EXHITIB 10.2
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SHARE PURCHASE AGREEMENT
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Among:
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XINHUA CHINA LTD.
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And:
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BEIJING BOHENG INVESTMENTS LTD.
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And:
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THE SHAREHOLDERS OF
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BEIJING BOHENG INVESTMENTS LTD.
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Notice to the Shareholders of Beijing Boheng Investments Ltd.: The shareholders
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of Beijing Boheng Investments Ltd. are hereby advised by each of Xxxxxx Xxxxxx,
counsel for Xinhua China Ltd., and Xinhua China Ltd. to obtain independent legal
advice with respect to his review and execution of this Share Purchase
Agreement.
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SHARE PURCHASE AGREEMENT
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THIS SHARE PURCHASE AGREEMENT is dated and made for reference effective
as fully executed on this 21st day of January, 2005.
BETWEEN:
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XINHUA CHINA LTD., a corporation organized under
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the laws of the State of Nevada and having an
address for notice and delivery located at XXX 000,
000 X Xxxxxx, Xxxxxx, Xxxxxxxxxx, XXX 00000.
(the "Purchaser");
OF THE FIRST PART
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AND:
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BEIJING BOHENG INVESTMENTS LTD., a corporation
organized under the laws of the People's Republic
of China and having an address for notice and
delivery located at Chaoqian Xx. 0, Xxxxxxxxxx
Xxxx, Xxxxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxx.
(the "Company");
OF THE SECOND PART
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AND:
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THE UNDERSIGNED SHAREHOLDERS OF BEIJING BOHENG
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INVESTMENTS LTD., having an address for notice and
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delivery located at x/x Xxxxxxxx Xx. 0, Xxxxxxxxxx
Xxxx, Xxxxxxxxx Xxxxxxxx, Xxxxxxx, Xxxxx.
(such shareholders being hereinafter referred to as
the "Vendors");
OF THE THIRD PART
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(the Vendors, the Company and the Purchaser being
hereinafter singularly also referred to as a
"Party" and collectively referred to as the
"Parties" as the context so requires).
WHEREAS:
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A. The Company is a body corporate subsisting under and registered pursuant
to the laws of the People's Republic of China;
B. The Company is in the business of wholesale and retail of domestic books,
newspapers, journals, and electronic publications in China, excluding books from
Hong Kong, Macau and Taiwan (collectively, the "Company's Business");
C. The Vendors are the legal and beneficial owners of all of the issued and
outstanding shares in the capital of the Company, 95% of which are to be
purchased by the Purchaser herein (each such share being a "Purchased Share");
the particulars of the registered and beneficial ownership of such Purchased
Shares being set forth in Schedule "A" which is attached hereto and which forms
a material part hereof; and
D. The Parties hereto have agreed to enter into this Share Purchase
Agreement (the "Agreement") which formalizes, amends and replaces, in its
entirety, the Letter Agreement, dated September 14, 2004 (the "Letter
Agreement") as contemplated and required by the terms of such Letter Agreement,
and which clarifies their respective duties and obligations in connection with
the purchase by the Purchaser from the Vendors of all of the Purchased Shares
together with the further development of the Company's Business as a consequence
thereof;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
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mutual promises, covenants and agreements herein contained, THE PARTIES HERETO
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COVENANT AND AGREE WITH EACH OTHER as follows:
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Article 1
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DEFINITIONS
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1.1 Definitions. For the purposes of this Agreement, except as otherwise
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expressly provided or unless the context otherwise requires, the following words
and phrases shall have the following meanings:
(a) "Agreement" means this "Share Purchase Agreement" as entered into
among the Vendors, the Company and the Purchaser herein, together
with any amendments thereto and any Schedules as attached thereto;
(b) "Board of Directors" means, as applicable, the respective Board of
Directors of each of the Parties hereto as duly constituted from
time to time;
(c) "business day" means any day during which Canadian Chartered Banks
are open for business in the City of Vancouver, Province of
British Columbia;
(d) "Business Documentation" means any and all records and other
factual data and information relating to the Company's Business
interests and assets and including, without limitation, all plans,
agreements and records which are in the possession or control of
Vendors or the Company in that respect;
(e) "Closing" has the meaning ascribed to it in Article "6.1"
hereinbelow;
(f) "Closing Date" has the meaning ascribed to it in Article "6.1"
hereinbelow;
(g) "Commercial Arbitration Act" means the Arbitration Act of the
Province of British Columbia, R.S.B.C. 1996, as amended from time
to time, as set forth in Article "11" hereinbelow;
(h) "Commissions" means the United States Securities and Exchange
Commission;
(i) "Common Shares" means the 18,613,000 shares of common stock of the
Purchaser to be issued and delivered to the Vendors, pro rata, as
part of the Purchase Price of the Purchased Shares;
(j) "Company" means Beijing Boheng Investment & Management Co., Ltd.,
a corporation organized under the laws of the People's Republic of
China, or any successor company, however formed, whether as a
result of merger, amalgamation or other action;
(k) "Company's Assets" means all assets, contracts, equipment,
goodwill, inventory and Intellectual Property of the Company;
(l) "Company's Business" has the meaning ascribed to it in recital
"B." hereinabove;
(m) "Company's Financial Statements" has the meaning ascribed to it in
Article "3.3(s)" hereinbelow;
(n) "Defaulting Party" and "Non-Defaulting Party" have the meanings
ascribed to them in Article "12" hereinbelow;
(p) "Encumbrances" means mortgages, liens, charges, security
interests, encumbrances and third party claims of any nature;
(p) "Exchange" means the NASD Over-the-Counter Bulletin Board;
(q) "Execution Date" means the actual date of the complete execution
of this Agreement and any amendment thereto by all Parties hereto
as set forth on the front page hereof;
(r) "Indemnified Party" and "Indemnified Parties" have the meanings
ascribed to them in Article "7.1" hereinbelow;
(s) "Intellectual Property" means, with respect to the Company, all
right and interest to all patents, patents pending, inventions,
know-how, any operating or identifying name or registered or
unregistered trademarks and tradenames, all computer programs,
licensed end-user software, source codes, products and
applications (and related documentation and materials) and other
works of authorship (including notes, reports, other documents and
materials, magnetic, electronic, sound or video recordings and any
other work in which copyright or similar right may subsist) and
all copyrights (registered or unregistered) therein, industrial
designs (registered or unregistered), franchises, licenses,
authorities, restrictive covenants or other industrial or
intellectual property used in or pertaining to the Company;
(t) "Parties" or "Party" means, respectively, the Vendors, the Company
and/or the Purchaser hereto, as the case may be, together with
their respective successors and permitted assigns as the context
so requires;
(u) "person" or "persons" means an individual, corporation,
partnership, party, trust, fund, association and any other
organized group of persons and the personal or other legal
representative of a person to whom the context can apply according
to law;
(v) "Purchased Shares" has the meaning ascribed to it in recital "C."
hereinabove; the particulars of the registered and beneficial
ownership of such Purchased Securities being set forth in Schedule
"A" which is attached hereto;
(w) "Purchase Price" has the meaning ascribed to it in Article "2.2"
hereinbelow;
(x) "Purchaser" means Xinhua China Ltd., a corporation organized under
the laws of the State of Nevada, or any successor company, however
formed, whether as a result of merger, amalgamation or other
action;
(y) "Purchaser's Due Diligence" has the meaning ascribed to it in
Article "5.1(b)" hereinbelow;
(z) "Purchaser's Ratification" has the meaning ascribed to it in
Article "5.1(a)" hereinbelow;
(aa) "Takeover" means that transaction or series of transactions
pursuant to which the Purchaser will acquire all of the Purchased
Shares of the Company from the Vendors in exchange for the
issuance from treasury by the Purchaser of the Common Shares;
(ab) "Time of Closing" means 2:00 o'clock, p.m. (Vancouver Time) on the
Closing Date;
(ac) "Transfer Agent" means Pacific Stock Transfer Company; and
(ad) "Vendors" means the shareholders of the Company who have executed
this Agreement as a Party hereto.
1.2 Schedules. For the purposes of this Agreement, except as otherwise
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expressly provided or unless the context otherwise requires, the following shall
represent the Schedules which are attached to this Agreement and which form a
material part hereof:
Schedule Description
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Schedule "A": Purchased Shares and Vendors; and
Schedule "B": Permits, Licenses and Certificates.
1.3 Interpretation. For the purposes of this Agreement, except as otherwise
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expressly provided or unless the context otherwise requires:
(a) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, section or other subdivision of this
Agreement;
(c) any reference to an entity shall include and shall be deemed to be
a reference to any entity that is a permitted successor to such
entity; and
(c) words in the singular include the plural and words in the
masculine gender include the feminine and neuter genders, and vice
versa.
Article 2
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PURCHASE AND SALE OF THE ALL OF THE PURCHASED SHARES
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2.1 Purchase and Sale. Subject to the terms and conditions hereof and based
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upon the representations and warranties contained in Articles "3" and "4"
hereinbelow and prior satisfaction of the conditions precedent which are set
forth in Article "5" hereinbelow, the Vendors hereby agrees to assign, sell and
transfer at the Closing Date (as hereinafter determined) all of their respective
rights, entitlement and interest in and to the Purchased Shares (which includes
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only 95% of each of the Vendors' shares in the capital of the Company) to the
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Purchaser and the Purchaser hereby agrees to purchase all of the Purchased
Shares from the Vendors on the terms and subject to the conditions contained in
this Agreement.
