COMMON STOCK PURCHASE AGREEMENT
THIS AGREEMENT made this ______________ day of September, 2000.
AMONG:
SOFTNET SYSTEMS., INC., a corporation incorporated pursuant
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to the laws of the State of Delaware and having an office at
650 Townsend Street, San Francisco, California, 94103
(the "Vendor")
OF THE FIRST PART
AND:
CHINA BROADBAND CORP., a corporation incorporated pursuant to
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the laws of the State of Nevada and having an office at 2080,
440 2nd Avenue S.W., Calgary, Alberta, T2P 5E9
(the "Purchaser")
OF THE SECOND PART
AND:
BIG SKY NETWORK CANADA LTD., an international company
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incorporated pursuant to the laws of the British Virgin
Islands and having an office at 1404, Building A, Huiyuan
International Apartment, Asia Game Village, Andingmen Wai,
Beijing, 100101, People's Republic of China
(the "Company")
OF THE THIRD PART
WHEREAS:
A. Pursuant to a Common Stock Purchase Agreement made the 23rd
day of December, 1999 (the "1999 Purchase Agreement"), the Vendor is the
registered owner and holder of 50,000 shares (the "Shares") of common stock, par
value $1.00 per share, in the capital of the Company, representing 50% (fifty
percent) of the issued and outstanding shares of common stock in the capital of
the Company; and
B. The Vendor has agreed to sell the Shares to the Purchaser,
and the Purchaser has agreed to purchase the Shares from the Vendor, for the
consideration and upon the terms and conditions as set forth herein.
IN CONSIDERATION of the payment of the sum of Ten Dollars ($10.00) now paid by
the Purchaser to the Vendor (the receipt and sufficiency of which is hereby
acknowledged by each of the parties hereto) and of the mutual covenants and
agreements contained herein, each of the parties covenant and agree with each
other as follows:
1. DEFINITIONS
In this Agreement:
1.1 "Act" means the United States Securities Act of 1933, as amended.
1.2 "Agreement" means this Agreement and any instrument supplementary or
ancillary hereto and includes all schedules attached hereto.
1.3 "Business Day" means a day other than a Saturday, Sunday and any other
day which is a legal holiday in the State of California.
1.4 "CBBC (BVI)" means China Broadband (BVI) Corp., an international
company incorporated pursuant to the laws of the British Virgin Islands
and the wholly owned subsidiary of the Purchaser, which will be the
transferee of the Shares hereunder.
1.5 "CBBC Shares" means that number of shares of common stock in the
capital of the Purchaser to be issued and allotted to the Vendor as
partial payment towards the Purchase Price in accordance with Section
3.2(c) of this Agreement.
1.6 "Closing Date" means the 30th day of September, 2000, or such other
date as may be agreed to by the parties.
1.7 "Closing" means the completion of the transactions contemplated herein
on the Closing Date.
1.8 "Consents" means any consents, approvals, waivers and releases required
for the execution and delivery of this Agreement.
1.9 "Encumbrance" or "Encumbrances" means any mortgage, charge, pledge,
hypothecation, security interest, lien, covenant, condition, right,
lease, licence, assignment, option or claim or any other encumbrance,
title defect or adverse claim of whatever kind or nature, regardless of
form, whether or not registered or registrable and whether consensual
or arising by law (statutory or otherwise) which may adversely affect
either the Purchaser's ownership or possession of the Shares or the
Vendor's ownership or possession of the CBBC Shares, as the case may
be.
1.10 "Governmental Authority" means any federal, state, provincial,
regional, county, municipal, or other government or governmental
authority or official, domestic or foreign, and includes any board,
bureau, commission, department, administrative agency or regulatory
body thereof.
1.11 "Investors' Rights Agreement" means that certain Investors' Rights
Agreement entered into as of the 23rd day of December, 1999, between
the Vendor and the Company providing for the extension of the
registration rights, information rights and other rights as set forth
therein by the Company to the Vendor.
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1.12 "Non-Compete Agreements" means collectively each of the individual
Non-Compete Agreements entered into as of April 25, 2000 among the
parties hereto and each of China Broadband (BVI) Corp., Matthew Heysel
and Daming Yang.
1.13 "person" or "persons" means a natural person, corporation, body
corporate, partnership, joint venture, association, trust or an
incorporated organization or any trustee, executor, administrator or
other legal representative.
1.14 "Press Release" shall have the meaning set forth in Section 12.1 of
this Agreement.
1.15 "Provision of Services Agreements" means that one or more agreements
entered into by the Vendor and the Company in accordance with Section
7.3 of the 1999 Purchase Agreement pursuant to which the Vendor agreed
to provide services, as designated therein, to enable the Company to
fulfill its obligations under the Company's contract with the Shekou
China Merchant's Industrial Zone, Ltd. and other subsequent contracts
the Company may have entered into from time to time.
1.16 "Purchase Price" shall have the meaning set forth in Section 3.2 of
this Agreement.
1.17 "Right of First Refusal, Co-Sale and Voting Agreement" means that Right
of First Refusal, Co-Sale and Voting Agreement entered into as of the
23rd day of December, 1999, among the Vendor, the Company and Matthew
Heysel, for himself and as attorney-in-fact for Daming Yang, Kai Yang,
Wei Yang, Jeff Xue, Dan Xue, Lu Wang, Wallace Nesbitt and Western
Capital Corp.
1.18 "Shares" means 50,000 shares of common stock in the capital of the
Company.
1.19 "Shekou Joint Venture" means the Shenzhen China Merchants Big Sky
Network Co. Ltd. joint venture established pursuant to a co-operative
joint venture contract dated September 21, 1999 between China
Merchants Shekou Industrial Zone Ltd. and the Company.
1.20 "1999 Purchase Agreement" means that certain Common Stock Purchase
Agreement made as of the 23rd day of December, 1999, between the Vendor
and the Company, pursuant to which the Vendor acquired the Shares.
2. INTERPRETATION
2.1 For the purposes of this Agreement, except as otherwise expressly
provided:
2.2 All references in this Agreement to designated "Sections" in other
subdivisions or Schedules are to the designated sections and other
subdivision or Schedules of or attached to this Agreement.
2.3 The words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
section or subdivision.
2.4 The headings are for convenience only and do not form a part of this
Agreement and are not intended to interpret, define or limit the scope,
extent or intent of this Agreement or any provision hereof.
