ACQUISITION AGREEMENT
BY AND BETWEEN
FREFAX, INC.,
a Florida corporation
and
CHINA XIN NETWORK (CANADA) INC.,
a federally chartered Canadian corporation.
As of November 8, 2001
(Closing Date of November 8, 2001)
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT ("Agreement"), is made this eighth (8) day of
October, 2001, by, between and among Frefax, Inc., a Florida corporation
("FFAX") and China Xin Network (Canada), Inc., a federally chartered Canadian
corporation. ("CXNC"), each herein sometimes being referred to individually as a
"party" and collectively as the "parties," with regard to the following facts:
R E C I T A L S
A. FFAX is a publicly held corporation that currently has no operating
business.
B. CXNC is a privately held corporation, which is a global provider of
financial, economic and business information on the People's Republic of China,
(the "Business").
C. The parties propose, as of the Effective Time (as hereinafter
defined), that FFAX shall acquire ownership of 100% of the outstanding common
shares of CXNC (the "Acquisition"), as a result of which (a) CXNC will become a
wholly-owned subsidiary of FFAX and (b) the current holders of the outstanding
common shares of CXNC (the "CXNC Shareholders") will receive as consideration
for the Acquisition shares of FFAX common stock as hereinafter set forth.
D. The Acquisition is to be effectuated as a non-taxable reorganization
under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW, THEREFORE, in consideration of the promises and the mutual
representations, warranties, covenants and agreements herein contained, the
parties hereby agree as follows:
ARTICLE ONE
The Acquisition
1.01 The Acquisition. On the terms and subject to the conditions set
forth in this Agreement, FFAX shall acquire 100% of the outstanding common
shares of CXNC (the "CXNC Shares") in exchange for a total of 28,836,566 newly
issued shares of FFAX common stock (the "FFAX Shares") to be issued to the CXNC
Shareholders in amounts calculated in accordance with Article Two.
ARTICLE TWO
Calculation of Exchange Ratio and FFAX Shares to Be Issued
2.01 Calculation of Exchange Ratio. The number of FFAX Shares to be
issued to each of the CXNC Shareholders for their respective CXNC Shares shall
be calculated in accordance with the formula in Section 2.02, using an exchange
ratio of two (2) for one (1) (the "Exchange Ratio"). The Exchange Ratio was
derived by dividing the total number of FFAX Shares to be issued (28,836,566) by
the total number of CXNC Shares 14,418,283).
2.02 Calculation of FFAX Shares to Be Issued. The number of FFAX Shares
to be issued to each of the CXNC Shareholders for their respective shares shall
be calculated by (i) multiplying (a) the total number of CXNC Shares held by
each CXNC Shareholder by (b) the Exchange Ratio and (ii) rounding the product to
the nearest whole number (subject to other reasonable adjustments needed to
maintain the total number of FFAX Shares to be issued at 28,836,566). No
fractional shares of FFAX common stock shall be issued in connection with the
Acquisition.
ARTICLE THREE
Closing and Effective Time of the Acquisition
3.01 The Closing. The consummation of the transactions contemplated by
this Agreement (the "Closing") shall take place on November 8, 2001, or sooner
(unless extended by written mutual agreement signed by both parties) provided
that the parties have satisfied or waived (again, in writing) of all of the
conditions precedent to the obligations of the parties hereto (the "Closing
Date"). The parties will conduct the Closing at the offices of FFAX 8680
LeCreusot, St-Leonard, Quebec Canada H1P 2A7, or such other place as the parties
may mutually agree. At the Closing, the parties will determine that each
condition to the obligations of the parties hereunder has been satisfied or
waived or will, at such Closing, be satisfied or waived.
3.02 The Effective Time. The Acquisition shall become effective when
all of the items required by this Agreement to be delivered at the Closing have
been delivered (the "Effective Time").
3.03 Directors of FFAX at the Effective Time. CXNC shall nominate up to
three new persons to serve as directors of FFAX at and after the Effective Time
of the Acquisition. CXNC shall identify any such nominees in Schedule 3.04. As
provided in Section 7.05 hereof, the FFAX board of directors shall adopt
resolutions appointing such persons (the "New FFAX Directors") as directors (the
"New Director Resolutions"), which by their terms shall become operative only at
the Effective Time of the Acquisition.
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3.04 Officers of FFAX at the Effective Time. CXNC shall identify
in Schedule 3.05 those persons it desires to nominate for appointment as the new
officers of FFAX at and after the Effective Time of the Acquisition. As provided
in Section 7.05 hereof, the FFAX board of directors shall adopt resolutions
appointing such persons as the new officers of FFAX (the "New FFAX Officers")
(the "New Officer Resolutions"), which by their terms shall become operative
only at the Effective Time of the Acquisition.
ARTICLE FOUR
Representations and Warranties of CXNC
CXNC represents and warrants to FFAX with respect to CXNC and its
subsidiaries as follows:
4.01 Organization and Good Standing. CXNC is a corporation duly
organized, validly existing and in good standing under the laws of Canada and
has all requisite corporate power and authority to own or lease its assets as
now owned or leased by it and to otherwise conduct its business. China Xin
Network, Inc. is wholly owned by CXNC and is a corporation duly organized,
validly existing and in good standing under the laws of the Canada and has all
requisite corporate power and authority to own or lease its assets as now owned
or leased by it and to otherwise conduct its business. All corporate proceedings
required by law or by the provisions of this Agreement to be taken by CXNC, and
if necessary, its subsidiaries, on or before the Closing Date in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been or will be duly and
validly taken.
4.02 Due Authorization. This Agreement and each other agreement
contemplated hereby to be executed in connection herewith by CXNC have been (or
upon execution will have been) duly executed and delivered by CXNC and
constitute (or upon execution will constitute) legal, valid and binding
obligations of CXNC enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency, reorganization or other laws
affecting generally the enforcement of creditors' rights.
4.03 Agreement Not in Breach of Other Instruments. Except as noted on
Schedule 4.03, the execution and delivery of this Agreement by CXNC and the
consummation of the transactions contemplated hereby will not result in a breach
of any of the terms and provisions of, or constitute a default under, or
conflict with, any material agreement, indenture or other instrument to which
CXNC or any subsidiary of CXNC is a party or by which they or their assets are
bound.
4.04 Absence of Certain Changes. Except as set forth in Schedule 4.04,
since August 16, 2001, there has not been any material adverse change in the
working capital, financial condition, assets, liabilities, reserves, contractual
allowances, business operations or prospects of CXNC, and neither CXNC nor any
subsidiary of CXNC has:
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(a) Engaged in any material transaction outside the ordinary course of
business;
(b) Made any capital expenditures other than in the ordinary course of
business;
(c) Paid, loaned or advanced (other than the payment of salaries or
reimbursement of expenses in the ordinary course of business) any amounts to, or
sold, transferred or leased any properties or assets to or entered into any
other transactions with any of its officers or directors, any of its affiliates,
or any officer or director of its affiliates;
(d) Made any material change in any method of accounting or accounting
practice;
(e) Incurred any material indebtedness or leasehold expense in excess
of (Cdn)$5,000;
(f) Entered into any material guaranties or otherwise incurred or
suffered to exist any material contingent liabilities;
(g) Paid or declared any dividend or other distribution in respect of
its capital stock, or set aside any sums for the payment of any such dividend or
other distribution;
(h) Issued or sold any common shares or other equity security, granted
any stock option or warrant, or otherwise issued any security convertible into
capital stock;
(i) Canceled any indebtedness due it except upon full payment thereof;
(j) Increased the compensation payable or to become payable by CXNC to
any of its respective directors, officers, employees or agents, or any bonus
payments or arrangement made to or with any thereof;
(k) Agreed, whether in writing or otherwise, to do any of the
foregoing;
(l) Suffered any labor trouble or any controversies with any of its
employees;
(m) Suffered any damage, destruction or loss, whether or not covered by
insurance, materially adversely affecting the business or properties of CXNC; or
(n)Received notice that any person or entity with which CXNC has a
significant business relationship intends to cancel or terminate such business
relationship.
4.05 Real Property Leases. CXNC has delivered to FFAX correct and
complete copies of the real property leases described on Schedule 4.05 hereto
(the "Real Property Leases"), as amended to date, which constitute all of the
real property leases to which CXNC or any subsidiary of CXNC is a party. With
respect to each Real Property Lease:
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(a) The lease is legal, valid, binding and enforceable and in full
force and effect;
(b) The lease will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the Closing;
(c) No party to the lease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a breach or
default or permit termination, modification or acceleration thereunder;
(d) no party to the lease has repudiated any provision thereof;
(e) there are no disputes, oral agreements or forbearance programs in
effect as to the lease;
(f) Neither CXNC nor any subsidiary of CXNC has assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any interest in the lease;
and
(g) All facilities leased thereunder have received all approvals of
governmental authorities (including licenses and permits) required in connection
with the operation thereof and have been operated and maintained in accordance
with applicable laws, rules and regulations.
4.06 Equipment Leases. CXNC has delivered to FFAX correct and complete
copies of the equipment leases described on Schedule 4.06 hereto (the "Equipment
Leases"), as amended to date, which constitute all of the equipment property
leases to which CXNC or any subsidiary of CXNC is a party. Each Equipment Lease
is a valid and binding obligation of CXNC or a subsidiary of CXNC and, to the
knowledge of CXNC, each of the other parties thereto; and to the knowledge of
CXNC, no party to any Equipment Lease is in default with respect to any material
term or condition thereof, nor has any event occurred which through the passage
of time or the giving of notice, or both, would constitute a default thereunder,
except as it may relate to the assignments pursuant hereto.
