SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("this Agreement"), dated as of 9th October,
2003, among, Xxxxxx Xxxxxxxx, Xxxxxxx X. Xxxxxx (collectively the "Sellers")
both of the correspondence address c/o M. A. Xxxxxxx, attorney at Law of 0000
Xxxxxxx Xxxx, Xxxxxx, XX 00000, The Art Boutique, Inc. ("ART"), whose
correspondence address c/o M. A. Xxxxxxx, attorney at Law of 0000 Xxxxxxx Xxxx,
Xxxxxx, XX 00000, Capital Hero Holdings Limited, a company incorporated under
the laws of the British Virgin Islands whose correspondence address is situate
at Rooms 1203-8, Hang Seng Xxxxxxxx, 00 Xxx Xxxxx Xxxx Xxxxxxx, Xxxx Xxxx (the
"Buyer"), and Xxxxxxx X. Xxxxxxx, attorney at Law of 0000 Xxxxxxx Xxxx, Xxxxxx,
XX 00000 ("Escrow Agent").
W I T N E S S E T H:
A. WHEREAS, ART is a corporation duly organized under the laws of the State
of Colorado.
B. WHEREAS, an aggregate of 3,700,000 shares of common stock of ART
("Purchase Shares") are held by the Sellers as to 1,850,000 shares of common
stock of which are registered in the name of and beneficially held by Xxxxxx
Xxxxxxxx and as to the remaining 1,850,000 shares of common stock are registered
in the name of and beneficially held by Xxxxxxx X. Xxxxxx.
C. WHEREAS, Buyer wishes to purchase the Purchase Shares from the Sellers
who desire to sell the Purchase Shares to Buyer free and clear of liens and
encumbrances subject to the terms as hereinafter appearing.
D. WHEARAS, both the Sellers and the Buyer wish to appoint the Escrow Agent
to act as an escrow agent to both the Sellers and the Buyer upon the terms as
hereinafter appearing.
E. WHEREAS an escrow agreement dated 9th October 2003 has been signed by
the parties thereunder ("Escrow Agreement") in setting out the services to be
provided by the Escrow Agent more particularly described thereunder. A copy of
the Escrow Agreement is annexed hereto as "Annex I".
F. ART is joining in this Agreement to provide certain warranties and
representations.
NOW, THEREFORE, it is agreed among the parties as follows:
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ARTICLE I
The Consideration
1.1 Subject to the conditions set forth herein, Sellers shall sell to Buyer and
Buyer shall purchase the Purchase Shares from Sellers. Xxxxxx Xxxxxxxx shall
convey to the Buyer 1,850,000 common shares forming part of the Purchase Shares
and Xxxxxxx X. Xxxxxx shall convey to the Buyer 1,850,000 common shares forming
part of the Purchase Shares. The purchase consideration payable by the Buyer for
the purchase of the Purchase Shares is US$275,000 (the "Consideration") from
which US$75,000 ("Deposit") forming part of the Consideration shall be
paidwithin two working days (Saturdays and Sundays excluded) after the date
(Hong Kong Time) on which the Buyer shall have received from the Escrow Agent a
facsimile copy of this Agreement (in its execution form duly prepared by the
Buyer) duly signed by all parties hereto, with the same to be paid into and
deposited at the Escrow Account (as defined in Section 1.2) operated by the
Escrow Agent who shall retain the Deposit at the Escrow Account until the
Closing Date (as defined in Section 5.1) or the date of termination or
abandonment of this Agreement arising as a result of the occurrence of any event
as set out in Section 7.1, whichever date shall be earlier.
1.2 Subject to the fulfillment of all the conditions as set out in Article
VI and provided that this Agreement shall not have been terminated as a result
of the Sellers or the Buyer exercising their rights under Article VII, and
further subject to the Buyer having received from the Escrow Agent a confir-
mation in writing in such form as shall be satisfactory to the Buyer in all
respects ("Confirmation") signed by the Escrow Agent confirming to the Buyer
that the conditions under Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7 and 6.8 have
been duly fulfilled and satisfied, the Buyer shall at or before 5:00 p.m. on
15th October 2003 (US (Colorado) time) pay the balance of the Consideration in
the sum of US$200,000 ("Balance Consideration") into the following escrow
account ("Escrow Account") operated by the Escrow Agent who shall retain the
Balance Consideration at the Escrow Account until the Closing Date (as defined
in Section 5.1) or the date of termination or abandonment of this Agreement
arising as a result of the occurrence of any event as set out in Section 7.1,
whichever date shall be earlier. Details of the Escrow Account are as follows:-
Bank: Commercial Federal Bank
Address: 0000 Xxxx Xxxxxx, Xxxxxx, XX 00000, X.X.X.