2.2 Purchase Price. The total purchase price (the "Purchase Price") for all
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of the Purchased Shares will be satisfied by way of the issuance and delivery by
the Purchaser to the Vendors, in accordance with section "2.3" hereinbelow, of
an aggregate of 18,613,000 common shares in the capital of the Purchaser (each a
"Common Share"), at a deemed price of US$0.0011111 per Common Share.
2.3 Resale Restrictions. The Vendors hereby acknowledge and agree that the
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Purchaser makes no representations as to any resale or other restriction
affecting the Common Shares and that it is presently contemplated that the
Common Shares will be issued by the Purchaser to the Vendors in reliance upon
the registration and prospectus exemptions contained in the United States
Securities Act of 1933, as amended (the "Securities Act") or "Regulation S"
promulgated under the Securities Act which will impose a trading restriction in
the United States on the Common Shares for a period of at least 12 months from
the Closing Date (as hereinafter determined). In addition, the obligation of the
Purchaser to issue the Common Shares pursuant to section "2.2" hereinabove will
be subject to the Purchaser being satisfied that an exemption from applicable
registration and prospectus requirements is available under the Securities Act
and all applicable securities laws, in respect of the Vendors and related Common
Shares, and the Purchaser shall be relieved of any obligation whatsoever to
purchase any Purchased Shares of the Vendors and to issue Common Shares in
respect of the Vendors where the Purchaser reasonably determines that a suitable
exemption is not available to it.
Article 3
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REPRESENTATIONS, WARRANTIES AND COVENANTS
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BY THE COMPANY AND THE VENDOR
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3.1 General Representations, Warranties and Covenants by the Company and the
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Vendors. In order to induce the Purchaser to enter into and consummate this
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Agreement, the Company and the Vendors, jointly and severally, represents to,
warrants to and covenants with the Purchaser, with the intent that the Purchaser
will rely thereon in entering into this Agreement and in concluding the
transactions contemplated herein, that, to the best of the knowledge,
information and belief of each of the Vendors and the Company, after having made
due inquiry:
(a) if a corporation, it is duly organized under the laws of its
respective jurisdiction of incorporation and is validly existing
and in good standing with respect to all statutory filings
required by the applicable corporate laws;
(b) it is qualified to do business in those jurisdictions where it is
necessary to fulfill its obligations under this Agreement and it
has the full power and authority to enter into this Agreement and
any agreement or instrument referred to or contemplated by this
Agreement;
(c) it has the requisite power, authority and capacity to own and use
all of its respective business assets and to carry on its
respective business as presently conducted by it and to fulfill
its respective obligations under this Agreement;
(d) the execution and delivery of this Agreement and the agreements
contemplated hereby have been duly authorized by all necessary
action, corporate or otherwise, on its respective part;
(e) there are no other consents, approvals or conditions precedent to
the performance of this Agreement which have not been obtained;
(f) this Agreement constitutes a legal, valid and binding obligation
of it enforceable against it in accordance with its terms, except
as enforcement may be limited by laws of general application
affecting the rights of creditors;
(g) no proceedings are pending for, and it is unaware of, any basis
for the institution of any proceedings leading to its respective
dissolution or winding up, or the placing of it in bankruptcy or
subject to any other laws governing the affairs of insolvent
companies or persons;
(h) the making of this Agreement and the completion of the
transactions contemplated hereby and the performance of and
compliance with the terms hereof does not and will not:
(i) if a corporation, conflict with or result in a breach of or
violate any of the terms, conditions or provisions of its
respective constating documents;
(ii) conflict with or result in a breach of or violate any of
the terms, conditions or provisions of any law, judgment,
order, injunction, decree, regulation or ruling of any
Court or governmental authority, domestic or foreign, to
which it is subject, or constitute or result in a default
under any agreement, contract or commitment to which it is
a party;
(iii) give to any party the right of termination, cancellation or
acceleration in or with respect to any agreement, contract
or commitment to which it is a party;
(iv) give to any government or governmental authority, or any
municipality or any subdivision thereof, including any
governmental department, commission, bureau, board or
administration agency, any right of termination,
cancellation or suspension of, or constitute a breach of or
result in a default under, any permit, license, control or
authority issued to it which is necessary or desirable in
connection with the conduct and operations of its
respective business and the ownership or leasing of its
respective business assets; or
(v) constitute a default by it, or any event which, with the
giving of notice or lapse of time or both, might constitute
an event of default, under any agreement, contract,
indenture or other instrument relating to any indebtedness
of it which would give any party to that agreement,
contract, indenture or other instrument the right to
accelerate the maturity for the payment of any amount
payable under that agreement, contract, indenture or other
instrument; and
(i) neither this Agreement nor any other document, certificate or
statement furnished to the Purchaser by or on behalf of any of the
Vendors or the Company in connection with the transactions
contemplated hereby knowingly or negligently contains any untrue
or incomplete statement of material fact or omits to state a
material fact necessary in order to make the statements therein
not misleading which would likely affect the decision of the
Purchaser to enter into this Agreement.
3.2 Representations, Warranties and Covenants by the Vendors respecting the
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Purchased Shares and the Common Shares. In order to induce the Purchaser to
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enter into and consummate this Agreement, the Vendors hereby represents to,
warrants to and covenants with the Purchaser, with the intent that the Purchaser
will also rely thereon in entering into this Agreement and in concluding the
transactions contemplated herein, that, to the best of the knowledge,
information and belief of the Vendors, after having made due inquiry:
(a) save and except as set forth in Schedule "A" which is attached
hereto, the Vendors have good and marketable title to and are the
legal and beneficial owners of all of the Purchased Shares, and
the Purchased Shares are fully paid and non-assessable and are
free and clear of liens, charges, encumbrances, pledges,
mortgages, hypothecations, security interests and adverse claims
of any and all nature whatsoever and including, without
limitation, options, pre-emptive rights and other rights of
acquisition in favour of any person, whether conditional or
absolute;
(b) the Vendors have the power and capacity to own and dispose of the
Purchased Shares, and the Purchased Shares are not subject to any
voting or similar arrangement;
(c) there are no actions, suits, proceedings or investigations
(whether or not purportedly against or on behalf of the Vendors or
the Company), pending or threatened, which may affect, without
limitation, the rights of the Vendors to transfer any of the
Purchased Shares to the Purchaser at law or in equity, or before
or by any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, and, without limiting the
generality of the foregoing, there are no claims or potential
claims under any relevant family relations legislation or other
equivalent legislation affecting the Purchased Shares. In
addition, the Vendors are not now aware of any existing ground on
which any such action, suit or proceeding might be commenced with
any reasonable likelihood of success;
(d) no other person, firm or corporation has any agreement, option or
right capable of becoming an agreement for the purchase of any of
the Purchased Shares;
(e) the Vendors acknowledge that the Common Shares will be issued
under certain exemptions from the registration and prospectus
filing requirements otherwise applicable under the Securities Act,
and that, as a result, the Vendors may be restricted from using
most of the remedies that would otherwise be available to the
Vendors, the Vendors will not receive information that would
otherwise be required to be provided to the Vendors and the
Purchaser is relieved from certain obligations that would
otherwise apply to the Purchaser, in either case, under applicable
securities legislation;
(f) the Vendors have not received, nor have the Vendors requested or
do the Vendors require to receive, any offering memorandum or a
similar document describing the business and affairs of the
Purchaser in order to assist the Vendors in entering into this
Agreement and in consummating the transactions contemplated
herein;
(g) the Vendors acknowledge and agree that the Common Shares have not
been and will not be qualified or registered under the securities
laws of the United States or any other jurisdiction and, as such,
the Vendors may be restricted from selling or transferring such
Common Shares under applicable law;
(h) the Vendors are resident in the jurisdiction as set forth under
the Vendors' address in Schedule "A" which is attached hereto, and
that all negotiations and other acts in furtherance of the
execution and delivery of this Agreement by the Vendors in
connection with the transactions contemplated herein have taken
place and will take place solely in such jurisdiction or in the
British Virgin Islands; and
(i) the Purchased Shares have been issued in accordance with all
applicable securities and corporate legislation and policies.
