Exhibit 10.44
DATED 6th DAY OF MAY 2005
EASTERN NANO-MATERIALS HOLDINGS PTE. LTD.
as Borrower
AND
VALUE MONETIZATION LTD
as Lender A
AND
INTERNATIONAL FACTORS (SINGAPORE) LTD
as Lender B
AND
CHEN XIANGZHI
as Warrantor
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CONVERTIBLE LOAN AGREEMENT
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STAMFORD LAW
(incorporated with limited liability)
0 XXXXXXX XXXXX., #00-00
XXXXXXXX XXXXX
XXXXXXXXX 000000
TELEPHONE: (00) 0000-0000
FACSIMILE: (00) 0000-0000
TABLE OF CONTENTS
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1. INTERPRETATION ............................................................2
2. LOAN ......................................................................5
3. PURPOSE ...................................................................5
4. DRAWDOWN AND CONDITIONS PRECEDENT .........................................S
5. CONVERSION AND COMPENSATION ...............................................6
6. REPAYMENT OF CONVERTIBLE LOAN .............................................8
7. SHARE ALLOTMENT AND ISSUE .................................................8
8. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS ..............................9
9. MINORITY RIGHTS ..........................................................10
10. EVENTS OF DEFAULT ........................................................11
11. RESTRICTION ON ANNOUNCEMENTS .............................................12
12. COSTS AND EXPENSES .......................................................13
13. TAXES ....................................................................13
14. NOTICES ..................................................................13
15. MISCELLANEOUS ............................................................14
16. LENDERS' RIGHTS AND OBLIGATIONS ..........................................14
17. JURISDICTION AND GOVERNING LAW CLAUSE ....................................15
SCHEDULE 1 ...................................................................16
SCHEDULE 2 ...................................................................18
SCHEDULE 3 ...................................................................19
SCHEDULE 4 ...................................................................20
SCHEDULE 5 ...................................................................30
"Companies Act" the Companies Act. Chapter 50 of Singapore;
"Convertible Loans" the convertible loans to be granted by the Lenders to
the Borrower on the terms and subject to the
conditions of this Agreement;
"Convertible Loan the agreement to be entered into among the relevant
Agreement" parties in relation to the ST Convertible Loan:
"Encumbrance" any mortgage, assignment of receivables, debenture,
lien, charge, pledge, security interest, title
retention, right to acquire, options, restriction on
transfer and any other encumbrance or condition
whatsoever;
"Event of Default" any of the events of default described in Clause 10;
"FY" financial year ended or ending as the case may be 31
December;
"Group" the Borrower and the Subsidiaries and where the
context requires, includes all subsidiaries of the
Borrower for the time being and "Group Company" means
any or a specific company within the Group;
"Haize" Shandong Haize Nanomaterials Co., Ltd.
"Initial Public Offering" the initial public offering of the Shares and the
listing of such Shares on the SGX-ST;
"Listing Manual" the Listing Manual of the SGX-ST as amended or
supplemented from time to time;
"Potential Event of any event or circumstances which, if it continued
Default" after the giving of any notice, the expiry of any
grace period, and/or (as the case may be) the making
of any determination by the Lenders, as provided in
Clause 10, would become an Event of Default;
"PRC" People's Republic of China;
"Prospectus" a prospectus to be prepared in accordance with all
relevant laws and regulations to be issued in
relation to the Initial Public Offering;
"RMB" Reminbi dollars;
"Restructuring Exercise" the restructuring exercise to be carried out as
between Shengda Nano, Shengda Chem and the Group to
rationalise and streamline the corporate structure of
the Group for-the purposes of the Initial Public
Offering, pursuant to which the Group wiliacquire the
assets of and carry out the business previously
carried on by Shengda Nano and Shengda Chem
"SGX-ST" the Singapore Exchange Securities Trading Limited;
"Shaanxi Haize" Shaanxi Haize Nanomaterials Co., Ltd.
"Share(s)" share(s) of S$1.00 each in the capital of the
Borrower existing at the date of this Agreement and
all other (if any) stock or shares from time to time
and for the time being ranking pari passu therewith
and all other (if any) shares or stock resulting from
any sub-division, consolidation or re-classification
thereof;
"Subsidiaries" the subsidiaries (as such term is defined in the
Companies Act) of the Borrower. which as at the date
of this Agreement comprises Haize, Bangsheng and
Shaanxi Haize, whose relevant details are set out in
Schedule 2;
"S$" Singapore dollars;
"Taxation" all forms of taxation and statutory. governmental,
supra governmental, state, provincial, local
government or municipal impositions, duties,
contributions and levies (including withholdings and
deductions), whether in the PRC or elsewhere in the
world, whenever imposed and however arising and all
penalties, fines, charges, costs and interest,
together with the cost of removing any charge or
other encumbrance relating thereto;
"USS" United States dollars; and
"Warranties" the various representations and warranties set out in
Schedule 4 of this Agreement;
1.2 Expressions defined in the Conditions shall, unless the context
otherwise requires, have the same meanings where used in this
Agreement.
1.3 Except as otherwise expressly provided, expressions defined in the
Companies Act have the same meanings in this Agreement.
1.4 A reference to a statute or statutory provision includes a reference:
1.4.1 to that statute or provision as from time to time modified or
re-enacted;
1.4.2 to any repealed statute or statutory provision which it
re-enacts (with or without modification); and
1.4.3 to any orders, regulations, instruments or other subordinate
legislation made under the relevant statute or statutory
provision.
1.5 Unless the context otherwise requires:
1.5.1 words in the singular include the plural, and vice versa;
1.5.2 words importing any gender include all genders; and
1.5.3 a reference to a person includes a reference to a body
corporate and to an unincorporated body of persons.
1.6 References to Recitals, Clauses and Schedules are to the relative
numbered Recitals to. Clauses of and Schedules to. this Agreement.
1.7 The headings are for convenience only and do not affect the
interpretation of this Agreement.
1.8 The Schedules form part of this Agreement and shall have the same force
and effect as if expressly set out in the body of this Agreement and
any reference to this Agreement shall include the Schedules.
2. LOAN
2.1 Lender A shall grant the Borrower, at the times and in the manner
provided in this Agreement, a convertible loan of up to Five Million,
Xxx Xxxxxxx xxx Xxxxxx Xxxxxxxx Xxxxxx Xxxxxx Dollars (US$5,120,000.00)
(equivalent to approximately S$8,500.000.00) (the "VML Loan Amount").
2.2 Lender B shall grant the Borrower, at the times and in the manner
provided in this Agreement. a convertible loan of up to One Million.
Four Hundred and Fifty Thousand Singapore Dollars (S$1,450,000.00) (the
"IFS Loan Amount").
3. PURPOSE
The Convertible Loans are intended for the purpose of funding the
Acquisition and the Borrower shall apply all amounts raised by it
hereunder in or towards satisfaction of the aforesaid purpose. The use
of the Convertible Loans shall be in accordance and as set out in
Schedule 3 hereto.
