EXHIBIT 99.2
DATED THE 1ST DAY OF NOVEMBER 2004
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LI XXXXXXX
XXX XX
XXXX XXXXXX
(VENDORS)
and
HARTCOURT CAPITAL, INC.
(PURCHASER)
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AGREEMENT
FOR SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF BESTEFFORT
INVESTMENTS LIMITED
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THIS AGREEMENT is dated the 1st day of November 2005.
BETWEEN:
(1) XX XXXXXXX (Holder of PRC Passport Number X00000000) of Room 1409,
Shanghai Mart, Xx.0000, Xxx'xx Xxxx (Xxxx), Xxxxxxxx 000000, Xxxxxx'x
Xxxxxxxx xx Xxxxx ("XX. XX");
(2) XXX XX (Holder of PRC Passport Number X00000000) of Room 1409, Shanghai
Mart, Xx.0000, Xxx'xx Xxxx (Xxxx), Xxxxxxxx 000000, Xxxxxx'x Xxxxxxxx of
China ("MR. REN")
(3) XXXX XXXXXX (Holder of PRC Passport Number X00000000) of Room 1409,
Shanghai Mart, Xx.0000, Xxx'xx Xxxx (Xxxx), Xxxxxxxx 000000, Xxxxxx'x
Xxxxxxxx xx Xxxxx ("XX. XXXX", together with Xx. Xx and Xx. Xxx
collectively the "VENDORS");
(4) HARTCOURT CAPITAL, INC., a company incorporated in the British Virgin
Islands (Company Number : 400480) and having its office at 3rd Floor, 000
Xxxxxxxxx Xxxx, Xxxxxxxx 000000, Xxxxxx'x Xxxxxxxx xx Xxxxx ("PURCHASER");
WHEREAS:
(A) Besteffort Investments Limited (the "COMPANY") is a company with limited
liability incorporated in the British Virgin Islands and has as at the
date of this Agreement an authorised share capital of US$50,000 divided
into 50,000 shares of US$1.00 each, of which 10 Shares (as defined below)
have been issued and are fully paid or credited as fully paid. Brief
particulars of the Company are set out in Part I of SCHEDULE 1.
(B) Xx. Xx is the registered and beneficial owner of 3 Shares, Xx. Xxx is the
registered and beneficial owner of 4 Shares and Xx. Xxxx is the registered
and beneficial owner of 3 Shares, representing a total of 100% of the
issued share capital of the Company.
(C) Control Tech Company Limited ("CONTROL TECH") is a company with limited
liability incorporated in Hong Kong and has as at the date of this
Agreement an authorised share capital of HK$200,000 divided into 2,000
shares of HK$100 each, of which 2,000 shares have been issued and are
fully paid. Brief particulars of the Company are set out in Part II of
SCHEDULE 1.
(D) (Control Tech Electronics (Shanghai) Co., Ltd.) ("SHANGHAI CONTROL TECH")
is a sino-foreign equity joint venture established in the PRC with
registered capital of US$200,000, of which US$180,000 is invested by
Control Tech and US$20,000 is invested by Beijing Control Tech (as defined
below). Brief particulars of Shanghai Control Tech are set out in Part III
of SCHEDULE 1.
(E) The Vendors are procuring reorganisation of Control Tech to the effect
that the Company will become the legal and beneficial owner of the entire
issued share capital of Control Tech.
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(F) The Purchaser is a wholly-owned subsidiary of the Issuer (as defined
below).
(G) The Vendors have agreed to sell and the Purchaser has agreed to purchase
the Sale Shares (defined below) on the terms and conditions of this
Agreement.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. INTERPRETATION
1.1 In this Agreement (including the Recitals, Schedules and Annexures),
unless the context otherwise requires, the following words and expressions
shall have the following meanings ascribed to each of them below:
"AUDITOR" a certified public accountant acceptable
to the Purchaser to be appointed by the
Purchaser for conducting audit of the
Completion Accounts;
"AGREEMENT" this agreement for the sale and purchase
of the Sale Shares, as amended or
supplemented from time to time;
"BEIJING CONTROL TECH" Beijing Control Tech Co., Ltd., a
Company established in the PRC;
"BUSINESS DAY" a day (other than Saturdays and days on
which a tropic cyclone warning No.8 or
above or a rainstorm warning signal is
hoisted in Hong Kong at any time between
9:00 a.m. and 5:00 p.m.) on which banks
in Hong Kong are generally open for
transactions of normal banking business;
"COMPANY" has the meaning ascribed thereto in
Recital (A);
"COMPANIES ORDINANCE" the Companies Ordinance (Chapter 32 of
the Laws of Hong Kong);
"COMPLETION" completion of the sale and purchase of
the Sale Shares in accordance with the
terms and conditions of this Agreement;
"COMPLETION ACCOUNTS" collectively :
(a) the unaudited consolidated
balance sheet of the Company
as at the Completion Date; and
(b) the unaudited consolidated
profit and loss account of the
Company for the period from 1
January 2004 and ending on the
Completion Date,
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to be delivered by the Vendors to the
Purchaser on Completion;
"COMPLETION ACCOUNTS DATE" the Completion Date;
"COMPLETION DATE" the date on which satisfaction or waiver
of all the conditions set out in CLAUSE
3.1 shall occur;
"CONTROL TECH" has the meaning ascribed thereto in
Recital (C);
"CONSIDERATION" the total sum of RMB16.2 million payable
by the Purchaser to the Vendors for the
purchase of the Sale Shares pursuant to
CLAUSE 4;
"CONSIDERATION SHARES" 19,588,875 new Issuer Shares to be
issued and allotted by the Issuer,
credited as fully paid, at the Issue
Price as payment of the Consideration to
the Vendors pursuant to CLAUSE 4 in such
proportion as set opposite their
respective names in column (4) of
SCHEDULE 5 and in accordance with the
terms of this Agreement;
"DISCLOSED" any matter which has been fully and
fairly disclosed by the Vendors in this
Agreement and in the Vendors Disclosure
Letter for the purpose of qualifying the
Warranties;
"DISCLOSED CHARGES" in respect of the Properties, the
charges, mortgages or Encumbrances in
favour of independent third parties
which have been registered in the
relevant land registry in its place of
business and which remain, as at the
date of this Agreement and at
Completion, undischarged;
"EMPLOYMENT AGREEMENTS" collectively the employment agreements
or service contracts (as the case may
be), each of a term of 3 years, in the
approved terms to be entered into
between Xx. Xxxx and the persons of the
Key Management Team and the Company
and/or its subsidiaries (as the
Purchaser may direct) respectively and
to take effect on the Completion Date;
"ENCUMBRANCE" any mortgage, charge, pledge, lien
(otherwise than arising by statute or
operation of law), hypothecation or any
interest or equity or adverse claims of
any matter whatsoever of any person
(including without prejudice to the
generality of the foregoing, any right
to acquire, option or right of
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pre-emption) or other encumbrance,
priority or security interest, deferred
purchase, title retention, leasing,
sale-and-repurchase or
sale-and-leaseback arrangement or rights
of whatsoever nature over or in any
property or assets, including any
agreement for any of the same;
"GROUP" the Company and its subsidiaries
including Control Tech and Shanghai
Control Tech and "MEMBER(S) OF THE
GROUP" shall be construed as all or any
one of them;
"GUARANTEED FIRST YEAR" the financial period of the Company
commencing on the Completion Date and
ending 31 December 2005;
"GUARANTEED FIRST HALF YEAR the financial period of the Company
OF FIRST YEAR" commencing on the Completion Date and
ending 30 June 2005;
"GUARANTEED SECOND YEAR" the financial period of the Company
commencing 1 January 2006 and ending 31
December 2006;
"GUARANTEED THIRD YEAR" the financial period of the Company
commencing 1 January 2007 and ending 31
December 2007;
"HK$" Hong Kong dollars, the lawful currency
of Hong Kong;
"HONG KONG" the Hong Kong Special Administrative
Region of the PRC;
"INTELLECTUAL PROPERTY" all industrial and intellectual property
and right used or required by the
Company or Control Tech or Shanghai
Control Tech or any other member of the
Group or any third party (as the case
may be), including (without limitation)
patents, trade marks, service marks,
trade names, domain names, designs,
copyrights and the copyright in all
publications, drawings, plans,
specifications, designs and computer
software (including in each case any
application therefor) in any part of the
world and whether or not registered or
registerable and all know-how,
inventions, formulae, trade secrets,
confidential or secret processes and
information, computer programs and
software (including all documents
relating thereto) and any other
protected rights and assets, and any
licences and permissions in connection
therewith;
"ISSUE PRICE" US$0.10 per Consideration Share;
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"ISSUER" The Hartcourt Companies, Inc., a company
incorporated under the laws of the state
of Utah in the United States and whose
shares are listed on the OTCBB;
"ISSUER SHARES" shares of US$0.001 each in the share
capital of the Issuer;
"KEY MANAGEMENT TEAM" those persons whose names and
particulars are set out in SCHEDULE 4;
"LEASED PROPERTIES" the properties more particularly
described in Part II of SCHEDULE 2;
"OWNED PROPERTIES" the properties more particularly
described in Part I of SCHEDULE 2;
"OTCBB" the OTC Bulletin Board in the United
States;
"PRC" the People's Republic of China, which
for the purpose of this Agreement,
excludes Hong Kong;
"PROPERTIES" collectively the Leased Properties and
the Owned Properties;
"PURCHASER'S SOLICITORS" Xxxxxxx Xxxxx & Xxxxx;
"RMB" Renminbi, the lawful currency of the
PRC;
"RESTRICTED TRADING PERIOD" the period of three years from the
Completion Date and "FIRST RESTRICTED
YEAR" is the period commencing on the
Completion Date and ending 31 December
2005, "SECOND RESTRICTED YEAR" is the
period commencing 1 January 2006 and
ending 31 December 2006" and "THIRD
RESTRICTED YEAR" is the period
commencing 1 January 2007 and ending 31
December 2007 and "RESTRICTED YEAR(S)"
shall be construed as all or any one of
them;
"SALE SHARES" 10 Shares to be sold by the Vendors to
the Purchaser, being 100% of the issued
share capital of the Company as at the
date of signing of this Agreement and on
Completion;
"SECURITIES ACT" the U.S. Securities Act of 1933, as
amended;
"SHANGHAI CONTROL TECH" has the meaning ascribed thereto in
Recital (D);
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"SHARE(S)" share(s) of US$1 each in the share
capital of the Company;
"TAX INDEMNITY" the deed of indemnity to be given by the
Vendors in favour of the Purchaser and
the Group in the agreed form set out in
ANNEXURE 1;
"TAXATION" all forms of taxation whenever created
or imposed and whether in Hong Kong, PRC
or elsewhere and without limiting the
generality of the foregoing, includes
all forms of profits tax, interest tax,
salaries tax, property tax, estate duty,
stamp duty, sales tax, any provisional
tax, customs and import duty and any
amount equal to any deprivation of any
relief, allowance, set off, deduction in
computing profits or rights to repayment
of taxation granted by or pursuant to
any legislation concerning or otherwise
relating to taxation and also includes
in addition and without prejudice to the
foregoing, all fines, penalties, costs,
charges, expenses and interests relating
thereto;
"US$" United States dollars, the lawful
currency of the United States;
"UNITED STATES" the United States of America;
"VENDORS DISCLOSURE LETTER" the letter of the same date of this
Agreement from the Vendors to the
Purchaser in the approved terms; and
"WARRANTIES" the representations, warranties and
undertakings made or given by the
Vendors set out in CLAUSE 9 and SCHEDULE
3 and "WARRANTY" means any of such
representations, warranties and
undertakings.
1.2 The headings of this Agreement are inserted for convenience only and shall
be ignored in construing this Agreement.
1.3 Unless the context otherwise requires, references in this Agreement to the
singular shall be deemed to include references to the plural and vice
versa; references to one gender shall include all genders and references
to any person shall include an individual, firm, body corporate or
unincorporated.
1.4 References in this Agreement to clauses, schedules and annexures are
references to clauses, schedules and annexures of this Agreement and
references to sub-clauses and paragraphs are unless otherwise stated,
references to sub-clauses and paragraphs of the clause, sub-clause or, as
appropriate, the schedule or the annexure in which the reference appears.
1.5 Reference to a "SUBSIDIARY" shall be construed in accordance with section
2 of the Companies Ordinance.
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1.6 Reference to "IN THE APPROVED TERMS" means a document the terms of which
have been approved by or on behalf of the parties hereto.
1.7 Reference to any Ordinance, regulation or other statutory provision or
stock exchange rules in this Agreement includes reference to such
Ordinance, regulation, provision or rule as modified, consolidated or
re-enacted from time to time.
2. SALE AND PURCHASE OF SALE SHARES
--------------------------------
2.1 Subject to the terms and conditions of this Agreement, each of the Vendors
as beneficial owner of the relevant Sale Shares shall sell and the
Purchaser shall, relying on the warranties and indemnities herein
contained, purchase the Sale Shares, with full title guarantee with effect
from date of this Agreement free from all Encumbrances together with all
rights now or hereafter attaching thereto including but not limited to all
dividends paid, declared and/or made in respect thereof on or after the
date of this Agreement.
2.2 The Purchaser shall not be obliged to purchase any of the Sale Shares
unless the purchase of all of the Sale Shares is completed simultaneously.
3. CONDITIONS
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3.1 Completion is conditional upon:
(a) all the assets of a total value of not less than RMB6 million, which
the Purchaser shall in its sole and absolute discretion at any time
after signing of this Agreement request the Vendors to procure
transfers into Shanghai Control Tech, having been legally and
validly transferred to Shanghai Control Tech and such transfers
having been verified by the Purchaser or an auditor appointed by the
Purchaser;
(b) Shanghai Control Tech having been granted with all licences,
approvals and permits to operate manufacturing business in the PRC
from the relevant PRC government authorities;
(c) the Purchaser having completed its due diligence (including without
limitation, legal, financial and commercial aspects) in respect of
the Company and all members of the Group referred to in CLAUSE 3.3
below and the results of which are, in the absolute opinion of the
Purchaser, satisfactory and acceptable to the Purchaser in all
respects;
(d) the Purchaser having obtained a legal opinion issued by a lawyer
(acceptable to the Purchaser) qualified to practise PRC laws (which
form and contents are satisfactory and acceptable to the Purchaser
at its absolute discretion) confirming :
(i) due establishment of Shanghai Control Tech;
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(ii) legality of the business being carried by Shanghai Control
Tech;
(iii) validity of the licences, approvals and permits having
obtained by and granted to Shanghai Control Tech and there is
not any event which may cause suspension, forfeiture or
cancellation of such licences, approvals and permits;
(iv) the registered capital of Shanghai Control Tech having been
paid up by Control Tech and Beijing Control Tech;
(v) legality, enforceability and due completion of all agreements
which are necessary for the fulfillment of the condition
precedent mentioned in CLAUSES 3.1 (A);
(vi) legality and validity of the transfers of all the assets
mentioned in CLAUSES 3.1 (A) to Shanghai Control Tech;
(vii) Control Tech is the owner of 90% interest in Shanghai Control
Tech and such interest is free from all Encumbrances;
(viii) the joint venture agreement and the articles of association
of Shanghai Control Tech having been varied to the effect that
Shanghai Control Tech shall have 5 directors, 3 of them to be
nominated by Control Tech and 2 of them to be nominated by
Beijing Control Tech, and Control Tech shall be entitled to
nominate the chairman and the legal representative of Shanghai
Control Tech and such varied joint venture agreement and
varied articles of association having been (if applicable)
approved and registered by the relevant PRC government
authorities; and
(ix) other issues relating to Shanghai Control Tech which the
Purchaser at it sole discretion consider necessary;
(e) the Vendors having procured reorganisation of Control Tech to the
effect that the Company has become the legal and beneficial owner of
the entire issued share capital of Control Tech and such interest is
free from all Encumbrances;
(f) each person of the Key Management Team having duly entered into an
Employment Agreement;
(g) all necessary consents permits and approval (whether governmental,
regulatory or otherwise) as may be required in respect of this
Agreement and the transactions contemplated hereunder having been
obtained by the Company, Control Tech and/or Shanghai Control Tech;
(h) all necessary consents permits and approval (whether governmental,
regulatory or otherwise) as may be required in respect of this
Agreement and the transactions contemplated hereunder having been
obtained by the Purchaser;
(i) the board of directors of the Purchaser having approved this
Agreement and the transactions hereby contemplated;
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(j) no indication being received from the Securities and Exchange
Commission of the United States that the trading of the Issuer
Shares may be withdrawn or objected to; and
(k) the Vendors are not in material breach of the Warranties.
