Acquisition Agreement
THIS AGREEMENT made effective the 15 th day of June, 2003.
BETWEEN
▇▇▇▇▇▇▇, Inc., a business corporation duly incorporated and validly existing
under the laws of the State of Delaware, with its business address at
1 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
("▇▇▇▇▇▇▇")
Party A
AND
Speed One Investment Limited, a business
corporation duly incorporated and validly
existing under the laws of the British Virgin
Islands,
with its registered office at East Asia ▇▇▇▇▇▇▇▇, ▇.▇.▇▇▇ 901,
Road Town, Tortola, British Virgin Islands,
("Speed One")
and
Beijing Beike Machinery Electronic Materials
Hightech Corporation A business corporation
duly incorporated and validly existing under
the laws of the People's Republic of China,
with its registered address at ▇▇.▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
("BK Machinery")
Party B
WHEREAS:
A. PARTY A is a business corporation whose common shares are traded Over
the Counter Bulletin Board of NASD;
B. SPEED ONE is a business corporation incorporated under the laws of
British Virgin Islands, which owns seventy-five percent (75%) of the
shares and interest in the capital stock of Beijing ▇▇▇▇▇-▇▇▇▇▇
Automation Engineering Company Limited ("BK") specialized in industrial
automation; and
C. BK Machinery is a business corporation incorporated under the laws of
the People's Republic of China ("PRC"), which owns 25% of the shares
and interest in the capital stock of BK
NOW, THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants herein contained, and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged by the Parties, and
intending to be legally bound, the Parties covenant and agree as follows:
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Article One
Shares Exchange Between the Parties
1.1 Subject to the terms and conditions set forth herein, each of Speed One
and BK Machinery agrees to transfer (the "Transfer") to ▇▇▇▇▇▇▇ all its
equity, interest and shares in the capital stock of BK, in exchange for
the common shares to be issued to Party B by ▇▇▇▇▇▇▇ as provided
herein. For the avoidance of doubt, Speed One and BK Machinery are the
lawful owners of all the equity and the issued and outstanding capital
stocks of BK ("Transferred Shares"), at a 75% and 25% ratio
respectively, and shall transfer all their respective equity and shares
holdings to ▇▇▇▇▇▇▇ in accordance with this Agreement.
1.2 It is the express understanding between the Parties that
(1) All the shares to be issued hereunder and the shares issued
and outstanding of Party A shall be consolidated by 3 to 1,
subject only to the approval of holders of a simple majority
of shares of Party A. On the post-consolidation basis, the
total number of all the shares issued and outstanding and
shares reserved for warrants and options issued whether or not
exercised immediately prior to the execution of this
Agreement, would be 15,503,458.
(2) The numbers of all shares issued and outstanding, and warrants
and options issued immediately prior to the execution of this
Agreement by ▇▇▇▇▇▇▇ are as follows:
common shares: 32,476,250, all in one class
warrants: 11,084,124
options: 2,950,000
For greater certainty, no warrants or options have been
exercised prior to the execution of this Agreement.
(3) All warrants and options shall be adjusted as to price, and
the number of shares exercisable shall be automatically
adjusted in accordance with the ratio of the share
consolidation.
(4) The common shares to be issued to Party B under this Agreement
shall exclude the finder's fees. The finder's fees shall be
issued by Party A in addition to the common shares issued
and/or to be issued to Party B.
(5) All the shares, options and warrants issued prior to share
consolidation shall, if calculated and issued on
pre-consolidation basis, be consolidated by the same 3 to 1
ratio. The common shares to be issued subsequent to the share
consolidation shall be issued on post-consolidation basis by
the same ratio provided that these shares have not been
consolidated previously.
(6) The common shares to be issued to Party B hereunder upon
shareholder approval of the share consolidation shall be
issued on consolidated basis according to the same 3 to 1
ratio. For greater certainty, the common shares referred to in
this paragraph shall be 25,173,600 as consolidated from
75,520,800 before consolidation.
1.3 The number of all shares to be issued to Party B pursuant to this
Agreement is calculated on pre-consolidation basis. For greater
certainty, these shares and their number shall be subject to the
consolidation as provided herein.
1.4 PARTY A shall issue to Speed One and BK Machinery and/or their
respective nominees a total of 93,020,800 common shares of PARTY A,
calculated on pre-consolidation basis, in consideration for the
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Transferred Shares acquired from Speed One and BK Machinery. The first
17,500,000 common shares shall be issued upon the execution of this
Agreement, and the balance being 75,520,800 shares shall be issued
after the share consolidation receives shareholders approval and shall
be issued on post consolidation basis by consolidating the 75,520,800
common shares by a 3 to 1 ratio.
