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Exhibit 2.10
Dated the thirty day of June 2003
(Dai Peimin)
(Xxx Xxxxxxx)
and
HARTCOURT CAPITAL, INC.
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AGREEMENT FOR SALE AND PURCHASE OF
CERTAIN INTEREST IN THE REGISTRED CAPITAL OF
(SHANGHAI HUAQING CORPORATION DEVELOPMENT CO LTD)
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Solicitors
10th Floor, Xxxxxxxxx House
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Tel: (000) 0000 0000 Fax: (000) 0000 0000
Website: xxx.xxxxxxxxxxxx.xxx
Our ref: 47831-00002/KAL/VTSO
1
THIS AGREEMENT is dated the thirty of June, 2003.
BETWEEN:
(0) 000000000000000(pound)>>46106
(0) 000000000000000(pound)>>436
and are hereinafter collectively referred to as the "Vendors" and each
@ individually referred to as the "Vendor"); and
(3) HARTCOURT CAPITAL, INC., a company incorporated in the British Virgin
Islands with its registered office situate at Akara Bldg., 00 Xx
Xxxxxx Xxxxxx, Xxxxxxxx Xxx 0, Xxxx Xxxx, Xxxxxxx, Xxxxxxx Xxxxxx
Islands and its principal office situate at Suite 1310, China
VentureTech Plaza, 000 Xxx Xxxx Xx Xxxx, Xxxxxxxx Xxxxx (the
"Purchaser").
WHEREAS:
(A) (Shanghai HuaQing Corporation Development Co Ltd) (the "Company") is a
domestic joint venture company with limited liability incorporated in
the PRC and has as at the date hereof a registered capital of
RMB20,000,000. Brief particulars of the Company are set out in
Schedule 1.
(B) As at the date of this Agreement, the Vendors are respectively the
beneficial owners of certain interests in the registered capital of
the Company as set out in column 2 of Schedule 2.
(C) As at the date of this Agreement, the Purchaser is a wholly owned
subsidiary of Hartcourt Companies, Inc. (the "Holding Company"), the
shares of which are currently listed on the Over-the-Counter Bulletin
Board ("OTCBB") of the United States (OTCBB Symbol: HRCT).
(D) The Vendors have agreed to sell and the Purchaser has agreed to
purchase certain interests in the registered capital of the Company as
set out in column 3 of Schedule 2, the aggregate of which represents
6% of the registered capital of the Company (the "Sale Interests") in
accordance with the terms and conditions of this Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 In this Agreement (including the Recitals and Schedules), unless the
context otherwise requires, the following words and expressions shall
have the following meanings ascribed to each of them below:
"Agreement" this agreement for the sale and purchase of the
Sale Interest, as amended or supplemented from
time to time;
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"Board" the board of directors of the Company from time to
time;
"Business Day" a day (other than Saturdays and days on which a
tropic cyclone warning No. 8 or above or a
rainstorm warning signal is hoisted in Hong Kong
at any time between 9:00 a.m. and 5:00 p.m.) on
which banks in Hong Kong are generally open for
the transaction of normal banking
business;
"Company" has the meaning ascribed thereto in Recital (A);
"Companies the Companies Ordinance (Chapter 32 of the Laws of
Ordinance" Hong Kong);
"Completion Date" the date falling on the 5th Business Day
after the conditions set out in Clause 3.1 have
been fulfilled or waived by the Purchaser;
"Completion" completion of the sale and purchase of the Sale
Interests in accordance with the terms and
conditions of this Agreement;
"Consideration" the consideration payable by the Purchaser
pursuant to Clause 4.1 hereof;
"Consideration Shares" 1,340,455 ordinary shares with par value
of US$0.001 each in the capital of the Holding
Company to be allotted and issued in the name of
the Vendors or their nominees pursuant to Clause
4.1;
"Directors" directors of the Company from time to time and
"Director" shall be construed as any one of them;
"Encumbrance" any mortgage, charge, pledge, lien (otherwise than
arising by statute or operation of law), equities,
hypothecation or other encumbrance, priority or
security interest, deferred purchase, title
retention, leasing, sale-and-repurchase or
sale-and-leaseback arrangement whatsoever over or
in any property, assets or rights of whatsoever
nature and includes any agreement for any of the
same;
"Group" the Company and its subsidiaries and "member of
the Group" shall be construed as any one of them;
"Guaranteed
Net Profit" RMB4,500,000;
"Guaranteed
Turnover" RMB400,000,000;
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"HK$" Hong Kong dollars;
"Holding Company"
The Hartcourt Companies, Inc., a company
incorporated under the laws of the State of Utah,
United States and the registered and beneficial
owner of the entire issued share capital of the
Purchaser;
"Hong Kong" the Hong Kong Special Administrative Region of the
PRC;
"Listing Rules" the Rules Governing the Listing of Securities on
the Stock Exchange;
"Long Stop Date" 31 December 2003;
"Net Profit" in relation to the year ending on the date
on which the Restricted Trading Period ends, the
consolidated profits (less losses) of the Group as
shown by the Special Audited Accounts :
(a) after deducting all expenses of working and
management including, without limitation,
director's remuneration (whether by way of
fees, salary or commission) and
depreciation;
(b) without taking into account profits or
losses of a capital nature arising on
disposal of fixed assets, investments, plant
or any other assets of the Group; and
(c) after making such other adjustments as the
auditors of the Company consider
appropriate;
"PRC"
the People's Republic of China, which for the
purpose of this Agreement, excludes Hong Kong and
Macau;
"Purchaser's persons to be nominated by the Purchaser to
Nominees" acquire the Sale Interests in accordance with the
terms and conditions of this Agreement;
"Relevant Proportion" the respective portion of Sale
Interests owned by each of the Vendors expressed
as a percentage of the entire interest in the
registered capital of the Company as set out in
column 4 of the Schedule 2;
"RMB" Renminbi, the lawfully currency of PRC;
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"Restricted Trading Period" a period of twelve (12) months
from the date on which the Consideration Shares
being allotted and issued to the Vendors or their
nominees;
"Sale Interests" 6% of the entire interest in the
registered capital of the Company to be sold by
the Vendors to the Purchaser's Nominees;
"Special Audited Accounts" the audited consolidated profit
and loss accounts of the Group for the year ended
on the date on which the Restricted Trading Period
ends;
"Tax Indemnity" the deed of indemnity to be given by
each of the Vendors in favour of the Purchaser and
the Group in such form and substance as may be
satisfactory and acceptable to the Purchaser;
"Taxation" all forms of taxation whenever created or imposed
and whether in the PRC or elsewhere and without
limiting the generality of the foregoing, includes
all forms of profits tax, interest tax, salaries
tax, property tax, estate duty, stamp duty, sales
tax, any provisional tax, customs and import duty
and any amount equal to any deprivation of any
relief, allowance, set off, deduction in computing
profits or rights to repayment of taxation granted
by or pursuant to any legislation concerning or
otherwise relating to taxation and also includes
in addition and without prejudice to the
foregoing, all fines, penalties, costs, charges,
expenses and interests relating thereto;
"US" the United States of America;
"US$" United States Dollars, being the lawful currency
of the United States of America;
"Vendors' Xx. Xx Xxxxxx
Solicitors" Shanghai Z&C Law Office
D/00X, 0 Xxxxx Xxxx 000,
Xxxxx Xxxx Xxxx, Xxxxxxxx
Tel:00000000,58358822-12
Fax:00000000
Mobile:00000000000
"Warranties" the representations and warranties set out in
Schedule 3.
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1.2 The headings of this Agreement are inserted for convenience only and
shall be ignored in construing this Agreement. Unless the context
otherwise requires, references in this Agreement to the singular
shall be deemed to include references to the plural and vice versa;
references to one gender shall include all genders and references to
any person shall include an individual, firm, body corporate or
unincorporated.
1.3 References in this Agreement to clauses, schedules and exhibits are
references to clauses, schedules and exhibits of this Agreement and
references to sub-clauses and paragraphs are unless otherwise stated,
references to sub-clauses and paragraphs of the clause, sub-clause
or, as appropriate, the schedule or the exhibit in which the
reference appears.
1.4 Reference to a "subsidiary" or "holding company" shall be construed
in accordance with section 2 of the Companies Ordinance.
1.5 Reference to any Ordinance, regulation or other statutory provision
or rules in this Agreement includes reference to such Ordinance,
regulation, provision or rule as modified, consolidated or re-enacted
from time to time.
2. SALE AND PURCHASE OF THE SALE INTERESTS
2.1 Subject to the terms and conditions of this Agreement, each of the
Vendors, as beneficial owners of the respective portion of Sale
Interests as set out in Schedule 2, shall sell and the Purchaser
shall, relying on the warranties and indemnities herein contained,
purchase or procure its nominee to purchase the Sale Interests, with
full title guarantee with effect from the date of this Agreement free
from all Encumbrances together with all rights now or hereafter
attaching thereto including but not limited to all dividends paid,
declared and/or made in respect thereof on or after the date of this
Agreement.
2.2 The parties acknowledge and agree that the Vendors will enter into a
share transfer agreement with the Purchaser's Nominees as referred to
in Clause 3.1(b), pursuant to which the Purchaser's Nominees will be
registered as the beneficiary owner of the Sale Interests in
accordance with the instructions of the Purchaser. That share
transfer agreement is the appendix to this agreement.
2.3 The Purchaser and/or the Purchaser's Nominees shall not be obliged to
purchase any portion of the Sale Interests unless the purchase of all
the Sale Interests is completed simultaneously.
