Exhibit 10.49
AGREEMENT CONCERNING THE EXCHANG OF COMMON STOCK
AMONG AMERICAN CHAMPION ENTERTAINMENT, INC. ("ACEI")
GREAT WALL INTERNATIONAL SPORTS MEDIA COMPANY ("GWIS") AND
THE SHAREHOLDERS OF GREAT WALL INTERNATIONAL SPORTS MEDIA COMPANY
AGREEMENT
AGREEMENT, made as of the 30th day of November , 1999, by and among
American Champion Entertainment, Inc. of the United States of America, a
Delaware corporation ("ACEI"), Great Wall International Sports Media
Company, a corporation formed under the laws of the People's Republic of
China ("GWIS") and the shareholders of Great Wall International Sports
Media Company (the "Shareholders"). This agreement is subject to review by
the U.S. Securities and Exchange Commission and approval by shareholders
of ACEI.
WHEREAS, ACEI desires to acquire 80% of all of the issued and outstanding
shares of GWIS, in exchange for a total value of $5,500,000 of ACEI
authorized but unissued shares of the common stock, $.0001 par value, of
ACEI (the "Exchange Stock"); and
WHEREAS, included in the Exchange Stock, a number of shares equal to
$750,000 in value based on the market price of ACEI's common stock on the
date of closing will be granted with registration rights to GWIS; and
WHEREAS, the remainder of the Exchange Stock, will be granted on an
earn-out basis between the years 2000 through 2002 according to the
following projections:
GWIS Revenue Projections 2000 2001 2002
(in RMB & U.S. $)
Gross Revenue (RMB) 78,000,000 85,800,000 94,380,000
Gross Revenue (US$) $9,397,590 $10,337,349 $11,371,084
Gross Revenue (US$) x 80% $7,518,072 $8,269,880 $9,096,867
EBITDA (Earnings Before Interest, Tax, Depreciation & Amortization)
EBITDA (RMB) 3,900,000 4,290,000 4,719,000
EBITDA (US$) $469,880 $516,867 $568,554
EBITDA (US$) x 80% $375,904 $413,494 $454,843
18% of Gross Revenue, payable $1,353,253 $1,488,578 $1,637,436
in ACEI common stock
18% of EBITDA, payable $67,663 $74,429 $81,872
in ACEI common stock
Total payable in ACEI stock $1,420,916 $1,563,007 $1,719,308
Total payments over years 2000 to 2002, to be paid in $4,703,231
ACEI common stock at a price equal to the average closing price over the
entire year. Such shares granted annually shall be subject to the following
restrictions from disposition: 25% without restriction, 25% restricted for
6 months and 50% restricted for 12 months.
WHEREAS, the Shareholders desire to exchange their GWIS shares for the
Exchange Stock as set forth herein; and
WHEREAS, GWIS desires to assist ACEI in a business combination which will
result in the Shareholders of GWIS owning approximately 30% of the then
issued and outstanding shares of ACEI's Common Stock and ACEI owning 80% of
the issued and outstanding shares of GWIS's Capital Stock;
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, the parties hereto agree as follows:
ARTICLE I
Exchange of Securities
1.1 Issuance of Shares. Subject to all of the terms and conditions of
this Agreement, ACEI agrees to issue to the Shareholders the shares of the
Exchange Stock as described above in exchange for 80% of all of the
outstanding shares of GWIS capital stock owned by the Shareholders, as set
forth on Exhibit 1.1.
1.2 Exemption from Registration. Except as specified above for issuance
of shares with registration rights, the parties hereto intend that the
Common Stock to be issued by ACEI to the Shareholder shall be exempt from
the registration requirements of the Securities Act of 1933, as amended
(the "Act") pursuant to Section 4(2) of the Act and the rules and
regulations promulgated thereunder.
ARTICLE 2
Representations and Warranties of GWIS
GWIS and the Shareholders of GWIS represent to ACEI that:
2.1 Organization. GWIS is a corporation duly organized and validly
existing and in good standing under the laws of the People's Republic of
China and has all necessary corporate powers to own its properties and to
carry on its business as now owned and operated by it, and is duly
qualified to do business and is in good standing where its business
requires qualification. (Further legal descriptions of GWIS, if necessary,
such as transfer of assets and liabilities of another entity, etc).
