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DATED THIS 20TH DAY OF JUNE , 1997
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-BETWEEN-
THE PARTIES WHOSE NAMES AND ADDRESSES ARE
SET OUT IN COLUMN (1) OF THE SCHEDULE
-AND-
NHANCEMENT TECHNOLOGIES INC.
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AGREEMENT FOR THE SALE OF SHARES
IN ADVANTIS NETWORK & SYSTEM SDN. BHD.
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Prepared By:
M/S XXXXXX & CO.
ADVOCATES & SOLICITORS
STRAITS TRADING BUILDING
NO. 4. LEBOH PASAR BESAR
50050 KUALA LUMPUR
File No. KCK/1972077.4/97
18th June 1997
G:\KCK\KCH\1972077.4\SPA.DOC
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AGREEMENT FOR THE SALE OF SHARES
IN ADVANTIS NETWORK & SYSTEM SDN. BHD.
AN AGREEMENT is made this 20th day of JUNE , 1997
BETWEEN
(1) THE PARTIES WHOSE NAMES AND ADDRESSES ARE SET OUT IN COLUMN (1) OF THE
SCHEDULE (severally "Vendor" and collectively "Vendors");
AND
(2) NHANCEMENT TECHNOLOGIES INC., a company incorporated under the laws of the
State of Delaware, the United States of America and having its principal
office at 0000 Xxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, Xxxxxx Xxxxxx
xx Xxxxxxx and Fax No: 00-0-000-000-0000 ("NHancement");
WHEREAS:-
A. ADVANTIS NETWORK & SYSTEM SDN. BHD. (Company No. 264705-A) ("Company") is
a company incorporated in Malaysia having an authorised share capital of
Ringgit Malaysia Five Hundred Thousand (RM500,000,00) divided into five
hundred thousand (500,000) ordinary shares of Ringgit Malaysia One (RM1.00)
each of which two hundred and fifty thousand (250,000) ordinary shares
have been issued and are fully paid.
B. The Vendors are the registered and beneficial owners of those number of
ordinary shares in the Company set out against their respective names in
Column (2) of the Schedule (collectively "Sale Shares") which in
aggregate constitute all the issued and fully paid-up ordinary shares of
the Company.
C. NHancement has authorised capital stock of twenty-two million (22,000,000)
shares designated into twenty million (20,000,000) shares of common stock
of USD0.01 par value per share and two million (2,000,000) shares of
preferred stock of USD0.01 par value per share of which four million two
hundred and twenty-eight thousand four hundred and forty (4,228,440)
shares of the common stock are issued and outstanding as at the date of
this Agreement. The common stock of NHancement is listed on The NASDAQ
Small Cap Market ("NASDAQ").
D. The Vendors are desirous of selling and NHancement is desirous of
purchasing the Sale Shares upon the terms and conditions hereinafter
contained.
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E. The parties intend that the transactions contemplated hereby qualify as a
pooling of interests for United States' financial accounting purposes and
as an exempt transaction pursuant to Section 4(2) of the Securities Act
(as hereafter defined).
NOW THIS AGREEMENT WITNESSETH as follows:
1. DEFINITIONS
1.1 In this Agreement where the context so admits, the following expression
shall have the following meanings:-
"Accounts" means the audited balance sheet and profit and loss accounts of
the Company audited by the Company's auditors for the periods ended on the
Accounts Date and a copy of which has been provided by the Vendors to
NHancement;
"Accounts Date" means the financial year ended 31st March 1996 of the
Company;
"Act" means the Companies Act, 1965 as amended form time to time and any
reenactment thereof;
"Common Stock" means the common stock of NHancement of USD0.01 par value
per share;
"Company" means ADVANTIS NETWORK & SYSTEM SDN.BHD. described in Recital A;
"Completion Date" means the date for completion of the sale and purchase
of the Sale Shares referred to in Clause 5.1;
"Consideration Shares" means 530,000 fully-paid and non-assessable shares
of Common Stock;
"Exchange Act" means the United States Securities and Exchange Act of
1934, as amended form time to time and any successor or re-enactment
thereof;
"FIC" means the Foreign Investment Committee of Malaysia;
"Purchase Price" means the purchase price payable by the Purchaser for the
Sale Shares determined in the manner set out in Clause 3.3;
"Sale Shares" means the aggregate of the shares to be purchased by
NHancement from the Vendors being all to the issued share capital of the
Company;
"Securities Act" means the Securities Act of 1933 of the United States of
America, as amended from time to time and any successor or re-enactment
thereof;
"USD" means the legal currency of the United States of America denominated
in Dollars;
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1.2 Words denoting the singular shall include the plural number and vice
versa. Words denoting the masculine gender shall include the feminine and
neuter genders. Words denoting persons shall include corporations and
firms.
1.3 Clause headings are for reference only and shall be ignored when
construing the meaning of any provisions of this Agreement.
1.4 The Schedule and Appendices shall be taken read and construed as an
essential part of this Agreement.
1.5 References to Clauses, Xxxxxxxx and Appendices are references to
Clauses, Schedule and Appendices respectively of this Agreement.
2. SALE AND PURCHASE
2.1 The Vendors hereby agree to sell and NHancement hereby agrees to
purchase the Sale Shares free from all encumbrances, claims, charges,
liens and equities and with all rights attaching thereto as from the date
hereof upon the terms and conditions herein contained.
3. CONSIDERATION
3.1 The consideration for the sale by the Vendors of the Sale Shares to
NHancement shall be satisfied by the issuance and delivery by NHancement
of the Consideration Shares to the Vendors.
3.2 The number of the Consideration Shares to be issued and delivered by
NHancement to each Vendor is set out in Column (4) of the Schedule
against the respective name of each Vendor.
3.3 The parties agree that the Purchase Price for the Sale Shares shall be
equal to eighty per cent (80%) of the average closing price per share
quoted by NASDAQ over the five (5) trading days immediately preceding the
date hereof times the number of Consideration Shares; being USD
1,484,000.00. The parties further agree that, notwithstanding any
variation in the price of the Common Stock as quoted by NASDAQ between
the date hereof and the Completion Date, there shall not be any
adjustments to the number of Consideration Shares to be issued to the
Vendors.
3.4 The Consideration Shares shall upon issue be restricted securities
subject to the restrictions on transfer pursuant to Rule 144 promulgated
under the Securities Act.
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4. CONDITIONS PRECEDENT
4.1 Subject to the provisions herein contained. NHancement's obligation to
perform this Agreement is conditional upon approval by the FIC and any
other relevant authority of the acquisition of the Sale Shares by
NHancement having been obtained on or before the expiration of six (6)
months from the date of this Agreement or such other date as the parties
hereto may mutually agree. It being agreed that:-
4.1.1 Each of NHancement and the Vendors shall, at its own cost
and expense, as soon as possible after the execution of this
Agreement make the necessary applications to the respective
authorities and persons for the purpose of obtaining the
approvals referred to in this Clause 4.1 and the parties
shall promptly furnish the other with any information and
documents which the other may require for the purposes of
making the applications referred to in the Clause 4.1;
4.1.2 If conditions or terms are imposed in connection with the
granting of the approvals referred to in this Clause 4.1 and
any of the said conditions or terms is unacceptable to
NHancement, NHancement shall appeal to the relevant
authority against such conditions or terms within thirty
(30) days of receipt of notice of the said conditions or
terms;
4.1.3 If any of the approvals referred to in this Clause 4.1 is
granted subject to terms and conditions which are acceptable
to NHancement, such approval shall be deemed to have been
obtained and this Agreement shall be deemed to have been
modified and varied to such extent as may be necessary to
comply with the terms and conditions imposed by the
authority(ies) concerned.
4.2 NHancement's obligation to perform this agreement is conditioned upon
NHancement being reasonably satisfied, after a due diligence audit
carried out by it or its advisers, that (A) the books of accounts and
records of the Company give a true and fair view of its assets,
liabilities, business and affairs; and (B) there has not been any
material deterioration in the financial position of the Company since the
Accounts Date. It being agreed that:-
4.2.1 the Vendors will as soon as possible after the date hereof
but no later than 15th August 1997:-
(a) ensure that the Company's auditors shall, at the cost
and expense of the Company, complete the audit of the
Company's accounts for its financial year ended 31st
March 1997;
(b) cause the audited accounts to be approved by the board
of directors and shareholders of the Company: and
(c) forthwith provide a copy of the audited accounts to
NHancement;
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4.2.2 NHancement shall, at its own cost and expense, as soon as
possible after the date hereof appoint a firm of auditors to
carry out a due diligence and shall use all reasonable
endeavours to ensure that the due diligence audit is
completed within sixty (60) days from the date of delivery
of the accounts referred to in Clause 4.2.1(c);
4.2.3 The Vendor shall procure the Company and its auditors,
officers and employees to give full and unfettered access to
the books of accounts and other documents of the Company to
NHancement's auditors;
4.2.4 NHancement shall furnish a copy of the report of the
auditors to the Vendors and shall within fourteen (14) days
from receipt of the report inform the Vendors in writing
whether the condition precedent of this Clause 4.2 has been
fulfilled; and
4.2.5 NHancement shall have the right to terminate this Agreement
if the audited accounts of the Company for the financial
year ended 31st March 1997 discloses a material
deterioration in the financial position of the Company as
compared to its financial position as at the Accounts Date.