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2.5 The singular of any terms includes the plural and vice versa, the use
of any term is generally applicable to any gender and whether
applicable, a body corporate, the word "or" is not exclusive and the
"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.
2.6 All references to currency means lawful money of the United States
(unless expressed to be in some other currency).
2.7 Any reference to a statute includes the regulations made pursuant
thereto, with all amendments made to the statute or regulations and in
force from time to time, and to any statute or regulations that may be
passed which has the effect of supplementing or superseding such
statute or such regulations.
2.8 Any reference to a corporate entity includes and is also reference to a
corporate entity that is a successor to such corporate entity.
2.9 Where the time for doing an act falls or expires on a day that is not a
Business Day, the time for doing such act is extended to the next
Business Day.
3. PURCHASE AND SALE
3.1 The Vendor hereby agrees to sell, transfer and assign to CBBC (BVI) all
of its respective right, title and interest in and to the Shares at the
time of Closing, free and clear of all Encumbrances, in consideration
for payment by the Purchaser to the Vendor of the Purchase Price.
3.2 The "Purchase Price" shall be paid and satisfied by the Purchaser as
follows:
(a) by delivery to the Vendor on or before the Closing Date of a
certified cheque or bank draft to or to the order of the
Vendor in the amount of $2,500,000. In the event the Closing
is not completed as herein contemplated for any reason
whatsoever, the said sum of $2,500,000 shall be returned to
the Purchaser within two Business Days from the Closing Date,
together with interest thereon;
(b) by delivery to the Vendor on or before the Closing Date of a
promissory note, substantially in the form and upon the terms
as the promissory note set forth in Schedule "A" attached
hereto, providing for the payment to the Vendor no later than
September 30, 2001 of $1,500,000 plus reimbursement of the
Vendor's expenditures incurred in connection with its support
of the Company up to a maximum of $200,000. In the event the
Closing is not completed as herein contemplated for any reason
whatsoever, the said promissory note shall be terminated
within two Business Days from the Closing Date;
(c) by forgiveness of the debt owing by the Vendor to the
Purchaser in the aggregate amount of $423,461 (being the
amount owing by the Vendor to the Purchaser as at June 30,
2000) plus any and all additional amounts owing by the Vendor
to the Purchaser during the period from on and after July 1,
2000 until and including the Closing Date; and
(d) as to the remaining balance of the Purchase Price, by
delivery to the Vendor on or before the Closing Date of such
number of shares of the common stock of the Purchaser (the
"CBBC Shares") as is equal to the greater of: (i) the amount
determined by dividing $8,500,000 by the average closing
bid price of the common stock of the Purchaser on NASDAQ
OTC over the fifteen (15) trading days prior to the
Closing Date; and (ii)
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1,133,000 shares of common stock of the Purchaser. In the
event the Closing is not completed as herein contemplated
for any reason whatsoever, the CBBC Shares shall be returned
to the Purchaser for cancellation within two Business Days
from the Closing Date.
4. COVENANTS
4.1 The Vendor hereby covenants and agrees as follows:
(a) subject to applicable federal and state securities rules and
regulations, to transfer legal and beneficial title to the
Shares to CBBC (BVI), free and clear of all Encumbrances at
the time of Closing on the Closing Date;
(b) to execute and deliver, or arrange to have executed and deli-
vered, all documents and instruments which are contemplated
to be executed and delivered prior to or at the time of
Closing;
(c) to obtain all necessary Consents of the Vendor entering into
the transactions contemplated by this Agreement;
(d) to cause the resignations of the nominee directors who were
designated by the Vendor for election to the Company's board
of directors pursuant to Section 5.9 of the 1999 Purchase
Agreement; and
(e) to enter into agreements providing for the termination of each
of: (i) the 1999 Purchase Agreement, the Investors' Rights
Agreement and the Right of First Refusal, Co-Sale and Voting
Agreement; (ii) the Non-Compete Agreements; and (iii) the
Provision of Services Agreements.
4.2 The Company hereby covenants and agrees:
(a) to cause share certificates representing the Shares to be
issued to CBBC (BVI) and the minute books and registers of the
Company to be updated; and
(b) to execute and deliver any and all instruments and do all
such acts as are required to give effect to this Agreement.
4.3 The Purchaser hereby covenants and agrees:
(a) to pay the Purchase Price in accordance with Section 3.2 of
this Agreement and, in particular, issue the CBBC Shares to
the Vendor;
(b) to forgive all advances made on behalf of the Vendor in
connection with the Shekou Joint Venture; and
(c) to execute and deliver, or arrange to have executed and
delivered, all documents and instruments which are
contemplated to be executed and delivered pursuant to this
Agreement.
