EXHIBIT 10.1
------------
STOCK PURCHASE AGREEMENT
BY AND AMONG
IVANHOE ENERGY INC.,
AS THE PARENT
SUNWING HOLDING CORPORATION,
AS THE SELLER
SUNWING ENERGY LTD.,
AS THE COMPANY
AND
CHINA MINERAL ACQUISITION CORPORATION,
AS THE BUYER
DATED AS OF MAY 12, 2006
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS........................................................2
Section 1.1 Defined Terms......................................................2
ARTICLE II PURCHASE AND SALE OF SHARES; PURCHASE PRICE........................9
Section 2.1 Closing; Closing Date..............................................9
Section 2.2 Purchase and Sale of the Shares...................................10
Section 2.3 Purchase Price Adjustment.........................................11
Section 2.4 Deliveries At Closing.............................................13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND PARENT AS TO THE COMPANY......................................14
Section 3.1 Organization; Standing and Power; Charter Documents...............14
Section 3.2 Authority; Non Contravention; Necessary Consents
and Filings.......................................................15
Section 3.3 Capitalization....................................................16
Section 3.4 Subsidiaries......................................................16
Section 3.5 Financial Statements; No Undisclosed Material Liabilities.........17
Section 3.6 Absence of Certain Changes or Events..............................18
Section 3.7 Taxes.............................................................18
Section 3.8 Intellectual Property.............................................19
Section 3.9 Compliance; Permits...............................................19
Section 3.10 Litigation........................................................20
Section 3.11 Real Estate.......................................................20
Section 3.12 Material Contracts................................................21
Section 3.13 Environmental Matters.............................................21
Section 3.14 Employee Benefit Plans............................................22
Section 3.15 Insurance.........................................................22
Section 3.16 Sufficiency of the Assets.........................................22
Section 3.17 Registration Statement............................................22
Section 3.18 Transactions between the Company and the Parent or Seller.........22
Section 3.19 Brokers' and Finders' Fees........................................23
Section 3.20 Exclusivity of Representations....................................23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PARENT.......23
Section 4.1 Organization; Standing and Power..................................23
Section 4.2 Authority; Non Contravention; Necessary
Consents and Filings..............................................23
Section 4.3 Title to the Shares...............................................24
Section 4.4 Acquisition for Investment........................................25
Section 4.5 Representations as to Parent......................................25
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PAGE
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER.......................25
Section 5.1 Organization; Standing and Power..................................25
Section 5.2 Authority; Non Contravention;
Necessary Consents and Filings....................................26
Section 5.3 Capitalization; Subsidiaries; Anti-Dilution Protection;
Registration Rights Agreements ...................................28
Section 5.4 The Buyer Reports; Financial Statements; No Undisclosed
Material Liabilities..............................................30
Section 5.5 Absence of Certain Changes or Events..............................32
Section 5.6 Litigation........................................................32
Section 5.7 Investment Company................................................33
Section 5.8 Taxes.............................................................33
Section 5.9 Compliance........................................................33
Section 5.10 Employee Benefit Plans............................................34
Section 5.11 Related Party Transactions........................................34
Section 5.12 Stockholder Vote Required.........................................34
Section 5.13 Registration Statement............................................35
Section 5.14 Purchase for Investment...........................................35
Section 5.15 Appropriate Target Business; Fair Market Value Opinion............36
Section 5.16 OTC Bulletin Board................................................36
Section 5.17 Brokers' and Finders' Fees........................................36
Section 5.18 Anti-takeover Plan; State Takeover Statutes.......................36
Section 5.19 Buyer Expenses....................................................37
Section 5.20 Exclusivity of Representations....................................37
ARTICLE VI COVENANTS AND AGREEMENTS..........................................37
Section 6.1 Conduct of Business of the Company................................37
Section 6.2 Conduct of Business of the Buyer..................................37
Section 6.3 Registration Statement............................................38
Section 6.4 Access to Information; Confidentiality............................39
Section 6.5 No Solicitation...................................................39
Section 6.6 Commercially Reasonable Efforts; Additional Actions...............40
Section 6.7 Notification of Certain Matters...................................41
Section 6.8 Public Announcements..............................................41
Section 6.9 Stockholder Approval..............................................41
Section 6.10 Resignations......................................................41
Section 6.11 Indemnity With Respect to Brokers Fees............................42
Section 6.12 Contingent Shares.................................................42
Section 6.13 Elimination of Inter-Company Accounts and Certain Liabilities.....42
Section 6.14 Conveyance Taxes..................................................43
Section 6.15 Anti-Takeover Statute.............................................43
Section 6.16 Stockholder Litigation............................................43
Section 6.17 Post-Closing Access...............................................43
Section 6.18 Trustee Notice....................................................43
Section 6.19 CMAC Sub Incorporation; CMAC Merger...............................44
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PAGE
Section 6.20 Expenses; Indemnity...............................................44
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES TO CLOSE...44
Section 7.1 Conditions Precedent to the Obligations of the Parties to Close...44
Section 7.2 Additional Conditions Precedent to the Obligations of the
Buyer to Close....................................................45
Section 7.3 Additional Conditions Precedent to the Obligations of the
Seller to Close...................................................46
Section 7.4 Frustration of Closing Condition..................................48
ARTICLE VIII TERMINATION OF AGREEMENT..........................................48
Section 8.1 Termination.......................................................48
Section 8.2 Notice of Termination; Effect of Termination......................49
Section 8.3 No Claim Against Trust Fund.......................................49
ARTICLE IX MISCELLANEOUS.....................................................49
Section 9.1 Non-Survival of Representations and Warranties....................49
Section 9.2 Notices...........................................................50
Section 9.3 Interpretation....................................................51
Section 9.4 Entire Agreement; Third-Party Beneficiaries.......................51
Section 9.5 Severability......................................................51
Section 9.6 Fees and Expenses.................................................51
Section 9.7 Amendment.........................................................52
Section 9.8 Extension; Waiver.................................................52
Section 9.9 Other Remedies; Specific Performance..............................52
Section 9.10 Governing Law; Jurisdiction.......................................53
Section 9.11 Rules of Construction.............................................53
Section 9.12 The Seller Disclosure Letter and Buyer Disclosure Letter..........53
Section 9.13 Assignment........................................................54
Section 9.14 Waiver of Jury Trial..............................................54
Section 9.15 Counterparts......................................................54
EXHIBITS:
Exhibit A Founders Option
Exhibit B Balance Sheet Rules
Exhibit C Current Assets and Current Liabilities
Exhibit D Performance Warrants
Exhibit E Plan of Merger for CMAC Merger
Exhibit F Area of Interest Agreement
Exhibit G Registration Rights Agreement
Exhibit H Amendment to Founders Registration Rights Agreement
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered
into as of May 12, 2006, by and among Ivanhoe Energy Inc., a Yukon, Canada
corporation (the "PARENT"), Sunwing Holding Corporation, a Barbados
corporation and a wholly-owned subsidiary of the Parent (the "SELLER"),
Sunwing Energy Ltd., a corporation organized under the laws of Bermuda and a
wholly-owned subsidiary of the Seller (the "COMPANY"), and China Mineral
Acquisition Corporation, a corporation organized under the laws of the State
of Delaware ("CMAC").
RECITALS
WHEREAS, CMAC is a "blank check" company organized for the purpose of
effecting a "Business Combination" (as defined in CMAC's amended and restated
certificate of incorporation) with a company having its primary operations in
the People's Republic of China ("PRC");
WHEREAS, the Company conducts oil and gas exploration and production
activities in the PRC through its wholly-owned subsidiaries, Sunwing
Management Ltd., a Hong Kong corporation, Sunwing Zitong Energy Ltd., a
British Virgin Islands corporation, Pan-China Resources, Ltd., a British
Virgin Islands corporation ("PAN-CHINA"), and Dagang Resources Ltd., a British
Virgin Islands corporation and a wholly-owned subsidiary of Pan-China;
WHEREAS, subject to the terms and conditions of this Agreement, CMAC
will form a wholly-owned subsidiary pursuant to the corporate laws of the
British Virgin Islands ("CMAC SUB") and CMAC will consummate a plan of merger,
in the form attached hereto as EXHIBIT E (the "PLAN OF MERGER"), pursuant to
which CMAC will be merged with and into CMAC Sub (the "CMAC MERGER") at the
closing provided for hereunder and immediately prior to the consummation of
the Stock Purchase (hereinafter defined) with CMAC Sub as the surviving entity
(the "SURVIVING CORPORATION");
WHEREAS, as of the date hereof the Seller is the sole record and
beneficial owner of all of the issued and outstanding capital stock of the
Company (the "SHARES");
WHEREAS, immediately following the CMAC Merger, the Seller wishes to
sell to the Surviving Corporation, and CMAC wishes that the Surviving
Corporation purchase from the Seller, all of the Shares to effect a Business
Combination upon the terms and subject to the conditions set forth in this
Agreement (the "STOCK PURCHASE");
WHEREAS, pursuant to CMAC's amended and restated certificate of
incorporation, the Stock Purchase requires the approval of the holders of a
majority of the outstanding shares of the CMAC's common stock, par value
$0.0001 per share (the "CMAC COMMON STOCK"), in order to consummate the
transactions contemplated hereby (provided that the holders of 20% or more in
interest of such shares of CMAC Common Stock issued in connection with the
initial public offering of CMAC Common Stock do
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not perfect their conversion rights under CMAC's amended and restated
certificate of incorporation);
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ Mu, Dr. ▇▇▇▇ ▇▇▇▇, Cui Guisheng and
Ma Xiao (collectively, the "FOUNDERS") have each executed and delivered to the
Seller an option agreement, substantially in the form attached hereto as
EXHIBIT A, to be effective as of (and subject to the occurrence of) the
closing provided for hereunder, granting the Seller an option to acquire, in
the aggregate, 500,000 shares of Buyer Common Stock (hereinafter defined) at a
price per share of $2.50 (as the same may be adjusted after the date hereof as
a result of a stock split, stock dividend, combination, reclassification,
recapitalization or other similar change with respect to the Buyer Common
Stock) (the "FOUNDERS OPTION"); and
WHEREAS, the parties to this Agreement desire to make certain
representations, warranties, covenants and agreements in connection with the
Stock Purchase and also to prescribe certain conditions to the Stock Purchase.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINED TERMS.
(a) For all purposes of this Agreement, the terms set forth
below shall have the respective meanings set forth in this SECTION 1.1 (such
definitions to be equally applicable to both the singular and plural forms of
the terms herein defined).
"ACTIONS" means any civil, criminal or administrative actions, suits,
claims, hearings, investigations, reviews, inquiries or proceedings.
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by or is under common control
with, such first Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled
by" and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities, by contract or otherwise.
"ANCILLARY AGREEMENTS" means the Plan of Merger, the Performance
Warrants, the Area of Interest Agreement, the Registration Rights Agreement,
the Amendment to Founders Registration Rights Agreement and such other
documents that
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are necessary in connection with the consummation of the transactions
contemplated by this Agreement.
"ASSUMED INDEBTEDNESS" means all Indebtedness of the Company and the
Company Subsidiaries outstanding as of the close of business on the day
immediately preceding the Closing Date, including all accrued interest
thereon, if any; PROVIDED, however, that Assumed Indebtedness shall not
include (A) any obligations under any performance bond or letter of credit to
the extent undrawn or uncalled as of the close of business on the day
immediately preceding the Closing Date, (B) any Indebtedness included in the
calculation of Current Liabilities in the determination of Closing Working
Capital, (C) any intercompany Indebtedness between the Company and/or any of
the Company Subsidiaries or (D) any inter-company Indebtedness to be
liquidated, eliminated and/or released pursuant to SECTION 6.13 hereof.
"BALANCE SHEET RULES" means the accounting principles and assumptions
set forth on EXHIBIT B.
"BUSINESS DAY" means any day other than a Saturday, Sunday or U.S.
federal or Canadian provincial holiday, and shall consist of the time period
from 12:01 a.m. through 12:00 midnight Eastern time.
"BUYER" means, prior to the consummation of the CMAC Merger, CMAC,
and from and after the consummation of the CMAC Merger, the Surviving
Corporation.
"BUYER COMMON STOCK" means, prior to the consummation of the CMAC
Merger, the CMAC Common Stock, and from and after the consummation of the CMAC
Merger, the Surviving Corporation Ordinary Shares.
"BUYER EXPENSES" means all legal, accounting, investment banking,
brokerage, amounts owed to any Related Person, amounts necessary to pay for
Taxes payable in respect of the period ending on the close of business on the
day immediately preceding the Closing Date and other transaction fees and
expenses incurred or to be paid by the Buyer, whether on its own behalf or on
behalf of its stockholders, in connection with the transactions contemplated
by this Agreement.
"CLOSING WORKING CAPITAL" means the Working Capital as of the close
of business on the day immediately preceding the Closing Date.
"CODE" means the Internal Revenue Code of 1986, as amended (including
any successor code), and the rules and regulations promulgated thereunder.
"COMPANY FINANCIAL STATEMENTS" means (i) the audited consolidated
balance sheets of the Company and the Company Subsidiaries as of December 31,
2004 and December 31, 2005, and the related audited consolidated statements of
income, accumulated deficit and cash flows of the Company and the Company
Subsidiaries for the years then ended, as certified by Deloitte & Touche LLP,
independent chartered accountants, whose opinion thereon is included
therewith, together with the notes and
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schedules thereto (the "AUDITED FINANCIAL STATEMENTS") and (ii) the unaudited
consolidated balance sheets of the Company and the Company Subsidiaries as of
March 31, 2006 and the related unaudited consolidated statements of income,
accumulated deficit and cash flows of the Company and the Company Subsidiaries
for the three months ended March 31, 2006 (the "UNAUDITED FINANCIAL
STATEMENTS").
"COMPANY MATERIAL ADVERSE EFFECT" means any change, event, condition,
circumstance, occurrence or effect (any such item, an "EFFECT") that, either
individually or in the aggregate with all other Effects, is materially adverse
to (x) the business, properties, assets, liabilities, condition (financial or
otherwise) or results of operations of the Company taken as a whole with the
Company Subsidiaries or (y) the validity or enforceability of this Agreement
or the ability of the Seller to perform its obligations hereunder or to
consummate the transactions contemplated by this Agreement in the manner
contemplated hereby; PROVIDED, HOWEVER, that in no event shall any of the
following be deemed to constitute, nor shall any of the following be taken
into account in determining whether there has been or would reasonably
expected to be, a Company Material Adverse Effect: (i) any Effect resulting
from compliance with the terms and conditions of this Agreement; (ii) any
Effect resulting from the announcement or pendency of the Stock Purchase;
(iii) any Effect resulting from changes affecting the worldwide economy or the
economy or the capital markets in the United States, Canada or the PRC
generally, or any of the industries in which the Company or the Company
Subsidiaries operate generally (to the extent the Company and the Company
Subsidiaries are not disproportionately affected thereby); (iv) any Effect
resulting from an outbreak or escalation of hostilities, acts of terrorism,
political instability or other national or international calamity, crisis or
emergency, or any governmental or other response to any of the foregoing, in
each case whether or not involving the United States, Canada, or the PRC (to
the extent the Company and the Company Subsidiaries are not disproportionately
affected thereby); and (v) any Effect arising from any pending or threatened
claim, action or proceeding arising out of or relating to the existence of
this Agreement or the transactions contemplated hereby, including the Stock
Purchase.
"CONTRACT" means any contract, agreement, lease, binding
understanding, indenture, note, option, license or legally binding commitment,
arrangement or undertaking.
"CURRENT ASSETS" means, as of any date, the consolidated current
assets of the Company, which current assets shall include only the line items
set forth on EXHIBIT C attached hereto under the heading "Current Assets" and
no other assets.
"CURRENT LIABILITIES" means, as of any date, the consolidated current
liabilities of the Company, which current liabilities shall include only the
line items set forth on EXHIBIT C attached hereto under the heading "Current
Liabilities" and no other liabilities.
"DOMAIN NAME" means a combined alphanumeric second-level domain and
alphanumeric top-level domain separated by a period, used to identify and
locate a computer site on the Internet, and applications and reservations
therefor.
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"EMPLOYEE" means any individual employed by the Company or any of the
Company Subsidiaries.
"ENVIRONMENTAL LAW" means any Legal Requirements regulating or
relating to the protection of natural resources or the environment, including,
without limitation, laws relating to contamination by and the use, generation,
management, handling, transport, treatment, disposal, storage, release or
threatened release of Hazardous Substances.
"FOUNDERS REGISTRATION RIGHTS AGREEMENT" means that certain
Registration Rights Agreement entered into by CMAC and the Founders in
connection with CMAC's initial public offering (as amended, modified or
supplemented from time to time).
"GAAP" means the United States generally accepted accounting
principles as in effect on the date hereof or for the period with respect to
which such principles are applied.
"GOVERNMENTAL ENTITY" means any international, national, federal,
state, provincial, municipal or local governmental, regulatory or
administrative authority, agency, commission, court, tribunal, arbitral body
or self-regulatory entity, whether domestic or foreign.
"HAZARDOUS SUBSTANCE" means any substance that: (i) is or contains
asbestos, urea formaldehyde insulation, polychlorinated biphenyls, petroleum
or petroleum products, radon gas, microbiological contamination or related
materials, (ii) requires investigation or remedial action pursuant to any
Environmental Law, or is defined, listed or identified as a "hazardous waste,"
"hazardous substance," "toxic substance" or words of similar import
thereunder, or (iii) is regulated under any Environmental Law.
"INDEBTEDNESS" means, of any Person, without duplication, (i)
indebtedness for borrowed money or indebtedness issued or incurred in
substitution or exchange for indebtedness for borrowed money, (ii) amounts
owing as deferred purchase price for property or services, (iii) indebtedness
evidenced by any note, bond, debenture, mortgage or other debt instrument or
debt security, (iv) obligations under any interest rate, currency or other
hedging agreement, (v) obligations under any performance bond or letter of
credit, (vi) all capitalized lease obligations as determined under GAAP and
(vii) guarantees with respect to any indebtedness of any other Person of a
type described in clauses (i) through (vi) above. For the avoidance of doubt,
Indebtedness shall not include (A) any contingent payments associated with
outstanding exploration commitments relating to the Zitong block and (B) any
asset retirement costs with respect to oil and gas operations in the PRC
associated with abandoning the field and restoring the site.
"INTELLECTUAL PROPERTY" means all patents, patent applications,
copyrights, copyright applications, Marks, trade secrets, know-how, software
and Domain Names
6
owned or filed by the Company or any of the Company Subsidiaries as of the
date of this Agreement.
"IPO WARRANTS" means those warrants issued in connection with the
initial public offering of the CMAC Common Stock, exercisable in respect of
8,000,000 shares of Buyer Common Stock following the consummation of a
Business Combination at a price of $5.00 per share.
"KNOWLEDGE OF THE BUYER" means with respect to any matter in
question, the actual knowledge of any of the individuals identified in SECTION
1.1(a) of the Buyer Disclosure Letter.
"KNOWLEDGE OF THE SELLER" means with respect to any matter in
question, the actual knowledge of any of the individuals identified in SECTION
1.1(a) of the Seller Disclosure Letter.
"LEGAL REQUIREMENTS" means any national, federal, state, provincial,
local, foreign or other law, statute, constitution, principle of common law,
ordinance, code, order, edict, decree, rule, regulation, ruling, judgment or
requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Entity.
"LIENS" means any liens, pledges, claims, charges, preemptive rights,
mortgages, options, security interests or encumbrances of any kind.
"MARKS" means trademarks, service marks, trade names, brand names,
assumed names, trade dress, designs, logos, corporate names and other indicia
of origin, whether registered or unregistered, and all registrations and
applications therefor and the goodwill associated exclusively therewith.
"ORDERS" means any orders, judgments, injunctions, awards, decrees or
writs handed down, adopted or imposed by any Governmental Entity.
"PERFORMANCE WARRANTS" means those warrants to purchase 2,000,000
shares of the Buyer Common Stock (as the same may be adjusted after the date
hereof as a result of a stock split, stock dividend, combination,
reclassification, recapitalization or other similar change with respect to the
Buyer Common Stock), substantially in the form of EXHIBIT D, to be delivered
to the Seller at the Closing pursuant to SECTION 2.4.
"PERMITS" means permits, licenses, authorizations, franchises,
variances, exemptions, certifications, registrations, orders and approvals
from Governmental Entities.
"PERSON" means any individual, corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock
7
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
"REPRESENTATIVES" means, when used with respect to the Buyer or the
Seller, the directors, officers, employees, consultants, accountants, legal
counsel, investment bankers, agents, financing sources and representatives of
financing sources and other representatives of the Buyer or the Seller, as
applicable, and its Subsidiaries.
"SUBSIDIARY" means, when used with respect to any Person, any
corporation or other organization, whether incorporated or unincorporated, at
least a majority of the capital stock or other equity interests of which
having by their terms ordinary voting power to elect a majority of the board
of directors or other body performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or
controlled by such first Person or by any one or more of its Subsidiaries.
"SURVIVING CORPORATION ORDINARY SHARES" means the ordinary shares, no
par value, of the Surviving Corporation.
"TAX" or "TAXES" means (i) any and all United States, Canada or PRC
federal, state, provincial, local, foreign and other taxes, levies, fees,
imposts, duties, and similar governmental charges (including any interest,
fines, assessments, penalties or additions to tax imposed in connection
therewith or with respect thereto), whether collected by withholding or
otherwise, including (A) taxes imposed on, or measured by, income, franchise,
profits or gross receipts, and (B) ad valorem, value added, capital gains,
sales, goods and services, use, real or personal property, capital stock,
license, branch, payroll, estimated withholding, employment, social security
(or similar), unemployment, compensation, utility, severance, production,
excise, stamp, occupation, premium, windfall profits, transfer and gains
taxes, and customs duties, and (ii) any transferee liability in respect of any
items described in the foregoing clause (i).
"TAX RETURNS" means any and all reports, returns, declarations,
claims for refund, elections, disclosures, estimates, information reports or
returns or statements required to be supplied to a taxing authority in
connection with Taxes, including any information, schedule or attachment
thereto or amendment thereof.
"TRUST FUND" means the trust established pursuant to the Investment
Management Trust Agreement, dated as of August 24, 2004, by and between the
Buyer and Continental Stock Transfer & Trust Company.
"WORKING CAPITAL" means, at any date, all Current Assets MINUS all
Current Liabilities as of such date.
"WORKING CAPITAL EXCESS" shall exist when (and shall be equal to the
amount by which) the Working Capital Estimate exceeds $2,000,000.
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"WORKING CAPITAL SHORTFALL" shall exist when (and shall be equal to
the amount by which) $2,000,000 exceeds the Working Capital Estimate.
(b) The following additional capitalized terms are defined in
the following Sections of this Agreement:
TERM SECTION
Accounting Firm...................................... Section 2.3(b)
Accredited Investor.................................. Section 4.4
Agreement............................................ Preamble
Anti-Takeover Statute................................ Section 6.15
Area of Interest Agreement........................... Section 7.2(d)
Business Combination................................. Recitals
Buyer Adjustment Amount.............................. Section 2.3(c)
Buyer Board Recommendation........................... Section 5.2(a)
Buyer Disclosure Documents........................... Section 5.13(a)
Buyer Disclosure Letter.............................. Section 9.12
Buyer Financial Statements........................... Section 5.4(a)
Buyer Reports........................................ Section 5.4(a)
Closing.............................................. Section 2.1
Closing Date......................................... Section 2.1
CMA Share Valuation.................................. Section 2.2(b)(ii)
CMA Stock Consideration.............................. Section 2.2(b)(iii)
CMAC................................................. Preamble
CMAC Common Stock.................................... Recitals
CMAC Merger.......................................... Recitals
CMAC Sub............................................. Recitals
Company.............................................. Preamble
Company Material Contract............................ Section 3.12
Company Permits...................................... Section 3.9(b)
Company Subsidiaries................................. Section 3.4(a)
Confidentiality Agreement............................ Section 6.4(b)
Contingent Shares.................................... Section 6.12
Deemed Sunwing Value................................. Section 2.2(b)(iv)
Estimated Assumed Indebtedness Amount................ Section 2.2(d)
Estimated Deemed Sunwing Value....................... Section 2.2(b)(v)
Evaluation Material.................................. Section 6.4(b)
Exchange Act......................................... Section 5.4(a)
Final Assumed Indebtedness........................... Section 2.3(c)
Final Working Capital................................ Section 2.3(c)
Founders............................................. Recitals
Founders Option...................................... Recitals
GGK.................................................. Section 5.4(a)
Insurance Policies................................... Section 3.15
Leased Real Property................................. Section 3.11(a)
Necessary Consents and Filings....................... Section 5.2(d)
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TERM SECTION
Notice of Disagreement............................... Section 2.3(b)
Organizational Documents............................. Section 3.1(b)
Outside Date......................................... Section 8.1(b)(ii)
Owned Real Property.................................. Section 3.11(a)
Pan-China............................................ Recitals
Parent............................................... Preamble
Plan of Merger....................................... Recitals
PRC.................................................. Recitals
Proxy Statement...................................... Section 5.2(c)(i)
Real Property........................................ Section 3.11(a)
Registration Rights Agreement........................ Section 7.3(h)
Registration Statement............................... Section 5.2(c)(i)
Requisite Buyer Vote................................. Section 5.12
SEC.................................................. Section 5.2(c)(i)
Securities Act....................................... Section 5.4(a)
Seller............................................... Preamble
Seller Adjustment Amount............................. Section 2.3(c)
Seller Disclosure Letter............................. Section 9.12
Shares............................................... Recitals
SOXA................................................. Section 5.4(a)
Statement............................................ Section 2.3(a)
Stock Purchase....................................... Recitals
Stockholders' Meeting................................ Section 5.2(c)(i)
Surviving Corporation................................ Recitals
Underwriter Option................................... Section 5.3(a)(iii)
Unit Section 5.3(a)(iii)
Working Capital Estimate............................. Section 2.2(d)
ARTICLE II
PURCHASE AND SALE OF SHARES; PURCHASE PRICE
Section 2.1 CLOSING; CLOSING DATE. Subject to the satisfaction
or waiver of all of the conditions to closing contained in ARTICLE VII, the
closing of the Stock Purchase (the "CLOSING") shall take place (a) at the
offices of ▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, 1285 Avenue of the
Americas, New York, New York, at 10:00 a.m. no later than three Business Days
after the day on which the last of those conditions (other than any conditions
that by their nature are to be satisfied at the Closing) is satisfied or
waived in accordance with this Agreement or (b) at such other place and time
or on such other date as the Buyer and the Seller may agree in writing. The
date on which the Closing occurs is referred to as the "CLOSING DATE."
10
Section 2.2 PURCHASE AND SALE OF THE SHARES.
(a) At the Closing, upon the terms and subject to the conditions
of this Agreement, the Seller shall sell to the Buyer, and the Buyer shall
purchase from the Seller, all of the Shares for consideration consisting, in
the aggregate, of the CMA Stock Consideration, the Performance Warrants and,
if the condition precedent to the issuance thereof is satisfied, the
Contingent Shares.
(b) For purposes of this Agreement:
(i) "ADJUSTED ESCROWED CASH" shall mean the aggregate
amount of cash held in the Trust Fund as of the close of business on the day
immediately preceding the Closing Date MINUS the aggregate amount of Buyer
Expenses (which, for the avoidance of doubt, shall be the actual amount of
Buyer Expenses incurred or payable by the Buyer in connection with the
transactions contemplated by this Agreement without any limitation for amounts
set forth in SECTION 5.19 of the Buyer Disclosure Letter);
(ii) "CMA SHARE VALUATION" shall mean the amount
obtained by DIVIDING (A) the Adjusted Escrowed Cash BY (B) 4,000,000 (i.e.,
the number of shares of CMAC Common Stock sold pursuant to CMAC's initial
public offering, as the same may be adjusted after the date hereof as a result
of a stock split, stock dividend, combination, reclassification,
recapitalization or other similar change with respect to the Buyer Common
Stock);
(iii) "CMA STOCK CONSIDERATION" shall mean that number
(rounded to the nearest whole number) of fully paid and non-assessable shares
of Buyer Common Stock obtained by DIVIDING (i) the Deemed Sunwing Value BY
(ii) the CMA Share Valuation;
(iv) "DEEMED SUNWING VALUE" shall mean the Estimated
Deemed Sunwing Value, as the same may be adjusted following the Closing
pursuant to SECTION 2.3; and
(v) "ESTIMATED DEEMED SUNWING VALUE" shall mean:
(A) $100,000,000,
PLUS
(B) the Working Capital Excess, if any;
MINUS
(C) the sum of:
(1) the Estimated Assumed Indebtedness
Amount; and
11
(2) the Working Capital Shortfall,
if any.
(c) If, prior to the Closing, the Buyer (i) declares, or
establishes a record date for, a stock dividend or other distribution payable
in (x) shares of Buyer Common Stock, (y) securities convertible or
exchangeable into or exercisable for shares of Buyer Common Stock or (z) any
other securities or (ii) effects a stock split (including a reverse stock
split), reclassification, recapitalization, combination or other similar
change with respect to the Buyer Common Stock, then the CMA Stock
Consideration shall be equitably adjusted to eliminate the effects of that
stock dividend, distribution, stock split, reclassification, recapitalization,
combination or other change.
(d) At least three (3) Business Days prior to the Closing Date,
the Chief Financial Officer of the Company shall deliver to the Buyer a good
faith estimate of (i) Closing Working Capital prepared in accordance with the
Balance Sheet Rules and the resulting Working Capital Excess or Working
Capital Shortfall (the "WORKING CAPITAL ESTIMATE") and (ii) the amount of
Assumed Indebtedness prepared in accordance with the Balance Sheet Rules (the
"ESTIMATED ASSUMED INDEBTEDNESS AMOUNT"), in each case reasonably satisfactory
to the Buyer.
Section 2.3 PURCHASE PRICE ADJUSTMENT.
(a) Within forty-five (45) days after the Closing Date, the
Seller shall deliver to the Buyer a statement (the "STATEMENT") of the Closing
Working Capital and the Assumed Indebtedness, in each case prepared in
accordance with the Balance Sheet Rules.
(b) The Statement shall become final and binding upon the
parties on the thirtieth (30th) day following the date on which the Statement
was delivered to the Buyer, unless the Buyer delivers written notice of its
disagreement with the Statement (a "NOTICE OF DISAGREEMENT") to the Seller
prior to such date. Any Notice of Disagreement shall (i) specify in reasonable
detail the nature of any disagreement so asserted and (ii) only include good
faith disagreements based on Closing Working Capital and/or Assumed
Indebtedness not being calculated in accordance with the Balance Sheet Rules.