2.2 Capital. The authorized capital stock of GWIS is as set forth on the
annexed Exhibit 2.2, a copy of which is annexed hereto and made a part
hereof. The shares currently outstanding are owned by the Shareholders.
All of the issued and outstanding shares of GWIS are duly and validly
issued, fully paid, and non-assessable. There are no outstanding
subscriptions, options, rights, warrants, debentures, instruments,
convertible securities, or other agreements or commitments obligating GWIS
to issue or to transfer from treasury any additional shares of its capital
stock of any class.
2.3 Subsidiaries. As of the date of this Agreement, GWIS does not have
any subsidiaries or own any interest in any other enterprise.
2.4 (a) Directors and Officers. Exhibit 2.4 to this Agreement, the text
of which is incorporated herein by reference, contains the names and
titles of all directors and officers of GWIS as of the date of this
Agreement.
2.5 (b) Financial Statements. The GWIS financial statements are to be
audited by a reputable international auditing firm for the year ending
December 31, 1999 which are annexed hereto as Exhibit 2.5 and must be
delivered to ACEI prior to the Closing. Such financial statements are to be
complete, accurate and fairly present the financial condition of GWIS as of
the date thereof and the results of operations for the year ending December
31, 1999, for the business of GWIS that has been operated in the normal
course.
There are no material liabilities, either fixed or contingent, not
reflected in such financial statements other than contracts or obligations
in the ordinary and usual course of business; and no such contracts or
obligations in the usual course of business constitute liens or other
liabilities which, if disclosed, would materially alter the financial
condition of GWIS as reflected in such financial statements. The financial
statements of GWIS are incorporated herein by reference and deemed to be a
part hereof.
2.6 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, ACEI and/or
its attorneys shall have the opportunity to meet with accountants and
attorneys of ACEI to discuss the financial condition of GWIS. GWIS shall
make available to ACEI and/or its attorneys all books and records of GWIS.
If the transaction contemplated hereby is not completed, all documents
received by ACEI and/or its attorneys shall be returned to GWIS and all
information so received shall be treated as confidential.
2.7 Compliance with Laws. GWIS has complied with and are not in
violation of applicable national, state or local statutes, laws and
regulations (including, without limitation, any applicable building, zoning
or other law, ordinance or regulation) affecting its properties or the
operation of its business. All national, state and local income tax returns
required to be filed by GWIS have been filed and all required taxes have
been paid or an adequate reserve therefor has been established in the
financial statements. GWIS's tax returns have not been audited by any
authority empowered to do so.
2.8 Litigation. Neither GWIS nor the Shareholders are a party to any
suit, action, arbitration or legal, administrative or other proceeding, or
governmental investigation pending or, to the best knowledge of GWIS and
the Shareholders, threatened against or affecting GWIS or the Shareholders,
their assets or financial condition, except for matters which would not
have a material effect on GWIS, the Shareholders or their respective
properties. Neither GWIS nor the Shareholders are in default with respect
to any order, writ, injunction or decree of any national, state, local or
foreign court, department, agency or instrumentality applicable to it.
Neither GWIS nor Shareholders are engaged in any lawsuits to recover any
material amount of moneys due to GWIS or Shareholders.
2.9 Authority. The Board of Directors of GWIS has authorized the
execution of this Agreement and the consummation of the transactions
contemplated herein, and upon obtaining any necessary shareholder approval,
GWIS will have full power and authority to execute, deliver and perform
this Agreement and this Agreement will be a legal, valid and binding
obligation of GWIS, enforceable in accordance with its terms and
conditions, except as may be limited by bankruptcy and insolvency laws and
by other laws affecting the rights of creditors generally.
