EXHIBIT 10.1
OPTION AGREEMENT
EXHIBIT 10.1
HIGHLAND MINING INC.
OPTION AGREEMENT
DATED 23 December 2004
TABLE OF CONTENTS
Page
1. Definitions.........................................................2
2. Grant of First Option...............................................3
3. Exercise of First Option............................................4
4. Exercise Price for First Option.....................................4
5. First Additional Investment by Continental..........................4
6. First Option Share Pledge...........................................5
7. Grant of Second Option..............................................6
8. Exercise of Second Option...........................................6
9. Exercise Price for Second Option....................................6
10. Second Additional Investment by Continental.........................6
11. Second Option Share Pledge..........................................7
12. Representations and Warranties......................................7
13. Force Majeure.......................................................11
14. Obligations and Liability of WZ and HDI.............................11
15. Miscellaneous.......................................................12
Signatures
Exhibit A Form of Shareholders Agreement
Exhibit B Description of Property and Exploration Permit
Exhibit C Form of Highland Articles
HIGHLAND MINING INC.
OPTION AGREEMENT
This OPTION AGREEMENT is made and entered into as of December 23, 2004 by and
among:
(1) ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, a citizen of China (Hong Kong) with an address at ▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, Fax: (▇▇▇) ▇▇▇▇-▇▇▇▇ ("LYM");
(2) ▇▇▇▇▇ ▇▇▇ Ming, a citizen of China (Hong Kong) with an address at ▇▇▇▇ ▇▇,
▇/▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ Wo Ferry Pier Road, Lantau, Hong Kong, Fax: (852)
▇▇▇▇-▇▇▇▇ ("LCM");
(3) ▇▇▇▇ ▇▇▇▇▇, a citizen of China with an address at ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇. ▇▇
▇▇ ▇▇▇ Men Jiao Dai Dong Road, Beijing City, People's Republic of China, Fax:
(▇▇ ▇▇) ▇▇▇▇ ▇▇▇▇ ("CY"); -
(4) China NetTV Holdings Inc. , a Delaware corporation with offices at Suite
▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Fax: (1 604)
▇▇▇-▇▇▇▇ ("CTVH");
(5) Highland Mining Inc., a British Virgin Islands company with offices at
TrustNet ▇▇▇▇▇▇▇▇, Road Town, Tortola, British Virgin Islands; Fax: (852) 5242
0544 (the "Company");
(6) Tibet Tianyuan Minerals Exploration Ltd., a wholly foreign-owned enterprise
incorporated and existing under the laws of the People's Republic of China with
a registered address at ▇▇▇, ▇▇▇▇▇▇▇ Economic and Trade Tower, 75 ▇▇▇ ▇▇▇ West
Road, Lhasa, Tibet, People's Republic of China, Fax: (▇▇ ▇▇▇) ▇▇▇▇ ▇▇▇
("Tianyuan"); -
(7) Continental Minerals Corporation, a British Columbia company with offices at
Suite 1020 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇, Fax: (▇ ▇▇▇) ▇▇▇-▇▇▇▇ ("Continental");
(8) ▇▇▇▇ ▇▇▇, a citizen the United States of America with an address at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America,
Fax: (▇▇ ▇▇) ▇▇▇▇ ▇▇▇▇ ("WZ"); and
(9) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Inc., a British Columbia company with offices at Suite 1020
- ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, Fax: (1
604) ▇▇▇-▇▇▇▇("HDI").
For the purpose of this Agreement, LYM, LCM and CY may be referred to
collectively as "ABC" and ABC, CTVH and Continental may be referred to
collectively as "Investors".
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R E C I T A L S
A. The parties, together with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Inc., have entered into a
Preliminary Option Agreement dated November 9, 2004 (the "Preliminary
Agreement"), which, among other things, provides that Continental shall have the
right to purchase certain shares of the Company;
B. Such agreement provides that ABC and the Company shall, within seventy-five
(75) days of the date of signing the agreement, negotiate and enter into an
option agreement detailing the terms upon which Continental may purchase shares
in the Company from ABC and the Company, and this Agreement is intended to
represent such option agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Definitions.
1.1 Certain Defined Terms. As used in this Agreement, the following terms shall
have the following respective meanings:
"Affiliate" means in relation to an entity, any individual, partnership,
corporation, trust or other entity that directly or indirectly controls, or is
controlled by, or is under common control with, such entity, where control means
the direct or indirect ownership of more than 50% of the outstanding shares or
other ownership interests having ordinary voting power to elect directors or the
equivalent.
