EXECUTION VERSION
PURCHASE AND SETTLMENT AGREEMENT
BY AND AMONG
CHINA DIRECT TRADING CORPORATION,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
AND
COMPLETE POWER SOLUTIONS LLC
AS OF DECEMBER 31, 2006
PURCHASE AND SETTLEMENT AGREEMENT dated as of December 31, 2006 (this
"Agreement"), by and among CHINA DIRECT TRADING CORPORATION, a Florida
corporation ("China Direct"), ▇▇▇▇▇▇▇ ▇▇▇▇, an individual ("Dato"), ▇▇▇▇▇▇
▇▇▇▇▇▇, an individual ("▇▇▇▇▇▇"), and COMPLETE POWER SOLUTIONS, LLC, a Florida
limited liability company (the "Company").
RECITALS
A. The Company is engaged in the business of importing, marketing, selling and
installing generators and related products and providing related services.
B. On January 27, ▇▇▇▇, ▇▇▇▇▇ Direct and Dato entered into a Purchase Agreement
(the "2006 Agreement") which provides, among other matters, that China Direct
owns 51% of the Company's member interests (the "CD Interests") and Dato owns
49% of the Company's member interests (the "Dato Interests").
C. As a result of the 2006 Agreement, Dato became the owner of record of 600,000
shares of preferred stock of China Direct
D. China Direct, the Company and Dato have agreed that it is in the best
interest of all parties for China Direct to divest itself of its interest in the
Company.
E. The Company wishes to purchase from China Direct, and China Direct wishes to
sell to the Company, the CD Interests, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.01 Definitions. As used herein, the following terms shall have the following
meanings:
"Ancillary Documents" as to any Person means all agreements,
instruments, releases, certificates and other documents contemplated by this
Agreement to be entered into or executed by such Person; and where a reference
to a Person is made in conjunction with a reference to the term shall refer only
to such documents which such Person has entered into or executed. Without
limiting the generality of the foregoing, Ancillary Documents includes the 2006
Promissory Note and 2007 Promissory Note.
"Closing" has the meaning specified in Section 2.02 hereof.
"Closing Date" has the meaning specified in Section 2.02 hereof.
"Damage Claim Notice" has the meaning specified in Section 5.04(a)
hereof.
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"Damages" has the meaning specified in Section 5.02 hereof.
"Employment Agreement" means that certain employment agreement dated as
of January 27, 2006 by and among Dato, China Direct and the Company.
"Encumbrance" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest, conditional sale agreement, financing
statement or encumbrance of any kind, or any other type of preferential
arrangement that has the practical effect of creating a security interest in
respect of such asset and also includes any voting agreement, trust, proxy or
other agreement with respect to the voting of any voting security.
"Effective Date" means 11:59 pm on December 31, 2006 with respect to
the date and time as of which the closing of the transactions contemplated by
this Agreement shall be deemed effective for all purposes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Governmental Authority" means any federal, state or local government,
other political subdivision or agency thereof exercising legislative, judicial,
regulatory or administrative functions of, or pertaining to, government.
"Indemnitee" has the meaning specified in Section 5.04(a) hereof.
"Indemnitor" has the meaning specified in Section 5.04(a) hereof.
"Laws" means any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its Property is subject or bound.
"Liabilities" means all debts, claims, agreements, liabilities and
obligations, including, without limitation, all salaries, severance payments,
accounts payable, media obligations, obligations incurred under license
agreements, client contracts, supply contracts, leases and employment
agreements, litigation claims or demands and any other obligations whether or
not incurred in the ordinary course of business.
"Operating Agreement" means the limited liability company operating
agreement dated as of January 27, 2006 by and among Dato, China Direct and the
Company.
"Person" means a natural person, corporation, partnership or other
business entity, or any Governmental Entity.
"Preferred Stock" means the shares of senior voting convertible
preferred stock of China Direct owned by Dato and acquired by Dato under the
2006 Agreement.
"2006 Promissory Note" means the promissory note in the original amount
of $250,000 executed by Dato on June 27, 2006 and payable to China Direct,
bearing interest at 7% per annum and maturing on June 30, 2007, as set forth
therein, subject to extension, offset by (i) $41,600 owed by an affiliate of
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China Direct to the Company for funds advanced by the Company for portable
generators which were never delivered and (ii) $15,000 as an agreed amount paid
to compensate the Company for refunds required to be made to clients of the
Company for cancelled sales made by ▇▇▇▇▇▇, which amounts have been applied
first to accrued and unpaid interest due September 30, 2006 and December 31,
2006 and then applied to quarterly interest payable on the principal of the 2006
Note to maturity (June 30, 2007), and then to reduce the principal amount of the
Note to $210,900.