3.2 The Vendors shall procure the fulfillment of the conditions precedent
mentioned in CLAUSES 3.1 (A), (B), (C), (D), (E), (F), (G) AND (K) above
and shall keep the Purchaser fully informed of all their actions and
efforts in connection therewith.
3.3 In relation to CLAUSE 3.1(C), the Vendors shall give and shall procure
that the Purchaser and/or any persons authorised by it in writing will be
given such access to the premises and all books, documents, title deeds,
records, returns, approvals, correspondence and accounts of the Company
and all members of the Group and all such information relating to the
Company and all members of the Group as may be reasonably requested by or
on behalf of the Purchaser to undertake and conduct a full due diligence
(including but without limitation, in all legal, financial and commercial
aspects) against the Company and all members of the Group and be permitted
to take copies of any such books, documents, title deeds, records and
accounts and that the directors and employees of the Company and all
members of the Group shall be instructed to give promptly all such
information and explanations to any such persons as aforesaid as may be
requested by it or them. For the avoidance of doubt, such due diligence
shall not limit or otherwise qualify in any way the obligations and
liabilities of the Vendors under CLAUSE 12.
3.4 The Purchaser may in its sole and absolute discretion at any time by
notice in writing to the Vendors waive any of the conditions set out in
CLAUSES 3.1(A) TO (G) AND (K). In the event that :
(a) any of the conditions set out in CLAUSE 3.1 has not been satisfied
(or as the case may be, waived by the Purchaser) on or before 3:00
p.m. on 15 November 2004 or such later date as the Purchaser may in
its sole and absolute discretion agree in writing (but in any event
not later than 31 December 2004); or
(b) the Purchaser is not satisfied with the results of the due diligence
conducted according to CLAUSE 3.3 and the Purchaser informs the
Vendors in writing,
this Agreement shall cease and determine and the parties to this Agreement
shall not have any obligations and liabilities hereunder save for any
antecedent breaches of the terms hereof and save that all monies (if any)
paid by the Purchaser to the Vendors hereunder shall be repaid to the
Purchaser in full without any deduction forthwith.
4. CONSIDERATION
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4.1 The total consideration for the sale and purchase of the Sale Shares shall
be RMB16.2 million (or, if the parties so agree, its equivalent of any
other currency), which shall be satisfied in full by the Purchaser by
procuring the Issuer to issue and allot in favour of the Vendors or their
respective nominee(s) as any of them may direct in writing the relevant
number of the Consideration Shares, all credited as fully paid, at the
Issue Price and in the proportion set opposite the Vendors' respective
names in column (4) of SCHEDULE 5.
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4.2 The total number of Consideration Shares shall be an aggregate of
19,588,875 new Issuer Shares at the Issue Price of US$0.10 per
Consideration Share in the capital of the Issuer to be issued and
allotted, credited as fully paid, to the Vendors in accordance with the
terms and conditions of this Agreement. The conversion rate of RMB into
US$ shall be :
US$1.00 is equal to RMB8.27 (US$1.00 = (pound)*8.27)
4.3 The Vendors understand that the Consideration Shares will not be
registered under the Securities Act. The Vendors also understand that the
Consideration Shares are being issued and allotted pursuant to an
exemption from registration contained in the Securities Act based in part
upon the Vendors' representations contained in this Agreement. The Vendors
hereby represent, warrant and agree as follow:
(a) Vendors bear economic risk : the Vendors have substantial experience
in evaluating and investing in private placement transactions of
securities in companies similar to the Purchaser so that it is
capable of evaluating the merits and risks of its investments in the
Purchaser and have the capacity to protect its own interests. The
Vendors are able to bear the economic risk of this investment;
(b) Acquisition for own account : the Vendors are acquiring the
Consideration Shares for their respective own account for investment
only, and not with a view towards their distribution;
(c) Vendors can protect their interest : the Vendors represent that by
reason of their management, business or financial experience, the
Vendors have the capacity to protect their own interests in
connection with the transactions contemplated in this Agreement.
Further, the Vendors are aware of no publication of any
advertisement in connection with the transactions contemplated in
this Agreement;
(d) Company information : the Vendors have had an opportunity to discuss
the Purchaser's business, management and financial affairs with
directors, officers and management of the Purchaser and have had the
opportunity to review the Purchaser's operations and facilities. The
Vendors have also had the opportunity to ask questions of and
receive answers from the Purchaser and its management regarding the
terms and conditions of this investment;
(e) Rule 144 : the Vendors acknowledge and agree that the Consideration
Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available. The Vendors have been advised or are
aware of the provisions of Rule 144 promulgated under the Securities
Act, which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions;
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(f) Legends : The Vendors understand and agree that the Purchaser will
cause the legends set forth in ANNEXURE 2 or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing
ownership of the Consideration Shares, together with any other
legends that may be required by state or federal securities laws, or
by the Articles of Association and Bye laws of the Company, or by
any other agreement between the Vendors and the Purchaser or between
the Vendors and any third party:
(g) Refusal to Transfer : The Purchaser will not be required to (i)
transfer on its books any Consideration Shares that have been sold
or otherwise transferred in violation of any of the provisions of
this Agreement; or (ii) treat as owner of such Consideration Shares
or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such Consideration Shares have been so
transferred;
(h) The Purchaser understands that no public market now exists for the
Shares and that there are no assurances that a public market will
ever exist for the Shares; and
(i) The Purchaser is an "accredited investor" as defined by Rule 501(a)
of Regulation D under the Securities Act.
5. COMPLETION
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5.1 Completion shall take place at the Hong Kong office of the Purchaser's
Solicitors on the Completion Date at 3:00 p.m. (or at such other place and
time as the parties may agree in writing) when all the acts and
requirements set out in this CLAUSE 5 shall be complied with.
5.2 On Completion, the Vendors shall (as the case may be) deliver or procure
the delivery to the Purchaser all the following:
(a) the original of the relevant instruments of transfer in respect of
the transfer of the Sale Shares duly executed by the Vendors in
favour of the Purchaser or such other nominee(s) as the Purchaser
may direct and such other documents as may be required to give a
good and effective transfer of title to the Sale Shares to the
Purchaser or such nominee(s) and to enable the Purchaser or such
nominee(s) to become the registered and beneficial holder thereof
free from all Encumbrances to the Purchaser's satisfaction;
(b) the original of the definitive share certificates in respect of the
Sale Shares and other evidence as may be required by the Purchaser
showing that each of the Vendors is the beneficial owner of the
relevant Sale Shares free from all Encumbrances;
(c) copies, certified as true and complete by the chairman of the
Company, of the resolutions of the board of directors of the Company
approving the transfer of the Sale Shares to the Purchaser pursuant
to this Agreement and signing of the Tax Indemnity;
(d) copies, certified as true and complete by the chairman of the
Company or the directors of the relevant member(s) of the Group (as
the case may be), of resolutions of the shareholders meeting and/or
board of directors approving the matters as stipulated in CLAUSES
5.3, 5.4, 5.5 AND 5.6;
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(e) in respect of the Company and Control Tech :
(i) all statutory records and minute books (which shall be written
up to date as at Completion), all unissued share certificates
(if any) and all other statutory records then;
(ii) all common seals and all rubber stamps, cheque books, cheque
stubs and bank statements, receipt books, all current
insurance policies, books and accounts and title deeds and
evidence of ownerships to all assets and all current contracts
and all other accounting records;
(iii) all correspondence and other documents belonging to the
Company and/or Control Tech (including its constitutional
documents); and
(iv) such other documents as the Purchaser may reasonably request.
(f) in respect of Shanghai Control Tech (delivery at the office of
Shanghai Control Tech in the PRC or such other place as the parties
hereto may agree) :-
(i) all statutory records and minutes books (which shall be
written up to date as to Completion), and all other statutory
records then;
(ii) all company seals and stamps, cheque books, cheque stubs and
bank statements, receipt books, all current insurance
policies, books and accounts and title deeds and evidence of
ownerships to all assets and all current contracts and all
other accounting records;
(iii) correspondence and other documents belonging to the Shanghai
Control Tech; and
(iv) such other documents as the Purchaser may reasonably request;
(g) the original of the Tax Indemnity duly executed by the Vendors,
Control Tech and the Company;
(h) the original of the Employment Agreements duly entered into by the
persons of the Key Management Team, Xx. Xxxx and the Company and/or
its subsidiaries (as the Purchaser may direct) respectively;
(i) the Completion Accounts;
(j) the original of resignations duly executed under seal by each of the
existing directors and secretary of the Company and Control Tech (as
the case may be) to resign from their respective offices with effect
from the Completion Date and to confirm to the satisfaction of the
Purchaser that they have no claim against the Company and Control
Tech (as the case may be) for compensation for loss of office or
otherwise;
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(k) the original of resignations duly executed under seal by each of the
existing director(s) and (if applicable) the chairman and the legal
representative nominated by Control Tech and the supervisor(s) of
Shanghai Control Tech to resign from their respective offices with
effect from the Completion Date and to confirm to the satisfaction
of the Purchaser that they have no claim against Shanghai Control
Tech, Control Tech (as Shanghai Control Tech's holding company) and
the Company for compensation for loss of office or otherwise; and
(l) such other documents as the Purchaser may reasonably request.
5.3 On Completion, the Vendors shall procure a meeting of the shareholders
and/or Directors of the Company at which the following matters shall be
dealt with and resolved :-
(a) appointment of such persons as the Purchaser may nominate to be
directors and secretary of the Company with effect from the
Completion Date;
(b) amendment of all mandates to bankers of the Company in the manner
required by the Purchaser; and
(c) resignations of the existing directors of the Company and the
existing secretary of the Company as directors and secretary with
effect from the Completion Date.
5.4 On Completion, the Vendors shall procure a meeting of the shareholders
and/or Directors of Control Tech at which the following matters shall be
dealt with and resolved :-
(d) appointment of such persons as the Purchaser may nominate to be
directors and secretary of Control Tech with effect from the
Completion Date;
(e) amendment of all mandates to bankers of Control Tech in the manner
required by the Purchaser; and
(f) resignations of the existing directors of Control Tech and the
existing secretary of Control Tech as directors and secretary with
effect from the Completion Date.
5.5 On Completion, the Vendors shall procure that a meeting of the
shareholders and directors of Shanghai Control Tech at which the following
matters shall be dealt with and resolved:
(a) appointment of such persons as the Purchaser may nominate to be the
director(s) and (if applicable) the chairman, the legal
representative and the supervisor(s) of Shanghai Control Tech with
effect from the Completion Date;
(b) amendment of all mandates to bankers of Shanghai Control Tech in the
manner required by the Purchaser; and
(c) the resignation of the existing director(s), and (if applicable) the
chairman and the legal representative nominated by Control Tech and
the supervisor(s) of Shanghai Control Tech with effect from the
Completion Date.
5.6 On Completion, the Vendors shall procure that a meeting of the
shareholders and directors of other member(s) of the Group at which the
following matters shall be dealt with and resolved:
13
(a) appointment of such persons as the Purchaser may nominate to be the
directors, the chairman, the legal representative and the
supervisor(s) of such member of the Group with effect from the
Completion Date;
(b) amendment of all mandates to bankers of such member of the Group in
the manner required by the Purchaser; and
(c) the resignation of the existing directors (save and except the
director(s) not appointed by such member of the Group), the
chairman, the legal representative and the supervisor(s) of such
member of the Group with effect from the Completion Date.
5.7 Against performance of the obligations by the Vendors under CLAUSES 5.2,
5.3, 5.4, 5.5 AND 5.6, the Purchaser shall:
(a) deliver to the Vendors a certified copy of the directors'
resolutions of the Purchaser approving this Agreement; and
(b) pay to the Vendors the Consideration in accordance with CLAUSES 4
AND 6.1.
5.8 If the Vendors shall fail to do anything required to be done by them under
CLAUSES 5.2, 5.3, 5.4, 5.5 AND 5.6, without prejudice to any other right
or remedy available to the Purchaser, the Purchaser may:
(a) defer Completion to a day not later than 14 days after the date
fixed for Completion or such other period that the Purchaser deems
fit and appropriate (and so that the provisions of this paragraph
(a) shall apply to Completion as so deferred); or
(b) proceed to Completion so far as practicable but without prejudice to
the Purchaser's rights to the extent that the Vendors shall not have
complied with their obligations hereunder; or
(c) rescind this Agreement without liability on its part and all monies
paid by the Purchaser to the Vendors hereunder shall be repaid to
the Purchaser in full without any deduction forthwith.
5.9 CLAUSES 6, 7, 8, 9, 10, 11, 12, 15, 16, 17, 18, 19, 20, AND 21 shall
survive the Completion.
6. RESTRICTED TRADING PERIOD
-------------------------
6.1 The definitive share certificates for the Consideration Shares (issued in
board lots or an integral multiple thereof in such denomination as the
Vendors may direct in writing and in the names of the respective Vendors
(or their respective nominee(s) as any of them may direct in writing))
shall be issued to the Vendors on Completion and to be released by the
Purchaser to the Vendors in accordance with CLAUSE 6.2 below.
14
6.2 Each of the Vendors undertakes and agrees with the Purchaser that during
the Restricted Trading Period, the Vendors shall not and shall procure
their respective nominee or directed person receiving the relevant
Consideration Shares) shall not directly or indirectly transfer or
otherwise dispose of (or enter into any agreement to sell, transfer or
otherwise dispose of) or permit the registered holder to sell, transfer or
otherwise dispose of (or enter into any agreement to sell, transfer or
otherwise dispose of) or create (or enter into any agreement to create)
any rights over (including without limitation by the creation of any
option, charge or other encumbrance or rights over or in respect of) any
of the Consideration Shares or any interests therein owned by him (his
nominee or directed person receiving the relevant Consideration Shares) or
in which he (his nominee or directed person receiving the relevant
Consideration Shares) is, directly or indirectly, interested immediately
after the issuance of such Consideration Shares or dispose of (including
without limitation by the creation of any option, charge or other
encumbrance or rights over or in respect of) any shares in any company
controlled by him (his nominee or directed person receiving the relevant
Consideration Shares) which is the registered owner of the relevant
Consideration Shares Provided that :
(a) 43 percent of the Consideration Shares after adjustments in
accordance with CLAUSES 7.1.3, 7.1.4, 7.1.5 AND 7.1.6 (in the
proportion set opposite the Vendors' respective names in column (5)
of SCHEDULE 5) shall be released from the above trading restriction
and the definitive share certificates for such part of Consideration
Shares shall be released by the Purchaser to the respective Vendors
within 30 Business Days after the end of the First Restricted Year;
(b) 28.5 percent of the Consideration Shares after adjustments in
accordance with CLAUSES 7.1.3, 7.1.4, 7.1.5 and 7.1.6 (in the
proportion set opposite the Vendors' respective names in column (5)
of SCHEDULE 5) shall be released from the above trading restriction
and the definitive share certificates for such part of Consideration
Shares shall be released by the Purchaser to the respective Vendors
within 30 Business Days after the end of the Second Restricted Year;
and
(c) 28.5 percent of the Consideration Shares after adjustment in
accordance with CLAUSE 7.1.6 (in the proportion set opposite the
Vendors' respective names in column (5) of SCHEDULE 5) shall be
released from the above trading restriction and the definitive share
certificates for such part of Consideration Shares shall be released
by the Purchaser to the respective Vendors within 30 Business Days
after the end of the Third Restricted Year.
