Document:

applied_8k-ex1001.htm

Exhibit 4.1

 

REGULATION D SUBSCRIPTION AND INVESTMENT AGREEMENT

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR OTHER SECURITIES AUTHORITIES.  THEY MAY NOT BE SOLD OR TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION TO THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES LAWS.

THIS SUBSCRIPTION AGREEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES DESCRIBED HEREIN BY OR TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.  THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL, STATE OR FOREIGN SECURITIES AUTHORITIES, NOR HAVE ANY SUCH AUTHORITIES REVIEWED OR DETERMINED THE ACCURACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK, INCLUDING BUT NOT LIMITED TO THOSE RISK FACTORS IDENTIFIED IN THE COMPANY’S FORM 10K FOR 2009 FILED ON MARCH 4, 2010 WITH THE SECURITIES AND EXCHANGE COMMISSION.  INVESTORS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT TERMS AND CONDITIONS OF THE PROPOSED INVESTMENT AND THEIR OWN ASSESSMENT OF THE RISKS INVOLVED.

This Regulation D Subscription Agreement (the “Agreement”) is executed bySichuan AnxianYinhe Constructional and Chemical Group Co., Ltd (the “Subscriber”) in connection with the offer to the Subscriber of, and the subscription by the Subscriber for, shares of Common Stock, $.001 par value per share (the “Common Stock”), of APPLIED NANOTECH HOLDINGS, INC., a Texas corporation (the “Company”).  The Company shall sell to the Subscriber 6,578,948 shares of the Company’s Common Stock at a price of $0.38 per share, for an aggregate purchase price of $2.5 million.

The solicitation of this Subscription by the Company, and if accepted by the Company, the sale of the shares of Common Stock subscribed for, are being made on reliance upon the provisions of Regulation D (“Regulation D”) promulgated under the Securities Act of 1933 (the “Securities Act”).

The undersigned Subscriber and the Company, upon acceptance of this Agreement, hereby agree as follows:

  

  

1.           Offering

1.1           Offer to Subscribe; Purchase Price and Closing; and Placement Fees.  Subject to satisfaction of the conditions to the closing of a purchase and sale of Common Stock as to each purchaser of Common Stock (the “Closing”) set forth in Section 1.2 below, the Subscriber hereby offers to subscribe for and purchase shares of Common Stock, for the aggregate purchase price set forth in Section 8 of this Agreement, all in accordance with the terms and conditions of this Agreement.  The Closing shall be deemed to occur when this Agreement has been executed by both the Subscriber and the Company, and full payment for the shares of Common Stock subscribed for shall have been made by the Subscriber, by wire transfer in United States Dollars or as otherwise agreed between the Subscriber and the Company, to the Company as set forth in Section 7.1(a) in consideration for the Company’s delivery of certificates representing the shares of Common Stock so subscribed for.

1.2           Conditions to Subscriber’s Obligations.  The Subscriber’s obligations hereunder are conditioned upon the occurrence of all of the following:

	
  

	
(a)

	
other than as described on Schedule 1.2 attached hereto, there have been no material adverse changes in the Company’s business prospects or financial condition since the date of the last balance sheet included in the Disclosure Documents (as defined below in Section 4.2);

	
  

	
(b)

	
the representations and warranties of the Company shall be true and correct in all material respects on the date of Closing, as if made on such date, and the Company shall deliver a certificate, signed by an officer of the Company, to such effect; and

	
  

	
(c)

	
the Subscription Agreement has been accepted by the Company.

1.3           Closing. The shares are to be delivered and funds to be wired no later than March 31, 2011.

2.           Representations and Warranties of the Subscriber.  The Subscriber hereby represents and warrants to the Company as follows (which representations and warranties shall be true as of the date of Closing):

2.1           Accredited Investor.  The Subscriber hereby represents and warrants to the Company that it is an “accredited investor,” as defined in Rule 501 of Regulation D, and has marked the applicable box set forth in Section 9 of this Agreement signifying such status.

	
  

	
2.2

	
Investment Experience; Access to Information; Independent Investigation.

2.2.1            Access to Information.  The Subscriber or its professional advisor has been granted the opportunity to ask questions of and receive answers from representatives of the Company, and its officers, directors, employees and agents concerning the terms and conditions of the Offering, and the Company and its business and prospects, and to obtain any additional information which the Subscriber or its professional advisor deems necessary to verify the accuracy of the information received.  The foregoing, however, does not limit or modify the Subscriber’s right to rely upon representations and warranties of the Company in Section 4 of this Agreement.

  

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2.2.2            Ability to Evaluate.  The Subscriber has such knowledge and experience in financial and business matters that it is fully capable of evaluating the merits and risks of an investment in the Company, including without limitation those set forth in the Disclosure Documents (as defined below in Section 4.2).

2.2.3            Disclosure Documents.  The Subscriber has received and reviewed the Disclosure Documents (as defined below in Section 4.2).  The foregoing, however, does not limit or modify the Subscriber’s right to rely upon the representations and warranties of the Company in Section 4 of this Agreement.

2.2.4            Investment Experience; Fend for Self.  The Subscriber has substantial experience in investing in securities and has made investments in securities other than those of the Company.  The Subscriber acknowledges that it is able to fend for itself in the transaction contemplated by this Agreement and that it has the ability to bear the economic risk of its investment in the Company.  The Subscriber has not been organized for the purpose of investing in securities of the Company.

2.2.5            Not an Affiliate.  The Subscriber is not an officer, director or “affiliate” (as that term is defined in Rule 415 of the Securities Act) of the Company.

2.3           Exempt Offering Under Regulation D

2.3.1            Investment; No Distribution.  The Subscriber is acquiring the shares of Common Stock subscribed for (the “Common Shares”) solely for investment purposes for the Subscriber’s own account (or for beneficiaries’ accounts over which the Subscriber has investment discretion but no discretionary authority as to voting or disposition) and not with a view to a distribution of all or any part thereof.  The Subscriber is aware that there are legal and practical limits on its ability to sell or dispose of the Common Shares and therefore, that the Subscriber must bear the economic risk of its investment for an indefinite period of time.  The Subscriber has adequate means of providing for its current needs and anticipated contingencies and has no need for liquidity of this investment.  The Subscriber’s commitment to illiquid investments is reasonable in relation to its net worth.

2.3.2            No General Solicitation.  The Common Shares were not offered to the Subscriber through, and the Subscriber is not aware of, any form of general solicitation or general advertising, including, without limitation, (i) any advertisement, articles, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, and (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising.

  

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2.3.3            No Registration of Common Shares.  The Subscriber understands that the Common Shares are not registered and therefore are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering, and that, under such laws and applicable regulations, such securities may not be transferred or resold without registration under the Securities Act or pursuant to an exemption therefrom.  In this connection, the Subscriber represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

2.3.4            Disposition.  Without in any way limiting the representations set forth above, the Subscriber further agrees not to make any disposition of all or any portion of the Securities unless and until:

 

	 	
(a) 

	
There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or

	 	
(b) 

	
The Subscriber shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, the Subscriber shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of the Common Shares under the Securities Act.

 

2.4           Due Authorization.

2.4.1            Authority.  The Subscriber, if executing this Subscription Agreement in a representative or fiduciary capacity, has full power and authority to execute and deliver this Subscription Agreement and each other document referred to herein for which a signature is required in such capacity and on behalf of the subscribing individual, partnership, trust, estate, corporation or other entity for whom or which the Subscriber is executing this Subscription Agreement.

