Exhibit 10.1

 

 

PURCHASE AGREEMENT

This PURCHASE AGREEMENT (the “Agreement”), dated as of August 6, 2020, by and
among iFresh Inc. (the “Purchaser”), Fei Zhang, holder of PRC identification
card no. 510283198104152817, a PRC citizen with his residence address at no.
136-30, Yue Jin Village, Da Du Kou District, Chong Qing City, China (“Mr. Fei
Zhang”), and Liu Meng, holder of PRC identification card no. 110102197209070444,
a PRC citizen with her residence address at no. 1402, Building 4, San Yuan Li
Bei Xiao Jie, Chaoyang District, Beijing, China (“Ms. Liu”, together with Mr.
Zhang, the “Sellers”, and each individually a “Seller”) and Jiuxiang Blue Sky
Technology (Beijing) Co. Ltd., a PRC company (the “Company”).

For good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties accordingly agree as follows:

ARTICLE I
DEFINITIONS

The following terms, as used herein, have the following meanings:

1.1                “Affiliate” means, with respect to any Person, any other
Person directly or indirectly Controlling, Controlled by, or under common
Control with such Person.

1.2                “Authority” means any governmental, regulatory or
administrative body, agency or authority, any court or judicial authority, any
arbitrator, or any public, private or industry regulatory authority, whether
international, national, Federal, state, or local.

1.3                “Books and Records” means all books and records, ledgers,
employee records, customer lists, files, correspondence, and other records of
every kind (whether written, electronic, or otherwise embodied) owned or used by
a Person or in which a Person’s assets, the business or its transactions are
otherwise reflected, other than stock books and minute books.

1.4                “Business” means the business as set forth in the business
license of the Company as of the date hereof.

1.5                “Business Day” means any day other than a Saturday, Sunday or
a legal holiday on which commercial banking institutions in New York, U.S.A. are
authorized to close for business.

1.6                “Contracts” means the Leases and all contracts, agreements,
leases (including equipment leases, car leases and capital leases), licenses,
commitments, client contracts, statements of work (SOWs), sales and purchase
orders and similar instruments, oral or written, to which the Company is a party
or by which any of its respective assets are bound, and all rights and benefits
thereunder, including all rights and benefits thereunder with respect to all
cash and other property of third parties under the Company’s dominion or
control.

1.7                “Control” of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract, or otherwise. “Controlled”, “Controlling” and “under common Control
with” have correlative meanings. Without limiting the foregoing, a Person (the
“Controlled Person”) shall be deemed Controlled by (a) any other Person (the
“10% Owner”) (i) owning beneficially, as meant in Rule 13d-3 under the Exchange
Act, securities entitling such Person to cast 10% or more of the votes for
election of directors or equivalent governing authority of the Controlled Person
or (ii) entitled to be allocated or receive 10% or more of the profits, losses,
or distributions of the Controlled Person; (b) an officer, director, general
partner, partner (other than a limited partner), manager, or member (other than
a member having no management authority that is not a 10% Owner) of the
Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt,
uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or
brother-in-law of an Affiliate of the Controlled Person or a trust for the
benefit of an Affiliate of the Controlled Person or of which an Affiliate of the
Controlled Person is a trustee. 

 

1.8                “Environmental Laws” shall mean all Laws that prohibit,
regulate or control any Hazardous Material or any Hazardous Material Activity.

1.9                “Equity Interests” means 100% of the outstanding equity
interests in the Company.

1.10             “Hazardous Material” shall mean any material, emission,
chemical, substance or waste that has been designated by any Governmental
Authority to be radioactive, toxic, hazardous, a pollutant or a contaminant.

1.11             “Hazardous Materials Activity” shall mean the transportation,
transfer, recycling, storage, use, treatment, manufacture, removal, remediation,
release, exposure of others to, sale, labeling, or distribution of any Hazardous
Material or any product or waste containing a Hazardous Material, or product
manufactured with ozone depleting substances, including, without limitation, any
required labeling, payment of waste fees or charges (including so-called e-waste
fees) and compliance with any recycling, product take-back or product content
requirements.

1.12             “Indebtedness” means with respect to any Person, (a) all
obligations of such Person for borrowed money, or with respect to deposits or
advances of any kind (including amounts by reason of overdrafts and amounts owed
by reason of letter of credit reimbursement agreements) including with respect
thereto, all interests, fees and costs, (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (d) all obligations of
such Person issued or assumed as the deferred purchase price of property or
services (other than accounts payable to creditors for goods and services
incurred in the ordinary course of business), (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien or security interest on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (f) all obligations of such Person under
leases required to be accounted for as capital leases, (g) all guarantees by
such Person and (h) any agreement to incur any of the same.

1.13             “Intellectual Property Right” means any trademark, service
mark, registration thereof or application for registration therefor, trade name,
license, invention, patent, patent application, trade secret, trade dress,
know-how, copyright, copyrightable materials, copyright registration,
application for copyright registration, software programs, data bases, u.r.l.s.,
and any other type of proprietary intellectual property right, and all
embodiments and fixations thereof and related documentation, registrations and
franchises and all additions, improvements and accessions thereto, and with
respect to each of the forgoing items in this definition, which is owned or
licensed or filed by the Company, or used or held for use in the Business,
whether registered or unregistered or domestic or foreign.

1.14             “Law” means any domestic or foreign, federal, state,
municipality or local law, statute, ordinance, code, rule, or regulation.

1.15             “Leases” means the leases with respect to the factories, office
buildings, stores, warehouses and parking lots leased by the Company at its
location, together with all fixtures and improvements erected on the premises
leased thereby.

1.16             “Lien” means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, and any conditional sale or voting agreement or proxy, including any
agreement to give any of the foregoing.

1.17             “Material Adverse Change” and “Material Adverse Effect” mean,
with respect to the parties hereto, any change, event or effect that
individually or when taken together with all other changes, events and effects
(financial or otherwise) that have occurred prior to the date of determination,
is or is reasonably likely to be material and adverse to the operations, assets,
liabilities, business or financial condition of the parties hereto or the
Company’s property owned thereby.

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1.18             “Order” means any decree, order, judgment, writ, award,
injunction, rule or consent of or by an Authority.

1.19             “Permitted Liens” means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in policies of
title insurance which have been made available to Purchaser; and (ii)
mechanics’, carriers’, workers’, repairers’ and similar statutory Liens arising
or incurred in the ordinary course of business for amounts (A) that are not
delinquent, (B) that are not material to the business, operations and financial
condition of the Company so encumbered, either individually or in the aggregate,
and (C) not resulting from a breach, default or violation by the Company of any
Contract or Law.

1.20             “Person” means an individual, corporation, partnership
(including a general partnership, limited partnership or limited liability
partnership), limited liability company, association, trust or other entity or
organization, including a government, domestic or foreign, or political
subdivision thereof, or an agency or instrumentality thereof.

1.21             “PRC” means the People’s Republic of China, which for the
purposes of this Agreement shall not include Hong Kong Special Administrative
Region, the Macau Special Administrative Region and Taiwan.

1.22             “Real Property” means, collectively, all real properties and
interests therein (including the right to use), together with all buildings,
fixtures, trade fixtures, plant and other improvements located thereon or
attached thereto; all rights arising out of use thereof (including air, water,
oil and mineral rights); and all subleases, franchises, licenses, permits,
easements and rights-of-way which are appurtenant thereto.

1.23             “Subsidiary” means each entity of which at least fifty percent
(50%) of the capital stock or other equity or voting securities are Controlled
or owned, directly or indirectly, by the Company.

1.24             “Tangible Personal Property” means all tangible personal
property and interests therein, including machinery, computers and accessories,
furniture, office equipment, communications equipment, automobiles, trucks,
forklifts and other vehicles owned or leased by the Company and other tangible
property.

1.25             “Tax(es)” means any federal, state, local or foreign tax,
charge, fee, levy, custom, duty, deficiency, or other assessment of any kind or
nature imposed by any Taxing Authority (including any income (net or gross),
gross receipts, profits, windfall profit, sales, use, goods and services, ad
valorem, franchise, license, withholding, employment, social security, workers
compensation, unemployment compensation, employment, payroll, transfer, excise,
import, real property, personal property, intangible property, occupancy,
recording, minimum, alternative minimum, environmental or estimated tax),
including any liability therefor as a transferee or successor or as a result of
any Tax sharing, indemnification or similar agreement, together with any
interest, penalty, additions to tax or additional amount imposed with respect
thereto.

1.26             “Taxing Authority” means the Internal Revenue Service and any
other Authority responsible for the collection, assessment or imposition of any
Tax or the administration of any Law relating to any Tax.

1.27             “Tax Return” means any return, information return, declaration,
claim for refund or credit, report or any similar statement, and any amendment
thereto, including any attached schedule and supporting information, whether on
a separate, consolidated, combined, unitary or other basis, that is filed or
required to be filed with any Taxing Authority in connection with the
determination, assessment, collection or payment of a Tax or the administration
of any Law relating to any Tax.

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ARTICLE II
TERMS AND CONDITIONS OF THE PURCHASE AND SALE

2.1                Purchase and Sale.

(a)                 Sellers hereby agree to sell to the Purchaser, or its
assignees, and the Purchaser hereby agrees to acquire from Sellers, the Equity
Interests of the Company.

