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EXHIBIT 10.4
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (this "Agreement") is made as of the 18th day
of May, 1999, by and between JENSON INTERNATIONAL, INC., a Nevada corporation,
formerly known as Best Medical Treatment Group, Inc. (the "Company"), and CHENG
CHAO MING, an individual (the "Shareholder").
RECITALS:
WHEREAS, the Company and the Shareholder have previously entered into
that certain Share Exchange Agreement dated as of March 12, 1998 (the "Share
Exchange Agreement");
WHEREAS, pursuant to the Share Exchange Agreement, the Shareholder
contributed to the Company 100% of the issued and outstanding capital stock of
Wonderwide Consultants Limited (B.V.I.) ("Wonderwide") in exchange for the
issuance to the Shareholder by the Company of 2,230,00 shares of the Company's
common stock, US$.001 par value per share (the "Common Stock");
WHEREAS, Section 2.04(b) of the Share Exchange Agreement provides for
the cancellation of certain shares of Common Stock issued to the Shareholder in
respect of the transactions contemplated thereby upon the occurrence of certain
conditions described therein;
WHEREAS, the Shareholder has provided certain interest free advances to
the Company from time to time, in the aggregate amount of RMB70,000,000, and the
Shareholder desires that such advances be capitalized. The Company has agreed to
issue to the Shareholder shares of Common Stock based on an independent
valuation;
WHEREAS, subsequent to the closing date of the Share Exchange
Agreement, the Shareholder agreed to transfer to Wonderwide all of the issued
and outstanding capital stock of Jenson International Travel Services Limited
("Jenson Travel") in exchange for the issuance to the Shareholder by the Company
of shares of Common Stock;
WHEREAS, the Shareholder has agreed to contribute to the Company the
sum of RMB36,535,000, representing the approximate net income of the group tour
business now conducted by Jenson Travel for the years ended December 31, 1995,
1996, 1997 and 1998; and
WHEREAS, the Company and the Shareholder desire to enter into this
Agreement to memorialize the terms and conditions of the transactions described
above.
AGREEMENT:
NOW THEREFORE, in consideration of the mutual promises herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Shareholder agree
as follows:
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1. Cancellation of Shares.
(a) The parties acknowledge and agree that, for purposes of
Section 2.04(b) of the Share Exchange Agreement, Wonderwide's consolidated net
income, as audited under U.S. GAAP for the fiscal year ended December 31, 1997,
was US$793,736. In accordance with the terms and conditions of the Share
Exchange Agreement, an aggregate of 1,886,022 shares of Common Stock issued to
the Shareholder on the closing date of the Share Exchange Agreement were
automatically cancelled effective as of May 17, 1999 (which is the date of
completion of the audit of Wonderwide's financial statements for the fiscal year
ended December 31, 1997). Upon cancellation of such shares, all obligations of
the Shareholder under Section 2.04(b) of the Share Exchange Agreement shall be
satisfied in full. In addition, the Company hereby irrevocably waives any claim,
cause of action or other right it may have had against the Shareholder, whether
arising under the Share Exchange Agreement or otherwise, that may have been
based, in full or in part, on the failure of Wonderwide to achieve consolidated
net income, as audited under U.S. GAAP for the fiscal year ended December 31,
1997, of US$2.5 million or on any representation or warranty of any party in
respect thereof.
(b) The parties acknowledge that the conditions for the
release of all shares held in escrow pursuant to Section 7.02 of the Share
Exchange Agreement shall be deemed to have been timely satisfied. Accordingly,
all 334,500 share of Common Stock held in escrow shall be available to the
Shareholder to submit for cancellation pursuant to Section 2.04(b) of the Share
Exchange Agreement as described in subsection (a) above.
(c) The Shareholder agrees to surrender to the Company all
certificates representing shares of Common Stock cancelled pursuant to Section
2.04(b) of the Share Exchange Agreement as described in subsection (a) above
(with the exception of certificates representing shares of Common Stock held in
escrow pursuant to Section 7.02 of the Share Exchange Agreement, which shall be
surrendered to the Company by the escrow agent).
2. Jenson Travel.
(a) Effective as of January 1, 1999, the Shareholder
transferred to Wonderwide all of the issued and outstanding capital stock of
Jenson Travel. In exchange therefor, the Company agrees to issue to the
Shareholder an aggregate of 1,275,673 shares of Common Stock. Such shares shall
be issued immediately upon execution of this Agreement, and upon issuance such
shares shall be fully paid and nonassessable. The parties acknowledge that such
exchange ratio was determined based upon an independent third-party valuation
report dated as of January 1, 1999 and that it is intended to reflect receipt of
consideration by the Company in an amount that approximates the fair value of
the shares of Common Stock issued to the Shareholder in respect thereof.
(b) The Shareholder hereby agrees contribute to the Company
the sum of RMB36,535,000 (the "Group Tour Contribution"), representing the
approximate net income of the certain group tour businesses for the years ended
December 31, 1995, 1996, 1997 and 1998, which group tour businesses were
previously conducted by the Shareholder but are now conducted by Jenson Travel
from January 1, 1999. Notwithstanding the obligation of the
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Shareholder to make such contribution, the parties acknowledge and agree that
such amount shall be offset in full by certain advances previously made by the
Shareholder to the Company as described in Section 3 of this Agreement.
