UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
AMENDMENT NO. 1
THE SECURITIES EXCHANGE ACT OF 1934
Forex365, Inc.
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(Name of Issuer)
Common Stock, $0.001 Par Value
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(Title of Class of Securities)
34630H 109
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(CUSIP Number)
Kevin R. Keating
190 Lakeview Way
Vero Beach, FL 32963
(772) 231-7544
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 25, 2010
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. |_|
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. None
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1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
Kevin R. Keating
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2. Check the Appropriate Box if a Member of a Group (See Instructions)
(a) |_|
(b) |_|
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3. SEC Use Only
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4. Source of Funds (See Instructions) PF/OO
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d)
or 2(e) |_|
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6. Citizenship or Place of Organization U.S.A.
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Number of 7. Sole Voting Power 0*
Shares Beneficially ------------------------------------------------
Owned 8. Shared Voting Power 0*
By Each ------------------------------------------------
Reporting 9. Sole Dispositive Power 0*
Person With ------------------------------------------------
10. Shared Dispositive Power 0*
------------------------------------------------
11. Aggregate Amount Beneficially Owned by Each Reporting Person
0*
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12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) |_|
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13. Percent of Class Represented by Amount in Row (11) 0.00%*
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14. Type of Reporting Person (See Instructions) IN
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*On March 25, 2010, Kevin R. Keating ("Mr. Keating") entered into a Stock
Purchase Agreement (the "Stock Purchase Agreement") with Capital Soldier
Limited, a corporation organized in the British Virgin Islands (the "Purchaser")
and certain other parties pursuant to which, among other things, Mr. Keating
agreed to sell to the Purchaser, and the Purchaser agreed to purchase from Mr.
Keating, an aggregate of 16,630,000 shares of common stock, par value $0.001 per
share ("Common Stock"), of Forex365, Inc., a Nevada corporation (the "Company"),
for an aggregate purchase price of $206,099, or approximately $0.0124 per share.
It is anticipated that the closing of the transactions under the Stock Purchase
Agreement will occur on or about April 8, 2010, assuming all of the conditions
to closing are either met or waived by the parties. There can be no assurance
that the transactions under the Stock Purchase Agreement will actually be
completed. The shares to be so transferred from Mr. Keating represent the
entirety of his holdings of the Common Stock of the Company. Accordingly, as of
March 25, 2010, for the purposes of Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), Mr. Keating has ceased to beneficially
own any shares of Common Stock of the Company.
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Item 1. Security and Issuer
This Amendment No. 1 to Schedule 13D amends the Schedule 13D originally
filed with the Securities and Exchange Commission on or about November 21, 2008
as amended, the "Schedule 13D"). Capitalized terms not otherwise defined herein
shall have the meaning ascribed thereto in the Schedule 13D. This Amendment No.
1 to the Schedule 13D is being filed solely to disclose the information set
forth in Item 6 hereto.
This Schedule 13D relates to the common stock, par value $0.001 per share
(the "Common Stock") of Forex365, Inc., a Nevada corporation, whose principal
executive offices are located at 190 Lakeview Way, Vero Beach, Florida 32963
(the "Issuer").
Item 2. Identity and Background
This Schedule 13D is being filed by Kevin R. Keating, a citizen of the
United States (the "Reporting Person"). Mr. Keating currently serves as the CEO,
CFO, President, Secretary and Treasurer and sole director of the Issuer and is
located at 190 Lakeview Way, Vero Beach, Florida 32963.
Each of the Reporting Persons has not, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors). Each of the Reporting Persons has not, during the last five
years, been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding were or are subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, Federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
On June 25, 2008, the Issuer issued 16,000,000 shares of its Common Stock
to Mr. Keating for a purchase price of $160,000, or $0.01 per share. On June 26,
2008, the Issuer issued 630,000 shares of its Common Stock to Mr. Keating for
services rendered to the Issuer valued at $6,300, or $0.01 per share.
Item 4. Purpose of Transaction
The Reporting Person acquired the Issuer's Common Shares for investment
purposes only. Except as otherwise described in this Schedule 13D, the Reporting
Person is not a member of a group relating to the Issuer.
Item 5. Interest in Securities of the Issuer
The information contained in the cover pages to this Amendment No. 1 is
incorporated herein by reference.
Except as disclosed herein, none of the Reporting Persons has effected any
transactions in Common Stock of the Company, or securities convertible into,
exercisable for or exchangeable for Common Stock, during the sixty (60) days on
or prior to March 25, 2010.
As of March 25, 2010, for the purposes of Rule 13d-3 under the Exchange,
the Reporting Persons have ceased to beneficially own any shares of Common Stock
of the Company.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer
On March 25, 2010, Mr. Keating entered into the Stock Purchase Agreement
with the Purchaser and certain other parties pursuant to which, among other
things, Mr. Keating to sell to the Purchaser, and the Purchaser agreed to
purchase from Mr. Keating, an aggregate of 16,630,000 shares of Common Stock of
the Company, for an aggregate purchase price of $206,099, or approximately
$0.0124 per share. The shares to be so transferred from Mr. Keating represent
the entirety of his holdings of the Common Stock of the Company. In connection
with the Stock Purchase Agreement, the Purchaser has agreed to pay at the
closing of the transactions under the Purchase Agreement, certain obligations of
the Company in an aggregate amount of $44,670.
It is anticipated that the closing of the transactions under the Stock
Purchase Agreement will occur on or about April 8, 2010, assuming all of the
conditions to closing are either met or waived by the parties. There can be no
assurance that the transactions under the Stock Purchase Agreement will actually
be completed.
Pursuant to the terms of the Stock Purchase Agreement, at the Closing, (i)
the existing sole director and officer of the Company will resign effective upon
the Closing, (ii) the existing director will appoint the designee of the
Purchaser, Cui Xiaowei, to serve as the director of the Company, and (iii) the
existing sole director will appoint Cui Xiaowei to serve as the President, the
Chief Financial Officer and Secretary of the Company. As a result of these
transactions, control of the Company will pass to the Purchaser (the "Change of
Control").
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To the best knowledge of the Reporting Persons as of the date hereof,
except to the extent set forth herein, the Reporting Persons do not have any
other contracts, arrangements, understandings or relationship (legal or
otherwise) with any other Reporting Person or any other person with respect to
any securities of the Issuer.
Item 7. Material to be Filed as Exhibits
Exhibit A: Stock Purchase Agreement, dated March 25, 2010, by and among Mr.
Keating, the Purchaser and certain other parties.
SIGNATURE
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned certify that the information set forth in this statement
is true, complete and correct.
Dated: March 26, 2010
/s/ Kevin R. Keating
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Kevin R. Keating
4
Exhibit A
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 25,
2010, is made by and among Kevin R. Keating ("Keating"), Lionsridge Capital,
LLC, an Illinois limited liability company ("LC"), Garisch Financial, Inc., an
Illinois corporation ("GFI"), and Capital Soldier Limited, a corporation
organized in the British Virgin Islands (the "Purchaser"). KI, Keating and LC
are referred to herein collectively as the "Primary Sellers" and individually as
a "Primary Seller." The Primary Sellers and GFI are referred to herein
collectively as the "Sellers" and individually as a "Seller."
RECITALS
WHEREAS, Keating is the sole record and beneficial owner of 16,630,000
shares of the common stock, par value $0.001 per share (the "Common Stock"), of
Forex365, Inc., a Nevada corporation (the "Company");
WHEREAS, the Purchaser desires to acquire from Keating, and Keating desires
to sell to the Purchaser, a total of 16,630,000 shares of the Company's Common
Stock (the "Keating Shares"), in the manner and on the terms and conditions
hereinafter set forth; and
WHEREAS, LC is the sole record and beneficial owner of 5,000,000 shares of
the Company's Common Stock; and
WHEREAS, the Purchaser desires to acquire from LC, and LC desires to sell
to the Purchaser, a total of 5,000,000 shares of the Company's Common Stock (the
"LC Shares"), in the manner and on the terms and conditions hereinafter set
forth; and
WHEREAS, GFI is the sole record and beneficial owner of 2,200,000 shares of
the Company's Common Stock; and
WHEREAS, the Purchaser desires to acquire from GFI, and GFI desires to sell
to the Purchaser, a total of 2,200,000 shares of the Company's Common Stock (the
"GFI Shares"), in the manner and on the terms and conditions hereinafter set
forth; and
WHEREAS, the Keating Shares, the LC Shares and the GFI Shares are referred
to herein collectively as the "Shares;" and
WHEREAS, the Shares represent approximately 95.87% of the outstanding
shares of the Company's Common Stock; and
WHEREAS, in connection with the Purchaser's purchase of the Shares, the
parties hereto desire to establish certain rights and obligations by and among
themselves.
