EXHIBIT 10.2
TERMINATION AGREEMENT
ACQUISITION AGREEMENT
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Acquisition Agreement, made this 25th day of April, 2001 among:
CHINA GATEWAY HOLDINGS, INC.
CLI Building, Suite 1003
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
a Delaware corporation
("Buyer")
and
HK GIANTRICH INTERNATIONAL (GROUPS) LIMITED
Flat K, 12th Floor, International Industrial Centre
2-8 Kwei Tei Street
Fo Tan, Shatin, N. T. Hong Kong
a , Niue corporation
(the "Company")
and
THE GLORY FAMOUS (GROUPS) LIMITED
A Republic of Seychelles corporation
(the "Seller")
WHEREAS;
A. Buyer, directly and through one or more subsidiaries, intends to engage
in the business of coal mining in the Shandong Province of the People's Republic
of China.
B. Company, is engaged in the business of coal mining.
C. The parties hereto deem it to be in the best interest of each of them
that Buyer purchase 100 percent of the issued and outstanding capital stock of
the Company, and generally succeed to the business of the Company, all pursuant
to such terms, provisions and conditions as the parties hereto shall agree.
NOW, THEREFORE, WITNESSETH, that for and in consideration of the premises
and of the mutual promises and covenants hereinafter set forth, the parties
hereto agree as follows:
A. PURCHASE AND PAYMENT
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1. Purchase and Sale of Stock.
1.1 Buyer agrees to purchase from Seller and Seller agrees to sell,
assign, transfer and deliver to Buyer 100 percent of the issued and outstanding
stock of the Company owned by the Seller consisting of 50,000 shares of the
Company as described in Schedule B annexed hereto and made a part hereto
(collectively, the "Stock").
1.2 The purchase and payment for the Stock by Buyer shall take place
at the time and in the manner hereinafter provided, and the sale, assignment,
transfer and delivery of the Stock by Seller, shall take place on the Closing
Date at the Closing as those terms are hereinafter defined, subject to the
fulfillment of the conditions hereinafter provided.
2. Purchase Price.
The aggregate purchase price of the Stock (the "Purchase Price"),
shall be twenty-five million (25,000,000) common shares of the Buyer. The
shares comprising the Purchase Price shall be transferred to the Seller at
closing.
B. REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer hereby warrants and represents to Seller that, as of the date hereof, the
following statements are true and correct.
1. CORPORATE STATUS.
The Buyer is (a) duly organized, validly existing and in good standing
under the laws of Delaware; (b) has full corporate power to own all of its
properties and carry on its business as it is now being conducted.
2. SHARES ISSUED AND OUTSTANDING.
2.1 The Buyer is authorized to issue 50,000,000 shares Common Stock,
US $0.0001 par value as noted in Schedule G annexed hereto and made a part
hereto.
2.2 As of this date, the Buyer has issued and outstanding 4,307,158
common shares as noted in Schedule F-3 annexed hereto and made a part hereto. As
of this date warrants to purchase 235,316 common shares of the Buyer are
outstanding at an exercise price of US$2.75 (RMB22.77) per share as noted in
Schedule F-17 annexed hereto and made a part hereto. The Buyer warrants, that
there are no other shares issued and outstanding and that there are no other
options or warrants outstanding except as noted in this paragraph herein.
2.3 As of the date of the Closing as defined in paragraph G below,
Buyer will have issued and outstanding after the current 4,307,158 common shares
issued and outstanding, after issuing 225,000 shares to Gateway Worldwide Ltd
for consulting services, and after issuing 25,000,000 shares to the Seller
(which represents 84.6535% of the total issued and outstanding), a total of
29,532,158 shares issued and outstanding.
3. AUTHORITY TO BUY.
Buyer have full right, power and authority to buy the Company and
deliver the Stock to the Seller in accordance with the terms of this Agreement,
and otherwise to consummate and close the transaction provided for in this
Agreement in the manner and upon the terms herein specified.
4. FINANCIAL STATEMENTS.
At or prior to the date of this Agreement, the Buyer has delivered to
the Seller certified financial statements prepared in accordance with United
States Generally Accepted Accounting Principles as of December 31, 2000, and
December 31, 1999 comprising Schedule F hereto, and said financial statements,
including the related notes and explanatory notes, present fairly the financial
position of the Buyer at the date thereof and the results of its operations for
the periods therein indicated, in conformity with United States Generally
Accepted Accounting Principles applied on a basis consistent in each case with
that of the preceding year.
5. PERIOD SINCE MOST RECENT FINANCIALS.
From the date of the most recent balance sheet included in the Buyer's
Schedule F-3 Financials, the Buyer has:
5.1 Not suffered any material adverse change in its financial
condition, assets, liabilities or business.
5.2 Not issued any additional shares of stock, rights or options to
purchase or convert into such stock, or other securities.
5.3 Not made any distribution to its shareholders, as shareholders, of
any assets, by way of dividends, purchase of shares or otherwise.