4.07 Trade Names. Attached hereto as Schedule 4.07 is a true and
correct description of all trade names, trademarks and service marks ("Trade
Names") utilized by CXNC or its subsidiaries in the conduct of their business.
Except as indicated in Schedule 4.07 hereto:
(a) CXNC or a subsidiary of CXNC is the legal and beneficial owner in
Canada of all right, title and interest in and to the Trade Names identified in
Schedule 4.07 free and clear of all liens, encumbrances, equities and other
adverse claims (and any agreement or commitment to grant any of such), and, with
respect to the Trade Names, no other person, corporation or firm has been
authorized to make any use whatsoever of any of the same. CXNC shall, at its
cost, cause all conditions, restrictions, liens or other matters listed on
Schedule 4.07 to be fully satisfied or removed on or prior to the Closing Date,
unless otherwise agreed to in writing by FFAX; and
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(b) CXNC or a subsidiary of CXNC has the right and authority to use the
Trade Names in connection with the conduct of their business in the manner
presently conducted, and such use does not conflict with, infringe upon or
violate any trade name, trademark or service mark, or any registration or
pending application relating thereto, or involve the unlicensed use of
confidential information of any other person, firm or corporation.
4.08 Contracts and Commitments. All references to CXNC in this Section
4.08 shall be deemed to refer to both CXNC and its subsidiaries. Attached as
Schedule 4.08 is a list of all agreements which materially affect CXNC, to which
CXNC is a party or by which CXNC or any of its property is bound which exist as
of the date of execution of this Agreement (including, without limitation, joint
venture or partnership agreements, personal property leases, conditional sales
contracts, notes or other evidence of indebtedness, or other contracts,
agreements, or commitments) (collectively, the "Contracts"). CXNC now has, and
at the Closing will have, valid and enforceable interests in and to the
Contracts. Except as set forth in Schedules 4.03 and 4.08, CXNC is not in
default with respect to any material term or condition of any such Contract, nor
has any event occurred which through the passage of time or the giving of
notice, or both, would constitute a default thereunder. CXNC has received no
notice that any party to a Contract intends to cancel or terminate such Contract
or to exercise or not to exercise any option thereunder.
4.09 Licenses and Permits. Schedule 4.09 lists all licenses
("Licenses") and permits ("Permits") held by CXNC and its subsidiaries in
connection with the operation of their business as currently conducted or to the
occupancy and use of the premises upon which their business is conducted. No
breach of any such License or Permit currently exists, nor has any event
occurred which through the passage of time or the giving of notice, or both,
would constitute a breach thereunder.
4.10 Litigation. All references to CXNC in this Section 4.10 shall be
deemed to refer to both CXNC and its subsidiaries. Except as listed in Schedule
4.10 and except for collection actions instituted by CXNC involving less than
(Cdn) $5,000 individually and (Cdn)$10,000 in the aggregate:
(a) there is no action, suit or proceeding to which CXNC is a party
(either as a plaintiff or defendant) pending before any court or governmental
agency, authority or body, or any arbitrator or arbitral body, which, if decided
or concluded adversely, would have a materially adverse impact upon the
operation by CXNC of the Business or on CXNC's ability to consummate the
transactions contemplated herein, and CXNC has no knowledge that any such
action, suit or proceeding has been threatened against CXNC;
(b) CXNC has not been permanently or temporarily enjoined by any order,
judgment or decree of any court or tribunal or any other agency from engaging in
or continuing any conduct or practice in connection with the Business; and
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(c) There is not in existence on the date hereof any order, judgment or
decree of any court or other tribunal or other agency or any arbitrator or
arbitral body, enjoining or requiring CXNC to take any action of any kind with
respect to the business, properties or assets of the Business.
4.11 Insurance. All of the properties, business and operations of CXNC
and its subsidiaries are adequately insured consistent with businesses of the
same or similar nature, and all such policies of insurance are described in
Schedule 4.11, which schedule reflects the policies' numbers, identity of
insurers, terms, amounts and coverage which exist as of the date of execution of
this Agreement. All of such policies have been, are now and will be until the
Closing in full force and effect with no premium in arrearage. Copies of all
such policies and any endorsements thereto have been or will be delivered to
FFAX prior to the Closing.
4.12 Inventories. All the inventory and supplies of CXNC and its
subsidiaries on hand as of the date of execution of this Agreement are, and as
of the Effective Time will be, of a quality and quantity usual in the ordinary
course of the business of CXNC.
4.13 Compliance with Law. Except as set forth in Schedule 4.13:
(a) CXNC and its subsidiaries currently have no outstanding notice or
notification from any court or governmental agency, authority or body that, with
respect to the operations of the Business, it is in violation in any material
respect of or not in substantial compliance with any federal, provincial or
local laws, statutes, ordinances, rules, regulations, decrees, orders, permits
or other similar items (including, but not limited to, those related to employee
safety, employment discrimination and environmental protection or conservation)
or that upon the passage of time it will be in violation in any material respect
of any of the foregoing;
(b) The conduct of the Business within the year period prior to the
date hereof has not been in violation of any federal, provincial or local laws,
statutes, ordinances, rules, regulations, decrees, orders, permits or other
similar items (including, but not limited to, those related to employee safety,
employment discrimination and environmental protection or conversation) in force
on the date hereof, the enforcement of which would materially and adversely
affect the condition (financial or otherwise), business or properties of CXNC or
its subsidiaries;
(c) Neither CXNC, its subsidiaries, nor any shareholder, officer,
employee or agent of CXNC or its subsidiaries has, directly or indirectly,
within the five year period prior to the date hereof given or agreed to give any
gift or similar benefit to any customer, supplier, competitor or governmental
employee or official or has engaged in any other practice, which in any such
case would subject CXNC to any damage or penalty in any civil, criminal or
governmental litigation or proceeding or which would be grounds for termination
or modification of any material contract, license or other instrument to which
CXNC or any subsidiary of CXNC is a party; and
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(d) All outstanding securities issued by CXNC (including all common
stock and securities convertible into or exercisable for common stock) were
issued in compliance with all applicable securities laws. All of the outstanding
common shares of CXNC are, and any common shares of CXNC issuable upon
conversion or exercise of any other security, when issued pursuant to such
conversion or exercise will be, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute, the
charter documents of CXNC or any agreement to which CXNC is a party or is bound.
4.14 Capitalization. The authorized capital stock of CXNC consists of
an unlimited number of common shares, of which 14,418,283 shares are outstanding
on the date hereof. Such issued and outstanding shares have been duly and
validly authorized and are fully paid and nonassessable. There are no other
shares of capital stock of CXNC outstanding, authorized or reserved for
issuance; there are no outstanding options, warrants, or rights to purchase or
acquire, or securities convertible into or exchangeable for, any shares of
capital stock of CXNC, and there are no contracts, commitments, agreements,
understandings, arrangements or restrictions which require CXNC to issue, sell
or deliver any shares of capital stock of CXNC other then the convertible loans
already disclosed. Attached, as Schedule 4.14 is a list of the shareholders of
CXNC as of the date hereof, indicating the number of CXNC common shares owned by
them beneficially and of record.
4.15 Labor and Employment Matters. All references to CXNC in this
Section 4.15 shall be deemed to refer to both CXNC and its subsidiaries.
(a) General. Except as set forth in Schedule 4.15, there is no
collective bargaining agreement, service or employment contract or other labor
or employment agreement or scheme to which CXNC is a party or by which CXNC is
bound; no profit sharing, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, welfare or incentive plan,
contract, arrangement or scheme to which CXNC is a party or by which CXNC is
bound; and no plan, contract, arrangement or scheme under which fringe benefits
(including, but not limited to, vacation plans or programs, sick leave plans or
programs and related benefits) are afforded to employees of CXNC. Except as set
forth in Schedule 4.15, all accrued material obligations of CXNC (whether
arising by operation of law, contract or past custom) for payments by CXNC
pursuant to any plan, contract, arrangement or scheme listed in Schedule 4.15
have been paid.
(b) Performance. Except as set forth in Schedule 4.15, neither CXNC
nor, to the best knowledge of CXNC, any other party to any agreement, plan or
contract set forth in Schedule 4.15, is in default with respect to any material
term or condition thereof, nor has any event occurred which through the passage
of time or the giving of notice, or both, would constitute a default thereunder.
CXNC has withheld and paid to the appropriate governmental authorities or is
withholding for payment not yet due to such authorities, all amounts required to
be withheld from employees of CXNC, and CXNC is not liable for any arrears of
wages, taxes, penalties or other sums for failure to comply with any of the
foregoing.
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(c) Labor Disputes. Except as set forth in Schedule 4.15, there is no
pending unfair labor practice complaint (or the equivalent) against CXNC before
any federal, provincial, local or foreign agency; pending labor strike affecting
CXNC; grievance or unfair dismissal proceeding pending against CXNC; pending
representation question respecting the employees of CXNC; pending arbitration
proceeding arising out of or under any collective bargaining agreement to which
CXNC is a party; or any basis for which a material claim may be made against
CXNC under any service or employment contract, collective bargaining agreement
or other labor scheme to which CXNC is a party or by which it is bound.
