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.
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"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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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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(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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(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 inc