"Board" means the Board of Directors of the Company.
"Business Day" means any day (excluding Saturdays, Sundays and public holidays
in either Vancouver, Canada or the PRC) on which banks are generally open for
business in Vancouver, Canada and the PRC.
"GAAP" means Canadian generally accepted accounting principles consistently
applied.
"CTVH" means China NetTV Holdings Inc., a Delaware corporation with an office at
Suite ▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
"CTVH Agreement" means the share exchange agreement between ABC and CTVH dated
December 23, 2004, pursuant to the terms of which CTVH has the right to acquire
from ABC Ordinary Shares representing 50% of the outstanding share capital of
the Company.
"Exploration Permit" means the exploration permit issued from time to time by
the relevant authorities evidencing the Exploration Rights. A copy of the
currently valid Exploration Permit is attached as part of Exhibit B.
"Exploration Rights" means all of the exploration rights in relation to the
Property.
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"First Option" shall have the meaning provided in Section 2.
"First Option Shares" shall have the meaning provided in Section 2.
"Highland Articles" means the Memorandum of Association and Articles of
Association of Highland Mining Inc. in the form attached hereto as Exhibit C.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any entity exercising executive, legislative,
judicial regulatory or administrative functions of or pertaining to any
government with competent jurisdiction.
"Group Company" means the Company, Tianyuan or a direct or indirect subsidiary
of either of them.
"Ordinary Shares" means the Ordinary Shares of the Company, nominal value
US$1.00 each share, which shall be the only class of shares.
"PRC" means the People's Republic of China.
"Property" means the Xietongmen Copper Property, which is located near ▇▇▇▇▇
Village, Xietongmen County, Rikaze area, Tibet Autonomous Region, the People's
Republic of China and more particularly described in Exhibit B.
"RMB" shall mean Renminbi, the lawful currency of the People's Republic of
China.
"Second Option" shall have the meaning provided in Section 7.
"Second Option Shares" shall have the meaning provided in Section 7.
"Transaction Agreements" shall mean this Agreement and the Shareholders
Agreement, collectively.
"US$" means the legal currency of the United States.
1.2 Rules of Construction. Words such as "herein," "hereinafter," "hereto,"
"hereby" and "hereunder," when used with reference to this Agreement, refer to
this Agreement as a whole, unless the context otherwise requires. The words
"include," "includes," "included" and "including" shall be construed as if
followed by the phrase "without being limited to." A reference to a particular
gender means a reference to any gender.
1.3 Aggregation of Shares. All shares of the Company held or acquired by any
Affiliate of any person or entity shall be aggregated together for the purpose
of determining the availability of any rights of such person or entity under
this Agreement.
2. Grant of First Option. ABC hereby grants Continental an option (the "First
Option") to purchase from ABC that number of fully-paid, non-assessable Ordinary
Shares that represent fifty percent (50%) of the issued share capital of the
Company, on an as-converted basis, at the time of exercise (such Ordinary
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Shares the "First Option Shares"). As used in this Agreement, the phrase "on an
as-converted basis" means assuming exercise or conversion of any preferred
shares, outstanding options, warrants, or other convertible securities. After
the full exercise of the First Option by Continental, CTVH shall own 50% of the
issued share capital of the Company, while Continental shall own 50% of the
issued share capital of the Company.
3. Exercise of First Option.
3.1 Prior to Continental's exercise of the First Option, the Company shall adopt
the Highland Articles, by all necessary corporate action of its Board and ABC.
3.2 Continental may exercise the First Option at any time prior to January 24,
2005, by giving written notice to ABC stating its election to exercise the First
Option. Within ten (10) Business Days of ABC's receipt of such notice, ABC shall
take all actions necessary (including without limitation, the execution of
instruments of transfer and notification to the Company's registered agent) in
order to transfer the First Option Shares to Continental and to update the
Company's share register to reflect the transfer of the First Option Shares to
Continental. A copy of the updated share register and the file-stamped Highland
Articles shall be delivered to Continental forthwith.
3.3 Upon exercise of the First Option, the Company and Investors shall execute a
Shareholders Agreement in the form attached hereto as Exhibit A (the
"Shareholders Agreement").
4. Exercise Price for First Option. The exercise price for the First Option
shall be:
(i) US$1,200,000, which Continental shall pay to ABC within five (5) Business
Days after the completion of the transfer of the First Option Shares to
Continental (evidenced by the delivery of an updated share register), via wire
transfer to a single account specified to Continental by ABC; and
(ii) US$800,000, which (subject to Section 6.2) Continental shall pay to ABC
within one (1) year after the completion of the transfer of the First Option
Shares to Continental, via wire transfer to a single account specified to
Continental by ABC.
