ASSET PURCHASE AGREEMENT
Exhibit 4.1
THIS
ASSET PURCHASE AGREEMENT dated as of June 6, 2005 is made and entered into by
and among Shenzhen Century Teltone Technology Co., Ltd., a solely foreign-own
corporation located in Shenzhen, PRC (“Purchaser”); Global National
Communications Corporation, a Nevada corporation (“Global”) a U.S. public
company whose shares are traded on the OTCBB with the trading symbol of GLNC and
total outstanding shares of 22 million; and Xxxx Xxxxxxx and Xx Xxxxxx
(“Shareholders”), on the one hand; and Shenzhen Teltone Communication Co. Ltd.,
a company organized under the laws of the People’s Republic of China (“Seller”),
on the other hand.
A. Seller
has developed intellectual property to manufacture certain personal handy mobile
phones and, for purposes of identification, has assigned to such phones model
numbers listed on Schedule I (the “PHS Phones”).
B. Global
has formed Purchaser to acquire such intellectual property (the “Intellectual
Property”).
C. Purchaser
has provided to Seller certain funds to enable Seller to manufacture or cause
the manufacture of the PHS Phones on behalf of Purchaser pending government
approval and prior to the Closing.
D. Purchaser
wishes to purchase from Seller, and Seller wishes to sell to Purchaser, the
Intellectual Property.
NOW,
THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties hereby agree as follows:
ARTICLE
I
DEFINITIONS
When used
in this Agreement, the following terms shall have the respective meanings set
forth below:
“Affiliate”
shall mean with respect to any Person (i) a Person directly or indirectly
controlling, controlled by or under common control with such Person; or
(ii) an officer, director, member or partner of such Person. For these
purposes, control means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether its the ownership of voting securities, by contract or
otherwise.
“Agreement”
shall mean this Asset Purchase Agreement, including all exhibits and schedules
thereto, as the same may hereafter be amended, modified or supplemented from
time to time.
Exh.
4.1-1
“Applicable
Law” shall mean, with respect to any Person, any statute, law, regulation,
order, injunction, judgment, decree or other requirement of any Authority
applicable to such Person or any of its Affiliates or any of their respective
properties, and assets.
“Authority”
shall mean any governmental, regulatory or administrative body, agency or
authority, any court of judicial authority, any arbitrator or any public,
private or industry regulatory authority.
“Books
and Records” of a Person shall mean all books and records, ledgers, employee
records, customer lists, files, correspondence, computer data bases, accounting
information and other records of every kind, whether written, computerized or
maintained in any other medium, which are owned by that Person or in which that
Person has any interest.
“Calculation
Date” shall mean the date that the Net Income has been calculated by Global’s
independent accountant.
“Closing”
shall mean the consummation of the transactions contemplated in this
Agreement.
“Closing
Date” shall mean the date upon which the Closing occurs.
“Effective
Time” shall mean 12:01 a.m. Shenzhen time on the Closing Date.
“GAAP”
shall mean generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the accounting profession,
as in effect on the date of this Agreement.
“Indemnified
Party” shall have the meaning specified at Section 13.3.
“Indemnifying
Party” shall have the meaning specified at Section 13.3.
“Intellectual
Property” of a Person shall mean all intangible properties owned by that Person
or in which that Person has any interest (including the right to use by license
or otherwise), and includes, without limitation, (i) all trademarks,
service marks, trade names, trade dress, logos, corporate names, slogans and
commercial symbols, all applications therefor, and all associated goodwill;
(ii) all copyrights, all applications therefor and all associated goodwill;
(iii) all patents and patent applications, all associated technical
information, know-how, trade secrets, processes, operating, maintenance and
other manuals, drawings and specifications, process flow diagrams and related
data, and all associated goodwill; (iv) all “software” and all
documentation thereof, (including all electronic data processing systems and
program specifications, functional specifications, source and object codes,
algorithms, architecture, input data, report layouts and format, record file
layouts, diagrams, narrative descriptions and flow charts) (collectively,
“Software”); (v) all other inventions, discoveries, improvements,
processes, formulae (secret or otherwise), data, drawings, specifications, trade
secrets, confidential information, financial, marketing and business data,
pricing and cost models and information, business and marketing plans, operating
procedures, customer and supplier lists, knowledge of customer preferences and
buying practices and all other ideas (including those in the possession of third
parties, but which are the property of that Person); (vi) all drawings,
records, books or other tangible media embodying the foregoing; (vii) all
rights to obtain and rights to register patents, trademarks and copyrights; and
(viii) all rights to xxx or recover and retain damages and costs and
attorneys fees for present and past infringement of any of the
foregoing.
Exh.
4.1-2
“Knowledge”
shall mean, with respect to Seller, the actual knowledge of each of its
directors, executive officers and key employees and the knowledge that each such
Person would have acquired upon diligent inquiry.
“Lien”
shall mean any lien, pledge, mortgage, security interest, lease, charge,
conditional sales contract, option, restriction, right of first refusal, or any
other adverse claim or right whatsoever.
“Losses”
shall mean all damages, awards, judgments, assessments, fines, penalties,
charges, costs, expenses, payments, diminutions in value and other losses,
however suffered or characterized, all interest thereon, all costs and expenses
of investigating any claim, lawsuit or arbitration and any appeal therefrom, all
actual attorneys’ fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and, subject to
Section 13.4, all amounts paid incident to any compromise or settlement of
any such claim, lawsuit or arbitration.
“Net
Income” shall mean the operating income attributable solely to the Purchased
Assets as calculated by Global’s principal outside auditors under
GAAP.
“Order”
shall mean any decree, order, judgment, writ, award, injunction, rule or consent
of or by an Authority.
