Corp.’s ordinary shares, par value US $0.001 per share.
1.5 “Company Shares” means the
Company Ordinary Shares being issued to the Chardan Shareholders pursuant to the
Merger.
1.6 “Affiliate” shall mean, with
respect to any Person, any other Person that (a) directly or indirectly, whether
through one or more intermediaries or otherwise, controls or is controlled by or
is under common control with such Person. For purposes of this
definition, “control” (including with correlative meanings “controlled by” and
“under common control with”) of a Person means the power, direct or indirect, to
direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities, by contract or
otherwise. For the purposes of this definition, a Person shall be
deemed to control any of his or her immediate family members.
1.7 “Agreement” means this
Agreement and Plan of Merger, including all Schedules and Exhibits hereto, as
this Agreement and Plan of Merger may be from time to time amended, modified or
supplemented.
1.8 “Chardan Indemnified Person”
has the meaning set forth in Section 11.1.
1.9 “Closing Date” has the meaning
set forth in Section 3.
1.10 “Code” means the Internal
Revenue Code of 1986, as amended.
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1.11 “Commission” means the
Securities and Exchange Commission or any other federal agency then
administering the Securities Act and the Exchange Act.
1.12 “Company” means China Dredging
Group Co., Ltd., a company organized under the laws of the British Virgin
Islands and having the registration number 1580676.
1.13 “Company Board” means the Board
of Directors of the Company.
1.14 “Company Indemnified Person”
has the meaning set forth in Section 11.2.
1.15 “Company Ordinary Shares”
means the Company’s ordinary shares, no par value per share.
1.16 “Equity Security” means any
stock or similar security, including, without limitation, securities containing
equity features and securities containing profit participation features, or any
security convertible into or exchangeable for, with or without consideration,
any stock or similar security, or any security carrying any warrant, right or
option to subscribe to or purchase any shares of capital stock, or any such
warrant or right.
1.17 “ERISA” means the Employee
Retirement Income Security Act of 1974, as amended.
1.18 “Exchange Act” means the
Securities Exchange Act of 1934 or any similar federal statute, and the rules
and regulations of the Commission thereunder, all as the same will then be in
effect.
1.19 “Exhibits” means the several
exhibits referred to and identified in this Agreement.
1.20 “Form 20-F” means a Shell
Report on Form 20-F under the Exchange Act.
1.21 “GAAP” means, with respect to
any Person, United States generally accepted accounting principles applied on a
consistent basis with such Person’s past practices.
1.22 “Governmental Authority” means
any federal or national, state or provincial, municipal or local government,
governmental authority, regulatory or administrative agency, governmental
commission, department, board, bureau, agency or instrumentality, political
subdivision, commission, court, tribunal, official, arbitrator or arbitral body,
in each case whether U.S. or non-U.S.
1.23 “HK Company” means China
Dredging (HK) Co., Ltd., a company organized under the laws of Hong
Kong.
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1.24 “Indebtedness” means any
obligation, contingent or otherwise. Any obligation secured by a Lien
on, or payable out of the proceeds of, or production from, property of the
relevant party will be deemed to be Indebtedness.
1.25 “Intellectual Property” means
all industrial and intellectual property, including, without limitation, all
U.S. and non-U.S. patents, patent applications, patent rights, trademarks,
trademark applications, common law trademarks, Internet domain names, trade
names, service marks, service ▇▇▇▇ applications, common law service marks, and
the goodwill associated therewith, copyrights, in both published and unpublished
works, whether registered or unregistered, copyright applications, franchises,
licenses, know-how, trade secrets, technical data, designs, customer lists,
confidential and proprietary information, processes and formulae, all computer
software programs or applications, layouts, inventions, development tools and
all documentation and media constituting, describing or relating to the above,
including manuals, memoranda, and records, whether such intellectual property
has been created, applied for or obtained anywhere throughout the
world.
1.26 “Laws” means, with respect to
any Person, any U.S. or non-U.S. federal, national, state, provincial, local,
municipal, international, multinational or other law (including common law),
constitution, statute, code, ordinance, rule, regulation or treaty applicable to
such Person.
1.27 “Lien” means any mortgage,
pledge, security interest, encumbrance, lien or charge of any kind, including,
without limitation, any conditional sale or other title retention agreement, any
lease in the nature thereof and the filing of or agreement to give any financing
statement under the Uniform Commercial Code or similar statutes of any
jurisdiction and including any lien or charge arising by Law.
1.28 “Material Chardan Contract”
means any and all agreements, contracts, arrangements, leases, commitments or
otherwise, of Chardan Corp., of the type and nature that Chardan Corp. is
required to file with the Commission.
1.29 “MCP Agreements” means the
following agreements (each an “MCP Agreement”) dated as of
June 30, 2010: (i) the Power of Attorney pursuant to which ▇▇▇▇ ▇▇▇ and Panxing
▇▇▇▇ ▇▇▇▇▇ to Fujian WangGang Dredging Construction Co., Ltd. shareholder powers
related to their shareholdings in Wonder Dredging Engineering LLC; (ii) the
Power of Attorney pursuant to which Wonder Dredging Engineering Ltd. grants to
Fujian WangGang Dredging Construction Co., Ltd. shareholder powers related to
its shareholding in Fujian Xing Gang Port Service Limited; (iii) the Contracted
Management Agreement between Fujian WangGang Dredging Construction Co., Ltd.,
Wonder Dredging Engineering Ltd. and Fujian Xing Gang Port Service Limited; (iv)
the Equity Interest Pledge Agreement between ▇▇▇▇ ▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇, Fujian
WangGang Dredging Construction Co., Ltd. and Wonder Dredging Engineering Ltd.;
(v) Contract Relating to the Exclusive Purchase Right of Equity Interest between
Wonder Dredging Engineering Ltd., Fujian WangGang Dredging Construction Co.,
Ltd. and Fujian Xing Gang Port Service Limited; and (vi) the Letter of
Commitment from Wonder Dredging Engineering Ltd. to Fujian WangGang Dredging
Construction Co., Ltd. regarding the draw of the dividend declared on May 27,
2010 by the shareholders of Fujian Xing Gang Port Service Limited.
5
1.30 “Material Adverse Effect”
means, any change, effect or circumstance which, individually or in the
aggregate, would reasonably be expected to (a) have a material adverse effect on
the business, assets, financial condition or results of operations of Chardan
Corp. or the Company, as the case may be, in each case taken as a whole or (b)
materially impair the ability of Chardan Corp. or the Company, as the case may
be, to perform their obligations under this Agreement, excluding any change,
effect or circumstance resulting from (i) the announcement, pendency or
consummation of the transactions contemplated by this Agreement, or (ii) changes
in general economic, currency exchange rate, political or regulatory conditions
in industries in which Chardan Corp. or the Company, as the case may be, operate
or (c) result in litigation, claims, disputes or property loss that would
prohibit or otherwise materially interfere with the ability of any party to this
Agreement to perform any of its obligations under this Agreement in any material
respect.
1.31 “Operating Company” means
Fujian Xing Gang Port Service Co., Ltd.
1.32 “Order” means any award,
decision, injunction, judgment, order, ruling, subpoena, or verdict entered,
issued, made, or rendered by any Governmental Authority.
1.33 “Organizational Documents”
means (a) the Memorandum and Articles of Association or articles or certificate
of incorporation and the by-laws or code of regulations of a corporation; (b)
the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) the articles or certificate of
formation and operating agreement of a limited liability company; (e) any other
document performing a similar function to the documents specified in clauses
(a), (b), (c) and (d) adopted or filed in connection with the creation,
formation or organization of a Person; and (f) any and all amendments to any of
the foregoing.
1.34 “Permitted Liens” means (a)
Liens for Taxes not yet payable or in respect of which the validity thereof is
being contested in good faith by appropriate proceedings and for the payment of
which the relevant party has made adequate reserves; (b) Liens in respect of
pledges or deposits under workmen’s compensation laws or similar legislation,
carriers, warehousemen, mechanics, laborers and materialmen and similar Liens,
if the obligations secured by such Liens are not then delinquent or are being
contested in good faith by appropriate proceedings conducted and for the payment
of which the relevant party has made adequate reserves; (c) statutory Liens
incidental to the conduct of the business of the relevant party which were not
incurred in connection with the borrowing of money or the obtaining of advances
or credits and that do not in the aggregate materially detract from the value of
its property or materially impair the use thereof in the operation of its
business; (d) Liens on any property leased by the Company or any of its
subsidiaries; and (d) Liens that would not have a Material Adverse
Effect.
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1.35 “Person” means all natural
persons, corporations, business trusts, associations, companies, partnerships,
limited liability companies, joint ventures and other entities, governments,
agencies and political subdivisions.
1.36 “PRC” means the People’s
Republic of China, excluding Taiwan, Hong Kong and Macau.
1.37 “PRC Companies” means Fujian
Wanggang Dredging Construction Co., Ltd. and Fujian Xing Gang Port Service Co.,
Ltd., both of which were organized under the laws of the PRC.
1.38 “Private Placement” has the
meaning set forth in the Recitals.
1.39 “Proceeding” means any action,
arbitration, audit, hearing, investigation, litigation, or suit (whether civil,
criminal, administrative or investigative) commenced, brought, conducted, or
heard by or before, or otherwise involving, any Governmental
Authority.
1.40 “Purchase Agreement” has the
meaning set forth in the Recitals.
1.41 “RMB” means the currency of
the PRC.
1.42 “Rule 144” means Rule 144 under
the Securities Act, as the same may be amended from time to time, or any
successor statute.
1.43 “Schedules” means the several
schedules referred to and identified herein, setting forth certain disclosures,
exceptions and other information, data and documents referred to at various
places throughout this Agreement.
1.44 “SEC Documents” has the meaning
set forth in Section 6.24.
1.45 “Section 4(2)” means Section
4(2) under the Securities Act, as the same may be amended from time to time, or
any successor statute.
1.46 “Securities Act” means the
Securities Act of 1933, as amended, or any similar federal statute, and the
rules and regulations of the Commission thereunder, all as the same will be in
effect at the time.
1.47 “Merger” has the meaning set
forth in the Recitals.
1.48 “Subsidiary” means, with
respect to any Person, any corporation, limited liability company, joint venture
or partnership of which such Person (a) beneficially owns, either directly or
indirectly, more than 50% of (i) the total combined voting power of all classes
of voting securities of such entity, (ii) the total combined equity interests,
or (iii) the capital or profit interests, in the case of a partnership or
limited liability company; or (b) otherwise has the power to vote or to direct
the voting of sufficient securities to elect a majority of the board of
directors or similar governing body.
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1.49 “Survival Period” has the
meaning set forth in Section 11.1.
1.50 “Taxes” means with respect to
any applicable jurisdiction, all national-level, state-level or local-level
taxes, charges, fees, levies, imposts, duties and other assessments, as
applicable, including, but not limited to, any income, alternative minimum or
add-on, estimated, gross income, gross receipts, sales, use, transfer,
transactions, intangibles, ad valorem, value-added, franchise, registration,
title, license, capital, paid-up capital, profits, withholding, payroll,
employment, unemployment, excise, severance, stamp, occupation, premium, real
property, recording, personal property, federal highway use, commercial rent,
environmental (including, but not limited to, taxes under Section 59A of the
Code) or windfall profit tax, custom, duty or other tax, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest, penalties or additions to tax with respect to any of the foregoing;
and “Tax” means any of the foregoing Taxes.
