Exhibit 99.1
STOCK PURCHASEAGREEMENT
This STOCKPURCHASEAGREEMENT(the“Agreement”) is made and entered into as of March 3, 2020,by and betweenHuihe Zheng, an individual with his offices located at Room 707, Soho T2, Tianshan Plaza, Changning District, Shanghai, China(the“Purchaser”),and Tim Shannon (the “Seller”) with his offices located at 8269 Burgos Ct., Orlando, FL 32836, a controlling stockholder as well as an officer and directorof 24/7 Kid Doc, Inc., a Florida corporation(the“Company”).
W I T N E S S E TH:
WHEREAS,the Seller is the record and beneficial owner of (i) 71,000,000 shares (the “Common Shares”) of common stock, par value $0.0001 per share (the “Common Stock”), of the Company, or 710,000 Common Shares after the approval bythe Financial Industry Regulatory Authority, Inc. (“FINRA”) of a reverse stock split of the Company’s issued and outstanding capital stock at the ratio of one-for-100 (the “Stock Split”),which represents approximately 43.2% of the issued and outstanding shares of Common Stock and (ii) 1,350,000 Series B Preferred Shares of the Company (the “Preferred Shares,” collectively with Common Shares, the “Shares”), or 13,500 Preferred Shares after the Stock Split, representing all of the issued and outstanding shares of Preferred Stock; and
WHEREAS,Sellerdesiresto sell to the Purchaser, andPurchaserdesires topurchase from the Seller, the Sharespursuant to the terms ofthisAgreement.
NOW,THEREFORE,ITISAGREED:
ARTICLE I
SALE OF THE SHARES
Section1.1Saleof the Shares. Subjectto the terms and conditionsherein stated, and in reliance upon the representations, warranties, covenants and agreements contained in this Agreement, Selleragrees to sell, assign, transfer, anddeliver to Purchaseronthe ClosingDate,andPurchaseragreestopurchasefrom SellerontheClosingDate,allof the Shares owned of record and beneficially by Seller for a total consideration of Five Hundred Thousand ($500,000) in cash(the“Purchase Price” and the transactions, the “Sale”).The certificates representing the Shares shallbeduly endorsedinblank,with each endorsement accompaniedby aMedallion signatureguarantee.
Section 1.2Escrow. The Purchaser and Seller acknowledge that the Purchase Price will be delivered to McMurdo Law Group, LLC, as escrow agent (“Escrow Agent”) in accordance with the escrow agreement dated February 4, 2020, by and among Seller, Purchaser and Escrow Agent (the “Escrow Agreement”). Seller shall, prior to the Closing, deliver to the Escrow Agentoriginal stock certificates representing the Shares, along with medallion guaranteed executed blank stock powers to the Shares and any other documents required to effect the sale of such Shares (collectively, the “Documents”).
The Escrow Agent shall hold the Purchase Price and Documents in escrow and disburse to Seller and Purchaser and the Transfer Agent (as defined below), respectively, in accordance with the terms hereof and the Escrow Agreement. Provided, however, if the Closing has yet to occur on March 6, 2020, the Purchase Price in the Escrow Account shall be delivered to the Purchaser and the Documents shall be delivered to the Seller and this Agreement shall automatically terminate, unless the Purchaser and the Seller agree, in writing, to extend the Closing to a different date.
Section1.3Closing.
| (a) | The closing of the Sale referred to in Section 1.1 (the “Closing”) shall take place on at such date, time and place as shall be determined by the Purchaser and the Seller. Such closing date is herein referred to as the “Closing Date.” |
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| (b) | At the Closing: |
| (i) | The Seller shall cause the Escrow Agent to deliver to Pacific Stock Transfer Company, the transfer agent of the Company (“Transfer Agent”), original stock certificate(s) representing the Common Shares, along with medallion guaranteed executed blank stock power to such shares and any other documents required to effect the sale of such shares (the “Common Share Documents”). |
| (ii) | The Seller shall cause the Escrow Agent to deliver to deliver to Purchaser, original stock certificate(s) representing the Preferred Shares, along with medallion guaranteed executed blank stock power to such shares and any other documents required to effect the sale of such shares. |
| (iii) | The Purchaser shall cause the Escrow Agent to disburse to the Seller $325,000 out of the Purchase Price for the Shares by wire transfer of immediately available funds upon receipt of written confirmation by the Transfer Agent that the Common Share Documents are acceptable and a new certificate representing the Common Shares in the name of Purchaser will be issued immediately. |
| (c) | At and at any time after the Closing, the parties shall duly execute, acknowledge and deliver all such further assignments, conveyances, instruments and documents, and shall take such other action consistent with the terms of this Agreement to carry out the transactions contemplated by this Agreement. |
| (d) | All representations, covenants and warranties of the Purchaser and Seller contained in this Agreement shall be true and correct on and as of the Closing Date with the same effect as though the same had been made on and as of such date. |
Section1.4Taxes.All sales, transfer, income,orgain taxes applicabletothe saleof the Sharesby Seller as contemplatedby thisAgreement shallbepaidby Seller.