If Continental does not pay the amount provided in subclause (i) and (ii) above
in accordance with the time requirement, this Agreement and the Shareholders
Agreement shall terminate and Continental shall promptly transfer back to ABC
the shares purchased pursuant to the First Option and ABC shall release
Continental from the share pledge granted under Section 6 of this Agreement.
5.First Additional Investment by Continental.
5.1 Continental may, at its absolute discretion and option, from time to time
between the date of this Agreement and November 10, 2006 (such period the "First
Expenditure Period") invest up to US$5,000,000 into the Company to provide
working capital for the Company and Tianyuan and to fund exploration activities
in relation to the Property (the "First Expenditure").
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5.2 If Continental obtains additional share capital in the Company as a result
of the First Expenditure, the then other shareholders of the Company shall
collectively be entitled to subscribe, at a price equal to the nominal value of
those Ordinary Shares for that number of Ordinary Shares as would permit the
other shareholders of the Company to maintain their then current percentage of
the issued share capital of the Company, which shall be at fifty percent (50%).
Continental undertakes to structure its investment in the Company so such
investment involves issuance to Continental and the other shareholders during
the First Expenditure Period of as few Ordinary Shares as possible, and in any
event no more than 10,000 Ordinary Shares without the prior approval of CTVH.
The Company shall allot and issue any such shares to the subscribing shareholder
within ten (10) Business Days after the receipt of the subscription monies by
the Company.
5.3 Subject to extension as provided in Section 5.4, payment for the First
Expenditure shall be in accordance with the following time schedule:
(i) the first US$3,000,000 no later than November 10, 2005; and
(ii) the remaining US$2,000,000 no later than November 10, 2006.
5.4 Apart from the funds needed to run the Company, the Company agrees to invest
into Tianyuan all of the First Expenditure. Tianyuan will use the funds the
Company invests solely for the exploration and development of the Property and
for running Tianyuan. If the exploration and development work is delayed for
reasons not attributable to Continental, Continental may request an extension of
the investment time schedule set out in Section 5.3 above as well as an equal
extension of the expiry date of the First Expenditure Period and the other
parties hereto shall not unreasonably refuse such request.
6. First Option Share Pledge.
6.1 Continental shall, upon receipt of the First Option Shares, pledge such
shares to ABC. Notwithstanding such pledge, Continental shall retain full
beneficial ownership of the First Option Shares, including, without limitation,
the right to vote such shares and to hold such shares for all purposes under the
Shareholders Agreement. Continental shall sign all documents in relation to such
pledge at the same time as it exercises the First Option.
6.2 On the earlier of (i) ABC's notice to Continental following the failure by
Continental to timely fulfill any of the payment obligations contained in
Sections 3 and 5 of this Agreement, or (ii) the date that Continental provides
notice to ABC that it no longer wishes to participate in the Property,
Continental shall within three (3) Business Days thereafter, transfer to ABC all
First Option Shares it holds for a total consideration of US$1.00 (the "First
Pledge Transfer"). Following such transfer, Continental shall only be obligated
to invest in the Company an amount equal to the costs Tianyuan has actually
incurred in the exploration and development of the Property prior to the date of
the First Pledge Transfer. Continental shall have no liability to make any other
additional investments into the Company and shall be released from further
liabilities under this Agreement, to the other parties to this Agreement, or in
relation to the Property. A cost shall be considered "actually incurred" for the
purposes of this Section 6.2 if Tianyuan has received the service or been
delivered the goods to which the cost relates prior to the date of the First
Pledge Transfer.
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6.3 Upon fulfillment of its payment obligations under Sections 3 and 5, the
First Option Shares held by Continental shall be released from the share pledge
granted in Section 6.1, and ABC shall, within three (3) Business Days
thereafter, execute any documents reasonably requested by Continental to
evidence such release.
7. Grant of Second Option. The Company hereby grants Continental an option (the
"Second Option") to subscribe for issuance by the Company that number of
fully-paid, non-assessable Ordinary Shares, such that following issuance of such
shares Continental shall own sixty percent (60%) of the issued share capital of
Company, on an as-converted basis, at the time of exercise (such Ordinary Shares
the "Second Option Shares"). After the full exercise of the Second Option by
Continental, CTVH shall own 40% of the issued share capital of the Company,
while Continental shall own 60% of the issued share capital of the Company.