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5. REPRESENTATIONS AND WARRANTIES
5.1 The Vendor hereby represents and warrants to the Purchaser and the
Company as representations and warranties that are true as at the date
hereof and at the time of Closing as if such representations and
warranties were made at such time, that:
(a) the Vendor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) the Vendor has all requisite corporate power and authority to
own its properties and to carry on its business as it is now
being conducted or proposed to be conducted and is duly
registered or qualified and is in good standing in each of the
jurisdictions in which the properties owned, leased or
operated by the Vendor or the nature of the business conducted
by the Vendor makes such registration or qualification
necessary;
(c) the Vendor has full power, authority and legal capacity to
execute and deliver this Agreement and any agreements
contemplated hereunder, and the performance by the Vendor of
its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby;
(d) neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
conflict with or result in a breach of any of the terms,
conditions or provisions of the constating documents of the
Vendor or any agreement or instrument to which Vendor is a
party or by which it is bound or constitute a default under
any of the foregoing or violate any law, rule, regulation,
judgment or decree by which the Vendor is bound, the
consequences of which would impair the ability of the Vendor
to perform its obligations under this Agreement;
(e) the Vendor is the registered and beneficial owner of the
Shares with good and marketable title thereto, free and clear
of any actual or threatened Encumbrance, voting agreement,
voting trust, shareholders' agreement or other limitation or
restriction of any nature whatsoever and upon the consummation
of the transactions contemplated hereby will vest in the
Purchaser legal and beneficial title to the Shares free and
clear of any or all Encumbrances and any claims of any nature
whatsoever including, but not limited to, any claims in the
course of insolvency or bankruptcy proceedings against the
Vendor which may be asserted against the Purchaser;
(f) the Vendor is not a party or subject to any agreement,
arrangement or otherwise which affects or will affect the
right of the Purchaser to own, use or enjoy the benefit of the
Shares;
(g) except for a Consent disclosed herein, no consent, approval,
authorization, licence, order or permit of any Governmental
Authority, court or arbitrator, and no filing, notice or
registration by the Vendor with any Governmental Authority,
court or arbitrator is required in order:
(i) for the Vendor to incur its obligations pursuant to
this Agreement;
(ii) for the Vendor to execute and deliver all other
agreements, instruments and documents required to
be executed and delivered by the Vendor pursuant to
this Agreement;
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(iii) for the Vendor to duly observe and perform the
provisions, terms and conditions of this Agreement
and all other agreements, instruments and documents
to be executed and delivered pursuant to this
Agreement; and
(iv) to render this Agreement and all other agreements,
instruments and documents to be executed and
delivered pursuant to this Agreement, legal, valid,
binding and enforceable in accordance with its and
their terms;
(h) the Vendor will have no indebtedness or liability, due or
accruing, contingent or absolute, liquidated or unliquidated,
to any person in respect of which the Purchaser may become
liable as a result of completing the purchase of the Shares or
which by the operation of law or otherwise constitute or
become an Encumbrance or material contracts or which could
affect the right of the Purchaser to own or enjoy the benefit
of the Shares;
(i) no litigation or administrative or other proceeding or
arbitration with or before any Governmental Authority, court
or arbitrator or dispute with any Governmental Authority is
presently in process, pending or threatened by or on behalf of
the Vendor and no state of fact exists which could constitute
the basis of any action, suit, claim, condemnation or other
litigation or administrative or other proceeding by or on
behalf of the Vendor, other than as disclosed herein, which
could affect the right of the Purchaser to own, use or enjoy
the benefit of the Shares;
(j) neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
result in any taxes, levies, assessments, duties, fees,
deductions or withholdings of any amount relating to it
business or the Assets becoming due or payable to any
Governmental Authority which could be payable by, charged to
or deducted or withheld from the Purchaser or result in an
Encumbrance or otherwise affect the right of the Purchaser to
own, use or enjoy the benefit of the Shares;
(k) the Vendor has no information or knowledge of any fact
relating to the transactions contemplated hereby or its
business or assets which, if known to the Purchaser might
reasonably be expected to deter the Purchaser from completing
the transactions contemplated herein or which materially and
adversely affect the ability of the Vendor to carry out its
obligations hereunder;
(l) the Vendor is an "accredited investor" within the meaning of
SEC Rule 501 of Regulation D, as presently in effect;
(m) the Vendor understands that the CBBC Shares it is acquiring
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the
Purchaser in a transaction not involving a public offering and
that under such laws and applicable regulations such shares
may be resold without registration under the Act only
in certain limited circumstances. In the absence of an effec-
tive registration statement covering the CBBC Shares or an
available exemption from registration under the Act, the
CBBC Shares must be held indefinitely. In this connection,
the Vendor represents and warrants that it is familiar with
SEC Rule 144, as presently in effect, and understands the
resale limitations imposed thereby and by the Act, including,
without limitation, the Rule 144 condition that current infor-
mation about the Purchaser be available to the public.
Without in any way limiting the representations and
warranties set forth above, the Vendor further agrees that
if the Vendor makes any disposition of all or any portion of
the CBBC Shares, not pursuant to Rule 144 or a
7
registration statement under the Act covering such proposed
disposition in accordance with such registration statement,
then the Vendor shall notify the Purchaser of such proposed
disposition and shall furnish the Purchaser with a
statement of the circumstances surrounding the disposition
and, if requested by the Purchaser,the Vendor shall have
furnished the Purchaser with an opinion of counsel, reasonably
satisfactory to the Purchaser, that such disposition is exempt
from registration or qualification requirements. It is agreed
that the Purchaser will not require opinions of counsel for
transactions made pursuant to Rule 144 or a registration
statement except in unusual circumstances;
(n) the CBBC Shares to be received by the Purchaser will be
acquired for investment for the Vendor's own account, not as
nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Vendor has no
present intention of selling, granting any participation in or
otherwise distributing the same. The Vendor further represents
and warrants that the Vendor does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third
person, with respect to any of the CBBC Shares;
(o) it is understood that the certificates evidencing the CBBC
Shares may bear one or all of the following legends:
(i) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT
WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD
PURSUANT TO RULE 144 OF SUCH ACT."
(ii) any legend required by state securities laws or the
securities laws of the jurisdiction where the Vendor
is domiciled, incorporated or organized; and
(p) this Agreement and the agreements contemplated hereunder have
been duly authorized, executed and delivered by the Vendor and
this Agreement and the agreements contemplated hereunder
constitute legal, valid and binding obligations of the Vendor
enforceable against the Vendor in accordance with their
respective terms.
5.2 The Company hereby represents and warrants to the Vendor and the
Purchaser as representations and warranties that are true as at the
date hereof and at the time of Closing as if such representations and
warranties were made at such time, that:
(a) the Company is an international business company duly orga-
nized, validly existing and in good standing under the laws
of the British Virgin Islands;
(b) the Company has all requisite corporate power and authority to
own its properties and to carry on its business as it is now
being conducted or proposed to be conducted and is duly
registered or qualified and is in good standing in each of the
jurisdictions in which the properties owned, leased or
operated by the Company or the nature of the business
conducted by the Company makes such registration or
qualification necessary;
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(c) the Company has full power, authority and legal capacity to
execute and deliver this Agreement and any agreements
contemplated hereunder, and the performance by the Company of
its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby; and
(d) neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
conflict with or result in a breach of any of the terms,
conditions or provisions of the constating documents of the
Company or any agreement or instrument to which the Company is
a party or by which it is bound or constitute a default under
any of the foregoing or violate any law, rule, regulation,
judgment or decree by which the Company is bound, the
consequences of which would impair the ability of the Company
to perform its obligations under this Agreement.