“Person”
shall mean any entity, corporation, company, association, joint venture, joint
stock company, partnership, trust, organization, individual (including personal
representatives, executors and heirs of a deceased individual), or government
(including agencies, departments, bureaus, boards, divisions and
instrumentalities thereof).
“PRC”
shall mean the People’s Republic of China.
“Purchased
Assets” shall mean all of the Intellectual Property which are owned by Seller or
in which Seller has any interest (including the right to use) relating
specifically to the PHS Phones.
“Purchaser
Disclosure Schedule” shall mean the schedule entitled “Purchaser Disclosure
Schedule”, dated of even date herewith. The Purchaser Disclosure Schedule shall
be considered a part of this Agreement.
“Purchaser
Documents” shall mean this Agreement and all other agreements, instruments and
certificates to be executed and delivered by Purchaser and/or Global in
connection with this Agreement.
“Purchase
Price” shall have the meaning specified at Section 4.1.
Exh.
4.1-3
“Required
Contractual Consents” shall mean those consents required to be obtained in order
to consummate the transactions contemplated by this Agreement.
“Required
Governmental Approvals” shall mean those filings, notices or approvals required
to be obtained in order to consummate the transactions contemplated by this
Agreement.
“Securities
Act” shall mean the Securities Act of 1933, as amended.
“Seller
Disclosure Schedule” shall mean the schedule entitled “Seller Disclosure
Schedule”, dated of even date herewith. Seller Disclosure Schedule shall be
considered a part of this Agreement.
“Seller
Documents” shall mean this Agreement and all other agreements, instruments and
certificates to be executed by Seller in connection with this
Agreement.
“Software”
shall have the meaning specified in the definition of Intellectual
Property.
“Target
Period” shall mean the twelve-month period commencing on the first day of the
month immediately following the Closing Date and ending on the first anniversary
of such date.
“Tax”
shall mean any tax, charge, fee, levy, deficiency or other assessment of
whatever kind or nature, together with any interest, penalty, addition to tax or
additional amount imposed by any Tax Authority. “Taxing” and Taxable” shall have
the correlative meanings.
“Tax
Authority” shall mean any Authority having jurisdiction over the reporting and
payment of any Taxes.
“Tax
Liability” shall have the meaning specified at Section 6.6(b).
“Tax
Return” shall mean any report, election, declaration, claim for refund,
estimate, information statement or return (including any schedules and
attachments thereto) relating to or required to be filed in connection with any
Taxes pursuant to the statutes, rules or regulations of any Tax
Authority.
“Third
Party Claim” shall have the meaning specified at Section 13.4.
References
in this Agreement to “Articles,” “Sections,” “Exhibits” and “Schedules,” shall
be to the Articles, Sections, Exhibits and Schedules of this Agreement, unless
otherwise specifically provided; any of the terms defined in this Agreement may,
unless the context otherwise requires, be used in the singular or the plural and
in any gender depending on the reference; the present tense shall include the
past and future tense; the words “herein”, “hereof” and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and except as
otherwise specified in this Agreement, all references in this Agreement
(a) to any Person shall be deemed to include such Person’s permitted heirs,
personal representatives, successors and assigns; and (b) to any agreement,
any document or any other written instrument shall be a reference to such
agreement, document or instrument together with all exhibits, schedules,
attachments and appendices thereto, and in each case as amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof; and (c) to any law, statute or regulation shall be deemed
references to such law, statute or regulation as the same may be supplemented,
amended, consolidated, superseded or modified from time to time.
Exh.
4.1-4
ARTICLE
II
SALE AND PURCHASE OF ASSETS
2.1 Assets
to be Transferred. Subject
to the terms and conditions set forth in this Agreement and in reliance upon the
representations and warranties of Seller and Purchaser herein set forth, at the
Closing, Seller shall sell, transfer, convey, assign and deliver to Purchaser,
by appropriate deeds, bills of sale, assignments and other instruments
satisfactory to Purchaser, and Purchaser shall purchase from Seller, all of
Seller’s right, title and interest, as of the Effective Time, in and to the
Purchased Assets.
2.2 Title
to Purchased Assets. The
Purchased Assets shall be conveyed free and clear of all liabilities,
obligations and Liens.
ARTICLE
III
ASSUMPTION OF LIABILITIES
No
Liabilities Assumed.
Purchaser shall not assume or be liable for any liabilities or obligations of
Seller, direct or indirect, fixed, contingent or otherwise, known or unknown,
which exist at the Effective Time or which arise thereafter as a result of any
act, omission or circumstance taking place prior to the Effective
Time.
ARTICLE
IV
PURCHASE PRICE, PAYMENT AND RELATED MATTERS
4.1 Purchase
Price. The
purchase price (the “Purchase Price”) for the Purchased Assets shall be
shares of
the Common Stock of Global (the “Shares”) consisting of 8,360,000 Shares to be
delivered at Closing pursuant to Section 4.2 and 6,640,000 contingent Shares to
be delivered pursuant to Section 4.3.
4.2 Delivery
of Initial Shares. At the
Closing, Global shall deliver to Seller or its designees 8,360,000 Shares
(the “Initial Shares”). The parties understand that the Shareholders will return
to Global an aggregate of 5,360,000 Shares for cancellation (the “Cancelled
Shares”) so that the net dilution for the issuance of the Initial Shares will be
3,000,000 Shares. In connection with the Cancelled Shares, Xxxx Xxxxxxx agrees
to cancel 5,096,000 Shares and Xx Xxxxxx agrees to cancel 264,000
Shares.
4.3 Contingent
Shares. If the
Net Income for the Target Period is at least US$5,000,000 (the
“Contingency Event”) then, within fifteen days from the Calculation Date, Global
shall deliver to Seller an additional 6,640,000 Shares
(the “Contingent Shares”);
Exh.
