Execution Copy
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") made this 11th day of
March, 2004 by and among TINTIC GOLD MINING COMPANY, a Utah corporation
("Parent"), TTGM ACQUISITION CORPORATION, a Utah corporation ("Sub"), and KIWA
BIO-TECH PRODUCTS GROUP LTD., an international business company organized
under the laws of the British Virgin Islands (the "Company").
Recitals:
A. The respective Boards of Directors of Parent, Sub and the Company
have determined that a merger of Sub with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement,
would be fair and in the best interests of their company and their respective
shareholders, and such Boards of Directors have approved such Merger, pursuant
to which the shares of the Company ("Company Shares") issued and outstanding
immediately prior to the Effective Time of the Merger (as defined in Section
1.4), other than Dissenting Shares (as defined in Section 2.1.4), will be
converted into the right to receive Common Stock of Parent ("Parent Common
Stock").
B. Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
C. For federal income tax purposes, the parties intend that the
Merger shall qualify as a reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code of 1986, as amended (the "Code"), by reason of Section
368(a)(2)(E) of the Code.
Agreement:
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
1. THE MERGER.
1.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the Utah Revised Business
Corporation Act (the "Utah Statutes") and the British Virgin Islands
International Business Companies Act (Cap. 291) (the "BVI Statutes"), Sub
shall be merged with and into the Company at the Effective Time of the Merger,
Sub and the Company being the constituent companies for the purposes of the
BVI Statutes. At the Effective Time of the Merger, the separate existence of
Sub shall cease, and the Company shall continue as the surviving corporation
(the "Surviving Corporation") and shall continue under the name Kiwa Bio-Tech
Products Group Ltd.
1.2 Voting. The Company has 5,000,000 voting shares in issue,
which are owned and held by the persons and entities set forth on Schedule
3.1.3 of the Company Disclosure Schedules (as hereinafter defined), and Sub
has 1,000 voting shares issued and outstanding, which are held by Parent. The
holders of the Company Shares and the stock of Sub are each entitled to vote
on the Merger as a single class.
1.3 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1 and subject to the satisfaction or waiver of the conditions set
forth in Section 6, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on the business day after satisfaction of the conditions set
forth in Section 6 (or as soon as practicable thereafter following
satisfaction or waiver of the conditions set forth in Section 6) (the "Closing
Date"), at the offices of Stubbs Alderton & Markiles, LLP, unless another
date, time or place is agreed to in writing by the parties hereto.
1.4 Effective Time of Merger. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Section 6, the
parties shall file articles of merger (the "Articles of Merger") executed in
accordance with the relevant provisions of the Utah Statutes and the BVI
Statutes and shall make all other filings or recordings required under the
Utah Statues and BVI Statutes. The Merger shall become effective at such time
as the Articles of Merger are duly filed with the Department of Commerce of
the State of Utah and the Registry of Corporate Affairs of the British Virgin
Islands, respectively, or at such other time as is permissible in accordance
with the Utah Statues and BVI Statutes and as Parent and the Company shall
agree should be specified in the Articles of Merger (the time the Merger
becomes effective being the "Effective Time of the Merger"). The parties
shall use reasonable efforts to have the Closing Date and the Effective Time
of the Merger to be the same day.
1.5 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the Utah Statutes and BVI Statutes.
1.6 Memorandum and Articles of Association; Purposes.
1.6.1 The Memorandum of Association of the Company in effect
immediately prior to the Effective Time of the Merger shall be the Memorandum
of Association of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
1.6.2 The Articles of Association of the Company in effect
at the Effective Time of the Merger shall be the Articles of Association of
the Surviving Corporation until thereafter changed or amended as provided
therein or by applicable law.
1.6.3 The purposes of the Surviving Corporation and the
total number of its authorized capital stock shall be as set forth in the
Memorandum and Articles of Association of the Company in effect immediately
prior to the Effective Time of the Merger until such time as such purposes and
such number may be amended as provided in the Memorandum and Articles of
Association of the Surviving Corporation and by applicable law.
1.7 Directors. The directors of the Company at the Effective
Time of the Merger shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
1.8 Officers. The officers of the Company at the Effective Time
of the Merger shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
1.9 Member/Shareholder Approval. This Agreement and the
Articles of Merger shall be submitted to the members or shareholders, as
applicable, of each of the constituent companies (being the Company and Sub)
for their approval by appropriate resolution of such members or shareholders.
2. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS.
2.1 Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the
holders of Company Shares or any shares of capital stock of Sub:
2.1.1 Common Stock of Sub. Each share of common stock of
Sub issued and outstanding immediately prior to the Effective Time of the
Merger shall be converted into one share of the Surviving Corporation and
shall be the only issued and outstanding shares of the Surviving Corporation.
2.1.2 Cancellation of Parent-Owned Company Shares. Each
Company Share that is owned by Parent, Sub or any other subsidiary (as defined
in Section 9.2) of Parent shall automatically be cancelled and retired and
shall cease to exist, and no Parent Common Stock or other consideration shall
be delivered or deliverable in exchange therefor.
2.1.3 Conversion of Company Shares. Except as otherwise
provided herein, each issued and outstanding Company Share shall be converted
into fully paid and nonassessable shares of Parent Common Stock in accordance
with the Exchange Ratio described in Section 2.2 (the "Merger Consideration").
The Merger Consideration shall be deposited by Parent with the Exchange Agent
(as described below) further to Section 2.4 herein.
2.1.4 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Company Shares issued and outstanding immediately
prior to the Effective Time of the Merger held by a holder (if any) who has
the right to dissent from the Merger and demand payment for and an appraisal
of such shares in accordance with the BVI Statutes ("Dissenting Shares") shall
not be converted into a right to receive Merger Consideration unless such
holder fails to dissent in accordance with the requirements of the BVI
Statutes. If such holder fails to dissent in accordance with the requirements
of the BVI Statutes, each such share of such holder shall be treated as a
share that had been converted as of the Effective Time of the Merger into the
right to receive Merger Consideration in accordance with this Section 2.1.
The Company shall give prompt notice to Parent of any dissention, and Parent
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any such demands, except as required by the BVI Statutes or a court
order.
2.1.5 Cancellation and Retirement of Company Shares. As of
the Effective Time of the Merger, all Company Shares issued and outstanding
immediately prior to the Effective Time of the Merger, shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease
to exist, and each holder of a certificate representing any such Company
Shares shall cease to have any rights with respect thereto, except the right
to receive the applicable Merger Consideration to be issued in consideration
therefor.
2.2 Exchange Ratio. The "Exchange Ratio" is as follows:
Each Company Share shall be converted into 1.5445839 shares of
Parent Common Stock in the Merger, an Exchange Ratio of Company Shares to
Parent Common Stock of 1:1.5445839. The Merger Consideration shall be
distributable by the Exchange Agent effective as of the Effective Time of the
Merger in accordance with the provisions of Section 2.4.1 herein. No
fractional Parent Common Stock shall be issued in the Merger. If the product
of the number of shares a Company shareholder holds immediately prior to the
Closing multiplied by the exchange ratio would result in the issuance of a
fractional share of Parent Common Stock, that product will be rounded down to
the nearest whole number of shares of Parent Common Stock if it is equal to or
less than the fraction of one-half (.5) of one Parent Common Stock or round up
to the nearest whole number of shares of Parent Common Stock if the said
product is greater than the fraction of one-half (.5) of one Parent Common
Stock.
2.3 Stock Options; Warrants.
2.3.1 Assumption. At the Effective Time of the Merger, all
options to purchase Company Shares then outstanding and all warrants to
purchase Company Shares then outstanding, in each case whether vested or
unvested, shall be assumed by Parent in accordance with Section 2.3.2 hereof.
2.3.2 Stock Options and Warrants. At the Effective Time of
the Merger, each outstanding option to purchase Company Shares (each, a
"Company Stock Option") and all outstanding warrants to purchase Company
Shares (each, a "Company Warrant") then outstanding, in each case whether or
not vested, shall by virtue of the Merger be assumed by Parent. Each Company
Stock Option and Company Warrant so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions of
such options immediately prior to the Effective Time of the Merger (including,
without limitation, any repurchase rights or vesting provisions and provisions
regarding the acceleration of vesting on certain transactions), except that
(i) each Company Stock Option and Company Warrant will be exercisable (or will
become exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock equal to the product of the number of Company
Shares that were issuable upon exercise of such Company Stock Option or
Company Warrant immediately prior to the Effective Time of the Merger
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock if the said product is equal to or less than the
fraction of one-half (.5) of one Parent Common Stock or rounded up to the
nearest whole number of shares of Parent Common Stock if the said product is
greater than the fraction of one-half (.5) of one Parent Common Stock, and
(ii) the per share exercise price for the shares of Parent Common Stock
issuable upon exercise of such assumed Company Stock Option and Company
Warrant will be equal to the quotient determined by dividing the exercise
price per Company Share at which such Company Stock Option and Company Warrant
was exercisable immediately prior to the Effective Time of the Merger by the
Exchange Ratio, rounded up to the nearest whole cent. Parent shall comply
with the terms of all such Company Stock Options and Company Warrants and use
its best efforts to ensure, to the extent required by, and subject to the
provisions of, the Company's stock incentive plans and permitted under the
Code or other relevant laws and regulations that any Company Stock Option that
qualified for tax treatment under Section 424(b) of the Code prior to the
Effective Time of the Merger continue to so qualify after the Effective Time
of the Merger. Parent shall take all corporate actions necessary to reserve
for issuance a sufficient number of shares of Parent Common Stock for delivery
upon exercise of all Company Stock Options and Company Warrants on the terms
set forth in this Section 2.3.2.
2.4 Exchange of Certificates.
2.4.1 Exchange Agent. As soon as reasonably practicable as
of or after the Effective Time of the Merger, but in no event later than the
second (2nd) business day following the Effective Time of the Merger, Parent
shall deposit the Initial Deposit with Leonard W. Burningham, Esq. (the
"Exchange Agent"), for the benefit of the holders of Company Shares, for
exchange in accordance with this Section 2.