(b)                In consideration for the Equity Interests, the Purchaser
shall issue 5,036,298 shares of common stock of the Purchaser, par value $0.0001
per share (the “Common Stock”) and 1,000 shares of Series C Convertible
Preferred Stock, par value $0.0001 per share (the “Series C Preferred Stock”) of
the Purchaser (the “Consideration”). The Series C Preferred Stock shall not be
convertible into the Purchaser’s Common Stock until such time as the conversion
is approved by the Purchaser’s stockholders. Upon approval of the Purchaser’s
shareholders, the 1,000 shares of Series C Preferred Stock shall be converted
into 1,916,781 shares of Common Stock. The designation, rights, preferences and
other terms and provisions of the Series C Preferred Stock are set forth in the
Certificate of Designation of the Relative Rights and Preferences of the Series
C Convertible Preferred Stock attached hereto as Exhibit A (the “Certificate of
Designation”)

2.2                Closing. Subject to the terms and conditions of this
Agreement, the closing ( the “Closing”) shall take place no later than the
second Business Day after all the conditions to the Closing set forth in Article
VI have been satisfied or waived (the date and time at which a Closing is
actually held being a “Closing Date”). At the Closing:

(a)                 Sellers shall transfer the Equity Interests in the Company
to I Fresh (BVI) Co., Ltd., a British Virgin Islands company (“iFresh BVI”), a
wholly owned subsidiary of the Purchaser. Immediately after the Closing, iFresh
BVI will have assumed and held all rights and interest in the Equity Interests,
and Sellers shall cease to hold any interest in, and shall be deemed to have
relinquished all rights and claims with respect to, the Equity Interests; and
(ii) iFresh BVI will hold an aggregate of 100% equity interests of the Company.

(b)                The Purchaser shall deliver the Consideration to Sellers.

2.3                Approval and Registration.

(a)                 Execution of Application Documents. Each party shall, at its
own cost, execute and prepare all such documents as may be required of such
party by applicable Laws of the PRC in connection with securing Government
Approvals (as defined below) for the transactions contemplated hereunder (the
“Application Documents”), including, without limitation, executing and
delivering an amended and restated articles of association of the Company of the
even date herewith (the “Amended Articles”).

(b)                Submission for Approval. Promptly after execution of this
Agreement, and in any event within ten (10) Business Days after the Application
Documents are complete and ready, the Company shall, and Sellers shall jointly
cause the Company to, submit the Application Documents and such other documents
as the relevant Authority in the PRC may require to such relevant Authority for
examination and approval of the transfer of the Equity Interests.

(c)                 Amendment of Registration. Within five (5) Business Days of
the Company’s receipt of an approval from the examination and approval
Authority, the Company shall, and Sellers shall procure the Company to, register
with the Administration for Market Regulation (“AMR”), or any equivalent
government Authority in the PRC (i) the transfer of the Equity Interests, (ii)
the Amended Articles of the Company. The Company shall, and Sellers shall
procure the Company to, obtain from the Authority in the PRC an updated business
license for the Company reflecting the completion of the transfer of the Equity
Interests as soon as practicable after the date hereof.

2.4                Transfer Taxes.

(a)                 All income tax and withholding tax incurred by Sellers in
relation to the transfer of the Equity Interests and the transaction
contemplated hereunder (the “Transfer Taxes”) shall be borne by Sellers.

(b)                Promptly after the date hereof, Sellers shall file
appropriate Tax Returns and other required documents, which shall have been
approved by Purchaser in writing in advance, with the competent tax Authority in
order to determine the amount of the Transfer Taxes.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY

Each of Sellers and the Company hereby, jointly and severally, represents and
warrants to Purchaser that each of the following representations and warranties
is true, correct and complete as of the date of this Agreement and as of the
Closing Date.

3.1                Corporate Existence and Power. The Company is a corporation
duly organized, validly existing and in good standing under the Laws of the PRC.
The Company has all power and authority, corporate and otherwise, and all
governmental licenses, franchises, Permits, authorizations, consents and
approvals required to own and operate its properties and assets and to carry on
the Business as presently conducted and as proposed to be conducted. The Company
is duly qualified to transact the Business. The Company has offices located only
at the addresses set forth on Schedule 3.1. The Company has not taken any
action, adopted any plan, or made any agreement or commitment in respect of any
merger, consolidation, sale of all or substantially all of its assets,
reorganization, recapitalization, dissolution or liquidation.

3.2                Each Seller is of sound mind, has the necessary legal
capacity to perform his obligations hereunder, and has entered into this
Agreement of his own will and understands the nature of the obligations to be
assumed by him.

3.3                Authorization. The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby are within the corporate powers of the Company
and have been duly authorized by all necessary action on the part of the
Company. This Agreement constitutes, upon its execution and delivery, a valid
and legally binding agreement of the Company enforceable against the Company in
accordance with its terms.

3.4                Governmental Authorization. Neither the execution, delivery
nor performance by the Company of the Agreement requires any consent, approval,
license or other action by or in respect of, or registration, declaration or
filing with, any Authority requiring a consent, approval, authorization, order
or other action of or filing with any Authority as a result of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby or thereby (each of the foregoing, a
“Governmental Approval”).

3.5                Non-Contravention. None of the execution, delivery or
performance by the Company of the Agreement does or will (a) contravene or
conflict with the organizational or constitutive documents of the Company, (b)
contravene or conflict with or constitute a violation of any provision of any
Law or Order binding upon or applicable to the Company, (c) constitute a default
under or breach of (with or without the giving of notice or the passage of time
or both) or violate or give rise to any right of termination, cancellation,
amendment or acceleration of any right or obligation of the Company or require
any payment or reimbursement or to a loss of any material benefit relating to
the Business to which the Company is entitled under any provision of any Permit,
Contract or other instrument or obligations binding upon the Company or by which
any of the Company Common Stock or any of the Company’s assets is or may be
bound or any Permit, (d) result in the creation or imposition of any Lien on any
of the Company Common Stock (as defined below) or any of the Company’s assets,
(e) cause a loss of any material benefit relating to the Business to which the
Company is entitled under any provision of any Permit or Contract binding upon
each Company, or (f) result in the creation or imposition of any Lien (except
for Permitted Liens) on any of the Company’s assets.

3.6                Company’s Shareholding Structure.

(a)                 Schedule 3.6 sets forth the correct basic particulars of the
Company as of the date hereof, including without limitation, the registered
capital amount, shareholding structure of the Company, the nature of legal
entity the Company constitutes, and the jurisdiction in which the Company was
organized and exists.

(b)                The Company has no subsidiary, nor does it own or Control,
directly or indirectly, any interest in any other Person. Except as set forth in
Schedule 3.6, the Company maintains no offices or any branches, nor is it a
participant in any joint venture, partnership or similar arrangement.

(c)                 Sellers hold good and valid title to the Equity Interests,
free and clear of all Encumbrances. There are no outstanding options, warrants,
rights (including conversion or pre-emptive rights and rights of first refusal),
subscriptions, or other rights, proxy or shareholders agreements or Contracts of
any kind, either directly or indirectly, entitling the holder thereof to
purchase or otherwise acquire any part of the equity of the Company, or to
compel the Company to increase or decrease its registered capital.

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(d)                The full amount of the registered capital of the Company has
been timely contributed and in compliance with all applicable Laws of the PRC,
such contribution has been duly verified by a certified accountant registered in
the PRC and the accounting firm employing such accountant, and the report of the
certified accountant evidencing such verification has been registered with the
AIC or any equivalent Authority in the PRC.

3.7                Certificate of Formation. Copies of (a) the certificate of
incorporation of the Company, or any equivalent documents, as certified by the
Authority, and (b) the bylaws of the Company, or any equivalent documents,
certified by the secretary of the Company, have heretofore been made available
to Purchaser, and such copies are each true and complete copies of such
instruments as amended and in effect on the date hereof. The Company has not
taken any action in violation or derogation of its certificate of incorporation
or bylaws.

3.8                Corporate Records. All proceedings of the board of directors,
including committees thereof, and all consents to actions taken thereby, are
accurately reflected in the minutes and records contained in the corporate
minute books of the Company. The stock ledgers and stock transfer books of the
Company are complete and accurate. The stock ledgers and stock transfer books
and minute book records of the Company relating to all issuances and transfers
of stock by the Company, and all proceedings of the board of directors,
including committees thereof, and stockholders of the Company have been made
available to Purchaser, and are the original stock ledgers and stock transfer
books and minute book records of the Company or true, correct and complete
copies thereof.

3.9                Third Parties. Other than Sellers, the Company is not
Controlled by any Person and, other than the Persons listed on Schedule 3.9(a),
the Company is not in Control of any other Person. Except as set forth on
Schedule 3.9, to the Company’s knowledge, no Key Personnel (as set forth on
Schedule 3.9(b)) (a) engage in any business, except through the Company, or are
employees of or provide any service for compensation to, any other business
concern or (b) own any equity security of any business concern, except for
publicly traded securities not in excess of 5% of the issued and outstanding
securities with respect to such publicly traded securities. Schedule 3.9(a) sets
forth a complete and accurate list of the Affiliates of the Company and the
ownership interests in the Affiliate of the Company.

3.10             Assumed Names. Schedule 3.10 is a complete and correct list of
all assumed or “doing business as” names currently or used by the Company,
including names on any websites. The Company has not used any name other than
the names listed on Schedule 3.10 to conduct the Business. The Company has filed
appropriate “doing business as” certificates in all applicable jurisdictions
with respect to itself.

3.11             Subsidiaries.

The Company does not currently own and has not owned directly or indirectly,
securities or other ownership interests in any other entity. The Company owns
100% of the issued and outstanding capital stock and securities of each Person
listed on Schedule 3.11. None of the Company or any of its Subsidiaries is a
party to any agreement relating to the formation of any joint venture,
association or other entity.

3.12             Consents. The Contracts listed on Schedule 3.12 are the only
Contracts binding upon the Company or by which any of the Company Common Stock
or any of the Company’s assets are bound, requiring a consent, approval,
authorization, order or other action of or filing with any Person as a result of
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby (each of the foregoing, a “Company
Consent”).

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3.13             Financial Statements.

(a)                 Schedule 3.13 includes the audited consolidated financial
statements of the Company as of December 31, 2019 (collectively, the “Financial
Statements” and the balance sheet as of December 31, 2019 included therein, the
“Balance Sheet”).

(b)                The Financial Statements are complete and accurate and fairly
present, in conformity with generally accepted accounting principles in the PRC
applied on a consistent basis, the financial position of the Company as of the
dates thereof and the results of operations of the Company for the periods
reflected therein. The Financial Statements (i) were prepared from the Books and
Records of the Company; (ii) were prepared on an accrual basis in accordance
with generally accepted accounting principles in the PRC consistently applied;
(iii) contain and reflect all necessary adjustments and accruals for a fair
presentation of the Company’s financial condition as of their dates including
for all warranty, maintenance, service and indemnification obligations; and (iv)
contain and reflect adequate provisions for all liabilities for all material
Taxes applicable to the Company with respect to the periods then ended.