5.4 Not mortgaged, pledged or granted a lien or encumbrance on any of
its properties or assets.
5.5 Not increased the rate of compensation for any of its officers or
directors nor for any executive employees.
5.6 To the best knowledge of Buyer, it not incurred any liabilities,
contingent or otherwise, except those stated in the balance sheet of the Buyer
as of December 31, 2000, or described in any notes accompanying said balance
sheet, those referred to in Schedule F hereto, and current liabilities incurred
in the ordinary and usual course of business since the date of the said balance
sheet.
6. CAPITAL STRUCTURE.
The Buyer (a) is authorized by its charter and applicable law to issue
capital stock of the type and having par values as set forth in Schedule G
hereto; (b) has no issued and outstanding shares of its capital stock whatever,
except as specifically indicated in Schedule F-3 hereto, all of which such
shares are fully paid and non-assessable; (c) does not have authorized, issued
or outstanding any subscription, option, warrant, conversion or other rights to
the issuance or receipt of shares of its capital stock except as set forth in
Schedule F-17 hereto; (d) has all voting rights vested exclusively in the
presently issued and outstanding capital stock; and (e) has outstanding no
bonds, debentures or other similar evidences of indebtedness except as
specifically disclosed in its balance sheet as of December 31, 2000, (and
related notes thereto).
7. WUHAN LIMITED.
At or prior to the date of this Agreement, the Buyer has delivered to
the Seller acceptable representation, which is attached hereto and marked as
Schedule I, proper proof, that the 30 year Joint Venture Agreement the Buyer's
subsidiary Orient Packaging Limited entered into on December 20, 1996 with Wuhan
▇▇▇▇ ▇▇▇▇ Paper Mill Company, has been legally terminated effective December 31,
2000 as noted in the Buyer's Certified Financial Statements as of December 31,
2000 as audited by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, P.C. of Denver, Colorado,
USA, and marked as Schedule F-8.
8. PEACEABLE POSSESSION OF ASSETS.
The ownership and possession of all of the assets of the Buyer have
been peaceable and undisturbed and the title thereto has never been disputed or
questioned to the knowledge of the Buyer; nor does the Buyer know of any facts
by reason of which the possession or title thereof by the Buyer might be
disturbed or questioned or by reason of which any claim to its assets might
arise or be set up adverse to the Buyer.
9. REGULATORY GOOD STANDING.
The Buyer has all material rights, certificates, authorities, permits,
licenses, franchises and other authorizations necessary to and has complied in
material respects with all laws applicable to, the conduct of its business in
the manner and in the areas in which such business is presently being conducted
and all such certificates, authorities, rights, permits, licenses, franchises
and authorizations are valid, in good standing, in full force and effect, under
no orders of suspension or restraints, and subject to no disciplinary,
probationary or other orders. To the best of its knowledge, the Buyer has
engaged in no activity whatever which would cause or lead to proceedings
involving revocation, suspension, restraint, disciplinary action or any other
action whereby any of such certificates, authorities, rights, permits, licenses,
franchises or authorizations, or any part thereof, might be canceled,
terminated, suspended, impaired, lost or otherwise adversely affected, and no
action or proceeding looking to or contemplating any of the foregoing is pending
or to the Buyer's knowledge threatened.
10. LITIGATION.
The Buyer is not a party to any pending or to its knowledge threatened
suit, action, proceeding, prosecution or litigation which might materially
adversely affect the financial condition, business, assets, properties,
certificates, rights, authorities, franchises or authorizations of the Buyer, or
materially interfere therewith, nor to the knowledge of the Buyer is there any
threatened or pending governmental investigation involving the Buyer or any of
its operations, including inquiries, citations or complaints by any federal,
state or local administration or agency, which would materially adversely affect
the financial condition, business, assets or properties of the Buyer; and there
are no outstanding, existing or pending judgments, orders, decrees, rulings,
directives, stipulations or other mandates of any court or any public or
quasi-public agency, body or official which have been in any way violated as
they relate to or affect the Buyer or any of the Buyer's properties, businesses,
operations, affairs or activities.
11. DEFAULTS.
There are no material defaults on the part of the Buyer under any
contract, lease, mortgage, pledge, credit agreement, title retention agreement,
security agreement, lien, encumbrance or any other commitment, contract,
agreement or undertaking to which the Buyer or any of its subsidiaries are a
party.
12. TAX RETURNS.
All returns for governmental income taxes, surtaxes, excess profits
taxes, franchise taxes, sales and use taxes, real and personal property taxes
and any and all other taxes to which the Buyer, or its assets, operations or
income may be subject, due as of the date hereof, have been duly prepared and
filed in good faith and all taxes shown thereon have been paid or are accrued on
the books of the Buyer.
13. TAX ACCRUALS.
All other taxes and other assessments and levies which the Buyer is
required by law to withhold or to collect have been duly withheld and collected
and have been paid over to the proper governmental authorities or are held by
the Buyer for such payment and all such withholding and collections and all
other payments unpaid and due in connection therewith as of December 31, 2000
are duly reflected in the balance sheet of the Buyer as of said date and as of
the date of Closing.