2.4.2            Due Authorization.  The Subscriber, if an entity, is duly and validly organized, validly existing and in good standing as such entity under the laws of the jurisdiction of its organization, with full power and authority to purchase the Common Shares subscribed for and to execute and deliver this Agreement.

  

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               3.          Acknowledgments.  The Subscriber is aware of the following:

 

3.1           Risks of Investment.  The Subscriber recognizes that investment in the Company involves certain risks, including the potential loss of the Subscriber’s investment herein.  The Subscriber recognizes that this Agreement and the exhibits hereto do not purport to contain all the information which would be contained in a registration statement under the Securities Act;

3.2           No Government Approval.  The Subscriber acknowledges that no federal, state or foreign agency has passed upon or reviewed the terms and conditions of the Offering or made any finding or determination as to the fairness of the Offering;

3.3           Restrictions on Transfer.  The Subscriber may not sell, transfer, assign, pledge or otherwise dispose of all or any portion of the Securities in the absence of either an effective registration statement or an exemption from the registration requirements of the Securities Act and applicable state securities law. Under Rule 144, the shares are eligible for sale starting six months after the date of the funding of the investment;

3.4           Exempt Transaction.  The Common Shares are being offered and sold in reliance on specific exemptions from the registration requirements of federal and state law and the Subscriber’s representations, warranties, agreements, acknowledgments and applicability of such exemptions and the suitability of the Subscriber to acquire Common Shares.

3.5           Legends.  It is understood that any certificates evidencing the Common Shares shall bear the following legend:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, NOR THE SECURITIES LAWS OF ANY OTHER JURISDICTION.  THEY MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THOSE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT THE SALE OR TRANSFER IS PURSUANT TO AN EXEMPTION TO THE REGISTRATION REQUIREMENTS OF THOSE SECURITIES LAWS.”

4.           Representations and Warranties of the Company.  The Company hereby makes the following representations and warranties to the Subscriber, except as disclosed in the Disclosure Documents or otherwise disclosed to Subscriber, which representations and warranties shall be true as of the date of acceptance of this Agreement by the Company and as of Closing:

  

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4.1           Organization, Good Standing, and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and has all requisite corporate power and authority to carry on its business as now conducted and as currently proposed to be conducted.  The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on the business or properties of the Company and its subsidiaries taken as a whole.  The Company is not the subject of any pending or, to its knowledge, threatened or contemplated investigation or administrative or legal proceeding by the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, or the Securities and Exchange Commission, or any state securities commission, or any other governmental entity, which are required to be disclosed in the Disclosure Documents and have not been disclosed.

4.2           Corporate Condition.  The Company has timely filed all forms, and reports and documents with the Securities and Exchange Commission required to be filed by it under the Securities Exchange Act 1934, as amended (the “Exchange Act”) through the date hereof (collectively, the “SEC Reports”).  Each of the SEC Reports, at the time filed, complied in all material respects with the requirements of the Exchange Act.  The Company has made available to the Subscriber a copy of the Company’s Form 10-K for the fiscal year ended December 31, 2009, and a copy of the Company’s Forms 10-Q, 8-K and S-1 filed by the Company since January 1, 2010 (the “Most Recent Filings Report”).  Other than as set forth in Schedule 4.2 attached hereto and made a part hereof, there have been no material adverse changes in the Company’s business, prospects, operations or financial condition since the date of the Most Recent Filings Report.  The SEC Reports, together with Schedule 4.2 and any other documents listed on Schedule 4.2(a) attached hereto and made a part hereof and furnished herewith by the Company to the Subscriber are referred to collectively as the “Disclosure Documents.”  The financial statements contained in the Disclosure Documents have been prepared in accordance with generally accepted accounting principles, consistently applied, and fairly present in all material respects the consolidated financial condition of the Company as of the dates of the balance sheets included therein and the consolidated results of its operations and cash flows for the periods then ended.  Without limiting the foregoing, there are no material liabilities, contingent or actual that are not disclosed in the Disclosure Documents (other than liabilities incurred by the Company in the ordinary course of its business, consistent with its past practice, after the periods covered by the Disclosure Documents).  The Company has paid all material taxes which are due, except for taxes which it reasonably disputes.  There is no material claim, litigation, or administrative proceeding pending, or, to the best of the Company’s knowledge, threatened or contemplated against the Company, except as disclosed in the Disclosure Documents.  This Agreement and the Disclosure Documents do not contain any  untrue statement of material fact and do not omit to state any material fact required to be stated therein or herein necessary to make the statements contained therein or herein not misleading in the light of the circumstances under which they were made.

4.3           Authorization.  All corporate action on the part of the Company by its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and the authorization, issuance and delivery of the Common Shares have been taken, and this Agreement constitutes valid and legally binding obligations of the Company, enforceable in accordance with their terms; provided, however that enforceability is subject to:  (i) applicable bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, and similar federal and state laws affecting the rights and remedies of creditors generally, and (ii) general principles of equity limiting the availability of equitable remedies (including but not limited to the remedy of specific performance), whether considered in a proceeding at law or in equity.  The Company has obtained all consents and approvals required for it to execute, deliver and perform this Agreement.

  

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4.4           Valid Issuance of Common Shares.  The Common Shares, when issued, sold and delivered in accordance with the terms hereof, for the consideration expressed herein, will be validly issued, fully paid and nonassessable and, based in part upon the representations of the Subscriber in this Agreement, will be issued in compliance with all applicable federal and state securities laws.  The Common Shares will be issued free of any preemptive rights.

4.5           Compliance with Other Instruments.  The Company is not in violation or default of any provisions of its Restated Articles of Incorporation or Bylaws as amended and in effect on and as of the date of this Agreement or of any material provision of any material instrument or contract to which it is a party or by which it is bound or, to its knowledge, of any provision of any federal or state judgment, writ, decree, order, statute, rule or governmental regulation applicable to the Company, which would have a material adverse effect on the Company’s business or prospects, except as described in the Disclosure Documents.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company.

4.6           Reporting Company.  The Company is subject to the reporting requirements of the Exchange Act, and has a class of securities registered under Section 12 or Section 15 of the Exchange Act.  When requested by the Subscriber, the Company shall furnish copies of reports filed by the Company with the Securities and Exchange Commission.

4.7           Authorized and Issued Shares.  The authorized and issued shares of the Company preferred stock, Common Stock and warrants, options, and instruments convertible into Common Stock as of December 31, 2010 are as set forth on Exhibit A.

4.8           Use of Proceeds.  As of the date hereof, the Company expects to use the proceeds from the Offering (less fees and expenses) for the purposes set forth on Exhibit B hereto.  These purposes are estimates and are subject to change, but represent the Company’s good faith best estimate of anticipated uses.

4.9           Compliance with Laws.  As of the date hereof, the conduct of the business of the Company complies in all material respects with all material statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto.  The Company has not received notice of any alleged violation of any statute, law, regulations, ordinance, rule, judgment, order or decree from any governmental authority.  The Company shall comply with all applicable securities laws with respect to the Offering.

  

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4.10           No Rights of Participation.  No person or entity, including, but not limited to, current or former shareholders of the Company, underwriters, brokers, agents or other third parties, has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the Offering  which has not been waived.

4.11           Disclosures.  There is no fact known to the Company (other than general economic conditions known to the public generally) that has not been disclosed in the Disclosure Documents that (a) could reasonably be expected to have a material adverse effect on the business, financial condition or results of operations of the Company, or which could reasonably be expected to materially and adversely affect the properties or assets of the Company or (b) could reasonably be expected to materially and adversely affect the ability of the Company to perform its obligations pursuant to this Agreement and the issuance of the Securities.

