ex10-1.htm

EX-10.1 7 ex10-1.htm ex10-1.htm

Exhibit 10.1

EXECUTION COPY

STOCK PURCHASE AND SHARE EXCHANGE AGREEMENT

by and among

CORPHQ INC.

a California corporation,

AMERICAN NANO SILICON TECHNOLOGY, INC.

a Delaware corporation,

THE SHAREHOLDERS OF AMERICAN NANO SILICON TECHNOLOGY, INC. LISTED ON SCHEDULE 3.2,

and

Nanchong Chunfei Nano-Silicon Technologies Co. Ltd.

a limited liability company of the People’s Republic of China

Effective as of May 24, 2007

EXECUTION COPY

STOCK PURCHASE AGREEMENT AND SHARE EXCHANGE

THIS STOCK PURCHASE AGREEMENT AND SHARE EXCHANGE (this “Agreement”), is made and entered into as of this 24th day of May, 2007, by and among CorpHQ Inc. (“COHQ"), a corporation organized under the laws of California, with its principal place of business located at 1650 South Pacific Coast Highway, Suite 308, Redondo Beach CA 90277; American Nano Silicon Technology, Inc. (“ANST”), a Delaware corporation with its principal place of business located at 18 Kimberly Court, East Hanover, New Jersey 07936; Nanchong Chunfei Nano-Silicon Technologies Co. Ltd. (“NST”), a limited liability company organized under the laws of the People’s Republic of China (the “PRC”) and a wholly-owned subsidiary of ANST, with its principal place of business located at Chunfei Industrial Park of Xiaolong Economic Development Zone, Gaoping Nanchong City, Sichuan, PRC, and the ANST shareholders listed on Schedule 3.2 attached hereto and made a part hereof (“ANST Shareholders”) (collectively, ANST, NST and the ANST Shareholders shall be known as the “ANST Group”).

Premises

A. This Agreement assumes that prior to the Closing contemplated by this Agreement, COHQ will further amend its Articles of Incorporation to provide for a reduction of the number of authorized shares from two billion (2,000,000,000) shares of COHQ Common Stock, par value $.001 per share (“Old COHQ Common Stock”) to two hundred million (200,000,000) shares of Common Stock, par value $.000001 per share (“New COHQ Common Stock”), and for the reverse stock split of one thousand three hundred and two (1,302) shares of Old COHQ Common Stock into one share of New COHQ Common Stock. The transactions contemplated by this paragraph are hereinafter referred to as the “Recapitalization”).

B. This Agreement provides for the acquisition of 100% of the issued and outstanding capital stock of ANST owned by the ANST Shareholders, making ANST a wholly-owned subsidiary of COHQ, in exchange for the issuance to the ANST Shareholders of (i) 25,181,450 authorized but unissued shares of New COHQ Common Stock, pro rata in accordance with their respective percentage interests in ANST. Simultaneously, there shall be a sale by Steven Crane, an adult individual residing in the County of Los Angeles, State of California (“Crane”) and Gregg Davis, an adult individual residing in the County of Los Angeles, State of California (“Davis” and, collectively with Crane, the “Sellers”) to one of the ANST Shareholders, Dr. Huakang Zhou, an adult individual residing in the County of Morris, State of New Jersey (the “Buyer”) of 558,520 shares of New COHQ Common Stock owned by the Sellers following the Recapitalization, in consideration of the sum of US$280,000 paid in cash. The 25,739,970 resulting from the combination of the shares of New COHQ Common Stock received by virtue of Clauses (i) and (ii) above shall constitute 99% of the New COHQ Common Stock to be issued and outstanding, fully diluted, after the transactions contemplated hereby (the “Transactions”).

C. The boards of directors of COHQ and ANST have respectively determined, subject to the terms and conditions set forth in this Agreement, that the Transactions are desirable and in the best interests of their shareholders. This Agreement is being entered into for the purpose of setting forth the terms and conditions of the proposed Transactions.