1.51 “Tax Group” means any federal,
state, local or foreign consolidated, affiliated, combined, unitary or other
similar group of which Chardan Corp. is now or was formerly a
member.
1.52 “Tax Return” means any return,
declaration, report, claim for refund or credit, information return, statement
or other similar document filed with any Governmental Authority with respect to
Taxes, including any schedule or attachment thereto, and including any amendment
thereof.
1.53 “Transaction Documents” means,
collectively, all agreements, instruments and other documents to be executed and
delivered in connection with the transactions contemplated by this
Agreement.
1.54 “U.S.” means the United States
of America.
1.55 “U.S. Dollars” or “US $” means the currency of
the United States of America.
SECTION
II
THE
MERGER
2.1 The
Merger. Upon the terms and subject to the conditions set forth
in this Agreement, in accordance with BVI Business Companies Act, 2004 (“BVI Law”), Chardan Corp. shall
be merged with and into the Company at the Effective Time (as defined
below). From and after the Effective Time, the separate corporate
existence of Chardan Corp. shall cease and the Company, as the surviving
corporation in the Merger, shall continue its existence under the laws of the
British Virgin Islands. The Company, as the surviving corporation
after the Merger, is hereinafter sometimes referred to as the “Surviving
Corporation.”
8
2.2 Effective
Time. On the Closing Date (as defined below), subject to the
terms and conditions set forth in this Agreement, the parties shall cause the
Merger to be consummated by filing the Articles and Plan of Merger with the
British Virgin Islands Registrar of Corporate Affairs, in accordance with the
relevant provisions of BVI Law (the “Articles and Plan of Merger”),
in such forms as required by and executed in accordance with the relevant
provisions of BVI Law (the date and time of such filing, or such later date and
time as may be specified in the Articles and Plan of Merger by mutual agreement
of the Company and Chardan Corp., being the “Effective Time”).
2.3 Effect of the
Merger. At the Effective Time, the effect of the Merger shall
be as provided herein and in the applicable provisions of the BVI
Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all of the all the property, rights, privileges,
agreements, powers and franchises, debts, liabilities, duties and obligations of
Chardan Corp. shall vest in the Surviving Corporation, which shall include the
assumption by the Surviving Corporation of any and all agreements, covenants,
duties and obligations of the Company set forth in this Agreement to be
performed after the Closing.
2.4 Memorandum and Articles of
Association of the Surviving Corporation. At the Effective
Time, and without further action on the part of the parties hereto, the
Memorandum and Articles of Association of the Company in effect immediately
prior to the Effective Time, shall be the Memorandum and Articles of Association
of the Surviving Corporation, in each case, until thereafter amended as provided
by the BVI Law. Notwithstanding the foregoing, the parties hereto
agree that the Memorandum and Articles of Association of the Surviving
Corporation shall be amended at the Effective Time to conform to Exhibit
B.
2.5 Conversion of Capital
Shares. At the Effective Time, by virtue of the Merger and
without any action of the part of Chardan Corp. or the Company or their
respective shareholders:
(a) Each
issued and outstanding Company Ordinary Share shall remain issued and
outstanding and shall thereafter represent one fully paid and nonassessable
ordinary share, no par value per share, of the Surviving
Corporation;
(b) Each
of the Chardan Ordinary Shares will be converted into [10] fully paid and
nonassessable Company Shares in accordance with Schedule I and the register of
members of the Surviving Corporation shall be updated to reflect the
conversion;
9
(c) Each
issued share of Chardan Corp. shall be cancelled and retired, and no payment
shall be made in respect thereof;
(d) As
of the Effective Time, all shares of Chardan Corp. shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and
each Chardan Shareholder holding a certificate (each, a “Certificate”) representing any
such Chardan Ordinary Shares shall cease to have any rights with respect
thereto. At the Effective Time, the register of members of Chardan
Corp. shall be closed and no further registration of transfers of Chardan
Ordinary Shares shall thereafter be made.
2.6 Cancellation of Chardan
Ordinary Shares. The Company Shares issued pursuant to Section
2.6 herein shall be delivered to each Chardan Shareholder only upon the
cancellation of the Chardan Ordinary Shares on the share register.
2.7 No Further Ownership
Rights. The conversion of shares of Chardan Ordinary Shares in
accordance with the terms of this Section 2 shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Chardan Ordinary Shares,
and there shall be no further registration of transfers on the records of the
Surviving Corporation of Chardan Ordinary Shares which were outstanding
immediately prior to the Effective Time.
2.8 No
Liability. Notwithstanding anything to the contrary in this
Agreement, neither the Company nor the Surviving Corporation shall be liable to
a holder of Chardan Ordinary Shares in respect of any Company Ordinary Shares
(or dividends or distributions with respect thereto) or cash payments delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
2.9
Tax-Free
Reorganization. The Company and Chardan Corp. intend to adopt this
Agreement as a “plan of reorganization” and, to the extent permitted by law,
treat the Merger for U.S. federal income tax purposes as a “reorganization”
within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended. The parties acknowledge and agree, however, that each (i) has had
the opportunity to obtain independent legal and tax advice with respect to the
transaction contemplated by this Agreement, and (ii) is responsible for paying
its own Taxes, including without limitation, any adverse Tax consequences that
may result if the transaction contemplated by this Agreement is determined not
to qualify as a reorganization under Section 368 of the Code.
SECTION
III
CLOSING
DATE
3.1 Closing
Date. Subject to the satisfaction or waiver of the conditions
set forth in Sections 8 and 9 herein, the closing of the Merger (the
“Closing”) shall take
place at 10:00 a.m. Eastern Time on the day all of the closing conditions set
forth in Sections 8 and 9 herein have been satisfied or waived, or at such other
time and date as the parties hereto shall agree in writing (the “Closing Date”), at the offices
of Loeb & Loeb LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
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SECTION
IV
REPRESENTATIONS
AND WARRANTIES OF SHAREHOLDERS AND
CHARDAN
CORP. SHAREHOLDERS
4.1 Representations and
Warranties of Shareholders. Subject to the disclosures
contained in the relevant Schedules attached hereto, each Shareholder, severally
and not jointly, hereby represents and warrants to Chardan Corp. as
follows:
4.1.1 Authority. Such
Shareholder has the right, power, authority and capacity to execute and deliver
this Agreement and each of the Transaction Documents to which such Shareholder
is a party, to consummate the transactions contemplated by this Agreement and
each of the Transaction Documents to which such Shareholder is a party, and to
perform such Shareholder’s obligations under this Agreement and each of the
Transaction Documents to which such Shareholder is a party, except for the
failure to perform any obligation that would not have a Material Adverse
Effect. This Agreement has been, and each of the Transaction
Documents to which such Shareholder is a party will be, duly and validly
authorized and approved, executed and delivered by such
Shareholder. Assuming this Agreement and the Transaction Documents
have been duly and validly authorized, executed and delivered by the parties
thereto other than such Shareholder, this Agreement is, and each of the
Transaction Documents to which such Shareholder is a party have been, duly
authorized, executed and delivered by such Shareholder and constitutes the
legal, valid and binding obligation of such Shareholder, enforceable against
such Shareholder in accordance with their respective terms, except as such
enforcement is limited by general equitable principles, or by bankruptcy,
insolvency and other similar Laws affecting the enforcement of creditors rights
generally.
4.1.2 No
Conflict. Neither the execution or delivery by such
Shareholder of this Agreement or any Transaction Document to which such
Shareholder is a party, nor the consummation or performance by such Shareholder
of the transactions contemplated hereby or thereby will, directly or indirectly,
(a) contravene, conflict with, or result in a violation of any provision of the
Organizational Documents of such Shareholder (if such Shareholder is not a
natural person); (b) contravene, conflict with, constitute a default (or an
event or condition which, with notice or lapse of time or both, would constitute
a default) under, or result in the termination or acceleration of, any agreement
or instrument to which such Shareholder is a party or by which the properties or
assets of such Shareholder are bound; or (c) contravene, conflict with, or
result in a violation of, any Law or Order to which such Shareholder, or any of
the properties or assets of such Shareholder, may be subject, except, for any
such contraventions, conflicts, violations or other occurrences as would not
have a Material Adverse Effect.
4.1.3 Litigation. There
is no pending Proceeding against such Shareholder that challenges, or may have
the effect of preventing, delaying or making illegal, or otherwise interfering
with, any of the transactions contemplated by this Agreement and, to the
knowledge of such Shareholder, no such Proceeding has been threatened, and no
event or circumstance exists that is reasonably likely to give rise to or serve
as a basis for the commencement of any such Proceeding.
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4.1.4 No Brokers or
Finders. To the knowledge of the Shareholder, except for
Chardan Capital Markets, LLC in connection with the Private Placement, no Person
has, or as a result of the transactions contemplated herein will have, any right
or valid claim against such Shareholder for any commission, fee or other
compensation as a finder or broker, or in any similar capacity.
4.2 Representations and
Warranties of Chardan Shareholders. Each Chardan Shareholder,
severally and not jointly, hereby represents and warrants, solely with respect
to itself and not any other Shareholder, to the Company as follows:
4.2.1 Authority. Each
Chardan Shareholder has the right, power, authority and capacity to execute and
deliver this Agreement and each of the Transaction Documents to which such
Chardan Shareholder is a party, to consummate the transactions contemplated by
this Agreement and each of the Transaction Documents to which such Chardan
Shareholder is a party, and to perform such Chardan Shareholder’s obligations
under this Agreement and each of the Transaction Documents to which such Chardan
Shareholder is a party. This Agreement has been, and each of the
Transaction Documents to which such Chardan Shareholder is a party will be, duly
and validly authorized and approved, executed and delivered by such Chardan
Shareholder. Assuming this Agreement and the Transaction Documents
have been duly and validly authorized, executed and delivered by the parties
thereto other than such Chardan Shareholder, this Agreement is, and each of the
Transaction Documents to which such Chardan Shareholder is a party have been,
duly authorized, executed and delivered by such Chardan Shareholder and
constitutes the legal, valid and binding obligation of such Chardan Shareholder,
enforceable against such Chardan Shareholder in accordance with their respective
terms, except as such enforcement is limited by general equitable principles, or
by bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors rights generally.
4.2.2 Acknowledgment. Each
Chardan Shareholder severally understands and agrees that the Company Shares to
be issued pursuant to this Agreement and the Merger have not been registered
under the Securities Act or the securities laws of any state of the U.S. and
that the issuance of the Company Shares is being effected in reliance upon an
exemption from registration afforded either under Section 4(2) of the Securities
Act for transactions by an issuer not involving a public offering or Regulation
D for offers and sales to accredited investors.