4.12           Representations True and Correct.  The foregoing representations, warranties and agreements are true, correct and complete in all material respects, and shall survive the Closing and the issuance of the Common Shares.

4.13           Underwriter’s Fees and Rights of First Refusal.  The Company is not obligated to pay any compensation or other fees, costs or related expenditures in cash or securities to any underwriter, broker, agent or other representative in connection with the Offering.

5.           Covenants of the Company

5.1           Independent Auditors.  The Company shall, until at least two (2) years after the date of the Closing, maintain as its independent auditors an accounting firm authorized to practice before the Securities and Exchange Commission.

5.2           Corporate Existence and Taxes.  The Company shall, until at least two (2) years after the date of the Closing, maintain its corporate existence in good standing (provided, however, that the foregoing covenant shall not prevent the Company from entering into any merger or corporate reorganization so long as the surviving entity in such transaction, if not the Company, assumes all of the Company’s obligations with respect to the Securities) and shall pay all its taxes when due, except for taxes which the Company disputes.

5.3           Filings with Securities and Exchange Commission.  The Company shall, upon request, provide the Subscriber with copies of its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K for as long as the Common Shares remain outstanding.

  

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5.4           Listing.  The Company shall use its best efforts to maintain the listing of its Common Stock on the OTC Bulletin Board or a national securities exchange or national quotation system.

6.           Miscellaneous

6.1           Representations and Warranties Survive the Closing; Severability.  The Subscriber’s and the Company’s representations and warranties shall survive the Closing of the transaction provided for hereby notwithstanding any due diligence investigation made by or on behalf of the party seeking to rely thereon.  In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

6.2           Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.  Neither party may assign its rights hereunder without the prior written consent of the other parties.

6.3           Governing Law.  This Agreement shall be governed by and construed under the laws of the State of Texas without respect to conflict of laws.

6.4           Execution in Counterparts Permitted.  This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one (1) instrument.

6.5           Titles and Subtitles; Gender.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.  The use in this Agreement of a masculine, feminine or neither pronoun shall be deemed to include a reference to the others.

6.6           Written Notices, Etc.  Any notice, demand or request required or permitted to be given by the Company or the Subscriber pursuant to the terms of this Agreement shall be in writing and shall be deemed given when delivered personally, or by facsimile (with a hard copy to follow by overnight or two (2) day courier), addressed to the parties at the addresses and/or facsimile telephone number of the parties set forth at the end of this Agreement or such other address as a party may request by notifying the other in writing.

6.7           Expenses.  Each of the Company and the Subscriber shall pay all costs and expenses that it respectively incurs, with respect to the negotiation, execution, delivery and performance of this Agreement.

  

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6.8           Entire Agreement; Written Amendments Required.  This Agreement, the Common Stock certificates and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein.  Neither this Agreement nor any terms hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought.

7.           Subscription and Wiring Instructions; Irrevocability.

7.1           Subscription

 

	 	
(a) 

	
Wire transfer of Subscription Funds.  Subscriber shall send its subscription funds by wire transfer to the Company as follows, unless otherwise agreed with the Company:

 

               Bank:                                      Chase Bank Texas

               Account Name:                       Applied Nanotech Holdings, Inc. 

               Account No.:                           081-00053751

               ABA Routing No.:                  113000609

 

	 	
(b) 

	
Irrevocable Subscription.  The Subscriber hereby acknowledges and agrees, subject to the provisions of any applicable laws providing for the refund of subscription amounts submitted by the  Subscriber, that this Agreement is irrevocable and that the Subscriber is not entitled to cancel, terminate or revoke this Agreement; provided, however, that if the conditions to Closing are not satisfied or if the Disclosure Documents are discovered prior to Closing to contain statements which are materially inaccurate, or omit statements of material facts, the Subscriber may revoke or cancel this Agreement.

 

	 	
(c) 

	
Company’s Right to Reject Subscription.  This Agreement shall be accepted by the Company when the Company countersigns this Agreement.  The Subscriber hereby confirms that the Company has full right in its sole discretion to accept or reject the subscription of the Subscriber, in whole or in part, provided that, if the Company decides to reject such subscription, the Company must do so promptly and in writing.  In the case of rejection, the Company will promptly return any rejected payments and (if rejected in whole) copies of all executed subscription documents (including without limitation this Agreement) to Subscriber.

 

 

  

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7.2           Acceptance of Subscription.  In the case of acceptance of this subscription, ownership of the number of securities being purchased hereby will pass to the Subscriber upon the Closing.

7.3           Subscriber to Forward Original Signed Subscription Agreement to Company.  The Subscriber agrees to courier to the Company its original inked signed Subscription Agreement within three (3) days after faxing said signed Agreement to the Company.

8.           Number of Shares and Purchase Price.  The undersigned Subscriber hereby subscribes for and agrees to purchase 6,578,948 shares of Common Stock for a total purchase price (to be paid by wire transfer) in the amount of Two million five hundred thousand dollars ($2,500,000.00) (the “Purchase Price”).

9.           Other Provisions. Upon completion of the investment, the Company agrees to appoint a representative, designated by subscriber, to its Board of Directors.

10.         Accredited Investor.  The Subscriber is (please check applicable box):

	
  

	
(a)

	
[x]

	
a corporation, business trust, limited liability company, or partnership not formed for the  specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.

	
  

	
(b)

	
[_]

	
any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment.

	
  

	
(c)

	
[_]

	
an individual, who

	
  

	
[_]

	
is a director, executive officer or general partner of the issuer of the securities being offered or sold or a director, executive officer or general partner of a general partner of that issuer.

	
  

	
[_]

	
has an individual net worth, or joint net worth with that person’s spouse, at the time of the purchase exceeding $1,000,000.

	
  

	
[_]

	
had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

	
  

	
(d)

	
[_]

	
an entity, each owner of which is an entity described in (a) or (b) above or is an individual described in (c) above.

  

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The undersigned acknowledges that this Agreement and the subscription represented hereby shall not be effective unless accepted by the Company as indicated below.

11. All notices and communications to be given by each party to the other shall be put in writing and addressed respectively to the parties at the following addresses:

ANHI

Applied Nanotech Holdings, Inc.

3006 Longhorn Blvd., Suite 107

Austin,TX   78758

Sichuan AnxianYinhe Constructional and Chemical Group Co., Ltd.

Jushui Town, Anxian, 622656 Mianyan City,

Sichuan Province, China.

(The remainder of this page is intentionally left blank.)

 

 

 

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, the undersigned Subscriber does hereby execute this Agreement effective the 13th day of February, 2011.

SUBSCRIBER

/s/ Xianrong Li

Name:  Xianrong Li

Title: Chief Executive Officer

 

DELIVERY  INSTRUCTIONS  FOR  PHYSICAL  CERTIFICATES:

Sichuan AnxianYinhe Constructional and Chemical Group Co., Ltd.

Jushui Town, Anxian, 622656 Mianyan City,

Sichuan Province, China.

ACCEPTANCE BY COMPANY:

 

THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY AND THE COMPANY AGREES TO BE BOUND BY THE TERMS AND CONDITIONS THEREOF THIS 13th DAY OF February, 2011.