(d) Governmental Benefit Obligations. Except as set forth in Schedule
4.15, all accrued material obligations of CXNC (whether arising by operation of
law, by contract or past custom) for payments by CXNC to trusts or other funds
or to any governmental agency, with respect to unemployment compensation
benefits, social security or similar benefits, health or welfare benefits or any
other governmental benefits for employees of CXNC with respect to employment of
said employees have been paid.
4.16 Taxes. All taxes and other governmental charges in respect of the
properties, income, sales and payrolls of CXNC and its subsidiaries have been
duly paid or reserved. There are no pending questions with governmental agencies
relating to, or claims or assessments for, taxes payable by CXNC or its
subsidiaries, and CXNC and its subsidiaries have not given, and have not been
requested to give, any waivers extending the statutory period of limitation
applicable to any income tax return for any period; and proper and accurate
amounts have been withheld by CXNC and its subsidiaries from their employees for
all periods in full and complete compliance with the tax withholding provisions
of all applicable laws.
4.17 Reserved.
4.18 Subsidiaries and Affiliates. Except for the one subsidiary of CXNC
named in Section 4.01 and except as set forth in Schedule 4.18, CXNC does not
have, directly or indirectly, an equity investment in any corporation,
partnership, joint venture or other business entity which investment represents
or upon conversion would represent more than ten percent (10%) of the voting
power or interest in the profits of such entity.
4.19 Banking Facilities. Attached hereto as Schedule 4.19 is a true and
complete list of each bank, savings and loan or similar financial institution in
which CXNC has an account or with which CXNC has a credit facility.
4.20 No Assets Owned by Affiliates. There are no properties, tangible
or intangible, owned by the shareholders of CXNC, or owned by any affiliate or
relative of such shareholders, which have been used in the normal day-to-day
operations of the Business any time since November 1, 1998.
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4.21 Indebtedness to and from Officers, Directors and Shareholders.
Except as set forth in Schedule 4.21, CXNC is not indebted to any officer,
director, or shareholder of CXNC in any amount whatsoever other than for
salaries or services rendered since the start of CXNC's current pay period and
for reimbursable business expenses, nor is any such officer, director or
shareholder indebted to CXNC except for advances made in the ordinary course of
business to meet anticipated reimbursable business expenses to be incurred by
such obligor.
4.22 Related Party Transactions. All references to CXNC in this Section
4.22 shall be deemed to refer to both CXNC and its subsidiaries. Except as set
forth in Schedules 4.21 and 4.22, no officer, director, or shareholder of CXNC,
nor any affiliate or relative of any such person, now has or within the last
three (3) years has had, either directly or indirectly, a material interest in
any contract, agreement or commitment to which CXNC is or was a party, or under
which CXNC is or was obligated or bound, or to which any of CXNC's properties
may be or may have been subject, other than any contract, agreement or
commitment between CXNC and such persons in their capacities as employees,
officers or directors of CXNC.
4.23 No Legal Bar. CXNC is not prohibited by any order, writ,
injunction or decree of any body of competent jurisdiction from consummating the
transactions contemplated by this Agreement, and no such action or proceeding is
pending against CXNC which questions the validity of this Agreement or any of
the transactions contemplated hereby.
4.24 Finder's Fees and Brokerage Fees. Except as set forth in Schedule
4.24, CXNC has not had any dealings with any person, which would entitle such
person to any finder's fee or brokerage fees in connection with this Agreement
or any transaction contemplated hereby.
4.25 Required Consents. Except as set forth in Schedule 4.25 hereto
(the "Required Consents"), no consent, waiver or other authorization of any
third party (including, without limitation, any third party to a Real Property
Lease, Equipment Lease, Contract, License, Permit or other instrument to which
CXNC or any subsidiary of CXNC is a party or by which CXNC or any subsidiary of
CXNC is bound) is required to the consummation of the transactions contemplated
by this Agreement, including any such approval or permit from a governmental
agency situate within the Country of Canada.
4.26 Other Information. CXNC has disclosed or will, prior to the
Closing, disclose to FFAX all information requested by FFAX and known to CXNC
(after reasonable investigation and inquiry) to be material to the condition
(financial or otherwise), business or properties of CXNC and its subsidiaries.
The information concerning CXNC and its subsidiaries set forth in this
Agreement, in the schedules hereto furnished by CXNC, and in any other document,
statement or certificate furnished or to be furnished to FFAX pursuant hereto,
does not and will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated herein or therein or necessary to
make the statements and facts contained herein or therein, in light of the
circumstances in which they are made, not false or misleading. All information
contained or referred to in the schedules hereto furnished by CXNC is accurate
in all material respects and CXNC (after having made reasonable inquiry) is not
aware of any other fact or matter which renders any such information materially
misleading. Copies of all documents heretofore or hereafter delivered or made
available to FFAX were or will be complete and accurate copies of such documents
on the date such copies are delivered.
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4.27 CXNC Unaudited Financial Statements. CXNC has delivered to FFAX
its unaudited consolidated financial statements for the year ended August 31,
2001, and such financial statements are true and correct and fully represent the
financial condition of CXNC at such dates and the results of operations,
shareholders equity and cash flows of CXNC for the periods covered and all
statements comply with Canadian generally accepted accounting principles
consistently applied throughout the periods covered.
4.28 Regulatory Investigations. To CXNC's knowledge, there are no
investigations or inquiries pending against CXNC or its directors or officers by
any stock exchange, securities regulatory authority, taxing authority or any
other governmental department or agency.
4.29 Corporate Records. All of the minute books and corporate and
financial records of CXNC are, or prior to the Closing will be, in all material
respects, complete, up to date and accurate.
4.30 Representations. All representations and warranties of CXNC are
true, accurate and complete in all material respects as of the date hereof and
will be true, accurate and complete as of the Closing as if made at such time,
except with respect to the effect of transactions in the ordinary course of
business and transactions contemplated or permitted by this Agreement. Any
exception to a representation or warranty of CXNC which is disclosed in any of
the schedules hereto furnished by CXNC shall be deemed to apply only to the
representation or warranty referenced by such schedule, and shall not, unless
scheduled separately, be considered an exception to any other representation or
warranty of CXNC in this Agreement.
ARTICLE FIVE
Representations of FFAX
FFAX represents and warrants to CXNC as follows:
5.01 Organization, Standing and Power. FFAX is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has all requisite corporate power and authority to own or lease its
assets as now owned or leased by it and to otherwise conduct its business. All
corporate proceedings required by law or by the provisions of this Agreement to
be taken by FFAX on or before the Closing Date in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been or will be duly and validly taken.
5.02 Due Authorization. This Agreement and each other agreement
contemplated hereby to be executed in connection herewith by FFAX or have been
(or upon execution will have been) duly executed and delivered by FFAX and
constitute (or upon execution will constitute) legal, valid and binding
obligations of FFAX enforceable in accordance with their respective terms,
except as limited by bankruptcy, insolvency, reorganization or other laws
affecting generally the enforcement of creditors' rights.
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5.03 Agreement Not in Breach of Other Instruments. The execution
and delivery of this Agreement by FFAX and the consummation of the transactions
contemplated hereby will not result in a breach of any of the terms and
provisions of, or constitute a default under, or conflict with, any material
agreement, indenture or other instrument to which FFAX is a party or by which it
or its properties are bound.
5.04 Status of Common Stock. Upon consummation of the
transactions contemplated by this Agreement, the FFAX Shares to be issued to the
CXNC Shareholders, when issued and delivered, will be duly authorized, validly
issued, fully paid and non-assessable and free of any and all liens, claims or
encumbrances.
5.05 No Bankruptcy. Neither FFAX nor its assets are the subject of any
proceeding involving either a voluntary or an involuntary bankruptcy, insolvency
or receivership.
5.06 Absence of Certain Changes. Since June 1, 2001, there has not been
any material adverse change in the financial condition, assets or liabilities of
FFAX, and FFAX has not:
(a) Engaged in any material transaction outside the ordinary course of
business;
(b) Made any capital expenditures other than in the ordinary course of
business;
(c) Paid, loaned or advanced (other than the payment of salaries or
reimbursement of expenses in the ordinary course of business) any amounts to, or
sold, transferred or leased any properties or assets to or entered into any
other transactions with any of its officers or directors, any of its affiliates,
or any officer or director of its affiliates;
(d) Made any material change in any method of accounting or accounting
practice;
(e) Incurred any material indebtedness or leasehold expense in excess
of $5,000;
(f) Entered into any material guaranties or otherwise incurred or
suffered to exist any material contingent liabilities;
(g) Paid or declared any dividend or other distribution in respect of
its capital stock, or set aside any sums for the payment of any such dividend or
other distribution;
(h) Issued or sold any shares of common stock or any other equity
security, granted any stock option or warrant, or otherwise issued any security
convertible into capital stock,
(i) Agreed, whether in writing or otherwise, to do any of the
foregoing;
(j) Suffered any labor trouble or any controversies with any of its
employees; or,
12
(k) Suffered any damage, destruction or loss, whether
or not covered by insurance, materially adversely affecting the business or
properties of FFAX.
5.07 Contracts and Commitments. All agreements which materially
affect FFAX, to which FFAX is a party or by which FFAX or any of its property is
bound which exist as of the date of execution of this Agreement have been filed
as exhibits to documents filed by FFAX (collectively, the "Contracts") with the
Securities and Exchange Commission (the Commission) under the Securities
Exchange Act of 1934, as amended (the 1934 Act). FFAX is not in default with
respect to any material term or condition of any such Contract, nor has any
event occurred which through the passage of time or the giving of notice, or
both, would constitute a default thereunder.