4.1-5
4.4 Status
of Shares. Seller
acknowledges that (a) the Shares (including the Initial Shares and the
Contingent Shares) have not been registered by Global under the Securities Act
or with any Authority and are being issued pursuant to an exemption from the
registration requirements of the Securities Act pursuant to Regulation D
and (b) the certificates evidencing the Shares will bear a restricted
legend.
ARTICLE
V
CLOSING
5.1 Time
and Place. Subject
to the provisions of Section 14.1 as to termination without default, the
Closing shall take place at the offices of Global in Shenzhen PRC, at
10:00 a.m. local time on June 8, 2005 or at such other time and place as
Purchaser and Seller mutually agree in writing, provided, however, that without
the prior written consent of Global, the Closing shall not occur after June 15,
2005. Notwithstanding the foregoing, the effective date of the Closing shall be
March 15, 2005, and the possession and control of the Purchased Assets
shall be deemed to have vested in Purchaser as of such date. For avoidance of
doubt, all sales on and after March 15, 2005 (together with income and
expenses associated therewith) shall be for the account of
Purchaser.
5.2 Transactions
at the Closing. At the
Closing, the following shall occur:
(a) Purchaser
shall deliver the Initial Shares to the Seller’s designees;
(b) Seller
shall deliver to Purchaser, assignments in registrable form of all trademarks,
service marks, patents, copyrights and registrations or applications for the
same included within the Purchased Assets, and such other instruments of sale,
transfer, conveyance, assignment and confirmation, and Seller shall take such
further actions, as Purchaser may reasonably deem necessary or desirable in
order to transfer, convey and assign to Purchaser, and to confirm Purchaser’s
title to, all of the Purchased Assets, to put Purchaser in actual possession and
operating control thereof and to assist Purchaser in exercising all rights with
respect thereto;
(c) Seller
shall deliver to Purchaser all of the Books and Records relating to the
Purchased Assets; and
(d) The
Shareholders shall deliver the Cancelled Shares to Xxxxx Xxxxxxxx, counsel to
Global, for cancellation.
ARTICLE
VI
REPRESENTATIONS AND WARRANTIES
OF THE
SELLER
Seller
hereby represents and warrants to Purchaser that (in the case of
Sections 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8 and 6.9, as such sections relate
to the Purchased Assets):
Exh.
4.1-6
6.1 Organization;
Authority; Due Authorization.
(a) Organization
and Good Standing. Seller
is a company duly organized, validly existing and in good standing under the
Applicable Laws of the PRC.
(b) Authority
to Execute and Perform Agreements. Seller
has all power, authority and approvals required to enter into, execute and
deliver this Agreement and all of the other Seller Documents and to perform
fully Seller’s obligations hereunder and thereunder.
(c) Due
Authorization; Enforceability. Seller
has taken all actions necessary to authorize it to enter into and perform fully
its obligations under this Agreement and all of the other Seller Documents to be
executed by it and to consummate the transactions contemplated herein and
therein. This Agreement has been duly and validly executed by Seller and
(assuming due authorization, execution and delivery by Purchaser and Global)
constitutes the legal, valid and binding obligation of Seller, enforceable in
accordance with its terms.
6.2 No
Violation. Neither
the execution or delivery by Seller of this Agreement or any of Seller Documents
nor the consummation of the transactions contemplated herein or therein will:
(a) violate any provision of the bylaws or other charter documents of
Seller; (b) violate, conflict with or constitute a default under, permit
the termination or acceleration of, or cause the loss of any rights or options
under, any Assumed Contract; (c) require any authorization, consent or
approval of, exemption or other action by, or notice to, any party to any
Assumed Contract; (d) result in the creation or imposition of any Lien upon
any of the Purchased Assets; or (e) violate or require any consent or
notice under any Applicable Law or Order to which Seller or any of its
properties is subject.
6.3 Regulatory
and Other Approvals. No
consent, approval, authorization, notice, filing, exemption or other requirement
must, pursuant to any Applicable Law or Order be obtained from any Authority or
Person or which must otherwise be satisfied by Seller in order that (a) the
execution or delivery by Seller of this Agreement or any of the other Seller
Documents (b) the consummation of the transactions contemplated herein or
therein or will not (i) violate in any material respect any Applicable Law,
any applicable Order to which Seller is subject or any License or Permit of
Seller; or (ii) result in the creation or imposition of any Lien upon any
of the Purchased Assets.
6.4 Title
to Purchased Assets. Seller
has good and marketable title to each of the Purchased Assets owned by it and
the valid and enforceable right to receive and/or use each of the Purchased
Assets in which Seller has any other interest, free and clear of all Liens. The
delivery to Purchaser of the instruments of transfer of ownership contemplated
by this Agreement will at the Effective Time vest good and marketable title to,
or the valid and enforceable right to receive and/or use, each such Purchased
Asset in Purchaser, free and clear of all Liens.
6.5 No
Undisclosed Liabilities. Seller
has, as of the date hereof, no direct or indirect indebtedness or liability.
Seller has no Knowledge of any circumstances, conditions, events or arrangements
which may hereafter give rise to any liabilities of Seller except in the
ordinary course of the business or as otherwise set forth in this
Section 6.5.
Exh.
4.1-7
6.6 Compliance
with Applicable Laws; Governmental Matters. Seller
has, in all material respects, complied with and is now, in all material
respects, in compliance with all Applicable Laws and Orders.
6.7 Litigation.
There is
no litigation pending or threatened relating to the Purchased
Assets.
6.8 Intellectual
Property.