"2007 Promissory Note" means the promissory note of the Company which
constitutes a portion of the consideration for the CD Interests, in the original
principal amount of $225,560, subject to (x) increase by up to $7,500, the
amount claimed as the cost of replacement of a garden by a customer in the event
that such customer abandons or settles the claim for less than $7,500 and (y)
offset for the payment of indemnification claims as provided in Section 4.05,
and payable to China Direct, in the form attached hereto as Exhibit A.
"Securities Act" means the Securities Act of 1933, as amended.
"Voting Agreement" means that certain Voting Agreement dated as of
January 27, 2006 by and among China Direct, Dato, and ▇▇▇▇▇▇.
ARTICLE 2
PURCHASE AND SALE
2.01 Purchase and Sale. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties contained herein, at the
Closing, China Direct will sell, convey, assign, transfer and deliver to the
Company, and the Company will acquire from China Direct, the CD Interests free
and clear of any Encumbrances as of the Effective Time.
2.02 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place on January 16, 2007 or on such date as may be
acceptable to each of the parties hereto (the "Closing Date") at the offices of
▇▇▇ ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or such
other place as may be acceptable to each of the parties hereto.
2.03 Consideration. In consideration of the mutual promises and consideration
made and delivered by the parties, at the Closing (x) China Direct shall assign,
transfer and deliver the CD Interests to the Company pursuant to Section 2.01
hereof, and (y) Dato and/or the Company shall deliver to China Direct: (i) one
or more certificates evidencing an aggregate of Six Hundred Thousand (600,000)
shares of Preferred Stock and (ii) the 2007 Promissory Note.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF DATO; CHINA DIRECT AND ▇▇▇▇▇▇
3.01 Dato and the Company Representations. Dato and the Company jointly and
severally represent and warrant to ▇▇▇▇▇▇ and China Direct that as of the date
hereof and as of the Closing Date, (i) Dato is the sole and lawful record and
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beneficial owner of the Preferred Stock, (ii) except as contemplated by this
Agreement, Dato has not offered, sold, transferred, granted any right to
purchase, or otherwise disposed of, or pledged, granted a security interest in
or lien on, or otherwise encumbered, any of the Preferred Stock, and the
Preferred Stock are free and clear of all Encumbrances of every kind whatsoever,
(iii) except as contemplated by this Agreement, the transfer of the Preferred
Stock to China Direct pursuant to this Agreement will transfer to China Direct
legal and valid record and beneficial ownership thereof, free and clear of all
Encumbrances, (iv) no notices, reports or other filings are required to be made
by the Company or Dato with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by the Company or Dato from,
any Governmental Authority in connection with the execution and delivery of this
Agreement by the Company and the consummation by the Company or Dato of the
transactions contemplated by this Agreement, other than the filing by Dato of
(a) a Form 4 and (b) an amendment to his Schedule 13D to disclose his sale of
the Preferred Stock and related reduction in beneficial ownership of the Common
Stock, which Form 4 and amendment must be filed two (2) business days and
promptly, respectively, after the consummation of such transactions and (v)
there are no civil, criminal or administrative actions, suits, claims, hearings,
investigations, arbitrations, or proceedings pending or threatened against the
Company or Dato preventing, or which, if determined adversely to the Company or
Dato would prevent the Company or Dato from consummating the transactions
contemplated by this Agreement.
