ASSET PURCHASE AGREEMENT
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THIS AGREEMENT is made as of the 6 day of April, 2005
BETWEEN:
WASTE CONSULTANTS LIMITED, a company having an office and place of business
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in the Isle of Man at the address:
Forestview, Bowring Road
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Ramsey, Isle of Man
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IM8 2LH, British Isles
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(the "Vendor")
OF THE FIRST PART
AND:
EAPI ENTERTAINMENT, INC., a company duly incorporated under the laws of
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Nevada and having an office and place of business at Suite 000 - 0000
Xxxx Xxxxxxxx Xxxxxx, Xxxxxxx XX X0X 0X0
(the "Purchaser")
OF THE SECOND PART
WITNESSES THAT WHEREAS:
A. The Vendor has the benefit of certain assets used in the organic
recycling and waste management business in China;
B. The Purchaser desires to acquire the Vendor's assets on the terms and
subject to the conditions hereinafter contained to permit the Purchaser to
negotiate contracts for, and to thereafter construct and operate, one or
more organic recycling and waste management facilities (each a "Facility")
in the People's Republic of China;
NOW THEREFORE, in consideration of the premises and the mutual agreements and
covenants herein contained, and in consideration of the sum of $10.00 now paid
by the Purchaser to the Vendor, and for other good and valuable consideration
(the receipt and adequacy of such consideration being hereby acknowledged by the
Vendor), the parties covenant and agree as follows:
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SECTION 1
INTERPRETATION
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1.1 Definitions In this Agreement, the following words and phrases shall
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have the meanings set forth after each:
"Assets" means all of the Vendor's assets used, usable or useful for the purpose
of constructing a Facility, or used, usable or useful in connection with the
organic recycling and waste management business in the People's Republic of
China, including without limitation such of the following as have been or are
currently used, usable or useful in connection with the organic recycling and
waste management business in the People's Republic of China:
(a) all technology, proprietary information, knowhow (including policital
knowhow) and showhow owned or controlled by the Vendor, including
without limitation all right, title and interest of the Vendor in and
to all registered and unregistered patents, trademarks, trade or brand
names, copyrights, designs, restrictive covenants and other industrial
or intellectual property;
(b) the benefit of all past and present marketing efforts and operations
of the Vendor, including without limitation a comprehensive summary of
all existing and potential projects, clients and customers;
(c) all of the Vendor's right, title, benefit and interest in, to and
under all contracts, engagements and commitments benefiting the
Vendor, whether oral or written, and the benefit thereof;
(d) all client, customer, governmental and business contact lists, and
other books and records, and all other information, correspondence,
documents, and material, and the benefit thereof;
(e) the goodwill of the Vendor in the form of introductions to
governmental, business and client representatives important to the
Purchaser's intended business, and the benefit thereof;
"Bonus" means $100,000;
"Closing", "Closing Time", Closing Date" means 11:00 a.m. (local Vancouver time)
on the date first written above, or such other time or date as may be agreed
upon by the parties hereto;
"Conversion Option" means the option in favour of the Purchaser to convert the
principal balance of the Debt plus accrued interest into Shares, exercisable on
the terms set forth in SCHEDULE 1.1A;
"Debt" means the portion of the Purchase Price remaining unpaid from time to
time and accrued and unpaid interest thereon;
"Encumbrance" means any mortgage, charge, pledge, hypothecation, lien, security
interest, assignment, option, equity, execution, claim or any other title defect
or other encumbrance of any kind or nature
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whatsoever (including any agreement to give any of the foregoing), whether or
not registered or registrable or whether consensual or arising by operation of
law (statutory or otherwise);
"Interest Rate" means seven (4%) percent per annum;
"Note" means a promissory note evidencing the Purchaser's obligation to pay the
Purchase Price and interest thereon substantially in the form attached hereto as
SCHEDULE 1.1C
"Person" includes an individual, corporation, body corporate, partnership, joint
venture, association, trust or unincorporated organization or any trustee,
executor, administrator or other legal representative thereof;
"Purchase Price" means US$500,000.00 plus all applicable sales and transfer
taxes payable by the Purchaser in connection with its acquisition of the Assets;
"Supplemental Conversion Option" means an option in favour of the Purchaser to
convert a Bonus into Shares, exercisable on the terms set forth in SCHEDULE
1.1B;
"Vendor's Certificates" means the certificates to be delivered at Closing
pursuant to paragraph 6.1(e)(v).
1.2 Schedules The following are the schedules to this Agreement:
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Schedule 1.1A Conversion Option
Schedule 1.1B Supplemental Conversion Option
Schedule 1.1C Note
1.3 Interpretation For the purposes of this Agreement, except as
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otherwise expressly provided herein:
(a) "this Agreement" means this Agreement, including the Schedules hereto,
as it may from time to time be supplemented or amended and in effect;
(b) all references in this Agreement to a designated "Section",
"paragraph", "subparagraph" or other subdivision, or to a Schedule, is
to the designated Section, paragraph, subparagraph or other
subdivision of or Schedule to this Agreement, unless otherwise
specifically stated;
(c) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Section, paragraph, subparagraph or other subdivision or
Schedule;
(d) the singular of any term includes the plural and vice versa and
the use of any term is equally applicable to any gender and, where
applicable, a body corporate;
(e) the word "or" is not exclusive and the word "including" is not
limiting (whether or not non-limiting language such as "without
limitation" or "but not limited to" or other words of similar import
is used with reference thereto);
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(f) all accounting terms not otherwise defined have the meanings assigned
to them in accordance with generally accepted accounting principles
applicable in the United States and applied on a basis consistent with
prior periods;
(g) except as otherwise provided, any reference to a statute includes
and is a reference to such statute and to the regulations made
pursuant thereto with all amendments made thereto and in force from
time to time, and to any statute or regulations that may be passed
which have the effect of supplementing or superseding such statute or
such regulations;
(h) where the phrase "to the best of the knowledge of" or phrases of
similar import are used in this Agreement, it shall be a requirement
that the person or persons in respect of whom the phrase is used shall
have made such due enquiries as are reasonably necessary to enable him
to make the statement or disclosure;
(i) the headings to the sections and subsections of this Agreement
are inserted for convenience only and do not form a part of this
Agreement and are not intended to interpret, define or limit the
scope, extent or intent of this Agreement or any provision hereof;
(j) any reference to a corporate entity includes and is also a reference
to any corporate entity that is a successor to such entity;
(k) the language in all parts of this Agreement shall in all cases be
construed as a whole and neither strictly for nor strictly against any
of the parties;
(l) the representations, warranties, covenants and agreements contained in
this Agreement shall not merge in the Closing and shall continue in
full force and effect from and after the Closing Date;
(m) all references to money in this Agreement are or shall be to money in
lawful money of the United States.