7. GUARANTEE
---------
7.1 VENDORS' GUARANTEE
7.1.1 Each of the Vendors jointly and severally guarantees and represents to the
Purchaser that :
(a) the consolidated net asset value of the Group as at the Completion
Date as shown in the audited Completion Accounts to be prepared in
accordance with CLAUSE 8 ("AUDITED COMPLETION NAV") shall not be
less than RMB6 million ("TARGET COMPLETION NAV");
15
(b) the audited net profit after tax of the Group for the Guaranteed
First Half Year of the Guaranteed First Year ("AUDITED FIRST HALF
YEAR PAT OF FIRST YEAR") shall be not less than RMB7.05 million
("TARGET FIRST HALF YEAR PAT OF FIRST YEAR");
(c) the audited net profit after tax of the Group for the Guaranteed
First Year ("AUDITED FIRST YEAR PAT") shall be not less than RMB11.1
million ("TARGET FIRST YEAR PAT");
(d) the audited net profit after tax of the Group for the Guaranteed
Second Year ("AUDITED SECOND YEAR PAT") shall be not less than
RMB9.4 million ("TARGET SECOND YEAR PAT"); and
(e) the audited net profit after tax of the Group for the Guaranteed
Third Year ("AUDITED THIRD YEAR PAT") shall be not less than RMB7.9
million ("TARGET THIRD YEAR PAT").
7.1.2 If the Audited Completion NAV is less than the Target Completion NAV, the
Vendors shall forthwith upon written demand by the Purchaser pay an amount
being the difference between the Audited Completion NAV and the Target
Completion NAV to the Purchaser (and the amount to be paid by the Vendors
shall be in the proportion as set opposite the Vendors' respective names
in column (5) of SCHEDULE 5).
7.1.3 If the Audited First Half Year PAT of First Year is less than the Target
First Half Year PAT of First Year, the Purchaser shall be entitled to
forfeit part of the Consideration Shares (to be valued on the basis of the
Issue Price) of a value equivalent to 1.5 times of the difference (in any
event not more than RMB3 million difference) between the Audited First
Half Year PAT of First Year and the Target First Half Year PAT of First
Year. The definitive share certificates of such forfeited Consideration
Shares (in the proportion as set opposite the Vendors' respective names in
column (5) of SCHEDULE 5) shall be cancelled by the Purchaser.
7.1.4 If the Audited First Year PAT is less than the Target First Year PAT, the
Purchaser shall be entitled to forfeit part of the Consideration Shares
(to be valued on the basis of the Issue Price) of a value equivalent to
0.75 times of the difference between the Audited First Year PAT and the
Target First Year PAT ("FIRST YEAR PAT DIFFERENCE") with the following
adjustments :
(a) if the Audited First Half Year PAT of First Year is less than the
Target First Half Year PAT of First Year, the First Year PAT
Difference shall be deducted by the difference (in any event not
more than RMB3 million difference) between the Audited First Half
Year PAT of First Year and the Target First Half Year PAT of First
Year ("FIRST HALF YEAR PAT DIFFERENCE"); and;
(b) if after deducting the First Half Year XXX Xxxxxxxxxx from the First
Year XXX Xxxxxxxxxx in accordance with CLAUSE 7.1.4(A) above, the
result is a negative figure, the Purchaser shall not be entitled to
forfeit any Consideration Shares under this CLAUSE 7.1.4..
16
The definitive share certificates of such forfeited Consideration Shares
(in the proportion as set opposite the Vendors' respective names in
column (5) of SCHEDULE 5) shall be cancelled by the Purchaser.
7.1.5 If the Audited Second Year PAT is less than the Target Second Year PAT,
the Purchaser shall be entitled to forfeit part of the Consideration
Shares (to be valued on the basis of the Issue Price) of a value
equivalent to the difference between the Audited Second Year PAT and the
Target Second Year PAT or the sum of the quantum of the loss and the
Target Second Year PAT (as the case may be). The definitive share
certificates of such forfeited Consideration Shares (in the proportion as
set opposite the Vendors' respective names in column (5) of SCHEDULE 5)
shall be cancelled by the Purchaser at the end of third year if the said
short fall is not made up in the third year.
7.1.6 If the total number of the Consideration Shares to be forfeited under
CLAUSES 7.1.3, 7.1.4 OR 7.1.5 exceed the respective number of the
Consideration Shares to be released under CLAUSES 6.2(A) AND 6.2(B), the
Purchaser shall have sole and absolute discretion to deduct from the
percentage of the Consideration Shares to be released in the subsequent
Restricted Year(s).
7.1.7 If the Audited Third Year PAT is less than the Target Third Year PAT,
part of the options to be granted to the Vendors (in the proportion as
set opposite the Vendors' respective names in column (5) of SCHEDULE 5)
shall be treated in the manner as stipulated in their respective
employment contracts or service contracts (as the case may be);
7.1.8 Each of the Vendors further jointly and severally guarantees and
represents to the Purchaser that :
(a) the audited net sales revenue after all taxes of the Group for the
Guaranteed First Half Year of First Year shall be not less than
RMB40.5 million;
(b) the audited net sales revenue after all taxes of the Group for the
Guaranteed Second Half Year of First Year shall be not less than
RMB40.5 million;
(c) the audited net sales revenue after all taxes of the Group for the
Guaranteed First Year shall be not less than RMB81 million;
(d) the audited net sales revenue after all taxes of the Group for the
Guaranteed Second Year shall be not less than RMB113 million; and
(c) the audited net sales revenue after all taxes of the Group for the
Guaranteed Third Year shall be not less than RMB135 million
and part of the options to be granted to the Vendors (in the proportion
as set opposite the Vendors' respective names in column (5) of SCHEDULE
5) shall be treated in the manner as stipulated in their respective
employment contracts or service contracts (as the case may be) in the
event there is breach of any provisions under this CLAUSES 7.1.8.
17
7.1.9 The parties hereto agree that the liquidated damages provided in this
CLAUSE 7.1 are a genuine pre-estimate of the losses likely to be suffered
by the Purchaser only in respect of a default by the Vendors of their
respective obligations specifically set out in this CLAUSE 7.1 AND shall
not prejudice the rights of the Purchaser to claim against the Vendors
for any loss and/or damages directly or indirectly incurred or suffered
by the Purchaser as a result of any breach of Warranties by the Vendors.
7.1.10 For the purpose of this CLAUSE 7.1, profit after tax of the Group shall
be determined by reference to the consolidated profits (less losses) of
the Group as shown by the audited consolidated account in relation to the
relevant period(to be prepared by the auditors of the Group) :-
(a) after deducting all expenses of working and management including,
without limitation, director's remuneration (whether by way of
fees, salary or commission) and depreciation;
(b) after deducting any taxation on profits;
(c) without taking into account profits or losses of a capital nature
arising on disposal of fixed assets, investments, plant or any
other assets of the Group; and
(d) after making such other adjustments as the auditors of the Group
consider appropriate.
7.1.11 Each of the Vendors jointly and severally guarantees and represents to
the Purchaser that Shanghai Control Tech will share expenses of Hartcourt
Capital, Inc. as a public listed company.
7.2. PURCHASER'S GUARANTEE
If the average closing price of each Issuer Share for the 20 trading days
immediately prior to the expiry of each of the First Restricted Year, the
Second Restricted Year and the Third Restricted Year respectively
("MARKET SHARE PRICE") is below US$0.10, then the Vendors may (but not
individually) at their collective and absolute discretion, within three
months from the issue of the audited consolidated accounts of the Company
for the relevant Restricted Year by notice in writing to the Purchaser,
request the Purchaser to procure the Issuer to issue and allot to the
Vendors additional new Issuer Shares. The number of additional new Issuer
Shares to be issued and allotted to the Vendors for that relevant
Restricted Year shall be calculated on the following basis and shared by
the Vendors in the proportion as set opposite the Vendors' respective
names in column (5) of SCHEDULE 5 :
Number of additional new Issuer Shares = (US$0.10 - Market Share Price) x
Number of Consideration Shares left after adjustments in Clause 7.1 for
the relevant Restricted Year / US$0.10
8. POST COMPLETION AUDIT
---------------------
8.1 At Completion, the Vendors shall deliver to the Purchaser the Completion
Accounts showing, among other, the amounts of the consolidated net asset
value of the Company (that is, including Control Tech and Shanghai
Control Tech) as at the Completion Date is not less than RMB6 million.
18
8.2 The Completion Accounts shall be:
(a) prepared on the same accounting bases, accounting and valuation
principles as the audited accounts of Control Tech adopted since
the date of its incorporation; and
(b) prepared in accordance with the Statements of Standard Accounting
Practice issued by the Hong Kong Society of Accountants, the
disclosure and other applicable requirements of the Companies
Ordinance.
8.3 Following Completion, the Company shall forthwith appoint the Auditor to
conduct an audit of the Completion Accounts by applying the same bases
and principles referred to in CLAUSE 8.2 and to issue the audited
Completion Accounts showing the amount of the consolidated net asset
value of the Company as at the Completion Date as soon as practicable
after Completion and in any event within 45 days from the Completion
Date, and dispatch copies of such audited Completion Accounts to the
Purchaser forthwith upon its issue.
8.4 The parties hereto agree that the decision of the Auditor and its
determination (if any) as to the amounts of the consolidated net asset
value of the Company shall be final and binding on the parties hereto and
the Auditor shall be deemed to act as an expert and not as arbitrator.
8.5 All costs of the Auditor in the preparation of the audited Completion
Accounts shall be borne by the Company solely.
9. VENDORS' PRE-COMPLETION UNDERTAKINGS
------------------------------------
9.1 Each of the Vendors jointly and severally covenants and undertakes that
prior to Completion, the Vendors shall procure that the Company, Control
Tech, Shanghai Control Tech and other member of the Group shall not (save
as contemplated by this Agreement and with prior written consent of the
Purchaser) :
(a) issue or agree to issue any shares, warrants or other securities
or loan capital or grant or agree to grant any option over or
right to acquire or convert into any share or loan capital or
otherwise take any action which might result in the Purchaser
acquiring on Completion a percentage interest in the Company lower
than that contemplated under this Agreement;
(b) incur any expenditure on capital account or enter into any option
in respect of any part of its assets;
(c) dispose of or agree to dispose of or grant any option in respect
of any part of its assets;
(d) borrow any money of the Company, Control Tech and Shanghai Control
Tech or make any payments out of or drawings on its bank
account(s) other than routine payments;
19
(e) enter into any long term, unusual or abnormal contract or
commitment;
(f) make any loan, advances or other credits to any third party;
(g) enter into any leasing hire purchase or other agreement or
arrangements for payment on deferred terms;
(h) declare make or pay any dividend or other distribution or do or
suffer anything which may render its financial position less
favorable than as at the date of this Agreement;
(i) grant or issue or agree to grant or issue any mortgages charges
debentures or other securities or give or agree to give any
guarantees, indemnities, surety or security;
(j) let or agree to let or otherwise part with possession or ownership
of the whole or any part of the Properties nor purchase, take on
lease or assume possession of any real property;
(k) make any change in the terms and conditions of employment or
pension benefits of any of its directors or employees or employ or
terminate (other than for good cause) the employment of any
person;
(l) permit any of its insurances to lapse or do anything which would
make any policy of insurance void or voidable;
(m) purchase or redeem any shares in the Company or any member of the
Group or provide financial assistance for any such purchase;
(n) in any other way depart from the ordinary course of its respective
day-to-day business either as regards the nature scope or manner
of conducting the same;
(o) alter any provisions of its memorandum or articles of association
or other constitutional documents;
(p) compromise, settle, release, discharge or compound any material
civil, criminal, arbitration or other proceedings or any material
liability, claim, action, demand or dispute or waive any right in
relation to any of the foregoing;
(q) voluntarily contravene or fail to comply with any material
obligation, statutory or otherwise;
(r) repay any loan or monies to the shareholders of the Company,
Control Tech, Shanghai Control Tech and/or other member of the
Group (except with prior written consent of the Purchaser); and
(s) do any act or thing which will have or which will reasonably be
expected to have a material and adverse effect on the financial
position or prospects of the Company or each member of the Group.
20
9.2 Each of the Vendors jointly and severally agrees to fully indemnify and
keep the Company, Control Tech, Shanghai Control Tech and/or the
Purchaser and its assignee fully indemnified on demand from and against
all losses, liabilities, damages, costs and expenses (including legal
expenses) which the Company, Control Tech, Shanghai Control Tech and/or
the Purchaser and its assignee may incur or sustain from or in
consequence of any liabilities of the Group, whether actual or contingent
including without limitation, the diminution of the value (including
without limitation, the net asset value or expected profits) of the
Group, arising from any act or omission or otherwise incurred on or
before the Completion Date.
10. WARRANTIES
----------
10.1 Each of the Vendors hereby jointly and severally represents and warrants
to the Purchaser that the Warranties are true and accurate in all
respects as at the date of this Agreement and will continue to be so up
to and including Completion and acknowledge that the Purchaser, in
entering into this Agreement, is relying on, inter alia, such Warranties.
For the avoidance of doubt, the liabilities and obligations of the
Vendors under the Warranties shall in no circumstances be lessened,
modified, relieved or otherwise reduced due to any actual or constructive
knowledge of the Purchaser of any facts or events relating to the
business, operations or otherwise of the Group, whether such knowledge is
gained in the course of the due diligence conducted under CLAUSE 3.3 or
otherwise.
10.2 Each of the Vendors jointly and severally agrees that the Purchaser shall
treat each of the Warranties as a condition of this Agreement. In
addition, each of the Warranties is without prejudice to any other
Warranty and, except where expressly otherwise stated, no provision in
any Warranty shall govern or limit the extent or application of any other
provision in any Warranty.
10.3 Each of the Vendors jointly and severally agrees to fully indemnify and
keep the Purchaser fully indemnified on demand from and against all
losses, liabilities, damages, costs and expenses (including legal
expenses) which the Purchaser may incur or sustain from or in consequence
of any of the Warranties not being correct or fully complied with. This
indemnity shall be without prejudice to any other rights and remedies of
the Purchaser in relation to any such breach of Warranties and all such
rights and remedies are hereby reserved.
10.4 The Warranties shall survive Completion and the rights and remedies of
the Purchaser in respect of any breach of the Warranties shall not be
affected by Completion or by any investigation made by or on behalf of
the Purchaser into the affairs of the Group or by the Purchaser
rescinding, or failing to rescind this Agreement, or failing to exercise
or delaying the exercise of any right or remedy, or by any other event or
matter whatsoever, except a specific and duly authorised written waiver
or release and no single or partial exercise of any right or remedy shall
preclude any further or other exercise.
10.5 The Purchaser shall be entitled to take action both before and after
Completion in respect of any breach or non-fulfillment of any of the
Warranties and Completion shall not in any way constitute a waiver of any
right of the Purchaser.