5.3 The Purchaser hereby represents and warrants to the Vendor as
representations and warranties that are true as at the date hereof and
at the time of Closing as if such representations and warranties were
made at such time, except as set forth on a Schedule of Exceptions (the
"Schedule of Exceptions") furnished to the Company attached hereto as
Schedule A, which exceptions shall be deemed to be representations and
warranties as if made hereunder, that:
(a) the Purchaser is a company duly organized, validly existing
and in good standing under the laws of State of Nevada;
(b) the Purchaser has all requisite corporate power and authority
to own its properties and to carry on its business as it is
now being conducted or proposed to be conducted and is duly
registered or qualified and is in good standing in each of the
jurisdictions in which the properties owned, leased or
operated by the Purchaser or the nature of the business
conducted by the Purchaser makes such registration or
qualification necessary;
(c) the Purchaser has full power, authority and legal capacity to
execute and deliver this Agreement and any agreements
contemplated hereunder, and the performance by the Purchaser
of its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby;
(d) neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
conflict with or result in a breach of any of the terms,
conditions or provisions of the constating documents of the
Purchaser or any agreement or instrument to which the
Purchaser is a party or by which it is bound or constitute a
default under any of the foregoing or violate any law, rule,
regulation, judgment or decree by which the Purchaser is
bound, the consequences of which would impair the ability of
the Purchaser to perform its obligations under this Agreement;
(e) the authorized capital of the Purchaser consists of 50,000,000
shares of common stock, par value $0.001, of which 18,341,517
shares are currently issued and outstanding and 4,175,000
shares are currently reserved for issuance (other than the
CBBC Shares contemplated hereunder);
(f) the CBBC Shares, when issued and delivered in accordance with
terms of this Agreement as partial payment towards the Pur-
chase Price, will be duly and validly issued, fully paid,
non-assessable and free of restrictions on transfer other than
restrictions on transfer under this Agreement, the agreements
contemplated hereunder and applicable state and federal
securities laws. Based upon the representations and warranties
of the Vendor under this
9
Agreement, the CBBC Shares, when issued and sold in accordance
with the terms of this Agreement as partial payment towards
the Purchase Price, will be issued and sold to the Purchaser
in compliance with all applicable state and federal securi-
ties laws. The issuance, sale and delivery of the CBBC Shares
is not subject to any pre-emptive rights of stockholders of
the Purchaser or to any right of first refusal or other
similar right in favour of any person;
(g) other than as set forth herein, no person has any agreement or
option, present or future, contingent, absolute, or capable of
becoming an agreement or option:
(i) to require the Purchaser to issue any further or
other shares in its capital or any other security
convertible or exchangeable into shares in its
capital or to convert or exchange any securities into
or for shares in the capital of the Purchaser;
(ii) for the issue or allotment of any of the authorized
but unissued shares in the capital of the Purchaser;
(iii) to require the Purchaser to purchase, redeem, or
otherwise acquire any of the issued and outstanding
shares in the capital of the Purchaser; or
(iv) to purchase or otherwise acquire any shares in the
capital of the Purchaser; and
(h) this Agreement has been duly authorized, executed and
delivered by the Purchaser and this Agreement constitutes a
legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its
terms.
(i) Except as set forth in the Schedule of Exceptions, the
Purchaser does not own or control, directly or indirectly, any
capital stock in any other corporation or similar business
entity (a "Subsidiary") nor is the Purchaser a participant in
any partnership, joint venture or similar arrangement. The
Schedule of Exceptions describes the state or other
jurisdiction of incorporation or organization and the
percentage ownership interest owned by the Purchaser of each
Subsidiary. Each Subsidiary is a corporation or limited
liability company duly organized, validly existing and in good
standing under the laws of its state or other jurisdiction of
incorporation or organization. Each Subsidiary has all
requisite power and authority (corporate or otherwise) to own
its properties and to carry on its business as it is now being
conducted or proposed to be conducted and is duly qualified to
do business as a foreign corporation or limited liability
company and is in good standing in the jurisdictions in which
the properties owned, leased or operated by such Subsidiary or
the nature of the business conducted by such Subsidiary makes
such qualification necessary and where the failure to so
qualify (individually or in the aggregate) would have a
material adverse effect on the business, operations, financial
condition or prospects of the Purchaser and its Subsidiaries
taken as a whole.
(j) The Purchaser and all of its Subsidiaries own their respective
properties and assets, including the properties and assets
reflected in the Financial Statements (as defined below), free
and clear of all liens, mortgages, loans or encumbrances
except liens for current taxes, and such encumbrances and
liens which arise in the ordinary course of business and do
not materially impair the Purchaser's or any of its
Subsidiaries' ownership or use of such property or assets.
With respect to the property and assets leased by the
Purchaser and each of its Subsidiaries, the Purchaser and each
of its
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Subsidiaries are in compliance with such leases and hold valid
leasehold interests free and clear of any liens, claims or
encumbrances.
(k) All of the contracts, mortgages, indentures, agreements,
instruments and transactions to which the Purchaser or any
Subsidiary is a party or by which they are bound (excluding
purchase orders made in the ordinary course of business to the
Purchaser or any of its Subsidiaries or placed by the
Purchaser or any of its Subsidiaries) which involve
obligations of, or payments to, the Purchaser or any of its
Subsidiaries in excess of Fifty Thousand Dollars ($50,000)
("Material Contracts") and all agreements between the
Purchaser or any of its Subsidiaries and any of their
respective officer, directors, employees and consultants are
valid, binding and in full force and effect in all respects
and enforceable by or against the Purchaser or any of its
Subsidiaries in accordance with their respective terms in all
respects, subject to the effect of applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of
creditor's rights and rules or laws concerning equitable
remedies. Neither the Purchaser nor any Subsidiary is in
default under any of such Material Contracts. No other party
to any of the Material Contracts has been in the past, nor, to
the Purchaser's knowledge, no other party to any of the
contracts is currently in material default thereunder.
(l) No consent, approval, authorization, license or order of,
registration, qualification, designation, declaration or
filing with, or notice to, any governmental entity or any
other person is necessary to be obtained, made or given by the
Purchaser in connection with the execution and delivery of
this Agreement, the performance by the Purchaser of its
obligations hereunder, and the consummation of the
transactions contemplated hereby.
(m) No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or
filing with, any federal, state or local governmental
authority on the part of the Purchaser or any of its
Subsidiaries is required in connection with (i) the execution,
delivery and performance of this Agreement, (ii) the issuance,
sale and delivery of the CBBC Shares, or (iii) the
consummation of the transactions contemplated by this
Agreement, except for such post-closing filings required
pursuant to applicable foreign and U.S. federal and state
securities laws and blue sky laws, which filings will be
effected within the required statutory period.