2.4.2 Exchange Procedures. As soon as practicable after the
Effective Time of the Merger, each holder of an outstanding certificate or
certificates which prior thereto represented Company Shares (each, a
"Shareholder") shall, upon surrender to the Exchange Agent of such certificate
or certificates (or a lost stock affidavit and indemnity in form reasonably
satisfactory to the Exchange Agent) and acceptance thereof by the Exchange
Agent, be entitled to a certificate or certificates representing the number of
shares of Parent Common Stock into which the aggregate number of Company
Shares previously represented by such certificate or certificates surrendered
shall have been converted pursuant to this Agreement. The Exchange Agent
shall accept such certificates (or a lost stock affidavit and indemnity in
lieu thereof) upon compliance with such reasonable terms and conditions as
the Exchange Agent may impose to effect an orderly exchange thereof in
accordance with normal exchange practices. After the Effective Time of the
Merger, there shall be no further transfer on the records of the Company or
its transfer agent of certificates representing Company Shares and if such
certificates are presented to the Company for transfer, they shall be
cancelled against delivery of certificates for Parent Common Stock as
hereinabove provided. If any certificate for such Parent Common Stock is to
be issued in a name other than that in which the certificate for Company
Shares surrendered for exchange is registered, it shall be a condition of such
exchange that the certificate so surrendered shall be properly endorsed, with
signature guaranteed, or otherwise in proper form for transfer and that the
person (as defined in Section 9.2) requesting such exchange shall pay to
Parent or its transfer agent any transfer or other taxes or other costs
required by reason of the issuance of certificates for such Parent Common
Stock in a name other than that of the registered holder of the certificate
surrendered, or establish to the satisfaction of Parent or its transfer agent
that all taxes have been paid. Until surrendered as contemplated by this
Section 2.4.2, each certificate for Company Shares shall be deemed at any time
after the Effective Time of the Merger to represent only the right to receive
upon such surrender the Merger Consideration as contemplated by Section 2.1.
2.4.3 Distributions with Respect to Unexchanged Shares. No
dividends or other distributions with respect to Parent Common Stock with a
record date after the Effective Time of the Merger shall be paid to the holder
of any unsurrendered certificate for Company Shares with respect to the shares
of Parent Common Stock represented thereby until the surrender of such
certificate in accordance with this Section 2.
2.4.4 No Further Ownership Rights in Company Shares. All
shares of Parent Common Stock issued upon the surrender for exchange of
certificates representing Company Shares in accordance with the terms of this
Section 2 shall be deemed to have been issued (and paid) in full satisfaction
of all rights pertaining to the Company Shares theretofore represented by such
certificates.
2.4.5 No Liability. None of Parent, Sub, the Company or the
Exchange Agent shall be liable to any person in respect of any shares of
Parent Common Stock (or dividends or distributions with respect thereto)
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any certificates representing Company Shares shall
not have been surrendered prior to December 31, 2004, any such shares,
dividends or distributions in respect of such certificate shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interests of any person previously entitled
thereto.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Company. Except as
set forth in the disclosure schedule delivered by the Company to Parent at the
time of execution of this Agreement (the "Company Disclosure Schedule"), or a
certain schedule comprising the Company Disclosure Schedule, the Company
represents and warrants to Parent and Sub as follows:
3.1.1 Organization, Standing and Corporate Power. The
Company is duly organized, validly existing and in good standing under the
laws of the British Virgin Islands and has the requisite corporate power and
authority to carry on its business as now being conducted. The Company is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing
of its properties makes such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) would not have a material adverse effect
(as defined in Section 9.2) with respect to the Company.
3.1.2 Subsidiaries. The only direct or indirect
subsidiaries of the Company are listed in the Company Disclosure Schedule (the
"Company Subsidiaries"). All the outstanding shares of capital stock of each
such Company Subsidiary which is a corporation have been validly issued and
are fully paid and nonassessable and, except as set forth in the Company
Disclosure Schedule, are owned (of record and beneficially) by the Company,
free and clear of all liens or encumbrances. Except for the capital stock of
its subsidiaries, which are corporations, the Company does not own, directly
or indirectly, any capital stock or other ownership interest in any
corporation, partnership, business association, joint venture or other entity.
3.1.3 Capital Structure. The authorized share capital of
the Company consists of 5,000,000 Company Shares. There are 5,000,000 Company
Shares issued and outstanding. Except as set forth above, no shares or other
equity securities of the Company are issued, reserved for issuance or
outstanding. All outstanding shares of the Company are duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no outstanding bonds, debentures, notes or other
indebtedness or other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of the Company may vote. The Company
Disclosure Schedule sets forth the outstanding capitalization of the Company.
Except as set forth above, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company is a party or by which it is bound obligating
the Company to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares or other equity or voting securities of the Company or
obligating the Company to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Other than the Company Stock Options and Company Warrants, there
are no outstanding contractual obligations, commitments, understandings or
arrangements of the Company to repurchase, redeem or otherwise acquire or make
any payment in respect of any shares of the Company. There are no agreements
or arrangements pursuant to which the Company is or could be required to
register Company Shares or other securities under the Securities Act of 1933,
as amended (the "Securities Act"), or other agreements or arrangements with or
among any security holders of the Company with respect to securities of the
Company.
3.1.4 Authority; Noncontravention. The Company has the
requisite corporate and other power and authority to enter into this Agreement
and to consummate the Merger. The execution and delivery of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
hereof will not, conflict with, or result in any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or result in
the creation of any lien upon any of the properties or assets of the Company
under, (i) the Memorandum of Association or Articles of Association of the
Company, (ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
applicable to the Company, its properties or assets, or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to the Company, its properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, breaches,
violations, defaults, rights, losses or liens that individually or in the
aggregate could not have a material adverse effect with respect to the Company
or could not prevent, hinder or materially delay the ability of Company to
consummate the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration, declaration or filing
with, or notice to, any federal, state or local government or any court,
administrative agency or commission or other governmental authority, agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect
to the Company in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, except, with respect to this Agreement, for the filing of
the Articles of Merger with the Department of Commerce of the State of Utah
and the Registry of Corporate Affairs of the British Virgin Islands.
3.1.5 Absence of Certain Changes or Events. Since December
31, 2003, the Company has conducted its business only in the ordinary course
consistent with past practice, and there is not and has not been: (i) any
material adverse change with respect to the Company; (ii) any condition, event
or occurrence which individually or in the aggregate could reasonably be
expected to have a material adverse effect or give rise to a material adverse
change with respect to the Company; (iii) any event which, if it had taken
place following the execution of this Agreement, would not have been permitted
by Section 4.1 without prior consent of Parent; or (iv) any condition, event
or occurrence which could reasonably be expected to prevent, hinder or
materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement.
3.1.6 Litigation; Labor Matters; Compliance with Laws.
(a) There is no suit, action or proceeding or
investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company or any basis for any such suit, action, proceeding or
investigation that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect with respect to the Company or
prevent, hinder or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company having, or which, insofar as reasonably could
be foreseen by the Company, in the future could have, any such effect.
(b) The Company is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is it the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages or conditions
of employment nor is there any strike, work stoppage or other labor dispute
involving it pending or, to its knowledge, threatened, any of which could have
a material adverse effect with respect to the Company.
(c) The conduct of the business of the Company
complies in all material respects with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards applicable
thereto.
3.1.7 Benefit Plans. The Company is not a party to any
collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or understanding
(whether or not legally binding) under which the Company currently has an
obligation to provide benefits to any current or former employee, officer or
director of the Company (collectively, "Benefit Plans").
3.1.8 Certain Employee Payments. The Company is not a party
to any employment agreement which could result in the payment to any current,
former or future director or employee of the Company of any money or other
property or rights or accelerate or provide any other rights or benefits to
any such employee or director as a result of the transactions contemplated by
this Agreement, whether or not (i) such payment, acceleration or provision
would constitute a "parachute payment" (within the meaning of Section 280G of
the Code), or (ii) some other subsequent action or event would be required to
cause such payment, acceleration or provision to be triggered.
3.1.9 Tax Returns and Tax Payments. The Company has timely
filed all Tax Returns required to be filed by it, has paid all Taxes shown
thereon to be due and has provided adequate reserves in its financial
statements for any Taxes that have not been paid, whether or not shown as
being due on any returns. No claim for unpaid Taxes has been made or become a
lien against the property of the Company or is being asserted against the
Company, no audit or examination of any Tax Return of the Company is being
conducted by a tax authority, and no extension of the statute of limitations
on the assessment of any Taxes has been granted by the Company and is
currently in effect. As used herein, "Taxes" means all taxes of any kind,
including, without limitation, those on or measured by or referred to as
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
premium value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. As used herein, "Tax Return"
means any federal, state, local or foreign return, report, information return
or other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment or collection of any Taxes or the administration of
any laws, regulations or administrative requirements relating to any Taxes.
3.1.10 Environmental Matters. The Company is in compliance
in all material respects with all applicable Environmental Laws.
"Environmental Laws" means all applicable federal, state, local or foreign
statutes, rules, regulations, ordinances, orders, decrees and common law
relating in any manner to contamination, pollution or protection of human
health or the environment, and similar state laws.
3.1.11 Contracts and Commitments. The Company Disclosure
Schedule contains a true, complete and accurate list of each of the following
written, and to the Company's knowledge, oral, contracts, agreements,
understandings or other obligations to which the Company is a party or by
which any of its assets or properties are bound (together the "Company
Contracts"):
(a) all rental or use agreements, contracts,
covenants or obligations which may involve the payment by or to the Company of
more than $25,000;
(b) any contract, agreement, commitment or
obligation to make any capital expenditures in excess of $25,000;
(c) contracts, agreements, commitments or other
obligations with any person containing any provision or covenant limiting the
ability of the Company to engage in any line of business or to compete with or
to obtain products or services from any person or limiting the ability of any
person to compete with or to provide products or services to, or obtain
products or services from, the Company, or covering indemnification of another
person other than in the ordinary course of business;
(d) any profit-sharing or similar contract,
agreement, understanding or obligation with any person;
(e) contracts, agreements, commitments or other
obligations with respect to the purchase or sale by or to the Company of any
product, equipment, facility, or similar item that by their respective terms
do not expire or terminate or are not terminable by the Company, without
penalty, premium or other liability within 30 days or may involve the payment
by or to the Company of more than $25,000;
(f) contracts, agreements, commitments or other
obligations to provide services or facilities by or to the Company or to or by
another person which is not terminable by the Company within 30 days without
penalty, premium or other liability or involving payment by Company or the
other person of more than $25,000;
(g) all other contracts, agreements, commitments or
other obligations whether or not made in the ordinary course of business which
may involve the expenditure by the Company of funds in excess of $25,000 per
commitment (or under a group of similar commitments), or are otherwise
material to the Company; or
(h) all other contracts, agreements, commitments, or
other obligations of any kind that involve or relate to any shareholder,
officer, director, employee or consultant of the Company or any affiliate (as
defined in Section 9.2) or relative thereof.
3.1.12 Company Contract Defaults. The Company is not, or has
not, received any notice or has any knowledge that any other party is, in
default in any respect under any Company Contract; and there has not occurred
any event that with the lapse of time or the giving of notice or both would
constitute such a material default.