3.02 ▇▇▇▇▇▇ and China Direct Representations. ▇▇▇▇▇▇ and China Direct jointly
and severally represent and warrant to Dato and the Company that as of the date
hereof and as of the Closing Date (i) China Direct is the sole and lawful record
and beneficial owner of the CD Interests, (ii) China Direct has not offered,
sold, transferred, granted any right to purchase, or otherwise disposed of, or
pledged, granted a security interest in or lien on, or otherwise encumbered, any
of the CD Interests, and the CD Interests are free and clear of all Encumbrances
of every kind whatsoever, (iii) except as contemplated by this Agreement, the
transfer of the CD Interests to the Company pursuant to this Agreement will
transfer to the Company legal and valid record and beneficial ownership thereof,
free and clear of all Encumbrances, (iv) no notices, reports or other filings
are required to be made by ▇▇▇▇▇▇ or China Direct with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
the ▇▇▇▇▇▇ or China Direct from, any Governmental Authority in connection with
the execution and delivery of this Agreement by ▇▇▇▇▇▇ and China Direct and the
consummation by ▇▇▇▇▇▇ and China Direct of the transactions contemplated by this
Agreement, other than the filing by China Direct of (a) a Current Report on Form
8-K to report the consummation of the transactions contemplated by this
Agreement with the SEC which Report shall be filed within four (4) business days
after the consummation of such transactions and (v) there are no civil, criminal
or administrative actions, suits, claims, hearings, investigations,
arbitrations, or proceedings pending or threatened against the China Direct or
▇▇▇▇▇▇ preventing, or which, if determined adversely to China Direct or ▇▇▇▇▇▇
would prevent China Direct or ▇▇▇▇▇▇ from consummating the transactions
contemplated by this Agreement.
3.03 Additional Company Representations. Dato and the Company jointly and
severally represent and warrant to ▇▇▇▇▇▇ and China Direct that as of the date
hereof and as of the Closing Date,
(a) The Company is duly organized, validly existing and in good standing as a
limited liability company under the laws of the State of Florida. The Company is
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not required to be licensed or qualified to do business as a foreign limited
liability company in any jurisdiction except where the failure to so qualify
would not have a material adverse effect on the Company. The Company has all
requisite limited liability company power and authority to own, operate, lease
and encumber its properties and to carry on its business as now being conducted,
and to execute and deliver this Agreement and perform its obligations hereunder.
(b) This Agreement constitutes the legal, valid and binding obligation of Dato
and the Company, enforceable against each of them in accordance with its terms.
(c) The execution and delivery of this Agreement by Dato and the Company, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby have been (or upon execution will be) duly
authorized by all requisite action on the part of such party and do not violate
or conflict with any applicable law, agreement, instrument or arrangement to
which such party is bound or affected.
(d) No broker, finder or investment banker is entitled to any brokerage, finders
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of any party for
which the other party will be responsible.
3.04 Additional China Direct Representations. ▇▇▇▇▇▇ and China Direct jointly
and severally represent and warrant to Dato and the Company that as of the date
hereof and as of the Closing Date:
(a) China Direct is duly incorporated, validly existing and in good standing
under the laws of the State of Florida. China Direct is not required to be
licensed or qualified to do business as a foreign corporation in any
jurisdiction except where the failure to so qualify would not have a material
adverse effect on China Direct. China Direct has all requisite corporate power
and authority to own, operate, lease and encumber its properties and to carry on
its business as now being conducted, and to execute and deliver this Agreement
and perform its obligations hereunder.
(b) This Agreement constitutes the legal, valid and binding obligation of ▇▇▇▇▇▇
and China Direct, enforceable against each of them in accordance with its terms.
(c) The execution and delivery of this Agreement by ▇▇▇▇▇▇ and China Direct, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby have been (or upon execution will be) duly
authorized by all requisite action on the part of such party and do not violate
or conflict with any applicable law, agreement, instrument or arrangement to
which such party is bound or affected.
(d) No broker, finder or investment banker is entitled to any brokerage, finders
or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of any party for
which the other party will be responsible.
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ARTICLE 4
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
4.01 Survival of Representations and Warranties of the Parties. All
representations and warranties made by any party hereto contained in this
Agreement or in any Ancillary Document, and the indemnification obligations of
each party hereto, shall survive the Closing Date until the second anniversary
of the Closing Date. Notwithstanding the foregoing, if a party has made a claim
for indemnification in accordance with the procedures set forth in this Article
5 on or prior to the expiration of the applicable survival period referred to in
the previous sentence, then the indemnity obligations relating to such claim
shall survive until the final resolution of such claim, as further provided in
this Article 5.