(c)                 Except as specifically disclosed, reflected or fully
reserved against on the Balance Sheet, and for liabilities and obligations of a
similar nature and in similar amounts incurred in the ordinary course of
business since the date of the Balance Sheet, there are no liabilities, debts or
obligations of any nature (whether accrued, fixed or contingent, liquidated or
unliquidated, asserted or unasserted or otherwise) relating to the Company. All
debts and liabilities, fixed or contingent, which should be included under
general, accepted accounting principles in the PRC on the Balance Sheet are
included therein.

(d)                The balance sheet included in the Financial Statements
accurately reflects the outstanding Indebtedness of the Company as of the date
thereof. Except as set forth on Schedule 3.13, the Company does not have any
Indebtedness.

(e)                 All financial projections delivered by or on behalf of the
Company to Purchaser with respect to the Business were prepared in good faith
using assumptions that the Company believes to be reasonable and the Company is
not aware of the existence of any fact or occurrence of any circumstances that
is reasonably likely to have an Material Adverse Effect.

3.14             Books and Records. The Company shall make all Books and Records
of the Company available to Purchaser for its inspection and shall deliver to
Purchaser complete and accurate copies of all documents referred to in the
Schedules to this Agreement or that Purchaser otherwise has requested within 30
days from the date hereof. All Contracts, documents, and other papers or copies
thereof delivered to Purchaser by or on behalf of the Company are accurate,
complete, and authentic.

(a)                 The Books and Records accurately and fairly, in reasonable
detail, reflect the transactions and dispositions of assets of and the providing
of services by the Company. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance that:

(i)                  transactions are executed only in accordance with the
respective management’s authorization;

(ii)                all income and expense items are promptly and properly
recorded for the relevant periods in accordance with the revenue recognition and
expense policies maintained by the Company, as permitted by applicable
accounting principles;

(iii)              access to assets is permitted only in accordance with the
respective management’s authorization; and

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(iv)               recorded assets are compared with existing assets at
reasonable intervals, and appropriate action is taken with respect to any
differences.

(b)                All accounts, books and ledgers of the Company have been
properly and accurately kept and completed in all material respects, and there
are no material inaccuracies or discrepancies of any kind contained or reflected
therein. The Company does not have any records, systems controls, data or
information recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held by any means (including any mechanical, electronic or
photographic process, whether computerized or not) which (including all means of
access thereto and therefrom) are not under the exclusive ownership (excluding
licensed software programs) and direct control of the Company and which is not
located at the relevant office.

3.15             Absence of Certain Changes. Since December 31, 2019 (the
“Balance Sheet Date”), the Company has conducted the Business in the ordinary
course consistent with past practices. Without limiting the generality of the
foregoing, since the Balance Sheet Date, there has not been:

(a)                 any Material Adverse Effect or any material diminishment in
the value to Purchaser of the transactions contemplated hereby;

(b)                any transaction, Contract or other instrument entered into,
or commitment made, by the Company relating to the Business, or any of the
Company’s assets (including the acquisition or disposition of any assets) or any
relinquishment by the Company of any Contract or other right, in either case
other than transactions and commitments in the ordinary course of business
consistent in all respects, including kind and amount, with past practices and
those contemplated by this Agreement;

(c)                 (i) any redemption of, declaration, setting aside or payment
of any dividend or other distribution with respect to any capital stock or other
equity interests in the Company; (ii) any issuance by the Company of shares of
capital stock or other equity interests in the Company, or (iii) any repurchase,
redemption or other acquisition, or any amendment of any term, by the Company of
any outstanding shares of capital stock or other equity interests;

(d)                (i) any creation or other incurrence of any Lien other than
Permitted Liens on the Company Common Stock or any of the Company’s assets, and
(ii) any making of any loan, advance or capital contributions to or investment
in any Person by the Company;

(e)                 any material personal property damage, destruction or
casualty loss or personal injury loss (whether or not covered by insurance)
affecting the business or assets of the Company;

(f)                  increased benefits payable under any existing severance or
termination pay policies or employment agreements; entered into any employment,
deferred compensation or other similar agreement (or amended any such existing
agreement) with any director, officer, manager or employee of the Company;
established, adopted or amended (except as required by law) any bonus,
profit-sharing, thrift, pension, retirement, deferred compensation,
compensation, stock option, restricted stock or other benefit plan or
arrangement covering any director, officer, manager or employee of the Company;
or increased any compensation, bonus or other benefits payable to any director,
officer, manager or employee of the Company, other than increases to non-officer
employees in the ordinary course of business consistent with past practices;

(g)                any material labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company, which employees were not
subject to a collective bargaining agreement at the Balance Sheet Date, or any
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to any employees of the Company;

(h)                any sale, transfer, lease to others or otherwise disposition
of any of its assets by the Company except for inventory sold in the ordinary
course of business consistent with past practices or immaterial amounts of other
Tangible Personal Property not required by its business;

(i)                  (i) any amendment to or termination of any Material
Contract, (ii) any amendment to any material license or material permit from any
Authority held by the Company, (iii) any receipt of any notice of termination of
any of the items referenced in (i) and (ii); and (iv) a material default by the
Company under any Material Contract, or any material license or material permit
from any Authority held by the Company;

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(j)                  any capital expenditure by the Company in excess in any
fiscal month of an aggregate of $50,000 or entering into any lease of capital
equipment or property under which the annual lease charges exceed $100,000 in
the aggregate by the Company;

(k)                any institution of litigation, settlement or agreement to
settle any litigation, action, proceeding or investigation before any court or
governmental body relating to the Company or its property or suffering of any
actual or threatened litigation, action, proceeding or investigation before any
court or governmental body relating to the Company or its property;

(l)                  any loan of any monies to any Person or guarantee of any
obligations of any Person by the Company;

(m)               except as required by applicable accounting principles, any
change in the accounting methods or practices (including, without limitation,
any change in depreciation or amortization policies or rates) of the Company or
any revaluation of any of the assets of the Company;

(n)                any amendment to the Company’s organizational documents, or
any engagement by the Company in any merger, consolidation, reorganization,
reclassification, liquidation, dissolution or similar transaction;

(o)                any acquisition of assets (other than acquisitions of
inventory in the ordinary course of business consistent with past practice) or
business of any Person;

(p)                any material Tax election made by the Company outside of the
ordinary course of business consistent with past practice, or any material Tax
election changed or revoked by the Company; any material claim, notice, audit
report or assessment in respect of Taxes settled or compromised by the Company;
any annual Tax accounting period changed by the Company; any Tax allocation
agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement
relating to any Tax entered into by the Company; or any right to claim a
material Tax refund surrendered by the Company; or

(q)                any commitment or agreement to do any of the foregoing.

Since the Balance Sheet Date through and including the date hereof, the Company
has not taken any action nor has any event occurred which would have violated
the covenants of the Company set forth in Section 5.2 herein if such action had
been taken or such event had occurred between the date hereof and the Closing
Date.

3.16             Properties; Title to the Company’s Assets.

(a)                 The items of Tangible Personal Property have no defects, are
in good operating condition and repair and function in accordance with their
intended uses (ordinary wear and tear excepted) and have been properly
maintained, and are suitable for their present uses and meet all specifications
and warranty requirements with respect thereto.

(b)                Schedule 3.16 sets forth a description and location of each
item of the Tangible Personal Property, as of a date within five days of the
date of this Agreement. All of the Tangible Personal Property is located at the
office of the Company.

(c)                 The Company has good, valid and marketable title in and to,
or in the case of the Leases and the assets which are leased or licensed
pursuant to Contracts, a valid leasehold interest or license in or a right to
use, all of their assets reflected on the Balance Sheet or acquired after the
Balance Sheet Date. No such asset is subject to any Liens other than Permitted
Liens. The Company’s assets constitute all of the assets of any kind or
description whatsoever, including goodwill, for the Company to operate the
Business immediately after the Closing in the same manner as the Business is
currently being conducted.

3.17             Litigation. There is no Action (or any basis therefore) pending
against, or to the best knowledge of the Company, threatened against or
affecting, the Company, any of its officers or directors, the Business, or any
capital stock or any of the Company’s assets or any Contract before any court,
Authority or official or which in any manner challenges or seeks to prevent,
enjoin, alter or delay the transactions contemplated hereby. There are no
outstanding judgments against the Company. The Company is not, and has not been
subject to any proceeding with any Authority.

