ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 2nd day of April, 2002
BETWEEN:
DALIAN BEIGANG INFORMATION INDUSTRY DEVELOPMENT CO LTD.
a company duly incorporated under the laws of China
(hereinafter called "Vendor")
AND:
DALIAN NORTH PORT INFORMATION DEVELOPMENT CO LTD.,
a company duly incorporated under the foreign joint venture laws of China
(hereinafter called "Purchaser")
WHEREAS:
A. The Vendor carries on several businesses in Dalian city, one of which is
called Xxxxx, an acronym for "taxation electronic network" (Xxxxx) being an
on-line reporting and tax payment business which the Vendor recently
launched in Dalian (Business);
B. The Vendor and ATC Systems Inc., (ATC) a Canadian company, formed the
Purchaser in which the shareholders of the Vendor owns 10% as well as 30 %
of ATC;
C. The Vendor has agreed under a separate agreement with the Purchaser to
provide certain important services for the Business; and
D. The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Business as a going concern, on the terms hereinafter set forth. .
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the
representations, warranties, covenants and agreements hereinafter set forth, the
parties agree as follows:
SECTION 1
INTERPRETATION
1.1 Definitions
For the purpose of this Agreement, unless there is something in the subject
matter inconsistent with a logical meaning, the words in Schedule "A" shall have
the meanings described therein.
1.2 Governing Law and Forum
This Agreement and all matters arising hereunder will be governed by and
construed in accordance with the laws of China and each party irrevocably
attorns to such jurisdiction.
1.3 Currency
All references to money shall be to lawful money of the US currency.
1.4 Schedules
The following are the Schedules attached to and incorporated in this Agreement
by this reference and deemed to form a part hereof:
Schedule A -Definitions
Schedule B -Equipment
Schedule C -Intangible Property
Schedule D -Material Contracts
Schedule E -Leasehold Property
Schedule F -Assumed Liabilities
SECTION 2
PURCHASE AND SALE
2.1 Purchase and Sale
Relying on the warranties and representations herein, and subject to the terms
on the Closing Date, but effective as of and from the Effective Date, the
Purchaser will purchase the Assets and the Vendor will sell the Assets, free and
clear of all Encumbrances, for the Purchase Price and for greater certainty it
is agreed that the Assets are only those associated with and which form part of
the Business but no other businesses of the Vendor.
2.2 Purchase Price
The Purchase Price is 9,090,000 rmb being the approximate costs the Vendor
incurred to acquire and/or develop the assets of the Business.
2.3 Allocation of Purchase Price
The Purchase Price shall be allocated as follows:
(a) Equipment 2,700,000 rmb;
(b) Material Contracts, 2000 customer subscriptions @ 1200
2,400,000
(c) Intangible Property 3,900,000
(d) Leasehold Property 74,000
Total 9,090,000
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2.3.1 The parties acknowledge that due to the inherent relationships
between the shareholders of the parties that the Purchase Price is
derived by the calculating the costs to develop the Xxxxx System and
begin the marketing thereof and that such costs were, in the case of
the value of material contracts, arbitrarily set and that if such
allocation or any other allocation needs to be adjusted to meet the
needs of the Purchasers auditors, Xxxxx Xxxxx, than the parties
agree to adjust the allocation of the Purchase Price accordingly.
2.3.2 The parties recognize that there is no value attributed to certain
classes of Assets, which does not mean there is no actual value for
such class rather it was agreed for the purposes of this agreement
the allocation thereof served little purpose so none was attributed.
2.4 Payment of Purchase Price
The Purchaser shall pay the Purchase Price, by assumption of the Assumed Debts
and adjusted as described in subsection 13.2.
2.5 Closing
Subject to the terms and conditions hereof, the purchase and sale of the Assets
shall be completed at a closing to be held on the Closing Date or such other
date as shall be agreed upon by the parties as the parties may agree.
SECTION 3
RECEIVABLES AND VALUATION OF PREPAID EXPENSES
3.1 Date of Determination of Value
The value of Prepaid Expenses shall be determined as of the close of business on
the day preceding the Effective Date in the manner hereinafter set forth.
3.2 Receivables
The Purchaser acknowledges that there are receivables but that for the purposes
of this agreement no allocation is being made for receivables and further it is
agreed that the Vendor is not subject to recourse should any receivable be
written off as non collectible.
3.3 Prepaid Expenses
The value of Prepaid Expenses shall be the net book value of the Prepaid
Expenses.
