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EXHIBIT 10.11
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THE OPTION CONTRACT
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XIAO GEHUI, XX XXXX
LI YU, XXXX XXX
AND
Xxxxxx Group Ltd.
MAY 19, 2005
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P 1
THIS CONTRACT is dated the May 19, 2005.
BETWEEN:
1) Xiao Gehui
ID No: 430422197509215453
Address: 1 Tianmashang Nan Road, Zhengxiang District, Hengyang, Hunan
2) Wan Zhan,
ID No: 61012119740621597X,
Address: No. 6205-206, 067 Jidi Family member Yard, Xxxxx District,
Xi'an, Shanxi
3) Li Yu
ID No: 210402197404200515
Address: 1-202, 8th Lize building, 00 Xxxxxxxxx Xxx Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxxxx
4) Xxxx Xxx
ID No: 210103710814211
Address: 3-2-1, 000-0 Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxxx
(XxxxXxxxx, Xx Xxxx, Li Yu and Xxxx Xxx ) are hereinafter
collectively referred to as the "Vendors" and each
individually referred to as the "Vendor"); and
5) Xxxxxx Group Ltd., a company incorporated in HONG KONG (the
"Purchaser")
Address: Suit 306, Hengbang Commercial Center, 00 Xxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx Legal representative: Xxxx Xx
WHEREAS:
(A) Beijing Zhong Xx Xxxx Ji Science and Trade Co., Ltd (the "Company") is
a domestic joint venture company with limited liability incorporated in
the People's Republic of China (the "PRC") and has as at the date
hereof a registered capital of RMB 25,000,000, a net asset of RMB
31,570,678 and net asset of RMB 9,670,678 deducted the due
shareholder's contribution by November 30, 2004
(B) As at the date of this Contract, the Purchaser is a wholly owned
subsidiary of Financial Telecom Limited (USA) Inc. (the "Xxxxxx
Company"), the shares of which are currently listed on the
Over-the-Counter Bulletin Board ("OTCBB") of the United States (OTCBB
Symbol: FLTL.OB).
(C) Another wholly owned subsidiary of the Xxxxxx Company has signed the
long term service agreement with the Vendors, which stipulates that the
wholly owned subsidiary shall provide the Vendors with the long term
financial and management service. In order to stimulate the wholly
owned subsidiary and improve its service quality, the Vendors have
agreed to empower the Option to the Purchaser and the Purchaser has
agreed to accept the Option according to the terms and conditions of
this Contract. Please see Clause 1 of this Contract for the definition
of Option.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises and agreements
contained herein, the terms and conditions hereby are agreed upon by the Parties
in this Contract:
P 2
1. INTERPRETATION
1.1 In this Contract (including the Recitals), unless the context
otherwise requires, the following words and expressions shall
have the following meanings ascribed to each of them below:
"CONTRACT" this Contract for the Option Contract, as
amended or supplemented from time to time;
"BUSINESS DAY" From Monday to Friday except PRC's public
"OPTION" holidays; Within one year after this
Contract is signed by Parties, The Purchaser
is entitled to purchase Sale Interests
according to Clause 4.1 of this Contract and
execute the right to Change the Transferable
Note according to Clause 2.6 and 2.7 and 4.1
of this Contract;
"THE TERM OF OPTION" One year after this Contract is signed by
"SALE INTERESTS" Parties. 19% of the entire interest in the
registered capital of the Company to be sold
by the Vendors to the Purchaser according to
Option of this Contract, in which 6.5% of
the entire interest in the registered
capital of the Company to be sold by Xiao
Gehui to the Purchaser, 5% of the entire
interest in the registered capital of the
Company to be sold by Xx Xxxx to the
Purchaser, 5% of the entire interest in the
registered capital of the Company to be sold
by Li Yu to the Purchaser, and 2.5% of the
entire interest in the registered capital of
the Company to be sold by Xxxx Xxx to the
Purchaser; "XXXXXX COMPANY" Financial
Telecom Limited (USA) Inc.(pound) a company
incorporated under the laws of the state of
Nevada, United States, the shares of which
are currently listed on the Over-the-Counter
Bulletin Board ("OTCBB") of the United
States (OTCBB Symbol:FLTL.OB).
