SKY Digital Stores Corp.
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(Name of Issuer)
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Common Stock, par value $.001 per share
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(Title of Class of Securities)
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83083U109
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(CUSIP Number)
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Copy To:
Gregory Sichenzia, Esq.
Lijia Sanchez, Esq.
Sichenzia Ross Friedman Ference LLP
61 Broadway, 32nd Flr
New York, NY 10006
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)
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May 5, 2011
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(Date of Event which Requires Filing of this Statement)
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CUSIP No. 83083U109
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1
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NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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Xiangfeng Lin
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2
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
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(a) [ ]
(b) [ ]
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3
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SEC USE ONLY
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4
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SOURCE OF FUNDS (See Instructions)
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OO
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5
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CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
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[ ]
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6
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CITIZENSHIP OR PLACE OF ORGANIZATION
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PRC
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NUMBER OF
SHARES
BENEFICIALLY
OWNED BY
EACH
REPORTING
PERSON
WITH
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7
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SOLE VOTING POWER:
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6,479,221
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8
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SHARED VOTING POWER:
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0
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9
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SOLE DISPOSITIVE POWER:
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6,479,221
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10
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SHARED DISPOSITIVE POWER:
0
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11
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AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
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6,479,221
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12
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CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
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[_]
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13
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PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
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26.7% (based on 24,309,066 shares of Common Stock issued and outstanding)
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14
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TYPE OF REPORTING PERSON (See Instructions)
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IN
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(a)
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The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer;
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(b)
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An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries;
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(c)
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A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries;
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(d)
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Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board;
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(e)
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Any material change in the present capitalization or dividend policy of the Issuer;
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(f)
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Any other material change in the Issuer’s business or corporate structure;
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(g)
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Changes in the Issuer’s charter, by-laws or instruments corresponding thereto or other actions which may impede the acquisition or control of the Issuer by any person;
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(h)
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Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association;
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(i)
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A class of equity security of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or
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(j)
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Any action similar to any of those enumerated above.
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Exhibit Number | Description | |
99.1 | Share Exchange Agreement, dated May 5, 2011 |
By:
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/s/ Xiangfeng Lin | ||
Xiangfeng Lin
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1.1
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THE EXCHANGE.
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1.2
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PURCHASE PRICE.
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1.3
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MECHANICS OF EXCHANGE.
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(a)
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At the Closing (as defined below), each Shareholder shall be entitled to surrender the documents, certificate or certificates that immediately prior to the Closing represented the FDH Common Stock (the “Certificates”) to the exchange agent designated by SKYC in exchange for the Acquisition Shares.
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(b)
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Promptly after the Closing, SKYC or its designated exchange agent shall make available to each Shareholder a letter of transmittal and instructions for use in effecting the surrender of Certificates in exchange for the Acquisition Shares. Upon surrender of a Certificate to such exchange agent together with the letter of transmittal, duly executed, the Shareholder shall be entitled to receive in exchange therefore such number of Acquisition Shares as such Shareholder has the right to receive in respect of the Certificate so surrendered pursuant to the provisions of this Article I.
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1.4
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NO FRACTIONAL SHARES.
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1.5
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CLOSING.
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2.1
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ORGANIZATION AND QUALIFICATION.
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(a)
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FDH is a company duly incorporated, validly existing, and in good standing under the laws of Hong Kong and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted. Included in the Schedule 1 are complete and correct copies of the memorandum of association and articles of association of FDH as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of FDH’s memorandum of association or articles of association. FDH has taken all actions required by law, its memorandum of association and articles of association, or otherwise to authorize the execution and delivery of this Agreement. FDH has full power, authority, and legal capacity and has taken all actions required by law, its memorandum of association and articles of association, and otherwise to consummate the transactions herein contemplated.
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(b)
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Each member of FDH is duly formed or organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being or currently planned by each member of FDH to be conducted. Each member of FDH is in possession of all approvals necessary to own, lease and operate the properties it purports to own, operate or lease, to carry on its business as it is now being conducted, to consummate the Transactions contemplated under this Agreement. No member of FDH is in violation of any of the provisions of their respective charter documents. The corporate records of each member of FDH contain true, complete and accurate records of meetings and consents in lieu of meetings of its board of directors (and any committees thereof), similar governing bodies and holders of its registered capital, since the time of their respective organization, and such corporate records have been heretofore delivered to SKYC. The ownership records of each FDH member’s registered capital are true, complete and accurate records of such ownership as of the date of such records and contain all transfers of such registered capital since the time of their respective organization, and such ownership records have been heretofore delivered to SKYC. No member of FDH is required to be qualified to do business as a foreign corporation in any other jurisdiction.
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2.2
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SUBSIDIARIES.
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2.3
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MEMORANDUM OF ASSOCIATION AND ARTICLES OF ASSOCIATION.
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2.4
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AUTHORIZATION AND VALIDITY OF THIS AGREEMENT.
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2.5
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NO VIOLATION.
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2.6
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CAPITALIZATION AND RELATED MATTERS.