8. Exercise of Second Option. For a period of twenty-four (24) months following
the date of this Agreement, Continental may exercise the Second Option by giving
(i) one month's prior written notice to the Company and the then other
shareholders of the Company, where notice of such exercise is given no later
than September 10, 2006, or (ii) two months' prior written notice to the Company
and the then other shareholders of the Company, where such notice is given after
September 10, 2006 and no later than November 10, 2006. Within ten (10) Business
Days of the Company's receipt of such notice and payment of the exercise price
in accordance with Section 9, the Company shall, and the Investors shall procure
that the directors designated by each shall, take all actions necessary
(including without limitation, passing relevant Board or shareholder
resolutions, increasing the number of authorized Ordinary Shares (if required),
and notifying the Company's registered agent) in order to allot and issue the
Second Option Shares to Continental and to update the Company's share register
to reflect the issuance of the Second Option Shares to Continental. A copy of
the updated share register shall be delivered to Continental forthwith.
9.Exercise Price for Second Option. The exercise price for the Second Option
shall be the nominal value of the Second Option Shares, and such amount shall be
paid to the Company via wire transfer to an account specified to Continental by
the Company.
10. Second Additional Investment by Continental.
10.1 Following its exercise of the Second Option, Continental may, at its
absolute discretion and option, from time to time within a timeframe determined
by Continental, but in any case no later than 365 days after expiry of the First
Expenditure Period (the "Second Expenditure Period") invest up to an additional
US$3,000,000, less the exercise price Continental has paid to obtain the Second
Option Shares, in the Company to provide working capital for the Company and
Tianyuan and to fund exploration activities in relation to the Property (the
"Second Expenditure").
10.2 If Continental obtains additional share capital in the Company as a result
of the Second Expenditure, the then other shareholders of the Company shall
collectively be entitled to subscribe, at a price equal to the nominal value of
those Ordinary Shares, for that number of Ordinary Shares as would permit the
other shareholders of the Company to maintain their then current percentage of
the issued share capital of the Company, which shall be at exceed forty percent
(40%). Continental undertakes to structure its investment in the Company so such
investment involves issuance to Continental and the other
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shareholders during the Second Expenditure Period of as few Ordinary Shares as
possible, and in any event no more than 10,000 Ordinary Shares without the prior
approval of CTVH. The Company shall allot and issue any such shares to the
subscribing shareholder within ten (10) Business Days after the receipt of the
subscription monies by the Company.
10.3 Subject to extension as provided in Section 10.4, payment for the Second
Expenditure shall be made prior to the expiration of the Second Expenditure
Period.
10.4 Apart from the funds needed to run the Company, the Company agrees to
invest into Tianyuan all of the Second Expenditure. Tianyuan will use the funds
the Company invests solely for the exploration and development of the Property
and for running Tianyuan. If the exploration and development work is delayed for
reasons not attributable to Continental, Continental may request an extension of
the investment time schedule set out in Section 10.3 above as well as an equal
extension of the expiry date of the Second Expenditure Period and the other
parties hereto shall not unreasonably refuse such request.
11. Second Option Share Pledge.
11.1 Continental shall, upon receipt of the Second Option Shares, pledge such
shares to ABC. Notwithstanding such pledge, Continental shall retain full
beneficial ownership of the Second Option Shares, including without limitation
the right to vote such shares and to hold such shares for all purposes under the
Shareholders Agreement. Continental shall sign all documents in relation to such
pledge at the same time as it exercises the Second Option.
11.2 On the earlier of (i) ABC's notice to Continental following the failure by
Continental to invest the Second Expenditure prior to the expiration of the
Second Expenditure Period (as may be extended pursuant to Section 10.4), or (ii)
the date that Continental provides notice to ABC that it will not be investing
the Second Expenditure, Continental shall within three (3) Business Days
thereafter, transfer to ABC all Second Option Shares it holds for a total
consideration of US$1.00 (the "Second Pledge Transfer"). Following such
transfer, Continental shall only be obligated to invest in the Company an amount
equal to the costs Tianyuan has actually incurred in the exploration and
development of the Property prior to the date of the Second Pledge Transfer.
Continental shall have no liability to make any other additional investments
into the Company and shall be released from further liabilities under this
Agreement, to the other parties to this Agreement, or in relation to the
Property. A cost shall be considered "actually incurred" for the purposes of
this Section 11.2 if Tianyuan has received the service or been delivered the
goods to which the cost relates prior to the date of the First Pledge Transfer.
11.3 Upon payment of the Second Expenditure, the Second Option Shares held by
Continental shall be released from the share pledge granted in Section 11.1, and
ABC shall, within three (3) Business Days thereafter, execute any documents
reasonably requested by Continental to evidence such release.
