SECURITIES EXCHANGE COMMISIION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Secutities of Small business Issurers
Commission file number _________
CIK No. ________________________
XIN NET CORP.
(Exact name of registrant as specified in this charter)
Florida 330751560
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
No.)
#830 - 789 West Pender Street, Vancouver, B.C. Canada V6C 1H2
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 632-9638
Securities Registered to be Pursuant to Section 12(b) of the Act:
NONE
Securities Registered to be Pursuant to Section 12(g) of the Act
COMMON STOCK $.001 PAR VALUE
<PAGE>
TABLE OF CONTENTS
PART I
Page
Item 1. Business 3
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
Item 3. Properties 10
Item 4. Security Ownership of Certain Beneficial Owners and Management 10
Item 5. Directors and Executive Officers of the Registrant 12
Item 6. Executive Compensation 13
Item 7. Certain Relationships and Related Transactions 15
Item 8. Description of Securities 15
PART II
Item 1. Market for Registrant's Common Stock and Security Holder Matters 16
Item 2. Legal Proceedings 17
Item 3. Changes in and Disagreements with Accountants on 17
Accounting and Financial Disclosure
Item 4. Recent Sales of Unregistered Securities 17
Item 5. Indemnification of Directors and Officers 32
PART F/S
Financial Statements and Supplementary Data 33
Signature Page 36
Exhibits, Financial Statement Schedule and Reports on Form 8-K 35
<PAGE>
PART I
ITEM 1. BUSINESS
(a) General Description and Development of Business.
HISTORY OF COMPANY
On September 6, 1996, the Registrant was incorporated under the laws of
the State of Florida under the name of Placer Technologies, Inc. The Company
conducted a small public offering of 200,000 shares @ $.25 per share to achieve
$50,000 in capital. In December 1996 a Rule 15c2-11filing resulted in trading
approval on the OTCBB
The Company's initial primary service consisted of developing Web Home
Pages for small businesses in USA. Minimal revenues were generated in 1996.
On April 2, 1997, the Registrant purchased 100% interest of Infornet
Investment Limited (a Hong Kong corporation). Through this subsidiary in 1997,
the Registrant entered into a joint-venture agreement under Chinese law with Xin
Hai Technology Development Ltd.(Xin Hai), an experienced Internet Service
Provider (ISP) which owns and operates Internet licenses in the cities of
Beijing and Shenyang, China. The Infornet/Xin Hai agreement provides the
Registrant with an 80% interest in Xin Hai joint venture, until Infornet has
recouped all of its invested capital, at which time the profit sharing reverts
49% to XIN HAI and 51% to Infornet.
On June 11, 1997, the Registrant purchased 100% interest of Infornet
Investment Corp., a British Columbia corporation. Infornet Investment Corp.
manages the daily operations for the Registrant.
On July 24, 1998, the Registrant changed its name from Placer
Technologies, Inc. to Xin Net Corp. in order to reflect the core business of
the Registrant more accurately.
THE COMPANY BUSINESS
General Operations
------------------
The Company's core business is to act as a supplier of Internet services
in China by covering the major cities through its operating partner-Xin Hai.
Businesses include ISP, Home-page portal, Internet Advertising, E-commerce and
other value-added services.
Current Business
----------------
Through its wholly owned subsidiary Infornet Investment LTD (Hong Kong)
the company is in a joint venture with Xin Hai Technology Development Ltd. for
upgrading telecommunication services in China. This has evolved into an internet
focused service provider business. Xin Hai Technology Development LTD started
its Internet service in Beijing in April 1997. For purposes of this discussion,
the joint venture operations will be termed "Xin Hai"
ISP licenses in China are tightly controlled by the Ministry of Posts and
Telecommunications and provide a substantial barrier to entry. The Infornet/Xin
Hai agreement provides Infornet with 80% participation in Xin Hai until Infornet
recoups its investment, at which time the profits share reverts to 49% to Xin
HAI and 51% to Infornet. Xin Hai is a supplier of Internet services in China in
the major cities Bejing and Shenyang. Xin Hai management is currently planning
to open offices in Shanghai (pop. 14 million) and Taiyuan (pop. 7 million), for
which licenses are already in hand. License application in 6 other major cities
are underway. Official statistics put the number of internet users in China at
2.1 million at the end of 1998. This number is predicted to grow to 4 million at
the end of the current year, and to 10 million at the end of year 2000.
<PAGE>
The Xin Hai joint venture plans on introducing an expanded online
E-Commerce service to the Chinese market in 1999. Xin Hai is already offering a
"flea market" to its subscribers currently with over 10,000 items offered for
sale. The expanded services will be made available during the summer of 1999.
For the expansion program, the company has completed a $5.5 million private
placement of restricted shares.
To facilitate this goal, the Xin Hai joint venture will solicit PC
manufacturers and retailers to bundle services, put more effort on system
integration services, and Xin Hail will offer more value-added services such as
Internet Voice, Internet Fax, Fax to E-mail . The joint venture will enhance Xin
Hai's portal type home page and E-commerce offerings. The Joint Venture will
also look for strategic alliances with suitable partners.
Xin Hai has attracted more than 20,000 subscribers in less than 2 years of
operations. The company has about 50 employees at its present locations in
Beijing and Shenyang.
As of April 6, 1999 Xin Net Corp. entered into an agreement with EDUVERSE's
Internet based English language instruction system (freeENGLISH) in China.
Under the terms of the agreement, EDUVERSE will provide a localized Mandarin
version of freeENGLISH to Xin Net Corp. websitefor launch in the summer of,
1999. Both companies will participate in marketing activities to attract new
users to the Xin Net network and the freeENGLISH application. freeENGLISH is a
premium English as a Second Language computer program that teaches spoken
English over the Internet WWW.FREEENGLISH.COM . The program is completely free
to use and generates revenue by displaying embedded advertising throughtout the
course content.
The Company currently maintains its office at: #830 - 789 West Pender
Street, Vancouver, B.C. Canada V6C 1H2. Its telephone number is 1-604-632-9638.
It also has offices in Beijing at Suite 210, Building B, No - 11Wu Gen Lin Road,
West District, Beijing, PRC, and in Shenyang, P.R.C. at # 44 North HuangHe St.,
HuangGu, Shenyang, Liaoning, P.R.C., Post Code 110034.
(b) Parents and Subsidiaries
Parent
XIN NET CORP., a Florida corporation
Subsidiaries
INFORNET INVESTMENT CORP., a British Columbia corporation (100%)
INFORNET INVESTMENT LIMITED, a Hong Kong corporation (100%)
PLACER TECHNOLOGY CORP., a Joint Venture in China (80%, reverting to 51%
Infornet Investment Limited and 20%, reverting to 49%, Xin Hai Technology
Development).
(c) Narrative Description of Business
The primary focus of the Company is to be a major Internet Service
Provider in China. Presently through the Xin Hai joint venture it is the fifth
largest in Beijing and the third largest in Shenyang. It is one of only a
handful of privately owned Internet Service Providers in China.
Governmental regulation for Internet services in China
- ------------------------------------------------------
To date, Chinese Internet operating licenses have been restricted to
Chinese companies only.
<PAGE>
The Registrant, through its subsidiary Infornet, participates with Xin Hai
Technology Development LTD. a chinese government owned company in the ISP
business in China. As the chinese government liberalizes policy toward foreign
participation in Internet Operating Licenses, it could substantially increase
competition in the markets where the joint venture operates. Thereby adversely
affecting the company markets. Direct operations by foreign companies may
commence in 2 - 3 years.
The Chinese government, while currently open to joint ventures, could at
any time, restrict operations, or expropriate from foreign participants' assets
in China. Any such action could have disastrous financial consequences to the
company and its business.
China Economy
- -------------
China is one of the largest countries in the world and is the most
populated. Since 1949, China underwent about 30 years of severe central planning
and was mostly closed to the outside world. Within that period the country was
subjected to the "Great Leap Forward" of the late 50's and the "Cultural
revolution" of the late 60's. When the country was returned to a market economy
by Deng Xiaoping, 1 billion Chinese were set free to pursue economic growth and
its rewards. Today, after over 20 years of economic reforms, China has risen
from an under-developed economy with little technical or industrial expertise to
the third largest economy in the world after the United States and Japan.
China - Computer Industry
- -------------------------
With 1.2 billion people, China accounts for about one fifth of the world's
population. Computer usage is rapidly growing, especially amongst the younger
age groups, leading industry analysts to be optimistic about the prospects for
this market. Computer consultant International Data Corp. (IDC) predicted that
PC sales in China would amount to 3.9 million units in 1998, a 30% increase over
the previous year. During the second quarter of the year, 994,000 DC units were
sold, making the Chinese market the second-fastest growing market for PCs in
Asia, after India.
Growth is expected to keep climbing in 1999, with IDC forecasting sales of
4.9 million units for this year. Analysts expect tremendous long-term growth in
the consumer market because of China's large population and the actually low
penetration rate of home computers.
Although large companies like IBM and Microsoft dominate the world market,
in 1998 Chinese PC companies held about 60% of the domestic market share. The
reason is simply one of price and affordability.
China - Computer Affordability
- ------------------------------
The average annual per capita disposable income in urban households has
increased significantly since 1992. Then, monthly income of 400 Yuan (about
US$50) was desirable, yet currently, urban foreign JV employees' salary falls in
a range of 5,000 to 10,000 Yuan (about US$625 to US$1,250) per month. Urban
local enterprise employees' salary averages 4,500 Yuan (about US$562.50) per
month. The mainstream computer sells for 8,000 to 15,000 Yuan (about US$1,000 to
1,875), the low end sells for only 6,000 Yuan to 8,000 Yuan (about US$750 to
US$1,000).
China - Internet
- ----------------
Chinese Internet users have increased from 10,000 in 1994 to 620,000 by
the end of 1997. At present, Internet users are increasing by 150,000 per month
on average. There were about 2.1 million at the end of 1998, and by the end of
year 2000, there may be 10 million users. China's PC market's exponential growth
and technological advancements are the major forces driving the Internet boom.
Large corporations are entering the China market. In March 1999, Microsoft
unveiled a new product called Venus, developed by a joint venture in China.
"Venus" would let Chinese consumers view the Internet through their TV sets and
is similar to Microsoft Web TV product in the U.S.
<PAGE>
Future Plans for ISP in China
- -----------------------------
China has recently allowed other domestic companies to do businesses
formerly monopolized by China TeleCom. Presently, foreign investors are still
restricted from direct operation for the next 2 to 3 years. China is also
investing heavily to improve the bandwidth and the quality of their backbone -
ChinaNet, while at the same time reducing the rates for telecommunications
services. Based on those facts, Xin Net management plans to open more offices in
major cities and enhance E-commerce and other value-added services.
Products, Services, Markets, Methods of Distribution and Revenues.
- ------------------------------------------------------------------
Internet Services are presently the principal services of the company. The
market is focused on China's major cities; Xin Hai offices in Beijing and
Shenyang have been operating since 1997. Offices in Shanghai and Taiyuan will
open soon. Revenues come from subscription fees, online usage fees, home page
design fees and other miscellaneous sources.
Working Capital Needs
- ---------------------
The working capital needs of the Registrant arise primarily from: expand
existing capacity of the services, open more offices in other major cities,
launch new value-added services, enhance capability for E-commerce design and
development in the People's Republic of China. These requirements have been met
by a private placement for an amount of US$5.5 millions. This provides the
needed working capital for the near and medium term of the Company.
Dependence on client base.
- --------------------------
Presently the Registrant's primary revenue comes from subscription fees
from the client base in Beijing and Shenyang. At the end of 1998, the number of
subscribers totaled 17,000, that number increased to 20,000 by the end of March,
1999. The Company's dependence on its client base will continue in the
foreseeale future.
Backlog of Orders. None.
- ------------------ -----
Government Contracts. None.
- --------------------- -----
Competitive Conditions.
- -----------------------
The Internet Services industry in China is highly competitive. Xin Hai
faces competition from government owned ISPs and other privately owned ISPs.
Many of them possess greater financial and personnel resources than Xin Hai and
therefore have greater leverage to use in developing new services, expanding
capacities, hiring personnel and marketing. Accordingly, a high degree of
competition in these areas is expected to continue. The markets for Internet
services have increased substantially in recent years. But cost of lines rental
is still the major expense of Xin Hai, Currently, all ISPs can only rent lines
from China TeleCom. There is uncertainty as to future line cost, although it has
been reduced by half recently and is expected to continue to come down. There is
no assurance the Registrant's revenues will not be adversely affected by these
factors.
The market in China is monitored by the Government, which could impose
taxes or restrictions at any time which would make operations unprofitable and
infeasible and cause a write-off of capital investment in Chinese ISP
opportunities.
A number of factors, beyond the Registrant's control and the effect of
which cannot be accurately predicted may affect the marketing of the ISP and
services. These factors include political policy on ISP's operation, political
policy to open the doors to foreign investors, the availability of adequate
bandwidth of the ChinaNet backbone and gateway.
Y2K Compliance
- --------------
The Xin Hai joint venture operating hardware and software are Y2K
compliant.
Registrant Sponsored Research and Development. None.
- ----------------------------------------------
<PAGE>
Compliance with related Laws and Regulations.
- ---------------------------------------------
The operations of the Xin Hai joint venture are subject to local,
provincial and national laws and regulations in the People's Republic of China.
Xin Hai Technology Development LTD. holds licenses to do businesses in the
currently operated locations: Beijing and Shenyang, as well as in Shanghai and
Taiyuan, where office openings are planned in late 1999. The Registrant is
unable to assess or predict at this time what effect such regulations or
legislation could have on its activities in the future.
(a) Local regulation -
The Registrant cannot determine to what extent future operations and
earnings of the Xin Hai joint venture may be affected by new legislation, new
regulations or changes in existing regulations.
(b) National regulation -
The Registrant cannot determine to what extent future operations and
earnings of the Xin Hai joint venture may be affected by new legislation, new
regulations or changes in existing regulations.
The value of the Registrant's investments in the Xin Hai joint venture may
be adversely affected by significant political, economic and social
uncertainties in the People's Republic of China ("PRC"). Any changes in the
policies by the Government of the PRC could adversely affect the Xin Hai joint
venture by, among other factors, changes in laws, regulations or the
interpretation thereof, confiscatory taxation, restrictions on currency
conversion, the expropriation or nationalization of private enterprises, or
political relationships with other countries.
Material Agreements
- -------------------
(1) Joint Venture Agreement
By an agreement dated August 25, 1998 through a 100% owned subsidiary
Infornet Investment Ltd., ( Registered in Hong Kong) - the Registrant agrees to
contribute 100% of the capital expenditure of the Xin Hai joint venture; in
return, Infornet Investment Ltd. will control 80% of the profit generated by Xin
Hai until recoupment of its investment and thereafter the profit share will
revert to 49% to Xin Hai Technology Developmnet, LTD. and 51% to the company.
Number of Persons Employed.
- ---------------------------
As of May 31, 1999, the Registrant had two employees, Xiao-qing Du and Xin
Wei , through Infornet Investment Corp., each at a salary of C$2,500 per month,
who assume the day-to-day management of the Company.
The Xin Hai joint venture had over 50 full-time employees in the PRC at
the end of May 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information presented herein, should be read in conjunction with the
Registrant's consolidated financial statements and related notes appearing
elsewhere herein.
Selected Financial Information
(A DEVELOPMENT STAGE COMPANY)
<PAGE>
Income Statement Data:
For the period from For the period
ended January 1, to December 31, 1997
September 30, 1998 (audited)
(unaudited)
Revenues ................................... $ 394,739 96,177
Expenses
General and Administrative 319,040 314,153
Operating Gain (Loss) ...................... 75,699 (217,976)
Other Income (Expense)
Interest Income ........................ 1,590 7,269
Remeasurement Gain ......................... 25,747 139,344
Depreciation and Amortization .......... (45,150) (46,950)
------------ ------------
Total Other Income ......................... (17,813) 99,663
Net Gain (Loss) Available to
Common Stockholders ........................ $ 57,886 (118,313)
------------ ------------
Earnings (Loss) Per Common Share
and Common Share Equivalents $ 0.004 (0.010)
Weighted Number of Common
Shares and Common Share
Equivalents Outstanding 14,075,000 12,127,082
---------- ----------
Balance Sheet Data:
At September 30,1998 Fiscal Year Ended
(unaudited) December 31,1997
(audited)
1998 1997
---- ----
Current Assets
Cash $ 218,843
447,269
Accounts Receivable 18,711 28,062
Inventory 14,976 0
------ -------
Total Current Asset 252,530 475,331
Property and Equipment, Net 349,187 189,544
Other Assets
Organizational Costs, Net 890 1,415
--- -----
Total Assets $ 602,607 666,290
====== ======
Current Liabilities
Accounts Payable and Other Accrued
Liabilities $ 28,473 13,089
Income Taxes Payable 737 0
--- -
Total Current Liabilities 29,210 13,089
<PAGE>
Loan Paybale 20,000 0
Commitments and Contingencies None None
Total Liabilities 49,210 13,089
Stockholder's Equity
Common Stock; $0.001 Par Value,
Authorized 50,000,000; Issue
and outstanding 14,075,000
Shares at September 30, 1998 14,075 14,075
Additional Paid In Capital 793,025 793,025
Retained Earnings (Accumulated
Deficit) (253,703) (153,899)
-------- --------
Total Stockholders' Equity 553,397 653,201
------- -------
Total Liabilities and Stockholders'
Equity $ 602,607 666,290
====== ======
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND CHANGES IN
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company remains in the development stage and, since inception,
has experienced significant liquidity problems. The Company has current assets
of over $5,000,000 in the form of cash and has current liabilities of
approximatley $160,000 for operations expenses.
The Registrant has revenues from its operations at this time. However
capital from private placements and/or borrowing against assets are required to
fund future operations. The Company completed a private offering of Common Stock
at $0.40 per share for $750,000 in June 1998. In 1999 the Company closed a
private placement of 5.5 million units of common stock at US$1.00 per Unit
consisting of one (1) common share and one (1) Non-Transferable Share Purchase
Warrant. One (1) Warrant entitles the holder to purchase on or before March 31,
2001 one (1) additional unit of the Issuer at a price of US$2.00 per Unit, each
Unit consisting of one (1) common share and one (1) additional warrant. The
additional warrant entitles the holder to purchase one (1) additional common
share of the Issuer at a price of US$5.00 per share on or before March 31, 2002.
RESULTS OF OPERATIONS
The company will carry out its plan of business as discussed
above. The Company cannot predict to what extent its liquidity and capital
resources will be depleted by the operating losses (if any) of the Xin Hai joint
venture.
For fiscal year 1999, the Company anticipates increased revenues derived
from an increase in subscriber base.
NEED FOR ADDITIONAL FINANCING
The Company has capital sufficient to meet the Company's current
cash needs, including the costs of compliance with the continuing reporting
requirments of the Securities Exchange Act of 1934. The Company may have to seek
loans or equity placements to cover future cash needs to continue expansion.
There is no assurance, however, that the available funds will ultimately prove
to be adequate to continue its business and the Company's needs for additional
financing are likely to increase substantially.
No commitments to provide additional funds have been made by
management or other stockholders.Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover
operations expenses. The company achieved a private placement of $5,500,000 in
spring 1999 and retains over $5,000,000 as capital.
<PAGE>
If future revenue declines, or operations are unprofitable, the Registrant
will be forced to develop another line of business, or to finance its operations
through the sale of assets it has, or enter into the sale of stock for
additional capital, none of which may be feasible when needed. The registrant
has no specific management ability, nor financial resources or plans to enter
any other business as of this date.
CHANGES IN FINANCIAL CONDITION
As of end of September, 1998 the Registrant's assets decreased to $602,607
compared to $666,290 at end of 1997. The liabilities increased from $13,089 to
$49,210 as a result of accounts payable and a loan payable. Stockholders' equity
at end of September 30,1998 was $553,397, a decrease from the 1997 stockholders'
equity of $653,201. The per-share is $.004 for the 9 months ended September 30,
1998 compared to a loss of ($.01) in 1997.
From the aspect of whether the Registrant can continue toward its business
goal of maintaining and expanding its joint venture Internet Services in China,
the Registrant may use all of its available capital without generating a profit.
ITEM 3. PROPERTIES
The Company currently maintains an office at #830, 789 W. Pender Street,
Vancouver, B.C., Canada as its corporate headquarters. It has offices in Beijing
China at Suite 210, Building B, No. 11 Wu Gen Lin Road, West District, Beijing
and also in Shenyang China at #44 North Huang He St., HuangGu, Shenyang,
Liaoning, P.R. China, Post Code 110034.
As of September 30, 1998, The Registrant had the following tangible assets.
(The amount is quoted in US Dollar)
(a) Real Estate. None
(b) Office Equipment $2,120
(c) Computer and
Communication Equipment $436,047
(d) Furniture $3,004
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CONFLICTS OF INTEREST
The officers and directors of the Company will not devote more than
a portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such confllict may require
that the company attempt to employ additional personnel. There is no asurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
There is no procedure in place which would allow officers or directors to
resolve potential conflicts in an arms - length fashion. Accordingly, they will
be required to use their discretion to resolve them in a manner which they
consider appropriate.
(a) Beneficial owners of five percent (5%) or greater, of the Registrant's
Common Stock: No Preferred Stock is outstanding at the date of this offering.
The following sets forth information with respect to ownership by holders of
more than five percent (5%) of the Registrant's Common Stock known by the
Registrant based upon 20,975,000 shares outstanding at June 25, 1999.
<PAGE>
Title of Name and Address Amount of Percent of
Class of Beneficial Owner Beneficial Interest Class
- ----- ------------------- ------------------- -----
Xiao-qing Du
Common Stock #2754 Adanac St. 2,076,000 9.8%
Vancouver, BC V5K 2M9
Common Stock Richco Investors Inc. 2,800,000 13.3%
Ste 830 789 West Pender
St. Vancouver, BC V6C 1H2
(b) The following sets forth information with respect to the Registrant's
Common Stock beneficially owned by each Officer and Director, and by all
Directors and Officers as a group, at June 25, 1999.
Title of Name of Amount of Percent of
Class Beneficial Owner Beneficial Ownership Class
Common Stock Xiao-qing Du (Director) 2,076,000 9.8%
2754 Adonac St.
Vancouver, B.C. V5K 2M9
Common Stock Ernest Cheung 0 0
Richco Investors
(See below)
Common Stock Maurice Tsakok 0 0
Richco Investors
(See below)
Common Stock Richco Investors, Inc. 2,800,000 13.3%
Ste. 830,789 W. Pender St.
Vancouver B.C. V6C 1H2
(beneficially owned by Ernest Cheung, Director and Secretary)
Maurice Tsakok (a Director) is also Director of Richo
Investors, Inc.
Common Stock S. Y. Marc Hung 118,000 .5%
830,789 W. Pender St.
Vancouver B.C. V6C 1H2
Total as a group 4,994,000 23.6%
<PAGE>
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) The following table furnishes the information concerning the directors
of the Registrant as of June, 1999. The directors of the Registrant are elected
every ear and serve until their successors are elected and qualify.
Name Age Title Term
- ---- --- ----- ----
Xiao-qing Du 28 President of Subsidiary
Infornet Investment Corp. and
Director Annual
S.Y. Marc Hung 54 President
Director Annual
Ernest Cheung 49 Director Annual
Maurice Tsakok 47 Director Annual
On March 10, 1999 Jing Liang resigned as a director of the Company.
On April 6, 1999, Xiao-qing (Angela) Du stepped down as president of Xin
Net Corp. Messrs. Maurice Tsakok and Marc Hung were elected to the board of
directors. Marc Hung was appointed to the position of President.
The term of office for each director is one (1) year, or until his/her
successor is elected at the Registrant's annual meeting and is qualified. The
term of office for each officer of the Registrant is at the pleasure of the
board of directors.
The board of directors has neither nominating nor auditing committee.
Therefore, the selection of persons or election to the board of directors was
neither independently made nor negotiated at arm's length.
(b) Identification of Certain Significant Employees.
Strategic matters and critical decisions are handled by the directors and
executive of the Company. Day-to-day management is delegated to Xiao-qing
(Angela) Du and Xin Wei who are employees of the Registrant's wholly-owned
subsidiary, Infornet Investment Corp.
(c) Family Relationships. None
(d) Business Experience.
The following is a brief account of the business experience during the
past five years of each director and executive officer of the Registrant,
including principal occupations and employment during that period and the name
and principal business of any corporation or other organization in which such
occupation and employment were carried on.
Xiao-qing (Angela) Du, President and Director, age 28, was President and
Director of the Registrant from 1996 to April 1999. She received a Bachelor of
Science in International Finance in 1992 from East China Normal University. She
received a Master of Science in Finance and Management Science in 1996 from
University of Saskatchewan Canada. She has been Business Manager of China
Machinery & Equipment I/E Corp. (CMEC) from 1992 to 1994. She is now President
of Infornet Investment Corp., a wholly owned subsidiary and remains a director
of regisrant.
Ernest Cheung, Secretary and Director, age 49, has been Secretary of the
Registrant since May, 1998. He received a B. Math in 1973 from University of
Waterloo Ontario. He received an MBA in Finance and Marketing from Queen's
University, Ontario in 1975. From 1991 to 1993 he was Vice President of Midland
Walwyn Capital,Inc. of Toronto, Canada.From 1992 - 1995 he served as Vice
President and Director of Tele Pacific International Communications Corp. (VSE).
He has also served as President for Richco Investors, Inc. (CDN) since 1995. He
has been a Director of Registrant since 1996. He is currently a Director of Agro
International Holdings, Inc. since 1997, Spur Ventures, Inc. since 1997, Richco
Investors, Inc. since 1995 and Drucker Industries, Inc. since 1997.
<PAGE>
Marc Hung, B.A.Sc.(E.E.), M.A. Sc. (E.E.) University of Montreal (1969 & 1971),
President and Director, age 54, has been President of the Registrant since April
6, 1999. He has over 25 years experience as engineer, manager and senior
executive in a major Quebec utility Hydro Quebec. Throughout the years, he has
been closely associated with technical and technological development and
management, including computer hardware and software.
Maurice Tsakok, Director, age 47, has over 15 years of computer and financial
industry experience. He holds an Engineering degree BSc (1974 University of
Minnesota) as well as an MBA specializing in Management Information Systems
(MIS) (1976 Hofstra University).
(e) Directors Compensation
Directors who are also officers of the Registrant receive no compensation
for services as a director.
ITEM 6. EXECUTIVE COMPENSATION
(a) Cash Compensation.
Compensation paid by the Registrant for all services provided during the
fiscal year ended December 31, 1998, (1) to each of the Registrant's five most
highly compensated executive officers whose cash compensation exceeded $60,000
and (2) to all officers as a group.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
- --------------------------------------------------------------------------------
Name and Year Salary Bonus Other Annual Restricted Securities
Principal ($) ($) Compensation Stock Underlying
Position ($) Award(s) ($Options/SARs(#)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Xiao-qing 1998 15,000 0 0 0 0
(Angela) Du,
President and
Director
(resigned as
Pres. In 1999)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jing Liang, 1998 8,000 0 0 0 0
Secretary and
Director
(resigned in
1999)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ernest Cheung, 1998 0 0 0 0 0
Secretary and
Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As a group 1998 23,000 0 0 0 0
- --------------------------------------------------------------------------------
(b) Compensation Pursuant to Plans. None.
(c) Other Compensation. None. No stock appreciation rights or warrants
exist to management.
(d) Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
(e) Compensation of Directors.
Compensation paid by the Registrant for all services provided during the
fiscal year ended December 31, 1998, (1) to each of the Registrant's directors
whose cash compensation exceeded $60,000 and (2) to all directors as a group is
set forth below:
<PAGE>
SUMMARY COMPENSATION TABLE OF DIRECTORS
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
- --------------------------------------------------------------------------------
Name and Year Annual Meeting Consulting Number Securities
Principal retainer Fees ($) Fees/Other of Underling
Position Fees ($) Fees ($) Shares Options/SARs(#)
(#)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Xiao-qing Du, 1998 0 0 0 0 0
Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jing Liang, 1998 0 0 0 0 0
Director
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ernest Cheung, 1998 0 0 0 0 0
Director
(resigned in
1999)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Directors as a 0 0 0 0 0 0
group
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No director, except for those who are also officers of the Company as
listed above, received any compensation in 1998.
Effective on May 1, 1998, Jing Liang resigned from his position as
Secretary of the Registrant. Ernest Cheung was appointed Secretary of the
Registrant as of the same date.
Effective March 10, 1999 Jing Liang resigned as director of the Company.
Effective on April 6, 1999, Mr. Marc Hung and Mr. Maurice Tsakok were
elected as directors of the board. Ms. Angela X. Du stepped down as the
President of the Registrant, and Mr. Marc Hung was appointed President of the
Registrant as of the same date.
(e) Termination of Employment and Change of Control Arrangements. None.
(f) Stock purchase options:
On February 26, 1999, stock options for a total of 1.4 million share at
$.40 per share were granted to parties that had contributed to the success of
the company in the past. They are: Lancaster Pacific Investment Ltd., Tandoor
Holdings Limited, Marc Hung, Kun Wei and Xin Wei. All 1.4 million share options
were exercised as of April 6, 1999.
Section 16(a) of the Securities Exchange Act of 1934, as amended (The
"Exchange Act"), requires the Registrant's officers and directors, and persons
who own more than 10% of a registered class of the Registrant's equity
securities, to file reports of ownership and changes in ownership of equity
securities of the Registrant with the Securities and Exchange Commission and
NASDAQ. Officers, directors and greater-than 10% shareholders are required by
the Securities and exchange Commission regulation to furnish to Registrant with
copies of all Section 16(a) that they file.
<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions
--------------------
On February 20, 1997, the Company issued 4,000,000 shares of cmmon stock
for services rendered at $.001 per share to 15 shareholders, none of whom were
affiliated or shareholders. The following shareholders recived shares equal to
or greater than 5% of the then outstanding shares: Kun Wei - 450,000, Xin Wei -
750,000 shares, Xi Ping Qu - 300,000 shares, Gemsco Management Ltd - 700,000
shares, Farmind Link Corp. - 700,000 shares, Simon Yuen - 700,000 shares and
Lionel Welch 320,000 shares.
During 1997, the Company issued 5,000,000 shares of common stock to
acquire the wholly owned subsidiary, Infornet Investment Corp. (Canada) to X.
Qing (Angela) Du - 4,000,000 shares and Jing Liang - 1,000,000 shares.
On August 25, 1997, through the wholly-owned subsidiary, Infornet
Investment Limited (Hong Kong), the Company formed an 80% cooperative joint
venture called Placer Technologies Corp. (a limited liability company) with Xin
Hai Technology Development Ltd. (a People's Republic of China Corporation) as a
20% partner, for a term of twenty (20) years. Xin Hai Technology Development
Ltd. (Xin Hai) is engaged in the business of developing computer hardware,
software, and telecommunication network technology, and providing consultation
and training services.
In May 1999, Marc Hung, President and Director, purchased 80,000 units of
the private placement at the $1.00 offering price. Richco Investors, Inc. a
shareholder controlled and beneficially owned by Ernest Cheung and Maurice
Tsakok, purchased 700,000 units in the private placement at $1.00 per unit in
May 1999.
In February 1999, Marc Hung, who was neither an officer nor director but
since has become President and Director, was granted and exercised (in March) an
option to purchase 150,000 shares of common stock at $.40 per share.
In February 1999, Kun Wei, a shareholder, was granted and exercised (in
March) an option to purchase 330,000 shares of common stock at $.40 per share.
In February 1999, Xin Wei, a shareholder, was granted and exercised (in
March) an option to purchase 330,000 shares of common at $.40 per share.
ITEM 8. DESCRIPTION OF SECURITIES
COMMON STOCK
The Company's Articles of Incorporation as amended authorize the issuance
of 50,000,000 shares of common stock no par value. Each record holder of Common
Stock is entitled to one vote for each share held on all matters properly
submitted to the stockholders for their vote. Cumulative voting for the election
of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds; and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratable, the net assets of the Company available to stockholders after
distribution is made to the creditors. Holders of outstanding shares of Common
Stock have no preemptive, conversion or redemptive rights. Allof the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be,duly authorized, validly issued, fully paid, and nonassessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
WARRANTS
The Company has issued 5,500,000 warrants as part of its unit private
placement in May 1999. Each warrant entitles the holder to purchase, on or
before March 31, 2001, one (1) additional unit of the Issuer at a price of US
$2.00 per unit, each unit consisting of one (1) common share and one (1)
additional warrant. The additional warrant entitles the holder to purchase one
(1) additional common share of the Issuer at a price of US $5.00 per share on or
before March 31, 2002.
<PAGE>
TRANSFER AGENT
The Company has engaged Holloday Stock Transfer, Inc., 2939 North 67th
Place, Scottsdale, Arizona, 85251 as transfer agent.
REPORTS TO STOCKHOLDERS
The Company plans to furnish its stockholders with an annual report for
each fiscal year containing financial statements audited by its independent
cerftified public accountants. In the event the Company enters into a business
combination with another company, it is the present intention of management to
continue furnishing annual reports to stockholders. Additionally, the Company
may, in its sole discretion, issue unaudited quarterly or other interim reports
to its shockholders when it deems appropriate. The Company intends to comply
with the periodic reporting requirements of the Securities Exchange Act of 1934
for so long as it is subject to those requirements.
PART II
ITEM 1. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
MATTERS
(a) The Registrant's common stock is traded on the NASD Electronic Bulletin
Board. The following table sets forth high and low bid prices of the
Registrant's common stock for years ended December 31, 1997 and December 31,
1998 as follows:
Bid (U.S. $)
------------
1999
----
High Low
---- ---
First Quarter $2.00 $ .34
1998
----
First Quarter $ .53 $.187
Second Qurater .375 .15
Third Quarter 1.06 .25
Fourth Quarter .78 .24
1997
----
First Quarter $ .75 $.03
Second Quarter .84 .68
Third Quarter .45 .25
Fourth .50 .156
Such Bulletin Board quotations reflect interdealer prices, without mark
up, mark down or commission and may not necessarily represent actual
transactions.
(b) As of June 25, 1999, the Registrant had 105 shareholders of record of the
common stock.
(c) No dividends on outstanding common stock have been paid within the last two
fiscal years, and interim periods. The Registrant does not anticipate or intend
upon paying dividends for the foreseeable future.
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
The Company is not a party to any pending legal proceedings and no such
proceedings are known to be contemplated.
No director, officer or affiliate of the Company, and no owner of record
of beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
In connection with the audits of the most recent fiscal years and any
interim period preceding resignation, no disagreements exist with any former
accountant on any matter of accounting principles or procedure, which
disagreements if not resolved to the satisfaction of the former accountant would
have caused him to make reference in connection with his report to the subject
matter of the disagreement(s).
The principal accountant's report on the financial statements for any of
the past two years contained no adverse opinion or a disclaimer of opinion nor
was qualified as to uncertainty, audit scope or accounting principles.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Since September 12, 1996 (the date of the Company's formation), the
Company has sold its Common Stock to the persons listed in the table below in
transactions summarized as follows:
Consideration consisted of pre-incorporation consulting services rendered
to the Registrant related to investigating and developing the Registrant's
proposed business plan and capital structure and completing the organization and
incorporation of the Registrant.
Date of Price per
Consideration Purchase # of Shares Share
------------- -------- ----------- -----
Ken Finkelstein Founder 10/96 3,000,000 $.001
Services rendered
Prior to Nov. 1996
Consideration consisted of pre-incorporation consulting services rendered
to the Registrant related to investigating and developing the Registrant's
proposed business plan and capital structure and completing the organization and
incorporation of the Registrant.
<TABLE>
<CAPTION>
1996 Original Purchasers List
- ---- ------------------------
Name Address Date of Number Consideration Price per
- ------------- Purchase of Shares ------------- Share
- ------------- -------- --------- -----
<S> <C> <C> <C> <C>
Sinh Le
1403- 4300 Mayberry St. Burnaby,
B.C. V5H-4A4 12/11/96 1000 $250 $.25
Terrence Johnson
1403- 4030 Mayberry St. Burnaby,
B.C. V5H-4A4 12/11/96 1000 $250 $.25
Kashmir Singh
1025- Augusta Ave, Burnaby,
B.C. V5A-1K3 12/11/96 2000 $500 $.25
<PAGE>
Noah Natovitch
121-3280 E. 58th Ave,Vancouver,
B.C V5S-3T2 12/11/96 1000 $250 $.25
Todd H. Weaver
2000 South Ocean Lane #11,
Ft. Lauderdale FL 33316 12/11/96 4000 $1,000 $.25
Fleet Sparrow, Inc.
7 Prince Street, P.O. Box 1117,
Belize City, Belize 12/11/96 2000 $500 $.25
David Mundie
2419 TreeTop Lane, N. Vancouver,
B.C. V2H-2K6 12/11/96 2000 $500 $.25
Redbrook Creek Corp
7 Prince St. P.O. Box 1117,
Belize City, Belize 12/11/96 2000 $500 $.25
Wes Janzen
#100- 8500 Alexandra Road,
Richmond, B.C. V6X-1C4 12/11/96 2000 $500 $.25
Wes Kroeker
#100- 8500 Alexandra Road,
Richmond, B.C. V6X-1C4 12/11/96 2000 $500 $.25
L. James Harder
5512 Okanagan N. Ave., Site 1B
Camp 11, Vernon B.C.V1T-6Y5 12/11/96 2000 $500 $.25
Kari - Anne Chase
85 Walnut Crescent, Whitehorse,
Yukon Y1A-5C7 12/11/96 2000 $500 $.25
Steven Giles
309-727 Hughton Road, Kelowna,
B.C. V1X-7J7 12/11/96 1000 $250 $.25
Robert N. Hatton
1830 Large Ave, RR #5 S-17B, C-53,
Kelowna, B.C. V1X-4K4 12/11/96 1000 $250 $.25
Adrian Klien
575 Perry Road, Kelowna,
B.C. V1X-1J1 12/11/96 1000 $250 $.25
Lamber Dhaliwal
3556 Calder Ave, N.
Vancouver, B.C. 12/11/96 2000 $500 $.25
Biro Dhaliwal
3556 Calder Ave, N.
Vancouver, B.C. 12/11/96 2000 $500 $.25
Doris Mackney
Box 44021, Oyama,
B.C. V4V01ZS 12/11/96 2000 $500 $.25
Stephane Martin
1704 Smithson Dr., Kelowna,
B.C. V1Y-4E3 12/11/96 1000 $250 $.25
Guy Martin
1704 Smithson Dr., Kelowna,
B.C. V1Y-4E3 12/11/96 1000 $250 $.25
Lawrence Kit
Box 32, Vegreville,
Alberta, T9C-1R1
Mervyn Kit
6604-132 A/ Ave.
Ed,pmtpm. AB T5C-2 B.C. 12/11/96 1000 $250 $.25
Emil Kit
5365 Bogette Place
Kamloops, B.C. V2C-6B2 12/11/96 1000 $250 $.25
Robert Thompson
14250 Middlebench Rd,
Oyama, B.C. V4V-2B9 12/11/96 1000 $250 $.25
Bob Mackney
P.O. Box 44021,
Oyama, B.C. V4V-1Z5 12/11/96 11,000 $2,750 $.25
Dean Mackney
11574 Artela Rd,
Winfield, B.C. V4V-1H4 12/11/96 1000 $250 $.25
Robert Brown
13525 Lake Pine
Winfield B.C. V4V-1A3 12/11/96 1000 $250 $.25
<PAGE>
Susan Bozyk
109-980 Dilworth Dr,
Kelowna, B.C. V1V01S6 12/11/96 500 $125 $.25
Cal McCarthy
10060 McCarthy Road,
Winfield, B.C. V4V-1T1 12/11/96 1000 $250 $.25
Sheelagh Thompson
14250 Middllebench Road,
Oyama, B.C. V4V-2B9 12/11/96 1000 $250 $.25
Tarif Mapara
1790 Boundary Rd,
Burnaby, B.C. V5M-4M2 12/11/96 1000 $250 $.25
Saira Mapara
1790 Boundary Rd,
Burnaby, B.C. V5M-4M2 12/11/96 1000 $250 $.25
Zaher Mapara.
1576 Lodgepole Pl,
Coquitlam, B.C. V3E-2V9 12/11/96 1000 $250 $.25
Mumtaz Mapara
1576 Lodgepole Pl,
Coquitlam, B.C. V3E-2V9 12/11/96 1000 $250 $.25
Riaz Mapara
1576 Lodgepole Pl,
Coquitlam, B.C. V3E-2V9 12/11/96 1000 $250 $.25
Fairous Mapara.
1576 Lodgepole PI,
Coquitlam, B.C. V3E-2V9 12/11/96 1000 $250 $.25
Sam Mapara ITF:
Arman Mapara 2932
Blackbear Ct. Coq, B.C. 12/11/96 1000 $250 $.25
Sam Mapara ITF:
Ariana. Mapara 2932
Blackbear Ct. Coq, B.C. 12/11/96 1000 $250 $.25
Anisha Mapara
2932 Blackbear Court,
Coquitlam, B.C 12/11/96 1000 $250 $.25
Sameer Mapara
2932 Blackbear Court,
Coquitlam, B.C. 12/11/96 1000 $250 $.25
Tazmina MangaIji
8214 Lakeland Drive,
Burnaby, B.C. V5A-4C9 12/11/96 2000 $500 $.25
Maidenhood MangaIji
8214 Lakeland Drive,
Burnaby, B.C. V5A-4C9 12/11/96 2000 $250 $.25
Garry McColl
#1405-2020 Bell Wood Ave,
Burnaby, B.C. V5B-4P8 12/11/96 1000 $250 $.25
Larry Kozak
1103-9595 Erickson Dr,
Burnaby, B.C. V3J-7N9 12/11/96 2000 $500 $.25
Rob Kozak
1103-9595 Erickson Dr,
Burnaby, B.C. V3J-7N9 12/11/96 500 $125 $.25
Garry Messer
25767 La Salina Pl,
Moreno Valley, CA 92551 12/11/96 500 $125 $.25
Sharon Delbridge
25767 La Salina PI,
Moreno Valley, CA 92551 12/11/96 1000 $250 $.25
James M. Lucas
P.O. Box 872,
Blue Jay, CA 92317 12/11/96 2000 $500 $.25
Joe Gamache
1421 Barber Ct.
Bunning, CA 92220 12/11/96 1000 $250 $.25
Dustin Lee Sexton
8350 Magnolia Ave, Unit 125,
Riverside, CA 92504 12/11/96 1000 $250 $.25
Ramona Lee Sexton
3957 San Mateo,
Riverside, CA 92504 12/11/96 1000 $250 $.25
William Navarro
23403 Silver Strike Dr,
Canyon Lake, CA 92587 12/11/96 2000 $500 $.25
<PAGE>
Jake Penner
1688 West 65th Ave,
Vancouver, B.C. V6P-2R3 12/11/96 2000 $500 $.25
Vern Craig
1369 Compton Cres,
Tsawwassen, B.C. V4L-IP8 12/11/96 1000 $250 $.25
Doug Maxwell
605 West Kent Ave,
Vancouver, B.C. V6P-6T7 12/11/96 1000 $250 $.25
M. Erik Nylin
RR6-S600, C36,
Courtenay, B.C. V9N-8H9 12/11/96 1000 $250 $.25
Dorothy L. Nylin
RR6-S600, C36,
Courtenay, B.C. V9N-8H9 12/11/96 500 $125 $.25
Richard T, Wotruba
501 Las Alturas Rd,
Santa Barbara, CA 93103 12/11/96 500 $125 $.25
Patricia A. Wotruba
501 Las Alturas Rd,
Santa Barbara, CA 93 10-1 12/11/96 1200 $300 $.25
Bhupinder Mroke
5076 Victoria Dr,
Vancouver, B.C. V5P-3T8 12/11/96 1000 $250 $.25
Jackueline Herauf
#56-28 Berwick Cres NW,
Calgary, AB T3K-IY7 12/11/96 2000 $500 $.25
Larry I Sandler D.D.S
272 Wolverine Lake Dr,
Wolverine Lake, MI 48390 12/11/96 2000 $500 $.25
Linda C. Sandler
272 Wolverine Lake Dr,
Wolverine Lake, NU 483 90 12/11/96 1000 $250 $.25
D. Percy Ryan
2423 37th Street SE,
Calgary, AB T2B-OZI 12/11/96 2000 $500 $.25
Jageero Singh
122 West Braemar Rd, N.
Vancouver, B.C. V7N-2S8 12/11/96 2000 $500 $.25
Jagbir Johl
122 West Braemar Rd, N.
Vancouver, B. C. V7N-2 S 8 12/11/96 2000 $500 $.25
Bob L. Stobbe
9420 98A Ave,
Fort St John, B.C. V 15-1 1R4 12/11/96 500 $125 $.25
Britt L. Weaver
6741 Alexandria Lane,
Charlotte, NC 28270 12/11/96 500 $125 $.25
Katherine H. Weaver
6741 Alexandria Lane,
Charotte, NC 28270 12/11/96 1000 $250 $.25
Dorilda Limoges
6509 Coach Hill Rd SW,
Calgary, A13 T2B-1H5 12/11/96 1000 $250 $.25
Vincent Luong
192 Saratoga Close NE,
Calgary, AB T 1 Y-7AI 12/11/96 1000 $250 $.25
Sigurd B. Peterson
2671 MacDonald Dr,
Victoria, B.C. V8N-1Y1 12/11/96 1000 $250 $.25
Dr. John Dale
Box 499, Nelson, B.C. VIL-5R3 12/11/96 1000 $250 $.25
Diana Haschke
Box 489,
Nelson, B.C. VIL-5R3 12/11/96 1000 $250 $.25
Errol Biebrick
104 Pinewind Close NE,
Calgary, AB TI 8-2H3 12/11/96 1000 $250 $.25
Bradley T. Johns
4602- 45th Ave NE #3 29,
Tacoma, WA 98422 12/11/96 1000 $250 $.25
Bhupinder Mann
1182 E, 33rd Ave,
Vancouver, B.C. V5V-3B3 12/11/96 1000 $250 $.25
<PAGE>
Nirmal S. Mann
1182 F. 33rd Ave,
Vancouver, B.C. V5V-3B3 12/11/96 1000 $250 $.25
S.P. Swadron
3914 W 11th Ave,
Vancouver, B.C. V6R-2L2 12/11/96 2000 $500 $.25
Sylvia Moir
905 Signal Hill Green SW,
Calgary, AB T3H-2Y4 12/11/96 1000 $250 $.25
John R. Moir
214 555 Strathcona Blvd SW,
Calgary, AB T3H-2Z9 12/11/96 1000 $250 $.25
Charanjit S. Parmar
17924-99A Ave,
Edmonton, AB T5T-3RI 12/11/96 2000 $500 $.25
Harjit K. Parmar
17924-99A Ave,
Edmonton, AB T5T-3RI 12/11/96 2000 $500 $.25
Murray Bisset
11402-120 St,
Edmonton, AB T5G-2Y2 12/11/96 2000 $500 $.25
Tom Schreiber
14316-123 St,
Edmonton, AB T5X-3M2 12/11/96 2000 $500 $.25
Don Pierson
100 Nottingham Rd,
Sherwood Park, AB T8A-5M5 12/11/96 2000 $500 $.25
Usha Bibra
6112-34A Ave,
Edmonton, AB T6L-IE4 12/11/96 1000 $250 $.25
Sachin Bibra
6112-34A Ave,
Edmonton, AB T6L-1E4 12/11/96 500 $125 $.25
KamaIjit Lall
3664-31A St,
Edmonton, AB T6T-1H6 12/11/96 500 $125 $.25
Tajinder Chohan
165 W. 65th Ave,
Vancouver, B.C. V5R-3T7 12/11/96 73,300 $18,325 $.25
------ ------
TOTAL 200,000 $50,000
</TABLE>
The offering and sales of the shares was made in reliance upon the exemptions
contained in Rule 504 of Regulation D and Regulation S to offshore residents,
and in Canada pursuant to the exemptions from registration contained in section
55(2) (4) and 55 (2) (9) of the Securities Company Act (B.C. and/or paragraphs
128(a) or 128(h) of the Securities Rules to the Securities Act).
