(1) EXHIBIT 2
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Purchase Agreement for the Acquisition of CB-BVI.
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PURCHASE AGREEMENT
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BETWEEN:
INSTITUTE FOR COUNSELING, INC., 000 - 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
(the "Purchaser")
OF THE FIRST PART
AND:
CHINA BROADBAND (BVI) CORP., c/o 000 Xxxxxxxxxx Xxxxx X.X.,
Xxxxxxx, Xxxxxxx X0X 0X0
("CBB")
OF THE SECOND PART
WHEREAS:
A. Big Sky Network Canada Ltd. ("Big Sky") is a company involved in
business in China;
B. Not less than one-half of the issued and outstanding shares of Big Sky
are, or will at Closing be, held by CBB;
C. The Purchaser wishes to acquire CBB's interest in Big Sky through the
acquisition of all of the issued and outstanding shares of CBB in
exchange for shares of the Purchaser; and
D. The Board of Directors of each of the Purchaser and CBB consider this
Agreement advisable for the benefit of each company and their respective
shareholders.
NOW THEREFORE in consideration of the covenants, representations and warranties
set forth herein and as such other further consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. PURCHASE AND SALE. CBB hereby agrees to transfer or to use its best
efforts to cause to be transferred all, and not less than all, of the
issued and outstanding shares of CBB ("CBB Shares") to the Purchaser and
the Purchaser hereby agrees to acquire all, and not less than all, of
the issued and outstanding CBB Shares in consideration for the issuance
to the shareholders of CBB (the "Shareholders"), pro rata in accordance
with their shareholdings in CBB, as set out in Schedule "A" attached
hereto, of an aggregate of 13,500,000 common shares (the "Treasury
Shares") in the capital of the Purchaser following the share
consolidation set forth in section 2(a) below.
2. COVENANTS OF THE PURCHASER. The Purchaser covenants and agrees with CBB
and Big Sky to do the following in the order which follows at or prior
to the Closing Date (as hereinafter defined), and prior to the
completion of the transactions contemplated in section 1, above:
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(a) to effect a share consolidation of its issued and outstanding
shares ("ICI Shares") on the basis of 0.65104 (new) ICI Shares
for 1 (old) ICI Share such that there will be 1,500,000 (new) ICI
Shares issued and outstanding in the capital of the Purchaser
immediately prior to the Closing (as hereinafter defined);
(b) to cause its directors and officers to resign from their
respective positions with the Purchaser, effective as at the
Closing Date and to appoint such new directors and officers as
CBB may direct to fill such vacancies;
(c) to change its name to "China Broadband Corp." or such other name
as may be acceptable to CBB; and
(d) to comply with all applicable securities laws and regulatory
requirements, including, if required, the preparation of proxy
materials for a shareholders' meeting and holding such meeting to
obtain applicable shareholder approvals.
3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to CBB that:
(a) the Purchaser is duly incorporated under the laws of the State of
Nevada and is validly subsisting and in good standing under such
laws;
(b) the Purchaser's Form 10-SB dated November 13, 1999 filed pursuant
to section 12(b) of the Securities Exchange Act of 1934 (the
"Form 10-SB") is true and correct as at the date hereof and shall
be true and correct at the date of Closing and such Form 10-SB
has been duly filed with the Securities and Exchange Commission
and, is effective and is in a "no comment" status with the SEC.