3. CONDITIONS
3.1 Completion is conditional upon:
(a) the Purchaser having completed its due diligence (including
without limitation, legal, financial and commercial
6
aspects) in respect of the Group referred to in Clause 3.3
below and the results of which are, in the absolute opinion
of the Purchaser, satisfactory and acceptable to the
Purchaser in all respects;
(b) the due execution of a share transfer agreement by the
Vendors and the Purchaser's Nominees;
(c) if so required, passing of necessary resolutions by
directors of the Purchaser at a board meeting approving (i)
this Agreement and the transactions contemplated herein and
(ii) the allotment and issue of the Consideration Shares to
the Vendors credited as fully paid;
(d) all necessary consents permits and approval (whether
governmental, regulatory or otherwise) as may be required
under US securities laws or other relevant laws,
regulations and rules in US in respect of this Agreement,
the allotment and issue of the Consideration Shares and the
transactions contemplated hereunder having been obtained by
the Purchaser;
(e) all necessary consents permits and approval (whether
governmental, regulatory or otherwise) as may be required
in respect of the sale and purchase of the Sale Interests
and/or the change of control of the Company having been
obtained from the relevant PRC governmental authorities,
including but not limited to the new business license for
the Company;
(f) the Purchaser having obtained a legal opinion issued by a
lawyer (acceptable to the Purchaser) qualified to practice
PRC securities laws (which form and contents are
satisfactory and acceptable to the Purchaser at its
absolute discretion) in respect of:
(i) the legality and validity of this Agreement and the
transactions contemplated herein;
(ii) the completion of all necessary procedures and
obtaining of all necessary approvals regarding the
sale and purchase of the Sale Interests;
(iii) the appointment of Director(s) nominated by the
Purchaser become effective;
(iv) no change in the permitted scope business of the
Company after the transfer of the Sale Interests;
(v) all other matters reasonably requested by the
Purchaser;
(g) the Purchaser having obtained a legal opinion issued by a
US legal counsel (which form and contents are satisfactory
and acceptable to the Purchaser at its absolute discretion)
in respect of:
(i) the legality and validity of this Agreement,
allotment and issue of the Consideration Shares and
the transactions contemplated herein;
(ii) the completion of all necessary procedures and
obtaining of all necessary approvals regarding the
acquisition of the Sale Interests; and
(iii) all other matters reasonably requested by the
Purchaser;
(h) the Purchaser having obtained a consent letter duly signed
by all shareholders and person who has any direct or
indirect interest in the registered capital of the Company
waiving their respective rights of pre-emption or any other
rights they may have in respect of the Sale Interests;
(i) the due execution of a share transfer and pledge agreement
by the Purchaser's Nominees and the Purchaser;
(j) the Warranties and undertakings under this Agreement are
true and accurate and are not misleading in any material
aspects at Completion as if repeated at Completion and at
all time between the date of this Agreement and the
Completion.
3.2 The Vendors shall jointly and severally procure the fulfillment of
the condition precedents mentioned in Clauses 3.1(e) above and shall
keep the Purchaser fully informed of all their actions and efforts in
connection with their obtaining the necessary consents, permits and
approvals from the relevant regulatory authorities, including without
limitation, providing the Purchaser immediately with all of their
correspondence with these relevant regulatory authorities.
3.3 In relation to Clause 3.1(a), the Vendors shall give and shall
procure that the Purchaser and/or any persons authorized by it in
writing will be given such access to the premises and all books,
documents, title deeds, records, returns, approvals, correspondence
and accounts of the Company and all members of the Group and all such
information relating to the Group as may be reasonably requested by
or on behalf of the Purchaser to undertake and conduct a full due
diligence (including but without limitation, in all legal, financial
and commercial aspects) against the Group and be permitted to take
copies of any such books, documents, title deeds, records and
accounts and that the directors and employees of all members of the
Group shall be instructed to give promptly all such information and
explanations to any such persons as aforesaid as may be requested by
it or them. For the avoidance of doubt, such due diligence shall not
limit or otherwise qualify in any way the obligations and liabilities
of the Vendors under Clause 10.
3.4 The Purchaser may at any time by notice in writing to the Vendors
waive any of the conditions set out in Clause 3.1. If (a) any of the
conditions set out in Clause 3.1 has not been satisfied (or as the
case may be, waived by the Purchaser) on or before 5:00 p.m. on the
Long Stop Date or such later date as the Purchaser may agree; or (b)
the Purchaser is not satisfied with the results of the due diligence
conducted according to Clause 3.3 and informs the Vendors in writing
at any time, this Agreement shall cease and determine and the parties
to this Agreement shall not have any obligations and liabilities.
4. CONSIDERATION
4.1 The consideration for the sale and purchase of the Sale Interests
shall be the sum of USD
0.858 million USD=(pound)*8.25(pound)(C), which shall be
satisfied by the Purchaser procuring the Holding Company to allot,
issue and credit the Consideration Shares to the Vendors in the
Relevant Proportion as fully paid at an issue price of US$0.64 per
share upon Completion.
4.2 The Vendors shall notify the Purchaser in writing at least two (2)
Business Days before the Completion Date of the name(s) and other
particulars of the registered holder(s) of the Consideration Shares
and the board lot denomination of the share certificate(s) in respect
of the Consideration Shares to be issued to them or their nominee(s)
and all necessary information and details as is reasonably required to
enable the share registrars of the Holding Company to issue the
definitive share certificates for such Consideration Shares upon
Completion.
4.3 The Vendors understand that the Consideration Shares will not be
registered under the Securities Act. The Vendors also understand that
the Consideration Shares are being allotted and issued pursuant to an
exemption from registration contained in the Securities Act based in
part upon the Vendors' representations contained in this Agreement.
The Vendors hereby represent and warrant as follow:
(a) Vendors bear economic risk: the Vendors have substantial
experience in evaluating and investing in private placement
transactions of securities in companies similar to the
Purchaser so that it is capable of evaluating the merits
and risks of its investments in the Purchaser and have the
capacity to protect its own interests. The Vendors are able
to bear the economic risk of this investment;
(b) Acquisition for own account: the Vendors are acquiring the
Consideration Shares for their respective own account for
investment only, and not with a view towards their
distribution;
(c) Vendors can protect their interest: the Vendors represent
that by reason of their management, business or financial
experience, the Vendors have the capacity to protect their
own interests in connection with the transactions
contemplated in this Agreement. Further, the Vendors are
aware of no publication of any advertisement in connection
with the transactions contemplated in this Agreement;
(d) Company information: the Vendors have had an opportunity to
discuss the Purchaser's business, management and financial
affairs with directors, officers and management of the
Purchaser and have had the opportunity to review the
Purchaser's operations and facilities. The Vendors have
also had the opportunity to ask questions of and receive
answers from the Purchaser and its management regarding the
terms and conditions of this investment; Purchaser will
provide balance sheet and income statement to Vendors.
(e) Rule 144: The Vendors have been advised or are aware of the
provisions of Rule 144 promulgated under the Securities
Act, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain
conditions;
(f) Legends: The Vendors understand and agree that the
Purchaser will cause the legends set forth below or legends
substantially equivalent thereto, to be placed upon any
certificate(s) evidencing ownership of the Consideration
Shares, together with any other legends that may be
required by state or federal securities laws, or by the
Articles of Association and Bye laws of the Company, or by
any other agreement between the Vendors and the Purchaser
or between the Vendors and any third party:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY
AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT
AND ANY APPLICABLE STATE SECURITIES LAWS.
(g) Refusal to Transfer: The Purchaser will not be required to
(i) transfer on its books any Consideration Shares that
have been sold or otherwise transferred in violation of any
of the provisions of this Agreement; or (ii) treat as owner
of such Consideration Shares or to accord the right to vote
or pay dividends to any purchaser or other transferee to
whom such Consideration Shares have been so transferred.
4.4 The Purchaser agrees that upon expiry of the Restricted Trading
Period and upon presentation of the Consideration Shares to
Purchaser, Purchaser will attend to all necessary formalities and
registration procedures as may be required under the Securities Act
and the applicable State securities law to enable the Consideration
Shares becoming freely transferable and resalable.
5. COMPLETION
5.1 Completion shall take place at the PRC office of the Vendors situated
at 000-000, Xxx Xxxxx Xxxxxxxx, Xx.0, Xxxx 000, Xxxxx Xxxx Xx,
Xxxxxxxx, Xxxxx on the Completion Date at 2p.m. (or at such other
place and time as the parties may agree) when all the acts and
requirements set out in this Clause 5 shall be complied with.
5.2 On Completion, each of the Vendors shall jointly and/or severally (as
the case may be) deliver or procure the delivery to the Purchaser of
all the following:
(a) copies, certified as true and complete by a director/ legal
representative of the Company and its relevant
subsidiaries, of resolutions of the shareholders /board of
directors meeting approving the matters as stipulated in
Clauses 5.3, 5.4(c) and 5.4(d);
(b) in respect of every member of the Group:
(i) all constitutional documents, statutory records and
minute books (which shall be written up to date as
at Completion);
(ii) all common seals and all rubber stamps, cheque
books, cheque stubs and bank statements, receipt
books, all current insurance policies (if any),
books and accounts and title deeds and evidence of
ownerships to all assets and all current contracts
and all other accounting records;
(iii) copies of all tax returns and assessments (receipted
where the due dates for payment fell on or before
the Completion Date); and
(iv) all other papers, correspondence and documents
relating to the Group which are in the possession of
or under the control of any of the Vendor;
provided that, if the Purchaser so agrees, delivery of all
documents and records as referred to in this Clause 5.2(b)
shall be deemed to have been effected where they are
situated in premises and shall continue to be in the sole
occupation of the relevant member of the Group following
Completion or otherwise in the custody of persons who shall
remain officers and/or employees of such member of the
Group following Completion;
(c) the Tax Indemnity duly executed by each of the Vendors.
