EXHIBIT 3.2
BY-LAWS OF VHS NETWORK, INC.
(EFFECTIVE AS OF DECEMBER 18, 1995)
TABLE OF CONTENTS
ARTICLE I - OFFICES....................................................................................-1-
Section 1. Principal Office.................................................................-1-
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Section 2. Other Offices....................................................................-1-
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ARTICLE II - STOCKHOLDERS.....................................................................-1-
Section 1. Annual Meeting..................................................................-1-
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Section 2. Special Meetings................................................................-1-
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Section 3. Place of Meeting................................................................-1-
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Section 4. Notice of Meeting...............................................................-1-
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Section 5. Notice of Adjourned Meeting.....................................................-2-
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Section 6. Waiver of Call and Notice of Meeting............................................-2-
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Section 7. Quorum..........................................................................-2-
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Section 8. Adjournment.....................................................................-2-
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Section 9. Voting on Matters Other than Election of Directors..............................-3-
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Section 10. Voting for Directors.............................................................-3-
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Section 11. Voting Lists.....................................................................-3-
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Section 12. Voting of Shares.................................................................-3-
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Section 13. Proxies..........................................................................-3-
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Section 14. Informal Action by Stockholders..................................................-4-
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Section 15. Inspectors.......................................................................-4-
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ARTICLE III - BOARD OF DIRECTORS ............................................................-4-
Section 1. General Powers...................................................................-4-
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Section 2. Number, Election, Tenure and Qualifications......................................-5-
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Section 3. Annual Meeting...................................................................-5-
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Section 4. Regular Meetings.................................................................-5-
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Section 5. Special Meetings.................................................................-5-
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Section 6. Notice...........................................................................-5-
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Section 7. Quorum...........................................................................-6-
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Section 8. Adjournment; Quorum for Adjourned Meeting........................................-6-
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Section 9. Manner of Acting.................................................................-6-
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Section 10. Removal...........................................................................-6-
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Section 11. Vacancies.........................................................................-6-
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Section 12. Compensation......................................................................-6-
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Section 13. Presumption of Assent.............................................................-6-
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Section 14. Informal Action by Board..........................................................-6-
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Section 15. Meeting by Telephone, Etc.........................................................-7-
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ARTICLE IV - OFFICERS.........................................................................-7-
BY-LAWS OF VHS NETWORK, INC.
(EFFECTIVE AS OF DECEMBER 18, 1995)
TABLE OF CONTENTS
Section 1. Number............................................................................-7-
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Section 2. Appointment and Term of Office....................................................-7-
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Section 3. Resignation.......................................................................-7-
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Section 4. Removal...........................................................................-7-
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Section 5. Vacancies.........................................................................-7-
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Section 6. Duties of Officers................................................................-8-
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Section 7. Salaries..........................................................................-8-
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Section 8. Delegation of Duties..............................................................-8-
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ARTICLE V - EXECUTIVE AND OTHER COMMITTEES....................................................-8-
Section 1. Creation of Committees...........................................................-8-
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Section 2. Executive Committee..............................................................-8-
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Section 3. Other Committees.................................................................-9-
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Section 4. Removal or Dissolution...........................................................-9-
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Section 5. Vacancies on Committees..........................................................-9-
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Section 6. Meetings of Committees...........................................................-9-
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Section 7. Absence of Committee Members.....................................................-9-
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Section 8. Quorum of Committees.............................................................-9-
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Section 9. Manner of Acting of Committees...................................................-9-
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Section 10. Minutes of Committees............................................................-9-
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Section 11. Compensation....................................................................-10-
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Section 12. Informal Action.................................................................-10-
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ARTICLE VI - INDEMNIFICATION OF DIRECTORS AND OFFICERS.......................................-10-
Section 1. General..........................................................................-10-
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Section 2. Actions by or in the Right of the Corporation....................................-10-
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Section 3. Determination that Indemnification Is Proper.....................................-11-
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Section 4. Evaluation and Authorization.....................................................-12-
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Section 5. Prepayment of Expenses...........................................................-12-
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Section 6. Obligation to Indemnify..........................................................-12-
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Section 7. Nonexclusivity and Limitations...................................................-12-
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Section 8. Continuation of Indemnification Right............................................-12-
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Section 9. Insurance........................................................................-13-
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ARTICLE VII - INTERESTED PARTIES.............................................................-13-
Section 1. General..........................................................................-13-
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Section 2. Determination of Quorum..........................................................-13-
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Section 3. Approval by Stockholders.........................................................-14-
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ARTICLE VIII - CERTIFICATES OF STOCK.........................................................-14-
Section 1. Certificates for Shares..........................................................-14-
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Section 2. Signatures of Past Officers......................................................-15-
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Section 3. Transfer Agents and Registrars...................................................-15-
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Section 4. Transfer of Shares...............................................................-15-
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Section 5. Lost Certificates................................................................-15-
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BY-LAWS OF VHS NETWORK, INC.
(EFFECTIVE AS OF DECEMBER 18, 1995)
TABLE OF CONTENTS
ARTICLE IX - RECORD DATE.....................................................................-15-
Section 1. Record Date for Stockholder Actions..............................................-15-
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Section 2. Record Date for Dividend and Other Distributions.................................-16-
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ARTICLE X - DIVIDENDS........................................................................-16-
ARTICLE XI - FISCAL YEAR.....................................................................-16-
ARTICLE XII - SEAL...........................................................................-16-
ARTICLE XIII - STOCK IN OTHER CORPORATIONS...................................................-16-
ARTICLE XIV - AMENDMENTS.....................................................................-17-
ARTICLE XV - EMERGENCY BY-LAWS...............................................................-17-
Section 1. Scope of Emergency By-laws.......................................................-17-
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Section 2. Call and Notice of Meeting.......................................................-17-
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Section 3. Quorum and Voting................................................................-17-
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Section 4. Appointment of Temporary Directors...............................................-17-
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Section 5. Modification of Lines of Succession..............................................-18-
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Section 6. Change of Principal Office.......................................................-18-
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Section 7. Limitation of Liability..........................................................-18-
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Section 8. Amendment or Repeal..............................................................-18-
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ARTICLE XVI - PRECEDENCE OF LAW AND
ARTICLES OF INCORPORATION....................................................................-18-
BY-LAWS OF VHS NETWORK, INC.
(Effective as of December 18, 1995)
ARTICLE I - OFFICES
Section 1. Principal Office. The principal office of VHS NETWORK, INC.
(the "Corporation") shall be 1428 Brickell Avenue, 8th Floor, Miami, Florida
33131 or such place within or without the State of Florida as the Board of
Directors of the Corporation (the "Board of Directors" or the "Board") shall
from time to time determine.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Florida as the Board of
Directors or the officers of the Corporation acting within their authority may
from time to time determine or the business of the Corporation may require.
ARTICLE II - STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders shall
be held between January 1 and December 31, inclusive, in each year for the
purpose of electing directors and for the transaction of such other proper
business as may come before the meeting. The exact date of the meeting shall be
established by the Board of Directors from time to time.
Section 2. Special Meetings. Special meetings of the stockholders may
be called, for any purpose or purposes, by the Board of Directors or the
President. Special meetings of the stockholders shall be called by the
President, the President or the Secretary if the holders of not less than ten
(10) percent of all the votes entitled to be cast on any issue proposed to be
considered at such special meeting sign, date and deliver to the Secretary one
or more written demands for a special meeting, describing the purpose(s) for
which it is to be held. Special meetings of the stockholders of the Corporation
may not be called by any other person or persons. Notice and call of any such
special meeting shall state the purpose or purposes of the proposed meeting, and
business transacted at any special meeting of the stockholders shall be limited
to the purposes stated in the notice thereof.
Section 3. Place of Meeting. The Board of Directors may designate any
place, either within or without the State of Florida, as the place of meeting
for any annual or special meeting of the stockholders. If no designation is
made, the place of meeting shall be the principal office of the Corporation.
Section 4. Notice of Meeting. Written notice stating the place, day and
hour of an annual or special meeting and, in the case of a special meeting, the
purpose or purposes for which it is called shall be given no fewer than ten (10)
nor more than sixty (60) days before the date of the meeting to each stockholder
entitled to vote at such meeting, except that no notice of a meeting need be
given to any stockholders for which notice is not required to be given under
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applicable law. Notice may be delivered personally, via United States mail,
facsimile or other electronic transmission, or by private mail carriers handling
nationwide mail services, by or at the direction of the President, the
Secretary, the Board of Directors, or the person(s) calling the meeting. If
mailed via United States mail, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at the
stockholder's address as it appears on the stock transfer books of the
Corporation, with postage thereon prepaid. If the notice is mailed at least
thirty (30) days before the date of the meeting, the mailing may be by a class
of United States mail other than first class.
Section 5. Notice of Adjourned Meeting. If a stockholders' meeting is
adjourned to a different date, time or place, notice need not be given of the
new date, time or place if the new date, time or place is announced at the
meeting before an adjournment is taken; and any business may be transacted at
the adjourned meeting that might have been transacted on the original date of
the meeting. If, however, a new record date for the adjourned meeting is or must
be fixed under law, notice of the adjourned meeting must be given to persons who
are stockholders as of the new record date and who are otherwise entitled to
notice of such meeting.
Section 6. Waiver of Call and Notice of Meeting. Call and notice of any
stockholders' meeting may be waived by any stockholder before or after the date
and time stated in the notice. Such waiver must be in writing signed by the
stockholder and delivered to the Corporation. Neither the business to be
transacted at nor the purpose of any meeting need be specified in such waiver. A
stockholder's attendance at a meeting (a) waives such stockholder's ability to
object to lack of notice or defective notice of the meeting, unless the
stockholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (b) waives such stockholder's ability
to object to consideration of a particular matter at the meeting that is not
within the purpose or purposes described in the meeting notice, unless the
stockholder objects to considering the matter when it is presented.
Section 7. Quorum. Except as otherwise provided in these By-laws or in
the Articles of Incorporation of the Corporation, a majority (based on voting)
of the outstanding shares of the Corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at any meeting of the
stockholders. Once a share is represented for any purpose at a meeting, it is
deemed present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting; and the withdrawal of stockholders after a quorum has been
established at a meeting shall not affect the validity of any action taken at
the meeting or any adjournment thereof.
Section 8. Adjournment; Quorum for Adjourned Meeting. If less than a
majority (based on voting) of the outstanding shares are represented at a
meeting, a majority (based on voting) of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present, any business may be transacted which might
have been transacted at the meeting as originally noticed.
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Section 9. Voting on Matters Other than Election of Directors. At any
meeting at which a quorum is present, action on any matter other than the
election of directors shall be approved if the votes cast by the holders of
shares represented at the meeting and entitled to vote on the subject matter
favoring the action exceed the votes cast opposing the action, unless a greater
number of affirmative votes or voting by classes is required by law, the
Articles of Incorporation of the Corporation or these By-laws.
Section 10. Voting for Directors. Directors shall be elected by a
plurality of the votes cast by the shares entitled to vote at a meeting at which
a quorum is present.
Section 11. Voting Lists. At least ten (10) days prior to each meeting
of stockholders, the officer or agent having charge of the stock transfer books
for shares of the Corporation shall make a complete list of the stockholders
entitled to vote at such meeting, or any adjournment thereof, with the address
and the number, class and series (if any) of shares held by each. The list shall
be subject to inspection by any stockholder during normal business hours for at
least ten (10) days prior to the meeting. The list also shall be available at
the meeting and shall be subject to inspection by any stockholder at any time
during the meeting or its adjournment. The list shall be prima facie evidence as
to who are the stockholders entitled to examine such list or the transfer books
and to vote at any meeting of the stockholders. If the requirements of this
Section have not been substantially complied with, the meeting shall be
adjourned on the demand of any stockholder(in person or by proxy) until there
has been substantial compliance with the requirements. If no demand for
adjournment is made, failure to comply with the requirements of this Section
does not affect the validity of any action taken at the meeting.
Section 12. Voting of Shares. Except as otherwise provided in the
Articles of Incorporation of the Corporation, each stockholder entitled to vote
shall be entitled at every meeting of the stockholders to one vote in person or
by proxy on each matter for each share of voting stock held by such stockholder.
Such right to vote shall be subject to the right of the Board of Directors to
fix a record date for voting stockholders as hereinafter provided. Treasury
shares, and shares of stock of the Corporation owned directly or indirectly by
another corporation the majority of the voting stock of which is owned or
controlled by the Corporation, shall not be voted at any meeting and shall not
be counted in determining the total number of outstanding shares.
Section 13. Proxies. At all meetings of stockholders, a stockholder may
vote by proxy, executed in writing and delivered to the Corporation in the
original or as a true and correct copy of the original or by the stockholder's
duly authorized attorney-in-fact. No proxy shall be valid after eleven (11)
months from its date, unless the proxy provides for a longer period. Each proxy
shall be filed with the Secretary before or at the time of the meeting. A proxy
may be revoked at the pleasure of the record owner of the shares to which it
relates, unless the proxy provides otherwise. In the event that a proxy shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or, if only one is present, that one, shall have all of
the powers conferred by the proxy upon all the persons so designated, unless the
instrument shall provide otherwise.
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Section 14. Informal Action by Stockholders. Unless otherwise provided
in the Articles of Incorporation of the Corporation, any action required or
permitted to be taken at a meeting of the stockholders may be taken by means of
one or more written consents that satisfy the requirements set forth below. In
such event, no meeting, prior notice or formal vote shall be required. To be
effective, a written consent (which may be in one or more counterparts) shall
set forth the action taken and shall be signed by stockholders holding shares
representing not less than the minimum number of votes of each voting group
entitled to vote thereon that would be necessary to authorize or take such
action at a meeting at which all voting groups and shares entitled to vote
thereon were present and voted. No written consent shall be effective unless,
within sixty (60) days of the date of the earliest dated consent delivered to
the Secretary, written consent signed by the number of stockholders required to
take action is delivered to the Secretary. If authorization of an action is
obtained by one or more written consents but less than all stockholders so
consent, then within ten (10) days after obtaining the authorization of such
action by written consents, notice must be given to each stockholder who did not
consent in writing and to each stockholder who is not entitled to vote on the
action. The notice shall fairly summarize the material features of the
authorized action and, if the action be such for which dissenters' rights are
provided under the Florida Business Corporation Act, the notice shall contain a
clear statement of the right of stockholders dissenting therefrom to be paid the
fair value of their shares upon compliance with the provisions of the Florida
Business Corporation Act regarding the rights of dissenting stockholders.
