Dated 11th September, 1996
--------------------------
REGAL INTERNATIONAL INC.
and
BTR CHINA HOLDINGS B.V.
and
CHINA STRATEGIC HOLDINGS LIMITED
--------------------------------------------------------------
Agreement relating to the sale
and purchase of the entire issued
share capital of
ACEWIN PROFITS LIMITED
the owner of the entire issued share capital of
CHINA MACHINE (HOLDINGS) LIMITED
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TABLE OF CONTENTS
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CLAUSE NO. CONTENT PAGE NO.
------------------- --------
1. INTERPRETATION 1
2. SALE AND PURCHASE OF THE SALE SHARES 4
3. COMPLETION 4
4. WARRANTIES/UNDERTAKING 6
5. CONDUCT OF BUSINESS PRIOR TO COMPLETION 9
6. MISCELLANEOUS 10
7. FURTHER ASSURANCE 10
8. ENTIRE AGREEMENT 11
9. COSTS AND EXPENSES 11
10. KNOW-HOW/TRADEMARK AGREEMENTS ETC. 11
11. NOTICES 11
12. TIME OF THE ESSENCE 12
13. ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇. GOVERNING LAW AND JURISDICTION 13
SCHEDULE 1
PART 1 DETAILS OF ACEWIN
PART 2 DETAILS OF CHINA MACHINE
PART 3 DETAILS OF THE WUXI JOINT VENTURE
PART 4 DETAILS OF VULKAN COUPLINGS
SCHEDULE 2 WARRANTIES
THIS AGREEMENT dated 11th September, 1996 is made
BETWEEN:-
(1) REGAL INTERNATIONAL INC., a company incorporated in
Delaware, the U.S.A., the registered office of which is at
▇.▇. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇ ▇▇▇▇▇, the U.S.A. (the "Vendor");
(2) BTR CHINA HOLDINGS B.V., a company incorporated in the
Netherlands, the registered office of which is at Weena
750, Rotterdam (the "Purchaser"); and
(3) CHINA STRATEGIC HOLDINGS LIMITED, a company incorporated in
Hong Kong, the registered office of which is at 52nd Floor,
Bank of ▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "Guarantor")
WHEREAS:-
(A) Acewin is an investment holding company incorporated in the
British Virgin Islands which holds a 100% interest in the
issued share capital of China Machine;
(B) China Machine is an investment holding company incorporated
in Hong Kong which holds a 55% interest in the registered
capital of the Wuxi Joint Venture; and
(C) the Vendor wishes to sell or procure the sale of and the
Purchaser wishes to acquire the entire issued share capital
of Acewin and through it, China Machine, on the terms set
out below and the Guarantor has agreed to give the guarantee set out herein.
IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
--------------
(A) In this Agreement and the recitals hereto, unless the
context otherwise requires:-
"Accounts" means together the Audited Accounts and the Management Accounts;
"Accounts Date" means 31st March, 1996;
"Acewin" means Acewin Profits Limited, a company
incorporated in the British Virgin Islands, particulars of
which are set out in Part 1 of Schedule 1;
"▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Report" means the report by ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ dated 5th April, 1996 in relation to the
consolidated financial statements of Acewin Profits Limited
and subsidiaries as of 31st December, 1993, 1994 and 1995
together with the auditor's reports;
- 1 -
"Audited Accounts" means the accounts set out in the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Report;
"BTR Group" means the Purchaser and any company which is a
holding company or subsidiary of the Purchaser and any other
subsidiary of such holding company and for this purpose "holding
company" and "subsidiary" have the meanings ascribed thereto in
section 2 of the Companies Ordinance of Hong Kong;
"Building" means all factory buildings and warehouses owned by
Wuxi Joint Venture;
"Business Day" means a day (other than a Saturday) on which banks
in Hong Kong are open for business;
"China Machine" means China Machine (Holdings) Limited, a company
incorporated in Hong Kong, particulars of which are set out in
Part 2 of Schedule 1;
"Completion" means the performance by the parties of their
respective obligations in accordance with the provisions of Clause;
"Completion Date" means 11th September, 1996 or such other date
as the parties may agree being the date upon which Completion is
to take place pursuant to Clause 4;
"Group" means Acewin, China Machine, the Wuxi Joint Venture and
Vulkan Couplings; and "Group Company" means any one of them;
"HK$" means Hong Kong dollars;
"Intellectual Property" means trademarks, service marks, trade
names, registered designs, designs, copyrights and other forms of
intellectual or industrial property (in each case in any part of
the world and whether or not registered or registrable and for
the full period thereof and all extensions and renewals thereof
and applications for registration of or otherwise in connection
with the foregoing, know-how, inventions, formulae, confidential
or secret processes and information, computer programs and
software, and any licenses and permissions in connection
therewith;
"Joint Venture Contract" means the joint venture contract dated
7th August, 1993, entered into between China Machinery (Holdings)
Limited, a company incorporated in Hong Kong, and China Machine's
predecessor in interest, and Wuxi Vibration Isolator Factory, as
amended by two supplemental joint venture contracts dated 12th
January, 1995 and 15th December, 1995 respectively;
"Management Accounts" means the unaudited management accounts of
the Group for the period from 1st January, 1996 to 31st March, 1996;
"PRC" means the People's Republic of China;
"Sale Shares" means 1,000 fully paid ordinary shares of US$1.00
each in the share capital of Acewin which are beneficially owned
by the Vendor and which together comprise all of the issued and
authorised share capital of Acewin;
- 2 -
"Site" means the 39,984 square metre-site located at ▇▇. ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇. ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Nanchang, and No. 154 Huiqianlu
Beitan Qu, Wuxi, Jiangsu Province, the PRC;
"Taxation" means:-
(i) any liability to any form of taxation whenever created or
imposed and whether of Hong Kong, the PRC or of any other part of
the world and without prejudice to the generality of the
foregoing includes profits tax, provisional profits tax, interest
tax, salaries tax, property tax, taxes on income, estate duty,
capital duty, stamp duty, payroll tax, withholding tax, rates,
customs and excise duties and similar liabilities and generally
any tax, duty, impost, levy or rate or any amount payable to the
revenue, customs or fiscal authorities whether of Hong Kong, the
PRC or of any other party of the world;
(ii) an amount of equal to any deprivation of any relief,
allowance, set off, deduction in computing profits or right to
repayment of taxation granted by or pursuant to any legislation
concerning or otherwise relating to taxation; and
(iii) all costs, interest, penalties, charges and expenses
incidental or relating to taxation or to any relief, allowance,
set off or deduction in computing profits or right to repayment
of taxation which is the subject of the Warranties and contained
in Schedule 2 to the extent that the same is/are payable or
suffered by any of the Group Companies;
"US$" means United States dollars;
"Vulkan Couplings" means Wuxi Vulkan Couplings Co., Ltd., a Sino-
foreign equity joint venture company, details of which are set
out in Part 4 of Schedule 1.
"Warranties" means the representations, warranties and
undertakings set out or referred to in Clause 4(A) below;
"Wuxi Accounts" means--
(i) 1994 audited annual report for the Wuxi Joint Venture
prepared by Beijing certified public accountants dated
20th March 1995; and
(ii) 1995 financial statements and audited annual report for the
Wuxi Joint Venture prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ Qiang dated
6th April 1996;
Wuxi Vibration Isolator Factory" means Wuxi Vibration Isolator
Factory, a company registered in Wuxi Municipality, Jiangsu
Province, the PRC, having its legal address at ▇▇.▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, the PRC;
"Wuxi Joint Venture" means Wuxi-CSI Vibration Isolator Co.,
Ltd.), a Sino-foreign equity joint venture company, particulars
of which are set out in Part 3 of Schedule 1;
- 3 -
(B) References herein to "Clauses" and "Schedules" are to
the clauses of and the schedules to this Agreement.
(C) In this Agreement words importing the singular include
the plural and vice versa, words importing gender or the
neuter include both genders and the neuter and references
to persons include bodies corporate or unincorporate.
