-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OK8OwEKS7IRubvL9H8klN5XktWxd9uUwmEabHiDAZRPtbqsXtDzphYPf3hyysC1g /8MKBcDwHkGI4C1gViqYpQ== 0000932799-03-000236.txt : 20031215 0000932799-03-000236.hdr.sgml : 20031215 20031215105344 ACCESSION NUMBER: 0000932799-03-000236 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20031205 ITEM INFORMATION: Changes in control of registrant FILED AS OF DATE: 20031215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHINA WORLD TRADE CORP CENTRAL INDEX KEY: 0001081834 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 870629754 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-26119 FILM NUMBER: 031053324 BUSINESS ADDRESS: STREET 1: GOLDION DIGITAL NETWORK CENTER STREET 2: 138 TI YU RD. E. 4TH FL CITY: TIAN HE GUANGZHOU STATE: K3 ZIP: 00000 BUSINESS PHONE: 01185298826818 MAIL ADDRESS: STREET 1: GOLDION DIGITAL NETWORK CENTER STREET 2: 138 YI TU RD E. CITY: TIAN HE GUANGHOU STATE: K3 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: TXON INTERNATIONAL DEVELOPMENT CORP DATE OF NAME CHANGE: 19990329 8-K 1 form8kdec.txt FORM 8K FOR DECEMBER 5, 2003 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 5, 2003 ---------------- CHINA WORLD TRADE CORPORATION (Exact name of registrant as specified in its charter) 000-26119 (Commission File Number) Nevada 87-0629754 ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation) 4th Floor, Goldlion District Network Center 138 Tiyu Road East, Tianhe Guangzhou, PRC 510620 (Address of principal executive offices, with zip code) (001)(8620)3878-0286 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Item 1. Changes in Control of Registrant. (a) The Company entered into a acquisition agreement (the "Acquisition Agreement") dated November 19, 2003, with Mr. Tsang Chi Hung ("Mr. Tsang"), the owner of the 21st to 23rd Floor of Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou 510620, PRC (the "Premises"). On December 5, 2003, pursuant to the Acquisition Agreement, Mr. Tsang purchased from the Company 3,000,000 common shares and warrants to purchase an additional 6,000,000 commons shares (the "Warrants") for US$1,800,000 (US$0.60 per common share). As consideration for the US$1,800,00 purchase price, Mr. Tsang assigned to the Company the rights to the after tax rental income of the Premises for a five year period commencing on December 1, 2003 and ending on November 30, 2008, the present value of which was estimated to be worth over US$1,800,000. The Warrants may be exercised between December 5, 2003 to December 1, 2005 at an exercise price of US$0.75 per common share. Pursuant to a Settlement Agreement dated December 5, 2003, entered into between the Mr. Tsang and the Company, Mr. Tsang converted US$456,661.73, which was previously advanced to the Issuer by the Mr. Tsang, into 761,103 common shares of the Company. As a result of the acquisition of shares and warrants pursuant to the Acquisition Agreement and the acquisition of shares pursuant to the the Settlement Agreement, and in the event Mr. Tsang exercises the Warrants in full, Mr. Tsang beneficially owns 71.82% of the common shares of the Company and controls the appointment of directors to the Board of Directors of the Company. However, no new directors or officers were appointed, and no directors of offices were removed as a result of the completion of the Acquisition Agreement and the Settlement Agreement. To the Company's knowledge, there are no agreements, arrangements or understandings between and among Mr. Tsang or any other shareholders or their respective associates with respect to the election of directors, appointment of officers or the control of the Company. (b) Information required by Item 403(c) of Regulation S-K - ------------------------ --------------------------- ------------------- Class Name and Address of Amount and Nature of Beneficial Owner Beneficial Owner - ------------------------ --------------------------- ---------------- - ------------------------ --------------------------- ---------------- - ------------------------ --------------------------- ---------------- - ------------------------ --------------------------- ---------------- Common Stock Tsang Chi Hung 7,761, 103 Unit No. 1217, 12/F The Metropolis No. 10 Metropolis Drive Hong Kong SAR - ------------------------ --------------------------- ---------------- - ------------------------ --------------------------- ---------------- - ------------------------ --------------------------- ---------------- - ------------------------ --------------------------- ---------------- Warrants to Purchase Tsang Chi Hung 10,000,000 Common Stock Unit No. 1217, 12/F The Metropolis No. 10 Metropolis Drive Hong Kong SAR - ------------------------ --------------------------- ---------------- Item 7. (c) Exhibits. 4.1 Warrants dated December 5, 2003, issued by the Company to Tsang Chi Hung. 4.2 Registration Rights Agreement dated December 5, 2003 between the Company and Tsang Chi Hung. 10.1 Acquisition Agreement dated November 19, 2003, between the Company and Tsang Chi Hung. 10.2 Settlement Agreement dated December 5, 2003,between the Company and Tsang Chi Hung SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CHINA WORLD TRADE CORPORATION (Registrant) By: /s/ JOHN HUI Name: John Hui Title: President Date: December 15, 2003 EX-99 3 form8kex4-1.txt EX 4.1 WARRANTS EXHIBIT 4.1 WARRANTS THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR ANY STATE SECURITIES LAWS OR THE PROVISIONS OF THIS WARRANT. No. of Shares of Common Stock: 6,000,000 WARRANT To Purchase Common Stock of China World Trade Corporation THIS IS TO CERTIFY THAT Chi Hung TSANG is entitled, at any time from the Warrant Issuance Date (as hereinafter defined) to the Expiration Date (as hereinafter defined), to purchase from China World Trade Corporation, a Nevada corporation (the "Company"), 6,000,000 shares of Common Stock (as hereinafter defined and subject to adjustment as provided herein), in whole or in part, including fractional parts, at a purchase price per share equal to US$0.75 (the "Original Purchase Price") on the terms and conditions and pursuant to the provisions hereinafter set forth. 1. DEFINITIONS As used in this Warrant, the following terms have the respective meanings set forth below: "Business Day" shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York. "Closing Date" shall have the meaning set forth in the Share Purchase Agreement. "Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws. "Common Stock" shall mean (except where the context otherwise indicates) the Common Stock, US$0.001 par value, of the Company as constituted on the Closing Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of shares of Common Stock upon any reclassification thereof which is also not preferred as to dividends or assets over any other class of stock of the Company and which is not subject to redemption, and (ii) shares of common stock of any successor or acquiring corporation received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 4.4. "Convertible Securities" shall mean evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. "Current Warrant Price" shall mean US$0.75 (or other Original Purchase Price, if different), subject to any adjustments to such amount made in accordance with Section 4 hereof. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Exercise Period" shall mean the period during which this Warrant is exercisable pursuant to Section 2.1. "Expiration Date" shall mean December 1, 2005. "GAAP" shall mean generally accepted accounting principles in the United States of America as from time to time in effect. "Holder" shall mean the Person in whose name the Warrant or Warrant Stock set forth herein is registered on the books of the Company maintained for such purpose. "Market Price" per Common Share means the average of the closing bid prices of the Common Shares as reported on The Nasdaq Stock Market ("NASDAQ") or, if such security is not listed or admitted to trading on NASDAQ, on the principal national security exchange or quotation system on which such security is quoted or listed or admitted to trading, or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the closing bid price of such security on the over-the-counter market on the day in question as reported by the National Association of Security Dealers, Inc., or a similar generally accepted reporting service, as the case may be, for the five (5) trading days immediately preceding the date of determination. "Other Property" shall have the meaning set forth in Section 4.4. "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, other legal entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Registration Rights Agreement" shall mean the Registration Rights Agreement dated as of 19th November, 2003 by and between the Company and Chi Hung TSANG, as it may be amended from time to time. "Restricted Common Stock" shall mean shares of Common Stock which are, or which upon their issuance on the exercise of this Warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 9.1(a). "Securities Act" shall mean the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Acquisition Agreement" shall mean the Acquisition Agreement dated as of 19th November, 2003 by and between the Company and Chi Hung TSANG, as it may be amended from time to time. "Transfer" shall mean any disposition of any Warrant or Warrant Stock or of any interest in either thereof, which would constitute a sale thereof within the meaning of the Securities Act. "Transfer Notice" shall have the meaning set forth in Section 9.2. "Warrant Issuance Date" shall mean any date on which Warrants are issued pursuant to the Share Purchase Agreement. "Warrants" shall mean this Warrant and all warrants issued upon transfer, division or combination of, or in substitution for, any thereof. All Warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock for which they may be exercised. "Warrant Price" shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such exercise. "Warrant Stock" shall mean the shares of Common Stock purchased by the holders of the Warrants upon the exercise thereof. 2. EXERCISE OF WARRANT 2.1 MANNER OF EXERCISE. (a) From and after the Warrant Issuance Date and until 5:00 P.M., New York City time, on the Expiration Date, Holder may exercise this Warrant, on any Business Day, for all or any part (which part shall be no less than 10,000 shares) of the number of shares of Common Stock purchasable hereunder. In order to exercise this Warrant, in whole or in part, Holder shall fax to the Company an executed and completed Notice of Exercise to exercise this Warrant, which Notice of Exercise shall specify the number of shares of Common Stock to be purchased (the "Notice of Exercise"), and shall deliver to the Company within three (3) business days thereafter by hand delivery or express courier at the office or agency designated by the Company pursuant to Section 12: (i) the original Notice of Exercise, (ii) payment by cash, check or bank draft payable to the Company of the Warrant Price in cash or by wire transfer or cashier's check drawn on a United States bank or by the Holder's surrender of Warrant Stock (or the right to receive such number of shares pursuant to Section 2.1(b)) having an aggregate Market Price equal to the Warrant Price for all shares then being purchased, and (iii) this Warrant. The Notice of Exercise shall be substantially in the form appearing at the end of this Warrant as Exhibit 1, duly executed by Holder or its agent or attorney. Upon receipt of the items referred to in clauses (i), (ii) and (iii) above, the Company shall, as promptly as practicable, and in any event within three (3) Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as Holder shall request in the notice and shall be registered in the name of Holder or, subject to Section 9, such other name as shall be designated in the notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by means of the fax of the Notice of Exercise to the Company. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. (b) If the Market Price of one share of Common Stock is greater than the Current Warrant Price, this Warrant may be exercised by means of a written notice as described in Section 2.1(a), marked to reflect a "Net Issue Exercise" and specifying the amount of Warrant Stock to be purchased. Upon such exercise, the Holder shall be entitled to receive Warrant Stock equal in value to the value of this Warrant (or the portion thereof being cancelled) and the Company shall issue to Holder a number of shares of Warrant Stock computed as of the date of surrender of this Warrant to the Company using the following formula: X = Y(A-B) ________ A Where X = the number of shares of Warrant Stock to be issued to Holder under this Section 2.1(b); Y = the number of shares of Warrant Stock purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being cancelled (at the date of such calculation); A = the Market Price of one share of the Warrant Stock (at the date of such calculation); and B = the Current Warrant Price (as adjusted to the date of such calculation). (c) The Holder shall be entitled to exercise the Warrant notwithstanding the commencement of any case under 11 U.S.C. sec. 101 et seq. (the "Bankruptcy Code"). If the Company is a debtor under the Bankruptcy Code, the Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. ss. 362 in respect of the Holder's exercise right. The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. sec. 362 in respect of the exercise of the Warrant. The Company agrees, without cost or expense to the Holder, to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. sec. 362. 2.2 PAYMENT OF TAXES AND CHARGES. All shares of Common Stock issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued, fully paid and nonassessable, and without any preemptive rights. The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issue or delivery thereof, other than any income or other similar taxes incurred by the Holder in connection with the issue, delivery and exercise of this Warrant. 2.3 FRACTIONAL SHARES. The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the Market Price per share of Common Stock on the relevant exercise date. 2.4 CONTINUED VALIDITY. A holder of shares of Common Stock issued upon the exercise of this Warrant, in whole or in part (other than a holder who acquires such shares after the same have been publicly sold pursuant to a Registration Statement under the Securities Act or sold pursuant to Rule 144 thereunder), shall continue to be entitled with respect to such shares to all rights to which it would have been entitled as Holder under Sections 9, 10 and 14 of this Warrant. The Company will, at the time of exercise of this Warrant, in whole or in part, upon the request of Holder, acknowledge in writing, in form reasonably satisfactory to Holder, its continuing obligation to afford Holder all such rights; provided, however, that if Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to Holder all such rights. 3. TRANSFER, DIVISION AND COMBINATION 3.1 TRANSFER. Subject to compliance with Sections 9, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company referred to in Section 2.1 or the office or agency designated by the Company pursuant to Section 12, together with a written assignment of this Warrant substantially in the form of Exhibit 2 hereto duly executed by Holder or its agent or attorney. Upon such surrender, the Company shall, subject to Section 9, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned in compliance with Section 9, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant issued. 3.2 DIVISION AND COMBINATION. Subject to Section 9, this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 3.1 and with Section 9, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. 3.3 EXPENSES. The Company shall prepare, issue and deliver at its own expense the new Warrant or Warrants under this Section 3. 3.4 MAINTENANCE OF BOOKS. The Company agrees to maintain, at its aforesaid office or agency, books for the registration and the registration of transfer of the Warrants. 4. ADJUSTMENTS The number of shares of Common Stock for which this Warrant is exercisable, or the price at which such shares may be purchased upon exercise of this Warrant, shall be subject to adjustment from time to time as set forth in this Section 4. The Company shall give Holder notice of any event described below which requires an adjustment pursuant to this Section 4 at the time of such event. 