21
10.6 Each of the Vendors jointly and severally undertakes in relation to any
Warranty which refers to the knowledge, information or belief of the
Vendors that he has made full enquiry into the subject matter of that
Warranty and that they do not have actual or constructive knowledge,
information or belief that the subject matter of that Warranty may not be
correct, complete or accurate.
10.7 If at any time before Completion, any of the Vendors comes to know of any
fact or event which:
(a) is in any way inconsistent with any of the Warranties given by the
Vendors, and/or
(b) suggests that any fact warranted may not be as warranted or may be
misleading; and/or
(c) might affect the willingness of a prudent purchaser for value of
the Sale Shares to complete its purchase or the amount of the
consideration which such purchaser would be prepared to pay for
the Sale Shares;
the Vendors shall give immediate written notice thereof to the Purchaser
in which event the Purchaser may within 14 days of receiving such notice
rescind this Agreement by written notice to the Vendors' Solicitors and
all monies paid by the Purchaser to the Vendors hereunder shall be repaid
to the Purchaser in full without any deduction forthwith.
10.8 If at any time before Completion, the Purchaser finds that any of the
Warranties is incorrect or has not been or is (in the reasonable opinion
of the Purchaser) incapable of being rectified the Purchaser may rescind
this Agreement by written notice to the Vendors' Solicitors and all
monies paid by the Purchaser to the Vendors hereunder (if any) shall be
repaid to the Purchaser in full without any deduction forthwith.
10.9 The Purchaser's rights under the above clauses are in addition to and
without prejudice to all other rights and remedies available to it and
its exercise of or its failure to exercise its rights under any of the
above clauses shall not constitute a waiver of or prejudice any of its
other rights under this Agreement.
11. RESTRICTIVE AGREEMENT
---------------------
For the purpose of assuring the full benefit of the business and goodwill
of the Company, Control Tech and Shanghai Control Tech, each of the
Vendors hereby undertakes that, without the prior written consent of the
Purchaser, he shall not and that he shall procure that none of his
subsidiaries shall, at any time during 4 years from the Completion Date :
(a) directly or indirectly carry on or be engaged or interested in
Hong Kong and the PRC (including The Macau Special Administrative
Region of the PRC and Taiwan) in any business carried on by the
Company, Control Tech and/or Shanghai Control Tech; and
(b) directly solicit or endeavour to entice away from the Company ,
Control Tech and/or Shanghai Control Tech (in such a way as to
adversely affect the business of the Company, Control Tech and/or
Shanghai Control Tech as carried on at the date of this Agreement)
any person who, to his knowledge, is now :-
22
(i) or has during the 4 years from the Completion Date been a
client or customer of, or in the habit of dealing with, the
Company, Control Tech and/or Shanghai Control Tech; or
(ii) has during the 4 years from the Completion Date been an
officer or employee of the Company, Control Tech and/or
Shanghai Control Tech.
12. ACCESS TO INFORMATION
---------------------
The Vendors shall assist the Purchaser, its agents, representatives and
professional advisers in obtaining promptly on request full access to all
such facilities and information regarding the business, assets,
liabilities, contracts and affairs of the Group and other evidence of
ownership of the assets owned by the Group as the Purchaser may require.
13. FURTHER ASSURANCE
-----------------
The Vendors shall execute, do and perform or procure to be executed, done
and performed by other necessary persons all such further acts,
agreements, assignments, assurances, deeds and documents as the Purchaser
may require effectively to vest the registered and beneficial ownership
of the Sale Shares in the Purchaser free from all Encumbrances and with
all rights now and hereafter attaching thereto.
14. CONFIDENTIALITY AND ANNOUNCEMENTS
---------------------------------
14.1 Each of the parties undertakes to the others that it will not, at any
time after the date of this Agreement, divulge or communicate to any
person other than to its professional advisers, or when required by law
or any rule of any relevant stock exchange, or to its respective officers
or employees whose province is to know the same any confidential
information concerning the business, accounts, finance or contractual
arrangements or other dealings, transactions or affairs of any of the
others which may be within or may come to its knowledge and it shall use
its best endeavours to prevent the publication or disclosure of any such
confidential information concerning such matters.
14.2 No public announcement or communication of any kind shall be made in
respect of the subject matter of this Agreement unless specifically
agreed between the parties or unless an announcement is required pursuant
to the applicable laws and the regulations or the requirements of any
stock exchange or any other regulatory body or authority.
15. TIME
----
Time shall be of the essence of this Agreement, both as regards the dates
and periods specifically mentioned and as to any dates and periods which
may, by agreement in writing between or on behalf of the Vendors and the
Purchaser, be substituted for them.
23
16. ASSIGNMENT
----------
This Agreement shall be binding upon and enure for the benefit of the
estates, personal representatives or successors of the parties but shall
not be assignable.
17. ENTIRE AGREEMENT
----------------
This Agreement (together with any documents referred to herein)
constitutes the entire agreement between the parties hereto and
supersedes all previous agreements, arrangements, statements,
understandings or transactions between the parties hereto in relation to
the matters hereof and the parties acknowledge that no claim shall arise
in respect of any agreement so superseded.
18. AMENDMENT
---------
Unless otherwise specifically provided for in this Agreement, any
provision of this Agreement may be amended, varied, supplemented or
waived only if the parties hereto agree in writing. In other words, on
each anniversary date each party has the right to change the investment
structure and it will be effective after the amendments is signed off by
the parties hereto.
19. NOTICES AND OTHER COMMUNICATION
-------------------------------
19.1 Any notice required or permitted to be given hereunder shall be given in
writing in the English language delivered personally or sent by post
(airmail if overseas) or by facsimile message to the parties hereto due
to receive such notice at their addresses as set out below (or such other
address as it may have notified to the other parties hereto in accordance
with this CLAUSE 19).
19.2 A notice delivered personally shall be deemed to be received when
delivered and any notice sent by pre-paid recorded delivery post shall be
deemed (in the absence of evidence of earlier receipt) to be received two
(2) Business Days after posting and in proving the time of despatch it
shall be sufficient to show that the envelope containing such notice was
properly addressed, stamped and posted or that the facsimile message was
properly addressed and despatched as the case may be. A notice sent by
facsimile message shall be deemed to have been received at the expiration
of two hours after the time of despatch, if despatched before 3:00 p.m.
on any Business Day and, in any other case, at 10:00 a.m. on the Business
Day following the date of despatch.
19.3 (a) For the purpose of delivery of notices under this Agreement, the
address and facsimile number of the Vendors are:-
XX. XX Address : Room 0000, Xxxxxxxx Xxxx, Xx. 0000,
Xxx'xx Xxxx (Xxxx), Xxxxxxxx
000000, XXX
Facsimile : (00) 000-00000000
Attention : Xx. Xx Xxxxxxx
24
MR. REN Address : Room 0000, Xxxxxxxx Xxxx, Xx. 0000,
Xxx'xx Xxxx (Xxxx), Xxxxxxxx,
000000, XXX
Facsimile : (00) 000-00000000
Attention : Xx. Xxx Xx
XX. XXXX Address : Room 0000, Xxxxxxxx Xxxx, Xx. 0000,
Xxx'xx Xxxx (Xxxx), Xxxxxxxx
000000, XXX
Facsimile : (00) 000-00000000
Attention : Xx. Xxxx Xxxxxx
(b) For the purpose of delivery of notices under this Agreement, the
address and facsimile number of the Purchaser are:-
HARTCOURT Address : 0/X, 000 Xxxxxxxxx Xxxx, Xxxxxxxx
000000, XXX
Facsimile : (00) 000-00000000
Attention : Xx. Xxxxxx Xxxxxxxx
19.4 Nothing in this CLAUSE 19 shall preclude the service of communication or
the proof of such service by any mode permitted by --------- law.
20. COSTS AND STAMP DUTY
--------------------
20.1 Each party shall bear its own costs and expenses (including legal fees)
incurred in connection with the preparation, negotiation, execution and
performance of this Agreement and all documents incidental or relating to
Completion.
20.2 All stamp duty (if any) payable in connection with the sale and purchase
of the Sale Shares shall be borne by the Vendors on one part and the
Purchaser on the other part in equal shares.
21. GENERAL
-------
21.1 The provisions of this Agreement including the warranties and
undertakings herein contained insofar as the same shall not have been
fully performed at Completion or any other requisite time shall remain in
full force and effect notwithstanding Completion or after such requisite
time.
21.2 Any right of rescission conferred upon any party hereby shall be in
addition to and without prejudice to all other rights and remedies
available to it and no exercise or failure to exercise such a right of
rescission shall constitute a waiver by such party of any such other
right or remedy.
25
21.3 No failure or delay by the Vendors or the Purchaser in exercising any
right, power or remedy under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of the same preclude
any further exercise thereof or the exercise of any other right, power or
remedy. Without limiting the foregoing, no waiver by a party of any
breach by the other party of any provisions hereof shall be deemed to be
a waiver of any subsequent breach of that or any other provision hereof.
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not be
affected or impaired thereby.
22. GOVERNING LAW AND JURISDICTION
------------------------------
22.1 This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong and the parties hereto submit to the non-exclusive
jurisdiction of the Hong Kong courts for the purpose of determining or
enforcing any claim arising hereunder.
22.2 Each of the Vendors hereby irrevocably appoints ______________________,
as its process agent to receive on its behalf service of any writ,
summons, order, judgment or other notice of legal process in Hong Kong.
Such service shall be deemed completed on delivery to such process agent
(whether or not it is forwarded to and received by Xx. Xx, Xx. Xxx and/or
Xx. Xxxx as the case may be). If for any reason such process agent ceases
to be able to act as process agent, or no longer has an address in Hong
Kong, the Vendors irrevocably agrees to appoint a substitute process
agent acceptable to the Purchaser and to deliver to the Purchaser a copy
of the new process agent's acceptance of that appointment within 30 days.
Nothing herein contained shall affect the right to serve process in any
other manner permitted by law.
23. COUNTERPARTS
------------
This Agreement may be executed in one or more counterparts each of which
shall be binding on each party by whom or on whose behalf it is so
executed, but which together shall constitute a single instrument. Any
party may enter into this Agreement by signing any such counterpart and
each counterpart may be signed and executed by the parties and
transmitted by facsimile transmission and shall be as valid and effectual
as if executed as an original. For the avoidance of doubt, this Agreement
shall not be binding on any party hereto unless and until it shall have
been executed by or on behalf of all persons expressed to be the parties
hereto.
26
IN WITNESS whereof this Agreement has been duly executed by all parties hereto
the day and year first above written.
SIGNED by )
XX XXXXXXX )
in the presence of: )
SIGNED by )
XXX XX )
in the presence of: )
SIGNED by )
XXXX XXXXXX )
in the presence of: )
SIGNED by )
for and on behalf of )
HARTCOURT CAPITAL, INC )
in the presence of: )
27
SCHEDULE 1
PART I
PARTICULARS OF THE COMPANY
Particulars of the Company as at the date of this Agreement :
Name of the Company : Besteffort Investments Limited
Company number : 619473
Date of incorporation : 18 October 2004
Place of incorporation : British Virgin Islands
Registered office : P.O. Box 957, Offshore Incorporations Centre,
Road Town, Tortola, British Virgin Islands
Authorised share capital : US$50,000 divided into 50,000 shares of
US$1 each
Issued share capital : US$10 divided into 10 shares of US$1 each
Directors : Ren Xx
Xx Yizheng
Xxxx Xxxxxx
Sch 1 - P.1
Shareholders :
NAME
NO. OF SHARES
Shareholding
PERCENTAGE
Ren Qi
4
40%
Xx Xxxxxxx
3
30%
Xxxx Xxxxxx
3
30%
Total :
------------
10
------------
100%
Subsidiary : Nil
Sch 1 - P.2
PART II
PARTICULARS OF CONTROL TECH
Particulars of Control Tech as at the date of this Agreement :
Name of the Company : Control Tech Company Limited
Company number : 720632
Date of incorporation : 16 June 2000
Place of incorporation : Hong Kong
Registered office : Block B, 8/F, Mai Luen Industrial Building,
00-00 Xxxx Xxx Xxxxxx, Xxxx Xxxxx, X.X.,
Xxxx Xxxx
Authorised share capital : HK$200,000 divided into 2,000 shares of
HK$100 each
Issued share capital : HK$200,000 divided into 2,000 shares of
HK$100 each
Directors : Ren Xx
Xxxx Xxx Xxxx
Sch 1 - P.3
Shareholders :
NAME
NO. OF SHARES
Shareholding
PERCENTAGE
Ren Qi
1,000
50%
Xxx Xxx Xxx
1,000
50%
Total :
----------
2,000
------------
100%
Subsidiary : 90% interest of (Control Tech Electronics
(Shanghai) Co., Ltd.)
Sch 1 - P.4
PART III
PARTICULARS OF SHANGHAI CONTROL TECH
Particulars of Shanghai Control Tech as at the date of this Agreement :
Name of the subsidiary (Control Tech Electronics (Shanghai) Co., Ltd.)
Date of Incorporation 10 June 2004
Place of Incorporation PRC
Type of Business Sino-foreign equity joint venture
Duration of Operation 20 years from 10 June 2004 to 9 June 2024
Registered Capital US$200,000
Total Investment US$200,000
Investors
CAPITAL SHAREHOLDING
NAME OF INVESTORS CONTRIBUTION PERCENTAGE
Beijing Control Tech Co., Ltd. US$20,000 10%
Control Tech Company Limited US$180,000 90%
Business Scope
Directors :
Legal Representative :
Financial year end : 31 December
Subsidiary : Nil
Sch 1 - P.5
SCHEDULE 2
DESCRIPTION OF THE PROPERTIES
PART I
OWNED PROPERTIES
Nil
PART II
LEASED PROPERTIES
--------------------------------------------------------------------------------
NAME OF
ADDRESS LANDLORD TERM RENTAL
--------------------------------------------------------------------------------
1. Room 116, B Grand commencing from 8 US$3,720 per
Pacific Bldg, 8A May 2003 and ending month
Guanghua Road, on 7 May 2005
Chaoyang District,
Beijing 100026, PRC
--------------------------------------------------------------------------------
2. Room 1409, Shanghai commencing from 1 US$2,474.13 per
Mart, No. 2299 Yan'an September 2004 and month
Road (West) Shanghai ending on 30
200336, PRC September 2005
--------------------------------------------------------------------------------
3. Room 2805, Peace Commencing from 12 RMB9,500 per
World Plaza, No. 362- August 2003 and month
366, HuangShidong ending on 11
Street, Guangzhou September 2005
510060, PRC
--------------------------------------------------------------------------------
Sch 2
SCHEDULE 3
WARRANTIES
PART I
GENERAL WARRANTIES
Subject to the matters referred to herein and save as Disclosed by the Vendors,
each of the Vendors jointly and severally represents and warrants to the
Purchaser that all representations and statements set out in this SCHEDULE 3 are
and shall be true and accurate and not misleading in all aspects as at the date
hereof and at all times up to and including Completion with reference to the
facts and circumstances subsisting at such time.
In this SCHEDULE 3, save for and to the extent the context otherwise requires,
(i) references to the expressions "SO FAR AS THE VENDORS ARE AWARE" or "TO
THE BEST OF KNOWLEDGE AND BELIEF OF THE VENDORS" any similar expression
to qualify any statement shall be deemed to include an additional
statement that it has been made after due and careful enquiries; and
(ii) references to the "COMPANY" shall be construed as a reference to the
Company and each member of the Group (including Control Tech and Shanghai
Control Tech) individually and each of the Warranties shall be deemed to
have been given in respect of each of such companies mutatis mutandis.
