THIS AGREEMENT RELATES TO AN OFFERING OF SECURITIES IN AN OFFSHORE TRANSACTION
TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE 1933
ACT) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT"). NONE OF THE SECURITIES TO WHICH THIS AGREEMENT RELATES
HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND,
UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN
THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE
CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 21st day of April, 2006
AMONG:
PACIFIC NORTHWEST PRODUCTIONS INC., a corporation formed pursuant to
the laws of the State of Nevada and having an office for business
located at 0000 Xxxxx Xxxx, Xxxxxx, X.X. Xxxxxx X0X 0X0
("Pacific")
AND:
XI'AN TSINING HOUSING DEVELOPMENT CO., LTD., a company formed
pursuant to the laws of the People's Republic of China and having an
office for business located at 6 Youyi Xxxx Xx, Han Yuan 4 Xxx,
Xi'An, Shaanxi Province, China
("Tsining Housing")
AND:
The shareholders of Tsining Housing, each of whom are set forth on
the signature page of this Agreement
(the "Tsining Housing Shareholders")
WHEREAS:
A. The Tsining Housing Shareholders own 50,000,000 registered shares of
Tsining Housing, constituting 100% of the presently issued and outstanding
Tsining Housing Shares;
B. Pacific is a reporting company whose common stock is quoted on the NASD
"Bulletin Board"; and
C. The respective Boards of Directors of Pacific, and Tsining Housing deem
it advisable and in the best interests of Pacific and Tsining Housing that
Tsining Housing become a wholly-owned subsidiary of Pacific (the "Acquisition")
pursuant to this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement the following terms will have the following meanings:
(a) "ACQUISITION" means the Acquisition, at the Closing, of Tsining
Housing by Pacific pursuant to this Agreement;
(b) "ACQUISITION SHARES" means the 2,000,000 Pacific Common Shares to be
issued to the Tsining Housing Shareholders at Closing pursuant to
the terms of the Acquisition;
(c) "AGREEMENT" means this share purchase agreement among Pacific,
Tsining Housing, and the Tsining Housing Shareholders;
(d) "CLOSING" means the completion, on the Closing Date, of the
transactions contemplated hereby in accordance with Article 9
hereof;
(e) "CLOSING DATE" means the day on which all conditions precedent to
the completion of the transaction as contemplated hereby have been
satisfied or waived;
(f) "PACIFIC ACCOUNTS PAYABLE AND LIABILITIES" means all accounts
payable and liabilities of Pacific, on a consolidated basis, due and
owing or otherwise constituting a binding obligation of Pacific
(other than a Pacific Material Contract) as of December 31, 2005 as
set forth is Schedule "B" hereto;
(g) "PACIFIC ACCOUNTS RECEIVABLE" means all accounts receivable and
other debts owing to Pacific, on a consolidated basis, as of
December 31, 2005 as set forth in Schedule "C" hereto;
(h) "PACIFIC ASSETS" means the undertaking and all the property and
assets of the Pacific Business of every kind and description
wheresoever situated including, without limitation, Pacific
Equipment, Pacific Inventory, Pacific Material Contracts, Pacific
Accounts Receivable, Pacific Cash, Pacific Intangible Assets and
Pacific Goodwill, and all credit cards, charge cards and banking
cards issued to Pacific;
2
(i) "PACIFIC BANK ACCOUNTS" means all of the bank accounts, lock boxes
and safety deposit boxes of Pacific or relating to the Pacific
Business as set forth in Schedule "D" hereto;
(j) "PACIFIC BUSINESS" means all aspects of any business conducted by
Pacific;
(k) "PACIFIC CASH" means all cash on hand or on deposit to the credit of
Pacific on the Closing Date;
(l) "PACIFIC COMMON SHARES" means the shares of common stock in the
capital of Pacific;
(m) "PACIFIC DEBT TO RELATED PARTIES" means the debts owed by Pacific to
any affiliate, director or officer of Pacific as described in
Schedule "E" hereto;
(n) "PACIFIC EQUIPMENT" means all machinery, equipment, furniture, and
furnishings used in the Pacific Business, including, without
limitation, the items more particularly described in Schedule "F"
hereto;
(o) "PACIFIC FINANCIAL STATEMENTS" means, collectively, the audited
consolidated financial statements of Pacific for the two fiscal
years ended December 31, 2005, together with the unqualified
auditors' report thereon, true copies of which are attached as
Schedule "A" hereto;
(p) "PACIFIC GOODWILL" means the goodwill of the Pacific Business
including the right to all corporate, operating and trade names
associated with the Pacific Business, or any variations of such
names as part of or in connection with the Pacific Business, all
books and records and other information relating to the Pacific
Business, all necessary licenses and authorizations and any other
rights used in connection with the Pacific Business;
(q) "PACIFIC INSURANCE POLICIES" means the public liability insurance
and insurance against loss or damage to the Pacific Assets and the
Pacific Business as described in Schedule "G" hereto;
(r) "PACIFIC INTANGIBLE ASSETS" means all of the intangible assets of
Pacific, including, without limitation, Pacific Goodwill, all
trademarks, logos, copyrights, designs, and other intellectual and
industrial property of Pacific;
(s) "PACIFIC INVENTORY" means all inventory and supplies of the Pacific
Business as of December 31, 2005, as set forth in Schedule "H"
hereto;
(t) "PACIFIC MATERIAL CONTRACTS" means the burden and benefit of and the
right, title and interest of Pacific in, to and under all trade and
non-trade contracts, engagements or commitments, whether written or
oral, to which Pacific is entitled whereunder Pacific is obligated
to pay or entitled to receive the sum of $10,000 or more including,
without limitation, any pension plans, profit sharing plans, bonus
plans, loan agreements, security agreements, indemnities and
guarantees, any agreements with employees, lessees, licensees,
managers, accountants, suppliers, agents, distributors, officers,
directors, attorneys or others which cannot be terminated without
liability on not more than one month's notice, and those contracts
listed in Schedule "I" hereto;
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(u) "PLACE OF CLOSING" means the offices of Sichenzia Xxxx Xxxxxxxx
Xxxxxxx LLP, or such other place as Pacific and Tsining Housing may
mutually agree upon;
(v) "TSINING HOUSING ACCOUNTS PAYABLE AND LIABILITIES" means all
accounts payable and liabilities of Tsining Housing, due and owing
or otherwise constituting a binding obligation of Tsining Housing
(other than a Tsining Housing Material Contract) as of December 31,
2005 as set forth in Schedule "K" hereto;
(w) "TSINING HOUSING ACCOUNTS RECEIVABLE" means all accounts receivable
and other debts owing to Tsining Housing, as of December 31, 2005 as
set forth in Schedule "L" hereto;
(x) "TSINING HOUSING ASSETS" means the undertaking and all the property
and assets of the Tsining Housing Business of every kind and
description wheresoever situated including, without limitation,
Tsining Housing Equipment, Tsining Housing Inventory, Tsining
Housing Material Contracts, Tsining Housing Accounts Receivable,
Tsining Housing Cash, Tsining Housing Intangible Assets and Tsining
Housing Goodwill, and all credit cards, charge cards and banking
cards issued to Tsining Housing;
(y) "TSINING HOUSING BANK ACCOUNTS" means all of the bank accounts, lock
boxes and safety deposit boxes of Tsining Housing or relating to the
Tsining Housing Business as set forth in Schedule "M" hereto;
(z) "TSINING HOUSING BUSINESS" means all aspects of the business
conducted by Tsining Housing;
(aa) "TSINING HOUSING CASH" means all cash on hand or on deposit to the
credit of Tsining Housing on the Closing Date;
(bb) "TSINING HOUSING DEBT TO RELATED PARTIES" means the debts owed by
Tsining Housing and its subsidiaries to the Tsining Housing
Shareholders or to any family member thereof, or to any affiliate,
director or officer of Tsining Housing or the Tsining Housing