5.3 On Completion, the Vendors shall procure a meeting of the
shareholders of the Company at which such matters shall be dealt with
and resolved upon as the Purchaser shall require for the purposes of
giving effect to the provisions of this Agreement including:
(a) approving the sale and purchase of the Sale Interests;
(b) appointing nominee(s) of the Purchaser to be Director(s)
and of the Company;
(c) amending the memorandum and articles of association of the
Company as may be required by the Purchaser to effect the
transactions contemplated hereunder; and
(d) procure the resignation of such existing Director(s) of the
Company as the Purchaser shall specify and that each person
shall confirm under seal that they have no claim against
the Company for compensation for loss of office or any
other claim.
5.4 On Completion, each of the Vendors shall jointly procure that:
(a) all registration procedures as may be required under the
PRC law in respect of the transfer of the Sale Interests by
the Vendors to the Purchaser's Nominees shall be completed
within reasonable time;
(b) a new articles of association of the Company shall be
signed by the Purchaser's Nominees and filed with the
relevant local Administration of Industry and Commerce
which shall state that the Purchaser's Nominees hold 6%
interest in the registered capital of the Company;
(c) a board meeting of each subsidiary of the Company shall be
held at which such matters shall be dealt with and resolved
upon as the Purchaser shall require for the purposes of
giving effect to the provisions of this Agreement,
including appointing such persons as the board of directors
may determine to be new director(s); and
(d) such existing directors, supervisor(s) and the secretary of
each subsidiary of the Company as the Purchaser shall
specify shall resign as directors, supervisor(s) and the
secretary of such relevant subsidiary of the Company and
that each such person shall confirm under seal that they
have no claim against the relevant subsidiary for
compensation for loss of office or any other claim
whatsoever.
5.5 Against performance of the obligations by the Vendors under Clauses
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5.2, 5.3 and 5.4 above, the Purchaser shall:
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(a) procure the allotment and issue to each of the Vendors (or
their respective nominees) the Consideration Shares in the
Relevant Proportion and immediately thereafter to register
each of the Vendors (or their respective nominees) as a
member of the Purchaser;
(b) cause to be delivered to each of the Vendors certified copy
of instructions to the share registrar of the Holding
Company for the issue of definitive share certificates of
title in respect of the Consideration Shares in the
Relevant Proportion in the respective names of the Vendors
or their respective nominee(s); and
(c) deliver to each of the Vendors a certified copy of the
directors' resolutions of the Purchaser approving:
(i) the acquisition of the Sale Interests and the terms
and conditions of this Agreement; and
(ii) the issue and allotment of the Consideration Shares.
5.6 If the Vendors shall fail to do anything required to be done by them
under Clauses 5.2, 5.3 and 5.4, without prejudice to
--------------------------------
any other right or remedy available to the Purchaser, the Purchaser
may:
(a) defer Completion to a day not later than 14 days after the
date fixed for Completion (and so that the provisions of
this paragraph (a) shall apply to Completion as so
deferred); or
(b) proceed to Completion so far as practicable but without
prejudice to the Purchaser's rights to the extent that the
Vendors shall not have complied with their obligations
hereunder; or
(c) rescind this Agreement without liability on its part.
5.7 Clauses 6 to Clause 17 shall survive the Completion.
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6. MANAGEMENT OF THE COMPANY
6.1 Upon Completion, the business and operations of the Group shall be
managed by the Board.
6.2 The chairman of the Board and the legal representative of the Company
shall be nominated and appointed by the Board. The chairman of the
Board and the legal representative of the Company shall initially be
Xx Xxxxxxxxxx.
6.3 The Board shall comprise of five Directors. The Purchaser's Nominees
shall be entitled to nominate and appoint three Directors at any time
by written notice addressed to the Company.
6.4 The quorum for meetings of the Board shall be three, of whom two
shall be a Director nominated by the Purchaser's Nominees.
6.5 Unless otherwise unanimously agreed by all Directors, meetings of the
Board shall be held at least once in each quarter.
6.6 At least 7 days' written notice of each meeting of the Board shall be
given to each Director and alternate director specifying the date,
time and place of the meeting and the business to be transacted
thereat with all documents and papers to be distributed in such
meeting attached, provided that if Directors and their nominated
alternates who would constitute a quorum at any meeting agree to a
shorter period of notice, then such meeting shall be deemed to be
properly called.
6.7 The financial controller and/or the chief financial officer of the
Company shall be nominated and appointed by the Purchaser's Nominees.
6.8 Save with the consent of the Purchaser, the Vendors shall not sell or
otherwise dispose of any of their remaining interests in the Company.
6.8 So far as the Vendors remain as shareholders of the Company, each of
the Vendors undertakes that he/she/it shall procure and take all
actions to ensure that all obligations under Clauses 6.8 be duly
executed, done and/or performed.
7. DISPOSAL OF CONSIDERATION SHARES
Each of the Vendors agrees and acknowledges that the Consideration
Shares are subject to the United States Securities and Exchange
Commission ("SEC") Rule 144 and in particular, hereby jointly and
severally undertakes to and covenants with the Purchaser and the
Holding Company that it will not, during the Restricted Trading
Period, dispose of (including without limitation by the creation of
any option, charge or other Encumbrance or rights over or in respect
of) any of the Consideration Shares or any interests therein owned by
it/him/her or in which it/he/she is, directly or indirectly,
interested immediately after Completion or dispose of (including
without limitation by the creation of any option, charge or other
encumbrance or rights over or in respect of) any shares in any
company controlled by it/he/she which is the beneficial owner of the
Consideration Shares.
8. REPURCHASE OPTION
8.1 If, according to the Special Audited Accounts, the Company either:
(a) fails to attain a Net Profit exceeding the Guaranteed Net
Profit or fails to achieve the Guaranteed Turnover during
the Restricted Trading Period; or
(b) making loss in any single quarter in the Restricted Trading
Period,
then the Purchaser may at its sole and absolute discretion, within
three (3) months from the issue of the Special Audited Accounts, by
notice in writing ("Purchaser's Repurchase Notice") to the Vendors,
request the Vendors to repurchase the Sale Interests and the Vendors
shall transfer to the Purchaser or its nominee all of the
Consideration Shares which have been issued pursuant to Clause 4.1
and Clause 8.3 free from Encumbrances in consideration of all
beneficial and equitable interest in the registered capital of the
Company then held by the Purchaser and/or the Purchaser's Nominees
being transferred to the Vendors.
8.2 If, upon expiry of the Restricted Trading Period, the return accrued
or derived from the Consideration Shares is less than the return
accrued or derived from the Sale Interests, then the Vendors may at
its sole and absolute discretion, within three (3) months from the
issue of the Special Audited Accounts, by notice in writing
("Vendors' Repurchase Notice") to the Purchaser, request the
Purchaser to repurchase the Consideration Shares and transfer to the
Vendors all beneficial and equitable interest in the registered
capital of the Company then held by the Purchaser and/or the
Purchaser's Nominees in consideration of all of the Consideration
Shares which have been issued pursuant to Clause 4.1 and Clause 8.3
free from Encumbrances being transferred to the Purchaser.
8.3 The Vendors shall, within 7 days from the date of the Purchaser's
Repurchase Notice or the Vendors' Repurchase Notice (as the case may
be), deliver to or cause to be delivered to the Purchaser the
following in respect of the relevant Consideration Shares:
(a) duly executed transfer instruments and contract notes in
favour of the Purchaser or its nominees together with the
relevant share certificates; and
(b) such other documents as may be reasonably required to give
good title to the Consideration Shares free from
Encumbrances to enable the Purchaser or its nominees (or as
it may nominate) to become the registered holder thereof,
against which the Purchaser shall transfer and assign or procure the
transfer and assign to the Vendors of all equitable and beneficial
interest and all shareholding in the Company then held by it and/or
the Purchaser's Nominees.
8.4 For the purposes of this Clause 9, return accrued or derived from the
Consideration Shares or the Sale Interests respectively shall be
calculated by reference to:
(a) the multiple of the average closing price of the
Consideration Shares for the last thirty (30) trading days
including the date on which the Restricted Trading Period
ends and the number of the Consideration Shares; and
(b) 6% of the net assets value of the Company as at the date on
which the Restricted Trading Period ends according to the
Special Audited Accounts.
9. WARRANTIES
9.1 Each of the Vendors hereby jointly and severally represents and
warrants to the Purchaser that the Warranties are true and accurate
in all respects as at the date of this Agreement and will continue to
be so up to and including Completion and agree to use their best
endeavours (including taking such remedial action as may be
necessary) to ensure that the Warranties have remained and will
remain true and accurate in all respects from date of signing of this
Agreement up to the time of Completion and acknowledges that the
Purchaser, in entering into this Agreement, is relying on, inter
alia, such Warranties. For the avoidance of doubt, the liabilities
and obligations of each of the Vendors under the Warranties shall in
no circumstances be lessened, modified, relieved or otherwise reduced
due to any actual or constructive knowledge of the Purchaser of any
facts or events relating to the business, operations or otherwise of
the Group, whether such knowledge is gained in the course of the due
diligence conducted under Clause 3.3 or otherwise.
9.2 Each of the Vendors agrees that the Purchaser shall treat each of the
Warranties as a condition of this Agreement. In addition, each of the
Warranties is without prejudice to any other Warranty and, except
where expressly otherwise stated, no provision in any Warranty shall
govern or limit the extent or application of any other provision in
any Warranty.
9.3 Each of the Vendors agrees to fully indemnify and keep the Purchaser
and its assignee fully indemnified on demand from and against all
losses, liabilities, damages, costs and expenses (including legal
expenses) which the Purchaser and its assignee may incur or sustain
from or in consequence of any of the Warranties not being correct or
fully complied with. This indemnity shall be without prejudice to any
other rights and remedies of the Purchaser and its assignee in
relation to any such breach of Warranties and all such rights and
remedies are hereby reserved.