SECTION 2
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
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2.1 Representations and Warranties of Vendor To induce the Purchaser to
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enter into and complete the transactions contemplated by this Agreement, the
Vendor hereby represents and warrants that:
(a) the Vendor:
(i) is a company duly incorporated and subsisting under the laws
of its jurisdiction of incorporation;
(ii) is duly organized, validly exists and is in good standing
under the laws of its jurisdiction of incorporation;
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(iii) is in good standing in each jurisdiction in which the nature of
the business conducted by it or the property owned or leased by
the Vendor makes such qualification necessary; and
(iv) has the full power, authority, right and capacity to own,
lease and dispose of the Assets, to execute and deliver this
Agreement, to complete the transactions contemplated hereby and
to duly observe and perform all of its covenants and obligations
herein set forth; and
(b) this Agreement has been duly and validly executed and delivered
by the Vendor and constitutes a legal, valid and binding obligation of
the Vendor, enforceable against the Vendor in accordance with its
terms, except as may be limited by laws of general application
affecting the rights of creditors;
(c) neither the execution nor the delivery of this Agreement, or the
other agreements and instruments contemplated hereby, nor the
completion of the transactions contemplated hereby will:
(i) constitute or result in the breach of or default under any
terms, provisions or conditions of, or conflict with, violate or
cause any, or give to any person any right of, after the giving
of a notice or lapse of time or otherwise, acceleration,
termination or cancellation in or with respect to any of the
following:
(A) any constating documents, charter documents or by-laws of
the Vendor or any resolution of directors or shareholders of
the Vendor;
(B) any law, judgment, decree, order, injunction, rule, statute
or regulation of any court, arbitrator or Governmental
Authority by which either the Assets or the Vendor is bound
or to which either the Assets or, the Vendor is subject;
(ii) result in the creation of any Encumbrance on any of the Assets;
or
(iii) result in any fees, duties, taxes, assessments or other amounts
relating to any of the Assets becoming due or payable, other than
federal or state sales or transfer tax payable by the Purchaser
as part of the Purchase Price in connection with the transactions
contemplated hereby;
(d) no authorization, approval, order, license, permit, consent,
certificate or registration of any Governmental Authority, court or
arbitrator, and no registration, declaration or filing by the Vendor
with any Governmental Authority, court or arbitrator, is required in
order for the Vendor:
(i) to incur the obligations expressed to be incurred by the
Vendor in or pursuant to this Agreement;
(ii) to execute and deliver all other documents and instruments
to be delivered by the Vendor pursuant to this Agreement;
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(iii) to duly perform and observe the terms and provisions of this
Agreement; or
(iv) to render this Agreement legal, valid, binding and enforceable;
(e) to the knowledge of the Vendor, no action suit, judgment,
investigation, inquiry, assessment, reassessment, litigation,
determination or administrative or other proceeding or arbitration
before or of any court, arbitrator or Governmental Authority or
dispute with any Governmental Authority is in process, or pending or
threatened, against or relating to the Vendor or any of the Assets and
no state of facts exists which could constitute the basis therefor;
(f) the Material Contracts are assignable with the consent of the
other party thereto and none of the Equipment is subject to any lease
or conditional sales agreement not previously disclosed to the
Purchaser;
(g) the Vendor is the legal and beneficial owner of and has good and
marketable title to the Assets free and clear of all Encumbrances, and
none of the Assets is in the possession of or under the control of any
other person;
(h) the Assets are being sold to the Purchaser "as is, where is",
without any warranty of merchantability or fitness for a particular
purpose;
(i) except as otherwise expressly disclosed to the Purchaser, there
has not been any default in any term, condition, provision or
obligation to be performed under any Material Contract, each of which
is in good standing and in full force and effect, unamended;
(j) there is no written, oral or implied agreement, option,
understanding or commitment or any right or privilege capable of
becoming any of the same, for the purchase from the Vendor of any of
the Assets;
(k) there is no indebtedness to any person which might, by operation
of law or otherwise, now or hereafter constitute or be capable of
forming an Encumbrance upon any of the Assets.
2.2 Other Representations All statements contained in any certificate or
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other instrument delivered by or on behalf of the Vendor pursuant hereto or in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Vendor hereunder.
2.3 Survival The representations and warranties of the Vendor contained
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in this Agreement shall survive the Closing and the payment of the Purchase
Price and, notwithstanding the Closing and the payment of the Purchase Price,
shall (except where otherwise specifically provided in this Agreement) survive
the Closing and shall continue in full force and effect for a period of one year
from the Closing Date.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
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3.1 Representations and Warranties In order to induce the Vendor to enter
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into and to consummate the transactions contemplated by this Agreement, the
Purchaser hereby represents and warrants to the Vendor that:
(a) The Purchaser is:
(i) is a company duly incorporated and subsisting under the laws
of its jurisdiction of incorporation;
(ii) is duly organized, validly exists and is in good standing
under the laws of its jurisdiction of incorporation;
(iii) has the full power, authority, right and capacity to execute and
deliver this Agreement, to complete the transactions contemplated
hereby and to duly observe and perform all of its covenants and
obligations herein set forth;
(b) The execution and delivery of this Agreement has been duly authorized
by all necessary corporate action on the part of the Purchaser and
this Agreement constitutes a valid and binding obligation of the
Purchaser;
(c) The Purchaser is not a party to, bound by or subject to any indenture,
mortgage, lease, agreement, instrument, statute, regulation, order,
judgment, decree or law which would be violated, contravened or
breached by or under which any default would occur as a result of the
execution and delivery by the Purchaser of this Agreement or the
performance by the Purchaser of any of the terms hereof;
and the Purchaser covenants, represents and warrants with and in favour of the
Vendor that all of the representations and warranties set forth in this Section
3.1 shall be true and correct at the Closing Time as if made at that time.