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(a)
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Capitalization. The Shareholders, as of the Closing Date, are the lawful, record and beneficial owners of the FDH Shares set forth opposite each Shareholder’s name on Schedule 1 attached hereto. The Shareholders have, as of the date hereof and as of the Closing Date, valid and marketable title to their respective ownership interest of FDH, free and clear of all Liens (including, without limitation, any claims of spouses under applicable community property laws) and are the lawful, record and beneficial owners of all of the FDH Shares. Except as is issued to and held by the Shareholders, no other class of capital stock or other security of FDH, as applicable, is authorized, issued, reserved for issuance or outstanding. At the Closing, SKYC will be vested with good and marketable title to the ownership or the Shares, free and clear of all Liens (including, without limitation, any claims of spouses under applicable community property laws). No legend or other reference to any purported Lien appears upon any certificate representing the Shares. Each of the Shares has been duly authorized and validly issued and is fully paid and nonassessable. None of the outstanding capital or other securities of FDH was issued, redeemed or repurchased in violation of the Securities Act of 1933, as amended (the “Securities Act”), or any other securities or “blue sky” laws.
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(b)
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No Redemption Requirements. There are no authorized or outstanding options, warrants, equity securities, calls, rights, commitments or agreements of any character by which FDH or any of its shareholders is obligated to issue, deliver or sell, or cause to be issued, delivered or sold, any shares of capital stock or other securities of FDH. There are no outstanding contractual obligations (contingent or otherwise) of FDH to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, FDH or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.
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2.7
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COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS.
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2.8
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CERTAIN PROCEEDINGS.
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2.9
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NO BROKERS OR FINDERS.
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2.10
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TITLE TO AND CONDITION OF PROPERTIES.
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2.11
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ABSENCE OF UNDISCLOSED LIABILITIES.
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2.12
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CHANGES.
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(a)
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Ordinary Course of Business. Conducted its business other than in the Ordinary Course of Business, except for this Agreement.
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(b)
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Loans. Made any loans or advances to any Person other than travel advances and reimbursement of expenses made to employees, officers and directors in the Ordinary Course of Business;
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(c)
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Compensation and Bonuses. Made any payments of any bonuses or compensation other than regular salary payments, increase in the salaries, or payment on any of its debts in the Ordinary Course of Business, to any of its Shareholders, directors, officers, employees, independent contractors or consultants or entry into by it of any employment, severance, or similar contract with any director, officer, or employee, independent contractor or consultant; Adopted, or increased in the payments to or benefits under, any profit sharing, bonus, deferred compensation, savings, insurance, pension, retirement, or other employee benefit plan for or with any of its employees;
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(d)
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Liens. Created or permitted to exist any Lien on any of its properties or assets other than Permitted Liens;
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(e)
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Capital Stock. Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option to acquire any shares of its capital stock or any other of its securities or any Equity Security, or altered the term of any of its outstanding securities or made any change in its outstanding shares of capital stock or its capitalization, whether by reason of reclassification, recapitalization, stock split, combination, exchange or readjustment of shares, stock dividend or otherwise; changed its authorized or issued capital stock; granted any stock option or right to purchase shares of its capital stock; issued any security convertible into any of its capital stock; granted any registration rights with respect to shares of its capital stock; purchased, redeemed, retired, or otherwise acquired any shares of its capital stock; declared or paid any dividend or other distribution or payment in respect of shares of capital stock of any other entity;
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(f)
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Dividends. Declared, set aside, made or paid any dividend or other distribution to any of its Shareholders;
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(g)
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Material Contracts. Terminated or modified any of its Material Contract except for termination upon expiration in accordance with the terms of such agreements, a description of which is included in the FDH Disclosure Schedule;
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(h)
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Claims. Released, waived or cancelled any claims or rights relating to or affecting FDH in excess of $100,000 in the aggregate or instituted or settled any Proceeding involving in excess of $100,000 in the aggregate;
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(i)
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Discharged Liabilities. Paid, discharged, cancelled, waived or satisfied any claim, obligation or liability in excess of $100,000 in the aggregate, except for liabilities incurred prior to the date of this Agreement in the Ordinary Course of Business;
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(j)
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Indebtedness. Created, incurred, assumed or otherwise become liable for any Indebtedness or commit to any endeavor involving a commitment in excess of $100,000 in the aggregate, other than contractual obligations incurred in the Ordinary Course of Business;
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(k)
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Guarantees. Guaranteed or endorsed in a material amount any obligation or net worth of any Person;
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(l)
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Accounting. Changed its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than as required by GAAP;
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2.13
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MATERIAL CONTRACTS.
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(a)
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FDH has delivered to SKYC prior to the date of this Agreement, true, correct and complete copies of each of its Material Contracts.
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(b)
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The Material Contracts of FDH are valid and binding agreements of FDH, as applicable, and are in full force and effect and are enforceable in accordance with their terms. Except as would not have a Material Adverse Effect, FDH is not in breach or default of any of its Material Contracts to which it is a party and, to the knowledge of FDH, no other party to any of its Material Contracts is in breach or default thereof. Except as would not have a Material Adverse Effect, no event has occurred or circumstance has existed that (with or without notice or lapse of time) would (a) contravene, conflict with or result in a violation or breach of, or become a default or event of default under, any provision of any of its Material Contracts or (b) permit FDH or any other person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any of its Material Contracts. FDH has not received any notice and has no knowledge of any pending or threatened cancellation, revocation or termination of any of its Material Contracts to which it is a party, and there are no renegotiations of, or attempts to renegotiate.
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2.14
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LICENSES.
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2.15
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GOVERNMENTAL INQUIRIES.
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2.16
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EMPLOYEE MATTERS.
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(a)
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No former or current employee of FDH is a party to, or is otherwise bound by, any agreement or arrangement (including, without limitation, any confidentiality, non-competition or proprietary rights agreement) that in any way adversely affected, affects, or will affect (i) the performance of his, her or its duties to FDH, or (ii) the ability of FDH to conduct its business.