4. DRAWDOWN AND CONDITIONS PRECEDENT
4.1 The drawdown of the Convertible Loans shall be conditional upon the
following:
4.1.1 the auditors of the Borrower. KPMG. having completed the audit
of the combined financial statements of the Borrower for
FY2002, FY2003 and FY2004 for the purposes of the submission
of a new listing application to the SGX-ST in respect of the
Initial Public Offering;
4.1.2 the finalisation of drafts of all relevant legal due diligence
reports or comfort letters from the relevant legal advisers to
the Borrower for the purposes of the submission of a new
listing application to the SGX-ST in respect of the Initial
Public Offering;
4.1.3 there being no material adverse changes in the financial and
business conditions of the Group since the Accounts Date and
there being no change of law which may adversely affect the
Borrower's ability to perform any of its obligations hereunder
or which may have a material adverse impact on the proposed
Initial Public Offering:
4.1.4 the execution of a licence agreement between the Group and
Nanomaterial Technology Pte. Ltd. allowing the use of the
patent relating to the high-gravity precipitation method
4
(Patent Number ZL95105343.4 granted by the China Patent
Office) by the Group for its precipitated calcium carbonate
nanomaterials business (in relation to the Group expanding its
production capacity beyond 30.000 tonnes per annum) on terms
reasonably satisfactory to the Lenders;
4.1.5 the finalisation of the financial forecast of the Borrower for
FY2005 and FY2006 by the Borrower which finalised forecast
shall not materially deviate from the forecast previously
presented to the Lenders;
4.1.6 the issue of a legal opinion in form and content reasonably
satisfactory to the Lenders by the legal adviser to the
Borrower on PRC laws stating their opinion that Haize and
Bangsheng are eligible to apply for and are qualified to
receive tax incentives in the form of a full exemption for the
first two years and a 50% reduction for the subsequent years
from enterprise income tax beginning from their respective
first profit-making year;
4.1.7 the receipt of approval from the State Development and Reform
Commission and the State Administration of Foreign Exchange or
any other relevant PRC authority for the transactions
contemplated herein or the Restructuring Exercise or a
confirmation from the same or from the legal adviser to the
Borrower on PRC laws that no approval therefrom is required;
4.1.8 all representations and warranties made by the Borrower and
the Warrantor in this Agreement being true and accurate and
remaining true and accurate if repeated on the proposed date
of drawing of the Convertible Loans by reference to the
circumstances then existing;
4.1.9 no Event of Default or Potential Event of Default has
occurred, whether by reason of the drawing of the Convertible
Loans or otherwise; and
4.1.10 the execution of the Convertible Loan Agreement.
4.2 Within fourteen (14) days after the satisfactory fulfillment of all the
conditions precedent set out in Clause 4.1.1 to 4.1.7 and 4.1.10 above
as reasonably determined by the Lenders and upon the giving of a
drawdown notice substantially in the form set out in Schedule 1 by the
Borrower, the Convertible Loans shall be paid into an escrow account to
be established in accordance with the Lenders' instructions and in
Singapore Dollars. The operation of the escrow account shall be in
accordance with the use of the Convertible Loans as set out in Schedule
3.
5. CONVERSION AND COMPENSATION
5.1 The Lenders may elect, at any time during the tenure of the Convertible
Loans as set out in Clause 6.1, to convert the entire outstanding
principal amount of the Convertible Loans into Shares (the "Conversion
Shares") as set out below:
Lender A may convert the VML Loan Amount into such number of
Shares as shall amount to 15.79% (the "VML
Percentage") of the entire issued share capital of
the Borrower
Lender B may convert the IFS Loan Amount into such number of
Shares as shall amount to 2.69% (the "IFS
Percentage") of the entire issued share capital. of
the Borrower
(in both cases assuming full conversion of the Convertible Loans as
well as the ST Convertible Loan on a fully-diluted basis).
5.2 For the avoidance of doubt:
5.2.1 the Lenders may only exercise such right of conversion once
and shall fully convert the Convertible Loans into Conversion
Shares; and
5.2.2 the Convertible Loans shall be deemed fully repaid upon
conversion into Conversion Shares. Conversion shall take place
on the third Business Day after notice of conversion has been
given in writing by the Lenders to the Borrower, whereupon the
Borrower shall issue and deliver to the Lenders the share
certificates in respect of the relevant number of Conversion
Shares
5.3 (a) Where the Borrower's audited (in accordance with Singapore
Auditing Standards) net profit after tax for FY2004 is less
than RMB66.1 million, the Warrantor shall pay to the Lenders
such amounts calculated in accordance with the formulae set
out immediately below:
(i) For Lender A:
Amount = (A/B x 4) - 0.1579) x C x D
where A is the VML Loan Amount
B is the actual audited net profit after tax for
FY2004
C is the actual number of Shares allotted and issued
immediately prior to the Initial Public Offerin
D is the offer price of each Share pursuant to the
Initial Public Offering
Lender A shall have the option of receiving the
compensation in the form of Shares calculated in
accordance with the formula (MB x 4) - 0.1579) x C.
where A, B and C bear the same meanings as above.
(ii) For Lender B:
Amount = (A/(B x 4) - 0.0269) x C x D
where A is the IFS Loan Amount
B is the actual audited net profit after tax for
FY2004
C is the actual number of Shares allotted and issued
immediately prior to the Initial Public Offering
D is the offer price of each Share pursuant to the
Initial Public Offering
Lender B shall have the option of receiving the
compensation in the form of Shares calculated in
accordance with the formula (MB x 4) - 0.0269) x C.
where A, B and C bear the same meanings as above.
(b) Where the Borrower's audited (in accordance with Singapore
Auditing Standards) net profit after tax for FY2004 is greater
than RMB68.1 million, the Lenders shall pay to the Warrantor
such amounts calculated in accordance with the formulae set
-out immediately below:
(iii) For Lender A:
Amount = (0.1579 - A/(B x 4)) x C x D
where A is the VML Loan Amount
B is the actual audited net profit after tax for
FY2004
C is the actual number of Shares allotted and issued
immediately prior to the Initial Public Offering
D is the offer price of each Share pursuant to the
Initial Public Offering
Lender A shall have the option of paying the
compensation in the form of Shares calculated in
accordance with the formula (0.1579 - A/(B x 4)) x C,
where A, B and C bear the same meanings as above.
(iv) For Lender B:
Amount (0.0269 - A/(B x 4)) x C x D
where A is the IFS Loan Amount
B is the actual audited net profit after tax for
FY2004
C is the actual number of Shares allotted and issued
immediately prior to the Initial Public Offering
D is the offer price of each Share pursuant to the
Initial Public Offering
Lender B shall have the option of paying the
compensation in the form of Shares calculated in
accordance with the formula (0.0269 - A/(B x 4)) x C,
where A, B and C bear the same meanings as above.
6. REPAYMENT OF CONVERTIBLE LOAN
6.1 Except where the Convertible Loans have been fully converted into
Conversion Shares pursuant to Clause 5 above, the Borrower shall repay
the Convertible Loans in the manner provided in Clause 6.2 at the close
of business in Singapore on the date (the "Terminal Date") falling
twelve (12) calendar months after the date on which the Convertible
Loans are advanced in accordance with this Agreement, provided that
where the Terminal Date is not a Business Day, the Borrower shall repay
the Convertible Loans on the preceding Business Day falling immediately
before the Terminal Date. However, the Lenders shall in its absolute
discretion have the option of extending the Terminal Date to a date
falling eighteen (18) calendar months after the date on which the
Convertible Loans are advanced in accordance with this Agreement.
6.2 The Borrower shall repay the Convertible Loans by making payment of an
aggregate amount equal to the VML Loan Amount to the account of Lender
A and the IFS Loan Amount to the account of Lender B (both with
interest from the drawdown date of the Convertible Loans up to the date
of repayment at a rate of eighteen percent (18%) per annum, compounded
annually); provided always that no interest shall be chargeable if the
Convertible Loans are converted into Conversion Shares pursuant to
Clause 5 above.