ARTICLEII
REPRESENTATIONSOFSELLER
The Seller represents and warrants to the Purchaser, as of the date of execution of this Agreement and the Closing Date that:
Section2.1Ownershipof the Shares.Selleris thelawfulownerof theShares,free and clearof allsecurityinterests, liens, encumbrances,equities andother charges. Sellerfurtherrepresentsthathedoesnotbeneficiallyown anyoptionsorwarrantsorotherrights topurchase sharesof Common Stock.Therearenooutstandingor authorizedoptions,warrants,rights,calls, commitments, conversionrights,rightsof exchangeorotheragreementsof any character, contingentorotherwise,providingforthepurchase,issuanceor saleof anyofthe Shares,or any arrangements thatrequireorpermitanyof theSharestobevotedbyor atthediscretionof anyoneother thanthe Seller, andtherearenorestrictionsofanykindonthetransferof anyofthe Sharesother than(a)restrictionson transfer imposedbythe SecuritiesActof1933,asamended(the“SecuritiesAct”) and(b)restrictionson transfer imposedby applicable state securitiesor“blue sky” laws.Thedeliveryby suchSellertoPurchaserof theSharespursuant to theprovisionsof thisAgreementwilltransfer to Purchaservalid title thereto,free and clearofany and allEncumbrances. The Preferred Shares being transferred hereby have been validly issued, fully paid and are non-assessable. The Common Shares were issued to Seller in consideration for a promissory note from Seller in the amount of $71,000 (the “Common Shares Payment”). Seller agrees to make the Common Shares Payment immediately after the execution of this Agreement and prior to the Closing. The Common Shares, when fully paid by the Seller, will be validly issued, fully paid and are non-assessable.The Shares havenotbeenregisteredwith the Securities and Exchange Commission (“SEC”) and are being sold to Purchaser in transactions exempt from registration.
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Section2.2AuthorizationandValidity ofAgreement.Sellerhas fullpowerand authorityto execute anddeliverthisAgreement, toperform hisobligationshereunder, and to consummate the transactions contemplatedhereby.ThisAgreementhasbeenduly executed anddeliveredbySellerand, assumingthedue executionof thisAgreementby Purchaser, is avalid andbindingobligationofSeller, enforceable against Seller in accordancewith itsterms, except totheextent that itsenforceabilitymaybesubject to applicablebankruptcy, insolvency,reorganization, and similar laws affectingthe enforcementofcreditors'rightsgenerally and togeneral equitableprinciples.TheSeller isnot aparty to anyagreement,writtenororal,creatingrightsinrespectof anyof theShares in anythirdpartyorrelating to thevotingof theShares.
Section2.3No Brokers.Nobrokerageorfinder'sfeesor commissionsareorwillbepayableby the Company to anybroker,financialadvisoror consultant,finder,placementagent, investmentbanker,bankorotherPersonwithrespect to the transactions contemplatedby thisAgreement,and theCompanyhasnot taken anyaction thatwouldcause the Purchaser tobe liableforany suchfeesor commissions.The Selleragreesthat thePurchaser shallhavenoobligationwithrespectto anyfeesorwithrespect toany claimsmadebyoronbehalfof any Person,forfeesofthe typecontemplatedby thisSection andSeller shall indemnifyandhold Purchaser and the Companyharmlessfrom anyfees, costsor liabilitiesof anykindincurredby Purchaser inconnectiontherewith.
Section2.4AccuracyofInformation.Noneoftherepresentations andwarrantiesof Seller containedherein,or in thedocumentsfurnishedby thempursuanthereto, contains anymaterialmisstatementoffactoromits to state anymaterialfactnecessary tomakethe statementshereinor therein in lightof thecircumstances inwhich theyweremadenotmisleading.
Section 2.5No restriction on the Sale. There is no restriction or limitation on the execution and delivery of this Agreement and the consummation or performance of the transactions contemplated hereby.
Section 2.6No Other Securities. Seller does not, directly or indirectly, own or control any securities of the Company other than the Shares.
ARTICLEIII
REPRESENTATIONSOF SELLERRELATING TO THE COMPANY
The Seller represents and warrants to the Purchaser, as of the date of execution of this Agreement and the Closing Date, as follows:
Section3.1Existence and Good Standing.TheCompany is acorporationdulyorganized,validlyexisting,and ingood standingunder thelawsofthe StateofFlorida andhasallrequisite corporatepower and authority toown,lease,andoperate itsproperties and to carryon itsbusiness asnowbeing conducted.
Section3.2CapitalStock.
(a)The Companyhas an authorized capitalization consistingof200,000,000 shares of Common Stock,parvalueof$0.0001per share and 5,000,000 shares of preferred stock, par value $0.0001 per share, of which 2,000,000 shares are designated as Series B Preferred Shares and 1,000,000 shares are designated as Series A Preferred Shares. As of the date hereof, 166,765,752 Common Shares, or 1,667,658 shares post the Stock Split,1,350,000 Preferred Shares, or 13,500 shares post the Stock Split, and none of the Series A Preferred Shares are issued andoutstanding.All theoutstanding sharesof capital stockhavebeenduly authorized andvalidlyissued and arefullypaidandnon-assessable.Alloftheissued andoutstanding sharesofcapital stockof the Companyhavebeenoffered, issued and soldby the Company in compliancewith all applicablefederaland state securities laws.No securitiesof the Companyareentitled topreemptiveor similarrights, andnopersonor entityhas anyrightoffirstrefusal,preemptiveright,rightofparticipation,or any similarright toparticipate inthe transactions contemplatedhereby.Except as aresultofthepurchase and saleof theShares,there arenooutstandingoptions,warrants, scriptrights to subscribeto, callsor commitmentsofany characterwhatsoeverrelatingto,or securities,rightsorobligations convertible intoor exchangeablefor,orgiving any Person anyright to subscribeforor acquire, any sharesof CommonStock,orcontracts, commitments,understandingsor arrangementsbywhich the Companyisormaybecomebound toissue additional sharesof CommonStock,or securitiesorrights convertibleorexchangeable into sharesof CommonStock.The issuance and saleofthe Shareswillnotobligatethe Company to issue sharesofCommonStockorother securitiestoanyPerson(other than the Purchaser) and shallnotresult in arightof anyholderof Company securities to adjust the exercise, conversion, exchangeorresetpriceunder such securities.
