Exhibit 10.1
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of January 16,
2007, is entered into by and among DRAGON INTERNATIONAL GROUP CORP., a company
organized under the laws of Nevada ("Buyer"), and WELLTON INTERNATIONAL FIBER
CORP., a corporation organized under the laws of the British Virgin Islands (the
"Company"). Buyer and the Company are sometimes referred to herein as a "Party"
and collectively as the "Parties". Defined terms used herein not otherwise
defined shall have the meanings ascribed to them in Article VIII hereof.
Recitals
WHEREAS, Buyer desires to purchase from the Company, and the Company desires
to sell to Buyer, fifty-one (51%) percent of the Company's issued and
outstanding shares of common stock (the "Common Stock");
WHEREAS, the Parties intend and contemplate that the stock purchase and the
other transactions contemplated by this Agreement and the related Documents (as
defined herein) (collectively, the "Transactions") will be consummated as of the
Closing Date (as defined herein).
NOW, THEREFORE, in consideration of these premises and the mutual agreements,
covenants, representations and warranties herein contained, the Parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Stock Purchase.
At the Closing and subject to the terms and conditions of this Agreement,
Buyer shall purchase from the Company and the Company shall sell to Buyer, an
amount of shares of Common Stock aggregating fifty-one (51%) percent of the
Company's Common Stock as determined on the Closing Date.
ARTICLE II
CLOSING; STOCK PURCHASE CONSIDERATION;
DELIVERIES AT CLOSING
2.1 Closing.
The closing of the Transactions contemplated by this Agreement and the
Documents (collectively, the "Closing") shall take place at the offices of
Ellenoff Grossman & Schole, LLP, or such other place as the Parties hereto may
agree upon, on or before March 31, 2007 or such later date as the Parties hereto
may agree. The date of the Closing is referred to herein as the ("Closing
Date").
2.2 Stock Purchase Consideration and Adjustment.
(a) Purchase Price. The aggregate consideration to be paid by Buyer for the
Common Stock ("Purchase Price") will amount to fifty-one (51%) percent of the
audited net tangible asset value of the Company as reflected on the Company's
audited financial statements for the year ended December 31, 2006 (the "Audited
Financials"); such Purchase Price to be paid in shares of restricted stock of
the Buyer (the "Consideration Stock") the valuation for which will be calculated
pursuant to section 2.2(b) hereof. In no event will the value of the
Consideration Stock exceed $1,500,000; and
(b) Consideration Stock Valuation. For purposes of Section 2.2(a) hereof, the
number of shares of Consideration Stock to be issued by the Buyer shall be
computed by dividing the aggregate Purchase Price by the closing price of
Buyer's common stock on the date that is ten (10) calendar days prior to the
Closing Date or, if such date is not a business day, then on the business day
immediately preceding such date.
2.3 Deliveries at the Closing.
(a) At the Closing, the Company shall deliver or cause to be delivered to Buyer:
(i) the stock certificate(s) representing fifty-one (51%) percent of
the issued and outstanding Common Stock of Company;
(iii) such other documents and instruments reasonably requested by
Buyer in connection with the Transactions.
(b) At the Closing, Buyer shall deliver or cause to be delivered to the Company:
(i) the Consideration Stock as provided in Section 2.2(a)(i);
(ii) such other documents and instruments reasonably requested by
the Company in connection with the Transactions.
ARTICLE III
CONDITIONS TO CLOSING OF BUYER
The obligations of Buyer to consummate the transactions to be performed by it
in connection with the Closing are subject to satisfaction of the following
conditions as of the Closing Date:
3.1 Closing Deliveries.
All of the deliveries required to be made by the Company at the Closing
pursuant to Section 2.3(a) shall have been made.
3.2 Representations and Warranties; Agreements and Covenants.
The representations and warranties of the Company set forth in Article V
shall be true and correct in all material respects as of the date hereof and the
Closing Date, except, in each case, where the failure to be so true and correct
in all material respects would not materially delay or prevent the consummation
of the Transactions. The Company shall have performed all its agreements and
covenants hereunder.
3.3 Proceedings.
No statute, rule, regulation, Order, decree, or injunction shall have been
enacted, entered, promulgated or enforced by any Court or Governmental Entity
which prohibits or restricts the consummation of the stock purchase or the other
Transactions contemplated by this Agreement or the Documents.
3.4 Consents.
All consents by third parties (including Governmental Entities, if any)
shall have been obtained that are required for the consummation of the
Transactions as contemplated hereby. All Permits and Licenses necessary for the
operation of the Business by Buyer after the Closing shall have been obtained by
Buyer at Buyer's sole expense and shall be in full force and effect.