3.2 Survival The representations and warranties of the Purchaser
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contained in this Agreement shall survive the Closing and the purchase of the
Shares and, notwithstanding the Closing and the purchase of the Shares, the
representations and warranties of the Purchaser shall continue in full force and
effect for the benefit of the Vendor for a period of one year from the Closing
Date.
3.3 Reliance The Purchaser acknowledges and agrees that the Vendor have
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entered into this Agreement relying on the warranties and representations and
other terms and conditions of this Agreement notwithstanding any independent
searches or investigations that may be undertaken by or on behalf of the Vendor,
and that no information which is now known or should be known or which may
hereafter become known to the Vendor, or its professional advisers, shall limit
or extinguish the right to identification hereunder.
SECTION 4
PURCHASE AND SALE
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4.1 Assets Based and relying on the representations and warranties set
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forth in Sections 2 and 3, the Purchaser hereby agrees to purchase the Assets
from the Vendor and the Vendor hereby agrees to sell the Assets to the
Purchaser, free and clear of all Encumbrances, and the Purchaser hereby agrees
to pay the Purchase Price to the Vendor on the terms and conditions hereinafter
set forth.
4.2 Bonuses Each time the Purchaser completes a Facility after the
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Purchaser has completed the First Facility (as defined in Schedule 1.1A), the
Vendor will be entitled to a Bonus and the Purchaser will be and be deemed for
all purposes to have been granted a Supplemental Conversion Option in respect of
such Bonus.
SECTION 5
CLOSING MATTERS
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5.1 Closing Date and Location The transactions contemplated herein shall
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be completed at 11:00 a.m. on the Closing Date at the offices of the Vendor's
Solicitors, Suite 1300 - 1111 West Georgia Street, Vancouver, British Columbia,
or at such other time or at such other location as may be mutually agreed upon
by the parties hereto.
5.2 Vendor's Closing Documents On the Closing Date, the Vendor shall
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deliver, or cause to be delivered, to the Purchaser the documents set forth in
subsection 11.1 hereof and such other documents as the Purchaser may reasonably
require to perfect the purchase and sale intended hereby.
5.3 Purchaser's Closing Date Documents On the Closing Date, the Purchaser
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shall deliver the Note to the Vendor.
5.4 Interest, Payment and Conversion Privilege The Purchaser will pay
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interest on the Debt before and after each of maturity, default and judgment, in
accordance with the following provisions:
(a) the Debt will bear interest at the Interest Rate from and after
the Closing Date; and
(b) interest will accrue from day to day on the basis of a year of
365 or 366 days, as the case may be, and will be calculated monthly.
5.5 Payments Under Note The Purchase Price and interest thereon will be
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paid to the Vendor in accordance with the terms of the Note, and in the event of
any default of payment in accordance with the terms of the Note:
(a) the Purchaser will become liable for and will pay to the Vendor
an amount equal to ten (10%) of that portion of the Debt required to
be paid on the date specified in the Note;
(b) the amount described in clause 5.5(a) will be added to the Debt
and and the unpaid portion of such amount will bear interest at the
Interest Rate from and after the date of default until such amount is
paid in full; and the provisions of section 5.4 shall apply to such
amount, mutatis mutandis.
5.6 Place of Payment All payments to be made by the Purchaser to the
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Vendor hereunder will be made to the Vendor at its address first set forth above
or at such other place as the Vendor may advise the Purchaser from time to time
in writing.
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5.7 Prepayment The Purchaser shall have the right to prepay the
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principal balance of the Debt in whole or in part, together with any and all
interest and other monies due hereunder, at any time prior to the fifth
anniversary of the Closing Date.
5.8 Event of Default The Purchaser shall be in default under this
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Agreement, unless waived in writing by the Vendor, in any of the following
events (each of which is herein called an "Event of Default"):
(a) if the Purchaser defaults in payment when due of the Debt or any
other monies due and owing hereunder;
(b) if the Purchaser defaults in the performance or observance of any
other term, condition or covenant contained herein or in any security
instrument or in any other agreement between the Vendor and the
Purchaser and such default is not remedied within thirty (30) days'
notice from the Vendor to the Purchaser specifying such default;
(c) if the Purchaser declares itself to be insolvent or admits in
writing its inability to pay its debts generally as they become due,
or makes an assignment for the benefit of its creditors, is declared
bankrupt, makes or files a notice of intention to make a proposal or
otherwise takes advantage of provisions for relief under bankruptcy
legislation in any jurisdiction (including "Chapter 11"); or
(d) a receiver, receiver and manager or receiver-manager of all or
any part of the assets of the Purchaser is appointed; or
(e) an order is made or an effective resolution is passed for winding-up
the Purchaser; or
(f) the Purchaser proposes to dispose of all or substantially all of
its assets and undertaking or ceases or threatens to cease to carry on
all or a substantial part of its business; or
(g) the holder of any other security interest, charge, encumbrance,
lien or claim against any of the assets of the Purchaser does anything
to enforce or realize on such security interest, charge, encumbrance,
lien or claim;
and the Vendor may waive non-performance, default or any breach by the Purchaser
hereunder, but no waiver shall extend to a subsequent non-performance, breach or
default, whether or not the same as or similar to the non-performance, breach or
default waived.
5.10 Conversion Option
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The Vendor hereby grants the Conversion Option to the Purchaser.
5.11 Supplemental Conversion Option
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The Vendor hereby grants the Supplemental Conversion Option to the Purchaser.
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SECTION 6
POST-CLOSING MATTERS
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6.1 Post-Closing Matters - After Closing, the Vendor will apply all funds
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received in accordance with the Note to reduce Equipment Debt, until the
Equipment Debt has been paid in its entirety.
SECTION 7
VENDOR'S COVENANTS
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7.1 Prior to Closing Date The Vendor covenants and agrees with the
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Purchaser that from and after the date of execution of this Agreement to the
Closing Date:
(a) except with the prior written consent of the Purchaser, the Vendor
will not do or fail to do anything that would result in any of the
representations and warranties set forth in subsection 2.1 not being
true and correct in all material respects at the time of Closing;
(b) the Vendor will obtain all necessary releases, discharges, waivers,
consents and approvals as may be required to validly and effectively
transfer the Assets to the Purchaser;
(c) the Vendor will take or cause to be taken all proper steps, actions
and corporate proceedings on its part (including the approval of the
sale by the directors and shareholders of the Vendor) to enable it to
vest a good and marketable title in the Purchaser to the Assets, free
and clear of all Encumbrances;
(d) the Vendor will permit the Purchaser, its officers, directors, agents,
professional advisers or other authorized representatives at any time
and from time to time to inspect the Assets.