4.2.3 Status. By
its execution of this Agreement, each Chardan Shareholder, severally and not
jointly, represents and warrants to the Company that such Chardan Shareholder is
an Accredited Investor. Each Chardan Shareholder understands that the Company
Shares are being issued to such Chardan Shareholder in reliance upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Chardan Shareholder set forth in this Agreement, in order
that the Company may determine the applicability and availability of the
exemptions from registration of the Company Shares on which the Company is
relying.
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4.2.4 Additional Representations
and Warranties of Accredited Investors. Each Chardan
Shareholder, severally and not jointly, further makes the representations and
warranties to the Company set forth on Exhibit
C.
4.2.5 Stock
Legends. Each Chardan Shareholder hereby agrees with the
Company as follows:
(a) The
certificates evidencing the Company Shares issued to the Chardan Shareholders,
and each certificate issued in transfer thereof, will bear the following
legend:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.
(b) Other
Legends. The certificates representing such Company Shares,
and each certificate issued in transfer thereof, will also bear any other legend
required under any applicable Law, including, without limitation, any U.S. state
corporate and state securities law, or contract.
SECTION
V
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Subject
to the disclosures contained in the relevant Schedules attached hereto, the
Company represents and warrants to Chardan Corp. as follows:
5.1 Organization; Qualification
and Licenses.
5.1.1 The
Company is duly incorporated and validly existing under the laws of the British
Virgin Islands, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to own, hold and
operate its properties and assets as now owned, held and operated by it and to
enter into this Agreement, to carry out the provisions hereof, except as would
not have a Material Adverse Effect on the transactions contemplated
hereby.
13
5.2 Subsidiaries. Except
for the PRC Companies and the HK Company and as set forth on Schedule 5.2, the
Company does not own directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise.
5.3
Organizational
Documents.
5.3.1 The
copies of the Memorandum and Articles of Association of the Company adopted on
April 14, 2010 and the documents which constitute all other Organizational
Documents of the Company, that have been delivered to Chardan Corp. prior to the
execution of this Agreement are true and complete and have not been amended or
repealed. The Company is not in violation or breach of any of the
provisions of its Organizational Documents. At the Effective Time,
the Company shall amend its Memorandum and Articles of Association to conform to
Exhibit
B.
5.4 Authorization, Validity and
Enforcement of Agreements. Except as would not have a Material
Adverse Effect on the transactions contemplated hereby, the Company has all
requisite authority and power (corporate and other) and third party
authorizations, consents and approvals to enter into this Agreement and each of
the Transaction Documents to which the Company is a party, to consummate the
transactions contemplated by this Agreement and each of the Transaction
Documents to which the Company is a party, to perform its obligations under this
Agreement and each of the Transaction Documents to which the Company is a party,
and to record the transfer of the Shares and the delivery of the new
certificates, if any, representing the Shares registered in the name of Chardan
Corp. The execution, delivery and performance by the Company of this
Agreement and each of the Transaction Documents to which the Company is a party
have been duly authorized by all necessary corporate action and do not require
from the Company Board or the Shareholders any consent or approval that has not
been validly and lawfully obtained. The execution, delivery and
performance by the Company of this Agreement and each of the Transaction
Documents to which the Company is a party requires no authorization, consent,
approval, license, exemption of or filing or registration with any Governmental
Authority or other Person, except as would not have a Material Adverse Effect on
the transactions contemplated hereby.
5.5 No Conflict or
Violation. Neither the execution nor the delivery by the
Company of this Agreement or any Transaction Document to which the Company is a
party, nor the consummation or performance by the Company of the transactions
contemplated hereby or thereby will, directly or indirectly, (a) contravene,
conflict with, or result in a violation of any provision of the Organizational
Documents of the Company; (b) contravene, conflict with, constitute a default
(or an event or condition which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or acceleration of, or
result in the imposition or creation of any Lien under, any agreement or
instrument to which the Company is a party or by which the properties or assets
of the Company is bound; (c) contravene, conflict with, or result in a violation
of, any Law or Order to which the Company, or any of the properties or assets
owned or used by the Company, may be subject; or (d) contravene, conflict with,
or result in a violation of, the terms or requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any licenses, permits, authorizations, approvals, franchises or other
rights held by the Company or that otherwise relate to the business of, or any
of the properties or assets owned or used by, the Company, except for any such
contraventions, conflicts, violations, or other occurrences as would not have a
Material Adverse Effect.
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5.6 Binding
Obligations. Assuming this Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered by the
parties hereto and thereto other than the Company, this Agreement and each of
the Transaction Documents to which the Company is a party are duly authorized,
executed and delivered by the Company and constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
laws affecting the enforcement of creditors rights generally.
5.7 Capitalization and Related
Matters.
5.7.1 Capitalization of the
Company. The Company is authorized to issue a maximum of the Company
consists of 250,000,000 shares, comprised of 225,000,000 authorized Ordinary
Shares and 25,000,000 authorized Class A Preferred Shares, of which 52,177,323
Ordinary Shares are issued and outstanding. At the Closing Date, the
Company will have sufficient authorized and unissued Company Ordinary Shares to
consummate the transactions contemplated hereby and by the Private
Placement. Other than as contemplated by the Purchase Agreement
related to the Private Placement and as except set forth on Schedule 5.7.1, there
are no outstanding or authorized options, warrants, calls, purchase agreements,
participation agreements, subscription rights, conversion rights, exchange
rights or other securities or contracts that could require the Company to issue,
sell or otherwise cause to become outstanding any of its authorized but unissued
shares of capital stock or any securities convertible into, exchangeable for or
carrying a right or option to purchase shares of capital stock or to create,
authorize, issue, sell or otherwise cause to become outstanding any new class of
capital stock. Other than as contemplated by the Purchase Agreement
related to the Private Placement, there are no outstanding shareholders’
agreements, voting trusts or arrangements, registration rights agreements,
rights of first refusal or other contracts pertaining to the capital stock of
the Company. Other than as contemplated by the Purchase Agreement
related to the Private Placement, there are no outstanding shareholders’
agreements, voting trusts or arrangements, registration rights agreements,
rights of first refusal or other contracts pertaining to the capital stock of
the Company. To the knowledge of the Company, the issuance of all of
the Ordinary Shares described in this Section 5.7.1 has been in compliance with
the laws of the British Virgin Islands. All issued and outstanding
shares of the Company’s capital stock are duly authorized, validly issued, fully
paid and nonassessable and have not been issued in violation of any preemptive
or similar rights.
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5.7.2 Issuance of Company Ordinary
Shares in Merger. The Company Ordinary Shares to be issued by the Company
in connection with the Merger, upon issuance in accordance with the terms of
this Agreement, will be duly authorized and validly issued and such Company
Ordinary Shares will be fully paid and nonassessable. Assuming the
accuracy of the representations and warranties of the Chardan Shareholders,
contained in Section 4 and Exhibit C hereto, the
issuance of Company Ordinary Shares to the Chardan Shareholders pursuant to this
Agreement will, when issued and paid for in accordance with the terms of this
Agreement, be, to the knowledge of the Company, issued in accordance with
exemptions from the registration and prospectus delivery requirements of the
Securities Act and the registration permit or qualification requirements of all
applicable state securities laws.
5.7.3 No Redemption
Requirements. Except as contemplated by the Private Placement,
there are no outstanding contractual obligations (contingent or otherwise) of
the Company to retire, repurchase, redeem or otherwise acquire any outstanding
shares of capital stock of, or other ownership interests in, the Company or to
provide funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any other Person.
5.8 Shareholders. Schedule II contains
a true and complete list of the names and addresses of the record and beneficial
holders of all of the outstanding capital stock of the Company.
5.9 Compliance with Laws and
Other Instruments. Except as would not have a Material Adverse
Effect, the Company has not received a notice of any violation (or any
Proceeding involving an allegation of any violation) of any applicable Law or
Order by or affecting the Company and, to the knowledge of the Company, no
Proceeding involving an allegation of violation of any applicable Law or Order
is threatened or contemplated. Except as would not have a Material
Adverse Effect, the Company is not, and to the knowledge of the Company, is not
alleged to be, in violation of, or (with or without notice or lapse of time or
both) in default under, or in breach of, any term or provision of its
Organizational Documents or of any indenture, loan or credit agreement, note,
deed of trust, mortgage, security agreement or other material agreement, lease
or other instrument, commitment, obligation or arrangement to which the Company
is a party or by which any of the Company properties, assets or rights are bound
or affected. To the knowledge of the Company, no other party to any
material contract, agreement, lease, license, commitment, instrument or other
obligation to which the Company is a party is (with or without notice or lapse
of time or both) in default thereunder or in breach of any term
thereof.
5.10 Certain
Proceedings. There is no pending Proceeding that has been
commenced against the Company and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated in this Agreement, except for any Proceeding that
would not have a Material Adverse Effect. To the knowledge of the
Company and the Shareholders, no such Proceeding has been
threatened.
16
5.11 No Brokers or
Finders. Except as disclosed in Schedule 5.11, no
Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against the Company for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, and the Company
will indemnify and hold Chardan Corp. harmless against any liability or expense
arising out of, or in connection with, any such claim.
5.12 Board
Recommendation. The Company Board has determined that this
Agreement and the transactions contemplated by this Agreement, are advisable and
in the best interests of the Company and its Shareholders.
5.13 Intellectual
Property. Except as would not have a Material Adverse Effect,
the Company owns or possesses all patents, trademarks, domain names (whether or
not registered) and any patentable improvements or copyrightable derivative
works thereof, websites and intellectual property rights relating thereto,
service marks, trade names, copyrights, licenses and authorizations, and all
rights with respect to the foregoing, which are necessary for the conduct of
their business as now conducted without any conflict with the rights of
others.
5.14 Due
Diligence. The Company has had the opportunity to perform all
due diligence investigations of Chardan Corp. and its business that the Company
has deemed necessary or appropriate and to ask all questions of the officers and
directors of Chardan Corp. that the Company wished to ask. The
Company has reviewed sufficient information to allow it to make the satisfactory
evaluation on the merits and risks of the transactions contemplated by this
Agreement. Notwithstanding the foregoing, nothing herein shall
derogate from or otherwise modify the representations and warranties of Chardan
Corp. set forth in this Agreement, on which the Shareholders and the Company
have relied upon.
5.15 Financial
Statements. Attached as Schedule 5.15 are the
Operating Company’s audited consolidated financial statements for the periods
ended December 31, 2008 and 2009, including, in each case, the notes thereto
(the “Operating Company Audited Financial
Statements”) and the unaudited consolidated financial statements for the
three and six months ended June 30, 2010 (the “Operating Company Unaudited Financial
Statements,” and together with the Operating Company Audited Financial
Statements, the “Financial
Statements”).
5.16 Absence of Undisclosed
Liabilities. Except as set forth on Schedule 5.16, the
Company has no debt, obligation or liability (whether accrued, absolute,
contingent, liquidated or otherwise, whether due or to become due) arising out
of any transaction entered into at or prior to the Closing Date or any act or
omission at or prior to the Closing Date in excess of eight million dollars,
except to the extent set forth on or reserved against on the Operating Company
Audited Financial Statements and the Operating Company Unaudited Financial
Statements. Other than agreements contemplated herein and the MCP
Agreements, the Company has not incurred any liabilities or obligations under
agreements entered into, except in the usual and ordinary course of business,
since June 30, 2010, it being understood that the lease and/or purchase of
dredger vessels are in the ordinary course of the Company’s
business.