Section 15. Inspectors. For each meeting of the stockholders, the Board
of Directors or the President may appoint two inspectors to supervise the
voting. If inspectors are so appointed, all questions respecting the
qualification of any vote, the validity of any proxy and the acceptance or
rejection of any vote shall be decided by such inspectors. Before acting at any
meeting, the inspectors shall take an oath to execute their duties with strict
impartiality and according to the best of their ability. If any inspector shall
fail to be present or shall decline to act, the President shall appoint another
inspector to act in his or her place. In case of a tie vote by the inspectors on
any question, the presiding officer shall decide the issue.
ARTICLE III - BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors, which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law, the
articles of Incorporation of the Corporation or these By-laws directed or
required to be exercised or done only by the stockholders.
Section 2. Number, Election, Tenure and Qualifications. The number of
directors of the Corporation shall be not less than one (1) nor more than seven
(7). The exact number of directors shall be fixed by resolution adopted by a
vote of a majority of the then authorized number of directors; provided that no
decrease in the number of directors shall have the effect of shortening the term
of any then incumbent director. At each annual meeting of stockholders, the
stockholders shall elect directors to hold office until the next succeeding
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annual meeting. Each director shall hold office until his or her term of office
expires and until such director's successor is elected and qualifies, unless
such director sooner dies, resigns or is removed by the stockholders at any
annual or special meeting. It shall not be necessary for directors to be
stockholders or residents of the State of Florida. All directors shall be
natural persons who are 18 years of age or older.
Section 3. Annual Meeting. Promptly after each annual meeting of
stockholders, the Board of Directors shall hold its annual meeting for the
purpose of the election of officers and the transaction of such other business
as may come before the meeting. If such meeting is held at the same place as and
immediately following such annual meeting of stockholders and if a majority of
the directors are present at such place and time, no prior notice of such
meeting shall be required to be given to the directors.
Section 4. Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and at such place as shall be determined
from time to time by the Board of Directors.
Section 5. Special Meetings. Special meetings of the Board of Directors
may be called by the President or any two directors. The person or persons
authorized to call special meetings of the Board of directors may fix the place
for holding any special meetings of the Board of directors called by such person
or persons. If no such designation is made, the place of meeting shall be the
principal office of the Corporation.
Section 6. Notice. Whenever notice of a meeting is required, written
notice stating the place, day and hour of the meeting shall be delivered at
least two (2) days prior thereto to each director, either personally, or by
first-class United States mail, facsimile or other form of electronic
communication, or by private mail carriers handling nationwide mail services, to
the director's business address. If notice is given by first-class United States
mail, such notice shall be deemed to be delivered five (5) days after deposited
in the United States mail so addressed with postage thereon prepaid or when
received, if such date is earlier. If notice is given by facsimile transmission
or other form of electronic communication or by private mail carriers handling
nationwide mail services, such notice shall be deemed to be delivered when
received by the director. Any director may waive notice of any meeting, either
before, at or after such meeting. The attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a director
attends a meeting for the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened and so states at
the beginning of the meeting or promptly upon arrival at the meeting.
Section 7. Quorum. A majority of the total number of directors as
determined from time to time to comprise the Board of Directors shall constitute
a quorum.
Section 8. Adjournment; Quorum for Adjourned Meeting. If less than a
majority of the total number of directors are present at a meeting, a majority
of the directors so present may adjourn the meeting from time to time without
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further notice. At any adjourned meeting at which a quorum shall be present, any
business may be transacted that might have been transacted at the meeting as
originally noticed.
Section 9. Manner of Acting. If a quorum is present when a vote is
taken, the act of a majority of the directors present at the meeting shall be
the act of the Board of Directors unless otherwise provided in the Articles of
Incorporation of the Corporation.
Section 10. Removal. Any director may be removed by the stockholders,
with or without cause, at any meeting of the stockholders called expressly for
that purpose. Any such removal shall be without prejudice to the contract
rights, if any, of the person removed.
Section 11. Vacancies. Any vacancy occurring in the Board of Directors,
including any vacancy created by reason of an increase in the number of
directors, may be filled by the affirmative vote of a majority of the remaining
directors, though less than a quorum of the Board of Directors, or by the
stockholders, unless otherwise provided in the Articles of Incorporation of the
Corporation. The term of a director elected to fill a vacancy shall expire at
the next following annual meeting of stockholders, and the person elected shall
hold office until such time and until such director's successor is elected and
qualifies, unless such director sooner dies, resigns or is removed by the
stockholders at any annual or special meeting.
Section 12. Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors, a stated salary as directors and/or such
other reasonable compensation as may be determined by the Board from time to
time. No payment shall preclude any director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 13. Presumption of Assent. A director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
such director objects at the beginning of the meeting (or promptly upon his or
her arrival) to the holding of the meeting or the transacting of specified
business at the meeting or such director votes against such action or abstains
from voting in respect of such matter.
Section 14. Informal Action by Board. Any action required or permitted
to be taken by any provisions of law, the Articles of Incorporation of the
Corporation or these By-laws at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if each and every member of the
Board or of such committee, as the case may be, signs a written consent thereto
and such written consent is filed in the minutes of the proceedings of the Board
or such committee, as the case may be. Action taken under this section is
effective when the last director signs the consent, unless the consent specifies
a different effective date, in which case it is effective on the date so
specified.
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Section 15. Meeting by Telephone, Etc. Directors or the members of any
committee thereof shall be deemed present at a meeting of the Board of Directors
or of any such committee, as the case may be, if the meeting is conducted using
a conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other at the same time.
ARTICLE IV - OFFICERS
Section 1. Number. The officers of the Corporation shall consist of a
President, a Secretary and a Treasurer, each of whom shall be appointed by the
Board of Directors. The Board of Directors may also appoint one or more vice
presidents, one or more assistant secretaries and assistant treasurers and such
other officers as the Board of Directors shall deem appropriate. The same
individual may simultaneously hold more than one office in the Corporation.
Section 2. Appointment and Term of Office. The officers of the
Corporation shall be appointed annually by the Board of Directors at its annual
meeting. If the appointment of officers shall not be made at such meeting, such
appointment shall be made as soon thereafter as is convenient. Each officer
shall hold office until such officer's successor is appointed and qualifies,
unless such officer sooner dies, resigns or is removed by the Board. The
appointment of an officer does not itself create contract rights. The failure to
elect a President, a Secretary or a Treasurer shall not affect the existence of
the Corporation.
Section 3. Resignation. An officer may resign at any time by delivering
notice to the Corporation. A resignation shall be effective when the notice is
delivered unless the notice specifies a later effective date. An officer's
resignation shall not affect the Corporation's contract rights, if any, with the
officer.
Section 4. Removal. The Board of Directors may remove any officer at
any time with or without cause. An officer's removal shall not affect the
officer's contract rights, if any, with the Corporation.
Section 5. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise may be filled by the Board
of Directors for the unexpired portion of the term.
Section 6. Duties of Officers. (a) The President of the Corporation
shall be the chief executive officer of the Corporation and shall, subject to
the direction of the Board, have general charge of the business and affairs of
the Corporation and shall preside at all meetings of the Board of Directors and
of the stockholders; (b) the Secretary shall be responsible for preparing
minutes of the directors' and stockholders' meetings and for authenticating
records of the Corporation; (c) the Treasurer shall (i) have charge and custody
of and be responsible for all funds of the Corporation and (ii) receive and give
receipts for monies due and payable to the Corporation from any source
whatsoever, and deposit monies in the name of the Corporation in the banks,
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trust companies or other depositories as shall be selected by the Corporation;
and (d) subject to the foregoing, the officers of the Corporation shall have
such powers and duties as ordinarily pertain to their respective offices and
such additional powers and duties specifically conferred by law, the Articles of
Incorporation of the Corporation and these Bylaws, or as may be assigned to them
from time to time by the Board of Directors or an officer authorized by the
Board of Directors to prescribe the duties of other officers.
Section 7. Salaries. The salaries of the officers shall be fixed from
time to time by the Board of Directors, and no officer shall be prevented from
receiving a salary by reason of the fact that the officer is also a director of
the Corporation.
Section 8. Delegation of Duties. In the absence or disability of any
officer of the Corporation, or for any other reason deemed sufficient by the
Board of Directors, the Board may delegate the powers or duties of such officer
to any other officer or to any other director for the time being.
ARTICLE V - EXECUTIVE AND OTHER COMMITTEES
Section 1. Creation of Committees.The Board of Directors may designate
an Executive Committee and one or more other committees. Each committee so
designated shall consist of two (2) or more of the directors of the Corporation.
Section 2. Executive Committee. The Executive Committee, if there
shall be one, shall consult with and advise the officers of the Corporation in
the management of its business. It shall have, and may exercise, except to the
extent otherwise provided in the resolution of the Board of Directors creating
such Executive Committee, such powers of the Board of Directors as can be
lawfully delegated by the Board. Included solely for information purposes, the
following is a list of the actions that, under Florida law in effect at the time
of the adoption of these By-laws, may not be delegated to a committee, but the
list shall be deemed automatically revised without further action by the Board
of Directors or the stockholders of this Corporation upon and to the extent of
any amendment to such law: (a) approve or recommend to stockholders actions or
proposals required by law to be approved by stockholders; (b) fill vacancies on
the Board of Directors or any committee of the Board; (c) adopt, amend or repeal
these By-laws; (d) authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board of Directors; or
(e) authorize or approve the issuance or sale of shares, or any contract to sell
shares, or designate the terms of a series or class of shares.
Section 3. Other Committees. Such other committees, to the extent
provided in the resolution or resolutions creating them, shall have such
functions and may exercise such powers of the Board of Directors as can be
lawfully delegated by the Board. Notwithstanding the foregoing, no committee
shall have the authority to take any action listed in subsections (a) through
(e), inclusive, of Section 2 of this Article V.
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Section 4. Removal or Dissolution. Any Committee of the Board of
directors may be dissolved by the Board at any meeting; and any member of such
committee may be removed by the Board of Directors with or without cause. Such
removal shall be without prejudice to the contract rights, if any, of the person
so removed.
Section 5. Vacancies on Committees. Vacancies on any committee of the
Board of Directors shall be filled by the Board of Directors at any meeting.
Section 6. Meetings of Committees. Regular meetings of any committee of
the Board of Directors may be held without notice at such time and at such place
as shall from time to time be determined by such committee. Special meetings of
any such committee may be called by any member thereof upon two (2) days notice
of the date, time and place of the meeting given to each of the other members of
such committee, or on such shorter notice as may be agreed to in writing by each
of the other members of such committee. Notice shall be given either personally
or in the manner provided in Section 6 of Article III of these By-laws
(pertaining to notice for directors' meetings).
Section 7. Absence of Committee Members. The Board of Directors may
designate one or more directors as alternate members of any committee of the
Board of Directors, who may replace at any meeting of such committee any member
not able to attend.
Section 8. Quorum of Committees. At all meetings of committees of the
Board of Directors, a majority of the total number of members of the committee
as determined from time to time shall constitute a quorum for the transaction of
business.
Section 9. Manner of Acting of Committees. If a quorum is present
when a vote is taken, the act of a majority of the members of any committee of
the Board of Directors present at the meeting shall be the act of such
committee.
Section 10.Minutes of Committees. Each committee of the Board of
directors shall keep regular minutes of its proceedings and report the same to
the Board of Directors when requested.
Section 11.Compensation. Members of any committee of the Board of
Directors may be paid compensation in accordance with the provisions of Section
12 of Article III of these By-laws (pertaining to compensation of directors).
Section 12.Informal Action. Any committee of the Board of Directors may
take such informal action and hold such informal meetings as allowed by the
provisions of Sections 14 and 15 of Article III of these By-laws.
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ARTICLE VI - INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1. General.
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(a) To the fullest extent permitted by law and consistent with the
principles set forth in Section 1(c) below, the Corporation shall indemnify any
person who is or was a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or other type of proceeding (other
than an action by or in the right of the Corporation), whether civil, criminal,
administrative, investigative or otherwise, and whether formal or informal, by
reason of the fact that such person is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, trustee or fiduciary of another corporation, partnership,
joint venture, trust (including without limitation an employee benefit trust),or
other enterprise.
(b) To the fullest extent permitted by law and consistent with the
principles set forth in Section 1(c) below, the Corporation shall be entitled
but shall not be obligated to indemnify any person who is or was a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or other type of proceeding (other than an action by or in the right of the
Corporation), whether civil, criminal, administrative, investigative or
otherwise, and whether formal or informal, by reason of the fact that such
person is or was an employee or agent of the Corporation or is or was serving at
the request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise.
(c) Any person for whom indemnification is required or authorized under
Section 1(a) or Section 1(b) above shall be indemnified against all liabilities,
judgments, amounts paid in settlement, penalties, fines (including an excise tax
assessed with respect to any employee benefit plan) and expenses (including
attorneys' fees, paralegals' fees and court costs) actually and reasonably
incurred in connection with any such action, suit or other proceeding, including
any appeal thereof. Indemnification shall be available only if the person to be
indemnified acted in good faith and in a manner such person reasonably believed
to be in, or not opposed to, the best interests of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
such person's conduct was unlawful. The termination of any such action, suit or
other proceeding by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner that such person
reasonably believed to be in, or not opposed to, the best interests of the
Corporation or, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation.
---------------------------------------------
(a) To the fullest extent permitted by law and consistent with the
principles set forth in Section 2(c) below, the Corporation shall indemnify any
person who is or was a party, or is threatened to be made a party, to any
threatened, pending or completed action, suit or other type of proceeding (as
further described in Section 1 of this Article VI) by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director or officer of the Corporation or is or was serving
at the request of the Corporation as a director, officer, trustee or fiduciary
of another corporation, partnership, joint venture, trust or other enterprise.