7. SHARE ALLOTMENT AND ISSUE
7.1 As soon as practicable after the execution of this Agreement and in any
event not later than seven (7) days after the execution of this
Agreement, the Lenders and the Warrantor shall subscribe and make
payment for and the Borrower shall allot and issue such number of
Shares to the Lenders and the Warrantor as set out below:
Party Number of Shares
----- ----------------
Lender A 16
Lender B 3
Warrantor 80
7.2 The Borrower and the Warrantor hereby undertake to procure that all
necessary corporate and shareholder actions to allot and issue the
Shares as set out above shall be effected upon the receipt of the
relevant subscription and payment.
7.3 The Warrantor further undertakes that, in the event the Initial Public
Offering does not take place within eighteen (18) months of the date of
the drawdown of the Convertible Loans and the Convertible Loans shall
have been fully converted into Conversion Shares. the Warrantor shall
grant an option to each of the Lenders to call for the transfer to each
of them of such number of Shares such that the final shareholding of
the Lenders in the issued and paid up share capital of the Borrower
after such transfer shall be in direct proportion to its capital
contribution to the Borrower. Such option may only be exercised by the
Lenders if the Borrower shall have divested its subsidiaries and the
transfer shall be made upon the payment of the sum of S$1.00 from each
of the Lenders.
8. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
8.1 Each of the party to this Agreement hereby represents, warrants and
undertakes to and with each other that:
8.1.1 it has full power and authority to enter into and perform this
Agreement and this Agreement constitutes valid and binding
obligations on it;
8.1.2 the execution and delivery of, and the performance of its
obligations under this Agreement will not:
(a) result in a breach of any provision of its memorandum
or articles of association or of any agreement or
arrangement to which it is a party or by which it is
bound: and/or
(b) result in a breach of any order, judgement or decree
of or undertaking to any court, government body,
statutory authority or regulatory body (including,
without limitation, any relevant stock exchange or
securities council) to which it is a party or by
which it is bound.
8.2 Each of the Borrower and the Warrantor represents, warrants and
undertakes to and with the Lenders that:
8.2.1 the total audited net profit after tax for the Borrower for
FY2003 and FY2044 shall not be less than RMB22.0 million and
RMB64.0 million respectively. For the purposes of this clause,
"audited" shall mean audited in accordance with Singapore
Auditing Standards; and
8.2.2 the Borrower shall use its best efforts to achieve the Initial
Public Offering within eighteen (18) months of the date of
this Agreement.
8.3 Each of the Borrower and the Warrantor further warrants and undertakes
to and with the Lenders that:
8.3.1 each of the Warranties is true and accurate in all respects
and not misleading at the date of this Agreement and will
continue to be true and accurate in all respects and not
misleading down to and including the drawdown of the
Convertible Loans; and
8.3.2 in relation to any Warranty which refers to the knowledge,
information or belief of the Borrower or the Warrantor, that
the Borrower or the Warrantor (as the case may be) has made
reasonable enquiry into the subject matter of that Warranty.
8.4 The Borrower further undertakes to provide reasonable access to
information promptly upon request by any Lender and to allow the
participation of the Lenders' representatives in management meetings of
the Borrower.
9. MINORITY RIGHTS
9.1 For as long as any portion of the Convertible Loans remain outstanding
or, if the Convertible Loans shall have been converted into Conversion
Shares, up to the date of the Initial Public Offering, Lender A shall
be entitled to nominate one (1) non-executive director and one (I)
observer to the Board and that of the Borrower's related companies and
Lender B shall be entitled to nominate one (1) observer to the Board
and that of the Borrower's related companies. The Borrower and the
Warrantor hereby undertake to effect all necessary corporate actions to
procure such appointment.
9.2 Prior to the Initial Public Offering, the unanimous consent, of the
Board and the Borrower's shareholders, and written consent of the
Lenders which have advanced more than 75% of the aggregate amount of
the Convertible Loans (assuming that the VMI, Loan Amount is converted
into Singapore Dollars) will be required for the following:
9.2.1 approval of the annual business plan of the Borrower;
9.2.2 the issue or allotment or agreement to issue or allot any
securities (whether voting or otherwise) or debentures or
securities convertible into shares (whether voting or
otherwise) or any other debentures or share capital in any
form whatsoever except as otherwise contemplated herein or in
the Convertible Loan Agreement;
9.2.3 any merger, restructuring, reorganisation or dissolution of
the Borrower except as may be effected pursuant to the
Restructuring Exercise;
9.2.4 the termination of the operations of any GroupCompany;
9.2.5 any change in the principal business activities of the Group;
9.2.6 engaging in business unrelated to the Group's current
business;
9.2.7 any capital expenditure above RMB400,000 and major cash
disbursements above RMB200,000 which are not included in the
Borrower's annual business and budget plan;
9.2.8 any major acquisition or disposals of assets except as in
accordance with the Restructuring Exercise;
9.2.9 the implementation or formulation of any dividend policy by
the Borrower;
9.2.10 the entering into any interested person transactions by any
Group Company within the scope of Chapter 9 of the Listing
Manual;
9.2.11 the appointment of any additional director or the removal of
any director from the Board;
9.2.12 the appointment of and/or change in any key member of the
Borrower's management team; and
9.2.13 the removal of the current auditors or the appointment of new
auditors of the Borrower.
For the avoidance of doubt, the provisions of this Clause 9.2 shall not
affect the repayment of the Convertible Loans and/or the ST Convertible
Loan, provided that they shall be repaid simultaneously.
10. EVENTS OF DEFAULT
10.1 Each of the following events shall be an Event of Default:
10.1.1 there is a breach of any obligations and/or any terms in this
Agreement, and in the case of any breach of an obligation or
term of this Agreement which, in the sole determination of the
Lenders, is capable of remedy, it is not remedied within 30
days of such breach:
10.1.2 any Group Company (a) stops or threatens to stop payment of
its debts or is otherwise unable to pay all or any part of its
debts without reasonable cause or ceases or threatens to cease
to carry on its business or takes proceedings or other steps
with a view to rescheduling or deferring its indebtedness or
any part of its indebtedness which it will otherwise be unable
to pay when due; (b) makes a general assignment or an
arrangement or composition with or for the benefit of its
creditors generally; (c) becomes insolvent or is unable or
legally deemed unable to pay its debts within the meaning of
section 254(2) of the Companies Act or any other similar
provision in any other applicable jurisdiction or admits in
writing its inability to pay its debts as and when they fall
due; or (d) a distress or execution or other legal process is
levied or enforced upon or commenced against any material part
of its business, property or assets and such distress,
execution or legal process is not terminated or discharged
within 14 days;
10.1.3 an encumbrancer takes possession of, or a receiver, trustee,
administrator, judicial manager or other similar officer is
appointed over, the whole or any part of the property or
assets of any Group Company;
10.1.4 except for the purpose of a solvent reconstruction or
amalgamation on terms and conditions which shall have first
been approved by the Lender:
10.1.4.1a petition is presented or other proceedings initiated
for its winding-up, judicial management or
administration of any Group Company which is not
discharged for a period of 30 days; or
10.1.4.2a court order is made for the winding up, bankruptcy,
judicial management or administration of any Group
Company;
10.1.5 any Group Company without the prior written consent of the
Lenders sells or otherwise disposes of any undertaking or
assets representing 25 percent or more of its net asset value
based on its latest available audited accounts (or if there
are no audited accounts. its latest management accounts):
10.1.6 any other indebtedness in respect of borrowed money of any
Group Company (a) is not paid when due or within any
applicable grace period in any agreement relating to that
indebtedness without reasonable cause or (b) becomes (or
becomes capable of being rendered) due and payable before its
normal maturity by reason of a default or event of default
(actual or potential), however described;
10.1.7 any creditor of any Group Company becomes entitled to declare
any indebtedness of the relevant Group Company due and payable
prior to its specified maturity as a result of an event of
default (or other event equivalent to an event of default);
10.1.8 the present or future security constituted by any mortgage or
charge upon the whole or any part of the undertaking or assets
of any Group Company shall become enforceable and/or steps are
taken to enforce the same;
10.1.9 a moratorium is agreed or declared in respect of any
indebtedness of any Group Company or any government authority
or agency condemns, seizes, compulsorily purchases or
expropriates all or a substantial part of the assets of any
Group Company;
10.1.10 it is or will become unlawful for the Borrower to perform or
comply with any one or more of its material obligations under
this Agreement;
10.1.11 any litigation or arbitration proceeding (whether criminal or
civil) is instituted against any Group Company which would
have a material adverse effect on the financial condition of
the relevant Group Company;
10.1.12 it is claimed by or on behalf of the Borrower that the terms
of this Agreement are not binding and enforceable against it;
and
10.1.13 any event occurs in relation to the Borrower or Group Company
which, under the laws of any applicable jurisdiction, has an
effect analogous or equivalent to any of the events referred
to in this Clause 9.1.