12. Representations and Warranties.
The Company, ABC, and WZ ("the Warrantors") hereby jointly and severally
represent and warrant to Continental that each of the statements in this Section
12 is true and correct as of the date hereof and, where appropriate, as of the
date of Continental's exercise of the First Option. In
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this Agreement, any reference to a party's "knowledge" means such party's actual
knowledge after due and diligent inquiries of officers, directors and other
employees of such party reasonably believed to have knowledge of the matter in
question.
12.1 Each of the Company and Tianyuan is a company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.
12.2 Each Warrantor has full power and authority to carry on its business and to
enter into this Agreement and any agreement or instrument referred to or
contemplated by this Agreement.
12.3 Neither the execution and delivery of this Agreement, nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated conflict with, result in the breach of or
accelerate the performance required by, any agreement to which any Warrantor is
a party.
12.4 The execution and delivery of this Agreement and the agreements
contemplated hereby by each Warrantor will not violate or result in the breach
of the laws of any jurisdiction applicable or pertaining to such Warrantor or
(where the Warrantor is a body corporate) of its constituting documents.
12.5 This Agreement constitutes a legal, valid and binding obligation of each of
Warrantors.
12.6 All returns, registrations, filings and other documents required to be
delivered by the Company and Tianyuan to the relevant government authorities
have been properly prepared and delivered.
12.7 To the best of the Warrantors' knowledge, neither of the Company nor
Tianyuan have breached any law of the jurisdiction where it is incorporated or
has citizenship, as the case may be.
12.8 No order has been made, petition presented or resolution passed for the
winding-up or bankruptcy of the Company or Tianyuan or for the appointment of a
provisional liquidator to the Company or Tianyuan and no administration order
has been made in respect of the Company or Tainyuan.
12.9 To the best of the Warrantors' knowledge, no receiver and/or manager has
been appointed for the whole or part of the Company's or Tianyuan's 'business or
assets.
12.10 To the best of the Warrantors' knowledge, there is not and has not been
any governmental or other investigation, enquiry or disciplinary proceeding
concerning the Company or Tianyuan and none is pending or threatened. No fact or
circumstance exists which might give rise to an investigation, enquiry or
proceeding of that type.
12.11 To the best of the Warrantors' knowledge, no civil, criminal, arbitration,
administrative or other proceeding is pending or threatened by or against the
Company or Tianyuan or a person for whose acts or defaults the Company or
Tianyuan may be vicariously liable.
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12.12 To the best of the Warrantors' knowledge, no fact or circumstance exists
that might give rise to a civil, criminal, arbitration, administrative or other
proceeding involving the Company or Tianyuan or a person for whose acts or
defaults the Company or Tianyuan may be vicariously liable.
12.13 To the best of the Warrantors' knowledge, there is no outstanding
judgment, order, decree, arbitral award or decision of a court, tribunal,
arbitrator or governmental agency against any the Company or Tianyuan or a
person for whose acts or defaults the Company or Tianyuan may be vicariously
liable.
12.14 Tianyuan has lawfully obtained the Exploration Rights, the Exploration
Permit and the mineral data and other geological information related to the
Property, and the Exploration Rights, the Exploration Permit, and such mineral
data and other geological information are not subject to any dispute or any
third party claim or interest. The Exploration Permit constitutes the only
exploration permit issued over the Property and the only exploration permit
currently issued to Tianyuan.
12.15 None of the Exploration Rights, the Exploration Permit or the mineral data
or other geological information related to the Property are subject to any title
dispute with, or lease or mortgage to, any third party.
12.16 All fees and charges (including but not limited to exploration right use
fee and mineral resources compensation) in connection with the Exploration
Rights and the Exploration Permit have been duly paid.
12.17 Tianyuan has duly made all filings necessary to maintain the validity of
the Exploration Permit.
12.18 Tianyuan has duly performed all obligations of the permit holder
contemplated under the Exploration Permit.
12.19 All existing exploration, mining, excavating, exploiting, extracting,
refining and processing activities and operations in the areas in connection
with the Property or the Exploration Rights conducted by any the Company,
Tianyuan or by any third party have been suspended.
12.20 To the best of Warrantors' knowledge, all mineral data and other
geological information that the Company or Tianyuan has provided to Continental
are complete, true, accurate, legally owned or controlled by the Company,
Tianyuan, and are not subject to any third party claim or any restriction.
