U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
---------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVEN REPORTED): MAY 28, 1999
COMMISSION FILE NUMBER: 000-26029
ASIAN STAR DEVELOPMENT, INC.
-----------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA
-------
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
86-0866395
---------------------
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ROOM 930, BLOCK B, EAST WING
NEW WORLD OFFICE BUILDING
TSIMSHATSUI, KOWLOON, HONG KONG
TEL. (852) 2721-0936
--------------------------------------------
(ADDRESS AND PHONE NUMBER OF PRINCIPAL OFFICES)
NONE
--------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS.
Sale of Real Estate Interests
On March 17, 2000, registrant entered into an agreement to sell its 80% equity
interests in Dongguan Dragon Villa Limited and Dongguan Dragon Entertainment
Centre Limited in exchange for approximately US$1,000,000 cash, which was the
approximate fair market value of the registrant's investment in the interests
sold. Closing is to take place on or before April 1, 2000. The sale excluded the
operational complex of Dragon Villa Water World, in which the registrant will
retain its 80% ownership. The interests were sold to the Shilong Town House &
Properties Corporation, a Chinese Government corporation which was the owner of
the other 20% interest in the ventures.
The cash received in the sale transaction was used to acquire controlling
interests in Harmonic Hall Investment Holdings, as described below.
There are no material relationships between the purchaser corporation and the
registrant or any of its affiliates, any officer or director of the registrant,
or any associate of any such officer or director, except for
1
<PAGE>
the ownership interests which registrant and the purchaser corporation continue
to hold in Dragon Villa Water World.
A copy of the sale agreement, as translated into English, is included as an
exhibit to this filing.
Acquisition of CD Manufacturer
- ------------------------------
On March 28, 2000, the registrant entered into an "Agreement for the Sale and
Purchase of Shares" (the"Agreement"), which provides for the registrant to
acquire approximately 52% of the total outstanding shares of Harmonic Hall
Investment Holdings Limited, a British Virgin Islands corporation ("Harmonic").
The shares are being acquired from Mr. Yui Siu Hung, an officer, director and
shareholder of Harmonic. Total consideration paid by registrant was US$650,000,
plus 2,313,625 shares of registrant's restricted Common Stock. The consideration
paid was based on the fair market value of the interests acquired. The closing
of the transaction is to take place on or before April 15, 2000.
The cash portion of the purchase price was obtained through the registrant's
sale of certain interests in its real estate holdings in China, as set forth
above.
Harmonic owns and operates two (2) state-of-the-art, high-technology CD
manufacturing plants, one in Hong Kong and one in mainland China, and has
thirteen (13) subsidiaries. Harmonic manufactures CD's, CD-ROM's, CD-RW's and
DVD's. The majority of its production is purchased by Philips. The registrant
intends to continue operating the plants. Harmonic has approximately 400
employees and average monthly sales of HK$10,778,644. The current exchange rate
is approximately US$1.00=HK$7.80.
There are no material relationships between Mr. Yui Siu Hung and the registrant
or any of its affiliates, any officer or director of the registrant, or any
associate of any such officer or director.
A copy of the purchase agreement is included as an exhibit to this filing.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Financial statements for Harmonic and PRO FORMA financial information will be
filed within 60 days of the date of this report.
Exhibits attached pursuant to Item 601 of Regulation SK:
(1) Exhibit 2(a) - Agreement relating to the Sale and Purchase of Shares in
Harmonic Hall Investment Holdings Limited
Exhibit 2(b) Subscription Agreement
(2) Exhibit 10 - Share Ownership Transfer Agreement
2
<PAGE>
EXHIBIT 2(A)
DATED THIS DAY OF , 2000
YIU SIU HUNG,
(as Vendor)
and
ASIAN STAR DEVELOPMENT, INC
(as Purchaser)
----------------------------------------------------
A G R E E M E N T
RELATING TO THE SALE AND PURCHASE OF SHARES IN
HARMONIC HALL INVESTMENT HOLDINGS LIMITED
-----------------------------------------------------
LO AND LO
SOLICITORS &C.
HONG KONG
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INDEX
RECITALS 3
DEFINITIONS 4
1. Agreement for Sale 6
2. Purchase Consideration 6
3. Conditions Precedent 6
4. Completion 7
5. Warranties, Representations and Undertakings etc. 9
6. Pre-Completion Obligations of the Vendor 10
7. Rights of the Purchaser 11
8. General 11
9. Schedule 1 - Consideration Shares 14
10. Schedule 2 - Company and other Group Companies 15
11. Schedule 3 - Representations, Warranties and Undertakings 31
12. Schedule 4- Properties 57
13. Schedule 5- Deed of Indemnity 59
4
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THIS AGREEMENT is made the day of 2000
BETWEEN
(1) YIU SIU HUNG ( ) of House No. D1, Fortune Garden, No. 72 Ting Kok Road,
Tai Po, New Territories, Hong Kong ("the Vendor"); and
(2) ASIAN STAR DEVELOPMENT, INC., a company incorporated under the laws of
the State of Nevada in the United States of America whose shares are
listed on Nasdaq and whose registered office is at 1495 Ridgeview
Drive, Suite 220, Reno, Nevada 89509, USA, with a correspondence
address in Hong Kong c/o Suite 930, East Wing, Block B, New World
Office Building, Tsimshatsui, Kowloon, Hong Kong ("the Purchaser").
RECITALS
- --------
W H E R E A S :-
(A) The Company (hereinafter named and defined) was incorporated on 30th
December 1996 with company number 210816 and having an authorised share
capital of US$50,000.00 divided into 50,000 shares of US$1.00 each of
which 1,000 shares are fully paid up or credited as fully paid up.
(B) The Vendor is the legal and beneficial owner of the Sale Shares
representing 50% of the entire issued share capital of the Company. The
Vendor has agreed to sell and the Purchaser has agreed to purchase the
Sale Shares free from any claims, charges, liens, encumbrances,
equities or adverse rights of any description in accordance with the
terms and conditions of this Agreement.
(C) Asia Star (Hong Kong) Limited ("ASHK") is a subsidiary of the Purchaser
incorporated under the laws of Hong Kong SAR.
(D) By a Subscription Agreement made between ASHK and the Company and
executed immediately prior to the signing of this Agreement, ASHK has
agreed to subscribe and the Company has agreed to issue and allot 35
new shares of US$1.00 each representing 3.38% of the enlarged share
capital of the Company at the subscription price of HK$144,000.00 per
share to ASHK upon the terms and conditions therein mentioned.
(E) It is a term of the Subscription Agreement that the Vendor shall sell
the Sale Shares to the Purchaser in order that the Purchaser together
with ASHK will hold 51.69% of the enlarged share capital of the Company
immediately following completion of the Subscription Agreement and this
Agreement.
DEFINITIONS
(A) In this Agreement and the Schedules attached hereto the following words
and expressions have the following meanings except where the context
otherwise requires :-
Expression Meaning
5
<PAGE>
"the Articles" the articles of association (in
force as of the date of this
Agreement) of the Company
"Associate" (in relation to any company) another
company which is a subsidiary of or
a holding company of or another
subsidiary of a holding company of
that company as set out in Schedule
2, Part II
"Business Day" means a day other than a Saturday on
which banks in Hong Kong are
open for business
"Company" Harmonic Hall Investment Holdings
Limited, brief particulars of
which are set out in Schedule 2,
Part I
"Consideration Shares" 2,313,625 Restricted Common
Stock with par value of US$0.001
each, credited as fully paid, in the
capital of the Purchaser
"Completion" Completion of the sale and purchase
of the Sale Shares in accordance
with Clause 4
"Completion Date" The date of completion of the pur-
chase of the Sale Shares, as
deemed by Clause 4.4
"Deed of Indemnity" The Deed of Indemnity referred to
in Clause 4.2 and being in the form
of the deed set out in Schedule 6
"Disclosure Letter" a letter of even date from the Ven-
dor to the Purchaser
"Group Companies" the Company and its Associates and
"Group Company" means any one
of such companies
"in writing" includes any communication made by
letter or facsimile transmission
"Last Accounts Date" 30th June 1999, being the date to
which the Principal Accounts
have been prepared
"Management Accounts" unaudited balance sheets and profit
and loss accounts of the Group
Companies as at 31st December 1999
6
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"Pre-Completion" completion of the matters set out in
Clause 4.2
"Principal Accounts" the audited balance sheet as at
the Last Accounts Date and
audited profit and loss account for
the period ended on the Last
Accounts Date of each Group Company,
including in the case of the
Company the audited consolidated
balance sheet as at that date
and the audited consolidated profit
and loss account for that year and
the directors' report and notes
"Properties" the properties of the Group
Companies shortly described in
Schedule 5
"Purchaser's Solicitors" Lo & Lo of Room 3501, 35th Floor,
Gloucester Tower, The Landmark,
Central, Hong Kong
"Sale Shares" 500 shares of US$1.00 each in the
issued share capital of the
Company, which are beneficially
owned by the Vendor
"Shares" any share in the capital of the
Group Companies
"Subscription Agreement" Share Subscription
Agreement dated 28 March, 2000 made
between ASHK, the Company, and the
Directors (as defined therein) , the
Vendor and the Purchaser in relation
to the subscription of 35 new shares
in the Company
"Subscription Date" date of completion of the Subscrip-
tion Agreement
"Taxation" any liability to any form of taxa-
tion whenever created or imposed
and whether of Hong Kong or of
any other part of the world and
without prejudice to the general-
ity of the foregoing includes
property tax, salaries tax, profits
tax, interest tax, estate duty,
stamp duty, and other similar liabi-
lities or contributions, and
generally any tax, duty, impost,
levy or rate or any amount payable
to the revenue, customs or fiscal
authorities whether of Hong Kong or
any other part of the world
"Vendor's Solicitors" means Messrs.
Jones, Day, Reavis & Pogue
"Warranties" the warranties representations and
undertakings contained in
Schedule 4
7
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(B) References to Clauses Sub-clauses and Schedules are to Clauses and
Sub-clauses of and Schedules to this Agreement. The singular includes
the plural and each of the masculine, the feminine and the neuter
includes the others of them.
(C) References in this Agreement to statutory provisions shall be construed
as references to those provisions as respectively amended or re-enacted
(whether before or after the date hereof) from time to time and shall
include any provisions of which there are re-enactments (whether with
or without modification) and any subordinate legislation made under
such provisions.
OPERATIVE PROVISIONS
NOW IT IS HEREBY AGREED as follows :-
AGREEMENT FOR SALE
1. SUBJECT TO THE TERMS AND CONDITIONS HEREOF, THE VENDOR AS BENEFICIAL OWNER
SHALL SELL AND TRANSFER TO THE PURCHASER AND THE PURCHASER SHALL PURCHASE
THE SALE SHARES, FREE FROM ALL CHARGES, LIENS, OPTIONS AND ENCUMBRANCES AND
OTHER THIRD PARTY RIGHTS, WHATSOEVER WITH THE BENEFIT OF ALL RIGHTS NOW OR
HEREINAFTER ATTACHED THERETO AND ALL DIVIDENDS AND DISTRIBUTIONS HEREAFTER
DECLARED, PAID OR MADE.
2. THE PURCHASER SHALL BE ENTITLED TO RECEIVE ALL DIVIDENDS AND DISTRIBUTIONS,
DECLARED PAID OR MADE BY THE COMPANY IN RELATION TO THE SALE SHARES ON OR
AFTER THE COMPLETION DATE.
PURCHASE CONSIDERATION
3. THE CONSIDERATION PAYABLE BY THE PURCHASER TO THE VENDOR IN RESPECT OF THE
SALE SHARES SHALL BE HONG KONG DOLLARS $72,000,000 WHICH SHALL BE PAID OR
SATISFIED BY THE ALLOTMENT AT COMPLETION OF THE CONSIDERATION SHARES TO THE
VENDOR AND HIS NOMINEES (WHO ARE EXISTING SHAREHOLDERS OF THE COMPANY) EACH
OF WHOM SHALL RECEIVE SUCH NUMBER OF CONSIDERATION SHARES AS SHOWN IN
COLUMN (3) OF SCHEDULE 1.
CONDITIONS PRECEDENT
Completion of the sale and purchase of the Sale Shares
pursuant to this Agreement is conditional upon Completion of
the sale and purchase of the Sale Shares shall be conditional
upon completion of the subscription for 35 new shares in the
Company by ASHK pursuant to the Subscription Agreement. The
Purchaser shall not be obliged to complete the purchase of the
Sale Shares until the aforesaid subscription under the
Subscription Agreement has been completed.
8
<PAGE>
COMPLETION
4. PRE-COMPLETION SHALL TAKE PLACE AT THE OFFICES OF THE COMPANY IN HONG KONG
AT 3:00 P.M. ON THE SUBSCRIPTION DATE (OR AT SUCH OTHER TIME OR PLACE IN
HONG KONG AS THE PARTIES MAY OTHERWISE AGREE).
5. ON PRE-COMPLETION, THE VENDOR SHALL DELIVER TO THE PURCHASER'S SOLICITORS,
AGAINST THE PURCHASER'S SOLICITORS' UNDERTAKING (WHICH SHALL BE ON THE
TERMS SET OUT IN CLAUSE 4.4):-
(i) undated instruments of transfer duly executed in
favour of the Purchaser or its nominees in respect of
the Sale Shares together with the relevant share
certificates;
(ii) a certificate duly signed by a Director of the
Company certifying that a board meeting of the
Company was duly held at which :-
(a) the transfer of the Sale Shares was approved
and the name of the Purchaser or its nominees
shall be entered in the register of members
as the holders thereof and that new share
certificates shall be issued accordingly;
(b) the persons nominated by the Purchaser were
appointed directors of the Company with
effect from the date of Pre-Completion;
(iii) the Deed of Indemnity duly signed and sealed by Mr.