AGREEMENTS
NOW, THEREFORE, in consideration of these premises, the mutual covenants
and agreements herein contained and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION I DEFINITIONS.
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The following terms when used in this Agreement have the following
respective meanings:
1
"1933 Act" means the Securities Act of 1933, as amended.
"1934 Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" means with respect to any Person, any (i) officer, director,
partner or holder of more than 10% of the outstanding shares or equity interests
of such Person, (ii) any relative of such Person, or (iii) any other Person
which directly or indirectly controls, is controlled by, or is under common
control with such Person. A Person will be deemed to control another Person if
such Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the "Controlled" Person, whether
through ownership of voting securities, by contract, or otherwise.
"Acquisition Proposal" means any offer or proposal for, or indication of
interest in, any acquisition of all or a portion of the Shares or any other
assets or securities of the Company, whether by way of a purchase, merger,
consolidation or other business combination.
"Business Day" means a day other than Saturday, Sunday or statutory holiday
in the State of New York and in the event that any action to be taken hereunder
falls on a day which is not a Business Day, then such action shall be taken on
the next succeeding Business Day.
"Bylaws" mean the Bylaws of the Company.
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as amended, and as on file with the Secretary of State of the State
of Nevada on the date of this Agreement.
"Closing Date" has the meaning set forth in Section 3.1 hereof.
"Closing" has the meaning set forth in Section 3.1 hereof.
"Common Stock" has the meaning set forth in the recitals hereto.
"Company" has the meaning set forth in the recitals hereto.
"Company Closing Obligations" shall have the meaning as used in Section
4.2(j) hereof.
"Corporate Records" shall have the meaning as used in Section 4.2(n)
hereof.
"Encumbrances" shall have the meaning as used in Section 4.1(b) hereof.
"End Date" has the meaning set forth in Section 7.1(b)(i) hereof.
"Fully-Diluted Basis" shall mean the aggregate of all shares of outstanding
Common Stock, all shares of outstanding Preferred Stock on an as-converted
basis, all outstanding options on an as-exercised basis, and all convertible
securities or other conversion rights on an as-converted basis.
"GAAP" means generally accepted accounting principles in the United States.
"GFI Shares" has the meaning set forth in the recitals hereto.
"Governmental Authority" means the United States, any state or
municipality, the government of any foreign country, any subdivision of any of
the foregoing, or any authority, department, commission, board, bureau, agency,
court, or instrumentality of any of the foregoing.
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"Indemnification" shall have the meaning as used in Section 5.7 hereof.
"Information Statement" means the information statement regarding a change
in the majority of directors of the Company pursuant to Rule 14f-1 as
promulgated under the 1934 Act, together with any amendments or supplements
thereof.
"Keating Shares" has the meaning set forth in the recitals hereto.
"Knowledge" means the actual knowledge of such Person or its Affiliates.
"LC Shares" has the meaning set forth in the recitals hereto.
"Lien" means any mortgage, lien, pledge, security interest, easement,
conditional sale or other title retention agreement, or other encumbrance of any
kind.
"Material Adverse Effect" means a change or effect in the condition
(financial or otherwise), properties, assets, liabilities, rights or business of
the Company which change or effect, individually or in the aggregate, could
reasonably be expected to be materially adverse to such condition, properties,
assets, liabilities, rights, operations or business.
"Material Changes" shall have the meaning as used in Section 4.2(g) hereof.
"Minute Books" shall have the meaning as used in Section 4.2(n) hereof.
"OTCBB" has the meaning set forth in Section 4.2(m) hereof.
"Person" means an individual, corporation, limited liability company,
partnership, joint venture, trust, unincorporated organization, or Governmental
Authority.
"Purchase Price" shall have the meaning as used in Section 2.1 hereof.
"Returns" shall have the meaning as used in Section 4.2(l) hereof.
"SEC" means the Securities and Exchange Commission.
"SEC Filings" means the Company's annual report, quarterly report and other
publicly-available filings made by the Company with the SEC under Section 13 or
Section 15(d) of the 1934 Act.
"Shares" shall have the meaning set forth in the recitals hereto.
"Stockholders" mean the record holders of shares of the Company's Common
Stock.
"Tax" or "Taxes" means any and all federal, state, local and foreign taxes,
including, without limitation, gross receipts, income, profits, sales, use,
occupation, value added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, assessments, governmental
charges and duties together with all interest, penalties and additions imposed
with respect to any such amounts and any obligations under any agreements or
arrangements with any other person with respect to any such amounts and
including any liability of a predecessor entity for any such amounts.
3
SECTION II PURCHASE AND SALE OF COMMON STOCK.
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2.1 Purchase of Common Stock. At the Closing, based upon the
representations, warranties, covenants and agreements of the parties set forth
in this Agreement: (i) the Purchaser shall acquire from Keating, and Keating
shall sell to the Purchaser, the Keating Shares; (ii) the Purchaser shall
acquire from LC, and LC shall sell to the Purchaser, the LC Shares; and (iii)
the Purchaser shall acquire from GFI, and GFI shall sell to the Purchaser, the
GFI Shares, all for an aggregate purchase price of Two Hundred Ninety-Five
Thousand Three Hundred Thirty U.S. Dollars (US$295,330) ("Purchase Price"). The
Purchase Price per Share is approximately $0.0124.
2.2 Payment for Common Stock. At the Closing Date, the Purchaser shall pay
the Purchase Price to the Sellers for their respective Shares as follows:
Keating US$ 206,099
LC US$ 61,966
GFI US$ 27,265
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Total US$ 295,330
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2.3 Payment of Certain Company Obligations. As further consideration for
the purchase of the Shares under this Agreement, the Purchaser shall pay at
Closing, certain obligations of the Company in an aggregate amount of $44,670
("Designated Obligations"), as more specifically set forth on Schedule 4.2(j)
hereto.
2.4 Manner of Payment. At least two (2) business days prior to the Closing,
the Purchaser shall deposit by wire transfer of immediately available funds in
the Escrow Account (as defined in Section 5.14) an amount equal to the sum of
the Purchase Price and the Designated Obligations, less the amount of the
Deposit (as defined in Section 5.14). On the Closing Date, pursuant to the joint
written instructions of the parties hereto, the Escrow Agent (as defined under
Section 5.14 hereof) shall disburse the Purchase Price to the Sellers as set
forth in Section 2.2 hereof by wire transfer of immediately available funds to
the accounts designated by the Sellers. On the Closing Date, pursuant to the
joint written instructions of the parties hereto, the Escrow Agent shall
disburse the Designated Obligations to the designated payees by wire transfer of
immediately available funds to the accounts designated by the payees.
SECTION III THE CLOSING.
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3.1 Closing. The closing of the sale of the Shares pursuant to Section 2.1
hereof and certain of the other transactions contemplated hereby (the "Closing")
shall take place at the offices of the Purchaser's counsel, DLA Piper LLP (US),
located at 1251 Avenue of the Americas, New York, NY 10020 on the next Business
Day (or such later date as the parties hereto may agree) following the
satisfaction or waiver of the conditions set forth in Section VI hereof (the
"Closing Date"), or at such other time or place as the parties mutually agree.
