SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. __________ )*
Medina Coffee, Inc.
--------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.001 par value per share
--------------------------------------------------------------------------------
(Title of Class of Securities)
584709109
--------------------------------------------------------------------------------
(CUSIP Number)
Xiangqian Li
BAK Industrial Park, No. 1 BAK Street
Kuichong Town, Longgang District
Shenzhen
People's Republic of China
--------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 20, 2005
--------------------------------------------------------------------------------
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [_].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7 for
other parties to whom copies are to be sent.
----------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
CUSIP No.584709109 13D Page 2 of _ Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Ziangqian Li
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
OO
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
PEOPLE'S REPUBLIC OF CHINA
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF
21,233,437 SHARES
SHARES _________________________________________________________________
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
_________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
21,233,437 SHARES
PERSON _________________________________________________________________
10 SHARED DISPOSITIVE POWER
WITH
0
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,233,437 SHARES
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.8%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
IN
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No.584709109 13D Page 3 of _ Pages
________________________________________________________________________________
Item 1. Security and Issuer.
This statement relates to shares of Common Stock, $0.001 par value per
share (the "Stock"), of Medina Coffee, Inc., a Nevada corporation (the
"Issuer"). The principal executive offices of the Issuer are located at BAK
Industrial Park, No. 1 BAK Street, Kuichong Town, Longgang District, Shenzhen,
People's Republic of China.
________________________________________________________________________________
Item 2. Identity and Background.
Pursuant to Rule 13d-1(a) of Regulation 13D-G of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended (the "Act"),
this Schedule 13D Statement is hereby filed by Xiangqian Li ("Li" or the
"Reporting Person"), a citizen of the People's Republic of China.
Li's principal occupation or employment is serving as the President and
Chief Executive Officer of the Issuer. The principal business address of Li,
which also serves as his principal office, is at BAK Industrial Park, No. 1 BAK
Street, Kuichong Town, Longgang District, Shenzhen, People's Republic of China.
During the last five years, the Reporting Person has not (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
________________________________________________________________________________
Item 3. Source and Amount of Funds or Other Consideration.
The Issuer completed a stock exchange transaction (the "Stock
Exchange") with the stockholders of BAK International, Ltd., a Hong Kong company
("BAK International"). The exchange was consummated under Nevada law pursuant to
the terms of a Securities Exchange Agreement (the "Exchange Agreement") dated
effective as of January 20, 2005 by and among the Issuer, BAK International and
the stockholders of BAK International. Pursuant to the Exchange Agreement, the
Issuer issued 39,826,075 shares of its common stock, par value $0.001 per share,
to the stockholders of BAK International, including Li, representing
approximately 97.2% of its post-exchange issued and outstanding common stock, in
exchange for 100% of the outstanding capital stock of BAK International. After
giving effect to the Stock Exchange, the Issuer had 40,978,533 shares of its
Stock outstanding.
At the closing of the Stock Exchange, BAK International became a
wholly-owned subsidiary of the Issuer, and the Issuer succeeded to the business
of BAK International. All of the Issuer's business operations are conducted
through BAK International. Prior to the Stock Exchange, there were no material
relationships between the Issuer and BAK International, or any of the parties'
respective affiliates, directors or officers, or any associates of their
respective officers or directors.
The Stock Exchange was approved in accordance with the laws of the
State of Nevada. Pursuant to the Exchange Agreement, at the closing of the Stock
Exchange, the membership of the board of directors of the Issuer was increased
from one to two directors, and Li was appointed to serve in the newly created
directorship. Also under the terms of the Stock Exchange, all existing officers
resigned as officers of the Issuer effective immediately following the closing
of the transaction and Li was elected as President, Chairman of the Board and
Chief Executive Officer of the Issuer.
________________________________________________________________________________
CUSIP No.584709109 13D Page 4 of _ Pages
________________________________________________________________________________
Item 4. Purpose of Transaction.
Li acquired the reported shares pursuant to the Exchange Agreement with
the purpose of obtaining control over the Issuer. BAK International and the
Issuer structured the Stock Exchange so that the former stockholders of BAK
International would own a majority of the outstanding common stock of the Issuer
and BAK International would become a wholly-owned subsidiary of the Issuer.
Except as set forth in this Item 4, the Reporting Person has no present
plans or proposals that relate to or that would result in any of the following
actions:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Act; or
(j) Any action similar to any of those enumerated above.
________________________________________________________________________________
Item 5. Interest in Securities of the Issuer.
The contents of Item 3 above are incorporated by reference.
Pursuant to Rule 13d-3(a), at the close of business on December 15,
2004, Li may be deemed to be the beneficial owner of 21,233,437 shares of the
Stock, which constitutes approximately 51.8% of the 40,978,533 shares of the
Stock outstanding on January 20, 2005 (the "Outstanding Shares"). Li exercises
sole voting power and sole dispositive power with respect to all such shares of
which he is the beneficial owner.
Prior to the Stock Exchange, none of BAK International or any of its
stockholders owned any shares of the Issuer.
Except as disclosed herein, Li has not effected any transactions in the
Issuer's Stock during the preceding 60 days.
________________________________________________________________________________
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
The contents of Items 3 and 4 above are incorporated by reference.
Except as set forth in Items 3 and 4 above and this Item 6, to the best
of Li's knowledge, there are no contracts, arrangements, understandings or
relationships (legal or otherwise) between Li and any other person with respect
to any securities of the Issuer, including but not limited to, transfer or
voting of any of the securities of the Issuer, finder's fees, joint ventures,
loan or option arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies, or a pledge or
contingency the occurrence of which would give another person voting power over
the securities of the Issuer.
________________________________________________________________________________
Item 7. Material to be Filed as Exhibits.
Exhibit 10: Securities Exchange Agreement dated January 20, 2005 among
---------- Medina Coffee, Inc., BAK International, Ltd., and the
Shareholders of BAK International, Ltd.
________________________________________________________________________________
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
DATED: January 20, 2005
/s/ Xiangqian Li
----------------------
Xiangqian Li
EXHIBIT 10
SECURITIES EXCHANGE AGREEMENT
dated effective as of January 20, 2005
by and among
MEDINA COFFEE, INC.
BAK INTERNATIONAL, LTD.
and
THE SHAREHOLDERS OF BAK INTERNATIONAL, LTD.