3.5 Authorization.
All authorization and other proceedings taken or required to be taken by the
Company in connection with the Transactions contemplated by this Agreement and
the Documents, or to be consummated at or prior to the Closing shall have been
taken and all documents incident thereto shall be reasonably satisfactory in
form and substance to Buyer.
3.6 Documents.
All of the Documents shall have been duly executed and delivered by the
Company and shall be in full force and effect.
3.7 Company Financials.
This agreement shall be conditional upon the engagement by Company and
Dragon of an SEC approved auditor.
3.8 Satisfactory Due Diligence.
The results of Buyer's due diligence review of Company and the Business
shall be satisfactory to Buyer.
ARTICLE IV
CONDITIONS TO CLOSING OF THE COMPANY
The obligations of the Company to consummate the transactions to be performed
by it in connection with the Closing are subject to satisfaction of the
following conditions as of the Closing Date:
4.1 Closing Deliveries.
All of the deliveries required to be made by Buyer at the Closing pursuant to
Section 2.3(b) shall have been made.
4.2 Representations and Warranties; Agreements and Covenants.
The representations and warranties of Buyer set forth in Article VI shall be
true and correct in all material respects as of the date hereof and the Closing
Date, other than such representations and warranties as are specifically made as
of another date, which shall be true and correct in all material respects as of
such date, except, in each case, where the failure to be so true and correct in
all material respects would not materially delay or prevent the consummation of
the Transactions. Buyer shall have performed all its agreements and covenants
hereunder.
4.3 Proceedings.
No statute, rule, regulation, Order, decree, or injunction shall have been
enacted, entered, promulgated or enforced by any Court or Governmental Entity
which prohibits or restricts the consummation of the stock purchase or the other
Transactions contemplated by this Agreement or the Documents.
4.4 Authorization.
All authorization and other Proceedings taken or required to be taken by
Buyer in connection with the Transactions contemplated by this Agreement and the
Documents, or to be consummated at or prior to the Closing shall have been taken
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company.
4.5 Documents.
All of the Documents shall have been duly executed and delivered by Buyer and
shall be in full force and effect.
4.7 Shareholder Approval.
The Transaction shall have been approved by the Company's shareholders
pursuant to the Law and such approval shall be reasonably satisfactory in form
and substance to the Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
5.1 Organization; Capitalization; Ownership.
(a) Company is a corporation duly organized, validly existing and in good
standing under the Laws of the state or country of its organization, and is
qualified to do business in every jurisdiction in which the failure to so
qualify could have a Material Adverse Effect on it. Company has no subsidiaries,
whether wholly or partially owned.
(b) The entire authorized capital stock of Company consists of (i) 50,000 shares
of Common Stock, of which 50,000 shares of Common Stock are issued and
outstanding and (ii) no shares of preferred stock. All of the issued and
outstanding Common Stock have been duly authorized, are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require Company to issue,
sell, or otherwise cause to become outstanding any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to Company.
(c) The Common Stock is free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act, and state securities Laws),
Taxes, Liens, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands.
5.2 Authorization of Transactions.
Upon execution and delivery by the Company, this Agreement is and each
Document to which the Company is a party will constitute the valid and legally
binding obligation of the Company hereto, enforceable against the Company in
accordance with its terms and conditions, subject to (a) judicial principles
limiting the availability of specific performance, injunctive relief and other
equitable remedies, and (b) bankruptcy, insolvency, reorganization, moratorium
or other similar Laws now or hereafter in effect generally relating to or
affecting creditors' rights.
5.3 Non-contravention.
to the Company's Knowledge, neither the execution, delivery and performance
of the Documents nor the consummation of the Transactions as contemplated by the
Documents by the Company shall (a) violate any Law to which Company, or the
Business is subject, (b) violate any provision of the governing documents of
Company, or (c) as of the Closing Date, result in the imposition of any Lien
upon any of the assets of the Business.
5.4 Financial Statements; Assets and Liabilities.
The financial statements as they relate to Company are materially
accurate representations of the financial condition of Company during the period
reported. Such financial statements have been prepared in accordance with GAAP
(except as provided in Section 5.12 below). The financial statements of Company
described herein are collectively referred to as "Company Financial Statements".
5.5 Creditors; Bankruptcy, Etc.
Company is not a party to any proceeding as a debtor in any Court under Title
11 of the United States Bankruptcy Code or any other insolvency or debtors'
relief act, whether state or federal, or for the appointment of a trustee,
receiver, liquidator, assignee, sequestrator or other similar official of
Company or for a substantial part of any of its assets or property.