14. LABOR PROBLEMS.
No labor or labor union problems or difficulties, arbitrations,
investigations, litigations or similar proceedings with respect thereto, are
presently existing, suffered, pending or threatened with respect to the Buyer or
any of its subsidiaries.
15. COMPLIANCE WITH LAW.
All of the properties, assets and business operations of the Buyer
conform in material respects with all applicable ordinances, regulations, laws
and statutes, including but not limited to building, zoning, safety, highway and
other such laws, rules, regulations and ordinances.
16. INFRINGEMENTS.
The Buyer has never been charged with infringement or violation of any
adversely held patent, trademark, trade name, or copyright, with claims reading
on operations of the Buyer or on apparatus or methods employed by the Buyer in
effecting the same, which would materially adversely affect any operation of the
Buyer, nor is the Buyer using or in any way making use of any confidential
information or trade secrets, of any former employer or any present or past
employee of the Buyer except as a result of the acquisition of the business of
such former employer.
17. TRUTH OF REPRESENTATION.
No representation by the Buyer made in this Agreement and no statement
made in any certificate or schedule furnished in connection with the transaction
herein contemplated contains or will contain any knowingly untrue statement of a
material fact or knowingly omits or will omit to state any material fact
reasonably necessary to make any such representation or any such statement not
misleading to a prospective purchaser of the Stock
C. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
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Seller and the Company hereby warrant and represent to Buyer that, as of
the date hereof, the following statements are true and correct.
1. CORPORATE STATUS.
The Company is (a) duly organized, validly existing and in good
standing under the laws of Niue as set forth in Schedule A; (b) has full
corporate power to own all of its properties and carry on its business as it is
now being conducted; and (c) is qualified to do business in each of the
jurisdictions in which it operates and the character of the properties owned by
the Company or the nature of the business transacted by the Company does not
make qualification necessary in any other jurisdiction or jurisdictions.
2. AUTHORITY TO SELL.
Seller have full right, power and authority to sell, transfer and
deliver the Stock owned by such Seller to Buyer in accordance with the terms of
this Agreement, and otherwise to consummate and close the transaction provided
for in this Agreement in the manner and upon the terms herein specified as set
forth in Schedule B and Schedule C.
3. ASSET TRANSFER AGREEMENT.
At or prior to the date of this Agreement, the Company has delivered
to Buyer copy of the Asset Transfer Agreement dated September 28, 2000 with
Xinwen Mining (Group) Co Ltd which includes the assessment and liabilities
associated with said Agreement comprising Schedule E 1 hereto.
4. FINANCIAL STATEMENTS.
At or prior to the date of this Agreement, the Company has delivered
to Buyer and its auditors a copy of the Financial Statements of the Huafeng Coal
Mine whose assets the Company purchased in its Asset Transfer Agreement noted in
Paragraph 3 above, which are most recent financial statements available
comprising Schedule J hereto, and said financial statements, including the
related notes and explanatory notes, present fairly the financial position of
the Huafeng Coal Mine at the date thereof and the results of its operations for
the periods therein indicated, in conformity with Chinese accounting principles
applied on a basis consistent in each case with that of the preceding year.
5. PERIOD SINCE MOST RECENT FINANCIALS.
From the date of the most recent balance sheet included in the Huafeng
Coal Mine's Schedule J Financial Statements, neither the Company nor the Mine
has:
5.1 Suffered any material adverse change in its financial condition,
assets, liabilities or business.
5.2 Affirmatively waived, canceled or compromised any of its rights,
debts or claims of substantial value.
5.3 Issued any additional shares of stock, rights or options to
purchase or convert into such stock, or other securities.
5.4 Made any distribution to its shareholders, as shareholders, of any
assets, by way of dividends, purchase of shares or otherwise.
5.5 Mortgaged, pledged or granted a lien or encumbrance on any of its
properties or assets, except with respect to equipment purchased by the Company
during such period.
5.6 Sold or transferred any of its assets, tangible or intangible,
except motor vehicles and except inventory and other assets sold or disposed of
in the ordinary and usual course of business.
5.7 Incurred any extraordinary losses, within the meaning of generally
accepted accounting principles, and/or incurred or become liable for any
obligations or liabilities except current liabilities, within the meaning of
generally accepted accounting principles, incurred in the ordinary and usual
course of business, or made any extraordinary expenditures, within the meaning
of generally accepted accounting principles, other than for the purchase of
motor vehicles and for additions and betterments to existing plant, equipment
and facilities.
5.8 Increased the rate of compensation for any of its officers or
directors nor for any executive employees, except as may be in accord with past
practices and in the usual and ordinary course of business of the Company.
5.9 Experienced any material adverse effect on its business,
properties and assets as the result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike, embargo, confiscation of vital equipment,
material or inventory, cancellation of contracts by any domestic or foreign
government, or any agency thereof, or customer whose business with seller
represents 5% or more of seller gross revenue, riot, activities of armed forces,
or acts of God or the public enemy.