(D) In this Agreement references to "writing", or any
cognate expression, include a reference to any
communication effected by telex, facsimile transmission or similar means.
(E) The headings and table of contents in this Agreement
are for convenience only and shall not affect its interpretation.
2. SALE AND PURCHASE OF THE SALE SHARES
------------------------------------
(A) On the terms and subject to the conditions set out in
this Agreement the Vendor shall sell or procure the sale of
and the Purchaser relying on the representations,
warranties and undertakings of the Vendor contained or
referred to herein shall purchase the Sale Shares free from
all rights of pre-emption, options, liens, claims,
equities, charges, encumbrances, adverse interests and
third-party rights of any nature and together with all
rights now attaching or hereafter becoming attached or
accruing thereto including the right to receive all
dividends and other distributions declared, made or paid in
respect of Acewin on or after the Accounts Date.
(B) The Vendor hereby waives any right of pre-emption which
it may have in respect of the Sale Shares, whether pursuant
to the Articles of Association of Acewin or otherwise howsoever arising.
(C) The consideration for the sale and purchase of the Sale
Shares shall be US$13,950,000 to be paid at Completion in
the manner described in Clause 3.
3. COMPLETION
-----------
Completion of this Agreement shall take place at 20th Floor,
Alexandra House, 1620 Chater Road, Central, Hong Kong, at or
about 7:00 p.m. (Hong Kong time) on the Completion Date when all
(but not part only) of the following business shall be transacted:-
(A) the Vendor shall:-
(i) deliver to the Purchaser:-
(a) duly executed instrument of transfer in respect of the Sale Shares to
be sold to the Purchaser in favour of the Purchaser and/or its nominee;
- 4 -
(b) the share certificates for the Sale Shares to be sold to the Purchaser;
(c) letters of resignation duly executed under seal of those
directors, secretary, auditors and officers of the Wuxi Joint Venture
and Vulkan Couplings who hold office at the nomination China Machine
(undated in the case of ▇▇. ▇▇▇▇▇ ▇▇▇ Hong ▇▇▇▇▇ provided that it
shall not be dated or submitted to the relevant Group Company unless
▇▇. ▇▇▇▇▇ ▇▇▇ Hong ▇▇▇▇▇ has first been informed of the Purchaser's
intention to do so) and of all directors, secretary auditors and
officers of Acewin and China Machine, in each case acknowledging that
they have no outstanding claims against the relevant Group Company
whether for compensation for loss of office or otherwise howsoever and
further, in the case of each director of China Machine such
resignation shall be accompanied by a resignation letter endorsed with
a signed certificate of the director in question pursuant to Section
157D(3)(b) of the Companies Ordinance;
(d) in respect of Acewin and China Machine, the statutory and minute
books (which shall be written up to but not including the Completion
Date), Common Seal, Certificate of Incorporation, Business
Registration Certificate, all available copies of the Memorandum and
Articles of Association, cheque books, books of account (all complete
and written up to Completion), copies of all tax return(s) filed and
related correspondence (if any), all current insurance policies, all
contracts (if any) to which any it is a party and all other documents
and records of Acewin and China Machine;
(e) such other documents as may be required to give the Purchaser
good title to the Sale Shares and to enable the Purchaser or its
nominee to become the registered holder of the Sale Shares; and
(f) the release in respect of the loan note dated 13th February, 1996
issued by the Vendor to Holer Holdings Limited relating to the loan in
the amount of US$13.5 million duly executed by the Vendor and Holer
Holdings Limited;
(ii) procure that board meetings of Acewin and each Group Company be held
at which resolutions shall be passed (where appropriate):-
(a) to approve and give effect to all of the matters referred to above;
(b) to approve the Purchaser and its nominee for registration as the
holders of the Sale Shares;
(c) to accept the resignations of the directors, secretary and auditors of
each Group Company referred to in sub-clauses (A)(i)(c) above and to
appoint as new directors, secretary and auditors of each Group
- 5 -
Company, such persons as the Purchaser may require, all with
effect from the close of business of the relevant meeting;
(d) to change the authorised signatories of Acewin and
China Machine to operate their bank accounts and otherwise
conduct their business as the Purchaser may require; and
(e) to deal with and resolve upon such other matters as the
Purchaser shall reasonably require for the purposes of
giving effect to the provisions of this Agreement;
(iii) execute and do and deliver to the Purchaser all such
other documents, acts and things as the Purchaser may reasonably
require in order to implement the transactions contemplated by
this Agreement;
(B) the Purchaser shall present the instrument of transfer together
with the share certificates in respect of the Sale Shares to be sold
to the Purchaser to Acewin for registration of the transfer;
(C) the Purchaser shall telegraphically transfer to the Vendor the
sum of US$13,950,000 and deliver proof in form and substance
satisfactory to the Vendor that such sum has been irrevocably
despatched to the Vendor by telegraphic transfer to as follows:-
Banker's name: The Hong Kong and Shanghai Banking Corporation
Limited
Address: ▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Multi-currency
savings account no.: ▇▇▇-▇-▇▇▇▇▇▇
Payee: Regal International Inc.
(D) no party shall be obliged to complete this Agreement unless each
other party complies fully with the above requirements of this Clause 3.
4. WARRANTIES/UNDERTAKINGS
-----------------------
(A) The Vendor hereby represents, warrants and undertakes to the
Purchaser in the terms set out in Schedule 2 and that at Completion:-
(i) the Sale Shares will be free from all rights of pre-emption,
options, liens, claims, equities, charges, encumbrances and
third-party rights of any nature;
(ii) Acewin will be the beneficial owner of a 100% interest in
the issued share capital of China Machine; and
(iii) China Machine will be the beneficial owner of a 55%
interest in the registered capital of the Wuxi Joint Venture.
- 6 -
(B) Any material breach of any of the representations,
warranties, undertakings or indemnities made or given by the
Vendor hereunder which adversely affects the value of the Group
occurring before Completion shall, in addition and without
prejudice to any other rights or remedies available to the
Purchaser, entitle the Purchaser to rescind this Agreement
without penalty.
(C) The Purchaser shall not be entitled to make any claims
against the Vendor arising out of or in connection with any
breach or alleged breach of the Warranties (any "Warranty Claim")
(i) after expiry of the period of two years following the date of
Completion except in respect of those matters or circumstances
which have been the subject of a claim made hereunder or in
respect of those circumstances which may give rise to a claim
made hereunder and of which notice has been given to the Vendor
on or prior to such date or (ii) where the aggregate amount of
that Warranty Claim does not exceed US$100,000. The Vendor's
aggregate liability for all Warranty Claims shall not exceed
US$13,950,000.
(D) insofar as the Warranties relate in whole or in part to
matters of fact, they shall constitute representations upon the
faith of which the Purchaser has entered into this Agreement and
each of the Warranties shall be construed as a separate Warranty
and (save as expressly provided to the contrary) shall not be
limited or restricted by reference to the terms of any other
Warranties or any other term of this Agreement.
(E) The Vendor hereby undertakes that it will from time to time
prior to Completion, promptly notify the Purchaser in writing of
any event, circumstance matter or thing of which it becomes aware
which is a material breach of or materially inconsistent with any
of the Warranties.
(F) Any rights to which the Purchaser may be or become entitled
by reason of any of the Warranties and all remedies which may be
available to the Purchaser in consequence of any of the
Warranties being untrue or misleading or breached shall enure for
the benefit of any wholly-owned subsidiary of the Purchaser which
has with the prior written consent of the Vendor (not to be
unreasonably withheld) explicitly referring to this Clause become
the beneficial owner for the time being of the Sale Shares and
accordingly any loss which is sustained by such wholly-owned
subsidiary in consequence of any of the Warranties being untrue
misleading or breached shall be deemed to be that of the
Purchaser and the Purchaser may bring proceedings and exercise
any other remedy on the footing that it has been the beneficial
owner of the Sale Shares at all times from Completion.