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SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
4.1 Representations and Warranties of Vendor
The Vendor represents and warrant, that:
(a) the Vendor:
(i) is a company duly incorporated in Dalian city, is duly
organized, validly exists and is in good standing;
(ii) has the authority to own and dispose of the Assets, to carry on
the Business, to execute and deliver this Agreement, to complete
the transactions contemplated hereby and to duly observe and
perform all of its covenants and obligations herein set forth;
and
(iii) is not in default of any reporting or filing requirement under
any applicable corporate, securities or taxation law or other
law to which it is subject;
(b) this Agreement has been duly and validly executed and delivered by the
Vendor and constitutes a legal obligation of the Vendor;
(c) neither the execution nor the delivery of this Agreement, or the other
agreements and instruments contemplated hereby will:
(i) constitute a breach of any term or condition or give to any
person or Governmental Authority any right of, after the giving
of a notice or lapse of time or otherwise, acceleration,
termination or cancellation in or with respect to any of the
following:
(A) any constating documents, charter documents or by-laws of
the Vendor or any resolution of directors or shareholders
of the Vendor;
(B) any indenture, mortgage, deed of trust, agreement,
contract, lease, franchise, certificate, consent, license,
authority, registration or other instrument or commitment
to which the Vendor is a party or is subject, or by which
it is bound or from which it derives benefit or which is
required or desirable for the conduct in the usual and
ordinary course of the operation of the Business; and
(C) any law, judgment, decree, order, injunction, rule, statute
or regulation of any court, arbitrator or Governmental
Authority by which the Business, the Assets, and the Vendor
is bound or to which the Business, the Assets, and the
Vendor is subject;
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(ii) result in the creation of any Encumbrance on any of the Assets;
or
(iii) result in any fees, duties, taxes, assessments or other amounts
relating to any of the Assets becoming due or payable;
(iv) give any person the right to terminate, cancel or remove any of
the Assets, save to the extent that the consent of third parties
is required to assign the Leasehold Property and Material
Contracts.
(d) no authorization, approval, order, license, permit, consent,
certificate or registration of any Governmental Authority, court or
arbitrator, and no registration, declaration or filing by the Vendors
with any Governmental Authority, court or arbitrator, is required in
order for the Vendor
(i) to incur the obligations expressed to be incurred by the Vendor
in or pursuant to this Agreement;
(ii) to execute and deliver all other documents and instruments to be
delivered by the Vendor pursuant to this Agreement;
(iii) to duly perform and observe the terms and provisions of this
Agreement; or
(iv) to render this Agreement legal, valid, binding and enforceable;
(e) the Books of Record:
(i) have been prepared in accordance with generally accepted
accounting principles , applied on a basis consistent with those
of previous fiscal years;
(ii) are in accordance with the books and accounts of the Vendor as
at the dates thereof and for the periods covered thereby; and
(iii) present fairly the assets, indebtedness and the financial
condition and position of the Business.
(f) since the date of Books of Record:
(i) there has been no material adverse change in any of the Assets
or the organization and its operations, other than changes in
the usual and ordinary course of the operation of the Business;
(ii) the Vendor has not materially increased or agreed to increase
the salary, pay, fringe benefits or other compensation of, or
paid or agreed to pay any pension, bonus, share or profits or
other benefit, compensation or
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payment to, or for the benefit of, any officers, employees or
agents of the Business, save and except remuneration paid to
employees of the Business in the usual and ordinary course of
the operation of the Business;
(iii) the Vendor has maintained in force insurance against loss on
such of the Assets against such risks and to such limits, as
well as insurance against public liability from such risks and
to such limits, as is in accordance with prudent business
practices prevailing in the industry in which the Business is
involved;
(iv) the Vendor has not purchased or agreed to purchase or leased or
agreed to lease or acquired or agreed to acquire any asset,
other than as required in the usual and ordinary course of the
operation of the Business;
(v) the Vendor has not sold, transferred, disposed of, mortgaged,
pledged, charged or leased any asset, other than as required in
the usual and ordinary course of operation of the Business; and
(vi) the Vendor has not engaged or entered into any transaction or
made any disbursement or assumed or incurred any liability or
obligation or made any commitment to make any expenditure which
might materially and adversely affect any of the Assets or the
organization, operations, affairs, business, properties,
prospects or financial condition or position of the Business;
(g) the Books and Records fairly and correctly set out and disclose the
Business in all material respects, in accordance with generally
accepted accounting principles in China;
(h) no action, suit, or other proceeding or arbitration before or of any
court, arbitrator or Governmental Authority or dispute with any
Governmental Authority is in process, or pending or threatened,
against or relating to the Vendor, the Business or any of the Assets
and no state of facts exists which could constitute the basis
therefor;
(i) all of the Assets are owned by the Vendor and are in the Vendor's
possession;
(j) the Leasehold Property are leased by the Vendor on normal business
terms from persons with whom the Vendor deals at arm's length and are
in the Vendor's possession;
(k) the Vendor is the legal and beneficial owner of and has good and
marketable title to the Assets free and clear of all Encumbrances and
none of the Assets are in the possession of or under the control of
any other person;
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(l) all tangible rights, assets and properties comprising the Assets are
free from material defect, are in good condition and repair and (where
applicable) are in proper working order, having regard to the use and
age thereof;
(m) other than the Assumed Liabilities, there is no indebtedness to any
person which might, by operation of law or otherwise, now or hereafter
constitute or be capable of forming an Encumbrance upon any of the
Assets and, save as aforesaid, there is no indebtedness of any kind
whatsoever relating to the Business in respect of which the Purchaser
may become liable on or after the Closing Date;
(n) none of the Assets is in any respect infringing the right of any
person under or in respect of any patent, design, trade xxxx, trade
name, copyright or other industrial in intellectual property;
(o) there is no employment contract, commitment or arrangement, whether
written, oral or implied, relating to the Business which contains any
specific agreement as to notice of termination or severance pay in
lieu thereof or which cannot be terminated without cause upon giving
reasonable notice as may be implied by law without the payment of, or
any indebtedness in respect of, any bonus, damages, share of profits
or penalty;
(p) Pensions have been set for employees but the value attributed to
pensions as of the Closing date are considered immaterial and any
obligation owed by the Vendor to employees for pensions is being
assumed by the Purchaser.