If a Notice of Disagreement is received by the Seller in a timely manner, then
the Statement (as revised in accordance with this sentence) shall become final
and binding upon the Seller and the Buyer on the earlier of (A) the date the
Seller and the Buyer resolve in writing any differences they have with respect
to the matters specified in the Notice of Disagreement and (B) the date any
disputed matters are finally resolved in writing by the Accounting Firm.
During the 14-day period following the delivery of a Notice of Disagreement,
the Seller and the Buyer shall seek in good faith to resolve in writing any
differences that they may have with respect to the matters specified in the
Notice of Disagreement. If at the end of such 14-day period the Seller and the
Buyer have not resolved in writing the matters specified in the Notice of
Disagreement, the Seller and the Buyer shall submit to an independent
accounting firm (the "ACCOUNTING FIRM") for arbitration, in accordance with
the standards set forth in this SECTION 2.3, only matters that remain in
dispute. The Accounting Firm shall be PricewaterhouseCoopers LLP or, if such
firm is unable or unwilling to act, such other nationally recognized
independent
12
public accounting firm as shall be agreed upon by the Seller and the Buyer in
writing. The Seller and the Buyer shall use reasonable efforts to cause the
Accounting Firm to render a written decision resolving the matters submitted
to the Accounting Firm within thirty (30) days of the receipt of such
submission. The scope of the disputes to be resolved by the Accounting Firm
shall be limited to fixing mathematical errors and determining whether the
items in dispute were determined in accordance with the Balance Sheet Rules
and the Accounting Firm is not to make any other determination, including any
determination as to whether the Working Capital Estimate or the Estimated
Assumed Indebtedness Amount are correct. The Accounting Firm's decision shall
be based solely on written submissions by the Seller and the Buyer and their
respective representatives and not by independent review and shall be final
and binding on all of the parties hereto. The Accounting Firm may not assign a
value greater than the greatest value for such item claimed by either party or
smaller than the smallest value for such item claimed by either party.
Judgment may be entered upon the determination of the Accounting Firm in any
court having jurisdiction over the party against which such determination is
to be enforced. The fees and expenses of the Accounting Firm incurred pursuant
to this SECTION 2.3 shall be borne by the Buyer and the Seller equally.
(c) For the purposes of this Agreement, "FINAL WORKING CAPITAL"
means the Closing Working Capital and "FINAL ASSUMED Indebtedness" means the
Assumed Indebtedness, in each case as finally agreed or determined in
accordance with SECTION 2.3(b). The Deemed Sunwing Value shall be increased
(any such increase, the "SELLER ADJUSTMENT AMOUNT") by the SUM of (i) the
amount, if any, that the Final Working Capital exceeds the Working Capital
Estimate and (ii) the amount, if any, that the Estimated Assumed Indebtedness
Amount exceeds the Final Assumed Indebtedness. The Deemed Sunwing Value shall
be decreased (any such decrease, the "BUYER ADJUSTMENT AMOUNT") by the SUM of
(i) the amount, if any that the Working Capital Estimate exceeds the Final
Working Capital and (ii) the amount, if any, that the Final Assumed
Indebtedness exceeds the Estimated Assumed Indebtedness Amount. If the Sellers
Adjustment Amount exceeds the Buyer Adjustment Amount, the Buyer shall, within
five Business Days after the Final Working Capital and the Final Assumed
Indebtedness are determined, issue additional shares of Buyer Common Stock to
the Seller having a value (as determined in accordance with the last sentence
of this SECTION 2.3(c)) in the amount of any such excess (rounded to the
nearest whole number). If the Buyer Adjustment Amount exceeds the Sellers
Adjustment Amount, the Seller shall within five Business Days after the Final
Working Capital and the Final Assumed Indebtedness are determined, deliver
shares of Buyer Common Stock to the Buyer having a value (as determined in
accordance with the last sentence of this SECTION 2.3(c)) in the amount of any
such excess (rounded to the nearest whole number). Any shares of Buyer Common
Stock to be issued by the Buyer or delivered by the Seller, as the case may
be, pursuant to this SECTION 2.3(c) shall be valued at the CMA Share Valuation
(as the same shall be adjusted as a result of a stock split, stock dividend,
combination, reclassification, recapitalization or other similar change with
respect to the Buyer Common Stock).
(d) During the period of time from and after the Closing Date
through the final determination and payment/delivery of Closing Working
Capital and Assumed Indebtedness in accordance with this SECTION 2.3, the
Company shall afford the Buyer
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and any accountants, counsel or financial advisers retained by Buyer in
connection with the review of Closing Working Capital and Assumed Indebtedness
in accordance with this SECTION 2.3, access during normal business hours upon
reasonable advance notice to all the properties, books, contracts, personnel,
representatives and records of the Company and such representatives relevant
to the review of the Statement and the determination of Closing Working
Capital and Assumed Indebtedness in accordance with this SECTION 2.3.
(e) During the period of time from and after the Closing Date
through the date the Seller provides the Statement to the Buyer in accordance
with this SECTION 2.3, the Company shall afford the Seller and any
accountants, counsel or financial advisers retained by Seller in connection
with the preparation of the Statement, access during normal business hours
upon reasonable advance notice to all the properties, books, contracts,
personnel, representatives and records of the Company and such representatives
relevant to the preparation of the Statement in accordance with this SECTION
2.3.
Section 2.4 DELIVERIES AT CLOSING.
(a) At the Closing, the Buyer shall deliver, or cause to be
delivered, to the Seller:
(i) certificates representing the CMA Stock
Consideration registered in the name of the Seller;
(ii) the Performance Warrants;
(iii) resignation letters signed by each of the directors
and officers of CMAC and CMAC Sub, effective as of the Closing Date, as
described in SECTION 6.13;
(iv) the officer's certificate referenced in SECTION
7.3(C), dated the Closing Date, of an appropriate officer of the Buyer,
certifying as to compliance by the Buyer with SECTIONS 7.3(a) and 7.3(b);
(v) a certificate of the Secretary of the Buyer
certifying resolutions of its board of directors approving and authorizing the
execution, delivery and performance of this Agreement by it and the Ancillary
Agreements to which the Buyer is a party and the consummation by it of the
transactions described in this Agreement and the Ancillary Agreements
(together with an incumbency and signature certificate regarding the officer
signing on behalf of the Buyer);
(vi) a certificate signed by a duly authorized officer
of the Buyer complying with the requirements of Section 1445 and Treasury
Regulations thereunder stating that the Buyer has not been a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code at any time during the five-year period ending on the date hereof;
and
14
(vii) such other documents and instruments as may be
reasonably required to consummate the transactions described in this Agreement
and the Ancillary Agreements.
(b) At the Closing, the Seller shall deliver, or cause to be
delivered, to the Buyer:
(i) the stock certificate representing the Shares, duly
endorsed in blank or accompanied by a stock power duly executed in blank
attached in proper form for transfer;
(ii) the officer's certificates referenced in SECTION
7.2(c), dated the Closing Date, of an appropriate officer of the Seller
certifying as to the compliance by the Seller with SECTIONS 7.2(a) and 7.2(b);
(iii) the officer's certificates referenced in SECTION
7.2(c), dated the Closing Date, of an appropriate officer of the Parent
certifying as to the compliance by the Parent with SECTIONS 7.2(a) and 7.2(b);
(iv) the officer's certificates referenced in SECTION
7.2(c), dated the Closing Date, of an appropriate officer of the Company
certifying as to the compliance by the Company with SECTION 7.2(b), as
applicable;
(v) certificates of the Secretary of the Seller, the
Secretary of the Parent and the Secretary of the Company certifying
resolutions of the board of directors of the Seller, the Parent and the
Company, respectively, approving and authorizing the execution, delivery and
performance by them of this Agreement and the Ancillary Agreements to which
the Seller, the Parent or the Company, as applicable, are a party and the
consummation by the Seller, the Parent and the Company of the transactions
described in this Agreement and the Ancillary Agreements (together with an
incumbency and signature certificate regarding the officer signing on behalf
of the Seller, the Parent and the Company); and
(vi) such other documents and instruments as may be
reasonably required to consummate the transactions described in this Agreement
and the Ancillary Agreements.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND PARENT AS TO THE COMPANY
The Seller and the Parent represent and warrant to the Buyer as
follows:
Section 3.1 ORGANIZATION; STANDING AND POWER; CHARTER DOCUMENTS.
(a) ORGANIZATION; STANDING AND POWER. Each of the Company and
the Company Subsidiaries is a corporation duly organized, validly existing and
in good
15
standing (to the extent such concept is recognized) under the laws of the
jurisdiction of its organization except where the failure to be so
incorporated, existing and in good standing would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.
The Company has all necessary corporate power and authority to enter into this
Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby. The Company and
the Company Subsidiaries have the requisite power and authority to own, lease
and operate their assets and properties and to carry on their business as now
being conducted.
(b) CHARTER DOCUMENTS. The Company has delivered to the Buyer a
correct and complete copy of the certificate of incorporation and by-laws, or
similar organizational documents, of the Company and the Company Subsidiaries,
each as amended to date (collectively, the "ORGANIZATIONAL DOCUMENTS"). Each
such instrument is in full force and effect. Neither the Company nor any of
the Company Subsidiaries is in violation of its respective Organizational
Documents, except for immaterial violations.
Section 3.2 AUTHORITY; NON CONTRAVENTION; NECESSARY CONSENTS AND
FILINGS.
(a) AUTHORITY. The Company has all requisite organizational
authority and power to execute, deliver and perform this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
the Company of this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary action on the part of
the Company and no other proceedings on the part of the Company are necessary
to authorize the execution and delivery and performance of this Agreement and
such Ancillary Agreements by the Company. The Company has duly and validly
executed and delivered this Agreement and has duly and validly executed and
delivered (or prior to or at the Closing shall duly and validly execute and
deliver) the Ancillary Agreements to which it is a party. Assuming due
authorization, execution and delivery by the other parties thereto, this
Agreement constitutes, and upon execution and delivery the Ancillary
Agreements to which the Company is a party shall constitute, legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by: (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
from time to time in effect affecting generally the enforcement of creditors'
rights and remedies; and (ii) general principles of equity.
(b) NON CONTRAVENTION. The execution and delivery by the Company
of this Agreement and the Ancillary Agreements to which it is a party, and the
performance by the Company of the transactions contemplated by this Agreement
and such Ancillary Agreements in accordance with their terms, will not (i)
conflict with or result in any breach of any provision of the Company's
Organizational Documents, (ii) require any consent, approval or notice under,
or conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under, or give rise to any
right of termination, revocation, amendment or acceleration
16
under any Company Permit or any Contract to which the Company or any of the
Company Subsidiaries is a party or by which any of them or the material assets
of the Company or any of the Company Subsidiaries are bound, or require any
offer to purchase or any prepayment of any Indebtedness or similar obligation
outstanding, (iii) violate in any material respect any material Legal
Requirements applicable to the Company or any of the Company Subsidiaries or
by which any of the material assets of the Company or any of the Company
Subsidiaries are bound, or (iv) cause the creation or imposition of any Liens
on any material asset of the Company or any of the Company Subsidiaries;
PROVIDED, HOWEVER, that no representation or warranty is made in the foregoing
clauses (ii) and (iv) with respect to matters that would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(c) NECESSARY CONSENTS AND FILINGS. No consent, approval or
authorization of, or registration, declaration or filing with, or notice to,
any Governmental Entity is required to be obtained or made by the Company in
connection with the execution, performance and delivery of this Agreement and
the Ancillary Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby, except for (i) those listed in
SECTION 3.2(c) of the Seller Disclosure Letter, (ii) the Necessary Consents
and Filings and (iii) such other consents, approvals, authorizations,
registrations, declarations and filings which if not obtained or made would
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 3.3 CAPITALIZATION. SECTION 3.3 of the Seller
Disclosure Letter sets forth a complete and accurate list of the authorized,
issued and outstanding capital stock of the Company as of the date hereof.
There are no other shares of capital stock or other equity securities of the
Company authorized, issued, reserved for issuance or outstanding and no
outstanding or authorized options, warrants, convertible or exchangeable
securities, subscriptions, rights (including any preemptive rights), calls or
commitments of any character whatsoever, relating to the capital stock of, or
other equity or voting interest in, the Company, to which the Company is a
party or is bound requiring the issuance, delivery or sale of shares of
capital stock of the Company. There are no Contracts to which the Company or
any of its Affiliates is a party or by which it is bound to (x) repurchase,
redeem or otherwise acquire any shares of capital stock of, or other equity or
voting interest in, the Company or (y) except for this Agreement, dispose of
any shares of capital stock of, or other equity or voting interest in, the
Company. There are no irrevocable proxies and no voting agreements with
respect to any shares of capital stock of, or other equity or voting interest
in, the Company. All of the issued and outstanding shares of capital stock of
the Company as of the date hereof are duly authorized, validly issued, fully
paid and non-assessable and free of any preemptive rights in respect thereto.
Section 3.4 SUBSIDIARIES.
(a)
SECTION 3.4(A) of the Seller Disclosure Letter sets forth a
complete and accurate list of the name and jurisdiction of organization of
each Subsidiary of the Company (collectively, the "COMPANY SUBSIDIARIES") and
the authorized, issued and
17
outstanding capital stock of each Company Subsidiary as of the date hereof.
The outstanding shares of capital stock of each Company Subsidiary are duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereto and, except as set forth in SECTION
3.4(A) of the Seller Disclosure Letter, are owned, of record and beneficially,
by the Company, directly or through one or more Company Subsidiaries, free and
clear of any Liens other than such Liens as are set forth in SECTION 3.4(a) of
the Seller Disclosure Letter. Except as set forth in SECTION 3.4(a) of the
Seller Disclosure Letter, there are no other shares of capital stock or other
equity securities of any Company Subsidiary authorized, issued, reserved for
issuance or outstanding and no outstanding or authorized options, warrants,
convertible or exchangeable securities, subscriptions, rights (including any
preemptive rights), calls or commitments of any character whatsoever, relating
to the capital stock of, or other equity or voting interest in, any Company
Subsidiary, to which the Company Subsidiaries are a party or is bound
requiring the issuance, delivery or sale of shares of capital stock of any of
the Company Subsidiaries. Except as set forth in SECTION 3.4(a) of the Seller
Disclosure Letter, there are no Contracts to which the Company or any of the
Company Subsidiaries is a party or by which they are bound to (i) repurchase,
redeem or otherwise acquire any shares of the capital stock of, or other
equity or voting interest in, any Company Subsidiary or (ii) dispose of any
shares of the capital stock of, or other equity or voting interest in, any
Company Subsidiary. Except as set forth in SECTION 3.4(a) of the Seller
Disclosure Letter, there are no irrevocable proxies and no voting agreements
with respect to any shares of the capital stock of, or other equity or voting
interest in, any Company Subsidiary.
(b) Neither the Company nor any Company Subsidiary owns,
directly or indirectly, any capital stock of, or other equity, ownership,
proprietary or voting interest in, any Person except as set forth in SECTION
3.4(b) of the Seller Disclosure Letter.
Section 3.5 FINANCIAL STATEMENTS; NO UNDISCLOSED MATERIAL
LIABILITIES.
(a) The Seller has furnished copies of the Company Financial
Statements to the Buyer. The consolidated balance sheets included in the
Company Financial Statements fairly present, in all material respects, the
consolidated financial position of the Company and the Company Subsidiaries as
of their respective dates, and the other related statements included in the
Company Financial Statements fairly present, in all material respects, the
results of their consolidated operations and cash flows for the periods
indicated, in each case in accordance with GAAP applied on a consistent basis,
with only such deviations from such accounting principles and/or their
consistent application as are referred to in the notes to the Company
Financial Statements and subject, in the case of the Unaudited Financial
Statements, to normal year-end audit adjustments and the absence of related
notes. The Company Financial Statements, including the footnotes thereto, have
been prepared from the books and records of the Company and have been prepared
in accordance with GAAP consistently applied.
(b) Except (i) as set forth in SECTION 3.5 of the Seller
Disclosure Letter, (ii) as reflected on or accrued or reserved against in the
Company Financial Statements for the fiscal periods ended December 31, 2005
and March 31, 2006 (or reflected in the
18
notes thereto, if any), (iii) for liabilities incurred in the ordinary course
of business since December 31, 2005, and (iv) other liabilities that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, the Company and the Company Subsidiaries do not have
any liabilities that are required by GAAP to be reflected or reserved against
in a consolidated balance sheet of the Company. Except as set forth in the
Audited Financial Statements, neither the Company nor any of the Company
Subsidiaries maintain any "off-balance sheet arrangement" within the meaning
of Item 303 of Regulation S-K promulgated under the Exchange Act.
Section 3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in SECTION 3.6 of the Seller Disclosure Letter, since December 31, 2005,
there has not been any Company Material Adverse Effect, nor has there been any
change, event, condition, circumstance, occurrence or effect that would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect and (b) since December 31, neither the Company nor any
of the Company Subsidiaries has taken any action that would have been
prohibited had SECTION 6.1 been in effect as of January 1, 2006.
Section 3.7 TAXES. Except as set forth in SECTION 3.7 of the
Seller Disclosure Letter:
(a) The Company and the Company Subsidiaries have timely filed
(within any applicable extensions) all material Tax Returns required to be
filed. All of such Tax Returns are true, complete and correct in all material
respects.
(b) The Company and the Company Subsidiaries have timely paid
all material Taxes due, whether or not shown on any Tax Return, other than
Taxes being contested in good faith by appropriate proceedings for which
adequate reserves have been provided. Any deficiencies for material Taxes
asserted or assessed in writing against the Company or any of the Company
Subsidiaries have been fully and timely paid. The Company and the Company
Subsidiaries have made adequate provision for any Taxes that are not yet due
and payable for all taxable periods or portions thereof through the date of
this Agreement.
(c) The Company and the Company Subsidiaries have made available
to the Buyer correct and complete copies of all material Tax Returns,
examination reports and statements of deficiencies for taxable periods for
which the applicable statutory periods of limitation have not expired.
(d) There are no outstanding agreements extending or waiving the
statutory period of limitations applicable to any claim for, or the period for
the collection, assessment or reassessment of, material Taxes due from the
Company or any of the Company Subsidiaries for any taxable period and no
request for any such waiver or extension is currently pending.
(e) No audit or other proceeding by any Governmental Entity is
pending with respect to any material Taxes due from or with respect to the
Company or
19
any of the Company Subsidiaries. No Governmental Entity has given written
notice of its intention to assert any deficiency or claim for additional
material Taxes or proposed any adjustment to any material Tax Returns against
the Company or any of the Company Subsidiaries.
(f) There are no Liens for material Taxes upon the Shares or the
assets of the Company or the Company Subsidiaries, except for Liens for
current Taxes not yet due.
(g) As of the Closing Date, neither the Company nor any of the
Company Subsidiaries will be a party to any Contract relating to the sharing,
allocation or indemnification of material Taxes or has any liability for
material Taxes of any Person other than the Company or any of the Company
Subsidiaries.
Section 3.8 INTELLECTUAL PROPERTY.
(a) The Company and each of the Company Subsidiaries owns or has
the right to use all material Intellectual Property necessary to conduct the
business of the Company and the Company Subsidiaries as presently conducted.
To the Knowledge of the Seller, all of the Company's and the Company
Subsidiaries' rights in the material Intellectual Property owned or
purportedly owned by the Company or the Company Subsidiaries are valid and
enforceable.
(b) Since January 1, 2005, neither the Company nor any of the
Company Subsidiaries has been a party to any claim, action or proceeding nor
has any claim, action or proceeding been threatened in writing, that
challenges the Company's or one of the Company Subsidiaries' ownership or
right to use any of the Intellectual Property that is necessary to conduct the
business of the Company and the Company Subsidiaries as presently conducted,
except as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
(c) To the Knowledge of the Seller, neither the Company nor any
of the Company Subsidiaries is infringing in any material respect upon the
intellectual property rights of any third party. To the Knowledge of the
Seller, no Person is materially infringing upon or otherwise violating in any
material respect the Intellectual Property rights of the Company or any of the
Company Subsidiaries.
Section 3.9 COMPLIANCE; PERMITS. Except as set forth in SECTION
3.9 of the Seller Disclosure Letter:
(a) COMPLIANCE. Neither the Company nor any of the Company
Subsidiaries is in conflict with, or in default or violation of, any Legal
Requirement applicable to the Company or any of the Company Subsidiaries
except for such conflicts, defaults or violations as would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect. No investigation or review by any Governmental Entity is pending or
has been threatened in writing against the Company or any of the Company
Subsidiaries and no written notice has been received by the
20
Company or the Company Subsidiaries alleging or inquiring about an alleged or
suspected violation of any Legal Requirements (and regulatory fees and
surcharges imposed thereunder) applicable to the Company or any of the Company
Subsidiaries, except for such investigations or reviews as would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. To the Knowledge of the Seller, no event has occurred
that, with the giving of notice, the passage of time, or both, would
constitute grounds for a violation or order with respect to any Legal
Requirements (and regulatory fees and surcharges imposed thereunder)
applicable to the Company or any of the Company Subsidiaries, except for such
events as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Notwithstanding anything to the
contrary contained in this SECTION 3.9(a), the representations and warranties
contained in this Section shall not be deemed applicable to any
representations or warranties regarding compliance with laws as may be
addressed in SECTIONS 3.7 (Taxes) and 3.13 (Environmental Matters).
(b) PERMITS. The Company and the Company Subsidiaries hold all
Permits from any Governmental Entity that regulates the business of the
Company and the Company Subsidiaries that are required for the operation of
the business of the Company and the Company Subsidiaries as now conducted,
other than any such Permits the absence of which would not reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect (the "COMPANY PERMITS"). All of the Company Permits existing on the
date hereof were duly obtained and are, valid and in full force and effect,
unimpaired by any material condition, except those conditions that may be
contained within the terms of such Company Permits. No Governmental Entity is
claiming or, to the Knowledge of the Seller, is threatening to claim that the
Company or any of the Company Subsidiaries is not in compliance in all
material respects with the material terms and conditions of a Company Permit.
No action by or before any Governmental Entity is pending or, to the Knowledge
of the Seller, threatened in which the requested remedy is (i) the revocation,
suspension, cancellation, rescission or modification or refusal to renew any
of the Company Permits, or (ii) material fines and/or forfeitures.
Section 3.10 LITIGATION. Except as set forth in SECTION 3.10 of
the Seller Disclosure Letter, (a) there are no material claims, actions, suits
or legal, regulatory or administrative proceedings or investigations pending
or threatened in writing against the Company or any of the Company
Subsidiaries or any material portion of the consolidated assets of the Company
and the Company Subsidiaries and (b) neither the Company nor any of the
Company Subsidiaries is subject to any material Order, and the Seller is not
aware, as of the date hereof, of a valid basis for any such action.
Section 3.11 REAL ESTATE.
(a) The Company and each of the Company Subsidiaries has (i)
good and marketable title to all real property owned by the Company or any of
the Company Subsidiaries (the "OWNED REAL PROPERTY") and (ii) valid and
binding leasehold interests in all of the leases and subleases under which the
Company or any of the Company Subsidiaries uses or occupies any real property
(the "LEASED REAL Property", and together
21
with the Owned Real Property, the "REAL PROPERTY"), subject in each case only
to Liens that would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. SECTION 3.11 of the Seller
Disclosure Letter includes a list and brief description of all of the Real
Property as of the date of this Agreement.
(b) Since January 1, 2005, there has been no damage by fire or
other casualty affecting the Real Property for which adequate insurance
coverage (subject to customary deductibles) is not available or which has not
heretofore been repaired or restored. To the Knowledge of the Seller, since
January 1, 2005, there has been no pending, threatened or contemplated
condemnation proceeding affecting any material portion of the Real Property or
any sale or other disposition of a material portion of the Real Property in
lieu of condemnation, and the Company has not received any written notice
thereof.
Section 3.12 MATERIAL CONTRACTS Except as set forth in SECTION
3.12 of the Seller Disclosure Letter, as of the date hereof there is no
Contract that is material to the business, properties, assets, financial
condition or results of operations of the Company and the Company Subsidiaries
taken as a whole (any such contract, agreement or understanding, a "COMPANY
MATERIAL CONTRACT"). Except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect, as of the
date hereof each Company Material Contract is a valid and binding obligation
of the Company or one of the Company Subsidiaries and is in full force and
effect and enforceable against the Company or one of the Company Subsidiaries
and, to the Knowledge of the Seller, the other party or parties thereto, in
each case in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws affecting
or relating to the enforcement of creditors' rights generally and is subject
to general principles of equity. Except to the extent any of the following
would not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect, as of the date hereof neither the Company nor
any of the Company Subsidiaries is in violation or breach of or in default
(with or without notice or the lapse of time or both) under any Company
Material Contract, nor to the Company's Knowledge is any other party to any
such Company Material Contract. As of the date hereof, no party to any Company
Material Contract has informed the Company in writing that it intends to
terminate or materially modify the terms of any such Company Material
Contract.
Section 3.13 ENVIRONMENTAL MATTERS. Except as set forth in
SECTION 3.13 of the Seller Disclosure Letter or as would not reasonably be
expected to have a Company Material Adverse Effect, (a) the Company and the
Company Subsidiaries are and have been in compliance with all applicable
Environmental Laws, and have obtained and are in compliance with all Permits
required under Environmental Laws, all of which to the Knowledge of the Seller
are in full force and effect as of the date of this Agreement; (b) no notice
of violation, notification of liability or request for information has been
received by the Company or any of the Company Subsidiaries arising out of any
Environmental Law; (c) there is no Order, claim, action or proceeding pending
or, to the Knowledge of the Seller, threatened in writing against the Company
or any of the
22
Company Subsidiaries pursuant to Environmental Laws, and the Seller is not
aware, as of the date hereof, of a valid basis therefor; and (d) the Company
is not otherwise subject to any liabilities under Environmental Laws. The
representations and warranties set forth in this SECTION 3.13 are the
exclusive representations and warranties made by the Company with respect to
matters arising under or pursuant to Environmental Laws.
Section 3.14 EMPLOYEE BENEFIT PLANS. The Company and the Company
Subsidiaries do not maintain, sponsor or contribute to any retirement plan or
group medical plan to which any Employee or former employee of the Company or
any Company Subsidiary has any present or future right to material benefits or
under which the Company or any Company Subsidiary has any present or future
material liability.
Section 3.15 INSURANCE. The Seller maintains insurance for the
properties and assets of the Company and the Company Subsidiaries of the type
and in an amount that is customary for the industry and business of the
Company and the Company Subsidiaries, taken as a whole. All material insurance
policies (the "INSURANCE POLICIES") with respect to the properties, assets, or
business of the Company and the Company Subsidiaries are in full force and
effect and all premiums due and payable thereon have been paid in full.
SECTION 3.15 of the Seller Disclosure Letter includes a list of all Insurance
Policies. Neither the Company nor any of the Company Subsidiaries has received
written notice of cancellation or non-renewal of any material Insurance
Policy.
Section 3.16 SUFFICIENCY OF THE ASSETS. The property and assets
owned and leased by the Company and each of the Company Subsidiaries include
all material rights, assets and property necessary for the conduct of the
business currently being conducted by the Company and each of the Company
Subsidiaries.
Section 3.17 REGISTRATION STATEMENT. None of the information
with respect to the Company or any of the Company Subsidiaries or Affiliates
of the Company that the Company furnishes to the Buyer for use in any document
required to be filed by the Buyer with the SEC or required to be distributed
or otherwise disseminated to the Buyer's stockholders in connection with the
transactions contemplated by this Agreement, including the Registration
Statement (which will include the Proxy Statement), at the time of the filing
thereof, at the time of any distribution or dissemination thereof and at the
time the stockholders of the Buyer vote on approval of the transactions
contemplated by this Agreement, will contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading.
Section 3.18 TRANSACTIONS BETWEEN THE COMPANY AND THE PARENT OR
SELLER. Except as set forth on SECTION 3.18 of the Seller Disclosure Letter,
there are no Contracts between the Company or any of the Company Subsidiaries,
on the one hand, and the Parent or the Seller or any of their respective
Subsidiaries (excluding the Company and the Company Subsidiaries) or any of
their respective directors or officers, on the other hand, that require any
payments from the Company or any of the Company Subsidiaries, on the one hand,
to the Parent or the Seller or any of their respective
23
Subsidiaries (excluding the Company and the Company Subsidiaries) or any of
their respective directors or officers, on the other hand.
Section 3.19 BROKERS' AND FINDERS' FEES. Except as set forth in
SECTION 3.19 of the Seller Disclosure Letter, neither the Company nor any of
the Company Subsidiaries has incurred any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or the Ancillary Agreements or any of transactions contemplated
hereby or thereby and no broker, finder, agent or similar intermediary is
entitled to any broker's, finder's or similar fee or other commission in
connection therewith based on any agreement with the Company or any of the
Company Subsidiaries or any action taken by the Company or any of the Company
Subsidiaries.
Section 3.20 EXCLUSIVITY OF REPRESENTATIONS. The representations
and warranties made by the Parent and the Seller in this Agreement are the
exclusive representations and warranties made by the Parent and the Seller.
The Parent and the Seller hereby disclaim any other express or implied
representations or warranties. The Parent and the Seller are not, directly or
indirectly, making any representations or warranties regarding any pro-forma
financial information, financial projections or other forward-looking
statements of the Company or the Company Subsidiaries. The Company is not
making any representations or warranties in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE PARENT
The Seller and the Parent each severally represent and warrant as to
themselves to the Buyer as follows:
Section 4.1 ORGANIZATION; STANDING AND POWER. The Seller is a
corporation duly incorporated, validly existing and in good standing (to the
extent such concept is recognized) under the laws of the jurisdiction of its
incorporation. The Seller has all necessary corporate power and authority to
enter into this Agreement and the Ancillary Agreements to which it is a party
and to consummate the transactions contemplated hereby and thereby.
Section 4.2 AUTHORITY; NON CONTRAVENTION; NECESSARY CONSENTS
AND FILINGS.