4.02 Indemnification by Dato and the Company. Each of Dato and the Company
agrees to indemnify and hold China Direct and its affiliates, subsidiaries,
parent companies, directors, officers, agents and employees harmless (subject to
the terms of this Article 5) from and against any and all damages, losses,
Liabilities, deficiencies, costs and/or expenses (including all reasonable legal
fees, expenses and other out-of-pocket costs) (collectively, "Damages")
resulting from, arising out of or in connection with any failure by Dato or the
Company to comply with applicable laws, including, without limitation, any
federal or state securities law, and any misrepresentation or breach of any
warranty, representation or covenant made by Dato or the Company in this
Agreement, the 2006 Agreement or any Ancillary Document, including, without
limitation, any Damages incurred in connection with any action, suit,
proceeding, demand or judgment of a third party (including Governmental
Authority).
4.03 Indemnification by China Direct. China Direct hereby agrees to indemnify
and hold Dato and the Company and their respective affiliates, subsidiaries,
parent companies, directors, officers, agents and employees harmless (subject to
the terms of this Article 5) from and against any and all Damages resulting
from, arising out of or in connection with Dato's duties as a director or
officer of China Direct or its subsidiaries, any failure by China Direct to
comply with applicable laws, including, without limitation, any federal or state
securities law, and any misrepresentation or breach of any warranty,
representation or covenant made by China Direct in this Agreement, the 2006
Agreement or any Ancillary Document, including, without limitation, any Damages
incurred in connection with any action, suit, proceeding, demand or judgment of
a third party (including Governmental Authority).
4.04 Procedure.
(a) Upon receipt by one party of notice of any claim by a third party which
might give rise to indemnification hereunder, or upon such party's discovery of
facts which might give rise to indemnification hereunder, the party claiming
indemnification hereunder (the "Indemnitee") shall give prompt written notice to
the other (the "Indemnitor"), which notice shall describe in reasonable detail
the Damages anticipated to be suffered (if ascertainable) and the specific
circumstances thereof, and specifying the provisions of this Agreement to which
such claim for Damages relates (the "Damage Claim Notice"). The Indemnitee may
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amend the Damage Claim Notice, without prejudice to its rights hereunder, if it
becomes aware of facts indicating that the Damages anticipated to be suffered
have increased or decreased from those estimated in the previous Damage Claim
Notice. A failure to provide or amend the Damage Claim Notice shall not relieve
the Indemnitor from any obligations or Liabilities that the Indemnitor may have
to the Indemnitee hereunder, except to the extent that the Indemnitor has been
adversely prejudiced as a result of such failure. The Indemnitor shall be
entitled to participate in the defense of any such claim or action which is a
third party claim or action at the Indemnitor's own cost and, upon the prior
written consent of the Indemnitee (which consent shall not be unreasonably
withheld or delayed), to assume the defense thereof, with counsel of
Indemnitor's own choosing, the cost of which shall be paid for by the
Indemnitor. Upon notice from Indemnitor to Indemnitee of Indemnitor's election
to assume the defense, the Indemnitor will not be liable to the Indemnitee for
any legal or other expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. The Indemnitee may not compromise or settle
any claim for which it has asserted or may assert its right to indemnification
without the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld or delayed. The Indemnitor may not compromise or settle
any claim for which Indemnitor has elected to assume the defense without
Indemnitee's prior written consent, unless (i) Indemnitor has acknowledged its
obligation to pay all Damages relating to such claim and has provided to
Indemnitee evidence reasonably satisfactory to Indemnitee that Indemnitor has
the financial wherewithal to pay such Damages, (ii) such settlement will not
contain any terms that would interfere in the normal operations of the
Indemnitee, and (iii) such settlement contains a unconditional release of all
claims against the Indemnitee.
(b) Upon receipt by Indemnitor of a Damage Claim Notice which does not relate to
a third party claim, the Indemnitor and Indemnitee shall make all reasonable
efforts to promptly resolve such claim on an amicable basis within the thirty
(30) day period following such receipt.
4.05 Payment of Indemnification Obligations.
(a) Damages shall be due and owing when finally judicially determined to be
covered by the indemnities set forth in Article 5 hereof or otherwise as
mutually agreed among the parties hereto; provided, however, that an Indemnitee
shall be entitled to the advancement of the costs of defense of a claim for
Damages; provided, however, if such claim shall be determined final judicial
determination or settlement adverse to Indemnitee, Indemnitee shall be required
to reimburse Indemnitor for monies advanced for the defense of such claim. The
Indemnitor shall, within two (2) business days following receipt of written
demand by the Indemnitee, pay the Indemnitee or at the Indemnitee's direction in
immediately available funds any and all Damages then due and owing.