5.10 To the best knowledge of Seller, the Company has incurred any
liabilities, contingent or otherwise, except those stated in the Asset Transfer
Agreement with Xinwen Mining (Group) Co Ltd as of December 31, 1999 and 2000,
attached hereto as Schedule E, or in the Financial Statements of the Huafeng
Coal Mine as of December 31, 1999 and 2000, attached hereto as Schedule J.
6. CAPITAL STRUCTURE.
The Company (a) is authorized by its charter and applicable law to
issue capital stock of the type and having par values as set forth in Schedule A
hereto; (b) has no issued and outstanding shares of its capital stock whatever,
except as specifically indicated in Schedule B hereto, all of which such shares
are fully paid and non-assessable; (c) does not have authorized, issued or
outstanding any subscription, option, warrant, conversion or other rights to the
issuance or receipt of shares of its capital stock except as set forth in
Schedule A hereto; (d) has all voting rights vested exclusively in the presently
issued and outstanding capital stock; and (e) has outstanding no bonds,
debentures or other similar evidences of indebtedness except as specifically
disclosed herein.
7. OWNERSHIP OF STOCK.
The Glory Famous (Groups) Limited, owns all of the issued and
outstanding shares of capital stock of the Company. Seller owns beneficially and
of record the number of shares set forth in Schedule B hereto opposite Seller's
name. Seller holds such stock free and clear of all liens, claims, debts,
encumbrances and assessments, and any and all restrictions as to sale,
assignment or transferability thereof. Seller has full rights, power and
authority to sell, transfer and deliver all of the shares of stock owned by said
Seller and the certificates therefore, sold hereunder, to Buyer in accordance
with the terms of this Agreement, and otherwise to consummate and close the
transaction provided for in this Agreement in the manner and upon the terms
herein specified.
8. TITLE TO ASSETS.
The Company states: (a) that it has good and marketable title to all
of its assets, as set forth on Schedule B hereto, which good and marketable
title is free and clear of all mortgages, pledges, liens, credit agreements,
title retention agreements, security agreements, taxes, claims, debts and other
obligations and encumbrances (b) the lien, if any, of current taxes not yet due
and payable and (c) such additional encumbrances or imperfections of title, if
any, which are not substantial in character, amount or extent and which do not
materially detract from the value, or materially interfere with the present or
future intended use, of the properties subject thereto or affected thereby, and
which do not otherwise materially impair or affect the business and operations
of the Company.
9. PEACEABLE POSSESSION OF ASSETS.
The ownership and possession of all of the assets of the Company have
been peaceable and undisturbed and the title thereto has never been disputed or
questioned to the knowledge of the Company; nor does the Company know of any
facts by reason of which the possession or title thereof by the Company might be
disturbed or questioned or by reason of which any claim to its assets might
arise or be set up adverse to the Company.
10. REGULATORY GOOD STANDING.
The Company has all material rights, certificates, authorities,
permits, licenses, franchises and other authorizations necessary to and has
complied in material respects with all laws applicable to, the conduct of its
business in the manner and in the areas in which such business is presently
being conducted and all such certificates, authorities, rights, permits,
licenses, franchises and authorizations are valid, in good standing, in full
force and effect, under no orders of suspension or restraints, and subject to no
disciplinary, probationary or other orders. To the best of its knowledge, the
Company has engaged in no activity whatever which would cause or lead to
proceedings involving revocation, suspension, restraint, disciplinary action or
any other action whereby any of such certificates, authorities, rights, permits,
licenses, franchises or authorizations, or any part thereof, might be canceled,
terminated, suspended, impaired, lost or otherwise adversely affected, and no
action or proceeding looking to or contemplating any of the foregoing is pending
or to the Company's knowledge threatened. The foregoing shall not be deemed to
constitute a warranty or representation that the Company has not heretofore or
shall not hereafter suffer to be committed minor and unintentional violations of
any governmental regulations of such nature as not to cause either suspension or
revocation of the Company's operating authority.
11. LITIGATION.
The Company is not a party to any pending or to its knowledge
threatened suit, action, proceeding, prosecution or litigation which might
materially adversely affect the financial condition, business, assets,
properties, certificates, rights, authorities, franchises or authorizations of
the Company, or materially interfere therewith, nor to the knowledge of the
Company is there any threatened or pending governmental investigation involving
the Company or any of its operations, including inquiries, citations or
complaints by any federal, state or local administration or agency, which would
materially adversely affect the financial condition, business, assets or
properties of the Company; and there are no outstanding, existing or pending
judgments, orders, decrees, rulings, directives, stipulations or other mandates
of any court or any public or quasi-public agency, body or official which have
been in any way violated as they relate to or affect the Company or any of the
Company's properties, businesses, operations, affairs or activities.