5.6 Legal Compliance; Permits; Licenses.
(a) Company has complied with and is in compliance in
all material respects with all applicable Laws,
Environmental and Safety Requirements, Orders and Permits, except where the
failure to comply would not have a Material Adverse Effect upon the financial
condition of Company, and no Proceeding is pending or, to the Company's
Knowledge, threatened, alleging any failure to so comply.
(b) Company is not subject to any litigation,
Proceeding or claim with respect to the Business nor has
Company, to the Company's Knowledge, received any notice of any pending or
threatened litigation, Proceeding or claim with respect to the Business to the
effect that Company is or may be liable to any Person or entity, or responsible
or potentially responsible for the costs of any remedies or removal action or
other cleanup costs, as a result of noncompliance with any Environmental or
Safety Requirements. To the Company's Knowledge, there is no past or present
action, activity, condition or circumstance that could be expected to give rise
to any such Liability on the part of Company to any Person or entity for such
cleanup costs or arising from or due to any unsafe or dangerous condition.
(c) To the Company's Knowledge, Company has obtained
all licenses, certificates of authority, Permits,
authorizations, Orders and approvals of, and has made all registrations or
filings with, all Governmental Entities as required or desirable in connection
with the conduct of its business other than licenses, certificates, Permits,
authorizations, Orders, approvals, registrations or filings that if not obtained
or made would not have Material Adverse Effect on the financial condition of
Company (collectively, the "Licenses"). To the Company's Knowledge, Company is
not transacting any business in any jurisdiction in which it is not authorized
or permitted to transact such business except where the failure to obtain such
authorization or permission will not have a Material Adverse Effect on the
Company. To the Company's Knowledge, all Licenses are valid and in full force
and effect.
5.7 Contracts.
As of the date of this Agreement, Company Contracts are valid, binding and
enforceable in accordance with their terms and are in full force and effect
against Company and, to the Knowledge of the Company, the other parties thereto,
subject to (a) judicial principles limiting the availability of specific
performance, injunctive relief and other equitable remedies, and (b) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter in
effect generally relating to or affecting creditors' rights. Notwithstanding the
foregoing, the Company does not represent and warrant that Company Contracts
shall remain in full force and effect after the Closing Date. In consideration
of the above, Buyer hereby acknowledges that Company may not be able to conduct
the Business it currently conducts prior to the Closing after the Closing Date.
5.8 Litigation.
There are no Proceedings current, pending or, to the Knowledge of the
Company, threatened against the Company that (i) seek to restrain or enjoin the
consummation of the Transactions, or (ii) could reasonably be expected to have a
Material Adverse Effect on Company.
5.9 Investment.
The Company is acquiring the Consideration Stock for its own account,
and not as a nominee or agent for any other person, is not participating
directly or indirectly in the underwriting of any such distribution or transfer
of the Consideration Stock nor will the Company act in any way that would deem
the Company an underwriter, within the meaning of the Securities Act. The
Company is not acquiring the Consideration Stock with a view to or for sale in
connection with any distribution thereof within the meaning of the Securities
Act. The Company understands, acknowledges and agrees that the Consideration
Stock have not been registered under the Securities Act or applicable state
securities laws, and may not be sold or otherwise transferred by the Company to
a Person unless the Consideration Stock has been registered under the Securities
Act and applicable state securities laws or is sold or transferred in a
transaction exempt therefrom. The Company understands that no public market now
exists for any of the Consideration Stock. The Company has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of its purchase of the Consideration Stock. The Company is an
"accredited investor" within the meaning of Rule 501 of Regulation D under the
Securities Act. The Company acknowledges that Buyer has made available to the
Company the opportunity to ask questions and to receive answers, and to obtain
information necessary to evaluate the merits and risks of a purchase of the
Consideration Stock and to verify the accuracy of any information, documents,
financial statements, projections, records and books made available by Buyer.
The Company has been represented by such advisors, each of whom has been
personally selected by the Company, as the Company has found necessary to
consult concerning the transaction contemplated hereby.
5.10 Brokers.
The Company has not incurred any obligation to any broker or finder in
connection with the Transactions.
5.11 Required Government Consents.
No approval, authorization, certification, consent, variance, permission,
License, or Permit to or from, or notice, filing or recording to or with any
government or Governmental Entity is necessary to consummate the contemplated
Transactions.
5.12 Tax Matters.
(a) (i) all Tax Returns which are required to be
filed on or before the Closing Date (taking into
account any applicable filing extensions) by or with respect to Company has been
or will be duly and timely filed, (ii) all information provided in each such Tax
Return is true, correct and complete, except to the extent a reserve for Taxes
has been established in the Company Financial Statements, and (iii) all
withholding Tax requirements imposed on or with respect to Company have been or
will be satisfied in full.