7.2 Enduring From and after the execution of this Agreement, both before
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and after the Closing Date, the Vendor covenants and agrees with the Purchaser
that the Vendor will, at its expense, execute and do all such further deeds,
acts, things and assurances as may reasonably be required for more perfectly and
absolutely assigning, transferring, assuring to and vesting in the Purchaser
title to the Assets.
SECTION 8
PURCHASER'S COVENANTS
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8.1 Purchaser's Covenants The Purchaser covenants and agrees with the
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Vendor that:
(a) from and after the date of this Agreement until the Closing, as
soon as the Purchaser has determined that a state of facts exists
which results in or will result in any representation or warranty
contained in subsection 3.1 being untrue or incorrect in any material
respect on the Closing Date, the Purchaser will notify the Vendor of
such state of facts;
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(b) the Purchaser will co-operate with the Vendor with respect to all
covenants set forth herein and the satisfaction of all conditions
precedent set forth herein;
(c) the Purchaser will be liable for and pay all social service taxes,
sales taxes, goods and services taxes, registration charges and
transfer fees properly payable upon and in connection with the sale
and transfer of the Assets by the Vendor to the Purchaser; provided
that all such taxes, charges and fees shall be included in the
Purchase Price;
(d) on and after the time of Closing, the Purchaser will assume, perform
and discharge all obligations arising under the Material;
(e) after the time of Closing the Purchaser will change its name to
"Organic Recycling Technologies Inc." or another name indicating that
it is carrying on business in the waste disposal and recycling
industry.
SECTION 9
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
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9.1 Purchaser's Conditions Precedent Notwithstanding anything herein
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contained, the obligation of the Purchaser to complete the purchase of the
Assets is conditional upon the fulfillment of the following conditions
precedent:
(a) the representations and warranties of the Vendor contained in this
Agreement and in any certificate or document delivered pursuant to the
provisions hereof or in connection with the transactions contemplated
hereby shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, except:
(i) to the extent that any of such representations and warranties
have been waived by the Purchaser or affected by the transactions
between the parties contemplated hereby; or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to
such date or period;
(b) all of the covenants, agreements and deliveries of the Vendor to be
performed or complied with on or before the Closing Date pursuant to
the terms of this Agreement shall have been duly performed or complied
with, except to the extent that such performance or compliance has
been waived by the Purchaser or is prevented by a default by the
Purchaser in the performance of its obligations hereunder;
(c) all consents or approvals required to be obtained by the Vendor for
the purpose of selling, assigning or transferring the Assets have been
obtained;
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(d) since the date hereof and prior to the Closing Date no substantial
damage by fire, negligence or otherwise to the Assets shall have
occurred which materially and adversely affects any of the Assets;
(e) The Purchaser shall be satisfied, acting reasonably, that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein will not constitute defaults under
any Material Contracts.
9.2 Conditions for Benefit of Purchaser The foregoing conditions are for
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the exclusive benefit of the Purchaser and any such condition may be waived in
whole or in part by the Purchaser on or prior to the Closing Date.
SECTION 10
CONDITIONS PRECEDENT TO THE VENDOR'S OBLIGATIONS
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10.1 Vendor's Conditions Precedent Notwithstanding anything herein
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contained, the obligation of the Vendor to complete the sale hereunder is
subject to the following conditions:
(a) the Purchaser's representations and warranties contained in this
Agreement shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, except:
(i) to the extent that any of such representations and warranties has
been waived by the Vendor or affected by the transactions between
the parties contemplated hereby; or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to
such date or period;
(b) the Purchaser shall have performed and complied with all covenants,
agreements and deliveries required by this Agreement to be performed
or complied with by it on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed or complied
with, except to the extent that such performance or compliance has
been waived by the Vendor or is prevented by a default by the Vendor
in the performance of its obligations hereunder; and
(c) all consents or approvals required to be obtained by the Vendor
for the purpose of selling, assigning or transferring the Assets have
been obtained, provided that this condition may only be relied upon by
the Vendor if the Vendor has diligently exercised its best efforts to
procure all such consents or approvals and the Purchaser has not
waived the need for all such consents or approvals.
10.2 Conditions for Benefit of the Vendor The foregoing conditions are
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for the exclusive benefit of the Vendor and any such condition may be waived in
whole or in part by the Vendor on or prior to the Closing Date.
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SECTION 11
DELIVERIES AT CLOSING
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11.1 Vendor's Deliveries At the Closing, the Vendor shall deliver or
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cause to be delivered to the Purchaser:
(a) all deeds of conveyance, bills of sale, transfer and assignments, duly
executed, in form and content satisfactory to the Purchaser's
Solicitors, appropriate to effectively vest good and marketable title
to the Assets in the Purchaser to the extent contemplated by this
Agreement, and immediately registrable in all places where
registration of such instruments is necessary or desirable;
(b) all consents or approvals required by this Agreement to be obtained by
the Vendor;
(c) at the Vendor's place of business, physical possession of the Assets;
(d) a certified copy of a resolution of the directors of the Vendor duly
passed, with a certification that it has not been rescinded and
continues to be in effect, authorizing the execution, delivery and
implementation of this Agreement and of all transactions contemplated
hereby and of all documents to be delivered by the Vendor pursuant
hereto; and
(e) if required by law, a certified copy of a special resolution of the
shareholder(s) of the Vendor duly passed, with a certification that it
has not been rescinded and continues to be in effect, approving the
sale of the Assets by the Vendor.
11.2 Purchaser's Deliveries At the Closing the Purchaser shall deliver or
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cause to be delivered to the Vendor a certified copy of a resolution of the
directors of the Purchaser duly passed authorizing the execution, delivery and
implementation of this Agreement and of all transactions contemplated hereby and
of all documents to be delivered by the Purchaser pursuant hereto.
