EXHIBIT 10.1
ACQUISITION AGREEMENT
Acquisition Agreement
THIS AGREEMENT made effective the 4th day of July, 2003.
BETWEEN
China NetTV Holdings Inc.,
a business corporation duly incorporated and validly existing
under the laws of the State of Nevada, with its business address at
950, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, XX, Xxxxxx
("China Net")
AND
Wang Xxx
Xxxx Jie
Xxxxxx Xxx
Ma Xiao Jun
("Honglu Shareholders")
WHEREAS:
A. CHINA NET is a business corporation whose common shares are traded Over the
Counter Bulletin Board of NASD;
B. Honglu Shareholders are all the shareholders, and owners of 100% capital
stocks, of Honglu Investment Holdings, Inc. ("Honglu"), a business
corporation incorporated under the laws of the People's Republic of China,
which is the owner and/or license holder of the mines and deposits listed
in Schedule I annexed hereto.
NOW, THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants herein contained, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged by the Parties, and
intending to be legally bound, the Parties covenant and agree as follows:
Article One
Shares Exchange Between the Parties
1.1 Subject to the terms and conditions set forth herein, Honglu Shareholders
agree to transfer (the "Transfer") to China NetTV Holdings Inc. 100% of the
shares of Honglu (the "Transferred Shares"), in exchange for the common
shares to be issued to Honglu Shareholders by China NetTV Holdings Inc. as
provided herein.
1.2 To effect the transaction under this Agreement, China net shall issue to
Honglu Shareholders and/or their nominees a total of 97,700,000 common
shares immediately upon the execution of this Agreement or upon
presentation of the share certificates representing the Transferred Shares.
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1.3 For the avoidance of doubt, the common shares to be issued to Honglu
Shareholders under this Agreement shall be issued to Honglu Shareholders
and/or their nominees according to the ratio and percentage of subscription
for shares by such Honglu Shareholders and/or their nominees.
1.4 Honglu Shareholders shall have the right to appoint majority directors of
the Board of Directors of China Net on the date of execution of this
Agreement. Honglu Shareholders agree to cause such director(s) of China Net
to be appointed as director(s) of Honglu, provided that the majority
directors of Honglu consist of majority directors of China Net, subsequent
to the transaction contemplated herein.
1.5 Directors and officers of China net will resign and appoint the follow- ing
persons to the Board of Directors effective upon the signing of this
agreement:
Xxxx Xxx
Xxxxxx Xxx
Xxxxxxx Xxxxxx
Xxxx Xxx
Xxxxxxx Xxxxxx
1.6 Subject to and in accordance with section 1.4, the Parties understand that
the number of directors of China Net will be increased to include such
business, geological, finance, legal and other professional personnel as
required for the mining operations of the Company.
Article Two
Representations and Warranties of China Net
2.1 Immediately prior to this Agreement, China Net has a total of 37,446,200
shares issued and outstanding, all in one class of common shares. In
addition, China Net has approved a stock option plan for the sale of
5,000,000 shares of China Net's common stock at $0.40 per share. No options
have been exercised nor shares been issued under the option plan. China Net
has issued and extended its Series "A" Share Purchase Warrants for 3.2
million common shares. Upon exercise of a Purchase Warrant, the holder will
receive one common share of China Net and an Additional Warrant. For the
purposes of this Agreement, the shares of China Net on fully diluted basis
shall be 48,846,200. China Net has issued no shares, options, warrants or
other instrument convertible into shares, other than those contained
herein.
2.2 China Net represents and warrants to Honglu Shareholders that China Net is
a corporation duly organized, validly existing and in good standing in all
aspect under the laws of the State of Nevada and those of the United States
applicable thereto, including without limitation to, the laws, regulations,
rules, provisions and policies applicable to or in respect of the past and
current compliance of China Net.
2.3 China Net represents and warrants that it is in good standing under the SEC
and NASD rules and has been consistently in compliance with all SEC and
NASD requirements for its common shares to be and continue to be traded
over the counter of the Bulletin Board of NASD.
2.4 China Net represents and warrants that there is no action, claim, lawsuits
pending or threatened against China Net. Since the last audited Financial
Statements and the unaudited interim financial statements for the first
quarter 2003, there has been no change in liabilities or debt or change in
circumstances of China Net that has
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had or which China Net may expect to have material change or adverse effect
on the business, affairs and assets of China Net. China Net has no debts,
liabilities to any third party other than those expressly disclosed in its
audited and unaudited financial statements referenced hereto. For greater
certainty, it has no indebtedness, liabilities or commitment in favour of
any third party in respect of any of its business or activities which it
pursued prior to this Agreement.
