EXHIBIT 2.2
DATED 2000
---------------------
(1) THE PERSONS WHOSE NAMES ARE SET OUT IN
COLUMN 1 OF SCHEDULE 1
(2) MINDARROW SYSTEMS, INC.
_______________________________
AGREEMENT FOR THE
SALE AND PURCHASE OF 90% OF THE ISSUED SHARE
CAPITAL OF XXXXXXXXXXXX.XXX LIMITED
_______________________________
XXXXX &
00xx Xxxxx, Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx Xxxx
CONTENTS
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Clause Headings Page
------ -------- ----
1. Definitions and Interpretation................................................... 1
2. Sale of Sale Shares.............................................................. 5
3. Consideration.................................................................... 5
4. Completion....................................................................... 5
5. Warranties....................................................................... 7
6. Confidentiality of Information Received.......................................... 9
7. Costs............................................................................ 9
8. General.......................................................................... 9
9. Notices.......................................................................... 10
10. Governing Law and Submission to Jurisdiction..................................... 11
SCHEDULE 1 The Vendors................................................................... 12
SCHEDULE 2 Details of the Company........................................................ 13
SCHEDULE 3 The Subsidiaries.............................................................. 14
SCHEDULE 4 Warranties.................................................................... 16
SCHEDULE 5 U.S. Securities Laws Representations and Warranties........................... 30
Execution................................................................................. 32
EXHIBIT A................................................................................. 34
EXHIBIT B................................................................................. 35
DATE: 2000
PARTIES:
(1) THE PERSONS WHOSE NAMES ARE SET OUT IN COLUMN 1 OF SCHEDULE 1 (collectively
hereinafter referred to as the "Vendors").
(2) MINDARROW SYSTEMS, INC., a company incorporated in Delaware whose
registered office is at 000 Xxxxxxxxxx, Xxxxx 000, Xxxxx Xxxxx, XX 00000,
X.X.X. (the "Purchaser").
RECITALS:
(A) The Vendors are the registered holders and beneficial owners of all the
issued shares in the capital of Xxxxxxxxxxxx.xxx Limited (the "Company").
Particulars of the Company are set out in Schedule 2.
(B) The Vendors wish to sell and the Purchaser wishes to purchase the Sale
Shares on the terms and conditions set out in this Agreement.
TERMS AGREED:
1. Definitions and Interpretation
------------------------------
1.1 In this Agreement where the context so admits the following words and
expressions shall have the following meanings:
"Accounting Date" 31 December 1999;
"Accounts" the draft audited financial statements of the Hong
Kong Company for the accounting period which ended
on the Accounting Date (such financial statements
comprising a balance sheet, profit and loss
account, statement of charges, notes and auditors'
report) together with the draft audit journal
adjustments, profit reconciliation and a list of
outstanding matters, a copy of which is annexed
hereto as Exhibit A and initialled by the Parties
for identification purpose;
"Accredited Investor" (a) A natural person whose individual net worth,
or joint net worth with that person's spouse, at
the time of this investment exceeds $1,000,000;
(b) A natural person who had individual income in
excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in
excess of
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$300,000 in each of those years and has a
reasonable expectation of reaching the same income
level in the current year. Individual income is
defined as adjusted gross income (as reported for
federal income tax purposes), less any income
earned by a spouse or from property owned by a
spouse increased by the following amounts (not
attributable to a spouse): (i) the amount of any
tax exempt interest income received, (ii) the
amount of losses claimed as a limited partner in a
limited partnership, (iii) any deductions claimed
for depletion and (iv) any amount by which income
from long term capital gains has been reduced in
arriving at adjusted gross income;
(c) An investment company registered under the
U.S. Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48)
of that Act;
(d) A private business development company as
defined in Section 202(a)(22) of the U.S.
Investment Advisers Act of 1940, as amended;
(e) A Small Business Investment Company licensed
by the U.S. Small Business Administration under
Section 301(c) or (d) of the U.S. Small Business
Investment Act of 1958, as amended;
(f) An organization described in Section
501(c)(3) of the U.S. Internal Revenue Code, a
corporation, a Massachusetts or similar business
trust, or a partnership, not formed for the
specific purpose of making this investment, in
each case with total assets in excess of
$5,000,000;
(g) A trust with total assets in excess of
$5,000,000, not formed for the specific purpose of
making this investment, whose investments are
directed by a sophisticated person as described in
Rule 506(b)(2)(ii)as adopted by the U.S.
Securities and Exchange Commission pursuant to the
U.S. Securities Act of 1933 (the "Securities
Act");
(h) An insurance company as defined in Section
2(13) of the Securities Act;
(i) A bank as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association
or other institution as defined in Section
3(a)(5)(A) of the Securities Act, whether acting
in regard to this investment in its individual or
fiduciary capacity;
(j) A director or an executive officer of the
Purchaser;
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(k) A broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act");
(l) An employee benefit plan within the meaning
of the U.S. Employee Retirement Income Security
Act of 1974, and either (a) the undersigned's
investment decisions are made by a plan fiduciary,
as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association,
insurance company or registered investment
adviser, or (b) the employee benefit plan has
total assets in excess of $5,000,000, or (c) if a
self-directed plan, the undersigned's investment
decisions are made solely by persons who are
accredited investors;
(m) A plan established and maintained by a state,
its political subdivisions, or any agency or
instrumentality of a state or its political
subdivisions for the benefit of its employees, and
such plan has total assets in excess of
$5,000,000; or
(n) An entity in which all of the equity owners
meet the requirements of at least one of the above
subparagraphs.
"Board" the board of directors of the Company for the time
being;
"Completion" completion of the sale and purchase of the Sale
Shares as specified in Clause 4;
"Completion Date" the date hereof (or such later date as the Parties
may agree in writing);
"Consideration Shares" restricted common stock in the capital of the
Purchaser, credited as fully paid;
"Directors" the directors of the Company immediately prior to
Completion;
"Group" the group of companies comprising the Company and
its Subsidiaries and the expression "member of the
Group" shall be construed accordingly;
"HK$" Hong Kong dollars;
"Hong Kong" the Hong Kong Special Administrative Region of the
People's Republic of China;
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"Hong Kong Company" Fusion Advertising Limited ( ), the details of
which are set out in Schedule 3;
"Intellectual Property" includes patents, knowhow, trade secrets and other
confidential information, registered designs,
copyrights, Internet domain names of any level,
design rights, rights in circuit layouts, trade
marks, service marks, business names,
registrations of, applications to register and
rights to apply for registration of any of the
aforesaid items, rights in the nature of any of
the aforesaid items in any country, rights in the
nature of unfair competition rights and rights to
xxx for passing off;
"Leased Property" 9/F., Xxx Xxxxx Xxxxxxxx, 00-00 Xxxxx Xxxx,
Xxxxxxx, Xxxx Xxxx;
"Management Accounts" the unaudited balance sheet of each Subsidiary as
at 31 January 2000 and the unaudited profit and
loss accounts of each Subsidiary for either the
period commencing from the Company's date of
incorporation and ending on 31 January 2000 or
from the date of the last Accounts to 31 January
2000;
"Parties" the named parties to this Agreement and their
respective successors and assigns;
"PRC" the People's Republic of China but excluding for
the purposes of the Agreement, Hong Kong, Macau
and Taiwan;
"PRC Companies" Chongqing Cyber City Technology Co., Ltd. ( )
and Chengdu Cyber City Computer Technology Co.
Ltd. ( ), being wholly foreign owned
enterprises established under the laws of the PRC,
details of which are set out in Schedule 3;
"Purchaser's Solicitors" Xxxxx & XxXxxxxx of 00xx Xxxxx, Xxxxxxxxx Xxxxx,
00 Xxxxxxxx Xxxx, Xxxxxxx, Xxxx Xxxx;
"Sale Shares" the aggregate of the number of Shares set opposite
each Vendor's name in column 2 of Schedule 1;
"Share" an ordinary share of US$1.00 in the capital of the
Company;
"Subsidiaries" the subsidiaries of the Company which are listed
in Schedule 3;
"Tax" all forms of taxation, estate duties, deductions,
withholdings, duties, imposts, levies, fees,
charges, social security contributions and rates
imposed, levied, collected, withheld
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or assessed by any local, municipal, regional,
urban, governmental, state, federal or other body
in Hong Kong, the PRC or elsewhere and any
interest, additional taxation penalty, surcharge
or fine in connection therewith;
"US$" the lawful currency for the time being of the
U.S.A.;
"Warranties" the representations, warranties and undertakings
and indemnities contained or referred to in Clause
5 and Schedule 4.