(a) AUTHORITY. The Seller has all requisite organizational
authority and power to execute, deliver and perform this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by
the Seller of this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary action on the part of
the Seller and no other proceedings on the part of the Seller are
24
necessary to authorize the execution and delivery and performance of this
Agreement and such Ancillary Agreements by the Seller. The Seller has duly and
validly executed and delivered this Agreement and has duly and validly
executed and delivered (or prior to or at the Closing shall duly and validly
execute and deliver) the Ancillary Agreements to which it is a party. Assuming
due authorization, execution and delivery by the other parties thereto, this
Agreement constitutes, and upon execution and delivery the Ancillary
Agreements to which the Seller is a party shall constitute, legal, valid and
binding obligations of the Seller, enforceable against the Seller in
accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by: (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
from time to time in effect affecting generally the enforcement of creditors'
rights and remedies; and (ii) general principles of equity.
(b) NON CONTRAVENTION. The execution and delivery by the Seller
of this Agreement and the Ancillary Agreements to which it is a party, and the
performance by the Seller of the transactions contemplated by this Agreement
and such Ancillary Agreements in accordance with their terms, will not (i)
conflict with or result in any breach of any provision of the organizational
documents of the Seller, (ii) require any consent, approval or notice under,
or conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under, or give rise to any
right of termination, revocation, amendment or acceleration under any Contract
to which the Seller is a party or by which the Seller or the material assets
of the Seller are bound, or require any offer to purchase or any prepayment of
any Indebtedness or similar obligation outstanding, (iii) violate in any
material respect any material Legal Requirements applicable to the Seller or
by which any of the material assets of the Seller are bound, or (iv) cause the
creation or imposition of any Liens on any material asset of the Seller;
PROVIDED, HOWEVER, that no representation or warranty is made in the foregoing
clauses (ii) and (iv) with respect to matters that, individually or in the
aggregate, would not reasonably be expected to materially impair the Seller's
ability to consummate the transactions contemplated hereby or that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
(c) NECESSARY CONSENTS AND FILINGS. No consent, approval or
authorization of, or registration, declaration or filing with, or notice to,
any Governmental Entity is required to be obtained or made by the Seller in
connection with the execution, performance and delivery of this Agreement or
the Ancillary Agreements to which it is a party or the consummation of the
transactions contemplated hereby or thereby, except for (i) those listed in
SECTION 4.2(c) of the Seller Disclosure Letter, (ii) the Necessary Consents
and Filings and (iii) such other consents, approvals, authorizations,
registrations, declarations and filings which if not obtained or made would
not reasonably be expected to, individually or in the aggregate, materially
impair the Seller's ability to consummate the transactions contemplated hereby
or that would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section 4.3 TITLE TO THE SHARES. SECTION 4.3 of the Seller
Disclosure Letter sets forth the Shares which constitute the Seller's record
and beneficial ownership of the Company's capital stock as of the date hereof.
The Seller owns the Shares
25
beneficially and of record, free and clear of any restrictions on transfer or
Liens or interests of any other party, and upon consummation of the Stock
Purchase will convey such Shares free and clear of any Liens. All of the
Shares are duly authorized, validly issued, fully paid and non-assessable and
not subject to any preemptive rights.
Section 4.4 ACQUISITION FOR INVESTMENT. The Seller is acquiring
the CMA Stock Consideration, the Performance Warrants and, if issued, the
Contingent Shares for its own account for the purpose of investment and not
with a view to, or for resale in connection with, the distribution thereof in
violation of applicable federal, state or provincial securities laws;
PROVIDED, HOWEVER, that the disposition of the Seller's property shall at all
times remain within the sole control of the Seller. The Seller acknowledges
that the disposition of the CMA Stock Consideration, the Performance Warrants
and, if issued, the Contingent Shares hereunder has not been registered under
the Securities Act or any state securities laws, and that the CMA Stock
Consideration, the Performance Warrants and, if issued, the Contingent Shares
may not be sold, transferred, offered for sale, pledged, hypothecated, or
otherwise disposed of without registration under the Securities Act, pursuant
to an exemption from the Securities Act or in a transaction not subject
thereto. The Seller represents that it is an "Accredited Investor" as that
term is defined in Rule 501 of Regulation D of the Securities Act.
Section 4.5 REPRESENTATIONS AS TO PARENT. Parent represents the
substance of SECTIONS 4.1 and 4.2 as to itself.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
Section 5.1 ORGANIZATION; STANDING AND POWER.
(a) ORGANIZATION; STANDING AND POWER. CMAC is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and CMAC Sub will be duly organized, validly existing and in good
standing under the laws of the British Virgin Islands. The Buyer has all
requisite power and authority to enter into this Agreement and the Ancillary
Agreements to which it is a party and, subject to obtaining the Requisite
Buyer Vote, to consummate the transactions contemplated hereby and thereby.
(b) CHARTER DOCUMENTS. The Buyer has delivered to the Seller a
correct and complete copy of the certificate of incorporation and by-laws of
CMAC, each as amended to date. Each such instrument is in full force and
effect. The Buyer is not in violation of any of the provisions of its
organizational documents.
(c) BUSINESS. CMAC was incorporated on March 30, 2004 and was
formed solely for the purposes of serving as a vehicle for engaging in a
Business
26
Combination. Except for this Agreement, CMAC has not engaged in any business
activities, conducted any operations or entered into any material agreements
or Contracts with any other Person other than the Contracts set forth in
SECTION 5.1(c) of the Buyer Disclosure Letter or incurred any liabilities,
other than liabilities and obligations incurred in connection with CMAC's
search for a target business to effect a Business Combination. Except in
connection with the CMAC Merger, CMAC Sub (when established) will not engage
in any business activities, conduct any operations or enter into any material
agreements or Contracts with any other Person or incur any liabilities. CMAC
has no (and CMAC Sub (when established) will have no) material assets,
properties or rights other than cash, the Trust Fund and those reflected on
the Buyer Financial Statements and the related notes thereto. CMAC has no (and
CMAC Sub (when established) will have no) liabilities or obligations (whether
accrued, absolute, contingent or otherwise) other than those reflected on the
Buyer Financial Statements and the related notes thereto.
(d) TRUST FUND. As of the date hereof and at the Closing Date,
the Buyer has and will have no less than $21,386,630 of escrowed cash in the
Trust Fund invested in United States Treasury Bills (having a maturity of one
hundred and eighty days or less), less such amounts, if any, as the Buyer is
required to utilize in order to pay (i) to stockholders who elect to have
their shares redeemed in accordance with the provisions of CMAC's amended and
restated certificate of incorporation and (ii) the Buyer Expenses PLUS one
half of the sales, use, value added, transfer, stamp, registration,
documentary, excise, real property transfer or gains, or similar Taxes
incurred as a result of the transactions contemplated by this Agreement.
Section 5.2 AUTHORITY; NON CONTRAVENTION; NECESSARY CONSENTS
AND FILINGS.
(a) AUTHORITY. The board of directors of the Buyer has adopted
resolutions: (i) approving this Agreement and the Ancillary Agreements to
which the Buyer is a party and the transactions contemplated hereby and
thereby, including, without limitation, the Stock Purchase and the CMAC
Merger; (ii) declaring that it is advisable that the Buyer enters into this
Agreement and the Ancillary Agreements to which the Buyer is a party and
consummates the Stock Purchase and the CMAC Merger upon the terms and subject
to the conditions set forth in this Agreement and the Plan of Merger,
respectively; (iii) declaring that the Company is an appropriate target
business for the stated objective of a Business Combination under CMAC's
organizational documents and Prospectus, dated August 24, 2004, filed pursuant
to Rule 424(b) of the Securities Act; (iv) directing that approval of the
Stock Purchase and CMAC Merger be submitted to a vote at a Stockholders'
Meeting; and (v) recommending to the stockholders of the Buyer that they
approve the Stock Purchase and the CMAC Merger (the "BUYER BOARD
RECOMMENDATION"). The execution, delivery and performance of this Agreement by
the Buyer and the Ancillary Agreements to which it is a party and the
consummation by the Buyer of the transactions contemplated hereby and thereby
have been duly and validly authorized by all necessary corporate action on the
part of the Buyer, subject to obtaining the Requisite Buyer Vote, holders of
not more than 19.99% in interest of the Buyer Common Stock issued in
connection with CMAC's initial public offering exercising their
27
rights under CMAC's amended and restated certificate of incorporation to
convert such stock into cash in connection with the consummation of the
transactions contemplated hereby and actions necessary to effectuate the CMAC
Merger. The Buyer has duly and validly executed and delivered this Agreement
and has duly and validly executed and delivered (or prior to or at the Closing
shall duly and validly execute and deliver) the Ancillary Agreements to which
it is a party. Assuming due authorization, execution and delivery by the other
parties thereto, this Agreement constitutes, and upon execution and delivery
the Ancillary Agreements to which the Buyer is a party shall constitute,
legal, valid and binding obligations of the Buyer, enforceable against the
Buyer in accordance with their respective terms, except to the extent that the
enforceability thereof may be limited by: (i) applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
from time to time in effect affecting generally the enforcement of creditors'
rights and remedies; and (ii) general principles of equity.
(b) NON CONTRAVENTION. The execution and delivery by the Buyer
of this Agreement and the Ancillary Agreements to which it is a party, and the
performance by the Buyer of the transactions contemplated hereby and thereby
in accordance with their terms, will not (i) conflict with or result in any
breach of any provision of the organizational documents of CMAC or CMAC Sub
(when established), (ii) require any consent, approval or notice under, or
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under, or give rise to any
right of termination, revocation, amendment or acceleration under any Contract
to which the Buyer is a party or by which Buyer or the material assets of the
Buyer are bound, or require any offer to purchase or any prepayment of any
Indebtedness or similar obligation outstanding, (iii) violate in any material
respect any material Legal Requirements applicable to CMAC or CMAC Sub (when
established) or by which any of the material assets of the Buyer are bound, or
(iv) cause the creation or imposition of any Liens on any material asset of
the Buyer.
(c) NECESSARY CONSENTS AND FILINGS. No consent, approval or
authorization of, or registration, declaration or filing with, or notice to,
any Governmental Entity is required to be obtained or made by the Buyer or
CMAC Sub (when established) in connection with the execution, performance and
delivery of this Agreement or the Ancillary Agreements to which it is a party
or the consummation of the transactions contemplated hereby or thereby, except
for:
(i) the filing with the United States Securities and
Exchange Commission (the "SEC") of (A) a proxy statement (together with all
amendments and supplements thereto, the "PROXY STATEMENT") relating to a
special meeting of the stockholders of the Buyer (together with any
adjournments or postponements thereof, the "STOCKHOLDERS' MEETING") to be held
to consider and vote on the approval and adoption of the Stock Purchase and
the CMAC Merger, (B) a registration statement on Form S-4 (together with all
amendments and supplements thereto, the "REGISTRATION STATEMENT") in which the
Proxy Statement shall be included as a prospectus, and declaration of
effectiveness of the Registration Statement, in connection with the
registration under the Securities Act of the shares of Surviving Corporation
Ordinary Shares to be issued to the stockholders of CMAC pursuant to the CMAC
Merger, and (C) any other filings and
28
reports that may be required in connection with this Agreement and the
transactions contemplated hereby under the applicable United States federal
securities laws;
(ii) such consents, approvals, authorizations,
registrations, declarations and filings as may be required under applicable
state securities or "blue sky" laws and the securities laws of any foreign
country;
(iii) satisfaction of the applicable redomestication and
merger requirements of the State of Delaware and the British Virgin Islands in
connection with the CMAC Merger; and
(iv) such consents, approvals, authorizations,
registrations, declarations and filings as may be required by those foreign
Governmental Entities set forth in SECTION 5.2(c)(iv) of the Buyer Disclosure
Letter.
(d) The consents, approvals, authorizations, registrations,
declarations and filings set forth in the foregoing clauses (c)(i), (c)(ii),
(c)(iii) and (c)(iv) are referred to collectively as the "NECESSARY CONSENTS
AND FILINGS."
Section 5.3 CAPITALIZATION; SUBSIDIARIES; ANTI-DILUTION
PROTECTION; REGISTRATION RIGHTS AGREEMENTS.
(a) CAPITALIZATION OF THE BUYER AND CMAC SUB.
(i) The authorized capital stock of CMAC consists of
21,000,000 shares, consisting of (A) 20,000,000 shares of CMAC Common Stock,
5,000,000 shares of which are issued and outstanding as of the date hereof,
and (B) 1,000,000 shares of preferred stock, par value $0.0001 per share, none
of which are issued and outstanding as of the date hereof. As of the date
hereof, an aggregate of 8,900,000 shares of CMAC Common Stock may become
issuable (and such number has been reserved for issuance) as follows: 900,000
shares of CMAC Common Stock upon exercise of the Underwriter Option and
8,000,000 shares of CMAC Common Stock upon the exercise of the IPO Warrants.
(ii) Upon formation and prior to the consummation of the
CMAC Merger, the authorized capital stock of CMAC Sub will include an
unlimited number of shares, consisting of (A) an unlimited number of ordinary
shares, no par value, of which one (1) share will be issued and outstanding to
CMAC, and (B) an unlimited number of preferred shares, no par value, none of
which will be issued and outstanding. There will be no options, warrants or
other rights (other than as contemplated by this Agreement) to acquire any
capital stock of CMAC Sub. The ordinary shares of CMAC Sub issued to CMAC upon
formation of CMAC Sub shall, in connection with the effectiveness of the CMAC
Merger and without any further action by any Person, be extinguished as a
contribution to capital of the Surviving Corporation.
(iii) All of the issued and outstanding shares of CMAC
Common Stock are, and all shares of Buyer Common Stock which may be issued
pursuant to the transactions contemplated by this Agreement (including the
Contingent
29
Shares) and upon exercise of the Underwriter Option, the IPO Warrants and the
Performance Warrants will be when issued in accordance with the terms thereof,
(A) duly authorized, validly issued, fully paid and non-assessable and not
subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the General Corporation Law of the State of Delaware,
the company laws of the British Virgin Islands, the organizational documents
of the Buyer or any Contract or commitment to which the Buyer is a party or
otherwise bound and (B) issued in material compliance with all applicable
Laws, including federal, state and foreign securities laws. Other than (x) the
IPO Warrants and (y) the option to purchase up to a total of 300,000 "Units"
at a per "Unit" price of $7.50 (the "UNDERWRITER OPTION"), with each "Unit"
consisting of one share of Buyer Common Stock and two warrants (each warrant
exercisable for one share of Buyer Common Stock at an exercise price of
$6.65), there are no preemptive or other outstanding rights, options,
warrants, conversion rights, stock appreciation rights, phantom stock, profit
participation, redemption rights, repurchase rights, agreements, arrangements
or commitments of any kind to which the Buyer is a party, or by which the
Buyer is bound, obligating the Buyer to issue, deliver or sell, or cause to be
issued, delivered or sold, any shares of capital stock or other securities or
equivalents of the Buyer or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to
subscribe for or acquire, any securities of the Buyer for cash or equivalent
value in lieu thereof, and no securities or obligations evidencing such rights
are authorized, issued or outstanding.
(iv) Except as set forth in SECTION 5.3 of the Buyer
Disclosure Letter, CMAC is not (and CMAC Sub (when established) will not be) a
party to any voting or other stockholders agreement with respect to its
securities and there are not any outstanding contractual obligations of the
Buyer to repurchase, redeem or otherwise acquire or to file any registration
statement with respect to any shares of capital stock of the Buyer. CMAC does
not (and CMAC Sub (when established) will not) have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the stockholders of CMAC or CMAC Sub (when established) on any
matter or any agreements with respect to the voting of any capital stock of
CMAC or CMAC Sub (when established).
(v) After giving effect to the transactions
contemplated by this Agreement and upon consummation of the CMAC Merger
pursuant to the Plan of Merger (for purposes of re-domestication of CMAC in
the British Virgin Islands), immediately following the Closing (w) the
authorized capital stock of the Buyer will consist solely of (i) an unlimited
number of shares of Buyer Common Stock and (ii) an unlimited number of
preferred shares, no par value, (x) the issued and outstanding capital stock
of the Buyer will consist solely of (i) that number of shares of Buyer Common
Stock equal to the CMA Stock Consideration (all of which will be held by the
Seller) and (ii) 5,000,000 shares of Buyer Common Stock (1,000,000 shares of
which will be held by the current management and directors of the Buyer), (y)
an aggregate of 12,100,000 shares of Buyer Common Stock may become issuable
(and such number will be reserved for issuance) as follows: 900,000 shares of
Buyer Common Stock upon exercise of the Underwriter
30
Option, 8,000,000 shares of Buyer Common Stock upon the exercise of the IPO
Warrants, 2,000,000 shares of Buyer Common Stock upon the exercise of the
Performance Warrants and 1,200,000 shares of Buyer Common Stock if the
condition precedent to the issuance of the Contingent Shares is satisfied, and
(z) other than the Underwriter Option, the IPO Warrants, the Performance
Warrants and the Contingent Shares, there will be no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, phantom stock, profit participation, redemption rights, repurchase
rights, agreements, arrangements or commitments of any kind to which the Buyer
is a party, or by which the Buyer is bound, obligating the Buyer to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of
capital stock or other securities or equivalents of the Buyer or any
securities or obligations convertible into or exchangeable or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
the Buyer for cash or equivalent value in lieu thereof, and no securities or
obligations evidencing such rights are authorized, issued or outstanding.
(b) SUBSIDIARIES. Except for CMAC Sub (when established), CMAC
does not own, directly or indirectly, any capital stock or other equity
interest of, or any security convertible or exchangeable into or exercisable
for any capital stock or other equity interest of, any Person.
(c) ANTI-DILUTION PROTECTION. No stockholder of the Buyer has
(or will have after giving effect to the transactions contemplated by this
Agreement) any rights to purchase or receive additional or other securities
upon the occurrence of an event that might dilute such stockholder's
percentage interest in the Buyer.
(d) REGISTRATION RIGHTS AGREEMENTS. Except as provided in that
certain agreement governing the Underwriter Option, the Founders Registration
Rights Agreement, the Amendment to Founders Registration Rights Agreement and
the Registration Rights Agreement, the Buyer is not, and after giving effect
to the transactions contemplated by this Agreement and the Ancillary
Agreements will not be, a party to any agreement granting any registration
rights to any Person. The execution and delivery by the Buyer of the
Registration Rights Agreement and the Amendment to Founders Registration
Rights Agreement and the performance by the Buyer of the transactions
contemplated by the Registration Rights Agreement and the Amendment to
Founders Registration Rights Agreement in accordance with their respective
terms, will not require any consent, approval or notice under, or conflict
with or result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or give rise to any right of
termination, revocation, amendment or acceleration under either that certain
agreement governing the Underwriter Option or the Founders Registration Rights
Agreement.
Section 5.4 THE BUYER REPORTS; FINANCIAL STATEMENTS; NO
UNDISCLOSED MATERIAL LIABILITIES.
(a) The Buyer has filed with the SEC all registration
statements, prospectuses, forms, reports, schedules, statements and other
documents required to be
31
filed by it since May 28, 2004, and all exhibits and amendments thereto, under
the Securities Exchange Act of 1934, as amended (including the rules and
regulations promulgated thereunder, the "EXCHANGE ACT"), the Securities Act of
1933, as amended (including the rules and regulations promulgated thereunder,
the "SECURITIES ACT"), and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended
(including the rules and regulations promulgated thereunder, the "SOXA")
(collectively, the "BUYER REPORTS"). The Buyer Reports, including the
financial statements and schedules included in the Buyer Reports, at the time
filed (and, in the case of registration statements and proxy statements, on
the dates of effectiveness and the dates of mailing, respectively, and, in the
case of any Buyer Report amended or superseded by a filing prior to the date
of this Agreement, then on the date of such amending or superseding filing)
(i) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) complied in all material respects with the applicable
requirements of the Exchange Act, the Securities Act and SOXA, as the case may
be. The financial statements of the Buyer included in the Buyer Reports (the
"BUYER FINANCIAL STATEMENTS") (i) have been prepared from, and are in
accordance with, the books and records of the Buyer, (ii) at the time filed
(and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively, and, in the
case of any Buyer Report amended or superseded by a filing prior to the date
of this Agreement, then on the date of such amending or superseding filing)
complied as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, (iii) were prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto, or, in the case of unaudited statements, as permitted by
Form 10-QSB of the SEC), and (iv) fairly present in all material respects
(subject, in the case of unaudited statements, to normal, recurring audit
adjustments, none of which have been or are reasonably likely to be materially
adverse to the Buyer) the financial position of the Buyer as at the dates
thereof and the results of the Buyer's operations and cash flows (and changes
in financial position, if any) for the periods then ended. The Buyer is not a
party to any off-balance sheet arrangements (as defined in Item 303 of
Regulation S-K promulgated under the Exchange Act). The Buyer has not had any
material dispute with ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP ("GGK") regarding accounting
matters or policies during any of its past two full fiscal years or during the
current fiscal year that is currently outstanding or that has resulted in any
restatement of the Buyer Financial Statements.
(b) Without limiting the generality of the foregoing, GGK has
not resigned nor been dismissed as independent public accountant of the Buyer
as a result of or in connection with any disagreement with the Buyer on a
matter of accounting practices which materially impacts or would require the
restatement of any previously issued Buyer Financial Statements, covering one
or more years or interim periods for which the Buyer is required to provide
Buyer Financial Statements, such that they should no longer be relied on.
(c) To the knowledge of the Buyer, no investigation by the SEC
with respect to the Buyer is pending or threatened.
32
(d) The Buyer has established and maintains "disclosure controls
and procedures" (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under
the Exchange Act) that are reasonably designed to ensure that material
information (both financial and non-financial) relating to the Buyer required
to be disclosed by the Buyer in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that such information
is accumulated and communicated to the Buyer's principal executive officer and
principal financial officer, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure and to
make the certifications of the "principal executive officer" and the
"principal financial officer" of the Buyer required by Section 302 of SOXA
with respect to such reports. The principal executive and principal financial
officers of the Buyer have each made all certifications required by Sections
302 and 906 of SOXA and the rules and regulations promulgated thereunder with
respect to the Buyer Reports and the statements contained in such
certifications are true and accurate in all material respects. There are no
"significant deficiencies" or "material weaknesses" (as defined by SOXA) in
the design or operation of the Buyer's internal controls and procedures which
could adversely affect the Buyer's ability to record, process, summarize and
report financial data.
(e) There are no outstanding loans made by the Buyer to any
executive officer (as defined in Rule 3b-7 under the Exchange Act) or director
of the Buyer. Since the enactment of SOXA, the Buyer has not made any loans to
any executive officer (as defined in Rule 3b-7 under the Exchange Act) or
director of the Buyer.
(f) Except as set forth in SECTION 5.4(f) of the Buyer
Disclosure Letter or as disclosed in Buyer Financial Statements filed with the
SEC prior to the date of this Agreement, the Buyer does not have (and CMAC Sub
(when established) will not have) any claims, liabilities, Indebtedness,
debts, obligations of any nature (whether known or unknown, absolute, accrued,
contingent or otherwise) that are required by GAAP to be reflected or reserved
against in a balance sheet of the Buyer.
Section 5.5 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in SECTION 5.5 of the Buyer Disclosure Letter, since March 30, 2004
there has not been any material adverse effect on the Buyer, nor has there
been any change, event, condition, circumstance, occurrence or effect that
would reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the Buyer, other than its incurrence of expenses or
expenditure of funds, in each case during the period from January 1, 2006
through the Closing Date in an amount not exceeding $699,000 in the aggregate,
for the purpose of finding a company with which to effect a Business
Combination and effecting the same, and (b) since March 30, 2004 until the
date hereof, the Buyer has not taken any action that would have been
prohibited had SECTION 6.2 been in effect as of such date.
Section 5.6 LITIGATION. There are no claims, actions, suits or
legal, regulatory or administrative proceedings or investigations pending or
threatened in writing against the Buyer or any material portion of the assets
of the Buyer and the Buyer is not subject to any material Order.
33
Section 5.7 INVESTMENT COMPANY. The Buyer is not a registered
"investment company," is not required to register as an "investment company"
and is not an entity controlled by or affiliated with an "investment company,"
as such terms are defined under the Investment Company Act of 1940, as
amended.
Section 5.8 TAXES. Except as set forth in SECTION 5.8 of the
Buyer Disclosure Letter:
(a) The Buyer has timely filed (within any applicable
extensions) all material Tax Returns required to be filed. All of such Tax
Returns are true, complete and correct in all material respects.
(b) The Buyer has timely paid all material Taxes due, whether or
not shown on any Tax Return, other than Taxes being contested in good faith by
appropriate proceedings for which adequate reserves have been provided. Any
deficiencies for material Taxes asserted or assessed in writing against the
Buyer has been fully and timely paid. The Buyer has made adequate provision
for any Taxes that are not yet due and payable for all taxable periods or
portions thereof through the date of this Agreement.
(c) The Buyer has made available to the Seller correct and
complete copies of all material Tax Returns, examination reports and
statements of deficiencies for taxable periods for which the applicable
statutory periods of limitation have not expired.
(d) There are no outstanding agreements extending or waiving the
statutory period of limitations applicable to any claim for, or the period for
the collection, assessment or reassessment of, material Taxes due from the
Buyer for any taxable period and no request for any such waiver or extension
is currently pending.
(e) No audit or other proceeding by any Governmental Entity is
pending with respect to any material Taxes due from or with respect to the
Buyer. No Governmental Entity has given written notice of its intention to
assert any deficiency or claim for additional material Taxes or proposed any
adjustment to any material Tax Returns against the Buyer.
(f) There are no Liens for material Taxes upon the assets of the
Buyer, except for Liens for current Taxes not yet due.
(g) The Buyer is not a party to any Contract relating to the
sharing, allocation or indemnification of material Taxes or has any liability
for material Taxes of any Person.
Section 5.9 COMPLIANCE(a) . Except as set forth in SECTION 5.9
of the Buyer Disclosure Letter, the Buyer is not in conflict with, or in
default or violation of, any Legal Requirement (and regulatory fees and
surcharges imposed thereunder) applicable to the Buyer except for such
conflicts, defaults or violations as would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Buyer. No
investigation or review by any Governmental Entity is pending or has been
threatened in writing against the Buyer and no written notice has been
received by
34
the Buyer alleging or inquiring about an alleged or suspected violation of any
Legal Requirements (and regulatory fees and surcharges imposed thereunder)
except for such investigations or reviews as would not reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the
Buyer. To the Knowledge of the Buyer, no event has occurred that, with the
giving of notice, the passage of time, or both, would constitute grounds for a
violation or order with respect to any Legal Requirements (and regulatory fees
and surcharges imposed thereunder) for such events as would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect
on the Buyer. Notwithstanding anything to the contrary contained in this
SECTION 5.9, the representations and warranties contained in this Section
shall not be deemed applicable to any representations or warranties regarding
compliance with laws as may be addressed in SECTIONS 5.8 (Taxes).
Section 5.10 EMPLOYEE BENEFIT PLANS. Except as set forth in
SECTION 5.10 of the Buyer Disclosure Letter, CMAC has (and CMAC Sub (when
established) will have) no employees. CMAC does not have (and CMAC Sub (when
established) will not have) any "employee benefit plans" (within the meaning
of Section 3(3) of ERISA) or any stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation, profit sharing, pension, retirement or other
employee benefit plan, agreement, program, policy or other arrangement,
whether or not subject to ERISA and whether or not governed by the laws of the
United States of America under which any Person has any present or future
right to material benefits or under which CMAC or CMAC Sub (when established)
has any present or future material liability.
Section 5.11 RELATED PARTY TRANSACTIONS. Except as set forth in
Section 5.11 of the Buyer Disclosure Letter, none of the current or former
directors (or nominees), officers, employees or consultants of the Buyer, any
stockholder of the Buyer or holder of the IPO Warrants or Underwriter Option,
or any relative, spouse, officer, director or Affiliate of any of the
foregoing Persons (each a "Related Person") (a) provides, causes to be
provided, provided or caused to be provided, any goods or services to the
Buyer, (b) owes or owed any amount or has or had any liability to the Buyer
nor does the Buyer owe any amount or have any liability to such Related
Person, or has the Buyer committed to make any loan or extend or guarantee of
credit to or for the benefit of any such Related Person, (b) owns any property
(real or personal or mixed) or right, tangible or intangible, that is used by
the Buyer or (c) has any claim or cause of action against the Buyer. Section
5.11 of the Buyer Disclosure Letter sets forth a true and complete list of all
(x) amounts that are owed by the Buyer to any Related Person as of the date
hereof and any liabilities or obligations of the Buyer to any Related Person
as of the date hereof, (y) all liabilities or obligations of the Buyer to any
Related Person that will arise between the date hereof and the Closing Date,
and (z) all liabilities or obligations of the Buyer to any Related Person that
will exist at and as of the Closing Date.
Section 5.12 STOCKHOLDER VOTE REQUIRED. The only vote of the
holders of any class or series of capital stock of the Buyer (under the CMAC's
organizational
35
documents, applicable Legal Requirements, Contracts or otherwise) necessary to
approve each of the Stock Purchase and the CMAC Merger is the affirmative vote
of the holders of a majority of the outstanding shares of Buyer Common Stock
(the "REQUISITE BUYER VOTE"); PROVIDED that holders of not more than 19.99% in
interest of the CMAC Common Stock issued in connection with CMAC's initial
public offering exercise their rights under CMAC's amended and restated
certificate of incorporation to convert such stock into cash in connection
with the consummation of the transactions contemplated hereby. Except as set
forth in Section 5.12 of the Buyer Disclosure Letter, there are no voting
trusts, proxies or similar agreements, arrangements or commitments to which
the Buyer is a party with respect to the voting of any shares of Buyer Common
Stock.
Section 5.13 REGISTRATION STATEMENT.
(a) Each document required to be filed by the Buyer with the SEC
or required to be distributed or otherwise disseminated to the Buyer's
stockholders in connection with the transactions contemplated by this
Agreement (the "BUYER DISCLOSURE DOCUMENTS"), including the Registration
Statement (which will include the Proxy Statement), when filed, distributed or
disseminated, as applicable, will comply in all material respects with the
applicable requirements of the Exchange Act. The representations and
warranties contained in this SECTION 5.13(a) do not apply to statements
included in the Buyer Disclosure Documents based upon information furnished to
the Buyer by the Seller, the Parent or the Company specifically for use
therein.