4.1 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. If at any time the Company shall: (a) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, additional shares of Common Stock, (b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then (i) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Current Warrant Price shall be adjusted to equal (A) the Current Warrant Price multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares for which this Warrant is exercisable immediately after such adjustment. 4.2 CERTAIN OTHER DISTRIBUTIONS. (a) If at any time prior to the Expiration Date the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive any dividend or other distribution of: cash, any evidences of its indebtedness, any shares of its stock or any other securities or property of any nature whatsoever (other than cash, Convertible Securities or additional shares of Common Stock), or any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of its stock or any other securities or property of any nature whatsoever (other than cash, Convertible Securities or additional shares of Common Stock), then Holder shall be entitled to receive such dividend or distribution as if Holder had exercised the Warrant. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4.2 and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4.1. (b) (i) If at any time or from time to time the Company issues or sells, or is deemed by the express provisions of this subsection (i) to have issued or sold, Additional Shares of Common Stock (as hereinafter defined), other than as a dividend or other distribution on any class of stock as provided in Section 4.2(a) above, and other than a subdivision or combination of shares of Common Stock as provided in Section 4.1 above, for an Effective Price (as hereinafter defined) less than the then effective Current Warrant Price, then and in each such case the Current Warrant Price shall be reduced, as of the opening of business on the date of such issue or sale, to a price determined by multiplying the Current Warrant Price existing immediately prior to such issuance by a fraction (x) the numerator of which shall be (A) the number of shares of Common Stock deemed outstanding (as defined below) immediately prior to such issue or sale, plus (B) the number of shares of Common Stock which the aggregate consideration received (as defined in subsection (b)(ii)) by the Company for the total number of Additional Shares of Common Stock so issued would purchase at the Current Warrant Price existing immediately prior to such issuance, and (y) the denominator of which shall be the number of shares of Common Stock deemed outstanding (as defined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued. For the purposes of the preceding sentence, the number of shares of Common Stock deemed to be outstanding as of a given date shall be the sum of (A) the number of shares of Common Stock actually outstanding, (B) the number of shares of Common Stock into which the then outstanding debts could be converted if fully converted on the day immediately preceding the given date, and (C) the number of shares of Common Stock which could be obtained through the exercise or conversion of the Warrants, all other rights, options and convertible securities on the date immediately preceding the given date. (ii) For the purpose of making any adjustment required under this Section 4.2(b), the consideration received by the Company for any issue or sale of securities shall (A) to the extent it consists of cash, be computed at the gross purchase price thereof, (B) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board of Directors, and (C) if Additional Shares of Common Stock, Convertible Securities (as hereinafter defined) or rights or options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such Additional Shares of Common Stock, Convertible Securities or rights or options. (iii) For the purpose of the adjustment required under this Section 4.2(b), if the Company issues or sells any rights or options for the purchase of, or stock or other securities convertible into, Additional Shares of Common Stock (such convertible stock or securities being herein referred to as "Convertible Securities") and if the Effective Price of such Additional Shares of Common Stock is less than the Current Warrant Price, in each case the Company shall be deemed to have issued at the time of the issuance of such rights or options or Convertible Securities the maximum number of Additional Shares of Common Stock issuable upon exercise or conversion thereof (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential antidilution adjustments) and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the Company for the issuance of such rights or options or Convertible Securities, plus, in the case of such rights or options, the minimum amounts of consideration, if any, payable to the Company upon the exercise of such rights or options, plus, in the case of Convertible Securities, the minimum amounts of consideration, if any, payable to the Company (other than the cancellation of liabilities or obligations evidenced by such Convertible Securities) upon the conversion thereof; provided that if in the case of Convertible Securities the minimum amounts of such consideration cannot be ascertained, but are a function of antidilution or similar protective clauses, the Company shall be deemed to have received the minimum amounts of consideration without reference to such clauses; provided further that if the minimum amount of consideration payable to the Company upon the exercise or conversion of rights, options or Convertible Securities is reduced over time or on the occurrence or nonoccurrence of specified events other than by reason of antidilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; provided further that if the minimum amount of consideration payable to the Company upon the exercise or conversion of such rights, options or Convertible Securities is subsequently increased, the Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Company upon the exercise or conversion of such rights, options or Convertible Securities. No further adjustment of the Current Warrant Price, as adjusted upon the issuance of such rights, options or Convertible Securities, shall be made as a result of the actual issuance of Additional Shares of Common Stock on the exercise of any such rights or options or the conversion of any such Convertible Securities. If any such rights or options or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Current Warrant Price, as adjusted upon the issuance of such rights, options or Convertible Securities, shall be readjusted to the Current Warrant Price which would have been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued were the Additional Shares of Common Stock, if any, actually issued or sold on the exercise of such rights or options or rights of conversion of such Convertible Securities, and such Additional Shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise, plus the consideration, if any, actually received by the Company for the granting of all such rights or options, whether or not exercised, plus the consideration received for issuing or selling the Convertible Securities actually converted, plus the consideration, if any, actually received by the Company (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion of such Convertible Securities, provided that such readjustment shall not apply to prior conversions of debts. (iv) "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Company or deemed to be issued pursuant to this Section 4.2(b), whether or not subsequently reacquired or retired by the Company, other than (1) shares of Common Stock issued upon conversion of the debts or exercise of the Warrants; (2) any shares of Common Stock issuable or issued pursuant to options (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like) after the issue date of the Warrants to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary of the Company pursuant to any plan approved by the Board of Directors) (provided that no more than 1,000,000 shares shall be issuable or issued pursuant to options at an exercise price of less than US$0.75 per share (as adjusted for any stock dividends, combinations, recapitalizations and the like); (3) shares of Common Stock issued pursuant to the exercise of options, warrants or convertible securities outstanding as of the issue date of the Warrants; (4) shares of Common Stock (or options, warrants, or other rights to purchase such Common Stock) issued or issuable to entities in connection with equipment leasing, bank financing or strategic alliance transactions (if such issuances are made in connection with transactions that do not have as a primary purpose equity financing) upon the express approval of the Board of Directors; provided, however, that all such issuances of Common Stock or such rights to acquire Common Stock issued or issuable under this clause (4) shall not exceed, on an aggregate basis, twenty-five percent (25%) of the outstanding Common Stock at any time; and (5) shares of Common Stock issued in connection with acquisitions by the Company of equity and/or assets of other businesses or in connection with a merger of the Company with another entity (if such issuances are made in connection with transactions that do not have as a primary purpose equity financing). The "Effective Price" of Additional Shares of Common Stock shall mean the quotient determined by dividing the total number of Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold by the Company under this Section 4.2(b), into the aggregate consideration received, or deemed to have been received by the Company for such issue under this Section 4.2(b), for such Additional Shares of Common Stock.. The "Average Outstanding Shares" shall mean all shares of capital stock of the Company calculated on weighted-average, fully-diluted basis in accordance with generally accepted accounting principles consistently applied, increased to reflect those shares of Common Stock specified on Exhibit 3 which have not been issued, exercised or fully vested as of the end of the applicable fiscal year for which the calculation is being performed (to the extent such shares are not included in the initial weighted-average, fully-diluted number calculated in accordance with generally accepted accounting principles consistently applied; for the avoidance of doubt, it being understood that no such shares shall be counted twice). In addition, in calculating the number of Average Outstanding Shares, any adjustment resulting from any stock split, stock combination, divided payable in shares of the Company's common stock or other such event shall be appropriately reflected in such calculation. 4.3 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Current Warrant Price provided for in this Section 4: (a) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (b) FRACTIONAL INTERESTS. In computing adjustments under this Section 4,fractional interests in Common Stock shall be taken into account to the nearest 1/10th of a share. (c) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (d) CHALLENGE TO GOOD FAITH DETERMINATION. Whenever the Board of Directors of the Company shall be required to make a determination in good faith of the fair value of any item under this Section 4, such determination may be challenged in good faith by the Holder, and any dispute shall be resolved by an investment banking firm of recognized national standing selected by the Holder. 4.4 REORGANIZATION, RECLASSIFICATION, MERGER, CONSOLIDATION OR DISPOSITION OF ASSETS. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another entity (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another entity and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then Holder shall have the right thereafter to receive, upon exercise of the Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate, subject to the Holder's consent, in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 4. For purposes of this Section 4.4, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 4.4 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. 4.5 OTHER ACTION AFFECTING COMMON STOCK. In case at any time or from time to time the Company shall take any action in respect of its Common Stock, other than any action taken in the ordinary course of the Company's business or any action described in this Section 4, which would, in the opinion of an unaffiliated investment bank selected by Holder, have a materially adverse effect upon the rights of the Holder, the number of shares of Common Stock and/or the purchase price thereof shall be adjusted in such manner as may be equitable in the circumstances, as determined in good faith by an unaffiliated investment bank selected by Holder. 4.6 CERTAIN LIMITATIONS. Notwithstanding anything herein to the contrary, the Company agrees not to enter into any transaction which, by reason of any adjustment hereunder, would cause the Current Warrant Price to be less than the par value per share of Common Stock. 4.7 NO VOTING RIGHTS. This Warrant shall not entitle its Holder to any voting rights or other rights as a stockholder of the Company. 5. NOTICES TO HOLDER 5.1 NOTICE OF ADJUSTMENTS. Whenever the number of shares of Common Stock for which this Warrant is exercisable, or whenever the price at which a share of such Common Stock may be purchased upon exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company shall forthwith prepare a certificate to be executed by an executive officer of the Company setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated, specifying the number of shares of Common Stock for which this Warrant is exercisable and (if such adjustment was made pursuant to Section 4.4 or 4.5) describing the number and kind of any other shares of stock or Other Property for which this Warrant is exercisable, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change. The Company shall promptly cause a signed copy of such certificate to be delivered to the Holder in accordance with Section 14.2. The Company shall keep at its office or agency designated pursuant to Section 12 copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the Holder or any prospective purchaser of a Warrant designated by the Holder. 5.2 NOTICE OF CORPORATE ACTION. If at any time (a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or (b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 Business Days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 Business Days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 14.2. 6. NO IMPAIRMENT The Company shall not by any action, including, without limitation, amending its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be reasonably necessary to protect the rights of Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. Upon the request of Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form reasonably satisfactory to Holder, the continuing validity of this Warrant and the obligations of the Company hereunder. 7. RESERVATION AND AUTHORIZATION OF COMMON STOCK From and after the Closing Date, the Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants. All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive rights. Before taking any action which would cause an adjustment reducing the Current Warrant Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Current Warrant Price. Before taking any action which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Current Warrant Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS In the case of all dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of Section 4 refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record as of the close of business on a Business Day. The Company will not at any time during normal business hours close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant except in compliance with the terms and conditions of this Warrant or applicable laws. 9. RESTRICTIONS ON TRANSFERABILITY The Warrants and the Warrant Stock shall not be transferred, hypothecated or assigned before satisfaction of the conditions specified in this Section 9, which conditions are intended to ensure compliance with the provisions of the Securities Act with respect to the Transfer of any Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by the provisions of this Section 9. 