12.21 Tianyuan has paid in full all consideration due and owing by it in
connection with Tianyuan's purchase of the Exploration Rights, and such
consideration including all monetary amounts and other consideration does not
exceed US$2,000,000.
12.22 Tianyuan has not conducted any business or incurred any obligations or
liabilities since the issuance of its business license; provided that all
transactions directly relating to the acquisition by Tianyuan of the Exploration
Rights and any transaction booked in the accounts of Tianyuan that
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have been provided to Continental in the course of Continental's due diligence
shall not represent a breach of this representation and warranty.
12.23 The Company has not conducted any business or incurred any obligations or
liabilities since the date of its incorporation other than purchasing 100% of
the registered capital of Tianyuan from the founding shareholders of Tianyuan.
12.24 Immediately prior to the exercise of the First Option, the authorized
share capital of the Company consists of a total of US$1,000,000 divided into
one million (1,000,000) authorized Ordinary Shares, nominal value US$1.00 per
share, of which one million (1,000,000) are outstanding. ABC and CTVH
collectively legally hold and beneficially own all issued and outstanding share
capital of the Company, clear of all liens, charges or encumbrances, and such
share capital has been duly authorized, validly issued and fully paid.
12.25 Other than this Agreement and CTVH's right to acquire shares in the
Company from ABC in accordance with the CTVH Agreement, there are no options,
warrants, conversion privileges or other rights, or agreements with respect to
the issuance thereof, presently outstanding to purchase any of the shares of the
Company. Except as provided in the Transaction Agreements and the Company's
Memorandum and Articles of Association, no shares of the Company's outstanding
share capital, or shares issuable by the Company, are subject to any preemptive
rights, rights of first refusal or other rights to purchase such shares (whether
in favor of the Company or any other person).
12.26 Immediately prior to the Exercise of the First Option, Tianyuan's
registered capital is US$1,600,000 and its total investment is RMB 28,000,000,
and such registered capital has been fully contributed. The Company owns all the
registered capital of Tianyuan, free and clear of all liens, charges or
encumbrances and has fully contributed to Tianyuan such registered capital.
12.27 The Company has paid in full all consideration due and owing by it in
connection with the Company's purchase of 100% of the registered capital of
Tianyuan and is not subject to any debts or other claims by the founding
shareholders of Tianyuan or third parties in connection with such purchase.
12.28 Tianyuan is not a party to or bound by any contract, agreement,
understanding or arrangement to allot or issue or sell or create any lien on any
of its registered capital or any other security convertible into any registered
capital or other security of Tianyuan. There are no outstanding rights of first
refusal or other rights, options, warrants, conversion privileges, subscriptions
or other rights or agreements to purchase or otherwise acquire or issue any
registered capital of Tianyuan, or obligating Tianyuan to issue, transfer, grant
or sell any registered capital in Tianyuan.
12.29 There are no options or any other rights to subscribed for or acquire any
equity interest of Tianyuan and except for the Shareholders Agreement, there are
no other shareholder agreements in respect of Tianyuan.
12.30 No order has been made, petition presented or resolution passed for the
winding-up or bankruptcy of Company or Tianyuan or for the
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appointment of a provisional liquidator to the Company or Tianyuan and no
administration order has been made in respect of the Company or Tianyuan.
12.31 Each of the Warrantors has provided the Shareholders with all the
information that the Investors have requested in deciding whether to purchase or
subscribe for Ordinary Shares. No representation or warranty by the Warrantors
in this Agreement and no information or materials provided by the Warrantors to
the Investors in connection with the negotiation or execution of this Agreement
that has not been subsequently corrected or amended, contains any untrue
statement of a material fact, or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances in which they are made, not misleading.
12.32 The aggregated liabilities of Warrantors other than the Company and
Tainyuan towards Continental in terms of this Section 12 shall not exceed
US$2,000,000.
12.33 Unless earlier terminated by provision(s) of this Agreement, the
liabilities of Warrantors other than the Company and Tianyuan towards
Continental under this Section 12 shall be terminated two (2) years from the
signature date of this Agreement.
13. Force Majeure.
Neither party shall be deemed in default of this Agreement to the extent that
performance of its obligations or attempts to cure any breach are delayed,
restricted or prevented by reason of any acts of God, war, civil strife, fire,
natural disaster, acts of terrorism, acts of government, strikes or labor
disputes, inability to obtain on reasonably acceptable terms any public or
private license, permit or other authorization, delay or failure by suppliers or
transporters of materials, parts, supplies, services or equipment, or any other
act or condition beyond the reasonable control of the parties provided that the
affected party gives the other party written notice thereof and uses its best
efforts to cure the delay. In the event that any act of force majeure prevents
any party from carrying out its obligations under this Agreement for a period of
more than six months (or such other period as may be agreed by the parties), the
other parties may terminate this Agreement without liability upon 30 days
written notice.