3.2 Deliveries by the Sellers. At the Closing, the Sellers shall deliver or
cause to be delivered to the Purchaser the following items (in addition to any
other items required to be delivered to the Purchaser pursuant to any other
provision of this Agreement):
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(a) original certificates representing the Shares being sold by the
Sellers to the Purchaser pursuant to Section 2.1 hereof, duly recorded on the
books of the Company, along with stock powers for such certificates executed in
blank;
(b) a full and complete release by each Seller of the Company from any
and all liabilities, claims and obligations, arising prior to the Closing, that
such Seller may have against the Company, in a form reasonably acceptable to the
Purchaser, provided, however, that Keating shall retain any statutory or other
rights to indemnification provided to him as a result of his service as an
officer and director of the Company, and, further provided, that such release
shall not affect those certain Registration Rights Agreements (as defined
herein) being assigned to the Purchaser under Section 5.11 hereof.
(c) a full and complete release, executed by GFI, of the Company's
obligations under that certain Agreement, dated as of June 26, 2008, by and
between GFI and the Company ("GFI Consulting Agreement");
(d) the termination of that certain Agreement, dated as of July 1, 2008,
by and between Vero Management, L.L.C. ("Vero") and the Company duly executed by
Vero, which shall provide for a full and complete release of any of the Company
liabilities and obligations thereunder;
(e) with respect to any Seller that is organized as a corporation or
limited liability company, the minutes of a meeting of the board of directors or
managers of such Seller, as the case may be, or a written consent or action in
lieu thereof, authorizing such Seller's entrance into this Agreement and the
transfer of such Seller's Shares to the Purchaser as contemplated herein; and
(f) a joint instruction letter signed by the Sellers and addressed to
the Escrow Agent directing, at the Closing, the disbursement of the Purchase
Price from the Escrow Account to the Sellers and the payment of the Designated
Obligations from the Escrow Account to the designated payees.
3.3 Deliveries by Primary Sellers. At the Closing, the Primary Sellers
shall deliver or cause to be delivered to the Purchaser the following items (in
addition to any other items required to be delivered to the Purchaser pursuant
to any other provision of this Agreement):
(a) resignation of Keating from his position as sole director and sole
officer of the Company;
(b) duly executed corporate actions accepting the resignation pursuant
to Section 3.3(a), appointing Cui Xiaowei as the sole director of the Company
and as the President, Chief Financial Officer and Secretary of the Company; and
(c) all records and documents relating to the Company, wherever located,
including, but not limited to, all books, records, government filings, Tax
Returns, consent decrees, orders, and correspondence, financial information and
records, electronic files containing any financial information and records, and
other documents used in or associated with the Company, to the extent such
records and documents have not been previously delivered to the Purchaser.
3.4 Deliveries by the Purchaser. At the Closing, the Purchaser shall
deliver or cause to be delivered to the Sellers (in addition to any other items
required to be delivered to the Sellers pursuant to any other provision of this
Agreement):
5
(a) a release by the Company of the Sellers from any and all
liabilities, claims and obligations arising prior to the Closing that the
Company may have against the Sellers (the "Company Release"); provided, however,
that the Company Release in favor of Keating and LC shall not cover any claims
for which the Purchaser or Company may be indemnified under Section 5.7 hereof;
(b) the minutes of a meeting of the Board of Directors of the Purchaser,
or a written consent in lieu thereof, authorizing the Purchaser's entrance into
this Agreement and the purchase of the Shares from the Sellers as contemplated
herein; and
(c) a joint instruction letter signed by the Purchaser and addressed to
the Escrow Agent directing, at the Closing, the disbursement of the Purchase
Price from the Escrow Account to the Sellers and the payment of the Designated
Obligations from the Escrow Account to the designated payees.
SECTION IV REPRESENTATIONS AND WARRANTIES.
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4.1 Representations and Warranties of the Sellers. Each Seller, severally,
and not jointly with any other Seller, represents and warrants to the Purchaser,
only with respect to the Shares owned by such Seller, that:
(a) Capacity of the Seller; Authorization; Execution of Agreements. Each
Seller has all requisite power, authority and capacity to enter into this
Agreement and to perform the transactions and obligations to be performed by it
hereunder. With respect to any Seller that is organized as a limited liability
company or corporation, the execution and delivery of this Agreement by such
Seller, and the performance by such Seller of the transactions and obligations
contemplated hereby, including, without limitation, the sale of their respective
Shares to the Purchaser hereunder, have been duly authorized by all requisite
action of such Seller. This Agreement constitutes a valid and legally binding
agreement of each Seller, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws of the United States (both state and federal),
affecting the enforcement of creditors' rights or remedies in general from time
to time in effect and the exercise by courts of equity powers or their
application of principles of public policy. Except as set forth in Section
3.2(e) hereof, no corporate proceedings or other action on the part of any
Seller that is organized as a limited liability company or corporation
(including the approval of such Seller's board of directors, managers,
shareholders or members) are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby.
(b) Title to Shares. Keating is the sole record and beneficial owner of
the Keating Shares and has sole managerial and dispositive authority with
respect to the Keating Shares. LC is the sole record and beneficial owner of the
LC Shares and has sole managerial and dispositive authority with respect to the
LC Shares. GFI is the sole record and beneficial owner of the GFI Shares and has
sole managerial and dispositive authority with respect to the GFI Shares. No
Seller has granted any person a proxy with respect to the Shares owned by such
Seller that has not expired or been validly withdrawn. The sale and delivery by
the Sellers of the Shares to the Purchaser pursuant to this Agreement will vest
in the Purchaser legal and valid title to the Shares, free and clear of all
Liens, security interests, adverse claims or other encumbrances of any character
whatsoever, other than encumbrances created by the Purchaser and restrictions on
the resale of the Shares under applicable securities laws ("Encumbrances").
(c) Brokers, Finders, and Agents. No Seller is, directly or indirectly,
obligated to anyone acting as broker, finder or in any other similar capacity in
connection with this Agreement or the transactions contemplated hereby. No
Person has or, immediately following the consummation of the transactions
contemplated by this Agreement, will have, any right, interest or valid claim
against the Company, the Sellers or the Purchaser for any commission, fee or
other compensation as a finder or broker in connection with the transactions
6
contemplated by this Agreement, nor are there any brokers' or finders' fees or
any payments or promises of payment of similar nature, however characterized,
that have been paid or that are or may become payable in connection with the
transactions contemplated by this Agreement, as a result of any agreement or
arrangement made by the Sellers.
(d) Disclosure. Each Seller acknowledges and agrees that the Purchaser
does not make and has not made (i) any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 4.3, or (ii) any statement, commitment or promise to the
Sellers or any of their representatives which is or was an inducement to the
Sellers to enter into this Agreement, other than as set forth in this Agreement.
4.2 Representations and Warranties of the Primary Sellers. Subject to the
limitations and qualifications contained in Section 4.2(p) hereof, the Primary
Sellers jointly and severally represent and warrant to the Purchaser, with
respect to the Company, that:
(a) Organization and Standing. The Company is duly incorporated and
validly existing under the laws of the State of Nevada, and has all requisite
corporate power and authority to own or lease its properties and assets and to
conduct its business as it is presently being conducted. The Company does not
own any equity interest, directly or indirectly, in any other Person. The
Company is qualified to do business and is in good standing in each jurisdiction
in which the failure to so qualify could reasonably be expected to have a
Material Adverse Effect upon its assets, properties, financial condition,
results of operations or business. The Company has no subsidiaries. Except as
set forth in Section 3.3(b) hereof, no corporate proceedings on the part of the
Company (including the approval of the Company's Board of Directors or
shareholders) are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
(b) Capitalization. At the date of this Agreement, the authorized
capital stock of the Company consists of (i) 200,000,000 shares of Common Stock,
of which 24,857,647 shares are issued and outstanding, and (ii) 10,000,000
shares of preferred stock, par value of $0.001 per share ("Preferred Stock"), of
which no shares are issued and outstanding. The Company has no other class or
series of equity securities authorized, issued, reserved for issuance or
outstanding. There are (x) no outstanding options, offers, warrants, conversion
rights, contracts or other rights to subscribe for or to purchase from the
Company, or agreements obligating the Company to issue, transfer, or sell
(whether formal or informal, written or oral, firm or contingent), shares of
capital stock or other securities of the Company (whether debt, equity, or a
combination thereof) or obligating the Company to grant, extend, or enter into
any such agreement and (y) no agreements or other understandings (whether formal
or informal, written or oral, firm or contingent) which require or may require
the Company to repurchase any of its Common Stock. There are no preemptive or
similar rights granted by the Company with respect to the Company's capital
stock. There are no anti-dilution or price adjustment provisions contained in
any security issued by the Company. Except as set forth on Schedule 4.2(b)
hereto, the Company is not a party to, and, to the Knowledge of the Primary
Sellers, without inquiry, no Stockholder is a party to, any registration rights
agreements, voting agreements, voting trusts, proxies or any other agreements,
instruments or understandings with respect to the voting of any shares of the
capital stock of the Company, or any agreement with respect to the
transferability, purchase or redemption of any shares of the capital stock of
the Company. The sale of the Shares to the Purchaser does not obligate the
Company to issue any shares of capital stock or other securities to any Person
(other than the Purchaser) and will not result in a right of any holder of
Company securities, by agreement with the Company, to adjust the exercise,
conversion, exchange or reset price under such securities. The outstanding
Common Stock is all duly and validly authorized and issued, fully paid and
nonassessable. The Primary Sellers will cause the Company not to issue, or
resolve or agree not to issue, any securities to any party, prior to the
Closing. The Shares represent approximately 95.87% of the outstanding Common
Stock of the Company, on a Fully-Diluted Basis.