9.4 The Warranties shall survive Completion and the rights and remedies
of the Purchaser in respect of any breach of the Warranties shall not
be affected by Completion or by any investigation made by or on
behalf of the Purchaser into the affairs of the Group or by the
Purchaser rescinding, or failing to rescind this Agreement, or
failing to exercise or delaying the exercise of any right or remedy,
or by any other event or matter whatsoever, except a specific and
duly authorised written waiver or release and no single or partial
exercise of any right or remedy shall preclude any further or other
exercise.
9.5 The Purchaser shall be entitled to take action both before and after
Completion in respect of any breach or non-fulfillment of any of the
Warranties and Completion shall not in any way constitute a waiver of
any right of the Purchaser.
9.6 Each of the Vendors undertakes in relation to any Warranty which
refers to the knowledge, information or belief of each of the Vendors
that it has made full enquiry into the subject matter of that
Warranty and that they do not have actual or constructive knowledge,
information or belief that the subject matter of that Warranty may
not be correct, complete or accurate.
9.7 If at any time before Completion the Vendors or any of them come to
know of any fact or event which:
(a) is in any way inconsistent with any of the undertakings
given by the Vendors, and/or
(b) suggests that any fact warranted may not be as warranted or
may be misleading; and/or
(c) might affect the willingness of a prudent purchaser for
value of the Sale Interests to complete its purchase or the
amount of the consideration which such purchaser would be
prepared to pay for the Sale Interests;
the Vendors shall give immediate written notice thereof to the
Purchaser in which event the Purchaser may within 14 days of
receiving such notice rescind this Agreement by written notice to
each of the Vendors.
9.8 If at any time before Completion, the Purchaser finds that any of the
Warranties is incorrect or has not been or is (in the reasonable
opinion of the Purchaser) incapable of being rectified the Purchaser
may rescind this Agreement by written notice to each of the Vendors.
9.9 The Purchaser's rights under the above clauses are in addition to and
without prejudice to all other rights and remedies available to it
and its exercise of or its failure to exercise its rights under any
of the above clauses shall not constitute a waiver of or prejudice
any of its other rights under this Agreement.
10. VENDORS' UNDERTAKINGS
10.1 Each of the Vendors jointly and severally undertakes that the Vendors
will not directly or indirectly either alone or jointly with or as
manager or agent of any person and whether or not for gain, carry on,
engage or in any way be interested in any business that is similar to
and/or in competition with the business of the Company and/or any of
its subsidiaries for a period of three (3) years commencing from the
date on which the Restricted Trading Period ends.
10.2 The Vendors covenant and undertake that prior to Completion and
without the prior written consent of the Purchaser, the Vendors shall
procure that the Company and each member of the Group shall not:
a. incur any expenditure on capital account or enter into any
option in respect of any part of its assets;
b. dispose of or agree to dispose of or grant any option in
respect of any part of its assets;
c. borrow any money or make any payments out of or drawings on
its bank account(s) other than routine payments;
d. enter into any unusual or abnormal contract or commitment;
e. make any loan;
f. enter into any leasing, hire, purchase or other agreement
or arrangements for payment on deferred terms;
g. declare, make or pay any dividend or other distribution or
do or suffer anything which may render its financial
position less favourable than as at the date of this
Agreement;
x. xxxxx or issue or agree to grant or issue any mortgages,
charges, debentures or other securities or give or agree to
give any guarantees or indemnities;
i. make any change in the terms and conditions of employment
or pension benefits of any of its directors or employees or
employ or terminate (other than for good cause) the
employment of any person;
j. create, issue or grant any option in respect of any class
of share or loan capital or agree so to do;
k. in any other way depart from the ordinary course of its
respective day-to-day business either as regards the nature
scope or manner of conducting the same;
l. voluntarily contravene or fail to comply with any material
obligation, statutory or otherwise; and
m. do anything whereby its financial position will be rendered
less favourable than at the date hereof.
10.3 Each of the Vendors agrees to fully indemnify and keep each member of
the Group and/or the Purchaser and its assignee fully indemnified on
demand from and against all losses, liabilities, damages, costs and
expenses (including legal expenses) which any member of the Group
and/or the Purchaser and its assignee may incur or sustain from or in
consequence of any liabilities of the Group, whether actual or
contingent including without limitation, the diminution of the value
(including without limitation, the net assets value or expected
profits) of the Group, arising from any act or omission or otherwise
incurred on or before the Completion Date.
11. ACCESS TO INFORMATION
Each of the Vendors shall assist the Purchaser, its agents,
representatives and professional advisers in obtaining promptly on
request full access to all such facilities and information regarding
the business, assets, liabilities, contracts and affairs of the Group
and other evidence of ownership of the assets owned by the Group as
the Purchaser may require.
12. FURTHER ASSURANCE
Each of the Vendors shall execute, do and perform or procure to be
executed, done and performed by other necessary persons all such
further acts, agreements, assignments, assurances, deeds and
documents as the Purchaser may require effectively to vest the
registered and beneficial ownership of the Sale Interests in the
Purchaser free from all Encumbrances and with all rights now and
hereafter attaching thereto.
13. CONFIDENTIALITY AND ANNOUNCEMENTS
13.1 Each of the parties undertakes to the others that it will not, at any
time after the date of this Agreement, divulge or communicate to any
person other than to its professional advisers, or when required by
law or any rule of any relevant stock exchange body or regulatory
authorities, or to its respective officers or employees whose
province is to know the same any confidential information concerning
the business, accounts, finance or contractual arrangements or other
dealings, transactions or affairs of any of the others which may be
within or may come to its knowledge and it shall use its best
endeavours to prevent the publication or disclosure of any such
confidential information concerning such matters.
13.2 No public announcement or communication of any kind shall be made in
respect of the subject matter of this Agreement unless specifically
agreed between the parties or unless an announcement is required
pursuant to the applicable laws and the regulations or the
requirements of any relevant stock exchange or any other regulatory
body or authority. Any announcement by any party required to be made
pursuant to any relevant laws or regulation or the requirements of
the relevant stock exchange or any other regulatory body or authority
shall be issued only after such prior consultation with the other
party as is reasonably practicable in the circumstances.
14. GENERAL
14.1 This Agreement constitutes the entire agreement between the parties
hereto with respect to the matters dealt with herein and supersedes
all previous agreements, arrangements, statements, understandings or
transactions between the parties hereto in relation to the matters
hereof and the parties acknowledge that no claim shall arise in
respect of any agreement so superseded.
14.2 Any variation to this Agreement shall be binding only if recorded in
a document signed by all the parties hereto.
14.3 Time shall be of the essence of this Agreement but no failure by any
party to exercise, and no delay on its part in exercising any right
hereunder will operate as a waiver thereof, nor shall any single or
partial exercise of any right under this Agreement (including a
settlement with the Vendor) preclude any other or further exercise of
it or the exercise of any right or prejudice or affect any right
against any person under the same liability whether joint, several or
otherwise. The rights and remedies provided in this Agreement are
cumulative and not exclusive of any rights or remedies provided by
law.
14.4 The obligations, liabilities (including without limitation, breach of
Warranties) and undertakings of the Vendors shall be joint and
several.
14.5 This Agreement shall be binding upon and ensure for the benefit of
the successors of the parties but shall not be assignable.
14.6 All provisions of this Agreement, in so far as the same shall not
have been performed at Completion, shall remain in full force and
effect notwithstanding Completion.
14.7 If any provision of this Agreement shall be held to be illegal or
unenforceable, the enforceability of the remainder of this Agreement
shall not be affected.
14.8 Time shall be of the essence as regards any date or period mentioned
in this Agreement and any date or period substituted for the same by
agreement of the parties hereto or otherwise.
15. NOTICES
15.1 Any notice, claim, demand, court process, document or other
communication to be given under this Agreement (collectively
"communication" in this Clause 15) shall be in writing in the English
language and may be served or given personally or sent to the address
or facsimile numbers (if any) stated after the relevant party's name
in Schedule 4 or to such other address as may have been last notified
in writing by such party to the party serving the communication
specifically referring to this Agreement. All communications shall be
served by the following means and the addressee of a communication
shall be deemed to have received the same within the time stated
adjacent to the relevant means of dispatch:
Means of dispatch Time of deemed receipt
----------------- ----------------------
Local mail or courier 24 hours
Facsimile on receipt of a satisfactory report of
transmission printed out by the sending
machine
Air courier/Speedpost 3 days
Airmail 5 days
Provided that in the case of delivery by hand or by fax which occurs
after 6:00 p.m. on a Business Day or a day which is not a Business
Day, service thereof shall be deemed to occur at 9:30 a.m. on the
next following Business Day.
15.2 A communication served in accordance with Clause 15.1 shall be deemed
sufficiently served and in proving service and/or receipt of a
communication it shall be sufficient to prove that such communication
was left at the addressee's address or that the envelope containing
such communication was properly addressed and posted or dispatched to
the addressee's address or that the communication was properly
transmitted by facsimile to the addressee.
15.3 Nothing in this Clause 15 shall preclude the service of communication
---------
or the proof of such service by any mode permitted by law.
16. COSTS AND STAMP DUTY
16.1 Each party shall bear its own costs and expenses (including legal
fees) incurred in connection with the preparation, negotiation,
execution and performance of this Agreement and all documents
incidental or relating to Completion.
16.2 All stamp duty (if any) payable in connection with the sale and
purchase of the Sale Interests shall be borne by the Vendors and the
Purchaser in equal shares.
17. GOVERNING LAW AND JURISDICTION
17.1 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong.
