EXHIBIT 10.14
SHARES SALE AND PURCHASE AGREEMENT
This Agreement (hereinafter referred to as the "Agreement") is made and
entered into on the 28th day of November, 2001, by and among the Parties listed
below.
PARTIES:
IMAGE SENSING SYSTEMS, INC., a company incorporated in Minnesota, USA,
having its registered office at 500 Spruce Tree Center, 0000 Xxxxxxxxxx Xxxxxx
Xxxx, Xx. Xxxx, Xxxxxxxxx 00000-0000, U.S.A. (hereinafter referred to as "ISS"),
BERKELEY DEVELOPMENT LIMITED, a company incorporated in the British
Virgin Islands, having its registered office at Atlantic Xxxxxxxx, Romasco
Harbour House, Road Town, Tortola, British Virgin Islands (hereinafter referred
to as "BDL"),
MR. MATS XXXXX XXXXXX, HK ID card No. X000000 (0) of One Xxxxxxxx
Place, 31st Floor, Xxxx X, 00 Xxxxxxxx Xxxx, Xxx-Xxxxxx, Xxxx Xxxx (hereinafter
referred to as "XXXXXX"),
and GROVE PLACE LIMITED, a company incorporated in the British Virgin
Islands, having its registered office at Xxxxxxx Building, P.O. Box 3136, Main
Street, Road Town, Tortola, British Virgin Islands (hereinafter referred to as
"GPL").
WHEREAS:
(A) BDL and Xxxxxx (collectively the "Xxxxxx Vendors") are the owners
of two (2) ordinary shares in Flow Traffic Limited, a company incorporated in
the Hong Kong Special Administrative Region of the People's Republic of China
("HKSAR") having its registered office at 2001 Xxxxxxx Xxxxx, 00 Xxxxxxx Xxxx,
Xxxxxxx, Xxxx Xxxx (hereinafter referred to as "FTL").
(B) GPL (the "Grove Vendor") is the owner of two (2) ordinary shares in
FTL. The Grove Vendor and the Xxxxxx Vendors are collectively referred to in
this Agreement as the "Vendors".
(C) The Vendors have agreed to sell and ISS has agreed to purchase the
Sale Shares (defined below) subject to and on the terms and conditions of this
Agreement.
WHEREBY IT IS AGREED AS FOLLOWS:
1. INTERPRETATION.
1.01 In this Agreement unless the context otherwise requires the following words
and expressions shall have the following meanings:
"Xxxxxx Consideration" has the meaning set out in Clause 3(a).
"XXXXXX SALE SHARES" means 2 fully paid ordinary shares of HK$ 1 each
of FM which are beneficially owned by BDL and Xxxxxx.
"XXXXXX SERVICE AGREEMENT" means the contract of employment entered
into between FTL and Xxxxxx in respect of the services provided by Xxxxxx to
FTL.
"COMPLETION" means the performance by the parties of the several
obligations contained in Clause 4.
"Completion Date" means 7th January 2002 upon which Completion is to
take place pursuant to Clause 4.
"EFFECTIVE DATE" means 7th January 2002.
"GROVE CONSIDERATION" has the meaning set out in Clause 3(b).
"GROVE CONSULTANCY AGREEMENT" means the consultancy agreement entered
into between ISS and GPL in respect of the consultancy services provided by GPL
to FTL and/or ISS.
"GROVE SALE SHARES" means 2 fully paid ordinary shares of UK$ 1 each of
FTL which are beneficially owned by GPL.
"INTEREST RATE" means 2.5 % above LIBOR.
"LETTER OF CREDIT" means an irrevocable stand-by letter of credit (in a
form to be approved by each of the Vendors) issued by a licensed bank approved
by each of the Vendors.
"SALE SHARES" means collectively the Xxxxxx Sale Shares and the Grove
Sale Shares.
"TOTAL CONSIDERATION" means the total consideration to be paid by ISS
to the Vendors for the Sale Shares as specified in Clauses 3(a), 3 (b), 6 (a)
and 6 (b).
2. SHARES SALE AND PURCHASE. The Vendors shall sell the sale shares and
ISS shall purchase the sale shares on the terms and conditions as set out in
this agreement.