<TABLE>
<CAPTION>
1997 PRIVATE PLACEMENT
- ---- -----------------
Subscriber Date of Consideration Shares Price Per
- ---------- ------------- ------
Purchase Share
-------- -----
<S> <C> <C> <C> <C>
Balraj Mann 6/2/97 $40,000 100,000 $.40
6228 Tiffany Blvd.
Richmond, B.C. V7C 4Z2
Thesis Group Inc. 6/2/97 $20,000 50,000 $.40
19 Hanover Terrace
Regents Park
London, England NW1 4RT
<PAGE>
Hare & Co. 6/2/97 $40,00 100,000 $.40
EB.C. Zurich AG
Bellariastrasse 23
8027 Zurich, Switzerland
Cayman Islands Securities Ltd. 6/2/97 $100,000 250,000 $.40
P.0, Box 1062 GT
Grand Cayman
BWI
Strategic Lines Asset Management 6/2/97 $40,000 100,000 $.40
3/F 73 Front Street
Hamilton HM NX
Bermuda
Floyd Hill 6/2/97 $29,000 72,500 $.40
4557 - W, 8th Ave.
Vancouver, B.C. V6R 2A4
Richard Angus 6/2/97 $100,000 250,000 $.40
1548 Marine Dr.
Vancouver, B.C. V7V 1H8
Taylor Oil Products 6/2/97 $100,000 250,000 $.40
Box 1062
3rd Floor, One Capital Place
Grand Cayman, BWI
Silver Shadow Investment Ltd. 6/2/97 $100,000 250,000 $.40
P.O. Box 546
St. , Helier, Jersey J E4 8XY
Channel Islands
Billee Davidson 6/2/97 $25,000 62,500 $.40
3902 - W. 38th Avenue
Vancouver, B.C. V6N 2Y6
A. Gregori Imports Ltd, 6/2/97 $60,000 150,000 $.40
112 - 1010 West Georgia St,
Vancouver, B.C. V6E 2Y2
J R Ing & Associates 6/2/97 $30,000 75,000 $.40
1360 W. 32nd
Vancouver, B.C. V6H 2J3
Linda A. Massie 6/2/97 $6,000 15,000 $.40
4379 Arbutus St,
Vancouver, B.C. V6J 4S4
<PAGE>
Debby Tonn 6/2/97 $15,000 37,500 $.40
4899 Meadfield Rd.
West Vancouver, B.C.
V7W 3E6
Daphne Killas 6/2/97 $25,000 62,500 $.40
608-1888 York Ave.
Vancouver, B.C. V6J 5A7
Chris MacPherson 6/2/97 $10,000 25,000 $.40
Suite 3434 - 666 Burrard Street
Vancouver, B.C. V6C 2X8
Rod Morreau 6/2/97 $5,000 12,500 $.40
Suite 3434 - 666 Burrard Street
Vancouver, B.C. V6C 2X8
Wendy Chan 6/2/97 $5,000 12,500 $.40
Suite 3434 - 666 Burrard Street
Vancouver, B.C. V6C 2X8
6/2/97 $750,000 1,875,000 $.40
</TABLE>
The issuance of the shares was made in reliance upon the exemption contained in
Regulation S as amended, to offshore residents and in Canada pursuant to the
exemptions from registration contained in section 55(2) (4) and 55 (2) (9) of
the Securities Company Act (British Columbia) and/or paragraphs 128(a) or 128(h)
of the Securities Rules to the Securities Act.
1997
- ----
Date of Consideration Number of Price per
-------------
Purchase Shares Share
-------- ------ -----
Xiao Qing Du March 3,1997 4,000,000
2754 Adanac Street
Vancouver, B.C., V5K 2M9 ( Exchange for
( acquisition of
( 100% of stock of
( Infornet Investment,
( L.T.D.
Jing Liang March 3,1997 . 1,000,000
403-1333 Haro Street 1,000,000
Vancouver, B.C., V6E 1G4
TOTAL 5,000,000
The issuance of the shares was made in reliance upon the exemption to
Registration contained in Regulation S as amended, to offshore residents, and in
Canada pursuant to the exemptions from registration contained in section 55(2)
(4) and 55 (2) (9) of the Securities Company Act (British Columbia) and/or
paragraphs 128(b) and or 128(h) of the Securities Rules to the Securities Act.
<PAGE>
1999 Option Exercise
- ---- ---------------
Date of Consideration Price Per Number
Purchase Share of Shares
1. Lancaster Pacific Investment Ltd. 4/6/99 $ 88,000 $.40 220,000
14/F Tung Hip Commercial Building
244-252 Des Voeux Road C.
Hong Kong
2. Tandoor Holdings Limited 4/6/99 $148,000 $.40 370,000
20D Primrose Mansion
Taikooshing, Hong Kong
3. S.Y.Marc Hung 4/4/99 $ 60,000 $.40 150,000
6-1200 Brunette Ave.
Coquitlam, B.C.,
Canada V3K I G3
4. Kun Wei 4/4/99 $132,000 $.40 330,000
#69 West Gulou Street
Beijing, P.R. China
5. Xin Wei 4/4/99 $132,000 $.40 330,000
#2754 Adanac Street
Vancouver, B.C.
Canada V5K 2M9
560,000 1,400,000
The issuance of the shares was made in reliance upon the exemption contained in
Regulation S as amended, to offshore residents and in Canada pursuant to the
exemptions from registration contained in section 55(2) (4) and 55 (2) (9) of
the Securities Company Act (British Columbia) and/or paragraphs 128(a) or 128(h)
of the Securities Rules to the Securities Act.
<TABLE>
<CAPTION>
PRIVATE PLACEMENT
Name & Address Number Consideration Date of Price per
- -------------- -------------
of Shares Purchase Share
--------- --------
(Units)
-------
<S> <C> <C> <C> <C>
Mitsukiku Investments Ltd 625,000 $625,000 5/19/99 $1.00
PO Box 428
Les Braves House,
Les Banques St. Peter Port
Guernsey
4V1 3W2
<PAGE>
Tandoor Holdings Ltd 570,000 $570,000 5/19/99 $1.00
20D Primrose
Mansion
Taikooshing
Hong Kong
Richco Investors Inc. 700,000 $700,000 5/19/99 $1.00
830-789 West Pender Street
Vancouver B.C.
Canada V6C 1H2
Development Fund 11 of
Nova Scotia Inc. 190,000 $190,000 5/19/99 $1.00
c/o Richco Investors Inc.
830-789 West Pender Street
Vancouver B.C.
Canada V6C 1H2
Mr. Minhas Sayani 75,000 $75,000 5/19/99 $1.00
PO Box 30020 Dubai
United Arab Emirates
Xerxes Venture Capital Fund Ltd. 50,000 $50,000 5/19/99 $1.00
PO Box 88 I Grenville St.
St. Helier, Jersey
JE4 9PF UK
Goldpac Investment Fund 40,000 $40,000 5/19/99 $1.00
16D 139 Drake St
Vancouver B.C.
V6Z 2T8 Canada
Nottinghill Resources Ltd. 50,000 $50,000 5/19/99 $1.00
Mareva House 4 George St.
Nassau, Bahamas
Mr. Allan Slaughter 10,000 $ 10,000 5/19/99 $1.00
1368 Madrona Dr. Bay, B.C.
V9P 9C9 Canada
Mr. David Atkinson 7,500 $7,500 5/19/99 $1.00
4590 Keith Rd
West Vancouver B.C.
V7W 1W2 Canada
Mr. Michael Atkinson 7,500 $7,500 5/19/99 $1.00
#210 1315 W. 11th Ave.
Vancouver B.C.
V6H 1K7 Canada
<PAGE>
Mrs. Juanita L. Po 5,000 $5,000 5/19/99 $1.00
842 Clements Ave.
North Vancouver B.C.
V7R 2K7 Canada
Mr. Joseph Go and 10,000 $ 10,000 5/19/99 $1.00
Mrs. Babs Po
1045 Montroyal Blvd.
N. Vancouver 13C
V7R 2H5 Canada
Bradstone Equity Partners Inc. 200,000 $200,000 5/19/99 $1.00
#638-375 Water St.,
Vancouver B.C.
V6B 5C6 Canada
403401 B.C. Ltd. 150,000 $150,000 5/19/99 $1.00
#638-375 Water St.,
Vancouver B.C.
V6B 5C6 Canada
Silver Shadow Investments Ltd. 20,000 $20,000 5/19/99 $1.00
PO Box
546 28-30 The Parade
St. Helier Jersey
Channel Islands
Cayman Islands Securities Ltd. 80,000 $80,000 5/19/99 $1.00
PO Box 2835 G.T.
Grand Cayman
B. W. I.
Chelsea Capital Corp. 70,000 $70,000 5/19/99 $1.00
#200-750 W. Pender St.
Vancouver B.C.
V6C 1B5 Canada
Mr.Carlo K.Rahal 25,000 $25,000 5/19/99 $1.00
6410 Charing Crt.
Burnaby B.C.
V5E 3Y3 Canada
Mr.David M.Lyall 100,000 $100,000 5/19/99 $1.00
6745 W. Blvd B.C.
V6P 5R8 Canada
Ms. Linda A. Massie 10,000 $10,000 5/19/99 $1.00
305-1750 West 13th Ave
Vancouver B.C.
V6J 2H1 Canada
<PAGE>
Mr. Patrick Hung 60,000 $60,000 5/19/99 $1.00
6-1200 Brunette Ave.
Coquitlam B.C.
V3K 1G3 Canada
Ms Chantal Hung 60,000 $60,000 5/19/99 $1.00
6C Winston Churchill Lane
Curepipe
Mauritius
Mr. Marc Hung 80,000 $80,000 5/19/99 $1.00
6- 1200 Brunette Ave.
Coquittam B.C.
V3K 1G3 Canada
Hare & Co. 100,000 $100,000 5/19/99 $1.00
C\o Bank of New York
1 Wall Street - 3rd Floor
New York, N.Y. 10286
Clariden Bank, 180,000 $180,000 5/19/99 $1.00
Claridestrasse 26,
8002 Zurich
Switzerland
Mr.Brian Findlay 50,000 $50,000 5/19/99 $1.00
29433 Simpson Rd,
Abbotsford, B.C.
V6C I H9 Canada
Mr.Hazel L. Allington 3,500 $3,500 5/19/99 $1.00
4614 Woodgreen Dr.
West Vancouver B.C.
V7S 2V2 Canada
Ms.Sharon Allington 1,500 $1,500 5/19/99 $1.00
4614 Woodgreen Dr
West Vancouver B.C.
V7S 2V2 Canada
Orbit Leasing Corp. 90,000 $90,000 5/19/99 $1.00
310-1324 17th Ave.SW
Calgary Alberta
T2T 5S8 Canada
Taylor Oil Products Ltd. 80,000 $80,000 5/19/99 $1.00
PO Box 1062 GT Grand Cayman.
B.W.I.
<PAGE>
Caribbean Avionics Ltd. 280,000 $280,000 5/19/99 $1.00
PO Box 599
Carribean Place Providenciales,
Turks & Caicos Is.
Yonderiche International
Consultant 15,000 $15,000 5/19/99 $1.00
102-1318 West 6th Ave.
Vancouver, B.C.
V6H 1A7 Canada
Ms. Jane Lee Kennedy 1,500 $1,500 5/19/99 $1.00
1253 Hunter Rd
Delta B.C.
V4L 1Y9 Canada
Mr. Billee Davidson 10,000 $10,000 5/19/99 $1.00
3902 West 38th Ave.
Vancouver B.C.
V6N 2Y6 Canada
Mr. F. Goelo 120,000 $120,000 5/19/99 $1.00
PO Box 10910 Grand Cayman
Cayman Islands
B.W.I.
Aberdeen Holdings Ltd. 50,000 $50,000 5/19/99 $1.00
60 Market Square
Belize City
Belize
Mr. Ken Aloysius Kow 16,000 $ 16,000 5/19/99 $1.00
Ms. Dannie Kow
(two names on the cert.)
2957 East 56 Ave
Vancouver B.C.
V5S 2A2 Canada
Mr. Floyd Hill 25,000 $25,000 5/19/99 $1.00
1800-609 Granville St.
Vancouver B.C.
V7S IC4 Canada
Ms. Linda Collins 25,000 $25,000 5/19/99 $1.00
3939 W. 38th Ave
Vancouver B.C.
V6N 2Y7 Canada
Mr. Patrick C. Lincoln 5,000 $5,000 5/19/99 $1.00
17 Leacock CT
Thornhill ON
L3T 6X9 Canada
<PAGE>
Mr. Rodney B. Johnston 25,000 $25,000 5/19/99 $1.00
17412-29th Ave.
S. Surrey B.C.
V4P 9R1 Canada
Mr. L. C. Allington 50,000 $50,000 5/19/99 $1.00
4614 Woodgreen Dr
West Vancouver B.C.
V7S 2V2 Canada
Mr. Hugh Cooper 10,000 $10,000 5/19/99 $1.00
425 Rabbit Lane
West Vancouver B.C.
V7S 1J1 Canada
Ms. Sharon Cooper 40,000 $40,000 5/19/99 $1.00
425 Rabbit Lane
West Vancouver 13C
V7S 1J1 Canada
J.F. Yang Capital Corp. 250,000 $250,000 5/19/99 $1.00
15 Starling House
Charlbert St.
London
NW8 7BS UK
Mr. Brent Petterson 2,500 $2,500 5/19/99 $1.00
603-1500 Ostler Court,
North Vancouver B.C.
V7G 2S2 Canada
Prism Holdings Inc. 25,000 $25,000 5/19/99 $1.00
PO Box 150, Design House,
Providenciales,
I Turks & Caicos Islands
B.W.I.
Ms.Christine Smith 10,000 $10,000 5/19/99 $1.00
#314-3738 Norfolk St.
Burnaby B.C.
V5G 4V4 Canada
First Nevisian Stockbrokers Ltd. 40,000 $40,000 5/19/99 $1.00
Barclays Building. Maw St.
Charlestown Nevis
B. W. I.
Tedburn Ltd. 150,000 $150,000 5/19/99 $1.00
2C Engineers Road,
Gibraltar
<PAGE>
J.R. Ing Associates 35,000 $35,000 5/19/99 $1.00
130 Adelaide St. West
Toronto ON
M5P I G6 Canada
Sirhc Holdings Ltd. 150,000 $150,000 5/19/99 $1.00
9 Church St.
Hamilton Hm11
Bermuda
A&E Capital Funding Inc. 250,000 $250,000 5/19/99 $1.00
2300 Yonge St. Suite 3000
Toronto ON
M4P 1E4 Canada
Thesis Group Inc. 150,000 $150,000 5/19/99 $1.00
19 Hanover Terrace Regents Park
London
NW1 4RJ UK
Mr.Barry Fraser 15,000 $15,000 5/19/99 $1.00
1300-777 Dunsmuir St.
Vancouver B.C.
V7Y I K2 Canada
Mr.William Adams 10,000 $10,000 5/19/99 $1.00
PO Box 922
40102 Skyline Pl.
Garibaldi Highlands
Vancouver B.C.
VON 1TO Canada
Mr.Fred TSE 40,000 $40,000 5/19/99 $1.00
186 Stevens Dr
West Vancouver B.C.
5,5000,000 $5,500,000
shares
</TABLE>
The issuance of the shares was made in reliance upon the exemption contained in
Regulation S as amended, to offshore residents and in Canada pursuant to the
exemptions from registration contained in section 55(2) (4) and 55 (2) (9) of
the Securities Company Act (British Columbia) and/or paragraphs 128(a) or 128(h)
of the Securities Rules to the Securities Act.
<TABLE>
<CAPTION>
Price per
Date Share Consideration Shares
---- ----- ------------- ------
<S> <C> <C> <C> <C>
Xin Wei
2754 Adanac Street
Vancouver, B.C. VSK 3M9 2/20/97 $.001 750,000
<PAGE>
Kun Wei
403 No I Blvd
Qianmachang Lane
Gulou Street, West
Beijing, China 2/20/97 $.001 450,000
Xi-ping Qu
403 - 1333 Haro Street
Vancouver, B.C. V6E 1G4 2/20/97 $.001 300,000
Nicole Alagich
1400 - 400 Burrard Street
Vancouver, B.C. V6C 3G2 2/20/97 $.001 3,000
Terry Johnston
1408 - 4300 Mayberry Street
Burnaby, B.C. V5H 4A4 2/20/97 $.001 3,000
Ranjit Bhogal
9042 135 A Street
Surrey, B.C. V3V 7CS 2/20/97 $.001 3,000
Bhupinder Mann
1182 East 33rd Ave.
Vancouver, B.C. V5F 3B3 2/20/97 $.001 3,000
Charles Grahn
203 - 1386 West 73rd Ave
Vancouver, B.C. V6P 3E8 2/20/97 $.001 3,000
Gemsco Management Ltd.
53 Woodland Drive
Delta, B.C. V4L 2H4 2/20/97 $.001 700,000
Farmind Link Corp.
2998 Park Lane
West Vancouver, B.C. V7V 1E9 2/20/97 $.001 700,000
Simon Yuen
19835 64th Avenue
Langley, B.C. V2Y 11.S 2/20/97 700,000
Lionel Welch
7 Prince Street
Belize City, Belize 2/20/97 $.001 320,000
Kathleen Robinson
P.O. Box 170
Grand Turk
Turks & Caicos Islands, BWI 2/20/97 $.001 10,000
<PAGE>
Mr. Joseph A. Gamache
1421 Barber Court
Banning CA 92220 2/20/97 $.001 10,000
Hartford Capital Corporation
1400 - 400 Burrard Street
Vancouver, B.C. V6C 3G2 2/20/97 $.001 45,000
4,000,000
</TABLE>
Each of the sales listed above was made for cash or services as listed. All of
the listed sales were made in reliance upon the exemption from registration
offered by Section 4 (2) of the Securities Act of 1933, as amended. Based upon
Subscription Agreements completed by each of the subscribers, the Company had
reasonable grounds to believe immediately prior to making an offer to the
private investors, and did in fact believe, when such subscriptions were
accepted, that such purchasers (1) were purchasing for investment and not with a
view to distribution, and (2) had such knowledge and experience in financial and
business matters that they were capable of evaluating the merits and risks of
their investment and were able to bear those risks. The purchasers had access to
pertinent information enabling them to ask informed questions. The shares were
issued without the benefit of registration. An appropriate restrictive legend is
imprinted upon each of the certificates representing such shares, and
stop-transfer instructions have been entered in the Company's transfer records.
All such sales were effected without the aid of underwriters.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Florida Statutes provide that the Company may indemnify its officers and
directors for costs and expenses incurred in connection with the defense of
actions, suits, or proceedings where the officer or director acted in good faith
and in a manner he reasonable believed to be in the Company's best interest and
is a party by reason of his status as an officer or director, acted in good
faith and in a manner he reasonably believed to be in the Company's best
interest and is a party by reason of his status as an officer or director,
absent a finding of negligence or misconduct in the performance of duty.
As permitted Florida Statures, the Company may indemnify its directors and
officers against expenses and liabilities they incur to defend, settle, or
satisfy any civil or criminal action brought against them on account of their
being or having been Company directors or officers unless, in any such action,
they are adjudged to have acted with gross negligence or willful misconduct.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the company has been informed that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in that Act and is, therefore, unenforceable.
Exclusion of Liability
The Florida Corporation Act excludes personal liability for its directors
for monetary damages based upon any violation of their fiduciary duties as
directors, except as to liability for any breach of the duty of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, acts in violation of the Florida Corporation Act, or any
transaction from which a director receives an improper personal benefit. This
exclusion of liability does not limit any right which a director may have to be
indemnified and does not affect any director's liability under federal or
applicable state securities laws.
<PAGE>
PART F/S
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is included as a separate Exhibit to this
report. Please see pages F-1 through F-12 and Page 1 through 6.
XIN NET CORP.
Index to Financial Statements
Report of Independent Auditors i
Balance Sheet ii
Statement of Operations iii
Statement of Changes in
Stockholders' Equity iv
Statement of Cash flows v
Notes to Financial Statements vi
<PAGE>
FINANCIAL STATEMENTS
(A Development Stage Company)
XIN NET CORP.
<PAGE>
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements and Schedules. The following financial statements
and schedules for the Registrant as of September 30, 1998 and for the fiscal
year of 1997 are filed as part of this report.
(1) Financial statements of Xin Net Corp. (formerly Placer Technologies,
Inc.) and subsidiaries
Year 1997
Page
----
Independent Auditor's Report F-1
Consolidated Balance Sheet at end of December 31, 1997 F-2
Consolidated Statement of Operations at end of December 31, 1997 F-3
Consolidated Statement of Stockholders' Equity at end of
December 31, 1997 F-4
Consolidated Statement of Cash Flows at end of December 31, 1997
F-5 F-6
Notes to the Consolidated Financial Statements F-7 F-10
Year 1998 (unaudited)
Page
----
Cover page 1
Consolidated Balance Sheet at September 30, 1998 2
Consolidated Statement of Operations As of End of September 1998 3
Consolidated Statement of Cash Flows As of End of September 1998 4
Notes to the Consolidated Financial Statements 5, 6
(2) Financial Statement Schedules:
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DATE XIN NET CORP.
June 29, 1999 by:/s/ Marc Hung, President
----------------------------
Marc Hung, President
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the dates indicated.
/s/Xiao-qing Du Director June 29, 1999
- -----------------
Xiao-qing Du
/s/ S.Y. Marc Hung President and Director June 29, 1999
- ------------------
S.Y. Marc Hung
/s/Ernest Cheung Secretary and Director June 29, 1999
- -----------------
Ernest Cheung
/s/Maurice Tsakok Director June 29, 1999
- ----------------
Maurice Tsakok
<PAGE>
PLACER TECHNOLOGIES, INC.
AND SUBSIDIARIES
Vancouver, BC
AUDIT REPORT
DECEMBER 31, 1997 AND 1996
CONTENTS
Independent Auditors' Report ...............................................F-1
Consolidated Balance Sheet at December 31, 1997 and 1996 ...................F-2
Consolidated Statement of Operations For The Year Ended
December 31, 1997, For the Period From Inception (September 12, 1996)
To December 31, 1996, and For the Period From Inception
(September 12, 1996) to December 31, 1997 ...........................F-3
Consolidated Statement of Stockholders' Equity From Inception
(September 12, 1996) To December 31, 1997 ...........................F-4
Consolidated Statement of Cash Flows For The Year Ended
December 31, 1997, For the Period From Inception (September 12, 1996)
To December 31, 1996, and For the Period From Inception
(September 12, 1996) to December 31, 1997 .......................F-5 F-6
Notes to the Consolidated Financial Statements ........................ F-7 F-10
All schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.
<PAGE>
26TH PLACE
2601 E. THOMAS RD.
SUITE 110
PHOENIX, AZ 83016
CLANCY AND CO., P.L.L.C.
CERTIFIED PUBLIC ACCOUNTANTS
PH: (602) 266-2646
FAX (602) 224-9496
E-MAIL [email protected]
INDEPENDENT AUDITORS' REPORT
Board of Directors
Placer Technologies, Inc.
and Subsidiaries
Vancouver, B.C. V6C I H2
We have audited the accompanying consolidated balance sheet of Placer
Technologies Inc. (A Development Stage Company), as of December 31, 1997 and
1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for the year ended December 3 1, 1997, for the period from
Inception (September 12, 1996) to December 31, 1996, and for the period from
Inception (September 12, 1996) to December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit of the financial statements provides a reasonable
basis for our opinion.
In our opinion, the financial statements present fairly, in all material
respects, the consolidated financial position of Placer Technologies, Inc. and
Subsidiaries, at December 31, 1997 and 1996 and the consolidated results of
their operations and their consolidated cash flows for the year ended December
31, 1997, and for the period from Inception (September 12, 1996) to December 31,
1996, in conformity with generally accepted accounting principles.
Clancy and Co., P.L.L.C.
Phoenix, Arizona
June 25, 1998
F-1
<PAGE>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31,1997 AND 1996
1997 1996
ASSETS
Current Assets
Cash ............................................... 447,269 17,414
Accounts Receivable ................................ 28,062 0
Total Current Assets ................................. 475,331 17,414
Property and Equipment, Net (Note 3)
189,544 0
Other Assets
Organizational Costs, Net (Note 4) ................. 1,415 0
--------- ---------
Total Assets ......................................... $ 666,290 117,413
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Other Accrued Liabilities ..... $ 13,089 0
Commitments and Contingencies ........................ None None
Stockholders' Equity
Common Stock: $0.001 Par Value, Authorized
50,000,000; Issued and Outstanding, 14,075,000
and 3,200,000 Shares at December 31, 1997 and
1996 14,075 3,200
Additional Paid In Capital ......................... 793,025 49,800
Retained Earnings (Accumulated Deficit) ............ (153,899) (35,586)
Total Stockholders' Equity ........................... 653,201 17,414
--------- ---------
Total Liabilities and Stockholders' Equity ........... $ 666,290 $ 177,414
The accompanying notes are integral part of these financial statements.
F-2
<PAGE>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,1997, FOR THE PERIOD FROM
INCEPTION (SEPTEMBER 12,1996) TO DECEMBER 31,1996, AND FOR THE
PERIOD FROM INCEPTION (SEPTEMBER 12,1996) TO DECEMBER 31,1997
<TABLE>
<CAPTION>
For the
Period From From
Inception Inception
For The (September (September
Year Ended 12, 1996) To 12,1996)
December December To December
31, 1997 31, 1996 31, 1997
<S> <C> <C> <C>
Revenues 96,177 0 96,177
Expenses
General and Administrative 314,153 35,865 350,018
Operating Loss (217,976) (35,865) (253,841)
Other Income (Expense)
Interest Income 7,269 279 7,548
Remeasurement Gain 139,344 0 139,344
Depreciation and Amortization (46,950) 0 (46,950)
-------- - --------
Total Other Income 99,663 279 99,942
Net Loss Available to Common Stockholders $(118,313) $(35,586) $ (153,899)
Earnings (Loss) Per Common Share and
Common Share Equivalents $ (.010) $ (.021) $ (.013)
Weighted Number of Common Shares and
Common Share Equivalents Outstanding 12,127,082 1,650,000 12,127,082
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (SEPTEMBER 12,1996)
TO DECEMBER 31,1997
Loss
Accumulated
Additional During the
Common Stock Paid In Development
Shares Amount Capital Stage Total
<S> <C> <C> <C> <C> <C>
Balance, September 12,
1996 0 $ 0 $ 0 $ 0 $ 0
Issuance of Common Stock
For Cash at $.25 Per
Share Through
October 31, 1996 200,000 200 49,800 0 50,000
Issuance of Common Stock
For Services at $.001
Per Share on November 16,
1996 3,000,000 3,000 0 0 3,000
Loss from Inception
(September 12, 1996)
Through December 31,
1996 0 0 0 (35,586) (35,586)
Balance, December
31, 1996 3,200,000 3,200 49,800 (35,586) 17,414
Issuance of Common
Stock For Cash at
$.40 Per Share on
June 2, 1997 1,875,000 1,875 748,125 0 750,000
Issuance of Common
Stock in Exchange
for Acquisition of
Subsidiary on March 3,
1997 5,000,000 5,000 (4,900) 0 100
Issuance of Common
Stock For Services
at $.001 Per Share
on February 20,
1997 4,000,000 4,000 0 0 4,000
Loss For the Year
Ended December 31,
1997 0 0 0 (118,313)(118,313)
Balance, December
31, 1997 14,075,000 $ 14,075 $793,025 $(153,899)$ 653,201
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,1997, FOR THE PERIOD FROM
INCEPTION (SEPTEMBER 12,1996) TO DECEMBER 31,1996, AND FOR THE
PERIOD FROM INCEPTION (SEPTEMBER 12,1996) TO DECEMBER 31,1997
For the Period From
From Inception Inception
For the (September 12, (September
Year Ended 1996) To 2, 1996)
December December To December
31, 1997 31, 1996 1, 1997
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net Loss (118,313) (35,586) (153,899)
Adjustments to Reconcile
Net Loss to Net Cash
Used in Operating Activities
Depreciation and Amortization 46,950 0 46,950
Common Stock Issued for Services 4,000 3,000 7,000
Changes in Assets and Liabilities
(Increase) Decrease in Accounts
Receivable (28,062) 0 (28,062)
(Increase) Decrease in
Organizational Costs (1,493) 0 (1,493)
Increase (Decrease) in
Accounts Payable 13,089 0 13,089
Total Adjustments 34,484 3,000 37,484
Net Cash Used in Operating Activities (83,829) (32,586) (116,415)
Cash Flows from Investing Activities
Purchase of Property and Equipment (236,316) 0 (236,316)
Net Cash Flows Used in Investing
Activities (236,316) 0 (236,316)
Cash Flows from Financing Activities
Proceeds from Sale of Common Stock 750,000 50,000 800,000
Net Cash Provided by Financing
Activities 750,000 50,000 800,000
Increase (decrease) in Cash and
Cash Equivalents 429,855 17,414 447,269
Cash and Cash Equivalents,
Beginning of Year 17,414 0 0
Cash and Cash Equivalents,
End of Year 447,269 17,414 447,269
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,1997, FOR THE PERIOD FROM
INCEPTION (SEPTEMBER 12,1996) TO DECEMBER 31,1996, AND FOR THE
PERIOD FROM INCEPTION (SEPTEMBER 12,1996) TO DECEMBER 31,1997
From
For the Period Inception
From Inception (September
(September 12, 12,1996)
Year Ended 1996) To Through
December December December
31,1997 31,1996 31,1997
<S> <C> <C> <C>
Supplemental Information:
Cash paid for:
Interest $ $ 0 $ 0 $ 0
Income taxes $ $ 0 $ 0 $ 0
Noncash Financing:
Common Stock Issued for Services $ 4,000 $ 3,000 $ 7,000
Common Stock Issued in Exchange for
Acquisition of Subsidiary $ 100 $ 0 $ 100
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1997 AND 1996
NOTE 1 -ORGANIZATION
- --------------------
Placer Technologies, Inc. (the Company) was incorporated under the laws of the
State of Florida on September 12, 1996, with an authorized capital of 2,000
shares of common stock with a par value of one cent ($.0 1) per share. On
December 11, 1996, the Company amended its Articles of Incorporation to increase
the outstanding common stock to 50,000,000 shares with a par value of one mil
($.001) per share. The Company is involved in the early stage development of
Internet related products and services, primarily developing web site home pages
for small businesses and electronic mail services.
The Company has two wholly-owned subsidiaries: Infornet Investment Limited, (a
Hong Kong Corporation) which is a telecommunication and management network
company providing financial resources and expertise in telecommunication
projects; and Infornet Investment Corp., (a Canadian Corporation), which is
engaged in a similar line of business.
During October 1996, the Company completed an Offering Memorandum for 200,000
shares of common stock for cash at $.25 per share, or $50,000. The shares were
issued on December 11, 1996.
On November 16, 1996, the Company authorized the issuance of 3,000,000 shares of
common stock for services at $.001 per share, or $3,000. The shares were issued
on December 11, 1996.
On February 20, 1997, the Company issued 4,000,000 shares of common stock for
services rendered at $.001 per share, or $4,000.
During 1997, the Company completed an Offering Memorandum for 1,875,000 shares
of common stock at $.40 per share, or $750,000. The shares were issued on June
2, 1997.
During 1997, the Company issued 5,000,000 shares of common stock to acquire the
wholly owned subsidiary, Infornet Investment Corp. (Canada), for a total value
of $ 100. The shares were issued on March 3, 1997.
On August 25, 1997, through the wholly-owned subsidiary, Infornet Investment
Limited (Hong Kong), the Company formed an 80% cooperative joint venture called
Placer Technologies Corp. (a limited liability company) with Xin Hai Technology
Development Ltd. (a People's Republic of China Corporation) as a 20% partner,
for a term of twenty (20) years. Xin Hai Technology Development Ltd. (Xin Hai)
is engaged in the business of developing computer hardware, software, and
telecommunication network technology, and providing consultation and training
services. Xin Hai is an experienced Internet
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1 -ORGANIZATION (CONTINUED)
- --------------------------------
Service Provider (ISP) based in Beijing, China. ISP licenses are tightly
controlled by the Ministry of Posts and Telecommunications and provide a
substantial barrier to entry. Xin Hai plans to position itself as a major
supplier of Internet services in China by covering the major cities.
The total investment of the joint venture company is two million U.S. dollars
(US$2,000,000). The registered capital of the joint venture is two hundred
thousand U.S. dollars (US$200,000) and is to be entirely contributed by Infornet
Investment Limited (Hong Kong). The joint venture company manufactures and sells
computer network systems, communication equipment and communication engineering
services, including development and construction of Internet access networks in
China. The joint venture will be operated in accordance with the laws and
regulations in China which allow Sino-foreign joint venture companies to
construct Internet access networks and to have ownership rights and fights for
return on investment, but disallow joint venture companies to operate such
networks.
The Company is a development stage company, as defined in the Financial
Accounting Standards Board No. 7. The Company is devoting substantially all of
its present efforts in securing and establishing a new business, and although
planned principal operations have commenced, substantial revenues have yet to be
realized.
The financial statements have been prepared on the basis of accounting
principles applicable to a going concern. Accordingly, they do not purport to
give effect to adjustments, if any, that may be necessary should the Company be
unable to continue as a going concern. The continuation of the Company as a
going concern, is dependent upon the Company's ability to establish itself as a
profitable business. The Company's ability to achieve these objectives cannot be
determined at this time.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
- -----------------------------------------
A. Method of Accounting
- -----------------------
The Company's financial statements are prepared using the accrual method of
accounting.
B. Cash and Cash Equivalents
- ----------------------------
The Company considers all highly liquid debt instruments with a maturity of
three months or less to be cash and cash equivalents.
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1997 AND 1996
NOTE 2 -SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- ---------------------------------------------------
C. Principles of Consolidation
- ------------------------------
The accompanying consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries, Infornet Investment Corp. (Canada)
and Infornet Investment Limited (Hong Kong). All significant intercompany
transactions and balances have been eliminated in consolidation.
D. Purchase Method
- ------------------
Investments in companies have been included in the financial report using the
purchase method of accounting. The Company's wholly-owned subsidiaries, Infornet
Investment Corp. (Canada) and Infornet Investment Limited (Hong Kong), provide
similar Internet services to the Canadian and Chinese markets.
E. Property and Equipment
- -------------------------
Property and equipment, stated at cost, is depreciated under the straight-line
method over their estimated useful lives, ranging from three to seven years.
F. Revenue Recognition
- ----------------------
Revenues are recognized as services are performed.
G. Income Taxes
- ---------------
There has been no provision for income taxes, because of the losses that the
Company has incurred to date. The Company has available net operating losses of
$118,313 and $35,586 for the years ended December 31, 1997 and 1996,
respectively. The unused net operating losses will expire in the year 2012 and
2011 for the years ended December 3 1, 1997 and 1996, respectively, unless
utilized by the Company.
H. Earnings or (Loss) Per Share
- -------------------------------
Earnings or loss per share is computed based on the weighted average number of
common shares and common share equivalents outstanding. Stock options are
included as common share equivalents using the treasury stock method. The number
of shares used in computing earnings (loss) per common share at December 31,
1997 and 1996 was 12,127,082 and 1,650,000, respectively.
1. Use of Estimates
- -------------------
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1997 AND 1996
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- ----------------------------------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.
J. Foreign Operations
- ---------------------
Foreign currency translation resulted in an aggregate exchange gain of $ 139,344
for the year ended December 31, 1997.
K. Presentation
- ---------------
Certain accounts from prior years have been reclassified to conform with the
current year's presentation.
L. Pending Accounting Pronouncements
- ------------------------------------
It is anticipated that current pending accounting pronouncements will not have
an adverse impact on the financial statements of the Company.
NOTE 3 - PROPERTY, EQUIPMENT, AND DEPRECIATION
- ----------------------------------------------
Property and equipment consists of the following at December 31, 1997:
Office Equipment $ 2,120
Equipment 231,291
Furniture 3,004
Total 236,415
Less Accumulated Depreciation (46,871)
Net Book Value $189,544
Depreciation charged to expense during the year ended
December 31, 1997 was $46,871.
NOTE 4 - ORGANIZATIONAL COSTS
- -----------------------------
Costs incurred to organize the Company have been capitalized and will be
amortized using the declining balance method at 7% per annum on 75% of the
original cost. Amortization charged to expense during the year ended December
31, 1997 was $79.
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
XIN NET CORPORATION AND SUBSIDIARIES
(FORMERLY PLACER TECHNOLOGIES INC. AND SUBSIDIARIES)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
<PAGE>
XIN NET CORPORATION AND SUBSIDIARIES
(FORMERLY PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEET
AS AT SEPTEMBER 30,1998
(UNAUDITED)
(US FUND)
ASSETS
CURRENT
Cash and Bank $ 218,843
Accounts Receivable - Note #1 18,711
Inventory 14,976
Total Current Assets 252,530
CAPITAL ASSETS - Note #3 349,187
OTHER ASSETS
Organizational Costs (Net) - Note #4 890
Total Assets $ 602,607
LIABILITIES
CURRENT
Accounts Payable $ 28,473
Income Taxes Payable 737
Total Current Liabilities 29,210
LOAN PAYABLE - Note #5 20,000
Total Liabilities 19,210
STOCKHOLDERS' EQ U ITY
SHARE CAPITAL - Note #6 14,075
ADDITIONAL PAID IN CAPITAL 793,025
DEFICIT
(253,703)
Total Stockholders' Equity 553,397
$ 602,607
The accompanying notes are an integral part of these statements.
2
<PAGE>
XIN NET CORPORATION AND SUBSIDIARIES
(FORMERLY PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENT OF DEFICIT
FOR NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
(US FUND)
DEFICIT Beginning of year $(153,899)
Prior Period Adjustment - Note #7 (157,690)
DEFICIT - Beginning of year, as restated $(311,589)
Net income for the period 57,886
DEFICIT - End of period $(253,703)
The accompanying notes are an integral part of these statements.
3
<PAGE>
XIN NET CORPORATION AND SUBSIDERARIES
(FORMERLY PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENT OF INCOME
FOR NINE MONTHS ENDED SEPTEMBER 30,1998
(UNAUDITED)
(US FUND)
Revenues $ 394,739
Expenses
General and Administrative 319,040
Operating Income 75,099
Other Income (Expense)
---------------
Interest Income 1,590
Remeasurement Gain 25,747
Amortization (45,150)
Total Other Expense (17,913)
Net Income Available to Common Stockholders 57,886
The accompanying notes are in integral part of these statements
4
<PAGE>
XIN NET CORPORATION AND SUBSIDIARIES
(FORMERLY PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR NINE MONTHS ENDED SEPTEMBER 30,1998
(UNAUDITED)
Note #1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) ORGANIZATION
X in Net Corporation (formerly Placer Technologies, Inc.) was incorporated under
the laws of the State of Florida on September 12, 1996, with an authorized
capital of 2,000 shares of common stock with a par value of one cent ($0.0 I)
per share, On December It, 1996, the company amended its Articles of
Incorporation to increase the outstanding common stock to 50,000,000 shares with
a par value of one mil($.001) per share. The company is involved in the early
stage development of Internet related products and services, primarily
development web site home pages for small business and electronic mail services
The company has two wholly owned subsidiaries: Infornet Investment Limited (a
Hong Kong Corporation) which is a telecommunication t1ld management network
company providing financial resources and expertise in telecommunication
projects: and Infornet Investment Corp., (a Canadian Corporation), which is
engaged in it similar title of business.
b) FOREIGN OPERATIONS
Foreign currency translation resulted in an aggregate exchange gain or $25,747
for nine months ended September 30, 1998.
c) CAPITAL ASSETS
Property and equipment, stated it cost, is amortized under the straight line
method over their estimated useful lives, ranging from three to seven years,
#2 Accounts Receivable
Represent:
Trade Receivable 18,332
Due from Govermental Agencies 379
18,711
<PAGE>
XIN NET CORPORATION AND SUBSIDIARIES
(FORMERLY PLACER TECHNOLOGIES, INC. AND SUBSIDIARIES)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR NINE MONTHS ENDED SEPTEMBER 30,1998
(UNAUDITED)
Continued ...
Note #3 CAPITAL ASSETS
Capital assets consists of the following it September 30, 1998:
Equipment's $ 436,047
Office Equipment 2,120
Furniture 3,004
441,171
Less: Accumulated Amortization (91,984)
Net book Value $ 349,187
Amortization charged to expense during nine months ended September 30, 1998
was $45,150
#4 ORGANIZATIONAL COSTS
Costs incurred to organize the company has been capitalized and amortized using
the declining balance method at 7% per annum on 75% of the original costs.
Amortization charged to expense during nine months ended September 30, 1998 was
$37.
#5 LOAN PAYABLE
Represents loan due to a private corporation with no fixed terms of interest and
repayment.
#6 SHARE CAPITAL
Authorized: 50,000,000 Common shares with par value @$0.001 per shire.
and fully paid: 14,075,000 shares $ 14,075
#7 PRIOR PERIOD ADJUSTMENTS
The balance of retained earnings at January 1, 1998 has been adjusted to reflect
the correct of remeasurement gain applicable to the 1997 fiscal year as an over
estimation was made at exchange rate difference when converting subsidiaries
transactions and assets to U.S. currency.
6
EXHIBIT INDEX
SK #
3.1 Articles of Incorporation to Placer Technology Inc.
3.2 Articles of Amendment to Placer Technology Inc.
3.3 Articles of Amendment to Placer Technology Inc. to change name to
Xin Net.
3.4 Bylaws to Placer Corp. (Xin Net)
3.5 Articles of Incorporation to Infornet (B.C.) Investment Corp. &
Amendment
3.6 Articles of Incorporation to Micro Express (Hong Kong) and
Amendment to change name to Infornet Investment LTD
3.7 Articles of Association Placer Technology Corp. (China)
10.1 Contract Between Xin Hai Technology Development, L.T.D.
and Infornet Investment, L.T.D. dated August 25, 1997
10.2 Cooperative Joint Venture Contract Placer Technologies/Xin Hai
10.3 EDUVERSE Non-Exclusive Binding Agreement
STATE OF FLORIDA
Department of State
I certify the attached is a true and correct copy of the Articles of Amendment,
filed on July 22, 1998, to Articles of Incorporation for PLACER TECHNOLOGIES,
INC. which changed its name to XIN NET CORP., a Florida corporation, as shown by
the records of this office.
The document number of this corporation is P96000075824.
Given under my hand and the Great Seal of the State of Florida at Tallahassee,
the Capitol, this the Twenty-third day of July, 1998
- ----------------------------------
Sandra B Mortham
CR2EO22 (2-95)
Articles of Incorporation
of
Placer Technologies, Inc.
Article I. Name
The name of this Florida corporation is: Placer Technologies, Inc.
Article II. Address
The mailing address of the Corporation is:
Placer Technologies, Inc.
1400-400 Burrard Street
Vancouver BC V6C3G2
Article III. Capital Stock
The Corporation shall have the authority to issue 2,000 shares of common stock,
par value $.01 per share.
Article IV. Registered Agent
The name and address of the registered agent of the Corporation is:
Corporate Creations Enterprises, Inc.
4521 PGA Boulevard #211
Palm Beach Gardens FL 33418
Article V. Board of Directors
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation.
The election of directors shall be done in accordance with the Bylaws. The
directors shall be protected from personal liability to the fullest extent
permitted by law. The name of each initial member of the Corporation's Board of
Directors is:
Harmel S. Rayat
Article VI. Incorporator
The name and address of the incorporator is:
Corporate Creations International Inc.
401 Ocean Drive - Suite 312 - Door Code #125
Miami Beach FL 33139-6629
Article VII. Corporate Existence
The corporate existence of the Corporation shall begin effective September
12, 1996
The authorized representative of the incorporator executed these Articles of
Incorporation on September 6, 1996
Corporate Creations International Inc.
By:_____________________________________
Brian R. Fons Vice President
Articles of Amendment
Article I. Name
The name of this Florida corporation is Placer Technologies, Inc. (the
"Corporation").
Article II. Amendments
The Articles of Incorporation of the Corporation are amended so that the text of
Article 11 is deleted in its entirety and replaced with the following:
The mailing address of the Corporation is:
Placer Technologies, Inc.
3957 San Mateo Avenue
Riverside, CA 92504
The Articles of Incorporation of the Corporation are amended so that the text of
Article III is deleted in its entirety and replaced with the following:
The corporation shall have the authority to issue 50,000,000 shares of common
stock, par value $.001 per share.
The Articles of Incorporation of the Corporation are amended so that the text of
Article V is deleted in its entirety and replaced with the following:
The affairs of the Corporation shall be managed by a Board of Directors
consisting of no less than one director. The number of directors may be
increased or decreased from time to time in accordance with the Bylaws of the
Corporation. The election of directors shall be done in accordance with the
Bylaws. The directors shall be protected from personal liability to the fullest
extent permitted by law. The name of each member of the Corporation's Board of
Directors is:
Herdev S. Rayat
David A. Gamace
Frank Mueller
Article III. Date Amendment Adopted
The amendment set forth in these Articles of Amendment was adopted on December
11, 1996.
Article IV. Shareholder Approval of Amendment
The amendment set forth in these Articles of Amendment was proposed by the
Corporation's Board of Directors and approved by the shareholders by a vote
sufficient for approval of the amendment.
An authorized representative of the Corporation executed these Articles of
Amendment on December 11, 1996.
Placer Technologies, Inc.
By:________________________________
Brian Fons, its Assistant Secretary
ARTICLES OF AMENDMENT
TO
ARTICLES OF
INCORPORATION
OF
PLACER TECHNOLOGIES, INC.
Pursuant to the provisions of section 60 7.1006, Florida Statutes, this Florida
profit corporation adopts the following articles of amendment to its articles of
incorporation:
FIRST: Amendment adopted:
Article I is hereby amended to read as follows:
The name of this corporation is Xin Net Corp.
SECOND: There is no change to the capital of the corporation.
THIRD: This amendment was adopted on July 20, 1998.
FOURTH: The amendment was approved by the shareholders. The number of votes
cast for the amendment was sufficient for approval.
Signed this 20"' day of July, 1998.
- ---------------------------------------
Ms Xiao-quing Du, President
Bylaws
of
Placer
Technologies, Inc.
ARTICLE I. DIRECTORS
Section 1. Function. All corporate powers shall be exercised by or under the
authority of the Board of Directors. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors. Directors must
be natural persons who are at least 18 years of age but need not be shareholders
of the Corporation. Residents of any state may be directors.
Section 2. Compensation. The shareholders shall have authority to fix the
compensation of directors. Unless specifically authorized by a resolution of
the shareholders, the directors shall serve in such capacity without
compensation.
Section 3. Presumption of Assent. A director who is present at a meeting of the
Board of Directors or a committee of the Board of Directors at which action on
any corporate matter is taken shall be presumed to have assented to the action
taken unless he objects at the beginning of the meeting (or promptly upon
arriving) to the holding of the meeting or transacting the specified business at
the meeting, or if the director votes against the action taken or abstains from
voting because of an asserted conflict of interest.
Section 4. Number. The Corporation shall have at least the minimum number of
directors required by law. The number of directors may be increased or
decreased from time to time by the Board of Directors.
Section 5. Election and Term. At each annual meeting of shareholders, the
shareholders shall elect directors to hold office until the next annual meeting
or until their earlier resignation, removal from office or death. Directors
shall be elected by a plurality of the votes cast by the shares entitled to vote
in the election at a meeting at which a quorum is present.
Section 6. Vacancies. Any vacancy occurring in the Board of Directors, including
a vacancy created by an increase in the number of directors, may be filled by
the shareholders or by the affirmative vote of a majority of the remaining
directors though less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall hold office only until the next election of
directors by the shareholders. If there are no remaining directors, the vacancy
shall be filled by the shareholders.
Section 7. Removal of Directors. At a meeting of shareholders, any director or
the entire Board of Directors may be removed, with or without cause, provided
the notice of the meeting states that one of the purposes of the meeting is the
removal of the director. A director may be removed only if the number of votes
cast to remove him exceeds the number of votes cast against removal.