(b) (i) The Registration Statement (which will include the Proxy
Statement), at the time such Registration Statement is first mailed to
stockholders of the Buyer and at the time such stockholders vote on approval
of the transactions contemplated by this Agreement, and (ii) any Buyer
Disclosure Documents (other than the Registration Statement (which will
include the Proxy Statement)), at the time of the filing of such Buyer
Disclosure Document or any supplement or amendment thereto and at the time of
any distribution or dissemination thereof, will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this SECTION 5.13(b) will not
apply to statements included in the Buyer Disclosure Documents based upon
information furnished to the Buyer by the Seller, the Parent or the Company
specifically for use therein.
Section 5.14 PURCHASE FOR INVESTMENT. The Buyer is purchasing
the Shares for its own account for the purpose of investment and not with a
view to, or for resale in connection with, the distribution thereof in
violation of applicable federal, state or provincial securities laws;
PROVIDED, HOWEVER, that the disposition of the Buyer's property shall at all
times remain within the sole control of the Buyer. The Buyer acknowledges that
the sale of the Shares hereunder has not been registered under the Securities
Act or any state or foreign securities laws, and that the Shares may not be
sold, transferred, offered for sale, pledged, hypothecated, or otherwise
disposed of without registration under the Securities Act, pursuant to an
exemption from the Securities Act or
36
in a transaction not subject thereto. The Buyer represents that it is an
"Accredited Investor" as that term is defined in Rule 501 of Regulation D of
the Securities Act.
Section 5.15 APPROPRIATE TARGET BUSINESS; FAIR MARKET VALUE
OPINION.
(a) The Buyer's board of directors has determined that the Stock
Purchase constitutes a "Business Combination" as defined in, and that the
Company is an appropriate target business for the stated objective of a
Business Combination under, CMAC's amended and restated certificate of
incorporation and CMAC's Prospectus, dated August 24, 2004, filed pursuant to
Rule 424(b) of the Securities Act (containing the requirements of the Buyer
regarding a Business Combination with another company).
(b) The Buyer's board of directors has either (x) independently
determined that as of the date hereof the Company has a fair market value
equal to at least 80% of the Buyer's net assets or (y) obtained an opinion
from an unaffiliated independent investment banking firm which is a member of
the National Association of Securities Dealers, Inc., which opinion provides
that as of the date hereof the Company has a fair market value equal to at
least 80% of the Buyer's net assets.
Section 5.16 OTC BULLETIN BOARD. The CMAC Common Stock is quoted
on the OTC Bulletin Board under the symbol "CMAQ", the CMAC units offered in
its initial public offering, which each consist of one share of CMAC Common
Stock and two IPO Warrants, are quoted on the OTC Bulletin Board under the
symbol "CMAQU" and the IPO Warrants are quoted on the OTC Bulletin Board under
the symbol "CMAQW". The Buyer is in compliance in all respects with all rules
and regulations of the National Association of Securities Dealers, Inc.
applicable to the Buyer and to the inclusion for quotation of such securities
on the OTC Bulletin Board.
Section 5.17 BROKERS' AND FINDERS' FEES. Except as set forth in
SECTION 5.17 of the Buyer Disclosure Letter, the Buyer has not incurred any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or the Ancillary Agreements or any
transactions contemplated hereby or thereby, and no broker, finder, agent or
similar intermediary is entitled to any broker's, finder's or similar fee or
other commission in connection therewith based on any agreement with the Buyer
or any action taken by the Buyer.
Section 5.18 ANTI-TAKEOVER PLAN; STATE TAKEOVER STATUTES.
(a) CMAC does not have (and CMAC Sub (when established) will not
have) in effect any stockholder rights plan or similar device or arrangement,
commonly or colloquially known as a "poison pill" or "anti-takeover" plan or
any similar plan, device or arrangement and the Board of Directors of the
Buyer has not adopted or authorized the adoption of such a plan, device or
arrangement. For the avoidance of doubt, the parties hereto acknowledge that
the staggered board provisions of CMAC's amended and restated certificate of
incorporation shall not be deemed to be an "anti-takeover" plan or any similar
plan, device or arrangement.
37
(b) Prior to the Closing, the Board of Directors of the Buyer
will have taken all necessary actions to exempt the Stock Purchase, this
Agreement and the transactions contemplated by this Agreement from Section 203
of the DGCL. No other "fair price," "moratorium," "control share acquisition,"
"business combination" or other similar state takeover statute or similar
statute or regulation of any jurisdiction applies or purports to apply to the
Stock Purchase, this Agreement, or any of the other transactions contemplated
by this Agreement.
Section 5.19 BUYER EXPENSES. SECTION 5.19 of the Buyer
Disclosure Letter sets forth a true and complete list of the type and amount
all Buyer Expenses incurred or to be paid by the Buyer, whether on its own
behalf or on behalf of its stockholders, in connection with the transactions
contemplated by this Agreement; PROVIDED, HOWEVER, that the Buyer Expenses
paid in full prior to the date of this Agreement are not set forth on such
Schedule.
Section 5.20 EXCLUSIVITY OF REPRESENTATIONS. The representations
and warranties made by the Buyer in this Agreement are the exclusive
representations and warranties made by the Buyer. The Buyer hereby disclaims
any other express or implied representations or warranties. The Buyer is not,
directly or indirectly, making any representations or warranties regarding any
pro-forma financial information, financial projections or other
forward-looking statements of the Buyer.
ARTICLE VI
COVENANTS AND AGREEMENTS
Section 6.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement or as set forth in SECTION 6.1 of the Seller
Disclosure Letter, during the period commencing on the date of this Agreement
and ending on the Closing Date (or the date on which this Agreement is
terminated pursuant to its terms), the Parent and the Seller shall cause the
Company to and the Company shall (x) conduct the operations of the Company and
the Company Subsidiaries in the ordinary course of business consistent with
past practice and (y) use commercially reasonable efforts to preserve intact
the business organization of the Company and the Company Subsidiaries, to
retain the services of the current officers and key Employees and to maintain
satisfactory relationships with its customers, suppliers and other Persons
with whom it has business relationships or dealings.
Section 6.2 CONDUCT OF BUSINESS OF THE BUYER. Except as
contemplated by this Agreement, the Plan of Merger or as set forth in SECTION
6.2 of the Buyer Disclosure Letter, during the period commencing on the date
of this Agreement and ending on the Closing Date (or the date on which this
Agreement is terminated pursuant to its terms), the Buyer shall and shall
cause CMAC Sub (when established) to (x) not engage in any business
activities, conduct any operations, enter into any agreements or Contracts
with any other Person or incur any liabilities, other than in connection with
the consummation of the transactions contemplated hereby, (y) use commercially
reasonable efforts to preserve intact the business organization of the Buyer
and CMAC Sub (when
38
established), to retain the services of the current directors and officers of
the Buyer and CMAC Sub (when established) and to maintain satisfactory
relationships with the Persons having business relationships or dealings with
Buyer and CMAC Sub (when established). Without limiting the generality of the
foregoing and except as contemplated by this Agreement or the Plan of Merger,
the Buyer shall not and shall cause CMAC Sub (when established) not to (i)
amend or modify or propose to amend or modify its organizational documents or
file any certificate of designation or similar instrument with respect to the
shares of its authorized but unissued capital stock, (ii) split, combine or
reclassify its outstanding shares of capital stock, (iii) declare, set aside
or pay any dividend, or actual, constructive or deemed distribution, payable
in cash, stock or property in respect of any capital stock, (iv) repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible into or exchangeable or exercisable for any shares of its capital
stock, (v) issue, sell, pledge, dispose of or encumber any shares of, or
securities convertible into or exchangeable or exercisable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of
its capital stock of any class or any other property or assets, and (vi) make
any other change in its capital structure.
Section 6.3 REGISTRATION STATEMENT.
(a) As promptly as practicable following the date of this
Agreement, the Buyer shall prepare a draft of the Registration Statement
(which will include the Proxy Statement). Each of the Parent, the Seller and
the Company shall provide the Buyer with any information that may be
reasonably requested by the Buyer which is necessary in the Buyer's reasonable
judgment (and in similar situations customarily provided) in connection with
the preparation and filing of the Registration Statement (which will include
the Proxy Statement) pursuant to this SECTION 6.3. The Buyer shall provide the
Seller with a reasonable opportunity to review and comment on such draft, and
once such draft is in a form reasonably acceptable to both the Buyer and the
Seller, the Buyer shall file the Registration Statement (which will include
the Proxy Statement) with the SEC.
(b) The Buyer shall use its commercially reasonable efforts to
(i) respond to any comments on the Registration Statement (which will include
the Proxy Statement) or requests for additional information from the SEC as
soon as practicable after receipt of any such comments or requests, (ii) to
cause the Registration Statement to become effective as promptly as
practicable, and, prior to the effective time of the Registration Statement,
the Buyer shall take all or any action required under any applicable federal
or state securities laws in connection with such actions and the preparation
of the Registration Statement (which will include the Proxy Statement), and
(iii) cause the Registration Statement (which will include the Proxy
Statement) to be mailed to the stockholders of the Buyer as promptly as
practicable following the date of this Agreement. The Buyer shall promptly (A)
notify the Seller upon the receipt of any such comments or requests and (B)
provide the Seller with copies of all correspondence between the Buyer and its
Representatives, on the one hand, and the SEC and its staff, on the other
hand. Prior to responding to any such comments or requests or the filing or
39
mailing of the Registration Statement (which will include the Proxy
Statement), the Buyer (x) shall provide the Seller with a reasonable
opportunity to review and comment on any drafts of the Registration Statement
(which will include the Proxy Statement) and related correspondence and
filings and (y) shall include in such drafts, correspondence and filings all
comments reasonably proposed by the Seller.
(c) Whenever any event occurs that, in the reasonable judgment
of the Buyer or the Seller, is required to be set forth in an amendment or
supplement to the Registration Statement (which will include the Proxy
Statement), the Buyer or the Seller, as the case may be, will promptly inform
the other of such occurrence and the parties shall cooperate in filing with
the SEC and/or mailing to stockholders of the Buyer such amendment or
supplement.
(d) The Registration Statement (which will include the Proxy
Statement) shall include the Buyer Board Recommendation.
Section 6.4 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Between the date of this Agreement and the Closing Date, the
Parent and the Seller shall and shall cause the Company and each of the
Company Subsidiaries to, (i) afford the Buyer and its Representatives
reasonable access during normal business hours to the officers, employees,
agents, properties, books and records of the Company and the Company
Subsidiaries and (ii) promptly deliver or make available to the Buyer such
information concerning the Company and the Company Subsidiaries as the Buyer
may from time to time reasonably request. No investigation conducted under
this SECTION 6.4(a), however, will affect or be deemed to modify any
representation or warranty made by the Seller or the Parent in this Agreement.
(b) Any information provided to or obtained by the Buyer or its
authorized representatives pursuant to paragraph (a) above shall be
"Evaluation Material" or "Confidential Material" (herein referred to as
"EVALUATION MATERIAL") as defined in the Confidentiality Agreement, dated
January 2006, by and between the Company and the Buyer (the "CONFIDENTIALITY
AGREEMENT"), and shall be held by the Buyer in accordance with and be subject
to the terms of the Confidentiality Agreement. Notwithstanding anything to the
contrary herein, the terms and provisions of the Confidentiality Agreement
shall survive the termination of this Agreement in accordance with the terms
therein. In the event of the termination of this Agreement for any reason, the
Buyer shall comply with the terms and provisions of the Confidentiality
Agreement, including returning or destroying all Evaluation Material. The
Confidentiality Agreement shall terminate on the Closing Date.
Section 6.5 NO SOLICITATION.
(a) Until the earlier of the Closing or such time as this
Agreement is terminated in accordance with its terms, the Parent and the
Seller will not, the Parent and the Seller will cause the Company and the
Company Subsidiaries not to, and the Parent and the Seller will cause its
directors, officers, agents, employees, advisors and
40
representatives not to, directly or indirectly, solicit, encourage or enter
into any negotiation, discussion, Contract, arrangement or understanding with
any party, with respect to the sale of the Shares, the shares of capital stock
of any of the Company Subsidiaries or all or substantially all of the assets
of the Company or any of the Company Subsidiaries, or any merger,
recapitalization or similar transaction with respect to the Company, any of
the Company Subsidiaries, or their respective businesses. The Parent and the
Seller recognize and agree that immediate irreparable damages for which there
is not adequate remedy at law would occur in the event that the provisions of
this SECTION 6.5(a) are not performed in accordance with the specific terms
hereof or are otherwise breached. It is accordingly agreed that in the event
of a failure by the Parent or the Seller to perform its obligations under this
Agreement, the Buyer shall be entitled to specific performance through
injunctive relief, without the necessity of posting a bond, to prevent
breaches of the provisions and to enforce specifically the provisions of this
SECTION 6.5(a), in addition to any other remedy to which the Buyer may be
entitled, at law or in equity.
(b) Until the earlier of the Closing or such time as this
Agreement is terminated in accordance with its terms, the Buyer will not and
the Buyer will cause its directors, officers, agents, advisors and
representatives not to, directly or indirectly, solicit, encourage or enter
into any negotiation, discussion, Contract, arrangement or understanding with
any party, with respect to the sale of the shares of capital stock of Buyer or
all or substantially all of the assets of the Buyer, or any merger,
recapitalization or similar transaction with respect to the Buyer or its
business. The Buyer recognizes and agrees that immediate irreparable damages
for which there is not adequate remedy at law would occur in the event that
the provisions of this SECTION 6.5(b) are not performed in accordance with the
specific terms hereof or are otherwise breached. It is accordingly agreed that
in the event of a failure by the Buyer to perform its obligations under this
Agreement, the Seller shall be entitled to specific performance through
injunctive relief, without the necessity of posting a bond, to prevent
breaches of the provisions and to enforce specifically the provisions of this
SECTION 6.5(b), in addition to any other remedy to which the Seller may be
entitled, at law or in equity.
Section 6.6 COMMERCIALLY REASONABLE EFFORTS; ADDITIONAL ACTIONS.
(a) Upon the terms and subject to the conditions of this
Agreement, each of the parties hereto shall use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, including using
all commercially reasonable efforts to fulfill or cause the fulfillment of the
conditions to Closing set forth in ARTICLE VII.
(b) In connection with obtaining or making the Necessary
Consents and Filings, the Buyer, the Parent and the Seller shall: (i) provide
the other party with a reasonable opportunity to review and comment on drafts
of any filings or other communications to be made by it; (ii) consider in good
faith any comments on such filings or other communications received from the
other party; (iii) provide a final copy
41
of each such filing or other communication to the other party promptly after
such filing or other communication is made; (iv) consult with the other party
in connection with any material inquiries from the Governmental Entities
responsible for such filings or other communications and the possible
resolution of any issues related thereto; and (v) inform the other party as
soon as practicable after receiving any notice from any such Governmental
Entities.
Section 6.7 NOTIFICATION OF CERTAIN MATTERS. Between the date
of this Agreement and the Closing, the Parent and the Seller shall provide
written notice to the Buyer, and the Buyer shall provide written notice to the
Seller and the Parent, promptly upon becoming aware of (a) anything that may
cause the conditions set forth in Article VII not to be satisfied, (b) any
notice or other communication from any Person alleging that the consent of
such Person (or another Person) is or may be required in connection with the
transactions contemplated by this Agreement, or (c) any notice or other
communication from any Governmental Entity in connection with the transactions
contemplated by this Agreement; PROVIDED that the delivery of any notice
pursuant to this SECTION 6.7 shall not be deemed to amend or supplement the
Seller Disclosure Letter or Buyer Disclosure Letter, to modify any
representation or warranty made by the Seller, the Parent or the Buyer in this
Agreement, or to limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
Section 6.8 PUBLIC ANNOUNCEMENTS. The initial press release
with respect to the transactions contemplated by this Agreement shall be in
the form agreed to by the Buyer, the Parent and the Seller. Thereafter, for as
long as this Agreement is in effect, the Buyer, the Parent and the Seller
shall not, and the Parent shall cause its Subsidiaries not to, issue any press
release or otherwise make any public announcement with respect to this
Agreement, the Stock Purchase, the CMAC Merger or the other transactions
contemplated hereby without the consent of the other parties hereto, except
where such release or announcement is required under applicable Legal
Requirements, in which case the issuing party shall use its commercially
reasonable efforts to consult with the other party before issuing any such
release or making any such public statement.
Section 6.9 STOCKHOLDER APPROVAL. The Buyer shall call and hold
a duly convened Stockholders' Meeting as promptly as practicable after the
date of this Agreement to seek the Requisite Buyer Vote.
Section 6.10 RESIGNATIONS. On the Closing Date, (a) the Buyer
shall cause to be delivered to the Seller duly signed resignations, effective
as of the Closing, of all directors and officers of their positions as a
director and/or officer of CMAC and CMAC Sub and (b) the individuals set forth
in SECTION 6.10 of the Seller Disclosure Letter shall, from and after the
Closing, be the directors and officers of the Buyer, each to hold the office
of director and/or officer of the Buyer in accordance with the provisions of
the applicable laws of the British Virgin Islands and the Memorandum and
Articles of Association of the Surviving Corporation, each as amended, until
their successors are duly qualified and elected.
42
Section 6.11 INDEMNITY WITH RESPECT TO BROKERS FEES. The Buyer
agrees to indemnify and hold harmless the Parent and the Seller from any claim
or demand for commission or other compensation by any broker claiming to have
been employed by or on behalf of the Buyer or any of its Affiliates in
connection with this Agreement or the transactions contemplated hereby, and to
bear the cost of legal expenses incurred in defending against any such claim.
The Parent and the Seller agree to indemnify and hold harmless the Buyer from
any claim or demand for commission or other compensation by any broker
claiming to have been employed by or on behalf of the Parent or the Seller or
any of their Affiliates with respect to this Agreement or the transactions
contemplated hereby, and to bear the cost of legal expenses incurred in
defending against any such claim.
Section 6.12 CONTINGENT SHARES. As additional consideration for
the Shares, the Buyer hereby agrees to issue 1,200,000 shares of Buyer Common
Stock (as the same may be adjusted after the date hereof as a result of any
stock split, stock dividend, combination, reclassification, recapitalization
or other similar change with respect to the Buyer Common Stock) (the
"CONTINGENT SHARES") to the Seller in the event that a valid notice of
redemption with respect to the IPO Warrants is issued by the Buyer at any time
after the Closing Date and prior to the second anniversary thereof. The Buyer
covenants and agrees that all Contingent Shares will upon issuance be duly
authorized, validly issued and fully paid and nonassessable. The Buyer shall
at all times reserve and keep available for issuance from and after the
Closing Date such number of its authorized but unissued shares of Buyer Common
Stock as will be sufficient to issue the Contingent Shares, and shall take all
action required to increase the authorized number of shares of Buyer Common
Stock if at any time there shall be insufficient authorized but unissued
shares of Buyer Common Stock to permit such reservation or to issue the
Contingent Shares.
Section 6.13 ELIMINATION OF INTER-COMPANY ACCOUNTS AND CERTAIN
LIABILITIES.
(a) The Parent and the Seller shall cause all inter-company
receivables, payables, loans, guarantees, liabilities and other obligations
then existing between the Company and the Company Subsidiaries (or their
respective directors and officers), on the one hand, and the Parent, the
Seller and any of the Parent's or Seller's Subsidiaries and Affiliates (other
than the Company or the Company Subsidiaries), on the other hand, to be
liquidated, eliminated (including by means of a contribution to capital)
and/or released, in each case without cost to the Buyer, the Company or any of
the Company Subsidiaries or the payment of any consideration by the Buyer, the
Company or any of the Company Subsidiaries effective immediately prior to the
Closing.
(b) The Seller shall cause the Company and the Company
Subsidiaries to pay all deferred compensation amounts and deferred Taxes owed
by the Company or any of the Company Subsidiaries prior to the close of
business on the day immediately preceding the Closing.
43
(c) The Company and the Seller shall enter into a written
agreement, reasonably satisfactory to the Buyer, with respect to certain
administrative services to be provided by the Seller to the Company following
the Closing.
Section 6.14 CONVEYANCE TAXES. The Buyer and the Seller shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees or any similar
taxes which become payable by the Seller or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement that are
required or permitted to be filed on or before the Closing.
Section 6.15 ANTI-TAKEOVER STATUTE. If any Anti-Takeover Statute
is or may become applicable to the Stock Purchase or the other transactions
contemplated hereby, each of the Seller and the Buyer and their respective
Boards of Directors shall grant all such approvals and take all such actions
as are reasonably necessary so that such transactions may be consummated as
promptly as practicable hereafter on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or
regulation on such transactions. "ANTI-TAKEOVER STATUTE" shall mean any
restrictive provision of any applicable "fair price," "moratorium," "control
share acquisition," "interested stockholder" or other similar anti-takeover
Law, including Section 203 of the DGCL.
Section 6.16 STOCKHOLDER LITIGATION. The Buyer shall give the
Seller the opportunity to participate in the defense or settlement of any
stockholder litigation against the Buyer and/or its directors relating to the
transactions contemplated by this Agreement, and no such settlement shall be
agreed to without Seller's prior written consent (which may be withheld in its
sole discretion).
Section 6.17 POST-CLOSING ACCESS. The Buyer (including, for the
purpose of this SECTION 6.17, the Company and the Company Subsidiaries after
the Closing) shall provide the Seller and its professional advisors with
reasonable access, reasonably promptly upon request therefor, to the Buyer's
and its Subsidiaries' books and records if reasonably required for a
legitimate business purpose, including any litigation, investigation, Tax
audit, discovery or similar proceeding, or in the preparation of Tax Returns
required to be filed by the Seller or by the Seller on behalf of the Company
or the Company Subsidiaries. If the Seller shall request the assistance
(including testimony) of employees of the Buyer or any of its Subsidiaries in
connection with any litigation, investigation, Tax audit, discovery or similar
proceeding, the Buyer shall reasonably promptly make such employees available
for a reasonable period of time; PROVIDED, that all out-of-pocket costs
incurred in connection therewith shall be borne by the Seller.
Section 6.18 TRUSTEE NOTICE. The Buyer, simultaneously with the
Closing, will deliver to Continental Stock Transfer & Trust Company, the
trustee of the Trust Fund, instructions in accordance with Exhibit A of that
certain Investment Management Trust Agreement, dated as of August 24, 2004, by
and between the Buyer
44
and Continental Stock Transfer & Trust Company, which instructions shall cause
the immediate disbursement of the funds contained therein to the Buyer.
Section 6.19 CMAC SUB INCORPORATION; CMAC MERGER.
(a) The Buyer shall cause CMAC Sub to be incorporated and duly
organized under the name China Ivanhoe Energy Ltd., to adopt the Plan of
Merger, to effectuate the CMAC Merger and to do all other things as are
necessary for it to do as a constituent corporation to the CMAC Merger. In
connection with the CMAC Merger, one new Surviving Corporation Ordinary Share
will be issued for each outstanding share of CMAC Common Stock and an
aggregate of 8,900,000 Surviving Corporation Ordinary Shares may become
issuable (and such number will be reserved for issuance) as follows: 900,000
Surviving Corporation Ordinary Shares upon exercise of the Underwriter Option
and 8,000,000 shares of Surviving Corporation Ordinary Shares upon the
exercise of the IPO Warrants. Each Surviving Corporation Ordinary Share that
is owned by CMAC will be canceled and resume the status of authorized and
unissued ordinary shares of the Surviving Corporation.
(b) Notwithstanding anything to the contrary herein, the parties
hereto acknowledge that the Seller has recently formed a subsidiary in the
British Virgin Islands under the name "China Ivanhoe Energy Ltd." and the
parties hereto acknowledge and agree that between the date hereof and the
Closing Date the Seller may transfer its ownership interest in such
subsidiary, representing all of the issued and outstanding capital stock of
such entity, to CMAC and that such transfer shall eliminate CMAC's obligations
hereunder with respect to the formation of the CMAC Sub and such entity shall
become CMAC Sub for all purposes of this Agreement.
Section 6.20 EXPENSES; INDEMNITY. At or immediately following
the Closing, the Buyer shall pay out of available cash or funds released from
the Trust Fund all of the Buyer Expenses. At the Closing, the Buyer shall
release the Founders from their respective indemnity obligations under those
certain letter agreements, by and between the Buyer and each of the Founders,
entered into in connection with CMAC's initial public offering, in respect of
the Buyer Expenses set forth on SCHEDULE 5.19 paid by the Buyer pursuant to
the preceding sentence; PROVIDED, HOWEVER, such release shall not be
applicable to any Buyer Expenses not set forth on SCHEDULE 5.19 or any
expenses in excess of the applicable amounts set forth on SCHEDULE 5.19.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE PARTIES TO CLOSE
Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PARTIES TO CLOSE. The respective obligations of each party to this Agreement
to consummate the transactions contemplated hereby shall be subject to the
satisfaction or waiver on or prior to the Closing Date of each of the
following conditions:
45
(a) REQUISITE BUYER VOTE. The Stock Purchase and the CMAC Merger
shall have been duly approved and adopted by the Requisite Buyer Vote under
the laws of the State of Delaware and the British Virgin Islands and the
Buyer's organizational documents and an executed copy of the Plan of Merger
reflecting the CMAC Merger, in the form attached hereto as EXHIBIT E, shall
have been filed with the Delaware Secretary of State and the equivalent
Governmental Entity in the British Virgin Islands effectuating the CMAC
Merger.
(b) NO ORDER. No Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Legal
Requirement or Order (whether temporary, preliminary or permanent) which (i)
is in effect and (ii) has the effect of making the Stock Purchase or CMAC
Merger illegal or otherwise restraining, enjoining or prohibiting consummation
of the Stock Purchase or CMAC Merger (or the consummation of any other
transactions contemplated by this Agreement or the Ancillary Agreements if it
would have the effect of restraining or prohibiting the consummation of the
Stock Purchase or CMAC Merger).
(c) TRUST FUND. Holders of not more than 19.99% in interest of
the Buyer Common Stock issued in connection with CMAC's initial public
offering shall have exercised their rights under CMAC's amended and restated
certificate of incorporation to convert such stock into cash in connection
with the consummation of the transactions contemplated hereby.
Section 7.2 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE BUYER TO CLOSE. The obligations of the Buyer to consummate the
transactions contemplated hereby shall be subject to the satisfaction or
waiver on or prior to the Closing Date of each of the following conditions,
any one or more of which may be waived in writing by the Buyer:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Seller and the Parent contained in SECTIONS 3.2 (Authority;
Non Contravention; Necessary Consents and Filings), 3.3 (Capitalization), 3.4
(Subsidiaries), 3.5 (Financial Statements; No Undisclosed Material
Liabilities), 3.19 (Brokers' and Finders' Fees), 4.2 (Authority; Non
Contravention; Necessary Consents and Filings) and 4.3 (Title to the Shares)
shall be true and correct in all material respects at and as of the Closing
Date, as if made at and as of such time (other than representations and
warranties that address matters only as of a certain date, which shall be true
and correct in all material respects as of such date), and (ii) the other
representations and warranties of the Seller and the Parent contained in this
Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality or a Company Material Adverse Effect or any similar
standard or qualification, shall be true and correct in all respects at and as
of the Closing Date, as if made at and as of such time (other than
representations or warranties that address matters only as of a certain date,
which shall be true and correct as of such date), except in this clause (ii)
where the failure of all such representations and warranties to be true and
correct, individually or in the aggregate, has not had or would not reasonably
be expected to have a Company Material Adverse Effect.
46
(b) COVENANTS AND AGREEMENTS. The Seller, the Parent and the
Company shall have performed or complied in all material respects with the
covenants and agreements required by this Agreement to be performed or
complied with by them on or prior to the Closing Date (except for SECTION 6.13
(Elimination of Inter-Company Accounts and Certain Liabilities) which shall
have been complied with in all respects).
(c) OFFICER'S CERTIFICATES. The Seller shall have delivered to
the Buyer a certificate, signed by an executive officer of the Seller and
dated as of the Closing Date, certifying the matters set forth in SECTIONS
7.2(a) and 7.2(b). The Parent shall have delivered to the Buyer a certificate,
signed by an executive officer of the Parent and dated as of the Closing Date,
certifying the matters set forth in SECTIONS 7.2(a) and 7.2(b). The Company
shall have delivered to the Buyer a certificate, signed by an executive
officer of the Company and dated as of the Closing Date, certifying the
matters set forth in SECTION 7.2(b).
(d) AREA OF INTEREST AGREEMENT. The Company shall have executed
and delivered the Area of Interest Agreement, dated the Closing Date (the
"AREA OF INTEREST AGREEMENT"), substantially in the form attached hereto as
EXHIBIT F.
Section 7.3 ADDITIONAL CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SELLER TO CLOSE. The obligations of the Seller to consummate the
transactions contemplated hereby shall be subject to the satisfaction or
waiver on or prior to the Closing Date of each of the following conditions,
any one or more of which may be waived in writing by the Seller:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Buyer contained in SECTIONS 5.1(C) and (D) (ORGANIZATION;
STANDING AND POWER; BUSINESS), 5.2 (Authority; Non Contravention; Necessary
Consents and Filings), 5.3 (Capitalization; Subsidiaries; Anti-Dilution
Protection; Registration Rights Agreements), 5.4 (The Buyer Reports; Financial
Statements; No Undisclosed Material Liabilities), 5.5 (Absence of Certain
Changes or Events), 5.9 (Compliance), 5.11 (Related Party Transactions), 5.17
(Brokers' and Finders' Fees) and 5.19 (Buyer Expenses) shall be true and
correct at and as of the Closing Date, as if made at and as of such time
(other than representations and warranties that address matters only as of a
certain date, which shall be true and correct at and as of such date), and
(ii) the other representations and warranties of the Buyer contained in this
Agreement, disregarding all qualifications and exceptions contained therein
relating to materiality or any similar standard or qualification, shall be
true and correct in all respects at and as of the Closing Date, as if made at
and as of such time (other than representations or warranties that address
matters only as of a certain date, which shall be true and correct as of such
date), except in this clause (ii) where the failure of all such
representations and warranties to be true and correct, individually or in the
aggregate, has not had or would not reasonably be expected to have a material
adverse effect on the Buyer.
(b) COVENANTS AND AGREEMENTS. The Buyer shall have performed or
complied in all material respects with the covenants and agreements required
by this
47
Agreement to be performed or complied with by the Buyer on or prior to the
Closing Date.
(c) OFFICER'S CERTIFICATE. The Seller shall have received a
certificate, signed on behalf of the Buyer by a senior executive officer of
the Buyer, certifying as to the matters set forth in SECTIONS 7.3(a) and
7.3(b).