(b) No claim against Company for any Taxes, and no
assessment, deficiency or adjustment has been
asserted or, to the Knowledge of the Company, proposed with respect to any Tax
Return of or with respect to Company.
5.13 Title to Property.
Company's properties are not subject to any mortgage, encumbrance or Lien of
any kind as of the Closing Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Company as follows:
6.1 Organization; Ownership.
Buyer is a company duly incorporated, validly existing and in good standing
under the Laws of Nevada. As of January 16, 2007, Buyer has authorized capital
stock consisting of 200,000,000 common stock, par value $.001 per share, of
which 74,733,643 shares of common stock are issued and outstanding.
6.2 No Restrictions Against Transactions.
Neither the execution, delivery and performance of the Documents nor the
consummation of the Transactions contemplated thereby, nor compliance by Buyer
with any of the provisions thereof (in each case, as applicable), will (i)
violate, conflict with, or result in a material breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under any of the terms, conditions or provisions of
the governing documents of Buyer, or under any note, bond, mortgage, indenture,
deed of trust or other agreement, contract or instrument to which Buyer is
bound, or by which Buyer or any of its properties or assets may be bound or
affected, which in either case would prevent the consummation by Buyer of the
Transactions contemplated hereby or by the Documents, or (ii) violate any Law
applicable to Buyer or any of its properties or assets which would prevent
consummation by Buyer of the Transactions contemplated by the Documents. No
consent or approval by, notice to, or registration with, any Governmental Entity
or any Person is required on the part of Buyer in connection with the execution
and delivery of the Documents or the consummation by Buyer of the Transactions
contemplated thereby which would prevent consummation by Buyer of the
Transactions contemplated by the Documents.
6.3 No Brokers.
Buyer has not incurred any obligation to any broker or finder in connection
with the Transactions.
6.4 Investment.
Buyer is acquiring the Common Stock for its own account, and not as a nominee
or agent for any other person, is not participating directly or indirectly in
the underwriting of any such distribution or transfer of the Common Stock nor
will Buyer act in any way that would deem Buyer an underwriter, within the
meaning of the Securities Act. Buyer is not acquiring the Common Stock with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act. Buyer understands, acknowledges and agrees that
the Common Stock have not been registered under the Securities Act or applicable
state securities laws, and may not be sold or otherwise transferred by Buyer to
a Person unless the Common Stock have been registered under the Securities Act
and applicable state securities laws or are sold or transferred in a transaction
exempt therefrom. Buyer understands that no public market now exists for any of
the Common Stock. Buyer has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
purchase of the Common Stock. Buyer is an "accredited investor" within the
meaning of Rule 501 of Regulation D under the Securities Act. Buyer acknowledges
that the Company has made available to Buyer the opportunity to ask questions
and to receive answers, and to obtain information necessary to evaluate the
merits and risks of a purchase of the Common Stock and to verify the accuracy of
any information, documents, financial statements, projections, records and books
made available by Company. Buyer has been represented by such advisors, each of
whom has been personally selected by Buyer, as Buyer has found necessary to
consult concerning the transaction contemplated hereby.
ARTICLE VII
SURVIVAL; INDEMNIFICATION;
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 Survival; Time to Assert Claims.
(a) Survival. Subject to Section 7.1(b) hereinbelow, the representations,
warranties and indemnification of the Parties set forth in this Agreement, or in
any certificate or other writing delivered in connection with this Agreement,
shall survive the Closing and the consummation of the Transactions contemplated
hereby until 11:59 P.M. (Eastern time) on the six (6) month anniversary of the
Closing Date. The covenants and agreements of the Parties set forth in this
Agreement which are not to be fully performed on the Closing Date shall survive
the Closing until fully performed or fulfilled, unless non-compliance with such
covenants or agreements is waived in writing by the Party entitled to such
performance.
(b) Time to Assert Claims. Any claim asserted pursuant to Section 7.2 for a
breach by a Party or any inaccuracy of a representation, warranty, covenant or
agreement of another Party contained herein must be asserted by written notice
given by one Party to the other on or before 11:59 P.M. (Eastern time) on the
six (6) month anniversary of the Closing Date. The limitation on the time during
which indemnification may be asserted, sought or obtained shall be extended if a
notice of a claim shall have been timely given pursuant to this Section 7.1(c),
until the related claim for indemnification has been satisfied or otherwise
resolved as provided in this Article VII.
(c) Adjustment to Purchase Price. All indemnification payments under
Section 7.2 will be deemed adjustments to the Purchase Price.
