Merger Agreement and Plan of Reorganization by and among Allstar Restaurants, Allstar Acquisitions Co., Terry Bowering, and China Qinba Pharmaceuticals, Inc. and the Controlling Shareholders of China Quinba dated February 12, 2010

THIS MERGER AGREEMENT AND PLAN OF REORGANIZATION, dated as of February 12, 2010 (this “Agreement”) by and among Allstar Restaurants, a Nevada corporation (“Parent”), Allstar Acquisitions Co., a Delaware corporation which is a wholly owned subsidiary of Parent (“Acquisition Subsidiary”) and China Qinba Pharmaceuticals, Inc., a Delaware corporation (“DE Qinba”); Terry G. Bowering (the “Parent Controlling Shareholder), and Guozhu Wang, Guiping Zhang, Xiu’e Xing, Yong Xu, XiLing Gao, Xianhong Xue, Congge Wei and Xiulan Kang (“Guozhu Wang and together with  Guiping Zhang, Xiu’e Xing, Yong Xu, XiLing Gao, Xianhong Xue, Congge Wei and Xiulan Kang, constituting the “Majority Qinba  Shareholders”).

WHEREAS, the Qinba Shareholders own 100% of the issued and outstanding capital stock of DE Qinba, such capital stock being hereinafter referred to as the “Qinba Shares”; and

WHEREAS, DE Qinba, through its wholly-owned subsidiary, WFOE, has entered into arrangements which effectively give DE Qinba control over Xian Xinba business and management;

WHEREAS, the Boards of Directors of each of Parent, Acquisition Subsidiary and DE Qinba have, pursuant to the laws of their respective jurisdiction, approved this Agreement and the consummation of the transactions contemplated hereby, including the merger of Acquisition Subsidiary with and into DE Qinba (the “Merger”); and the Boards of Directors of each of DE Qinba and Acquisition Subsidiary have declared that this Agreement is advisable, fair and in the best interests of their respective shareholders and approved the Merger upon the terms and conditions set forth in this Agreement; and

WHEREAS, immediately prior to the Merger, no more than 9,950,000 shares of common stock of Parent Common Stock shall be issued and outstanding.

Unless the context otherwise requires, the terms defined in this Article I shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

“Affiliate” means any Person that directly or indirectly controls, is controlled by, or is under common control with, the indicated Person.  For the purpose hereof the term “control” shall mean the holding of shares in excess of fifty percent (50%) of the voting securities of a corporate entity.

“Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

“Damages” shall mean any and all losses, claims, actions, damages, liabilities, penalties, fines, settlement costs and expenses, including, without limitation, costs of preparation and reasonable attorneys’ fees.

“GAAP” means United States generally accepted accounting principles consistently applied, as in effect from time to time.

“Governmental Authority” means any foreign, federal, national, state or local judicial, legislative, executive or regulatory body, authority, agency, court, administrative panel, tribunal or instrumentality, including, without limitation, any such United States or PRC authorities.

“Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above.

“Laws” means any federal, national, state, local or foreign statute, law, ordinance, regulation, rule, code, order or other requirement or rule of law.

“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and including any lien or charge arising by Law.

“Person” means all natural persons, corporations, business trusts, associations, unincorporated organizations, limited liability companies, partnerships, joint ventures and other entities and Governmental Authorities or any department or agency thereof.

“Tax” or “Taxes” means (a) any and all taxes, assessments, customs, duties, levies, fees, tariffs, imposts, deficiencies and other governmental charges of any kind whatsoever (including, but not limited to, taxes on or with respect to net or gross income, franchise, profits, gross receipts, capital, sales, use, ad valorem, value added, transfer, real property transfer, transfer gains, transfer taxes, inventory, capital stock, license, payroll, employment, social security, unemployment, severance, occupation, real or personal property, estimated taxes, rent, excise, occupancy, recordation, bulk transfer, intangibles, alternative minimum, doing business, withholding and stamp), together with any interest thereon, penalties, fines, damages costs, fees, additions to tax or additional amounts with respect thereto, imposed by the United States (federal, state or local) or other applicable jurisdiction; (b) any liability for the payment of any amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined, unitary or similar group or as a result of transferor or successor liability, including, without limitation, by reason of Section 1.1502-6 of the Treasury Regulations promulgated under the Code; and (c) any liability for the payments of any amounts as a result of being a party to any tax sharing agreement or as a result of any express or implied obligation to indemnify any other Person with respect to the payment of any amounts of the type described in clause (a) or (b).

“Transaction Documents” means this Agreement and all agreements, contracts, documents, certificates and instruments contemplated by or referenced in this Agreement, including all schedules and exhibits hereto and thereto.

Section 2.1   Merger.  Upon the terms and subject to the conditions of this Agreement, at the Merger Effective Date, Acquisition Subsidiary shall have been merged with and into DE Qinba in accordance with the Delaware General Corporation Law, the separate legal existence of Acquisition Subsidiary will have ceased, and DE Qinba shall (i) be the surviving corporation of the

Merger (sometimes hereinafter referred to as the “Surviving Corporation”); (ii) be governed and continue its corporate existence under the laws of Delaware; and (iii) have succeeded to and assumed all of the rights and the properties and obligations of Acquisition Subsidiary and DE Qinba in accordance with the Delaware General Corporation Law. With respect to references in this Agreement relating to any obligations or duties of DE Qinba accruing after the Merger Effective Date, the usage of the defined term “DE Qinba” as opposed to “Surviving Corporation” shall not operate to negate any such obligation or duties.

Section 2.2   Merger Effective Date; Closing.  The parties hereto shall cause the terms and conditions of the Merger (including but not limited to the exchange and cancellation of share certificates and updating of share registers) to be consummated as soon as practicable after the filing of the Certificate of Merger (the “Certificate of Merger”) with the Secretaries of State of Delaware (in such forms as required by and executed in accordance with the relevant provisions of the Delaware General Corporation Law) (the “Merger Effective Date”), the receipt of a certified Certificate of Merger from the Secretary of State of Delaware, and the satisfaction or due waiver of the conditions set forth in Articles VI and VII. The closing of the Merger (the “Closing”) shall take place at 5:00 p.m. E.S.T. on the day the conditions to closing set forth in Articles VI and VII herein have been satisfied or waived, or at such other time and date as the parties hereto shall agree in writing (the “Closing Date”), at the offices of Macdonald Tuskey, Corporation and Securities Lawyers, 1210 – 777 Hornby Street, Vancouver, BC V6Z 1S4, Attn: Konrad Malik

(a)     Articles of Incorporation.  The Articles of Incorporation of DE Qinba (the “DE Qinba Articles”), as in effect immediately prior to the Merger, shall be the Articles of Incorporation of the Surviving Corporation from and after the Merger until further amended in accordance with applicable Law.