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(b)Therearenooutstandingobligations, contingentorotherwise,ofthe Company toredeem,purchaseorotherwiseacquireany capital stockorother securitiesof theCompany.
(c) Therearenoshareholderagreements,votingtrustsorotheragreementsorunderstandingstowhich the CompanyorSeller is apartyorbywhich eitherofthemareboundrelating tothevotingof anysharesofthe capital stockofthe Company.
Section 3.3Subsidiaries. The Company has no subsidiaries.
Section3.4Books and Records.The Company's books and records, financial and otherwise, are in all material respects complete and correct and are in the Company’s principal executive offices.
Section 3.5Litigation. There are no (a) actions, suits, or legal, equitable, arbitrative, or administrative proceedings pending threatened against the Company, or (b) judgments, injunctions, writs, rulings, or orders by any governmental person against the Company. Neither the Company, nor any officer, key employee or 5% stockholder of the Company in his, her or its capacity as such, is in default with respect to any order, writ, injunction, decree, ruling or decision of any court, commission, board or any other government agency. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act.
Section3.6Taxes. The Company has duly and timely filed all required federal, state, county, local and foreign tax returns required to be filed by the Company.There arenoliensfor taxesupon the assetsof the Company exceptfor statutoryliensforcurrent taxesnotyetdue andpayableorwhichmaythereafterbepaidwithoutpenaltyor arebeingcontested ingoodfaith.The Companyhasnotreceived anynoticeof audit,isnotundergoing any auditof itstaxreturns,orhasreceived anynoticeofdeficiencyor assessmentfrom anytaxing authoritywithrespect to liabilityfor taxeswhichhasnotbeenfullypaidorfinally settled.Therehavebeennowaiversof statutesof limitationsby theCompanywithrespect to anytaxreturns.TheCompanyhasnotfiled arequestwith theInternalRevenue Serviceforchanges in accountingmethodswithin the lastthreeyearswhich changewould affect the accountingfor taxpurposes,directlyor indirectly,of itsbusiness.The Companyhasnot executed an extensionorwaiverof any statuteoflimitationson the assessmentorcollectionof any taxesdue(excluding such statutes thatrelate toyears currentlyunder examinationbytheInternal RevenueServiceorother applicable taxing authorities) that is currently in effect.
Section3.7AccuracyofInformation.Noneoftherepresentations andwarrantiesof theSeller as an officer and director of the Company containedherein,orinthedocumentsfurnishedbyhimpursuanthereto, contains anymaterialmisstatementoffactoromits to state anymaterialfactnecessary tomake the statementshereinor therein in lightofthe circumstances inwhich theyweremadenotmisleading.
Section3.8Disclosure.TheSeller confirms thatneitherhenor anyother Person actingonhisbehalfhasprovidedthePurchaseror hisagentsor counselwith any information thatconstitutesormight constitutematerial,nonpublic information concerningthe Company.TheSellerunderstands and confirms that the Purchaserwillrelyontheforegoingrepresentations in effecting transactions in securitiesof the Company.Alldisclosureprovided to the Purchaserregarding the Company,itsbusiness and the transactions contemplatedhereby,furnishedbyoronbehalfof theSellerwithrespect totherepresentations andwarrantiesmadeherein are true and correctwithrespect to suchrepresentations andwarranties anddonot contain anyuntrue statementof amaterialfactoromit to state anymaterialfactnecessary inorder tomakethe statementsmade therein,in lightof the circumstancesunderwhich theyweremade,notmisleading.TheSeller acknowledgesandagrees thatthe Purchaserhasnotmade,nor is thePurchasermaking, anyrepresentationsorwarrantieswithrespect to the transactions contemplatedherebyother thanthose specifically setforthherein.
Section3.9NoDisagreementswithAccountants andLawyers.There arenodisagreementsof anykindpresentlyexisting,orreasonably anticipatedby the Company to arise,between the accountants and lawyersformerlyorpresentlyemployedby theCompany.The Company does notowe any fees to itsaccountants and lawyers.
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Section3.10No Conflicts.The execution,delivery andperformanceofthisAgreement and the transactions contemplatedherebydonot andwillnot:(i) conflictwithorviolate anyprovisionof the Company’sArticlesofIncorporation,By-lawsorotherorganizationalor charterdocuments,or(ii) conflictwith,or constitute adefault(or anevent thatwithnoticeor lapseof timeorbothwouldbecome adefault)under,orgive toothers anyrightsof termination,amendment, accelerationor cancellation(withorwithoutnotice, lapseof timeorboth)ofanyagreement, creditfacility,debtorother instrument(evidencing a Companydebtorotherwise)orotherunderstanding towhich theCompanyis apartyorbywhich anypropertyor assetof the Companyisboundoraffectedor(iii)resultin aviolationof any law,rule,regulation,order, judgment, injunction,decreeorotherrestrictionof any courtorgovernmental authority towhich theCompany is subject(includingfederal and state securities laws andregulations),orbywhichanypropertyor assetofthe Company isboundor affected.