9.1 RESTRICTIVE LEGEND. The Holder by accepting this Warrant and any Warrant Stock agrees that this Warrant and the Warrant Stock issuable upon exercise hereof may not be assigned or otherwise transferred unless and until (i) the Company has received an opinion of counsel for the Holder that such securities may be sold pursuant to an exemption from registration under the Securities Act, or (ii) a registration statement relating to such securities has been filed by the Company and declared effective by the Commission. (a) Each certificate for Warrant Stock issuable hereunder shall bear a legend substantially worded as follows unless such securities have been sold pursuant to an effective registration statement under the Securities Act: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act") or any state securities laws. The securities may not be offered for sale, sold, assigned, offered, transferred or otherwise distributed for value except (i) pursuant to an effective registration statement under the Act or any state securities laws, or (ii) pursuant to an exemption from registration or prospectus delivery requirements under the Act or any state securities laws in respect of which the Company has received an opinion of counsel satisfactory to the Company to such effect. Copies of the agreement covering both the purchase of the securities and restricting their transfer may be obtained at no cost by written request made by the holder of record of this certificate to the Secretary of the Company at the principal executive offices of the Company." (b) Except as otherwise provided in this Section 9, the Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form: "This Warrant and the securities represented hereby have not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be transferred in violation of such Act, the rules and regulations thereunder or any state securities laws or the provisions of this Warrant." 9.2 NOTICE OF PROPOSED TRANSFERS. Prior to any Transfer or attempted Transfer of any Warrants or any shares of Restricted Common Stock, the Holder shall give five days' prior written notice (a "Transfer Notice") to the Company of Holder's intention to effect such Transfer, describing the manner and circumstances of the proposed Transfer, and obtain from counsel to Holder an opinion that the proposed Transfer of such Warrants or such Restricted Common Stock may be effected without registration under the Securities Act or state securities laws. After the Company's receipt of the Transfer Notice and opinion, such Holder shall thereupon be entitled to Transfer such Warrants or such Restricted Common Stock, in accordance with the terms of the Transfer Notice. Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon such Transfer and the Warrant issued upon such Transfer shall bear the restrictive legends set forth in Section 9.1, unless in the opinion of such counsel such legend is not required in order to ensure compliance with the Securities Act. In no event shall the Holder knowingly make a transfer of any Warrants to a competitor of the Company in the business of the design, engineering, manufacturing and installation of custom curtainwall systems for the construction industry. 9.3 REQUIRED REGISTRATION. Pursuant to the terms and conditions set forth in the Registration Rights Agreement, the Company shall prepare and file with the Commission not later than the 90th day after the receipt of a written request to register the Warrant Stock, a Registration Statement relating to the offer and sale of the Common Stock issuable upon exercise of the Warrants and shall use its best efforts to cause the Commission to declare such Registration Statement effective under the Securities Act no later than 180 days after the request date. 9.4 TERMINATION OF RESTRICTIONS. Notwithstanding the foregoing provisions of Section 9, the restrictions imposed by this Section upon the transferability of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) and the legend requirements of Section 9.1 shall terminate as to any particular Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) (i) when and so long as such security shall have been effectively registered under the Securities Act and applicable state securities laws and disposed of pursuant thereto, or (ii) when the Company shall have received an opinion of counsel reasonably acceptable to the Company that such shares may be transferred without registration thereof under the Securities Act and applicable state securities laws. All Warrants issued upon registration of transfer, division or combination of, or in substitution for, any Warrant or Warrants entitled to bear such legend shall have a similar legend endorsed thereon. Whenever the restrictions imposed by this Section shall terminate as to any share of Restricted Common Stock, as hereinabove provided, the holder thereof shall be entitled to receive from the Company, at the Company's expense, a new certificate representing such Common Stock not bearing the restrictive legends set forth in Section 9.1. 9.5 LISTING ON SECURITIES EXCHANGE. If the Company has listed or will list any shares of Common Stock on any securities exchange, it will, at its expense, list thereon, maintain and, when necessary, increase such listing of, all shares of Common Stock issued or, to the extent permissible under the applicable securities exchange rules, issuable upon the exercise of this Warrant so long as any shares of Common Stock shall be so listed during any such Exercise Period. 10. SUPPLYING INFORMATION The Company shall cooperate with Holder in supplying such information as may be reasonably necessary for Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrant or Restricted Common Stock. 11. LOSS OR MUTILATION Upon receipt by the Company from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to it (it being understood that the written agreement of the Holder shall be sufficient indemnity), and in case of mutilation upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation. 12. OFFICE OF THE COMPANY As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant, such office to be initially located at 3-4/F Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou 510620, The People's Republic of China, fax: (8620) 3878-1852, provided, however, that the Company shall provide prior written notice to Holder of a change in address no less than 30 days prior to such change. 13. LIMITATION OF LIABILITY No provision hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 14. MISCELLANEOUS 14.1 NONWAIVER AND EXPENSES. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies, notwithstanding all rights hereunder terminate on the Expiration Date. If the Company fails to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Warrant, the Company shall pay to Holder such amounts as shall be sufficient to cover any direct and indirect losses, damages, costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 14.2 NOTICE GENERALLY. Except as may be otherwise provided herein, any notice or other communication or delivery required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified mail, postage prepaid, or by a nationally recognized overnight courier service, and shall be deemed given when so delivered personally or by overnight courier service, or, if mailed, three (3) days after the date of deposit in the United States mails, as follows: Company: China World Trade Corporation 3-4/F Goldlion Digital Network Center 138 Tiyu Road East, Tianhe Guangzhou 510620 The People's Republic of China ATTENTION: Mr. John Hui CEO Tel.: (8620) 3878 0168 Fax: (8620) 3878 1852 Vendor: Chi Hung TSANG Unit no. 1217 12/F The Metropolis Tower 10 Metropolis Drive Hunghom Kowloon, Hong Kong Tel.: (852) 2787-2005 Fax.: (852) 2787-0005 email: william@mail.ggcc21.com Copy to Heller, Ehrman, White &McAuliffe LLP 35th Floor, One Exchange Square 8 Connaught Place, Central Hong Kong Attention: Simon Luk, Esq. and Vincent Lai, Esq. Tel.: (852)-2292-2000 Fax.: (852)-2292-2200 The Company or the Holder may change the foregoing address by notice given pursuant to this Section 14.2. 14.3 INDEMNIFICATION. The Company agrees to indemnify and hold harmless Holder from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant. 14.4 REMEDIES. Holder in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 14.5 SUCCESSORS AND ASSIGNS. Subject to the provisions of Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and, with respect to Section 9 hereof, holders of Warrant Stock, and shall be enforceable by any such Holder or holder of Warrant Stock. 14.6 AMENDMENT. This Warrant and all other Warrants may be modified or amended or the provisions hereof waived only with the prior written consent of the Company and the Holder. 14.6 SEVERABILITY. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant. 14.8 HEADINGS. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 14.9 GOVERNING LAW. This Warrant shall be governed by the laws of the State of California, without regard to the provisions thereof relating to conflict of laws. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and its corporate seal to be impressed hereon and attested by its Secretary or an Assistant Secretary. Dated: December 5, 2003 China World Trade Corporation By:/s/ CHAO MING LUO Name: Chao Ming Luo Title: Director EXHIBIT 1 NOTICE OF EXERCISE [To be executed only upon exercise of Warrant] The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of ______ Shares of Common Stock of China World Trade Corporation and herewith makes payment therefor in cash or by check or bank draft made payable to the Company, or by surrender of Warrant Stock or the right to receive Warrant Stock pursuant to Section 2.1(b) of the Warrant, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _____________ whose address is _________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. [In lieu of cash payment, the undersigned hereby elects to effect a "Net Issue Exercise" under the Warrant and hereby requests the issuance of __________ share of Common Stock in exchange for the right to purchase _______ shares of Common Stock under this Warrant.] ------------------------------- (Name of Registered Owner) ------------------------------- (Signature of Registered Owner) ------------------------------- (Street Address) ------------------------------- (City) (State) (Zip Code) NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever. EXHIBIT 2 ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Common Stock set forth below: Name and Address of Assignee No. of Shares of Common Stock and does hereby irrevocably constitute and appoint _______ ________________ attorney-in-fact to register such transfer on the books of China World Trade Corporation maintained for the purpose, with full power of substitution in the premises. Dated:__________________ Print Name:___________________ Signature:____________________ Witness:______________________ NOTICE: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever. EXHIBIT 3 Base Amount Shares of Common Stock outstanding 10,970,497 Shares of Common Stock issuable upon exercise of options outstanding 100,000 Shares of Common Stock to be issued pursuant to options not yet granted under the Company's Stock Option Plan 100,000 Shares of Common Stock issuable upon exercise of warrants outstanding 14,000,000 Shares of Common Stock to be issued upon conversion of debentures outstanding 0 EX-99 4 form8kex4-2.txt EX 4.2 REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT, dated as of 5th of December , 2003 (this "Agreement"), is made by and between China World Trade Corporation, a Nevada corporation (the "Company") and Chi Hung TSANG (the "Vendor"). W I T N E S S E T H: WHEREAS, pursuant to an Acquisition Agreement, dated as of 19 November, 2003, between the Company and the Vendor (the "Acquisition Agreement"), the Vendor has agreed to surrender to the Company the after tax rental income of the Premises for a five-year period commencing 1st day of December 2003 and ending 30th day of November 2008, with an estimated present value of US$1,800,000 in exchange for, (i) 3,000,000 shares of the Company's common stock ("Company Shares"), each with par value US$0.001 per share (the "Common Stock"); and (ii) a two year warrant to purchase up to 6,000,000 shares of the Common Stock at an exercise price of US$0.75 per share (the "Warrants); WHEREAS, pursuant to the terms of this Agreement, the Company will issue and sell to the Vendor the Company Shares, the Warrants and upon the exercise of the Warrants the Company will issue to the Vendor or its permitted assigns shares of Common Stock (such Company Shares and shares of Common Stock issued upon the exercise of the Warrants are collectively referred to herein as the "Registrable Securities"); and WHEREAS, to induce the Vendor to execute and deliver the Acquisition Agreement, the Company has agreed to provide to the Vendor and its permitted assigns certain registration rights under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws; and NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Vendor hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: (a) "Holder" or "Holders" mean a holder or holders of Registrable Securities or securities convertible into or exercisable for Registrable Securities. (b) "Registration Statement" means a registration statement or registration statements of the Company filed under the Securities Act covering Registrable Securities. (c) "Register," "Registered" and "Registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and pursuant to Rule 415 under the Securities Act or any successor rule providing for offering securities on a continuous basis ("Rule 415"), and the declaration or ordering of effectiveness of such registration statement by the United States Securities and Exchange Commission (the "Commission"). (d) Capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Share Purchase Agreement. 2. DEMAND REGISTRATIONS. (a) Registration Statement. Subject to the terms of this Agreement, in the event that the Company shall receive from the Holder(s) (who in the aggregate hold at least 50% of the Registrable Securities, a written request that the Company effect any Registration with respect to all or a part of the Registrable Securities), the Company shall, as soon as practicable and in no event later than 90 days after the receipt of the written request, prepare and file with the Commission a Registration Statement or Registration Statements (as necessary) on Form S-3 (if available) covering the resale of all of the Registrable Securities. If Form S-3 is unavailable and/or inappropriate for such a registration, the Company shall use such other form as is available and appropriate for such a registration. Any Registration Statement prepared pursuant hereto shall register for resale at least that number of shares of Common Stock equal to the sum of (i) the maximum number of Registrable Securities that are Company Shares; and (ii) the maximum number of Registrable Securities issuable upon exercise of the Warrants without regard to any limitation on any holder's ability to convert any of the Warrants (such sum, the "Registrable Amount"). Such Registration Statement shall state that, in accordance with Rule 416 under the Securities Act, it also covers such indeterminate number of additional shares of Common Stock ("Shares") as may become issuable upon exercise of the Warrants (i) resulting from any adjustment in the applicable price of the Warrants; or (ii) to prevent dilution resulting from stock splits, stock dividends, recapitalizations, reclassifications, distributions, consolidations, mergers or similar transactions. If at any time the Registrable Amount exceeds the total number of Shares so registered, the Company shall, within ten (10) business days after receipt of a written notice from the Vendor, either (i) amend the Registration Statement or Registration Statements filed by the Company pursuant to this section, if such Registration Statement has not been declared effective by the Commission at that time, to register the Registrable Amount of Shares, or (ii) if such Registration Statement has been declared effective by the Commission at that time, file with the Commission an additional Registration Statement on Form S-3 or such other appropriate form, to register the number of Shares by which the Registrable Amount exceeds the number of Shares already registered. The Company shall use its best efforts to cause the Registration Statement to be declared effective not later than one hundred eighty (180) days following the Closing Date (the "Effectiveness Deadline"). (b) The Company shall use its best efforts to keep each Registration Statement effective pursuant to Rule 415 at all times until such date as is the earlier of (i) the date on which all of the Registrable Securities have been sold; and (ii) the date on which the Registrable Securities (in the opinion of counsel to the Vendor) may be immediately sold without restriction (including without limitation as to volume by each holder thereof) without registration under the Securities Act (the "Registration Period"). (c) If any offering pursuant to a Registration Statement pursuant to Section 2 hereof involves an underwritten offering (which may only be with the consent of the Company), the Vendor shall have the right to select legal counsel and an investment banker or bankers and manager or managers to administer the offering, which investment banker or bankers or manager or managers shall be reasonably satisfactory to the Company. 