Account holder: M.A. Xxxxxxx
Account number: 630996227
ARTICLE II
Matters to be dealt with prior to closing
2.1 (a) The Sellers shall fulfill and satisfy all the conditions as set out
in Article VI as soon as practicable after the signing of this Agreement.
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(b) The Buyer shall pay the Balance Consideration in the manner as
set out in Section 1.2.
2.2 Upon the Balance Consideration having been deposited by the Buyer
at the Escrow Account pursuant to Section 1.2, the Escrow Agent shall
immediately proceed to carry out the following:-
(a) deliver the documents as mentioned in Section 6.2 to the stock
transfer agent of ART, namely Interstate Transfer Company
("Transfer Agent") for the issue by the Transfer Agent of the new
share certificate in respect of 3,700,000 shares of common stock
of ART, duly registered in the name of the Buyer ("New Share
Certificate"); and
(b) conduct filing, and procure delivery to the shareholders of ART
the documents (including without limitation to Form 14f-1)
required to be filed and/or delivered to the shareholders of ART
under the Securities Exchange Act of 1934, as amended ("Exchange
Act") or otherwise for the purpose of effecting the resignation
of all existing directors of ART and appointment of the New
Directors on the expiry of the requisite period of time as
required under the Exchange Act or other laws. The date on which
both the resignation of all existing directors of ART (together
with those in its subsidiary companies) and the appointment of
the New Directors have so become effective is hereinafter called
the "Effective Date".
2.3 The Buyer shall not be obliged to purchase any of the Purchase Shares
unless the purchase of all the Purchase Shares is completed simultaneously.
2.4 Save where this Agreement shall have been terminated under Article VII,
at all times prior to Closing Date (as defined in Section 5.1), both the Deposit
and the Balance Consideration shall be retained at the Escrow Account by the
Escrow Agent.
ARTICLE III
Representations, Warranties, and Covenants of Sellers and ART as to ART
Both the Sellers and ART hereby jointly and severally, represents,
warrants, and covenants to Buyer that the matters as set out below in this
Article III are true and accurate in all respects as at the date hereof and will
continue to be so up to and including the date which is the later of the Closing
Date or the Effective Date. Both the Sellers and ART acknowledge that the Buyer
in entering into this Agreement is relying on such representations, warranties
and covenants, which are as follows:
3.1 ART is a corporation duly organized, validly existing and in good
standing under the laws of the State of Wyoming, and has the corporate power and
authority to own or lease its properties and to carry on its business as it is
now being conducted. The Articles of Incorporation and Amendments and Bylaws of
ART, are complete and accurate, and the minute books of ART, copies of which
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have also been made available to Buyer, contain a record, which is complete and
accurate in all material respects, of all meetings, and all corporate actions of
the shareholders and Board of Directors of ART.
3.2 (a) The authorized capital stock of ART consists of 50,000,000 shares
of common stock. There are 4,471,900 shares of Common Stock of ART issued and
outstanding. All such shares of capital stock of ART are validly issued, fully
paid, non-assessable and free of preemptive rights. ART has no outstanding
options, warrants, or other rights to purchase, or subscribe to, or other
securities convertible into or exchangeable for any shares of capital stock of
ART, or contracts or arrangements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of ART. All of the
outstanding shares of capital stock of ART have been offered, issued, sold and
delivered in compliance with applicable federal and state securities laws and
none of such securities were, at the time of issuance, subject to preemptive
rights. None of such issued and outstanding shares is the subject of any voting
trust agreement relating to the voting thereof or restricting in any way the
sale or transfer thereof.
(b) Xxxxxx Xxxxxxxx of the Sellers owns 1,850,000 shares forming part of
the Purchase Shares and Xxxxxxx X. Xxxxxx of the Sellers owns the remaining
1,850,000 shares out of the Purchase Shares that they are conveying pursuant to
this Agreement beneficially and of record, free and clear of any lien, pledge,
security interest or other encumbrance, and, upon payment of the Consideration
for the Purchase Shares as provided in this Agreement, the Buyer will acquire
good and valid title to the Purchase Shares, free and clear of any lien, pledge,
security interest or other encumbrance. None of the Purchase Shares are the
subject of any voting trust agreement or other agreement relating to the voting
thereof or restricting in any way the sale or transfer thereof except for this
Agreement. Each Seller has full right and authority to transfer the portion of
the Purchase Shares respectively owned by each of them pursuant to the terms of
this Agreement.
3.3 ART does not own nor has it owned, in the last five years prior to the
date hereof, any outstanding shares of capital stock or other equity interests
of any partnership, joint venture, trust, corporation, limited liability company
or other entity and there are no obligations of ART to repurchase, redeem or
otherwise acquire any capital stock or equity interest of another entity.
