January 12, 2000
Golden Thunder Resources ltd.
Tun Resources Inc.
Xxxxx 000, 000 Xxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Attention: Tun Ave Sai
Dear Sirs:
RE: LETTER OF INTENT FOR PURCHASE OF SHARES OF TUN RESOURCES INC.
This letter (the "letter of Intent") sets forth the general terms and condition
of an agreement whereby Xxxx-Atlantic Corporation ("Xxxx") will purchase the
right, title and interest in and to 80% of the issued and outstanding shares in
Tun Resources Inc. ("Tun") from Golden Thunder Resources Ltd. ("Golden
Thunder"), with an option to purchase the remaining 20% of the shares of Tun
held by Golden Thunder.
BACKGROUND:
X. Xxxx is a Colorado corporation, listed and trading on the OTC Bulletin
Board in the United States.
B. Golden Thunder is a B.C. corporation, listed on the CDNX for trading.
X. Xxxxxx Thunder owns 100% of the issued and outstanding shares of Tun.
D. Tun holds an interest in two mineral prospect joint ventures in the
Republic of China: the Yuntong Joint Venture in the Yunnan Province, P.R.C.
(82% interest), and the Lutong Project in the Yunnan Province, P.R.C. (80%
interest), and may also hold an interest in other properties by way of
joint venture or other form of interest (collectively, the "Tun Joint
Venture Interest").
X. Xxxx wishes to purchase from Golden Thunder 80% of the issued and
outstanding shares of Tun (the "Shares"), with an option to purchase the
remaining 20% of the shares (the "Option").
In consideration of the sum of $10.00 paid to Golden Thunder, the receipt and
sufficiency of which is hereby acknowledged, and for other good and valuable
consideration, the parties hereto agree as follows;
1. PURCHASE AND SALE OF THE SHARES
1.1 Golden Thunder will sell to Xxxx, and Xxxx will purchase from Golden
Thunder, the Shares in consideration of the following:
a. a commitment to provide funding to Tun on or before the dates and in the
amounts set out below:
Amount of
Date of Investment Investment ($U.S.)
------------------ ------------------
January 31, 2000 50,000
February 15, 2000 250,000
March 15, 2000 300,000
April 15, 2000 200,000
May 15, 2000 200,000
August 15, 2000 (the 180,000
"Completion Date")
Total $1,180,000
(collectively, the "Tun Investment Funds").
b. 600,000 Rule 144 common shares in the capital of Xxxx transferred to Golden
Thunder on or about the Closing Date set out in clause 3.1 below;
c. 1,000,000 Rule 144 common shares in the capital of Xxxx transferred to
Golden Thunder on or about the Completion Date;
d. 500,000 employee share options in the capital of Xxxx at $0.10 U.S. per
share, which will be made available to employees and directors of Tun, such
option plan to be entered into after the Closing Date set out in clause 3.1
below; AND
x. Xxxx acknowledges that it shall be soley responsible for the funding of Tun
and the Tun Joint Venture Interests, and that Golden Thunder's minority
ownership interest will not require Golden Thunder to provide funding in
the future. The funding of Tun and the Tun Joint Venture Interests includes
costs and expenses associated with day to day operation.
1.2 If the Tun Investment Funds are not forwarded on or about the dates set out
above, or if Xxxx does not transfer the Tun Investment Funds or Xxxx Shares
by on or about the Closing Date or on or about the Completion Date, as set
out above, the agreement contemplated herein will be null and void, unless
otherwise agreed by the parties hereto.
1.3 The Investment Funds to be provided by Xxxx shall be deemed to be loans to
Tun, until the completion of the total advance of all the Investment Funds,
the terms of such deemed loans to be further detailed in the Formal
Agreement referred to in Clause 7.
1.4 The Xxxx Shares will be, when issued, fully paid and non-assessable
exchangeable common shares in the capital of Xxxx and will be free and
clear of all liens, charges and encumbrances save and except for hold
periods or resale restrictions imposed by applicable securities laws,
regulations and statutes of all applicable jurisdictions.
2. THE OPTION
2.1 Golden Thunder will provide Xxxx with an option to purchase the remaining
20% of the issued and outstanding shares (the "Optioned Shares") of Tun on
the following terms:
a. upon the request of Xxxx, the Optioned Shares will be assessed at fair
market value by qualified independent evaluator(s), the cost of such
evaluation to be divided equally between Golden Thunder and Xxxx;
b. Golden Thunder shall offer the Optioned Shares to Xxxx at the fair market
value price determined in the evaluation;
c. the option will be exercisable from the Completion Date for two years
following such date, or until August 15, 2002;
x. Xxxx must provide notice in writing to Golden Thunder that it wishes to
exercise the option, and upon receiving such notice, Golden Thunder will
transfer the Optioned Shares to Xxxx;
e. if Xxxx does not exercise the Option by August 15, 2002, the Option will be
null and void.