Section 6.8 of Seller Disclosure Schedule sets forth, as of the date
hereof, (i) a true and accurate identification of each registered and
unregistered fictitious business name, trademark, service xxxx, trade name,
domain name, URL, web site, and each registration and application for any of the
foregoing, constituting a part of the Intellectual Property of Seller;
(ii) a true and complete schedule of each copyright, and each registration
and application for any of the foregoing, constituting a part of such
Intellectual Property; (iii) a true and complete schedule of each patent
and associated invention, process and design, technical information, know-how
and operating maintenance or other manual and each registration and application
for any of the foregoing, constituting a part of such Intellectual Property;
(iv) each item of Software and associated documentation constituting a part
of such Intellectual Property; (v) a true and complete list, without
extensive or revealing descriptions, of each trade secret constituting a part of
such Intellectual Property, and (vi) a true and complete list of all
Contracts to which Seller is a party either as licensee or licensor relating to
any item of such Intellectual Property. Except as indicated in
Section 6.8(b) of Seller Disclosure Schedule, as of the date
hereof:
(i) all
trademarks, service marks, patents, copyrights and other registrations and all
applications therefor listed in Section 6.8(b) of Seller Disclosure
Schedule are valid and in full force and effect and are not subject to any
Taxes;
(ii) all of
the Software of Seller performs in full compliance with all of the
specifications therefor (including, without limitation, functional
specifications) set forth in user manuals, promotional materials or license
agreements;
(iii) accurate
and complete copies of all source codes relating to all versions of each item of
Software of Seller exist and have been made available to Purchaser;
(iv) there are
no pending claims, actions, or other adversary proceedings, disputes or
disagreements involving Seller concerning any item of its Intellectual Property,
and, to the Knowledge of Seller, no such action, proceeding, dispute or
disagreement is threatened.
6.9 Investment
Representation. Seller
is and will be acquiring the Shares for investment purposes only and not with a
view to distribution.
ARTICLE
VII
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Each of
Global and Purchaser represents and warrants to Seller as follows:
Exh.
4.1-8
7.1 Due
Incorporation. Each of
Global and Purchaser is a duly organized, validly existing and in good standing
under the Applicable Laws of its jurisdiction of incorporation.
Purchaser is a foreign invested company in Nanshan district of
Shenzhen.
7.2 Authority
to Execute and Perform Agreements. Each of
Global and Purchaser has all requisite power, authority and approval required to
enter into, execute and deliver this Agreement and the other Purchaser Documents
and to perform fully Global’s and Purchaser’s obligations hereunder and
thereunder.
7.3 Due
Authorization; Enforceability. Each of
Global and Purchaser has taken all actions necessary to authorize it to enter
into and perform its obligations under this Agreement and all other Purchaser
Documents and to consummate the transactions contemplated herein and therein.
This Agreement has been duly and validly executed by Purchaser and Global and
(assuming the due authorization, execution and delivery by Seller) constitutes
the legal, valid and binding obligations of Purchaser and Global, as the case
may be, enforceable in accordance with its terms.
ARTICLE
VIII
COVENANTS AND AGREEMENTS OF THE PARTIES
EFFECTIVE
PRIOR TO CLOSING
The
parties hereto covenant and agree as follows:
8.1 Business
Examinations and Physical Investigations of Purchased Assets. Prior
to the Effective Time, each of Global and Purchaser shall be entitled, through
its employees and representatives, and Purchaser’s lenders, prospective lenders,
investment bankers and consultants, to make such investigations and examinations
of the Purchased Assets, the Books and Records of Seller as Purchaser may
request for the purpose of familiarizing Purchaser with the Purchased Assets. In
order that Purchaser may have the full opportunity to do so, Seller shall
furnish Purchaser and its representatives during such period with all
information concerning the Purchased Assets as Purchaser or such representatives
may request and cause Seller’s officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with Purchaser and such
representatives and to make full disclosure of all information and documents
requested by Purchaser and/or such representatives; provided, however, that
without the consent of the relevant employee, no personnel file of any employee
of Seller shall be made available to Purchaser or its representatives. Any such
investigations and examinations shall be conducted at reasonable times and under
reasonable circumstances. No investigation by Purchaser shall, however, diminish
or obviate in any way, or affect Purchaser’s right to rely upon, any of the
representations, warranties, covenants or agreements of Seller contained in this
Agreement.
8.2 Cooperation;
Consents. Prior
to the Closing Date, each party shall cooperate with the other to the end that
the parties shall (i) in a timely manner make all necessary filings with,
and conduct negotiations with, all Authorities and other Persons the consent or
approval of which, or a license or permit from which, is required for the
consummation of the transactions contemplated herein and (ii) provide to
each other party such information as the other party may reasonably request in
order to enable it to prepare such filings and to conduct such negotiations. The
parties shall also use their respective best efforts to expedite the review
process and to obtain all such necessary consents, approvals, licenses and
permits as promptly as practicable. To the extent permitted by Applicable Law,
the parties shall request that each Authority or other Person whose review,
consent or approval is requested treat as confidential all information which is
submitted to it. Seller and Purchaser shall bear their own costs and expenses
incurred or fees paid to Authorities to obtain any governmental approvals and
contractual consents. Each Party shall bear its own costs and expenses
(including fees paid to authorities) incurred to obtain such consents,
approvals, licenses or permits.
Exh.
4.1-9
8.3 No
Solicitation or Negotiation. Unless
and until this Agreement is terminated, Seller shall not, nor shall it cause,
suffer or permit the directors, officers, employees, representatives, agents,
investment bankers, advisors, accountants or attorneys of Seller to, initiate or
solicit, directly or indirectly, any inquiries or the making of any proposal
that constitutes or could be reasonably expected to lead to an acquisition of
the Purchased Assets from any Person, or engage in any discussions or
negotiations relating thereto, or accept any such acquisition or otherwise
facilitate, attempt to seek or continue any of the foregoing.