3.1.13 Properties. The Company has good, clear and
marketable title to all the tangible properties and tangible assets reflected
in the Company's latest balance sheet as being owned by the Company or
acquired after the date thereof which are, individually or in the aggregate,
material to the Company's business (except properties sold or otherwise
disposed of since the date thereof in the ordinary course of business), free
and clear of all material liens.
3.1.14 Intellectual Property Rights.
(a) For purposes of this Agreement, "Intellectual
Property" means shall mean any and all United States and foreign: (i) patent
registrations and patent applications (including all reissues, divisions,
continuations, continuations-in-part, extensions and reexaminations) and all
rights therein and all improvements to the inventions disclosed in each such
registration, patent or application, (ii) trademarks, service marks, trade
dress, trade names and corporate names, whether or not registered, including
but not limited to all common law rights, and registrations and applications
for registration thereof, (iii) copyrights (including but not limited to
copyrights on designs) (registered or otherwise) and registrations and
applications for registration thereof, (iv) computer software, including,
without limitation, source code, operating systems and specifications, data,
data bases, files, documentation and other materials related thereto, data and
documentation, (v) trade secrets and confidential technical and business
information (including but not limited to formulas, compositions, and
inventions reduced to practice, whether or not patentable), (vi) confidential
technology (including know-how and show-how), manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable
works, financial, marketing and business data, pricing and cost information,
business and marketing plans and customer and supplier lists and information,
(vii) any right arising under any law providing protection to industrial or
other designs, (viii) all rights to obtain and rights to apply for patents,
and to register trademarks and copyrights, and (ix) all rights to sue or
recover and retain damages and costs and attorneys fees for present and past
infringement of any of the foregoing.
(b) The Company owns, or is licensed or otherwise
has the valid rights to use, all Intellectual Property used in the conduct of
its business. The Company Disclosure Schedule contains an accurate and
complete list of all material (i) Intellectual Property owned by the Company,
(ii) Intellectual Property licensed to the Company, including a list of all
agreements related thereto, (iii) licenses granted by the Company to others to
use the Company's Intellectual Property, including a list of all agreements
related thereto (in each case excluding licenses available in consumer retail
stores or subject to "shrink-wrap" license agreements) (collectively, the
"Company Intellectual Property"). The Company owns all right, title and
interest in and to the Intellectual Property owned by it, free and clear of
any liens or encumbrances. The Company has the sole and exclusive right to
use the Company Intellectual Property licensed to it, and the consummation of
the transaction contemplated hereby will not alter or impair any such rights.
No claims have been asserted by any person challenging or questioning the
validity or effectiveness of any licenses or agreements related to the
Intellectual Property licensed by, or licensed to, the Company, and to the
knowledge of the Company, there is no valid basis for any such claim. To the
knowledge of the Company, the use by the Company of any Intellectual Property
owned or licensed to it does not violate or infringe the rights of any person.
To the knowledge of the Company, neither the Company nor any other person is
in default under any license or other agreement relating to any Company
Intellectual Property, and all such licenses and agreements are valid, in full
force and effect and enforceable. The Company has taken reasonable steps to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, the Company Intellectual Property. No present or former employee
or consultant of the Company owns or has any proprietary, financial or other
interest, direct or indirect (other than through ownership of Company Shares),
in whole or in part, in any Company Intellectual Property.
3.1.15 Transactions with Related Parties. The Company is not
a party to any contract, lease, license, commitment or arrangement, written or
oral, which, were the Company a "registrant" under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), would be required to be disclosed
pursuant to Item 404(a) or (c) of Regulation S-K as promulgated by the
Securities and Exchange Commission (the "SEC"), and there are no loans
outstanding to or from any person specified in Item 404(a) of Regulation S-K
from or to the Company.
3.1.16 No Guaranties. None of the obligations or liabilities
of the Company incurred in connection with the operation of its business is
guaranteed by or subject to a similar contingent obligation of any other
person. The Company has not guaranteed or become subject to a similar
contingent obligation in respect of the obligations or liabilities of any
other person. There are no outstanding letters of credit, surety bonds or
similar instruments of the Company or any of its affiliates.
3.1.17 Insurance. The Company is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which the Company is
engaged. The Company does not have any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business without a significant increase in cost.
3.1.18 Records. The books of account, corporate records and
minute books of the Company are complete and correct in all material respects.
3.1.19 No Brokers or Finders. Other than its engagement of
WestPark Capital, Inc., the Company has not, and its affiliates, officers,
directors or employees have not, employed any broker or finder or incurred any
liability for any brokerage or finder's fee or commissions or similar payment
in connection with any of the transactions contemplated hereby.
3.1.20 Investment Representations.
(a) For the purpose of this Section 3.1.20, the term
"Parent Common Stock" shall include any securities into which the Parent
Common Stock may be exchanged or converted.
(b) The Company has informed each of the
Shareholders (i) that the shares of Parent Common Stock to be issued to such
Shareholder pursuant to this Agreement have not been registered for sale under
any federal or state securities laws and that such shares of Parent Common
Stock are being offered and sold to such Stockholder pursuant to an exemption
from registration provided under Regulation S and/or Section 4(2) of the
Securities Act, (ii) that such Shareholder is acquiring such shares of Parent
Common Stock for such Shareholder's own account for investment purposes and
without a view to any distribution thereof, and (iii) that such Shareholder
must bear the economic risk of the investment in such shares of Parent Common
Stock for an indefinite period of time as such shares of Parent Common Stock
cannot be sold unless subsequently registered under such laws or unless an
exemption from registration is available.
(c) Each of the Shareholders is either:
(i) is an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act; or
(ii) (A) is not a "U.S. person" within the
meaning of Rule 901 of Regulation S under the Securities Act, (B) is not
acquiring the Parent Common Stock for the account of or benefit of any U.S.
person, and (C) is not a U.S. person who purchased securities in a transaction
that did not require registration under the Securities Act.
(d) Each Shareholder will resell the Parent Common
Stock acquired pursuant hereto only in accordance with the provisions of this
Regulation S under the Securities Act (if applicable), pursuant to
registration under the Securities Act or pursuant to an available exemption
from registration.
(e) Each Shareholder described in Section
3.1.20(c)(ii) above will refrain from engaging in hedging transactions with
regard to the Parent Common Stock acquired pursuant hereto unless in
compliance with the Securities Act.
(f) The Company agrees that the certificates
evidencing the shares of Parent Common Stock shall bear substantially the
following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
EXCEPT IN ACCORDANCE WITH [REGULATION S UNDER THE ACT,]
PURSUANT TO A REGISTRATION STATEMENT IN EFFECT WITH RESPECT
TO THE SECURITIES UNDER THE ACT OR AN EXEMPTION FROM
REGISTRATION UNDER THE ACT. [HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE
WITH THE ACT]."
(g) With respect to any shares of Parent Common
Stock issued pursuant hereto in reliance on the exemption from registration
under the Securities Act provided by Regulation S under the Securities Act,
Parent shall refuse to register any transfer of such Parent Common Stock not
made in accordance with the provisions of such Regulation S, pursuant to
registration under the Securities Act, or pursuant to an available exemption
from registration.
3.1.21 Tax Reporting. Consistent with the intent of the
parties hereto, the Company shall treat, and cause its affiliates to so treat,
the Merger as a reorganization under Section 368(a)(1)(A) by reason of Section
368(a)(2)(E) with respect to all Tax Returns, to the extent consistent with
law.
3.1.22 Board Recommendation. The Board of Directors of the
Company has unanimously determined that the terms of the Merger are fair to
and in the best interests of the shareholders of the Company and recommended
that the holders of the Company Shares approve the Merger.
3.1.23 Required Company Vote. The affirmative vote of the
holders of a majority of the Company Shares is the only vote of the holders of
any class or series of the Company's securities necessary to approve the
Merger (the "Company Shareholder Approval").
3.2 Representations and Warranties of Parent and Sub. Except as
set forth in the disclosure schedule delivered by Parent to the Company at the
time of execution of this Agreement (the "Parent Disclosure Schedule"), Parent
and Sub represent and warrant to the Company as follows:
3.2.1 Organization, Standing and Corporate Power. Each of
Parent, Sub and the other Parent Subsidiaries (as defined in Section 3.2.2) is
(or at Closing will be) duly organized, validly existing and in good standing
under the laws of its State of organization, and has the requisite corporate
power and authority to carry on its business as now being conducted. Each of
Parent, Sub and the other Parent Subsidiaries is duly qualified or licensed to
do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
would not have a material adverse effect with respect to Parent.
3.2.2 Subsidiaries. The only direct or indirect
subsidiaries of Parent are listed in the Parent Disclosure Schedule (together
with Sub, the "Parent Subsidiaries"). All the outstanding shares of capital
stock of each such Parent Subsidiary which is a corporation have been validly
issued and are fully paid and nonassessable and, except as set forth in the
Parent Disclosure Schedule, are owned (of record and beneficially) by Parent,
free and clear of all lien or encumbrances of any kind. Except for the
capital stock of its subsidiaries, which are corporations, Parent does not
own, directly or indirectly, any capital stock or other ownership interest in
any corporation, partnership, business association, joint venture or other
entity.
3.2.3 Capital Structure. The authorized capital stock of
Parent consists of 50,000,000 shares of Parent Common Stock, $0.001 par value,
of which 1,009,643 shares of Parent Common Stock shall be issued and
outstanding immediately prior to the Effective Time of the Merger and no
shares of Parent Common Stock are issuable upon the exercise of outstanding
warrants, convertible notes, options and otherwise. Except as set forth
above, no shares of capital stock or other equity securities of Parent are
issued, reserved for issuance or outstanding. All outstanding shares of
capital stock of Parent are, and all shares which may be issued pursuant to
this Agreement will be, when issued, duly authorized, validly issued, fully
paid and nonassessable and, not subject to preemptive rights, and issued in
compliance with all applicable state and federal laws concerning the issuance
of securities. There are no outstanding bonds, debentures, notes or other
indebtedness or other securities of Parent having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of Parent may vote. Except as set forth
above, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which
Parent or any of its subsidiaries is a party or by which any of them is bound
obligating Parent or any its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
equity securities of Parent or any of its subsidiaries or obligating Parent or
any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity
securities of Parent or any of its subsidiaries or obligating Parent or any of
its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding contractual obligations, commitments,
understandings or arrangements of Parent or any of its subsidiaries to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of Parent or any of its subsidiaries. There are no
agreements or arrangements pursuant to which Parent is or could be required to
register shares of Parent Common Stock or other securities under the
Securities Act or other agreements or arrangements with or among any
securityholders of Parent with respect to securities of Parent. The
authorized capital stock of Sub consists of 1,000 shares of common stock, of
which 1,000 shares have been validly issued, are fully paid and nonassessable,
were issued in compliance with all applicable state and federal laws
concerning the issuance of securities, and are owned by Parent, free and clear
of any lien.
