Dated 23rd January, 1998
(1) ▇▇▇▇▇ ▇▇▇ DEVELOPMENT HOLDINGS LIMITED
(2) LEADING EDGE PACKAGING, INC.
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SHARE EXCHANGE AGREEMENT
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THIS SHARE EXCHANGE AGREEMENT is made the 23rd day of January, 1998
BETWEEN:
(1) ▇▇▇▇▇ ▇▇▇ DEVELOPMENT HOLDINGS LIMITED, a company incorporated in Bermuda
and whose registered office is situated at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ("CHD"); and
(2) LEADING EDGE PACKAGING, INC., a company incorporated in Delaware, U.S.A.
and whose registered office is situated at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇.▇.▇. and whose
principal place of business is situated at Empire State Building, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, U.S.A.("LEPI").
WHEREAS:
(A) CHD is a company incorporated in Bermuda with limited liability and has its
securities listed on the Hong Kong Stock Exchange and owns all of the
issued share capital of the Company, as hereinafter defined;
(B) LEPI is a company incorporated in Delaware, U.S.A. with limited liability
and which has its securities listed on the Nasdaq;
(C) LEPI and the Company have the common directors of Mr. Lip-Boon Saw and ▇▇.
▇▇▇▇▇▇▇ ▇▇▇▇-Gea ▇▇▇▇.
(D) CHD owns the majority of the issued and outstanding shares of common stock
of LEPI.
(E) CHD and LEPI have agreed to exchange the Shares and the LEPI Shares
on the terms set out below.
1. DEFINITIONS
(A) In this Agreement, unless the context otherwise requires, the
following expressions shall have the following meanings:
Expression Meaning
---------- -------
"Breakspear" Breakspear Limited, short particulars of
which are set out in Part B of Schedule
1;
"Business Day" a day upon which banks are open for business
in Hong Kong and New York, other than a
Saturday;
1
"Circle Round" Circle Round Limited, short particulars of
which are set out in Part C of Schedule 1;
"Company" Justrite Investments Limited, short
particulars of which are set out in Part A of
Schedule I.
"Companies Act" The Companies ▇▇▇ ▇▇▇▇ of Bermuda;
"Companies Ordinance" Companies Ordinance (Chapter 32 of the Laws
of Hong Kong);
"Disclosure Letter" the letter of even date herewith from CHD to
LEPI, containing exceptions to the
Warranties;
"Dongguan Shilong" Dongguan Shilong Wah Rich Packaging Limited,
short particulars of which are set out in
Part D of Schedule 1;
"Dongguan Walford" Dongguan Walford Ornaments packaging Limited,
short particulars of which are set out in
Part E of Schedule 1;
"Exchange" completion of this Agreement by the
performance by the parties of the several
obligations contained in Clause 4;
"Exchange Date" the third Business Day following the day on
which all the conditions referred to in
Clause 2(A) are satisfied or such other date
as the parties may agree;
"Group" the Company, the Wholly-owned Subsidiaries
and the Majority-owned Subsidiaries;
"Hong Kong" the Hong Kong Special Administrative Region
of the People's Republic of China;
"Hong Kong Stock The Stock Exchange of Hong Kong Limited;
Exchange"
"Justrite Shares" 100 Shares, representing all the issued
share capital of the Company;
"LEPI Shares" a total of 2,250,000 shares of common stock,
par value US$0.01 per share in the capital of
LEPI, such shares to be allotted and issued
credited as fully paid to CHD (or its
nominee)
2
at an issue price of US$6.00 per share in
exchange for the transfer to LEPI of the
Justrite Shares;
"Listing Rules" the Rules Governing the Listing of Securities
on the Hong Kong Stock Exchange;
"Majority-owned Dongguan Shilong and Dongguan Walford
Subsidiaries" which the Company owns half of the interest
in the registered capital and over half of
the interest in the registered capital
respectively;
"Management Accounts" the unaudited consolidated management
accounts of the Company for the period ended
on the Management Accounts Date;
"Management Accounts 30th September, 1997;
Date"
"Nasdaq" Nasdaq National Market;
"PRC Property" the two properties details of which are set
out in Schedule 3;
"Rich City" Rich City International Packaging Limited,
short particulars of which are set out in
Part F of Schedule 1;
"SEC" the United States Securities and Exchange
Commission;
"SFC" the Securities and Futures Commission in Hong
Kong;
"Shares" shares of US$1.00 each in the capital of the
Company;
"Tax" or "Taxation" any form of taxation, charge, duty, levy,
impost, withholding, deduction or liability
wherever imposed to collect public or local
revenue by any statutory governmental state
provincial local or municipal authority
whatever;
3
"Underwriter" Gilford Securities Incorporated, being the
underwriter in relation to the initial public
offering of LEPI;
"Warranties" the warranties representations and
undertakings referred to in Clause 6 and
Schedule 2;
"Wholly-owned Breakspear, Circle Round and Rich City in
Subsidiaries" which the Company beneficially owns the
entire issued share capital thereof;
"$ " or "HK$" Hong Kong dollars; and
"US$" United States dollars.