(q) this Agreement does not contain any untrue statement by the Vendor of
a material fact nor has the Vendor omitted to state in this Agreement
a material fact necessary in order to make the statements contained
herein not misleading; and
(r) all information set out in the Schedules to this Agreement is accurate
and correct in every material respect.
4.2 Representations and Warranties in Closing Documents
All statements contained in any certificate or other instrument delivered by or
on behalf of the Vendor pursuant hereto or in connection with the transaction
contemplated hereby shall be deemed to be representations and warranties by the
Vendor hereunder.
4.3 Survival of Representations and Warranties
The representations and warranties of the Vendor contained in this Agreement
shall survive the Closing and the Payment of the Purchase Price and,
notwithstanding the Closing and the Payment of the Purchase Price, the
representations and warranties of the Vendor shall continue in full force and
effect for the benefit of the Purchaser.
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4.4 Reliance
The Vendor acknowledges and agrees that the Purchaser has entered into this
Agreement relying on the warranties and representations and other terms and
conditions of this Agreement notwithstanding any independent searches or
investigations that may be undertaken by or on behalf of the Purchaser and that
no information which is now known or should be known or which may hereafter
become known to the Purchaser or its officers, directors or professional
advisors shall limit or extinguish the right to indemnity under this section .
There is no Section 5.
SECTION 6
PURCHASER'S REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Purchaser
The Purchaser represents and warrants, as of the Closing Date that:
(a) the Purchaser:
(i) is a foreign joint venture corporation incorporated in Dalian
city, is duly organized, validly exists and is in good standing
under the laws of Dalian; and
(ii) has the full authority to execute this Agreement, to complete
the transactions contemplated hereby and to duly observe and
perform all of its covenants and obligations herein set forth;
(b) this Agreement has been duly and validly executed and delivered by the
Purchaser and constitutes a legal and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its
terms;
(c) the execution of this Agreement, or the other agreements and
instruments contemplated hereby, will constitute a default under any
terms, provision or conditions of, or conflict with, violate or cause
any, or give to any person or Governmental Authority any right of,
after the giving of a notice or lapse of time or otherwise,
acceleration, termination or cancellation in or with respect to any of
the following:
(i) any constating documents, charter documents or by-laws of the
Purchaser or any resolution of directors or shareholder of the
Purchaser;
(ii) any indenture, mortgage, deed of trust, agreement, contract,
lease, franchise, certificate, consent, license or other
instrument or commitment to which the Purchaser is a party or is
subject, or by which it is bound or from which it derives
benefit;
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(iii) any law, judgment, decree, order, injunction, rule, statute or
regulation of any court, arbitrator or Governmental Authority by
which the Purchaser is bound or to which the Purchaser is
subject;
(d) this Agreement does not contain any untrue statement by the Purchaser
of a material fact nor has the Purchaser omitted to state in this
Agreement a material fact necessary in order to make the statements
contained herein not misleading.
6.2 Survival of Representation and Warranties
The representation and warranties of the Purchaser contained in this Agreement
shall survive the Closing and the conveyance of the Assets and, notwithstanding
the Closing and the conveyance of the Assets, the representations and warranties
of the Purchaser shall continue in full force and effect for the benefit of the
Vendor.
SECTION 7
VENDOR'S COVENANTS
7.1 Prior to Closing Date
The Vendor covenants and agrees with the Purchaser that as of the Closing Date:
(a) the Vendor will obtain any release, waiver, consent or approval that
the Purchaser, acting reasonably, may advise is required in order that
none of the execution and delivery of this Agreement, the completion
of the transactions contemplated hereby, or the observance and
performance of the obligations of the Vendor herein will:
(i) constitute or result in a material breach of or a material
default under, or an event which, with the giving of notice or
lapse of time or otherwise, would constitute or result in a
material breach of or material default under; or
(ii) give to any other person any right of termination, cancellation
in or with respect to, any indenture, mortgage, agreement,
contract, lease, certificate, consent, licence or other
instrument or commitment to which the Vendor is a party or is
subject, or by which it is bound or from which it derives
benefit or which is required or desirable for the conduct in the
usual and ordinary course of the operation of the Business;
(b) the Vendor will obtain all necessary releases, waivers, consents and
approvals, and effectively transfer the Assets to the Purchaser as
contemplated by this Agreement and all such releases, consents and
approvals will be in a form, and upon such terms, as may be reasonably
acceptable to the Purchaser;
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(c) the Vendor will take all proper corporate proceedings on its part to
enable it to vest a good and marketable title in the Purchaser to the
Assets, free and clear of all Encumbrances;
(d) the Vendor will maintain in force policies of insurance heretofore
maintained, and obtain and maintain such additional policies of
insurance as may be required to insure the Assets ;
(e) the Vendor will conduct the Business only in the usual and ordinary
course of the operation of the Business, endeavor to preserve the
organization of the Business intact and keep available the services of
the present officers and employees (subject to voluntary resignations
and dismissals in accordance with proper business practice) and
preserve the goodwill of the suppliers and customers and others having
business relations with the Vendor relating to the Business;and
(f) the Vendor will make all necessary tax, governmental and other filings
in a timely fashion.