3.2.4 Authority; Noncontravention. Parent and Sub have all
requisite corporate authority to enter into this Agreement and to consummate
the transactions contemplated by this Agreement. The execution and delivery
of this Agreement by Parent and Sub and the consummation by Parent and Sub of
the transactions contemplated by this Agreement have been (or at Closing will
have been) duly authorized by all necessary corporate action on the part of
Parent and Sub. This Agreement has been duly executed and delivered by and
constitutes a valid and binding obligation of each of Parent and Sub,
enforceable against each such party in accordance with its terms. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement will not, conflict with, or result in any breach or
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
or "put" right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any lien upon any of the properties or
assets of Parent or any of its subsidiaries under, (i) the articles of
incorporation or bylaws of Parent or Sub or the comparable charter or
organizational documents of any other subsidiary of Parent, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Parent, Sub
or any other subsidiary of Parent or their respective properties or assets, or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance,
rule, regulation or arbitration award applicable to Parent, Sub or any other
subsidiary of Parent or their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such conflicts, breaches, violations,
defaults, rights, losses or liens that individually or in the aggregate could
not have a material adverse effect with respect to Parent or could not
prevent, hinder or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to,
any Governmental Entity is required by or with respect to Parent, Sub or any
other subsidiary of Parent in connection with the execution and delivery of
this Agreement by Parent or Sub or the consummation by Parent or Sub, as the
case may be, of any of the transactions contemplated by this Agreement, except
for the filing of the Articles of Merger with the Department of Commerce of
the State of Utah and the Registry of Corporate Affairs of the British Virgin
Islands, as required, and such other consents, approvals, orders,
authorizations, registrations, declarations, filings or notices as may be
required under the "blue sky" laws of various states.
3.2.5 SEC Documents; Undisclosed Liabilities. Parent has
filed all reports, schedules, forms, statements and other documents as
required by the SEC in a timely basis (or has received a valid extension of
such time of filing and has filed any such reports or other documents prior to
the expiration of any such extension), and Parent has delivered or made
available to the Company all reports, schedules, forms, statements and other
documents filed with the SEC (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference
therein, the "Parent SEC Documents"). As of their respective dates, the Parent
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Parent SEC
documents, and none of the Parent SEC Documents (including any and all
consolidated financial statements included therein) as of such date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a subsequent filing
with the SEC (a copy of which has been provided to the Company prior to the
date of this Agreement), none of the Parent SEC Documents contains any untrue
statement of a material fact or omits to state any material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements of Parent
included in such Parent SEC Documents comply as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles in the United States ("GAAP")
(except, in the case of unaudited consolidated quarterly statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
and accurately present the consolidated financial position of Parent and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of operations and changes in cash flows for the periods then ended (subject,
in the case of unaudited quarterly statements, to normal year-end audit
adjustments as determined by Parent's independent accountants). Except as set
forth in the Parent SEC Documents, at the date of the most recent audited
financial statements of Parent included in the Parent SEC Documents, neither
Parent nor any of its subsidiaries had, and since such date neither Parent nor
any of such subsidiaries has incurred, any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect with respect to Parent.
3.2.6 Absence of Certain Changes or Events. Except as
disclosed in the Parent SEC Documents, since the date of the most recent
financial statements included in the Parent SEC Documents, Parent has
conducted its business only in the ordinary course consistent with past
practice in light of its current business circumstances, and there is not and
has not been: (i) any material adverse change with respect to Parent; (ii) any
condition, event or occurrence which, individually or in the aggregate, could
reasonably be expected to have a material adverse effect or give rise to a
material adverse change with respect to Parent; (iii) any event which, if it
had taken place following the execution of this Agreement, would not have been
permitted by Section 4.1 without the prior consent of the Company; or (iv) any
condition, event or occurrence which could reasonably be expected to prevent,
hinder or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement.
3.2.7 Interim Operations of Sub. Sub was formed in March
2004 solely for the purpose of engaging in the transactions contemplated
hereby, has (or will have) engaged in no other business activities and has (or
will have) conducted its operations only as contemplated hereby.
3.2.8 Litigation; Labor Matters; Compliance with Laws.
(a) There is no suit, action or proceeding or
investigation pending or, to the knowledge of Parent, threatened against or
affecting Parent or any basis for any such suit, action, proceeding or
investigation that, individually or in the aggregate, could reasonably be
expected to have a material adverse effect with respect to Parent or prevent,
hinder or materially delay the ability of Parent to consummate the
transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent having, or which, insofar as reasonably could be
foreseen by Parent, in the future could have, any such effect.
(b) Parent is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization, nor is it the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it to bargain with any labor organization as to wages or conditions
of employment nor is there any strike, work stoppage or other labor dispute
involving it pending or, to its knowledge, threatened, any of which could have
a material adverse effect with respect to Parent.
(c) The conduct of the business of Parent complies
in all material respects with all statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees or arbitration awards applicable thereto.
3.2.9 Benefit Plans. Parent is not a party to any Benefit
Plan under which Parent currently has an obligation to provide benefits to any
current or former employee, officer or director of Parent.
3.2.10 Certain Employee Payments. Parent is not a party to
any employment agreement which could result in the payment to any current,
former or future director or employee of Parent of any money or other property
or rights or accelerate or provide any other rights or benefits to any such
employee or director as a result of the transactions contemplated by this
Agreement, whether or not (i) such payment, acceleration or provision would
constitute a "parachute payment" (within the meaning of Section 280G of the
Code), or (ii) some other subsequent action or event would be required to
cause such payment, acceleration or provision to be triggered.
3.2.11 Tax Returns and Tax Payments. Parent has timely filed
all Tax Returns required to be filed by it, has paid all Taxes shown thereon
to be due and has provided adequate reserves in its financial statements for
any Taxes that have not been paid, whether or not shown as being due on any
returns. No claim for unpaid Taxes has been made or become a lien against the
property of Parent or is being asserted against Parent, no audit or
examination of any Tax Return of Parent is being conducted by a tax authority,
and no extension of the statute of limitations on the assessment of any Taxes
has been granted by Parent and is currently in effect.
3.2.12 Environmental Matters. Parent is in compliance in all
material respects with all applicable Environmental Laws. No material
expenditures are or will be required in order for Parent to comply with any
applicable Environmental Law. No Hazardous Materials are used or have been
used, stored, or disposed of by Parent or by any other person on any property
owned, leased or used by Parent. Parent has not received any written or oral
notice, report or other information regarding any actual or alleged violation
of Environmental Laws or any liabilities, including any investigatory,
remedial or corrective liabilities, relating to Parent, its sub-surface
mineral rights, or its facilities arising under Environmental Laws. Neither
Parent nor any of its predecessors or affiliates has, either expressly or by
operation of law, assumed or undertaken any liability, including any
obligation for corrective or remedial action, of any other person relating to
Environmental Laws. Without limiting the foregoing, Parent does not have any
liabilities for clean-up, remediation or other liabilities under Environmental
Laws arising out of or in connection with its exploration, production or other
mining activities. For purposes of this Agreement, "Hazardous Materials"
means (a) petroleum and petroleum products, heavy metals, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
polychlorinated biphenyls, and radon gas, (b) any other chemicals, materials
or substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "contaminants" or "pollutants", or words of
similar import, under any applicable Environmental Law, and (c) any other
chemical, material or substances exposure to which is regulated by any
Governmental Entity.
3.2.13 Contracts and Commitments. The Parent Disclosure
Schedule contains a true, complete and accurate list of each of the following
written, and to Parent's knowledge, oral, contracts, agreements,
understandings or other obligations to which Parent is a party or by which any
of its assets or properties are bound (together the "Parent Contracts"):
(a) all rental or use agreements, contracts,
covenants or obligations which may involve the payment by or to Parent of more
than $25,000;
(b) any contract, agreement, commitment or
obligation to make any capital expenditures in excess of $25,000;
(c) contracts, agreements, commitments or other
obligations with any person containing any provision or covenant limiting the
ability of Parent to engage in any line of business or to compete with or to
obtain products or services from any person or limiting the ability of any
person to compete with or to provide products or services to, or obtain
products or services from, Parent, or covering indemnification of another
person other than in the ordinary course of business;
(d) any profit-sharing or similar contract,
agreement, understanding or obligation with any person;
(e) contracts, agreements, commitments or other
obligations with respect to the purchase or sale by or to Parent of any
product, equipment, facility, or similar item that by their respective terms
do not expire or terminate or are not terminable by Parent, without penalty,
premium or other liability within 30 days or may involve the payment by or to
Parent of more than $25,000;
(f) contracts, agreements, commitments or other
obligations to provide services or facilities by or to Parent or to or by
another person which is not terminable by Parent within 30 days without
penalty, premium or other liability or involving payment by Parent or the
other person of more than $25,000;
(g) all other contracts, agreements, commitments or
other obligations whether or not made in the ordinary course of business which
may involve the expenditure by Parent of funds in excess of $25,000 per
commitment (or under a group of similar commitments), or are otherwise
material to Parent; or
(h) all other contracts, agreements, commitments, or
other obligations of any kind that involve or relate to any shareholder,
officer, director, employee or consultant of Parent or any affiliate or
relative thereof.
3.2.14 Parent Contract Defaults. Parent is not, or has not,
received any notice or has any knowledge that any other party is, in default
in any respect under any Parent Contract; and there has not occurred any event
that with the lapse of time or the giving of notice or both would constitute
such a material default.
3.2.15 Properties. Parent has good, clear and marketable
title to all the tangible properties and tangible assets reflected in the
Parent's latest balance sheet included in the Parent SEC Documents (the
"Parent Balance Sheet") as being owned by Parent or acquired after the date
thereof which are, individually or in the aggregate, material to Parent's
business (except properties sold or otherwise disposed of since the date
thereof in the ordinary course of business), free and clear of all liens or
encumbrances of any kind.
