SECURITIES
PURCHASE AGREEMENT
This
SECURITIES PURCHASE AGREEMENT (“Agreement”), dated as of June 30, 2008, is by
and among Peng Zhou, an individual (“Seller”),
Sino
Clean Energy Inc., a Nevada corporation (“Sino
Clean”),
Hangson Limited, a British Virgin Islands company and wholly owned subsidiary
of
Sino Clean (“Hangson”
and
together with Hangson, collectively referred to as “Buyer”),
and
Shaanxi Suo’ang New Energy Enterprise Company Limited, a People’s Republic of
China (“PRC”)
limited liability company (“Suo’ang
New Energy”).
Hereinafter, Seller and Buyer may each be referred to individually as a
“Party”
and
collectively as the "Parties."
Suo’ang New Energy is made a party to this Agreement for the sole purpose of
acknowledging the Agreement.
RECITALS
A. Seller
is
a member of the board of directors of Sino Clean and the registered owner
of
twenty percent (20%) of the issued and outstanding equity interests of Suo’ang
New Energy (the “Registered
Capital”,
and
this term's meaning shall include any and all forms of ownership interests,
regardless of whether such interests are stock, member interests, partnership
interests, or any other form of equity).
B. The
remaining eighty percent (80%) of the issued and outstanding equity interests
of
Suo’ang New Energy is owned by and registered to Shaanxi Suoang Biological
Science & Technology Co., Ltd., a PRC limited liability company controlled
and a variable interest entity of Hangson pursuant to certain contractual
arrangements.
C. This
Agreement contemplates a transaction in which Buyer will purchase from Seller,
and Seller will sell to Buyer, the Registered Capital in exchange for Sino
Clean’s issuance of shares of its restricted common stock in accordance with the
terms of this Agreement.
NOW
THEREFORE, in consideration of the mutual covenants, representations, warranties
and agreements contained herein, and for other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Parties,
intending to be legally bound, agree as follows:
Article
1
Definitions
1.1.
Defined
Terms. As
used herein, the terms below shall have the following meanings:
"Books
and Records" shall
mean all records pertaining to the assets, properties, business, operations,
accounts, financial condition, customers or suppliers of Suo’ang New
Energy.
“Business”
shall
mean, collectively, the business and operations of the Suo’ang New
Energy.
"Closing"
has the
meaning ascribed in Section
2.2
hereof.
"Closing
Date" shall
mean the date of the Closing, as defined in Section
3.2
hereof.
"Contract"
shall
mean any of the agreements, contracts, instruments or commitments to which
Suo’ang New Energy is a party, all as identified or listed on Schedule
1.1(a).
"Encumbrance"
shall
mean any lien, pledge, option, adverse claim, charge, easement, security
interest, right-of-way or encumbrance.
"Exchange
Act" shall
mean the Securities Exchange Act of 1934, as amended.
"Governmental
Entity" shall
mean any governmental entity, department, commission, board, agency or
instrumentality, whether national, federal, provincial, state or local, and
whether domestic or foreign.
“Indemnified
Liabilities”
has the
meaning ascribed in Section
8.3
hereof.
"Leases"
shall
mean all of the leases to which Suo’ang New Energy is a party, which are listed
on Schedule
1.1(b)
attached
hereto, which schedule indicates with respect to each Lease listed thereon
the
term, annual rent, renewal options and, if applicable, the number of square
feet
leased.
"Licenses"
shall
mean all governmental or regulatory licenses or permits required to conduct
the
Business as presently conducted, which are identified or listed on Schedule
1.1(c)
attached
hereto.
"Material
Adverse Effect" shall
mean a material adverse effect upon the business, operations, properties,
assets
or condition (financial and otherwise) or projected cash flows of Suo’ang New
Energy.
"Registered
Capital" has
the
meaning ascribed in Recital A hereof.
"Representative"
shall
mean any officer, director, principal, attorney, agent, employee or other
representative.
"SEC"
shall
mean the U.S. Securities and Exchange Commission.
"Securities
Act" shall
mean the Securities Act of 1933, as amended.
“Shares”
shall
mean the 7,500,000 fully paid and non-assessable restricted shares of Sino
Clean’s common stock, $0.001 par value, comprising the Stock
Consideration.
"Sino
Clean’s Common Stock" shall
mean the common stock, par value $0.001 per share, of Sino Clean.
“Stock
Consideration”
shall
mean the Shares, provided,
however,
that if
Sino Clean shall at any time prior to the Closing Date (i) subdivide Sino
Clean’s Common Stock, by split up or otherwise, or combine Sino Clean’s Common
Stock, by reverse stock split or otherwise, or (ii) issue additional shares
of
Sino Clean’s Common Stock as a dividend with respect to any shares of Sino
Clean’s Common Stock, the number of Shares issuable at Closing to Seller as
Stock Consideration shall forthwith be proportionately increased in the case
of
a subdivision of stock or issuance of additional shares, or proportionately
decreased in the case of a combination.
"Taxes"
shall
mean all taxes, charges, levies or other assessments, including, without
limitation, income, gross receipts, excise, real and personal property, sales,
use, transfer, capital gains, transfer gains, license, payroll, privilege,
and
franchise taxes, imposed by any Governmental Entity, and shall include any
interest, penalties or additions to taxes attributable to any of the
foregoing.
Article
2
Purchase
and Sale of Stock
2.1. Sale
of the Registered Capital. Subject
to the terms of this Agreement, Seller hereby agrees to sell, transfer, assign,
convey and deliver to Buyer, and Buyer hereby agrees to purchase and acquire
from Seller, on the Closing Date, all right, title and interest of Seller,
legal
and/or equitable, in and to the Registered Capital.