17
5.17 Material
Contracts. The Company has made available to Chardan Corp. and
Chardan Shareholders, prior to the date of this Agreement, true, correct and
complete copies of material agreements, contracts, arrangements, leases,
commitments or otherwise, of any of the Company and the Company Subsidiaries, of
the type and nature that is required to be filed with the SEC (each a “Company Material
Contract”).
5.18 Material
Assets. The Financial Statements reflect the material
properties and assets (real and personal) owned or leased by the Company and the
Subsidiaries.
5.19 Litigation;
Orders. There are no Actions (whether U.S. or non-U.S.
federal, state, local or foreign) pending or, to the knowledge of the Company,
threatened against or affecting any of the Company or its properties, assets,
business or employees, except as would not have a Material Adverse Effect on the
Company and the Subsidiaries, taken as a whole. To the knowledge of
the Company and the Shareholders, there are no facts that might result in or
form the basis for any such Action.
5.20 Interested Party
Transactions. Except as disclosed in the Financial Statements
or on Schedule
5.20, no officer, director or stockholder of any of the Company or any
affiliate or “associate” (as such term is defined in Rule 405 promulgated by the
SEC under the Securities Act) of any such Person, have or have had, either
directly or indirectly, (1) an interest in any Person which (a) furnishes or
sells services or products which are furnished or sold or are proposed to be
furnished or sold by the Company and the Company Subsidiaries, or (b) purchases
from or sells or furnishes to, or proposes to purchase from, sell to or furnish
the Company any goods or services; or (2) a beneficial interest in any contract
or agreement to which any of the Company is a party or by which it may be bound
or affected.
5.21 Stock Option Plans; Employee
Benefits.
5.21.1 The
Company does not have a stock option plan providing for the grant by it of stock
options to directors, officers or employees.
5.21.2 Except
as set forth on Schedule 5.21.2
hereto, the Company does not have any employee benefit plans or arrangements
covering its present and former employees or providing benefits to such persons
in respect of services provided to it.
5.21.3 Neither
the consummation of the transactions contemplated hereby alone, nor in
combination with another event, with respect to each director, officer, employee
and consultant of the Company, will result in (a) any payment (including,
without limitation, severance, unemployment compensation or bonus payments)
becoming due from such companies, (b) any increase in the amount of compensation
or benefits payable to any such individual or (c) any acceleration of the
vesting or timing of payment of compensation payable to any such
individual. No agreement, arrangement or other contract of any of the
Company provides benefits or payments contingent upon, triggered by, or
increased as a result of a change in the ownership or effective control of the
Company.
18
5.22 Environmental and Safety
Matters. Except as set forth on Schedule 5.22 and
except as would not have a Material Adverse Effect:
5.22.1 The
Company has at all times been and is in compliance with all applicable
Environmental Laws (as defined below).
5.22.2 There
are no Actions pending or, to the knowledge of the Company, threatened against
the Company alleging the violation of any Environmental Law (as defined below)
or Environmental Permit applicable to any of the Company or alleging that the
Company is a potentially responsible parties for any environmental damage or
site contamination.
5.22.3 Neither
this Agreement nor the consummation of the transactions contemplated by this
Agreement shall impose any obligations to notify or obtain the consent of any
Governmental Authority or third Persons under any Law or other requirement
relating to the environment, natural resources, or public or employee health and
safety (“Environmental
Laws”) applicable to the any of the Company and the Company
Subsidiaries.
5.23 Employees; Labor
Matters. The Company does not have any collective bargaining arrangements
covering any of its employees.
5.24 Tax Returns and
Payments. Except as would not have a Material Adverse Effect,
the Company has filed all Tax Returns required pursuant to applicable law to be
filed with any applicable national-, state- and local-level governmental
authority or regulatory body responsible for the imposition of any Tax (domestic
or foreign) (a “Tax
Authority”). All such Tax Returns are accurate, complete and
correct in all material respects, and the Company has timely paid all Taxes due,
if any. Except as would not have a Material Adverse Effect, the
Company has withheld or collected from each payment made to each of its
employees, if applicable, the amount of all Taxes (including foreign taxes)
required to be withheld or collected therefrom, and has paid the same to the
proper Tax Authority.
5.25 Disclosure. This
Agreement, the schedules hereto and any certificate attached hereto or delivered
in accordance with the terms hereof by the Company, the HK Company and the PRC
Companies or the Shareholders in connection with the transactions contemplated
by this Agreement, when taken together, do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained herein and/or therein in light of the circumstances under
which they were made not misleading.
19
5.26 Foreign Corrupt Practices
Act. Except as would not have a Material Adverse Effect, the
Company, or to the knowledge of the Company, any agent or other person acting on
behalf of the Company has, directly or indirectly, (i) used any funds, or will
use any proceeds from the sale of the Convertible Preferred Shares, for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any Person
acting on their behalf of which the Company is aware) or any members of their
respective management which is in violation of any applicable law, or (iv) has
violated in any material respect any provision of the Foreign Corrupt Practices
Act of 1977, as amended, and the rules and regulations thereunder which was
applicable to the Company.
5.27 OFAC. None of the
Company nor, to the knowledge of the Company, any director, officer, agent,
employee, affiliate or person acting on behalf of any of the Company, is
currently subject to any U.S. sanctions administered by the Office of Foreign
Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will
not directly or indirectly use the proceeds of the sale of the Convertible
Preferred Shares, or lend, contribute or otherwise make available such proceeds
to any subsidiary of the Company, joint venture partner or other Person or
entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or
any other country sanctioned by OFAC or for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered by
OFAC.
5.28 Money Laundering
Laws. To the knowledge of the Company, the operations of the Company have
been conducted at all times in compliance with the money laundering requirements
of all applicable governmental authorities and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental
authority (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental authority or
any arbitrator involving any of the Company with respect to the Money
Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
SECTION
VI
REPRESENTATIONS
AND WARRANTIES OF CHARDAN CORP. AND THE
CHARDAN
SHAREHOLDERS
Subject
to the disclosures contained in the relevant Schedules attached hereto, each of
Chardan Corp. and the Chardan Shareholders hereby represent and warrant to the
Company as follows:
20
6.1 Organization and
Qualification. Chardan Corp. is duly organized, validly
existing and in good standing under the laws of British Virgin Islands, has all
requisite corporate authority and power, governmental licenses, authorizations,
consents and approvals to carry on its business as presently conducted and to
own, hold and operate its properties and assets as now owned, held and operated
by it. Chardan Corp. is duly qualified, licensed or domesticated as a
foreign corporation in good standing in each jurisdiction wherein the nature of
its activities or its properties owned, held or operated makes such
qualification, licensing or domestication necessary, except where the failure to
be so duly qualified, licensed or domesticated and in good standing would not
have a Material Adverse Effect. Schedule 6.1 sets
forth a true, correct and complete list of Chardan Corp.’s jurisdiction of
organization and each other jurisdiction in which Chardan Corp. presently
conducts its business or owns, holds and operates its properties and
assets. Chardan Corp. was duly organized as a Nevada corporation on
September 26, 2008 and all such necessary action as required by the laws of both
the state of Nevada and the British Virgin Islands has been taken to validly
continue the company into the British Virgin Islands and no further action is
required is required on the part of Chardan Corp. to perfect such
continuation.
6.2 Subsidiaries. Chardan
Corp. does not own, directly or indirectly, any equity or other ownership
interest in any corporation, partnership, joint venture or other entity or
enterprise.
6.3 Organizational
Documents. True, correct and complete copies of the
Organizational Documents of Chardan Corp. have been delivered to the Company
prior to the execution of this Agreement, and no action has been taken to amend
or repeal such Organizational Documents since such date of
delivery. Chardan Corp. is not in violation or breach of any of the
provisions of its Organizational Documents.
6.4 Authorization. Chardan
Corp. has all requisite authority and power (corporate and other), governmental
licenses, authorizations, consents and approvals to enter into this Agreement
and each of the Transaction Documents to which Chardan Corp. is a party, to
consummate the transactions contemplated by this Agreement and each of the
Transaction Documents to which Chardan Corp. is a party and to perform its
obligations under this Agreement and each of the Transaction Documents to which
Chardan Corp. is a party. The execution, delivery and performance by
Chardan Corp. of this Agreement and each of the Transaction Documents to which
Chardan Corp. is a party have been duly authorized by all necessary corporate
action and do not require from the Chardan Corp. Board any consent or approval
that has not been validly and lawfully obtained. The execution,
delivery and performance by Chardan Corp. of this Agreement and each of the
Transaction Documents to which Chardan Corp. is a party requires no
authorization, consent, approval, license, exemption of or filing or
registration with any Governmental Authority or other Person other than such
other customary filings with the Commission for transactions of the type
contemplated by this Agreement and the Transaction Documents.
6.5 No
Violation. Neither the execution nor the delivery by Chardan
Corp. of this Agreement or any Transaction Document to which Chardan Corp. is a
party, nor the consummation or performance by Chardan Corp. of the transactions
contemplated hereby or thereby will, directly or indirectly, (a) contravene,
conflict with, or result in a violation of any provision of the Organizational
Documents of Chardan Corp.; (b) contravene, conflict with, constitute a default
(or an event or condition which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or acceleration of, or
result in the imposition or creation of any Lien under, any agreement or
instrument to which Chardan Corp. is a party or by which the properties or
assets of Chardan Corp. are bound; (c) contravene, conflict with, or result in a
violation of, any Law or Order to which Chardan Corp., or any of the properties
or assets owned or used by Chardan Corp., may be subject; or (d) contravene,
conflict with, or result in a violation of, the terms or requirements of, or
give any Governmental Authority the right to revoke, withdraw, suspend, cancel,
terminate or modify, any licenses, permits, authorizations, approvals,
franchises or other rights held by Chardan Corp. or that otherwise relate to the
business of, or any of the properties or assets owned or used by, Chardan Corp.,
except, in the case of clauses (b), (c), or (d), for any such contraventions,
conflicts, violations, or other occurrences as would not have a Material Adverse
Effect.
21
6.6 Binding
Obligations. Assuming this Agreement and the Transaction
Documents have been duly and validly authorized, executed and delivered by the
parties hereto and thereto other than Chardan Corp., this Agreement and each of
the Transaction Documents to which Chardan Corp. is a party are duly authorized,
executed and delivered by Chardan Corp. and constitutes the legal, valid and
binding obligations of Chardan Corp., enforceable against Chardan Corp. in
accordance with their respective terms, except as such enforcement is limited by
general equitable principles, or by bankruptcy, insolvency and other similar
Laws affecting the enforcement of creditors rights generally.
6.7 Capitalization and Related
Matters.