7
(c) Status of Shares. The Shares (i) have been duly authorized, validly
issued, fully paid and are nonassessable, and will be such at the Closing, (ii)
were issued in compliance with all applicable United States federal and state
securities laws, and will be in compliance with such laws at the Closing, (iii)
subject to restrictions under this Agreement, and applicable United States
federal and state securities laws, have the rights and preferences set forth in
the Certificate of Incorporation, as amended, and will have such rights and
preferences at the Closing, and (iv) are free and clear of all Encumbrances and
will be free and clear of all Encumbrances at the Closing (other than
Encumbrances created by the Seller or Purchaser and restrictions on the resale
of the Shares under applicable securities laws).
(d) Conflicts; Defaults. The execution and delivery of this Agreement by
the Sellers and the performance by the Sellers of the transactions and
obligations contemplated hereby and thereby to be performed by it do not (i)
violate, conflict with, or constitute a default under any of the terms or
provisions of, the Certificate of Incorporation, as amended, the Bylaws, or any
provisions of, or result in the acceleration of any obligation under, any
contract, note, debt instrument, security agreement or other instrument to which
the Company is a party or by which the Company, or any of the Company's assets,
is bound, except as set forth on Schedule 4.2(d) hereto; (ii) result in the
creation or imposition of any Encumbrances or claims upon the Company's assets
or upon any of the shares of capital stock of the Company; (iii) constitute a
violation of any law, statute, judgment, decree, order, rule, or regulation of a
Governmental Authority applicable to the Company; or (iv) constitute an event
which, after notice or lapse of time or both, would result in any of the
foregoing.
(e) Securities Laws. The Company has complied in all material respects
with applicable federal securities laws, rules and regulations, including the
Sarbanes-Oxley Act of 2002, as amended, as such laws, rules and regulations
apply to the Company and its securities. All shares of capital stock of the
Company have been issued in accordance with applicable federal securities laws,
rules and regulations. There are no stop orders in effect with respect to any
securities of the Company that have been communicated to the Company's transfer
agent.
(f) SEC Filings. The SEC Filings, when filed, complied in all material
respects with the requirements of Section 13 or Section 15(d) of the 1934 Act,
as such sections were applicable as of the dates when filed, and did not, as of
the dates when filed, contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The financial statements of the Company
included in the SEC Filings complied in all material respects with the rules and
regulations of the SEC with respect thereto as in effect at the time of filing.
Such financial statements were prepared in accordance with GAAP applied on a
consistent basis during the periods covered by such financial statements, except
as may be otherwise specified in such financial statements or the notes thereto,
and fairly present in all material respects the financial position of the
Company as of and for the dates thereof and for the periods indicated, and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
All material agreements to which the Company is a party or to which the property
or assets of the Company are subject and which are required to be disclosed
pursuant to the 1934 Act are included as part of or specifically identified in
the SEC Filings.
(g) Material Changes. Since the date of the latest audited financial
statements included within the SEC Filings, except as specifically disclosed in
the SEC Filings, (i) there has been no event that could result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of the business of a shell corporation consistent with past
practice, and (B) liabilities not required to be reflected in the Company's
8
financial statements pursuant to GAAP as required to be disclosed in filings
made with the SEC, (iii) the Company has not altered its method of accounting or
the identity of its auditors, except as disclosed in its SEC Filings, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) the Company has not
issued any equity securities ("Material Changes").
(h) Absence of Litigation. There is no action, suit, claim, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the
Primary Sellers, threatened against or affecting the Company.
(i) Brokers, Finders, and Agents. The Company is not, directly or
indirectly, obligated to anyone acting as broker, finder or in any other similar
capacity in connection with this Agreement or the transactions contemplated
hereby. No Person has or, immediately following the consummation of the
transactions contemplated by this Agreement, will have, any right, interest or
valid claim against the Company, the Sellers or the Purchaser for any
commission, fee or other compensation as a finder or broker in connection with
the transactions contemplated by this Agreement, nor are there any brokers' or
finders' fees or any payments or promises of payment of similar nature, however
characterized, that have been paid or that are or may become payable in
connection with the transactions contemplated by this Agreement, as a result of
any agreement or arrangement made by the Company. Notwithstanding the foregoing,
certain of the Designated Obligations to be paid by the Purchaser at Closing (as
specifically set forth on Schedule 4.2(j) hereof) are payable to a certain payee
that has provided consulting services to the Company in connection with the
transactions contemplated hereunder.
(j) Absence of Businesses and Liabilities. The Company is not engaged in
any business and is currently a "shell company" as defined under SEC rules. The
Company has no liabilities or obligations of any kind or nature, except as set
forth on: (i) Schedule 4.2(j) hereto, as may be updated and supplemented by the
Primary Sellers at any time prior to the Closing ("Company Closing
Obligations"), and (ii) the other schedules to this Agreement. As of the date of
this Agreement, the Company's only assets consist of cash and cash equivalents
and, at Closing, the Company shall have no assets.
(k) No Agreements. Except as set forth on Schedule 4.2(k) hereto, the
Company is not a party to any agreement, commitment or instrument, whether oral
or written, which imposes any obligations or liabilities on the Company after
the Closing.
(l) Taxes.
(i) The Company has timely filed all federal, state, local and
foreign returns, estimates, information statements and reports relating to Taxes
("Returns") required to be filed by the Company with any Tax authority prior to
the date hereof, except such Returns which are not material to the Company. All
such Returns are true, correct and complete and the Company has no basis to
believe that any audit of the Returns would cause a Material Adverse Effect upon
the Company or its financial condition. The Company has paid all Taxes shown to
be due on such Returns.
(ii) All Taxes that the Company is required by law to withhold or
collect have been duly withheld or collected, and have been timely paid over to
the proper governmental authorities to the extent due and payable.
9
(iii) The Company has no material Tax deficiency outstanding,
proposed or assessed against the Company, and the Company has not executed any
unexpired waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(iv) No audit or other examination of any Returns of the Company by
any Tax authority is known by the Company to be presently in progress, nor has
the Company been notified of any request for such an audit or other examination.
(v) No adjustment relating to any Returns filed by the Company has
been proposed in writing, formally or informally, by any Tax authority to the
Company or any representative thereof.
(vi) The Company has no liability for any Taxes for its current
fiscal year, whether or not such Taxes are currently due and payable.
(m) OTC Bulletin Board Quotation. The Common Stock is quoted on the
Over-the-Counter Bulletin Board (the "OTCBB"). There is no known action or known
proceeding pending or threatened in writing against the Company by the Nasdaq or
the Financial Industry Regulatory Authority with respect to any intention by
such entities to prohibit or terminate the quotation of the Common Stock on the
OTCBB.