3. OBLIGATIONS OF THE COMPANY. In connection with the registration of the Registrable Securities, the Company shall do each of the following: (a) Prepare and file with the Commission the Registration Statements required by Section 2 of this Agreement and such amendments (including post-effective amendments) and supplements to the Registration Statements and the prospectuses used in connection with the Registration Statements, each in such form as to which the Vendor and its counsel shall not have objected, as may be necessary to keep the Registration current at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all of the Registrable Securities until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in the Registration Statements; (b) Furnish to the Vendor, if the Registrable Securities of the Vendor are included in the Registration Statement, and its legal counsel identified to the Company, promptly after the same is prepared and publicly distributed, filed with the Commission, or received by the Company, a copy of the Registration Statement, each preliminary prospectus, each final prospectus, and all amendments and supplements thereto and such other documents, as the Vendor may reasonably request in order to facilitate the disposition of its Registrable Securities; (c) As soon as practicable, furnish to the Vendor and its counsel copies of any correspondence between the Company and the Commission with respect to any registration statement or amendment or supplement thereto filed pursuant to this Agreement; (d) Use all best efforts to (i) register and qualify the Registrable Securities covered by the Registration Statement under such other securities or blue sky laws of such jurisdictions as the Vendor may request, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof at all times during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; (e) List such securities on The OTCBB or Nasdaq Stock Market and all the other national securities exchanges on which any securities of the Company are then listed, and file any filings required by The Nasdaq Stock Market and/or such other exchanges; (f) As promptly as practicable after becoming aware of such event, notify the Vendor of the occurrence of any event of which the Company has knowledge as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein in order to make the statements therein, in light of the circumstances under which they were made, not misleading, and to use its best efforts to promptly prepare a supplement or amendment to the Registration Statement or other appropriate filing with the Commission to correct such untrue statement of omission, and to deliver a number of copies of such supplement or amendment to the Vendor as it may reasonably request; (g) As promptly as practicable after becoming aware of such event, notify the Vendor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance by the Commission of any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time, and to use its best efforts to promptly obtain the withdrawal of such stop order or other suspension of effectiveness (the occurrence of any of the events described in paragraphs (f) and (g) of this Section 3 is referred to herein as a "Blackout Event"), and the Vendor shall not, during the continuation of a Blackout Event, sell any Registrable Securities pursuant to a Registration Statement after the Company has given notice to the Vendor pursuant to the terms hereof that such Registration Statement is subject to a Blackout Event; (h) If the Company has consented to an underwritten offering and such offering is underwritten, at the request of the Vendor, to furnish on the date that Registrable Securities are delivered to the underwriters for sale pursuant to such registration: (i) an opinion dated such date of counsel representing the Company for the purposes of such registration, addressed to the underwriters and to the Vendor selling Registrable Securities in connection with such underwriting, stating that such registration statement has become effective under the Securities Act and that (A) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, and (B) the registration statement, the related prospectus and each amendment or supplement thereof comply as to form in all material respects with the requirements of the Securities Act (except that such counsel need not express any opinion as to financial statements or other financial data contained therein), and (ii) a letter dated such date from the Company's independent public accountants addressed to the underwriters and to the Vendor, stating that they are independent public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements of the Company included in the registration statement or the prospectus, or any amendment or supplement thereof, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and such letter shall additionally cover such other financial matters (including information as to the period ending no more than five (5) business days prior to the date of such letter) with respect to such registration as such underwriters may reasonably request; (i) Cooperate with the Vendor to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and to enable such certificates for the Registrable Securities to be in such denominations or amounts, as the case may be, as the Vendor may reasonably request, and registered in such names as the Vendor may request; and, within three (3) business days after a Registration Statement which includes Registrable Securities is ordered effective by the Commission, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the transfer agent for the Registrable Securities (with copies to the Vendor) an appropriate instruction and opinion of such counsel; (j) Enter into customary agreements (including, in the case of an underwritten offering, underwriting agreements in customary form, and including provisions with respect to indemnification and contribution in customary form and consistent with the provisions relating to indemnification and contribution contained herein) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in connection therewith: (i) make such representations and warranties to the Vendor and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings; (ii) to the extent requested and customary for the relevant transaction, enter into a securities sales agreement with the Vendor and its representative relating to the Registration and providing for, among other things, the appointment of such representative as agent for the selling Vendor for the purpose of soliciting purchases of Registrable Securities, which agreement shall be customary in form, substance and scope and shall contain customary representations, warranties and covenants; and (iii)deliver such customary documents and certificates as may be reasonably requested by the Vendor whose Registrable Securities are being sold or by the managing underwriters, if any. The above shall be done (i) at the effectiveness of such Registration Statement (and each post-effective amendment thereto) in connection with any registration, and (ii) at each closing under any underwriting or similar agreement as and to the extent required thereunder; (k) The Company shall, at the request of the Vendor, make generally available to its security holders as soon as practicable, but not later than ninety (90) days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 under the Securities Act) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the effective date of a Registration Statement; (l) The Company shall make available for inspection by (i) the Vendor, (ii) any underwriter participating in any disposition pursuant to a Registration Statement, (iii) one firm of attorneys and one firm of accountants or other agents retained by the Vendor, and (iv) one firm of attorneys retained by all such underwriters (collectively, the "Inspectors") all pertinent financial and other records, and pertinent corporate documents and properties of the Company (collective, the "Records"), as shall be reasonably deemed necessary by each Inspector to enable each Inspector to exercise its due diligence responsibility, and cause the Company's officers, directors and employees to supply all information which any Inspector may reasonably request for purposes of such due diligence; provided, however, that each Inspector shall hold in confidence and shall not make any disclosure (except to the Inspectors) of any Record or other information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, unless (a) the disclosure of such Records is necessary to avoid or correct a material misstatement or omission in any Registration Statement, (b) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, or (c) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company shall not be required to disclose any confidential information in such Records to any Inspector until and unless such Inspector shall have entered into confidentiality agreements (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially in the form of this Section 3(m). The Vendor agrees that upon learning that the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, it shall give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein shall be deemed to limit the Vendor' ability to sell Registrable Securities in a manner which is otherwise consistent with applicable laws and regulations; and (m) The Company shall hold in confidence and not make any disclosure of information concerning the Vendor provided to the Company unless (i) disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered pursuant to a subpoena or other order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available to the public other than by disclosure in violation of this or any other agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Vendor is sought in or by a court or governmental body of competent jurisdiction or though other means, give prompt notice to the Vendor prior to making such disclosure, and allow the Vendor, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information. 4. OBLIGATIONS OF THE VENDOR. In connection with the registration of the Registrable Securities, the Vendor shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities, and the Vendor shall execute such documents in connection with such registration as the Company may reasonably request. At least five (5) days prior to the first anticipated filing date of the Registration Statement, the Company shall notify the Vendor of the information the Company included in the Registration Statement. The Vendor shall not, during the continuation of a Blackout Event, sell any Registrable Securities pursuant to a Registration Statement after the Company has given notice to the Vendor pursuant to the terms hereof that such Registration Statement is subject to a Blackout Event (as defined in Section 3(g) hereof). 5. EXPENSES OF REGISTRATION. All expenses, other than underwriting discounts and commissions and other fees and expenses of investment bankers and other than brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Section 3, but including, without limitation, all registration, listing, and qualification fees, printing and accounting fees, and the fees and disbursements of counsel for the Company, and the fees of one counsel to the Vendor with respect to each Registration Statement filed pursuant hereto, shall be borne by the Company provided, that the expenses of the Vendor' counsel shall not exceed US$15,000. 6. INDEMNIFICATION. If any Registrable Securities are included in a Registration Statement under this Agreement: (a) The Company will indemnify and hold harmless the Vendor, each of its officers, directors, partners and shareholders, and each person, if any, who controls the Vendor within the meaning of the Securities Act or the Exchange Act (each, an "Indemnified Person"), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, "Claims") to which any of them may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the Commission) or the omission to state therein any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state or foreign securities law or any rule or regulation under the Securities Act, the Exchange Act or any state or foreign securities law (the matters in foregoing clauses (i) through (iii) being, collectively, "Violations"). The Company shall, subject to the provisions of Section 6(b) below, reimburse the Vendor, promptly as such expenses are incurred and are due and payable, for any legal and other costs, expenses and disbursements in giving testimony or furnishing documents in response to a subpoena or otherwise, including without limitation, the costs, expenses and disbursements, as and when incurred, of investigating, preparing or defending any such action, suit, proceeding or investigation (whether or not in connection with litigation in which the Vendor is a party), incurred by it in connection with the investigation or defense of any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (i) apply to any Claim arising out of or based upon a modification which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of any Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto; (ii) with respect to any preliminary prospectus, inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any person controlling such person) if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected in the final prospectus, as then amended or supplemented, if such final prospectus was timely made available by the Company pursuant to Section 3(b) hereof; (iii) be available to the extent that such Claim is based upon a failure of the Vendor to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(b) hereof; or (iv) apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of the Registrable Securities by the Vendor pursuant to Section 9. The Vendor will indemnify the Company and its officers and directors against any Claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of the Vendor, expressly for use in connection with the preparation of the Registration Statement (including any modifications, amendments or supplements thereto), subject to such limitations and conditions as are applicable to the Indemnification provided by the Company in this Section 6; provided, however, that in no event shall any indemnity by the Vendor under this Section 6 exceed the amount of the net proceeds received by the Vendor in connection with the offering effected through such Registration Statement. (b) Promptly after receipt by an Indemnified Person under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and to the extent that the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person, provided, however, that an Indemnified Person shall have the right to retain its own counsel with the reasonable fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person and any other party represented by such counsel in such proceeding. In such event, the Company shall pay for only one separate legal counsel for the Vendor, and such legal counsel shall be selected by the Vendor. The failure to deliver written notice to an indemnifying party within a reasonable time after the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person under this Section 6, except to the extent that the indemnifying party is materially prejudiced in its ability to such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. (c) No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Person of an unconditional and irrevocable release from all liability in respect of such claim or litigation. (d) Notwithstanding the foregoing, to the extent that any provisions relating to indemnification or contribution contained in the underwriting agreements entered into among the Company, the underwriters and the Vendor in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in such underwriting agreements shall be controlling as to the Registrable Securities included in the public offering; provided, however, that if, as a result of this Section 6(d), the Vendor, its officers, directors, partners, shareholders or any person controlling the Vendor is or are held liable with respect to any Claim for which they would be entitled to indemnification hereunder but for this Section 6(d) in an amount which exceeds the aggregate proceeds received by the Vendor from the sale of Registrable Securities included in a registration pursuant to such underwriting agreement (the "Excess Liability"), the Company shall reimburse the Vendor for such Excess Liability. 