Immediately upon closing, Purchaser shall prepare and file an
Information Statement, pursuant to Rule 15c2-11, with the
National Association of Securities Dealers to obtain a listing on
the Over the Counter Bulletin Board (the "NASD OTC Bulletin
Board");
(c) all of the currently issued and outstanding ICI Shares are
validly issued and outstanding and are fully paid and
non-assessable and the Treasury Shares to be issued at Closing
will, on issuance, be validly issued and outstanding as fully
paid and non-assessable and the Treasury Shares will at Closing
be free and clear of all liens, charges and encumbrances;
(d) the Purchaser has good and sufficient authority to enter into
this Agreement on the terms and conditions set forth herein;
(e) neither the execution nor delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
conflict in any material respect with, or result in any material
breach of, the terms, conditions, or provisions of or will
constitute a material default under the Articles of Incorporation
or resolutions of the Purchaser or any instrument, agreement or
contract to which it is party or by which it is bound;
(f) no consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and
performance of this Agreement by the Purchaser and the
consummation of the transactions contemplated hereby;
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(g) there are no suits, actions, litigation, arbitration
proceedings or government or regulatory proceedings
outstanding, in progress, pending or to the best of the
knowledge of the Purchaser, threatened, against or relating to
the Purchaser which might materially and adversely affect the
Purchaser;
(h) the Purchaser is not subject to any judgment, order or decree
entered in any lawsuit or proceeding which might materially and
adversely affect the Purchaser;
(i) all material transactions of the Purchaser have been properly
recorded or filed in or with its books and records and the minute
book of the Purchaser contains records of all meetings and
proceedings of the shareholders and directors of the Purchaser;
(j) the unaudited financial statements of the Purchaser for the
period ending June 30, 1999 and the audited financial statements
of the Purchaser for years ended December 31, 1998, December 31,
1997 and December 31, 1996 were prepared in accordance with
United States generally accepted accounting principles applied on
the basis consistent with prior years, and present fairly and
accurately in all material respects the financial condition and
position of the Purchaser as of those dates and the results of
its operations for the year and period then ended;
(k) the Purchaser has duly filed all federal, state, local and
foreign tax report's and returns required to be filed by it and
has duly paid all taxes and other charges due or claimed to be
due from it by federal, state, local and foreign taxing
authorities. Further, there are no tax liens upon any property or
assets of Purchaser. No state of facts exists which would
constitute grounds for the assessment of any tax liability by the
state, local, or foreign tax authorities. All deficiencies and
assessments, if any, resulting from any examination of state,
local and foreign tax returns and reports of the Purchaser if
any, have been paid. There are no outstanding agreements or
waivers extending the statutory period of limitation applicable
to any federal, state, local, or foreign tax return or report for
any period;
(l) the Purchaser is in compliance with all laws, regulations and
orders applicable to its business. The Purchaser has not received
any notification that it is in violation of any law, regulation
or order and no such violation exists. Neither the Purchaser nor
any of its employees or agents, to the best of their knowledge,
has made any payments to any persons which violate any statute or
law;
(m) other than this Agreement, there are no undisclosed material
changes in the affairs of the Purchaser since;
(n) the authorized capital of the Purchaser consists of an unlimited
number of ICI Shares with no par value, of which 2,304,000 ICI
Shares are currently issued and outstanding; and
(o) other than as provided for under this Agreement, there are no
rights, options or warrants outstanding pursuant to which any ICI
Shares may be required to be issued.
4. CBB'S REPRESENTATIONS AND WARRANTIES. CBB hereby represents and warrants
to the Purchaser as follows:
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(a) CBB is, or will on the Closing Date be, duly incorporated under
the laws of the British Virgin Islands and is validly subsisting
and in good standing under such laws;
(b) CBB has, or will on the Closing Date have, good and sufficient
authority to enter into this Agreement on the terms and
conditions set forth herein;
(c) neither the execution nor delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
conflict in any material respect with, or result in any material
breach of, the terms, conditions, or provisions of or will
constitute a material default under the constating documents of
CBB or any instrument, agreement or contract to which it is party
or which it is a party or by which it is bound;
(d) no consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and
performance of this Agreement by CBB and the consummation of the
transactions contemplated hereby;
(e) there are no suits, actions, litigation, arbitration proceedings
or government or regulatory proceedings outstanding, in progress,
pending or to the best of the knowledge of CBB, threatened,
against or relating CBB which might materially and adversely
affect CBB;
(f) CBB is not subject to any judgment, order or decree entered in
any lawsuit or proceeding which might materially and adversely
affect CBB;
(g) all material transactions of CBB have been properly recorded or
filed in or with its books and records and the minute book of CBB
contains records of all meetings and proceedings of the
shareholders and directors of CBB;
(h) the authorized capital of CBB consists of, or will at the Closing
Date consist of, 20,000,000 CBB Shares, of which 15,000,000 CBB
Shares are currently or will at the Closing Date be issued and
outstanding as fully paid and non-assessable;
(i) at the Closing Date, upon transfer thereof by the shareholders of
CBB, the Purchaser will be the legal and beneficial owner of all
of the issued and outstanding shares of CBB and no other person
(other than the Purchaser under this Agreement) will have any
right, present or future, to acquire any shares or other
securities of CBB, and such shares shall be free and clear of all
liens, charges and encumbrances;
(j) CBB is in compliance with all laws, regulations and orders
applicable to its business. CBB has not received any notification
that it is in violation of any law, regulation or order and no
such violation exists. Neither CBB nor any of its employees or
agents, to the best of their knowledge, has made any payments to
any persons which violate any statute or law; and
(k) other than this Agreement, there are no undisclosed material
facts in the affairs of CBB.