(b)     Directors and Officers.  The directors and officers of DE Qinba immediately prior to the Merger, shall be the directors and officers of the Surviving Corporation, and each shall hold his respective office or offices from and after the Merger until his successor shall have been elected and shall have qualified in accordance with applicable Law, or as otherwise provided in the Articles of Association of the Surviving Corporation.

Section 2.4   Effects of the Merger.  The Merger shall have the effects provided for herein and in the applicable provisions of the Delaware General Corporation Law.  Without limiting the generality of the foregoing and subject thereto, at the Merger Effective Date, all of the properties, rights, privileges, powers and franchises of DE Qinba and Acquisition Subsidiary will have vested in the Surviving Corporation and all debts, liabilities and duties of DE Qinba and Acquisition Subsidiary will have become the debts, liabilities and duties of the Surviving Corporation.

(a)     Acquisition Subsidiary Share Conversion.  At the Merger Effective Date, each share of Acquisition Subsidiary that was outstanding immediately prior to the Merger shall have, by virtue of the Merger and without any action on the part of the holder thereof, been converted into one share of the Surviving Corporation, with no cash or other consideration having

been delivered or deliverable in exchange therefor, so that at the Merger Effective Date, Parent shall have become the holder of all of the issued and outstanding shares of the Surviving Corporation.

(b)     All shares of Common Stock issued upon the surrender for exchange of Certificates in accordance with the terms of this Article II shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to the Qinba Shares previously represented by such Certificates, and at the Merger Effective Date, the share transfer books of DE Qinba shall be closed and thereafter there shall be no further registration of transfers on

Each of Parent, Acquisition Subsidiary and the Parent Controlling Shareholders (where specifically included) hereby, severally and not jointly, represents, warrants and agrees that all of the statements in the following subsections of this Article III are true and complete in all material respects as of the date hereof, and will, except as contemplated by this Agreement, be true and complete as of the Closing Date as if first made on such date:

(a)     Parent is a corporation duly organized, validly existing and in good standing under the laws of Nevada, and has all requisite corporate power and authority to own its properties and assets and to conduct its business as now conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by Parent or the ownership or leasing of its properties makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing will not have a Material Adverse Effect on the business, operations, properties, assets, condition or results of operation of Parent.

 

(b)     Acquisition Subsidiary is a corporation duly organized and validly existing under the laws of Delaware, and has all requisite corporate power and authority to carry on its business as now conducted.

 

(c)     Copies of the Articles of Incorporation and By-laws of Parent, as amended to date, and the Memorandum of Association and Articles of Association of Acquisition Subsidiary (as may be amended or supplemented from time to time) (collectively, the “Parent Charter Documents”) have been furnished to DE Qinba and the Majority Qinba Shareholders, and such copies are accurate and complete as of the date hereof.  Neither Parent nor Acquisition Subsidiary is in violation or default of any of the respective provisions of the Parent Charter Documents.

Section 3.2   Capitalization of Parent.

 

(a)     On the Closing Date, immediately before the consummation of the Merger, Parent shall be authorized to issue: (i) 75,000,000 shares of Common Stock, of which not more than 9,950,000 shares of Common Stock shall be issued and outstanding and 5,100,000 shall be cancelled pursuant to the Vend Out.  Immediately following the Merger and the Vend Out the Majority Qinba Shareholders will own 87.38% of the total combined voting power of all classes of capital stock of Parent entitled to vote.

(b)     (i)  Parent has timely made all filings with the SEC that it has been required to make under the Securities Act and the Exchange Act (the “Public Reports”).  Each of the Public Reports has complied in all material respects with the applicable provisions of the Securities Act, the Exchange Act, and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and/or regulations promulgated thereunder.  None of the Public Reports, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading.  To the knowledge of Parent or the Parent Controlling Shareholders,

there is no event, fact or circumstance that would cause any certification signed by any officer of Parent in connection with any Public Report pursuant to the Sarbanes/Oxley Act to be untrue, inaccurate or incorrect in any respect.  There is no revocation order, suspension order, injunction or other proceeding or law affecting the trading of its Common Stock.  The consummation of the transactions contemplated by this Agreement do not conflict with and will not result in any violation of any FINRA or OTC Bulletin Board trading requirement or standard applicable to Parent or its Common Stock.  All of the issued and outstanding shares of Common Stock have been issued in compliance with the Securities Act and applicable state securities laws and no shareholder of Parent has any right to rescind or other claim against Parent for failure to comply with the Securities Act or state securities laws.

 

(ii)    Since the date of the filing of its Quarterly Report on Form 10-Q for the quarter ended December 31, 2009: (A) there has been no event, occurrence or development that has resulted in or could result in a Material Adverse Effect.  A “Material Adverse Effect” means, when used with respect to the Parent, any event, occurrence, fact, condition, change or effect that is materially adverse to the business, assets, condition (financial or otherwise), operating results or prospects of Parent); (B) Parent has not incurred any liabilities other than in the ordinary course of business, contingent or otherwise, other than professional fees, which are accurately disclosed in the Public Reports; (C)  Parent has not declared or made any dividend or distribution of cash or property to its shareholders, purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, or issued any equity securities; and (D) Parent has not made any loan, advance or capital contribution to or investment in any person or entity.

Each of DE Qinba and the Majority Qinba Shareholders severally, not jointly, represents, warrants to Parent, Acquisition Subsidiary and the Parent Controlling Shareholders and agrees that all of the statements in the following subsections of this Article IV are true and complete as of the date hereof, and will, except as contemplated by this Agreement, be true and complete as of the Closing Date as if first made on such date.

Section 4.1   Corporate Organization.

 

(a)     DE Qinba and if applicable, each of the Majority Qinba Shareholders, is validly existing and in good standing under the laws of their respective jurisdictions of organization, and have the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on their respective businesses as they are now being or currently planned to be conducted.

 

(b)     DE Qinba is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“Approvals”) necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted and to consummate the transactions contemplated under this Agreement, except where the failure to have such Approvals could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, operations, properties, assets, condition or results of operation of DE Qinba.  DE Qinba has delivered to Parent and the Parent Controlling Shareholders complete and correct copies of the following documents for each respective entity (collectively referred to herein as the “DE Qinba Charter Documents”): (i) the articles or certificate of incorporation and the by-laws or code of regulations of a corporation; (ii) any other document performing a similar function to the documents specified in clause (i) adopted or filed in connection with the creation, formation or organization of a Person (as defined elsewhere in this Agreement); and (iii) any and all amendments to any of the foregoing.  DE Qinba is not in violation of any of the provisions of the DE Qinba Charter Documents.  The minute books or the equivalent of DE Qinba contain true and accurate records of all meetings and consents in lieu of meetings of its Board of Directors and shareholders (“Corporate Records”), from the time of its organization until the date hereof.  The stock ledgers and other ownership records of the shares of all of DE Qinba’s capital stock (the “Qinba Share Records”) are true, complete and accurate records of the ownership of the shares of such capital stock as of the date thereof and contain all issuances and transfers of such shares since the time of DE Qinba’s organization.

