EXHIBIT 2.1
ACQUISITION AGREEMENT
BETWEEN
LOTUS PACIFIC, INC.
AND
TURBONET COMMUNICATIONS
March 15, 1999
THIS ACQUISITION AGREEMENT (this "Agreement") is entered into effective
as of March 15, 1999, by and between Lotus Pacific, Inc. (hereinafter "LPFC")
and Turbonet Communications (hereinafter "Turbonet"). Each of LPFC and Turbonet
is also referred to as a "Party", collectively the "Parties".
RECITALS
WHEREAS, LPFC desires to acquire certain interest in Turbonet as defined
herein;
WHEREAS, LPFC agrees to issue to the existing shareholders of Turbonet
eighty million U.S. dollars ($80,000,000) worth of common stock (hereinafter
the "LPFC Shares");
WHEREAS, LPFC agrees to provide Turbonet with twenty million U.S. dollars
($20,000,000) in cash as additional working capital based on Turbonet's
financial needs (hereinafter the "Working Capital"); and
WHEREAS, Turbonet desires to issue certain number of shares of common stock
constituting eighty-one percent (81%) of its equity interest at the time of the
closing.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
1. Interest Acquired
LPFC will acquire eighty-one percent (81%) of the equity interest in Turbonet
(hereinafter the "Turbonet Equity Interest").
2. Consideration
a. In consideration of Turbonet's agreement to sell to LPFC the Turbonet
Equity Interest, LPFC shall transfer to the existing shareholders of
Turbonet certain number of shares of its common stock with a market value
of eighty million U.S. dollars ($80,000,000), which shall be determined
based on the average closing price of LPFC shares in the open market
during the four (4) weeks immediately after the execution of this
Agreement.
b. As of the date hereof, Turbonet has four million eight hundred fifty
thousand (4,850,000) shares of common stock issued and outstanding. In
consideration of LPFC's transfer of LPFC Shares, Turbonet shall issue
twenty million six hundred seventy-six thousand three hundred fifteen
(20,676,315) shares (or such other number of shares) of its common stock
constituting eighty-one percent (81%) of Turbonet's equity interest at
the time of the closing (hereinafter the "Turbonet Shares").
3. Additional Working Capital
LPFC agrees to provide Turbonet with twenty million U.S. dollars ($20,000,000)
in cash as additional working capital based on Turbonet's financial needs.
4. Restriction on LPFC Shares
The Parties understand that the LPFC Shares to be transferred to the existing
shareholders of Turbonet are restricted as defined under the Securities Act of
1933 (the "1933 Act") as amended, the Securities Exchange Act of 1934 (the
"1934 Act"), as amended, and other federal and state securities laws and
regulations. As such, the share certificate(s) shall bear certain legend
pursuant to the 1933 and 1934 Acts. The Parties agree that the LPFC Shares so
transferred shall be prohibited from being sold, in whole or in part, and shall
be held in trust by Xx. Xxxxx Xxxx Xxxx, President of Turbonet acting as
representative of its existing shareholders, until Turbonet's annual gross
revenue shall have exceeded thirty million U.S. dollars ($30,000,000) with an
annual (before-tax) net profit of not less than six million U.S. dollars
($6,000,000).
5. The Closing
The closing of the transactions contemplated by this Agreement (the "Closing")
shall occur upon execution and delivery of this Agreement by the Parties
together with all documents, instruments, and agreements referred to herein by
the respective parties referred to in such documents, instruments, and
agreements. The date on which the Closing occurs shall be referred to as the
"Closing Date". The Closing shall occur at such location and at such time as
the Parties shall mutually agree.
6. Turbonet's Obligations
a. Currently, Turbonet is authorized to issue up to ten million (10,000,000)
shares of common stock. Turbonet agrees to amend, or cause to be amended,
its certificate of incorporation to increase the number of shares it is
authorized to issue to thirty million (30,000,000) shares so as to
consummate the transaction contemplated hereby;
b. At the time of Closing, Turbonet shall deliver to LPFC a stock
certificate or stock certificates representing and evidencing the
Turbonet Shares, endorsed in blank or accompanied by duly executed
assignment documents or stock powers sufficient to transfer good and
marketable title to the Turbonet Shares to LPFC;
c. Execute and deliver this Agreement and all other documents, instruments,
and agreements referred to herein or contemplated hereby; and
d. Provide LPFC with a list of individuals and entities specifying the
respective numbers of shares to be transferred.
7. LPFC's Obligations
a. At the time of Closing, LPFC shall deliver to Turbonet's Representative
a stock certificate or stock certificates representing and evidencing the
LPFC Shares, endorsed in blank or accompanied by duly executed assignment
documents or stock powers sufficient to transfer good and marketable
title to the LPFC Shares to the individuals and entities set forth in the
list provided by Turbonet pursuant to Section 6.d. hereof;
b. Execute and deliver this Agreement and all other documents, instruments,
and agreements referred to herein or contemplated hereby; and
c. LPFC shall provide Turbonet with twenty million U.S. dollars
($20,000,000) in cash as additional working capital based on Turbonet's
financial needs.