3.3 Representations, Warranties and Covenants by the Company and the Vendor
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respecting the Company. In order to induce the Purchaser to enter into and
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consummate this Agreement, each of the Vendors and the Company hereby, jointly
and severally, also represents to, warrants to and covenants with the Purchaser,
with the intent that the Purchaser will also rely thereon in entering into this
Agreement and in concluding the transactions contemplated herein, that, to the
best of the knowledge, information and belief of each of the Vendors and the
Company, after having made due inquiry:
Corporate Status of the Company
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(d) the Company is a company with limited liability duly and properly
organized and validly subsisting under the laws of the People's
Republic of China being the only jurisdiction where it is required
to be registered for the purpose of enabling it to carry on its
business and own its property as presently carried on and owned;
(e) the Company has good and sufficient power, authority and right to
own or lease its property, to enter into this Agreement and to
perform its obligations hereunder;
Authorization
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(f) this Agreement has been duly authorized, executed and delivered by
the Vendors and the Company and is a legal, valid and binding
obligation of the Vendors and the Company, enforceable against the
Vendors and/or the Company, as the case may be, by the Purchaser
in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency and other laws affecting the rights of
creditors generally and except that equitable remedies may be
granted only in the discretion of a court of competent
jurisdiction;
No Other Agreements to Purchase
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(d) no person other than the Purchaser has any written or oral
agreement or option or any right or privilege (whether by law,
pre-emptive or contractual) capable of becoming an agreement, or
option for the purchase or acquisition from the Vendors of any of
the Purchased Shares;
Options
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(e) no person has any agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming
an agreement, including convertible securities, warrants or
convertible obligations of any nature, for the purchase,
subscription, allotment or issuance of any unissued shares or
other securities of the Company;
Title to Shares
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(g) the Purchased Shares are beneficially owned by the Vendors with
good and marketable title thereto free of all Encumbrances and are
registered in the books of the Company in the name of the Vendors
and, without limitation thereto, none of the Purchased Shares are
subject to any voting trust, unanimous shareholders agreement,
other shareholders agreements, pooling agreements or voting
agreements;
(g) upon completion of the transactions contemplated by this
Agreement, all of the Purchased Shares will be owned by the
Purchaser as the beneficial owner of record, with good and
marketable title thereto (except for such Encumbrances as may have
been granted by the Purchaser);
Title to Personal Property and Other Property
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(z) the property and assets of the Company, which includes, but is not
limited to, ownership of 30.67% of the registered capital of
Xinhua Publications Circulation and Distribution Co., Ltd., a
company organized under the laws of the People's Republic of
China, are, and between the date hereof and the Closing Date (as
hereinafter determined), will be, owned beneficially by the
Company with a good and marketable title thereto, free and clear
of all Encumbrances save as previously disclosed to the Purchaser;
(i) the permits, licenses and certificates set out in Schedule "B"
attached hereto have been issued to Xinhua Publications
Circulation and Distribution Co., Ltd.
Intellectual Property
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(j) the Company has provided the Purchaser with a complete and
accurate list of all trade marks, trade names, business names,
patents, inventions, know-how, copyrights, service marks, brand
names, industrial designs and all other industrial or intellectual
property owned or used by the Company in carrying on the Company's
Business and all applications therefor and all goodwill connected
therewith, including, without limitation, all licenses, registered
user agreements and all like rights used by or granted to the
Company in connection with the Company's Business and all right to
register or otherwise apply for the protection on any of the
foregoing (collectively, the "Intellectual Property");
(k) the Intellectual Property comprises all trade marks, trade names,
business names, patents, inventions, know-how, copyrights, service
marks, brand marks, industrial designs and all other industrial or
intellectual property necessary to conduct the Company's Business;
(l) the Company is the beneficial owner of the Intellectual Property,
free and clear of all Encumbrances, and is not a party to or bound
by any contract or other obligation whatsoever that limits or
impairs its ability to sell, transfer, assign or convey, or that
otherwise affects, the Intellectual Property;
(m) no person has been granted any interest in or right to use all or
any portion of the Intellectual Property;
(n) neither the Vendors nor the Company are aware of a claim of any
infringement or breach of any industrial or intellectual property
rights of any other person by the Company, nor have the Vendors or
the Company received any notice that the conduct of the Company's
Business infringes or breaches any industrial or intellectual
property rights of any other person, and neither the Vendors nor
the Company, after due inquiry, have any knowledge of any
infringement or violation of any of their rights or the rights of
the Company in the Intellectual Property;
(o) the conduct of the Company's Business does not infringe upon the
patents, trade marks, licenses, trade names, business names,
copyright or other industrial or intellectual property rights,
domestic or foreign, of any other person;
(p) neither the Vendors nor the Company are aware of any state of
facts that casts doubt on the validity or enforceability of any of
the Intellectual Property;
(q) the Company has provided to the Purchaser a true and complete copy
of all Contracts and amendments thereto that comprise or relate to
the Intellectual Property;
Financial Statements
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(r) the Company's Financial Statements, dated January 15, 2005, have
been prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods, are
correct and complete and present fairly the assets, liabilities
(whether accrued, absolute, contingent or otherwise) and financial
condition of the Company as at the respective dates of and for the
respective periods covered by the Company's Financial Statements;
(s) for any period up to the Time of Closing the Company will not have
any debts or liabilities whatsoever (whether accrued, absolute or
contingent or otherwise), including any liabilities for federal,
provincial, sales, excise, income, corporate or any other taxes of
the Company except for;
(i) the debts and liabilities disclosed on, provided for or
included in the balance sheet forming a part of the most
recent of the Company's Financial Statements;
(ii) debts or liabilities disclosed in this Agreement or any
Schedule hereto; and
(iii) liabilities incurred by the Company in the ordinary course
of the Company's Business subsequent to the date of the
balance sheet referred to in the Company's Financial
Statements;
Books and Records
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(t) the books and records of the Company fairly and correctly set out
and disclose, in all material respects, in accordance with
generally accepted accounting principles, consistently applied,
the financial condition of the Company as of the date of this
Agreement and all material financial transactions of the Company
have been accurately recorded in such books and records;
Corporate Records
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(u) the Corporate records and minute books of the Company contain
complete and accurate minutes, (duly signed by the chairman and/or
secretary of the appropriate meeting) of all meetings of the
directors and shareholders of the Company since its date of
incorporation;
(v) the share certificate records, the securities register, the
register of disclosures , the register of directors and officers
for the Company are contained in the corporate minute book and are
complete and accurate in all respects;
Directors and Officers
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(w) the present directors and officers of the Company are as follows:
Name Position
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Xxxxxxx Xxxx President and Director
Hongxing Li Secretary and Director
Accuracy of Warranties
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(x) neither this Agreement nor any document, schedule, list,
certificate, declaration under oath or written statement now or
hereafter furnished by the Vendors or the Company to the Purchaser
in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement or representation of
a material fact on the part of the Vendors or the Company, or
omits or will omit on behalf of the Vendors or the Company to
state a material fact necessary to make any such statement or
representation therein or herein contained not misleading; and
Full Disclosure
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(y) the Vendors have no information or knowledge of any fact not
communicated to the Purchaser and relating to the Company or to
the Company's Business or to the Purchased Shares which, if known
to the Purchaser, might reasonably be expected to deter the
Purchaser from entering into this Agreement or from completing the
transactions contemplated by this Agreement.
3.4 Survival of the Representations, Warranties and Covenants by each of the
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Vendors and the Company. To the extent they have not been fully performed at or
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prior to the Time of Closing, each and every representation and warranty of the
Vendors or the Company contained in this Agreement and any agreement,
instrument, certificate or other document executed or delivered pursuant to this
Agreement shall:
(a) be true and correct on and as of the Closing Date with the same
force and effect as though made or given on the Closing Date;
(b) remain in full force and effect notwithstanding any investigations
conducted by or on behalf of the Purchaser; and
(c) survive the completion of the transactions contemplated by this
Agreement until the second anniversary of the Closing Date and
shall continue in full force and effect for the benefit of the
Purchaser during that period, except that:
(i) the representations and warranties set out in section
3.2(a) to and including 3.2(i) above shall survive and
continue in full force and effect without limitation of
time; and
(ii) a claim for any breach of any of the representations and
warranties contained in this Agreement or in any agreement,
instrument, certificate or other document executed or
delivered pursuant hereto involving fraud or fraudulent
misrepresentation may be made at any time following the
Closing Date, subject only to applicable limitation periods
imposed by law.
(d) to the extent they have not been fully performed at or prior to
the Time of Closing, each and every covenant of the Vendors
contained in this Agreement and any agreement, instrument,
certificate or other document executed or delivered pursuant to
this Agreement shall survive the completion of the transactions
contemplated by this Agreement and, notwithstanding such
completion, shall continue in full force and effect for the
benefit of the Purchaser.