Shareholders as described in Schedule "N";
(cc) "TSINING HOUSING EQUIPMENT" means all machinery, equipment,
furniture, and furnishings used in the Tsining Housing Business,
including, without limitation, the items more particularly described
in Schedule "O" hereto;
(dd) "TSINING HOUSING FINANCIAL STATEMENTS" means collectively, the
audited consolidated financial statements of Tsining Housing for two
year period ended December 31, 2005, true copies of which are
attached as Schedule "J" hereto;
(ee) "TSINING HOUSING GOODWILL" means the goodwill of the Tsining Housing
Business together with the exclusive right of Pacific to represent
itself as carrying on the Tsining Housing Business in succession of
Tsining Housing subject to the terms hereof, and the right to use
any words indicating that the Tsining Housing Business is so carried
on including the right to use the name "Tsining Housing" or "Tsining
Housing International" or any variation thereof as part of the name
of or in connection with the Tsining Housing Business or any part
thereof carried on or to be carried on by Tsining Housing, the right
to all corporate, operating and trade names associated with the
Tsining Housing Business, or any variations of such names as part of
or in connection with the Tsining Housing Business, all telephone
listings and telephone advertising contracts, all lists of
customers, books and records and other information relating to the
Tsining Housing Business, all necessary licenses and authorizations
and any other rights used in connection with the Tsining Housing
Business;
4
(ff) "TSINING HOUSING INSURANCE POLICIES" means the public liability
insurance and insurance against loss or damage to Tsining Housing
Assets and the Tsining Housing Business as described in Schedule "P"
hereto;
(gg) "TSINING HOUSING INTANGIBLE ASSETS" means all of the intangible
assets of Tsining Housing, including, without limitation, Tsining
Housing Goodwill, all trademarks, logos, copyrights, designs, and
other intellectual and industrial property of Tsining Housing and
its subsidiaries;
(hh) "TSINING HOUSING INVENTORY" means all inventory and supplies of the
Tsining Housing Business as of December 31, 2005 as set forth in
Schedule "Q" hereto;
(ii) "TSINING HOUSING MATERIAL CONTRACTS" means the burden and benefit of
and the right, title and interest of Tsining Housing in, to and
under all trade and non-trade contracts, engagements or commitments,
whether written or oral, to which Tsining Housing is entitled in
connection with the Tsining Housing Business whereunder Tsining
Housing is obligated to pay or entitled to receive the sum of
$10,000 or more including, without limitation, any pension plans,
profit sharing plans, bonus plans, loan agreements, security
agreements, indemnities and guarantees, any agreements with
employees, lessees, licensees, managers, accountants, suppliers,
agents, distributors, officers, directors, attorneys or others which
cannot be terminated without liability on not more than one month's
notice, and those contracts listed in Schedule "R" hereto;
(jj) "TSINING HOUSING RELATED PARTY DEBTS" means the debts owed by the
Tsining Housing Shareholders or by any family member thereof, or by
any affiliate, director or officer of Tsining Housing or the Tsining
Housing Shareholders, to Tsining Housing as described in Schedule
"S"; and
(kk) "TSINING HOUSING SHARES" means all of the issued and outstanding
shares of Tsining Housing's equity stock.
Any other terms defined within the text of this Agreement will have the meanings
so ascribed to them.
CAPTIONS AND SECTION NUMBERS
1.2 The headings and section references in this Agreement are for convenience of
reference only and do not form a part of this Agreement and are not intended to
interpret, define or limit the scope, extent or intent of this Agreement or any
provision thereof.
SECTION REFERENCES AND SCHEDULES
1.3 Any reference to a particular "Article", "section", "paragraph", "clause" or
other subdivision is to the particular Article, section, clause or other
subdivision of this Agreement and any reference to a Schedule by letter will
mean the appropriate Schedule attached to this Agreement and by such reference
the appropriate Schedule is incorporated into and made part of this Agreement.
The Schedules to this Agreement are as follows:
5
Information concerning Pacific
Schedule "A" Pacific Financial Statements
Schedule "B" Pacific Accounts Payable and Liabilities
Schedule "C" Pacific Accounts Receivable
Schedule "D" Pacific Bank Accounts
Schedule "E" Pacific Debts to Related Parties
Schedule "F" Pacific Equipment
Schedule "G" Pacific Insurance Policies
Schedule "H" Pacific Inventory
Schedule "I" Pacific Material Contracts
Information concerning Tsining Housing
Schedule "J" Tsining Housing Financial Statements
Schedule "K" Tsining Housing Accounts Payable and Liabilities
Schedule "L" Tsining Housing Accounts Receivable
Schedule "M" Tsining Housing Bank Accounts
Schedule "N" Tsining Housing Debts to Related Parties
Schedule "O" Tsining Housing Equipment
Schedule "P" Tsining Housing Insurance Policies
Schedule "Q" Tsining Housing Inventory
Schedule "R" Tsining Housing Material Contracts
Schedule "S" Tsining Housing Related Party Debts
SEVERABILITY OF CLAUSES
1.4 If any part of this Agreement is declared or held to be invalid for any
reason, such invalidity will not affect the validity of the remainder which will
continue in full force and effect and be construed as if this Agreement had been
executed without the invalid portion, and it is hereby declared the intention of
the parties that this Agreement would have been executed without reference to
any portion which may, for any reason, be hereafter declared or held to be
invalid.
ARTICLE 2
THE ACQUISITION
SALE OF SHARES
2.1 The Tsining Housing Shareholders hereby agree to sell to Pacific the Tsining
Housing Shares in exchange for the Acquisition Shares on the Closing Date and to
transfer to Pacific on the Closing Date a 100% undivided interest in and to the
Tsining Housing Shares free from all liens, mortgages, charges, pledges,
encumbrances or other burdens with all rights now or thereafter attached
thereto.
ALLOCATION OF CONSIDERATION
2.2 The Acquisition Shares shall be allocated to the Tsining Housing
Shareholders, as set forth on Schedule 2.2 attached hereto and made a part
hereof.
6
ADHERENCE WITH APPLICABLE SECURITIES LAWS
2.2 The Tsining Housing Shareholders agree that they are acquiring the
Acquisition Shares for investment purposes and will not offer, sell or otherwise
transfer, pledge or hypothecate any of the Acquisition Shares issued to them
(other than pursuant to an effective Registration Statement under the Securities
Act of 1933, as amended) directly or indirectly unless:
(a) the sale is to Pacific;
(b) the sale is made pursuant to the exemption from registration under
the Securities Act of 1933, as amended, provided by Rule 144
thereunder; or
(c) the Acquisition Shares are sold in a transaction that does not
require registration under the Securities Act of 1933, as amended,
or any applicable United States state laws and regulations governing
the offer and sale of securities, and the vendor has furnished to
Pacific an opinion of counsel to that effect or such other written
opinion as may be reasonably required by Pacific.
The Tsining Housing Shareholders acknowledge that the certificates
representing the Acquisition Shares shall bear the following legend:
"THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS
WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION
S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"1933 ACT"). ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS
CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY
U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE
OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO
U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE
SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933
ACT."