Yiu and signed by an authorised person on behalf of
the Company.
4.3 As soon as practicable after Pre-Completion and by no later
than 21 Business Days after Pre-Completion the Purchaser
shall:
(a) issue the Consideration Shares to the Vendor
and his nominees in the amounts as set out in
column (3) of Schedule 1 and deliver the
certificates in respect of the Consideration
Shares to the Vendor's Solicitors ;
(b) deliver to the Vendor's Solicitors a legal
opinion in form satisfactory to the Vendor,
issued by the Purchaser's US lawyers
confirming that the Consideration Shares have
been duly issued and allotted and are listed
on Nasdaq and opining on such other matters
reasonably required by the Vendor in relation
to the rights attached to the Consideration
Shares.
4.4 The Purchaser's Solicitors' undertaking referred to in Clause
4.2 shall be on the terms that:
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(a) the Purchaser's Solicitors will hold the documents
delivered to it pursuant to Clause 4.2 until the
Vendor's Solicitors have confirmed receipt of the
documents referred to in, and in accordance with,
Clause 4.3;
(b) upon such confirmation from the Vendor's Solicitors
Completion shall be deemed to have taken effect from
that date of confirmation and the Purchaser's
Solicitors shall date the instruments of transfer as
at that date and will hold the documents delivered to
it pursuant to clause 4.2 to the order of the
Purchaser;
(c) in the event that the Vendor's Solicitors have not
confirmed receipt of the documents referred to in
Clause 4.3 by the date referred to therein, the
Purchaser's Solicitors shall return the documents to
the the Vendor or the Vendor's Solicitors or, if
requested by either of them to their order..
4.5 Without prejudice to any other remedies available to the
Purchaser, if in any respect the Conditions Precedent set out
in Clause 3 shall not have been fulfilled or the provisions of
Clause 4.2. have not been complied with by the Vendor on the
Subscription Date and provided that the Purchaser had
fulfilled the Conditions Precedent at Clause 3 and had not
caused default of the Condition Precedent at Clause 3 and
provided that the Purchaser was ready to fulfill its
obligations at clauses 4.3, the Purchaser may :-
(a) defer Pre-Completion to a date not more than 28 days
after the Subscription Date (and so that the
provisions of Clause 4.2 shall apply to
Pre-Completion as so deferred); or
(b) proceed to Pre-Completion and Completion so far as
practicable (without prejudice to its rights
hereunder); or
(c) rescind this Agreement.
4.6 Without prejudice to any other remedies available to the
Vendor, if in any respect the Conditions Precedent set out in
Clause 3 shall not have been fulfilled or the provisions of
Clause 4.3 have not been complied with by the Purchaser on the
Subscription Date and provided that the Vendor had not caused
default of the Condition Precedent at Clause 3 and provided
that the Vendor was ready to fulfill his obligations at Clause
4.2., the Vendor may :-
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(a) defer Pre-Completion to a date not more than 28 days
after the Subscription Date (and so that the
provisions of Clause 4.2 shall apply to
Pre-Completion as so deferred); or
(b) proceed to Pre-Completion so far as practicable
(without prejudice to his rights hereunder); or
(c) rescind this Agreement.
WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS ETC.
6. SAVE AS DISCLOSED TO THE PURCHASER AND/OR THE PURCHASER'S SOLICITORS IN THE
DISCLOSURE LETTER, ALL THE WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
(HEREINAFTER CALLED THE "WARRANTIES") BY THE VENDOR SET FORTH IN SCHEDULE 4
ARE TRUE AND ACCURATE IN ALL RESPECTS AT THE DATE HEREOF AND WILL BE TRUE
AND ACCURATE IN ALL RESPECTS AS THOUGH MADE ON COMPLETION, WITH REFERENCE
TO THE FACTS AND CIRCUMSTANCES SUBSISTING ON EACH OF SUCH OCCASIONS AND ON
SUCH DATES AND SHALL HAVE EFFECT AND BE BINDING ON THE VENDOR.
7. EACH OF THE WARRANTIES SHALL CONSTITUTE A SEPARATE AND INDEPENDENT WARRANTY
TO THE INTENT THAT THE PURCHASER SHALL HAVE A SEPARATE CLAIM AND RIGHT OF
ACTION IN RESPECT OF EVERY BREACH OF ANY OF THE WARRANTIES AND SAVE AS
EXPRESSLY PROVIDED TO THE CONTRARY, NO WARRANTY SHALL LIMIT OR GOVERN THE
EXTENT OR APPLICATION OF ANY OTHER WARRANTY.
8. THERE IS NO MATERIAL ADVERSE CHANGE IN THE BUSINESS, ASSETS, PROPERTIES,
LIABILITIES, PROFITS, PROSPECTS OR CONDITION OF THE GROUP COMPANIES SINCE
THE LAST ACCOUNTS DATE AND THERE ARE NO MATERIAL FACTS RELATING TO THE
GROUP COMPANIES KNOWN TO THE VENDOR WHICH COULD AFFECT THE WILLINGNESS OF A
PURCHASER TO ENTER INTO AN AGREEMENT WITH THE VENDOR IN TERMS SIMILAR TO
THE TERMS OF THIS AGREEMENT WHICH HAVE NOT BEEN DISCLOSED TO THE PURCHASER.
9. THE VENDOR HEREBY UNDERTAKES THAT HE WILL AT ALL TIMES INDEMNIFY THE
PURCHASER AGAINST ANY LOSS OR DAMAGE SUFFERED BY THE PURCHASER AS A RESULT
OF ANY BREACH OF THE WARRANTIES CONTAINED IN SCHEDULE 4 HERETO AND THE
OTHER RELEVANT PROVISIONS OF THIS AGREEMENT.
OBLIGATIONS OF THE VENDOR UP TO PRE-COMPLETION
10. SUBJECT TO THE TERMS OF THIS AGREEMENT, THE VENDOR WILL PROCURE THAT THE
BUSINESS OF THE GROUP COMPANIES ARE OPERATED IN A MANNER CONSISTENT WITH
PAST PRACTICES DURING THE PERIOD FROM THE DATE HEREOF UNTIL PRE-COMPLETION.
11. BETWEEN THE DATE HEREOF AND PRE-COMPLETION, THE VENDOR SHALL NOT, AND SHALL
PROCURE THAT THE GROUP COMPANIES SHALL NOT, WITHOUT THE PRIOR CONSENT IN
WRITING OF THE PURCHASER :-
(a) purchase or redeem any Shares;
11
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(b) issue or agree to issue any Shares;
(c) increase or decrease its authorised share capital;
(d) increase or decrease the par value of the Shares;
(e) grant or convey any interest, right, option or claim
with respect to any Shares;
(f) amend the Memorandum and Articles of Association of
any of the Group Companies;
(g) incur any Liabilities other than purchase of goods
and services in the normal course of business of the
Group Companies;
(h) acquire any assets (other than in the normal course
of business of the Group Companies).
RIGHTS OF THE PURCHASER
12. NOTWITHSTANDING ANY RULE OF LAW OR EQUITY TO THE CONTRARY, EVERY RIGHT AND
REMEDY HEREIN OF THE PURCHASER SHALL BE CUMULATIVE AND ANY RELEASE,
EXTENSION, WAIVER OR COMPROMISE OR ANY OTHER ARRANGEMENT OF ANY KIND
WHATSOEVER WHICH THE PURCHASER MAY AGREE TO OR EFFECT WITH RESPECT TO THE
VENDOR'S OBLIGATIONS UNDER THIS AGREEMENT SHALL NOT AFFECT THE RIGHTS AND
REMEDIES OF THE PURCHASER WITH RESPECT TO THE REMAINING OBLIGATIONS OF THE
VENDOR STATED HEREIN.
13. THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT AFTER COMPLETION IN
RESPECT OF ANY MATTERS, UNDERTAKINGS, COVENANTS OR CONDITIONS WHICH ARE NOT
IN ACCORDANCE WITH THEIR TERMS REQUIRED TO HAVE BEEN DONE, OBSERVED AND
PERFORMED IN FULL PRIOR THERETO.
GENERAL
14. THIS AGREEMENT SUPERSEDES ANY PREVIOUS AGREEMENT BETWEEN THE PARTIES IN
RELATION TO THE SALE AND PURCHASE OF THE SALE SHARES AND THE PARTIES
ACKNOWLEDGE THAT NO CLAIM SHALL ARISE IN RESPECT OF ANY AGREEMENT SO
SUPERSEDED BY THIS AGREEMENT.
15. ANY VARIATION TO THIS AGREEMENT SHALL BE BINDING ONLY IF IT IS RECORDED IN
A DOCUMENT SIGNED BY ALL THE PARTIES HERETO.
16. NOTICES
1.1.1. Any notice or other communication to be given to parties hereto
pursuant to this Agreement shall be in writing delivered or sent
by registered mail, postage prepaid, telex or facsimile to its
address as follows:-
(1) Mr. Yiu Siu Hung
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Address: House No.D1, Fortune Garden,
No.72 Ting Kok Road,
Tai Po, New Territories,
Hong Kong.
(Facsimile No.: 2414 2333)
(2) the Purchaser:
Address: Suite 930, East Wing, Block B,
New World Office Building,
Tsimshatsui, Kowloon,
Hong Kong.
For the attention of : Mr. Stephen Chow
(Facsimile No.: 2722 7957 )
1.1.2. Any notice or other communication shall be deemed to have been
received when left at the addresses mentioned in sub-clause 8.3.1
or (if sent by facsimile) on the next working day or (if sent by
pre-paid post to the said address) on the expiry of forty eight
(48) hours after posting.
17. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT BOTH AS REGARDS THE DATES
AND PERIODS SPECIFICALLY MENTIONED AND AS TO ANY DATES AND PERIODS WHICH
MAY BY AGREEMENT IN WRITING BETWEEN OR ON BEHALF OF THE VENDOR AND THE
PURCHASER BE SUBSTITUTED FOR THEM.
18. EACH PARTY SHALL PAY ITS OWN COST FOR THE NEGOTIATION, PREPARATION AND
EXECUTION OF THIS AGREEMENT.
19. THIS AGREEMENT SHALL BE BINDING ON AND SHALL ENURE FOR THE BENEFIT OF EACH
PARTY'S SUCCESSORS AND ASSIGNS AND PERSONAL REPRESENTATIVES (AS THE CASE
MAY BE).
20. (A) THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETE
IN ACCORDANCE WITH AND IS EXECUTED PURSUANT TO THE
LAWS OF HONG KONG.
(b) The parties hereby submit to the non-exclusive
jurisdiction of the Court of Hong Kong SAR but this
Agreement may be enforced in any court of competent
jurisdiction.
8.8 The Purchaser hereby irrevocably appoints Lo & Lo of 35th
Floor, Gloucester Tower, The Landmark, 11 Pedder Street,
Central, Hong Kong to accept on its behalf service of process
in respect of any proceedings in the courts of Hong Kong
arising out of this Agreement.
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<TABLE>
<CAPTION>
SCHEDULE 1
(Clauses 2.1, 4.2, 4.3 and paragraph 1.1 of Schedule 4)
Shares in the Company
(1) Name (2) upon Completion(3) Consideration Shares
---- --------------- --------------------
<S> <C> <C>
Yiu Siu Hung 360 1, 781,491
World Media Group Limited 60 277,635
Packwood Business Corporation 55 254,499
Parama Profits Limited 25 NIL
----------------------------------------------------
Total: 500 2,313,625
</TABLE>
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<TABLE>
<CAPTION>
SCHEDULE 2
(definition of "Company" and paragraph 1.3 of Schedule 4)
---------------------------------------------------------
PART I
Brief Particulars of the Company
--------------------------------
<S> <C>
1. Name : Harmonic Hall Investment Holdings Limited
Chinese Name :
2. Country of Incorporation : British Virgin Islands
3. Class of Company : Registered under The International Business
Companies Ordinance of the British Virgin
Islands
4. Date of Incorporation : 30th December 1996
5. Registration Number : 210816
6. Registered Office : P.O. Box 957, Offshore Incorporations Centre,
Road Town, Tortola, British Virgin Islands
7. Nature of Business : Investment Holding
8. Share Capital
Authorised : US$50,000.00 divided into 50,000 Shares of
US$1.00 each.
