MAJORITY STOCKHOLDER CONSENT AGREEMENT [Xu Hong Bin]
Exhibit 10.4
Execution Copy
MAJORITY STOCKHOLDER CONSENT AGREEMENT
[Xu Hong Bin]
[Xu Hong Bin]
This Stockholder Consent Agreement (this “Agreement”) is made and entered into as of
May 19, 2008, by and among: Xxxxxxxx Corporation, a Delaware corporation (“Parent”), and
Xu Hong Bin (the “Consenting Stockholder”).
Recitals
A. The Consenting Stockholder is a holder of outstanding shares of common stock, par value
$0.001 per share (“Company Common Stock”) of China Water and Drinks, Inc., a Nevada corporation
(the “Company”), and is the record holder and has sole voting power over such number of shares of
Company Common Stock as is set forth opposite the Consenting Stockholder’s name on Schedule
A (the “Shares”).
B. Parent, Xxxxxxx Acquisition II Corp., a Delaware corporation and a wholly owned Subsidiary
of Parent (“Merger Sub”) and the Company have entered into an agreement and plan of merger and
reorganization (the “Merger Agreement”), pursuant to which the Company will be merged with and into
Merger Sub (the “Merger”) with the Company ceasing to exist and Merger Sub remaining as a wholly
owned Subsidiary of Parent.
C. Pursuant to the Merger Agreement, each share of Company Common Stock will be converted,
upon the Merger, into the right to receive (i) shares of common stock, par value $0.01 per share,
of Parent (“Parent Common Stock”) at the Exchange Ratio, and/or (ii) at the election of the holders
thereof, an amount in cash equal to US$5.00 per share of Company Common Stock.
D. Concurrently with the execution of this Agreement, Parent, the Company and certain
specified holders of Company Common Stock are entering into an undertaking agreement (the
“Undertaking Agreement”), pursuant to which each such holder will (i) elect to receive in the
Merger only cash at US$5.00 for each share of Company Common Stock held by such holder, and (ii)
provide a general release of claims against the Company, Parent and Merger Sub.
E. Concurrently with the execution of this Agreement, Parent, the Company and holders of the
Company’s 5% secured convertible notes due January 29, 2011 (the “Notes”), which Notes are
convertible into shares of Company Common Stock, are entering into a conversion agreement (the
“Conversion Agreement”), pursuant to which such holders, subject to the conditions therein, will
(i) convert their Notes into Company Common Stock, (ii) elect to receive in the Merger only Parent
Common Stock at the Exchange Ratio, (iii) release the Company of certain of its obligations under, and waive certain breaches, defaults and potential defaults of the Company under the Note Purchase Documents (as defined in the Conversion
Agreement) on the terms set forth in the Conversion Agreement, and (iv) as of the Effective Time,
release various liens and other rights under and terminate the Note Purchase Documents, and in
consideration for such waivers, releases, suspensions, and relinquishment of rights as holders of
Notes, Parent will, if certain conditions are met, pay to such holders the Contingent Payment (as defined in the
Conversion Agreement).
F. Concurrently with the execution of this Agreement, Parent, the Company and certain
specified holders of Company Common Stock (the “Releasors”) are entering into a release agreement
(the “Release Agreement”), pursuant to which each such holder, subject to the conditions set forth
therein, will (i) elect to receive in the Merger only Parent Common Stock for each share of Company
Common Stock held by such holder, (ii) waive or suspend certain defaults, potential defaults, and
obligations of the Company under the PIPE Transaction Documents (as defined in the Release
Agreement) on the terms set forth in the Release Agreement, (iii) as of the Effective Time,
terminate the PIPE Transaction Documents,
and release in full any and all rights of such holders in any shares of Company Common
Stock owned or controlled by Xu Hong Bin that are subject to the Make Good Escrow Agreement (as
defined in the Release Agreement), and in consideration for such waivers, releases and suspensions,
Parent will, if certain conditions are met, pay to such holders the Contingent Payment (as defined in the Release
Agreement).
G. In consideration of the execution and delivery of the Merger Agreement and the other
agreements referred to above by Parent and Merger Sub, the Consenting Stockholder desires to (i)
vote, or execute a written consent with respect to the Shares, consenting to the adoption of the
Merger Agreement and the approval of the Merger, and (ii) elect to receive all stock in the Merger,
except as to 15% of the Consenting Stockholder’s Shares.
H. Certain capitalized terms used in this Agreement are defined in Exhibit A
and other capitalized terms used in this Agreement are defined in the Sections of this Agreement
where they first appear.
Agreement
The Consenting Stockholder, intending to be legally bound, agrees as follows:
SECTION 1: Written Consent.
1.1 Execution of Written Consent. Concurrent with the execution of this Agreement,
the Consenting Stockholder is hereby delivering to the Company a written consent, executed and
delivered in accordance with NRS §78.320, in the form attached as Exhibit B (the
“Stockholder Written Consent”), pursuant to which the Consenting Stockholder is
irrevocably consenting to the adoption of the Merger Agreement and the approval of the Merger.
1.2 Effectiveness; Agreement Not to Revoke. The Consenting Stockholder acknowledges
and agrees that the Stockholder Written Consent is effective upon the Consenting Stockholder’s
execution and delivery to the Company in accordance with NRS §78.320 and Section 1.1 above and that
the corporate action consented to in such Stockholder Written Consent may be taken at any time
thereafter as provided in the NRS, subject to the terms of the Merger Agreement, the applicable
rules and regulations of the SEC, and other applicable Legal Requirements. The Consenting
Stockholder further covenants and agrees that the Consenting Stockholder will not revoke, seek to
revoke, or take any action, directly or indirectly, for the purpose of, or having the effect of,
revoking or seeking to revoke, the Stockholder Written Consent. The Consenting Stockholder also
covenants and agrees to re-execute and re-deliver the Stockholder Written Consent as and when
requested by Parent in order that the corporate action contemplated by the Stockholder Written
Consent remains continuously authorized by the Consenting Stockholder at all times from the date
hereof through the first to occur of (a) the Effective Time, or (b) the termination of the Merger
Agreement in accordance with its terms (the “Termination”).
SECTION 2: Election Pursuant to Merger Agreement.
2.1 Election. The Consenting Stockholder hereby elects (the “Cash/Stock
Election”) to, in the event the Merger occurs, receive in the Merger (i) cash at $5.00 per share
in respect of 15% of the Shares held by the Consenting Stockholder, and (ii) shares of Parent
Common Stock at the Exchange Ratio with respect to the remaining Shares held by the Consenting
Stockholder. The Consenting Stockholder agrees that, subject to the consummation of the Merger, the
Cash/Stock Election is unconditional and irrevocable. The Consenting Stockholder acknowledges that
his Cash/Stock Election pursuant to this Section 2.1 was made on a completely voluntary basis. The
Consenting Stockholder will execute such further instruments and provide such further information
relevant to the Cash/Stock
Election, including declarations related to Taxes, as Parent shall reasonably request in
connection with the foregoing.
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2.2 Effectiveness; Agreement Not to Revoke. The Consenting Stockholder acknowledges
and agrees that the Cash/Stock Election is effective upon the execution and delivery thereof to
Parent in accordance with Section 2.1 above, and the Consenting Stockholder will not revoke, seek
to revoke, or take any action, directly or indirectly, for the purpose of, or having the effect of,
revoking or seeking to revoke, the Cash/Stock Election. The Consenting Stockholder also covenants
and agrees to re-execute and re-deliver the Cash/Stock Election as and when requested by Parent in
order that such Cash/Stock Election remains continuously in effect at all times from the date
hereof through the first to occur of (a) the Effective Time, or (b) the Termination.
SECTION 3: Representations and Warranties of The Consenting Stockholder.