12. DEFAULTS.
There are no material defaults on the part of the Company under any
contract, lease, mortgage, pledge, credit agreement, title retention agreement,
security agreement, lien, encumbrance or any other commitment, contract,
agreement or undertaking to which the Company is a party.
13. TAX RETURNS.
All returns for governmental income taxes, surtaxes, excess profits
taxes, franchise taxes, sales and use taxes, real and personal property taxes
and any and all other taxes to which the Company, or its assets, operations or
income may be subject, due as of the date hereof, have been duly prepared and
filed in good faith and all taxes shown thereon have been paid or are accrued on
the books of the Company.
14. TAX ACCRUALS.
All other taxes and other assessments and levies which the Company is
required by law to withhold or to collect have been duly withheld and collected
and have been paid over to the proper governmental authorities or are held by
the Company for such payment and all such withholding and collections and all
other payments unpaid and due in connection therewith as of December 31, 2000
are duly reflected in the balance sheet of the Company as of said date.
15. LABOR PROBLEMS.
No labor or labor union problems or difficulties, strikes, walk-outs,
slow downs, job actions, boycotts, arbitrations, investigations, litigations or
similar proceedings with respect thereto, are presently existing, suffered,
pending or threatened with respect to the Company, its employees, business
operations, assets or properties.
16. COMPLIANCE WITH LAW.
All of the properties, assets and business operations of the Company
conform in material respects with all applicable ordinances, regulations, laws
and statutes, including but not limited to building, zoning, safety, highway and
other such laws, rules, regulations and ordinances.
17. INFRINGEMENTS.
The Company has never been charged with infringement or violation of
any adversely held patent, trademark, trade name, or copyright, with claims
reading on operations of the Company or on apparatus or methods employed by the
Company in effecting the same, which would materially adversely affect any
operation of the Company, nor is the Company using or in any way making use of
any confidential information or trade secrets, of any former employer or any
present or past employee of the Company except as a result of the acquisition of
the business of such former employer.
18. TRUTH OF REPRESENTATION.
No representation by the Company made in this Agreement and no
statement made in any certificate or schedule furnished in connection with the
transaction herein contemplated contains or will contain any knowingly untrue
statement of a material fact or knowingly omits or will omit to state any
material fact reasonably necessary to make any such representation or any such
statement not misleading to a prospective purchaser of the Stock.
D. COVENANTS OF THE SELLER AND THE COMPANY
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Seller hereby covenant and agrees as follows:
1. INSPECTION OF RECORDS.
During the period from the date hereof through the Closing Date as
that term is hereinafter defined (the "Contract Period"), the Buyer shall have
the right and opportunity at its own expense to make such examination and
investigation of the Company's business, properties and affairs as the Buyer may
deem reasonably necessary or desirable for all purposes relating to this
Agreement and to that end, throughout the Contract Period, the Company will
allow and grant the Buyer, its officers, counsel, accountants, auditors and
executive employees full, free and continuous access, during normal business
hours and without interference with the conduct of the Company's business, to
all of the premises, properties, contracts, commitments, leases, books, papers,
documents, instruments, books of account, minutes and other records of the
Company and will furnish and provide the Buyer with all such financial and other
statements and all such additional information and particulars in respect of the
business, properties and affairs of the Company as the Buyer may, from time to
time during the Contract Period, reasonably request or require.
2. CONDUCT OF BUSINESS.
During the period from the date hereof to the Closing Date as that
term is hereinafter defined, the Company shall:
2.1 Conduct its business and operations solely in the usual, normal
and ordinary course;
2.2 Issue no additional shares of stock, options, calls or other
rights to purchase such stock, or any other securities of any kind whatever;
2.3 Make no distributions to its shareholders, as shareholders, of any
of its assets or properties by way of dividends, purchase of shares, redemption
or otherwise.
2.4 Not transfer to any person, firm or corporation any customers,
customer lists or customer accounts of the Company;
2.5 Make no increase of any kind in any salary, wages, bonus or
compensation of any officer, employee, representative or agent of the Company or
pay any extra compensation of any kind whatever to any of such persons;
2.6 Not sell, transfer or dispose of any of the Stock;
2.7 Not sell, transfer or dispose of any of its business, properties
or assets, tangible or intangible, except for a full and fair consideration in
the usual and ordinary course of business;
2.8 Make no purchases or acquisitions of any real or personal property
nor increase or decrease inventory, except in the usual and ordinary course of
its business;
2.9 Not subject any of its business, property or assets whatever,
tangible or intangible, to any mortgage, lien, pledge, hypothecation or
encumbrance in any manner except for a full and fair consideration in the usual
and ordinary course of business;
2.10 Not borrow any money, make any unusual or extraordinary
expenditures or incur or become liable for any obligations or liabilities except
current liabilities in the usual and ordinary course of its business;
2.11 Not make any loans or advances or extend any credit except in the
usual and ordinary course of its business.
3. PUBLICITY.
All notices to third parties other than Seller and all other publicity
concerning the transactions contemplated by this Agreement shall be planned and
coordinated jointly by Buyer and by the Company.