(d) LITIGATION. There shall not be pending or threatened in
writing any Action by any Governmental Entity or any Action that has a
reasonable likelihood of success by any third party, in each case, (A)
challenging the acquisition by the Buyer of the Shares, seeking to restrain or
prohibit the consummation of the Stock Purchase or the CMAC Merger or any of
the other transactions contemplated hereby, (B) seeking to prohibit, limit or
impose restrictions on or requirements related to the ownership or operation
by the Company, the Buyer or any of their respective Affiliates of any
material portion of the business or assets of the Company, the Buyer or any of
their respective Affiliates or to compel the Company, the Buyer or any of
their respective Affiliates to dispose of or hold separate any material
portion of the business or assets of the Company, the Buyer or any of their
respective Affiliates, as a result of the Stock Purchase or any other
transaction contemplated hereby, (C) seeking to impose limitations on the
ability of the Buyer to acquire or hold, or exercise full rights of ownership
of, the Shares or (D) seeking to prohibit the Buyer or any of its Affiliates
from effectively controlling in any material respect the business or
operations of the Company or any of the Company Subsidiaries.
(e) AREA OF INTEREST AGREEMENT. The Buyer shall have executed
and delivered the Area of Interest Agreement, dated the Closing Date,
substantially in the form attached hereto as EXHIBIT F.
(f) FOUNDERS OPTION. The Seller shall have received an executed
Founders Option, substantially in the form attached hereto as EXHIBIT A, from
each Founder. None of the Founders shall have repudiated the Founders Option
to which such Founder is a party, each of which shall be in full force and
effect.
(g) PERFORMANCE WARRANTS. The Buyer shall have executed and
delivered to the Seller the Performance Warrants, dated the Closing Date,
substantially in the form attached hereto as EXHIBIT D
(h) REGISTRATION RIGHTS AGREEMENT. The Buyer shall have executed
and delivered the Registration Rights Agreement, dated the Closing Date (the
"REGISTRATION RIGHTS AGREEMENT"), substantially in the form attached hereto as
EXHIBIT G.
(i) AMENDMENT TO FOUNDERS REGISTRATION RIGHTS AGREEMENT. The
Buyer and the Founders shall have executed and delivered the Amendment to
Founders Registration Rights Agreement, dated the Closing Date (the "AMENDMENT
TO FOUNDERS REGISTRATION RIGHTS Agreement"), substantially in the form
attached hereto as EXHIBIT H.
(j) SEC COMPLIANCE. Immediately prior to the Closing, the Buyer
shall be in compliance with the reporting requirements under the Exchange Act.
48
(k) DIRECTOR AND OFFICER RESIGNATIONS. The Seller shall have
received written resignation letters from each of the members of the Board of
Directors and each of the officers of CMAC and CMAC Sub effective as of the
Closing and the individuals set forth in SECTION 6.10 of the Seller Disclosure
Letter shall be appointed, effective as of the Closing, as the directors and
officers of the Buyer.
(l) PAYOFF LETTERS. The Seller shall have received duly executed
payoff letters (in form and substance reasonably acceptable to the Seller)
with respect to the payment of the Buyer Expenses and the release of any Liens
related thereto.
(m) CMAC MERGER DISSENTERS. Not more than 10% of the issued and
outstanding Buyer Common Stock shall have demanded an appraisal of their value
in connection with the CMAC Merger in compliance (in all respects) with
Section 262 of the Delaware General Corporation Law.
Section 7.4 FRUSTRATION OF CLOSING CONDITION. None of the
parties to this Agreement may rely on the failure of any condition set forth
in this ARTICLE VII to be satisfied if such failure was caused by such party's
failure to use reasonable efforts to consummate the Stock Purchase and the
other transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION OF AGREEMENT
Section 8.1 TERMINATION. This Agreement may be terminated at
any time prior to the Closing Date:
(a) by the mutual written consent of the Buyer and the Seller;
(b) by the Buyer or the Seller:
(i) if (x) any Governmental Entity shall have issued an
Order (which has not been vacated, withdrawn or overturned) permanently
restraining, enjoining or otherwise prohibiting the acceptance for payment of,
or payment for, the Shares pursuant to the Stock Purchase or makes
consummation of the Stock Purchase or the CMAC Merger illegal or otherwise
prohibited and such Order shall have become final and nonappealable or (y)
there is any Law prohibiting the consummation of the Stock Purchase or the
CMAC Merger; provided, HOWEVER, that the right to terminate this Agreement
pursuant to this SECTION 8.1(b) shall not be available to any party that has
failed to perform in all material respects its obligations under SECTION 6.6;
(ii) if the Closing Date shall not have occurred on or
before August 30, 2006 (the "OUTSIDE DATE"); or
(iii) if the Stock Purchase and CMAC Merger have been
submitted to the stockholders of the Buyer for approval at a Stockholders'
Meeting and the Requisite Buyer Vote is not obtained;
49
(c) by the Seller, if there shall have occurred, on the part of
the Buyer, a breach of any representation, warranty, covenant or agreement
contained in this Agreement, which (i) would result in a failure of a
condition set forth in SECTIONS 7.3(a) or 7.3(b) and (ii) is not curable or,
if curable, is not cured within the earlier of (x) thirty (30) days after
written notice of such breach is given by the Seller to the Buyer and (y) the
Outside Date;
(d) by the Buyer, if there shall have occurred, on the part of
the Seller or the Parent, a breach of any representation, warranty, covenant
or agreement contained in this Agreement which (i) would result in a failure
of a condition set forth in SECTIONS 7.2(a) or 7.2(b) and (ii) is not curable
or, if curable, is not cured within the earlier of (x) thirty (30) days after
written notice of such breach is given by the Buyer to the Seller and the
Parent and (y) the Outside Date;
Section 8.2 NOTICE OF TERMINATION; EFFECT OF TERMINATION. Any
termination of this Agreement under SECTION 8.1 will be effective immediately
upon the delivery of a valid written notice of the terminating party to the
other parties hereto, subject, if applicable, to the 30-day cure period under
SECTIONS 8.1(c) and 8.1(d). In the event of the termination of this Agreement
under SECTION 8.1, this Agreement shall be void and of no further force or
effect, with no liability on the part of any party hereto, except that (a)
SECTION 6.4(b), this SECTION 8.2 and ARTICLE IX shall survive the termination
of this Agreement and (b) nothing in this Agreement shall relieve any party
from liability for any willful breach of this Agreement or willful failure to
perform its obligations under this Agreement. No termination of this Agreement
shall affect the obligations of the parties contained in any confidentiality
agreement entered into between the Seller, on the one hand, and the Buyer, on
the other hand, all of which obligations shall survive termination of this
Agreement in accordance with their terms.
Section 8.3 NO CLAIM AGAINST TRUST FUND. It is understood and
agreed by the Seller, the Parent and the Company that in the event of any
breach of this Agreement or any of the Ancillary Agreements by the Buyer, that
they have no right, title, interest or claim of any kind in or to any amount
of the funds held in the Trust Fund, they hereby waive any claim they may have
in the future as a result of, or arising out of, this Agreement and any of the
Ancillary Agreements that would adversely affect the amount of the funds held
in the Trust Fund and they will not seek recourse against the Trust Fund for
any reason whatsoever.
ARTICLE IX
MISCELLANEOUS
Section 9.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement, or in any
instrument delivered pursuant to this Agreement, shall terminate on the
Closing Date, and only the covenants or agreements that by their terms survive
the Closing Date shall survive the Closing Date.
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Section 9.2 NOTICES. All notices and other communications under
this Agreement shall be in writing and shall be deemed duly given (i) on the
date of delivery if delivered personally, (ii) on the date of confirmation of
receipt (or, the first Business Day following such receipt if the date is not
a Business Day) of transmission by facsimile or (iii) on the date of
confirmation of receipt (or, the first Business Day following such receipt if
the date is not a Business Day) if delivered by a nationally-recognized
courier service. All notices or other communications hereunder shall be
delivered as set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
(a) if to the Buyer, to:
China Mineral Acquisition Corporation
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Loeb & Loeb LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Parent, the Seller or the Company, to:
c/o Ivanhoe Energy Inc.
The World Trade Centre Suite ▇▇▇-▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Corporate Secretary
Facsimile: 604-682-2060
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Goodmans LLP
19th Floor - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.3 INTERPRETATION. When a reference is made in this
Agreement to Exhibits, such reference shall be to an Exhibit to this Agreement
unless otherwise indicated. When a reference is made in this Agreement to
Articles or Sections, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. For purposes of this Agreement, the
words "include," "includes" and "including" shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Any
statute, regulation, or other law defined or referred to herein (or in any
agreement or instrument that is referred to herein) means such statute,
regulation or other law as, from time to time, may be amended, modified or
supplemented, including (in the case of statutes) by succession of comparable
successor statutes and references herein to any law shall be deemed also to
refer to all rules and regulations promulgated thereunder. References to a
Person also refer to its predecessors and permitted successors and assigns and
references to the terms "Dollars" and "$" mean United States Dollars unless
otherwise specified.
Section 9.4 ENTIRE AGREEMENT; THIRD-PARTY BENEFICIARIES. This
Agreement and the Ancillary Agreements and the documents and instruments and
other agreements among the parties hereto as contemplated by or referred to
herein or therein, including the Seller Disclosure Letter and the Buyer
Disclosure Letter, and the Confidentiality Agreement (a) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, it being
understood that the Confidentiality Agreement shall continue in full force and
effect until the Closing and shall survive any termination of this Agreement,
and (b) are not intended to confer upon any other Person any rights or
remedies hereunder.
Section 9.5 SEVERABILITY. In the event that any provision of
this Agreement or the application thereof becomes or is declared by a court of
competent jurisdiction to be void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties to this Agreement. The parties
hereto further agree to replace any such void or unenforceable provision of
this Agreement with a valid and enforceable provision that will achieve, to
the greatest extent possible, the economic, business and other purposes of
such void or unenforceable provision.
Section 9.6 FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement, all fees and
expenses incurred in connection with this Agreement and the Ancillary
Agreements and
52
the transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, whether or not the Stock Purchase is consummated.
(b) Notwithstanding anything to the contrary herein, all sales,
use, value added, transfer, stamp, registration, documentary, excise, real
property transfer or gains, or similar Taxes incurred as a result of the
transactions contemplated by this Agreement shall be borne and paid one half
by the Seller and one half by the Buyer.
(c) All filing fees payable in connection with obtaining any
Necessary Consents and Filings shall be paid by the Buyer.
Section 9.7 AMENDMENT. Subject to applicable laws, this
Agreement may be amended by the parties hereto, by action taken or authorized
by their respective boards of directors, at any time before or after the
Requisite Buyer Vote is obtained; PROVIDED, after any such approval, no
amendment shall be made which, under applicable laws or in accordance with the
rules of any relevant stock exchange, requires further approval by such
stockholders without such further stockholder approval. This Agreement may not
be amended except by execution of an instrument in writing signed on behalf of
each of the Buyer, the Parent and the Seller.
Section 9.8 EXTENSION; WAIVER. At any time prior to the Closing
Date and subject to applicable laws, any party hereto, by action taken or
authorized by its board of directors, may: (a) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto; (b) waive any inaccuracies in the representations and warranties made
to such party in this Agreement or in any document delivered pursuant hereto;
and (c) waive compliance with any of the agreements or conditions for the
benefit of such party contained in this Agreement. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. Delay in
exercising any right under this Agreement shall not constitute a waiver of
such right.
Section 9.9 OTHER REMEDIES; SPECIFIC PERFORMANCE.
(a) OTHER REMEDIES. Except as otherwise provided in this
Agreement, any and all remedies herein expressly conferred upon a party will
be deemed cumulative with, and not exclusive of, any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of
any one remedy will not preclude the exercise of any other remedy. The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.
(b) SPECIFIC PERFORMANCE. It is accordingly agreed that the
parties hereto shall be entitled to seek an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
53
Section 9.10 GOVERNING LAW; JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without regard to principles of conflict of laws. The parties hereto
hereby declare that it is their intention that this Agreement shall be
regarded as made under the laws of the State of Delaware and that the laws of
said State shall be applied in interpreting its provisions in all cases where
legal interpretation shall be required. Each of the parties hereto: (a) agrees
that this Agreement involves at least $100,000.00, (b) agrees that this
Agreement has been entered into by the parties hereto in express reliance upon
6 DEL. C. ss. 2708, (c) irrevocably and unconditionally submits to the
exclusive jurisdiction of the courts of the State of Delaware and of the
federal courts sitting in the State of Delaware with respect to all actions
and proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby; (d) agrees that all claims with respect to
any such action or proceeding shall be heard and determined in such courts and
agrees not to commence any action or proceeding relating to this Agreement or
the transactions contemplated hereby except in such courts; (e) irrevocably
and unconditionally waives any objection to the laying of venue of any action
or proceeding arising out of this Agreement or the transactions contemplated
hereby and irrevocably and unconditionally waives the defense of an
inconvenient forum; (f) agrees that any service of process or other legal
summons in connection with any such dispute, litigation, action or proceeding
brought in such courts may be served on it by mailing a copy of such process
or summons to it in accordance with, and in the manner provided in, SECTION
9.2 hereof, with such service deemed effective on the fifth day after the date
of such mailing; and (g) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
Section 9.11 RULES OF CONSTRUCTION. The parties to this
Agreement agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any Legal Requirement or rule of construction providing that
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
Section 9.12 THE SELLER DISCLOSURE LETTER AND BUYER DISCLOSURE
LETTER. Each of the disclosure letter prepared by the Seller and delivered to
the Buyer (the "SELLER DISCLOSURE LETTER") and the disclosure letter prepared
by the Buyer and delivered to the Seller (the "BUYER DISCLOSURE LETTER"), in
each case prior to the execution of this Agreement, is qualified in its
entirety by reference to the specific provisions of this Agreement and nothing
in the Seller Disclosure Letter or the Buyer Disclosure Letter is intended to
broaden the scope of any representation or warranty contained in this
Agreement or to create any representation, warranty, agreement or covenant on
the part of the Seller, the Parent, the Company or the Buyer, respectively.
The inclusion of any matter, information, item or other disclosure set forth
in any section of the Seller Disclosure Letter or the Buyer Disclosure Letter
shall not be deemed to constitute an admission of any liability of the Seller,
the Parent, the Company or the Buyer to any third party or otherwise imply
that such matter, information or item is material or creates a measure for
materiality for purposes of this Agreement, is required to be disclosed under
54
this Agreement, or has had or would reasonably be expected to have a material
adverse effect on the business, assets, properties, liabilities, conditions,
financial or otherwise, or results of operations of the Seller, the Parent,
the Company (together with its Subsidiaries) or the Buyer, as the case may be.
Certain matters disclosed in the Seller Disclosure Letter and the Buyer
Disclosure Letter are not material and/or have been disclosed for
informational purposes only. Each of the Seller Disclosure Letter and the
Buyer Disclosure Letter sets forth items of disclosure with specific reference
to the particular Section or subsection of this Agreement to which the
information in such disclosure letter relates; PROVIDED, that any information
set forth in one section of such disclosure letter will be deemed to apply to
each other Section or subsection of this Agreement to the extent such
disclosure is made in a way as to make its relevance to such other Section or
subsection reasonably apparent.
Section 9.13 ASSIGNMENT. No party may assign either this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of the other parties. Any purported assignment in
violation of this SECTION 9.13 shall be void. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Section 9.14 WAIVER OF JURY TRIAL. EACH OF THE SELLER, THE
PARENT, THE COMPANY AND THE BUYER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS
OF THE SELLER, THE PARENT, THE COMPANY OR THE BUYER IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
Section 9.15 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE PARENT
IVANHOE ENERGY INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer
THE SELLER
SUNWING HOLDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE COMPANY
SUNWING ENERGY LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
THE BUYER:
CHINA MINERAL ACQUISITION CORPORATION
By: /s/ Simon Mu
----------------------------
Name: Simon Mu
Title: President and Chief
Executive Officer
Signature Page - Stock Purchase Agreement
EXHIBIT A
---------
[FORM OF FOUNDERS OPTION]
OPTION AGREEMENT (the "AGREEMENT"), dated as of May __, 2006, by and
among Sunwing Holding Corporation, a Barbados company (the "OPTIONHOLDER"),
and the person identified on SCHEDULE I hereto (the "FOUNDER"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed to such terms in the Purchase Agreement (hereinafter defined).
WHEREAS, the Optionholder is a party to a Stock Purchase Agreement,
dated as of the date hereof (the "PURCHASE AGREEMENT"), by and among the
Optionholder, Ivanhoe Energy Inc., a Yukon, Canada corporation, Sunwing Energy
Ltd., a Bermuda company, and China Mineral Acquisition Corporation, a Delaware
corporation ("CMAC");
WHEREAS, the Founder owns shares of common stock, par value $0.0001
per share, of CMAC;
WHEREAS, the consummation of the transactions contemplated by the
Purchase Agreement will inure to the benefit of the Founder;
WHEREAS, to induce the Optionholder to enter into the Purchase
Agreement, the Founder has agreed to grant to the Optionholder an option to
purchase a portion of the shares of Buyer Common Stock owned by the Founder in
accordance with the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto agree as
follows:
1. OPTION; EXERCISE.
(a) Subject to the other terms and conditions set forth
herein, the Founder hereby grants to the Optionholder an irrevocable option
(an "OPTION") to purchase that number of shares of Buyer Common Stock set
forth opposite the Founder's name on SCHEDULE I hereto (the "SHARES") at a
cash purchase price equal to $2.50 per share (the "PURCHASE PRICE"). The
Option may, on one occasion, be exercised by the Optionholder, in whole or in
part, during the period commencing on the date of release of the Founder's
shares of Buyer Common Stock from escrow pursuant to that certain Stock Escrow
Agreement, dated as of August 24, 2004, by and among CMAC, the Founder,
Continental Stock Transfer & Trust Company and the other persons listed
therein, which escrow agreement was entered into in connection with CMAC's
initial public offering, and ending at 5:00 p.m. (Eastern time) on the day
that is ten (10) calendar days after the Optionholder receives notice of such
escrow release pursuant to Section 3(c) of this Agreement (the "OPTION
PERIOD"). Notwithstanding anything to the contrary herein, if the Founder
fails to notify the Optionholder in accordance with Section 3(c) of this
Agreement that the Shares have been released from escrow and the Optionholder
otherwise becomes aware of such release, the Optionholder shall have the
right, at its
election, to exercise the Option at any time during the ten (10) calendar day
period after the date on which the Optionholder becomes aware of the escrow
release.
(b) In the event of any change, after the date hereof,
in the number of issued and outstanding shares of Buyer Common Stock by reason
of any stock dividend, stock split, split-up, recapitalization, reorganization
or other change in the corporate or capital structure of CMAC or any successor
thereof, both the number and/or kind of Shares subject to the Option and the
Purchase Price shall be appropriately adjusted to restore the Optionholder to
its rights hereunder.
(c) In the event the Optionholder wishes to exercise
the Option with respect to some or all of the Shares, the Optionholder shall
send a written notice to the Founder at any time during the Option Period (the
"EXERCISE NOTICE"), specifying a date for the closing of its purchase of the
Shares to be purchased pursuant to the exercise of the Option, which date
shall not be later than fifteen (15) Business Days and not earlier than five
(5) Business Days following the date the Exercise Notice is given. For the
avoidance of doubt, provided the Option is duly exercised during the Option
Period, such exercise shall be valid notwithstanding the fact that such
specified closing date is to occur following the expiration of the Option
Period.
2. THE CLOSING. Any closing hereunder with respect to the
purchase of Shares shall take place on the date specified by the Optionholder
in its Exercise Notice, at 10:00 a.m., local time, at the offices of the
Optionholder, or at such other time and place as the parties may agree (the
"CLOSING DATE"). On the Closing Date, the Founder will deliver to the
Optionholder a certificate or certificates representing the Shares subject to
the exercised Option, free and clear of any liens, claims or other
encumbrances whatsoever (collectively, "LIENS"), in the denominations
designated by the Optionholder in its Exercise Notice, and the Optionholder
will purchase such Shares from the Founder at the price per Share equal to the
Purchase Price. Any such payments by the Optionholder shall be in cash by wire
transfer of immediately available funds in accordance with the Founder's
written instructions delivered to the Optionholder at least two (2) Business
Days prior to the Closing Date.
3. TITLE; RESTRICTIONS ON TRANSFER; PRO RATA EXERCISE.
(a) The Founder hereby represents and warrants that (i)
the Founder is the record and beneficial owner of the Shares set forth
opposite his name on SCHEDULE 1, (ii) except as provided in Section 3(c),
holds such Shares free and clear of any Liens (other than any Liens that will
terminate upon the consummation of a "Business Combination," as such term is
defined in the Certificate of Incorporation of CMAC) and (iii) the foregoing
representations will be true and correct as of the Closing Date.
(b) The Founder hereby agrees that, from the date
hereof until the end of the Option Period, no sale, transfer or other
disposition shall be made of any or all of the Shares except (i) by gift to a
member of the Founder's immediate family or to a trust, the beneficiary of
which is the Founder or a member of the Founder's immediate
2
family, (ii) by virtue of the laws of descent and distribution upon death of
the Founder, or (iii) pursuant to a qualified domestic relations order;
PROVIDED, HOWEVER, that such permissive transfers may be implemented only upon
the respective transferee's written agreement to be bound by the terms and
conditions of this Agreement in a form reasonably acceptable to the
Optionholder. Except as provided in Section 3(c), from the date hereof until
the end of the Option Period, the Founder shall not pledge or grant a security
interest in the Shares or grant a security interest in his rights under this
Agreement.
(c) The Founder hereby covenants that he shall take all
reasonable action necessary to cause the Shares to be released from escrow
under the Stock Escrow Agreement, dated as of August 24, 2004, by and among
CMAC, the Founder, Continental Stock Transfer & Trust Company and the other
persons listed therein, upon the termination of the escrow period under such
agreement such that the Founder can perform his obligations under Section 2 on
the Closing Date. The Founder hereby further covenants and agrees to provide
the Optionholder with prompt written notice of the escrow agent's release of
the Shares from escrow upon termination of the escrow period under the escrow
agreement referenced in the foregoing sentence.
(d) The Optionholder hereby acknowledges that ▇▇▇▇▇▇
▇▇▇▇, ▇▇. ▇▇▇▇▇ Mu, Dr. ▇▇▇▇ ▇▇▇▇, Cui Guisheng and Ma Xiao have each executed
and delivered to the Optionholder an option agreement, substantially in the
form of this Agreement, to be effective as of (and subject to the occurrence
of) the Closing, pursuant to which the Optionholder has been granted an option
to purchase a portion of the shares of Buyer Common Stock owned by each such
Person. The Optionholder hereby agrees that if it desires to acquire shares of
Buyer Common Stock pursuant to the exercise of any of these options, the
Optionholder will not exercise its rights under just one option agreement to
acquire such shares but shall instead acquire the desired aggregate number of
shares on a pro rata basis from all of the optionors in accordance with the
following formula (as applied to each optionor): (x) the aggregate number of
shares the Optionholder desires to acquire multiplied by (y) a fraction, the
numerator of which is the number of shares of Buyer Common Stock owned by such
optionor and subject to his respective option agreement, and the denominator
of which is the total number of shares of Buyer Common Stock then subject to
all of the option agreements referenced in the first sentence of this Section
3(d).
4. TERMINATION OF PURCHASE AGREEMENT. Notwithstanding anything
to the contrary contained in this Agreement, in the event the Purchase
Agreement is terminated for any reason (other than the failure of this
Agreement to be in full force and effect as of the closing of the Purchase
Agreement), this Agreement shall automatically, and without any action by any
party, terminate.
5. MISCELLANEOUS.
(a) GOVERNING LAW. The validity, interpretation, and
performance of this Agreement shall be governed in all respects by the laws of
the State of New York, without giving effect to conflict of laws. The parties
hereby agree that any
3
action, proceeding or claim against it arising out of or relating in any way
to this Agreement shall be brought and enforced in the courts of the State of
New York or the United States District Court for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. Each of the parties hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum.
(b) SPECIFIC PERFORMANCE. The Founder acknowledges that
if he fails to perform any of his obligations under this Agreement, immediate
and irreparable harm or injury would be caused to the Optionholder for which
money damages would not be an adequate remedy. In such event, the Founder
agrees that the Optionholder shall have the right, in addition to any other
rights it may have, to specific performance of this Agreement. Accordingly, if
the Optionholder should institute an action or proceeding seeking specific
enforcement of the provisions hereof, the Founder hereby waives the claim or
defense that the Optionholder has an adequate remedy at law and hereby agrees
not to assert in any such action or proceeding the claim or defense that such
remedy at law exists.
(c) ENTIRE AGREEMENT. This Agreement contains the
entire agreement of the parties hereto with respect to the subject matter
hereof and, except as expressly provided herein, may not be changed or
modified except by an instrument in writing signed by the party to the
charged.
(d) HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation thereof.
(e) BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of the respective parties hereto and their legal
representatives, successors and assigns.
(f) FURTHER ASSURANCES. Each of the parties hereto
shall execute such documents and perform such further acts (including, without
limitation, obtaining any consents, exemptions, authorizations or other
actions by, or giving any notices to, or making any filings with, any person
or entity) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
(g) NOTICES. Any notice or other communication required
or which may be given hereunder shall be in writing and either be delivered
personally or be mailed, certified or registered mail, or by private national
courier service, return receipt requested, postage prepaid, and shall be
deemed given when so delivered personally or, if mailed, two days after the
date of mailing, as follows:
If to the Optionholder, to:
Sunwing Holding Corporation
The World Trade Centre
4
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: Corporate Secretary
With a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and:
Goodmans LLP
19th Floor - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
If to the Founder, at his address set forth in SCHEDULE I.
With a copy to:
Loeb & Loeb LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
The parties may change the persons and addresses to which the notices
or other communications are to be sent by giving written notice to any such
change in the manner provided herein for giving notice.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
5
IN WITNESS WHEREOF, each of the undersigned has executed
this Option Agreement as of the date first above written.
SUNWING HOLDING CORPORATION
By: __________________________________
Name:
Title:
FOUNDER:
__________________________________
Signature Page - Founders Option
SCHEDULE I
----------------------------------------------------- ------------------------
Name and Address of Founder(1) Number of Shares
===================================================== ========================
▇▇. ▇▇▇▇▇ Mu 50,000 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------------- ------------------------
Dr. ▇▇▇▇ ▇▇▇▇ 100,000
Flat ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇
----------------------------------------------------- ------------------------
▇▇. ▇▇▇▇▇▇ ▇▇▇▇ 100,000 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------------------- ------------------------
▇▇. ▇▇▇ Guisheng 125,000
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇
----------------------------------------------------- ------------------------
Mr. Ma Xiao 125,000
Room ▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
Futian District, Shenzhen, PRC
----------------------------------------------------- ------------------------
--------
(1) Execution copy of Founder Option will set forth information with respect
to the respective Founder party thereto.
7
EXHIBIT B
---------
BALANCE SHEET RULES
1. The accounting principles, methods and practices utilized in preparing
the audited consolidated balance sheets of the Company and the Company
Subsidiaries as of December 31, 2005, applied on a consistent basis.
2. All accruals shall be computed as if the Closing Date was the Company's
normal year-end date.
EXHIBIT C
---------
CURRENT ASSETS
Cash and Cash Equivalents
Accounts Receivable, net of allowance for doubtful accounts
Prepaid Expenses
CURRENT LIABILITIES
Accounts Payable
Accrued Liabilities
EXHIBIT D
---------
[FORM OF PERFORMANCE WARRANTS]
THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR FOREIGN
JURISDICTION. NEITHER THIS WARRANT, SUCH SECURITIES NOR ANY INTEREST THEREIN
MAY BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR PURSUANT TO
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
SUCH LAWS.
_____________________________________________
CHINA IVANHOE ENERGY, LTD.
COMMON STOCK PURCHASE WARRANT
_____________________________________________
This certifies that, for good and valuable consideration, China
Ivanhoe Energy, Ltd., a corporation organized under the laws of the British
Virgin Islands (formerly known as China Mineral Acquisition Corporation, a
Delaware corporation, the "COMPANY"), grants to Sunwing Holding Corporation, a
Barbados company (the "WARRANTHOLDER"), the right to subscribe for and
purchase from the Company, during the Exercise Period (as hereinafter
defined), two million (2,000,000)(1) validly issued, fully paid and
nonassessable shares, no par value, of Common Stock of the Company (the
"WARRANT SHARES"), at the exercise price per share of $5.00,(1) subject to
adjustment pursuant to Section 5 hereof (the "EXERCISE PRICE"), all subject to
the terms, conditions and adjustments herein set forth. Capitalized terms used
herein shall have the meanings ascribed to such terms in Section 9 below.
1. WARRANT. This Warrant is issued pursuant to the Stock
Purchase Agreement, dated as of ______, 2006 (the "PURCHASE AGREEMENT"), by
and among the Warrantholder, Ivanhoe Energy Inc., a Yukon, Canada corporation,
Sunwing Energy Ltd. and the Company.
2. EXERCISE OF WARRANT; PAYMENT OF TAXES; REGULATORY FILINGS.
2.1 EXERCISE OF WARRANT. Subject to the terms and
conditions set forth herein, this Warrant may be exercised at any time, in
whole or in part, by the Warrantholder during the Exercise Period by:
--------
(1) The number of Warrant Shares and strike price will be appropriately
adjusted in the event of a stock split, combination, etc. occurring prior
to the closing of the transactions contemplated by the Purchase
Agreement.
2
(a) the surrender of this Warrant to the
Company, with a duly executed Exercise Form, and
(b) the delivery of payment to the Company,
for the account of the Company, by cash, wire transfer, certified or official
bank check or any other means approved by the Company, of the aggregate
Exercise Price in lawful money of the United States of America.
The Company agrees that the Warrant Shares shall be deemed to be issued to the
Warrantholder as the record holder of such Warrant Shares as of the close of
business on the date on which this Warrant shall have been surrendered and
payment made for the Warrant Shares as aforesaid.
2.2 WARRANT SHARES CERTIFICATE. A stock certificate or
certificates for the Warrant Shares specified in the Exercise Form shall be
delivered to the Warrantholder within five (5) Business Days after receipt of
the Exercise Form by the Company and the payment by the Warrantholder of the
aggregate Exercise Price. If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of the stock certificate or
certificates, deliver to the Warrantholder a new Warrant evidencing the right
to purchase the remaining Warrant Shares, which new Warrant shall in all other
respects be identical with this Warrant.
