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Execution Copy
AGREEMENT AND
PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER
(this "Agreement") has been made as of
October 1, 2007, by and among Vella Productions, Inc., a Nevada corporation
("VLLA"), VLLA Merger Sub, Inc., a Nevada corporation and a
wholly-owned
Subsidiary of VLLA ("Sub"), Guoxi Holding Limited, a British Virgin
Islands
corporation ("GHL"), and the shareholders of GHL, each of whom is identified
on
Schedule A to this Agreement (the "GHL Shareholders").
Whereas, the respective Boards of
Directors of VLLA, Sub and GHL have
approved the merger, pursuant and subject to the terms and conditions of this
Agreement, of Sub with and into GHL (the "Merger"), whereby all of
the issued
and outstanding shares of the Common Stock of GHL (the "GHL Common
Stock") will
be converted into the right to receive a specified number of shares of the
Common Stock of VLLA (the "VLLA Common Stock"); and the parties each
desire to
make certain representations, warranties and agreements in connection with the
Merger and also to prescribe various conditions to the Merger;
Now, Therefore, in consideration of
the premises and the representations,
warranties and covenants herein contained, the parties agree to effect the
Merger on the terms and conditions herein provided and further agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions.
In addition to the other definitions
contained in this Agreement, the
following terms will, when used in this Agreement, have the following
respective
meanings:
"Affiliate" means a
Person that, directly or indirectly, controls, is
controlled by, or is under common control with, the referenced party.
"BVI" British Virgin
Islands.
"Claim" means any
contest, claim, demand, assessment, action, suit, cause
of action, complaint, litigation, proceeding, hearing, arbitration,
investigation or notice of any of the foregoing involving any Person.
"Closing" means the
consummation of the Merger.
"Code" means the Internal
Revenue Code of 1986, as amended, together with
all rules and regulations promulgated thereunder.
"Constituent
Corporations" means GHL and Sub, as the constituent
corporations of the Merger.
"GAAP" means United
States generally accepted accounting practices.
"GCL" means the Nevada
General Corporation Law.
"Person" means and
includes any individual, partnership, corporation,
trust, company, unincorporated organization, joint venture or other entity, and
any Governmental Entity.
<PAGE>
"Record Holder" means a
holder of record of GHL Common Stock as shown on
the regularly maintained stock transfer records of GHL.
"Subsidiary" means, with
respect to any Person, any corporation,
partnership, joint venture, trust or other entity of which such Person,
directly
or indirectly through an Affiliate, owns an amount of voting securities, or
possesses other ownership interests, having the power, direct or indirect, to
elect a majority of the Board of Directors or other governing body thereof.
"Surviving Corporation"
means GHL, as the surviving corporation of the
Merger.
"U.S." means the United
States of America.
1.2 Interpretation.
In this Agreement, unless the
express context otherwise requires:
(a) the words
"herein," "hereof" and "hereunder and words of similar
import refer to this Agreement as a
whole and not to any particular
provision of this Agreement;
(b) references to
"Article" or "Section" are to the respective
Articles and Sections of this
Agreement, and references to "Exhibit" or
"Schedule" are to the
respective Exhibits and Schedules annexed hereto;
(c) references to a
"party" means a party to this Agreement and
include references to such party's
successors and permitted assigns;
(d) references to a
"third party" means a Person that is neither a
Party to this Agreement nor an
Affiliate thereof;
(e) the terms
"dollars" and "$" means U.S. dollars;
(f) terms defined in the
singular have a comparable meaning when
used in the plural, and vice versa;
(g) the masculine pronoun
includes the feminine and the neuter, and
vice versa, as appropriate in the
context; and
(h) wherever the word
"include," "includes" or "including is used in
this Agreement, it will be deemed
to be followed by the words "without
limitation."
ARTICLE 2.
THE MERGER
2.1 Effective Time of the Merger.
Subject to the provisions of this
Agreement, the Merger will be
consummated by the filing with the Secretary of State of the State of Nevada of
articles of merger, in such form as required by, and signed and attested in
accordance with, the relevant provisions of the GCL and by the filing with the
of the BVI of articles of merger, in such form as required by, and signed and
attested in accordance with, the relevant provisions of the (the time of the
filing of such instruments as occurs second or such later time and date as is
specified in such filings being the "Effective Time"). It is the
intent of the
parties to cause such filings to be made no later than the Closing Date.