5. REPRESENTATIONS AND WARRANTIES OF CBB AS TO BIG SKY. CBB hereby
represents and warrants to the Purchaser as follows:
(a) Big Sky is duly incorporated under the laws of the British Virgin
Islands and is validly subsisting and in good standing under such
laws;
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(b) Big Sky has good and sufficient authority to enter into this
Agreement on the terms and conditions set forth herein;
(c) neither the execution nor delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
conflict in any material respect with, or result in any material
breach of, the terms, conditions, or provisions of or will
constitute a material default under the constating documents of
Big Sky or any instrument, agreement or contract to which it is
party or which it is a party or by which it is bound;
(d) no consent, approval or authorization of, or declaration, filing
or registration with, any governmental or regulatory authority is
required in connection with the execution, delivery and
performance of this Agreement by Big Sky and the consummation of
the transactions contemplated hereby;
(e) there are no suits, actions, litigation, arbitration proceedings
or government or regulatory proceedings outstanding, in progress,
pending or to the best of the knowledge of Big Sky, threatened,
against or relating to Big Sky which might materially and
adversely affect Big Sky;
(f) Big Sky is not subject to any judgment, order or decree entered
in any lawsuit or proceeding which might materially and adversely
affect Big Sky;
(g) all material transactions of Big Sky have been properly recorded
or filed in or with its books and records and the minute book of
Big Sky contains records of all meetings and proceedings of the
shareholders and directors of the Big Sky;
(h) the authorized capital of Big Sky consists of 100,000 shares, of
which 100,000 shares are, or will at the Closing Date be, issued
and outstanding as fully paid and non-assessable;
(i) CBB is, or at the Closing Date will be, the legal and beneficial
owner of 50,000 shares of Big Sky, such shares shall be free and
clear of all liens, charges and encumbrances and no other person
(other than the Purchaser under this Agreement) will have any
right, present or future, to acquire any shares or other
securities of Big Sky excepting SoftNet Systems, Inc. which has
the right to acquire 50,000 shares of Big Sky, in the event of
which exercise CBB will hold 50% of the issued and outstanding
shares of Big Sky;
(j) Big Sky has duly filed all federal, state, local and foreign tax
reports and returns required to be filed by it and has duly paid
all taxes and other charges due or claimed to be due from it by
federal, state, local and foreign taxing authorities. Further,
there are no tax liens upon any property or assets of Big Sky. No
state of facts exists which would constitute grounds for the
assessment of any tax liability by the state, local, or foreign
tax authorities. All deficiencies and assessments, if any,
resulting from any examination of state, local and foreign tax
returns and reports of Big Sky if any, have been paid. There are
no outstanding agreements or waivers extending the statutory
period of limitation applicable to any federal, state, local, or
foreign tax return or report for any period;
(k) Big Sky is in compliance with all laws, regulations and orders
applicable to its business. Big Sky has not received any
notification that it is in violation of any law, regulation or
order and no such violation exists. Neither Big Sky nor any of
its employees or agents, to the best of their knowledge, has made
any payments to any persons which violate any statute or law; and
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(l) other than this Agreement, there are no undisclosed material
facts in the affairs of Big Sky.