(d) Limitation. Notwithstanding anything to the contrary contained herein, the
Company shall not be required to indemnify Buyer Indemnitees (as defined below)
and Buyer Indemnitees may not seek indemnification under Section 7.2(a) for
Damages exceeding (whether singularly or in the aggregate) the sum of $1,000,000
less an amount equal to the dollar amount of any claims previously paid by the
Company to Buyer Indemnitees under this Section 7. Notwithstanding anything to
the contrary contained herein, the Buyer Indemnitees shall not be entitled to
receive indemnification under Section 7.2(a) until the Damages, individually or
in the aggregate, exceed $100,000.
(e) Buyer's Actual Knowledge of Claim. Buyer is not aware of any facts or
circumstances that would serve as the basis for a claim by Buyer against the
Company based upon a breach of any of the representations and warranties of the
Company contained in this Agreement. Buyer shall be deemed to have waived in
full the right to assert any claim against the Company for any breach of any of
the Company's representations and warranties of which Buyer has such awareness
at the Closing.
7.2 Indemnification; Indemnification Procedures.
(a) Indemnification by the Company. The Company shall indemnify, save and hold
harmless Buyer, its Affiliates and their respective stockholders, directors,
officers, employees and agents (collectively "Buyer Indemnitees") from and
against any and all costs, losses, Liabilities, damages, lawsuits, deficiencies,
claims and expenses (whether or not arising out of third-party claims),
including, without limitation, interest, penalties, travel expenses, reasonable
attorneys' fees and all amounts paid in investigation, defense or settlement of
any of the foregoing (collectively, "Damages"), incurred in connection with or
arising out of or resulting from any breach of any representation, warranty,
covenant or agreement, or the inaccuracy of any representation or warranty, made
by the Company, in or pursuant to this Agreement or the Documents.
(b) Indemnification by Buyer. Buyer shall indemnify, save and hold harmless the
Company and its Affiliates and their respective stockholders, directors,
officers, employees and agents, as the case may be from and against any and all
Damages incurred in connection with or arising out of or resulting from any
breach of any representation, warranty, covenant or agreement, or the inaccuracy
of any representation or warranty, made by Buyer, in or pursuant to this
Agreement or the Documents.
(c) "Damages" Further Defined. The term "Damages" as used in this Section 7.2 is
not limited to matters asserted by third parties against a Party, but includes
Damages incurred or sustained by a Party in the absence of third party claims.
(d) Defense and Payment of Claims.
(i) Promptly after receipt by a Party entitled to indemnity
under Sections 7.2(a) or 7.2(b)(an "Indemnified Party") of notice of the
assertion of a claim by a Person who is not a Party (a "Third Party Claim")
against it, such Indemnified Party shall give notice to the Party obligated to
indemnify under such Section (an "Indemnifying Party") of the assertion of such
Third Party Claim, provided that the failure to notify the Indemnifying Party
will not relieve the Indemnifying Party of any liability that it may have to any
Indemnified Party, except to the extent that the Indemnifying Party demonstrates
that the defense of such Third Party Claim is prejudiced by the Indemnified
Party's failure to give such notice.
(ii) If an Indemnified Party gives notice to the Indemnifying
Party pursuant to Section 7.2(d)(i) of the assertion of a Third Party Claim, the
Indemnifying Party shall be entitled to participate in the defense of such Third
Party Claim and, to the extent that it wishes unless (i) the Indemnifying Party
is also a Person against whom the Third Party Claim is made and the Indemnified
Party determines in good faith that joint representation would be inappropriate
or (ii) the Indemnifying Party fails to provide reasonable assurance to the
Indemnified Party of its financial capacity to defend such Third Party Claim and
provide indemnification with respect to such Third Party Claim), to assume the
defense of such Third Party Claim with counsel satisfactory to the Indemnified
Party. After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such Third Party Claim, the Indemnifying Party
shall not, so long as it diligently conducts such defense, be liable to the
Indemnified Party under this Section 7 for any fees of other counsel or any
other expenses with respect to the defense of such Third Party Claim, in each
case subsequently incurred by the Indemnified Party in connection with the
defense of such Third Party Claim, other than reasonable costs of investigation.
If the Indemnifying Party assumes the defense of a Third Party Claim, (i) such
assumption will conclusively establish for purposes of this Agreement that the
claims made in that Third Party Claim are within the scope of and subject to
indemnification, and (ii) no compromise or settlement of such Third Party Claims
may be effected by the Indemnifying Party without the Indemnified Party's
consent unless (A) there is no finding or admission of any violation of Law or
any violation of the rights of any Person, (B) the sole relief provided is
monetary damages that are paid in full by the Indemnifying Party, and (C) the
Indemnified Party shall have no liability with respect to any compromise or
settlement of such Third Party Claims effected without its or his consent. If
notice is given to an Indemnifying Party of the assertion of any Third Party
Claim and the Indemnifying Party does not, within ten (10) business days after
the Indemnified Party's notice is given, give notice to the Indemnified Party of
its or his election to assume the defense of such Third Party Claim, the
Indemnifying Party will be bound by any determination made in such Third Party
Claim or any compromise or settlement effected by the Indemnified Party.