(b) Dato and the Company may elect, but shall not be obligated, to apply the
amount of any Damages due and owed by China Direct as Indemnitor to offset and
reduce any payments due to it under the 2006 Promissory Note and/or the 2007
Promissory Note. Any such Damages not so offset shall be and remain payable
pursuant to Section 4.05(a) above.
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ARTICLE 5
THE CLOSING
5.01 Conditions to Each Party's Obligations to Close. The respective obligation
of each party to close the transactions described in Article 2 hereof shall be
subject to the satisfaction prior to Closing of the following conditions:
(a) No temporary restraining order, injunction or other order preventing the
transactions contemplated by this Agreement shall have been issued by any court
or other governmental entity and remain in effect, and no litigation seeking the
issuance of such an order or injunction, or seeking relief against China Direct,
the Company or Dato if the sale is consummated, shall be pending. In the event
any such order or injunction shall have been issued, each party agrees to use
commercially reasonable efforts to have any such injunction lifted.
(b) All authorizations, consents, orders or approvals of (including board
approvals), or declarations or filings with, or expiration of waiting periods
imposed by, any private party or Governmental Authority necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred or been obtained, unless failure to make such filing or obtain
such approval would not be materially adverse to China Direct, the Company or
Dato.
5.02 Conditions to Obligations of China Direct. The obligations of China Direct
to complete the transactions contemplated hereunder are subject to the
satisfaction of the following conditions, unless waived by China Direct in
writing:
(a) Performance of Obligations of Dato and the Company. Dato and the Company
shall have performed in all material respects all obligations and covenants
required to be performed by them under this Agreement and under the 2006 Note;
provided, however, Dato and the Company shall be deemed to have complied in full
with their requirements with respect to the 2006 Note if all payments of
interest due and owing on the Closing Date shall have been made to China Direct
by offset of amounts owed by China Direct and ▇▇▇▇▇▇ to the Company; and,
provided, further, that the Company shall not be deemed in default as the result
of delay or delinquency of payment of payments of interest on the 2006 Note
offset by amounts owed by China Direct or ▇▇▇▇▇▇ to the Company as set forth
herein. In addition, it shall also be a condition to Closing and a performance
obligation of Dato and the Company to deliver to China Direct on or before the
Closing Date: (i) a statement of the Company's backlog and inventory as of a
reasonably recent date; and (ii) a statement of the Company's cash position as
of January 12, 2007.
(b) Closing Payment. At the Closing, Dato and/or the Company shall have
delivered to China Direct the 2007 Promissory Note and certificates representing
the CD Interests.
5.03 Conditions to Obligations of Dato and the Company. The obligations of Dato
and the Company to complete the transactions contemplated hereunder are subject
to the satisfaction of the following conditions, unless waived by Dato in
writing:
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(a) Performance of Obligations of China Direct. China Direct shall have
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement on or prior to the Closing Date.
5.04 Termination.
(a) This Agreement may be terminated at any time prior to the Closing:
(i) by agreement of China Direct, the Company and Dato;
(ii) by China Direct (provided China Direct is not otherwise in breach), if the
Closing has not occurred on or before January 31, 2007 by reason of the failure
to fulfill any closing condition set forth under Sections 6.01 and 6.02 (unless
waived by China Direct) or if there has been a breach by Dato of any covenant or
agreement set forth in this Agreement on the part of Dato which is material (and
which was not caused in whole or part by China Direct) and which is not cured
within a reasonable period of time after notice thereof is given by China Direct
(except that no cure period shall be provided for a breach by Dato which by its
nature cannot be cured) or if any representation or warranty made by Dato in
this Agreement is materially inaccurate or untrue as of the date hereof;
(iii) by Dato (provided Dato is not otherwise in breach), if the Closing has not
occurred on or before January 31, 2007 by reason of the failure to fulfill any
closing condition set forth under Sections 6.01 and 6.03 (unless waived by Dato)
or if there has been a breach by China Direct of any covenant or agreement set
forth in this Agreement on the part of China Direct which is material (and which
was not caused in whole or part by Dato) and which is not cured within a
reasonable period of time after notice thereof is given by Dato (except that no
cure period shall be provided for a breach by China Direct which by its nature
cannot be cured) or if any representation or warranty made by China Direct in
this Agreement is materially inaccurate or untrue as of the date hereof; and
(iv) by any of China Direct, the Company or Dato if any permanent injunction or
other order of a court or other competent authority preventing the transactions
hereunder shall have become final and nonappealable.