4.3 NHancement being satisfied from documents and evidence furnished to it
by the Vendors or the Company that:-
4.3.1 the Vendors have taken all necessary corporate actions to
procure Advantis Structured Systems Sdn Bhd and Advantis
Integration Sdn Bhd to have changed their respective names
to remove any reference to "Advantis" or any word or phrase
similar thereto;
4.3.2 the sale by the Company of its fifty-one per cent (51%)
shareholding in each of Advantis Structured Systems Sdn Bhd
and Advantis Integration Sdn Bhd have been completed on an
armslength and fair market value basis and on a without
recourse basis against the Company and the sale proceeds
have been received by the Company;
4.3.3 the Vendors who have an interest in the remaining 49% of
the issued capital of Advantis Integration Sdn Bhd have
disposed of their respective legal and beneficial interests
in that company; and
4.3.4 the Vendors who have an interest in the issued capital of
Advantis Technologies Sdn Bhd have taken all necessary
corporate actions to procure that company to have changed
its name to remove any reference to "Advantis" or any word
or phrase similar thereto and subsequently to have disposed
of their respective legal and beneficial interests in that
company.
4.4 NHancement may terminate this Agreement by giving written notice to
such effect to the Vendors if:-
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4.4.1 any of the approvals required by Clause 4.1 is refused, not
obtained within the allotted period, or is obtained subject to
limitations which are unacceptable to Nhancement and which
Nhancement is unable to modify on appeal to the relevant
authority; or
4.4.2 any of the other conditions of Clause 4 remains unfulfilled by a
date (6) months after the date hereof:
Upon receipt of such written notice by the other party hereto, this
Agreement shall summarily terminate and be at an end of no further effect
and no party hereto shall have any further claim against the other
pursuant to the terms of this Agreement save for any antecedent breach.
5. COMPLETION
5.1 The sale and purchase of the Sale Shares shall be completed on or before
the expiry of thirty (30) days from the date the last of the approvals or
conditions stated in Clause 4 have been obtained or fulfilled ("COMPLETION
DATE") in the manner hereinafter set forth:-
5.1.1 the Vendors shall deliver or procure the delivery to NHancement
of the following:-
(a) a copy of the resolution of the Board of Directors of the
Company (duly certified by a Director or the company
Secretary of the Company) approving the transfer of the
Sale Shares from the vendors to NHancement or its
nominee(s) together with signed copies of the waiver(s) of
pre-emption rights of any person whomsoever to the Sale
Shares or any part thereof it such waiver(s) are required
under the Articles of Association of the Company to enable
NHancement or its nominee(s) to be registered as the
transferee(s) of the Sale Shares;
(b) the relevant share certificates relating to the Sale Shares
and duly executed valid and registrable transfers in
respect thereof in favour of Nhancement or its nominee(s);
(c) a copy of the resolutions of the Board of Directors of the
Company (duly certified by a Director or the Secretary of
the Company) approving the appointment of four (4) nominees
of Nhancement as directors of the Company;
(d) letters of resignation of all directors of the Company
other than the directors nominated by Xxxxxxxxxx to take
effect immediately and without any compensation for loss of
office;
(e) letters of resignation of the Auditors and the Company
Secretary;
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(f) the common seal and all assets and documents belonging to
the Company;
(g) employment agreements between the persons whose names
appear below and the Company in a form acceptable to
NHancement whereby the said persons agree to be employed by
the Company in the designation which appears against their
respective names for not less than two (2) years after the
Completion Date.
Name Designation
---- -----------
Xxx Xxx Xxxxx Managing Director
Xx Xxx Xxx Technical Manager
Xxx Xxxx Xxxx Technical Manager
Xxxxxx Xxxxxxxx Divisional Manager, Sales;
s/o X.X. Xxxxxx
(h) a market stand-off agreement signed by each Vendor
substantially in a form acceptable to NHancement;
(i) a Closing Certificate signed by each Vendor whereby the
Vendors confirm that the representatives, warranties and
covenants provided by them under this Agreement remain true
and accurate as at the Completion Date;
(j) a Closing Certificate signed by the Managing Director of
the Company confirming that the representations and
warranties set out in Clauses 6.1.1 to 6.1.28 hereof remain
true and accurate, and the undertakings set out in Clauses
7.1.1 to 7.1.11 have been complied with by the Vendors, as
at the Completion Date;
(k) a copy of the United States Internal Revenue Code FORM
W-8 "Certificate of Foreign Status" signed by each Vendor;
5.1.2 against delivery and completion of the items referred to in
Clause 5.1.1 above NHancement shall deliver to the Vendors:-
(a) stock certificate(s) representing Common Stock in
denominations relating to each Vendor's respective
proportion of the Consideration Shares;
(b) a Closing Certificate signed on behalf of NHancement
whereby NHancement confirms that the representations,
warranties and covenants provided by it under this
Agreement remain true and accurate as at the Completion
Date.
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5.2 The parties acknowledge that NHancement is not obliged to
complete the purchase of the Sales Shares unless the sale and
purchase of all Sale Shares takes place contemporaneously.
6. VENDORS REPRESENTATIONS AND WARRANTIES
6.1 The Vendors hereby jointly and severally represent and warrant
to NHancement to the intent that the provisions of this Clause
shall continue to have full force and effect for a period of
three (3) years from the Completion Date, that except as
otherwise disclosed in the Accounts or by the Vendors to
NHancement in writing before the date hereof or as provided for
in this Agreement that:-
6.1.1 The Company is duly incorporated, validly existing and in
good standing under the laws of Malaysia;
6.1.2 No order has been made, no petition has been presented and
no resolution has been passed or proposed and no analogous
action or proceedings in Malaysia or any other jurisdiction
has been initiated or taken for the purpose of winding up
the Company and no receiver, manager or liquidator has been
appointed with respect thereto;
6.1.3 All corporate approvals required in connection with the increase
from time to time in the authorised and issued share capital of
the Company have been obtained and the authorised and issued
share capital is as set out in Recital (A) hereof;
6.1.4 No person has the right to call for the issue of any share or
loan capital of the Company under any option or other agreement
(including conversion rights);
6.1.5 The Company has the requisite corporate powers to carry on the
business presently being carried on;
6.1.6 The Accounts for the period ended on the Accounts Date have been
prepared in accordance with the requirements of all relevant
statutes and generally accepted accounting principles in
Malaysia and are true and accurate in all material respects and
show a true and fair view of the assets and liabilities of the
Company at the Accounts Date and the profits thereof for the
relevant period;
6.1.7 There has been no material deterioration on the financial
position, profits or prospects of the Company since the Accounts
Date;
6.1.8 The amounts included in the Accounts or in the books of the
Company as due from debtors are substantially collectable and
have not been written off or proved to be irrecoverable to any
material extent;
6.1.9 The aggregate of the stock-in-trade included in the Accounts has
been arrived at on the basis of the cost or market value
whichever is
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the lower and full provision has been made for old and slow
moving stock and no part of such aggregate value is attributable
to stock which is known to be unusable or unsaleable in the
normal course of business;
6.1.10 All licences, consents, permits and authorities of or from any
court, tribunal, or governmental authority or agency which are
necessary or desirable to enable the Company to carry on its
business in the places and in the manner in which such business
is now carried on have been obtained and the Vendors know of no
reason why any of them should be suspended, cancelled or revoked;
6.1.11 All licences including business licences and permits,
intellectual property including patents, trade marks, copyrights
and registered designs which are used by the Company in
connection with its business are registered in the name of or
licensed to the Company and are valid and effective and licence
or other rights have been granted or agreed to be granted to any
third party in respect of such intellectual property;
6.1.12 The Company is not in default in respect of any of its
obligations, whether contractual or statutory, in any material
respect;
6.1.13 The Company is not engaged in any material litigation or
arbitration proceedings and no material litigation or
arbitration proceedings are pending or threatened by or against
the Company and the Vendors know of no reason why any such
proceedings are likely to be commenced;
6.1.14 The Company has not entered into any long term or abnormal
contract or undertaken any obligations whatsoever except such as
are usual an necessary in the ordinary and proper course of its
business or as are referred to in the Accounts and in
particular, and without limitation to the foregoing, there are
no contracts for the purchase of stocks at prices substantially
in excess of market prices prevailing as at the dates such
contracts were made or for the sale of stocks at prices
substantially lower than the market prices prevailing as at the
dates such contracts were made;
6.1.15 Save as disclosed in the Accounts, the Company has not any
mortgages, charges, liens or other encumbrances secured over any
of its assets;
6.1.16 The Company has no outstanding debts, liabilities, contracts or
engagements other than those disclosed in the Accounts and in
respect of transactions entered into subsequent to the Accounts