9

 

3.18             Contracts.

(a)                 Schedule 3.18(a) lists all material Contracts, oral or
written (collectively, “Material Contracts”) to which each Company is a party
and which are currently in effect and constitute the following:

(i)                  all Contracts that require annual payments or expenses by,
or annual payments or income to, the Company of $50,000 or more (other than
standard purchase and sale orders entered into in the ordinary course of
business consistent with past practice);

(ii)                all sales, advertising, agency, lobbying, broker, sales
promotion, market research, marketing or similar contracts and agreements, in
each case requiring the payment of any commissions by the Company in excess of
$500,000 annually;

(iii)              all employment Contracts, employee leasing Contracts, and
consultant and sales representatives Contracts with any current or former
officer, director, employee or consultant of the Company or other Person, under
which the Company (A) has continuing obligations for payment of annual
compensation of at least $50,000 (other than oral arrangements for at-will
employment), (B) has severance or post termination obligations to such Person,
or (C) has an obligation to make a payment upon consummation of the transactions
contemplated hereby or as a result of a change of control of the Company;

(iv)               all Contracts creating a joint venture, strategic alliance,
limited liability company and partnership agreements to which the Company is a
party;

(v)                all Contracts relating to any acquisitions or dispositions of
assets by the Company;

(vi)               all Contracts for material licensing agreements, including
Contracts licensing Intellectual Property Rights, other than “shrink wrap”
licenses;

(vii)             all Contracts relating to secrecy, confidentiality and
nondisclosure agreements restricting the conduct of the Company or substantially
limiting the freedom of the Company to compete in any line of business or with
any Person or in any geographic area;

(viii)           all Contracts relating to patents, trademarks, service marks,
trade names, brands, copyrights, trade secrets and other Intellectual Property
Rights of the Company;

(ix)               all Contracts providing for guarantees, indemnification
arrangements and other hold harmless arrangements made or provided by the
Company, including all ongoing agreements for repair, warranty, maintenance,
service, indemnification or similar obligations;

(x)                all Contracts with or pertaining to the Company to which any
10% stockholder is a party;

(xi)               all Contracts relating to property or assets (whether real or
personal, tangible or intangible) in which the Company holds a leasehold
interest (including the Leases) and which involve payments to the lessor
thereunder in excess of $50,000 per month;

(xii)             all Contracts relating to outstanding Indebtedness, including
financial instruments of indenture or security instruments (typically
interest-bearing) such as notes, mortgages, loans and lines of credit;

10

 

(xiii)           any Contract relating to the voting or control of the equity
interests of the Company or the election of directors of the Company (other than
the Organizational Documents of the Company);

(xiv)           any Contract not cancellable by the Company with no more than 60
days’ notice if the effect of such cancellation would result in monetary penalty
to the Company in excess of $50,000 per the terms of such contract;

(xv)             any Contract that can be terminated, or the provisions of which
are altered, as a result of the consummation of the transactions contemplated by
this Agreement to which the Company is a party; and

(xvi)           any Contract for which any of the benefits, compensation or
payments (or the vesting thereof) will be increased or accelerated by the
consummation of the transactions contemplated hereby or the amount or value
thereof will be calculated on the basis of any of the transactions contemplated
by this Agreement.

(b)                Each Contract is a valid and binding agreement, and is in
full force and effect, and neither the Company nor, to best knowledge of the
Company, any other party thereto, is in breach or default (whether with or
without the passage of time or the giving of notice or both) under the terms of
any such Material Contract. The Company has not assigned, delegated, or
otherwise transferred any of its rights or obligations with respect to any
Material Contracts, or granted any power of attorney with respect thereto or to
any of the Company’s assets. No Contract (i) requires the Company to post a bond
or deliver any other form of security or payment to secure its obligations
thereunder or (ii) imposes any non-competition covenants that may be binding on,
or restrict the Business or require any payments by or with respect to Purchaser
or any of its Affiliates. The Company shall, within 30 days of the date hereof,
provide to Purchaser true and correct (A) fully executed copies of each written
Material Contract and (B) written summaries of each oral Material Contract.

(c)                 None of the execution, delivery or performance by the
Company of this Agreement to which the Company is a party or the consummation by
the Company of the transactions contemplated hereby constitutes a default under
or gives rise to any right of termination, cancellation or acceleration of any
obligation of the Company or to a loss of any material benefit to which the
Company is entitled under any provision of any Material Contract.

(d)                The Company is in compliance with all covenants, including
all financial covenants, in all notes, indentures, bonds and other instruments
or agreements evidencing any Indebtedness.

3.19             Insurance. Schedule 3.19 contains a true, complete and correct
list (including the names and addresses of the insurers, the names of the
Persons if other than the Company to whom such insurance policies have been
issued, the expiration dates thereof, the annual premiums and payment terms
thereof, whether it is a “claims made” or an “occurrence” policy and a brief
identification of the nature of the policy) of all liability, property, workers’
compensation and other insurance policies currently in effect that insure the
property, assets or business of the Company or its employees (other than
self-obtained insurance policies by such employees). Each such insurance policy
is valid and binding and in full force and effect, all premiums due thereunder
have been paid and the Company has not received any notice of cancellation or
termination in respect of any such policy or default thereunder. The Company
believes such insurance policies, in light of the nature of the Company’s
Business, assets and properties, are in amounts and have coverage that are
reasonable and customary for Persons engaged in such business and having such
assets and properties. Neither the Company, nor, to the knowledge of the
Company, the Person to whom such policy has been issued, has received notice
that any insurer under any policy referred to in this Section 3.19 is denying
liability with respect to a claim thereunder or defending under a reservation of
rights clause. The Company has not filed for any claims exceeding $200,000
against any of its insurance policies, exclusive of automobile and health
insurance policies. The Company has not received written notice from any of its
insurance carriers or brokers that any premiums will be materially increased in
the future, and does not have any reason to believe that any insurance coverage
listed on Schedule 3.19 will not be available in the future on substantially the
same terms as now in effect.

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3.20             Licenses and Permits. Schedule 3.20 correctly lists each
license, franchise, permit, order or approval or other similar authorization
affecting, or relating in any way to, the Business, together with the name of
the Authority issuing the same (the “Permits”). Except as indicated on Schedule
‎3.20, such Permits are valid and in full force and effect, and none of the
Permits will, assuming the related third party consents have been obtained or
waived prior to the Closing Date, be terminated or impaired or become terminable
as a result of the transactions contemplated hereby. The Company has all Permits
necessary to operate the Business.

3.21             Compliance with Laws. The Company is not in violation of, has
not violated, and is neither under investigation with respect to nor has been
threatened to be charged with or given notice of any violation or alleged
violation of, any Law, or judgment, order or decree entered by any court,
arbitrator or Authority, domestic or foreign, nor is there any basis for any
such charge and the Company has not received any subpoenas by any Authority.

Without limiting the foregoing paragraph, the Company is not in violation of,
has not violated, and to the best knowledge of the Company is not under
investigation with respect to nor has been threatened or charged with or given
notice of any violation of any provisions of:

(i)                  any Law applicable due to the specific nature of the
Business;

(ii)                the Foreign Corrupt Practices Act of 1977 (§§ 78dd-1 et
seq.), as amended (the “Foreign Corrupt Practices Act”);

(iii)              any comparable or similar Law of any jurisdiction; or

(iv)               any Law regulating or covering conduct in, or the nature of,
the workplace, including regarding sexual harassment or, on any impermissible
basis, a hostile work environment.

No permit, license or registration is required by the Company in the conduct of
the Business under any of the Laws described in this Section 3.21.

3.22             Intellectual Property.

(a)                 Schedule 3.22 sets forth a true, correct and complete list
of all Intellectual Property Rights, specifying as to each, as applicable: (i)
the nature of such Intellectual Property Right; (ii) the owner of such
Intellectual Property Right; (iii) the jurisdictions by or in which such
Intellectual Property Right has been issued or registered or in which an
application for such issuance or registration has been filed; and (iv) all
licenses, sublicenses and other agreements pursuant to which any Person is
authorized to use such Intellectual Property Right.

(b)                The Company has not been sued or charged in writing with or
been a defendant in any Action that involves a claim of infringement of any
Intellectual Property Rights, and the Company has no knowledge of any other
claim of infringement by the Company, and no knowledge of any continuing
infringement by any other Person of any Intellectual Property Rights of the
Company.

(c)                 The current use by the Company of the Intellectual Property
Rights does not infringe, and the use by the Company of the Intellectual
Property Rights after the Closing will not infringe, the rights of any other
Person. Any Intellectual Property Rights used by the Company in the performance
of any services under any Contract is, and upon the performance of such Contract
remains, owned by the Company and no client, customer or other third-party has
any claim of ownership on the Intellectual Property Rights.

(d)                All employees, agents, consultants or contractors who have
contributed to or participated in the creation or development of any
copyrightable, patentable or trade secret material on behalf of the Company or
any predecessor in interest thereto either: (i) is a party to a “work-for-hire”
agreement under which the Company is deemed to be the original owner/author of
all property rights therein; or (ii) has executed an assignment or an agreement
to assign in favor of the Company (or such predecessor in interest, as
applicable) all right, title and interest in such material.

12

 

(e)                 None of the execution, delivery or performance by the
Company of this Agreement to which the Company is a party or the consummation by
the Company of the transactions contemplated hereby will cause any material item
of Intellectual Property Rights owned, licensed, used or held for use by the
Company immediately prior to the Closing to not be owned, licensed or available
for use by the Company on substantially the same terms and conditions
immediately following the Closing.

(f)                  The Company has taken reasonable measures to safeguard and
maintain the confidentiality and value of all trade secrets and other items of
Company Intellectual Property that are confidential and all other confidential
information, data and materials licensed by the Company or otherwise used in the
operation of the Business.

3.23             Customers and Suppliers. No supplier or customer of the Company
has (i) terminated its relationship with each Company, (ii) materially reduced
its business with each Company or materially and adversely modified its
relationship with each Company, (iii) notified each Company in writing of its
intention to take any such action, or (iv) to the Knowledge of each Company,
become insolvent or subject to bankruptcy proceedings.

3.24             Accounts Receivable and Payable; Loans.

(a)                 All accounts receivable and notes of the Company reflected
on the Financial Statements, and all accounts receivable and notes arising
subsequent to the date thereof, represent valid obligations arising from
services actually performed or goods actually sold by the Company in the
ordinary course of business consistent with past practice. The accounts payable
of the Company reflected on the Financial Statements, and all accounts payable
arising subsequent to the date thereof, arose from bona fide transactions in the
ordinary course consistent with past practice.

(b)                There is no contest, claim, or right of setoff in any
agreement with any maker of an account receivable or note relating to the amount
or validity of such account, receivables or note that could reasonably result in
a Material Adverse Effect. To the best of the Company’s knowledge, all accounts,
receivables or notes are good and collectible in the ordinary course of
business.

(c)                 The information set forth on Schedule 3.24(c) separately
identifies any and all accounts, receivables or notes of the Company which are
owed by any Affiliate of the Company. Except as set forth on Schedule 3.24(c),
the Company is not indebted to any of its Affiliates and no Affiliates are
indebted to the Company.

3.25             Pre-payments. The Company has not received any payments with
respect to any services to be rendered or goods to be provided after the Closing
except in the ordinary course of business.