(n) Corporate Records. All records and documents relating to the Company
known to the Primary Sellers, including, but not limited to, the books,
shareholder lists, government filings, Tax Returns, consent decrees, orders, and
correspondence, financial information and records (including any electronic
files containing any financial information and records), and other documents
used in or associated with the Company (the "Corporate Records") are true,
complete and accurate in all material respects. The minute books of the Company
known to the Primary Sellers contain true, complete and accurate records of all
meetings and consents in lieu of meetings of the Board of Directors of the
Company (and any committees thereof), similar governing bodies and shareholders
(the "Minute Books"). Copies of such Corporate Records of the Company and the
Minute Books currently in the possession of the Company, have been heretofore
delivered to the Purchaser; the original Corporate Records and Minute Books, to
the extent such original Corporate Records and Minute Books exist, will be
delivered to the Purchaser at Closing pursuant to Section 3.3(c).
(o) Disclosure. Each Primary Seller acknowledges and agrees that the
representations and warranties by such Primary Seller in this Section 4.2 are
true and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, under the circumstance under which they were made.
(p) Knowledge Qualification. All representations and warranties by the
Primary Sellers contained in this Section 4.2 are hereby qualified and limited
by, and are hereby made subject to, the Knowledge of the Primary Sellers to the
extent such representations and warranties cover or relate to liabilities,
obligations, claims, losses, expenses, damages, actions, liens and deficiencies
of the Company or its Affiliates due to or arising out of actions or inactions
of the Company or its Affiliates taken prior to November 11, 2007; provided,
however, the Primary Sellers had used commercially reasonable efforts in
obtaining such Knowledge.
4.3 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Sellers that:
10
(a) Organization and Standing. The Purchaser is duly organized and
validly existing under the laws of the British Virgin Islands, and has all
requisite corporate power and authority to own or lease its properties and
assets and to conduct its business as it is presently being conducted. The
Purchaser is qualified to do business and is in good standing in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect upon its assets, properties, financial condition,
results of operations or business. Except as set forth in Section 3.4(b) hereof,
no corporate proceedings on the part of the Purchaser (including the approval of
the Purchaser's Board of Directors or shareholders) are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby.
(b) Capacity of the Purchaser; Authorization; Execution of Agreements.
The Purchaser has all requisite power, authority and capacity to enter into this
Agreement and to perform the transactions and obligations to be performed by it
hereunder. The execution and delivery of this Agreement by the Purchaser, and
the performance by the Purchaser of the transactions and obligations
contemplated hereby, including, without limitation, the purchase of the Shares
from the Sellers hereunder, have been duly authorized by all requisite corporate
action of the Purchaser. This Agreement constitutes a valid and legally binding
agreement of the Purchaser, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws of the United States (both state and federal),
affecting the enforcement of creditors' rights or remedies in general from time
to time in effect and the exercise by courts of equity powers or their
application of principles of public policy.
(c) Investment Intent. The Shares being purchased hereunder by the
Purchaser are being purchased for its own account and are not being purchased
with the view to, or for resale in connection with, any distribution or public
offering thereof within the meaning of the 1933 Act. The Purchaser understands
that such Shares have not been registered under the 1933 Act by reason of their
issuance in a transaction exempt from the registration and prospectus delivery
requirements of the 1933 Act pursuant to Section 4(2) thereof, the provisions of
Rule 506 of Regulation D promulgated thereunder, and/or such other available
exemption from registration, and under the securities laws of applicable states
and agrees to deliver to the Sellers, if requested by the Sellers, an investment
letter in customary form. The Purchaser further understands that the
certificates representing such Shares shall bear a legend substantially similar
to the following and agrees that it will hold such Shares subject thereto:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY PORTION HEREOF OR
INTEREST HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE DISPOSED OF UNLESS THE SAME IS REGISTERED UNDER SAID ACTS AND
APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE AND THE COMPANY SHALL HAVE RECEIVED, AT THE
EXPENSE OF THE HOLDER HEREOF, EVIDENCE OF SUCH EXEMPTION REASONABLY
SATISFACTORY TO THE COMPANY (WHICH MAY INCLUDE, AMONG OTHER THINGS, AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY).
(d) Accredited Investor. The Purchaser, and each of the stockholders of
the Purchaser, is an "accredited investor" as defined in Rule 501(a) of
Regulation D promulgated under the 1933 Act.
(e) Suitability and Sophistication. The Purchaser, and each of the
stockholders of the Purchaser, has (i) such knowledge and experience in
financial and business matters that it is capable of independently evaluating
11
the risks and merits of purchasing the Shares it is purchasing; (ii)
independently evaluated the risks and merits of purchasing such Shares and has
independently determined that the Shares are a suitable investment for it; and
(iii) sufficient financial resources to bear the loss of its entire investment
in such Shares. The Purchaser has had an opportunity to review the SEC Filings
of the Company.
(f) Brokers, Finders, and Agents. The Purchaser is not, directly or
indirectly, obligated to anyone acting as broker, finder, or in any other
similar capacity in connection with this Agreement or the transactions
contemplated hereby. No Person has or, immediately following the consummation of
the transactions contemplated by this Agreement, will have, any right, interest
or valid claim against the Company, the Sellers or the Purchaser for any
commission, fee or other compensation as a finder or broker in connection with
the transactions contemplated by this Agreement, nor are there any brokers' or
finders' fees or any payments or promises of payment of similar nature, however
characterized, that have been paid or that are or may become payable in
connection with the transactions contemplated by this Agreement, as a result of
any agreement or arrangement made by the Purchaser.
(g) Disclosure. The Purchaser acknowledges and agrees that the
representations and warranties by the Purchaser in this Section 4.3 are true and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein not misleading, under the
circumstance under which they were made. The Purchaser acknowledges and agrees
that the Sellers do not make and have not made (i) any representations or
warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Sections 4.1 and 4.2, or (ii) any statement,
commitment or promise to the Purchaser or any of its representatives which is or
was an inducement to the Purchaser to enter into this Agreement, other than as
set forth in this Agreement.
4.4 Rule 144. The Purchaser acknowledges that the Shares it will be
purchasing are "restricted shares" and must be held indefinitely unless
subsequently registered under the 1933 Act or unless an exemption from such
registration is available. The Purchaser is aware of the provisions of Rule 144
promulgated under the 1933 Act which permit limited resale of shares purchased
in a private placement or private transaction subject to the satisfaction of
certain conditions, including, among other things, the availability of certain
current public information about the Company, the resale occurring not less than
six months after a party has purchased and paid for the security to be sold, the
sale being effected through a "broker's transaction" or in transactions directly
with a "market maker" and the number of shares being sold during any three-month
period not exceeding specified limitations. The Purchaser further acknowledges
and agrees that: (i) the Company is currently a "shell company" as defined under
SEC rules, (ii) the Shares being acquired by the Purchaser were originally
issued by the Company to the Sellers when the Company was a "shell company," and
(iii) the resale of the Shares are subject to the satisfaction of additional
conditions and requirements under Rule 144(i)(2) applicable to the shares of
"shell companies" and "former shell companies."
SECTION V COVENANTS OF THE PARTIES.
------------------------
5.1 Commercially Reasonable Efforts. Subject to the terms and conditions
hereof, each party shall use commercially reasonable efforts to take, or cause
to be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement as promptly as practicable after the
date hereof, including (i) preparing and filing as promptly as practicable all
documentation to effect all necessary SEC filings and other documents and to
obtain as promptly as practicable all consents, waivers, licenses, orders,
registrations, approvals, permits and authorizations necessary or advisable to
be obtained from any Person and/or any Governmental Authority in order to
consummate any of the transactions contemplated by this Agreement, (ii)
executing and delivering such other documents, instruments and agreements as any
12
party hereto shall reasonably request, and (iii) taking all reasonable steps as
may be necessary to obtain all such material consents, waivers, licenses,
orders, registrations, approvals, permits and authorizations. Notwithstanding
the foregoing, in no event shall any party have any obligation, in order to
consummate the transactions contemplated hereby, to: (i) take any action(s) that
would result in Material Adverse Changes in the benefits to the Sellers on the
one hand or to the Purchaser on the other of this Agreement, or (ii) dispose of
any material assets or make any material change in its business other than as
contemplated by this Agreement, or (iii) expend any material amount of funds or
otherwise incur any material burden other than those contemplated by this
Agreement.