(B) References to Clauses and Schedules are to clauses of and schedules to
this Agreement.
(C) References in this Agreement to statutory provisions shall be
construed as references to those provisions as respectively replaced,
amended or re-enacted (whether before or after the date hereof) from
time to time and shall include any provisions of which they are
re-enactments (whether with or without modification) and any
subordinate legislation or regulations made under such provisions.
(D) Words importing the singular include the plural and vice versa, words
importing gender include every gender and references to persons
include bodies corporate or unincorporate.
(E) References to "writing", or any cognate expression, includes a
reference to any communication effected by telex, facsimile
transmission or similar means.
(F) References to a document "in the agreed terms" is a reference to the
form of the version initialed for the purposes of identification for
or on behalf of the parties.
(G) The headings in this Agreement are for convenience only and shall not
affect its interpretation.
2. CONDITIONS TO CLOSING
(A) Completion of this Agreement is conditional upon satisfaction of all
of the following conditions by not later that 10th March, 1998 or such
later date as may be agreed between the parities:
4
(i) if required by the Hong Kong Stock Exchange, the transactions
envisaged by, and the performance of the obligations by CHD
pursuant to, this Agreement being approved by a simple majority
of shareholders of CHD (excluding those shareholders (if any)
prohibited by the Listing Rules from voting on the relevant
resolution) voting at a special general meeting convened for the
aforementioned purpose;
(ii) the Underwriter unconditionally approving or agreeing to the
issue by LEPI of the LEPI Shares;
(iii) all necessary consents and authorisations which may be required
to implement this Agreement under any existing contractual
arrangements, or under loan or finance documentation of CHD,
LEPI or any member of the Group (as the case may be), having
been obtained;
(iv) financial due diligence of the Group carried out by LEPI
based on the results of review of financial statements of the
Group for the six months ended 30th September, 1997 to be
performed by the auditors of LEPI and to be completed before
10th March, 1998.
(B) The conditions mentioned in paragraphs (i) to (iv) of Clause 2(A)
above shall only be treated as satisfied if the relevant waiver,
authorisation, consent or approval is unconditional or, if it is
conditional or imposes requirements, the conditions or requirements
are acceptable to LEPI. The parties shall notify each other in
writing when they consider all of the conditions in Clause 2(A) to be
satisfied.
(F) The parties shall use all reasonable endeavors to procure that the
conditions in Clause 2(A) are satisfied by no later than 10th March,
1998 or, in the event that the parties hereto agree in writing, a
later date or dates. In the event of the conditions referred to in
Clause 2(A) not being fulfilled or waived by the parties in writing by
10th March, 1998 or such later date(s) as may be agreed between the
parties, all rights, obligations and liabilities of the parties
hereunder will cease and determine and no party will have any claim
against the other save for any antecedent breach hereof.
5
3. EXCHANGE OF SHARES
Subject to the satisfaction of all the conditions referred to in
Clause 2(A), at Exchange:
(A) CHD shall transfer, or procure the transfer of, as beneficial owner,
to LEPI the Shares in each case free from all liens, charges,
encumbrances, equities, claims, adverse interests and third party
rights of any kind whatsoever and together with all rights attaching
or accruing thereto on or after the Exchange Date; and
(B) LEPI shall allot and issue the LEPI Shares to CHD or as CHD shall in
writing direct in each case credited as fully paid and free and clear
from all encumbrances and third party rights whatsoever.
4. EXCHANGE
Upon satisfaction of the conditions referred to in Clause 2(A), Exchange
will take place on the Exchange Date at the offices of CHD in Hong Kong or
at such other place and time as the parties to this Agreement may agree.