2.10 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by GWIS and the performance by GWIS of its obligations
hereunder in the time and manner contemplated will not cause, constitute or
conflict with or result in (a) any breach or violation of any of the
provisions of or constitute a default under any license, indenture,
mortgage, charter, instrument, articles of incorporation, by-laws, or other
agreement or instrument to which GWIS or Shareholders are a party or by
which either may be bound, nor will any consents or authorizations of any
party other than those hereto be required; (b) an event that would permit
any party to any agreement or instrument, to terminate it or to accelerate
the maturity of any indebtedness or other obligation of GWIS or
Shareholders; or (c) an event that would result in the creation or
imposition of any lien, charge, or encumbrance on any asset of GWIS or
Shareholders.
2.11 Full Disclosure. None of the representations and warranties made by
GWIS and the Shareholders herein, or in any exhibit, certificate or
memorandum furnished or to be furnished by GWIS, or on its behalf, contains
or will contain any untrue statement of material fact, or omit any
material fact, the omission of which would be misleading.
2.12 Material Contracts. Neither GWIS nor the Shareholders has any
material contracts to which either is a party or by which they are bound,
except for those agreements set forth on the annexed hereto as Exhibit 2.12.
2.13 Indemnification. GWIS and the Shareholders agree to defend and hold
harmless ACEI, its officers and directors against and in respect of any
and all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries and deficiencies, including interest, penalties and
reasonable attorney's fees, that it shall incur or suffer, which arise out
of, result from or relate to any breach of or failure by GWIS to perform
any of its respective representations, warranties, covenants and
agreements in this Agreement or in any exhibit or other instrument
furnished or to be furnished by GWIS under this Agreement.
2.14 Transactions with Officers and Directors. Except as otherwise
disclosed in GWIS's financial statements dated December 31, 1998 and
delivered to ACEI, there have been, and through the date of Closing there
will be (1) no bonuses or unusual compensation to any of the officers or
directors of GWIS; (2) no loans, leases or contracts made to or with any of
the officers or directors of GWIS; (3) no dividends or other distributions
declared or paid by GWIS; and (4) no purchases by GWIS of any of its
capital shares.
2.15 Background of Officers and Directors. During the past five year
period, no officer or director of GWIS has been the subject of:
(a) A petition under the U.S. Federal Bankruptcy laws or any other
insolvency law or has a receiver, fiscal agent or similar officer been
appointed by a court for the business or property of such person, or any
partnership in which he was a general partner at or within two years before
the time of such filing, or any corporation or business association of
which he was an executive officer at or within two years before the time
of such filing;
(b) A conviction in the United States in a criminal proceeding or a
named subject of a pending criminal proceeding (excluding traffic
violations and other minor offenses);
(c) Any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining him from, or otherwise limiting, the following
activities:
(i) Acting as a futures commission merchant, introducing broker,
commodities trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the United
States Commodity Futures Trading Commission or an associated person of any
of the foregoing, or as an investment advisor, underwriter, broker or
dealer in securities, or as an affiliated person, director or employee of
any investment company, bank, savings and loan association or insurance
company, or engaging in or continuing any conduct or practice in
connection with such activity;
(ii) Engaging in any type of business practice; or
(iii) Engaging in any activity in connection with the purchase and sale
of any security or commodity or in connection with any violation of U.S.
Federal, State or other securities law or commodities law.
(d) Any order, judgment, decree, not subsequently reversed, suspended
or vacated, of any U.S. Federal, State or local authority barring,
suspending, or otherwise limiting for more than 60 days the right of such
person to engage in any activity described in the preceding sub-paragraph,
or to be associated with persons engaged in any such activity;
(e) a finding by any court of competent jurisdiction in a civil action
or by the United States Securities and Exchange Commission to have
violated any securities law, and the judgment in such civil action or
finding by such Commission has not been subsequently reversed, suspended or
vacated; or (f) a finding by any court of competent jurisdiction in a
civil action or by the United States Commodity Futures Trading Commission
to have violated any commodities law, and the judgment in such civil action
or finding by such Commission has not been subsequently reversed,
suspended or vacated.
2.16 Employee Benefits. GWIS does not have any pension plan, profit
sharing or similar employee benefit plan.