Article 4
---------
WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE PURCHASER
----------------------------------------------------------
4.1 Warranties, Representations and Covenants by the Purchaser. In order to
-----------------------------------------------------------
induce the Vendors and the Company to enter into and consummate this Agreement,
the Purchaser hereby warrants to, represents to and covenants with each of the
Vendors and the Company, with the intent that each of the Vendors and the
Company will rely thereon in entering into this Agreement and in concluding the
transactions contemplated herein, that, to the best of the knowledge,
information and belief of the Purchaser, after having made due inquiry:
Corporate Status of the Purchaser
---------------------------------
(d) the Purchaser is a company with limited liability duly and
properly incorporated, organized and validly subsisting under the
laws of the State of Nevada being the only jurisdiction where it
is required to be registered for the purpose of enabling it to
carry on its business and own its property as presently carried on
and owned;
(e) the Purchaser has good and sufficient power, authority and right
to own or lease its property, to enter into this Agreement and to
perform its obligations hereunder;
Authorization
-------------
(f) this Agreement has been duly authorized, executed and delivered by
the Purchaser and is a legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser, as the case may be,
by the Vendors and/or the Company in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency and
other laws affecting the rights of creditors generally and except
that equitable remedies may be granted only in the discretion of a
court of competent jurisdiction;
Share Capital
-------------
(d) the authorized capital of the Purchaser consists of 500,000,000
shares of common stock of which 61,056,375 shares of common stock
of the Purchaser have been duly issued and are outstanding as
fully paid and non-assessable;
(e) all of the issued and outstanding shares of the Purchaser are
listed and posted for trading on the Exchange;
(f) the Purchaser will allot and issue the Common Shares on the
Closing Date in accordance with sections "2.2" and "2.3"
hereinabove as fully paid and non-assessable in the capital of the
Purchaser, free and clear of all actual or threatened liens,
charges, security interests, options, encumbrances, voting
agreements, voting trusts, demands, limitations and restrictions
of any nature whatsoever, other than hold periods or other
restrictions imposed under applicable securities legislation or by
securities regulatory authorities;
Options
-------
(g) no person has any agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming
an agreement, including convertible securities, warrants or
convertible obligations of any nature, for the purchase,
subscription, allotment or issuance of any unissued shares or
other securities of the Purchaser except for 4,280,000 stock
options exercisable at prices ranging from US$2.40 to US$3.05 per
share which have been granted to directors, officers, employees
and consultants of the Purchaser;
Directors and Officers
----------------------
(j) the present directors and officers of the Purchaser are as
follows:
Name Position
---- --------
Xxxxxxxx Xxxx President, CEO and Director
Xxxxx Xxxx CFO and Director
Reg Xxxxxxxx Secretary and Director
Xxxxxx Xxxx Director
Xxxxx Xxxxxxx Director
Full Disclosure
---------------
(k) the Purchaser has no information or knowledge of any fact not
communicated to the Vendors and the Company and relating to the
Purchaser or to the Purchaser's business or to its issued and
outstanding securities which, if known to the Vendors and/or the
Company, might reasonably be expected to deter the Vendors and/or
the Company from entering into this Agreement or from completing
the transactions contemplated by this Agreement.
4.2 Survival of the Representations, Warranties and Covenants by the
-------------------------------------------------------------------------
Purchaser. To the extent they have not been fully performed at or prior to the
---------
Time of Closing, each representation and warranty of the Purchaser contained in
this Agreement or in any document, instrument, certificate or undertaking given
pursuant hereto shall:
(d) be true and correct on and as of the Closing Date with the same
force and effect as though made or given on the Closing Date;
(e) remain in full force an effect notwithstanding any investigations
conducted by or on behalf of the Purchaser;
(f) survive the completion of the transactions contemplated by this
Agreement until the second anniversary of the Closing Date and
shall continue in full force and effect for the benefit of the
Vendors and the Company during that period, except that a claim
for any breach of any of the representations and warranties
contained in this Agreement or in any agreement, instrument,
certificate or other document executed or delivered pursuant
hereto involving fraud or fraudulent misrepresentation may be made
at any time following the Closing Date, subject only to applicable
limitation periods imposed by law; and
(d) To the extent they have not been fully performed at or prior to
the Time of Closing, each and every covenant of the Purchaser
contained in this Agreement and any agreement, instrument,
certificate or other document executed or delivered pursuant to
this Agreement shall survive the completion of the transactions
contemplated by this Agreement and, notwithstanding such
completion, shall continue in full force and effect for the
benefit of the Vendors and the Company.
Article 5
---------
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
5.1 Parties' Conditions Precedent prior to the Closing Date. All of the
------------------------------------------------------------
rights, duties and obligations of each of the Parties hereto under this
Agreement are subject to the following conditions precedent for the exclusive
benefit of each of the Parties to be fulfilled in all material aspects in the
reasonable opinion of each of the Parties or to be waived by each or any of the
Parties, as the case may be, as soon as possible after the Execution Date;
however, unless specifically indicated as otherwise, not later than the Time of
Closing:
(a) the specific ratification of the terms and conditions of this
Agreement by the Board of Directors of the Purchaser within five
business days of the due and complete execution of this Agreement
by each of the Parties hereto (the "Purchaser's Ratification");
and
(b) the completion by the Purchaser of a due diligence and operations
review of the Company's Business and operations prior to the
Purchaser's Ratification (the "Purchaser's Due Diligence").
5.2 Parties' Waiver of Conditions Precedent. The conditions precedent set
-----------------------------------------
forth in section "5.1" hereinabove are for the exclusive benefit of each of the
Parties hereto and may be waived by each of the Parties in writing and in whole
or in part at or prior to the Time of Closing.
5.3 The Vendors' and the Company's Conditions Precedent. The purchase and
------------------------------------------------------
sale of the Purchased Securities is subject to the following terms and
conditions for the exclusive benefit of the Vendors and the Company, to be
fulfilled or performed at or prior to the Time of Closing:
(a) the representations and warranties of the Purchaser contained in
this Agreement shall be true and correct in all material respects
at the Time of Closing, with the same force and effect as if such
representations and warranties were made at and as of such time;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Purchaser at or before the Time
of Closing shall have been complied with or performed in all
material respects;
(c) there shall have been obtained, from all appropriate federal,
provincial, municipal or other governmental or administrative
bodies, such licenses, permits, consents, approvals, certificates,
registrations and authorizations as are required by law, if any,
to be obtained by the Purchaser to permit the change of ownership
of the Purchased Shares contemplated hereby, in each case in form
and substance satisfactory to the Vendors and the Company, acting
reasonably; and
(d) no legal or regulatory action or proceeding shall be pending or
threatened by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Shares contemplated hereby.
If any of the conditions contained in this section 5.3 shall not be
performed or fulfilled at or prior to the Time of Closing to the satisfaction of
the Vendors and the Company, acting reasonably, the Vendors and/or the Company
may, by notice to the Purchaser, terminate this Agreement and the obligations of
the Vendors, the Company and the Purchaser under this Agreement, other than the
obligations contained in Article 8 hereinbelow, shall be terminated, provided
that the Vendors and the Company may also bring an action pursuant to Article 7
against the Purchaser for damages suffered by the Vendors and/or the Company
where the non-performance or non-fulfillment of the relevant condition is as a
result of a breach of covenant, representation or warranty by the Purchaser. Any
such condition may be waived in whole or in part by the Vendors and the Company
in writing without prejudice to any claims it may have for breach of covenant,
representation or warranty.
5.4 Purchaser's Conditions Precedent prior to the Closing Date. The sale and
-----------------------------------------------------------
purchase of the Purchased Shares is subject to the following terms and
conditions for the exclusive benefit of the Purchaser, to be fulfilled or
performed at or prior to the Time of Closing:
(a) the representations and warranties of the Vendors and the Company
contained in this Agreement shall be true and correct at the Time
of Closing, with the same force and effect as if such
representations and warranties were made at and as of such time;
(b) all of the terms, covenants and conditions of this Agreement to be
complied with or performed by the Vendors and the Company at or
before the Time of Closing shall have been complied with or
performed;
(c) there shall have been obtained, from all appropriate federal,
provincial, municipal or other governmental or administrative
bodies, such licenses, permits, consents, approvals, certificates,
registrations and authorizations as are required to be obtained,
if any, by the Vendors and the Company to permit the change of
ownership of the Purchased Shares contemplated hereby;
(d) there shall have been no material adverse changes in the condition
(financial or otherwise), assets, liabilities, operations,
earnings, the Company's Business or prospects of the Company since
the date of the Company's Financial Statements;
(e) no legal or regulatory action or proceeding shall be pending or
threatened by any person to enjoin, restrict or prohibit the
purchase and sale of the Purchased Shares contemplated hereby; and
(f) no material damage by fire or other hazard to the whole or any
material part of the property or assets of the Company shall have
occurred from the date hereof to the Time of Closing.
If any of the conditions contained in this section 5.4 shall not be
performed or fulfilled at or prior to the Time of Closing to the satisfaction of
the Purchaser, acting reasonably, the Purchaser may, by notice to the Vendors
and the Company, terminate this Agreement and the obligations of the Vendors,
the Company and the Purchaser under this Agreement, other than the obligations
set forth in Article 8, shall be terminated, provided that the Purchaser may
also bring an action pursuant to Article 7 against the Vendors and/or the
Company for damages suffered by the Purchaser where the non-performance or
non-fulfillment of the relevant condition is as a result of a breach of
covenant, representation or warranty by the Vendors or the Company. Any such
condition may be waived in whole or in part by the Purchaser without prejudice
to any claims it may have for breach of covenant, representation or warranty.
Article 6
---------
CLOSING AND EVENTS OF CLOSING
-----------------------------
6.1 Closing and Closing Date. The closing (the "Closing") of the within
--------------------------
purchase and delivery of the Purchased Shares, as contemplated in the manner as
set forth in Article "2" hereinabove, together with all of the transactions
contemplated by this Agreement shall occur on January 20, 2005 (the "Closing
Date"), or on such earlier or later Closing Date as may be agreed to in advance
and in writing by each of the Parties hereto, and will be closed at the offices
of solicitors for the Purchaser, Xxxxxx Xxxxxx, Barristers and Solicitors,
located at Xxxxx 0000 - 000 X. Xxxxxxxx Xx., Xxxxxxxxx, X.X., X0X 0X0, at 2:00
p.m. (Vancouver time) on the Closing Date.