17.2 Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach termination or invalidity thereof, shall be
settled by arbitration in accordance with the UNCITRAL Arbitration
Rules as at present in force and as may be amended by the rest of
this clause. The appointing authority shall be Hong Kong
International Arbitration Centre.
17.3 The place of arbitration shall be in Hong Kong and at Hong Kong
International Arbitration Centre (HKIAC). There shall be only [one]
arbitrator. Any such arbitration shall be administered by HKIAC in
accordance with HKIAC Procedures for Arbitration in force at the date
of this Agreement including such additions to the UNCITRAL
Arbitration Rules as are therein contained.
17.4 The language to be used in the arbitral proceedings shall be English.
17.5 Each of the Vendors hereby irrevocably appoints Mr.Xxxxxx Xxx of Flat
H, 27th Floor, Tang Kung Mansion, 00 Xxxxxx Xxxxx Xxxx, Xxxx Xxxx and
Purchaser hereby irrevocably appoints Xxx Xxxxxxx of 10th floor
Xxxxxxxxx House, 00 Xxxxxxxxx xxxx, Xxxxxxx Xxxxxxxx (TEL: (852)
00000000, FAX: (000)00000000) as its process agent to receive on its
behalf service of any writ, summons, order, judgment or other notice
of legal process in Hong Kong. Such service shall be deemed completed
on delivery to such process agent (whether or not it is forwarded to
and received by both parties). If for any reason such process agent
ceases to be able to act as process agent, or no longer has an
address in Hong Kong, any party irrevocably agrees to appoint a
substitute process agent with an address in Hong Kong and to deliver
to the other party a copy of the new process agent's acceptance of
that appointment within 30 days. Nothing herein contained shall
affect the right to serve process in any other manner permitted by
law.
18. LEGAL REPRESENTATION
Each party confirms and acknowledges to the other that he/she/it has
sought separate legal representation and is fully aware of the
provisions of this Agreement and the transactions contemplated herein
before entering into this Agreement.
19. COUNTERPARTS
This Agreement may be executed in one or more counter parts each of
which shall be binding on each party by whom or on whose behalf it is
so executed, but which together shall substitute 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 a party hereto.
20 FURTHER UNDERTAKING OF THE VENDORS
20.1 (HuaQing Economics Development Company Limited) is a domestic joint
venture company established in the PRC and is beneficially owned as
to 50% by (HuaQing Economics Development Company), 16.67% by (HuaChen
Computer Company Limited)] and the remaining 33.33% by.Each of the
Vendors is a beneficial owner of certain interests in the registered
capital of(HuaQing Economics Development Company).
20.2 The Vendors hereby jointly and severally undertake to procure that:
(a) a new domestic joint venture company ("New JV Company")
with a registered share capital of not less than RMB 6
million will be established within three 3 months after the
date of this Agreement and the Purchaser's Nominees will
become the beneficial owner of 45% interest in the
registered capital of the New JV Company and the remaining
55% interest in the registered capital of the New JV
Company will be owned by the existing shareholders of the
Company; for the avoidance of doubt, the Vendors will, at
their costs and expenses, be responsible for all the
contribution to the registered capital of the New JV
Company and the Purchaser's Nominees will not be required
to make any contribution or be responsible for any other
expenses;
(b) [all tangible and intangible assets and business currently
owned by (HuaQing Economics Development Company Limited)
will be transferred to the New JV Company and all existing
shareholders (and each of their respective ultimate
beneficial owners) of (HuaQing Economics Development
Company Limited) will consent to such transfer and attend
to all necessary formalities and procedures to effect such
transfer;]
(c) the registered capital of the New JV Company will be fully
paid-up and that the New JV Company shall have incurred no
debt or liabilities without the written consent of the
Purchaser; and
(d) all necessary formalities and registration procedures for
the formation of the New JV Company as may be required
under the PRC law will be duly complied with and all
necessary documentation in relation thereto will be
executed and performed by the relevant parties to the
satisfaction of the Purchaser.
20.3 The Purchaser agrees that, within five (5) Business Days after the
fulfillment of the undertakings as set out Clause 20.2 to its
satisfaction, it will procure the Holding Company to allot and issue
1,833,992 ordinary shares in the share capital of the Holding Company
to the Vendors or their nominees in addition to the Consideration
Shares.
20.4 For the avoidance of doubt, this Clause 20 shall survive the
Completion.
SCHEDULE 1
----------
Particulars of the Company
--------------------------
Shanghai HuaQing Corporation Development Co Ltd
1. Date of incorporation : 10 July 2000
2. Place of incorporation : PRC
3. Registration No. : 3101062011473
4. Registered capital :
RMB20,000,000
5. Registered Address :
5. Nature : domestic
joint venture company
with limited
liability
6. Legal Representative :
7. Directors :
8. Financial year end : 31 December
9. Auditors :
10. Scope of Business :
Computer hardware,
software, components
and services;
electronic products,
biotech and health
products; foods.
SCHEDULE 2
----------
The Vendors
-----------
Shanghai HuaQing Corporation Development Co Ltd
Name Amount of registered capital Percentage of Sale
paid up by each of the Interests to the entire
Vendors(RMB) issued share capital of the
) Group
600,000 3%
600,000 3%
Total(pound)(0) 1,200,000 6%
SCHEDULE 3
----------
Warranties
----------
1. INTERPRETATION
(A) In this schedule where the context admits:
"Accounts" means the consolidated balance sheet of the Group made up
as at the Balance Sheet Date and the consolidated profit and loss
accounts of the Company and its subsidiaries for the year ended on
the Balance Sheet Date, true copies of which are attached hereto
marked "Appendix";
"Balance Sheet Date" means 31 December 2002;
"Connected Persons" shall have the meaning ascribed thereto in the
Listing Rules;
"Intellectual Property" means patents, trademarks, service marks,
trade names, registered designs, designs, copyrights and other forms
of intellectual or industrial property (in each case in any part of
the world and whether or not registered or registrable and for the
full period thereof and all extensions and renewals thereof and
applications for registration of or otherwise in connection with the
foregoing), know-how, inventions, formulae, confidential or secret
processes and information, computer programs and software, and any
other protected rights and assets, and any licences and permissions
in connection therewith;
(B) All references in this Schedule 3 to the Company, other than those in
paragraphs 3(B), 4(A) and 4(C) shall be read and construed as a
reference to the Company and each of its subsidiaries.
2. INFORMATION
(A) Disclosures
The facts and information set out in the recitals and, the Schedules
and all documents attached are true and all information which has
been provided in writing to the Purchaser or its representatives or
advisers by the Vendors or by any Director, officer or other official
of the Company by its professional advisers or other agents was when
given and is now true and accurate in all material respects. There is
no fact or matter which has not been disclosed which renders any such
information untrue, inaccurate or misleading or the disclosure of
which might reasonably affect the willingness of a willing purchaser
to purchase the Sale Interests in accordance with the provisions of
this Agreement.
(B) Assessment of prospects
The information disclosed to the Purchaser or its representatives or
professional advisers, by the Vendors and the directors, officers or
other officials of the Company regarding its current status or
prospects comprises all information which is material for the
reasonable assessment of the financial and trading prospects of the
Company or the Group as a whole.
3. COMPLIANCE AND ABILITY TO SELL
(A) Constitution of each member of the Group
The copy of the memorandum and articles of association of the Company
which have been provided to the Purchaser are true and complete in
all respects and have embodied in them or annexed to them a copy of
every such resolution and agreement required by law to be annexed
thereto and the Company has at all times carried on its business and
affairs in all respects in accordance with its respective memorandum
and articles of association and all such resolutions and agreements.
(B) Statutory compliance
The Company is a domestic joint venture company with limited
liability duly established and validly existing under the laws of the
PRC and has the corporate powers and authorises to carry on the
business presently carried on by it and to own and hold the assets
used therewith.
Each member of the Group are duly established and validly existing
under the laws of the place of its incorporation and has the
corporate powers and authorises to carry on the business presently
carried on by it and to own and hold the assets used therewith.
Each member of the Group has complied with the provisions of all
applicable laws, regulations (and all orders notices and directions
made thereunder) and all applicable codes or practices. All returns,
particulars, resolutions and other documents required to be filed
with or delivered to the registrar of companies or to any other
authority whatsoever by the relevant member of the Group have been
correctly and properly prepared and so filed or delivered.
(C) Power to sell
Each of the Vendors has full power to enter into and perform this
Agreement and the Tax Indemnity respectively and this Agreement and
the Tax Indemnity will constitute binding obligations on each such
party, enforceable in accordance with their terms.
4. CAPITAL STRUCTURE
(A) Capital of the Company
The Sale Interests together constitute 6% of the registered capital
of the Company as at the date of this Agreement and are fully paid
up. There is no Encumbrance or other form of agreement (including
conversion rights and rights of pre-emption) on, over or affecting
the Sale Interests and there is no agreement or commitment to give or
create any of the foregoing, and no claim has been made by any person
to be entitled to any of the foregoing, and no person has the right
(whether exercisable now or in the future and whether contingent or
not) to call for any portion of the capital of the Company under any
of the foregoing.
(B) Ownership
All the Sale Interests are solely legally and beneficially owned by
and registered in the names of the Vendors in the proportions set out
in column 3 of Schedule 2 and are free from any Encumbrance and there
are no arrangements in force or claimed entitling or allegedly
entitling any person to any Encumbrance.
(C) Connected business
Save as disclosed, the Company:
(i) does not have any subsidiary and there is no company,
partnership or unincorporated business or association in
which the Company owns or controls (whether directly or
indirectly through another company) any interests therein;
(ii) has not been and has not agreed to become a subsidiary of
any other company or under the control of any group of
companies or consortium;
(iii) has not at any time been and has not agreed to become a
member of any partnership, joint venture, consortium or
other unincorporated business or association; and
(iv) has no branch, place of business, permanent establishment
or substantial assets outside the PRC.