6. FURTHER REPRESENTATIONS AND WARRANTIES OF CBB: CBB hereby represents and
warrants on behalf of each of the Shareholders that:
(a) each of the Shareholders is financially responsible, able to meet
his obligations hereunder, and acknowledges this investment may
be long term and is by its nature speculative; further, each of
the Shareholders acknowledges he is financially capable of
bearing the risk of this investment.
(b) each of the Shareholders has had substantial experience in
business or investments in one or more of the following:
(i) knowledge of and investment experience with securities,
such as Treasury Shares and bonds;
(ii) ownership of interests in new ventures and/or start-up
companies;
(iii) experience in business and financial dealings and
parlance, and each of the Shareholders can protect his own
interests in an investment of this nature and does not
have a "Purchaser Representative," as that term is defined
in Regulation D of the Securities Act of 1933, as amended,
(the "Securities Act") and does not need such a
Representative.
(c) each of the Shareholders is capable of bearing the high degree of
economic risks and burdens of this investment, including, but not
limited to, the possibility of complete loss of all his
investment capital and the lack of a liquid public market, such
that he may not be able to readily liquidate the investment
whenever desired or at the then current asking price of the ICI
Shares.
(d) each of the Shareholders has had access to the information set
forth in section 4 hereof and was able to request copies of such
information, ask questions of and receive answers from the
Purchaser regarding such information and any other information he
desired concerning the terms and conditions of this transaction
and all such questions have been answered to his full
satisfaction. Each of the Shareholders understands that the
Treasury Shares have not been registered under the Securities Act
and the applicable state securities laws in reliance on the
exemption provided by Section 4(2) of the Securities Act and
Regulation D relating to transactions not involving a public
offering. Each of the Shareholders further understands that he is
purchasing the Treasury Shares without being furnished any
offering literature, prospectus or private offering memorandum,
other than that supplied under or identified hereunder.
(e) at no time was any of the Shareholders presented with or
solicited by any leaflet, public promotional meeting, circular,
newspaper or magazine article, radio or television advertisement,
or any other form of general advertising otherwise than in
connection and concurrently with this distribution of Treasury
Shares.
(f) the Treasury Shares which each of the Shareholders hereby
subscribes is being acquired solely for his own account, for
investment, and is not being purchased with a view to or for the
resale or distribution thereof and each of the Shareholders has
no present plans to
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enter into any contract, undertaking, agreement or arrangement
for such resale or distribution.
(g) each of the Shareholders is aware of the following:
(i) the Purchaser's financial and operating history;
(ii) the existence of substantial restrictions on the
transferability of Treasury Shares;
(iii) the Treasury Shares will not be, and each of the
Shareholders will have no rights to require, that the
Purchaser register the Treasury Shares under the
Securities Act or any state securities laws; and
(iv) each of the Shareholders may not be able to avail himself
of the provisions of Rule 144 adopted by the Securities
and Exchange Commission under the Securities Act or any
applicable state securities acts with respect to the
release of the Treasury Shares, and, accordingly, it may
not be possible for any of the Shareholders to liquidate
part or all of his investment in the Purchaser or to
liquidate at the then current asking price of the Treasury
Shares, if any.
(h) it has at no time been represented, guaranteed, or warranted to
each of the Shareholders by an officer or director of the
Purchaser, or the agents or employees thereof , or any other
person, expressly or impliedly, any of the following:
(i) an exact or approximate length of time that each of the
Shareholders will or will not remain as owner of the
Treasury Shares;
(ii) a percentage of profit and/or amount or type of
consideration, profit, loss, credits or deductions to be
realized, if any, as a result of each of the Shareholder's
ownership of the Treasury Shares; or
(iii) past performance on the part of any director or officer of
the Purchaser, or the agents or employees thereof, that
will in any way indicate the predictable results accruing
from ownership of the Treasury Shares.
(i) the Purchaser is under no duty to register the Treasury Shares or
comply with any exemption from registration under the Securities
Act or any state securities law, including supplying to the
appropriate agency or to each of the Shareholders any information
required in connection with transfers under appropriate rules and
regulations.