2.3 PAYMENT OF TAXES. The Company will pay all
documentary stamp or other issuance taxes, if any, attributable to the
issuance of Warrant Shares upon the exercise of this Warrant; PROVIDED,
HOWEVER, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue or delivery of
any Warrants or Warrant certificates or Warrant Shares in a name other than
that of the then Warrantholder as reflected upon the books of the Company.
2.4 REGULATORY FILINGS. The Company shall prepare and
file, and cooperate with the Warrantholder so that it may prepare and file, in
each case within five (5) Business Days of a request by the Warrantholder,
notification and report forms in compliance with the HSR Act, and shall
otherwise fully comply with the requirements of the HSR Act, to the extent
required in connection with the issuance of the Warrant Shares. The Company
shall bear all of its own expenses and all of its own out-of-pocket expenses
(including reasonable attorneys' fees, charges and expenses) and filing fees
of such holder in connection with any such preparation and filing.
3. RESTRICTIVE LEGEND. Except as otherwise permitted by this
Section 3, each Warrant (and each Warrant issued in substitution for any
Warrant pursuant to Section 6) shall be stamped or otherwise imprinted with a
legend in substantially the form as set forth on the cover of this Warrant.
Notwithstanding the foregoing, the Warrantholder may require the Company to
issue a Warrant or a certificate for Warrant Shares, in each case without a
legend, if either (i) such Warrant or such Warrant Shares, as the case may be,
have been registered for resale under the Securities Act, (ii) the
Warrantholder has delivered to the Company an opinion of legal counsel (from a
firm reasonably satisfactory to the Company), which opinion shall be addressed
to the
3
Company and be reasonably satisfactory in form and substance to the Company's
counsel, to the effect that such registration is not required with respect to
such Warrant or such Warrant Shares, as the case may be, or (iii) such Warrant
or Warrant Shares may be sold pursuant to Rule 144 (or any successor provision
then in effect) under the Securities Act.
4. RESERVATION AND REGISTRATION OF SHARES. The Company
covenants and agrees as follows:
(a) All Warrant Shares that are issued upon
the exercise of this Warrant shall, upon issuance, be validly issued, not
subject to any preemptive rights, and be free from all taxes, liens, security
interests, charges, and other encumbrances with respect to the issuance
thereof, other than taxes in respect of any transfer occurring
contemporaneously with such issue.
(b) The Company shall at all times have
authorized and reserved, and shall keep available and free from preemptive
rights, a sufficient number of shares of Common Stock to provide for the
exercise of the rights represented by this Warrant.
(c) The Company shall not, by amendment of its
Memorandum and Articles of Association or through any reorganization, transfer
of assets, spin-off, consolidation, merger, dissolution, issue or sale of
securities or any other action or inaction, seek to avoid the observance or
performance of any of the terms of this Warrant, and shall at all times in
good faith assist in performing and giving effect to the terms hereof and in
the taking of all such actions as may be necessary or appropriate in order to
protect the rights of the Warrantholder against dilution or other impairment.
5. ANTI-DILUTION ADJUSTMENTS. The Exercise Price and the number
of Warrant Shares to be received upon exercise of this Warrant shall be
subject to adjustment as follows:
5.1 DIVIDEND, SUBDIVISION, COMBINATION OR
RECLASSIFICATION OF COMMON STOCK. In the event that the Company shall at any
time or from time to time, after the issuance of this Warrant but prior to the
exercise hereof, (i) make a dividend or distribution on the outstanding shares
of Common Stock payable in Capital Stock, (ii) subdivide the outstanding
shares of Common Stock into a larger number of shares, (iii) combine the
outstanding shares of Common Stock into a smaller number of shares or (iv)
issue any shares of its Capital Stock in a reclassification of the Common
Stock (other than any such event for which an adjustment is made pursuant to
another clause of this Section 5), THEN, and in each such case, (A) the
aggregate number of Warrant Shares for which this Warrant is exercisable (the
"WARRANT SHARE NUMBER") immediately prior to such event shall be adjusted (and
any other appropriate actions shall be taken by the Company) so that the
Warrantholder shall be entitled to receive upon exercise of this Warrant the
number of shares of Common Stock or other securities of the Company that it
would have owned or would have been entitled to receive upon or by reason of
any of the events described above, had this Warrant been exercised immediately
prior to the
4
occurrence of such event and (B) the Exercise Price payable upon the exercise
of this Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, the numerator of which
shall be the number of Warrant Shares issuable upon the exercise of this
Warrant immediately prior to such adjustment, and the denominator of which
shall be the number of Warrant Shares issuable immediately thereafter. An
adjustment made pursuant to this Section 5.1 shall become effective
retroactively (x) in the case of any such dividend or distribution, to a date
immediately following the close of business on the record date for the
determination of holders of shares of Common Stock entitled to receive such
dividend or distribution or (y) in the case of any such subdivision,
combination or reclassification, to the close of business on the day upon
which such corporate action becomes effective.
5.2 CERTAIN DISTRIBUTIONS. In case the Company shall at
any time or from time to time, after the issuance of this Warrant but prior to
the exercise hereof, distribute to all holders of shares of Common Stock
(including any such distribution made in connection with a merger or
consolidation in which the Company is the resulting or surviving Person and
shares of Common Stock are not changed or exchanged) cash, evidences of
indebtedness of the Company or another issuer, securities of the Company or
another issuer or other assets (excluding dividends or distributions payable
in shares of Common Stock for which adjustment is made under Section 5.1) or
rights or warrants to subscribe for or purchase any of the foregoing, THEN,
and in each such case, (A) the Exercise Price then in effect shall be adjusted
(and any other appropriate actions shall be taken by the Company) by the
product obtained by multiplying the Exercise Price in effect prior to the date
of distribution by a fraction (i) the numerator of which shall be such Current
Market Price of Common Stock immediately prior to the date of distribution
less the then fair market value (as determined in good faith by a majority of
the Unaffiliated Board Members) of the portion of the cash, evidences of
indebtedness, securities or other assets so distributed or of such rights or
warrants applicable to one share of Common Stock and (ii) the denominator of
which shall be the Current Market Price of the Common Stock immediately prior
to the date of distribution (but such fraction shall not be greater than one)
and (B) the Warrant Share Number shall be increased by the product obtained by
multiplying by the Warrant Share number by a fraction (i) the numerator of
which shall be the Current Market Price of one share of Common Stock
immediately prior to the record date for the distribution of such cash,
evidences of indebtedness, securities, other assets or rights or warrants and
(ii) the denominator of which shall be the Current Market Price of one share
of Common Stock immediately prior to such record date less the fair market
value (as determined in good faith by a majority of the Unaffiliated Board
Members) of the portion of such cash, evidences of indebtedness, securities,
other assets or rights or warrants so distributed. Such adjustment shall be
made whenever any such distribution is made and shall become effective
retroactively to a date immediately following the close of business on the
record date for the determination of stockholders entitled to receive such
distribution.
5.3 OTHER CHANGES. In case the Company at any time or
from time to time, after the issuance of this Warrant but prior to the
exercise hereof, shall take any action affecting its Common Stock similar to
or having an effect similar to any of the
5
actions described in any of Sections 5.1, 5.2 or 5.7 (but not including any
action described in any such Section) and a majority the Unaffiliated Board
Members in good faith determines that it would be equitable in the
circumstances to adjust the Exercise Price and/or the Warrant Share Number as
a result of such action, THEN, and in each such case, the Exercise Price
and/or the Warrant Share Number shall be adjusted in such manner and at such
time as a majority of the Unaffiliated Board Members in good faith determines
would be equitable in the circumstances (such determination to be evidenced in
a resolution, a certified copy of which shall be delivered to the
Warrantholder).
5.4 NO ADJUSTMENT; PAR VALUE MINIMUM. Notwithstanding
anything herein to the contrary, no adjustment under this Section 5 need be
made to the Exercise Price or Warrant Share Number if the Company receives
written notice from the Warrantholder that no such adjustment is required.
Notwithstanding any other provision of this Warrant, the Exercise Price shall
not be adjusted below the par value of a share of Common Stock.
5.5 ABANDONMENT. If the Company shall take a record of
the holders of shares of its Common Stock for the purpose of entitling them to
receive a dividend or other distribution, and shall thereafter and before the
distribution to stockholders thereof legally abandon its plan to pay or
deliver such dividend or distribution, then no adjustment in the Exercise
Price or Warrant Share Number shall be required by reason of the taking of
such record.
5.6 CERTIFICATE AS TO ADJUSTMENTS. Upon any adjustment
in the Exercise Price or Warrant Share Number, the Company shall within a
reasonable period (not to exceed ten (10) days) following any of the foregoing
transactions deliver to the Warrantholder a certificate, signed by the Chief
Executive Officer of the Company and the Chief Financial Officer of the
Company, setting forth in reasonable detail the event requiring the adjustment
and the method by which such adjustment was calculated and specifying the
adjusted Exercise Price and Warrant Share Number then in effect following such
adjustment.
5.7 REORGANIZATION, RECLASSIFICATION, SALE TRANSACTION
OR MERGER. In case of any capital reorganization, reclassification, Sale
Transaction, merger or consolidation (other than a Sale Transaction or a
merger or consolidation of the Company in which the Company is the surviving
corporation) of the Company or other change of outstanding shares of Common
Stock (other than a change in par value, or from par value to no par value, or
from no par value to par value) (each, a "Transaction") at any time after the
issuance of this Warrant but prior to the exercise hereof, the Company shall
execute and deliver to the Warrantholder at least ten (10) Business Days prior
to effecting such Transaction a certificate stating that the Warrantholder
shall have the right thereafter to exercise this Warrant for the kind and
amount of shares of stock or other securities, property or cash receivable
upon such Transaction by a holder of the number of shares of Common Stock into
which this Warrant could have been exercised immediately prior to such
Transaction, and provision shall be made therefor in the agreement, if any,
relating to such Transaction. Such certificate shall provide for
6
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 5. The provisions of this Section 5.7
and any equivalent thereof in any such certificate similarly shall apply to
successive transactions.
5.8 REQUIRED NOTICES. In case at any time or from time
to time:
(a) the Company shall declare a dividend (or
any other distribution) on its shares of Common Stock;
(b) the Company shall authorize the granting
to the holders of shares of its Common Stock rights or warrants to subscribe
for or purchase any shares of Capital Stock or any other rights or warrants;
(c) there shall occur a Transaction;
(d) the Company shall take any other action
that would require a vote of the Company's stockholders; or
(e) the Company shall give notice to the
holders of the IPO Warrants of the redemption of the IPO Warrants in
accordance with the IPO Warrant Agreement;
then the Company shall mail to the Warrantholder, as promptly as possible but
in any event at least ten (10) days prior to the applicable date hereinafter
specified, a notice stating, as applicable, (A) the date on which a record is
to be taken for the purpose of such dividend, distribution or granting of
rights or warrants or, if a record is not to be taken, the date as of which
the holders of Common Stock of record to be entitled to such dividend,
distribution or granting of rights or warrants are to be determined, (B) the
date on which such Transaction is expected to become effective and the date as
of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for shares of stock or other
securities or property or cash deliverable upon such Transaction or (C) the
Redemption Date of the IPO Warrants. Notwithstanding the foregoing, in the
case of any event to which Section 5.7 is applicable, the Company shall also
deliver the certificate described in such Section 5.7 to the Warrantholder at
least ten (10) Business Days prior to effecting such reorganization or
reclassification as aforesaid.
6. LOSS OR DESTRUCTION OF WARRANT. Subject to the terms and
conditions hereof, upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant and, in the case of loss, theft or destruction, of such bond or
indemnification as the Company may reasonably require, and, in the case of
such mutilation, upon surrender and cancellation of this Warrant, the Company
will execute and deliver a new Warrant of like tenor.
7. OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other
7
than the Company) for all purposes and shall not be affected by any notice to
the contrary, until presentation of this Warrant for registration of transfer.
8. AMENDMENTS. Any provision of this Warrant may be amended and
the observance thereof waived only with the written consent of the Company and
the Warrantholder.
9. DEFINITIONS. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"BUSINESS DAY" means any day other than a Saturday, Sunday or a
United States federal holiday and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern time.
"CAPITAL STOCK" means, with respect to any Person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting or non-voting) of such Person's capital stock
and any and all rights, warrants or options exchangeable for or convertible
into such capital stock (but excluding any debt security whether or not it is
exchangeable for or convertible into such capital stock).
"COMMON STOCK" means the ordinary shares, no par value, of the
Company.
"COMMON STOCK EQUIVALENT" means any security or obligation which is
by its terms convertible into or exercisable into shares of Common Stock,
including, without limitation, any option, warrant or other subscription or
purchase right with respect to Common Stock.
"COMPANY" has the meaning set forth in the first paragraph of this
Warrant.
"CURRENT MARKET PRICE" means, as of the date of determination, (a)
the average of the daily Market Price under clause (a), (b) or (c) of the
definition thereof of the Common Stock during the immediately preceding thirty
(30) trading days ending on such date and (b) if the Common Stock is not then
listed or admitted to trading on any national securities exchange or quoted in
the over-the-counter market, then the Market Price under clause (d) of the
definition thereof on such date.
"EXERCISE FORM" means an Exercise Form in the form annexed hereto as
EXHIBIT A.
"EXERCISE PERIOD" means the period commencing on the Redemption
Notice Date and ending at the close of business on the second anniversary of
the consummation of the transactions contemplated by the Purchase Agreement.
"EXERCISE PRICE" has the meaning set forth in the first paragraph of
this Warrant.
8
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"IPO WARRANT AGREEMENT" means the Warrant Agreement, dated as of
August 24, 2004, by and between China Mineral Acquisition Corporation and
Continental Stock Transfer & Trust Company, as amended from time to time.
"IPO WARRANTS" means the warrants to purchase shares of Common Stock,
issued pursuant to the IPO Warrant Agreement.
"MAJORITY WARRANTHOLDERS" means the holders of a majority of Warrant
Shares issuable upon exercise of all of the warrants issued pursuant the
Purchase Agreement assuming the exercise of all such warrants.
"MARKET PRICE" means, as of the date of determination, (a) if the
Common Stock is listed on a national securities exchange, the closing price
per share of Common Stock on such date published in THE WALL STREET JOURNAL
(NATIONAL EDITION) or, if no such closing price on such date is published in
THE WALL STREET JOURNAL (NATIONAL EDITION), the average of the closing bid and
asked prices on such date, as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; or (b) if the Common Stock is not then listed or admitted to trading
on any national securities exchange but is designated as a national market
system security by the National Association of Securities Dealers, Inc., the
last trading price of the Common Stock on such date; or (c) if there shall
have been no trading on such date or if the Common Stock is not designated as
a national market system security by the National Association or Securities
Dealers, Inc., the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by the National Market System of the
National Association of Securities Dealers, Inc. Automated Quotations System
and reported by any member firm of the New York Stock Exchange selected by the
Company; or (d) if none of (a), (b) or (c) is applicable, a market price per
share determined mutually by a majority of the Unaffiliated Board Members and
the Majority Warrantholders or, if a majority of the Unaffiliated Board
Members and the Majority Warrantholders shall fail to agree, at the Company's
expense by an appraiser chosen by a majority of the Unaffiliated Board Members
and reasonably acceptable to the Majority Warrantholders. Any determination of
the Market Price by an appraiser shall be based on a valuation of the Company
as an entirety without regard to any discount for minority interests or
disparate voting rights among classes of capital stock.
"PERSON" means any individual, firm, corporation, partnership,
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, governmental body or other entity of any
kind.
"PURCHASE AGREEMENT" has the meaning set forth in Section 1 of this
Warrant.
"REDEMPTION NOTICE DATE" means the date the Company first gives
notice of redemption of the IPO Warrants to the holders of IPO Warrants
pursuant to the terms
9
of the IPO Warrant Agreement; the Company and the Warrantholder hereby
acknowledging that, pursuant to the IPO Warrant Agreement as in effect on the
date hereof, the Company, at its option, may redeem the IPO Warrants provided
that the last sales price of the Common Stock has been equal to or greater
than $8.50 per share (as the same may be adjusted pursuant to the terms of the
IPO Warrant Agreement), on each of twenty (20) trading days within any thirty
(30) trading day period ending on the third business day prior to the date on
which notice of redemption is given pursuant to the terms of the IPO Warrant
Agreement.
"SALE TRANSACTION" shall mean (A) (i) the merger or consolidation of
the Company into or with one or more Persons, (ii) the merger or consolidation
of one or more Persons into or with the Company or (iii) a tender offer or
other business combination if, in the case of (i), (ii) or (iii), the
stockholders of the Company prior to such merger or consolidation do not
retain at least a majority of the voting power of the surviving Person or (B)
the voluntary sale, conveyance, exchange or transfer to another Person of (i)
the voting Capital Stock of the Company if, after such sale, conveyance,
exchange or transfer, the stockholders of the Company prior to such sale,
conveyance, exchange or transfer do not retain at least a majority of the
voting power of the Company or (ii) all or substantially all of the assets of
the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the Securities and Exchange Commission
thereunder.
"TRANSACTION" has the meaning set forth in Section 5.7 of this
Warrant.
"UNAFFILIATED BOARD MEMBERS" shall mean, as of the time of any
determination to be made by the Unaffiliated Board Members, a majority of the
members of the Board of Directors of the Company that, as of such time, are
unaffiliated with the Warrantholder.
"WARRANT SHARE NUMBER" has the meaning set forth in Section 5.1 of
this Warrant.
"WARRANT SHARES" has the meaning set forth in the first paragraph of
this Warrant.
"WARRANTHOLDER" has the meaning set forth in the first paragraph of
this Warrant.
10. MISCELLANEOUS.
10.1 ENTIRE AGREEMENT. This Warrant (together with the
Purchase Agreement) constitutes the entire agreement between the Company and
the Warrantholder with respect to the Warrant and supersedes all prior
agreements and understanding with respects to the subject matter of this
Warrant.
10
10.2 BINDING EFFECT; BENEFITS. This Warrant shall inure
to the benefit of and shall be binding upon the Company and the Warrantholder
and their respective successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any Person other than
the Company and the Warrantholder, or their respective successors or assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Warrant.
10.3 HEADINGS. The headings in this Warrant are for
convenience of reference only and shall not limit or otherwise affect the
meaning of this Warrant.
10.4 NOTICES. All notices, demands and other
communications provided for or permitted hereunder shall be made in writing
and shall be by registered or certified first-class mail, return receipt
requested, telecopier, courier service or personal delivery:
(a) if to the Company: China Ivanhoe Energy
Ltd. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ Attention:
President Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Goodmans LLP
19th Floor - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
(b) if to the Warrantholder:
Sunwing Holding Corporation
c/o Ivanhoe Energy Inc.
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: 604-682-2060
Attention: Corporate Secretary
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and:
Goodmans LLP
19th Floor - ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
All such notices, demands and other communications shall be deemed to
have been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed;
and when receipt is mechanically acknowledged, if telecopied. Any party may by
notice given in accordance with this Section 10.4 designate another address or
Person for receipt of notices hereunder.
10.5 SEVERABILITY. Any term or provision of this Warrant
which is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the terms and
provisions of this Warrant or affecting the validity or enforceability of any
of the terms or provisions of this Warrant in any other jurisdiction.
10.6 GOVERNING LAW. The validity, interpretation, and
performance of this Warrant shall be governed in all respects by the laws of
the State of New York, without giving effect to conflict of laws. The Company
hereby agrees that any action, proceeding or claim against it arising out of
or relating in any way to this Warrant shall be brought and enforced in the
courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any such process or summons to be served upon the Company may be served
by transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in
Section 10.4. Such mailing shall be deemed personal service and shall be legal
and binding upon the Company in any action, proceeding or claim.
10.7 NO RIGHTS OR LIABILITIES AS STOCKHOLDERS. Nothing
contained in this Warrant shall be determined as conferring upon the
Warrantholder any rights as a stockholder of the Company or as imposing any
liabilities on the Warrantholder to purchase any securities whether such
liabilities are asserted by the Company or by creditors or stockholders of the
Company or otherwise.
12
10.8 COUNTERPARTS. This Warrant may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
CHINA IVANHOE ENERGY, LTD.
By: ________________________________
Name:
Title:
Dated: ________, 2006
EXHIBIT A
EXERCISE FORM
(To be executed upon exercise of this Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase ________ shares of Common Stock and
herewith tenders payment for such shares to the order of the Company in the
amount of $______ in accordance with the terms of this Warrant. The
undersigned requests that a certificate for such Warrant Shares be registered
in the name of the undersigned and that such certificates be delivered to the
undersigned's address below.
The undersigned represents that it is acquiring such shares for its
own account for investment and not with a view to or for sale in connection
with any distribution thereof (subject, however, to any requirement of law
that the disposition thereof shall at all times be within its control).
Dated:
Signature ___________________________
___________________________
(Print Name)
___________________________
(▇▇▇▇▇▇ ▇▇▇▇▇▇▇)
___________________________
(City) (State) (Zip Code)
EXHIBIT E
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[FORM OF ARTICLES OF MERGER]
These Articles of Merger made the [.] day of [.], 2006 between CHINA IVANHOE
ENERGY LTD. (the "SURVIVING COMPANY") and CHINA MINERAL ACQUISITION
CORPORATION (the "MERGING COMPANY").
NOW THEREFORE these Articles of Merger witnesseth as follows:
1. The merger of the Surviving Company and the Merging Company (the
"MERGER") shall be effective on the date of the filing of these
Articles of Merger with the Registry of Corporate Affairs of the
British Virgin Islands (the "EFFECTIVE DATE").
2. The Memorandum and Articles of Association of the Surviving Company
were registered with the Registrar of Corporate Affairs on the 29th
day of March, 2006.
3. The Certificate of Incorporation and Bylaws of the Merging Company
were filed with the Secretary of State of the State of Delaware, in
the United States of America ("DELAWARE"), on the 30th day of March,
2004.
4. The Merger and the attached Plan of Merger were approved and adopted
by the Surviving Company by a resolution of directors dated the [ ]
of 2006 and by a resolution of the sole shareholder dated the [ ] of
2006.
5. The Merger and the attached Plan of Merger were approved, adopted,
certified, executed and acknowledged for the Merging Company by a
resolution of directors dated the [ ] of 2006 and by the affirmative
vote of the Merging Company's stockholders at a special meeting held
on [ ] of 2006.
6. The Surviving Company has complied with all the provisions of the
laws of the British Virgin Islands and the Merging Company has
complied with all the provisions of the laws of Delaware, to enable
them to merge upon the Effective Date.
7. The executed Articles of Merger between the aforesaid constituent
corporations is on file at the principal place of business of the
aforesaid Surviving Company, the address of which is as follows:
China Ivanhoe Energy Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President
8. A copy of the Articles of Merger will be furnished by the aforesaid
Surviving Company, on request, and without cost, to any stockholder
of each of the aforesaid constituent corporations.
9. The aforesaid Surviving Company does hereby agree that it may be
served with process in the State of Delaware in any proceeding for
enforcement of any obligation of Merging Company, as well as for
enforcement of any obligation of said Surviving Company arising from
the merger herein certified, including any suit or other proceeding
to enforce the right, if any, of
any stockholder of Merging Company as determined in appraisal
proceedings pursuant to the provisions of Section 262 of the General
Corporation Law of the State of Delaware; does hereby irrevocably
appoint the Secretary of State of the State of Delaware as its agent
to accept service of process in any such suit or other proceedings;
and does hereby specify the following as the address to which a copy
of such process shall be mailed by the Secretary of State of the
State of Delaware:
China Ivanhoe Energy Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President
10. These Articles of Merger may be executed in counterparts which when
taken together shall constitute one instrument.
IN WITNESS WHEREOF the parties hereto have caused these Articles of Merger to
be executed on this [ ] day of [ ], 2006.
EXECUTED and DELIVERED as a DEED )
for and on behalf of )
CHINA IVANHOE ENERGY LTD. ) ____________________________
by [ ] ) [ ]
a duly authorised director )
EXECUTED and DELIVERED as a DEED )
for and on behalf of )
CHINA MINERAL ACQUISITION ) ____________________________
CORPORATION ) [ ]
by [ ] )
a duly authorised [director]/[officer])
2
[FORM OF PLAN OF MERGER]
This Plan of Merger is dated the [ ] day of [ ], 2006 with respect to CHINA
IVANHOE ENERGY LTD. (sometimes hereinafter referred to as "CHINA IVANHOE" or
the "SURVIVING COMPANY") and CHINA MINERAL ACQUISITION CORPORATION ("CHINA
MINERAL"). China Ivanhoe and China Mineral are hereinafter collectively
referred to as the "COMPANIES".
China Ivanhoe is a BVI Business Company incorporated and existing under and by
virtue of the BVI Business Companies Act, 2004 as amended (the "ACT"), and
makes this Plan of Merger pursuant to the provisions of sections 169 to 174 of
the Act.
China Mineral is a company incorporated under and by virtue of the General
Corporation Law of the State of Delaware (the "LAW") and makes this Plan of
Merger pursuant to the provisions of Section 252 of the said Law.
This Plan of Merger provides as follows:
1. CONSTITUENT COMPANIES
The constituent companies to this Plan of Merger are China Ivanhoe
and China Mineral.
2. SURVIVING COMPANY
China Ivanhoe shall be the surviving company to the merger.
3. OUTSTANDING AND VOTING SHARES
(a) (i) China Ivanhoe is authorised to issue an unlimited
number of ordinary shares of no par value each and
an unlimited number of preferred shares of no par
value each.
(ii) One (1) ordinary share of China Ivanhoe is issued
and outstanding and no preferred shares of China
Ivanhoe are issued and outstanding.
(iii) All shares in China Ivanhoe have the right to vote
and all shares in China Ivanhoe vote as a single
class.
(b) (i) China Mineral is authorised to issue 21,000,000
shares divided into:
(1) 20,000,000 shares of common stock of
US$0.0001 par value each; and
(2) 1,000,000 shares of preferred stock of
US$0.0001 par value each.
(ii) 5,000,000 shares of common stock are issued and
outstanding and no shares of preferred stock are
issued and outstanding.
(iii) All shares in China Mineral have the right to vote
and all shares in China Mineral vote as a single
class.
4. OUTSTANDING WARRANTS AND OPTIONS
(a) There are no warrants or options issued and outstanding for
shares in China Ivanhoe.
(b) (i) There are 8,000,000 warrants outstanding to
purchase up to 8,000,000 shares of common stock in
China Mineral;
(ii) there is a unit purchase option to purchase up to
300,000 shares of common stock in China Mineral;
and
(iii) there are 600,000 warrants to purchase up to
600,000 shares of Merged Company common stock.
5. CONVERSION OF SHARES, WARRANTS AND OPTIONS
(a) (i) Each share of no par value of China Ivanhoe issued
and outstanding on the effective date of the merger
shall be cancelled and shall be classified as
authorised but unissued shares; and
(ii) each share common stock of US$0.0001 par value of
China Mineral issued and outstanding on the
effective date shall be converted into one (1)
share of no par value in the Surviving Company.
(b) Any warrants and unit purchase options issued with respect
to shares in each of the Companies shall be deemed to be
issued with respect to shares in the Surviving Company and
the Surviving Company will assume all such outstanding
warrants and options on the same terms as currently issued.
6. AMENDMENT TO MEMORANDUM AND ARTICLES
The Memorandum and Articles of Association of Arian as in effect on
the effective date shall otherwise be the constitutional documents of
the Surviving Company until the same shall be altered or amended or
until new constitutional documents are adopted as provided therein.
7. APPROVAL
This Plan of merger shall be submitted to the directors and
shareholders of each of the Companies for their approval by way of a
resolution of shareholders.
8. EFFECT AND TERMS OF MERGER
(i) Upon the merger, the separate corporate existence of China
Mineral shall cease and the Surviving Company shall become
the owner, without other transfer, of all the rights and
property of the Companies and the Surviving Company shall
become subject to all liabilities obligations and penalties
of the Companies.
(ii) China Mineral's shares will no longer be eligible to trade
on the over-the-counter bulletin board market ("OTCBB") and
the shares of the Surviving Company will be eligible to
trade in their place under a new CUSIP number and trading
symbol. The
4
symbol will be assigned if the market will be the OTCBB or
will be as determined with the approval of NASDAQ National
Market if that is where the shares will trade upon
consummation of the stock purchase transaction contemplated
by that certain Stock Purchase Agreement, dated as of
________, 2006, by and among Ivanhoe Energy Inc., a Yukon,
Canada corporation, Sunwing Holding Corporation, a Barbados
corporation, Sunwing Energy Ltd., a corporation organized
under the laws of Bermuda, and China Mineral.
(iii) The merger shall be effective on the date of the filing of
the Articles of Merger with the Registry of Corporate
Affairs of the British Virgin Islands.
5
EXHIBIT F
---------
[FORM OF AREA OF INTEREST AGREEMENT]
THIS AGREEMENT made as of the o day of o, 2006.