SECTION 8
PURCHASER'S COVENANTS
8.1 Purchaser's Covenants
The Purchaser covenants and agrees with the Vendor that:
(a) as of the Closing, it will assume and pay the Assumed Liabilities and
indemnify and save the Vendor harmless of and from all claims,
demands, suits and actions in respect thereof;
(b) as of the Closing, it will assume, perform all obligations arising
under the Material Contracts and all other contracts, commitments or
engagements which are entered into by the Vendor between the date of
execution hereof and the time of Closing in the usual and ordinary
course of the Operation of the Business and which are not prohibited
by this Agreement or are consented to in writing by the Purchaser;
(c) as of the Closing Date but effective as of and from the Effective Date
the Purchaser shall offer employment to all of the employees employed
on the Closing Date in connection with the Business, on substantially
the terms and conditions of their employment in effect on the Closing
Date.
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SECTION 9
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
9.1 Purchaser's Conditions Precedent
Notwithstanding anything herein contained, the obligation of the Purchaser to
complete the purchase of the Assets is conditional upon the fulfillment of the
following conditions precedent:
(a) the representations and warranties of the Vendor contained in this
Agreement and in any certificate or document delivered pursuant to the
provisions hereof or in connection with the transaction contemplated
hereby shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, except:
(i) to the extent that any of such representations and warranties
have been waived by the Purchaser or affected by the
transactions between the parties contemplated hereby; or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to
such date or period;
(b) all of the covenants, agreements and deliveries of the Vendor to be
performed or complied with on or before the Closing Date pursuant to
the terms of this Agreement shall have been duly performed or complied
with, except to the extent that such performance or compliance has
been waived by the Purchaser or is prevented by a default by the
Purchaser in the performance of its obligations hereunder;
(c) all consents or approvals required to be obtained by the Vendor for
the purpose of selling, assigning or transferring the Assets have been
obtained;
(d) since the date hereof and prior to the Closing Date:
(i) the Vendor shall not have experienced any event or condition or
have taken any action of any character; and
(ii) no substantial damage by fire, negligence or otherwise to the
Assets shall have occurred,
which materially and adversely affects the Business, any of
the Assets or the right of the Purchaser to the full enjoyment
of the Assets or that materially and adversely reduces the
value of the Assets or the Business to the Purchaser;
(e) on or before the Closing Date:
(i) no Governmental Authority shall have enacted any statute,
regulation or bylaws or announced any policy that will
materially and adversely affect
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the Business, any of the Assets or the right of the Purchaser to
the full enjoyment of the Assets; and
(ii) no injunction or restraining order of a court or administrative
tribunal or competent jurisdiction shall be in effect which
prohibits the transactions contemplated hereunder and no action
or proceeding shall have been instituted and remain pending
before any such court or administrative tribunal to restrain or
prohibit the transactions contemplated hereby;
(f) the Purchaser shall have received from the Purchaser's Solicitors an
opinion dated as of the Closing Date as to the state of title of the
Assets;
9.2 Conditions for Benefit of Purchaser
The foregoing conditions are for the exclusive benefit of the Purchaser and any
such condition may be waived in whole or in part by the Purchaser on or prior to
the Closing Date by delivery to the Vendor of a written waiver to that effect,
signed by the Purchaser.
SECTION 10
CONDITIONS PRECEDENT TO THE VENDOR'S OBLIGATIONS
10.1 Vendor's Conditions Precedent
Notwithstanding anything herein contained the obligation of the Vendor
to complete the sale hereunder is subject to the following conditions:
(a) the Purchaser's representations and warranties contained in this
Agreement shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on
and as of the Closing Date, except:
(i) to the extent that any of such representations and warranties
have been waived by the Vendor or affected by the transactions
between the parties contemplated hereby; or
(ii) insofar as such representations and warranties are given as of a
particular date or for a particular period and relate solely to
such date or period;
(b) the Purchaser shall have performed and complied with all covenants,
agreements and deliveries required by this Agreement to be performed
or complied with by it on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed or complied
with, except to the extent that such performance or compliance has
been waived by the Vendor or is prevented by a default by the Vendor
in the performance of its obligations hereunder; and
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(c) all consents or approvals required to be obtained by the Vendor for
the purpose of selling, assigning or transferring the Assets have been
obtained, provided that this condition may only be relied upon by the
Vendor if the Vendor has diligently exercised its best efforts to
procure all such consents or approvals and the Purchaser has not
waived the need for all such consents or approvals.