(n) There is no action, arbitration, proceeding or investigation
pending or threatened against the Purchaser or any Subsidiary
or any of their respective officers, directors or, to the
Purchaser's knowledge, against any other employees or
consultants of the Purchaser or any of its Subsidiaries (or,
to the Purchaser's knowledge, any valid basis therefore or
threat thereof) which might result, either individually or in
the aggregate, in (a) any material adverse change in the
business, conditions, affairs, operations or prospects of the
Purchaser, any of its Subsidiaries or in any of their
respective properties or assets of any shareholder, (b) any
material adverse impairment of the right or ability of the
company or any of its Subsidiaries to carry on its business as
now conducted or as proposed to be conducted, or (c) any
material liability on the part of the Purchaser or any of its
Subsidiaries or any shareholder. Neither the Purchaser nor any
of its Subsidiaries is a party to or subject to the provisions
of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality. Other than as
set out in the Schedule of Exceptions, there is no action,
suit, arbitration, proceeding or investigation by the
Purchaser or any of its Subsidiaries currently pending or
which the Purchaser or any Subsidiary currently intends to
initiate.
11
(o) The Purchaser and each Subsidiary owns or has the right to use
the patents, unpatented inventions, trademarks, tradenames,
service marks, service names, copyrights, trade secrets,
know-how, designs, processes and other intangible assets
(collectively, "Proprietary Assets") necessary for the
business of the Purchaser and the Subsidiaries free and clear
of liens, claims, and encumbrances created outside of the
ordinary course of business or identified in the Schedules of
Exceptions hereto. Neither the Purchaser nor any Subsidiary is
knowingly violating or infringing the rights of others in any
patent, unpatented invention, trademark, trade name,
servicemark, copyright, trade secret, know-how, design,
process or other intangible asset. Neither the Purchaser nor
any Subsidiary has received any written communications
alleging, nor is it aware, that it (or any of its officers,
employees or consultants) has violated or infringed or, by
conducting its business as proposed, would violate or
infringe, any Proprietary Asset of any other person or entity.
To the Purchaser's knowledge, no third party has any
ownership, right, title, interest, claim or lien on any of the
Purchaser's or any Subsidiary's Proprietary Assets, and each
of the Purchaser and its Subsidiaries has taken, and in the
future each of the Purchaser and its Subsidiaries will use its
best efforts to take, all steps reasonably necessary to
preserve its legal rights in, and the secrecy of, all its
Proprietary Assets, except those for which disclosure is
required for legitimate business or legal reasons. Except as
set forth in the Schedule of Exceptions, neither the Purchaser
nor any Subsidiary has granted, and, to the Purchaser's
knowledge there are not outstanding, any options, licenses or
agreements of any kind relating to any Proprietary Asset of
the Purchaser or any Subsidiary, nor is the Purchaser or any
Subsidiary bound by or a party to any option, license or
agreement of any kind with respect to any of its Proprietary
Assets. Except as set forth in the Schedule of Exceptions,
neither the Purchaser nor any Subsidiary is obligated to pay
any royalties or other payments to third parties with respect
to the marketing, sale, distribution, manufacture, license or
use of any of its Proprietary Asset or any other property or
rights.
(p) Financial Statements.
(i) The Purchaser has delivered to Investor the following
financial statements and notes (collectively, the
"Financial Statements"):
(a) the unaudited balance sheet of the Purchaser
as of the last day of each fiscal year
preceding the Closing and the related
unaudited statements of operations, changes
in stockholder's equity and cash flows of
the Purchaser for such fiscal years,
together with the notes thereto; and
(b) the unaudited balance sheet of the Purchaser
as of the end of the fiscal quarter
immediately preceding the Closing (the
"Unaudited Interim Balance Sheet"), and the
related unaudited statements of operations,
changes in stockholder's equity and cash
flows of the Purchaser for the period from
the end of the preceding fiscal year to the
end of such fiscal quarter, together with
the notes thereto.
(ii) All of the Financial Statements are accurate and com-
plete in all respects, and the dollar amount of each
line item included in the Financial Statements is
accurate in all respects. The Financial Statements
are in accordance with the books and records of the
Purchaser and present fairly the financial position
of the Purchaser as of the respective dates
thereof and the results of operations of the
Purchaser, changes in stockholder's equity and
cash flows for the periods covered thereby.
12
The Financial Statements have been prepared in accor-
dance with GAAP, applied on a consistent basis
throughout the periods covered.
(iii) Except as set forth in the Schedule of Exceptions,
at the date of the Unaudited Interim Balance Sheet,
(i) the Purchaser had no Liabilities of any nature
(matured or unmatured, fixed or contingent) required
by GAAP to be provided for in the Unaudited Interim
Balance Sheet which were not provided for in the
Unaudited Interim Balance Sheet, (ii) the Purchaser
had no debt, liability or obligation of any nature
(matured or unmatured, fixed or contingent) which
were not required by GAAP to be provided for in
the Unaudited Interim Balance Sheet, (iii) all
reserves established by the Purchaser and set forth
in the Unaudited Interim Balance Sheet were ade-
quate for the purposes for which they were esta-
blished,and (iv) there are no assets of the Purchaser
or any Subsidiary, the value of which (in the reaso-
nable judgment of the Purchaser) is materially
overstated in the Unaudited Interim Balance Sheet.
(q) The Purchaser and each of its Subsidiaries maintain such
insurance covering property damage, including environmental,
and liability as is reasonably prudent under commercially
reasonable business practices. The Purchaser and each of its
Subsidiaries have in full force and effect products liability
and errors and omissions insurance in amounts customary for
companies similarly situated.