(G) The Vendor undertakes and agrees:-
(i) in the event that the book value of all stock-in-trade
and inventory owned by members of the Group as at the
Completion Date is or has not been fully realised in
cash by the relevant Group Company within a period of
nine (9) months after Completion, to pay to the
Purchaser, forthwith after the expiration of the said
nine-month period, an amount equal to fifty-one percent
(51%) of such unrealised value; and
(ii) in the event that the book value of any of the accounts
receivable (both trade and others, including any debts or
loans to third parties) due to members
- 7 -
of the Group as at the Completion Date is or has not been
fully realised in cash by the relevant Group Company within a
period of six (6) months from the date on which such debt or
loan becomes due and payable, to pay to the relevant Group
Company, forthwith upon expiration of the said six-month
period, an amount equal to fifty-one percent (51%) of such unrealised value.
(H) Subject to the Vendor's compliance with sub-clause 4(G)(i)
and (ii) above, the Purchaser agrees to pay to the Vendor a sum
equal to all sales proceeds in respect of such stock-in-trade and
inventory received by the relevant Group Company from time to
time after expiration of the said nine-month period referred to
in Clause 4(G)(i), and any payments in respect of such accounts
receivable received by the relevant Group Company from time to
time after the expiration of the relevant period referred to
therein and provided always that the total payments by the
Purchaser and the Vendor as aforesaid shall not exceed the
amounts paid by the Vendor to the Purchaser under sub-clauses
4(G)(i) and (ii) above and the Purchaser shall (subject to
indemnity from the Vendor as to 51% of the costs thereof) take
such legal or other legal proceedings for the recovery of any
book debts or accounts receivable as the Vendor may reasonably require.
(1) The Vendor shall procure:-
(i) for the Wuxi Joint Venture, a land use rights
certificate in respect of the Site, issued by the Wuxi
land bureau in the name of the Wuxi Joint Venture;
(ii) for the Purchaser, written approval from the Wuxi
Vibration Isolator Factory of the replacement of those
members of the board of directors of the Wuxi Joint
Venture who were nominated by China Machine with new
directors, selected by the Purchaser and thereafter
nominated by China Machine;
(iii) for each of the Wuxi Joint Venture and the Wuxi
Vibration Isolator Factory, the termination of all
contracts and agreements relating to the Wuxi Vibration
Isolator Factory Compound Damping Materials Branch
Factory(
) the Wuxi Jieda Vibration Isolator Metal Parts Company(
) and the Shanghai Sidalizhen Engineering Company(
) and to arrange for the PRC State Administration for
Industry and Commerce either to cancel the business licence
of each of these three companies or to revise their
registrations to remove as an investor in them the Wuxi Joint
venture or the Wuxi Vibration Isolator Factory, as relevant;
(iv) within two weeks after Completion, in respect of Vulkan
Couplings, copies of (i) the government approval of the joint
venture contract, articles of association and feasibility
study, (ii) the approval certificate and (iii) the business
licence, all providing for terms substantially the same as
those provided in the joint venture contract in respect of
the establishment of Vulkan Couplings dated 6th December, 1995;
(v) within three months after Completion, unconditional and
final discharge and full release of the guarantee issued by
the Wuxi Joint Venture in favour
- 8 -
of Wuxi Communication Bank in the amount of RMB800,000
in 1995 in a form acceptable to the Purchaser.
5. CONDUCT OF BUSINESS PRIOR TO COMPLETION
---------------------------------------
The Vendor shall procure that prior to Completion the business of
the Group will be operated in the ordinary course of day-to-day
operations and that it will not do or omit to do (or allow to be
done or omitted to be done) any act or thing which is outside the
ordinary course of day-to-day operations without the prior
written consent of the Purchaser (not to be unreasonably
withheld) and furthermore that no Group Company will (save as
contemplated by this Agreement or as the Purchaser may consent to
in writing as aforesaid):-
(i) issue or agree to issue any share or loan capital
or grant or agree to grantor redeem any option or
amend the terms of any existing option over or
right to acquire or subscribe any of its share or
loan capital;
(ii) borrow or raise money other than in the ordinary
course of normal day-to-day business of the Group
as carried on at the date of this Agreement;
(iii) enter into any material contract, agreement,
trade or other material transaction or capital
commitment or undertake any material contingent
liability other than in the ordinary course of trading;
(iv) terminate any agreement, arrangement or
understanding or waive any right of material value;
(v) declare, pay or make any dividends or other distributions;
(vi) create or permit to arise any mortgage, charge,
lien, pledge, other form of security or encumbrance of
equity of whatsoever nature, whether similar to the
foregoing or not, on or in respect of any part of its
undertaking, property or assets other than liens
arising by operation of law in amounts which are not
material other than mortgages, charges, liens pledges
or other form of security given in relation to banking
facilities made available to any Group Company or the
obligations of any other Group Company in the ordinary
and usual course of trading;
(vii) give any guarantee, indemnity, surety or
security other than guarantees indemnity surety or
security given in relation to banking facilities made
available to any Group Company or the obligations of
any other Group Company in the ordinary and usual
course of trading;
(viii) appoint any new directors or employ any
employees or terminate the employment of any existing
key employees or vary their terms of employment;
(ix) dispose or agree to dispose of or acquire or agree
to acquire any material asset;
- 9 -
(x) dispose of the ownership, possession, custody or
control of any corporate or other books or records;
(xi) other than in the ordinary and usual course of its
business, 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;
(xii) otherwise than in the ordinary course of its
business, release compromise or write off any material
amount recorded in the books of account of the relevant
Group Company as owing by any debtors of such Group
Company;
(xiii) let or agree to let or otherwise part with
possession or ownership of the whole or any part of any
property or Site or the buildings thereon nor purchase,
take on lease or assume possession of any real property; or
(xiv) terminate any or allow to lapse any insurance
policy now in effect or default under any provision thereof.
6. MISCELLANEOUS
--------------
(A) Any provision of this Agreement which is capable of
being performed after but which has not been performed at
or before Completion and all Warranties and indemnities and
other undertakings contained in or entered into pursuant to
this Agreement shall remain in full force and effect
notwithstanding Completion.
(B) Any remedy conferred on any part hereto for breach of
this Agreement (including the breach of any Warranty) shall
be in addition and without prejudice to all other rights
and remedies available to it and the exercise of or failure
to exercise any remedy shall not constitute a waiver by
such party of any of its rights or remedies.
(C) This Agreement shall be binding on and enure for the
benefit of the successors of each of the parties but,
subject to Clause 4(F), shall not be capable of being
assigned by any party without the written consent of the other parties.
7. FURTHER ASSURANCE
-----------------
Each party hereby undertakes to the others that it will do
all such acts and things and execute all such deeds and
documents as may be necessary or desirable to carry into
effect or to give legal effect to the provisions of this
Agreement and the transactions hereby contemplated.
- 10 -
8. ENTIRE AGREEMENT
----------------
This Agreement constitutes the whole agreement between the parties relating
to the transactions hereby contemplated and no future variation
shall be effective unless made in writing and signed by all of the parties.
9. COSTS AND EXPENSES
------------------
Each party shall bear its own costs in relation to the
preparation, execution and carrying into effect of this Agreement.
10. KNOW-HOW/TRADEMARK AGREEMENTS ETC.
-----------------------------------
The Vendor acknowledges that the Purchaser or another member of
the BTR Group intends to enter into certain trademark and know-
how licence agreements with the Wuxi Joint Venture pursuant to
which certain intellectual property rights will be licensed by
the Purchaser or another member of the BTR Group to the Wuxi
Joint Venture for an aggregate consideration not exceeding 3% of
the annual sales of the Wuxi Joint Venture. The Purchaser shall
supply to the Vendor and the Wuxi Joint Venture drafts in English
and Chinese of such agreements. The Vendor shall use its best
endeavours to procure approval thereof by the relevant regulatory
authorities in Wuxi within three months after Completion but does
not represent or warrant that any such approval can or will be
obtained. All proper and reasonable costs incurred by the Vendor
in connection with seeking such approvals shall be paid by the
Purchaser, either by way of a cash advance or by way of
reimbursement (at the election of the Vendor).