Date, in the books of account of the Company;
6.1.17 The Company has not since the Accounts Date paid or made and
will not pending completion hereunder pay or make any dividend,
bonus issue or other distribution (other than those for which
full
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reserve or provision was made in Accounts) or any loan or
advance;
6.1.18 To the best of the knowledge, information and belief of the
Vendors, the tax returns of the Company have at all times been
correct and on a proper basis and are not the subject of any
back duty claim or other dispute with the revenue authorities;
6.1.19 The amounts provided in the Accounts for taxation are sufficient
to cover all taxation (whether income tax, amounts assessed as
if they were amounts of income tax, service tax, sales tax or
capital gains tax) for which the Company is at the Accounts Date
or at any time thereafter may become liable to be assessed or to
pay on or in respect of or by reference to its business, income
or profits on or before the Accounts Date or in respect of
dividends or distributions made prior to the Accounts Date or in
respect of any accounting period of the Company ended on or
before the Accounts Date;
6.1.20 There are no outstanding notices served on the Company in
respect of any of its assets which are material to its business;
6.1.21 The Company has no subsidiaries other than Advantis Structured
Systems Sdn Bhd and Advantis Integration Sdn Bhd in respect of
which the Company has divested its entire fifty-one per cent
(51%) shareholding in each of such companies subsequent to the
Accounts Date;
6.1.22 The divestment of the shares by the Company referred to in
Clause 6.1.21 have been effected with the purchasers thereof on
a without recourse basis to the Company;
6.1.23 The Company and to the best of the knowledge and belief of the
Vendors, every officer of the Company has complied with all
laws, regulations and official directives (whether or not having
the force of law) and all judgments, orders and decrees in
Malaysia and every other relevant jurisdiction applicable to the
Company, the carrying on of its business and all issues of
shares debentures or other securities by the Company;
6.1.24 The statutory books and minute books of the Company have been
properly written up and all appropriate returns have been made
to the Registrar of Companies and any other official body in
Malaysia and any other relevant jurisdictions;
6.1.25 The furniture fixtures fittings equipment and vehicles used in
connection with the business of the Company other than leased or
hired items which have been disclosed are the property of and
held by the Company free from any hire or hire purchase
agreement or agreement for payment on deferred terms or bill of
sale;
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6.1.26 Of the fixtures fittings equipment and vehicles included in the
Accounts and also any such item acquired by the Company since the
Accounts Date:-
(a) none has been retaken into possession by the owner under
any hire purchase agreement or equipment lease agreement;
(b) none has been sold or disposed of at a price which is
materially less than its book value:
(c) none was acquired at a price substantially in excess of
market value;
6.1.27 All the assets of the Company which are of an insurable nature
are insured in amounts reasonably regarded as adequate against
fire and other risks and all policies for such insurance are in
force and are not voidable on account of any act, omission or
non-disclosure;
6.1.28 With respect to its employees, the Company has:-
(a) paid all statutory contributions (including without
limitation, employees' provident fund and social security
contributions) which are required to be paid by the Company
under the laws of Malaysia;
(b) has deducted from the employees and paid to the relevant
authorities, contributions and payments (including without
limitation the employees' contribution to the employees'
provident fund and deductions on account of income tax)
which are required to be so deducted and paid over to the
relevant authorities under the laws of Malaysia.
6.2 The Vendors hereby severally represent and warrant to NHancement that:-
6.2.1 This Agreement constitutes valid and binding obligations on the
respective Vendors;
6.2.2 Each respective Vendor is the registered and beneficial owner of
the respective number of the Sale Shares registered in his name:
6.2.3 Each respective Vendor is entitled to sell and transfer or
procure the sale and transfer of the full legal and beneficial
ownership in the respective number of the Sale Shares registered
in his name to NHancement on the terms set out in this Agreement;
6.2.4 There is no option, right to acquire, mortgage, charge, or other
encumbrance or any equity on, over or affecting the Sale Shares
or any of them and so far as the respective Vendor thereof is
aware no claim has been made by any person to be entitled to any
of the foregoing.
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6.3 NHancement hereby acknowledges that the obligations of the Vendors under
Clause 6.2 are several and no Vendor shall be liable for the default of any
other Vendor of any representation or warranty contained therein. The
Vendors acknowledge that their obligations under Clauses 6.1.1 to 6.1.28
are joint and several.
6.4 Each representation and warranty set out in Clauses 6.1 and 6.2 shall be
separate and independent and, save as expressly provided, shall not be
limited by reference to any other representation or warranty or any other
provisions contained in this Agreement.
7. VENDORS UNDERTAKINGS
7.1 As from the date of this Agreement and until the Completion Date the
Vendors shall procure that the Company shall maintain and carry on its
business in the ordinary and usual course and that no act or omission other
than in such ordinary and usual course shall be effected without the prior
consent in writing of NHancement and in particular but without prejudice to
the generality of the foregoing the Vendors shall procure that:-
7.1.1 no share or loan capital in the Company are issued and no options
and rights or warrants are created in respect of any share or
loan capital in the Company;
7.1.2 the business of the Company will continue to be carried on and
managed in the same manner as at the present time and in
accordance with all regulations applicable to it;
7.1.3 the Company will not create or agree to create any mortgage,
charges or other security or encumbrances over its assets save
and except in the ordinary course of its business;
7.1.4 the Company will not enter into any material contracts or incur
any material liabilities or obligations except in the ordinary
course of its business;
7.1.5 the Company will not enter into any long term or abnormal
contract or capital commitment except in the ordinary course of
its business;
7.1.6 the Company will not pay or agree to pay to its directors or
officers or any of them any remuneration or other emoluments or
benefits whatsoever other than those which have been disclosed
and agreed to by NHancement;
7.1.7 the Company will not dispose of any material part of its fixed
assets save and except for those assets which are no longer
required in the Company's business;
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7.1.8 the Company will not do anything other than acts in the ordinary
course of its business whereby its financial position shall be
rendered materially less favorable than at the date hereof;
7.1.9 the Company will not permit any liens to arise on any of its
assets save and except such liens arising in the ordinary course
of business or by law;
7.1.10 the Company will not acquire any assets on hire purchase or
deferred terms save and except with respect to assets which are
necessary for its business;
7.1.11 the Company will not pass any resolution by its board of
directors or by its members in general meeting and will not make
any alteration to its Memorandum and Articles of Association save
and except as is necessary to give effect to the provisions of
this Agreement or as required in the ordinary and proper course
of its business.
7.2 Any Vendor who hereby acquires a number of Consideration Shares greater
than five per cent (5%) of the outstanding Common Stock of NHancement shall
file with the United States Securities and Exchange Commission within ten
(10) days of the Completion Date a fully executed Form 13D reporting such
acquisition as required by Section 13(d) of the Exchange Act, copies of
which shall also be delivered to NHancement and filed with NASDAQ.
7.3 The Vendors acknowledge that the proprietary interest and goodwill in the
word "Advantis" continues to vest in the Company upon completion of the
sale and purchase of the Sale Shares. The Vendors undertake that they will
not by themselves or through any third parties use the name "Advantis" or
any word or phrase similar thereto in any other company or business which
they may now or hereafter carry on in Malaysia or elsewhere.
8. VENDORS TAX INDEMNITIES
8.1 The Vendors hereby jointly and severally undertake with NHancement that
they will indemnify NHancement against any depletion or diminution in value
in the assets of the Company resulting from:-
8.1.1 any amount of tax (whether income tax, amounts assessed as if
they were amounts of income tax, service tax or sales tax)
already assessed or which may hereafter be assessed on the
Company for any period ending on or before the Accounts Date
except in so far as provision is made for such liability in the
Accounts;
8.1.2 any claim for income tax in respect of any dividend paid or any
distribution made by the Company before the Completion Date
except in so far as provision is made for such liability in the
Accounts;
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8.1.3 any claim made for payment by the Company of capital gains tax
in respect of a chargeable gain accruing at any time prior to the
Completion Date except in so far as provision is made for such
liability in the Accounts;
8.1.4 any reasonable settlement of any threatened claim, demand,
direction, apportionment, assessment, recovery or counter-claim
as aforesaid;
8.1.5 any costs reasonably incurred by the Company in contesting or
settling any such claim, demand, direction, apportionment,
assessment, recovery or counter-claim as aforesaid, whether
threatened or made.