 

Section 4.2   Capitalization of DE Qinba; Title to the Qinba Shares.  On the Closing Date, immediately before the transactions to be consummated pursuant to this Agreement, DE Qinba shall have 28,000,000 common shares issued and outstanding. DE Qinba has also entered into agreements pursuant to which the Parent will be obligated to issue warrants to acquire 4,200,000 shares of the Parent’s common stock at $0.83 per share.  These are the only outstanding securities of DE Qinba and there are no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any unissued or treasury shares of capital stock of DE Qinba.

 

Section 4.3   Authorization and Validity of Agreements.  DE Qinba has all corporate power and authority to execute and deliver this Agreement, to perform their obligations hereunder and to consummate the transactions contemplated hereby.  Each of the Majority Qinba Shareholders has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement constitutes the valid and legally binding obligation of DE Qinba and the Majority Qinba Shareholders and is enforceable in accordance with its terms against each of them.  Neither DE Qinba nor the Majority Qinba Shareholders need give any notice to, make any filings with, or obtain any authorization, consent or approval of any government or governmental agency or other person in order for it to consummate the transactions contemplated by this Agreement, other than filings that may be required or permitted under states securities laws, the Securities Act and/or the Exchange Act resulting from the transfer and exchange of the Qinba

 

Section 4.4   No Conflict or Violation.  Neither the execution and delivery of this Agreement by DE Qinba or the Majority Qinba Shareholders, nor the consummation by DE Qinba and/or the Majority Qinba Shareholders of the transactions contemplated hereby will: (i) violate any provision of the DE Qinba Charter Documents, (ii) violate any Law, constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge or other restriction of any Governmental Authority to which DE Qinba and/or the Majority Qinba Shareholders are subject, (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument or other arrangement to which DE Qinba and/or the Majority Qinba Shareholders is/are a party or by which it/they is/are bound, or to which any of its/their/his assets is subject; or (iv) result in or require the creation or imposition of any encumbrance of any nature upon or with respect to DE Qinba or any of the Majority Qinba Shareholders’ assets, including without limitation the Qinba Shares.

 

Section 4.5   Material Changes/Compliance with Laws and Other Instruments. Except as would not have a Material Adverse Effect on DE Qinba, the business and operations of DE Qinba have been and are being conducted in accordance with all applicable Laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations and awards of all Governmental Authorities.  Except as would not have a Material Adverse Effect on DE Qinba, DE Qinba is not, and is not alleged to be, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of the DE Qinba Charter Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment, obligation or arrangement to which DE Qinba is a party or by which any of the DE Qinba’s  properties, assets or rights are bound or affected.  To the knowledge of the DE Qinba, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation to which DE Qinba is a party are (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof.  DE Qinba is not subject to any obligation or restriction of any kind or character, nor are there, to the knowledge of DE Qinba, any event or circumstance relating to DE Qinba that materially and adversely affects in any way their business, properties, assets or prospects or that would prevent or make burdensome their performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby.  “Material Adverse Effect” means, when used with respect to DE Qinba, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of DE Qinba, in each case

taken as a whole or (b) materially impair the ability of the DE Qinba to perform its obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which DE Qinba operates.

(ii)     Other Legends.  The certificates representing such Merger Shares, and each certificate issued in transfer thereof, will also bear any other legend required by contract or under any applicable Law, including, without limitation, any U.S. state corporate and state securities law.

(h)     Each Majority Qinba Shareholder understands and acknowledges that Parent may refuse to transfer the Merger Shares, unless such Shareholder complies with this Section 4.8.  Each Majority Qinba Shareholder consents to Parent making a notation on its records or giving instructions to any transfer agent of the Common Stock in order to implement the restrictions on transfer of the Merger Shares.

(i)     Each of the Majority Qinba Shareholders has been furnished with and has carefully read the Public Reports filed by Parent with the SEC during the preceding two years.  With respect to individual or partnership tax and other economic considerations involved in this investment, each of the Majority Qinba Shareholders confirms that they are not relying on Parent (or any agent or representative of Parent).  Each of the Majority Qinba Shareholders have carefully considered and have, to the extent such persons believe such discussion necessary, discussed with their own legal, tax, accounting and financial advisers the suitability of an investment in the stock for such particular tax and financial situation.

 

(j)     Each of the Majority Qinba Shareholders has had an opportunity to inspect relevant documents relating to the organization and business of Parent.  Each of the Majority Qinba Shareholders acknowledges that all documents, records and books pertaining to this investment which such Majority Qinba Shareholders have requested has been made available for inspection by such Majority Qinba Shareholders and their respective attorney, accountant or other adviser(s).

 

(k)     Each of the Majority Qinba Shareholders and/or their respective advisor(s) has/have had a reasonable opportunity to ask questions of, and receive answers and request additional relevant information from, the officers of Parent concerning the transactions contemplated by this Agreement.

 

(l)     Each of the Majority Qinba Shareholders confirms that they are not acquiring the Common Stock as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar.

 

(m)     Each of the Majority Qinba Shareholders, by reason of such person’s business or financial experience, has the capacity to protect its own interests in connection with the transactions contemplated by this Agreement.

 

(n)     Except as set forth in this Agreement, each of the Majority Qinba Shareholders represents that no representations or warranties have been made to them by Parent, any officer director, agent, employee, or Affiliate of Parent, and such Majority Qinba Shareholder has not relied on any oral representations by Parent or by any of its officers, directors or agents in connection with their decision to acquire the Merger Shares.

 

(o)     Each of the Majority Qinba Shareholders has adequate means for providing for their current financial needs and contingencies, is able to bear the substantial economic risks of an investment in the Merger Shares for an indefinite period of time, has no need for liquidity in such investment and, at the present time, could afford a complete loss of such investment.

 

(p)     Each of the Majority Qinba Shareholders has such knowledge and experience in financial, tax and business matters so as to enable such shareholder to use the information made available to them in connection with the transaction to evaluate the merits and risks of an investment in the Merger Shares and to make an informed investment decision with respect thereto.

 

(q)     Each of the Majority Qinba Shareholders understands that the Merger Shares constitute “restricted securities” that have not been registered under the Securities Act or any applicable state securities law and they are acquiring the same as principal for their own account for investment purposes and not for distribution.  The Majority Qinba Shareholders acknowledge that the Merger Shares have not been registered under the Securities

Act or under any securities act of any state or country.  The Majority Qinba Shareholders understand further that in absence of an effective registration statement, the Merger Shares can only be sold pursuant to some exemption from registration under the Securities Act.