(iii) Notwithstanding the foregoing, if counsel for an
Indemnified Party determines in good faith that there is a reasonable
probability that a Third Party Claim may adversely affect it other than as a
result of monetary damages for which it would be entitled to indemnification
under this Agreement, the Indemnified Party may, by notice to the Indemnifying
Party, assume the exclusive right to defend, compromise or settle such Third
Party Claim, but the Indemnifying Party will not be bound by any determination
of any Third Party Claim so defended for the purposes of this Agreement or any
compromise or settlement effected without its or his consent (which may not be
unreasonably withheld).
(iv) With respect to any Third Party Claim subject to
indemnification under this Section 7, (i) both the Indemnified Party and the
Indemnifying Party, as the case may be, shall keep the other Party fully
informed of the status of such Third Party Claim and any related Proceedings at
all stages thereof where such Party is not represented by its own counsel, and
(ii) the Parties agree (each at its or his own expense) to render to each other
such assistance as they may reasonably require of each other and to cooperate in
good faith with each other in order to ensure the proper and adequate defense of
any Third Party Claim.
(e) Other Claims. A claim for indemnification for any
matter not involving a Third Party Claim may be
asserted by notice to the Party from whom indemnification is sought and shall be
paid promptly after such notice.
7.3 Further Assurances.
Subject to the terms and conditions herein provided, the Parties shall do or
cause to be done all such acts and things as may be necessary, proper or
advisable, consistent with all applicable Laws, to consummate and make effective
the Transactions as soon as reasonably practicable.
7.7 Termination Events.
By notice given prior to or at the Closing and subject to Section 7.7,
this Agreement may be terminated as follows:
(a) by Buyer if any condition in Article III has not been satisfied as of the
Closing Date or if satisfaction of such a condition by such date is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement), and Buyer has not waived such condition on or
before such date;
(b) by the Company if any condition in Article IV has not been satisfied as of
the Closing Date or if satisfaction of such a condition by such date is or
becomes impossible (other than through the failure of the Company to comply with
its obligations under this Agreement), and the Company has not waived such
condition on or before such date; or
(c) by mutual consent of Buyer and the Company.
7.8 Effect of Termination.
Each Party's right of termination under Section 7.7 is in addition to
any other rights it may have under this Agreement or otherwise, and the exercise
of such right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 7.7, all obligations of the Parties
under this Agreement will terminate, except that the obligations of the Parties
in this Section 7.8 and Article IX will survive, provided, however, that, if
this Agreement is terminated because of a breach of this Agreement by the
non-terminating Party or because one or more of the conditions to the
terminating Party's obligations under this Agreement is not satisfied as a
result of the other Party's failure to comply with its obligations under this
Agreement, the terminating Party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE VIII
DEFINITIONS
For purposes of this Agreement, the following terms shall have the meanings
set forth below:
"Affiliate" means with respect to any Person, any Person that, directly or
indirectly through one or more intermediaries, Controls, or is Controlled by, or
is under common Control with, another Person.
"Business" shall mean the importation of paper pulp business as engaged in by
Company.
"Buyer" has the meaning set forth in the preamble.
"Closing" has the meaning set forth in Section 2.1.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the United States Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"Common Stock" has the meaning set forth in the Recitals.
"Company" has the meaning set forth in the preamble.
"Company Contracts" means all of Company's interest and rights in and to the
agreements, contracts, commitments, arrangements and proposals to which Company
is a party or by which its assets are bound and all sale or supply orders
entered into or received by Company in the Ordinary Course, employment
agreements and all other agreements of Company.
"Company Financial Statements" has the meaning set forth in Section 5.4.
"Consideration Stock" has the meaning set forth in Section 2.2(a).
"Control" means, without limitation, the possession, directly or indirectly,
of the power to direct the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Court" means any court or arbitration tribunal of the United States,
any state and any political subdivision thereof.
"Damages" has the meaning set forth in Section 7.2(a).
"Documents" means this Agreement and exhibits attached thereto.
"Environmental and Safety Requirements" means all Laws, Orders, contractual
obligations and all common law concerning public health and safety, worker
health and safety, pollution, or protection of the environment, including, all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, including,
but not limited to, the Solid Waste Disposal Act, as amended, 42 U.S.C. ss.ss.