At Exchange all (but not part, unless all the parties hereto so agree) of
the following business will be transacted:
(A) CHD will:
(i) Deliver to LEPI:
(a) instruments of transfer in respect of all of the Shares duly
executed by or on behalf of CHD or the registered
shareholder in favour of LEPI or its nominee(s);
(b) the share certificates for all the Justrite Shares;
(c) such other documents as may be required to give a good title
to the Justrite Shares and to enable LEPI or its nominee(s)
to become the registered holder thereof; and
(d) the common seal, certificate of incorporation, business
registration certificate, memorandum and articles of
association and statutory books and all accounting and other
records of the Company;
(ii) if required, procure and deliver evidence of the approval
by a simple majority of the shareholders of CHD referred
to under Clause (2)(A)(i);
(iii) procure that a board meeting of the Company be held at
which resolutions shall be passed to:
(a) accept and approve the transfers referred to in Clause
4(A)(i)(a) for registration subject only to execution of the
same by LEPI or its
6
nominee(s); and
(b) appoint such persons as LEPI may nominate to be directors
and/or secretary of the Company; and
(iv) execute and do and deliver to LEPI all such other documents,
acts and things as LEPI may reasonably require in order to
implement the transactions contemplated by this Agreement
and to pass control, ownership, management and
administration of the Company, the Wholly-owned Subsidiaries
and the Majority-owned Subsidiaries to LEPI;
(B) LEPI will:
(i) allot and issue the LEPI Shares to CHD or as it shall in writing
direct, credited as fully paid at US$6.00 per share;
(ii) deliver to CHD a certified copy of the document showing that the
condition under Clause2(A)(ii) has been satisfied;
(iii) deliver to CHD a certified copy of the board resolution of LEPI
approving the allotment and issue of the LEPI Shares to CHD (or
its nominee); and
(iv) certificates for the LEPI Shares in the name of
CHD (or its nominee).
5. WARRANTIES
(A) CHD hereby warrants, represents and undertakes to LEPI in the terms
set out in Schedule 2 as at the date hereof and as at the date of
Exchange and warrants that all the warranties and representations set
out in Schedule 2 are correct and complete as at the date hereof and
as at the date of the Exchange.
(B) In so far as the Warranties relate in whole or in part to matters of
fact they shall constitute representations upon the faith of which
LEPI 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 or
inference from the terms of any other Warranty or any other term of
this Agreement.
(C) The provisions of this Clause 5(C) shall operate, inter alia, to limit
the liability of CHD under or in connection with this Agreement and
"liability" and "liabilities" shall be construed accordingly. The
parties agree:
7
(i) no liability shall attach to CHD unless and until the aggregate
amount of the liabilities of CHD shall exceed the sum of
US$250,000 but if the liabilities exceed that sum CHD shall
(subject to the other provisions hereof) be liable for the whole
of such liability and not merely the excess;
(ii) no liability shall attach to CHD in respect of any single claim
unless the amount of such claim shall exceed US$10,000;
(iii) the aggregate amount of the liabilities shall not exceed the
aggregate value attributable to the LEPI Shares hereunder, being
US$13,500,000;
(iv) no liability shall accrue if and to the extent that:
(a) adequate provision or adequate reserve is made in the
Management Accounts for the matter giving rise to the
claim; or
(b) it relates to Tax assessed or liable to be assessed in
respect of any period or arising in consequence of any
transaction carried out after the date of Exchange; or
(c) the facts which give rise to the claim are fairly
contained in the Disclosure Letter;
(v) no liability shall accrue in respect of any matter, act,
omission, transaction or circumstance which would not have
occurred but for the passing of , or any retrospective change
in, after the date of this Agreement, any law, rule,
regulation or generally accepted administrative practice of
any government, or any increase in the rates of taxation or
any imposition of Tax not in effect at Exchange and which has
retrospective effect;
(vi) no liability shall accrue for any loss arising from a breach
of the Warranties to the extent that any such loss is covered
by a policy of insurance unless the policy is avoided not as
a result of any actions or omissions on the part of LEPI,
Provided that nothing herein shall be construed to impose on
LEPI any obligation to effect or maintain any such policy of
insurance; and
(vii) CHD shall not be liable for breach of any representation,
warranty or undertaking contained in this Agreement by reason
of any omission or default of LEPI, the Company, the
Wholly-owned Subsidiaries or the Majority-owned Subsidiaries
occurring after the date of Exchange.
(D) Where a Warranty is made or given "so far as CHD is aware", or "to the
best of the
8
knowledge of CHD" such Warranty shall be deemed to be given to the
best of the knowledge information and belief of CHD after making
enquiry of the directors and senior management of the Company, the
Wholly-owned Subsidiaries and the Majority-owned Subsidiaries.
(E) No claim shall be made by LEPI against CHD pursuant to this Clause 5,
Clause 6(B) or Schedule 2 unless written notice of such claim
specifying the nature of the claim has been delivered to CHD on or
before the date falling 12 months from the Exchange Date.