ARTICLE 3
Representations and Warranties of ACEI
ACEI represents and warrants to GWIS that:
3.1 Organization. ACEI is a corporation duly organized, validly existing
and in good standing under the laws of Delaware, and has all necessary
corporate powers to own properties and to carry on business.
3.2 Capital. The authorized capital stock of ACEI consists of 40,000,000
shares of Common Stock, par value $.0001 per share and 6,000,000 shares of
Preferred Stock, par value $.0001 per share, which may be issued in one or
more series at the discretion of the board of directors. As of the date
of this Agreement, there were approximately 12,000,000 shares of Common
Stock outstanding, all of which were fully paid and non-assessable, and
there was no Preferred Stock outstanding. Except for the Options and
common stock purchase warrants as listed in Exhibit 3.2 and convertible
debentures that ACEI has sold and that the underlying common stock are
registered on Form S-3's filed with the U.S. Securities and Exchange
Commission on July 22, 1999 and November 5, 1999, there are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating ACEI to issue or to transfer from
treasury any additional shares of its capital stock of any class.
3.3 Subsidiaries. ACEI's subsidiaries are identified on Exhibit 3.3,
annexed hereto and made a part hereof.
3.4 Directors and Officers. Exhibit 3.4, annexed hereto and hereby
incorporated herein by reference, contains the names and titles of all
directors and officers of ACEI as of the date of this Agreement.
3.5 Financial Statements. Exhibit 3.5, annexed hereto and incorporated
herein by reference, consists of the ACEI audited financial statements as
of December 31, 1998, and unaudited financial statements for the three
month periods ended March 31, 1999 and June 30, 1999.
3.6 Changes Since December 31, 1998. Since December 31, 1998, there has
been not been any adverse change in the financial condition and operations
of ACEI.
3.7 Absence of Undisclosed Liabilities. As of Xxxxxxxx 00, 0000, XXXX
does not have any material debt, liability, or obligation of any nature,
whether accrued, absolute, contingent, or otherwise, and whether due or to
become due, that is not reflected in ACEI balance sheet as of December 31,
1998 or as presented in the Notes to the Financial Statements. There have
been no new liabilities incurred since December 31, 1998, except for those
described in the reports for the three month periods ended March 31, 1999
and June 30, 1999 and those incurred in the ordinary course of business
and in connection with this transaction.
3.8 Tax Returns. Within the times and in the manner prescribed by law,
ACEI has filed all federal, state and local tax returns required by law
and has paid all taxes, assessments and penalties due and payable. The
provisions for taxes, if any, reflected in the balance sheet included in
Exhibit 3.5 is adequate for any and all federal, state, county and local
taxes for the period ending on the date of such balance sheet and for all
prior periods, whether or not disputed. There are no present disputes as
to taxes of any nature payable by ACEI.
3.9 Investigation of Financial Condition. Without in any manner reducing
or otherwise mitigating the representations contained herein, GWIS shall
have the opportunity to meet with ACEI's accountants and attorneys to
discuss the financial condition of ACEI. ACEI shall make available to GWIS
all books and records of ACEI.
3.10 Trade Names and Rights. Except for the subsidiaries of ACEI as
described in Exhibit 3.3 which own trademark and copyrights of intellectual
properties, ACEI does not use any trademark, service xxxx, trade name, or
copyright in its business, or own any trademarks, trademark registrations
or applications. To the best knowledge of ACEI, no person owns any
trademark, trademark registration or application, service xxxx, trade name,
copyright, or copyright registration or application the use of which is
necessary or contemplated in connection with the operation of ACEI's
business as a holding company.
3.11 Compliance with Laws. ACEI has complied with and is not in
violation of applicable federal, state or local statutes, laws or
regulations (including, without limitation, any applicable building,
zoning, securities or other law, ordinance, or regulation) affecting its
properties or the operation of its business.
3.12 Litigation. ACEI is not a party to any suit, action, arbitration,
or legal, administrative, or other proceeding, or governmental
investigation pending or, to the best knowledge of ACEI, threatened against
or affecting ACEI or its business, assets or financial condition. ACEI is
not engaged in any legal action to recovery moneys due to it.