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<PAGE>
2.2 Closing.
The Closing will take place at
10:00 a.m., local time, on the earliest
date practicable after all of the conditions set forth in Articles 7 and 8 are
satisfied or waived by the appropriate party, but in no event later than the
applicable date referred to in Section 10.1(d) (the "Closing Date"),
unless
another time, date or place is agreed to in writing by the parties.
2.3 Effects of the Merger.
By virtue of the Merger and without
the necessity of any action by or on
behalf of the Constituent Corporations, or either of them:
(a) at the Effective Time,
(i) the separate existence of Sub will
cease, and Sub will be merged with
and into GHL, and (ii) the certificate
of incorporation and bylaws of GHL
as in effect immediately prior to the
Effective Time will be the
certificate of incorporation and bylaws of the
Surviving Corporation until thereafter
amended; and
(b) at and after the
Effective Time, the Surviving Corporation will
possess all the rights, privileges,
powers and franchises of a public as
well as of a private nature, and be
subject to all the restrictions,
disabilities and duties, of each of
the Constituent Corporations; and all
property, real, personal and mixed,
and all debts due to either of the
Constituent Corporations on
whatever account, as well for stock
subscriptions as all other things
in action or belonging to each of the
Constituent Corporations will be
vested in the Surviving Corporation; and
all property, rights, privileges,
powers and franchises, and all and every
other interest of each of the
Constituent Corporations will be thereafter
as effectually be the property of
the Surviving Corporation as they were
of the respective Constituent
Corporations, and the title to any real
estate vested by deed or otherwise,
in either of the Constituent
Corporations, will not revert or be
in any way impaired; but all rights of
creditors and all liens upon any
property of either of the Constituent
Corporations will be preserved
unimpaired, and all debts, liabilities and
duties of the respective
Constituent Corporations will thereafter attach
to the Surviving Corporation, and
may be enforced against it to the same
extent as if such debts and
liabilities had been incurred or contracted by
it.
ARTICLE 3. EFFECT OF
MERGER ON CAPITAL STOCK
3.1 Effect on Capital Stock.
As of the Effective Time, by virtue
of the Merger and without any action
on the part of any holder of shares of GHL Common Stock or of shares of the
capital stock of Sub:
(a) Capital Stock of Sub.
Each issued and outstanding share of the
capital stock of Sub will be
converted into the right to receive one fully
paid and non-assessable share of
the capital stock of the Surviving
Corporation.
(b) Cancellation of Treasury
Stock. Shares of common stock of GHL
("Common Stock"), if any,
that are held by GHL as treasury stock will be
cancelled and retired and will
cease to exist, and no Merger Consideration
will be delivered in exchange
therefor. Any shares of common stock of VLLA
("VLLA Common Stock"), if
any, owned by GHL or the GHL Shareholders as of
the Effective Time will remain
unaffected by the Merger.
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<PAGE>
(c) Exchanged Shares; Merger
Consideration.
(i) "Exchanged
Shares" means all shares of GHL Common Stock
issued and outstanding
immediately prior to the Effective Time other
than shares of GHL Common
Stock, if any, held by GHL as treasury
stock
(ii) The consideration
payable to the GHL Shareholders in the
Merger will consist of an
aggregate of 68,900,000 shares of VLLA
Common Stock (the "Stock
Merger Consideration") and $14,334,500 to
be paid no later than the
first anniversary of the Closing Date in
accordance with non-interest
bearing notes of VLLA in the form
annexed hereto (the
"Cash Merger Consideration," collectively with
the Stock Merger
Consideration, the "Merger Considertion"), which
shall be distributed among
the GHL Shareholders proportionately in
accordance with their
shareholdings as set forth on Schedule A
hereto.
(d) Exchange of Exchanged
Shares for Merger Consideration. As of the
Effective Time, by virtue of the
Merger, each issued and outstanding
Exchanged Share will be converted
into the right to receive the Merger
Consideration due in respect
thereof, payable, to the Record Holders of
Exchanged Shares at the Effective
Time. As of the Effective Time, all
shares of GHL Common Stock will no
longer be outstanding and will
automatically be cancelled and retired
and will cease to exist, and each
holder of a certificate
representing any such shares will cease to have
any rights with respect thereto,
except the right to receive the Merger
Consideration therefor, without
interest, upon the surrender of such
certificate in accordance with
Section 3.2.