Issued and paid up : US$1,035.00
9. Shareholders:
Registered holder Number of Shares
----------------- ----------------
Yiu Siu Hung 745
World Media Group Limited 120
Packwood Business Corporation 110 (including 80 bearer shares)
Parama Profits Limited 25
Asian Star (Hong Kong ) Limited 35
10. Directors : Yiu Siu Hung
Ho Kin Man
Chan Sik Hong, David
New directors nominated by ASDI
11. Secretary : Yiu Siu Hung
12. Auditors : Ernst & Young, Certified Public Accountants
</TABLE>
15
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<TABLE>
<CAPTION>
PART II
Information Relating to other Group Companies
---------------------------------------------
<S> <C>
1. Harmonic Hall Optical Disc Limited (Company No.:325583)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Fan Kai Leung
Shareholders : Harmonic Hall Investment Holdings Limited
Fan Kai Leung
Yiu Siu Hung (held in trust of Harmonic Hall Investment
Holdings Limited
2. Siam Orchid International Limited (BVI) (Company No.199762)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholder : Harmonic Hall Optical Disc Limited
3. Harmonic Hall Recordable Media Limited (Company No.643725)
Directors : Yiu Siu Hung
Ho Kin Man
Fan Kai Leung
Shareholders : Harmonic Hall Optical Disc Limited
Yiu Siu Hung (held in trust of Harmonic Hall Optical Disc
Limited)
4. Anwell Industrial Limited (Company No.183020)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Harmonic Hall Optical Disc Limited
Yiu Siu Hung (held in trust of Harmonic Hall Investment
Holdings Limited)
5. Kiat Koon Limited (BVI) (Company No.205628)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
16
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Shareholders : Anwell Industrial Limited
6. Rich Union International Limited (BVI) (Company No.162892)
Directors : Yiu Siu Hung
Ho Kin Man
Shareholders : Harmonic Hall Investment Holdings Limited
7. Daiichi Records Limited (Company No.145968)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Rich Union International Limited
Yiu Siu Hung (held in trust of Rich Union International Limited)
8. City Laser & Video Company Limited (Company No.618714)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Rich Union International Limited
Yiu Siu Hung (held in trust of Rich Union International Limited)
9. Tap Investment Limited (Company No.181488)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Harmonic Hall Investment Holdings Limited
Yiu Siu Hung (held in trust of Harmonic Hall Investment
Holdings Limited)
10. City Entertainment Services Limited (BVI) (Company No.128627)
Directors : Yiu Siu Hung
Ho Kin Man
Shareholders : Harmonic Hall Investment Holdings Limited
11. Harmonic Hall International Limited (BVI) (Company No.150032)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Harmonic Hall Investment Holdings Limited
17
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12. Harmonic (Holdings) Limited (BVI) (Company No.44074)
Directors : Yiu Siu Hung
Ho Kin Man
Chan Sik Hong, David
Shareholders : Harmonic Hall Investment Holdings Limited
13. Guangzhou Anwell Moulding Injection Industries Limited
Directors : Yiu Siu Hung
Ho Kin Man
Xu Wei Cong
Liu Xin Yuen
Shareholders : Anwell Industrial Ltd. 90%
Jiangnan Chemical Electronic & Instrument Development Company 10%
14. Guangzhou Rosedale Studio Limited
Directors : Yiu Siu Hung
Yao Rui Rong
Liu Feng Xuan
Xu Wei Cong
Shareholders : Yiu Siu Hung (In trust for Harmonic Hall Optical Disc Ltd.)
Ho Kin Man (In trust for Harmonic Hall Optical Disc Ltd.)
Yao Rui Rong (In trust for Harmonic Hall Optical Disc Ltd.)
Liu Feng Xuen (In trust for Harmonic Hall Optical Disc Ltd.)
Xu Wei Cong (In trust for Harmonic Hall Optical Disc Ltd.)
15. New City Laser and Video Company Limited
In voluntary liquidation.
16. United Basic Laser and Video Company Limited
In voluntary liquidation.
</TABLE>
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SCHEDULE 3
(Clause 5.1)
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
The Vendor hereby represents and warrants to the Purchaser, its successors and
assigns that save as disclosed in the Disclosure Letter:-
1. SHAREHOLDINGS AND SHARE CAPITAL ETC.
21. THE SALE SHARES COMPRISE 50% OF THE ENTIRE ISSUED SHARE CAPITAL OF THE
COMPANY AND WILL AT PRE-COMPLETION AND UPON COMPLETION OF THE SUBSCRIPTION
AGREEMENT COMPRISE 48.31% OF THE ENLARGED SHARE CAPITAL , AND APART FROM
THE SALE SHARES THERE WILL NOT BE AT COMPLETION, IN ISSUE ANY OTHER SHARES,
WARRANTS OR OPTIONS OF ANY DESCRIPTION IN THE COMPANY EXCEPT THOSE SHARES
SET OUT IN COLUMN 2 OF SCHEDULE 1 AND THE 35 NEW SHARES TO BE ISSUED
PURSUANT TO THE SUBSCRIPTION AGREEMENT.
22. NONE OF THE GROUP COMPANIES IS A PARTY, AND WILL NOT AT COMPLETION BE A
PARTY TO, ANY CONTRACT, OPTIONS, WARRANTS, NOR DOES IT, NOR WILL IT AT
COMPLETION, HAVE ANY OTHER OBLIGATION REGARDING ANY PART OF ITS CAPITAL,
ISSUED OR UNISSUED, OR FOR THE ISSUE OF ANY SHARES, WARRANTS, OPTIONS, OR
OTHER SIMILAR SECURITIES.
23. SAVE AS SET OUT IN PART II OF SCHEDULE 2, THE GROUP COMPANIES DO NOT HAVE
AND NONE OF THEM WILL AT COMPLETION HAVE, ANY SUBSIDIARY NOR HOLD ANY
SHARES OR SECURITIES IN ANY COMPANY.
24. THE VENDOR IS THE BENEFICIAL OWNER OF THE SALE SHARES AND WILL AT
COMPLETION HAVE THE RIGHT POWER AND AUTHORITY TO SELL AND TRANSFER THOSE
SALE SHARES FREE FROM ALL LIENS, CHARGES, PLEDGES, OPTIONS CONTRACTS,
PRE-EMPTION RIGHTS, THIRD PARTY RIGHTS AND EQUITIES, AND INCUMBRANCES OF
WHATEVER NATURE AND THE SAME ARE FREELY TRANSFERRABLE BY THE VENDOR WITH
ALL RIGHTS NOW AND HEREAFTER ATTACHING THERETO WITHOUT THE CONSENT,
APPROVAL, PERMISSION, LICENCE OR CONCURRENCE OF ANY THIRD PARTY (SAVE AS
OTHERWISE PROVIDED IN THE COMPANY'S ARTICLES OF ASSOCIATION).
25. THE VENDOR IS FULLY CAPABLE OF ENTERING INTO THIS AGREEMENT AND TO PERFORM
ALL OBLIGATIONS AND DUTIES HEREUNDER WITHOUT THE CONSENT, APPROVAL,
PERMISSION, LICENCE OR CONCURRENCE OF ANY THIRD PARTY.
ACCOUNTS
26. THE PRINCIPAL ACCOUNTS
1.1.1. The Principal Accounts were prepared in accordance with the
historical cost convention; and the bases and policies of
accounting adopted for the purpose of preparing the Principal
Accounts are the same as those adopted in preparing the
audited accounts of each Group Company in respect of the three
last preceding accounting periods.
1.1.2. The Principal Accounts :-
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(a) give a true and fair view of the assets and
liabilities of each Group Company at the Last
Accounts Date and its profits for the
financial period ended on that date;
(b) comply with the requirements of the Companies
Ordinance and other relevant law or statutes
applicable to the relevant Group Companies;
(c) comply with all current good accounting and
auditing principles;
(d) are not affected by any extraordinary,
exceptional or non-recurring item;
(e) properly reflect the financial position of
each Group Company as at their date;
(f) fully disclose all the assets of each Group
Company as at their date;
(g) make adequate provision or reserve for all
liabilities and capital commitments of each
Group Company outstanding at the Last
Accounts Date, including contingent,
unquantified or disputed liabilities;
(h) make provision or reserve, in accordance with
the principles set out in the notes included
in the Principal Accounts, for all Taxation
liable to be assessed on each Group Company
or for which it may be accountable in respect
of the period ended on the Last Accounts
Date.
1.1.3. No amount included in the Principal Accounts in respect of any
asset, whether fixed or current, exceeds its purchase price or
production cost or (in the case of current assets) its net
realisable value on the Last Accounts Date.
27. VALUATION OF STOCK-IN-TRADE AND WORK IN PROGRESS
1.1.4. In the Principal Accounts and in the accounts of each Group
Company for the three preceding financial years the
stock-in-trade and work in progress of each Group Company have
been treated in accordance with SSAP.
1.1.5. In the Principal Accounts all redundant, obsolete and
slow-moving stock-in-trade has been written off or written
down, as appropriate.
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28. DEPRECIATION OF FIXED ASSETS
1.1.6. In the Principal Accounts and in the accounts of each Group
Company for the three preceding financial years, the fixed
assets of each Group Company have been depreciated in
accordance with SSAP.
29. BOOK DEBTS
1.1.7. No part of the amounts included in the Principal Accounts, or
subsequently recorded in the books of any Group Companies or
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
the relevant Group Companies as irrecoverable in whole or in
part.
30. BOOKS AND RECORDS
1.1.8. All the accounts, books, ledgers, financial and other records,
of whatsoever kind, of each Group Company :-
(a) are in its possession;
(b) have been fully properly and accurately kept
and completed;
(c) do not contain any material inaccuracies or
discrepancies of any kind;
(d) give and reflect a true and fair view of its
trading transactions, and its financial,
contractual and trading position.
CORPORATE MATTERS
31. DIRECTORS
1.1.9. The only directors of the Group Companies are the persons
whose names are listed in relation to each Group Company in
Schedule 1 and 2.
32. SUBSIDIARIES, ASSOCIATIONS AND BRANCHES
1.1.10. No Group Companies :-
(a) is the holder or beneficial owner of or has
agreed to acquire any share or loan capital of
any company (whether incorporated in Hong Kong
or elsewhere);
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(b) has outside Hong Kong any branch, agency or
place of business, or any permanent
establishment (as that expression is defined
in the relevant double taxation relief order
current at the date of this Agreement).
33. OPTIONS OVER GROUP COMPANIES' CAPITAL
1.1.11. Except as required by this Agreement, there are no agreements
or arrangements in force which provide for the present or
future issue, allotment or transfer or grant to any person the
right (whether conditional or otherwise) to call for the
issue, allotment or transfer of any share or loan capital of
any Group Companies (including any option or right of
pre-emption or conversion).
34. NEW ISSUES OF CAPITAL
1.1.12. No share or loan capital has been issued or allotted, or
agreed to be issued or allotted, by any Group Companies since
the Last Accounts Date.
35. MEMORANDA AND ARTICLES OF ASSOCIATION, STATUTORY BOOKS AND RESOLUTIONS
1.1.13. The register of members and other statutory books of each
Group Company have been properly kept and contain an accurate
and complete record of the matters with which they should
deal.
1.1.14. No notice or allegation that any of the foregoing is incorrect
or should be rectified has been received.
1.1.15. Since the Last Accounts Date no alteration has been made to
the memorandum or articles of association of any Group
Companies and no resolution of any kind of the shareholders of
any Group Companies has been passed (other than resolutions
relating to business at annual general meetings which was not
special business) and, pending Completion, no resolution shall
be passed without the prior written consent of the Purchaser.
1.1.16. The memorandum and articles of association (or such other
similar constitutional instruments) of each Group Company
provided to the Purchaser are accurate and complete in all
respects and has embodied therein or annexed thereto a copy of
every such resolution as is required by the law applicable to
each Group Company.
36. DOCUMENTS FILED
1.1.17. All returns, particulars, resolutions and documents required
by the law or any other legislation to be filed with the
Registrar of Companies or any other relevant regulatory
authorities, in respect of each Group Company have been duly
filed and were correct; and due compliance has been
22
<PAGE>
made with all the provisions of the Companies Ordinance and
other legal requirements in connection with the formation of
each Group Company, the allotment or issue of shares,
debentures and other securities, the payment of dividends and
the conduct of its business.
1.1.18. All charges in favour of any Group Companies have (if
appropriate) been registered in accordance with the provisions
of the applicable laws.
37. POSSESSION OF DOCUMENTS
1.1.19. All title deeds relating to the assets of each Group Company,
and an executed copy of all agreements to which any Group
Companies 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 Group Companies are in its possession.
38. INVESTIGATIONS
1.1.20. There are not pending, or in existence, any investigations or
enquiries by, or on behalf of, any governmental or other body
in respect of the affairs of any Group Companies.
39. INFORMATION DISCLOSED TO PURCHASER CORRECT
1.1.21. All information given by the Vendor and/or the Vendor's
Solicitors or the Company's Accountants to the Purchaser, the
Purchaser's Solicitors or the Purchaser's Accountants relating
to the business, activities, affairs, or assets or liabilities
of any Group Companies was, when given, accurate and
comprehensive in all respects.
1.1.22. There are no material facts or circumstances, in relation to
the assets, business or financial condition of any Group
Companies, which have not been fully and fairly disclosed in
writing to the Purchaser or the Purchaser's Solicitors, and
which, if disclosed, might reasonably have been excepted to
affect the decision of the Purchaser to enter into this
Agreement.
TAXATION
40. ADMINISTRATION
1.1.23. All returns, computations and payments which should be or
should have been made by any Group Companies for any Taxation
purpose have been made within the requisite periods and are
up-to-date, correct and on a proper basis and none of them is
or is likely to be the subject of any dispute with the Inland
Revenue or other Taxation authorities.
23
<PAGE>
1.1.24. All particulars furnished to the Inland Revenue or other
Taxation authorities, in connection with the application for
any consent or clearance on behalf of any Group Companies, or
affecting any Group Companies, made since the Last Accounts
Date, fully and accurately disclosed all facts and
circumstances material for the decision of those authorities;
any consent or clearance is valid and effective; and any
transaction, for which consent or clearance has previously
been obtained, has been carried into effect (if at all) only
in accordance with the terms of the relative application and
consent or clearance.
1.1.25. No Group Companies has, since the Last Accounts Date, taken
any action which has had, or might have, the result of
altering, prejudicing or in any way disturbing any arrangement
or agreement which it has previously negotiated with the
Commissioners of Inland Revenue or other Taxation authorities.
1.1.26. No Group Companies has, since the Last Accounts Date, paid or
become liable to pay any penalty or interest charged by virtue
of the provisions of Inland Revenue Ordinance or any other
Taxation statute.