1. GENERAL
-------
1.1 The facts and information set out in the Recitals, Xxxxxxxxx and
Annexures are true and all information which has been provided in writing
to the Purchaser or its representatives or advisers by the Vendors or by
any Director, officer or other official of the Company or by their
respective professional advisers or other agents was when given and is
now true and accurate in all material respects. There is no fact or
matter which has not been disclosed which renders any such information
untrue, inaccurate or misleading or the disclosure of which might
reasonably affect the willingness of a willing purchaser to purchase the
Sale Shares in accordance with the provisions of this Agreement.
1.2 The information disclosed to the Purchaser or its representatives or
professional advisers, by the Vendors and the Directors officers or other
officials of the Company regarding the current trading and prospects of
the Company comprises all information which is material for the
reasonable assessment of the financial and trading prospects of the
Company.
2. COMPLIANCE
----------
2.1 The copy of the memorandum and articles of association of the Company
which is provided to the Purchaser is true and complete in all respects
and has embodied in it or annexed to it a copy of every such resolution
and agreement required by law to be annexed to it and the Company has at
all times carried on its business and affairs in all respects in
accordance with its memorandum and articles of association and all such
resolutions and agreements.
Sch 3 - P.1
2.3 The Company is a duly organised limited liability, company validly
existing under the laws of the place of its incorporation and has the
corporate powers, authorises, licences and permits to carry on the
business presently carried on by it and to own and hold the assets used
therewith.
2.4 The Company has complied with the provisions of all applicable laws,
regulations (and all orders notices and directions made thereunder) and
all applicable codes or practices. All returns, particulars, resolutions
and other documents required to be filed with or delivered to the
registrar of companies or to any other authority whatsoever by the
Company have been correctly and properly prepared and so filed or
delivered.
3. CAPACITY
--------
3.1 Each of the Vendors has full power to enter into and perform this
Agreement and the Tax Indemnity respectively (as the case may be) and
this Agreement and the Tax Indemnity will constitute, binding obligations
on the Vendors, enforceable in accordance with their terms in Hong Kong.
3.2 The execution, delivery and performance of this Agreement and the Tax
Indemnity by the Vendors does not and will not violate in any material
respect any provision of:
(a) any law or regulation or any order, judgement or decree of any
governmental authority, agency or court of Hong Kong;
(b) the laws and documents incorporating and constituting the Vendors;
and
(c) any mortgage, agreement, contract or other undertaking or
instrument to which any of the Vendors is a party or which is
binding upon his or any of his assets, and does not and shall not
result in the creation or imposition of any Encumbrance on any of
its material assets pursuant to the provisions of any such
mortgage, contract or other undertaking or instrument.
3.3 Subject to satisfaction of the conditions set out in CLAUSE 3 and save as
Disclosed, no consent, licence, approval or authorisation of or filing or
registration with or other requirement of any governmental department,
authority or agency in Hong Kong or other applicable jurisdictions is
required of the Vendors in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
4. CAPITAL STRUCTURE AND OWNERSHIP
-------------------------------
4.1 The Sale Shares constitute 100% of the issued share capital of the
Company as at the date of this Agreement and the Completion Date and are
fully paid up.
4.2 There is no Encumbrance or other form of agreement (including conversion
rights and rights of pre-emption) on, over or affecting the Sale Shares
or any unissued shares, debentures or other securities of the Company and
there is no agreement or commitment to give or create any of the
foregoing, and no claim has been made by any person to be entitled to any
of the foregoing, and no person has the right (whether exercisable now or
in the future and whether contingent or not) to call for the issue of any
share or loan capital of the Company under any of the foregoing.
Sch 3 - P.2
4.3 All the Sale Shares are solely legally and beneficially owned by and
registered in the names of the Vendors and all the shares in each member
of the Group other than the Company are solely legally and beneficially
owned by and registered in the name of the Company or another member of
the Group and the Sale Shares, the unissued share capital of the Company
and all the shares in each member of the Group other than the Company are
free from any Encumbrance and there are no arrangements in force or
claimed entitling or allegedly entitling any person to any Encumbrance.
4.4 The Company has not at any time:
(a) repaid, redeemed or purchased or agreed to repay, redeem or
purchase any of its shares, or otherwise reduced or agreed to
reduce its issued share capital or any class of it; or
(b) capitalised or agreed to capitalise in the form of shares,
debentures or other securities or in paying up any amounts unpaid
on any shares, debentures or other securities, any profits or
reserves of any class or description or passed or agreed to pass
any resolution to do so.
4.5 The Company :
(a) is not and has not agreed to become the holder or beneficial owner
of any class of any shares, debentures or other securities of any
other company (wherever incorporated) other than its existing
subsidiaries, and as contemplated under this agreement;
(b) has not been and has not agreed to become a subsidiary of any
other company or under the control of any group of companies or
consortium;
(c) is not and has not at any time been and has not agreed to become a
member of any partnership, joint venture, consortium or other
unincorporated association; and
(d) has no branch, place of business, permanent establishment or
substantial assets outside Hong Kong or PRC other than
contemplated under this agreement.
5. ACCOUNTS
--------
5.1 All accounts of the Company and the Completion Accounts :
(a) were prepared in accordance with the requirements of all relevant
laws, statutes, with good accounting principles and practices
generally accepted at the date hereof in Hong Kong or PRC (as the
case may be) for companies carrying on a similar business to that
of the Company comply with the Companies Ordinance and all
relevant statements of standard accounting practice and accounting
guidelines issued by the relevant authorities, are prepared on a
basis consistent with preceding accounting periods of the Company
and with the books of account of the Company and are true and
accurate in all material respects;
Sch 3 - P.3
(b) disclose a true and fair view of the assets and liabilities of the
Company at the relevant accounts dates and the Completion Accounts
Date (as the case may be) and of its profits for the financial
year ended on such date;
(c) contain full provision or reserve for bad and doubtful debts,
burdensome contracts or other obligations, obsolescent or slow
moving stocks and for depreciation on fixed assets, which
provision or reserve was when made and is now adequate;
(d) contain a note of all capital commitments of the Company at the
relevant accounts dates and the Completion Accounts Date (as the
case may be), which note was when made and is now and will be
adequate, fair and not misleading; and
(e) contain full provision or reserves (as appropriate) for all
Taxation.
5.2 As at the relevant accounts dates and the Completion Accounts Date (as
the case may be), the Company had and will have no liabilities known,
actual or contingent (including contingent liabilities to customers and
contingent liabilities for Taxation) which were not or will not be
disclosed, noted or provided for in the Accounts.
5.3 The stock-in-trade shown in the Accounts has been and will be valued at
the lower of cost and net realisable value and includes no redundant,
obsolete or unsaleable items and no items which are the subject of any
dispute (other than minor disputes in the ordinary course of business)
with a supplier or customer. The basis of valuation of the stock-in-trade
has remained in all material respects consistent with that adopted for
the purpose of the Company's audited accounts at the beginning and end of
each of the accounting periods of the Company since its incorporation.
5.4 All the fixed and loose plant and machinery, equipment, furniture,
fittings and vehicles used by the Company as at the relevant accounts
dates and the Completion Accounts Date (as the case may be) are reflected
in its accounts, were at the relevant accounts dates and will be as the
Completion Accounts Date (except for such items as have been and will be
disposed of or realised by the Company in the ordinary course of
business) remain in the absolute beneficial ownership of the Company and
are free from any Encumbrance, hire or hire purchase agreement or leasing
agreement or agreement for payment on deferred terms and (apart from
depreciation in the ordinary course of business) their value is not and
will not be less than that as at the relevant accounts dates or the
Completion Accounts Date (as the case may be) and none has been or will
be acquired for any consideration in excess of its net realisable value
at the date of such acquisition or otherwise than by way of a bargain at
arm's length.
5.5 Depreciation of the fixed assets of the Company has been and will be made
at a rate sufficient to write down the value of such assets to nil not
later than the end of their useful working lives and no fixed asset has
attributed to it a value exceeding the current market value thereof as at
the relevant accounts dates or the Completion Accounts Date (as the case
may be).
5.6 All accounts, books, ledgers, financial and other necessary records of
whatsoever kind of the Company (including all invoices and other records
required for tax):
(a) have been fully, properly and accurately maintained, are in the
possession of the Company and contain true and accurate records of
all matters including those required to be entered in them by
applicable laws and no notice or allegation that any of the same
is incorrect or should be rectified has been received;
Sch 3 - P.4
(b) do not contain or reflect any material inaccuracies or
discrepancies;
(c) give and reflect a true and fair view of the matters which ought
to appear in them and in particular of the financial, contractual
and trading position of the Company and of its plant and
machinery, fixed and current assets and liabilities (actual and
contingent), debtors and creditors and stock-in trade; and
(d) contain accurate information in accordance with generally accepted
accounting principles in Hong Kong or PRC (as the case may be)
relating to all transactions to which the Company has been a party
and the Accounts do not and will not overstate the value of any
asset or understate any liability of the Company at the relevant
accounts dates or the Completion Accounts Date (as the case may
be).
6. POST LATEST AUDITED ACCOUNTS EVENTS
-----------------------------------
Since the accounts date of the latest audited accounts of the Company,
other than as disclosed in such accounts :
(a) has carried on its business in the ordinary and usual course and
without entering into any transaction, assuming any liability or
making any payment not provided for in the latest audited accounts
of the Company which is not in the ordinary course of business and
without any interruption or alteration in the nature, scope or
manner of its business and nothing has been done which would be
likely to prejudice the interests of the Purchaser as a
prospective purchaser of the Sale Shares;
(b) has not experienced any deterioration in its financial or trading
position or prospects or turnover or suffered any diminution of
its assets by the wrongful act of any person and the value of its
net assets is not less than the value of its net assets as at the
accounts date as shown by the latest audited accounts of the
Company and the Company has not had its business, profitability or
prospects adversely affected by the loss of any important customer
or source of supply or by any abnormal factor not affecting
similar businesses to a like extent and there are no facts which
are likely to give rise to any such effects;
(c) has not acquired or disposed of or agreed to acquire or dispose of
any assets or assumed or incurred or agreed to assume or incur any
liabilities (actual or contingent) otherwise than in the ordinary
course of business;
(d) has not declared, made or paid any dividend, bonus or other
distribution of capital or income (whether a qualifying
distribution or otherwise) and (excluding fluctuations in
overdrawn current accounts with bankers) no loan or loan capital
of the Company has been repaid in whole or in part or has become
due or is liable to be declared due by reason of either service of
a notice or lapse of time or otherwise howsoever;
Sch 3 - P.5
(e) has not carried out or entered into any transaction and no other
event has occurred in consequence of which (whether alone or
together with any one or more transactions or events occurring
before, on or after the date of this Agreement) any liability of
the Company to Taxation has arisen or will arise (or would have
arisen or would or might arise but for the availability of any
relief, allowance, deduction or credit) other than profits tax on
the actual income (not chargeable gains or deemed income) of the
Company arising from transactions entered into in the ordinary
course of business;
(f) has not made any change to the remuneration, terms of employment,
emoluments or pension benefits of any present or former director,
officer or employee of the Company who on the accounts date of the
latest audited accounts of the Company was entitled to
remuneration in excess of US$10,000 (or its equivalent in any
other currency) per annum and has not appointed or employed any
additional director, officer or employee entitled as aforesaid;
(g) has not waived a released any debts in whole or in part and has
not written off debts in an amount exceeding US$10,000 (or its
equivalent in any other currency) in the aggregate;
(h) has not entered into contracts involving capital expenditure in an
amount exceeding in the aggregate US$10,000 (or its equivalent in
any other currency);
(i) (including any class of its members) has not passed any resolution
whether in general meeting or otherwise;
(j) has not become aware that any event has occurred which would
entitle any third party to terminate any contract or any benefit
enjoyed by it or call in any money before the normal due date
therefor;
(k) has not purchased stocks in quantities or at prices materially
greater than was the practice of the Company prior to the accounts
date of the latest audited accounts of the Company;
(l) has paid its creditors within the times agreed with such creditors
and does not have any debts outstanding which are overdue for
payment by more than four weeks; and
(m) has not borrowed or raised any money or taken any financial
facility (except such short term borrowings from bankers as are
within the amount of any overdraft facility which was available to
the Company at the accounts date of the latest audited accounts of
the Company) or since the accounts date of the latest audited
accounts of the Companyrenegotiated or received any notice from
any banker that such banker wishes to renegotiate any overdraft
facility available to the Company at the accounts date of the
latest audited accounts of the Company.
7. TRANSACTIONS WITH VENDORS, DIRECTORS AND CONNECTED PERSONS
----------------------------------------------------------
7.1 There is not outstanding:
(a) any indebtedness or other liability (actual or contingent) owing
by the Company to any of the Vendors or any director of the
Company or any connected person (as that expression defined in the
relevant stock exchange rules) of any of them or owing to the
Company by any of the Vendors or any director of the Company or
any connected person of any of them; or
Sch 3 - P.6
(b) any guarantee or security for any such indebtedness or liability
as aforesaid.
7.2 (a) There is not now outstanding, any agreement, arrangement or
understanding (whether legally enforceable or not) to which the
Company is a party or has an interest and in which the Vendors, or
any director of the Company or any connected person of any of them
is interested whether directly or indirectly.
(b) The Company is not a party to nor has its profits or financial
position during the last 3 years been affected by any agreement or
arrangement which is not entirely of an arm's length nature.
7.3 None of the Vendors nor any director of the Company nor any connected
person of any of them or intends to acquire, either individually or
collectively, or with any other person or persons, has any estate, right
or interest, directly or indirectly, in any business other than that now
carried on by the Company which is or is likely to be or become
competitive with the business of the Company.
7.4 None of the Vendors nor any director of the Company nor any of their
respective connected persons either individually, collectively or with
any other person or persons are not interested in any way whatsoever in
any Intellectual Property used and not wholly owned by the Company.
7.5 None of the Vendors nor any director of the Company, nor any of their
respective connected persons, is entitled to or has claimed entitlement
to any remuneration, compensation or other benefit from the Company.
8. FINANCE
-------
8.1 Regarding the borrowings of the Company :
(a) The amount borrowed by the Company from each of its bankers does
not exceed the overdraft facility agreed with such banker.
(b) The total amount borrowed by the Company from any source does not
exceed any limitation on its borrowing contained in the articles
of association of the Company or in any debenture or loan stock
trust deed or instrument or any other document executed by the
Company.
(c) The Company has no outstanding loan capital or loan stock.
(d) Particulars of all money borrowed by the Company has been
disclosed.
8.2 Regarding the debts owed to the Company :
(a) The Company does not own the benefit of any debt (whether present
or future) other than debts which have accrued to it in the
ordinary course of business.
(b) All debts owed to the Company are collectable in the ordinary
course of business and each such debt will realise in full its
face value within three months of its due date for payment.
Sch 3 - P.7
(c) The debts owing to the Company shown in the accounts of the
Company (subject to any provision for bad and doubtful debts made
in the accounts of the Company) were paid in full on their due
dates or, if any such debts are not yet due, each such debt is not
now regarded by the Company or by the Vendors as irrecoverable in
whole or in part.
8.3 Particulars of the balances on all the Company's bank accounts as at a
date not more than seven days before the date of this Agreement have been
disclosed and the Company has no other bank accounts; since the date of
such particulars there have been no payments out of any such bank
accounts except for routine payments and the aggregate balance on all
such bank accounts is not substantially different from the aggregate
balance shown in such particulars.
8.4 Having regard to the existing banking and other facilities, the Company
has sufficient working capital for the purpose of continuing to carry on
its business in its present form and at its present level of turnover for
the foreseeable future and for the purposes of executing, carrying out
and fulfilling in accordance with their terms all orders, projects and
contractual obligations which have been placed with or undertaken by the
Company.