(F) Any liability of CHD under the Warranties shall be reduced by an
amount equal to:
(i) the value or additional value of any fixed assets (save for
the value of intangible assets and goodwill) held at Exchange
which are not included in the Management Accounts or are
included at less than market value;
(ii) the amount of or by which any Taxation for which any member
of the Group is accountable is extinguished or reduced as a
result of the claim giving rise to the liability;
(iii) the amount by which any provision for Taxation, bad or
doubtful debts or contingent or other liabilities contained
in the Management Accounts proves after Exchange to have been
excessive, except by reason of a reduction in tax rates; and
(iv) the amount of any credits, recoveries or other benefits which
have been or will be received or obtained by any of member of
the Group by reason of or arising out of the matters giving
rise to the liability.
(G) If a breach of the Warranties is established, after the liability of
CHD has been reduced pursuant to the provisions of Clause 5(F) above,
CHD shall be entitled to set-off, against the amount of any liability
incurred by it as a result of the breach, in any amount by which
(after adjustment where appropriate for taxation in respect of revenue
items) the position of the Group (taken as a whole) in respect of any
other matter is established to be better than warranted (after
adjustment for taxation where appropriate). Provided always that the
provisions of this Clause 5(G) shall not apply and CHD shall not be
entitled to any set off in respect of any item or matter which has
been taken into account or the benefit of which it has received under
the provisions of Clause 5(F) above.
6. UNDERTAKINGS
(A) CHD undertakes that prior to Exchange or such later date as the
parties may agree in writing, it will procure that all current
account balances between on the one hand
9
CHD and its subsidiaries (other than members of the Group) and on the
other hand members of the Group agreed by the parties to be settled in
full are settled in full.
(B) With the exception of the transactions under Clause 6(A) above, CHD
represents, warrants and undertakes to LEPI to procure that (a) prior
to Exchange it will procure that the Group continues to operate its
business in the ordinary course of business in the same manner as
prior to the date hereof and (b) neither the Company, the Wholly-owned
Subsidiaries nor the Majority-owned Subsidiaries shall (save as
contemplated herein) at any time from the date of this Agreement until
Exchange without the prior written consent of LEPI (which consent
shall not be unreasonably withheld or delayed):
(i) make any change in its business carried on at the date of this
Agreement;
(ii) do or omit to do anything whereby any of its outstanding
agreements may be modified in a material manner or terminated
prematurely such that the condition of its assets or the
financial position of its businesses might be materially and
adversely affected;
(iii) permit or suffer any of its insurances in respect of any of its
assets or its business to lapse or do anything which would make
any policy of insurance void or voidable;
(iv) increase the remuneration of any of its employees by an amount
greater that thirty-five per cent of that individual's aggregate
remuneration package or amend the material terms of any of its
employees or any other individual whose services are provided to
any material extent;
(v) assign or purport to assign any rights under any contract to
which it is a party or novate or purport to novate any such
contract otherwise than in the ordinary course of business; or
(vi) pass any resolution in general meeting other than a
resolution at an annual general meeting which is not special
business and save as provided in this Agreement.
(C) LEPI hereby undertakes, following the Exchange, to use its best
endeavors to procure the release of CHD from all guarantees and
letters of undertaking given by it in respect of the obligations of
the Company, the Wholly-owned Subsidiaries and the Majority-owned
Subsidiaries (if any), and, if required as a condition to the release
of such guarantees and letters of undertaking by the lender(s) or
person(s) in whose favour such guarantees and letters of undertaking
have been given, to replace such guarantees and letters of undertaking
with guarantees and letters of undertaking from
10
LEPI; and until such guarantees and letters of undertaking have been
released, from the time immediately following Exchange to indemnify
CHD, and keep it indemnified and held harmless against all claims,
losses, damages, costs, expenses and liabilities arising out of such
guarantees and letters of undertaking.
(D) CHD hereby undertakes to LEPI that in the event the audited net asset
value of the Company for the year ending 31st March, 1998 as reflected
in the audited report and accounts of the Company for such period is
less than US$4,500,000 it will forthwith pay to LEPI on a US$ for US$
basis the amount of any shortfall.
(E) LEPI hereby undertakes, to procure that Rich City obtains all the
documents, consents and approvals and completes all formalities
necessary for the transfer of the PRC Property to CHD or its nominee
and to procure that Rich City effects the transfer of the PRC
Property to CHD or its nominee.