6.7.1 Capitalization. The
authorized capital stock of Chardan Corp. consists of 50,000 Ordinary Shares,
par value $0.001 per share, of which 50,000 Ordinary Shares are issued and
outstanding as of the date hereof and no shares of Chardan Corp.’s Class A
Preferred Shares are issued and outstanding. All issued and outstanding shares
of Chardan’s Ordinary Shares immediately prior to Merger are duly authorized,
validly issued, fully paid and nonassessable, and have not been issued in
violation of any preemptive or similar rights. There are no
outstanding options, warrants, purchase agreements, participation agreements,
subscription rights, conversion rights, exchange rights or other securities or
contracts that could require Chardan Corp. to issue, sell or otherwise cause to
become outstanding any of its authorized but unissued shares of capital stock or
any securities convertible into, exchangeable for or carrying a right or option
to purchase shares of capital stock or to create, authorize, issue, sell or
otherwise cause to become outstanding any new class of capital
stock. There are no outstanding shareholders’ agreements, voting
trusts or arrangements, registration rights agreements, rights of first refusal
or other contracts pertaining to the capital stock of Chardan
Corp. The issuance of all of the shares of Chardan’s Ordinary Shares
described in this Section 6.7.1 have been in compliance with U.S. federal and
state securities laws and state corporate laws and no shareholder of Chardan
Corp. has any right to rescind or bring any other claim against Chardan Corp.
for failure to comply under the Securities Act, or state securities
laws.
6.7.2 No Redemption
Requirements. Other than as contemplated by the Purchase
Agreement related to the Private Placement, there are no outstanding contractual
obligations (contingent or otherwise) of Chardan Corp. to retire, repurchase,
redeem or otherwise acquire any outstanding shares of capital stock of, or other
ownership interests in, Chardan Corp. or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
other Person.
22
6.8 Compliance with
Laws. The business and operations of Chardan Corp. have been
and are being conducted in accordance with all applicable Laws and
Orders. Chardan Corp. has not received notice of any violation (or
any Proceeding involving an allegation of any violation) of any applicable Law
or Order by or affecting Chardan Corp. and, to the knowledge of Chardan Corp.,
no Proceeding involving an allegation of violation of any applicable Law or
Order is threatened or contemplated. Chardan Corp. is not subject to
any obligation or restriction of any kind or character, nor is there, to the
knowledge of Chardan Corp., any event or circumstance relating to Chardan Corp.
that materially and adversely affects in any way its business, properties,
assets or prospects or that prohibits Chardan Corp. from entering into this
Agreement or would prevent or make burdensome its performance of or compliance
with all or any part of this Agreement or the consummation of the transactions
contemplated hereby.
6.9 Certain
Proceedings. There is no pending Proceeding that has been
commenced against Chardan Corp. and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
transactions contemplated by this Agreement. To the knowledge of
Chardan Corp., no such Proceeding has been threatened.
6.10 No Brokers or
Finders. Except as disclosed in Schedule 6.10, no
Person has, or as a result of the transactions contemplated herein will have,
any right or valid claim against Chardan Corp. for any commission, fee or other
compensation as a finder or broker, or in any similar capacity, and after the
Closing, Chardan Shareholders will indemnify and hold Chardan Corp. and the
Company harmless against any liability or expense arising out of, or in
connection with, any such claim.
6.11 Absence of Undisclosed
Liabilities. Except as set forth on Schedule 6.11 or in
the SEC Documents, as hereafter defined, Chardan Corp. has no debt, obligation
or liability (whether accrued, absolute, contingent, liquidated or otherwise,
whether due or to become due, whether or not known to Chardan Corp.) arising out
of any transaction entered into at or prior to the Closing Date or any act or
omission at or prior to the Closing Date, except to the extent set forth on or
reserved against on the Chardan Balance Sheet attached hereto as Schedule
6.11. Other than as shown on the balance sheet as of September 30,
2010 and any updates thereto included on Schedule 6.11 or in
the SEC Documents, any and all debts, obligations or liabilities with respect to
directors and officers of Chardan Corp. and of Chardan Corp. to officers and
directors will be cancelled prior to the Closing. Chardan Corp. has
not incurred any liabilities or obligations under agreements entered into, other
than in the usual and ordinary course of business since September 30,
2010.
6.12 Changes. Except
as set forth on Schedule 6.12 or in
the SEC Documents, Chardan Corp. has, conducted its business in the usual and
ordinary course of business consistent with past practice and has
not:
23
6.12.1 entered
into any transaction other than in the usual and ordinary course of business,
except for the redomestication to the British Virgin Islands to facilitate the
consummation of the transactions contemplated by this Agreement, the Private
Placement and each of the Transaction Documents;
6.12.2 suffered
or experienced any change in, or affecting, its condition (financial or
otherwise), properties, assets, liabilities, business, operations, results of
operations or prospects other than changes, events or conditions in the usual
and ordinary course of its business, none of which would have a Material Adverse
Effect;
6.12.3 made
any loans or advances to any Person other than travel advances and reimbursement
of expenses made to employees, officers and directors in the ordinary course of
business;
6.12.4 created
or permitted to exist any Lien on any material property or asset of Chardan
Corp., other than Permitted Liens;
6.12.5 issued,
sold, disposed of or encumbered, or authorized the issuance, sale, disposition
or encumbrance of, or granted or issued any option to acquire any shares of its
capital stock or any other of its securities or any Equity Security, or altered
the term of any of its outstanding securities or made any change in its
outstanding shares of capital stock or its capitalization, whether by reason of
reclassification, recapitalization, stock split, combination, exchange or
readjustment of shares, stock dividend or otherwise;
6.12.6 declared,
set aside, made or paid any dividend or other distribution to any of its
shareholders;
6.12.7 terminated
or modified any Material Chardan Contract, except for termination upon
expiration in accordance with the terms thereof;
6.12.8 released,
waived or cancelled any claims or rights relating to or affecting Chardan Corp.
in excess of US $10,000 in the aggregate or instituted or settled any Proceeding
involving in excess of US $10,000 in the aggregate;
6.12.9 paid,
discharged or satisfied any claim, obligation or liability in excess of US
$10,000 in the aggregate, except for liabilities incurred prior to the date of
this Agreement in the ordinary course of business;
6.12.10 created,
incurred, assumed or otherwise become liable for any Indebtedness in excess of
US $10,000 in the aggregate, other than professional fees;
6.12.11 guaranteed
or endorsed in a material amount any obligation or net worth of any
Person;
6.12.12 acquired
the capital stock or other securities or any ownership interest in, or
substantially all of the assets of, any other Person;
24
6.12.13 changed
its method of accounting or the accounting principles or practices utilized in
the preparation of its financial statements, other than as required by GAAP;
or
6.12.14 entered
into any agreement, or otherwise obligated itself, to do any of the
foregoing.
6.13 Material Chardan
Contracts. Chardan Corp. has provided to the Company, prior to
the date of this Agreement, true, correct and complete copies of each written
Material Chardan Contract, including each amendment, supplement and modification
thereto.
6.13.1 No
Defaults. Each Material Chardan Contract is a valid and
binding agreement of Chardan Corp. that is party thereto, and is in full force
and effect. Chardan Corp. is not in breach or default of any Material
Chardan Contract to which it is a party and, to the knowledge of Chardan Corp.,
no other party to any Material Chardan Contract is in breach or default
thereof. No event has occurred or circumstance exists that (with or
without notice or lapse of time) would (a) contravene, conflict with or result
in a violation or breach of, or become a default or event of default under, any
provision of any Material Chardan Contract or (b) permit Chardan Corp. or any
other Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify any
Material Chardan Contract. Chardan Corp. has not received notice of
the pending or threatened cancellation, revocation or termination of any
Material Chardan Contract to which it is a party. There are no
renegotiations of, or attempts to renegotiate, or outstanding rights to
renegotiate any material terms of any Material Chardan Contract.
6.14 Employees.
6.14.1 Except
as set forth on Schedule 6.14.1,
Chardan Corp. has no employees, independent contractors or other Persons
providing services to them. Except as would not have a Material
Adverse Effect, Chardan Corp. is in full compliance with all Laws regarding
employment, wages, hours, benefits, equal opportunity, collective bargaining,
the payment of Social Security and other taxes, and occupational safety and
health. Chardan Corp. is not liable for the payment of any
compensation, damages, taxes, fines, penalties or other amounts, however
designated, for failure to comply with any of the foregoing Laws.
6.14.2 No
director, officer or employee of Chardan Corp. is a party to, or is otherwise
bound by, any contract (including any confidentiality, non-competition or
proprietary rights agreement) with any other Person that in any way adversely
affects or will materially affect (a) the performance of his or her duties as a
director, officer or employee of Chardan Corp. or (b) the ability of Chardan
Corp. to conduct its business. Except as set forth on Schedule 6.14.2, each
employee of Chardan Corp. is employed on an at-will basis and Chardan Corp. does
not have any contract with any of its employees which would interfere with its
ability to discharge its employees.
25
6.15 Tax Returns and
Audits.
6.15.1 Tax
Returns. Chardan Corp. has filed all material Tax Returns
required to be filed (if any) by or on behalf of Chardan Corp. as of the Closing
Date and has paid all material Taxes of Chardan Corp. required to have been paid
on or prior to the Closing Date (whether or not reflected on any Tax
Return). All such Tax Returns are accurate, complete and correct in
all material respects. Chardan Corp. has duly withheld and paid all Taxes
required to have been withheld and paid by Chardan Corp. on or prior to the
Closing Date. No Governmental Authority in any jurisdiction has made a claim,
assertion or threat to Chardan Corp. that Chardan Corp. is or may be subject to
taxation by such jurisdiction; there are no Liens with respect to Taxes on
Chardan Corp.’s property or assets other than Permitted Liens; and there are no
Tax rulings, requests for rulings, or closing agreements relating to Chardan
Corp. for any period (or portion of a period) that would affect any period after
the date hereof. Notwithstanding the foregoing, Chardan Corp.
represents that as of the Closing Date, it will be treated as a domestic
corporation for U.S. federal income tax purposes, and it expects to be required
to file a final U.S. federal income Tax Return (and applicable state and local
Tax Returns)covering the period from January 1, 2010 through and including the
Closing Date (the “Final Tax
Returns”).
6.15.2 No Adjustments,
Changes. Neither Chardan Corp. nor any other Person on behalf
of Chardan Corp. (a) has executed or entered into a closing agreement pursuant
to Section 7121 of the Code or any predecessor provision thereof or any similar
provision of state, local or foreign law; or (b) has agreed to or is required to
make any adjustments pursuant to Section 481(a) of the Code or any similar
provision of state, local or foreign law.
6.15.3 No
Disputes. There is no pending audit, examination,
investigation, dispute, proceeding or claim with respect to any Taxes of Chardan
Corp., nor is any such claim or dispute pending or
contemplated. Chardan Corp. has delivered to the Company true,
correct and complete copies of all Tax Returns and examination reports and
statements of deficiencies assessed or asserted against or agreed to by Chardan
Corp., if any, since its inception and any and all correspondence with respect
to the foregoing.
6.15.4 Not a U.S. Real Property
Holding Corporation. Chardan Corp. is not and has not been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code at any time during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
6.15.5 No Tax Allocation,
Sharing. Chardan Corp. is not and has not been a party to any
Tax allocation or sharing agreement and is not liable for the Taxes of any other
Person, including as a member of a Tax Group, by contract or
otherwise.