TABLE OF CONTENTS
ARTICLE I. ISSUANCE AND EXCHANGE OF SHARES.....................................1
1.1 Issuance and Exchange...............................................1
1.2 Exchange Ratio......................................................1
ARTICLE II. CLOSING 2
2.1 Closing.............................................................2
2.2 Deliveries by Public Company........................................2
2.3 Deliveries by Shareholders and Holding Co...........................2
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS....................2
3.1 Ownership of Stock..................................................2
3.2 Authority to Execute and Perform Agreement; No Breach...............3
3.3 Securities Matters..................................................3
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF HOLDING CO.......................4
4.1 Organization, Standing and Corporate Power..........................4
4.2 Authority; Noncontravention.........................................4
4.3 Financial Statements................................................5
4.4 Capital Structure...................................................5
4.5 Subsidiaries........................................................5
4.6 Intellectual Property...............................................5
4.7 Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.........................................................5
4.8 Books and Records...................................................6
4.9 Employees...........................................................6
4.10 Employee Benefit Plans..............................................6
4.11 Compliance with Applicable Laws.....................................6
4.12 Insurance...........................................................7
4.13 Litigation, etc.....................................................7
4.14 Contracts...........................................................7
4.15 Real Property.......................................................7
4.16 Environmental Matters...............................................7
4.17 Solicitation........................................................7
4.18 Disclosure..........................................................7
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PUBLIC COMPANY....................8
5.1 Organization, Standing and Power....................................8
5.2 Capital Structure...................................................8
5.3 Authority: Noncontravention.........................................8
5.4 Subsidiaries........................................................9
5.5 Intellectual Property...............................................9
5.6 Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.........................................................9
5.7 Books and Records..................................................10
5.8 Employees..........................................................10
5.9 Employee Benefit Plans.............................................10
i
5.10 Compliance with Applicable Laws....................................10
5.11 Insurance..........................................................11
5.12 Litigation, etc....................................................11
5.13 Contracts..........................................................11
5.14 Real Property......................................................11
5.15 Quotation..........................................................11
5.16 Filings............................................................11
5.17 Environmental Matters..............................................11
5.18 Anti-takeover Plan: State Takeover Statutes........................12
5.19 Solicitation.......................................................12
5.20 Disclosure.........................................................12
ARTICLE VI. INDEMNIFICATION...................................................12
6.1 Indemnification of Holding Co and Shareholders.....................12
6.2 Indemnification of Public Company..................................13
ARTICLE VII. CONDITIONS PRECEDENT.............................................13
7.1 Conditions to Each Party's Obligation to Effect the Exchange.......13
7.2 Conditions to Obligations of Holding Co and the Shareholders.......14
7.3 Conditions to Obligations of Public Company........................14
7.4 Frustration of Closing Conditions..................................15
ARTICLE VIII. GENERAL PROVISIONS..............................................15
8.1 Survival of Representations and Warranties.........................15
8.2 Fees and Expenses..................................................15
8.3 Definitions........................................................15
8.4 Usage..............................................................16
8.5 Notices............................................................16
8.6 Counterparts.......................................................17
8.7 Entire Agreement; Third-Party Beneficiaries........................17
8.8 Governing Law......................................................17
8.9 Assignment.........................................................17
8.10 Enforcement........................................................17
8.11 Severability.......................................................18
ii
SECURITIES EXCHANGE AGREEMENT
THIS SECURITIES EXCHANGE AGREEMENT (the "Agreement"), dated as of
January 20, 2005 (the "Effective Date"), is entered into by and among BAK
INTERNATIONAL, LTD., a company incorporated in Hong Kong with limited liability
("Holding Co"), and MEDINA COFFEE, INC., a Nevada corporation (the "Public
Company"), and the individuals whose names appear on the signature page hereof,
each being either a shareholder of Holding Co or an entity holding shares in
trust (each a "Trust Company") for the benefit of certain shareholders of
Holding Co (collectively, the "Shareholders"). Certain capitalized terms used in
this Agreement are defined in Section 8.3 hereof.
W I T N E S S E T H:
WHEREAS, as of the Effective Date, there are 39,826,075 outstanding
shares of the common stock of Holding Co (the "Holding Co Stock"), of which all
of the shares of Holding Co Stock are beneficially owned and/or controlled by
the Shareholders.
WHEREAS, Public Company proposes to acquire all of the outstanding
shares of Holding Co in exchange for the issuance of an aggregate of 39,826,075
shares of common stock, par value $0.001, of Public Company (the "Exchange");
WHEREAS, the Exchange shall constitute a reorganization within the
meaning of Section 368(a) (1)(B) of the Internal Revenue Code of 1986, as
amended, and/or any other "tax free" exemptions thereunder that may be available
for the Exchange; and
WHEREAS, the Boards of Directors of Public Company and Holding Co have
determined that it is desirable to effect such a plan of reorganization.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants, agreements, representations and warranties contained herein,
the parties hereto agree as follows:
ARTICLE I.
ISSUANCE AND EXCHANGE OF SHARES
1.1 Issuance and Exchange.
At the Closing (as defined in Section 2.1 below), to be held in
accordance with the provisions of Article II below and subject to the terms and
agreements set forth herein, Public Company shall authorize Public Company's
transfer agent to issue to the Shareholders the number of duly authorized and
newly issued shares of common stock, par value $0.001, of Public Company (the
"Public Company Stock") set forth in Section 1.2 below for the outstanding
shares of Holding Co Stock. In consideration for the shares of Public Company
Stock to be exchanged, the Shareholders shall have delivered to counsel for
Public Company, prior to Closing, certificates evidencing their shares of
Holding Co, together with duly executed stock powers to effectuate the transfer.
Counsel for Public Company shall release the Holding Co shares, over which he
has custody, to Public Company in accordance with the written instruction of
Public Company, assuming satisfaction by the Shareholders and Holding Co of all
applicable conditions set forth in this Agreement.
1.2 Exchange Ratio.
(a) At the Closing, Public Company shall exchange an aggregate of
39,826,075 shares of Public Company Stock for all issued and outstanding shares
of Holding Co Stock as full consideration for the Holding Co Stock. A chart
setting forth the capitalization of Public Company immediately prior to and
immediately following the Closing (as defined in Section 2.1) is set forth on
Exhibit 1.2(a) hereto.
1
(b) No fractional shares of Public Company Stock will be issued to any
Shareholder entitled to receive said shares. Accordingly, Shareholders who would
otherwise be entitled to receive fractional shares of Public Company Stock will,
upon surrender of their certificate representing the fractional shares of
Holding Co Stock, receive a full share if the fractional share exceeds fifty
percent (50%) and if the fractional share is less than fifty percent (50%) the
fractional share shall be cancelled.
ARTICLE II.
CLOSING
2.1 Closing.
The consummation of the Exchange by Public Company, Holding Co and the
Shareholders (the "Closing") shall occur on the Effective Date at the offices of
Holding Co, subject to the satisfaction or waiver of all of the conditions to
Closing, or at such other place as the parties may agree upon.
2.2 Deliveries by Public Company.
Public Company shall deliver, or cause to be delivered, to the
Shareholders:
(a) As soon as practicable after the Closing, certificates for the
shares of Public Company Stock being exchanged for their respective accounts, in
form and substance reasonably satisfactory to the Shareholders and their
counsel, it being understood that the certificates will be prepared by Public
Company's transfer agent and delivered to Jackson Walker, L.L.P. for the benefit
of the Shareholders;
(b) At the Closing, the items specified in Article VII below; and
(c) At the Closing, all of the books and records of Public Company.