10.2 Upon the occurrence of an event of default, the Lenders may at any time
thereafter. whether individually or collectively, whether or not notice
shall have been given to the Borrower of the occurrence of such event
of default, declare that the whole of the total indebtedness for the
time being outstanding and unpaid shall become immediately due and
payable as the Lender or Lenders (as the case may be) may determine.
11. RESTRICTION ON ANNOUNCEMENTS
Save as may be required to be disclosed pursuant to any applicable
requirement issued by any competent governmental or statutory authority
or rules or regulations of any relevant regulatory body (including,
without limitation, any relevant stock exchange or securities council)
or to their respective professional advisers or otherwise as may be
necessary in connection with the initial Public Offering, each party
undertakes that during the tenure of the Convertible Loan it will not
make any announcement in connection with this Agreement unless the
other party shall have given its written consent to such announcement
(which consent not to be unreasonably withheld).
12. COSTS AND EXPENSES
The Borrower shall reimburse the Lenders for all costs and expenses
(including legal fees) together with any goods and services tax thereon
incurred by it in connection with the completion of the transactions
herein contemplated.
13. TAXES
All payments to be made by the Borrower to the Lenders hereunder shall
be made free and clear of and without deduction for or on account of
tax unless the Borrower is required to make such a payment subject to
the deduction or withholding of tax, in which case the sum payable by
the Borrower in respect of which such deduction or withholding is
required to be made shall be increased to the extent necessary to
ensure that, after the making of the required deduction or withholding,
the Lenders receive and retain (free from any liability in respect of
any such deduction or withholding) a net sum equal to the sum which it
would have received and so retained had no such deduction or
withholding been made or required to be made.
14. NOTICES
Any notice required to be given by any party to the other shall be
deemed validly served by hand delivery or by telefax or by prepaid
registered letter sent through the post to its address given herein or
such other address as may from time to time be notified for this
purpose. Any notice served by hand shall be deemed to have been served
on delivery, any notice served by telefax shall be deemed to have been
served when sent provided that such notice sent by telefax shall
thereafter be sent by post by way of a confirmation copy and any notice
served by prepaid registered letter shall be deemed to have been served
seven (7) days after the time at which it was posted and in proving
service it shall be sufficient to prove that the notice was properly
addressed and delivered or posted, as the case may be. The initial
addresses and telefax numbers of the parties are:
The Borrower: Eastern Nano-Materials Holdings Pte. Ltd.
0 Xxxxxxx Xxxxx, #00-00 Xxxxxxxx Xxxxx.
Xxxxxxxxx 000000
Telefax no: (00) 000 0000000
Attention: Xx Xxxx Xiangzhi
Lender A: Value Monetization Ltd
00 Xxxxxxx Xxxxx, 000-00, Xxxxxxxxx Xxxx Xxxxx,
Xxxxxxxxx 000000
Telefax no: (00) 00000000
Attention: Xxxxx Xxxx Pee Teck/Yong Xxxxx Xxx
Lender B: International Factors (Singapore) Ltd
0 Xxxxxxx Xxxxxxxxx, #00-00 Xxxxxx Xxxxx Xxx
Xxxxxxxxx 000000
Telefax no: (00) 00000000
Attention: Xxx Soon Kie/Xxx Xxxx Yeow
The Warrantor: Chen Xiangzhi
x/x 0 Xxxxxxx Xxxxx, #00-00 Xxxxxxxx Xxxxx,
Xxxxxxxxx 000000
Telefax no: (00) 000 0000000
15. MISCELLANEOUS
15.1 Except as otherwise provided, time is of the essence of this Agreement.
15.2 No failure or delay or omission to exercise any power, right or remedy
provided by law or under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise or waiver of any such
power, right or remedy preclude its further exercise or the exercise of
any other power, right or remedy. The powers, rights and remedies
provided in this Agreement are cumulative and not exclusive of any
powers, rights or remedies provided by law.
15.3 The single or partial exercise of any right, power or remedy provided
by law or under this Agreement shall not preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.
15.4 Any liability of any party hereunder may in whole or in part be
released, compounded or compromised, or time or indulgence given by a
party to another party, in its absolute discretion without in any way
prejudicing or affecting any other or further rights of the party
against the other party.
15.5 This Agreement and the documents referred to herein contain the whole
agreement between the parties relating to the transactions contemplated
by this Agreement and supersede all previous agreements between the
parties relating to these transactions.
15.6 The parties shall do and execute or procure to be done and executed all
such further acts, deeds, things and documents as the other party may
reasonably require to fulfil the provisions of and to give to each
party the full benefit of this Agreement.
15.7 If any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law,
such invalidity, illegality or unenforceability shall not in any way
affect or impair any other provisions of this Agreement but this
Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
15.8 Unless expressly provided to the contrary in this Agreement, a person
who is not a party to this Agreement has no right under the Contracts
(Rights of Third Parties) Act, Chapter 53B of Singapore to enforce or
to enjoy the benefit of any term of this Agreement.
16. LENDERS' RIGHTS AND OBLIGATIONS
16.1 The obligations of each Lender under this Agreement are several.
Failure by a Lender to perform its obligations under this Agreement
does not affect the obligations of any other party under this
Agreement. No Lender is responsible for the obligations of the other
Lender under this Agreement.
16.2 The rights of each Lender under or in connection with this Agreement
are separate and independent rights and any debt arising under this
Agreement to a Lender from the Borrower shall be a separate and
independent debt.
16.3 A Lender may, except as otherwise stated in this Agreement, separately
enforce its rights under this Agreement.
17. JURISDICTION AND GOVERNING LAW CLAUSE
17.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of Singapore.
17.2 In relation to any legal action or proceedings arising out of or in
connection with this Agreement, each of the parties hereto irrevocably
submits to the exclusive jurisdiction of the courts of Singapore,
SCHEDULE 1
DRAWDOWN NOTICE
(Clause 4.2)
[Letterhead of Borrower]
To: Value Monetization Ltd
00 Xxxxxxx Xxxxx,
#00-00 Xxxxxxxxx Xxxx Xxxxx
Xxxxxxxxx 000000
International Factors (Singapore) Ltd 0
Xxxxxxx Xxxxxxxxx
#00-00 Xxxxxx Xxxxx Xxx
Xxxxxxxxx 000000
Dear Sirs
CONVERTIBLE LOAN AGREEMENT
We refer to the above Convertible Loan Agreement dated 3 May 2005 (the
"Agreement") made between ourselves, as Borrower, and yourselves, as Lender. All
the terms as defined in the Agreement shall bear the same meaning when used in
this notice.