5.08 Litigation.
(a) There is no action, suit or proceeding to which FFAX is a party
(either as a plaintiff or defendant) pending before any court or governmental
agency, authority or body, or any arbitrator or arbitral body, which, if decided
or concluded adversely, would have a materially adverse impact upon the
operation by FFAX of its business or on FFAX's ability to consummate the
transactions contemplated herein, and FFAX has no knowledge that any such
action, suit or proceeding has been threatened against FFAX;
(b) FFAX has not been permanently or temporarily enjoined by any order,
judgment or decree of any court or tribunal or any other agency from engaging in
or continuing any conduct or practice in connection with its business; and
(c) There is not in existence on the date hereof any order, judgment or
decree of any court or other tribunal or other agency or any arbitrator or
arbitral body, enjoining or requiring FFAX to take any action of any kind with
respect to its business, properties or assets.
5.09 Compliance with Law.
(a) FFAX currently has no outstanding notice or
notification from any court or governmental agency, authority or body that, with
respect to the operations of FFAX's business, it is in violation in any material
respect of or not in substantial compliance with any federal, state or local
laws, statutes, ordinances, rules, regulations, decrees, orders, permits or
other similar items (including, but not limited to, those related to employee
safety, employment discrimination and environmental protection or conservation)
or that upon the passage of time it will be in violation in any material respect
of any of the foregoing;
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(b) The conduct of FFAX's business within the five-year
period prior to the date hereof has not been in violation of any federal, state
or local laws, statutes, ordinances, rules, regulations, decrees, orders,
permits or other similar items (including, but not limited to, those related to
employee safety, employment discrimination and environmental protection or
conversation) in force on the date hereof, the enforcement of which would
materially and adversely affect the condition (financial or otherwise), business
or properties of FFAX;
(c) Neither FFAX nor any shareholder, officer, employee or agent of
FFAX has, directly or indirectly, within the five year period prior to the date
hereof given or agreed to give any gift or similar benefit to any customer,
supplier, competitor or governmental employee or official or has engaged in any
other practice, which in any such case would subject FFAX to any damage or
penalty in any civil, criminal or governmental litigation or proceeding or which
would be grounds for termination or modification of any material contract,
license or other instrument to which FFAX is a party; and
(d) All outstanding securities issued by FFAX (including all common
stock and securities convertible into or exercisable for common stock) were
issued in compliance with all applicable securities laws. All of the outstanding
shares of FFAX common stock are, and any shares of FFAX common stock issuable
upon conversion or exercise of any other security, when issued pursuant to such
conversion or exercise will be, duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
charter documents of FFAX or any agreement to which FFAX is a party or is bound.
5.10 Capitalization. The authorized capital stock of FFAX consists of
50,000,000 shares of common stock, of which 19,446,000 (approximately) shares
are outstanding on the date hereof. Such issued and outstanding shares have been
duly and validly authorized and are fully paid and non-assessable. There are no
other shares of capital stock of FFAX outstanding, authorized or reserved for
issuance, there are no outstanding options, warrants, or rights to purchase or
acquire, or securities convertible into or exchangeable for, any shares of
capital stock of FFAX, and there are no contracts, commitments, agreements,
understandings, arrangements or restrictions which require FFAX to issue, sell
or deliver any shares of capital stock of FFAX. Attached as Schedule 5.10 is a
list of the stockholders of FFAX indicating the number of FFAX common shares
owned of record by them as of a recent date.
5.11 Taxes. All tax returns required to be filed with respect to
FFAX have been duly filed and all taxes and other governmental charges as
reflected on such tax returns as being due and owing in respect of the
properties, income, sales and payrolls of FFAX have been duly paid. There are no
pending questions with governmental agencies relating to, or claims or
assessments for, taxes payable by FFAX, and FFAX has not given, and has not been
requested to give, any waivers extending the statutory period of limitation
applicable to any income tax return for any period; and proper and accurate
amounts have been withheld by FFAX from its employees for all periods in full
and complete compliance with the tax withholding provisions of all applicable
laws.
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5.12 Subsidiaries and Affiliates. FFAX has no direct or indirect equity
investment in any corporation, partnership, joint venture or other business
entity.
5.13 Indebtedness to and from Officers, Directors and Stockholders.
FFAX is not indebted to any officer, director, or stockholder of FFAX in any
amount whatsoever other than for salaries or services rendered since the start
of FFAX's current pay period and for reimbursable business expenses, nor is any
such officer, director or stockholder indebted to FFAX except for advances made
in the ordinary course of business to meet anticipated reimbursable business
expenses to be incurred by such obligor and except for the debt to Anthony Papa
and/or his nominee as already been declare, the said amount of $513,000 USD will
be reimbursed by the issuance of 2,565,000 shares.
5.14 No Legal Bar. FFAX is not prohibited by any order, writ,
injunction or decree of any body of competent jurisdiction from consummating the
transactions contemplated by this Agreement, and no such action or proceeding is
pending against FFAX which questions the validity of this Agreement or any of
the transactions contemplated hereby.
5.15 Finder's Fees and Brokerage Fees. FFAX has not had any
dealings with any person which would entitle such person to any finder's fee or
brokerage fees in connection with this Agreement or any transaction contemplated
hereby.
5.16 Other Information. FFAX has disclosed or will, prior to the
Closing, disclose to CXNC all information requested by CXNC and known to FFAX
(after reasonable investigation and inquiry) to be material to the condition
(financial or otherwise), business or properties of FFAX. The information
concerning FFAX set forth in this Agreement, in the FFAX Annual Report
(including the audited financial statements contained therein (the "FFAX
Financial Statements")), in any schedules hereto furnished by FFAX, and in any
other document, statement or certificate furnished or to be furnished to FFAX
pursuant hereto, does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated herein or
therein or necessary to make the statements and facts contained herein or
therein, in light of the circumstances in which they are made, not false or
misleading. All information contained or referred to in the schedules hereto
furnished by FFAX is accurate in all material respects and FFAX (after having
made reasonable inquiry) is not aware of any other fact or matter which renders
any such information materially misleading. Copies of all documents heretofore
or hereafter delivered or made available to CXNC were or will be complete and
accurate copies of such documents on the date such copies are delivered.
5.17 FFAX Financial Statements. The FFAX Financial Statements
fully represent the financial condition of FFAX and the results of operations,
shareholders equity and cash flows of FFAX for the periods covered. The FFAX
Financial Statements comply with generally accepted accounting principles
consistently applied throughout the periods covered.
5.18 Reporting Company. FFAX is a reporting company registered under
Section 12(g) of the Securities Exchange Act of 1934 and is in compliance with
all laws, rules and regulations applicable to reporting companies generally.
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5.19 Securities Filings. FFAX is current with respect to all required
filings with state and federal securities regulatory authorities and the
contents of all such filings are complete and accurate in all material respects.
5.20 OTC Bulletin Board. FFAX's common stock is posted for trading on
the OTC Bulletin Board under the symbol "FFAXE"
5.21 Stop Trade Orders. To FFAX's knowledge, there are no
pending, and there have never been any, stop trade orders issued against FFAX or
any of its directors or officers or those of any affiliates of FFAX by any
securities regulatory authority whether in the United States or in any other
jurisdiction.
5.22 Regulatory Investigations. To FFAX's knowledge, there are no
investigations or inquiries pending against FFAX or its directors or officers by
any stock exchange, securities regulatory authority, taxing authority or any
other governmental department or agency.
5.23 Corporate Records. All of the minute books and corporate and
financial records of FFAX are, or prior to the Closing
will be, in all material respects, complete, up to date and accurate.
5.24 Representations. All representations and warranties of FFAX
are true, accurate and complete in all material respects as of the date hereof
and will be true, accurate and complete as of the Closing as if made at such
time, except with respect to the effect of transactions in the ordinary course
of business and transactions contemplated or permitted by this Agreement. Any
exception to a representation or warranty of FFAX which is disclosed in any of
the schedules hereto furnished by FFAX shall be deemed to apply only to the
representation or warranty referenced by such schedule, and shall not, unless
scheduled separately, be considered an exception to any other representation or
warranty of FFAX in this Agreement.
5.25 Required Consents. No consent, waiver or other authorization
of any third party (including, without limitation, any third party to a real
property lease, equipment lease, contract, license, permit or other instrument
to which FFAX is a party or by which FFAX is bound) is required to the
consummation of the transactions contemplated by this Agreement.