(b) In the event of termination of this Agreement as provided in this Section
6.04, this Agreement shall forthwith become void, except that termination of
this Agreement shall not limit the liability of any party hereto except as
provided in this Agreement.
5.05 Mutual Efforts to Close. Subject to the terms and conditions of this
Agreement, ▇▇▇▇▇▇ and China Direct, on the one hand, and Dato and the Company on
the other hand, shall use their respective commercially reasonable efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to consummate the
transactions contemplated by this Agreement on or before January 31, 2007.
5.06 Access to Information. From the date hereof until the Closing, (a) Dato
shall provide China Direct, and ▇▇▇▇▇▇ and China Direct shall provide Dato, and
their respective counsel, financial advisors, auditors and other authorized
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representatives full access to such information as China Direct or Dato, as the
case may be, may from time to time reasonably request with respect to the
Company or China Direct, and the transactions contemplated by this Agreement,
and shall provide China Direct and Dato, and their respective representatives
reasonable access during regular business hours and upon reasonable notice to
the properties, books, and records of the Company and China Direct as the case
may be.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.01 Operating Agreement of the Company. All parties hereto agree and
acknowledge that effective as of the date hereof China Direct shall no longer be
a member of the Company and is not bound or benefited by the terms and
conditions of the Operating Agreement.
6.02 Voting Agreement. All parties hereto agree and acknowledge that as of the
date hereof the Voting Agreement is terminated and of no further force or
effect.
6.03 Employment Agreement. All parties hereto agree and acknowledge that as of
the date hereof the Employment Agreement is automatically amended without
further action of the parties to reflect the removal of China Direct as a party
thereto and as such, effective as of the date hereof, China Direct is not bound
by the terms and conditions of the Employment Agreement and is released from any
liability thereunder.
6.04 Post Closing Covenants. The Company and Dato agree to cooperate with China
Direct and take such actions as may be reasonably required by China Direct,
Rodriguez, Kinzbrunner, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, internal accountants of the Company
("RKCW"), or Daszkal ▇▇▇▇▇▇ LLP, independent public accountants ("Daszkal"), to
deliver to China Direct a final audit for each of the fiscal years ended
December 31, 2004, 2005 and 2006, including the corresponding audited financial
statements and accompanying certified public accountant's opinions. Dato and the
Company further agree that they will use their commercially reasonable efforts
to fully and promptly cooperate with RKCW and Daszkal in connection with the
audits (collectively, the "Audits") of the Company's financial statements for
the years ended December 31, 2004, 2005 and 2006 (collectively, the "Financial
Statements"). The Company, Dato, ▇▇▇▇▇▇ and China Direct each agree to take such
further actions, including the execution and delivery of such other agreements,
instruments and other documents, as may be necessary to give effect to the
intent and purposes of this Agreement. Notwithstanding the foregoing, it shall
not be a breach of the covenant made by the Company and Dato in this Section
6.04 to condition the release by Daszkal of its audit report on the Financial
Statements, or any of them, on the receipt by the Company of a cash payment from
China Direct equal to fifty percent (50%) of the fees and disbursements (due and
payable) to Daszkal in connection with the audit work performed by Daszkal for
purposes of the Audits; such cash payment by China Direct to the Company shall
be reduced by $7,500 to reflect a cash advance previously provided by China
Direct to the Company in connection with the Audits.