3.4 This Agreement has been duly authorized, validly executed and delivered
on behalf of the Sellers and ART and is a valid and binding agreement and
obligation of ART and Sellers enforceable against the parties in accordance with
its terms, subject to limitations on enforcement by general principles of equity
and by bankruptcy or other laws affecting the enforcement of creditors' rights
generally, and Sellers and ART have complete and unrestricted power to enter
into and, upon the appropriate approvals as required by law, to consummate the
transactions contemplated by this Agreement.
3.5 Neither the making of nor the compliance with the terms and provisions
of this Agreement and consummation of the transactions contemplated herein by
Sellers or ART will conflict with or result in a breach or violation of the
Articles of Incorporation or Bylaws of ART, or of any material provisions of any
indenture, mortgage, deed of trust or other material agreement or instrument to
which ART or Sellers are a party, or of any material provision of any law,
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statute, rule, regulation, or any existing applicable decree, judgment or order
by any court, federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over ART or Sellers, or any of its
material properties or assets, or will result in the creation or imposition of
any material lien, charge or encumbrance upon any material property or assets of
ART pursuant to the terms of any agreement or instrument to which ART is a party
or by which ART may be bound or to which any of ART property is subject and no
event has occurred with which lapse of time or action by a third party could
result in a material breach or violation of or default by ART or Sellers.
3.6 There is no claim, legal action, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order, decree
or judgment in progress, pending or in effect, or to the best knowledge of the
Sellers threatened against or relating to ART or any of its subsidiary companies
or affecting any of their respective assets, properties, business or capital
stock. There is no continuing order, injunction or decree of any court,
arbitrator or governmental authority to which ART or any of its subsidiary
companies is a party or by which ART or any of its subsidiary companies or any
of their respective assets, properties, business or capital stock are bound.
3.7 ART has accurately prepared and filed all federal, state and other tax
returns required by law, domestic and foreign, to be filed by it, has paid or
made provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of ART for all current taxes and other charges to which ART
is subject and which are not currently due and payable. None of the Federal
income tax returns of ART have been audited by the Internal Revenue Service or
other foreign governmental tax agency. ART has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
pending or threatened against ART for any period, nor of any basis for any such
assessment, adjustment or contingency.
3.8 ART has delivered to Buyer audited financial statements dated December
31, 2002. All such statements, herein called "ART Financial Statements" are
complete and correct in all material respects and, together with the notes to
these financial statements, present fairly the financial position and results of
operations of ART for the periods indicated. All financial statements of ART
have been prepared in accordance with generally accepted accounting principles.
The Sellers will complete and file the September 30, 2003 10QSB on or before
October 15, 2003.
3.9 Save and except the fees and expenses as provided in Section 4.12, as
at the date which is the later of the Closing Date or the Effective Date, ART
and/or any of its subsidiary companies has no outstanding indebtedness,
liabilities or obligations due or owing to any third party including but not
limited to any director of ART or any director of any of its subsidiary
companies or professional advisers of ART, whether actual, contingent, disputed,
unquantified or deferred and irrespective of whether the same is due and payable
on the Closing Date or the effective Date.
3.10 Since the dates of the ART Financial Statements, there have not been
any material adverse changes in the business or condition, financial or
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otherwise, of ART. ART does not have any liabilities, commitments or
obligations, secured or unsecured (whether accrued, absolute, contingent or
otherwise) save and except those liabilities as set out in Section 4.12.
3.11 ART is not a party to any contract performable in the future except to
issue shares set forth in this Agreement hereof and with the Transfer Agent.
3.12 The representations and warranties of the ART shall be true and
correct as of the date hereof and shall continue to be so up to and including
the date which is the later of the Closing Date or the Effective Date.
3.13 ART will have delivered to Buyer, all of its corporate books and
records for review.
3.14 ART has no employee benefit plan in effect at this time.
3.15 No representation or warranty by ART or the Sellers in this Agreement,
or any certificate delivered pursuant hereto contains any untrue statement of a
material fact or omits to state any material fact necessary to make such
representation or warranty not misleading.
3.16 Buyer has received copies of Form 10SB as filed with the Securities
and Exchange Commission ("SEC") which included audits for the year ended
December 31, 2002 and each of its other reports to shareholders filed with the
SEC through the period ended June 30, 2003. ART is a registered company under
the Exchange Act.
3.17 ART has duly filed all reports required to be filed by it under the
Exchange Act. No such reports, or any reports sent to the shareholders of ART
generally contained any untrue statement of material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements in such report, in light of the circumstances under which they were
made, not misleading.
3.18 The Buyer has not received any general solicitation or general
advertising regarding the shares of Seller's common stock.