ARTICLE
IX
CONDITIONS PRECEDENT TO THE OBLIGATION
OF EACH
PARTY TO CLOSE
The
obligations Purchaser to consummate the transactions contemplated herein shall
be subject to the fulfillment, at or prior to the Closing of all of the
conditions set forth below in this ARTICLE IX.
9.1 No
Action or Proceeding. The
consummation of the transactions contemplated herein shall not violate any
Applicable Law. Further, no legal restraint preventing the consummation of the
transactions contemplated herein, or imposing material damages in respect
thereof, shall be in effect, nor shall there be any action or proceeding pending
or threatened by any Person which seeks any of the foregoing.
9.2 Governmental
and Other Approvals. All
Required Governmental Approvals and all Required Contractual Consents shall have
been obtained without the imposition of any conditions that are or would be
materially burdensome upon the Business. All Required Governmental Approvals and
Required Contractual Consents shall be in effect and all conditions and
requirements prescribed by any of the same to be satisfied on or prior to the
Closing Date shall have been satisfied.
ARTICLE
X
CONDITIONS PRECEDENT TO THE OBLIGATION
OF
PURCHASER AND GLOBAL TO CLOSE
The
obligations of Purchaser and Global to consummate the transactions contemplated
herein shall be subject to the fulfillment, at or before the Closing Date, of
all of the conditions set forth below in this ARTICLE X.
Exh.
4.1-10
10.1 Representations
and Warranties. The
representations and warranties of Seller contained in this Agreement and in each
other Seller Document shall have been true and correct when made and shall be
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.
10.2 Performance
of Covenants. Each
obligation of Seller to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement and each other Seller Document shall
have been duly performed on or before the Closing Date.
ARTICLE
XI
CONDITIONS PRECEDENT TO THE OBLIGATION
OF SELLER
TO CLOSE
The
obligation of Seller to consummate the transactions contemplated herein shall be
subject to the fulfillment, at or before the Closing Date, of all the conditions
set forth below in this ARTICLE XI.
11.1 Representations
and Warranties. The
representations and warranties of Purchaser and Global contained in this
Agreement and in each other Purchaser Document shall have been true and correct
when made and shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date.
11.2 Performance
of Covenants. Each of
the obligations of Purchaser to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement and each other Purchaser Document shall
have been duly performed in all material respects on or before the Closing
Date.
ARTICLE
XII
COVENANTS AND AGREEMENTS OF THE PARTIES
AFTER
CLOSING
12.1 Cooperation
of Seller. Seller
shall, and shall cause its employees to, cooperate with Purchaser in respect of
the marketing of the PHS Phones and to provide such assistance and documentation
as may be necessary or appropriate to permit Purchaser to fully exploit the
Purchased Assets.
12.2 Audit
Matters. Seller
hereby authorizes Purchaser, its Affiliates and representatives, including
accountants, to audit the financial records of Seller pertaining to the sales of
PHS Phones prior to Closing and shall provide such parties with full access and
cooperation to the Books and Records of Seller.
Exh.
4.1-11
ARTICLE
XIII
INDEMNIFICATION
13.1 Indemnification
by Seller. Seller
shall indemnify, defend and hold harmless (i) Purchaser and Global,
(ii) each of Purchaser’s and Global’s Affiliates, assigns and successors in
interest to the Purchased Assets, and (iii) each of their respective
shareholders, directors, officers, managers, employees, agents, attorneys and
representatives, from and against any and all Losses which may be incurred or
suffered by any such party and which may arise out of or result
from:
(a) provided
Purchaser’s claim therefor is instituted by written notice within the time
period specified in Section 13.5, any breach of any representation,
warranty, covenant or agreement of Seller contained in this Agreement or in any
other Seller Document including, without limitation, any attempt (whether or not
successful) by any Person to cause or require Purchaser to pay, perform or
discharge any debt, liability or commitment the existence of which constitutes a
breach of any such representation, warranty, covenant or agreement;
(b) any
litigation, arbitration, governmental investigation, suit, action or other
proceeding and any liability of Seller, other than those, if any, specifically
assumed by the Purchaser pursuant to Section 3.1;
(c) any Tax
Liability of Seller; or
(d) any and
all actions, suits, proceedings, claims, demands, judgments, costs and expenses,
including, without limitation, legal fees and expenses, incurred in enforcing
this indemnity.
13.2 Indemnification
by Purchaser.
Provided Seller’s claim therefor is instituted by written notice within the time
period specified in Section 13.5, Purchaser shall indemnify, defend and
hold harmless Seller from and against any Losses arising out of or due to
(i) a breach of any representation, warranty, covenant or agreement of
Purchaser contained in this Agreement or in any Purchaser Document; or
(ii) any liability or obligation assumed by Purchaser pursuant to
Section 3.1;
13.3 Notice
to Indemnifying Party. Any
party (the “Indemnified Party”) seeking indemnification pursuant to
Sections 13.1 or 13.2, or pursuant to any other indemnification covenant
contained in this Agreement, shall promptly give the party from whom such
indemnification is sought (the “Indemnifying Party”) written notice of the
matter with respect to which such indemnification is sought, which notice shall
specify in reasonable detail, if known, the amount or an estimate of the amount
of the liability arising therefrom and the basis of the claim. Such notice shall
be a condition precedent to any liability of the Indemnifying Party for
indemnification hereunder, but the failure of the Indemnified Party to give
prompt notice of a claim shall not adversely affect the Indemnified Party’s
right to indemnification hereunder unless the defense of that claim is
materially prejudiced by such failure.
Exh.
4.1-12
13.4 Third
Party Claims.