2.3 Deliveries by Shareholders and Holding Co.
At the Closing, the Shareholders and Holding Co, as applicable, shall
deliver to Public Company the items specified in Article VII below.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
Each Shareholder, including those Shareholders whose shares in Holding
Co are being held by a Trust Company, hereby represents and warrants to Public
Company as follows (it being acknowledged that Public Company is entering into
this Agreement in material reliance upon each of the following representations
and warranties, and that the truth and accuracy of each, as evidenced by their
signature set forth on the signature page, constitutes a condition precedent to
the obligations of Public Company hereunder):
3.1 Ownership of Stock.
Each Shareholder is the lawful owner of his Holding Co Stock to be
transferred to Public Company free and clear of all preemptive or similar
rights, Liens, and the delivery to Public Company of the Holding Co Stock
pursuant to the provisions of this Agreement will transfer to Public Company
valid title thereto, free and clear of all Liens. To the Knowledge of each
Shareholder, the Holding Co Stock to be exchanged herein has been duly
authorized and validly issued and is fully paid and nonassessable.
2
3.2 Authority to Execute and Perform Agreement; No Breach.
Each Shareholder has the full legal right and power and all authority
and approval required to enter into, execute and deliver this Agreement, and to
sell, assign, transfer and convey the Holding Co Stock and to perform fully his
respective obligations hereunder. This Agreement has been duly executed and
delivered by each Shareholder and, assuming due execution and delivery by, and
enforceability against Public Company, constitutes the valid and binding
obligation of each Shareholder enforceable in accordance with its terms, subject
to the qualifications that enforcement of the rights and remedies created hereby
is subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors, and (b) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law). No approval or consent of, or filing with, any Governmental Entity,
and no approval or consent of, or filing, with any other Person is required to
be obtained by the Shareholders or in connection with the execution and delivery
by the Shareholders of this Agreement and consummation and performance by them
of the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each
Shareholder and the consummation of the transactions contemplated hereby in
accordance with the terms and conditions hereof by each Shareholder will not:
(a) violate, conflict with or result in the breach of any of the terms
of, or constitute (or with notice or lapse of time or both would constitute) a
default under, any contract, lease, agreement or other instrument or obligation
to which a Shareholder is a party or by or to which any of the properties and
assets of any of the Shareholders may be bound or subject;
(b) violate any order, judgment, injunction, award or decree of any
court, arbitrator, governmental or regulatory body, by which a Shareholder or
the securities, assets, properties or business of any of them is bound; or
(c) violate any statute, law or regulation to which any Shareholder is
subject.
3.3 Securities Matters.
The Shareholders hereby represent, warrant and covenant to the Public
Company, as follows:
(a) The Shareholders have been advised that the Public Company Stock
has not been registered under the Securities Act, or any state securities act in
reliance on exemptions therefrom.
(b) The Public Company Stock is being acquired solely for each
Shareholder's own account, for investment and are not being acquired with a view
to or for the resale, distribution, subdivision or fractionalization thereof.
The Shareholders have no present plans to enter into any such contract,
undertaking, agreement or arrangement and the Shareholders further understand
that the Public Company Stock may only be resold pursuant to a registration
statement under the Securities Act, or pursuant to some other available
exemption.
(c) The Shareholders agree that the certificate or certificates
representing the Public Company Stock will be inscribed with substantially the
following legend:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933. The securities have been
acquired for investment and may not be sold, transferred or assigned in
the absence of an effective registration statement for these securities
under the Securities Act of 1933 or an opinion of counsel that
registration is not required under said Act."
3
(d) The Shareholders acknowledge that an investment in Public Company
is subject to a high degree of risk and that, even though Public Company's
common stock is quoted on the NASD Over-the-Counter Bulletin Board, there exists
no established trading market for the Public Company Stock.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HOLDING CO
Holding Co hereby represents and warrants to Public Company as follows
(it being acknowledged that Public Company is entering into this Agreement in
material reliance upon each of the following representations and warranties, and
that the truth and accuracy of each, as evidenced by the execution of this
Agreement by a duly authorized officer of Holding Co, constitutes a condition
precedent to the obligations of the Public Company hereunder):
4.1 Organization, Standing and Corporate Power.
Each of Holding Co and Shenzhen BAK Battery Co., Ltd., Holding Co's
wholly-owned subsidiary ("BAK"), is a company with limited liability duly
organized, validly existing and in good standing under the laws of Hong Kong and
the People's Republic of China, respectively, and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business substantially as now conducted, except where the failure to do so would
not have, individually or in the aggregate, a Holding Co Material Adverse
Effect. For purposes of this Agreement, the term "Holding Co Material Adverse
Effect" means any Material Adverse Effect with respect to Holding Co and BAK,
taken as a whole, or any change of effect that adversely, or is reasonably
expected to adversely, affect the ability of Holding Co to consummate the
transactions contemplated by this Agreement in any material respect or
materially impair or delay Holding Co's ability to perform its obligations
hereunder.
4.2 Authority; Noncontravention.
Holding Co has the requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance by Holding Co of this
Agreement and the consummation of the transactions contemplated hereby by
Holding Co have been duly authorized by all necessary corporate action on the
part of Holding Co. This Agreement has been duly executed and delivered by
Holding Co and, assuming this Agreement constitutes the valid and binding
agreement of Public Company, constitutes a valid and binding obligation of
Holding Co, enforceable against Holding Co in accordance with its terms, subject
to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors, and (b) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law). The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement, will not (x) conflict with any provisions of the charter or
other organizational or governing documents of Holding Co, (y) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of first refusal, termination,
cancellation or acceleration of any obligation (including to pay any sum of
money) or loss of a material benefit under, or require the consent of any Person
under, any indenture, or other material agreement, Permit, concession, ground
lease or similar instrument or undertaking to which Holding Co is a party or by
which Holding Co or any of its assets are bound or affected, result in the
creation or imposition of a Lien against any material asset of Holding Co, which
singly or in the aggregate would have a Holding Co Material Adverse Effect, or
(z) subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation, or any order, writ,
judgment, injunction, decree, determination or award binding on or applicable to
Holding Co or BAK and currently in effect, which, in the case of clauses (y) and
(z) above, singly or in the aggregate, would have a Holding Co Material Adverse
Effect. No consent, approval or authorization of, or declaration or filing with,
4
or notice to, any Governmental Entity or any third party which has not been
received or made is required by or with respect to Holding Co in connection with
the execution and delivery of this Agreement by Holding Co or the consummation
by Holding Co of the transactions contemplated hereby, except for consents,
approvals, authorizations, declarations, filings and notices that, if not
obtained or made, will not, individually or in the aggregate, result in a
Holding Co Material Adverse Effect.