1.5 Before and after the share consolidation as set forth herein, holder of
each of the common shares issued hereunder to Party B and the common
shares issued and outstanding immediately prior to the execution of
this Agreement and held by shareholders other than Party B shall have
one (1) vote in respect of the share with the same right and privilege
amongst all the shareholders of Party A.
1.6 For the avoidance of doubt, the common shares to be issued to Party B
under this Agreement shall be allotted and issued to Party B according
to the following ratio:
Speed One and/or its nominees: 75%
BK Machinery and/or its nominees: 25%
1.7 It is the express understanding of the Parties hereto that, upon
issuance of all the common shares hereunder, these shares shall exceed
2/3 of all the shares issued and outstanding including all options and
warrants issued whether or not exercised or exercisable on the date on
which these common shares are fully issued to Party B.
Article Two
Directors and Authorized Capital
2.1 The current directors, except one (1), of Party A will tender, prior to
closing, their resignations from the Board of Directors of Party A and
all officers of Party A will tender resignation to resign from the
posts they hold at Party A, effective on the date first above written.
Despite such resignation, the directors in office shall appoint the
following persons to be the new directors (the "New Directors"). Both
resignation and appointment shall become effective on the date first
above written:
▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇
▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇, ▇▇▇▇▇▇
SUN, ▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇
2.2 Party A hereby confirms that the number of the directors has been
changed to seven (7) by the Board of Directors in accordance with the
Certificate of Incorporation, By-Laws and the law of Delaware
applicable thereto. The New Directors and the one (1) director
continued from the current Board shall constitute the full Board as
from the date first above written.
2.3 The total authorized capital of Party A shall not be affected in any
way by any provision of this Agreement and shall remain as 50 million
common shares, prior and subsequent to the execution of this Agreement.
Article Three
Representations and Warranties of Party A
3.1 Party A represents and warrants to Party B that Party A is a
corporation duly organized, validly existing and in good standing in
all aspect under the laws of the State of Delaware and those of the
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United States applicable thereto, including without limitation to, the
laws, regulations, rules, provisions and policies applicable to or in
respect of the past and current compliance of Party A.
3.2 Party A represents and warrants that it is in good standing under the
SEC and NASD rules and has been consistently in compliance with all SEC
and NASD requirements for its common shares to be and continue to be
traded over the counter of the Bulletin Board of NASD.
3.3 Party A represents and warrants that there is no action, claim,
lawsuits pending or threatened against Party A. All debts, liabilities
of Party A have been settled prior to closing. Since the last audited
Financial Statements and the unaudited interim financial statements for
the first quarter 2003, there has been no change in liabilities or debt
or change in circumstances of Party A that has had or which Party A may
expect to have material change or adverse effect on the business,
affairs and assets of Party A.
3.4 Party A represents and warrants that it has not been the subject of
investigation or any disciplinary action by the SEC or NASD for a
minimum of three (3) years immediately prior to the execution of this
Agreement.
3.5 PARTY A has full power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby; all approval and
consent required in respect of the transactions hereunder have been
given to and obtained by PARTY A, and no further consent, approval or
action or proceeding on the part of PARTY A, its shareholders or its
directors is required; the execution, delivery and performance of this
Agreement by PARTY A and its directors have been duly and validly
approved by PARTY A, its directors and shareholders pursuant to the
Certificate of Incorporation and By-Laws of Party A, save and except
that the share consolidation will require the affirmative vote by
holders of a simple majority of the shares issued and outstanding prior
to such vote.
3.6 The execution, delivery and performance of this Agreement by PARTY A
will not violate any laws, regulations, rules, provisions or policies,
including without limitation, SEC and NASD rules, provisions and
policies. Nothing contained and contemplated herein will adversely
affect the current and post-transaction listing status and privileges
of PARTY A's common shares traded Over the Counter Bulletin Board of
NASD .
3.7 Party A represents and warrants that the approval of the share
consolidation set forth herein requires an affirmative vote by holders
of a simple majority shares. There has been no change, amendment, made
or proposed to be made by the directors and/or shareholders of Party A,
to the existing Incorporation Certificate, Articles of Association
and/or By-Laws of Party A, which has had or may have the effect of
increasing, decreasing or otherwise varying the simple majority vote
requirement for shareholders approval of the share consolidation
provided herein.
3.8 Since the last financial statements, ending on March 31, 2003, there
has been no change in circumstances that has had or Party A may expect
to have a material adverse effect on the assets, business and affairs
of Party A.
Article Four
Representations and Warranties of Party B
4.1 Speed One is a business corporation duly incorporated, validly existing
and in good standing under the laws of the British Virgin Islands. It
owns and holds 75% of all the equity and shares in the capital stock of
BK, a Chinese-foreign equity joint venture company organized under the
laws of the People's Republic of China.