6.2 Latest Closing Date. If the Closing Date has not occurred by February 1,
--------------------
2005, subject to an extension as may be mutually agreed to by the Parties for a
maximum of 14 days per extension, then the Purchaser and the Vendors shall each
have the option to terminate this Agreement by delivery of written notice to the
other Party. Upon delivery of such notice, this Agreement shall cease to be of
any force and effect except for Article "8" hereinbelow, which shall remain in
full force and effect notwithstanding the termination of this Agreement.
6.3 Documents to be delivered by the Company and the Vendors prior to the
-------------------------------------------------------------------------
Closing Date. Not later than the Closing Date, and in addition to the
-------------
documentation which is required by the agreements and conditions precedent which
are set forth hereinabove, the Company and the Vendor shall also execute and
deliver or cause to be delivered to Purchaser's counsel all such other
documents, resolutions and instruments as may be necessary, in the opinion of
counsel for the Purchaser, acting reasonably, to complete all of the
transactions contemplated by this Agreement and including, without limitation,
the necessary transfer of all of the Purchased Shares to the Purchaser free and
clear of all liens, security interests, charges and encumbrances, and in
particular including, but not being limited to, the following materials:
(a) all documentation as may be necessary and as may be required by
the solicitors for the Purchaser, acting reasonably, to ensure
that all of the Purchased Shares have been transferred, assigned
and are registerable in the name of and for the benefit of the
Purchaser under all applicable corporate and securities laws;
(b) certificates representing the Purchased Shares registered in the
name of the Vendors, duly endorsed for transfer to the Purchaser
and/or irrevocable stock powers transferring the Purchased Shares
to the Purchaser;
(c) certificates representing the Purchased Shares registered in the
name of the Purchaser;
(d) a certified copy of the resolutions of the directors (and of the
Vendors/shareholders, if necessary) of the Company authorizing the
transfer by the Vendors to the Purchaser of the Purchased Shares;
(e) a copy of all corporate records and books of account of the
Company and including, without limiting the generality of the
foregoing, a copy of all minute books, share register books, share
certificate books and annual reports of the Company;
(f) all remaining Business Documentation; and
(g) all such other documents and instruments as the Purchaser's
solicitors may reasonably require.
6.4 Documents to be delivered by the Purchaser prior to the Closing Date. Not
--------------------------------------------------------------------
later than the Closing Date, and in addition to the documentation which is
required by the agreements and conditions precedent which are set forth
hereinabove, the Purchaser shall also execute and deliver or cause to be
delivered to the Company's and the Vendors' counsel, all such other documents,
resolutions and instruments that may be necessary, in the opinion of counsel for
the Company and the Vendors, acting reasonably, to complete all of the
transactions contemplated by this Agreement and including, without limitation,
the necessary acceptance of the transfer of all of the Purchased Shares to the
Purchaser free and clear of all liens, charges and encumbrances, and in
particular including, but not being limited to, the following materials:
(a) a copy of the resolutions of the directors of the Purchaser
providing for the approval of all of the transactions contemplated
hereby;
(b) an executed treasury order of the Purchaser providing for the due
issuance of all of the Purchase Price Common Shares to the order
and direction of the Vendors in accordance with section "2.2" and
"2.3" hereinabove; and
(c) all such other documents and instruments as the Company's and the
Vendors' respective solicitors may reasonably require.
Article 7
---------
INDEMNIFICATION AND LEGAL PROCEEDINGS
-------------------------------------
7.1 Indemnification. The Parties hereto agree to indemnify and save harmless
---------------
the other Parties hereto and including, where applicable, their respective
affiliates, directors, officers, employees and agents (each such party being an
"Indemnified Party") harmless from and against and agree to be liable for any
and all losses, claims, actions, suits, proceedings, damages, liabilities or
expenses of whatever nature or kind, including any investigation expenses
incurred by any Indemnified Party, to which an Indemnified Party may become
subject by reason of the terms and conditions of this Agreement.
7.2 No Indemnification. This indemnity will not apply in respect of an
-------------------
Indemnified Party in the event and to the extent that a court of competent
jurisdiction in a final judgment shall determine that the Indemnified Party was
grossly negligent or guilty of willful misconduct.
7.3 Claim of Indemnification. The Parties hereto agree to waive any right
-------------------------
they might have of first requiring the Indemnified Party to proceed against or
enforce any other right, power, remedy, security or claim payment from any other
person before claiming this indemnity.
7.4 Notice of Claim. In case any action is brought against an Indemnified
---------------
Party in respect of which indemnity may be sought against any of the Parties
hereto, the Indemnified Party will give the relevant Party hereto prompt written
notice of any such action of which the Indemnified Party has knowledge and such
Party will undertake the investigation and defense thereof on behalf of the
Indemnified Party, including the prompt consulting of counsel acceptable to the
Indemnified Party affected and the payment of all expenses. Failure by the
Indemnified Party to so notify shall not relieve any Party hereto of such
Party's obligation of indemnification hereunder unless (and only to the extent
that) such failure results in a forfeiture by any Party hereto of substantive
rights or defenses.
7.5 Settlement. No admission of liability and no settlement of any action
----------
shall be made without the consent of each of the Parties hereto and the consent
of the Indemnified Party affected, such consent not to be unreasonably withheld.
7.6 Legal Proceedings. Notwithstanding that the relevant Party hereto will
------------------
undertake the investigation and defense of any action, an Indemnified Party will
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel will be at the
expense of the Indemnified Party unless:
(a) such counsel has been authorized by the relevant Party hereto;
(b) the relevant Party hereto has not assumed the defense of the
action within a reasonable period of time after receiving notice
of the action;
(c) the named parties to any such action include that any Party hereto
and the Indemnified Party shall have been advised by counsel that
there may be a conflict of interest between any Party hereto and
the Indemnified Party; or
(d) there are one or more legal defenses available to the Indemnified
Party which are different from or in addition to those available
to any Party hereto.
7.7 Contribution. If for any reason other than the gross negligence or bad
------------
faith of the Indemnified Party being the primary cause of the loss claim,
damage, liability, cost or expense, the foregoing indemnification is unavailable
to the Indemnified Party or insufficient to hold them harmless, the relevant
Party hereto shall contribute to the amount paid or payable by the Indemnified
Party as a result of any and all such losses, claim, damages or liabilities in
such proportion as is appropriate to reflect not only the relative benefits
received by any Party hereto on the one hand and the Indemnified Party on the
other, but also the relative fault of the Parties and other equitable
considerations which may be relevant. Notwithstanding the foregoing, the
relevant Party hereto shall in any event contribute to the amount paid or
payable by the Indemnified Party, as a result of the loss, claim, damage,
liability, cost or expense (other than a loss, claim, damage, liability, cost or
expenses, the primary cause of which is the gross negligence or bad faith of the
Indemnified Party), any excess of such amount over the amount of the fees
actually received by the Indemnified Party hereunder.
Article 8
---------
NON-DISCLOSURE
--------------
8.1 Public Announcements and Disclosure to Regulatory Authorities. All
-------------------------------------------------------------------
information relating to the Agreement and the transaction contemplated therein
shall be treated as confidential and no public disclosure shall be made by any
Party without the prior approval of the Company and the Purchaser.
Notwithstanding the provisions of this Article, the Parties hereto agree to make
such public announcements and disclosure to the Regulatory Authorities of this
Agreement promptly upon its execution all in accordance with the requirements of
applicable securities legislation and regulations.
Article 9
---------
ASSIGNMENT AND AMENDMENT
------------------------
9.1 Assignment. Save and except as provided herein, no Party hereto may sell,
----------
assign, pledge or mortgage or otherwise encumber all or any part of its
respective interest herein without the prior written consent of all of the other
Parties hereto.
9.2 Amendment. This Agreement and any provision thereof may only be amended
---------
in writing and only by duly authorized signatories of each of the respective
Parties hereto.
Article 10
----------
FORCE MAJEURE
-------------
10.1 Events. If any Party hereto is at any time prevented or delayed in
------
complying with any provisions of this Agreement by reason of strikes, walk-outs,
labour shortages, power shortages, fires, wars, acts of God, earthquakes,
storms, floods, explosions, accidents, protests or demonstrations by
environmental lobbyists or native rights groups, delays in transportation,
breakdown of machinery, inability to obtain necessary materials in the open
market, unavailability of equipment, governmental regulations restricting normal
operations, shipping delays or any other reason or reasons beyond the control of
that Party, then the time limited for the performance by that Party of its
respective obligations hereunder shall be extended by a period of time equal in
length to the period of each such prevention or delay.
10.2 Notice. A Party shall, within seven calendar days, give notice to the
------
other Parties of each event of force majeure under section "10.1" hereinabove,
and upon cessation of such event shall furnish the other Parties with notice of
that event together with particulars of the number of days by which the
obligations of that Party hereunder have been extended by virtue of such event
of force majeure and all preceding events of force majeure.
Article 11
----------
ARBITRATION
-----------
11.1 Matters for Arbitration. The Parties agree that all questions or matters
-----------------------
in dispute with respect to this Agreement shall be submitted to arbitration
pursuant to the terms hereof.