3.26             Employees.

(a)                 Schedule 3.26(a) sets forth a true, correct and complete
list of the ten (10) highest paid employees and independent contractors of the
Company as of the date hereof, including the name, department, title, employment
or engagement commencement date, current salary or compensation rate for each
such person and total compensation (including bonuses) paid to each such person
as of the date hereof. Unless indicated in such list, no salaried employee or
independent contractor included in such list (i) is currently on leave, (ii) has
given written notice of his or her intent to terminate his or her relationship
with the Company, or (iii) has received written notice of such termination from
the Company. No salaried employee or independent contractor (but specifically
excluding all account executives) of the Company that earned an aggregate amount
of compensation in excess of $100,000 as of the date hereof intends to terminate
his or her relationship with each Company within six (6) months following the
Closing Date. Schedule 3.26(a) sets forth all proceedings, governmental
investigations or administrative proceedings of any kind against each Company of
which each Company has been notified regarding its employees or employment
practices, or operations as they pertain to conditions of employment.

(b)                Each Company is not a party to or subject to any employment
contract, consulting agreement, collective bargaining agreement, confidentiality
agreement restricting the activities of each Company, non-competition agreement
restricting the activities of the Company, or any similar agreement, and there
has been no activity or proceeding by a labor union or representative thereof to
organize any employees of the Company.

13

 

(c)                 There are no pending or, to the knowledge of the Company,
threatened claims or proceedings against the Company under any worker’s
compensation policy or long-term disability policy.

(d)                Except as would not have a Material Adverse Effect, the
Company has properly classified all of its employees as exempt or non-exempt.

3.27             Employment Matters.

(a)                 Schedule 3.27(a) sets forth a true and complete list of
every employment agreement, commission agreement, employee group or executive
medical, life, or disability insurance plan, and each incentive, bonus, profit
sharing, retirement, deferred compensation, equity, phantom stock, stock option,
stock purchase, stock appreciation right or severance plan of the Company now in
effect or under which the Company has or might have any obligation, or any
understanding between the Company and any employee concerning the terms of such
employee’s employment that does not apply to the Company’s employees generally
(collectively, “Labor Agreements”). The Company has previously delivered to
Purchaser true and complete copies of each such Labor Agreement, any employee
handbook or policy statement of the Company, and complete and correct
information concerning the Company’s employees, including with respect to the
(i) name, residence address, and social security number; (ii) position; (iii)
compensation; (iv) vacation and other fringe benefits; (v) claims under any
benefit plan; and (vii) resident alien status (if applicable). Schedule 3.27(a)
sets forth a true and complete list of the names, addresses and titles of the
directors, officers and managers of the Company.

(b)                Except as disclosed on Schedule 3.27(b):

(i)                  all employees of the Company are employees at will, and the
employment of each employee by each Company may be terminated immediately by
each Company, as applicable, without any cost or liability except severance in
accordance with each Company’s standard severance practice as disclosed on
Schedule 3.27(b);

(ii)                to the best knowledge of the Company, no employee of the
Company has any plan to terminate his or her employment now or in the near
future, whether as a result of the transactions contemplated hereby or
otherwise;

(iii)              to the best knowledge of the Company, no employee of the
Company, in the ordinary course of his or her duties, has breached or will
breach any obligation to a former employer in respect of any covenant against
competition or soliciting clients or employees or servicing clients or
confidentiality or any proprietary right of such former employer; and

(iv)               the Company is not a party to any collective bargaining
agreement, does not have any material labor relations problems, and there is no
pending representation question or union organizing activity respecting
employees of the Company.

(c)                 The Company has complied in all material respects with all
Labor Agreements and all applicable laws relating to employment or labor. No
present or former employee, officer, director or manager of the Company has, or
will have at the Closing Date, any claim against the Company for any matter
including for wages, salary, or vacation or sick pay, or otherwise under any
Labor Agreement. All accrued obligations of the Company applicable to its
employees, whether arising by operation of Law, by Contract, by past custom or
otherwise, for payments by the Company to any trust or other fund or to any
Authority, with respect to unemployment or disability compensation benefits,
social security benefits have been paid or adequate accruals therefor have been
made.

3.28             Withholding. All obligations of the Company applicable to its
employees, whether arising by operation of Law, by contract, by past custom or
otherwise, or attributable to payments by the Company to trusts or other funds
or to any governmental agency, with respect to unemployment compensation
benefits, social security benefits or any other benefits for its employees with
respect to the employment of said employees through the date hereof have been
paid or adequate accruals therefor have been made on the Financial Statements.
All reasonably anticipated obligations of the Company with respect to such
employees (except for those related to wages during the pay period immediately
prior to the Closing Date and arising in the ordinary course of business),
whether arising by operation of Law, by contract, by past custom, or otherwise,
for salaries and holiday pay, bonuses and other forms of compensation payable to
such employees in respect of the services rendered by any of them prior to the
date hereof have been or will be paid by the Company prior to the Closing Date.

14

 

3.29             Employee Benefits and Compensation.

(a)                 Schedule 3.29 sets forth a true and complete list of each
employee benefit plan, bonus, deferred compensation, equity-based or
non-equity-based incentive, severance or other plan or written agreement
relating to employee or director benefits or employee or director compensation
or fringe benefits, maintained or contributed to by the Company at any time
during the period immediately preceding the date hereof and/or with respect to
which the Company could incur or could have incurred any direct or indirect,
fixed or contingent liability (each a “Plan” and collectively, the “Plans”).
Each Plan is and has been maintained in substantial compliance with all
applicable laws, and has been administered and operated in all material respects
in accordance with its terms.

(b)                There is no unfunded non-tax-qualified Plan which provides a
pension or retirement benefit.

(c)                 The Company has not made any commitment to create or cause
to exist any employee benefit plan which is not listed on Schedule 3.29, or to
modify, change or terminate any Plan (other than as may be necessary for
compliance with applicable Laws).

(d)                With respect to each Plan, the Company has delivered or
caused to be delivered to Purchaser and its counsel true and complete copies of
the following documents, as applicable, for each respective Plan: (i) all Plan
documents, with all amendments thereto; (ii) the current summary plan
description with any applicable summaries of material modifications thereto as
well as any other material employee or government communications; (iii) all
current trust agreements and/or other documents establishing Plan funding
arrangements; (iv) the three most recently prepared financial statements; and
(v) all material related contracts, including without limitation, insurance
contracts, service provider agreements and investment management and investment
advisory agreements.

3.30             Real Property.

(a)                 Except as set forth on Schedule 3.30, the Company does not
own, or otherwise have an interest in, any Real Property, including under any
Real Property lease, sublease, space sharing, license or other occupancy
agreement. The Company has good, valid and subsisting title to its respective
leasehold estates in the offices described on Schedule 3.30, free and clear of
all Liens. The Company has not breached or violated any local zoning ordinance,
and no notice from any Person has been received by the Company or served upon
the Company claiming any violation of any local zoning ordinance.

(b)                With respect to the Leases: (i) they are valid, binding and
in full force and effect; (ii) all rents and additional rents and other sums,
expenses and charges due thereunder have been paid; (iii) the lessees have been
in peaceable possession since the commencement of the original term thereof;
(iv) no waiver, indulgence or postponement of the lessees’ obligations
thereunder have been granted by the lessors; (v) there exists no default or
event of default thereunder by the Company or, to the Company’s knowledge, by
any other party thereto; (vi) there exists no occurrence, condition or act
which, with the giving of notice, the lapse of time or the happening of any
further event or condition, would become a default or event of default by the
Company thereunder; and (vii) there are no outstanding claims of breach or
indemnification or notice of default or termination thereunder. The Company
holds the leasehold estate on the Leases free and clear of all Liens, except for
Liens of mortgagees of the Real Property in which such leasehold estate is
located. The Real Property leased by the Company is in a state of maintenance
and repair in all material respects adequate and suitable for the purposes for
which it is presently being used, and there are no material repair or
restoration works likely to be required in connection with any of the leased
Real Property. The Company is in physical possession and actual and exclusive
occupation of the whole of the leased properties, none of which are subleased or
assigned to another Person. The Leases lease all useable square footage of the
premises located at the leased Real Property locations. The Company does not owe
any brokerage commission with respect to any Real Property.

15

 

3.31             Accounts. Schedule 3.31 sets forth a true, complete and correct
list of the checking accounts, deposit accounts, safe deposit boxes, and
brokerage, commodity and similar accounts of the Company, including the account
number and name, the name of each depositary or financial institution and the
address where such account is located and the authorized signatories thereto.

3.32             Tax Matters.

(a)                 (i) The Company has duly and timely filed all Tax Returns
which are required by applicable Laws of the PRC to be filed by or with respect
to it, and has paid all Taxes which have become due; (ii) all such Tax Returns
are true, correct and complete and accurate and disclose all Taxes required to
be paid; (iii) all such Tax Returns have been examined by the relevant Taxing
Authority or the period for assessment for Taxes in respect of such Tax Returns
has expired; (iv) there is no Action, pending or proposed or, to the best
knowledge of the Company, threatened, with respect to Taxes of the Company or
for which a Lien may be imposed upon any of the Company’s assets and, to the
best of the Company’s knowledge, no basis exists therefor; (v) no statute of
limitations in respect of the assessment or collection of any Taxes of the
Company for which a Lien may be imposed on any of the Company’s assets has been
waived or extended, which waiver or extension is in effect; (vi) the Company has
complied in all material respects with all applicable Laws relating to the
reporting, payment, collection and withholding of Taxes and has duly and timely
withheld or collected, paid over to the applicable Taxing Authority and reported
all Taxes (including income, social, security and other payroll Taxes) required
to be withheld or collected by the Company; (vii) no stock transfer Tax, sales
Tax, use Tax, real estate transfer Tax or other similar Tax will be imposed with
respect to or as a result of any transaction contemplated by this Agreement;
(viii) there is no Lien for Taxes upon any of the assets of the Company; (ix)
there is no outstanding request for a ruling from any Taxing Authority, request
for a consent by a Taxing Authority for a change in a method of accounting,
subpoena or request for information by any Taxing Authority, or closing
agreement, with respect to the Company; (x) no claim has ever been made by a
Taxing Authority in a jurisdiction where the Company has not paid any Tax or
filed Tax Returns, asserting that the Company is or may be subject to Tax in
such jurisdiction; (xi) the Company has provided to Purchaser true, complete and
correct copies of all Tax Returns relating to, and all audit reports and
correspondence relating to each proposed adjustment, if any, made by any Taxing
Authority with respect to, any taxable period ending after the Balance Sheet
Date; (xii) there is no outstanding power of attorney from the Company
authorizing anyone to act on behalf of the Company in connection with any Tax,
Tax Return or Action relating to any Tax or Tax Return of the Company; (xiii)
the Company is not, and has ever been, a party to any Tax sharing or Tax
allocation Contract; (xiv) the Company is and has never been included in any
consolidated, combined or unitary Tax Return; (xv) to the knowledge of the
Company, no issue has been raised by a Taxing Authority in any prior Action
relating to the Company with respect to any Tax for any period which, by
application of the same or similar principles, could reasonably be expected to
result in a proposed Tax deficiency of the Company for any other period; (xvi)
the Company has not requested any extension of time within which to file any Tax
Return, which Tax Return has since not been filed; and (xvii) the Company is not
and has not been treated as a foreign corporation for U.S. federal income tax
purposes.