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(b)
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FDH has no employees, directors, officers, consultants, independent contractors, representatives or agents whose contract of employment or engagement cannot be terminated by three months’ notice.
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(c)
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FDH is not required or obligated to pay, has not paid any moneys other than in respect of remuneration, pension or other benefits pursuant to plans described in the FDH Disclosure Schedule, to or for the benefit of, any director, officer, employee, consultant, independent contractor, representative or agent of FDH.
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(d)
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FDH are in compliance with all applicable laws respecting employment and employment practices, terms and conditions or employment and wages and hours, and are not engaged in any unfair labor practice. There is no labor strike, dispute, shutdown or stoppage actually pending or, to the knowledge of FDH or the Shareholders, threatened against or affecting FDH.
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2.17
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DISCLOSURE.
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(a)
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Any information set forth in this Agreement, the FDH Disclosure Schedule, or the Transaction Agreements shall be true, correct and complete in all material respects.
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(b)
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No statement, representation or warranty of FDH or the Shareholders in this Agreement (taken with the Schedules) or the Transaction Agreements or any exhibits or schedules thereto contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements herein or therein, taken as a whole, in light of the circumstances in which they were made, not misleading.
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(c)
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Except as set forth in the FDH Disclosure Schedule, the Shareholders and FDH have no knowledge of any fact that has specific application to FDH (other than general economic or industry conditions) and that adversely affects the assets or the business, prospects, financial condition, or results of operations of FDH.
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(d)
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In the event of any inconsistency between the statements in the body of this Agreement and those in the Schedules (other than an exception expressly set forth as such in the Schedules with respect to a specifically identified representation or warranty), the statements in the Schedules shall control.
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(e)
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The books of account, minute books and stock record books of FDH, all of which have been made available to SKYC, are complete and accurate and have been maintained in accordance with sound business practices. Without limiting the generality of the foregoing, the minute books of FDH contain complete and accurate records of all meetings held, and corporate action taken, by the shareholders, the boards of directors, and committees of the boards of directors of FDH, as applicable, and no meeting of any such shareholders, board of directors, or committee has been held for which minutes have not been prepared and are not contained in such minute books.
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3.1
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ORGANIZATION; GOOD STANDING.
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3.2
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CAPITALIZATION.
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3.3
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AUTHORITY; BINDING NATURE OF AGREEMENTS.
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(a)
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The execution, delivery and performance of this Agreement, and all other agreements and instruments contemplated to be executed and delivered by SKYC in connection herewith have been duly authorized by all necessary corporate action on the part of SKYC and its board of directors.
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(b)
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This Agreement, the Transactional Agreements, and all other agreements and instruments contemplated to be executed and delivered by SKYC constitute the legal, valid and binding obligation of SKYC, enforceable against SKYC in accordance with their terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general principles of equity regardless of whether such enforceability is considered in a proceeding in law or equity.
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(c)
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There is no pending Proceeding, and, to SKYC’s knowledge, no Person has threatened to commence any Proceeding that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Exchange or SKYC’s ability to comply with or perform its obligations and covenants under the agreements, and, to the knowledge of SKYC, no event has occurred, and no claim, dispute or other condition or circumstance exists, that might directly or indirectly give rise to or serve as a basis for the commencement of any such Proceeding.
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3.4
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NON-CONTRAVENTION; CONSENTS.
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(a)
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contravene, conflict with or result in a material violation of (i) SKYC’s Certificate of Incorporation or Bylaws, or (ii) any resolution adopted by SKYC’s board of directors or any committee thereof or the stockholders of SKYC;
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(b)
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to the knowledge of SKYC, contravene, conflict with or result in a material violation of, or give any Governmental Body the right to challenge the Exchange or to exercise any remedy or obtain any relief under, any legal requirement or any Order to which SKYC or any material assets owned or used by it are subject to;
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(c)
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to the knowledge of SKYC, cause any material assets owned or used by SKYC to be reassessed or revalued by any taxing authority or other Governmental Body;
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(d)
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to the knowledge of SKYC, contravene, conflict with or result in a material violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by SKYC or that otherwise relates to SKYC’s business or to any of the material assets owned or used by SKYC, where such contraventions, conflict, violation, revocation, withdrawal, suspension, cancellation, termination or modification would have a Material Adverse Effect on SKYC;
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(e)
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contravene, conflict with or result in a material violation or material breach of, or material default under, any contract to which SKYC is a party;
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(f)
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give any Person the right to any payment by SKYC or give rise to any acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments or other contingent obligations of any nature whatsoever of SKYC in favor of any Person, in any such case as a result of the Exchange; or
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(g)
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result in the imposition or creation of any material Lien upon or with respect to any material asset owned or used by SKYC.
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3.5
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FINDERS AND BROKERS.
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(a)
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Neither SKYC nor any Person acting on behalf of SKYC has engaged any finder, broker, intermediary or any similar Person in connection with the Exchange.
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(b)
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SKYC has not entered into a contract or other agreement that provides that a fee shall be paid to any Person or Entity if the Exchange is consummated.