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4.2 BK Machinery is a business corporation duly incorporated and validly
existing and in good standing under the laws of the PRC. It owns and
holds 25% of all the equity and shares in the capital stock of BK.
4.3 Each of Speed One and BK Machinery has the full power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby. All approval, consent required in respect of the
transaction hereunder have been given and have been obtained by Speed
One and BK Machinery respectively. No further consent, approval or
action or proceeding on the part of Speed One is required.
4.4 The transfer and assignment by each of Party B of the Transferred
Shares shall in all aspects be considered as separate transfer and
assignment.
4.5 Since December 31, 2002, BK's business has been operated substantially
in accordance with all laws, rules, regulations, orders of competent
regulatory authorities, and there has not been
(1) any event or change in circumstances that has had, or which
Party B or BK expects to have, a materials adverse effect on BK
or its business;
(2) any change in liabilities of BK that has had, or which Party B
or BK may expect to have, a material effect on BK or its
business;
(3) any incidence, assumption or guarantee of any indebtedness of BK
for borrowed money of BK;
(4) any payments by BK in respect of any indebtedness of BK for
borrowed money or in satisfaction of any liabilities of BK;
(5) the creation, assumption or sufferance of the existence of any
lien on any assets reflected on BK's Financial Statements;
(6) any change by BK in its accounting principles, methods or
practices in the manner it keeps its books and records;
(7) any distribution, dividend or bonus by BK to any of its respec-
tive officers, directors, stockholders or affiliates, or any of
their respective affiliates or associates; and
(8) any material capital expenditure or commitment by BK or material
sale, assignment, transfer, lease or other disposition of or
agreement to sell, assign, transfer, lease or otherwise dispose
of any assets or property by BK other than in the ordinary
course of business.
4.6 BK has the full corporate power and authority to carry on the business
presently being carried on by it and as proposed to be carried on by
it.
4.7 BK holds all licenses, IP, software program and permits as may be
requisite for carrying on its business in the manner in which it has
heretofore been carried on.
4.8 Since the last financial statements annexed hereto as Schedule I, there
has been no change in circumstances which has had or which Party B may
expect to have any adverse effect on the assets, business and affairs
of Party B.
4.9 Schedule I annexed hereto are true and complete copies of the unaudited
annual financial statements of BK for the years 2000 through to 2002,
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and the unaudited interim financial statements ending on April 30,
2003, all compiled in accordance with the Chinese Generally Accepted
Accounting Practices consistently applied (Chinese GAAP). Party B shall
prepare and provide Party A with audited financial statements for the
last two years (2002 and 2001) in accordance with US GAAP as soon as
practically possible for the purpose of filing with SEC.
Article Five
Covenants
5.1 This Agreement shall enter into force and be binding on the Parties as
from the date first above written, save and except that the provisions
in respect of share consolidation shall be subject to and conditional
on the approval by the holders of a simple majority of the shares of
Party A issued and outstanding on the record date set by the directors
of Party A when calling the shareholders meeting to approve the share
consolidation. For greater certainty, the requisite majority shares
shall include the common shares issued to Party B pursuant to this
Agreement.
5.2 Directors of Party A shall call such annual or special shareholder
meeting on the first available date and as early as practically
possible to approve the share consolidation. Consolidation shall be
effected by a 3 to 1 ratio, which ratio shall apply to all shares
issued and outstanding prior to the share consolidation and the
warrants and options issued prior to the execution of this Agreement.
5.3 The shares issued to Party B under this Agreement, subsequent to share
consolidation, shall exceed 2/3 of the total number of all the shares
issued and outstanding including the shares issued hereunder and
warrants and options whether or not exercised.
5.4 The Parties shall cooperate and work in good faith with each other to
provide to each other with all information necessary to enable the
Parties to complete their respective due diligence.
5.5 It is the express understanding and covenants between the Parties
hereto that, in the event that Party A fails to obtain the shareholders
approval for the share consolidation, SEC disapproves any part of the
reverse take-over transaction, Party A fails to issue to Party B all
the common shares to be issued to Party B hereunder, or for reasons
beyond the control of any of the Parties the transactions under this
Agreement can not be closed.
(1) The transfer and assignment by Party B of the Transferred Shares
shall be considered to have no force and effect as from the
execution of this Agreement;
(2) The New Directors appointed pursuant to this Agreement shall
resign from the Board of Party A, and all common shares issued
to Party B hereunder shall be returned to Party A for cancella-
tion;
(3) No Party shall be liable unless such Party is responsible,
directly or indirectly, by act or omission, for Party A's
failure to obtain shareholders approval as early as practically
possible for the share consolidation; and
(4) The finder's fees under this Agreement issued in common shares
of Party A shall be returned to Party A for cancellation.