(b)                The unpaid Taxes of the Company (i) did not, as of the most
recent fiscal month end, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the Balance Sheet and (ii) will not exceed
that reserve as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company in filing its Tax
Return.

3.33             Environmental Laws.

(a)                 The Company has not (i) received any written notice of any
alleged claim, violation of or liability under any Environmental Law which has
not heretofore been cured or for which there is any remaining liability; (ii)
disposed of, emitted, discharged, handled, stored, transported, used or released
any Hazardous Materials, arranged for the disposal, discharge, storage or
release of any Hazardous Materials, or exposed any employee or other individual
to any Hazardous Materials so as to give rise to any liability or corrective or
remedial obligation under any Environmental Laws; or (iii) entered into any
agreement that may require it to guarantee, reimburse, pledge, defend, hold
harmless or indemnify any other Person with respect to liabilities arising out
of Environmental Laws or the Hazardous Materials Activities of the Company,
except in each case as would not, individually or in the aggregate, have a
Material Adverse Effect.

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(b)                The Company has delivered to Purchaser all material records
in its possession concerning the Hazardous Materials Activities of the Company
and all environmental audits and environmental assessments in the possession or
control of the Company of any facility currently owned, leased or used by the
Company which identifies the potential for any violations of Environmental Law
or the presence of Hazardous Materials on any property currently owned, leased
or used by the Company.

(c)                 There are no Hazardous Materials in, on, or under any
properties owned, leased or used at any time by the Company such as could give
rise to any material liability or corrective or remedial obligation of the
Company under any Environmental Laws.

3.34             Finders’ Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of the Company or any of Affiliates who might be entitled to any fee or
commission from Purchaser or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.

3.35             Powers of Attorney and Suretyships. The Company does not have
any general or special powers of attorney outstanding (whether as grantor or
grantee thereof) or any obligation or liability (whether actual, accrued,
accruing, contingent, or otherwise) as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any Person.

3.36             Directors and Officers. Schedule 3.36 sets forth a true,
correct and complete list of all directors and officers of the Company.

3.37             Other Information. Neither this Agreement nor any of the
documents or other information made available to Purchaser or its Affiliates,
attorneys, accountants, agents or representatives pursuant hereto or in
connection with Purchaser’s due diligence review of the Business, the Company
Common Stock, the Company’s assets or the transactions contemplated by this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained therein not misleading. The Company has provided Purchaser
with all requested material information regarding the Business.

3.38             Certain Business Practices. Neither the Company, nor any
director, officer, agent or employee of the Company (in their capacities as
such) has (i) used any funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees, to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977 or (iii) made any other unlawful payment. Neither
the Company, nor any director, officer, agent or employee of the Company (nor
any Person acting on behalf of any of the foregoing, but solely in his or her
capacity as a director, officer, employee or agent of the Company) has, since
December 30, 2014, directly or indirectly, given or agreed to give any gift or
similar benefit in any material amount to any customer, supplier, governmental
employee or other Person who is or may be in a position to help or hinder the
Company or assist the Company in connection with any actual or proposed
transaction, which, if not given could reasonably be expected to have had a
Material Adverse Effect on the Company, or which, if not continued in the
future, could reasonably be expected to adversely affect the business or
prospects of the Company or that could reasonably be expected to subject the
Company to suit or penalty in any private or governmental litigation or
proceeding.

3.39             Money Laundering Laws. The operations of the Company are and
have been conducted at all times in compliance with laundering statutes in all
applicable jurisdictions, the rules and regulations thereunder and any related
or similar rules, regulations or guidelines, issued, administered or enforced by
any governmental authority (collectively, the “Money Laundering Laws”), and no
Action involving the Company with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.

3.40             OFAC. Neither the Company, nor any director or officer of the
Company (nor, to the knowledge of the Company, any agent, employee, affiliate or
Person acting on behalf of the Company) is currently identified on the specially
designated nationals or other blocked person list or otherwise currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”); and the Company has not, directly or
indirectly, used any funds, or loaned, contributed or otherwise made available
such funds to any subsidiary, joint venture partner or other Person, in
connection with any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or
any other country sanctioned by OFAC or for the purpose of financing the
activities of any Person currently subject to, or otherwise in violation of, any
U.S. sanctions administered by OFAC in the last five (5) fiscal years.

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3.41             Not an Investment Company. The Company is not an “investment
company” within the meaning of the Investment Company Act of 1940, as amended,
and the rules and regulations promulgated thereunder.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser hereby represents and warrants to Sellers and the Company that:

4.1                Corporate Existence and Power. Purchaser is a company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser has all power and authority, corporate and otherwise, and
all governmental licenses, franchises, Permits, authorizations, consents and
approvals required to own and operate its properties and assets and to carry on
its business as presently conducted and as proposed to be conducted.

4.2                Corporate Authorization. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation by the
Purchaser of the transactions contemplated hereby are within the corporate
powers of the Purchaser and have been duly authorized by all necessary corporate
action on the part of the Purchaser, including each of the Purchaser Parties’
board of directors to the extent required by the its organizational documents,
any other applicable Law or any contract to which Purchase or any of its
shareholders is a party or by which or its securities are bound. This Agreement
has been duly executed and delivered by each Purchaser and it constitutes a
valid and legally binding agreement of Purchaser, enforceable against it in
accordance with its terms.

4.3                Governmental Authorization. Other than as required under
Delaware Law, or as otherwise set forth on Schedule 4.3, neither the execution,
delivery nor performance of this Agreement requires any consent, approval,
license or other action by or in respect of, or registration, declaration or
filing with any Authority.

4.4                Non-Contravention. The execution, delivery and performance by
the Purchaser of this Agreement do not and will not contravene or conflict with
or constitute a violation of any provision of any Law, judgment, injunction,
order, writ, or decree binding upon the Purchaser.

4.5                Finders’ Fees. There is no investment banker, broker, finder
or other intermediary which has been retained by or is authorized to act on
behalf of Purchaser or its Affiliates who might be entitled to any fee or
commission from the Company or any of its Affiliates upon consummation of the
transactions contemplated by this Agreement.  

ARTICLE V
COVENANTS OF ALL PARTIES HERETO

The parties hereto covenant and agree that:

5.1                Best Efforts; Further Assurances. Subject to the terms and
conditions of this Agreement, each party shall use its best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or desirable under applicable laws, to consummate and implement
expeditiously the transaction contemplated by this Agreement. The parties hereto
shall execute and deliver such other documents, certificates, agreements and
other writings and take such other actions as may be necessary or desirable in
order to consummate or implement expeditiously the transaction contemplated by
this Agreement.

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5.2                Conduct of the Business.

(a)                 From the date hereof through the Closing Date, the Company
shall conduct the Business only in the ordinary course (including the payment of
accounts payable and the collection of accounts receivable), consistent with
past practices, and shall not enter into any material transactions without the
prior written consent of Purchaser, and shall use its best efforts to preserve
intact its business relationships with employees, clients, suppliers and other
third parties. Without limiting the generality of the foregoing, from the date
hereof until and including the Closing Date, without Purchaser’s prior written
consent (which shall not be unreasonably withheld), the Company shall not:

(i)                  amend, modify or supplement its certificate of
incorporation and bylaws or other organizational or governing documents;

(ii)                make any capital expenditures in excess of $50,000
(individually or in the aggregate);

(iii)              sell, lease, license or otherwise dispose of any of the
Company’s assets except (1) pursuant to existing contracts or commitments
disclosed herein and (2) sales of inventory in the ordinary course consistent
with past practice;

(iv)               accept returns of products sold from inventory except in the
ordinary course, consistent with past practice;

(v)                pay, declare or promise to pay any dividends or other
distributions with respect to its capital stock, or pay, declare or promise to
pay any other payments to any stockholder of the Company;

(vi)               suffer or incur any lien on the Company’s assets;

(vii)             suffer any damage, destruction or loss of property related to
any of the Company’s assets, whether or not covered by insurance;

(viii)           merge or consolidate with or acquire any other Person or be
acquired by any other Person;

(ix)               suffer any insurance policy protecting any of the Company’s
assets to lapse;

(x)                make any change in its accounting principles or methods or
write down the value of any inventory or assets;

(xi)               change the place of business or jurisdiction of organization
of the Company;

(xii)             extend any loans other than travel or other expense advances
to employees in the ordinary course of business not to exceed $10,000
individually or $50,000 in the aggregate;

(xiii)           issue, redeem or repurchase any capital stock, membership
interests or other securities, or issue any securities exchangeable for or
convertible into any shares of its capital stock;

(xiv)           effect or agree to any change in any practices or terms,
including payment terms, with respect to customers or suppliers;

(xv)             make or change any material tax election or change any annual
tax accounting periods; or

(xvi)           agree to do any of the foregoing.

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(b)                The Company shall (i) take or agree to take any action that
might make any representation or warranty of the Company inaccurate or
misleading in any respect at, or as of any time prior to, the Closing Date or
(ii) omit to take, or agree to omit to take, any action necessary to prevent any
such representation or warranty from being inaccurate or misleading in any
respect at any such time.