6901, et seq., the Clean Air Act, as amended, 42 U.S.C. ss.ss. 7401 et seq., the
Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.ss. 1251 et seq.,
the Emergency Planning and Community Right-to-Know Act, as amended, 42 U.S.C.
ss.ss. 11001 et seq., the Comprehensive Environmental Response, Compensation,
and Liability Act, as amended, 42 U.S.C. ss.ss. 9601 et seq., the Hazardous
Materials Transportation Uniform Safety Act, as amended, 49 U.S.C. ss.ss. 1804
et seq., the Occupational Safety and Health Act of 1970, in each case whenever
enacted or amended, and the rules and regulations promulgated thereunder.
"GAAP" means United States generally accepted accounting principles, applied
on a consistent basis.
"Governmental Entity" means any Court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, federal,
state, county or local.
"Knowledge", "knowledge", "known" or other similar words means (i) in the
case of the Company, the actual awareness of the Company's senior executives of
a fact or matter after conducting reasonable inquiry about the accuracy of any
representation or warranty of the Company contained in this Agreement or (ii) in
the case of Buyer, the actual awareness of Buyer's senior executives of a fact
or matter after conducting reasonable inquiry about the accuracy of any
representation or warranty of Buyer contained in this Agreement.
"Law" means any constitution, law, statute, treaty, rule, directive,
requirement or regulation or Order of any Governmental Entity.
"Liability" means any liability or obligation, whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated and whether due or to become due, regardless of when asserted.
"Licenses" has the meaning set forth in Section 5.6(c).
"Lien" means any security interest, pledge, bailment (in the nature of a
pledge or for purposes of security), mortgage, deed of trust, the grant of a
power to confess judgment, conditional sales and title retention agreement
(including any lease in the nature thereof), charge, encumbrance, easements,
reservations, restrictions, clouds, rights of first refusal or first offer,
options, or other similar arrangement or interest in real or personal property.
"Material Adverse Effect" means, any change, condition, circumstance, event
or effect that, individually or in the aggregate with all other changes,
conditions, circumstances, events or effects, is or is reasonably likely to have
a material adverse effect on the business, assets, financial condition or
results of operations of a Person taken as a whole; provided, that none of the
following, individually or in the aggregate, shall be deemed to have a Material
Adverse Effect itself or be considered in any determination as to whether a
Material Adverse Effect has occurred or is continuing: (i) any change, event or
effects arising out of or resulting from changes in or affecting the (x)
beverage distribution industry generally, and (y) the financial, banking,
currency or capital markets in general, (ii) any change, event or effect
resulting from the entering into or public announcement of the transactions
contemplated by this Agreement and (iii) any change, event or effect resulting
from any act of terrorism, commencement, escalation, continuation or cessation
of armed hostilities. Further, no event or condition that results primarily from
such events shall be deemed to have, individually or in the aggregate, a
Material Adverse Effect.
"Order" means judgment, writ, decree, compliance agreement, injunction or
order of any Governmental Entity or arbitrator.
"Ordinary Course" means an action taken by a Person will be deemed to have
been taken in the ordinary course of such Person's business only if that action
is consistent in nature, scope and magnitude with the past practices of such
Person and is taken in the ordinary course of the normal, day-to-day operations
of such Person.
"Party" and "Parties" have the meanings set forth in the preamble.
"Permits" means all material permits, licenses, authorizations,
registrations, franchises, approvals, certificates, variances and similar rights
obtained, or required to be obtained, from Governmental Entities under which
Company is operating or bound.
"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization, or a
Governmental Entity (or any department, agency, or political subdivision
thereof).
"Proceeding" means any action, suit, proceeding, complaint, charge, hearing,
inquiry or investigation before or by a Governmental Entity or arbitrator.
"Purchase Price" has the meaning set forth in Section 2.2(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Tax" means, with respect to any Person, (a) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, property or windfall profits taxes, alternative or add-on minimum
taxes, customs duties and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax and other
additional amounts imposed by any taxing authority (domestic or foreign) on such
Person (if any) and (b) any Liability for the payment of any amount of the type
described in the immediately preceding clause (a) as a result of being a
"transferee" (within the meaning of Section 6901 of the Code or any other
applicable Law) of another entity or a member of an Affiliated or combined
group. Notwithstanding the foregoing, solely for purposes of Section 5.11, Tax
(and the correlative meaning, "Taxes") shall not include any amount to the
extent that (A) a Lien, claim or encumbrance cannot be placed upon any of the
assets of Company with respect to such amount and (B) neither Buyer nor any
Affiliates of either such entity can be made directly or indirectly liable with
respect to such amount.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any attachment
thereto, and including any amendment thereof.
"Transactions" has the meaning set forth in the Recitals.