We give you notice that we wish to drawdown the following amounts to be made to
us under the terms of the Agreement on [oDate] (or, if it is not a Business Day,
on the next Business Day) to be deposited in [oname of bank] Account No. [o]:
(a) US$5,120,000.00 from Value Monetization Ltd; and
(b) S$1,450,000.00 from international Factors (Singapore) Ltd.
We hereby confirm:
(i) that the conditions precedent under Clause 4 of the Agreement have been
complied with in every respect;
(ii) that each of the warranties and representations contained in Clause 8
of the Agreement are true and accurate in all respects as though made
on the date of this Notice with reference to facts and circumstances
presently subsisting and will be true and accurate in all respects on
the date of the intended drawing as though made on the date of the
intended drawing with reference to facts and circumstances then
subsisting; and
(iii) that as at the date hereof no Event of Default or Potential Event of
Default has occurred, and we undertake that no Event of Default or
Potential Event of Default will exist at the date of the intended
drawing.
Yours faithfully,
For and on behalf of
Eastern Nano-Materials Holdings Pte. Ltd.
________________________________
Name: [o]
Designation: [o]
SCHEDULE 2
DETAILS OF GROUP STRUCTURE AND THE SUBSIDIARIES Group Structure
--------------------------
EASTERN NANO-MATERIALS
HOLDINGS PTE. LTD.
--------------------------
|
----------------------------|----------------------------
| 100% | 100% | 100%
--------------------- ---------------------- --------------------------
SHAANXI HAIZE SHANDONG HAIZE SHANDONG BANGSHENG
NANO CO., LTD. NANO CO., LTD. CHEMICAL CO., LTD.
--------------------- ---------------------- --------------------------
Details of Subsidiaries
Issued and
Place of Principal Principal Place Paid-up Capital Percentage
Name Incorporation Business of Business Registered Capital owned
SHANDONG PRC Manufacture of Daiyue RMB46,530.000 100%
HAIZE NANO nanosized Economic and
CO., LTD. precipitated Technology
calcium Development
carbonate Zone, Taian
City, Shandong
Province. PRC
SHANDONG PRC Manufacture of No. 342, R M B24,500,000 100%
BANGSHENG chemical Lingshan
CHEMICAL products Avenue. Taian
CO., LTD. City. Shandong
Province, PRC
SHAANXI MAIZE PRC Manufacture of Xxxxxx Xxxx, XXX00,000,000 100%
NANO CO. nanosized Qianxian
LTD. precipitated County.
calcium Xianyang City,
carbonate Shaanxi
Province, PRC
SCHEDULE 3
USE OF CONVERTIBLE LOAN
1. The Convertible Loans shall be used by the Borrower for the acquisition
of relevant assets of Shengda Nano and Shengda Chem pursuant to the
Asset Acquisition Agreements as part of the Restructuring Exercise for
the Initial Public Offering on the SGX-ST. Any other uses of the
Convertible Loans shall require the written approval of the Lenders.
2. The Convertible Loans shall be advanced into an escrow account (the
"Escrow Account") set up by the Borrower at a Singapore bank designated
by the Lenders. The funds to be used by the Borrower for the
Acquisition shall be paid into the escrow accounts of Shengda Nano and
Shengda Chem designated by the Lenders to be established in the PRC for
this purpose. The funds shall be converted into RMB at the spot rate
quoted by the relevant bank in the PRC on the day the funds are
received by the bank.
SCHEDULE 4
WARRANTIES AS TO THE GROUP
1. Accounts
--------
1.1 The Audited Accounts have been prepared in accordance with all
applicable laws and on a consistent basis in accordance with accounting
principles, standards and practices generally accepted in Singapore at
the date of this Agreement so as to give a true and fair view of the
state of affairs of the Group at the date of the Audited Accounts and
of the profits or losses for the period concerned and as at that date
make:
1.1.1. full provision for all actual liabilities (including taxation
liabilities);
1.1.2. proper provision (or note in accordance with good accountancy
practice) for all contingent liabilities;
1.1.3. provision reasonably regarded as adequate for all had and
doubtful debts; and
1.1.4. due provision for depreciation and amortisation and for any
obsolescence of assets.
1.2. The stock were included in the Audited Accounts at figures not
exceeding the amounts which could in the circumstances existing at the
date of the Audited Accounts reasonably be expected to be realised in
the normal course of carrying on the business of the Group.
1.3. The profits and losses of the Group for each of the financial years
ended on the Accounts Date as shown by the Audited Accounts have not
(except as therein disclosed) been affected to a material extent by
inconsistencies of accounting practices, by the inclusion of
non-recurring items of income or expenditure, by transactions entered
into otherwise than on normal commercial terms or by any other factors
rendering such profits for all or any of such periods exceptionally
high or low (other than as disclosed in the relevant accounts).
1.4. The Group has no outstanding loan capital and has not factored any of
its debts, or engaged in financing of a type which would not be
required to be shown or reflected in the Audited Accounts or borrowed
any money which it has not repaid and that no Group Company has any
other debt whatsoever other than as disclosed in the Audited Accounts.
1.5. There are no liabilities (including contingent liabilities) which are
outstanding on the part of the Group, other than those liabilities
disclosed in the Audited Accounts or which have arisen in the ordinary'
course of business since the date of the Audited Accounts.
1.6. The Group has not been party to any transaction of material importance
which, if it had taken place on or before the date of the Audited
Accounts, would have been required to be disclosed or reflected in the
Audited Accounts,
2. Changes Since Accounts Date
------------------------------
Since the Accounts Date as regards each Group Company:
2.1 its business has been lawfully carried on in the ordinary course and so
as to maintain the same as a going concern;
2.2 it has not disposed of any assets or assumed or incurred any material
liabilities (including contingent liabilities) otherwise than in the
ordinary course of carrying on its business;
2.3 its business has not been adversely affected by the loss of any
important customer or source of supply or by any abnormal factor not
affecting similar businesses to a like extent or by any other cause and
the Borrower and/or the Warrantor after making due and careful
enquiries are not aware of any facts which are likely to give rise to
any such effects;
2.4 no dividend or other distribution has been declared, made or paid to
its members except as provided for in the Audited Accounts;
2.5 its turnover and its trading position has not materially deteriorated;
2.6 it has not borrowed any money or issued any guarantee or created any
charge or Encumbrance over any asset other than as disclosed in the
Audited Accounts;
2.7 no share or loan capital has been allotted or issued or agreed to be
issued except as otherwise contemplated herein or in the Convertible
Loan Agreements;
2.8 there has been no unusual increase or decrease in the level of its
stock;
2.9 it has not entered into any unusual, long term or onerous commitments
or contracts;
2.10 the Borrower and/or the Warrantor after making due and careful
enquiries has not learnt of any circumstance making bad or doubtful any
of the book debts of the relevant Group Company;
2.11 there has been no material adverse change in its financial position or
prospects;
2.12 it has not knowingly waived or released any proprietary rights of a
material or substantial value howsoever arising;
2.13 no resolutions have been passed and nothing has been done in the
conduct or management of the affairs of any Group Company which would
be likely to materially reduce the net tangible asset value of the
relevant Group Company.
3. Litigation
----------
3.1 Since the Accounts Date, no claim in damages has been made against any
Group Company.