(F) LEPI hereby undertakes, following the Exchange, to procure that the
Company and its auditors prepares the accounts referred to in
Clause 6(D) on a consistent basis with, and adopts the same
policies as, previous accounts in determination of the net asset
value of the Company. For compliance with the requirements of the
SEC, if required, the auditors of the Company will consolidate the
financial statements of the Company and comply with such disclosure
requirements in accordance with USGAAP. For the avoidance of doubt,
if the net asset value of the Company for the year ending 31st
March, 1998, for the purposes of clause 6(D) calculated by applying
USGAAP is different from that calculated without applying USGAAP,
then USGAAP will not be applicable in calculating the net asset value
of the Company for the year ending 31st March, 1998 for the purposes
of clause 6(D) only and as a seperate determination from the
preparation of the annual accounts of the Company.
(G) LEPI represents, warrants and undertakes to CHD that:
(i) subject to Exchange it will allot and issue the LEPI Shares to
CHD credited as fully paid as to US$6.00 per share free and clear
of all encumbrances and third party rights whatsoever;
(ii) it has sufficient authorised but unissued share capital to permit
the allotment and issue of the LEPI Shares; and
(iii) it will file, or cause to be filed, not later than 14 days from
the Exchange Date, a registration statement with respect
to the LEPI Shares, with the SEC, on behalf of CHD.
7. REPRESENTATIONS AND WARRANTIES AS TO AUTHORITY AND LEGALITY
Each party represents and warrants to the other that:
(A) it has the corporate power to enter into and perform its obligations
under this Agreement and to carry out the transactions contemplated
hereby;
(B) it has taken all necessary corporate action to authorise the entering
into and
11
performance of this Agreement and to carry out the transactions
contemplated hereby; and
(C) this Agreement is a valid and binding obligation on it and it is not
in contravention of any applicable statute, regulation, ordinance or
other governmental restriction and does not conflict with or cause a
breach or default under any of its agreements or other contractual
arrangements.
8. ASSIGNMENT
This Agreement shall be binding on and enure for the benefit of the
successors of each of the parties but shall not be assignable without the
prior consent of the other party.
9. REMEDIES FOR BREACH
Any remedy conferred on any party 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. No failure or
delay by any party hereto to exercise any remedy shall operate
as a waiver thereof nor shall any single or partial exercise of any remedy
preclude any further exercise thereof or the exercise of any other remedy.
10. FURTHER ASSURANCE
Each of the parties hereby undertakes to the other 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 and
so that each party shall be responsible for its own costs in connection
with its obligations under this Clause 9.
11. MISCELLANEOUS
(A) Any provision of this Agreement which is capable of being performed
after but which has not been performed at or before Exchange and all
Warranties and other undertakings contained in or entered into
pursuant to this Agreement shall remain in full force and effect
notwithstanding Exchange and shall, in the case of the Warranties, be
repeated with reference to the facts and circumstances subsisting at
Exchange.
(B) This Agreement constitutes the whole agreement between the parties
relating to the transactions hereby contemplated (no party having
relied on any representation or warranty made by any other party which
is not a term of this Agreement) and no future variation shall be
effective unless made in writing and signed by each of the
12
parties.
(C) This Agreement shall supersede all and any previous agreements or
arrangements between the parties hereto or any of them relating to the
Company, the Wholly-owned Subsidiaries and the Majority-owned
Subsidiaries or to any other matter referred to in this Agreement and
all or any such previous agreements or arrangements (if any) shall
cease and determine with effect from the date of this Agreement.
(D) If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the remaining provisions
hereof shall in no way be affected or impaired thereby.
12. COSTS AND EXPENSES
Each party shall pay its own costs and expenses in relation to the
preparation, execution and carrying into effect of this Agreement.
13. ANNOUNCEMENTS AND CIRCULARS
(A) Each of the parties hereto shall comply with all applicable laws,
rules and regulations with respect to any and all announcements and
circulars by or on behalf of any of the parties hereto and relating to
the transactions contemplated by this Agreement.
(B) Subject to Clause 13 (A), all announcements and circulars referred to
in Clause 13(A) shall be pending an announcement or release thereof,
kept confidential by each party.
14. NOTICES
(A) Any notice or other document to be given under this Agreement shall be
in writing and shall be delivered by hand or sent by first class post
or airmail or facsimile transmission to the address or facsimile
number of the party to be served as stated below (or to such other
addresses and/or numbers as the addressee may have by two Business
Days' prior notice notified the other party hereto):
To CHD:
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
13
To LEPI:
Suite 3922
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer
(B) Any such notice or other document shall be deemed to have been duly
given upon receipt if delivered by hand or if sent by facsimile
transmission upon the receipt by the sending machine of the
addressee's confirmatory answerback or other confirmation and in the
case of notice sent by post it shall be deemed to have been given one
Business Day after posting if the address is in Hong Kong and five
Business Days after posting if the address is outside Hong Kong. In
proving the giving of a notice it shall be sufficient to prove that
the notice was left or that the envelope containing such notice was
properly addressed and posted or that the applicable means of
telecommunication was properly received (as the case may be).