2.2.
Purchase
Price. The
aggregate consideration (the “Purchase
Price”)
for
the Registered Capital shall be the Stock Consideration.
2.3
Documentary
Stamp Taxes. Buyer
shall be responsible for any documentary stamp taxes, if any, on any other
transfer, sales or other taxes imposed by reason of the transfer of the
Registered Capital.
Article
3
Pre-Closing,
Closing and Post Closing
3.1 Pre
Closing. During
the period between the date of the Agreement and the Closing, Suo’ang New Energy
will refrain from making any distributions or payments to Seller without
the
Buyer’s consent.
3.2.
Closing.
The
closing of the transactions contemplated herein (the "Closing")
shall
occur as
soon
as practicable after the fulfillment or waiver of all conditions to closing
herein,
unless
the Parties otherwise agree in writing. The Closing shall
be
held at 10:00 a.m. local time on the Closing Date at the law offices of
Richardson & Patel LLP, 10900 Wilshire Boulevard, Suite 500, Los Angeles,
California, 90024, U.S.A., unless the parties hereto otherwise mutually agree
in
writing to the contrary.
3.3.
Deliveries
at Closing. At
Closing, Seller and Buyer shall conclude all matters and make all deliveries
set
forth in Article
7
hereof,
unless the parties hereto otherwise mutually agree in writing to the
contrary.
3.4.
Post
Closing.
From and
after the Closing, each Party will provide the other Party with reasonable
cooperation in connection with any and all matters that arise in connection
with
the Business of Suo’ang New Energy, including, without limitation, any
litigation, tax matter, or governmental investigation.
Article
4
Representations
and Warranties of Seller
Except
as
set forth on the Schedules to this Agreement, Seller hereby represents and
warrants to Buyer that as of Closing:
4.1.
Execution.
Seller
has the capacity to enter into this Agreement, and this Agreement has been
executed and delivered by Seller and is a legal, valid and binding obligation
of
Seller enforceable against Seller in accordance with its terms (except as
may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally, and, subject to the qualification
that the availability of equitable remedies, is subject to the discretion
of the
court before which any proceeding therefor may be brought).
4.2.
The
Registered Capital. The
Registered Capital is owned of record and beneficially by Seller, duly
authorized and validly issued, fully paid and nonassessable, and free and
clear
of all Encumbrances. There are no outstanding subscriptions, options, puts,
calls, agreements, understandings, claims, or other commitments or rights
of any
type relating to the issuance, sale or transfer by Seller of any equity or
other
ownership interests of Seller; and Seller has no obligation of any kind to
sell
or pay for any additional equity or other ownership interests. The
sale and transfer of the Registered Capital by Seller has been made in full
compliance with all applicable national and provincial laws.
4.3.
No
Conflict or Violation. Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) result in a violation of, or a
conflict with, any provision of the organizational documents of Suo’ang New
Energy, (b) constitute a material violation by Seller of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or
award
applicable to the Business or Seller, or (c) create an imposition of any
encumbrance, restriction or charge on the Business, Suo’ang New Energy, or on
any of its assets.
4.4.
Consents
and Approvals.
Except
as set forth herein and on Schedule
4.4,
no
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Entity, or any other person or entity, is required
to be
made or obtained by Suo’ang New Energy or Seller in connection with the
execution, delivery and performance of this Agreement and the consummation
of
the transactions contemplated hereby.
4.5.
No
Pending or Threatened Actions.
Except
as set forth on Schedule
4.5,
there
is no action, suit, investigation, or other proceeding, or governmental
investigation, audit, or inquiry, pending, or to Seller’s knowledge, threatened,
whether formal or informal, civil, criminal, administrative, or investigative,
and whether at law, in equity, or before any governmental agency, to include,
without limitation, any bankruptcy proceeding or creditor’s reorganization or
similar proceeding, pending, or to Seller’s knowledge, threatened, against
Seller, or any of the property of Seller, including the Registered
Capital.
4.6.
No
Other Agreements to Sell the Registered Capital. Except
as
disclosed in Schedule
4.6,
Seller
has no legal obligation, absolute or contingent, to any person or entity,
other
than to Buyer, to sell the Registered Capital, or to enter into any agreement
with respect thereto.
4.7.
Material
Misstatements or Omissions.
No
representations or warranties by Seller in this Agreement nor any document,
exhibit, certificate or schedule furnished to Buyer in connection herewith
or
pursuant hereto, contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary to make
the
statements or facts contained therein not misleading. Copies of all
documents furnished to Buyer hereunder are true and complete copies of the
originals thereof in all material respects.
4.8
Officers,
Directors and Employees and Post Closing Arrangements. Except
as set forth in Schedule
4.8,
Seller
has no agreement or understanding with any equity owner, employee or
Representative of Suo’ang New Energy which would influence any such person not
to become associated with Buyer from and after the Closing, or from serving
Suo’ang New Energy after the Closing in a capacity similar to the capacity
presently held. Seller knows of no employee or Representative of Suo’ang New
Energy who intends to terminate his or her employment with Suo’ang New Energy
prior to or following the Closing.
4.9 Client
and Vendor Relationships. Seller
shall use its best efforts to maintain the goodwill and reputation associated
with Suo’ang New Energy, and to keep Suo’ang New Energy’s personnel, suppliers,
vendors, Representatives and client relationships intact.