"CONSIDERATION SHARES" New restricted shares of the Xxxxxx Company
to be allotted and issued in the name of the
Vendors or their nominees for the
consideration of Sale Interests and the
Transferable Note according to Clause 4.1,
which are restricted according to Rule 144
promulgated under the U.S Securities Act and
are calculated by the Consideration
regulated in Clause 4.1 /50% of the average
share price of 30 business days before
Completion;
"TRANSFERABLE NOTE" The debt certificate issued by the Vendors
to the Purchaser. After the Vendors are
satisfied by the consideration from the
Purchaser according to Clause 4.1 of this
Contract, they shall owe the Purchaser the
debt of USD 266,667 without interests and
pay off the debt of USD 266,667 after ten
years from the issuing date of the debt
certificate. During the Term of Transferable
Note, the Purchaser shall be entitled to
execute the right to change the Vendors'
debt to 11% of the entire interest in the
registered capital of the Company according
to Clause 2.6 and 2.7 of this Contract.
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"THE TERM OF TRANSFERABLE NOTE" Within ten years after the issuing date of
the Transferable Note.
"Repurchasing" The Vendor shall have the rights to
repurchase Sale Interests and the rights and
execution of the Transferable Note within
thirty-third month after Completion date
from the Purchaser.
"RESTRICTED TRADING PERIOD" a period of twelve (12) & twenty-four (24) &
thirty-six (36) months from the date on
which the Consideration Shares being
allotted and issued to the Vendors or their
nominees; twelve months for 37.5% of the
Consideration Shares, eighteen months for
another 18.75% of the Consideration Shares,
twenty-four months for another 31.25% of the
Consideration Shares, thirty-six months for
another 12.5% shares of the Consideration
Shares;
"COMPLETION" The execution of Option in accordance with
the terms and conditions of this Contract
including the completion of the sale and
purchase of the Sale Interests and the
issuing of the Transferable Note and the
satisfaction of the Consideration in
accordance with the terms and conditions of
this Contract;
"COMPLETION DATE" the date falling on the 5th Business Day
after the conditions set out in Clause 3.2 ,
3.3 have been fulfilled or waived by the
Purchaser and the Vendors according to
Clause 3.5;
"THE DATE OF THE BALANCE SHEET" November 30, 2004
2. OPTION
2.1 Subject to the terms and conditions of this Contract, each of
the Vendors, agrees to empower the Option to the Purchaser and
the Purchaser agrees to accept the Option.
2.2 Subject to Clause 2.1 of this Contract, when the Purchaser get
the Option, 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 its subsidiaries and all such
information relating to the Company 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 Company and be permitted to take copies of any
such books, documents, title deeds, records and accounts and
that the directors and employees of the Company 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. The Purchaser shall complete its due
diligence (including without limitation, legal, financial and
commercial aspects) in respect of the Company and its
subsidiaries and the results of which are, in the absolute
opinion of the Purchaser, satisfactory and acceptable to the
Purchaser in all respects. On the Date of the Balance Sheet,
the Company's net assets which are audited by independent
third party CPA are RMB 31,670,678 and the net assets deducted
the due shareholder's contribution are RMB 9,670,678.
2.3 Within the Term of Option, the Vendors shall not sell Sale
Interests to any third party and not make guarantee, and/or
pledge and/or mortgage or any other types of rights and/or
benefit on Sale Interests without the Purchaser's written
agreement.
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2.4 If the Purchaser does not execute Option in accordance with
Clause 2.5 and 2.6 and 2.7 of this Contract during the Term of
Option, Option shall be cancelled.
2.5 During the Term of Option, if the Purchaser execute Option, it
shall send the written note ( "Option Note") to the Vendors
and inform them Completion Day and that it shall own Sale
Interests and Transferable Note on the Completion Date.