4. WARRANTIES AND REPRESENTATIONS.
The Company will promptly furnish to Buyer copies of any and all
financial statements of the Company prepared by or for the Company subsequent to
the date hereof, and will promptly furnish to and advise the Buyer of any and
all material information, details, facts and circumstances concerning the
Company's financial condition, or business arising subsequent to the date of
this Agreement by reason of which any changes, modifications, amendments,
additions or deletions from any Schedule annexed hereto or any warranty,
representation, covenant or condition recited herein would be necessary to
render the same true and correct in material respects and not materially false
or misleading, as of the date such information, details, facts and circumstances
are furnished to the Buyer.
E. CONDITIONS PRECEDENT TO CLOSING
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All obligations of the Buyer under this Agreement are subject to the
fulfillment of each of the following conditions, in addition to the fulfillment
of any and all other conditions set forth in this Agreement:
1. EFFECTIVENESS OF WARRANTIES.
Each and every one of the warranties and representations of Seller and
the Company as hereinbefore set forth in Paragraph C hereof, shall be true at
and as of the Closing Date as though such representations were made at and as of
such time.
2. PERPORMANCE OF COVENANTS.
Each and every covenant herein made by Seller and the Company, as set
forth in Paragraph D, which is to be performed at or prior to the Closing Date,
shall have been duly performed by such times.
3. FINANCIAL CONDITION.
The financial condition and financial statements of the Company are
such that:
3.1 The Company's financial statements prepared in accordance with US
Generally Accepted Accounting Principles and the audit as prepared by the
Certified Public Accounting firm of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ P.C. in
accordance with US Generally Accepted Auditing Standards must be commenced as of
or prior to the Closing Date.
3.2 During the period from the date of the Company's December 31, 2000
internal financial statement to the Closing Date, there have been no material
adverse changes in the capital stock or long term debt, within the meaning of
general accepted accounting principles, of the Company or any material adverse
change in the financial condition or results of operations of the Company.
4. CORPORATE ACTION.
4.1 Prior to the Closing Date, the Board of Directors of the Company
and of the Buyer shall have duly adopted resolutions to the same effect with
respect to the aforesaid matters.
4.2 Prior to the Closing Date, the Board of Directors of the Company
and of the Buyer shall call a special meeting of their respective shareholders
whereby their respective shareholders shall have duly approved the above Board
of Directors resolutions to the same effect with respect to the aforesaid
matters.
5. TERMINATION.
In the event any of the foregoing conditions shall not be fulfilled
prior to the Closing, unless caused by any action or failure to act on the part
of Buyer, Buyer shall have the right to terminate the Agreement by notice
thereof in writing to the Company, and the parties hereto shall be restored as
far as possible to status quo, whereupon the parties hereto shall have no
further obligations or liabilities hereunder, one against the other, except for
the obligation of Buyer under Section E hereof which shall survive a termination
of this Agreement.
F. INDEMNIFICATION
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1. Buyer shall be indemnified by Seller and the Company as follows:
Seller and the Company shall indemnify and hold harmless the Buyer
from and against any losses, damages or expenses which may be suffered or
incurred by Buyer arising from or by reason of the inaccuracy of any statement,
representation or warranty of Seller or the Company made herein or, in any
schedule hereto or certificate delivered in connection herewith, or the failure
of Seller or the Company to perform any agreement made by them herein. Buyer
shall give Seller prior written notice of any claim, demand, suit or action with
respect to which indemnity may be sought pursuant to this Section. Seller, in
every such case, shall have the right at his sole expense and cost to
participate in contesting the validity or the amount of any such claim, demand,
suit or action. In the event Buyer suffers loss, damage or expense and is
entitled to indemnification under this Section, the amount of any such loss,
damage or expense shall be assessed against and shall be paid by Seller. Seller
shall have no liability under this Section unless a claim for indemnification is
made by the Buyer prior to the Six (6) month anniversary of the Closing.
Notwithstanding anything herein to the contrary, Seller shall have no liability
under this Section for any loss, damage, expense or amount suffered or incurred
by Buyer or the Company (a) as a result of any election made by the Buyer or the
Company subsequent to the Closing under Section 338 of the Internal Revenue Code
of 1954, as amended, or (b) which is covered by insurance maintained by the
Company on the Closing Date.
2. The Buyer shall indemnify the Company and Seller and shall hold the
Company and Seller harmless, on demand, from and against any losses, damages or
expenses which may be suffered or incurred by the Company or Seller arising from
or by reason of the inaccuracy of any statement, representation or warranty of
the Buyer made herein or in any document or instrument delivered by Buyer to
Seller or the Company in connection with the transactions herein contemplated,
or the failure of Buyer to perform any agreement or covenant made by it herein
or in any document or instrument delivered by Buyer to Seller or the Company in
connection with the transactions herein contemplated.
G. CLOSING
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1. TIME AND PLACE.
