Dismissal Agreement
Exhibit
4
Dismissal
Agreement
This
Dismissal Agreement is entered into between Wang Changli, individually and
as
representative of the GTH Shareholders (as defined below), and Advance Pacific
Holdings Limited, a British Virgin Islands company (“APH”), with respect to the
following facts:
X.
Xxxx
Changli, represents the following seven companies, which had been shareholders
of record of Gifted Time Holdings, Limited, a British Virgin Islands company
(“GTH”):
1.
Acclaimed Insight Investments Limited, a British Virgin Islands company,
(holding 11,033 common shares of GTH), the sole director and shareholder
of
which is Xu Shengheng;
2.
Pioneer Sum Investments Limited, a British Virgin Islands Company, (holding
2,758 common shares of GTH), the sole director and shareholder of which is
Mei
Qinglin;
3.
Plus
View Investments Limited, a British Virgin Islands Company, (holding 4,542
common shares of GTH), the sole director and shareholder of which is Wang
Changli;
4.
Ace
Lead Profits Limited, a British Virgin Islands Company, (holding 6,541 common
shares of GTH), the sole director and shareholder of which is Wang
Changli;
5.
Sure
Grow Profits Limited, a British Virgin Islands Company, (holding 7,966 common
shares of GTH), the sole director and shareholder of which is Wang
Changli;
6.
Faith
Best Profits Limited, a British Virgin Islands Company, (holding 7,966 common
shares of GTH), the sole director and shareholder of which is Xxxx
Xx;
7.
Allied
Earn Investments Limited, a British Virgin Islands Company, (holding 9,194
common shares of GTH), the sole director and shareholder of which is Song
Xuesong;
B.
APH,
the sole director and shareholder of which is Ka Wa Cheng, purchased the
shares
of GTH from the GTH Shareholders for $230 million (consisting of two promissory
notes, of which a note for $200 million (the “Note”) remains outstanding).
C.
APH
sold the shares of GTH to HLS Systems International, Ltd. (a successor to
Chardan North China Acquisition Corporation) and received 22.2 million shares
of
HLS and a right to additional shares (the “Earn-Out Shares”) if specified
after-tax operating profit goals were met.
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D.
Although GTH’s ultimate goal was acquiring ownership of 100% of the stock of
Hangzhou HollySys Automation Co., Ltd. (“HZHLS”) and 74.11% of the stock of
Beijing HollySys Co., Ltd. (“BJHLS”) (and the GTH Shareholders had intended to
handle this issue by the form of trust), GTH cannot acquire the 74.11% direct
ownership of BJHLS in the originally intended fashion.
E.
The
GTH Shareholders have entered into an alternative series of transactions,
and
the GTH Shareholders and APH now desire to dismiss and terminate the agreement
by which APH acquired the GTH shares.
On
the
basis of these facts, the parties agree that:
1.
The
agreement by which APH acquired the GTH shares, together with all clarifications
and amendments is dismissed and terminated.
2.
The
termination and dismissal has the following effects:
| a. |
APH
will no longer be obligated to pay the Note, and will not assume
the
obligations brought about during the whole
process.
|
| b. |
The
rights and obligations of the GTH Shareholders will revert back
to the
conditions before the agreement with APH was signed. However, this
does
not mean that the shareholder’s right held by APH after the replacement
agreement of December 2006 will be gone. The shareholder’s right after the
replacement agreement will be assumed by GTH, especially the right
and
obligations on the purchase agreement of December 20th
2006 which is signed with Chardan.
|
| c. |
GTH
is the indirect owner of 74.11% of the stock of BJHLS and all the
stock of
HZHLS.
|
| d. |
The
GTH Shareholders will accept the remaining consideration paid by
HLS to
APH, which is 22.2 million shares of HLS and the right to the Earn-Out
Shares (which shall be allocated in the proportion of amounts set
forth on
page 1).
|
2
This
agreement will be effective immediately after signed. Both parties have the
duties to implement the whole agreement kindly and willingly, and have the
obligations to restate, prosecute, implement, and clarity the contemplated
obligations and transactions that result from the process of implementing
this
agreement.
The
two
parties signed this agreement in Hong Kong.
| By: /s/ Ka Wa Cheng | By: /s/ Wang Changli | |
| Name: Ka Wa Cheng | Name: Wang Changli | |
| Its: Chief Executive Officer | Its: Representative of Shareholders |
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