 

	
 

	
By: 

	/s/ Douglas P. Baker	 
	 	 	Name: Douglas P. Baker	 
	 	 	
Title: Chief Executive Officer

	 

 

  

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EXHIBIT “A”

CAPITALIZATION

 

 

	 	 	Number of Shares	 
	 	Shares	of Common Stock	 
	 	Outstanding on	issuable upon	 
	 	December 31, 2010	conversion or exercise	 
	 	 	 	 
	Shares of Common Stock (A) :	109,967,628 	 	 
	 	 	 	 
	Committed to be released shares (B)	 	306,119 	 
	 	 	 	 
	Convertible Notes Payable (C)	 	10,180,301 	 
	 	 	 	 
	Common Stock Options: 	 	6,222,972 	 
	 	 	 	 
	Common Stock Warrants : 	 	 None	 
	 	 	 	 
	Total Potential Shares based on conversion with no further payment	 	
120,454,048

	 

 

                                                                                                        

                                                                                                           

    

                                                                                                                                          

                                                                                                                                           

  

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EXHIBIT “B”

USE OF PROCEEDS

Working Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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Schedule 1.2

MATERIAL ADVERSE CHANGES

None

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 16aspire_8k-ex1001.htm

EXHIBIT 10.1

   

ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (the “Agreement”) is entered into between Aspire International Inc. Inc a public company traded on the pink sheets (hereinafter (APIT.PK) (the “Purchaser”) and or (the “Company”) and Candid Global Resources Hong Kong Limited, (“the “Seller”) effective as of the 14th February, 2011 (the “Effective Date”) for purposes of this Agreement, each of the Purchaser and Seller shall be referred to individually as a “Party” and both of them shall be referred to collectively as the “Parties”

 

Recitals

 

A.   Seller desires to sell 100 % of their assets, including the sub-entity known as “Mygos and related trademarks and intellectual property for 10,000,000 common shares of Aspire International Inc.

 

B.    Buyer desires to pay the purchase consideration due to the Seller with transfer of a certificate in the name of Candid Global Resources Hong Kong Ltd.

    

Agreement

 

In consideration of the premises and of the mutual covenants contained in this Agreement, the Parties agree as follows:

 

Purchase of Intellectual Property Assets of Seller

 

1.1   Purchase and Sale. Subject to the terms and conditions of this Agreement, Seller agrees to sell to Purchaser, and Purchaser agrees to purchase from Seller, 100 % of Seller’s interest in Mygos including all patents, copyrights, trademarks, any other intellectual property of any kind, all claims for infringement, and all other assets and licenses of any kind owned by Seller.

 

1.2   Purchase Price. The Purchase Price of 10,000,000 shares common in Aspire  for all assets described in 1.1 supra; to be paid by the transfer and delivery of said shares.

 

1.3   Closing. The purchase and sale of the assets of Seller shall be consummated in the manner described in this Section.

 

1.4    Closing shall occur upon the Purchase Price being received by Seller (the “Closing Date”). All parties agree that all representations, covenants and warranties set fourth herein shall be true and correct as of the Closing Date, and same shall be a condition to Closing. At Closing, the following shall occur:

 

(a)    Purchaser shall deliver to seller registered in Seller’s name or in the names as nominated by Seller certificates for 10,000,000 shares of unregistered common stock of Aspire International Inc. Inc (APIT.PK).

   

  

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2.   Representations of Seller  Seller represents, warrants and agrees to and with Purchaser as follows as of the effective Date and as of the date (the “Closing Date”) on which the purchase and sale of the Assets  is consummated:

 

(a)    Seller is the sole beneficial, legal owner of Mygos contemplated by this and accompanying agreements;

   

(b)    Seller has full power, authority, and legal right to sell Mygos;

 

(c)    There are no charges, claims, liens, pledges, or other encumbrances on the Assets;

 

(d)    This Agreement constitutes a legal and binding obligation of the Seller, and is valid and enforceable against the Seller and Seller’s successors in accordance with its terms;

 

(e)   The execution, delivery and performance of this Agreement by the Seller does not require the consent or approval of any other person, entity or governmental agency.  This Agreement has been duly executed and delivered by Seller and constitutes a legal, valid and binding obligations of Seller, enforceable against Seller in accordance with its terms and not in violation of any other agreements, instruments, order or judgment by which Seller is bound or subject. The Seller has the full right, power and authority to enter into this Agreement, to consummate the transactions contemplated hereby and to perform its obligations under this Agreement, and has taken all necessary action to authorize such execution, delivery and performance.  Seller has duly executed and delivered this Agreement, which is a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency and similar laws relating to creditors’ rights generally and by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law)

 

(i)    The execution and delivery of this Agreement and the performance of the obligations imposed on Seller hereunder will not result in a violation of any order, decree or judgment of any court or governmental agency having jurisdiction over Seller or Seller's properties, will not conflict with constitute a default under, or result in the breach of, any contract, agreement or other instrument to which Seller is a party or is otherwise bound and no consent, authorization or order of, or filing or registration with, any court or governmental agency is required for the execution, delivery and performance of this Agreement by Seller;

 

(j)    There is no litigation or proceeding pending or, to the best knowledge of Seller, threatened, against Seller, which would have an effect on the validity or performance of this Agreement;

 

(k)    There are no restrictions on the transfer of the Assets to Purchaser and Purchaser is entitled to have the Assets registered in its name;

 

(l)    Upon delivery of the Assets  and payment of the consideration therefore pursuant to this Agreement, title to such securities, free and clear of all liens, encumbrances and pledges (except for restrictions on transferability under the Act), will pass to the Purchaser.  The delivery of the Assets  to the Purchaser pursuant to this Agreement will transfer legal and valid title thereto, free and clear of all liens, claims, charges and other encumbrances and other than as set forth herein, subject to no condition to, or restriction on, the ability of the holder thereof to sell, assign or otherwise transfer such securities, whether set forth in such security or arising under contract or by operation of law, except for restrictions on transferability under the Act and any applicable state securities laws;

   

  

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(m)    Seller shall take all action necessary, as the Purchaser shall request, to cause the Company and/or its transfer agent to have the Purchaser registered as the holder of record of such securities at no cost to the Purchaser;

 

(n)    The Assets are not subject to any right of first refusal or other similar right in favor of any person;

 

3.   Representations of Purchaser.  Purchaser hereby represents, warrants, and agrees to and with Seller as follows:

 

(a)    Purchaser has full power, authority, and legal right to purchase the Assets  from Seller, and the execution of this Agreement by Purchaser does not require the consent of, or notice to, any party not previously obtained or given;

 

(b)    This Agreement constitutes a legal and binding obligation of the Purchaser, and is valid and enforceable against Purchaser and Purchaser’s successors in accordance with its terms;

 

(c)   Investment Representations.

 

(i)    Seller acknowledges being informed that the Company’s common stock is being received as part of the purchase consideration and delivered at closing to Purchaser is not registered under the Securities Act of 1933;

 

(ii)    Seller has not obtained any representative to review or evaluate its purchase of common stock in the Company and, by reason of Purchaser’s knowledge and experience in financial and business matters in general, Purchaser is capable of evaluating the merits and risks of this transaction; seller has been afforded the opportunity to have his financial and or legal advisor review or evaluate the merits of the transaction herein contemplated.

