Item 1.01 Entry Into A Material Definitive Agreement.
On September 25, 2018, American
Lorain Corporation (
Lorain
) and Shanghai Xunyang Internet Technology
Co., Ltd. (the
Subsidiary
), a subsidiary of Lorain, entered into a
Share Exchange Agreement (the
Agreement
) with Taishan Muren Agriculture
Co. Ltd. (
Target
), and Shenzhen Jiamingrui New Agriculture Co., Ltd.
(the
Seller
), the sole shareholder of the Target, pursuant to which,
among other things and subject to the terms and conditions contained therein,
the Subsidiary will effect an acquisition of Target by acquiring from the Seller
all of the outstanding shares of Target (the
Acquisition
). Target grows
various spice plants and fruit trees and sells such products in China.
Pursuant to the Agreement, in
exchange for the acquisition of all of the outstanding shares of Target to the
Subsidiary, Lorain will issue 10,000,000 shares of common stock (the
Exchange Shares
) to the Seller. At the closing of the Acquisition,
Lorain will enter into a lock-up agreement with the Seller with respect to the
Exchange Shares, pursuant to which Seller will agree, subject to certain
exceptions, from the closing of the Acquisition until the first anniversary of
the closing, not to transfer the Exchange Shares or publicly disclose the
intention to do so (the
Lock-Up Agreement
).
The Agreement contains customary
representations and warranties made by Lorain and Subsidiary, on the one hand,
and Target and the Seller on the other hand, made solely for the benefit of the
other, which in certain cases are subject to specified exceptions and
qualifications contained in the Agreement or in information provided pursuant to
certain disclosure schedules to the Agreement. The Agreement also contains
certain customary covenants by each of the parties during the period between the
signing of the Agreement and the earlier of the closing of the Acquisition or
the termination of the Agreement in accordance with its terms.
The obligation of the parties to
complete the Acquisition is subject to the satisfaction of certain closing
conditions, including but not limited to:
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all necessary consents from government
authorities and third parties have been obtained;
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the entrance by the applicable parties into
certain ancillary agreements;
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no material adverse effect has occurred to any
party prior to closing; and
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the transactions contemplated by (i) the share exchange
agreement, dated August 8, 2018, by and among Lorain, Si Chen and certain
of Lorains subsidiaries and (ii) the amended and restated securities
purchase agreement, dated August 8, 2018, by and among the Lorain and
Yimin Jin and Hongxiang Yu shall have been approved by the requisite vote
of the shareholders of Lorain at the 2018 annual meeting of shareholders
in accordance with the terms of the proxy statement filed with the U.S.
Securities and Exchange Commission and mailed to Lorains shareholders in
connection therewith.
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At the closing of the
Acquisition, the Seller, its sole shareholder and certain individuals that are
involved in the management of Target (the
Subject Parties
) will enter
into non-competition and non-solicitation agreements (the
Non-Competition
Agreement
) in favor of Lorain, relating to the post-acquisition business of
Lorain (the
Business
) in the spice plants and fruit trees industry in
the Peoples Republic of China (the
PRC
). Pursuant to such agreements,
subject to certain exceptions, for a period from the closing of the Acquisition
to four years thereafter, each Subject Party and its affiliates will not,
without Lorains prior written consent, anywhere in the PRC, directly or
indirectly engage in (or own, manage, finance or control, or become engaged or
serve as an officer, director, employee, member, partner, agent, consultant,
advisor or representative of, an entity that engages in) the Business.
The foregoing descriptions of the
Agreement, the Lock-Up Agreement and the Non-Competition Agreement do not
purport to be complete and are subject to, and are qualified in their entirety
by, the full text of those agreements, which are filed herewith as Exhibits
10.1, 10.2, and 10.3 and incorporated herein by reference.