The Consenting Stockholder represents and warrants to Parent as of the date hereof and as of
the Effective Time as follows:
3.1 Authority; No Conflict.
3.1(a) The Consenting Stockholder has all necessary individual power, capacity and authority
to execute and deliver this Agreement, to perform his obligations hereunder, and to consummate the
transactions contemplated hereby (collectively, the “Contemplated Transactions”). This Agreement
has been duly and validly executed and delivered by the Consenting Stockholder and constitutes the
legal, valid and binding obligation of the Consenting Stockholder, enforceable against the
Consenting Stockholder in accordance with its terms.
3.1(b) Neither the execution and delivery of this Agreement nor the consummation of any of the
Contemplated Transactions do or will, directly or indirectly (with or without notice or lapse of
time or both), (i) contravene, conflict with, or result in a violation of any Legal Requirements to
which the Consenting Stockholder, or any of the assets owned or used by the Consenting Stockholder,
is subject; or (ii) contravene, conflict with, or result in a violation or breach of any provision
of, or give any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify, any contract to
which the Consenting Stockholder is a party, except, in the case of clauses (i) and (ii), for any
such conflicts, violations, breaches, defaults or other occurrences that would not prevent or delay
consummation of the Contemplated Transactions in any material respect or would otherwise not
prevent the Consenting Stockholder from performing his obligations under this Agreement in any
material respect.
3.1(c) The execution and delivery of this Agreement by the Consenting Stockholder does not,
and the performance of this Agreement and the consummation of the Contemplated Transactions by the
Consenting Stockholder will not, require any Consent of, or filing with or notification to, any
Governmental Body, except (i) for applicable requirements, if any, of the Exchange Act, the
Securities Act and state securities or “blue sky” laws (“Blue Sky Laws”), and (ii) such other
Consents, filings or notifications where failure to obtain such Consents, or to make such filings
or notifications, would not prevent or delay the consummation of the Contemplated Transactions, or
otherwise prevent the Consenting Stockholder from performing his obligations under this Agreement.
3.2 Ownership; Voting. The Consenting Stockholder owns, beneficially or of record,
the number of Shares as set forth opposite the Consenting Stockholder’s name on Schedule
Ahereto, free and clear of any and all Liens or other restrictions on transfer, other
than those arising under the Exchange Act, the Securities Act, Blue Sky Laws and other securities
laws, and has full power and authority to vote
the Consenting Stockholder’s Shares in favor of the Merger and the other transactions
contemplated by the Merger Agreement.
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3.3 Review of Merger, Conversion, Release and Undertaking Agreements. The Consenting
Stockholder has received execution copies of the Merger Agreement, Conversion Agreement,
Undertaking Agreement and Release Agreement and has had an opportunity to review them with
assistance of counsel and other advisors of his own choosing. The Consenting Stockholder
acknowledges and agrees that the terms of such agreements and this Agreement are fair and
reasonable.
3.4 Review of SEC Filings. The Consenting Stockholder has had access to the Parent SEC
Reports and the Company SEC Reports and has had an opportunity to review the Parent SEC Reports and
the Company SEC Reports with assistance of counsel and other advisors of its own choosing. The
Consenting Stockholder and his advisors have been afforded the opportunity to ask questions of and
receive answers from the Company and Parent regarding the Company, the Company SEC Reports, Parent,
the Parent SEC Reports and the Contemplated Transactions.
3.5 Company Representations and Warranties. To the knowledge of the Consenting
Stockholder, the representations and warranties made by the Company in the Merger Agreement are
true and accurate in all respects. With respect to the knowledge of the Consenting Stockholder, the
term “knowledge” shall mean the actual knowledge of the Consenting Stockholder of such matter or
what a prudent individual could be expected to discover or otherwise become aware of with respect
to a matter after conducting a reasonable inquiry of appropriate senior executives and responsible
key employees of the Company concerning the existence of such matter.
SECTION 4: Representations and Warranties of Parent.
Parent represents and warrants to the Consenting Stockholder as of the date hereof and as of
the Effective Time as follows:
4.1 Organization and Good Standing. Parent is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to conduct its business as now being conducted, to own or use its
properties and assets that it purports to own or use, and to perform all of its obligations under
contracts to which Parent is party or by which Parent or any of its assets are bound. Parent is
duly qualified to do business as a foreign corporation and is in good standing (where such concept
is applicable) under the laws of each state or other jurisdiction in which either the ownership or
use of the properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification, except where the failure to be so qualified could not reasonably be
expected to, individually or in the aggregate, result in a material adverse effect on Parent.
4.2 Authority; No Conflict. Except for the requirement that Parent obtain the
Required Parent Stockholder Vote:
4.2(a) Parent has all necessary corporate power and authority to execute and deliver this
Agreement and the Merger Agreement, and to perform its obligations hereunder and to consummate the
Contemplated Transactions and the Merger. The execution and delivery of this Agreement by Parent
and the consummation by Parent of the Contemplated Transactions and the Merger have been duly and
validly authorized by all necessary corporate action and no other corporate proceedings on the part
of Parent are necessary to authorize this Agreement or to consummate the Contemplated Transactions
and the Merger. This Agreement has been duly and validly executed and delivered by Parent and,
assuming the due execution and delivery of this Agreement by the Consenting Stockholder,
constitutes the legal,
valid and binding obligation of Parent, enforceable against Parent in accordance with its
terms subject to the effect of (i) applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to rights of creditors generally and (ii)
rules of law and equity governing specific performance, injunctive relief and other equitable
remedies.
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4.2(b) Neither the execution and delivery of this Agreement nor the consummation of any of the
Contemplated Transactions or the Merger do or will, directly or indirectly (with or without notice
or lapse of time or both); (i) contravene, conflict with, or result in a violation of any provision
of the Organizational Documents of Parent, (ii) contravene, conflict with, or result in a violation
of, any Legal Requirement, except, in the case of clause (ii), for any such conflicts, violations,
breaches, defaults or other occurrences that would not prevent or delay consummation of the
Contemplated Transactions or the Merger in any material respect, or would otherwise not prevent
Parent from performing its obligations under this Agreement or the Merger Agreement in any material respect.
4.2(c) The execution and delivery of this Agreement by Parent does not, and the performance of
this Agreement and the consummation of the Contemplated Transactions and the Merger by Parent will
not, require any Consent of, or filing with or notification to, any Governmental Body, except (i)
for (A) applicable requirements, if any, of the Exchange Act, the Securities Act, any national
securities exchange on which the Parent Common Stock is then listed, and Blue Sky Laws (B) the
filing of the Certificates of Merger as required by the DGCL and NRS, (C) the filing of the
Certificate of Incorporation Amendment with the Secretary of State of the State of Delaware, and
(D) filings made in connection with applicable Antitrust Laws and investment laws, and (ii) such
other Consents, filings or notifications where failure to obtain such Consents, or to make such
filings or notifications, would not prevent or delay the consummation of the Contemplated
Transactions in any material respect, or would otherwise not prevent Parent from performing its
obligations under this Agreement in any material respect.
4.3 Capitalization. The authorized capital stock of Parent consists of 250,000,000
shares of Parent Common Stock and 1,000,000 shares of preferred stock, US$0.001 par value per share
(“Parent Preferred Stock”). As of the date hereof, (a) 67,646,800 shares of Parent Common Stock
are issued and outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable, (b) 74,646,800 shares of Parent Common Stock are reserved for issuance upon
exercise of outstanding warrants of Parent (“Parent Warrants”), and (c) no shares of Parent
Preferred Stock are issued or outstanding. Except as set forth in this Section 4.3, there are no
Warrants relating to the issued or unissued capital stock of Parent, or obligating Parent to issue,
grant or sell any shares of capital stock of, or other equity interests in, or securities
convertible into equity interests in, Parent. None of the outstanding equity securities or other
securities of Parent was issued in violation of the Securities Act or any other Legal Requirement.