4.10
Status
of Seller.
Seller
hereby represents and warrants as follows:
(a) Non-U.S.
Person Under Regulation S.
Seller:
(i) is
not a
“U.S. person” as defined by Rule 902 of Regulation S promulgated under the
Securities Act (the definition of which includes, but is not limited to,
an
individual resident in the U.S. and an estate or trust of which any executor
or
administrator or trust, respectively is a U.S. Person), was not organized
under
the laws of any U.S. jurisdiction, and was not formed for the purpose of
investing in securities not registered under the Securities Act;
(ii) at
the
time of Closing, Seller was located outside the United States;
(iii) no
offer
of the Shares was made to Seller within the United States;
(iv) Seller
is
either (a) acquiring the Shares for his own account for investment purposes
and
not with a view towards distribution, or (b) acting as agent for a principal
that has signed this Agreement or has delivered representations and warranties
substantially similar to this Section 4.10(a);
(v) understands
that none of the Shares have been or will be registered under the Securities
Act, or under any state securities or “blue sky” laws of any state of the United
States, and all subsequent offers and sales of the Shares by Seller will
be made
outside the United States in compliance with Rule 903 of Rule 904 of Regulation
S, pursuant to registration of the Shares under the Securities Act, or pursuant
to an exemption from such registration
(vi)
Seller
will not resell the Shares to U.S. Persons or within the United States until
after the end of the six-month period commencing on the date of Closing (the
“Restricted
Period”);
(vii) Seller
shall not and hereby agrees not to enter into any short sales with respect
to
the common stock of Sino Clean at any time after the execution of this Agreement
by Seller and prior to the expiration of the Restricted Period;
(viii)
Seller
understands that the Shares are being offered and sold to it in reliance
on
specific provisions of federal and state securities laws and that the Parties
are relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understanding of Seller set forth herein
in
order to determine the applicability of such provisions. Accordingly, Seller
agrees to notify Sino Clean of any events which would cause the representations
and warranties of Seller to be untrue or breached at any time after the
execution of this Agreement by Seller and prior to the expiration of the
Restricted Period;
(ix) in
the
event of resale of the Shares to non-U.S. Persons outside of the U.S. during
the
Restricted Period, Seller shall provide a written confirmation or other written
notice to any distributor, dealer, or person receiving a selling concession,
fee, or other remuneration in respect of the Shares stating that such purchaser
is subject to the same restrictions on offers and sales that apply to the
undersigned, and shall require that any such purchase shall provide such
written
confirmation or other notice upon resale during the Restricted Period;
(x)
Seller
has not engaged, nor is it aware that any party has engaged, and it will
not
engage or cause any third party to engage in any “directed selling” efforts (as
such term is defined in Regulation S) in the United States with respect to
the
Shares;
(xi)
Seller
is
not a “distributor” as such term is defined in Regulation S, and it is not a
“dealer” as such term is defined in the Securities Act;
(xii) Seller
has not taken any action that would cause any of the parties to this Agreement
to be subject to any claim for commission or other forms of remuneration
by any
broker, finder, or other person; and
(xiii)
Seller
hereby represents that it has observed and fully satisfied the laws of the
jurisdiction in which it is located or domiciled, in connection with the
acquisition of the Shares or this Agreement, including (i) the legal
requirements of Seller’s jurisdiction for the acquisition of the Shares, (ii)
any foreign exchange restrictions applicable to such acquisition, (iii) any
governmental or other consents that may need to be obtained, and (iv) the
income
tax and other tax consequences, if any, which may be relevant to the
acquisition, holding, redemption, sale, or transfer of the Shares; and further,
Seller agrees to continue to comply with such laws as long as it shall hold
the
Shares.
(b) Access
to Books, Records and Other Buyer Information.
Buyer’s
books and records were available to Seller upon reasonable notice for
inspection, subject to certain confidentiality restrictions, during reasonable
business hours at Buyer’s principal place of business and that all documents,
records and books in connection with the acquisition of the Shares under
the
Agreement have been made available for inspection by Buyer, and Seller and/or
Seller’s Representatives have had a reasonable opportunity to ask questions of
and receive answers from Buyer in connection with the acquisition of the
Shares
under the Agreement, and to obtain additional information, to the extent
possessed or obtainable by Buyer without unreasonable effort or
expense.
(c) Consultations.
Seller has been advised to consult its own legal, tax and other advisors
with
respect to the merits and risks of an investment in the Shares and, with
respect
to applicable resale restrictions, is solely responsible (and Buyer is not
in
any way responsible) for compliance with applicable resale
restrictions.
(d) Investment
Risk.
Seller
is able to fend for itself in connection with the acquisition of the Shares,
has
such knowledge and experience in business matters as to be capable of evaluating
the merits and risks of its prospective investment in the Shares, and is
able to
bear the economic risk of acquiring the Shares pursuant to the terms of this
Agreement, including a complete loss of Seller’s investment in the Shares.
(e) Transfer
restrictions. Seller acknowledges and agrees that Buyer shall refuse to register
any transfer of Shares not made in accordance with the provisions of Regulation
S, pursuant to registration under the Securities Act, or pursuant to an
available exemption from registration under the Securities Act.
(f) Restrictive
Legends.
Seller
acknowledges that the certificate(s) representing the Shares shall each
conspicuously set forth on the face or back thereof a legend in substantially
the following form:
REGULATION
S LEGEND:
“THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (“SECURITIES ACT”), AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH
THE
PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT
TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH CASE ONLY IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING
TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY MAY NOT BE CONDUCTED
UNLESS
IN COMPLIANCE WITH THE SECURITIES ACT.”