3.2.16 Intellectual Property Rights. Parent owns, or is
licensed or otherwise has the valid rights to use, all Intellectual Property
used in the conduct of its business. The Parent Disclosure Schedule contains
an accurate and complete list of all material (i) Intellectual Property owned
by the Parent, (ii) Intellectual Property licensed to Parent, including a list
of all agreements related thereto, (iii) licenses granted by Parent to others
to use Parent's Intellectual Property, including a list of all agreements
related thereto (in each case excluding licenses available in consumer retail
stores or subject to "shrink-wrap" license agreements) (collectively, the
"Parent Intellectual Property"). Parent owns all right, title and interest in
and to the Intellectual Property owned by it, free and clear of any liens or
encumbrances. Parent has the sole and exclusive right to use the Parent
Intellectual Property licensed to it, and the consummation of the transaction
contemplated hereby will not alter or impair any such rights. No claims have
been asserted by any person challenging or questioning the validity or
effectiveness of any licenses or agreements related to the Intellectual
Property licensed by, or licensed to, Parent, and to the knowledge of Parent,
there is no valid basis for any such claim. To the knowledge of Parent, the
use by Parent of any Intellectual Property owned or licensed to it does not
violate or infringe the rights of any person. To the knowledge of Parent,
neither Parent nor any other person is in default under any license or other
agreement relating to any Parent Intellectual Property, and all such licenses
and agreements are valid, in full force and effect and enforceable. Parent
has taken reasonable steps to safeguard and maintain the secrecy and
confidentiality of, and its proprietary rights in, the Parent Intellectual
Property. No present or former employee or consultant of Parent owns or has
any proprietary, financial or other interest, direct or indirect (other than
through ownership of Parent Common Stock), in whole or in part, in any Parent
Intellectual Property.
3.2.17 Transactions with Related Parties. Other than as
described in the Parent SEC Documents, Parent is not a party to any contract,
lease, license, commitment or arrangement, written or oral, which would be
required to be disclosed pursuant to Item 404(a) or (c) of Regulation S-K as
promulgated by the SEC, and there are no loans outstanding to or from any
person specified in Item 404(a) of Regulation S-K from or to the Company.
3.2.18 No Guaranties. None of the obligations or liabilities
of Parent incurred in connection with the operation of its business is
guaranteed by or subject to a similar contingent obligation of any other
person. Parent has not guaranteed or become subject to a similar contingent
obligation in respect of the obligations or liabilities of any other person.
There are no outstanding letters of credit, surety bonds or similar
instruments of Parent or any of its affiliates.
3.2.19 Insurance. Parent is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which Parent is
engaged. Parent does not have any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business without a significant increase in cost.
3.2.20 Records. The books of account, corporate records and
minute books of Parent are complete and correct in all material respects.
Complete and accurate copies of all such books of account, corporate records
and minute books and of the stock register of Parent have been provided to the
Comapny.
3.2.21 No Brokers or Finders. Parent has not, and its
affiliates, officers, directors or employees have not, employed any broker or
finder or incurred any liability for any brokerage or finder's fee or
commissions or similar payment in connection with any of the transactions
contemplated hereby.
3.2.22 Tax Reporting. Consistent with the intent of the
parties hereto, Parent shall treat, and cause its affiliates to so treat, the
Merger as a reorganization under Section 368(a)(1)(A) by reason of Section
368(a)(2)(E) with respect to all Tax Returns, to the extent consistent with
law.
3.2.23 Sarbanes-Oxley; Internal Accounting Controls. Parent
is in material compliance with all provisions of the Sarbanes-Oxley Act of
2002 which are applicable to it. Parent and the Parent Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences. Parent has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for Parent and designed
such disclosure controls and procedures to ensure that material information
relating to Parent, including its subsidiaries, is made known to the
certifying officers by others within those entities, particularly during the
period in which Parent's most recently filed periodic report under the
Exchange Act, as the case may be, is being prepared. Parent's certifying
officers have evaluated the effectiveness of Parent's controls and procedures
as of the date prior to the filing date of the most recently filed periodic
report under the Exchange Act (such date, the "Evaluation Date"). Parent
presented in its most recently filed periodic report under the Exchange Act
the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no significant
changes in Parent's internal controls (as such term is defined in Item 307(b)
of Regulation S-K under the Exchange Act) or, to Parent's knowledge, in other
factors that could significantly affect Parent's internal controls.
3.2.24 Application of Takeover Protections. Parent and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under Parent's Articles of Incorporation (or similar
charter documents) or the laws of its state of incorporation that is or could
become applicable to the Company or the Shareholders as a result of the
transaction contemplated by this Agreement, including without limitation
Parent's issuance of the Parent Common Stock pursuant hereto.
3.2.25 Private Placement. Assuming the accuracy of the
representations and warranties set forth in Section 3.1.20, no registration
under the Securities Act is required for the offer and issuance of the Parent
Common Stock by Parent to the Shareholders of the Company at the Effective
Time of the Merger as contemplated hereby.
3.2.26 No Integrated Offering. Assuming the accuracy of the
representations and warranties set forth in Section 3.1.20, neither Parent,
nor any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause the
issuance of the Parent Common Stock pursuant to this Agreement to be
integrated with prior offerings by Parent for purposes of the Securities Act.
3.2.27 Registration Rights. No person has any right to cause
Parent to effect the registration under the Securities Act of any securities
of Parent.
3.2.28 Spin-Off of Mining Interests. The contemplated
contribution of Parent's mining rights and interests to its Nevada subsidiary
and the distribution of the capital stock of such subsidiary to Parent's
shareholders immediately subsequent to the Effective Time of the Merger (the
"Spin-Off") will not result in any Tax obligations or liabilities of Parent or
other adverse Tax consequences with respect to Parent. The Spin-Off will be
concluded by Parent in compliance with the Securities Act and all applicable
securities laws of any Governmental Entity. The Distribution Agreement, dated
on or about March 5, 2004, by and among Parent; Tintic Gold Mining Company, a
Nevada corporation and wholly-owned subsidiary of Parent; and George P.
Christopulos, Hugh N. Coltharp and Jack R. Coombs (the "Distribution
Agreement") has been duly executed by all persons which are parties thereto
and constitutes the valid and binding obligation of each person a party
thereto, enforceable in accordance with its terms. For avoidance of doubt, the
Shareholders of the Company shall not participate in the Spin-Off and their
respective shares of Parent Common Stock to be issued under the Agreement as
Merger Consideration shall not be entitled to receive any dividend related to
the Spin-Off.
3.2.29 Board Recommendation. The Board of Directors of
Parent has unanimously determined that the terms of the Merger are fair to and
in the best interests of the shareholders of Parent.
4. COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.
4.1 Conduct of Company and Parent. Except as expressly
permitted by this Agreement, between the date of this Agreement and the
Effective Time of the Merger, each of Parent and the Company shall conduct its
business only in the ordinary course in substantially the same manner as
heretofore conducted, and use all its reasonable efforts to preserve intact
its present business organization and employees and to preserve the goodwill
of persons with which it has business relations. Without limiting the
generality of the foregoing, except as otherwise expressly provided in this
Agreement, between the date of this Agreement and the Effective Time of the
Merger, each of Parent and the Company shall pay accounts payable and pay and
perform other obligations of its business when they become due and payable in
the ordinary course of business consistent with past practice, or when
required to be performed, as the case may be, and shall (unless otherwise
mutually agreed to in writing):
4.1.1 not amend or alter its memorandum or articles of
incorporation, bylaws, or similar charter documents;
4.1.2 not engage in any transaction, except in the normal
and ordinary course of business, or create or suffer to exist any lien or
other encumbrance upon any of its assets or which will not be discharged in
full prior to the Effective Time of the Merger;
4.1.3 not sell, assign or otherwise transfer any of its
assets, or cancel or compromise any debts or claims relating to their assets,
other than for fair value, in the ordinary course of business, and consistent
with past practice;
4.1.4 not fail to use reasonable efforts to preserve intact
its present business organizations, keep available the services of their
employees and preserve its material relationships with customers, suppliers,
licensors, licensees, distributors and others, to the end that its good will
and on-going business not be impaired prior to the Effective Time of the
Merger;
4.1.5 except for matters related to complaints by former
employees related to wages, not suffer or permit any material adverse change
to occur with respect to Company and Parent or their business or assets;
4.1.6 not organize any subsidiary or acquire any capital
stock or other equity securities of any person or any equity or ownership
interest in any business, other than in connection with the Spin-Off and as
contemplated by the Distribution Agreement;
4.1.7 not enter into any instrument which would constitute a
Company Contract or Parent Contract, as applicable, or enter into any material
amendment, supplement or waiver in respect of any such Company Contract or
Parent Contract;
4.1.8 not incur any severance pay obligation by reason of
this Agreement or the transactions contemplated hereby;
4.1.9 not grant or extend any power of attorney other than
in the ordinary course of business which does not affect a material part of
its business;
4.1.10 keep in full force and effect insurance comparable in
amount and scope of coverage to insurance now carried by it;
4.1.11 not make any material change with respect to their
business in accounting or bookkeeping methods, principles or practices, except
as required by GAAP.
4.1.12 promptly advise the other party in writing of any
material adverse effect with respect to it; or
4.1.13 agree or otherwise commit, whether in writing or
otherwise, to do, or take any action or omit to take any action that would
result in, any of the foregoing.
5. ADDITIONAL AGREEMENTS.
5.1 Shareholders Meetings. The Company shall, as promptly as
practicable following the execution of this Agreement, call, give notice of,
convene and hold a meeting of its shareholders for the purpose of approving
this Agreement and the transactions contemplated by this Agreement or obtain
the unanimous written consent of its shareholders (if legally permitted) for
the same aforementioned purpose. Sub shall, as promptly as practicable
following the execution of this Agreement, call, give notice of, convene and
hold a meeting of its shareholders for the purpose of approving this Agreement
and the transactions contemplated by this Agreement or obtain the unanimous
written consent of its shareholders (if legally permitted) for the same
aforementioned purpose.
5.2 Access to Information; Confidentiality.
5.2.1 The Company shall, and shall cause its officers,
employees, counsel, financial advisors and other representatives to, afford to
Parent and its representatives reasonable access during normal business hours
during the period prior to the Effective Time of the Merger to its properties,
books, contracts, commitments, personnel and records and, during such period,
the Company shall, and shall cause its officers, employees and representatives
to, furnish promptly to Parent all information concerning its business,
properties, financial condition, operations and personnel as such other party
may from time to time reasonably request. For the purposes of determining the
accuracy of the representations and warranties of the Company set forth herein
and compliance by the Company of its obligations hereunder, during the period
prior to the Effective Time of the Merger, Parent shall provide the Company
and its representatives with reasonable access during normal business hours to
its properties, books, contracts, commitments, personnel and records as may be
necessary to enable the Company to confirm the accuracy of the representations
and warranties of Parent set forth herein and compliance by Parent and Sub of
their obligations hereunder, and, during such period, Parent shall, and shall
cause its subsidiaries, officers, employees and representatives to, furnish
promptly to the Company upon its request (i) a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities laws and (ii) all
other information concerning its business, properties, financial condition,
operations and personnel as such other party may from time to time reasonably
request. Except as required by law, each of the Company, Sub, and Parent will
hold, and will cause its respective directors, officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in confidence.