(r) Foreign Corrupt Practices Act. None of the activities or types
of conduct below have been or may have been engaged in by the
Purchaser or any Subsidiary, either directly or indirectly:
(i) Any bribes or kickbacks to government officials or
their relatives, or any other payments to such
persons, whether or not legal, to obtain or retain
business or to receive favorable treatment with
regard to business; or
(ii) Any bribes or kickbacks to persons other than
government officials, or to relatives of such
persons, or any other payments to such persons or
their relatives, whether or not legal, to obtain or
retain business or to receive favorable treatment
with regard to business; or
(iii) Any illegal contributions made to any political party
political candidate or holder of governmental office;
or
(iv) Any bank accounts, funds or pools of funds created or
maintained without being reflected on the corporate
books of account, or as to which the receipts and
disbursements therefrom have not been reflected on
such books; or
(v) Any receipts of disbursements, the actual nature
of which has been "disguised" or intentionally mis-
recorded on the corporate books of account; or
(vi) Fees paid to consultants or commercial agents which
exceeded the reasonable value of the services pur-
ported to have been rendered; or
(vii) Any payments or reimbursements made to personnel of
the Purchaser for the purposes of enabling them to
expend time or to make contributions or payments of
the kind or for the purpose referred to in
subparagraphs (a)-(f) above. The
13
Purchaser has not violated the United States Corrupt
Foreign Practices Act or any other similar laws,
statute, rule or regulation of any country.
6. CONDITIONS PRECEDENT
6.1 The obligations of the Purchaser to consummate the transactions
contemplated herein are subject to the fulfilment and performance of
the following conditions on or prior to the Closing Date, each of which
is for the exclusive benefit of the Purchaser and may be waived in
writing in whole or in part by the Purchaser on or prior to the Closing
Date:
(a) the parties shall execute and deliver or cause to be executed
and delivered an agreement providing for the termination of
each of: (i) the 1999 Purchase Agreement, the Investors'
Rights Agreement and the Right of First Refusal, Co-Sale and
Voting Agreement; (ii) the Non-Compete Agreements; and (iii)
the Provision of Services Agreements;
(b) each and all of the representations and warranties of the
Vendor contained herein shall be true and correct in all
material respects as of the Closing Date to the same extent
and to the same effect as if made on the Closing Date;
(c) no injunction or restraining order of a court or
administrative tribunal of competent jurisdiction shall be in
effect prohibiting the transactions between the parties
contemplated hereby and no actions or proceedings shall have
been instituted and remain pending before any court or
administrative tribunal to restrain or prohibit the
transactions between the parties contemplated hereby;
(d) no event shall have occurred or condition or state of facts of
any character shall have arisen or legislation, whether by
statute rule, regulation, bylaw or otherwise, shall have been
introduced which might reasonably be expected to have a
material adverse affect upon the financial condition, results
of operations, business or prospects of the operation of the
business of the Company; and
(e) the Vendor shall have performed and complied with all of the
covenants and obligations herein to be performed or complied
with by it.
6.2 In the event that any of the conditions in Section 6.1 are not
fulfilled and performed on or before the Closing Date, or the date
stated therein, the Purchaser may rescind this Agreement and abandon
the transactions contemplated hereby by notice in writing to the Vendor
and, in that event, the Purchaser shall be released from all
obligations hereunder, any and all amounts paid to the Vendor or in
connection with the completion of the transactions contemplated hereby
shall be repaid to the Purchaser except for the amount of Ten Dollars
($10.00), which is non-refundable and was paid to the Vendor in
consideration of the Vendor entering into this Agreement.
6.3 The obligations of the Vendor to consummate the transactions
contemplated herein are subject to the fulfilment and performance of
the following conditions on or prior to the Closing Date, each of which
is for the exclusive benefit of the Vendor and may be waived in writing
in whole or in part by the Vendor on or prior to the Closing Date:
(a) the common stock of the Purchaser shall have been traded on
the NASDAQ OTC for at least fifteen (15) trading days prior to
the Closing Date.
14
(b) each and all of the representations and warranties of the
Purchaser contained herein shall be true and correct in all
material respects as of the Closing Date to the same extent
and to the same effect as if made on the Closing Date;
(c) no injunction or restraining order of a court or
administrative tribunal of competent jurisdiction shall be in
effect prohibiting the transactions between the parties
contemplated hereby and no actions or proceedings shall have
been instituted and remain pending before any court or
administrative tribunal to restrain or prohibit the
transactions between the parties contemplated hereby;
(d) no event shall have occurred or condition or state of facts of
any character shall have arisen or legislation, whether by
statute rule, regulation, bylaw or otherwise, shall have been
introduced which might reasonably be expected to have a
material adverse affect upon the financial condition, results
of operations, business or prospects of the operation of the
business of the Purchaser; and
(e) the Purchaser shall have performed and complied with all of
the covenants and obligations herein to be performed or
complied with by it.
6.4 In the event that any of the conditions in Section 6.3 are not
fulfilled and performed on or before the Closing Date, or the date
stated therein, the Vendor may rescind this Agreement and abandon the
transactions contemplated hereby by notice in writing to the Purchaser
and, in that event, the Vendor shall be released from all obligations
hereunder, any and all amounts paid to the Vendor or in connection with
the completion of the transactions contemplated hereby shall be repaid
to the Purchaser except for the amount of Ten Dollars ($10.00), which
is non-refundable and was paid to the Vendor in consideration of the
Vendor entering into this Agreement.
7. CLOSING
7.1 The Closing of this transaction shall take place on the Closing Date at
the offices of Koffman Kalef located in Vancouver, British Columbia, or
at such other place as may be approved by the parties hereto.
7.2 At or before Closing, each of the parties hereto shall take, or cause
to be taken, all actions, steps and corporate proceedings necessary or
desirable to validly and effectively approve or authorize the
completion of the transactions herein provided for and the Vendor shall
deliver or cause to be delivered to the Purchaser:
(a) the Shares, duly endorsed for transfer;
(b) certified copy of directors resolution of the Vendor
authorizing and approving the transfer of the Shares to the
Purchaser;
(c) certified copy of directors resolution of the Company
transferring the Shares to the Purchaser;
(d) any Consents;
(e) the resignations of each of the nominee directors of the
Vendor from the board of directors of the Company; and
15
(f) any and all such further certificates, agreements or documents
as reasonably required by the Purchaser to give effect to this
Agreement.