2.5 China Net represents and warrants that neither itself nor any of its
current or former directors, officers has been the subject of investigation
or any disciplinary action by the SEC or NASD for a minimum of three (3)
years immediately prior to the execution of this Agreement.
2.6 CHINA NET has full power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby; all approval and consent
required in respect of the transactions hereunder have been given to and
obtained by CHINA NET, and no further consent, approval or action or
proceeding on the part of CHINA NET, its shareholders or its directors is
required; the execution, delivery and performance of this Agreement by
CHINA NET and its directors have been duly and validly approved by CHINA
NET, its directors and shareholders pursuant to the Certificate of
Incorporation and By-Laws of China Net, save and except that the share
consolidation will require the affirmative vote by holders of a simple
majority of the shares issued and outstanding prior to such vote.
2.7 The execution, delivery and performance of this Agreement by CHINA NET will
not violate any laws, regulations, rules, provisions or policies, including
without limitation, SEC and NASD rules, provisions and policies. Nothing
contained and contemplated herein will adversely affect the current and
post-transaction listing status and privileges of CHINA NET's common shares
traded Over the Counter Bulletin Board of NASD.
2.8 Since the last financial statements, ending on March 31, 2003, there has
been no change in circumstances that has had or China Net may expect to
have a material adverse effect on the assets, business and affairs of China
Net.
Article Three
Representations and Warranties of Honglu Shareholders
3.1 Honglu Shareholders are the owners of all the Transferred Shares in the
capital stock of Honglu.
3.2 Honglu is a business corporation duly incorporated and validly existing and
in good standing under the laws of the PRC. It owns and holds title and/or
licenses to the mines and deposits listed in Schedule I annexed hereto.
3.3 Each of Honglu Shareholders has the full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. All
approval, consent required in respect of the transaction hereunder have
been given and have been obtained by Honglu Shareholders. No further
consent, approval or action or proceeding on the part of Honglu
Shareholders is required.
3.4 The transfer and assignment by each of Honglu Shareholders of the
Transferred Shares shall in all aspects be considered as separate transfer
and assignment.
3.5 Since December 31, 2002, Honglu's business has been operated substantially
in accordance with all laws, rules, regulations, orders of competent
regulatory authorities, and there has not been
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(1) any event or change in circumstances that has had, or which Honglu
Shareholders expect to have, a materials adverse effect on Honglu or
its business;
(2) any change in liabilities of Honglu that has had, or which Honglu
Shareholders may expect to have, a material effect on Honglu or its
business;
(3) any incidence, assumption or guarantee of any indebtedness of Honglu
for borrowed money of Honglu;
(4) any payments by Honglu in respect of any indebtedness of HONGLU for
borrowed money or in satisfaction of any liabilities of HONGLU;
(5) the creation, assumption or sufferance of the existence of any lien on
any assets reflected on HONGLU's Financial Statements;
(6) any change by HONGLU in its accounting principles, methods or
practices in the manner it keeps its books and records;
(7) any distribution, dividend or bonus by HONGLU to any of its respec
-tive officers, directors, stockholders or affiliates, or any of their
respective affiliates or associates; and
(8) any material capital expenditure or commitment by HONGLU or material
sale, assignment, transfer, lease or other disposition of or agreement
to sell, assign, transfer, lease or otherwise dispose of any assets or
property by HONGLU other than in the ordinary course of business.
3.6 HONGLU has the full corporate power and authority to carry on the business
presently being carried on by it and as proposed to be carried on by it.
3.7 HONGLU holds all licenses, IP, software program and permits as may be
requisite for carrying on its business in the manner in which it has
heretofore been carried on.
3.8 Since the last financial statements annexed hereto as Schedule II, there
has been no change in circumstances which has had or which Honglu
Shareholders may expect to have any adverse effect on the assets, business
and affairs of Honglu.