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3.6
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REPORTS AND FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
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(a)
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SKYC has filed all reports required to be filed with the SEC pursuant to the Exchange Act (all such reports, including those to be filed prior to the Closing Date and all registration statements and prospectuses filed by SKYC with the SEC, are collectively referred to as the “SKYC SEC Reports”). All of the SKYC SEC Reports, as of their respective dates of filing (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing): (i) complied in all material respects as to form with the applicable requirements of the Securities Act or Exchange Act and the rules and regulations thereunder, as the case may be, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required 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. The audited financial statements of SKYC included in the SKYC SEC Reports comply in all material respects with the published rules and regulations of the SEC with respect thereto, and such audited financial statements (i) were prepared from the books and records of SKYC, (ii) were prepared in accordance with GAAP applied on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and (iii) present fairly the financial position of SKYC as of the dates thereof and the results of operations and cash flows for the periods then ended. The unaudited financial statements included in the SKYC SEC Reports comply in all material respects with the published rules and regulations of the SEC with respect thereto; and such unaudited financial statements (i) were prepared from the books and records of SKYC, (ii) were prepared in accordance with GAAP, except as otherwise permitted under the Exchange Act and the rules and regulations thereunder, on a consistent basis (except as may be indicated therein or in the notes or schedules thereto) and (iii) present fairly the financial position of SKYC as of the dates thereof and the results of operations and cash flows (or changes in financial condition) for the periods then ended, subject to normal year-end adjustments and any other adjustments described therein or in the notes or schedules thereto.
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(b)
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Except as specifically contemplated by this Agreement or reflected in the SKYC SEC Reports, since December 31, 2010, there has not been (i) any material adverse change in SKYC’s business, assets, liabilities, operations, and, to the knowledge of SKYC, no event has occurred that is likely to have a Material Adverse Effect on SKYC’s business, assets, liabilities or operations, (ii) any declarations setting aside or payment of any dividend or distribution with respect to the SKYC Common Stock other than consistent with past practices, (iii) any material change in SKYC’s accounting principles, procedures or methods, (iv) cancellation in writing of any material customer contract or (v) the loss of any customer relationship which would have a Material Adverse Effect on SKYC’s business, assets, liabilities or operations.
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3.7
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COMPLIANCE WITH APPLICABLE LAW.
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3.8
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COMPLETE COPIES OF REQUESTED REPORTS.
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3.9
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FULL DISCLOSURE.
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(a)
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Neither this Agreement (including all Schedules and Exhibits hereto) nor any of the Transactional Agreements contemplated to be executed and delivered by SKYC in connection with this Agreement contains any untrue statement of material fact; and none of such documents omits to state any material fact necessary to make any of the representations, warranties or other statements or information contained therein not misleading.
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(b)
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All of the information set forth in the prospectus and all other information regarding SKYC and the business, condition, assets, liabilities, operations, financial performance, net income and prospects of either that has been furnished to FDH or the Shareholders by or on behalf of SKYC or any of the SKYC’s Representatives, is accurate and complete in all material respects.
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4.1
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ACCESS AND INVESTIGATION.
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(a)
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Each of FDH and its Representatives provide SKYC and its Representatives access, at reasonable times and with twenty-four (24) hours’ notice from SKYC to FDH, to all of the premises and assets of FDH, to all existing books, records, Tax Returns, work papers and other documents and information relating to FDH, and to responsible officers and employees of FDH, and FDH and its Representatives provide SKYC and its Representatives with copies of such existing books, records, Tax Returns, work papers and other documents and information relating to FDH as SKYC may request in good faith;
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(b)
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Each of FDH and its Representatives confer regularly with SKYC upon its request, concerning operational matters and otherwise report regularly (not less than semi-monthly and as SKYC may otherwise request) to SKYC and discuss with SKYC and its Representatives concerning the status of the business, condition, assets, liabilities, operations, and financial performance of FDH, and promptly notify SKYC of any material change in the business, condition, assets, liabilities, operations, and financial performance of FDH, or any event reasonably likely to lead to any such change.
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4.2
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OPERATION OF BUSINESS.
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(a)
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It conducts its operations in the Ordinary Course of Business and in the same manner as such operations have been conducted prior to the date of this Agreement;
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(b)
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It uses its commercially reasonable efforts to preserve intact its current business organization, keep available and not terminate the services of its current officers and employees and maintain its relations and goodwill with all suppliers, customers, landlords, creditors, licensors, licensees, employees and other Persons having business relationships with FDH;
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(c)
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It does not declare, accrue, set aside or pay any dividend or make any other distribution in respect of any shares of its capital stock, and does not repurchase, redeem or otherwise reacquire any shares of its capital stock or other securities, except with respect to the repurchase of shares of FDH upon termination of employees at the original purchase price pursuant to agreements existing at the date hereof;
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(d)
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It does not sell or otherwise issue (or grant any warrants, options or other rights to purchase) any shares of capital stock or any other securities, except the issuance of shares of FDH pursuant to option grants to employees made under the option plan in the Ordinary Course of Business;
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(e)
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It does not amend its Articles of Incorporation, Bylaws or other Organizational Documents, and does not effect or become a party to any recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction;
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(f)
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It does not revalue any of its assets, including, without limitation, writing down the value of inventory or writing off notes or accounts receivable, except as required under GAAP and in the Ordinary Course of Business;
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(g)
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It does not establish or adopt any Employee Benefit Plan, and does not pay any bonus or make any profit sharing or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers or employees;
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(h)
|
It does not change any of its methods of accounting or accounting practices in any respect;
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(i)
|
It does not commence or take any action or fail to take any action which would result in the commencement of any Proceeding;
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(j)
|
It does not (i) acquire, dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or other assets, other than in the Ordinary Course of Business; (ii) incur, assume or prepay any indebtedness, Indebtedness or obligation or any other liabilities or issue any debt securities, other than in the Ordinary Course of Business; (iii) assume, guarantee, endorse for the obligations of any other person, other than in the Ordinary Course of Business; (iv) make any loans, advances or capital contributions to, or investments in, any other Person, other than in the Ordinary Course of Business; or (v) fail to maintain insurance consistent with past practices for its business and property;
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(k)
|
It pays all debts and Taxes, files all of its Tax Returns (as provided herein) and pays or performs all other obligations, when due;
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(l)
|
It does not hire any new officer-level employee;
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(m)
|
Except as otherwise contemplated hereunder, it does not enter into any transaction or take any other action outside the Ordinary Course of Business; and
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(n)
|
It does not enter into any transaction or take any other action that likely would cause or constitute a Breach of any representation or warranty made by it in this Agreement.