4.4 SEC Reports. Parent has made available to the Consenting Stockholder a correct
and complete copy of each of the Parent SEC Reports, which are all the forms, reports and documents
required to be filed by Parent with the SEC prior to the date of this Agreement. As of their
respective dates, the Parent SEC Reports: (a) were prepared in accordance and complied in all
material respects with the requirements of the Securities Act or the Exchange Act, as the case may
be, and the rules and regulations of the SEC thereunder applicable to such Parent SEC Reports, and
(b) did not at the time they were filed (and if amended or superseded by a filing, then on the date
of such filing and as so amended or superseded) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
Except to the extent set forth in the preceding sentence, Parent makes no representation or
warranty whatsoever concerning the Parent SEC Reports as of any time other than the time they were
filed.
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4.5 Financial Statements. The financial statements and notes contained or
incorporated by reference in the Parent SEC Reports present fairly the financial condition and the
results of operations, changes in stockholders’ equity, and cash flow of Parent as at the
respective dates of and for the periods referred to in such financial statements, all in accordance
with GAAP and Regulation S-X of the SEC, subject, in the case of interim financial statements, to
normal recurring year-end adjustments (the effect of which will not, individually or in the
aggregate, be materially adverse) and the omission of notes to the extent permitted by Regulation
S-X of the SEC or GAAP.
4.6 Availability of Funds. Parent has uncommitted cash on hand in an amount sufficient
to consummate the transactions contemplated hereby.
SECTION 5: Additional Agreements.
5.1 No Solicitation. The Consenting Stockholder covenants and agrees as of the date
hereof and as of the Effective Time as follows:
5.1(a) No Solicitation or Negotiation. From the date of this Agreement until the
earlier to occur of the Termination and the Effective Time, the Consenting Stockholder will not,
directly or indirectly:
(i) solicit, initiate, or knowingly or intentionally encourage or facilitate, any inquiries,
offers or proposals that constitute, or could reasonably be expected to lead to, any Acquisition
Proposal; or
(ii) enter into, continue or otherwise participate in any discussions or negotiations
regarding, furnish to any Person any non-public information with respect to, assist or participate
in any effort or attempt by any Person with respect to, or otherwise knowingly or intentionally
cooperate in any way with, any Acquisition Proposal (provided, however, that providing notice of
the restrictions set forth in this Section 5.1 to a third party in response to any such inquiry,
request or Acquisition Proposal shall not, in and of itself, be deemed a breach of this Section);
or
(iii) otherwise sell, offer to sell, contract to sell (including, without limitation, any
short sale), grant any option to purchase, pledge or otherwise transfer or dispose of (other than
to donees who agree to be similarly bound) any securities of the Company held by the Consenting
Stockholder.
It is agreed that any violation of the restrictions set forth in this Section 5.1(a) by any
Representative of the Consenting Stockholder, whether or not such Person is purporting to act on
behalf of the Consenting Stockholder or otherwise, shall be deemed to be a breach of this Section
5.1(a) by the Consenting Stockholder. For purposes of this Agreement, the term “Acquisition
Proposal” shall mean any proposal or offer, whether in one transaction or a series of related
transactions, for (i) a merger, consolidation, dissolution, tender offer, exchange offer,
recapitalization, share exchange, business combination, stock purchase or other similar transaction
involving or affecting any of the Shares, or (ii) any transaction which is similar in form,
substance or purpose to any of the foregoing transactions, in each case other than the Contemplated
Transactions.
5.1(b) No Alternative Acquisition Agreement. Until the earlier to occur of the
Termination and the Effective Time, the Consenting Stockholder will not enter into any letter of
intent, memorandum of understanding, agreement in principle, acquisition agreement, merger
agreement or similar agreement constituting or relating to any Acquisition Proposal or any
transactions described in Section 5.1(a)(iii).
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5.1(c) Cessation of Ongoing Discussions. Until the earlier to occur of the
Termination and the Effective Time, the Consenting Stockholder will cease immediately all
discussions and negotiations regarding any proposal that constitutes, or could reasonably be
expected to lead to, an Acquisition Proposal or transactions described in Section 5.1(a)(iii).
5.2 Legal Conditions to the Contemplated Transactions. Subject to the terms hereof,
Parent and the Consenting Stockholder shall use all commercially reasonable efforts to (i) take, or
cause to be taken, all actions, and do, or cause to be done, and to assist and cooperate with the
other parties in doing, all things necessary, proper or advisable to consummate and make effective
the Merger and the Contemplated Transactions as promptly as reasonably practicable, (ii) as
promptly as practicable, obtain from any Governmental Body or any other third party any Consents,
licenses, permits, waivers, approvals, authorizations, or orders required to be obtained or made by
the Consenting Stockholder in connection with the authorization, execution and delivery of this
Agreement and the consummation of the Contemplated Transactions and the Merger, (iii) as promptly
as practicable, make all filings and any other submissions that such party is required to make,
with respect to this Agreement, the Contemplated Transactions and the Merger under (A) the
Securities Act, the Exchange Act and any other applicable federal or state securities laws, and (B)
any other Legal Requirements, and (iv) execute or deliver any additional instruments reasonably
necessary to consummate the Contemplated Transactions and the Merger, and to fully carry out the
purposes of this Agreement. Parent and the Consenting Stockholder shall use commercially
reasonable efforts to cooperate with each other in connection with the making of all such filings
other than any filing required to be made by the Consenting Stockholder with the SEC or any
regulatory body (subject to Legal Requirements regarding the sharing of information), including
providing copies of all such documents to the non-filing party and its advisors prior to filing
and, if requested, accepting all reasonable additions, deletions or changes suggested in connection
therewith. Notwithstanding the foregoing, this Section 5.2 shall not be deemed to impose greater or
different obligations on Parent with respect to the Merger than as provided in the Merger
Agreement.
5.3 Public Disclosure. No party will issue any press release or otherwise make any
public statement or other disclosure with respect to the Contemplated Transactions, unless the
other party shall have approved such disclosure or such disclosure is required by any Legal
Requirement.
5.4 Notification of Certain Matters. The Consenting Stockholder shall give prompt
notice to Parent of the occurrence, or failure to occur, of any event, which occurrence or failure
to occur causes, or would be reasonably likely to cause (a) any representation or warranty of the
Consenting Stockholder contained in this Agreement to be untrue or inaccurate in any respect, or
(b) any covenant, condition or agreement not to be complied with or satisfied by him under this
Agreement. Notwithstanding the above, the delivery of any notice pursuant to this Section will not
limit or otherwise affect the remedies available hereunder to Parent or the conditions to such
party’s obligation to consummate the Contemplated Transactions.
5.5 Market Standoff. For a period beginning at the Effective Time and ending on the
second anniversary of such date, the Consenting Stockholder hereby agrees not to sell, offer to
sell, contract to sell (including, without limitation, any short sale), grant any option to
purchase, pledge or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any Parent Common Stock received by the Consenting Stockholder in the Merger. For
a period beginning on the date that is the two year anniversary of the Effective Date and ending on
the first anniversary of such date, the Consenting Stockholder hereby agrees to sell, offer to
sell, contract to sell (including, without limitation, any short sale), grant any option to
purchase, pledge or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) Parent Common Stock received by the Consenting Stockholder in the Merger only in
conformity with the volume limitations set forth in Rule 144(e) promulgated under the Securities
Act.