5.2.2 No investigation pursuant to this Section 5.2 shall
affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
5.3 Best Efforts. Upon the terms and subject to the conditions
set forth in this Agreement, each of the parties agrees to use its best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement. Parent, Sub and the Company will use their
best efforts and cooperate with one another (i) in promptly determining
whether any filings are required to be made or consents, approvals, waivers,
permits or authorizations are required to be obtained (or, which if not
obtained, would result in an event of default, termination or acceleration of
any agreement or any put right under any agreement) under any applicable law
or regulation or from any Governmental Entities or third parties, including
parties to loan agreements or other debt instruments and including such
consents, approvals, waivers, permits or authorizations as may be required to
transfer the assets and related liabilities of the Company to the Surviving
Corporation in the Merger, in connection with the transactions contemplated by
this Agreement, and (ii) in promptly making any such filings, in furnishing
information required in connection therewith and in timely seeking to obtain
any such consents, approvals, permits or authorizations. Parent and the
Company shall mutually cooperate in order to facilitate the achievement of the
benefits reasonably anticipated from the Merger.
5.4 Public Announcements. Parent and Sub, on the one hand, and
the Company, on the other hand, will consult with each other before issuing,
and provide each other the reasonable opportunity to review and comment upon,
any press release or other public statements with respect to the transactions
contemplated by this Agreement. The parties agree that the initial press
release or releases to be issued with respect to the transactions contemplated
by this Agreement shall be mutually agreed upon prior to the issuance thereof.
Notwithstanding the foregoing, Company may disclose the contemplated Merger in
letters to the Company's optionees for purposes of fulfilling the Company's
obligations under any stock option or incentive plan of the Company.
5.5 Amending Schedules. From time to time prior to the Closing,
the Company and Parent shall promptly supplement or amend the Company
Disclosure Schedules or Parent Disclosure Schedules, as applicable, hereto
with respect to any matter arising after the date of this Agreement which, if
existing or occurring at the date of this Agreement, would have been required
to have been set forth in the Company Disclosure Schedules or Parent
Disclosure Schedules, as applicable. Such supplement or amendment shall have
the effect of curing any related misrepresentation or breach of warranty made
in connection with the transactions contemplated by this Agreement; provided,
however, each party shall have a commercially reasonable period of time
following receipt of any supplemented or amended Company Disclosure Schedules
or Parent Disclosure Schedules, as applicable, to elect (i) to terminate this
Agreement without any further liability to any other party hereunder, or (ii)
in such non-amending party's sole discretion, to elect to waive such breach
and consummate the transactions contemplated by this Agreement.
5.6 Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses, and Parent shall pay and discharge all of
its costs and expenses on or prior to the Effective Time of the Merger.
5.7 Directors and Officers. On or prior to the Effective Date,
Parent shall take each of the following actions:
5.7.1 Parent shall have obtained and provided the Company
with copies of written resignations from each of its directors and officers,
which resignations shall be effective: (i) with respect to all officers of
Parent and one director of Parent, at the Effective Time of the Merger, and
(ii) with respect to the remaining directors, on the date which is ten (10)
days following filing with the Securities and Exchange Commission and
transmission to all shareholders of Parent of an information statement meeting
the requirements of Rule 14f-1 under the Exchange Act (such date is referred
to herein as the "Board Transition Date").
5.7.2 Parent shall have taken all action to cause Wei Li and
Da-chang Ju to be elected to its Board of Directors effective as of the
Effective Date of the Merger and for James Nian Zhan, Lian-jun Luo and Yun-
long Zhang to be elected to its Board of Directors effective as of the Board
Transition Date.
5.7.3 Parent shall have appointed each of following
individuals to the office set forth opposite such individual's name, effective
as of the Effective Date of the Merger:
Name Title
Wei Li Chairman of the Board & Chief Executive Officer
Lian-jun Luo Chief Financial Officer
James Nian Zhan Secretary
5.8 Post-Closing Conduct of Business. Except as expressly
permitted by this Agreement, between the Closing and the Board Transition
Date, Parent shall conduct the combined business of Parent and the Company
only in the ordinary course in substantially the same manner as heretofore
conducted, and use all its reasonable efforts to preserve intact the combined
business organization and employees and to preserve the goodwill of persons
with which it has business relations. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement or
consented to in writing by each of the directors appointed to Parent's Board
of Directors at the Effective Time of the Merger pursuant to Section 5.7.2,
between the Closing and the Board Transition Date, Parent shall:
5.8.1 not amend or alter its articles of incorporation or
bylaws, except as provided in Section 5.9 below;
5.8.2 not engage in any transaction, except in the normal
and ordinary course of business, or create or suffer to exist any lien or
other encumbrance upon any of its assets;
5.8.3 not sell, assign or otherwise transfer any of its
assets, or cancel or compromise any debts or claims relating to their assets,
other than for fair value, in the ordinary course of business;
5.8.4 not fail to use reasonable efforts to preserve intact
its present business organizations, keep available the services of their
employees and preserve its material relationships with customers, suppliers,
licensors, licensees, distributors and others, to the end that its good will
and on-going business not be impaired prior to the Board Transition Date;
5.8.5 not suffer or permit any material adverse change to
occur with respect to Parent or its business or assets;
5.8.6 not organize any subsidiary or acquire any capital
stock or other equity securities of any person or any equity or ownership
interest in any business, other than in connection with the Spin-Off and as
contemplated by the Distribution Agreement;
5.8.7 not enter into any instrument which would constitute a
Parent Contract, as applicable, or enter into any material amendment,
supplement or waiver in respect of any such Parent Contract;
5.8.8 not grant or extend any power of attorney other than
in the ordinary course of business which does not affect a material part of
its business;
5.8.9 not make any material change with respect to its
business in accounting or bookkeeping methods, principles or practices, except
as required by GAAP;
5.8.10 not issue any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any liability for borrowed money or
capitalized lease contract;
5.8.11 not declare, set aside, or paid any dividend or made
any distribution with respect to its equity securities (whether in cash or in
kind) or redeemed, purchased, or otherwise acquired any of its equity
securities, except as provided in Section 5.9; or
5.8.12 agree or otherwise commit, whether in writing or
otherwise, to do, or take any action or omit to take any action that would
result in, any of the foregoing.
5.9 Stock Split; Name Change. Following the Effective Date of
the Merger, Parent and the Company shall cause the Board of Directors to
approve: (i) a four-for-one forward stock split with respect to the Parent
Common Stock (such that each holder of Parent Common Stock will receive three
(3) additional shares of Parent Common Stock for every share of Parent Common
Stock held on the record date of the stock split), and (ii) a change the
corporate name of Parent to such name as shall be directed by the Company.
5.10 No Solicitation. Except as previously agreed to in writing
by the other party, neither Company nor Parent shall authorize or permit any
of its officers, directors, agents, representatives, or advisors to (a)
solicit, initiate or encourage or take any action to facilitate the submission
of inquiries, proposals or offers from any person relating to any matter
concerning any merger, consolidation, business combination, recapitalization
or similar transaction involving Company or Parent, respectively, other than
the transaction contemplated by this Agreement or any other transaction the
consummation of which would or could reasonably be expected to impede,
interfere with, prevent or delay the Merger or which would or could be
expected to dilute the benefits to the Company of the transactions
contemplated hereby. The Company or Parent will immediately cease and cause
to be terminated any existing activities, discussions and negotiations with
any parties conducted heretofore with respect to any of the foregoing.
6. CONDITIONS PRECEDENT.
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
6.1.1 Shareholder Approval. Each of the Company Shareholder
Approval and the approval of Sub's shareholders shall have been obtained.
6.1.2 OTCBB Clearance. The shares of Parent Common Stock
shall have been cleared for quotation on the Over-the-Counter Bulletin Board.
6.1.3 No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect.
6.1.4 No Dissent. Holders of no more than five percent (5%)
of the Company Shares shall have dissented to the Merger.
6.2 Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
following conditions:
6.2.1 Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, unless made as of another date, in which case they shall be true and
correct in all material respects as of such date. Parent shall have received
a certificate signed on behalf of the Company by the President or Chief
Executive Officer of the Company to such effect.
6.2.2 Performance of Obligations of the Company. The
Company shall have performed the obligations required to be performed by it
under this Agreement at or prior to the Closing Date (except for such failures
to perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a material adverse effect with
respect to the Company or adversely affect the ability of the Company to
consummate the transactions herein contemplated or perform its obligations
hereunder), and Parent shall have received a certificate signed on behalf of
the Company by the President or Chief Executive Officer of the Company to such
effect.
6.2.3 Consents, etc. Parent shall have received evidence,
in form and substance reasonably satisfactory to it, that such licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties as necessary in connection
with the transactions contemplated hereby have been obtained.
6.2.4 No Litigation. There shall not be pending or
threatened by any Governmental Entity any suit, action or proceeding (or by
any other person any suit, action or proceeding which has a reasonable
likelihood of success), (i) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by
this Agreement or seeking to obtain from Parent or any of its subsidiaries any
damages that are material in relation to Parent and its subsidiaries taken as
a whole, (ii) seeking to prohibit or limit the ownership or operation by the
Company, Parent or any of its subsidiaries of any material portion of the
business or assets of the Company, Parent or any of its subsidiaries, or to
dispose of or hold separate any material portion of the business or assets of
the Company, Parent or any of its subsidiaries, as a result of the Merger or
any of the other transactions contemplated by this Agreement, (iii) seeking to
impose limitations on the ability of Parent or Sub to acquire or hold, or
exercise full rights of ownership of, any Company Shares or Common Stock of
the Surviving Corporation, including, without limitation, the right to vote
the Company Shares or Common Stock of the Surviving Corporation on all matters
properly presented to the shareholders of the Company or the Surviving
Corporation, respectively, or (iv) seeking to prohibit Parent or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company.
6.2.5 Legal Opinion. Parent shall have received the legal
opinion of counsel to the Company, in substantially the form of Exhibit
Ahereto.
6.2.6 Secretary's Certificate. Parent shall have received a
certificate of the Secretary or Assistant Secretary of the Company certifying
(i) a true and complete copy of the resolutions duly and validly adopted by
the Board of Directors of the Company evidencing the authorization of the
execution and delivery of this Agreement, (ii) the names and signatures of the
officers of the Company authorized to sign this Agreement and the other
documents to be delivered hereunder and (iii) a true and complete copy of the
Memorandum of Association and Articles of Association of the Company.
6.3 Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is further subject to the following
conditions:
6.3.1 Representations and Warranties. The representations
and warranties of Parent and Sub set forth in this Agreement shall be true and
correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, unless made as of another date, in which case they shall be true and
correct in all material respects as of such date. The Company shall have
received a certificate signed on behalf of Parent by the President or Chief
Executive Officer of Parent to such effect.