14. Obligations and Liability of WZ and HDI.
14.1 Obligations and Liability of WZ.
WZ shall actively assist Continental, the Company, Group Companies and Tianyuan
to apply for and maintain the approvals, registrations, licenses, permits and
other government authorizations and support necessary or desirable in order for
the Company and Tianyuan to undertake the exploration and development of the
Property and for Continental to participate in those activities. The parties
confirm for the avoidance of doubt that by agreeing to provide his active
assistance, WZ does not guarantee to the other parties that such approvals,
registrations, licenses, permits and other government authorizations and support
will be available.
WZ hereby agrees that he shall be jointly and severally liable to Continental
for all of the representations and warranties, covenants, and other obligations
of the Group Companies and ABC under this Agreement, and for any breaches of the
foregoing, provided that WZ's aggregated liability towards
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Continental under Section 12 shall not exceed USD 2 million. Unless earlier
terminated by provision(s) of this Agreement, WZ's liability towards Continental
under Section 12 shall be terminated two years from the signature of this
Agreement.
14.2 Obligations and Liability of HDI.
HDI assumes joint and several liability for each of Continental's obligations
under this Agreement.
15. Miscellaneous.
15.1 Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of British Columbia, Canada without
giving effect to any choice of law rule that would cause the application of the
laws of any jurisdiction other than the laws of British Columbia, Canada to the
rights and duties of the parties hereunder.
15.2 Non-Assignability. The First Option, Second Option, and any other rights or
obligations hereunder may not be assigned or transferred by Continental, except
to Continental's Affiliates. The rights and obligations of the ABC in this
Agreement may not be assigned or transferred by ABC, except to CTVH after a
transfer of at least 50% of the Ordinary Shares held by ABC to CTVH in
accordance with the terms of the CTVH Agreement. In all other respects, the
rights and obligations of the parties to this Agreement may not be assigned or
transferred.
15.3 Amendments. Except as otherwise provided in this Agreement (including,
without limitation, in Sections 5.4 and 10.4), any provision of this Agreement
may be amended only with the written consent of the Company, the Investors, and
ABC. The observance of any provision of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
as to any party only with the written consent of that party and any party may
waive any of its rights hereunder without obtaining the consent of any other
party. Any amendment or waiver effected in writing in accordance with this
Section 15.3 shall be binding upon the Company, each Investor, and their
respective successors in interest.
15.4 Entire Agreement. This Agreement constitutes the entire understanding and
agreement between the parties with regard to the subject matter of this
Agreement and supersedes all prior discussions, negotiations and agreements,
between them with respect to the subject matter hereof.
15.5 Notices. Except as may be otherwise provided herein, all notices, requests,
waivers and other communications made pursuant to this Agreement shall be in
writing and shall be conclusively deemed to have been duly received:
(a) when hand delivered to the receiving party, upon delivery;
(b) when sent by facsimile, upon receipt of confirmation of error-free
transmission at the number set forth in the preamble;
(c) ten (10) Business Days after deposit in the mail as air mail or certified
mail, receipt requested, postage prepaid and addressed to the receiving party as
set forth in the preamble; or
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(d) seven (7) Business Days after deposit with an overnight delivery service,
postage prepaid, addressed to the receiving party as set forth in the preamble
with next-business-day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery service provider.
Each party making a communication hereunder by facsimile shall promptly confirm
by telephone to the party to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 15.5 by giving the other parties written
notice of the new address in the manner set forth above.
15.6 Delays or Omissions. No delay or omission to exercise any right, power or
remedy accruing to any party hereto upon any breach or default of any other
party hereto under this Agreement, shall impair any such right, power or remedy
of the aggrieved party nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or of any similar breach of
default thereafter occurring; nor shall any waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party hereto of any breach
of default under this Agreement or any waiver on the part of any party hereto of
any provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement, or by law or otherwise afforded to the
parties shall be cumulative and not alternative.
15.7 Legal Fees. In the event of any action at law, suit in equity or
arbitration proceeding in relation to this Agreement or the rights conferred
hereunder, the Parties shall be respectively responsible for the attorney's fees
and out-of-pocket expenses incurred in relation to the abovementioned action at
law, suit in equity or arbitration proceeding.
