STRICTLY PRIVATE AND CONFIDENTIAL
4 February 2004
DF China Technology Inc.
Unit 3207-08 West Tower
Shun Tak Centre
168-200 Connaught Road Central
Attention: Mr. Aaron Zhu
INTRODUCTION OF POTENTIAL INVESTORS TO DF CHINA TECHNOLOGY INC.
This letter serves as an agreement (the "Agreement") between Quam Securities
Company Limited ("Quam") and DF China Technology Inc. (the "Company") pursuant
to which the Company agrees to appoint Quam as the arranger, on a best effort
basis, to source potential investors in respect of a placing of new shares in
the capital of the Company (the "Proposed Transaction").
The countersigning of this letter of agreement by an authorized signatory of
Quam and the Company is intended to form legally binding obligations on the two
parties and shall constitute an acceptance by the Company of the terms and
conditions set out below:
The securities of the Company are listed on NASDAQ in the US. The Company
is now seeking a new equity funding of not exceeding US$5 million to
finance its business development in future. The issue price per share is
intended to be US$0.2 per share.
2. Scope of Services to be provided
Under this Agreement, Quam accepts the responsibilities of acting as the
arranger to the Company in relation to the Proposed Transaction. The
services to be provided by Quam as the arranger will include the
(i) to seek potential investors for the Proposed Transaction on behalf
of the Company; and
(ii) to liaise and co-ordinate between the management and the Company and
potential investors as required; and
(iii) to assist in the negotiations with potential investors.
3. The Company's Responsibilities
(i) to obtain a valid board resolution of the Company authorizing the
appointment of Quam as the arranger in respect of the Proposed
(ii) to provide Quam will all relevant information regarding the Company
that Quam may reasonably require to properly perform its duties as
set out herein provided that all such information has been publicly
(iii) to assist Quam personnel in the performance of their duties in
respect of the Proposed Transaction by providing full and frank
disclosure of all matters that bay be relevant to the Proposed
Transaction provided that all such information has been publicly
4. Commencement of Assignment
Quam proposes to commence its duties and responsibilities upon acceptance
and countersignature and return of this Agreement.
The fee payable to Quam in connection with the Proposed Transaction to be
provided shall be HK$200,000. Such fee shall be payable upon completion of
the Proposed Transaction and may be deducted by Quam from the proceeds for
the Proposed Transaction if applicable.
The Company shall reimburse Quam upon demand for all out of pocket
expenses incurred by Quam in relation to the Proposed Transaction and
undertake to indemnify Quam the full amount if Quam were to incur any US
tax liabilities as a result for the provision of services to the Company
in respect of the Proposed Transaction. Fees payable for other
professional services engaged in relation to the Proposed Transaction and
their related out of pocket expenses shall be paid by the Company. All
commitments to any such expenses shall be discussed and agreed with the
Company prior to
such expenses being incurred. All such expenses shall remain due and
payable by the Company whether or not Quam continues to be the arranger
for the Proposed Transaction.
The Company hereby indemnifies and holds Quam harmless from and against
any and all losses, claims, damages or liabilities, incurred by Quam in
relation with the aforementioned services provided to the Company, save to
the extent that any such loss, claim, damage or liability arises as a
direct result of the willful default or negligence of Quam.
Save for the exception noted below, all information received concerning
the Company shall be kept strictly private and confidential by Quam. Such
information shall only be used in connection with the provision of
aforementioned services to the Company and shall not be disclosed to any
third parties and/or potential investors of the Company without the prior
consent or approval of the Company.
9. Termination Clause
In accordance with market practice, Quam reserves the right to resign from
this engagement by giving the Company 14 days' notice (taking account of
the circumstances of the case) in writing if there arise any
circumstances, including regulatory requirements both in Hong Kong and the
United States of America, which in the opinion of Quam, makes it
inadvisable for Quam to continue to act for the Company. Further, the
Company has the right to cancel the engagement with Quam by giving 14
days' notice. Quam accepts no liability whatsoever in relation to the
termination of engagement as a result of this clause.
10. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong Special Administrative Region of the People's Republic
11. Duration of Agreement and Continuity
The terms herein shall become effective upon signing of this letter by
both parties hereto and shall continue and remain in force until 31 March
2004, save that any outstanding fees payable to Quam shall remain payable
Please confirm your acceptance of the terms and conditions are acceptable of
this Agreement by countersigning and returning the attached copy letter.
For and on behalf of
QUAM SECURITIES COMPANY LIMITED
Agreed and Confirmed by:
For and on behalf of
DF CHINA TECHNOLOGY INC.