3.2 Exchange of Merger
Consideration for Exchanged Shares.
(a) Exchange. On the Closing
Date, the holders of all of the GHL
Common Stock shall deliver to VLLA
certificates or other documents
evidencing all of the issued and
outstanding GHL Common Stock, duly
endorsed in blank or with executed
power attached thereto in transferable
form. In exchange for all of the
GHL Common Stock tendered pursuant
hereto, VLLA shall issue to GHL Shareholders
the Merger Consideration.
(b) No Further Ownership
Rights in GHL Common Stock. All shares of
VLLA Common Stock issued upon the
surrender for exchange of shares of GHL
Common Stock in accordance with the
terms hereof will be deemed to have
been issued in full satisfaction of
all rights pertaining to such shares
of GHL Common Stock, and there will
be no further registration of
transfers of the shares of GHL
Common Stock (other than shares held
directly or indirectly by VLLA)
after the Effective Time. If, after the
Effective Time, certificates
representing GHL Common Stock are presented
to the Surviving Corporation or its
transfer agent for any reason, such
certificates will be cancelled and
exchanged as provided by this Article
3.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF GHL
GHL and each of the GHL
Shareholders jointly and severally represents and
warrants to VLLA and to Sub as follows, as of the date hereof and as of the
Closing Date:
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<PAGE>
4.1 Organization.
GHL is a corporation duly
organized, validly existing and in good standing
under the laws of British Virgin Island and has the corporate power and is duly
authorized, qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
entity in the country or states in which the character and location of the
assets owned by it or the nature of the business transacted by it requires
qualification. Included in the attached Schedules (as hereinafter defined) are
complete and correct copies of the articles of incorporation, bylaws and
amendments thereto as in effect on the date hereof. The execution and delivery
of this Agreement does not and the consummation of the transactions
contemplated
by this Agreement in accordance with the terms hereof will not, violate any
provision of GHL's certificate of incorporation or bylaws. GHL has full power,
authority and legal right and has taken all action required by law, its
articles
of incorporation, bylaws or otherwise to authorize the execution and delivery
of
this Agreement.
4.2 Capitalization.
The authorized capitalization of
GHL consists of 50,000 shares of common
stock, no par value and no preferred shares. As of the date hereof, there are
50,000 shares of common stock issued and outstanding. All issued and
outstanding
common shares have been legally issued, fully paid, are nonassessable and not
issued in violation of the preemptive rights of any other person. GHL has no
other securities, warrants or options authorized or issued.
4.3 Subsidiaries.
GHL owns 100% of Jiangxi Xi Cheong
Lacquer, Inc., a China corporation
(herein, "JXC").
4.4 Tax Matters; Books & Records
(a) The books and records,
financial and others, of GHL and JXC are
in all material respects complete
and correct and have been maintained in
accordance with good business
accounting practices; and
(b) Neither GHL nor JXC has
any liabilities with respect to the
payment of any country, federal,
state, county, local or other taxes
(including any deficiencies,
interest or penalties).
(c) Each of GHL and JXC shall
remain responsible for all debts
incurred by it prior to the
closing.
4.5 Information.
The information concerning GHL and
JXC as set forth in this Agreement and
in the attached Schedules is complete and accurate in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
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<PAGE>
4.6 Title and Related Matters.
Each of GHL and JXC has good and
marketable title to and is the sole and
exclusive owner of all of its properties, inventory, interests in properties
and
assets, real and personal (collectively, the "Assets") free and clear
of all
liens, pledges, charges or encumbrances. Except as set forth in the Schedules
attached hereto, each of GHL and JXC owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or limitations of any
nature whatsoever, any and all procedures, techniques, marketing plans,
business
plans, methods of management or other information utilized in connection with
its business. Except as set forth in the attached Schedules, no third party has
any right to, and neither GHL nor JXC has received any notice of infringement
of
or conflict with asserted rights of others with respect to any product,
technology, data, trade secrets, know-how, proprietary techniques, trademarks,
service marks, trade names or copyrights which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a
materially adverse affect on the business, operations, financial conditions or
income of GHL or JXC or any material portion of their properties, assets or
rights.
4.7 Litigation and Proceedings
There are no actions, suits or
proceedings pending or threatened by or
against or affecting GHL or JXC, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign or before any
arbitrator of any kind that would have a material adverse effect on the
business, operations, financial condition, income or business prospects of GHL
or JXC. Neither GHL nor JXC has any knowledge of any default on its part with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental agency or instrumentality.