(r)     Each of the Majority Qinba Shareholders recognizes that an investment in the Merger Shares involves substantial risks.  Each of the Majority Qinba Shareholders acknowledges that they have reviewed the risk factors identified in the periodic reports filed by Parent with the SEC.  Each of the Majority Qinba Shareholders further confirms that they are aware that no federal or state agencies have passed upon this transaction or made any finding or determination as to the fairness of this investment.

Section 4.7   Ownership of Shares.  Each Majority Qinba Shareholder is both the record and beneficial owner of the Qinba Shares set forth opposite such Majority Qinba Shareholder's name on Schedule 4.1 hereto.  Each Majority Qinba Shareholder is not the record or beneficial owner of any other Qinba Shares.  The information set forth on Schedule 4.1 with respect to each Majority Qinba Shareholder is accurate and complete.  Each Majority Qinba Shareholder has and shall transfer at the Closing, good and marketable title to the Qinba Shares shown as owned of record by such Majority Qinba Shareholder on Schedule 4.1 to this Agreement, free and clear of all Liens.

Section 4.8   Pre-emptive Rights.  At Closing, no Majority Qinba Shareholder has any pre-emptive rights or any other rights to acquire any Qinba Shares that have not been waived or exercised.

Section 4.9   Disclosure.  This Agreement, the schedules hereto and any certificate attached hereto or delivered in accordance with the terms hereof by or on behalf of DE Qinba or any of the Majority Qinba Shareholders in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

 

Section 4.10  Title to and Condition of Properties.  DE Qinba owns or hold under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of DE Qinba as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect on DE Qinba.  The material buildings, plants, machinery and equipment necessary for the conduct of the business of DE Qinba as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment are in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

 

Section 4.11   Financial Statements/Absence of Undisclosed Liabilities.  The audited financial statements for fiscal years ended December 31, 2008 and 2007 and the unaudited financial statements for the fiscal quarters ended March 31, 2009, June 30, 2009 and September 30, 2009 of DE Qinba and its Subsidiaries (the “DE Qinba Financial Statements”) have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements,

to normal, immaterial, year-end audit adjustments.  DE Qinba and its Subsidiaries have no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to DE Qinba) arising out of any transaction entered into at or prior to the Closing Date or any act or omission at or prior to the Closing Date, except to the extent set forth on or reserved against on DE Qinba’s audited financial statements for the fiscal years ended December 31, 2008 and 2007 and the unaudited financial statements for the fiscal quarters ended March 31, 2009, June 30, 2009 and September 30, 2009.  All debts, obligations or liabilities with respect to directors and officers of DE Qinba will be cancelled prior to the Closing.

 

Section 4.12   Material DE Qinba Contracts.  DE Qinba has made available to Parent and the Parent Controlling Shareholders, prior to the date of this Agreement, true, correct and complete copies of each written Material DE Qinba Contract, including each amendment, supplement and modification thereto.  Each Material DE Qinba Contract is a valid and binding agreement of DE Qinba and is in full force and effect.  Except as would not have a Material Adverse Effect, DE Qinba is not in breach or default of any Material DE Qinba Contract to which they are a party and, to the knowledge of DE Qinba, no other party to any Material DE Qinba Contract are in breach or default thereof.  Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists 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 Material DE Qinba Contract or (b) permit DE Qinba 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 Material DE Qinba Contract.  DE Qinba has not received notice of the pending or threatened cancellation, revocation or termination of any Material DE Qinba Contract to which they are a party.  There are no renegotiations of, or attempts to renegotiate, or outstanding rights to renegotiate any material terms of any Material DE Qinba Contract.

 

Section 4.13   Material Assets.  The financial statements of DE Qinba reflect the material properties and assets (real and personal) owned or leased by DE Qinba and its Subsidiaries.

 

Section 4.14   Litigation.  There is no Action pending or, to the best knowledge of the DE Qinba and the Majority Qinba Shareholders, currently threatened against DE Qinba or any of their respective Subsidiaries or Affiliates, that may affect the validity of this Agreement, the right of such parties to enter into this Agreement, to consummate the transactions contemplated hereby or thereby, or threatened against or affecting DE Qinba’s respective properties, assets, business or employees.  There is no Action pending or, to the best knowledge of DE Qinba and the Majority Qinba Shareholders, currently threatened against DE Qinba or any of their respective Subsidiaries or Affiliates, before any court or by or before any Governmental Authority or any arbitration board or tribunal, nor is there any judgment, decree, injunction or order of any Governmental Authority or arbitrator against DE Qinba or any of their respective Subsidiaries or Affiliates.  Neither DE Qinba or its respective Subsidiaries or Affiliates is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any Governmental Authority.  There is no Action by DE Qinba or any of its respective Subsidiaries or Affiliates relating to DE Qinba currently pending or which DE Qinba or any of its respective Subsidiaries intends to initiate.

Section 4.15   Licenses. Except as would not have a Material Adverse Effect, DE Qinba possesses from the appropriate Governmental Authority all licenses, permits, authorizations, approvals, franchises and rights that are necessary for DE Qinba to engage in their business as currently conducted and to permit DE Qinba to own and use their properties and assets in the manner in which they currently own and use such properties and assets (collectively, the “DE Qinba Permits”).  DE Qinba has not received notice from any Governmental Authority or other Person that there are lacking any license, permit, authorization, approval, franchise or right necessary for DE Qinba to engage in their business as currently conducted and to permit DE Qinba to own and use their properties and assets in the manner in which they currently own and use such properties and assets.  Except as would not have a Material Adverse Effect, the DE Qinba Permits are valid and in full force and effect.  Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that may (with or without notice or lapse of time): (a) constitute or result, directly or indirectly, in a violation of or a failure to comply with any DE Qinba Permit; or (b) result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any DE Qinba Permit.  DE Qinba has not received notice from any Governmental Authority or any other Person regarding: (a) any actual, alleged, possible or potential contravention of any DE Qinba Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to, any DE Qinba Permit.  All applications required to have been filed for the renewal of such DE Qinba Permits have been duly filed on a timely basis with the appropriate Persons, and all other filings required to have been made with respect to such DE Qinba Permits have been duly made on a timely basis with the appropriate Persons.  All DE Qinba Permits are renewable by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, all of which have, to the extent due, been duly paid.

 

Section 4.16    Interested Party Transactions.  No officer, director or shareholder of DE Qinba or any Affiliate or “associate” (as such term are defined in Rule 405 of the Securities Act) of any such Person, have or have had, either directly or indirectly, (1) an interest in any Person which (a) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by DE Qinba, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish DE Qinba any goods or services; or (2) a beneficial interest in any contract or agreement to which DE Qinba is a party or by which they may be bound or affected.