Section3.11Filings, Consents andApprovals.NeithertheSellernorthe Company isrequired toobtain anyconsent,waiver, authorizationororderof,give anynotice to,ormake anyfilingorregistrationwith, anycourtorotherfederal, state,localorothergovernmentalauthorityorotherPerson inconnectionwith the execution,delivery andperformanceof thisAgreement.
Section 3.12Compliance. The Company: (i)is not in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is not in violation of any order of any court, arbitrator or governmental body and (iii) is not and has not been in violation of any statute, rule or regulation of any governmental authority.
Section3.13TransactionsWithAffiliates andEmployees.Except asrequired tobe setforth inthe SEC Reports,noneoftheofficersordirectorsof the Companyandnoneof theAffiliatesoremployeesof the Company ispresently aparty to any transactionwith the Company(otherthanfor services asemployees,officers anddirectors), including any contract,agreementorotherarrangementprovidingfor thefurnishingof servicestoorby,providingforrentalofrealorpersonalproperty toorfrom,orotherwiserequiringpayments toorfrom anyofficer,directoror such employeeorany entityinwhich anyofficer,director,or any suchemployeehas a substantial interestor is anofficer,director, trusteeorpartner.
Section3.14Assets.The Company does not own or lease any assets.
Section3.15InvestmentCompany/InvestmentAdvisor.Thebusinessof theCompanydoesnotrequire it toberegistered as aninvestmentcompanyor investment advisor; as such terms aredefinedundertheInvestment CompanyAct and theInvestmentAdvisorsActof1940.
Section3.16EnvironmentalMatters.The Companyhas compliedwithall applicable state andfederal environmental laws andregulations(“EnvironmentalLaw”).There isnopendingor threatened civilor criminal litigation,writtennoticeofviolation,formal administrativeproceedingor investigation, inquiryorinformationrequestby any state andfederalgovernmentalentityrelating to anyEnvironmentalLaw involvingthe Company.
Section3.17InformedDecision.TheSeller isawareof theCompany’sbusinessaffairs andfinancial condition andhasreachedan informed andknowledgeabledecisionto sellthe Shares.
Section3.18NoLiabilitiesorDebts.Except for the loans from Seller in the aggregate amount of $71,000 as of the date hereof (the “Loans”), which will be paid off prior to the Closing,there areno liabilitiesordebtsoftheCompanyofanykindwhatsoever,whetheraccrued, contingent, absolute,determined,determinableorotherwise and there isno existingcondition, situationor setof circumstanceswhich couldreasonablybe expectedtoresult in such a liabilityordebt.TheCompanyisnot aguarantorof any indebtednessof anyotherperson,firmor corporation.
Section 3.19Employee Matters. The Company does not have and since October 2016 did not have any employees other than the Seller. There are no outstanding employment obligation of the Company of any kind. The Company shall have no obligations whatsoever, for any compensation or other amounts payable to any employee, director, consultant, or independent contractor of the Company, including, but not limited to bonus, salary, compensation, accrued vacation, fringe, pension or profit sharing benefits or severance paid or payable to any employee, director, consultant or independent contractor of the Company relating to service with or for the Company at any time prior to the Closing Date.
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Section 3.20SEC Reports. The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, 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 the light of the circumstances under which they were made, not misleading. The consolidated financial statements of the Company included in the SEC Reports 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. The financial statements included in the SEC Reports have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The agreements and documents described in the SEC Reports conform in all material aspects to the descriptions thereof contained therein and there are no agreements or other documents required by the Securities Act and the rules and regulations thereunder to be described in the SEC Reports or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed.
Section 3.21Free-Trading Shares. Of the total issued and outstanding shares of Common Stock of the Company, 148,305,242 shares of Common Stock, or 1,483,052 shares post the Stock Split, are “restricted securities” under applicable U.S. federal and state securities laws and the remaining 18,460,510 shares or 184,605 shares post the Stock Split, are non-restricted securities and their certificates do not contain a legend.
Section 3.22Trading, DTC Eligibility and Market Makers. The Common Stock of the Company is DTC (Depository Trust Corporation) eligible and is being quoted on the OTC QB under the trading symbol “TVMD”. The Company has eight market makers as of the date hereof. The Company has received notice from the OTC Market Group notifying the Company’s deficiency in meeting the public float requirement and is granted a cure period of 30 calendar days to attain a public float that is at least 10% of the total issued and outstanding shares of Common Stock (the “OTCQB Deficiency”).
Section 3.23Stock Split. The Board of Directors and the stockholders of the Company have approved the Stock Split which became effective with the State of Florida upon filing of a certificate of amendment on January 13, 2020. The Company is currently undergoing a review of the Stock Split by FINRA.
ARTICLEIV
REPRESENTATIONSOFPURCHASER
Purchaserrepresentsandwarrants asfollows:
Section4.1AuthorizationofPurchaser.The Purchaserhasfullpower and authority to execute anddeliver thisAgreement, toperform hisobligationshereunder, and to consummatethe transactions contemplatedhereby.ThisAgreementhasbeenduly executed anddeliveredby the Purchaser and, assumingthedue executionof thisAgreementbySeller,willconstitute avalid andbindingobligationof the Purchaser enforceableagainst suchPurchaser in accordancewithitsterms,except to the extentthat enforceabilitymaybe subjecttoapplicablebankruptcy, insolvency,reorganization,and similarlawsaffecting the enforcementof creditors'rightsgenerally and togeneralequitableprinciples.