3.13 Authority. The Board of Directors and Shareholders of ACEI have
authorized the execution of this Agreement and the transactions
contemplated herein, and ACEI has full power and authority to execute,
deliver and perform this Agreement and this Agreement is the legal, valid
and binding obligation of ACEI, is enforceable in accordance with its terms
and conditions, except as may be limited by bankruptcy and insolvency laws
and by other laws affecting the rights of creditors generally.
3.14 Ability to Carry Out Obligations. The execution and delivery of
this Agreement by ACEI and the performance by ACEI of its obligations
hereunder will not cause, constitute, or conflict with or result in (a) any
breach or violation of any of the provisions of or constitute a default
under any license, indenture, mortgage, charter, instrument, articles of
incorporation, by-laws, or other agreement or instrument to which ACEI is
a party, or by which it may be bound, nor will any consents or
authorizations of any party other than those hereto be required; (b) an
event that would permit any party to any agreement or instrument to
terminate it or to accelerate the maturity of any indebtedness or other
obligation of ACEI; or (c) an event that would result in the creation or
imposition of any lien, charge, or encumbrance on any asset of ACEI.
3.15 Validity of ACEI Shares. The shares of ACEI Common Stock to be
delivered pursuant to this Agreement, when issued in accordance with the
provisions of this Agreement, will be duly authorized, validly issued,
fully paid and non-assessable.
3.16 Full Disclosure. None of the representations and warranties made by
ACEI herein, or in any exhibit, certificate or memorandum furnished or to
be furnished by ACEI, or on its behalf, contains or will contain any
untrue statement of material fact, or omit any material fact, the omission
of which would be misleading.
3.17 Assets. ACEI has good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances, except as
disclosed in its financial statements.
3.18 Material Contracts. Except as otherwise disclosed in this agreement
and in its Report on From 10-KSB for the year ended December 31, 1998 and
the three month periods ended March 31, 1999 and June 30, 1999, ACEI has
no material contracts to which it is a party or by which it is bound.
3.19 Complience With SEC Reporting Requirements. The Common Stock of ACEI
is registered under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). ACEI has duly filed all materials and
documents required to be filed pursuant to all reporting obligations under
either Section 13(a) or 15(d) of the Exchange Act prior to the consummation
of the transaction contemplated hereby. The Common Stock of ACEI is
currently traded on the Nasdaq SmallCap Market.
ARTICLE 4
Representations and Warranties of Shareholders
4.1 Share Ownership. The Shareholders represent that they hold shares of
GWIS's common stock as set forth in Exhibit 2.2 hereof, and that such
shares are owned of record and beneficially by such shareholders, and such
shares are not subject to any lien, encumbrance or pledge, and are
restricted securities as defined in Rule 144 of the Securities Act of 1933.
The Shareholders severally represent that they hold authority to exchange
their shares pursuant to this Agreement.
4.2 Investment Intent. The Shareholders understand and acknowledge that the
shares of Exchange Stock are being offered for exchange in reliance upon the
exemption provided in Section 4(2) of the Securities Act of 1933 for
non-public offerings; and The Shareholders make the following representations
and warranties with the intent that same may be relied upon in determining the
suitability of each such shareholder as a purchaser of securities:
(a) The Shareholders acknowledge that the Exchange Stock being acquired solely
for the account of such Shareholders, for investment purposes only, and not
with a view towards or for sale in connection with any distribution thereof,
and with no present intention of distributing or re-selling any part of the
Exchange Stock;
(b) The Shareholders agree not to dispose of his Exchange Stock, or any
portion thereof unless and until counsel for ACEI shall have determined that
the intended disposition is permissible and does not violate the Securities
Act of 1933 or any applicable state securities laws, or the rules and
regulations thereunder;
(c) The Shareholders acknowledge that ACEI has made all documentation
pertaining to all aspects of the herein transaction available to them and to
their qualified representatives, if any, and has offered such person or
persons an opportunity to discuss such transaction with the officers of ACEI;
(d) The Shareholders represent that they have relied solely upon ACEI's Report
on Form 10-KSB for the period ended December 31, 1998 and all other filings
made by ACEI with the Securities and Exchange Commission and independent
investigations made by the Shareholders or their representatives, if any;
(e) The Shareholders represent that they are knowledgeable and experienced in
making and evaluating investments of this nature and desire to acquire the
Exchange Stock on the terms and conditions herein set forth;
(f) The Shareholders represent that they are able to bear the economic risk
of an investment, as a result of the herein transaction, in the Exchange Stock;
(g) The Shareholders represent that they understand that an investment in the
Exchange Stock is not liquid, and The Shareholders represent that they have
adequate means of providing for their current needs and personal contingencies
and have no need of liquidity in this investment; and
(h) The Shareholders represent that they are an "accredited investor" as that
term is defined in Rule 501 of Regulation D, promulgated under the Securities
Act of 1933.