7. CONTRIBUTION. To the extent any indemnification by an indemnifying party is prohibited or limited under applicable law, the indemnifying party agrees to contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage, liability or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the Indemnified Person on the other hand in connection with the statements or omissions which resulted in such Claim, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the Indemnified Person shall be determined by reference to, among other things, whether the untrue statement of a material fact or the omission to state a material fact on which such Claim is based relates to information supplied by the indemnifying party or by the Indemnified Person, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the forgoing, (a) no contribution shall be made under circumstances where the payor would not have been liable for indemnification under the fault standards set forth in Section 6, (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent misrepresentation, and (c) contribution by any seller of Registrable Securities shall be limited in amount to the net proceeds received by such seller from the sale of such Registrable Securities. The Company and the Vendor agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Vendor and any other party were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in this Section. 8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the Vendor the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the Commission that may at any time permit the Vendor to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) furnish to the Vendor so long as it owns Registrable Securities promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or periodic report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested to permit the Vendor to sell such securities pursuant to Rule 144 without registration. 9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company register Registrable Securities pursuant to this Agreement shall be automatically assigned by the Vendor to any transferee of all or any portion of the principal amount of the Warrants, or the underlying Common Stock held by the Vendor (collectively, the "Securities") if: (a) the Vendor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of the name and address of such transferee or assignee; (c) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein; and (d) the transfer of the relevant Securities complies with the restrictions set forth in Section 4 of the Share Purchase Agreement. 10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Vendor holding two thirds (2/3) of the outstanding Registrable Securities. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon the Vendor and the Company. 11. MISCELLANEOUS. (a) A person or entity is deemed to be a holder of Warrants or Registrable Securities whenever such person or entity owns of record such Warrants or Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Warrants or Registrable Securities, the Company shall act upon the basis of the instructions, notice or election received from the registered owner of such Warrants or Registrable Securities. (b) Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten (10) days advance written notice to each of the other parties hereto. COMPANY: China World Trade Corporation 3-4/F Goldlion Digital Network Center 138 Tiyu Road East, Tianhe Guangzhou 510620 The People's Republic of China ATTENTION: Mr. John Hui Tel.: (8620) 3878-0168 Fax: (8620) 3878-1852 VENDOR Chi Hung TSANG Unit no. 1217 12/F The Metropolis Tower 10 Metropolis Drive Hunghom Kowloon, Hong Kong Tel.: (852) 2787-2005 Fax.: (852) 2787-0005 email: william@mail.ggcc21.com With copies to: Heller, Ehrman, White & McAuliffe LLP 35th Floor, One Exchange Square 8 Connaught Place, Central Hong Kong Attention: Simon Luk, Esq. and Vincent Lai, Esq. Tel.: (852)-2292-2000 Fax.: (852)-2292-2200 (c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. (d) This Agreement shall be governed by and interpreted in accordance with the laws of the State of California, except for provisions with respect to internal corporate matters of the Company which shall be governed by the corporate laws of the State of Nevada. Each of the parties agrees to the jurisdiction of the federal courts whose districts encompass any part of the State of California or the state courts of the California in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions. This Agreement may be signed in two or more counterparts, each of which shall be deemed an original. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such validity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. Subject to the provisions of Section 10 hereof, this Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement. (e) This Agreement, together with the Share Purchase Agreement and the Warrants, constitutes the entire agreement among the parties hereto with respect to the subject matter hereof. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. (f) Subject to the requirements of Section 9 hereof, this Agreement shall inure for the benefit of and be binding upon the successors and assigns of each of the parties hereto. (g) All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. (h) The Company acknowledges that any failure by the Company to perform its obligations under Section 2, or any delay in such performance could result in direct and indirect damages to the Vendor, and the Company agrees that, in addition to any other liability the Company may have by reason of any such failure or delay, the Company shall be liable for all direct and consequential damages caused by any such failure or delay. Nothing herein shall limit the Vendor' right to pursue any claim seeking such direct or consequential damages. [Signature page follows] IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned. Dated: 5 December, 2003 "COMPANY" China World Trade Corporation By:/s/ CHAO MING LUO --------------------------------- Name: Chao Ming Luo Title: Director "VENDOR" Chi Hung TSANG By: /s/ CHI HUNG TSANG -------------------------------- Name: Chi Hung Tsan EX-99 5 form8kex10-1.txt EX 10.1 ACQUISITION AGMT EXHIBIT 10.1 ACQUISITION AGREEMENT THIS ACQUISITION AGREEMENT, dated as of 19th day of November 2003 (this "Agreement"), is entered into by and between China World Trade Corporation, a Nevada corporation (the "Company"), and Chi Hung Tsang (the "Vendor"). W I T N E S S E T H: WHEREAS, the Company and the Vendor are executing and delivering this Agreement in reliance upon the exemptions from registration provided by Regulation D ("Regulation D") promulgated by the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Securities Act"), and/or Section 4(2) of the Securities Act; WHEREAS, the Vendor is the owner of 21st floor to 23rd floor of Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou 510620, The People's Republic of China (the "Premises"); WHEREAS, the Vendor wishes to surrender to the Company the after tax rental income of the Premises for a five-year period commencing 1st day of December 2003 and ending 30th day of November 2008 (the "Consideration") in exchange for 3,000,000 newly issued shares (the "Company Shares") of common stock of the Company, each with par value of US$ 0.001 (the "Common Stock"), and a two year warrant to purchase up to 6,000,000 shares of the Common Stock at an exercise price of US$0.75 per share upon the terms and conditions of this Agreement (the "Warrants", hereinafter the Company Shares, the Warrants and the Common Stock issuable upon exercise of the Warrants, all of such securities, collectively are referred to as the "Securities"), the number of shares of the Common Stock covered under the Warrants may be adjusted from time to time pursuant to the terms of the Warrants, which Warrants shall be in the form to be agreed upon by the parties. WHEREAS, the Warrants may be exercised for the purchase of Common Stock on the terms set forth therein. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. AGREEMENT TO EXCHANGE; CLOSING a. EXCHANGE OF THE COMPANY SHARES AND WARRANTS. Subject to the terms and conditions set forth herein and in consideration of the receipt of the Consideration, the Company hereby agrees to issue to, and exchange with, the Vendor, and the Vendor hereby agrees to receive from the Company, the Company Shares and the Warrants at the Closing (as such term is defined in Section 1.b. hereof) and the parties intend that the Common Stock shall be valued at the closing bid price on the 19th day of November 2003 of US$ 0.60 per share. At the time of the exchange, it is agreed that the estimated present value of the Consideration shall be approximately equal to US$ 1,800,000 (as stipulated in Schedule1) b. CLOSING. The closing (the "Closing") of the issuance and exchange of the Company Shares will take place at the offices of the Company on December 1, 2003, or at such other place and time as mutually agreed by the Vendor and the Company. The date of the Closing is referred to herein as a "Closing Date." At the Closing, the Company will deliver to the Vendor the share certificates representing the Company Shares and the Warrants set forth in Section 1.a. hereof, against delivery of the Consideration by the Vendor described in Section 1.c. The Company Shares and the Warrants shall be registered in the Vendor's name. c. CONSIDERATION. As consideration for the Company Shares and the Warrants, the Vendor agrees to surrender to the Company on the Closing Date the after tax rental income for a five-year period commencing 1st day of December 2003 and ending 30th day of November 2008. 2. REPRESENTATIONS AND WARRANTIES OF THE VENDOR; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION The Vendor represents and warrants to, and covenants and agrees with, the Company as follows: a. The Vendor is: (i) experienced in making investments of the kind contemplated by this Agreement; (ii) able, by reason of the business and financial experience of its management, to protect its own interests in connection with the transactions contemplated by this Agreement; (iii) able to afford the entire loss of its investment in the Company Shares and the Warrants; and (iv) an "accredited investor" as that term is defined in Rule 501(a) of Regulation D. b. The Vendor is acquiring the Securities for its own account for investment only and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered under the Securities Act. The Vendor has not been organized for the purpose of investing in securities of the Company, although such investment is consistent with its purposes. c. All subsequent offers and sales of the Company Shares and the Warrants and the Common Stock issuable upon exercise of the Warrants by the Vendor shall be made pursuant to an effective registration statement under the Securities Act or pursuant to an applicable exemption from such registration. d. The Vendor understands that the Company Shares and the Warrants are being offered and sold to it in reliance upon exemptions from the registration requirements of the United States federal securities laws, and that the Company is relying upon the truth and accuracy of the Vendor's representations and warranties, and the Vendor's compliance with its agreements in order to determine the availability of such exemptions and the eligibility of the Vendor to acquire the Company Shares and the Warrants. e. The Vendor: (i) has been provided with information with respect to the business of the Company, including, without limitation, the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002 (the "Quarterly Report") and Annual Report on Form 10-KSB for the period ended September 31, 2001 (the "Annual Report"); and (ii) has had access to management of the Company and the opportunity to ask questions of the management of the Company. f. The Vendor has the requisite corporate power and authority to enter into this Agreement, the registration rights agreement (the "Registration Rights Agreement"), dated as of the date hereof, between the Company and the Vendor, in the form to be agreed by the parties. g. This Agreement, the Registration Rights Agreement and the transactions contemplated hereby and thereby have been duly and validly authorized by the Vendor and such agreements, when executed and delivered by the other party thereto will each be a valid and binding agreement of the Vendor, enforceable against the Vendor in accordance with their respective terms, except to the extent that enforcement of such agreements may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. h. The Vendor is the authorized owner of the Premises under the laws of The People's Republic of China and certified by Guangzhou Bureau of Real Estates and the certificates numbers are included in Schedule 2. i. The Vendor is the beneficial owner of the Closing Shares, and holds the Closing Shares in good title, free from any claim, lien, charge, or encumbrance. 