The Tsining Housing Shareholders further represent and acknowledge
that:
(a) The Tsining Housing Shareholders are located outside the United
States;
(b) The Tsining Housing Shareholders are not aware of any
advertisement of any of the shares be issued hereunder;
(c) The Tsining Housing Shareholders will not acquire the shares as
a result of, and will not itself engage in, any "directed selling efforts" (as
defined in Regulation S under the 0000 Xxx) in the United States in respect of
the shares which would include any activities undertaken for the purpose of, or
that could reasonably be expected to have the effect of, conditioning the market
in the United States for the resale of the shares; provided, however, that the
Tsining Housing Shareholders may sell or otherwise dispose of the shares
pursuant to registration of the shares pursuant to the 1933 Act and any
applicable state and provincial securities laws or under an exemption from such
registration requirements and as otherwise provided herein;
7
(d) The Tsining Housing Shareholders agree that Pacific will refuse
to register any transfer of the shares not made in accordance with the
provisions of Regulation S, pursuant to an effective registration statement
under the 1933 Act or pursuant to an available exemption from the registration
requirements of the 1933 Act and in accordance with applicable state and
provincial securities laws; and
(e) The Tsining Housing Shareholders understand and agree that
offers and sales of any of the shares, prior to the expiration of a period of
one year after the date of transfer of the shares (the "Distribution Compliance
Period"), shall only be made in compliance with the safe harbor provisions set
forth in Regulation S, pursuant to the registration provisions of the 1933 Act
or an exemption therefrom, and that all offers and sales after the Distribution
Compliance Period shall be made only in compliance with the registration
provisions of the 1933 Act or an exemption therefrom and in each case only in
accordance with all applicable securities laws;
(f) The Tsining Housing Shareholders understand and agree not to
engage in any hedging transactions involving the Acquisition Shares prior to the
end of the Distribution Compliance Period unless such transactions are in
compliance with the provisions of the 1933 Act;
(g) The Tsining Housing Shareholders hereby acknowledge and agree to
Pacific making a notation on its records or giving instructions to the registrar
and transfer agent of Pacific in order to implement the restrictions on transfer
set forth and described herein.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PACIFIC
REPRESENTATIONS AND WARRANTIES
3.1 Pacific hereby represents and warrants in all material respects to Tsining
Housing and the Tsining Housing Shareholders, with the intent that Tsining
Housing and the Tsining Housing Shareholders will rely thereon in entering into
this Agreement and in approving and completing the transactions contemplated
hereby, that:
PACIFIC - CORPORATE STATUS AND CAPACITY
(a) Incorporation. Pacific is a corporation duly incorporated and
validly subsisting under the laws of the State of Nevada, and is in
good standing with the office of the Secretary of State for the
State of Nevada;
(b) Carrying on Business. Pacific conducts the business described in its
filings with the Securities and Exchange Commission and does not
conduct any other business. Pacific is duly authorized to carry on
such business in British Columbia, Canada. The nature of the Pacific
Business does not require Pacific to register or otherwise be
qualified to carry on business in any other jurisdictions;
8
(c) Corporate Capacity. Pacific has the corporate power, capacity and
authority to own the Pacific Assets and to enter into and complete
this Agreement;
(d) Reporting Status; Listing. Pacific is required to file current
reports with the Securities and Exchange Commission pursuant to
section 12(g) of the Securities Exchange Act of 1934, the Pacific
Common Shares are quoted on the NASD "Bulletin Board", and all
reports required to be filed by Pacific with the Securities and
Exchange Commission or NASD have been timely filed;
PACIFIC - CAPITALIZATION
(e) Authorized Capital. The authorized capital of Pacific consists of
100,000,000 Pacific Common Shares, $0.001 par value, of which
1,500,000 Pacific Common Shares are presently issued and
outstanding;
(f) No Option, Warrant or Other Right. No person, firm or corporation
has any agreement, option, warrant, preemptive right or any other
right capable of becoming an agreement, option, warrant or right for
the acquisition of Pacific Common Shares or for the purchase,
subscription or issuance of any of the unissued shares in the
capital of Pacific;
PACIFIC - RECORDS AND FINANCIAL STATEMENTS
(g) Charter Documents. The charter documents of Pacific have not been
altered since its incorporation, except as filed in the record books
of Pacific;
(h) Corporate Minute Books. The corporate records of Pacific are
complete and each of the minutes accurately reflect the actions that
were taken at a duly called and held meeting or by consent without a
meeting. All actions by Pacific which required director or
shareholder approval are reflected in the corporate records of
Pacific. Pacific is not in violation or breach of, or in default
with respect to, any term of their respective Certificates of
Incorporation (or other charter documents) or by-laws.
(i) Pacific Financial Statements. The Pacific Financial Statements
present fairly, in all material respects, the assets and liabilities
(whether accrued, absolute, contingent or otherwise) of Pacific, on
a consolidated basis, as of the respective dates thereof, and the
sales and earnings of the Pacific Business during the periods
covered thereby, in all material respects and have been prepared in
substantial accordance with generally accepted accounting principles
consistently applied;
(j) Pacific Accounts Payable and Liabilities. There are no material
liabilities, contingent or otherwise, of Pacific which are not
disclosed in Schedule "B" hereto or reflected in the Pacific
Financial Statements except those incurred in the ordinary course of
business since the date of the said schedule and the Pacific
Financial Statements, and Pacific has not guaranteed or agreed to
guarantee any debt, liability or other obligation of any person,
firm or corporation. Without limiting the generality of the
foregoing, all accounts payable and liabilities of Pacific as of
December 31, 2005, are described in Schedule "B" hereto;
(k) Pacific Accounts Receivable. All the Pacific Accounts Receivable
result from bona fide business transactions and services actually
rendered without, to the knowledge and belief of Pacific, any claim
by the obligor for set-off or counterclaim. Without limiting the
generality of the foregoing, all accounts receivable of Pacific as
of December 31, 2005, are described in Schedule "C" hereto;
9
(l) Pacific Bank Accounts. All of the Pacific Bank Accounts, their
location, numbers and the authorized signatories thereto are as set
forth in Schedule "D" hereto;
(m) No Debt to Related Parties. Except as disclosed in Schedule "E"
hereto, Pacific is not, and on Closing will not be, indebted to any
affiliate, director or officer of Pacific except accounts payable on
account of bona fide business transactions of Pacific incurred in
normal course of the Pacific Business, including employment
agreements, none of which are more than 30 days in arrears;
(n) No Related Party Debt to Pacific. No director or officer or
affiliate of Pacific is now indebted to or under any financial
obligation to Pacific on any account whatsoever, except for advances
on account of travel and other expenses not exceeding $1,000 in
total;
(o) No Dividends. No dividends or other distributions on any shares in
the capital of Pacific have been made, declared or authorized since
the date of Pacific Financial Statements;
(p) No Payments. No payments of any kind have been made or authorized
since the date of the Pacific Financial Statements to or on behalf
of officers, directors, shareholders or employees of Pacific or
under any management agreements with Pacific, except payments made
in the ordinary course of business and at the regular rates of
salary or other remuneration payable to them;
(q) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting Pacific;
(r) No Adverse Events. Since the date of the Pacific Financial
Statements
(i) there has not been any material adverse change in the
consolidated financial position or condition of Pacific, its
liabilities or the Pacific Assets or any damage, loss or other
change in circumstances materially affecting Pacific, the
Pacific Business or the Pacific Assets or Pacific' right to
carry on the Pacific Business, other than changes in the
ordinary course of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting Pacific, the Pacific Business or the
Pacific Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Pacific to any of Pacific'
officers, employees or agents or any bonus, payment or
arrangement made to or with any of them,
(iv) the Pacific Business has been and continues to be carried on
in the ordinary course,
(v) Pacific has not waived or surrendered any right of material
value,
(vi) Pacific has not discharged or satisfied or paid any lien or
encumbrance or obligation or liability other than current
liabilities in the ordinary course of business, and
10
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made.