3. CONSIDERATION.
(a) The consideration for the sale of the Xxxxxx Sale Shares shall
be US$475,000 (the "Xxxxxx Consideration").
(b) The consideration for the sale of the Grove Sale Shares shall
be US$475,000 (the "Grove Consideration").
(c) The Total Consideration shall be paid in the manner described
in Clause 5 and Clause 6.
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(d) Xxxxxx is hereby irrevocably authorized and instructed to accept
payment of the consideration for the sale of BDL's shares in FTL of any part
thereof on the terms and conditions herein stated.
4. COMPLETION.
4.01 Completion shall take place on the Completion Date when
all of the following business shall be transacted:
(a) the Xxxxxx Vendors shall release to ISS:
(i) two duly executed instruments of transfer and sold
contract notes in respect of each of the Xxxxxx Sale Shares in favour
of ISS and/or its nominee together with the relevant certificates
therefor;
(ii) a cheque drawn in favour of the Government of the HKSAR
for the amount of stamp duty payable by the Xxxxxx Vendors for the sale
of the Xxxxxx Sale Shares.
(b) the Grove Vendor shall release to ISS:
(i) a duly executed instrument of transfer and sold contract
note in respect of the Grove Sale Shares in favour of ISS and/or its
nominee together with the relevant certificates therefor;
(ii) a cheque drawn in favour of the Government of the HKSAR
for the amount of stamp duty payable by the Grove Vendor for the sale
of the Grove Sale Shares.
(c) ISS shall release:
(i) to the Xxxxxx Vendors counterparts of the two instruments
of transfer and the two sold contract notes in respect of each of the
Xxxxxx Sale Shares in favour of the Xxxxxx Vendors;
(ii) to the Grove Vendor a counterpart of the instrument of
transfer and the sold contract note in respect of the Grove Sale Shares
in favour of the Grove Vendor;
(iii) to the Xxxxxx Vendors a Letter of Credit drawn in favour
of Xxxxxx or his nominee in the amount of US$ 225,000 for payment to be
made in accordance with Clause 5(c);
(iv) to the Grove Vendor a Letter of Credit drawn in favour of
GPL or its nominee in the amount of US$ 225,000 for payment to be made
in accordance with Clause 5(d);
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(v) to the Xxxxxx Vendors cash to the amount of US$ 125,000 in
accordance with Clause 5(a);
(vi) to the Grove Vendor cash to the amount of US$ 125,000 in
accordance with Clause 5 (b);
(vii) to the Xxxxxx Vendors a preferred share certificate in
ISS with a par value of US$ 125,000 in accordance with Clause 5(e)
(viii) to the Grove Vendor a preferred share certificate in
ISS with a par value of US$ 125,000 in accordance with Clause 5(f)
(ix) a cheque drawn in favour of the Government of the HKSAR
for the amount of stamp duty payable by ISS for the purchase of the
Sale Shares;
(x) such other documents as may be required to complete the
transactions contemplated by this Agreement.
(d) the [Vendors]/[ISS] shall procure a board meeting of FTL to be held
at which resolutions shall be passed (where appropriate):
(i) to approve and give effect to all of the matters referred
to above;
(ii) to approve ISS or its nominee for registration as the
holder of the Sale Shares and to authorise and instruct FTL's company
secretary to enter ISS's or its nominee's name in the register of
members and to issue new Share Certificates in the name of ISS and/or
its nominee;
(iii) to release the latest audited management accounts of FTL
to the Vendors and/or ISS for submission to the Inland Revenue
Department for stamp duty purposes;
4.02 The Vendors shall not be obliged to complete this Agreement or
perform any obligations hereunder unless ISS complies fully with the
requirements of Clause 4.01(c).
4.03 The transfer of the title to the Sale Shares to ISS shall take
effect on the Effective Date.
5. MANNER OF PAYMENT.
(a) US$ 125,000 of the Xxxxxx Consideration shall be payable by ISS in
cash by telegraphic transfer to such account in Hong Kong as nominated by
Xxxxxx. This cash transfer must be received in the nominated account on or
before the Completion Date.
(b) US$ 125,000 of the Grove Consideration shall be payable by ISS in
cash by telegraphic transfer to such account in Hong Kong as nominated by GPL.