The foregoing representations and warranties shall be true and accurate as of
the date hereof and as of the date of any acceptance of this offer by the
Purchaser and shall survive the date of such acceptance by the Purchaser.
7. CONDUCT OF BUSINESS PENDING CLOSING Prior to the Closing Date, except as
otherwise consented to or approved by the Purchaser in writing, CBB
convenants and warrants that:
(a) CBB and Big Sky shall each carry on their business diligently and
substantially in the same manner as previously conducted, and CBB
and Big Sky shall not engage in any transaction or activity,
enter into any agreement or make any commitment except in the
ordinary course of business and consistent with past practice;
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(b) no change or amendment shall be made to the constating documents
of CBB and Big Sky;
(c) neither CBB or Big Sky shall issue or sell, or issue options,
warrants to purchase, conversion privileges or other rights to
subscribe to or enter into any arrangement or contract with
respect to any of its shares, other than as contemplated or
disclosed herein;
(d) neither CBB or Big Sky shall declare, pay or set aside for
payment any dividend or other distribution in respect of its
shares nor shall Big Sky redeem, purchase or otherwise acquire
any of its Shares; and
(e) each of CBB and Big Sky shall use their best efforts to preserve
their corporate existence and business organizations intact.
8. CONDITIONS FOR THE BENEFIT OF THE PURCHASER. The obligations of the
Purchaser to complete the transaction as contemplated herein shall be
subject to the following conditions:
(a) this Agreement shall have been duly executed by CBB;
(b) all the representations and warranties of CBB set forth in
sections 4 and 5 and of the Shareholders in section 6 shall be
true and correct as of the Closing Date; and
(c) the covenants of CBB set forth in section 8 shall have been
completed in full to the Purchaser's satisfaction as at the
Closing Date.
9. CONDITIONS FOR THE BENEFIT OF CBB. The obligations of CBB to complete
the transactions as contemplated herein shall be subject to the
following conditions:
(a) this Agreement shall have been duly executed by the Purchaser;
(b) all the representations and warranties of the Purchaser set forth
in section 3 shall be true and correct as at the Closing Date;
(c) all of the covenants of the Purchaser set forth in section 2
shall have been completed in full to CBB's satisfaction as at the
Closing Date;
(d) there shall have been no material adverse change in the financial
condition or assets of the Purchaser; and
(e) completion of due diligence by CBB with results satisfactory to
CBB.
10. CLOSING. Completion of the transactions contemplated herein (the
"Closing") shall take place as soon as practicable after the approval of
the shareholders of the Purchaser at the law firm of Xxxxxxx Xxxxx in
Vancouver, British Columbia (the "Closing Date"), or such other date,
time and place acceptable to the parties hereto. Closing shall in any
event occur on or before March 31, 2000, failing which this Agreement
shall terminate and be of no further force or effect, unless otherwise
mutually agreed to by the parties hereto.
11. DELIVERY BY THE PURCHASER. At the Closing, the Purchaser shall deliver
to CBB the following:
(a) a certified true copy of a resolution of the board of directors
of the Purchaser evidencing its approval to this Agreement and
all transactions contemplated hereunder;
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(b) a certified true copy of a resolution of all of the shareholders
of the Purchaser evidencing their approval to this Agreement and
all transactions contemplated hereunder;
(c) share certificate or certificates representing the Treasury
Shares; and
(d) such other documents, certificates and legal opinions that are,
in the opinion of legal counsel of the Purchaser, reasonably
required to complete the transactions and due diligence
contemplated hereunder.
12. DELIVERY BY CBB. At the Closing, CBB shall deliver to the Purchaser the
following:
(a) a certified true copy of a resolution of the board of directors
of CBB evidencing its approval of this Agreement and all
transactions contemplated hereunder;
(b) share certificate or certificates representing all of the CBB
Shares duly cancelled;
(c) a new share certificate representing all, and not less than all,
of the issued and outstanding CBB Shares registered in the name
of the Purchaser, together with confirmation of registration of
the Purchaser as the holder of all of the outstanding CBB Shares;
and
(d) such other documents, certificates and legal opinions that are,
in the opinion of legal counsel to the Purchaser, reasonably
required to complete the transactions and due diligence
contemplated hereunder.