5.2 Certain Filings; Cooperation in Receipt of Consents.
(a) The Primary Sellers and the Purchaser shall reasonably cooperate
with one another in (i) determining whether any other action by or in respect
of, or filing with, any Governmental Authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated hereby, and (ii) taking or seeking any such other actions,
consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith. Each party shall permit the other
party to review any communication given by it to, and shall consult with each
other in advance of any meeting or conference with, any Governmental Authority
or, in connection with any proceeding by a private party, with any other Person,
and to the extent permitted by the applicable Governmental Authority or other
Person, give the other party the opportunity to attend and participate in such
meetings and conferences, in each case in connection with the transactions
contemplated hereby.
(b) The Primary Sellers shall use their commercially reasonable efforts
to cause the Company to file all periodic reports pursuant to Section 13 of the
1934 Act which become due from the date of this Agreement to the Closing and all
other documents required to be filed by it with the SEC under the 1933 Act or
the 1934 Act from the date of this Agreement to the Closing; provided, however,
that the Purchaser shall cause the Company to file the Post-Closing 8-K as set
forth in Section 5.10 hereof.
5.3 Public Announcements. The parties shall consult with each other before
issuing, and provide each other a reasonable opportunity to review and comment
upon, any press release or public statement with respect to this Agreement and
the transactions contemplated hereby and, except as may be required by
applicable law, shall not issue any such press release or make any such public
statement prior to such consultation.
5.4 Access to Information; Notification of Certain Matters.
(a) From the date hereof to the Closing and subject to applicable law,
the Primary Sellers shall (i) give to the Purchaser or its counsel reasonable
access to the books and records of the Company, and (ii) furnish or make
available to the Purchaser and its counsel such financial and operating data and
other information about the Company as such Persons may reasonably request.
(b) Each party hereto shall give notice to each other party hereto, as
promptly as practicable after the event giving rise to the requirement of such
notice, of:
(i) any communication received by such party from, or given by such
party to, any Governmental Authority in connection with any of the transactions
contemplated hereby;
13
(ii) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to its Knowledge, threatened against, relating to or involving or
otherwise affecting such party or any of its Affiliates that, if pending on the
date of this Agreement, would have been required to have been disclosed, or that
relate to the consummation of the transactions contemplated by this Agreement;
provided, however, that the delivery of any notice pursuant to this Section
5.4(b) shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
5.5 Board of Directors and Officers. The Primary Sellers shall cause the
Company to appoint Cui Xiaowei as the sole director of the Company and as the
President, Chief Financial Officer and Secretary of the Company at the Closing
and obtain any necessary resignations from the Company's current directors and
officers effective as of the Closing.
5.6 Interim Operations of the Company. During the period from the date of
this Agreement to the Closing, the Primary Sellers shall cause the Company to
conduct its business only in the ordinary course of business consistent with
past practice, except to the extent otherwise necessary to comply with the
provisions hereof and with applicable laws and regulations. Additionally, during
the period from the date of this Agreement to the Closing, except as required
hereby in connection with this Agreement, the Primary Sellers shall not permit
the Company to do any of the following without the prior consent of the
Purchaser: (i) amend or otherwise change its Certificate of Incorporation or
Bylaws, (ii) issue, sell or authorize for issuance or sale (including, but not
limited to, by way of stock split or dividend), shares of any class of its
securities or enter into any agreements or commitments of any character
obligating it to issue such securities; (iii) declare, set aside, make or pay
any dividend or other distribution (whether in cash, stock or property) with
respect to its common stock, (iv) redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock, (v) enter into any material
contract or agreement or material transaction or make any material capital
expenditure other than those relating to the transactions contemplated by this
Agreement, (vi) create, incur, assume, maintain or permit to exist any
indebtedness except as otherwise incurred in the ordinary course of business,
consistent with past practice, or except for the Company Closing Obligations,
(vii) pay, discharge or satisfy claims or liabilities (absolute, accrued,
contingent or otherwise) other than in the ordinary course of business
consistent with past practice, or except for the Company Closing Obligations,
(viii) waive any material claims or rights, (ix) make any loans, advances or
capital contributions to, or investments in financial instruments of any Person,
(x) assume, guarantee, endorse or otherwise become responsible for the
liabilities or other commitments of any other Person, (xi) alter in any material
way the manner of keeping the books, accounts or records of the Company or the
accounting practices therein reflected other than alterations or changes
required by GAAP or applicable law, (xii) enter into any indemnification,
contribution or similar contract pursuant to which the Company may be required
to indemnify any other Person or make contributions to any other Person, (xiii)
amend or terminate any existing contracts in any manner that would result in any
material liability to the Company for or on account of such amendment or
termination, or (xiv) change any existing or adopt any new tax accounting
principle, method of accounting or tax election except as provided herein or
agreed to in writing by the Purchaser.
5.7 Indemnification. Subject to the limitations set forth in this Section
5.7, Keating and LC, jointly and severally, agree to indemnify and hold harmless
the Purchaser and the Company (the "Indemnified Parties") from and against any
and all liabilities, obligations, claims, losses, expenses, damages, actions,
liens and deficiencies (including reasonable attorneys' fees) which exist, or
which may be imposed on, incurred by or asserted against the Indemnified Parties
due to or arising out of any breach or inaccuracy of any representation or
warranty of any Primary Seller under Section 4.2 hereof, or any covenant,
14
agreement or obligation of any Primary Seller hereunder or in any other
certificate, instrument or document contemplated hereby or thereby ("Damages"),
for a period of six (6) months from the Closing Date (the "Indemnification," and
the period herein is referred to as the "Indemnification Period").
Notwithstanding the foregoing, Keating shall not be obligated to pay to the
Indemnified Parties any amounts for Indemnification for Damages in excess of
US$100,000 (the "Keating Cap"), and LC shall not be obligated to pay to the
Indemnified Parties any amounts for Indemnification for Damages in excess of
US$50,000 (the "LC Cap"). The Keating Cap and the LC Cap shall be referred to
herein as the "Caps." Neither Keating nor LC shall be obligated to make any
payment for Indemnification in respect of any claims for Damages that are made
by the Indemnified Parties after the expiration of the Indemnification Period;
provided, however, that the obligations of Keating and LC under the
Indemnification shall remain in full force and effect, subject to the Caps, in
respect of any claims for Damages which are made prior to, and remain pending
at, the expiration of the Indemnification Period. In addition, LC covenants that
it shall have no liquidation, dissolution, winding up or any other similar
action of itself within the Indemnification Period. For the abundance of
clarity, GFI is not responsible for any indemnification to the Indemnified
Parties for any Damages. The indemnification provided by this Section 5.7 shall
be the sole remedy of the Indemnified Parties for any Damages; provided,
however, that no remedies of the Indemnified Parties for any breach by any of
the Sellers of the representations and warranties contained in Section 4.1 shall
be limited in any way by this Section 5.7.
5.8 Information Statement. The Primary Sellers shall cause the Company to
file the Information Statement with the SEC, and to mail the Information
Statement to its Stockholders of record, within two (2) Business Days after the
execution and delivery of this Agreement by the parties. The Information
Statement shall be prepared by the Company, and prior to filing with the SEC,
shall be subject to the Purchaser's review and comment.
5.9 Stockholder Filings. The Purchaser and the Primary Sellers shall, at
their own cost and expense, make any stockholder filings with the SEC to the
extent, and in the time period, required by SEC rules as a result of the
transactions contemplated by this Agreement.
5.10 Post-Closing 8-K. Following the Closing, the Purchaser shall, at its
own cost and expense, cause the Company to timely file a Current Report on Form
8-K with the SEC disclosing the change of control of the Company and the
purchase of the Shares contemplated hereunder and any other information required
in connection therewith ("Post-Closing 8-K").