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4.3
|
FILINGS AND CONSENTS; COOPERATION.
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(a)
|
Each filing or notice required to be made or given (pursuant to any applicable Law, Order or contract, or otherwise) by FDH or the Shareholders in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is made or given as soon as possible after the date of this Agreement;
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(b)
|
Each Consent required to be obtained (pursuant to any applicable Law, Order or contract, or otherwise) by FDH or the Shareholders in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date;
|
(c)
|
It promptly delivers to SKYC a copy of each filing made, each notice given and each Consent obtained by FDH during the Pre-Closing Period; and
|
(d)
|
During the Pre-Closing Period, it and its Representatives cooperate with SKYC and SKYC’s Representatives, and prepare and make available such documents and take such other actions as SKYC may request in good faith, in connection with any filing, notice or Consent that SKYC is required or elects to make, give or obtain.
|
4.4
|
NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULES.
|
(a)
|
During the Pre-Closing Period, FDH shall promptly notify SKYC in writing of:
|
(i)
|
the discovery by it of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement which is contrary to any representation or warranty made by it in this Agreement or in any of the other Transactional Agreements, or that would upon the giving of notice or lapse of time, result in any of its representations and warranties set forth in this agreement to become untrue or otherwise cause any of the conditions of Closing set forth in Article VI or Article VII not to be satisfied;
|
(ii)
|
any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement (except as a result of actions taken pursuant to the express written consent of SKYC) and that is contrary to any representation or warranty made by it in this Agreement, or that would upon the giving of notice or lapse of time, result in any of its representations and warranties set forth in this agreement to become untrue or otherwise cause any of the conditions of Closing set forth in Article VI or Article VII not to be satisfied;
|
(b)
|
If any event, condition, fact or circumstances that is required to be disclosed pursuant to Section 4.4(a) requires any material change in the FDH Disclosure Schedule, or if any such event, condition, fact or circumstance would require such a change assuming the FDH Disclosure Schedule were dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstances, then FDH, as applicable, shall promptly deliver to SKYC an update to the FDH Disclosure Schedule specifying such change (a “Disclosure Schedule Update”).
|
(c)
|
It will promptly update any relevant and material information provided to SKYC after the date hereof pursuant to the terms of this Agreement.
|
4.5
|
Commercially Reasonable Efforts.
|
4.6
|
CONFIDENTIALITY; PUBLICITY.
|
(a)
|
It and its Representatives keep strictly confidential the existence and terms of this Agreement prior to the issuance or dissemination of any mutually agreed upon press release or other disclosure of the Exchange; and
|
(b)
|
Neither it nor any of its Representatives issues or disseminates any press release or other publicity or otherwise makes any disclosure of any nature (to any of its suppliers, customers, landlords, creditors or employees or to any other Person) regarding any of the Exchange; except in each case to the extent that it is required by law to make any such disclosure regarding such transactions or as separately agreed by the parties; provided, however, that if it is required by law to make any such disclosure, FDH advises SKYC, at least five business days before making such disclosure, of the nature and content of the intended disclosure.
|
5.1
|
NOTIFICATION.
|
(a)
|
the discovery by SKYC of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement which is contrary to any representation or warranty made by SKYC in this Agreement; and
|
(b)
|
any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement (except as a result of actions taken pursuant to the written consent of FDH) and that is contrary to any representation or warranty made by SKYC in this Agreement;
|
5.2
|
FILINGS AND CONSENTS; COOPERATION.
|
(a)
|
Each filing or notice required to be made or given (pursuant to any applicable Law, Order or contract, or otherwise) by SKYC in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is made or given as soon as possible after the date of this Agreement;
|
(b)
|
Each Consent required to be obtained (pursuant to any applicable Law, Order or contract, or otherwise) by SKYC in connection with the execution and delivery of any of the Transactional Agreements, or in connection with the consummation or performance of the Exchange, is obtained as soon as possible after the date of this Agreement and remains in full force and effect through the Closing Date;
|
(c)
|
SKYC promptly delivers to FDH a copy of each filing made, each notice given and each Consent obtained by SKYC during the Pre-Closing Period; and
|
(d)
|
During the Pre-Closing Period, SKYC and its Representatives cooperate with FDH and its Representatives, and prepare and make available such documents and take such other actions as FDH may request in good faith, in connection with any filing, notice or Consent that FDH is required or elects to make, give or obtain.
|
5.3
|
COMMERCIALLY REASONABLE EFFORTS.
|
5.4
|
DISCLOSURE OF CONFIDENTIAL INFORMATION.
|
(a)
|
Each of SKYC, FDH and the Shareholders acknowledges and agrees that it may receive Confidential Information in connection with this Transaction including without limitation, the FDH Disclosure Schedule and any information disclosed during the due diligence process, the public disclosure of which will harm the disclosing party’s business. The Receiving Party may use Confidential Information only in connection with the Transaction. The results of the due diligence review may not be used for any other purpose other than in connection with the Transaction. Except as expressly provided in this Agreement, the Receiving Party shall not disclose Confidential Information to anyone without the Disclosing Party’s prior written consent. The Receiving Party shall take all reasonable measures to avoid disclosure, dissemination or unauthorized use of Confidential Information, including, at a minimum, those measures it takes to protect its own confidential information of a similar nature. The Receiving Party shall not export any Confidential Information in any manner contrary to the export regulations of the governmental jurisdiction to which it is subject.