3. REPRESENTATIONS OF THE COMPANY The Company represents and warrants to the Vendor that, other than as set forth on the Company Schedules attached hereto: a. ORGANIZATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. Each of the Company's subsidiaries, if any, is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation. Each of the Company and its subsidiaries, if any, is duly qualified as a foreign corporation in all jurisdictions in which the failure to so qualify would have a material adverse effect on the Company and its subsidiaries, taken as a whole. Schedule 3.a. lists all subsidiaries of the Company and, except as noted therein, all of the outstanding capital stock of all such subsidiaries is owned of record and beneficially by the Company. The Company and its subsidiaries have all requisite corporate power and authority, and hold all licenses, permits and other required authorizations from governmental authorities, necessary to conduct their business as it is now being conducted or proposed to be conducted and to own or lease their properties and assets as they are now owned or held under lease. b. CAPITALIZATION. On the date hereof, the authorized capital of the Company consists of 50,000,000 shares of Common Stock, par value US$0.001 per share and 10,000,000 preferred stock, par value US$0.001 per share. On the date hereof (assuming the condition in Section 5(a)(i) is completed), 10,970,497 shares of Common Stock are issued and outstanding and no shares of Preferred Stock are issued or outstanding. Additionally, 8,000,000 Warrants have been issued. Schedule 3.b. sets forth all of the options, warrants and convertible securities of the Company, and any other rights to acquire securities of the Company (collectively the "Derivative Securities") which are (i) outstanding on the date hereof; (ii) will be outstanding as of the Closing Date just before Closing; and (iii) will be outstanding immediately after the Closing, including in each case: (i) the name and class of such Derivative Securities; (ii) the issue date of such Derivative Securities; (iii) the number of shares of Common Stock or Preferred Stock of the Company into which such Derivative Securities are convertible as of the date hereof; (iv) the conversion or exercise price or prices of such Derivative Securities as of the date hereof; (v) the expiration date of any conversion or exercise rights held by the owners of such Derivative Securities; and (vi) any registration rights associated with such Derivative Securities. Schedule 3.b. also sets forth all registration rights associated with or covering the Common Stock or Preferred Stock. All outstanding securities of the Company are validly issued, fully paid and nonassessable. No stockholder of the Company is entitled to any preemptive rights with respect to the purchase of or sale of any securities by the Company. Except as contemplated herein, none of the shares of capital stock of the Company is reserved for any purpose, and the Company is neither subject to any obligation (contingent or otherwise), nor has any option, to repurchase or otherwise acquire or retire any shares of its capital stock. No antidilution adjustments with respect to the outstanding securities of the Company will be triggered by the issuance of the securities contemplated hereby. c. CONCERNING THE COMPANY SHARES AND THE WARRANTS. The Securities, when issued, will be duly and validly issued, fully paid and non-assessable, will be free and clear of any liens imposed by or through the Company, will not be subject to preemptive rights and will not subject the holder thereof to personal liability by reason of being such a holder. There are currently no preemptive rights of any stockholder of the Company, as such, to acquire any Security. d. REPORTING COMPANY STATUS. The Company's Common Stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company files reports with the Commission pursuant to Section 12 and/or 15(d) of the Exchange Act. The Company has complied in all material respects with the filing requirements under either Section 13(a) or 15(d) of the Exchange Act and the applicable rules and regulations of the Commission promulgated thereunder, except that some of the filings were filed late. e. AUTHORIZED SHARES. The Company has available and has reserved a sufficient number of authorized and unissued shares of Common Stock as may be necessary to effect the issuance of the Company Shares and the exercise of the Warrants. The Company understands and acknowledges the potentially dilutive effect to the Common Stock of the issuance of shares of Common Stock upon the exercise of the Warrants. The Company further acknowledges that its obligation to issue shares of Common Stock upon exercise of the Warrants is absolute and unconditional regardless of the dilutive effect such issuance may have on the ownership interest of other stockholders of the Company and notwithstanding the commencement any case under 11 U.S.C. 101 et seq. (the "Bankruptcy Code"). If the Company becomes a debtor under the Bankruptcy Code, the Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. 362 in respect of the exercise of the Warrants. At the direction of the Vendor, the Company agrees, without cost or expense to the Vendor, to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. 362. f. LEGALITY. The Company has the requisite corporate power and authority to enter into this Agreement and the Registration Rights Agreement and to issue and deliver the Warrants, Common Stock issuable upon the exercise of the Warrants and the Company Shares. g. Transaction Agreements. This Agreement, the Company Shares, the Warrants and the Registration Rights Agreement (collectively, the "Primary Documents") and the transactions contemplated hereby and thereby have been duly and validly authorized by the Company; the Primary Documents have been duly executed and delivered by the Company and are each the legal, valid and binding agreement of the Company, enforceable in accordance with their respective terms, except to the extent that enforcement of each agreement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and to general principles of equity. h. NON-CONTRAVENTION. The execution and delivery of the Primary Documents, and the consummation by the Company of the transactions contemplated hereby and thereby, does not and will not (i) result in a violation of the Articles of Incorporation or By-laws of the Company or its subsidiaries, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment or cancellation of, any agreement, indenture or instrument to which the Company or any of its subsidiaries is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (foreign or domestic and including federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any material property or asset of the Company or any of its subsidiaries is bound or affected. Neither the filing of the registration statement required to be filed by the Company pursuant to the Registration Rights Agreement nor the offering or sale of the Securities as contemplated by this Agreement gives rise to any rights, other than those which have been waived or satisfied on or prior to the date hereof, for or relating to the registration of any shares of the Common Stock. i. APPROVALS. No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, stock exchange or market or the stockholders of the Company is required to be obtained by the Company for the entry into or the performance of any Primary Document. j. SEC DOCUMENTS, FINANCIAL STATEMENTS. The Company has filed all reports, schedules, forms and statements required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act (the "SEC Documents"). As of their respective dates, none of the SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents were prepared in accordance with U.S. generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements) and fairly present in all material respects the consolidated financial position of the Company and its consolidated subsidiaries and results of their operations and cash flows for the periods covered thereby (subject, in the case of unaudited statements, to normal year-end audit adjustments). k. UNDISCLOSED LIABILITIES. The Company has no material obligation or liability (whether accrued, absolute, contingent, unliquidated, or otherwise, whether due or to become due) arising out of transactions entered into at or prior to the Closing of this Agreement, or any action or inaction at or prior to the Closing of this Agreement, or any state of facts existing at or prior to the Closing of this Agreement, except (a) liabilities reflected on the latest balance sheet included in the SEC Documents (the "Company Balance Sheet"), (b) liabilities incurred in the ordinary course of business since the date of the Company Balance Sheet (none of which is a liability for breach of contract, breach of warranty, torts, infringements, claims or lawsuits), and (c) liabilities or obligations disclosed on Schedule 3.k. hereto. l. STABILIZATION AND MANIPULATION. Neither the Company, nor, to the knowledge of the Company, any of its affiliates or their respective agents, officers, directors or employees has taken or may take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Stock. m. ABSENCE OF CERTAIN CHANGES. Except as disclosed to the Vendor and in the Company's public filings with the Commission, since June 30, 2002, there has been no material adverse change nor any material adverse development in the business, properties, operations, financial condition, prospects, outstanding securities, employee relations, customer relations or results of operations of the Company or its subsidiaries, taken as a whole (each, a "Material Adverse Effect"). n. ENVIRONMENTAL. Except as disclosed in the SEC Documents, and except for instances of noncompliance with or exceptions to the following that could not have been, individually or in the aggregate, a Material Adverse Effect: (i) the Company and its subsidiaries are in full compliance with all environmental laws; (ii) the Company is not aware of, nor has the Company received notice of, any past, present, or future conditions, events, activities, practices, or incidents which may interfere with or prevent the compliance or continued compliance of the Company and its subsidiaries with all environmental laws; (iii) the Company and its subsidiaries have obtained all permits, licenses, and authorizations that are required under applicable environmental laws, and all such permits, licenses, and authorizations are in good standing and the Company is in compliance with all of the terms and conditions thereof; and (iv) no hazardous materials exist on, about, or within or have been used, generated, stored, transported, disposed of on, or released from any of the properties of the Company or its subsidiaries, except in compliance with applicable environmental laws. o. TITLE TO PROPERTIES; LIENS AND ENCUMBRANCES. The Company and its subsidiaries have good and marketable title to all of their material properties and assets, both real and personal, and have good title to all their leasehold interests, in each case subject only to mortgages, pledges, liens, security interests, conditional sale agreements, encumbrances or charges (collectively, "Liens") created in the ordinary course of business. p. PROPRIETARY RIGHTS. The Company and its subsidiaries have sufficient title and ownership of all trademarks, service marks, trade names, internet domain names, copyrights, trade secrets, information, proprietary rights and processes necessary for the conduct of their business as now conducted and as proposed to be conducted, and, to the knowledge of the Company, such business does not conflict with or constitute an infringement on the rights of others. q. PERMITS. The Company and its subsidiaries have all franchises, permits, licenses and any similar authority necessary for the conduct of their business as now conducted, the lack of which could result in a Material Adverse Effect. The Company and its subsidiaries are not in default in any respect under any of such franchises, permits, licenses or similar authority. r. ABSENCE OF LITIGATION. Except as disclosed in the Company's public filings with the Commission, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company or any of its subsidiaries. s. NO DEFAULT. Each of the Company and its subsidiaries is not in default in the performance or observance of any obligation, covenant or condition contained in any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it or its property may be bound which default could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. t. TRANSACTIONS WITH AFFILIATES. Except as disclosed in the Company's public filings with the Commission, there are no agreements, understandings or proposed transactions between the Company or any of its subsidiaries and any of their officers, directors or affiliates that, had they existed on June 30, 2002, would have been required to be disclosed in the Company's Annual Report or an amendment thereto. u. EMPLOYMENT MATTERS. The Company and its subsidiaries are in material compliance with all federal, state, local and foreign laws and regulations respecting employment and employment practices, terms and conditions of employment and wages and hours. There are no pending investigations involving the Company or any of its subsidiaries by any other governmental agency. There is no strike, picketing, boycott, dispute, slowdown or stoppage pending or threatened against or involving the Company or any of its subsidiaries. No grievance or arbitration proceeding is pending under any expired or existing collective bargaining agreements of the Company or any of its subsidiaries. No material labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent. v. ERISA MATTERS. Except as set forth in the Company's public filings with the Commission, neither the Company nor any ERISA Affiliate of the Company (as defined below) maintains, administers, contributes to or is obligated to contribute to any employee pension benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")), including, without limitation, any multiemployer plan as defined in Section 3(37) of ERISA; employee welfare benefit plan (as defined in Section 3(1) of ERISA); or bonus, deferred compensation, stock purchase, stock option, severance plan, salary continuation, vacation, sick leave, fringe benefit, incentive, insurance, welfare or similar arrangement (all of the foregoing being hereafter referred to as a "Plan" and collectively as the "Plans") with respect to any of its employees. The Company (i) has materially complied with all of the provisions of each such Plan and all applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the "Code"), (ii) has administered each such Plan (including the payment of benefits thereunder) in accordance with the material provisions of each such Plan and all applicable material provisions of ERISA and the Code, and (iii) no penalties under ERISA or any other applicable law or regulation are owed to any Plan participant, beneficiary and/or governmental authority with respect to the failure to file any reports or other information required under ERISA or any other applicable law or regulation or to distribute or make available any such reports or other information. The Company has timely made all required contributions to each such Plan. No such Plan is subject to Title IV of ERISA or has at any time been subject to Section 3(2) of ERISA or a "multiemployer plan" within the meaning of Section 3(37) of ERISA or Section 4001(a)(3) of ERISA. None of the Plans is under investigation or audit by either the United States Department of Labor or the Internal Revenue Service. For these purposes, "ERISA Affiliate" means all members of a controlled group of corporations and all trades and businesses (whether or not incorporated) under common control and all other entities which, together with the Company, are treated as a single employer under any or all of Section 414(b), (c), (m) or (o) of the Code on either the date of this Agreement or the Closing Date. w. INSURANCE. The Company and its subsidiaries maintain property and casualty, general liability, personal injury and other similar types of insurance that are reasonably adequate, consistent with industry standards and their historical claims experience. The Company and its subsidiaries have not received notice from, and have no knowledge of any threat by, any insurer (that has issued any insurance policy to the Company or its subsidiaries) that such insurer intends to deny coverage under or cancel, discontinue or not renew any insurance policy covering the Company or any of its subsidiaries presently in force. x. TAXES. All applicable tax returns required to be filed by the Company and each of its subsidiaries have been prepared and filed in compliance with all applicable laws and were true, correct and complete in all material respects when filed, or if not yet filed have been granted extensions of the filing dates which extensions have not expired, and all taxes, assessments, fees and other governmental charges upon the Company, its subsidiaries, or upon any of their respective properties, income or franchises, required to be paid by the Company or its subsidiaries have been paid, or adequate reserves therefor have been set up if any of such taxes are being contested in good faith; or if any of such tax returns have not been filed or if any such taxes have not been paid or so reserved for, the failure to so file or to pay would not in the aggregate have a Material Adverse Effect. All amounts required to be withheld by the Company or any of its subsidiaries from employees for income, social security and other payroll taxes have been collected and withheld and have either been paid to the appropriate agency, set aside in accounts for such purpose or accrued and reserved upon the books and records of the Company or the appropriate subsidiary. There were no tax liens