3.19 As at the date which is the later of the Closing Date or the Effective
Date, ART or any of its subsidiary companies has no outstanding contract,
agreement, transaction, obligation, commitment, understanding, arrangement,
guarantee, indemnity or liability of any nature whatsoever and howsoever and ART
and/or any of its subsidiary companies has not agreed to enter into, contract
for or incur, any such contract, agreement, transaction, obligation, commitment,
understanding, arrangement guarantee, indemnity or liability, save and except a
transfer agent contract dated 30th October 2001 ("Transfer Agent Contract") and
signed between ART and the Transfer Agent, a copy which is enclosed herewith
under "Annex II" for reference purposes.
3.20 As at the date which is the later of the Closing Date or the Effective
Date, ART and/or any of its subsidiary companies has no outstanding capital
commitments nor has ART and/or any of its subsidiary companies authorized,
contracted for or entered into any capital commitments.
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ARTICLE IV
Termination of Representation and
Warranties and Certain Agreements; Indemnification
4.1 The respective representations and warranties of the parties hereto
shall survive this Agreement for two years commencing from the Closing Date and
the continuing covenants, obligations and the agreements of the parties hereto
shall survive this Agreement.
4.2 The right to indemnification or payment of Damages (as defined in
section 4.4) or other remedy based on any representation, warranty, covenant or
obligation of a party hereunder shall not be waived by any investigation
conducted with respect to, or any knowledge acquired (or capable of being
acquired) at any time, whether before or after the execution and delivery of
this Agreement, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant or obligation.
4.3 The waiver of any condition to a party's obligation to consummate the
transactions contemplated hereunder, where such condition is based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, or payment of Damages, or other remedy based on such
representation, warranty, covenant or obligation.
4.4 Sellers and ART, jointly and severally, shall indemnify and hold
harmless the Buyer and its respective officers, directors and affiliates
(collectively the "Buyer Indemnified Persons" and each a "Buyer Indemnified
Person") for, and will pay to the Buyer Indemnified Persons, on a
dollar-for-dollar basis, the amount of, any loss, liability, claim, damage
(including, without limitation, incidental and consequential damages), cost,
expense (including, without limitation, interest, penalties, costs of
investigation and defense and the reasonable fees and expenses of attorneys and
other professional experts) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), directly or indirectly arising
from, attributable to or in connection with:
(a) any representation or warranty made by the Sellers or ART in this
Agreement or any closing deliveries, that is, or was at the time
made, false, inaccurate or not fully complied with, or any breach
of, or misrepresentation with respect to, any such representation
or warranty;
(b) any breach by any of the Sellers or ART of any covenant,
agreement or obligation of ART or Sellers contained in this
Agreement;
(c) any claims or litigation relating to ART now pending or
threatened or which may hereafter be brought against Buyer and/or
ART or Sellers based upon events occurring prior to the Closing
Date and not attributable to the acts of the Buyer ; or
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(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, losses, liabilities and reasonable
legal and other expenses incident to any of the foregoing.
4.5 Sellers and ART shall have no liability for indemnification with
respect to any representation or warranty, unless, on or before the second
anniversary of the Closing Date, the Buyer notifies the Sellers of a claim
specifying the basis thereof in reasonable detail to the extent then known by
Buyer. A claim with respect to any covenant, agreement or obligation contained
in this Agreement, may be made at any time without any time limitation.
4.6 Promptly after receipt by an indemnified party referred to in Article
IV of written notice (the "Notice of Claim") of the commencement of any action,
suit or proceeding against it, or written threat thereof, such indemnified party
will, if a claim is to be made against an indemnifying party under either of
said sections, as applicable, give notice to the indemnifying party of the
commencement of such action, suit or proceeding. The indemnified party shall
furnish to the indemnifying party in reasonable detail such information as the
indemnified party may have with respect to such indemnification claims
(including copies of any summons, complaint or other pleading which may have
been served on it and any written claim, demand, invoice, billing or other
document evidencing or assenting the same). Subject to the limitations set forth
in this section, no failure or delay by the indemnified party in the performance
of the foregoing shall reduce or otherwise affect the obligation of the
indemnifying party to indemnify and hold the indemnified party harmless except
to the extent that such failure or delay shall have materially and adversely
affected the indemnifying party's ability to defend against, settle or satisfy
any action, suit or proceeding the claim for which the indemnified party is
entitled to indemnification hereunder. The foregoing shall not apply to the
extent inconsistent with the provisions of section 4.10 relating to proceedings.