D. The boards of directors of COHQ and ANST have determined that it would be in the best interests of COHQ and its shareholders to separate COHQ’s current business (the “Current COHQ Business”) from COHQ after the Transactions close, and to such effect to contribute the entirety of the Current COHQ Business to South Bay Financial Solutions, Inc., a Nevada corporation and existing subsidiary of COHQ (“COHQ Sub”), and, after the Transactions close, sell the stock of COHQ Sub to the Sellers in exchange for COHQ Sub assuming all of the liabilities of COHQ (the “Assumed COHQ Liabilities”) and agreeing to indemnify and hold COHQ and its officers, directors and shareholders harmless from all Assumed COHQ Liabilities (the “Subsidiary Transaction”).

E. The parties desire that the exchange of all of the issued and outstanding capital stock of ANST for 25,181,450 authorized but unissued shares of New COHQ Common Stock qualify as a tax free exchange meeting the requirements of Article 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”).

Agreement

NOW, THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived herefrom, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE SELLERS

As an inducement to and to obtain the reliance of ANST, the Sellers jointly and severally represent and warrant as follows, all of which is subject to the disclosures attached to this Agreement as “Schedules”.

Section 1.1 Organization of COHQ. COHQ is a corporation duly organized, validly existing, and in good standing under the laws of California and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in each jurisdiction, if any, in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification, or where the failure to be so qualified would not produce a material adverse effect upon the business, operations, financial condition or prospects of COHQ (a “Material Adverse Effect”). The Sellers have heretofore made available to the ANST Group complete and correct copies of the Articles of Incorporation and Bylaws of COHQ, and amendments thereto, as in effect on the date hereof. The execution and delivery of this Agreement does not and the consummation of the Transactions in accordance with the terms hereof will not violate any provision of COHQ’s Articles of Incorporation or Bylaws. COHQ has full power, authority and legal right and has taken all action required by law, its Articles of Incorporation, its Bylaws or otherwise to authorize the execution and delivery of this Agreement.

Section 1.2 Capitalization. The authorized capitalization of COHQ presently consists of two billion (2,000,000,000) shares of Old COHQ Common Stock. As of the date hereof, COHQ has 1,065,753,214 shares of Old COHQ Common Stock issued and outstanding. Prior to the Closing, the Recapitalization will effect the change of the authorized capitalization of COHQ to consist of two hundred million authorized shares of New COHQ Common Stock. As of the Closing date, and after giving effect to the Transaction, COHQ will have not more than 26,000,000 shares of New COHQ Common Stock issued and outstanding. All issued and outstanding shares of Old COHQ Common Stock are, and when issued as contemplated in the Transactions all shares of New COHQ Common Stock to be issued and outstanding after giving effect to the Transactions will be, legally issued, fully paid and non-assessable and are (in the case of Old COHQ Common Stock) or will be (in the case of New COHQ Common Stock) not issued in violation of the preemptive or other rights of any person. COHQ has no securities, warrants or options authorized or issued, except for those disclosed in Schedule 1.2.

Section 1.3 Subsidiaries. Other than as set forth on Schedule 1.3 attached hereto, COHQ has no subsidiaries.

Section 1.4 Tax Matters; Books and Records.

(a)	The books and records, financial and others, of COHQ are in all material respects complete and correct and have been maintained in accordance with good business accounting practices; and

(b)

COHQ has no liabilities with respect to the payment of any federal, state, county, or local income, franchise, sales, use or other taxes (including any deficiencies, interest or penalties), other than in respect of liens for taxes not yet due or payable, which will constitute one of the Assumed COHQ Liabilities.

Section 1.5 Litigation and Proceedings. There are no actions, suits, proceedings or investigations pending or threatened by or against or affecting the Sellers or COHQ or their respective properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind that would have a Material Adverse Effect. COHQ is not in default with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental agency or instrumentality, nor, to the best knowledge of Sellers, do there exist any circumstances which, after reasonable investigation, are likely to result in the discovery of such a default.

Section 1.6 Information. The information concerning COHQ as set forth in this Agreement and in the attached Schedules is complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading.