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Section4.2Consents andApprovals;NoViolations.Theexecution anddeliveryof thisAgreementby Purchaser andthe consummationof the transactions contemplatedhereby(a)willnotviolateany statute,rule,regulation,orderordecreeof anypublicbodyor authoritybywhichPurchaser isboundorbywhichanyof hispropertiesor assetsarebound,(b)willnotrequire anyfilingwith,orpermit, consentor approvalof,orthegivingof anynotice to, anygovernmentalorregulatorybody,agencyorauthorityonorprior to the ClosingDate, and(c)willnotresult in aviolationorbreachof,conflictwith,constitute(withorwithoutduenoticeor lapseof timeorboth) adefault(orgiverise to anyrightof termination, cancellation,paymentor acceleration)under,orresult in the creationofanyEncumbranceuponanyof thepropertiesor assetsofPurchaserunder anyof theterms, conditions,orprovisionsof anynote,bond,mortgage, indenture,license,franchise,permit,agreement, lease,franchiseagreement,or anyotherinstrumentorobligationtowhich Purchaser is aparty,orbywhichheoranyofhis propertiesor assetsmaybebound.
Section4.3PurchaseforInvestment.Withregardtothe Sharespurchasedfrom theSeller,Purchaser andhisassignsordesigneeswill acquire the Shares solelyforhis own accountfor investmentpurposesonly andnotwith aview towardanyresaleordistribution thereof.Withregard to the Sharespurchasedfrom theSeller, Purchaseragrees that the Sharesmaynotbe sold,transferred,offeredfor sale,pledged,hypothecated,orotherwisedisposedofwithoutregistrationunder the SecuritiesAct, exceptpursuant to an exemptionfrom suchregistrationavailableunder suchSecuritiesAct, andwithout compliancewith the securities lawsofotherjurisdictions, to the extent applicable. Purchaserhas suchknowledgeandexperience infinancial andbusinessmatters thathe iscapableofevaluating themerits andrisksofits purchaseofthe Shares.Purchaser confirms that the Company andSellerhavemade availableto Purchaser theopportunity toaskquestionsof the Company and toacquire additionalinformation aboutthe Company'sbusiness andfinancialcondition.
Section4.4AvailableFunds. Purchaserwillhaveonthe ClosingDate sufficientfunds toperform allofhis obligationsunderthisAgreement.
Section4.5Broker'sorFinder'sFees.No agent,broker,firmorotherPersonactingonbehalfofPurchaser is,orwillbe, entitled to anycommissionorbroker'sorfinder'sfeesfrom anyof thepartieshereto,orfrom any Person controlling, controlledbyorunder commoncontrolwithanyof thepartieshereto, in connectionwithanyof thetransactions contemplatedherein.
Section4.6AccuracyofInformation.Noneoftherepresentations andwarrantiesof Purchaser containedherein,or in thedocumentsfurnishedpursuanthereto, contains anymaterialmisstatementoffactoromitsto state anymaterialfactnecessarytomake the statementshereinor therein inlightof thecircumstances inwhichtheyweremadenotmisleading.
ARTICLE V
CONDITIONSTOSELLER'SOBLIGATIONS
The sale of the Shares by Seller on the Closing Date is conditioned upon satisfaction or waiver, at or prior to the consummation of the Sale, of the following conditions:
Section 5.1Accuracy of Representations and Warranties. The representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date.
Section 5.2Performance of Agreements. Each and all of the agreements of Purchaser to be performed at or prior to the Closing Date pursuant to the terms hereof shall have been duly performed in all material respects.
Section 5.3No Injunction. No court or other governmental body or public authority shall have issued an order that shall then be in effect restraining or prohibiting the completion of the transactions contemplated hereby.
Section 5.4Deposit of Purchase Price to Escrow Agent. The Purchaser shall have deposited the Purchase Price to the Escrow Agent.
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ARTICLEVI
CONDITIONSTOPURCHASER'SOBLIGATIONS
The purchase of the Shares by Purchaser on the Closing Date is conditioned upon the satisfaction or waiver, at or prior to the consummation of the Sale, of the following conditions:
Section 6.1Accuracy of Representations and Warranties. The representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties have been made on and as of such date (except to the extent that any such representation and warranty is stated in this Agreement to be made as of a specific date, in which case such representation and warranty shall be true and correct as of such specified date).
Section 6.2Performance of Agreements. Each and all of the agreements of Seller to be performed at or prior to the Closing Date pursuant to the terms hereof shall have been duly performed in all material respects.
Section 6.3No Injunction. No court or other government body or public authority shall have issued an order which shall then be in effect restraining or prohibiting the completion of the transactions contemplated hereby.
Section 6.4Completion of Due Diligence. Purchaser has completed his due diligence investigation of the Shares and the Company, and the results of such investigation are satisfactory to Purchaser in its sole discretion.
Section 6.5Delivery ofDocuments. The Documents shall have been delivered to the Transfer Agent and Escrow Agent and Purchaser shall have received written confirmation from the Transfer Agent that the Common Share Documents are acceptable and a new certificate representing the Common Shares in the name of Purchaser will be issued immediately.
Section 6.6Certificate of Good Standing. A copy of the Certificate of Good Standing from the Company, dated no more than three business days prior to the Closing Date, shall have been delivered to Purchaser prior to the Closing Date.
Section 6.7Payment of Common Shares. Seller shall have made the Common Shares Payment in full.