10.2 Conditions for Benefit of the Vendor
The foregoing conditions are for the exclusive benefit of the Vendor and any
such condition may be waived in whole or in part by the Vendor on or prior to
Closing Date by delivery to the Purchaser of a written waiver to that effect,
signed by the Vendor.
SECTION 11
DELIVERIES AT CLOSING
11.1 Vendor's Deliveries
At the Closing the Vendor shall deliver or cause to be delivered to the
Purchaser:
(a) all deeds of conveyance, bills of sale, transfer and assignments, duly
executed, in form and content satisfactory to the Purchaser's
Solicitors, appropriate to effectively vest good and marketable title
to the Assets in the Purchaser to the extent contemplated by this
Agreement, and immediately registrable in all places where
registration of such instruments is necessary or desirable;
(b) all consents or approvals required by this Agreement to be obtained by
the Vendor;
(c) possession of the Assets;
(d) a duly executed statutory declaration of the President of the Vendor
dated the losing Date to the effect that the representations and
warranties of the Vendor ontained in this Agreement are true and
correct and that the covenants and greements of the Vendor to be
performed on or before the Closing Date pursuant to the terms of this
Agreement have been duly performed
(e) duly executed releases of, or evidence to the reasonable satisfaction
of the Purchaser as to the discharge of any and all indebtedness which
the Purchaser has not agreed to assume and which may be enforceable
against any of the Assets being purchased hereunder;
(f) a statement of the Assumed Liabilities signed by the Vendor;
(g) evidence satisfactory to the Purchaser's Solicitors of the transfer to
the Purchaser or acquisition by the Purchaser of all Permits;
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(h) a certified copy of a resolution of the directors of the Vendor duly
passed, with a certification that is has not been rescinded and
continues to be in effect, authorizing the execution, delivery and
implementation of this Agreement and of all transactions contemplated
hereby and of all documents to be delivered by the Vendor pursuant
hereto; and
(i) all lists of customers, outstanding orders for the purchase and sale
of inventory, brochures, samples, price lists, files, records,
documents and other information related to the Business and all
consents, and other rights used in connection with the Business.
11.2 Purchaser's Deliveries
At the Closing the Purchaser shall deliver or cause to be delivered to the
Vendor:
(a) a duly executed covenant of the Purchaser in favour of the Vendor
agreeing to assume and pay or perform and indemnify the Vendor against
the Assumed Liabilities and other obligations agreed to be assumed
hereunder by the Purchaser in the manner and to the extent herein
provided;
(b) a statutory declaration of the President of the Purchaser dated the
Closing Date to the effect that the representations and warranties of
the Purchaser contained in this Agreement are true and correct and
that the covenants and agreements of the Purchaser to be performed on
or before the Closing Date pursuant to the terms of this Agreement
have been duly performed;and
(c) a certified copy of a resolution of the directors of the Purchaser
duly passed authorizing the execution, delivery and implementation of
this Agreement and of all transactions contemplated hereby and of all
documents to be delivered by the Purchaser pursuant hereto.
SECTION 12
There is no section 12.
SECTION 13
EFFECTIVE DATE AND ADJUSTMENTS
13.1 Effective Date
The purchase and sale of Assets herein contemplated shall take effect as of and
from the Effective Date. All transactions in the Business conducted prior to the
Effective Date shall be for the account of the Vendor and all transactions in
the Business on or after the Effective Date shall be for the account of the
Purchaser.
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13.2 Adjustments
Taxes, rents, water, gas and hydro rates, and prepaid expenses relating to the
Assets and other matters customarily the subject of adjustment shall be adjusted
as at the close of business on the business day immediately preceding the
Effective Date on a per diem basis and the Purchase Price shall be adjusted
accordingly.
SECTION 14
CONVEYANCE
14.1 Conveyance of Assets
On completion of the Closing, this Agreement shall, operate as a transfer to the
Purchaser of all Assets to be sold and purchased hereunder as the same shall be
at the close of business on the Effective Date. The Vendor shall nevertheless,
at the Closing and from time to time after the Closing, execute and deliver to
the Purchaser all such conveyances, transfers, assignments and other instruments
in writing and further assurances as the Purchaser or the Purchaser's Solicitor
shall reasonably require from the Vendor, and the Purchaser shall execute and
deliver to the Vendor all such agreements of assumptions and other instruments
in writing and further assurances as the Vendor shall reasonably require in
order to give effect to the provisions of this Agreement.
14.2 Trust Regarding Assets Not Covered
Should any of the Assets intended to be transferred hereunder not be transferred
to the Purchaser at the completion of the Closing on the Closing Date, the
Vendor shall hold as bare trustee in trust for, and at the sole cost of the
Purchaser, all such Assets from the commencement of business on the Closing Date
until such Assets are effectively transferred.