9. NHANCEMENT'S REPRESENTATIONS AND WARRANTIES
9.1 NHancement hereby represents and warrants to the Vendors to the intent that
the provisions of this Clause shall continue to have full force and effect
for a period of three (3) years from the Completion Date, that except as
otherwise disclosed by NHancement to the Vendors in writing before the date
hereof or as provided for in this Agreement that:-
9.1.1 NHancement is a corporation duly organised, validly exisiting and
in good standing under the laws of the State of Delaware, United
States of America;
9.1.2 all corporate actions required in connection with the issuance
and delivery of the Consideration Shares will have been obtained
and be of full force and effect on the Completion Date;
9.1.3 The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorised
by all necessary corporate action and this Agreement is a valid
and binding obligation of NHancement, enforceable in accordance
with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws
affecting the rights of creditors generally;
9.1.4 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby in the
manner herein provided will:-
(a) contravene any provision of the Certificate of Incorporation
or Bylaws of NHancement;
(b) violate, be in conflict with, constitute a default under,
cause the acceleration of any payments pursuant to, or
otherwise impair the good standing, validity and
effectiveness of any
16
15
lease, licence, law, rule, regulation, order or permit to
which NHancement is subject;
9.1.5 Upon issuance the Consideration Shares will be eligible for
trading on NASDAQ subject to the restrictions of Rule 144 and the
market standoff agreement;
9.1.6 NHancement has delivered to the vendors copies of its final
prospectus dated January 30, 1997 and its most recent FORM 10KSB,
FORM 10QSB and FORMS 8K filed with the United States Securities
and Exchange Commission in compliance with the reporting
requirements of the Exchange Act; which documents include, among
other things, audited financial statements of NHancement for its
most recent fiscal year and unaudited financial statements of
NHancement for its most recent quarter, and which describe its
business as of their respective dates and, taking into account
the activities described therein and herein, accurately describe
its business as of the date hereof.
9.2 Each representation and warranty set out in Clause 9.1 shall be separate
and independent and, save as expressly provided, shall not be limited by
reference to any other representation or warranty or any other provisions
contained in this Agreement.
10. SPECIFIC PERFORMANCE
10.1 The parties hereto shall be entitled to obtain an order for specific
performance against any party defaulting in the performance of its
respective obligations under this Agreement.
11. TIME OF THE ESSENCE
11.1 Time wherever mentioned shall be of the essence in this Agreement.
12. LEGAL COSTS AND STAMP DUTY
12.1 The cost of and incidental to the preparation of this Agreement including
the stamp duty and transfer fee payable on the transfer and registration of
the Sale Shares shall be borne by NHancement. Each party shall bear its
own solicitors fees of and incidental to the preparation of this Agreement.
13. GOVERNING LAW AND JURISDICTION
13.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of the State of Delaware and the parties hereto
submit to the nonexclusive jurisdiction of the Courts of Malaysia. The
parties hereto agree that
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16
nothing contained in this Clause shall preclude any party from commencing
legal proceedings in any other jurisdiction.
13.2 Each of the Vendors hereby appoints the person named below to be their
agent ("Service Agent") for receipt of service of any originating process
and cause papers with respect to any legal proceedings commenced against
them under or pursuant to this Agreement:-
Name of Service Agent: Xxx Xxx Xxxxx
Address: Xx. 000, Xxxxx XX 0/0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
13.3 The Vendors agree that any originating process and cause papers served on
the Service Agent in accordance with Clause 13.2 shall be deemed to have
been duly served on the Vendors.
14. NOTICES
14.1 Any communication (including without limitation notices consents and
similar documents) required or permitted to be given or served under this
Agreement shall be in writing and may be served by registered post for
addresses within the country of the sender and by registered air-letter for
addresses outside the country of the sender and in both cases by hand or by
telefax, addressed to the relevant party at the addresses or telefax
numbers set out in the Schedule or such other address or telefax number as
may have been notified to the other party in accordance with this Clause.
14.2 Any such communication notice consents and similar documents shall be
deemed to have been served:-
14.2.1 in the case of delivery by hand when delivered if a receipt is
obtained from the addressee; and
14.2.2 in the case of telefax:-
(a) if despatched during regular business hours of the receiving
office when despatced and telefax acknowledgement or
answerback is duly and automatically received by the sender
of the telefax; or
(b) if despatched otherwise than during regular business hours
of the receiving office upon the commencement at the
receiving office of the next regular business hours
succeeding transmission provided always that answerback is
duly automatically received by the sender on despatch as
aforesaid;
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17
14.2.3 if despatched by registered post to an address within the country
of the sender five (5) days and if despatched by registered
air-letter to an address outside the country of the sender
fourteen (14) days after the date it is lodged with the postal
authorities for despatch.
15. SUCCESSORS BOUND
15.1 This Agreement shall be binding upon the respective successors-in-title,
personal representatives and permitted assigns of the Vendors and the
successors-in-title and permitted assigns of the Purchaser. None of the
parties shall assign his rights and obligations hereunder without the prior
consent in writing of the other parties hereto.
16. SEVERABILITY
16.1 Any term, condition, stipulation, provision, covenant or undertaking
in this Agreement which is or may become illegal, void, prohibited or
unenforceable in any respect under any law shall be ineffective to the
extent of such illegality, voidness, prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
illegality, voidness, prohibition or unenforceability shall not invalidate
or render illegal, void or unenforceable any other term condition,
stipulation, provision, covenant or undertaking contained in this
Agreement.
17. NO WAIVER
17.1 Knowledge or acquiescence by any party of or in any breach of any of the
terms, conditions or covenants herein contained shall not operate as or be
deemed to be a waiver of such terms, conditions or covenants or any of them
and notwithstanding such knowledge or acquiescence, each party shall be
entitled to exercise its respective rights under this Agreement and to
require strict performance by the other of the terms, conditions and
covenants herein.
18. NO TRADING
18.1 The Vendors severally covenant with NHancement that they shall not trade in
any securities of NHancement until the Completion Date or earlier
termination hereof.
19. CONFIDENTIALITY
19.1 Except as and to the extent required by law:
19.1.1 NHancement will not disclose or use to the detriment of the
Company or the Vendors, any Confidential Information (as defined
below) with respect to the Company furnished or to be furnished
to NHancement or its auditors or representatives by any Vendor or
the Company or their representatives in the course of the due
19
18
diligence audit referred to in Clause 4 hereof or pursuant to
this Agreement;
19.1.2 the Vendors will not disclose or use to the detriment of
NHancement, any Confidential Information (as defined below) with
respect to NHancement furnished or to be furnished to the Vendors
or their respective representatives pursuant to this Agreement;
19.2 For the purposes of Clause 19.1, "Confidential Information" means any
information about stamped "confidential" or identified in writing as such
by the party providing the information ("Provider") to the other party
("Recipient") or their respective representatives unless:
19.2.1 such information is already known to the Recipient or its
representatives or to others not bound by a duty of
confidentiality or such information becomes publicly available
through no fault of the Recipient or its representatives;
19.2.2 the use of such information is necessary or appropriate in making
any filing or obtaining any consent or approval set out in Clause
4.1 hereof;
19.2.3 the furnishing or use of such information is required by or
necessary or appropriate in connection with legal proceedings.
19.3 Upon the written request of the Provider, the Recipient will promptly
return to the Provider or destroy any Confidential Information in its
possession and certify in writing to the Provider that it has done so.
20. DISCLOSURE
20.1 Except and to the extent required by law, none of the parties hereto or
their respective representatives shall directly or indirectly make any
public comment, statement or communication with respect to, or disclose the
provisions of this Agreement or the transaction herein provided for to any
other persons without the prior consent in writing of the other parties
hereto PROVIDED THAT NHancement may file all reports and make all
disclosure required by the Exchange Act and NASDAQ and any corresponding
public release and in connection therewith make the necessary disclosure to
its accountants, agents and other third parties without the prior approval
of the Vendors.
21. ENTIRE CONTRACT AND AMENDMENT
21.1 This Agreement constitutes the entire agreement and understanding between
the parties hereto in connection with the subject matter hereof.
21.2 No purported amendment of this Agreement shall be effective unless made in
writing and signed by all parties.
20
19
22. NO NEGOTIATION
22.1 Until such time, if any, as this Agreement is terminated pursuant to
Clause 4, the Vendors will not, and will cause the Company and
each of their representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider the
merits of any unsolicited inquiries or proposals form, any person
(other than the Purchaser) relating to any transaction involving the
sale of the business or assets (other than in the ordinary course of
business) of the Company, or any part of the share capital of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
23. INDEMNIFICATION
23.1 From and after the Completion Date, the Vendors shall jointly and
severally indemnify and hold harmless NHancement and its officers,
directors, employees, shareholders and agents from and against any and
all damages, losses, obligations, deficiencies, liabilities, claims,
encumbrances, penalties, costs, and expenses, including reasonable
attorneys' fees (collectively "Losses"), that any of them may suffer
or incur, resulting from, related to, or arising out of any
misrepresentation, breach of any representation and warranty, or
nonfulfillment of any of the covenants or agreements of the Vendors in
this Agreement or from any misrepresentation in or omission from
Annexure A to this Agreement, certificate, financial statement, or from
any other document furnished or to be furnished to NHancement hereunder
and any and all actions, suits, investigations, proceedings, demands,
assessments, audits, judgments and claims arising out of the foregoing.