 

(iii)    Seller has examined this Agreement and has been given access to all underlying documents related to this transaction, or will be on or before the Closing date, and is (or will be) satisfied that it has received such information as Purchaser deems necessary or appropriate as a prudent and knowledgeable investor to verify the accuracy of such information and to evaluate the merits and risks of buying common stock in the Company.  Purchaser has carefully evaluated its financial resources, investment condition and the risks attendant upon this investment, and acknowledges that it is able to bear the economic risks of this investment;

 

(iv)    Seller realizes that neither the Securities and Exchange Commission nor the securities regulatory body of any country or state has received, considered or passed upon the accuracy or adequacy of the information and representations made in this Agreement;

   

  

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(v)    At the time of this Agreement or on or before the Closing, seller reviewed the economic consequences of this Agreement, was afforded access to the books and records of the Company (including but not limited to corporate minute book and filings with the U.S. Securities and Exchange Commission), conducted an independent investigation of the business of the Company, and was fully familiar with the financial affairs of the Company. Seller has received and reviewed the Company’s financial statements as filed with the SEC, as well as any other documents or other information desired by seller, and seller has had the opportunity to discuss the sale of the Assets with Purchaser and the Company, and seller has obtained or been given access to all information concerning, including information concerning the Closing, that seller has requested;

 

(vii)    Seller confirms that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company and of making an informed investment decision. Seller understands the term "accredited investor" as used in Regulation D promulgated under the United States Securities Act of 1933 and represents and warrants to the purchaser Aspire International Inc.  that seller is an "accredited investor" for purposes of acquiring the Common Stock purchased by it hereunder;

 

(viii)    seller acknowledges being informed and agrees that certificates for Company common stock issued to it are subject to the provisions of securities and exchange commission.

(d)    Previous Agreements. Neither the execution, delivery, nor performance of this Agreement shall conflict with or result in the breach of any material term, condition, provision of or constitute a default under any material agreement, contract instrument or lease to which Purchaser is a party or by which Purchaser is bound.

 

(e)    Seller understands that the Assets and the transfer of Assets  pursuant to this Agreement have not been registered under federal or state securities laws and the Assets  are “restricted” securities as defined in Rule 144 under the Securities Act of 1933, as amended (the “Act”).  Purchaser understands that the sale, offer for sale, transfer, pledge or hypothecation of the Assets  may only be accomplished if there is an effective registration statement covering that transaction (under applicable U.S. federal and state securities laws) or if the transaction is exempt from registration (under all U.S. federal and state securities laws)

   

4.   Representations of the Company.

 

4.1   Due Organization and Qualification; Subsidiaries; Due Authorization. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of formation, with full corporate power and authority to own, lease and operate its respective business and properties and to carry on its respective business in the places and in the manner as presently conducted.  The Company is in good standing as a foreign corporation in each jurisdiction in which the properties owned, leased or operated, or the business conducted, by it requires such qualification. The undersigned signatory executing this Agreement on behalf of the Company is a Director of the Company and has full authority to execute this Agreement on behalf of the Company. The Board of Directors of the Company has approved the transactions contemplated by this Agreement.

   

  

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(a)    The Company has all requisite corporate power and authority to execute and deliver this Agreement, and to consummate the transactions contemplated hereby and thereby.  The Company has taken all corporate action necessary for the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and this Agreement constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, except as may be affected by bankruptcy, insolvency, moratoria or other similar laws affecting the enforcement of creditors’ rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought.

 

4.2   No Conflicts or Defaults.  The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby do not and shall not (a) contravene the Certificate of Incorporation or By-laws of the Company or (b) with or without the giving of notice or the passage of time  (i) violate, conflict with, or result in a breach of, or a default or loss of rights under, any covenant, agreement, mortgage, indenture, lease, instrument, permit or license to which the Company is a party or by which the Company is bound, or any judgment, order or decree, or any law, rule or regulation to which the Company is subject, (ii) result in the creation of, or give any party the right to create, any lien, charge, encumbrance or any other right or adverse interest (“Liens”) upon any of the assets of the Company, (iii) terminate or give any party the right to terminate, amend, abandon or refuse to perform, any agreement, arrangement or commitment to which the Company is a party or by which the Company’s assets are bound, or (iv) accelerate or modify, or give any party the right to accelerate or modify, the time within which, or the terms under which, the Company is to perform any duties or obligations or receive any rights or benefits under any agreement, arrangement or commitment to which it is a party.

 

4.3   Capitalization.  The authorized capital stock of the Company immediately prior to giving effect to the transactions contemplated hereby consists of 1,000,000,000 shares of Common Stock, par value $0.00001 per share, of which 356,639,329 shares are issued and outstanding as of the date hereof. All of the outstanding shares of the Company are duly authorized, validly issued, fully paid and no assessable, and have not been or, with respect to shares, will not be issued in violation of any preemptive right of stockholders.  The shares are not subject to any preemptive right.  There is no outstanding voting trust agreement or other contract, agreement, arrangement, option, call, commitment or other right of any character entitling the Company to issue, sell, redeem or repurchase any of its securities, and there is no outstanding security of any kind convertible into or exchangeable for its Common Stock.  The Company has not granted registration rights (or any similar rights) to any person. There are no declared or accrued unpaid dividends with respect to any shares of the Company’s Common Stock. The Company has never adopted or maintained any stock option plans or other plan providing for equity compensation of any person. There are no agreements, written or oral, between the Company and of their shareholders or among any shareholders relating to the acquisition (including without limitation rights of first refusal or preemptive rights), disposition, registration under the Securities Act of 1933, as amended (the “Securities Act”), or voting of the capital stock of the Company. There are no outstanding or authorized stock appreciations, phantom stock, profit participation, or other similar rights with respect to the Company.  There are no voting trusts, proxies, or other agreements or understandings with respect to voting stock of the Company. There have been no issuances (or promises to issue) under the aforementioned stock incentive plan.

   

  

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4.4   Financial Statements. The Financial Statements of the company, together with the notes thereto, have been prepared in accordance with U.S. generally accepted accounting principles applied on a basis consistent throughout all periods presented. These statements present fairly the financial position of the Company as of the dates and for the periods indicated.  The books of account and other financial records of the Company have been maintained in accordance with good business practices. The Company is aware of no facts or circumstance, not disclosed in the Company’s Pinksheets reports or hereby which adversely affects the Company assets or affects the financial condition of the Company.

 

4.5   Further Financial Matters.  The Company does not have any (a) assets of any kind or (b) liabilities or obligations, whether secured or unsecured, accrued, determined, absolute or contingent, asserted or unasserted or otherwise, which are required to be reflected or reserved in a balance sheet or the notes thereto under generally accepted accounting principles, but which are not reflected in the Financial Statements. Aside from wireless patents and the lone printing company, the Company does not have any (a) assets of any kind or (b) liabilities or obligations, whether secured or unsecured, accrued, determined, absolute or contingent, asserted or unasserted or otherwise, and will not have any on the Closing Date. The Company shall be responsible for all debts, taxes, and liabilities of whatever nature incurred prior to the Closing Date. Note that iMan is the holder of several patents, patents pending, service marks, trade marks, copyrights etc. These assets are listed as such, though without specific pecuniary value.