Section 8. Quorum and Voting. A majority of the number of directors fixed by
these Bylaws shall constitute a quorum for the transaction of business. The act
of a majority of directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by resolution
adopted by a majority of the full Board of Directors, may designate from among
its members one or more committees each of which must have at least two members.
Each committee shall have the authority set forth in the resolution designating
the committee.
Section 10. Place of Meeting. Regular and special meetings of the Board of
Directors shall be held at the principal place of business of the Corporation or
at another place designated by the person or persons giving notice or otherwise
calling the meeting.
Section 11. Time, Notice and Call of Meetings. Regular meetings of the Board of
Directors shall be held without notice at the time and on the date designated by
resolution of the Board of Directors. Written notice of the time, date and place
of special meetings of the Board of Directors shall be given to each director by
mail delivery at least two days before the meeting.
<PAGE>
Notice of a meeting of the Board of Directors need not be given to a director
who signs a waiver of notice either before or after the meeting. Attendance of a
director at a meeting constitutes a waiver of notice of that meeting and waiver
of all objections to the place of the meeting, the time of the meeting, and the
manner in which it has been called or convened, unless a director objects to the
transaction of business (promptly upon arrival at the meeting) because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors must be specified in the notice or waiver of notice of the meeting.
A majority of the directors present, whether or not a quorum exists, may adjourn
any meeting of the Board of Directors to another time and place. Notice of an
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place of the adjourned meeting
are announced at the time of the adjournment, to the other directors. Meetings
of the Board of Directors may be called by the President or the Chairman of the
Board of Directors. Members of the Board of Directors and any committee of the
Board may participate in a meeting by telephone conference or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation by these means constitutes presence
in person at a meeting.
Section 12. Action By Written Consent. Any action required or permitted to be
taken at a meeting of directors may be taken without a meeting if a consent in
writing setting forth the action to be taken and signed by all of the directors
is filed in the minutes of the proceedings of the Board. The action taken shall
be deemed effective when the last director signs the consent, unless the consent
specifies otherwise.
ARTICLE II. MEETINGS OF SHAREHOLDERS
Section 1. Annual Meeting. The annual meeting of the shareholders of the
corporation for the election of officers and for such other business as may
properly come before the meeting shall be held at such time and place as
designated by the Board of Directors.
Section 2. Special Meeting. Special meetings of the shareholders shall be held
when directed by the President or when requested in writing by shareholders
holding at least 10% of the Corporation's stock having the right and entitled to
vote at such meeting. A meeting requested by shareholders shall be called by the
President for a date not less than 10 nor more than 60 days after the request is
made. Only business within the purposes described in the meeting notice may be
conducted at a special shareholders' meeting.
Section 3. Place. Meetings of the shareholders will be held at the principal
place of business of the Corporation or at such other place as is designated
by the Board of Directors.
Section 4. Notice. A written notice of each meeting of shareholders shall be
mailed to each shareholder having the right and entitled to vote at the meeting
at the address as it appears on the records of the Corporation. The meeting
notice shall be mailed not less than 10 nor more than 60 days before the date
set for the meeting. The record date for determining shareholders entitled to
vote at the meeting will be the close of business on the day before the notice
is sent. The notice shall state the time and place the meeting is to be held. A
notice of a special meeting shall also state the purposes of the meeting. A
notice of meeting shall be sufficient for that meeting and any adjournment of
it. If a shareholder transfers any shares after the notice is sent, it shall not
be necessary to notify the transferee. All shareholders may waive notice of a
meeting at any time.
Section 5. Shareholder Quorum. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting without further notice until a quorum is obtained.
Section 6. Shareholder Voting. If a quorum is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders. Each outstanding share
shall be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders. An alphabetical list of all shareholders who are entitled to
notice of a shareholders' meeting along with their addresses and the number of
shares held by each shall be produced at a shareholders' meeting upon the
request of any shareholder.
Section 7. Proxies. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-infact. The appointment
of proxy will be effective when received by the Corporation's officer or agent
authorized to tabulate votes. No proxy shall be valid more than 11 months after
the date of its execution unless a longer term is expressly stated in the proxy.
<PAGE>
Section 8. Validation. If shareholders who hold a majority of the voting stock
entitled to vote at a meeting are present at the meeting, and sign a written
consent to the meeting on the record, the acts of the meeting shall be valid,
even if the meeting was not legally called and noticed.
Section 9. Conduct of Business By Written Consent. Any action of the
shareholders may be taken without a meeting if written consents, setting forth
the action taken, are signed by at least a majority of shares entitled to vote
and are delivered to the officer or agent of the Corporation having custody of
the Corporation's records within 60 days after the date that the earliest
written consent was delivered. Within 10 days after obtaining an authorization
of an action by written consent, notice shall be given to those shareholders who
have not consented in writing or who are not entitled to vote on the action. The
notice shall fairly summarize the material features of the authorized action. If
the action creates dissenters' rights, the notice shall contain a clear
statement of the right of dissenting shareholders to be paid the fair value of
their shares upon compliance with and as provided for by the state law governing
corporations.
ARTICLE III. OFFICERS
Section 1. Officers; Election; Resignation; Vacancies. The Corporation shall
have the officers and assistant officers that the Board of Directors appoint
from time to time. Except as otherwise provided in an employment agreement which
the Corporation has with an officer, each officer shall serve until a successor
is chosen by the directors at a regular or special meeting of the directors or
until removed. Officers and agents shall be chosen, serve for the terms, and
have the duties determined by the directors. A person may hold two or more
offices.
Any officer may resign at any time upon written notice to the Corporation. The
resignation shall be effective upon receipt, unless the notice specifies a later
date. If the resignation is effective at a later date and the Corporation
accepts the future effective date, the Board of Directors may fill the pending
vacancy before the effective date provided the successor officer does not take
office until the future effective date. Any vacancy occurring in any office of
the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board of Directors at any regular or
special meeting.
Section 2. Powers and Duties of Officers. The officers of the Corporation shall
have such powers and duties in the management of the Corporation as may be
prescribed by the Board of Directors and, to the extent not so provided, as
generally pertain to their respective offices, subject to the control of the
Board of Directors.
Section 3. Removal of Officers. An officer or agent or member of a committee
elected or appointed by the Board of Directors may be removed by the Board with
or without cause whenever in its judgment the best interests of the Corporation
will be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed. Election or appointment of an
officer, agent or member of a committee shall not of itself create contract
rights. Any officer, if appointed by another officer, may be removed by that
officer.
Section 4. Salaries. The Board of Directors may cause the Corporation to enter
into employment agreements with any officer of the Corporation. Unless provided
for in an employment agreement between the Corporation and an officer, all
officers of the Corporation serve in their capacities without compensation.
Section 5. Bank Accounts. The Corporation shall have accounts with financial
institutions as determined by the Board of Directors.
ARTICLE IV DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions to its
shareholders in cash, property, or its own shares, unless the distribution would
cause (i) the Corporation to be unable to pay its debts as they become due in
the usual course of business, or (ii) the Corporation's assets to be less than
its liabilities plus the amount necessary, if the Corporation were dissolved at
the time of the distribution, to satisfy the preferential rights of shareholders
whose rights are superior to those receiving the distribution. The shareholders
and the Corporation may enter into an agreement requiring the distribution of
corporate profits, subject to the provisions of law.
<PAGE>
ARTICLE V CORPORATE RECORDS
Section 1. Corporate Records. The corporation shall maintain its records in
written form or in another form capable of conversion into written form within a
reasonable time. The Corporation shall keep as permanent records minutes of all
meetings of its shareholders and Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors on behalf of the
Corporation. The Corporation shall maintain accurate accounting records and a
record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
The Corporation shall keep a copy of its articles or restated articles of
incorporation and all amendments to them currently in effect; these Bylaws or
restated Bylaws and all amendments currently in effect; resolutions adopted by
the Board of Directors creating one or more classes or series of shares and
fixing their relative rights, preferences, and limitations, if shares issued
pursuant to those resolutions are outstanding; the minutes of all shareholders'
meetings and records of all actions taken by shareholders without a meeting for
the past three years; written communications to all shareholders generally or
all shareholders of a class of series within the past three years, including the
financial statements furnished for the last three years; a list of names and
business street addresses of its current directors and officers; and its most
recent annual report delivered to the Department of State.
Section 2. Shareholders' Inspection Rights. A shareholder is entitled to inspect
and copy, during regular business hours at a reasonable location specified by
the Corporation, any books and records of the Corporation. The shareholder must
give the Corporation written notice of this demand at least five business days
before the date on which he wishes to inspect and copy the record(s) The demand
must be made in good faith and for a proper purpose. The shareholder must
describe with reasonable particularity the purpose and the records he desires to
inspect, and the records must be directly connected with this purpose. This
Section does not affect the right of a shareholder to inspect and copy the
shareholders, list described in this Article if the shareholder is in litigation
with the Corporation. In such a case, the shareholder shall have the same rights
as any other litigant to compel the production of corporate records for
examination.
The Corporation may deny any demand for inspection if the demand was made for an
improper purpose, or if the demanding shareholder has within the two years
preceding his demand, sold or offered for sale any list of shareholders of the
Corporation or of any other corporation, has aided or abetted any person in
procuring any list of shareholders for that purpose, or has improperly used any
information secured through any prior examination of the records of this
Corporation or any other corporation.
Section 3. Financial Statements for Shareholders. Unless modified by resolution
of the shareholders within 120 days after the close of each fiscal year, the
Corporation shall furnish its shareholders with annual financial statements
which may be consolidated or combined statements of the Corporation and one or
more of its subsidiaries, as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public accountant, his
report must accompany them. If not, the statements must be accompanied by a
statement of the President or the person responsible for the Corporation's
accounting records stating his reasonable belief whether the statements were
prepared on the basis of generally accepted accounting principles and, if not,
describing the basis of preparation and describing any respects in which the
statements were not prepared on a basis of accounting consistent with the
statements prepared for the preceding year. The Corporation shall mail the
annual financial statements to each shareholder within 120 days after the close
of each fiscal year or within such additional time thereafter as is reasonably
necessary to enable the Corporation to prepare its financial statements.
Thereafter, on written request from a shareholder who was not mailed the
statements, the Corporation shall mail him the latest annual financial
statements.
Section 4. Other Reports to Shareholders. If the Corporation indemnities or
advances expenses to any director, officer, employee or agent otherwise than
by court order or action by the shareholders or by an insurance carrier
pursuant to insurance
FORM 1 (section 5)
COMPANY ACT
MEMORANDUM
I wish to be formed into a company with limited liability under the Company act
in pursuance of this memorandum.
1. The name of the company is " 535483 B.C. LTD."
-------------------------------------
2. The authorized capital of the company consists of 100,000,000 common
shares without par value.
3. I agree to take the number and kind of shares in the company set opposite
my name.
Full Name, Resident Address Number and Kind of Shares
and occupation of Subscriber Taken by Subscriber
David Toyoda One common share without
Suite 1202 par value
B.C.7040 Granville Street
Richmond, B.C.
V6Y 3W5
Solicitor
Total shares taken: One
DATED: January 20, 1997
Hanna Heppell Bell & Visosky
<PAGE>
ARTICLES OF
535483 B.C. LTD.
TABLE OF CONTENTS
PART ARTICLE SUBJECT PAGE
1 INTERPRETATION . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . 1
1.2 Construction of Words . . . . . . . . . . . . . 2
1.3 Definitions Same as Company Act 2
1.4 Interpretation Act Rules of
Construction Apply . . . . . . . . . . . . 2
1.5 References to Writing. . . . . . . . . . . . . 2
2 SHARES AND SHARE CERTIFICATES . . . . . . . . . . . 2
2.1 Member Entitled to Certificate . . . . . . . 2
2.2 Form of Certificate . . . . . . . . . . . . . 2
2.3 Replacement of Lost or Defaced Certificate 3
2.4 Execution of Certificates . . . . . . . . . . 3
2-5 Recognition of Trusts . . . . . . . . . . . . 3
2.6 Delivery to Joint Holders . . . . . . . . . . 4
3 ISSUE OF SHARES . . . . . . . . . . . . . . . . . . 4
3.1 Directors Authorized . . . . . . . . . . . . 4
3.2 Commissions and Discounts . . . . . . . . . . 4
3.3 Condition of Issue. . . . . . . . . . . . . . 4
4 SHARE REGISTERS . . . . . . . . . . . . . . . . . . 5
4.1 Registers of Members, Transfers
and Allotments . . . . . . . . . . . 5
4.2 Branch Registers of Members . . . . . . . . . 5
4.3 No Closing of Register of Members . . . . . . 5
5 TRANSFER OF SHARES . . . . . . . . . . . . . . . . . 5
5.1 Transfer of Shares . . . . . . . . . . . . . 5
5.2 Execution of instrument of Transfer . . . . . 6
5.3 Enquiry as to Title not Required . . . . . . 6
5.4 Submission of Instruments of Transfer . . . . 6
5.5 Transfer Fee . . . . . ........ . . . . . . . . 7
5.6 Consent of Directors Required . . . . . . . . 7
<PAGE>
6 TRANSMISSION OF SHARES . . . . . . . . . . . . . . . 7
6.1 Personal Representatives Recognized
on Death . . . . . ........ . . . . . . . . . 7
6.2 Death or Bankruptcy . . . . . . . ........... 7
6.3 Persons in Representative Capacity . . . . . 8
7 ALTERATION OF CAPITAL . . . . . . . . . . . . . . . 8
7.1 Increase of Authorized Capital . . . . . . . 8
7.2 Other Capital Alterations . . . . . . . . . . 8
7.3 Creation, Variation and Abrogation
of Special Rights and Restrictions . . . . 8
7.4 Special Rights of Conversion . . . . . . . . 9
7.5 Class Meetings of Members . . . . . . . . . 9
8 PURCHASE AND REDEMPTION OF SHARES . . . . . . . 9
8.1 Company Authorized to Purchase
or Redeem its Shares . . . . . . . . . . 9
8.2 Offer to Purchase Made Pro Rata . . . . . . . 9
8.3 Selection of Shares to be Redeemed 10
8.4 Purchased or Redeemed Shares Not Voted . . . 10
9 BORROWING POWERS . . . . . . . . . . . . . . . . . 10
9.1 Powers of Directors . . . . . . . . . . . . . 10
9.2 Negotiability of Debt Obligations . . . . . . 11
9.3 Special Rights Attached to Debt Obligations . 11
9.4 Register of Debentureholders . . . . . . . . 11
9.5 Execution of Debt Obligations . . . . . . . . 11
9.6 Register of indebtedness . . . . . . . . . . 11
10 GENERAL MEETING 12
10.1 Annual General Meeting . . . . . . . . . . . 12
10.2 Waiver of Annual General Meeting . . . . . . 12
10.3 Classification of General Meetings . . . . . 12
10.4 Calling of Meetings . . . . . . . . . . . . . 12
10.5 Advance Notice for Election of Directors . . 12
10.6 Notice for General Meeting . . . . . . . . . 12
10.7 Waiver or Reduction of Notice . . . . . . . . 12
10.8 Notice of Special Business at
General Meeting . . . . . . . . . . . . 13
10.9 Postponement of Meeting following
Advance Notice . . . . . . . . . . . . 13
<PAGE>
11 PROCEEDINGS AT GENERAL MEETINGS . . . . . . . . . . 13
11.1 Special Business . . . . . . . . . . . . . . 13
11.2 Requirement of Quorum ...... . . . . . . . . . 14
11.3 Quorum . . . . . . . . . . . . . . . . . . 14
11.4 Lack of Quorum . . . . . . . . . . . . . . . 14
11.5 Chairman . . . . . . . . . . . . . . 14
11.6 Alternate Chairman . . . . . . . . . . . . . 14
11.7 Adjournments . . . . . . . . . . . . . . . . 15
11.8 Resolutions Need Not Be Seconded . . . . . . 15
11.9 Decisions by Show of Hands or Poll . . . . . 15
11.10 Casting Vote . . . . . . . . . . . . . . . . 15
11.11 Manner of Taking Poll . . . . . . . . . . . . 15
11.12 Disputed Vote . . . . . . . . . . . . . . . . 16
11.13 Retention of Ballots Cast on a Poll . . . 16
11.14 Casting of Votes . . . . . . . . . . . . . . 16
11.15 Ordinary Resolution Sufficient . . . . . . . 16
11.16 Resolutions in Counterparts . . . . . . . . . 16
12 VOTES OF MEMBERS . . . . . . . . . . . . . . . . . . 16
12.1 Number of Votes Per Share or Member . . . . . 16
12.2 Votes of Persons in Representative
Capacity . . . . . . . . . . . . . . . . . 16
12.3 Representative of a Corporate Member . . . . 17
12.4 Votes by Joint Holders . . . . . . . . . . . 17
12.5 Votes by Committee for a member . . . . . . . 17
12.6 Appointment of Proxyholders . . . . . . . . . 17
12.7 Qualification of Proxyholders . . . . . . . . 18
12.8 Execution of Form of Proxy . . . . . . . . . 18
12.9 Deposit of Proxy . . . . . . . . . . . . . . 18
12.10 Directors May Make Regulations
Relating to Deposit of Proxies . . . . . . 18
12.11 Form of Proxy . . . . . . . . . . . . . . . . 18
12.12 Validity of Proxy Vote . . . . . . . . . . . 19
12.13 Revocation of Proxy . . . . . . . . . . . . . 19
12.14 Chairman to Determine Validity . . . . . . . 20
13 DIRECTORS . . . . . . . . . . . . . . . . . . . . . 20
13.1 Number of Directors . . . . . . . . . . . . . 20
13.2 Remuneration and Expenses of Directors . . . 20
13.3 Qualification of Directors . . . . . . . . . 20
<PAGE>
14 ELECTION AND REMOVAL OF DIRECTORS . . . . . . . . . . 21
14.1 Election at Annual General Meetings . . . . . 21
14.2 Eligibility of Retiring-Director . . . . . . 21
14.3 Continuance of Directors . . . . . . . . . . 21
14.4 Election of Less than Required
Number of Directors . . . . . . . . . . 21
14.5 Filling a Casual vacancy . . . . . . . . . . 21
14.6 Additional Directors . . . . . . . . . . . 21
14.7 Alternate Directors . . . . .. . . . . . . . . 22
14.8 Termination of Directorship . . . . . . . . 22
14.9 Resignation of Directors . . . . . . . . . . 22
14.10 Removal of Directors . . . . . . . . . . . . 22
15 POWERS AND DUTIES OF DIRECTORS . . . . . . . . . . 23
15.1 Management of Affairs and Business 23
15.2 Appointment of Attorney . . . . . . . . . . 23
16 DISCLOSURE OF INTEREST OF DIRECTORS . . . . . . . 23
16.1 Disclosure of Conflicting interest 23
16.2 Voting and Quorum re Proposed Contract . 23
16.3 Director May Hold office or
Position with Company . . . . . . . . . 24
16.4 Director Acting in Professional
Capacity . . . . . . . . . . . . . . . 25
16.5 Director Receiving Remuneration
from other Interests . . . . . . . . . . . 25
17 PROCEEDINGS OF DIRECTORS . . . . . . . . . . . . . . 25
17.1 Chairman and Alternate . . . . . . . . . . . 25
17.2 Meetings - Procedure - Casting Vote . . . . . 25
17.3 Meetings by Conference Telephone . . . . . . 25
17.4 Notice of Meeting . . . . . . . . . . . . . . 26
17.5 Waiver of Notice of meetings . . . . . . . . 26
17.6 Quorum . . . . . . . . . . 26
17.7 Continuing Directors May Act
During Vacancy . . . . . . . . . . . . . . 26
17.8 Validity of Acts of Directors . . . . . . . . 26
17.9 Resolution in Writing Effective . . . . . . . 27
17.10 Resolutions Need Not Be Seconded
and Chairman May Move a Motion . . . . . . 27
<PAGE>
18 EXECUTIVE AND OTHER COMMITTEES . . . . . . . . . . . 27
18.1 Appointment of Executive Committee 27
18.2 Appointment of committees . . . . . . . 27
18.3 Procedure at Meetings . . . . . . . . . . . . 28
19 OFFICERS . . . . . . . . . . . . . . . . . . . . 28
19.1 President and Secretary Required . . . . . 28
19.2 Persons Holding More Than One office
and Remuneration . . . . . . . . . . . . 28
19.3 Disclosure of Conflicting Interest 29
20 INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS
AND EMPLOYEES . . . . . . . . . . . . . . 29
20.1 Indemnification of Directors . . . . . . . . 29
20.2 Indemnification of Officers,
Employees, Agents . . . . . . . . . . . . 29
20.3 Indemnification not Invalidated
by Non-Compliance . . . . . . . . . . . . 30
20.4 Company May Purchase Insurance . . . . . . . 30
21 DIVIDENDS AND RESERVE . . . . . . . . . . . . . . . 30
21.1 Declaration of Dividends . . . . . . . . . 30
21.2 Declared Dividend Date . . . . . . . . . . . 30
21.3 Proportionate to Number of Shares Held . . . 30
21.4 Reserves . . . . . . . . . . . . . . . . . . 31
21.5 Receipts from Joint Holders . . . . . . . . . 31
21.6 No Interest on Dividends . . . . . . . . . . 31
21.7 Payment of Dividends . . . . . . . . . . . . 31
21.8 Capitalization of Undistributed Surplus . . . 31
21.9 Fractional Share Dividends . . . . . . . . . 31
22 DOCUMENTS, RECORDS AND REPORTS . . . . . .......... . . . 32
22.1 Documents to be Kept . . . . . . . . . . . 32
22.2 Accounts to be Kept . . . . . . . . . . . . 32
22.3 Inspection of Accounts . . . . . . . . . . 32
22.4 Financial Statements and Reports
for General meetings . . . . . . . . . . 32
22.5 Financial Statements and Reports
for Members . . . . . . . . . . . . . . 32
<PAGE>
23 NOTICES . . . . . . . . . . . . . . . . . . . . . . 32
23.1 Method of Giving Notice . . . . . . . . . . . 32
23.2 Notice to Joint Holder . . . . . . . . . . . 33
23.3 Notice to Personal Representative . . . . . . 33
23.4 Persons to Receive Notice . . . . . . . . . . 33
24 RECORD DATES . . . . . . . . . . . . . . . . . . . . 33
24.1 Record Date . . . . . . . . . . . . . . . . . 33
24.2 No Record Date Fixed . . . . . . . . . . . . 34
25 SEAL . . . . . . . . . . . . . . . . . . . . . . . . 34
25.1 Affixation of Seal to Documents . . . . . . . . 34
25.2 Reproduction of Seal . . . . . . . . . . . . . 34
25.3 Official Seal for Other Jurisdictions . . . . . 35
26 MECHANICAL REPRODUCTION OF SIGNATURES . . . . . . . 35
26.1 Instruments May be Mechanically Signed . . . . 35
26.2 Definition of Instruments . . . . . . . . . . 35
<PAGE>
PROVINCE OF BRITISH COLUMBIA
COMPANY ACT
ARTICLES
OF
535483 B.C. LTD.
PART 1
INTERPRETATION
1.1 In these Articles, unless there is something in the subject or context
inconsistent therewith:
"Board of Directors", "Board", "the Directors" and "the Directors" mean
the Directors or sole Director of the Company for the time being;
"Company" means the company named at the head of these Articles;
"Company Act" means the Company Act of the Province of British Columbia as
from time to time enacted and all amendments thereto and includes all
regulations and amendments thereto made pursuant to that Act;
"member" means those persons defined as such in the Company Act and
includes any person who owns shares in the capital of the Company and
whose name is entered in the register of members or a branch register of
members;
"ordinary resolution" means an ordinary resolution as defined in the
Company Act;
"registered owner" or "registered holder" when used with respect to a
share in the authorized capital of the Company means the person registered
in the register of members in respect of such share;
"seal" means the common seal of the Company, if the Company has one;
"solicitor of the Company" means any partner, associate or articled
student 'of the law firm retained by the Company in respect of the matter
in connection with which the term is used;
"special resolution" means a special resolution as defined in the Company
Act; and "writing", "in writing" and like expressions include all modes of
representing, or reproducing, and recording words in visible form,
including: printing; lithographing; typewriting; and photostatic,
electrostatic and mechanical copying.
1.2 Words importing the singular include the plural and vice versa; and words
importing male persons, include female persons and words importing persons shall
include corporations.
<PAGE>
1.3 Any words or phrases defined in the Company Act shall, if not inconsistent
with the subject or context, bear the same meaning when used in these Articles.
1.4 The Rules of Construction contained in the Interpretation Act of the
Province of British Columbia shall apply, mutatis mutandis, to the
interpretation of these Articles.
1.5 Reference in these Articles to writing shall he construed as including
references to printing, lithography,typewriting, photography and other modes of
representing or reproducing words in a visible form.
PART 2
SHARES AND SHARE CERTIFICATES
2.1 Every member is entitled, without charge, to one certificate representing
the share or shares of each class or series held by him; provided that, in
respect of a share or shares held jointly by several persons, the Company shall
not be bound to issue more than one certificate, and delivery of a certificate
for a share to one of several joint registered holders or to his duly
authorized agent shall he sufficient delivery to all; and provided further that
the Company shall not he bound to issue certificates representing redeemable
shares, if such shares are to be redeemed within one month of the date on which
they were allotted. Any share certificate may be sent through the mail by
registered prepaid mail to the member entitled thereto, and neither the Company
nor any transfer agent shall be liable for any loss occasioned to the member
owing to any such share certificate so sent being lost in the mail or stolen.
2.2 Every share certificate issued by the Company shall be in such form as the
Directors approve and shall comply with the Company Act.
2.3 If a share certificate:
(i) is worn or defaced, the Directors shall, upon production to
them of the said certificate and upon such other terms, if
any, as they may think fit, order the said certificate to
be canceled and shall issue a new certificate in lieu
thereof;
(ii) is lost, stolen or destroyed, then, upon proof thereof to
the satisfaction of the Directors and upon such indemnity,
if any, as the Directors deem adequate being given, a new
share certificate in lieu thereof shall be issued to the
person entitled to such lost, stolen or destroyed
certificate; or
(iii) represents more than one share and the registered
owner thereof surrenders it to the Company with a
written request that the Company issue in his
name two or more certificates each representing a
specified number of shares and in the aggregate
representing the same number of shares as the
certificate so surrendered, the Company shall
cancel the certificate so surrendered and issue
in lieu thereof certificates in accordance with
such request.
<PAGE>
There shall be paid to the Company such sum, not exceeding ten dollars, as the
Directors may from time to time fix, for each certificate to be issued under
this Article.
2.4 Every share certificate shall be signed manually by at least one officer or
Director of the Company, or by or on behalf of a registrar, branch registrar,
transfer agent or branch transfer agent of the Company and any additional
signatures may be printed or otherwise mechanically reproduced and, in such
event, a certificate so signed is as valid as if signedmanually, notwithstanding
that any person whose signature is so printed or mechanically reproduced shall
have ceased to hold the office that he is stated on such certificate to hold at
the date of' the issue of the share certificate.
2.5 Except as required by law, statute or these Articles, no person shall be
recognized by the company as holding any share upon any trust, and the Company
shall not be bound by or compelled in any way to recognize (even when having
notice thereof) any equitable, contingent, future or partial interest in any
share or in any fractional part of a share or (except only as by law, statute or
these Articles provided or as ordered by a court of competent jurisdiction) any
other rights in respect of any share except an absolute right to the entirety
thereof in its registered holder.
2.6 The certificate representing shares registered in the name of two or more
persons shall be delivered to the person first named on the register of members.
PART 3
ISSUE OF SHARES
3.1 Subject to the requirements of the Company Act with respect to pro-rata
offerings (if applicable) and otherwise and to any direction to the contrary,
save for a direction which, at the discretion of the Directors, may not be
proceeded with, contained in a resolution passed at a general meeting
authorizing any increase or alteration of capital, the shares shall be under
the control of the Directors who may, subject to the rights of the holders of
the shares of the Company for the time being outstanding, issue, allot, sell or
otherwise dispose of., and/or grant options on or otherwise deal in, shares
authorized but not outstanding, and outstanding shares held by the Company, at
such times, to such persons (including Directors), in such manner, upon such
terms and conditions and at such price or for such consideration, as the
Directors, in their absolute discretion, may determine.
3.2 Subject to the provisions of the Company Act, the Company, or the Directors
on behalf of the Company, may pay a commission or allow a discount to any
person in consideration of his subscribing or agreeing to subscribe, whether
absolutely or conditionally, for any shares in the Company, or procuring or
agreeing to procure subscriptions, whether absolutely or conditionally, for any
such shares, provided that, if the Company is not a specially limited company,
the rate of the commission and discount shall not in the aggregate exceed 25
per centum of the amount of the subscription price of such shares, and if the
Company is a specially limited company, the rate of the commission and discount
shall not in the aggregate exceed 95 per centum of the amount of the
subscription price of such shares.
3.3 No share may be issued until it is fully paid and the Company shall have
received the full consideration therefor in cash, property or past services
actually performed for the Company.
<PAGE>
The value of property or services for the purposes of this Article shall be the
value determined by the Directors by resolution to be, in all circumstances of
the transaction, the fair market value thereof, and the full consideration
received for a share issued by way of dividend shall be the amount declared by
the Directors to be the amount of the dividend.
PART 4
SHARE REGISTERS
4.1 The Company shall keep or cause to be kept a register of members, a register
of transfers and a register of allotments within British Columbia, all as
required by the Company Act, and may combine one or more of such registers. If
the Company's capital shall consist of more than one class of shares, a separate
register of members, register of transfers and register of allotments may be
kept in respect of each class of shares. The Directors on behalf of the Company
may appoint a trust company to keep the register of members, register of
transfers and register of allotments or, if there is more than one class of
shares, the Directors may appoint a trust company, which need not be the same
trust company, to keep the register of members, the register of transfers and
the register of allotments for each class of shares. The Directors on behalf of
the Company may also appoint one or more trust companies, including the trust
company which keeps the said registers of its shares or of a class thereof, as
transfer agent for its shares or such class thereof, as the case may be, and the
same or another trust company or companies as registrar for its shares or such
class thereof, as the case may be. The Directors may terminate the appointment
of any such trust company at any time and may appoint another trust company in
its place.
4.2 Subject to the provisions of the Company Act, the Company may keep or cause
to be kept one or more branch registers of members at such place or places as
the Directors may from time to time determine.
4.3 The Company shall not at any time close its register of members.
PART 5
TRANSFER OF SHARES
5.1 Subject to the restrictions, if any, set forth in the Memorandum and these
Articles, any member may transfer any of his shares by instrument in writing
executed by or on behalf of such member and delivered to the Company or its
transfer agent. The instrument of transfer of any share of the Company shall be
in the form, if any, on the back of the Company's share certificates or insuch
other form as the Directors may from time to time approve. If the Directors so
determine, each instrument of transfer shall be in respect of only one class of
share. Except to the extent that the Company Act may otherwise provide, the
transferor shall be deemed to remain the holder of the shares until the name of
the transferee is entered in the register of members or a branch register of
members in respect thereof.
<PAGE>
5.2 The signature of the registered owner of any shares, or of his duly
authorized attorney, upon an authorized instrument of transfer shall constitute
a complete and sufficient authority to the Company, its Directors, Officers and
agents to register, in the name of the transferee as named in the instrument of
transfer, the number of shares specified therein or, if no number is specified,
all the shares of the registered owner represented by share certificates
deposited with the instrument of transfer. If no transferee is named in the
instrument of transfer, the instrument of transfer shall constitute a complete
and sufficient authority to the Company, its Directors, Officers and agents to
register, in the name of the person on whose behalf any certificate for the
shares to be transferred is deposited with the Company for the purpose of having
the transfer registered, the number of shares if specified in the instrument of
transfer or, if no number is specified, all the shares represented by all share
certificates deposited with the instrument of transfer.
5.3 Neither the company nor any Director, Officer or agent thereof shall be
bound to enquire into the title of the person named in the form of transfer as
transferee, or, if no person is named therein as transferee, of the person on
whose behalf the certificate is deposited with the Company for the purpose of
having the transfer registered or be liable to any claim by such registered
owner or by any intermediate owner or holder of the certificate or of any of
the shares represented thereby or any interest therein for registering the
transfer, and the transfer, when registered,shall confer upon the person in
whose name the shares have been registered a valid title to such shares.
5.4 Every instrument of transfer shall be executed by the transfer or and left
at the registered office of the Company or at the office of its transfer agent
or registrar for registration together with the share certificate for the shares
to be transferred and such other evidence, if any, as the Directors or the
transfer agent or registrar may require to prove the title of the transferor or
his right to transfer the shares and the right of the transferee to have the
transfer registered. All instruments of transfer, where the transfer is
registered, shall be retained by the Company or its transfer agent or registrar
and any instrument of transfer, where the transfer is not registered, shall be
returned to the person depositing the same together with the share certificate
which accompanied the same when tendered for registration.
5.5 There shall be paid to the Company in respect of the registration of any
transfer such sum, if any, as the Directors may from time to time determine.
5.6 Notwithstanding any other provision of these Articles, if the Company is, or
becomes:
(i) a company which is not a reporting company; or
(ii) a reporting company that has not, with respect to any of
its securities, filed a prospectus with the Superintendent
of Brokers for British Columbia or any similar securities
regulatory body within or outside British Columbia and
obtained therefor a receipt or its equivalent;
then no shares shall he transferred and entered on the register of members
without the previous consent of the Directors expressed by a resolution of the
Board and the Directors shall not berequired to give any reason for refusing to
consent to any such proposed transfer. The consent of the Board required by this
Article may be in respect of a specific proposed trade or trades or trading
generally, whether or not over a specified period of time, or by specific
persons or with such other restrictions or requirements as the Directors may
determine.
<PAGE>
PART 6
TRANSMISSION OF SHARES
6.1 In the case of the death of a member, the survivor or survivors, where the
deceased was a joint registered holder, and the legal personal representative of
the deceased, where he was the sole holder, shall be the only persons recognized
by the Company as having any title to his interest in the shares. Before
recognizing any legal personal representative the Directors may require him to
deliver to the Company the original or a court-certified copy of a grant of
probate or letters of administration in British Columbia or such other evidence
and documents as the Directors consider appropriate to establish the right of
the personal representative to such title to the interest in the shares of the
deceased member.
6.2 Upon the death or bankruptcy of a member, his personal representative or
trustee in bankruptcy, although not a member, shall have the same rights,
privileges and obligations that attach to the shares formerly held by the
deceased or bankrupt member if the documents required by the Company Act shall
have been deposited with the Company. This Article does not apply on the death
of a member with respect to shares registered in his name and the name of
another person in joint tenancy.
6.3 Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member shall, upon such documents and evidence being produced to
the Company as the Company Act requires, or who becomes entitled to a share as a
result of an order of a Court of competent jurisdiction or a statute, has the
right either to be registered as a member in his representative capacity in
respect of such share, or, if he is a personal representative, instead of being
registered himself, to make such transfer of the shares as the deceased or
bankrupt person could have made; but the Directors shall, as regards a transfer
by a personal representative or trustee in bankruptcy, have the right, if any,
to decline or suspend registration of a transferee as they would have in the
case of a transfer of a share by the deceased or bankrupt person before the
death or bankruptcy.
PART 7
ALTERATION OF CAPITAL
7.1 The Company may by ordinary resolution filed with the Registrar amend its
memorandum to increase the authorized capital of the Company by:
(i) creating shares with par value or shares without par
value, or both;
(ii) increasing the number of shares with par value or shares
without par value, or both; or
<PAGE>
(iii) increasing the par value of a class of shares with par
value, if no shares of that class are issued.
7.2 The Company may by special resolution alter its Memorandum to subdivide,
consolidate, change from shares with par value to shares without par value, or
from shares without par value to shares with par value, or change the
designation of, all or any of its shares but only to such extent, in such
manner and with such consents of members holding shares of a class or series
which is the subject of or affected by such alteration, as the Company Act
provides.
7.3 The Company may alter its Memorandum or these Articles:
(i) by special resolution, to create, define and
attach special rights or restrictions to any
shares; and
(ii) by special resolution and by otherwise complying with any
applicable provision of its memorandum or these Articles,
to vary or abrogate any special rights and restrictions
attached to any shares;
and in each case by filing a certified copy of such resolution with the
Registrar, but no right or special right attached to any issued shares shall be
prejudiced or interfered with unless all members holding shares of each class or
series whose right or special right is so prejudiced or interfered with consent
thereto in writing, or unless a resolution consenting thereto is passed at a
separate class or series meeting of the holders of the shares of each such class
or series by a majority of three-fourths of the issued shares of such class or
series or such greater majority as may be specified by the special rights
attached to the class or series of shares.
7.4 If the Company is or becomes a reporting company, and if so required by the
Company Act, no resolution to create, vary or abrogate any special right of
conversion attaching to any class of shares shall be submitted to a general
meeting or a class meeting of members unless the Superintendent of Brokers shall
have first consented to the resolution.
7.5 Unless these Articles otherwise provide, the provisions of these Articles
relating to general meetings shall apply, with the necessary changes and so far
as they are applicable, to a class or series meeting of members holding a
particular class or series of shares, provided that the quorum at a class or
series meeting shall be one or more persons holding or representing by proxy not
less than one-third of the shares affected.
<PAGE>
PART 8
PURCHASE AND REDEMPTION OF SHARES
8.1 Subject to the special rights and restrictions attached to any class of
shares the Company may, by a resolution of the Directors and in compliance with
the Company Act, purchase any of its shares at the price and upon the terms
specified in such resolution or redeem any class of its shares in accordance
with the special rights and restrictions attaching thereto. No such purchase or
redemption shall be made if the Company is insolvent at the time of the proposed
purchase or redemption or if the proposed purchase or redemption would render
the Company insolvent.
8.2 Unless the shares of the Company are to be purchased through a stock
exchange, or from a bona fide employee or bona fide former employee of the
Company or of an affiliate of the Company, or his personal representative, in
respect of shares beneficially owned by such employee or former employee,or the
Company is purchasing the shares from dissenting members pursuant to the
requirements of the Company Act, the Company shall make its offer to purchase
pro rata to every member who holds shares of the class or series to be
purchased.
8.3 If the Company proposes at its option to redeem some but not all of the
shares of any class or series, the Directors may, subject to the special rights
and restrictions attached to such shares, decide the manner in which the shares
to be redeemed shall be selected and such redemption may or may not be made pro
rata among every member holding any such shares as the Directors may determine.
8.4 Subject to the provisions of the Company Act, any shares purchasedor
redeemed by the Company may be sold or, if cancelled, reissued by it, but, while
such shares which have not been cancelled are held by the Company, it shall not
exercise any vote in respect of these shares and no dividend or other
distribution shall be paid or made thereon.
PART 9
BORROWING POWERS
9.1 Subject to the provisions of the Company Act, the Directors may from time
to time authorize the Company to:
(i) borrow money in such manner and amount, on such security,
from such sources and upon such terms and conditions as
they think fit;
(ii) issue bonds, debentures, and other debt obligations either
outright or as security for any liability or obligation of
the Company or any other person;
(iii) mortgage, charge, whether by way of specific or floating
charge, or give other security on the undertaking or on the
whole or any part of the property and assets of the
company, both present and future; and
(iv) give financial assistance to any person, directly or
indirectly, by way of loan, guarantee, the provision of
security, or otherwise.
9.2 The Directors may make any bonds, debentures or other debt obligations
issued by the Company by their terms assignable free from any equities between
the Company and the person to whom they may be issued or any other person who
lawfully acquires them by assignment, purchase or otherwise.
<PAGE>
9.3 The Directors may authorize the issue of any bonds, debentures or other debt
obligations of the Company at a discount, premium or otherwise and with special
or other rights or privileges as to redemption, surrender, drawings, allotment
of or conversion into or exchange for shares, attending at general meetings of
the Company and otherwise as the Directors may determine at or before the time
of issue.
9.4 The company shall keep or cause to be kept within the Province of British
Columbia in accordance with the Company Act a register of its debentures and a
register of debentureholders, which registers may be combined, and, subject to
the provisions of the Company Act, may keep or cause to be kept one or more
branch registers of its debentureholders. at such place or places as the
Directors may from time to time determine and the Directors may by resolution,
regulation or otherwise make such provisions as they think fit respecting the
keeping of such branch registers.
9.5 Every bond, debenture or other debt obligation of the Company shall be
signed manually by at least one Director or officer of the Company or by or on
behalf of a trustee, registrar, branch registrar, transfer agent or branch
transfer agent for the bond, debenture or other debt obligations appointed by
the Company or under any instrument under which the bond, debenture or other
debt obligation is issued and any additional signatures may be printed or
otherwise mechanically reproduced thereon and, in such event, a bond, debenture
or other debt obligation so signed is as valid as if signed manually
notwithstanding that any person whose signature is so printed or mechanically
reproduced shall have ceased to hold the office that he is stated on such bond,
debenture or other debt obligation to hold at the date of the issue thereof.
9.6 If the Company is or becomes a reporting company, the Company shall keep, or
cause to be kept a register of its indebtedness to every Director or Officer of
the Company or an associate of any of them in accordance with the provisions of
the Company Act.
PART 10
GENERAL MEETING
10.1 Subject to any extensions of time permitted pursuant to the Company Act,
the first annual general meeting of the Company shall be held within 15 months
from the date of incorporation and thereafter an annual general meeting shall be
held once in every calendar year at such time (not being more than 13 months
after the holding of the last preceding annual general meeting) and place as may
be determined by the Directors.
10.2 If the Company is, or becomes, a company which is not a reporting company
and all the members entitled to attend and vote at an annual general meeting
consent in writing to all the business which is required or desired to be
transacted at the meeting, such annual general meeting shall be deemed for the
purpose of this part to have been held on the date specified in the consent, and
it is not necessary for the Company to hold that annual general meeting.
10.3 All general meetings other than annual general meetings are herein referred
to as and may be called extraordinary general meetings.
<PAGE>
10.4 The Directors may, whenever they think fit, convene an extraordinary
general meeting. An extraordinary general meeting, if requisitioned in
accordance with the Company Act, shall be convened by the Directors or, if not
convened by the Directors, may be convened by the requisitionists as provided in
the Company Act.
10.5 If the Company is or becomes a reporting company, advance notice of any
general meeting at which Directors are to be elected shall be published in the
manner required by the Company Act.
10.6 A notice convening a general meeting specifying the place, the day, and the
hour of the meeting, and, in case of special business, the general nature of
that business, shall be given as provided in the Company Act and in the manner
hereinafter in these Articles mentioned, or in such other manner as may be
prescribed by the Directors to such persons as are entitled by law or under
these Articles to receive such notice from the Company. Accidental omission to
give notice of a meeting to, or the non-receipt of notice of a meeting by, any
member shall not invalidate the proceedings at that meeting.
10.7 All the members of the Company entitled to attend and vote at a general
meeting may, by unanimous consent in writing given before, during or after the
meeting, or if they are present at the meeting by a unanimous vote, waive or
reduce the period of notice of such meeting and an entry in the minute book of
such waiver or reduction shall be sufficient evidence of the due convening of
the meeting.
10.8 Except as otherwise provided by the Company Act, where any special business
at a general meeting includes considering, approving, ratifying, adopting or
authorizing any document or the execution thereof or the giving of effect
thereto, the notice convening the meeting shall, with respect to such document,
be sufficient if it states that a copy of the document or proposed document is
or will be available for inspection by members at the registered office or
records office of the Company or at some other place in British Columbia
designated in the notice during the usual business hours up to the date of such
general meeting.
10.9 Where, in accordance with the Company act, the Company has published in
prescribed manner an advance notice of a general meeting at which Directors are
to he elected, the Company may, notwithstanding such notice, postpone the
general meeting to a date other than that specified in such notice. In the event
of such a postponement, the Company shall publish, in the same manner prescribed
for the original notice, a notice of the postponement of the meeting which
notice shall include, if the date to which the meeting is postponed is known,
the same information as is required by the Company Act to be included in the
original notice. If the date to which the meeting is postponed is not known, the
notice of postponement need state only that the meeting is postponed until
further notice, provided however that once such date is known, the Company shall
publish a new advance notice which shall comply with the Company Act. The date
to which any such meeting is postponed shall be deemed to be the date of the
meeting for the purpose of complying with any time limitations in respect of
general meetings prescribed by the Company Act.
<PAGE>
PART 11
PROCEEDINGS AT GENERAL MEETINGS
11.1 All business shall be deemed special business which is transacted at:
(i) an extraordinary general meeting other than the conduct of and
voting at, such meeting; and
(ii) an annual general meeting, with the exception of the conduct
of, and voting at, such meeting, the consideration of the
financial statement and of the respective reports of the
Directors and auditor, fixing or changing the number
of Directors., approval of a motion to elect two or more
Directors by a single resolution, the election of Directors,
the appointment of the auditor, the fixing of the remuneration
of the auditor and such other business as by these Articles or
the Company Act ought to be transacted at a general meeting
without prior notice thereof being given to the members or any
business which is brought under consideration by the report of
the Directors.
11.2 No business, other than election of the chairman or the adjournment of the
meeting, shall be transacted at any general meeting unless a quorum of members
in person or by proxy, entitled to attend and vote, is present at the
commencement of the meeting, but the quorum need not be present throughout the
meeting.
11.3 Save as herein otherwise provided, a quorum shall be two members, or two
proxyholders representing members, holding not less than one-twentieth of the
issued shares entitled to be voted at the meeting. It there is only one member
the quorum is one person present and being, or representing by proxy, such
member. The Directors, the Secretary or, in his absence, an Assistant Secretary,
and the solicitor of the Company shall be entitled to attend at any general
meeting but no such person shall be counted in the quorum or be entitled to vote
at any general meeting unless he shall be a member or proxyholder entitled to
vote thereat.
11.4 If within half an hour from the time appointed for a general meeting a
quorum is not present, the meeting, it convened upon the requisition of members,
shall be dissolved. In any other case it shall stand adjourned to the same day
in the next week, at the same time and place, and, if at the adjourned meeting a
quorum is not present within half an hour from the time appointed for the
meeting, the person or persons present andbeing, or representing by proxy, a
member or members entitled to attend and vote at the meeting shall be a quorum.
11.5 The Chairman of the Board, if any, or in his absence the President of the
Company or in his absence a Vice-President of the company, if any, shall he
entitled to preside as chairman at every general meeting of the Company.
Notwithstanding the foregoing, with the consent of the meeting, which consent
may he expressed by the failure to object of any person present and entitled to
vote, the solicitor of the company may act as chairman of the meeting.
<PAGE>
11.6 If at any general meeting neither the Chairman of the Board nor President
nor a Vice-President is present within fifteen minutes after the time appointed
for holding the meeting or is willing to act as chairman, the Directors present,
shall choose someone of their number, or the solicitor of
the Company, to be chairman,If all the Directors present, and the solicitor of
the Company, decline to take the chair or fail to so choose or if no Director be
present, the persons present and entitled to vote shall choose one of their
number to be chairman.
11.7 The chairman may and shall, if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a meeting is adjourned
for 30 days or more, notice, but not the advance notice otherwise required with
respect to the election of Directors of a reporting Company, of the adjourned
meeting shall be given as in the case of an original meeting. Save as aforesaid,
it shall not be necessary to give any notice of an adjourned meeting or of the
business to be transacted at an adjourned meeting.
11.8 No motion proposed at a general meeting need be seconded and the chairman
may propose or second a motion.
11.9 Subject to the provisions of the Company Act at any general meeting a
resolution put to the vote of the meeting shall be decided on a show of hands,
unless (before or on the declaration of the result of the show of hands) a poll
is directed by the chairman or demanded by at least one member entitled to vote
who is present in person or by proxy. The chairman shall declare to the meeting
the decision on every question in accordance with the result of the show of
hands or the poll, and such decision shall be entered in the book of proceedings
of the Company. A declaration by the chairman that a resolution has been
carried, or carried unanimously, or by a particular majority, or lost or not
carried by a particular majority and an entry to that effect in the book of the
proceedings of the company shall be conclusive evidence of the fact, without
proof of the number or proportion of the votes recorded in favour of, or
against, that resolution.