4.3 Financial Statements.
The financial statements of Holding Co and BAK have been audited by the
chartered accounting firm of Schwartz Levitsky Feldman LLP/SRL for the periods
indicated in conformity with U.S. Generally Accepted Accounting Principles
("GAAP").
4.4 Capital Structure.
As of the Effective Date, 39,826,075 shares of Holding Co Stock were
issued and outstanding and no shares of Holding Co Stock were held by Holding Co
in its treasury. All outstanding shares of capital stock of Holding Co will have
been duly authorized and validly issued, and will be fully paid and
nonassessable and not subject to preemptive or similar rights. No bonds,
debentures, notes or other indebtedness of Holding Co having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which the Shareholders may vote are issued or outstanding.
Except for this Agreement, Holding Co does not have and, at or after Closing
will not have, any outstanding option, warrant, call, subscription or other
right, agreement or commitment which either (a) obligates Holding Co to issue,
sell or transfer, repurchase, redeem or otherwise acquire or vote any shares of
the capital stock of Holding Co, or (b) restricts the voting, disposition or
transfer of shares of capital stock of Holding Co. There are no outstanding
stock appreciation rights or similar derivative securities or rights of Holding
Co.
4.5 Subsidiaries.
Other than as provided on Schedule 4.5, neither Holding Co nor BAK
owns, directly or indirectly, any of the capital stock of any other corporation
or any equity, profit sharing, participation or other interest in any
corporation, partnership, joint venture or other entity.
4.6 Intellectual Property.
Schedule 4.6 lists the trademarks, trade names, service marks, patents,
copyrights used by Holding Co and BAK and any applications with respect thereto.
Neither Holding Co nor BAK has any Knowledge of any claim that, or inquiry as to
whether, any product, activity or operation of Holding Co or BAK infringes upon
or involves, or has resulted in the infringement of, any trademarks, trade
names, service marks, patents, copyrights or other proprietary rights of any
other Person, corporation or other entity; and no proceedings have been
instituted, are pending or are threatened with respect thereto.
4.7 Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.
(a) Each of Holding Co and BAK has conducted its business only in the
ordinary course, and, except as set forth on Schedule 4.7, there has not been
(i) any change, destruction, damage, loss or event which has had or could
reasonably be expected to have, individually or in the aggregate a Holding Co
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend or other distribution in respect of shares of Holding Co or BAK's
capital stock, or any repurchase, redemption or other acquisition by Holding Co
or BAK of any shares of their respective capital stock or equity interests, as
applicable; (iii) any increase in the rate or terms of compensation payable or
to become payable by Holding Co or BAK to its directors, officers or key
employees; (iv) any entry into, or increase in the rate or terms of, any bonus,
insurance, severance, pension or other employee or retiree benefit plan, payment
or arrangement made to, for or with any such directors, officers or employees;
(v) any entry into any agreement, commitment or transaction by Holding Co or
5
BAK, or waiver, termination, amendment or modification to any agreement,
commitment or transaction, which is material to Holding Co or BAK taken as a
whole; (vi) any material labor dispute involving the employees of Holding Co or
BAK; (vii) any change by Holding Co or BAK in accounting methods, principles or
practices except as required or permitted by GAAP; (viii) any write-off or
write-down of, or any determination to write-off or write-down, any asset of
Holding Co or BAK or any portion thereof; (ix) any split, combination or
reclassification of any of Holding Co or BAK's capital stock or issuance or
authorization relating to the issuance of any other securities in respect of, in
lieu of or in substitution for shares of Holding Co or BAK's capital stock; (x)
any amendment of any material term of any outstanding security of Holding Co or
BAK; (xi) any loans, advances or capital contributions to or investments in, any
other Person in existence on the Effective Date made by Holding Co or BAK; (xii)
any sale or transfer by Holding Co or BAK of any of the assets of Holding Co or
BAK, as applicable; (xiii) cancellation of any material debts or claims or
waiver of any material rights by Holding Co or BAK; or (xiv) any agreements by
Holding Co or BAK to (a) do any of the things described in the preceding clauses
(i) through (xiii) other than as expressly contemplated or provided for herein
or (b) take, whether in writing or otherwise, any action which, if taken prior
to the Effective Date, would have made any representation or warranty of Holding
Co in this Agreement untrue or incorrect in any material respect.
(b) BAK has no liabilities, except as set forth in its financial
statements for the period ended September 30, 2004 or otherwise incurred in the
ordinary course of business.
4.8 Books and Records.
The books of account and other financial Records of Holding Co and BAK,
all of which have been made available to Public Company, are complete and
correct and represent actual, bona fide transactions and have been maintained in
accordance with sound business practices.
4.9 Employees.
Neither Holding Co nor BAK has any labor disputes with its respective
employees. Except as otherwise set forth on Schedule 4.9, there are no loans or
other obligations payable or owing by Holding Co or BAK to any stockholder,
officer, director or employee of Holding Co or BAK, as applicable, nor are there
any loans or debts payable or owing by any of such persons to Holding Co or BAK
or any guarantees by Holding Co or BAK of any loan or obligation of any nature
to which any such Person is a party.
4.10 Employee Benefit Plans.
All employee benefit plans provided by BAK to its employees are
operated under and in accordance with applicable laws of the People's Republic
of China.
4.11 Compliance with Applicable Laws.
Each of Holding Co and BAK has and after giving effect to the
transactions contemplated hereby will have in effect all Permits necessary for
it to own, lease or operate its properties and assets and to carry on its
business as now conducted, and to the Knowledge of Holding Co there has occurred
no default under any such Permit, except for the lack of Permits and for
defaults under Permits which individually or in the aggregate would not have a
Holding Co Material Adverse Effect. To Holding Co's Knowledge, each of Holding
Co and BAK is in compliance with, and has no liability or obligation under, any
applicable statute, law, ordinance, rule, order or regulation of any
Governmental Entity, including any liability or obligation to undertake any
remedial action under Hazardous Substances Laws (as hereinafter defined), except
for instances of non-compliance, liabilities or obligations, which individually
or in the aggregate would not have a Holding Co Material Adverse Effect.
6
4.12 Insurance.
Except as disclosed on Schedule 4.12, each of Holding Co and BAK has no
insurance policies in effect.
4.13 Litigation, etc.
Except as set forth on Schedule 4.13 and as of the Effective Date, (a)
there is no suit, claim, action or proceeding (at law or in equity) pending or,
to the Knowledge of Holding Co, threatened against Holding Co or BAK (including,
without limitation, any product liability claims) before any court or
governmental or regulatory authority or body, and (b) neither Holding Co nor BAK
is subject to any outstanding order, writ, judgment, injunction, order, decree
or arbitration order that, in any such case described in clauses (a) and (b),
(i) could reasonably be expected to have, individually or in the aggregate, a
Holding Co Material Adverse Effect or (ii) involves an allegation of criminal
misconduct or a violation of the Racketeer and Influenced Corrupt Practices Act.