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(b) To the fullest extent permitted by law and consistent with the
principles set forth in Section 2(c) below, the Corporation shall be entitled
but shall not be obligated to indemnify any person who is or was a party, or is
threatened to be made a party, to any threatened, pending or completed action,
suit or other type of proceeding (as further described in Section 1 of this
Article VI) by or in the right of the Corporation to procure a judgment in its
favor by reason of the fact that such person is or was an employee or agent of
the Corporation or is or was serving at the request of the Corporation as an
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise.
(c) Any person for whom indemnification is required or authorized under
Section 2(a) or Section 2(b) above shall be indemnified against expenses
(including attorneys' fees, paralegals' fees and court costs) and amounts paid
in settlement not exceeding, in the judgment of the Board of directors, the
estimated expenses of litigating the action, suit or other proceeding to
conclusion, that are actually and reasonably incurred in connection with the
defense or settlement of such action, suit or other proceeding, including any
appeal thereof. Indemnification shall be available only if the person to be
indemnified acted in good faith and in a manner such person reasonably believed
to be in, or not opposed to, the best interests of the Corporation.
Notwithstanding the foregoing, no indemnification shall be made under this
Section 2 in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable unless, and only to the extent that, the court
in which such action, suit or other proceeding was brought, or any other court
of competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnification for such expenses
that such court shall deem proper.
Section 3. Determination that Indemnification Is Proper.
Indemnification pursuant to Section 1 or Section 2 of this Article VI, unless
made under the provisions of Section 6 of this Article VI or unless otherwise
made pursuant to a determination by a court, shall be made by the Corporation
only as authorized in the specific case upon a determination that the
indemnification is proper in the circumstances because the indemnified person
has met the applicable standard of conduct set forth in Section 1 or Section 2
of this Article VI. Such determination shall be made under one of the following
procedures: (a) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the action, suit or other
proceeding to which the indemnification relates; (b) if such a quorum is not
obtainable or, even if obtainable, by majority vote of a committee duly
designated by the Board of Directors (the designation being one in which
directors who are parties may participate) consisting solely of two or more
directors not at the time parties to such action, suit or other proceeding; (c)
by independent legal counsel (i) selected by the Board of directors in
accordance with the requirements of subsection (a) or by a committee designated
under subsection (b) or (ii) if a quorum of the directors cannot be obtained and
a committee cannot be designated, selected by majority vote of the full Board of
Directors (the vote being one in which directors who are parties may
participate); or (d) by the stockholders by a majority vote of a quorum
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consisting of stockholders who were not parties to such action, suit or other
proceeding or, if no such quorum is obtainable, by a majority vote of
stockholders who were not parties to such action, suit or other proceeding.
Section 4. Evaluation and Authorization. Evaluation of the
reasonableness of expenses and authorization of indemnification shall be made in
the same manner as is prescribed in Section 3 of this Article VI for the
determination that indemnification is permissible; provided, however, that if
the determination as to whether indemnification is permissible is made by
independent legal counsel, the persons who selected such independent legal
counsel shall be responsible for evaluating the reasonableness of expenses and
may authorize indemnification.
Section 5. Prepayment of Expenses. Expenses (including attorneys' fees,
paralegals' fees and court costs) incurred by a director or officer in defending
a civil or criminal action, suit or other proceeding referred to in Section 1 or
Section 2 of this Article VI shall be paid by the Corporation in advance of the
final disposition thereof, but only upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if such person is
ultimately found not to be entitled to indemnification by the Corporation
pursuant to this Article VI.
Section 6. Obligation to Indemnify. To the extent that a director or
officer has been successful on the merits or otherwise in defense of any action,
suit or other proceeding referred to in Section 1 or Section 2 of this Article
VI, or in the defense of any claim, issue or matter therein, such person shall,
upon application, be indemnified against expenses (including attorneys' fees,
paralegals' fees and court costs) actually and reasonable incurred by such
person in connection therewith.
Section 7. Nonexclusivity and Limitations. The indemnification and
advancement of expenses provided pursuant to this Article VI shall not be deemed
exclusive of any other rights to which a person may be entitled under any law,
By-law, agreement, vote of stockholders or disinterested directors, or
otherwise, both as to action in such person's official capacity and as to action
in any other capacity while holding office with the Corporation. Such
indemnification and advancement of expenses shall continue as to any person who
has ceased to be a director or officer and shall inure to the benefit of such
person's heirs and personal representatives. The Board of Directors may, at any
time, approve indemnification of or advancement of expenses to any other person
that the Corporation has the power by law to indemnify. In all cases not
specifically provided for in this Article VI, indemnification or advancement of
expenses shall not be made to the extent that such indemnification or
advancement of expenses is expressly prohibited by law.
Section 8. Continuation of Indemnification Right.
-------------------------------------
(a) The right of indemnification and advancement of expenses under this
Article VI for directors and officers shall be a contract right inuring to the
benefit of the directors and officers entitled to be indemnified hereunder. No
amendment or repeal of this Article VI shall adversely affect any right of such
director or officer existing at the time of such amendment or repeal.
Indemnification and advancement of expenses as provided for in this article VI
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shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of the heirs, executors and administrators of such
person.
(b) Unless expressly otherwise provided when authorized or ratified by
this Corporation, indemnification and advancement of expenses that have been
specifically authorized and approved by the Corporation for a particular
employee or agent shall continue as to a person who has ceased to bean employee
or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
(c) For purposes of this Article VI, the term "corporation"includes, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger, so that
any person who is or was a director or officer of a constituent corporation, or
is or was serving at the request of a constituent corporation as a director,
officer, employee, agent, trustee or fiduciary of another corporation,
partnership, joint venture, trust or other enterprise, is in the same position
under this Article VI with respect to the resulting or surviving corporation as
such person would have been with respect to such constituent corporation if its
separate existence had continued.
Section 9. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or who is or was serving at the request of the
Corporation as a director, officer, trustee, fiduciary, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise. Such
insurance may cover any liability asserted against such person and incurred by
such person in any such capacity or arising out of such person's status as such,
whether or not the Corporation is obligated to or would have the power to
indemnify such person against the liability under Section 1 or Section 2 of this
Article VI.
ARTICLE VII - INTERESTED PARTIES
Section 1. General. No contract or other transaction between the
Corporation and any one or more of its directors or any other corporation, firm,
association or entity in which one or more of its directors are directors or
officers or are financially interested shall be either void or voidable because
of such relationship or interest, because such director or directors were
present at the meeting of the Board of Directors or of a committee thereof that
authorizes, approves or ratifies such contract or transaction, or because such
director's or directors' votes are counted for such purpose, as long as one or
more of the following requirements is satisfied: (a) the fact of such
relationship or interest is disclosed or known to the Board of Directors or
committee that authorizes, approves or ratifies the contract or transaction by a
vote or consent sufficient for the purpose without counting the votes or
consents of such interested directors; (b) the fact of such relationship or
interest is disclosed or known to the stockholders entitled to vote on the
matter, and they authorize, approve or ratify such contract or transaction by
vote or written consent; or (c) the contract or transaction is fair and
reasonable as to the Corporation at the time it is authorized by the Board of
Directors, a committee thereof or the stockholders.
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Section 2. Determination of Quorum. Common or interested directors
maybe counted in determining the presence of a quorum at a meeting of the Board
of directors or a committee thereof that authorizes, approves or ratifies a
contract or transaction referred to in Section 1 of this Article VII.
Section 3. Approval by Stockholders. For purposes of Section 1(b) of
this Article VII, a conflict of interest transaction shall be authorized,
approved or ratified if it receives the vote of a majority of the shares
entitled to be counted under this Section 3. Shares owned by or voted under the
control of a director who has a relationship or interest in the transaction
described in Section 1 of this Article VII may not be counted in a vote of
stockholders to determine whether to authorize, approve or ratify a conflict of
interest transaction under Section 1(b) of this Article VII. The vote of the
shares owned by or voted under the control of a director who has a relationship
or interest in the transaction described in Section 1 of this Article VII shall
be counted, however, in determining whether the transaction is approved under
other sections of these By-laws and applicable law. A majority of those shares
that would be entitled, if present, to be counted in a vote on the transaction
under this Section 3 shall constitute a quorum for the purpose of taking action
under this Section 3.
ARTICLE VIII - CERTIFICATES OF STOCK
Section 1. Certificates for Shares. Shares may but need not be
represented by certificates. The rights and obligations of stockholders shall be
identical whether or not their shares are represented by certificates. If shares
are represented by certificates, each certificate shall be in such form as the
Board of Directors may from time to time prescribe and shall be signed (either
manually or in facsimile) by the President (and may be signed (either manually
or in facsimile) by the Secretary or an Assistant secretary and/or sealed with
the seal of the Corporation or its facsimile). Each certificate shall set forth
the holder's name and the number of shares represented by the certificate, and
shall state such other matters as may be required by law. The certificates shall
be numbered and entered on the books of the Corporation as they are issued. If
shares are not represented by certificates, then, within a reasonable time after
issue or transfer of shares without certificates, the Corporation shall send the
stockholder a written statement in such form as the Board of Directors may from
time to time prescribe, certifying as to the number of shares owned by the
stockholder and as to such other information as would have been required to be
on certificates for such shares. If and to the extent the Corporation is
authorized to issue shares of more than one class or more than one series of any
class, every certificate representing shares shall set forth or fairly summarize
upon the face or back of the certificate, or shall state that the Corporation
will furnish to any stockholder upon request and without charge a full statement
of: (a) the designations, relative rights, preferences and limitations of the
shares of each class or series authorized to be issued; (b) the variations in
rights, preferences and limitations between the shares of each such series, if
the Corporation is authorized to issue any preferred or special class in series
insofar as the same have been fixed and determined; and (c) the authority of the
Board of Directors to fix and determine the variations, relative rights and
preferences of future series.
-17-
Section 2. Signatures of Past Officers. If the person who signed
(either manually or in facsimile) a share certificate no longer holds office
when the certificate is issued, the certificate shall nevertheless be valid.
Section 3. Transfer Agents and Registrars. The Board of Directors may,
in its discretion, appoint responsible banks or trust companies in such city or
cities as the Board may deem advisable from time to time to act as transfer
agents and registrars of the stock of the Corporation. When such appointments
shall have been made, no stock certificate shall be valid until countersigned by
one of such transfer agents and registered by one of such registrars.
Section 4. Transfer of Shares. Transfers of shares of the Corporation
shall be made upon its books by the holder of the shares in person or by the
holder's lawfully constituted representative, upon surrender of the certificate
of stock for cancellation if such shares are represented by a certificate of
stock or by delivery to the Corporation of such evidence of transfer as may be
required by the Corporation if such shares are not represented by certificates.
The person in whose name shares stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes; and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Florida.
Section 5. Lost Certificates. The Board of Directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation and alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing such
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or the owner's
legal representative, to pay a reasonable charge for issuing the new
certificate, to advertise the matter in such manner as it shall require and/or
to give the Corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost or destroyed.
ARTICLE IX - RECORD DATE
Section 1. Record Date for Stockholder Actions. The Board of Director
is authorized from time to time to fix in advance a date as the record date for
the determination of the stockholders entitled to notice of and to vote at any
meeting of the stockholders and any adjournment thereof (unless a new record
date must be established by law for such adjourned meeting), or of the
stockholders entitled to give such consent or take such action, as the case
maybe. In no event may a record date so fixed by the Board of Directors precede
the date on which the resolution establishing such record date is adopted by the
Board of Directors; and such record date may not be more than seventy (70) nor
less than ten (10) days before the date of any meeting of the stockholders,
before a date in connection with the obtaining of the consent of stockholders
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for any purpose, or before the date of any other action requiring a
determination of the stockholders. Only those stockholders listed as
stockholders of record as of the close of business on the date so fixed as the
record date shall be entitled to notice of and to vote at such meeting and any
adjournment thereof, or to exercise such rights or to give such consent, as the
case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid. If the Board of
Directors fails to establish a record date as provided herein, the record date
shall be deemed to be the date ten (10) days prior to the date of the
stockholders' meeting.
Section 2. Record Date for Dividend and Other Distributions. The Board
of Directors is authorized from time to time to fix in advance a date as the
record date for the determination of the stockholders entitled to receive a
dividend or other distribution. Only those stockholders listed as stockholders
of record as of the close of business on the date so fixed as the record date
shall be entitled to receive the dividend or other distribution, as the case
maybe, notwithstanding any transfer of any stock on the books of the Corporation
after any such record date fixed as aforesaid. If the Board of Directors fails
to establish a record date as provided herein, the record date shall be deemed
to be the date of authorization of the dividend or other distribution.
ARTICLE X - DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, dividends on its outstanding shares of capital stock in the
manner and upon the terms and conditions provided by the Articles of
Incorporation of the Corporation and by law. Subject to the provisions of the
articles of Incorporation of the Corporation and to law, dividends may be paid
in cash or property, including shares of stock or other securities of the
Corporation.
ARTICLE XI - FISCAL YEAR
The fiscal year of the Corporation shall be the period selected by the
Board of Directors as the fiscal year. Unless and until changed by the Board of
directors, the fiscal year of the Corporation shall end on December 31 of each
year.
ARTICLE XII - SEAL
The corporate seal shall have the name of the Corporation and the word
"SEAL" inscribed thereon. It may be a facsimile, engraved, printed or
impressioned.
ARTICLE XIII - STOCK IN OTHER CORPORATIONS
Shares of stock in other corporations held by the Corporation shall be
voted by such officer or officers or other agent of the Corporation as the Board
of Directors shall from time to time designate for the purpose or by a proxy
thereunto duly authorized by said Board.
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ARTICLE XIV - AMENDMENTS
These By-laws may be altered, amended or repealed and new By-laws maybe
adopted either by the Board of Directors or by the holders of a majority of the
issued and outstanding shares of stock of the Corporation entitled to vote;
provided, however, that the Board of Directors may not alter, amend or repeal
any By-law adopted by the stockholders if the stockholders specifically provide
that the By-law is not subject to amendment or repeal by the Board.