BETWEEN:
IVANHOE ENERGY INC., a corporation incorporated under the laws of the
Yukon Territory
("IVANHOE")
AND:
SUNWING ENERGY LTD., a corporation incorporated under the laws of
Bermuda
("SUNWING")
WHEREAS:
A. capitalized terms used in these recitals without definition have the
meanings assigned to them in Section 1.1 hereof;
B. CMA, Holdings and Sunwing are parties to the Stock Purchase
Agreement, pursuant to which Holdings will sell, and CMA will
purchase, all of the issued and outstanding shares of Sunwing;
C. it is a condition precedent to CMA's obligations to consummate the
transactions contemplated by the Stock Purchase Agreement that
Ivanhoe agree to refrain from engaging in Petroleum Activities within
the Area of Interest;
D. it is also a condition precedent to CMA's obligations to consummate
the transactions contemplated by the Stock Purchase Agreement that
Ivanhoe agree to offer to Sunwing the right to participate in any HTL
Activities that Ivanhoe proposes to undertake within the Area of
Interest; and
E. Ivanhoe and Sunwing are entering into this Agreement to formally
document their agreement in respect of the matters referred to in the
foregoing recitals in order to fulfill the above-referenced
conditions precedent to CMA's obligations to consummate the
transactions contemplated by the Stock Purchase Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the
premises and the respective covenants and agreements herein contained, the
parties hereto covenant and agree as follows:
PART 1
DEFINITIONS AND INTERPRETATION
DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the
following terms will have the meanings hereinafter set forth:
"AFFILIATE" means means any person, partnership, limited liability
company, joint venture, corporation, or other form of enterprise
which Controls, is Controlled by, or is under common Control with a
party to this Agreement;
"AMI OPPORTUNITY" has the meaning assigned to it in Section 3.1;
"AMI OPTION NOTICE" has the meaning assigned to it in Section 3.2;
"AREA OF INTEREST" means those geographical areas comprising the
sovereign territory of the People's Republic of China, including its
territorial waters as determined in accordance with the United
Nations Convention on Law of the Sea;
"BUSINESS DAY" means any day upon which chartered banks in Vancouver,
British Columbia and Calgary, Alberta are open for business;
"CMA" means China Minerals Acquisition Corporation, a corporation
incorporated under the laws of the State of Delaware;
"CONTROL" used as a verb means, when used with respect to an entity,
the ability, directly or indirectly through one or more
intermediaries, to direct or cause the direction of the management
and policies of such entity through the legal or beneficial ownership
of voting securities or membership interests, the right to appoint
managers, directors or corporate officers, rights arising under
operating agreements or other contracts, a voting trust or otherwise;
and "Control" used as a noun means an interest which gives the holder
the ability to exercise any of the foregoing powers;
"GTL ACTIVITIES" means all activities involving the actual or
potential application of GTL Technology to the evaluation and
development of deposits of natural gas, together with other
applications which Ivanhoe may develop during the Term of this
Agreement (to the extent involving GTL Technology) and to the
production, transportation and marketing of products derived
therefrom;
"GTL TECHNOLOGY" means the technology licensed by Ivanhoe from
Syntroleum Corporation to convert natural gas into fuels and other
products;
"HOLDINGS" means Sunwing Holding Corporation, a company incorporated
under the laws of Barbados;
"HTL ACTIVITIES" means all activities involving the actual or
potential application of HTL Technology to the evaluation and
development of deposits of heavy crude oil and/or bitumen, together
with other applications which Ivanhoe may develop during the Term of
this Agreement (to the extent involving HTL Technology) and to the
production, transportation and marketing of products derived
therefrom;
"HTL AMI THIRD PARTY" means any person, partnership, limited
liability company, joint venture, corporation, or other form of
enterprise that acquires from Ivanhoe a license or other right to use
the HTL Technology to conduct HTL Activities within the Area of
Interest;
"HTL OPTION NOTICE" has the meaning assigned to it in Section 4.2;
"HTL PARTICIPATION OPPORTUNITY" has the meaning assigned to it in
Section 4.1;
"HTL TECHNOLOGY" means the technology exclusively licensed as of the
date hereof by Ivanhoe and its Subsidiaries from Ensyn Technologies
Inc. to upgrade heavy crude oil and bitumen, and related technology
developed or licensed by Ivanhoe during the Term of this Agreement;
"NOTICE" has the meaning assigned to it in Section 6.1;
"PARTICIPATION TERMS" has the meaning assigned to it in Section 4.1;
"PETROLEUM ACTIVITIES" means all activities involving exploration,
discovery, evaluation, development, production, transportation and
marketing of oil and gas and includes enhanced oil recovery but does
not include GTL Activities or HTL Activities;
"STOCK PURCHASE AGREEMENT" means the Stock Purchase Agreement made
and entered into as of o, 2006, by and among Holdings, Sunwing and
CMA (as the same may, from time to time, be supplemented, amended or
modified and in effect);
"SUBSIDIARY" means a corporation, company or other form of enterprise
that, in relation to another entity, is Controlled, directly or
indirectly, by that entity, or by one or more other entities each of
which is Controlled by that entity;
"SUNWING PARTICIPATION INTEREST" has the meaning assigned to it in
Section 4.1; and
"TERM" has the meaning assigned to it in Section 2.4.
INTERPRETATION
1.2 For the purposes of this Agreement, except as otherwise expressly
provided:
(a) "this Agreement" means this agreement, including the
schedules hereto, and not any particular part, section or
other portion hereof, and includes any agreement, document
or instrument entered into, made or delivered pursuant to
the terms hereof, as any of the same may, from time to time,
be supplemented, amended or modified and in effect;
(b) all references in this Agreement to a designated "part",
"section", "subsection" or other subdivision or to a
schedule are references to the designated part, section,
subsection or other subdivision of, or schedule to, this
Agreement;
(c) the words "hereof", "herein", "hereto" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular part, section, subsection or
other subdivision or schedule unless the context or subject
matter otherwise requires;
(d) the division of this Agreement into parts, sections and
other portions and the insertion of headings are for
convenience of reference only and are not intended to
interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof;
(e) unless otherwise provided herein, all references to currency
in this Agreement are to lawful money of the United States
of America;
(f) a reference in this Agreement to a statute includes all
rules and regulations made thereunder, all amendments to the
statute, rules or regulations in force from time to time,
and any statute, rule or regulation that supplements or
supersedes such statute, rule or regulation;
(g) the singular of any term includes the plural, and vice
versa, and the use of any term is generally applicable to
any gender and, where applicable, a body corporate, firm or
other entity, and 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 words of similar import) is used with reference
thereto;
(h) in the event that any date on which any action is required
to be taken hereunder by any of the parties hereto is not a
Business Day, such action will be required to be taken on
the next succeeding day which is a Business Day; and
(i) all references to "approval", "authorization" or "consent"
in this Agreement mean written approval, authorization or
consent.
PART 2
AREA OF INTEREST
IVANHOE PETROLEUM ACTIVITIES WITHIN AREA OF INTEREST
2.1 Ivanhoe hereby covenants and agrees that it will not, and will
procure that its Subsidiaries (other than CMA and its Subsidiaries) do not, at
any time during the Term, engage in any Petroleum Activities or HTL Activities
within the Area of Interest except in accordance with the terms and conditions
of this Agreement.
EXCEPTIONS
2.2 Nothing in this Agreement will be construed to prevent, or in any way
restrict, Ivanhoe or any of its Affiliates from engaging in:
(a) Petroleum Activities outside of the Area of Interest;
(b) GTL Activities or HTL Activities outside of the Area of
Interest; and
(c) GTL Activities or, subject to Part 4, HTL Activities within
the Area of Interest.
SUNWING PETROLEUM ACTIVITIES OUTSIDE AREA OF INTEREST
2.3 Nothing in this Agreement will be construed to prevent, or in any way
restrict, Sunwing or any of its Subsidiaries from engaging in Petroleum
Activities outside of the Area of Interest provided that such Petroleum
Activities do not conflict with any area of interest or other geographical
restrictions contained in agreements in effect as of the date hereof between
Ivanhoe or any of its Subsidiaries, on the one hand, and one or more third
parties, on the other hand.
TERM
2.4 This Agreement will remain in effect for a term (the "Term")
commencing on the date of this Agreement and ending on the earliest of:
(a) the date upon which Ivanhoe ceases to beneficially own,
directly or indirectly, at least fifty per cent (50%) of the
issued and outstanding common shares of CMA or its
successor;
(b) the date upon which Ivanhoe and Sunwing agree in writing to
terminate this Agreement; or
(c) the fifth (5th) anniversary of the date of this Agreement or
such later date as Ivanhoe and Sunwing agree in writing.
SURVIVAL
2.5 Upon the expiration of the Term, this Agreement will be void and of
no further force or effect, with no liability on the part of any party hereto,
except that this Section 2.5, Section 5.2, Section 5.3, Section 5.4 and Part 6
will survive the expiration of the Term.
PART 3
OPPORTUNITIES FOR PETROLEUM ACTIVITIES WITHIN THE AREA OF INTEREST
AMI OPPORTUNITIES
3.1 Ivanhoe, on behalf of itself and each of its Subsidiaries (other than
CMA and its Subsidiaries), hereby covenants and agrees that if, during the
Term, Ivanhoe or any such Subsidiary acquires, directly or indirectly, any
opportunity to engage in Petroleum Activities wholly or partially within the
Area of Interest (an "AMI Opportunity"), Ivanhoe will promptly offer the AMI
Opportunity to Sunwing.
AMI OPTION NOTICE
3.2 Any offer under Section 3.1 will be made by Notice (an "AMI Option
Notice") setting out the nature of the AMI Opportunity and including all
information respecting the AMI Opportunity known to Ivanhoe including
Ivanhoe's acquisition costs and all other details relating thereto.
AMI OPTION EXERCISE
3.3 If, within 60 days from the date of the receipt of an AMI Option
Notice, Sunwing notifies Ivanhoe in writing that it desires to acquire the AMI
Opportunity and reimburses Ivanhoe for its acquisition costs, if any, Ivanhoe
will convey and assign the AMI Opportunity to Sunwing (or, if such interest
cannot legally be conveyed or assigned, Ivanhoe will hold in trust for
Sunwing, subject to indemnification acceptable to Ivanhoe, acting reasonably).
FAILURE TO EXERCISE AMI OPTION
3.4 If, during the 60 day period from the date of the receipt of an AMI
Option Notice, Sunwing fails to elect to acquire the AMI Opportunity, Ivanhoe
will be entitled to retain the AMI Opportunity for its own account with no
further obligation or liability to Sunwing and engage in Petroleum Activities
in respect of the AMI Opportunity notwithstanding the terms of this Agreement.
PART 4
OPPORTUNITIES FOR HTL ACTIVITIES
WITHIN THE AREA OF INTEREST
HTL PARTICIPATION OPPORTUNITIES
4.1 If, at any time and from time to time during the Term, Ivanhoe
determines, in its sole discretion, to actively engage in any HTL Activities
within the Area of Interest and, following such determination, establishes
definitive terms and conditions on which Ivanhoe or any of its Subsidiaries
will carry out, or otherwise participate in, such HTL Activities, either
pursuant to an agreement with one or more third parties or otherwise
("Participation Terms"), Ivanhoe will, promptly after having established the
Participation Terms, make an offer to Sunwing in writing to participate with
Ivanhoe in such HTL Activities on the Participation Terms (the "HTL
Participation Opportunity"). The participating interest in the HTL
Participation Opportunity offered to Sunwing (the "Sunwing Participation
Interest") will be not less than fifty per cent (50%) of Ivanhoe's total
participating interest in such HTL Participation Opportunity.
HTL OPTION NOTICE
4.2 Any offer under Section 4.1 will be made by Notice in (an "HTL Option
Notice") setting out the nature of the HTL Participation Opportunity and
including all information respecting the HTL Participation Opportunity known
to Ivanhoe including Ivanhoe's acquisition costs and all other details
relating thereto. Each HTL Option Notice will be deemed to evidence an option
in favour of Sunwing, exercisable in accordance with Section 4.3, to acquire a
Sunwing Participation Interest equal to not less than fifty per cent (50%) of
Ivanhoe's total participating interest in the relevant HTL Participation
Opportunity or such lesser Sunwing Participating Interest as Sunwing may
elect.
HTL OPTION EXERCISE
4.3 If, within 60 days from the date of the receipt of an HTL Option
Notice, Sunwing notifies Ivanhoe in writing that it intends to participate
with Ivanhoe in the HTL Participation Opportunity, specifies in writing the
amount of the offered Sunwing Participation Interest it
intends to acquire and reimburses Ivanhoe for its proportionate share of
Ivanhoe's acquisition costs, if any, Ivanhoe will convey and assign to Sunwing
(or, if such interest cannot legally be conveyed or assigned, Ivanhoe will
hold in trust for Sunwing, subject to indemnification acceptable to Ivanhoe,
acting reasonably) the amount of the offered Sunwing Participation Interest
Sunwing elects to acquire and, thereafter, Ivanhoe and Sunwing will
participate in proportion to their respective participating interests in all
of the rights and obligations in respect of the HTL Participation Opportunity
in accordance with the Participation Terms notwithstanding the subsequent
expiry of the Term, or any amendment or modification, of this Agreement.
FAILURE TO EXERCISE HTL OPTION
4.4 If, during the 60 day period from the date of the receipt of an HTL
Option Notice, Sunwing fails to elect to acquire the Sunwing Participation
Interest, Ivanhoe will be entitled to retain the entire HTL Participation
Opportunity for its own account with no further obligation or liability to
Sunwing and engage in HTL Activities in respect of the HTL Participation
Opportunity within the Area of Interest notwithstanding the terms of this
Agreement.
PART 5
HTL TECHNOLOGY LICENSING
WITHIN AREA OF INTEREST
SHARING OF PASSIVE FEES AND ROYALTIES
5.1 If, at any time during the Term of this Agreement, Ivanhoe elects not
to actively engage in HTL Activities in respect of a deposit or series of
deposits of hydrocarbons within the Area of Interest and instead licenses or
otherwise makes the HTL Technology available to an HTL AMI Third Party in
consideration for royalties, licensing fees or other consideration ("Licensing
Consideration"), Ivanhoe will, for as long as it continues to receive such
Licensing Consideration, pay to Sunwing, as and when received, an amount equal
to twenty five per cent (25%) of the Licensing Consideration (net of any
withholding or similar taxes).
NO OWNERSHIP OF HTL TECHNOLOGY
5.2 Sunwing hereby acknowledges and agrees that nothing in this Agreement
will be construed as transferring to Sunwing any ownership or proprietary
interest in the HTL Technology, or any modifications thereto or improvements
thereon.
PROTECTION OF HTL TECHNOLOGY
5.3 Sunwing hereby acknowledges that Ivanhoe has a proprietary interest
in the HTL Technology which, as between the parties hereto, will remain under
the exclusive control of Ivanhoe. Sunwing agrees, on behalf of itself and each
of its Subsidiaries, to use reasonable commercial efforts to co-operate with
Ivanhoe in the protection and defence of the HTL Technology within the Area of
Interest and, in that regard, Sunwing will execute, acknowledge and deliver
all documents as may be necessary or desirable to enable Ivanhoe to protect
and defend its proprietary interest in the HTL Technology within the Area of
Interest. Sunwing will promptly advise Ivanhoe in writing of any potentially
infringing uses of the HTL Technology by others within the Area of Interest of
which Sunwing may become aware. Decisions involving the
protection and defence of the HTL Technology within the Area of Interest will
be solely in the discretion of Ivanhoe. Sunwing will take no actions in this
regard without the express written consent of Ivanhoe. Sunwing will not
attack, or assist any other entity in attacking, the validity of Ivanhoe's
proprietary interest in the HTL Technology.
CONFIDENTIALITY
5.4 Sunwing agrees to keep all information, data, knowledge and know-how
pertaining to the HTL Technology ("Confidential Information") confidential and
not to disclose Confidential Information to any person or entity other than:
(a) such of Sunwing's directors, officers, employees
("Representatives") and Representatives of Sunwing's
Subsidiaries who have a bona fide need to have access to
such Confidential Information in order for Sunwing or such
Affiliates to participate in any of the transactions
contemplated by this Agreement and who have agreed in
writing to be likewise bound by the provisions of this
Agreement; and
(b) such other persons ("Approved Third Parties") as Ivanhoe
hereafter agrees in writing may receive such Confidential
Information (which agreement may be withheld for any reason
or for no reason).
Sunwing shall be responsible and liable for any use or disclosure of the
Confidential Information by its or its Affiliate's Representatives or by
Approved Third Parties in violation of this Agreement. Nothing contained
herein shall be deemed to prevent disclosure of any of the Confidential
Information if, in the written opinion of Sunwing's legal counsel, such
disclosure is legally required to be made in a judicial, administrative, or
governmental proceeding pursuant to a valid subpoena or other applicable
order; provided, however, Sunwing shall give Ivanhoe at least ten days' prior
Notice (unless less time is permitted by the applicable proceeding) before
disclosing any of the Confidential Information in any such proceeding and, in
making such disclosure, Sunwing shall disclose only that portion thereof
required to be disclosed and shall take all reasonable efforts to preserve the
confidentiality thereof, including supporting Ivanhoe in obtaining protective
orders and in intervention.
EXPLOITATION OF HTL TECHNOLOGY
5.5 Notwithstanding anything to the contrary in this Agreement, the
parties hereto acknowledge and agree that Ivanhoe is under no obligation to
seek to exploit, market or otherwise develop its HTL Technology, either within
or outside of the Area of Interest, at any time during the Term of this
Agreement.
PART 6
GENERAL PROVISIONS
NOTICES
6.1 All notices, payments and other required or permitted communications
(each a "Notice") to either party will be in writing, and will be addressed
respectively as follows:
If to Ivanhoe: Ivanhoe Energy Inc.
▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
Attention: Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sunwing: Sunwing Energy Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All Notices will be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the date of confirmation of receipt (or, the first Business
Day following such receipt if the date is not a Business Day) of transmission
by facsimile or (c) on the date of confirmation of receipt (or, the first
Business Day following such receipt if the date is not a Business Day) if
delivered by a nationally-recognized courier service. Either party may change
its address by Notice to the other party.
WAIVER
6.2 The failure of either party to insist on the strict performance of
any provision of this Agreement or to exercise any right, power or remedy upon
a breach hereof will not constitute a waiver of any provision of this
Agreement or limit such party's right thereafter to enforce any provision or
exercise any right.
MODIFICATION
6.3 No modification of this Agreement will be valid unless made in
writing and duly executed by both parties.
FURTHER ASSURANCES
6.4 Each of the parties will take, from time to time and without
additional consideration, such further actions and execute such additional
instruments as may be reasonably necessary or convenient to implement and
carry out the intent and purpose of this Agreement.
ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES
6.5 This Agreement contains the entire understanding of the parties and
supersedes all prior agreements and understandings between the parties
relating to the subject matter hereof. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person or entity any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
ASSIGNMENT
6.6 Except as expressly permitted elsewhere in this Agreement, neither
party may assign its rights or obligations under this Agreement without the
prior written consent of the other party, such consent not to be unreasonably
withheld.
SUCCESSORS AND ASSIGNS
6.7 This Agreement will be binding upon and inure to the benefit of the
respective successors and permitted assigns of the parties.
TIME
6.8 Time is of the essence of this Agreement.
GOVERNING LAW
6.9 This Agreement will be governed by and interpreted in accordance with
the laws of British Columbia without regard for any conflict of laws or choice
of laws principles that would permit or require the application of the laws of
any other jurisdiction.
SEVERABILITY
6.10 In the event that any provision of this Agreement or the application
thereof becomes or is declared by a court of competent jurisdiction to be void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to the parties or
circumstances will be interpreted so as reasonably to effect the intent of the
parties to this Agreement. The parties hereto further agree to replace any
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the greatest extent possible, the
economic, business and other purposes of such void or unenforceable provision.
COUNTERPARTS
6.11 This Agreement may be executed in any number of counterparts, and it
will not be necessary that the signatures of both parties be contained on any
counterpart. Each counterpart will be deemed an original, but all counterparts
together will constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
IVANHOE ENERGY INC.
By___________________________________
Title:
SUNWING ENERGY LTD.
By___________________________________
Title:
EXHIBIT G
---------
[FORM OF REGISTRATION RIGHTS AGREEMENT]
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is entered into
as of the ___ day of ________, 2006, by and among China Ivanhoe Energy Ltd., a
corporation organized under the laws of the British Virgin Islands (formerly
known as China Mineral Acquisition Corporation, a Delaware corporation, the
"COMPANY"), and Sunwing Holding Corporation, a Barbados company ("SUNWING").
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated as
of __________, 2006, by and among Sunwing, Ivanhoe Energy Inc., a Yukon,
Canada corporation, Sunwing Energy Ltd. and the Company, the Company has
agreed to enter into this Agreement to provide Sunwing with certain rights
relating to the registration of shares of capital stock of the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
DEFINITIONS
The following capitalized terms used herein have the following
meanings:
"AGREEMENT" means this Agreement, as amended, restated, supplemented,
or otherwise modified from time to time.
"COMMISSION" means the Securities and Exchange Commission, or any
other federal agency then administering the Securities Act or the Exchange
Act.
"COMMON STOCK" means the ordinary shares, no par value, of the
Company.
"COMPANY" is defined in the preamble to this Agreement.
"DEMAND REGISTRATION" is defined in Section 2.1.1.
"DEMANDING HOLDER" is defined in Section 2.1.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder, all as
the same shall be in effect at the time.
"FORM S-3" is defined in Section 2.3.
"INDEMNIFIED PARTY" is defined in Section 4.3.
"INDEMNIFYING PARTY" is defined in Section 4.3.
"MAXIMUM NUMBER OF SHARES" is defined in Section 2.1.4.
"NOTICES" is defined in Section 6.3.
"PIGGY-BACK REGISTRATION" is defined in Section 2.2.1.
"PREVIOUSLY GRANTED RIGHTS" is defined in Section 6.1.
"REGISTER," "REGISTERED" and "REGISTRATION" means a registration
effected by preparing and filing a registration statement or similar document
in compliance with the requirements of the Securities Act, and the applicable
rules and regulations promulgated thereunder, and such registration statement
becoming effective.
"REGISTRABLE SECURITIES" means each of the following: (i) any shares
of Common Stock owned by the Sunwing Stockholders, whether as of the date
hereof or acquired after the date hereof; (ii) any shares of Common Stock
issued or issuable upon exercise of any options or warrants to purchase Common
Stock owned by any of the Sunwing Stockholders, whether as of the date hereof
or acquired after the date hereof; and (iii) any shares of Common Stock issued
or issuable to any of the Sunwing Stockholders with respect to the Registrable
Securities by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise and any shares of Common Stock or common stock
issuable upon conversion, exercise or exchange thereof. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities when: (a) a Registration Statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been sold, transferred, disposed of or exchanged in
accordance with such Registration Statement; (b) such securities shall have
been otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration under
the Securities Act; (c) such securities shall have ceased to be outstanding;
or (d) the Commission makes a definitive determination that the Registrable
Securities are salable under Rule 144(k).
"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission in compliance with the Securities Act and the
rules and regulations promulgated thereunder for a public offering and sale of
Common Stock (other than a registration statement on Form S-4, Form F-4 or
Form S-8, or their successors, or any registration statement covering only
securities proposed to be issued in exchange for securities or assets of
another entity).
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder, all as the
same shall be in effect at the time.
"SUNWING" is defined in the preamble to this Agreement.
"SUNWING INDEMNIFIED PARTY" is defined in Section 4.1.
2
"SUNWING STOCKHOLDERS" means Sunwing and any transferee thereof to
whom Registrable Securities have been transferred.
"UNDERWRITER" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 DEMAND REGISTRATION.
2.1.1 REQUEST FOR REGISTRATION. At any time and from time to time
on or after the date hereof, the holders of a majority-in-interest of the
Registrable Securities held by the Sunwing Stockholders may make a written
demand for registration under the Securities Act of the sale of all or part of
their Registrable Securities (a "DEMAND REGISTRATION"). Any such written
demand shall specify the number of shares of Registrable Securities proposed
to be sold and the intended method(s) of distribution thereof. The Company
will notify all holders of Registrable Securities of the demand, and each
holder of Registrable Securities who wishes to include all or a portion of
such holder's Registrable Securities in the Demand Registration (each such
holder including shares of Registrable Securities in such registration, a
"DEMANDING HOLDER") shall so notify the Company within fifteen (15) days after
the receipt by the holder of the notice from the Company. Upon any such
request, the Demanding Holders shall be entitled to have their Registrable
Securities included in the Demand Registration, subject to Section 2.1.4 and
the provisos set forth in Section 3.1.1. The Company shall not be obligated to
effect more than four (4) Demand Registrations under this Section 2.1.1 in
respect of Registrable Securities.
2.1.2 EFFECTIVE REGISTRATION. A registration will not count as a
Demand Registration until the Registration Statement filed with the Commission
with respect to such Demand Registration has been declared effective and the
Company has complied with all of its obligations under this Agreement with
respect thereto; PROVIDED, HOWEVER, that if, after such Registration Statement
has been declared effective, the offering of Registrable Securities pursuant
to a Demand Registration is interfered with by any stop order or injunction of
the Commission or any other governmental agency or court, the Registration
Statement with respect to such Demand Registration will be deemed not to have
been declared effective, unless and until (i) such stop order or injunction is
removed, rescinded or otherwise terminated and (ii) a majority-in-interest of
the Demanding Holders thereafter elect to continue the offering.
2.1.3 UNDERWRITTEN OFFERING. If a majority-in-interest of the
Demanding Holders so elect and such holders so advise the Company as part of
their written demand for a Demand Registration, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the
form of an underwritten offering. In such event, the right of any holder to
include its Registrable Securities in such registration shall be conditioned
upon such holder's participation in such underwriting and the inclusion of
such holder's Registrable Securities in the underwriting to the extent
provided herein. All Demanding Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting
agreement
3
in customary form with the Underwriter or Underwriters selected for such
underwriting by a majority-in-interest of the holders initiating the Demand
Registration.
2.1.4 REDUCTION OF OFFERING. If the managing Underwriter or
Underwriters for a Demand Registration that is to be an underwritten offering
advises the Company and the Demanding Holders in writing that the dollar
amount or number of shares of Registrable Securities which the Demanding
Holders desire to sell, taken together with all other shares of Common Stock
or other securities, if any, which the Company desires to sell and shares of
Common Stock, if any, as to which registration has been requested pursuant to
written contractual piggy-back registration rights held by other shareholders
of the Company who desire to sell, exceeds the maximum dollar amount or
maximum number of shares that can be sold in such offering without adversely
affecting the proposed offering price, the timing, the distribution method, or
the probability of success of such offering (such maximum dollar amount or
maximum number of shares, as applicable, the "MAXIMUM NUMBER OF SHARES"), then
the Company shall include in such registration: (i) first, the Registrable
Securities as to which the Demand Registration has been requested by the
Demanding Holders (pro rata in accordance with the number of shares of
Registrable Securities which each Demanding Holder has requested be included
in such registration, regardless of the number of shares of Registrable
Securities held by each Demanding Holder) that can be sold without exceeding
the Maximum Number of Shares; (ii) second, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clause (i), the
shares of Common Stock for the account of other persons that the Company is
obligated to register pursuant to written contractual arrangements with such
persons and that can be sold without exceeding the Maximum Number of Shares;
(iii) third, to the extent that the Maximum Number of Shares has not been
reached under the foregoing clauses (i) and (ii), the shares of Common Stock
or other securities, if any, that the Company desires to sell that can be sold
without exceeding the Maximum Number of Shares; and (iv) fourth, to the extent
that the Maximum Number of Shares have not been reached under the foregoing
clauses (i), (ii), and (iii), the shares of Common Stock that other
stockholders desire to sell that can be sold without exceeding the Maximum
Number of Shares.
2.1.5 WITHDRAWAL. If a majority-in-interest of the Demanding
Holders disapprove of the terms of any underwriting or are not entitled to
include all of their Registrable Securities in any offering, such
majority-in-interest of the Demanding Holders may elect to withdraw from such
offering by giving written notice to the Company and the Underwriter of their
request to withdraw prior to the effectiveness of the Registration Statement
filed with the Commission with respect to such Demand Registration, in which
case the Company shall not be required to effect the registration. If the
majority-in-interest of the Demanding Holders withdraws from a proposed
offering relating to a Demand Registration, then such registration shall not
count as a Demand Registration provided for in Section 2.1.1.
Section 2.2 PIGGY-BACK REGISTRATION.
2.2.1 PIGGY-BACK RIGHTS. If at any time on or after the date
hereof the Company proposes to file a Registration Statement under the
Securities Act with respect to an offering of equity securities, or securities
or other obligations exercisable or exchangeable for, or convertible into,
equity securities, by the Company for its own account or by stockholders of
the Company
4
for their own account (or by the Company and by stockholders of the Company
including, without limitation, pursuant to Section 2.1), other than a
Registration Statement (i) filed in connection with any employee stock option
or other benefit plan, (ii) for an exchange offer or offering of securities
solely to the Company's existing stockholders, (iii) for an offering of debt
that is convertible into equity securities of the Company or (iv) for a
dividend reinvestment plan, then the Company shall (x) give written notice of
such proposed filing to the holders of Registrable Securities as soon as
practicable but in no event less than forty-five (45) days before the
anticipated filing date, which notice shall describe the amount and type of
securities to be included in such offering, the intended method(s) of
distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities in such notice the opportunity to register the sale of
such number of shares of Registrable Securities as such holders may request in
writing within fifteen (15) days following receipt of such notice (a
"PIGGY-BACK REGISTRATION"). The Company shall cause such Registrable
Securities to be included in such registration and shall use its best efforts
to cause the managing Underwriter or Underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggy-Back Registration to be included on the same terms and conditions as any
similar securities of the Company and to permit the sale or other disposition
of such Registrable Securities in accordance with the intended method(s) of
distribution thereof. All holders of Registrable Securities proposing to
distribute their securities through a Piggy-Back Registration that involves an
Underwriter or Underwriters shall enter into an underwriting agreement in
customary form with the Underwriter or Underwriters selected for such
Piggy-Back Registration. Registrations effected pursuant to this Section 2.2
shall not be counted as Demand Registrations effected pursuant to Section 2.1.
2.2.2 REDUCTION OF OFFERING. If the managing Underwriter or
Underwriters for a Piggy-Back Registration that is to be an underwritten
offering advises the Company and the holders of Registrable Securities in
writing that the dollar amount or number of shares of Common Stock which the
Company desires to sell, taken together with (i) the shares of Common Stock,
if any, as to which registration has been demanded pursuant to written
contractual arrangements with persons other than the holders of Registrable
Securities hereunder, (ii) the Registrable Securities as to which registration
has been requested under this Section 2.2 and (iii) the shares of Common
Stock, if any, as to which registration has been requested pursuant to written
contractual piggy-back registration rights held by other stockholders of the
Company, exceeds the Maximum Number of Shares, then the Company shall include
in any such registration:
(i) if the registration is undertaken for the Company's
account: (A) first, the shares of Common Stock or other securities that the
Company desires to sell that can be sold without exceeding the Maximum Number
of Shares; (B) second, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clause (A), the Registrable Securities as to
which registration has been requested under this Section 2.2 (pro rata in
accordance with the number of shares of Common Stock which each such person
has actually requested to be included in such registration, regardless of the
number of shares of Common Stock with respect to which such persons have the
right to request such inclusion); and (C) third, to the extent that the
Maximum Number of Shares has not been reached under the foregoing clauses (A)
and (B), the shares of Common Stock, if any, as to which registration has been
5
requested pursuant to written contractual piggy-back registration rights which
such other stockholders desire to sell and that can be sold without exceeding
the Maximum Number of Shares; and
(ii) if the registration is a "demand" registration
undertaken at the demand of persons other than the holders of Registrable
Securities pursuant to written contractual arrangements with such persons: (A)
first, the shares of Common Stock for the account of the demanding persons
that can be sold without exceeding the Maximum Number of Shares; (B) second,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (A), the Registrable Securities as to which registration has
been requested under this Section 2.2 (pro rata in accordance with the number
of shares of Registrable Securities held by each such holder); and (C) third,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (A) and (B), the shares of Common Stock or other securities,
if any, that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; and (D) fourth, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (A), (B) and
(C), the shares of Common Stock, if any, as to which registration has been
requested pursuant to written contractual piggy-back registration rights which
such other stockholders desire to sell and that can be sold without exceeding
the Maximum Number of Shares.