26
6.15.6 No Other
Arrangements. Chardan Corp. is not a party to any agreement,
contract or arrangement for services that would result, individually or in the
aggregate, in the payment of any amount that would not be deductible by reason
of Section 162(m), 280G or 404 of the Code. Chardan Corp. is not a
“consenting corporation” within the meaning of Section 341(f) of the
Code. Chardan Corp. does not have any “tax-exempt bond financed
property” or “tax-exempt use property” within the meaning of Section 168(g) or
(h), respectively of the Code. Chardan Corp. does not have any
outstanding closing agreement, ruling request, request for consent to change a
method of accounting, subpoena or request for information to or from a
Governmental Authority in connection with any Tax matter. During the
last two years, Chardan Corp. has not engaged in any exchange with a related
party (within the meaning of Section 1031(f) of the Code) under which gain
realized was not recognized by reason of Section 1031 of the
Code. Chardan Corp. is not a party to any reportable transaction
within the meaning of Treasury Regulation Section 1.6011-4.
6.16 Material
Assets. The financial statements of Chardan Corp. set forth in
the SEC Documents reflect the material properties and assets (real and personal)
owned or leased by Chardan Corp.
6.17 Litigation;
Orders. There is no Proceeding (whether federal, state, local
or foreign) pending or, to the knowledge of Chardan Corp., threatened against or
affecting Chardan Corp. or any of Chardan Corp.’s properties, assets, business
or employees. To the knowledge of Chardan Corp., there is no fact
that might result in or form the basis for any such
Proceeding. Chardan Corp. is not subject to any Orders.
6.18 Licenses. Chardan
Corp. possesses from the appropriate Governmental Authority all licenses,
permits, authorizations, approvals, franchises and rights that are necessary for
Chardan Corp. to engage in its business as currently conducted and to permit
Chardan Corp. to own and use its properties and assets in the manner in which it
currently owns and uses such properties and assets (collectively, “Chardan
Permits”). Chardan Corp. has not received notice from any
Governmental Authority or other Person that there is lacking any license,
permit, authorization, approval, franchise or right necessary for Chardan Corp.
to engage in its business as currently conducted and to permit Chardan Corp. to
own and use its properties and assets in the manner in which it currently owns
and uses such properties and assets. Chardan Permits are valid and in
full force and effect. No event has occurred or circumstance exists
that may (with or without notice or lapse of time): (a) constitute or
result, directly or indirectly, in a violation of or a failure to comply with
any Chardan Permit; or (b) result, directly or indirectly, in the revocation,
withdrawal, suspension, cancellation or termination of, or any modification to,
any Chardan Permit. Chardan Corp. has not received notice from any
Governmental Authority or any other Person regarding: (a) any actual,
alleged, possible or potential contravention of any Chardan Permit; or (b) any
actual, proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to, any Chardan
Permit. All applications required to have been filed for the renewal
of such Chardan Permits have been duly filed on a timely basis with the
appropriate Persons, and all other filings required to have been made with
respect to such Chardan Permits have been duly made on a timely basis with the
appropriate Persons. All Chardan Permits are renewable by their terms
or in the ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than routine fees
or similar charges, all of which have, to the extent due, been duly
paid.
27
6.19 Interested Party
Transactions. Except as set forth on Schedule 6.19 or the SEC
Documents, no officer, director or shareholder of Chardan Corp. or any Affiliate
or “associate” (as such term is defined in Rule 405 of the Commission under the
Securities Act) of any such Person, has or has had, either directly or
indirectly, (1) an interest in any Person which (a) furnishes or sells services
or products which are furnished or sold or are proposed to be furnished or sold
by Chardan Corp., or (b) purchases from or sells or furnishes to, or proposes to
purchase from, sell to or furnish Chardan Corp. any goods or services; or (2) a
beneficial interest in any contract or agreement to which Chardan Corp. is a
party or by which it may be bound or affected.
6.20 Governmental
Inquiries. Chardan Corp. has provided to the Company a copy of
each material written inspection report, questionnaire, inquiry, demand or
request for information received by Chardan Corp. from any Governmental
Authority, and Chardan Corp.’s response thereto, and each material written
statement, report or other document filed by Chardan Corp. with any Governmental
Authority.
6.21 Bank Accounts and Safe
Deposit Boxes. Except as set forth on Schedule 6.21,
Chardan Corp. does not have any bank or other deposit or financial account, nor
does Chardan Corp. have any lock boxes or safety deposit boxes.
6.22 Intellectual
Property. Chardan Corp. does not own, use or license any
Intellectual Property in its business as presently conducted.
6.23 Title to
Properties. Chardan Corp. owns (with good and marketable title
in the case of real property) or holds under valid leases the rights to use all
real property, plants, machinery, equipment and other personal property
necessary for the conduct of its business as presently conducted, free and clear
of all Liens, except Permitted Liens.
6.24 SEC Documents; Financial
Statements. Except as set forth on Schedule 6.24, Chardan
Corp. has filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the three (3) years
preceding the date hereof (or such shorter period as Chardan Corp. was required
by law to file such material) (the foregoing materials being collectively
referred to herein as the “SEC
Documents”). As of their respective dates, the SEC Documents
and any registration statements filed under the Securities Act (the “Registration Statements”)
complied in all material respects with the requirements of the Exchange Act and
the Securities Act, as applicable, and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Documents or Registration
Statements, when filed, or corrected by a subsequent filing, 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. All Material Chardan Contracts to which Chardan Corp. is
a party or to which the property or assets of Chardan Corp. are subject have
been appropriately filed as exhibits to the SEC Documents and the Registration
Statements as and to the extent required under the Exchange Act and the
Securities Act, as applicable. The financial statements of Chardan
Corp. included in the Registration Statement and the SEC Documents comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing, were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto,
or, in the case of unaudited statements as permitted by Form 10-Q of the
Commission), and fairly present in all material respects (subject in the case of
unaudited statements, to normal, recurring audit adjustments) the financial
position of Chardan Corp. as at the dates thereof and the results of its
operations and cash flows for the periods then ended. The disclosure set forth
in the SEC Documents and Registration Statements regarding Chardan Corp.’s
business is current and complete and accurately reflects operations of Chardan
Corp. as it exists as of the date hereof.
28
6.25 Stock Option Plans; Employee
Benefits.
6.25.1 Chardan
Corp. has no stock option plans providing for the grant by Chardan Corp. of
stock options to directors, officers or employees.
6.25.2 Chardan
Corp. has no employee benefit plans or arrangements covering their present and
former employees or providing benefits to such persons in respect of services
provided Chardan Corp.
6.25.3 Neither
the consummation of the transactions contemplated hereby alone, nor in
combination with another event, with respect to each director, officer, employee
and consultant of Chardan Corp., will result in (a) any payment (including,
without limitation, severance, unemployment compensation or bonus payments)
becoming due from Chardan Corp., (b) any increase in the amount of compensation
or benefits payable to any such individual or (c) any acceleration of the
vesting or timing of payment of compensation payable to any such
individual. No agreement, arrangement or other contract of Chardan
Corp. provides benefits or payments contingent upon, triggered by, or increased
as a result of a change in the ownership or effective control of Chardan
Corp.
6.26 Money Laundering
Laws. The operations of Chardan Corp. is and has been
conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all U.S. and non-U.S.
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
Governmental Authority (collectively, the “Money Laundering Laws”) and no
Proceeding involving Chardan Corp. with respect to the Money Laundering Laws is
pending or, to the knowledge of Chardan Corp., threatened.
6.27 Board
Recommendation. Chardan Corp.’s Board, by unanimous written
consent, has determined that this Agreement and the transactions contemplated by
this Agreement are advisable and in the best interests of Chardan Corp.’s
shareholders and has duly authorized this Agreement and the transactions
contemplated by this Agreement.
6.28 No Material Adverse
Effect. Since September 30, 2010, Chardan Corp. has not
suffered a Material Adverse Effect.
29
6.29 Foreign Corrupt Practices
Act. Neither Chardan Corp., nor to the knowledge of Chardan
Corp., any agent or other person acting on behalf of Chardan Corp., has,
directly or indirectly, (i) used any funds, or will use any proceeds from the
sale of the Convertible Preferred Shares, for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic
political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by Chardan Corp. (or made by any Person acting on their behalf
of which Chardan Corp. is aware) or any members of management which is in
violation of any applicable law, or (iv) has violated in any material respect
any provision of the Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder which was applicable to Chardan
Corp.
6.30 Due
Diligence. Chardan Corp. has had the opportunity to perform
all due diligence investigations of the Company, its Subsidiaries and its
business that Chardan Corp. has deemed necessary or appropriate and to ask all
questions of the officers and directors of the Company that Chardan Corp. wished
to ask. Chardan Corp. has reviewed sufficient information to allow it
to make the satisfactory evaluation on the merits and risks of the transactions
contemplated by this Agreement.
SECTION
VII
COVENANTS
AND AGREEMENTS OF THE PARTIES
7.1 SEC
Documents. From and after the Closing Date, in the event the
Commission notifies the Company of its intent to review any SEC Document filed
prior to the Closing Date or the Company receives any oral or written comments
from the Commission with respect to any SEC Document filed prior to the Closing
Date or any disclosure regarding the Company’s business or operations, as in
existence through the date hereof in any SEC Document or registration statement
filed after the Closing Date, the Company shall promptly notify Chardan
Shareholders and Chardan Shareholders shall fully cooperate with the Company in
connection with such review and response.
7.2 Other
Actions.
7.2.1 Prior
to Closing, the Company shall have prepared and delivered to Chardan Corp. the
Shell Company Report on Form 20-F announcing the Closing, which shall include
all information required by such form, any other information required in
connection with Chardan Corp. ceasing to be a shell company as a result of the
Merger, the U.S. GAAP Financial Statements and the Pro Forma Financial
Statements (as defined below) (“Transaction Form 20-F”) in a
format acceptable for ▇▇▇▇▇ filing. Prior to Closing, the Company
shall prepare the press release announcing the consummation of the Merger
hereunder (“Press
Release”). The Company shall file the Transaction Form 20-F
with the SEC within the legally required time period and shall concurrently
distribute the Press Release.
30
7.2.2 Prior
to the Closing, the Company shall have delivered to Chardan Corp. pro forma
consolidated financial statements for the Company, and pro forma consolidated
financial statements for the Company and Chardan Corp. giving effect to the
Merger, for such periods as required by the SEC to be included in a Form 20-F or
any other report or form required to be filed with the SEC at or after Closing
with respect to the Merger, all prepared in all material respects with the
published rules and regulations of the SEC and in accordance with U.S. GAAP
applied on a consistent basis throughout the periods involved (the
“Pro Forma Financial
Statements”). The Pro Forma Financial Statements shall have
been reviewed by the Company’s independent accountants and shall be in a format
acceptable for inclusion in the Transaction Form 20-F.