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ARTICLE SIX
Covenants and Agreements of CXNC
All references to CXNC in this Article shall be deemed to refer to both
CXNC and its subsidiaries, except where the context requires otherwise. CXNC
hereby covenants and agrees, between the date hereof and the Closing (and, with
respect to Sections 6.06, 6.10, and 6.15 through 6.19, also after the Closing),
as follows:
6.01 Conduct of Business. CXNC shall conduct the operations of
its Business only in the ordinary course and in a manner consistent with a
maximization of the value of the Business. CXNC shall use reasonable efforts to
preserve the goodwill of its customers and others with whom it has business
relations. Except as otherwise contemplated by this Agreement or consented to by
FFAX in writing, between the date of this Agreement and the Closing, CXNC shall
not:
(a) Engage in any material transaction outside the ordinary course of
business;
(b) Make any capital expenditures other than in the ordinary course of
business;
(c) Enter into any material guaranties or otherwise incur or suffer to
exist any material contingent liabilities;
(d) Enter into any material new indebtedness, or cancel any
indebtedness due it except upon full payment thereof;
(e) Make any payment of dividends or other unusual distribution of cash
or assets to shareholders or employees, including repayment of outstanding
indebtedness;
(f) Make any material change in any method of accounting or accounting
practice;
(g) Enter into or engage in any transaction with any officer, director,
shareholder or affiliate, except for the payment of salaries and other
activities in the ordinary course of business;
(h) Fail to pay when due, or fail to maintain a reserve adequate for
the payment when due of, any applicable local, provincial or federal taxes;
(i) Issue or sell any common shares or other equity security, grant any
stock option or warrant, or otherwise issue any security convertible into
capital stock;
(j) Take any other action which would render any representation or
warranty of CXNC herein inaccurate as of the date such action is taken; or
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(k) Agree, whether in writing or otherwise, to do any of the foregoing.
6.02 Fulfillment of Conditions and Covenants. CXNC shall not
voluntarily undertake any course of action inconsistent with the satisfaction of
the requirements or conditions applicable to it as set forth in this Agreement
and shall promptly do all acts and take all such steps as it deems necessary or
appropriate to enable it to perform as early as possible the obligations herein
provided.
6.03 Status of Assets. CXNC's title to its assets shall be
maintained and preserved at all times from the date hereof until completion of
the Closing in material accordance with the representations and warranties of
CXNC set forth in Article Four hereof.
6.04 Access to Information. Upon reasonable notice from FFAX,
CXNC shall deliver to the representatives of FFAX, or grant such representatives
access during normal business hours to, the books, records and financial
statements of CXNC to make such reviews, examinations and investigations thereof
as FFAX deems necessary.
6.05 Financial Records and Unaudited Financial Statements. CXNC
shall accurately maintain its books and records and promptly advise FFAX in
writing of any material adverse change in the condition (financial or
otherwise), assets, liabilities, earnings or Business of CXNC.
6.06 Audited Financial Statements and Commission Compliance. CXNC
shall prepare and complete, at its own cost, an audit of the financial
statements of CXNC, which shall be consolidated as to CXNC, its subsidiary and
FFAX, and shall conform with the requirements of Form 8-K (items 2 and 7) and
other applicable rules and regulations of the 1934 Act and other requirements of
the Commission. Such audit shall be completed in time for FFAX to timely file
the audited financial statements of CXNC, together with all required pro forma
financial statements, with the Commission on Form 8-K, i.e., within 75 days
after the Effective Time. Further, after the Effective Time, FFAX (as the owner
of CXNC) shall timely comply with all the reporting requirements applicable to
FFAX, including, without limitation, preparing and filing quarterly, annual and
other reports to the Commission as required by the 1934 Act and any other
applicable law, rule, regulation or order issued by the Commission.
6.07 Consents. Between the date hereof and the Closing, CXNC
shall, at its cost, obtain from third parties any Required Consents in writing;
provided, however, that the terms and conditions of any agreements as to which
such consents are obtained shall not be less favorable following the Acquisition
than those terms and conditions to which CXNC is currently subject.
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6.08 Transfer of Licenses, Permits and Authorizations. Between
the date hereof and the Closing, CXNC shall, if required by applicable law or
regulations, at its cost, obtain new Licenses and Permits or transfers of
existing Licenses and Permits and any governmental or other consents or
authorizations required for the consummation of the Acquisition and the conduct
of CXNC's Business following the Closing; provided, however, that the terms and
conditions of such new or transferred Licenses and Permits shall not be less
favorable than those terms and conditions to which CXNC is currently subject.
6.09 Employees. Between the date hereof and the Closing, CXNC
shall use its best efforts to ensure that all of the key employees of CXNC shall
remain as employees of CXNC (subject to Section 14.05 below).
6.10 Agreement with Respect to Other Regulatory Filings. CXNC
agrees that it shall cooperate with FFAX in the preparation of any document or
other material which may be required by any governmental agency as a predicate
to or result of the transactions herein contemplated.
6.11 Solicitation of Inquiries. From the date hereof to the
earlier to occur of (i) the Closing or (ii) the termination of this Agreement
pursuant to Article Ten hereof (which period shall be referred to herein as the
"No-Shop Period"), neither CXNC nor its directors, employees, agents or
representatives shall, without the prior written consent of FFAX, solicit from
any other person, firm or corporation any inquiry or proposal relating to a
merger, consolidation, amalgamation, purchase or sale of assets, exchange of
securities or similar transaction involving CXNC, other than in the ordinary
course of business, nor shall they deliver to any other person any information
concerning CXNC or its business, financial affairs or prospects for the purpose
or with the intent of permitting such person or entity to evaluate the
possibility of such a transaction involving CXNC.
6.12 Purchase and Sale Agreements. CXNC shall distribute to each
of the CXNC Shareholders a Purchase and Sale Agreement in substantially the form
attached as Exhibit A (the "Purchase and Sale Agreement") to be signed by them
and returned to CXNC for delivery to FFAX at the Closing. For information
purposes only, CXNC shall also distribute to each of the CXNC Shareholders both
a copy of the FFAX Annual Report and a copy of this Agreement.
6.13 Public Announcements. Except as required by any applicable
law, rule or regulation, prior to the Closing CXNC shall not issue nor permit to
be issued any press release or otherwise make or permit to be made any public
statement with respect to the transactions contemplated by this Agreement
without the prior written consent of FFAX.
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ARTICLE SEVEN
Covenants and Agreements of FFAX
FFAX hereby covenants and agrees, between the date hereof and
the date of Closing as follows:
7.01 Fulfillment of Conditions and Covenants. FFAX shall not
voluntarily undertake any course of action inconsistent with the satisfaction of
the requirements and conditions applicable to it as set forth in this Agreement,
and FFAX shall promptly do all acts and take all such measures as may be
necessary or appropriate to enable it to perform as early as possible the
obligations herein provided.
7.02 Access to Information. Upon reasonable notice from CXNC,
FFAX shall deliver to the representatives of CXNC, or grant such representatives
access during normal business hours to, the books, records and financial
statements of FFAX to make such reviews, examinations and investigations thereof
as CXNC deems necessary.
7.03 Compliance with Applicable Securities Laws. FFAX agrees to
use its best efforts to comply with all applicable securities laws in connection
with the offer and sale of the FFAX Shares to the CXNC Shareholders and will pay
all expenses incident thereto.
7.04 Resignations of Existing Directors and Officers. The board
of directors of FFAX shall obtain written resignations of each of the existing
directors and officers of FFAX, to become effective at the Effective Time, and
shall deliver them to CXNC at the Closing.
7.05 Appointment of New Directors and Officers. The board of
directors of FFAX shall adopt the New Director Resolutions (as defined in
Section 3.04) and the New Officer Resolutions (as defined in Section 3.05) and
shall deliver certified copies of such resolutions to CXNC at the Closing.
7.06 Conduct of Business. FFAX shall conduct the operations of
its business only in the ordinary course. Except as otherwise contemplated by
this Agreement or consented to by CXNC in writing, between the date of this
Agreement and the Closing, FFAX shall not:
(a) Engage in any material transaction outside the ordinary course of
business;
(b) Make any capital expenditures other than in the ordinary course of
business;
(c) Enter into any material guaranties or otherwise incur or suffer to
exist any material contingent liabilities;
(d) Enter into any material new indebtedness, or cancel any
indebtedness due it except upon full payment thereof;
20
(e) Make any payment of dividends or other unusual distribution of cash
or assets to stockholders or employees,
including repayment of outstanding indebtedness;
(f) Make any material change in any method of accounting or accounting
practice;
(g) Enter into or engage in any transaction with any officer, director,
shareholder or affiliate, except for the payment of salaries and other
activities in the ordinary course of business;
(h) Fail to pay when due, or fail to maintain a reserve adequate for
the payment when due of, any applicable local, state or federal taxes;
(i) Issue or sell any shares of common stock or other equity security,
grant any stock option or warrant, or otherwise issue any security convertible
into capital stock;
(j) Take any other action which would render any representation or
warranty of FFAX herein inaccurate as of the date such action is taken; or
(k) Agree, whether in writing or otherwise, to do any of the foregoing.
7.07 Financial Records. FFAX shall accurately maintain its books and
records and promptly advise CXNC in writing of any material adverse change in
the condition (financial or otherwise), assets, liabilities or business of FFAX.
7.08 Agreement with Respect to Other Regulatory Filings. FFAX
agrees that it shall cooperate with CXNC in the preparation of any document or
other material which may be required by any governmental agency as a predicate
to or result of the transactions herein contemplated.
7.09 Solicitation of Inquiries. Unless otherwise permitted by
this Agreement, during the No-Shop Period (as defined in Section 6.11) neither
FFAX nor its directors, employees, agents or representatives shall, without the
prior written consent of CXNC, solicit from any other person, firm or
corporation any inquiry or proposal relating to a merger, consolidation,
amalgamation, arrangement, purchase or sale of assets, exchange of securities or
similar transaction involving FFAX, other than in the ordinary course of
business, nor shall they deliver to any other person any information concerning
FFAX or its business, financial affairs or prospects for the purpose or with the
intent of permitting such person or entity to evaluate the possibility of such a
transaction involving FFAX.