4.7 If the claim or demand set forth in the Notice of Claim given by the
indemnified party is a claim or demand asserted by a third party, the
indemnifying party shall have 30 days after the Date of Notice of Claim to
notify the indemnified party in writing of its election to defend such third
party claim or demand on behalf of the indemnified party (the "Notice Period");
provided, however, that the indemnified party is authorized to file any motion,
answer or other pleading which it deems necessary or appropriate to protect its
interests during the Notice Period. If the indemnifying party elects to defend
such third party claim or demand, the indemnified party shall make available to
the indemnifying party and its agents and representatives all records and other
materials which are reasonably required in the defense of such third party claim
or demand and shall otherwise cooperate (at the sole cost and expense of the
indemnifying party) with, and assist (at the sole cost and expense of the
indemnifying party) the indemnifying party in the defense of, such third party
claim or demand, and so long as the indemnifying party is diligently defending
such third party claim in good faith, the indemnified party shall not pay,
settle or compromise such third party claim or demand. If the indemnifying party
elects to defend such third party claim or demand, the indemnified party shall
have the right to control the defense of such third party claim or demand, at
the indemnified party's own expense. If the indemnifying party does not elect to
defend such third party claim or demand or does not defend such third party
claim or demand in good faith, the indemnified party shall have the right, in
addition to any other right or remedy it may have hereunder at the indemnifying
party's expense, to defend such third party claim or demand.
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4.8 The term "Date of Notice of Claim" shall mean the date the Notice of
Claim is effective pursuant to section 4.6 of this Agreement.
4.9 A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
4.10 Any legal action or proceeding with respect to this Agreement or any
matters arising out of or in connection with this Agreement or the transactions
contemplated hereby or the documents executed and delivered in connection
herewith, and any action for enforcement of any judgment in respect thereof may
be brought in the courts of the State of Colorado or of the United States of
America for the District of Colorado, and, by execution and delivery of this
Agreement, the parties each hereby accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts and appellate courts thereof. The parties irrevocably consent to service
of process out of any of the aforementioned courts in any such action or
proceeding in accordance with the notice provisions set forth in Section 9.5.
The parties each hereby irrevocably waive any objection that it may now or
hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with this Agreement or the
transactions contemplated hereby or the documents execute and delivered in
connection herewith brought in the courts referred to above and hereby further
irrevocably waive and agree, to the extent permitted by applicable law, not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum. Nothing herein shall
affect the right of any party hereto to serve process in any other manner
permitted by law.
4.11 Notwithstanding anything herein contained, in the event where there
shall be discovered, at any time whether before or after the date which is the
later of the Closing Date or the Effective Date, any outstanding debts or
liabilities incurred by ART and/ or any of its subsidiary companies prior to
such date, the Sellers shall immediately pay or discharge in full such debts,
liabilities or indebtedness. For the avoidance of doubt, the obligations of the
Sellers hereunder shall survive closing of this Agreement.
4.12 Without prejudice to Section 4.11, the Sellers hereby confirm to the
Buyer that as at Closing Date, there shall have been outstanding directors'
fees, outstanding professional fees and consultancy fees being incurred and
payable by ART and/or its subsidiary companies, and outstanding fees due to the
Transfer Agent by ART under the Transfer Agent Contract or otherwise. The
Sellers hereby agree to pay or discharge in full the aforesaid fees on behalf of
ART on or before Closing Date. For the avoidance of doubt, the obligations of
the Sellers hereunder shall survive this Agreement. The aforesaid fees shall
include fees and expenses incurred by ART in its preparing and filing of the
30th day of September 2003 10QSB but shall exclude fees and expenses incurred by
ART in relation to the preparation filing and mailing of the Form 14f-1 as
described in Section 2.2(b).
4.13 The parties hereto hereby acknowledge that the Escrow Agent further
acts for the Sellers and ART in connection with this Agreement. All fees in
respect thereof shall be paid by the Sellers.
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ARTICLE V
Procedure for Closing
5.1 Subject to and provided that this Agreement shall not have been
terminated under Article VII, closing of this Agreement shall take place on the
date of occurrence ("Closing Date") of all of the followings:-
(a) due compliance with or fulfillment or performance of all the
conditions set out in Article VI;
(b) the Balance Consideration having been paid by the Buyer in
accordance with Section 1.2;
(c) due performance by the Escrow Agent in respect of his filing and
delivery obligations under Section 2.2(b);
(d) the New Share Certificate having been issued by the Transfer
Agent;
(e) all such fees and expenses as referred to in Section 4.12 having
been duly paid or settled by the Sellers; and
(f) a written confirmation issued by the Buyer or its legal advisor
to the Escrow Agent that the Buyer has, in its possession :-
(i) one original copy of this Agreement duly signed by all
parties hereto, and
(ii) one original copy of the Escrow Agreement duly signed by
all parties thereunder.