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5.6 General Release. Effective upon the Effective Time, and as a condition to
Parent’s executing this Agreement and the Merger Agreement:
5.6(a) The Consenting Stockholder, for himself and his heirs, devisees, legal representatives,
successors, and assigns (each, a “Releasing Party”, and, collectively, the “Releasing Parties”),
does hereby acknowledge complete satisfaction of and does hereby fully, finally, and forever
release and discharge each of the Company, Parent, and Merger Sub, and each of the respective
directors, officers, employees, stockholders, representatives, predecessors, successors,
Affiliates, parents, Subsidiaries (direct and indirect), beneficiaries, heirs, executors, or
assigns of any of them (collectively, the “Released Parties”) of and from any and all commitments,
actions, debts, claims, counterclaims, suits, causes of action, damages, demands, liabilities,
obligations, costs, expenses, and compensation of every kind or nature whatsoever, past, present,
or future, at law or in equity, whether known or unknown, contingent or otherwise, which such
Releasing Parties, or any of them, had, has, or may have had at any time in the past and through
and including the Effective Time, against the Released Parties, or any of them, including, but not
limited to, any claims which relate to or arise out of such Releasing Party’s relationship with the
Company or any of its predecessors or Affiliates, or such Releasing Party’s rights or status as a
stockholder of the Company or any of its predecessors or Affiliates, and further including, without
limitation, any claims of fraud or fraudulent inducement in connection with the negotiation,
execution, delivery, and performance of this Agreement and the other documents and agreements to
which such Releasing Party is a party in connection with the Contemplated Transactions
(collectively, the “Causes of Action”); provided, however, that nothing in this Section shall
release, acquit, or discharge any Causes of Action or preclude a lawsuit or claim in respect of any
Causes of Action that a Releasing Party may have or bring arising under this Agreement or the other
documents and agreements executed and delivered pursuant to this Agreement and under any employment
agreement or other agreement between the Consenting Stockholder and Parent that by its terms
continues in effect following the Effective Time.
5.6(b) Each Releasing Party acknowledges that (i) the cash election price in the Merger is
less, as of the date hereof, than the stock election under which Parent Common Stock will be
issued, (ii) Parent Common Stock could trade at prices lower or higher than the current price, and
(iii) Parent may take any number of actions that could have an effect on the price of its stock,
including the issuance of Parent Company Stock and mergers or acquisitions. To the extent that
Releasing Party is receiving cash in the Merger, he will not participate in any appreciation of
Parent’s Common Stock. Any and all Causes of Action, without limitation arising from or relating to
such differences in value or such other transactions or such increases or decreases in value are
encompassed within the scope of the release set forth herein.
5.6(c) Each Releasing Party represents, warrants, covenants, and agrees that such Releasing
Party (a) has not and will not assign any Causes of Action or possible Causes of Action against any
Released Party, (ii) fully intends to release all Causes of Action against the Released Parties,
including, without limitation, unknown and contingent Causes of Action (other than those
specifically reserved above), and (iii) has consulted with counsel with respect to the matters
covered hereby and has been fully apprised of the consequences hereof.
5.6(d) Each Releasing Party covenants and agrees not to institute any litigation, lawsuit,
claim, or action against any of the Released Parties with respect to any released Causes of Action.
5.7 Release of Dissenter’s Rights. The Consenting Stockholder hereby fully, finally,
and forever releases, waives and discharges any dissenter’s rights that he is or may be entitled to
in accordance with Nevada Revised Statutes Section 92A.420.
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5.8 Escrow.
5.8(a) In order to secure the Consenting Stockholder’s obligations under Section 3, Section
5.1, and Section 5.5 above and Section 6 below, Parent shall hold the certificates evidencing 90%
of the shares of Parent Common Stock received by the Consenting Stockholder in respect of the
Merger (the “Parent Shares”), in escrow together with separate stock powers executed by the
Consenting Stockholder in blank for transfer. Parent shall not retain the Parent Shares except as
provided in Section 6 of this Agreement. In the event Parent is entitled to any Parent Shares
under Section 6 below, Parent is hereby authorized by the Consenting Stockholder, as the Consenting
Stockholder’s attorney-in-fact, to date and complete the stock powers necessary for the transfer of
the Parent Shares to which Parent is then entitled and to transfer such Parent Shares in accordance
with the terms hereof.
5.8(b) On March 31, 2010, Parent shall deliver to the Consenting Stockholder the certificates
representing 80% of the Parent Shares and, on the date that is the two year anniversary of the
Closing Date, Parent shall deliver to the Consenting Stockholder the certificates representing the
remaining Parent Shares, in each case, less the number of Parent Shares having a Value (as
determined in the manner set forth in Section 6.2(e)) below (but based on 15-day trading period
ending on the day before the release date) equal to the good faith estimate of Losses that the
Parent Indemnified Parties have incurred or expect to incur for claims made under Section 6.2. The
Consenting Stockholder shall retain the full power to vote his Parent Shares in his discretion and
the Parent Shares shall remain the sole property of the Consenting Stockholder, in each case,
unless and until such Parent Shares shall have been recovered pursuant to Section 6.2(e). At such time as any Parent Shares are no longer subject to the provisions of Section 2,
Section 5.1, Section 5.5 or Section 6, Parent shall, at the written request of the Consenting Stockholder, deliver to the Consenting Stockholder the certificates representing such Parent Shares.
5.8(c) The parties agree to discuss in good faith the creation by the Consenting Stockholder
and funding with shares of Company Common Stock or Parent Common Stock, as the case may be, of a
trust, escrow or other arrangement for the benefit of his children, in an amount not to exceed $3.5
million.
SECTION 6: Survival; Indemnification.
6.1 Survival.
6.1(a) The representations, warranties, covenants, and agreements of the Consenting
Stockholder made herein and in all agreements, documents, and instruments executed and delivered by
the Consenting Stockholders in connection herewith (i) are material, shall be deemed to have been
relied upon by Parent, and shall survive the Closing regardless of any investigation on the part of
Parent or its Representatives, with Parent reserving its rights hereunder, and (ii) shall bind the
Consenting Stockholder’s successors and assigns, whether so expressed or not, and shall inure to
the benefit of Parent and its respective successors and assigns.
6.1(b) The representations and warranties of the Consenting Stockholders made herein and in
all agreements, documents, and instruments executed and delivered by the Consenting Stockholders in
connection herewith shall expire and be of no further force or effect on March 31, 2010, except
that any written claim for breach thereof made by Parent prior to such expiration date and
delivered to the party against whom such claim is made shall survive thereafter and, as to any such
claim, such applicable expiration will not effect the rights to indemnification of Parent
hereunder; provided, however, that (i) the representations and warranties set forth in Section 3.2,
and Section 3.3 hereof shall survive indefinitely and any such written claim with respect to a
breach of such representations and warranties, or with respect to fraud, intentional
misrepresentation or willful breach, may be given at any time, and (ii) the representation and
warranty of the Consenting Stockholder contained in Section 3.5 insofar as it relates to the representations and warranties of the Company set forth in Section 2.10 of the Merger Agreement, shall survive for
three (3) years following the Effective Time, and, any such written claim
with respect to a breach of such representation and warranty may be given at any time on or
prior to the third anniversary of the Effective Time.