|
(b)
|
The Receiving Party may disclose Confidential Information as required to comply with binding orders of governmental entities that have jurisdiction over it, provided that the Receiving Party (i) gives the Disclosing Party reasonable notice (to the extent permitted by law) to allow the Disclosing Party to seek a protective order or other appropriate remedy, (ii) discloses only such information as is required by the governmental entity, and (iii) uses commercially reasonable efforts to obtain confidential treatment for any Confidential Information so disclosed.
|
(c)
|
All Confidential Information shall remain the exclusive property of the Disclosing Party. The Disclosing Party’s disclosure of Confidential Information shall not constitute an express or implied grant to the Receiving Party of any rights to or under the Disclosing Party’s patents, copyrights, trade secrets, trademarks or other intellectual property rights.
|
(d)
|
The Receiving Party shall notify the Disclosing Party immediately upon discovery of any unauthorized use or disclosure of Confidential Information or any other breach of this Agreement by the Receiving Party. The Receiving Party shall cooperate with the Disclosing Party in every reasonable way to help the Disclosing Party regain possession of such Confidential Information and prevent its further unauthorized use.
|
(e)
|
The Receiving Party shall return or destroy all tangible materials embodying Confidential Information (in any form and including, without limitation, all summaries, copies and excerpts of Confidential Information) promptly following the Disclosing Party’s written request; provided, however, that, subject to the provisions of this Agreement, the Receiving Party may retain one copy of such materials in the confidential, restricted access files of its legal department for use only in the event a dispute arises between the parties related to the Transaction and only in connection with that dispute. At the Disclosing Party’s option, the Receiving Party shall provide written certification of its compliance with this Section.
|
5.5
|
INDEMNIFICATION.
|
(a)
|
Each of FDH and the Shareholders, jointly and severally, each shall defend, indemnify and hold harmless SKYC, and its respective employees, officers, directors, stockholders, controlling persons, affiliates, agents, successors and assigns (collectively, the “SKYC Indemnified Persons”), and shall reimburse the SKYC Indemnified Persons, for, from and against any loss, liability, claim, damage, expense (including costs of investigation and defense and reasonable attorneys’ fees) or diminution of value, whether or not involving a third-party claim (collectively, “Damages”), directly or indirectly, relating to, resulting from or arising out of:
|
(i)
|
any untrue representations, misrepresentations or breach of warranty by or of FDH or the Shareholders contained in or pursuant to this Agreement, and the FDH Disclosure Schedule;
|
(ii)
|
any breach or nonfulfillment of any covenant, agreement or other obligation by or of FDH or the Shareholders (only to the extent made or occurring prior to or at the Closing) contained in or pursuant to this Agreement, the Transaction Agreements executed by FDH or any of the Shareholders in their individual capacity, the FDH Disclosure Schedule, or any of the other agreements, documents, schedules or exhibits to be entered into by FDH or any of the Shareholders in their individual capacity pursuant to or in connection with this Agreement;
|
(iii)
|
all of Pre-Closing liabilities of FDH or the Shareholders; and
|
(iv)
|
any liability, claim, action or proceeding of any kind whatsoever, whether instituted or commenced prior to or after the Closing Date, which directly or indirectly relates to, arises or results from, or occurs in connection with facts or circumstances relating to the conduct of business of FDH, or the assets of FDH, or events or circumstances existing on or prior to the Closing Date.
|
(b)
|
SKYC shall defend, indemnify and hold harmless FDH and its respective affiliates, agents, successors and assigns (collectively, the “FDH Indemnified Persons”), and shall reimburse the FDH Indemnified Persons, for, from and against any Damages, directly or indirectly, relating to, resulting from or arising out of:
|
(i)
|
any untrue representation, misrepresentation or breach of warranty by or of SKYC contained in or pursuant to this Agreement;
|
(ii)
|
any breach or nonfulfillment of any covenant, agreement or other obligations by or of SKYC contained in or pursuant to this Agreement, the Transaction Agreements or any other agreements, documents, schedules or exhibits to be entered into or delivered to pursuant to or in connection with this Agreement.
|
(c)
|
Promptly after receipt by an indemnified party under Section 5.5 of this Agreement of notice of a claim against it (“Claim”), such indemnified party shall, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of such Claim, but the failure to so notify the indemnifying party will not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the indemnifying party demonstrates that the defense of such action is prejudiced by the indemnified party’s failure to give such notice.
|
(d)
|
A claim for indemnification for any matter not involving a third-party claim may be asserted by notice to the Party from whom indemnification is sought.
|
6.1
|
ACCURACY OF REPRESENTATIONS AND WARRANTIES.
|
6.2
|
ADDITIONAL CONDITIONS TO CLOSING.
|
(a)
|
All necessary approvals under federal and state securities laws and other authorizations relating to the issuance of the Acquisition Shares and the transfer of the Shares shall have been received.