on any of the Company's or its subsidiaries' assets that arose in connection with the failure, or alleged failure, to pay any taxes except for liens for taxes not yet due and payable. No taxing authority is asserting or threatening to assert against the Company or any of its subsidiaries any deficiency or claim for additional taxes and no tax return of Company or any of its subsidiaries is currently under audit by any tax authority. The provision for taxes on the Company Balance Sheet adequately reflects all tax liabilities in accordance with U.S. generally accepted accounting principles. y. FOREIGN CORRUPT PRACTICES ACT. Neither the Company, its subsidiaries nor any of their respective directors, officers or other agents has: (i) used any Company funds for any unlawful contribution, endorsement, gift, entertainment or other unlawful expense relating to any political activity; (ii) made any direct or indirect unlawful payment of company funds to any foreign or domestic government official or employee; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other similar payment to any person. z. COMPLIANCE WITH LAW. To the best of their knowledge, the Company and its subsidiaries have complied in all material respects with all applicable statutes and regulations of the United States and of all states, municipalities and applicable agencies and foreign jurisdictions or bodies in respect of the conduct of its business and operations, and the failure, if any, by the Company or its subsidiaries to have fully complied with any such statute or regulation has not and will not result in a Material Adverse Effect. aa. INTERNAL CONTROLS. The Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with U.S. generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. bb. INVESTMENT COMPANY ACT. The Company and its subsidiaries are not conducting, and will not conduct, their business in a manner which would cause any of them to become an "investment company," as defined in Section 3(a) of the Investment Company Act of 1940, as amended. cc. BROKERAGE FEES. The Company and its subsidiaries have not incurred any liability for any consulting fees or agent's commissions in connection with the exchange of the Company Shares or the Warrants with the Vendor and the transactions contemplated by this Agreement. dd. PRIVATE OFFERING. Subject to the accuracy of the Vendor's representations and warranties set forth in Section 2 hereof, the offer, sale and issuance of the Company Shares or the Warrants and the conversion and/or exercise of such securities into shares of Common Stock, each as contemplated by this Agreement, are exempt from the registration requirements of the Securities Act. The Company agrees that neither the Company nor anyone acting on its behalf will offer any of the Company Shares or the Warrants, or any similar securities, for issuance or sale, or solicit any offer to acquire any of the same from anyone so as to render the issuance and sale of such securities subject to the registration requirements of the Securities Act. The Company has not offered or sold the Company Shares or the Warrants by any form of general solicitation or general advertising, as such terms are used in Rule 502(c) under the Securities Act. ee. FULL DISCLOSURE. Neither this Agreement, the Primary Documents nor any of the schedules, exhibits, written statements, documents or certificates prepared or supplied by the Company with respect to the transactions contemplated hereby contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which made. Except as disclosed in the SEC Documents and except for matters affecting the industry of the Company as a whole, there exists no fact or circumstance which, to the knowledge of the Company upon due inquiry, could reasonably be anticipated to have a Material Adverse Effect or could adversely affect the ability of the Company to perform its obligations set forth in the Primary Documents. ff. MINUTE BOOKS. The Company's minute books, which have been previously made available to the Vendor, are in good order, complete, accurate, up-to-date, and with all necessary signatures, and set forth the Company's articles of incorporation and bylaws, as amended, and all meetings and actions taken by the directors and stockholders. gg. STOCK RECORDS. The Company's transfer agent for its Common Stock is Interwest Transfer Co., Inc. The stock transfer books and stock ledgers of the Company are in good order, complete, accurate, up-to-date, and with all necessary signatures, and set forth all stock and securities issued, transferred, and surrendered, including duplicate certificates. No transfer has been made without surrender of the proper certificate of the Company, duly endorsed, and the Company has cancelled and retained such certificates in its stock records. 4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS a. TRANSFER RESTRICTIONS. The Vendor acknowledges that, except as provided in the Registration Rights Agreement, (i) none of the Securities have been, or are being, registered under the Securities Act, and such securities may not be transferred unless (A) subsequently registered thereunder, or (B) they are transferred pursuant to an exemption from such registration; and (ii) any sale of the Securities made in reliance upon Rule 144 under the Securities Act may be made only in accordance with the terms of said Rule. The provisions of Section 4.a. and 4.b. hereof, together with the rights and obligations of the Vendor under the Primary Documents, shall be binding upon any subsequent transferees of the Securities. b. RESTRICTIVE LEGEND. The Vendor acknowledges and agrees that, until such time as the Securities shall have been registered under the Securities Act or the Vendor demonstrates to the reasonable satisfaction of the Company that such registration shall no longer be required, such Securities shall bear a restrictive legend in substantially the following form: THESE SECURITIES (INCLUDING ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL NO LONGER BE REQUIRED. c. FILINGS. The Company undertakes and agrees that it will make all required filings in connection with the exchange of the Securities with the Vendor as required by United States laws and regulations, or by any domestic securities exchange or trading market, and if applicable, the filing of a notice on Form D (at such time and in such manner as required by the Rules and Regulations of the Commission), and to provide copies thereof to the Vendor promptly after such filing or filings. d. NASDAQ LISTING. Subject to compliance with NASDAQ listing rules and requirements, the Company shall use its best efforts to promptly secure the listing of the Common Stock upon a national securities exchange or automated quotation system, and shall include the Company Shares and the shares of Common Stock issuable upon the exercise of the Warrants upon the same exchange or system as soon as practicable. The Company further agrees and covenants that it will not seek to have the trading of its Common Stock on OTCBB or Nasdaq suspended or terminated, will use its best efforts to maintain its eligibility for trading on OTCBB or Nasdaq and, if such trading of its Common Stock is suspended or terminated, will use its best efforts to requalify its Common Stock or otherwise cause such trading to resume. e. REPORTING STATUS. The Company shall timely file all reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act and shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination. f. STATE SECURITIES FILINGS. The Company shall from time to time promptly take such action as the Vendor may request to qualify the Securities for offering and sale under the securities laws (other than United States federal securities laws) of the jurisdictions in the United States as shall be so identified to the Company, and to comply with such laws so as to permit the continuance of sales therein. g. RESERVATION OF COMMON STOCK. The Company shall at all times have authorized and reserved for the purpose of issuance a sufficient number of shares of Common Stock to provide for the exercise of the Warrants. The Company will use its best efforts at all times to maintain a number of shares of Common Stock so reserved for issuance that is sufficient to permit and the exercise in full of the Warrants at such time. h. RETURN OF WARRANTS ON EXERCISE. Upon any partial exercise by the Vendor of the Warrants, the Company shall issue and deliver to the Vendor within three (3) days of the date on which such Warrants are exercised a new Warrant or Warrants representing the number of adjusted shares of Common Stock covered thereby, in accordance with the terms thereof. i. REPLACEMENT WARRANTS. The Warrants will be exchangeable, at the option of the Vendor, at any time and from time to time at the office of the Company, for other Warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable under such Warrants. No service charge will be made for such transfer or exchange. 5. TRANSFER AGENT INSTRUCTIONS AND CONVERSION MECHANICS a. The Company warrants that no instruction, other than the instructions referred to in this Section 5 hereof, prior to the registration and sale under the Securities Act of the Common Stock issuable upon exercise of the Warrants will be given by the Company to its transfer agent and that the shares of Common Stock issuable upon exercise of the Warrants shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement, the Registration Rights Agreement and applicable law. Nothing in this Section 6 shall affect in any way the Vendor's obligations and agreement to comply with all applicable securities laws upon resale of the Securities. If the Vendor provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Vendor of any of the Securities in accordance with Section 4(a) of this Agreement is not required under the Securities Act, the Company shall permit the transfer of the Securities and, in the case of the Common Stock, promptly instruct the Company's transfer agent to issue one or more certificates for Common Stock without legend in such names and in such denominations as specified by the Vendor. b. The Vendor shall exercise the Warrants in the manner set forth in the Warrants. Each date on which Warrants are exercisable in accordance with the provisions thereof shall be deemed a "Conversion Date" with respect to such exercise. For purposes of this Agreement, any exercise of the Warrants shall be deemed to have been made immediately prior to the close of business on the Conversion Date. c. In lieu of delivering physical certificates representing the Common Stock issuable upon the exercise of the Warrants, provided the Company's transfer agent is participating in the Depositary Trust Company ("DTC") Fast Automated Securities Transfer program, on the written request of the Vendor, who shall have previously instructed the Vendor's prime broker to confirm such request to the Company's transfer agent, the Company shall cause its transfer agent to electronically transmit such Common Stock to the Vendor by crediting the account of the Vendor's prime broker with DTC through its Deposit Withdrawal Agent Commission ("DWAC") system no later than three (3) business days after the applicable Conversion Date relating to the Warrants (each such delivery date, a "Delivery Date"). Nothing herein shall limit the Vendor's right to pursue actual damages for the Company's failure to so issue and deliver Common Stock to the Vendor. Furthermore, in addition to any other remedies which may be available to the Vendor, if the Company fails for any reason to effect delivery of such Common Stock within five (5) business days after the relevant Delivery Date, the Vendor will be entitled to revoke the relevant Notice of Conversion or Form of Election to Purchase by delivering a notice to such effect to the Company, whereupon the Company and the Vendor shall each be restored to their respective positions immediately prior to delivery of such Notice of Conversion or Form of Election to Purchase. For purposes of this Section 6, "business day" shall mean any day in which the financial markets of New York are officially open for the conduct of business therein. 6. CONDITIONS TO THE COMPANY'S OBLIGATION TO ISSUE THE COMPANY SHARES AND WARRANTS. The Vendor understands that the Company's obligation to issue the Company Shares and the Warrants on the Closing Date to the Vendor pursuant to this Agreement is conditioned upon the satisfaction or waiver by the Company of each of the following conditions: a. The accuracy on the Closing Date of the representations and warranties of the Vendor contained in this Agreement as if made on the Closing Date and the performance by the Vendor on or before the Closing Date of all covenants and agreements of the Vendor required to be performed on or before the Closing Date. b. The absence or inapplicability of any and all laws, rules or regulations prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained. c. The Vendor shall have executed this Agreement and the Registration Rights Agreement and delivered the same to the Company. d. The Vendor shall have delivered the Consideration in accordance with Section 1.c. above. e. Each of Messrs. John Hui and William Tsang, or their respective management companies, will have entered into a three year employment or management agreement, as the case may be, with GBN, a British Virgin Islands corporation and after the Closing, a subsidiary of the Company. 7. CONDITIONS TO THE VENDOR'S OBLIGATION TO PURCHASE THE COMPANY SHARES AND THE WARRANTS The Company understands that the Vendor's obligation to purchase the Company Shares and the Warrants on the Closing Date is conditioned upon the satisfaction or waiver by the Vendor of each of the following conditions: a. The accuracy on the Closing Date of the representations and warranties of the Company contained in this Agreement as if made on the Closing Date, and the performance by the Company on or before the Closing Date of all covenants and agreements of the Company required to be performed on or before the Closing Date. b. The Company shall have executed and delivered to the Vendor (i) the Registration Rights Agreement; (ii) the stock certificate representing the Company Shares; and (iii) the Warrants. c. On the Closing Date, the Vendor shall have received an opinion of counsel for the Company satisfactory to the Vendor at its sole discretion, dated the Closing Date. d. On the Closing Date, the Vendor shall have received a certificate executed by the President or the Chief Executive Officer of the Company and by the Chief Financial Officer of the Company, stating that all of the representations and warranties of the Company set forth in the Primary Documents are accurate as of the Closing Date and that the Company has performed all of its covenants and agreements required to be performed under the Primary Documents on or before the Closing Date. e. The Vendor shall have received an incumbency certificate, dated the Closing Date, for the officers of the Company executing this Agreement, the Company Shares, the Warrants, and any other documents or instruments delivered in connection with this Agreement at the Closing. f. The Vendor shall have received certificates of the Secretary of State of the State of Nevada, dated a recent date, to the effect that the Company is in good standing in the State of Nevada, and that all annual reports, if any, have been filed as required and that all taxes and fees have been paid in connection therewith. g. The Vendor shall have received a certified copy of the Articles of Incorporation and By-laws of the Company as filed with the Secretary of State of the State of Nevada and any amendments thereto through the Closing Date. h. The Vendor shall have received from the Company such other certificates and documents as it shall reasonably request, and all proceedings taken by the Company in connection with the Primary Documents contemplated by this Agreement, including resolutions adopted by its Board of Directors authorizing the actions to be taken by it contemplated by the Primary Documents. i. No injunction, order, investigation, claim, action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would restrain, impair or prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause any such transaction to be rescinded. j. The Company shall have obtained in writing or made all consents, waivers, approvals, orders, permits, licenses and authorizations of, any registrations, declarations, notices to and filings and applications with, any governmental authority or any other person or entity (including, without limitation, security holders and creditors of the Company) required to be obtained or made in order to enable the Company to observe and comply with all its obligations under this Agreement and to consummate the transactions contemplated hereby. k. The Company shall have performed all acts described in Section 5 hereof. l. The Company agrees that it shall have a board of directors of no more than seven (7) members and the Vendor shall have the right to appoint up to four (4) directors. If the Vendor's shareholding shall fall below 15% of the Company's total issued and outstanding share capital, then while the Vendor is holding below 15%, the Vendor shall have the right to appoint only one director. If the Vendor's shareholding shall fall below 5% of the Company's total issued and outstanding share capital, then, while the Vendor is holding below 5%, the Vendor will have no right to appoint any director. Without the written consent of the Vendor, the Company shall not change the size of its board of directors. 