1
EXHIBIT 10.28
DATED THIS 20th DAY OF JUNE, 1997.
================================================================================
- BETWEEN -
THE PARTIES WHOSE NAMES AND ADDRESSES ARE
SET OUT IN COLUMN (1) OF THE SCHEDULE
- AND -
NHANCEMENT TECHNOLOGIES INC.
=======================================================
AGREEMENT FOR THE SALE OF SHARES
IN ADVANTIS NETWORK & SYSTEM SDN. BHD.
=======================================================
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
2
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.
3
2
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 period 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 from time to time and any
re-enactment 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 from 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 of 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;
4
3
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.
5
4
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:-
4.4.1 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 this 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;
6
5
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 arms-length
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:-
7
6
4.4.1 any of the approvals required by Clause 4.1 is refused, nor
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 six (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 and of no further
effect and no party hereto shall have any further claim against the
others 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 if 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 the 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 NHancement to take
effect immediately and without any compensation for loss of
office;
(e) letters of resignation of the Auditors and the Company
Secretary;
8
7
(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 Xxxxxxxxx Divisional Manager, Sales;
s/o S. O. Thevar
(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 representations, 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 6.2.2 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.
9
8
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 the Sale
Shares takes place contemporaneously.
6. VENDORS' REPRESENTATIONS AND WARRANTIES
6.1 The Vendors hereby jointly and severally represent and warrant to
NHancement 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 in 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 irrevocable 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
10
9
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 no 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 and 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
11
10
reserve or provision was made in the 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 of 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;
12
11
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.
13
12
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 of 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 be 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;
14
13
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;
15
14
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 existing 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 non-exclusive jurisdiction of the Courts of Malaysia. The
parties hereto agree that
17
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 any originating process and cause
papers with respect to any legal proceeding 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 the given or served under
this Agreement shall be in writing and may be served or 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 despatched and telefax
acknowledgement or answerback is duly an 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;
18
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 respective 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 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 from, 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 any 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 this 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 NHancements, 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 defense 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
indemnifying 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 Sales 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 data
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 Completion 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
(e) 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 this 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 Pewira 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 Xxxxxxxx
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 22,500 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 CHAIR
XXXXXX CHAIR
731005-10-5397
SIGNED by )
XXXXXX BIN XXXXXXX XXXX ) /s/ XXXXXX BIN XXXXXXX XXXX
in the presence of:- )
/s/ XXXXXX XX00 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 XX00 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 CHAIR
XXXXXX CHAIR
731005-10-5397
SIGNED by )
XX XXX XXX ) /s/ NG KOK WAH
in the presence of:- )
/s/ XXXXXX CHAIR
XXXXXX CHAIR
731005-10-5397
28
SIGNED by )
XXX XXXX XXXX ) /s/ XXX XXXX XXXX
in the presence of:- )
/s/ XXXXXX CHAIR
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 XX00 XXXX XXXX
XXXXXX XXXX XXXX XXXX
Advocate & Solicitor
Kuala Lumpur