6.3.2 Performance of Obligations of Parent and Sub. Parent
and Sub shall have performed the obligations required to be performed by them
under this Agreement at or prior to the Closing Date (except for such failures
to perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a material adverse effect with
respect to Parent or adversely affect the ability of Parent to consummate the
transactions herein contemplated or perform its obligations hereunder), and
the Company shall have received a certificate signed on behalf of Parent by
the President or Chief Executive Officer of Parent to such effect.
6.3.3 No Litigation. There shall not be pending or
threatened any suit, action or proceeding before any court, Governmental
Entity or authority (i) pertaining to the transactions contemplated by this
Agreement or (ii) seeking to prohibit or limit the ownership or operation by
the Company, Parent or any of its subsidiaries, or to dispose of or hold
separate any material portion of the business or assets of the Company, Parent
or of its any subsidiaries.
6.3.4 Consents, etc. Company shall have received evidence,
in form and substance reasonably satisfactory to it, that such licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and other third parties as necessary in connection
with the transactions contemplated hereby have been obtained.
6.3.5 Filing of Merger Agreement. Parent shall have filed
or will promptly file after the Closing Date in the office of the Department
of Commerce of the State of Utah or other office of each jurisdiction in which
such filings are required for the Merger to become effective.
6.3.6 Resignations. Parent shall deliver to the Company
written resignations of all of the officers of Parent and evidence of election
of those new directors and officers as further described in Section 5.7herein,
subject to compliance with Rule 14f-1 of the Exchange Act.
6.3.7 Legal Opinion. The Company shall have received the
legal opinion of counsel to Parent, in substantially the form of Exhibit
Bhereto.
6.3.8 Good Standing Certificates. The Company shall have
received certificates of the Department of Commerce of the State of Utah with
respect to Parent and of each state in which Parent is qualified to do
business as a foreign corporation as of a recent date, showing Parent to be
validly existing and in good standing in the State of Utah and qualified to do
business and in good standing in such other states as a foreign corporation,
as the case may be.
6.3.9 Secretary's Certificate. The Company shall have
received certificates of the Secretary or Assistant Secretary of Parent and
Sub certifying (i) a true and complete copy of the resolutions duly and
validly adopted by the Board of Directors of Parent or Sub, as applicable,
evidencing the authorization of the execution and delivery of this Agreement,
(ii) the names and signatures of the officers of Parent and Sub, as
applicable, authorized to sign this Agreement and the other documents to be
delivered hereunder and (iii) a true and complete copy of the articles of
incorporation and bylaws of each of Parent and Sub.
6.3.10 Spin-Off. The Spin-Off shall be completed by Parent
in accordance with the Distribution Agreement and without any adverse Tax
consequences and in full compliance with all applicable securities laws.
6.3.11 Indebtedness. All indebtedness of Parent shall have
been repaid, otherwise satisfied in full or cancelled.
6.3.12 Accrued Fees. All accrued fees of Parent's
professional advisors, including without limitation all legal and accounting
fees incurred by Parent in connection with the preparation, negotiation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and all accounting fees incurred in
connection with the audit of Parent's financial statements for the year ended
December 31, 2003 (the "Professional Fees"), shall have been paid and
satisfied in full.
6.3.13 8-K. Parent shall file a Form 8-K with the SEC within
fifteen days of the closing of the Merger and a subsequent Form 8-K within 60
days thereafter containing audited financial statements of the Company as
required by Item 310 of Regulation S-B.
7. TERMINATION, AMENDMENT AND WAIVER.
7.1 Termination. This Agreement may be terminated and abandoned
at any time prior to the Effective Time of the Merger:
7.1.1 by mutual written consent of Parent and the Company;
7.1.2 by either Parent or the Company if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become final and
nonappealable;
7.1.3 by either Parent or the Company if the Merger shall
not have been consummated on or before March 26, 2004 (other than as a result
of the failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Effective Time of the Merger);
7.1.4 by Parent, if a material adverse change shall have
occurred relative to the Company or if the Company willfully fails to perform
in any material respect any of its material obligations under this Agreement;
or
7.1.5 by the Company, if a material adverse change shall
have occurred relative to Parent or Sub or if Parent or Sub willfully fails to
perform in any material respect any of their respective obligations under this
Agreement.
7.2 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Sub or the Company, other than
the provisions of the last sentence of Section 5.2.1, Section 7.6 and this
Section 7.2. Nothing contained in this Section shall relieve any party for
any breach of the representations, warranties, covenants or agreements set
forth in this Agreement.
7.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
7.4 Extension; Waiver. At any time prior to the Effective Time
of the Merger, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement, or (c) waive
compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert
any of its rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
7.5 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver of this Agreement
pursuant to Section 7.4 shall, in order to be effective, require in the case
of Parent, Sub or the Company, action by its Board of Directors.
7.6 Return of Documents. In the event of termination of this
Agreement for any reason, Parent and Company will return to the other party
all of the other party's documents, work papers, and other materials
(including copies) relating to the transactions contemplated in this
Agreement, whether obtained before or after execution of this Agreement.
Parent and Company will not use any information so obtained from the other
party for any purpose and will take all reasonable steps to have such other
party's information kept confidential.
8. INDEMNIFICATION AND RELATED MATTERS.
8.1 Survival. All representations, warranties, covenants and
agreements of Parent and Sub contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Closing for the time
period set forth in Section 8.2 notwithstanding any investigation conducted
with respect thereto. The representations and warranties of the Company
contained in this Agreement or in any certificate delivered pursuant to this
Agreement shall not survive the Closing.
8.2 Time Limitations. Neither Parent nor Sub, on the one hand,
nor the Company, on the other hand, shall have any liability (for
indemnification or otherwise) with respect to any representation or warranty,
or agreement to be performed and complied with prior to the Effective Time of
the Merger, unless on or before the six-month anniversary of the Effective
Time of the Merger (the "Claims Deadline"), the indemnifying party is given
notice of a claim with respect thereto, in accordance with Section 8.7,
specifying the factual basis therefor in reasonable detail to the extent then
known by the party claiming indemnification hereunder.
8.3 Indemnification.
8.3.1 By Parent. Parent shall indemnify and hold harmless
the Company, each of the Shareholders and their respective officers,
directors, agents and representatives (the "Company Indemnified Parties"), and
shall reimburse the Company Indemnified Parties for, any loss, liability,
claim, damage, expense (including, but not limited to, costs of investigation
and defense and reasonable attorneys' fees) or diminution of value
(collectively, "Damages") arising from or in connection with (a) any
inaccuracy, in any material respect, in any of the representations and
warranties of Parent or Sub in this Agreement or in any certificate delivered
by Parent or Sub to the Company pursuant to this Agreement, or any actions,
omissions or statements of fact inconsistent with any such representation or
warranty, (b) any failure by Parent or Sub to perform or comply in any
material respect with any agreement in this Agreement, (c) any claim by any
person for brokerage for finder's fees or commissions or similar payments
based upon any agreement or understanding alleged to have been made by any
such person with Parent or Sub (or any person acting on their behalf) in
connection with any of the transactions contemplated by this Agreement, (d)
Taxes attributable to any transaction or event occurring on or prior to the
Closing, including without limitation Taxes attributable to the Spin-Off, to
the extent such liabilities exceed the amount of the reserve for Taxes accrued
on the Parent Balance Sheet, (e) any claim by any person relating to or
arising out of any liabilities reflected on the Parent Balance Sheet or with
respect to Professional Fees arising thereafter, or (f) any litigation,
action, claim, proceeding or investigation by any third party relating to or
arising out of the business or operations of Parent, or the actions of Parent
or any holder of Parent capital stock prior to the Effective Time of the
Merger.
8.3.2 By the Company. The Company shall indemnify and hold
harmless Parent and its officers, directors, agents and representatives (the
"Parent Indemnified Parties"), and shall reimburse the Parent Indemnified
Parties for, any Damages arising from or in connection with (a) any
inaccuracy, in any material respect, in any of the representations and
warranties of the Company in this Agreement or in any certificate delivered by
the Company to Parent pursuant to this Agreement, or any actions, omissions or
statements of fact inconsistent with any such representation or warranty, or
(b) any failure by the Company to perform or comply in any material respect
with any agreement in this Agreement.
8.4 Sole Remedy. Other than claims based on fraud or for
specific performance, injunctive or other equitable relief, the indemnity
provided in this Section 8 shall be the sole and exclusive remedy of the
parties hereto at law or equity for any matter covered by Section 8.3.
8.5 Notice of Claims.
8.5.1 If, at any time on or prior to the Claims Deadline,
either the Company Indemnified Parties or the Parent Indemnified Parties, as
the case may be (each, an "Indemnitee"), shall assert a claim against the
other (the "Indemnifying Party") for indemnification pursuant to Section 8,
such Indemnitee shall submit to the Indemnifying Party a written claim in good
faith signed by an authorized officer of Parent or the Company or the
requisite number of Shareholders under Section 8.7, as applicable, stating:
(i) that an Indemnitee incurred or reasonably believes it may incur Damages
and the reasonable estimate of the amount of any such Damages; (ii) in
reasonable detail, the facts alleged as the basis for such claim and the
section or sections of this Agreement alleged as the basis or bases for the
claim; and (iii) if the Damages have actually been incurred, the number of
additional shares of Parent Common Stock to which the Shareholders or Parent
Shareholders (as defined in Section 8.6.2), as applicable, are entitled with
respect to such Damages, which shall be determined as provided in Section
8.6below. If the claim is for Damages which the Indemnitee reasonably
believes may be incurred or are otherwise unliquidated, the written claim of
the applicable Indemnitee shall state the reasonable estimate of such Damages,
in which event a claim shall be deemed to have been asserted under this
Section 8in the amount of such estimated Damages, but no distribution of
additional shares of Parent Common Stock pursuant to Section 8.6 below shall
be made until such Damages have actually been incurred.
8.5.2 In the event that any action, suit or proceeding is
brought against any Indemnitee with respect to which an Indemnifying Party may
have liability under Section 8, the Indemnifying Party shall have the right,
at its cost and expense, to defend such action, suit or proceeding in the name
and on behalf of the Indemnitee; provided, however, that an Indemnitee shall
have the right to retain its own counsel, with fees and expenses paid by the
Indemnifying Party, if representation of the Indemnitee by counsel retained by
Indemnifying Party would be inappropriate because of actual or potential
differing interests between Indemnitee and the Indemnifying Party. In
connection with any action, suit or proceeding subject to Section 8, the
parties agree to render to each other such assistance as may reasonably be
required in order to ensure proper and adequate defense of such action, suit
or proceeding. No Indemnifying Party shall, without the prior written consent
of the applicable Indemnitee, which consent shall not be unreasonably withheld
or delayed, settle or compromise any claim or demand if such settlement or
compromise does not include an irrevocable and unconditional release of such
Indemnitee for any liability arising out of such claim or demand.