8. INDEMNIFICATION A. INDEMNIFICATION OF VENDOR BY THE COMPANY. The Company hereby agrees to indemnify and hold harmless the Vendor, its affiliates and their respective officers, directors, partners, shareholders, employees and members (collectively, the "Vendor Indemnitees"), from and against any and all losses, claims, damages, judgments, penalties, liabilities and deficiencies (collectively, "Losses"), and agrees to reimburse the Vendor Indemnitees for all out-of-pocket expenses (including the fees and expenses of legal counsel), in each case promptly as incurred by the Vendor Indemnitees and to the extent arising out of or in connection with: 1. any misrepresentation, omission of fact or breach of any of the Company's representations, warranties or covenants contained in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by the Company pursuant to this Agreement; or 2. any failure by the Company to perform any of its covenants, agreements, undertakings or obligations set forth in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by the Company pursuant to this Agreement. B. INDEMNIFICATION OF THE COMPANY BY THE VENDOR. The Vendor hereby agrees to indemnify and hold harmless the Company, its affiliates and their respective officers, directors, partners and members (collectively, the "Company Indemnitees"), from and against any and all Losses, and agrees to reimburse the Company Indemnitees for all out-of-pocket expenses (including the fees and expenses of legal counsel), to the extent arising out of or in connection with; 1. any misrepresentation, omission of fact or breach of any of the Vendor's representations, warranties or covenants contained in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by the Vendor pursuant to this Agreement; or 2. any failure by the Vendor to perform any of its covenants, agreements, undertakings or obligations set forth in this Agreement, the annexes, schedules or exhibits hereto or any instrument, agreement or certificate entered into or delivered by the Vendor pursuant to this Agreement. C. THIRD PARTY CLAIMS. Promptly after receipt by either party hereto seeking indemnification pursuant to this Section 9 (an "Indemnified Party") of written notice of any investigation, claim, proceeding or other action in respect of which indemnification is being sought (each, a "Claim"), the Indemnified Party promptly shall notify the party against whom indemnification pursuant to this Section 9 is being sought (the "Indemnifying Party") of the commencement thereof; but the omission to so notify the Indemnifying Party shall not relieve it from any liability that it otherwise may have to the Indemnified Party, except to the extent that the Indemnifying Party is materially prejudiced and forfeits substantive rights and defenses by reason of such failure. In connection with any Claim as to which both the Indemnifying Party and the Indemnified Party are parties, the Indemnifying Party shall be entitled to assume the defense thereof. Notwithstanding the assumption of the defense of any Claim by the Indemnifying Party, the Indemnified Party shall have the right to employ separate legal counsel and to participate in the defense of such Claim, and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs and expenses of such separate legal counsel to the Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall have concluded that representation of the Indemnified Party by the Indemnifying Party by the same legal counsel would not be appropriate due to actual or, as reasonably determined by legal counsel to the Indemnified Party, potentially differing interests between such parties in the conduct of the defense of such Claim, or if there may be legal defenses available to the Indemnified Party that are in addition to or disparate from those available to the Indemnifying Party, or (z) the Indemnifying Party shall have failed to employ legal counsel reasonably satisfactory to the Indemnified Party within a reasonable period of time after notice of the commencement of such Claim. If the Indemnified Party employs separate legal counsel in circumstances other than as described in clauses (x), (y) or (z) above, the fees, costs and expenses of such legal counsel shall be borne exclusively by the Indemnified Party. Except as provided above, the Indemnifying Party shall not, in connection with any Claim in the same jurisdiction, be liable for the fees and expenses of more than one firm of legal counsel for the Indemnified Party (together with appropriate local counsel). The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which consent shall not unreasonably be withheld) settle or compromise any Claim or consent to the entry of any judgment that does not include an unconditional release of the Indemnified Party from all liabilities with respect to such Claim or judgment. D. RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE. The right to indemnification, payment for Losses or other remedy based on any representation, warranty, covenant or obligation of a party hereunder shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing Date, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation. 9. EXPENSES The Company covenants and agrees with the Vendor that the Company shall pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Vendor's counsel in connection with the issuance of the Securities (not to exceed US$10,000), payable on the Closing Date; (ii) all expenses in connection with registration or qualification of the Securities for offering and sale under state securities laws as provided in Section 4.f. hereof; and (iii) all other costs and expenses incident to the performance of its obligations hereunder which are not otherwise specifically provided for in this Section 10, including the fees and disbursements of the Company's counsel, accountants and other professional advisors, if any. 10. SURVIVAL The agreements, covenants, representations and warranties of the Company and the Vendor shall survive the execution and delivery of this Agreement and the delivery of the Securities hereunder until all of the Warrants are exercised in full and the Company has satisfied in full its obligations under the terms of the Registration Rights Agreement. 11. MISCELLANEOUS a. GOVERNING LAW. This Agreement shall be governed by and interpreted in accordance with the internal laws of the State of California. b. Arbitration. If a dispute arises out of or is related to this Agreement, or the breach thereof, and such dispute cannot be settled through negotiation, the dispute may be submitted to final and binding arbitration under the then current rules of the Hong Kong International Arbitration Centre in Hong Kong, China. The prevailing party in such arbitration shall be entitled to expenses, including costs and reasonable attorneys' and other professional fees, incurred in connection with the arbitration (but excluding any costs and fees associated with any prior negotiation or mediation). The decision of the arbitrator shall be final and non-appealable and may be enforced in any court of competent jurisdiction. The use of any alternative dispute resolution procedures will not be construed under the doctrine of laches, waiver or estoppel to adversely affect the rights of the parties. c. COUNTERPARTS. This Agreement may be signed in two or more counterparts, each of which shall be deemed an original. d. HEADINGS. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement. e. INTERPRETATION. This Agreement and each of the Primary Documents have been entered into freely by each of the parties, following consultation with their respective counsel, and shall be interpreted fairly in accordance with its respective terms, without any construction in favor of or against either party. f. SEVERABILITY. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or unenforceability of this Agreement in any other jurisdiction. g. SUCCESSORS. This Agreement shall inure to the benefit of, and be binding upon the successors and assigns of each of the parties hereto, including any transferees of the Company Shares and the Warrants. h. AMENDMENTS. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement. i. MERGER. This Agreement, together with the other Primary Documents, supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. j. EQUITABLE RELIEF. The Company and the Vendor each recognize that if any party fails to perform, observe, or discharge any or all of its obligations under any Primary Document, any remedy at law may prove to be inadequate relief to the aggrieved party. The Company and the Vendor therefore agree that an aggrieved party under any Primary Document, if such party so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. k. NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be effective upon personal delivery, via facsimile (upon receipt of confirmation of error-free transmission) or two business days following deposit of such notice with an internationally recognized courier service, with postage prepaid and addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by five days advance written notice to each of the other parties hereto. Company: China World Trade Corporation 3-4/F Goldlion Digital Network Center 138 Tiyu Road East Tianhe, Guangzhou 510620 The People's Republic of China Attention: Mr. John Hui Tel.: (8620) 3878 0168 Fax: (8620) 3878 1852 Vendor: Mr. Chi Hung Tsang Unit no. 1217 12/F The Metropolis Tower No. 10 Metropolis Drive Hunghom Kowloon Tel.: (852) 2787-2005 Fax: (852) 2787-0005 email: william@mail.ggcc21.com cc. Heller, Ehrman, White & McAuliffe LLP 35th Floor, One Exchange Square 8 Connaught Place, Central Hong Kong Attention: Simon Luk, Esq. and Vincent Lai, Esq. Tel.: (852)-2292-2000 Fax.: (852)-2292-2200 12. NON-DISCLOSURE. The Vendor acknowledges that the Company is a publicly-listed company and, as such, is subject to strict regulation governing the disclosure of information relating to corporate transactions. Except as required by law, without the prior written consent of the Company, the Vendor will not directly or indirectly, make any public comment, statement or communication to any individual or entity with respect to, or otherwise disclose the existence of discussions regarding a possible transaction between the parties or any of the terms, conditions, or other aspects of this Agreement until such time as the transaction is completed, or any confidential information provided by the Company to the Vendor. Further, the Vendor acknowledges that they may not trade in the securities of the Company when they are in possession of material, non-public information and that they agree that they will not do so. Confidential Information shall include all non-public information provided by the Company to the Vendor, but shall not include information that (a) is now or subsequently becomes generally available to the public through no wrongful act or omission of the Vendor, (b) the Vendor can demonstrate to have had rightfully in their possession prior to disclosure to the Vendor by the Company, and (c) the Vendor rightfully obtain from a third party who has the right to transfer or disclose it. IN WITNESS WHEREOF, Share Exchange Agreement has been duly executed by each of the undersigned. CHINA WORLD TRADE CORPORATIOn By /s/ CHAOMING LUO Name: Chaoming Luo Title: Director CHI HUNG TSANG By /s/TSANG CHI HUNG Name: Tsang Chi Hung Title: SCHEDULE 1 VALUTATION OF THE PREMISES - ------------------------------------------------------------ --------------------------------------------------------- Location of Premises Estimated Present Value of Rental for December 1, 2003 to November 31, 2008 - ------------------------------------------------------------ --------------------------------------------------------- - ------------------------------------------------------------ --------------------------------------------------------- - ------------------------------------------------------------ --------------------------------------------------------- - ------------------------------------------------------------ --------------------------------------------------------- 21st floor to 23rd floor of Goldlion Digital Network US$1,824,178 Center, 138 Tiyu Road East, Tianhe, Guangzhou 510620, The People's Republic of China - ------------------------------------------------------------ ---------------------------------------------------------
SCEHDULE 2 CERTIFICATE NUMBER OF THE GUANGZHOU BUREAU OF REAL ESTATES C1253746 C1253747 C1253748 C1253749 C1253750 C1253752 C1253753 C1253751 C1253754 C1253755 C1253967 C1253968 C1253969 C1253970 C1253971 C1253972 C1253973 C1253743 C1253744 C1253745 C1253966 C1253965 C1253964 C1253742 C1253741 C1253740 C1253739 C1253738 C1253737 C1253736 EX-99 6 form8kex10-2.txt EX. 10.2 SETTLEMENT AGREEMENT Exhibit 10.2 China World Trade Corporation - ------------------------------------------------------------------------------- SETTLEMENT AGREEMENT This Agreement dated 5 December 2003 entered into between and by: Party A: China World Trade Corporation, c/o 4th Floor Goldlion Network Center, 138 Tiyu Road East, Tianhe, Guangzhou, the PRC 510620 Party B: Mr. Chi Hung TSANG c/o Room 1217, 12/F., The Metropolis Tower, 10 Metropolis Drive, Hunghom, Hong Kong RECITALS Party A is a public company with business provided in the major areas of business recreational club, management consultancy, and credit cards and agency services; and Party A owed Party B a total amount of US$456,661.73 (the "Consideration Amount") in cash advance to Party A for its working capital as of 15 November 2003. WHEREAS: 1. Party B agrees to convert the Consideration Amount that Party A owed into the shares of the common stock of Party A which shall rank pari-passu to the existing common stock; and Party A agrees to issue or cause to issue a total of Seven Hundred Sixty-one Thousand One Hundred and Three shares (761,103) of its common stock to Party B for the settlement of the Consideration Amount (the "Transaction"). 2. Party A agrees to pay for all the expenses in relation to the issuance of its shares of common stock to Party B. 3. Upon signing of this Agreement and the completion of the issuance of shares of the common stock of Party A to Party B, neither Party A nor Party B would claim the counter party for any form of additional damage and/or settlement regarding the Consideration Amount. 4. Both parties agree to keep all information regarding the Transaction and its business or affairs which are known to the Parties in connection with this Agreement strictly confidential and shall release such information only to parties authorized by either party. 5. This Agreement shall be governed by the laws of the Hong Kong Special Administrative Region and the Parties shall submit to the jurisdiction thereof. For and on behalf of For and on behalf of Party A Party B /s/ RINGO LEUNG /s/ CHI HUNG TSANG - ------------------------- ------------------------ Name: Ringo Leung Name: Chi Hung TSANG Director -----END PRIVACY-ENHANCED MESSAGE-----