|
(b)
|
No preliminary or permanent injunction or other order by any federal, state or foreign court of competent jurisdiction which prohibits the consummation of the Exchange shall have been issued and remain in effect. No statute, rule, regulation, executive order, stay, decree, or judgment shall have been enacted, entered, issued, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation of the Exchange. All authorizations, consents, orders or approvals of, or declarations or filings with, and all expirations of waiting periods imposed by, any Governmental Body which are necessary for the consummation of the Exchange, other than those the failure to obtain which would not materially adversely affect the consummation of the Exchange or in the aggregate have a Material Adverse Effect on SKYC and its subsidiaries, taken as a whole, shall have been filed, occurred or been obtained (all such permits, approvals, filings and consents and the lapse of all such waiting periods being referred to as the “Requisite Regulatory Approvals”) and all such Requisite Regulatory Approvals shall be in full force and effect.
|
(c)
|
There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Exchange, by any Governmental Body which, in connection with the grant of a Requisite Regulatory Approval, imposes any material condition or material restriction upon SKYC or its subsidiaries or FDH, including, without limitation, requirements relating to the disposition of assets, which in any such case would so materially adversely impact the economic or business benefits of the Exchange as to render inadvisable the consummation of the Exchange.
|
6.3
|
PERFORMANCE OF AGREEMENTS.
|
6.4
|
CONSENTS.
|
6.5
|
NO MATERIAL ADVERSE CHANGE AND SATISFACTORY DUE DILIGENCE.
|
6.6
|
FDH CLOSING CERTIFICATES.
|
(a)
|
copies of resolutions of FDH, certified by a Secretary, Assistant Secretary or other appropriate officer of FDH, authorizing the execution, delivery and performance of this Agreement and other Transactional Agreements;
|
(b)
|
such other documents as SKYC may request in good faith for the purpose of (i) evidencing the accuracy of any representation or warranty made by FDH, (ii) evidencing the compliance by FDH, or the performance by FDH of, any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements, (iii) evidencing the satisfaction of any condition set forth in Article VII or this Article VI, or (iv) otherwise facilitating the consummation or performance of the Exchange.
|
6.7
|
DELIVERY OF STOCK CERTIFICATES, MINUTE BOOK AND CORPORATE SEAL.
|
7.1
|
ACCURACY OF REPRESENTATIONS AND WARRANTIES.
|
7.2
|
ADDITIONAL CONDITIONS TO CLOSING.
|
(a)
|
All necessary approvals under federal and state securities laws and other authorizations relating to the issuance and transfer of the Acquisition Shares by SKYC and the transfer of the Shares by FDH shall have been received.
|
(b)
|
No preliminary or permanent injunction or other order by any federal, state or foreign court of competent jurisdiction which prohibits the consummation of the Exchange shall have been issued and remain in effect. No statute, rule, regulation, executive order, stay, decree, or judgment shall have been enacted, entered, issued, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation of the Exchange. All Requisite Regulatory Approvals shall have been filed, occurred or been obtained and all such Requisite Regulatory Approvals shall be in full force and effect.
|
(c)
|
There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Exchange, by any federal or state Governmental Body which, in connection with the grant of a Requisite Regulatory Approval, imposes any condition or restriction upon the Surviving Corporation or its subsidiaries (or, in the case of any disposition of assets required in connection with such Requisite Regulatory Approval, upon SKYC, its subsidiaries or FDH or any of their subsidiaries), including, without limitation, requirements relating to the disposition of assets, which in any such case would so materially adversely impact the economic or business benefits of the Exchange as to render inadvisable the consummation of the Exchange.
|
7.3
|
SKYC CLOSING CERTIFICATES.
|
(a)
|
copies of resolutions of SKYC, certified by a Secretary, Assistant Secretary or other appropriate officer of SKYC, authorizing the execution;
|
(b)
|
good standing certificates for the State of Nevada; and
|
(c)
|
such other documents as FDH may request in good faith for the purpose of (i) evidencing the accuracy of any representation or warranty made by SKYC, (ii) evidencing the compliance by SKYC with, or the performance by SKYC of, any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements, (iii) evidencing the satisfaction of any condition set forth in Article VI or this Article VII, or (iv) otherwise facilitating the consummation or performance of the Exchange.
|
7.4
|
NO MATERIAL ADVERSE CHANGE.
|
7.5
|
PERFORMANCE OF AGREEMENTS.
|
7.6
|
CONSENTS.
|
7.7
|
SKYC STOCK.
|
10.1
|
TERMINATION.
|
(a)
|
by mutual written consent of SKYC, FDH and the Shareholders;
|
(b)
|
by SKYC if it is not satisfied with the results of its due diligence of FDH for any reason;
|
(c)
|
by SKYC if (i) there is a material Breach of any covenant or obligation of FDH or the Shareholders; provided however, that if such Breach or Breaches are capable of being cured prior to the Closing Date, such Breach or Breaches shall not have been cured within 10 days of delivery of the written notice of such Breach, or (ii) SKYC reasonably determines that the timely satisfaction of any condition set forth in Article VI has become impossible or impractical (other than as a result of any failure on the part of SKYC to comply with or perform its covenants and obligations under this Agreement or any of the other Transactional Agreements);
|
(d)
|
by FDH if (i) there is a material Breach of any covenant or obligation of SKYC; provided however, that if such Breach or Breaches are capable of being cured prior to the Closing Date, such Breach or Breaches shall not have been cured within 10 days of delivery of the written notice of such Breach, or (ii) FDH reasonably determines that the timely satisfaction of any condition set forth in Article VII has become impossible or impractical (other than as a result of any failure on the part of FDH or any Shareholders to comply with or perform any covenant or obligation set forth in this Agreement or any of the other Transactional Agreements);
|
(e)
|
by SKYC if the Closing has not taken place on or before May 5, 2011 (except if as a result of any failure on the part of SKYC to comply with or perform its covenants and obligations under this Agreement or in any other Transactional Agreement);
|
(f)
|
by FDH if the Closing has not taken place on or before May 5, 2011 (except if as a result of the failure on the part of FDH or the Shareholders to comply with or perform any covenant or obligation set forth in this Agreement or in any other Transactional Agreement);
|
(g)
|
by any of SKYC, on the one hand or FDH, on the other hand, if any court of competent jurisdiction in the United States or other United States governmental body shall have issued an order, decree or ruling or taken any other action restraining, enjoining or otherwise prohibiting the Exchange and such order, decree, ruling or any other action shall have become final and non-appealable; provided, however, that the party seeking to terminate this Agreement pursuant to this clause (g) shall have used all commercially reasonable efforts to remove such order, decree or ruling; or
|
(h)
|
The parties hereby agree and acknowledge that a breach of the provisions of Sections 4.1, 4.2, 4.3, 4.4 and 4.6 are, without limitation, material Breaches of this Agreement.