5.3                Access to Information.

(a)                 From the date hereof until and including the Closing Date,
the Company shall, to the best of its ability, (i) continue to give the
Purchaser, its legal counsel and other representatives full access to the
offices, properties and, books and records, (ii) furnish to the Purchaser, its
legal counsel and other representatives such information relating to the
Business as such Persons may request and (iii) cause the employees, legal
counsel, accountants and representatives of the Company to cooperate with
Purchaser in its investigation of the Business; provided that no investigation
pursuant to this Section (or any investigation prior to the date hereof) shall
affect any representation or warranty given by the Company and, provided
further, that any investigation pursuant to this Section shall be conducted in
such manner as not to interfere unreasonably with the conduct of the Business of
the Company.

 

5.4                Lock-up. For a period commencing on the date hereof and
ending on the first anniversary after the conversion of Series C Preferred Stock
(the “Lock-Up Period”), each Seller agrees that he will not, without the prior
written consent of the Purchaser, (i) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant for the sale of, lend or otherwise
dispose of or transfer any shares of the Purchaser’s Common Stock or any
securities convertible into, or exercisable or exchangeable, for shares of
Common Stock of the Company (whether such shares or any such securities are now
owned or hereafter acquired) or publicly disclose the intention to make any such
offer, pledge, sale, contract to sell, contract to purchase, purchase,
disposition or filing or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of shares of capital stock of the Company.

ARTICLE VI
CONDITIONS TO CLOSING

6.1                Condition to the Obligations of the Parties. The obligations
of all of the parties to consummate the Closing are subject to the satisfaction
of all the following conditions: (a) no provision of any applicable Laws, and no
judicial order, shall prohibit or impose any condition on the consummation of
the Closing, and (b) there shall not be any pending action brought by a
third-party non-Affiliate to enjoin or otherwise restrict the consummation of
the Closing.

6.2                Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the Closing are subject to the satisfaction, or the
waiver at the Purchaser’s discretion, of the following further conditions:

(a)                 Each Seller and the Company shall have performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the Closing Date.

(b)                All of the representations and warranties of Sellers and the
Company contained in this Agreement and in any certificate or other writing
delivered by Sellers or the Company pursuant hereto, disregarding all
qualifications and expectations contained therein relating to materiality or
Material Adverse Effect, regardless of whether it involved a known risk, shall
be true and correct in all material respects at and as of the Closing Date, as
if made at and as of such date.

(c)                 Purchaser shall have received a certificate signed by
Sellers and an authorized officer of the Company to the effect set forth in
clauses (a) and (b) of this Section 6.2.

(d)                The Company shall have delivered to (i) the Purchaser the
Company’s shareholder register with an official corporate seal, evidencing that
the iFresh BVI’s name has been duly entered as a holder of the Equity Interests,
and (ii) an investment certificate with an official corporate seal affixed
thereto evidencing the iFresh BVI’s ownership of the Equity Interests
immediately after the Closing.

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(e)                 All approval and registration formalities as set forth in
Section 2.3 hereof shall have been completed, and shall be in full force and
effect as of the Closing Date, and the Company shall have provided to Purchaser
certified true copies of such approval and registration documents.

ARTICLE VII
INDEMNIFICATION

7.1                Indemnification of Sellers. Purchaser hereby agrees to
indemnify and hold harmless each Seller, each of his Affiliates and each of his
partners, employees, attorneys and agents and permitted assignees (the “Seller
Indemnitees”), against and in respect of any and all out-of-pocket loss, cost,
payments, demand, penalty, forfeiture, expense, liability, judgment, deficiency
or damage, and diminution in value or claim (including actual costs of
investigation and attorneys’ fees and other costs and expenses) (all of the
foregoing collectively, “Losses”) incurred or sustained by any Seller Indemnitee
as a result of or in connection with any breach, inaccuracy or nonfulfillment or
the alleged breach, inaccuracy or nonfulfillment of any of the representations,
warranties and covenants of Purchaser contained herein or any certificate or
other writing delivered pursuant hereto.

7.2                Indemnification of Purchaser. Each Seller hereby agrees to
indemnify and hold harmless Purchaser, each of its Affiliates, and each of their
members, managers, partners, directors, officers, employees, attorneys and
agents and permitted assignees (the “Purchaser Indemnitees”) against and in
respect of any Losses incurred or sustained by any Purchaser Indemnitee as a
result of any breach, inaccuracy or nonfulfillment or the alleged breach, of any
of the representations, warranties and covenants of Sellers or the Company
contained herein or in any certificate or other writing delivered pursuant
hereto.

7.3                Indemnification Procedures. The following procedures shall
apply with respect to all claims by either a Seller Indemnitee or a Purchaser
Indemnitee (an “Indemnified Party”) for indemnification:

(a)                 An Indemnified Party shall give the Purchaser or Sellers, as
applicable, prompt notice (an “Indemnification Notice”) of any third-party
action with respect to which such Indemnified Party seeks indemnification
pursuant to Section 7.1 or 7.2 (a “Third-Party Claim”), which shall describe in
reasonable detail the Loss that has been or may be suffered by the Indemnified
Party. The failure to give the Indemnification Notice shall not impair any of
the rights or benefits of such Indemnified Party under Section 7.1 or 7.2,
except to the extent such failure materially and adversely affects the ability
of Purchaser or Sellers, as applicable (any of such parties, “Indemnifying
Parties”) to defend such claim or increases the amount of such liability.

(b)                In the case of any Third-Party Claims as to which
indemnification is sought by any Indemnified Party, such Indemnified Party shall
be entitled, at the sole expense and liability of the Indemnifying Parties, to
exercise full control of the defense, compromise or settlement of any
Third-Party Claim unless the Indemnifying Parties, within a reasonable time
after the giving of an Indemnification Notice by the Indemnified Party (but in
any event within ten (10) days thereafter), shall (i) deliver a written
confirmation to such Indemnified Party that the indemnification provisions of
Section 7.1 or 7.2 are applicable to such action and the Indemnifying Parties
will indemnify such Indemnified Party in respect of such action pursuant to the
terms of Section 7.1 or 7.2 and, notwithstanding anything to the contrary, shall
do so without asserting any challenge, defense, limitation on the Indemnifying
Parties liability for Losses, counterclaim or offset, (ii) notify such
Indemnified Party in writing of the intention of the Indemnifying Parties to
assume the defense thereof, and (iii) retain legal counsel reasonably
satisfactory to such Indemnified Party to conduct the defense of such
Third-Party Claim.

(c)                 If the Indemnifying Parties assume the defense of any such
Third-Party Claim pursuant to Section 7.3(b), then the Indemnified Party shall
cooperate with the Indemnifying Parties in any manner reasonably requested in
connection with the defense, and the Indemnified Party shall have the right to
be kept fully informed by the Indemnifying Parties and their legal counsel with
respect to the status of any legal proceedings, to the extent not inconsistent
with the preservation of attorney-client or work product privilege. If the
Indemnifying Parties so assume the defense of any such Third-Party Claim the
Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel employed by the Indemnified Party
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Parties have agreed to pay such fees and expenses, or (ii) the named parties to
any such Third-Party Claim (including any impleaded parties) include an
Indemnified Party and an Indemnifying Party and such Indemnified Party shall
have been advised by its counsel that there may be a conflict of interest
between such Indemnified Party and the Indemnifying Parties in the conduct of
the defense thereof, and in any such case the reasonable fees and expenses of
such separate counsel shall be borne by the Indemnifying Parties.

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(d)                If the Indemnifying Parties elect to assume the defense of
any Third- Party Claim pursuant to Section 7.3(b), the Indemnified Party shall
not pay, or permit to be paid, any part of any claim or demand arising from such
asserted liability unless the Indemnifying Parties withdraw from or fail to
vigorously prosecute the defense of such asserted liability, or unless a
judgment is entered against the Indemnified Party for such liability. If the
Indemnifying Parties do not elect to defend, or if, after commencing or
undertaking any such defense, the Indemnifying Parties fail to adequately
prosecute or withdraw such defense, the Indemnified Party shall have the right
to undertake the defense or settlement thereof, at the Indemnifying Parties’
expense. Notwithstanding anything to the contrary, the Indemnifying Parties
shall not be entitled to control, but may participate in, and the Indemnified
Party (at the expense of the Indemnifying Parties) shall be entitled to have
sole control over, the defense or settlement of (i) that part of any Third Party
Claim (x) that seeks a temporary restraining order, a preliminary or permanent
injunction or specific performance against the Indemnified Party, or (y) to the
extent such Third Party Claim involves criminal allegations against the
Indemnified Party or (ii) the entire Third Party Claim if such Third Party Claim
would impose liability on the part of the Indemnified Party in an amount which
is greater than the amount as to which the Indemnified Party is entitled to
indemnification under this Agreement. In the event the Indemnified Party retains
control of the Third Party Claim, the Indemnified Party will not settle the
subject claim without the prior written consent of the Indemnifying Party, which
consent will not be unreasonably withheld or delayed.

(e)                 If the Indemnified Party undertakes the defense of any such
Third-Party Claim pursuant to Section 7.1 or 7.2 and proposes to settle the same
prior to a final judgment thereon or to forgo appeal with respect thereto, then
the Indemnified Party shall give the Indemnifying Parties prompt written notice
thereof and the Indemnifying Parties shall have the right to participate in the
settlement, assume or reassume the defense thereof or prosecute such appeal, in
each case at the Indemnifying Parties’ expense. The Indemnifying Parties shall
not, without the prior written consent of such Indemnified Party settle or
compromise or consent to entry of any judgment with respect to any such
Third-Party Claim (i) in which any relief other than the payment of money
damages is or may be sought against such Indemnified Party, (ii) in which such
Third Party Claim could be reasonably expected to impose or create a monetary
liability on the part of the Indemnified Party (such as an increase in the
Indemnified Party’s income Tax) other than the monetary claim of the third party
in such Third-Party Claim being paid pursuant to such settlement or judgment, or
(iii) which does not include as an unconditional term thereof the giving by the
claimant, person conducting such investigation or initiating such hearing,
plaintiff or petitioner to such Indemnified Party of a release from all
liability with respect to such Third-Party Claim and all other actions (known or
unknown) arising or which might arise out of the same facts.