8. Conditions Precedent
a. LPFC's completion of satisfactory due diligence (which shall mean that
LPFC has found nothing that varies substantially or materially with its
understanding currently of the operations of Turbonet), which shall
continue immediately and Turbonet agrees to cooperate with LPFC in all
reasonable respects.
b. Approval by the respective Parties' Boards of Directors and shareholders,
if necessary; and
c. The completion of any revisions and alterations which LPFC may deem
advisable to the documentation evidencing the operations of Turbonet.
9. Regulatory Approval
The parties recognize that, in securing required regulatory approvals, they may
be required to provide confirmation of the terms of this Agreement in form and
substance satisfactory to regulatory authorities. It is not contemplated that
copies of this Agreement will be provided to regulatory authorities. Rather,
the Parties agree to cooperate in the preparation and execution of any
agreements or confirmations necessary to secure regulatory approvals.
10. Representations and warranties of Turbonet
Turbonet hereby represents and warrants to LPFC that the statements contained
in this Section 10 are correct and complete as of the Closing Date.
Notwithstanding LPFC's due diligence investigation of Turbonet, LPFC may rely
on the representations and warranties contained in this Section 10.
a. Organization of Turbonet. Turbonet is duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation;
b. Authorization of Transaction. Turbonet has full power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder.
c. Authority to Issue Additional Turbonet Shares. Currently, Turbonet is
authorized to issue up to ten million (10,000,000) shares of common
stock. Turbonet shall amend, or cause to be amended, its certificate of
incorporation to increase the number of shares it is authorized to issue
to thirty million (30,000,000) shares so as to consummate the transaction
contemplated hereby.
d. Noncontravention. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (a)
violate any governing law or other restrictions of any governmental
authority to which Turbonet is subject, or (b) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any person the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, permit, governmental approval, certificate, instrument, or other
arrangement to which he is a party or by which he is bound or to which
any of his assets or properties is subject.
e. Broker's Fees. Turbonet has no liability or obligation to pay any fees
or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Turbonet could
become liable or obligated.
f. Disclosure. The representations and warranties contained in this Section
10 do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and
information contained in this Section 10 not misleading.
11. Representations and Warranties of LPFC. LPFC hereby represents and
warrants to Turbonet that the statements contained in this Section 11 are
correct and complete as of the Closing Date. Moreover, notwithstanding
Turbonet's due diligence investigation of LPFC, Turbonet may rely on the
representations and warranties contained in this Section 11.
a. Organization of LPFC. LPFC is duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation.
b. Authorization of Transaction. LPFC has full power and authority to
execute and deliver this Agreement and to perform its obligations
hereunder.
c. Authorization to Issue Shares of Common Stock. LPFC is duly authorized
to issue eighty million U.S. dollars ($80,000,000) worth of shares of
common stock to consummate the transaction contemplated hereby.
d. Noncontravention. Neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will (a)
violate any governing law or other restrictions of any governmental
authority to which LPFC is subject, or any provision of its charter or
bylaws, or (b) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any person the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, permit, governmental approval,
certificate, instrument, or other arrangement to which it is a party or
by which it is bound or to which any of its assets or properties is
subject.
e. Broker's Fees. LPFC has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which LPFC could become
liable or obligated.
f. Disclosure. The representations and warranties contained in this Section
11 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 11 not misleading.
12. Miscellaneous
a. Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by
or between the Parties, written or oral, to the extent they related in
any way to the subject matter hereof.
b. Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective
successors and assigns. No Party may assign this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
consent of the other; provided, however, that such consent shall not be
unreasonably withheld.
3. Counterparts. This Agreement may be executed by facsimile signature and
in one or more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same instrument.
4. Headings. The section headings contained herein are inserted for
convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
5. Notices. All Notices, requests, demands, claims, and other communications
hereunder will be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given if (and then five (5)
business days after) it is sent by air mail, postage prepaid, and address
to the intended recipient as set forth below:
Lotus Pacific, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Turbonet Communications
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the addresses set
forth above using any other means (including personal delivery, recognized
overnight or international courier, messenger service, confirmed telecopy,
or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the intended recipient or receipt is confirmed by
a third party or by electronic means. Any Party may change the address to
which notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in the
manner herein set forth.
6. Applicable Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware, U.S.A., without
giving effect to any choice or conflict of law provision or rule (whether
of the State of Delaware or any other state or jurisdiction) that would
cause the application of the laws of any state or jurisdiction other than
the State of Delaware.
7. Amendments and Waivers. No amendments of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the
Parties. No waiver by any Party of any default, misrepresentation, or
breach of warranty or covenants hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder to affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
8. Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any state or jurisdiction shall not
affect the validity or enforceability of the remaining terms and provision
hereof or the validity or enforceability of the offending term or provision
in any other situation or in any other state or jurisdiction.
9. Expenses. Each of the Parties will bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
10. Construction: Official Version. The Parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement.
11. Specific Performance. Each of the Parties acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Party shall be entitled to an injunction or
injunctions to prevent breach of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in
any action instituted in any court of the U.S.A. or any state thereof
having jurisdiction over the Parties and the matter, in addition to any
other remedy to which they may be entitled, at law or equity.
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement
on the date first above written.
LOTUS PACIFIC, INC.
By: /s/ Xxxxx Xxx
____________________________
Xxxxx Xxx, Chairman
TURBONET COMMUNICATIONS
Representative of Shareholders
By: /s/ Hsing Xxxx Xxxx
____________________________
Hsing Xxxx Xxxx, President