Section 6.8OTCQB Compliance. The Company shall have received written confirmation from the OTCQB Market that the OTCQB Deficiency has been cured and the Company is in full compliance with the requirements of the OTCQB Market.
Section 6.9Delivery of Additional Closing Documents. Seller shall have delivered to Escrow Agent the following items to be delivered to Purchaser at Closing:
| (e) | a duly executed loan payoff letter, evidencing the payoff of the Loans, prior to the Closing Date; |
| (f) | a duly executed personal guarantee, in the form attached hereto asExhibit A; |
| (g) | duly signed resignation letters from certain officers and directors; and |
| (h) | a duly executed board resolution approving the appointment of Purchaser Director and Purchaser Officer (as defined below). |
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ARTICLE VII
CERTAINAGREEMENTS
Section7.1ReasonableBestEfforts.Eachof thepartiesheretoagrees touse itsreasonablebestefforts to takeorcause tobetaken allaction, todoorcausetobedone, and to assist andcooperatewith theotherpartyheretoindoing,all thingsnecessary,proper,or advisable to consummate andmake effective, inthemost expeditiousmannerpracticable,the transactions contemplatedby thisAgreement,including,butnot limited to,(a)theobtainingof allnecessarywaivers,consents, and approvalsfromgovernmentalorregulatory agenciesor authorities and themakingof allnecessaryregistrations andfilingsand thetakingof allreasonable steps asmaybenecessary toobtain any approvalorwaiverfrom,or to avoid any actionorproceedingby, anygovernmentalagencyor authority,(b)theobtainingof allnecessary consents, approvals,orwaiversfrom thirdparties, and(c) thedefendingof any lawsuitsor anyother legalproceedings,whether judicialor administrative, challengingthisAgreementorthe consummationof the transactions contemplatedhereby,including,without limitation, seeking tohave any temporaryrestrainingorder enteredbyany courtoradministrativeauthorityvacatedorreversed.
Section 7.2Board of Directors; Officers. At the Closing, (a) the Board of Directors shall consist of two current directors (the “Existing Directors”) and one director appointed by Purchaser (the “Purchaser Director”), and (b) all officers of the Company shall resign except that Seller shall continue to serve as Chief Financial Officer of the Company until the filing of the Annual Report (as defined below) and the Board of Directors shall appoint the designees of Purchaser as the officers thereof (the “Purchaser Officer”). Upon compliance by the Company with information statement delivery requirements pursuant to Rule 14f-1 under the Exchange Act, if applicable, the Existing Directors shall resign and the vacancy created thereby shall be filled by directors designated by the Purchaser Director.
Section 7.3Further SEC Filings. Seller shall take all such further acts as shall be required to permit the Company to file any SEC Reports to be filed at or following the Closing which reflect the business and operations of the Company prior to the Closing, and shall execute and deliver all certifications required to be filed by the Company with respect to financial statements of the Company reflecting in whole or in part the business and operations of the Company prior to the Closing. Seller acknowledges that this covenant is a material inducement to the Buyer in entering into the transactions contemplated hereby and in connection herewith.
Section 7.4Annual Report. Seller shall prepare and file the annual report on Form 10-K for the Company for the fiscal year ended December 31, 2019 (the “Annual Report”) expeditiously following the Closing, in no event later than April 14, 2020. Seller shall bear all the costs in connection with the filing of the Annual Report, provided that Purchaser will pay Seller Twenty Thousand and no/100 U.S. Dollars ($20,000) towards the costs for the filing of the Annual Report, which payment has been included in the Purchase Price. A portion of the Purchase Price ($50,000) shall remain in the escrow account for indemnification purposes and shall be disbursed to Seller upon filing of the Annual Report, provided that such funds are not subject to any indemnification claims brought by Purchaser.
Section 7.5Compensation Shares. Seller agrees to accept an aggregate of 200,000,000 shares of Common Stock (the “Compensation Shares”) in lieu of cash for a severance payment of $200,000 (the “Severance Payment”), to which Seller will be entitled for termination of his employment with the Company in connection with the transactions contemplated herein and transfer all of his Compensation Shares to Purchaser or his assignee(s) at no additional cost at the end of his term of employment. In the event the Company does not have sufficient authorized but unissued shares of common stock for the issuance of the Compensation Shares, or the issuance of such Compensation Shares would cause the Company to be incompliant with any requirements of the OTCQB Marketplace, Seller agrees to assign to Purchaser or his designee(s) all his right, title and interest in, to the Severance Payment, at no additional cost.
Section 7.6Escrow.