3. Previous Advances.
(a) The parties acknowledge and agree that the Shareholder
has, without any obligation or pre-existing liability to do so, made various
advances to the Company from time to time in the aggregate amount of
RMB70,000,000 and, in exchange therefor, the Company agrees to issue shares of
Common Stock to the Shareholder. The obligation of the Shareholder to make the
Group Travel Contribution described in Section 2(b) of this Agreement shall be
used to partially offset the aggregate amount owing from the Company to the
Shareholder in respect of such previous advances. As a result of such offset,
the aggregate net balance of the previous advances made to the Company by the
Shareholder shall be RMB33,465,000.
(b) In exchange for the aggregate net previous advances of
RMB33,465,000, the Company agrees to issue to the Shareholder an aggregate of
501,484 shares of Common Stock. Such shares shall be issued immediately upon
execution of this Agreement, and upon issuance such shares shall be fully paid
and nonassessable. The parties acknowledge that such exchange ratio was
determined based upon an independent third-party valuation report dated as of
December 31, 1998 and that it is intended to reflect receipt of consideration by
the Company in an amount that approximates the fair value of the shares of
Common Stock issued to the Shareholder in respect thereof.
4. Acknowledgement of Capitalization and Share Holdings. The parties
acknowledge and agree that, as of the date of this Agreement and after giving
effect to the transactions contemplated hereby, a total of 2,654,514 shares of
Common Stock shall be issued and outstanding, of which 2,121,135 shares shall be
held by the Shareholder.
5. Representations and Warranties of the Shareholder. In respect of the
acquisition by the Shareholder of shares of Common Stock from the Company (the
"Securities") as described in Sections 2(a) and 3(b) above, the Shareholder
represents and warrants to the Company that (i) the Shareholder is acquiring the
Securities for his or its own account for investment purposes only and not with
a view to the distribution or sale of such Securities within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), (ii) the Shareholder
is an "accredited investor," as such term is defined in Rule 501 promulgated
under the Securities Act, (iii) the Shareholder has read this Agreement and the
audited annual financial statements of Wonderwide for the three years ended
December 31, 1997 and of the Company for the year ended December 31, 1998,
together with all such other information that the Shareholder may have requested
from the Company in order to make an investment decision (the "Supplemental
Information") and is capable of evaluating and understanding this Agreement and
the Supplemental Information, (iv) the Shareholder has been provided with all
information requested from the Company and has been afforded the opportunity to
ask questions and receive answers concerning the terms and conditions of the
Company and the Supplemental Information, (v) the Shareholder understands the
significant risks involved with an investment in the Securities, (vi) the
Shareholder understands that the Securities have not been and will not be
registered under the
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Securities Act or registered or qualified under any state securities or blue sky
laws and that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act and applicable state securities
and blue sky laws or an exemption from such registration is available, and (vii)
the Shareholder understands that no federal or state agency has passed upon the
Securities or made any finding or determination as to the fairness of the
investment or any recommendation or endorsement of the Securities.
6. Miscellaneous.
(a) Notices. All notices and other communication provided for
in this Agreement shall be in writing and delivered (by hand or by recognized
courier services), telecopied or mailed (registered or certified), addressed as
follows:
(i) if to the Company:
Jenson International Inc.
Room 1008-9
Shun Tak Centre, West Tower
168-200 Connaught Road, Central
Hong Kong
Attn: Mr. Jimmy Chow
Facsimile: (852) 2546-3910
with a copy to:
Squire, Sanders & Dempsey L.L.P.
40 North Central Avenue Suite 2700
Phoenix, Arizona 85004
Attn: Christopher D. Johnson, Esq.
Facsimile: (602) 253-8129
(ii) if to the Shareholder:
Mr. Cheng Chao Ming
Room 1008-9
Shun Tak Centre, West Tower
168-200 Connaught Road, Central
Hong Kong
Facsimile: (852) 2546-3910
Any notice or communication shall be deemed to have been given when
delivered, telecopied or mailed as aforesaid.
(b) Successors and Assigns. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. Neither party
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may assign or delegate its rights or obligations under this Agreement without
the prior written consent of the other party.
(c) Further Assurances. The Company and the Shareholder shall
take such actions and execute and deliver such instruments as either party may
reasonably request to further perfect, evidence or consummate the transactions
contemplated by this Agreement.
(d) Waiver. A waiver on the part of any party hereto of any
term, provision or condition of this Agreement or breach thereof shall not
constitute a precedent, nor bind either party hereto to a waiver of any other
term, provision or condition of this Agreement or any other or succeeding breach
of the same or any other term, provision or condition thereof.
(e) Amendments. This Agreement shall not be modified, amended
or otherwise changed without the written agreement of each of the parties
hereto.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(g) Entire Agreement. This Agreement contains the entire
understanding between the parties relating to its subject matter, and this
letter supersedes all prior agreements, understandings, representations and
statements, oral or written, between the Company and the Shareholder relating to
the matters which are the subject of this Agreement.
(h) Severability. If any one or more of the provisions
contained in this Agreement, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(i) Governing Law. This Agreement and the Note shall be
governed by and construed in accordance with the laws of the State of Nevada,
without regard to conflict of law principles.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Investment
Agreement on the date above first written.
JENSON INTERNATIONAL INC., a Nevada corporation
By: /s/ Xiong P. Paul
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Title: Director
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/s/ Cheng Chao Ming
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Mr. Cheng Chao Ming
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