1.2 The Recitals and Schedules to this Agreement shall be deemed to form part
of this Agreement.
1.3 Headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.4 The expression "the Vendors" and "the Purchaser" shall, where the context
permits, include their respective successors and permitted assigns.
1.5 A document expressed to be "in the approved terms" means a document the
terms of which have been approved by or on behalf of the Parties and a copy
of which has been signed for the purposes of identification by or on behalf
of the Parties.
2. Sale of Sale Shares
-------------------
2.1 Subject to the terms of this Agreement, the Vendors shall sell as
beneficial owners and the Purchaser shall purchase, free from all liens,
charges and encumbrances and together with all rights now or hereafter
attaching to them, including all rights to any dividend or other
distribution declared, made or paid after the date of this Agreement, the
Sale Shares.
2.2 Each of the Vendors hereby waives and agrees to procure the waiver of any
restrictions on transfer (including pre-emption rights which may exist in
relation to the Sale Shares, whether under the articles of association of
the Company or otherwise).
3. Consideration
-------------
3.1 The total consideration payable for the Sale Shares shall be satisfied by
the allotment and issue to each of the Vendors of the number of
Consideration Shares (excluding fractions) as set opposite each Vendor's
name in Column 3 of Schedule 1.
3.2 The Purchaser agrees that such number of the Sale Shares as represents 10%
of the issued share capital of the Company as at Completion shall be
allocated to a stock option plan of the Company, the terms of which are to
be determined by the Board.
4. Completion
----------
4.1 Completion shall take place on the Completion Date at the offices of the
Purchaser's Solicitors when all (but not some only) of the events described
in Clause 4.2 and Clause
5
4.3 shall occur.
4.2 At Completion, the Vendors shall:
4.2.1 deliver to the Purchaser:
4.2.1.1 duly executed transfer(s) in respect of the Sale Shares in
favour of the Purchaser or its nominee(s) together with the
relative share certificates;
4.2.1.2 such waivers or consents as the Purchaser may reasonably
require to enable the Purchaser or its nominee(s) to be
registered as holders of the Sale Shares;
4.2.1.3 all the statutory and other books and records (including
financial records) of the Company and the Subsidiaries duly
written up to date and their certificates of incorporation,
current business registration certificate(s), common seals
and any other papers and documents of the Company or the
Subsidiaries which are in the possession or under the
control of the Vendors or any member of the Group;
4.2.1.4 certified copies of any power of attorneys under which any
of the documents referred to in this Clause 4.2 are
executed or evidence satisfactory to the Purchaser of the
authority of any person signing on behalf of the Vendors;
4.2.1.5 a duly executed release under seal, in the approved terms,
releasing each member of the Group from any liability
whatsoever (whether actual or contingent) which may be
owing to the Vendors by any member of the Group at
Completion;
4.2.1.6 the resignations of Xxxxx Xxx Xxxx Xxxx and Jamo Lo Xx Xxxx
as Directors of the Company and of Lo Xx Xxx, Xxxxxxx and
Fan Xxxx Xx as directors of the Hong Kong Company;
4.2.1.7 such other documents as may be reasonably required to give
to the Purchaser good title to the Sale Shares and to
enable the Purchaser or its nominee(s) to become the
registered holders thereof;
4.2.2 cause the Board to pass resolutions to approve the registration of
the Purchaser or its nominee(s) as a member of the Company subject
only to the production of completed transfers in respect of the Sale
Shares.
4.2.3 cause such persons as the Purchaser may nominate to be validly
appointed as directors of the Company;
4.2.4 procure giving of authority to such persons as the Purchaser may
nominate to operate the bank accounts of the Hong Kong Company and
of the Company.
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4.3 At Completion, the Purchaser shall:-
4.3.1 allot and issue to each of the Vendors the number of
Consideration Shares (excluding fractions) as set opposite each
Vendor's name in Column 3 of Schedule 1 together with stock
certificates for the Consideration Shares;
4.3.2 deliver to the Vendors a certified copy of the board resolution
of the Purchaser approving and authorising the execution and
performance of this Agreement by the Purchaser.
4.4 As soon as practicable and in any event no later than five (5) days after
Completion, the Vendors shall procure that each of Xxxxxx Xxx Xxxx Xxxx,
Jamo Lo Xx Xxxx and Xxxxx Xxx Xxxx Xxxx shall enter into service agreements
with the Company substantially in the form as annexed hereto an Exhibit B;
4.5 As soon as practicable and in any event no later than 14 days after
Completion the Vendors shall deliver to the Purchaser a Certificate of Good
Standing issued by the Registrar of Companies of the BVI confirming, inter
alia, that as at a date as close to the Completion Date as possible, there
is no winding-up petition made against the Company and a certificate ("BVI
Certificate") issued by the Company's registered agent in the BVI
confirming as at a date as close to the Completion Date as possible:-
(a) that the Vendors are the sole registered and beneficial
shareholders of the Company; and
(b) the name(s) of all the director(s) of the Company;
5. Warranties
----------
5.1 Each of the Vendors jointly and severally represent, warrant and
undertake to and with the Purchaser that each of the statements set out in
Part I of Schedule 4 is now and will at all times up to and including the
Completion Date be true and accurate.
5.2 Jamo Lo Xx Xxxx represents, warrants and undertakes to and with the
Purchaser that each of the statements set out in Part II of Schedule 4 is
now and will at all times up to and including the Completion Date be true
and accurate.
5.3 Xxxxx Xxx Xxxx Xxxx represents, warrants and undertakes to and with
the Purchaser that each of the statements set out in Part III of Schedule 4
is now and will at all times up to and including the Completion Date be
true and accurate.
5.4 The Vendors shall indemnify and keep indemnified (and in the case of
the Warranties set out in Part I of Schedule 4, on joint and several basis)
the Purchaser against and agree to hold the Purchaser (for itself and as
trustee for the Company) harmless from any and all claims, liabilities,
losses, fines, penalties, damages or reasonable expenses incurred or
suffered by the Purchaser (including but without limitation, reasonable
expenses of investigation and attorneys' fees and reasonable expenses in
connection with any action, suit or proceeding brought against the
Purchaser) arising from or in connection with any breach of any Warranties
given by any of them in any material respect or any claims by a third party
arising therefrom prior to the Completion Date.
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5.5 The Vendors acknowledge that the Purchaser has entered into this Agreement
in reliance upon the Warranties and has been induced by it to enter into
this Agreement.
5.6 Without restricting the rights of the Purchaser or otherwise affecting the
ability of the Purchaser to claim damages on any other basis available to
it, in the event that any of the Warranties are breached or (as the case
may be) prove to be untrue or misleading in any material respect, the
relevant Vendor or Vendors (as the case maybe) giving the Warranty shall,
on demand, pay to the Purchaser or, at the Purchaser's direction, the
Company:
5.6.1 the amount necessary to put the relevant member of the Group into
the position which would have existed if the Warranties had not
been breached or (as the case may be) had been true and not
misleading; and
5.6.2 all costs and expenses reasonably incurred by the Purchaser and
each relevant member of the Group in connection with or as a
result of such breach and any costs (including legal costs),
expenses or other liabilities which any of them may reasonably
incur either before or after the commencement of any action in
connection with (i) any legal proceedings in which the Purchaser
claims that any of the Warranties has been breached or is untrue
or misleading in any material respect and in which judgement is
given for the Purchaser or (ii) the enforcement of any settlement
of, or judgement in respect of, such claim.
5.7 Each of the Warranties shall be separate and independent and, save as
expressly provided to the contrary, shall not be limited by reference to or
inference from any other Warranty or any other term of this Agreement.
5.8 The liabilities of the Vendors under the Warranties shall cease after
three (3) years except in respect of matters which have been the subject of
a bona fide written claim made before such date by the Purchaser to any of
the Vendors unless in each case the relevant claim or claims has arisen by
reason of fraud, wilful concealment, dishonesty or deliberate non-
disclosure on the part of any of the Vendors prior to the date of this
Agreement, in which event there shall be no limit under this Agreement on
the time period within which such claims may be brought.