2.6 On Completion Date, if the Vendors don't issue the written
Transferable Note, the Purchaser automatically receive all the
rights of Transferable Note. The Vendor warrants as follow:
i. the Purchaser may send the written note ("
Information of Transferable Note") to the Vendors
during the Term of Transferable Note and inform them
to get rid of the debt of the Transferable Note
instead that they shall transfer 11% of the entire
interest in the registered capital of this Company to
the Purchaser in the consideration of
RMB(pound)+/-(pound)(R)
ii. The Vendors shall transfer 11% of the entire interest
in the registered capital of this Company to the
Purchaser under the Chinese registration law
according to Information of Transferable Note and the
Purchaser's or its designated third party shall
become the owner in the registry office.
2.7 The unconcerned matters in relation to the execution of
Transferable Note shall be considered by other clauses of this
Contract.
2.8 After the date of the Option Note, The Vendors will not assume
any debts and any other duties regards to the Sale
Interests(pound) which exist after the date of the Option Note
and will not have any creditor's rights and any other rights
regards to the Sale Interests(pound) which exists after the
date of the Option Note. After the date of the Option Note,
The Purchaser will assume any debts and any other duties
regarding to the Sales Interests(pound)which exist after the
date of the Option Note and will have any creditor's rights
and any other rights regarding to the Sale
Interests(pound)which exist after the date of the Option Note.
3. COMPLETION
3.1 The Completion Day is the date of the Option Note.
3.2 On Completion, The Vendors shall meet the following
requirements:
(a) The Vendors shall get all necessary consents permits
and approval (whether governmental, regulatory or
otherwise) as may be required in respect of the
transferring of the Sale Interests from the relevant
governmental authorities of the PRC, including but
not limited to the ratification from the PRC foreign
trade economic bureau or the provincial foreign trade
economic department and the Vendors shall inform the
Purchaser all the relevant letters, the ratification
documents and other relevant documents;
(b) 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:
(i) all constitutional documents, contracts,
minute books and records (which shall be
written up to date as at Completion);
P 5
(ii) copies of the business license, the name of
the shareholders, the copies of the
shareholders' identity card, the structure
of the shareholding and financial statements
of the Company;
(iii) other documents, letters and material
which the Purchaser may require;
(c) The Vendors shall hold a shareholder meeting
approving the following items according to the
Purchaser's requirements:
(i) the sale and purchase of the Sale Interests;
(ii) the Transferable Note;
(iii) amending the constitution of the Company
according to the Purchaser;
(d) The Vendors shall complete the change registration
procedures regards to the Sale Interests in relevant
commercial and industrial bureau and inform the
Purchaser all the relevant letters, ratification
documents and other relevant documents regards to the
above the change procedures..
3.3 On Completion, The Purchaser shall meet the following
requirements:
a) The Purchaser shall, if so required, pass of
necessary resolutions by shareholders of the
Purchaser at a shareholder meeting approving (i) the
purchase of the Sale Interests from the Vendors and
(ii)the Transferable Note(iii) this Contract.
b) The Purchaser shall procure that the directors of the
board of Xxxxxx Company make the resolutions and
approve: the allotment and issue of the Consideration
Shares to the Vendors credited as fully paid;
c) The Purchaser having obtained a legal opinion issued
by a qualified lawyer (acceptable by the Purchaser)
in respect of:
(i) the legality and validity of this Contract
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) no change in the permitted scope of business
of the Company after the transfer of the
Sale Interests;
(iv) all other matters reasonably requested by
the Vendors.
3.4 When any of the conditions set out in the Clause 3.2 has been
satisfied by the Vendors, unless that the Purchaser may by
notice in writing inform the Vendors to waive any of the
conditions set out in Clause 3.5, the Purchaser shall procure
Xxxxxx Company to allot, issue and credit the Consideration
Shares to the Vendors as fully paid.
3.5 From the date of this Contract to the Completion Date, the
Purchaser has the rights at any time in writing to inform the
Vendors to waive any of the conditions set out in Clauses 3.2;
At same time, the Vendors also have the rights at any time in
writing to inform the Purchaser to waive any of the conditions
set out in Clause 3.3 from the date of this Contract to the
Completion Date.