 

Section 4.17  Governmental Inquiries.  DE Qinba has provided to Parent a copy of each material written inspection report, questionnaire, inquiry, demand or request for information received by DE Qinba from any Governmental Authority, and DE Qinba’s response thereto, and each material written statement, report or other document filed by DE Qinba with any Governmental Authority.

 

Section 4.18   Stock Option Plans; Employee Benefits.

 

(a)     DE Qinba has no stock option plans providing for the grant by DE Qinba of stock options to directors, officers or employees.

(b)     DE Qinba has no employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided DE Qinba.

 

(c)     Neither the consummation of the transactions contemplated hereby alone, nor in combination with another event, with respect to each director, officer, employee and consultant of DE Qinba, will result in (a) any payment (including, without limitation, severance, unemployment compensation or bonus payments) becoming due from DE Qinba, (b) any increase in the amount of compensation or benefits payable to any such individual or (c) any acceleration of the vesting or timing of payment of compensation payable to any such individual.  No agreement, arrangement or other contract of DE Qinba provides benefits or payments contingent upon, triggered by, or increased as a result of a change in the ownership or effective control of DE Qinba.

Section 4.19   Environmental and Safety Matters.  Except as would not have a Material Adverse Effect:

 

(a)     DE Qinba has at all time been and is in compliance with all Environmental Laws applicable to DE Qinba.

 

(b)     There are no Actions pending or threatened against DE Qinba alleging the violation of any Environmental Law or environmental permit applicable to DE Qinba or alleging that DE Qinba is potentially responsible parties for any environmental site contamination.

 

(c)     Neither this Agreement nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of any Governmental Authority or third Persons under any Law or other requirement relating to the environment, natural resources, or public or employee health and safety (“Environmental Laws”) applicable to DE Qinba. 

 

Section 4.20   Board Recommendation.  The Board of Directors of DE Qinba, at a meeting duly called and held or by action in writing, has determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of the holders of DE Qinba stock and has duly authorized this Agreement and the transactions contemplated by this Agreement.

 

Section 4.24   Compliance of Transaction with PRC Laws.  The execution and the consummation of the transactions contemplated by this Agreement do not conflict with or result in a violation of the Company Act, the Securities Act of China or any other Law of the PRC.

 

Section 4.25   Foreign Corrupt Practices.  Neither DE Qinba nor the Majority Qinba Shareholders nor any director, officer, agent, employee or other Person acting on behalf of either or both of them, has, in the course of its actions for, or on behalf of, either of DE Qinba or the Majority Qinba Shareholders, as the case may be, (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

Section 4.26   OFAC.  Neither DE Qinba nor the Majority Qinba Shareholders (i) is a Person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of such executive order, or is otherwise associated with any such Person in any manner violative of Section 2 of such executive order or (iii) is a Person on the list of Specially Designated Nationals and Blocked Persons or subject to the limitations or prohibitions under any other U.S. Department of Treasury’s Office of Foreign Assets Control regulation or executive order.

 

Section 4.27   Patriot Act.  Assuming it were applicable to DE Qinba and the Majority Qinba Shareholders, DE Qinba and the Majority Qinba Shareholders would be in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto; and (ii) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001).

 

Section 4.28   Representations and Warranties True.  Each of DE Qinba and the Majority Qinba Shareholders covenant and represent and warrant that all of the representations and warranties set forth herein shall be true and correct at the time of Closing as if made on that date.

 

Section 4.29   Survival.  Each of the representations and warranties set forth in this Article III shall be deemed represented and made by DE Qinba and the Majority Qinba Shareholders at the Closing as if made at such time and shall survive the Closing for a period terminating twenty-four months after the Closing Date.

Section 5.1   Certain Changes and Conduct of Business.

 

(a)     From and after the date of this Agreement and until the Closing Date, each of Parent and DE Qinba shall conduct its business solely in the ordinary course consistent with past practices and, in a manner consistent with all their respective representations, warranties or covenants contained herein, and without the prior written consent of the other party (which may be withheld for any reason or no reason), will not, except as required or permitted pursuant to the terms hereof:

 

(i)     make any material change in the conduct of its businesses and/or operations or enter into any transaction other than in the ordinary course of business consistent with past practices;

(ii)     make any change to the Parent Charter Documents or the DE Qinba Charter Documents; issue any additional shares of capital stock or equity securities or grant any option, warrant or right to acquire any capital stock or equity securities or issue any security convertible into or exchangeable for its capital stock or alter in any material term of any of its outstanding securities or make any change in its outstanding shares of capital stock or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise;

 

(iii)     other than in the ordinary course of business, incur, assume or guarantee any indebtedness for borrowed money, issue any notes, bonds, debentures or other corporate securities or grant any option, warrant or right to purchase any thereof;

 

(iv)     issue any securities convertible or exchangeable for debt or equity securities;

 

(v)     make any sale, assignment, transfer, abandonment or other conveyance of any of its assets or any part thereof;

 

(vi)     subject any of its assets, or any part thereof, to any Lien or suffer such to be imposed;

 

(vii)     acquire any assets, raw materials or properties, or enter into any other transaction;

 

(viii)     enter into any new (or amend any existing) employee benefit plan, program or arrangement or any new (or amend any existing) employment, severance or consulting agreement, grant any general increase in the compensation of officers or employees (including any such increase pursuant to any bonus, pension, profit-sharing or other plan or commitment) or grant any increase in the compensation payable or to become payable to any employee;

 

(ix)     make or commit to make any material capital expenditures;

 

(x)     pay, loan or advance any amount to, or sell, transfer or lease any properties or assets to, or enter into any agreement or arrangement with, any of its affiliates;

 

(xi)     guarantee any indebtedness for borrowed money or any other obligation of any other person;

 

(xii)     fail to keep in full force and effect insurance comparable in amount and scope to coverage maintained by it (or on behalf of it) on the date hereof;

 

(xiii)     take any other action that would cause any of the representations and warranties made by it in this Agreement not to remain true and correct in any material respect;

 

(xiv)     make any loan, advance or capital contribution to or investment in any person;

 

(xv)     make any change in any method of accounting or accounting principle, method, estimate or practice;

(xvi)     settle, release or forgive any claim or litigation or waive any right;

 

(xvii)     commit itself to do any of the foregoing.

(b)     From and after the date of this Agreement, each of Parent and DE Qinba and each of its Subsidiaries will:

 

(i)     continue to maintain, in all material respects, its properties in accordance with present practices in a condition suitable for its current use;

 

(ii)     file, when due or required, federal, state, foreign and other tax returns and other reports required to be filed and pay when due all taxes, assessments, fees and other charges lawfully levied or assessed against it, unless the validity thereof is contested in good faith and by appropriate proceedings diligently conducted;

 

(iii)     continue to conduct its business in the ordinary course consistent with past practices;

 

(iv)     keep its books of account, records and files in the ordinary course and in accordance with existing practices; and

 

(v)     continue to maintain existing business relationships with suppliers.