 

4.6   Taxes.  The Company has filed all United States federal, state, county, local and foreign, national, provincial and local returns and reports which were required to be filed on or prior to the Closing Date hereof in respect of all income, withholding, franchise, payroll, excise, property, sales, use, value-added or other taxes or levies, imposts, duties, license and registration fees, charges, assessments or withholdings of any nature whatsoever (together, “Taxes”), and has paid all Taxes (and any related penalties, fines and interest) which have become due pursuant to such returns or reports or pursuant to any assessment which has become payable, or, to the extent its liability for any Taxes (and any related penalties, fines and interest) has not been fully discharged, the same have been properly reflected as a liability on the books and records of The Company and adequate reserves therefore have been established.  All such returns and reports filed on or prior to the date hereof have been properly prepared and are true, correct (and to the extent such returns reflect judgments made by the Company, as the case may be, such judgments were reasonable under the circumstances) and complete.  No tax return or tax return liability of the Company has been audited or, presently under audit.  The Company has not given or been requested to give waivers of any statute of limitations relating to the payment of any Taxes (or any related penalties, fines and interest).  There are no claims pending or, to the knowledge of the Company, threatened for past due Taxes.  All payments for withholding taxes, unemployment insurance and other amounts required to be paid for periods prior to the date hereof to any governmental authority in respect of employment obligations of the Company, including, without limitation, amounts payable pursuant to the Federal Insurance Contributions Act, have been paid or shall be paid prior to the Closing and have been duly provided for on the books and records of the Company and in the Financial Statements. As of the Closing Date, there are (and immediately following the Closing Date there will be) no liens, pledges, charges claims, restrictions on transfer, mortgages, security interests or other encumbrances of any sort (collectively, “Liens”) on the assets of the Company relating to or attributable to Taxes. The Company has not filed any consent agreement under Section 341(f) of the Code or agreed to have Section 341(f)4 of the Code apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code) owed by the Company.  The Company is not a party to any tax sharing, indemnification or allocation agreement nor does it owe any amount under any such agreement. No adjustment relating to any Return filed by the Company has been proposed formally or informally by any tax authority to the Company or any representative thereof. The Company has not participated (either as a “distributing” or “controlled” corporation) in any transaction described in Section 355 of the Code.

   

  

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4.7   Indebtedness; Contracts; No Defaults. Other than monies owed to current, the Company has no instruments, agreements, indentures, mortgages, guarantees, notes, commitments, accommodations, letters of credit or other arrangements or understandings, whether written or oral, to which the Company is a party.

 

(a)    Neither the Company, nor any other person or entity is in breach or in default under any contract, agreement, arrangement, commitment or plan to which the Company is a party, and no event or action has occurred, is pending or is threatened, which, after the giving of notice, passage of time or otherwise, would constitute or result in such a breach or default by the Company or any other person or entity.  The Company has not received any notice of default under any contract, agreement, arrangement, commitment or plan to which it is a party.

 

(b)    As of the date hereof and as of the Closing Date (the Company will not be bound by), the Company is not a party to nor bound by:

 

(i)    any individual consultation or salesperson or consulting or sales agreement, or plan, including, without limitation, any stock option plans, stock appreciation rights plan or stock purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which will be accelerated, by the occurrence of any  of the transactions contemplated by this Agreement or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement, any agreement, contract or commitment containing any covenant limiting the freedom of Aspire International Inc.  to engage in any line of business or to compete with any person; any agreement, contract or commitment relating to capital expenditures and involving future payments; any agreement, contract or commitment relating to the disposition or acquisition of assets or any interest in any business enterprise any dealer, distribution, joint marketing or development agreement; or any other agreement, contract or commitment.

  

  

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(ii)   any fidelity or surety bond or completion bond;

 

(iii)   any lease of personal property;

 

(iv)   any mortgages, indentures, loans or credit agreements, security agreements or other agreements or instruments relating to the borrowing of money or extension of credit;

 

(v)   any purchase order or contract for the purchase of materials; and

 

(vi)   any construction contracts.

4.8   Real Property.  The Company does not own or lease any real property.

 

4.9   Compliance with Law.  The Company is not conducting its respective business or affairs in violation of any applicable federal, state or local law, ordinance, rule, regulation, court or administrative order, decree or process, or any requirement of insurance carriers.  The Company has not received any notice of violation or claimed violation of any such law, ordinance, rule, regulation, order, decree, process or requirement.

 

(a)    The Company is in compliance with all applicable federal, state, local and foreign laws and regulations relating to the protection of the environment and human health.  There are no claims, notices, actions, suits, hearings, investigations, inquiries or proceedings pending or, to the knowledge of the Company, threatened against the Company that are based on or related to any environmental matters or the failure to have any required environmental permits, and there are no past or present conditions that the Company has reason to believe are likely to give rise to any liability or other obligations of the Company under any environmental laws.

 

4.10   Permits and Licenses.  The Company currently has in place all certificates of occupancy, rights, permits, certificates, licenses, franchises, approvals and other authorizations as are reasonably necessary to conduct its respective business and to own, lease, use, operate and occupy its assets, at the places and in the manner now conducted and operated.  The Company has not received any written or oral notice or claim pertaining to the failure to obtain any permit, certificate, license, approval or other authorization required by any federal, state or local agency or other regulatory body.

   

  

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4.11   Litigation.  There is no claim, dispute, action, suit, proceeding or investigation pending or, to the knowledge of the Company, threatened, against or affecting the business of the Company, or challenging the validity or propriety of the transactions contemplated by this Agreement, at law or in equity or admiralty or before any federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality, nor to the knowledge of Aspire International Inc. , has any such claim, dispute, action, suit, proceeding or investigation been pending or threatened, during the 12 month period preceding the date hereof; (b) there is no outstanding judgment, order, writ, ruling, injunction, stipulation or decree of any court, arbitrator or federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality, against or affecting the business of the company and they have not received any written or verbal inquiry from any federal, state, local, foreign or other governmental authority, board, agency, commission or instrumentality concerning the possible violation of any law, rule or regulation or any matter disclosed in respect of its business.

 

4.12   Insurance the Company does not currently maintain any form of insurance; however the company hereby agrees to obtain an officers and directors liability policy.

 

4.13   Certificate of Incorporation and By-laws; Minute Books.  The copies of the Certificate of Incorporation and By-laws (or similar governing documents) of Aspire International Inc., and all amendments to each are true, correct and complete.  The minute books of Aspire International Inc.  contains true and complete records of all meetings and consents in lieu of meetings of their respective Board of Directors (and any committees thereof), or similar governing bodies, since the time of their respective organization. To the best of the director’s knowledge, the stock books of Aspire International Inc.  are true, correct and complete.

 

4.14   Employee Benefit Plans. Aspire International Inc.  does not maintain, nor has it. maintained in the past, any employee benefit plans (“as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)), or any plans, programs, policies, practices, arrangements or contracts (whether group or individual) providing for payments, benefits or reimbursements to employees of Aspire International Inc. , former employees, their beneficiaries and dependents under which such employees, former employees, their beneficiaries and dependents are covered through an employment relationship with Aspire International Inc. , any entity required to be aggregated in a controlled group or affiliated service group with Aspire International Inc.  for purposes of ERISA or the Internal Revenue Code of 1986 (the “Code”) (including, without limitation, under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA, at any relevant time (“Benefit Plans”). Aspire International Inc.  has never maintained, established, sponsored, participated in, or contributed to, any Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code. At no time has Aspire International Inc.  contributed to or been obliged to contribute to any Multiemployer Plan. Aspire International Inc.  has never maintained, established, sponsored, participated in, or contributed to any multiple employer plan, or to any plan described in Section 413 of the Code.

   

  

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4.15   Patents; Trademarks and Intellectual Property Rights. Aspire International Inc.  does not own or possesses any patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, Internet web site(s) or proprietary rights of any nature. iMan’s patent rights are not in violation of any other’s patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information, Internet web site(s) or proprietary rights of any nature.

 

4.16   Affiliate Transactions.  Except as disclosed by Purchaser, no officer, director or employee of Aspire International Inc.  (or any of the relatives or Affiliates of any of the aforementioned Persons) is a party to any agreement, contract, commitment or transaction with Aspire International Inc.  or affecting the business of Aspire International Inc. , or has any interest in any property, whether real, personal or mixed, or tangible or intangible, used in or necessary to Seller which will subject Seller to any liability or obligation from and after the Closing Date.