5. ACCOUNTS
(A) General
The Accounts:
(i) were prepared in accordance with the requirements of all
relevant laws, statutes, with good accounting principles
and practices generally accepted at the date hereof in the
PRC for companies carrying on a similar business to that of
the Group, comply with all relevant statements of standard
accounting practice and accounting guidelines issued by the
relevant authorities, are prepared on a basis consistent
with preceding accounting periods of the Group and with the
books of account of the Group and are true and accurate in
all material respects;
(ii) disclose a true and fair view of the assets and liabilities
of the Group at the Balance Sheet Date and of its profits
for the financial year ended on such date;
(iii) contain full provision or reserve for bad and doubtful
debts, burdensome contracts or other obligations,
obsolescent or slow moving stocks and for depreciation on
fixed assets, which provision or reserve was when made and
is now adequate;
(iv) contain a note of all capital commitments (if any) of the
Company and its subsidiaries at the Balance Sheet Date,
which note was when made and is now adequate, fair and not
misleading; and
(v) contain full provision or reserves (as appropriate) for all
Taxation.
(B) Liabilities
At the Balance Sheet Date, the Group had no liabilities known, actual
or contingent (including contingent liabilities to customers and
contingent liabilities for Taxation) which were not disclosed, noted
or provided for in the Accounts.
(C) Stock valuation
The stock-in-trade shown in the Accounts has been valued at the lower
of cost and net realisable value and includes no redundant, obsolete
or unsaleable items and no items which are the subject of any dispute
(other than minor disputes in the ordinary course of business) with a
supplier or customer. The basis of valuation of the stock-in-trade
has remained in all material respects consistent with that adopted
for the purpose of the Group's consolidated accounts at the beginning
and end of each of the accounting periods of the Group since its
incorporation.
(D) Plant and machinery etc.
All the fixed and loose plant and machinery, equipment, furniture,
fittings and vehicles used by the Group at the Balance Sheet Date are
reflected in the Accounts, were at the Balance Sheet Date and (except
for such items as have been disposed of or realised by the Group in
the ordinary course of business) remain in the absolute beneficial
ownership of the Group and are free from any Encumbrance, hire or
hire purchase agreement or leasing agreement or agreement for payment
on deferred terms and (apart from depreciation in the ordinary course
of business) their value is not less than at the Balance Sheet Date
and none has been acquired for any consideration in excess of its net
realisable value at the date of such acquisition or otherwise than by
way of a bargain at arm's length.
(E) Profits
The profits of the Group for the two years ended on the Balance Sheet
Date as shown by the Accounts and by the audited accounts of the
Group for previous periods delivered to the Purchaser and the trend
of profits shown by them have not (except as disclosed in them) been
affected to a material extent by inconsistencies of accounting
practices, by the inclusion of non-recurring items of income or
expenditure, by transactions entered into otherwise than on normal
commercial terms or by any other factors rendering such profits for
all or any of such periods exceptionally high or low.
(F) Depreciation
Depreciation of the fixed assets of the Group has been made at a rate
sufficient to write down the value of such assets to nil not later
than the end of their useful working lives and no fixed asset has
attributed to it a value exceeding the current market value thereof
at the Balance Sheet Date.
(G) Books of account
All accounts, books, ledgers, financial and other necessary records
of whatsoever kind of the Group (including all invoices and other
records required for tax):
(i) have been fully, properly and accurately maintained, are in
the possession of the relevant company and contain true and
accurate records of all matters including those required to
be entered in them by applicable laws and no notice or
allegation that any of the same is incorrect or should be
rectified has been received;
(ii) do not contain or reflect any material inaccuracies or
discrepancies;
(iii) give and reflect a true and fair view of the matters which
ought to appear in them and in particular of the financial,
contractual and trading position of the relevant company
and of its plant and machinery, fixed and current assets
and liabilities (actual and contingent), debtors and
creditors and stock-in trade; and
(iv) contain accurate information in accordance with generally
accepted accounting principles in the PRC relating to all
transactions to which any member of the Group has been a
party and the Accounts do not overstate the value of any
asset or understate any liability of the Group at the
Balance Sheet Date.
6. POST BALANCE SHEET DATE EVENTS
Since the Balance Sheet Date, each member of the Group:
(A) Business
has carried on its business in the ordinary and usual course and
without entering into any transaction, assuming any liability or
making any payment not provided for in the Accounts which is not in
the ordinary course of business and without any interruption or
alteration in the nature, scope or manner of its business and nothing
has been done which would be likely to prejudice the interests of the
Purchaser as a prospective purchaser of the Sale Interests;
(B) Financial position and prospects
has not experienced any deterioration in its financial or trading
position or prospects or turnover or suffered any diminution of its
assets by the wrongful act of any person and the value of its net
assets is not less than the value of its net assets as at the Balance
Sheet Date as shown by the Accounts and each member of the Group has
not had its business, profitability or prospects adversely affected
by the loss of any important customer or source of supply or by any
abnormal factor not affecting similar businesses to a like extent and
there are no facts which are likely to give rise to any such effects;
(C) Assets and liabilities
has not acquired or disposed of or agreed to acquire or dispose of
any assets or assumed or incurred or agreed to assume or incur any
liabilities (actual or contingent) otherwise than in the ordinary
course of business;
(D) Distributions and loan repayments
has not declared, made or paid any dividend, bonus or other
distribution of capital or income (whether a qualifying distribution
or otherwise) and (excluding fluctuations in overdrawn current
accounts with bankers) no loan or loan capital of any member of the
Group has been repaid in whole or in part or has become due or is
liable to be declared due by reason of either service of a notice or
lapse of time or otherwise howsoever;
(E) Liability to tax
has not carried out or entered into any transaction and no other
event has occurred in consequence of which (whether alone or together
with any one or more transactions or events occurring before, on or
after the date of this Agreement) any liability of the Group to
Taxation has arisen or will arise (or would have arisen or would or
might arise but for the availability of any relief, allowance,
deduction or credit) other than profits tax on the actual income (not
chargeable gains or deemed income) of the relevant member of the
Group arising from transactions entered into in the ordinary course
of business;
(F) Employees
has not made any change to the remuneration, terms of employment,
emoluments or pension benefits of any present or former director,
officer or employee of the Group who on the Balance Sheet Date was
entitled to remuneration in excess of US$10,000 (or its equivalent in
any other currency) per annum and has not appointed or employed any
additional director, officer or employee entitled as aforesaid;
(G) Debts
has not waived or released any debts in whole or in part and has not
written off debts in an amount exceeding US$10,000 (or its equivalent
in any other currency) in the aggregate;
(H) Contracts
has not entered into contracts involving capital expenditure in an
amount exceeding in the aggregate US$10,000 (or its equivalent in any
other currency);
(I) Resolutions
has not passed any resolution whether in general meeting or
otherwise;
(J) Third party rights
has not become aware that any event has occurred which would entitle
any third party to terminate any contract or any benefit enjoyed by
it or call in any money before the normal due date therefor;
(K) Stock-in-trade
has not purchased stocks in quantities or at prices materially
greater than was its practice prior to the Balance Sheet Date;
(L) Creditors
has paid its creditors within the times agreed with such creditors
and does not have any debts outstanding which are overdue for payment
by more than four weeks;
(M) Borrowings
has not borrowed or raised any money or taken any financial facility
(except such short term borrowings from bankers as are within the
amount of any overdraft facility which was available to the relevant
member of the Group at the Balance Sheet Date) or since the Balance
Sheet Date renegotiated or received any notice from any banker that
such banker wishes to renegotiate any overdraft facility available to
the Group at the Balance Sheet Date;
7. TRANSACTIONS WITH VENDORS, DIRECTORS AND CONNECTED PERSONS
(A) Loans and debts
There is not outstanding:
(i) any indebtedness or other liability (actual or contingent)
owing by the Company to any of the Vendors or any director
or supervisor of the Company or any of its Connected
Persons or owing to the Company by any of the Vendors or
any director or supervisor of the Company or any of its
respective Connected Persons; or
(ii) any guarantee or security for any such indebtedness or
liability as aforesaid.
(B) Contracts and arrangements
(i) There is not now outstanding, any agreement, arrangement or
understanding (whether legally enforceable or not) to which
the Company is a party or has an interest and in which any
of the Vendors, or any director or supervisor of the
Company or any of its Connected Persons is interested
whether directly or indirectly.
(ii) The Company is not a party to nor has its profits or
financial position during the last 3 years been affected by
any agreement or arrangement which is not entirely of an
arm's length nature.
(C) Competitive interests
None of the Vendors nor any director or supervisor of the Company nor
any of its Connected Persons intends to acquire, either individually
or collectively, or with any other person or persons, has any estate,
right or interest, directly or indirectly, in any business other than
that now carried on by the Group which is or is likely to be or
become competitive with the business of any member of the Group.
(D) Intellectual Property
None of the Vendors nor any director or supervisor of the Company nor
any of its Connected Persons either individually, collectively or
with any other person or persons are interested in any way whatsoever
in any Intellectual Property used and/or not wholly owned by the
Group.
(E) Benefits
None of the Vendors nor any director or supervisor of the Company nor
any of its Connected Persons, is entitled to or has claimed
entitlement to any remuneration, compensation or other benefit from
the Group.
8. FINANCE
(A) Borrowings
(i) The amount borrowed by the Company from its bankers does
not exceed the overdraft facility agreed with such banker.
(ii) The total amount borrowed by the Company from any source
does not exceed any limitation on its borrowing contained
in its articles of association or in any debenture or loan
stock trust deed or instrument or any other document
executed by it.