ARTICLE XV - EMERGENCY BY-LAWS
Section 1. Scope of Emergency By-laws. The emergency By-laws provided
in this Article XV shall be operative during any emergency, notwithstanding any
different provision set forth in the preceding Articles hereof; provided,
however, that to the extent not inconsistent with the provisions of this Article
XV and the emergency By-laws, the By-laws provided in the preceding Articles
shall remain in effect during such emergency. For purposes of the emergency
By-law provisions of this Article XV, an emergency shall exist if a quorum of
the Corporation's directors cannot readily be assembled because of some
catastrophic event. Upon termination of the emergency, these emergency By-laws
shall cease to be operative.
Section 2. Call and Notice of Meeting. During any emergency, a meeting
of the Board of Directors may be called by any officer or director of the
Corporation. Notice of the date, time and place of the meeting shall be given by
the person calling the meeting to such of the directors as it may be feasible to
reach by any available means of communication. Such notice shall be given at
such time in advance of the meeting as circumstances permit in the judgment of
the person calling the meeting.
Section 3. Quorum and Voting. At any such meeting of the Board of
directors, a quorum shall consist of any one or more directors, and the act of
the majority of the directors present at such meeting shall be the act of the
Corporation.
Section 4. Appointment of Temporary Directors.
----------------------------------
(a) The director or directors who are able to be assembled at a meeting
of directors during an emergency may assemble for the purpose of appointing, if
such directors deem it necessary, one or more temporary directors (the
"Temporary Directors") to serve as directors of the Corporation during the term
of any emergency.
(b) If no directors are able to attend a meeting of directors during an
emergency, then such stockholders as may reasonably be assembled shall have the
right, by majority vote of those assembled, to appoint Temporary Directors to
serve on the Board of Directors until the termination of the emergency.
(c) If no stockholders can reasonably be assembled in order to conduct
a vote for Temporary Directors, then the President or his or her successor as
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determined under an emergency succession plan adopted by the Board of Directors
under Section 5 of this Article XV shall be deemed a Temporary Director of the
Corporation, and such President or his or her successor, as the case may be,
shall have the right to appoint additional Temporary Directors to serve with him
or her on the Board of Directors of the Corporation during the term of the
emergency.
(d) Temporary Directors shall have all of the rights, duties and
obligations of directors appointed pursuant to Article III hereof; provided,
however, that a Temporary Director may be removed from the Board of Directors at
any time by the person or persons responsible for appointing such Temporary
Director, or by vote of the majority of the stockholders present at any meeting
of the stockholders during an emergency. In any event, the Temporary Director
shall automatically be deemed to have resigned from the Board of Directors upon
the termination of the emergency in connection with which the Temporary Director
was appointed.
Section 5. Modification of Lines of Succession. Either before or during
any emergency, the Board of Directors may provide, and from time to time modify
lines of succession in the event that during such an emergency any or all
officers or agents of the Corporation shall for any reason be rendered incapable
of discharging their duties.
Section 6. Change of Principal Office. The Board of Directors may,
either before or during any such emergency, and effective during such emergency,
change the principal office of the Corporation or designate several alternative
head offices or regional offices, or authorize the officers of the Corporation
to do so.
Section 7. Limitation of Liability. No officer, director or employee
acting in accordance with these emergency By-laws during an emergency shall be
liable except for willful misconduct.
Section 8. Amendment or Repeal. These emergency By-laws shall be
subject to amendment or repeal by further action of the Board of Directors or by
action of the stockholders, but no such amendment or repeal shall modify the
provisions of Section 7 above with regard to actions taken prior to the time of
such amendment or repeal. Any amendment of these emergency By-laws may make any
further or different provision that may be practical or necessary under the
circumstances of the emergency.
ARTICLE XVI - PRECEDENCE OF LAW AND ARTICLES OF INCORPORATION
Any provision of the Articles of Incorporation of this Corporation
shall, subject to law, control and take precedence over any provision of these
By-laws inconsistent therewith.
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EXHIBIT 10.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT is made effective the 12th day of April, 2000,
BETWEEN
VHS NETWORK INC.,
--------------------------------------------
a corporation incorporated under the laws of
the State of Florida, (the "Purchaser")
- and -
CHINA EMALL CORPORATION,
an Ontario corporation, ("China eMall")
- and -
UPHILL CAPITAL INC.,
an Ontario corporation and a shareholder of China eMall, ("Uphill")
- and -
GDCT INVESTMENT INC.,
an Ontario corporation and a shareholder of China eMall, ("GDCT")
- and -
GANG CHAI and QIN LU CHAI,
individuals and shareholders of Uphill Capital Inc. and China eMall,
(collectively referred as "Uphill Vendors")
- and -
QING WANG and TAI XUE SHI,
individuals and shareholders of GDCT Investment Inc. and China eMall,
(collectively referred to as "GDCT Vendors")
- and -
CHARLES HE, an individual and shareholder of China eMall,
- and -
FORTE MANAGEMENT CORP.,
a Caymanian corporation and a shareholder of China eMall, ("Forte")
1
WHEREAS the Parties desire to enter into a share exchange transaction
as contemplated by this Agreement in accordance with the terms and conditions of
this Agreement.
WHEREAS the Parties hereby confirm that this Amended and Restated Share
Exchange Agreement cancels and replaces the Share Exchange Agreement dated March
9, 2000 entered into by the Parties.
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT, in consideration of the mutual
covenants hereinafter contained and provided for and other good and valuable
consideration (the receipt and sufficiency of which is hereby acknowledged by
the Parties), the Parties agree as follows:
ARTICLE I
INTERPRETATION
--------------
1.1 Definitions. In this Agreement, unless the context otherwise requires, the
terms set forth in Schedule 1.1 shall have the meanings set forth therein.
1.2 Entire Agreement. This Agreement together with the agreements and other
documents to be delivered pursuant to this Agreement, constitute the entire
agreement between the Parties pertaining to the transactions contemplated by
this Agreement and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, and there are no warranties,
representations and other agreements between the Parties in connection with the
subject matter hereof except as specifically set forth in this Agreement or any
other agreement or document to be delivered pursuant to this Agreement.
1.3 Extended Meanings. In this Agreement, words importing the singular number
include the plural and vice versa; words importing the masculine gender include
the feminine and neuter genders.
1.4 Headings. The division of this Agreement into articles, sections,
subsections and paragraphs and the insertion of headings are for convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.
1.5 References. References to an article, section, subsection, paragraph,
schedule or exhibit shall be construed as references to an article, section,
subsection, paragraph, schedule or exhibit to this Agreement, unless the context
otherwise requires.
1.6 Governing Law. This Agreement shall be governed and construed in accordance
with the laws of the Province of Ontario and the laws of Canada applicable in
that Province.
2
1.7 Currency. Unless otherwise specified, the word "dollar", or the symbol
"$" refers to US currency.
1.8 Schedules. The following is a list of schedules attached to and incorporated
into this Agreement by reference and deemed as part of this Agreement.
SCHEDULE DESCRIPTION
1.1 Definitions
2.8 Exchangeable Shares
3.1 Support Agreement between Purchaser and China eMall
4.1 (e) Shareholders of China eMall
4.2 (e) Shareholders of Uphill
4.3 (e) Shareholders of GDCT
5.1 (m) China eMall Financial Statements
5.1 (p) China eMall Business Agreements
5.2 (m) Uphill Financial Statements
5.2 (p) Uphill Business Agreements
5.3 (m) GDCT Financial Statements
5.3 (p) GDCT Business Agreements
6.1 (k) Purchaser Litigation
6.1 (m) Purchaser Business Agreements
6.1 (n) Purchaser Financial Statements
6.1 (p) Purchaser Issued and Outstanding Shares
6.1 (u) Purchaser Tax Liability
ARTICLE II
SHARE CONVERSION AND ISSUANCE
-----------------------------
2.1 Agreement to Purchase and Convert. Upon the terms and subject to the
conditions contained in this Agreement, the Purchaser, China eMall, and the
China Vendors agree to undertake the following:
all the China Vendors, excluding Uphill, GDCT and Forte, shall convert
their existing common shares in the capital of China eMall (their
"China Shares") into Exchangeable Shares of China eMall on or prior to
Closing;
the Uphill Vendors shall cause Uphill to subdivide the existing 100
common shares of its capital into 700,000 common shares prior to the
Closing Date;
the Uphill Vendors shall sell and the Purchaser shall purchase, as of
and with effect from the opening of business on the Closing Date, the
Uphill Shares;
the GDCT Vendors shall sell and the Purchaser shall purchase, as of and
with effect from the opening of business on the Closing Date, the GDCT
Shares; and
3
Forte shall sell and the Purchaser shall purchase, as of and with
effect from the opening of business on the Closing Date, the China
Shares held by Forte.
2.2 Share Conversion. The conversion of China Shares as contemplated in section
2.1 (a) above, shall be effected by the issuance of the Exchangeable Shares from
the treasury of China eMall to the China Vendors, excluding Uphill, GDCT and
Forte, (the "Share Conversion") in exchange for the China Shares, pursuant to
the issuer bid rules contained in paragraph 93 (3) (g) of the Securities Act
(Ontario) and pursuant to the prospectus and registration exemptions contained
in paragraph 35(1)(17) and Rule 45-501 (section 2.17) of the Securities Act
(Ontario).
2.3 Share Exchange. The purchase and sale of the Uphill Shares and the GDCT
Shares shall be effected by the issuance of common shares in the capital of the
Purchaser to the Uphill Vendors and the GDCT Vendors in exchange for the Uphill
Shares and GDCT Shares as the case may be, (the "Share Exchange") pursuant to
the prospectus and registration exemptions contained in paragraphs 72(1)(j) and
35(1)(16) of the Securities Act (Ontario), and Regulation S under the United
States Securities Act of 1933.
2.4 Share Exchange Forte. The purchase and sale of the China Shares held by
Forte shall be effected by the issuance of common shares in the capital of the
Purchaser to Forte in exchange for the China Shares held by Forte (the "Forte
Exchange") pursuant to Regulation S under the United States Securities Act of
1933.
2.5 Share Conversion Ratio. The Purchaser and the China Vendors have established
for the purposes of the Share Conversion a conversion ratio of 3.5 Exchangeable
Shares for every one of the China Shares held by the China Vendors, excluding
Uphill, GDCT and Forte.
2.6 Share Exchange Ratio The Purchaser and the China Vendors have established
for the purposes of the Share Exchange an exchange ratio of 1 common share in
the capital of the Purchaser for every one of the Uphill Shares and GDCT Shares
based on 700,000 common shares outstanding on the Closing Date in the capital of
each of Uphill and GDCT.
2.7 Share Exchange Ratio Forte. The Purchaser and the China Vendors have
established for the purposes of the Forte Exchange an exchange ratio of 3.5
common share in the capital of the Purchaser for every one of the China Shares
held by Forte based on 200,000 common shares held by Forte on the Closing Date
in the capital of China eMall.
2.8 Exchangeable Shares. Each Exchangeable Share may, on or after Closing, be
exchanged at the request of its holder for one common share of the Purchaser,
provided that in the event of a consolidation, split or other reorganization of
the capital stock of the Purchaser or China eMall, the number of the Purchaser's
common shares issuable for each one Exchangeable Share shall be adjusted
accordingly. The rights, privileges and restrictions of the Exchangeable Shares
shall be substantially as set out in Schedule 2.8.
4
2.9 Acknowledgement of Resale Restrictions. The Vendors hereby acknowledge that
any Exchangeable Shares or common shares in the capital of the Purchaser that
they receive pursuant to this Agreement are restricted in accordance with the
United States Securities Act of 1933 and the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder subject to the Purchaser's
covenants set out in section 8.10.
ARTICLE III
SUPPORT AGREEMENT
-----------------
3.1 Support Agreement. On Closing the Purchaser and China eMall will enter into
a Support Agreement substantially in the form as attached hereto as Schedule
"3.1"
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
---------------------------------------------
4.1 Representations and Warranties of the China Vendors. Each of the China
Vendors jointly and severally represents and warrants to the Purchaser as
follows (to the extent that the following representations and warranties relate
to that China eMall Shareholder) and acknowledges that the Purchaser is relying
on these representations and warranties in connection with the completion of the
transactions contemplated by this Agreement:
(a) Capacity to own China Shares - Each of the China Vendors has all
necessary power, authority and capacity to own the China Shares.
(b) Capacity to Enter Agreement - Each of the China Vendors has full power,
right and authority to enter into this Agreement and to perform their
obligations under it.
(c) Binding Obligation - This Agreement has been duly executed and
delivered by each of the China Vendors and constitutes a valid and
binding obligation of each of them.
(d) Absence of Conflict - None of the China Vendors is a party to, bound or
affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of any
Encumbrance upon any of the China Shares as a consequence of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated in this Agreement.
(e) Title to China Shares - Each of the China Vendors is the legal and
beneficial owner of the China Shares as set forth in Schedule 4.1 (e),
with good and marketable title, free and clear of any Encumbrances.
(f) No Bankruptcy - No proceedings have been taken or authorized by any
China eMall Shareholder or by any other person in respect of the
bankruptcy, insolvency, liquidation, dissolution or winding up as
applicable, of any China eMall Shareholder.
5
(g) No Option - No Person, other than the Purchaser under this Agreement,
has any agreement or any right capable of becoming an agreement or
option for the purchase from the China Vendors of any of the China
Shares.
(h) Disclosure - The representations and warranties of each of the China
Vendors in this Agreement are true, correct and do not contain any
untrue or misleading statement of a material fact or omit to state a
material fact necessary to make such representations and warranties not
misleading to the Purchaser.
(i) Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of China eMall or a
China eMall shareholder, any by-laws, any court or administrative order
or process, any agreement or instrument to which China eMall or a China
eMall shareholder is party or by which it is bound.
4.2 Representations and Warranties of the Uphill Vendors. Each of the Uphill
Vendors jointly and severally represents and warrants to the Purchaser as
follows (to the extent that the following representations and warranties relate
to that Uphill Shareholder) and acknowledges that the Purchaser is relying on
these representations and warranties in connection with the completion of the
transactions contemplated by this Agreement:
(a) Capacity to own Uphill Shares - The Uphill Vendors have all necessary
power, authority and capacity to own the Uphill Shares.
(b) Capacity to Enter Agreement - The Uphill Vendors have full power, right
and authority to enter into this Agreement and to perform their
obligations under it.