8.5 In relation to any Encumbrance to which any asset of the Company is
subject and in relation to debentures, acceptance lines, overdrafts,
loans or other financial facilities outstanding or available to the
Company:
(i) each of the Vendors has disclosed full details of them and true
and correct copies of all documents relating to them; and
(ii) none of the Vendors nor the Company has done anything whereby the
continuance of any such Encumbrance or facility in full force and
effect might be affected or prejudiced.
8.6 The Company is not responsible for the indebtedness of any other person,
and in particular but without prejudice to the generality of the
foregoing is not a party to any option or pre-emption right or a party to
any guarantee or suretyship or any other obligation (whatever called) to
pay, purchase or provide funds (whether by the advance of money, the
purchase of or subscription for shares or other securities or the
purchase of assets or services or otherwise) for the payment of, or as an
indemnity against the consequence of default in the payment of, any
indebtedness of any other person.
9. TAXATION
--------
9.1 All notices, returns and computations of the Company for the purposes of
Taxation have been made punctually on a proper basis and are correct and
none of them is, or is likely to be, the subject of any dispute with any
fiscal authority.
9.2 All Taxation which the Company is liable to pay prior to Completion has
been or will be so paid prior to Completion.
9.3 The Company has not paid or become liable to pay any penalty, fine or
interest charged by virtue of the provisions of any Taxation statute,
law, rule or regulation.
Sch 3 - P.8
9.4 All tax deductible and payable under any Taxation statute, law, rule or
regulation has, so far as is required to be deducted, been deducted from
all payments made or treated as made by the Company and all amounts due
to be paid to all relevant Taxation authorities prior to the date of this
Agreement have been so paid.
9.5 All payments by the Company to any person which ought to have been made
under deduction of tax have been so made and the Company (if required by
law to do so) has accounted to the relevant fiscal authority for the tax
so deducted.
9.6 Proper records have been maintained in respect of all such deductions and
payments and all applicable regulations have been complied with.
9.7 The Company has not in the last 3 years been the subject of a discovery,
audit or investigation by any Taxation authority and there are no facts
which are likely to cause a discovery, audit or investigation to be made.
9.8 Full provision or reserve has been made in the accounts of the Company
for all Taxation assessed or liable to be assessed on the Company or for
which it is accountable in respect of income, profits or gains earned,
accrued or received on or before the relevant accounts dates of the
accounts of the Company and the Completion Accounts Date (as the case may
be), including distributions made down to such date or provided for in
the accounts of the Company or the Completion Accounts (as the case may
be), and proper provision has been made in the accounts of the Company or
the Completion Accounts (as the case may be) for deferred taxation in
accordance with internationally accepted accounting standards.
9.9 The Company has not entered into or been a party to any scheme or
arrangement of which the main purpose, or one of the main purposes, was
the avoidance of or the reduction in liability to taxation.
9.10 The Company has sufficient records to permit accurate calculation of the
tax liability or relief which would arise upon a disposal or realisation
on completion of each asset owned by the Company as at the relevant
accounts dates of the accounts of the Company or acquired by the Company
before Completion.
9.11 The Company has duly submitted all claims and disclaimers the making of
which has been assumed for the purposes of the accounts of the Company
and the Completion Accounts (as the case may be).
9.12 The Company has not been a party to any sale or other disposal of an
asset either at an under-value or an over-value.
10. THE PROPERTIES
--------------
10.1 The Properties comprise all the properties which are beneficially owned,
leased, used or occupied by the Company and all the rights vested in the
Company and the particulars of the Properties set out in SCHEDULE 2 are
true and accurate in all respects.
10.2 The Company is the registered and beneficial owner of and has a good and
marketable title to the Owned Properties.
10.3 The Leased Properties are all occupied under lease.
10.4 All deeds and documents necessary to prove the title of the Company to
the Properties are in the possession of the Company.
Sch 3 - P.9
10.5 Save for the Disclosed Charges, the Owned Properties and the title deeds
and documentation relating thereto are not subject to any debenture
(whether fixed or floating), option, agreement for sale, condition,
covenant, agreement, claim, overriding interest or any other Encumbrance,
nor is there any person in possession or occupation of or who has or
claims any right or easement of any kind in respect of the Owned
Properties adversely to the estate, interest, right or title therein of
the Company.
10.6 There are no rights, interests, covenants, restrictions, reservations,
licences or easements, nor any disputes or outstanding notices (whether
given by a lessor or any other person) nor in the case of leasehold
property, rights for the lessor to break the term nor (without prejudice
to the generality of the foregoing) any other matters or things which
adversely affect the value of the Properties or the proper use and
enjoyment of the Properties for the purpose of the business now being
carried on at the Properties by the Company.
10.7 There are no circumstances which would entitle or require a lessor or any
other person to exercise any power of entry upon or of taking possession
of the Properties or which would otherwise restrict or terminate the
continued possession or occupation thereof.
10.8 The Company has duly performed, observed and complied with all covenants,
restrictions, reservations, conditions, agreements, statutory
requirements, bye-laws, orders, building regulations and other
stipulations and regulations affecting the Properties and their use,
including the terms of any lease or tenancy agreement under which any
part of the Properties is held, and the use of the Properties does not
contravene the same and (without prejudice to the generality of the
foregoing) all outgoings have been paid to date and, in the case of
leasehold property, all rents and service charges have been paid to date
and no notice of any alleged breach of any of the terms of any such lease
or tenancy agreement has been served on the Company.
10.9 The Company is entitled to and has exclusive vacant possession of the
Properties and no part of the Properties is subject to any lease, tenancy
or licence or any agreement to grant such lease, tenancy or licence and
no person other than a member of the Group has a right to occupy or enter
upon any of the Properties other than the rights of landlords pursuant to
tenancy agreements relating to the Leased Properties.
10.10 The Company has not agreed to transfer, sell, assign or otherwise dispose
of the Properties or any part thereof or any interest therein or
sub-divide, lease, or in any other way deal with or part with the
possession of or make any arrangement for the sharing of any of the
Properties or any part thereof or any interest therein or enter into any
agreement so to do or accept the surrender of any lease or tenancy.
10.11 There is no outstanding monetary claim or liability, contingent or
otherwise, affecting the Properties and in the case of leasehold property
there are no rent reviews in the course of being determined or
exercisable by the lessor from a date prior to the date of Completion.
10.12 The existing use of each of the Properties is the lawful permitted use.
10.13 So far as the Vendors are aware the current use of each of the Properties
is in compliance with the provisions, covenants, terms and conditions of
any conditions and any regulations in force relating to the Properties,
and all necessary certificates of compliance, occupation permits and
other consents and authorities for such use have been issued and are in
force and there are no circumstances known or which would on reasonable
enquiry be known to the Vendors which are likely to result in the
forfeiture, avoidance, withdrawal or non-renewal of or restriction on or
amendment to the same.
Sch 3 - P.10
10.14 So far as the Vendors are aware there are no outstanding complaints or
orders of any district or other authority affecting the Properties or the
use thereof or the owner and there are no pending applications in respect
of the Properties.
10.15 Other than as provided in the tenancy agreements relating to the Leased
Properties, there is no obligation to reinstate any of the Properties by
removing or dismantling any alteration made to it by the Company.
10.16 The rates, property tax and all other outgoings in respect of the
Properties have been duly paid up to the date hereof and will be paid up
to the date of Completion.
11. OTHER ASSETS
------------
11.1 All assets of the Company which are or will be included in the accounts
of the Company and the Completion Accounts (as the case may be) or have
otherwise been represented as being the assets of the Company or which
were or will be as at the relevant accounts dates of the accounts of the
Company or the Completion Accounts Date (as the case may be) used or held
for the purposes of its business were at the relevant accounts dates of
the accounts of the Company or the Completion Accounts Date (as the case
may be) in the absolute beneficial ownership of the Company and (except
for assets disposed of or realised by the Company in the ordinary course
of business) the Company is the absolute beneficial owner of and has
good, marketable title to all such assets and all such assets are in the
possession and control of the Company and are sited within Hong Kong or
PRC.
11.2 All assets which have been acquired by the Company since the accounts
date of the latest audited accounts of the Company are (except as
aforesaid) now in the absolute beneficial ownership of the Company and in
the possession and control of the Company and none is the subject of any
Encumbrance (excepting only liens arising in the normal course of
trading) nor has the Company created or agreed to create any Encumbrance
or entered into any factoring arrangement, hire-purchase, conditional
sale or credit sale agreement which has not been disclosed and in respect
of any such Encumbrance, arrangement or agreement so disclosed there has
been no default by the Company in the performance or observance of any of
the provisions thereof.
11.3 The plant and machinery (including fixed plant and machinery) and all
vehicles and office and other equipment and assets shown or to be shown
in the accounts of the Company and the Completion Accounts (as the case
may be) or acquired or to be acquired since the account date of the
latest audited accounts of the Company or the Completion Accounts Date
(as the case may be)or otherwise used in connection with the business of
the Company which have not been disposed of in the ordinary course of
business:
(a) do not contravene any requirement or restriction having the force
of law;
(b) performs in accordance with its manufacturers specifications and
are in good repair and condition and are regularly maintained,
fully serviceable and in good working order;
Sch 3 - P.11
(c) are each capable of doing the work for which they were designed
and/or purchased and will each be so capable (subject to fair wear
and tear) during the period of time over which the value of such
assets will be written down to nil in the accounts of the Company;
(d) are not surplus to the Company's requirements; and
(e) are not dangerous, inefficient, out-of-date, unsuitable or in need
of renewal or replacement and the vehicles owned by the Company
are road-worthy and duly licensed for the purposes for which they
are used.
11.4 Maintenance contracts are in full force and effect in respect of the
computer and all other assets owned or used by the Company which it is
normal or prudent to have maintained by outside or specialist
contractors.
11.5 The Company's stock-in-trade is of merchantable quality and not obsolete,
defective or out of fashion and is capable of being sold by the Company
in the ordinary course of business in accordance with its current price
list without rebate or allowance to retail purchasers.
11.6 The Company has not acquired or agreed to acquire any material asset on
terms that title to such asset does not pass to the Company until full
payment is made.
11.7 Rentals payable by the Company under any leasing, hire-purchase or other
similar agreement to which it is a party have not been and are not likely
to be increased and all such rentals are fully deductible by the Company
for tax purposes.
12. INSURANCE
---------
12.1 All the assets of the Company which are of an insurable nature have at
all material times been and are at the date hereof fully insured to their
full replacement value against fire and other risks normally insured
against by companies carrying on similar businesses or owning property of
a similar nature to those of the Company and the Company has at all
material times been and is at the date of this Agreement adequately
covered against all legal liability and risks normally insured against by
such companies (including liability to employees or third parties for
personal injury or loss or damage to property, product liability and loss
of profit).
12.2 Particulars of all policies of insurance of the Company now in force have
been disclosed and such particulars are true and correct and all premiums
due on such policies have been duly paid and all such policies are valid
and in force and (so far as the Vendors are aware) there are no
circumstances which might lead to any liability under such insurance
being avoided by the insurers or the premiums being increased and there
is no claim outstanding under such policy nor are the Company and the
Vendors aware of any circumstances likely to give rise to a claim or
cause an application for renewal of such policy to be refused.
12.3 No insurance company has refused to insure the Property assets or risks
of the Company or has imposed conditions (by way of increased premiums or
otherwise) for such insurance.
Sch 3 - P.12
13. OPERATION
---------
13.1 The Company has all necessary licences (including statutory licences),
permits, consents and authorities (public and private) from government
authorities in the PRC, Hong Kong, the British Virgin Islands and other
jurisdictions for the proper and effective carrying on of its business
and in the manner in which such business is now carried on and all such
licences, permits, consents and authorities are valid and subsisting and
none of the Vendors know of any reason why any of them should be
suspended, cancelled or revoked whether in connection with the
acquisition of the Sale Shares by the Purchaser or otherwise and so far
as the Vendors are aware there are no factors that might in any way
prejudice the continuance or renewal of any of those licences, permits,
consents or authorities and the Company is not restricted by contract
from carrying on any activity in any part of the world.
13.2 There is no matter or fact in existence which might give rise to any
legal proceedings or arbitration involving the Company including any
which might form the basis of any criminal prosecution against the
Company.
13.3 No current director, officer or employee of the Company has had a
bankruptcy petition presented against him, is party to any arrangement or
compromise under any insolvency legislation, or has been disqualified
from acting as a director of a company for any period or has been
convicted of or is at present or has been charged with and not acquitted
of any criminal offence (other than traffic offences the subject of a
fixed penalty fine).
13.4 No governmental or other investigation or inquiry is in progress or
threatened in respect of the Company or its business and there are no
circumstances likely to lead to any of the same.
13.5 There are in force no powers of attorney given by the Company nor any
other authority (express, implied or ostensible) given by the Company to
any person to enter into any contract or commitment or do anything on its
behalf other than any authority of employees to enter into routine
trading contracts in the normal course of their duties.
13.6 Save as expressly Disclosed, not more than 10% in value of purchases by
the Company are placed with any one supplier and not more than 10% of the
Company's turnover relating to any one product or service supplied by the
Company has in any of the three years ending on the date hereof been
provided to any single customer of the Company and for the purposes of
this paragraph purchases from and supplies to different entities in the
same group of companies shall be aggregated and treated as purchases from
or supplies to the same person.
13.7 No significant client, customer or supplier of the Company has since the
date being one year prior to the date of this Agreement ceased or
indicated an intention to cease or to the best of knowledge and belief of
the Vendors might prior to or as a result of Completion cease to contract
with or supply to the Company or might substantially reduce its business
with the Company.
13.8 No circumstance exists which would or might enable any third party to
raise any set off or counterclaim against the Company or cause any third
party to withhold or delay payment to the Company or cause any supplier
to withhold or delay delivery of any real or personal property or the
provision of any service to the Company.
13.9 The aggregate amount of all unpresented cheques drawn by the Company and
all members of the Group in the normal course of business does not exceed
HK$5,000 (or its equivalent in any other currency) and there are no such
unpresented cheques drawn otherwise than in the normal course of
business.
Sch 3 - P.13
13.10 No disclosure has been made of any of the confidential information,
including financial or trade secrets, of the Company save in the ordinary
course of business of the Company and the Company has taken adequate
steps to preserve the confidential nature of all such information.
13.11 The Company does not use on its letterhead, books or vehicles or
otherwise carry on its business under any name other than its corporate
name.
13.12 All the accounting records, statutory and other books and records
(including the register of members), and other deeds documents records,
data and information of the Company and its pension and benefit schemes
(if any) are, and have since its incorporation been, kept up to date,
properly, accurately and consistently completed and are a complete and
accurate record of all acts and transactions of the Company and of all
matters required by law or best business practice to be recorded or
registered therein; the Company has not received any application or
request for rectification of any such registers are in the possession of
the Company.
13.13 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.
13.14 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.
13.15 The Company has not stopped payment and is not insolvent nor unable to
pay its debts as they fall due.
13.16 No administrative or other receiver has been appointed by any person of
the business or assets of the Company or any part thereof, nor has any
order been made or petition presented for the appointment of an
administrator in respect of the Company.
13.17 There has been no delay by the Company in the payment of any material
obligation due for payment.
13.18 The Company has not given any guarantee or warranty or made any
representation in respect of articles or trading stock sold or contracted
to be sold or service provided or contracted to be provided by it save
for any warranty or guarantee implied by law and (save as aforesaid) has
not accepted any liability or obligation to service, maintain, repair,
take back or otherwise do or not do anything in respect of any articles,
stock or service that would apply after any such article or stock has
been delivered by it or service performed by it, as the case may be.