(iii) No member of the Group has any outstanding loan capital or
loan stock.
(iv) Particulars of all money borrowed by each member of the
Group have been disclosed.
(B) Debts owed to each member of the Group
(i) No member of the Group owns the benefit of any debt
(whether present or future) other than debts which have
accrued to it in the ordinary course of business.
(ii) All debts owed to the Company are collectable in the
ordinary course of business and each such debt will realise
in full its face value within three months of its due date
for payment.
(iii) The debts owing to the Company shown in the Accounts
(subject to any provision for bad and doubtful debts made
in the Accounts) were paid in full on their due dates or,
if any such debts are not yet due, each such debt is not
now regarded by the Company or by the Vendors as
irrecoverable in whole or in part.
(C) Bank accounts
Particulars of the balances on all bank accounts of the Company as at
a date not more than seven days before the date of this Agreement
have been disclosed and the Company has no other bank accounts; since
the date of such particulars there have been no payments out of any
such bank accounts except for routine payments and the aggregate
balance on all such bank accounts is not substantially different from
the aggregate balance shown in such particulars.
(D) Working capital requirements
Having regard to the existing banking and other facilities, the
Company has sufficient working capital for the purpose of continuing
to carry on its business in its present form and at its present level
of turnover for the foreseeable future and for the purposes of
executing, carrying out and fulfilling in accordance with their terms
all orders, projects and contractual obligations which have been
placed with or undertaken by the Company.
(E) Financial facilities
In relation to any Encumbrance to which any asset of the Group is
subject and in relation to debentures, acceptance lines, overdrafts,
loans or other financial facilities outstanding or available to the
Group:
(i) the Vendors have disclosed full details of them and true
and correct copies of all documents relating to them; and
(ii) none of the Vendors nor any member of the Group has done
anything whereby the continuance of any such encumbrance or
facility in full force and effect might be affected or
prejudiced.
(F) Options, guarantees etc.
The Company is not responsible for the indebtedness of any other
person, and in particular but without prejudice to the generality of
the foregoing is not a party to any option or pre-emption right or a
party to any guarantee or suretyship or any other obligation
(whatever called) to pay, purchase or provide funds (whether by the
advance of money, the purchase of or subscription for shares or other
securities or the purchase of assets or services or otherwise) for
the payment of, or as an indemnity against the consequence of default
in the payment of, any indebtedness of any other person.
9. TAXATION
(A) General
(i) Notices and returns
All notices, returns and computations of the Company for
the purposes of Taxation have been made punctually on a
proper basis and are correct and none of them is, or is
likely to be, the subject of any dispute with any fiscal
authority.
(ii) Payment of tax due
All Taxation that the Company is liable to pay prior to
Completion has been or will be so paid prior to Completion.
(iii) Penalties or interest on tax
No member of the Group has paid or become liable to pay any
penalty, fine or interest charged by virtue of the
provisions of any Taxation statute, law, rule or
regulation.
(iv) Compliance with tax collection obligations
(a) All tax deductible and payable under any Taxation
statute, law, rule or regulation has, so far as is
required to be deducted, been deducted from all
payments made or treated as made by the Company and
all amounts due to be paid to all relevant Taxation
authorities prior to the date of this Agreement have
been so paid.
(b) All payments by the Company to any person which
ought to have been made under deduction of tax have
been so made and the relevant company (if required
by law to do so) has accounted to the relevant
fiscal authority for the tax so deducted.
(c) Proper records have been maintained in respect of
all such deductions and payments and all applicable
regulations have been complied with.
(v) No back duty investigation
The Company has not in the last 3 years been the subject of
a discovery, audit or investigation by any Taxation
authority and there are no facts which are likely to cause
a discovery, audit or investigation to be made.
(vi) Tax provision
Full provision or reserve has been made in the Accounts for
all Taxation assessed or liable to be assessed on the
Company or for which it is accountable in respect of
income, profits or gains earned, accrued or received on or
before the Balance Sheet Date, including distributions made
down to such date or provided for in the Accounts, and
proper provision has been made in the Accounts for deferred
taxation in accordance with internationally accepted
accounting standards.
(vii) Anti-avoidance provisions
The Company has not entered into or been a party to any
scheme or arrangement of which the main purpose, or one of
the main purposes, was the avoidance of or the reduction in
liability to taxation.
(viii) Calculation of tax liability
The Company has sufficient records to permit accurate
calculation of the tax liability or relief which would
arise upon a disposal or realisation on completion of each
asset owned by the Company at the Balance Sheet Date or
acquired by the Company before Completion.
(ix) Sales at under-value or over-value
The Company has not been a party to any sale or other
disposal of an asset either at an under-value or an
over-value.
10. THE PROPERTIES
No member of the Group has owned any real properties.
11. OTHER ASSETS
(A) Assets and charges
(i) All assets of the Company which are included in the
Accounts or have otherwise been represented as being the
property of the Company or which were at the Balance Sheet
Date used or held for the purposes of its business were at
the Balance Sheet Date in the absolute beneficial ownership
of the Company and (except for assets disposed of or
realised by the Company in the ordinary course of business)
the Company is the absolute beneficial owner of and has
good, marketable title to all such assets and all such
assets are in the possession and control of the Company and
are sited within the PRC.
(ii) All assets which have been acquired by the Company since
the Balance Sheet Date are (except as aforesaid) now in the
absolute beneficial ownership of the Company and in the
possession and control of the Company and none is the
subject of any Encumbrance (excepting only liens arising in
the normal course of trading) nor has the Company created
or agreed to create any encumbrance or entered into any
factoring arrangement, hire-purchase, conditional sale or
credit sale agreement which has not been disclosed and in
respect of any such encumbrance, arrangement or agreement
so disclosed there has been no default by the Company in
the performance or observance of any of the provisions
thereof.
(B) Condition of assets
The plant and machinery (including fixed plant and machinery) and all
vehicles and office and other equipment and assets shown in the
Accounts or acquired since the Balance Sheet Date or otherwise used
in connection with the business of the Company which have not been
disposed of in the ordinary course of business:
(i) do not contravene any requirement or restriction having the
force of law;
(ii) performs in accordance with its manufacturers
specifications and are in good repair and condition and are
regularly maintained, fully serviceable and in good working
order;
(iii) are each capable of doing the work for which they were
designed and/or purchased and will each be so capable
(subject to fair wear and tear) during the period of time
over which the value of such assets will be written down to
nil in the accounts of the Company;
(iv) are not surplus to the Company's requirements; and
(v) are not dangerous, inefficient, out-of-date, unsuitable or
in need of renewal or replacement and the vehicles owned by
the Company are road-worthy and duly licensed for the
purposes for which they are used.
(vi) Maintenance contracts are in full force and effect in
respect of the computer and all other assets owned or used
by the Company which it is normal or prudent to have
maintained by outside or specialist contractors.
(C) Condition of stock-in-trade
The Company's stock-in-trade is of merchantable quality and not
obsolete, defective or out of fashion and is capable of being sold by
the Company in the ordinary course of business in accordance with its
current price list without rebate or allowance to retail purchasers.
(D) Insurance
(i) All the assets of the Company which are of an insurable
nature have at all material times been and are at the date
hereof fully insured to their full replacement value
against fire and other risks normally insured against by
companies carrying on similar businesses or owning property
of a similar nature to those of the Company and the Company
has at all material times been and is at the date of this
Agreement adequately covered against all legal liability
and risks normally insured against by such companies
(including liability to employees or third parties for
personal injury or loss or damage to property, product
liability and loss of profit).
(ii) Particulars of all policies of insurance of the Company now
in force have been disclosed and such particulars are true
and correct and all premiums due on such policies have been
duly paid and all such policies are valid and in force and
(so far as the Company and the Vendors are aware) there are
no circumstances which might lead to any liability under
such insurance being avoided by the insurers or the
premiums being increased and there is no claim outstanding
under such policy nor are the Company and the Vendors aware
of any circumstances likely to give rise to a claim or
cause an application for renewal of such policy to be
refused.
(iii) No insurance company has refused to insure the assets or
risks of the Company or has imposed conditions (by way of
increased premiums or otherwise) for such insurance.
(E) Retention of title
The Company has not acquired or agreed to acquire any material asset
on terms that title to such asset does not pass to the Company until
full payment is made.
(F) Equipment leases etc
Rentals payable by the Company under any leasing, hire-purchase or
other similar agreement to which it is a party have not been and are
not likely to be increased and all such rentals are fully deductible
by the Company for tax purposes.
12. OPERATION
(A) Licences, permits, consents and authorities
The Company has all necessary licences (including statutory
licences), permits, consents and authorities (public and private) for
the proper and effective carrying on of its business and in the
manner in which such business is now carried on and all such
licences, permits, consents and authorities are valid and subsisting
and none of the Vendors knows of any reason why any of them should be
suspended, cancelled or revoked whether in connection with the
acquisition of the Sale Interests by the Purchaser or otherwise and
so far as the Vendors are aware there are no factors that might in
any way prejudice the continuance or renewal of any of those
licences, permits, consents or authorities and the Company is not
restricted by contract from carrying on any activity in any part of
the world.
(B) Litigation and arbitration
The Company is not engaged in (nor are any of its director in
relation to the affairs of the Company engaged in) any legal
proceedings (including litigation, administrative, arbitration and
prosecution) and no such proceedings are pending or threatened, nor
are there any facts likely to give rise to such proceedings known or
which would on reasonable enquiry be known to the Company or its
directors.
(C) Delegation of powers
There are in force no powers of attorney given by the Company nor any
other authority (express, implied or ostensible) given by the Company
to any person to enter into any contract or commitment or do anything
on its behalf other than any authority of employees to enter into
routine trading contracts in the normal course of their duties.