15.8 Interpretation; Titles and Subtitles. This Agreement shall be construed
according to its fair language. The rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed
in interpreting this Agreement. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement. Unless otherwise expressly provided
herein, all references to Sections and Exhibits herein are to Sections and
Exhibits of this Agreement.
15.9 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
15.10 Severability. If any provision of this Agreement is found to be invalid or
unenforceable, then such provision shall be construed, to the extent feasible,
so as to render the provision enforceable and to provide for the consummation of
the transactions contemplated hereby on substantially the same terms as
originally set forth herein, and if no feasible interpretation would save such
provision, it shall be severed from the remainder of this
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Agreement, which shall remain in full force and effect unless the severed
provision is essential to the rights or benefits intended by the parties. In
such event, the parties shall use best efforts to negotiate, in good faith, a
substitute, valid and enforceable provision or agreement that most nearly
effects the parties' intent in entering into this Agreement.
15.11 Language of Performance. All notices, communications, and proceedings
relating to this Agreement and the exercise or performance of the parties'
respective rights and duties hereunder shall be in the English language.
15.12 Further Assurances. Each party shall from time to time and at all times
hereafter make, do, execute, or cause or procure to be made, done and executed
such further acts, deeds, conveyances, consents and assurances without further
consideration, which may reasonably be required to effect the transactions
contemplated by this Agreement.
15.13. Dispute Resolution.
(a) Negotiation Between Parties. The parties agree to negotiate in good faith to
resolve any dispute between them regarding this Agreement. If the negotiations
do not resolve the dispute to the reasonable satisfaction of all parties within
thirty (30) days, subsection (c) of this Section shall apply.
(b) Choice of Law. The formation, validity, in- terpretation and performance of
this Agreement, and any disputes arising under this Agreement, shall be governed
by the laws of British Columbia.
(c) Arbitration. In the event the parties are unable to settle a dispute between
them regarding this Agreement in accordance with subsection (a) above, such
dispute shall be referred to and finally settled by arbitration at Hong Kong
International Arbitration Centre (the "HKIAC") in accordance with the UNCITRAL
Arbitration Rules (the "UNCITRAL Rules") in effect, which rules are deemed to be
incorporated by reference into this subsection (c), and as may be amended by the
following provisions:
(i) The appointing authority shall be the HKIAC.
(ii) The place of arbitration shall be in Hong Kong at the HKIAC.
(iii) There shall be only one arbitrator chosen by the Parties by agreement in
accordance with the Rules, provided that if they do not reach agreement on the
choice of a sole arbitrator, then three arbitrators shall be appointed in
accordance with the Rules. The sole or presiding arbitrator shall not be a
citizen of any of Canada, United States of America and the PRC.
(iv) Any such arbitration shall be administered by the HKIAC in accordance
with HKIAC Procedures for Arbitration in force at the date of this Agreement
including such additions to the UNCITRAL Rules as are therein contained.
(v) The language to be used in the arbitral proceedings shall be English.
(vi) The Group Companies as a group and the Investors shall each submit to the
arbitrators in writing a description of the facts relating to, and a requested
remedy for, the dispute. The arbitrators shall select between the remedy
requested by the Group Companies and that
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requested by the Investors and it shall award the entire remedy selected and
only that remedy. In no event may the arbitrators issue an award that provides a
remedy less than, more than, or in any other way different from the
party-requested remedy that the arbitrators have selected.
(vii) The arbitration award shall be final and binding on the Parties.
(viii) The parties understand and agree that this provision regarding
arbitration shall not prevent any party from pursuing equitable or injunctive
relief in a judicial forum to compel another party to comply with this
provision, to preserve the status quo prior to the invocation of arbitration
under this provision, or to prevent or halt actions that may result in
irreparable harm. A request for such equitable or injunctive relief shall not
waive this arbitration provision.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties have caused their respective duly authorized
representatives to execute this Agreement as of the date and year first above
written.
Highland Mining Inc.
____________________________, Director
Tibet Tianyuan Minerals Exploration Ltd.
____________________, Legal Representative
▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇ Chi ▇▇▇▇
▇▇▇▇ Yulin
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China NetTV Holdings Inc.
By:
Name:
Title:
Continental Minerals Corporation
By:
Name:
Title:
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Inc.
By:
Name:
Title:
17
EXHIBIT A
FORM OF SHAREHOLDERS AGREEMENT
EXHIBIT B
DESCRIPTION OF PROPERTY AND EXPLORATION PERMIT
EXHIBIT C
FORM OF MEMORANDUM OF ASSOCIATION AND ARTICLES OF
ASSOCIATION OF HIGHLAND MINING INC.