This cash transfer must be received in the nominated account on or before the
Completion Date.
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(c) US$ 225,000 of the Xxxxxx Consideration shall be payable by ISS by
Letter of Credit in one payment to be effected any such time between 1st April
2003 and 30th April 2003 that the Xxxxxx Vendors may choose. ISS agrees that the
documentation required for payment under this Letter of Credit shall be an
invoice issued by the Xxxxxx Vendors only. ISS further agrees that the Letter of
Credit shall be issued to the Xxxxxx Vendors and received by the Xxxxxx Vendors
on or before the Completion Date.
(d) US$ 225,000 of the Grove Consideration shall be payable by ISS by
Letter of Credit in one payment to be effected at any such time between 1st
April 2003 and 30th April 2003 that the Grove Vendor may choose. ISS agrees that
the documentation required for payment under this Letter of Credit shall be an
invoice issued by the Grove Vendor only. ISS further agrees that the Letter of
Credit shall be issued to the Grove Vendor and received by the Grove Vendor on
or before the Completion Date
(e) US$ 125,000 of the Xxxxxx Consideration shall be payable by ISS in
the form of a preferred share certificate being convertible to 50,000 common
shares in ISS at any time within five years from the issuing date. ISS shall
have a call option to purchase this share certificate at any time during the
year 2002 at a purchase price of US$ 125,000, payable in cash. The Xxxxxx
Vendors shall have a put option to sell this share certificate at a sale price
of US$ 25,000 at any time after 1st April 2003. ISS shall further have a call
option to purchase this share certificate at any time after 1st April 2003 at a
purchase price of US$ 150,000. If this share certificate has not been converted
to common shares or purchased by ISS prior to 7th January 2007, ISS shall
purchase this certificate at a purchase price of US$ 125,000. ISS agrees that
this share certificate shall be issued to the Xxxxxx Vendors and received by the
Xxxxxx Vendors on or before the Completion Date.
(f) US$ 125,000 of the Grove Consideration shall be payable by ISS in
the form of a preferred share certificate being convertible to 50,000 common
shares in ISS at any time within five years from the issuing date. ISS shall
have a call option to purchase this share certificate at any time during the
year 2002 at a purchase price of US$ 125,000, payable in cash. The Grove Vendor
shall have a put option to sell this share certificate at a sale price of US$
125,000 at any time after 1st April 2003. ISS shall further have a call option
to purchase this share certificate at any time after 1st April 2003 at a
purchase price of US$ 150,000. If this share certificate has not been converted
to common shares or purchased by ISS prior to 7th January 2007, ISS shall
purchase this certificate at a purchase price of US$ 125,000. ISS agrees that
this share certificate shall be issued to the Grove Vendor and received by the
Grove Vendor on or before the Completion Date.
(g) Any amount not paid by ISS when due shall accrue interest on such
amount from the due date at the Interest Rate.
6. ADDITIONAL PAYMENT.
(a) So long as FTL achieves an audited net profit before tax of HK$
1,418,000 or greater for the financial year 2002, ISS will pay the Xxxxxx
Vendors an additional payment in consideration of the Xxxxxx Sale Shares of US$
50,000, payable in cash within 10 days upon
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completion of audit. Such payment shall be paid to such account in Hong Kong as
nominated by Xxxxxx.
(b) So long as FTL achieves an audited net profit before tax of HK$
1,418,000 or greater for the financial year 2002, ISS will pay the Grove Vendor
an additional payment in consideration of the Grove Sale Shares of US$ 50,000,
payable in cash within 10 days upon completion of audit. Such payment shall be
paid to such account in Hong Kong as nominated by GPL.
(c) ISS agrees that it will not impose any additional costs on FTL in
the year 2002 other than such costs as have been included in the budget for the
financial year 2002.
7. TERM.
7.01 This Agreement shall take effect from the date first above written
and shall continue in full force until the Vendors have been fully paid the
Total Consideration by ISS.
7.02 If ISS fails to pay any or all of the instalments of the Total
Consideration required to be paid hereunder, each of the Vendors (or both of
them) as the case may be shall have the following rights and remedies:
(a) all rights and remedies arising under this Agreement and
under the laws of the HKSAR;
(b) to terminate the Xxxxxx Service Agreement and/or the Grove
Consultancy Agreement respectively;
(c) to require the Xxxxxx Sale Shares and/or the Grove Sale
Shares to be transferred back to the Xxxxxx Vendors and the Grove
Vendor respectively.