5.2 Provided that this Agreement shall not have been terminated under
Article VII, on Closing Date, the Escrow Agent shall carry out the following
businesses (irrespective of whether the Effective Date has occurred or not):-
(a) both the Deposit and the Balance Consideration shall be released
from escrow and paid by the Escrow Agent to the Sellers;
(b) the Escrow Agent shall, unless otherwise directed by the Buyer,
deliver to the Buyer the New Share Certificate and other relevant
documents via Federal Express or other speedpost services at the
direction of the Buyer to the following address:
Xxxx 0000-0, Xxxx Seng Xxxxxxxx, 00 Xxx Xxxxx Xxxx Xxxxxxx,
Xxxx Xxxx and to the attention of Xx. Xxxxxx Xxx of Capital
Hero Holdings Limited (Mobile Phone Number (000) 0000-0000);
and
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(c) the Escrow Agent shall release from escrow the Written
Resignations, the Board Resolutions and the Company Items and
shall deliver the same to the Buyer in such manner as the Buyer
may direct.
5.3 The Escrow Agent shall, on the Effective Date, deliver to the Buyer all
documents evidencing both the effective resignations of all existing directors
of ART (and its subsidiary companies) and the effective appointment of the New
Directors.
ARTICLE VI
Conditions Precedent to the
Consummation of the Purchase
The following are conditions precedent to the consummation of the Agreement
on or before the Closing Date:
6.1 the representations and warranties made by Sellers and ART in this
Agreement have remained to be true and accurate in all respects as though such
representations and warranties had been made or given on and as of the Closing
Date, except to the extent that such representations and warranties may be
untrue on and as of the Closing Date because of changes caused by transactions
suggested or approved in writing by the Buyer;
6.2 by way of conveying the Purchase Shares from the Sellers to the Buyer,
the Sellers shall have delivered with the Escrow Agent for his retention the
original share certificates in respect of the Purchase Shares and relevant stock
powers duly executed by the Sellers in readiness to effect the transfer of
ownership of the Purchase Shares to the Buyer and other documents required to be
delivered by the Sellers to the Escrow Agent for the purpose of the sale of the
Purchase Shares to the Buyer including without limitation to such forms,
endorsement, guarantees and assurance as the Transfer Agent may require whether
under the Transfer Agent Contract or otherwise in respect of the transfer of
ownership of the Purchase Shares hereunder;
6.3 the Escrow Agent shall have in its possession all requisite
documentation in relation to closing of this Agreement;
6.4 the Sellers shall have delivered to the Escrow Agent for his retention
the written resignations ("Written Resignations") of all existing directors of
ART and all its subsidiary companies with such resignations to take effect on
the Effective Date together with a written acknowledgement under seal from each
of them respectively in such form as the Buyer shall require that he has no
claims against ART or any of its subsidiary companies whether by way of
compensation, remuneration, severance payments, expenses, damages or otherwise;
6.5 the Sellers shall have delivered to the Escrow Agent for his retention
a copy, certified as true and complete by a director of ART of resolutions of
its board of directors ("Board Resolutions") approving:-
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(a) this Agreement and authorizing a person to execute the same for
and on its behalf;
(b) the acceptance of the resignation of the directors of ART and its
subsidiary companies as provided under Section 6.4;
(c) the appointment of Xx. Xxx Chi Xx Xxxxxx as Chief Executive
Officer and director and Xx. Xxxx Mow Hung as director
(collectively "New Directors") nominated by the Buyer as new
directors of ART with effect from the Effective Date; and
(d) the cancellation of all accounts (including the signatories and
bank mandates) maintained by ART and its subsidiary companies
with banks and financial institutions in such manner as the Buyer
may require; and
6.6 the Sellers shall have delivered to the Escrow Agent for his retention
the following items ("Company Items"):-
(a) all statutory records and minute books (which shall be written up
to the Closing Date) and other statutory records of ART;
(b) the common seal and all rubber stamps, cheque books, cheque stubs
and bank statements, receipt books, all current insurance
policies, books and accounts and title deeds and evidence of
ownership to all assets and all current contracts and all other
accounting records of ART and its subsidiary companies; and
(b) all correspondence and other documents belonging to ART and its
subsidiary companies (including its constitutional documents).
6.7 A Form 14f-1 and other requisite documentation in effecting the
resignation of all existing directors of ART (and those in its subsidiary
companies) and appointment of the New Directors and the change in board control
of ART as may be required to be prepared under the Exchange Act or otherwise
have been duly prepared in readiness for, where appropriate, filing and/or
delivery to the shareholders of ART; and
6.8 ART shall have completed and filed the 30th day of September 2003 10QSB
in relation to ART.