7.10 Public Announcements. Except as required by any applicable
law, rule or regulation, prior to the Closing FFAX shall not issue nor permit to
be issued any press release or otherwise make or permit to be made any public
statement with respect to the transactions contemplated by this Agreement
without the prior written consent of CXNC.
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ARTICLE EIGHT
Conditions Precedent in Favor of CXNC
The obligations of CXNC contemplated herein are subject to the
satisfaction, at or before the Closing, of all of the conditions set out
hereinbelow. If any such condition is not satisfied, CXNC shall have the right,
at its sole election, either to waive the condition in question and proceed with
the Closing or, in the alternative, to terminate this Agreement without
liability. In the event that CXNC elects to waive the condition in question and
proceed with the Closing, the condition in question shall be deemed to have been
satisfied and shall have no further force or effect hereunder in the absence of
any misrepresentation of FFAX to CXNC with respect to such condition.
8.01 Accuracy of and Certificate as to Representations and
Warranties. The representations and warranties of FFAX contained herein and in
all documents to be delivered pursuant hereto shall be true and correct in all
material respects as of the Closing, as if made at such time, and CXNC shall
have received from FFAX a certificate, dated as of the Closing and signed by an
executive officer of FFAX, certifying that all such representations and
warranties of FFAX remain true and correct as of the Closing.
8.02 Compliance with Covenants. FFAX shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or satisfied by FFAX.
8.03 Action/Proceeding. No court shall have issued an order effective
against a party to restrain or prohibit the transactions herein contemplated.
8.04 Consents. CXNC shall have obtained all Required Consents
from the parties from whom consent is required, as listed on Schedule 4.25
hereto, and from any other third party (including any federal, provincial or
local governmental agency or instrumentality) as may be necessary or appropriate
in connection with the execution and delivery of this Agreement, or to the
consummation of the transactions contemplated hereby, and CXNC shall have
obtained documentation or other evidence confirming same.
8.05 Compliance with Law. There shall have been obtained any and
all permits, approvals and consents of all governmental bodies or agencies which
counsel for CXNC may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance in all material respects with applicable laws.
8.06 Opinion of Counsel for FFAX. CXNC shall have received an
opinion from the counsel to FFAX, dated as of the Closing, which is addressed to
CXNC and the CXNC Shareholders and is satisfactory in form and substance to CXNC
and its counsel, to the effect that:
(a) FFAX is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida;
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(b) FFAX is qualified to do business in the State of Florida;
(c) FFAX has corporate power and authority to enter into this
Agreement, the Purchase and Sale Agreements and to perform its obligations
thereunder, and FFAX has corporate power and authority to own its properties and
assets and to conduct its present business;
(d) The execution, delivery and performance of the agreements to be
delivered pursuant hereto by FFAX have been duly authorized and approved by FFAX
and constitute the valid and binding obligations of FFAX duly enforceable in
accordance with their terms except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting the rights of creditors
generally, and will not contravene outstanding documents, by-laws, contracts or
instruments by which FFAX or its assets are bound or to which they are subject;
(e) The FFAX Shares to be issued and delivered at the Closing are duly
authorized, validly issued, fully paid and non-assessable, and free of
pre-emptive rights; and,
(f) The offer and sale of the FFAX Shares to be issued and delivered at
the Closing does not require registration, qualification or delivery of a
prospectus under the Securities Act of 1933 or any state securities laws.
In rendering its opinion, counsel for FFAX may rely upon
certificates of officers of FFAX and certificates of governmental authorities as
to factual matters.
8.07 Delivery of Resolutions. The board of directors of FFAX
shall have adopted the New Director Resolutions (as defined in Section 3.04) and
the New Officer Resolutions (as defined in Section 3.05) and shall have
delivered certified copies of such resolutions to CXNC at the Closing.
8.08 Delivery of FFAX Shares. Pursuant to the terms of this
Agreement and an arrangement with CXNC's counsel, FFAX shall have delivered to
CXNC's counsel prior to the Closing the certificates representing the FFAX
Shares to be delivered to the CXNC shareholders in exchange for the shares of
CXNC to be delivered to FFAX by the CXNC Shareholders.
8.10 Purchase and Sale Agreements. CXNC shall have received properly
executed Purchase and Sale Agreements from all of the CXNC Shareholders for
delivery to FFAX at the Closing.
8.11 Other Information. CXNC shall have received such other
certificates, opinions and other documents as it or its counsel may reasonably
require in order to consummate the transactions contemplated hereby, all of
which shall be in form and substance satisfactory to it and its counsel.
8.12 Adverse Change. FFAX shall not have suffered any material change,
loss or damage, whether or not covered by insurance, since the date of execution
of this Agreement.
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8.13 Corporate Authorization. FFAX shall have delivered to CXNC
certified copies of all appropriate resolutions of FFAX's board of directors
authorizing the transactions contemplated by this Agreement.
8.14 Certificate of Status. FFAX shall have delivered to CXNC a
certificate of good standing and a tax clearance certificate from the Florida
Secretary of State with respect to FFAX dated not more than ten (10) days prior
to the Closing.
8.15 Incumbency Certificate. FFAX shall have delivered to CXNC a
certificate of incumbency with respect to those persons who are the directors
and officers of FFAX at the time of the Closing.
8.17 Stockholder Notice. No later than ten days after the
Effective Time, FFAX (as the owner of CXNC) shall file with the Commission the
notice (aka an Information Statement or Stockholder Notice) required by Section
14(f) of the 1934 Act and Rule 14f-1 promulgated thereunder (the "Stockholder
Notice") with respect to the change in control of FFAX's board of directors. As
soon thereafter as permitted and/or required by the 1934 Act and said rules, as
well as in accordance with same, FFAX (as the owner of CXNC) shall mail said
Stockholder Notice to all the stockholders of FFAX and otherwise take all
actions required by said rules.
ARTICLE NINE
Conditions Precedent in Favor of FFAX
The obligations of FFAX contemplated herein are subject to the
satisfaction, at or before the Closing, of all of the conditions set out herein
below. If any such condition is not satisfied, FFAX shall have the right, at its
sole election, either to waive the condition in question and proceed with the
Closing or, in the alternative, to terminate this Agreement without liability.
In the event that FFAX elects to waive the condition in question and proceed
with the Closing, the condition in question shall be deemed to have been
satisfied and shall have no further force or effect hereunder in the absence of
any misrepresentation of CXNC to FFAX with respect to such condition.
9.01 Accuracy of and Certificate as to Representations and
Warranties. The representations and warranties of CXNC contained herein and in
all documents to be delivered pursuant hereto shall be true and correct in all
material respects as of the Closing, as if made at such time, and FFAX shall
have received from CXNC a certificate, dated as of the Closing and signed by an
authorized officer of CXNC, certifying that all such representations and
warranties of CXNC remain true and correct as of the Closing.
9.02 Compliance with Covenants. CXNC shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed or satisfied by CXNC.
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9.03 Action/Proceeding. No court shall have issued an order effective
against a party to restrain or prohibit the transactions herein contemplated.
9.04 Consents. CXNC shall have obtained all Required Consents
from the parties from whom consent is required, as listed on Schedule 4.25
hereto, and from any other third party (including any federal, provincial or
local governmental agency or instrumentality) as may be necessary or appropriate
in connection with the execution and delivery of this Agreement, or to the
consummation of the transactions contemplated hereby, and FFAX shall have
obtained from CXNC documentation or other evidence confirming same.
9.05 Compliance with Law. There shall have been obtained any and
all permits, approvals and consents of all governmental bodies or agencies which
counsel for FFAX may reasonably deem necessary or appropriate so that
consummation of the transactions contemplated by this Agreement will be in
compliance in all material respects with applicable laws.
9.06 Purchase and Sale Agreements. CXNC shall have delivered to FFAX a
properly executed Purchase and Sale Agreement from each of the CXNC
Shareholders.
9.07 Opinion of Counsel for CXNC. FFAX shall have received an
opinion from Bruce Taub, counsel to CXNC, which is dated as of the Closing and
is satisfactory in form and substance to FFAX and its counsel, to the effect
that:
(a) CXNC and each of its subsidiaries are corporations duly organized,
validly existing and in good standing under the federal laws of Canada
(b) CXNC and each of its subsidiaries are qualified to do business in
the Province of Quebec;
(c) CXNC has corporate power and authority to enter into this
Agreement, and to perform its obligations thereunder, and CXNC and its
subsidiaries have corporate power and authority to own their respective
properties and assets and to conduct their present businesses;
(d) The execution, delivery and performance of the agreements to be
delivered pursuant hereto by CXNC have been duly authorized and approved by CXNC
and constitute the valid and binding obligations of CXNC duly enforceable in
accordance with their terms except as such enforcement may be limited by
bankruptcy, insolvency and other similar laws affecting the rights of creditors
generally, and will not contravene outstanding documents, by-laws, contracts or
instruments by which CXNC, its subsidiaries, or the assets of CXNC or its
subsidiaries are bound or to which they are subject;
(e) The CXNC Shares to be delivered at the Closing are duly authorized,
validly issued, fully paid and non-assessable, and free of pre-emptive rights;
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(f) The transfer, conveyance and/or sale to FFAX of the CXNC Shares at
the Closing is exempt from all applicable provincial takeover statutes, rules
and regulations;
(g) No governmental notices, filings, approvals or consents are
required in order for CXNC to complete the transactions contemplated by this
Agreement;
(h) To counsel's knowledge, without investigation, CXNC is not a party
to any litigation or the subject of any judgment or actual or threatened claim
except as disclosed in the Agreement or the schedules thereto;
(i) To counsel's knowledge, without investigation, CXNC has not been
the subject of any investigation, stop order or legal action by any securities
authorities having jurisdiction; and
(j) The transactions contemplated by this Agreement will not contravene
any applicable law, rule or regulation to which CXNC is subject; and
In rendering its opinion, counsel for CXNC may rely upon
certificates of officers of CXNC and certificates of governmental authorities as
to factual matters.