 

4.17   Trading.  Aspire International Inc.  Common Stock is currently listed for trading on the OTC Pink Sheets and the company has received no notice that its Common Stock is subject to being delisted therefrom. To the knowledge of the company there is no action, inquiry or investigation pending or threatened against the company by, the NASD or the SEC.

 

4.19   Consents.  No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission (“Governmental Entity”) is required by or with respect to Aspire International Inc.  in connection with the execution and delivery of this Agreement and any Related Agreements to which the Company is a party or the consummation of the transactions contemplated hereby and thereby, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities laws.

 

4.20   Employees. Save for Bok Wong and To-Han Lan, the company will have no employees as of the closing date, however Aspire International Inc. shall hold seller harmless from all claims for wages, vacation and fringe benefits and from all payroll taxes and penalties, industrial insurance, employment security claims, whether assessed by Federal, State, or local governmental authorities, with respect to any such claims.

 

4.21   SEC Filings; Financial Statements.   Aspire International Inc.  has filed all forms, reports and documents required to be filed with Pinksheets).  The Aspire International Inc.  Pinksheet Reports (i) at the time they were filed, complied as to form in all respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of fact or omit to state a fact require to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Except to the extent set forth in the preceding sentence, Aspire International Inc.  makes no representation or warranty whatsoever concerning the Reports as of any time other than the time they were filed.

   

  

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4.22   No Changes.  Since the last date  of Pinksheets filing there have not been, occurred or arisen any:

 

(a)    Amendments or changes to the Certificate of Incorporation or Bylaws of Aspire International Inc.;

 

(b)    Capital expenditure or commitment by Aspire International Inc. ;

 

(c)    Destruction of, damage to or loss of any assets, business or customer of Aspire International Inc.  (whether or not covered by insurance);

 

(d)    Labor trouble or claim of wrongful discharge or other unlawful labor practice or action involving Aspire International Inc. Inc

 

(e)    Change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by Aspire International Inc. Inc

 

(f)    Revaluation by Aspire International Inc.  of any assets;

 

(g)    declaration, setting aside or payment of a dividend or other distribution with respect to the capital stock of Aspire International Inc.  or any direct or indirect redemption, purchase or other acquisition by Aspire International Inc.  of its capital stock other than repurchase of Assets  of the capital stock  from their employees in connection with the termination of such employees’ employment.

 

(h)    increase in the salary or other compensation whether cash or equity-based, payable or to become payable by Aspire International Inc.  to any of the officers, directors, employees or advisors of Aspire International Inc. , or the declaration, payment or commitment or obligation of any kind for the payment, Aspire International Inc.  of a bonus or other salary or compensation to any such person;

 

(i)    increase, or announcement of any increase, in the wages, salaries, compensation, bonuses, incentives, pension, or other benefits payable by Aspire International Inc.  to any of employees, consultants, or directors;

 

(j)    loan by Aspire International Inc.  to any person or entity, incurring by Aspire International Inc.  of any indebtedness, guaranteeing by Aspire International Inc.  of any indebtedness, issuance or sale of any debt securities of Aspire International Inc.  or guaranteeing of any debt securities of others, except for advances to employees for travel and business expenses in the ordinary course of business, consistent with past practice;

 

(k)    waiver or release of any right or claim of Aspire International Inc.  including any write-off or other compromise of any account receivable of the company;

 

(l)    the commencement or notice or threat or reasonable basis therefore of any lawsuit or, to the knowledge of Aspire International Inc. , any proceedings or investigation against the company;

    

  

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(m)    issuance or sale, or contract to issue or sell of any Assets  of the capital stock of Aspire International Inc.  or any or securities exchangeable, convertible or exercisable therefore, or any securities, warrants, options or rights to purchase any of the foregoing;

 

(n)    event or condition of any character that has had or is reasonably likely to have an adverse effect on the company

 

(o)    transaction outside of the ordinary course of business initiated by Aspire International Inc. , other than this agreement; or

 

(p)    negotiation or agreement by Aspire International Inc.  or any officer or employee thereof to do any of the things described in the preceding clauses (a) through (o).

 

4.23   Minute Books.  The minutes of Aspire International Inc.  (to be delivered to counsel for the Purchaser on or before the Closing Date) are the only minutes of Aspire International Inc. Inc and contain a reasonably accurate summary of all meetings of the Board of Directors (or committees thereof) of Aspire International Inc.  and their respective shareholders or actions by written consent since the time of incorporation, respectively of Aspire International Inc.

 

4.24   Environmental Matters. 

 

(a)   Hazardous Material. Aspire International Inc.  has never: (i) operated any underground storage tanks at any property that Aspire International Inc.  has at any time owned, operated, occupied or leased; or (ii) illegally released any material amount of any substance that has been designated by any Governmental Entity or by applicable foreign, federal, state, or local law to be radioactive, toxic, hazardous or otherwise a danger to health or the environment, including, without limitation, PCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed as hazardous substances pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste pursuant to the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to said laws (a “Hazardous Material”), but excluding office and janitorial supplies properly and safely maintained Hazardous Material.  No Hazardous Materials are present as a result of the actions of the Company or as a result of any actions of any other person or otherwise, in, on or under any property, including the land and the improvements, ground water and surface water thereof, that the Company has at any time owned, operated, occupied or leased.

 

(b)   Hazardous Materials Activities.  The Company has never transported, stored, used, manufactured, disposed of, released or exposed its employees or others to engaged in any Hazardous Materials in violation of any law in effect on or before the Effective Time, nor has either of them disposed of, transported, sold, or manufactured any product containing a Hazardous Material (any or all of the foregoing being collectively referred to as “Hazardous Materials Activities”).  Activities in violation of any rule, regulation, treaty or statute promulgated by any Governmental Entity in effect prior to or as of the date hereof to prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.

  

  

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(c)   Environmental Liabilities.  No action, proceeding, revocation proceeding, amendment procedure, writ, injunction or claim is pending, or to the knowledge of the Company, threatened concerning any Environmental Permit, Hazardous Material or any Hazardous Materials Activity of the Company.  The Company Aspire International Inc.  has no knowledge of any fact or circumstance which could reasonably be expected to involve the Company in any environmental litigation or impose upon the Company any environmental liability.

 

4.25   Compliance with Laws.  The Company has not received any notices of violation with respect to, has complied with, and is not in violation of, and any foreign, federal, state or local statute, law or regulation.

 

4.26   Warranties; Indemnities.  The Company has not given any warranties or indemnities relating to products or technology sold or licensed or services rendered by the Company.

 

4.27   Compliance.  The Company has complied with all laws, regulations and orders applicable to its present and proposed business and has all permits, variances, orders, approvals, and licenses required thereby.  There is no term or provision of any mortgage, indenture, contract, agreement or instrument to which the Company is a party or by which it is bound or of any provision of any existing state or federal judgment, decree, order, statute, rule or regulation applicable to or binding upon the Company, that would reasonably cause an adverse effect on the Company or affect this Agreement, or, so far as the Company may now reasonably foresee, in the future is reasonably likely to cause an adverse effect on the Company.  None of the Shareholders of the Company nor any employee of the Company is in violation of any term of any contract or covenant (either with the Company or with another entity) relating to employment, patents, proprietary information disclosure, non competition or non-solicitation.

5.    Additional Covenants.

 

5.1   Brokerage Commissions and Finders’ Fees. There are no brokerage commissions or finders fees payable as a result of this transaction.

