Translation) SALES AND PURCHASE OF EQUITY AGREEMENT
(Translation)
AN AGREEMENT made
this 29th day
of October, ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇-▇▇▇
Industries Limited (Company No.1004146) a company incorporated in
Hong Kong SAR, People’s Republic of China with limited liability and having its
principal place of business at Rm 1613, 16/F, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇. (hereinafter called "the Vendor") on the other
part.
AND
▇▇. ▇▇▇▇
▇▇ ▇▇▇▇▇ (Chinese IC No.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇) of ▇▇▇▇ ▇▇ ▇▇▇
He Animal Health Products Co. Ltd. and of address at ▇▇. ▇▇, ▇▇▇ ▇▇▇
▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jining City, Shandong Province, P. R.
China.
(hereinafter
collectively called "the Purchaser") of the one part.
WHEREAS:-
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1.
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The
Vendor is the legal and beneficial owners of 30% equity stake of Hu ▇▇▇ ▇▇▇▇ Qian Ke Ji Kai Fa
You ▇▇▇▇ ▇▇▇▇ Si (Chinese Business Register No. 4301002017685),
(hereinafter referred to as “the said Company”), a company incorporated in
People’s Republic of China with limited liability and having its principal
place of business at (▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ Sha Shi Fu Rong Qu Gao Xin Ji ▇▇▇
▇▇▇▇ Ye Kai Fa Qu Long ▇▇▇▇ ▇▇▇ Ke Ji ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ Ban ▇▇▇▇ ▇▇▇ ▇▇
▇▇▇ 2 ▇▇▇) and with a fully paid up registered capital of RMB10 million
having main business activities in Turf Plantations and related
engineering services. (herein after referred to as “Principal
Activities”). The Vendor’s ownership in the said company is aggregating to
Thirty Percent (30%) of the fully paid-up Registered capital of the said
Company (hereinafter referred to as “the Sale 30% Equity”)
.
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2.
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The
Purchaser is a businessman having multiple business interests in P.R.
China.
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3.
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The
financial position of the said Company, as shown in its Management account
supported by an Audited Report prepared by a firm of Public Chartered
Accountants is evidencing Net Assets of no less than United States Dollars
Three Million and Twenty Six Thousand (US$3,680,000.00) as at 30th.
September 2008 and Retained Earning of United State Dollars One Million
and five hundred thousand (US$ 1,500,000.00) based on the exchange rate of
US$1 to RMB6.80 (hereinafter referred to as “the TQST
Accounts”). Copies of the TQST’s Audited Report at
30th
September 2008 is annexed hereto and marked as Appendix
(C1).
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4.
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The
Vendors have agreed to sell and the Purchaser has agreed to purchase the
Sale of the 30% Equity free from all encumbrances with all rights to
dividends and other distribution declared made and paid after the date of
this Agreement upon the terms and conditions hereinafter
appearing.
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NOW
IT IS HEREBY AGREED as follows:-
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1.
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Definitions
and Interpretations
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In this
Agreement, unless the context otherwise requires, the following words or
expression shall have the following meaning:-
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(a)
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“Purchaser” includes
its respective nominees and successors in title
;
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1
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(b)
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“Vendors” include
their respective successors in title
;
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(c)
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“The
Completion Date” shall refer to the date of full payment of all monies and
shares payable by the Purchaser herein provided
;
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(d)
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“US$”
means United States Dollars, the currency of the United States of America
;
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(e)
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All
undertakings, agreements, terms, warranties and representations expressed
to be made by two or more parties hereto shall be deemed to be made by
them and be binding on them jointly and severally
;
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(f)
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Reference
to natural persons shall be deemed to include body corporate and the
plural number shall include the singular number and vice versa
;
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(g)
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Words
importing the masculine gender shall be deemed to include the feminine and
neuter gender ;
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(h)
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The
headings are inserted for convenience of reference only and shall not
affect the interpretation of this Agreement hereof
;
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(i)
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Where
an act required to be done within a specified number of days after or from
a specified date, the period is inclusive of and begins to run from the
date so specified ;
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(j)
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A
period of a month from the happening of an event or the doing of an act or
thing shall be deemed to be inclusive of the day on which the event
happens or the act or thing is or was required to be done
;
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(k)
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The
Appendices hereto shall be taken, read and construed as an essential part
of this Agreement ;
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2.