Article
5
Representations
and Warranties of Buyer
Buyer
hereby represents and warrants to Seller that as of Closing:
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5.1.
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Organization
of Buyer.
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(a) Sino
Clean is duly organized validly existing and in good standing under the laws
of
the State of Nevada, has full corporate power and authority to conduct its
business as it is presently being conducted and to own, lease and operate
its
properties and assets.
(b) Hangson
is duly organized validly existing and in good standing under the laws of
the
British Virgin Islands, has full corporate power and authority to conduct
its
business as it is presently being conducted and to own, lease and operate
its
properties and assets.
5.2.
Authorization.
(a) Sino
Clean has all necessary corporate power and authority and has taken all
corporate action necessary to enter into this Agreement and to consummate
the
transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by
Sino Clean and is a legal, valid and binding obligation of Sino Clean
enforceable against Sino Clean in accordance with its terms (except as may
be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditors' rights generally).
(b) Hangson
has all necessary corporate power and authority and has taken all corporate
action necessary to enter into this Agreement and to consummate the transactions
contemplated hereby and to perform its obligations hereunder. This
Agreement has been duly executed and delivered by Hangson and is a legal,
valid
and binding obligation of Hangson enforceable against Hangson in accordance
with
its terms (except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditors' rights
generally).
5.3.
No
Conflict or Violation.
(a) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in (i) a violation of or a conflict
with any provision of the Articles of Incorporation or Bylaws of Sino Clean,
(ii) a breach of, or a default under, any term or provision of any contract,
agreement, indebtedness, Lease, Encumbrance, commitment, license, franchise
permit, authorization or concession to which Sino Clean is a party or by
which
Sino Clean or any of its assets are bound, (iii) a violation by Sino Clean
of
any statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award applicable to Sino Clean including, but not limited
to the Securities Act, or (iv)
an
imposition of any Encumbrance, restriction or charge on the business of Sino
Clean or on any of its assets.
(b) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in (i) a violation of or a conflict
with any provision of the Memorandum or Articles of Association of Hangson,
(ii)
a breach of, or a default under, any term or provision of any contract,
agreement, indebtedness, Lease, Encumbrance, commitment, license, franchise
permit, authorization or concession to which Hangson is a party or by which
Hangson or any of its assets are bound, (iii) a violation by Hangson of any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award applicable to Hangson, or (iv) an imposition of any Encumbrance,
restriction or charge on the business of Hangson or on any of its
assets.
5.4.
Consents
and Approvals.
(a) Except
as
set forth herein and in Schedule
5.4
attached
hereto, no consent, approval or authorization of, or declaration, filing
or
registration with, any Governmental Entity, or any other person is required
to be made or obtained by Sino Clean in connection with the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby.
(b) Except
as
set forth herein and in Schedule
5.4
attached
hereto, no consent, approval or authorization of, or declaration, filing
or
registration with, any Governmental Entity, or any other person is required
to be made or obtained by Hangson in connection with the execution, delivery
and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
5.5.
Compliance
with Law. To
Buyer's knowledge, Buyer and the conduct of its business are in material
compliance with all applicable material laws, statutes, ordinances and
regulations, whether federal, national, state, provincial or local and whether
foreign or domestic, except where the failure to comply would not have a
material adverse effect on the business or financial condition of Buyer and
its
subsidiaries, taken as a whole. Buyer has not received any written notice
to the
effect that, or otherwise been advised that, it is not in compliance with
any of
such statutes, regulations, orders, ordinances or other laws where the failure
to comply would have a material adverse effect an the business or financial
condition of Buyer and its subsidiaries, taken as a whole.
5.6.
Compliance
with Reporting. As
of the
Closing Date, Sino Clean shall be current in, and in compliance with all
requirements of, all filings required to be tendered to the SEC pursuant
to the
Securities Act and the Exchange Act. Said filings shall contain all
of the information required pursuant to the Exchange Act and, to the best
knowledge of Buyer, will not fail to state any material facts which were
required to be so stated. Buyer shall be responsible for all Securities
Act and Exchange Act filings, together with the costs associated therewith,
as a
consequence of this transaction.
5.7.
Buyer
Acknowledgments.
Buyer,
acting through its own management personnel, counsel, and accountants has
been
given the opportunity to inspect and examine the books, documents, records,
Contracts, Leases, Licenses, permits, purchase agreements and other agreements,
business arrangements and commitments including but not limited to those
described in the Schedules and Exhibits attached hereto (collectively the
“Records”)
of
Seller for purpose of determining the acceptability to Buyer of Seller's
titles
to the Registered Capital.
5.8.
Material
Misstatements or Omissions. No
representations or warranties by Buyer in this Agreement nor any document,
exhibit, certificate or schedule furnished to Seller pursuant hereto, contains
or will contain any untrue statement of a material fact, or omits or will
omit
to state any material fact necessary to make the statements or facts contained
therein not misleading. Copies of all documents furnished to Seller
hereunder are true and complete copies of the originals thereof in all material
respects.
Article
6
Additional
Covenants of Seller and Buyer
Seller,
on the one hand, and Buyer, on the other hand, covenant with each other as
follows:
6.1.