P 6
3.6 Clauses 5 to Clause 13 shall survive the Completion.
4. CONSIDERATION
4.1 The Consideration for the transferring of the Sale Interests
and the issuing of the Transferable Note shall separately be
RMB3,800,000 equal to US$460,606 (1USD=RMB8.25) and RMB
2,200,000 equal to USD 266,667 (1USD=RMB8.25) which shall be
satisfied by the Purchaser in the following manners:
i. The Purchaser procuring the Xxxxxx Company to allot,
issue and credit the Consideration Shares to the
Vendors in the relevant proportions as fully paid on
Completion;
ii. The Purchaser shall not be obliged to complete the
purchase of any of the Sale Interests and the
Transferable Note unless the purchase of all the Sale
Interests and the Transferable Note is completed
simultaneously.
4.2 The Vendors shall notify the Purchaser in writing at least ten
(10) Business Days before the Completion Date of the name(s),
the address(es) 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 Xxxxxx Company
to issue the definitive share certificates for such
Consideration Shares upon Completion. Otherwise, the Purchaser
is entitled to issue such Consideration Shares under the name
of the Vendors.
4.3 The Vendors understand that the Consideration Shares are
restricted by the U.S. Securities Act. The Vendors hereby
represent and warrant as follow:
(a) Vendors bear economic risks: 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 of protecting 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 interests: 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
Contract.
(d) Information of Xxxxxx Company: 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.
P 7
(e) Rule 144: The Vendors have been advised or are aware
of the provisions of Rule 144 promulgated under the
U.S. 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 By laws of the Company or by any other agreements
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.
4.4 The Purchaser agrees that upon expiry of the Restricted
Trading Period, upon presentation of the Consideration Shares
Certificate to Purchaser, under the terms and conditions of
this Contract, Purchaser will commerce within 7 business days
all necessary formalities and registration procedures as may
be required under the U.S. Securities Act and the applicable
State securities law to enable the Consideration Shares to
become freely transferable and saleable.
5. THE SHAREHOLDERS MEETING, BOARD AND MANAGEMENT OF THE COMPANY AFTER THE
SALE AND PURCHASE OF SALE INTERESTS
5.1 The shareholders meeting which is formed by all shareholders
shall be the highest power organization of the Company. The
methods and the procedures of discussing business in the
shareholders meeting and the scope of power of the
shareholders meeting shall be ruled by "the Company Law of the
PRC " and the Company's constitution amended under Clause 3.1
of this Contract.
5.2 After the sale and purchase of Sale Interest, The Company
shall set up the Board, the members of the Board are not more
than 5 people and the Purchaser has the rights to designate 1
director in the Board. The business and operations of the
Group shall be managed by the Board.
5.3 The Chairman of the Board and the legal representative of the
Company shall be nominated and appointed by the Board.
P 8
5.4 The financial controller and/or the chief financial officer of
the Company shall be nominated and appointed by the Board.
5.5 The power scope of the Board, the rules and the way of
discussing the business in the Board and the matters which are
not concerned in Clause 5 shall be ruled by "the Company Law
of the People's Republic of China" and the Company's
constitution amended under Clause 3.1 of this Contract.
5.6 The General Manager takes charge of the Company under the
leading of the Board. The power scope of the General Manager,
the rules and the way of discussing the business of the
General Manager are ruled by " the company law of the People's
Republic of China" and the Company's constitution amended
under Clause 3.1 of this Contract.
6. 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
Xxxxxx 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 him/her or any
interests which it/he/she obtains , directly or indirectly, immediately
after Completion.
7. REPRENSENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES FROM THE VENDORS
1. 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 to carry on the business presently
carried on by it and to own and hold the assets used
therewith.
Each subsidiary of the Company is duly established and in
validly existing under the laws of the place of its incorporation and
has the corporate powers to carry on the business presently carried on
by it and to own and hold the assets used therewith.
2. The facts and information set out in the recitals and
Clause 2.2, 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,
professional advisers or agents of the Company by
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 Contract.
3. 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 its
subsidiaries as a whole.
P 9
4. The copies of the memorandum, the Articles of
Association, resolutions of the Board meeting and
shareholders meeting and other material contrats, of
the Company which have been provided to the Purchaser
are true The Company has at all times carried on its
business and affairs in all respects in accordance
with the above mentioned documents.