3.2 No Group Company is at present engaged, whether as plaintiff or
defendant or otherwise, in any legal action, proceeding or arbitration
(other than as plaintiff in the collection of debts arising in the
ordinary course of its business) or being prosecuted for any criminal
offence.
3.3 There are no circumstances known to the Borrower and/or the Warrantor
after making due and careful enquiries likely to lead to any such claim
or legal action, proceeding or arbitration (other than as aforesaid) or
prosecution.
3.4 There is not in force any court injunction, order or directive
restraining or restricting any Group Company from carrying on its
business or any part thereof.
3.5 No Group Company is subject to any outstanding judgement: order or
decree of any court, tribunal or regulatory or government body or any
undertaking to any court, judicial authority or regulatory or
government body or any outstanding arbitration award; there are no
civil, criminal, administrative or disciplinary or arbitration
proceedings in progress, pending or threatened against any Group
Company and there are no facts likely to give rise to any such
proceedings.
3.6 No Group Company nor any person, for whose acts or defaults of any
Group Company may be liable, has committed any criminal, illegal or
other unlawful act or any breach of contract or statutory duty or any
tortious or other act or default which could lead to a claim or
proceedings against the relevant Group Company or give rise to or
increase a liability or obligation of any Group Company or which could
entitle any other person to terminate any contract to which such Group
Company is a party.
3.7 There are no investigations, inquiries or disciplinary proceedings by
or before any regulatory or government body concerning any Group
Company, none are pending or threatened and there are no facts likely
to give rise to any such investigation, inquiry or proceedings.
3.8 No Group Company has been convicted of any offence. No employee, agent
or former officer, agent or employee of any Group Company has been
convicted of any offence in relation to the relevant Group Company, and
no employee has, so far as the Borrower and/or' the Warrantor are
aware, been convicted of any offence (save for any minor traffic
offences) which reflects upon his suitability to hold his position or
upon the reputation of the relevant Group Company.
4. Taxation
--------
4.1 There is no liability on any Group Company to Taxation in respect of
which a Taxation claim could be made and there are no circumstances
likely to give rise to such a liability.
4.2 All income tax. goods and services and value-added tax. salaries tax
and property tax, stamp duties, withholding tax and other taxes charges
and levies assessed or imposed by any government or governmental or
statutory body which have been assessed upon each Group Company or any
of them and which are due and payable on or before completion have been
paid and were paid on or before the relevant due date for payment.
4.3 In relation to stamp duty assessable or payable in the PRC or elsewhere
in the world, as at the date of this Agreement, all documents in the
enforcement of which any Group Company may be interested have been duly
stamped and no document belonging to any Group Company now or at
completion which is subject to ad valorem stamp duty is or will be
unstamped or insufficiently stamped; nor has any relief from such duty
been improperly obtained, nor has any event occurred as a result of
which any such duty from which any Group Company has obtained relief,
has become payable; and all stamp duty payable upon any transfer of
shares in each Group Company before Completion has been duly paid.
4.4 In relation to goods and services tax and/or value-added or other
similar tax, where applicable. each Group Company:
4.4.1 has been duly registered and is a taxable person;
4.4.2 has complied, in all respects, with all statutory
requirements, orders, provisions, directions or conditions;
4.4.3 maintains complete, accurate and up-to-date records as is
required by the applicable legislation; and
4.4.4 has not been required by the relevant authorities of customs
and excise to give security.
4.5 No Group Company has paid or, since the Accounts Date, has become
liable to pay any penalty or interest under any Taxation statute
anywhere in the world.
4.6 No Group Company has been the subject of an investigation, discovery or
access order by or involving any Tax Authority and there are no
circumstances existing which make it likely that an investigation,
discovery or order will be made.
5. Tax Returns
-----------
Each Group Company has duly made all returns and given or delivered all
notices, accounts and information which on or before the date of this
Agreement ought to have been made, given or delivered for the purposes
of Taxation and all such returns, notices, accounts and information
(and all other information supplied to the relevant tax or customs and
excise or other fiscal authority concerned for any such purpose) have
been complete and correct and made on a proper basis and none of such
returns, notices, accounts or information is disputed in any respect by
the fiscal authority concerned and there is no fact known to the
Borrower and/or the Warrantor after making due and careful enquiries
which might be the occasion of any such dispute or of any claim for
taxation in respect of any financial period down to and including the
Accounts Date not provided for in the Audited Accounts.
6. Employees
---------
6.1 There are not in existence any contracts of service with directors or
employees of each Group Company, nor any consultancy agreements with
each Group Company, which cannot be terminated by three (3) months'
notice or less or (where not reduced to writing) by reasonable notice
(not exceeding a three (3) month period) without giving rise to any
claim for damages or compensation except otherwise as disclosed in the
Prospectus.
6.2 There are no amounts owing to any present or former director or to any
employee of each Group Company save for accrued benefits and
remuneration due to present directors and employees of each Group
Company, full details of which have been set out in the Audited
Accounts.
6.3 Save to the extent (if any) to which provision or allowance has been
made in the relevant Audited Accounts:
6.3.1 no liability has been incurred by any Group Company for breach
of any contract of service or for services, for redundancy
payments or for compensation for wrongful dismissal or unfair
dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee; and
6.3.2 no gratuitous payment has been made or promised by any Group
Company in connection with the actual or proposed termination
or suspension of employment or variation of any contract of
employment of any present or former director or employee.
6.4 Each Group Company has in relation to each of its employees (and so far
as relevant to each of its former employees) complied in all respects
with:
6.4.1 all obligations imposed on it by all statutes, regulations and
codes of conduct and practice relevant to the relations
between it and its employees or any trade union and each Group
Company has maintained current, adequate and suitable records
regarding the service of each of its employees;
6.4.2 all collective agreements and customs and practices for the
time being dealing with such relations or the conditions of
service of its employees; and
6.4.3 all relevant orders and awards made under any relevant
statute, regulation or code of conduct and practice affecting
the conditions of service of its employees.
6.5 Each Group Company is not involved in and has not received notice of
any industrial or trade dispute or any dispute or negotiation with any
trade union or association of trade unions or organisation or body of
employees.
6.6 Each Group Company does not have in existence and is not proposing to
introduce any incentive scheme, share incentive scheme, share option
scheme, profit sharing scheme or other bonus commission or incentive
scheme for all or any of its directors or employees.
6.7 There are no amounts owing to any present or former employee of each
Group Company other than remuneration accrued for the current wage or
salary period or for reimbursement of normal business expenses and no
present or former employee of each Group Company has any claim against
the relevant Group Company or right to be indemnified by the relevant
Group Company arising out of an act or omission in the course of his
office or employment on or before the date of this Agreement.
6.8 There has been no strike, work to rule or industrial action (official
or unofficial) by any employee of each Group Company within the last
five (5) years.
6.9 There are no claims pending or threatened or, to the best of the
knowledge of the Borrower and/or the Warrantor, having made due and
careful enquiries, capable of arising, against each Group Company:
6.9.1 by an employee or xxxxxxx or third party, in respect of an
accident or injury which is not fully covered by insurance; or
6.9.2 by an employee or director in relation to his terms and
conditions of employment or appointment.