SECTION 15
COLLECTION OF RECEIVABLES
15.1 Collection
The Purchaser shall be solely responsible for the Receivables and there shall be
no recourse to the Vendor.
SECTION 16
PROCEDURE FOR RESOLVING DISPUTES
16. Arbitration
16.1 In the event a dispute arises in connection with the interpretation or
implementation of this Agreement, the parties to the dispute shall attempt
in the first instance to resolve such
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dispute through amicable consultations. If the dispute cannot be resolved
in this manner within thirty (30) days after first conferring, then any or
all parties to the dispute may refer the dispute to arbitration by the
China International Economic and Trade Arbitration Committee. ("Cietac").
The number of arbitrators shall be three. The arbitration proceedings shall
be conducted in the Chinese language.
16.2 Any award of the arbitrators shall be final and binding on the parties. The
costs of arbitration shall be borne by the losing party, unless the
arbitrators determine that this would be inequitable. The parties agree and
recognize that any award of the arbitrators shall be recognizable and
enforceable in any court having jurisdiction over the party against whom
the award was rendered, and also wherever assets of such party are located.
16.3 The legal relations between the parties under this Agreement shall be
interpreted in accordance with the substantive laws of China. Any disputes
between the parties concerning their legal obligations arising under this
Agreement, which are submitted to arbitration pursuant to this clause shall
be decided pursuant to the substantive laws of China.
16.4 During the process of arbitration, except the part that is in dispute under
arbitration, the other parts of the agreement should be carried out.
SECTION 17
There is no section 17
SECTION 18
GENERAL PROVISIONS
18.1 Notice
Any notice, consent, waiver, approval, report, authorization or other
communication which any party is required or may desire to give to or make upon
any other party pursuant to this Agreement will be effective and valid only if
in writing and actually delivered (including by telecopy) to the
second-mentioned party at the address mentioned above or at such other address
as such second-mentioned party may from time to time designate to such
first-mentioned party by notice delivered in accordance with this subsection.
18.2 Time
Time shall be of the essence of this Agreement.
18.3 Entire Agreement
This Agreement contains the whole agreement between the parties in respect of
the subject matters hereof and there are no warranties, representations, terms,
conditions or collateral agreements, express, implied or statutory, other than
as expressly set forth in this Agreement.
16
18.4 Enurement
This Agreement shall enure to the benefit of and be binding upon the Vendor, the
Purchaser and, as applicable, their respective heirs, executors, administrators,
successors and assigns.
18.5 Further Assurances
Each of the parties will, on demand by another party, execute and deliver or
cause to be executed and delivered all such further documents and instruments
and do all such further acts and things as the other may either before or after
the Closing reasonably require to evidence, carry out and give full effect to
the terms, conditions, intent and meaning of this Agreement and to assure the
completion of the transactions contemplated hereby.
18.6 Modifications, Approvals and Consents
No amendment, modification, supplement, termination or waiver of any provision
of this Agreement will be effective unless in writing signed by the appropriate
party and then only in the specific instance and for the specific purpose given.
IN WITNESS WHEREOF the parties have duly executed this Agreement as of the date
first written above.
/s/ Xxxx Xxx
--------------------------------------------------------
DALIAN BEIGANG INFORMATION INDUSTRY DEVELOPEMENT CO LTD.
/s/ Xxx Xxxxx Bo
--------------------------------------------------------
DALIAN NORTH PORT INFORMATION DEVELOPMENT CO LTD.,
17
SCHEDULE "A"
DEFINITIONS
1. "Assets" means all properties, assets, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description, wherever located, which are belonging to or usually and
ordinarily used in the Business, as a going concern, or to which the Vendor
is entitled in connection with the Business, including:
(a) the Goodwill;
(b) the Leasehold Property;
(c the Equipment;
(d) the Inventory;
(e) the Receivables;
(f) the Prepaid Expenses;
(g) the Material Contracts;
(h) the Intangible Property;
(i) the Supplies;
(j) the Books and Records
2. "Assumed Liabilities" means the amount of the liabilities of the Vendor
relating to the Business or the Assets on the Effective Date and specified
at the Closing Date and as described in Schedule F by the Vendor, and
accepted by the Purchaser, in writing setting forth the name and address of
each creditor and the amount to be assumed.
3. "Books and Records" means all books, records, files, documents and other
written, electronically maintained or computer accessed information
relating to the Business or the Assets, including the following:
(a) lists of customers and suppliers (past, present and potential);
(b) price lists;
(c) records with respect to production, engineering, product development,
costs, inventory, machinery and equipment;
(d) business development plans;
(e) advertising matter, catalogues, correspondence, mailing lists,
photographs, sales material and records, purchasing materials and
records;
(f) personnel records of employees whose employment will be continued with
the Purchaser;
(g) research and development files, records, data, and other books;
(h) media material and plates;
(i) sales order and purchase order files;
(j) information from accounting, tax and litigation files reasonably
requested by the Purchaser from time to time;
(k) plans, specifications, surveys, construction contracts, and other
materials relating to the Leasehold Property; and
(l) other records used in or required to continue the Business as
heretofore and presently being conducted by the Vendor.