6.05 Release. Each party to this Agreement (the "Releasors") hereby
unconditionally and irrevocably remises, releases, acquits, satisfies and
forever discharges each other party to this Agreement and their respective
affiliates, subsidiaries, officers, directors, shareholders, partners, managers,
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members, employees, principals, agents, attorneys, legal representatives,
successors and assigns of and from all, and all manner of action and actions,
cause and cause of action, claims, suits, debts, damages, judgments, executions,
agreements, contracts, or demands of any kind or make whatsoever, arising out of
or in connection with the 2006 Agreement, whether sounding in contract, tort or
otherwise, and whether arising in law or equity, and any claims for attorneys
fees, interest or otherwise, which any of the Releasors ever had, now have, or
could have, whether know or unknown, on account of, or in any way related to the
2006 Agreement and in each such case, to the extent arising from or relating to
actions or inactions that took place or did not take place prior to the date of
this Agreement (the "Released Liabilities"). Notwithstanding the foregoing, this
release shall not be construed to impair a party's right to enforce the
provisions of this Agreement and/or the Ancilliary Documents, including without
limitation, the rights of the party to obtain indemnification as provided in
this Agreement and/or the Ancilliary Documents. Each party represents and
warrants to the other party that such party has not heretofore assigned or
transferred, or purported to assign or transfer, or otherwise disposed of (as
collateral or otherwise) any right, title or interest in or to any or any
interest therein to any other individual or entity, any claim, demand,
liability, action or cause of action herein released. As used in this Section
6.05, "parties" shall be deemed to include Dato and ▇▇▇▇▇▇, in their individual
capacities.
6.06 Resignations.
(a) Dato hereby resigns from any and all positions that Dato may hold as an
officer, director, manager, member, partner, employee or other position of China
Direct or any Affiliate of China Direct, as the case may be, effective as of the
date hereof.
(b) ▇▇▇▇▇▇ and each other appointee of China Direct under the Operating
Agreement hereby resigns from any and all positions that ▇▇▇▇▇▇ and such other
party may hold as an officer, director, manager, member, partner, employee or
other position of the Company or any Affiliate of the Company, as the case may
be, effective as of the date hereof. China Direct shall use its best efforts to
obtain written resignations of all persons not party to this Agreement.
6.07 Board Compensation. Dato agrees and acknowledges that all compensation due
and payable to him for his service as a member of the board of directors of
China Direct has been satisfied in full by China Direct; such compensation has
been satisfied and paid in full to Dato by reducing the amount of the principal
amount due under the 2007 Promissory Note to $225,560.
ARTICLE 7
GENERAL PROVISIONS
7.01 Expenses. Each party shall pay its own expenses (including legal and
accounting costs and expenses) in connection with the negotiation, preparation
and consummation of this Agreement and the Ancillary Documents, and the
transactions contemplated hereby and thereby.
7.02 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAW OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE.
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7.03 Headings. Article and Section headings used in this Agreement are for
convenience only and shall not affect the meaning or construction of this
Agreement.
7.04 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or mailed by certified mail
(return receipt requested) or by courier (with proof of delivery and charges
prepaid), to the parties at the following address (or at such other address for
a party as shall be specified by like notice), or if sent by telecopy to the
parties at the following telecopy numbers:
If to China Direct:
China Direct Trading Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ #▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
If to Dato or the Company:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
7.05 Parties in Interest. All the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the successors
of the parties hereto, and by the successors, heirs, executors and personal
representatives of Dato.
7.06 Entire Agreement. This Agreement, including any agreements set forth as an
annex to any such agreements, constitute the entire agreement between the
parties hereto and supersede all prior agreements and understandings, both
written and oral, with respect to the subject matter hereof.
7.07 Counterparts. This Agreement may be executed in two or more counterparts
(including by facsimile signature), each of which shall be considered an
original, but all of which together shall constitute the same instrument.
7.08 Amendment; Assignment. This Agreement may be amended only by an instrument
in writing signed by or on behalf of each of they parties sought to be bound by
such amendment. This Agreement may not be assigned without the written consent
of the other parties hereto.
7.09 Public Announcements. The: parties hereto shall mutually agree in advance
on the form, timing and contents of any public announcements concerning the
transactions contemplated hereby, subject to the requirement that nothing herein
shall be construed to prevent China Direct from making any such disclosure that
is reasonably determined by China Direct's outside legal counsel in writing to
be required for China Direct to comply with its obligations under the Exchange
Act or other applicable law.
7.10 Gender, Etc. Whenever the context may require, any pronouns used herein
shall be deemed to refer to the masculine, feminine, or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural, and vice
versa. Whenever used herein, the terms "include," "includes" and "including"
shall mean to include without limitation.
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7.11 Severability. Should one or more of the provisions of this Agreement or the
Ancillary Documents be determined by a court of law to be illegal or
unenforceable, the other provisions nevertheless will remain effective and will
be enforceable.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
CHINA DIRECT TRADING CORPORATION
By: /s/
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇
/s/
-----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, individually
DATO
/s/
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, individually
COMPLETE POWER SOLUTIONS, LLC
By: /s/
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Manager
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