3.9 Schedule II annexed hereto are true and complete copies of the audited
annual financial statements of HONGLU for the years 2000 through to 2002,
and the unaudited interim financial statements ending on May 31, 2003, all
compiled in accordance with the Chinese Generally Accepted Accounting
Practices consistently applied (Chinese GAAP). Honglu Shareholders shall
cause Honglu to prepare and provide China Net with audited financial
statements for the last two years (2002 and 2001) in accordance with US
GAAP as soon as practically possible for the purpose of filing with SEC.
Article Four
Covenants
4.1 This Agreement shall enter into force and be binding on the Parties as from
the date first above written.
4.2 The Parties shall cooperate and work with each other in good faith to
provide to each other with all information necessary to enable the Parties
to complete their respective due diligence.
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4.3 The Parties agree that China Net will pay Xxxxxx Xxxxx Xxx and/or his
nominees 6,839,000 common shares for his legal services and advice provided
to the Company on the transaction.
Article Five
Miscellaneous Provisions
5.1 This Agreement shall be governed by and construed in accordance with the
laws of the British Columbia and those of Canada applicable thereto.
5.2 Any and all disputes arising out of or in connection with this Agreement,
or in respect of any defined legal relationship associated therewith or
derived therefrom, shall be first addressed through consultation and/or
mediation. Disputes unresolved through consultation and mediation shall be
referred to and finally resolved by arbitration under the Rules of and
before the International Chamber of Commerce ("ICC") International Court of
Arbitration in Vancouver, Canada, as those rules may be amended and
replaced from time to time.
5.3 The arbitration tribunal shall consist of three (3) arbitrators to be named
and appointed in accordance with the applicable rules of procedures of the
ICC International Court of Arbitration. For the avoidance of doubt, each
China Net and Honglu Shareholders acting jointly shall have the right to
name one (1) arbitrator and the chairman and the third arbitrator of the
tribunal shall be appointed pursuant to the applicable rules of procedure.
The final award of the arbitration tribunal shall be final and binding upon
the Parties. The losing Party shall bear and reimburse the prevailing Party
costs and expenses associated with the preparation and prosecution of the
arbitration and any enforcement proceedings, including attorney fees on
solicitor-client basis, unless otherwise directed by the arbitration
tribunal or court of competent jurisdiction.
5.4 Where the losing Party fails to comply with such order and award, the
prevailing Party shall be free to apply to a court of competent
jurisdiction for an order of enforcement or such other orders or relief as
may be properly granted by the court.
5.5 Nothing contained herein will limit or prohibit the rights of either Party
to apply to a court of competent jurisdiction for interim protection such
as, by way of example, an interim injunction or order enforcing its rights
hereunder in a court of competent jurisdiction, prior or subsequent to the
arbitration.
5.6 No condoning, excusing or overlooking by a Party of any default, breach or
non-observance by the other at any time or times in respect of any
covenants, provisions, or conditions of this Agreement shall operate as a
waiver of such Party's rights under this Agreement in respect of any
continuing or subsequent default, breach or non-observance, so as to defeat
in any way the rights of such Party in respect of any such continuing or
subsequent default or breach and no waiver shall be inferred from or
implied by anything done or omitted by such Party in the absence of an
express waiver in writing.
5.7 No amendment or other modification of this Agreement will be binding unless
executed in writing by the Parties hereto. The Parties shall cooperate in
order to comply with all legal and regulatory provisions required to
maintain and continue the trading status of the shares of China Net at
NASD.
5.8 This Agreement and everything contained herein will inure to the benefit of
and be binding upon the Parties and their permitted successors and assigns.
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5.9 This Agreement may be executed in counterparts and by facsimile
transmission, each such counterpart together shall constitute a single
instrument. Three (3) original copies of such counterparts executed by each
Party shall be forth with delivered to all other Parties by registered
express mail.
5.10 For all purposes, this Agreement shall be deemed to be signed and executed
at Vancouver, British Columbia, Canada.
5.11 Schedules annexed hereto shall form an integral part of this Agreement.
5.12 This Agreement shall enter into force as of the date first above written.
IN WITNESS WHEREOF the Parties have duly executed this agreement.
China NetTV Holdings Inc. )
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Xxxxxx Xxxxxx, President & Director )
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Xxxxxxx Xxxxxx, Director
Honglu Shareholders
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Xxxx Xxx )
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Xxxx Xxx )
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Xxxxxx Xxx )
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Ma Xiao Jun )
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Schedule I Schedule of Mineral Deposits of Honglu and Danlu
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Schedule II Financial Statements of Honglu
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