9
6.2 Indemnification.
6.2(a) Indemnification by Consenting Stockholders. The Consenting Stockholder
acknowledges and agrees that the Parent has relied on the representations, warranties, covenants
and other agreements of the Consenting Stockholder contained in this Agreement in connection with
the Contemplated Transactions. Accordingly, the Consenting Stockholder, severally and not jointly,
on his, her or its own behalf and on behalf of his, her or its successors, executors,
administrators, estate, heirs and assigns (collectively, the “Stockholder Indemnifying Parties”)
agrees (to the extent of the Merger Consideration received by the Consenting Stockholder in
connection with the Merger) to defend, indemnify and holder Parent, its Affiliates, stockholders,
directors, officers, employees and agents and each person that who controls any of them within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively, the
“Parent Indemnified Parties”) harmless from and against any and all damages, liabilities, losses,
claims, diminution in value, obligations, liens, assessments, judgments, Taxes, fines, penalties,
reasonable costs and expenses (including, without limitation, reasonable fees of counsel), as the
same are incurred, of any kind or nature whatsoever (whether or not arising out of third-party
claims and including all amounts paid in investigation, defense or settlement of the foregoing
(collectively, “Losses”) which may be sustained or suffered by any such Parent Indemnified Party
based upon, arising out of, or by reason of (i) any breach of any representation or warranty made
by the Consenting Stockholder in this Agreement or in any certificate delivered pursuant to this
Agreement, and (ii) any breach of any covenant or agreement made by the Consenting Stockholder in
this Agreement or in any certificate delivered pursuant to this Agreement, in each case, without
respect to any materiality or Material Adverse Effect qualification contained in such
representation, warranty, covenant or agreement (or any underlying representation or warranty
contained in the Merger Agreement).
6.2(b) Notice; Payment of Losses; Defense of Third-Party Claims.
(i) A Parent Indemnified Party shall give written notice of a claim for indemnification under
Sections 6.2(a) to the applicable Stockholder Indemnifying Party promptly after receipt of any
written claim by any third party and in any event not later than twenty (20) business days after
receipt of any such written claim (or not later than ten (10) business days after the receipt of
any such written claim in the event such written claim in the form of a formal complaint filed with
a court of competent jurisdiction and served on the Parent Indemnified Party or in the form of a
final determination by any Governmental Body), specifying in reasonable detail the amount, nature
and source of the claim, and including therewith copies of any notices or other documents received
from third parties with respect to such claim; provided, however, that failure to give such notice
shall not limit the right of the Parent Indemnified Party to recover indemnity or reimbursement
except to the extent that the Stockholder Indemnifying Party suffers any material prejudice or
material harm with respect to such claim as a result of such failure. The Parent Indemnified Party
shall also provide the Stockholder Indemnifying Party with such further information concerning any
such claims as the Stockholder Indemnifying Party may reasonably request by written notice.
10
(ii) Within seven (7) business days after receiving notice of a claim for indemnification or
reimbursement, the Stockholder Indemnifying Party shall, by written notice to the Parent
Indemnified Party, either (i) concede or deny liability for the claim in whole or in part, or (ii)
in the case of a claim asserted by a third party, advise that the matters set forth in the notice
are, or will be, subject to contest or legal proceedings not yet finally resolved. If the
Stockholder Indemnifying Party concedes liability in whole or in part, it shall, within twenty (20)
business days of such concession, pay
the amount of the claim to the Parent Indemnified Party to the extent of the liability
conceded.
Any such payment shall be made in immediately available funds equal to the amount of such
claim so payable. If the Stockholder Indemnifying Party denies liability in whole or in part or
advises that the matters set forth in the notice are, or will be, subject to contest or legal
proceedings not yet finally resolved, then the Stockholder Indemnifying Party shall make no payment
(except for the amount of any conceded liability payable as set forth above and reimbursement of
expenses as set forth herein) until the matter is resolved in accordance with this Agreement.
(iii) In the case of any third party claim, if, within seven (7) business days after receiving
the notice described in the preceding paragraph (a), the Stockholder Indemnifying Party gives
written notice to the Parent Indemnified Party stating that the Stockholder Indemnifying Party
would be liable under the provisions hereof for indemnity in the amount of such claim if such claim
were valid and that the Stockholder Indemnifying Party disputes and intends to defend against such
claim, liability or expense at the Stockholder Indemnifying Party’s own cost and expense, then,
except as provided below, counsel for the defense shall be selected by the Stockholder Indemnifying
Party (subject to the consent of such Parent Indemnified Party which consent shall not be
unreasonably withheld) and such Stockholder Indemnifying Party shall not be required to make any
payment to such Parent Indemnified Party with respect to such claim, liability or expense as long
as the Stockholder Indemnifying Party is conducting a good faith and diligent defense at its own
expense; provided, however, that the assumption of defense of any such matters by the Stockholder
Indemnifying Party shall relate solely to the claim, liability or expense that is subject or
potentially subject to indemnification. If the Stockholder Indemnifying Party assumes such defense
in accordance with the preceding sentence, it shall have the right, with the consent of such Parent
Indemnified Party, which consent shall not be unreasonably withheld, to settle all indemnifiable
matters related to claims by third parties which are susceptible to being settled provided the
Stockholder Indemnifying Party’s obligation to indemnify such Parent Indemnified Party therefor
will be fully satisfied only by payment of money by the Stockholder Indemnifying Party pursuant to
a settlement which includes a complete release of such Parent Indemnified Party. The Stockholder
Indemnifying Party shall keep such Parent Indemnified Party apprised of the status of the claim,
liability, or expense and any resulting suit, proceeding or enforcement action, shall furnish such
Parent Indemnified Party with all documents and information that such Parent Indemnified Party
shall reasonably request, and shall consult with such Parent Indemnified Party prior to acting on
major matters, including settlement discussions. Notwithstanding anything herein stated, such
Parent Indemnified Party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel; provided, however, if the named parties to the action
or proceeding include both the Stockholder Indemnifying Party and such Parent Indemnified Party and
representation of both parties by the same counsel would be inappropriate under applicable
standards of professional conduct, the reasonable expense of separate counsel for such Parent
Indemnified Party shall be paid by the Stockholder Indemnifying Party. If (A) no such notice of
intent to dispute and defend is given by the Stockholder Indemnifying Party, or if such diligent
good faith defense is not being or ceases to be conducted, or (B) the third party claim relates to
breaches of representations and warranties made by a Stockholder Indemnifying Party that relate to
the Company, its business or operations, Parent may undertake the defense of such claim, liability,
or expense at the Stockholder Indemnifying Party’s own cost and expense (with counsel selected by
Parent), and shall have the right to compromise or settle, such claim, liability, or expense
(exercising reasonable business judgment). If such claim, liability, or expense is one that by its
nature cannot be defended solely by the Stockholder Indemnifying Party, then such Parent
Indemnified Party shall make available all information and assistance that the Stockholder
Indemnifying Party may reasonably request and shall cooperate with the Stockholder Indemnifying
Party in such defense.
11
6.2(c) Monetary Limitation. No claim for Losses may be brought under this Section 6.2
unless and until the aggregate amount of all claims for Losses of a Parent Indemnified Party is at
least $5
million (without double counting for the same threshold in the majority stockholder written
consent agreement between Parent and Chen Xing Hua) whereupon all claims for Losses of such Parent
Indemnified Party may be brought by such Parent Indemnified Party, and the maximum liability of the
Stockholder Indemnifying Parties shall be the total Value of consideration received by the
Consenting Stockholder under the Merger as of the Effective Time (based on Parent Common Stock
valued in the manner described in Section 6.2(e) below, but with the 15-day trading period ending
on the day before the day on which the Effective Time occurs).
6.2(d) Limitation on Contribution and Certain Other Rights. The Consenting
Stockholder hereby agrees that if, following the Effective Time, any Losses become due from the
Consenting Stockholder pursuant to this Section 6.2 (a “Loss Payment”), the Consenting Stockholder
shall have no rights against Parent, the Company or any of their directors, officers or employees
(in their capacity as such), whether by reason of contribution, indemnification, subrogation or
otherwise, in respect of any such Loss Payment, and the Consenting Stockholder shall not take any
action against Parent or any such Person with respect thereto.