3. CLOSING
3.1 The closing of the Formal Agreement as defined in Section 7 of this Letter
of Intent shall occur no later than April 15, 2000 (the "Closing Date")
after the receipt of final regulatory approval and Tun shareholders
approval, unless otherwise agreed by the parties hereto.
3.2 On Completion Date, Tun Aye Sai shall be appointed to the Board of
Directors of Xxxx.
3.3 Also on the Closing Date, a designate of Xxxx shall be made a signatory to
the banking documents and accounts of Tun.
3.4 On or before the Closing Date, Tun Aye Sai agrees to enter into a
management contract with Tun whereby be shall continue in the day-to-day
operation and management of Tun until August 15, 2002.
4. DUE DILIGENCE AS A PRE-CONDITION TO CLOSING
4.1 The transaction contemplated herein is subject to Xxxx conducting due
diligence investigations and being satisfied with the results of same prior
to the Closing Date. The due diligence investigations of Xxxx may include,
but shall not be limited to, confirmation and review of:
a. Title, status and ownership of the Tun Joint Venture Interests;
b. The Tun Joint Venture Costs, which may include a detailed listing of same;
c. Corporate status, tax filings, regulatory filing in all applicable
jurisdictions, employee withholding and payroll filings, republic levies,
taxes and other charges;
d. A listing of legal proceedings to which Tun may be a party;
e. The minute books and corporate records of Tun;
f. The outstanding liabilities of Tun, which liabilities shall remain
substantially unchanged at the Closing Date;
g. The most recent financial statements of Tun, including any audited
statements, which shall be prepared in accordance with Canadian GAAP,
current to Tun's most recently completed financial quarter, and all
subsequently updated financials;
h. The date of Tun's fiscal year end; and
i. Any other information which Xxxx reasonable my request from Tun.
4.2 Golden Thunder and Tun may also conduct due diligence investigations and
request from Xxxx any information that they reasonable require in order to
conduct such investigation, including, but not limited to, minute books,
corporate documents, financial statements, regulatory and tax filings,
records of legal proceedings, and outstanding liabilities.
4.3 The closing of the transaction contemplated in this Letter of Intent will
be subject to the parties being satisfied with the results of their
respective due diligence investigations.
5. REPRESENTATIONS AND WARRANTIES
5.1 Xxxx represents and warrants to Golden Thunder that:
(a) Xxxx is a valid and subsisting corporation duly incorporated and in good
standing under the laws of the State of Colorado; and it is a "reporting
issuer" on the OTC Bulletin Board as that term is normally defined in that
exchange's rules and regulations;
(b) entering into this Letter of Intent does not and will not conflict with,
and does not and will not result in a breach of, any of the terms of its
incorporating documents or any agreement or instrument to which Xxxx is a
party;
(c) this Letter of Intent has been or will be authorized by all necessary
corporate action on the part of Xxxx;
(d) Xxxx'x common shares are listed and posted for trading through the OTC
Bulletin Board, and it is in good standing with all regulatory and
statutory bodies having jurisdiction over its business affairs.
5.2 Golden Thunder represents and warrants to Xxxx that:
(a) Golden Thunder is a valid and subsisting corporation duly incorporated and
in good standing under the laws of the Province of British Columbia; and it
is both a "reporting issuer" and an "exchange issuer" listed on the
Canadian Venture Exchange (the "CDNX") as those terms are normally defined
in the securities industry in British Columbia;
(b) entering into this Letter of Intent does not and will not conflict with,
and does not and will not result in a breach of, any of the terms of its
incorporating documents or any agreement or instrument to which Golden
Thunder is a party;
(c) this Letter of intent has been or will be authorized by all necessary
corporate action on the part of golden Thunder.
5.3 Tun represents and warrants to Xxxx that:
(a) Tun is a valid and subsisting privately-held corporation duly incorporated
and in good standing under the laws of the Province of British Columbia.