As of the Closing, there are no suits, actions, claims or proceedings pending
or, to Holding Co's Knowledge, threatened, seeking to prevent, hinder, modify or
challenge the transactions contemplated by this Agreement.
4.14 Contracts.
Schedule 4.14 lists all material contracts, leases, arrangements or
commitments (whether oral or written) of either Holding Co or BAK relating to:
(a) the employment of any Person; (b) collective bargaining with, or any
representation of any employees by, any labor union or association; (c) the
acquisition of services, supplies, equipment or other personal property; (d) the
purchase or sale of real property; (e) distribution, agency or construction; (f)
lease of real or personal property as lessor or lessee or sublessor or
sublessee; (g) lending or advancing of funds; (h) borrowing of funds or receipt
of credit; (i) incurring any obligation or liability; or (j) the sale of
personal property.
4.15 Real Property.
Except as provided on Schedule 4.15, neither Holding Co nor BAK owns or
leases any real property.
4.16 Environmental Matters.
The operations of each of Holding Co and BAK comply with all applicable
local and national environmental laws.
4.17 Solicitation.
None of Holding Co, BAK, or the officers, directors, Affiliates or
agents of Holding Co or BAK, or any other Person acting on behalf of Holding Co
or BAK has solicited, directly or indirectly, any Person to enter into a merger
or similar business combination transaction with Holding Co or BAK by any form
of general solicitation, including, without limitation, any advertisement,
article, notice or other communication published in any newspaper, magazine or
similar media or broadcast over television or radio or any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.
4.18 Disclosure.
The representations and warranties and statements of fact made by
Holding Co in this Agreement are, as applicable, accurate, correct and complete
and do not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements and information
contained herein not false or misleading.
7
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PUBLIC COMPANY
Public Company hereby represents and warrants to Holding Co and the
Shareholders as follows (it being acknowledged that Holding Co and the
Shareholders are entering into this Agreement in material reliance upon each of
the following representations and warranties, and that the truth and accuracy of
each, as evidenced by the execution of this Agreement by a duly authorized
officer of Public Company, constitutes a condition precedent to the obligations
of Holding Co and the Shareholders hereunder):
5.1 Organization, Standing and Power.
Public Company is duly organized, validly existing and in good standing
under the laws of Nevada and has the requisite corporate power and authority to
carry on its business as now being conducted. Public Company is duly qualified
or licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not have a Public Company Material Adverse Effect. For purposes
of this Agreement, the term "Public Company Material Adverse Effect" means any
Material Adverse Effect with respect to Public Company, taken as a whole, or any
change or effect that adversely, or is reasonably expected to adversely, affect
the ability of Public Company to consummate the transactions contemplated by
this Agreement in any material respect or materially impairs or delays Public
Company's ability to perform its obligations hereunder. Public Company has made
available to Holding Co complete and correct copies of its charter documents and
bylaws.
5.2 Capital Structure.
As of the Effective Date, the authorized capital stock of Public
Company consists of 100,000,000 shares of Public Company Stock. Immediately
following the Closing, there will be 40,978,533 shares of common stock of Public
Company issued and outstanding. No shares of common stock of Public Company will
be held by Public Company in its treasury. All outstanding shares of capital
stock of Public Company will have been duly authorized and validly issued, and
will be fully paid and nonassessable and not subject to preemptive or similar
rights. No bonds, debentures, notes or other indebtedness of Public Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which the stockholders of Public
Company may vote are issued or outstanding. Except for this Agreement, Public
Company does not have, and at or after Closing will not have, any outstanding
option, warrant, call, subscription or other right, agreement or commitment
which either (a) obligates Public Company to issue, sell or transfer,
repurchase, redeem or otherwise acquire or vote any shares of the capital stock
of Public Company, or (b) restricts the voting, disposition or transfer of
shares of capital stock of Public Company. There are no outstanding stock
appreciation rights or similar derivative securities or rights of Public
Company.
5.3 Authority: Noncontravention.
Public Company has the requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by Public
Company and the consummation by Public Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Public Company. This Agreement has been duly executed and delivered by Public
Company and, assuming this Agreement constitutes the valid and binding agreement
of Holding Co and the Shareholders, constitutes a valid and binding obligation
of Public Company, enforceable against Public Company in accordance with its
terms, subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other laws of general application affecting the
rights and remedies of creditors, and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity). The execution and delivery of this Agreement do not, and the
8
consummation of the transactions contemplated by this Agreement and compliance
with the provisions hereof, will not, (x) conflict with any of the provisions of
the charter documents or bylaws of Public Company, (y) subject to the
governmental filings and other matters referred to in the following sentence,
conflict with, result in a breach of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of first refusal, termination,
cancellation or acceleration of any obligation (including to pay any sum of
money) or loss of a benefit under, or require the consent of any Person under,
any indenture or other agreement, Permit, concession, ground lease or similar
instrument or undertaking to which Public Company is a party or by which Public
Company or any of its assets are bound or affected, result in the creation or
imposition of a Lien against any material asset of Public Company, which, singly
or in the aggregate, would have a Public Company Material Adverse Effect, or (z)
subject to the governmental filings and other matters referred to in the
following sentence, contravene any law, rule or regulation, or any order, writ,
judgment, injunction, decree, determination or award binding on Public Company
currently in effect, which in the case of clauses (y) and (z) above, singly or
in the aggregate, would have a Public Company Material Adverse Effect. Except as
required by applicable federal securities law, no consent, approval or
authorization of, or declaration or filing with, or notice to, any Governmental
Entity or any third party which has not been received or made is required by or
with respect to Public Company in connection with the execution and delivery of
this Agreement by Public Company or the consummation by Public Company of the
transactions contemplated hereby, except for consents, approvals,
authorizations, declarations, filings and notices that, if not obtained or made,
will not, individually or in the aggregate, result in a Public Company Material
Adverse Effect.
5.4 Subsidiaries.
Public Company does not own, directly or indirectly, any of the capital
stock of any other corporation or any equity, profit sharing, participation or
other interest in any corporation, partnership, joint venture or other entity.
5.5 Intellectual Property.
Public Company does not own or use any trademarks, trade names, service
marks, patents, copyrights or any applications with respect thereto. Public
Company has no Knowledge of any claim that, or inquiry as to whether, any
product, activity or operation of Public Company infringes upon or involves, or
has resulted in the infringement of, any trademarks, trade names, service marks,
patents, copyrights or other proprietary rights of any other Person, corporation
or other entity; and no proceedings have been instituted, are pending or are
threatened with respect thereto.
5.6 Absence of Certain Changes or Events; No Undisclosed Material
Liabilities.