23.2 From and after the Completion Date, the Purchaser agrees to indemnify
and hold harmless the Vendors from and against any and all Losses that
Vendors may suffer or incur, resulting from, related to, or arising out
of any misrepresentation, breach of warranty, or nonfulfillment of any
of the covenants or agreements of NHancement in the Agreement or from
any misrepresentation in or omission from any certificate or document
furnished or to be furnished to the Vendors hereunder and any and all
actions, suits, investigations, proceedings, demands, assessments,
audits, judgments, and claims arising out of any of the foregoing
PROVIDED THAT nothing herein shall oblige NHancement to indemnify the
Vendors for any losses suffered by them in consequence of changes in the
price of the Common Stock (including the Consideration Shares).
23.3 Promptly after acquiring knowledge of any Losses against which the
Vendors have indemnified NHancement or against which NHancement has
indemnified the Vendors, or as to which any party may be liable, the
Vendors or NHancement, as the case may be, shall give to the other party
written notice thereof. Each indemnifying party shall, at its own
expense, promptly defend, contest or otherwise protect against any
Losses against which it has indemnified an indemnified party, and each
indemnified party shall receive from the other party all necessary and
21
20
reasonable cooperation in said defence including, but not limited to, the
services of employees of the other party who are familiar with the
transactions out of which any such Losses may have arisen. The idemnifying
party shall have the right to control the defence of any such proceeding
unless it is relieved of its liability hereunder with respect to such
defence by the indemnified party. The indemnifying party shall have the
right, at its option, and, unless so relieved, to compromise or defend, at
its own expense by its own counsel, any such matter involving the asserted
liability of the indemnified party. In the event that the indemnifying
party shall undertake to compromise or defend any such asserted liability,
it shall promptly notify the indemnified party of its intention to do so.
In the event that an indemnifying party, after written notice from an
indemnified party, fails to take timely action to defend the same, the
indemnified party shall have the right to defend the same by counsel of
its own choosing, but at the cost and expense of the indemnifying party.
24. INTERFERENCE WITH BUSINESS
24.1 The Vendors acknowledge that:-
24.1.1 they have occupied a position of trust and confidence with the
Company prior to the date hereof and have become familiar with
the following, any and all of which constitute confidential
information of the Company (collectively the "Advantis
Confidential Information"):
(a) any and all trade secrets concerning the business and
affairs of the Company, product specifications, data,
know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions
and ideas, past, current and planned research and
development, current and planned manufacturing and
distribution methods and processes, customer lists, current
and anticipated customer requirements, price lists, market
studies, business plans, computer software and programs
(including object code and source code), computer software
and database technologies, systems, structures and
architectures (and related processes, formulae,
compositions, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and
information of the Company and any other information,
however documented, of the Company that is a trade secret;
(b) any and all information concerning the business and affairs
of the Company, which includes historical financial
statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the
names and backgrounds of key personnel, personnel training
and techniques and materials, however documented; and
22
21
(c) any and all notes, analysis, compilations, studies,
summaries, and other material prepared by or for the
Company containing or based, in whole or in part, on
any information included in the foregoing;
24.1.2 the business of the Company is national in scope and its
products and services are marketed throughout Malaysia;
24.1.3 the Company competes with other businesses that are or could
be located in any part of Malaysia;
24.1.4 NHancement has required that the Vendors make the covenants
set out in Clauses 24.2 and 24.3 as a condition to
NHancement's purchase of the Sale Shares;
24.1.5 the provisions of Clauses 24.2 and 24.3 are reasonable and
necessary to protect and preserve the Company's business
enterprise and value; and
24.1.6 the Company would be irreparably damaged if the Vendors were
to breach the covenants set out in Clauses 24.2 or 24.3.
24.2 The Vendors acknowledge and agree that all Advantis Confidential
Information known or obtained by Seller, whether before or after the
date hereof, is the property of the Company. Therefore, the Vendors
agree that they will not, at any time, disclose to any unauthorized
persons or use for his own account or for the benefit of any third
party any Advantis Confidential Information, whether the Vendors
have such information in their respective memory or embodied in
writing or other physical form, without NHancement's prior consent
in writing, unless and to the extent that the Advantis Confidential
Information is or becomes generally known to and available for use
by the public other than as a result of the Vendors' fault or the
fault of any other person bound by a duty of confidentiality to
NHancement or the Company. The Vendors acknowledge that at the
Completion Date they will deliver to NHancement all documents
(including devices, or computer software, whether embodied in a disk
or in other form) and all copies thereof, relating to the
businesses, operations, or affairs of the Company and any other
Advantis Confidential Information that the Vendors may then possess
or have under their control.
24.3 As an inducement for NHancement to enter into this Agreement the
Vendors agree that for a period of three (3) years after the
Complete Date:-
24.3.1 the Vendors will not, directly or indirectly, either for
himself or any other person:-
(a) induce or attempt to induce any employee of the Company
to leave the employ thereof;
(b) in any way interfere with the relationship between the
Company and any employee thereof;
23
22
(c) employ, or otherwise engage as an employee, independent
contractor, or otherwise, any employee of the Company;
or
(d) induce or attempt to induce any customer, supplier,
licensee, or business relation of the Company to cease
doing business with the Company or in any way interfere
with the relationship between any customer, supplier,
licensee, or business relation of the Company;
24.3.2 the Vendors will not use any Advantis Confidential
Information, directly or indirectly, either for himself or
any other person, to solicit the business of any person
known to the Vendor to be a customer of the Company,
whether or not the Vendor had personal contact with such
person, with respect to products or activities which
compete in whole or in part with the products or activities
of the Company;
24.3.3 the Vendors will not disparage NHancement or the Company, or
any of their shareholders, directors, officers, employees,
or agents; and
24.3.4 the Vendors will, within ten days after accepting any
employment, advise NHancement of the identity of any
employer of the Vendor whereafter NHancement or the
Company may serve notice upon each such employer that the
Vendor is bound by the Clause 24 and furnish each such
employer with an extract of this Clause or the relevant
portions thereof.
25. BANK BORROWINGS AND EXISTING SECURITIES
25.1 NHancement hereby acknowledges that:-
25.1.1 the Company has an existing credit facility in the principal
sum of Ringgit Malaysia Two Million Two Hundred and Fifty
Thousand (RM2,250,000.00) with Perwira Affin Bank Berhad
("Existing Facilities") which is secured by a Joint and
Several Guarantee of Xxx Xxx Xxxxx, Xxxxx Xxxxxx Bin Xxxxxxx
Xxxxxxx and Xxx Xxx Xxxx ("Existing Guarantee") and a third
party charge over certain immovable properties owned by
Xxx Xxx Xxxx and a pledge of fixed deposits by Xxx Xxx Xxxx
("Existing Third Party Securities"); and
25.1.2 a financial institution has in principle approved overdraft
facilities in the principal sum of Ringgit Malaysia Two
Hundred and Fifty Thousand (RM250,000.00) ("Additional
Facilities") but the terms thereof have yet to be advised
to the Company and may include provision of third party
securities by way of bank guarantees or charge over fixed
assets ("Additional Third Party Securities").
24
23
25.2 Within ninety (90) days from the Completion Date, NHancement shall use
commercially reasonable efforts to (a) retain the Existing Facilities and
procure the release of the Existing Guarantee or (b) replace the Existing
Facilities with new credit facilities so as to secure a release of the
Existing Guarantee and the Existing Third Party Securities. As from the
Completion Date until the Existing Guarantee and the Existing Third Party
Securities have been released, NHancement shall indemnify the guarantors
and Xxx Xxx Xxxx against any losses incurred by them under the Existing
Guarantee and the Existing Third Party Securities, as the case may be, in
consequence of non-compliance by the Company with the terms of the
Existing Facilities.
25.3 The Vendors shall upon receipt of the letter setting out the terms of the
Additional Facilities furnish a copy of such letter to NHancement. If
NHancement is satisfied that the Additional Facilities are offered on
reasonable commercial terms existing in Malaysia, NHancement will consent
to the Company accepting the same. If any Additional Third Party
Securities are provided as securities for the Additional Facilities,
NHancement shall use commercially reasonable efforts to procure a release
of such securities within ninety (90) days from the Completion Date. As
from the Completion Date until the Additional Third Party Securities have
been released, NHancement shall indemnify the parties providing any
Additional Third Party Securities against any losses incurred by them
under such securities in consequence of non-compliance by the Company
with the terms of the Additional Facilities.