9.08 Securities Law Compliance. All applicable securities laws have
been satisfied in connection with the offer and sale of the FFAX Shares.
9.09 Other Information. FFAX shall have received such other
certificates, opinions and other documents as it or its counsel may reasonably
require in order to consummate the transactions contemplated hereby, all of
which shall be in form and substance satisfactory to it and its counsel.
9.10 Adverse Change. No material adverse change in the results of
operations or the financial condition of CXNC which materially impairs CXNC's
ability to conduct its Business shall have occurred other than for changes which
occur from the fact that CXNC has entered into this Agreement with FFAX, and
CXNC shall not have suffered any material change, loss or damage, whether or not
covered by insurance, since the date of execution of this Agreement, which
change, loss or damage materially affects or impairs the ability of CXNC to
conduct its Business. Without limitation of the foregoing, there shall not have
occurred any destruction of or damage or loss to all or any part of the assets
of CXNC from any cause whatsoever, including, but not limited to, fire, flood,
accident, acts of God, earthquake, insurrection, riot or any other cause
commonly referred to as force majeure, which destruction, damage or loss shall
not have been fully repaired to FFAX's satisfaction.
9.11 Corporate Authorization. CXNC shall have delivered to FFAX
certified copies of all appropriate resolutions of CXNC's board of directors
authorizing the transactions contemplated by this Agreement.
9.12 Certificate of Status. CXNC shall have delivered to FFAX
certificates of good standing for CXNC and its subsidiary from the jurisdictions
in which they are incorporated and in which they conduct business, dated not
more than ten (10) days prior to the Closing.
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9.13 Transfer and Delivery of CXNC Shares. Pursuant to the terms
of this Agreement and an arrangement with FFAX's counsel, CXNC shall have
delivered to FFAX's counsel prior to the Closing the certificates representing
the CXNC Shares, together with stock powers or other transfer documentation
pursuant to which the CXNC Shareholders have transferred ownership of their
respective CXNC Shares to FFAX.
9.15 Incumbency Certificate. CXNC shall have delivered to FFAX a
certificate of incumbency with respect to those persons who are the directors
and officers of FFAX at the time of the Closing.
ARTICLE TEN
Termination and Abandonment of the Acquisition
10.01 Termination. This Agreement may be terminated and the
Acquisition abandoned (notwithstanding any shareholder approval of the
Acquisition) prior to the Effective Time:
(a) by mutual written consent of FFAX and CXNC at any time;
(d) by FFAX or CXNC at any time if an order is entered by any court or
governmental agency having jurisdiction enjoining FFAX or CXNC, respectively,
from consummating any of the transactions contemplated by this Agreement and
such order shall not have been vacated, reversed or withdrawn on or before the
thirtieth (30th) day after the date on which such order was first issued; or
(e) by FFAX or CXNC if (i) any representation or warranty of the other
hereunder shall not have been true and correct as of the time at which made, or
(ii) any conditions precedent to the obligations of such party as set forth in
Article Eight or Nine are not satisfied in a timely fashion, or (iii) default
shall be made by the other hereunder in the due and timely observance or
performance of any of its covenants and agreements herein contained, in either
event only if such representation or warranty cannot be made true and correct or
such default cannot be cured on or prior to the fifteenth (15th) day after the
non-defaulting or breaching party notifies the other in writing of such default
or breach, specifying the nature thereof.
10.02 Notice of Termination. The power of termination provided for
by Section 10.01 hereof may be exercised only by a notice given in writing and
signed on behalf of FFAX by Anthony Papa and on behalf of CXNC by Jean Francois
Amyot.
10.03 Effect of Termination. In the event of termination and
abandonment pursuant to this Article Ten, this Agreement shall become void and
have no effect, without any liability on the part of any of the parties, except
as otherwise provided in Articles Eleven and Twelve hereof. Any announcement of
the termination of this Agreement and the abandonment of the Acquisition shall
be made by means of a press release issued jointly by FFAX and CXNC unless
otherwise required to be made by FFAX pursuant to the federal or state
securities laws.
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ARTICLE ELEVEN
Indemnification
11.01 Survival of Representations and Warranties. The representations
and warranties of each party hereto shall survive the Closing and shall not be
affected by any investigation made by or on behalf of FFAX or CXNC, as the case
may be. The representations and warranties set forth in this Agreement shall
expire with, and be terminated and extinguished upon, the expiration of the
applicable statute of limitations with respect to the matters referenced
therein. After the applicable expiration with respect to any particular
representation or warranty, neither FFAX nor CXNC shall be under any liability
whatsoever with respect to any such representation or warranty. All covenants
and agreements of the parties contained herein shall survive the Closing Date
and shall continue for the period required to fulfill the applicable covenant or
agreement.
11.02 Indemnification. The parties shall indemnify each other as
follows
(a) CXNC's Indemnity. CXNC hereby agrees to indemnify, defend and hold
harmless FFAX and its stockholders, directors, officers and agents from and
against all losses, judgments, liabilities, claims, damages, or expenses
(including reasonable attorneys' fees) of every kind, nature and description,
whether known or unknown, absolute or contingent, joint or several ("Loss"),
arising out of or relating to (i) any misrepresentation, breach of any
representation or warranty, or non-fulfillment, non-performance, failure to
timely or fully perform, or breach of any covenant, agreement or other
obligation to be performed by CXNC contained in this Agreement or any exhibit or
schedule hereto, (ii) the conduct of CXNC's Business prior to the Effective
Time, or (iii) the conduct of CXNC's business after the Effective Time.
(b) FFAX's Indemnity. FFAX hereby agrees to indemnify, defend and hold
harmless CXNC, the CXNC Shareholders and CXNC's directors, officers and agents
from and against any Loss arising out of or relating to (i) any
misrepresentation, breach of any representation or warranty, or non-fulfillment,
non-performance, failure to timely or fully perform, or breach of any covenant,
agreement or other obligation to be performed by FFAX contained in this
Agreement or any exhibit or schedule hereto, or (ii) the conduct of FFAX's
business prior to the Effective Time.
11.03 Indemnification Notice.
(a) Third Party Claim. In the event that CXNC, FFAX or any other party
entitled to indemnification under Section 11.02 hereof shall choose to assert a
claim for Loss or potential Loss based upon a claim by a third party ("Third
Party Claim"), the party seeking indemnification ("Indemnified Party") shall
notify the party against which indemnification is sought ("Indemnifying Party")
in writing of such claim, promptly following the occurrence of the event giving
rise thereto, certifying that such a claim has been asserted and the basis
therefore which shall be set forth in reasonable detail ("Notification").
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(i) The Indemnifying Party shall acknowledge receipt of the
Notification and advise the Indemnified Party in writing twenty (20) days after
receipt thereof as to whether the Indemnifying Party agrees to such Third Party
Claim and whether the defense of the Third Party Claim shall be undertaken by
counsel of the choice of and at the expense of the Indemnifying Party. If the
Indemnifying Party so agrees, the Indemnifying Party shall be deemed to have
accepted any indemnifiable Loss suffered arising from such Third Party Claim,
the defense of which has been assumed by the Indemnifying Party. If the
Indemnifying Party advises the Indemnified Party that it shall undertake the
defense of the Third Party Claim, the Indemnified Party shall deliver all the
documents related to the Third Party Claim to the Indemnifying Party or to its
counsel, after which the responsibility of the Indemnified Party for the defense
of the Third Party Claim shall cease, except that the Indemnified Party shall
make available all documents, books and records in its possession related to the
Third Party Claim, at no expense to the Indemnifying Party, and shall fully
cooperate with counsel for the Indemnifying Party, including providing its
personnel who are acquainted with the facts or the documents or books and
records related to the Third Party Claim.
(ii) If the Indemnifying Party advises the Indemnified Party that the
defense of the Third Party Claim will not be undertaken, either the Indemnified
Party shall settle such Third Party Claim (in which case, the amount of such
settlement and all attorneys' fees attendant to the achievement of such
settlement shall be deemed included in any computation to determine Loss), or
the Indemnified Party shall notify the Indemnifying Party of the identity of the
counsel for the Indemnified Party who has been selected to defend the Third
Party Claim. The Indemnifying Party shall fully cooperate with the Indemnified
Party and its counsel to the extent that the Indemnifying Party has knowledge of
the facts or circumstances relating to the Third Party Claim and the Indemnified
Party shall cause its counsel to be available to the Indemnifying Party or its
counsel to respond to any inquiries of the Indemnifying Party concerning the
progress of such defense. In the event that the Indemnified Party shall assert a
claim for Loss as a result of any loss suffered by the Indemnified Party in
settling or defending such Third Party Claim, the Indemnified Party shall notify
the Indemnifying Party in writing of such claim. The Indemnifying Party shall
pay all costs related to the settlement or the defense within thirty (30) days
after a demand for the Loss or any component part is made.