(D) Confidentiality
No disclosure has been made of any of the confidential information,
including financial or trade secrets, of any member of the Group save
in the ordinary course of business and the Company has taken adequate
steps to preserve the confidential nature of all such information.
(E) Business names
The Company does not use on its letterhead, books or vehicles or
otherwise carry on its business under any name other than its
corporate name.
(F) Records of the Group
(i) All the accounting records, statutory and other books and
records (including the register of members), and other
deeds documents records, data and information of the
Company and its pension and benefit schemes (if any) are,
and have since its incorporation been, kept up to date,
properly, accurately and consistently completed and are a
complete and accurate record of all acts and transactions
of the Company and of all matters required by law or best
business practice to be recorded or registered therein; the
Company has not received any application or request for
rectification of any such registers are in the possession
of the Company.
(ii) The Company has no records, systems, controls, data or
information recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic
process whether computerised or not) which (including all
means of access thereto and therefrom) are not under its
exclusive ownership and direct control.
(G) Winding up, insolvency and receivership
(i) No order has been made or petition presented or resolution
passed for the winding up of the Company and no distress,
execution or other process has been levied on any of its
assets.
(ii) The Company is not insolvent nor unable to pay its debts as
they fall due.
(iii) No administrative or other receiver has been appointed by
any person of the business or assets of the Company or any
part thereof, nor has any order been made or petition
presented for the appointment of an administrator in
respect thereof.
(iv) There has been no delay by the Company in the payment of
any material obligation due for payment.
(H) Guarantees, warranties and sureties
(i) The Company has not given any guarantee or warranty or made
any representation in respect of articles or trading stock
sold or contracted to be sold or service provided or
contracted to be provided by it save for any warranty or
guarantee implied by law and (save as aforesaid) has not
accepted any liability or obligation to service, maintain,
repair, take back or otherwise do or not do anything in
respect of any articles, stock or service that would apply
after any such article or stock has been delivered by it or
service performed by it, as the case may be.
(ii) No person other than the Company has given any guarantee of
or security for any overdraft, loan or loan facility
granted to the Company.
13. CONTRACTS
(A) Onerous contracts
There are no long term contracts (i.e. contracts not terminable by
the Company without penalty on six months' notice or less) or onerous
or unusual or abnormal contracts (i.e. contracts for capital
commitments or contracts differing from those necessitated by the
ordinary course of business) binding upon the Company, nor is the
Company a party to any contract which contains any onerous or other
provision material for disclosure to an intending purchaser of the
Sale Interests and no expenses or liabilities of a material amount
have been incurred before the date of this Agreement by the Company
otherwise than for the purpose of the Company's business.
(B) Material contracts
Copies of all material contracts to which the Company is a party have
been disclosed or will be disclosed to the Purchaser during the due
diligence to be conducted by the Purchaser pursuant to Clause 3.3 of
the Agreement and, save as those disclosed, the Company is not a
party to or subject to any agreement, transaction, obligation,
commitment, understanding, arrangement or liability which:
(i) is incapable of complete performance in accordance with its
terms within six months after the date on which it was
entered into or undertaken;
(ii) is known by any of the Vendors to be likely to be
unprofitable or result in a loss to the Company on
completion of performance;
(iii) cannot readily be fulfilled or performed by the relevant
member of the Group on time and without undue or unusual
expenditure of money and effort;
(iv) involves or is likely to involve obligations, restrictions,
expenditure or receipts of an unusual, onerous or
exceptional nature and not in the ordinary course of
business;
(v) requires an aggregate consideration payable by the Company
in excess of US$10,000 (or its equivalent in any other
currency);
(vi) is a contract for services (other than contracts for the
supply of electricity or normal office services);
(viii) requires any member of the Company to pay any commission,
finder's fee, royalty or the like; or
(ix) is in any way otherwise than in the ordinary and proper
course of the Company's business.
(C) Performance of contracts
(i) The terms of all contracts of the Company have been
complied with by the Company and by the other parties to
the contracts in all respects and there are no
circumstances likely to give rise to a default by the
Company or by the other parties under any such contract.
(ii) All the contracts of the Company except those between the
Company and its employees are assignable by the Company
without the consent of any other party.
(iii) There are no outstanding claims, separately or in the
aggregate of material amounts, against the Company on the
part of customers or other parties in respect of defects in
quality or delays in delivery or completion of contracts or
deficiencies of design or performance or otherwise relating
to liability for goods or services sold or supplied by the
Company and no such claims are threatened or anticipated
and there is no matter or fact in existence in relation to
goods or services currently sold or supplied by the Company
which might give rise to the same.
(iv) The Company has no knowledge of the invalidity of or
grounds for rescission, avoidance or repudiation of any
agreement or other transaction to which it is a party and
has received no notice of any intention to terminate,
repudiate or disclaim any such agreement or other
transaction.
(D) Restrictive contracts
There are no agreements in force restricting the freedom of the
Company to provide and take goods and services by such means and from
and to such persons as it may from time to time think fit.
(E) Agency and distributorship agreements
Save as disclosed, the Company is not a party to any subsisting
agency or distributorship agreement.
14. EMPLOYEES
(A) There is no current contract of service between the Company and any
of its directors, officers or employees which is not terminable by
the Company without compensation by three months notice or less given
at any time or payment of salary for such period in lieu of notice.
(B) Save as regards any scheme which the Company is or may become obliged
to join or subscribe under any applicable law or regulations, there
is no scheme or fund in respect of retirement, pension, health
insurance, housing, bonus, incentive, share option or other benefits
to directors, officers, staff, employees or any other party to which
the Company is a party or in respect of which there is any
obligations or liabilities, present or future, actual or contingent.
(C) The Company is not subject to or involved in any industrial dispute
or action whether official or unofficial.
15. INTELLECTUAL PROPERTY
(A) Ownership and rights
(i) General
Full particulars of all Intellectual Property owned or
otherwise exploited or used by the Company in any part of
the world will be disclosed to the Purchaser during the due
diligence to be conducted by the Purchaser. All
Intellectual Property exploited or used by the Company is
in the absolute beneficial ownership of the Company or any
member of the Group is a 1icensee of the same and the
Company does not own, use, exploit or have any other
interest in any Intellectual Property which has not been
disclosed. In particular but without prejudice to the
generality of the foregoing, none of the Intellectual
Property disclosed is jointly owned by the Company and a
third party.
(ii) Enforcement
All applications for any Intellectual Property owned, used
or otherwise exploited by the Company are being diligently
prosecuted; patents, registered trademarks and registered
designs and other similar registered or recorded
Intellectual Property rights owned, used or otherwise
exploited by the Company have been maintained; nothing has
been done to diminish or otherwise affect the reputation of
unregistered trademarks, trade names, brand names or get up
owned, used or otherwise exploited by the Company; no
copying or reproduction of the copyright material owned,
used or otherwise exploited by the Company has been
permitted (expressly or by implication); the technical
information and other knowhow owned, used or otherwise
exploited by the Company has been kept confidential; and
(where applicable) all application, registration and
renewal fees necessary to procure, register, record or
maintain the Intellectual Property have been paid.
(iii) Intellectual Property Agreements
All agreements in relation to any Intellectual Property
used or owned by the Company have been disclosed and are
valid and binding; none has been the subject of any breach
or default by any party thereto or of any event which with
notice or lapse of time or both would constitute a default;
nor are there any disputes, claims or proceedings arising
out of or relating to such agreements. No member of the
Group has authorised or otherwise permitted, expressly or
by implication, any use whatsoever of the Intellectual
Property owned, used or otherwise exploited by the Group
save insofar as any such authority is contained in the
appropriate agreements. The Company does not use or
otherwise exploit any Intellectual Property belonging to a
third party save insofar as it is licensed to do so in the
appropriate agreements. All such agreements have been duly
recorded or registered with the proper authorities whenever
a requirement to do so exists.
16. CONSEQUENCE OF THE PURCHASE OF THE SALE INTERESTS
The purchase of the Sale Interests by the Purchaser or compliance
with the terms of this Agreement and any change in the current
management of the Company:
(i) will not cause the Company to lose the benefit of any right
or privilege it presently enjoys or cause any person who
normally does business with the Company not to continue to
do so on the same basis as previously;
(ii) will not relieve any person of any obligation to the
Company (whether contractual or otherwise) or enable any
person to determine any such obligation or any right or
benefit enjoyed by the Company or to exercise any right
whether under an agreement with or otherwise in respect of
the Company;
(iii) will not conflict with or result in the breach of or
constitute a default under any of the terms, conditions or
provisions of any agreement or instrument to which the
Company is now a party or any loan to or mortgage created
by the Company or of its memorandum or articles of
association;
(iv) will not result in any present or future indebtedness of
the Company becoming due and payable or capable of being
declared due and payable prior to its stated maturity;
(v) will not cause any director, supervisor or senior employee
of the Company to leave employment;
(vi) will not conflict with, violate or result in a breach of
any law, regulation, order, decree or writ applicable to
the Company; and
so far as the Company and the Vendors are aware the attitude or
actions of clients, customers and suppliers with regard to the
Company will not be prejudicially affected thereby.
SCHEDULE 4
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Addresses and facsimile numbers
for communication
-----------------
Name Address Facsimile
021-62588795
021-62588795
Hartcourt Capital, Inc. 021-52130664
IN WITNESS whereof this Agreement has been duly executed by all parties hereto
the day and year first above written.
SIGNED by )
)
in the presence of: )
SIGNED by )
)
in the presence of: )
SIGNED by )
for and on behalf of )
HARTCOURT CAPITAL, INC. )
in the presence of: )