| (a) | At the Closing, Three Hundred Twenty-Five Thousand Dollars ($325,000) shall be released from the Escrow Account and paid to Seller. |
| (b) | Twenty-Five Thousand Dollars ($25,000) out of the Purchase Price shall continue to be held in the Escrow Account, pursuant and subject to the terms of this Agreement and the Escrow Agreement and shall be disbursed from the Escrow Account upon the approval by FINRA of the Stock Split. |
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| (c) | Fifty Thousand Dollars ($50,000) out of the Purchase Price shall continue to be held in the Escrow Account pursuant and subject to the terms of this Agreement and the Escrow Agreement, to satisfy Purchaser’ rights, if any, to indemnification under Section 8.1(a) hereof. Subject to and in accordance with the Escrow Agreement, on the first Business Day immediately after the filing of the Annual Report, Purchaser and Seller will provide joint written instructions to the Escrow Agent to disburse from the Escrow Account an amount equal to (i) Fifty Thousand Dollars ($50,000) less (ii) the sum of the amount of (A) any finally determined but unpaid indemnification claims and (B) any reasonable reserve to satisfy pending indemnification claims, in each case, made by a Purchaser indemnitee pursuant to Article VIII hereof. Notwithstanding the foregoing, if the Purchaser indemnitee makes a claim pursuant to Article VIII hereof within the date of the filing of the Annual Report, Fifty Thousand Dollars ($50,000) will be held in the Escrow Account until a final determination has been made with respect to such indemnification claim. Upon final determination of all such pending indemnification claims, Purchaser and Seller will provide joint written instructions to the Escrow Agent to pay (x) to the Purchaser Indemnitees from the Escrow Account the amount of the finally determined indemnification claims and (y) to Seller any remaining escrow funds after giving effect to the payment in clause (x) unless there is an indemnification claim. |
| (d) | One Hundred Thousand Dollars ($100,000) out of the Purchase Price shall continue to be held in the Escrow Account, pursuant and subject to the terms of this Agreement and the Escrow Agreement and shall be disbursed from the Escrow Account to Seller upon the delivery of the Compensation Shares to the Company. |
ARTICLEVIII
SURVIVALOF REPRESENTATIONS;INDEMNIFICATION
Section8.1Indemnities.
(a) Seller hereby agrees to indemnify and hold harmless the Purchaser from and against any and all damages, claims, losses, or expenses (including reasonable attorneys' fees and expenses) (“Damages”) actually suffered or paid by Purchaser as a result of the breach of any representation or warranty made by such Seller in this Agreement. Seller further agrees that Purchaser may be indemnified without first filing a lawsuit against the Seller or the Company. To the extent that Seller's undertakings set forth in this Section 8.1(a) may be unenforceable, Seller shall contribute the maximum amount that they are permitted to contribute under applicable law to the payment and satisfaction of all Damages incurred by the parties entitled to indemnification hereunder. In the event that Purchaser should raise a claim for damages pursuant to this section 8.1(a), Seller shall have a fifteen (15) business day cure period, beginning upon notice received, to cure any such defect to Purchaser's satisfaction. If not cured to Purchaser’s satisfaction, in addition to any rights the Purchaser has, Purchaser may have the Escrow Agent to pay Purchaser for such Damages out of the escrow funds.
(b) Purchaserherebyagrees to indemnifyandholdharmlessSeller againstDamages actuallysufferedorpaidby Selleras aresultofthebreachof anyrepresentationorwarrantymadeby thePurchaser in thisAgreement.To the extent that the Purchaser'sundertakings setforthin this Section8.1(b)maybeunenforceable, the Purchaser shall contribute themaximum amount thathe ispermittedtocontributeunder applicable law to thepayment and satisfactionof allDamages incurredby theparties entitledto indemnificationhereunder.
(c)Anypartyseekingindemnificationunder thisArticleVIII(an“IndemnifiedParty”)shallgive eachpartyfromwhom indemnificationisbeing sought(each, an“Indemnifying Party”)noticeof anymatterforwhich suchIndemnified Party is seeking indemnification, statingtheamountof theDamages, ifknown, andmethodof computation thereof,and containing areferencetotheprovisionsof thisAgreement inrespectofwhich suchrightofindemnification isclaimedor arises.TheobligationsofanIndemnifying Partyunder thisArticleVIIIwithrespect toDamagesarisingfrom any claimsofany thirdparty that are subject to theindemnificationprovidedfor in thisArticleVIII(collectively,“Third-Party Claims”) shallbegovernedby and contingentupon thefollowing additional terms and conditions: if anIndemnified Party shallreceive, after the ClosingDate,initialnoticeof anyThird-Party Claim, theIndemnified Party shallgive theIndemnifyingPartynoticeof suchThird-Party Claimwithin such timeframe as isnecessary to allowfor a timelyresponseand in any eventwithin30daysofthereceiptby theIndemnified Partyofsuchnotice;provided,however,thatthefailure toprovide suchtimelynotice shallnotrelease theIndemnifyingPartyfrom anyofitsobligationsunder thisArticleVIII except totheextenttheIndemnifying Party ismateriallyprejudicedby suchfailure.TheIndemnifying Party shallbeentitledto assume and control thedefenseofsuchThird-Party Claim at its expense and through counselof its choice ifitgivesnoticeof its intentiontodo soto theIndemnifiedPartywithin30daysof thereceiptof suchnoticefrom theIndemnified Party;provided,however, that ifthere existsorisreasonably likely to exist a conflictof interest thatwouldmake it inappropriate in the judgmentof theIndemnifiedParty(upon adviceofcounsel)forthe same counsel torepresentboth theIndemnifiedParty and theIndemnifyingParty, then theIndemnifiedPartyshallbeentitled toretainitsown counsel, atthe expenseoftheIndemnifyingParty,provided that theIndemnifiedParty andsuch counsel shallcontest suchThird-PartyClaims ingoodfaith.In the eventtheIndemnifying Party exercisestheright toundertake any suchdefenseagainstany suchThird-Party Claim asprovided above,theIndemnified Party shallcooperatewith theIndemnifyingPartyin suchdefense andmakeavailable to theIndemnifying Party, at theIndemnifyingParty's expense,allwitnesses,pertinentrecords,materials, and informationin theIndemnified Party'spossessionorunder theIndemnifiedParty's controlrelating thereto as isreasonablyrequiredbytheIndemnifying Party.Similarly, in theevent theIndemnified Partyis,directlyor indirectly,conducting thedefenseagainst any suchThird-Party Claim,theIndemnifyingParty shall cooperatewith theIndemnified Party in suchdefense andmake available to theIndemnified Party,at theIndemnifyingParty's expense, all suchwitnesses,records,materials,and informationintheIndemnifyingParty'spossessionorunder theIndemnifying Party's controlrelatingthereto as isreasonablyrequiredbytheIndemnified Party.TheIndemnifyingParty shallnot,without thewritten consentoftheIndemnifiedParty,(i) settleor compromise anyThird-PartyClaimor consenttothe entryof any judgment thatdoesnot include as anunconditional term thereof thedeliverybythe claimantorplaintiff to theIndemnified Partyof awrittenreleasefrom allliability inrespectof suchThird-Party Claim,or(ii) settleor compromise anyThird-PartyClaim in anymanner thatmayadversely affect theIndemnified Party.Finally,noThird-Party Claim that isbeingdefended ingoodfaithby theIndemnifyingPartyor that isbeingdefendedbytheIndemnifiedParty asprovidedabove in this Section8.1(c) shallbe settledbytheIndemnifiedPartywithout thewritten consentof theIndemnifyingParty.