13.19 No person other than the Company or a member of the Group has given any
guarantee of or security for any overdraft, loan or loan facility granted
to the Company or any member of the Group.
Sch 3 - P.14
13.20 All title deeds and other documents required to show title to the assets
of the Company (duly stamped where necessary) and all other documents and
agreements to which the Company is a party and all other documents,
records and correspondence of the Business owned by, or which ought to be
in the possession of, the Company are in the possession of the Company.
14. CONTRACTS
---------
14.1 There are no long term contracts which are not terminable by the Company
without penalty on six months' notice or less, or onerous, unusual or
abnormal contracts which are for capital commitments or contracts
differing from those necessitated by the ordinary course of business
binding upon the Company, nor is the Company a party to any contract
which contains any onerous or other provision material for disclosure to
an intending purchaser of the Sale Shares and no expenses or liabilities
of a material amount have been incurred before the date of this Agreement
by the Company otherwise than for the purpose of the Company's business.
14.2 Copies of all material contracts to which the Company is a party have
been disclosed or will be disclosed to the Purchaser during the due
diligence to be conducted by the Purchaser pursuant to CLAUSE 3.3 of this
Agreement and, save as Disclosed, the Company is not a party to or
subject to any agreement, transaction, obligation, commitment,
understanding, arrangement or liability which:
(a) is incapable of complete performance in accordance with its terms
within six months after the date on which it was entered into or
undertaken;
(b) is known by any of the Vendors to be likely to be unprofitable or
result in a loss to the Company on completion of performance;
(c) cannot readily be fulfilled or performed by the Company on time
and without undue or unusual expenditure of money and effort;
(d) involves or is likely to involve obligations, restrictions,
expenditure or receipts of an unusual, onerous or exceptional
nature and not in the ordinary course of business;
(e) requires an aggregate consideration payable by the Company in
excess of US$10,000 (or its equivalent in any other currency);
(f) involves or is likely to involve the supply of goods by or to the
Company the aggregate sales value of which will represent in
excess of ten per cent of the turnover of the Company for the year
ended on the Completion Accounts Date;
(g) is a contract for services (other than contracts for the supply of
electricity or normal office services);
(h) requires the Company to pay any commission, finder's fee, royalty
or the like; or
(i) is in any way otherwise than in the ordinary and proper course of
the Company's business.
14.3 The terms of all contracts of the Company have been complied with by the
Company and by the other parties to the contracts in all respects and
there are no circumstances likely to give rise to a default by the
Company or by the other parties under any such contract.
Sch 3 - P.15
14.4 All the contracts of the Company except those between the Company and its
employees are assignable by the Company without the consent of any other
party.
14.5 There are no outstanding claims, separately or in the aggregate of
material amounts, against the Company on the part of customers or other
parties in respect of defects in quality or delays in delivery or
completion of contracts or deficiencies of design or performance or
otherwise relating to liability for goods or services sold or supplied by
the Company and no such claims are threatened or anticipated and there is
no matter or fact in existence in relation to goods or services currently
sold or supplied by the Company which might give rise to the same.
14.6 The Company has no knowledge of the invalidity of or grounds for
rescission, avoidance or repudiation of any agreement or other
transaction to which the Company is a party and has received no notice of
any intention to terminate, repudiate or disclaim any such agreement or
other transaction.
14.7 There are no agreements in force restricting the freedom of the Company
to provide and take goods and services by such means and from and to such
persons as it may from time to time think fit.
14.8 The Company is not a party to any subsisting agency or distributorship
agreement.
15. EMPLOYEES
---------
15.1 The particulars to be disclosed to the Purchaser during the due diligence
to be conducted by the Purchaser pursuant to CLAUSE 3.3 of this Agreement
are true and complete and show in respect of each director, officer and
employee of the Company the date on which he/she commenced employment
with the Company and all remuneration payable and other benefits provided
or which the Company is bound to provide (whether now or in the future)
to each such person and include full particulars of all remuneration
arrangements (particularly profit sharing, incentive and bonus
arrangements to which the Company is a party whether binding or not) and
each director, officer and employee of the Company is listed therein.
15.2 There is no contract of service in force between the Company and any of
its directors, officers or employees which is not terminable by the
Company without compensation on one month's notice given at any time.
15.3 There are no consultancy or management services agreements in existence
between the Company and any other person, firm or company.
15.4 There are no agreements or other arrangements (binding or otherwise)
between the Company or any employers' or trade association of which the
Company is a member and any trades union or other body or organisation
representing its employees.
15.5 There are no amounts owing to present or former directors, officers or
employees of the Company other than not more than one month's arrears of
remuneration accrued or due or for reimbursement of business expenses
incurred within a period of three months preceding the date hereof.
Sch 3 - P.16
15.6 Save to the extent (if any) to which provision or allowance has been made
or will be made in the accounts of the Company or the Completion Accounts
(as the case may be), the Company has not made or agreed to make any
payment to or provided or agreed to provide any benefit for any present
or former director, officer or employee of the Company nor any dependent
of any present or former director, officer or employee of the Company.
15.6 Save as Disclosed, no moneys or benefits other than in respect of
remuneration or emoluments of employment are payable to or for the
benefit of any present or former director, officer or employee of the
Company.
15.7 Save to the extent (if any) to which provision or allowance has been made
or will be made in the accounts of the Company or the Completion Accounts
(as the case may be) :
(a) no liability has been incurred or is anticipated by the Company
for breach of any contract of employment or for services or for
severance payments or for redundancy payments or protective awards
or for compensation for unfair dismissal or for failure to comply
with any order for the reinstatement or re-engagement of any
employee or for any other liability accruing from the termination
or variation of any contract of employment or for services; and
(b) no gratuitous payment has been made or promised by the Company in
connection with the actual or proposed termination or suspension
of employment or variation of any contract of employment or for
services of any present or former director, officer or employee of
the Company.
15.8 The Company has in relation to each of its employees (and so far as
relevant to each of its former employees) complied with:
(a) all obligations imposed on it by all relevant statutes,
regulations and codes of conduct and practice affecting its
employment of any persons and all relevant orders and awards made
thereunder and has maintained current, adequate and suitable
records regarding the service, terms and conditions of employment
of each of its employees; and
(b) all collective agreements, recognition agreements and customs and
practices for the time being affecting its employees or their
conditions of service.
15.9 The Company has not been served with any improvement and/or prohibition
notices pursuant to any applicable employment or health and safety laws,
rules and/or regulations and is not in breach of any provisions of any of
the foregoing.
15.10 There is no liability or claim against the Company from any employee or
former employee outstanding or anticipated.
15.11 Within a period of one year preceding the date of this Agreement the
Company has not given notice of any redundancies.
15.12 No present director, officer or employee of the Company has given or
received notice terminating his employment except as expressly
contemplated under this Agreement and Completion of this Agreement will
not trigger any "golden parachute" agreement.
15.13 The Company does not have in existence nor is it proposing to introduce:
Sch 3 - P.17
(i) any employee share trust, share incentive scheme, share option
scheme or profit sharing scheme for the benefit of all or any of
its directors, officers or employees; or
(ii) any scheme whereunder any director, officer or employee of the
Company is entitled to a commission or remuneration of any other
sort calculated by reference to the whole or part of the turnover,
profits or sales of the Company.
15.14 No dispute exists or can reasonably be anticipated between the Company
and a material number or category of its employees and so far as the
Vendors are aware there are no wage or other claims outstanding against
the Company by any person who is now or has been a director, officer or
employee of the Company.
15.15 The Company has not had during the last three years any strike, work
stoppages, slow-down, work-to-rule or lock-out by its employees, nor, so
far as the Vendors are aware, is any anticipated.
15.16 Each of the employees who is by law subject to immigration control, has
been granted appropriate permission to remain in Hong Kong or PRC and has
a valid work permit issued in relation to his employment with the Company
and has obtained all necessary extensions to his/her leave to remain in
Hong Kong or PRC and so far as the Vendors are aware there are in
existence no grounds upon which any such leave to remain or work permit
might be curtailed or the employee may be required to leave Hong Kong or
PRC.
16. INTELLECTUAL PROPERTY
---------------------
16.1 Full particulars of all Intellectual Property owned or otherwise
exploited or used by the Company in any part of the world will be
disclosed to the Purchaser during the due diligence to be conducted by
the Purchaser pursuant to CLAUSE 3.3 of this Agreement. All Intellectual
Property exploited or used by the Company is in the absolute beneficial
ownership of the Company or the Company is a 1icensee of the same
pursuant to an Intellectual Property agreement and the Company does not
own, use, exploit or have any other interest in any Intellectual Property
which has not been disclosed. In particular but without prejudice to the
generality of the foregoing, none of the Intellectual Property disclosed
is jointly owned by the Company and a third party.
16.2 All applications for any Intellectual Property owned, used or otherwise
exploited by the Company are being diligently prosecuted; patents,
registered trademarks and registered designs and other similar registered
or recorded Intellectual Property rights owned, used or otherwise
exploited by the Company have been maintained; nothing has been done to
diminish or otherwise affect the reputation of unregistered trademarks,
trade names, brand names or get up owned, used or otherwise exploited by
the Company; no copying or reproduction of the copyright material owned,
used or otherwise exploited by the Company has been permitted (expressly
or by implication); the Technical Information and other knowhow owned,
used or otherwise exploited by the Company has been kept confidential;
and (where applicable) all application, registration and renewal fees
necessary to procure, register, record or maintain the Intellectual
Property have been paid.
Sch 3 - P.18
16.3 All agreements relating to the Intellectual Property have been disclosed
and are valid and binding, and none has been the subject of any breach or
default by any party thereto or of any event which with notice or lapse
of time or both would constitute a default, nor are there any disputes,
claims or proceedings arising out of or relating to any Intellectual
Property agreement which the Company is a party to. The Company has not
authorised or otherwise permitted, expressly or by implication, any use
whatsoever of the Intellectual Property owned, used or otherwise
exploited by the Company save insofar as any such authority is contained
in the appropriate Intellectual Property agreements which have been
disclosed to the Purchaser during the due diligence to be conducted by
the Purchaser pursuant to CLAUSE 3.3 of this Agreement. The Company does
not use or otherwise exploit any Intellectual Property belonging to a
third party save insofar as it is licensed to do so in such appropriate
Intellectual Property agreements. All such Intellectual Property
agreements have been duly recorded or registered with the proper
authorities whenever a requirement to do so exists.
17. LITIGATION
----------
17.1 Save as being a plaintiff in the collection of debts (not exceeding
HK$5,000 (or its equivalent in any other currency) in the aggregate)
arising in the ordinary course of business, the Company is not engaged in
any litigation or arbitration proceedings and there are no lawsuits or
arbitration proceedings pending or threatened by or against the Company
or any person for whose acts or defaults the Company may be vicariously
liable.
17.2 No injunction has been granted against the Company.
17.3 The Company is not subject to any order or judgment given by any court or
governmental agency which is still in force.
17.4 The Company has not given any undertaking to any court or to any third
party arising out of any legal proceedings.
18. CONSEQUENCE OF THE PURCHASE OF THE SALE SHARES
----------------------------------------------
The purchase of the Sale Shares by the Purchaser or compliance with the
terms of this Agreement and any change in the current management of the
Company:
(a) will not cause the Company to lose the benefit of any right or
privilege it presently enjoys or cause any person who normally
does business with the Company not to continue to do so on the
same basis as previously;
(b) will not relieve any person of any obligation to the Company
(whether contractual or otherwise) or enable any person to
determine any such obligation or any right or benefit enjoyed by
the Company or to exercise any right whether under an agreement
with or otherwise in respect of the Company;
(c) will not conflict with or result in the breach of or constitute a
default under any of the terms, conditions or provisions of any
agreement or instrument to which the Company is now a party or any
loan to or mortgage created by the Company or of its memorandum or
articles of association;
(d) will not result in any present or future indebtedness of the
Company becoming due and payable or capable of being declared due
and payable prior to its stated maturity;
Sch 3 - P.19
(e) will not cause any director, supervisor, officer or senior
employee of the Company (other than those who are required to
resign in accordance with CLAUSE 5 of this Agreement) to leave
employment ;
(f) will not conflict with, violate or result in a breach of any law,
regulation, order, decree or writ applicable to the Company; and
(g) so far as the Vendors are aware the attitude or actions of
clients, customers and suppliers with regard to the Company will
not be prejudicially affected thereby.
PART II
SPECIFIC WARRANTIES IN RESPECT OF CONTROL TECH
1.1 Save as disclosed, Control Tech does not carry on, and has never carried
on, any business other than that trading business with Beijing Control
Tech and holding a 90% equity interest in Shanghai Control Tech.
1.2 Save as disclosed, Control Tech has no assets and subsidiary other than
inventories, cash and its equity interest in Shanghai Control Tech.
PART III
SPECIFIC WARRANTIES IN RESPECT OF SHANGHAI CONTROL TECH
1. CORPORATE MATTERS
-----------------
1.1 Shanghai Control Tech is a sino-foreign equity joint venture duly
established and validity existing under the laws of the PRC and has full
power, authority and legal right to own its assets and to carry on its
business which it now conducts and proposes to conduct and has complied
with all applicable laws and regulations.
1.2 Shanghai Control Tech's term of operation is 20 years commencing from 10
June 2004 to 9 June 2024 (both days inclusive) and Shanghai Control Tech
possesses a valid business operations licence for such term.
1.3 The joint venture contract relating to the establishment of Shanghai
Control Tech and the articles of association of Shanghai Control Tech
("JV DOCUMENTS") have been duly executed and delivered by the parties
thereto and each of them is legally valid, binding and enforceable in
accordance with its terms and there is no event or circumstance which
would give rise to the early termination of the JV Documents or any other
licences, consents, approvals or authorisations necessary or useful in
the performance of the terms thereof.
1.4 The JV Documents set out all the rights and obligations in addition to
those conferred by law between the parties thereto in respect of Shanghai
Control Tech, and the manner in which Shanghai Control Tech will be
operated, and on amendment, variation, addition or alteration has been
made to the JV Documents.
Sch 3 - P.20
1.5 All consents, authorisations, permits, approvals, registrations with or
declarations to any authority ("CONSENTS") required for the establishment
of Shanghai Control Tech and for Shanghai Control Tech to carry on its
business up to the Completion Date have been obtained from or issued by
all relevant authorities in the PRC, and all Consents required for the
execution and performance of the JV Documents up to the Completion Date
have been obtained from or issued by all relevant authorities in the PRC.
All such Consents remain effective and valid, and all conditions and
other terms upon which such Consents are issued and all requirements
contained in such Consents have been duly fulfilled and observed.
1.6 Each of the parties to the JV Documents is in full compliance with its
obligation thereunder.
1.7 Shanghai Control Tech is in compliance, in all material respects, with
the terms and conditions of its business licence and the JV Documents
(including all amendments, annexes and supplements thereto).
1.8 All title deeds relating to the assets of Shanghai Control Tech, and an
executed copy of all agreements to which Shanghai Control Tech is a
party, and the original copies of all other documents which are owned by,
or which ought to be in the possession of, Shanghai Control Tech are in
its possession.
1.9 Certified true copies of investment certificates issued by the board of
directors of Shanghai Control Tech to the existing parties to the JV
Documents have been provided by the Vendors to the Purchaser for
inspection.
2. FINANCE
-------
All dividends or distributions declared, made or paid by Shanghai Control
Tech have been declared, made or paid in accordance with the JV Documents
and all applicable laws and regulations.
3. INSURANCE
---------
3.1 All the assets and undertakings of Shanghai Control Tech of an insurable
nature, are, and have at all material times been insured in amounts
representing their full replacement or reinstatement value against fire
and other risks normally insured against by persons carrying on the same
business as that carried on by Shanghai Control Tech.