11. NOTICES
-------
(A) Any notice or other document to be given under this
Agreement shall be in writing and shall be left by hand at
or sent by registered or recorded post to the address of the
party to be served as stated below or to such other address
as may have been last notified by such party to the other
party hereto:-
To the Vendor:-
c/o 52nd Floor, Bank of China Tower
▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇
- 11 -
To the Purchaser:-
BTR Antivibration Systems Group
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attn: Mr. ▇▇▇▇ ▇▇▇▇▇▇▇
(B) Any such notice or other document shall be deemed to
have been duly given upon receipt if left by hand and in the
case of notice sent by post, it shall be deemed to have been
given on the second day after posting.
12. TIME OF THE ESSENCE
-------------------
Time shall be of the essence of this Agreement.
13. GUARANTEE
---------
(A) The Guarantor unconditionally and irrevocably
guarantees to the Purchaser (as primary obligor and not
merely as surety) the due, punctual and complete payment of
all sums payable by, the discharge of all liabilities of,
and the performance and observance of all obligations of the
Vendor hereunder. In the event that the Vendor fails to
perform any obligation, then the Guarantor shall on demand
promptly perform such obligations in its place.
(B) It is agreed by the Guarantor that amounts which may
not be recoverable from the Guarantor on the footing of a
guarantee, whether by reason of any legal limitation,
disability or incapacity of the Vendor or any other fact or
circumstance and whether or not known to the Purchaser,
shall nevertheless be recoverable from the Guarantor as
primary obligor in respect thereof and shall be paid by the
Guarantor on demand subject to the proviso that the
Guarantor shall, in resisting or disputing any claim made
against it under this guarantee, have the benefit of any
claim, counter-claim, right of set-off or otherwise
available to the Vendor in relation to the Purchaser under
the terms of this Agreement or otherwise.
(C) The Purchaser need not make demand or proceed against
the Vendor before making demand upon the Guarantor as
guarantor pursuant to sub-clause (A).
(D) The guarantee contained in this Clause 13 is a
continuing security and shall remain in full force and
effect until all of the obligations described in sub-clause
(A) have been discharged and performed in full.
- 12 -
14. GOVERNING LAW AND JURISDICTION
-------------------------------
(A) This Agreement is governed by and shall be construed in
accordance with the laws of Hong Kong.
(B) Each party hereby submits to the non-exclusive
jurisdiction of the Hong Kong courts and irrevocably
waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any
such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an
inconvenient form.
(C) The Vendor hereby irrevocably authorises and appoints
▇▇▇▇ ▇▇▇▇▇, ▇/▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇ Garden
Road, Central, Hong Kong (or such other person or persons,
being resident in Hong Kong, which the Vendor may hereafter
by notice to the Purchaser from time to time substitute) to
accept on its behalf service in Hong Kong of all legal
process arising out of or connected with this Agreement and
service of such process on the person or persons for the
time being authorised under this Clause to accept it on
behalf of the Vendor as the case may be shall be deemed to
be service of that process on the Vendor.
(D) The Purchaser hereby irrevocably authorises and
appoints ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Master of ▇▇-▇▇/▇, ▇▇▇▇▇▇'▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (or such other
person or persons, being resident in Hong Kong, as the
Purchaser may hereafter by notice to the Vendor from time
to time substitute) to accept on its behalf service in Hong
Kong of all legal process arising out of or connected with
this Agreement and service of such process on the person or
persons for the time being authorised under this Clause to
accept it on behalf of the Purchaser shall be deemed to be
service of that process on the Purchaser.
(E) If any agent for the service of process referred to in
this clause (or any replacement agent) at any time ceases
for any reason to act as such, a replacement agent to
accept service having an address for service in Hong Kong
shall be appointed by the relevant party and such party
shall give notice in writing to the other party of the name
and address of the replacement agent; failing such
appointment and notification, the other party shall be
entitled to appoint such a replacement agent so to act.
IN WITNESS whereof this Agreement has been entered into the
day and year first above written.
- 13 -
SCHEDULE 1
-------------
Part 1
------
Company Name : Acewin Profits Limited
Place of incorporation : British Virgin Islands
Date of Incorporation : 4th October, 1993
& Certificate Number : 96843
Business Registration No.: N/A
Registered office : ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Principal Activities : Investment Holding
Directors/ : Oei Hong ▇▇▇▇▇
(Alternate Directors) ▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇
Ma Wai Man, ▇▇▇▇▇▇▇▇▇
Secretary : Treasure Way Services Limited
Share Capital : Authorised US$50,000 (5,000,000 shares of
US$1.00 each)
Issued US$1,000 (1,000 shares of US$1.00 each)
Shareholders : Regal International Inc. (1,000 shares)
Accounting Year End : 31 December
Auditors : No auditor appointed as this as BVI Company
1st Directors' Meeting : 21 October 1993
- 14 -
Part 2
--------
Company Name : China Machine (Holdings) Limited
Place of Incorporation : Hong Kong
Date of Incorporation : 16 January 1992
& Certificate Number : 340556
Business Registration No.: 15254284
Registered office : ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ of ▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Principal Activities : Investment Holding
Directors/ : Oei Hong ▇▇▇▇▇
(Alternate Directors) ▇▇▇▇▇ ▇▇▇ ▇▇▇, ▇▇▇▇
Ma Wai Man, ▇▇▇▇▇▇▇▇▇
Secretary : Treasure Way Services Limited
Share Capital : Authorised HK$10,000 (10,000 Ordinary shares
of HK$l each)
Issued HK$1,000 (1,000 Ordinary shares of
HK$1 each)
Shareholders : Acewin (999)
Treasure Way Services Limited (1)
(in trust for Acewin)
Accounting Year End : 31 December
Auditors : Deloitte Touche Tohmatsu
1st Directors' Meeting : 27 February 1992
- 15 -
Part 3
------
The Wuxi Joint Venture
----------------------
Company Name : Wuxi CSI Vibration Isolator Co., Ltd.
Place of Incorporation : the PRC
Date of Incorporation : 10th September, 1993
Business Licence Number : 001970
Registered Office : ▇▇. ▇, ▇▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇, Jiangsu, the PRC
Principal Activities : Manufacture of vibration isolators of various
kinds for use in cars, trucks, ships etc.
Total Investment : RMB156,600,000
Registered Capital : RMB83,702,700
Shareholders : Wuxi Vibration Isolator Factory (45%)
China Machine(55%)
Accounting Year End : 31st December
Auditors : ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.
- 16 -
Part 4
------
Vulkan Couplings
-----------------
Company Name : Wuxi-Vulkan Couplings Co., Ltd.
Place of Incorporation : the PRC
Date of Incorporation : 20th March, 1996
Registered Office : ▇▇. ▇, ▇▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇, Jiangsu,
the PRC
Principal Activities : Manufacture of couplings and other
products for power transmission use
Total Investment : US$6,800,000
Registered Capital : US$3,400,000
Shareholders : Wuxi Joint Venture (40%)
Vulkan Kupplungs-U Getriebebau ▇.
▇▇▇▇▇▇▇▇▇ GMBH Co. KG (60%)
Accounting Year End : 31st December
- 17 -
Schedule 2
----------
Warranties
----------
Subject to the matters referred to herein or the Accounts or as
disclosed to the Purchaser or its professional advisers in
writing or which are included in the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Report of,
the Vendor represents that all representations and statements of
fact set out in this Schedule or otherwise contained in this
Agreement are and will be true and accurate in all respects as at
the date hereof and as at Completion.
1. Compliance with Legal Requirements
-----------------------------------
(A) All corporate or other documents required to be filed
or registered in respect of China Machine with the Registrar
of Companies in Hong Kong in accordance with the Companies
Ordinance or in respect of other Group Companies with the
authorities in the place of incorporation of each relevant
Group Company have been duly filed as appropriate.