(b) entering into this Letter of Intent does not and will not conflict with,
and does not and will not result in a breach of, any of the terms of its
incorporating documents or any agreement or instrument to which Xxxx is a
party;
(c) this Letter of Intent has been or will be authorized by all necessary
corporate action on the part of Xxxx;
6. RIGHTS AND OBLIGATIONS OF THE PARTIES
6.1 Upon execution of this Letter of Intent, Xxxx shall take all reasonable
steps to:
(a) gain, prior to the Closing Date, such approvals to this Letter of Intent as
may be required from its shareholders, from regulatory and statutory
authorities having jurisdiction if required including, without limiting the
generality of the foregoing, the written consent of the directors and
officers of Xxxx to the terms of this Letter of Intent (in form required by
corporate legislation in Colorado or by the corporate counsel of Xxxx);
(b) at any time prior to the Closing Date, not do or permit to be done any act
or thing which would or might in any way adversely affect the rights of
Golden Thunder and Tun hereunder; and
(c) provide to Golden Thunder and Tun any and all reasonable requested
agreements, documents, records, data and files (in written or electronic
form) relating to Xxxx and in the care, control and possession of Xxxx.
6.2 Upon execution of this Letter of Intent, Golden Thunder and Tun shall take
all reasonable steps to:
(a) gain, prior to Closing, such approvals to the purchase and sale of the
Shares as may be required from their shareholders, from the CDNX, and from
regulatory and statutory authorities having jurisdiction including, without
limiting the generality of the foregoing, the written consent of the
directors and officers of Golden Thunder and Tun to the terms of this
Letter of Intent (in form required by the Company Act of British Columbia
or by the corporate counsel of the companies);
(b) at any time prior to Closing, not do or permit to be done any act or thing
which would or might in any way adversely affect the rights of Xxxx
hereunder; and
(c) provide to Xxxx any and all reasonable requested agreements, documents,
records, data and files (in written or electronic form) relating to Xxxx
and in the care, control and possession of Xxxx.
7. FORMAL AGREEMENT
7.1 The parties agree that this Letter of Intent incorporates all of the
essential terms of their agreement and that is shall be binding upon them.
However, the parties will negotiate, on or before April 15, 2000 an
agreement, or agreements, (the "Formal Agreement") which may incorporate
such further terms and conditions as are reasonable necessary to carry out,
and give effect in, the general terms and conditions of this Letter of
Intent.
7.2 The parties agree that upon execution of the Formal Agreement that all
prior understandings and agreements, whether verbal or written, shall be
superseded by the terms of the Formal Agreement and that such prior
understandings and agreements, including this Letter of Intent, shall be
superseded and terminated by the terms of the Formal Agreement.
8. MISCELLANEOUS
8.1 Any notice to be required or permitted hereunder will be in writing and
sent by delivery, facsimile transmission, or prepaid registered mail
addressed to the party entitled to receive the same, or delivered to such
party at the address specified above, or to such other address as either
party may give to the other for that purpose. The date of receipt of any
notice, demand or other communication hereunder will be the date of
delivery, the date of transmission if sent by facsimile, or, if given by
registered mail as aforesaid, will be the date on which the notice, demand
or other communication is actually received by the addressee.
8.2 This Letter of Intent shall enure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, successors and
permitted assigns.
8.3 Xxxx agrees that it shall be responsible for its own legal expenses and
disbursements relating to this Letter of Intent and their expenses related
to negotiation and preparation of the Final Agreement.
8.4 This Letter of Intent and the Final Agreement shall be interpreted and
construed in accordance with the laws of British Columbia and the parties
agree to attorn to the courts thereof.
8.5 All dollar figures in this Letter of Intent are given in valid currency of
Canada unless otherwise specified.
8.6 This Letter of Intent may be executed by facsimile and in counterpart.
8.7 All amendments to this Letter of Intent must be in writing and signed by
all of the parties hereto.
8.8 The performance of the covenants and obligations are subject to Golden
Thunder's shareholders' approval and the acceptance for filing of this
Letter of Intent and the Formal Agreement by the CDNX and regulatory
authorities.
If the above terms and conditions accurately record your understanding of our
agreement, please so acknowledge by signing a copy of this Letter of Intent in
the pace provide below turning the same to us at your earliest convenience. Upon
your execution thereof, this Letter of Intent will constitute a legal and
binding agreement subject to its terms.
Yours truly,
XXXX-ATLANTIC CORPORATION
/s/ Xxxxx Xxxxxx
----------------
Xxxxx Xxxxxx, President
I/We the undersigned hereby accept the terms and conditions of this Letter of
Intent.
GOLDEN THUNDER RESOURCES LTD.
/s/ Xxxxx Xxxx Xxx-Xxxxxx
-------------------------
Authorized Signatory
Director
--------
Position with Golden Thunder Resources Ltd.
January 14, 2000
----------------
Date Accepted
TUN RESOURCES INC.
/s/ Tun Aye Sai
---------------
Authorized Signatory
Director
--------
Position with Tun Resources Inc.
January 14, 2000
----------------
Date Accepted