Section 1.7 Contracts. On the date of the Closing, after giving effect to the Transactions and the Subsidiary Transaction:

(a)	there will be no material contracts, agreements, leases, franchises, license agreements, or other commitments to which COHQ is a party or by which it or any of its properties are bound, which have not been assigned to, or assumed by, COHQ Sub, Sellers and/or another party; and

(b)	COHQ will not be party to any contract, agreement, commitment or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or award which does, or in the future may cause a Material Adverse Effect.

Section 1.9 Compliance With Laws and Regulations. COHQ has complied with all applicable statutes and regulations of any federal, state, local or other governmental entity or agency thereof, except to the extent that noncompliance would not create or give rise to a Material Adverse Effect.

Section 1.10 Approval of Agreement. The directors of COHQ have authorized the execution and delivery of this Agreement and have approved the Transactions.

Section 1.11 Material Transactions or Affiliations. Other than as contemplated herein with respect to the Subsidiary Transaction, there are no material contracts or agreements of arrangement between COHQ and any person, who was at the time of such contract, agreement or arrangement an officer, director or person owning of record, or known to beneficially own ten percent (10%) or more of the issued and outstanding shares of Common Stock of COHQ and which is to be performed in whole or in part after the date hereof. COHQ has no commitment, whether written or oral, to lend any funds to, borrow any money from or enter into material transactions with any such affiliated person.

Section 1.12 No Conflict With Other Instruments. The execution of this Agreement and the consummation of the Transactions will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust or other material contract, agreement or instrument to which COHQ is a party or to which any of its properties or operations are subject.

Section 1.13 Governmental Authorizations. Except for compliance with federal and state securities and corporation laws, as hereinafter provided, no authorization, approval, consent or order of, or registration, declaration or filing with, any court or other governmental body is required in connection with the execution and delivery by COHQ of this Agreement and the consummation of the Transactions.

Section 1.14 SEC Reporting.

(a) COHQ is a small business issuer (as defined in Item(a)(1) of Regulation S-B (“Regulation S-B”) promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”) and the Securities Act of 1933 (the “Securities Act”).

(b) COHQ has never been a reporting company (as defined in Item 10(b)(3) of Regulation S-B), and no class of capital stock of COHQ has ever been, or been required to be, registered under the Exchange Act.

Section 1.15 COHQ Financial Statements. The Sellers have caused to be prepared and delivered to Buyer, and Buyer has accepted from the Sellers, financial statements audited by a PCAOB-registered accounting firm (the “COHQ Financial Statements”), which Financial Statements fairly present the financial condition of COHQ as of the date of this Agreement and as of the Closing date and the results of operations of COHQ for the periods indicated therein. The COHQ Financial Statements include the related opinion of Moore & Associates, Chartered, COHQ’s independent auditing firm. To the extent that the COHQ Financial Statements do not include all of the COHQ financial statements that COHQ will be required to file with the SEC in order to register the New COHQ Common Stock under the Exchange Act, the books and records of COHQ, which will be delivered to the Buyer at the Closing, contain all of the information that will be required to prepare the missing financial statements and to perform any required audits.

Section 1.16 No General Solicitation or Advertising. In issuing New COHQ Common Stock under this Agreement, neither COHQ nor anyone acting on its behalf has offered to sell the New COHQ Common Stock by any form of general solicitation or advertising.

Section 1.17 Questionable Payments and Off-Balance Sheet Arrangements. Neither COHQ nor any director, officer, agent, employee or other person associated with or acting on behalf of COHQ, has used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payments to government officials or employees from corporate funds; established or maintained any unlawful or unrecorded fund of corporate monies or other assets; made any false or fictitious entries on the books of record of any such corporations; made any off-balance sheet arrangements; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

Section 1.18 Indebtedness. The COHQ Financial Statements will set forth as of the dates and periods to be indicated on such financial statements, all outstanding secured and unsecured Indebtedness of COHQ, as applicable, or for which COHQ, as applicable, has commitments. For the purposes of this Section 1.18, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in COHQ’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments due under leases required to be capitalized in accordance with GAAP. COHQ is not in default with respect to any Indebtedness, except where such default would not produce a Material Adverse Effect. Except as expressly set forth on Schedule 1.18 attached hereto, all Indebtedness will be transferred to COHQ Sub as part of the Subsidiary Transaction.