6.2(e) Payment of Claims. In the event that a Parent Indemnified Party sustains or
incurs Losses for which it is entitled to be indemnified by a Stockholder Indemnifying Party under
this Agreement, such Parent Indemnified Party shall be entitled (in addition to collecting directly
from the Stockholder Indemnifying Party) to exercise its rights under Section 5.8 above to recover
Parent Shares held by Parent pursuant to Section 5.8 having a Value equal to the amount of such
Losses. For purposes of this Section 6.2(e), in the event a Parent Indemnified Party is to receive
Shares or Parent Shares in connection with any such claim for Losses, the number of Shares or
Parent Shares to be received shall be equal to the number obtained by dividing (i) the amount of
such Losses, by (ii) the average closing sale price per share of Parent Common Stock on the trading
market or national securities exchange on which such shares are then traded over the fifteen (15)
trading days ending on the trading day prior to the date such shares are due to such Parent
Indemnifying Party (the “Value” of a share) .
SECTION 7: Miscellaneous Provisions.
7.1 Fees, Expenses and Taxes. All fees, expenses and Taxes incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by the party incurring
such fees, expenses, or Taxes, whether or not the Contemplated Transactions are consummated.
7.2 Amendment. This Agreement may not be amended, except by an instrument in writing
signed by or on behalf of Parent and the Consenting Stockholder.
7.3 Waiver.
7.3(a) Neither any failure nor any delay by any party in exercising any right, power or
privilege under this Agreement or any of the documents referred to in this Agreement will operate
as a waiver of such right, power or privilege and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right, power or privilege or
the exercise of any other right, power or privilege. To the maximum extent permitted by Legal
Requirements, (i) no waiver that may be given by a party will be applicable except in the specific
instance for which it is given; and (ii) no notice to or demand on one party will be deemed to be a
waiver of any obligation of that party or of the right of the party giving such notice or demand to
take further action without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
12
7.3(b) At any time prior to the Effective Time, Parent (with respect to the Consenting
Stockholder) and the Consenting Stockholder (with respect to Parent), may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or other acts of such other
party to this Agreement, (ii) waive any inaccuracies in the representation and warranties contained
in this Agreement or any document delivered pursuant to this Agreement and (iii) waive compliance
with any covenants, obligations or conditions contained in this Agreement. Any agreement on the
part of a party to this Agreement to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
7.4 Entire Agreement. This Agreement and the documents and instruments and other
agreements among the parties hereto as contemplated by or referred to herein constitute the entire
agreement among the parties to this Agreement and supersede all prior agreements and
understandings, both written and oral, among or between any of the parties with respect to the
subject matter hereof.
7.5 Execution of Agreement; Counterparts; Electronic Signatures.
7.5(a) This Agreement may be executed in several counterparts, each of which shall be deemed
an original and all of which shall constitute one and the same instrument, and shall become
effective when counterparts have been signed by each of the parties and delivered to the other
parties; it being understood that all parties need not sign the same counterpart.
7.5(b) The exchange of copies of this Agreement and of signature pages by facsimile
transmission (whether directly from one facsimile device to another by means of a dial-up
connection or whether mediated by the worldwide web), by electronic mail in “portable document
format” (“.pdf” format), or by any other electronic means intended to preserve the original graphic
and pictorial appearance of a document, or by a combination of such means, shall constitute
effective execution and delivery of this Agreement as to the parties and may be used in lieu of an
original Agreement for all purposes. Signatures of the parties transmitted by facsimile shall be
deemed to be their original signatures for all purposes.
7.5(c) Notwithstanding the Electronic Signatures in Global and National Commerce Act (15
U.S.C. Sec. 7001 et seq.), the Uniform Electronic Transactions Act, or any other Legal Requirement
relating to or enabling the creation, execution, delivery, or recordation of any contract or
signature by electronic means, and notwithstanding any course of conduct engaged in by the parties,
no party shall be deemed to have executed this Agreement or any other document contemplated by this
Agreement (including any amendment or other change thereto) unless and until such party shall have
executed this Agreement or such document on paper by a handwritten original signature or any other
symbol executed or adopted by a party with current intention to authenticate this Agreement or such
other document contemplated.
7.6 Governing Law. Except to the extent that the corporate laws of the State of
Delaware apply to a party, this Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.
7.7 Consent to Jurisdiction; Venue. In any action or proceeding between Parent and
the Consenting Stockholder arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement, each of the parties: (a) irrevocably and unconditionally consents
and submits to the exclusive jurisdiction and venue of any state or federal court located in the
Borough of Manhattan, the City of New York, New York (each, a “New York Court”); and (b) agrees
that all claims in respect of such action or proceeding may be heard and determined exclusively in
any New York Court. Each of the parties hereto agrees that a final judgment in any such action or
proceeding and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The
Consenting Stockholder agrees that personal service may be effected by mail addressed to their
residence as reflected in the records of the Company, provided, that nothing in this Agreement
shall affect the right of any party to this Agreement to serve process in any other manner
permitted by Legal Requirements.
13
7.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES IRREVOCABLY WAIVES ANY AND ALL RIGHTS
TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN THE PARTIES ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
7.9 Attorneys’ Fees. In any action at law or suit in equity to enforce this Agreement
or the rights of any of the parties hereunder, and except as provided in Section 6 and Section 7.1,
the prevailing party in such action or suit shall be entitled to receive a reasonable sum for its
attorneys’ fees and all other reasonable costs and expenses incurred in such action or suit.
7.10 Assignments and Successors. This Agreement shall be binding upon, and shall be
enforceable by and inure solely to the benefit of, the parties hereto and their respective
successors and assigns; provided, however, that neither this Agreement nor any of the Consenting
Stockholder’s rights hereunder may be assigned by the Consenting Stockholder without the prior
written consent of Parent. Any attempted assignment of this Agreement or of any such rights by the
Consenting Stockholder without such consent shall be void and of no effect.
7.11 No Third Party Rights. Except as provided in Section 5 and Section 6, nothing
in this Agreement, express or implied, is intended to or shall confer upon any Person (other than
the parties hereto) any right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
7.12 Notices. All notices, Consents, waivers and other communications required or
permitted by this Agreement shall be in writing and shall be deemed given to a party when (a)
delivered to the appropriate address by hand or by nationally recognized overnight courier service
(costs prepaid); or (b) sent by facsimile or e-mail with confirmation of transmission by the
transmitting equipment confirmed with a copy delivered as provided in clause (a), in each case to
the following addresses or facsimile numbers and marked to the attention of the person (by name or
title) designated below (or to such other address, facsimile number, e-mail address or person as a
party may designate by notice to the other parties) between the hours of 9:00 a.m. and 5:00 p.m. in
the recipient’s time zone:
Parent:
Xxxxxxxx Corporation
00000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Fax no.: (000) 000-0000
00000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx
Fax no.: (000) 000-0000
with a copy to:
DLA Piper US LLP
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax no.: (000) 000-0000
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Fax no.: (000) 000-0000
14
If to Consenting Stockholder:
Xu Hong Bin
Xxxx 000, 0/X Xxxxxxxxx Xxxxx, 0 Science Museum Road
Tsimshatsui East, Kowloon, Hong Kong
People’s Republic of China
Fax no.: ( )
Xxxx 000, 0/X Xxxxxxxxx Xxxxx, 0 Science Museum Road
Tsimshatsui East, Kowloon, Hong Kong
People’s Republic of China
Fax no.: ( )
with copies to:
Xxxxxx Xxxx Xxxxx Raysman & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax no.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Fax no.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
and
Xxxxxx Xxxx Xxxxx Raysman & Xxxxxxx, LLP
000 Xxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Fax no.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Xx.
000 Xxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Fax no.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Xx.