4.3 Indemnification. The Shareholders recognize that the offer of the
Exchange Stock to them is based upon the representations and warranties made
by the Shareholders set forth and contained herein and the Shareholders hereby
agree to indemnify and hold harmless ACEI against all liability, costs or
expenses (including reasonable attorney's fees) arising as a result of any
misrepresentations made herein by such Shareholder.
4.4 Legend. The Shareholders agree that the certificates evidencing the
Exchange Stock acquired pursuant to this Agreement will have a legend placed
thereon stating that the securities have not been registered under the Act or
any state securities laws and setting forth or referring to the restrictions
on transferability and sale of such securities.
ARTICLE 5
Covenants
5.1 Investigative Rights. From the date of this Agreement until the Closing
Date, ACEI and GWIS shall provide to each other, and such other party's
counsels, accountants, auditors and other authorized representatives, full
access during normal business hours and upon reasonable advance written notice
of each party's properties, books, contracts, commitments and records for the
purpose of examining the same. Each party shall furnish the other party with
all information concerning each party's affairs as the other party may
reasonably request.
5.2 Conduct of Business. Prior to the Closing, ACEI and GWIS shall each
conduct its business in the normal course, and shall not sell, pledge, or
assign any assets, without the prior written approval of the other party
except in the regular course of business or as part of the transactions
contemplated hereby. Neither ACEI nor GWIS shall amend its Articles of
Incorporation or By-laws, declare dividends, redeem or sell stock or other
securities, incur additional or newly funded liabilities, acquire or dispose
of fixed assets, change employment terms, enter into any material or long term
contract, guarantee obligations of any third party, settle or discharge any
balance sheet receivable for less than its stated amount, pay more on any
liability than its stated amount, or enter into any other transaction other
than in the regular course of business.
ARTICLE 6
Conditions Precedent to ACEI's Performance
6.1 Conditions. ACEI's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in
this Article 6. ACEI may waive any or all of these conditions in whole or in
part without prior notice; provided, however, that no such wavier of a
condition shall constitute a waiver by ACEI of any other condition or of any
of ACEI's other rights or remedies, at law or in equity, if GWIS or the
Shareholders shall be in default of any of their representations, warranties
or covenants under this Agreement.
6.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by Shareholders and GWIS in this
Agreement or in any written statement that shall be delivered to ACEI by GWIS
under this Agreement shall be true and accurate on and as of the Closing Date
as though made at that time.
6.3 Performance. GWIS shall have performed, satisfied, and complied with all
covenants, agreements and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
6.4 Absence of Litigation. No action, suit or proceeding before any court or
any governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, shall have been instituted or
threatened against GWIS or the Shareholders on or before the Closing Date.
6.5 Acceptance by GWIS Shareholders. The holders of an aggregate of not less
than 100% of the issued and outstanding shares of common stock of GWIS shall
have agreed to exchange a percentage of their shares as stipulated in this
Agreement, for shares of the Exchange Stock.