11.10 In the case of an equality of votes, whether on a show of hands or on a
poll, the chairman of the meeting at which the show of hands takes place or at
which the poll is demanded shall not be entitled to. a casting vote in addition
to the vote or votes to which he may be entitled as a member or proxyholder.
11.11 No poll may be demanded on the election of a chairman. A poll demanded on
a question of adjournment shall be taken at the meeting without adjournment. A
poll demanded on any other question shall be taken as soon as, in the opinion of
the chairman, is reasonably convenient, but in no event later than seven days
after the meeting and at such time and place and in such manner as the chairman
of the meeting directs. The result of the poll shall be deemed to he the
resolution of and passed at the meeting at which the poll was demanded. Any
business other than that upon which the poll has been demanded may be proceeded
with pending the taking of the poll. A demand for a poll may be withdrawn.
<PAGE>
11.12 In the case of any dispute as to the admission or rejection of a vote,
whether by show of hands or on a poll, the chairman shall determine the same,
and his determination made in good faith is final and conclusive.
11.13 Every ballot cast upon a poll and every proxy appointing a proxyholder who
casts a ballot upon a poll shall be retained by the Secretary for such period
and be subject to such inspection as the Company Act may provide.
11.14 On a poll a person entitled to cast more than one vote need not, if he
votes, use all his votes or cast all the votes he uses in the same way.
11.15 Unless the Company Act, the Memorandum or these Articles otherwise
provide, any action to be taken by a resolution of the members may be taken by
an ordinary resolution.
11.16 A resolution submitted to all members entitled to vote and consented to in
writing, whether by document, telegram, telex or any method of transmitting
legibly recorded messages or other means, by all of the members entitled to
vote, in the case of a special resolution, or so consented to by members holding
shares carrying 75% of the votes entitled to the cast in the case of an ordinary
resolution shall be as valid and effectual as if it had been passed at a meeting
of the members duly called and held. Such resolution may be in two or more
counterparts which together shall be deemed to constitute one resolution in
writing. Such resolution shall be filed with the minutes of the proceedings of
the members and shall he effective on the date stated thereon or on the latest
date stated on any counterpart.
PART 12
VOTES OF MEMBERS
12.1 Subject to any special voting rights or restrictions attached to any class
of shares and the restrictions on joint registered holders of shares, on a show
of hands every member who is present in person or by proxy and entitled to vote
thereat shall have one vote and on a poll every member shall have one vote for
each share of which he is the registered holder and may exercise such vote
either in person or by proxy.
12.2 Any person who is not registered as a member but is entitled to vote at any
general meetingin respect of a share, may vote theshare in the same manner as if
he were a member; but, unless the Directors have previously admitted his right
to vote at that meeting in respect of the share, he shall satisfy the Directors
of his right to vote the share before the time for holding the meeting, or
adjourned meeting, as the case may be, at which he proposes to vote.
12.3 Any corporation not being a subsidiary which is a member of the Company may
by resolution of its Directors or other governing body authorize such person as
it thinks fit to act as its representative at any general meeting or class
meeting. The person so authorized shall be entitled to exercise in respect of
and at such meeting the same powers on behalf of the corporation which he
represents as that corporation could exercise if it werean individual member of
the Company personally present, including, without limitation, the right, unless
restricted by such resolution, to appoint a proxyholder to represent such
corporation, and shall be counted for the purpose of forming a quorum if present
at the meeting. Evidence of the resolution appointing any such representative
may be sent to the Company by written instrument, telegram,telex or any method
of transmitting legibly recorded messages. Notwithstanding the foregoing, a
corporation being a member may appoint a proxyholder.
<PAGE>
12.4 Where there are joint members registered in respect of any share, any one
of the joint members may vote at any meeting in person, by proxy or by
authorized representative in respect of the share as if he were solely entitled
to it.if more than one of the joint members is present at any meeting in person,
by proxy or by authorized representative, the joint member so present whose name
stands first on the register of members in respect of the share shall alone be
entitled to vote in respect of that share. For the purpose of this Article
several executors or administrators of a deceased member in whose sole name any
share stands shall be deemed joint members.
12.5 A member of unsound mind entitled to attend and vote, in respect of whom an
order has been made by any court having jurisdiction, may vote, whether on a
show of hands or on a poll, by his committee or other person in the nature of a
committee appointed by that court, and any such committee, or other person may
appoint a proxyholder.The chairman may require such proof of such appointment as
he sees fit.
12.6 A member holding more than one share in respect of which he is entitled to
vote shall be entitled to appoint one or more (but, in the case of a
non-reporting Company, not more than five) proxyholders to attend, act and vote
for him on the same occasion. If such a member should appoint more than one
proxyholder for the same occasion he shall specify the number of shares each
proxyholder shall be entitled to vote. A member may also appoint one or more
alternate proxyholders to act in the place and stead of an absent proxyholder.
12.7 Any person, having attained the age of majority, may act as proxyholder
whether or not he is entitled on his own behalf to be present and to vote at the
meeting at which he acts as proxyholder. The proxy may authorize the person so
appointed to act as proxyholder for the appointor for the period, at any meeting
or meetings, and to the extent permitted by the Company Act.
12.8 A proxy shall be in writing under the hand of the appointor or of his
attorney duly authorized in writing, or, if the appointor is a corporation,
either under the seal of the corporation or under the hand of a duly authorized
officer or attorney of that corporation.
12.9 Unless the Directors fix some other time by which proxies must he
deposited, a proxy and the power of attorney or other authority, if any, under
which it is signed, or a notarially certified copy thereof, shall be deposited
at the registered office of the Company or at such other place as is specified
for that purpose in the notice convening the meeting, not less than 48 hours
(excluding Saturdays and holidays) before the time for holding the meeting in
respect of which the person named in the instrument is appointed.
<PAGE>
12.10 In addition to any other method of depositing proxies provided for in
these Articles, the Directors may by resolution make regulations relating to the
depositing of proxies at any place or places and fixing the time for depositing
the proxies. If the Company is or becomes a reporting company, the time so fixed
shall not exceed 48 hours (excluding Saturdays and holidays) preceding the
meeting or adjourned meeting specified in the notice calling a meeting of
members and providing for particulars of such proxies to be sent to the Company
or any agent of the Company in writing or by letter, telegram, telex or any
method of transmitting legibly recorded messages so as to arrive before the
commencement of the meeting or adjourned meeting at the office of the Company or
of any agent of the Company appointed for the purpose of receiving such
particulars and providing that proxies so deposited may he acted upon as though
the proxies themselves were deposited as required by this Part and votes given
in accordance with such regulations shall be valid and shall be counted.
12.11 Unless the Company Act or any other statute or law requires any other form
of proxy, a proxy, whether for a specified meeting or otherwise, shall he either
in the form following or in any other form that the Directors or the chairman of
the meeting shall approve:
[Name of Company]
The undersigned, being a member of the above named Company, appoints of
or failing him of for the undersigned to attend, act and vote for and on
behalf of the undersigned at the general meeting of the Company to be
held on theday of and at any adjournment thereof.
Signed this ______________________________, 19__
(Signature of Member)
12.12 A vote given in accordance with the terms of a proxy is valid
notwithstanding the previous death or incapacity of the member giving the proxy
or the revocation of the proxy or of the authority under which the form of proxy
was executed or the transfer of the share in respect of which the proxy is
given, provided that no notification in writing of such death, incapacity,
revocation or transfer shall have been received at the registered office of the
Company or by the chairman of the meeting or adjourned meeting for which the
proxy was given before the vote was taken.
12.13 Every proxy may be revoked by an instrument in writing:
(i) executed by the member giving the same or by his attorney
authorized in writing or, where the member is a
corporation, by a duly authorized officer or attorney of
the corporation; and
<PAGE>
(ii) delivered either at the registered off ice of the
Company at any time up to and Including the last
business day preceding the day of the meeting, or any
adjournment thereof at which the proxy is to be used, or
to the chairman of the meeting on the day of the meeting
or any adjournment thereof before any vote in respect of
which the proxy is to be used shall have been taken; or
in any other manner provided by law.
12.14 The chairman of the meeting may determine whether or not a proxy,
deposited f or use at such meeting, which may not strictly comply with the
requirements of this Part as to form, execution, accompanying documentation,
time of filing, or otherwise, shall be valid for use at such meeting and any
such determination made in good faith shall be final, conclusive and binding
upon such meeting.
PART 13
DIRECTORS
13.1 The subscribers to the Memorandum of the Company are the first Directors,
The Directors to succeed the first Directors may be appointed in writing by a
majority of the subscribers or at a meeting of the subscribers, or if not so
appointed, they shall be elected by the members entitled to vote on the election
of Directors. Directors may be appointed at any time by a special resolution.
The number of Directors, excluding additional Directors, may be fixed or changed
from time to time by ordinary resolution, whether previous notice thereof has
been given or not, but notwithstanding anything contained in these Articles the
number of Directors shall never be less than one or, if the Company is or
becomes a reporting company, less than three.
13.2 The remuneration of the Directors may from time to time be determined by
the Directors unless by ordinary resolution the members determine that such
remuneration shall be determined by the members. Such remuneration may be in
addition to any salary or other remuneration paid to any Director in his
capacity as Officer or employee of the Company, The Directors shall be
reimbursed for reasonable traveling, hotel and other expenses they incur in and
about the business of the Company and if any Director shall perform any
professional or other services for the Company that in the opinion of the
Directors are outside the ordinary duties of a Director or shall otherwise be
specially occupied in or about the Company's business, he may be paid a
remuneration to be fixed by the Board, or, at the option of such Director, by
the Company in general meeting, and such remuneration may be either in addition
to, or in substitution for any other remuneration that he may be entitled to
receive. The Directors on behalf of the Company, unless otherwise determined by
ordinary resolution, may pay a gratuity or pension or allowance on retirement to
any Director who has held any office or position with the Company or to his
spouse or dependents and may make contributions to any fund and pay premiums for
the purchase or provision of any such gratuity, pension or allowance.
13.3 A Director shall not be required to hold a share in the capital of the
Company as qualification for his office but shall be qualified as required by
the Company Act to become or act as a Director. Any Director who is not a member
shall he deemed to have agreed to be bound by the provisions of the articles to
the same extent as if he were a member of the Company.
<PAGE>
PART 14
ELECTION AND REMOVAL OF DIRECTORS
14.1 At each annual general meeting of the Company all the Directors shall
retire and the members entitled to vote thereat shall elect a Board of Directors
consisting of the number of Directors or the time being fixed pursuant to these
Articles.
14.2 A retiring Director shall be eligible for re-election.
14.3 Where the Company fails to hold an annual general meeting in accordance
with the Company Act, the Directors then in office shall be deemed to have been
elected or appointed as Directors on the last day on which the annual general
meeting could have been held pursuant to these Articles and they may hold office
until other Directors are appointed or elected or until the day on which the
next annual general meeting is held.
14.4 If at any general meeting at which there should he an election of Directors
the places of any of the retiring Directors are not filled by such election,
such of the retiring Directors who are not re-elected as may be requested by the
newly-elected Directors shall, if willing to do so, continue in office to
complete the number of Directors for the time being fixed pursuant to these
Articles until further new Directors are elected at a general meeting convened
for the purpose. If any such election or continuance of Directors does not
result in the election or continuance of the number of Directors for the time
being fixed pursuant to these Articles such number shall he fixed at the number
of Directors actually elected or continued in office.
14.5 The remaining Directors or Director shall have the power from time to time
to appoint any person as a Director to fill any casual vacancy occurring in the
Board of Directors.
14.6 Between successive annual general meetings the Directors shall have power
to appoint one or more additional Directors but the number of additional
Directors shall not be more than one-third of the number of Directors elected or
appointed at the last annual general meeting. Any Director so appointed shall
hold office only until the next following annual general meeting of the Company,
hut shall be eligible for election at such meeting and, so long as he is an
additional Director, the number of Directors shall be increased accordingly.
14.7 Any Director may by instrument in writing delivered to the Company appoint
any person to be his alternate to act in his place at meetings of the Directors
at which he is not present unless the Directors shall have reasonably
disapproved the appointment of such person as an alternate Director and shall
have given notice to that effect to the Director appointing the alternate
Director within a reasonable time after delivery of such instrument to the
Company. Every such alternate shall be entitled to notice of meetings of the
Directors and to attend and vote as a Director at a meeting at which the person
appointing him is not personally present, and, it he is a Director, to have a
separate vote on behalf of the Director he is representing in addition to his
own vote. A Director may at any time by instrument, telegram, telex or any
method of transmitting legibly recorded messages delivered to the Company revoke
the appointment of an alternate appointed by him. The remuneration payable to
such an alternate shall be payable out of the remuneration of the Director
appointing him.
<PAGE>
14.8 A Director ceases to hold office when he:
(i) dies;
(ii) resigns his office by notice in writing delivered to the
registered office of the Company;
(iii) is convicted of an indictable offence and the other
Directors shall have resolved to remove him;
(iv) ceases to be qualified to act as a Director pursuant to
the Company Act; or
(v) is removed in accordance with Article 14.1.0.
14.9 Every resignation of a Director becomes effective at the time a written
resignation is delivered to the registered office of the Company or at the time
specified in the resignation, whichever is later.
14.10 The Company may by special resolution remove any Director before the
expiration of his period of office and may by an ordinary resolution appoint
another person in his stead.
PART 15
POWERS AND DUTIES OF DIRECTORS
15.1 The Directors shall manage or supervise the management of the affairs and
business of the Company and shall have the authority to exercise all such powers
of the Company as are not, by the Company Act or by the Memorandum or these
Articles, required to be exercised by the Company in general meeting.
15.2 The Directors may from time to time by power of attorney or other
instrument under seal appoint any person to be the attorney of the Company for
such purposes, and with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Directors under these Articles and
excepting the powers of the Directors relating to the constitution of the Board
and of any of its committees and the appointment or removal of Officers and the
power to declare dividends) and for such period, with such remuneration and
subject to such conditions as the Directors may think fit, and any such
appointment may be made in favour of any of the Directors or any of the members
of the Company or in favour of any corporation, or of any of the members,
Directors, nominees or managers of any corporation, firm or joint venture and
any such power of attorney may contain such provisions for the protection or
convenience of persons dealing with such attorney as the Directors think fit.
Any such attorney may be authorized by the Directors to sub-delegate all or any
of the powers, authorities and discretions for the time being vested in him.
<PAGE>
PART 16
DISCLOSURE OF INTEREST OF DIRECTORS
16.1 A Director who is in any way, directly or indirectly, interested in an
existing or proposed contract or transaction with the Company or who holds any
office or possesses any property whereby, directly or indirectly, a duty or
interest might be created to conflict with his duty or interest as a Director
shall declare the nature and extent of his interest in such contract or
transaction or of the conflict or potential conflict with his duty and interest
as a Director, as the case may be, in accordance with the provisions of the
Company Act.
16.2 A Director shall not vote in respect of any such contractor transaction
with the Company in which he is interested and if he shall do so his vote shall
not be counted, but he shall he counted in the quorum present at the meeting at
which such vote is taken. Subject to the provisions of the Company Act, the
prohibitions contained in this Part shall not apply to:
(i) any contract or transaction relating to a loan to the
Company, the repayment of all or part of which a Director
or a specified corporation or a specified firm in which he
has an interest has guaranteed or joined in guaranteeing;
(ii) any contract or transaction made, or to be made, with or
for the benefit of an affiliated corporation of which a
Director is a Director or Officer;
(iii) any contract by a Director to subscribe for or
underwrite shares or debentures to be issued by
the Company or a subsidiary of the Company, or any
contract, arrangement or transaction in which a
Director is, directly or indirectly, interested if
all the other Directors are also, directly or
indirectly, interested in the contract,
arrangement or transaction;
(iv) determining the remuneration of the Directors;
(v) purchasing and maintaining insurance to cover
Directors against liability incurred by them as
Directors; or
(vi) the indemnification of any Director by the Company.
These exceptions may from time to time be suspended or amended to any extent
approved by the company in general meeting and permitted by the Company Act,
either generally or in respect of any particular contract or transaction or for
any particular period.
16.3 A Director may hold any office or position with the Company, other than the
office of auditor of the Company, in conjunction with his office of Director for
such period and on such terms, as to remuneration or otherwise, asthe Directors
may determine and no Director or intended Director shall be disqualified by his
off ice from contracting with the Company either with regard to his tenure
<PAGE>
of any such other office or position or as vendor, purchaser or otherwise,
and, subject to compliance with the provisions of the Company Act,no contract or
transaction entered into by or on behalf of the Company in which a Director is
in any way interested shall be liable to be voided by reason thereof.
16.4 Subject to compliance with the provisions of the Company Act, a Director or
his firm may act in a professional capacity for the Company and he or his firm
shall be entitled to remuneration for professional services as if he were not a
Director.
16.5 A Director may be or become a director or other officer or employee of, or
otherwise interested in, any corporation or firm in which the Company may be
interested as a member or otherwise, and, subject to compliance with the
provisions of the Company Act, such Director shall not be accountable to the
Company for any remuneration or other benefits received by him as director,
officer or employee of, or from his interest in, such other corporation or firm.
PART 17
PROCEEDINGS OF DIRECTORS
17.1 The Chairman of the Board, if any, or in his absence the President, shall
preside as chairman at every meeting of the Directors, or if there is no
Chairman of the Board or neither the Chairman of Board nor the President is
present within fifteen minutes of the time appointed for holding the meeting or
is willing to act as chairman, or, if the Chairman of the Board, if any, and the
President have advised the Secretary that they will not be present at the
meeting, the Directors present shall choose one of their number to be chairman
of the meeting. With the consent of the meeting, the solicitor of the Company
may act as chairman of a meeting of the Directors.
17.2 The Directors may meet together for the dispatch of business, adjourn and
otherwise regulate their meetings, as they think fit.Questions arising at any
meeting shall be decided by a majority of votes. In case of an equality of votes
the chairman shall not have a second or casting vote. Meetings of the Board held
at regular intervals may be held at such place, at such time and upon such
notice (if any) as the Board may by resolution from time to time determine.
17.3 A Director may participate in a meeting of the Board or of any committee of
the Directors by means of conference telephones or other communications
facilities by means of which all Directors participating in the meeting can
hear each other and provided that all suchDirectors agree to such participation.
A Director participating in a meeting in accordance with this Article shall be
deemed tobe present at the meeting and to have so agreed and shall be counted in
the quorum therefor and be entitled to speak and vote thereat.
17.4 A Director may, and the Secretary or an Assistant Secretary upon request of
a Director shall, call a meeting of the Board atany time. Reasonable notice
shall be given for any meeting specifying the place, day and hour of such
meeting shall be given by mail, postage prepaid, addressed to each of the
Directors and alternate Directors at his address as it appears on the books of
the Company or by leaving it at his usual business or residential address or by
telephone, telegram, telex, or any method of transmitting legibly recorded
messages. it shall not be necessary to give notice of a meeting of Directors to
any Director or alternate Director if such meeting is to be held immediately
following a general meeting at which such Director shall have been elected or is
the meeting of Directors at which such Director is appointed. Accidental
omission to give notice of a meeting of Directors to, or by the non-receipt of
notice by, any Director shall not invalidate the proceedings at that meeting.
<PAGE>
17.5 Any Director of the Company may file with the Secretary a document executed
by him waiving notice of any past, present or future meeting or meetings of the
Directors being, or required to have been, sent to him and may at any time
withdraw such waiver with respect to meetings held thereafter. After the filing
of such waiver with respect to future meetings, and until such waiver is
withdrawn, no notice of any meeting of the Directors need be given to such
Director or, unless the Director otherwise requires in writing to the Secretary,
to his alternate Director, and all meetings of the Directors so held shall be
deemed not to be improperly called or constituted by reason of notice not having
been given to such Director or alternate Director.
17.6 The quorum necessary for the transaction of the business of the Directors
may be fixed by the Directors and if not so fixed shall be a majority of the
Directors or, if the number of Directors is fixed at one, shall be one Director.
17.7The Directors may act notwithstanding any vacancy in their body, but, if and
so long as their number is reduced below the number fixed pursuant to these
Articles as the necessary quorum of Directors, the Directors may act for the
purpose of increasing the number of Directors to that number, or of summoning a
general meeting of the Company, but for no other purpose.
17.8 Subject to the provisions of the Company Act, all acts done by any meeting
of the Directors or of a committee of Directors, or by any person acting as a
Director, shall, notwithstanding that it be afterwards discovered that there was
some defect inthe qualification, election or appointment of any such Directors
or of the members of such committee or person acting as aforesaid, or that they
or any of them were disqualified, he as valid as if every such person had been
duly elected or appointed and was qualified to be a Director.
17.9 A resolution consented to in writing, whether by document, telegram, telex
or any method of transmitting legibly recorded messages or other means, by all
of the Directors or their alternates shall he as valid and effectual as if it
had been passed at a meeting of the Directors duly called and held. Such
resolution may be in two or more counterparts which together shall be deemed to
constitute one resolution in writing. Such resolution shall be filed with the
minutes of the proceedings of the Directors and shall be effective on the date
stated thereon or on the latest date stated on any counterpart.
17.10 No resolution proposed at a meeting of Directors need be seconded, and the
chairman of any meeting is entitled to move or propose a resolution.
PART 18
EXECUTIVE AND OTHER COMMITTEES
18.1 The Directors may by resolution appoint an Executive Committee to consist
of such member or members of their body as they think fit, which Committee shall
have, and may exercise during the intervals between the meetings of the Board,
all the powers vested in the Board except the power to fill vacancies in the
Board, the power to change the membership of, or fill vacancies in, said
Committee or any other committee of the Board and such other powers, if any, as
may be specified in the resolution. The said Committee shall keep regular
minutes of its transactions and shall cause them to be recorded in books kept
for that purpose, and shall report the same to the Board of Directors at such
times as the Board of Directors may from time to time require. The Board shall
have the power at any time to revoke or override the authority given to or acts
done by the Executive Committee, except as to acts done before such revocation
or overriding, and to terminate the appointment or change the membership of such
Committee and to fill vacancies in it. The Executive Committee may make rules
for the conduct of its business and may appoint such assistants as it may deem
necessary. A majority of the members of said Committee shall constitute a quorum
thereof.
<PAGE>
18.2 The Directors may by resolution appoint one or more committees consisting
of such member or members of their body as they think fit and may delegate to
any such committee between meetings of the Board such powers of the Board
(except the power to fill vacancies in the Board and the power to change the
membership of or fill vacancies in any committee of the Board and the power to
appoint or remove officers appointed by the Board) subject to such conditions as
may be prescribed in such resolution, and all committees so appointed shall keep
regular minutes of their transactions and shall cause them to be recorded in
books kept for that purpose, and shall report the same to the Board of Directors
at such times as the Board of Directors may from time to time require. The
Directors shall also have power at any time to revoke or override any authority
given to or acts to be done by any such committees except as to acts done before
such revocation or overriding and to terminate the appointment or change the
membership of a committee and to fill vacancies in it. Committees may make rules
for the conduct of their business and may appoint such assistants as they may
deem necessary. A majority of the members of a committee shall constitute a
quorum thereof.
18.3 The Executive' committee and any other committee may meet and adjourn as it
thinks proper. Questions arising at any meeting shall be determined by a
majority of votes of the members of the committee present, and in case of an
equality of votes the chairman shall not have a second or casting vote. A
resolution approved in writing by all the members of the Executive Committee or
any other committee shall be as valid and effective as if it had been passed at
a meeting of such Committee duly called and constituted. Such resolution may be
in two or more counterparts which together shall be deemed to constitute one
resolution in writing. Such resolution shall be filed with the minutes of the
proceedings of the committee and shall be effective on the date stated thereon
or on the latest date stated in any counterpart.
PART 19
OFFICERS
19.1 The Directors shall, from time to time, appoint a President and a Secretary
and such other Officers, if any, as the Directors shall determine and the
Directors may, at any time, terminate any such appointment. No officer shall be
appointed unless he is qualified in accordance with the provisions of the
Company Act.
<PAGE>
19.2 One person may hold more than one of such offices except that the offices
of President and Secretary must be held by different persons unless the Company
has only one member. Any person appointed as the Chairman of the Board, the
President or the Managing Director shall be a Director. The other officers need
not be Directors. The remuneration of the officers of the Company as such and
the terms and conditions of their tenure of office or employment shall from time
to time be determined by the Directors; such remuneration may be by way of
salary, fees, wages, commission or participation in profits or any other means
or all of these modes and an officer may in addition to such remuneration be
entitled to receive after he ceases to hold such office or leaves the employment
of the Company a pension or gratuity. The Directors may decide what functions
and duties each officer shall perform and may entrust to and confer upon him any
of the powers exercisable by them upon such terms and conditions and with such
restrictions as they think fit and may from time to time revoke, withdraw, alter
or vary all or any of such functions, duties and powers. The Secretary shall,
inter alia, perform the functions of the Secretary specified in the Company Act.
19.3 Every officer of the Company who holds any office or possesses any property
whereby, whether directly or indirectly, duties or interests might be created in
conflict with his duties or interests as an Officer of the Company shall, in
writing, disclose to the President the fact and the nature, character and extent
of the conflict.
PART 20
INDEMNITY AND PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES
20.1 Subject to the provisions of the Company Act, the Directors shall cause the
Company to indemnify a Director or former Director of the Company and the
Directors may cause the Company to indemnify a Director or former Director of a
corporation of which the Company is or was a member and the heirs and personal
representatives of any such person against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, actually and
reasonably incurred by him or them including an amount paid to settle an action
or satisfy a judgment in a civil, criminal or administrative action or
proceeding to which he is or they are made a party by reason of his being or
having been a Director of the Company or a Director of such corporation,
including any action brought 'by the Company or any such corporation. Each
Director of the Company on being elected or appointed shall be deemed to have
contracted with the Company on the terms of the foregoing indemnity.
20.2 Subject to the provisions of the Company Act, the Directors may cause the
Company to indemnify any officer, employee or agent of the Company or of a
corporation of which the company is or was a member (notwithstanding that he is
also a Director) and his heirs and personal representatives against all costs,
charges and expenses whatsoever incurred by him or them and resulting from his
acting as an Officer, employee or agent of the Company or such corporation. In
addition the Company shall indemnify the Secretary or an Assistant Secretary of
the Company (if he shall not be a full time employee of the Company and
notwithstanding that he is also a Director) and his respective heirs and legal
representatives against all costs, charges and expenses whatsoever incurred by
him or them and arising out of the functions assigned to the Secretary by the
Company Act or these Articles and each such Secretary and Assistant Secretary
shall on being appointed be deemed to have contracted with the Company on the
terms of the foregoing indemnity.
<PAGE>
20.3 The failure of a Director or Officer of the Company to comply with the
provisions of the Company Act or of the Memorandum or these Articles shall not
invalidate any indemnity to which he is entitled under this Part.
20.4 The Directors may cause the Company to purchase and maintain insurance for
the benefit of any person who is or was serving as a Director, officer, employee
or agent of the Company or as a Director, officer, employee or agent of any
corporation of which the Company is or was a member and his heirs or personal
representatives against any liability incurred by him as such Director, Officer,
employee or agent.
PART 21
DIVIDENDS AND RESERVE
21.1 The Directors may from time to time declare and authorize payment of such
dividends, if any, as they may deem advisable and need not give notice of such
declaration to any member. No dividend shall be paid otherwise than out of funds
and/or assets properly available for the payment of dividends and a declaration
by the Directors as to the amount of such funds or assets available for
dividends shall be conclusive.The Company may pay any such dividend wholly or in
part by the distribution of specific assets, and in particular by paid up
shares, bonds, debentures or other securities of the Company or any other
corporation, or in any one or more such ways as may be authorized by the Company
or the Directors, and where any difficulty arises with regard to such a
distribution the Directors may settle the same as they think expedient, and in
particular may fix the value for distribution of such specific assets or any
part thereof, and may determine that cash payments in substitution for all or
any part of the specific assets to which any members are entitled shall be made
to any members on the basis of the value so fixed to adjust the rights of all
parties, and may vest any such specific assets in trustees for the persons
entitled to the dividend as may seem expedient to the Directors.
21.2 Any dividend declared on shares of any class by the Directors may be made
payable on such date as is fixed by the Directors.
21.3 Subject to the rights of members (it any) holding shares with specific
rights as to dividends, all dividends on shares of any class shall be declared
and paid according to the number of such shares held.
21.4 The Directors may, before declaring any dividend, set aside out of the
funds properly available for the payment of dividends such sums as they think
proper as a reserve or reserves, which shall, at the discretion of the
Directors, be applicable for meeting contingencies, or for equalizing dividends,
or for any other purpose to which such funds of the Company may be properly
applied, and pending such application may, at the like discretion, either be
employed in the business of the Company or be invested in such investments as
the Directors may from time to time think fit. The Directors may also, without
placing the same in reserve, carry forward such funds which they think prudent
not to divide.
<PAGE>
21.5 If several persons are registered as joint holders of any share, any one of
them may give an effective receipt for any dividend, bonus or other moneys
payable in respect of the share.
21.6 No dividend shall bear interest against the Company where the dividend to
which a member is entitled includes a fraction of a cent, such fraction shall be
disregarded in making payment thereof and such payment shall be deemed to be
payment in full.
21.7 Any dividend, bonus or other moneys payable in cash in respect of shares
may be paid by cheque or warrant sent through the post directed to the
registered address of the holder, or in the case of joint holders, to the
registered address of that one of the joint holders who is first named on the
register, or to such person and to such address as the holder or joint holders
may direct in writing. Every such cheque or warrant shall be made payable to the
order of the person to whom it is sent. The mailing of such cheque or warrant
shall, to the extent of the sum represented thereby (plus the amount of any tax
required by law to be deducted) discharge all liability for the dividend, unless
such cheque or warrant shall not be paid on presentation or the amount of tax so
deducted shall not be paid to the appropriate taxing authority.
21.8 Notwithstanding anything contained in these Articles, the Directors may
from time to time capitalize any undistributed surplus on hand of the Company
and may from time to time issue as fully paid and non-assessable any unissued
shares, or any bonds, debentures or debt obligations of the Company as a
dividend representing such undistributed surplus on hand or any part thereof.
21.9 Notwithstanding any other provisions of these articles should any dividend
result in any members being entitled to a fractional part of a share of the
Company, the Directors shall have the right to pay such members in place of that
fractional share, the cash equivalent thereof calculated on the par value
thereof or, in the case of shares without par value, calculated on the price or
consideration for which such shares were or were deemed to be issued, and shall
have the further right and complete discretion to carry out such distribution
and to adjust the rights of the members with respect thereon on as practical and
equitable a basis as possible including the right to arrange through a fiscal
agent or otherwise for the sale, consolidation or other disposition of those
fractional shares on behalf of those members of the Company.
PART 22
DOCUMENTS, RECORDS AND REPORTS
22.1 The Company shall keep at its records office or at such other place as the
Company Act may permit, the documents, copies, registers, minutes, and records
which the Company is required by the Company Act to, keep at its records office
or such other place, as the case may be.
22.2 The Company shall cause to be kept proper books of account and accounting
records in respect of all financial and other transactions of the Company to
record properly the financial affairs and condition of the Company and to comply
with the Company Act.
<PAGE>
22.3 Unless the Directors determine otherwise, or unless otherwise determined by
an ordinary resolution, no member of the Company shall be entitled to inspect
the accounting records of the Company.
22.4 The Directors shall from time to time at the expense of the Company cause
to be prepared and laid before the Company in general meeting such financial
statements and reports as are required by the Company Act.
22.5 Every member shall he entitled, on demand, to be furnished with a copy of
the latest financial statement of the Company including the auditor's report on
it, if any, and, if so required by the Company Act, a copy of each annual
financial statement and interim financial statement shall be mailed to each
member.
PART 23
NOTICES
23.1 A notice, statement, report or other document may he given or delivered by
the Company to any member either by delivery to him personally or by sending it
by mail to his address as recorded in the register of members. Where a notice,
statement, report or other document is sent by mail, service or delivery of the
notice, statement or report shall be deemed to be effected by properly
addressing, prepaying and mailing the notice, statement or report and to have
been given on the day, Saturdays and holidays excepted, following the date of
mailing. A certificate signed by the Secretary or other officer of the Company
or of any other corporation acting in that behalf for the Company that the
letter, envelope or wrapper containing the notice, statement, report or other
document was so addressed, prepaid and mailed shall be conclusive evidence
thereof.
23.2 A notice, statement, report or other document may be given or delivered by
the Company to the joint holders of a share by giving the notice to the joint
holder first named in the register of members in respect of the share.
23.3 A notice, statement, report or other document may be given or delivered by
the Company to the persons entitled to a share in consequence of the death,
bankruptcy or incapacity of a member by sending it by mail, prepaid, addressed
to them by name or by the title of representatives of the deceased or
incapacitated person or trustee of the bankrupt, or by any like description, at
the address (if any) supplied to the Company for the purpose by the persons
claiming to be so entitled, or (until such address has been so supplied) by
giving the notice in a manner in which the same might have been given if the
death, bankruptcy or incapacity had not occurred.
23.4 Notice of every general meeting or meeting of members holding shares of a
particular class or series shall be given in a manner hereinbefore authorized to
every member holding at the time of the issue of the notice or the date fixed
for determining the members entitled to such notice, whichever is the earlier,
shares which confer the right to notice of and to attend and vote at any such
meeting. No other person except the auditor of the Company and the Directors of
the company shall be entitled to receive notices of any such meeting.
<PAGE>
PART 24
RECORD DATES
24.1 The Directors may fix in advance a date, which shall not be more than the
maximum number of days permitted by the Company Act, preceding the date of any
meeting of members, including class and series meetings, or of the payment of
any dividend or of the proposedtaking of any other proper action requiring the
determination of members, as the record date for the determination of the
members entitled to notice of, or to attend and vote at, any such meeting and
any adjournment thereof, or entitled to receive payment of any such dividend or
for any other proper purpose and, in such case, notwithstanding anything
elsewhere contained in these Articles, only members of record on the date so
fixed shall be deemed to be members for the purposes aforesaid.
24.2 Where no record date is so fixed for the determination of members as
provided in the preceding Article the date on which the notice is mailed or on
which the resolution declaring the dividend is adopted, as the case may be,
shall be the record date for such determination.
PART 25
SEAL
25.1 The Directors may provide a seal for the Company and, if they do so, shall
provide for the safe custody of the seal which shall not be affixed to any
instrument except in the presence of the following persons, namely:
(i) any two Directors; or
(ii) anyone of the Chairman of the Board, the President, the
managing Director, a Director or a Vice-President together
with any one of the Secretary, the Treasurer, the
Secretary-Treasurer, an Assistant Secretary, an Assistant
Treasurer and an Assistant Secretary-Treasurer; or
(iii) if the Company shall have only one member, the
President or the Secretary; or
(iv) such person or persons as the Directors may from time to
time by resolution appoint;
and the said Directors, Officers, person or persons in whose presence the seal
is so affixed to an instrument shall sign such instrument. For the purpose of
certifying under seal true copies of any document or resolution the seal may be
affixed in the presence of any one of the foregoing persons.
25.2 To enable the seal of the Company to be affixed to any bonds, debentures,
share certificates, or other securities of the Company, whether in definitive or
interim form, on which facsimiles of any of the signatures of the Directors or
officers of the Company are, in accordance with the Company Act and/or these
Articles, printed or otherwise mechanically reproduced there may be delivered to
the firm or company employed to engrave, lithograph or print such definitive or
<PAGE>
interim bonds, debentures, share certificates or other securities one or more
unmounted dies reproducing the Company's seal and the Chairman of the Board, the
President, the Managing Director or a Vice-President and the Secretary,
Treasurer, Secretary-Treasurer, an Assistant Secretary, an Assistant Treasurer
or an Assistant Secretary-Treasurer may by a document authorize such firm or
company to cause the Company's seal to be affixed to such definitive or interim
bonds, debentures, share certificates or other securities by the use of such
dies. Bonds, debentures, share certificates or other securities to which the
Company's seal has been so affixed shall for all purposes be deemed to be under
and to bear the Company's seal lawfully affixed thereto.
25.3 The Company may have an official seal for use in any other province, state,
territory or country, and all of the powers conferred by the Company Act with
respect thereto may be exercised by the Directors or by a duly authorized agent
of the Company.
PART 26
MECHANICAL REPRODUCTION OF SIGNATURES
26.1 The signature of any Officer, Director, registrar, branch registrar,
transfer agent or branch agent of the Company, unless otherwise required by the
Company Act or by these Articles, may, if authorized by the Directors, he
printed, lithographed, engraved or otherwise mechanically reproduced upon all
instruments executed or issued by the Company or any Officer thereof; and any
instrument on which the signature of any such person is so reproduced shall be
deemed to have been manually signed by such person whose signature is so
reproduced and shall be as valid to all intents and purposes as if such
instrument had been signed manually, and notwithstanding that the person whose
signature is so reproduced may have ceased to hold the office that he is stated
on such instrument to hold at the date of the delivery or issue of such
instrument.
26.2 The term "instrument" as used in Article 26.1, shall include deeds,
mortgages, hypothecs, charges, conveyances, transfers and assignments of
property, real or personal, agreements, releases, receipts and discharges for
the payment of money or other obligation, shares and share warrants of the
Company, bonds, debentures and other debt obligations of the Company, and all
paper writings.
DATED: January 20, 1997
Subscriber
<PAGE>
FORM 3 (Section 8)
COMPANY ACT
NOTICE OF OFFICES
The offices of the undermentioned company are located as follow:
Name of Company: 535483 B.C. LTD.
Registered Office 1100 - 1055 West Hastings Street
Address: Vancouver, British Columbia V6E 2E9
Records office 1100 - 1055 West Hastings Street
Address: Vancouver, British Columbia V6E 2E9
Dated January 20,1997.
(Signature)
(Relationship to company) Subscriber
<PAGE>
NUMBER: 585483
CERTIFICATE
OF
CHANGE OF NAME
COMPANY ACT
CANADA
PROVINCE OF BRITISH COLUMBIA
I Hereby Certify that
535483 B.C. LTD.
has this day changed its name to
INFORNET INVESTMENT CORP.
Issued under my hand at Victoria, British
Columbia
on February 21, 1997
JOHN S. POWELL
Registrar of Companies
CERTIFICATE OF INCORPORATION
I hereby certify that
MICRO EXPRESS LIMITED
is this day incorporated in Hong Kong under the Companies Ordinance, and that
this company is limited.
Given under my hand this Twenty-seventh day of December One Thousand Nine
Hundred and Eighty- five.
- -----------------------------------
p. Registrar General
(Registrar of Companies) Hong Kong
<PAGE>
COMPANIES ORDINANCE
(CHAPTER 32)
CERTIFICATE OF INCORPORATION
ON CHANGE OF NAME
I hereby certify that
MICRO EXPRESS LIMITED
having by special resolution changed its name, is now incorporated under the
name of
INFORNET INVESTMENT LIMITED
Issued by the undersigned on 18 July 1997.
MISS H. CHANG
for registrar of Companies Hong Kong
<PAGE>
MEMORANDUM
AND
ARTICLES OF ASSOCIATION
OF
Infornet Investment Limited
(Name changed on the 18th day of July, 1997)
Incorporated the 27th day of December, 1985.
HONG KONG
<PAGE>
Reg. No.163530
THE COMPANIES ORDINANCE (CHAPTER 32)
SPECIAL RESOLUTION
OF
MICRO EXPRESS LIMITED
Passed on the 9th day or July, 1997.
By a written resolution of all the members of the Company pursant to Section
116B of the Companies Ordinance dated the 9th day of July, 1997, the following
resolution was passed as a Special Resolution
"THAT the name of the Company be changed to Infornet Investment Limited"
- ------------------------- ----------------------------
Raoul Noel TSAKOK Francoise TSAKOK
being all the members for the time being of the Company
<PAGE>
No-163530
(COPY)
CERTIFICATE OF INCORPORATION
I HEREBY CERTIFY that
MICRO. EXPRESS LIMITED
is this day incorporated in Hong Kong under the Companies Ordinance, and that
this company is limited.
Given under my hand this Twenty-Seventh day of December One
Thousand Nine Hundred and Eighty- five
(Sd.) J. ALMEIDA
P. Registrar General
(Registrar of Companies)
Hong Kong.
<PAGE>
THE COMPANIES ORDINANCE (Chapter 32)
Private Company Limited by Shares
MEMORANDUM OF ASSOCIATION
OF
Infornet Investment Limited
(Name changed on the 18th day of July, 1997)
1. The name of the Company is "Infornet Investment Limited"
2. The registered office of the Company will be situate in Hong Kong:
3. The objects for which the Company is established are:
(1) To carry on all, or any one or more, of the following businesses in
all or any of their various aspects:
(a) the business of a holding and/or investment company in any
part or the world;
(b) general trading, importing, exporting, buying, selling and
dealing in goods, materials, substances, articles and merchandise of all kinds
in, from and to any part of the world, whether as principal or as agent;
(c) investing, developing, dealing in and/or managing real estate or
interests therein in any part of the world;
(d) manufacturing, processing and/or extracting or taking
goods, materials, substances, articles and merchandise of all kinds in any part
of the world;
(e) owning, operating, chartering and/or managing ships, vehicles an
and/or aircraft in any part of the world;
(f) providing services of any kind, Financial or otherwise, in,
from and to any Part or the world;
(g) acting as agents, managers, brokers, advisers and.
consultants in any part of the world.
(2) To carry on any other business of any nature whatsoever which may stern to
the Directors to be capable of being conveniently carried on in connection or
conjunction with any business of the Company hereinbefore or hereinafter
authorized or to be expedient with a view to rendering profitable or more
profitable any of the Company's assets or utilizing its know how or expertise.
(3) To purchase or otherwise acquire and hold for any estate or interest any
real or personal property or assets or any concessions, licences, grants,
patents, trade marks, copy or other exclusive or non-exclusive rights of any
kind and to develop and turn to account and deal with the same in such manner as
may be thought fit and to make experiments and tests and to carry on all kinds
or research work.
<PAGE>
(4) To build, construct, pull down, equip, execute, carry out, improve, work,
develop, administer, maintain, manage or control buildings, structures or
facilities of all kinds, whether for the purpose of the Company or for sale,
letting or hire to or in return for any consideration from any company, firm or
person, and to contribute to or assist in or carry out any pail of any such
operation.
(5) To undertake and execute any (rusts the undertaking -whereof may seem
desirable and to undertake the office of or act as executor, administrator,
director, treasurer, accountant, secretary, registrar, custodian, depository or
nominee or in such other capacity as the Directors may from time to time think
fit.
(6) To subscribe, underwrite, purchase, or otherwise acquire, and to hold,
dispose of, and deal with, any shares or other securities or commodities or
other investments of any nature whatsoever (whether or not income-producing),
and any options or rights in respect thereof, and to buy and sell foreign
exchange.
(7) To amalgamate or enter into partnership or any joint venture or
profit-sharing arrangement of other association with any company, firm of
person.
(8) To purchase or otherwise acquire and undertake all or any part of the
business, property and liabilities of any company, firm or person carrying on
any business which the Company is authorized to carry an or possessed of any
property suitable for the purposes of the Company.
(9) To promote, or join in the promotion of, any company, whether or not having
objects similar to those of the Company.
(10) To borrow and raise money and to secure or discharge any debt or obligation
of or binding on the Company in such manner as may be thought fit and in
particular by mortgages and charges upon all or any part of the undertaking,
property and assets (present and future) and the uncalled capital of the
Company, or by the creation and issue of debentures, debenture stock or other
securities of any description.
(11) To advance, lend or give credit to or deposit money with any company, firm
or person on such terms as may be thought fit and with or without security.
(12) To guarantee or eve indemnities or provide security, whether by personal
covenant or by mortgage or charge upon all or any part of the undertaking,
property and assets (present and future) and the uncalled capital of the
Company, or by all or any such methods, and whether with or without
consideration, for the performance of any contracts or obligations, and the
payment of capital or principal (together with any premium) and dividends or
interest on any shares, debentures or other securities, of, and otherwise to
support and assist, any person, firm or company including (without limiting the
generality of the foregoing) any company which is for the time being a
subsidiary or holding company of the Company or another subsidiary of any such
holding company or is otherwise allied to or associated with the Company or any
such subsidiary or holding company in business or otherwise, but so that nothing
in this paragraph shall authorize the carrying on by the Company of an insurance
business and so that (without prejudice to the construction of any other
paragraph hereof) this paragraph shall be construed both as a separate and
independent object of the Company and as a power ancillary to the other objects
of the Company.
(13) To issue any securities which the Company has power to issue for any other
purpose by way of security or indemnity or in satisfaction of any liability
undertaken or agreed to be undertaken by the Company, but so that nothing in
this paragraph shall authorize the carrying on by the Company of an insurance
business.
<PAGE>
(14) To subscribe or guarantee money for any charitable, benevolent, public,
general or useful object or for any purpose which may be considered likely
directly or indirectly to further the interests of the Company or of its
members.
(15) To procure the registration or incorporation of the Company in Dr under the
laws of any territory outside Hong Kong.
(16) To draw. make accept, endorse, discount, negotiate, execute, and issue, and
to buy, sell and deal with bills of exchange, promissory notes, and other
negotiable or transferable instruments or securities.
(17) To carry on in Hong Kong or elsewhere the business of hotel, restaurant,
cafe, tavern, beerhouse, refreshment room, billiard table and lodging
house-keepers, shopkeepers, shop-owners, house-owners, publicans, licensed
victuallers, importers, and manufacturers of and dealers in aerated, mineral and
artificial waters, and other drinks, purveyors, caterers for public amusements,
generally farmers, dairymen, ice merchants, importers and brokers of food, live
and dead stock, and colonial and foreign produce or all descriptions, bakers and
manufacturers of and dealers in bread, flour, biscuits and farinaceous compounds
and materials of every description, confectioners, butchers, milk sellers,
butter sellers, grocers, poulterers and greengrocers, hair-dressers, perfumers,
chemists, proprietors of clubs, baths, dressing rooms, laundries, reading,
writing, refreshment and newspaper rooms, libraries, grounds and places of
amusement, recreation, sport, entertainment and instructions of all kinds of
tobacco and cigar merchants, agents for railway and shipping companies and
carriers, theatrical and opera box office proprietors, entrepreneurs and general
agents and any other business which the Company may now or at any future lime
consider can be conveniently carried on in connection with its business.
(18) To sell, lease, grant. licences, easements and other rights over, and in
any other manner deal with or dispose of, the undertaking, property, assets,
rights and effects or the Company or any part thereof for such consideration as
may be thought fit, and in particular for shares or other securities, whether
fully or partly paid up.
(19) To establish and maintain Of contribute to any pension or superannuation
funds for the benefit of, and to give or procure the giving a donations,
gratuities, pensions, allowances or emoluments to, any individuals who are or
were at any time in the employment or service of the Company or of any company
which is or was at any relevant time a subsidiary or holding company of the
Company or another subsidiary of any such holding company or is otherwise allied
to or associated with the Company or any such subsidiary or holding company, or
who are or were at any time directors or officers or the Company or of any such
other company, and the wives, widows families and dependents or any such
individuals; to establish and subsidize or subscribe to any institutions,
associations, clubs or funds which may be considered likely to benefit. any such
persons or to further the interests of the Company or of any such other company;
and to make payments for or towards the insurance of any such persons.
(20) To establish and maintain, and to contribute to, any scheme for encouraging
or facilitating the holding of shares or debentures in the Company by or for the
benefit of its employees or former employees, or those of its subsidiary or
holding company or of any other subsidiary of its holding company, or by or for
the benefit of such other persons as may for the time being be permitted by law.
or any scheme for sharing profits with its employees or those of its subsidiary
and/or associated companies, and (so far as for the time bring permitted by law)
to tend money to or to trustees for the Company's employees (other than
directors) with a view to enabling them to acquire shares in the Company or its
holding company.
(21) To distribute among members of the Company in specie or otherwise, by way
of dividend or bonus or by way of reduction of capital, all or any of the
property or assets of the Company, or any proceeds of sale or
<PAGE>
other disposal of any property or assets of the Company, with and subject to any
incident authorized and consent required by law.