5.11 Assignment of Registration Rights. Effective as of the Closing, each
of the Sellers hereby assigns and transfers to the Purchaser all of its rights
under those certain registration rights agreements to which each Seller is party
as listed on Schedule 4.2(b) ("Registration Rights Agreements"), with respect to
the Shares being sold to the Purchaser hereunder, and the Purchaser hereby
accepts such assignment. The Purchaser shall become, and is hereby made, a party
to each such Registration Rights Agreement as a Holder (as such term is defined
in the Registration Rights Agreement) and shall, and hereby agrees to, be bound
by all of the terms and conditions set forth in the Registration Rights
Agreement applicable to it as a Holder, with respect to the Shares being
acquired by it hereunder.
5.12 Interim Actions of the Parties.
(a) Until the earlier of the Closing Date or the termination of this
Agreement pursuant to Section VII hereof, neither the Sellers nor any of their
respective Affiliates shall, directly or indirectly (i) take any action to
solicit or initiate any Acquisition Proposal, or (ii) continue, initiate or
engage in negotiations concerning any Acquisition Proposal with, or disclose any
non-public information relating to the Company, or afford access to the
properties, books or records of the Company to, any corporation, partnership,
person or other entity (except the Purchaser and its Affiliates) that may be
considering or has made an Acquisition Proposal.
15
(b) Until the earlier of the Closing Date or the termination of this
Agreement pursuant to Section VII hereof, neither the Purchaser nor any of its
Affiliates shall, directly or indirectly, take any action to solicit or pursue
new offers or continue negotiations with or from any person other than the
Primary Sellers concerning the acquisition of a controlling interest in a public
shell company.
(c) Until the earlier of the Closing Date or the termination of this
Agreement pursuant to Section VII hereof, neither the Sellers, the Purchaser,
nor any of their respective Affiliates shall engage directly or indirectly in
any transaction involving any of the securities of the Company other than as
contemplated by this Agreement.
5.13 Payment of Liabilities. Prior to or at the Closing, the Primary
Sellers shall pay, or shall cause the Company to pay, in full each of the
Company Closing Obligations, as well as any additional liabilities or
obligations incurred by the Company since the date of this Agreement through
Closing, including any and all liabilities or obligations incurred by the
Company in connection with the transactions contemplated by this Agreement;
provided, however, that the Designated Obligations shall be paid by the
Purchaser at the Closing pursuant to Section 2.3 hereof.
5.14 Deposit. The Purchaser and the Sellers acknowledge that $25,000
("Deposit") was deposited into an escrow account ("Escrow Account") by the
Purchaser pursuant to an Escrow Agreement between the Purchaser, the Sellers and
Escrow, LLC ("Escrow Agent") dated March 1, 2010. The Deposit shall be disbursed
from the Escrow Account and paid: (i) to the Sellers, if the transactions
contemplated by this Agreement fail to close due to a material breach of any
representation, warranty, covenant, agreement or obligation of the Purchaser
hereunder or in any other certificate, instrument or document contemplated
hereby or thereby by the Purchaser ("Purchaser's Breach"), (ii) to the
Purchaser, if the transactions contemplated by this Agreement fail to close for
any reason other than the Purchaser's Breach, or (iii) to the Sellers as partial
payment of the Purchase Price, if the transactions contemplated by this
Agreement close. The Deposit shall be held and disbursed pursuant to the terms
of the Escrow Agreement and this Agreement, and the Purchase Price and the
amount of the Designated Obligations shall be held and disbursed pursuant to the
terms of the Escrow Agreement, this Agreement and the joint instruction letter
delivered by the parties under Sections 3.2(f) and 3.4(c) hereof.
SECTION VI CONDITIONS.
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6.1 Conditions to the Obligations of Each Party. The obligations of the
Sellers and the Purchaser to consummate the transactions contemplated by this
Agreement are subject to the satisfaction of the following conditions:
(a) No Governmental Authority of competent authority or jurisdiction
shall have issued any order, injunction or decree, or taken any other action,
that is in effect and restrains, enjoins or otherwise prohibits the consummation
of the transactions contemplated hereby; and
(b) The parties shall have obtained or made all consents, approvals,
actions, orders, authorizations, registrations, declarations, announcements and
filings contemplated by this Agreement.
6.2 Conditions to the Obligations of the Sellers. The obligations of the
Sellers to consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following further conditions:
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(a) The Purchaser has performed or complied in all material respects
with all agreements and covenants required by this Agreement to be performed by
or complied with by the Purchaser on or prior to the Closing Date, except to the
extent that any failure to perform or comply (other than a willful failure to
perform or comply or failure to perform or comply with an agreement or covenant
reasonably within the control of the Purchaser) does not, or will not,
constitute a Material Adverse Effect with respect to the Sellers taken as a
whole;
(b) The representations and warranties of the Purchaser contained in
this Agreement shall have been true and correct when made and, in all material
respects, at and as of the time of the Closing as if made at and as of such time
(except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case it shall be true and correct as of such date, or
except to the extent any such representation or warranty is subject to any
materiality qualifications as contained herein);
(c) The Sellers shall have received a certificate signed by the
Purchaser to the foregoing effect; and
(d) The Purchaser shall have delivered to the Sellers written
instruments, in forms reasonably satisfactory to the Sellers, evidencing the
Purchaser's deposit into the Escrow Account, by wire transfer of immediately
available funds at least two (2) business days prior to the Closing, all funds
necessary to satisfy the Purchaser's obligations to the Sellers under Section
2.2 hereof and to those certain payees under the Designated Obligations under
Section 2.3.
6.3 Conditions to the Obligations of the Purchaser. The obligations of the
Purchaser to consummate the transactions contemplated by this Agreement are
subject to the satisfaction of the following further conditions:
(a) The Sellers have performed or complied in all material respects with
all agreements and covenants required by this Agreement to be performed by or
complied with by the Sellers on or prior to the Closing Date, except to the
extent that any failure to perform or comply (other than a willful failure to
perform or comply or failure to perform or comply with an agreement or covenant
reasonably within the control of the Sellers) does not, or will not, constitute
a Material Adverse Effect with respect to the Purchaser or the Company taken as
a whole;
(b) At least ten (10) days have expired since the filing of the
Information Statement with the SEC, and any comments received from the SEC
during such ten (10) day period have been responded to, or otherwise handled, to
the mutual satisfaction of the Primary Sellers and the Purchaser.
(c) The representations and warranties of each Seller contained in this
Agreement shall have been true and correct when made and, in all material
respects, at and as of the time of the Closing as if made at and as of such time
(except to the extent any such representation or warranty expressly speaks as of
an earlier date, in which case it shall be true and correct as of such date, or
except to the extent any such representation or warranty is subject to any
materiality qualifications as contained herein);
(d) The Purchaser shall have received a certificate signed by each
Seller to the foregoing effect;
(e) The Shares being sold to the Purchaser hereunder for the Purchase
Price shall represent approximately 95.87% of the issued and outstanding shares
of the Company's Common Stock on a Fully-Diluted Basis;
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(f) The Primary Sellers shall have delivered to the Purchaser written
instruments, in forms reasonably satisfactory to the Purchaser, evidencing the
payment of the Company Closing Obligations, subject to the provisions of this
Agreement, as well as any additional liabilities or obligations incurred by the
Company since the date of this Agreement through the Closing, including any and
all liabilities or obligations incurred by the Company in connection with the
transactions contemplated by this Agreement (other than the Designated
Obligations).
SECTION VII TERMINATION.