(c)     From and after the date of this Agreement, none of the Majority Qinba Shareholders will sell, transfer, convey, assign or otherwise dispose of, or contract or otherwise agree to sell, transfer, convey, assign or otherwise dispose of any of the Qinba Shares except as provided by this Agreement.

 

(d)     From the date of this Agreement and until the Closing date, each of Parent and DE Qinba shall confer on a reasonable basis with each other regarding operational matters and other matters related to the Merger and the transactions contemplated hereby.

Section 5.2   Publicity.  No party shall issue any press release or public announcement pertaining to the Merger that has not been agreed upon in advance by Parent and DE Qinba, except as Parent reasonably determines to be necessary in order to comply with the rules of the SEC; provided, however, that to the maximum extent practicable, Parent and DE Qinba shall give prior notice thereof to the other, as applicable, and consult with each other regarding the same.

 

Section 5.3   Tax Returns; Cooperation.  From and after the Closing, DE Qinba, on the one hand, and Parent, on the other, will cooperate with each other and provide such information as the other party may require in order to file any return to determine Tax liability.  Such cooperation shall include making employees available on a mutually convenient basis to explain any documents or information provided hereunder or otherwise as required in the conduct of any audit or other proceeding.  In addition, each of the parties shall use all commercially reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, as soon as reasonably practicable, the Merger and the other transactions contemplated by this Agreement.

Section 5.4   Tax-Free Exchange.  Each of Parent, DE Qinba and the Majority Qinba Shareholders shall use its respective reasonable efforts to cause the Merger to qualify as a tax-free exchange of the Merger Shares under the Code.  For purposes of the foregoing, this Agreement shall constitute a plan of reorganization.

 

Section 5.5   Transaction Form 8-K; Other Filings.  Within four (4) business days after Closing, Parent will prepare and file a Current Report on Form 8-K at the expense of DE Qinba (the “Transaction Form 8-K”) and any filings required to be filed by it under the Exchange Act, the Securities Act or any other Federal, foreign or blue sky or related Laws relating to the execution of this Agreement and the consummation of the Merger and the transactions contemplated hereby, as well as under the stock exchange or trading system on which shares of Common Stock are listed or quoted and such other governmental agencies as may require the filing of such other filings.

 

Section 5.6   Parent Directors and Officers.

 

(a)     Directors.  On the Closing Date, Parent shall take all necessary actions to ensure that Mr. Guozhu Wang or such other Person designated by DE Qinba (the “DE Qinba Designee”) shall be appointed to the Board of Directors of Parent, and that on the Merger Effective Date, the Board of Directors of Parent shall consist of two members, one of whom shall be the DE Qinba Designee.

 

(b)     Independent Directors.    Within ninety (90) days of the Closing Date, Parent shall cause the number of members of its Board of Directors to be increased by three (3) for a total of five (5) members, and Mr. Guozhu Wang shall be entitled to nominate and the Parent shall cause to be appointed, three (3) independent directors for the Board of Directors of Parent.

 

(c)     Officers.  Immediately following the Closing Date, the officers of Parent shall consist of those individuals nominated by DE Qinba.

Section 5.7    Continued Listing.  Parent will take all action necessary to continue the quotation or listing of its Common Stock on the OTC Bulletin Board or other exchange or market on which the Common Stock is trading or may be traded in the future.

 

Section 5.8   Sales of Securities under Rule 144, If Applicable.  Parent will use its best efforts to at all times satisfy the current public information requirements of Rule 144 promulgated under the Securities Act.  If any certificate representing any such restricted stock is presented to Parent’s transfer agent for registration or transfer in connection with any sales theretofore made under Rule 144, provided such certificate is duly endorsed for transfer by the appropriate person(s) or accompanied by a separate stock power duly executed by the appropriate person(s) in each case with reasonable assurances that such endorsements are genuine and effective, and is accompanied by an opinion of counsel satisfactory to Parent and its counsel that such transfer has complied with the requirements of Rule 144, as the case may be, Parent will promptly instruct its transfer agent to allow such transfer and to issue one or more new certificates representing such shares to the transferee and, if appropriate under the provisions of Rule 144, as the case may be, free of any stop transfer order or restrictive legend.

 

Section 5.9   Consistency in Reporting.  Each party hereto agrees that if the characterization of any transaction contemplated in this Agreement or any ancillary or collateral transaction is challenged, each party hereto will testify, affirm and ratify that the characterization contemplated in such agreement was the characterization

intended by the party; provided, however, that nothing herein shall be construed as giving rise to any obligation if the reporting position is determined to be incorrect by final decision of a court of competent jurisdiction.

Section 5.10   Further Assurances.  Subject to the terms and conditions herein provided, each of the parties hereto agrees to use reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to satisfy the conditions to Closing and to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, using reasonable efforts to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement and using reasonable efforts to prevent the breach of any representation, warranty, covenant or agreement of such party contained or referred to in this Agreement and to promptly remedy the same. In case at any time after the Merger Effective Date any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall take all such necessary action.  Nothing in this Section 5.11 shall be construed to require any party to participate in any threatened or actual legal, administrative or other proceedings (other than proceedings, actions or investigations to which it is a party or subject or threatened to be made a party or subject) in connection with consummation of the transactions contemplated by this Agreement unless such party shall consent in advance and in writing to such participation and the other party agrees to reimburse and indemnify such party for and against any and all costs and damages related thereto.

 

Section 5.11   Financial Statements.  Prior to the Closing Date, DE Qinba shall have initiated a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. DE Qinba shall disclose to DE Qinba’s outside auditors (A) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect DE Qinba’s ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in DE Qinba’s internal controls over financial reporting.

 

Section 5.12   Access to Parent and Acquisition Subsidiary.  Parent shall afford to DE Qinba and its officers, directors, agents and counsel access at times and upon conditions reasonably convenient to Parent and make available all properties, books, records, contracts and documents of Parent and Acquisition Subsidiary, and an opportunity to make such investigations as they shall reasonably desire to make of Parent and Acquisition Subsidiary; and Parent shall furnish or cause to be furnished to DE Qinba and its authorized representatives all such information with respect to the business and affairs of Parent and Acquisition Subsidiary as the Company and its authorized

Section 5.13   Access to DE Qinba.  DE Qinba shall afford to Parent and its officers, directors, agents and counsel access at times and upon conditions reasonably convenient to DE Qinba and make available all properties, books, records, contracts and documents of DE Qinba, and an opportunity to make such investigations as it shall reasonably desire to make of DE Qinba; and DE Qinba shall furnish or cause to be furnished to Parent and its authorized representatives all such information with respect to the business and affairs of DE Qinba as Parent and its authorized representatives may request and make the officers, directors, employees, auditors and counsel of DE Qinba available for consultation and permit access to other third parties reasonably requested for verification of any information so obtained.