4. "Business" means the Xxxxx business currently and heretofore carried on by
the Vendor.
5. "Closing" means the completion of the sale and purchase of the Assets
hereunder by the transfer and conveyance thereof and the payment of or
provision for the Purchase Price therefor, all as provided herein and "time
of Closing" means the time that Closing occurs.
6. "Closing Date" means the 15th day of April, 2002, or such other date as
shall be agreed upon by the parties
7. "DLTB" means the Dalian Local Tax Bureau.
8. "Effective Date" means the 25th day of September 2001, being the day the
Xxxxx system was launched in Dalian.
9. "Encumbrance" means any mortgage, charge, pledge, hypothecation, lien,
security interest, assignment, option, equity, execution, claim or any
other title defect or other encumbrance of any kind or nature whatsoever
(including any agreement to give any of the foregoing,), whether or not
registered or registrable.
10. "Equipment" means all machinery, equipment, automobiles, trucks, office
equipment, yard equipment, furniture, furnishings, spare parts, tools,
stores and supplies of all kinds used in connection with the Business
including the equipment, and the other property described in Schedule "B"
hereto
11. Books of record " means all written documents and records which, in any
way, relate to the Business, including all accounting documents,
engineering and software files, all invoices and supplier files, employee
records, regulatory filings, and the like.
12. "Goodwill" means the goodwill of the Business, together with the exclusive
right to the Purchaser to represent itself as carrying on the Business in
continuation of and in succession to the Vendor and the right to use any
words indicating that the Business is
2
so carried on including the right to use the name "Xxxxx" or any variation
thereof as part of the name of, or in connection with, the Business or any
part thereof carried on or to be carried on by the Purchaser, contractual
rights otherwise not provided for.
13. "Governmental Authority" means any federal, provincial, state, municipal,
county or regional government or governmental authority, domestic or
foreign, and includes any department, commission, bureau, board,
administrative agency or regulatory body of any of the foregoing.
14. "Indebtedness", in respect of any person, means, at any time and from time
to time, all indebtedness, liabilities and obligations due or accruing due,
matured or unmatured, liquidated or unliquidated, of such person.
15. "Intangible Property" means all right, title and interest of the Vendor in
and to all intangible property used in connection with the Business,
including all registered and unregistered trade xxxx, trade or brand names,
copyrights, patents, applications for any of the foregoing, licences for
any of the foregoing, computer software, magnetic tape and other data
processing materials, designs, inventions, records of inventions, trade
secrets, know how, formulae, processes, procedures, research records, test
information, market surveys, marketing know how, licenses, permits,
authorities, franchises, approvals and authorizations by any Governmental
Authority, restrictive covenants and other rights used in connection with
the Business, and other industrial or intellectual property used in
connection with the Business including the Intangible Property described in
Schedule "C".
16. "Leasehold Property" means all of the leases of the leasehold lands and
interests therein and all plant, improvements, appurtenances and fixtures
(including fixed machinery and fixed equipment) situated thereon or forming
part thereof used in connection with the Business, described in Schedule
"E" hereto along with all of such leasehold land and interests.
17. "Material Contracts" means the benefit of all unfilled orders received by
the Vendor and forward commitments to purchase made by the Vendor in
connection with the business, and all other contracts, engagements or
commitments, whether written or oral, to which the Vendor is entitled in
connection with the Business including the right, title and interest of the
Vendor in, to and under the material agreements and contracts described in
Schedule "D" hereto and including the leases.
18. "parties" means the Vendor and, the Purchaser.
19. "Permits" means all licenses, consents, permits, authorities, certificates
and registrations which are required, necessary or desirable for the
conduct in the usual and ordinary course of the operation of the Business
and the ownership or leasing of and the uses to which the Assets have been
and presently are put.
21. "Prepaid Expenses" means all prepaid expenses relating to the Business.
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22. "Purchaser's Solicitor" means Xx Xxx, of Zheng, Liu, Yuan & Zhou Law Office
Suite 818, Tower 2Bright China Xxxxx Xx Xxxxxxxx0, Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, 000000 Xxxxx Tel: (0000) 0000-000 Fax: (8610) 0000-0000
23. "Purchase Price" means the purchase price to be paid by the Purchaser to
the Vendor for the Assets, as provided for in subsection 2.2.
24. "Supplies" means all operating stores or supplies used in carrying on the
Business.
25. Subscribers" means commercial tax payers in Dalian that are subscribers to
the Xxxxx system.