(a) Defense
by Indemnifying Party. In
connection with any claim giving rise to indemnity hereunder resulting from or
arising out of any claim or legal proceeding by a Person who is not a party to
this Agreement (a “Third Party Claim”), the Indemnifying Party at its sole cost
and expense may, upon written notice to the Indemnified Party, assume the
defense of any such Third Party Claim (i) if it acknowledges to the
Indemnified Party in writing its obligations to indemnify the Indemnified Party
with respect to all elements of such Third Party Claim (subject to any
limitations on such liability contained in this Agreement) and (ii) if it
provides assurances, reasonably satisfactory to the Indemnified Party, that it
will be financially able to satisfy such Third Party Claim in full if the same
is decided adversely. If the Indemnifying Party assumes the defense of any Third
Party Claim, it may use counsel of its choice to prosecute such defense, subject
to the approval of such counsel by the Indemnified Party, which approval shall
not be unreasonably withheld or delayed. The Indemnified Party shall be entitled
to participate in (but not control) the defense of any such Third Party Claim,
with its counsel and at its own expense. If the Indemnifying Party assumes the
defense of any such Third Party Claim, the Indemnifying Party shall take all
steps necessary to pursue the resolution thereof in a prompt and diligent
manner. In the event that the Indemnifying Party exercises the right to
undertake any such defense against any such Third Party Claim as provided above,
the Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party all witnesses, pertinent
records, materials and information in the Indemnified Party’s possession or
under the Indemnified Party’s control relating thereto as are reasonably
required by the Indemnifying Party without cost to the Indemnifying Party. The
Indemnified Party shall cooperate with the Indemnifying Party in such defense
and make available to the Indemnifying Party all witnesses, pertinent records,
materials and information in the Indemnified Party’s possession or under the
Indemnified Party’s control relating thereto as are reasonably required by the
Indemnifying Party. The Indemnifying Party shall be entitled to consent to a
settlement of, or the stipulation of any judgment arising from, any such Third
Party Claim, with the consent of the Indemnified Party, which consent shall not
be unreasonably withheld or delayed; provided, however, that no such consent
shall be required from the Indemnified Party if (i) the Indemnifying Party
pays or causes to be paid all Losses arising out of such settlement or judgment
concurrently with the effectiveness thereof (as well as all other Losses
theretofore incurred by the Indemnified Party which then remain unpaid or
unreimbursed), (ii) in the case of a settlement, the settlement is
conditioned upon a complete release by the claimant of the Indemnified Party and
(iii) such settlement or judgment does not require the encumbrance of any
asset of the Indemnified Party or impose any restriction upon its conduct of
business.
(b) Defense
by Indemnified Party. If the
Indemnifying Party does not assume the defense of any such Third Party Claim,
the Indemnified Party may defend against such Third Party Claim and settle or
compromise the same, after giving notice thereof to the Indemnifying Party, on
such terms as the Indemnified Party may deem appropriate, and the Indemnifying
Party shall be entitled to participate in (but not control) such defense with
its own counsel and at its own expense. The Indemnifying Party shall cooperate
with the Indemnified Party in such defense and make available to the Indemnified
Party, at the Indemnifying Party’s expense, all such witnesses, records,
materials and information in the Indemnifying Party’s possession or under the
Indemnifying Party’s control relating thereto as are reasonably required by the
Indemnified Party. If the Indemnifying Party thereafter seeks to question the
manner in which the Indemnified Party defended such Third Party Claim or the
amount or nature of any such settlement, the Indemnifying Party shall have the
burden to prove by a preponderance of the evidence that the Indemnified Party
did not defend or settle such third-party claim in a reasonably prudent manner.
The Indemnified Party shall not settle or compromise any Third Party Claim for
which it is entitled to indemnification hereunder, unless suit shall have been
instituted against it and the Indemnifying Party shall not have assumed the
defense of such suit after notification as provided in
Section 13.3.
Exh.
4.1-13
13.5 Survival
of Representations and Covenants of Seller.
Notwithstanding any right of Purchaser fully to investigate the affairs of
Seller and notwithstanding any knowledge of facts determined or determinable by
Purchaser pursuant to such investigation or right of investigation, Purchaser
and Global shall have the right to rely fully upon the representations,
warranties, covenants and agreements of Seller contained in this Agreement or in
any agreement, instrument or other document delivered to Purchaser by Seller or
any of its representatives in connection with the transactions contemplated by
this Agreement. With the sole exception of those covenants which are to be
performed by Seller after the Closing (which shall survive until a claim thereon
is barred by the applicable statute of limitations (including extensions and
waivers thereof)), each representation, warranty, covenant and agreement of
Seller contained herein shall survive the execution and delivery of this
Agreement and the Closing and shall thereafter terminate and expire on the
second anniversary of the Closing Date, unless, on or before such date,
Purchaser has delivered to Seller a written notice of a claim with respect to
such representation, warranty, covenant or agreement.
13.6 Survival
of Representations and Covenants of Purchaser. With
the sole exception of those covenants which are to be performed by Purchaser
after the Closing (which shall survive until a claim thereon is barred by the
applicable statute of limitations), each representation, warranty, covenant and
agreement of Purchaser contained herein shall survive the execution and delivery
of this Agreement and the Closing and shall thereafter terminate and expire on
the second anniversary of the Closing Date, unless, on or before such date,
Seller has delivered to Purchaser a written notice of a claim with respect to
such representation, warranty, covenant or agreement.
ARTICLE
XIV
TERMINATION; REMEDIES
14.1 Termination
Without Default.
Anything herein to the contrary notwithstanding, this Agreement and the
transaction contemplated by this Agreement shall terminate at the close of
business on June 15, 2005, unless extended by the mutual consent in writing of
the parties, and, except as specified in Section 14.2, may otherwise be
terminated before the Closing only as follows (and in no other
manner):
(a) Mutual
Consent. By the
mutual consent in writing of the parties.