7.3 Post-Closing SEC Reports and
Inquiries. Chardan Corp. has engaged the firm of ▇▇▇▇▇▇ &
Jaclin to coordinate the filing of its Transition Report under the Exchange Act
(the “Transition
Report”) for the period October 1, 2009 to January 31, 2010 (“Transition Period”) in
connection with Chardan Corp.’s change in fiscal year end to January 31 and in
connection with the filing of its quarterly report on Form 10-Q for the quarter
ended June 30, 2010 (“Chardan
10-Q”) and has engaged the firm of ▇▇▇▇ & Company, P.A., to audit the
Transition Period in connection with the preparation of the Transition Report
and to review the Chardan 10-Q. Upon the request of the Company,
after the Closing Date, the Chardan Shareholders shall provide such information
that is requested by the Company, including information, filings, reports,
financial statements or other circumstances of Chardan Corp. occurring, reported
or filed prior to the Closing, as may be necessary or required by the Company
for the preparation of the post-Closing Date reports that the Company is
required to file with the Commission to remain in compliance and current with
its reporting requirements under the Exchange Act, including the Transition
Report if the Transition Report has not been filed prior to the Closing Date, or
filings required to address and resolve matters as may relate to the period
prior to the Closing and any Commission comments relating thereto or any
Commission inquiry thereof.
7.4 Transfers. Except
for the shares listed in Schedule I and as contemplated by the Transaction
Documents, none of Chardan Shareholders or the Shareholders will sell, transfer,
assign, hypothecate, lien, or otherwise dispose or encumber the shares owned by
them.
SECTION
VIII
CONDITIONS
TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER
8.1 The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions:
31
8.1.1 No Injunctions or
Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order (whether temporary,
preliminary or permanent) issued by any court of competent jurisdiction or other
legal restraint or prohibition shall be in effect which prevents the
consummation of the Merger on the terms, and conferring upon the Company all of
the rights and benefits, as contemplated herein, nor shall any proceeding
brought by any governmental authority seeking any of the foregoing be pending,
and there shall not be any action taken, or any law or order enacted, entered,
enforced or deemed applicable to the Merger, which makes the consummation of the
Merger on the terms, and conferring upon the Company all of the rights and
benefits, as contemplated herein illegal.
8.1.2 Readiness of the Transaction
Form 20-F. A draft of the Transaction Form 20-F will have been
circulated to each party and in a format acceptable for ▇▇▇▇▇ filing with the
SEC prior to the Closing.
SECTION
IX
CONDITIONS
PRECEDENT OF CHARDAN CORP.
The
obligations of Chardan Corp. to consummate and effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of each of the
following conditions, any of which may be waived, in writing, exclusively by
Chardan Corp., in whole or in part:
9.1 Accuracy of Representations
and Warranties. The representations and warranties of the
Company and the Shareholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are not qualified as to materiality
shall be true and correct in all material respects as of the date of this
Agreement and on and as of the Closing Date, except to the extent a
representation or warranty is expressly limited by its terms to another date and
without giving effect to any supplemental Schedule. The
representations and warranties of the Company and the Shareholders set forth in
this Agreement or in any Schedule or certificate delivered pursuant hereto that
are qualified as to materiality shall be true and correct in all respects as of
the date of this Agreement and on and as of the Closing Date, except to the
extent a representation or warranty is expressly limited by its terms to another
date and without giving effect to any supplemental Schedule.
9.2 No Force Majeure
Event. There shall not have been any delay, error, failure or
interruption in the conduct of the business of the Company, or any loss, injury,
delay, damage, distress, or other casualty, due to force majeure including but
not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of
terrorism or other civil unrest; or (d) national emergency.
9.3 Consents. All
material consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by the Company and/or the
Shareholders for the authorization, execution and delivery of this Agreement and
the consummation by them of the transactions contemplated by this Agreement,
shall have been obtained and made by the Company or the Shareholders, as the
case may be, except where the failure to receive such consents, waivers,
approvals, authorizations or orders or to make such filings would not have a
Material Adverse Effect on the Company.
32
9.4 Certificate of
Officer. The Company will have delivered to Chardan Corp. a
certificate executed by an officer of the Company, certifying the satisfaction
of the conditions specified in Sections 9.1 relating to the
Company.
9.5 Certificate of
Shareholders. Each Shareholder will have delivered to Chardan
Corp. a certificate executed by such Shareholder, if a natural person, or an
authorized officer of the Shareholder, if an entity, certifying the satisfaction
of the conditions specified in Section 9.1 relating to such
Shareholder.
9.6 Private
Placement. The definitive documentation with respect to the
Private Placement and the financing contemplated thereby shall have been
finalized for execution by the parties thereto immediately following
consummation of the Merger.
9.7 Documents. The
Company and the Shareholders must deliver to Chardan Corp. at the
Closing:
9.7.1 a
Secretary’s Certificate, dated the Closing Date certifying attached copies of
(A) the Organizational Documents of the Company, (B) the resolutions of the
Company Board approving this Agreement and the transactions contemplated hereby;
and (C) the incumbency of each authorized officer of the Company signing this
Agreement and any other agreement or instrument contemplated hereby to which the
Company is a party;
9.7.2 a
Certificate of Good Standing of the Company that is dated within five (5)
business days of the Closing;
9.7.3 each
of the Transaction Documents to which the Company and/or the Shareholders is a
party, duly executed; and
9.7.4 the
following legal opinions: (i) the opinion of ▇▇▇▇▇▇ &
Calder, BVI counsel to the Company, in substantially the form of Exhibit D-1 attached
hereto; (ii) the opinion of DaCheng, PRC counsel to the Company, in
substantially the form of Exhibit D-2 attached
hereto; and (iii) the opinion of Loeb & Loeb LLP, US counsel to the Company,
in substantially the form of Exhibit
D-3.
9.8 No
Proceedings. There must not have been commenced or threatened
against Chardan Corp., the Company or any Shareholder any Proceeding (which
Proceeding remains unresolved as of the Closing Date) (a) involving any
challenge to, or seeking damages or other relief in connection with, any of the
transactions contemplated by this Agreement, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
transactions contemplated by this Agreement.
33
9.9 No Claim Regarding Stock
Ownership or Consideration. There must not have been made or
threatened by any Person, any claim asserting that such Person (a) is the holder
of, or has the right to acquire or to obtain beneficial ownership of the Company
Shares or any other stock, voting, equity, or ownership interest in, the
Company, or (b) is entitled to all or any portion of the Chardan Ordinary
Shares.
SECTION
X
CONDITIONS
PRECEDENT OF THE COMPANY
AND
THE SHAREHOLDERS
The
obligations of the Company to consummate and effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company,
in whole or in part:
10.1 Accuracy of Representations
and Warranties. The representations and warranties of Chardan
Corp. and Chardan Shareholders set forth in this Agreement or in any Schedule or
certificate delivered pursuant hereto that are not qualified as to materiality
shall be true and correct in all material respects as of the date of this
Agreement and on and as of the Closing Date, except to the extent a
representation or warranty is expressly limited by its terms to another date and
without giving effect to any supplemental Schedule. The
representations and warranties of Chardan Corp. and Chardan Shareholders set
forth in this Agreement or in any Schedule or certificate delivered pursuant
hereto that are qualified as to materiality shall be true and correct in all
respects as of the date of this Agreement and on and as of the Closing Date,
except to the extent a representation or warranty is expressly limited by its
terms to another date and without giving effect to any supplemental
Schedule.
10.2 No Force Majeure
Event. There shall not have been any delay, error, failure or
interruption in the conduct of the business of Chardan Corp., or any loss,
injury, delay, damage, distress, or other casualty, due to force majeure
including but not limited to (a) acts of God; (b) fire or explosion; (c) war,
acts of terrorism or other civil unrest; or (d) national emergency.
10.3 Consents.
10.3.1 All
material consents, waivers, approvals, authorizations or orders required to be
obtained, and all filings required to be made, by Chardan Corp. for the
authorization, execution and delivery of this Agreement and the consummation by
it of the transactions contemplated by this Agreement, shall have been obtained
and made by Chardan Corp., except where the failure to receive such consents,
waivers, approvals, authorizations or orders or to make such filings would not
have a Material Adverse Effect on the Company or Chardan Corp.
10.4 Certificate of
Officer. Chardan Corp. will have delivered to the Company a
certificate, dated the Closing Date, executed by an officer of Chardan Corp.,
certifying the satisfaction of the conditions specified in Sections 10.1
relating to Chardan Corp.
34
10.5 Certificate of Chardan
Shareholders. Chardan Shareholders will have delivered to the
Company a certificate, dated the Closing Date, executed by such Chardan
Shareholders, certifying the satisfaction of the conditions specified in Section
10.1 relating to Chardan Shareholders and a duly executed IRS Form W-9 or W-8,
as applicable..
10.6 Documents. Chardan
Corp. must have caused the following documents to be delivered to the Company
and/or the Shareholders:
10.6.1 a
Secretary’s Certificate, dated the Closing Date certifying attached copies of
(A) the Organizational Documents of Chardan Corp., (B) the resolutions of
Chardan Corp.’s Board approving this Agreement and the transactions contemplated
hereby; and (C) the incumbency of each authorized officer of Chardan Corp.
signing this Agreement and any other agreement or instrument contemplated hereby
to which Chardan Corp. is a party;
10.6.2 a
Certificate of Good Standing of Chardan Corp. that is dated within five (5)
business days of the Closing;
10.6.3 each
of the Transaction Documents to which Chardan Corp. is a party, duly
executed;
10.6.4 the
following legal opinions: (i) the opinion of Forbes Hare, BVI counsel
to Chardan Corp., substantially in the form of Exhibit E-1 and (ii)
the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC, US counsel to
Chardan Corp., substantially in the form attached as Exhibit
E-2;
10.6.5 such
other documents as the Company may reasonably request for the purpose of (i)
evidencing the accuracy of any representation or warranty of Chardan Corp.
pursuant to Section 10.1, (ii) evidencing the performance by Chardan Corp. of,
or the compliance by Chardan Corp. with, any covenant or obligation required to
be performed or complied with by Chardan Corp., (iii) evidencing the
satisfaction of any condition referred to in this Section 10, or (iv) otherwise
facilitating the consummation of any of the transactions contemplated by this
Agreement.
10.7 No
Proceedings. Since the date of this Agreement, there must not
have been commenced or threatened against Chardan Corp., the Company or any
Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding
remains unresolved as of the date of this Agreement) (a) involving any challenge
to, or seeking damages or other relief in connection with, any of the
transactions contemplated hereby, or (b) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the transactions
contemplated hereby.
10.8 No Claim Regarding Stock
Ownership or Consideration. There must not have been made or
threatened by any Person, other than persons listed on Schedule I hereto any
claim asserting that such Person (a) is the holder of, or has the right to
acquire or to obtain beneficial ownership of Company Ordinary Shares or any
other stock, voting, equity, or ownership interest in, the Company, or (b) is
entitled to all or any portion of Chardan Ordinary Shares.
35
10.9 Expenses. Chardan
Corp. will have paid in full all of its expenses and fees incurred in connection
with the transactions related to this Agreement, including but not limited to
attorneys’ fees, auditors fees, government fees and any other cost or expense
incurred prior to the Closing Date or related to the post-closing SEC reports
and inquiries referenced in Section 7.3 hereof (collectively, the “Chardan Corp.
Expenses”).
SECTION
XI
INDEMNIFICATION;
REMEDIES
11.1 Survival. All
representations, warranties, covenants, and obligations made by Chardan Corp. or
Chardan Shareholders in this Agreement, and in any certificate or other
agreements delivered by Chardan Corp. or the Chardan Shareholders pursuant to
this Agreement shall survive for such period of time as the representations,
warranties and covenants made by the Company to the Purchasers in the Purchase
Agreement shall survive, except that any representations, warranties covenants
and obligations with respect to Taxes shall expire sixty (60) days after the
expiration of the applicable statute of limitations period (the “Survival
Period”). The right to indemnification, payment of damages or
other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant, or obligation. The waiver of any condition based
on the accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages, or other remedy based on such
representations, warranties, covenants, and obligations.
11.2 Indemnification in favor of
the Company and the Shareholders. From and after the Closing
Date until the expiration of the Survival Period, Chardan Shareholders will
severally indemnify and hold harmless the Company and the Shareholders, and
their respective officers, directors, agents, attorneys and employees, and each
person, if any, who controls or may “control” (within the meaning of the
Securities Act) any of the forgoing persons or entities (hereinafter referred to
individually as a “Company
Indemnified Person”) from and against any and all Damages arising out of
any (i) any breach of representation or warranty made by Chardan Corp. or
Chardan Shareholders in this Agreement, and in any certificate delivered by
Chardan Corp. or Chardan Shareholders pursuant to this Agreement, (ii) any
breach by Chardan Corp. or Chardan Shareholders of any covenant, obligation or
other agreement made by Chardan Corp. or Chardan Shareholders in this Agreement,
(iii) any third-party claim based on any acts or omissions by Chardan Corp. or
Chardan Shareholders from the date hereof through and including the Closing Date
and (iv) any breach of the obligations of disclosing true, correct and entire
information pursuant to the term of this Agreement. Notwithstanding
anything to the contrary contained herein, Chardan Shareholders’ total
indemnification obligations under this Section 11.2 shall be limited to and
shall not under any circumstances exceed the lesser of (A) $2,500,000 or (B) the
amount actually realized, net of taxes, by Chardan Shareholders from the sale of
the Company Shares.
36
11.3 Tax
Indemnification. Notwithstanding anything to the contrary
contained herein, the Chardan Shareholders shall be responsible at their sole
cost and expense for the preparation and timely filing of the Final Tax Returns,
and for timely paying any Tax shown as due on the Final Tax Returns; provided
that the Company and its accountants shall be given a reasonable opportunity to
review and comment on such Tax Returns prior to the filing thereof and shall be
given copies of such Tax Returns promptly after the filing thereof, and the
Company and the Chardan Shareholders shall cooperate with each other in the
preparation of such Tax Returns and in any Tax proceedings relating
thereto. The Chardan Shareholders shall also indemnify and hold
harmless each Company Indemnified Person from and against any and all Damages
arising from any Taxes of Chardan Corp. attributable to any taxable period (or
portion thereof) ended or ending on or prior to the Closing Date. In
the event that the Company receives a notice of any Tax examinations, claims,
adjustments or other proceedings that affect any of the Tax liabilities of
Chardan Corp. for any such tax periods, the Company shall provide a copy of such
notice to the Chardan Shareholders within five business days of the receipt of
such notice, and the Chardan Shareholders shall be entitled at their sole cost
and expense to handle, control and compromise or settle all such proceedings for
Taxes for which it is required to indemnify a Company Indemnified Person
pursuant to this Section 11.3; provided that the Chardan Shareholders shall be
responsible for paying, and shall indemnify and hold harmless each Company
Indemnified Person for, any and all Taxes or other Damages arising out of or
resulting from any such Tax proceedings.
SECTION
XII
GENERAL
PROVISIONS
12.1 Expenses. Except
as otherwise expressly provided in this Agreement, each party to this Agreement
will bear its respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the transactions contemplated
by this Agreement, including all fees and expenses of agents, representatives,
counsel, and accountants. In the event of termination of this Agreement, the
obligation of each party to pay its own expenses will be subject to any rights
of such party arising from a breach of this Agreement by another
party. For purposes of clarification, Chardan Corp. acknowledges that
the Company will not assume the payment of any of the Chardan Corp. Expenses,
which payment shall be the sole obligation of Chardan Corp. prior to the Merger
and the Chardan Shareholders, after the Merger as set forth in Section 10.9
hereof.
12.2 Confidentiality.
12.2.1 Subject
to Section 12.2.2 below, Chardan Corp., Chardan Shareholders, the Shareholders
and the Company will maintain in confidence, and will cause their respective
directors, officers, employees, agents, and advisors to maintain in confidence,
any written, oral, or other information obtained in confidence from another
party in connection with this Agreement or the transactions contemplated by this
Agreement, unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information becomes
publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any required filing with the
Commission, or obtaining any consent or approval required for the consummation
of the transactions contemplated by this Agreement, or (c) the furnishing or use
of such information is required by or necessary or appropriate in connection
with legal proceedings.
37
12.2.2 In
the event that any party is required to disclose any information of another
party pursuant to clause (b) or (c) of Section 12.2.1, the party requested or
required to make the disclosure (the “disclosing party”) shall
provide the party that provided such information (the “providing party”) with prompt
notice of any such requirement so that the providing party may seek a protective
order or other appropriate remedy and/or waive compliance with the provisions of
this Section 12.2. If, in the absence of a protective order or other
remedy or the receipt of a waiver by the providing party, the disclosing party
is nonetheless, in the opinion of counsel, legally compelled to disclose the
information of the providing party, the disclosing party may, without liability
hereunder, disclose only that portion of the providing party’s information which
such counsel advises is legally required to be disclosed, provided that the
disclosing party exercises its reasonable efforts to preserve the
confidentiality of the providing party’s information, including, without
limitation, by cooperating with the providing party to obtain an appropriate
protective order or other relief assurance that confidential treatment will be
accorded the providing party’s information.
12.3 Notices. All
notices, demands, consents, requests, instructions and other communications to
be given or delivered or permitted under or by reason of the provisions of this
Agreement or in connection with the transactions contemplated hereby shall be in
writing and shall be deemed to be delivered and received by the intended
recipient as follows: (i) if personally delivered, on the business day of such
delivery (as evidenced by the receipt of the personal delivery service), (ii) if
mailed certified or registered mail return receipt requested, upon the business
day of delivery (as evidenced by a receipt signed by the receiving party), (iii)
if delivered by overnight courier (with all charges having been prepaid), on the
business day of such delivery (as evidenced by the receipt of the overnight
courier service of recognized standing), or (iv) if delivered by facsimile
transmission, on the business day of such delivery if sent by 6:00 p.m. in the
time zone of the recipient, or if sent after that time, on the next succeeding
business day (as evidenced by the printed confirmation of delivery generated by
the sending party’s telecopier machine). If any notice, demand,
consent, request, instruction or other communication cannot be delivered because
of a changed address of which no notice was given (in accordance with this
Section 12.4), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the
second business day the notice is sent (as evidenced by a sworn affidavit of the
sender). All such notices, demands, consents, requests, instructions
and other communications will be sent to the following addresses or facsimile
numbers as applicable.
38
|
If
to Chardan Corp.:
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with
a copy, which shall not constitute notice,
to:
|
|
Chardan
Acquisition Corp.
|
|
|
c/o
Codan Trust Company
▇▇▇▇▇▇▇
Place
|
Mintz,
Levin, Cohn, Ferris, Glovsky and
Popeo,
PC
|
|
Wickhams
Cay 1
|
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
|
|
P.O.
3140
|
|
|
Road
Town
|
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇, Esq.
|
|
Tortola,
British Virgin Islands VG1110
|
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
|
|
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
If
to the Company:
|
with
a copy, which shall not constitute notice,
to:
|
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CHINA
DREDGING GROUP CO.,
LTD.
|
Loeb
& Loeb LLP
|
|
Floor
18, Tower A, Zhongshan
|
345
Park Avenue
|
|
Building,
No.
154, Hudong Road, Gulou District,
|
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Esq.
|
|
Fuzhou
City, Fujian Province, PRC
|
Telephone
No.: (▇▇▇) ▇▇▇-▇▇▇▇
|
|
Facsimile
No.: (▇▇▇) ▇▇▇-▇▇▇▇
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12.4 Arbitration. Any
dispute or controversy under this Agreement shall be settled exclusively by
arbitration in the City of New York, County of New York in accordance with the
rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitration award in any court
having jurisdiction.
12.5 Further
Assurances. The parties agree (a) to furnish upon request to
each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
12.6 Waiver. The
rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in
exercising any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this
Agreement.
12.7 Entire Agreement and
Modification. This Agreement supersedes all prior agreements
between the parties with respect to its subject matter and constitutes (along
with the documents referred to in this Agreement) a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written
agreement executed by the party against whom the enforcement of such amendment
is sought.
39
12.8 Assignments, Successors, and
No Third-Party Rights. No party may assign any of its rights
under this Agreement without the prior consent of the other
parties. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of and be
enforceable by the respective successors and permitted assigns of the
parties. Except as set forth in Section 11.3 hereof, nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions
are for the sole and exclusive benefit of the parties to this Agreement and
their successors and assigns.
12.9 Severability. If
any provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and effect to
the extent not held invalid or unenforceable.
12.10 Section Headings,
Construction. The headings of Sections in this Agreement are
provided for convenience only and will not affect its construction or
interpretation. All references to “Section” or “Sections” refer to
the corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word
“including” does not limit the preceding words or terms.
12.11 Governing
Law. This Agreement will be governed by the laws of the State
of New York without regard to conflicts of laws principles.
12.12 Counterparts. This
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement. In
the event that any signature is delivered by facsimile transmission or by e-mail
delivery of a “.pdf” format data file, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
40
COUNTERPART
SIGNATURE PAGE
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement and Plan
of Merger as of the date first written above.
|
Chardan
Acquisition Corp.
|
Chardan
Shareholders:
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||
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▇▇▇▇▇
▇▇▇▇▇▇▇
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|||
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Signed:
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||
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Printed
name: Congyan Xue
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Signed:
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Title: CEO
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||
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Chardan
Capital Markets, LLC
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||
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Signed:
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Printed
name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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||
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Title: President
|
||
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Signed:
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Printed name:
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Title:
|
|
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41
Company
Shareholders:
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VENUS
SEED CO., LTD.
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MARS
HARVEST CO., LTD.
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|||
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Signed:
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Signed:
|
|
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Printed name:
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Printed name:
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Title:
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Title:
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SATURN
GLORY CO., LTD.
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REGENT
FILL INVESTMENT GROUP
LIMITED
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|||
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Signed:
|
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Signed:
|
|
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Printed name:
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|
Printed name:
|
|
|
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Title:
|
|
Title:
|
|
|
|
DING
▇▇▇
|
▇▇
JIANLIANG
|
|||
|
Signed:
|
|
Signed:
|
|
|
|
POYING
HOLDINGS LIMITED
|
||||
|
Signed:
|
|
|||
|
Printed
name:
|
|
|||
|
Title:
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|
|||
42