11.2 Notice. It shall be a condition precedent to the right of any Party to
------
submit any matter to arbitration pursuant to the provisions hereof that any
Party intending to refer any matter to arbitration shall have given not less
than 10 calendar days' prior written notice of its intention to do so to the
other Party together with particulars of the matter in dispute. On the
expiration of such 10 calendar days the Party who gave such notice may proceed
to refer the dispute to arbitration as provided in section "11.3" hereinbelow.
11.3 Appointments. The Party desiring arbitration shall appoint one
------------
arbitrator, and shall notify the other Party of such appointment, and the other
Party shall, within two calendar days after receiving such notice, appoint an
arbitrator, and the two arbitrators so named, before proceeding to act, shall,
within 10 calendar days of the appointment of the last appointed arbitrator,
unanimously agree on the appointment of a third arbitrator, to act with them and
be chairman of the arbitration herein provided for. If the other Party shall
fail to appoint an arbitrator within 10 calendar days after receiving notice of
the appointment of the first arbitrator, and if the two arbitrators appointed by
the Parties shall be unable to agree on the appointment of the chairman, the
chairman shall be appointed under the provisions of the Commercial Arbitration
Act (British Columbia) (the "Arbitration Act"). Except as specifically otherwise
provided in this section, the arbitration herein provided for shall be conducted
in accordance with such Arbitration Act. The chairman, or in the case where only
one arbitrator is appointed, the single arbitrator, shall fix a time and place
in Vancouver, British Columbia, for the purpose of hearing the evidence and
representations of the Parties, and he shall preside over the arbitration and
determine all questions of procedure not provided for under such Arbitration Act
or this section. After hearing any evidence and representations that the Parties
may submit, the single arbitrator, or the arbitrators, as the case may be, shall
make an award and reduce the same to writing, and deliver one copy thereof to
each of the Parties. The expense of the arbitration shall be paid as specified
in the award.
11.4 Award. The Parties agree that the award of a majority of the arbitrators,
-----
or in the case of a single arbitrator, of such arbitrator, shall be final and
binding upon each of them.
Article 12
----------
DEFAULT AND TERMINATION
-----------------------
12.1 Default. The Parties hereto agree that if any Party hereto is in default
-------
with respect to any of the provisions of this Agreement (herein called the
"Defaulting Party"), the non-defaulting Party (herein called the "Non-Defaulting
Party") shall give notice to the Defaulting Party designating such default, and
within 10 calendar days after its receipt of such notice, the Defaulting Party
shall either:
(a) cure such default, or commence proceedings to cure such default
and prosecute the same to completion without undue delay; or
(b) give the Non-Defaulting Party notice that it denies that such
default has occurred and that it is submitting the question to
arbitration as herein provided.
12.2 Arbitration. If arbitration is sought, a Party shall not be deemed in
-----------
default until the matter shall have been determined finally by appropriate
arbitration under the provisions of Article "11" hereinabove.
12.3 Curing the Default. If:
------------------
(a) the default is not so cured or the Defaulting Party does not
commence or diligently proceed to cure the default; or
(b) arbitration is not so sought; or
(c) the Defaulting Party is found in arbitration proceedings to be in
default, and fails to cure it within five calendar days after the
rendering of the arbitration award,
the Non-Defaulting Party may, by written notice given to the Defaulting Party at
any time while the default continues, terminate the interest of the Defaulting
Party in and to this Agreement.
12.4 Termination. In addition to the foregoing it is hereby acknowledged and
-----------
agreed by the Parties hereto that this Agreement will be terminated in the event
that:
(a) the Purchaser's Ratification is not received within five business
days of the due and complete execution of this Agreement by each
of the Parties hereto;
(b) the Purchaser fails to complete a successful and Purchaser's Due
Diligence review of the Company's business and operations prior to
the Purchaser's Ratification;
(c) the conditions specified in section "5.1" hereinabove have not
been satisfied at or prior to the Time of Closing;
(d) either of the Parties hereto has not either satisfied or waived
each of their respective conditions precedent at or prior to the
Time of Closing in accordance with the provisions of Article "5"
hereinabove;
(h) either of the Parties hereto has failed to deliver or caused to be
delivered any of their respective documents required to be
delivered by Articles "5" and "6" hereinabove at or prior to the
Time of Closing in accordance with the provisions of Articles "5"
and "6"; or
(i) by Closing has not occurred on or before February 1, 2005, or such
later date, all in accordance with section "6.2" hereinabove; or
(j) by agreement in writing by each of the Parties hereto;
and in such event this Agreement will be terminated and be of no further force
and effect other than the obligations under Article "8" hereinabove.
Article 13
----------
NOTICE
------
13.1 Notice. Each notice, demand or other communication required or permitted
------
to be given under this Agreement shall be in writing and shall be sent by
prepaid registered mail deposited in a post office addressed to the Party
entitled to receive the same, or delivered to such Party, at the address for
such Party specified above. The date of receipt of such notice, demand or other
communication shall be the date of delivery thereof if delivered, or, if given
by registered mail as aforesaid, shall be deemed conclusively to be the third
calendar day after the same shall have been so mailed, except in the case of
interruption of postal services for any reason whatsoever, in which case the
date of receipt shall be the date on which the notice, demand or other
communication is actually received by the addressee.
13.2 Change of Address. Either Party may at any time and from time to time
-------------------
notify the other Party in writing of a change of address and the new address to
which notice shall be given to it thereafter until further change.
Article 14
----------
GENERAL PROVISIONS
------------------
14.1 Entire Agreement. This Agreement constitutes the entire agreement to date
----------------
between the Parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
Parties with respect to the subject matter of this Agreement and including,
without limitation, the agreement as between the Purchaser, the Vendor and the
Company.
14.2 Enurement. This Agreement will enure to the benefit of and will be
---------
binding upon the Parties hereto, their respective heirs, executors,
administrators and assigns.
14.3 Schedules. The Schedules to this Agreement are hereby incorporated by
---------
reference into this Agreement in its entirety.
14.4 Time of the Essence. Time will be of the essence of this Agreement.
-------------------
14.5 Representation and Costs. It is hereby acknowledged by each of the
--------------------------
Parties hereto that, as between the Parties hereto, Xxxxxx Xxxxxx, Barristers
and Solicitors, acts solely for the Purchaser, and that each of the Vendors and
the Company have been advised by the Purchaser and Xxxxxx Xxxxxx to obtain
independent legal advice with respect to their respective reviews and execution
of this Agreement. In addition, it is hereby further acknowledged and agreed by
the Parties hereto that each Party to this Agreement will bear and pay its own
costs, legal and otherwise, in connection with its respective preparation,
review and execution of this Agreement, and, in particular, that the costs
involved in the preparation of this Agreement, and all documentation necessarily
involved thereto, by Xxxxxx Xxxxxx shall be at the cost of the Purchaser.
14.6 Applicable Law. The situs of this Agreement is Vancouver, British
---------------
Columbia and for all purposes this Agreement will be governed exclusively by and
construed and enforced in accordance with the laws and Courts prevailing in the
Province of British Columbia.
14.7 Further Assurances. The Parties hereto hereby, jointly and severally,
-------------------
covenant and agree to forthwith, upon request, execute and deliver, or cause to
be executed and delivered, such further and other deeds, documents, assurances
and instructions as may be required by the Parties hereto or their respective
counsel in order to carry out the true nature and intent of this Agreement.
14.8 Severability and Construction. Each Article, section, paragraph, term
-----------------------------
and provision of this Agreement, and any portion thereof, shall be considered
severable, and if, for any reason, any portion of this Agreement is determined
to be invalid, contrary to or in conflict with any applicable present or future
law, rule or regulation in a final unappealable ruling issued by any court,
agency or tribunal with valid jurisdiction in a proceeding to any of the Parties
hereto is a party, that ruling shall not impair the operation of, or have any
other effect upon, such other portions of this Agreement as may remain otherwise
intelligible (all of which shall remain binding on the Parties and continue to
be given full force and agreement as of the date upon which the ruling becomes
final).
14.9 Captions. The captions, section numbers, Article numbers and Schedule
--------
numbers appearing in this Agreement are inserted for convenience of reference
only and shall in no way define, limit, construe or describe the scope or intent
of this Agreement nor in any way affect this Agreement.
14.10 Currency. Unless otherwise stipulated, all references to money amounts
--------
herein shall be in lawful money of the United States.
14.11 Counterparts. This Agreement may be signed by the Parties hereto in as
------------
many counterparts as may be necessary, and via facsimile if necessary, each of
which so signed being deemed to be an original and such counterparts together
constituting one and the same instrument and, notwithstanding the date of
execution, being deemed to bear the effective Execution Date as set forth on the
front page of this Agreement.
14.12 No Partnership or Agency. The Parties hereto have not created a
---------------------------
partnership and nothing contained in this Agreement shall in any manner
whatsoever constitute any Party the partner, agent or legal representative of
any other Party, nor create any fiduciary relationship between them for any
purpose whatsoever. No Party shall have any authority to act for, or to assume
any obligations or responsibility on behalf of, any other party except as may
be, from time to time, agreed upon in writing between the Parties or as
otherwise expressly provided.
14.13 Consents and Waivers. No consent or waiver expressed or implied by either
--------------------
Party hereto in respect of any breach or default by any other Party in the
performance by such other of its obligations hereunder shall:
(a) be valid unless it is in writing and stated to be a consent or
waiver pursuant to this section;
(b) be relied upon as a consent to or waiver of any other breach or
default of the same or any other obligation;
(c) constitute a general waiver under this Agreement; or
(d) eliminate or modify the need for a specific consent or waiver
pursuant to this section in any other or subsequent instance.