PACIFIC - INCOME TAX MATTERS
(s) Tax Returns. All tax returns and reports of Pacific required by law
to be filed have been filed and are true, complete and correct, and
any taxes payable in accordance with any return filed by Pacific or
in accordance with any notice of assessment or reassessment issued
by any taxing authority have been so paid;
(t) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Pacific. Pacific is not aware of any contingent tax
liabilities or any grounds which would prompt a reassessment
including aggressive treatment of income and expenses in filing
earlier tax returns;
PACIFIC - APPLICABLE LAWS AND LEGAL MATTERS
(u) Licenses. Pacific does not require any licenses for carrying on the
Pacific Business in the manner in which it has heretofore been
carried on;
(v) Applicable Laws. Pacific has not been charged with or received
notice of breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees to which they are subject or which apply
to them the violation of which would have a material adverse effect
on the Pacific Business, and to Pacific' knowledge, Pacific is not
in breach of any laws, ordinances, statutes, regulations, bylaws,
orders or decrees the contravention of which would result in a
material adverse impact on the Pacific Business;
(w) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to Pacific, the Pacific Business, or any of the
Pacific Assets nor does Pacific have any knowledge of any deliberate
act or omission of Pacific that would form any material basis for
any such action or proceeding;
(x) No Bankruptcy. Pacific has not made any voluntary assignment or
proposal under applicable laws relating to insolvency and bankruptcy
and no bankruptcy petition has been filed or presented against
Pacific and no order has been made or a resolution passed for the
winding-up, dissolution or liquidation of Pacific;
(y) Labor Matters. Pacific is not party to any collective agreement
relating to the Pacific Business with any labor union or other
association of employees and no part of the Pacific Business has
been certified as a unit appropriate for collective bargaining or,
to the knowledge of Pacific, has made any attempt in that regard;
(z) Finder's Fees. Pacific is not party to any agreement which provides
for the payment of finder's fees, brokerage fees, commissions or
other fees or amounts which are or may become payable to any third
party in connection with the execution and delivery of this
Agreement and the transactions contemplated herein;
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EXECUTION AND PERFORMANCE OF AGREEMENT
(aa) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of Pacific;
(bb) No Violation or Breach. The execution and performance of this
Agreement will not:
(i) violate the charter documents of Pacific or result in any
breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which Pacific is
party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, the Pacific Material Contracts,
or any right or rights enjoyed by Pacific,
(iii) result in any alteration of Pacific's obligations under any
agreement to which Pacific is party including, without
limitation, the Pacific Material Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favor of a third
party upon or against the Pacific Assets,
(v) result in the imposition of any tax liability to Pacific
relating to the Pacific Assets, or
(vi) violate any court order or decree to which Pacific is subject;
THE PACIFIC ASSETS - OWNERSHIP AND CONDITION
(cc) Business Assets. The Pacific Assets comprise all of the property and
assets of the Pacific Business, and no other person, firm or
corporation owns any assets used by Pacific in operating the Pacific
Business, whether under a lease, rental agreement or other
arrangement, other than as disclosed in Schedules "F" or "I" hereto;
(dd) Title. Pacific is the legal and beneficial owner of the Pacific
Assets, free and clear of all mortgages, liens, charges, pledges,
security interests, encumbrances or other claims whatsoever, save
and except as disclosed in Schedules "F" or "I" hereto;
(ee) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the Pacific Assets;
(ff) Pacific Insurance Policies. Pacific maintains the public liability
insurance and insurance against loss or damage to the Pacific Assets
and the Pacific Business as described in Schedule "G" hereto;
(gg) Pacific Material Contracts. The Pacific Material Contracts listed in
Schedule "I" constitute all of the material contracts of Pacific;
(hh) No Default. There has not been any default in any material
obligation of Pacific or any other party to be performed under any
of the Pacific Material Contracts, each of which is in good standing
and in full force and effect and unamended (except as disclosed in
Schedule "I" hereto), and Pacific is not aware of any default in the
obligations of any other party to any of the Pacific Material
Contracts;
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(ii) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Pacific. Pacific is
not obliged to pay benefits or share profits with any employee after
termination of employment except as required by law;
PACIFIC ASSETS - PACIFIC EQUIPMENT
(jj) Pacific Equipment. The Pacific Equipment has been maintained in a
manner consistent with that of a reasonably prudent owner and such
equipment is in good working condition;
PACIFIC ASSETS - PACIFIC GOODWILL AND OTHER ASSETS
(kk) Pacific Goodwill. Pacific does not carry on the Pacific Business
under any other business or trade names. Pacific does not have any
knowledge of any infringement by Pacific of any patent, trademarks,
copyright or trade secret;
THE PACIFIC BUSINESS
(ll) Maintenance of Business. Since the date of the Pacific Financial
Statements, Pacific has not entered into any material agreement or
commitment except in the ordinary course and except as disclosed
herein;
(mm) Subsidiaries. Pacific does not own any subsidiaries and does not
otherwise own, directly or indirectly, any shares or interest in any
other corporation, partnership, joint venture or firm; and
PACIFIC - ACQUISITION SHARES
(nn) Acquisition Shares. The Acquisition Shares when delivered to the
Tsining Housing Shareholders pursuant to the Acquisition shall be
validly issued and outstanding as fully paid and non-assessable
shares and the Acquisition Shares shall be transferable upon the
books of Pacific, in all cases subject to the provisions and
restrictions of all applicable securities laws.
NON-MERGER AND SURVIVAL
3.2 The representations and warranties of Pacific contained herein will be true
at and as of Closing in all material respects as though such representations and
warranties were made as of such time. Notwithstanding the completion of the
transactions contemplated hereby, the waiver of any condition contained herein
(unless such waiver expressly releases a party from any such representation or
warranty) or any investigation made by Tsining Housing or the Tsining Housing
Shareholders, the representations and warranties of Pacific shall survive the
Closing.
INDEMNITY
3.3 Pacific agrees to indemnify and save harmless Tsining Housing and the
Tsining Housing Shareholders from and against any and all claims, demands,
actions, suits, proceedings, assessments, judgments, damages, costs, losses and
expenses, including any payment made in good faith in settlement of any claim
(subject to the right of Pacific to defend any such claim), resulting from the
breach by it of any representation or warranty made under this Agreement or from
any misrepresentation in or omission from any certificate or other instrument
furnished or to be furnished by Pacific to Tsining Housing or the Tsining
Housing Shareholders hereunder.
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ARTICLE 4
COVENANTS OF PACIFIC
COVENANTS
4.1 Pacific covenants and agrees with Tsining Housing and the Tsining Housing
Shareholders that it will:
(a) Conduct of Business. Until the Closing, conduct the Pacific Business
diligently and in the ordinary course consistent with the manner in
which the Pacific Business generally has been operated up to the
date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use its best efforts to
preserve the Pacific Business and the Pacific Assets and, without
limitation, preserve for Tsining Housing Pacific's relationships
with any third party having business relations with them;
(c) Access. Until the Closing, give Tsining Housing, the Tsining Housing
Shareholders, and their representatives full access to all of the
properties, books, contracts, commitments and records of Pacific,
and furnish to Tsining Housing, the Tsining Housing Shareholders and
their representatives all such information as they may reasonably
request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve and
maintain the Pacific Assets notwithstanding the change in control of
Tsining Housing arising from the Acquisition;
(e) Stock Dividend. Within ten (10) days from the Closing Date, Pacific
shall effectuate an eight-for-one forward split of the Pacific
Common Shares by way of stock dividend;
(f) Name Change. Forthwith after the Closing, take such steps are
required to change the name of Pacific to "China Housing & Land
Development, Inc." or such similar name as may be acceptable to the
board of directors of Tsining Housing; and
(g) Sale of Business. Within thirty (30) days from the Closing Date,
Pacific shall sell its business operations, as they exist
immediately prior to the Closing, to Xxxxxx Xxxxx. In consideration
of the sale, Xxxxxx Xxxxx shall forgive all debt owned to her by
Pacific (in the amount of $1,556). Other than indebtedness of
Tsining Housing, Pacific shall have no indebtedness or other
liability of any kind or nature after the sale of the business to
Xxxxxx Xxxxx, save and except for liabilities incurred in connection
with the Acquisition.
(h) Return of Shares. Concurrently with the Closing, Xxxxxx Xxxxx and
Xxxxxxxx Xxxxx shall return to Pacific without further consideration
the 1,000,000 Pacific Common Shares which they own.
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AUTHORIZATION
4.2 Pacific hereby agrees to authorize and direct any and all federal, state,
municipal, foreign and international governments and regulatory authorities
having jurisdiction respecting Pacific to release any and all information in
their possession respecting Pacific to the Tsining Housing Shareholders. Pacific
shall promptly execute and deliver to the Tsining Housing Shareholders any and
all consents to the release of information and specific authorizations which the
Tsining Housing Shareholders reasonably requires to gain access to any and all
such information.
SURVIVAL
4.3 The covenants set forth in this Article shall survive the Closing for the
benefit of Tsining Housing and the Tsining Housing Shareholders.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
THE TSINING HOUSING SHAREHOLDERS
REPRESENTATIONS AND WARRANTIES
5.1 The Tsining Housing Shareholders hereby jointly and severaly represent and
warrant in all material respects to Pacific, with the intent that it will rely
thereon in entering into this Agreement and in approving and completing the
transactions contemplated hereby, that:
TSINING HOUSING - COMPANY STATUS AND CAPACITY
(a) Formation. Tsining Housing is a company duly formed and validly
subsisting under the laws of the People's Republic of China;
(b) Carrying on Business. Tsining Housing carries on the Tsining Housing
Business primarily in the People's Republic of China and does not
carry on any material business activity in any other jurisdiction.