Section 1.19 Absence of Certain Developments. Except as may be disclosed in this Agreement or in Schedule 1.19 attached hereto, since December 31, 2006, COHQ has not:

(a) issued any stock, bonds or other corporate securities or any rights, options or warrants with respect thereto;

(b) borrowed any amount or incurred or become subject to any liabilities (absolute or contingent) except current liabilities incurred in the ordinary course of business which are comparable in nature and amount to the current liabilities incurred in the ordinary course of business during the comparable portion of its prior fiscal year, as adjusted to reflect the current nature and volume of COHQs business;

(c) discharged or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business;

(d) declared or made any payment or distribution of cash or other property to shareholders with respect to its stock, or purchased or redeemed, or made any agreements so to purchase or redeem, any shares of its capital stock;

(e) sold, assigned or transferred any other tangible assets, or canceled any debts or claims, except in the ordinary course of business;

(f) sold, assigned or transferred any patent rights, trademarks, trade names, copyrights, trade secrets or other intangible assets or intellectual property rights, or disclosed any proprietary confidential information to any person except to customers in the ordinary course of business;

(g) suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business;

(h) made any changes in employee compensation except in the ordinary course of business and consistent with past practices;

(i) made capital expenditures or commitments therefor that aggregate in excess of $10,000;

(j) entered into any other transaction other than in the ordinary course of business, or entered into any other material transaction, whether or not in the ordinary course of business;

(k) made charitable contributions or pledges in excess of $10,000;

(l) suffered any material damage, destruction or casualty loss, whether or not covered by insurance;

(m) experienced any material problems with labor or management in connection with the terms and conditions of their employment;

(n) effected any two or more events of the foregoing kind which in the aggregate would be material to ANST or NST; or

(o) entered into an agreement, written or otherwise, to take any of the foregoing actions.

Section 1.20 Due Diligence Disclosure. None of the documents made available to the Buyer by COHQ in response to an email due diligence request made on April 11, 2007 (the “COHQ Due Diligence Documents”) contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein not misleading in the light of the circumstances under which they were made.

ARTICLE II

REPRESENTATIONS, COVENANTS AND WARRANTIES OF ANST GROUP

As an inducement to, and to obtain the reliance of COHQ, the ANST Group, jointly and severally, represent and warrant as follows, all of which is subject to the disclosures attached to this Agreement as “Schedules”.

Section 2.1 Organization. Each of ANST and NST is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the corporate power and is duly authorized, qualified, franchised and licensed under all applicable laws, regulations, ordinances and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign entity in the country, provinces or states, as applicable in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification, or where the failure to be so qualified would not have a material adverse effect upon the business, operations, financial conditions or prospect of the ANST and NST taken as a whole (an “ANST/NST Material Adverse Effect”). Included in the attached Schedules are complete and correct copies of the respective Certificates of Incorporation, Bylaws, other charter documents and amendments thereto as in effect on the date hereof of ANST and NST (collectively, the “Charter Documents”). The execution and delivery of this Agreement does not, and the consummation of the Transactions in accordance with the terms hereof will not, violate any provision of the Charter Documents. ANST and NST have full power, authority and legal right and have taken all action required by the Charter Documents or otherwise to authorize the execution and delivery of this Agreement.