(22) To apply for, promote and obtain any statute, order, regulation or other
authorization or enactment which may seem calculated directly or indirectly to
benefit the Company, and to oppose any bills. proceedings or applications which
may seem calculated or likely directly or indirectly to prejudice the Company's
interests.
(23) To do all or any of the things and matters aforesaid in any part of the
world, and either as principals, agents, contractors, trustees or otherwise, and
by or through trustees agents, subsidiary companies or otherwise, and either
alone or in conjunction with others.
(24) To do all such other things as may be considered to be incidental or
conducive to the attainment of any of the objects and the exercise of any of the
powers of the Company.
And it is hereby declared that:
(a) the objects of the Company as specified in each of the foregoing paragraphs
of this Clause (except only if and so far as otherwise expressly provided in any
paragraph) shall be separate and distinct objects of the Company and shall not
be in any way limited by reference to any other paragraph or the order in which
the same occur or the name of the Company, and
(b) the Company shall in addition have the powers set forth in the Seventh
Schedule to the Companies Ordinance (Chapter 32 or the Laws of Hong Kong) except
to the extent, if at all, that they are inconsistent with any of the foregoing
paragraphs of This Clause.
4. The liability of the members is limited
5. The share capital of the Company is HK$IO,000.00 divided into 10,000 shares
of HK$ 1.00 each.
THE COMPANIES ORDINANCE (Chapter 32)
Private Company Limited by Shares
ARTICLES OF ASSOCIATION
OF
Infornet Investment Limited
(Name changed on the 18th day of July, 1997)
PRELIMINARY
1. The regulations in Table A in the First Schedule to the Companies
Ordinance- (Chapter 32) shall not apply to the Company,
2. In these Articles (if not inconsistent with the subject or Context) the words
and expressions set out in the first column below shall bear the meanings set
opposite to them respectively:
<PAGE>
"the Statutes" the Companies Ordinance (Chapter 32) as amended from
time to time and every other ordinance for the time being in
force concerning companies and affecting the Company.
"these Articles" these Articles of Association as from time to time
altered or added to in accordance with the Statutes
and these Articles,
We the several persons, whose names, addresses and descriptions are hereto
subscribed, are desirous of being formed into a Company in pursuance of this
Memorandum of Association, and we respectively agree to take the number of
shares in the capital of the Company set opposite- to our respective names:
Names, Addresses and Descriptions Number of Shares
of Subscribers. taken by each
Subscriber.
For and on behalf of
Rivot limited One
By KWOK ON SANG, Director
9th Floor, Bank of East Asia Building,
10 Des Voeux Road Central,
Hong Kong.
Corporation
For and on behalf of
Gay Hussar Company Limited One
By KWOK ON SANG, Director
9th Floor, Bank of East Asia Building,
10 Des Voeux Road Central,
Hong Kong
Corporation.
Total Number of Shares Taken Two
Dated the 6th day of December, 1985
WITNESS to the above signatures:
(SD.) JENNIFER CHEUNG
Solicitor,
9/F., Bank of East Asia Bldg.,
10, Des Voeux Road Central,
Hong Kong.
"Office" the registered office of the Company for the time
being.
"Seal" the Common Seal of the Company.
<PAGE>
"Securities Seal" an official teat kept by the Company pursuant to Section 73A
of the Companies Ordinance.
"month" calendar month.
"Year" calendar year.
'In writing" written or produced by any substitute for writing or
partly one and partly another
"paid" paid or credited as paid.
The expressions "debenture" and "debenture holder" shall respectively include
"debenture stock" and "debenture stockholders'.
The expression "Secretary" shall include arty person appointed by the Directors
to perform any of the duties of the Secretary and where two, or more persons are
appointed to act as Joint Secretaries shall include any One Or those persons.
Ali such or the provisions of these Articles as are applicable to paid-up shares
shall apply to stock. and the words "share" and "shareholder" shall be construed
accordingly.
Words denoting the singular shall include the plural and vice versa. Words
denoting the masculine shall include the feminine. Words denoting persons shall
include corporations.
References to any statute or statutory provision shall be construed as relating
to any statutory modification or re-enactment thereof for the time bring in
force.
Subject as aforesaid any words or expressions defined in the Statutes shall (if
not inconsistent with the subject or context) bear the same meanings in these
Articles.
A Special Resolution shall be effective for any purpose for which an Ordinary
Resolution is expressed to be required under any provision of these Articles.
PRIVATE COMPANY
3. The Company is a private company and accordingly:
(a) the right to transfer shares in the Company shall be restricted in the
manner Provided by these Articles; and
(b) the number of members of the Company (not including persons who are in the
employment of the Company and persons who, having been formerly in the
employment of the Company, were while in that employment, and have continued
after the determination of that employment to be, members of the Company) is
limited to fifty; provided that, where two or more persons hold one or more
shares in the Company jointly, they shall, for the purposes or this paragraph,
be treated as a single member; and
(c) no imitation shall be made to the public to subscribe for my shares
or debentures of the Company; and
(d) the Company shall not have power to issue share warrants to bearer.
<PAGE>
VARIATION OF RIGHT'S
4. Whenever the share capital of the Company is divided into different classes
of shares, the special rights attached to any class may, subject to the
provisions of the Statutes, be varied or abrogated either with the consent in
writing of the holders of three-quarters in nominal value of the issued shares
of the class or with the sanction of a Special Resolution passed at a separate
meeting of the holders of the, shares of the class (but not otherwise) and may
be so varied or abrogated either whilst the Company is a going concern or during
or in contemplation of a winding-up. To every such separate meeting all the
provisions of these Articles relating to general meetings of the Company and to
the proceedings thereat shall mutatis mutandis apply, except that the necessary
quorum shall be two persons at least holding or representing by proxy at least
one-third in nominal value of the issued shares of the class (but that at any
adjourned meeting any holder of shares of the class present in person or by
proxy shall be a quorum) and that any holder of shares of the class present in
person or by proxy may demand a poll and that every such holder shall on a poll
have one vote for every share of the class held by him. The foregoing provisions
of this Article &hall apply to the variation or abrogation of the special rights
attached to some only of the shares of any class as if each group of shares of
the class differently treated formed a separate class the special rights whereof
are to be varied.
5. The special rights attached to any class of shares having preferential rights
shall not, unless otherwise expressly provided by the terms of issue thereof, be
deemed to be varied by the creation or issue of further shares ranking as
regards participation in the profits or assets of the Company in some or all
respects pari passu therewith but in no respect in priority thereto.
ALTERATION OF SHARE CAPITAL
6. The Company may from time to time by Ordinary Resolution increase its capital
by such sum to be divided into shares of such amounts as the resolution shall
prescribe. All new shares shall be subject to the provisions of the Statutes and
of these Articles with reference to allotment, payment of calls, lien, transfer,
transmission, forfeiture and otherwise.
7. The Company may by Ordinary Resolution;
(a) consolidate and divide all or any of its share capital into shares of
larger amount than its existing shares;
(b) cancel any shares which, at the date of the passing of the resolution, have
not been taken, or agreed to be taken, by any person and diminish the amount of
its capital by the amount of the shares so cancelled;
(c) sub-divide its shares, or any of them, into shares of smaller amount than is
fixed by the Memorandum of Association (subject, nevertheless, to the provisions
of the Statutes), and so that
(i) in the sub-division the proportion between the amount paid and the amount,
if any, unpaid on each reduced share shall be the same as it was in the case of
the share from which the reduced share is derived; and
(ii) the resolution whereby any share is sub-divided may determine that, is
between the holders of the shares resulting from such sub-division, one or mom
of the shares may, as compared with the others, have any such preferred,
deferred or other special rights, or be subject to any such restrictions, as the
Company has power to attach to unissued or new shares.
<PAGE>
8. The Company may by Special Resolution reduce its share capital or any capital
redemption reserve, share premium account or other undistributable reserve in
any manner and with and subject to any incident authorized and consent required
by law.
SHARES
9. Without prejudice to any special rights previously conferred on the holders
of any shares or class of shares for the time being issued, any share in the
Company may be issued with such preferred, deferred or other special rights, or
subject to such restrictions whether as regards dividend, return or capital,
voting or otherwise, as the Company may from time to time by Ordinary Resolution
determine (or, in the absence of any such determination, as the Directors may
determine) and subject to the provisions of the Statutes the Company may issue
any shares which are, or at the option of the Company or the. holder are liable,
to be redeemed.
10. Subject to the provisions of the Statutes relating to authority, pre-emption
rights and otherwise and of any resolution of the Company in general meeting
passed Pursuant thereto, all unissued shares shall be at the disposal of the
Directors and they may allot (with or without conferring a right of
renunciation), grant options over or otherwise dispose of them to such persons,
at such times and on such terms as they think proper.
11. The Company may exercise the powers of paying commissions conferred by the
Statutes to the full extent thereby permitted. Such commissions may be satisfied
by the payment of cash or the allotment of fully or partly paid shares in the
capital of the Company or partly In one way and partly in the other. The Company
may also on any Issue of shares pay such brokerage as may be lawful .
12. The Directors may accord to the allottee of any share a right, upon and
subject to such terms and conditions as the Directors may think fit to impose,
to effect a renunciation thereof in favour of some other person at any time
after the allotment of the share but before any person has been entered in the
Register of Members as the holder thereof and may at any such time recognize
such a renunciation.
13. Except as requited by law, no person shall be recognized by the Company as
holding any share upon any trust, and the Company shall not be bound by or
compelled in any way to recognize any equitable, contingent, future or partial
Interest in any share, or any interest in any fractional part of a share, or
(except only as by these Articles or by law otherwise provided) any other not in
respect of any share, except an absolute right to the entirety thereof in the
registered holder.
SHARE CERTIFICATES
14. Every share certificate shall be issued under the Sea] (or under a
Securities Seal or, in the case of shares on a branch register, an Official seal
for use in the relevant territory) and shall specify the number and class of
shares to which it relates and the amount paid up thereon. No certificate shall
be issued representing shares of More than one class.
15. In the case of a share held jointly by several persons the Company shall not
be bound to issue more than one certificate therefore and delivery of a
certificate to one of joint holders shall be sufficient delivery to all.
16. Any person (subject as aforesaid) whose name is entered in the Register of
Members as a member in respect or any shares of any one class upon the issue or
transfer thereof shall be entitled without payment to a certificate therefor or,
on payment (if the Directors shall so require) of HKSS or such smaller sum as
the Directors shall determine for each additional certificate, to several
certificates each for one or more such
<PAGE>
shares (in the case or issue) within one month (or such longer period as the
terms of issue shall provide) after allotment or (in the case or a transfer of
fully paid shares) within twenty-one days after lodgement of a transfer or (in
the case of a transfer of partly paid shares) within two months after lodgement
of a transfer.
17. Where some only of the shares comprised in a share certificate are
transferred, the old certificate shall be cancelled and a new certificate for
the balance or such shares issued in lieu without charge.
18. (A) Any two or more certificates representing shares of any one class held
by any member may at his request be cancelled and a single new certificate for
such shares issued in lieu on payment (if the Directors shall so require) of
HKSS or such smaller skim as the Directors shall determine.
(B) If a share certificate shall be damaged or defaced or alleged to have
been lost, stolen or destroyed, a new certificate representing the same shares
may be issued to the relevant member upon request subject, to delivery up of the
old certificate or (if alleged to have been lost, stolen or destroyed)
compliance with such conditions as to evidence and indemnity and the payment of
out-of-pocket expenses of the Company in connection with the request as the
Directors may think fit.
(C) In the case of shares held jointly by several persons any such request
may be made by any one of the joint holders.
CALLS ON SHARES
19. Directors may from time to time make calls upon the members in respect of
any moneys unpaid on their shares (whether on account of the nominal value of
the shares or by way of premium) but subject always to the terms of issue of
such shares. A call shall be deemed to have been made at the time when the
resolution of the Directors authorizing the call was passed and may be made
payable by installments.
20. Each member shall (subject to receiving at least fourteen days notice
specifying the time or times and place of payment) pay to the Company at the
time or times and place so specified the amount called on his shares. The join(
holders of a share shall be jointly and severally liable to pay all calls in
respect thereof. A call may be reduced or revoked or in whole or in part
postponed as The Directors may determine.
21. Any sum (whether on account of the nominal value of the share or by way of
premium) which by the terms of issue of a share becomes payable upon allotment
or at any fixed date shall for all the purposes of these Articles be deemed to
be a call duly made and payable on the date on which by the terms of issue the
same becomes payable. In case of non-payment all the relevant provisions or
these Articles as to payment of interest and expenses, forfeiture or otherwise
shall apply his if such sum had become payable by virtue of a call duly made and
notified.
22. The Directors may on the issue or shares differentiate between the holders
as to the amount of calls to be paid and the times of payment.
23. If a sum called in respect of a share is not paid before or on the day
appointed for payment, thereof, the person from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate (not exceeding 15 per cent. per annum) as the
Directors determine but the Directors shall be at liberty in any case or cases
to waive payment of such interest wholly or in part.
<PAGE>
24. The Directors may if they think fit receive from any member willing to
advance the same all or any part of the moneys (whether on account of the
nominal value of the shares or by way of premium) uncalled and unpaid upon the
shares held by him and such payment in advance or calls shall extinguish pro
tanro the liability upon the shares in respect of which it is made and upon the
money so received (until and to the extent that the same would but for such
advance become payable) the Company may pay interest at such rate (not exceeding
20 per cent, per annum) as the member paying such sum and the Directors may
agree.
FORFEITURE AND LIEN
25. If a member fails to pay in full any call or installment of a call on the
due date for payment thereof, the Directors may at any time thereafter serve a
notice in writing on him requiring payment of so much of the call or installment
as is unpaid together with any interest which may have accrued thereon and any
expenses incurred by the Company by reason of such non-payment.
26. The notice shall name a further day (not being less than seven days from the
date of service of the notice) on or before which and the place where the
payment required by the notice is to be made, and shall state that in the event
of non-payment in accordance therewith the shares an which the call has been
made will be liable to be forfeited.
27. If the requirements of any such notice as aforesaid art not complied with,
any share in respect of which such notice has been given may at any time
thereafter, before payment of all calls and interest and expenses due in respect
thereof has been made, be forfeited by a resolution of the Directors to that
effect. Such forfeiture shall include all dividends declared in respect of the
forfeited share and not actually paid before forfeiture. The Directors may
accept a surrender of any share liable to be forfeited hereunder.
28. A share so forfeited or surrendered shall become the Property of the Company
and may be sold, re-allotted or otherwise disposed of either to the person who
was before such forfeiture or surrender the holder thereof or entitled thereto
or to any other person upon such terms and in such manner as the Directors shall
think fit and at any time before a sale, re-allotment or disposition the
forfeiture or surrender may be canceled on such terms as the Directors think
fit. The Directors may, if necessary, authorize some person to transfer a
forfeited or surrendered share to any such other person as aforesaid.
29. A member whose shares have been forfeited or surrendered shall cease to be a
member in respect of the shares but shall notwithstanding the forfeiture or
surrender remain liable to pay to tile Company all moneys which at the date of
forfeiture or surrender were presently payable by him to the Company in respect
of the shares with interest thereon at 15 per cent per annum) (or such lower
rate as the Directors may determine) from the date of forfeiture or surrender
until payment and the Directors may at their absolute discretion enforce payment
without any allowance fox the value of the shares at the time forfeiture or
surrender or waive payment in whole or in part.
30. The Company shall have a first and paramount lien on every snare (not being
2 fully paid share) for all moneys (whether presently payable or not) called or
payable at a fixed time in respect of such share and the Company shall also have
a first and paramount lien on every share (whether or not a fully paid share)
standing registered in the of a member (whether or not jointly with other
members) for all the debts and liabilities of such member or his estate to the
Company whether the same shall have been incurred before or after notice to the
Company of any equitable or other interest of any person other than such member
and whether the period for the payment or discharge of the same shall, have
actually arrived not and notwithstanding that the same are joint debts or
liabilities of such member or his estate and any other person, whether a member
of the Company or not. The Directors may waive any lien which has arisen and may
resolve that any share shall for some limited period be exempt wholly or
partially from the provisions of this Article. The Company's lien on any share
shall extend to all dividends payable thereon but unpaid.
<PAGE>
31. The Company may sell in such manner as the Directors think fit any share on
which the Company has a lien, but no sale shall be made unless some sum in
respect of which the lien exists is presently payable nor until the expiration
of fourteen days after a notice in writing stating and demanding payment of the
sum presently payable and giving notice or intention to sell in default shall
have been given to the holder for the time being of the share or the person
entitled thereto by reason of his death or bankruptcy.
32. The net proceeds of such sale after payment of the costs of such sale shall
be applied in or towards payment or satisfaction of the debts or liabilities in
respect whereof the lien exists so far as the same are then payable and any
residue shall (subject to a like lien for debts or liabilities not presently
payable as existed upon the shares prior to the sale) be paid to the person
entitled to the shares at the time of the sale. For the purpose of giving effect
to any such sale the Directors may authorize some person to transfer the shares
sold to the purchaser.
33. A statutory declamation in writing that the declarant is a Director or the
Secretary of the Company and that a share has been duly forfeited or surrendered
or sold to satisfy a lien of the Company on a date stated in the declaration
shall be conclusive evidence of the facts therein stated as against all persons
claiming to be entitled to the share. Such declaration and the receipt of the
Company for the consideration (if any) given for the share on the sale,
re-allotment or disposal thereof together with the share certificate delivered
to a purchaser or allottee thereof shall (subject to the execution of a sold
note and transfer if the same be required) constitute a good title to the share
and the person to whom the share is sold, re-allotted or disposed or shall
(subject to any required transfer being presented duly stamped) be registered as
the holder of the share and shall in any event not be bound to see to the
application of the purchase money (if any) nor shall his title to the share be
affected by any irregularity or invalidity in the proceedings relating to the
forfeiture, surrender, tale, re-allotment or disposal of the share.
TRANSFER OF SHARES
34. All transfers of shares may be effected by transfer in writing in any usual
or common form or in any other form acceptable to the Directors and may be under
hand only. The instrument of transfer shall be signed by or on behalf of the
transferor and by or- on behalf of the transferee. The transferor shall remain
the holder of the shares concerned until the name of the transferee is entered
in the Register of Members in respect thereof.
35. The registration of transfers may be suspended at such times and for such
periods as the Directors may from time to time determine and either generally or
in respect of any class of shares. The Register of Members shall not be closed
for more than thirty days in any year.
36. The Directors may in their absolute discretion and without assigning any
reason therefor refuse to register any transfer of shares (whether or not fully
paid shares). If the Directors refuse to register a transfer they shall within
two months after the date on which the transfer was lodged with the Company send
to the transferor and the transferee notice of the refusal.
37. Without limiting the generality of the last preceding Article the Directors
may decline to recognize any instrument of transfer unless the instrument of
transfer is in respect of only one class of share and is lodged at the Office
accompanied by the relevant share certificate(s) and such other evidence as the
Directors may reasonably require to show the right of the transferor to make the
transfer (and, if the instrument of transfer is executed by some other person on
his behalf, the authority of that person so to do).
38. All instruments of transfer which are registered may be retained by the
Company.
<PAGE>
39. No fee shall be charged by the Company in respect of the registration of any
instrument of transfer or probate or letters of administration or certificate of
marriage or death or stop notice or power of attorney or other document relating
to or affecting the title to any shares or otherwise for making any entry in the
Register of Members affecting the title to any shares.
40. The Company shall be entitled to destroy all instruments of transfer which
have been registered at any time after the expiration of six years from the date
of registration thereof and all dividend mandates and notifications of change of
address at any time after the expiration of two years from the date of recording
thereof and all share certificates which have been canceled it any time after
the expiration of one year from the date of the cancellation thereof and it
shall conclusively be presumed in favour of the Company that every entry in the
register purporting to have been made on the basis of an instrument of transfer
or other document so destroyed was duty and properly made and every Instrument
of transfer so destroyed was a valid and effective instrument duly and properly
registered and every share certificate so destroyed was a valid and effective
certificate duly and properly cancelled and every other document hereinbefore
mentioned so destroyed was a valid and effective document in accordance with the
recorded particulars thereof in the books or records of the Company, provided
always that:
(a) the provisions aforesaid shall apply only to the destruction of a document
in good faith and without notice of any claim (regardless of the parties
thereto) to which the document might be relevant;
(b) nothing herein contained shall be construed as imposing tip on the Company
any liability in respect of the destruction of any such document earher than as
aforesaid or in any other circumstances which would not attach to the Company in
the absence of this Article; and
(c) references herein to the destruction or any document include references to
the disposal thereof in any manner.
TRANSMISSION OF SHARES
41. In case of the death of a member, the survivors at survivor where the
deceased was a joint holder, and the executors or administrators of the deceased
where he was a sole or only surviving holder, shall be the only persons
recognized by the Company as having any title to his interest in the shares, but
nothing in this Article shall release the estate of a deceased member (whether a
sole or a joint holder) from any liability in respect of any share held by him.
42. Any person becoming entitled to a share in consequence of the death or
bankruptcy of a member may (subject as hereinafter provided) upon supplying to
the Company such evidence as the Directors may reasonably require to show his
title to the share either be registered himself as holder of the share upon
giving to the Company notice in writing of such his desire or transfer such
share to some other person. All the limitations, restrictions and provisions of
these Articles relating to the right to transfer and the registration or
transfers of shares shall be applicable to any such notice of transfer as
aforesaid as if the death or bankruptcy of the member had not occurred and the
notice. or transfer were a transfer executed by such member.
43. Save as otherwise provided by or in accordance with these Articles, a person
becoming entitled to a share in consequence of the death or bankruptcy of a
member (upon supplying to the Company such evidence as the Directors may
reasonably require to show his title to the share) shall be "entitled to the
same dividends and other advantages as those to which he would be entitled if he
were the registered holder of the share except that he shall not be entitled In
respect thereof (except with the authority of the Directors) to exercise any
right conferred by membership in relation to meetings of the Company until he
shall have been registered as a member in respect. of the share.
<PAGE>
STOCK
44. The Company may from time to time by Ordinary Resolution convert any paid up
shares into stock, and reconvert any stock into paid up shares of any
denomination. If and whenever any unissued shares of any class in the capital of
the Company for the time bring shall have been issued and be fully paid and at
that time the shares of that class previously issued stand converted into stock
such further shares upon being fully paid and ranking pari passu in all respects
with the shares representing such stock shall ipso facto be converted into stock
transferable in the same units as the existing stock of that class.
45. The holders of stock may transfer the same or any part thereof in the same
manner and subject to the same regulations as and subject to which the shares
from which the stock arose might previously to conversion have been transferred,
or as near thereto as circumstances will permit, provided that:
(a) the Directors may from time to time, if they think fit, fix the minimum
amount of stock transferable, and direct that fractions of a dollar or of any
other sum shall not be dealt with power, nevertheless, at their discretion, to
waive such stipulations in any particular case: and
(b) the minimum amount of stock transferable shall not exceed the nominal amount
or the shares from which the stock arose.
46. The stock shall confer on the holders thereof respectively the same
privileges and advantages as regards dividends, participation in assets on a
winding up, voting at meetings of the Company and other matters as would have
been conferred by the shares from which the stock arose, but so that none of
such privileges or advantages (except participation in dividends and profits of
the Company and in assets an a winding up) shall be conferred by an amount of
the stock which would not, if existing in shares, have conferred such privileges
or advantages.
GENERAL MEETINGS
47. An Annual General Meeting shall be held not more than eighteen months after
the incorporation of the Company and subsequently once in every year, at such
time (within a period or not more than fifteen months after the holding of the
last preceding Annual General Meeting, if any) and place as may be determined by
the Directors. All other general meetings shall be called Extraordinary General
Meetings.
48. The Directors may whenever they think fit, and shall on requisition in
accordance with the Statutes, proceed with proper expedition to convene an
Extraordinary General Meeting.
NOTICE OF GENERAL MEETINGS
49. An Annual General Meeting and any Extraordinary General Meeting at which it
is proposed to pass a Special Resolution shall be called by twenty-one days
notice in writing at the least and any other Extraordinary General Meeting by
fourteen days notice in writing at the least. The period of notice shall in each
case, be exclusive of the day on which it is served or deemed to be served and
of the day on which the meeting is to be held and shall be given in manner
hereinafter mentioned to all members entitled to attend and vote at the meeting,
provided that:
(a) a general meeting notwithstanding that it has been called by a shorter
notice than that specified above shall be deemed to have been duly called if it
is so agreed:
(i) in the case of a meeting called as the Annual General Meeting, by all the
members entitled to attend and vote thereat; and
<PAGE>
(ii) in the case or any other meeting, by a majority in number of the members
having a right to attend and vote at the meeting being a majority together
holding not less than 95 per cent In nominal value of the shares giving that
right; and
(b) the accidental omission to give notice of a general meeting to or the
non-receipt of notice of a general meeting by any person entitled thereto shall
not. invalidate the proceedings at that general meeting.
50. (A) Every notice calling a general meeting shall specify the place and the
day and time of the meeting, and there shall appear with reasonable prominence
in every such notice a statement that a member entitled to attend and vote is
entitled to appoint a proxy to attend and, on a poll, vote instead of him and
that a proxy need not be a member of the Company.
(B) In the case of an Annual General Meeting, the notice shall also
specify the meeting as such.
(C) In the use of any general meeting at which business other than routine
business is to be transacted, the notice shall specify the general nature of
such business.; and if any resolution is to be proposed as a Special Resolution,
the notice shall contain a statement to that effect.
51. For the purposes or the last preceding Article routine business shall mean
and include only business transacted at an Annual General Meeting of the
following classes, that is to say
(a) declaring dividends;
(b) receiving and/or adapting the accounts. the reports of the
Directors and Auditors and other documents required to be attached or annexed
to the accounts:
(c) appointing or re-appointing Directors to fill vacancies arising
at the meeting On retirement;
(d) appointing the Auditors,
(e) fixing the remuneration of the Auditors or determining the manner in which
such remuneration is to be fixed.
PROCEEDINGS AT GENERAL MEETINGS
52. The Chairman or the Directors, failing whom the Deputy Chairman, shall
preside as chairman at a general meeting. If there be no such Chairman or Deputy
Chairman, or if at any meeting neither he present within five minutes after the
time appointed for holding the meeting and willing to act, the Directors present
shall choose one of their number (or, if no Director be present or if all the
Directors present decline to take the chair, the members present shall choose
one of their number) to be chairman of the meeting.
53. No business other than the appointment of a chairman shall be transacted at
any general meeting unless a quorum is present at the time when the meeting
proceeds to business. Two members present in person or by proxy and entitled to
vote shall be a quorum for all purposes.
54. If within five minutes from the time appointed for a General Meeting (or
such longer interval as the chairman of the meeting may think fit to allow) a
quorum is not present, the meeting, if convened on the requisition of members,
shall be dissolved. In any other case it shall stand adjourned to the same day
in the next week, at the same time and place, or to such day and at such time
and place as the chairman of the meeting may determine and In the latter case
not less than seven days notice of the adjourned meeting shall
<PAGE>
be given in like manner as in the case of the original meeting. At the adjourned
meeting any one member present in person or by proxy and entitled to vote shall
be a quorum.
55. The chairman of any General Meeting at which a quorum is present may with
the consent of the meeting (and shall if so directed by the meeting) adjourn the
Meeting from time to time (or sine die) and from place to place, but no business
shall be transacted at any adjourned meeting except business which might
lawfully have been transacted at the meeting from which the adjournment took
place. Where a meeting is adjourned sine die, the day, time and place for the
adjourned meeting shall be fixed by the Directors. Not less than seven days
notice of the adjourned meeting shall be given in like manner as in the case of
the original meeting.
56. Save as hereinbefore expressly provided, it shall not be necessary to give
any notice of an adjournment or of the business to be transacted at an adjourned
meeting.
57. If an amendment shall be proposed to any resolution under consideration but
shall in good faith be ruled out of order by the chairman of the meeting, the
proceedings on the, substantiate resolution shall not be invalidated by any
error in such ruling. In the case of a resolution duly proposed as a Special
Resolution no amendment thereto (other than a where clerical amendment to
correct a patent error) may in any event be considered or voted upon.
VOTING
58. At any General Meeting a resolution put to the vote of the meeting shall be
decided or) a show of hands unless a poll is therefore or on the declaration of
the result of the show of hands) demanded by the chairman of the meeting or by
any member present in person or by Proxy and entitled to vote.
59. A demand for a poll may be withdrawn only with the approval of the meeting.
Unless a poll is required a declaration by the chairman of the meeting that a
resolution has been carried, or carried unanimously, or carried by a particular
majority, or lost, and an entry to that effect In the minute book, shall be
conclusive evidence of that fact without proof of the number or proportion of
the votes recorded for or against such resolution. If a poll is required, it
shall be taken in such manner (including the use of ballot or voting papers or
tickets) as the chairman of the meeting may direct, and the result of the poll
shall be deemed to be the resolution of the meeting at which the poll was
demanded The chairman of the meeting may (and if to directed by the meeting
shall) appoint scrutineers and may adjourn the meeting to some place, day and
time fixed by film for the purpose of declaring the result of the poll.
60. No chairman of any meeting shall have a second or casting vote.
61. A poll demanded on the choice of a chairman or on a question of adjournment
shall be taken forthwith. A poll demanded on any other question shall be taken
either immediately or at such subsequent time (not being more than thirty days
from the date of the meeting) and place as the chairman may direct No notice
need be given of a poll not taken immediately. The demand for a poll shall not
prevent the continuance of the meeting for the transaction of any business other
than the question on which the poll has been demanded.
VOTING RIGHTS
62. Subject to any special rights or restrictions as to voting attached by or in
accordance with these Articles to any class of Shares, on a show of hands every
member who is present in person shall have one vote and on a poll every member
who is present in person or by proxy shall have one vote for every share of
which be is the holder.
<PAGE>
63. In the case of joint holders of a Share the vote of the senior who tenders a
vote, whether in person or by proxy, shall be accepted to the exclusion of the
votes of the other joint holders and for this purpose seniority shall be
determined by the order in which the names stand in the Register of Members In
respect of the share.
64. Where in Hong Kong or elsewhere a receiver or other person (by whatever name
called) has been appointed by any court claiming jurisdiction in that behalf to
exercise powers with respect to the property or affairs; of any member on the
ground (however formulated) of mental disorder, the Directors may in their
absolute discretion, upon or subject to production of such evidence of the
appointment as the Directors may require, permit such receiver or other person
on behalf of such member to vote in person or by proxy at any general meeting or
to exercise any other right conferred by membership in relation to meetings of
the Company.
65. No member shall. unless the Directors otherwise determine, be entitled in
respect of shares held by him to vote at a general meeting either personally or
by proxy or to exercise any other right conferred by membership in relation to
meetings of the Company if any call or other sum presently payable by him to the
Company in respect of such shares remains unpaid.
66. No objection shall be raised as to the admissibility of any vote except at
the meeting or adjourned meeting at which the vote objected to is or may be
given or tendered and every vote not disallowed at such meeting shall be valid
for all purposes. Any such objection shall be referred to the chairman of the
meeting, whose decision shall be final and conclusive.
67. On a poll votes may be given either personally or by proxy and a person
entitled to more than one vote need not use a his votes or cast all the votes he
uses in the same way.
PROXIES
68. A member may in respect or any shares held by him attend try proxy any
general meeting which he is entitled to attend in person and, on a poll but not
otherwise, vote by proxy on any resolution at any such meeting on which he
would, if present in person, otherwise be entitled to vote in respect of such
shares. A proxy need not be a member of the Company.
69. An instrument appointing a proxy shall be in writing in any usual or common
form or in any other form which the Directors may approve and:
(a) in the case of an individual shall be signed by the appointor or his
attorney; and
(b) in the case of a corporation shall be either given under its common seal or
signed on its behalf by an attorney or a duty authorized officer of the
corporation in the case of an instrument of proxy purporting to be signed on
behalf of a corporation by an officer thereof it shall be assumed, unless the
contrary appears, that such officer was duly authorized to sign such instrument
of proxy on behalf of the corporation without further evidence of the fact.
70. An instrument appointing a proxy (and, where it is signed on behalf of the
appointor by an attorney, and failing previous registration with the Company,
the power of attorney or a certified copy thereof) must either be delivered at
such place or one of such places (if any) as may be specified for that purpose
in or by way of note to or in any document accompanying the notice converting
the meeting (or, if no place is so specified, at the Office) at least
twenty-four hours before the time appointed for holding the meeting or adjourned
meeting or (in the case of a poll taken otherwise than at or on the same day as
the meeting of adjourned meeting) for the taking of the poll at which it is to
be used or be delivered to the Secretary or the
<PAGE>
chairman of the meeting on the day and at the place, but before the start, of
the meeting or adjourned meeting or poll. An instrument of proxy shall not be
treated as valid until such delivery shall have been effected. The instrument
shall, unless the contrary is stated thereon, be valid as well for any
adjournment of the meeting as for the meeting to which it relates. An instrument
of proxy relating to more than one meeting (including any adjournment thereof)
having once been so delivered for the purposes of any meeting shall not require
again to be delivered (or the purposes of any subsequent meeting to which it
relates).
71. An instrument appointing a proxy shall be deemed to include the fight to
demand or join in demanding a poll, and the same right to speak at the meeting
as the appointor has in respect of the relevant shareholding
72. A vote cast by proxy shall not be invalidated by the previous death or
insanity of the appointor or by the revocation of the appointment of the proxy
or of the authority under which the appointment was made provided that no
intimation in writing of such death, insanity or revocation shall have been
received by the Company at the Office at lust twenty-four hours before, or by
the Secretary or the chairman of the meeting an the day and at the place, but
before the start, of the meeting or adjourned meeting or (in the case of a poll
taken otherwise than at or on the same day as the meeting or adjourned meeting)
the lime appointed for the taking of the poll at which the vote is cast.
73. Anything which under these Articles a member may do by proxy he may likewise
do by his duly appointed attorney and the provisions of these Articles relating
to proxies and instruments appointing proxies shall apply mutatis mutandis in
relation to any such attorney and the instrument under which such attorney is
appointed.
CORPORATIONS ACTING BY REPRESENTATIVES
74. Any corporation which is a member of the Company may by resolution of its
directors or other governing body authorize such person as it thinks flit to act
as its representative at any meeting of the Company of or any class of members
of the Company. The person so authorized shall be entitled to exercise the same
powers on behalf of such corporation as the corporation could exercise if it
were an individual member or the Company and such corporation shall for the
purposes of these Articles be deemed to be present in person at any such meeting
if a person so authorized is present thereat.
WRITTEN RESOLUTIONS
75. A resolution in writing signed (in such manner as to indicate, expressly or
impliedly, unconditional approval) by or an behalf of all persons for the time
being entitled to receive notice of and to attend and vote at general meetings
of the Company shall, for the purposes of these Articles, be treated as a
resolution duly passed at a general meeting of the Company and, where relevant,
as a Special Resolution so passed. Any such resolution shall be deemed to have
been passed at a meeting held on the date on which it was signed by the last
member to sign, and where the resolution states a date as being the date of his
signature thereof by any member the statement shall be prima facie evidence that
it was signed by him on that date. Such a resolution may consist of several
documents in the like form, each signed by one or more relevant members.
DIRECTORS
76. Subject as hereinafter provided the Directors shall not be less than two in
number and there shall be no maximum number of Directors.
77. A Director shall not be required to hold any shares of the Company by way or
qualification. A Director who is not a member of the Company shall nevertheless
be entitled to attend and speak at general meetings
<PAGE>
and a Director who is not a member of any class of members of the Company shall
nevertheless be entitled to attend and speak at a meeting of that class.
78. The ordinary remuneration of the Directors shall from time to time be
determined by an Ordinary Resolution of the Company and shall (unless such
resolution otherwise provides) be divisible among the Directors as they may
agree, or, failing agreement, equally, except that any Director who shall hold
office for part only of the period in respect of which such remuneration is
payable shall be entitled only to rank in such division for a proportion of
remuneration related to the period during which he shall have held office.
79. Any Director who holds any executive office or who serves on any committee
of the Directors, or who otherwise performs services which in the opinion of the
Directors are outside the scope of the ordinary duties of a Director, may be
paid such extra remuneration by way of salary, commission or otherwise as the
Directors may determine.
80. The Directors may repay to any Director all such reasonable expenses as he
may incur in attending and returning from meetings of the Directors or of any
committee of the Directors or general meetings or meetings of any class of
members of the Company or otherwise in or about the business or the Company.
81. The Directors shall have power to pay and agree to pay pensions or ocher
retirement, superannuation, death or disability benefits to (or to any person in
respect of) any Director or ex Director and for the purpose or providing any
such pensions or other benefits to con tribute to any scheme or fund or to pay
premiums.
82. A Director may be party to, or in any way interested in, any contract or
arrangement or transaction to which the Company is a party or in which the
Company is in any way interested and he may hold and be remunerated in respect
of any office or place of profit (other than the office of auditor of the
Company or any subsidiary thereof) under the Company or any other company in
which the Company is in any way interested mid he (or any firm of which he is a
member) may act in a professional capacity for the Company or any such other
company and be remunerated therefor and in any such cast as aforesaid (save as
otherwise agreed) he may retain for his own absolute use and benefit all profits
and advantages directly or indirectly accruing to him thereunder or in
consequence thereof.
83. (A) The Directors may from time to Lime appoint one or Mine of their body to
be the holder of any executive office (including where considered appropriate,
the office of executive Chairman or Deputy Chairmany on such terms and for such
period as they may (subject to the provisions of the Statutes) determine and,
without prejudice to the terms of any contract entered into in any particular
ease, may at any time revoke any such appointment.
<PAGE>
(B) The appointment of any Director to the office or Chairman or Deputy
Chairman (whether or not executive) or Managing or Joint Managing Director or
Deputy Managing Director or Assistant Managing Director shall automatically
determine if he ceases to be a Director but without prejudice to any claim for
damages for breach of any contract of service between him and the Company.
(C) The appointment of any Director to any other executive office shall
not automatically determine if he ceases from any cause to be a Director, unless
the contract or resolution under Which he holds office shall expressly state
otherwise, in which event such determination shall be without prejudice to any
claim for damages for breach of any contract of service between him and the
Company.
84. The Directors may from time to time appoint any person to an office or
employment having a designation or title including the word "Director" or attach
to any existing office or employment with the Company such a designation or
title. The inclusion of the word "Director" in the designation or title of any
office or employment with the Company (other than the office of Managing
Director or Joint Managing Director or Deputy Managing Director or Assistant
Managing Director) shall not imply that the holder thereof is a Director of the
Company nor shall such holder thereby be empowered in any respect to act as a
Director of the Company or be deemed to be a Director for any or the purposes of
these Articles.
APPOINTMENT, RETIREMENT AND REMOVAL OF DIRECTORS
85. (A) The first Directors. to be appointed shall be appointed in writing
by the subscribers to the Memorandum of Association
(B) The Company may by Ordinary Resolution appoint any person to be a
Director either to fill a casual vacancy or as an additional Director
(C) Without prejudice to (B) above the Directors shall have power at any
time to appoint any person to be a Director either to fill a casual vacancy or
as an additional Director, but no such appointment shall be made except with the
consent of a majority of the Directors
86. The office of a Director shall be vacated in any of the following events,
each of which shall, without prejudice to the creation or a casual vacancy in
any other manner, for the purposes of these Articles be regarded as creating a
casual vacancy, namely:
(a) if he shall become, prohibited by law from acting as it Director or shall
cease to be qualified under these Articles to act as a Director;
(b) if he shall resign by notice In writing signed by him and lodged at the
Office or if he shall by notice In writing signed by him offer to resign and the
Directors shall resolve to accept such offer, and so that in either such case
the office of Director shall be vacated with effect from the date and/or time of
or (if later) specified in such notice or offer or, if none, from the date on
which it is so lodged or, as the case may be, accepted;
(c) if he shall have a receiving order made against him or shall make any
arrangement or composition with his creditors generally;
(d) if in Hong Kong or elsewhere an order shall be made by any court claiming
jurisdiction in that behalf on the ground (however formulated) of mental
disorder for his detention or for the appointment or a guardian or for the
appointment of a receiver or other person (by whatever name called) to exercise
powers with respect to his property or affairs;
(e) if, without leave, he is absent from meetings of the Directors for six
consecutive months and the Directors resolve that his office be vacated;
(f) if he shall be removed from office by notice in writing served upon him
signed by all his coDirectors being two or more in number), but so that if he
holds an appointment to an executive office which thereby automatically
determines such removal shall be deemed an art of the Company and shall have
effect without prejudice to any claim for damages for breach of any contract of
service between him and the Company;
(g) if he shall be removed from office by Special Resolution in accordance with
the Statutes.
87. Without prejudice and in addition to the last two preceding Articles, the
holder or holders of not less than 90 per cent in aggregate nominal amount or
the issued shares for the time being carrying the unrestricted right to vote at
a general meeting of the Company may appoint any person to be a Director either
to fill a casual vacancy or as an additional Director and to remove from office
any Director howsoever appointed. Any such appointment or removal shall be
effected by an instrument in writing signed by the member of members making the
same or, in the cast of a corporation, signed on its behalf by a director or the
secretary thereof or by its duly appointed attorney or duly authorized
representative, and shall take effect upon lodgment at the Office. Such an
instrument may consist of several documents in the like form. each signed by or
on behalf of one or More persons.
<PAGE>
ALTERNATE DIRECTORS
88. (A) Any Director may with the approval of the Directors at any time by
notice in writing signed by him and lodged at the Office, or delivered at a
meeting of the Directors, appoint any person (including another Director) to be
his alternate Director and may in like manner at any time terminate such
appointment. Such approval shaft not be unreasonably withheld, and shall be
deemed to have been even in the case of the appointment of another Director, or
a person who is for the time being approved and appointed as an alternate
Director or another Director. Unless previously so approved such appointment
shall have effect only upon and subject to being so approved, The holder or
holders of not less than 90 per cent in aggregate nominal amount of the issued
shares for the time being carrying the unrestricted right to vote at a general
meeting of the Company may by the like notice (but without the need of any such
approval) appoint, and terminate the appointment of, any alternate Director of
any Director, and in such a case the Director in respect of whom the alternate
Director is appointed shall for the purposes of this Article be regarded as the
appointor of that alternate Director. In the case of a corporation any such
notice may be signed on its behalf by a director or the secretary thereof or by
its duly appointed attorney Or duly authorized representative.
(B) The appointment of an alternate Director shall determine on the
happening of any event which if he were a Director would cause him to vacate
such office and if his appointor ceases to be a Director.
(C) An alternate Director shall (subject to his giving to the Company an
address at which notices may be served on him) be entitled to receive mid waive
notices of meetings of the Directors and of any committee of the Directors of
which has appointor is a member and shall be entitled to attend and vote as a
Director and be counted in the quorum at any such meeting at which his appointor
is not personally present and generally at such meeting to Perform all functions
of his appointor as a Director and for the purposes of the proceedings at such
meeting the provisions of these Articles shall apply as if he, (instead of his
appointor) were a Director. If he shall be himself a Director or shall attend
any such meeting as an alternate for more thin one Director, he shall be counted
in the quorum separately in respect or himself (if a Director) and In respect of
each Director for whom he Is an alternate (but so that nothing In this provision
shall enable a meeting to be constituted when only one person is physically
present) and his voting rights shall be cumulative and he need not use all his
votes or cast all the votes he uses in the same way. His signature to any
resolution in writing of the Directors or of any such committee shall be as
effective as the signature of his appointor. An alternate Director shall not
(save as aforesaid) have power to act as a Director nor shall he deemed to be a
Director for the purposes of these Articles.
(D) An alternate Director shall be entitled to contract and be interested
in and benefit from contracts Or arrangements and to be repaid expenses and to
be indemnified to the same extent mutatis mutandis as if he were a Director,
but, he shall not be entitled to receive from the Company in respect of his
appointment as Alternate Director any remuneration except only such part (if
any) of the remuneration otherwise payable to his appointor as such appointor
may by notice in writing to the Company from time to time direct.
MEETINGS AND PROCEEDINGS OF DIRECTORS
89. Subject to the provisions of these Articles the Directors may meet together
for the despatch of business, adjourn and otherwise regulate their meetings as
they think fit. At any time any Director rnay, and the Secretary on the
requisition or a Director shall, summon a meeting of the Directors. Notice of a
meeting of the Directors shall be given to all Directors, and may be given in
any manner, including in writing or by cable or telex or facsimile transmission
or by telephone or otherwise orally. Any Director may waive notice of any
meeting and any such waiver may be retroactive.
<PAGE>
90. The quorum necessary For the transaction of the business of the Directors
shall be two. A meeting of the Directors at which a quorum is present when the
meeting proceeds to business shall be competent to exercise all powers and
discretions for the time being exercisable by the Directors.
91. Questions arising at any meeting of the Directors shall be determined by a
majority of votes. No chairman of any meeting shall have a second or casting
vote.
92. The Directors may exercise the voting power conferred by the shares in any
other company held or owned by the Company, or exercisable by them as directors
of such other company, in such manner in all respects as they think fit,
including the exercise thereof in favour of any resolution appointing themselves
or any of them directors, managing directors, managers or other officers of such
company, or voting or providing for the payment of remuneration to the
directors, managing directors, managers or other officers of such company.
93. (A) A Director who is in any way, whether directly or indirectly, materially
interested in a contract, arrangement or transaction or proposed contract,
arrangement or transaction with the Company and which is of significance in
relation to the Company's business shall declare the nature of his interest at
the earhest meeting of the Directors at which it is practicable for him to do
so, in accordance with the Statutes. A general notice to the Directors by a
Director stating that, by reason of facts specified in the notice, he is to be
regarded as interested in contracts, arrangement; or transactions or proposed
contracts, arrangements or transactions of any description which may
subsequently be made or contemplated by the Company shall be deemed for the
purposes of this Article to be a sufficient declaration of his interest, so far
as attributable to those facts, in relation to any contract, arrangement or
transaction or proposed contract, arrangement or transaction of that description
which may subsequently be made or contemplated by the Company, but no such
general notice shall have effect in relation to any contract, arrangement or
transaction or proposed contract, arrangement or transaction unless it is given
before the date on which the question of entering Into the same is first taken
into consideration on behalf of the Company.
(B) A Director may vote in respect of any contract, arrangement or
transaction or proposed contract, arrangement or transaction notwithstanding
that he may be interested therein and if he does so, his vote shall be counted
and he may be counted in the quorum at any meeting of the Directors at which
any, such contract, arrangement or transaction or proposed contract, arrangement
or transaction shall come before t he meeting for consideration provided that he
has, where relevant, first disclosed his interest in accordance with paragraph
(A) of this Article.
(C) If any question shall arise at any meeting as to the materiality of a
Director's interest or the significance of a contract, arrangement or
transaction or proposed contract, arrangement or transaction or as to the
entitlement of any Director to vote or form part of a quorum and such question
is not resolved by his voluntarily agreeing to abstain from voting, such
question shall be referred to the chairman of the meeting and his ruling in
relation to any other Director shall be final and conclusive except In a case
where the nature or extent of the interests of the Director concerned as known
to such Director have not been fairly disclosed.
(D) The Company may by Ordinary Resolution suspend or relax the provisions
of this Article to any extent or ratify any transaction not duly authorized by
reason or a contravention of this Article.
<PAGE>
94. The continuing Directors may act notwithstanding any vacancies, but if and
so long as the number of Directors is reduced below the minimum number fixed by
these Articles the continuing Directors or Director may act for the purpose of
filling such vacancies or of summoning general meetings but not for any other
purpose. If there be no Directors or Director able or willing to act, then any
two members may summon a general meeting for the purpose of appointing
Directors.
95. (A) The Directors may elect from. their number a Chairman and a Deputy
Chairman (or two or more Deputy Chairmen) and determine the period for which
each is to hold office. If no Chairman or Deputy Chairman shall have been
appointed or if at any meeting of the Directors no Chairman or Deputy Chairman
shall be present within five minutes after the time appointed for holding the
meeting, the Directors present may choose one of their number to be chairman of
the meeting.
B) It at any, time there is more than one Deputy Chairman the right. in
the absence of the Chairman to preside at a meeting of the Directors or the
company shall be determined as between the Deputy Chairmen present (if more than
one) by seniority in length of appointment or otherwise as resolved by the
Directors.
96. A resolution in writing signed (in such manner as to indicate, expressly or
impliedly, unconditional approval) by all the Directors shall be as effective as
a resolution duly passed at a meeting of the Directors and may consist of
several documents in the like form each signed by one or more Directors.
97. The Directors may delegate any of their powers or discretions to committees
consisting or one or more Directors and (if thought fit) one or more other
persons co-opted as hereinafter provided. Any committee so formed shall in the
exercise of the powers so delegated conform to any regulations which may from
time to time be imposed by the Directors. Any such regulations may provide for
or authorize the co-option to the committee of persons other than Directors and
for such co-opted members to have voting rights as members of the committee but
so that (a) the number or co-opted members shall be less than one-half of the
total number or members of the committee and (b) no resolution of the committee
shall be effective unless a majority of the members of the committee present at
the meeting are Directors.
98. The meetings and proceedings of any committee consisting of two or more
persons shall be governed mutatis mutandis by the provisions of these Articles
regulating the meetings and proceedings of the Directors, so far as the same are
not superseded by any regulations made by the Directors under the last
proceeding Article.
99. All acts done by any meeting of Directors, or of any committee, or by any
person acting as a Director or as a member or any committee, shall as regards
all persons dealing in good faith with the Company, notwithstanding that there
was some defect in the appointment of any of the persons acting as aforesaid, or
that any such persons were disqualified or had vacated office, of were not
entitled to vote, or form part of a quorum, be as valid as if every such person
had been duly appointed and was qualified and had continued to be a Director or
member of the committee and had been entitled to vote and form part of a quorum.
100. Where a Director is a corporation, it may vote and in all other respects
act as a Director (a) by any of its directors or (b) by its other representative
duly authorized by resolution of its directors or other governing body.
<PAGE>
POWERS OF DIRECTORS
101. The business and affairs of the Company shall be managed by the Directors,
who may, subject to the Statutes and these Articles, exercise all such powers of
the Company as are not by the Statutes or by these Articles required to be
exercised by the Company in general meeting, The general powers given by this
Article shall not be limited or restricted by any special authority or power
given to the Directors by any other Article.
102. The Directors may establish any local boards or agencies for managing any
of the affairs of the Company, either in Hong Kong or elsewhere, and may appoint
any persons to be members of such local boards, or any managers or agents, and
may fix their remuneration's, and may delegate to any local board. manager or
agent any or the powers, authorities and discretions vested in the Directors,
with power to subdelegate, and may authorize the members of any local boards, or
any of them, to fill any, vacancies therein, and to act notwithstanding
vacancies, and any such appointment or delegation may be made upon such terms
and subject to such conditions as the Directors may think fit, and the Directors
may remove any person so appointed, and may annul or vary any such delegation,
but no person dealing in good faith and without notice of any such annulment or
variation shall be affected thereby.
103. The Directors may from time to time and at any time by power of attorney or
otherwise appoint any company, firm or person or any fluctuating body of
persons, whether nominated directly or indirectly by the Directors, to be the
attorney or attorneys of the Company for such purposes and with such powers.
authorities and discretions (not exceeding those vested in or exercisable by the
Directors under these Articles) and for such period and subject to such
conditions as they may think fit, and any such power of attorney may contain
such provisions for the protection and convenience of persons dealing with any
such attorney as the Directors may think fit and may also authorize any such
attorney to sub-delegate all or a any of the powers, authorities and discretions
vested In him.
104. The Directors may entrust to and confer upon any Director holding any
executive office any of the powers exercisable by them as Directors upon such
terms and conditions and with such restrictions as they think fit, and either
collaterally with or to the exclusion of their own powers, and may, from time to
time revoke, withdraw, alter or vary all or any of such powers.
BRANCH REGISTERS
105. Subject to and to the extent permitted by the Statutes, the Company, or the
Directors on behalf of the Company, may cause to be kept in any territory a
branch register of members resident in such territory, and the Directors may
make and vary such regulations as they may think fit respecting the keeping of
any such register.
SECRETARY
106. The Secretary shall be appointed by the Directors on such terms and for
such period as they may think fit. Any Secretary so appointed may at any time be
removed from office by the Directors, but without prejudice to any claim for
damages for breach of any contract or service between him and the Company. If
thought fit tow or more persons may be appointed as Joint Secretaries. The
Directors may also appoint from time to time on such terms as they may think fit
one or more Assistant Secretaries.
CHEQUES
107. All cheques, promissory notes, drafts, bills of exchange, and other
negotiable or transferable instruments, and all receipts for moneys paid to the
Company, shall be signed, drawn, accepted, endorsed, or
<PAGE>
otherwise executed, as the case may be, in such manner as the Directors shall
from time to time by resolution determine.
THE SEAL
108. (A) The Directors shall provide for the safe custody of the Seal and any
Securities Seal and neither shall be used without the authority of the Directors
or of a committee authorized by the Directors in that behalf.
(B) Subject to (C) below every instrument to which the Seal shall be
affixed shall be signed autographically by;
(i) any one Director; or
(ii) any one or more other persons authorized for the
purpose by the Directors,
and where any instrument to which the Seal is affixed is so signed the
Seal shall, as regards all persons dealing in good faith with the Company,
be deemed to have been affixed to that instrument with the authority of
the Directors.
(C) Without prejudice to (D) below, as regards any certificates for shares
or debentures or other securities of the Company the Directors may by resolution
determine that such signatures or any of them shall be dispensed with or affixed
by some method or system of mechanical signature.
(D) Any Securities Seal shall only be used for sealing securities issued
by the Company and documents creating or evidencing securities so issued. Any
such securities or documents sealed with the Securities shall not require to be
signed.
109. The Company may exercise the powers conferred by the Statutes with regard
to having an official seal for use abroad and such powers shall be vested in the
Directors.
AUTHENTICATION OF DOCUMENTS
110. Any Director or the Secretary or any person appointed by the Directors for
the purpose shall have power to authenticate any documents affecting the
constitution of the Company and any resolutions passed by the Company or the
Directors or any committee, and any books, records, documents and accounts
relating to the business of the Company, and to certify copies thereof or
extracts therefrom at true copies or extracts; and where any books, records,
documents or accounts are elsewhere than at the Office the local manager or
other officer of the Company having the custody thereof shall be deemed to be a
person appointed by the Directors as aforesaid. A document purporting to be a
copy of a resolution, or an extract from the minutes of a meeting, of the
Company or of the Directors or any committee which is certified as aforesaid
shall be conclusive evidence in favour of all persons dealing with the Company
upon the faith thereof that such resolution has been duly passed or, as the case
may be, that any minute so extracted is a true and accurate record of
proceedings at a duly constituted meeting.
RESERVES
111. The Directors may from time to time set aside out of the profits of do
Company and carry to reserve such sums is they think proper which, at the
discretion of the Directors, shall be applicable for any purpose to which the
profits of the Company may properly be applied and pending such application may
either be employed in the business of the Company or be invested. The Directors
may divide the reserve into such special funds as they think fit and may
consolidate into one fund any special funds or any parts. of any special funds
into which the reserve may have been divided. The Directors may also without
placing the same to reserve carry forward any profits.
<PAGE>
DIVIDENDS
112. The Company may by Ordinary Resolution declare but no such dividend shall
exceed the amount recommended by the Directors.
113. If and so far as in the opinion of the Directors the profits of the Company
justify such payments, the Directors may declare and pay the fixed dividends on
any class of shares carrying a fixed dividend expressed to be payable on fixed
dates on the half-yearly or other dates prescribed for the payment thereof and
may also from time to time pay interim dividends on shares of any class of such
amounts and on such dates and in respect of such periods as they think fit.
114. Unless and to the extent that the rights attached to any regular shares or
the terms of issue thereof otherwise provide, all dividends shall (as regards
any Shares not fully paid throughout the period in respect of which the dividend
is paid) be apportioned and paid pro rata according to the amounts paid on the
shares during any portion or portions of the period in respect of which the
dividend is paid. For the purposes of this Article no amount paid on a share In
advance of calls shall be treated as paid on the share.
115. No dividend shall be paid otherwise than cut of profits available for
distribution.
116. No dividend or other moneys payable on or in respect of a share shall bear
interest as against the Company.
117. (A) The Directors may retain any dividend or other moneys payable on as in
respect of a share on which the Company has a lien and may apply the same in or
towards satisfaction of the debt, liabilities or engagements in respect of which
the lien exists.
(B) The Directors may retain the dividends payable upon shares in respect
of which any person is, under the provisions as to the transmission of shares
contained in these Articles, entitled to become a member, or which any person is
tinder those provisions entitled to transfer, until such person shall become a
member in respect of such shares or shall transfer the same.
118. The payment by the Directors of any unclaimed dividend or other moneys
payable on or in respect of a share into a separate account shall not constitute
the Company a trustee in respect thereof and any dividend unclaimed after a
period or six years from the date of declaration or (in the case of an interim
dividend) payment of such dividend shall be forfeited and shall revert to the
Company.
119. The Company may upon the recommendation of the Directors by Ordinary
Resolution direct payment of a dividend in whole or in part by the distribution
of specific assets (and in particular of paid-up shares or debentures of any
other company) and the Directors shall give effect to such resolution. Where any
difficulty arises in regard to such distribution, the Directors may settle the
same as they think expedient and in particular may issue fractional certificates
or may aggregate fractional entitlements and sell the same for the benefit of
the Company, may fix the value for distribution of such specific assets or any
part thereof, may determine that cash payments shall be made to any members upon
the footing of the value so fixed in order to adjust the rights of all parties
and may vest any such specific assets in trustees as may seem expedient to the
Directors.
<PAGE>
120. Any dividend or other moneys payable in cash an be in respect of a share
way be paid by cheque or warrant sent through the post to the registered address
of the member or person entitled thereto (or, if two or more persons are
registered as joint holders of the share or are entitled thereto in consequence
of the death or bankruptcy of the holder, to any one of such persons) or to such
person and such address as such member or person or persons may by writing
direct. Every such cheque at warrant shall be made payable to the order of the
person to whom It is sent or to such person as the holder or joint holders or
person or persons entitled to the share in consequence of the death or
bankruptcy of the holder may direct and payment or the cheque or warrant by the
banker upon whom it is drawn shall be a good discharge to the Company. Every
such cheque or warrant shall be sent at the risk of [he person entitled to the
money represented thereby.
121. If two or more persons are registered as joint holders of any share, or are
entitled jointly to a share in consequence or the death or bankruptcy of the
holder, any one or them may give effectual receipts for any dividend or other
moneys payable or property distributable on or in respect of the share.
122. Any resolution declaring or resolving upon the payment of a dividend on
shares of any class, whether a resolution of the Company in general meeting or a
resolution of the Directors. may specify that the same shall be payable to the
persons registered as the holders of such shares at the close or business on a
particular date, notwithstanding that it may be a date prior to that on which
the resolution is passed, and thereupon the dividend shall be payable to them in
accordance with their respective holdings so registered, but without prejudice
to the rights inter se in respect or such dividend of transferors and
transferees of any such shares.
CAPITALIZATION OF PROFITS AND RESERVES
123. The Directors may, with the sanction or an Ordinary Resolution of the
Company, capitalize any sum standing to the credit of any of the Company's
reserve accounts (including any share premium account, capital redemption
reserve or other undistribulable reserve) or any sum standing to the credit of
profit and loss account by appropriating such sum to the holders of Ordinary
Shares on the Register of Members at the close-of business on the date of the
relevant Ordinary Resolution (or such other date as may be specified therein or
determined as therein provided) in the proportions in which such sum would have
been divisible amongst them had the same been a distribution of profits by way
or dividend on the Ordinary Shares and applying such sum on their behalf either
in or towards paying tip any amounts for the time being unpaid on any share;
held by such holders respectively or in paying up in full unissued Ordinary
Shares (or, subject to any special rights previously conferred on any shares or
class of shares for the time being issued, unissued shares of any, other class,
or debentures of the Company) for allotment and distribution credited as fully
paid up to and amongst them as bonus shares in the proportions aforesaid, or
partly in one way and partly in another or others, provided that any sum
standing to the credit of any share premium account, capital redemption reserve
or other undistributable reserve of the Company may, for the purposes of this
Article, only be applied in the paying up of otherwise unissued shares to be
issued as non-redeemable bonus shares. The Directors may do all acts and things
considered necessary or expedient to give effect to any such capitalization,
with full power to the Directors to make such provisions as they think fit for
any fractional entitlements which would arise on the basis aforesaid (including
provisions whereby fractional entitle are disregarded or the benefit thereof
accrues to the Company rather than to the members concerned or to some members
rather than to others). The Directors may authorize any person to enter on
behalf of all the members interested into an agreement with the Company
providing for any such capitalization and matters incidental thereto and any
agreement made under such authority shall be effective and binding on all
concerned. For the purposes of this Article, where all the shares in issue or
agreed to be issued me shares or a single class, they shall be considered
Ordinary Shares.
<PAGE>
ACCOUNTS
124. Accounting records sufficient to show and explain the Company's
transactions and otherwise complying with the Statutes shall be kept at the
Office, or at such other place as the Directors think fit, and shall always be
open to inspection by the officers of the Company. Subject as aforesaid no
member of the Company or other person shall have any right of inspecting any
account or book or document of the Company except as conferred by law or ordered
by a court or competent jurisdiction or authorized by the Directors.
125. A copy of every balance sheet and profit and loss account which is to be
laid before the Company in general meeting (including every document required by
law to be comprised therein or attached or annexed thereto) shall not less than
twenty-one days before the date of the meeting be sent to every member of, and
every holder of debentures of, the Company and to every other person who is
entitled to receive notices of meetings from the Company under the provisions of
the Statutes or of these Articles, provided that this Article shall not require
a copy of these documents to be, sent to more Than one of joint holders or to
any person of whose address the Company is not aware, but any member or
debenture holder to whom a copy of these documents has not been sent shall be
entitled to receive a copy free of charge on application at the Office.
AUDITORS
126. Subject to the provision s of the Statutes, all acts d one by any person
acting as an auditor of the Company shall, as regards all persons dealing in
good faith with the Company, be valid, not withstanding that there was some
defect in his appointment or that he was at the time of his appointment not
qualified for appointment or subsequently became disqualified.
127. An auditor or the Company shall be entitled to attend any general meeting
and to receive all notices of and other communications relating to any general
meeting which any member is entitled to receive and to be heard at any general
meeting on any part or the business of the meeting which concerns Him as
auditor.
128. Any notice from the Company to a member shall be given in writing or by
cable, telex or facsimile transmission message and any such notice and (where
appropriate) any other document may be served or delivered by the Company on or
to any member either personally or by sending it through the post in a prepaid
envelope addressed to such member at his registered address as appearing in the
Register of Members or at any other address supplied by him to the Company for
the giving of notice to him or, as the case may be, by transmitting it to any
such address or transmitting it to any telex or facsimile transmission number
supplied by him to the Company for the giving of notice to him or which the
person transmitting the notice reasonably and bona fide believes at the relevant
time will result in the notice being duly received by the member.
129. All notices required to be given to members shall, with respect to any
share to which persons are jointly entitled, be given to whichever of such
persons is named first in the Register of Members in respect of the joint
holding and notice so given shall be sufficient notice to all the joint holders.
130. Any notice or other document:
(a) if served or delivered by post, shall be sent airmail where appropriate and
shall be deemed to have been served or delivered at the time when the envelope
containing the same is put into the post; in proving such service or delivery it
shall be sufficient to prove that the letter containing the notice or document
was properly addressed and put into the post and a certificate in writing signed
by the Secretary or other officer of the Company that the envelope containing
the notice or other document was so addressed and put into the post shall be
conclusive evidence thereof: and
<PAGE>
(b) if served or delivered in any other manner contemplated by these Articles,
shall be deemed to have been served or delivered at the time of personal service
or delivery or, as the case may be at the time of the relevant despatch or
transmission; and in proving such service or delivery a certificate in writing
signed by the Secretary or other officer of the Company as to the fact and time
of such service, delivery, despatch or transmission shall be conclusive evidence
thereof.
131. Any notice or document delivered or sent by post to, or left at, the
registered address of any member or any other address supplied by him to the
Company for the giving of notice to him shall, if such member be then deceased,
and whether or not the Company has notice of his death, be deemed to have been
duly served on his legal personal representatives.
132. Every person who, by operation of law, transfer, transmission, or other
means whatsoever, shall become entitled to any share, shall be bound by every
notice in respect or such share which, previously to his name and address being
entered in the Register of Members as the registered holder of such share, shall
have been duly given to the person from whom he derives the title to such share.
WINDING UP
133. The Directors shall have power in the name and on behalf of the Company to
present a petition to the Court for the Company to be wound up.
134. If the Company shall be wound up (whether the liquidation is voluntary or
by the court) the liquidator may, with the authority of a Special Resolution,
divide among the members in specie or kind the whole or any part of the assets
or the Company and whether or not the assets shall consist of property of one
kind or shall consist or properties of different kinds, and may for such
purpose, set such value as he, deems fair upon any one or more class or classes
of property and may determine how such division shall be carried out as between
the members or different clams of members. The liquidator may, with the like
authority, vest any part of the assets in trustees upon such trusts for the
benefit of members as the liquidator with the, like authority shall think fit,
and the liquidation of the Company may be closed and the Company dissolved, but
so that no contributory shall be compelled to accept any shares or other
property in respect of which there is a liability.
INDEMNITY
135. Subject to the provisions of and so far as may be consistent with the
Statutes, every Director, Secretary or other officer, and every auditor, of the
Company shall be entitled to be indemnified by the Company against all costs,
charges, losses, expenses and liabilities incurred by him in the execution
and/or discharge of his duties and/or the exercise of his powers and/or
otherwise in relation to or in connection with his duties, powers or office
including (without prejudice to the generality of the foregoing) any liability
incurred by him in defending any proceedings civil or criminal, which relate to
anything done or omitted or alleged to have been done or omitted by him as an
officer or employee or auditor of the Company and in which judgment is given in
his favour (or the proceedings are otherwise disposed of without any finding or
admission of any material breach of duty on his part) or in which he is
acquitted or in connection with any application under any ordinance for relief
from liability in respect of any such act or omission in which relief is granted
to him by the Court.
SIGNATURES
136. For the purposes of these Articles, a cable or telex or facsimile
transmission message purporting to come from a holder of shares or, as the case
may be, a Director or alternate Director, or, in the case of a corporation which
is a holder of shares or a Director or alternate Director, from a director or
the secretary thereof or a duty appointed attorney or duly authorized
representative thereof for it and on its behalf, shall in
<PAGE>
the absence of express evidence to the contrary available to the person relying
thereon at the relevant time be deemed to be a document or instrument in writing
signed by such holder or Director or alternate Director in the terms in which it
is received.
Names, Addresses and Descriptions of Subscribers
For and on behalf of
Rivot Limited
BY KWOK ON SANG, Director
9th Floor, Bank of East Asia Building,
10, Des Voeux Road Central,
Hong Kong.
Corporation.
For and on behalf of
Gay Hussar Company Limited
By KWOK ON SANG, Director
9th Floor, Bank of East Asia Building,
10, Des Voeux Road Central,
Hong Kong.
Corporation.
Dated the 6th day of December, 1985
WITNESS to the above signatures:
(SD) JENNIFER CHEUNG
Solicitor,
9/F Bank of East Asia Bldg.,
10, Des Voeux Road Central,
Hong Kong.
ARTICLES OF ASSOCIATION
OF THE COOPERATIVE JOINT VENTURE CONTRACT
PLACER TECHNOLOGIES CORP.
This Contract is made and entered as of the ____th day of___________________
1997 by and between:
XIN HAI TECHNOLOGY DEVELOPMENT LTD., a corporation formed under the laws of
the People's Republic of China with its legal address at Suite 210, Building
B, No. 11, Wu Gen Lin Road, West District, City of Beijing, People's Republic
of China herein represented by MR. XIN WEI. a Chinese citizen, its legal
representative and its Chairman
("Xin Hai")
AND:
INFORNET INVESTMENT LIMITED, a corporation formed under the laws of Hong Kong
with its legal address at 14th Floor, Hutchison House, 10 Harcourt Road, Hong
Kong, and herein represented by MR. ERNEST CHEUNG, a Canadian citizen, its legal
representative and its President
("Infornet")
who together, acting for and on behalf of PLACER TECHNOLOGIES CORP., a
Chinese corporation to be formed under the laws of the People's Republic of
China, with a legal address at Suite 2 10, Building B, No. 11, Wu Gen Lin
Road, West District, City of Beijing, People's Republic of China
("hereinafter sometimes referred to as "Party A" or as the "Joint Venture
Company')
AND:
XIN HAI TECHNOLOGY DEVELOPMENT LTD., a corporation formed under the laws of the
People's Republic of China with its legal address at Suite 210, Building B, No.
11, Wu Gen Lin Road, West District, City of Beijing, People's Republic of China,
herein represented by MR. XIN WEI, a Chinese citizen, its legal representative
and its Chairman
(hereinafter sometimes referred to as "Party B" or ('Xin Hai" or as the
"Chinese Operator"
AND:
INFORNET INVESTMENT LIMITED, a corporation formed under the laws of Hong Kong
with its legal address at l4th Floor, Hutchison House, 10 Harcourt Road, Hong
Kong, and herein represented by MR. ERNEST CHEUNG, a Canadian citizen, its legal
representative and its President
<PAGE>
(hereinafter sometimes referred to as "Party C" or "Infornet')
WHEREAS Xin Hai is a Chinese company engaged in the business of developing
computer hardware, software and telecommunication network technology, and
providing consultation and training services and technology
transfer thereof, and Xin Hai has obtained from the Beijing Telecommunication &
Administration Bureau, under the Ministry of Posts and Telecommunications, an
internet service provider ("ISP") license, which permits
Xin Hai to provide internet access services and value-added services, including
World Wide Web server hosting and integration services, client software and
security products, training, and network integration as well as consulting
services in Beijing;
WHEREAS Xin Hai and Infornet entered into a Cooperative Joint Venture Contract
on___________ day of ___________1997, pursuant to which PLACER TECHNOLOGIES
CORP. (the "Joint Venture Company") is to be formed and registered under the
laws and other relevant regulations of
the People's Republic of China;
WHEREAS the Joint Venture Company to be formed shall manufacture and sell
computer network systems, communication equipment and provide communication
engineering services, including development and construction of internet access
networks in China and the parties agree -to authorize Xin Hai to operate the
said network according to the prevailing laws and regulations in China which
allow Sino-foreign joint venture companies to construct internet access networks
and to have legitimate ownership rights and rights for return on the investment.
but disallow joint venture companies to operate such networks:
WHEREAS Xin Hai and Infornet have agreed on their own behalf. and acting
collectively for and on behalf of the Joint Venture Company to be formed, to
enter into this Contract in order to render effective and implement the Joint
Venture Contract
WHEREAS Xin Hai declares that it has duly obtained all authorizations required
under the laws of the People's Republic of China to operate the internet access
services and value-added services in Beijing;
WHEREAS Xin Hai has been designated as the "Chinese Operator to be responsible
for the operations of the internet access networks set up by the Joint Venture
Company";
WHEREAS according to the Joint Venture Contract signed by the parties, Infornet
shall contribute all of the required capital of the Joint Venture Company and
until such date as Infornet's total investment in the Joint Venture Company has
been fully recovered by Infornet (the "Recoupment Date"),. the distribution of
profits shall be in accordance with the following percentages:
Xin Hai - 20%
Infornet - 80%
and after the Recoupment Date all distribution of profits shall be made as
follows:
Xin Hai - 49%
Infornet - 51 %
<PAGE>
WHEREAS Xin Hai and the Joint Venture Company recognize the benefit of a
cooperative arrangement in which Xin Hai exclusively contracts with the Joint
Venture Company and uses the technical service and financial support provided by
the Joint Venture Company during the term of this Contract;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
adhering to the principles of equality and mutual benefit through friendly
consultations, the Parties hereto hereby agree as follows:
ARTICLE 1
INTERPRETATION
1. Definitions. When used in this Agreement, unless the context indicates
otherwise, the capitalized
expressions used therein shall have the meanings as set out below:
1. 1. "Affiliate" means any legal entity whose ownership by a party shall exist
through the direct or indirect ownership of more than fifty percent (50%) of the
equity interest of the legal entity and more than fifty percent (50%) of the
voting rights entitling the holders thereof to vote for the election of
directors or persons performing similar functions, or the right by any other
means to elect or appoint directors or persons performing similar functions, or
has more than fifty percent (50%) of the vote in such a legal entity;
1.2. "Commencement Date" means the date upon which the Joint Venture Company
shall have
obtained its Business License;
1.3. "Contract" means this present contract entered into between the Parties and
all agreements and other documents relating thereto:
1.4. "Earnings" has the meaning ascribed thereto in Section 9.11;
1.5. "Event of Force Majeure" means fire, explosion, accident, earthquake, tidal
wave, strike, picketing, lockout, labour dispute, breakdown in machinery,
facilities or equipment, flood, drought, embargo, war, riot or insurrection,
uprising, rebellion, act of God or public enemy, acts or orders of any
government or governmental authority, failure or delay of carrier, contractor,
supplier or distributor or any other event whether similar or dissimilar to the
foregoing which is beyond the reasonable control of the Party affected thereby
and which shall delay, interrupt or prevent the performance in whole or in part
by such Party of any of its obligations;
1.6. "Fiscal Year" shall mean the period of twelve months ending on
December 31 of each year;
1.7. "Internet Network" means the internet access service, its value-added
services, including World Wide Web server hosting and integration services,
client software and security products, training and network integration as well
as consulting services pursuant to the internet server provider license ("ISP
License") issued to Xin Hai by Beijing Telecommunication & Administration Bureau
which is directly under the Chinese ministry of Posts and Telecommunications.
1.8. "Operating Expenditures" has the meaning ascribed thereto in Section
9.6;
<PAGE>
1.9. "Revenues" has the meaning ascribed thereto in Section 9.4.
2. The Preamble. The preamble forms an integral part of this Contract as if
herein recited at length
3. Interpretation Not Affected by Headings. Grammatical variations of any terms
defined herein shall have similar meanings; words importing the singular number
shall include the plural and vice versa; and words importing the masculine
gender shall include the feminine and neuter genders and vice versa. The
division of this Contract into separate articles, sections, subsections,
paragraphs and subparagraphs, the provision of a table of contents and index
thereto, and the insertion of headings, marginal notes and references are for
convenience of reference only and shall not affect the construction or
interpretation of this Contract.
4. Severability. If any provision of this Contract. or the application thereof
to any person or circumstance shall, to any extent, be invalid or unenforceable,
the remainder of this Contract or the application of such provision to persons
or circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby and each provision of this Contract shall be
separately valid and enforceable to the fullest extent permitted by law.
5. Governing Law. This Contract shall be governed by and construed in accordance
with the law of the People's Republic of China.
6. Generally Accepted Accounting Principles and Generally Accepting Auditing
Standards. An accounting and financial terms used herein unless specifically
provided to the contrary herein shall be interpreted and applied in accordance
with international generally accepted principles (International GAAP)
consistently applied.
7. Language. This Contract shall be written in Chinese and in English. Both
versions shall have the same legal and binding effect. If there is any
controversy between the both versions, such controversy shall be resolved by the
decision of the relevant Arbitration Commission.
ARTICLE 2
THE PROJECT
2.1 Purpose. The Parties hereby agree that the purpose of this Contract is to
establish the terms and conditions concerning:
2.1.1 the construction by the Joint Venture Company of the Internet
Network;
2.1.2 the operation of the Internet Network by Xin Hai as the Chinese
Operator;
2.1.3 the provision of equipment to the users of the Internet Network;
2.1.4 the terms of the technical assistance to be provided by the
Joint Venture Company to Xin
Hai; and
2.1.5 the sharing of revenues between the Joint Venture Company and
the Chinese Operator
during the term of this Contract.
<PAGE>
2.2 Collaboration. The Parties hereto acknowledge and agree that they shall
collaborate with each other in order to achieve the objectives of this Contract
and perform their respective obligations hereunder. The Parties further
acknowledge and agree that they shall act in good faith in performing their
respective obligations hereunder and shall act according to the principles of
friendly consultation and discussion, equality and mutual benefit, to ensure
that the Internet Network can be operated on a profitable basis.
2.3 Separate Operating Unit. For the purposes of the Contract, the Parties
hereto agree that Xin Hai shall independently operate the Internet Network.
ARTICLE 3
THE TERM
3.1 The Term. The term of this Contract shall commence on the Commencement Date
and shall terminate on the twentieth (20th) anniversary of the Commencement
Date, unless otherwise terminated hereunder. This Contract shall form an
integrated part of the Joint Venture Contract, upon the termination of the Joint
Venture Contract, this Contract shall be terminated concomitantly therewith.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations of XIN HAI Xin Hai hereby represents and warrants to the
other Parties that:
4.1.1 Xin. Hai is formed exclusively of Chinese shareholders.
4.1.2 Xin Hai is licensed by the Beijing Telecommunication & Administration
Bureau under the Ministry of Post and Telecommunications of China under the laws
of the People's Republic of China to operate, in Beijing, Internet Networks as
defined in this Contract. Xin Hai hereby warrants and guarantees to maintain in
full force and effect such legal and legitimate internet operating license
during the entire term of this Contract-,
4.1.3 Xin Hai is designated by Xin Hai and Infornet as the Chinese Operator to
enter into this Contract.
4.1.4 Xin Hai is duly organized, validly existing and in good standing under the
laws of the People's Republic of China, has the independent legal person status
and has all requisite power and authority to own and operate its assets,
properties and business and to carry on its business as now conducted.
4.1.5 Xin Hai has all requisite power and approvals required to enter into,
execute and deliver this Contract and to fully perform its obligations
hereunder.
4.1.6 Xin Hai has taken all actions necessary to authorize it to enter into and
perform its obligations under this Contract and this Contract is a legal, valid
and binding obligation of Xin Hai, enforceable against Xin Hai in accordance
with its terms.
<PAGE>
4.1.7 Neither the execution and delivery of this Contract by Xin Hai, nor the
performance of Xin Hai's obligations hereunder, will conflict with, or result in
a breach of, or constitute a default under any provision of the Articles of
Association of Xin Hai, or any law, rule, regulation, judgment, order or decree
of any court, arbitrator or governmental agency, or of any contract, agreement
or instrument to which the Joint Venture Company and Xin Hai are subject.
4.1.8 No authorization, approval or consent of any governmental, municipal or
other authority or person or otherwise is required in connection with Xin Hai's
execution and delivery of this Contract and the performance of its obligations
hereunder.
4.1.9 Xin Hai is not entitled to claim any immunity from suit, execution, or
other legal process under the laws of the People's Republic of China.
4.2 Representations of Infornet. Infornet hereby represents and warrants to the
other Parties that:
4.2.1 It is duly organized, validly existing and in good standing under the laws
of Hong Kong, has the independent legal person status and has all requisite
power and authority to own and operate its assets, properties and business and
to carry on its business as now conducted.
4.2.2 It has all requisite power, authority and approvals required to enter
into, execute and deliver this Contract and to fully perform its obligations
hereunder.
4.2.3 It has taken all actions necessary to authorize it to enter into and
perform its obligations under this Contract and this Contract is its legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
4.2.4 Neither the execution and delivery of this Contract by it, nor the
performance of its obligations hereunder, will conflict with, or result in a
breach of, or constitute a default under, any provision of its charter, or any
law, rule, regulation, judgment, order or decree of any court, arbitrator or
governmental agency, or of any contract, agreement or instrument to which the
Joint Venture Company and the Xin Hai are subject.
4.2.5 No authorization, approval or consent of any governmental, municipal or
other authority or person or otherwise is required in connection with its
execution and delivery of this Contract and the performance of its obligations
hereunder.
ARTICLE 5
CONDITIONS PRECEDENT
The performance by the Joint Venture Company of its obligations hereunder are
subject to the following conditions to be fulfilled or performed at or prior to
the Commencement Date, which conditions are for the exclusive benefit of the
Joint Venture Company and may be waived in whole or in part by the Joint Venture
Company, in its sole discretion.
<PAGE>
5.1 Deliveries. The Joint Venture Company shall have received at or prior to the
Commencement Date, the following, in form, scope and substance acceptable to the
Joint Venture Company and its counsel, acting reasonably: certified copies of
such consents, licenses, permits, approvals and registrations by or with all
governmental agencies or other competent authorities in the People's Republic of
China, as may be necessary to ensure the validity and binding effect of this
Contract and to permit the performance by the Parties hereto of their respective
obligations under this Contract in accordance with all of the terms and
provisions hereof and more specifically to permit Xin Hai to operate the
Internet Network in accordance with the terms and conditions outlined in this
Contract and with all applicable laws, regulations, directives, orders or
decrees in effect in the People's Republic of China.
5.2 Corporate Deliveries. The Joint Venture Company shall have received at
or prior to the Commencement Date, certified copies of company registration
certificates and certificates of good standing of Infornet;
5.3 Truth of Representations and Warranties. The representations and warranties
of Xin Hai contained in this Contract or in any report or other document
delivered to the Joint Venture Company, shall be true and correct as of the
Commencement Date with the same force and effect as if such representations and
warranties had been made on and as of such date.
5.4 No Default or Event of Default. No event of default shall have
occurred and shall be continuing.
ARTICLE 6
CONSTRUCTION
6.1 Certain Obligations of the Joint Venture Company.
6.1.1 During the term of the Joint Venture Contract and in accordance with this
Contract, the Joint Venture Company shall provide the Internet Network with all
the communication equipment as well as the necessary accessories for selling or
leasing to end users.
6.1.2 The Joint Venture Company assumes all the Operating Expenditures of the
Internet Network as contemplated in this Contract.
6.2 Engineering Services. The Parties hereto agree that the Joint Venture
Company exclusively shall perform or cause to be performed all the engineering
services in respect of the Internet Network which engineering
services shall include but shall not be limited to:
6.2.1 the engineering design;
6.2.2 the integration, the installation and the testing of the Internet
Network;
6.2.3 the customization of the Internet Network protocol and of the
network management software;
6.2.4 the development of end user interface software and user application
software;
6.2.5 the technical support to the Internet Network and advisory service on
maintenance;
<PAGE>
6.2.6 the supply of parts and instruments to the Internet Network
ARTICLE 7
OPERATIONS
7.1 Certain obligations of Xin Hai. During the term of this Contract, Xin Hai
shall, inter alia, be responsible for:
7.1.1 managing, supervising, operating, maintaining and repairing the Internet
Network and taking all the necessary steps to ensure that the Internet Network
be in good operating condition;
7.1.2 marketing;
7.1.3 selling or leasing equipment on behalf of the Joint Venture Company;
7.1.4 collecting all the fees payable by the users of the Internet
Network;
7.1.5 obtaining all required licenses, authorizations and permits from local,
state and other authorities of the People's Republic of China to permit the
transactions contemplated under this Contract and the Joint Venture Contract
7.1.6 subject to obtaining prior written consent of the Joint Venture Company
and thereafter the Joint Venture Company's final approval, the negotiating and
entering into agreements with governmental or private parties. which are
necessary and appropriate for or in connection with the construction or
operation of the Internet Network;
7.1.7 effecting and maintaining all appropriate insurances in relation to the
assets comprising the Internet Network and in relation to all employees or
agents engaged in any way in the operation thereof,
7.1.8 in the case of emergency or accident, taking such action as is necessary
for the protection of life and property (and forthwith reporting any such
emergency or accident and the particulars thereof to the Joint Venture Company);
7.1.9 doing such other acts and things as may be necessary or advisable for the
efficient and economical operation of the Internet Network as well as doing any
other act or thing in accordance with the Joint Venture Contract or which may be
authorized thereunder.
ARTICLE 8
STANDARDS
8. 1 Standards. Each of the Parties shall perform all of its obligations
hereunder and conduct all of its operations in a good workmanlike and
commercially reasonable manner and in accordance with standard and suitable
engineering, processing, procurement and purchasing methods, procedures and
practices, and with the standard of diligence and care normally exercised by
duly qualified persons in the performance of comparable work..
<PAGE>
8.2 Employees in Connection with Internet Network. During the term of this
Contract, Xin Hai shall employ qualified personnel according to the authorized
staff quantity (subject to the review and approval of the Joint Venture Company)
to carry out its obligations under this Contract. The Parties hereto agree that
the total employment compensation payable to, or in respect of, such personnel
must not exceed the amount allocated for such expense under the budgets approved
by the Joint Venture Company as contemplated under Section 9. 1.
ARTICLE 9
FINANCIAL MATTERS WITH RESPECT TO OPERATIONS
9.1 Budgets. Immediately following the date hereof, and thereafter at least 30
days prior to the commencement of each subsequent Fiscal Year, Xin Hai shall
prepare and submit to the Joint Venture Company for its review and approval the
programmes (including long term programmes and planning), budgets and estimates
including revenue, delivery and cash flow schedules, capital expenditure and
outstanding commitment schedules and other matters transpiring in connection
with operations of the Internet Network for the next following twelve months
(except for the first period which shall continue until the commencement of the
next following Fiscal Year) and for any other periods as the Joint Venture
Company may, from time to time, reasonably require. Xin Hai shall, on a
quarterly basis to prepare and submit to the Joint Venture Company amendments
and revisions of such Programmes, budgets and estimates as aforesaid. The
programmes and budgets as approved and from time to time amended or revised by
the Joint Venture Company shall be binding on Xin Hai which shall carry out its
duties hereunder in accordance therewith. Xin Hai shall, for the benefit of the
Internet Network, make all disbursements in connection with operations of the
Internet Network in accordance with such approved programmes and budgets.
9.2 Financial Statements
9.2.1 Monthly. Starting from the beginning of the second Fiscal Year, Xin Hai
shall, -within fifteen (15) days after the close of each month, furnish to the
Joint Venture Company a progress report summarizing the operations and results
of the Internet Network during such month together with an unaudited statement
reflecting in reasonable detail, but in summary form, revenues, expenditures and
cash flow of the Internet Network for such month and a comparison for the same
period in the immediately preceding Fiscal Year.
9.2.2 Other Reports. In addition to the report and comparative statements
referred to in Section 9.2. 1, Xin Hai shall, as promptly as practicable after
their preparation, furnish to the Joint Venture Company copies of other
significant reports prepared by or received by Xin Hai and in addition, Xin Hai
shall promptly furnish to the Joint Venture Company copies of any written
communications to or from any government or other competent authority which, in
the opinion of Xin Hai, is significant to the transactions contemplated
hereunder.
9.2.3 Quarterly. Within thirty (30) days following the end of each fiscal
quarter. Xin Hai shall furnish to the Joint Venture Company quarterly and
cumulative financial statements consisting of a balance sheet as of the end of
such quarter. and a statement of income and cash flow for such quarter, and
quarterly and cumulative figures for the corresponding periods of the preceding
year as well as the budgeted figures for such quarter. Such quarterly reports
shall also include other financial, commercial, business or operational
information concerning the operations of the Internet Network as may be required
by the Joint Venture Company.
<PAGE>
9.2.4 Annually. In addition to the reports, statements and communications
referred to in Sections 9.2.1, 9.2.2 and 9.2.3, Xin Hai shall furnish to the
Joint Venture Company as soon as practicable after the close of each Fiscal Year
and in any event not later than eighty (80) days after the close thereof,
Financial Statements, to be audited by a firm appointed by the Joint Venture
Company reflecting the results for such Fiscal Year of all transactions in
connection with operations of the Internet Network as disclosed by the records
and accounts kept or caused to be kept by the Chinese Operator pursuant to
Section 9.3 and reflecting the Internet Network assets in the custody or control
of Xin Hai as at the end of such Fiscal Year. The firm of auditors appointed by
the Joint Venture Company shall have access to all records, registries,
documents, reports, data, software and other information in the possession of or
under the control of Xin Hai, to allow such auditors to proceed with the audit
of the Financial Statements in accordance with the instructions of the Joint
Venture Company.
9.3 Records and Accounts and Rights of Inspection
9.3.1 Xin Hai shall keep or cause to be kept, distinct and separate from any
other records and accounts relating to the business of Yin Hai, comprehensive,
true and accurate records and accounts of all operations of the Internet
Network, and of Xin Hai's performance of its duties under this Contract and all
property, real and personal, belonging to and of all transactions entered into
in connection with the Internet Network and of the costs and expenses thereof
including, without limitation, records and accounts in respect of:
(a) each sum received by Xin Hai from the Joint
Venture Company and date of receipt thereof;
(b) each sum received from Xin Hai on behalf of the Joint
Venture Company and the date of receipt and the
source thereof,
(c) each sum disbursed by Xin Hai for the benefit of the
Internet Network and the date and purpose thereof,
(d) the acquisition of services and materials, equipment and
supplies and other property and assets by Xin Hai for
the purposes of the Internet Network and the date, cost of
acquisition and description thereof,
(e) inventories of materials, equipment and supplies and other
property of the Interne Network in the custody or
possession of Xin Hai;
(f) the sale, abandonment or other disposition by Xin Hai of
any of such materials, equipment and supplies or any
other property which may be part of the Internet Network.
The Joint Venture Company shall be entitled to inspect and
obtain copies of all such records and accounts, and Xin
Hai shall supply the Joint Venture Company with copies
of all reports, statements and certificates material to
the Joint Venture Company.
9.3.2 The Joint Venture Company shall be entitled to inspect and obtain copies
of all such records and accounts, and Xin Hai shall supply the Joint Venture
Company with copies of all reports, statements and certificates material to the
Joint Venture Company.
<PAGE>
9.3.3 The records and accounts referred to herein shall be made available for
audit by the firm of auditors appointed by the Joint Venture Company at such
time and in such manner as the Joint Venture Company may direct.
9.3.4 The Joint Venture Company shall have the right at all reasonable times
during the term of this Contract to send observers to inspect and observe the
operations of the Internet Network and to report to the Joint Venture Company.
Such observers shall have access to any and all records, data and information
relating to the Internet Network and the operation thereof.
9.4 Internet Revenues. The Parties agree that the revenues generated from the
operations of the Internet Network (the "Revenues") shall consist of any amount
invoiced or that may be invoiced under any contract entered into by Xin Hai
relating to the sale of products or the performance of services offered by Xin
Hai in connection with the Internet Network. The Internet Revenues shall consist
of, but not be limited to:
9.4.1 the end users monthly service fees;
9.4.2 the internet initial connecting fees;
9.4.3 equipment sales revenues and/or monthly leasing fees;
9.4.4 maintenance fees;
9.4.5 the fees for additional warranty coverage on equipment;
9.4.6 the bank interest income (including the interest
income in the bank accounts of the Xin Hai and the bank
account of the Join Venture Company as referred to in
Section;
9.5 Collection of Internet Revenues. All Revenues shall be deposited by Xin Hai
into a bank account in the name of Xin Hai which shall require joint signatures
and joint seals of both a Xin Hai authorized officer and a Joint Venture Company
authorized officer for any withdrawal of money from it. Forty percent (40%) of
the Revenue shall be transferred to another bank account (the second account) of
the Xin Hai while the other sixty percent (60%) of the Revenue shall be
transferred to a bank account of the Joint Venture Company. The forty percent
(40%) Revenue transferred to the second bank account of Xin Hai shall be used to
cover the Operating Expenditures. If the amount is less than actual Operating
Expenditures, Xin Hai shall obtain the balance from the Joint Venture Company
(on a month by month basis). If the amount is higher than the actual Operating
Expenditures, then the Xin Hai must remit the surplus to the Joint Venture
Company. The use of the sixty percent (60%) Internet Revenue transferred to the
Joint Venture Company shall be reported to the two Parties of the Joint Venture
Company. This amount shall be treated as business revenue of the Joint Venture
Company under the terms of the network investment/construction return, technical
service fees and profit repatriated to network owners.
9.6 Internet Network Operating Expenditures. The Parties hereby agree that all
operating expenditures contained in the operating budgets submitted to and
approved by the Joint Venture Company shall constitute expenditures derived from
the operation of the Internet Network (the "Operating Expenditures").
<PAGE>
9.7 Chargeable Costs by Xin Hai. Xin Hai may charge as operating expenses of the
Internet Network all the costs, expenses and liabilities (except as herein
mentioned) incurred by Xin Hai in the performance of its obligations under this
Contract and which constitute Operating Expenditures but solely to the extent
that they have been approved by the Joint Venture Company in the programmes,
budgets and estimates referred to in Section 9.1 hereof The Parties hereby agree
that for greater certainty, the following expenditures when they are directly
related to the Internet Network form part of the Operating Expenditures:
9.7.1 salaries and other reimbursements of network operators;
9.7.2 office rental costs;
9.7.3 marketing costs;
9.7.4 reasonable business entertainment costs;
9.7.5 reasonable traveling costs;
9.7.6 insurance costs; and
9.7.7 management costs;
9.7.8 In principle, the Internet Network service employees shall enjoy similar
compensation packages as those received by the Joint Venture Company employees.
9.8 Non-chargeable Costs by Xin Hai. The following costs, expenses and
liabilities shall be borne entirely by Xin Hai unless otherwise determined by
the Board of Directors:
9.8.1 fines and penalties and similar liabilities and amounts paid in settlement
thereof resulting from negligent failure by Xin Hai to comply with or the
willful violation by Xin Hai of the applicable laws, rules or regulations except
when incurred as a result of compliance with guidelines of the Joint Venture
Company; and
9.8.2 taxes imposed upon or measured by income of the Chinese Operator.
9.9 Any rebates or other credits received by Xin Hai for goods, equipment and
services acquired by Xin Hai hereunder during the Operation of the Internet
Network shall be for the account of the Internet Network.
9.10 Working Capital Requirement. The above-mentioned forty percent (40%) of the
Revenue transferred to the second account of Xin Hai shall be used to cover the
Operating Expenditures. At the end of each month, Xin Hai shall prepare and
submit to the Joint Venture Company a report indicating the results of the
operations of the Network during such preceding month, and indicating a
comparison between the Operating Expenditures incurred by Xin Hai for the
benefit of the Internet Network and the sum of the advances Xin Hai received
from the Joint Venture Company and the above mentioned forty percent (40%) of
the Revenue received for such month. If the amount received is less than actual
expenses, Xin Hai shall obtain the balance from the Joint Ventur6 Company (on a
month by month basis). If the amount of the Operating Expenditures is higher
than the actual expenses, then Xin Hai must remit the surplus to the Joint
Venture Company.
<PAGE>
9.11 Revenue. The parties agree that all of the Earnings generated by the
operation of the Internet Network shall be retained by the Joint Venture Company
as legitimate returns on the network development and technical support. For
purposes hereof, "Earnings" is the amount by which the Revenues (described in
Section 9.4) exceeds the Operating Expenditures (described in Sections 9.6 and
9.7).
ARTICLE 10
OWNERSHIP OF THE INTERNET NETWORK
10.1 Ownership during the term of this Contract. The ownership and title to all
of the assets comprising the Internet Network shall remain with the Joint
Venture Company during the term of this Contract. Xin Hai shall, subject to this
Contract, be entitled to the custody and control of such assets on behalf of the
Joint Venture Company. Subject to the prior written approval of the Joint
Venture Company, title to any such assets may be vested in Xin Hai and, in all
such cases, such assets shall be held by Xin Hai in trust for the Joint Venture
Company.
10.2 After-acquired Property. All property, real or personal, tangible or
intangible, held, developed, constructed or acquired by Xin Hai on behalf of the
Joint Venture Company under or pursuant to this Contract shall beowned by the
Joint Venture Company in accordance with the provisions of this Contract.
10.3 Mortgages or Liens. Xin Hai shall not have any right or power (except for
liens arising in the normal and ordinary course of business) to mortgage,
pledge, charge, encumber, or otherwise dispose of or create any lien over or
trust in respect of the Internet Network or any portion thereof.