(B) The statutory books and minute books of each Group
Company have been properly written up and contain an
accurate and complete record of the matters which should be
dealt with in these books and no Group Company has received
any application or request for rectification of its register
of members or any other register and compliance has been
made with all other legal requirements concerning each Group
Company and all issues of shares, debentures or other
securities thereof.
(C) Each Group Company and its officers (in their capacity
as such) have complied in all material respects with all
relevant legislation and other regulations or requirements
whether in Hong Kong, the PRC or elsewhere, including (but
without limitation) legislation relating to companies and
securities, exchange controls, borrowing and lending
controls, pollution, real property, Taxation and, prevention
of corruption.
(D) Each Group Company has at all relevant times
maintained in force all such licences as may be
required by it for the purpose of establishing and
carrying on the business of such Group Company and
has complied in all respects with the terms and
conditions on which such licenses were incurred.
(E) Copies of the Memorandum and Articles of Association or
Byelaws (or equivalent constitutional documents) of each
Group Company (having attached thereto copies of all such
resolutions as are by law required to be attached thereto)
to be supplied to the Purchaser within seven days of signing
of this Agreement are complete and accurate in all respects
and all legal and procedural requirements and other
formalities concerning the said Memorandum and Articles of
Association (or equivalent documents) have been duly and
properly complied with.
(F) Each of the Wuxi Joint Venture and Vulkan Couplings is
a Chinese-foreign equity joint venture with limited
liability duly established and validly existing under
- 18 -
the laws of the PRC and has the right to carry on its
business as it is now being conducted and to own its property and assets.
2. Accuracy and Completeness of Information
-----------------------------------------
(A) The information and particulars in respect of the Group
set out herein and in the Schedules and in the Accounts
are true and accurate in all material respects and not
misleading and all statements of fact made by the
Vendor in writing in relation to each Group Company and
its business are true and accurate in all material
respects unless superseded by information in writing
given prior to the date of this Agreement.
(B) There are no material facts or circumstances, in
relation to the assets, liabilities (whether contingent or
otherwise), capital commitment, business or financial
condition of any Group Company, which have not been
disclosed in writing to the Purchaser.
(C) All the accounts, books, ledgers and financial and
other records of each Group Company have been
properly kept in accordance with normal business
practice in the place in which it carries on its
business and are in the possession of the relevant
Group Company or under its control and all
transactions relating to its business have been duly
and correctly recorded therein and there are as at
the date hereof no material inaccuracies or
discrepancies of any kind contained or reflected in
such accounts, books, ledgers and financial and other records.
3. Power, Shares and Options
--------------------------
(A) The Vendor has the requisite power and authority to
enter into and perform this Agreement.
(B) The Vendor is the sole beneficial owner of the Sale
Shares and is entitled to sell and transfer the full legal
and beneficial ownership of the same to the Purchaser or its nominees.
(C) The Sale Shares comprise the whole of the issued and
allotted share capital of Acewin and all of them are fully paid up.
(D) Neither Acewin nor China Machine has any subsidiaries
(direct or indirect) or associated companies (as
defined in the Companies Ordinance) or any
shareholding or other interest in any company,
partnership, firm or other entity other than China
Machine and the Wuxi Joint Venture in the case of
Acewin and the Wuxi Joint Venture in the case of China Machine.
(E) No Group Company has repaid, redeemed or purchased any
of its share capital or issued any share capital or by
capitalisation of earnings as paid up otherwise than by
receipt of consideration therefor.
(F) No Group Company has been directly or indirectly
engaged or involved in any scheme of reconstruction or
amalgamation or any reorganisation or reduction of share
capital nor has any Group Company transferred any business carried on by it.
- 19 -
(G) Subject to the approval of the Board of Directors of
Acewin and the relevant provisions, if any, in the Articles
of Association of Acewin, no consent of any third party is
required to the sale of the Sale Shares.
(H) There is no option, right to acquire, mortgage, charge,
pledge, lien or other form of security or encumbrance on,
over or affecting any of the Sale Shares or any part of the
issued or unissued share capital of any Group 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 which has not been waived
in its entirety or satisfied in full.
(I) Other than that created by this Agreement, there is no
agreement or commitment outstanding which calls for the
allotment or issue of or accords to any person the right to
call for the allotment or issue of any shares in or
debentures of any Group Company.
4. Corporate Matters
-----------------
(A) The minute books of directors' meetings and of
shareholders' meetings respectively contain full and
accurate records of all resolutions passed by the directors
and the shareholders respectively of each Group Company and
no resolutions have been passed by either the directors or
the shareholders of the relevant Group Company which are not
recorded in its minute books.
(B) All charges in favour of any Group Company have (if
appropriate) been registered in accordance with the
provisions of the relevant law.
(C) All title deeds relating to assets of the Group
Companies, and an executed copy of all agreements to which
any such company is a party, and the original copies of all
other documents which are owned by, or which ought to be in
the possession of, any such company are in its possession.
5. Financial Matters
-----------------
(A) The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Report gives a true and fair view
of the state of affairs and financial position of the Group
for the periods reported in it and of the Group's results
for the relevant periods.
(B) The Wuxi Accounts were prepared in accordance with
accounting principles and practices generally accepted in
the PRC which have been consistently applied and present
fairly and accurately the financial situation of the Wuxi Joint Venture.
(C) The Management Accounts are complete and accurate in
all material respects and fairly and accurately reflect
the financial position of the Group at the date thereof
and of its results for the financial period ended on
that date.
- 20 -
(D) Each Group Company owns and will own free from encumbrance
all its undertaking and assets shown or comprised in the relevant
accounts and all such assets are in its possession or under its control.
(E) No Group Company holds any security (including any guarantee
or indemnity) which is not valid and enforceable by such Group
Company against the grantor thereof in accordance with its terms.
(F) The Management Accounts in respect of the Wuxi Joint Venture
were prepared in accordance with accounting principles and
practices generally accepted in the PRC which have been
consistently applied and present fairly and accurately the
financial situation of the Wuxi Joint Venture.
(G) Since the Accounts Date, there has not been:
(i) any material adverse change in the business,
prospects, financial condition, operations, or assets of the
Group (taken as a whole);
(ii) any damage, destruction, or loss, whether covered by
insurance or not, materially adversely affecting business of
the Group (taken as a whole);
(iii) any sale, disposal, acquisition, transfer by any
Group Company of any tangible or intangible property or
asset other than in the ordinary course of business, any
mortgage or pledge or the creation of any security interest,
lien, or encumbrance on any such property or asset, or any
lease of property, including equipment, other than tax liens
with respect to taxes not yet due and statutory rights of
customers in inventory and other assets;
(iv) any transaction or liability incurred which is not in
the ordinary course of business of the relevant Group Company;
(v) the lapse of any patent, utility models, design,
trademark, trade name, service ▇▇▇▇, copyright, or license
or any application with respect to the foregoing by any Group Company;
(vi) the making of any material loan, advance, indemnity or
guaranty by any Group Company to or for the benefit of any
person (except a Group Company) except the creation of
accounts receivable in the ordinary course of business; or
(vii) an agreement to do any of the foregoing.
(H) The accounting books and records of each Group Company have
been properly written up and present a true and fair view of all
the transactions to which that Group Company has been a party and
there are at the date hereof no material inaccuracies or
discrepancies of any kind contained or reflected in the said
books and records.
(I) No Group Company has any material capital commitment or is
engaged in any scheme or project requiring the expenditure of
capital of significant amount.
- 21 -
(J) All dividends or distributions declared, made or paid by
each Group Company have been declared, made or paid in accordance
with its articles of association and the applicable provisions of
law. No dividend or other distribution has been or will be paid
by the Wuxi Joint Venture from the declared dividend in the Wuxi
Accounts. No dividends or distributions have been declared or
paid by any Group Company since 1st January, 1996.