Section 2.2 Capitalization. (A) ANST’s authorized capitalization consists of one hundred million shares (100,000,000) shares of common stock, par value $.00001 per share (“ANST Common Stock”), and no preferred stock. As of the date hereof, ANST has 30,000 shares of ANST Common Stock issued and outstanding. All issued and outstanding shares of ANST Common Stock have been legally issued, fully paid, are non-assessable and not issued in violation of the preemptive rights of any other person. ANST has no other securities, warrants or options authorized or issued, nor does there exist any contract or instrument which is convertible into, exercisable or exchangeable for any such security. (B) The registered capital of NST is 1,000,000 RMB (“NST Capital”). As of the date hereof, ANST is the registered owner of ninety-five percent (95%) of the NST Capital, and Sichuan Chunfei Fine Chemical Industry Co., Ltd. owns the other five percent (5%) of the NST Capital. All issued and outstanding shares of ANST Common Stock and NST Common Stock have been legally issued, fully paid, are non-assessable and not issued in violation of applicable securities laws or the preemptive rights of any other person. Neither ANST nor NST has other securities, warrants, options or any rights to acquire securities of ANST or NST, as applicable, authorized or issued, and neither ANST nor NST is a party to any agreement, arrangement or understanding pursuant to which either ANST or NST has agreed to issue securities, warrants, options or rights to acquire securities of ANST or NST, as applicable.

Section 2.3 Subsidiaries. NST is the only subsidiary of ANST. NST has two controlled operating subsidiaries: (a) Sichuan Chunfei Refined Chemicals Co. Ltd., a limited liability company of the People’s Republic of China, of which NST is the registered owner of ninety percent (90%) of the total issued and outstanding equity interests as of the date hereof; and (b) Sichuan Hedi Veterinary Medicines Co. Ltd., a limited liability company of the People’s Republic of China, of which NST is the registered owner of ninety-two percent (92%) of the total issued and outstanding equity interests as of the date hereof.

Section 2.4 Tax Matters, Books & Records.

(a) The books and records, financial and others of each of ANST and NST are in all material respects complete and correct and have been maintained in accordance with good business accounting practices;

(b) Neither ANST nor NST has liabilities with respect to the payment of any country, federal, state, province, county, local or other taxes (including any deficiencies, interest or penalties), other than liens in respect of taxes not yet due and payable; and

(c) ANST and NST shall remain responsible for all of their respective debts and obligations incurred prior to the Closing.

Section 2.5 Information and Disclosure.

(a) Neither this Agreement or the Schedules attached hereto nor any other documents, certificates or instruments furnished to COHQ by or on behalf of ANST, NST or the ANST Shareholders in connection with the Transactions (collectively, the “ANST Disclosure Documents”) contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements made herein or therein, in the light of the circumstances under which they were made herein or therein, not false or misleading.

(b) Neither ANST nor NST has ever been a reporting company (as defined Item 10(b)(3) of Regulation S-B), and no class of capital stock of ANST or NST has ever been, or been required to be, registered under the Exchange Act.

(c) Prior to the Closing, ANST will cause to be prepared, audited by a PCAOB registered accounting firm, and delivered to the Sellers all of the financial statements of ANST and its subsidiary that COHQ would be required to file with the SEC pursuant to Item 9.01 of Form 8-K with respect to the Transactions if it were subject to the reporting requirements of the Securities Exchange Act. (the “ANST Financial Statements”).

Section 2.6 ANST Financial Statements. The balance sheets, and statements of income, changes in financial position and shareholders’ equity to be contained in the ANST Financial Statements (i) will be prepared in accordance with Item 9.01 of Form 8-K applied on a basis consistent with prior periods (and, in the case of unaudited financial information, on a basis consistent with year-end audits), (ii) will be in accordance with the books and records of the ANST and NST, and (iii) will present fairly in all material respects the consolidated financial condition of ANST and NST at the dates therein specified and the results of its operations and changes in financial position for the periods therein specified. The ANST Financial Statements will be audited by, and include the related opinions of Bagell, Josephs, Levine & Company, LLC, ANST’s independent audit firm.

Section 2.7 Title and Related Matters. Each of ANST and NST has good and marketable title to and is the sole and exclusive owner of all of its properties, inventory, interests in properties and assets, real and personal (collectively, the "ANST Assets") free and clear of all liens, pledges, charges or encumbrances except those which would not have an ANST/NST Material Adverse Effect.