Schedule B
Equipment
-------------- --------- ---------------- -------- --------------- --------
Original Original Original
Name Value Name Value Name Vaule
-------------- --------- ---------------- -------- --------------- --------
Car (Nissan 350,000 Panasonic laptop 19,200 Laptop 22,000
VIP)
-------------- --------- ---------------- -------- --------------- --------
Panasonic 19,200 Panasonic laptop 19,200 UPS 3000 33,900
laptop
-------------- --------- ---------------- -------- --------------- --------
Server 18,500 Server 16,950 Switch 2,890
-------------- --------- ---------------- -------- --------------- --------
Scanner 1,890 Printer 4,000 2514 Router 8,000
-------------- --------- ---------------- -------- --------------- --------
Laptop 24,960 D-LINK.Hub 5,100 2 Servers 65,864
-------------- --------- ---------------- -------- --------------- --------
6 Work 40,790 Advanced Work 18,649 Computer 16,352
Stations Station
-------------- --------- ---------------- -------- --------------- --------
Server 15,374 4 Computers 35,241 Printer 3,300
-------------- --------- ---------------- -------- --------------- --------
Server 14,814 Sharp Copier 32,000 2 Meeting Desks 6,000
-------------- --------- ---------------- -------- --------------- --------
Safe 1,750 Document Shelf 7,200 7 Mobile phones 42,600
-------------- --------- ---------------- -------- --------------- --------
Computer 9,150 Laptop 11,000 HP Printer 1,500
-------------- --------- ---------------- -------- --------------- --------
Computers 37,000 Laptop 21,000 Switch 2,000
-------------- --------- ---------------- -------- --------------- --------
Computer 8,000 Laptop 16,000 Hub 2,000
-------------- --------- ---------------- -------- --------------- --------
Conditioner 7,000 Car (Xxx Xx) 85,239
-------------- --------- ---------------- -------- --------------- --------
Sub Total 1,045,613
-------------- --------- ---------------- -------- --------------- --------
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Training Classroom
-------------------- -------------- --------------------- --------------
Name Original Value Name Original Value
-------------------- -------------- --------------------- --------------
DLX Fire wall 63,450 EXCHAGE 18,220
-------------------- -------------- --------------------- --------------
Computer Desks 4,800 30 Computers 165,237
-------------------- -------------- --------------------- --------------
Hub 2,000 Protection Card 4,500
-------------------- -------------- --------------------- --------------
Projector 40,643 Screen 1,100
-------------------- -------------- --------------------- --------------
CD Writer 830 Modem 2,165
-------------------- -------------- --------------------- --------------
Sub Total 302,945
-------------------- -------------- --------------------- --------------
New Fixed Asset List
-------------------- -------- --------------- ------------------------
Name Quantity Original Value Note
-------------------- -------- --------------- ------------------------
Office Furniture Set 24,400 Office Desks and Chairs
-------------------- -------- --------------- ------------------------
Program-controlled
Telephone 1 3,960 Office Use
-------------------- -------- --------------- ------------------------
Buick Car 1 328,000 Office Use
-------------------- -------- --------------- ------------------------
Hisence Conditioner 1 3,380 Meeting Room Use
-------------------- -------- --------------- ------------------------
Printer (2477) 1 3,846 For VAT Invoice Use
-------------------- -------- --------------- ------------------------
Laptop 1 12,500 For Software Development
-------------------- -------- --------------- ------------------------
Computer 10 43,450 For Training Classroom
-------------------- -------- --------------- ------------------------
Computer 2 7,900 For Training Classroom
-------------------- -------- --------------- ------------------------
Computer 2 8,342 For Training Classroom
-------------------- -------- --------------- ------------------------
Travel Car(FuTian) 1 112,007 For Service
-------------------- -------- --------------- ------------------------
Travel Car(Xxxxx An) 2 67,032 For Service
-------------------- -------- --------------- ------------------------
Car (Avlon) 1 672,991 Office Use
-------------------- -------- --------------- ------------------------
Computer 17 102,430 For Tax Bureau Use
-------------------- -------- --------------- ------------------------
Computer 1 21,900 For Tax Bureau Use
-------------------- -------- --------------- ------------------------
Laptop 1 12,999 For Tax Bureau Use
-------------------- -------- --------------- ------------------------
Sub Total 1,425,137
-------------------- -------- --------------- ------------------------
Grand total 2,772,695,000
-------------------- -------- --------------- ------------------------
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Schedule C
Intangible Property
All software used in development Xxxxx, its source code, the Trade Name, logo
and trade xxxx for Xxxxx, all software programs under development
Schedule D
Material Contracts
Subscription agreements with all Class A and B taxpayer Subscribers; Cooperation
agreement with the DLTB.
Schedule E
Leasehold Property
721 sq M leased year to year for 1rmb/day/sq M @ Xxxx 000, Xxxxx X, Xx.0 Xxxxx
Xxxx, Qixianling Basement, Hi-Tech Garden, Dalian City, Liaoning Province, PRC
Schedule F
Assumed Liabilities
1. Communication Bank of China 3,400,000 (interest @ 5.3%
(Dalian head branch) due April 03)
2. ATC 3,690,000
3. Loan from Founders 2,000,000 (private loan through
Founders, 15% due Sept 2002).
Total 9,090,000
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