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7.1 Termination. This Agreement may be terminated at any time prior to the
Closing by written notice by the terminating party to the other party (except if
such termination is pursuant to Section 7.1(a)):
(a) by mutual written agreement of the Purchaser and all of the Sellers;
(b) by either the Purchaser or by all of the Sellers, if
(i) the transactions contemplated by this Agreement shall not have
been consummated by April 21, 2010 (the "End Date"); provided, however, that
this date will be automatically extended by the number of days reasonably needed
for the Company, the Purchaser and the Primary Sellers to review and respond to
any SEC comment letters sent to the Company in respect of the Information
Statement; provided further, however, that the right to terminate this Agreement
under this Section 7.1(b)(i) shall not be available to any party whose breach of
any provision of or whose failure to perform any obligation under this Agreement
has been the cause of, or has resulted in, the failure of the transactions to
occur on or before the End Date; or
(ii) a judgment, injunction, order or decree of any Governmental
Authority having competent jurisdiction enjoining either a Seller or the
Purchaser from consummating the transactions contemplated by this Agreement is
entered and such judgment, injunction, judgment or order shall have become final
and nonappealable and, prior to such termination, the parties shall have used
their respective commercially reasonable efforts to resist, resolve or lift, as
applicable, such judgment, injunction, order or decree; provided, however, that
the right to terminate this Agreement under this Section 7.1(b)(ii) shall not be
available to any party whose breach of any provision of or whose failure to
perform any obligation under this Agreement has been the cause of such judgment,
injunction, order or decree.
(c) by all of the Sellers:
(i) if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of the Purchaser set forth in this
Agreement shall have occurred which would cause the conditions set forth in
Section 6.2(a) not to be satisfied, and any such condition shall be incapable of
being satisfied by the End Date or such breach or failure to perform has not
been cured within ten days after notice of such breach or failure to perform has
been given by the Sellers to the Purchaser.
(d) by the Purchaser:
(i) if a breach of or failure to perform any representation,
warranty, covenant or agreement on the part of either of the Sellers set forth
in this Agreement shall have occurred which would cause the conditions set forth
in Section 6.3 not to be satisfied, and any such condition is incapable of being
satisfied by the End Date or such breach or failure to perform has not been
cured within ten days after notice of such breach or failure to perform has been
given by the Purchaser to the Sellers.
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7.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 7.1, except as set forth in Section 7.3 below, there shall be no
liability or obligation on the part of the Purchaser or the Sellers, or any of
their respective officers, directors, shareholders, agents or Affiliates, except
that the provisions of this Section 7.2, Section 7.3 and Section VIII of this
Agreement shall remain in full force and effect and survive any termination of
this Agreement and except that, notwithstanding anything to the contrary
contained in this Agreement, no parties shall be relieved of or released from
any liabilities or damages arising out of its material breach of or material
failure to perform its obligations under this Agreement. Upon termination of
this Agreement, the Deposit shall be disbursed pursuant to the terms of the
Escrow Agreement and Section 5.14 of this Agreement.
7.3 Expenses. Whether or not the transactions contemplated by this
Agreement are consummated, all fees and expenses of any party hereto incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees and expenses.
SECTION VIII MISCELLANEOUS.
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8.1 Waivers and Amendments. This Agreement may be amended or modified in
whole or in part only by a writing which makes reference to this Agreement
executed by all of the parties hereto. The obligations of any party hereunder
may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the party
claimed to have given the waiver; provided, however, that any waiver by any
party of any violation of, breach of, or default under any provision of this
Agreement or any other agreement provided for herein shall not be construed as,
or constitute, a continuing waiver of such provision, or waiver of any other
violation of, breach of or default under any other provision of this Agreement
or any other agreement provided for herein.
8.2 Entire Agreement. This Agreement (together with any Schedules and/or
any Exhibits hereto) among the Sellers and the Purchaser, the Escrow Agreement
and the other agreements and instruments expressly provided for herein, together
set forth the entire understanding of the parties hereto and supersede in their
entirety all prior contracts, agreements, arrangements, communications,
discussions, representations, and warranties, whether oral or written, including
the Letter of Intent between the Sellers and the Purchaser dated March 1, 2010,
among the parties with respect to the subject matter hereof.
8.3 Governing Law and Submission to Jurisdiction. This Agreement shall in
all respects be governed by and construed in accordance with the internal
substantive laws of the State of Nevada without giving effect to the principles
of conflicts of law thereof. Each of the parties irrevocably agrees that any
legal action or proceeding arising out of or relating to this Agreement brought
by any other party or its successors or assigns shall be brought and determined
in any Nevada State or federal court sitting in Nevada (or, if such court lacks
subject matter jurisdiction, in any appropriate Nevada State or federal court),
and each of the parties hereby irrevocably submits to the exclusive jurisdiction
of the aforesaid courts for itself and with respect to its property, generally
and unconditionally, with regard to any such action or proceeding arising out of
or relating to this Agreement and the transactions contemplated hereby. Each of
the parties agrees not to commence any action, suit or proceeding relating
thereto except in the courts described above in Nevada, other than actions in
any court of competent jurisdiction to enforce any judgment, decree or award
rendered by any such court in Nevada as described herein. Each of the parties
hereby irrevocably and unconditionally waives, and agrees not to assert, by way
of motion or as a defense, counterclaim or otherwise, in any action or
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proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby, (a) any claim that it is not personally subject to the
jurisdiction of the courts in Nevada as described herein for any reason, (b)
that it or its property is exempt or immune from jurisdiction of any such court
or from any legal process commenced in such courts (whether through service of
notice, attachment prior to judgment, attachment in aid of execution of
judgment, execution of judgment or otherwise) and (c) that (i) the suit, action
or proceeding in any such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper or (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such courts.
8.4 Notices. Any notice, request or other communication required or
permitted hereunder shall be in writing and be deemed to have been duly given
(a) when personally delivered or sent by facsimile transmission (the receipt of
which is confirmed in writing), (b) one Business Day after being sent by a
nationally recognized overnight courier service or (c) five Business Days after
being sent by registered or certified mail, return receipt requested, postage
prepaid, to the parties at their respective addresses set forth below.
If to the Sellers:
Mr. Kevin R. Keating
190 Lakeview Way
Vero Beach, Florida 32963
Facsimile: (772) 231-5947
Lionsridge Capital, LLC
2395 Woodglen Drive
Aurora, Illinois 60502
Attn: Frederic M. Schweiger, Manager
Facsimile: (630) 692-0647
Garisch Financial, Inc.
2395 Woodglen Drive
Aurora, Illinois 60502
Attn: Frederic M. Schweiger, President
Facsimile: (630) 692-0647
if to the Purchaser Capital Soldier Limited
Quastisky Building
P.O. Box 4389
Road Town, Tortola
British Virgin Islands
Attn: Cui Xiaowei
Facsimile: (852) 2116-1232
With a copy to: DLA Piper LLP (US)
1251 Avenue of the Americas
New York, NY 10020
Attention: William N. Haddad
Fax: (212) 884-8498
And
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Any party by written notice to the other
may change the address or the persons to
whom notices or copies thereof shall be
directed.
8.5 Counterparts; Facsimile and Electronic Signatures. This Agreement may
be executed in any number of counterparts, each of which shall be deemed to be
an original, and all of which together will constitute one and the same
instrument. The signature pages hereto in facsimile copy or other electronic
means, including e-mail attachment, shall be deemed an original for all
purposes.
8.6 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, except that the Sellers may not assign or transfer their
rights hereunder without the prior written consent of the Purchaser, and the
Purchaser may not assign or transfer its rights under this Agreement without the
consent of the Sellers.
8.7 Third Parties. Nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any Person other than
the parties hereto and their successors and assigns any rights or remedies under
or by reason of this Agreement.
8.8 Schedules. The Schedules and Exhibits attached to this Agreement are
incorporated herein and shall be part of this Agreement for all purposes.
8.9 Headings. The headings in this Agreement are solely for convenience of
reference and shall not be given any effect in the construction or
interpretation of this Agreement.
8.10 Interpretation. Whenever the context may require, any pronoun used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
[Signature Page Follows]
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SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT
BY AND AMONG
THE SELLERS AND THE PURCHASER
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.
THE SELLERS:
/s/ Kevin R. Keating
Kevin R. Keating, Individually
Lionsridge Capital, LLC,
an Illinois limited liability company
By: /s/ Frederic M. Schweiger
Frederic M. Schweiger, Manager
Garisch Financial, Inc,
an Illinois corporation
By: /s/ Frederic M. Schweiger
Frederic M. Schweiger, President
THE PURCHASER:
Capital Soldier Limited
a British Virgin Islands company
By: /s/Cui Xiaowei
Cui Xiaowei, Director
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