SECTION 12
LOSS OR DAMAGE PRIOR TO CLOSING
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12.1 Loss or Damage Prior to Closing If, prior to the Closing Date, there
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shall have been any loss or damage to any Assets, the Vendor shall forthwith
thereafter deliver to the Purchaser a detailed list showing the insurance
coverage with respect thereto, particulars of any claims made by the Vendor
under its insurance coverage, and the standing of such claims and if,
notwithstanding such loss or damage, the Purchaser elects by notice in writing
to the Vendor to complete the transactions contemplated herein, the sale and the
purchase provided for herein shall be completed, and the Vendor shall on
Closing:
(a) pay to the Purchaser all monies received by the Vendor before the
Closing Date as proceeds of insurance with respect thereto; and
(b) deliver to the Purchaser a duly executed assignment in form and
substance satisfactory to the Purchaser's Solicitors, of all of the
Vendor's interest in and to any proceeds of
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insurance with respect to any such items and the Vendor's written
undertaking to co-operate with the Purchaser in the satisfactory
settlement of all claims.
SECTION 13
EFFECTIVE DATE AND ADJUSTMENTS
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13.1 Effective Date The purchase and sale of Assets herein contemplated
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shall take effect as of and from the Closing Date.
13.2 Adjustments Rentals and prepaid expenses relating to the Assets and
-----------
other matters customarily the subject of adjustment shall be adjusted as at the
close of business on the business day immediately preceding the Closing Date on
a per diem basis and the Purchase Price shall be adjusted accordingly.
SECTION 14
CONVEYANCE AND POSSESSION
-------------------------
14.1 Conveyance of Assets On completion of the Closing, this Agreement
----------------------
shall, without further act or formality, operate as a transfer to the Purchaser
of all Assets to be sold and purchased hereunder as the same shall be at the
close of business on the Closing Date. The Vendor shall nevertheless, at the
Closing and from time to time after the Closing, execute and deliver to the
Purchaser all such conveyances, transfers, assignments and other instruments in
writing and further assurances as the Purchaser shall reasonably require from
the Vendor, and the Purchaser shall execute and deliver to the Vendor all such
agreements of assumptions and other instruments in writing and further
assurances as the Vendor shall reasonably require in order to give effect to the
provisions of this Agreement.
14.2 Trust Regarding Assets Not Conveyed Should any of the Assets
---------------------------------------
intended to be transferred hereunder not be transferred to the Purchaser at the
completion of the Closing on the Closing Date, the Vendor shall hold as bare
trustee in trust for, and at the sole cost of the Purchaser, all such Assets
from the commencement of business on the Closing Date until such Assets are
effectively transferred.
SECTION 15
LAW AND PROCEDURE FOR RESOLVING DISPUTES
----------------------------------------
15.1 Arbitration Notwithstanding the jurisdictions of subsistence of the
-----------
parties to this Agreement and notwithstanding the situs of the subject matter of
this Agreement, this Agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia and, subject to the
requirement for arbitration of disputes set forth herein, the parties hereto
irrevocably submit and attorn to the jurisdiction of the Courts of the Province
of British Columbia; provided that any and all disputes arising out of or in
connection with this Agreement or in respect of any legal relationship
associated herewith or derived from this Agreement shall be referred to and
finally resolved by arbitration by a single arbitrator pursuant to the
International Commercial Arbitration Act (British Columbia), and the place of
the arbitration hearing shall be Vancouver, British Columbia.
SECTION 16
-15-
GENERAL PROVISIONS
------------------
16.1 Notices Any notice or other writing required or permitted to be
-------
given hereunder or for the purposes hereof shall be sufficiently given if
delivered or telecopied to the party to whom it is given or if mailed, by
prepaid registered mail, addressed to such party at its address first set forth
above or at such other address as the party to whom such writing is to be given
shall have last notified to the party giving the same in the manner provided in
this section, and:
(a) any notice mailed as aforesaid shall be deemed to have been given
and received on the fifth business day next following the date of its
mailing unless at the time of mailing or within five business days
thereafter there occurs a postal interruption which could have the
effect of delaying the mail in the ordinary course, in which case any
notice shall only be effectively given if actually delivered or sent
by telecopier; and
(b) any notice delivered or telecopied to the party to whom it is
addressed shall be deemed to have been given and received on the day
it was delivered; provided that if such day is not a business day then
the notice shall be deemed to have been given and received on the
business day next following such day.
16.2 Time Time shall be of the essence of this Agreement.
----
16.3 Entire Agreement This Agreement contains the whole agreement between
----------------
the parties in respect of the subject matters hereof and there are no
warranties, representations, terms, conditions or collateral agreements,
express, implied or statutory, other than as expressly set forth in this
Agreement and this Agreement supersedes all of the terms of any written or oral
agreement or understanding between the parties.
16.4 Enurement This Agreement shall enure to the benefit of and be
---------
binding upon the Vendor and the Purchaser and, as applicable, their heirs,
executors, administrators, successors and assigns.
16.5 Further Assurances Each of the parties will, on demand by another
-------------------
party, execute and deliver cause to be executed and delivered all such further
documents and instruments and do all such further acts and things as the other
may either before or after the Closing reasonably require to evidence, carry out
and give full effect to the terms, conditions, intent and meaning of this
Agreement and to assure the completion of the transactions contemplated hereby.
16.6 Modifications, Approvals and Consents No amendment, modification,
----------------------------------------
supplement, termination or waiver of any provision of this Agreement will be
effective unless in writing signed by the appropriate party and then only in the
specific instance and for the specific purpose given.
16.7 Legal and Other Fees Unless otherwise specifically provided herein,
---------------------
the parties will pay their respective legal, accounting and other professional
fees and expenses, including goods and services taxes on such fees and expenses,
incurred by each in connection with negotiation and settlement of this
Agreement, the completion of the transactions contemplated hereby and other
matters pertaining hereto.
16.8 Proof of Indebtedness The records of the Vendor as to the amount
-----------------------
outstanding hereunder, or as to payment of any money payable hereunder or any
part thereof being in default or of any demand for payment having been made
shall be prima facie proof of such fact.
-16-
16.9 Counterparts This Agreement may be executed in any number of
------------
counterparts or by facsimile, each of which shall together, for all purposes,
constitute one and the same instrument, binding on the parties, and each of
which shall together be deemed to be an original, notwithstanding that all of
the parties are not signatory to the same counterpart or facsimile.
16.10 Assignment The Purchaser may not assign the benefit of this
----------
Agreement except with the prior written consent of the Vendor, which consent may
be arbitrarily withheld; and in the event of any permitted assignment, the
Purchaser shall nevertheless remain bound by the terms hereof including the
obligation to pay the Purchase Price when due.