5.6 A finder's fee equal in amount to 7% of and in addition to the common
shares issued to Party B under this Agreement shall be issued by Party
A upon the shareholder approval of the share consolidation provided
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herein. The finder's fee shall be issued and calculated on
post-consolidation basis. The consent for its issuance is hereby given
by Party B.
5.7 Party B agree not to transfer the existing assets of Party A out of
Canada for purposes not directly related to Party A.
Article Six
Miscellaneous Provisions
6.1 This Agreement shall be governed by and construed in accordance with
the laws of the British Columbia and those of Canada applicable
thereto.
6.2 Any and all disputes arising out of or in connection with this
Agreement, or in respect of any defined legal relationship associated
therewith or derived therefrom, shall be first addressed through
consultation and/or mediation. Disputes unresolved through consultation
and mediation shall be referred to and finally resolved by arbitration
under the Rules of and before the International Chamber of Commerce
("ICC") International Court of Arbitration in Vancouver, Canada, as
those rules may be amended and replaced from time to time.
6.3 The arbitration tribunal shall consist of three (3) arbitrators to be
named and appointed in accordance with the applicable rules of
procedures of the ICC International Court of Arbitration. For the
avoidance of doubt, each Party A and Party B shall have the right to
name one (1) arbitrator and the chairman and the third arbitrator of
the tribunal shall be appointed pursuant to the applicable rules of
procedure. The final award of the arbitration tribunal shall be final
and binding upon the Parties. The losing Party shall bear and reimburse
the prevailing Party all costs and expenses associated with the
preparation and prosecution of the arbitration and any enforcement
proceedings, including attorney fees on solicitor-client basis, unless
otherwise directed by the arbitration tribunal or court of competent
jurisdiction.
6.4 Where the losing Party fails to comply with such order and award, the
prevailing Party shall be free to apply to a court of competent
jurisdiction for an order of enforcement or such other orders or relief
as may be properly granted by the court.
6.5 Nothing contained herein will limit or prohibit the rights of either
Party to apply to a court of competent jurisdiction for interim
protection such as, by way of example, an interim injunction or order
enforcing its rights hereunder in a court of competent jurisdiction,
prior or subsequent to the arbitration.
6.6 No condoning, excusing or overlooking by a Party of any default, breach
or non-observance by the other Party at any time or times in respect of
any covenants, provisions, or conditions of this Agreement shall
operate as a waiver of such Party's rights under this Agreement in
respect of any continuing or subsequent default, breach or
non-observance, so as to defeat in any way the rights of such Party in
respect of any such continuing or subsequent default or breach and no
waiver shall be inferred from or implied by anything done or omitted by
such Party in the absence of an express waiver in writing.
6.7 No amendment or other modification of this Agreement will be binding
unless executed in writing by the Parties hereto. The Parties shall
cooperate in order to comply with all legal and regulatory provisions
required to maintain and continue the trading status of the common
shares of Party A at NASD.
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6.8 This Agreement and everything contained herein will inure to the
benefit of and be binding upon the Parties and their permitted
successors and assigns.
6.9 This Agreement may be executed in counterparts and by facsimile
transmission, each such counterpart together shall constitute a single
instrument. Three (3) original copies of such counterparts executed by
each Party shall be forth with delivered to all other Parties by
registered express mail.
6.10 For all purposes, this Agreement shall be deemed to be signed and
executed at Vancouver, British Columbia, Canada.
6.11 Schedules annexed hereto shall form an integral part of this Agreement.
6.12 This Agreement shall enter into force as of the date first above
written.
IN WITNESS WHEREOF the Parties have duly executed this agreement.
THE COMMON SEAL of ▇▇▇▇▇▇▇, INC. )
was hereto affixed in the presence of: )
)
---------------------------- )
Authorised Signatory ) c/s
)
)
---------------------------- )
Authorised Signatory )
THE COMMON SEAL of Speed One Investment )
Limited was) hereto affixed in the presence of: )
)
)
---------------------------- ) c/s
Authorised Signatory )
)
)
---------------------------- )
Authorised Signatory
)
THE COMMON SEAL of Beijing Beike ) c/s
Machinery Electronic Materials Hightech )
Corporation was hereto affixed in the presence )
of: )
)
)
-------------------------- )
Authorized Signatory )
)
)
--------------------------
Authorized Signatory
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SIGNED BEFORE ME BY THE AUTHORIZED REPRESENTATIVES OF ▇▇▇▇▇▇▇, INC. REFERENCED
ABOVE.
-----------------------
NAME:
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Schedule I
Unaudited Financial Statements of Beijing ▇▇▇▇▇-▇▇▇▇▇ Automation Engineering
Company Limited
1. unaudited financial statements for the years 2000, 2001, 2002
2. unaudited interim financial statement ending on April 30, 2003
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