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ARTICLE IX
MISCELLANEOUS
Section9.1Expenses.Thepartieshereto shallpayallof theirown expensesrelating to the transactions contemplatedbythisAgreement, including,withoutlimitation,thefees and expensesof theirrespective counsel,financial advisors, andaccountants.
Section9.2GoverningLaw; Consentto Jurisdiction.
(a)The interpretation and constructionof thisAgreement, and allmattersrelatinghereto, shallbegovernedby the lawsofthe StateofNew York applicable to contractsmade and tobeperformed entirelywithin the StateofNew York.
(b)Eachof thepartiesagreesthatany legalactionorproceedingwithrespect to thisAgreementshall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Eachof thepartiesheretoherebyirrevocablywaives anyobjection that itmaynoworthereafterhave to the layingofvenueofanyof the aforesaid actionsorproceedingsarisingoutofor in connectionwith thisAgreementbrought inthe courtsreferredto in thepreceding sentence.Eachpartyheretohereby consentstoprocessbeingserved in any such actionorproceedingby themailingof a copy thereof to theaddress setforthopposite itsnamebelow andagrees that such serviceuponreceipt shall constitutegood and sufficient serviceofprocessornotice thereof.Nothinginthisparagraph shall affector eliminate anyright to serveprocessinanyothermannerpermittedby law.
Section9.3Captions.The articleand sectioncaptionsusedherein areforreferencepurposesonly, and shallnotin anyway affectthemeaningor interpretationof thisAgreement.
Section9.4Notices.Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via e-mail attachment at the email address set forth below at or prior to 5:30 p.m. (New York City time) on a business day, (b) the next business day after the date of transmission, if such notice or communication is delivered via e-mail attachment at the e-mail address as set forth below on a day that is not a business day or later than 5:30 p.m. (New York City time) on any business day, (c) the second (2nd) business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given.
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if to Purchaser,to:
Room 707, Soho T2, Tianshan Plaza
Changning District, Shanghai, China
Attn: Huihe Zheng
Email: 1512529899@qq.com
Telephone: +86 13141099919
With a copy to (which does not constitute notice):
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas, 11th Floor
New York, NY 10105
Attn: Wei Wang
Email: wwang@egsllp.com
Telephone: 212-370-1300
and iftoSeller, to:
8269 Burgos Ct.
Orlando, FL 32836
Email: tbshannon@aol.com
Telephone: (828) 244-5980
or suchother addressesornumbers as shallbefurnishedinwritingby any suchpartyinthemannerforgivingnoticeshereunder.
Section9.5Parties in Interest.ThisAgreementmaynotbetransferred, assigned,pledged,orhypothecatedby anypartyhereto,other thanbyoperationoflaw.ThisAgreement shallbebindinguponand shall inure to thebenefitof thepartieshereto and theirrespective successors andpermitted assigns.
Section9.6Counterparts.ThisAgreementmay be executedintwoormore counterparts,allofwhich taken together shallconstituteone instrument.
Section9.7EntireAgreement.ThisAgreement, includingits exhibits, schedules, andotherdocumentsreferredtoherein thatform aparthereof, contain the entireunderstandingof thepartiesheretowithrespect tothe subjectmatter containedherein andtherein.ThisAgreement supersedes allprioragreementsandunderstandingsbetween thepartieswithrespect to such subjectmatter.
Section9.8Third-Party Beneficiaries.Eachpartyhereto intends that thisAgreement shallnotbenefitor create anyrightor causeof actioninoronbehalfof anypersonother thanthepartieshereto.
* * * * *
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INWITNESSWHEREOF,eachof thepartieshas caused thisAgreement tobeexecutedby theirrespectiveofficers thereuntoduly authorized,all asof thedayandyearfirst abovewritten.
PURCHASER:
/s/ Huihe Zheng
HUIHE ZHENG
SELLER:
/s/ Tim Shannon
TIM SHANNON
INWITNESSWHEREOF, theundersignedofficer and director of the Company confirms thewarranties andrepresentationsmade inARTICLEIIIaboveasbeing true and correct.
/s/ Tim Shannon
TIM SHANNON
Chief Executive Officer, Chief Financial Officer and director
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EXHIBIT A
PERSONAL GUARANTEE
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