(a) The Shareholders have been provided with the audited financial
statements of Public Company as of December 31, 2003 and unaudited balance sheet
of Public Company dated September 30, 2004 (collectively, the "Financial
Statements"). Except as otherwise disclosed in its filings or public record with
the Securities and Exchange Commission, Public Company has conducted its
business only in the ordinary course, and there has not been (i) any change,
destruction, damage, loss or event which has had or could reasonably be expected
to have, individually or in the aggregate a Public Company Material Adverse
Effect; (ii) any declaration, setting aside or payment of any dividend or other
distribution in respect of shares of Public Company's capital stock, or any
repurchase, redemption or other acquisition by Public Company of any shares of
their respective capital stock or equity interests, as applicable; (iii) any
increase in the rate or terms of compensation payable or to become payable by
Public Company to its directors, officers or key employees; (iv) any entry into,
or increase in the rate or terms of, any bonus, insurance, severance, pension or
other employee or retiree benefit plan, payment or arrangement made to, for or
with any such directors, officers or employees; (v) any entry into any
agreement, commitment or transaction by Public Company, or waiver, termination,
amendment or modification to any agreement, commitment or transaction, which is
material to Public Company taken as a whole; (vi) any material labor dispute
9
involving the employees of Public Company; (vii) any change by Public Company in
accounting methods, principles or practices except as required or permitted by
GAAP; (viii) any write-off or write-down of, or any determination to write-off
or write-down, any asset of Public Company or any portion thereof; (ix) any
split, combination or reclassification of any of Public Company's capital stock
or issuance or authorization relating to the issuance of any other securities in
respect of, in lieu of or in substitution for shares of Public Company's capital
stock; (x) any amendment of any material term of any outstanding security of
Public Company; (xi) any loans, advances or capital contributions to or
investments in, any other Person in existence on the Effective Date made by
Public Company; (xii) any sale or transfer by Public Company of any of the
assets of Public Company; (xiii) cancellation of any material debts or claims or
waiver of any material rights by Public Company; or (xiv) any agreements by
Public Company to (a) do any of the things described in the preceding clauses
(i) through (xiii) other than as expressly contemplated or provided for herein
or (b) take, whether in writing or otherwise, any action which, if taken prior
to the Effective Date, would have made any representation or warranty of Public
Company in this Agreement untrue or incorrect in any material respect.
(b) Public Company has no Liabilities, except as set forth in the
Financial Statements or otherwise incurred in the ordinary course of business.
5.7 Books and Records.
The books of account and other financial Records of Public Company, all
of which have been made available to Holding Co, are complete and correct and
represent actual, bona fide transactions and have been maintained in accordance
with sound business practices and the requirements of Section 13(b)(2) of the
Exchange Act.
5.8 Employees.
Except with regard to Timothy P. Halter, Public Company's sole officer
and director, Public Company (a) has no employees, (b) does not owe any
compensation of any kind, deferred or otherwise, to any current or previous
employees, (c) has no written or oral employment agreements with any officer or
director of Public Company or (d) is not a party to or bound by any collective
bargaining agreement. There are no loans or other obligations payable or owing
by Public Company to any stockholder, officer, director or employee of Public
Company, nor are there any loans or debts payable or owing by any of such
persons to Public Company or any guarantees by Public Company of any loan or
obligation of any nature to which any such Person is a party.
5.9 Employee Benefit Plans.
Public Company has no (a) non-qualified deferred or incentive
compensation or retirement plans or arrangements, (b) qualified retirement plans
or arrangements, (c) other employee compensation, severance or termination pay
or welfare benefit plans, programs or arrangements or (d) any related trusts,
insurance contracts or other funding arrangements maintained, established or
contributed to by Public Company.
5.10 Compliance with Applicable Laws.
Public Company has and after giving effect to the transactions
contemplated hereby will have in effect all Permits necessary for it to own,
lease or operate its properties and assets and to carry on its business as now
conducted, and to the Knowledge of Public Company there has occurred no default
under any such Permit, except for the lack of Permits and for defaults under
Permits which individually or in the aggregate would not have a Public Company
Material Adverse Effect. To Public Company's Knowledge, Public Company is in
compliance with, and has no liability or obligation under, any applicable
statute, law, ordinance, rule, order or regulation of any Governmental Entity,
including any liability or obligation to undertake any remedial action under
Hazardous Substances Laws (as hereinafter defined), except for instances of
non-compliance, liabilities or obligations, which individually or in the
aggregate would not have a Public Company Material Adverse Effect.
10
5.11 Insurance.
Public Company has no insurance policies in effect.
5.12 Litigation, etc.
As of the Effective Date, (a) there is no suit, claim, action or
proceeding (at law or in equity) pending or, to the Knowledge of Public Company,
threatened against Public Company (including, without limitation, any product
liability claims) before any court or governmental or regulatory authority or
body, and (b) Public Company is not subject to any outstanding order, writ,
judgment, injunction, order, decree or arbitration order that, in any such case
described in clauses (a) and (b), (i) could reasonably be expected to have,
individually or in the aggregate, a Public Company Material Adverse Effect or
(ii) involves an allegation of criminal misconduct or a violation of the
Racketeer and Influenced Corrupt Practices Act. As of the Closing, there are no
suits, actions, claims or proceedings pending or, to Public Company's Knowledge,
threatened, seeking to prevent, hinder, modify or challenge the transactions
contemplated by this Agreement.
5.13 Contracts.
Except for its contract with Securities Transfer Corporation, a Texas
corporation ("STC"), pursuant to which STC acts as the Public Company's stock
transfer agent, Public Company has no material contracts, leases, arrangements
or commitments (whether oral or written) and is not a party to or bound by or
affected by any contract, lease, arrangement or commitment (whether oral or
written) relating to: (a) the employment of any Person; (b) collective
bargaining with, or any representation of any employees by, any labor union or
association; (c) the acquisition of services, supplies, equipment or other
personal property; (d) the purchase or sale of real property; (e) distribution,
agency or construction; (f) lease of real or personal property as lessor or
lessee or sublessor or sublessee; (g) lending or advancing of funds; (h)
borrowing of funds or receipt of credit; (i) incurring any obligation or
liability; or (j) the sale of personal property.
5.14 Real Property.
Public Company does not own or lease any real property.
5.15 Quotation.
As of the Effective Date, the Public Company Stock will remain eligible
for quotation on the NASD Over-the-Counter Bulletin-Board.
5.16 Filings.
Prior to the Effective Date, Public Company has filed all reports
required to be filed by it under the Securities Exchange Act.