15. TIME OF THE ESSENCE
Time shall be of the essence of this agreement, both as to times, dates and
periods mentioned herein and as to any times, dates or periods which may by
agreement in writing be substituted therefor.
IN WITNESS whereof this Agreement has been entered into the day and year
first above written.
14
SCHEDULE 1
Part A
Particulars of the Company
Name : Justrite Investments Limited
Registered Office : ▇.▇. ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Incorporation Date : 2nd March, 1993
Capital :
-Authorised : US$50,000 dividend into 50,000
shares of US$1.00 each
-Paid Up : US$100.00
Nature of Business : investment holding
Director : ▇▇▇▇▇ ▇▇▇-fu
Ong Ai-gin
Saw Lip-boon
▇▇▇▇ ▇▇▇▇-gea
Registered Shareholders : ▇▇▇▇▇ ▇▇▇ Development Holdings
Limited (100 shares)
15
SCHEDULE 1
Part B
Particulars of Breakspear
Name : Breakspear Limited
Registered Office : ▇.▇. ▇▇▇ ▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Incorporation Date : 24th January, 1992
Capital :
-Authorised : US$50,000 divided into 50,000
shares of US$1.00 each
-Paid up : US$1.00
Nature of Business : investment holding and provision of
Group services
Directors : Mr. Saw Lip Boon
▇▇. ▇▇▇▇ ▇▇▇▇ Gea
▇▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Registered Shareholder : Justice Investments Limited
(one share)
16
SCHEDULE 1
Part C
Particulars of Circle Round
Name : Circle Round Limited
Registered Office : ▇▇▇▇ ▇▇▇, ▇▇▇▇-▇▇ ▇▇▇▇ Sing Centre
71-75 Container ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Incorporation Date : 2nd December 1993
Capital
-Authorised : HK$10,000.00 divided into 10,000
shares of HK$1.00 each
-Paid up : HK$2.00
Nature of Business : property holding
Directors : ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇▇
Secretary : ▇▇▇▇▇ ▇▇▇▇ Wah
Registered Shareholders : Rich City International
Packaging Limited (one share)
Smart Investments Limited
(one share)
17
SCHEDULE 1
Part D
Particulars of Dongguan Shilong
Name : Dongguan Shilong Wah Rich Packaging
Limited
Registered Office : ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇,
the PRC
Incorporation Date : 27th September, 1989
Registered Capital : RMB1,410,000.00
Nature of Business : manufacture and sale of packaging
products
Directors : ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ Kit
Registered Shareholders : Dongguan City ▇▇▇▇ ▇▇▇▇ Wah
Nam Enterprises Company (50%)
Rich City International
Packaging Limited (50%)
18
SCHEDULE 1
Part E
Particulars of Dongguan Walford
Name : Dongguan Walford Ornaments Packaging
Limited
Registered Office : ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
the PRC
Incorporation Date : 21st August, 1993
Registered Capital : HK$26,250,000
Nature of Business : manufacture and sale of
packaging products
Directors : ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ Kit
Registered Shareholders : Dongguah City ▇▇▇▇ ▇▇▇▇ Wah
Nam Enterprises Company (40%)
Breakspear Limited (60%)
19
SCHEDULE 1
Part F
Particulars of Rich City
Name: : Rich City International Packaging
Limited
Registered Office : ▇▇▇▇ ▇▇▇, ▇▇▇▇-▇▇ ▇▇▇▇ Sing Centre
71-75 Container ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Incorporation Date : 19th March, 1991
Capital :
-Authorised : HK$5,000,000.00 divided into
5,000,000 shares of HK$1.00 each
-Paid up : HK$2,000,000.00
Nature of Business : investment holding and financial
services
Directors : ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
Saw Lip-boon
▇▇▇▇ ▇▇▇▇-gea, ▇▇▇▇▇▇▇
: ▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇
Registered Shareholders : Justrite Investments Limited
(1,999,999 shares)
▇▇▇▇▇ ▇▇▇ Fu (1 share)
20
SCHEDULE 2
CLAUSE 5: WARRANTIES
It is agreed that unless the context otherwise requires, the representations,
warranties and undertakings contained in this Schedule in relation to the
Company shall be deemed to be and are hereby repeated mutatis mutandis in
relation to each of the Wholly-owned Subsidiaries and the Majority-owned
Subsidiaries.