Tsining Housing is duly authorized to carry on the Tsining Housing
Business in the People's Republic of China. The nature of the
Tsining Housing Business does not require Tsining Housing to
register or otherwise be qualified to carry on business in any other
jurisdiction;
(c) Legal Capacity. Tsining Housing has the legal power, capacity and
authority to own Tsining Housing Assets, to carry on the Business of
Tsining Housing and to enter into and complete this Agreement;
TSINING HOUSING - CAPITALIZATION
(d) Authorized Capital. The authorized capital of Tsining Housing
consists of 50,000,000 shares of capital stock;
(e) Ownership of Tsining Housing Shares. The registered, issued and
outstanding share capital of Tsining Housing will on Closing consist
of 50,000,000 capital shares (being the Tsining Housing Shares),
which shares on Closing shall be validly issued and outstanding as
fully paid and non-assessable shares. The Tsining Housing
Shareholders will be at Closing the registered and beneficial owners
of the 50,000,000 Tsining Housing Shares. The Tsining Housing Shares
owned by the Tsining Housing Shareholders will on Closing be free
and clear of any and all liens, charges, pledges, encumbrances,
restrictions on transfer and adverse claims whatsoever;
15
(f) No Option, Warrant or Other Right. No person, firm or corporation
has any agreement, option, warrant, preemptive right or any other
right capable of becoming an agreement, option, warrant or right for
the acquisition of Tsining Housing Shares held by the Tsining
Housing Shareholders or for the purchase, subscription or issuance
of any of the unissued shares in the capital of Tsining Housing;
(g) No Restrictions. There are no restrictions on the transfer, sale or
other disposition of Tsining Housing Shares contained in the charter
documents of Tsining Housing or under any agreement;
TSINING HOUSING - RECORDS AND FINANCIAL STATEMENTS
(h) Charter Documents. The charter documents of Tsining Housing have not
been altered since its formation date, except as filed in the record
books of Tsining Housing;
(i) Minute Books. The minute books of Tsining Housing are complete and
each of the minutes contained therein accurately reflect the actions
that were taken at a duly called and held meeting or by consent
without a meeting. All actions by Tsining Housing which required
director or shareholder approval are reflected on the corporate
minute books of Tsining Housing. Tsining Housing is not in violation
or breach of, or in default with respect to, any term of its
Certificate of Incorporation (or other charter documents) or
by-laws.
(j) Tsining Housing Financial Statements. The Tsining Housing Financial
Statements present fairly, in all material respects, the assets and
liabilities (whether accrued, absolute, contingent or otherwise) of
Tsining Housing as of the date thereof, and the sales and earnings
of the Tsining Housing Business during the periods covered thereby,
in all material respects, and have been prepared in substantial
accordance with generally accepted accounting principles
consistently applied;
(k) Tsining Housing Accounts Payable and Liabilities. There are no
material liabilities, contingent or otherwise, of Tsining Housing
which are not disclosed in Schedule "K" hereto or reflected in the
Tsining Housing Financial Statements except those incurred in the
ordinary course of business since the date of the said schedule and
the Tsining Housing Financial Statements, and Tsining Housing has
not guaranteed or agreed to guarantee any debt, liability or other
obligation of any person, firm or corporation. Without limiting the
generality of the foregoing, all accounts payable and liabilities of
Tsining Housing as of December 31, 2005 are described in Schedule
"K" hereto;
(l) Tsining Housing Accounts Receivable. All the Tsining Housing
Accounts Receivable result from bona fide business transactions and
services actually rendered without, to the knowledge and belief of
the Tsining Housing Shareholders, any claim by the obligor for
set-off or counterclaim. Without limiting the generality of the
foregoing, all accounts receivable of Tsining Housing as of December
31, 2005, are described in Schedule "L" hereto;
(m) Tsining Housing Bank Accounts. All of the Tsining Housing Bank
Accounts, their location, numbers and the authorized signatories
thereto are as set forth in Schedule "M" hereto;
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(n) No Debt to Related Parties. Except as disclosed in Schedule "N"
hereto, Tsining Housing is not and on Closing will not be, indebted
to the Tsining Housing Shareholders nor to any family member
thereof, nor to any affiliate, director or officer of Tsining
Housing or the Tsining Housing Shareholders except accounts payable
on account of bona fide business transactions of Tsining Housing
incurred in normal course of Tsining Housing Business, including
employment agreements with the Tsining Housing Shareholders, none of
which are more than 30 days in arrears;
(o) No Related Party Debt to Tsining Housing. Except as set forth on
Schedule "S" hereto, no Tsining Housing Shareholder nor any
director, officer or affiliate of Tsining Housing is now indebted to
or under any financial obligation to Tsining Housing on any account
whatsoever, except for advances on account of travel and other
expenses not exceeding $5,000 in total;
(p) No Dividends. No dividends or other distributions on any shares in
the capital of Tsining Housing have been made, declared or
authorized since the date of the Tsining Housing Financial
Statements;
(q) No Payments. No payments of any kind have been made or authorized
since the date of the Tsining Housing Financial Statements to or on
behalf of the Tsining Housing Shareholders or to or on behalf of
officers, directors, shareholders or employees of Tsining Housing or
under any management agreements with Tsining Housing, except
payments made in the ordinary course of business and at the regular
rates of salary or other remuneration payable to them;
(r) No Pension Plans. There are no pension, profit sharing, group
insurance or similar plans or other deferred compensation plans
affecting Tsining Housing, except as set forth in the Tsining
Housing Financial Statements;
(s) No Adverse Events. Since the date of the Tsining Housing Financial
Statements:
(i) there has not been any material adverse change in the
consolidated financial position or condition of Tsining
Housing, its liabilities or the Tsining Housing Assets or any
damage, loss or other change in circumstances materially
affecting Tsining Housing, the Tsining Housing Business or the
Tsining Housing Assets or Tsining Housing's right to carry on
the Tsining Housing Business, other than changes in the
ordinary course of business,
(ii) there has not been any damage, destruction, loss or other
event (whether or not covered by insurance) materially and
adversely affecting Tsining Housing, the Tsining Housing
Business or the Tsining Housing Assets,
(iii) there has not been any material increase in the compensation
payable or to become payable by Tsining Housing to the Tsining
Housing Shareholders or to any of Tsining Housing's officers,
employees or agents or any bonus, payment or arrangement made
to or with any of them,
(iv) the Tsining Housing Business has been and continues to be
carried on in the ordinary course,
(v) Tsining Housing has not waived or surrendered any right of
material value,
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(vi) Tsining Housing has not discharged or satisfied or paid any
lien or encumbrance or obligation or liability other than
current liabilities in the ordinary course of business, and
(vii) no capital expenditures in excess of $10,000 individually or
$30,000 in total have been authorized or made;
TSINING HOUSING - INCOME TAX MATTERS
(t) Tax Returns. All tax returns and reports of Tsining Housing required
by law to be filed have been filed and are true, complete and
correct, and any taxes payable in accordance with any return filed
by Tsining Housing or in accordance with any notice of assessment or
reassessment issued by any taxing authority have been so paid;
(u) Current Taxes. Adequate provisions have been made for taxes payable
for the current period for which tax returns are not yet required to
be filed and there are no agreements, waivers, or other arrangements
providing for an extension of time with respect to the filing of any
tax return by, or payment of, any tax, governmental charge or
deficiency by Tsining Housing. Tsining Housing is not aware of any
contingent tax liabilities or any grounds which would prompt a
reassessment including aggressive treatment of income and expenses
in filing earlier tax returns;
TSINING HOUSING - APPLICABLE LAWS AND LEGAL MATTERS
(v) Licenses. Tsining Housing holds all licenses and permits as may be
requisite for carrying on the Tsining Housing Business in the manner
in which it has heretofore been carried on, which licenses and
permits have been maintained and continue to be in good standing
except where the failure to obtain or maintain such licenses or
permits would not have a material adverse effect on the Tsining
Housing Business;
(w) Applicable Laws. Tsining Housing has not been charged with or
received notice of breach of any laws, ordinances, statutes,
regulations, by-laws, orders or decrees to which they are subject or
which applies to them the violation of which would have a material
adverse effect on the Tsining Housing Business, and, to the
knowledge of the Tsining Housing Shareholders, Tsining Housing is
not in breach of any laws, ordinances, statutes, regulations,
by-laws, orders or decrees the contravention of which would result
in a material adverse impact on the Tsining Housing Business;
(x) Pending or Threatened Litigation. There is no material litigation or
administrative or governmental proceeding pending or threatened
against or relating to Tsining Housing, the Tsining Housing
Business, or any of the Tsining Housing Assets, nor do the Tsining