26. TRUST ARRANGEMENTS
26.1 Xxxxxx bin Xxxxxxx Xxxx ("Trustee), a Vendor, hereby discloses to the
other parties hereto, including NHancement, that ten thousand (10,000)
shares ("Trust Shares") presently registered in his name have been held by
him in trust for Xxxxx Xxxxxx Bin Xxxxxxx Xxxxxxx ("Beneficiary"), another
Vendor since 17th May 1994. The Trustee shall within two (2) weeks from
the date hereof transfer the Trust Shares to the Beneficiary. NHancement
hereby consents to such transfer. The Trustee and the Beneficiary shall
as soon as possible after the completion of the transfer of the Trust
Shares provide NHancement with such documents (including, without
limitation, stamped transfer forms, board resolution and new and cancelled
share certificates) as NHancement may reasonably require as evidence of
the completion of the transfer.
26.2 Notwithstanding anything herein contained to the contrary, all parties to
this Agreement hereby agree and confirm that all representations,
warranties and undertakings provided by the Vendors under this Agreement
with respect to their registered and beneficial ownership of the
respective Sale Shares are hereby modified to the extent required by the
disclosure set out in Clause 26.1.
[THE REST OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK.]
25
SCHEDULE
COLUMN (1) COLUMN (2) COLUMN (3) COLUMN (4)
AGREED NUMBER OF
NAME AND ADDRESS NUMBER OF PROPORTION CONSIDERATION
OF VENDORS SALE SHARES (%) SHARES
---------------------------------------------------------------------------------------------------
1. Xxx Xx Xxxx 47,500 19 100,700
Xx. 000, Xxxxx XX 0/0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
Fax No.: 000-000 0000
2. Xxxxxx bin Xxxxxxx Xxxx 5,000 2 10,600
Xx. 00, Xxxxx XX 0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
Fax No.: 000-000 0000
3. Xxxxx Xxxxxx Bin Xxxxxxx 32,500* 13 68,900
Hussain
No. 00, Xxxxx 00/00
Xxxxx Xxxx Xxxx
00000 Xxxxxxxx Xxxx
Xxxxxxxx
Fax No.: 000-000 0000
4. Xxx Xxx Xxxx 127,500 51 270,300
12 Jalan Xxxxxx
6 1/2 Mile, Xxxxx Xxxxxx
00000 Xxxxx Xxxxxx
Fax No.: 000-000 0000
5. Man Yiew Ming 23,500 9 47,700
42 Xxxxx XX 0/00
Xxxxx Xxxxx Xxxxx
00000 Xxxxxxx
Xxxxxxxx
Fax No.: 000-000 0000
*Ten thousand (10,000) of such shares as of the date of the Agreement are held
in trust by Xxxxxx bin Xxxxxxx Xxxx for the benefit of Xxxxx Xxxxxx bin Xxxxxxx.
26
SCHEDULE (contd.)
Column (1) Column (2) Column (3) Column (4)
Agreed Number of
Name And Address Number of Proportion Consideration
Of Vendors Sale Shares (%) Shares
---------------------------------------------------------------------------------------------------
6. Ng Kok Wah 15,000 6 31,800
00, Xxxxx XXX 0/0X
00000 XXX Xxxxxx
Xxxxxxxx
Fax No: 000-000 0000
-------- --- --------
TOTAL - 250,000 100 530,000
======== === ========
27
IN WITNESS WHEREOF the parties hereto have hereunto set their hands the day and
year first above written.
SIGNED by )
XXX XX XXXX ) /s/ XXX XX XXXX
in the presence of: )
/s/ XXXXXX XXXXX
----------------------
XXXXXX CHAIR
231005-10-5397
SIGNED by )
XXXXXX BIN XXXXXXX XXXX ) /s/ XXXXXX BIN XXXXXXX XXXX
in the presence of: )
/s/ XXXXXX XXXX XXXX XXXX
------------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXXX XXXXXX BIN XXXXXXX ) /s/ XXXXX XXXXXX BIN XXXXXXX
XXXXXXX )
in the presence of:
/s/ XXXXXX XXXX XXXX XXXX
------------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXX XXX XXXX ) /s/ XXX XXX XXXX
in the presence of )
/s/ XXXXXX XXXXX
----------------------
XXXXXX CHAIR
231005-10-5397
SIGNED by )
XX XXX XXX ) /s/ XX XXX XXX
in the presence of: )
/s/ XXXXXX CHAIR
----------------------
XXXXXX CHAIR
731005-10-5397
28
SIGNED by )
XXX XXXX XXXX ) /s/ MAN XXXX XXXX
in the presence of: )
/s/ XXXXXX XXXXX
----------------------
XXXXXX CHAIR
731005-10-5397
SIGNED by XXXXXX XXXX ) /s/ XXXXXX XXXX
)
for and on behalf of )
NHANCEMENT TECHNOLOGIES )
INC. )
in the presence of: )
/s/ XXXXXX XXXX XXXX XXXX
------------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
29
DATED THIS 26TH DAY OF NOVEMBER, 1997.
--------------------------------------
-BETWEEN-
THE PARTIES WHOSE NAMES AND ADDRESSES ARE
SET OUT IN COLUMN (1) OF THE SCHEDULE
-AND-
NHANCEMENT TECHNOLOGIES INC.
--------------------------------------
SUPPLEMENTAL AGREEMENT
FOR THE SALE OF SHARES
IN ADVANTIS NETWORK & SYSTEM SDN. BHD.
--------------------------------------
Prepared By:
M/S XXXXXX & CO.
ADVOCATES & SOLICITORS
UNIT 50-8-1 WISMA UOA DAMANSARA
00 XXXXX XXXXXX
XXXXXXXXX XXXXXXX
XXXXX XXXXXX
File No. KCK/1972077.4/97
31 October 1997
V:\KCH\SHARES\1972077.4\SUPAGT
30
[OFFICIAL STAMP]
SUPPLEMENTAL AGREEMENT
A SUPPLEMENTAL AGREEMENT is made this 26th day of November, 1997
BETWEEN:-
(1) THE PARTIES WHOSE NAMES AND ADDRESSES ARE SET OUT IN COLUMN (1) OF THE
SCHEDULE (severally "VENDOR" and collectively "VENDORS");
AND
(2) NHANCEMENT TECHNOLOGIES INC., a company incorporated under the laws of the
State of Delaware, the United States of America and having its principal
office at 00000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Xxxxxx Xxxxxx
xx Xxxxxxx and Fax No: 00-0-000-0000000 ("NHANCEMENT");
WHEREAS:-
(A) Pursuant to an Agreement dated 20th June 1997 ("PRINCIPAL AGREEMENT"), the
Vendors agreed to sell and NHancement agreed to purchase Two Hundred and
Fifty Thousand (250,000) fully paid ordinary shares of Ringgit Malaysia One
(RM1.00) each ("SALE SHARES") in ADVANTIS NETWORK & SYSTEM SDN. BHD.
(Company No. 264705) ("COMPANY") comprising the entire issued ordinary
share capital for the time being of the Company for a Purchase Price of
United States Dollars One Million Four Hundred And Eighty-Four Thousand
(USD1,484,000.00) ("PURCHASE PRICE") to be satisfied by the issuance and
delivery by NHancement of 530,000 fully-paid and non-assessable shares of
Common Stock of USD0.01 par value each in NHancement ("CONSIDERATION
SHARES").
(B) The parties are desirous of amending the Principal Agreement in the manner
set out in this Supplemental Agreement.
NOW THIS SUPPLEMENTAL AGREEMENT WITNESSETH as follows:-
1. DEFINITIONS
1.1 In this Supplemental Agreement where the context so admits, the following
expressions shall have the following meanings:-
"ADDITIONAL CONSIDERATION SHARES" means the additional number of fully-paid
and non-assessable shares of Common Stock of USD0.01 par value each in
NHancement, not exceeding an aggregate of Two Hundred and Thirty Thousand
(230,000), to be issued by NHancement to the Vendors in satisfaction of the
Additional Purchase Price, if any, in accordance with this Supplemental
Agreement;
31
2
"ADDITIONAL PURCHASE PRICE" means the additional amounts payable by way of
additional consideration for the Sale Shares by NHancement to the Vendors,
not exceeding the maximum sum of United States Dollars Six Hundred and
Forty Four Thousand (USD644,000.00), in accordance with this Supplemental
Agreement;
"FYE 1" means the financial period of the Company for the period ending on
31st March 1998;
"FYE 2" means the financial period of the Company for the period ending on
31st March 1999;
"MINIMUM FYE 1 PROFIT" means the minimum profit before tax of Ringgit
Malaysia Three Hundred and Fifteen Thousand (RM315,000.00);
"MINIMUM FYE 2 PROFIT" means the minimum profit before tax of Ringgit
Malaysia Seven Hundred and Five Thousand (RM705,000.00);
"NHANCEMENT'S AUDITORS" means a firm of auditors appointed by NHancement to
determine and certify the profit before tax for FYE 1 and FYE 2;
"REVISED CONSIDERATION SHARES" means Three Hundred Thousand (300,000)
fully-paid and non-assessable shares of Common Stock of USD0.01 par value
each in NHANCEMENT;
"REVISED PURCHASE PRICE" means United States Dollars Eight Hundred and
Forty Thousand (USD840,000.00).