Consents
and Best Efforts. Within
five (5) business days after the execution of this Agreement, Seller and
Buyer
will commence all commercially reasonable action required hereunder, and
Seller
will cooperate with Buyer as is necessary, to obtain all applicable consents,
approvals and agreements of, and to give all notices and make all filings
with,
any third parties as may be necessary to authorize, approve or permit the
full
and complete sale, conveyance, assignment or transfer of the Registered Capital
and the Stock Consideration. In addition, subject to the terms and
conditions herein provided, each of the parties hereto covenants and agrees
to
use its best efforts to take or cause to be taken all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby.
6.2.
Notification
of Certain Matters.
Seller
shall give prompt notice to Buyer, and Buyer shall give prompt notice to
Seller,
of (i) the occurrence, or failure to occur, of any event which occurrence
or
failure that would be likely to cause any of its representations or warranties
made in, or pursuant to, this Agreement to be untrue or inaccurate in any
material respect, and (ii) any material failure of Seller or Buyer, as the
case
may be, to comply with or satisfy any covenant, condition or agreement to
be
complied with or satisfied by it hereunder. Each party shall use all reasonable
commercial efforts to remedy any material failure on its part to comply with
or
be satisfied by it hereunder.
6.3
Brokers.
Buyer
and
Seller have had no dealings with any broker or finder in connection with
this
Agreement or the transactions contemplated hereby and no broker, finder or
other
person is entitled to receive any broker's commission or finder's fee or
similar
compensation in connection with any such transaction. Each of the
Parties agrees to defend, indemnify and hold harmless, in the manner herein
provided, the other from, against, for and in respect of any and all claims,
suits, expenses, attorneys fees, costs or other losses sustained by the other
as
a result of any liability or obligation to any broker or finder on the basis
of
any arrangement, agreement or acts made by or on behalf of such other Party
with
any person or persons whatsoever.
6.4.
Payments.
Neither
party hereto has, directly or indirectly knowingly paid or delivered any
fee,
commission or other sum of money or item or property, however characterized,
to
any finder, agent, government official or other party, in the United States
or
any other country, which is in any manner related to the business or operations
of either party’s business, and which such party knows or has reason to believe
to have been illegal under any federal, national, state, provincial or local
laws of the United States or any other country having jurisdiction.
6.5.
Notices
of Certain Events. Prior
to the Closing, Seller shall promptly notify Buyer of:
(a) Any
notice or other communication from any person or entity alleging that the
consent of such person or entity is or may be required in connection with
the
transactions contemplated by this Agreement;
(b) Any
notice or other communication from any Governmental Entity in connection
with
the transactions contemplated by this Agreement; and
(c) Any
actions commenced, or to the knowledge of Seller threatened against, relating
to, involving, or otherwise affecting Seller or any of their property, or
any
disputes, conflicts or circumstances providing the basis for any dispute
or
conflict, which, if in existence on the date of this Agreement would have
been
required to have been disclosed by Seller to Buyer pursuant this Agreement
or
which relate directly or indirectly to the consummation of the transactions
contemplated by this Agreement.
6.6. Exclusivity. Unless
and until this Agreement has been terminated in accordance with Section
10
below,
neither Seller nor its respective Representatives, agents or employees, will
solicit or accept offers from, provide information or assistance to, or
negotiate or enter into any agreement or understanding (written or oral)
with,
any other person or entity regarding (i) the sale or other disposition of,
or
the granting of any security interest, lien or encumbrance on, any of the
Registered Capital; or (ii) any other transaction, except as otherwise provided
hereunder, which would cause or result in any change, other than of an
immaterial nature, in or adversely affect the Businesses of Suo’ang New Energy
or otherwise interfere with the consummation of the transactions contemplated
herein.
Article
7
Closing
Documents
7.1.
Buyer’s
Deliveries. On
or
prior to the Closing Date, Buyer shall deliver the following to
Seller:
(a) Certificate(s)
representing the Shares registered in the name of Seller;
(b) A
duly
executed copy of resolutions unanimously adopted by the board of directors
of
Sino Clean and of Hangson approving the execution and delivery of this Agreement
to Seller and the consummation of the transactions contemplated hereby, in
such
form as may be reasonably acceptable to Seller's counsel;
(c) An
opinion of counsel to Buyer, addressed to Seller as to the corporate
organization and good standing of Buyer, non-contravention, the due
authorization of the transactions contemplated hereby and the enforceability
of
this Agreement; and
(d) Such
other documents that Seller may reasonably deem necessary or appropriate
in
order to consummate the transaction contemplated herein.
7.2.
Seller’s
Deliveries. On
or
prior to the Closing Date, Seller shall deliver the following documents to
Buyer:
(a) All
documents, including but not limited to all written People’s Republic of China
(“PRC”) government approval documents required for transfers of registered
capital in the PRC, that evidence Seller’s full, complete and valid transfer of
the Registered Capital to Hangson;
(b) An
opinion of counsel to the Seller, addressed to Buyer, reasonably acceptable
to
Buyer, as to the due authorization of the transactions contemplated hereby,
non-contravention, the legality of the transactions contemplated hereby under
the laws of the PRC and the enforceability of this Agreement; and
(c) Such
other documents that Buyer may reasonably deem necessary or appropriate in
order
to consummate the transaction contemplated herein.
Article
8
Actions
by Seller and Buyer After Closing
8.1.