(c) Binding Obligation - This Agreement has been duly executed and
delivered by the Uphill Vendors and constitutes a valid and binding
obligation of each of them.
(d) Absence of Conflict - The Uphill Vendors are not a party to, bound or
affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of any
Encumbrance upon any of the Uphill Shares as a consequence of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated in this Agreement.
(e) Title to Uphill Shares - The Uphill Vendors are the legal and
beneficial owners of the Uphill Shares as set forth in Schedule 4.2
(e), with good and marketable title, free and clear of any
Encumbrances.
(f) No Bankruptcy - No proceedings have been taken or authorized by any
Uphill eMall Shareholder or by any other person in respect of the
bankruptcy, insolvency, liquidation, dissolution or winding up as
applicable, of any Uphill eMall Shareholder.
6
(g) No Option - No Person, other than the Purchaser under this Agreement,
has any agreement or any right capable of becoming an agreement or
option for the purchase from the Uphill Vendors of any of the Uphill
Shares.
(h) Disclosure - The representations and warranties of the Uphill Vendors
in this Agreement are true, correct and do not contain any untrue or
misleading statement of a material fact or omit to state a material
fact necessary to make such representations and warranties not
misleading to the Purchaser.
(i) Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of Uphill or an
Uphill Shareholder, any by-laws, any court or administrative order or
process, any agreement or instrument to which Uphill or an Uphill
Shareholder is party or by which it is bound.
4.3 Representations and Warranties of the GDCT Vendors. Each of the GDCT Vendors
jointly and severally represents and warrants to the Purchaser as follows (to
the extent that the following representations and warranties relate to that GDCT
Shareholder) and acknowledges that the Purchaser is relying on these
representations and warranties in connection with the completion of the
transactions contemplated by this Agreement:
(a) Capacity to own GDCT Shares - The GDCT Vendors have all necessary
power, authority and capacity to own the GDCT Shares.
(b) Capacity to Enter Agreement - The GDCT Vendors have full power, right
and authority to enter into this Agreement and to perform their
obligations under it.
(c) Binding Obligation - This Agreement has been duly executed and
delivered by the GDCT Vendors and constitutes a valid and binding
obligation of each of them.
(d) Absence of Conflict - The GDCT Vendors are not a party to, bound or
affected by any agreement which would be violated, breached or
terminated by, or which would result in creation or imposition of any
Encumbrance upon any of the GDCT Shares as a consequence of the
execution and delivery of this Agreement or the consummation of the
transactions contemplated in this Agreement.
(e) Title to GDCT Shares - The GDCT Vendors are the legal and beneficial
owners of the GDCT Shares as set forth in Schedule 4.3 (e), with good
and marketable title, free and clear of any Encumbrances.
(f) No Bankruptcy - No proceedings have been taken or authorized by any
GDCT Shareholder or by any other person in respect of the bankruptcy,
insolvency, liquidation, dissolution or winding up as applicable, of
any GDCT Shareholder.
(g) No Option - No Person, other than the Purchaser under this Agreement,
has any agreement or any right capable of becoming an agreement or
option for the purchase from the GDCT Vendors of any of the GDCT
Shares.
7
(h) Disclosure - The representations and warranties of the GDCT Vendors in
this Agreement are true, correct and do not contain any untrue or
misleading statement of a material fact or omit to state a material
fact necessary to make such representations and warranties not
misleading to the Purchaser.
(i) Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of GDCT or a GDCT
Shareholder, any by-laws, any court or administrative order or process,
any agreement or instrument to which GDCT or an GDCT Shareholder is
party or by which it is bound.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CHINA EMALL, THE CHINA
VENDORS, UPHIILL, THE UPHILL VENDORS, GDCT AND THE GDCT VENDORS
---------------------------------------------------------------
5.1 Representations and Warranties of China eMall and the China Vendors. China
eMall and the China Vendors jointly and severally represent and warrant to the
Purchaser as follows and acknowledge that the Purchaser is relying on these
representations and warranties in connection with this Agreement:
(a) Due Incorporation - China eMall is a corporation duly incorporated and
validly existing under the laws of Ontario.
(b) Capacity to Enter Agreement - China eMall has full corporate power and
authority to enter into this Agreement and to perform its obligations
under it.
(c) Due Authorization - The execution and delivery of this Agreement and
the consummation of the transactions contemplated under it have been
duly authorized by all necessary corporate action on the part of China
eMall.
(d) Binding Obligation - This Agreement has been duly executed and
delivered by China eMall and constitutes a valid and binding obligation
of it.
(e) Absence of Conflict - China eMall is not a party to, bound or affected
by any agreement which would be violated, breached or terminated by, or
which would result in the creation or imposition of any Encumbrance
upon any of the China Shares as a consequence of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated in this Agreement.
(f) Regulatory Approvals - No governmental or regulatory authorization,
approval, order or consent is required on the part of China eMall, in
connection with the execution, delivery and performance of this
Agreement and the performance of China eMall's obligations under this
Agreement.
8
(g) No Bankruptcy - No proceedings have been taken, are pending or
authorized by China eMall or by any other person in respect of the
bankruptcy, insolvency, liquidation, dissolution or winding up of China
eMall.
(h) Authorised and Issued Capital - The authorized capital of China eMall
consists of an unlimited number of common shares, of which 1,747,143
common shares are currently outstanding as fully paid and
non-assessable shares of China eMall and an unlimited number of special
shares of which none are issued and outstanding. There are no other
options or warrants or other rights of any kind in existence,
authorized or agreed to which could result in any further shares or
other securities of China eMall being allotted or issued or becoming
outstanding.
Minute Books - The minute books of China eMall contain accurate and
complete minutes of all meetings and resolutions of the directors and
the shareholders of China eMall held or passed by signature in writing,
respectively, since the date of its incorporation. All such meetings
have been duly called and held. China eMall share certificate books and
share registers are complete and accurate.
(j) No Subsidiaries - China eMall does not own any shares in or securities
of any corporate body and is not a partner of any partnership or a
member of any joint venture.
(k) China eMall's Capacity and Power - China eMall has full corporate
right, power and authority to own or lease its assets as now owned or
leased and to carry on the China eMall Business.
(l) Business - The only business carried on by China eMall is the China
eMall Business.
(m) China eMall Financial Statements - The China eMall Financial Statements
have been prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis throughout the
periods indicated, and fairly and accurately present, subject to
immaterial variation, the financial position, assets and liabilities
(whether absolute, contingent, accrued or otherwise) of China eMall on
the dates thereof and the financial results of China eMall for the
periods referred to in the China eMall Financial Statements a copy of
which is attached hereto as Schedule 5.1 (m).
(n) No Guarantees etc. - China eMall is not a party to or bound by any
agreement of guarantee, indemnification, assumption or endorsement or
any like commitment of the obligations, liabilities (contingent or
otherwise) or indebtedness of any Person.
(o) Records -
(i) The China eMall Records are true and correct and present
fairly and disclose in all material respects the actual
results of the China eMall Business.
9
(ii) To the best of knowledge, all material financial transactions
of China eMall have been accurately recorded in the China
eMall Records. The China eMall Records (of a financial nature)
have been prepared in accordance with Canadian generally
accepted accounting principles consistently applied.
(iii) The files, documentation and information in writing provided
by China eMall to the Purchaser in connection with the
negotiation and completion of the transactions contemplated in
this Agreement are true and correct in all material respects.
(p) Business Agreements - There are no material agreements relating to the
China eMall Business except for those listed in Schedule 5.1 (p),
copies of which have been translated into English if necessary and
provided to the Purchaser on or before Closing.
(q) Litigation - There are no judgements, decrees, injunctions, ruling or
orders of any court, Governmental Authority or arbitration, or any
actions, suits, grievances or proceedings, (whether or not on behalf of
China eMall and, to the best of knowledge, pending or threatened or
involving China eMall, or the China eMall Business) which may
materially adversely affect the China eMall Business or China eMall's
assets.
(r) Disclosure - The representations and warranties of each of the China
Vendors in this Agreement are true, complete and correct and do not
contain any untrue or misleading statement of a material fact.
Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of China eMall, any
by-laws, any court or administrative order or process, any agreement or
instrument to which China eMall is party or by which it is bound.
Liabilities - There are no outstanding debts or liabilities of China
eMall other than as reflected in the audited financial statements for
the period ended August 31, 1999 and as reasonably incurred in the
ordinary course of business since August 31, 1999.
Tax - For all periods prior to the date of this Agreement, all federal,
state, provincial and foreign tax returns and tax reports required to
be filed by China eMall have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, and all of the foregoing are true,
correct and complete. Except for all taxes for the current fiscal year,
all taxes (including interest and penalties) due from China eMall have
been fully paid or, adequate provisions made therefor and no claim or
liability is pending or has been assessed or asserted against the China
eMall in connection with any such taxes and China eMall knows of no
basis for any such claim or liability.
10
5.2 Representations and Warranties of Uphill and the Uphill Vendors. Uphill and
the Uphill Vendors jointly and severally represent and warrant to the Purchaser
as follows and acknowledge that the Purchaser is relying on these
representations and warranties in connection with this Agreement:
(a) Due Incorporation - Uphill is a corporation duly incorporated and
validly existing under the laws of Ontario.
(b) Capacity to Enter Agreement - Uphill has full corporate power and
authority to enter into this Agreement and to perform its obligations
under it.
(c) Due Authorization - The execution and delivery of this Agreement and
the consummation of the transactions contemplated under it have been
duly authorized by all necessary corporate action on the part of
Uphill.
(d) Binding Obligation - This Agreement has been duly executed and
delivered by Uphill and constitutes a valid and binding obligation of
it.
(e) Absence of Conflict - Uphill is not a party to, bound or affected by
any agreement which would be violated, breached or terminated by, or
which would result in the creation or imposition of any Encumbrance
upon any of the Uphill Shares as a consequence of the execution and
delivery of this Agreement or the consummation of the transactions
contemplated in this Agreement.
(f) Regulatory Approvals - No governmental or regulatory authorization,
approval, order or consent is required on the part of Uphill, in
connection with the execution, delivery and performance of this
Agreement and the performance of Uphill's obligations under this
Agreement.
(g) No Bankruptcy - No proceedings have been taken, are pending or
authorized by Uphill or by any other person in respect of the
bankruptcy, insolvency, liquidation, dissolution or winding up of
Uphill.
Authorised and Issued Capital - The authorized capital of Uphill
consists of an unlimited number of common shares, of which at the time
of signing of this Agreement, 100 common shares are currently
outstanding as fully paid and non-assessable shares of Uphill and an
unlimited number of special shares of which none are issued and
outstanding. There are no other options or warrants or other rights of
any kind in existence, authorized or agreed to which could result in
any further shares or other securities of Uphill being allotted or
issued or becoming outstanding.
Minute Books - The minute books of Uphill contain accurate and complete
minutes of all meetings and resolutions of the directors and the
shareholders of Uphill held or passed by signature in writing,
respectively, since the date of its incorporation. All such meetings
have been duly called and held. Uphill share certificate books and
share registers are complete and accurate.
11
(j) No Subsidiaries - Uphill does not own any shares in or securities of
any corporate body, other than China Shares, and is not a partner of
any partnership or a member of any joint venture.
(k) Uphill's Capacity and Power - Uphill has full corporate right, power
and authority to own or lease its assets as now owned or leased and to
carry on the Uphill Business.
(l) Business -The only business carried on by Uphill is the Uphill
Business.
(m) Uphill Financial Statements - The Uphill Financial Statements have been
prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis throughout the periods
indicated, and fairly and accurately present, subject to immaterial
variation, the financial position, assets and liabilities (whether
absolute, contingent, accrued or otherwise) of Uphill on the dates
thereof and the financial results of Uphill for the periods referred to
in the Uphill Financial Statements attached hereto as Schedule 5.2 (m).
(n) No Guarantees etc. - Uphill is not a party to or bound by any agreement
of guarantee, indemnification, assumption or endorsement or any like
commitment of the obligations, liabilities (contingent or otherwise) or
indebtedness of any Person.
(o) Records -
(i) The Uphill Records are true and correct and present fairly and
disclose in all material respects the actual results of the
Uphill Business.
(ii) To the best of knowledge, all material financial transactions
of Uphill have been accurately recorded in the Uphill Records.
The Uphill Records (of a financial nature) have been prepared
in accordance with Canadian generally accepted accounting
principles consistently applied.
(iii) The files, documentation and information in writing provided
by Uphill to the Purchaser in connection with the negotiation
and completion of the transactions contemplated in this
Agreement are true and correct in all material respects.
(p) Business Agreements - There are no material agreements relating to the
Uphill Business except for those listed in Schedule 5.2 (p), copies of
which have been provided to the Purchaser on or before closing.
(q) Litigation - There are no judgements, decrees, injunctions, ruling or
orders of any court, Governmental Authority or arbitration, or any
actions, suits, grievances or proceedings, (whether or not on behalf of
Uphill and, to the best of knowledge, pending or threatened or
involving Uphill, or the Uphill Business) which may materially
adversely affect the Uphill Business or Uphill's assets.
12
(r) Disclosure - The representations and warranties of the Uphill Vendors
in this Agreement are true, complete and correct and do not contain any
untrue or misleading statement of a material fact.
Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of Uphill, any
by-laws, any court or administrative order or process, any agreement or
instrument to which Uphill is party or by which it is bound.
Liabilities - There are no outstanding debts or liabilities of Uphill.
Tax - For all periods prior to the date of this Agreement, all federal,
state, provincial and foreign tax returns and tax reports required to
be filed by Uphill have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, and all of the foregoing are true,
correct and complete. Except for all taxes for the current fiscal year,
all taxes (including interest and penalties) due from Uphill have been
fully paid or, adequate provisions made therefor and no claim or
liability is pending or has been assessed or asserted against Uphill in
connection with any such taxes and Uphill knows of no basis for any
such claim or liability.
5.3 Representations and Warranties of GDCT and the GDCT Vendors. GDCT and the
GDCT Vendors jointly and severally represent and warrant to the Purchaser as
follows and acknowledge that the Purchaser is relying on these representations
and warranties in connection with this Agreement:
(a) Due Incorporation - GDCT is a corporation duly incorporated and validly
existing under the laws of Ontario.