41. TAXATION CLAIMS, LIABILITIES AND RELIEFS
1.1.27. No Group Companies is or will become liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or any
amount corresponding to Taxation) in consequence of the
failure by any other person (not being the Group Companies) to
discharge that Taxation or amount within any specified period
or otherwise, where the Taxation or amount within any
specified period or otherwise, where the Taxation or amount
relates to a profit, income or gain, transaction, event,
omission or circumstance arising, occurring or deemed to arise
or occur (whether wholly or partly) prior to Completion.
1.1.28. No relief (whether by way of deduction, reduction, set-off
exemption, repayment or allowance, or otherwise) from, against
or in respect of any Taxation has been claimed and/or given to
any Group Companies which could or might be effectively
withdrawn, postponed, restricted or otherwise lost as a result
of any act, omission, event or circumstance arising or
occurring at any time after Completion.
1.1.29. Stamp duty and capital duty
(a) Within the five years ending on the date of
this Agreement, no Group Companies has made
any claim for relief or exemption under
Section 45 of the Stamp Duty Ordinance
(Relief from transfer
24
<PAGE>
stamp duty in case of transfer of property as
between associated companies); and
(b) Each Group Company has duly paid all stamp
duty and interest, fines and penalties
thereon payable in accordance with the
provisions of Stamp Duty Ordinance (Stamp
duty on documents relating to chargeable
transactions of capital companies) whether or
not the due date for payment has passed, and
all loan capital duty for which it has at any
time been liable.
FINANCE
42. CAPITAL COMMITMENTS
1.1.30. There were no commitments on capital account outstanding at
the Last Accounts Date and since the Last Accounts Date no
Group Companies has made or agreed to make any capital
expenditure, or incurred or agreed to incur any capital
commitments nor has it disposed of or realised any capital
assets or any interest therein.
43. DIVIDENDS AND DISTRIBUTIONS
1.1.31. Since the Last Accounts Date no dividend or other distribution
has been or is treated as having been declared, made or paid
by any Group Companies.
1.1.32. 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 the Companies Ordinance or the laws applicable to such
Group Companies.
44. BANK AND OTHER BORROWINGS
1.1.33. Full details of all limits on each Group Company's bank
overdraft facilities had been accurately disclosed to the
Purchaser in writing prior to the signing of this Agreement.
1.1.34. The total amount borrowed by each Group Company (as determined
in accordance with the provisions of the relevant instrument)
does not exceed any limitation on its borrowing powers
contained in its articles of association, or in any debenture
or other deed or document binding upon it.
1.1.35. No Group Companies has outstanding, or has agreed to create or
issue, any loan capital; nor has it factored any of its debts,
or engaged in financing of a type which would not require to
be shown or reflected in the Last Accounts, or borrowed any
money which it has not repaid, save for borrowings not
exceeding the amounts shown in the Last Accounts.
25
<PAGE>
1.1.36. No Group Companies has since 31st December 1999 repaid or
become liable to repay any loan or indebtedness in advance of
its stated maturity.
1.1.37. No Group Companies has received notice (whether formal or
informal) from any lenders of money to it, requiring repayment
or intimating the enforcement of any security the lender may
hold over any of its assets; and there are no circumstances
likely to give rise to any such notice.
45. LOANS BY AND DEBTS DUE TO GROUP COMPANIES
1.1.38. No Group Companies has lent any money which has not been
repaid to it, or owns the benefit of any debt (whether or not
due for payment), other than debts which have arisen in the
ordinary course of its business; and no Group Companies has
made any loan or quasi-loan contrary to the Companies
Ordinance.
46. LIABILITIES
1.1.39. There are no liabilities (including contingent liabilities)
which are outstanding on the part of any Group Companies other
than those liabilities disclosed in the Last Accounts or
incurred in the ordinary and proper course of trading since
the Last Accounts Date.
1.1.40. There has been no exercise, purported exercise or claim for
any charge, lien, encumbrance or equity over any of the fixed
assets of any Group Companies; and there is no dispute
directly or indirectly relating to any of its fixed assets.
1.1.41. No Group Companies has been the tenant of, or a guarantor in
respect of, any leasehold property other than the Properties.
47. BANK ACCOUNTS
1.1.42. A statement of the bank accounts of each Group Company has
been supplied to the Purchaser.
48. CONTINUATION OF FACILITIES
1.1.43. In relation to all debentures, acceptance credits, overdrafts,
loans or other financial facilities outstanding or available
to any Group Companies (referred to in this clause as
"`facilities") :
(a) there has been no contravention of or
non-compliance with any provision of
any of those documents;
(b) no steps for the early repayment of any
indebtedness have been taken or threatened;
(c) there have not been nor are there any
circumstances known to the Vendor whereby the
continuation of any of the facilities might
be
26
<PAGE>
prejudiced, or which might give rise to any
alteration in the terms and conditions of any
of the facilities;
(d) the Vendor does not have any knowledge,
information or belief that, as a result of
the Completion of the Subscription by the
Purchaser or any other thing contemplated in
this Agreement, any of the facilities might
be terminated or mature prior to its stated
maturity.
TRADING
49. CHANGES SINCE LAST ACCOUNTS DATE
1.1.44. Since the Last Accounts Date :
(a) the business of each Group Company has been
continued in the ordinary and normal course;
(b) no Group Companies has by doing or omitting
to do anything prejudiced its goodwill;
(c) no part of the business of any Group
Companies has been affected by any abnormal
factor not affecting similar businesses to a
like extent;
(d) each Group Company has paid its creditors in
accordance with their respective credit
terms.
1.1.45. The value of the net realisable assets of each Group Company,
save for depreciation during the period between the Last
Accounts Date and Completion Date, is not now less than at the
Last Accounts Date.
1.1.46. The trading prospects of each Group Company have not been
adversely affected as a result of any event or circumstance
arising since the Last Accounts Date.
50. VENDOR'S OTHER INTERESTS AND LIABILITIES TO GROUP COMPANIES
1.1.47. The Vendor does not have any rights or interests, directly or
indirectly, in any business other than those now carried on by
the Group Companies which are or are likely to be or become
competitive with the businesses of the Group Companies, save
as registered holder or beneficial owner of any class of
securities of any company which is listed on an
internationally recognised stock exchange and in respect of
which the Vendor holds and is beneficially interested in less
than 5 per cent of any single class of the securities in that
company.
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<PAGE>
51. EFFECT OF SALE OF SHARES
1.1.48. The Vendor has no knowledge, information or belief that after
Completion of the Sale Shares (whether by reason of an
existing agreement or arrangement or otherwise) by the
Purchaser :-
(a) any supplier of any Group Companies will
cease or be entitled to cease supplying it or
may substantially reduce its supplies to it;
(b) any customer of any Group Companies will
cease or be entitled to cease to deal with it
or may substantially reduce its existing
level of business with it;
(c) any Group Companies will lose the benefit of
any right or privilege which it enjoys;
(d) any officer or senior employee of the Group
Companies with monthly salary of over
HK$45,000 will leave.
1.1.49. Compliance with the terms of this Agreement does not and will
not :
(a) conflict with, or result in the breach of, or
constitute a default under, any of the terms,
conditions or provisions of any agreement or
instrument to which any Group Companies is a
party, or any provision of the memorandum or
articles of association of any Group
Companies or any encumbrance, lease,
contract, order, judgment, award, injunction,
regulation or other restriction or obligation
of any kind or character by which or to which
any asset of any Group Companies is bound or
subject;
(b) relieve any person from any obligation to any
Group Companies (whether contractual or
otherwise), or enable any person to determine
any such obligation or any right or benefit
enjoyed by any Group Companies, or to
exercise any right, whether under an
agreement with or otherwise in respect of any
Group Companies;
(c) result in the creation, imposition,
crystallisation or enforcement of any
encumbrance whatsoever on any of the assets
of any Group Companies;
(d) result in any present or future indebtedness
of any Group Companies becoming due or
capable of being declared due and payable
prior to its stated maturity.
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<PAGE>
52. CONDUCT OF BUSINESSES IN ACCORDANCE WITH MEMORANDA AND ARTICLES OF
ASSOCIATION
1.1.50. Each Group Company has at all times carried on business and
conducted its affairs in all respects in accordance with its
memorandum and articles of association for the time being in
force and any other documents to which it is or has been a
party.
1.1.51. Each Group Company is empowered and duly qualified to carry on
business in all jurisdictions in which it now carries on
business.
53. JOINT VENTURES AND PARTNERSHIP
1.1.52. No Group Companies is or has agreed to become a member of any
joint venture, consortium, partnership or other unincorporated
association; and no Group Companies is or has agreed to become
a party to any agreement or arrangement for sharing
commissions or other income.
54. AGREEMENTS RELATING TO THE MANAGEMENT AND BUSINESS
1.1.53. There are no arrangements or understandings (whether legally
enforceable or not) between the Group Companies and any person
who is a shareholder or the beneficial owner of any interest
in it, or in any company in which any Group Companies is
interested, or any Associate of any such person, relating to
the management of any Group Companies's business, or the
appointment or removal of directors of any Group Companies, or
the ownership or transfer of ownership or the letting of any
of the assets of any Group Companies, or the provision, supply
or purchase of finance, goods, services or other facilities
to, by or from any Group Companies, or in any other respect
relating to its affairs.
55. AGENCY AGREEMENTS AND AGREEMENTS RESTRICTING BUSINESS
1.1.54. No Group Companies is a party to any agency, distributor-ship,
marketing, purchasing, manufacturing or licensing agreement or
arrangement, or any restrictive trading or other agreement or
arrangement pursuant to which any part of its business is
carried on, or which in any way restricts its freedom to carry
on the whole or any part of its business in any part of the
world in such manner as it thinks fit.
1.1.55. No Group Companies is a party to any undertaking or assurances
given to any court or governmental agency which is still in
force.
56. LITIGATION, DISPUTES AND WINDING UP
1.1.56. No Group Companies is engaged in any litigation or arbitration
proceedings as plaintiff or defendant; there are no
proceedings pending or threatened either by or against any
Group
29
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Companies; and there are no circumstances which are likely to
give rise to any litigation or arbitration.
1.1.57. There is no dispute with any revenue or other official
department in the Hong Kong SAR, PRC or elsewhere, in relation
to the affairs of any Group Companies, and there are no facts
which may give rise to any dispute.
1.1.58. There are no claims pending or threatened or capable of
arising against any Group Companies by an employee or workman
or third party, in respect of any accident or injury, which
are not fully covered by insurance.
1.1.59. No order has been made or petition presented or resolution
passed for the winding up of any Group Companies; nor has any
distress, execution or other process been levied in respect of
any Group Companies which remains undischarged; nor is there
any unfulfilled or unsatisfied judgment or court order
outstanding against any Group Companies.
57. COMPLIANCE WITH STATUTES
1.1.60. No Group Companies and none of its officers, agents or
employees (during the course of their duties in relation to
it), has committed or omitted to do any act or thing the
commission or omission of which is or could be in
contravention of any act, order, regulation or the like
(whether of the Hong Kong SAR or elsewhere) giving rise to any
fine, penalty, default proceedings or other liability on its
part.
1.1.61. Each Group Company has conducted and is conducting its
business in all respects in accordance with all applicable
laws and regulations whether of Hong Kong SAR or elsewhere.
58. DOCUMENTS STAMPED
1.1.62. All documents which in any way affect the right, title or
interest of any Group Companies in or to any of its property,
undertaking or assets, or to which any of the Group Companies
is a party, and which attract stamp duty have been duly
stamped within the requisite period for stamping.
59. BUSINESS NAMES
1.1.63. No Group Companies uses a name for any purpose other than its
full corporate name.
60. TRANSACTIONS INVOLVING DIRECTORS
1.1.64. No Group Companies has been a party to any transaction to
which any of the provisions of Companies Ordinance Section
157H may apply.
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61. POWERS OF ATTORNEY AND AUTHORITY
1.1.65. No power of attorney given by any Group Companies is in force.
1.1.66. There are not outstanding any authorities (express or implied)
by which any person may enter into any contract or commitment
to do anything on behalf of the Group Companies.
62. LICENCES AND CONSENTS
1.1.67. Each Group Company has obtained all necessary licences and
consents from any person, authority or body for the proper
carrying on of its business (short particulars of each licence
and consent having been disclosed to the Purchaser in writing
prior to the signing of this Agreement) and all the licences
and consents are valid and subsisting.
63. SUBSISTING CONTRACTS
1.1.68. No Group Companies is a party to any subsisting contract which
is or may be material in relation to its business or affairs.
1.1.69. No Group Companies is a party to any contract, transaction,
arrangement or liability which :
(a) is of an unusual or abnormal nature or
outside the ordinary and proper course of
business;
(b) is for a fixed term of more than six months;
(c) is of a long-term nature (that is, unlikely
to have been fully performed in accordance
with its terms more than six months after the
date on which it was entered into or
undertaken);
(d) is incapable of termination by it in
accordance with its terms on sixty days'
notice or less;
(e) is of a loss-making nature (that is, known to
be likely to result in a loss to it on
completion of performance);
(f) cannot readily be fulfilled or performed by
it on time without undue or unusual
expenditure of money, effort or personnel;
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(g) involves payment by it of amounts determined
by reference to fluctuations in the index of
retail prices or any other index or in the
rate of exchange for any currency;
(h) involves an aggregate outstanding expenditure
by it of more than [HK$100,000.00];
(i) involves or is likely to involve the supply
of goods the aggregate sales value of which
will represent in excess of 10 per cent of
its turnover for the preceding financial
year;
(j) is a contract for hire or rent, hire purchase
or purchase by way of credit sale or
periodical payment;
(k) involves or is likely to involve obligations
or liabilities which by reason of their
nature or magnitude ought reasonably to be
made known to an intending purchaser of the
Shares.