ARTICLE IX
MISCELLANEOUS
9.1 No Third Party Beneficiaries.
This Agreement shall not confer any rights or remedies upon any Person other
than the Parties and their respective successors, permitted assigns, personal
representatives, heirs and estates, as the case may be.
9.2 Entire Agreement.
This Agreement and the Documents referred to herein constitute the entire
agreement among the Parties and supersedes any prior or contemporaneous
understandings, agreements or representations by or among the Parties, written
or oral, which may have related in any way to the subject matter of any
Document.
9.3 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the Parties
and their respective successors, permitted assigns, personal representatives,
heirs and estates. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party.
9.4 Notices.
All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed effectively given: (i) upon personal delivery to
the Party to be notified, (ii) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (iii) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent to the respective Parties at the addresses set forth below:
<table>
<s> <c>
If to Buyer: If to the Company:
Dragon International Group Corp. Wellton International Fiber Corp.
Building 14, Suite A09 12/f, Wah Hing Conun Centre, 383 Shanghai St.
International Trading Center KLN, HongKong
29 Dongdu Road TEL: 852-26260115
Ningbo, China 315000 fax: 852-26260685
Telephone: (86) 574-56169308 E-mail: wellton@wellton.com.hk
Facsimile: Attention: Kungming Kuo
Attention: David Wu
With copy to:
Ellenoff Grossman & Schole LLP
370 Lexington Avenue
New York, New York 10017
Telephone: (212) 370-1300
Facsimile: (212) 370-7889
Attention: David Selengut, Esq.
</table>
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
9.5 Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance
with and subject to, the Laws of the State of Nevada without giving effect to
the principles of conflicts of Law.
9.6 Modification, Amendments and Waiver.
No modification, amendment or waiver of any provision of this Agreement shall
be valid unless the same shall be approved in writing and signed by all of the
Parties. No such waiver by any Party of any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
9.7 Construction.
The Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement. Whenever
appropriate in the context, terms used in this Agreement in the singular also
include the plural, and vice versa, and each masculine, feminine or neuter
pronoun shall also include the other genders. Unless otherwise expressly stated
herein, all references to the term "including" shall be deemed to be interpreted
as meaning "including, without limitation". Unless otherwise expressly stated
herein, all references to the phrase "applicable law" shall be deemed to include
provisions of rules and regulations promulgated under applicable Law. Except as
otherwise expressly provided herein, all references herein to any contract,
agreement, Law, rule, regulation or other document shall refer to such contract,
agreement, Law, rule, regulation or other document as amended from time to time.
9.8 Severability.
It is the desire and intent of the Parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Laws and
public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. In the event the
invalid, illegal or unenforceable provision is material in the context of this
Agreement, the Parties shall in good faith agree to a mutually satisfactory
replacement which accomplishes, to the extent possible, the original business
purpose and intent of the invalid, illegal or unenforceable provision in a valid
and enforceable manner.
9.9 Waiver of Jury Trial.
EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY DOCUMENT.
9.10 Specific Performance and Arbitration.
(a) Except as otherwise provided in Section 9.12(b)
hereinbelow, Buyer and the Company hereby irrevocably and unconditionally submit
to resolution of any and all controversies, disputes or claims arising out of,
or relating to, this Agreement to arbitration in New York, New York, in
accordance with the arbitration rules of the American Arbitration Association.
The Parties shall agree on a panel of 1 to 3 arbitrator(s) and judgment upon the
award rendered by the arbitrator(s) may be entered in any court having competent
jurisdiction thereof.
(b) Notwithstanding the commencement of arbitration under this Section
9.12, at any time either Party may proceed directly to a court of competent
jurisdiction for any available injunctive or other equitable remedy. The Parties
agree that irreparable damage would occur and that the Parties would not have
any adequate remedy at Law in the event that any of the provisions of this
Agreement or the Documents were not performed in accordance with their specific
terms or were otherwise breached. The Parties further agree that such equitable
remedies will be cumulative and not exclusive and will be in addition to any
other remedies that the Parties may have under this Agreement or the Law.
9.14 Headings.
The section headings contained in this Agreement are inserted for convenience
only and shall not affect in any way the meaning or interpretation of this
Agreement.
9.15 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
COMPANY:
WELLTON INTERNATIONAL FIBER CORP.
By: /s/ Kungming Kuo
- ---------------------
Kungming Kuo
CEO:
BUYER:
DRAGON INTERNATIONAL GROUP CORP.
By: /s/ David Wu
- ---------------------
David Wu:
CEO:
Schedule 9.9
Press Releases
1. Press Release issued January 16, 2007 at 8:00am EST with Dateline "Ningbo,
China."