6.6 Officer's Certificate. GWIS shall have delivered to ACEI a certificate,
dated the Closing Date, and signed by the President of GWIS, certifying that
each of the conditions specified in Sections 6.2 through 6.5 hereof have been
fulfilled.
6.7 Opinion of Counsel to GWIS. GWIS shall have delivered to ACEI an opinion
of its Chinese and United States counsel, as applicable, dated the Closing
date, to the effect that:
(a) GWIS is a corporation duly organized, validly existing and in good
standing under the laws of the People's Republic of China and the City of
Beijing;
(b) The authorized capital stock of GWIS is as set forth on the annexed
Exhibit 2.2, a copy of which is annexed hereto and made a part hereof. All
issued and outstanding shares are legally issued. (c) This Agreement has been
duly and validly authorized, executed and delivered and constitutes the legal
and binding obligation of GWIS, except as limited by bankruptcy and insolvency
laws and by other laws affecting the rights of creditors generally; and
ARTICLE 7
Conditions Precedent to
GWIS's and Shareholders' Performance
7.1 Conditions. GWIS's and Shareholders' obligations hereunder shall be
subject to the satisfaction, at or before the Closing, of all the conditions
set forth in this Article 7. GWIS and Shareholders may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by GWIS and
Shareholders of any other condition or of any of GWIS's and Shareholders'
rights or remedies, at law or in equity, if ACEI shall be in default of any of
its representations, warranties or covenants under this Agreement.
7.2 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by ACEI in this Agreement or in
any written statement that shall be delivered to GWIS and Shareholders by ACEI
under this Agreement shall be true and accurate on and as of the Closing Date
as though made at that time.
7.3 Performance. ACEI shall have performed, satisfied, and complied with all
covenants, agreements and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
7.4 Absence of Litigation. No action, suit or proceeding before any court or
any governmental body or authority, pertaining to the transaction contemplated
by this Agreement or to its consummation, shall have been instituted or
threatened against ACEI on or before the Closing Date, except as disclosed
herein.
7.5 Current Status. ACEI shall have prepared and filed with the Securities
and Exchange Commission its Annual Report on Form 10-KSB for the period ended
December 31, 1998 and its Quarterly Report on Form 10-QSB for the three month
periods ended March 31, 1999 and June 30, 1999.
7.6 Directors of ACEI. ACEI's Board of Directors shall remain to serve until
a new board is elected at the next annual meeting of stockholders in the year
2000.
7.7 Officers of ACEI. ACEI's officers shall remain in their office as per
terms of their employment agreements.
7.8 Intentionally Left Blank
7.9 Officers' Certificate. ACEI shall have delivered to GWIS and
Shareholders a certificate, dated the Closing Date and signed by the President
of ACEI certifying that each of the conditions specified in Sections 7.2
through 7.7 have been fulfilled.
7.10 Opinion of Counsel. ACEI shall deliver an opinion of its counsel in the
form annexed hereto as Exhibit 7.10;
ARTICLE 8
Closing
8.1 Closing. The Closing of this transaction shall be held at the offices of
Sichenzia, Ross & Xxxxxxxx LLP, Esqs., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or such other place as shall be mutually agreed upon, on
______________________ , 2000 or such other date as shall be mutually agreed
upon by the parties. At the Closing:
(a) Shareholder shall present the certificates representing their shares of
GWIS being exchanged to ACEI, and such certificates will be duly endorsed in
blank;
(b) Shareholders shall receive a certificate or certificates representing the
number of shares of ACEI Common Stock for which the shares of GWIS common
stock shall have been exchanged;
(c) ACEI shall deliver an officer's certificate, as described in Section 7.9
hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of ACEI are
true and correct as of, or have been fully performed and complied with by, the
Closing Date;
(d) ACEI shall deliver a resolution of its Board of Directors of ACEI
approving this Agreement and each matter to be approved by the Directors of
ACEI under this Agreement;
(e) ACEI shall deliver an opinion of its counsel, as described in Section
7.10 hereof, dated the Closing Date;
(f) GWIS shall deliver an officer's certificate, as described in Section 6.6
hereof, dated the Closing Date, that all representations, warranties,
covenants and conditions set forth in this Agreement on behalf of GWIS are
true and correct as of, or have been fully performed and complied with by, the
Closing Date.