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Agreement For The Sale
and Purchase
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2.1
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Purchase Consideration
and Part Payment
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In
consideration of the sum of RMB
Five Hundred Thousand), (RMB500,000.00 equivalent to US$73,530.00) only (hereinafter
call “the Part Payment") now paid by the Purchaser to the Vendors by way of
deposit and part payment towards the purchase price of the Sale Shares (the
receipt of which the Vendors hereby duly acknowledge, and that, its
corresponding paid order, signed receipt and corresponding banking record of the
said payment are annexed hereto marked Appendix E ), (hereinafter referred to as
Part Payment), the
Vendors hereby agree to sell and the Purchasers hereby agree to purchase the
Sale of 30% Equity free from all encumbrances with all rights to dividends and
other distribution declared made and paid for the year of 2008 and after the
date of this Agreement at the total purchase price of United States Dollars Four Million
Five Hundred Thousand (US$4,500,000.00) only (hereinafter called
"the Purchase Price") and subject to further terms and conditions
hereinafter contained.
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2.2
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Payment of Balance
Purchase Price
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The
balance of the Purchase Price amounting to United States Dollars Four
Million Four Hundred Twenty Six Thousand and Four Hundred and Seventy
(US$4,426,470.00) only (hereinafter called "the Balance Purchase
Price”) shall be settled within Sixty (60) days from the date
hereof (hereinafter called “the Completion
Date”).
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2.3
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Purchaser’s Right
after payment of the Part
Payment
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After
the Purchaser has paid the Balance Payment referred to in Clause 2.2
hereof, the Purchaser shall become the owner of the 30% equity of the said
Company (hereinafter referred to as Ownership) and the Vendor shall have
no further claim or entitlement to the said company
thereafter.
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2
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3.
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Due
Diligence
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3.1
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Purchaser's Rights to
Due Diligence
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Not with
standing the fact that the Purchase has done its Due Diligence in respect of
said company’s business affairs satisfactorily during the period prior to the
execution of this agreement. The Vendor agreed that during the period commencing
the date of this Agreement and ending on the Completion Date, the Purchaser
shall be entitled to:
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(i)
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make
such reasonable enquiries and to attend at the offices of the
said Company.
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(ii)
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a
due diligence investigation of on the profit records of the said
Company.
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(iii)
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a
due diligence investigation of the profit forecast and projection of the
said Company’s operations by the Purchaser and its auditors
;
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(iv)
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obtain
current valuation of Said Company’s properties to confirm that the Net
Asset Value of the Said Company is in accordance with records stated in
the Said Company’s Audited Report as at 30th September
2008.
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3.2
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Vendors'
Obligations
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The
Vendors shall take all steps and do all things necessary to enable the Purchaser
and/or its representatives to carry out the enquiries and the due diligence
investigation as provided in Clause 3.1 and to enable the Said Company to be
re-instated as a China Company instead of the Foreign Joint Venture Company that
is presently registered.
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3.3
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Purchaser's
Entitlement to claim
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In the event that :
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(i)
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the
Purchaser is unable to make reasonable enquiries or attend at the office
of The said Company and TQST or carry out the due diligence investigations
due to no fault of the Purchaser;
or
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(i)
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it
is found, as a result of the due diligence investigations or otherwise,
that any of the Representations and Warranties contained in Clause 11 are
untrue, misleading or incorrect or have not been fully carried out in any
material respect, or
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(iii)
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in
any event of any matter or thing arising or becoming known or being
notified to the Purchaser which is materially inconsistent with any of the
Representations and Warranties contained in Clause 9 hereof
;
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then the
Purchaser may by notice in writing to the Vendors, to be given not later than
the Completion Date, specify and verify the amount of claims, (hereinafter
referred to as the Claims) and in which event (without prejudice to any claim in
damages), the Vendors shall refund forthwith to the Purchaser the claims
together with interest accruing thereon (if any).
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4.