 

5.2   Conduct of The Company.  During the period from the date of this Agreement and continuing until the Closing Date, the Company, agrees  to carry on its business in the usual, regular and ordinary course in substantially the same manner as heretofore conducted, to pay the debts and Taxes of the Company when due, to pay or perform other obligations when due, and, to the extent consistent with such business, use its commercially reasonable efforts consistent with past practice and policies to preserve intact the present business organizations of the Company, all with the understanding that the Company must eliminate all liabilities of the Company prior to the Closing Date. The Company shall promptly notify the Purchaser of any event or occurrence or emergency not in the ordinary course of business of the Company and any material event involving the Company.

   

  

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5.3    The Company shall not, without the prior written consent of its board of directors and if required by law of its majority shareholders:

(a)    declare, set aside or pay any dividends on or make any other distributions (whether in cash, stock or property) in respect of any of its capital stock, or split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for Assets  of capital stock of the Company, or repurchase, redeem or otherwise acquire, directly or indirectly, any Assets of the capital stock of the Company (or options, warrants or other rights exercisable therefore).

 

(b)    issue, grant, deliver or sell or authorize or propose the issuance, grant, delivery or sale of, or purchase or propose the purchase of, any Assets  of the Company capital stock or securities convertible into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any character obligating Aspire International Inc.  to issue or purchase any such Assets  or other convertible securities, or accelerate the vesting of any stock options, except for the issuance of Assets  of the Company’s Common Stock upon the exercise or conversion of those options, warrants or other rights, or convertible securities that are outstanding on the date hereof;

 

(c)    cause or permit any amendments to the Articles of Incorporation or Bylaws of the Company;

 

(d)    acquire or agree to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;

 

(e)    sell, lease, license or otherwise dispose of any of its properties or assets;

 

(f)    incur any indebtedness for borrowed money or guarantee any such indebtedness or issue or sell any debt securities or guarantee any debt securities;

 

(g)    grant any loans to others or purchase debt securities of others or amend the terms of any outstanding loan agreement;

 

(h)    grant any severance or termination pay to any director, officer, employee, or service provider of the Company;

 

(i)    adopt any employee benefit plan, or enter into any employment contract, pay or agree to pay any special bonus or special remuneration to any director or employee, or increase the salaries or wage rates of its employees, excepting George Macleod.

 

(j)    revalue any of its assets, including without limitation writing down the value of inventory or writing off notes or accounts receivable other than in the ordinary course of business;

   

  

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(k)    make or change any election in respect of Taxes, adopt or change any accounting method in respect of Taxes, enter into any closing agreement, settle any claim or assessment in respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes;

 

(l)    accelerate the vesting schedule of any of the outstanding stock options of the Company;

 

(m)    take, or agree in writing or otherwise to take, any of the actions described in sub-Sections (a) through (l) above, or any other action that would prevent the Company from performing or cause the Company not to perform its covenants hereunder, or any other action not in the ordinary course of the business or inconsistent with past practice of the Company.

 

 5.4   Expenses.  Each respective Party will pay all expenses and fees of their respective legal counsel, accountants, and other agents and advisers incurred pursuant to this Agreement regardless of whether the transactions contemplated in this Agreement are consummated.

 

5.5   Deliveries. On or prior to the Closing Date the Company Aspire International Inc.  shall deliver to counsel for the Purchaser full and complete copies of all corporate records including but not limited to: by-laws (including any amendments), Certificate of Incorporation (including any amendments), the Company SEC Reports (and back up documentation), stock ledgers, board and stockholder minutes, agreements.  The minutes of the Company (to be delivered to counsel for the Purchaser on or before the Closing Date) are the only minutes of the Company and contain an accurate summary of all meetings of the Board of Directors (or committees thereof) of the Company and their respective shareholders or actions by written consent since the time of incorporation.

 

6.   Miscellaneous.

 

6.1   Entire Agreement.  This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and the parties acknowledge that the contemplated transactions constitute related party transactions due to common share ownerships in the purchaser, the seller and the company and the company agrees to disclose the transaction as a related party transaction and accounting of the transaction shall reflect the related party nature thereof.

 

6.2   Notice.  All notices, requests, demands, directions and other communications (“Notices”) provided for in this Agreement shall be in writing and shall be mailed or delivered personally or sent by telecopier or facsimile to the applicable Party at the address of such Party set forth below in this Section 6.2.  When mailed, each such Notice shall be sent by first class, certified mail, return receipt requested, enclosed in a postage prepaid wrapper, and shall be effective on the third business day after it has been deposited in the mail.  When delivered personally, each such Notice shall be effective when delivered to the address for the respective Party set forth in this Section 6.2.  When sent by Telecopier or facsimile, each such Notice shall be effective on the first business day on which or after which it is sent.  Each such Notice shall be addressed to the Party to be notified as shown below:

     

  

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             Purchaser: 

	
    Aspire International Inc. Inc

    Unit 310, 18 Crown Steel Drive,

    Markham, Ontario

 

 

 

	
             Seller: 

	
    Candid Global Resources Hong Kong Limited

    Unit 1908, Level 19, Tower 2

    Grand Century Place

    193 Prince Edward Road West

    Mongkok, Kowloon

   

Either Party may change his or its respective address for purposes of this Section

 

6.2    by giving the other Party notice of the new address in the manner set forth above.

 

6.3   Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, and if any provision of this Agreement shall be or become prohibited or invalid in whole or in part for any reason whatsoever, that provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remaining portion of that provision or the remaining provisions of this Agreement.

 

6.4   Non-Waiver.  The waiver of any Party of a breach or a violation of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach or violation of any provision of this Agreement.

 

6.5   Amendment.  No amendment or modification of this Agreement shall be deemed effective unless and until it has been executed in writing by the Parties to this Agreement.  No term or condition of this Agreement shall be deemed to have been waived, nor shall there by any estoppel to enforce any provision of this Agreement, except by a written instrument that has been executed by the Party charged with such waiver or estoppel.

 

6.6   Inurement This Agreement shall be binding upon all of the Parties, and it shall benefit, respectively, each of the Parties, and their respective successors and assigns.  This Agreement shall not be assignable by any Party.  There are no third party beneficiaries to this Agreement.

 

6.7   Headings.  The headings to this Agreement are for convenience only; they form no part of this Agreement and shall not affect its interpretation.

 

6.8   Counterparts.  This Agreement may be executed in one or more counterparts, all of which taken together shall constitute a single instrument.

   

  

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6.9   Survival of Representations and Warranties.  Each covenant, agreement, representation, warranty of the Parties under this Agreement and their obligations hereunder shall survive for two years the execution of this Agreement.

 

6.10          Arbitration. Any controversy arising out of, connected to, or relating to any matters herein of the transactions between Seller, the Company, or Purchaser (including for purposes of arbitration, affiliates, professional advisors, accountants, attorneys, or agents of the Purchaser, the Company, and/or Seller, on behalf of the undersigned, or this Agreement, or the breach thereof, including, but not limited to any claims of violations of United States law or statute shall be settled by arbitration.  In the event of such a dispute, each party to the conflict shall select an arbitrator, both of whom shall select a third arbitrator, which shall constitute the three-person arbitration board.  The decision of a majority of the board of arbitrators, who shall render their decision within thirty (30) days of appointment of the final arbitrator, shall be binding upon the parties.

IN WITNESS WHEREOF, this Agreement is executed on the dates set forth below to be effective as of the Effective Date.

 

SELLER:

______________________

                    , Dir. on behalf of

Candid Global Resources Hong Kong Limited

BUYER:

______________________

Bok Wong, Dir., on behalf of

Aspire International Inc.

 

17

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