4.8 Contracts.
On the Closing Date:
(a) Except as set forth on
Schedule, there are no material
contracts, agreements, franchises,
license agreements, or other
commitments to which GHL or JXC is
a party or by which it or any of its
properties are bound;
(b) Neither GHL nor JXC is
party to any contract, agreement,
commitment or instrument or subject
to any charter or other corporate
restriction or any judgment, order,
writ, injunction, decree or award
which materially and adversely
affects, or in the future may (as far as
GHL or JXC can now foresee)
materially and adversely affect, the business,
operations, properties, assets or
conditions of GHL or JXC; and
(c) Neither GHL nor JXC is
party to any material oral or written:
(i) contract for the employment of
any officer or employee; (ii) profit
sharing, bonus, deferred
compensation, stock option, severance pay,
pension, benefit or retirement
plan, agreement or arrangement covered by
Title IV of the Employee Retirement
Income Security Act, as amended; (iii)
agreement, contract or indenture
relating to the borrowing of money; (iv)
guaranty of any obligation for the
borrowing of money or otherwise,
excluding endorsements made for
collection and other guaranties of
obligations, which, in the
aggregate exceeds $1,000; (v) consulting or
other contract with an unexpired
term of more than one year or providing
for payments in excess of $10,000
in the aggregate; (vi) collective
bargaining agreement; or (vii)
contract, agreement, or other commitment
involving payments by it for more
than $10,000 in the aggregate.
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<PAGE>
4.9 No Conflict With Other
Instruments.
The execution of this Agreement and
the consummation of the transactions
contemplated by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any material indenture,
mortgage, deed of trust or other material contract, agreement or instrument to
which GHL or JXC is party or to which any of its properties or operations are
subject.
4.10 Material Contract Defaults.
To the best knowledge and belief of
GHL and JXC, neither GHL nor JXC is in
default in any material respect under the terms of any outstanding contract,
agreement, lease or other commitment which is material to the business,
operations, properties, assets or condition of GHL or JXC, and there is no
event
of default in any material respect under any such contract, agreement, lease or
other commitment in respect of which GHL or JXC has not taken adequate steps to
prevent such a default from occurring.
4.11 Governmental Authorizations.
To the best knowledge of GHL and
JXC, each of GHL and JXC has all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable it to conduct its business operations in all
material
respects as conducted on the date hereof. Except for compliance with federal
and
state securities or corporation laws, no authorization, approval, consent or
order of, or registration, declaration or filing with, any court or other
governmental body is required in connection with the execution and delivery by
GHL and the GHL Sharerholders of the transactions contemplated hereby.
4.12 Compliance With Laws and
Regulations.
To the best knowledge and belief of
CGD and JXC, GHL and JXC has complied
with all applicable statutes and regulations of any federal, state or other
governmental entity or agency thereof, except to the extent that noncompliance
would not materially and adversely affect the business, operations, properties,
assets or condition of GHL or JXC or would not result in GHL's or JXC's
incurring any material liability.
4.13 Insurance.
All of the insurable properties of
GHL and JXC are insured for GHL's
benefit under valid and enforceable policy or policies containing substantially
equivalent coverage and will be outstanding and in full force at the Closing
Date.
4.14 Approval of Agreement.
The directors of GHL have
authorized the execution and delivery of the
Agreement and have approved the transactions contemplated hereby.
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<PAGE>
4.15 Material Transactions or
Affiliations.
As of the Closing Date, there will
exist no material contract, agreement
or arrangement between GHL or JXC and any person who was at the time of such
contract, agreement or arrangement an officer, director or person owning of
record, or known by GHL or JXC to own beneficially, ten percent (10%) or more
of
the issued and outstanding Common Shares of GHL and which is to be performed in
whole or in part after the date hereof. Neither GHL nor JXC has any commitment,
whether written or oral, to lend any funds to, borrow any money from or enter
into any other material transactions with, any such affiliated person.