8. ENTIRE AGREEMENT. This agreement constitutes and expresses the
entire agreement between the parties relating to its subject matter, superseding
in all respects any and all prior oral or written agreements or understandings
between them pertaining to the transactions contemplated by this Agreement,
including without limitation a Shareholders' Agreement entered into between ISS,
BDL, GPL, Xxxxxx, Xxxxxxx X. Xxxxx and FTL (formerly known as Max Resources
Limited) dated 1st February 1999, and a Subscription Agreement entered into
between ISS, Xxxxxx, BDL and FTL (formerly blown as Max Resources Limited) dated
1st February 1999.
9. AMENDMENT. Unless otherwise specifically provided for in this
Agreement, the provisions of this Agreement may be amended, supplemented or
waived only if the parties hereto agree in writing.
10. NOTICES.
10.01 In Writing and Methods of Delivery. Every notice or communication
under this Agreement must be in writing and may, without prejudice to any other
from of delivery, be delivered personally or sent by post or transmitted by fax
or telex.
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10.02 Authorised Addresses and Numbers.
(a) In the case of posting, the envelope containing the notice or
communication must be addressed to the intended recipient at the
authorised address of that party and must be properly stamped or have
the proper postage prepaid for delivery and, in the case of a fax or
telex, the transmission must be sent to the intended recipient at the
authorized number of that party.
(b) Subject to Clause 10.03, the authorised address, fax and
telex numbers of each party, for the purpose of Clause 10, are as
follows:
If to ISS: Image Sensing Systems, Inc.
000 Xxxxxx Xxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxxx Xxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
U.S.A.
Attention: President
Telefax No.: 0-000-000-0000
If to GPL: ISS Asia Regional Xxxxxx
00/00 Xxxxx Xxxxx Xxxxxxxxxx
Xxxxx Xxxxx 00000
Xxxxxxxx
Attention: Xx. Xxxxxxx X. Xxxxx
Telefax No.: 000-000-0000
If to BDL or Xxxxxx: 2001 Xxxxxxx Xxxxx
00 Xxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Attention: Berkeley Development Limited
Telefax No.: 000-0000-0000
10.03 Notification of Changes. No change in any of the particulars set
out in Clause 10.02 will be effective against a party until it has been notified
to that party.
10.04 Deemed Giving of Notice and Receipt. A notice or communication
will be deemed to have been duly given and received:
(a) on personal delivery to the addressee or on a business day to
a place for the receipt of letters at that addressee's authorised
address;
(b) in the case of posting, where the addressee's authorised
address is in the same country as the country of posting, at 10:00 a.m.
(local time at the place where the address is located) on the second
business day after the day of posting;
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(c) in the case of posting, where the addressee's authorised
address is not in the same country as the country of posting, at 10:00
a.m. (local time at the place where that address is located) on the fifth
business day after the day of posting;
(d) in the case of a fax, on issue to the sender of an O.K.
result confirmation receipt or, if the day of issue is not a business
day, at 10:00 a.m. (local time where the authorised fax number of the
intended recipient is located) on the next business day; and
(e) in the case of a telex, on receipt by the sender of the
confirmed answerback or, if the day of receipt is not a business day, at
10 a.m. (local time where the authorised telex number of the intended
recipient is located) on the next business day.
11. WAIVER. No failure on the part of any party to exercise and no delay in
exercising any right or remedy hereunder shall operate as a waiver hereof; nor
shall any single or partial exercise or any right or remedy hereunder preclude
any other or further exercise thereof or the exercise of any other right or
remedy granted hereby or by any related document or at law or in equity.
12. ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit
of the parties an their respective successors and permitted assigns; provided,
however, that no party shall have the right to assign this Agreement in whole or
in part without the prior written consent of the other parties hereto, which
consent may be granted or withheld in the sole and absolute discretion of such
other parties.