 

Section 5.14   Negotiations.  From and after the date hereof until the earlier of the Closing or the termination of this Agreement, no party to this Agreement, nor any of its officers or directors (subject to such director's fiduciary duties), nor anyone acting on behalf of any party or other persons shall, directly or indirectly, encourage, solicit, engage in discussions or negotiations with, or provide any information to, any person, firm, or other entity or group concerning any merger, sale of substantial assets, purchase or sale of shares of capital stock or similar transaction involving any party except for the Private Placement.  A party shall promptly communicate to any other party any inquiries or communications concerning any such transaction which they may receive or of which they may become aware.

 

Section 5.15   Consents and Approvals.  The parties shall: (i) use their reasonable commercial efforts to obtain all necessary consents, waivers, authorizations and approvals of all governmental and regulatory authorities, domestic and foreign, and of all other persons, firms or corporations required in connection with the execution, delivery and performance by them of this Agreement; and (ii) diligently assist and cooperate with each party in preparing and filing all documents required to be submitted by a party to any governmental or regulatory authority, domestic or foreign, in connection with such transactions and in obtaining any governmental consents, waivers, authorizations or approvals which may be required to be obtained in connection with such transactions.

The obligations of DE Qinba and the Majority Qinba Shareholders to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by DE Qinba and the Majority Qinba Shareholders at their sole discretion:

 

Section 6.1   Representations and Warranties of Parent, Acquisition Subsidiary and the Parent Controlling Shareholders.  All representations and warranties made by Parent, Acquisition Subsidiary and the Parent Controlling Shareholders in this Agreement shall be true and correct in all material respects on and as of the Closing Date as if again made by Parent, Acquisition Subsidiary and the Parent Controlling Shareholders, as applicable, on

 

Section 6.2   Agreements and Covenants.  Each of Parent, Acquisition Subsidiary and the Parent Controlling Shareholders shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by on or prior to the Closing Date.

 

Section 6.3   Consents and Approvals.  All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement shall be in full force and effect on the Closing Date.  The Merger shall have been duly approved by the Parent’s Board of Directors and, if necessary under applicable laws, the requisite vote of the outstanding shares of capital stock of Acquisition Subsidiary entitled to vote thereon.

 

Section 6.4   No Violation of Orders.  No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, which declares this Agreement invalid in any respect or prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of Parent shall be in effect; and no action or proceeding before any court or governmental or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

 

Section 6.5   Other Closing Documents.  Each of the Majority Qinba Shareholders shall have received such certificates, instruments and documents in confirmation of the representations and warranties of Parent and the Parent Controlling Shareholders, Parent’s and Parent Controlling Shareholders’ performance of its obligations hereunder, and/or in furtherance of the transactions contemplated by this Agreement as the Majority Qinba Shareholders and/or their respective counsel may reasonably request.

 

Section 6.6   Opinions of Counsel, Etc.  At the Closing, counsel to Parent shall deliver to the Majority Qinba Shareholders an opinion of counsel substantially in the form of Exhibit A.

 

Section 6.7   Appointment of New Directors.  At the Closing, (i) Mr. Guozhu Wang shall be duly appointed to the Board of Directors of Parent, and (ii) subject to the effectiveness of a Schedule 14F-1 filed with the SEC on the Closing Date, Mr. Terry Bowering shall resign as a member of the Board of Directors of Parent, and Tao Lei, Zaizhi Cheng, Xiaogang Zhu and Michael Segal shall be duly appointed to the Board of Directors of Parent.

The obligations of Parent and Acquisition Subsidiary to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by Parent in its sole discretion:

 

Section 7.1   Representations and Warranties of DE Qinba and the Majority Qinba Shareholders.  All representations and warranties made by DE Qinba and the Majority Qinba Shareholders in this Agreement shall be true and correct on and as of the Closing Date as if again made by DE Qinba or the Majority Qinba Shareholders, as applicable, on and as of such date.

 

Section 7.2   Agreements and Covenants.  Each of DE Qinba and the Majority Qinba Shareholders shall have performed and complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by each of them on or prior to the Closing Date.

 

Section 7.3   Consents and Approvals.  All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, shall have been duly obtained and shall be in full force and effect on the Closing Date.  The Merger shall have been duly approved by the majority consent of the holders of the Qinba Shares in accordance with the Delaware General Corporation Law (the “Qinba Shareholder Approval”).

 

Section 7.4    No Violation of Orders.  No preliminary or permanent injunction or other order issued by any court or other governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, domestic or foreign, that declares this Agreement invalid or unenforceable in any respect or which prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of DE Qinba, taken as a whole, shall be in effect; and no action or proceeding before any court or government or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

 

Section 7.5   Financial Statements of DE Qinba.  DE Qinba shall have delivered the DE Qinba Financial Statements to Parent at least two (2) days prior to the Closing Date.

 

Section 7.6   Other Closing Documents.  Parent shall have received such certificates, instruments and documents in confirmation of the representations and warranties of DE Qinba and the Majority Qinba Shareholders, the performance of DE Qinba and the Majority Qinba Shareholders’ respective obligations hereunder and/or in furtherance of the transactions contemplated by this Agreement as Parent or its counsel may reasonably request.

Section 7.7   No Material Change.  There shall have been no Material Adverse Effect with respect to DE Qinba since the date hereof.

 

Section 7.8   Schedule 14F-1.  On the Closing Date, Parent shall have filed with the SEC an Information Statement on Schedule 14F-1 with respect to the change of a majority of members of the Board of Directors of Parent.

Section 8.1   Appointment of Directors.  Within ninety (90) days of the Closing Date, Parent shall have increased the number of members of its Board of Directors to five (5) members, of which three (3) directors shall be independent directors.

 

Section 8.2   Transaction Form 8-K.  Within four (4) business days of the Closing Date, Parent and DE Qinba shall have ensured that the Transaction Form 8-K has been filed with the SEC.

 

Section 8.3   Subsidiary Vend-out.  Immediately prior to the Closing of the Merger, 100 common shares of the Parent’s wholly owned subsidiary, China Doll Foods Ltd., held in the name of the Parent, as well as all assets and liabilities of the Parent, will be exchanged for 5,100,000 shares of the Parent held by the Parent Controlling Shareholder (the “Vend Out”). China Doll Foods Ltd., holds all assets and liabilities disclosed on the Parent’s financial statements.  These assets and liabilities will be sold along with China Doll Foods Ltd., leaving the Parent with no assets and no liabilities.  The 5,100,000 common shares of the Parent will be cancelled and returned to treasury.