10.4 Acquisition of Property. Except in accordance with the provisions of this
Contract or as directed in writing by the Joint Venture Company, Xin Hai may not
acquire or contract to acquire any property of any kind for or on behalf of the
Joint Venture Company.
ARTICLE 11
AGREEMENT FOR OPERATIONS PURSUANT TO
ISP LICENSES OBTAINED IN OTHER CITIES IN CHINA
11.1 Covenant of Xin Hai. Xin Hai covenants that in order to expand the business
of the Joint Venture Company and Xin Hai, it will use its best efforts for
obtaining ISP licenses in other cities in China and operate the Internet Network
thereunder mutatus mutandis in accordance with this Contract. In the event that
any affliate of Xin Hai created to obtain an ISP license in a city other than
Beijing in China obtains such ISP License, Xin Hai will cause that affiliate or
affiliates as the case may be to expressly adopt in writing the rights, duties
and to be fully liable to perform the obligations under this Contract as if it
were the Chinese Operator hereunder for the Internet Network operation in that
city pursuant to this Contract and operate the Internet Network in that city
mutatis mutandis in accordance with this Contract.
11.2 Applicabi1ity of this Contract. The parties agree that this Contract shall
govern mutatis mutandis any and all future Internet Network operations pursuant
to any or all ISP license(s) to be obtained by Xin Hai or Xin Hai's affiliates.
<PAGE>
ARTICLE 12
LIABILITY AND INDEMNIFICATION
12.1 Liability and Indemnification of Xin Hai. Xin Hai hereby agrees to
indemnify and hold the Joint Venture Company, its officers, directors,
shareholders and employees harmless from and against any and all claims, losses,
liabilities, damages, arising out of, resulting from or in connection with the
performance by Xin Hai its officers and employees of the obligations of Xin Hai
under this Contract or in connection with the Internet Network.
12.2 Liability and Indemnification of the Joint Venture Company. The Joint
Venture Company hereby agrees to indemnify and hold Xin Hai, its officers,
directors, shareholders and employees harmless from and against any and all
claims, losses, liabilities, damages, arising out of, resulting from or in
connection with the performance by the Joint Venture Company, its officers and
employees of the obligations of the Joint Venture Company under this Contract or
in connection with the Internet Network.
ARTICLE 13
FORCE MAJEURE
13.1 Event of Force Majeure. Should any Party be prevented from executing any of
its obligations under this Contract or should the Internet Network (or any part
thereof) be prevented from operating as a result of an Event of Force Majeure,
then the Party so prevented shall notify the other Party in writing without
delay, and within fifteen (15) days thereafter shall further provide detailed
information of the Event of Force Majeure and explain the reason of its
inability to execute its obligations under this Contract or the delay in the
execution of all or part of this Contract. The Parties shall, through
consultation, decide either to terminate this Contract in whole or in part, or
to delay the execution of this Contract (or a portion of this Contract) until
such time that the Event of Force Majeure ceases.
13.2 Minimizing Losses. The Parties hereby agree that in the Event of Force
Majeure, they shall consult with each other and take all reasonable steps to
minimize the losses of any Party resulting from such Event of Force Majeure.
ARTICLE 14
ASSIGNMENTS
14.1 Assignments Not Permitted. Neither the Joint Venture Company nor Xin Hai
may assign or transfer all or any part of its rights, benefits or obligations
hereunder. provided. however, that this shall not prevent the Joint Venture
Company or Xin Hai from merging or consolidating with any other company where
the surviving entity adopts and becomes fully liable to perform the obligations
of the Joint Venture Company or Xin Hai hereunder.
14.2 Joint Venture Company. Notwithstanding the foregoing, the Joint Venture
Company may transfer all or any part of its rights and obligations hereunder for
the purposes of (i) arranging or rearranging financing for the Internet Network,
(ii) assigning or transferring to any person providing financing to the Internet
Network all or any part of its rights (but not its obligations) hereunder. Xin
Hai shall duly acknowledge any such assignment or transfer of which it is given
notice.
<PAGE>
14.3 Infornet. Notwithstanding the foregoing, Infornet shall have the right,
upon notice thereof to the other Parties hereto, to assign this Contract and any
or all of its rights, duties and obligations hereunder to any subsidiary or
affiliate of Infornet or to a successor in interest to Infornet's business, (as
the case may be), acceptable to the other Parties acting reasonably, provided
however, that such assignee of Infornet expressly adopts in writing the rights,
duties and obligations of Infornet hereunder. Infornet shall have the right,
upon notice thereof to the other Parties hereto, to assign this Contract and any
or all of its rights, duties and obligations hereunder to one or more
unaffiliated third parties, acceptable to the other Parties acting reasonably,
provided that such assignee of Infornet expressly adopts in writing the rights,
duties and obligations of Infornet hereunder. No assignment under this Section
14.3 shall release Infornet from any liability or responsibility hereunder.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Agreements with Affiliates. Any agreements which are entered into by Xin
Hai in the performance of its obligations under this Contract with any Affiliate
shall be on normal "arm's length" commercial terms. Any such agreements or
agreements with appointed regional representatives or agents shall require the
prior approval of the Joint Venture Company.
15.2 Resolution of Disputes
15.2.1 Any controversy or claim that may arise under, out of, in connection with
or relating to this Contract or any breach hereof, shall be submitted to a panel
consisting of representatives of each Party. Each Party may appoint up to two
(2) individuals to such panel. The members of such panel shall be appointed by
each Party within ten (10) days of the receipt by the Party of notice of the
existence of such controversy or claim- The unanimous decision of such panel
shall resolve the controversy or claim. If the panel is unable to resolve such
matter within thirty (30) days of the submission of such controversy or claim to
such panel, it shall be brought before the President of each Party for final
resolution. If the Presidents are unable to resolve the matter within thirty
(30) days of the submission of such controversy or claim to them, any Party may
request arbitration in accordance with Section 15.2.2.
15.2.2 Any controversy or claim that is not resolved under Section 15.2.1 shall
be settled by final and binding arbitration in Beijing in accordance with the
then existing rules of arbitration of the China International Economic and Trade
Arbitration Commission. Judgment upon any award rendered by the arbitrators may
be entered in any court having jurisdiction or application may be made for
judicial acceptance of the award and an order of enforcement, as the case may
be. The Parties agree that if it becomes necessary for any Party to enforce an
arbitral award by legal action or additional arbitration or judicial methods,
the party against whom enforcement is sought shall pay all reasonable costs and
attorneys' fees incurred by the party seeking to enforce the award.
15.3 Change in Circumstances. In the event, as a result of any laws, regulations
or policies of the People's Republic of China, or any agency or other body under
the control of the Government of the People's Republic of China, coming into
effect after the date hereof or as a result of any amendment, modification or
repeal of such laws, regulations or policies, the Joint Venture Company is
authorized to operate or participate in the operation, directly or indirectly,
of the Internet Network, then the Parties agree that they will discuss the basis
and terms upon which the arrangements set out in this Contract may be amended or
discontinued.
<PAGE>
15.4 Notices. Any notice, consent, authorization, direction or other instrument
required or permitted to be given (a "Notice") hereunder shall be in writing and
shall be delivered either by personal delivery, by certified mail or by
telecopier, return receipt requested, and addressed as follows:
15.4.1 if to XIN RAI TECHNOLOGY DEVELOPMENT LTD.
Suite 2 10, Building B. No. 11
Wu Gen Lin Rd., West District
Beijing, People's Republic of China
Attention: Mr. Xin Wei
Telecopier: (8610) 6221-2512
15.4.2 if to INFORNET INVESTMENT LIMITED
14th Floor Hutchison House
10 Harcourt Road, Hong Kong
Attention: Mr. Ernest Cheung
Telecopier: (852) 2845-0476
COPY TO:
830 - 789 West Pender Street
Vancouver, BC
Canada
V6C I H2
Attention: Mr. Ernest Cheung
Telecopier(604) 689-4407
Any Notice shall be deemed to have been effectively given and received, if sent
by telecopier, on the next business day following receipt of such transmission
(confirmation of receipt by confirmed facsimile transmission being deemed
receipt of communication sent by telecopy) or, if delivered, to have been given
and received on the date of such delivery. Any Party may change its address for
service by written Notice given as aforesaid.
15.5 Confidential Information. All information other than information generally
known in the telecommunications industry supplied by or on behalf of any Party
pursuant to this Contract ("Confidential Information") shall be treated as
confidential by all Parties. The Parties covenant and agree that no Confidential
Information shall be disclosed to anyone outside the organization of such party
without the prior written consent of the other. In addition, the Parties agree
to take such action as may be appropriate to prevent the unauthorized use and
disclosure of, and to keep confidential all such Confidential Information,
including ensuring that such Confidential Information is disclosed only to
responsible employees of the Party and on a need to know basis.
<PAGE>
15.6 Relationship of Parties. No Party has the power of authority to legally
bind any other Party and nothing herein contained shall be construed as
authorizing any Party to act as an agent or representative of any other Party.
15.7 Counterparts. This Contract shall be executed in six (6) originals and all
to be executed at the same time. All executed counterparts shall constitute one
contract binding on all the Parties.
15.8 Binding Effect. Except as otherwise provided to the contrary, this Contract
shall be binding upon, and inure to the benefit of, the Parties and their
respective heirs, executors, administrators, successors and permitted assigns.
15.9 Amendment. This Contract may be amended in whole or in part only by an
agreement in writing signed by all the Parties. The Parties agree that during
the term of this Contract in order to effect a major amendment to this Contract,
they shall, where required, apply for approval to the competent authorities
where the subject of amendment requires industrial or commercial registration or
tax registration. The re-registration formalities shall be completed with the
Administrator or other competent authorities in industry and commerce or the
taxation authorities, as the case may be.
15.10 Integration. This Contract including the schedules and exhibits hereto, if
any, sets forth the entire agreement between the Parties on the subject hereof
and supersedes any previous agreement, understanding, memorandum, letter of
intent or representation on the subject matter hereof other than the Joint
Venture Contract.
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this Contract in Beijing,
China as of ________________________1997.
Party A: Placer Technologies Corp. The Company to be incorporated under the laws
of The Peoples' Republic of China and represented by the following parties. This
contract will also be signed as evidence of ratification by the legal
representative of the Joint Venture company according to the decision of its
Board of Directors.
Xin Hai Technology Development Ltd.
Per:______________________________________________
Infornet Investment Limited
Per:______________________________________________
Placer Technologies Corp.
Per:______________________________________________
Legal representative has signed as evidence of the ratification this__day of
_____________ 1997.
Party B: Xin Hai Technology Development Ltd.
Per:______________________________________________
Party C: Infornet Investment Limited
Per:______________________________________________
ARTICLES OF ASSOCIATION
BETWEEN: XIN HAI TECHNOLOGY DEVELOPMENT LTD., a corporation
formed under the laws of the People's Republic of
China with its legal address at Suite 210, Building B
No. 11 Wu Gen Lin Road, West District, City of
Beijing, People's Republic of China;
(hereinafter sometimes referred to as "Party A" or
as "Xin Hai")
AND: INFORNET INVESTMENT LIMITED., a corporation formed
under the laws of Hong Kong with its legal address
at 14th Floor, Hutchison House, 10 Harcourt Road,
Hong Kong;
(hereinafter sometimes referred to as "Party B" or as
"Infornet")
NOW THEREFORE in consideration of the mutual covenants herein and adhering to
the principle of equality and mutual benefit and through friendly consultations,
the Parties hereto hereby agree as follows:
CHAPTER 1: GENERAL PROVISIONS
Article 1: Basis of the Articles of Association
In accordance with the Laws of the People's Republic of China on Sino-Foreign
Cooperative Joint Venture, other relevant Chinese laws and regulations, and the
Cooperative Joint Venture Contract signed in the City of Beijing on __ 1997 by
Xin Hai as Party A and Infornet as Party B, the Parties hereby a formulate these
Articles of Association of the Joint Venture Company.
Article 2: Name and Legal Address of the Joint Venture Company
The name in Chinese of the Joint Venture Company is Pu Wei Si You Xian Gong Si.
The name in English of the Joint Venture Company is Placer Technologies Corp.
The principal place of business and legal address of the Joint Venture
Company shall be located at, Suite 210, Building B No. 11 Wu Gen Lin Road,
West District, City of Beijing, People's Republic of China;
The Parties agree that the Joint Venture Company may establish branches in other
areas of the other regions in China.
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<PAGE>
The Joint Venture Company may transfer its registered office to another place by
amending its articles, and such amendment shall become effective on the date
appearing on the approval document of the registration and administration
authorities.
Article 3: Names and Legal Addresses of the Parties
The name and legal address of Parties to the Joint Venture Company are as
follows:
Party A: XIN HAI TECHNOLOGY DEVELOPMENT LTD., a Chinese
corporation with its legal address at Suite 2 10,
Building B No. 11 Wu Gen Lin Road, West District, City
of Beijing, People's Republic of China;
Party B: INFORNET INVESTMENT LIMITED., a Hong Kong corporation
with its legal address at 14th Floor, Hutchison
House, 10 Harcourt Road, Hong Kong;
Article 4: Limited Liability Company
The Cooperative Joint Venture Company is a limited liability company.
Article 5: Legal Person
The Joint Venture Company has the status of a legal person and is subject to the
jurisdiction and protection of the laws of China. All its activities shall be
governed by Chinese laws, decrees and other legal rules and regulations which
may be applicable thereto.
Article 6: Seal and Logo
The Board of directors of the Joint Venture Company may determine the form of
the seal of the Joint Venture Company, and may amend it by ordinary resolution.
The seat may have both the Chinese and English forms of the Joint Venture
Company name. The seals shall be kept at the registered office of the Joint
Venture Company or in any other place determined by the Board of Directors.
The Joint Venture Company may adopt a logo which specifications may be
determined by the Board of directors.
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<PAGE>
CHAPTER 2: PURPOSE AND SCOPE OF JOINT VENTURE COMPANY
Article 7: General Purpose of the Joint Venture Company
The Joint Venture Company shall employ the latest scientific management methods
and advanced technology to ensure that the computer and telecommunications
technology services perform according to the most advanced international
standards. The Joint Venture Company shall demonstrate competitive capability in
the market place based on its engineering technology and quality of its service,
so as to maximize the economic results of the Joint Venture Company and ensure
satisfactory economic benefits for each Party.
The short term purpose of the Joint Venture Company is to establish computer and
telecommunications engineering service business in Beijing; the long term
purpose will be to expand the computer and telecommunications engineering
service business in China.
Article 8: Specific Purpose and Scope of the Joint Venture Company
The specific purpose and business scope of the Joint Venture Company is as
follows:
8.1 to manufacture and sell computer software.
8.2 to manufacture and sell computer network systems.
8.3 to manufacture and sell communications equipment.
8.4 to provide communication engineering services.
Article 9: Territory of the business
The Joint Venture Company shall conduct its business in Beijing and then in
other cities of China.
CHAPTER 3: TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL
Article 10: Total investment and registered capital
The total amount of investment (registered capital and external financing) of
the Joint Venture Company is established at two million dollars U.S.
(US$2,000,000). Its registered capital is two hundred thousand dollars U.S.
(US$200,000) (or the equivalent amount in Renminbi determined at the time that
the registered capital is invested). The registered capital shall be contributed
by Party B.
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<PAGE>
Article 11: Time to Contribution
The registered capital of the Joint Venture Company shall be contributed within
six months from the date of the registration and obtaining business license of
the Joint Venture Company.
Article 12: Verification by a Registered Accountant
After the contribution in the registered capital are paid by the Parties to the
Joint Venture Company, a Chinese registered accountant selected by the Joint
Venture Company shall verify it and provide a certificate of verification.
According to this certificate, the Joint Venture Company shall issue an
investment certificate which includes the following items:
Name of the Joint Venture Company;
Date of the establishment of the Joint Venture Company;
Names of the Parties to the Joint Venture Company;
Amount of capital contributed by each Party and the form of the contribution;
Date of the contribution or date of satisfying capital contribution
conditions; and
The date of the issuance and number of the investment certificate.
Article 13: Transfer of the Capital Contribution or Participation
Should one Party assign all or part of its capital contribution or participation
in the Joint Venture Company or its investment consent shall be obtained from
the other Parties of the Joint Venture Company. When one Party assigns its
participation, the other Party has the right of first refusal. The terms and
conditions of the assignment to a third party cannot be more favorable than
those offered to other Parties.
Article 14: Increase and Assignment of Registered Capital
Any increase or assignment of the registered capital of the Joint Venture
Company shall be approved by the Parties and the Board of directors and
submitted to the original examination and approval authority for approval. The
registration procedures for changes shall be dealt with at the original
registration and administration office.
CHAPTER 4: BOARD OF DIRECTORS
Article 15: Board of Directors
The Joint Venture Company shall establish the Board of directors which is the
highest authority of the Joint Venture Company.
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Article 16: Board Decisions
The Board of directors shall decide all major issues concerning the Joint
Venture Company. Its functions and powers are as follows:
16.1 Reviewing and approving the important reports submitted by the president.
16.2 Approving annual financial reports, budget or receipts and expenditures,
distribution plan of annual profits.
16.3 Responsible for making important rules and regulations of the Joint Venture
Company.
16.4 Deciding to set up branches.
16.5 Amending the Articles of Association of the Joint Venture Company with the
consensus of the Parties.
16.6 Discussing and deciding the termination of the Joint Venture Contract,
termination of the Joint Venture Company or merging with another economic
organization.
16.7 Deciding the engagement of high-rank officials such as the president, chief
engineer, Chief financial officer, auditor, etc.
16.8 Being in charge of the expiration of the Joint Venture Company and the
liquidation matters upon the expiration of the Joint Venture Company.
16.9 Other major issues which shall be decided by the Board of directors.
Article 17: Representation
The Board of directors of the Joint Venture Company will be composed of four (4)
directors, of which two (2) shall be appointed by Party A and two (2) by Party
B. The term of office for the directors is four (4) years. Their term of office
may be renewed if continuously appointed by the relevant Party.
Article 18: Chairman of the Board of Directors
The Chairman of the Board of directors shall be appointed by Party B.
Article 19: Appointing and Replacing a Director
When appointing and replacing directors, a written notice shall be submitted by
the relevant Party to the Board of directors. The Board of directors will
approve the appointing or replacing director by a resolution or minutes of
meeting.
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Article 20: Legal Representation
The Chairman of the Board of directors is the legal representative of the Joint
Venture Company. If the Chairman cannot perform his duty for some reason, the
Parties shall appoint a director to be the temporary representative of the Joint
Venture Company.
Article 21: Board Meetings
The Board of directors shall convene at least one (1) meeting every year. The
Chairman may convene an interim meeting of the Board based on a proposal made by
more than two (2) directors of which there will be one (1) representative from
each of Party A and Party B.
The Parties may request that a meeting of directors be held by telephone
conference call, by giving at least two (2) business days' notice to all
directors, by telefax or by telephone.
All notices and minutes of the meetings shall be in Chinese and in English.
Article 22: Place of Meetings
The Board meeting will be held at the registered office of the Joint Venture
Company or at any other place as determined by the Chairman.
Article 23: Procedure of Meetings
Such Board meeting shall be called and presided by the Chairman. Should the
Chairman be absent, a director as agreed by both parties shall call and preside
the Board meeting. The Chairman shall be responsible for the proper conduct of
the meeting and shall submit any proposal upon which a vote of the directors is
required. At the commencement of each Board meeting, the Directors who are
present shall select one secretary who is not member of the Board of directors
to take the minutes of the meeting either in Chinese or in English, but who will
transcribe the minutes into Chinese or English, as the case may be.
Article 24: Written Notice
The Chairman shall give each director a written notice 30 days before the date
of the Board meeting (not less than 15 days in the special circumstance). The
notice shall cover the agenda, time and place of the meeting.
Article 25: Proxy
Should the director be unable to attend a meeting of the Board of directors, he
may present or send by telecopier to the Chairman a proxy in the following
written form authorizing another director to attend and vote on his behalf. In
case the director neither attends nor entrusts another to attend the meeting he
will be regarded as having been absent from the meeting.
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<PAGE>
"The undersigned,____________________________________________being a director of
PLACER TECHNOLOGIES CORP. hereby appoints (name and function of
Proxy___________________ ) the true and lawful attorney and proxy of the
undersigned with full power for and in the name and on behalf of the undersigned
to attend and to vote in respect of the matters mentioned in the agenda of the
meeting of the Board of directors, to be held at (address of the meeting)
_______________________on the date of __________________________________ and at
any adjournment thereof, with all powers which the undersigned could exercise if
personally present and acting.
Signed on_______________________________________________
(signature)______________________________________________"
(name)
Article 26: Quorum
Quorum at the meeting (including any adjourned meeting or any telephone
conference meeting) of the Board of directors shall consist of at least three
(3) directors.
If the quorum is not respected, the decisions adopted by the Board of directors
at such meeting are invalid.
Article 27: Detailed Written Minutes
The minutes of each Board meeting shall he made in both Chinese and English and
shall he signed for acceptance by all directors who attended the meeting either
in person or by proxy. The minutes shall be filed with the Joint Venture Company
and a copy thereof shall be remitted to each director.
Article 28: Issues to he Unanimously Agreed by at Least Five Directors of the
Board
The following issues shall require the unanimous consent of at least four (4)
directors of the Board of directors:
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<PAGE>
28.1 to approve the annual budgets;
28.2 to acquire property, both moveable and immovable, in one instance for a
consideration of or in twelve months its accrued amount is greater than or equal
to one hundred thousand dollars U.S. (US$ 100,000);
28.3 to deal with any negotiable or non-negotiable instruments which is for a
consideration in excess of US$100,000;
28.4 to borrow money on behalf of the Joint Venture Company or to provide the
security mortgage or guarantee to any other company;
28.5 to open and operate any bank accounts and to designate and change the
signatories to such accounts;
28.6 to make any amendment to the Articles of Association or to the Joint
Venture Contract;
28.7 to invest into any other company or enterprise, or to acquire any of the
shares or assets of any other company or enterprise;
28.8 to distribute any capital or profit of the Joint Venture Company after
Recoupment Date;
28.9 to issue, purchase or redeem any interest in the Joint Venture Company;
28.10 to increase the registered capital of the Joint Venture Company;
28.11 to merge or amalgamate the Joint Venture Company with any other company or
legal entity;
28.12 to deal with any matter concerning any transactions of the Joint Venture
Company which may result in a conflict of interest.
28.13 to change the business scope and the mode of operation of the Joint
Venture Company; 28.14 to terminal the Joint Venture Company before its
expiration, to declare that the Joint Venture Company becomes bankrupt of
insolvent;
28.15 to set up the branch of the Joint Venture Company.
CHAPTER 5: BUSINESS MANAGEMENT OFFICE
Article 29: Management Organization
The Joint Venture Company shall establish a management office which shall be
responsible for its daily management and operations. The Board of directors
shall appoint a president and several vice-presidents to form the management
office.
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Article 30: President and Other High Level Management
The president (sometimes referred to as the general manager), the vice president
in charge of technology development and the chief engineer shall be nominees of
Party A. The vice-president (sometimes referred to as the deputy general
manager) acting as senior financial officer shall be a nominee of Party B. The
Board of directors may appoint other vice-presidents. The appointment term of
the president and of the vice-presidents shall be three (3) years.
Article 31: Responsibility of the President
The president shall be directly responsible to the Board of directors. He shall
carry out the decisions of the Board of directors, organize and conduct the
daily management and operation of the Joint Venture Company. He shall also make
reports and recommendations to the Board of directors for approval.
Article 32: Responsibility of the Vice-President
The vice-presidents shall assist the president. During the absence of the
president, the vice-president in charge of daily business shall exercise the
functions of the president.
Article 33: Management and Operation Committee
The president, the vice-presidents, senior financial officer and chief engineer
shall constitute a Management and Operation Committee (the "M&O Committee") to
ensure and promote the effective and timely management of the affairs of the
Joint Venture Company.
Article 34: Plurality of Offices
At the invitation of the Board of directors, the Chair-man, or directors of the
Board of directors may concurrently be president, vice-president or other high
ranking personnel of the Joint Venture Company.
Article 35: Conflict of Offices
The president or vice-presidents shall not concurrently be president or
vice-president, or have any substantial interest (directly or indirectly) in any
economic organization which is in competition (directly or indirectly) with the
Joint Venture Company.
Article 36: Remuneration
The remuneration of president, vice-president, chief engineer and senior
financial officer shall be fixed from time to time by a resolution of the Board
of directors.
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Article 37: Written Resignations
The president, vice-presidents, chief engineer, senior financial officer and
other high-ranking personnel who ask for resignation shall submit their written
resignations to the Board of directors in advance.
Any of the above-mentioned persons may be dismissed at any time upon the
decision of the Board of directors in the event of fraud or willful misconduct.
Anyone who violates the criminal law shall be subject to criminal sanction.
CHAPTER 6: FINANCE AND ACCOUNTING
Article 38: Finance and Accounting
The finance and accounting of the Joint Venture Company shall be handled in
accordance with the Stipulations of the Finance and Accounting System of the
Joint Ventures Using Chinese and Foreign Investment formulated by the Ministry
of Finance of the People's Republic of China. The senior financial officer shall
be responsible for the preparation of the finance and accounting systems of the
Joint Venture Company. The guidelines of the finance and accounting systems will
be submitted to the appropriate tax authorities.
Article 39: Fiscal Year
The fiscal year of the Joint Venture Company for accounting and tax purposes
shall coincide with the calendar year, i.e. from January I to December 31 on the
Gregorian calendar, except for the first fiscal year which will commence on the
day the business license is issued and end on December 31 of the same year.
Article 40: Account Books
The Joint Venture Company shall maintain and keep at its legal address all books
and records required by law or necessary, useful or appropriate for the business
and affairs of the Joint Venture Company.
All minutes, account books, statistic statements and reports of the Joint
Venture Company shall be written in Chinese and English.
Article 41: Accounts Keeping Unit and Banking
The Joint Venture Company adopts Renminbi as the standard currency for keeping
accounts The conversion of Renminbi into other currency or from other currency
into Renminbi shall be in accordance with the exchange rate of the converting
day published by the Bank of China.
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The Joint Venture Company shall open an account in Renminbi and an other account
in foreign currency.
Article 42: Auditor
The auditors of Joint Venture Company shall be a firm of auditors of
international expertise as the Par-ties shall appoint from time to time. The
Auditors shall, at the end of the Fiscal Year of the Joint Venture Company and
at such other times as they may be reasonably requested by any of the Party,
make an audit of the books and records of Joint Venture Company and for such
purposes they shall have access to all books and records of the Joint Venture
Company.
Article 43: Accounting System
The Joint Venture Company shall adopt the internationally used accrual basis and
debit credit double entry bookkeeping as its accounting system.
Article 44: Content of Financial Account Books
Following items shall be covered in the financial accounts books of the Joint
Venture Company
44.1 The amount of overall cash receipts and expense of the Joint
Venture Company;
44.2 All material purchasing and selling of the Joint Venture
Company;
44.3 The registered capital of the Joint Venture Company;
44.4 The time of payment and of increase in the registered capital
of the Joint Venture Company as well as any assignment or transfer of the
participation or other investment of any Party in the Joint Venture Company.
Article 45: Approval of Statements
The Joint Venture Company shall prepare statement of assets and liabilities, and
losses and profits for each fiscal year, and shall submit same to the Board of
directors for the approval after they shall have been examined and signed by the
auditor and the president.
The books of account shall be closed promptly after the end of each Fiscal Year
of the Joint Venture Company. The Joint Venture Company shall deliver to all of
the Parties the following financial reports prepared in accordance with the
procedure set forth below:
45.1 Annual. Within eighty (80) days after the end of each fiscal year of the
Joint Venture Company, an annual report in respect of such fiscal year
containing:
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(a) audited financial statement as at the end of, and for, such fiscal year
(prepared in accordance with international generally accepted accounting
principles (International GAAP adopted in China consistently applied with
comparative financial statements as at the end of, and for, the immediately
preceding fiscal year) containing a balance sheet; a statement of profit and
loss; a statement of changes in financial position; and a statement of change in
capital;
(b) a report of the Auditors on such financial statements stating that such
financial statements have been prepared in accordance with international
generally accepted accounting principles (International GAAP) adopted in China
consistently applied;
(c) a report on allocations and distributions (whether directly or indirectly)
to the Parties;
(d) such other information as is required to be provided to the Parties or, in
the opinion of the president (general manager), is material to the business of
the Joint Venture Company;
(e) such financial and other information as may be reasonably requested by a
Party; and
(f) information concerning credits and charges to the capital and current
accounts allocated to the Parties and such other information as may be necessary
to enable a Party to file income tax returns with respect to such Party's income
or loss in respect of such fiscal year.
Article 46: Right to Inspect
Each Party shall have the right to inspect the Joint Venture Company's books and
records at any reasonable time upon advance written request to the president.
Each Party also has the right to invite an auditor to undertake annual financial
check and examination at such Party's expense. The Joint Venture Company shall
cooperate with such auditor and provide him with the appropriate books and
records.
Article 47: Depreciation
The depreciation period for the fixed assets of the Joint Venture Company shall
be decided by the Board of directors in accordance with the Rules for the
Implementation of the Income Tax Laws of the People's Republic of China
Concerning Joint Ventures with Chinese and Foreign Investments and
internationally generally accepted accounting principles and the accounting
principles applicable to the telecommunication industry.
Article 48: Matters Concerning Foreign Exchange
All matters concerning foreign exchange shall be handled in accordance with the
Provisional Regulations for Exchange Control of the People's Republic of China,
and other pertaining regulations as well as the stipulation of the Joint Venture
Contract signed by the Parties on_______________________________________,1997.
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CHAPTER 7: DISTRIBUTION OF PROFIT
Article 49: Reserve Funds
The Joint Venture Company shall withdraw from profits, after payment of taxes,
monies which win be held as reserve funds, expansion funds and bonuses and
welfare funds for staff and workers in accordance with the Rules for the
Accounting system of the People's Republic of China Concerning Joint Ventures
with Chinese and Foreign Investments. The proportion of allocation of monies
into each such reserve fund shall be decided by the Board of directors taking
into account the then current business situation and financial condition of the
Joint Venture Company.
Article 50: Distribution Percentage
After paying the taxes in accordance with law and withdrawing the various
reserve funds as provided in article 49 hereof, the remaining profits will be
distributed to Party A and Party B in accordance with the following percentages:
(a) Until such date as Party B's total investment and interest of the external
financing in the Joint Venture Company has been fully recovered by Party B (the
"Recoupment Date"), the distribution of profits shall be in accordance with the
following percentages:
Party Distribution Percentage
PARTY A 20%
PARTY B 80%
(b) After the Recoupment Date, all distribution of profits shall be made as
follows:
Name of the Party Distribution Percentage
PARTY A 49%
PARTY B 51%
Unless otherwise unanimously agreed to by the Parties, the profit shall be
distributed in cash (in Renminbi). Such distribution shall be converted into
foreign currency.
Article 51: Time of Distribution
The Distribution of Profits prior to the Recoupment Date shall be made as and
when profits are legally available for distribution, as determined by the Joint
Venture Company's accountant.
The Joint Venture Company may distribute profits quarterly or annually according
to the current business situation.
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Article 52: Previous Year and Current Year
The Joint Venture Company shall not distribute profits unless the losses, if
any, of previous fiscal years have been made up. Remaining profit from previous
years can be distributed together with that of the current year.
CHAPTER 8: STAFF AND WORKERS
Article 53: Recruitment
The recruitment, dismissal and resignation of the staff and workers of the Joint
Venture Company and their salary, welfare benefits, labour discipline and other
matters shall be handled according to the Regulation of the People's Republic of
China on Labour Management in Joint Venture Using Chinese and Foreign Investment
and its implementation rules.
Article 54: Local Labour
The employment of the required staff and workers by the Joint Venture Company
will be registered with the local labour department. The Joint Venture Company
may organize a open recruitment through interview and test. The Joint Venture
Company should report to the local labour department on the chosen employees and
to get its consent. All employees of the Joint Venture Company shall sign
employment contracts with the company. The employment contracts shall specify
the benefits of the employees. The contracts must be filed with the local labour
department.
Article 55: Disciplinary Actions
The Joint Venture Company has the right to take disciplinary actions, record a
demerit and reduce salary against those staff and workers who violate the rules
and regulation of the Joint Venture Company or Labour disciplines. Those serious
violations may be dismissed. The dismissal of workers shall be filed with the
local labour and personnel department.
Article 56: Salary Treatment of the Staff
The salary treatment of the staff and workers shall be set by the Board of
directors according to the specific situation of the Joint Venture Company, with
reference to pertaining stipulations of China, and shall be specified in detail
in the labour contract.
Article 57: Welfare Funds
The Joint Venture Company shall establish the rule and regulations concerning
the welfare funds, bonuses, labour protection and labour insurance, etc., to
ensure that the staff and workers go in for production and work under normal
conditions.
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CHAPTER 9: TRADE UNION ORGANIZATION
Article 58: Right to Establish Trade Union
The staff and workers of the Joint Venture Company have the right to establish
trade union organization and carry out activities in accordance with the
stipulations of the Trade Union Law of the People's Republic of China.
Article 59: Tasks of the Trade Union
The tasks of the trade union are: to protect the democratic fights and material
interests of the staff and workers pursuant to the law; to assist the Joint
Venture Company to arrange and make rational use of welfare funds and bonuses;
to organize political, professional, scientific and technical studies, carry out
literary, art and sports activities; and to educate staff and workers to observe
labour discipline and strive to fulfill the economic tasks of the Joint Venture
Company.
Article 60: Trade Union in the Mediation of Disputes
The trade union shall take part in the mediation of disputes arising between the
staff and workers and Joint Venture Company.
CHAPTER 10: DURATION, TERMINATION AND LIQUIDATION
Article 61: Duration
The duration of the Joint Venture Company shall be Twenty (20) years with a
period of extension to be agreed by the Parties pursuant to Article 62,
beginning from the date on which the business license of the Joint Venture
Company is issued.
Article 62: Extension of Duration
An application for the extension of duration shall, proposed by one Party and
unanimously approved by the Board of directors, be submitted to the original
examination and approval authority six months prior to the expiry date of the
original term of the Joint Venture Contract. Only upon the approval may the
duration be extended, and the Joint Venture Company shall go through
registration formalities for the alteration at the original registration office.
Article 63: Termination before the Expiration
The Joint Venture Company may be terminated before its expiration upon the
happening of any of the following occurrences:
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63.1 If a Party shall be in breach of any of its material obligations hereunder
causing the Joint Venture Company not to be able to operate continuously, and
such breach shall continue for a period of thirty (30) days from the receipt of
a written notice of breach from the other Party;
63.2 If a Party passes a resolution that it be wound up or liquidated, or a
meeting is convened for the purposes of passing any such resolution, or an order
is made for the winding-up or liquidation of such Party;
63.3 If a receiver or receiver-manager is appointed in respect to the whole or a
substantial part of the affairs or assets of any Party or if a Party is adjudged
bankrupt or insolvent, or files a proposal in bankruptcy;
63.4 If the Joint Venture Company is unable to attain its business objectives or
suffers significant losses during any fiscal year for a reason other than the
happening of an event of force majeure;
63.5 If the Joint Venture Company suffers significant losses during any fiscal
year for a reason of an event of force majeure. Force majeure shall refer to
events such as earthquake, typhoon, flood, fire, riots, war, civil commotions,
strikes, and other unforeseen events or circumstances beyond reasonable control
of a Party and causing the Party not to be able to exercise the responsibilities
specified in this Article;
63.6 If there has been a material change in the applicable laws, regulations or
policies of the pertinent governmental authorities that, in the reasonable
opinion of Party B, would adversely affect the business objectives of the Joint
Venture Company;
63.7 If the Joint Venture Company becomes bankruptcy;
63.8 If the Parties agree unanimously that the termination of the Joint Venture
Contract is in the best interests of the Parties.
In any such event and at the initiative of the Party entitled to terminate as
above provided, the Board of Directors shall resolve at a meeting duly held for
such purpose to terminate the Joint Venture Contract, and such decision shall be
submitted to the examination and approval authority for approval.
Article 64: Liquidation
Upon expiration or termination of the Joint Venture Company before its term
ends, the Board of directors shall proceed to liquidate the Joint Venture
Company in the following manner:
64.1 the Board of Directors shall set up a liquidation committee of four (4)
members. The members of such committee will be selected from among the members
of the Board and each of Party A and Party B.
64.2 the proceeds of liquidation of the Joint Venture Company's assets shall be
utilized in the following order of priority: 17
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(a) firstly, to the repayment of all debts and liabilities of the Joint Venture
Company and the expenses of liquidation and to the setting up of any reserve
that the Board of Directors, upon the recommendation of the liquidation
committee, considers reasonably necessary for any contingent or unforeseen
liabilities or obligations of the joint venture.
(b) secondly, to the Parties for the payment of any profits in accordance to
their participation;
(c) thirdly, any remaining assets shall be distributed to the Parties in
accordance to their participation.
During the process of liquidation, the liquidation committee shall represent the
company to sue and be sued.
Article 65: Representation of Liquidation Committee
During the process of liquidation, the liquidation committee shall represent the
Joint Venture Company in any suit.
Article 66: Liquidation Expenses
The liquidation expenses and remuneration to the members of the liquidation
committee shall be paid in priority from the existing assets of the Joint
Venture Company.
Article 67: Remaining Property
Assets of the Joint Venture Company may be distributed in kind on the basis of
the then appraised fair market value of such assets, if agreed to by all the
Parties. For purposes of making such distribution only, the unrealized profit or
loss on any such asset (based on its fair market value) shall be first allocated
among the Parties and the distribution of the asset shall be treated as a
distribution of cash equal to the fair market value of such asset. In the event
that Party B is unable to repatriate the assets distributed to it in kind, then
Party A shall agree to purchase the assets to be otherwise distributed to Party
B at their fair market value as determined by an independent evaluator
acceptable to the Parties.
Article 68: Liquidation Report
On completion of the liquidation, the Joint Venture Company shall submit a
liquidation report to the original examination and approval authority, go
through the formalities for nullifying its registration office and hand in its
business license, at the same time a it announces its liquidation to the public.
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Article 69: Account Books after Liquidation
After winding up of the Joint Venture Company, its account books shall be left
in the care of the Chinese participant.
Article 70: Inspection of Accounts after Liquidation
In the event of liquidation, during the liquidation process or after the
liquidation, each Party shall have the right to inspect the Joint Venture
Company's books and records at any reasonable time upon advanced written request
to the party which keeps the books and records.
CHAPTER 11: RULES AND REGULATIONS
Article 71: Rules and Regulations
The following are the rules and regulations formulated by the Board of directors
of the Joint Venture Company:
71.1 Management regulation, including the power and functions of
the management staff,
71.2 Rules for the staff and workers;
71.3 System of labour and salary;
71.4 System of work attendance records, promotion and awards and
penalty for the staff and workers;
71.5 Detail rules of staff and worker's welfare;
71.6 Financial system;
71.7 Liquidation procedures upon the dissolution of the Joint
Venture Company;
71.8 Other necessary rules and regulations.
CHAPTER 12: SUPPLEMENTARY ARTICLES
Article 72: Amendment to the Articles of Association
The amendment to the Articles of Association shall unanimously be agreed and
decided by the Parties and the Board of directors and submitted to the original
examination and approval authority for approval.
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Article 73: Both languages
The Articles of Association are written in both the Chinese and English
language, both languages are equally authentic and both Chinese and English
versions shall have the same legal effect.
Article 74: Effect of Articles of Association
The Articles of Association shall come into effect upon the approval by the
ministry of Foreign Economic relations and trade of the People's Republic of
China (or its entrusted examination and approval authority). The same applies in
the event of amendments.
Article 75: Conflict with Joint Venture Contract
In the event that there is a conflict or inconsistency between any provision of
those Articles of Association and the Joint Venture Contract signed by the
Parties on _____________________1997, the Joint Venture Contract shall prevail.
Article 76: Integration
Article 17 of the Joint Venture Contract signed by the both Parties
on_______________________1997 is applicable to this Articles of Association.
Article 77: Notice
Any notice, consent, authorization, direction or other instrument required or
permitted to be given hereunder ("Notice") shall be in writing and shall be
delivered either by personal delivery, by certified mail or by telecopier,
return receipt requested, and addressed as follows:
(a) XIN RAI TECHNOLOGY DEVELOPMENT LTD.
Suite 210, Building B. No. I I
We Gen Lin Rd., West District
Beijing, People's Republic of China
Attention: President
Telecopier:(8610) 622-2512
(b) INFORNET INVESTMENT LIMITED
14th Floor Hutchison House
10 Harcourt Road, Hong Kong
Attention: President
Telecopier:(852) 2845-0476
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COPY TO:
830 - 789 West Pender Street
Vancouver, BC
Canada
V6C 1H2
Attention: Mr. Ernest Cheung
Telecopier: (604) 689-4407
Any Notice shall be deemed to have been effectively given and received, if sent
by telecopier, on the next business day following receipt of such transmission
(confirmation of receipt by confirmed facsimile transmission being deemed
receipt of communication sent by telecopy) or, if delivered, to have been given
and received on the date of such delivery. Any Party may change its address for
service by written Notice given as aforesaid.
IN WITNESS WHEREOF, the Parties have duly executed this Articles of Association
in the City of Beijing, China, as of this 25th day of____________1997.
XIN HAI TECHNOLOGY DEVELOPMENT LTD.
Seal
Per: ____________________________________________
INFORNET INVESTMENT LIMITED
Seal
Per:_____________________________________________
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COOPERATIVE JOINT VENTURE CONTRACT
IN RESPECT OF
PLACER TECHNOLOGIES CORP.
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COOPERATIVE JOINT VENTURE CONTRACT
This Cooperative Joint Venture Contract in respect of PLACER TECHNOLOGIES
CORP. is made and entered into:
BY AND BETWEEN: XIN HAI TECHNOLOGY DEVELOPMENT LTD., a corporation formed
under the laws of the People's Republic of China with its legal address at
Suite 210, Building B No. 11 Wu Gen Lin Road, West District, City of
Beijing, People's Republic of China, herein represented by Mr. Xin Wei, a
Chinese citizen, its legal representative and its Chairman;
(hereinafter sometimes referred to as "Party A" or as "Xin Hai")
AND: INFORNET INVESTMENT LIMITED., a corporation formed under the laws of Hong
Kong with its legal address at 14th Floor, Hutchison House, 10 Harcourt
Road, Hong Kong, and herein represented by Mr. Ernest Cheung, a Canadian
citizen, its legal representative and its president;
(hereinafter sometimes referred to as "Party B" or as "Infornet")
WHEREAS the Xin Hai Technology Development Ltd. ("Xin Hai") is a Chinese company
engaged in the business of developing computer hardware, software, and
telecommunication network technology, and providing consultation and training
services and technology transfer thereof;
WHEREAS Infornet Investment Limited is a Hong Kong telecommunication and
management company which provides financial resources and expertise in
telecommunication projects;
NOW, THEREFORE, in accordance with the Law of the People's Republic of China on
SinoForeign Cooperative Joint Ventures and other relevant Chinese laws and
regulations, Party A and Party B hereby agree, acting on the principle of
equality and of mutual benefit and through friendly consultation, to set up a
sino-foreign cooperative joint venture company in the City of Beijing, People's
Republic of China and further agree as follows:
ARTICLE 1
ESTABLISHM[ENT OF THE JOINT VENTURE COM[PANY
1.1 Formation. In accordance with the Law of the People's Republic of China on
Sino-Foreign Cooperative Joint Ventures and other relevant Chinese laws and
regulations, the Parties hereto agree to form Placer Technologies Corp.
(hereinafter referred to as the "Joint Venture Company") which shall be
established as a limited liability company.
1.2 Name. The name in the English language of the Joint Venture Company is
Placer Technologies Corp. The name in the Chinese language of the Joint Venture
Company is Pu Wei Si You Xian Gong Si.
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1.3 Legal address. The legal address of the Joint Venture Company shall be
located at Suite 210, Building B No. 11 Wu Gen Lin Road, West District, City of
Beijing, People's Republic of China.
1.4 Fiscal Year. The fiscal year of the Joint Venture Company for accounting and
tax purposes shall be from January I to December 31 (the "Fiscal Year").
1.5 Document. The Joint Venture Company shall execute, file and submit all
documents necessary to comply with the requirements of the laws, decrees and
applicable rules and regulations of China for the establishment of the Joint
Venture Company.
1.6 Title to Property. All property owned by the Joint Venture Company, tangible
or intangible, shall be owned by the Joint Venture Company (as an entity) and no
Party, individually, shall have any ownership interest in any such property.
1.7 Risk. No Party shall be liable for any of the debts, losses or liabilities
which not belong to the Joint Venture Company. The liabilities and the risk of
the Parties to the Joint Venture Company is limited to the amount of the
registered capital of the Joint Venture Company; each Party's liability shall be
limited to the amount of its investment in the Joint Venture Company. The Joint
Venture Company's liability shall be limited to its whole asset.
1.8 Participation in Profits. The profits of the Joint Venture Company shall be
allocated and distributed to the Parties in accordance with Article 4 of this
Contract.
1.9 Articles of Association. The Parties agree to negotiate in good faith the
terms of the Articles of Association of the Joint Venture Company.
ARTICLE 2
THE PURPOSE AND SCOPE OF THE JOINT VENTURE COMPANY
2.1 Purpose. The Joint Venture Company shall employ the latest scientific
management methods and advanced technology to ensure that the computer and
telecommunications technology services perform according to the most advanced
international standards. The Joint Venture Company shall demonstrate competitive
capability in the market place based on its engineering technology and quality
of its service, so as to maximize the economic results of the Joint Venture
Company and ensure satisfactory economic benefits for each Party. The short term
purpose of the Joint Venture Company is to establish the computer and
telecommunications engineering service business in Beijing; the long term
purpose will be to expand the computer and telecommunications engineering
services into other cities in China.
2.2 Scope. The business scope of the Joint Venture Company is as follows:
2.2.1 to manufacture and sell computer software.
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2.2.2 to manufacture and sell computer network systems.
2.2.3 to manufacture and sell communications equipment.
2.2.4 to provide communication engineering services.
ARTICLE 3
TOTAL AMOUNT OF INVESTMENT AND THE REGISTERED CAPITAL
3.1 Total Investment. The total amount of investment (registered capital and
external financing) of the Joint Venture Company is established at Two million
dollars U.S. (US$2,000,000).
3.2 Registered Capital. Based on the amount of investment mentioned in section
3.1 above, the registered capital of the Joint Venture Company shall be Two
hundred thousand dollars U.S. (US$200,000) (or the equivalent amount in Renminbi
determined at the time that the registered capital is invested). The registered
capital shall be entirely contributed by Party B.
3.3 Capital Contribution. The Parties agree that the capital contribution may
take a variety of forms, including but without limitation, cash, equipment,
industrial property rights and Know how etc. However, the capital contribution
taking forms of cash and equipment shall not less than 90% of the total
registered capital contribution (i.e. US$180,000).
3.4 External Financial . The Parties agree that the Joint Venture Company may
borrow funds from financial institutions within China or from foreign financial
institutions outside of China and grant security on its assets.
3.5 Time to Contribution. The registered capital of the Joint Venture Company
shall be contributed within six months from the date of the registration and
obtaining business license of the Joint Venture Company. An investment
verification report shall be issued by a Chinese registered accountant and the
Joint Venture Company shall issue an investment certificate after the
contribution in the registered capital is paid.
3.6 Use of Funds. The Parties agree that most of the capital investment shall be
used to develop the business of the company.
3.7 Tax efficiency. The Parties agree that the investment to be made by each of
them in the Joint Venture Company may be effected through a wholly owned
subsidiary or an Affiliate of such Party. All changes fees shall be paid by the
Party looking for such changes.
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For the purposes hereof, the expression "Affiliate" means any legal entity (i)
whose ownership by a Party shall exist through the direct or indirect ownership
of more than fifty percent (50%) of the equity interest of the legal entity and
having more than fifty percent (50%) of the voting rights entitling the holders
thereof to vote for the election of directors or persons performing similar
functions, or (ii) in respect of which a Party has the right to elect or appoint
the majority of directors or persons performing similar functions, or (iii) in
respect of which a Party has more than fifty percent (50%) of the right of vote
in such legal entity.