16.11 Severability If any one or more of the provisions contained in this
------------
Agreement should be invalid, illegal or unenforceable in any respect in any
jurisdiction, the validity, legality and enforceability of such provision or
provisions shall not in any way be affected or impaired thereby in any
jurisdiction and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any
-17-
way be affected or impaired thereby, unless in either case as a result of such
determination this Agreement would fail in its essential purpose.
IN WITNESS WHEREOF the parties hereto have hereunto duly executed this Agreement
as of the day and year first above written.
EAPI ENTERTAINMENT, INC.
Per:
/s/ Xxxxx Xxxxxxxx
________________________________
Authorized Signatory
WASTE CONSULTANTS LIMITED
Per:
/s/ Xxxxx Xxxxxx
________________________________
Authorized Signatory
SCHEDULE 1.1A
TERMS OF CONVERSION OPTION
--------------------------
1.0 Conversion Privilege
--------------------
1.1 Subject to the provisions hereinafter set forth, the Purchaser shall
have the sole and exclusive right and option (the "Option") to convert the
principal balance of the Debt into common shares ("Shares") of the Purchaser at
a conversion price (the "Conversion Price") per Share equal to that amount which
is 90% of the average of the closing prices (last trades) of the Purchaser's
shares on the OTC Bulletin Board (or on such other market or trading system on
or through which its shares shall be traded or quoted for trading) over the
three trading days immediately preceding the date on which notice of exercise of
the Option in whole or in part is given to the Vendor.
1.2 The Option may be exercised by the Purchaser as to the following amounts
(each a "Conversion Amount") until the times hereinafter specified:
(a) as to $15,000 of the Debt plus accrued interest on that $15,000
of the Debt, at any time up to 4:00 p.m. (local Vancouver time) on the
forty-fifth day next following that day on which the Purchaser signs a
letter of intent for the construction of an organic recycling and
waste management facility (the "First Facility") in China, where such
agreement was entered into by the Purchaser and the First Facility is
proposed to be constructed as a direct result of the Purchaser's
acquisition and use of the Assets (such that there is a direct causal
link between the Purchaser's acquisition and use of the Assets and the
Purchaser's contract to construct the First Facility);
(b) as to an additional $15,000 of the Debt plus accrued interest on
that $15,000 of the Debt, at any time up to 4:00 p.m. (local Vancouver
time) on the forty-fifth day next following that day on which the
Purchaser performs and completes all the due dillegence for the
construction of an organic recycling and waste management facility
(the "First Facility") in China, where such due dilligence was
completed by the Purchaser and the First Facility is proposed to be
constructed as a direct result of the Purchaser's acquisition and use
of the Assets (such that there is a direct causal link between the
Purchaser's acquisition and use of the Assets and the Purchaser's
contract to construct the First Facility);
(c) as to an additional $20,000 of the Debt plus accrued interest on
that $20,000 of the Debt, at any time up to 4:00 p.m. (local Vancouver
time) on the forty-fifth day next following that day on which the
Purchaser signs a binding agreement for the construction of an organic
recycling and waste management facility (the "First Facility") in
China, where such agreement was entered into by the Purchaser and the
First Facility is proposed to be constructed as a direct result of the
Purchaser's acquisition and use of the Assets (such that there is a
direct causal link between the Purchaser's acquisition and use of the
Assets and the Purchaser's contract to construct the First Facility);
-19-
(d) as to an additional $450,000 of the Debt plus accrued interest on
that $450,000 of the Debt, by a scheduled of trigering events to be
agreed to by the parties in a schedule to be attached to the binding
agreement completed in item (c) above and once the air permit and
project construction has begun
1.3 If the Purchaser does not exercise the Option as to the Conversion
Amount specified in any subsection of section 1.2 within the time permitted
(each a "Late Conversion Amount"), a penalty equal to 5% of the Late Conversion
Amount shall be added to the Late Conversion Amount, and the Late Conversion
Amount and such penalty shall be added to the portion of the Debt and accrued
interest thereon specified in the next following subsection of section 1.2 and
shall be convertible together with that portion of the Debt and accrued interest
thereon until the time specified in such subsection.
1.4 If at the end of the five year term of the Note one or more of the
events described in section 1.2 has/have not occurred, the Debt will be reduced
by the aggregate Conversion Amounts associated with the event(s) which has/have
not occurred (including accrued penalties where applicable) and the Purchaser
will:
(a) convert those Late Conversion Amounts then remaining unconverted
into Shares (the "Registration Shares") at a Conversion Price per
Share equal to that amount which is 90% of the average of the closing
prices (last trades) of the Purchaser's shares on the OTC Bulletin
Board (or on such other market or trading system on or through which
its shares shall be traded or quoted for trading) over the three
trading days immediately preceding the fifth anniversary of the
Closing Date; and
(b) file a registration statement with the United States Securities
and Exchange Commission for the registration of the Registration
Shares.
2.0 Manner of Exercise of Right to Convert
--------------------------------------
2.1 On each occasion on which the Purchaser desires to convert a Conversion
Amount or Late Conversion Amount (in each case an "Amount") to Shares, the
Purchaser shall deliver a written notice (each a "Notice') to the Vendor
specifying the Amount to be converted, expressed in U.S. dollars and shall,
within five (5) days thereafter:
(a) deliver an appropriate order to its transfer agent directing the
registration of the Vendor as the owner of the number of Shares into
which the Amount specified in the Notice is convertible; and
(b) deliver to the Vendor certificates for such Shares and, if
applicable, a cheque for any amount payable under paragraph 4.1.
2.3 Any Amount may be converted as provided in this Option and all
references in this Option to the conversion of the Debt shall be deemed to
include the conversion of an Amount where applicable.
3.0 Adjustment of Conversion Price
------------------------------
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3.1 If and whenever at any time prior to the expiry of the Term the
outstanding shares of the Purchaser are subdivided, redivided or changed into a
greater or consolidated into a lesser number of shares or reclassified into
different shares, if the Purchaser has not fully exercised its right of
conversion prior to the effective date of such subdivision, redivision, change
or consolidation or reclassification (each a "Change"), the Vendor shall be
entitled to receive and shall accept, upon the exercise of such right at any
time thereafter, in lieu of the number of Shares to which the Vendor was
entitled upon conversion immediately prior to such Change, the aggregate number
of Shares of the Purchaser that the Vendor would have been entitled to receive
as a result of such Change if, on the effective date thereof, the Vendor had
been the registered holder of the number of Shares to which it was entitled upon
conversion immediately prior to such Change.