7. Capital Commitments, Unusual Contracts, Guarantees
--------------------------------------------------
Each Group Company:
7.1 has no capital commitment in excess of S$100,000 except as otherwise
disclosed in the Prospectus;
7.2 is not a party to any contract entered into otherwise than in the
ordinary and usual course of business or any contract of an onerous or
long-term nature (exceeding a 12 month period);
7.3 has not by reason of any default by it in any of its obligations become
bound or liable to be called upon to repay prematurely any loan capital
or borrowed moneys;
7.4 is not a party to any agreement which is or may become terminable as a
result of the entry into this Agreement;
7.5 has not entered into or is bound by any guarantee or indemnity under
which any liability or contingent liability is outstanding;
7.6 is not and has not agreed to become, a member of any joint venture,
consortium, partnership or other unincorporated association; is not and
has not agreed to become, a party to any agreement or arrangement for
participating with others in any business sharing commissions or other
income; and
7.7 is not a party to any agency. distributorship, marketing, purchasing,
manufacturing or licensing agreement or arrangement or any agreement or
arrangement of any nature whatsoever which restricts its freedom to
carry on its business in any part of the world in any manner except as
otherwise disclosed in the Prospectus.
8. Book Debts
Save as disclosed in the Audited Accounts, none of the book debts which
are included in the Audited Accounts or which have subsequently arisen
have been outstanding for more than six (6) months from their due dates
for payment and each such debt has realised or will realise in the
normal course of collection its full value as included in the Audited
Accounts or in the books of each Group Company after taking into
account any provision for such debt made in the Audited Accounts.
9. Insurance
---------
9.1 All material insurable risks of each Group Company have been duly and
properly insured with adequate coverage in keeping with normal industry
practice.
9.2 In respect of all such insurances:
9.2.1 all premiums have been duly paid to date; and
9.2.2 all the policies are in force and are not voidable on account
of any act, omission or non-disclosure on the part of the
insured party; and
9.2.3 none of the insurance policies is subject to any special or
unusual terms or restrictions or to the payment of any premium
in excess of the usual rate.
9.3 Each Group Company has not made any claim on its insurers, nor have any
circumstances arisen which may give rise to any claim, which (in either
case) could have the effect of causing future premiums to be higher
than would otherwise be the case.
10. Title to and Condition of Assets
--------------------------------
10.1 All assets owned by each Group Company:
10.1.1 are legally and beneficially owned by that Group Company free
from any Encumbrance;
10.1.2 are in the possession or under the exclusive control of that
Group Company: and 10.1.3 are situated in its respective
country of incorporation.
10.2 There is no Encumbrance on, over or affecting the whole or any part of
the undertaking or assets of each Group Company and there is no
agreement or commitment to give or create any Encumbrance and no claim
has been made by any person to be entitled to(.) any Encumbrance.
10.3 Each Group Company is able to prove title to all the assets owned by
it.
10.4 Except as disclosed in the Prospectus, the assets owned by each Group
Company comprise all the assets necessary to enable the Group Company
to carry on its business fully and effectively in the ordinary course,
as carried on up to the present time and no such assets are used wholly
or partly for any purpose other than the business of that Group
Company.
10.5 All assets owned by each Group Company which are subject to a
requirement of licensing or registration of ownership possession or use
are duly licensed or registered in the sole name of that Group Company.
10.6 The assets registers of each Group Company comprise a complete and
accurate record of all plant, machinery, equipment and vehicles owned,
held or used by that Group Company and are capable of being reconciled
in respect of each item with the book values of such assets in the
accounting records of that Group Company.
10.7 All plant, machinery, equipment and vehicles owned or used by each
Group Company are in good and safe repair and condition having regard
to their age. have been regularly and properly maintained and are in
working order and none are in a dangerous or (in the case of vehicles)
unroadworthy condition or in need of renewal or replacement.
11. Compliance with Leases and Other Agreements
-------------------------------------------
11.1 The terms of all leases, tenancies. licences, concessions. agencies,
franchises and agreements of whatsoever nature to which each Group is a
party have been duly complied with by that Group Company.
11.2 No such lease, tenancy, licence, concession, agency. franchise or
agreement will become subject to avoidance, revocation or be otherwise
affected upon or in consequence of the making or implementation of this
Agreement.
12. Statutory and Other Requirements, Consents and Licences
-------------------------------------------------------
12.1 Each Group Company has carried on its business in accordance with
applicable laws and regulations in the PRC or elsewhere and so far as
the Borrower and/or the Warrantor are aware in any relevant country.
There is no investigation or enquiry by, or order, decree or judgment
of. any court or any governmental agency or regulatory body outstanding
or anticipated against any Group Company or which may have a material
adverse effect upon its assets or business.
12.2 All statutory and other requirements applicable to the carrying on of
the business of each Group Company as now carried on. and all
conditions applicable to any licences and consents involved in the
carrying on of such business, have been complied with and the Borrower
and/or the Warrantor are not aware of any breach thereof or of any
intended or contemplated refusal or revocation of any such licence or
consent.
13. Books and Records
-----------------
13.1 The statutory records, registers and books and the books of account of
each Group Company are duly entered up and maintained in accordance
with all legal requirements applicable thereto and contain true, full
and accurate records of all matters required to be dealt with therein
and all such books and all records and documents (including documents
of title) which are its property, in its possession or under its
control and all accounts, documents and returns required to be
delivered or made to the relevant authority in the PRC or elsewhere in
the world have been duly and correctly delivered or made.
13.2 No Group Company has received any notice of any application or intended
application under any relevant legislation for the rectification of
that Group Company's statutory records, registers and/or books.
14. Options on Share Capital
------------------------
14.1 Except as otherwise contemplated herein and in the Convertible Loan
Agreement, no unissued shares of any Group Company are under option or
agreed conditionally or unconditionally to be placed under option or
created or issued.
14.2 Except as otherwise contemplated herein and in the Convertible Loan
Agreement, there is no option, right to acquire, mortgage. charge,
pledge, lien or other form of security or encumbrance on, over or
affecting the shares in any Group Company and there is no agreement or
commitment to give or create any of the foregoing.
15. Intellectual Property Rights
----------------------------
15.1 All intellectual property rights used or required by each Group Company
in connection with its business are in full force and effect and are
vested in and beneficially owned or otherwise licensed by it.
15.2 Except as disclosed in the Prospectus, each Group Company does not
require any patent, trade or service xxxx, registered design,
copyright, design right, licence or other right of any other person in
order to carry on its business and none of the activities of each Group
Company infringes any patent or other intellectual property of any kind
whatsoever of any other person or gives rise to an obligation to pay
any sum in the nature of a royalty.
15.3 The business of each Group Company (and of any licensee under a licence
granted by any Group Company) as now carried on does not and is not
likely to infringe any intellectual property right of any other person
(or would not do so if the same were valid) or give rise to a liability
pursuant to the laws relating to intellectual property rights and all
licences to each Group Company in respect of any such right are in full
force and effect.
16. Leasehold Properties
--------------------
16.1 Each Group Company has paid the rent and observed and performed the
covenants on the part of the tenant and the conditions contained in any
leases under which the properties (the "Properties") used by the
relevant Group Company for its business are held, and all the leases
are valid and in full force.
16.2 All licences, consents and approvals required from the landlords and
any superior landlords under any leases of the Properties have been
obtained, and the covenants on the part of the tenant contained in the
licences, consents and approvals have been duly performed and observed.
16.3 No obligation necessary to comply with any notice or other requirement
given by the landlord under any leases of the Properties is outstanding
and unobserved and unperformed.
16.4 There is no obligation to reinstate the Properties by removing or
dismantling any alteration made to it by any Group Company or any
predecessor in title to the relevant Group Company.