Books
and Records. Each
Party agrees that it will cooperate with, and make available to, the other
party, upon reasonable written notice of inspection and during normal hours,
all
books and records, and information retained and remaining in existence after
the
Closing Date which are necessary or useful in connection with any Tax inquiry,
audit, investigation or dispute, any litigation or investigation or any other
matter requiring any such books and records, information or employees’ access
for any reasonable business purpose. The Party requesting any such
books and records or information shall bear all of the out-of-pocket costs
and
expenses (including, without limitation, attorneys' fees, but excluding
reimbursement for salaries and employee benefits) reasonably
incurred in connection with providing access to such books and records or
information. Buyer may require certain financial information relating
to Seller for periods after the Closing Date for the purpose of filing national,
provincial, local and foreign Tax Returns and other governmental reports,
and
Seller agrees to furnish such information to Buyer at Buyer's reasonable
request.
8.2.
Survival
of Representations, and Warranties. All
representations and warranties contained herein or in any certification or
instrument delivered pursuant to this Agreement or the transactions contemplated
hereby shall survive for a period of two (2) year from the execution and
delivery hereof and the consummation of the transactions contemplated
hereby.
8.3.
Indemnification.
Buyer
and
Seller each agree to indemnify and hold the other harmless from and against
all
claims, damage, losses, liabilities, costs and expenses, including, without
limitation, settlement costs and any legal, accounting or other expenses
for
investigating or defending any actions or threatened actions (the “Indemnified
Liabilities”)
incurred by the other in connection with:
(a) Any
material breach of any representation or warranty made in this Agreement
by the
Party against whom indemnification is sought; or
(b) Any
material misrepresentation contained in any statement, certificate, exhibit
or
schedule to this Agreement furnished by the Party against whom indemnification
is sought; or
(c) Any
material breach of or failure to perform any covenant, agreement or obligation
contained in this Agreement or in any related documents or other certification
or instrument contemplated hereby.
8.3.1
Claims
for Indemnification.
Whenever
any claim shall arise for indemnification hereunder (a “Claim”),
the
Party seeking indemnification (the "Indemnified
Party")
shall
promptly notify each Party from whom indemnification is sought (the
"Indemnifying
Party")
of the
Claim and, when known, the facts constituting the basis for the
Claim. In the event of any such claim for indemnification results
from or is in connection with any Claim or legal proceedings by a third party,
the notice to the Indemnifying Party shall specify, if known, the amount
or an
estimate of the amount, of the liability arising therefrom. The
Indemnified Party shall not settle or compromise any Claim by a third party
for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld
or
delayed, unless suit shall have been instituted against the Indemnified Party
and the Indemnifying Party shall not have taken control of such suit after
notification thereof, as provided in Section
8.3.2
of this
Agreement.
8.3.2
Defense
of Claims.
If a
Claim results from, or arises out of, any claim or legal proceeding by a
person
who is not a party to this Agreement, the Indemnifying Party, at its sole
cost
and expense, may, upon written notice to the Indemnified Party, assume the
defense of any such Claim or legal proceeding, with counsel reasonably
satisfactory to the Indemnified Party. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any such action,
with its counsel and at its own expense. If the Indemnifying Party
does not assume the defense of any such Claim or litigation resulting therefrom
within ten calendar (10) days after notice of such Claim is given to the
Indemnified Party, then, (i) the Indemnified Party may defend against such
Claim
or litigation in such manner as it may deem appropriate, including, but not
limited to, settling such claim or litigation, after giving notice of the
same
to the Indemnifying Party, on such terms as the Indemnified Party may deem
appropriate, and (ii) the Indemnifying Party shall be entitled to participate
in
(but not control) the defense of such action, with its counsel and at its
own
expense. If the Indemnifying Party thereafter seeks to question,
defend against or limit liability as a result of the manner in which the
Indemnified Party defended such third party Claim or litigation, or the amount
or nature of any such settlement, the Indemnifying Party shall have the burden
to prove by a preponderance of the evidence that the Indemnified Party did
not
defend or settle such third party Claim or litigation, in a reasonably prudent
manner.
8.3.3 Payment.
Upon
judgment, determination, settlement or compromise of any third party Claim
(a
“Determination”)
in a
manner provided for by Section 8.3.2, the Indemnifying Party shall promptly
pay
on behalf of the Indemnified Party or to the Indemnified Party in reimbursement
of any amount theretofore required to be paid by it, the amount so determined
by
such Determination with respect thereto, unless in the case of a judgment
an
appeal is made from the judgment. If the Indemnifying party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post
and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such
amounts, the Indemnifying Party shall succeed to the rights of such Indemnified
Party, to the extent not waived in settlement, against the third party who
made
such third party Claim.
8.4.
Further
Assurances. Both
at
and after Closing, each Party shall prepare, execute and deliver, at the
other's
direction and expense, such further instruments of conveyance, sale, assignment
or transfer and such other documents, and shall take or cause to be taken
such
other or further action, as the Party shall reasonably request at any time
or
from time to time in order to perfect, confirm and evidence Hangson’s title to
all or any part of the Registered Capital and/or to perfect Seller's right
to,
and receipt of, the Shares, or to consummate, in any other manner the terms
and
provisions of this Agreement.
8.5.
No
Prohibited Assignment: Best Efforts. This
Agreement shall not constitute an agreement to assign any claim, contract,
license, lease, commitment, sales order or purchase order if any attempted
assignment of the same without the consent of the other Parties thereto would
constitute a breach thereof or in any way affect the rights of the Parties
thereunder and such consent has not been obtained. If such consent is
not obtained or if any attempted assignment would be ineffective or would
affect
a Party rights thereunder so that such Party would not in fact receive all
such
rights, then, the other Party shall use its best efforts to cause the affected
Party to be placed in the same economic position as if such consent or
assignment had been effected. In doing so, the other Party shall
thereafter not be in breach of its related representations and warranties
under
this Agreement.