(b) Conditions
to Purchaser’s Performance Impossible. By
Purchaser upon written notice to Seller if any event occurs which would render
impossible the satisfaction of one or more conditions to the obligations of
Purchaser set forth in ARTICLE IX or in Sections 10.1 or
10.2.
Exh.
4.1-14
(c) Conditions
to Seller’s Performance Impossible. By
Seller upon written notice to Purchaser if any event occurs which would render
impossible the satisfaction of one or more conditions to the obligations of
Seller set forth in ARTICLE IX or in Sections 11.1 or
11.2.
14.2 Termination
Upon Default. Either
party may terminate this Agreement by giving notice to the other on or prior to
the Closing Date, without prejudice to any rights or obligations it may have, if
(i) after written notice of the default and the passage of (A) ten
(10) Days, in the case of a default which is by its nature incapable of being
cured, or (B) thirty (30) Days, or such shorter period as may end upon the
scheduled Closing Date, in the case of a default which by its nature is capable
of being cured, the other party has failed in the due and timely performance of
any of its covenants or agreements herein contained or there shall have been a
breach of the other’s warranties or representations herein contained, and
(ii) such failure or breach could reasonably be expected to give the
non-defaulting party grounds not to close pursuant to Sections 10.1, 10.2,
11.1 or 11.2, as the case may be. In any such event the party who is not guilty
of the breach may, in addition to all of its other rights and remedies, recover
all Losses incurred by it from the party responsible for the
breach.
14.3 Specific
Performance. The
parties acknowledge that the Purchased Assets are unique and cannot be obtained
by Purchaser except from Seller and for that reason, among others, Purchaser
will be irreparably damaged in the absence of the consummation of this
Agreement. Therefore, in the event of any breach by Seller of this Agreement,
Purchaser shall have the right, at its election, to obtain an order for specific
performance of this Agreement, without the need to post a bond or other
security, to prove any actual damage or to prove that money damages would not
provide an adequate remedy.
14.4 Attorneys’
Fees. If
Seller or Purchaser shall bring an action against the other by reason of any
alleged breach of any covenant, provision or condition hereof, or otherwise
arising out of this Agreement, the unsuccessful party shall pay to the
prevailing party all attorneys’ fees and costs actually incurred by the
prevailing party, in addition to any other relief to which it may be entitled.
As used in this Section 14.4 and elsewhere in this Agreement, “actual
attorneys’ fees” or “attorneys’ fees actually incurred” means the full and
actual cost of any legal services actually performed in connection with the
matter for which such fees are sought calculated on the basis of the usual fees
charged by the attorneys performing such services, and shall not be limited to
“reasonable attorneys’ fees” as that term may be defined in statutory or
decisional authority.
ARTICLE
XV
EXPENSES; CONFIDENTIALITY
15.1 Expenses
of Sale. Seller
shall bear its own direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the other Company Documents
and the consummation and performance of the transactions contemplated herein and
therein.
Exh.
4.1-15
15.2 Confidentiality. Subject
to any obligation to comply with (i) any Law (ii) any rule or
regulation of any Authority or securities exchange or (iii) any subpoena or
other legal process to make information available to the Persons entitled
thereto, whether or not the transactions contemplated herein shall be concluded,
all information obtained by any party about any other or any Affiliate of the
other, and all of the terms and conditions of this Agreement, shall, for a
period of two years after the date of this Agreement, be kept in confidence by
each party, and each party shall cause its shareholders, members, partners,
directors, officers, managers, employees, agents and attorneys to hold such
information confidential. Such confidentiality shall be maintained to the same
degree as such party maintains its own confidential information and shall be
maintained until such time, if any, as any such data or information either is,
or becomes, published or a matter of public knowledge; provided, however, that
the foregoing shall not apply to any information obtained by Purchaser through
its own independent investigations of Seller or received by Purchaser from a
source not known by Purchaser to be bound by a confidentiality agreement with,
or other contractual, legal or fiduciary obligation of confidentiality to,
Seller nor to any information obtained by Purchaser which is generally known to
others engaged in the trade or business of Seller; and provided, further, that
from and after the Closing, Purchaser shall be under no obligation to maintain
confidential any such information concerning Seller. In the event either party
becomes legally compelled to disclose any such information, it shall promptly
provide the other with written notice of such requirement so that the other may
seek a protective order or other remedy. If this Agreement shall be terminated
for any reason, each party shall return or cause to be returned to the other all
written data, information, files, records and copies of documents, worksheets
and other materials obtained by such party in connection with this Agreement.
15.3 Publicity. Up to
(and including) the Closing Date, no publicity release or announcement
concerning this Agreement or the transactions contemplated herein shall be
issued without advance written approval of the form and substance thereof by
Purchaser and Seller; provided, however, that such restrictions shall not apply
to any disclosure required by Authorities, Applicable Law or the rules of any
securities exchange which may be applicable. For a period of ten (10) days after
the Closing Date, the parties shall consult with each other before issuing any
press release or public statement with respect to this Agreement or the
transactions contemplated herein, and, except as may be required by Applicable
Law or the rules of any securities exchange which may be applicable, will not
issue any such press release or public statement prior to such
consultation.
ARTICLE
XVI
NOTICES
16.1 Notices. All
notices, requests and other communications hereunder shall be in writing and
shall be delivered by courier or other means of personal service (including by
means of a nationally recognized courier service or a professional messenger
service), or sent by telex or telecopy, in all cases, addressed to:
Exh.
4.1-16
|
Purchaser:
Century
Teltone Technology (Shenzhen) Co. Ltd.
2/F
Xxxxxx Network Xxxx.
Xx.
0 xx Xxxxxxx Xxxx
Xxxxx
Xx-Xxxx Xxxx
Shenzen,
Peoples’
Republic of China
Attention:
Xxxx Xx
Fax:
00-0000-00000000 |
|
Global:
0/X
Xxxx Xxx Xxxx.