PROVIDED ALWAYS that if in any case the relevant claims has arisen by
reason of
5.8.1 fraud or wilful concealment or dishonesty or deliberate non
disclosure on the part of any of the Vendors or on the part of any
officer or representative of any member of the Group or of the
Vendors prior to the date of this Agreement; or
5.8.2 any member of the Group not having good title to any asset of
which it is now warranted to be the owner;
then in any such case the limitations as to time set forth in this Clause
5.8 shall apply.
5.9 The Vendors shall give to the Purchaser and its solicitors and accountants
after Completion all such information and documentation relating to the
Company as the Purchaser shall reasonably require to give legal effect to
the provisions of this Agreement and the transactions hereby contemplated.
8
5.10 The provisions of Schedule 5 shall have effect.
6. Confidentiality of Information Received
---------------------------------------
6.1 The Vendors and the Purchaser each undertake with the other that it shall
treat as strictly confidential all information received or obtained by it
or its employees, agents or advisers as a result of entering into or
performing this Agreement including information relating to the provisions
of this Agreement, the negotiations leading up to this Agreement, the
subject matter of this Agreement or the business or affairs of the other or
any member of the other's group and subject to the provisions of Clause 6.2
that it will not at any time hereafter make use of or disclose or divulge
to any person any such information and shall use their reasonable
endeavours to prevent the publication or disclosure of any such
information.
6.2 The restrictions contained in Clause 6.1 shall not apply so as to prevent
the Vendors or the Purchaser from making any disclosure required by law or
by any securities exchange or supervisory or regulatory or governmental
body pursuant to rules to which the relevant party is subject or from
making any disclosure to any professional adviser for the purposes of
obtaining advice (provided always that the provisions of this Clause 6
shall apply to and the relevant party shall procure that they apply to and
are observed in relation to, the use or disclosure by such professional
adviser of the information provided to him) nor shall the restrictions
apply in respect of any information which comes into the public domain
otherwise than by a breach of this Clause 6 by the party.
7. Costs
-----
Each Party shall be responsible for its own costs and expenses
(including legal fees and transaction costs) in relation to the
preparation, execution and performance of this Agreement.
8. General
-------
8.1 This Agreement shall be binding upon and ensure for the benefit of the
successors of the Parties.
8.2 This Agreement (together with any documents referred to herein or executed
contemporaneously by the Parties in connection herewith) constitutes the
whole agreement between the Parties and supersedes any previous agreements
or arrangements between them relating to the subject matter hereof; it is
expressly declared that no variations hereof shall be effective unless made
in writing signed by duly authorised representatives of the Parties.
8.3 All of the provisions of this Agreement shall remain in full force and
effect notwithstanding Completion (except insofar as they set out
obligations which have been fully performed at Completion).
8.4 If any provision or part of a provision of this Agreement shall be, or be
found by any authority or court of competent jurisdiction to be, invalid or
unenforceable, such invalidity or unenforceability shall not affect the
other provisions or parts of such
9
provisions of this Agreement, all of which shall remain in full force and
effect.
8.5 No failure of any Party to exercise, and no delay or forbearance in
exercising, any right or remedy in respect of any provision of this
Agreement shall operate as a waiver of such right or remedy.
8.6 Upon and after Completion each party hereto shall do and execute or
procure to be done and executed all such further acts, deeds, documents and
things as may be necessary to give effect to the terms of this Agreement
and to place control of the Company in the hands of the Purchaser. Pending
the doing of such acts, deeds, documents and things the Vendors shall hold
and shall procure its nominee to hold the legal estate in the Sale Shares
in trust for the Purchaser as from Completion until the Purchaser and its
nominee have become registered holders of the Sale Shares.
8.7 This Agreement may be executed in one or more counterparts, and by the
Parties on separate counterparts, but shall not be effective until each
Party has executed at least one counterpart and each such counterpart shall
constitute an original of this Agreement but all the counterparts shall
together constitute one and the same instrument. Immediate evidence that
an engrossment has been executed may be provided by transmission of such
engrossment by facsimile machine with the original executed engrossment to
be forthwith put in the mail.
9. Notices
-------
Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant party
at its address or fax number set out below (or such other address or fax
number as the addressee has by five (5) days' prior written notice
specified to the other parties):
To the Vendors: c/o Xxxxxx Xx-Xxxxxxxx, Solicitors
2312, 23/F., Tower One
Xxx Xxxxxxx, 00 Xxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxx
Xxxx Xxxx
Attention: Xxxxxxxx Xx-Scharsig
Fax Number: 852 - 2377 4222
To the Purchaser: Mindarrow Systems, Inc.
000 Xxxxxxxxxx
Xxxxx 000
Xxxxx Xxxxx
XX 00000
Attention: Xx. Xxxxxxx Xxxxxx
Fax Number: 0- 000 000 0000
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, when actually delivered to the relevant address (b) if given or
made by fax, when despatched. In proving service it shall be sufficient
(in the case of service by hand and prepaid registered letter) to prove
10
that the notice was properly addressed and delivered or posted, as the case
may be, and in the case of service by facsimile transmission to prove that
the transmission was confirmed as sent by the originating machine.
10. Governing Law and Submission to Jurisdiction
--------------------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong and the parties hereto irrevocably submit to the non-
exclusive jurisdiction of its courts for the purpose of enforcing any claim
arising hereunder. Xxxx Xxxx Group Limited, Intellectual Partners Limited
and Arch International Group Limited hereby irrevocably appoint Xxxxxx Xx-
Xxxxxxxx, Solicitors of 0000, Xxxxx Xxx, Xxx Xxxxxxx, 00 Xxxxxx Xxxx,
Xxxxxxxxxxx, Xxxxxxx, Xxxx Xxxx and the Purchaser hereby irrevocably
appoints B. & McK. Nominees Limited of 1401 Xxxxxxxxx Xxxxx, 00 Xxxxxxxx
Xxxx, Xxxxxxx, Xxxx Xxxx as their respective agents to receive and
acknowledge on each of their behalf service of any writ, summons, order,
judgment or other notice of legal process in Hong Kong. If for any reason
one of the agents named above (or their successor) no longer serves as
agent for this purpose, the party of such agent (the "relevant party")
shall promptly appoint a successor agent satisfactory to other party,
notify the other party thereof and deliver to the other party a copy of the
new process agent's acceptance of appointment Provided that until the other
party receives such notification, it shall be entitled to treat the agent
named above of the relevant party (or its said successor) as the agent of
the relevant party for the purposes of this Clause. The parties agree that
any such legal process shall be sufficiently served on it if delivered to
its agent for service at its address for the time being in Hong Kong
whether or not such agent gives notice thereof to the other parties.