Taxation
1. All returns of the Company made for taxation purposes were, as at the date
on which they were made, correct in all material respects and on a proper
basis and all other information supplied to the Inland Revenue Department
or other fiscal authority for such purpose was when supplied correct in all
material respects and on a proper basis and such returns included all
returns and information which the Company ought to have made or given and
are not subject to any material dispute with the Inland Revenue Department
or any other relevant fiscal authority at the date hereof and there is no
fact or matter which might result in any such dispute or any material
liability for taxation (present or future) not provided for appropriately
in the Accounts.
2. The Company has paid all taxation for which it is liable to account to the
Inland Revenue Department or other fiscal authority on the due date for
payment thereof and is under no liability to pay any penalty or interest in
connection therewith and without limiting the generality of the foregoing
the Company has made all deductions and withholdings in respect or on
account of taxation which it is required or entitled by any relevant
legislation to make from any payments made by it including, but not limited
to, interest, annuities or other annual payments, royalties, rent,
remuneration payable to employees or sub-contractors or payments to a
non-resident and where appropriate the Company has accounted in full to the
relevant fiscal authority for any taxation so deducted or withheld.
Corporate matters
3. The Company has been duly incorporated and is validly existing under the
laws of its jurisdiction and has full power, authority and legal right to
own its assets and carry on its business as presently conducted and is not
in receivership or liquidation, it has taken no steps to enter liquidation
and no petition has been presented for winding up the Company and there are
no grounds on which a petition or application could be based for the
winding up or appointment of a receiver of the Company.
4. There are no outstanding options, warrants or similar rights to purchase
shares or other securities of the Company or the Wholly-owned Subsidiaries
or Majority-owned Subsidiaries except as specifically set forth herein or
in the Disclosure Letter.
21
Trading and general commercial matters
5. There are no agreements concerning the Company which are material to its
business which will be terminated as a result of the execution of this
Agreement or Exchange or any transaction associated herewith or therewith
and which will have a material adverse effect on the financial position
of the Company and its subsidiaries taken as a whole.
6. The Company is not in default under any material provision of any material
contract or material agreement to which it is a party or by which it is
bound and which has or may have a material adverse effect on the financial
position of the Company and its subsidiaries taken as a whole; and no event
has occurred which constitutes such default, or which with the giving of
notice or the passage of time or otherwise, would constitute such default
or which would require the premature repayment of any material loans or
other material amounts due thereunder.
7. So far as the Company is aware, it is not the subject of any official
investigation or inquiry and there are no facts which are likely to give
rise to any such investigation or inquiry.
8. The Company has at all material times carried on its business in compliance
with all applicable laws and regulations and without prejudice to the
generality of the foregoing the Company has obtained all licenses and
consents necessary for the carrying on of its business, and all such
licenses and consents are valid and subsisting and so far as the Company is
aware there is no reason why any of them should be suspended, canceled or
revoked.
9. Any and all agreements executed by CHD on behalf of the Company which are
necessary to the business of the Company and the Wholly-owned Subsidiaries
and the Majority-owned Subsidiaries have been assigned by CHD to LEPI.
10. The Company is not obligated under any product warrantees or other
guarantees with which it is unable to comply.
11. The Company and its Wholly-owned Subsidiaries and Majority-owned
Subsidiaries have good title to all the properties and assets used by them
in the ordinary course of their respective businesses.
12. The Company has no patent, copyright, trademark or other intellectual
property rights which it requires in the ordinary course of its business.
Litigation
13. The Company is not involved whether as plaintiff or defendant or otherwise
in any civil, criminal or arbitration proceedings (apart from debt
collecting in the ordinary course of business) or in any proceedings before
any tribunal and the outcome of which, whether successful
22
or otherwise, will have a material adverse effect on the financial
position of the Company and its subsidiaries taken as a whole; and so
far as the Company is aware no such proceedings are threatened or
pending; nor is there any material unsatisfied judgment, court order or
tribunal or arbitral award outstanding against the Company (unless the
same is the subject of an appeal or in respect of which an appeal is
contemplated) and no distress, execution or process has been levied on
any part of its business or assets.
14. Neither the Company nor any of its Wholly-owned Subsidiaries or
Majority-owned Subsidiaries is responsible for any liability or obligation
for or on behalf of any third party.
The Company
15. The Justrite Shares have been allotted and issued to CHD free from any
lien, charge, encumbrance and third party right of whatsoever nature and
together with all rights attaching thereto.