Xxxx
0
Xxxxx
Xx-Xxxx Xxxx
Shenzhen,
Peoples’
Republic of China
Attention:
Xxxx Xxxxx
Fax-86-0755-86029889 |
|
Seller:
Shenzhen
Teltone Communications Co. Ltd.
2/F
Xxxxxx Network Blvd.
Xx.
0 xx Xxxxxxx Xxxx
Xxxxx
Xx-Xxxx Xxxx
Shenzhen,
Peoples’
Republic of China
Attention:
Xxxx Xx
Fax:
00-0000-00000000 |
All
notices, requests and other communications shall be deemed given on the date of
actual receipt or delivery as evidenced by written receipt, acknowledgement or
other evidence of actual receipt or delivery to the address specified above. In
case of service by telecopy, a copy of such notice shall be personally delivered
or sent by registered or certified mail, in the manner set forth above, within
three (3) business days thereafter. Either party hereto may from time to time by
notice in writing served as set forth above designate a different address or a
different or additional person to which all such notices or communications
thereafter are to be given.
ARTICLE
XVII
MISCELLANEOUS
17.1 Further
Assurances. Each of
the parties shall use its reasonable and diligent best efforts to proceed
promptly with the transactions contemplated herein, to fulfill the conditions
precedent for such party’s benefit or to cause the same to be fulfilled and to
execute such further documents and other papers and perform such further acts as
may be reasonably required or desirable to carry out the provisions hereof and
the transactions contemplated herein.
Exh.
4.1-17
17.2 Modifications
and Amendments; Waivers and Consents. At any
time prior to the Closing Date or termination of this Agreement, Purchaser, on
the one hand, and Seller, on the other hand, may, by written
agreement:
(a) extend
the time for the performance of any of the obligations or other acts of the
other party hereto;
(b) waive any
inaccuracies in the representations and warranties made by the other party
contained in this Agreement or any other agreement or document delivered
pursuant to this Agreement; and
(c) waive
compliance with any of the covenants or agreements of the other party contained
in this Agreement. However, no such waiver shall operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits a waiver or consent by or on behalf of any party
hereto, such waiver or consent shall be given in writing.
17.3 Entire
Agreement. This
Agreement (including the exhibits hereto and Seller and Purchaser Disclosure
Schedules) and the agreements, documents and instruments to be executed and
delivered pursuant hereto or referred to herein are intended to embody the
final, complete and exclusive agreement among the parties with respect to the
purchase of the Purchased Assets and related transactions; are intended to
supersede all prior agreements, understandings and representations written or
oral, with respect thereto; and may not be contradicted by evidence of any such
prior or contemporaneous agreement, understanding or representation, whether
written or oral.
17.4 Governing
Law and Venue. This
Agreement is to be governed by and construed in accordance with the laws of the
PRC applicable to contracts made and to be performed wholly within the PRC, and
without regard to the conflicts of laws principles thereof. However,
the English version of this Agreement shall be the applicable version in the
event of a discrepancy between the English and Chinese version.
17.5 Binding
Effect. This
Agreement and the rights, covenants, conditions and obligations of the
respective parties hereto and any instrument or agreement executed pursuant
hereto shall be binding upon the parties and their respective successors,
assigns and legal representatives. Neither this Agreement, nor any rights or
obligations of any party hereunder, may be assigned by a party without the prior
written consent of the other party; provided, however, that prior to or
following the Closing, this Agreement and any rights and obligations of
Purchaser hereunder, and under any Purchaser Documents may, without the prior
written consent of Seller, be assigned and delegated by Purchaser to any Person
affiliated with Purchaser or pledged or hypothecated to any lender(s) of
Purchaser or any such Affiliate, and following the Closing, this Agreement and
any rights and obligations of Purchaser hereunder and under any Purchaser
Documents may also be assigned and delegated by Purchaser, without the prior
written consent of Seller, to any successor-in-interest of Purchaser to the
Purchased Assets or to a substantial portion thereof; provided, however, that no
delegation by Purchaser of any such obligation shall relieve Purchaser of
liability therefor.
Exh.
4.1-18
17.6 Counterparts. This
Agreement may be executed simultaneously in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument. In making proof of this Agreement it shall not be
necessary to produce or account for more than one counterpart.
17.7 Section
Headings. The
section headings of this Agreement are for convenience of reference only and
shall not be deemed to alter or affect any provision hereof.
17.8 Severability. In the
event that any provision or any part of any provision of this Agreement shall be
void or unenforceable for any reason whatsoever, then such provision shall be
stricken and of no force and effect. However, unless such stricken provision
goes to the essence of the consideration bargained for by a party, the remaining
provisions of this Agreement shall continue in full force and effect, and to the
extent required, shall be modified to preserve their validity.
17.9 No
Third Party Rights. Nothing
in this Agreement, whether express or implied, is intended to confer any rights
or remedies under or by reason of this Agreement on any Persons other than the
parties to it and their respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the obligation or liability of
any third Persons to any party to this Agreement, nor shall any provision give
any third Persons any right of subrogation or action over against any party to
this Agreement.
Exh.
4.1-19
IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
day and year first above written.
| PURCHASER | ||
| Shenzhen Century Teltone Technology Co., Ltd., | ||
| By: | ||
|
Name:
Title: | ||
| GLOBAL | ||
| Global National Communication Company, a Nevada corporation | ||
| By: | ||
|
Name:
Title: | ||
| SELLER | ||
| Shenzhen Teltone Communications Co. Ltd. | ||
| By: | ||
|
Name:
Title: | ||
| SHAREHOLDERS | |
|
Xxxx
Xxxxxxx | |
|
Xx
Xxxxxx | |
Exh.
4.1-20