13. BINDING AGREEMENT. Upon acceptance of the terms of this Agreement by the
parties hereto, this Agreement shall be deemed to constitute and shall
be a legally valid and binding agreement.
14. FURTHER ASSURANCES. The parties hereto agree to execute and deliver or
cause to be executed and delivered all such further documents and
instruments and do all such acts and things as either party may
reasonably request to give full effect to the terms and conditions,
intent and meaning of this Agreement.
15. ENTIRE AGREEMENT. This agreement constitutes the entire agreement
between the parties hereto and in respect of the matters referred to
herein and there are no representations, warranties, covenants,
agreements, express or implied, collateral hereto other than as
expressly set forth or referred to herein.
16. TIME OF THE ESSENCE. Time shall be of the essence of this Agreement.
17. APPLICABLE LAW AND ATTORNMENT. This agreement shall be governed and
interpreted in accordance with the laws of the Province of British
Columbia and the parties hereto irrevocably attorn to the non-exclusive
jurisdiction of the courts of the Province of British Columbia.
18. ENUREMENT. This agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective successors and assigns.
19. COUNTERPARTS. This agreement may be executed in any number of
counterparts with the same effect as if all the parties hereto had
signed the same agreement and all counterparts will be construed
together and constitute one and the same instrument.
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20. NOTICE. Any notice, request, demand or other communication to be given
under this Agreement will be in writing and shall be delivered by hand
or by telecopy to the party at the following respective addresses:
To CBB:
China Broadband (BVI) Corp.
c/o 000 Xxxxxxxxxx Xxxxx X.X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: President
Facsimile Number: 0-000-000-0000
To the Purchaser:
Institute for Counseling, Inc.
000 - 000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
Attention: President
Facsimile Number: 0-000-000-0000
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
INSTITUTE FOR COUNSELING, INC.
Per: _____________________________
Authorized Signatory
CHINA BROADBAND (BVI) CORP.
Per: _____________________________
Authorized Signatory
CHINA BROADBAND (BVI) CORP. as attorney for and
on behalf of each of the Shareholders set forth
in Schedule A hereto
Per: _____________________________
Authorized Signatory
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SCHEDULE "A"
CHINA BROADBAND (BVI) CORP. INSTITUTE FOR COUNSELLING
----------------------------------- ----------------------------------
NAME OF SHAREHOLDER NO. SHARES PERCENTAGE NO. SHARES PERCENTAGE
-------------------
Xxxxxxx Xxxxxx 2,137,500 14.25 1,923,750 12.83
Xxxxxx Xxxx 2,137,500 14.25 1,923,750 12.83
Xxx Xxxx 2,137,500 14.25 1,923,750 12.83
Xxx Xxxx 2,137,500 14.25 1,923,750 12.83
Xxxxxx Xxx 900,000 6.00 810,000 5.40
Donghe Xue 900,000 6.00 810,000 5.40
Xx Xxxx 900,000 6.00 810,000 5.40
Xxxxxxx Xxxxxxx 625,000 4.17 562,500 3.75
Western Capital 625,000 4.17 562,500 3.75
Xxxxxx Xxxxxxxx 50,000 0.33 45,000 0.30
R. Xxxxx Xxxxxxxxx 50,000 0.33 45,000 0.30
Xxxxx Xxxxxx 400,000 2.67 360,000 2.40
Xxxxx Xxxxxxx 1,000,000 6.67 900,000 6.00
Xxxxxxx Xxxxxx 100,000 0.67 90,000 0.60
000000 Xxxxxxx Ltd. 200,000 1.33 180,000 1.20
000000 Xxxxxxx Ltd. 100,000 0.67 90,000 0.60
000000 Xxxxxxx Ltd. 100,000 0.67 90,000 0.60
Lombard Odier & Cie 500,000 3.33 450,000 3.00
----------------- -------------- ------------------ -------------
TOTAL 15,000,000 100.00 13,500,000 100.00
* to be renamed China Broadband Corp.
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