ARTICLE VII
Termination and Abandonment
7.1 Anything contained in this Agreement to the contrary notwithstanding,
the Agreement may be terminated and abandoned at any time prior to the Closing
Date (in respect of events as set out in Section 7.1 (a), (c) and (e), at any
time between 5:00 p.m. on 10th October 2003 and 5:00 p.m. on 15th October 2003
(both of which US (Colorado) time) (in respect of an event under Section 7.1(b)
or (d))), or at any time after the Closing Date (in respect of the event as set
out in Section 7.1(f)):-
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(a) by mutual consent of the Sellers and the Buyer;
(b) by Buyer only, if any of the conditions set forth in Article VI
has not been fulfilled or performed;
(c) by Sellers or Buyer, if any suit, action, or other proceeding
shall be pending or threatened by the federal or a state
government before any court or governmental agency, in which it
is sought to restrain, prohibit, or otherwise materially affect
the consummation of the transactions contemplated hereby;
(d) by Buyer only, if the Buyer shall fail to receive the original
copy of the Confirmation by 5:00 p.m. on 10th of October, 2003
(US (Colorado) time);
(e) by Buyer only, if there is discovered any breach, inaccuracy,
material error, misstatement or misleading information in the
representations and warranties given by any of the Sellers or ART
under this Agreement; or
(f) provided where this Agreement shall not have been terminated
pursuant to and under any of the events in Section 7.1 (a), (b),
(c), (d) or (e) and provided further that all the conditions
under Article VI shall have been duly fulfilled, satisfied and
complied with and provided further that the Confirmation shall
have been received by the Buyer at a time prior to 5:00 p.m. on
10th October 2003 (US (Colorado) time), by the Sellers acting
jointly, in the event where the Buyer shall fail to pay the
Balance Consideration in accordance with the terms as set out in
Section 1.2 by 5:00 p.m. on 15th October, 2003 (US (Colorado)
time), unless such time or date shall have been extended by the
Sellers and Buyer jointly.
7.2 Any of the terms or conditions of this Agreement may be waived at any
time by the party who is entitled to terminate this Agreement pursuant to the
relevant clause under Section 7.1.
7.3 (a) On the occurrence of the Buyer (or the Sellers in Section 7.1(c)
only) exercising its rights to terminate this Agreement under any of the events
as set out in Section 7.1(a), (b), (c), (d)or (e), both the Deposit and the
Balance Consideration (if the same shall have been paid by the Buyer to the
Escrow Agent) shall forthwith be returned by the Escrow Agent to the Buyer.
(b) On the occurrence of the Sellers exercising their rights to terminate
this Agreement under the event as set out in Section 7.1(f), the Sellers shall
be entitled to forfeit the Deposit. Upon the Sellers forfeiting the Deposit as
such, none of the parties hereto shall thereafter have any further liabilities
and/ or obligations against or towards one another save for any antecedent
breaches of this Agreement by any of the parties hereto.
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ARTICLE VIII
Services of the Escrow Agent
8.1 In consideration of the payment of a fee to the Escrow Agent (as
referred to in Section 8.4) and for other valuable consideration, the Sellers,
the Buyer and the Escrow Agent all agree that the Escrow Agent shall be
appointed as an escrow agent by both the Sellers and the Buyer for the period
commencing from the date hereof until the date on which all his duties and
obligations hereunder shall have been duly fulfilled and/ or discharged. Under
this Agreement, the Escrow Agent shall be authorized, instructed and obligated
to observe, perform and comply with the following:-
(a) procure and conduct full control of the Escrow Account at all
times; and to operate the Escrow Account in accordance with the
terms of this Agreement;
(b) accept payment of both the Deposit and the Balance Consideration
from the Buyer into the Escrow Account;
(c) retain the Deposit in accordance with Sections 1.1 and 2.4 and
hold the Balance Consideration in accordance with Sections 1.2
and 2.4;
(d) where appropriate, release both the Deposit and the Balance
Consideration to the Sellers in accordance with Section 5.2(a);
(e) where appropriate, return to the Buyer the Deposit and the
Balance Consideration in accordance with Article VII;
(f) prepare and issue the Confirmation to the Buyer immediately upon
the fulfillment and/or satisfaction of the conditions under
Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7 and 6.8;
(g) duly perform his obligations as set out in Section 2.2;
(h) accept delivery of all the documents and other items as mentioned
in Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7 and 6.8;
(i) undertakes with the Buyer that he shall not proceed to closing or
otherwise allow closing of this Agreement to take place unless
and until all the events under Section 5.1 have occurred or taken
place;
(j) duly perform his obligations as set out in Section 5.2. In his
performance of his obligations under Section 5.2(b), the Escrow
Agent hereby further irrevocably undertakes with the Buyer that
the New Share Certificate shall be delivered at the address under
the direction of the Buyer within 5 days after the Closing Date;
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(k) duly perform his obligations under Section 5.3; and
(l) where the Agreement shall be terminated under Article VII, the
documents and items as mentioned in Sections 6.2, 6.3, 6.4, 6.5
and/or 6.6 shall be returned to the Sellers or ART, as the case
may be.