16. The Justrite Shares have been allotted and issued in CHD fully paid up
and in accordance with the memorandum and articles of the Company and
rank pari passu in all respects inter se and with all other shares in the
share capital of the Company.
17. The Justrite Shares will at Exchange represent all of the entire issued
share capital of the Company.
18. The Company will at Exchange be the legal and beneficial owner of all the
issued shares in Rich City and Breakspear free from all liens, charges,
rights of pre-emptions, options, claims, equities, encumbrances and third
party rights of any kind.
19. The Company will at Exchange be the legal and beneficial owner of half of
the interest in the registered capital of Dongguan Shilong and over half of
the interest in the registered capital in Dongguan Walford free from all
liens, charges, rights of pre-emptions, options, claims, equities,
encumbrances and third party rights of any kind.
20. The Company has been duly incorporated and is validly existing under the
laws of the British Virgin Islands and has full power, authority and legal
right to own its assets and carry on its business as presently conducted
and is not in receivership or liquidation, it has taken no steps to enter
liquidation and no petition has been presented for winding up the Company
and there are no grounds on which a petition or application could be based
for the winding up or appointment of a receiver of the Company.
21. The total amount borrowed by the Company (as determined under the relevant
instrument) does not exceed any limitation on its borrowing powers
contained in its articles of association or equivalent constitutional
documents, or in any debenture or other relevant document.
22. The Company has not received any notices (whether formal or informal) from
any lenders of money, requiring repayment or intimating the enforcement of
any security.
23
23. The Company has no knowledge of the invalidity of, or grounds for
rescission, avoidance or repudiation of, any material agreement or
arrangement to which it is a party and no party with whom it has entered
into any material agreement or arrangement has given any notice of its
intention to terminate, or has otherwise sought to repudiate or disclaim,
the agreement or arrangement.
24. The Company is not a party to nor has it any liability under any onerous or
unusual agreement, arrangement or obligation being:
(i) any material agreement, arrangement or obligation which was entered
into otherwise than in the ordinary and usual course of its
business;
(ii) any material agreement, arrangement or obligation which was entered
into otherwise than by way of a bargain at arm's length;
(iii) any material agreement or arrangement which restricts its freedom
to carry on the whole or any material part of its business in
such manner as it thinks fit;
(iv) any material sale or purchase option or similar agreement, arrangement
or obligation affecting any material assets owned or used by it; or
(v) any material agreement, arrangement or obligation which cannot readily
be fulfilled or performed on time or without undue or unusual
expenditure of money or effort.
25. There is no power of attorney given by the Company which is in force and
there is no outstanding authority by which any person may enter into any
agreement, arrangement or obligation to do anything on behalf of any such
company (other than any authority of its employees and directors to enter
into agreements in the ordinary and usual course of their duties).
26. All material assets of any member of the Group of an insurable nature have
at all times been and are insured in such amounts and against such risks as
are in accordance with good commercial practice normally insured against.
Each member of the Group has at all times been adequately covered against
accident, third party, public liability (as the case may be) and other
risks normally covered by insurance and nothing has been done or omitted to
be done by or on behalf of each member of the Group which would make any
policy of insurance void or voidable or enable the insurers to avoid the
same and there is no claim outstanding under any such policy and the
Company is not aware of any circumstances likely to give rise to such a
claim or result in an increased rate of premium.
27. No member of the Group has not suffered any material uninsured losses nor
waived any rights of material or substantial value or allowed any material
insurances to lapse.
24
28. Save for the outstanding accounts referred to in Clause 6(A) and Schedule
3, there are no amounts owing by CHD and its subsidiaries (other than the
Group) to the Group and all such accounts as are referred to in Clause 6(A)
and Schedule 3 will be settled on or before the Exchange.
25
SCHEDULE 3
PRC Property
Address Registered Owner
------- ----------------
1. ▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ International Packaging
Guang Fat Gardens Limited
482 ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇
Guangzhou Province
People's Republic of China
2. ▇▇▇▇ ▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ International Packaging
Tower 2 Limited
Dong-Jun ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China
26
SIGNED by ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ )
for and on behalf of )
▇▇▇▇▇ ▇▇▇ DEVELOPMENT ) [SIGNATURE]
HOLDINGS LIMITED )
in the presence of: ▇▇▇▇▇▇ ▇▇▇ )
SIGNED by Lip-Boon Saw )
for and on behalf of ) [SIGNATURE]
LEADING EDGE PACKAGING, INC. )
in the presence of: ▇▇▇▇-Gea ▇▇▇▇ )