Housing Shareholders have any knowledge of any deliberate act or
omission of Tsining Housing that would form any material basis for
any such action or proceeding;
(y) No Bankruptcy. Tsining Housing has not made any voluntary assignment
or proposal under applicable laws relating to insolvency and
bankruptcy and no bankruptcy petition has been filed or presented
against Tsining Housing and no order has been made or a resolution
passed for the winding-up, dissolution or liquidation of Tsining
Housing;
18
(z) Labor Matters. Tsining Housing is not party to any collective
agreement relating to the Tsining Housing Business with any labor
union or other association of employees and no part of the Tsining
Housing Business has been certified as a unit appropriate for
collective bargaining or, to the knowledge of the Tsining Housing
Shareholders, has made any attempt in that regard;
(aa) Finder's Fees. Tsining Housing is not a party to any agreement which
provides for the payment of finder's fees, brokerage fees,
commissions or other fees or amounts which are or may become payable
to any third party in connection with the execution and delivery of
this Agreement and the transactions contemplated herein;
EXECUTION AND PERFORMANCE OF AGREEMENT
(bb) Authorization and Enforceability. The execution and delivery of this
Agreement, and the completion of the transactions contemplated
hereby, have been duly and validly authorized by all necessary
corporate action on the part of Tsining Housing;
(cc) No Violation or Breach. The execution and performance of this
Agreement will not
(i) violate the charter documents of Tsining Housing or result in
any breach of, or default under, any loan agreement, mortgage,
deed of trust, or any other agreement to which Tsining Housing
is a party,
(ii) give any person any right to terminate or cancel any agreement
including, without limitation, Tsining Housing Material
Contracts, or any right or rights enjoyed by Tsining Housing,
(iii) result in any alteration of Tsining Housing's obligations
under any agreement to which Tsining Housing is a party
including, without limitation, the Tsining Housing Material
Contracts,
(iv) result in the creation or imposition of any lien, encumbrance
or restriction of any nature whatsoever in favor of a third
party upon or against the Tsining Housing Assets,
(v) result in the imposition of any tax liability to Tsining
Housing relating to Tsining Housing Assets or the Tsining
Housing Shares, or
(vi) violate any court order or decree to which either Tsining
Housing is subject;
TSINING HOUSING ASSETS - OWNERSHIP AND CONDITION
(dd) Business Assets. The Tsining Housing Assets, comprise all of the
property and assets of the Tsining Housing Business, and neither the
Tsining Housing Shareholders nor any other person, firm or
corporation owns any assets used by Tsining Housing in operating the
Tsining Housing Business, whether under a lease, rental agreement or
other arrangement, other than as disclosed in Schedules "O" or "R"
hereto;
(ee) Title. Tsining Housing is the legal and beneficial owner of the
Tsining Housing Assets, free and clear of all mortgages, liens,
charges, pledges, security interests, encumbrances or other claims
whatsoever, save and except as disclosed in Schedules "O" or "R"
hereto;
19
(ff) No Option. No person, firm or corporation has any agreement or
option or a right capable of becoming an agreement for the purchase
of any of the Tsining Housing Assets;
(gg) Tsining Housing Insurance Policies. Tsining Housing maintains the
public liability insurance and insurance against loss or damage to
the Tsining Housing Assets and the Tsining Housing Business as
described in Schedule "P" hereto;
(hh) Tsining Housing Material Contracts. The Tsining Housing Material
Contracts listed in Schedule "R" constitute all of the material
contracts of Tsining Housing;
(ii) No Default. There has not been any default in any material
obligation of Tsining Housing or any other party to be performed
under any of Tsining Housing Material Contracts, each of which is in
good standing and in full force and effect and unamended (except as
disclosed in Schedule "R"), and Tsining Housing is not aware of any
default in the obligations of any other party to any of the Tsining
Housing Material Contracts;
(jj) No Compensation on Termination. There are no agreements, commitments
or understandings relating to severance pay or separation allowances
on termination of employment of any employee of Tsining Housing.
Tsining Housing is not obliged to pay benefits or share profits with
any employee after termination of employment except as required by
law;
TSINING HOUSING ASSETS - TSINING HOUSING EQUIPMENT
(kk) Tsining Housing Equipment. The Tsining Housing Equipment has been
maintained in a manner consistent with that of a reasonably prudent
owner and such equipment is in good working condition;
TSINING HOUSING ASSETS - TSINING HOUSING GOODWILL AND OTHER ASSETS
(ll) Tsining Housing Goodwill. Tsining Housing carries on the Tsining
Housing Business only under the name "Xi'an Tsining Housing
Devlopment Co., Ltd." and variations thereof and under no other
business or trade names. The Tsining Housing Shareholders do not
have any knowledge of any infringement by Tsining Housing of any
patent, trademark, copyright or trade secret;
THE BUSINESS OF TSINING HOUSING
(mm) Maintenance of Business. Since the date of the Tsining Housing
Financial Statements, the Tsining Housing Business has been carried
on in the ordinary course and Tsining Housing has not entered into
any material agreement or commitment except in the ordinary course;
and
(nn) Subsidiaries. Tsining Housing does not own any subsidiaries and does
not otherwise own, directly or indirectly, any shares or interest in
any other corporation, partnership, joint venture or firm.
20
NON-MERGER AND SURVIVAL
5.2 The representations and warranties of Tsining Housing contained herein will
be true at and as of Closing in all material respects as though such
representations and warranties were made as of such time. Notwithstanding the
completion of the transactions contemplated hereby, the waiver of any condition
contained herein (unless such waiver expressly releases a party from any such
representation or warranty) or any investigation made by Pacific, the
representations and warranties of Tsining Housing shall survive the Closing.
INDEMNITY
5.3 The Tsining Housing Shareholders agree to indemnify and save harmless
Pacific from and against any and all claims, demands, actions, suits,
proceedings, assessments, judgments, damages, costs, losses and expenses,
including any payment made in good faith in settlement of any claim (subject to
the right of the Tsining Housing Shareholders to defend any such claim),
resulting from the breach by any of them of any representation or warranty of
such party made under this Agreement or from any misrepresentation in or
omission from any certificate or other instrument furnished or to be furnished
by Tsining Housing or the Tsining Housing Shareholders to Pacific hereunder.
ARTICLE 6
COVENANTS OF TSINING HOUSING AND
THE TSINING HOUSING SHAREHOLDERS
COVENANTS
6.1 Tsining Housing and the Tsining Housing Shareholders covenant and agree with
Pacific that they will:
(a) Conduct of Business. Until the Closing, conduct the Tsining Housing
Business diligently and in the ordinary course consistent with the
manner in which the Tsining Housing Business generally has been
operated up to the date of execution of this Agreement;
(b) Preservation of Business. Until the Closing, use their best efforts
to preserve the Tsining Housing Business and the Tsining Housing
Assets and, without limitation, preserve for Pacific Tsining
Housing's relationships with their suppliers, customers and others
having business relations with them;
(c) Access. Until the Closing, give Pacific and its representatives full
access to all of the properties, books, contracts, commitments and
records of Tsining Housing relating to Tsining Housing, the Tsining
Housing Business and the Tsining Housing Assets, and furnish to
Pacific and its representatives all such information as they may
reasonably request;
(d) Procure Consents. Until the Closing, take all reasonable steps
required to obtain, prior to Closing, any and all third party
consents required to permit the Acquisition and to preserve and
maintain the Tsining Housing Assets, including the Tsining Housing
Material Contracts, notwithstanding the change in control of Tsining
Housing arising from the Acquisition;
(e) Reporting and Internal Controls. From and after the Closing, the
Tsining Housing Shareholders shall forthwith take all required
actions to implement internal controls on the business of Tsining
Housing to ensure that Tsining Housing and Pacific comply with
Section 13(b)(2) of the Securities and Exchange Act of 1934;
21
(f) Stock Dividend. Within ten (10) days from the Closing Date, Tsining
Housing and the Tsining Housing Shareholders shall cause Pacific to
effectuate an eight-for-one forward split of the Pacific Common
Shares by way of stock dividend;
(g) Name Change. Forthwith after the Closing, Tsining Housing and the
Tsining Housing Shareholders shall take such steps are required to
change the name of Pacific to "China Housing & Land Development,
Inc." or such similar name as may be acceptable to the board of
directors of Pacific;
(h) Sale of Business. Within thirty (30) days from the Closing Date,
Pacific shall sell its business operations, as they exist
immediately prior to the Closing, to Xxxxxx Xxxxx. In consideration
of the sale, Xxxxxx Xxxxx shall forgive all debt owned to her by
Pacific (in the amount of $1,556);
(i) No Reverse Stock Splits. For a period of twelve (12) months
following the Closing, not take any action to cause or result in any
way in a reverse stock split of the capital stock of Pacific; and
(j) 1934 Act Reports. From and after the Closing Date, take all such
steps as are necessary to discharge all reporting obligations
imposed upon them by the Securities Exchange Act of 1934.