7.3 Contemporaneously with fulfilment of the foregoing provisions of
Section 7.2 and upon fulfilment of the conditions in favour of the
Purchaser that have not been waived in writing as therein provided, the
Purchaser shall deliver to the Vendor:
(a) a certified cheque, bank draft or wire transfer payable to or
to the order of the Vendor in the amount of $2,500,000 in
accordance with Section 3.2(a) of this Agreement;
(b) a promissory note, substantially in the form and upon the
terms and conditions of the promissory note set forth in
Schedule "A" attached hereto, in accordance with Section
3.2(b) of this Agreement;
(c) copy of certificates, duly legended, representing the CBBC
Shares in accordance with Section 3.2(c) of this Agreement;
(d) certified copy of directors resolution of the Purchaser
issuing the CBBC Shares to the Vendor in satisfaction of the
Purchase Price; and
(e) any and all such further certificates, agreements or documents
as reasonably required by the Vendor to give effect to this
Agreement.
8. NON COMPETITION
8.1 For a period of two years following the Closing Date and so long as any
part of the Purchase Price shall remain unpaid, the Vendor agrees that
it will not, without the prior written consent of the Purchaser, either
individually or in conjunction with any other person or persons, as
principal, agent, partner, co-venturer, shareholder, investor, advisor,
consultant, officer, director, employee or otherwise, in any manner
whatsoever become engaged in, interested in or concerned with, or be
engaged in, interested in or concerned with, or advise, lend money to,
guarantee the debts or obligations of, permit its name to be used or
employed by, or associated with, or be connected in any manner
whatsoever with, any person or persons engaged with, interested in or
concerned with a business in those cities set forth in Schedule B
hereto which is the same as or similar to or competitive with the
business of the Company as presently carried on by it.
9. CONFIDENTIALITY
9.1 "Confidential Information" means any oral, written or electronic data
and information now or hereafter existing relating to the business,
products, trade-secrets, know-how and management of the Company or the
Purchaser which is treated by the Company and/or the Purchaser as
confidential.
9.2 The Vendor hereby agrees:
(a) between the date hereof and the expiry of two years following
the Closing Date, to keep all Confidential Information in
strictest confidence and not to disclose or permit disclosure
of all or any portion of such Confidential Information to any
person or persons, except as otherwise expressly permitted by
this Agreement, or with the prior written consent of the
Purchaser, which consent may be unreasonably withheld;
16
(b) to use all reasonable efforts to ensure the protection of the
confidentiality of the Confidential Information of the Company
and/or the Purchaser; and
(c) not to use all or any portion of the Confidential Information
of the Company and/or the Purchaser in any way which may be
reasonably considered detrimental to the business and/or
operations of the Company and/or the Purchaser.
10. REMEDIES
10.1 It is further understood and agreed that money damages may not be a
sufficient remedy for any breach by the Vendor of the provisions of
Section 9 of this Agreement and that in the event of such breach, the
Purchaser shall be entitled to specific performance or injunctive
relief as a remedy for any breach. The exercise of any remedy shall not
be deemed to be the exclusive remedy for a breach of these provisions,
but shall be in addition to all other remedies available at law or
equity.
11. SURVIVAL AND INDEMNITY
11.1 The covenants, representations and warranties contained in this
Agreement and given by any of the parties hereto respectively shall
survive the Closing of the sale and purchase of the Shares herein
provided for and shall survive notwithstanding any investigation made
by any party prior to the Closing Date, shall not merge with any deed,
conveyance or other transfer, instrument or other agreement giving
effect hereto, and shall survive any amalgamation or reorganization or
merger entered into by any party and, notwithstanding such Closing and
any investigation by or on behalf of any party, and shall continue in
full force and effect indefinitely.
11.2 Without prejudice to any other remedy available to the Purchaser at law
or in equity, the Vendor does hereby agree, on demand, to indemnify and
save harmless the Purchaser from and against all costs, damages,
deficiencies, demands, injury, liabilities (whether accrued, actual,
contingent or otherwise), losses, claims, judgments, amounts paid in
settlement of actions or claims, and expenses (including but not
limiting to legal fees and disbursements on a solicitor and his own
client basis) and any manner accruing from, arising out of or with
respect to or relating to any of the representations, warranties and
covenants of the Vendor contained herein being untrue or incorrect or
the failure of the Vendor to observe or perform any of its obligations
hereunder or as a result of the Purchaser owning and possessing the
Shares, as and from the Closing Date.
11.3 Without prejudice to any other remedy available to the Vendor at law or
in equity, the Purchaser does hereby agree, on demand, to indemnify and
save harmless the Vendor from and against all costs, damages,
deficiencies, demands, injury, liabilities (whether accrued, actual,
contingent or otherwise), losses, claims, judgments, amounts paid in
settlement of actions or claims, and expenses (including but not
limiting to legal fees and disbursements on a solicitor and his own
client basis) and any manner accruing from, arising out of or with
respect to or relating to any of the representations, warranties and
covenants of the Purchaser contained herein being untrue or incorrect
or the failure of the Purchaser to observe or perform any of its
obligations hereunder or as a result of the Vendor owning and
possessing the CBBC Shares, as and from the Closing Date
12. DISCLOSURE/PRESS RELEASES
12.1 Prior to issuing any press release, advertising, publicity or public
statement or in any way engaging in any other form of public disclosure
that indicates the existence of or terms of this Agreement and/or the
agreements contemplated hereunder ("Press Release"), each party hereby
17
agrees to give notice to the other party of its intention to issue a
Press Release, deliver a draft copy of the Press Release to the other
party and allow the other party an opportunity to comment upon the
contents of the draft Press Release within twenty-four (24) hours of
receipt by such other party of the draft Press Release. Each party
further agrees to use its best efforts to address any comments of the
other party received by it within the twenty-four (hour) period during
which the other party has had the opportunity to review the proposed
Press Release. The obligations of the parties as provided for in this
Section 12.1 in no way impose upon either party the obligation to
receive the prior approval and/or consent of the other party to the
issuance and/or dissemination of a Press Release by such party.
18
13. GENERAL
13.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties
(including transferees of any Shares or CBBC Shares). Nothing in this
Agreement, express or implied, is intended to confer upon any party,
other than the parties hereto or their respective successors and
assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided in this
Agreement.
13.2 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
the State of California.
13.3 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed
facsimile if sent during normal business hours of the recipient, if
not, then on the next business day; (iii) five days after having been
sent by registered or certified mail, return receipt requested, postage
prepaid; or (iv) one day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other
address as such party may designate by ten days advance written notice
to the other parties hereto and if to the Vendor, with a copy to Latham
& Watkins, 505 Montgomery Street, Suite 1900, San Francisco, CA 94111
(Fax no. 415/395-8095) Attn: Tad Freese and if to the Purchaser and/or
the Company, with a copy to Koffman Kalef, 19th Floor, 885 West Georgia
Street, Vancouver, British Columbia, Canada V6C 3H4 (Fax no.