The closing under this Agreement (the "Closing") and all deliveries
hereunder shall take place at the office of the Buyer on April ___, 2001 or such
other date as shall be agreed upon by all the parties ("the Closing date").
2. DELIVERY OF DOCUMENTS.
At the Closing, the Company will deliver to the Buyer the following documents:
2.1 A written opinion, dated on the Closing Date, of counsel
representing the Company, in the form of Schedule G hereto, to the effect that
the Company has been duly incorporated and is on the closing date validly
existing as a corporation in good standing under the laws of the state of its
incorporation; that the Company is duly qualified or licensed as a foreign
corporation in all other states in which it does business; that the shares of
capital stock delivered by Seller to Buyer at the closing have been validly
issued and are outstanding, fully paid, and non-assessable, and constitute all
of the issued and outstanding shares of capital stock of the Company; that such
counsel knows of no litigation, proceeding or investigation pending or
threatened against the Company or Seller which might result in any material
adverse change in the business, properties or financial condition of the Company
or which questions the validity of this Agreement or of any action taken or to
be taken pursuant to or in connection with the provisions of this Agreement,
other than as represented elsewhere in this Agreement; and that to the knowledge
of such counsel the sale, transfer, assignment and delivery by Seller to Buyer
of the Stock pursuant to this Agreement will vest in Buyer all rights, title and
interest in and to such Stock free and clear of all liens, encumbrances, and
equities.
2.2 A written confirmation dated the Closing Date, by the accountant
who reviewed any and all of the financial statements of the Company and who most
recently examined the books and records of the Company in the form of Schedule H
hereto.
2.3 A certificate of the Chief Executive Officer and the Chief
Financial Officer of the Company, dated the Closing Date certifying to the best
of his knowledge, in reasonable detail as Buyer may request on and as of said
date, to the fulfillment, as of the Closing Date, of each and every one of the
conditions precedent to the closing set forth in Paragraph E hereof, and
specifically setting forth each and every change, amendment, modification,
omission or addition to any provision hereof or schedule annexed hereto or
furnished hereunder, necessary to render each and every one of the provisions
hereof or schedules annexed hereto correct and accurate in material respects and
not materially false or misleading.
2.4 Such additional copies or duplicate originals of the above
described documents and such other documents, undertakings and assurances as
Buyer shall reasonably require, all of which documents, undertakings and
assurances shall be delivered to Buyer sufficiently in advance of the Closing
Date, as Buyer shall reasonably require, so as to permit adequate inspection and
examination thereof, all of which documents, undertakings and assurances shall
be in form satisfactory to counsel to Buyer.
H. CONFIDENTIALITY
---------------
All information and documentation provided or to be provided by the Company
or Seller to Buyer in connection with this Agreement and the transactions
contemplated hereby has been and shall be provided in the strictest confidence.
Pending the Closing, Buyer covenants and agrees not to use any of such
information or documentation in or for the benefit of any business engaged in
directly or indirectly by Buyer and not to furnish or disclose any of such
information or documentation to any person or company. If the transactions
contemplated by this Agreement are not consummated, Buyer covenants and agrees
to return all such information and documentation to the Company and not retain
any copies thereof, and Buyer further covenants and agrees to maintain the
confidentiality of such information and documentation and to neither use any of
it in or for the benefit of any business engaged in directly or indirectly by
the Buyer nor furnish or disclose any of it to any person or company.
I. GENERAL PROVISIONS
-------------------
1. SURVIVAL Of REPRESENTATIONS, WARRANTIES AND COVENANTS.
Unless otherwise expressly provided herein, the representations,
warranties, covenants, indemnities and other agreements herein contained shall
be deemed to be continuing and shall survive the consummation of the
transactions contemplated by this Agreement.
2. DILIGENCE.
The parties hereto agree that each shall with reasonable diligence
proceed to take all action which may be reasonably required to consummate the
transaction herein contemplated.
3. WAIVERS.
Each party hereto may:
3.1 Extend the time for performance of any of the obligations of the
other party;
3.2 Waive in writing any inaccuracies in representations and
warranties made to it contained in this Agreement or any schedule hereto or
any certificate or certificates delivered by any of the other parties
pursuant to this Agreement; and
3.3 Waive in writing the failure of performance of any of the
agreements, covenants, obligations or conditions of the other parties
herein set forth, or alternatively terminate this Agreement for such
failure.
4. NON-WAIVER.
The waiver by any party hereto of any breach, default, inaccuracy or
failure by another party with respect to any provision in this Agreement or any
schedule hereto shall not operate or be construed as a waiver of any other
provision thereof or of any subsequent breach thereof.
5. FURTHER ASSURANCES.
Each party hereto agrees to execute such further documents or
instruments, requested by the other party, as may be reasonably necessary or
desirable to effect the purposes of this Agreement and to carry out its
provisions, at the expense of the party requesting the same.