(K) No part of the amounts included in the Accounts or
subsequently recorded in the books of any Group Company, as owing
by any debtors has been released on terms that any debtor pays
less than the full book value of his debt, or has been written
off, or has proved to any extent to be irrecoverable, or is now
regarded by any Group Company as irrecoverable in whole or in
part other than, in each case, in the ordinary course of business.
(L) No Group Company has any material obligations or liabilities
other than those which have arisen or may arise in the ordinary
course of its business, other than those set out in the Accounts.
(M) Having regard to existing bank facilities, the Group has
sufficient working capital for its present requirements (that is
to say, to enable it to continue to carry on its business in its
present form and at its present level of turnover) and for the
purposes of performing in accordance with its terms all orders,
projects and contractual obligations which have been placed with
or undertaken by it.
(N) Each Group Company has paid its creditors in accordance
with their respective credit terms.
(O) Each Group Company has as at the date hereof and the Vendor
will use all reasonable endeavours to ensure that it will
not, as at Completion, have outstanding:-
(i) any borrowing or indebtedness in the nature of
borrowing or other credit facility save for bank borrowings
incurred in the ordinary course of business;
(ii) any mortgage, charge or debenture or any obligation
(including a conditional obligation) to create a mortgage,
charge or debenture save and except as disclosed in the Accounts;
(iii) any liabilities outstanding under any guarantee or
other than the guarantee referred to in Clause 4(I)(v) of this Agreement;
(iv) any other contingent liabilities other than those
disclosed in the Accounts or incurred in the ordinary course
of trading of the relevant Group Company.
(P) Since the Accounts Date:-
(i) no resolution of any members of any Group Company in
general meeting has been passed other than resolutions
relating to the business of the annual general meeting
which would not (if the relevant Company were
incorporated in Hong Kong) constitute special business;
- 22 -
(ii) the financial year of the Group has not changed from 31st December;
(iii) no event has occurred which would entitle any
third party (with or without the giving of notice)
to call for the repayment of indebtedness prior to its normal maturity date;
(iv) the business of each Group Company has been
carried on in the ordinary and usual course and in
the same manner (including nature and scope) as in
the past, no fixed asset or stock has been written
up nor any debt written off and no unusual or
abnormal contract has been entered into by any Group Company;
(v) no remuneration (including bonuses) or benefit
payable to any officer or employee of the Group
has been materially increased nor has any Group
Company undertaken any obligation to increase
materially any such remuneration at any future
date with or without retrospective effect;
(vi) no transaction of any importance to which any
Group Company has been party has taken place,
which materially and adversely affects the value
of the Group (taken as a whole) and which if it
had taken place on or before the Accounts Date
would require to be disclosed or reflected in the
audited accounts of such Group Company or the
Group as at the date thereof or in the report of
the Directors accompanying such accounts.
(Q) No Group Company has any outstanding inter-company
indebtedness to either the Vendor or the Guarantor or to any
company associated therewith.
6. Plant and Equipment
--------------------
(A) The fixed and loose plant, machinery, furniture,
fixtures, fittings, equipment, vehicles and other
material assets used in connection with the business
of each Group Company are the property of and are
held by such Group Company free from any hire-
purchase agreement or agreement for payment on
deferred terms or bills of sale or lien, charge or other encumbrance.
(B) All plant, machinery, vehicles and equipment owned or
used by the Group is in good and safe condition and in
working order (fair wear and tear excepted).
7. Taxation
----------
(A) Each Group Company has complied with all other relevant legal
requirements relating to registration or notification for Taxation purposes.
(B) Each Group Company has:-
- 23 -
(i) paid or accounted for all Taxation (if any) due to be paid or
accounted for by it before the date of this Agreement; and
(ii) taken all necessary steps to obtain any repayment of or relief
from Taxation available to it.
(C) The returns which ought to have been made by or in respect of each
Group Company for any Taxation purposes have been made and all such returns
are up-to-date correct and on a proper basis and are not the subject of any
dispute with any Taxation or other relevant authority and there are no
present circumstances known to the Company which are likely to give rise to
any such dispute and provision has been made in the Accounts or in the
Accounts for all amounts which were or would have been shown by any such
return to be payable by any Group Company.
(D) The provisions (if any) included in the Accounts are sufficient to
cover all Taxation in respect of all periods ending on or before the
Accounts Date for which any Group Company was then or might at any time
thereafter become or have become liable:-
(i) on or in respect of or by reference to any
profits, gains or income (including deemed profits, gains or income) for
any period ended on or before the Accounts Date; or
(ii) in respect of any distribution made or transaction entered into
on or before the Accounts Date.
(E) No Group Company has incurred any liability to
Taxation since the Accounts Date other than tax in respect of profits
retained by such Group Company.
(F) Each Group Company is not, and has not at any time
since the Accounts Date been, liable to pay interest on any unpaid Taxation.
(G) In the accounting reference periods immediately preceding that ended
on the Accounts Date no Group Company has made or agreed to make any
payment to, or provided or agreed to provide any benefit for, any person
who is or has been an officer or employee of that company or a dependent of
any such person in excess of the sum of HK$50,000 which is not allowable as
a deduction in calculating the profits of the relevant Group Company for
Taxation purposes.
(H) All documents in the possession or under the control of any Group
Company and which attract stamp duty in Hong Kong or elsewhere for which
that company is liable have been properly stamped.
(I) Neither the execution nor the performance of this Agreement:-
(i) will result in any losses of any Group Company or any other
allowance, deduction or credit available for relief for Taxation
purposes against the profits or deemed profits of any Group Company
ceasing to be so available or being reduced;
- 24 -
(ii) will render any Group Company liable to any, or
any additional, Taxation.
(J) The Group has duly and punctually paid all Taxation
imposed on the Group by the relevant authorities in the Hong
Kong, the People's Republic of China or elsewhere and no
Group Company has any outstanding liability in relation to
Taxation imposed by the authorities in Hong Kong, the PRC or
elsewhere including value added tax, land use fees, real
estate taxes, income tax and custom duties.
(K) There is no material liability on the Group as a result
of any changes in the arrangements which the Group has
entered into in relation to import duty paid by the Group in the PRC.
8. Employment Arrangements
-------------------------
(A) All contracts of service to which any Group Company is
a party can be terminated by it without payment of
compensation (save as provided by legislation) by not more
than three months' notice or less without compensation
(other than compensation in accordance with the Employment
Ordinance of Hong Kong).
(B) No Group Company is a party to:-
(i) any agreement, arrangement or scheme (whether or
not legally enforceable) for profit sharing, share
incentives, share options or for the payment to
employees of bonuses or incentive payments or the like,
except that employees of Group Companies are entitled
to 13 months' salary annually and a bonus at the
discretion of the board of the relevant Group Company;
(ii) any collective bargaining or procedural or other
agreement with any trades union or similar association; and
no employee will become redundant and be entitled to a
redundancy payment as a result of this Agreement.
(C) Save as provided by legislation no Group Company is
under any legal liability or obligation or a party to any
ex-gratia arrangement or promise to pay pensions,
gratuities, retirement annuities, benefits, periodical sums,
or any other payment or compensation in connection with
retirement, death or disability to or for any of its past or
present officers or employees or their relatives or
dependents; and there are no retirement benefit, or pension
or death benefit, or similar schemes or arrangements in
relation to or binding on any Group Company or to which any
Group Company contributes.
9. Litigation
------------
No Group Company is engaged in or is a party to (whether as
plaintiff, defendant or otherwise) or the subject of any
investigation, litigation, arbitration, administrative or
criminal or other proceedings or to any disputes and no
investigation, litigation,
- 25 -
arbitration, administrative or criminal or other proceedings
are, to the Vendor's knowledge, threatened or pending either
by or against or in respect of any Group Company and there
are no facts known to the Vendor which might give rise to any
such investigation, litigation, arbitration, administrative
or criminal or other proceedings or to any payment otherwise
than in the ordinary course of business or to any proceedings
against any director, officer or employee past or present) of
any Group Company in respect of any act or default for which
such Group Company might be vicariously liable and there are
no unfulfilled or unsatisfied judgments or court orders
against any Group Company.