17. Corporate Matters
-----------------
17.1 Each Group Company has been duly incorporated and are validly existing
and is not in receivership or liquidation, it has taken no steps to
enter into liquidation and the Borrower and/or the Warrantor are not
aware of any petition being presented for winding up of any Group
Company and the Borrower and/or the Warrantor are not aware of any
grounds on which a petition or application could be based for the
winding up or appointment of a receiver of any such company.
17.2 All governmental approvals. licences and authorisations which were
necessary or desirable in connection with the incorporation of each
Group Company, the allotment or transfer of its shares to the present
and former holders thereof and the activation of each Group Company
(including the appointment of directors) were duly obtained.
18. Banking and Finance
-------------------
18.1 No circumstances have arisen which could now (or which could with the
giving of notice or lapse of time or both) entitle a provider of
finance to each Group Company (other than on a normal overdraft
facility) to call in the whole or any part of the monies advanced or to
enforce his security, and no provider of finance to each Group Company
on overdraft facility has demanded repayment or indicated that the
existing facility will be withdrawn or reduced or not renewed or that
any terms thereof will be altered to the disadvantage of the relevant
Group Company.
18.2 Each Group Company's borrowings may be repaid by the relevant Group
Company at any time at no more than one months' notice and without any
premium or penalty (howsoever called) on repayment.
18.3 Each Group Company has not engaged in any borrowing or financing
transaction or arrangement which does not appear as borrowings in the
Audited Accounts.
18.4 No Group Company or any other person has given or undertaken to give
any security or guarantee for any liability of the relevant Group
Company except as disclosed in the Prospectus.
18.5 No Group Company has given or undertaken to give any security or
guarantee for any liability of any person.
19. Contracts
---------
19.1 To the best of the knowledge of the Borrower and/or the Warrantor, none
of the contracts or purported contracts of each Group Company is void,
voidable or unenforceable by it. Each Group Company is not in breach of
any of its contractual obligations and no other party to any contract
to which each Group Company is a party is in breach of that contract or
is unlikely to be able or willing to fulfil its contractual
obligations.
19.2 No event or omission has occurred or been permitted to arise which
would entitle any third party to terminate prematurely any contract to
which any Group Company is a party or call in any money or enforce any
obligation before the date on which payment or performance would
normally be due.
19.3 Save as disclosed in the Prospectus, there are no related party
transactions entered into by any Group Company.
20. Customers and Suppliers
-----------------------
20.1 The loss of any single supplier to or customer of the Group would not
have a material affect on its business.
20.2 To the best of the knowledge of the Borrower, the Borrower is not aware
that after the drawdown of the Convertible Loan (whether by reason of
an existing agreement or arrangement or otherwise):
20.2.1 any supplier of the Group will cease supplying the Group or
may substantially reduce its supplies to the Group:
20.2.2 any material customer of the Group will cease to deal with the
Group or may substantially reduce its existing level of
business with the Group: or
20.2.3 any officer or senior employee of the Group will leave.
21. Licences
--------
21.1 The Group has all the licences that are necessary or desirable for the
carrying on of its business.
21.2 The Group is not in breach of the terms and conditions relating to the
grant, continued use or renewal of any of the licences, and the
Borrower and/or the Warrantor are not aware of any reason why any of
them should be suspended, cancelled, refused, revoked or not renewed.
22. Insolvency
----------
22.1 No order has been made or petition or other application presented or
resolution passed for the winding-up, judicial management or
administration of any Group Company, nor are there any grounds on which
any person would be entitled to have such Group Company wound up or
placed under judicial management or in administration, nor has any
person threatened to present such a petition or convened or threatened
to convene a meeting of the relevant Group Company to consider a
resolution to wind up the relevant Group Company or any other
resolutions, nor has any such step been taken in relation to any Group
Company under the law relating to insolvency or the relief of debtors
in any part of the world.
22.2 No distress, execution or other process has been levied on any asset
owned or used by the Group, nor has any person threatened any such
distress, execution or other process, whether in the PRC or anywhere
else in the world.
22.3 No person has appointed or threatened to appoint or become entitled to
appoint a receiver or receiver and manager or other similar officer of
the Group's business or assets or any part of them.
22.4 No Group Company has ceased trading or stopped payment to its creditors
and there are no grounds on which such company could be found to be
unable to pay its debts for the purposes of determining insolvency.
SCHEDULE 5
BENEFICIAL SHAREHOLDINGS
Name Percentage of Beneficial Shareholding (%)
------------------------ -----------------------------------------
Chen Xiangzhi 52.55
Kong Fanying 2.76
Chen Houzhi 2.41
Xxxx Xxxx 2.96
Li Xuewen 2.73
Gong Xingyu 2.72
Xxxxx Xxxx 2.72
Xx Xxxxxxx 2.71
Xx Xxxx 2.70
Wang Gongqin 2.69
Shan Chuanpo 2.68
Xxx Xxxxx 2.68
Xxxx Xxxx 2.67
Xx Xxxxxx 2.63
Yu Xuehuai 2.59
Li Shujin 2.59
Wang Mingqiang 2.46
Xxx Xxxxxxxx 2.41
Yue Guangjun 2.34
IN WITNESS WHEREOF the parties have hereunto set their hands on the date stated
at beginning of this Agreement.
THE BORROWER
------------
Signed by
Name:
for and on behalf of
EASTERN NANO-MATERIALS HOLDINGS PTE.
LTD.
in the presence of
Name:
LENDER A
--------
Signed by
Name:
for and on behalf of
VALUE MONETIZATION LTD
in the presence of
Name:
LENDER B
--------
Signed by
Name:
for and on behalf of
INTERNATIONAL FACTORS (SINGAPORE) LTD
in the presence of
Name:
THE WARRANTOR
-------------
Signed by
CHEN XIANGZHI
in the presence of
Name:
CREST CAPITAL PARTNERS LTD
Correspondance Address: 00 Xxxxxxx Xxxxx
#00-X0: Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxxx 000000
30 December 2005
Shandong Shengda Technology Co. Ltd.
Taishan Development Zone for Youth Do Pioneering Work
Attn: Xx. Xxx Anhui
Chief Financial Officer
Subject: Settlement of Expenses Pursuant to Project Nano
We refer to WS letter dated 29 December 2005. Further which, the payment should
cover legal cast jointly incurred by IFS and Crest Capital. We confirm that the
agreement signed between International Factors (Singapore) Ltd, Yide Investments
Pte Ltd, Eastern Nano-Materials Holdings Pte Ltd, Value Monetization Ltd and
Chen Xiangzhl will henceforth be terminated.
Thank you.
Yours Faithfully
/s/ Yong Xxxxx Xxx
-------------------
Yong Xxxxx Xxx
Partner
C R E S T C A P I T A L P A R T N E R S
--------------------------------------------------------------------------------
BEIJING o JAKARTA o KUALA LUMPUR o GEOUI o SHANGHAI o SINGAPORE
INTERNATIONAL FACTORS (SINGAPORE) LTD
29 December 2005
Shandong Shengda Technology Co., Ltd.
Taishan Development Zone for Youth Do Pioneering Work
Attn: Xx. Xxx Anhui
Chief Financial Officer
Subject: Settlement of Expenses Pursuant to Project Nano
Further to our letter to you dated 27 December 2005. we confirm that all other
terms in all the agreements signed between International Factors (Singapore)
Ltd, Yide Investments Pte Ltd, Eastern Nano-Materials Holdings Pte Ltd, Value
Monetization Ltd and Chen Xiangzhi will henceforth be terminated.
Thank you.
Yours faithfully
/s/ Xxx Soon Kie
-----------------
Xxx Soon Kie
Chief Executive Officer