8.2 Save for the default, negligence, non-observation, non-performance or
non-compliance on the part of the Escrow Agent of any of his obligations
hereunder, the Escrow Agent is specifically indemnified and held harmless
against all losses, claims, costs, expenses which the Escrow Agent may suffer or
incur as a consequence of his appointment as Escrow Agent hereunder. In the
event of a dispute involving the escrow instructions or the consideration to be
delivered in escrow, subject to the joint consent of the Sellers and the Buyer,
the escrow agent is authorized to transfer and deposit all funds previously
deposited by the Buyer into the Escrow Account pursuant to the terms of this
Agreement and the amount of interest accrued thereon with the Clerk of the
District Court for the City and County of Denver, State of Colorado upon ten
days written notice, and, subject to and provided that there shall have been no
default, negligence, non-observation, non-performance or non-compliance on the
part of the Escrow Agent of any of his obligations and undertaking hereunder, be
relieved of any further escrow duties thereupon. Any and all costs of attorneys
fees and legal actions of escrow agent for any dispute resolution or
interpleader action shall be paid in equal shares by the parties to this
Agreement.
8.3 The Escrow Agent shall be fully liable to the Sellers and/or the Buyer
(as the case may be) for all losses, damages, liabilities or claims in whatever
nature as shall be sustained or suffered by the Sellers and/ or the Buyer (as
the case may be) arising from or as a result of the breach, default, negligence,
non-observation, non-performance or non-compliance on the part of the Escrow
Agent of any of his obligations and undertaking hereunder.
8.4 (a) In consideration of the services provided by the Escrow Agent
hereunder, the Buyer agree to pay the Escrow Agent an escrow fee in the sum of
US$[2,500], whereas all reasonable out of pocket expenses incurred by the Escrow
Agent relating to the escrow services hereunder are borne solely by the Sellers.
(b) The Buyers agrees that the said escrow fees in the sum of US$2,500 as
set out in Section 8.4(a) shall be paid to the Escrow Agent by way of depositing
the same at the Escrow Account at the same time when the Balance Consideration
shall be paid by the Buyer pursuant to Section 1.2.
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ARTICLE IX
Miscellaneous
9.1 This Agreement embodies the entire agreement between the parties, and
there have been and are no agreements, representations or warranties among the
parties other than those set forth herein or those provided for herein.
9.2 To facilitate the execution of this Agreement, any number of
counterparts hereof may be executed, and each such counterpart shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one instrument. Facsimile execution and delivery of this
Agreement is legal valid and binding execution and delivery for all purposes.
9.3 All parties to this Agreement agree that if it becomes necessary or
desirable to execute further instruments or to make such other assurances as are
deemed necessary, the party requested to do so will use its best efforts to
provide such executed instruments or do all things necessary or proper to carry
out the purpose of this Agreement.
9.4 This Agreement may not be amended except by written consent of both the
Sellers and the Buyer.
9.5 Any documents, notices, requests, or other communications required or
permitted hereunder shall be delivered personally or sent by overnight courier
service, prepaid, addressed as follows:
To Sellers: Xxxxxx Xxxxxxxx and Xxxxxxx X. Xxxxxx
c/o Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile number : (000) 000 0000
To ART: Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile number : (000) 000 0000
To Buyer: Xx. Xxxxxx Xxx
Capital Hero Holdings Ltd.
Rooms 1203-8, Hang Seng Xxxxxxxx
00 Xxx Xxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile number : (000) 0000 0000
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To Escrow
Agent : Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile number : (000) 000 0000
or such other addresses as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
received.
9.6 No press release or public statement will be issued relating to the
transactions contemplated by this Agreement without prior approval of the Buyer
and Sellers. However, ART may issue at any time any press release or other
public statement it believes on the advice of its counsel it is obligated to
issue to avoid liability under the law relating to disclosures, but the party
issuing such press release or public statement shall make a reasonable effort to
give the other party prior notice of and opportunity to participate in such
release or statement.
9.7 This Agreement shall be governed by and construed in accordance with
and enforced under the laws of the state of Colorado applicable to all
agreements made hereunder. Venue and jurisdiction for any legal actions
hereunder shall be District Court in and for Jefferson County, Colorado.
9.8 Buyers and ART hereby covenant and agree to continue to retain the
Transfer Agent as the stock transfer agent of ART for the remaining term
pursuant to and under the Transfer Agent Contract.
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IN WITNESS WHEREOF, the parties have executed this Agreement this _____ day
of __________________________, 2003.
SELLERS: THE ART BOUTIQUE, INC.
__________________________ By:________________________
Xxxxxx Xxxxxxxx Name:
Title:
__________________________
Xxxxxxx X. Xxxxxx
BUYER: ESCROW AGENT:
CAPITAL HERO HOLDINGS LTD.
By:_________________________ ___________________________
Xxxxxx Xxx Name: Xxxxxxx X. Xxxxxxx
Director Title: Attorney at law
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