7.13 Construction; Usage.
7.13(a) Interpretation. In this Agreement, unless a clear contrary intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person’s successors and assigns but, if applicable,
only if such successors and assigns are not prohibited by this Agreement, and reference to a Person
in a particular capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance with the terms
thereof;
(v) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references to
this Agreement as a whole and not to any particular Article, Section or other provision hereof
unless the context requires otherwise;
(vi) “including” (and with correlative meaning “include”) means including without limiting the
generality of any description preceding such term;
(vii) “or” is used in the inclusive sense of “and/or”;
15
(viii) with respect to the determination of any period of time, “from” means “from and
including” and “to” means “to but excluding”;
(ix) references to documents, instruments or agreements shall be deemed to refer as well to
all addenda, exhibits, schedules or amendments thereto; and
(x) any dollar thresholds set forth herein shall not be used as a benchmark for determination
of what is or is not “material” under this Agreement.
7.13(b) Legal Representation of the Parties. This Agreement was negotiated by the
parties with the benefit of legal representation and any rule of construction or interpretation
otherwise requiring this Agreement to be construed or interpreted against any party shall not apply
to any construction or interpretation hereof.
7.13(c) Headings. The headings contained in this Agreement are for convenience of
reference only, shall not be deemed to be a part of this Agreement and shall not be referred to in
connection with the construction or interpretation of this Agreement.
7.14 Enforcement of Agreement.
7.14(a) Except as otherwise expressly provided herein, any and all remedies herein expressly
conferred upon a party hereunder shall be deemed cumulative with and not exclusive of any other
remedy conferred hereby or by law on such party, and the exercise of any one remedy shall not
preclude the exercise of any other. The parties acknowledge and agree that each other party
hereunder would be irreparably damaged if any of the provisions of this Agreement are not performed
in accordance with their specific terms and that any breach of this Agreement by a party hereunder
could not be adequately compensated in all cases by monetary damages alone. Accordingly, in
addition to any other right or remedy to which a party hereunder may be entitled, at law or in
equity, it shall be entitled to enforce any provision of this Agreement by a decree of specific
performance and temporary, preliminary and permanent injunctive relief to prevent breaches or
threatened breaches of any of the provisions of this Agreement, without posting any bond or other
undertaking.
7.14(b) The Consenting Stockholder has read and understands (a) Parent’s Registration
Statement on Form S-1, filed with the SEC on November 8, 2007, Parent’s final prospectus relating
thereto, dated November 12, 2007, and any and all other Parent SEC Reports (including all exhibits
thereto), (b) the Trust Agreement, and (c) Parent’s Amended and Restated Certificate of
Incorporation (collectively, the “Parent Disclosures”). The Consenting Stockholder acknowledges
and understands that (i) Parent is a special purpose acquisition corporation, (ii) Parent has
established the Trust Fund for the benefit of its public stockholders and may disburse monies from
the Trust Fund only as described in the Parent Disclosures, and (iii) in the event the Contemplated
Transactions are not consummated for any reason by November 16, 2009, Parent will be obligated to
return to its stockholders the amounts being held in the Trust Fund. In accordance with
foregoing, the Consenting Stockholder acknowledges and agrees that it does not have and will not
have any right, title, interest or claim (collectively, “Claims”) of any kind or nature, in or to
any monies held in the Trust Fund, hereby waives any and all Claims to any monies held in the Trust
Fund that the Consenting Stockholder may have or seek to have in the future (including, but not
limited to, any Claims arising as a result of the termination of this Agreement, any breach of this
Agreement by Parent, or otherwise) and will not seek recourse against the Trust Fund for any reason
(a “Trust Waiver”), and the Consenting Stockholder hereby waives any and all Claims against any of
Parent’s vendors that have issued a Trust Waiver to Parent in connection with services provided to
Parent. Notwithstanding anything to the contrary, this Section 7.14(b) shall not constitute a
waiver of any remedy of the Consenting Stockholder under this Agreement.
7.15 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or unenforceable
only in part or degree will remain in full force and effect to the extent not held invalid or
unenforceable.
[Remainder of page intentionally left blank – signature page follows]
16
Execution Copy
In Witness Whereof, the parties have caused this Agreement to be executed as of the
date first above written.
| PARENT: | ||||||
| Xxxxxxxx Corporation | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |||||
| Name: | Xxxxxxx X. Xxxxxxxx | |||||
| Title: | Chief Executive Officer and Chief Financial Officer | |||||
| CONSENTING STOCKHOLDER: | ||||||
| /s/ Xu Hong Xxx | ||||||
| Xx Hong Bin | ||||||
Execution Copy
Exhibit A
Certain Definitions
For purposes of the Agreement (including this Exhibit A):
Affiliate. “Affiliate” shall mean, with respect to a Person, any other Person that,
directly or indirectly, Controls, is Controlled by or is under common Control with such
Person. The term “Affiliated” has the meaning correlative to the foregoing.
Cash Conversion Election. “Cash Conversion Election” shall mean the exercise by holders of thirty
percent (30%) or more of the shares of Parent Common Stock issued in Parent’s initial public
offering of securities and outstanding immediately before the Closing of their rights to convert
their shares into a pro rata share of the Trust Fund in accordance with Parent’s Amended and
Restated Certificate of Incorporation.
Certificate of Incorporation Amendment. “Certificate of Incorporation Amendment” shall mean an
amendment to Parent’s Amended and Restated Certificate of Incorporation approved by the holders of
a majority of the shares of Parent Common Stock issued in Parent’s initial public offering of
securities and outstanding as of the record date of the Parent Stockholders’ Meeting, providing for
perpetual existence of Parent.
Certificates of Merger. “Certificates of Merger” shall mean the certificate of merger satisfying
the applicable requirements of the DGCL and the articles of merger satisfying the applicable
requirements of the NRS required to be filed in connection with the Merger.
Company SEC Reports. “Company SEC Reports” shall mean each report, registration statement and
definitive proxy statement filed by the Company with the SEC.
Consent. “Consent” shall mean any approval, consent, ratification, permission, waiver or
authorization (including any Governmental Authorization).
Control. “Control”, “Controlled”, “Controlling” or “under common Control with” with respect
to any Person, means having the ability to direct the management and affairs of such
Person, whether through the ownership of voting securities, by contract or otherwise, and
such ability shall be deemed to exist when a Person holds at least fifty (50)% of the
outstanding voting securities of such Person.
DGCL. “DGCL” shall mean the Delaware General Corporation Law.
Effective Time. “Effective Time” shall mean the date and time the Merger becomes effective.
Entity. “Entity” shall mean any corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture, estate, trust,
company (including any company limited by shares, limited liability company or joint stock
company), firm, society or other enterprise, association, organization or entity.
Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
A-1
Exchange Agent. “Exchange Agent” shall mean a reputable bank or trust company designated by Parent
and reasonably satisfactory to the Company to act as exchange agent for the payment of the Merger
Consideration pursuant to the Merger Agreement.
Exchange Ratio. “Exchange Ratio” shall mean 0.8 of a share of Parent Common Stock.
GAAP. “GAAP” shall mean generally accepted accounting principles for financial reporting in the
United States, applied on a basis consistent with the basis on which the financial statements
referred to herein were prepared.
Governmental Authorization. “Governmental Authorization” shall mean any: (a) permit, license,
certificate, franchise, permission, variance, clearance, registration, qualification or
authorization issued, granted, given or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement; or (b) right under any contract with any
Governmental Body.
Governmental Body. “Governmental Body” shall mean any: (a) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority
of any nature (including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or other tribunal).
Legal Requirement. “Legal Requirement” shall mean any federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution, ordinance, code, edict,
decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented
or otherwise put into effect by or under the authority of any Governmental Body (or under the
authority of any national securities exchange on which Parent Common Stock is listed). Reference to
any Legal Requirement means such Legal Requirement as amended, modified, codified, replaces or
reenacted, in whole or in part, and in effect from time to time, and reference to any section or
other provision of any Legal Requirement means that provision of such Legal Requirement from time
to time in effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision.