10. Contracts and Commitments
--------------------------
(A) Since the Accounts Date, each Group Company has carried
on its business in the ordinary course so as to maintain the
same as a going concern and, save as mentioned in or as
contemplated by this Agreement , no Group Company has entered
into any transaction and incurred any material liabilities
except in the ordinary course of its day-to-day business and
for full value.
(B) There is not now outstanding nor will there be
outstanding at Completion with respect to any Group Company:-
(i) any agreement (whether by way of guarantee,
indemnity, warranty, representation or otherwise) under
which any Group Company is under any actual or
contingent liability in respect of the obligations of
any person other than the relevant Group Company;
(ii) any contract to which any Group Company is a party
which is of a long-term and non-trading nature or
contains any unusual or unduly onerous provision;
(iii) any sale or purchase option or similar
agreement or arrangement affecting any material assets
or business owned or used by any Group Company or by
which any Group Company is bound except those entered
in the ordinary course of day to day trading;
(iv) any agreements, entered into by any Group Company
otherwise than by way of bargain at arm's length;
(v) any contract which materially restricts the
freedom of any Group Company to carry on the business
now carried on by it in any part of the world;
(vi) any management agreements, co-insurance
agreements, joint venture agreements, agency agreements
or any form of arrangement or agreement whatsoever
which entities any person to bind any Group Company
contractually, to settle, negotiate or compromise any
accounts or claims or to collect, receive or share in
any balances or sums payable to any Group Company.
- 26 -
(C) No Group Company has received any notice to repay under any
agreement relating to any borrowing (or indebtedness in the
nature of borrowing) which is repayable on demand and there has
not occurred any event of default (or any event which would
constitute an event of default with the giving of notice, the
lapse of time and/or the issue of certificate) under any
agreement relating to any other borrowing or indebtedness in the
nature of borrowing or other credit facility of any Group Company
or no obligation thereunder becomes prematurely repayable or
becomes capable of being declared to be prematurely repayable.
(D) No Group Company is under any obligation, or party to any
contract, which cannot readily be fulfilled or performed by it on
time and without undue or unusual expenditure of money or effort.
(E) No party to any agreement or arrangement with or under an
obligation to any Group Company is in default under it, being a
default which would be material in the context of such Group
Company's financial or trading position and there are no
circumstances likely to give rise to such a default.
(F) No Group Company is:-
(i) in default in any material respect under any agreement,
obligation or arrangement to which it is party or in respect
of any other obligations or restrictions binding upon it;
(ii) in default in any material respect under any
obligations existing by reason of membership of any
association or body;
(iii) liable in any material respect in respect of any
representation or warranty (whether express or implied); and
(iv) party to any agreement which is invalid or in respect
of which there are grounds for determination, recision,
avoidance or repudiation.
(G) No charges, rights of security or third party rights of any
kind whatsoever have been created or agreed to be created or
permitted to arise over any of the assets of any Group Company
and are subsisting other than liens arising in the ordinary
course of business.
(H) No Group Company is under any obligation, nor is it a
party to any forward contract relating to foreign currency
save in the ordinary course of business.
(I) No Group Company is a party to nor has it any liability
(present or future) under any loan agreement, debenture,
guarantee, indemnity or letter of credit or leasing,
hiring, hire purchase, credit sale or conditional sale
agreement nor has it entered into any contract or
commitment involving, or likely to involve, obligations or
expenditure of an unusual or exceptional nature or
magnitude.
(J) As at the Accounts Date, there were no debts by any Group
Company other than those shown in the Accounts and since the
Accounts Date there are no debts by
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any Group Company other than the debts which have arisen in
the ordinary course of business.
(K) Other than in the ordinary course of business no Group
Company has outstanding any bid or tender or sale or service
proposal which, if accepted, would be likely to result in a
loss to such Group Company.
(L) Save for any guarantee or warranty implied by law or
given in the usual and normal course of trade and consistent
with previous practice, no Group Company has given any
guarantee or warranty, or made any representation, in
respect of goods or services supplied or contracted to be
supplied by it or accepted any liability or obligation that
would apply after any such goods or services had been supplied by it.
11. Insolvency
-----------
(A) No receiver has been appointed of the whole or any part
of the assets or undertaking of the Group or any Group Company.
(B) No petition has been presented, no order has been made
and no resolution has been passed for the winding-up or
dissolution of the Group or any Group Company.
(C) No Group Company has stopped payment nor is it insolvent
or unable to pay its debts within the meaning of section
178 of the Companies Ordinance of Hong Kong.
12. Insurance
---------
(A) All premiums due in respect of the policies of insurance
taken at by members of the Group have been paid in full
and all the other conditions of the said policies have
been performed and observed in full. Nothing has been
done or omitted to be done whereby any of the said
policies has or may become void or voidable and copies of
the relevant policies have been supplied to the Purchaser.
(B) No claim is outstanding either by the insurer or the
insured under any of the said policies and no claim
against any Group Company by any third party is
outstanding in respect of any risk covered by any of the
policies or by any policy previously held by such Group Company.
(C) There are no circumstances which would or might entitle
any Group Company to make a claim under any of the said
policies or which would or might be required under any of
the said policies to be notified to the insurers.
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13. Delinquent Acts
---------------
To the best knowledge and belief of the Vendor no Group Company
has committed nor is it liable for any criminal, illegal,
unlawful or unauthorised act or breach of any obligation whether
imposed by or pursuant to statute, contract or otherwise which
would materially adversely affect the value of the Group taken as a whole.
14. Tax Returns
-----------
(A) Each Group Company has, in respect of all years of
assessment since incorporation falling before the date of
this Agreement, made or caused to be made all proper returns,
and has supplied or caused to be supplied all information
regarding taxation matters which it is required to make or
supply to any revenue authority (whether in Hong Kong or
elsewhere) and there is at the date hereof no dispute or
disagreement nor is any contemplated with any such authority
regarding any Group Company's liability or potential
liability to any tax or duty (including in each case
penalties and interest) or regarding the availability to any
Group Company of any relief from tax or duty.
(B) Each Group Company has sufficient records relating to
past events during the years prior to the date of this
Agreement to calculate the tax liability or relief
which would arise on any disposal or realisation of any
asset owned at the date of this Agreement.
15. Anti-avoidance
---------------
None of the Group Companies has at any time been a party or
otherwise involved in any transaction or series of transactions
involving steps taken without any commercial or business purpose
apart from the obtaining of a tax advantage.
16. Powers of Attorney
------------------
No Group Company has given any power of attorney or other
authority (express, implied or ostensible) which is outstanding
or effective to any person to enter into any contract or
commitment on its behalf other than to its employees and agents
and the bankers of such Group Company in the normal course of business.
17. Intellectual Property
---------------------
The processes employed and the products and services provided by
each Group Company do not use, embody or infringe any patents,
registered designs, know-how or trade secrets, copyrights,
trademarks or similar intellectual property rights (whether
registered or not) of third parties and no claims have been made
and no applications are pending.
- 29 -
18. Computer Records
-----------------
No Group Company has or will pending Completion 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 a Group Company.
19. Confidentiality
----------------
Except in the ordinary course of its business no Group Company
has disclosed or permitted to disclosed or undertaken or arranged
to disclose to any person any of its know-how, secrets,
confidential information or lists of customers or suppliers.
20. Effect of this Agreement on other agreements etc.
---------------------------------------------------
There is no agreement or arrangement between any Group Company
and any other person which will or may be terminated as a result
of this Agreement or the transactions contemplated therein or
which will be affected materially by it or which includes any
provision with respect to a change in the control, management or
shareholders of the relevant Group Company and compliance with
this Agreement does not and will not constitute a default under
any loan to or mortgage created by any Group Company.