3.2 Shanghai Control Tech is now, and has at all material times been,
adequately covered against accident, damage, injury, third party loss
(including product liability), loss of profits and other risks normally
insured against by persons carrying on the same business.
3.3 All insurance is currently in full force and effect, and nothing has been
done or omitted to be done which could make any policy of insurance void
or voidable, or which is likely to result in an increase in premium.
3.5 None of the policies is subject to any special or unusual terms or
restrictions or to the payment of any premium in excess of the normal
rate.
Sch 3 - P.21
3.6 No claim is outstanding, or may be made, under any of the said policies
and no circumstances exist which are likely to give rise to such a claim.
4. FOREIGN EXCHANGE BALANCE
------------------------
Compliance has been made with all applicable laws and regulations with
respect to the opening and operation of the foreign exchange accounts and
foreign exchange activities of Shanghai Control Tech.
5. CONTRACTS
---------
In respect of all the contracts signed by Shanghai Control Tech
("SHANGHAI CONTROL TECH CONTRACTS") :
(a) Each of the Shanghai Control Tech Contracts has been duly executed
and delivered by the parties thereto and each of them is legally
valid, binding and enforceable in accordance with its terms and
under the laws of its relevant jurisdiction; and
(b) all relevant consents, approvals or authorisations which are
necessary or useful in the performance of the terms of the
Shanghai Control Tech Contracts by the parties thereto have been
duly obtained, granted and remain effective and valid; and
(c) there is no event or circumstance which would give rise to the
early termination of any of the Shanghai Control Tech Contracts;
and
(d) the terms of all the Shanghai Control Tech Contracts have been
complied with by Shanghai Control Tech and by the other parties
thereto in all respects and there are no circumstances likely to
give rise to a default by Shanghai Control Tech or by the other
parties thereto or a cause of litigation or arbitration.
6. SUBSIDIARY
----------
Shanghai Control Tech has no subsidiary and associated company.
7. PRC ASSETS
----------
7.1 All PRC Assets have been legally and validly acquired by Shanghai Control
Tech and are in the absolute beneficial ownership of Shanghai Control
Tech and in the possession and control of Shanghai Control Tech.
7.2 None of the PRC Assets is the subject of any Encumbrance and Shanghai
Control Tech has not agreed to create any Encumbrance over any of the PRC
Assets.
7.3 All the consideration and expenses in connection with the transfers of
the PRC Assets to Shanghai Control Tech has been paid by the Vendors
prior to Completion. There is and will not be any claim against Shanghai
Control Tech for any losses, liabilities, damages, interest, penalties,
costs, charges and expenses which may be sustained or incurred by such
transfers.
Sch 3 - P.22
8. PREFERENTIAL TAX TREATMENTS
---------------------------
Shanghai Control Tech has been granted with preferential tax treatments
by the PRC government authorities before the signing of this Agreement,
namely "two years full exemption and succeeding three years 50%
deduction" for corporate income tax. Such preferential tax treatments
will continue to be enjoyed by Shanghai Control Tech after Completion,
and the signing and completion of this Agreement and all agreements which
are necessary for the fulfillment of the condition precedent mentioned in
CLAUSE 3.1 (A) will not affect such enjoyment.
Sch 3 - P.23
SCHEDULE 4
KEY MANAGEMENT TEAM
Persons of the Key Management Team :
(1) General Manager, Xx. Xxx XxxX
(2) Deputy General Xxxxxx, Xx. Xx Xxxxxxx.
Sch 4
SCHEDULE 5
PROPORTION FOR PAYMENT OF CONSIDERATION
----------------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
NAME OF THE NUMBER OF THE SHAREHOLDING NUMBER OF SHARING RATIO FOR
VENDORS RELEVANT SALE PERCENTAGE OF THE CONSIDERATION CLAUSES 6.2 AND 7
SHARES TO BE RELEVANT SALE SHARES TO BE
SOLD AT SHARES ISSUED AND ALLOTTED
COMPLETION FOR THE RELEVANT
SALE SHARES
----------------------------------------------------------------------------------------------------------------
Xx Xxxxxxx 3 Shares 30% 5,876,662 30%
Consideration Shares
----------------------------------------------------------------------------------------------------------------
Xxx Xx 4 Shares 40% 7,835,551 40%
Consideration Shares
----------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx 3 Shares 30% 5,876,662 Consideration 30%
Shares
----------------------------------------------------------------------------------------------------------------
10 Shares 100% 19,588,875 100%
Total : Consideration Shares
----------------------------------------------------------------------------------------------------------------
Sch 5
ANNEXURE 1
TAX INDEMNITY
DATED THE ____ DAY OF ___________ 2005
LI XXXXXXX
XXX XX
XXXX XXXXXX
and
HARTCOURT CAPITAL, INC.
and
BESTEFFORT INVESTMENTS LIMITED
and
CONTROL TECH COMPANY LIMITED
and
------------------------------------
DEED OF INDEMNITY
IN RESPECT OF
TAXATION
------------------------------------
Annex 1 - P.1
THIS DEED OF INDEMNITY is made the day of 2005
BY:-
1. XX XXXXXXX (Holder of PRC Passport Number X00000000) of Room 1409,
Shanghai Mart, Xx.0000, Xxx'xx Xxxx (Xxxx), Xxxxxxxx 000000, People's
Republic of China ("XX. XX");
2. XXX XX (Holder of PRC Passport Number X00000000 of Room 1409, Shanghai
Mart, Xx.0000, Xxx'xx Xxxx (Xxxx), Xxxxxxxx 000000, People's Republic of
China) ("MR. REN");
3. XXXX XXXXXX (Holder of PRC Passport Number X00000000) of Room 1409,
Shanghai Mart, Xx.0000, Xxx'xx Xxxx (Xxxx), Xxxxxxxx 000000, People's
Republic of China ("XX. XXXX", together with Xx. Xx and Xx. Xxx
collectively the "VENDORS")
IN FAVOUR OF :-
(1) HARTCOURTCAPITAL, INC, a company incorporated in the British Virgin
Islands (Company Number : 400480) and having its office at 0/X, 000
Xxxxxxxxx Xxxx, Xxxxxxxx 000000, xxx Xxxxxx'x Xxxxxxxx xx Xxxxx
("PURCHASER"); and
(2) BESTEFFORT INVESTMENTS LIMITED, a company incorporated in the British
Virgin Islands (Company Number : 619473) and having its registered office
at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands ("BESTEFFORT "); and
(3) CONTROL TECH COMPANY LIMITED, a company incorporated in Hong Kong
(Company Number : 720632) and having its registered office at Block B,
8th Floor, Mai Luen Industrial Building, 00-00 Xxxx Xxx Xxxxxx, X. X.,
Xxxx Xxxx ("CONTROL TECH"); and
(4) [CHINESE CHARACTERS], a sino-foreign joint venture incorporated in the
PRC and having its registered office at [CHINESE CHARACTERS] ("SHANGHAI
CONTROL TECH", together with Besteffort and Control Tech, collectively
the "COMPANY").
WHEREAS :-
(A) By an agreement ("AGREEMENT") dated 30th October 2004, the Purchaser at
the request of the Vendors agreed to purchase from the Vendors 100% of
the entire issued share capital of Besteffort, the holding company of
Control Tech which owns 90% interest in Shanghai Control Tech subject to
and upon the terms and conditions of the Agreement.
(B) The Vendors agreed with the Purchaser to execute this Deed pursuant and
supplemental to the Agreement.
Annex 1 - P.2
NOW THIS DEED WITNESSETH AS FOLLOWS :-
1. (a) Words and expressions used herein, unless otherwise expressed or
required by context, shall have the same meanings as those used or
defined in the Agreement.
(b) In this Deed, in addition to the definitions in the Agreement, the
following words and expressions shall have the following
meanings :-
"TAXATION" (i) any liability to any form of taxation, duty,
impost, levy, rate, or other amount payable
to any revenue, customs or fiscal authorities
whenever created or imposed and of any part
of the world, including, without limitation,
profits tax, provisional profits tax,
interest tax, salaries tax, property tax,
taxes on income, estate duty, capital duty,
stamp duty, payroll tax, rates, customs and
excise duties and other similar liabilities
(ii) such amount or amounts as is referred to in
CLAUSE L(C) hereof
(iii) all interest, penalties, costs, charges and
expenses incidental or relating to the
liability to Taxation or the deprivation of
any Relief which is the subject of this
indemnity to the extent that the same is
payable or suffered by the Company
"CLAIM" any assessment, notice, demand or other
document issued or action taken by or on
behalf of the Inland Revenue Department of
Hong Kong or in the PRC or any other
statutory or governmental authority
whatsoever in Hong Kong or in the PRC or in
any other part of the world from which it
appears that the Company is liable or is
sought to be made liable for any payment of
any form of Taxation or to be deprived of any
Relief which Relief would, but for the Claim,
have been available to the relevant company
"RELIEF" any relief, allowance, set-off or deduction
in computing profits or credit or right to
repayment of Taxation available to the
Company granted by or pursuant to any
legislation concerning or otherwise relating
to Taxation
(c) In the event of deprivation of any Relief, there shall be treated
as an amount of Taxation for which liability has arisen the amount
of such Relief, applying the relevant rates of Taxation in force
in the period or periods in respect of which Relief would have
applied or (where the rate has at the relevant time not been
fixed) the last known rate and assuming that Relief was capable of
full utilisation by the relevant company.
2. Subject as hereinafter provided, each of the Vendors hereby covenants and
agrees with the Purchaser and the Company that they will fully and
effectually indemnify and at all times keep fully and effectually
indemnified the Purchaser and the Company from and against :-
Annex 1 - P.3
(a) the amount of any and all Taxation falling on the Company from or
by reference to any income, profits, gains, transactions, events,
matters or things earned, accrued, received, entered into or
occurring up to the date hereof, whether alone or in conjunction
with any other circumstances whenever occurring and whether or not
such Taxation is chargeable against or attributable to any other
person, firm or company, including any and all Taxation resulting
from the receipt by the Company or the Purchaser of any amounts
paid by the Vendors under this Deed; and
(b) all reasonable costs (including all legal costs), expense or other
liabilities which the Purchaser or the Company may incur in
connection with :-
(i) the settlement of any claim under this Deed;
(ii) any legal proceedings in which the Purchaser or the Company
claims under or in respect of this Deed and in which
judgement is given for the Purchaser or the Company or
(iii) the enforcement of any such settlement or judgement.
3. This Deed does not cover any Claim and the Vendors shall be under no
liability under this Deed in respect of Taxation :-
(a) to the extent that provision has been made for such Taxation in
the Accounts; or
(b) which would not have arisen but for any act or omission by the
Purchaser or the Company effected without the prior written
consent or agreement of the Vendors, otherwise than in the
ordinary course of business after the date hereof; or
(c) for which the Company is primarily liable as a result of
transactions in the ordinary course of normal day to day trading
operations since the Completion Date; or
(d) to the extent that such Claim arises or is incurred as a result of
the imposition of Taxation as a consequence of any retrospective
change in the law or practice coming into force after the date
hereof or to the extent such Claim arises or is increased by an
increase in rates of Taxation after the date hereof with
retrospective effect.
4. (a) No claim under this Deed shall be made by the Purchaser and the
Company in respect of the same Taxation.
(b) No claim under this Deed shall be made if a Claim in respect
thereof has been made under the Agreement.
(c) The Vendors shall not be liable in respect of any Claim under this
Deed after the sixth anniversary of the Completion Date except for
Claims notice of which has been given to the Vendors on or prior
to such sixth anniversary.
5. (a) In the event of any Claim arising, the Purchaser shall, by way of
covenant but not as a condition precedent to the liability of the
Vendors hereunder, give or procure that notice thereof is given,
as soon as reasonably practicable, to the Vendors and, as regards
any Claim, the Company and/or the Purchaser shall take such action
to cause the Claim to be withdrawn, or to dispute, resist, appeal
against, compromise or defend the Claim and any determination in
respect thereof, but subject to it being indemnified and secured
to its reasonable satisfaction by the Vendors from and against any
and all losses, liabilities (including additional Taxation),
damages, interest, penalties, costs, charges and expenses which
may be thereby sustained or incurred.
Annex 1 - P.4
(b) Without the prior approval of the Purchaser (which shall not be
unnecessary withheld), the Vendors shall make no settlement of any
Claim nor agree any matter in the course of disputing any Claim
likely to affect the amount thereof or the future taxation
liability of the Company.
6. If, after any of the Vendors has made any payment pursuant to this Deed,
the Company shall receive a refund of all or part of the relevant
Taxation, the relevant company shall repay to the Vendors a sum
corresponding to the balance of the refund remaining after deducting the
aggregate of (a) any costs, charges and expenses payable or sustained or
incurred by the Company and/or the Purchaser in recovering such refund,
and (b) the amount of any additional Taxation which may be suffered or
incurred by the Company in consequence of such refund.
7. The provisions of the Agreement relating to service of notice shall be
incorporated in and be deemed to be part of this Deed.
8. Time shall be of the essence of this Deed.
9. This Deed shall be governed by and construed in all respects in
accordance with the laws of Hong Kong and the parties irrevocably submit
to the non-exclusive jurisdiction of the Hong Kong courts in relation to
any proceedings arising out of or in connection with this Deed, but this
Deed may be enforced in any other courts of competent jurisdiction.
10. Each of the Vendors hereby irrevocably appoints ________________________
as its process agent to receive on its behalf service of any writ,
summons, order, judgment or other notice of legal process in Hong Kong.
Such service shall be deemed completed on delivery to such process agent
(whether or not it is forwarded to and received by Xx. Xx, Xx. Xxx and/or
Xx. Xxxx (as the case may be)). If for any reason such process agent
ceases to be able to act as process agent, or no longer has an address in
Hong Kong, each of the Vendors irrevocably agrees to appoint a substitute
process agent acceptable to the Purchaser and to deliver to the Purchaser
a copy of the new process agent's acceptance of that appointment within
30 days. Nothing herein contained shall affect the right to serve process
in any other manner permitted by law.
Annex 1 - P.5
AS WITNESS whereof this Deed has been duly executed on the day and year first
above written.
SEALED with the Common Seal of )
SIGNED SEALED and DELIVERED by )
XX XXXXXXX )
in the presence of: )
SIGNED SEALED and DELIVERED by )
XXX XX )
in the presence of: )
SIGNED SEALED and DELIVERED by )
XXXX XXXXXX )
in the presence of :- )
SIGNED by )
for and on behalf of )
HARTCOURT CAPITAL, INC )
in the presence of :- )
SIGNED by )
for and on behalf of )
BESTEFFORT INVESMENTS LIMITED )
in the presence of :- )
SIGNED by )
for and on behalf of )
CONTROL TECH COMPANY LIMITED )
in the presence of :- )
Annex 1 - P.6
SIGNED by )
for and on behalf of )
[CHINESE CHARACTERS] )
in the presence of :- )
Annex 1 - P.7
ANNEXURE 2
LEGEND TO BE PLACED ON CERTIFICATES OF ISSUER SHARES
"The Securities represented hereby have not been registered under the Securities
Act of 1933, as amended (the "ACT"), or under the securities laws of certain
States. These securities are subject to restrictions on transferability and
resale and may not be transferred or resold except as permitted under the Act
and the applicable State securities laws, pursuant to registration or exemption
therefrom. Investors should be aware that they may be required to bear the
financial risks of this investment for an indefinite period of time. The issuer
of these securities may require an option of counsel in form and substance
satisfactory to the issuer to the effect that any proposed transfer or resale is
in compliance with the Act and any applicable State securities laws."
Annex 2