Liens. “Lien” shall mean any lien, pledge, hypothecation, charge, mortgage, security interest,
encumbrance, claim, infringement, interference, option, right of first refusal, equitable interest,
title retention or title reversion agreement, preemptive right, community property interest or
restriction of any nature, whether accrued, absolute, contingent or otherwise (including any
restriction on the voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any restriction on the
use of any asset and any restriction on the possession, exercise or transfer of any other attribute
of ownership of any asset).
Make Good Escrow Agreement. “Make Good Escrow Agreement” shall mean that certain make good escrow
agreement by and among Xu Hong Bin, The Pinnacle Fund, L.P., as agent, Loeb & Loeb LLP, as escrow
agent, and the investors party thereto, which investors include the Releasors.
NRS. “NRS” shall mean the Nevada Revised Statutes.
Organizational Documents. “Organizational Documents” means the certificate or articles of
incorporation, bylaws and other organizational documents.
Parent SEC Reports. “Parent SEC Reports” shall mean each report, registration statement and
definitive proxy statement filed by Parent with the SEC.
A-2
Parent Stockholders’ Meeting. “Parent Stockholders’ Meeting” shall mean a meeting of the holders
of Parent Common Stock to vote on (i) the adoption of the Merger Agreement by the stockholders of
Parent, (ii) the issuance of Parent Common Stock in the Merger and (iii) the adoption of the
Certificate of Incorporation Amendment.
Person. “Person” shall mean any individual, Entity or Governmental Body.
Representatives. “Representatives” shall mean any party’s respective directors, officers,
employees, investment bankers, attorneys, accountants or other advisors or representatives.
Required Parent Stockholder Vote. “Required Parent Stockholder Vote” shall mean the affirmative
vote to adopt the Merger Agreement, approve the issuance of Parent Common Stock in the Merger and
adopt the Certificate of Incorporation Amendment by the holders of a majority of the shares of
Parent Common Stock issued in Parent’s initial public offering of securities and outstanding as of
the record date of the Parent Stockholder Meeting and constituting a quorum for the purpose of
voting on such proposal and the absence of the Cash Conversion Election.
SEC. “SEC” shall mean the United States Securities and Exchange Commission.
Securities Act. “Securities Act” shall mean the Securities Act of 1933, as amended.
Subsidiary. An entity shall be deemed to be a “Subsidiary” of another Person if such Person
directly or indirectly owns, beneficially or of record, (a) an amount of voting securities of other
interests in such Entity that is sufficient to enable such Person to elect at leased a majority of
the members of such Entity’s board of directors or other governing body, or (b) at least 50% of the
outstanding equity or financial interests of such Entity.
Tax. “Tax” shall mean any tax (including any income tax, franchise tax, capital gains tax, gross
receipts tax, value-added tax, surtax, excise tax, ad valorem tax, transfer tax, stamp tax, sales
tax, use tax, property tax, business tax, withholding tax or payroll tax), levy, assessment,
tariff, duty (including any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or under the authority
of any Governmental Body.
Trust Agreement. “Trust Agreement” shall mean that certain Investment Trust Management Agreement,
dated as of November 16, 2007, by and between Parent and American Stock Title & Transfer Co., as
trustee of the trust fund established pursuant thereto.
Trust Fund. “Trust Fund” shall mean the trust fund established pursuant to the Trust Agreement.
Warrants. “Warrants” shall mean any options, stock appreciation rights, warrants, convertible or
exchangeable securities or other rights, Contracts, arrangements or commitments of any character
relating to the issuance of equity.
A-3
Execution Copy
Exhibit B
Action by Written Consent in lieu of Meeting
of the Stockholders of China Water & Drinks, Inc.
of the Stockholders of China Water & Drinks, Inc.
The undersigned stockholders (the “Consenting Stockholders”) of China Water & Drinks, Inc., a
Nevada corporation (the “Company”), being the holders of a majority of the outstanding shares of
common stock, par value $0.001 per share (“Company Common Stock”) of the Company (on an as
converted basis), voting as a single class, pursuant to Section 78.320 of the Nevada Revised
Statutes (the “NRS”), and for purposes of Section 92A.120 of the NRS, do hereby consent to the
adoption of the following resolutions and agree that said resolutions shall have the same force
and effect as if duly adopted by affirmative vote at a meeting of the stockholders of the Company
duly called and held for the purpose:
Whereas, Xxxxxxxx Corporation, a Delaware corporation (“Parent”), Xxxxxxxx
Acquisition II Corporation, a Delaware corporation and a wholly owned Subsidiary of Parent (“Merger
Sub”), and the Company have entered into an Agreement and Plan of Merger and Reorganization dated
as of May 19, 2008 (the “Merger Agreement”), pursuant to which the Company agreed to merge with and
into Merger Sub (the “Merger”), with the Company ceasing to exist and Merger Sub surviving as a
wholly owned Subsidiary of Parent; and
Whereas, the respective Boards of Directors of Parent, Merger Sub and the Company
have approved the Merger Agreement and the Merger, and have deemed it advisable and in the best
interests of their respective corporations and stockholders that Merger Sub and the Company
consummate the Merger; and
Whereas, in connection with the Merger Agreement, (i) Parent, the Company and certain
stockholders of the Company entered into an undertaking agreement, pursuant to which such
stockholders elected to receive all cash in the Merger and agreed to provide a general release of
claims against the Company, Parent and Merger Sub, (ii) Parent, the Company and each holder of the
Company’s outstanding convertible notes which are convertible into Company Common Stock entered
into a conversion agreement, pursuant to which such holders agreed to convert their notes into
Company Common Stock, waive or suspend certain defaults, potential defaults and obligations or the
Company for the times set forth therein, as of the effective time of the Merger, release various
liens and other rights and elected to receive all stock in the Merger, and in consideration for
releases, waivers, suspensions and relinquishment of rights, Parent agreed to grant to such holders
the right to receive a contingent payment, and (iii) Parent, the Company and certain stockholders
of the Company entered into a release agreement, pursuant to which such stockholders agreed to
waive or suspend certain defaults, potential defaults and obligations of the Company, release in
full any and all rights of such stockholders in any shares of Company Common Stock owned or
controlled by Xu Hong Bin that are subject to the Make Good Escrow Agreement (as defined therein)
and elected to receive all stock in the Merger, and in consideration for such waivers, releases and
suspensions, Parent agreed to grant to such stockholders the right to receive a contingent payment;
and
B-1
Whereas, at the request of Parent, the Consenting Stockholders are entering into an
agreement, pursuant to which, among other things, the Consenting Stockholders are delivering this
written consent; and
Whereas, each Consenting Stockholder has received an execution copy of the Merger
Agreement and the other agreements referred to above, has had an opportunity to review such
agreements
with assistance of counsel and other advisors of its own choosing, and believes that the terms of
the Merger Agreement and such other agreements are fair and reasonable.
NOW THEREFORE, be it:
| Resolved: | That the Merger Agreement and the Merger be, and each of them hereby is, adopted and approved. | |||
| Further Resolved: | That this Consent be, and hereby is, irrevocable. | |||
| Further Resolved: | That this consent be filed with the records of meetings of the stockholders of the Company. |
B-2
IN WITNESS WHEREOF, each of the undersigned has hereunto set its hand on the date set forth
opposite its name below.
Date: |
May 19,2008 | By: | /s/ Xu Hong Bin | |||||
| Name: | Xu Hong Bin | |||||||
Date: |
May 19, 2008 | By: | /s/ Chen Xing Hua | |||||
| Name: | Chen Xing Hua | |||||||
B-3
SCHEDULE A
SCHEDULE OF CONSENTING STOCKHOLDER’S
OWNERSHIP OF SHARES
OWNERSHIP OF SHARES
| Name of Consenting Stockholder | Number of Shares | |||
Xu Hong Bin |
36,000,000 | |||