7.4                Periodic Payments. Any indemnification required by Section
7.1 or 7.2 for costs, disbursements or expenses of any Indemnified Party in
connection with investigating, preparing to defend or defending any action shall
be made by periodic payments by the Indemnifying Parties to each Indemnified
Party during the course of the investigation or defense, as and when bills are
received or costs, disbursements or expenses are incurred.

7.5                Insurance. Any indemnification payments hereunder shall take
into account any insurance proceeds or other third party reimbursement actually
received.

7.6                Survival of Indemnification Rights. The representations and
warranties of Purchaser, the Company and Sellers shall survive for a twelve (12)
month period following the Closing.

ARTICLE VIII
TERMINATION

8.1                Termination Upon Default.

(a)                 Sellers may terminate this Agreement by giving notice to the
Purchaser on or prior to the Closing Date, without prejudice to any rights or
obligations Sellers may have, if Purchaser shall have materially breached any
representation or warranty or breached any agreement or covenant contained
herein on or prior to the Closing Date, and in either case, such breach is not
cured within ten (10) days following receipt by the Purchaser of a notice
describing in reasonable detail the nature of such breach.

22

 

(b)                The Purchaser may terminate this Agreement by giving notice
to Sellers, without prejudice to any rights or obligations Purchaser or Company
may have, if Sellers shall have materially breached any of their covenants,
agreements, representations, and warranties contained herein to be performed on
or prior to the Closing Date and such breach shall not be cured by ten (10) days
following receipt by Sellers of a notice describing in reasonable detail the
nature of such breach.

(c)                 In the event this Agreement is terminated by Sellers
pursuant to Section 8.1(a), Purchaser shall be responsible for paying all of its
own expenses and those of Sellers and the Company incurred in connection with
this Agreement.

(d)                In the event this Agreement is terminated by the Purchaser
pursuant to Section 8.1(b), Sellers shall be responsible for paying all of its
own expenses and the expenses of Purchaser incurred in connection with this
Agreement.

8.2                Survival. This Article VIII shall survive any termination
hereof.

ARTICLE IX
MISCELLANEOUS

9.1                Notices. Any notice hereunder shall be sent in writing,
addressed as specified below, and shall be deemed given: (a) if by hand or
recognized courier service, by 4:00PM on a business day, addressee’s day and
time, on the date of delivery, and otherwise on the first business day after
such delivery; (b) if by fax or email, on the date that transmission is
confirmed electronically, if by 4:00PM on a business day, addressee’s day and
time, and otherwise on the first business day after the date of such
confirmation; or (c) five days after mailing by certified or registered mail,
return receipt requested. Notices shall be addressed to the respective parties
as follows (excluding telephone numbers, which are for convenience only), or to
such other address as a party shall specify to the others in accordance with
these notice provisions:

if to Purchaser, to:

iFresh Inc.
2-39 54th Avenue
Long Island City, NY 11101
Attention: Long Deng
Telecopy: 718-706-1586

if to Sellers, to:

Fei Zhang
Room 1605, Floor 16, Building 12, Wang Jing Fu Tong Xi Da Jie, Chaoyang
District, Beijing, China
Attn: Fei Zhang
Fax: [__________]

if to Company, to:

Jiuxiang Blue Sky Technology (Beijing) Co., Ltd.

Room 1605, Floor 16, Building 12, Wang Jing Fu Tong Xi Da Jie, Chaoyang
District, Beijing, China
Attn: Fei Zhang
Fax: [__________]

 

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9.2                Amendments; No Waivers; Remedies.

(a)                 This Agreement cannot be amended, except by a writing signed
by each party, or terminated orally or by course of conduct. No provision hereof
can be waived, except by a writing signed by the party against whom such waiver
is to be enforced, and any such waiver shall apply only in the particular
instance in which such waiver shall have been given.

(b)                Neither any failure or delay in exercising any right or
remedy hereunder or in requiring satisfaction of any condition herein nor any
course of dealing shall constitute a waiver of or prevent any party from
enforcing any right or remedy or from requiring satisfaction of any condition.
No notice to or demand on a party waives or otherwise affects any obligation of
that party or impairs any right of the party giving such notice or making such
demand, including any right to take any action without notice or demand not
otherwise required by this Agreement. No exercise of any right or remedy with
respect to a breach of this Agreement shall preclude exercise of any other right
or remedy, as appropriate to make the aggrieved party whole with respect to such
breach, or subsequent exercise of any right or remedy with respect to any other
breach.

(c)                 Except as otherwise expressly provided herein, no statement
herein of any right or remedy shall impair any other right or remedy stated
herein or that otherwise may be available.

(d)                Notwithstanding anything else contained herein, neither shall
any party seek, nor shall any party be liable for, punitive or exemplary
damages, under any tort, contract, equity, or other legal theory, with respect
to any breach (or alleged breach) of this Agreement or any provision hereof or
any matter otherwise relating hereto or arising in connection herewith.

9.3                Arms’ Length Bargaining; no Presumption Against Drafter. This
Agreement has been negotiated at arms-length by parties of equal bargaining
strength, each represented by counsel or having had but declined the opportunity
to be represented by counsel and having participated in the drafting of this
Agreement. This Agreement creates no fiduciary or other special relationship
between the parties, and no such relationship otherwise exists. No presumption
in favor of or against any party in the construction or interpretation of this
Agreement or any provision hereof shall be made based upon which Person might
have drafted this Agreement or such provision.

9.4                Publicity. Except as required by law, the parties agree that
neither they nor their agents shall issue any press release or make any other
public disclosure concerning the transactions contemplated hereunder without the
prior approval of the other party hereto.

9.5                Expenses. Except as otherwise expressly set forth herein, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such cost
or expense.

9.6                No Assignment or Delegation. No party may assign any right or
delegate any obligation hereunder, including by merger, consolidation, operation
of law, or otherwise, without the written consent of the other party. Any
purported assignment or delegation without such consent shall be void, in
addition to constituting a material breach of this Agreement.

9.7                Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the state of New York, without
giving effect to the conflict of laws principles thereof.

9.8                Counterparts; Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall constitute an original, but all of
which shall constitute one agreement. This Agreement shall become effective upon
delivery to each party of an executed counterpart or the earlier delivery to
each party of original, photocopied, or electronically transmitted signature
pages that together (but need not individually) bear the signatures of all other
parties.

9.9                Entire Agreement. This Agreement sets forth the entire
agreement of the parties with respect to the subject matter hereof and thereof
and supersedes all prior and contemporaneous understandings and agreements
related thereto (whether written or oral), all of which are merged herein. No
provision of this Agreement may be explained or qualified by any agreement,
negotiations, understanding, discussion, conduct or course of conduct or by any
trade usage. Except as otherwise expressly stated herein, there is no condition
precedent to the effectiveness of any provision hereof or thereof. No party has
relied on any representation from, warranty or agreement of any person in
entering into this Agreement, prior or contemporaneous, except those expressly
stated herein.

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9.10             Severability. A determination by a court or other legal
authority that any provision that is not of the essence of this Agreement is
legally invalid shall not affect the validity or enforceability of any other
provision hereof. The parties shall cooperate in good faith to substitute (or
cause such court or other legal authority to substitute) for any provision so
held to be invalid a valid provision, as alike in substance to such invalid
provision as is lawful.

9.11             Construction of Certain Terms and References; Captions. In this
Agreement:

(a)                 References to particular sections and subsections,
schedules, and exhibits not otherwise specified are cross-references to sections
and subsections, schedules, and exhibits of this Agreement.

(b)                The words “herein,” “hereof,” “hereunder,” and words of
similar import refer to this Agreement as a whole and not to any particular
provision of this Agreement, and, unless the context requires otherwise, “party”
means a party signatory hereto.

(c)                 Any use of the singular or plural, or the masculine,
feminine, or neuter gender, includes the others, unless the context otherwise
requires; “including” means “including without limitation;” “or” means “and/or;”
“any” means “any one, more than one, or all;” and, unless otherwise specified,
any financial or accounting term has the meaning of the term under United States
generally accepted accounting principles as consistently applied heretofore by
party.

(d)                Unless otherwise specified, any reference to any agreement
(including this Agreement), instrument, or other document includes all
schedules, exhibits, or other attachments referred to therein, and any reference
to a statute or other law includes any rule, regulation, ordinance, or the like
promulgated thereunder, in each case, as amended, restated, supplemented, or
otherwise modified from time to time. Any reference to a numbered schedule means
the same-numbered section of the disclosure schedule.

(e)                 If any action is required to be taken or notice is required
to be given within a specified number of days following a specific date or
event, the day of such date or event is not counted in determining the last day
for such action or notice. If any action is required to be taken or notice is
required to be given on or before a particular day which is not a Business Day,
such action or notice shall be considered timely if it is taken or given on or
before the next Business Day.

(f)                  Captions are not a part of this Agreement, but are included
for convenience, only.

9.12             Further Assurances. Each party shall execute and deliver such
documents and take such action, as may reasonably be considered within the scope
of such party’s obligations hereunder, necessary to effectuate the transactions
contemplated by this Agreement.

9.13             Third Party Beneficiaries. Neither this Agreement nor any
provision hereof confers any benefit or right upon or may be enforced by any
Person not a signatory hereto.

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IN WITNESS WHEREOF, Sellers, Purchaser and the Company have each caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.

  SELLERS:       /s/Fei Zhang     Fei Zhang                 /s/Liu Meng     Liu
Meng               PURCHASER:         iFresh Inc.             By: /s/Long Deng  
    Name: Long Deng       Title:  CEO   COMPANY:                            
Jiuxiang Blue Sky Technology (Beijing) Co., Ltd.

            By: /s/Liu Meng       Name: Liu Meng       Title: General Manager  
     

 

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Exhibit A

 

Certificate of Designation of

the Relative Rights and Preferences of the Series C Convertible Preferred Stock

 

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