(b) Capacity to Enter Agreement - GDCT has full corporate power and
authority to enter into this Agreement and to perform its obligations
under it.
(c) Due Authorization - The execution and delivery of this Agreement and
the consummation of the transactions contemplated under it have been
duly authorized by all necessary corporate action on the part of GDCT.
(d) Binding Obligation - This Agreement has been duly executed and
delivered by GDCT and constitutes a valid and binding obligation of it.
(e) Absence of Conflict - GDCT is not a party to, bound or affected by any
agreement which would be violated, breached or terminated by, or which
would result in the creation or imposition of any Encumbrance upon any
of the GDCT Shares as a consequence of the execution and delivery of
this Agreement or the consummation of the transactions contemplated in
this Agreement.
13
(f) Regulatory Approvals - No governmental or regulatory authorization,
approval, order or consent is required on the part of GDCT, in
connection with the execution, delivery and performance of this
Agreement and the performance of GDCT's obligations under this
Agreement.
(g) No Bankruptcy - No proceedings have been taken, are pending or
authorized by GDCT or by any other person in respect of the bankruptcy,
insolvency, liquidation, dissolution or winding up of GDCT.
Authorised and Issued Capital - The authorized capital of GDCT consists
of an unlimited number of common shares, of which at the time of
Closing, 700,000 common shares will be outstanding as fully paid and
non-assessable shares of GDCT and an unlimited number of special shares
of which none are issued and outstanding. There are no other options or
warrants or other rights of any kind in existence, authorized or agreed
to which could result in any further shares or other securities of GDCT
being allotted or issued or becoming outstanding.
Minute Books - The minute books of GDCT contain accurate and complete
minutes of all meetings and resolutions of the directors and the
shareholders of GDCT held or passed by signature in writing,
respectively, since the date of its incorporation. All such meetings
have been duly called and held. GDCT share certificate books and share
registers are complete and accurate.
(j) No Subsidiaries - GDCT does not own any shares in or securities of any
corporate body, other than China Shares, and is not a partner of any
partnership or a member of any joint venture.
(k) GDCT's Capacity and Power - GDCT has full corporate right, power and
authority to own or lease its assets as now owned or leased and to
carry on the GDCT Business.
(l) Business - The only business carried on by GDCT is the GDCT Business.
(m) GDCT Financial Statements - The GDCT Financial Statements have been
prepared in accordance with Canadian generally accepted accounting
principles applied on a consistent basis throughout the periods
indicated, and fairly and accurately present, subject to immaterial
variation, the financial position, assets and liabilities (whether
absolute, contingent, accrued or otherwise) of GDCT on the dates
thereof and the financial results of GDCT for the periods referred to
in the GDCT Financial Statements attached hereto as Schedule 5.3 (m).
(n) No Guarantees etc. - GDCT is not a party to or bound by any agreement
of guarantee, indemnification, assumption or endorsement or any like
commitment of the obligations, liabilities (contingent or otherwise) or
indebtedness of any Person.
14
(o) Records -
(i) The GDCT Records are true and correct and present fairly and
disclose in all material
respects the actual results of the GDCT Business.
(ii) To the best of knowledge, all material financial transactions
of GDCT have been accurately recorded in the GDCT Records. The
GDCT Records (of a financial nature) have been prepared in
accordance with Canadian generally accepted accounting
principles consistently applied.
(iii) The files, documentation and information in writing provided
by GDCT to the Purchaser in connection with the negotiation
and completion of the transactions contemplated in this
Agreement are true and correct in all material respects.
(p) Business Agreements - There are no material agreements relating to the
GDCT Business except for those listed in Schedule 5.3 (p), copies of
which have been provided to the Purchaser on or before closing.
(q) Litigation - There are no judgements, decrees, injunctions, ruling or
orders of any court, Governmental Authority or arbitration, or any
actions, suits, grievances or proceedings, (whether or not on behalf of
GDCT and, to the best of knowledge, pending or threatened or involving
GDCT, or the GDCT Business) which may materially adversely affect the
GDCT Business or GDCT's assets.
(r) Disclosure - The representations and warranties of the GDCT Vendors in
this Agreement are true, complete and correct and do not contain any
untrue or misleading statement of a material fact.
Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of GDCT, any
by-laws, any court or administrative order or process, any agreement or
instrument to which GDCT is party or by which it is bound.
Liabilities - There are no outstanding debts or liabilities of GDCT.
Tax - For all periods prior to the date of this Agreement, all federal,
state, provincial and foreign tax returns and tax reports required to
be filed by GDCT have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, and all of the foregoing are true,
correct and complete. Except for all taxes for the current fiscal year,
all taxes (including interest and penalties) due from GDCT have been
fully paid or, adequate provisions made therefor and no claim or
liability is pending or has been assessed or asserted against GDCT in
connection with any such taxes and GDCT knows of no basis for any such
claim or liability.
15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
6.1 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to China eMall and the Vendors as follows and
acknowledges that China eMall and the Vendors are relying on those
representations and warranties in connection with this Agreement:
(a) Due Incorporation - The Purchaser is a corporation duly incorporated
and validly existing under the laws of the State of Florida.
(b) Capacity to Enter Agreement - The Purchaser has full power, right and
authority to enter into this Agreement and to perform the obligations
under it.
(c) Due Corporate Authorization - The execution and delivery of this
Agreement and the consummation of the transactions contemplated under
it have been duly authorized by all necessary corporate action on the
part of the Purchaser.
(d) Binding Obligation - This Agreement has been duly executed and
delivered by the Purchaser and constitutes a valid and binding
obligation of the Purchaser.
(e) Absence of Conflict - The Purchaser is not a party to, bound or
affected by or subject to any agreement which would be violated,
breached or terminated by, or which would result in the creation or
imposition of any Encumbrance upon any of the Exchangeable Shares as a
consequence of, the execution and delivery of this Agreement or the
consummation of the transactions contemplated in this Agreement.
(f) Regulatory Approvals - No governmental or regulatory authorization,
approval, order or consent is required on the part the Purchaser, in
connection with the execution, delivery and performance of this
Agreement and the performance of the Purchaser's obligations under this
Agreement.
(g) No Bankruptcy - No proceedings have been taken, are pending or
authorized by the Purchaser or by any other person in respect to the
bankruptcy, insolvency, liquidation, dissolution or winding up of the
Purchaser.
Minute Books - The minute books of the Purchaser contain accurate and
complete minutes of recent meetings and resolutions of the directors
and the shareholders of the Purchaser held or passed by signature in
writing, respectively.
(i) Absence of Material Changes - Since the execution of this Agreement:
(i) no changes have been made in the accounting methods,
practices, or policies followed by the Purchaser since
December 31, 1998 except that the financial statements for the
fiscal year 1998 were prepared according to generally accepted
auditing standards in Canada and the financial statements for
the fiscal year 1999 will be prepared by a United States
auditor;
16
(ii) the Purchaser has not increased, incurred or guaranteed any
debt, obligation, or liability (whether absolute or contingent
and whether or not currently due and payable);
(iii) there has been no damage, destruction or loss, labour trouble,
or other event, development or condition of any character
(whether or not covered by insurance) which adversely affects,
or, may adversely affect, the properties or prospects of the
Purchaser; and
(iv) the Purchaser has not paid any amount or dividend, or
otherwise made any distribution or the payment of any kind or
nature whatsoever to any non-arm's length Person.
(j) Records - The files, documentation and information in writing provided
by the Purchaser to China eMall and the Vendors in connection with the
negotiation and completion of the transactions contemplated in this
Agreement are true and correct in all material respects.
Litigation - There are no judgements, decrees, injunctions, ruling or
orders of any court, Governmental Authority or arbitration, or any
actions, suits, grievances or proceedings (whether or not on behalf of
the Purchaser) pending or threatened of the Purchaser which may
materially adversely affect the Purchaser's assets other than those
disclosed in Schedule 6.1 (k).
Disclosure - The representations and warranties of the Purchaser in
this Agreement are true, complete and correct and do not contain any
untrue or misleading statement of a material fact or omit to state a
material fact necessary to make such representations and warranties not
misleading to Vendors.
Business Agreements - The are no material agreements relating to the
business of the Purchaser except as those listed in Schedule 6.1 (m)
attached hereto copies of which will be provided to the Vendors on or
before closing and which the Purchaser represents and warrants are in
good standing.
Purchaser's Financial Statements - The Purchaser's Financial Statements
have been prepared in accordance with Canadian generally accepted
accounting principles applied on a consistent basis throughout the
periods indicated, and fairly and accurately present, subject to
immaterial variation, the financial position, assets and liabilities
(whether absolute, contingent, accrued or otherwise) of the Purchaser
on the dates thereof and the financial results of the Purchaser for the
periods referred to in the Purchaser's Financial Statements a copy of
which is attached hereto as Schedule 6.1 (n).
17
OTC Bulletin Board - The Purchaser is currently listed for trading on
the Nasdaq Over-the-counter bulletin board ("OTCBB") under the symbol
VHSN. The NASD Eligibility Rule provides that no issuer may be quoted
on the OTCBB unless it is required to make certain filings pursuant to
Section 13 or 15 (d) of the Securities Exchange Act of 1934 (the
"Act"). In order to be required to make filings pursuant to Section 13
or 15 (d) of the Act, an issuer must register its class of securities
under the Securities Act of 1933 or the Securities Exchange Act of
1934. The Purchaser has until May 17, 2000 to have the Securities and
Exchange Commission ("SEC") declare a Form 10SB (or other registration
statement) effective, and have the SEC staff reach a position of no
further comment on the filing to avoid delisting.
Authorized and Issued Capital - The authorized capital of the Purchaser
consists of and will on Closing Date consist of 100,000,000 common
shares each with a par value of $0.001 and 25,000,000 preferred shares
each with a par value of $0.001, of which only 15,520,268 common shares
and no preferred shares are outstanding on April 12, 2000, as set out
in Schedule 6.1 (p) all of which issued common shares are fully paid
and non-assessable. Schedule 6.1 (p) also sets out the issued and
outstanding number of common shares on a fully diluted basis and there
are no other options, warrants or convertible instruments outstanding
other than as disclosed in Schedule 6.1 (p).
Purchaser's Capacity and Power - the Purchaser has full corporate
right, power and authority to own or lease its assets as now owned or
leased and to carry on the Purchasers Business.
Business - the only business carried on by the Purchaser is the Purchasers
Business.
Non-Violation - The entering into of this Agreement and the
consummation of transactions contemplated herein do not and will not
conflict with, or result in a breach of, or constitute a default under
the terms or conditions of any constating document of the Purchaser,
any by- laws, any court or administrative order or process, any
agreement or instrument to which the Purchaser is party or by which it
is bound.
Liabilities - There are no outstanding debts or liabilities of the
Purchaser other than as disclosed in the Purchaser's Financial
Statements, elsewhere in this Agreement or as otherwise disclosed in
writing to the China Vendors prior to Closing.
Tax - For all periods prior to the date of this Agreement, all federal,
state, provincial and foreign tax returns and tax reports required to
be filed by the Purchaser have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such returns and
reports are required to be filed, and all of the foregoing are true,
correct and complete. Except for all taxes for the current fiscal year,
all taxes (including interest and penalties) due from the Purchaser
have been fully paid or, adequate provisions made therefor and no claim
or liability is pending or has been assessed or asserted against the
Purchaser in connection with any such taxes and the Purchaser knows of
no basis for any such claim or liability except as otherwise set out in
Schedule 6.1 (u) attached hereto.
Subsidiaries. The Purchaser has no other subsidiaries then VHS Acquisition Inc.
and VHS Network Inc.
18
No Guarantees etc. The Purchaser is not a party to or bound by any
agreement of guarantee, indemnification, assumption or endorsement or
any like commitment of the obligations, liabilities (contingent or
otherwise) or indebtedness of any Person other than as provided in the
Articles of Incorporation and By-laws of the corporation or otherwise
in the normal course of business.
Groupmarkdebt. As of Closing there will be US$380,000 owed to Groupmark Canada
Limited by the Purchaser.
ARTICLE VII
NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
-----------------------------------------------------
7.1 Subject to section 7.2, all representations and warranties contained in this
Agreement on the part of each of the Parties shall survive the Closing for a
period of one (1) year from the Closing Date, after which time, if no claim
shall have been made against a Party with respect to any incorrectness or breach
of any representation or warranty, that Party shall have no further liability
under this Agreement with respect to the representation or warranty.
7.2 The representations, warranties, covenants and indemnities of the
Parties relating to tax liability shall:
(a) unless resulting from any misrepresentation made or fraud committed in
filing a return or supplying information for the purposes of the Income
Tax Act (Canada), applicable provincial corporation tax legislation or
any other legislation imposing tax on China eMall Uphill, GDCT or the
Purchaser, terminate at the expiration of the last of the limitation
periods contained in the Income Tax Act (Canada), applicable provincial
corporation tax legislation or any other legislation imposing tax on
China eMall, Uphill, GDCT or the Purchaser; and
(b) if based upon misrepresentation made or fraud committed in filing a
return or in supplying information for the purposes of the Income Tax
Act (Canada), applicable provincial corporation tax legislation or any
other legislation imposing tax on China eMall, Uphill, GDCT or the
Purchaser, survive without limit as to time.
7.3 All statements contained in any certificate or any instrument delivered by
or on behalf of a Party pursuant to or in connection with the transactions
contemplated by this Agreement shall be deemed to be made by such Party under
this Agreement.
ARTICLE VIII
COVENANTS
---------
8.1 Conduct of China eMall Business Prior to Closing. During the Interim
Period, China eMall shall:
(a) Conduct Business in Ordinary Course - except as otherwise contemplated
or permitted by this Agreement, conduct the China eMall Business
diligently and prudently and shall not, without the prior written
consent of the Purchaser, enter into any contracts, agreements,
commitments or leases, or undertake any activity (including allotment
or issuance of any further shares or securities of China eMall), except
in the ordinary course of the China eMall Business;
(b) Continue Insurance - continue in full force all existing insurance
policies;
(c) Comply with Laws - comply with all laws applicable to the China eMall
Business;
(d) Maintain Permits - apply for, maintain in good standing and renew all
permits, licenses, registrations and permits necessary to enable it to
carry on the China eMall Business as now conducted; and
(e) Distributions - not pay any amount or dividend or otherwise make any
distribution to its shareholders or any non-arm's length Person out of
the normal course.