IN WITNESS WHEREOF each of the Parties hereto has hereunto executed this
------------------
Agreement as of the Execution Date as set forth on the front page of this
Agreement.
SIGNED and DELIVERED by )
XXXXXXX XXXX, a Vendor )
------------ )
herein, in the presence of: )
)
/s/ Ding Liu )
------------------------------------)
Witness Signature ) /s/ Xxxxxxx Xxxx
) ---------------------------
) XXXXXXX XXXX
B-26F Oriental Kenzo, No. 48 )
------------------------------------)
Dongzhimenwai, Beijing )
------------------------------------)
Witness Address )
)
Ding Liu, Dept. Manager )
------------------------------------)
Witness Name and Occupation )
SIGNED and DELIVERED by )
HONGXING LI, a Vendor )
----------- )
herein, in the presence of: )
)
/s/ Li Ai Ping )
------------------------------------)
Witness Signature ) /s/ Hong Xxxx Xx
) ---------------------------
) HONGXING LI
B-26F Oriental Kenzo, No. 48 )
------------------------------------)
Dongzhimenwai, Beijing )
------------------------------------)
Witness Address )
)
Li Ai Ping, Dept. Manager )
------------------------------------)
Witness Name and Occupation )
BEIJING BOHENG INVESTMENTS )
-------------------------- )
LTD., )
---- )
the Company herein, )
)
)
Per: /s/ Xxxxxxx Xxxx )
------------------------------------)
Authorized Signatory )
)
Xxxxxxx Xxxx, President )
------------------------------------)
(print name and title) )
XINHUA CHINA LTD., the )
----------------- )
Purchaser herein, )
)
)
Per: /s/ Xxxxxxxx Xxxx )
------------------------------------)
Authorized Signatory )
)
Xxxxxxxx Xxxx, President and CEO )
------------------------------------)
(print name and title) )
Schedule A
----------
This is Schedule "A" to that certain Share Purchase Agreement among
Xinhua China Ltd., Beijing Boheng Investments Ltd. and the shareholders of
Beijing Boheng Investments Ltd.
Purchased Securities and Vendors
--------------------------------
Authorized Capital: $___________ RMB
------------------
Paid Up Capital: $50,000,000 RMB
---------------
Vendor: Purchased Shares:
------ -----------------
Xxxxxxx Xxxx: 57.5% of registered capital
------------
South Construction Street, No. 0
Xxxxxxxx Xxxxxxxx
Xxxxxxxxxxxx, Xxxxx
Hongxing Li: 37.5% of registered capital
-----------
Xxxx 000, Xxxxx 00
Xxxxxxx Xxxxxx University
Haidian District
Beijing, China
Schedule B
----------
This is Schedule "B" to that certain Share Purchase Agreement among
Xinhua China Ltd., Beijing Boheng Investments Ltd. and the shareholders of
Beijing Boheng Investments Ltd.
Permits, Licenses and Certificates
----------------------------------
A. Request for instruction by the Beijing City Bureau of Commerce regarding
the formation of the Joint Venture of Xinhua Publications Circulation &
Distribution Co. Ltd. (issued by Beijing City Bureau of Commerce on
November 17, 2004)
B. Official reply from the Ministry of Commerce regarding approval for the
formation of the Xinhua Publications Circulation & Distribution Co. Ltd.
(issued by Ministry of Commerce of the People's Republic of China on
December 22, 2004)
C. Certificate of Approval for Establishment of Enterprises with Foreign
Investment in the People's Republic of China. (issued by the Ministry of
Commerce of the People's Republic of China on December 31, 2004)
D. People's Republic of China Publication Business Permit (issued by Beijing
City Bureau of News Publication on December 28, 2004)
E. People's Republic of China Publication Business Permit (copy) (issued by
Beijing City Bureau of News Publication on December 28, 2004)
F. Enterprise Corporation Business License (issued by the General Office of
the State Industry and Commerce Administration of the People's Republic
of China on December 31, 2004)
Refer to the materials attached hereto
--------------------------------------
-----------
(Translation)
Beijing City Bureau of Commerce
-------------------------------
Jingshangzi (2004) No.778 Signed & issued by: Zhou He
--------------------------------------------------------------------------------
Request for instruction by the Beijing City Bureau of Commerce regarding
the formation of the Joint Venture of
Xinhua Publications Circulation & Distribution Co. Ltd
To: The Ministry of Commerce
The Xinhua Bookstore-Main Store, Beijing Boheng Investments Ltd, Pac-poly
Investments Ltd, the People's Publishing House, the People's Literature
Publishing House, the Great Encyclopedia of China Publishing House, the
Commercial Press, Sanlian Bookstore, the China Map Publishing House, Jieli
Publishing House and the Beijing Forbidden City Investment Management Ltd intend
to form the Joint Venture of Xinhua Publications Circulation & Distribution Co.
Ltd in Beijing, with total investment and registered capital at Three Hundred
Million Renminbi. The business scope will be the wholesale and retail of
domestic (excluding Hong Kong, Macau and Taiwan) publication of books,
newspapers, periodicals, and electronic publications. The term of business will
be for thirty years.
The relevant information is hereby submitted for examination and approval.
[Seal of the Beijing City Bureau of Commerce]
November 17, 2004
(Person of contact: Zhang Zhencheng. Tel: 6523-6688-2020)
Keywords: Foreign trade. Joint venture. Contract. Constitution. Request for
Instruction.
Office of the Beijing City Bureau of Commerce. Printed on November 18, 2004
--------------------------------------------------------------------------------
Translator's Declaration:
-------------------------
I, Xxxxxx Tu, Certified Translator and Member in good standing of the Society of
Translators and Interpreters of British Columbia, attest that, to the best of my
knowledge and belief, the document above is a true and accurate English
translation of a document in the Chinese language entitled [Beijing City Bureau
of Commerce].
Signed: /s/ Xxxxxx Tu Date: December 3, 2004
-----------------------
Xxxxxx Tu
Certified Translator. STIBC Membership No. 04-10-0685 Tel: 000-000-0000
Attorney General Accredited & STIBC Certified Court Interpreter
Member of Canadian Translators, Terminologists & Interpreters Council
(Translation)
Ministry of Commerce of the People's Republic of China (official reply)
-----------------------------------------------------------------------
--------------------------------------------------------------------------------
SZP [2004] #2021
Official reply from the Ministry of Commerce regarding approval for the
-----------------------------------------------------------------------
formation of the Xinhua Publications Circulation & Distribution Co. Ltd
-----------------------------------------------------------------------
To: Beijing City Bureau of Commerce
The document: <> (JSZ [2004] #778) and other relevant information have
been received. After examination and verification of same, here is our reply:
5. We approve the formation in Beijing of the Sino-foreign Joint Investment
Enterprise, the "Xinhua Publications Circulation & Distribution Co. Ltd"
(hereinafter referred to as the Joint Venture), by the Xinhua
Bookstore-Main Store; Beijing Boheng Investments Ltd; the People's
Publishing House; the People's Literature Publishing House; the Great
Encyclopedia of China Publishing House; the Commercial Press; Sanlian
Bookstore; the China Map Publishing House; the Beijing Forbidden City
Investment Management Ltd; Jieli Publishing House; and Pac-poly Investments
Ltd registered in the British Virgin Islands. We also approve the Joint
Investment Contract signed by the Parties mentioned above on September 22,
2004 and the Constitution of the Joint Venture.
6. The total investment of the Joint Venture is RMB(Y)300,000,000.00 and the
registered capital is RMB(Y)300,000,000.00. Xinhua Bookstore-Main Store
will contribute RMB(Y)120,000,000.00 by way of house property, lands, goods
in kind and other intangible assets, accounting for 40% of the registered
capital; Beijing Boheng Investments Ltd will contribute
RMB(Y)92,000,000.00, accounting for 30.67% of the registered capital;
Pac-poly Investments Ltd will contribute RMB(Y)81,000,000.00 by way of cash
in foreign currency, accounting for 27% of the registered capital; the
People's Publishing House will contribute RMB(Y)600,000.00, accounting for
0.2% of the registered capital; the People's Literature Publishing House
will contribute RMB(Y)600,000.00, accounting for 0.2% of the registered
capital; the Great Encyclopedia of China Publishing House will contribute
RMB(Y)600,000.00, accounting for 0.2% of the registered capital; the
Commercial Press will contribute RMB(Y)600,000.00, accounting for 0.2% of
the registered capital; Sanlian Bookstore will contribute RMB(Y)600,000.00,
accounting for 0.2% of the registered capital; the China Map Publishing
House will contribute RMB(Y)2,000,000.00, accounting for 0.67% of the
registered capital; Jieli Publishing House will contribute
RMB(Y)1,000,000.00, accounting for 0.33% of the registered capital; the
Beijing Forbidden City Investment Management Ltd will contribute
RMB(Y)1,000,000.00, accounting for 0.33% of the registered capital. The
Parties of the Joint Venture shall pay 20% of their respective share of the
registered capital within three months of the issuance of the Business
Licence of the Joint Venture. The balance shall be paid up within six
months of the issuance of the Business Licence.