5.17 Environmental Matters.
Public Company has not received any written notice from any
Governmental Entity that there exists any violation of any Hazardous Substances
Law (as hereinafter defined). Public Company has no Knowledge (a) of any
Hazardous Substances (as hereinafter defined) present on, under or about any
Public Company asset, and to Public Company's Knowledge no discharge, spillage,
uncontrolled loss, seepage or filtration of Hazardous Substances has occurred
on, under or about any Public Company asset, (b) that any Public Company assets
violates, or has at any time violated, any Hazardous Substance Laws, and (c)
that there is a condition on any asset for which Public Company has an
obligation to undertake any remedial action pursuant to Hazardous Substance
11
Laws. For purposes hereof, "Hazardous Substances" means, without limitation (i)
those substances included within definitions of any one or more of the terms
"Hazardous Substance," and "Hazardous Waste," "Toxic Substance" and "Hazardous
Material" in the Comprehensive Environmental Response Compensation and Liability
Act, 42 U.S.C. ss. 90,601, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. ss. 6901, et seq., the Toxic Substances Control Act, 15 U.S.C. ss.
2601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. ss. 1801 et
seq., the Occupational Safety and Health Act, 29 U.S.C. ss. 651, et seq.,
(insofar as it relates to employee health and safety in relation to exposure to
Hazardous Substances) and any other local, state, federal or foreign laws or
regulations related to the protection of public health or the environment
(collectively, "Hazardous Substances Laws"); (ii) such other substances,
materials or wastes as are or become regulated under, or as are classified as
hazardous or toxic under Hazardous Substance Laws; and (iii) any materials,
wastes or substances that can be defined as (v) petroleum products or wastes;
(w) asbestos; (x) polychlorinated biphenyl; (y) flammable or explosive; or (z)
radioactive.
5.18 Anti-takeover Plan: State Takeover Statutes.
Public Company does not have in effect any plan, scheme, device or
arrangement, commonly or colloquially known as a "poison pill" or
"anti-takeover" plan or any similar plan, scheme, device or arrangement. The
Board of Directors of Public Company has approved this Agreement. No other state
takeover statute or similar statute or regulation applies or purports to apply
to the Exchange, this Agreement or any of the transactions contemplated by this
Agreement.
5.19 Solicitation.
None of Public Company, its officers, directors, Affiliates or agents,
or any other Person acting on its behalf has solicited, directly or indirectly,
any Person to enter into a merger or similar business combination transaction
with Public Company by any form of general solicitation, including, without
limitation, any advertisement, article, notice or other communication published
in any newspaper, magazine or similar media or broadcast over television or
radio or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising.
5.20 Disclosure.
The representations and warranties and statements of fact made by
Public Company in this Agreement are, as applicable, accurate, correct and
complete and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained herein not false or misleading.
ARTICLE VI.
INDEMNIFICATION
6.1 Indemnification of Holding Co and Shareholders.
(a) Public Company shall, from and after the Closing, indemnify, defend
and hold harmless the Shareholders, Holding Co, and Holding Co's officers,
directors, Affiliates or agents, and any other Person acting on its behalf (the
"Holding Co Indemnified Parties") against all losses, claims, damages, costs,
expenses (including reasonable attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (the "Holding Co Indemnified Liabilities") based on, or
arising out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case, to the fullest extent permitted under the laws of the
State of Nevada.
(b) The Holding Co Indemnified Parties shall have the right to conduct
the defense of any action giving rise to a claim for indemnity under this
Agreement with counsel of their own choosing. Holding Co, the Shareholders and
12
Public Company agree that all rights to indemnification, including provisions
relating to advances of expenses incurred in defense of any action or suit,
existing in favor of the Holding Co Indemnified Parties with respect to matters
occurring through the Closing, shall survive the Exchange and shall continue in
full force and effect for a period of not less than two years from the Closing;
provided, however, that all rights to indemnification in respect of any Holding
Co Indemnified Liabilities asserted or made within such period shall continue
until the disposition of such Holding Co Indemnified Liabilities.
(c) The provisions of this Section 6.1 are intended to be for the
benefit of, and shall be enforceable by, each Holding Co Indemnified Party, his
or her heirs and his or her personal representatives and shall be binding upon
all successors and assigns of Public Company and Holding Co.
6.2 Indemnification of Public Company.
(a) Holding Co shall, from and after the Closing, indemnify, defend and
hold harmless Public Company and Public Company's officers, directors,
Affiliates or agents, and any other Person acting on its behalf (the "Public
Company Indemnified Parties") against all losses, claims, damages, costs,
expenses (including reasonable attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (the "Public Company Indemnified Liabilities") based on, or
arising out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case, to the fullest extent permitted under the laws of the
State of Nevada and Hong Kong.
(b) The Public Company Indemnified Parties shall have the right to
conduct the defense of any action giving rise to a claim for indemnity under
this Agreement with counsel of their own choosing. Holding Co, the Shareholders
and Public Company agree that all rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any action or
suit, existing in favor of the Public Company Indemnified Parties with respect
to matters occurring through the Closing, shall survive the Exchange and shall
continue in full force and effect for a period of not less than two years from
the Closing; provided, however, that all rights to indemnification in respect of
any Public Company Indemnified Liabilities asserted or made within such period
shall continue until the disposition of such Public Company Indemnified
Liabilities.
(c) The provisions of this Section 6.2 are intended to be for the
benefit of, and shall be enforceable by, each Public Company Indemnified Party,
his or her heirs and his or her personal representatives and shall be binding
upon all successors and assigns of Public Company and Holding Co.
ARTICLE VII.
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation to Effect the Exchange.
The respective obligation of each party to effect the Exchange is
subject to the satisfaction or written waiver of the following conditions:
(a) No Injunctions or Restraints. No statute, rule, regulation,
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Exchange shall be in effect;
provided, however, that the party invoking this condition shall use its best
efforts to have any such temporary restraining order, injunction, order,
restraint or prohibition vacated.
(b) Governmental and Regulatory Consents. All material filings required
to be made prior to the Closing with, and all material consents, approvals,
permits and authorizations required to be obtained prior to the Closing from,
13
Governmental Entities, in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by
Holding Co and Public Company will have been made or obtained (as the case may
be).
7.2 Conditions to Obligations of Holding Co and the Shareholders.
The obligations of Holding Co and the Shareholders to effect the
Exchange are further subject to the satisfaction or written waiver on or prior
to the Closing of the following conditions:
(a) Representations and Warranties. The representations and warranties
of Public Company set forth in Article V that are qualified as to materiality or
Material Adverse Effect shall be true and correct and the representations and
warranties of Public Company set forth in Article V that are not so qualified
shall be true and correct in all material respects, in each case as of the
Closing, except to the extent such representations and warranties speak as of an
earlier date. In addition, all such representations and warranties shall be true
and correct as of the Closing, except to the extent such representation or
warranty speaks of an earlier date (without regard to any qualifications for
materiality or Material Adverse Effect) except to the extent that any such
failure to be true and correct (other than any such failure the effect of which
is immaterial) individually and in the aggregate with all such other failures
would not have a Material Adverse Effect, and Holding Co and the Shareholders
shall have received a certificate signed on behalf of Public Company by the
chief executive officer of Public Company to the effect set forth in this
paragraph.
(b) Performance of Obligations of Public Company. Public Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing.