1.1.70. There is not now outstanding in respect of any Group Companies
any agreement for the supply of services or for agency.
64. DEFAULTS UNDER AGREEMENTS BY GROUP COMPANIES
1.1.71. No Group Companies is nor will it with the lapse of time
become :
(a) in default under any agreement or covenant to
which it is a party or in respect of any
other obligations or restrictions binding
upon it;
(b) in default under any obligations existing by
reason of membership of any association or
body;
(c) liable in respect of any representation or
warranty (whether express or implied) or any
matter giving rise to a duty of care on its
part.
1.1.72. No threat or claim of default under any agreement, instrument
or arrangement to which any Group Companies is a party has
been made and is outstanding against it; and there is nothing
whereby any such agreement, instrument or arrangement may be
prematurely terminated or rescinded by any other party or
whereby the terms thereof may be worsened.
65. OTHER PARTY'S DEFAULTS
1.1.73. No party to any agreement with or under an obligation to any
Group Companies is in default under it, being a default which
would be material in the context of its financial or trading
position; and there are no circumstances likely to give rise
to such a default.
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<PAGE>
66. OUTSTANDING OFFERS
1.1.74. No offer, tender or the like is outstanding which is capable
of being converted into an obligation of any Group Companies
by acceptance or other act of some other person, firm or
company.
67. DEFECTIVE PRODUCTS
1.1.75. No Group Companies has manufactured, sold or supplied products
which are or were or will become in any material respect
faulty or defective or which do not comply in any material
respect with any warranties or representations expressly or
impliedly made by it or with all applicable regulations,
standards and requirements.
68. SERVICE LIABILITIES
1.1.76. No Group Companies is subject to any liability or obligation
(save as may be implied by law) to service, repair, maintain,
take back or otherwise do or not do anything in respect of any
goods that have been or are after the date of this Agreement
delivered by it.
69. PURCHASES AND SALES FROM OR TO ONE PARTY
1.1.77. Neither more than 25 per cent of the aggregate amount of all
the purchases, nor more than 25 per cent of the aggregate
amount of all the sales, of any Group Companies are obtained
or made from or to the same supplier or customer (including
any person, firm or company in any way connected with such
supplier or customer) nor is any material source of supply to
any Group Companies, or any material outlet for the sales of
any Group Companies, in jeopardy or likely to be in jeopardy.
70. GUARANTEES AND INDEMNITIES
1.1.78. There is not now outstanding in respect of any Group Companies
any guarantee, or agreement for indemnity or for suretyship,
given by it or for its accommodation.
71. INSIDER CONTRACTS
1.1.79. There is not now outstanding and there has not at any time
during the three years prior to the date of this Agreement
been outstanding any contract or arrangement to which any
Group Companies is a party and which the Company or any
director of any Group Companies is or has been interested,
whether directly or indirectly.
1.1.80. No Group Companies is a party to, nor have its profits or
financial position during the three years prior to the date of
this Agreement been affected by, any contract or arrangement
which is not of an entirely arm's length nature.
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<PAGE>
72. MANAGEMENT REPORTS
1.1.81. There have been no reports, concerning any Group Companies, by
financial or management consultants within the period of three
years prior to the date of this Agreement.
EMPLOYMENT
73. EMPLOYEES AND TERMS OF EMPLOYMENT
1.1.82. Full particulars of the identities, dates of commencement of
employment, or appointment to office, and terms and conditions
of employment of all the employees and officers of each Group
Company whose salary exceeds HK$45,000.00, including without
limitation profit sharing, commission or discretionary bonus
arrangements, have been fully and accurately disclosed to the
Purchaser in writing prior to the signing of this Agreement.
1.1.83. No contract of service exists between any Group Companies and
a director or employee in relation to which any relevant
requirements have not been fulfilled.
74. BONUS SCHEMES
1.1.84. There are no schemes in operation by, or in relation to, any
Group Companies whereunder any employee of any Group Companies
is entitled to a commission or remuneration of any other sort,
calculated by reference to the whole or part of the turnover,
profits or sales of any Group Companies.
75. CHANGES IN REMUNERATION
1.1.85. During the period to which the Principal Accounts relate and
since the Last Accounts Date or (where employment, or holding
of office commenced after the beginning of such period) since
the commencing date of the employment or holding of office :-
(a) no change has been made in the rate of
remuneration, or the emoluments or pension
benefits, of any officer, ex-officer or
senior executive of any Group Companies (a
senior executive being a person in receipt of
remuneration in excess of HK$30,000.00 per
month);
(b) no change has been made in any other terms of
employment of any officer or senior
executive.
1.1.86. No Group Companies is bound or accustomed to pay any moneys
other than in respect of remuneration or emoluments of
employment or pension benefits to or for the benefit of any
officer or employee of any Group Companies.
34
<PAGE>
1.1.87. No negotiations for any increase in the remuneration or
benefits of any officer or employee of any Group Companies are
current or likely to take place within six months after the
date of Completion.
76. TERMINATION OF CONTRACTS OF EMPLOYMENT
1.1.88. All subsisting contracts of service to which any Group
Companies is a party are determinable at any time on three
months' notice or less without compensation (other than
compensation in accordance with the Employment Ordinance).
1.1.89. No executive of any Group Companies, who is in receipt of
remuneration in excess of HK$20,000.00 per month, and no
officer of any Group Companies has given or received notice
terminating his employment, except as expressly contemplated
in this Agreement, and no such executive or officer will be
entitled to give such notice as a result of the provisions of
this Agreement.
77. INDUSTRIAL DISPUTES AND NEGOTIATIONS
1.1.90. None of the Group Companies or their respective employees is
involved in any industrial dispute, and there are no facts
known or which would on reasonable enquiry be known to any
Group Companies or its directors or to the Company which might
suggest that there may be any industrial dispute involving the
Group Companies or that any of the provisions of this
Agreement may lead to any such industrial dispute.
78. REDUNDANCIES
1.1.91. No employee will become redundant and be entitled to a
redundancy payment as a result of any provision of this
Agreement.
79. PENSIONS
1.1.92. Save as disclosed no Group Companies is under any legal or
moral liability or obligation or a party to any ex-gratia
arrangement or promise to pay pensions, gratuities, retirement
fees, super-annuation allowances or the like, or there are no
retirement benefit, or pension or death benefit, or similar
schemes or arrangements in relation to or binding on any Group
Companies or to which any Group Companies contributes.
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<PAGE>
ASSETS
80. OWNERSHIP OF ASSETS
1.1.93. The Group Companies owned at the Last Accounts Date and had
good and marketable title to and (except for current assets
subsequently sold or realised in the ordinary course of
business) still own and have good and marketable title to all
assets included in the Principal Accounts (excluding the
Properties) and to all assets acquired since the Last Accounts
Date and not subsequently sold or realised as aforesaid.
1.1.94. No Group Companies has created or granted or agreed to create
or grant any security interest or other encumbrance in respect
of any of the fixed assets included in the Principal Accounts
(excluding the Properties) or acquired or agreed to be
acquired since the Last Accounts Date, otherwise than in the
ordinary course of its business.
1.1.95. Save as disclosed in the Principal Accounts, none of the
property, assets, undertaking, goodwill or uncalled capital of
any Group Companies (excluding the Properties) is subject to
and no Group Companies has agreed to grant in respect of such
property any option, charge, lien or encumbrance, or right of
pre-emption.
81. STOCKS AND WORK IN PROGRESS
1.1.96. The stock of raw materials, packaging materials and finished
goods now held are not excessive and are adequate in relation
to the current trading requirements of the businesses of the
Group Companies; and none of the stock is obsolete, slow
moving, unusable, unmarketable or inappropriate or of limited
value in relation to the current business of any Group
Companies; and no contracts are outstanding which are likely
to change this.
1.1.97. The stock-in-trade of each Group Company is in good condition
and is capable of being sold by such Group Companies in the
ordinary course of its business in accordance with its current
price list without rebate or allowance to a purchaser.
82. RETENTION OF TITLE
1.1.98. No Group Companies has purchased any stock, goods or materials
from any of its suppliers on terms that property in it does
not pass until full payment is made or all indebtedness
discharged.
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<PAGE>
83. INSURANCE
1.1.99. All the stock-in-trade and the assets and undertakings of each
Group Company of an insurable nature (excluding the
Properties) are and have at all material times been, insured
in amounts representing their full replacement or
reinstatement value against fire and other risks normally
insured against by persons carrying on the same business as
that carried on by such Group Companies.
1.1.100. Each Group Company is now and has at all material times been
adequately covered against accident, damage, injury, third
party loss, loss of profits and other risks normally insured
against by persons carrying on the same business.
1.1.101. All insurance is currently in full force and effect, and
nothing has been done or omitted to be done which could make
any policy of insurance void or voidable or which is likely to
result in an increase in premium.
1.1.102. None of the policies is subject to any special or unusual
terms or restrictions or to the payment of any premium in
excess of the normal rate.
1.1.103. No claim is outstanding or may be made under any of the said
policies and no circumstances exist which are likely to give
rise to such a claim.
84. PLANT IN WORKING ORDER
1.1.104. The plant, machinery, vehicles and other equipment used in
connection with the business of each Group Company:
(a) are in a good and safe state of repair and
condition and satisfactory working order and
have been regularly and properly maintained;
(b) are not to any extent surplus to
requirements;
(c) are not expected to require replacements or
additions at a cost in excess of HK$
5,000,000 within six months from the date of
this Agreement;
(d) are all capable and (subject to normal wear
and tear) will remain capable throughout the
respective periods of time during which they
are each written down to a nil value in the
accounts of the Group Companies (in
accordance with the normal recognised
accountancy principles consistently applied
prior to the date hereof) of doing the work
for which they were designed or purchased.
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<PAGE>
1.1.105. Maintenance contracts are in full force and effect in respect
of all assets of the Group Companies which it is normal or
prudent to have maintained by independent or specialist
contractors and in respect of all assets which any Group
Companies is obliged to maintain or repair under any leasing
or similar agreement; and all those assets have been regularly
maintained to a good technical standard and in accordance with
safety regulations usually observed in relation to assets of
that description and in accordance with the terms and
conditions of any applicable leasing or similar agreement.
85. INDUSTRIAL PROPERTY RIGHTS AND TRADE SECRETS
1.1.106. All industrial property rights used or required by any Group
Companies in connection with its business are in full force
and effect and are vested in and beneficially owned by it.
1.1.107. No right or licence has been granted to any person by any
Group Companies to use in any manner or to do anything which
would or might otherwise infringe any of the industrial
property rights referred to above; and no act has been done or
omission permitted by any Group Companies whereby they or any
of them have ceased or might cease to be valid and
enforceable.
1.1.108. The business of each Group Company (and of any licensee under
a licence granted by any Group Companies) as now carried on
does not and is not likely to infringe any industrial property
right, of any other person (or would not do so if the same
were valid) or give rise to a liability to pay compensation
and all licences to any Group Companies in respect of any such
protection are in full force and effect.
1.1.109. No Group Companies has (otherwise than in the ordinary and
normal course of business) disclosed or permitted to be
disclosed or undertaken or arranged to disclose to any person
other than the Purchaser any of its know-how, trade secrets,
confidential information, price lists or lists of customers or
suppliers.
1.1.110. No Group Companies is a party to any secrecy agreement or
agreement which may restrict the use of disclosure of
information.
1.1.111. Nothing has been done or omitted by any Group Companies which
would enable any licensee under a licence granted by the Group
Companies to be terminated or which in any way constitutes a
breach of terms of any licence.
38
<PAGE>
PROPERTIES
86. TITLE
1.1.112. The properties of the Group Companies shortly described in
Schedule 5 ("Properties") comprise all the properties owned,
occupied or otherwise used in connection with their businesses
by the Group Companies.
1.1.113. Those of the Properties which are occupied or otherwise used
by the Group Companies in connection with their businesses are
so occupied or used by right of ownership or under lease or
licence, and the terms of any such lease or licence permit
such occupation or use.
1.1.114. The Group Companies are the legal and beneficial owners of the
Properties.
1.1.115. The information contained in Schedule 5, Part II as to the
tenure of each of the Properties, the principal terms of the
leases or licences held by the Group Companies, and the
principal terms of the tenancies and licences subject to and
with the benefit of which the Properties are held is true and
accurate in all respects.
1.1.116. The Group Companies have a good and marketable title to each
of the Properties.
1.1.117. The Group Companies are the registered owner of the Properties
registered at the Land Registry with good title.
87. ENCUMBRANCES
1.1.118. Save for those already charged to banks and financial institutions and
are recorded in the books and accounts of the relevant Group Company, the
Properties are free from any mortgage, debenture, charge, lien or other
encumbrance securing the repayment of monies or other obligation or
liability of any of the Group Companies or any other party.
1.1.119. The Properties are not subject to any outgoings other than
rates and government rent.
1.1.120. The Properties are not subject to any option, right of
pre-emption or right of first refusal.
88. PLANNING MATTERS
1.1.121. The use of each of the Properties is the permitted use for the
purposes of the Government Lease and Occupation Permit.
39
<PAGE>
1.1.122. Building regulation consents have been obtained with respect
to all development, alterations and improvements to the
Properties.
89. STATUTORY OBLIGATIONS
1.1.123. Compliance has been made with all applicable statutory and
Deed of Mutual Covenant requirements with respect to the
Properties, and in particular (but without limitation) with
the requirements as to fire precautions.