8.2 Conduct of Uphill Business Prior to Closing. During the Interim Period,
Uphill shall:
(a) Conduct Business in Ordinary Course - except as otherwise contemplated
or permitted by this Agreement, conduct the Uphill Business diligently
and prudently and shall not, without the prior written consent of the
Purchaser, enter into any contracts, agreements, commitments or leases,
or undertake any activity (including allotment or issuance of any
further shares or securities of Uphill ), except in the ordinary course
of the Uphill Business;
(b) Continue Insurance - continue in full force all existing insurance
policies;
(c) Comply with Laws - comply with all laws applicable to the Uphill
Business;
(d) Maintain Permits - apply for, maintain in good standing and renew all
permits, licenses, registrations and permits necessary to enable it to
carry on the Uphill Business as now conducted; and
(e) Distributions - not pay any amount or dividend or otherwise make any
distribution to its shareholders or any non-arm's length Person out of
the normal course.
8.3 Conduct of GDCT Business Prior to Closing. During the Interim Period,
GDCT shall:
(a) Conduct Business in Ordinary Course - except as otherwise contemplated
or permitted by this Agreement, conduct the GDCT Business diligently
and prudently and shall not, without the prior written consent of the
19
Purchaser, enter into any contracts, agreements, commitments or leases,
or undertake any activity (including allotment or issuance of any
further shares or securities of GDCT), except in the ordinary course of
the GDCT Business;
(b) Continue Insurance - continue in full force all existing insurance
policies;
(c) Comply with Laws - comply with all laws applicable to the GDCT
Business;
(d) Maintain Permits - apply for, maintain in good standing and renew all
permits, licenses, registrations and permits necessary to enable it to
carry on the GDCT Business as now conducted; and
(e) Distributions - not pay any amount or dividend or otherwise make any
distribution to its shareholders or any non-arm's length Person out of
the normal course.
8.4 Conduct of the Purchaser Prior to Closing. During the Interim Period,
the Purchaser shall comply with all laws applicable to the Purchaser.
8.5 Conduct of the Purchaser After Closing.
The Purchaser shall not transfer or cause Uphill or GDCT to transfer
any common shares of China eMall without providing at least 45 days'
written notice to the holders of the Exchangeable Shares outstanding at
that time, of such intention so that the holders of the Exchangeable
Shares have the option of exchanging their Exchangeable Shares at that
time.
(b) During the period from Closing until there are no longer any
Exchangeable Shares outstanding, the Purchaser shall not:
take actions that prejudice the holders of Exchangeable Shares, by
unduly diminishing the value of that which they are entitled to receive
on the conversion/exchange of their shares, provided that the Purchaser
shall not be liable hereunder for reasonable decisions made in the
ordinary course of business, or for fluctuations in market price caused
by factors beyond its control;
cause China eMall to commence, continue or complete any liquidation,
dissolution or winding-up of China eMall or other distribution of the
property or assets of China eMall among its shareholders for the
purpose of winding-up its affairs without the express written consent
of a majority of the votes attaching to the holders of Exchangeable
Shares outstanding from time to time; or
cause China eMall to sell or dispose of all or substantially all of its
assets or property without the express written consent of a majority of
the votes attaching to the holders of Exchangeable Shares outstanding
from time to time.
20
(c) Notwithstanding the provisions in 8.5 (a) and (b) above the Purchaser
shall be entitled to complete statutory amalgamations between Uphill,
GDCT and/or China eMall without consent of the holders of Exchangeable
Shares provided that the amalgamated corporation has the same articles
and by-laws as China eMall.
8.5A Covenants of Vendors After Closing.
GDCT. Within 90 days after Closing the GDCT Vendors shall provide the
Purchasers with the Financial Statements and completed tax returns for
GDCT for the year ended January 31, 2000 and the interim period from
January 31, 2000 up to Closing.
Uphill. Within 90 days after Closing the Uphill Vendors shall provide
the Purchasers with the Financial Statements and completed tax returns
for Uphill for the last completed fiscal year and the interim period
from the last fiscal year end up to Closing.
8.6 Access for Investigation.
(a) The Purchaser, the China Vendors and China eMall shall permit the other
Parties and their Authorized Representatives, until the Closing Date,
to have reasonable access during normal business hours to their
respective premises and their respective Records to enable confirmation
of the accuracy of the Records and the matters represented and
warranted in Articles IV, V and VI .
(b) Until the Closing Date and, in the event the termination of this
Agreement without the completion of the transactions contemplated
hereby, each of the Parties shall thereafter, subject to subsection
8.6(c), use its best efforts to keep confidential and not use for its
own purpose (other than as contemplated by this Agreement) any
information obtained from any other Party with respect to the other
Party's affairs. If this Agreement is terminated, all documents,
working papers and other written material obtained by the Party from
the other party in connection with this Agreement and not previously
made public (and all copies thereof) shall be returned to the other
Party promptly after such termination.
(c) The obligation of each of the Parties under subsection 8.6(b) to keep
confidential and not use any information shall not apply to information
which:
(i) becomes generally available to the public other than as a
result of a disclosure by the Party or its representatives in
violation of this Agreement;
(ii) was available to the Party on a non-confidential basis prior
to its disclosure by the other party or their representatives;
(iii) becomes available to the party on a non-confidential basis
from a source other than the other Party or its
representatives, provided that such source is not bound by a
confidentiality agreement with the other Party; or
(iv) the Party is required by law to disclose.
21
8.7 Closing Documents. The Ancillary Agreements shall be executed and
delivered by the Parties thereto at the Closing time.
8.8 Corporate Proceedings. On or before the Closing Date, each Party (which is a
corporation) shall provide to the other Parties certified copies of all
necessary proceedings and resolutions, corporate or otherwise, and all other
necessary actions, corporate or otherwise, authorizing the execution and
delivery of this Agreement and the matters contemplated in it.
8.9 Actions to Satisfy Closing Conditions. Each Party shall take all such
actions as are within its power to control, and shall use its best efforts to
cause other actions to be taken which are not within its power to control, so as
to ensure compliance with any conditions set forth in this Agreement which are
for the benefit of itself or any other Party.
8.10 Purchaser's Proceedings. The Purchaser shall, on or immediately following
Closing, complete and diligently pursue a Form 10SB, Form SB-2 or other suitable
filing with the US Securities and Exchange Commission ("SEC") so as to register
all the common shares of the Purchaser issued to or issuable to the China
Vendors, including the Uphill Vendors and the GDCT Vendors, pursuant to this
Agreement to permit such common shares to be freely tradeable. The Purchase
shall also maintain its reporting company status with the SEC while there are
Exchangeable Shares outstanding.
8.11 Exemption Order. After Closing the Purchaser shall make an application to
the Ontario Securities Commission for an exemption order to permit the resale of
common shares of the Purchaser that are issued to the China Vendors, including
the Uphill Vendors and the GDCT Vendors, with the expense being shared 50% by
the Purchaser and 50% by the China Vendors who consent to such an application
for their respective Exchangeable Shares.
8.12 Management Agreement. On or before the Closing Date, the Purchaser
shall enter into a management agreement with Gang Chai.
8.13 Director. On or before the Closing Date, the Purchaser shall cause the
appointment of Gang Chai as a director of the Purchaser.
ARTICLE IX
CONDITIONS OF CLOSING
---------------------
9.1 Conditions for the Purchaser's Benefit. The Purchaser shall not be obliged
to complete the transactions contemplated by this Agreement unless, on the
Closing Date, each of the following conditions shall have been satisfied:
(a) Accuracy of Representations - The representations and warranties of the
China Vendors and China eMall set forth in sections 4.1, 4.2, 4.3 5.1,
5.2 and 5.3, respectively, shall be true and correct at the Closing,
except as those representations and warranties may be affected by the
22
occurrence of events or transactions expressly contemplated and
permitted by this Agreement, including, without limitation, those in
the ordinary course of business, and the Purchaser shall have received
a certificate from the Vendors and China eMall confirming the
foregoing.
(b) Performance of Obligations - China eMall and the China Vendors shall
have performed all of the obligations hereunder to be performed by them
at or prior to the Closing. China eMall and the China Vendors shall not
be in breach of any agreement on its part contained herein;
(c) Deliveries - China eMall and the China Vendors shall have delivered or
caused to be delivered to the Purchaser the Ancillary Agreements;
(d) Approvals - All necessary approvals of the directors and/or
shareholders of China eMall, Uphill and GDCT shall have been obtained
or given, as the case may be, on or before the Closing Time;
(e) Completion of Investigations - The investigations and assessments
contemplated in section 8.6 shall have been completed and the Purchaser
shall be satisfied with the result of such investigations and
assessments including, without limitation, the accuracy of the Records
and matters represented and warranted in Articles IV and V;
(f) Consents, Authorizations and Registrations - All consents, approvals,
orders and authorizations of, from or notifications to any persons or
Governmental Authorities required in connection with the completion of
any of the transactions contemplated by this Agreement, the execution
of this Agreement, the Closing or the performance of any of the terms
and conditions of this Agreement shall have been obtained on or before
the Closing Date. There shall be no injunction or order issued
preventing, and no pending or threatened claim, action, litigation or
proceeding, judicial or administrative, or investigation against any
Party by any Governmental Authority or Person for the purpose of
enjoining or preventing the consummation of this Agreement, or
otherwise claiming that this Agreement or the consummation thereof is
improper or would give rise to proceedings under any statute or rule of
law;
(g) No Loss - During the Interim Period, there has been no material damage
to the assets of China eMall, the China eMall Business, GDCT, the GDCT
Business, Uphill, the Uphill Business by fire or other peril, whether
or not such damage is covered by insurance;
No Material Changes - There shall have been no material adverse changes
in the China eMall Business, the Uphill Business or the GDCT Business,
assets or financial condition of China eMall, Uphill or GDCT during the
Interim Period. For the purposes of this subsection, the term "material
adverse change" shall mean any change in the assets, liabilities or
financial condition of China eMall, GDCT, the China eMall Business,
Uphill, the Uphill Business or the GDCT Business that may involve
material reduction, damage, risk to or destruction of the assets,
whether or not the change is covered by insurance; and
23
Legal Opinion - Counsel to China eMall and the China Vendors shall
deliver to counsel for the Purchaser an opinion confirming that China
eMall qualifies for the exemption from the provisions of Part XX of the
Securities Act (Ontario) set out in s.93(3)(g) and s.93(1)(d) of said
act and that GDCT and Uphill qualify for the exemption from the
provisions of Part XX of the Securities Act (Ontario) set out in s.
93(1)(d) of said act and an opinion as to other general matters to the
satisfaction of the Purchaser's counsel.
If any one or more of the foregoing conditions shall not have been fulfilled on
or before the Closing Date, the Purchaser may terminate this Agreement by notice
in writing to the other Parties in which event the Purchaser shall be released
from all obligations under this Agreement without any liability and (unless the
Purchaser can show that the condition relied upon could reasonably have been
performed by the other Parties) the other Parties shall also be released from
all obligations hereunder without any liability; provided, however, that the
Purchaser shall be entitled to waive compliance with any one or more of such
conditions in whole or in part if it shall see fit to do so, without prejudice
to its rights of termination in the event of the non-fulfilment of any other
condition in whole or in part.
9.2 Conditions for the Benefit of the Vendors. The China Vendors shall not be
obliged to complete the transactions contemplated by this Agreement unless, on
the Closing Date, each of the following conditions shall have been satisfied:
(a) Accuracy of Representations - The representations and warranties of
the Purchaser set forth in sections 6.1 shall be true and correct at
the Closing, except as those representations and warranties may be
affected by the occurrence of events or transactions expressly
contemplated and permitted by this Agreement, and the Vendors shall
have received certificates from the Purchaser confirming the foregoing.
(b) Performance of Obligations - the Purchaser shall have performed all
of the obligations hereunder to be performed by it at or prior to the
Closing and the Purchaser shall not be in breach of any agreement on
its part contained herein.
(c) Deliveries - China eMall shall have delivered or caused to be
delivered to China Vendors possession of the Exchangeable Shares, free
and clear of any Encumbrances.
(d) Approvals - All necessary approvals by the directors and/or
shareholders of the Purchaser shall have been obtained, completed or
given, as the case may be, on or before the Closing Time.
(e) Completion of Investigations - The investigations and assessments
contemplated in section 8.6 shall have been completed and the China
Vendors shall be satisfied with the results of such investigations and
assessments including, without limitation, the accuracy of the Records
and matters represented and warranted in Article VI.
24
(f) Consents, Authorizations and Registrations - All consents,
approvals, orders and authorizations of, from or notifications to any
Persons or Governmental Authorities required in connection with the
completion of any of the transactions contemplated by this Agreement,
the execution of this Agreement, the Closing or the performance of any
of the terms and conditions of this Agreement shall have been obtained
on or before the Closing Date. There shall be no injunction or order
issued preventing, and no pending or threatened claim, action,
litigation or proceeding, judicial or administrative, or investigation
against any Party by any Governmental Authority or Person for the
purpose of enjoining or preventing the consummation of this agreement,
or otherwise claiming that this Agreement or the consummation thereof
is improper or would give rise to proceedings under any statute or rule
of law.
(g) No Loss - During the Interim Period, there has been no material
damage to the assets of the Purchaser by fire or other peril, whether
or not such damage is covered by insurance.
(h) No Material Changes - There shall have been, in the reasonable
opinion of China eMall and the China Vendors, no material adverse
changes in the assets or financial condition of the Purchaser during
the Interim Period. For the purposes of this subsection, the term
"material adverse change" shall mean any change in the assets,
liabilities or financial condition of the Purchaser that may, in the
reasonable opinion of China eMall and the China Vendors involve
material reduction, damage, risk to or destruction of the assets
whether or not the change is covered by insurance.
(i) Support Agreement - The Purchaser shall have executed the Support
Agreement on or before the Closing Date.
Legal Opinion - Florida counsel to the Purchaser shall provide an opinion
that the Purchaser is validly existing under the laws of Florida, that
no shareholder approval is required and other such general matters to
the satisfaction of counsel to China eMall and the Vendors.