AUTHORIZATION
6.2 Tsining Housing hereby agrees to authorize and direct any and all federal,
state, municipal, foreign and international governments and regulatory
authorities having jurisdiction respecting Tsining Housing to release any and
all information in their possession respecting Tsining Housing to Pacific.
Tsining Housing shall promptly execute and deliver to Pacific any and all
consents to the release of information and specific authorizations which Pacific
reasonably require to gain access to any and all such information. Tsining
Housing Shareholders hereby authorize Lu Pingji to execute all certificates or
other representations required to complete the transactions contemplated by this
Agreement.
SURVIVAL
6.3 The covenants set forth in this Article shall survive the Closing for the
benefit of Pacific.
ARTICLE 7
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT IN FAVOR OF PACIFIC
7.1 Pacific's obligations to carry out the transactions contemplated hereby are
subject to the fulfillment of each of the following conditions precedent on or
before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to Pacific hereunder will have been so executed and
delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Tsining Housing or the Tsining Housing
Shareholders at or prior to the Closing will have been complied with
or performed;
22
(c) title to the Tsining Housing Shares held by the Tsining Housing
Shareholders and to the Tsining Housing Assets will be free and
clear of all mortgages, liens, charges, pledges, security interests,
encumbrances or other claims whatsoever, save and except as
disclosed herein, and the Tsining Housing Shares shall be duly
transferred to Pacific;
(d) subject to Article 8 hereof, there will not have occurred
(i) any material adverse change in the financial position or
condition of Tsining Housing, its liabilities or the Tsining
Housing Assets or any damage, loss or other change in
circumstances materially and adversely affecting Tsining
Housing, the Tsining Housing Business or the Tsining Housing
Assets or Tsining Housing's right to carry on the Tsining
Housing Business, other than changes in the ordinary course of
business, none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to Tsining Housing
or the Tsining Housing Business (whether or not covered by
insurance) materially and adversely affecting Tsining Housing,
the Tsining Housing Business or the Tsining Housing Assets;
and
(e) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any.
WAIVER BY PACIFIC
7.2 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Pacific and any such condition may be waived in whole
or in part by Pacific at or prior to the Closing by delivering to Tsining
Housing a written waiver to that effect signed by Pacific. In the event that the
conditions precedent set out in the preceding section are not satisfied on or
before the Closing, Pacific shall be released from all obligations under this
Agreement.
CONDITIONS PRECEDENT IN FAVOR OF TSINING HOUSING AND THE TSINING HOUSING
SHAREHOLDERS
7.3 The obligations of Tsining Housing and the Tsining Housing Shareholders to
carry out the transactions contemplated hereby are subject to the fulfillment of
each of the following conditions precedent on or before the Closing:
(a) all documents or copies of documents required to be executed and
delivered to Tsining Housing hereunder will have been so executed
and delivered;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by Pacific at or prior to the Closing
will have been complied with or performed;
(c) Pacific will have delivered the Acquisition Shares to be issued
pursuant to the terms of the Acquisition to Tsining Housing at the
Closing and the Acquisition Shares will be registered on the books
of Pacific in the name of the Tsining Housing Shareholders at the
time of Closing;
(d) title to the Acquisition Shares will be free and clear of all
mortgages, liens, charges, pledges, security interests, encumbrances
or other claims whatsoever;
(e) subject to Article 8 hereof, there will not have occurred
23
(i) any material adverse change in the financial position or
condition of Pacific, its liabilities or the Pacific Assets or
any damage, loss or other change in circumstances materially
and adversely affecting Pacific, the Pacific Business or the
Pacific Assets or Pacific' right to carry on the Pacific
Business, other than changes in the ordinary course of
business, none of which has been materially adverse, or
(ii) any damage, destruction, loss or other event, including
changes to any laws or statutes applicable to Pacific or the
Pacific Business (whether or not covered by insurance)
materially and adversely affecting Pacific, the Pacific
Business or the Pacific Assets;
(f) the transactions contemplated hereby shall have been approved by all
other regulatory authorities having jurisdiction over the subject
matter hereof, if any;
(g) Xxxxxx Xxxxx and Xxxxxxxx Xxxxx shall have returned to Pacific
without further consideration the 1,000,000 Pacific Common Shares
which they own;
(h) all officers and all members of the board of directors of Pacific
other than Xxxxxxxx Xxxxx shall have resigned from Pacific; and
(i) the satisfaction of all liabilities of Pacific on or prior to the
Closing Date, other than (i) those liabilities to be transferred to
Xxxxxx Xxxxx, (ii) liabilities incurred in connection with the
Acquisition, and (iii) additional liabilities not to exceed $5,000
in the aggregate.
WAIVER BY TSINING HOUSING AND THE TSINING HOUSING SHAREHOLDERS
7.4 The conditions precedent set out in the preceding section are inserted for
the exclusive benefit of Tsining Housing and the Tsining Housing Shareholders
and any such condition may be waived in whole or in part by Tsining Housing or
the Tsining Housing Shareholders at or prior to the Closing by delivering to
Pacific a written waiver to that effect signed by Tsining Housing and the
Tsining Housing Shareholders. In the event that the conditions precedent set out
in the preceding section are not satisfied on or before the Closing, Tsining
Housing and the Tsining Housing Shareholders shall be released from all
obligations under this Agreement.
NATURE OF CONDITIONS PRECEDENT
7.5 The conditions precedent set forth in this Article are conditions of
completion of the transactions contemplated by this Agreement and are not
conditions precedent to the existence of a binding agreement. Each party
acknowledges receipt of the sum of $1.00 and other good and valuable
consideration as separate and distinct consideration for agreeing to the
conditions of precedent in favor of the other party or parties set forth in this
Article.
TERMINATION
7.6 Notwithstanding any provision herein to the contrary, if the Closing does
not occur on or before April 30, 2006, this Agreement will be at an end and will
have no further force or effect, unless otherwise agreed upon by the parties in
writing.
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CONFIDENTIALITY
7.7 Notwithstanding any provision herein to the contrary, the parties hereto
agree that the existence and terms of this Agreement are confidential and that
if this Agreement is terminated pursuant to the preceding section the parties
agree to return to one another any and all financial, technical and business
documents delivered to the other party or parties in connection with the
negotiation and execution of this Agreement and shall keep the terms of this
Agreement and all information and documents received from Tsining Housing and
Pacific and the contents thereof confidential and not utilize nor reveal or
release same, provided, however, that Pacific will be required to issue a news
release regarding the execution and consummation of this Agreement and file a
Current Report on Form 8-K with the Securities and Exchange Commission
respecting the proposed Acquisition contemplated hereby together with such other
documents as are required to maintain the currency of Pacific's filings with the
Securities and Exchange Commission.
ARTICLE 8
RISK
MATERIAL CHANGE IN THE BUSINESS OF TSINING HOUSING
8.1 If any material loss or damage to the Tsining Housing Business occurs prior
to Closing and such loss or damage, in Pacific' reasonable opinion, cannot be
substantially repaired or replaced within sixty (60) days, Pacific shall, within
two (2) days following any such loss or damage, by notice in writing to Tsining
Housing, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to Pacific' obligations to carry out
the transactions contemplated hereby, be vested in Tsining Housing
or otherwise adequately secured to the satisfaction of Pacific on or
before the Closing Date.
MATERIAL CHANGE IN THE PACIFIC BUSINESS
8.2 If any material loss or damage to the Pacific Business occurs prior to
Closing and such loss or damage, in Tsining Housing's reasonable opinion, cannot
be substantially repaired or replaced within sixty (60) days, Tsining Housing
shall, within two (2) days following any such loss or damage, by notice in
writing to Pacific, at its option, either:
(a) terminate this Agreement, in which case no party will be under any
further obligation to any other party; or
(b) elect to complete the Acquisition and the other transactions
contemplated hereby, in which case the proceeds and the rights to
receive the proceeds of all insurance covering such loss or damage
will, as a condition precedent to Tsining Housing's obligations to
carry out the transactions contemplated hereby, be vested in Pacific
or otherwise adequately secured to the satisfaction of Tsining
Housing on or before the Closing Date.