1.1.124. There is no outstanding and unobserved or unperformed
obligation with respect to the Properties necessary to comply
with the requirements (whether formal or informal) of any
competent authority exercising statutory or delegated powers.
90. ADVERSE ORDERS
1.1.125. There are no compulsory purchase notices, orders or
resolutions affecting any of the Properties nor are there any
circumstances likely to lead to any being made.
1.1.126. There are no changing orders, enforcement notices or stop
notices affecting the Properties nor are there any
circumstances likely to lead to any being made.
91. CONDITION OF THE PROPERTIES
1.1.127. The Properties are in good and substantial repair and fit for
the purposes for which they are presently used.
1.1.128. There are no disputes with any adjoining or neighbouring owner
with respect to boundary walls and fences or with respect to
any easement, right or means of access to the Properties.
92. INSURANCE
1.1.129. The Properties are insured in their respective full
reinstatement values against third party and public
liabilities to an adequate extent.
1.1.130. All premiums payable in respect of insurance policies with
respect to the Properties which have become due have been duly
paid and no circumstances have arisen which would vitiate or
permit the insurers to avoid such policies.
93. LEASEHOLD PROPERTIES
1.1.131. The relevant Group Companies have paid the rent and observed
and performed the covenants on the part of the tenant and the
conditions contained in any leases (which expressions includes
40
<PAGE>
underleases) under which the Properties are held, and the last
demand (or receipts for rent if issued) were unqualified, and
all such leases are valid and in full force.
1.1.132. All licences, consents and approvals required from the
landlords and any superior landlords under any leases of the
Properties have been obtained and the covenants on the part of
the tenant contained in such licences, consents and approvals
have been duly performed and observed.
1.1.133. There are no rent reviews under the leases of the Properties
held by the Group Companies currently in progress.
1.1.134. There is not outstanding and unobserved or unperformed any
obligation necessary to comply with any notice or other
requirement given by the landlord under any leases of the
Properties.
1.1.135. There is no obligation to reinstate any of the Properties by
removing or dismantling any alteration made to it by Group
Companies or any predecessor in title to the Group Companies
or any predecessor in title to the Group Companies.
9.9.1 THE VENDOR IS NOT AWARE OF ANY MATERIAL OR
PERSISTENT BREACHES OF COVENANT BY A TENANT
OF ANY OF THE PROPERTIES INCLUDING THE
COVENANTS TO PAY RENT.
9.9.2 THE CERTIFIED TRUE COPIES OF THE TENANCY
AGREEMENTS RELATING TO THE PROPERTIES
PROVIDED TO THE PURCHASER PRIOR TO THE
SIGNING OF THIS AGREEMENT ARE TRUE AND
CORRECT AND ARE THE LATEST AGREEMENTS
RELATING TO THE PROPERTIES AND HAVE NOT BEEN
AMENDED BY THE PARTIES THERETO SUBSEQUENTLY.
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<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 4
PROPERTIES OF THE GROUP COMPANIES
PART I
Properties Occupied by the Group Companies
------------------------------------------
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
Particulars Registered Owner Occupied By
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
<S> <C> <C> <C>
1. Lorry Car Park No.26, Success Industrial Building, Tap Investment Limited Harmonic Hall Optical Disc
7 Kin Fat Street, Tuen Mun, New Territories, Hong Kong. Ltd.
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
2. Lorry Car Park No.L17, 3/F and 18/F, Tap Investment Limited Harmonic Hall Optical Disc
Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, Ltd.
New Territories, Hong Kong
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
3. Private Car Park No.P24 & P25, 3/F and 19/F, Tap Investment Limited Harmonic Hall Optical Disc
Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan, Ltd.
New Territories, Hong Kong
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
4. North Bridge Road, Shiqiao, Panyu, PRC GZ Anwell Moulding Injection GZ Anwell Moulding Injection
[Except for the fourth floor thereof, which has been let to Industrial Limited Industrial Ltd.
a jewellery factory prior to the signing of this
Agreement to which this Schedule is attached.
This fourth floor has a size of approximately 20% of the
property in terms of floor area.]
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
5. Lorry Car Park No.17, Success Industrial Building, Tap Investment Limited Vacant
7 Kin Fat Street, Tuen Mun, New Territories, Hong Kong.
(Vacant)
- ----- ------------------------------------------------------------- ---------------------------------- -----------------------------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
PART II
Properties Rented to Third Parties
----------------------------------
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
Particulars Registered Owner Name of Tenant Term of tenancy
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
<S> <C> <C> <C> <C>
1. 3/F., Success Industrial Building, Anwell Industrial Limited Ng Vai Lon 1/11/99 - 31/10/2002
7 Kin Fat Street, Tuen Mun,
New Territories, Hong Kong
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
2. Lorry Car Park No.6, Anwell Industrial Limited Ng Vai Lon 1/11/99 - 31/10/2002
Success Industrial Building,
7 Kin Fat Street, Tuen Mun,
New Territories, Hong Kong
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
3. Private Car Park No.7, Anwell Industrial Limited 1/1/2000 - 31/12/2001
Success Industrial Building,
7 Kin Fat Street, Tuen Mun,
New Territories, Hong Kong
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
4. 4th Floor, North Bridge Road, GZ Anwell Moulding Injection (jewellery factory) 1/2/2000 - 31/1/2002
Shiqiao, Panyu, PRC (*) Industrial Limited
- ---- ----------------------------------- -------------------------------- ------------------------------- --------------------------
(*) Reference shall be made to the representative about this property as
contained in Part I of this Schedule.
</TABLE>
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<PAGE>
SCHEDULE 5
FORM OF DEED OF INDEMNITY
THIS DEED made on ,2000
BETWEEN
(A) YIU SIU HUNG ( ) (holder of
Hong Kong Identity Card No. ) of House No.D1, Fortune Garden, No.72
Ting Kok Road, Tai Po, New Territories, Hong Kong (hereinafter called
"the Vendor");
(B) ASIAN STAR DEVELOPMENT, INC., a company incorporated under the laws of
the State of Nevada in the United States of America c/o Suite 930, East
Wing, Block B, New World Office Building, Tsimshatsui, Kowloon, Hong
Kong (hereinafter called "the Purchaser")
(C) HARMONIC HALL INVESTMENT HOLDINGS LIMITED, a company incorporated under
the laws of the British Virgin Islands whose registered office is at
P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands (hereinafter called "the Company").
PRELIMINARY
(A) Pursuant to an Agreement (hereinafter referred to as "the Agreement")
dated [ ] and made between the Vendor and the Purchaser the Purchaser
has today completed the purchase of the Sale Shares from the Vendor in
reliance inter alia upon the covenants herein contained.
(B) This Deed is entered into pursuant to the provisions of the Agreement.
OPERATIVE PROVISIONS
- ---------------------
2. IN THIS DEED AND IN THE RECITALS HERETO :-
94. WORDS AND EXPRESSIONS DEFINED IN THE AGREEMENT SHALL (SAVE WHERE THE
CONTEXT OTHERWISE REQUIRES) BEAR THE SAME MEANING WHEREVER USED HEREIN AND
THOSE PROVISIONS OF THE AGREEMENT DEALING WITH CONSTRUCTION OR
INTERPRETATION AND THE GIVING OF NOTICES AND THE GOVERNING LAW SHALL
(EXCEPT WHERE OTHERWISE PROVIDED) APPLY EQUALLY HEREIN.
95. REFERENCES TO PROVISIONS OF THE ESTATE DUTY ORDINANCE ARE REFERENCES TO THE
ESTATE DUTY ORDINANCE OF HONG KONG AS IN FORCE AT THE DATE OF THIS DEED BUT
IN THE EVENT OF ANY REPEAL OR AMENDMENT OF SUCH PROVISIONS SUCH REFERENCES
SHALL BE READ AS INCLUDING ANY PROVISIONS TO THE LIKE EFFECT RESPECTIVELY
REPLACING OR AMENDING THE SAME, AND "ESTATE DUTY" MEANS HONG KONG ESTATE
DUTY.
96. A "RELEVANT TRANSFER" IN RELATION TO ANY PERSON MEANS A TRANSFER MADE BY
THAT PERSON OF ANY PROPERTY OTHER THAN AN INTEREST LIMITED TO CEASE ON HIS
OR HER DEATH OR PROPERTY WHICH HE OR SHE TRANSFERRED IN A FIDUCIARY
CAPACITY BEING A TRANSFER OCCURRING ON OR SUBSISTING AT OR BEFORE
COMPLETION. A TRANSFER MADE BY A PERSON OF ANY PROPERTY OTHER THAN AN
INTEREST LIMITED TO CEASE ON HIS OR HER DEATH OR PROPERTY WHICH HE OR SHE
TRANSFERRED IN A FIDUCIARY CAPACITY MEANS A TRANSACTION OF THE KIND
DESCRIBED BY THE WORDS "A TRANSFER OF ANY PROPERTY OTHER THAN AN INTEREST
LIMITED TO
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<PAGE>
CEASE ON HIS DEATH OR PROPERTY WHICH HE TRANSFERRED IN A FIDUCIARY
CAPACITY" IN S.35 OF THE ESTATE DUTY ORDINANCE INTERPRETED IN ACCORDANCE
WITH THE PROVISIONS CONTAINED IN S.3 OF THE ESTATE DUTY ORDINANCE.
97. THE WORD "TAXATION" SHALL MEAN ANY LIABILITY TO ANY FORM OF TAXATION,
DUTIES, RATES AND LEVIES WHENEVER CREATED OR IMPOSED AND WHETHER OF HONG
KONG SAR OR OF ANY OTHER PART OF THE WORLD INCLUDING BUT NOT LIMITED TO :-
2.1.1. profits tax, provisional profits tax, interest tax, property
tax, salaries tax, capital gains tax, or any other taxation
measured by reference to actual or deemed income, profits,
receipts, distributions, shortfalls, chargeable gains, sales,
turnover, assets or interest;
2.1.2. estate duty, death duty or capital transfer tax;
2.1.3. payroll tax, social security or other contributions of a like
nature;
2.1.4. withholding tax, value added tax, purchase tax, customs and
excise and any other import duties, stamp duties, capital duties,
rates, or filing or registration fees;
2.1.5. generally any tax, duty, impost, levy or rate or any amount
payable to the revenue, customs or fiscal authorities whether of
Hong Kong or of any other part of the world;
2.1.6. such an amount or amounts as is referred to in sub-clause (7) of
this Clause;
2.1.7. all costs, interest, penalties, charges, fines and expenses inci-
dental or relating to the liability to taxation or the deprivation
of Relief or of a right to repayment of taxation which is the
subject of the indemnities given by Clauses 2 and 3 hereof; or
2.1.8. any reasonable settlement of any threatened claim in respect of
any of the above matters.
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<PAGE>
98. THE WORD "CLAIM" SHALL INCLUDE ANY NOTICE, DEMAND, ASSESSMENT, LETTER OR
OTHER DOCUMENT ISSUED OR ACTION TAKEN BY OR ON BEHALF OF ANY FISCAL OR
CUSTOMS AND EXCISE AUTHORITY, OR ANY OTHER STATUTORY OR GOVERNMENTAL
AUTHORITY OR BODY WHATSOEVER, WHETHER LOCAL, STATE, MUNICIPAL, FEDERAL OR
NATIONAL, WHETHER IN HONG KONG OR ELSEWHERE FROM WHICH IT APPEARS THAT ANY
PERSON IS OR IS SOUGHT TO BE PLACED UNDER A LIABILITY TO MAKE ANY PAYMENT
OF ANY FORM OF TAXATION AS AFORESAID, WHETHER OR NOT SUCH PAYMENT IS
PRIMARILY PAYABLE BY SUCH PERSON AND WHETHER OR NOT SUCH PERSON HAS OR MAY
HAVE ANY RIGHT OR REIMBURSEMENT OR CONTRIBUTION FROM ANY OTHER PERSON OR
PERSONS, OR TO BE DEPRIVED OF ANY RELIEF OR RIGHT TO REPAYMENT OF ANY FORM
OF TAXATION AS AFORESAID WHICH RELIEF OR RIGHT TO REPAYMENT WOULD OTHERWISE
HAVE BEEN AVAILABLE TO SUCH PERSON.
99. "RELIEF" INCLUDES ANY RELIEF, ALLOWANCE, SET OFF OR DEDUCTION IN COMPUTING
PROFITS OR CREDIT GRANTED BY OR PURSUANT TO ANY LEGISLATION OR OTHERWISE
RELATING TO ALL FORMS OF TAXATION AS AFORESAID.
100. IN THE EVENT OF ANY DEPRIVATION OF RELIEF OR OF A RIGHT TO REPAYMENT OF ANY
FORM OF TAXATION AS AFORESAID THERE SHALL BE TREATED AS AN AMOUNT OF
TAXATION FOR WHICH A LIABILITY HAS ARISEN THE AMOUNT OF SUCH RELIEF OR
REPAYMENT OR (IF SMALLER) THE AMOUNT BY WHICH THE LIABILITY TO ANY SUCH
TAXATION OF THE COMPANY WOULD HAVE BEEN REDUCED BY RELIEF IF THERE HAD BEEN
NO SUCH DEPRIVATION AS AFORESAID, APPLYING THE RELEVANT RATES OF TAXATION
IN FORCE IN THE PERIOD OR PERIODS IN RESPECT OF WHICH RELIEF WOULD HAVE
APPLIED OR (WHERE THE RATE HAS AT THE RELEVANT TIME NOT BEEN FIXED) THE
LAST KNOWN RATE AND ASSUMING THAT THE COMPANY HAD SUFFICIENT PROFITS
AGAINST WHICH RELIEF MIGHT BE SET OR GIVEN.