2.2.3 WITHDRAWAL. Any holder of Registrable Securities may elect
to withdraw such holder's request for inclusion of Registrable Securities in
any Piggy-Back Registration by giving written notice to the Company of such
request to withdraw prior to the effectiveness of the Registration Statement.
The Company may also elect to withdraw a registration statement at any time
prior to the effectiveness of the Registration Statement. Notwithstanding any
such withdrawal, the Company shall pay all expenses incurred by the holders of
Registrable Securities in connection with such Piggy-Back Registration as
provided in Section 3.3.
Section 2.3 REGISTRATIONS ON FORM S-3. The holders of
Registrable Securities may at any time and from time to time, without
limitation as to the aggregate number of such requests, request in writing
that the Company register the resale of any or all of such Registrable
Securities on Form S-3, Form F-3 or any similar short-form registration which
may be available at such time ("FORM S-3"); PROVIDED, HOWEVER, that the
Company shall not be obligated to effect such request through an underwritten
offering. Upon receipt of such written request, the Company will promptly give
written notice of the proposed registration to all other holders of
Registrable Securities, and, as soon as practicable thereafter, effect the
registration of all or such portion of such holder's or holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other holder or holders joining in such
request as are specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company; PROVIDED, HOWEVER, that
the Company shall not be obligated to effect any such registration pursuant to
this Section 2.3: (i) if Form S-3 is not available for such offering; or (ii)
if the holders of the Registrable Securities, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at
any aggregate price to the public of less than $500,000. Registrations
effected pursuant to this Section 2.3 shall not be counted as Demand
Registrations effected pursuant to Section 2.1.
6
ARTICLE 3
REGISTRATION PROCEDURES
Section 3.1 FILINGS; INFORMATION. Whenever the Company is
required to effect the registration of any Registrable Securities pursuant to
Article 2, the Company shall use its best efforts to effect the registration
and sale of such Registrable Securities in accordance with the intended
method(s) of distribution thereof as expeditiously as practicable, and in
connection with any such request:
3.1.1 FILING REGISTRATION STATEMENT. The Company shall, as
expeditiously as possible and in any event within sixty (60) days after
receipt of a request for a Demand Registration pursuant to Section 2.1,
prepare and file with the Commission a Registration Statement on any form for
which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of all Registrable
Securities to be registered thereunder in accordance with the intended
method(s) of distribution thereof, and shall use its best efforts to cause
such Registration Statement to become and remain effective for the period
required by Section 3.1.1; PROVIDED, HOWEVER, that the Company shall have the
right to defer any Demand Registration for up to thirty (30) days, and any
Piggy-Back Registration for such period as may be applicable to deferment of
any demand registration to which such Piggy-Back Registration relates, in each
case if the Company shall furnish to the holders a certificate signed by the
Chief Executive Officer of the Company stating that, in the good faith
judgment of the Board of Directors of the Company, it would be materially
detrimental to the Company and its shareholders for such Registration
Statement to be effected at such time; provided further, however, that the
Company shall not have the right to exercise the right set forth in the
immediately preceding proviso more than once in any 365-day period in respect
of a Demand Registration hereunder.
3.1.2 COPIES. The Company shall, prior to filing a Registration
Statement or prospectus, or any amendment or supplement thereto, furnish
without charge to the holders of Registrable Securities included in such
registration, and such holders' legal counsel, copies of such Registration
Statement as proposed to be filed, each amendment and supplement to such
Registration Statement (in each case including all exhibits thereto and
documents incorporated by reference therein), the prospectus included in such
Registration Statement (including each preliminary prospectus), and such other
documents as the holders of Registrable Securities included in such
registration or legal counsel for any such holders may request in order to
facilitate the disposition of the Registrable Securities owned by such
holders.
3.1.3 AMENDMENTS AND SUPPLEMENTS. The Company shall prepare and
file with the Commission such amendments, including post-effective amendments,
and supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement
effective and in compliance with the provisions of the Securities Act until
all Registrable Securities and other securities covered by such Registration
Statement have been disposed of in accordance with the intended method(s) of
distribution set forth in such Registration Statement (which period shall not
exceed the sum of one hundred eighty (180) days plus any period during which
any such disposition is interfered
7
with by any stop order or injunction of the Commission or any governmental
agency or court) or such securities have been withdrawn.
3.1.4 NOTIFICATION. After the filing of a Registration Statement,
the Company shall promptly, and in no event more than two (2) business days
after such filing, notify the holders of Registrable Securities included in
such Registration Statement of such filing, and shall further notify such
holders promptly and confirm such advice in writing in all events within two
(2) business days of the occurrence of any of the following: (i) when such
Registration Statement becomes effective; (ii) when any post-effective
amendment to such Registration Statement becomes effective; (iii) the issuance
or threatened issuance by the Commission of any stop order (and the Company
shall take all actions required to prevent the entry of such stop order or to
remove it if entered); and (iv) any request by the Commission for any
amendment or supplement to such Registration Statement or any prospectus
relating thereto or for additional information or of the occurrence of an
event requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of the
securities covered by such Registration Statement, such prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, and promptly make available to the holders of Registrable
Securities included in such Registration Statement any such supplement or
amendment; except that before filing with the Commission a Registration
Statement or prospectus or any amendment or supplement thereto, including
documents incorporated by reference, the Company shall furnish to the holders
of Registrable Securities included in such Registration Statement and to the
legal counsel for any such holders, copies of all such documents proposed to
be filed sufficiently in advance of filing to provide such holders and legal
counsel with a reasonable opportunity to review such documents and comment
thereon, and the Company shall not file any Registration Statement or
prospectus or amendment or supplement thereto, including documents
incorporated by reference, to which such holders or their legal counsel shall
object.
3.1.5 STATE SECURITIES LAWS COMPLIANCE. The Company shall use its
best efforts to (i) register or qualify the Registrable Securities covered by
the Registration Statement under such securities or "blue sky" laws of such
jurisdictions in the United States as the holders of Registrable Securities
included in such Registration Statement (in light of their intended plan of
distribution) may request and (ii) take such action necessary to cause such
Registrable Securities covered by the Registration Statement to be registered
with or approved by any governmental authority of such jurisdictions as may be
necessary by virtue of the business and operations of the Company and do any
and all other acts and things that may be necessary or advisable to enable the
holders of Registrable Securities included in such Registration Statement to
consummate the disposition of such Registrable Securities in such
jurisdictions; PROVIDED, HOWEVER, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph 3.1.5 or to subject
itself to taxation in any such jurisdiction.
3.1.6 AGREEMENTS FOR DISPOSITION. The Company shall enter into
customary agreements (including, if applicable, an underwriting agreement in
customary form) and take such other actions as are reasonably required in
order to expedite or facilitate the disposition of the Registrable Securities
in accordance with the terms of this Agreement. The representations,
8
warranties and covenants of the Company in any such underwriting agreement
which are made to or for the benefit of any Underwriters, to the extent
applicable, shall also be made to and for the benefit of the holders of
Registrable Securities included in such registration statement. No holder of
Registrable Securities included in such registration statement shall be
required to make any representations or warranties in the underwriting
agreement except, if applicable, with respect to such holder's organization,
good standing, authority, title to Registrable Securities, lack of conflict of
such sale with such holder's material agreements and organizational documents,
and with respect to written information relating to such holder that such
holder has furnished in writing expressly for inclusion in such Registration
Statement.
3.1.7 COOPERATION. The principal executive officer of the Company,
the principal financial officer of the Company, the principal accounting
officer of the Company and all other officers and members of the management of
the Company shall cooperate fully in any offering of Registrable Securities
hereunder, which cooperation shall include, without limitation, the
preparation of the Registration Statement with respect to such offering and
all other offering materials and related documents, and participation in
meetings with Underwriters, attorneys, accountants and potential investors in
connection with such offering.
3.1.8 RECORDS. The Company shall make available for inspection by
the holders of Registrable Securities included in such Registration Statement,
any Underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other professional retained by any
holder of Registrable Securities included in such Registration Statement or
any Underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, as shall be necessary to enable them
to exercise their due diligence responsibility, and cause the Company's
officers, directors and employees to supply all information requested by any
of them in connection with such Registration Statement.
3.1.9 OPINIONS AND COMFORT LETTERS. The Company shall furnish to
each holder of Registrable Securities included in any Registration Statement a
signed counterpart, addressed to such holder, of (i) any opinion of counsel to
the Company delivered to any Underwriter and (ii) any comfort letter from the
Company's independent public accountants delivered to any Underwriter. In the
event no legal opinion is delivered to any Underwriter, the Company shall
furnish to each holder of Registrable Securities included in such Registration
Statement, at any time that such holder elects to use a prospectus, an opinion
of counsel to the Company to the effect that the Registration Statement
containing such prospectus has been declared effective and that no stop order
is in effect.
3.1.10 EARNINGS STATEMENT. The Company shall comply with all
applicable rules and regulations of the Commission and the Securities Act, and
make available to its stockholders, as soon as practicable, an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 thereunder.
3.1.11 LISTING. The Company shall use its best efforts to cause all
Registrable Securities included in any registration to be listed on such
exchanges or otherwise designated for trading in the same manner as similar
securities issued by the Company are then listed or
9
designated or, if no such similar securities are then listed or designated, in
a manner satisfactory to the holders of a majority of the Registrable
Securities included in such registration.
Section 3.2 OBLIGATION TO SUSPEND DISTRIBUTION. Upon receipt of
any notice from the Company of the happening of any event of the kind
described in Section 3.1.4(iv), or, in the case of a resale registration on
Form S-3 pursuant to Section 2.3 hereof, upon any suspension by the Company,
pursuant to a written ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ compliance program adopted by the
Company's Board of Directors, of the ability of all "insiders" covered by such
program to transact in the Company's securities because of the existence of
material non-public information, each holder of Registrable Securities
included in any registration shall immediately discontinue disposition of such
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such holder receives the supplemented or amended
prospectus contemplated by Section 3.1.4(iv) or the restriction on the ability
of "insiders" to transact in the Company's securities is removed, as
applicable, and, if so directed by the Company, each such holder will deliver
to the Company all copies, other than permanent file copies then in such
holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice.
Section 3.3 REGISTRATION EXPENSES. The Company shall bear all
costs and expenses incurred in connection with any Demand Registration
pursuant to Section 2.1, any Piggy-Back Registration pursuant to Section 2.2,
and any registration on Form S-3 effected pursuant to Section 2.3, and all
expenses incurred in performing or complying with its other obligations under
this Agreement, whether or not the Registration Statement becomes effective,
including, without limitation: (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or "blue sky" laws (including fees
and disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities); (iii) printing expenses; (iv) the Company's internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees); (v) the fees and expenses incurred in connection with
the listing of the Registrable Securities as required by Section 3.1.11; (vi)
National Association of Securities Dealers, Inc. fees; (vii) fees and
disbursements of counsel for the Company and fees and expenses for independent
certified public accountants retained by the Company (including the expenses
or costs associated with the delivery of any opinions or comfort letters
requested pursuant to Section 3.1.9)); (viii) the fees and expenses of any
special experts retained by the Company in connection with such registration
and (ix) the fees and expenses of one legal counsel selected by the holders of
a majority-in-interest of the Registrable Securities included in such
registration. The Company shall have no obligation to pay any underwriting
discounts or selling commissions attributable to the Registrable Securities
being sold by the holders thereof, which underwriting discounts or selling
commissions shall be borne by such holders. Additionally, in an underwritten
offering, all selling shareholders and the Company shall bear the expenses of
the Underwriter pro rata in proportion to the respective amount of shares each
is selling in such offering.
Section 3.4 INFORMATION. The holders of Registrable Securities
shall provide such information as may reasonably be requested by the Company,
or the managing Underwriter, if any, in connection with the preparation of any
Registration Statement, including amendments and supplements thereto, in order
to effect the registration of any Registrable Securities under the
10
Securities Act pursuant to Article 2 and in connection with the Company's
obligation to comply with federal and applicable state securities laws.
ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
Section 4.1 INDEMNIFICATION BY THE COMPANY. The Company agrees
to indemnify and hold harmless each Sunwing Stockholder and each other holder
of Registrable Securities, and each of their respective officers, employees,
affiliates, directors, partners, members, attorneys and agents, and each
person, if any, who controls a Sunwing Stockholder and each other holder of
Registrable Securities (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) (each, an "SUNWING INDEMNIFIED PARTY"),
from and against any expenses, losses, judgments, claims, damages or
liabilities, whether joint or several, arising out of or based upon any untrue
statement of a material fact contained in any Registration Statement under
which the sale of such Registrable Securities was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arising out of or based upon any
omission to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, or any violation by the Company
of the Securities Act applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration; and
the Company shall promptly reimburse the Investor Indemnified Party for any
legal and any other expenses reasonably incurred by such Sunwing Indemnified
Party in connection with investigating and defending any such expense, loss,
judgment, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus, final prospectus, or summary prospectus, or any such amendment or
supplement, in reliance upon and in conformity with information furnished to
the Company, in writing, by such selling holder expressly for use therein. The
Company also shall indemnify any Underwriter of the Registrable Securities,
their officers, affiliates, directors, partners, members and agents and each
person who controls such Underwriter on substantially the same basis as that
of the indemnification provided above in this Section 4.1.
Section 4.2 INDEMNIFICATION BY HOLDERS OF REGISTRABLE
SECURITIES. Each selling holder of Registrable Securities will, in the event
that any registration is being effected under the Securities Act pursuant to
this Agreement of any Registrable Securities held by such selling holder,
indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any), and each other person, if any, who controls
such selling holder or such underwriter within the meaning of the Securities
Act, against any losses, claims, judgments, damages or liabilities, whether
joint or several, insofar as such losses, claims, judgments, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement of a material fact contained in any Registration Statement
under which the sale of such Registrable Securities was registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained in the Registration Statement, or any amendment or
11
supplement to the Registration Statement, or arise out of or are based upon
any omission to state a material fact required to be stated therein or
necessary to make the statement therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information
furnished in writing to the Company by such selling holder expressly for use
therein, and shall reimburse the Company, its directors and officers, and each
such controlling person for any legal or other expenses reasonably incurred by
any of them in connection with investigation or defending any such loss,
claim, damage, liability or action. Each selling holder's indemnification
obligations hereunder shall be several and not joint and shall be limited to
the amount of any net proceeds actually received by such selling holder.
Section 4.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Promptly
after receipt by any person of any notice of any loss, claim, damage or
liability or any action in respect of which indemnity may be sought pursuant
to Section 4.1 or 4.2, such person (the "INDEMNIFIED PARTY") shall, if a claim
in respect thereof is to be made against any other person for indemnification
hereunder, notify such other person (the "INDEMNIFYING PARTY") in writing of
the loss, claim, judgment, damage, liability or action; PROVIDED, HOWEVER,
that the failure by the Indemnified Party to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability which the
Indemnifying Party may have to such Indemnified Party hereunder, except and
solely to the extent the Indemnifying Party is actually prejudiced by such
failure. If the Indemnified Party is seeking indemnification with respect to
any claim or action brought against the Indemnified Party, then the
Indemnifying Party shall be entitled to participate in such claim or action,
and, to the extent that it wishes, jointly with all other Indemnifying
Parties, to assume the defense thereof with counsel satisfactory to the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party for any legal
or other expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof other than reasonable costs of investigation;
PROVIDED, HOWEVER, that in any action in which both the Indemnified Party and
the Indemnifying Party are named as defendants, the Indemnified Party shall
have the right to employ separate counsel (but no more than one such separate
counsel) to represent the Indemnified Party and its controlling persons who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Indemnified Party against the Indemnifying
Party, with the fees and expenses of such counsel to be paid by such
Indemnifying Party if, based upon the written opinion of counsel of such
Indemnified Party, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, consent to entry of judgment or effect any settlement of any claim or
pending or threatened proceeding in respect of which the Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such judgment or settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding.
Section 4.4 CONTRIBUTION.
4.4.1 If the indemnification provided for in the foregoing
Sections 4.1, 4.2 and 4.3 is unavailable to any Indemnified Party in respect
of any loss, claim, damage, liability or action referred to herein, then each
such Indemnifying Party, in lieu of indemnifying such
12
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage, liability or action
in such proportion as is appropriate to reflect the relative fault of the
Indemnified Parties and the Indemnifying Parties in connection with the
actions or omissions which resulted in such loss, claim, damage, liability or
action, as well as any other relevant equitable considerations. The relative
fault of any Indemnified Party and any Indemnifying Party shall be determined
by reference to, among other things, whether the untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by such Indemnified Party or such Indemnifying Party and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such statement or omission.
4.4.2 The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding Section 4.4.1. The amount paid or payable by an Indemnified Party as
a result of any loss, claim, damage, liability or action referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 4.4, no holder
of Registrable Securities shall be required to contribute any amount in excess
of the dollar amount of the net proceeds (after payment of any underwriting
fees, discounts, commissions or taxes) actually received by such holder from
the sale of Registrable Securities which gave rise to such contribution
obligation. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
ARTICLE 5
UNDERWRITING AND DISTRIBUTION
Section 5.1 RULE 144. The Company covenants that it shall file
any reports required to be filed by it under the Securities Act and the
Exchange Act and shall take such further action as the holders of Registrable
Securities may reasonably request, all to the extent required from time to
time to enable such holders to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rules may be amended
from time to time, or any similar Rule or regulation hereafter adopted by the
Commission.
Section 5.2 RESTRICTIONS ON SALE BY THE COMPANY AND OTHERS. The
Company agrees: (i) not to effect any public sale or distribution of any
securities similar to those being registered in accordance with Section 2.1,
or any securities convertible into or exchangeable or exercisable for such
securities, from the date the Company receives the written demand for any
Demand Registration (except as part of such Demand Registration to the extent
permitted by Section 2.1.4) until permitted under any "lock-up" agreement with
the Underwriter, but not more than ninety (90) days from the effective date of
any registration statement filed pursuant to Section 2.1; and (ii) that any
agreement entered into after the date hereof pursuant to which the Company
issues or agrees to issue any privately placed securities shall contain a
provision under
13
which holders of such securities agree not to effect any sale or distribution
of any such securities during the periods described in (i) above, in each case
including a sale pursuant to Rule 144 under the Securities Act (except as part
of any such registration, if permitted); PROVIDED, HOWEVER, that the
provisions of this Section 5.2 shall not prevent the conversion or exchange of
any securities pursuant to their terms into or for other securities and shall
not prevent the issuance of securities by the Company under any employee
benefit, stock option or stock subscription plans.
ARTICLE 6
MISCELLANEOUS
Section 6.1 NO INCONSISTENT AGREEMENTS. The Company represents
and warrants that no person has any right to require the Company to register
any shares of the Company's capital stock for sale or to include shares of the
Company's capital stock in any registration filed by the Company for the sale
of shares of capital stock for its own account or for the account of any other
person, other than such rights specified in that certain (a) Registration
Rights Agreement by and among the Company, ▇▇. ▇▇▇▇▇ Mu, Dr. ▇▇▇▇ ▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇ Guisheng, and Mr. Ma Xiao, dated as of __________, 2004
and (b) Unit Purchase Option granted by the Company to Broadband Capital
Management LLC in connection with the Company's initial public offering
(together, the "PREVIOUSLY GRANTED RIGHTS"), which Previously Granted Rights
are not inconsistent with the rights granted hereunder. The Company shall not
(i) enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Sunwing Stockholders in this
Agreement or (ii) grant any additional registration rights to any person or
with respect to any securities which are not Registrable Securities, or modify
any existing agreement to provide for registration rights, in each case, which
are prior in right to or inconsistent with the rights granted in this
Agreement.
Section 6.2 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement and the rights, duties and obligations of the Company hereunder may
not be assigned or delegated by the Company in whole or in part. This
Agreement and the rights, duties and obligations of the holders of Registrable
Securities hereunder may be freely assigned or delegated by such holder of
Registrable Securities in conjunction with and to the extent of any transfer
of Registrable Securities by any such holder. This Agreement and the
provisions hereof shall be binding upon and shall inure to the benefit of each
of the parties and their respective successors and the permitted assigns of
the Investor or holder of Registrable Securities or of any assignee of the
Investor or holder of Registrable Securities. This Agreement is not intended
to confer any rights or benefits on any persons that are not party hereto
other than as expressly set forth in Article 4 and this Section 6.2.
Section 6.3 NOTICES. All notices, demands, requests, consents,
approvals or other communications (collectively, "NOTICES") required or
permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of
14
service or transmission if personally served or transmitted by telegram, telex
or facsimile; provided, that if such service or transmission is not on a
business day or is after normal business hours, then such notice shall be
deemed given on the next business day. Notice otherwise sent as provided
herein shall be deemed given on the next business day following timely
delivery of such notice to a reputable air courier service with an order for
next-day delivery.
To the Company:
China Ivanhoe Energy Ltd.
▇▇▇▇▇ ▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Sunwing, to:
Sunwing Holding Corporation
The World Trade Centre
▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: Corporate Secretary
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Section 6.4 SEVERABILITY. This Agreement shall be deemed
severable, and the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this Agreement or of
any other term or provision hereof. Furthermore, in lieu of any such invalid
or unenforceable term or provision, the parties hereto intend that there shall
be added as a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be valid and
enforceable. Section 6.5 COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument.
Section 6.6 ENTIRE AGREEMENT. This Agreement (including all
agreements entered into pursuant hereto and all certificates and instruments
delivered pursuant hereto and thereto) constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements, representations, understandings, negotiations and
discussions between the parties, whether oral or written.
Section 6.7 MODIFICATIONS AND AMENDMENTS. No amendment,
modification or termination of this Agreement shall be binding upon any party
unless executed in writing by such party.
15
Section 6.8 TITLES AND HEADINGS. Titles and headings of
sections of this Agreement are for convenience only and shall not affect the
construction of any provision of this Agreement.
Section 6.9 WAIVERS AND EXTENSIONS. Any party to this Agreement
may waive any right, breach or default which such party has the right to
waive, provided that such waiver will not be effective against the waiving
party unless it is in writing, is signed by such party, and specifically
refers to this Agreement. Waivers may be made in advance or after the right
waived has arisen or the breach or default waived has occurred. Any waiver may
be conditional. No waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding breach
thereof nor of any other agreement or provision herein contained. No waiver or
extension of time for performance of any obligations or acts shall be deemed a
waiver or extension of the time for performance of any other obligations or
acts.
Section 6.10 REMEDIES CUMULATIVE. In the event that the Company
fails to observe or perform any covenant or agreement to be observed or
performed under this Agreement, the Investor or any other holder of
Registrable Securities may proceed to protect and enforce its rights by suit
in equity or action at law, whether for specific performance of any term
contained in this Agreement or for an injunction against the breach of any
such term or in aid of the exercise of any power granted in this Agreement or
to enforce any other legal or equitable right, or to take any one or more of
such actions, without being required to post a bond. None of the rights,
powers or remedies conferred under this Agreement shall be mutually exclusive,
and each such right, power or remedy shall be cumulative and in addition to
any other right, power or remedy, whether conferred by this Agreement or now
or hereafter available at law, in equity, by statute or otherwise.
Section 6.11 GOVERNING LAW. The validity, interpretation, and
performance of this Agreement shall be governed in all respects by the laws of
the State of New York, without giving effect to conflict of laws. The parties
hereby agree that any action, proceeding or claim against it arising out of or
relating in any way to this Agreement shall be brought and enforced in the
courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
Section 6.12 WAIVER OF TRIAL BY JURY. Each party hereby
irrevocably and unconditionally waives the right to a trial by jury in any
action, suit, counterclaim or other proceeding (whether based on contract,
tort or otherwise) arising out of, connected with or relating to this
Agreement, the transactions contemplated hereby, or the actions of the
Investor in the negotiation, administration, performance or enforcement
hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be executed and delivered by their duly authorized
representatives as of the date first written above.
CHINA IVANHOE ENERGY LTD.
By: _______________________________
Name:
Title:
SUNWING HOLDING CORPORATION
By: _______________________________
Name:
Title:
17
EXHIBIT H
---------
[FORM OF AMENDMENT TO FOUNDERS
REGISTRATION RIGHTS AGREEMENT]
AMENDMENT NO. 1 TO
REGISTRATION RIGHTS AGREEMENT
AMENDMENT NO. 1 dated as of ___________, 2006 (this "AMENDMENT") to
REGISTRATION RIGHTS AGREEMENT, dated as of __________, 2004 (the "REGISTRATION
RIGHTS AGREEMENT"), by and among China Ivanhoe Energy Ltd., a Delaware
corporation (formerly known as China Mineral Acquisition Corporation, a
Delaware corporation, the "COMPANY"), ▇▇. ▇▇▇▇▇ Mu, Dr. ▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇
▇▇▇▇, ▇▇. ▇▇▇ Guisheng and Mr. Ma Ziao (collectively, the "INITIAL
INVESTORS").
WHEREAS, the Company is a party to a Stock Purchase Agreement, dated
as of __________, 2006, by and among Ivanhoe Energy Inc., a Yukon, Canada
corporation (the "Parent"), Sunwing Holding Corporation, a Barbados company
and a wholly-owned subsidiary of the Parent ("SUNWING"), Sunwing Energy Ltd.,
a Bermuda corporation and a wholly-owned subsidiary of Sunwing, and the
Company (the "PURCHASE AGREEMENT");
WHEREAS, the Initial Investors own shares of Common Stock of the
Company;
WHEREAS, the consummation of the transactions contemplated by the
Purchase Agreement will inure to the benefit of the Initial Investors; and
WHEREAS, as a condition to the obligation of Sunwing to enter into
the Purchase Agreement, the Company and the Initial Investors have agreed to
amend the Registration Rights Agreement to effect the changes provided for
herein.
NOW, THEREFORE, in consideration of the mutual agreements herein set
forth, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. Capitalized terms used and not otherwise
defined in this Amendment shall have the respective meanings given them in the
Registration Rights Agreement.
2. AMENDMENTS.
(a) Section 2.1.4 of the Registration Rights Agreement
is hereby amended and restated in its entirety as follows:
"2.1. REDUCTION OF OFFERING. If the managing
Underwriter or Underwriters for a Demand Registration that is to be an
underwritten offering advises the Company and the Demanding Holders in writing
that the dollar amount or number of shares of Registrable Securities which the
Demanding Holders desire to sell, taken
together with all other shares of Common Stock or other securities, if any,
which the Company desires to sell and the shares of Common Stock, if any, as
to which registration has been requested pursuant to written contractual
piggy-back registration rights held by other shareholders of the Company who
desire to sell, exceeds the maximum dollar amount or maximum number of shares
that can be sold in such offering without adversely affecting the proposed
offering price, the timing, the distribution method, or the probability of
success of such offering (such maximum dollar amount or maximum number of
shares, as applicable, the "MAXIMUM NUMBER OF SHARES"), then the Company shall
include in such registration: (i) first, the Registrable Securities as to
which the Demand Registration has been requested by the Demanding Holders (pro
rata in accordance with the number of shares of Registrable Securities which
each Demanding Holder has requested be included in such registration,
regardless of the number of shares of Registrable Securities held by each
Demanding Holder) that can be sold without exceeding the Maximum Number of
Shares; (ii) second, to the extent that the Maximum Number of Shares has not
been reached under the foregoing clause (i), the shares of Common Stock for
the account of other persons that the Company is obligated to register
pursuant to written contractual arrangements with such persons and that can be
sold without exceeding the Maximum Number of Shares; (iii) third, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the shares of Common Stock or other securities
that the Company desires to sell that can be sold without exceeding the
Maximum Number of Shares; and (v) fourth, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clauses (i), (ii),
and (iii), the shares of Common Stock that other stockholders desire to sell
that can be sold without exceeding the Maximum Number of Shares."
(b) Section 2.2.2(i) of the Agreement is hereby amended
and restated in its entirety as follows:
"(i) If the registration is undertaken for the
Company's account: (A) first, the shares of Common Stock or other securities
that the Company desires to sell that can be sold without exceeding the
Maximum Number of Shares; (B) second, to the extent that the Maximum Number of
Shares has not been reached under the foregoing clause (A), (x) the
Registrable Securities as to which registration has been requested under this
Section 2.2 (PROVIDED, HOWEVER, in no event shall Registrable Securities under
this clause (x) constitute less than 25% of the number of shares included in
such registration) and (y) the shares of Common Stock, if any, as to which
registration has been requested pursuant to written contractual piggy-back
registration rights which such other shareholders desire to sell that can be
sold without exceeding the Maximum Number of Shares (pro rata, in the case of
clauses (x) and (y), in accordance with the number of shares of Common Stock
which each such person referred to in clauses (x) and (y) has actually
requested to be included in such registration, regardless of the number of
shares of Common Stock with respect to which such persons have the right to
request such inclusion); and"
3. GOVERNING LAW. The validity, interpretation, and performance
of this Amendment shall be governed in all respects by the laws of the State
of New York,
2
without giving effect to conflict of laws. The parties hereby agree that any
action, proceeding or claim against it arising out of or relating in any way
to this Amendment shall be brought and enforced in the courts of the State of
New York or the United States District Court for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. Each of the parties hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum.
4. THIRD PARTY BENEFICIARY. This Amendment is expressly
intended to inure to the benefit of Sunwing, its successors, assigns and
transferees, which such persons may enforce the provisions of this Amendment
as if a party hereto.
5. EXECUTION IN COUNTERPARTS. This Amendment may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument.
6. REGISTRATION RIGHTS AGREEMENT REMAINS IN EFFECT. Except as
expressly amended hereby, the Registration Rights Agreement shall remain in
full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first written above.
CHINA IVANHOE ENERGY LTD.
By:________________________________
Name:
Title:
INITIAL INVESTORS:
___________________________________
▇▇. ▇▇▇▇▇ Mu
___________________________________
Dr. ▇▇▇▇ ▇▇▇▇
___________________________________
▇▇. ▇▇▇▇▇▇ ▇▇▇▇
___________________________________
▇▇. ▇▇▇ Guisheng
___________________________________
Mr. Ma Xiao
4