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Delivery of
Documents
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Simultaneously
with the execution of this Agreement, the Vendors shall deliver or cause to be
delivered the following documents to the Purchaser:
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(a)
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The
transfer forms in respect of the Sale 30% Equity duly executed by the
Vendors in favour of the Purchaser and/or the Purchaser's nominee(s)
(hereinafter called “the said Transfers”) together with all other relevant
documents necessary for effecting the transfer of the Sale 30% Equity to
the Purchaser and or the Purchaser's
nominee(s).
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(b)
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The
letters of resignations of all the existing directors from their
respective offices in the said Company each acknowledging that they have
no claims against the said Company for compensation or
otherwise;
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(The
documents referred to in Clauses 4 (a) and 4 (b) are hereinafter collectively
referred to as "the said Documents").
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5.
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Completion
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The
Completion of this Agreement shall take place on the Completion Date,
whereupon the Purchaser shall issue the Purchaser’s Consideration Shares
in the name of the Vendors and/or their nominee(s) as the Vendors shall
direct and shall deliver the share certificates to the
Vendors.
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6.
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Non-Registration of
the Transfer of the Sale
Shares
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In
the event that the transfer of the Sale Shares cannot be registered in
favour of the Purchaser or its nominee(s) free from encumbrances for any
reason whatsoever, all monies received by or paid on behalf of the Vendors
or for or on behalf of The said Company and TQST shall be refunded by the
Vendors to the Purchaser or its nominee(s) free of interest thereon and
upon such refund this Agreement shall be deemed terminated and of no
further effect and neither of the parties shall have any claim against the
other PROVIDED THAT all documents received by the Purchaser shall have by
then returned by the Purchaser to the
Vendors.
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7.
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Outgoings
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The
Vendor has on February 2008 deposited and advanced a sum of US$95,000. to
the Said Company, the Vendor hereby agrees to write off this amount
without any further claim to the Said Company such that all rent,
assessment charges, rates, taxes and other outgoings if any payable by The
said Company on or before the Completion Date shall be borne and paid for
by the Purchaser PROVIDED ALWAYS that the Purchaser shall indemnify the
Vendor or its assigns in respect of any penalties and damages which may be
arise as a result of any late payments or default in payment in respect of
such rent, assessment charges, rates, taxes or other
outgoings.
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8.
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Vendors’
Indemnity
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8.1
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If
there shall be any breach by the Vendors of any warranty, guarantee,
undertaking and agreement herein contained, then the Purchaser shall be
entitled to be indemnified by the Vendors in respect of any loss resulting
from such breach.
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8.2
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Without
prejudice to the generality of the foregoing, if the effect of any such
breach is that The said Company has incurred or incurs any liability or
contingent liability which would not have been incurred had there been no
such breach, then the Vendors shall make good to The said Company the
amount of the loss occasioned by such liability by payment in cash to The
said Company.
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9.
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Representations
and Warranties
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9.1
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The
Vendors hereby jointly and severally represent, warrant and undertake to
and with the Purchaser as follows
:-
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(a)
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None
of the Sale 30% Equity which are registered in the names of the Vendors
are subject to any option, charge, lien or encumbrances and the Vendors
are the beneficial owners thereof ;
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(b)
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The
accounts of The said Company as at the 30th September 2008 gave a true and
fair view of the financial position of The said Company bearing normal
operational financial changes and minimal consequences that will cause
material adverse effect to the Said Company financially calculating to the
Completion Date..
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(c)
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The
said Company is not involved in any dispute with any revenue authorities
concerning any matter likely to affect in any way the liability ( whether
accrued, contingent or future) of The said Company to taxation or other
sum imposed, charged, levied or payable under the provision of any
taxation statute.
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(d)
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The
said Company have not prior to the date hereof issued or agreed to issue
any shares or equity stake or given or agreed to give any option in
respect of any shares or equity stake nor issued or agreed to issue or
give any option in respect of any debentures or other
securities.
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(e)
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There
are no existing service agreements or contracts between The said Company
and any of the Vendor’s nominees action as the directors of the Said
Company thereof.
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(f)
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The
said Company is not engaged in any litigation or arbitration proceedings
and no such proceedings and no prosecution are pending or threatened
against the said Company and the Vendors know of no facts or matters
likely to give rise thereto and that the said Company is not in default in
respect of any obligations whether contractual statutory or
municipal;
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(g)
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The
said Company have no subsidiaries other than the subsidiaries disclosed
hereof.