1.2 Subject to Clause 1.1 above, expressions used in this Supplemental
Agreement shall have the meanings ascribed to them in the Principal
Agreement.
2. AMENDMENTS TO PRINCIPAL AGREEMENT
2.1 The parties agree that the Principal Agreement shall be amended in the
manner set out below;-
2.1.1 REVISED PURCHASE PRICE AND REVISED CONSIDERATION SHARES
Subject to the adjustments, if any, set out in Clause 2.1.2
hereof, the purchase consideration payable by NHancement to the
Vendors for the Sale Shares shall, in lieu of the Purchase
Price, be the Revised Purchase Price. The Revised Purchase Price
shall be satisfied on the Completion Date of the Principal
Agreement by the issue and delivery by NHancement of the Revised
Consideration Shares to the Vendors. The number of Revised
Consideration Shares to be issued and delivered by NHancement to
each Vendor is set out in Column (3) of the Schedule hereto
against the respective name of each Vendor.
32
3
2.1.2 ADDITIONAL PURCHASE PRICE AND ADDITIONAL CONSIDERATION SHARES
(a) Entitlement to Additional Purchase Price
The Vendors shall be entitled to receive from NHancement an
amount by way of Additional Purchase Price if the Company
achieves a profit before tax in excess of the Minimum FYE 1
Profit and the Minimum FYE 2 Profit for FYE 1 and FYE 2
respectively.
(b) Xxxxxx of satisfying Additional Purchase Price
The Additional Purchase Price payable by NHancement to the
Vendors shall be satisfied by the issue and delivery of the
number of Additional Consideration Shares determined in the
manner set out in this Supplemental Agreement. The
Additional Purchase Price shall not in any event be
satisfied by cash payment.
(c) Amount of Additional Purchase Price for FYE 1
The Vendors will be entitled to one (1) Additional
Consideration Share (rounded down to the nearest whole
number of shares) for every Ringgit Malaysia Three (RM3.00)
of the pre-tax profit in excess of the Minimum FYE 1 Profit
for FYE 1 PROVIDED THAT the maximum number of Additional
Consideration Shares which NHancement is obliged to issue
to the Vendors with respect to profits achieved for FYE 1
shall not in any event exceed One Hundred and Fifteen
Thousand (115,000) Additional Consideration Shares.
If the profit before tax for FYE 1 exceeds Ringgit Malaysia
Six Hundred and Sixty Thousand (RM660,000.00), the amount
of pre-tax profits in excess of the said sum shall be
credited ("PROFITS CREDITS") towards the pre-tax profits of
the Company for FYE 2 and the Vendors shall, subject always
to the Company achieving a pre-tax profit for FYE 2 of not
less than the Minimum FYE 2 Profit and to sub-paragraph (d)
below, be entitled to receive Additional Consideration
Shares on such Profits Credits upon completion of FYE 2.
(d) Amount of Additional Purchase Price for FYE 2
The Vendors will be entitled to one (1) Additional
Consideration Share (rounded down to the nearest whole
number of shares) for every Ringgit Malaysia Three (RM3.00)
of the pre-tax profit achieved in excess of the Minimum FYE
2 Profit for FYE 2 PROVIDED THAT:
3
33
4
(i) if the Company achieves a pre-tax profit in excess of
the Minimum FYE 2 Profit and subject always to
sub-paragraph (ii) below, the Vendors shall also be
entitled to one (1) Additional Consideration Share for
every Ringgit Malaysia Three (RM3.00) of the Profits
Credits. For avoidance of doubt, it is hereby agreed that
the Vendors shall not be entitled to any Additional
Consideration Shares for Profits Credits if the Company
fails to achieve the Minimum FYE 2 Profits for FYE 2; and
(ii) the maximum number of Additional Consideration Shares which
NHancement is obliged to issue to the Vendors with respect
to profits achieved for FYE 2 and the Profits Credits shall
not in any event exceed One Hundred and Fifteen Thousand
(115,000) Additional Consideration Shares.
(e) Determination of pre-tax profits
As soon as practible after the completion of FYE 1 and FYE 2,
NHancement shall cause NHancement's Auditors to carry out an audit to
determine the pre-tax profits of the Company for the relevant
financial period. The Vendors undertake to procure the Company to
grant free and unfettered access to its books of accounts and other
documents to NHancement's Auditors for the aforesaid purpose.
(f) Certification of pre-tax profits
NHancement's Auditors shall as soon as possible after the completion
of the audit, issue and deliver a certificate to the parties hereto
stating the following:-
(i) the pre-tax profits achieved by the Company for the relevant
financial period.
(ii) the Additional Purchase Price, if any, payable and the
Additional Consideration Shares to be issued in satisfaction
thereof;
(iii)with respect to FYE 1, the Profits Credits, if any.
The parties agree that NHancement's Auditors shall be acting as
experts and not arbitrators in determining and certifying the matters
referred to in this paragraph (f) and their determination and
certification of such matters shall, in the absence of manifest
error, be final and binding on the parties.
4
34
5
(g) Issue of Additional Consideration Shares
Any Additional Consideration Shares to be issued by
NHancement shall be issued and delivered to the Vendors
within thirty (30) days after its receipt of the
certificate referred to in paragraph (f).
The number of Additional Consideration Shares to be issued
and delivered by NHancement to the Vendors shall be in the
proportion set out in Column (2) of the Schedule hereto
against the respective name of each Vendor. If it is not
feasible for NHancement to issue the Additional
Consideration Shares to the Vendors in amounts which
correspond with the proportions set out in Column (2) of
the Schedule hereto, the Vendors shall instruct NHancement
in writing of the number of Additional Consideration
Shares to be issued to each Vendor ("ISSUANCE
INSTRUCTIONS"). In such event, the period set out in this
paragraph (g) within which NHancement is obliged to issue
and deliver the Additional Consideration Shares shall
commence on the date it receives the Issuance Instructions
from the Vendors.
3. REMAINING TERMS UNAFFECTED
3.1 Save as modified by the provisions of this Supplemental Agreement, the
terms and conditions of the Principal Agreement shall remain in full
force and effect.
[the rest of this page is intentionally left blank.]
35
IN WITNESS WHEREOF the parties hereto have hereunto set their hands the day and
year first above written.
SIGNED by )
XXX XX XXXX ) /s/ XXX XX XXXX
in the presence of:- ) ------------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXXXX BIN XXXXXXX XXXX ) /s/ XXXXXX BIN XXXXXXX XXXX
in the presence of:- ) ------------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXXX XXXXXX BIN XXXXXXX) /s/ XXXXX XXXXXX BIN XXXXXXX XXXXXXX
XXXXXXX ) ------------------------------------
in the presence of:- )
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXX XXX XXXX ) /s/ XXX XXX XXXX
in the presence of:- ) ------------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XX XXX XXX ) /s/ NG KOK WAH
in the presence of:- ) ------------------------------------
/s/ XXXXXX XXXX XXXX XXXX
---------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
36
SIGNED by
XXX XXXX XXXX /s/ XXX XXXX XXXX
in the presence of:
/s/ [ILLEGIBLE]
SIGNED by XXXXXX )
TJINGOEAN XXXX ) /s/ XXXXXX TJINGOEAN XXXX
for and on behalf of )
NHANCEMENT TECHNOLOGIES )
INC. )
in the presence of: )
/s/ [ILLEGIBLE]
37
SCHEDULE
Column (1) Column (2) Column (3)
Agreed Number of Revised
Name and Address Proportion Consideration
of Vendors (%) Shares
-----------------------------------------------------------------------------
1. Xxx Xx Xxxx 19 57,000
Xx. 000, Xxxxx XX 0/0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
Fax No: 000-000 0000
2. Xxxxxx bin Xxxxxxx Xxxx 2 6,000
Xx. 00, Xxxxx XX 0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
Fax No: 000-000 0000
3. Xxxxx Xxxxxx Bin Xxxxxxx 13 39,000
Hussain
Xx. 00, Xxxxx 00/00
Xxxxx Xxxx Xxxx
00000 Xxxxxxxx Xxxx
Xxxxxxxx
Fax No: 000-000 0000
4. Xxx Xxx Xxxx 51 153,000
12 Xxxxx Xxxxxx
0 0/0 Xxxx, Xxxxx Xxxxxx
00000 Xxxxx Xxxxxx
Fax No: 000-000 0000
5. Man Yiew Ming 9 27,000
42 Xxxxx XX 0/00
Xxxxx Xxxxx Xxxxx
00000 Xxxxxxx
Xxxxxxxx
Fax No: 000-000 0000
38
SCHEDULE (contd.)