Exchangeable Shares - Before closing the shareholders of China eMall
shall create the Exchangeable Shares by filing articles of amendment of
China eMall. The rights, privileges, restrictions and conditions of the
Exchangeable Shares shall be as is substantially set out in Schedule
2.8.
GDCT and Uphill Shares - Before Closing the Uphill Vendors shall cause
Uphill to file articles of amendment subdividing the 100 common shares
into 700,000 common shares.
Voting Trust - On Closing the Purchaser and the Vendors holding
Exchangeable Shares shall enter into a voting trust agreement in a
mutually agreeable form prepared by counsel to China eMall to provide
to a trustee, acting on behalf of all of the holders of Exchangeable
Shares, voting rights of shares in the capital of the Purchaser
equivalent to the voting rights of the common shares in the capital of
the Purchaser into which the Exchangeable Shares are exchangeable that
will be allotted for purposes of issuance with respect to the
Exchangeable Shares; or the Purchaser shall deposit a number of common
shares in the capital of the Purchaser equal at all times and from time
25
to time to the number of common share in the capital of the Purchaser
into which the outstanding Exchangeable Shares are exchangeable,
provided that the voting rights of such shares shall be held by the
trustee of such voting trust pursuant to the terms and conditions of
such a voting trust agreement in a mutually agreeable form prepared by
counsel to China eMall for the benefit of the holders of the
outstanding Exchangeable Shares from time to time but all other rights
of such common shares in the capital of the Purchaser shall be held by
the trustee for the benefit of the Purchaser pursuant to the terms and
conditions of such a voting trust agreement in a mutually agreeable
form prepared by counsel to China eMall.
If any one or more of the foregoing conditions shall not have been fulfilled on
or before the Closing Date, the Vendors may terminate this Agreement by notice
in writing to the Purchaser in which event the Vendors shall be released from
all obligations under this Agreement without liability and (unless the Vendors
can show that the condition relied upon could reasonably have been performed by
the Purchaser) the Purchaser shall also be released from all obligations
hereunder without liability; provided, however, that the Vendors shall be
entitled to waive compliance with any one or more of such conditions in whole or
in part if they shall see fit to do so, without prejudice to their rights to
termination in the event of the non-fulfilment of any other condition in whole
or in part.
ARTICLE X
INDEMNIFICATION
---------------
10.1 Mutual Indemnifications for Breaches of Warranty, etc. Subject to section
10.3, the Purchaser hereby covenants and agrees with the Vendors and China eMall
and the Vendors and China eMall hereby covenant and agree severally with the
Purchaser (the parties covenanting and agreeing to indemnify another party under
this Article X are hereinafter individually referred to as "Indemnifying Party"
and the parties that are being indemnified by another Party under this Article X
are hereinafter individually referred to as the "Indemnified Party") to
indemnify and save harmless the Indemnified Party, effective as and from the
Closing Time, from and against any Claims which may be made or brought against
the Indemnified Party and/or which it may suffer or incur as a result of, or
arising out of any non-fulfilment of any covenant or agreement on the part of
the Indemnifying Party under this Agreement or any Ancillary Agreement or any
incorrectness in or breach of any representation or warranty of the Indemnifying
Party contained in this Agreement or any Ancillary Agreement.
10.2 Undisclosed Liabilities Indemnity. Notwithstanding section 10.1 and without
limiting the generality of section 10.1:
(a) the Vendors and China eMall shall indemnify the Purchaser from all
Claims arising from liabilities or obligations to Persons that arise
from any act or failure to act of China eMall or the Vendors prior to
the Closing Date that is not disclosed to the Purchaser pursuant to
Articles IV or V or otherwise prior to Closing; and
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(b) the Purchaser shall indemnify China eMall and the Vendors from all
Claims arising from liabilities or obligations to Persons that arise
from any act or failure to act of the Purchaser prior to the Closing
Date that is not disclosed to China eMall and the Vendors pursuant to
Articles V or VI or otherwise prior to Closing.
10.3 Limitation on Mutual Indemnification. The indemnification obligations
of each of the Parties pursuant to section 10.1 and 10.2 shall be subject to the
following:
(a) the applicable limitation mentioned in Article VII respecting the
survival of the representations and warranties of the Parties;
(b) the indemnity obligations under section 10.2 shall survive for a period
of one (1) year from the Closing Date;
(c) there shall be no limit as to amount in respect of breaches of the
representations and warranties of the Parties other than as
specifically limited by the provisions of the section; and
(d) an Indemnifying Party shall not be required to indemnify an Indemnified
Party until the aggregate Claims sustained by the Indemnified Party
exceeds a value of $5,000, in which case the Indemnifying Party shall
be obligated to the Indemnified party for all Claims without limit as
to amount.
10.4 Procedure for Indemnification. The following provisions shall apply to any
Claims for which an Indemnifying Party may be obligated to indemnify an
Indemnified Party pursuant to this Agreement:
(a) upon receipt from a third party by the Indemnified Party of notice of a
Claim or the Indemnified party becoming aware of a Claim in respect of
which the Indemnified Party proposes to demand indemnification from the
Indemnifying Party, the Indemnified Party shall give notice to that
effect to the Indemnifying Party with reasonable promptness, provided
that failure to give such notice shall not relieve an Indemnifying
Party from any liability it may have to the Indemnified Party except to
the extent that the Indemnifying Party is prejudiced thereby;
(b) in the case of Claims arising from third parties, the Indemnifying
Party shall have the right by notice to the Indemnified party not later
than thirty (30) days after receipt of the notice described in
paragraph (i) above to assume the control of the defence, compromise or
settlement of the Claims, provided that such assumption shall, by its
terms, be without costs to the Indemnified Party and the Indemnifying
Party shall at the Indemnified Party's request furnish it with
reasonable security against any costs or other liabilities to which it
may be or become exposed by reason of such defence, compromise or
settlement;
(c) upon the assumption of control by the Indemnifying Party as aforesaid,
the Indemnifying Party shall diligently proceed with the defence,
compromise or settlement of the Claims at its sole expense, including
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employment of counsel reasonably satisfactory to the Indemnified Party
and, in connection therewith, the Indemnified Party shall co-operate
fully, but at the expense of the Indemnifying Party, to make available
to the Indemnifying Party all pertinent information and witnesses under
the Indemnified Party's control, make such assignments and take such
other steps as in the opinion of counsel for the Indemnifying Party are
necessary to enable the Indemnifying Party to conduct such defence;
provided always that the Indemnified Party shall be entitled to
reasonable security from the Indemnifying Party for the expense, costs
of other liabilities to which it may be or may become exposed by reason
of such co-operation;
(d) the final determination of any such Claims arising from third parties,
including all related costs and expenses, will be binding and
conclusive upon the Parties as to the validity or invalidity, as the
case may be of such Claims against the Indemnifying Party hereunder;
and
(e) should the Indemnifying Party fail to give notice to the Indemnified
Party as provided in paragraph (ii) above, the Indemnified Party shall
be entitled to make such settlement of the Claims as in its sole
discretion may appear advisable, and such settlement or any other final
determination of the Claims shall be binding upon the Indemnifying
Party.
ARTICLE XI
CLOSING ARRANGEMENTS
--------------------
11.1 Closing. The Closing shall take place at the offices of Stewart &
Associates, Barristers and Solicitors, 1 First Canadian Place, Suite 700, 100
King Street West, Toronto M5X 1C7, Ontario, Canada at the Closing Time on the
Closing Date.
11.2 Closing Procedures. At the Closing Time or where specified, prior to the
Closing Time;
China eMall shall issue and deliver to the China Vendors' possession,
except GDCT, Uphill and Forte the Exchangeable Shares;
the China Vendors except GDCT, Uphill and Forte shall convert their
China Shares for the Exchangeable Shares;
GDCT and the Purchaser shall exchange the GDCT Shares and the common
shares in the capital of the Purchaser;
Uphill and the Purchaser shall exchange the Uphill Shares and the
common shares in the capital of the Purchaser;
Forte and the Purchaser shall exchange the China Shares held by Forte
and the common shares in the capital of the Purchaser; and
(e) the Parties shall take or shall have taken, as the case may be, the
other actions contemplated to be taken by them at or before the Closing
contemplated in this Agreement.
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11.3 Non-Waiver. No investigations made by or on behalf of the Purchaser, China
eMall and the China Vendors at any time shall have the effect of waiving or
diminishing the scope of or otherwise affecting any representation, warranty or
indemnity made by or imposed upon the Parties pursuant to this Agreement.
ARTICLE XII
GENERAL
-------
12.1 Termination.
(1) This agreement may be terminated at any time prior to the Closing Date:
by the mutual agreement of the Parties;
by the Purchaser within 14 days of the execution of this
Agreement if the Purchaser has any concerns whatsoever at its
own discretion with respect to the due diligence of Uphill or
GDCT; or
by the Parties if the transactions contemplated by this Agreement
would violate any non-appealable final order, decree or
judgement of any court or governmental body having competent
jurisdiction.
(2) If this Agreement is terminated by a Party under subsection 12.1(1),
such termination shall be without liability of either Party to the
other parties, or to any of their shareholders, directors, officers,
employees, agents, consultants or representatives provided that if such
termination shall result from the wilful failure of the Party to fulfil
a condition to the performance of the other Parties or to perform a
covenant of this agreement or from a wilful breach by the party to this
Agreement, the Party shall be fully liable for any and all damages,
costs and expenses (including, but not limited to, reasonable counsel
fees and disbursements) sustained or incurred by the other Parties.
12.2 Expenses Except as otherwise specified herein, all costs and expenses
(including the fees and disbursements of accountants and legal counsel) incurred
in connection with this Agreement and completion of the transactions
contemplated by this Agreement shall be paid by the Party incurring those
expenses.
12.3 Time of Essence. Time shall be of the essence in all respects of this
Agreement.
12.4 Notices. Any notice or other communication which is required or permitted
to be given or made by one Party to the others hereunder shall be in writing and
shall be either personally delivered to such Parties sent by facsimile.
Any notice shall be sent to the intended recipient at its address as
follows:
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(a) to the Purchaser:
c/o Elwin Cathcart
6705 Tomken Road
Unit 12-14
Mississauga, Ontario
L5T 2J6
Facsimile No.: (905) 795-9682
and to Stewart & Associates at:
c/o Adam K. Szweras
Stewart & Associates
Barristers & Solicitors
Suite 700, P.O. Box 160
1 First Canadian Place
100 King Street West
Toronto, Ontario
M5X 1C7
Facsimile No.: (416) 368-7805
to the China Vendors, except Forte Management Corp. at:
c/o Dr. Gang Chai
McVicar Minerals Ltd.
1 Dundas Street West
Suite 2402, Box 13
Toronto, Ontario
M5G 1Z3
Facsimile No.: (416) 977-8335
and to Dexter, Marrelli & Amenta at:
c/o James Marrelli
1 Dundas Street West
Suite 2402, Box 24
Toronto, Ontario
M5G 1Z3
Facsimile No.: (416) 971-7458
and to Vivan Wong, Barrister & Solicitor, at:
5400 Yonge Street Suite 401
North York, Ontario
M2N 5R5
Facsimile No.: (416) 222-8320
to Forte Management Corp. at:
Facsimile No. (441) 295-5491
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or at such other address as any Party may from time to time advise the others by
notice in writing. Any notice given by personal delivery shall be deemed to be
received on the date of delivery. Any notice sent by facsimile or similar method
of recorded communication shall be deemed to have been received on the next
Business Day following the date of its transmission.
12.5 Further Assurances. The Parties shall with reasonable diligence do all
things and provide all reasonable assurances as may be required to complete the
transactions contemplated by this Agreement, and each Party shall provide such
further documents or instruments required by any other Party as may be
reasonably necessary or desirable to give effect to this Agreement and carry out
its provisions, whether before or after the Closing.
12.6 Public Notice. All public notices to third parties and all other publicity
concerning the transactions contemplated by this Agreement shall be jointly
planned and co-ordinated by the Parties and no Party shall act unilaterally in
this regard without the prior written approval of the other Parties, such
approval not to be unreasonably withheld.
12.7 Amendment and Waiver. No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound. No waiver of any of the Provisions of this Agreement shall constitute a
waiver of any other provision (whether or not similar) nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
12.8 Assignment. This Agreement and the rights or obligations hereunder or
thereunder are not assignable by any Party without the prior written consent of
the other Parties, which consent shall not be unreasonably withheld. This
Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
12.9 Severability. Any provision of this Agreement, which is prohibited or
unenforceable in any jurisdiction, shall not invalidate the remaining provisions
hereof. Any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
12.10 Governing Law. The Parties agree that this Agreement shall be governed by
the laws of the Province of Ontario, and the federal laws of Canada applicable
therein, that Ontario will be the proper forum for any controversy arising in
connection with this Agreement and that the courts of which will be the
exclusive forums for all such suits, actions or proceedings.
12.11 Counterparts. This Agreement may be executed by the Parties in one or
more counterparts, originally or by facsimile signature, each of which when so
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executed and delivered shall be deemed an original and such counterparts shall
together constitute one and the same instrument.
12.12 Prior Agreement Cancelled. The Parties have agreed that the Share Exchange
Agreement entered into among them on the 9th day of March, 2000 is hereby
cancelled and fully replaced by this present Agreement.
IN WITNESS WHEREOF this agreement has been executed by the Parties each
as of the day and year first before written.
THIS AGREEMENT IS HEREBY EXECUTED on the date set forth above.
VHS NETWORK, INC.
Per: _________________________________
A.S.O.
CHINA EMALL CORPORATION
Per: ___________________________
A.S.O.
FORTE MANAGEMENT CORP.
Per:
A.S.O.
UPHILL CAPITAL INC.
Per:__________________________
A.S.O.
GDCT INVESTMENT INC.
Per:_________________________
A.S.O.
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- ------------------------- -----------------------------
Witness Dr. Gang Chai
- ------------------------- -----------------------------
Witness Dr. Charles He
- ------------------------- -----------------------------
Witness Qing Wang
- ------------------------- -----------------------------
Witness Qin Lu Chai
- ------------------------- -----------------------------
Witness Tai Xue Shi
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