 

Section 8.4   Reverse Split.  Parent will use its best commercially reasonable efforts to effect a 5 for 6 reverse split within three (3) months of Closing.

 

Section 8.5   Name Change.  Parent will use its commercially reasonable efforts to effect a name change from AllStar Restaurants to China Pharmaceuticals, Inc., within one (1) month of the Closing.

Section 9.1   Methods of Termination.  This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time before the Closing:

 

(a)     By the mutual written consent of DE Qinba and Parent;

(b)     By Parent, upon a material breach on the part of DE Qinba or the Majority Qinba Shareholders of any representation, warranty, covenant or agreement set forth in this Agreement, or if any representation or warranty of DE Qinba or any of the Majority Qinba Shareholders shall become untrue, in either case such that any of the conditions set forth in Article VII hereof would not be satisfied (a “DE Qinba Breach”), and such breach, if capable of cure, has not been cured within ten (10) days after receipt by DE Qinba and the Majority Qinba Shareholders of a written notice from Parent setting forth in detail the nature of such DE Qinba Breach;

 

(c)     By DE Qinba, upon a material breach on the part of Parent or Acquisition Subsidiary of any representation, warranty, covenant or agreement set forth in this Agreement, or, if any representation or warranty of Parent or Acquisition Subsidiary shall become untrue, in either case such that any of the conditions set forth in Article VI hereof would not be satisfied (a “Parent Breach”), and such breach, if capable of cure, has not been cured within ten (10) days after receipt by Parent of a written notice from DE Qinba setting forth in detail the nature of such Parent Breach;

 

(d)     By either Parent or DE Qinba, if the Closing shall not have consummated before ninety (90) days after the date hereof; provided, however, that this Agreement may be extended by written notice of either DE Qinba or Parent if the Closing shall not have been consummated as a result of DE Qinba or Parent having failed to receive all required regulatory approvals or consents with respect to this transaction or as the result of the entering of an order as described in this Agreement; and further provided, however, that the right to terminate this Agreement under this Section 9.1(d) shall not be available to any party whose failure to fulfill any obligations under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before this date; or

 

(e)     By either DE Qinba or Parent if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the parties hereto shall use its best efforts to lift), which permanently restrains, enjoins or otherwise prohibits the transactions contemplated by this Agreement.

Section 9.2   Procedure Upon Termination.  In the event of termination and abandonment of this Agreement pursuant to Section 9.1, written notice thereof shall forthwith be given by the terminating parties to the other parties and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action.  If this Agreement is terminated as provided herein, no party to this Agreement shall have any liability or further obligation to any other party to this Agreement; provided, however, that no termination of this Agreement pursuant to this Article VIII shall relieve any party of liability for a breach of any provision of this Agreement occurring before such termination.

Section 10.1   Survival of Provisions.  The respective representations, warranties, covenants and agreements of each of the parties to this Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or before the Closing Date) shall expire on the first day of the twenty-four-month anniversary of the Closing Date (the “Survival Period”), subject to Sections 3.19 and 4.29.  In the event of a

Section 10.2   Indemnification.

 

(a)     Notwithstanding the limitation set forth in Section 10.1 and subject to the limitation set forth in this Section 10.2, from and after the Closing Date until the expiration of the twelve-month anniversary of the Closing Date, the Parent Controlling Shareholders will indemnify and hold harmless DE Qinba, the Majority Qinba Shareholders, and their respective officers, directors, agents, attorneys and employees, and each person, if any, who controls or may “control” (within the meaning of the Securities Act) any of the forgoing persons or entities (hereinafter referred to individually as a “DE Qinba Indemnified Party”) from and against any and all Damages suffered, sustained, incurred or required to be paid by a DE Qinba Indemnified Party arising out of:

 

(i)     any breach of any representation, warranty, covenant, obligation or other agreement made by Parent or the Parent Controlling Shareholders in any Transaction Document;

 

(ii)     any acts or omissions by Parent or the Parent Controlling Shareholders since February 14, 2008 through and including the Closing Date; or

 

(iii)     any actions or omissions by Parent or the Parent Controlling Shareholders  taken in furtherance of the transactions contemplated by this Agreement, the Private Placement or the financing contemplated thereby.

(b)     Indemnification and Director and Officer Insurance.  From and after the Closing, Parent will honor in all respects its obligations pursuant to any indemnification agreements between Parent and its directors and officers in effect immediately prior to the Merger Effective Date and any indemnification benefits accruing to such persons under Law, to the maximum extent permitted by Law.

Section 10.3   Successors and Assigns.  This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns; provided, however, that no party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other parties.

 

Section 10.4   Fees and Expenses.  Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses.

 

Section 10.5   Notices.  All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses:

If to the DE Qinba or the Majority Qinba Shareholders, to:

 

Section 10.6   Entire Agreement.  This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith.  This Agreement

Section 10.7   Severability.  This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof.  Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable.

 

Section 10.8   Titles and Headings.  The Article and Section headings contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof.

 

Section 10.9   Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement.

 

Section 10.10   Convenience of Forum; Consent to Jurisdiction.  The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts of the State of New York located in County of New York, and/or the United States District Court for the Southern District of New York, in respect of any matter arising under this Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any place where it may be found or giving notice to such party as provided in Section 9.5.

 

Section 10.11   Enforcement of the Agreement.  The parties hereto agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereto, this being in addition to any other remedy to which they are entitled at law or in equity.

 

Section 10.12   Governing Law.  Except to the extent required by Nevada or Delaware law, this Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of New York without giving effect to the choice of law provisions thereof.

Section 10.14   Electronic Signatures.

 

(a)     Execution on Paper.  Notwithstanding the Electronic Signatures in Global and National Commerce Act (15 U.S.C. Section 7001 et seq.), the Uniform Electronic Transactions Act or any other Law relating to or enabling the creation, execution, delivery or recordation of any contract or signature by electronic means, and notwithstanding any course of conduct engaged in by DE Qinba, Acquisition Subsidiary and Parent, neither DE Qinba, Parent or Acquisition Subsidiary will be deemed to have executed a transaction document or other document contemplated thereby (including any amendment or other change thereto) unless and until such party shall have executed such transaction document or other document on paper by a handwritten original signature or any other symbol executed or adopted by that party with the current intention to authenticate such transaction document or such other document contemplated.

 

(b)     Electronic Delivery.  Delivery of a copy of a transaction document or such other document bearing an original signature by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in “portable document format” (“.PDF”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature. “Originally signed” or “original signature” means or refers to a signature that has not been mechanically or electronically reproduced.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.