Column (1) Column (2) Column (3)
Agreed Number of Revised
Name and Address Proportion Consideration
of Vendors (%) Shares
------------------------------------------------------------------------------
6. Ng Kok Wah 6 18,000
68, Xxxxx XXX 0/0X
00000 XXX Xxxxxx
Xxxxxxxx
Fax No: 000-000 0000
--- --------
TOTAL 100 300,000
=== ========
39
DATED THIS 26TH DAY OF NOVEMBER, 1997
**************************************
-BETWEEN-
THE PARTIES WHOSE NAMES AND ADDRESSES ARE
SET OUT IN COLUMN (1) OF THE SCHEDULE
-AND-
NHANCEMENT TECHNOLOGIES INC.
*****************************
SECOND SUPPLEMENTAL AGREEMENT
*****************************
Prepared By:
M/S XXXXXX & CO.
ADVOCATES & SOLICITORS
UNIT 50-8-1, 8th FLOOR
WISMA UOA DAMANSARA
00 XXXXX XXXXXX
00000 XXXXXXXXX XXXXXXX
XXXXX XXXXXX.
File No. KCK/1972077.4/97
V:\KCH\SHARES\1972077.4\AGMT.DOC
26 November 1997
40
SECOND SUPPLEMENTAL AGREEMENT
THIS SECOND SUPPLEMENTAL AGREEMENT is made this 26th day of November, 1997
BETWEEN:-
(1) THE PARTIES WHOSE NAMES AND ADDRESSES ARE SET OUT IN COLUMN (1) OF THE
SCHEDULE (severally "VENDOR" and collectively "VENDORS"):
AND
(2) NHANCEMENT TECHNOLOGIES INC., a company incorporated under the laws of
the State of Delaware, the United States of America and having its
principal office at 00000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
Xxxxxx Xxxxxx xx Xxxxxxx and Fax No: 00-0-000-0000000 ("NHANCEMENT");
WHEREAS:-
(A) Pursuant to an Agreement dated 20th June 1997 ("PRINCIPAL AGREEMENT"),
the Vendors agreed to sell and NHancement agreed to purchase Two
Hundred and Fifty Thousand (250,000) fully paid ordinary shares of
Ringgit Malaysia One (RM1.00) each ("SALE SHARES") in ADVANTIS
NETWORK & SYSTEM SDN. BHD. (Company No. 264705) ("COMPANY")
comprising the entire issued ordinary share capital for the time
being of the Company for a Purchase Price of United States Dollars
One Million Four Hundred and Eighty-Four Thousand (USD1,484,000.00)
("PURCHASE PRICE") to be satisfied by the issuance and delivery by
NHancement of 530,000 fully-paid and non-assessable shares of Common
Stock of UDSD0.01 par value each in NHancement ("CONSIDERATION
SHARES").
(B) By virtue of an Agreement dated 26th, November 1997 ("Supplemental
Agreement"), the parties to the Principal Agreement agreed to amend
the Principal Agreement in the manner set out in the Supplemental
Agreement.
(C) As a result of the due diligence audit conducted on the Company and
undertaken as one of the conditions precedent pursuant to the
completion of the Principal Agreement, an issue has arisen as to the
inclusion of a particular debt owed to the Company which has remained
unpaid for a period in excess of one (1) year and for which no
provision for bad and/or doubtful debt has been made and in respect of
which the collectability is doubted by NHancement.
1
41
NOW THIS AGREEMENT WITNESSETH as follows:-
1. DEFINITIONS
1.1 In this Second Supplemental Agreement where the context so admits,
the following expressions shall have the following meanings:-
"KBI" means Koperasi Xxxxx Xxxxx Malaysia Berhad;
"OUTSTANDING AMOUNT" means the sum of Ringgit Malaysia Six Hundred and
Forty Thousand One Hundred and Seventy-Four (RM640,174.00) owed by KBI
to the Company or that part of the said sum as shall remain unpaid
from time to time;
"REVISED CONSIDERATION SHARES" shall have the same meaning ascribed
to it in the Supplemental Agreement.
1.2 Subject to Clause 1.1 above, expressions used in this Second
Supplemental Agreement shall have the meanings ascribed to them in the
Principal Agreement and/or the Supplemental Agreement
2. CONSIDERATION
2.1 In consideration of NHancement agreeing to proceed with the
completion of the Principal Agreement (as amended by the Supplemental
Agreement) notwithstanding the issue of the collectability of the
Outstanding Amount, which issue has arisen as a result of the due
diligence audit on the Company which is a condition precedent for
completion of the Principal Agreement, the Vendors hereby agree to
enter into and execute this Second Supplemental Agreement.
3. COLLECTABILITY OF OUTSTANDING AMOUNT
3.1 The Vendors hereby jointly guarantee to NHancement that the
Outstanding Amount remains collectable.
3.2 Notwithstanding Clause 3.1 hereof, in the event the Outstanding
Amount fails to be collected by 30 June 1998, the Vendors hereby agree
that they shall, in the proportions set out in the Schedule hereto,
re-imburse to the Company an amount equal to the Outstanding Amount
and/or otherwise make good the same to the Company.
3.3 The re-imbursment of the Outstanding Amount referred to in Clause 3.2
may, at the option of the Vendors, be satisfied from the proceeds of
the sale of Revised Consideration Shares at such price and at such
exchange rate as shall prevail at the close of business on the first
business day in New York, United States of America, after any
restrictions placed on the Revised Consideration Shares are lifted.
3.4 Notwithstanding Clause 3.2 hereof, in the event the Outstanding
Amount is collected after 30 June 1998 but before the date referred to
in Clause 3.3 hereof,
2
42
the Outstanding Amount shall be deemed to have been collected
and the Revised Consideration Shares shall cease to be withheld.
3.5 For the purposes of satisfying the re-imbursement of the
Outstanding Amount NHancement shall withhold such number of the
Revised Consideration Shares as when valued based on the value
utilised in the Principal Agreement and multiplied at an
exchange rate of RM2.50 to USD1.00 shall correspond to the
Outstanding Amount, rounded up to the nearest whole number.
Such withheld Revised Consideration Shares, or any unutilised
part thereof, shall only be released after the Outstanding
Amount has been re-imbursed to the Company.
4. REMAINING TERMS UNAFFECTED
3.1 Save as modified by the provisions of this Second Supplemental
Agreement, the terms and conditions of the Principal Agreement
and the Supplemental Agreement shall remain in full force and
effect.
3
43
IN WITNESS WHEREOF the parties hereto have hereunto set their hands the day and
year first above written.
SIGNED by )
XXX XX XXXX ) /s/ XXX XX XXXX
in the presence of:- ) -------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXXXX BIN XXXXXXX XXXX ) /s/ XXXXXX BIN XXXXXXX XXXX
in the presence of: ) -------------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXXX XXXXXX BIN XXXXXXX ) /s/ XXXXX XXXXXX BIN XXXXXXX
in the presence of:- ) -------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXX XXX XXXX ) /s/ XXX XXX XXXX
in the presence of:- ) -------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XX XXX XXX ) /s/ NG KOK WAH
in the presence of:- ) -------------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
44
SIGNED by )
XXX XXXX XXXX ) /s/ MAN XXXX XXXX
in the presence of:- ) ---------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXXXX TJINGOGAN XXXX ) /s/ XXXXXX TJINGOGAN XXXX
in the presence of:- ) ---------------------------
/s/ XXXXXX XXXX XXXX XXXX
----------------------------
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
45
SCHEDULE
--------
Column (1) Column (2)
Name and Address of Vendors Agreed Proportion (%)
-----------------------------------------------------------------------------
1. Xxx Xx Xxxx 00
Xx. 000, Xxxxx XX 0/0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
Fax No: 000-000 0000
2. Xxxxxx bin Xxxxxxx Xxxx 2
Xx. 00, Xxxxx XX 0
Xxxxxx Xxxxxxx
00000 Xxxxx Xxxxxx
Fax No: 000-000 0000
3. Xxxxx Xxxxxx Bin Xxxxxxx Xxxxxxx 00
Xx. 00, Xxxxx 00/00
Xxxxx Xxxx Xxxx
00000 Xxxxxxxx Xxxx
Xxxxxxxx
Fax No: 000-000 0000
4. Xxx Xxx Xxxx 00
00 Xxxxx Xxxxxx
0 0/0 Xxxx, Xxxxx Xxxxxx
00000 Xxxxx Xxxxxx
Fax No: 000-000 0000
5. Man Yiew Ming 0
00 Xxxxx XX 0/00
Xxxxx Xxxxx Xxxxx
00000 Xxxxxxx
Xxxxxxxx
Fax No: 000-000 0000
6. Xx Xxx Xxx 0
00, Xxxxx XXX 0/0X
00000 Xxxxxx
Xxxxxxxx
Fax No: 000-000 0000