(g) GWIS shall deliver an opinion of its counsel, as described in Section 6.7
hereof, dated the Closing Date; and
(h) GWIS shall deliver resolutions of its Board of Directors approving this
Agreement and each matter to be approved by the Directors of GWIS under this
Agreement.
ARTICLE 9
Miscellaneous
9.1 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
9.2 No Oral Change. This Agreement and any provision hereof may not be
waived, changed, modified or discharged orally, but it can be changed by an
agreement in writing, signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
9.3 Non-Waiver. Except as otherwise expressly provided herein, no waiver of
any covenant, condition or provision of this Agreement shall be deemed to have
been made unless expressly in writing and signed by the party against whom
such waiver is charged; and (i) the failure of any party to insist in any one
or more cases upon the performance of any of the provisions, covenants or
conditions of this Agreement or to exercise any option herein contained shall
not be construed as a waiver or relinquishment for the future of any such
provisions, covenants or conditions; (ii) the acceptance of performance of
anything required by this Agreement to be performed with knowledge of the
breach of failure of a covenant, condition or provision hereof shall not be
deemed a waiver of such breach or failure; and (iii) no waiver by any party of
one breach by another party shall be construed as a waiver with respect to any
other or subsequent breach.
9.4 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto and supersedes all prior agreements
and understandings.
9.5 Choice of Law. This Agreement and its application shall be governed by
the laws of the State of California.
9.6 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
in the English and Chinese languages. In the event of discrepancies between
the two languages, the English version shall prevail.
9.7 Notices. All notices, requests, demands and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom notice is to
be given, or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
To ACEI:
Xx. Xxxxxxx X. Xxxx
President & CEO
American Champion Entertainment, Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
U. S. A.
Phone: 0-000-000-0000
Fax: 0-000-000-0000
E-mail: x.xxxx@xxxxxxxxxxxxx.xxx
To GWIS:
Xx. Xxx Xx Xxx
Chairman of the Board
9/F, North Office Building
New World Center, 3B
Xxxxx Xxx Men Wai Street
Xxxxx Xxx Xxxxxxxx
Xxxxxxx, Xxxxx 000000
Phone: 00-00-0000-0000
Fax: 00-00-0000-0000
E-mail: xxxx@xxx.xx.xxx
9.8 (deleted)
9.9 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives, successors and assigns of each of
the parties to this Agreement.
9.10 Mutual Cooperation. The parties hereto shall cooperate with each other
to achieve the purpose of this Agreement and shall execute such other and
further documents and take such other and further actions as may be necessary
or convenient to effect the transaction described herein.
9.11 Announcements. ACEI and GWIS will consult and cooperate with each other
as to the timing and content of any announcements of the transactions
contemplated hereby to the general public or to employees, customers or
suppliers.
9.12 Expenses. Each party will pay its own legal, accounting and any other
out-of-pocket expenses reasonably incurred in connection with this
transaction, whether or not the transaction contemplated hereby is
consummated. In no event shall one party be liable for any of the expenses of
the other party.
9.13 Survival of Representations and Warranties. The representations,
warranties, covenants and agreements of the parties set forth in this
Agreement or in any instrument, certificate, opinion or other writing provided
for in it, shall survive the Closing irrespective of any investigation made by
or on behalf of any party.
9.14 Exhibits. As of the execution hereof, the parties hereto have provided
each other with the Exhibits provided for hereinabove, including any items
referenced therein or required to be attached thereto. Any material changes
to the Exhibits shall be immediately disclosed to the other party.
WHEREFORE, the above agreement is hereby agreed to and accepted as of the date
first above written.
AMERICAN CHAMPION ENTERTAINMENT, INC.
By: /s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
President & CEO
GREAT WALL INTERNATIONAL SPORTS MEDIA COMPANY
By: /s/ Niu Xx Xxx
Niu Xx Xxx
Chairman of the Board