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SCHEDULE 1
----------
The Vendors
-----------
(1) (2) (3)
Name and Address of Vendor Number of Sale Shares Number of
Consideration
Shares
(1) Jamo Xx Xxxx Lo 15,750 52,500
9/F., Xxx Xxxxx Xxxxxxxx
00 Xxxxx Xxxx
Xxxxxxx
Xxxx Xxxx
(2) Xxx Xxxx Xxx 1,575 5,250
Xxxx X0, 0xx Xxxxx
Xxxxx X, Xxxx Xxxxx Xxxxx
00 Xxx Xxxx Xxxxxx
Xxxxxxx
Xxxx Xxxx
(3) Xxxx Xxxx 472 1,575
Group Limited
X.X. Xxx 000
Offshore Incorporation Centre
Road Town
Tortola
British Virgin Islands
(4) Xxxxx Xxxx Xxxx Xxx 7,088 23,625
Apt. X, Xxxxxx Xxxxx
000 Xxxxxxxx Xxxx
Xxxxxxxx
Xxxx Xxxx
(5) Intellectual Partners Limited 6,615 22,050
X.X. Xxx 000
Offshore Incorporations Centre
Road Town
Tortola
British Virgin Islands
(6) Arch International Group Limited 13,500 45,000
Sea Meadow House
Blackburne Highway
Road Town
Tortola
British Virgin Islands
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SCHEDULE 2
----------
Details of the Company
----------------------
THE COMPANY
-----------
1. Registered number: 363893
2. Address of registered office: Sea Meadow House, Blackburne Highway,
Road Town, Tortola, British Virgin
Islands
3. Date and place of incorporation: 17 January 2000, British Virgin Islands
4. Authorised share capital: US$50,000 divided into 50,000 shares of
US$1.00 each
5. Issued share capital: US$50,000; 50,000 shares of US$1.00 each
6. Directors: (1) Xxxxxx Xxxx Xxxx XXX
9/F., Xxx Xxxxx Building
00-00 Xxxxx Xxxx
Xxxxxxx
Xxxx Xxxx
(2) Jamo Xx Xxxx LO
9/F., Xxx Xxxxx Building
00-00 Xxxxx Xxxx
Xxxxxxx
Xxxx Xxxx
(3) Xxxxx Xxxx Xxxx XXX
Apt. A, G/F., 438 Victoria Road
Pokfulam, Hong Kong
7. Registered Agent: CCS Management Limited
Sea Meadow House
Blackburne Highway
Road Town
Tortola
British Virgin Islands
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SCHEDULE 3
----------
The Subsidiaries
----------------
1. Name of Subsidiary: Fusion Advertising Limited ( )
Registered Number: 46835
Date and Place of Incorporation: 30 March 1971, Hong Kong
Address of Registered Office: 0xx Xxxxx, Xxx Xxxxx Xxxxxxxx, 00-00
Xxxxx Xxxx, Xxxxxxx, Xxxx Xxxx
Directors: Lo Xx Xxxx Jamo
Lo Xx Xxx, Xxxxxxx
Fan Xxxx Xx
Auditors: Xxxxxx C.T. Lung & Co.
Annual Accounts Date: 31st December
Authorised Share Capital: HK$500,000 divided into 5,000 ordinary
shares of HK$100 each
Issued Share Capital: HK$120,000 divided into 1,200 ordinary
shares of HK$100 each
Registered Shareholders & Xxxxxxxxxxxx.xxx Limited (1,999 shares)
Identity of Beneficial Owners: Jamo Lo Xx Xxxx (1 share)
2. Name of Subsidiary: Cambridge Technology International
Limited
Registered Number: 334846
Date and Place of Incorporation: 19 July 1999, British Virgin Islands
Address of Registered Office: Sea Meadow House, Blackburne Highway,
Road Town, Tortola, British Virgin
Islands
Directors: Xxx Xxxx Xxxx, Xxxxxxx
Xxx Xxxx Xxxx, Xxxxx
Xxx Xxxx Xxx
Authorised Share Capital: US$50,000 divided into 50,000 ordinary
shares of US$1.00 each
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Issued Share Capital: US$50,000 divided into 50,000 ordinary
shares of US$1.00 each
Registered Shareholders & Xxxxxxxxxxxx.xxx Limited
Identity of Beneficial Owners:
3. Name of Subsidiary: Chongqing Cyber City Technology Co.,
Ltd. ( )
Licence Number: XXXX Xx. 00000
Date and Place of Establishment: 12 October 1999, Chongqing City, PRC
Address: 22-4, Block A3, California Garden,
Jiangbei District, Chongqing City, PRC
Directors: Xxx Xxxx Ling, Chairman
Xxx Xxxx Xxxx, Xxxxxx
Total Investment: RMB700,000
Registered Capital: RMB500,000 (HK$ equivalent is
HK$460,000)
Registered Capital held as 100% held by Cambridge Technology
follows: International Limited
4. Name of Subsidiary: Chengdu Cyber City Computer Technology
Co. Ltd. ( )
Business Licence Number: XXXX Xx. 000000
Date and Place of Establishment: 30 March 2000, Chengdu City, PRC
Address: Xx. 00, Xxxxxxx Xxxx Xxxxxx, Xxxxxxx
Xxxx, XXX
Directors: Xxx Xxxx Ling, Chairman
Xxx Xxxx Xxxx, Xxxxxx
Total Investment: RMB700,000
Registered Capital: RMB500,000
Registered Capital held as 100% held by Cambridge Technology
follows: International Limited
15
SCHEDULE 4
----------
Warranties
----------
Part I
1. Corporate Matters
-----------------
1.1 The Company has been duly incorporated and is validly existing and no order
has been made or petition presented or resolution passed for the winding up
of the Company and no distress, execution or other process has been levied
on any of its assets. The Company is not insolvent nor unable to pay its
debts, no receiver or receiver and manager has been appointed by any person
of its business or assets or any part thereof, no power to make any such
appointment has arisen, the Company has taken no steps to enter liquidation
and there are no grounds on which a petition or application could be based
for the winding up or appointment of a receiver.
1.2 The Vendors are the beneficial owners of the Sale Shares set opposite their
names in column 2 of Schedule 1, free and clear of any lien, charge,
option, right of pre-emption or other encumbrance or third party right
whatsoever.
1.3 The Sale Shares constitute all the issued shares in the capital of the
Company and are fully paid up and the Company has complied with all legal
requirements for the issue of the Sale Shares.
1.4 The Company has not and never has had any subsidiary or shares in or stock
of any company other than the Subsidiaries and all of the details shown in
Schedule 3 relating to the Subsidiaries are accurate and complete and the
Company has never been a director or other officer of any other company.
1.5 Save for the fact that the Company has a correspondence address at 2312,
00/X, Xxxxx Xxx, Xxx Xxxxxxx, 00 Xxxxxx Xxxx, Xxxxxxxxxxx, Xxxx Xxxx, the
Company has not nor ever had any place of business outside its jurisdiction
of incorporation, nor has it carried on any trading activities outside such
jurisdiction.
1.6 The Company has not reduced, repaid, redeemed or purchased any of its share
capital.
1.7 There are no options or other agreements outstanding which call for the
issue of or accord to any person the right to call for the issue of any
shares in the capital of the Company or the right to require the creation
of any mortgage, charge, pledge, lien or other security or encumbrance over
the Sale Shares or any of the assets of the Company.
1.8 The Company has complied with its bye-laws in all respects, has full power,
authority and legal right to own its assets and carry on its business and
none of the activities, agreements, commitments or rights of the Company is
ultra xxxxx or unauthorised.
1.9 The Register of Members and all other statutory books of the Company are up
to date and contain true full and accurate records of all matters required
to be dealt with therein and the Company has not received any notice of any
application or intended application for rectification of its register and
all legal requirements relating to the issue of shares and other securities
by the Company have been complied with.
16
2. Trading and General Commercial Matters
--------------------------------------
2.1 The Company has good and marketable title to (with full power to sell) all
its property and assets and has never traded or conducted any business
other than to act as an investment holding company. All such property and
assets are free from any liens, mortgages, charges, encumbrances or other
third party rights and are in the possession or under the control of the
Company.
2.2 The Company is not a party to:
2.2.1 any unusual or onerous contract, any contract not entered into in
the ordinary course of business or not on arm's length terms, nor
any contract which cannot be terminated without penalty or other
compensation on less than twelve months' notice;
2.2.2 any contract restricting its freedom of action in relation to its
business activities or materially and adversely affecting its
business or assets;
2.2.3 any agency, distribution, marketing, purchasing, franchising,
licensing (whether by or to it), consulting, management, joint
venture, shareholders' or partnership arrangement or agreement or
similar arrangement.
2.3 There are no contracts or obligations, agreements, arrangements or
concerted practices involving the Company and does not engage in practices,
which are void, illegal, unenforceable, registrable or notifiable under or
which contravene any fair trading or anti-trust legislation or regulations
anywhere in the world nor has it received any threat or complaint or
request for information or investigation in relation to or in connection
with any such legislation or regulations.
2.4 There are no loans, guarantees, pledges, mortgages, charges, liens,
debentures, encumbrances or unusual liabilities given, made or incurred by
or on behalf of the Company (and, in particular but without limiting the
foregoing), no loans have been made by the Company to any directors or
shareholders of the Company and no person has given any guarantee of or
security for any liability of the Company.
2.5 The execution, delivery and performance of this Agreement will not result
in the breach, cancellation or termination of any of the terms or
conditions of or constitute a default under any agreement, commitment or
other instrument affecting the Company or its property or assets or result
in the acceleration of any obligation under any loan agreement or in the
loss of the benefit of or in liability to refund or repay any grant or any
financial or Tax concession or relief or violate any law or any rule or
regulation of any administrative agency or governmental body or any order,
writ, injunction or decree of any court, administrative agency or
governmental body affecting the Company.
2.6 The Company is not the subject of any official investigation or inquiry and
there are no facts which are likely to give rise to any such investigation
or inquiry.
2.7 The Company has at all times carried on its business in compliance with all
applicable laws and regulations. Neither the Company, nor any of its
directors or officers, have
17
committed any criminal offence or any tort or any breach of the
requirements or conditions of any statute, treaty, regulation, bye-law or
other obligation relating to the Company.
2.8 The Company does not have any of its records, systems, controls, data or
information recorded, stored, maintained, operated or otherwise wholly or
partly dependent on or held by any means (including any electronic,
mechanical or photographic process whether computerised or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Company.
3. Intellectual Property, including confidential information
---------------------------------------------------------
3.1 The Company does not use or needs to use, not has within the six years
preceding the date of this Agreement used, any Intellectual Property in a
manner that infringes the Intellectual Property rights of a third party.
3.2 The Company has not disclosed any know how or confidential information to
third parties.
4. Litigation
----------
The Company nor any person for whose acts or defaults the Company may be
vicariously liable is or are engaged whether as plaintiff or defendant or
otherwise in any civil, criminal or arbitration proceedings or any
proceedings before any tribunal and there are no proceedings threatened or
pending against the Company and there are no facts which are likely to give
rise to any litigation or proceedings. There are no unfulfilled or
unsatisfied judgments or orders against the Company or any of its assets.
5. Employment
----------
5.1 The Company has no employees.
6. Arrangements with connected persons etc.
----------------------------------------
6.1 The Company has no financial arrangements with its directors or
shareholders.
7. Accuracy of Information Provided
--------------------------------
7.1 All information contained in this Agreement (including the Recitals) is
true and accurate in all respects and not misleading in any respect.
7.2 All information given to the Purchaser and its professional advisers by the
Vendors, the officers of the Company, the Vendors' professional advisers
and the Company's advisers during the negotiations prior to this Agreement
was when given and is at the date hereof true and accurate.
18
Part II
1. The Accounts
------------
1.1 The Accounts have been prepared in accordance with the requirements of all
relevant laws and applicable statements of standard accounting practice and
with good and generally accepted accountancy principles and practice
consistently applied, are complete and accurate in all respects, show a
true and fair view of the state of affairs of the Hong Kong Company and of
its results and profits for the financial period ending on the Accounting
Date and disclose and make full provision or reserve for all liabilities
(whether actual or contingent and whether quantified or disputed or
otherwise).
1.2 The profits and losses of the Hong Kong Company shown by the Accounts and
for the last three accounting periods have not in any material respect been
affected by any unusual or non-recurring or exceptional item or by any
other matter which has rendered such profits or losses unusually high or
low.
1.3 All of the Hong Kong Company's book debts, whether shown in the Accounts or
arising since the Accounting Date, are valid and enforceable.
1.4 The books and records of the Hong Kong Company accurately present and
reflect in accordance with generally accepted accounting principles and
standards within the Hong Kong Company's jurisdiction of incorporation all
transactions entered into by the Hong Kong Company or to which it has been
a party.
2. Management Accounts
-------------------
The Management Accounts have been prepared in accordance with the
accounting policies of the Hong Kong Company and show a fair view of the
assets and liabilities and profits and losses of the Hong Kong Company as
at and to 31 January 2000.
3. Tax, Records and Returns
------------------------
3.1 Since the Accounting Date no liability or contingent liability for Tax has
arisen otherwise than as a result of trading activities in the ordinary
course of business of the Hong Kong Company.
3.2 The Hong Kong Company has duly filed all returns, computations, notices and
information required to be made or provided by the Company for any Tax
purpose and the same have been made or given within the requisite periods
and on a proper basis and when made were true and accurate in all material
respects and are up to date and none of them is or is likely to be the
subject of any dispute with any Tax authority.
3.3 The Hong Kong Company has paid when due, and has withheld, deducted and
accounted to the relevant Tax authorities for, all Tax, including
provisional taxation, which it has become liable to pay, withhold, deduct
or account for on or before the date hereof and within the period of seven
years prior to the date hereof neither the Hong Kong Company
19
nor any director or officer of the Hong Kong Company has paid or become
liable to pay any fine, penalty, surcharge or interest in relation to Tax.
3.4 The Hong Kong Company has never been resident for Tax purposes in any
jurisdiction other than Hong Kong and has never carried on a trade or
business for Tax purposes other than the trade or business which the Hong
Kong Company will be carrying on at Completion.
3.5 No payments of rents, interest, annuity, royalties, annual payments,
emoluments, remuneration, compensation for loss of office or other sums of
an income or revenue nature made or payable by the Hong Kong Company or
which the Hong Kong Company is under an obligation to pay in the future
have been, are or (under the law as presently in force) may be wholly or
partially disallowable as deductions or charges in computing profits or
against profits for Tax purposes and no payments have been made since the
Accounting Date for which no relief will be received, whether as a
deduction or otherwise, for Tax purposes.
3.6 No act or transaction has been or will, on or before Completion, be
effected by the Hong Kong Company, in consequence of which any member of
the Group is or may be held liable for Tax primarily chargeable against
some other person.
3.7 The Hong Kong Company has not entered into or been engaged in or been a
party to any transaction which is artificial or fictitious or any
transaction or series of transactions or scheme or arrangement of which the
main or dominant purpose or one of the main or dominant purposes was the
avoidance or deferral of or reduction in the liability to Tax of the Hong
Kong Company.
3.8 The Hong Kong Company has not appropriated any trading stock to fixed
assets or vice versa, all assets are correctly shown in the Accounts as
trading stock/current assets or fixed assets and any property under
development is held and shown in the Accounts as fixed assets.
3.9 The Hong Kong Company is not and has not at any time in the period of six
years ending with the date of this Agreement been liable to Tax in any
jurisdiction other than Hong Kong.
3.10 Except as disclosed to the Purchaser, none of the assets of the Hong Kong
Company have been purchased or sold at an under value or been given to the
Hong Kong Company in circumstances where the gift or element of under value
(including (without limitation) any gift or element of under value which
might be regarded as property passing on the death of a deceased pursuant
to the provisions of Section 6(1)(c) of the Estate Duty Ordinance) might be
subject to or give rise to any form of Estate Duty chargeable or assessable
against the Hong Kong Company or on any of its assets.
3.11 There is no unsatisfied liability to estate duty attached or attributable
to any asset of the Hong Kong Company, there has been no transfer of any
property to the Hong Kong Company which has given or may give rise to any
claim, assessment or demand in relation to estate duty under Section 35 of
the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong), there is
no charge or potential charge on any property or assets of the Hong Kong
Company under Section 18 or Section 43(6) of the Estate Duty Ordinance
20
and no person is liable to estate duty attributable to the value of any of
the Sale Shares or any asset of the Hong Kong Company.
3.12 All documents to which the Hong Kong Company is a party or which form part
of the Hong Kong Company's title to any asset or in the enforcement of
which the Hong Kong Company is or may be interested which are subject to
stamp or similar duty have been duly stamped and, where appropriate or
necessary, adjudicated.
4. Corporate Matters
-----------------
4.1 The Hong Kong Company has been duly incorporated or duly established (as
the case may be) and is validly existing and no order has been made or
petition presented or resolution passed for the winding up of the Hong Kong
Company and no distress, execution or other process has been levied on any
of its assets.
4.2 The Hong Kong Company has not nor ever had any place of business outside
its jurisdiction of incorporation, nor has it carried on any trading
activities outside such jurisdiction.
4.3 The Hong Kong Company has not reduced, repaid, redeemed or purchased any
of its share capital.
4.4 The Hong Kong Company has complied with its bye-laws in all respects, has
full power, authority and legal right to own its assets and carry on its
business and none of its activities, agreements, commitments is ultra xxxxx
or unauthorised.
4.5 The Register of Members and all other statutory books of the Hong Kong
Company are up to date and contain true full and accurate records of all
matters required to be dealt with therein and the Hong Kong Company has not
received any notice of any application or intended application for
rectification of its register and all annual or other returns required to
be filed have been properly filed within any applicable time limit and all
legal requirements relating to the issue of shares and other securities by
the Hong Kong Company have been complied with.
5. Trading and General Commercial Matters
--------------------------------------
5.1 The Hong Kong Company has good and marketable title to (with full power to
sell) all property and assets as are necessary to enable it properly to
conduct its business as such business has been conducted prior to the date
hereof. All such assets are free from any liens, mortgages, charges,
encumbrances or other third party rights and are in the possession or under
the control of the Hong Kong Company.
5.2 The Hong Kong Company is not party to:
5.2.1 any unusual or onerous contract, any contract not entered into in
the ordinary course of business or not on arm's length terms, nor
any contract which cannot be terminated without penalty or other
compensation on less than twelve months' notice;
21
5.2.2 any contract restricting its freedom of action in relation to its
business activities or materially and adversely affecting its
business or assets;
5.2.3 any agency, distribution, marketing, purchasing, franchising,
licensing (whether by or to it), consulting, management, joint
venture, shareholders' or partnership arrangement or agreement or
similar arrangement.
5.3 There are no contracts or obligations, agreements, arrangements or
concerted practices involving the Hong Kong Company and no practices in
which it is engaged, which are void, illegal, unenforceable, registrable or
notifiable under or which contravene any fair trading or anti-trust
legislation or regulations anywhere in the world nor has it received any
threat or complaint or request for information or investigation in relation
to or in connection with any such legislation or regulations.
5.4 With respect to each contract, commitment, arrangement, understanding,
tender and bid involving the Hong Kong Company:
5.4.1 the Hong Kong Company has duly performed and complied in all
material respects with each of its obligations thereunder;
5.4.2 the Hong Kong Company is under no obligation which cannot readily be
fulfilled, performed or discharged by it on time and without undue
or unusual expenditure or effort or loss;
5.4.3 other than for the customer's right to elect not to proceed with an
advertising project there are no grounds for rescission, avoidance,
repudiation or termination and the Hong Kong Company has not
received any notice of rescission or termination; and
5.4.4 none of the other parties thereto is in default thereunder.
5.5 There are no outstanding loans, guarantees, pledges, mortgages, charges,
liens, debentures, encumbrances or unusual liabilities given, made or
incurred by or on behalf of the Hong Kong Company (and, in particular but
without limiting the foregoing, all loans made by or on behalf of the Hong
Kong Company to any directors or shareholders of the any member of the
Group have been repaid in full) and no person has given any guarantee of or
security for any liability of the Hong Kong Company.
5.6 The execution, delivery and performance of this Agreement will not result
in the breach, cancellation or termination of any of the terms or
conditions of or constitute a default under any agreement, commitment or
other instrument affecting the Hong Kong Company or its property or assets
or result in the acceleration of any obligation under any loan agreement or
in the loss of the benefit of or in liability to refund or repay any grant
or any financial or Tax concession or relief or violate any law or any rule
or regulation of any administrative agency or governmental body or any
order, writ, injunction or decree of any court, administrative agency or
governmental body affecting the Hong Kong Company.
5.7 There are no circumstances whereby, following a change in the control of
the Hong Kong Company or in the composition of the board of directors, any
of the principal customers
22
of or suppliers or licensors to the Hong Kong Company would have the right
to, or would, cease to remain customers or suppliers or licensors to the
same extent and of the same nature as prior to the date hereof.
5.8 The Hong Kong Company has no liabilities except liabilities arising in the
ordinary course of business under contracts for service, purchase orders,
supply contracts or sale contracts, nor does it have any other liabilities
direct or indirect, absolute or contingent, not required by generally
accepted accounting principles to be referred to in the Accounts,
including, but not limited to, off balance sheet financing arrangements. In
particular, all loans made to the Hong Kong Company by any director or
shareholder of any member of the Group have been repaid in full.
5.9 The Hong Kong Company is not the subject of any official investigation or
inquiry and there are no facts which are likely to give rise to any such
investigation or inquiry.
5.10 The Hong Kong Company has at all times carried on its business in
compliance with all applicable laws and regulations. Neither the Hong Kong
Company, nor any of its directors, officers, employees or agents, have
committed any criminal offence or any tort or any breach of the
requirements or conditions of any statute, treaty, regulation, bye-law or
other obligation relating to the Hong Kong Company or the carrying on of
its business and the Hong Kong Company has obtained and complied with all
registrations, licences and consents necessary or advisable for the
carrying on of its business, and all such registrations, licences and
consents are valid and subsisting and there is no reason why any of them
should be suspended, cancelled or revoked (whether as a result of the sale
and purchase of the Sale Shares pursuant to this Agreement or otherwise).
5.11 The Hong Kong Company does not have any of its records, systems, controls,
data or information recorded, stored, maintained, operated or otherwise
wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process whether computerised or not)
which (including all means of access thereto and therefrom) are not under
the exclusive ownership and direct control of the Hong Kong Company.
6. The Properties
--------------
6.1 The Leased Property comprises all the land, buildings and premises
currently owned, occupied or used by the Hong Kong Company.
6.2 There are no outstanding claims, disputes, complaints, notices, orders or
proceedings relating to or affecting the Leased Property.
6.3 The Hong Kong Company has not at any time assigned or otherwise disposed of
any estate, interest, right or title in or to any property, land, building
or premises (leasehold or otherwise) in respect of which it has or may have
any continuing liabilities (contingent or otherwise) for payment of rent
and/or for any other liability and the Hong Kong Company is not the
guarantor of any other party's obligations or liabilities under any
document creating or disposing of any estate, interest, right or title in
or to any property, land, building or premises.
23
6.4 The Hong Kong Company is not engaged in any rent, management or service
charge, or fee negotiations, process, proceedings or determination under
any legislation or any lease, tenancy agreement, licence or similar
agreement or arrangement and there is no outstanding rent, management or
service charge or fee review under any lease, tenancy agreement or licence.
6.5 There are no covenants, restrictions, burdens, stipulations, wayleases,
easements, conditions, outgoings, terms, overriding interests, rights or
licences affecting the Leased Property which are of an unusual or onerous
nature or which adversely affect the use of the Leased Property for which
they are currently used.
7. Intellectual Property, including confidential information
---------------------------------------------------------
7.1 The Hong Kong Company does not use or needs to use, not has within the six
years preceding the date of this Agreement used, any Intellectual Property
in a manner that infringes the Intellectual Property rights of a third
party.
7.2 The Hong Kong Company has not disclosed any know how or confidential
information to third parties.
8. Litigation
----------
The Hong Kong Company nor any person for whose acts or defaults the Hong
Kong Company may be vicariously liable is not engaged whether as plaintiff
or defendant or otherwise in any civil, criminal or arbitration proceedings
or any proceedings before any tribunal (save for debt collection by the
Hong Kong Company in the ordinary course of business) and there are no
proceedings threatened or pending against the Hong Kong Company and there
are no facts which are likely to give rise to any litigation or
proceedings. There are no unfulfilled or unsatisfied judgments or orders
against the Hong Kong Company or any of its assets.
9. Employment
----------
9.1 No circumstances have arisen under which the Hong Kong Company is likely to
be required to pay damages for wrongful dismissal, to make any statutory
severance, redundancy or long service payment or to make or pay any
compensation for unreasonable dismissal or to make any other payment under
any employment protection legislation or to reinstate or re-engage any
former employee. No circumstances have arisen under which the Hong Kong
Company is likely to be required to pay damages or compensation, or suffer
any penalty or be required to take corrective action or be subject to any
form of discipline under the Sex Discrimination Ordinance, the Disability
Discrimination Ordinance, the Family Status Discrimination Ordinance or any
other laws conferring protection against discrimination, harassment,
victimisation or vilification by reason of age, gender, family
circumstances, race, religion or disability. There are no current, pending
or threatened claims of any type against it by any existing or former
employees.
9.2 Save as disclosed, there are no occupational retirement schemes, retirement
benefits, pension, provident, superannuation, share option, share
incentive, life assurance, disability or similar schemes, arrangements or
obligations for any employees or directors or former employees or directors
24
or former employees or directors of the Hong Kong Company or any of their
spouses or dependants, and has an obligation (whether legally binding or
established by custom) to pay any pension, allowance or gratuity or make
any other payment on termination of service, death or retirement or to
make any payment for the purpose of providing any similar benefits to or
in respect of any person who is now or has been an officer or employee of
the Hong Kong Company or any spouse or dependant of any such person and is
not a party to any scheme or arrangement having as its purpose or one of
its purposes the making of such payments or the provision of such
benefits.
10. Arrangements with connected persons etc.
----------------------------------------
10.1 All amounts outstanding and appearing in the books of the Hong Kong
Company as due to directors or shareholders wholly represent money or
money's worth paid or transferred as the case may be or remuneration
accrued due and payable for services rendered. All amounts outstanding
between the directors or the shareholders of the Hong Kong Company and the
Hong Kong Company are specifically disclosed in the Accounts.
10.2 Save as disclosed in the Accounts, there are no outstanding and there has
not at any time been outstanding any contract or arrangement to which the
Hong Kong Company is a party and in which the directors or the
shareholders of the Hong Kong Company is or has been interested, whether
directly or indirectly, other than arm's length service contracts and the
Hong Kong Company is not a party to, or had its profits or financial
position at any time been adversely affected by, any contract or
arrangement which is not of an entirely arm's length nature; save as
aforesaid, there are no agreements or understandings (whether legally
enforceable or not) between the Hong Kong Company and any person who is a
shareholder or the beneficial owner of any interest in the Hong Kong
Company relating to the management of the Hong Kong Company's business or
the appointment or the removal of its directors or the ownership or
transfer of ownership or the letting of any of its assets or the provision
of finance, goods, services or other facilities to or by the Hong Kong
Company or otherwise howsoever relating to the Hong Kong Company or its
affairs.
11. Matters since the Accounting Date
---------------------------------
Since the Accounting Date:
11.1 there has been no interruption or alteration in the nature, scope or
manner of the Hong Kong Company's business which business has been carried
on lawfully and in the ordinary and usual course of business as previously
carried on and so as to maintain it as a going concern;
11.2 there has been no material adverse change in the customer relations of the
said business or in the financial condition or the position, prospects,
assets or liabilities of the said business or the Hong Kong Company as
compared with the position disclosed by the Accounts and there has been no
damage, destruction or loss (whether or not covered by insurance)
affecting the said business or its assets;
11.3 no substantial customer of the Hong Kong Company for the accounting period
ending on the Accounting Date has indicated that it is likely to cease
trading with the Hong Kong Company, or indicated that it is likely to
reduce substantially its trading with the Hong
25
Kong Company or indicated that it is likely to change substantially the
terms upon which it is prepared to trade with the Hong Kong Company (other
than normal price and minor changes);
11.4 the Hong Kong Company has continued to pay its creditors in the ordinary
course of business and no unusual trade discounts or other special terms
have been incorporated into any contract entered into by the Hong Kong
Company;
11.5 the Hong Kong Company has not repaid any loan capital in whole or in part
(other than indebtedness to its bankers) nor has it become bound or liable
to be called upon to repay prematurely any loan capital or borrowed
monies;
11.6 the Hong Kong Company has not cancelled, waived, released or discontinued
any rights, debts or claims;
11.7 save as disclosed, no dividends, bonuses or other distributions have been
declared, paid or made in respect of the shares in the Hong Kong Company;
12. Accuracy of Information Provided
--------------------------------
12.1 All information contained in this Part is true and accurate in all
respects and not misleading in any respect.
12.2 All information given to the Purchaser and its professional advisers in
connection with the Hong Kong Company during the negotiations prior to
this Agreement was when given and is at the date hereof true and accurate.
26
Part III
--------
1. The Accounts
Since incorporation the PRC Companies have never prepared any accounts.
The PRC Companies are not and have never been required to prepare any
accounts under any laws of any jurisdictions.
2. Tax
Since incorporation the PRC Companies have never paid and have never been
required to pay any Tax. None of the transactions or activities ever
undertaken by the PRC Companies will give rise to any Tax.
3. Corporate
3.1 Cambridge Technology International Limited ("Cambridge") and each of the
PRC Companies have been duly incorporated and are validly existing and no
order has been made or petition presented or resolution passed for the
winding up of any of them and no distress, execution or other process has
been levied on any of its assets. None of Cambridge nor the PRC Companies
are insolvent or unable to pay their debts, no receiver or receiver and
manager has been appointed by any person of their business or assets or any
part thereof, no power to make any such appointment has arisen, Cambridge
and the PRC Companies have taken no steps to enter liquidation and there
are no grounds on which a petition or application could be based for the
winding up or appointment of a receiver.
3.2 Each of the PRC Companies have obtained all necessary governmental
licenses, authorisations, consents and approvals to own its assets and to
carry on its business as presently conducted and all such licences,
authorisations, consents and approvals are valid and subsisting and there
is no reason why any of them should be suspended, cancelled or resolved.
3.3 Cambridge has not and never has had any subsidiary or shares in or stock of
any company other than the PRC Companies and Cambridge has never been a
director or other officer of any other company.
3.4 Save for the fact that Cambridge has a correspondence address at 2312,
23/F, Tower One, Xxx Xxxxxxx, 00 Xxxxxx Xxxx, Xxxxxxxxxxx, Xxxx Xxxx none
of Cambridge or the PRC Companies has and or ever had any place of business
outside its jurisdiction of incorporation, nor has it carried on any
trading activities outside such jurisdiction.
3.5 Cambridge has ever reduced, repaid, redeemed or purchased any of its share
capital.
3.6 There are no options or other agreements outstanding which call for the
issue of or accord to any person the right to call for the issue of any
shares in the capital of Cambridge or any of the PRC Companies or the right
to require the creation of any mortgage, charge, pledge, lien or other
security or encumbrance over any of their assets.
27
3.7 Save for each of the PRC Companies having only two board members, Cambridge
and each of the PRC Companies have complied with their respective bye-laws
in all respects, have full power, authority and legal right to own its
assets.
3.8 The Register of Members and all other statutory books of Cambridge are up
to date and contain true full and accurate records of all matters required
to be dealt with therein and it has not received any notice of any
application or intended application for rectification of its register and
all legal requirements relating to the issue of shares and other securities
by Cambridge have been complied with.
3.9 None of the PRC Companies is in default of any registration, filing or
licensing requirements under the laws and regulations of the PRC.
3.10 The copies of the Articles of Associations, the Approval Certificate, the
Business Licence and documents, permits, certificates or other forms of
authorization issued by or in the name of the PRC Companies as currently in
effect, which have been produced to the Purchaser or the Purchaser's
Solicitors, are accurate and complete in all respects and in full force and
effect and have attached to them copies of all resolutions and agreements
which are required to be so attached.
4. Trading and General Commercial Matters
4.1 Cambridge and the PRC Companies have good and marketable title to (with
full power to sell) all their respective property and assets. All such
assets and stocks are free from any liens, mortgages, charges, encumbrances
or other third party rights and are in the possession or under the control
of Cambridge and the PRC Companies.
4.2 Since incorporation the Cambridge and the PRC Companies have never carried
on any business activities (other than as disclosed in the Management
Accounts), owned any assets (other than cash) nor entered into any
contract, agreement or commitment (whether legally binding or not) with any
third party.
4.3 There are no loans, guarantees, pledges, mortgages, charges, liens,
debentures, encumbrances or unusual liabilities given, made or incurred by
or on behalf of any of Cambridge or the PRC Companies (and, in particular
but without limiting the foregoing, no loans have been made by or on behalf
of Cambridge or the PRC Companies to any directors or shareholders of
Cambridge or the PRC Companies) and no person has given any guarantee of or
security for any liability of Cambridge or the PRC Companies.
4.4 The execution, delivery and performance of this Agreement will not result
in the breach, cancellation or termination of any of the terms or
conditions of or constitute a default under any agreement, commitment or
other instrument affecting Cambridge or the PRC Companies or their property
or assets or result in the acceleration of any obligation under any loan
agreement or in the loss of the benefit of or in liability to refund or
repay any grant or any financial or Tax concession or relief or violate any
law or any rule or regulation of any administrative agency or governmental
body or any order, writ, injunction or decree of any court, administrative
agency or governmental body affecting Cambridge or the PRC Companies.
28
4.5 Cambridge and the PRC Companies do not have any of their records, systems,
controls, data or information recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means (including any
electronic, mechanical or photographic process whether computerised or not)
which (including all means of access thereto and therefrom) are not under
their exclusive ownership and direct control.
4.6 All loans made to Cambridge by any director or shareholder of any member of
the Group have been repaid in full by Cambridge or waived by the relevant
director or shareholder. All amounts outstanding and appearing in the books
of Cambridge as due to directors or shareholders wholly represent money or
money's worth paid or transferred as the case may be or remuneration
accrued due and payable for services rendered.
5. Intellectual Property, including confidential information
5.1 None of Cambridge or any of the PRC Companies use or need to use, nor
have within the six years preceding the date of this Agreement used, any
Intellectual Property in a manner that infringes the Intellectual Property
rights of a third party.
5.2 Cambridge and the PRC Companies have not disclosed any know how or
confidential information to third parties.
6. Litigation
None of Cambridge or any of the PRC Companies nor any person for whose acts
or defaults they may be vicariously liable, is or are engaged whether as
plaintiff or defendant or otherwise in any civil, criminal or arbitration
proceedings or any proceedings before any tribunal and there are no
proceedings threatened or pending against any of Cambridge or any of the
PRC Companies or any such person including proceedings in respect whereof
any of Cambridge or the PRC Companies is liable to indemnify any party
concerned therein and there are no facts which are likely to give rise to
any litigation or proceedings. There are no unfulfilled or unsatisfied
judgments or orders against any of Cambridge or the PRC Companies or any of
their assets.
7. Employment
There are no employees of Cambridge or the PRC Companies and there are no
existing service or other agreements or contracts between the PRC Companies
and their directors or other officers.
29
SCHEDULE 5
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U.S. Securities Laws Representations and Warranties
---------------------------------------------------
1. This Agreement is made with each Vendor in reliance on the following
specific representations to the Vendor that
(a) The Consideration Shares will be acquired for the Vendor's own
account, not as a nominee or agent, and not with a view to the
distribution of any part thereof, and each Vendor has no present
intention of selling, granting participation in, or otherwise
distributing the same. If the Vendor is not a natural person, the
Vendor has not been organized for the purpose of investing in
Consideration Shares of the Vendor, although such investment is
consistent with its purposes.
(b) Each Vendor understands that the purchase of the Consideration Shares
represents a speculative investment, and each Vendor is able, without
impairing his, her or its financial condition, to hold the
Consideration Shares for an indefinite period of time and to suffer a
complete loss of the Vendor's investment.
(c) Each Vendor is aware of and has investigated the Purchaser's business,
management and financial condition, has had the opportunity to inspect
the Purchaser's facilities and has had access to such other
information about the Purchaser as such Vendor has deemed necessary or
desirable to reach an informed and knowledgeable decision to acquire
the Consideration Shares.
(d) Each Vendor understands that the Consideration Shares will not be
registered under the Securities Act by reason of, among other things,
reliance upon certain exemptions therefrom, and that the reliance of
the Purchaser on such exemptions is predicated upon, among other
things, the bona fide nature of such Vendor's investment intent as
expressed herein.
(e) Each Vendor is experienced in evaluating and investing in securities
of companies in the development stage and has made investments in
securities other than those of the Purchaser. Each Vendor
acknowledges that by reason of his or its business or financial
experience, he, she or it has the ability to bear the economic risk of
his, her or its investment pursuant to this Agreement.
(f) Each Vendor is an Accredited Investor.
2. Each Vendor understands that the Consideration Shares are restricted shares
within the meaning of Rule 144 promulgated under the Securities Act; that
the Consideration Shares are not registered under the Securities Act, that
the Vendor may be required to hold the Consideration Shares indefinitely
unless they are subsequently registered or an exemption from such
registration is available; that, in any event, the exemption from
registration under Rule 144 would not be available for at least one year,
and even then, if the Vendor is an affiliate of the Purchaser or has held
such Consideration Shares for less than two years, such exemption will not
be available unless: (i) a public trading market then exists for the
Consideration Shares; (ii) adequate information concerning the Purchaser is
then available to the public; and (iii) other terms and conditions of Rule
144 are complied
30
with, including, among other things, the sale being made through a broker
in an unsolicited "broker's transaction" or in transactions directly with a
"market maker" and the number of such shares sold in any three-month period
not exceeding specified limitations.
3. Each Vendor has had an opportunity to discuss the Purchaser's business,
management and financial affairs with its management. It has also had an
opportunity to ask questions of officers of the Purchaser, which questions
were answered to its satisfaction. Each Vendor understands that such
discussions, as well as any written information issued by the Purchaser,
were intended to describe certain aspects of the Purchaser's business and
prospects but were not a thorough or exhaustive description.
4. Each Vendor has reviewed with its own tax advisors applicable tax
consequences of this investment and the transactions contemplated by this
Agreement. Each Vendor has relied solely on such advisors and not on any
statements or representations of the Purchaser or any of its agents. Each
Vendor understands that it (and not the Purchaser) shall be responsible for
its own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement.
5. Each certificate representing the Consideration Shares shall be stamped or
otherwise imprinted with a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE CONSIDERATION SHARES ACT OF 1933.
Such legend shall be removed by the Purchaser upon delivery to it of an
opinion of counsel, in form and substance reasonably acceptable to the
Purchaser and its counsel, that a registration statement under the
Securities Act and qualification under applicable state securities laws is
at the time in effect with respect to the legended security or that such
security can be freely transferred without such registration and
qualification.
Any certificate representing the Consideration Shares shall also be
endorsed with any legend or legends required by the laws of the
jurisdictions of the residence of the Vendor.
6. The Consideration Shares may not be transferred unless and until one of the
following events shall have occurred:
(i) the Purchaser shall have received a statement of the circumstances
surrounding the transfer and, if reasonably requested by the Purchaser, an
opinion of counsel, in form and substance reasonably acceptable to the
Purchaser and its counsel, stating that the transfer is exempt from
registration under the Securities Act as then in effect, and the rules and
regulations promulgated by the U.S. Securities and Exchange Commission
thereunder; or
31
(ii) the Consideration Shares are transferred pursuant to an effective
registration statement under the Securities Act.
The restrictions on transfer imposed by this Section 8.6 shall cease and
terminate as to the Consideration Shares or any portion thereof when (i)
such Consideration Shares shall have been effectively registered under the
Securities Act and sold by the holder thereof in accordance with such
registration, or (ii) the Purchaser is provided with an acceptable opinion
of counsel to the effect that all future transfers of such Consideration
Shares by the transferor or the contemplated transferee would be exempt
from registration under the Securities Act.
7. Each Vendor understands that no United States or foreign federal or state
agency has passed on or made any recommendation or endorsement of the
Consideration Shares.
8. Each Vendor has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for the
Conversion Shares or any use of this Agreement, including (i) the legal
requirements within its jurisdiction for the purchase of the Conversion
Shares, (ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be obtained and
(iv) the income tax and other tax consequences, if any, that may be
relevant to the purchase, holding, redemption, sale, or transfer of the
Conversion Shares. Each Vendor's subscription and payment for, and its
continued ownership of the Conversion Shares, will not violate any
applicable securities or other laws of its jurisdiction.
32
IN WITNESS WHEREOF the parties hereto have executed this document on the date
appearing at the head hereof.
Signed by )
JAMO XX XXXX LO )
in the presence of )
Signed by )
XXX XXXX XXX )
in the presence of )
Signed by )
XXXX XXXX GROUP LIMITED )
in the presence of )
Signed by )
XXXXX XXXX XXXX XXX )
in the presence of )
Signed by )
for and on behalf of )
INTELLECTUAL PARTNERS LIMITED )
in the presence of )
Signed by )
for and on behalf of )
ARCH INTERNATIONAL GROUP LIMITED )
in the presence of )
33
Signed by )
for and on behalf of )
MINDARROW SYSTEMS, INC. )
in the presence of )
34
EXHIBIT A
---------
The Accounts
------------
35
EXHIBIT B
---------
The Service Contracts
---------------------
36