Article
9
Other
Conditions to Obligations of Buyer and Seller
9.1.
Conditions
to Obligations of Buyer. The
obligation of Buyer to consummate the acquisition and the other transactions
contemplated by this Agreement shall be subject to the fulfillment of all
of the
following conditions, unless waived by Buyer in writing or through closing
this
transaction:
(a) The
representations and warranties of Seller set forth in this Agreement and
not
qualified as to materiality shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing as though made at
and as
of the Closing. The representations and warranties of Seller set forth in
this
Agreement and qualified as to materiality shall be true and correct as of
the
date of this Agreement and as of the Closing as though made at and as of
the
Closing.
(b) Seller
shall have performed and observed in all material respects all obligations
and
conditions to be performed or observed by Seller under this
Agreement.
(c) Seller
shall have received such third party consents and approvals required because
of
this Agreement or the transactions contemplated by this Agreement as defined
by
Section
4.4
and
Schedule
4.4.
(d) No
action, suit or proceeding shall be pending or threatened before any court,
arbitrator or other body or administrative agency of any national, provincial,
local or foreign jurisdiction wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would prevent consummation of any of the
transactions contemplated by this Agreement (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect).
(e) All
proceedings taken or required to be taken by Seller in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing
and all documents incident thereto shall be satisfactory in form and substance
to Buyer and its counsel.
(f) Seller
shall have delivered to Buyer all of the documents and other things set forth
in
Section
7.2
hereof.
(g) Seller
hereby agrees and acknowledges that upon Closing, Seller’s execution of this
Agreement shall be deemed Seller’s waiver of any and all rights under the
Registered Capital to any distributions and/or payments from Suo’ang New Energy
beginning January 1, 2008.
9.2.
Conditions
to Obligations of Seller.
The
obligation of Seller to consummate the acquisition and the other transactions
contemplated by this Agreement shall be subject to the fulfillment of all
of the
following conditions unless waived by Seller in writing or through closing
this
transaction:
(a) The
representations and warranties of Buyer set forth in this Agreement and not
qualified as to materiality shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing as though made at
and as
of the Closing. The representations and warranties of Buyer set forth in
this
Agreement and qualified as to materiality shall be true and correct as of
the
date of this Agreement and as of the Closing as though made at and as of
the
Closing.
(b) Buyer
shall have performed and observed in all material respects all obligations
and
conditions to be performed or observed by Buyer under this
Agreement.
(c) Buyer
shall have received such third-party consents and approvals, including but
not
limited to all PRC government approvals, that are required because of this
Agreement or the transactions contemplated by this Agreement as defined by
Section
5.4,
Schedule
5.4(a)
and
Schedule
5.4(b).
(d) No
action, suit or proceeding shall be pending or threatened before any court,
arbitrator or other body or administrative agency of any national, provincial,
local or foreign jurisdiction wherein an unfavorable injunction, judgment,
order, decree, ruling or charge would prevent consummation of any of the
transactions contemplated by this Agreement (and no such injunction, judgment,
order, decree, ruling or charge shall be in effect).
(e) All
corporate and other proceedings taken or required to be taken by Buyer in
connection with the transactions contemplated hereby to be consummated at
or
prior to the Closing and all documents incident thereto shall be satisfactory
in
form and substance to Seller and its counsel.
(g) Buyer
shall have delivered to Seller all of the documents and other things set
forth
in Section
7.1
hereof.
Article
10
Termination
10.1.
This
Agreement may be terminated as provided below:
(a) Buyer
and
Seller may terminate this Agreement by mutual written consent at any time
prior
to the Closing;
(b) Buyer
may
terminate this Agreement by giving written notice to Seller at any time prior
to
the Closing: (i) by reason of the failure of the fulfillment of any condition
under Section
9.1
by
Seller, or (ii) if the Closing shall not have occurred on or before July
15,
2008; and
(c) Seller
may terminate this Agreement by giving written notice to Buyer at any time
prior
to the Closing: (i)
by
reason of the failure of fulfillment of any condition under Section
9.2
by
Buyer, or
(ii)
if the
Closing shall not have occurred on or before July 15, 2008.
10.2.
Notwithstanding
anything in this Section
10
to the
contrary, no Party may terminate this Agreement if the circumstances giving
rise
to such Party’s right to terminate results primarily from such Party itself
breaching any representation, warranty, or covenant contained in this
Agreement. In addition, each Party acknowledges that a failure by a
Party to complete the transaction contemplated by this Agreement will cause
irreparable and continuing damage to the other Party, and that actual damages
for any such failure are not ascertainable and would otherwise be inadequate
and
that the other Party will therefore have no adequate remedy at
law. Consequently, each Party agrees that the
other
Party, its affiliates, successors and assigns, shall be entitled to specific
performance of any of the provisions of this Agreement.
Article
11
Miscellaneous
11.1.
Notices.
All
notices and other communications required or permitted under this Agreement
shall be deemed to have been duly given if made in writing and if served
either
by personal delivery to the party for whom intended or by being deposited,
delivery charges prepaid, with a reputable international courier service
bearing
the address shown in this Agreement for, or such other address as may be
designated in writing hereafter by, such Party.
| |
If
to Buyer:
|
| |
|
| |
Sino
Clean Energy Inc.
|
| |
Room
2205, Suite A, Zhengxin Building
|
| |
No.