21. Commercial position
--------------------
(A) To the best of the Vendor's knowledge and belief there
is no substantial customer or supplier of any Group Company
who has ceased purchasing from or supplying to it or who is
likely after the date of the Agreement to reduce
substantially or terminate purchases from or supplies to it
in each case by reason only of the making of this Agreement.
(B) There are no special circumstances which might lead to
the manufacture by any Group Company of any goods, or
the supply by or to it of any goods or services, being
restricted or hindered, not being circumstances which
affect generally companies or persons carrying on
business similar to that of the relevant Group Company
in a place where that company carries on business.
22. Litigation and Offences
------------------------
(A) No party with whom any Group Company has entered into
any contract is in default under it which could lead
to a material claim by the relevant Group Company
against such part for damages or have a material
adverse effect on the relevant Group Company's
business, and there are no circumstances likely to
give rise to such a default.
- 30 -
(B) No governmental of official investigation or inquiry
concerning any Group Company which may have a material
adverse effect on the Group Company's business is in
progress or, there are no circumstances which are likely to
give rise to any such investigation or inquiry.
(C) There are no powers of attorney given (which are still
in force) by any Group Company.
23. Environmental Compliance
-------------------------
(A) To the best of the Vendor's knowledge and belief after
having made all reasonable enquiries throughout the period
of its use of the Site and the Building, the Wuxi Vibration
Isolator Factory was in compliance with all environmental
requirements, including all applicable environmental
protection laws, rules and regulations, and its level of
all] discharges or emissions of wastes and other pollutants
did not exceed permissible levels set by the relevant governmental agency.
(B) The Wuxi Joint Venture is in compliance with the PRC
Environmental Protection Law and all applicable
environmental protection rules and regulations.
(C) All environmental licences, consents and other
permissions or approvals required for carrying on the
operations now being carried on by the Wuxi Joint Venture
will be obtained within a reasonable time after request.
(D) There are no outstanding notices, complaints,
requirements or fines issued by any governmental body,
authority or department concerning environmental pollution
on or emitted from the Site.
24. Site
----
(A) No Group Company owns or is tenant, lessee or licensee
of any real property other than the Site. To the best of
the Vendor's knowledge and belief after having made all
reasonable enquiries the Wuxi Vibration Isolator Factory
possesses a lawful right to use the Site and the buildings
thereon for its operations.
(B) The Wuxi Joint Venture has no legal right to use the
site and the buildings thereon and does so by
sufferance of the Wuxi Vibration Isolator Factory.
(C) The Site and the buildings thereon are occupied or
otherwise used by the Wuxi Joint Venture in
connection with its business. Save that the Wuxi
Joint Venture has no right to use the Site, the
present use of the Site and the buildings thereon is
not in contravention of any applicable laws, orders
or official directions and there is no development or
construction thereon in contravention of such laws,
regulations orders or directions.
(D) The Wuxi Joint Venture does and will at Completion use
the Site and the buildings thereon.
- 31 -
(E) All fees, taxes and all other outgoings in respect of the
Site and the buildings thereon which have fallen due have been
duly paid up to the date hereof and will be duly paid up to
Completion if and when they fall due.
(F) There are no outstanding notices, complaints or requirements
issued by any governmental body, authority or department to the
Wuxi Vibration Isolator Factory or the Wuxi Joint Venture in
respect of the Site or the buildings thereon or any part thereof.
The Vendor undertakes to notify the Purchaser promptly of any
notice received by it or the Wuxi Joint Venture or the Wuxi
Vibration Isolator Factory before Completion from any
governmental body, authority or department relating to any of the
aforesaid matters.
(G) To the best of the Vendor's knowledge, after having made all
reasonable enquiries, neither the Wuxi Vibration Isolator Factory
nor the Wuxi Joint Venture has been notified of any planning or
other proposals made or intended to be made by any governmental
body, authority or department concerning the compulsory
acquisition or resumption of the Site or the buildings thereon or
any part thereof or which would adversely affect the use of Site
or the building or any part thereof for the purposes of the Wuxi
Joint Venture.
(H) There are no outstanding actions, disputes, claims or
demands between the Wuxi Vibration Isolator Factor or the Wuxi
Joint Venture and any third party affecting the Site, the
buildings thereon, or any property neighbouring the Site.
(I) The Wuxi Joint Venture has no residual liability in respect
of any premises previously owned, controlled or occupied by it.
(J) To the best of the Vendor's knowledge and behalf after
having made all reasonable enquiries the Wuxi Vibration Isolator
Factory has not contracted to sell or part with the possession of
or let or grant any option over or otherwise dispose of its
interest in the Site or the buildings and has not mortgaged,
charged or otherwise encumbered such interest or agreed to do so.
(K) Pending Completion neither the Wuxi Joint Venture nor the
Wuxi Vibration Isolator Factor shall transfer, sell, assign, sub-
divide, charge, mortgage or otherwise dispose of, lease, license
for use or occupation or in any other way or part with the
possession of or make any arrangement for the sharing of the Site
or buildings or any part thereof or any interest therein or enter
into any agreement to do any of the aforesaid without the prior
written consent of the Purchaser.
(L) The Wuxi Joint Venture will be able to obtain a grant of the
land use right of the Site from the Wuxi land administration
bureau upon entering into a land grant contract with the Wuxi
land administration bureau and paying the land grant premium as
set by the Wuxi land administration bureau.
(M) The Wuxi Vibration Isolator Factory has agreed to the
arrangement under which the Wuxi Joint Venture will rent a part
of the metal bellows expansion workshop to the Vulkan Couplings.
- 32 -
25. The Wuxi Joint Venture's interest in Vulkan Couplings
------------------------------------------------------
(A) The equity interest of the Wuxi Joint Venture in Vulkan Couplings
represents, and as at Completion shall represent, forty per cent (40%)
of the entire registered capital of Vulkan Couplings.
(B) The Wuxi Joint Venture's ownership of a 40% equity interest in
Vulkan Couplings does not violate any laws or regulations of the PRC
and is within the business scope of the Wuxi Joint Venture.
(C) All consents, approvals, permissions and authorizations, whether
from relevant PRC authorities or from any third parties, which were
required from the Wuxi Joint Venture to invest in Vulkan Couplings or
to own its interest in the registered capital of Vulkan Couplings have
been obtained and are legally valid and effective.
26. Other Investments
------------------
(A) The Wuxi Joint Venture has not entered into any contractual
arrangements with, and has no liability or obligations respecting the
Wuxi Vibration Isolator Factory Compound Damping Materials Branch
Factory, the Wuxi Jieda Vibration Isolator Metal Parts Company, and
the Shanghai Sidalizhen Engineering Company, or the Wuxi Vibration
Isolator Factory's co-investors in these three companies.
(B) Other than Vulkan Couplings, the Wuxi Joint Venture has no
subsidiaries (direct or indirect), branches or associated companies
and no shareholding or other interest in any company, partnership,
firm or other entity.
27. Miscellaneous
--------------
(A) Other than transactions entered into in the ordinary course of
business, no Group Company has entered into any transaction
which is still executory.
(B) No-one is entitled to receive from any Group Company any
finder's fee brokerage or commission in connection with the sale
of the Sale Shares or the Loan under this Agreement.
(C) Except as provided herein, all necessary consents or approvals
for the entering into and the performance of this Agreement has
been obtained.
(D) All warranties and representations contained in the foregoing
provisions of this Schedule shall be deemed to be repeated
immediately before Completion and to relate to the facts then
existing.
(E) The equity interest of China Machine in the Wuxi Joint Venture
represents, and as at Completion shall represent, fifty-five per cent
(55%) of the entire registered capital of the Wuxi Joint Venture.
- 33 -
SIGNED BY
on behalf of
REGAL INTERNATIONAL, INC.
in the presence of:-
SIGNED BY
on behalf of
BTR CHINA HOLDINGS B.V,
in the presence of:-
The COMMON SEAL of
CHINA STRATEGIC HOLDINGS LIMITED
was hereunto affixed
in the presence of:-
- 34 -