3.2 If and whenever at any time prior to the expiry of the Term there is a
capital reorganization of the Purchaser or an amalgamation of the Purchaser with
or into any other company including by way of a sale whereby all or
substantially all of the Purchaser's undertaking and assets would become the
property of any other company, if the Purchaser has not fully exercised its
right of conversion prior to the effective date of such reorganization,
consolidation, merger, amalgamation or sale (herein individually called a
"Reorganization"), the Vendor shall be entitled to receive and shall accept,
upon exercise of such right at any time on or thereafter, in lieu of the number
of Shares to which the Vendor was entitled upon conversion immediately prior to
such Reorganization, the aggregate number of securities or property of the
Purchaser resulting from the Reorganization that the holder would have been
entitled to receive as a result of such Reorganization if, on the effective date
thereof, the Vendor had been the registered holder of the number of Shares to
which it was entitled upon conversion immediately prior to such Reorganization.
3.3 If any Reorganization occurs, appropriate adjustment shall be made in
the application of the provisions set forth in this Option with respect to the
rights and interests thereafter of the Purchaser to the end that after such
event the Purchaser shall retain rights substantially equivalent to the rights
held by it prior to the occurrence of such event and that the provisions set
forth in this Option shall thereafter be made applicable, as nearly as may
reasonably be, in relation to any shares or other securities or property to
which the Vendor is entitled on the exercise of the Purchaser's right of
conversion thereafter.
3.4 The adjustments provided for in this option are cumulative and shall
apply to successive Changes, Reorganizations or other events resulting in any
adjustment under the provisions of this Option.
3.5 In the event of any question arising with respect to the adjustments
provided in this Option, such question shall be determined by a firm of
chartered accountants appointed by the Purchaser (who may be the auditors of the
Purchaser); and such accountants shall have access to all necessary records of
the Purchaser and such determination shall be binding upon the Vendor and the
Purchaser.
4.0 No Requirement to Issue Fractional Shares
-----------------------------------------
4.1 The Purchaser shall not be required to issue fractional Shares upon the
conversion of an Amount pursuant to this Option. If any fractional interest in
a Share would be deliverable upon conversion of an Amount, the Purchaser shall,
in lieu of delivering any certificate for such fractional interest, satisfy such
fractional interest by paying to the Vendor an amount in lawful money of the
United States equal (computed to the nearest cent) to the appropriate fraction
of the value (being the last reported sale price if a sale took place within
sixty (60) days of the applicable Notice or, if none, a value determined by the
Directors of the Purchaser) of a Share on the date of receipt by the Vendor of
the Purchaser's Notice.
-21-
5.0 Purchaser to Reserve Shares
------------------------------
5.1 The Purchaser covenants that it will at all times reserve and keep
available out of its authorized capital solely for the purpose of issuance upon
conversion of all Amounts as in this Option provided, and conditionally allot to
the Vendor such number of Shares as shall then be issuable upon conversion of
all Amounts; and all Shares so issued shall be duly and validly issued as fully
paid and non-assessable.
SCHEDULE 1.1B
TERMS OF SUPPLEMENTAL CONVERSION OPTIONS
----------------------------------------
1.0 Conversion Privilege
--------------------
1.1 Subject to the provisions hereinafter set forth, the Purchaser shall
have the sole and exclusive right and option (in this Schedule the "Option") to
convert each and every Bonus into common shares ("Shares") of the Purchaser at a
conversion price (in this Schedule the "Conversion Price") per Share equal to
that amount which is 90% of the average of the closing prices (last trades) of
the Purchaser's shares on the OTC Bulletin Board (or on such other market or
trading system on or through which its shares shall be traded or quoted for
trading) over the three trading days immediately preceding the date on which
notice of exercise of the Option in whole or in part is given to the Vendor.
1.2 The Option may be exercised by the Purchaser as to each Bonus (in this
Schedule a "Conversion Amount") until the times hereinafter specified:
(a) as to 1/8 of the Bonus, at any time up to 4:00 p.m. (local
Vancouver time) on the forty-fifth day next following that day on
which the Purchaser signs a binding agreement for the construction of
the Facility in respect of which the Bonus is payable (the "Facility")
in China, where such agreement was entered into by the Purchaser and
the Facility is proposed to be constructed as a direct result of the
Purchaser's acquisition and use of the Assets (such that there is a
direct causal link between the Purchaser's acquisition and use of the
Assets and the Purchaser's contract to construct such Facility);
(b) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which the Purchaser receives financing for the construction and
completion of such Facility;
(c) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which the Purchaser receives the last of all required environmental
permits and licenses for the construction, completion and operation of
such Facility;
(d) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which construction of such Facility is one-quarter complete, as
certified by the chief project architect or chief project engineer;
(e) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which construction of such Facility is one-half complete, as
certified by the chief project architect or chief project engineer;
(f) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which construction of such Facility is three-quarters complete, as
certified by the chief project architect or chief project engineer;
-23-
(g) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which construction of such Facility is complete, as certified by
the chief project architect or chief project engineer; and
(h) as to an additional 1/8 of the Bonus, at any time up to 4:00 p.m.
(local Vancouver time) on the forty-fifth day next following that day
on which the Purchaser officially opens such Facility for operation.
1.3 If the Purchaser does not exercise the Option as to the Conversion
Amount specified in any subsection of section 1.2 within the time permitted
(each a "Late Conversion Amount"), a penalty equal to 5% of the Late Conversion
Amount shall be added to the Late Conversion Amount, and the Late Conversion
Amount and such penalty shall be added to the portion of the Debt and accrued
interest thereon specified in the next following subsection of section 1.2 and
shall be convertible together with that portion of the Debt and accrued interest
thereon until the time specified in such subsection.
1.4 If at the end of the five year term of the Note one or more of the
events described in section 1.2 has/have not occurred, the Debt will be reduced
by the aggregate Conversion Amounts associated with the event(s) which has/have
not occurred (including accrued penalties where applicable) and the Purchaser
will:
(a) convert those Late Conversion Amounts then remaining unconverted
into Shares (the "Registration Shares") at a Conversion Price per
Share equal to that amount which is 90% of the average of the closing
prices (last trades) of the Purchaser's shares on the OTC Bulletin
Board (or on such other market or trading system on or through which
its shares shall be traded or quoted for trading) over the three
trading days immediately preceding the fifth anniversary of the
Closing Date; and
(b) file a registration statement with the United States Securities
and Exchange Commission for the registration of the Registration
Shares.