5, Gaoxin 1st Road
|
| |
Gao
Xin District, Xi’an
|
| |
Shaanxi
Province, PRC
|
| |
Attn:
Mr. Baowen Ren
|
| |
Tel:
(029) 8406 7376
|
| |
Fax:
(029) 8406 7375
|
| |
|
| |
Hangson
Limited
|
| |
Room
2205, Suite A, Zhengxin Building
|
| |
No.
5, Gaoxin 1st Road
|
| |
Gao
Xin District, Xi’an
|
| |
Shaanxi
Province, PRC
|
| |
Attn:
Mr. Baowen Ren
|
| |
Tel:
(029) 8406 7376
|
| |
Fax:
(029) 8406 7375
|
| |
|
| |
|
| |
If
to Seller:
|
| |
|
| |
Peng
Zhou
|
| |
Room
2205, Suite A, Zhengxin Building
|
| |
No.
5, Gaoxin 1st Road
|
| |
Gao
Xin District, Xi’an
|
| |
Shaanxi
Province, PRC
|
| |
Tel:
(029) 8406 7376
|
| |
Fax:
(029) 8406 7375
|
11.2.
Entire
Agreement.
This
Agreement, together with the schedules, exhibits and certificates annexed
hereto, merges and supersedes all prior and contemporaneous understandings,
oral
or written, of the Parties hereto and sets forth the entire understanding
of the
Parties with respect to the subject matter hereof. Unless expressly
provided for to the contrary under this Agreement, no term or condition of
this
Agreement may be waived or modified, in whole or in part, except by a writing
signed by each of the Parties hereto. No waiver of any provision of
this Agreement in any instance shall be deemed to be a waiver of the same or any
other provision in any other instance.
11.3.
Binding
Effect and Assignments.
This
Agreement shall be binding upon, enforceable against and inure to the benefit
of, the Parties hereto and their respective heirs, administrators, executors,
personal representatives, successors and assigns, and nothing herein is intended
to confer any right, remedy or benefit upon any other person. This
Agreement may not be assigned by either Party except with the prior written
consent of the other Party.
11.4.
Captions. The
article and section headings of this Agreement are inserted for convenience
only
and shall not constitute a part of this Agreement in construing or interpreting
any provision thereof.
11.5.
Expenses
of Transaction. Except
as otherwise stated herein, each of the Parties hereto shall bear and pay,
without any right of reimbursement from any other Party, all costs, expenses
and
fees incurred by it on its behalf incident to this transaction and the
performance of such Party's obligations hereunder, whether or not the
transactions contemplated by this Agreement are consummated, including, without
limitation, any broker's or finder's fees, costs incident to the transfer
of any
securities and the fees and disbursements of counsel, accountants and
consultants (including investment banking firms/advisors) employed by such
Party.
11.6.
Counterparts.
This
Agreement may be executed simultaneously in multiple counterparts, each of
which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument.
11.7.
Severability.
If any
provision of this Agreement is held to be invalid or unenforceable by a court
of
competent jurisdiction, Seller and Buyer hereby agree that such court shall
have
jurisdiction to reform such provision so that it is enforceable to the maximum
extent permitted by law, and the parties agree to abide by such court's
determination. In the event that any provision of this Agreement
cannot be reformed, such provision shall be deemed to be severed or limited,
but
only to the extent necessary to render such provision and this Agreement
enforceable, and every other provision of this Agreement shall remain in
full
force and effect.
11.8.
Governing
Law.
The
interpretation and construction of this Agreement, and all matters relating
hereto, shall be governed by and enforced in accordance with the internal
laws,
and not the law of conflicts, of the state of Nevada applicable to all
agreements made and to be performed in such state. The parties hereto agree
that
all actions and proceedings relating directly or indirectly hereto shall
be
litigated in any state court or federal court of competent jurisdiction located
in Clark County, Nevada and the parties hereto expressly consent to the
jurisdiction of any such courts and to venue therein. In the event of
any litigation arising out of a breach of this Agreement, the prevailing
party
shall be entitled to reasonable attorneys fees and court costs at the trial
and
appellate levels.
11.9.
Remedies.
The
remedies hereunder shall be cumulative and not alternatives; the election
of one
remedy for a breach shall not preclude pursuit of other remedies.
[Signature
Page Follows]
IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement
as
of the date first written above.
SELLER:
|
PENG
ZHOU
|
| |
|
|
/s/
Peng Zhou
|
|
|
Peng
Zhou
|
BUYER:
SINO
CLEAN ENERGY INC.
|
By:
|
/s/
Baowen Ren
|
|
|
|
Baowen
Ren
|
|
|
Chief
Executive Officer, President
|
HANGSON
LIMITED
|
By:
|
/s/
Baowen Ren
|
|
|
|
Baowen
Ren
|
|
|
Sole
Director
|
ACKNOWLEDGED:
SHAANXI
SUO’ANG NEW ENERGY ENTERPRISE
COMPANY LIMITED
|
By:
|
/s/
Baowen Ren
|
|
| |
Baowen
Ren
|
| |
Chairman
|
SCHEDULE
1.1(a)
Contracts
SCHEDULE
1.1(b)
Leases
SCHEDULE
1.1(c)
Licenses
SCHEDULE
4.4
Consents
and Approvals for Seller
SCHEDULE
4.5
Pending
or Threatened Actions
SCHEDULE
4.6
Other
Agreements to Sell the Registered Capital
SCHEDULE
4.8
Officers,
Directors and Employees and Post Closing Arrangements
SCHEDULE
5.4(a)
Consents
and Approvals for Sino Clean
SCHEDULE
5.4(b)
Consents
and Approvals for Hangson