101. THE EXPRESSION "CLAIM FOR TAXATION" SHALL BE LIMITED TO ANY CLAIM FOR ANY
TAXATION WHICH HAS BEEN MADE OR MAY HEREAFTER BE MADE WHOLLY OR PARTLY IN
RESPECT OF OR IN CONSEQUENCE OF ANY ACTS OMISSIONS TRANSACTIONS
ARRANGEMENTS OR OTHER EVENTS WHATSOEVER OF THE COMPANY OR OF THE VENDOR
OCCURRING OR ENTERED INTO AT OR BEFORE COMPLETION AND SHALL INCLUDE
INSTANCES WHERE SUCH CLAIM ARISES FROM THE COMBINED EFFECTS OF TWO OR MORE
SUCH ACTS OMISSIONS TRANSACTIONS OR ARRANGEMENTS OR OTHER EVENTS THE FIRST
OR SOME OF WHICH SHALL HAVE TAKEN PLACE AT OR BEFORE COMPLETION AND THE
REMAINDER OF WHICH TAKE PLACE AFTER COMPLETION.
102. REFERENCES TO THE COMPANY INCLUDE EVERY SUCCESSOR IN TITLE TO A PART OR ALL
OF THE BUSINESS OF THE COMPANY TO THE INTENT AND EFFECT THAT THIS DEED
SHALL APPLY TO EACH SUCCESSOR AS IF IT WERE THE COMPANY.
103. REFERENCES TO THE PURCHASER SHALL ALSO BE DEEMED TO INCLUDE REFERENCES TO
ITS SUCCESSORS IN TITLE BEING THE OWNERS FOR THE TIME BEING OF ALL OR ANY
OF THE SALE SHARES.
The Vendor HEREBY COVENANTS with the Company and (as a separate covenant)
the Purchaser (both for its own benefit and as trustee for its successors in
title, being the owners for the time being of all or any of the Sale Shares)
that he will indemnify and at all times keep them and each of them indemnified
against any Claim for Taxation and any reasonable costs and expenses incurred or
46
<PAGE>
payable by the Company or the Purchaser in connection with or in consequence of
any Claim for Taxation.
Within fourteen (14) days of the receipt by the Vendor of a written notice from
the Purchaser or the Company of a claim under this Deed, the Vendor shall pay to
the Purchaser or the Company the amount of such claim.
No waiver by the Purchaser or the Company either of any right to be indemnified
hereunder in respect of any matter, or of any breach by the Vendor of any
provision hereof shall be deemed to be a waiver of any right to be indemnified
in respect of any other matter nor, as the case may be, shall it be deemed to be
a waiver of any subsequent breach of that or any other provision hereof, and any
forbearance or delay by the Purchaser or the Company in exercising any of its
rights hereunder shall not be construed as a waiver thereof.
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IN WITNESS whereof the parties hereto have executed this Deed the day
and year first above written.
SIGNED SEALED AND DELIVERED )
)
by YIU SIU HUNG )
)
in the presence of :- )
SIGNED by )
)
for and on behalf of ASIAN STAR )
)
DEVELOPMENT, INC in the presence of :- )
SIGNED by )
)
for and on behalf of HARMONIC HALL )
)
INVESTMENT HOLDINGS LIMITED )
)
in the presence of :- )
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<PAGE>
IN WITNESS whereof the parties hereto have executed this Agreement the
day and year first above written.
SIGNED by YIU SIU HUNG )
)
in the presence of :- )
SIGNED by )
)
for and on behalf of ASIAN STAR )
)
DEVELOPMENT, INC. in the presence of :- )
EXHIBIT 2(b)
THIS AGREEMENT is made the 28th day of March 2000 BETWEEN
(1) ASIAN STAR (HONG KONG) LIMITED, a company incorporated under the laws
of Hong Kong whose registered office is at Suite 930, East Wing, Block
B, New World Office Building, Tsimshatsui, Kowloon, Hong Kong ("the
Subscriber");
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(2) HARMONIC HALL INVESTMENT HOLDINGS LIMITED, a company incorporated
under the laws of the British Virgin Islands whose registered office
is at P.O. Box 957, Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands ("the Company");
(3) The persons named in Part I of Schedule 1 ("the Directors");
(4) The persons named in Part II of Schedule 1 ("the Shareholders");
(5) YIU SIU HUNG ( ) of House NO.D1, Fortune Garden,
No.72 Ting Kok Road, Tai Po, New Territories, Hong Kong ("the Warran-
tor"); and
(6) ASIAN STAR DEVELOPMENT, INC., a company incorporated under the laws of
the State of Nevada in the United States of America whose shares are
listed on Nasdaq and whose registered office is at 1495 Ridgeview
Drive, Suite 220, Reno, Nevada 89509, U.S.A., with a correspondence
address in Hong Kong, with a correspondence address in Hong Kong c/o
Suite 930, East Wing, Block B, New World Office Building, Tsimshatsui,
Kowloon, Hong Kong ("the Guarantor").
WHEREAS :-
(A) The Company was incorporated on 30th December 1996 with company number
210816 and having an authorised share capital of US$50,000.00 divided
into 50,000 Shares of US$1.00 each. As at the date hereof, the Company
is the holding company of a group of companies, the names, shareholding
structure and respective principal activities of which are set out in
Schedule 2.
(B) The Company wishes to raise additional capital by the issue at a
premium of the Subscription Shares (as defined below) on the terms of
this Agreement.
(C) The Subscriber has agreed to subscribe in cash for the Subscription
Shares and the Company has agreed to issue and allot these to the
Subscriber on the terms of this Agreement.
(D) The Shareholders are the existing registered and beneficial share-
holders of the Company.
(E) The Warrantor is major shareholder of the Company.
(F) The Guarantor is the holding company of the Subscriber.
NOW IT IS HEREBY AGREED as follows :-
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DEFINITIONS
104. IN THIS AGREEMENT AND THE SCHEDULES HERETO THE FOLLOWING WORDS AND EXPRES-
SIONS SHALL HAVE THE FOLLOWING MEANINGS :-
"the Articles" the articles of association (in
force as of the date of this
Agreement) of the Company
"Associate" (in relation to any company) another
company which is a subsidiary of or
a holding company of or another
subsidiary of a holding company of
that company
"Business Day" means a day other than a Saturday on
which banks in Hong Kong are open
for business
"Company's Solicitors" means Messrs. Jones, Day, Reavis
& Pogue of 29th Floor, Enter-
tainment Building, 30 Queen's Road
Central, Hong Kong
"Completion" completion of the share subscription
in accordance with Clauses 2, 3
and 4
"Disclosure Letter" the letter of even date from the
Company and the Warrantor to the
Subscriber
"Group Companies" the Company and its Associates and
"Group Company" means any one of
such companies
"in writing" includes any communication made by
letter facsimile transmission or
electronic mail
"Last Accounts Date" 31st December 1999, being the
date to which the Management
Accounts have been prepared
"Management Accounts" unaudited balance sheets and
profit and loss accounts of the
Group Companies as at the Last
Accounts Date
"Properties" the properties of the Group
Companies shortly described in
Schedule 3
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"Share Purchase Agreement" an agreement of the even date made
between Yiu Siu Hung and Asian Star
Development, Inc. in relation to
the sale and purchase of 500 shares
in the Company
"Shareholders" the Subscriber and the Warrantor
"Subscription Date" the date of this Agreement or
such later date on which completion
of the subscription of the
Subscription Shares will take place
"Subscriber's Solicitors" Messrs. Lo and Lo of 3501,
Gloucester Tower, The Landmark,
Central, Hong Kong
"Subscription Shares" 35 shares of US$1.00 each in the
capital of the Company to be
issued to the Subscriber or as it
may direct as set out in Clause 2.01
"Taxation" any liability to any form of taxa-
tion whenever created or imposed
and whether of Hong Kong or of any
other part of the world and without
prejudice to the generality of
theforegoing includes property tax,
salaries tax, profits tax, interest
tax, estate duty, stamp duty, and
other similar liabilities or contri-
butions, and generally any tax,
duty, impost, levy or rate or any
amount payable to the revenue,
customs or fiscal authorities
whether of Hong Kong or any other
part of the world
"Warranties" the warranties representations and
undertakings contained in the
Schedule 4
105. WORDS AND PHRASES DEFINED IN THE COMPANIES ORDINANCE (CHAPTER 32 OF THE
LAWS OF HONG KONG) SHALL HAVE THE SAME MEANINGS IN THIS AGREEMENT UNLESS
THEY ARE OTHERWISE DEFINED IN THIS AGREEMENT.
106. REFERENCES TO CLAUSES SUB-CLAUSES AND SCHEDULES ARE TO CLAUSES AND
SUB-CLAUSES OF AND SCHEDULES TO THIS AGREEMENT. THE SINGULAR
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INCLUDES THE PLURAL AND EACH OF THE MASCULINE, THE FEMININE AND THE NEUTER
INCLUDES THE OTHERS OF THEM.
107. REFERENCES IN THIS AGREEMENT TO STATUTORY PROVISIONS SHALL BE CONSTRUED AS
REFERENCES TO THOSE PROVISIONS AS RESPECTIVELY AMENDED OR RE-ENACTED
(WHETHER BEFORE OR AFTER THE DATE HEREOF) FROM TIME TO TIME AND SHALL
INCLUDE ANY PROVISIONS OF WHICH THERE ARE RE-ENACTMENTS (WHETHER WITH OR
WITHOUT MODIFICATION) AND ANY SUBORDINATE LEGISLATION MADE UNDER SUCH
PROVISIONS.
SUBSCRIPTION
108. THE SUBSCRIBER IN RELIANCE UPON THE WARRANTIES, THE REPRESENTATIONS
UNDERTAKINGS AGREEMENTS AND COVENANTS REFERRED TO IN THIS AGREEMENT HEREBY
SUBSCRIBES FOR THE SUBSCRIPTION SHARES.
109. THE COMPANY AGREES TO ISSUE THE SUBSCRIPTION SHARES AND THE WARRANTOR BEING
AN EXISTING SHAREHOLDER OF THE COMPANY CONSENTS TO THE ISSUE OF THE
SUBSCRIPTION SHARES AND UNDERTAKES TO PROCURE THE COMPANY TO DO SO.
CONDITIONS PRECEDENT
Completion of the subscription of Subscription Shares pursuant to this Agreement
is conditional upon :-
2.1.9. the passing at a shareholders meeting of the Company of a
resolution approving the issue of the Subscription Shares to the
Subscriber in accordance with the terms of this Agreement;
2.1.10. signing of the Share Purchase Agreement.
SUBSCRIPTION ARRANGEMENTS
110. COMPLETION OF SUBSCRIPTION SHALL TAKE PLACE SIMULTANEOUSLY WITH THE PRE-
COMPLETION (AS DEFINED IN THE SHARE PURCHASE AGREEMENT) OF THE SHARE
PURCHASE AGREEMENT AT THE OFFICES OF THE COMPANY'S SOLICITORS OR AT SUCH
OTHER TIME AND PLACE AS MAY BE AGREED BETWEEN THE PARTIES TO THIS AGREE-
MENT. ON COMPLETION :-
2.1.11. The Company and the Directors shall procure that :-
2.1.11.1. a Directors' and a Shareholders' meeting of the Company are
convened and duly held at which valid resolutions are passed to
authorise the issue
5
<PAGE>
and allotment of the Subscription Shares to the Subscriber and
the registration of the Subscription Shares in the name of the
Subscriber or its nominees;
2.1.11.2. a certified copy of the minutes of the board meeting and
Shareholders' meeting referred to above shall be delivered to
the Subscriber;
2.1.11.3. the Company shall allot and issue fully paid Subscription
Shares to the Subscriber (or, as the case may be, its nominees)
and shall enter the name of the Subscriber (or, as the case
may be, its nominees) in the register of members of the Company
as registered holder(s) and shall issue and deliver to the
Subscriber the appropriate share certificates duly executed
by the Company; and
2.1.11.4. the Company shall notify the Registered Agent of the Company in
the British Virgin Islands regarding the issue of the
Subscription Shares.
2.1.12. The Subscriber shall pay to the Company the subscription price in
the sum of HK$5,040,000.00 in the manner to be agreed between
the parties.
111. IF ANY OF THE CONDITIONS SET OUT IN CLAUSE 3 SHALL NOT HAVE BEEN FULFILLED
(AND PROVIDED THAT THE SUBSCRIBER WAS READY AND WILLING TO FULFIL ITS
OBLIGATIONS UNDER CLAUSE 3(II), THE SUBSCRIBER MAY :-
2.1.13. defer Completion to a date not more than 60 days after the
original scheduled date; or
2.1.14. proceed to Completion so far as practicable (without prejudice to
its rights hereunder); or
2.1.15. rescind this Agreement.
MATTERS TO BE DEALT WITH AFTER COMPLETION
112. ON COMPLETION, THE PARTIES HERETO SHALL OR SHALL PROCURE THE FOLLOWING
MATTERS TO TAKE PLACE :-
2.1.16. The Subscriber, the Warrantor and each registered shareholder
of the Company shall enter into a Shareholders' Agreement in the
form to be agreed between the relevant parties;
6
<PAGE>
2.1.17. The Directors shall procure a board meeting of the Group Compa-
nies to be held at which :-
2.1.17.1. the persons nominated by the Subscriber shall be appointed
directors of the Group Companies, and such appointments shall
take effect on Completion;
2.1.17.2. all existing bank signatures authorities shall be amended in the
manner agreed between the parties hereto.