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ARTICLE 9
CLOSING
CLOSING
9.1 The Acquisition and the other transactions contemplated by this Agreement
will be closed at the Place of Closing in accordance with the closing procedure
set out in this Article.
DOCUMENTS TO BE DELIVERED BY TSINING HOUSING
9.2 On or before the Closing, Tsining Housing and the Tsining Housing
Shareholders will deliver or cause to be delivered to Pacific:
(a) the original or certified copies of the charter documents of Tsining
Housing and all corporate records documents and instruments of
Tsining Housing, the corporate seal of Tsining Housing and all books
and accounts of Tsining Housing;
(b) all reasonable consents or approvals required to be obtained by
Tsining Housing for the purposes of completing the Acquisition and
preserving and maintaining the interests of Tsining Housing under
any and all Tsining Housing Material Contracts and in relation to
Tsining Housing Assets;
(c) certified copies of such resolutions of the shareholders and
directors of Tsining Housing as are required to be passed to
authorize the execution, delivery and implementation of this
Agreement;
(d) an acknowledgement from Tsining Housing and the Tsining Housing
Shareholders of the satisfaction of the conditions precedent set
forth in section 7.3 hereof;
(e) the certificates or other evidence of ownership of the Tsining
Housing Shares, together with such other documents or instruments
required to effect transfer of ownership of the Tsining Housing
Shares to Pacific; and
(f) such other documents as Pacific may reasonably require to give
effect to the terms and intention of this Agreement.
DOCUMENTS TO BE DELIVERED BY PACIFIC
9.3 On or before the Closing, Pacific shall deliver or cause to be delivered to
Tsining Housing and the Tsining Housing Shareholders:
(a) share certificates representing the Acquisition Shares duly
registered in the names of the holders of shares of Tsining Housing
Common Stock;
(b) certified copies of such resolutions of the directors of Pacific as
are required to be passed to authorize the execution, delivery and
implementation of this Agreement;
(c) a certified copy of a resolution of the directors of Pacific dated
as of the Closing Date appointing the nominees of Tsining Housing as
officers of Tsining Housing and appointing the nominee of the
Tsining Housing Shareholders to the board of directors of Pacific;
(d) undated resignation of Xxxxxxxx Xxxxx as a director of Pacific;
26
(e) an acknowledgement from Pacific of the satisfaction of the
conditions precedent set forth in section 7.1 hereof;
(f) such other documents as Tsining Housing may reasonably require to
give effect to the terms and intention of this Agreement.
ARTICLE 10
POST-CLOSING MATTERS
Forthwith after the Closing, Pacific, Tsining Housing and the Tsining
Housing Shareholders, as the case may be, agree to use all their best efforts
to:
(a) issue a news release reporting the Closing;
(b) file with the Securities and Exchange Commission a report on Form
14f1 disclosing the change in control of Pacific and, 10 days after
such filing, forthwith date and accept the resignation of Xxxxxxxx
Xxxxx as a director of Pacific;
(c) file a Form 8-K with the Securities and Exchange Commission
disclosing the terms of this Agreement within 4 business days of the
Closing which includes full Form 10 disclosure and the audited
financial statements of Tsining Housing, as well as pro forma
financial information of Tsining Housing and Pacific as required by
Item 310 of Regulation SB as promulgated by the Securities and
Exchange Commission;
(d) file reports on Forms 13D and 3 with the Securities and Exchange
Commission disclosing the acquisition of the Acquisition Shares by
the Tsining Housing Shareholders;
(e) within 10 days of the Closing, take such steps are required to
change the name of Pacific to "China Housing & Land Development,
Inc." or such similar name as may be acceptable to the board of
directors of Pacific; and
(f) within 10 days of the Closing, take such steps are required to
effectuate an eight-for-one forward split of the Pacific Common
Shares by way of stock dividend.
ARTICLE 11
GENERAL PROVISIONS
ARBITRATION
11.1 The parties hereto shall attempt to resolve any dispute, controversy,
difference or claim arising out of or relating to this Agreement by negotiation
in good faith. If such good negotiation fails to resolve such dispute,
controversy, difference or claim within fifteen (15) days after any party
delivers to any other party a notice of its intent to submit such matter to
arbitration, then any party to such dispute, controversy, difference or claim
may submit such matter to arbitration in the City of New York, New York.
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NOTICE
11.2 Any notice required or permitted to be given by any party will be deemed to
be given when in writing and delivered to the address for notice of the intended
recipient by personal delivery, prepaid single certified or registered mail, or
telecopier. Any notice delivered by mail shall be deemed to have been received
on the fourth business day after and excluding the date of mailing, except in
the event of a disruption in regular postal service in which event such notice
shall be deemed to be delivered on the actual date of receipt. Any notice
delivered personally or by telecopier shall be deemed to have been received on
the actual date of delivery.
ADDRESSES FOR SERVICE
11.3 The address for service of notice of each of the parties hereto is as
follows:
(a) Pacific:
Pacific Northwest Productions Inc.
0000 Xxxxx Xxxx
Xxxxxx, X.X., Xxxxxx X0X 0X0
Attn: Xxxxxx Xxxxx, President
Phone: (000) 000-0000
Telecopier: (000) 000-0000
(b) Tsining Housing or the Tsining Housing Shareholders:
Xi'an Tsining Housing Development Co., Ltd.
6 Youyi Xxxx Xx, Han Yuan 4 Xxx
Xi'An, Shaanxi Province
China 710054
Attn: Lu Pingji, CEO
Tel: 00-000-00000000
Fax: 00-000-00000000
With a copy to:
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx, Esq.
Phone: (000) 000-0000
Telecopier: (000) 000-0000
CHANGE OF ADDRESS
11.4 Any party may, by notice to the other parties change its address for notice
to some other address in North America and will so change its address for notice
whenever the existing address or notice ceases to be adequate for delivery by
hand. A post office box may not be used as an address for service.
FURTHER ASSURANCES
11.5 Each of the parties will execute and deliver such further and other
documents and do and perform such further and other acts as any other party may
reasonably require to carry out and give effect to the terms and intention of
this Agreement.
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TIME OF THE ESSENCE
11.6 Time is expressly declared to be the essence of this Agreement.
ENTIRE AGREEMENT
11.7 The provisions contained herein constitute the entire agreement among
Tsining Housing, the Tsining Housing Shareholders and Pacific respecting the
subject matter hereof and supersede all previous communications, representations
and agreements, whether verbal or written, among Tsining Housing, the Tsining
Housing Shareholders and Pacific with respect to the subject matter hereof.
ENUREMENT
11.8 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
ASSIGNMENT
11.9 This Agreement is not assignable without the prior written consent of the
parties hereto.
COUNTERPARTS
11.10 This Agreement may be executed in counterparts, each of which when
executed by any party will be deemed to be an original and all of which
counterparts will together constitute one and the same Agreement. Delivery of
executed copies of this Agreement by telecopier will constitute proper delivery,
provided that originally executed counterparts are delivered to the parties
within a reasonable time thereafter.
APPLICABLE LAW
11.11 This Agreement is subject to the laws of the State of New York.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF the parties have executed this Agreement effective as
of the day and year first above written.
PACIFIC NORTHWEST
PRODUCTIONS INC.
By: /s/ XXXXXX XXXXX
----------------------
Xxxxxx Xxxxx, President
XI'AN TSINING HOUSING
DEVELOPMENT CO., LTD.
By: /s/ LU PINGJI
------------------------
Lu Pingji, Chairman
SHAREHOLDERS
/s/ XXXX XXXXX
--------------------------
Xxxx Xxxxx
/s/ NIE FANG
-----------------------------
Nie Fang
/s/ XXX XXXXXXX
Xxx Xxxxxxx
/s/ CHEN XXXXXXX
Xxxx Xxxxxxx
/s/ WEI SHUANCUN
Wei Shuancun
XXXX XXXXXX
Xxxx Xxxxxx
30
/s/ XXX XXXX
--------------------------
Xxx Xxxx
/s/ FAN QINGHAI
Fan Qinghai
/s/ XXX XXX
-----------------------------
Xxx Xxx
31