6. ENTIRE AGREEMENT.
This Agreement constitutes a complete statement of all the
arrangements, understandings and agreements between the parties, and all prior
memoranda and oral understandings with respect thereto are merged in this
Agreement. There are no representations, warranties, covenants, conditions or
other agreements among the parties except as herein specifically set forth, and
none of the parties hereto shall rely on any statement by or on behalf of the
other parties which is not contained in this Agreement.
7. GOVERNING LAW.
Irrespective of the place of execution or performance of this
Agreement, it shall be governed by and construed in accordance with the laws of
the State of Connecticut, United States of America applicable to contracts made
and to be performed in the United States, and cannot be changed, modified,
amended or terminated except in writing, signed by the parties hereto.
8. BENEFIT AND ASSIGNABILITY.
This Agreement shall bind and inure to the benefit of the parties
hereto and their respective legal representatives, successors and assigns,
provided, however, that this Agreement cannot be assigned by any party except by
or with the written consent of the others. Nothing herein expressed or implied
is intended or shall be construed to confer upon or to give any person, firm or
corporation other than the parties hereto and their respective legal
representatives, successors and assigns any rights or benefits under or by
reason of this Agreement.
9. APPROVAL OF COUNSEL.
The form of all legal proceedings and of all papers and documents used
or delivered hereunder, shall be subject to the approval of counsels to Buyer
and Seller.
10. COSTS.
The Buyer shall bear its own costs and expenses of the transaction.
The costs and expenses of Seller in connection with this Agreement and the
transactions contemplated hereby shall be borne and paid by Seller.
11. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.
12. NOTICES.
Any notices and other communications under this Agreement shall be in
writing and shall be considered given if delivered personally or mailed by
certified mail to the party, for whom such notice is intended, at the address
indicated at the outset hereof (or at such other address as such party may
specify by notice to the other parties hereto).
13. HEADINGS.
The headings in this Agreement are intended solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
14. FURTHER AACTION
Any further action required or permitted to be taken under this
Agreement, including giving notices, executing documents, waiving conditions,
and agreeing to amendments or modifications, may be taken on behalf of a party
by its Board of Directors, its President or any other person designated by its
Board of Directors, and when so taken shall be deemed the action of such party.
IN WITNESS WHEREOF, the parties hereto have respectively executed this
Agreement the day and year first above written.
BUYER
CHINA GATEWAY HOLDINGS, Inc.
By: /s/ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ Hon
---------------------------------------
▇▇▇▇▇ ▇▇, Chairman, ▇▇▇▇▇▇▇▇ Hon, Director
Witness:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esquire
---------------------------------------
SELLER
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THE GLORY FAMOUS (GROUPS) LIMITED
By: /s/ Yau ▇▇▇ ▇▇▇▇
---------------------------------------
Yau ▇▇▇ ▇▇▇▇, Sole Director
Witness: /s/ Fukman Yip
---------------------------------------
Fukman Yip
THE COMPANY
------------
HK GIANTRICH INTERNATIONAL (GROUPS) LIMITED
By: /s/ Yau ▇▇▇ ▇▇▇▇
---------------------------------------
Yau ▇▇▇ ▇▇▇▇, President
Witness: /s/ Fukman Yip
---------------------------------------
Fukman Yip
Schedule of Exhibits
--------------------
A. HK Giantrich International (Group) Ltd Certificate of Incorporation
1. Original Certificate.
2. Name Change from Giantrich International to HK Giantrich
International.
B. Giantrich International (Group) Limited Stock Certificates.
C. Authority of Yau ▇▇▇ ▇▇▇▇ as Chairman of the Board of Directors of HK
Giantrich International (Group) Ltd.
D. Certificate of Incorporation of The Glory Famous (Groups) Limited;
Appointment of Yau ▇▇▇ ▇▇▇▇ Director of The Glory Famous (Groups) Limited
and the Sale and Purchase Note of HK Giantrich International (Group) Ltd
from Yau ▇▇▇ ▇▇▇▇ to The Glory Famous (Groups) Limited.
E. Asset Transfer Contract between HK Giantrich International (Group) Ltd and
Xinwen Mining (Group)Co Ltd.
1. Contract to transfer the assets.
2. Assessment valuation for assets at RMB267,999,600.
3. Liabilities assumed by Contract RMB71,372,300.
4. Approval document from Shandong Province Government dated January 26,
2000
5. Certificate of Approval of Shandong XinWen ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Ltd
F. China Gateway Holding Inc. Audited Financial Statements for the year ended
12/31/2000.
G. China Gateway Holding Inc. Certificate of Incorporation.
H. China Gateway Holding Inc. By-Laws.
I. Termination Agreement of Joint Venture.
1. Termination Agreement.
2. Legal Opinion.
J. Financial Statements for Huafeng Coal Mine for the Year Ended 12/31/1999
and 2000.
K. Form 8-K - Notice of termination of the Wuhan ▇▇▇▇ ▇▇▇▇ Paper Company Joint
Venture and signing of Letter of Intent with H.K. Giantrich International
Group, Limited dated April 12, 2001.
L. Form 10KSB for the Year Ended December 31, 2000 dated April 19, 2001.