7. The scope of business of the Joint Venture is as follows: "The wholesale
and retail of the domestic (excluding Hong Kong, Macau and Taiwan) edition
of books, newspapers, periodicals and electronic publications; and
warehousing."
8. The term of business of the Joint Venture is thirty years.
Please notify the Enterprise to come to the Ministry with this Official Reply to
pick up the Certificate of Approval and to complete all necessary transactions.
December 22, 2004
[Seal of the Ministry of Commerce of the People's Republic of China]
cc: General Customs, General Revenue, General Industry & Commerce, Foreign
Exchange Bureau. Ministry of Commerce: Leadership (Ma, Liao), Department of
Foreign Capital (5), Personnel on duty, Filing.
General Office of the Ministry of Commerce. Printed on December 24, 2004
--------------------------------------------------------------------------------
Translator's Declaration:
-------------------------
I, Xxxxxx Tu, Certified Translator and Member in good standing of the Society of
Translators and Interpreters of British Columbia, attest that, to the best of my
knowledge and belief, this two page document is a true and accurate English
translation of a document in the Chinese language that appears to be an
[Official reply from the Ministry of Commerce].
Signed: /s/ Xxxxxx Tu Date: January 2, 2005
-----------------------
Xxxxxx Tu
Certified Translator. STIBC Membership No. 04-10-0685 Tel: 000-000-0000
Attorney General Accredited & STIBC Certified Court Interpreter
Member of Canadian Translators, Terminologists & Interpreters Council
(Translation)
CERTIFICATE OF APPROVAL
-----------------------
FOR ESTABLISHMENT OF ENTERPRISES WITH FOREIGN
INVESTMENT IN THE PEOPLE'S REPUBLIC OF CHINA
Approval Number: SWZ ZS [2004] 0329
Code for Import & Export Enterprise: 1100717853756
Date of Approval: December 22, 2004
Date of Issue: December 31, 2004
Serial Number of Certificate: 1100016711
Name of Enterprise: Xinhua Publications Circulation &
Distribution Co. Ltd
Address: 000 Xxxxxxxx Xx, Xxxxxxxxxxx, Beijing
Type of Business: Sino-foreign Joint Venture
Duration of Operation: Thirty years
Total Investment: Three Hundred Million (Y) Renminbi
Registered Capital: Three Hundred Million (Y) Renminbi
Scope of Business: Wholesale & retail of domestic
(excluding Hong Kong, Macau & Taiwan)
edition of books, newspapers,
periodicals and electronic
publications; and warehousing.
Name of Investor Place of Registration Capital Contribution
----------------- --------------------- --------------------
Xinhua Bookstore-Main Store China RMB(Y)120,000,000.00 in house property,
lands, goods in kind & intangible assets.
Beijing Boheng Investments Ltd China RMB(Y)92,000,000.00
China Map Publishing House China RMB(Y)2,000,000.00
Jieli Publishing House China RMB(Y)1,000,000.00
Beijing Forbidden City Investment Management Ltd China RMB(Y)1,000,000.00
People's Publishing House China RMB(Y)600,000.00
People's Literature Publishing House China RMB(Y)600,000.00
The Great Encyclopedia of China Publishing House China RMB(Y)600,000.00
Sanlian Bookstore China RMB(Y)600,000.00
The Commercial Press China RMB(Y)600,000.00
Pac-poly Investments Ltd British Virgin Islands RMB(Y)81,000,000.00
[Seal of the Ministry of Commerce of the People's Republic of China]
--------------------------------------------------------------------------------
Translator's Declaration:
-------------------------
I, Xxxxxx Tu, Certified Translator and Member in good standing of the Society of
Translators and Interpreters of British Columbia, attest that, to the best of my
knowledge and belief, the document above is a true and accurate English
translation of a document in the Chinese language entitled [Certificate of
Approval].
Signed: /s/ Xxxxxx Tu Date: January 2, 2005
------------------------
Xxxxxx Tu
Certified Translator. STIBC Membership No. 04-10-0685 Tel: 000-000-0000
Attorney General Accredited & STIBC Certified Court Interpreter
Member of Canadian Translators, Terminologists & Interpreters Council
(Translation)
People's Republic of China
--------------------------
Publication Business Permit
---------------------------
XCF JP No.W0001
Name: Xinhua Publications Circulation &
Distribution Co. Ltd
Place of Business: 000 Xxxxxxxx Xx, Xxxxxxxxx, Beijing
Legal Representative: Xxx Xxxxxx
Registered Capital: RMB(Y)300,000,000.00
Type of Capital: Sino-foreign joint capital.
Scope of Business: Wholesale and retail of domestic edition of
books, newspapers, periodicals and electronic
publications.
Valid until: December 31, 2007
Issued by: (seal) [Seal of Beijing City Bureau of News
Publication]
December 28, 2004
Produced by the General Office of News Publication of the
People's Republic of China
--------------------------------------------------------------------------------
Translator's Declaration:
-------------------------
I, Xxxxxx Tu, Certified Translator and Member in good standing of the Society of
Translators and Interpreters of British Columbia, attest that, to the best of my
knowledge and belief, the document above is a true and accurate English
translation of a document in the Chinese language that appears to be a
[Publication Business Permit].
Signed: /s/ Xxxxxx Tu Date: January 2, 2005
-----------------------
Xxxxxx Tu
Certified Translator. STIBC Membership No. 04-10-0685 Tel: 000-000-0000
Attorney General Accredited & STIBC Certified Court Interpreter
Member of Canadian Translators, Terminologists & Interpreters Council
(Translation)
People's Republic of China
--------------------------
Publication Business Permit (copy)
----------------------------------
XCF JP No.W0001
Name: Xinhua Publications Circulation &
Distribution Co. Ltd
Place of Business: 000 Xxxxxxxx Xx, Xxxxxxxxx, Beijing
Legal Representative: Xxx Xxxxxx
Registered Capital: RMB(Y)300,000,000.00
Type of Capital: Sino-foreign joint capital.
Scope of Business: Wholesale and retail of domestic edition of
books, newspapers, periodicals and electronic
publications.
Valid until: December 31, 2007
Issued by: [Seal of Beijing City Bureau of News
Publication]
December 28, 2004
Produced by the General Office of News Publication of the
People's Republic of China
The following types of business have been approved:
Books, newspapers, periodicals and electronic publications.
Seal of approving Department. [Approval Seal for Publication & Distribution of
the Beijing City Bureau of News Publication]
December 28, 2004
N.B.
5. Any changes in the items registered, or termination of business or
publication must go through proper procedures with the relevant Government
Departments.
6. All regulations on the publication market must be observed. Business must
be conducted in accordance with the law and the supervision by supervising
Departments must be obeyed.
7. This Permit is not to be rented out, sold, transferred, altered or
duplicated. Loss of this Permit should be reported promptly.
8. This Permit will be inspected yearly. Not participating in the yearly
inspection will render this Permit invalid.
--------------------------------------------------------------------------------
Translator's Declaration:
-------------------------
I, Xxxxxx Tu, Certified Translator and Member in good standing of the Society of
Translators and Interpreters of British Columbia, attest that, to the best of my
knowledge and belief, the document above is a true and accurate English
translation of a document in the Chinese language that appears to be a
[Publication Business Permit (copy)].
Signed: /s/ Xxxxxx Tu Date: January 2, 2005
--------------------------
Xxxxxx Tu
Certified Translator. STIBC Membership No. 04-10-0685 Tel: 000-000-0000
Attorney General Accredited & STIBC Certified Court Interpreter
Member of Canadian Translators, Terminologists & Interpreters Council
(Translation)
Enterprise Corporation
----------------------
Business Licence
----------------
Licence No. 0891977
Registration No. QHG 001105
Date of Incorporation: December 31, 2004
Name: Xinhua Publications Circulation &
Distribution Co. Ltd
Address: 000 Xxxxxxxx Xx, Xxxxxxxxx, Beijing
Legal Representative: Xxx Xxxxxx
Registered Capital: Three Hundred Million (Y) RMB (paid up
registered capital 0 U.S. Dollar)
Type of Business: Sino-foreign Joint Venture
Scope of Business: Wholesale and retail of domestic (excluding
Hong Kong, Macau, and Taiwan) edition of
books, newspapers, periodicals and electronic
publications; and warehousing.
Branches:
Term of Validity: From December 31, 2004 until December 30, 2034
[Seal of the General Office of the State Industry and Commerce Administration of
the People's Republic of China]
December 31, 2004
--------------------------------------------------------------------------------
Translator's Declaration:
-------------------------
I, Xxxxxx Tu, Certified Translator and Member in good standing of the Society of
Translators and Interpreters of British Columbia, attest that, to the best of my
knowledge and belief, the document above is a true and accurate English
translation of a document in the Chinese language entitled [Enterprise
Corporation Business Licence].
Signed: /s/ Xxxxxx Tu Date: January 4, 2005
---------------------------
Xxxxxx Tu
Certified Translator. STIBC Membership No. 04-10-0685 Tel: 000-000-0000
Attorney General Accredited & STIBC Certified Court Interpreter
Member of Canadian Translators, Terminologists & Interpreters Council