604/891-3788) Attn: Bernard Poznanski.
13.4 EXPENSES. Irrespective of whether the Closing is effected, each party
shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement and
the agreements contemplated hereunder.
13.5 TIME OF THE ESSENCE. Time shall be of the essence in the performance
by each party of its respective obligations under this Agreement.
13.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties hereto.
Any amendment or waiver effected in accordance with this Section 13.6
shall be binding upon the holder of the Shares purchased under this
Agreement at the time outstanding, each future holder of all the Shares
and the Company.
13.7 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
13.8 ENTIRE AGREEMENT. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein or
therein.
19
13.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
SOFTNET SYSTEMS, INC.
Per:
-----------------------------------------------
Authorized Signatory
CHINA BROADBAND CORP.
Per:
-----------------------------------------------
Authorized Signatory
BIG SKY NETWORK CANADA LTD.
Per:
-----------------------------------------------
Authorized Signatory
20
SCHEDULE "A"
FORM OF SECURED PROMISSORY NOTE
AMOUNT: $________________ DUE: September 30, 2001
------------------
FOR VALUE RECEIVED China Broadband Corp. (the "Borrower") hereby unconditionally
promises to pay to or to the order of Softnet Systems, Inc. (the "Lender") on or
before September 30, 2001 at the offices of the Lender located at the date
hereof at 650 Townsend Street, San Francisco, California, 94103, the principal
amount of o ($o) (the "Principal Amount") plus interest accrued from the date
hereof at a rate of 8% per annum.
The Borrower shall be entitled to repay at any time and from time to time all or
any part of the Principal Amount then outstanding under this Promissory Note.
Such prepayment shall be made by the Borrower to the Lender without premium,
penalty or bonus.
The Borrower hereby expressly waives the presentation, demand, protest, notice
of default, notice of acceleration and any other notice of any kind hereunder.
Payment of this Promissory Note shall be secured at Lender's cost by all of the
assets of the Borrower. Upon reasonable request by Lender, Borrower shall do any
and all reasonable acts necessary to assist Lender to perfect such security
interest.
The occurrence of any of the following shall constitute an "Event of Default"
under this Promissory Note:
(1) the failure to make any payment of principal, interest or any other
amount payable hereunder when due under this Promissory Note or the breach of
any other condition or obligation under this Promissory Note, and the
continuation of such failure or breach for five (5) days;
(2) the filing of a petition by or against the Borrower under any pro-
vision of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar law relating to
bankruptcy, insolvency or other relief for debtors;or appointment of a receiver,
trustee, custodian or liquidator of or for all or any part of the assets or
property of the Borrower; or the insolvency of the Borrower; or the making
of a general assignment for the benefit of creditors by the Borrower;
(3) causing China Broadband (BVI) Corp. (CBBC (BVI)), an interna-
tional company incorporated pursuant to the laws of the British Virgin islands
and a wholly-owned subsidiary of the Borrower, to transfer any of the shares
of Big Sky Network Canada Ltd. owned by CBBC (BVI); or
(4) the dissolution or liquidation of the Borrower.
Upon the occurrence of any Event of Default, the Lender, at its option, may (i)
by notice to the Borrower, declare the unpaid principal amount of this
Promissory Note, all interest accrued and unpaid hereon and all other amounts
payable hereunder to be immediately due and payable, whereupon the unpaid
principal amount of this Promissory Note all such interest and all such other
amounts shall become immediately due and payable, without presentment, demand,
protest or further notice of any kind; and (ii) whether or not the actions
referred to in clause (i) have been taken, after sixty (60) days from the
occurrence of such
21
event, exercise any or all of the Lender's rights and remedies hereunder
and proceed to enforce all other rights and remedies available to the
Lender under applicable law.
The Borrower agrees to pay on demand all the losses, costs, and expenses
(including, without limitation, attorneys' fees and disbursements) which the
Lender incurs in connection with enforcement or attempted enforcement of this
Promissory Note, or the protection or preservation of the Lender's rights under
this Promissory Note, whether by judicial proceedings or otherwise. Such costs
and expenses include, without limitation, those incurred in connection with any
workout or refinancing, or any bankruptcy, insolvency, liquidation or similar
proceedings.
The Borrower hereby waives diligence, demand, presentment, protest or further
notice of any kind. The Borrower agrees to make all payments under this
Promissory Note without setoff or deduction and regardless of any counterclaim
or defence.
No single or partial exercise of any power under this Promissory Note shall
preclude any other or further exercise of such power or exercise of any other
power. No delay or omission on the part of the Lender in exercising any right
under this Promissory Note shall operate as a waiver of such right or any other
right hereunder.
This Promissory Note shall be binding on the Borrower and his successors,
assigns, personal representatives, executors, heirs, and legatees, and shall be
binding upon and inure to the benefit of the Lender, any future holder of this
Promissory Note and their respective successors and assigns. Neither the
Borrower nor the Lender may assign or transfer this Promissory Note or any of
his obligations hereunder without the other party's prior written consent.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
CALIFORNIA LAW.
The Borrower and the Lender hereby (i) submit to the nonexclusive jurisdiction
of the courts of the State of California and the federal courts of the United
States sitting in the Northern District of the State of California for the
purpose of any action or proceeding arising out of or relating to this
Promissory Note, (ii) agree that all claims in respect of any such action or
proceeding may be heard and determined in such courts, (iii) irrevocably waive
(to the extent permitted by applicable law) any objection which they now or
hereafter may have to the laying of venue of any such action or proceeding
brought in any of the foregoing courts, and any objection on the grounds that
any such action or proceeding in any such court has been brought in an
inconvenient forum and (iv) agree 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 permitted by law.
THE BORROWER AND LENDER HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL
BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED
TO THIS PROMISSORY NOTE, OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES. THE BORROWER AND LENDER HEREBY AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
IN ANY WAY LIMITING THE FOREGOING, THE BORROWER AND LENDER FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS PROMISSORY NOTE, OR
ANY PROVISION HEREOF.
22
CHINA BROADBAND CORP.
Per:
-----------------------------------------------
Authorized Signatory
23