|
10.2
|
TERMINATION PROCEDURES.
|
10.3
|
EFFECT OF TERMINATION.
|
11.1
|
SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
|
11.2
|
EXPENSES.
|
11.3
|
ENTIRE AGREEMENT.
|
11.4
|
COUNTERPARTS
|
11.5
|
DESCRIPTIVE HEADINGS.
|
11.6
|
NOTICES.
|
If to SKYC:
|
#1801 Building B, Hai Song Da Sha,Che Gong Miao, Fu Tian Qu,Shenzen, China 518041
|
|
If to FDH:
|
Room 3211F, Far East Consortium Building, 121 Des Voeux Road Central, Hong Kong, China.
|
|
If to the Shareholders:
|
To such address or addresses as a party shall have previously designated by notice to the sender given in accordance with this section.
|
11.7
|
CHOICE OF LAW.
|
11.8
|
BINDING EFFECT; BENEFITS.
|
11.9
|
ASSIGNABILITY.
|
11.10
|
WAIVER AND AMENDMENT.
|
11.11
|
ATTORNEYS’ FEES.
|
11.12
|
SEVERABILITY.
|
11.13
|
CONSTRUCTION.
|
SKY DIGITAL STORES CORP. | |||
|
By:
|
/s/ Xiangfeng Lin | |
Name: Xiangfeng Lin | |||
Title: CEO/ Chairman | |||
HONGKONG FIRST DIGITAL HOLDING LIMITED.
|
|||
|
By:
|
/s/ Xiangfeng Lin | |
Name: Xiangfeng Lin | |||
Title: Chairman/ President | |||
Shareholders: | |||
See attached Shareholder signature pages |
Name
|
Ownership Percentage of FDH
|
Number of Shares of SKYC to be issued
|
|||
1) Xiangfeng Lin
|
27.32 | % |
6,479,221 shares
|
||
2) Jianxing Lin
|
9.5 | % |
2,253,023 shares
|
||
3) Wenbin Wu | 5.86 | % | 1,389,760 shares | ||
4) Zihong Lin | 1.1 | % | 260,876 shares | ||
5) Junyong Wang | 1.1 | % | 260,876 shares | ||
6) Yaping Ren | 1.1 | % | 260,876 shares | ||
7) Kun Chen | 1.1 | % | 260,876 shares | ||
8) Jinshui Lin | 9 | % | 2,134,443 shares | ||
9) Xiuzi Lin | 8 | % | 1,897,283 shares | ||
10) Chengfeng Zhang | 4.92 | % | 1,166,829 shares | ||
11) Shenzhen Top Finance Guaranty Investment Inc. | 9 | % | 2,134,443 shares | ||
12) TF Capital Management (HK) Limited | 7.5 | % | 1,778,703 shares | ||
13) Lingjuan Wang | 5 | % | 1,185,802 shares | ||
14) Linlin Li | 5 | % | 1,185,802 shares | ||
15) Hao Wang | 2 | % | 474,321 shares | ||
16) Xiaolan Dai | 2.5 | % | 592,901 shares | ||
Total | 100 | % | 23,716,035 shares | ||
Shareholders:
|
Signatures:
|
1) Xiangfeng Lin
|
/s/ Xiangfeng Lin |
2) Jianxing Lin
|
/s/ Jianxing Lin |
3) Wenbin Wu
|
/s/ Wenbin Wu |
4) Zihong Lin
|
/s/ Zihong Lin |
5) Junyong Wang
|
/s/ Junyong Wang |
6) Yaping Ren
|
/s/ Yaping Ren |
7) Kun Chen
|
/s/ Kun Chen |
8) Jinshui Lin
|
/s/ Jinshui Lin |
9) Xiuzi Lin
|
/s/ Xiuzi Lin |
10) Chengfeng Zhang
|
/s/ Chengfeng Zhang |
11) Lingjuan Wang
|
/s/ Lingjuan Wang |
12) Linlin Li
|
/s/ Linlin Li |
13) Hao Wang
|
/s/ Hao Wang |
14) Xiaolan Dai
|
/s/ Xiaolan Dai |
15) Shenzhen Top Finance Guaranty Investment Inc.
|
By: /s/ Rui Wang
Name: Rui Wang
Title: President
|
16) TF Capital Management (HK) Limited
|
By: /s/ Bing Xu
Name: Bing Xu
Title: President
|
By:
|
/s/ Xiangfeng Lin
|
Name:
|
Xiangfeng Lin
|
Title:
|
President
|