2.0 Manner of Exercise of Right to Convert
--------------------------------------
2.1 On each occasion on which the Purchaser desires to convert a Conversion
Amount or Late Conversion Amount (in each case an "Amount") to Shares, the
Purchaser shall deliver a written notice (each a "Notice') to the Vendor
specifying the Amount to be converted, expressed in U.S. dollars and shall,
within five (5) days thereafter:
(a) deliver an appropriate order to its transfer agent directing the
registration of the Vendor as the owner of the number of Shares into
which the Amount specified in the Notice is convertible; and
(b) deliver to the Vendor certificates for such Shares and, if applicable,
a cheque for any amount payable under paragraph 4.1.
2.3 Any Amount may be converted as provided in this Option and all
references in this Option to the conversion of the Debt shall be deemed to
include the conversion of an Amount where applicable.
-24-
3.0 Adjustment of Conversion Price
------------------------------
3.1 If and whenever at any time prior to the expiry of the Term the
outstanding shares of the Purchaser are subdivided, redivided or changed into a
greater or consolidated into a lesser number of shares or reclassified into
different shares, if the Purchaser has not fully exercised its right of
conversion prior to the effective date of such subdivision, redivision, change
or consolidation or reclassification (each a "Change"), the Vendor shall be
entitled to receive and shall accept, upon the exercise of such right at any
time thereafter, in lieu of the number of Shares to which the Vendor was
entitled upon conversion immediately prior to such Change, the aggregate number
of Shares of the Purchaser that the Vendor would have been entitled to receive
as a result of such Change if, on the effective date thereof, the Vendor had
been the registered holder of the number of Shares to which it was entitled upon
conversion immediately prior to such Change.
3.2 If and whenever at any time prior to the expiry of the Term there is a
capital reorganization of the Purchaser or an amalgamation of the Purchaser with
or into any other company including by way of a sale whereby all or
substantially all of the Purchaser's undertaking and assets would become the
property of any other company, if the Purchaser has not fully exercised its
right of conversion prior to the effective date of such reorganization,
consolidation, merger, amalgamation or sale (herein individually called a
"Reorganization"), the Vendor shall be entitled to receive and shall accept,
upon exercise of such right at any time on or thereafter, in lieu of the number
of Shares to which the Vendor was entitled upon conversion immediately prior to
such Reorganization, the aggregate number of securities or property of the
Purchaser resulting from the Reorganization that the holder would have been
entitled to receive as a result of such Reorganization if, on the effective date
thereof, the Vendor had been the registered holder of the number of Shares to
which it was entitled upon conversion immediately prior to such Reorganization.
3.3 If any Reorganization occurs, appropriate adjustment shall be made in
the application of the provisions set forth in this Option with respect to the
rights and interests thereafter of the Purchaser to the end that after such
event the Purchaser shall retain rights substantially equivalent to the rights
held by it prior to the occurrence of such event and that the provisions set
forth in this Option shall thereafter be made applicable, as nearly as may
reasonably be, in relation to any shares or other securities or property to
which the Vendor is entitled on the exercise of the Purchaser's right of
conversion thereafter.
3.4 The adjustments provided for in this option are cumulative and shall
apply to successive Changes, Reorganizations or other events resulting in any
adjustment under the provisions of this Option.
3.5 In the event of any question arising with respect to the adjustments
provided in this Option, such question shall be determined by a firm of
chartered accountants appointed by the Purchaser (who may be the auditors of the
Purchaser); and such accountants shall have access to all necessary records of
the Purchaser and such determination shall be binding upon the Vendor and the
Purchaser.
4.0 No Requirement to Issue Fractional Shares
-----------------------------------------
4.1 The Purchaser shall not be required to issue fractional Shares upon the
conversion of an Amount pursuant to this Option. If any fractional interest in
a Share would be deliverable upon conversion of an Amount, the Purchaser shall,
in lieu of delivering any certificate for such fractional interest, satisfy such
fractional interest by paying to the Vendor an amount in lawful money of the
United States equal (computed to the nearest cent) to the appropriate fraction
of the value (being the last reported sale price if
-25-
a sale took place within sixty (60) days of the applicable Notice or, if none, a
value determined by the Directors of the Purchaser) of a Share on the date of
receipt by the Vendor of the Purchaser's Notice.
5.0 Purchaser to Reserve Shares
------------------------------
5.1 The Purchaser covenants that it will at all times reserve and keep
available out of its authorized capital solely for the purpose of issuance upon
conversion of all Amounts as in this Option provided, and conditionally allot to
the Vendor such number of Shares as shall then be issuable upon conversion of
all Amounts; and all Shares so issued shall be duly and validly issued as fully
paid and non-assessable.
SCHEDULE 1.1C
PROMISSORY NOTE
---------------
Vancouver, B.C.
April 6 , 2005
--------------
PRINCIPAL AMOUNT: U.S.$500,000
FOR VALUE RECEIVED, EAPI ENTERTAINMENT, INC. (the "Purchaser") hereby promises
to pay to the order of WASTE CONSULTANTS LIMITED (the "Vendor"), the sum of FIVE
HUNDRED THOUSAND DOLLARS lawful money of the United States of America (U.S.
$500,000) (the "Principal Sum") together with interest on the unpaid balance of
the Principal Sum from and after the date of this promissory note at the
Interest Rate (as hereinafter defined) on the payment scheudle as outlined in
Schedule 1.1A.
For the purpose hereof the Interest Rate means four per cent (4%) per annum.
Interest at the Interest Rate will be calculated monthly not in advance and will
be paid at the Interest Rate both before and after each of maturity, default and
judgment.
At the sole option of the Purchaser, the Principal Sum and accrued and unpaid
interest thereon may be converted into shares of the Purchaser on the terms and
conditions set forth in that certain asset purchase agreement dated for
reference April, 2005 between the Vendor and the Purchaser.
The Purchaser hereby waives presentment, protest, notice of protest and notice
of dishonor of this Promissory Note.
THE COMMON SEAL OF
EAPI ENTERTAINMENT, INC.
was hereunto affixed in the presence of:
c/s
/s/ Xxxxx Xxxxxxxx
_____________________________________
Authorized Signatory