8.6 Payment of Damages.
8.6.1 By Parent. In the event that a Company Indemnified
Party shall be entitled to indemnification pursuant to this Section 8 for
actual Damages incurred by them, Parent shall, within thirty (30) days after
the final determination of the amount of such Damages, issue to the
Shareholders that number of additional shares of Parent Common Stock in an
aggregate amount equal to the quotient obtained by dividing (x) the amount of
such Damages by (y) the Fair Market Value (as defined below) per share of the
Parent Common Stock as of the date of the submission of the notice of claim to
Parent pursuant to Section 8.5. Such shares of Parent Common Stock shall be
issued to the Shareholders pro rata, in proportion to the number of share of
Parent Common Stock issued (or issuable) to the Shareholders at the Effective
Time of the Merger.
8.6.2 By Company. In the event that a Parent Indemnified
Party shall be entitled to indemnification pursuant to this Section 8 for
actual Damages incurred by them, Parent shall, within thirty (30) days after
the final determination of the amount of such Damages, issue to the
shareholders of Parent immediately prior the Effective Time of the Merger (the
"Parent Shareholders") that number of additional shares of Parent Common Stock
in an aggregate amount equal to the quotient obtained by dividing (x) the
amount of such Damages by (y) the Fair Market Value (as defined below) per
share of the Parent Common Stock as of the date of the submission of the
notice of claim to the Company pursuant to Section 8.5. Such shares of Parent
Common Stock shall be issued to the Parent Shareholders pro rata, in
proportion to the number of share of Parent Common Stock held by the Parent
Shareholders immediately prior to the Effective Time of the Merger.
8.6.3 Fair Market Value. For purposes of this Agreement,
"Fair Market Value" shall mean, with respect to a share of Parent Common Stock
on any date, the average of the daily closing prices for the ten (10)
consecutive trading days prior to such date. The closing price for each day
shall be the last sales price or in case no sale takes place on such day, the
average of the closing high bid and low asked prices, in either case (a) as
officially quoted by the NASD Over-the-Counter Bulletin Board, Nasdaq SmallCap
Market or the Nasdaq National Market or such other market on which the Parent
Common Stock is then principally listed for trading, or (c) if there exists no
principal United States market for the Parent Common Stock, then as reasonably
determined by the Board of Directors of Parent.
8.7 Third Party Beneficiaries. The Parties acknowledge and
agree that each of the Shareholders are direct beneficiaries with respect to
the provisions of this Section 8 and may enforce each of its provisions as if
such Shareholders were a party to this Agreement, provided, however, that no
action, claim, notification or other writing of the Shareholders pursuant to
this Section 8 shall be valid and binding upon Parent or have any force or
effect unless such action, claim, notification or writing is executed by
Shareholders, or their duly appointed proxies, holding a majority of the
outstanding Company Shares immediately prior to the Effective Time of the
Merger.
9. GENERAL PROVISIONS.
9.1 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by facsimile, electronic mail, or
overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be
specified by like notice):
if to Parent, to:
Tintic Gold Mining Company
3131 Teton Drive
Salt Lake, UT 84109
Attn: George Christopulos
Fax: (801) 468-2249
with a copy to (which shall not constitute notice):
Leonard W. Burningham, Esq.
455 East 500 South, Suite 205
Salt Lake City, UT 84111
Fax: 801-355-7126
if to the Company, to:
Kiwa Bio-Tech Products Group Ltd.
17700 Castleton St., Suite #589
City of Industry, CA 91748
Attn: Wei Li
Fax: (626) 965-9877
with a copy to (which shall not constitute notice):
Stubbs Alderton & Markiles, LLP
15821 Ventura Blvd., Suite 525
Encino, CA 91436
Attn: V. Joseph Stubbs, Esq.
Fax: (818) 474-8607
9.2 Definitions. For purposes of this Agreement:
9.2.1 an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
9.2.2 "material adverse change" or "material adverse
effect" means, when used in connection with the Company or Parent, any change
or effect that either individually or in the aggregate with all other such
changes or effects is materially adverse to the business, assets, properties,
condition (financial or otherwise) or results of operations of such party and
its subsidiaries taken as a whole;
9.2.3 "person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity; and
9.2.4 a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its board of
Directors or other governing body (or, if there are no such voting interests,
fifty percent (50%) or more of the equity interests of which) is owned
directly or indirectly by such first person.
9.3 Interpretation. When a reference is made in this Agreement
to a Section, Exhibit or Schedule, such reference shall be to a Section of, or
an Exhibit or Schedule to, this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation".
9.4 Entire Agreement; No Third-Party Beneficiaries. This
Agreement and the other agreements referred to herein constitute the entire
agreement, and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement. This Agreement is not intended to confer upon any person other
than the parties any rights or remedies.
9.5 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
9.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or
in part, by operation of law or otherwise by any of the parties without the
prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective successors and assigns.
9.7 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of California or the State of Utah, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself
to the personal jurisdiction of any court sitting in Los Angeles County,
California or Salt Lake County, Utah in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement to
the extent such courts would have subject matter jurisdiction with respect to
such dispute and (b) agrees that it will not attempt to deny or defeat such
personal jurisdiction or venue by motion or other request for leave from any
such court.
9.8 Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of
any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or portion of any provision in such jurisdiction, and this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision or portion of any provision
had never been contained herein.
9.9 Counterparts. This Agreement may be executed in one or more
identical counterparts, all of which shall be considered one and the same
instrument and shall become effective when one or more such counterparts shall
have been executed by each of the parties and delivered to the other parties.
[Signature pages follow.]
IN WITNESS WHEREOF, the undersigned have caused their duly authorized
officers to execute this Agreement as of the date first above written.
TINTIC GOLD MINING COMPANY
By:/s/George Christopulos
Name: George Christopulos
Title: President
TTGM ACQUISITION CORPORATION
By:/s/George Christopulos
Name: George Christopulos
Title: President
KIWA BIO-TECH PRODUCTS GROUP LTD.
By:/s/Wei Li
Name: Wei Li
Title: Chief Executive Officer
Exhibit A
Form of Legal Opinion of Company Counsel
[To be put in standard form of Company's counsel]
The following opinions to be rendered by BVI counsel:
1. The Company is validly existing as an international business
company in good standing under the laws of the British Virgin
Islands. The Company has corporate power to enter into the Merger
Agreement.
2. The execution and delivery of the Merger Agreement by the Company
and the performance of its obligations thereunder have been duly
authorized by all necessary corporate action on the part of the
Company.
The following opinions to be rendered by Stubbs Alderton & Markiles, LLP:
3. The Merger Agreement has been duly and validly executed and
delivered by the Company. The Merger Agreement constitutes the
valid and binding obligation of the Company, enforceable against
it in accordance with its terms.
4. The execution and delivery of the Merger Agreement by the Company
do not, and the performance of its obligations thereunder will
not, (a) result in any violation of any law, rule or regulation;
(b) result in any violation of any order, writ, judgment or decree
known to us; or (c) result in a violation of the Articles of
Association of the Company.
5. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body
(each, a "Filing") is required under any applicable law for the
due execution and delivery of the Merger Agreement by the Company
and performance of its obligations thereunder except for (a) such
Filings as have been obtained or made; (b) the filing of a
certificate of merger with the British Virgin Islands [and other
applicable agencies]; and (c) Filings required under Federal and
state securities laws as contemplated by the Merger Agreement.
6. The Company is not a party to any adversarial action, suit, or
proceeding pending or threatened overtly by a written
communication, at law or in equity, or before any Federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which action, suit or
proceeding seeks either to enjoin the transactions contemplated by
the Agreement.
7. The authorized capital stock of the Company consists of ________
shares of common stock, par value $_____ per share, and ________
shares of preferred stock, par value $______ per share.
Immediately prior to the Closing, there were 5,000,000 shares of
common stock of the Company and no shares of preferred stock of
the Company, issued and outstanding.
Exhibit B
Form of Opinion of Parent Counsel
[To be put in standard form of Parent's counsel]
1. Each of Parent and Sub is validly existing as a corporation in
good standing under the laws of its state of incorporation. Each
of Parent and Sub has corporate power to enter into the Merger
Agreement.
2. The execution and delivery of the Merger Agreement by each of
Parent and Sub and the performance of their respective obligations
thereunder have been duly authorized by all necessary corporate
action on the part of Parent or Sub, as applicable.
3. The Merger Agreement has been duly and validly executed and
delivered by each of Parent and Sub. The Merger Agreement
constitutes the valid and binding obligation of each of Parent and
Sub, enforceable against each of Parent and Sub in accordance with
its terms.
4. The execution and delivery of the Merger Agreement by each of
Parent and Sub do not, and the performance of their respective
obligations thereunder will not, (a) result in any violation of
any law, rule or regulation; (b) result in any violation of any
order, writ, judgment or decree; or (c) result in a violation of
the Articles of Incorporation or Bylaws of either Parent or Sub.
5. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body
(each, a "Filing") is required under any applicable law for the
due execution and delivery of the Merger Agreement by Parent and
Sub and performance of their respective obligations thereunder
except for (a) such Filings as have been obtained or made; (b) the
filing of a certificate of merger with the British Virgin Islands
[and other applicable agencies]; and (c) Filings required under
Federal and state securities laws as contemplated by the Merger
Agreement.
6. Neither Parent nor Sub is a party to any adversarial action, suit,
or proceeding pending or threatened overtly by a written
communication, at law or in equity, or before any Federal, state,
municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which action, suit or
proceeding seeks either to enjoin the transactions contemplated by
the Agreement.
7. The issuance of the Parent Common Stock to the shareholders of the
Company in accordance with the Merger Agreement will be exempt
from registration under the Securities Act of 1933, as amended.
8. The authorized capital stock of Parent consists of ________ shares
of common stock, par value $_____ per share, and ________ shares
of preferred stock, par value $______ per share. Immediately
prior to the Closing, there were ______ shares of Parent Common
Stock and no shares of preferred stock of Parent, issued and
outstanding. The authorized capital stock of Sub consists of
________ shares of common stock, par value $_____ per share.
Immediately prior to the Closing, there were ______ shares of
common stock of Sub and no shares of preferred stock of Sub,
issued and outstanding.
9. The shares of Parent Common Stock to be issued pursuant to the
Merger Agreement have been duly authorized and, when issued in
accordance with the terms of the Merger Agreement, will be validly
issued, fully paid and non-assessable, and will not be issued in
violation of any preemptive rights granted under Parent's Articles
of Incorporation, Bylaws, under the corporate laws of the State of
the Parent's incorporation, or under any agreement to which Parent
is a party.