5. The Sale Interests at the date of this Agreement are
fully paid up and are legally owned by the Vendors.
There is not any guarantees , mortgages or pledges
and other forms of third party's benefit on, over or
affecting the Sale Interests.
6. The accounting systems of the Company and its
subsidiaries comply with `the Accounting Law of the
PRCand other relevant accounting regulations and
laws. All the books of the account of the Company and
its subsidiaries are true and accurate in all
material respects and there is no loss at the Date of
the Balance Sheet of the Company;
7. The vendors engage the qualified auditor to audit the
Company for each year or each quarter. At the Date of
the Balance Sheet and the future, the Vendors shall
disclose a true and fair view of the assets and
liabilities of the Company and its subsidiaries and
its profits for the financial year ended on such date
and the future;
8. The Company and its subsidiaries have paid all the
taxes before the Completion or will pay all the taxes
according to the tax laws and regulations and
disclose all tax evasion or legally tax evasions or
other tax problems which can seriously affect the
Purchaser's intent of purchasing the Sale Interests.
The Company and its subsidiaries have not or will not
pay any fine, penalty and interests according to the
tax laws, regulations and rules. The Company and its
subsidiaries have not during the last 3 years been
the subject of any discovery, audit or investigation
by any Taxation authority and there are no fact which
is likely to cause such discovery, audit or
investigation to be made.
9. 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 its subsidiaries shall not:
a. 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, 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;
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j. create, issue or grant any option in respect
of any type 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 regarding either 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. After the date of the Contract, the Vendors, required
by the Purchaser as shareholder, shall hire the
qualified and licensed accountant in the PRC
(Excluding Hongkong, Marco and Taiwan) to audit the
Company for each financial year .
7.2 REPRESENTATIONS AND WARRANTIES FROM THE PURCHASER
1. The Company is a company duly established and validly
existing under the laws of the Hongkong 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. The Xxxxxx Company is
a listed company duly established and validly
existing under the laws of USA.
2. The Purchaser procure that Xxxxxx Company will issue
the Consideration Shares according to the terms and
conditions of this Contract.
8. LIABILITY FOR THE BREACH OF THIS CONTRACT
8.1. The Vendors and Purchaser shall fulfill the Contract properly
and timely, Should all or part of this Contract be unable to
be fulfilled as the result the breach of one party, the
breaching party shall bear the liabilities thus caused.
8.2. Should the Vendors break the warranties regulated in Clause
8.1 and cause the Purchaser's economic loss and expenses (
including the legal fees ), the Vendors shall bear the
liabilities thus caused.
9.9. PRICE ADJUSTMENT
9.1 If the 12 months, 24 months and 36 months of Restricted
Trading Period are over, the value of the freely transferable
Consideration Shares which the Vendors or their designated
persons are owner, that is the freely transferable
Consideration Shares x the average price of 30 trading days
before the end of Restricted Trading Period, is less than the
twice of the value of the freely transferable Consideration
Shares on Completion Date, the Vendors inform the Purchaser in
written note(the Vendors' note) and ask the Purchaser execute
the following price adjustments. The Purchaser shall choose
one of the following ways to execute the price adjustments
within 30 business days after the Vendors' note.
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(a) To pay back cash according to the following formula: the
Cash paid back = the twice of the value of freely transferable
Consideration Shares on Completion Date -(the freely
transferable Consideration Shares x the average price of 30
trading days before the Restricted Trading Period(including
the ending day of the Restricted Trading Period));
(b) Procure the Xxxxxx Company issue and allot new restricted
shares of the Xxxxxx Company in the name of the Vendors or
their nominees, which are restricted according to Rule 144
promulgated under the U.S Securities Act and are calculated by
the Cash paid back / the average share price of 30 business
days before the Restricted Trading Period(including the ending
day of the Restricted Trading Period).
9.2 If the value of the freely transferable Consideration Shares
on the ending days of the Restricted Trading Period and the
days that the Vendors sell is more than twice of the value of
the freely transferable Consideration Shares on Completion,
the Purchaser shall have the rights to share 50% of
difference.