(b) Non-Third Party Claim. In the event the Indemnified
Party shall choose to assert a claim for Loss or potential Loss by reason of
other than a Third Party Claim, the Indemnified Party shall notify the
Indemnifying Party in writing of such claim and the reasons therefor, which
reasons shall be set forth in reasonable detail. The Indemnifying Party shall
pay to the Indemnified Party the amount of the Loss within thirty (30) days of
demand pursuant to this Section 11.03.
11.04 Dispute.
(a) If the Indemnifying Party disputes any claim for indemnification or
its obligation to indemnify any claim pursuant to this Article Eleven, the
Indemnifying Party shall notify the Indemnified Party of such dispute within
twenty (20) days of receipt of the Notification. If the matter cannot be
reconciled by mutual agreement, the matter shall be submitted to binding
arbitration as provided in Section 14.05 hereof.
29
(b) If the Indemnifying Party fails to fulfill its obligations under
this Article, the Indemnified Party may submit the matter to binding arbitration
as provided in Section 14.05 hereof.
ARTICLE TWELVE
Litigation Costs
12.01 Litigation Costs. If any legal action, arbitration or other
proceeding is brought for the enforcement of this Agreement or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees, court costs and other costs
incurred in such action or proceeding, in addition to any other relief to which
it or they may be entitled.
ARTICLE THIRTEEN
Certain Additional Agreements of the Parties
13.01 Due Diligence Review. By execution of this Agreement, CXNC
acknowledges and confirms that: (i) FFAX has complied with all due diligence
requests of CXNC; (ii) that CXNC has completed its due diligence of FFAX; and,
(iii) that FFAX has completed its due diligence of CXNC. In this regard, CXNC
acknowledges that CXNC retained its own counsel in connection with the
transactions contemplated by this Agreement, that CXNC's counsel advised CXNC as
to due diligence issues, and that CXNC due diligence is complete.
13.02 Confidentiality. Except as may be required by law or as
otherwise permitted herein, the parties hereto shall cause all information
obtained by them in connection with the negotiation and performance of this
Agreement to be treated as confidential and will not use, and will not knowingly
permit others to use, any such information in any manner detrimental to the
other. Notwithstanding the foregoing, such information may be disclosed (i) in
connection with any filings or permit applications with governmental authorities
as may be necessary in order to complete the transactions contemplated by this
Agreement; (ii) as necessary in order to obtain any Required Consents of third
parties to the transactions contemplated by this Agreement; or (iii) as
otherwise necessary in order for FFAX to close the transactions contemplated by
this Agreement. The provisions of this Section shall survive any termination of
this Agreement.
13.03 Provincial Takeover Laws. If any provincial takeover laws or
regulations shall be applicable to the transactions contemplated by this
Agreement, FFAX and CXNC shall use their reasonable best efforts to take such
actions and obtain such approvals as are necessary so that the transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effects
of such provisions on the transactions contemplated by this Agreement.
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ARTICLE FOURTEEN
Miscellaneous
14.01 Notices. All notices, waivers or other communications
required or contemplated hereby shall be deemed given if delivered personally,
or sent by registered or certified mail or air courier, postage prepaid, return
receipt requested, or by telex or telecopier addressed to the parties so to be
served as follows:
If to CXNC:
Jean Francois Amyot, Chief Executive Officer
China Xin Network (Canada) Inc.
1010, rue Ste-Catherine Ouest, bureau 550
Montreal (Quebec)
Canada,H3B 1G4
Fax No.: (514) 398-0515
With a copy to:
Bruce Taub, Esq.
644 De Courcelle
Montreal, Quebec, Canada H4C 3C5
Fax No.: (514) 938-1555
If to FFAX:
Mr. Anthony Papa
Frefax Inc.
8680 Le Creusot
St-Leonard, Quebec Canada H1P 2A7
Fax No.: ( ) -
Except as provided in section 14.05 below, service of any such notice
or demand so made by mail shall be deemed complete on the date of actual
delivery thereof as shown by the addressee's registry or certification receipt,
or upon the expiration of seven days following the date of mailing. Any party
hereto from time to time by notice in writing served upon the other as aforesaid
may designate a different mailing address to which, or a different or additional
person to whom, all such notices or demands thereafter shall be addressed.
31
14.02 Assignment. Neither the Agreement nor any of the rights
hereunder may be assigned by either party without the prior written consent of
the other.
14.03 Expenses. Except as otherwise provided in this Agreement,
each party hereto shall bear all expenses and costs incurred by it with respect
to this Agreement and the transactions contemplated hereby.
14.04 Governing Law. This Agreement shall be governed and construed in
accordance with the internal law of the State of Florida without reference to
its rules as to conflicts of law.
14.05 Dispute, Jurisdiction and Venue. Each party irrevocably
submits to the exclusive jurisdiction of (a) the Superior Court in and for the
State of Florida, and (b) the United States District Court for the Central
District of Florida, for the purposes of any proceeding arising out of or
relating to this Agreement, any other transaction contemplated hereby or
thereby, including, without limitation, any controversy or claim arising out of
or relating to this Agreement, or breach thereof, including without limitation
claims against any party or its affiliates, employees, professionals, officers
or directors. Each party further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
set forth above shall be effective service of process for any proceeding. Each
party irrevocably and unconditionally waives any objection to the laying of
venue of any proceeding arising out of or related to this Agreement, any other
transactions contemplated hereby and thereby in a) the Superior Court of the
State of Florida, and (b) the United States District Court for the Central
District of Florida, and hereby and thereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
14.06 Entire Understanding. All prior agreements, representations,
discussions, negotiations, commitments and understandings between the parties
are incorporated in this Agreement and the exhibits and schedules attached
hereto which constitute the entire contract between the parties. The terms of
this Agreement are intended by the parties as a final expression of their
agreement with respect to such terms as are included herein and may not be
contradicted by evidence of any prior or contemporaneous written or oral
representations, agreements or understandings, whether express or implied. The
parties further intend that this Agreement constitutes the complete and
exclusive statement of its terms and that no extrinsic evidence whatsoever may
be introduced in any judicial proceeding, if any, involving this Agreement. No
amendment or variation of the terms of this Agreement shall be valid unless made
in writing and signed by each of the parties.
14.07 Further Assurances. Each party, both prior to and after the
Closing, shall reasonably cooperate with the other, at the other's request, in
furnishing information, documents, testimony and other assistance in connection
with the transactions contemplated hereby.
14.08 Waiver. Each party may at any time waive compliance by the
other with any covenants or conditions contained in this Agreement, but only by
a written instrument executed by the party waiving such compliance. If either
party waives a condition of Closing, the other party shall have no liability
hereunder with respect to the matters so waived.
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14.09 Headings. All Section and Article headings are included for
convenience only and are not intended to be full or accurate descriptions of the
contents thereof.
14.10 Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which may be deemed an original but all of
which together shall constitute one and the same instrument. In asserting proof
of this Agreement, it shall not be necessary to produce or account for more than
one counterpart.
14.11 Severability. If any provision of this Agreement, as applied
to any party or to any circumstance, shall be adjudged by a court to be void,
invalid or unenforceable, the same shall in no way affect any other provision of
this Agreement, the application of such provision in any other circumstance or
the validity or enforceability of this Agreement.
14.12 Binding on Successors. All of the terms, provisions and
conditions of this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, successors, assigns
and legal representatives.
33
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in multiple originals as of the day and year first above written.
"FFAX":
Frefax Inc.,
A Florida corporation
By: /s/ Anthony Papa
----------------
Name: Anthony Papa
Title: President and Chief Executive Officer
By: ---------------
Name:
Title: Witness
"CXNC":
CHINA XIN NETWORK (CANADA) INC.,
A Canadian corporation
By: /s/ Jean Francois Amyot
----------------------
Name: Jean Francois Amyot
Title: Chief Executive Officer
By: /s/ Bruce Taub
----------------------
Name: Bruce Taub
Title: Vice President of Corporate & Legal Affairs
34
LIST OF ATTACHED SCHEDULES
Schedule Description
3.04 New FFAX Directors
3.05 New FFAX Officers
4.03 Breaches and Defaults
4.04 Certain Changes
4.05 Real Property Leases
4.06 Equipment Leases
4.07 Trade Names
4.08 Contracts and Commitments
4.09 Licenses and Permits
4.10 Litigation
4.11 Insurance Policies
4.13 Compliance with Law
4.14 Shareholders of CXNC
4.15 Matters Relating to Labor and Employment
4.18 Subsidiaries and Affiliates
4.19 Banking Facilities
4.21 Indebtedness to and from Affiliates
4.22 Related Transactions
4.24 Finder's Fees and Brokerage Fees
4.25 Required Consents
5.10 Stockholders of FFAX
5.14 Indebtedness to and from Officers, Directors and Stockholders
35
Schedule 3.04
New FFAX Directors
Jean - Francois Amyot
Raymond Boisvert
Schedule 3.05
New FFAX Officers
Jean-Francois Amyot, Chief Executive Officer, Secretary and Treasurer
Raymond Boisvert, President and Publisher
CXNC Shareholders
3884368 Canada Inc. - 9,371,884 common shares - 65%
China Economic Information Network - 5,046,399 common shares - 35%