(c) Board Representation. At the Closing and pursuant to a written
consent to action of the Board of Directors of Public Company, the Board of
Directors (a) shall appoint Xiangqian Li as a member of the Board of Directors,
and (b) all existing officers shall resign as officers of Public Company.
(d) Current Report and Registration Statement. Simultaneously with the
Closing, Public Company shall file with the Securities and Exchange Commission
(i) a Current Report on Form 8-K to report the transaction contemplated
hereunder and (ii) a registration statement to register those shares issued to
those stockholders of Holding Co who participated in Holding Co's private
offering of securities deemed consummated on the Effective Date.
7.3 Conditions to Obligations of Public Company.
The obligation of Public Company to effect the Exchange is further
subject to the satisfaction or written waiver on or prior to Closing of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of Holding Co set forth in Article IV and the Shareholders set forth in Article
III that are qualified as to materiality or Material Adverse Effect shall be
true and correct and the representations and warranties of Holding Co set forth
in Article IV and the Shareholders set forth in Article III that are not so
qualified shall be true and correct in all material respects, in each case as of
the Closing. In addition, all such representations and warranties shall be true
and correct as of the Closing, except to the extent such representation or
warranty speaks of an earlier date (without regard to any qualifications for
materiality or Material Adverse Effect) except to the extent that any such
failure to be true and correct (other than any such failure the effect of which
is immaterial) individually and in the aggregate with all such other failures
would not have a Material Adverse Effect, and Public Company shall have received
a certificate signed on behalf of Holding Co by the president of Holding Co to
the effect set forth in this paragraph.
14
(b) Performance of Obligations of Holding Co and the Shareholders.
Holding Co and the Shareholders shall have performed in all material respects
all obligations required to be performed by them under this Agreement at or
prior to the Closing.
7.4 Frustration of Closing Conditions.
None of Public Company, the Shareholders or Holding Co may rely on the
failure of any condition set forth in Sections 7.1, 7.2 or 7.3, as the case may
be, to be satisfied if such failure was caused by such party's failure to use
reasonable efforts to commence or complete the Exchange and the other
transactions contemplated by this Agreement.
ARTICLE VIII.
GENERAL PROVISIONS
8.1 Survival of Representations and Warranties.
Except as otherwise contemplated herein, the representations and
warranties in this Agreement and in any instrument delivered pursuant to this
Agreement shall survive the Closing for a period of two years.
8.2 Fees and Expenses.
Each party hereto shall pay its own expenses incident to preparing for,
entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
8.3 Definitions.
For purposes of this Agreement, and except as otherwise defined in this
Agreement:
(a) "Affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person;
(b) "Governmental Entity" means any domestic or foreign governmental
agency or regulatory authority;
(c) "Knowledge" means actual knowledge. In order for an individual to
have Knowledge of a fact or matter, the individual must be actually aware of
that fact or matter. A Person (other than an individual) will be deemed to have
Knowledge of a particular fact or matter if any individual who is serving, or
who has at any time served, as a director, officer, partner, executor or trustee
of that Person (or in any similar capacity) has, or at any time had, Knowledge
of that fact or matter.
(d) "Liens" means, collectively, all material pledges, claims, liens,
charges, mortgages, conditional sale or title retention agreements,
hypothecations, collateral assignments, security interests, easements and other
encumbrances of any kind or nature whatsoever;
(e) "Material Adverse Effect" with respect to any Person means an event
that has had or would reasonably be expected to have a material adverse effect
on the business, financial condition or results of operations of such Person and
its subsidiaries taken as a whole;
(f) "Permits" means federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises, licenses, notices,
permits an rights; and
(g) "Person" means an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity.
15
(h) "Record" means information that is inscribed on a tangible medium
or that is stored in an electronic or other medium and is retrievable in
perceivable form.
(i) "Securities Act" means the Securities Act of 1933, as amended.
(j) "Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
8.4 Usage.
In this Agreement, unless a clear contrary intention appears:
(a) the singular number includes the plural number and vice versa;
(b) 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;
(c) reference to any gender includes each other gender or, in the case
of an entity, the neuter;
(d) 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, and shall be deemed to refer as
well to all addenda, exhibits and schedules;
(e) reference to a Section or Schedule, such reference shall be to a
Section of, or a Schedule to, this Agreement unless otherwise indicated
(f) reference to any law means such law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time,
including rules and regulations promulgated thereunder and reference to any
section or other provision of any law means that provision of such law from time
to time in effect and constituting the substantive amendment, modification,
codification, replacement or reenactment of such section or other provision;
(g) the table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) "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 thereof;
(i) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(j) "or" is used in the inclusive sense of "and/or;" and
(k) with respect to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding."
8.5 Notices.
All notices, requests, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
16
(a) if to Public Company prior to the Closing to:
Timothy P. Halter
12890 Hilltop Road
Argyle, Texas 76226
Telephone: (972) 233-0300
(b) if to Holding Co and to Public Company after the Closing to
BAK Industrial Park
No. 1 BAK Street, Kuichang Town
Longgang District, Shenzhen, China
Telephone:
8.6 Counterparts.
This Agreement may be executed in two or more counterparts.
8.7 Entire Agreement; Third-Party Beneficiaries.
This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Agreement. This Agreement is not
intended to confer upon any Person other than the parties hereto and the third
party beneficiaries referred to in the following sentence, any rights or
remedies. The parties hereto expressly intend the provisions of Sections 6.1 and
6.2 to confer a benefit upon and be enforceable by, as third party beneficiaries
of this Agreement, the third Persons referred to in, or intended to be benefited
by, such provisions.
8.8 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEVADA REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE
GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
8.9 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by operation of law
or otherwise by any of the parties without the prior written consent of the
other parties, and any such assignment that is not consented to shall be null
and void. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
8.10 Enforcement.
The parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States located in the State of
Nevada, this being in addition to any other remedy to which they are entitled at
law or in equity.
17
8.11 Severability.
Whenever possible, each provision or portion of any provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party, such invalidity, illegality or unenforceability
will not affect any other provision or portion of any provision in such
jurisdiction, and this Agreement will be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision or
portion of any provision had never been contained herein.
IN WITNESS WHEREOF, Public Company, Holding Co and the Shareholders
have executed this Agreement to be effective as of the Effective Date.
MEDINA COFFEE, INC.
By: /s/ Timothy P. Halter
------------------------------------------
Timothy P. Halter, Chief Executive Officer
BAK INTERNATIONAL, LTD.
By: /s/ Xiangqian Li
------------------------------------------
Xiangqian Li, President
18
SKY TARGET INTERNATIONAL, LIMITED
By: /s/
-----------------------------
Its:
----------------------------
KENWELL INTERNATIONAL LIMITED
By: /s/
-----------------------------
Its:
----------------------------
19
SHAREHOLDERS
By: /s/
---------------------------
20