Section 2.8 Litigation and Proceedings. There are no actions, suits or proceedings pending, or to the best knowledge of ANST and NST threatened, by or against or affecting ANST or NST, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign or before any arbitrator of any kind that would have a ANST/NST Material Adverse Effect and/or that would result in any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of ANST or NST to perform any of their respective obligations under this Agreement in any material respect. Neither ANST nor NST has any knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator or governmental agency or instrumentality, or of any circumstances which, with notice or the passage of time, or both, would result in such a default.

Section 2.9 Contracts. On the Closing date:

(a) Except as disclosed in Schedule 2.9 attached hereto, there are no material contracts, agreements, franchises, license agreements, or other commitments to which either ANST and/or NST, is a party or by which either of them or any of their properties or assets are bound; and

(b) Except as disclosed in Schedule 2.9 attached hereto, neither ANST nor NST is a party to any contract, agreement, commitment or instrument or subject to any charter or other corporate restriction or any judgment, order, writ, injunction, decree or award which may, now or in the future (as far as ANST or NST, as applicable, can now foresee), individually or in the aggregate, result in an ANST/NST Material Adverse Effect.

Section 2.10 Intellectual Property. Schedule 2.10 attached hereto sets forth all registered and unregistered intellectual property owned or claimed by ANST or NST (excluding non-proprietary information otherwise available to the industry or public or rights obtained pursuant to licenses associated with software, and other intellectual property generally made available for purchase or use by the industry or the public) and accurately identifies, where applicable, the following for each item applicable to such registered Intellectual Property: the filing date, issue date, classification of invention or goods or services covered, country of origin, licensor, license date, licensed subject matter, territorial limitations and the degree of exclusivity of use.

Section 2.11 No Conflict With Other Instruments. The execution of this Agreement and the consummation of the Transactions will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust or other material contract, agreement or instrument to which ANST or NST is a party or to which any of its properties or operations are subject.

Section 2.12 Material Contract Defaults. To the best of ANST’s and NST’s knowledge, neither ANST nor NST is in default under the terms of any outstanding contract, agreement, lease or other commitment, and there is no event of default in any such contract, agreement, lease or other commitment which default has resulted in or is likely to produce, individually or in the aggregate, an ANST/NST Material Adverse Effect.

Section 2.13 Governmental Authorizations. Except for compliance with federal and state securities or corporation laws, or the applicable laws of the PRC or any other jurisdiction, as applicable, no authorization, approval, consent or order of, or registration, declaration or filing with, any court or other governmental body is required in connection with the execution and delivery by ANST, NST or any ANST Shareholder of this Agreement and the consummation of the Transactions.

Section 2.14 Compliance with Laws and Regulations. The business of each of ANST and NST has been and is presently being conducted in accordance with all applicable federal, state and local governmental laws, rules, regulations and ordinances, and all applicable laws, rules, regulations and ordinances of the PRC or any other jurisdiction, as applicable, except for such noncompliance that, individually or in the aggregate, would not cause an ANST/NST Material Adverse Effect. Each of ANST and NST has all franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals necessary for the conduct of its business as now being conducted by it unless the failure to possess such franchises, permits, licenses, consents and other governmental or regulatory authorizations and approvals, individually or in the aggregate, could not reasonably be expected to have an ANST/NST Material Adverse Effect.

Section 2.15 Approval of Agreement. The directors of ANST have authorized the execution and delivery of this Agreement and have approved the Transactions. No other consent or approval is required for ANST to execute, deliver and perform this Agreement.

Section 2.16 Indebtedness. The ANST Financial Statements will set forth as of the dates and periods indicated all outstanding secured and unsecured Indebtedness of ANST or NST, as applicable, or for which ANST or NST, as applicable, has commitments. For the purposes of this Section 2.16, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $5,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in ANST’s or NST’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $5,000 due under leases required to be capitalized in accordance with GAAP. Except as set forth on Schedule 2.16, neither ANST nor NST is in default with respect to any such Indebtedness.

Section 2.17 Absence of Certain Developments. Except as may be disclosed in the ANST Disclosure Documents or Schedule 2.17, since the date of the most recent balance sheet contained in the ANST Financial Statements, neither ANST nor NST has: