EXHIBIT 10 (xxxii)
================================================================================
SHARE PURCHASE AGREEMENT
BY AND AMONG
CHENGSHAN GROUP COMPANY LIMITED
AND
CTB (BARBADOS) INVESTMENT CO. LTD
================================================================================
DATED AS OF October 27, 2005
TABLE OF CONTENT
ARTICLE PAGE
1. Interpretation................................... 2
2. Purchase and Sale of Equity Interest............. 2
3. Transaction Price................................ 2
4. Transaction Preconditions........................ 3
5. Closing.......................................... 7
6. Seller's Representations and Warranties.......... 8
7. Buyer's Representations and Warranties........... 20
8. indemnification.................................. 21
9. Confidentiality.................................. 22
10. Expenses......................................... 23
11. Termination...................................... 23
12. Force Majeure.................................... 24
13. Governing Law and Dispute resolution............. 25
14. Miscellaneous.................................... 26
Appendix 1 Definitions and Interpretation........... 29
i
This SHARE PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into in the
People's Republic of China ("CHINA" or "PRC") on this 27th day of October, 2005,
in accordance with the PRC Tentative Regulations Regarding Merger with and
Acquisition of Domestic Enterprises by Foreign Investors (the "M&A REGULATIONS")
and other applicable PRC laws and regulations, pursuant to the principles of
equality and mutual benefit, by and among:
SELLER: CHENGSHAN GROUP COMPANY LTD., a limited liability company
registered and incorporated under the laws of the PRC, with
its registered address at Xx. 00, Xxxxx Xxx Xxxx Xxxx,
Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, XXX;
BUYER: CTB (BARBADOS) INVESTMENT CO. LTD., an international business
company, duly incorporated pursuant to the laws of Barbados
and having its registered office at Xxxxxxxx Xxxxx, Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, W.I.; and
COMPANY: RONGCHENG CHENGSHAN STEEL CORD CO., LTD., a limited liability
company registered and incorporated under the laws of the PRC,
with its registered address at Xx. 00, Xxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, XXX.
(Each of Seller, Buyer and Company is hereinafter individually referred to as a
"PARTY" and collectively as the "PARTIES".)
WHEREAS:
(A) On the date of this Agreement, Seller holds 95.3% of the equity
interests of the Company. For the purpose of this Agreement, Seller will
purchase all of the Company's equity interests held by the other
shareholder prior to the Closing Date;
(B) Seller intends to sell to Buyer, and Buyer is willing to purchase from
Seller, a portion of the equity interests of the Company owned by Seller
in accordance with the terms and conditions of this Agreement;
(C) As consideration for the transfer of Equity Interests for Sale and the
other transactions contemplated herein, Buyer intends to pay Seller the
Transaction Price subject to the terms and conditions hereof;
(D) Upon completion of the above transfer of equity interests, Buyer shall
own 25% of equity interest of the Company, and Seller shall own 75% of
the equity interest of the Company; and
(E) Seller intends to use its best endeavors to support, and provide a loan
at an amount of US$ 6,400,000 to the Company after the Closing which
will be subordinated to the claims against and liabilities incurred by
the Company;
(F) On or prior to the Closing Date, the Company shall be registered as a
Sino-foreign equity joint-venture enterprise, for which purpose Buyer
and Seller have agreed to enter into a Sino-foreign equity joint venture
contract (the "JOINT VENTURE CONTRACT") on the date of this Agreement.
- 1 -
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 Unless the terms or context of this Agreement provide otherwise,
capitalized terms used herein without definition have the meanings
ascribed to them in Appendix 1 as attached to this Agreement.
1.2 The following terms in this Agreement shall have the meanings set
out below:
1.2.1 Reference to "entity" shall include the reference to any
individual, firm, corporation, enterprise or other body
corporate, government, state or state organization, any
partnership, association or employees' representative
organization (regardless of its eligibility as an independent
legal person); and
1.2.2 Reference to an Article, paragraph or appendix shall mean the
corresponding Article, paragraph or appendix in this
Agreement, unless otherwise required herein.
1.3 Headings of this Agreement shall not affect the understanding of the
contents of this Agreement.
2. PURCHASE AND SALE OF EQUITY INTEREST
2.1 Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, the Equity Interests for Sale free and clear of all
Encumbrances, together with any other the incidental rights accrued
thereon on or after the execution of this Agreement.
2.2 Buyer shall pay, or cause to be paid, to Seller the Transaction
Price set forth in Article 3 herein.
2.3 Seller hereby undertakes to appropriately support, and to the extent
necessary, provide a loan at an amount of US$ 6,400,000 to the
Company as soon as practicable upon the Closing, which shall have a
term of at least 10 years bearing interest at the prevailing market
rate and will be subordinated to the claims against and liabilities
incurred by the Company.
3. TRANSACTION PRICE
3.1 As consideration for the purchase of the Equity Interests for Sale,
in reliance upon the representations and warranties, covenants,
agreements and undertakings of Seller made herein, and subject to
the terms and conditions of this Agreement, Buyer shall pay to
Seller, the sum of United States Dollars Six Million Four Hundred
Thousand (US$6,400,000) (the "TRANSACTION PRICE") (subject to the
adjustments contained in this Article) according to the payment
schedule as follows:
- 2 -
3.1.1 United State Dollars Six Million Four Hundred Thousand
(US$6,400,000), representing a hundred percent (100%) of the
Transaction Price, shall be paid by Buyer to Seller within
three (3) months of the issuance of the New Business License
of the Company.
3.2 Seller and Buyer hereby covenant that the Transaction Price has been
determined by reference to the appraisal value of the entire equity
interest of the Company as indicated in the appraisal report. Buyer
shall pay the Transaction Price to Seller in accordance with the
applicable PRC laws and regulations, including without limitation,
the relevant foreign exchange supervision statutory requirements.
3.3 Upon Closing an audit of the Equity Interests for Sale (the "CLOSING
AUDIT") shall be completed by a qualified audit firm selected by
Buyer prior to payment of the Transaction Price by Buyer to Seller.
3.4 Without prejudice to any other remedies available to Buyer, in the
event that Seller is in material breach of this Agreement or the
Joint Venture Contract ("DEFAULT") before the full amount of the
Transaction Price has been paid under this Article 3, at the
discretion and request of Buyer, Seller shall forthwith cease to
have any right to receive and Buyer shall cease to have any further
obligation to pay any remaining balance of the Transaction Price to
Seller, and Seller shall refund the amount of the Transaction Price,
which has been paid by Buyer immediately preceding the occurrence of
the Default, to Buyer within five (5) days from demand by Buyer.
4. TRANSACTION PRECONDITIONS
4.1 Closing is conditional upon satisfaction of the following
Transaction Preconditions:
4.1.1 The representations and warranties of Seller made in this
Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date as though
made as of the Closing Date, and Seller and the Company shall
have performed and complied in all material respects with all
terms, agreements and covenants contained in this Agreement
required to be performed or complied by Seller or the Company
on or before the Closing Date.
4.1.2 No provision of any applicable law and no judgment,
injunction, order or decree of any governmental authority
shall be in effect which shall prohibit the consummation of
the Closing.
4.1.3 Seller and the Company shall have obtained all relevant
corporate approvals for the execution and performance of this
Agreement and the Joint Venture Contract, and the adoption of
the Articles of Association of New Company, and such corporate
approvals shall continue to be effective without amendment or
revocation as of the Closing Date.
- 3 -
4.1.4 All consents, approvals, waivers, subordinations and permits,
if any, required in connection with the consummation of the
sale and purchase of the Equity Interest for Sale and the
transactions contemplated herein shall have been received by
Seller and the Company, including but not limited to the
approval of the Ministry of Commerce, or examination and
approval authorities authorized by the Ministry of Commerce,
and other government or regulatory authorities necessary to
complete the transactions contemplated herein, for the purpose
of receiving approval for:
(a) transfer of the Equity Interest for Sale and this
Agreement;
(b) change of shareholders of the Company;
(c) conversion of the Company into a Sino-foreign joint
venture enterprise;
(d) the Joint Venture Contract; and
(e) the Articles of Association of the New Company.
4.1.5 Prior to the Closing Date, no event shall have occurred which,
individually or when considered together with all other
matters, has had, or could reasonably be expected to have, a
Material Adverse Effect the Company, and Buyer shall not have
discovered any fact or circumstance which, individually or
when considered together with all other matters, has, or could
reasonably be expected to have, a Material Adverse Effect on
the Company.
4.1.6 Seller and the Company shall have obtained an appraisal report
in respect of the Equity Interests for Sale, which is
reasonably acceptable to both Seller and Buyer and have been
prepared and issued by an appraiser selected by Seller and
reasonably agreed upon by Buyer.
4.1.7 Seller and the Company shall have delivered to Buyer the copy
of the Accounts.
4.2 Each Party shall use its good-faith best efforts to satisfy and
complete each of the Transaction Preconditions to be completed by
such Party as soon as practicable after the execution of this
Agreement.
4.3 Where Seller, the Company or Buyer is aware at any time that a
certain fact or circumstance may impede the completion of a
Transaction Precondition, it shall promptly inform all other Parties
of such fact or circumstance in writing.
4.4 Seller and the Company shall forthwith notify Buyer of its receipt
of any approval from the relevant government approval authorities on
the transfer of the Equity Interests for Sale and the transactions
contemplated herein. The Parties shall use their best efforts in
attending to all necessary amendments with relevant government
authorities in connection with the transfer of the Equity Interests
for Sale and the transactions contemplated herein within the
- 4 -
time period prescribed by the relevant government authorities or
applicable laws of China, including the obtaining of an approval
certificate and a New Business License of the Company reflecting the
result of the transfer of the Equity Interests for Sale.
4.5 Subject to the terms and conditions of this Agreement, each of the
Company, Seller and Buyer shall use its commercially reasonable
efforts to take, or cause to be taken, all actions, and do, or cause
to be done, all things necessary, proper or advisable under this
Agreement and applicable laws and regulations to consummate the sale
and purchase of the Equity Interests for Sale and the other
transactions contemplated by this Agreement as soon as practicable
after the date hereof, including (i) preparing and filing as
promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, ruling requests, and
other documents and to obtain as promptly as practicable all
consents, waivers, licenses, orders, registrations, approvals,
permits, rulings, authorizations and clearances necessary or
advisable to be obtained from any third party and/or any
governmental authority in order to consummate the sale and purchase
of the Equity Interests for Sale and the other transactions
contemplated by this Agreement (collectively, the "REQUIRED
APPROVALS") and (ii) taking all commercially reasonable steps as may
be necessary to obtain all such Required Approvals.
4.6 During the period from the date of this Agreement to the Closing
Date, the Company and Seller shall cause the Company to conduct
operations only in the Ordinary Course of Business and use its
commercially reasonable efforts to preserve intact its business
organizations, and maintain its relationships and goodwill with
licensors, suppliers, distributors, customers, landlords, employees,
agents and others having business relationships with the Company.
Notwithstanding the generality of the foregoing, Seller and the
Company shall procure that, with effect from the date of this
Agreement up to and including the Closing Date, the Company shall
not, except with the written consent of Buyer (which consent should
not be unreasonably withheld) or as otherwise specifically
contemplated in this Agreement:
4.6.1 Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or
policies existing, on the date hereof and unless previously
disclosed in writing or made available to Buyer, or adopt any
new severance plan or agreement or make changes in the terms
of employment of any of its employees.
4.6.2 Cause or permit any of the senior management employees and key
technical personnel of the Company to be dismissed, resigned
or terminated from their employment with the Company.
4.6.3 Sell, license or transfer to any person any intellectual
property right, or buy or license any intellectual property
right or enter into any agreement with respect to the
intellectual property right of any person, other than
agreements entered into with employees or ex-employees for the
transfer or assignment of any intellectual property right of
such employees or ex-employees in relations to their
employment with the Company.
- 5 -
4.6.4 Split, combine or reclassify any shares or issue or authorize
the issuance of any other securities in respect of, in lieu of
or in substitution for any shares.
4.6.5 Purchase, redeem or otherwise acquire, directly or indirectly,
any shares or other equity interest in the capital of the
Company.
4.6.6 Issue any shares or other equity interest in the capital of
the Company, or any securities convertible into shares or
other equity interest in the capital of the Company.
4.6.7 Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the
assets of, or by any other manner, any business or any
company, partnership, association or other business
organization or division thereof, or otherwise acquire or
agree to acquire any assets for aggregate consideration in
excess of US$500,000, or enter into any joint venture,
strategic partnership or alliance.
4.6.8 Sell, lease, license, encumber or otherwise dispose of any
material properties or assets, except sales of inventory and
used equipment in the Ordinary Course of Business.
4.6.9 Commence or settle any litigation the claims of which exceed
US$100,000.
4.6.10 Enter into any commitment, activity or transaction (including
entering into any commitment to make any capital expenditure)
not in the Ordinary Course of Business or in any event
exceeding US$100,000 individually or US$500,000 in the
aggregate.
4.6.11 Incur any material indebtedness for borrowed money, or
guarantee any such indebtedness of another person, issue or
sell any debt securities or options, warrants, calls or other
rights to acquire any debt securities of the Company, other
than drawdown of credit facilities granted prior to the date
hereof within the Ordinary Course of Business.
4.6.12 Make any change in the nature, scope or organization of its
business.
4.6.13 Make any loans or grant any credit (other than in the
Ordinary Course of Business and advances made to employees
against expenses incurred by them on its behalf).
4.6.14 Permit any of its insurances to lapse or do anything which
would make any policy of insurance void or voidable.
4.6.15 Agree in writing or otherwise to take any of the actions
described in 4.6.1 through 4.6.14 above.
- 6 -
5. CLOSING
5.1 Closing shall take place at the offices of the Company or such other
place as the Buyer and Seller may agree, on the Closing Date.
5.2 Seller and the Company shall, at the Closing, submit the following
to Buyer:
5.2.1 Copies of resolution of the board of directors of Seller and
the Company on the approval and authorization of its
execution, delivery and performance of this Agreement the
Joint Venture Contract and Articles of Association of the New
Company;
5.2.2 An appraisal report in respect of the Equity Interests for
Sale prepared and issued by a qualified appraiser selected by
Seller and agreed upon by Buyer in China.
5.3 Subject to the requirements of Articles 5.2, the transactions
contemplated by this Agreement shall be effective on or subsequent
to the Closing Date in the following sequence:
5.3.1 The Equity Interests for Sale shall be transferred by Seller
to Buyer; and
5.3.2 The Company shall be registered as a Sino-foreign
joint-venture enterprise (in the form of a limited liability
company), in which Seller shall hold 75% of the Company's
equity interest and Buyer shall hold 25% of the Company's
equity interest.
5.4 If either Party shall fail to make a required payment on the due
date of such payment in accordance with the terms and conditions of
this Agreement, such Party shall pay the interest on such sum of
money, with the interest period commencing from the due date of such
payment to the date that the payment is actually made by the
relevant Party. The interest assessed shall be 0.05% per day.
5.5 Without prejudice to any other remedies available to Buyer, if in
any respect the provisions of Article 5.2 are not complied with on
the Closing Date the Buyer may:
5.5.1 defer Closing to a date not more than thirty (30) days after
the Closing Date (and so that the provisions of this Article
5.5 shall apply to Closing as so deferred); or
5.5.2 proceed to Closing so far as practicable (without prejudice to
its rights hereunder); or
5.5.3 terminate this Agreement, and without limiting the Buyer's
right to claim all obligations of Seller under this Agreement,
Buyer shall, unless otherwise expressly stated, cease to enjoy
and assume all rights and liabilities hereunder, but, for the
avoidance of doubt, all rights
- 7 -
and liabilities of the Parties which have accrued before
termination shall continue to exist.
6. SELLER'S REPRESENTATIONS AND WARRANTIES
Except otherwise disclosed, Seller hereby represents and warrants to
Buyer, as of the date hereof and as of the Closing Date as though such
representations and warranties were made at the Closing Date, all Seller's
Representations and Warranties set forth hereunder are true, accurate and
complete. For the sole purposes of Seller's Representations and
Warranties, reference to the "Company" shall as of the Closing Date
include the New Company:
6.1 Capacity and Authority
6.1.1 Incorporation and existence
Seller is a limited liability company as an independent legal
entity established in accordance with the laws of China.
Seller has been in continuous existence since its
establishment.
6.1.2 Right, power, authority and action
(a) Each of Seller and the Company has the right, power and
authority and has taken all actions necessary to execute
and deliver, and to exercise its rights and perform its
obligations under, this Agreement, the Joint Venture
Contract, and the Articles of Association of the New
Company.
(b) The execution, delivery and performance by Seller and
the Company of this Agreement, the Joint Venture
Contract, and the Articles of Association of the New
Company and the consummation of the transactions
contemplated thereby will not violate, constitute a
default, conflict with, or give rise to any right of
termination, cancellation, or acceleration under any
agreement, note, bond, mortgage, lease, security,
license, permit, or other similar instrument to which a
Seller or the Company is a party; (ii) result in the
imposition of any Encumbrance on any Equity Interests
for Sale; (iii) violate or conflict with any relevant
laws; or (iv) require any consent, approval or other
action of, notice to, or filing with any person
(governmental or private), except for those that have
been obtained or will be obtained by the Closing Date.
(c) The Company has the right, power and authority to
conduct its business as conducted at the date of this
Agreement.
6.2 Information
6.2.1 General
- 8 -
All information given by, or on behalf of, Seller to Buyer,
its advisers or agents before or during the negotiations
leading to this Agreement is true, complete, accurate and not
misleading.
6.2.2 This Agreement
The information set out in this Agreement (including the
Appendices) is true, complete, accurate and not misleading in
all material aspects.
6.2.3 Material information
All information about the Equity Interests for Sale and the
business of the Company which might be material for disclosure
to a buyer of the Equity Interests for Sale has been disclosed
to Buyer in writing.
6.3 The Company
6.3.1 The Company has been duly established as a limited liability
company pursuant to the laws of China. The business license of
the Company is in full force and effect.
6.3.2 Save for the interests of Seller, no person has any rights of
any nature whatsoever on, over or affecting the Company or the
registered capital of the Company unless otherwise disclosed.
6.3.3 No event or omission has occurred whereby the constitution,
subsistence or corporate status of the Company has been or is
likely to be adversely affected.
6.3.4 The Company does not have and has never had any subsidiary,
branch or representative office.
6.3.5 The Company is not the legal or beneficial owner of any
shares, registered capital or other equity or contractual
interest in any other company.
6.4 Equity Interests for Sale
Seller is the currently the legal and beneficial owner of 95.3% of
the equity interests of the Company, and immediately prior to the
Closing shall be the legal and beneficial owner of 100% of the
equity interests of the Company. There is no Encumbrance and there
is no agreement, arrangement or obligation to create or give an
Encumbrance, in relation to the Equity Interests for Sale or any
part of it. No person has claimed to be entitled to an Encumbrance
in relation to the Equity Interests for Sale or any part of it.
6.5 Accounts
6.5.1 General
(a) The Accounts have been prepared in accordance with
Chinese GAAP on a consistent basis.
- 9 -
(b) The Accounts show a true and fair view of the assets,
liabilities, capital commitments and the state of
affairs of the Company at their respective reference
dates.
6.5.2 Debts and liabilities
(a) Subject to Chinese Accounting Rules, provision for bad
and doubtful debts and all liabilities (whether actual,
contingent or otherwise) and all financial commitments
in existence at the Accounts Date have been made in the
Accounts.
(b) To the knowledge of the Seller, all liabilities (actual,
contingent or otherwise) and all financial commitments
of the Company have been accurately reflected and
disclosed in the Accounts.
6.5.3 Provision for tax
The Accounts reserve in full for all Tax to which the Company
may become liable under Chinese law, for a period starting on
or before the Accounts Date. The Accounts reserve in full for
contingent or deferred liabilities to Tax for a period
starting on or before the Accounts Date.
6.5.4 Accounting records
The accounting records of the Company are up-to-date, in its
possession or under its control and fully and accurately
completed in accordance with China law and applicable
standards, principles and practices generally accepted in
China.
6.6 Changes since The Accounts Date
Since the Accounts Date and through the date hereof, (i) the Company
has conducted its business and operations only in the Ordinary
Course of Business, and (ii) there has been no Material Adverse
Effect on the Company.
6.7 Tax
6.7.1 General
(a) The Company will pay any and all taxes in compliance
with the applicable laws and regulations;
(b) All forms, filings, and information provided by the
Company to any taxing authority were timely filed and
were, at the time of filing and continue to be, complete
and accurate;
(c) Except otherwise disclosed, there is no liability in
respect of taxation (whether actual or contingent) or
any liability for
- 10 -
interest, penalties or charges imposed in relation to any
taxation arising in any part of the world that is not
adequately disclosed or provided by the Company;
(d) Except otherwise disclosed, the Company is not and has
not in the last three years been the subject of a Tax
Authority unresolved investigation or other dispute
regarding Tax or duty recoverable from the Company or
regarding the availability of any relief from Tax or
duty to the Company and there are no facts which are
likely to cause such an investigation or audit to be
instituted or such a dispute to arise and all returns
made by the Company are agreed with the appropriate Tax
Authority;
6.7.2 Value added tax
The Company:
(a) is validly registered with the relevant Tax Authority
for the purposes of China value added tax laws and
regulations;
(b) has made, given, obtained and kept up-to-date, full and
accurate records, invoices and documents appropriate or
required for the purposes of payment of value added tax
under Chinese laws and regulations;
(c) is not in arrears with payment or returns of value added
tax due under Chinese laws and regulations;
(d) has lodged timely claims for any refund of value added
tax under Chinese laws and regulations.
6.7.3 Customs duties
(a) All customs duties, charges, imposts or fees payable to
a Tax authority in respect of the import, export or
ownership of any asset (including, without limitation,
trading stock) or goods by the Company have been paid.
(b) All plant, machinery, vehicles, equipment and raw
materials and consumables imported by the Company as
investment or required by the Company for production and
operation, and which were imported with funds within the
maximum amount of permitted registered capital of the
Company were imported exempt of customs duties and value
added tax. To the best knowledge of Seller, such
exemption will continue as long as the value of imports
fall within the maximum permitted registered capital of
the Company.
6.8 Assets
6.8.1 Title and condition
- 11 -
(a) Each asset acquired by the Company since the Accounts
Date and all assets used by the Company:
(i) are legally and beneficially owned by the Company
free from any Encumbrance;
(ii) are not the subject of any agreement for lease,
hire, hire purchase or sale on deferred terms;
(iii) where capable of possession, are in the possession
or under the control of the Company; and
(iv) are situated in Rongcheng City, Shandong Province,
China.
(b) The Company owns each asset necessary or desirable to
enable the Company to carry on its business.
6.9 Intellectual Property
6.9.1 Each Intellectual Property Right is:
(a) valid and enforceable and nothing has been done or
omitted to be done by which it may cease to be valid and
enforceable;
(b) legally and beneficially owned by, and validly granted
to the Company alone, free from any licence,
Encumbrance, restriction on use or disclosure
obligation, or is validly licensed to the Company in
China; and
(c) is not, and will not be, the subject of a claim or
opposition from a person (including, without limitation,
an employee of the Company) as to title, validity,
enforceability, entitlement or otherwise.
6.10 Debtors
6.10.1 Except otherwise disclosed, no debt of the Company is overdue
by more than thirty (30) days or is the subject of an
arrangement not made in the Company's Ordinary Course of
Business.
6.10.2 The Company has not released a debt shown in its accounting
records so that the debtor has paid or will pay less than the
debt's book value. Except otherwise disclosed, none of those
debts has been deferred, subordinated or written off or become
irrecoverable to any extent. Seller has no reason to believe
that any of those debts will fail to realize its book value in
the usual course of collection.
6.11 Effect of Sale
- 12 -
6.11.1 Neither the execution nor performance of this Agreement or a
document to be executed at or before Closing will:
(a) result in the Company losing the benefit of a permit or
an asset, license, grant, subsidy, right or privilege
which it enjoys at the date of this Agreement in any
jurisdiction; or
(d) conflict with, or result in a breach of, or give rise to
an event of default under, or require the consent of a
person under, or enable a person to terminate, or
relieve a person from an obligation under, an agreement,
arrangement or obligation to which the Company is a
party or a legal or administrative requirement in any
jurisdiction.
6.12 Insurance
The Company maintains insurance coverage with reputable insurers in
such amounts and covering such risks as are in accordance with
normal industry practice for companies engaged in businesses similar
to that of the Company in China.
6.13 Property
6.13.1 Property
(a) The land use rights and premises acquired, used or
occupied by the Company and all the rights vested in the
Company relating to such land use rights and premises at
the date of this Agreement (the "PROPERTY") comprises
all the land use rights and premises acquired, used or
occupied by the Company and all the rights vested in the
Company relating to such land use rights and premises at
the date of this Agreement.
(b) Full and accurate particulars of all land use rights
documents and all documents and agreements relating to
the use and occupation of the Property by the Company
(the "LAND DOCUMENTS") have been appropriately disclosed
and delivered to Buyer.
(c) The Company does not own, hold or have any interest in
any allocated land use rights or granted land use rights
other than as disclosed to Buyer.
(d) The Properties are not subject to land premiums, land
use fees, penalties or any other type of payment
whatsoever, which remains unpaid as of the date hereof,
or shall become otherwise due and payable as a result of
(i) the transactions contemplated herein; or (ii) the
conversion of the Company into a Sino-foreign joint
venture enterprise, except for those fees, expenses or
Taxes that would arise in the Ordinary Course of
Business.
- 13 -
6.13.2 Exclusive right to use the Property
(a) The Company has the exclusive right to use the Property.
There are appurtenant to the Property all rights and
easements necessary for its use and enjoyment by the
Company.
(e) In respect of each Land Documents:
(i) all procedures pertaining to the requirement to
approve or register such an agreement (where
necessary) have been duly effected;
(ii) the Company has in all material respects observed
and performed all obligations (including the
payment of any rent or license fee) and
restrictions;
(iii) the grantor or lessor of the Property (as
appropriate) has not waived any obligation or
restriction;
(iv) the land grant premium, other applicable land use
fees and rental payments (whether in the form of
advance payment or otherwise) have been paid in
full;
(v) no extension or option for renewal has been
exercised and no notice requesting an extension or
renewal of the term of any Land Document has been
served or received; and
(vi) there has not been any assignment, subletting,
parting with the possession of or transferring of
the Property or any part thereof or any interest
therein by the Company to any other person whether
formally or informally.
6.13.3 Encumbrances and adverse matters
(a) Except otherwise disclosed, the Property is not subject
to any Encumbrance and there is no person in possession
or occupation of or who has or may have or claims to
have any right or easement of any kind in respect of the
Property which may adversely affect the use occupation
and enjoyment thereof by the Company.
(b) There are no disputes or outstanding or expected notices
(whether given by the lesser, a government authority or
any other person) affecting the Property.
(c) There are no rights for the grantor or lessor (as
appropriate) to vary the terms of or to terminate the
Land Document
- 14 -
before its expiry and there are no circumstances which
would entitle or require the grantor or lessor or any
other person (as appropriate) to exercise any power of
entry or re-entry upon or to take possession of the
Property or which would otherwise restrict or terminate
the continued possession or occupation thereof or which
could prevent or restrict the development thereof.
(d) The Company has duly performed, observed and complied
with and there is no subsisting breach of any agreement,
statutory requirement, order, building regulation or
other obligation affecting the Property or the use
thereof and no notice of any alleged breach of any of
the terms of the Land Documents has been served on or
received by the Company.
(e) The Company will not (without the prior written consent
of Buyer, but such consent shall not be unreasonably
rejected) exercise or cause to be exercised, any
extension or option for renewal of any of the Land
Documents.
6.13.4 No other adverse matters
There are no matters which adversely affect the value of, or
the use and enjoyment of the Property by the Company, and
there are no other facts or matters, the omission of which
would affect the valuation of the Property.
6.13.5 Outstanding property liabilities
Save in relation to the Land Documents there is no actual or
contingent liability on the Company arising directly or
indirectly out of any agreement whatsoever relating to the
Property or any other property not forming part of the
Property, or to any interest therein.
6.14 Environmental Matters
The Company has not committed any breach of China legal or
regulatory requirements for the protection of the environment or of
human health or amenity, and has acted at all times in conformity
with all relevant Chinese laws, regulations, codes of practice,
guidance, notes, standards and other advisory material issued by any
local and national governmental authority in China with regard to
environmental protection and the protection of human health or
amenity.
6.15 Material Agreements
Each Material Agreement is a legal, valid and binding obligation of
the Company and, to the knowledge of Seller or the Company, each
other party to such Material Agreement, enforceable against the
Company and, to the knowledge of Seller or the Company, each such
other party in accordance with its terms, and neither Seller nor the
Company, or to the knowledge of Seller or
- 15 -
the Company, any other party to a Material Agreement, is in material
default or material breach or has failed to perform any material
obligation under a Material Agreement, and there does not exist any
event, condition or omission that would constitute such a material
breach or material default.
6.16 Creditors
The Company has paid its creditors within the times agreed with
them.
6.17 Licenses and Statutory Compliance
6.17.1 The Company has obtained all licenses, permits, approvals and
other authorizations as are necessary in order to enable it to
own, operate, and use all its assets and conduct its business
as it is currently being conducted. All such licenses,
permits, approvals, and authorizations are in full force and
effect. No violations have been recorded or alleged in respect
of any such licenses, permits, approvals or authorizations,
and no proceeding is pending or, to the knowledge of Seller,
threatened or contemplated with respect to the revocation or
limitation of the same.
6.17.2 The Company is not in breach of any such approvals, licenses,
consents, permissions, authorizations and exceptions and there
are no factors that might in any way prejudice the
continuation or renewal of any of them, in whole or in part.
6.17.3 The Company has conducted its business and its corporate
affairs in accordance with all applicable China laws and
regulations and has not done or omitted to do anything in
contravention or breach of any law or regulation of China or
elsewhere applicable to it or the business of the Company
which would have a material adverse effect upon the assets or
business of the Company.
6.17.4 The Company has at all times carried on business in all
respects in accordance with, and all acts and things done or
performed by the Company are within the scope of business
specified in the Articles of Association and the business
license of the Company.
6.18 Employees
6.18.1 General
(a) Except otherwise disclosed, there is no employment or
other contract of engagement (written or otherwise)
between the Company and any of its directors. Except
otherwise disclosed, the Company has not entered into
any consultancy agreements with any person currently.
The Company will not enter into any consultancy
agreements with any person before Closing Date unless it
gets a written approval from the Buyer in advance.
- 16 -
(b) There is no employment contract between the Company and
any of its employees which cannot be terminated by three
months' notice or less without giving rise to a claim
for damages or compensation (other than economic
compensation under applicable Chinese laws and
regulations).
(c) There is no employment or other contract of engagement
between the Company and any person which is in
suspension or has been terminated but is capable of
being revived or enforced or in respect of which the
Company has a continuing obligation.
(d) There does not exist any waived or unpaid employee
compensation (including salary, bonuses, allowances, or
benefits) and there are no severance or pension
liabilities pertaining to the period prior to the
Closing. All recurring expenses related to severance,
pension, medical or other benefits which the Company
will incur post-transaction are reflected in the
management projections.
6.18.2 Compliance with law
The Company has in relation to each of its employees (and, so
far as relevant, to each of its former employees):
(a) complied with applicable PRC and local labor
regulations, and all other obligations imposed on it by,
and all orders and awards made under all regulations,
codes of conduct and practice, collective agreements,
customs and practices relevant to the relations between
it and its employees or any trade union or the
conditions of service of its employees; and
(b) maintained current, adequate and suitable records
regarding the service of each of its employees.
6.18.3 Trade union
(a) The Company has no agreement or arrangement (binding or
otherwise) with any trade union or other body
representing its employees or any of them.
(b) The Company is not involved in any industrial or trade
disputes or any dispute or negotiation regarding a claim
of material importance with any trade union or
association of trade unions or organization or body of
employees and there are no circumstances likely to give
rise to any such dispute.
6.19 Liabilities
- 17 -
6.19.1 Indebtedness
Save as may be reflected in the Accounts, the Company does not
have outstanding and has not agreed to create or incur loan
capital, borrowing or indebtedness in the nature of borrowing.
6.19.2 Guarantees and indemnities
(a) Save as disclosed in the Accounts, the Company is not a
party to and is not liable (including, without
limitation, contingently) under a guarantee, indemnity
or other agreement to secure or incur a financial or
other obligation with respect to another person's
obligation.
(b) Except otherwise disclosed, no part of the loan capital,
borrowing or indebtedness in the nature of borrowing of
the Company is dependent on the guarantee or indemnity
of, or security provided by, another person.
6.19.3 Events of default
No event has occurred or been alleged which:
(a) constitutes an event of default, or otherwise gives rise
to an obligation to repay, under an agreement relating
to borrowing or indebtedness in the nature of borrowing;
or
(b) will lead to an Encumbrance constituted or created in
connection with borrowing or indebtedness in the nature
of borrowing, a guarantee, an indemnity or other
obligation of the Company becoming enforceable (or will
do so with the giving of notice or lapse of time or
both).
6.19.4 SAFE registration
All loans made to the Company by overseas entities, if any,
have been disclosed and have been approved by and/or
registered with the State Administration of Foreign Exchange
or its local branch in accordance with China law, and all
other foreign currency indebtedness of the Company has been
approved by and/or registered with the State Administration of
Foreign Exchange or its local branch to the extent required by
China law.
6.20 Insolvency
No order has been made or application for bankruptcy presented to
the People's Court or resolution passed for the winding up of the
Company; no distress, execution or other process has been levied on
any of its assets; the Company has not stopped payment or become
unable to pay its debts or become insolvent under China law and the
Company has not applied for conciliation in order to settle its
debts; no liquidation committee has been appointed by the Company,
the People's Court or any other person for the
- 18 -
purpose of liquidating the business or assets of the Company or any
part thereof; no meeting of the creditors of the Company has been
held or is in prospect; no ruling declaring the bankruptcy of the
Company has been made and no public announcement in respect of the
same has been pronounced by the People's Court, and there is no
unfulfilled or unsatisfied judgment or order of the People's Court
outstanding against it; and there has been no delay by it in the
payment of any obligation due for payment.
6.21 Pensions and Benefits
Other than as otherwise expressly disclosed to Buyer, there are no
agreements, arrangements, schemes, customs or practices (whether
legally enforceable or not) in operation at the date of this
Agreement for the payment of or contributions towards any provident
fund, pensions, allowances, lump sums or other like benefits on
retirement or on death or during periods of sickness or disablement
for the benefit of any director or former director or employee or
former employee of the Company or for the benefit of the dependants
of any such persons other than pursuant to obligations prescribed by
applicable China labor laws and regulations, nor has any proposal
been announced to establish any such agreement or arrangement.
6.22 Litigation and Compliance with Law
6.22.1 Litigation
(a) To the knowledge of the Seller, neither the Company nor
a person for whose acts or defaults the Company may be
vicariously liable is involved, or has during the two
years ending on the date of this Agreement been
involved, in a civil, criminal, arbitration,
administrative or other proceeding in any jurisdiction.
No civil, criminal, arbitration, administrative or other
proceeding in any jurisdiction is pending or threatened
by or against the Company or a person for whose acts or
defaults the Company may be vicariously liable.
(b) To the best of the knowledge of Seller, information and
belief, no fact or circumstance exists which might give
rise to a civil, criminal, arbitration, administrative
or other proceeding in any jurisdiction involving the
Company or a person for whose acts or defaults the
Company may be vicariously liable.
(c) There is no outstanding judgment, order, decree,
arbitral award or decision of a court, tribunal,
arbitrator or governmental agency in any jurisdiction
against the Company or a person for whose acts or
defaults the Company may be vicariously liable.
6.22.2 Compliance with law
- 19 -
The Company has conducted its business and dealt with its
assets in all material respects in accordance with all
applicable PRC laws and regulations.
6.22.3 Investigations
There is and has been no governmental or other investigation,
enquiry or disciplinary proceeding concerning the Company in
any jurisdiction and none is pending or threatened. To the
best of the knowledge of Seller, information and belief, no
fact or circumstance exists which might give rise to an
investigation, enquiry or proceeding of that type.
6.23 Constitution
6.23.1 The Articles of Association were duly executed and delivered
by the parties thereto and are legally valid, binding and
enforceable in accordance with their respective terms. There
is no circumstance which would give rise to the early
termination of the Articles of Association or the term of
operation of the Company as stated in its business license and
no order or petition has been made or presented.
6.23.2 The Company is operating and has always operated its business
in all respects in accordance with the Articles of Association
and its business license.
6.23.3 The Company is not, and will not be, liable to any fine,
penalty or other sanction (including any liability to the Tax
Authority) to make payment or repayment of any Tax as a result
of any breach by the Company of its obligations under this
Agreement.
6.24 Brokerage or Commissions
No one is entitled to receive from the Company any finder's fee,
brokerage or commission in connection with this Agreement or
anything contained in it.
6.25 Foreign Exchange
There is no event which would render the Company liable to any fine,
penalty or other sanction (including revocation of its business
license) as a result of any breach of the foreign exchange
regulations of China.
7. BUYER'S REPRESENTATIONS AND WARRANTIES
7.1 Buyer hereby represents and warrants to Seller, as of the date
hereof and as of the Closing Date as though such representations and
warranties were made at the Closing Date, as follows:
7.1.1 Buyer is a company duly existing under the laws of Barbados,
has the power and authorization necessary to execute and
implement
- 20 -
this Agreement, and has taken all corporate actions necessary
to authorize the execution of this Agreement and
implementation of all obligations under this Agreement,
including obtaining all relevant approvals from the competent
authorities of Buyer's country approving Buyer's purchase of
the Equity Interests for Sale (if such approval is required by
the local law).
7.1.2 This Agreement and the Joint Venture Contract shall each
constitute effective and binding obligations of Buyer.
Compliance with the terms and conditions of this Agreement
will not be inconsistent with or violate any agreement or
contract to which Buyer is a party or any provisions of the
Articles of Association of Buyer, and will not be in violation
of any order, law or regulation, judgment or decree issued by
any court, governmental organization or other regulatory body
to which Buyer is a party or bound by, nor require Buyer or
any Affiliates of Buyer to obtain consent or approval from any
government body, supervising body or other organizations
(other than such bodies or organizations in China), or issue
notices to or register with any of the aforesaid bodies and
organizations;
7.1.3 No assets or businesses of Buyer and its subsidiaries, in part
or in whole, have been taken over, seized, detained, frozen,
auctioned and sold off, etc. by relevant government
departments, liquidation committee or court.
7.1.4 The Buyer has sufficient money to pay for all its obligations
hereunder.
8. INDEMNIFICATION
8.1 Seller and the Company shall give prompt notice to Buyer, and Buyer
shall give prompt notice to Seller and the Company, of (a) the
occurrence or non-occurrence of any event the occurrence or
non-occurrence of which could reasonably be expected to cause any
representation and warranty of such Party contained in this
Agreement to be untrue or inaccurate, and (b) any failure of Seller,
the Company or Buyer, as the case may be, to comply with or satisfy
any covenant or agreement to be complied with or satisfied by it
hereunder; provided however, that the delivery of any notice
pursuant to this 8.1 shall not limit or otherwise affect the
remedies available hereunder to the Party receiving such notice.
8.2 If after the execution hereof and before the Closing Date, Seller
shall have committed a breach of any of its representations and
warranties, covenants or agreements contained herein, Seller shall
promptly notify Buyer of such breach pursuant to Article 8.1. Upon
receipt of such written notice from Seller, either Buyer or Seller
may request the other Party to convene a meeting to communicate the
facts and circumstances surrounding the breach, determine the
materiality of the breach, and seek a mutual agreement for the
resolution of the breach. If the Parties are able to reach an
agreement with respect to the resolution of the breach, then the
Parties shall proceed in accordance with such agreement and enter
into any amendment or
- 21 -
supplement to this Agreement as may be necessary. If the Parties do
not reach an agreement with respect to the resolution of the breach,
then the provisions of Article 8.3 shall apply.
8.3 Unless otherwise agreed by Seller and Buyer, if Seller is in breach
of any of its representations and warranties, covenants or
agreements contained herein giving rise to a Buyer's Relevant Claim,
Buyer may seek compensation from Seller for all losses, liabilities
and damages incurred by Buyer, including but not limited to any
relevant interest, fine, expenditure and reasonable legal expenses,
by promptly notifying Seller of the assertion of a Relevant Claim in
respect of which indemnity may be sought hereunder, but failure to
give such notice shall not relieve Seller of any liability hereunder
(unless Seller has suffered material prejudice by such failure).
8.4 If after the Closing, Buyer discovers a breach by Seller of its
representation and warranty, covenant or agreement contained herein,
then Buyer may assert a Relevant Claim and seek compensation from
Seller for all losses, liabilities and damages incurred by Seller,
including but not limited to any relevant interest, fine, and
expenditure.
8.5 If this Agreement is terminated pursuant to Article 11.1 hereof,
each Party shall take all necessary or appropriate actions to return
the Company to the situation before the execution hereof, including
but not limited to application to relevant PRC governmental
authorities for the cancellation or revocation of the approvals of
transactions contemplated hereunder.
9. CONFIDENTIALITY
9.1 Except as otherwise specifically provided in this Article 9.1, no
Party shall divulge, disclose or communicate, or permit to be
divulged, disclosed or communicated, to any unaffiliated third party
in any manner, directly or indirectly, any Confidential Information,
and each Party shall ensure that their respective Affiliates,
officers, directors, employees (including, without limitation,
individuals seconded thereto), agents and contractors (collectively
"REPRESENTATIVES") do not divulge, disclose or communicate, or
permit to be divulged, disclosed or communicated, to any
unaffiliated third party in any manner, directly or indirectly, any
Confidential Information. Confidential Information shall remain the
exclusive and sole property of the relevant disclosing party (the
"PROTECTED PARTY") and shall be promptly returned upon the request
of the Protected Party.
9.2 The Parties shall only disclose or permit to be disclosed
Confidential Information to those of their respective
Representatives who have a need to know such Confidential
Information (and then shall only disclose such portion of the
Confidential Information as is necessary) in order to consummate the
transactions contemplated herein and to establish or conduct the
Company's business and operations in the ordinary course. Each Party
shall advise its Representatives of the confidentiality provisions
hereunder, and shall be responsible to the Protected Party for any
non-compliance by any such Representative.
- 22 -
9.3 In the event that any Party, or any of its Representative is
required by applicable law or is validly ordered by a governmental
entity having proper jurisdiction to disclose any Confidential
Information, the affected party shall, as soon as possible in the
circumstances, provide the Protected Party with prompt prior written
notice of the disclosure request or requirement, and, if requested
by the Protected Party, shall furnish to the Protected Party an
opinion of legal counsel that the release of all such Confidential
Information is required by applicable law. The proposed disclosing
party shall seek, with the reasonable cooperation of the Protected
Party if necessary, a protective order or other appropriate remedy
and shall exercise best efforts to obtain assurances that
confidential treatment will be accorded to any Confidential
Information disclosed.
9.4 The Parties shall take all other necessary, appropriate or desirable
actions to preserve the confidentiality of the Confidential
Information.
10. EXPENSES
10.1 Unless otherwise agreed upon herein, all Parties shall bear all of
its expenses incurred in the negotiation, preparation, execution and
performance hereof and the documents as mentioned herein.
10.2 Each of the Parties shall be responsible for its own Tax liability
arising from the Transaction. In the event where Buyer or the
Company is required to withhold Tax payable by Seller in China, the
Parties shall agree to set-off the amount of such Tax from the
Transaction Price payable to Seller. Buyer and Seller further agree
that any stamp duty payable in China shall be borne by them equally.
11. TERMINATION
11.1 This Agreement may be terminated at any time prior to the Closing:
11.1.1 by the mutual written consent of Buyer and Seller;
11.1.2 by Buyer or Seller if the Closing shall not have occurred by
the end of the twelve-month period from the date of this
Agreement or such other later date as the Parties may agree in
writing; provided however that the right to terminate this
Agreement under this Article 11.1.2 shall not be available to
any Party whose action or failure to act has been a principal
cause of or resulted in the failure of the Closing to occur on
or before such date and such action or failure to act
constitutes a breach of this Agreement;
11.1.3 by Buyer or Seller if (i) there shall be a final
non-appealable order of a court of competent jurisdiction in
effect preventing consummation of the Closing or the
transactions contemplated herein, or (ii) there shall be any
law, rule, regulation or order enacted or issued by any
governmental body that would make consummation of the Closing
illegal;
- 23 -
11.1.4 by Buyer if Buyer is not in material breach of its
obligations under this Agreement and there has been a breach
of any representation and warranty, covenant or agreement of
Seller or regarding the Company contained in this Agreement
such that any of the Transaction Preconditions set forth in
Article 4 would not be satisfied and such breach has not been
cured within twenty (20) Business Days after written notice
thereof to Seller or the Company; provided however that no
cure period shall be required for a breach which by its nature
cannot be cured; or
11.1.5 by Seller if Seller is not in material breach of its
obligations under this Agreement and there has been a breach
of any representation and warranty, covenant or agreement of
Buyer contained in this Agreement such that any of the
Transaction Preconditions set forth in Article 4 would not be
satisfied and such breach has not been cured within twenty
(20) Business Days after written notice thereof to Buyer;
provided however that no cure period shall be required for a
breach which by its nature cannot be cured.
11.2 In the event of the termination of this Agreement in accordance with
Article 11.1, nothing in this Article 11 shall be deemed to release
any Party from any liability for any breach of any obligation under
this Agreement prior to the termination hereof.
12. FORCE MAJEURE
12.1 A "Force Majeure Event" shall mean any event, circumstance or
condition that (i) directly or indirectly prevents the fulfillment
of any material obligation set forth in this Agreement, (ii) is
beyond the reasonable control of the respective Party, and (iii)
could not, by the exercise of reasonable care, have been avoided or
overcome in whole or in part by such Party. Subject to the
aforementioned items (i), (ii) and (iii), Force Majeure Event
includes, but is not limited to, natural disasters such as acts of
God, earthquake, windstorm and flood, terrifying events such as war,
terrorism, civil commotion, riot, blockade or embargo, fire,
explosion, off-stream or strike or other labor disputes, epidemic
and pestilence, material accident or by reason of any law, order,
proclamation, regulation, ordinance, demand, expropriation,
requisition or requirement or any other act of any governmental
authority, including military action, court orders, judgments or
decrees.
12.2 Should any Party be prevented from performing the terms and
conditions of this Agreement due to the occurrence of a Force
Majeure Event, the prevented Party shall send notice to the other
Parties within fourteen (14) days from the occurrence of the Force
Majeure Event stating in the details of such Force Majeure Event.
12.3 Any delay or failure in performance of this Agreement caused by a
Force Majeure Event shall not constitute a default by the prevented
Party or give rise to any claim for damages, losses or penalties.
Under such circumstances, the Parties are still under an obligation
to take reasonable measures to perform
- 24 -
this Agreement, so far as is practical. The prevented Party shall
send notice to the other Parties as soon as possible of the
elimination of the Force Majeure Event, and confirm receipt of such
notice.
12.4 Should the Force Majeure Event continue to delay implementation of
this Agreement for a period of more than three (3) months, the
Parties shall, through consultations, decide whether to terminate or
modify this Agreement. Should the Force Majeure Event continue for a
period of six (6) months or longer, any Party may terminate this
Agreement by giving written notice to the other Parties. In the
event of the termination of this Agreement, without limiting the
Purchaser's right to claim all obligations of the Seller under this
Agreement, the Purchaser shall, unless otherwise expressly stated,
cease to enjoy and assume all rights and liabilities hereunder, but,
for the avoidance of doubt, all rights and liabilities of the
Parties which have accrued before termination shall continue to
exist.
13. GOVERNING LAW AND DISPUTE RESOLUTION
13.1 The formation of this Agreement, its validity, interpretation,
execution and any performance of this Agreement, and the settlement
of any Disputes hereunder, shall be governed by published and
publicly available laws, rules and regulations of the PRC, the
applicable provisions of any international treaties and conventions
to which the PRC is a party, and, if there are no published or
publicly available PRC laws, rules or regulations, or treaties or
conventions governing a particular matter, by general international
commercial practices.
13.2 Any and all disputes, controversies or claims (the "Dispute")
arising out of or relating to the formation, validity,
interpretation, implementation or termination of this Agreement, or
the breach hereof or relationships created hereby shall be settled
through friendly consultations. If a Dispute is not resolved through
friendly consultations within thirty (30) days from the date a Party
gives the other Parties written notice of a Dispute, then it shall
be resolved exclusively and finally by arbitration in Hong Kong at
the Hong Kong International Arbitration Center ("HKIC") in
accordance with the arbitration rules of the HKIC (the "HKIC Rules")
for the time being in force which rules are deemed to be
incorporated by reference to this clause.
13.3 Any arbitration shall be heard before a tribunal consisting of three
(3) arbitrators. Each side of the Dispute shall appoint one (1)
arbitrator. The two arbitrators thus appointed shall choose the
third arbitrator who will act as the presiding arbitrator of the
tribunal. If the two arbitrators have not agreed on the choice of
the presiding arbitrator, the presiding arbitrator shall be
appointed by the Chairman of the HKIC. The language of the
arbitration shall be Chinese and English. The arbitration shall be
final and binding on the Parties, shall not be subject to any
appeal, and the Parties agree to be bound thereby and to act
accordingly. The award of the arbitrators may be enforced by any
court having jurisdiction to do so. Throughout any dispute
resolution and arbitration proceedings, the Parties shall continue
to perform this Agreement, to the extent practical, with the
exception of those parts of this Agreement that are under
arbitration. Except as otherwise determined by the arbitration
tribunal, each Party shall be responsible for its expenses incurred
in
- 25 -
connection with resolving any Dispute, but the arbitration fees
shall be borne by the losing side of the Dispute.
13.4 Notwithstanding any other provision of this Agreement, each Party
acknowledges that a breach of confidentiality as provided in Article
9 or other obligations under this Agreement may result in
irreparable harm and damage to the affected Party and its Affiliates
in an amount that is difficult to ascertain and that cannot be
adequately compensated by a monetary award. Accordingly, in addition
to any other relief to which the affected Party and its Affiliates
may be entitled, such Party shall be entitled to temporary and/or
permanent injunctive relief from any breach or threatened breach by
the relevant Party without proof of actual damages that have been or
may be caused to such Parties by such breach or threatened breach.
14. MISCELLANEOUS
14.1 This Agreement is written and executed in a Chinese version and in
an English version. In case of any discrepancy between the Chinese
version and the English version, the Chinese version approved by the
Examination and Approval Authority shall prevail.
14.2 No delay on the part of any Party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof,
nor shall any waiver on the part of any Party of any right, power or
privilege hereunder, nor any single or partial exercise of any
right, power or privilege hereunder, preclude any other or other
exercise thereof hereunder. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies that
any Party may otherwise have.
14.3 All notices or other communications under this Agreement shall be in
writing and shall be delivered or sent to the correspondence
addresses or facsimile numbers of the Parties set forth below or to
such other addresses or facsimile numbers as may be hereafter
designated in writing on seven (7) days' notice by the relevant
Party. All such notices and communications shall be effective: (i)
when delivered personally; (ii) when sent by telex, telefacsimile or
other electronic means with sending machine confirmation; (iii) ten
(10) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) four (4) days
after deposit with a commercial overnight courier, with evidence of
delivery provided by the courier.
Seller Address: Xx 00, Xxxxx Xxx Xxxx Xxxx, Xxxxxxxxx Xxxx,
Xxxxxxxx Xxxxxxxx, PRC
Tel: (00-000) 0000 000
Fax: (00-000) 0000 000
Attn: Zhang Jun Quan
Buyer Address: Xxxxxxxx Xxxxx, Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx, W.I.
Tel: 0 (000) 000-0000
Fax: 0 (000) 000-0000
Attn: Xxxxxx X. Xxxx
- 26 -
Company Address: Xxxxx Xxxx Road, Rongcheng City, Shandong
Province, PRC
Tel: (00-000) 0000000
Fax: (00-000) 0000000
Attn: Xxx Xxx Bao
14.4 If any provision of this Agreement should be or become fully or
partially invalid, illegal or unenforceable in any respect for any
reason whatsoever, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be
affected or impaired thereby.
14.5 This Agreement, together with its Appendix which are hereby
incorporated by reference as an inseparable and integral part of
this Agreement, constitutes the entire agreement among the Parties
with reference to the subject matter hereof, and supersede any
agreements, contracts, representations and understandings, oral or
written, made prior to the signing of this Agreement.
14.6 No amendment or modification of this Agreement, whether by way of
addition, deletion or other change of any of its terms, shall be
valid or effective unless a variation is agreed to in writing and
signed by authorized representatives of each of the Parties.
14.7 No Party shall, without the prior written consent of the other
Parties, transfer or assign any of its right hereunder.
14.8 This Agreement is executed in nine (9) original counterparts, each
of which shall have equal effect in law.
14.9 Unless already performed before the Closing or otherwise stipulated
herein, the obligations and liabilities as specified herein shall
continue to be effective after the Closing.
- 27 -
IN WITNESS WHEREOF, each of the Parties has executed this Agreement or has
caused this Agreement to be executed by its duly authorized officer or officers
as of the date first above written.
SELLER:
CHENGSHAN GROUP COMPANY LIMITED
By: _______________________________
Name: [-]
Title: [-]
Nationality: [-]
PURCHASER:
CTB (BARBADOS) INVESTMENT CO. LTD
By: _______________________________
Name: Xxxxxx X. Xxxxxx
Title: President
Nationality: USA
COMPANY:
RONGCHENG CHENGSHAN STEEL CORD CO., LTD.
By: _______________________________
Name: [-]
Title: [-]
Nationality: [-]
- 28 -
APPENDIX 1
DEFINITIONS AND INTERPRETATION
"ACCOUNTS" The audited financial statements of the Seller
(including, without limitation, a balance sheet,
profit and loss statement and cash flow statement
together in each case with the notes thereon) made
up to the Accounts Date and for the financial
period from January 1, 2005 to the Accounts Date
prepared in accordance with relevant PRC laws and
regulations, the Chinese GAAP, and in manner
consistent with past practice
"ACCOUNTS DATE" shall mean the date of Closing
"AFFILIATE" shall mean, with respect to any Person, any other
Person controlling or controlled by or under
common control with such specified Person. For
purposes of this definition, "control" when used
with respect to any specified Person means the
power to direct the management and policies of
such Person, directly or indirectly, whether
through the ownership of shares, registered
capital or voting securities, by contract or
otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the
foregoing.
"ARTICLES OF ASSOCIATION" shall mean the Articles of Association of the
Company as modified from time to time;
"ARTICLES OF ASSOCIATION OF shall mean the Articles of Association of the New
THE NEW COMPANY" Company signed by Seller and Buyer on the
execution date of this Agreement;
"BUSINESS DAY" shall mean all days except Saturday, Sunday
and legal public holidays in (i) China, or (ii)
U.S.A.;
"CHINESE GAAP" shall mean the general accepted accounting
principles applicable in China, consistently
applied;
"CLOSING" shall mean the completion of the sale and purchase
of the Equity Interests for Sale in accordance
with the terms and conditions of this Agreement;
"CLOSING DATE" shall mean the date mutually agreed by both
Parties subsequent to the condition that Article
4.1 is satisfied;
"CONFIDENTIAL INFORMATION" shall mean the terms of this Agreement and all
technical, financial, business, commercial,
operational and strategic information and data,
know-how, trade
- 29 -
secrets and any analysis, amalgamation, market
studies or compilation, whether written or
unwritten and in any format or media, concerning,
directly or indirectly, the business of a Party,
which has been delivered or furnished by a Party,
or any of its Representative, to another Party, or
any of its Representative, but shall not include
any information that: (a) at the time of
disclosure is (or thereafter becomes) generally
available to the public through no act of any
Person in violation of a confidentiality
obligation or applicable law; or (b) the receiving
Party has obtained lawfully from an independent
source not subject to a confidentiality
obligation; or (c) the receiving Party can prove
was known to it or to its Representatives prior to
the receipt of such information from the
disclosing Party; or (d) is independently
developed by the receiving Party without any
access to or knowledge of such information.
"ENCUMBRANCE" shall mean a mortgage, charge, pledge, lien,
option, restriction, right of first refusal, right
of pre-emption, third party right or interest,
other encumbrance or security interest of any
kind, or any type of preferential arrangement
(including, without limitation, a title transfer
or retention arrangement) having similar effect;
"EQUITY INTERESTS FOR SALE" shall mean the equity interest accounting for 25%
of the registered capital of the Company that
Seller shall sell to Buyer in accordance with
Article 2 of this Agreement;
"EVENT" shall mean any event, action or omission,
including but not limited to collection or
generation of income, profit or benefit,
distribution, non-distribution, acquisition,
disposal, transfer, payment, borrowing or advance
payment;
"INTELLECTUAL PROPERTY RIGHT" shall mean:
(a) rights in patent, trademark, service logo,
registered pattern, trade name or company
name, copyright, technical know-how,
design and invention;
(b) Rights in connection to Paragraph (a)
above obtained through license;
"JOINT VENTURE CONTRACT" shall mean the Joint Venture Contract of the New
Company, i.e. the joint venture contract of the
New Company entered into by Seller and Buyer on
the date of this Agreement;
- 30 -
"LAND DOCUMENTS" shall have the meaning ascribed to such term
defined in Article 6.13 hereof;
"MATERIAL" shall mean, unless otherwise provided in specific
Articles, any event involving an amount of
[US$500,000] or more, or any event that has or
could be reasonably expected to have Material
Adverse Effect (defined below);
"MATERIAL ADVERSE EFFECT" shall mean, with respect to the Company, Seller or
Buyer, as the case may be, any change, event,
violation, inaccuracy, circumstance or effect (any
such item, an "EFFECT") that, individually or when
taken together with all other Effects that have
occurred during the applicable measurement period
prior to the date of determination of the
occurrence of the Material Adverse Effect, is or
is reasonably likely to be materially adverse to
(i) the business, capitalization, financial
condition or results of operations of the Company,
Seller or Buyer, as the case may be, taken as a
whole or (ii) materially impede the ability of the
Company, Seller or Buyer, as the case may be, to
consummate the transactions contemplated by this
Agreement;
"MATERIAL AGREEMENTS" shall mean any existing and effective agreements
involving an amount of [US$500,000] or above
including without limitation any loan or guarantee
agreements that are being performed by the Company
as contract party (if applicable) on the day when
this Agreement is signed, or any other agreements,
of which any default, event of default or breach
could reasonably be expected to invoke or trigger
default, event of default or breach under other
Material Agreements;
"NEW BUSINESS LICENSE" The new business license of the Company as issued,
amended or replaced, as the case may be, by the
Registration Authority to indicate the Company
being converted into and registered as a
Sino-foreign equity joint venture;
"NEW COMPANY" shall mean the Company upon registration as a
Sino-foreign equity joint venture;
"ORDINARY COURSE OF BUSINESS" shall mean, with respect to any entity, the
ordinary course of business of such entity and its
subsidiaries, taken as a whole, consistent with
such entity's past practice;
"PERSON" shall mean any individual, company, legal person
enterprise, non-legal person enterprise, joint
venture,
- 31 -
partnership, wholly owned entity, unit, trust or
other entity or organization, including, without
limitation, any government or political
subdivision or any agency or instrumentality of a
government or political subdivision and other body
corporate or unincorporated; Person also includes
a reference to that Person's legal
representatives, assignees, successors or heirs.
"PRC" OR "CHINA" shall mean the People's Republic of China.
"PROPERTY" shall have the meaning ascribed to such term
defined in Article 6.13 hereof;
"REGISTRATION AUTHORITY" The State Administration of Industry and Commerce,
or its local division or any successor government
institution or agency empowered to issue a
Business License to the Buyer;
"RELEVANT CLAIMS" shall mean any claims or payment requests
involving or concerning the breach of any
provision of this Agreement asserted by Buyer in
accordance with or based on this Agreement;
"REPRESENTATIVES" shall have the meaning ascribed to such term in
Article 9.1 hereof;
"REQUIRED APPROVALS" shall have the meaning ascribed to such term
defined in Article 4.5 hereof;
"SELLER'S REPRESENTATIONS AND shall mean any one of the representations or
WARRANTIES" warranties of Seller set forth in Article 6, and
"each Seller's Representations and Warranties"
referring to all those representations and
warranties;
"TAX AUTHORITIES" refers to Chinese government, provinces,
municipalities and autonomous regions and other
authorities of finance, taxation and customs
administration;
"TAXES" shall mean all taxes, charges, withholdings and
levies, however denominated, that are levied by or
payable to the Tax Authorities (including but not
limited to any related fines and interests);
"TRANSACTION PRECONDITIONS" shall mean the transaction preconditions listed in
Article 4, and "each Transaction Precondition"
shall mean all of such Transaction Preconditions;
"TRANSACTION PRICE" shall have the meaning ascribed to such term
defined in Article 3.1 hereto.
- 32 -