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(h)
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The
said Company have no mortgages liens other encumbrances secured over any
of their properties and assets other than the one disclosed in the
Financial Statements of the Said
Company.
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(i)
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The
said Company has in relation to each of their employee (and in so far as
relevant to each of its former employees) complied in all material
respects with all obligations imposed on it by all statutes, regulations
and codes of conduct and practice relevant to the relations between them
and their employees.
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10.
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Default by
Purchaser
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In the
event that the Purchaser shall fail to complete the sale and purchase of the
Sale Shares in accordance with Clause 2.2 hereof, the Vendors shall be entitled
to claim liquidated damages amounting up to the Balance Purchase Price of United
State Dollars Four Million Four Hundred Twenty Six Thousand and Four Hundred and
Seventy .(US$4,426,470.00).
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11.
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Force
Majeure
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Notwithstanding
any provision herein to the contrary, no party hereto shall be liable to any
other party hereto for loss, injury, delay or damages suffered or incurred by
any such other party due to a substantial effect, acts of God, government
actions or any other cause which is beyond the reasonable control of the party
the performance of whose obligations hereunder are affected by such
cause.
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12.
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Time of
Essence
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Time
wherever mentioned shall be deemed to be of the essence of this
Agreement.
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13.
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Notice
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Every
notice, request, consent, demand or other communication under this
Agreement shall be given or made in writing shall be sufficiently served
on the party to whom it is addressed if it is left at or sent by
registered post or telegram to the address given above or to the place of
business for the time or to such address as one party hereto may from time
to time notify in writing to the other party hereto. A notice sent by
registered post or facsimile shall be deemed to have served at the time
when it ought in due course of post or transmission to have been
received.
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14.
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Governing
Law
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This
Agreement shall be governed by and construed in accordance with the Laws
of Republic of People of China.
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15.
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Modifications
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All
parties hereto agree that the provisions herein contained may if mutually agreed
upon be varied, amended, modified or substituted and any such variations,
amendment, modification or substitution thereof shall be in writing and signed
by all parties hereto. In the event of any inconsistency as to any of
the provisions thereof, the one subsequent in time shall prevail.
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16.
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Severability
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If any of
the provisions of this Agreement becomes invalid, illegal or unenforceable in
any respect under any law, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired.
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17.
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This Agreement the
Sole Agreement
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This
Agreement constitutes the sole and only agreement between the Vendors and the
Purchaser respecting the sale and purchase of the Sale Shares and correctly sets
forth the agreement reached between them in respect of the subject matter of
this Agreement and supersedes and cancels all previous and other agreements,
negotiations, representations, undertakings or undertakings whatsoever whether
written or oral in respect thereof.
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18.
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Costs
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The
Parties hereto shall bear and pay their respective Solicitors’ fees and costs
and the Purchaser shall bear all charges fees and expenses incurred or levied in
respect of the Transfer of the Sale Shares including the stamp duties and the
registration fees thereof and the stamp duty for this Agreement.
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19.
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Successors
Bound
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This
Agreement shall be binding on the respective successors-in-title, heirs
and permitted assigns of the parties hereto.
IN WITNESS WHEREOF the parties
hereto have hereunto set their hands and seal the day and year first above
written.
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The
Common Seal of THE Vendor
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was
hereunto affixed in the
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presence
of :-
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)
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(Common Seal
of
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)
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Tri-Way
Industries Limited affixed)
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)
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)
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(signed)
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(signed)
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DIRECTOR
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DIRECTOR
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Signed
by THE Purchaser )
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(signed)
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▇▇▇▇
▇▇ ▇▇▇▇▇:-
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APPENDIX
(Y)
MEMORANDUM
OF ARTICLE AND ASSOCIATION OF TQST
APPENDIX
(C1)
TQST’S
AUDITED REPORT ▇▇▇▇
▇▇▇▇▇▇▇▇
(C2)
TQST’S
MANAGEMENT ACCOUNT AS AT 300908
APPENDIX
(E)
CORRESPONDING
PAID ORDER, SIGNED RECEIPT AND CORRESPONDING BANKING RECORD OF “ THE PART
PAYMENT
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