ARTICLE 5. REPRESENTATIONS
AND WARRANTIES OF VLLA
VLLA represents and warrants to
GHL, as of the date hereof and as of the
Closing Date, as follows:
5.1 Organization.
VLLA is a corporation duly
organized, validly existing, and in good
standing under the laws of Nevada and has the corporate power and is duly
authorized, qualified, franchised and licensed under all applicable laws,
regulations, ordinances and orders of public authorities to own all of its
properties and assets and to carry on its business in all material respects as
it is now being conducted, including qualification to do business as a foreign
corporation in the jurisdiction in which the character and location of the
assets owned by it or the nature of the business transacted by it requires
qualification. The execution and delivery of this Agreement does not and the
consummation of the transactions contemplated by this Agreement in accordance
with the terms hereof will not violate any provision of VLLA's articles of
incorporation or bylaws. VLLA has full power, authority and legal right and has
taken all action required by law, its articles of incorporation, its bylaws or
otherwise to authorize the execution and delivery of this Agreement.
5.2 Capitalization.
The authorized capitalization of
VLLA consists of 75,000,000 shares of
common stock, $0.001 par value per share. As of the date hereof, VLLA has
approximately 6,080,000 shares of common stock issued and outstanding. All
issued and outstanding shares are legally issued, fully paid and nonassessable
and are not issued in violation of the preemptive or other rights of any
person.
5.3 Subsidiaries.
VLLA has no subsidiaries other than
Sub.
5.4 Tax Matters: Books and Records.
(a) The books and records,
financial and others, of VLLA are in all
material respects complete and
correct and have been maintained in
accordance with good business
accounting practices; and
(b) VLLA has no liabilities
with respect to the payment of any
country, federal, state, county, or
local taxes (including any
deficiencies, interest or
penalties).
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<PAGE>
(c) VLLA shall remain
responsible for all debts incurred by VLLA
prior to the date of closing.
5.5 Litigation and Proceedings.
There are no actions, suits,
proceedings or investigations pending or
threatened by or against or affecting VLLA or its properties, at law or in
equity, before any court or other governmental agency or instrumentality,
domestic or foreign or before any arbitrator of any kind that would have a
material adverse affect on the business, operations, financial condition or
income of VLLA. VLLA is not in default with respect to any judgment, order,
writ, injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality or of any circumstances which, after
reasonable investigation, would result in the discovery of such a default.
5.6 Material Contract Defaults.
VLLA is not in default in any
material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of VLLA, and there is
no event of default in any material respect under any such contract, agreement,
lease or other commitment in respect of which VLLA has not taken adequate steps
to prevent such a default from occurring.
5.7 Information.
The information concerning VLLA as
set forth in this Agreement and in the
attached Schedules is complete and accurate in all material respects and does
not contain any untrue statement of a material fact or omit to state a material
fact required to make the statements made in light of the circumstances under
which they were made, not misleading.
5.8 Title and Related Matters.
VLLA has good and marketable title
to and is the sole and exclusive owner
of all of its properties, inventory, interest in properties and assets, real
and
personal (collectively, the "Assets") free and clear of all liens,
pledges,
charges or encumbrances. VLLA owns free and clear of any liens, claims,
encumbrances, royalty interests or other restrictions or limitations of any
nature whatsoever and all procedures, techniques, marketing plans, business
plans, methods of management or other information utilized in connection with
VLLA's business. No third party has any right to, and VLLA has not received any
notice of infringement of or conflict with asserted rights of other with
respect
to any product, technology, data, trade secrets, know-how, proprietary
techniques, trademarks, service marks, trade names or copyrights which, singly
on in the aggregate, if the subject of an unfavorable decision ruling or
finding, would have a materially adverse affect on the business, operations,
financial conditions or income of VLLA or any material portion of its
properties, assets or rights.
5.9 Contracts.
On the Closing Date:
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<PAGE>
(a) There are no material
contracts, agreements franchises, license
agreements, or other commitments to
which VLLA is a party or by which it
or any of its properties are bound;
(b) VLLA is not a party to
any contract, agreement, commitment or
instrument or subject to any
charter or other corporate restriction or any
judgment, order, writ, injunction,
decree or award materially and
adversely affects, or in the future
may (as far as VLLA can now foresee)
materially and adversely affect,
the business, operations, properties,
assets or conditions of VLLA; and
(c) VLLA is not a party to
any material oral or written: (i)
contract for the employment of any
officer or employee; (ii) profit
sharing, bonus, deferred
compensation, stock option, severance pay,
pension benefit or retirement plan,
agreement or arrangement covered by
Title IV of the Employee Retirement
Income Security Act, as amended; (iii)
agreement, contract or indenture
relating to the borrowing of mone