ARTICLE 4
DISTRIBUTION OF PROFIT
4.1 Distribution Percentage.
The Parties agree that the percentage of profits to be distributed to Party A
and Party B by the Joint Venture Company shall be made in accordance with the
following:
(a) Unfit such date as Party B's total investment and interest of the external
financing in the Joint Venture Company has been fully recovered by Party B (the
"Recoupment Date"), the distribution of profits shall be in accordance with the
following percentages:
Name of the Party Distribution Percentage
PARTY A 20%
PARTY B 80%
(b) After the Recoupment Date, all distribution of profits shall be made as
follows:
Name of the Party Distribution Percentage
PARTY A 49%
PARTY B 51%
4.2 Nature of Distribution. The net profit of the Joint Venture Company shall be
distributed in cash (in Renminbi) unless otherwise unanimously agreed to by the
Parties. Such distribution may be converted into foreign currency with the rate
determined at the time of the distribution.
4.3 Distribution of Profits prior to the Recoupment Date shall be made as and
when Profits are legally available for distribution, as determined by the Joint
Venture Company's accountant.
4.4 All equipments provided by Party B shall be treated as investment made by
Party B to the Joint Venture Company.
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4.5 Regarding the guarantee of the payback of investment of Party B, Party B
shall have 80% of the profit distribution to ensure the payback of its
investments contributed to the Joint Venture Company. ARTICLE 5
RESPONSIBILITIES OF EACH PARTY TO THE JOINT VENTURE
5.1 Responsibilities of Party A.
Party A shall be responsible for:
5.1.1 coordinating with all existing customers and actively promoting
sales and applications of the Joint Venture Company's products, as well as
supporting sales of goods and services of the Joint Venture Company to
customers;
5.1.2 obtaining all required pen-nits and authorizations (whether local,
municipal, provincial, state or other) and registrations which may be
required or applicable to the constitution of the Joint Venture Company
including the preparation and submission of the necessary documents for
the examination and approval authorities;
5.1.3 securing and obtaining all necessary licenses, permits and
authorizations from the administration which may be applicable or
necessary to the business of the company;
5.1.4 assisting the Joint Venture Company in handling the applications for
processing import customs declarations for the machinery and mechanical
and electronic equipment to be used and arranging transportation and
delivery within the Chinese territory;
5.1.5assisting the Joint Venture Company in contracting for and
obtaining all necessary infrastructure and utility facilities, such as
water, electricity, transportation, etc.;
5.1.6 according to applicable laws and regulations in China,
assisting the Joint Venture Company in applying for and obtaining a
reduction or exemption of taxes, including local taxes, business tax,
import or custom duties, sales taxes or other duties on material,
equipment or other goods imported into China for the purposes of the Joint
Venture Company, and in obtaining other preferential tax treatments for
the Joint Venture Company and the Parties for the maximum available
period;
5.1.7 obtaining all necessary permits or authorization from
the appropriate foreign exchange control bureaus confirming that Party B
can have access to all required U.S. dollars or other foreign
currency acceptable to it and that Party B can send its investments
to the overseas;
5.1.8 Party A warranties that it will not cooperate with any party
other than Party B with regard to business of the Company;
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5.1.9 Performing any other responsibilities as may be agreed upon by and between
the Parties.
5.2 Responsibilities of Party B.
Party B shall be responsible for:
5.2.1 making the capital contribution to the Joint Venture Company as
contemplated in Section 3.3 and Section 3.4 in accordance with the laws
and regulations in China;
5.2.2assisting the Company in purchasing and/or leasing equipment,
material, office supplies, transportation, communication lines from
local or overseas suppliers;
5.2.3 within the China's territory, Party B warranties that it will
not cooperate with any other party than Party A for the business specified
in this agreement;
5.2.4 assuming any other responsibilities as may be mutually agreed upon
by the Parties.
ARTICLE 6
BOARD OF DIRECTORS
6.1 Highest Authority. The Board of Directors shall be the highest authority of
the Joint Venture Company. It shall decide all major issues concerning the
activities, business and operations of the Joint Venture Company.
6.2 Board of Directors. The Board of Directors of the Joint Venture Company
shall be composed of four (4) directors, of which two (2) shall be designated by
Party A and two (2) by Party B. The Chairman of the Board shall be appointed by
Party B. The term of office for the directors and Chair-man is four (4) years.
The term of office of each of them may be extended or renewed by the Party
designating same.
6.3 Approval. Unanimous approval of at least four directors shall be required
before any decision is made concerning the matters listed below:
6.3.1 to approve the annual budgets;
6.3.2 to acquire property, both moveable and immovable, in one instance
for a consideration of or in twelve months its accrued amount is greater
than or equal to one hundred thousand dollars U.S. (US$1 00,000);
6.3.3 to deal with any negotiable or non-negotiable instrument which is
for a consideration in excess of US$100,000;
6.3.4 to borrow money on behalf of the Joint Venture Company or to provide
security, mortgage or guarantee to any other company;
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6.3.5 to open and operate any bank accounts of the Joint Venture Company
and to designate and change the signatories to such accounts;
6.3.6 to make any amendment to the Articles of Association or to the
Joint Venture Contract;
6.3.7 to invest in any other company or enterprise, or to acquire any of
the shares or assets of any other company or enterprise;
6.3.8 to distribute any capital or profit of the Joint Venture
Company after Recoupment Date;
6.3.9 to issue, purchase or redeem any interest in the Joint
Venture Company;
6.3.10 to increase the registered capital of the Joint Venture
Company;
6.3.11 to merge or amalgamate the Joint Venture Company with any other
company or legal entity or economic organization;
6.3.12 to deal with any matter concerning any transactions of the Joint
Venture Company which may result in a conflict of interest between the
Joint Venture Company and any party hereto;
6.3.13 to change the business scope and the mode of operation of the
Joint Venture Company;
6.3.14 to terminate the Joint Venture Company before its expiration or to
declare that the Joint Venture Company becomes bankrupt or insolvent;
6.3.15 to set up any branch office of the Joint Venture Company.
6.4 Chairman. The Chairman of the Board is the legal representative of the
Joint Venture Company. If, for any reason, the Chairman is unable to
exercise his responsibilities, a director as agreed upon by all the
Parties, shall represent the Joint Venture Company.
6.5 Meeting. The Board of Directors shall convene at least one (1) meeting every
year. The meeting shall be called and presided over by the Chairman of the
Board. The Chairman may convene an interim meeting based on a proposal made by
more than two (2) directors or which there will be one (1) representative from
each of Party A and Party B. Minutes of the meetings shall be placed on file.
The meetings of the Board of Directors shall be held at the registered office of
the Joint Venture Company or at any other place as determined by the Chairman.
All notices and minutes of such meetings shall be in both Chinese and English.
6.6 Telephone Conference Calls. Any Party may request that a meeting of
directors be held by telephone conference call, by giving at least two (2)
business days' notice to all directors, by telefax or by telex.
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6.7 Quo . Quorum at the meetings (including any adjourned meetings of the Board
of Directors shall consist of at least three (3) directors. To the extent
permitted under Chinese law, a director who is unable to attend a meeting may
authorize another director to attend and vote at such meeting on his behalf by
power of attorney.
6.8 No Interference. The Joint Venture Company shall conduct its affairs in
accordance with the terms of this Joint Venture Contract and the Articles of
Association.
ARTICLE 7
MANAGEMENT COMMITTEE
7.1 Management Committee. The Joint Venture Company shall establish a Management
Committee (the "Management Committee") to administer its day to day affairs. The
Management Committee shall consist of a president (sometimes called the "General
Manager") and several vice-presidents (sometimes called the "Deputy General
Manager") appointed by the Board of Directors. Their appointment shall be
reviewed every three (3) years. The President, the vice president in charge of
technology and the chief engineer shall be nominees of Party A. The vice
president acting as senior financial officer shall be a nominee of Party B.
7.2 Conduct of Business. The Management Committee shall be chaired by the
president who shall decide all matters of importance relating to the business
and operations of the Joint Venture Company. The Management Committee shall make
recommendations and reports for approval by the Board of Directors.
7.3 Responsibilities of the President. The president shall be responsible for
organizing and conducting the daily management and business operations of the
Joint Venture Company. The vice-presidents shall assist the president in
performing his responsibilities. The president shall consult the vice presidents
in respect of important decisions regarding the business operations of the Joint
Venture Company.
7.4 Removal of the President and Vice-President. The Board of Directors shall
have the power to dismiss the president and any vice-president at any time for
cause. Furthermore, the president and any vice-president may be dismissed by the
Party who nominated him and such officer shall again be designated by the same
Party subject to the approval of the Board of Directors.
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ARTICLE 8
PURCHASE AND SALE OF EQUIPMENT
8.1 China First. The Joint Venture Company shall purchase, whenever possible,
such goods as machinery equipment, raw materials, fuel, spare parts,
transportation services and facilities in the Chinese market, provided however
that the cost and quality of such goods or services are at least equal to the
cost and quality of equivalent goods and services which may be acquired from
outside the PRC.
8.2 Purchases Abroad. Any purchase of goods or services in the international
market requires the unanimous consent of the Board of Directors regarding the
models, quality, place of production, quantity and price. ARTICLE 9
LABOUR MANAGEMENT
9.1 Labour Relations.The recruitment, employment, dismissal, resignation, wages,
labour insurance, welfare, rewards, penalty and other matters concerning the
personnel of the Joint Venture Company shall be carried out in accordance with
the Labour Management Regulations of the Enterprises with Foreign and Chinese
Investment in the People's Republic of China. The Joint Venture Company shall
draw up the labour contracts for the personnel for submission to the Beijing
Municipal Labour Bureau (for the record).
9.2 Appointment and Compensation of Senior Personnel. The appointment of senior
personnel recommended or nominated by the Parties, their salaries, social
insurance, welfare, traveling expenses and other related matters, shall be
decided by the Board of Directors.
ARTICLE 10
TAXES, FINANCE AND AUDIT
10.1 Payment of Taxes. The Joint Venture Company shall pay taxes in accordance
with all applicable Chinese laws and regulations. Each Party agrees to use its
best efforts to ensure that the business affairs of Joint Venture Company be
conducted in the most tax efficient manner.
10.2 Individual Income Tax. Each employee of the Joint Venture Company shall pay
individual income tax according to the Individual Income Tax Law of the People's
Republic of China. Except for statutory withholding taxes, the Joint Venture
Company shall not be responsible for the payment of such taxes. 10
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10.3 Reserves. Allocations for reserve funds, expansion funds and welfare funds
of the Joint Venture Company shall be set up in accordance with the provisions
contained in the Law of the People's Republic of China on China Foreign
Cooperative Joint Ventures and other relevant Chinese laws, regulations and
decrees. The annual allocations shall be decided by the Board of Directors
according to the business situation and financial condition of the Joint Venture
Company.
10.4 Books and Records. The Joint Venture Company shall maintain and keep at its
legal address all books and records required by law or necessary, useful or
appropriate for the business and affairs of the Joint Venture Company. Each
Party shall have the right to inspect the Joint Venture Company's books and
records at any reasonable time upon advance written request to the general
manager.
10.5 Accounts. The Joint Venture Company shall, according to the requirements
for an enterprise with Chinese and Foreign Investment in the People's Republic
of China, hire accountants and draw up an accounting system for the Joint
Venture Company.
10.6 Certificates, Reports, Returns, and Audits. The books of account shall be
closed promptly after the end of each Fiscal Year. Unless the following
requirements or any of them, are waived unanimously by the Parties, the Joint
Venture Company shall deliver to all of the Parties the following financial
reports prepared in accordance with the procedures set forth below:
10.6.1 All financial statements shall be prepared in Renminbi and in U.S.
dollars in English and Chinese.
10.6.2Annual. Within eighty (80) days after the end of each Fiscal Year, an
annual report in respect of such Fiscal Year containing:
10.6.2.1 audited financial statements as at the end of, and for, such
Fiscal Year (prepared in accordance with international generally accepted
accounting principles (International GAAP) adopted in China consistently
applied, with comparative financial statements as at the end of, and for,
the immediately preceding Fiscal Year) containing a balance sheet; a
statement of profit and loss; a statement of changes in financial
position; and a statement of change in capital;
10.6.2.2 a report of the Auditors on such financial statements stating
that such financial statements have been prepared in accordance with
international generally accepted accounting principles (International
GAAP) adopted in China consistently applied;
10.6.2.3 a report on allocations and distributions (whether
directly or indirectly) to the Parties;
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10.6.2.4 such other information as is required to be provided to the Parties or,
in the opinion of the general manager, is material to the business of the Joint
Venture Company;
10.6.2.5 such financial and other information as may be reasonably requested by
a Parry; and
10.6.2.6 information concerning creditors and charges to the capital and current
accounts allocated to the Parties and such other information as may be necessary
to enable a Party to file income tax returns with respect to such Party's income
or loss in respect of such Fiscal Year.
10.7 Auditors. The auditors of the Joint Venture Company shall be a firm of
auditors of international expertise as the Parties may appoint from time to time
(the "Auditors"). The Auditors shall, at the Fiscal Year end and at such other
times as they may be reasonably requested by any Party, make an audit of the
books and records of the Joint Venture Company and for such purposes they shall
have access to all books and records of the Joint Venture Company.
10.8 Timing of the profit distribution. The Joint Venture Company may distribute
profits quarterly or annually according to the current business situation.
ARTICLE 11
DURATION OF THE JOINT VENTURE COMPANY
AND OWNERSHIP OF FIXED ASSETS
11.1 Term of the Joint Venture Company. This Joint Venture Contract shall become
effective upon the execution thereof and shall terminate twenty (20) years
following the issuance of the business license to the Joint Venture Company.
11.2 Extension of the Joint Venture Contract. An application for the extension
of this Joint Venture Contract, proposed by one Party and unanimously approved
by the Board of Directors, shall be submitted for approval to the examination
and approval authorities (or other examination and approval authorities
stipulated in the law) located in the area where has been done the registration
of the Joint Venture Company six months prior to the expiry date of the original
term of the Joint Venture Contract.
11.3 Ownership of fixed assets. On the expiry of the duration of the term of the
Joint Venture Company, if Parties agree to not extend its duration and under the
condition that Party B has already recouped its investment, the fixed assets of
the Joint Venture Company will revert to the ownership of Party A.
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ARTICLE 12
BUDGETS
12.1 Except as other-wise herein permitted, all operations of the Joint Venture
Company shall be carried on in conformity with the budgets previously approved
by the Board of Directors, setting, forth operating costs and capital costs to
be incur-red in such Fiscal Year by the Joint Venture Company.
ARTICLE 13
TERMINATION AND LIQUIDATION
13.1 Termination. This Joint Venture Contract may be terminated before its
expiration upon the occurrence of any of the following events:
13.1.1 if any Party shall be in breach of any of its material obligations
hereunder, and such breach shall continue for a period of thirty (30) days from
the receipt of a written notice of breach from the other Party;
13.1.2 if any Party passes a resolution that it wind up or be liquidated, or a
meeting is convened for the purpose of passing any such resolution, or an order
is made for the winding-up or liquidation of such Party;
13.1.3 if a receiver or receiver-manager is appointed with respect to the whole
or a substantial part of the affairs or assets of any Party or if a Party is
adjudged bankrupt or insolvent, or files a proposal in bankruptcy;
13.1.4 if the Joint Venture Company suffers significant losses during any Fiscal
Year due to an event of force majeure as defined in Article 15.1 . hereto or the
foreign investor suffers significant losses;
13.1.5 if the Joint Venture Company becomes bankrupt or insolvent; or
13.1.6 if the two Parties agree unanimously that the termination of the Joint
Venture Contract is in the best interests of the Parties.
The Board of Directors shall decide at a meeting duly held for such purpose to
terminate the Joint Venture Contract, and such decision shall be submitted for
examination and approval by the competent examination and approval authorities.
13.2 Events of Default.
13.2.1 If any party fails to perform its duties specified in the present Joint
Venture Contract or in the Articles of Association, or if the Party seriously
breaches the provisions of the Joint Venture Contract or of the Articles of
Association, and thereby causes damage to the operations of the Joint Venture
Company or causes,
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directly or indirectly, the failure to reach the goals regarding the operations
specified in the present Joint Venture Contract, such act shall be deemed an
event of default by the Party who breaches the Joint Venture Contract. The other
Party is entitled to claim for remedy, and shall have the right to terminate the
Joint Venture Contract by filing an application to the competent examination and
approval authorities. Should the Joint Venture Company continue to operate. the
Party who breaches the Joint Venture Contract must compensate for the economic
losses and damages incurred by the Joint Venture Company and the shareholders
thereof.
13.2.2 A party which tails to contribute investment or to meet terms of
cooperation as stipulated in the Joint Venture Contract must bear liability for
breach of Contract in respect of that other party which has already contributed
investment or met terms of cooperation as stipulated in the Joint Venture
Contract.
13.2.3 Any Party that causes the non-performance or incomplete performance of
the Joint Venture Contract or any ancillary agreement thereto, because of its
default. shall be deemed responsible for the occurrence of an event of default.
If two Parties cause the non-performance or incomplete performance of such
contract, each shall be responsible to the extent of its own breach or liability
for the' occurrence of the event of default.
13.3 Dissolution and Liquidation. Upon the expiration of the term of this Joint
Venture Contract, or, if the Joint Venture Contract is terminated as provided
above in this Section CHAPTER 13, as the case may be, the Parties shall proceed
to liquidate the Joint Venture Company in the following manner:
13.3.1 the Board of Directors of the Joint Venture Company shall set-up a
liquidation committee of four (4) members. The members of such committee will be
selected from among the members of the Board and each of Party A and Party B
shall have two (2) representatives on such committee. The task of the committee
will be to prepare an inventory of the Joint Venture Company's assets and
liabilities and to formulate a liquidation plan;
13.3.2 the proceeds of liquidation of the Joint Venture Company's assets shall
be utilized in the following order of priority:
13.3.2.1 firstly, to the repayment of all debts and liabilities of the Joint
Venture Company and the expenses of liquidation and to the setting up of any
reserve fund that the Board of Directors, upon the recommendation of the
liquidation committee, considers reasonably necessary for any contingent or
unforeseen liabilities or obligations of the Joint Venture Company;
13.3.2.2 secondly, to the Parties for the payment of any registered capital and
profits not yet paid to them.
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13.3.2.3 after accomplish the above mentioned two payments, the remaining shall
be distributed in accordance with the percentage stated in the Section 4. 1.
13.4 Survival. In the event that the Joint Venture Contract is terminated as
provided in this Section CHAPTER 13, no Party shall be relieved of any
obligation or liability towards the Joint Venture Company or any other Party, in
each case accrued up to the date of the resolution of the Board of Directors to
liquidate the Joint Venture Company.
13.5 Assets Other Than Cash. Assets of the Joint Venture Company may be
distributed in kind on the basis of the then appraised fair market value of such
assets, if agreed to by all the Parties. For the purposes of making such
distribution only, the unrealized profit or loss on any such asset (based on its
fair market value) shall be first allocated among the Parties and the
distribution of the asset shall be treated as a distribution of cash equal to
the fair market value of such asset. In the event that Party B is unable to
repatriate the assets distributed to it in kind, then Party A agrees to purchase
the assets to be otherwise distributed to them at their fair market value as
determined by an independent evaluator acceptable to the Parties.
ARTICLE 14
INSURANCE
14.1 Insurance Policies. Insurance policies of the Joint Venture Company on
various kinds of risks shall be underwritten with the People's Insurance Company
of China and shall be maintained in force at all times. The type, value and
duration of insurance shall be decided by the Board of Directors in accordance
with generally accepted international standards for such coverage.
ARTICLE 15
FORCE MAJEURE
15.1 Force Majeure. Should any Party to this Joint Venture Contract be prevented
from executing any of its obligations under this Joint Venture Contract by force
majeure, such as earthquake, typhoon, flood, fire, war, riots, civil commotions,
strikes, and other unforeseen events or circumstances beyond the reasonable
control of a Party, then the Party so prevented shall notify the other Party in
the manner set forth in Section 18.2 without any delay, and within fifteen (15)
days thereafter provide the detailed information of the events explaining the
reasons of its inability to execute or of the delay in the execution of all or
part of this Joint Venture Contract. The Parties shall, through consultation,
decide whether to terminate the Joint Venture Contract and liquidate the Joint
Venture Company or to exempt the part of obligations which is subject to force
majeure from the terms of the Joint Venture Contract or to delay the execution
of the Joint Venture Contract until such time that the events giving rise to the
force majeure cease.
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ARTICLE 16
EXCLUSIVE DEALING
16.1 In consideration for the Parties entering into the present Contract, the
Parties hereto mutually agree that they shall not, directly or indirectly,
solicit or consider offers, enter into discussions with, provide information to,
negotiate with or in any manner, encourage, discuss, accept, or consider, any
proposal of any third party in the PRC.
ARTICLE 17
REPRESENTATIONS AND WARRANTIES
17.1 Representations and Warranties. Each of the Parties to the Contract
represents and warrants to the other as follows:
17.1.1 it is a legal entity duty organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation with power,
authority and capacity to enter into this Joint Venture Contract and to perform
its obligations hereunder and in the agreements and contracts contemplated
hereunder in accordance with the terms thereof,
17.1.2 the execution, delivery and performance of this Joint Venture Contract
and the transactions contemplated hereby have been duly authorized by all
necessary corporate and other action, and upon the Joint Venture Contract coming
into effect, it shall constitute a valid and binding obligation and shall be
enforceable against such Party in accordance with its terms subject to any
applicable insolvency or bankruptcy laws; and
17.1.3 neither the execution and delivery of this Joint Venture Contract nor the
consummation of the transaction contemplated hereby shall violate, result in a
breach of any material term or provision of, or constitute a default under
statutes, regulations or articles of association or any material agreement,
instrument, law or regulation to which such Party is bound;
17.1.4 to the extent that it may in any jurisdiction claim for itself or its
assets or revenues immunity from suit, execution, attachment (whether in aid of
execution, before judgment or otherwise) or other legal process and to the
extent that in any such jurisdiction there may be attributed to itself or its
assets or revenues such immunity (whether or not claimed) it agrees not to claim
and irrevocably waives such immunity to the full extent permitted by the laws of
such jurisdiction.
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ARTICLE 18
MISCELLANEOUS PROVISIONS
18.1 Preamble. The preamble shall form an integral part hereof as if herein
recited at length.
18.2 Notice. Any notice, consent, authorization, direction or other instrument
required or permitted by this contract to be given hereunder ("Notice") shall be
in writing and shall be delivered either by personal delivery, registered mail
or by telecopier, return receipt requested, and addressed as follows:
18.2.1 if to XIN HAI TECHNOLOGY DEVELOPMENT LTD.
Suite 2 10, Building B. No. I I
We Gen Lin Rd., West District
Beijing, People's Republic of China
Attention: Mr. Xin Wei
Telecopier: (8610) 622-2512
18.2.2 if to INFORNET INVESTMENT LIMITED
14th Floor Hutchison House
10 Harcourt Road, Hong Kong
Attention: Mr. Ernest Cheung
Telecopier: (852) 2845-0476
COPY TO:
830 - 789 West Pender Street
Vancouver, BC
Canada
V6C 1H2
Attention: Mr. Ernest Cheung
Telecopier (604) 689-4407
Any Notice shall be deemed to have been effectively given and received, if sent
by telecopier, on the next business day following receipt of such transmission
(confirmation of receipt by confirmed facsimile transmission being deemed
receipt of communication sent by telecopy) or, if delivered, to have been given
and received on the date of such delivery. Any of Party A or Party B may change
its address for service by written Notice given as aforesaid.
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18.3 Foreign Economic Contracts. The Parties acknowledge that this Contract and
the other contracts and agreements contemplated hereunder constitute foreign
economic contracts and are subject to the Foreign Economic Contract Law and Law
of the People's Republic of China on Sino-Foreign Cooperative Joint Ventures.
18.4 Integration. This Joint Venture Contract, together with all of the
contracts and agreements contemplated herein, set forth the entire agreement
between the Parties with regard to the subject matter hereof.
18.5 Resolution of Disputes.
18.5.1 Any controversy or claim that may arise under, out of, in connection with
or relating to this Joint Venture Contract or the Joint Venture Company or any
breach hereof, shall be submitted to a panel consisting of representatives of
each Party. Each of Parties related to the dispute may appoint up to one (1)
individual to such panel. The members of such panel shall be appointed by each
of them within ten (10) days of the receipt by the Party of notice of the
existence of such controversy or claim. The unanimous decision of such panel
shall resolve the controversy or claim. If the panel is unable to resolve such
matter within thirty (30) days of the submission of such controversy or claim to
such panel, it shall be. brought before the President or Chairman of each of
Party involved in any such controversy or claim, for final resolution. If such
individuals are unable to resolve the matter within thirty (30) days of the
submission of such controversy or claim to such individuals, any Party may
request arbitration in accordance with Section 18.5.2.
18.5.2 Any controversy or claim that is not resolved under Section 18.5.1 shall
be submitted to the China International Economic and Trade Arbitration Committee
for settlement by arbitration in accordance with its arbitration procedures or
rules. The PRC laws and regulations are applicable for the arbitration. The
arbitration location shall be at Beijing. The arbitral decision shall be final
and binding, and without appeal. The costs of arbitration shall be assumed by
the Party or Parties against whom the arbitral award is decided.
18.5.3 Any controversy which constitutes a disagreement as to a matter which is
properly within the competence of the Board of Directors shall not be subject to
arbitration under Section 18.5.2 unless all Parties agree thereto.
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18.6 Confidential Information. All information other than information generally
known in the telecommunications industry supplied by or on behalf of any Party
pursuant to this Joint Venture Contract ("Confidential Information") shall be
treated as confidential by all Parties. The Parties covenant and agree that no
Confidential Information shall be disclosed to anyone outside the organization
of such Party without the prior written consent of the other. In addition, the
Parties agree to take such action as may be appropriate to prevent the
unauthorized use and disclosure of, and to keep confidential all such
Confidential Information, including ensuring that such Confidential Information
be disclosed only to responsible employees of the Party and on a need to know
basis.
18.7 Implementation. The Parties hereto hereby agree to ensure compliance by its
directors, agents or representatives with the terms and conditions of this Joint
Venture Contract. The Parties shall also implement or help to implement all
necessary and useful steps in order to ensure Parties' promises.
18.8 Severability. In case any one or more of the provisions contained in this
Joint Venture Contract or any application of such provisions shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions or the remaining applications shall
at no time in any way be affected or impaired.
18.9 Applicable Law. This Joint Venture Contract shall be governed by, construed
and enforced in accordance with the laws of the People's Republic of China.
18.10 Counterparts This Joint Venture Contract shall be executed in six (6)
originals and may be executed in counterparts and all counterparts so executed
shall constitute one contract binding all the Parties.
18.11 Captions. The captions and headings in this Joint Venture Contract are for
convenience only and shall not be considered in interpreting any provision of
this Joint Venture Contract.
18.12 Binding Effect. Except as other-wise provided to the contrary, this Joint
Venture Contract shall be binding upon, and enure to the benefit of, the Parties
and their respective heirs, executors, administrators, successors and permitted
assigns.
18.13 Gender and Number. Whenever required by the context, the singular shall be
deemed to include the plural, and the plural shall be deemed to include the
singular.
18.14 Amendment. This Joint Venture Contract may not be amended in whole or in
part unless by agreement in writing signed by all the Parties. If the Parties
agree, during the term of this Joint Venture Contract, to make a major amendment
to this Joint Venture Contract, they shall apply for approval to the appropriate
authorities. Where the subject of amendment involves industrial or commercial
registration or tax registration, the re-registration formalities shall be
completed with the industry and commerce authorities and the taxation
authorities, as required.
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18.15 Transfer to Affiliates. Any of Party A and Party B may, at any time, but
subject to the provisions of this Contract, sell, transfer, assign or otherwise
dispose of all or any of their respective Participation in the Joint Venture
Company to one or more of their respective Affiliates provided however that:
18.15.1 each such transferee Affiliate agrees in writing m advance to be fully
bound by the terms and conditions of this Contract;
18.15.2 the Party transferring its interest, shall remain responsible to the
other Parties for the action of such transferee Affiliate, including compliance
with this Contract;
18.15.3 all transfers of a Participation as provided above shall also require
the approval of the relevant authorities in China.
18.16 Language. This Joint Venture Contract shall be written in Chinese and in
English and both versions shall have the same legal and binding effect.
IN WITNESS WHEREOF, the Parties have duly executed this Joint Venture Contract
in Beijing, China, as of this_____ th day of Aug____________ 1997.
XIN HAI TECHNOLOGY DEVELOPMENT LTD.
Seal
Per: ______________________________________________
INFORNET INVESTMENT LIMITED
Seal
20
EDUVERSE" Accelerated Learning Systems, Inc.
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make available to you a report listing the number of users during the preceding
calendar month, the Gross Revenues collected and the commission due you.
d) EDUVERSE will maintain books and records of Gross Revenues derived from your
users, in accordance with Generally Accepted Accounting Principles. On an annual
basis, EDUVERSE shall engage at EDUVERSE's own expense, an independent auditor
to certify EDUVERSE's compliance with the terms of this agreement and amount and
accuracy of payments to you made under this agreement.
3. freeENGLISH Site Policy
a) EDUVERSE shall have the sole right and responsibility for determining the
advertising pricing policy on freeENGLISH. All advertisements shall be subject
to acceptance by EDUVERSE, in its sole discretion. All advertisements accepted
shall be subject to the terms and conditions of EDUVERSE's then current terms
and conditions of advertising. Such terms may be changed at any time, without
notice to you. EDUVERSE shall have no obligation to advertise any company's
products or services. Prices for advertisements shall be set solely by EDUVERSE
and shall be consistent with prices for freeENGLISH advertisements In similar
geographic regions. EDUVERSE reserves the right to change its prices at any
time, without notice to you or advertisers.
b) You agree nor to make any representations, warranties or other statements
concerning any customer service matter, including freeENGLISH policies,
advertising availability and/or pricing without the prior written consent of
EDUVERSE and EDUVERSE is not responsible or liable in any manner for any such
statements.
4. Special Promotions
You acknowledge that in the event that you and EDUVERSE enter into any special
marketing and promotional activities not set forth in this Agreement, there may
be additional costs associated with such activities. You and EDUVERSE shall
agree In advance In a written promotion schedule (signed by an authorized
representative of EDUVERSE and your Company) as to the scope of such special
marketing and promotional activities and the amount of funds and/or other
resources to be contributed to such activities by you and EDUVERSE, Any and all
promotion schedules shall be deemed appended to this Agreement.
5. Site Qualification
We may exclude sites that we feel do not qualify for participation in the
Program because those sites: a) promote sexually explicit material, b)
promote violence,
c) promote Illegal activities,
d) promote discrimination based on race, sex, religion, national origin,
physical disability, sexual orientation or age, or
e) violate intellectual property rights of others.
6. Scope of Agreement
a) Participation in the Program constitutes your agreement to be bound by the
terms and conditions of this Agreement. EDUVERSE reserves the right, at its
discretion, to change, modify, add or delete any portion of this Agreement at
any time. Notification of changes to this Agreement will be posted in the
Member's Section of the Program.
b) If the terms or conditions of this Agreement in Its current form, or any
future changes to this Agreement are unacceptable to you, or cause you to no
longer be in compliance with the Agreement, you may terminate your participation
in the Program by ceasing use of the freeENGLISH links and URL(s) and promptly
notifying EDUVERSE of the same (see Section 9 regarding termination).
c) EDUVERSE may change, suspend or discontinue any aspect of the Program at any
time, including the availability of any Program feature, database, or content,
with thirty (30) days written notice.
7. Licensing; Ownership
a) EDUVERSE grants you a revocable, limited, non-exclusive license to use the
name, logos, trademarks, service marks, trade dress, proprietary technology,
graphic banners or other information (the "EDUVERSE Intellectual Property"), as
provided by EDUVERSE during the registration process, on your site for the sole
purpose of creating a link from your site to freeENGLISH during your
participation in the Program. You may not use the EDUVERSE Intellectual Property
for any other purpose. Upon termination of this Agreement, you shall immediately
terminate the use of the EDUVERSE Intellectual Property. Except as expressly set
forth in this Agreement, you may not copy, distribute, modify, reverse engineer,
or create derivative works from the EDUVERSE Intellectual Property
b) You grant EDUVERSE a revocable, non-exclusive, worldwide, royalty-free
license to use any of your names, logos, trademarks, service marks, trade dress,
proprietary technology, graphic banners or other information ("Your Intellectual
Property"), submitted by you for participation In this Program as reasonably
necessary to perform Its obligations under this Agreement. EDUVERSE may not use
Your Intellectual Property for any other purpose. Upon termination of this
Agreement, EDUVERSE shall immediately terminate the use of Your Intellectual
Property. Except as expressly set forth in this Agreement, EDUVERSE may not
copy, distribute, modify, reverse engineer, or create derivative works from Your
Intellectual Property.
C) Each party owns and shall retain all right, title and interest in its names,
logos, trademarks, service marks, trade dress, copyrights and proprietary
technology including without limitation, those names, logos, trademarks, service
marks, trade dress, copyrights and proprietary technology currently used or
which may be developed and/or used by It in the future. The goodwill associated
with the use of the same shall inure solely to the benefit of the owning party.
8. Image Scans
In the event that EDUVERSE provides you with access to designated digitally
scanned Images displayed on freeENGLISH, you agree to display the scans in their
entirety and to limit your use of the scans to the advertisement or review of
the displayed images In accordance with the U.S. Copyright Act. Should you
desire to modify or use the scans in a manner which is not in accordance with
the U.S Copyright Act, you agree to obtain the permission of the appropriate
copyright holder prior to such modification or use. You understand and agree
that you are solely responsible for compliance with the U.S. Copyright Act. In
addition, you may not provide the digital scans to third parties without prior
written permission from EDUVERSE. This grant of access to designated digitally
scanned images shall not be construed to be a grant of access to use any other
copyrighted materials, including, but not limited to reviews, articles, ad
banners, photographs, Images, illustrations, audio clips and video clips
displayed on freeENGLISH without prior written permission from EDUVERSE.
9. Termination
a) You may terminate your participation in the Program at any time by sending an
email with the Subject "Cancellation," along with your account number to:
[email protected]. EDUVERSE will pay you all commissions accrued until
the point of termination and on a quarterly basis thereafter, will continue to
pay you all commissions due to you for your users until such time as there are
no active freeENGLISH users that had registered on freeENGLISH from a link on
your web site during your active participation in the Program.
b) With thirty (30) days written notice, EDUVERSE may, in its sole discretion,
terminate or suspend your participation in the Program for any reason
whatsoever, including, without limitation, breach of this Agreement or
assignment of this Agreement or any portion of this Agreement by you without the
prior written permission of EDUVERSE, and such termination notice may be sent by
email to you. Subject to the foregoing restriction, this Agreement shall be
binding upon you and EDUVERSE and your and EDUVERSE's respective heirs,
executors, successors and assigns.
C) Upon termination by either you or EDUVERSE, each of us will immediately
revoke the license referred to in Section 7 of this Agreement and cease any and
all use of the other's name, logos, trademarks, service marks, trade dress,
proprietary technology and graphic banners or other information submitted or
provided by the other party, and, promptly (within ten (10) days) of the
effective date of termination return or destroy all assets (digital, proprietary
or otherwise), including all whole or partial copies thereof, belonging to the
other; and, upon request of the other, will certify the same in writing to the
other.
d) Sections 7(c), 9, 10 and 11 shall survive termination of this Agreement.
10. Your Representations; Indemnification
a) You represent and warrant that any material that is displayed on your site
and/or provided by you for display an freeENGLISH will not:
i) Infringe on any third party's copyright, patent, trademark, trade secret
or other proprietary rights;
ii) violate any applicable law, statute, ordinance or regulation;
iii) be defamatory or libelous;
iv) violate any applicable pornography or obscenity laws;
v) promote violence or contain hate speech; or
vii) contain viruses, trojan horses, worms, time bombs, cancelbots or other
similar harmful or deleterious programming routines.
b) You agree to indemnify, defend and hold harmless EDUVERSE and Its affiliates,
directors, officers, employees and agents, from and against any and all
liability, claim, loss, damage, injury or expense (including reasonable
attorneys' fees) brought by a third party, arising out of a breach, or alleged
breach, of any of your representations, warranties or obligations herein.
11. General Provisions
a) freeENGLISH and the Program are provided an an "as is" basis without
warranties of any kind, either express or -implied, including, without
limitation, warranties or implied warranties of merchantability or fitness for a
particular purpose. In no event shall EDUVERSE be liable to you for any direct,
indirect, special, exemplary, consequential or incidental damages, whether such
damages are alleged in tort, contract or indemnity arising out of the use or
inability to use the freeENGLISH, the failure for any reason to return users to
your site or loss of data, even if EDUVERSE is informed of the possibility of
such damages. In the event of dissatisfaction, your sole and exclusive remedy is
to terminate participation in the Program. EDUVERSE is liable for any breach of
this Agreement with respect to the payment of commissions due to you and with
respect to the proper use of Your Intellectual Property as per this Agreement.
b) EDUVERSE agrees to defend, indemnify and hold you harmless for any loss,
damage or liability for any claimed infringement of any U.S. patent right,
copyright and trade secrets, or other proprietary rights asserted by any third
person arising out of your use of freeENGLISH or any EDUVERSE products, provided
(1) that EDUVERSE is promptly notified in writing by you of any such claim
against you, (2) that you authorize EDUVERSE to assume sole control over the
defense of any such claim thereafter, together with the right to settle or
compromise such claim, and (3) that you make available to EDUVERSE such
information, assistance and authority as may be reasonably requested by EDUVERSE
in order to enable EDUVERSE to defend any such claim, In the event any such
claim is asserted, EDUVERSE shall have the right without limitation, at its
option either (a) to obtain such rights and/or licenses from the claimant as may
be necessary to enable you to continue using and/or marketing the EDUVERSE
Products which are the subject of the claim, and/or (b) to modify the EDUVERSE
Products with respect to which such claim is asserted so as to avoid further
claimed infringement by such Person. EDUVERSE further agrees to indemnify and
hold you harmless from and against any and all liabilities, costs, damages and
expenses (including legal costs) arising out of or in connection with any issue
for warranty. EDUVERSE agrees to indemnify you (including reasonable attorney's
fees and costs of litigation) against and hold you harmless from any and all
claims by any other party resulting from EDUVERSE's acts, omissions or
representations, regardless of the form of action. A copy of EDUVERSE's current
End User License Agreement for freeENGLISH is attached hereto as Exhibit A.
c) Each party shall act as an independent contractor and shall have no authority
to make or accept any representations or offers on the other's behalf,
d) This Agreement has been made in and shall be construed and enforced in
accordance with the laws of the State of Nevada. Any action to enforce this
Agreement shall be brought in the federal or state courts located in Reno, NV.
e) If you need to send official correspondence, send it via certified mail
return receipt requested to:
EDUVERSE Accelerated Learning Systems, Inc.
Suite 209, 1135 Terminal Way
Reno, NV, US 89502
Attn: General Counsel
f) The terms and conditions of this Agreement represent the entire understanding
between EDUVERSE and you with respect to the subject matter of this Agreement,
and supersede all prior and contemporaneous agreements express or implied, oral
or written, except as herein contained. You may not modify or amend this
Agreement other than by an agreement In writing signed by both EDUVERSE and you.
I represent that I am an officer or other authorized representative of the
Company with the power to enter into this Agreement on behalf of the Company. I
have read and understood this Agreement and agree that the Company shall be
bound by all of its terms and conditions.
COMPANY
EDUVERSE ACCELERATED
LEARNING SYSTEMS, INC.
XIN NET CORP.
Per:_______________________________
Per:_______________________________
Mark E. Bruk, President & CEO
XIAO-QING DU
Print Name
DIRECTOR & CEV
Print Title
- ----------------------------------
Date
<PAGE>
EXHIBIT A - SINGLE END-USER LICENSE AGREEMENT FOR freeENGLISH SOFTWARE
IMPORTANT-READ CAREFULLY. This End-User License Agreement ("EULA") is a legal
AGREEMENT between you (either an individual or a single entity) and EDUVERSE
Accelerated Learning Systems, Inc. ("EDUVERSE") for freeENGLISH, which product
includes computer software and may include associated media, printed materials,
and 11 online" or electronic documentation ("SOFTWARE"). By installing, copying,
or otherwise using the SOFTWARE, you agree to be bound by the terms of this
EULA. If you do not agree to the terms of this EULA, EDUVERSE is unwilling to
license the SOFTWARE to you. In such event, you may not use or copy the
SOFTWARE.
SOFTWARE LICENSE
The SOFTWARE Is protected by copyright laws and international copyright
treaties, as well as other intellectual property laws and treaties. The
SOFTWARE is licensed, not sold.
1) GRANT OF LICENSE This EULA grants you, the registered computer software user,
the following rights:
SOFTWARE. You may install and use the SOFTWARE on personal computer(s). You
may make copies of the computer software portion of the SOFTWARE.
2) DESCRIPTION OF OTHER RIGHTS AND LIMITATIONS.
LIMITATIONS on REVERSE ENGINEERING, DECOMPILATION and DISASSEMBLY. You may not
reverse engineer, decompile, or disassemble the SOFTWARE, except and only to the
extent that such activity is expressly permitted by applicable law
notwithstanding this limitation.
NOT FOR RESALE SOFTWARE. Notwithstanding other sections of this EULA, you may
not sell, or otherwise transfer for value, the SOFTWARE.
RENTAL. You may not rent or lease the SOFTWARE to any party.
SOFTWARE TRANSFER. You may permanently transfer all of your rights under this
EULA, provided you (a) retain no copies, (b) transfer all of the SOFTWARE
(including all component parts, the media and printed materials, any upgrades,
this EULA, and, if applicable, the Certificate of Authenticity), and (c) the
recipient agrees to abide by all of the terms of this EULA.
SUPPORT SERVICES. EDUVERSE may provide you with support services related to the
SOFTWARE ("Support Services"). The provision and use of Support Services is
governed by the EDUVERSE policies and programs described in the SOFTWARE user
manual and/or in "online" documentation. Any supplemental software code provided
to you as part of the Support Services shall be considered part of the SOFTWARE
and subject to the terms and conditions of this EULA. With respect to technical
Information you provide to EDUVERSE as part of the Support Services, EDUVERSE
may use such information for its business purpose, including for product updates
and development. EDUVERSE will use its best efforts to not utilize such
technical information in a form that personally identifies you.
TERMINATION. Without prejudice to any of EDUVERSE's other rights, EDUVERSE may
terminate this EULA if you fall to comply with the terms and conditions of this
EULA. In such event, you must destroy all copies of the SOFTWARE and all of its
component parts; to this end you grant to EDUVERSE the right to, with or without
notice, monitor your Internet accessible activities for the purpose of verifying
SOFTWARE performance and/or your compliance with the terms hereof, including,
but not limited to the remote monitoring and verification of your
implementation, use and duplication of the SOFTWARE
3) UPGRADES. If the SOFTWARE is labeled or otherwise identified by EDUVERSE as
an "upgrade", you must be properly licensed to use a product identified by
EDUVERSE as being eligible for the upgrade in order to use the SOFTWARE. A
SOFTWARE labeled or otherwise identified by EDUVERSE as an upgrade replaces
and/or supplements the product that formed the basis for your eligibility for
such upgrade. You may use the resulting upgraded product only in accordance with
the terms of this EULA.
<PAGE>
4) COPYRIGHT AND TRADEMARKS. All title, trademarks and copyrights In and
pertaining to the SOFTWARE (including but not limited to any images,
photographs, animation, video, audio, music, text, and applets incorporated into
the SOFTWARE), the accompanying printed materials and any copies of the SOFTWARE
are owned by EDUVERSE or its affiliated companies. The SOFTWARE is protected by
copyright and trademark laws and international treaty provisions. You may not
copy the printed materials accompanying the SOFTWARE.
You may not remove, modify or alter any EDUVERSE copyright or trademark notice
from any part of the SOFTWARE, including but not limited to any such notices
contained In the physical and/or electronic media or documentation, in the
EDUVERSE Setup Wizard dialogue or 'about' boxes, in any of the runtime resources
and/or in any web-presence or web-enabled notices, code or other embodiments
originally contained in or dynamically or otherwise created by the SOFTWARE.
5) U. S, GOVERNMENT RESTRICTED RIGHTS, The SOFTWARE and documentation are
provided with RESTRICTED RIGHTS. Use, duplication, or disclosure by the U. S.
Government is subject to restrictions as set forth In subparagraph (c)(1)(ii) of
the Rights in Technical Data and Computer Software clause at DFARS 252.227-7013
or subparagraphs (c)(1) and (2) of the Commercial Computer Software --
Restricted Rights at 48 CFR 52.227-19, as applicable.
Manufacturer is:
EDUVERSE Accelerated Learning Systems, Inc.
1135 Terminal Way, Suite 209,
Reno, NV 89502
Phone 775.332.3325
Fax 775.332.3326
Email [email protected]
Web www.eduverse.com
Web www.freeENGLISH.com
7) MISCELLANEOUS If this SOFTWARE was acquired and Is used exclusively outside
of the United States, then local law will apply. Should you have any questions
concerning this EULA, or if you desire to contact EDUVERSE for any reason,
please contact the EDUVERSE distributor serving your country, or write:
EDUVERSE Accelerated Learning Systems, Inc.
1135 Terminal Way, Suite 209,
Reno, NV 89S02
Phone 775.332.3325
Fax 775.332.3326
Email [email protected]
Web www.eduverse.com
Web www.freeENGLISH.com
8) LIMITED WARRANTY. EDUVERSE warrants that (a) the SOFTWARE will, for a period
of ninety (90) days from the date of your receipt, perform substantially in
accordance with EDUVERSE's written materials accompanying it, and (b) any
Support Services provided by EDUVERSE shall be substantially as described in
applicable written materials provided to you by EDUVERSE, and (c) EDUVERSE
support engineers will make commercially reasonable efforts to solve any problem
issues with the SOFTWARE. To the extent that implied warranties on the SOFTWARE
are disclaimable, they are disclaimed hereinbelow. Some states and jurisdictions
do not allow disclaimers of or limitations on the duration of an implied
warranty, so the above limitation may not apply to you. To the extent implied
warranties may not be entirely disclaimed but implied warranty limitations are
allowed by applicable law, implied warranties on the SOFTWARE, if any, are
limited to ninety (90) days.
CUSTOMER REMEDIES. EDUVERSE's and its suppliers' entire liability and your
exclusive remedy shall be for EDUVERSE to repair or replace the component(s) of
the SOFTWARE that do not meet EDUVERSE's Limited Warranty. This Limited Warranty
is void if failure of the SOFTWARE has resulted from accident, abuse, or
misapplication. Any replacement SOFTWARE will be warranted for the remainder, of
the original warranty period or thirty (30) days, whichever is longer.
NO OTHER WARRANTIES TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, EDUVERSE
AND ITS SUPPLIERS DISCLAIM ALL, OTHER WARRANTIES AND CONDITIONS, EITHER EXPRESS
OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND NON-INFRINGEMENT,
WITH REGARD TO THE SOFTWARE AND THE PROVISION OF OR FAILURE TO PROVIDE SUPPORT
SERVICES, THIS LIMITED WARRANTY GIVES YOU SPECIFIC LEGAL RIGHTS. YOU MAY HAVE
OTHERS, WHICH VARY FROM STATE/] URTSDICTION TO STATE/JURISDICTION.
9) LIMITATION OF LIABILITY, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
IN NO EVENT SHALL EDUVERSE OR ITS SUPPLIERS BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF BUSINESS PROMS, BUSINESS INTERRUPTION, LOSS OF
BUSINESS INFORMATION, OR ANY OTHER PECUNIARY LOSS) ARISING OUT OF THE USE OF OR
INABILITY TO USE THE SOFTWARE OR THE PROVISION OF OR FAILURE TO PROVIDE SUPPORT
SERVICES, EVEN IF EDUVERSE HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
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