9.3 If the Company is listed in any security exchange board after
within 12 months after the Completion, the Clause 9 of the
Contract shall be not valid.
10. TERMINATION AND AMENDMENTS
10.1 The Vendors and the Purchasermay agree in writing to terminate
this Contract after negotiations. 10.2 The Vendors and the
Purchaser may terminate this Contract according to the
following conditions:
1. Should this Contract be unable to be fulfilled
materially due to the Force Majeure, the Vendors and
the Purchaser have the rights to terminate this
Contract without any liabilities.
2. Should one party be unable to fulfil this Contract
improperly and cause to break this Contract
fundamentally, the non-breaching party has the right-
to terminate this Contract, the breaching party shall
bear the responsibilities thus caused.
3. Other situations regulated by the relevant laws.
11. CONFIDENTIALITY AND ANNOUNCEMENTS
11.1 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
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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 endeavors to prevent the publication or disclosure of
any such confidential information concerning such matters.
11.2 No public announcement or communication of any kind shall be
made in respect of the subject matter of this Contract 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.
12. GOVERNING LAW AND JURISDICTION
12.1 This Contract shall be governed by and construed in accordance
with the laws of Hong Kong.
12.2 Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach termination or invalidity
thereof, shall be settled firstly by friendly negotiations; In
case no settlement can be reached through negotiation, the
disputes shall be submitted to the Court wit jurisdiction in
HongKong.
13. FURTHER PROMISE
13.1 The Vendors shall promise that the net asset of the Company
deducted the due shareholder's contribution at the end of the
12nd month from the Completion Date shall be not less than RMB
15 million. Should the Vendors may not fulfill this promise,
the Purchaser is entitled to withdraw all the Consideration
Shares and return the Sale Interests purchased and the
Transferable Note acquired from the Vendors.
13.2 The Vendors shall promise that the net asset of the Company
deducted the due shareholder's contribution at the end of the
24th month from the Completion Date shall be not less than RMB
25 million. Should the Vendors may not fulfill this promise,
the Purchaser is entitled to withdraw 25% of Consideration
Shares and retain the Sale Interests purchased and the
Transferable Note acquired from the Vendors.
14. REPURCHASING
14.1 The Vendors have the right to repurchase the Sales Interests
and the Transferable Note of the Company within the 33rd month
from the Completion Date.
14.2 The Vendors shall not repurchase any portion of Sales
Interests and the Transferable Note of the Company while it
shall repurchase all the Sales Interests and the Transferable
Note purchased by the Purchaser from the Vendors.
14.3 The Repurchasing price shall be calculated as follows: (unsold
Consideration Shares + sold Consideration Share) X ( the
average price of 30 trading days before Completion Date) X
8.25
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14.4 The Repurchasing price shall be transferred to the account
number designated by the Purchaser within sixty (60) days from
the day when the Vendors require the Repurchasing.
5. MISCELLANEOUS
15.1 This Contract 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.
15.2 Any variation to this Contract shall be binding only if
recorded in a document signed by all the parties hereto. 15.3
The obligations, liabilities (including without limitation:
breach of warranties) and undertakings of the Vendors shall be
joint and several.
15.4 This Contract shall be binding upon and ensure for the benefit
of the successors of the parties but shall not be assignable.
15.5 All provisions of this Contract t, in so far as the same shall
not have been performed at Completion, shall remain in full
force and effect notwithstanding Completion.
15.6 If any provision of this Contract shall be held to be illegal
or unenforceable, the enforceability of the remainder of this
Agreement shall not be affected.
15.7 The Purchaser shall not be responsible for any government fees
and tax and other additional expenses(including lawyer fees)
caused by the Vendors according to this Contract
IN WITNESS WHEREOF THIS CONTRACT HAS BEEN DULY EXECUTED BY ALL PARTIES HERETO
THE DAY AND YEAR FIRST ABOVE WRITTEN.
THE VENDORS
XIAO GEHUI
XX XXXX
XX XX
XXXX XXX
THE PURCHASER
XXXXXX GROUP LTD.(STAMP)
AUTHORIZATION