13. SEVERABILITY. If any provision of this Agreement is not or ceases to be
legal, valid, binding and enforceable under the law of any Jurisdiction, neither
the legality, validity, binding effect or enforceability of the remaining
provisions under that law nor the legality, validity, binding effect or
enforceability of that provision under the law of any other jurisdiction shall
be affected.
14. COUNTERPARTS. This Agreement may be executed in one or more counterparts
each of which shall be binding on each party by whom or on whose behalf it is so
executed, but which together shall constitute a single instrument. for the
avoidance of doubt, this Agreement shall not be binding on any party hereto
unless and until it shall have been executed by or on behalf of all persons
expressed to be the parties hereto.
15. TIME OF THE ESSENCE. Time shall be of the essence of this Agreement, both
as regards the dates and periods specifically mentioned and as to any dates and
periods which may, by agreement in writing between or on behalf of the Vendors
and ISS, be substituted for them.
16. SERVICE AGREEMENT/CONSULTANCY AGREEMENT. The parties agrees that any
disputes or termination or other matters arising under the Xxxxxx Service
Agreement and/or the Grove Consultancy Agreement shall not affect ISS's
obligations (including but not limited to its obligation to pay the Total
Consideration) under this Agreement.
17. CONFIDENTIALITY. Subject to any applicable statutory or regulatory rules,
none of the parties hereto shall make any public announcement or divulge or
otherwise make public in any manner any information in relation to this
Agreement or the transactions or arrangements hereby
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contemplated or herein referred to (including without prejudice to the foregoing
generality the fact that this Agreement has been entered into between the
parties) or any matter ancillary hereto or thereto without the prior consent of
the other parties (which consent shall not be unreasonably withheld or delayed).
18. COSTS AND EXPENSES.
18.01 Each party shall pay its or his own costs and expenses in
relation to the negotiations leading up to the sale and purchase of the Sale
Shares and to the preparation and execution and performance of this Agreement.
18.02 The stamp duty shall be paid by the Vendors and ISS in equal
shares.
19. PROCESS AGENT.
19.01 BDL hereby appoints Xxxxx Xxxxxx of One Xxxxxxxx Place, 31st
Floor, Flat C, 70 Xxxxxxxx Road, Mid-Levels, Hong Kong (or such other person,
being resident or incorporated in Hong Kong, as it may by notice to all other
parties hereto substitute) to accept service of all legal process arising out of
or connected with this Agreement and service on Xxxxx Xxxxxx (or such
substitute) shall be deemed to be service on BDL.
19.02 The Grove Vendor hereby appoints Xxxxx Xxxxxx of One Xxxxxxxx
Place, 31st Floor, Flat C, 70 Xxxxxxxx Road, Mid-Levels, Hong Kong (or such
other person, being resident or incorporated in Hong Kong, as it may by notice
to all other parties hereto substitute) to accept service of all legal process
arising out of or connected with this Agreement and service on Xxxxx Xxxxxx (or
such substitute) shall be deemed to be service on the Grove Vendor.
19.03 ISS hereby appoints Xxxxxxx Management Services Limited of Hong
Kong (or such other person, being resident or incorporated in Hong Kong, as it
may by notice to all other parties hereto substitute) to accept service of all
legal process arising out of or connected with this Agreement and service on
Xxxxxxx Management Services Limited (or such substitute) shall be deemed to be
service on ISS.
20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the HKSAR and each party hereby irrevocably submits
to the non-exclusive jurisdiction of the courts of the HKSAR.
In witness whereof this Agreement has been duly entered into by the
parties the day and year first above written.
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EXECUTED by the parties
For and on behalf of For and on behalf of
IMAGE SENSING SYSTEMS, INC. GROVE PLACE LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
----------------------------- ----------------------------------
Xxxxxxx X. Xxxxxxx Xxxxxxx X. Xxxxx
Witnessed by: Witnessed by:
/s/ Xxxxxxx X. Xxxxxxxx /s/ Xxxxx Xxxxxx
--------------------------------- --------------------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx Xxxxxx
Title: Title:
For and on behalf of /s/ Xxxxx Xxxxxx
--------------------------------------
MR. MATS XXXXX XXXXXX
BERKELEY DEVELOPMENT LIMITED
Witnessed by:
By /s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
Witnessed by: Name: Xxxxxxx X. Xxxxx
Title:
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxx
Title:
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