WARRANTIES
113. SAVE AS DISCLOSED IN THE DISCLOSURE LETTER, THE COMPANY AND THE WARRANTOR
HEREBY WARRANT TO THE SUBSCRIBER ON BEHALF OF THEMSELVES AND AS TRUSTEE FOR
THE SUBSCRIBER'S SUCCESSORS AND ASSIGNS IN THE TERMS OF THE WARRANTIES AND
AGREE TO INDEMNIFY AND HOLD THE SUBSCRIBER HARMLESS AGAINST ALL OR ANY
CLAIMS LOSSES LIABILITIES DAMAGES COSTS AND EXPENSES RESULTING FROM A
BREACH OF THE WARRANTIES. THE WARRANTOR SHALL HAVE NO RIGHT OF RECOURSE
AGAINST NOR RIGHT OF CONTRIBUTION FROM THE COMPANY IN RESPECT OF ANY
LIABILITY INCURRED BY THE WARRANTOR IN RESPECT OF THE SAID WARRANTIES.
114. EACH OF THE WARRANTIES SHALL CONSTITUTE A SEPARATE AND INDEPENDENT WARRANTY
TO THE INTENT THAT THE SUBSCRIBER SHALL HAVE A SEPARATE CLAIM AND RIGHT OF
ACTION IN RESPECT OF EVERY BREACH OF ANY OF THE WARRANTIES AND SAVE AS
EXPRESSLY PROVIDED TO THE CONTRARY, NO WARRANTY SHALL LIMIT OR GOVERN THE
EXTENT OR APPLICATION OF ANY OTHER WARRANTY.
115. THERE IS NO MATERIAL ADVERSE CHANGE IN THE BUSINESS, ASSETS, PROPERTIES,
LIABILITIES, PROFITS, PROSPECTS OR CONDITION OF THE GROUP COMPANIES SINCE
THE LAST ACCOUNTS DATE AND THERE ARE NO MATERIAL FACTS RELATING TO THE
GROUP COMPANIES KNOWN TO THE COMPANY WHICH COULD AFFECT THE WILLINGNESS OF
AN INVESTOR TO ENTER INTO AN AGREEMENT WITH THE COMPANY IN TERMS SIMILAR TO
THE TERMS OF THIS AGREEMENT WHICH HAVE NOT BEEN DISCLOSED TO THE
SUBSCRIBER.
116. UNLESS OTHERWISE AGREED IN WRITING BY THE SUBSCRIBER THE PROCEEDS OF THE
ISSUE OF THE SUBSCRIPTION SHARES SHALL BE APPLIED BY THE COMPANY AS WORKING
CAPITAL OF THE GROUP COMPANIES AND/OR FOR PURCHASE OF MACHINERY.
117. REFERENCES TO THE 'KNOWLEDGE AND/OR AWARENESS OF THE COMPANY OR THE
WARRANTOR OR ANY SIMILAR PHRASE SHALL BE TAKEN TO MEAN SUCH
7
<PAGE>
KNOWLEDGE AND AWARENESS HAVING MADE ALL DUE REASONABLE ENQUIRIES ABOUT THE
RELEVANT FACTS MATTERS OR CIRCUMSTANCES AND THE EXISTENCE OR OTHERWISE
THEREOF.
118. THE COMPANY AGREES WITH THE SUBSCRIBER TO INDEMNIFY THE SUBSCRIBER AGAINST
ANY DEPLETION OR DIMINUTION IN VALUE OF THE ASSETS OF THE GROUP COMPANIES
RESULTING FROM :-
2.1.18. any claim made against the Group Companies for payment of any
taxes assessed charged or recovered on or from the Group
Companies arising out of any disposition made by or to the Group
Companies or relating to any period of assessment prior to
Completion;
2.1.19. any settlement of any threatened claim apportionment demand or
assessment in relation to any matter referred to in this sub-
clause and any penalties;
2.1.20. any costs incurred by the Group Companies in contesting or
settling any such claim apportionment demand or assessment in
relation to any matter referred to in this sub-clause whether
threatened or made;
2.1.21. any loss damage resulting from any contingent and/or
undisclosed liabilities or any claim made against the Group
Companies in respect of transaction carried out prior to
Completion;
2.1.22. any costs incurred by the Subscriber or its successors or assigns
in contesting or settling any such claim apportionment demand or
assessment as aforesaid whether threatened or made.
8
<PAGE>
119. THE COMPANY AND THE WARRANTOR UNDERTAKE TO INFORM THE SUBSCRIBER (IN
WRITING SUPPLYING BRIEF PARTICULARS) AS SOON AS PRACTICABLE UPON BECOMING
AWARE OF ANY BREACH OF THE WARRANTIES OR INDEMNITIES.
120. THE WARRANTIES AND INDEMNITIES CONTAINED IN THIS AGREEMENT SHALL NOT BE
AFFECTED BY ANY INVESTIGATION BY OR ON BEHALF OF THE SUBSCRIBER INTO THE
AFFAIRS OF THE COMPANY.
121. EACH OF THE SHAREHOLDERS HEREBY CONFIRM AND AGREE TO THE ISSUE AND
ALLOTMENT OF THE SUBSCRIPTION SHARES TO THE SUBSCRIBER IN ACCORDANCE WITH
THE TERMS OF THIS AGREEMENT. EACH OF THE SHAREHOLDERS HEREBY WAIVE ANY
PREFERENCE RIGHTS EACH OF THEM MAY HAVE OVER THE SUBSCRIPTION SHARES.
122. EACH OF THE DIRECTORS HEREBY UNDERTAKES AND AGREES THAT EACH OF THEM WILL
TAKE THE NECESSARY ACTION TO PROCURE THE COMPANY TO PERFORM ITS CONTRACTUAL
OBLIGATIONS PURSUANT TO THE PROVISIONS OF THIS AGREEMENT.
123. ASIAN STAR DEVELOPMENT, INC. HEREBY :-
2.1.23. guarantees to the Company the due and punctual performance by the
Subscriber of all its obligations contained in this Agreement;
and
2.1.24. undertakes to hold the Company fully and completely indemnified
on demand against any loss, damage or liability occasioned by
any failure of the Subscriber so to perform its obligations
hereunder.
FUTURE TRANSACTIONS
124. PRIOR TO THE COMPLETION, THE WARRANTOR (SO FAR AS HE IS ABLE) AND THE
COMPANY COVENANTS WITH THE SUBSCRIBER THAT FOR SO LONG AS THE SUBSCRIBER OR
ANY OF ITS ASSOCIATES ARE THE HOLDERS OF ANY SHARE IN THE CAPITAL OF THE
COMPANY NONE OF THE GROUP COMPANIES SHALL WITHOUT THE PRIOR WRITTEN CONSENT
OF THE SUBSCRIBER (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD) :-
2.1.25. increase or reduce its authorised or issued share capital or con-
solidate sub-divide purchase redeem or cancel any of such
share capital or alter any right pertaining to any share or
class of shares in such capital;
2.1.26. issue or allot any share or security or grant or create any
option or right to acquire any share or security in such share
capital;
9
<PAGE>
2.1.27. enter into any transaction or series of transactions which if the
share capital of the relevant company was then listed on The
Stock Exchange of Hong Kong Limited would constitute a 'notifi-
able transaction' as defined from time to time in the publica-
tion entitled 'Rules Governing The Listing of Securities on The
Stock Exchange of Hong Kong Limited';
2.1.28. take or permit the taking of any step to have the relevant
company voluntarily wound up or any petition for winding up to
be issued against the company;
2.1.29. alter its memorandum of association or the Articles;
2.1.30. make any change in the nature of its trade or business;
2.1.31. change its accounting reference date, auditors or any other of
the particulars set out in Schedule 2;
2.1.32. register any transfer of share in its capital;
2.1.33. be a party to any scheme of arrangement pertaining to the winding
up or reconstruction;
2.1.34. consolidate merge or amalgamate with any other person;
2.1.35. acquire or dispose of any shares securities or other interest
in any company or business or incorporate or promote any
company or permit any subsidiary to issue or allot any share or
security or grant or create any option or right to acquire any
share or security;
2.1.36. enter into any joint venture partnership or consortium;
2.1.37. enter into or renew or continue after expiry any contract which
is :-
2.1.37.1. not on bona fide arm's length terms; or
2.1.37.2. not within its ordinary and usual course of the business; or
2.1.37.3. with any director of any Group Company;
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<PAGE>
2.1.38. vary or terminate (other than by effluxion of time) any long term
contract or contract of material importance to the relevant
company;
2.1.39. alter the terms of employment (including salary and benefits)
of any director or higher paid employee;
2.1.40. establish or vary any retirement death disability redundancy
bonus profit sharing incentive or other benefit scheme for any
present or former director officer employee agent or consultant
of the company within the Group or any dependant of any of the
foregoing;
2.1.41. approve any annual budget or any business plan for the relevant
company or implement any material amendment to or material depar-
ture from any of the same;
2.1.42. factor or assign any debts of the relevant company;
2.1.43. give any guarantee indemnity or create any mortgage or other
security over any of the assets or uncalled share capital of the
relevant company;
2.1.44. institute any litigation arbitration or tribunal proceedings
(other than normal debt collection in the ordinary course of
business);
2.1.45. make any loan or advance other than normal trade credit;
2.1.46. delegate any powers of the directors to any committee manager
agent or other third party;
2.1.47. surrender or accept any trading losses or other amounts eligible
for relief from profits tax; and
2.1.48. surrender or accept the benefit of the whole or part of any
surplus provisional profits tax by the relevant company.
GENERAL
125. THE PARTIES AGREE THAT THE COMPANY SHALL PAY ALL COSTS AND EXPENSES
(INCLUDING LEGAL AND REGISTRATION AGENCY FEE) INCURRED BY ALL PARTIES
(INCLUDING THE SUBSCRIBER) TO THIS AGREEMENT IN RELATION TO THE
11
<PAGE>
PREPARATION AND EXECUTION OF THIS AGREEMENT AND ALL DOCUMENTS ANCILLARY
HERETO. THE COST OF SUBSCRIBER'S SOLICITORS SHALL BE PAID BY THE
SUBSCRIBER AND REIMBURSED BY THE COMPANY TO THE SUBSCRIBER AFTER THE
SUCCESSFUL COMPLETION OF THE SHARE SUBSCRIPTION.
126. THE PROVISIONS OF THIS AGREEMENT SHALL BE BINDING UPON AND ENURE TO THE
BENEFIT OF THE PERSONAL REPRESENTATIVES OF EACH OF THE PARTIES BEING AN
INDIVIDUAL.
127. NOTHING IN THIS AGREEMENT SHALL CONSTITUTE OR BE DEEMED TO CONSTITUTE A
PARTNERSHIP AGREEMENT OR ARRANGEMENT BETWEEN THE PARTIES HERETO.
128. IN THE EVENT OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND
THE PROVISIONS OF THE ARTICLES THE PROVISIONS OF THIS AGREEMENT SHALL
PREVAIL.
129. ALL OBLIGATIONS OF THE DIRECTORS, THE SHAREHOLDERS OR THE WARRANTOR UNDER
THIS AGREEMENT SHALL BE SEVERAL.
ENTIRE AGREEMENT
Each party confirms that this Agreement sets out the entire agreement and
understanding between the parties in relation to the transactions contemplated
and that it supersedes all previous agreements arrangements and understandings
between them or any of them with regard to such transactions.
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WAIVERS REMEDIES CUMULATIVE AMENDMENTS ETC.
130. NO FAILURE OR DELAY BY THE SUBSCRIBER IN EXERCISING ANY RIGHT POWER OR
PRIVILEGE UNDER THIS AGREEMENT SHALL OPERATE AS A WAIVER OF IT NOR SHALL
ANY SINGLE OR PARTIAL EXERCISE BY THE SUBSCRIBER OF ANY RIGHT POWER OR
PRIVILEGE PRECLUDE ANY FURTHER EXERCISE OF IT OR THE EXERCISE OF ANY OTHER
RIGHT POWER OR PRIVILEGE.
131. THE RIGHTS AND REMEDIES PROVIDED IN THIS AGREEMENT ARE CUMULATIVE AND NOT
EXCLUSIVE OF ANY RIGHTS AND REMEDIES PROVIDED BY LAW.
132. NO PROVISION OF THIS AGREEMENT MAY BE AMENDED MODIFIED WAIVED DISCHARGED OR
TERMINATED OTHERWISE THAN BY THE EXPRESS WRITTEN AGREEMENT OF THE PARTIES
HERETO NOR MAY ANY BREACH OF ANY PROVISION OF THIS AGREEMENT BE WAIVED OR
DISCHARGED EXCEPT WITH THE EXPRESS WRITTEN CONSENT OF THE SUBSCRIBER.
NOTICES
Any notice to be served on any party by another shall be sent by prepaid
recorded delivery or registered post or by fax and shall be deemed to be have
been received by the addressee within [72] hours of posting or [24] hours if
sent by fax to the correct fax number of the addressee.
LAW
133. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ALL RESPECTS IN
ACCORDANCE WITH THE LAW OF HONG KONG SAR AND THE PARTIES AGREE TO SUBMIT TO
THE NON-EXCLUSIVE JURISDICTION OF THE HONG KONG COURTS AS REGARDS ANY CLAIM
OR MATTER ARISING IN RELATION TO THIS AGREEMENT.
134. HARMONIC HALL INVESTMENT HOLDINGS LIMITED HEREBY IRREVOCABLY APPOINTS
MESSRS. JONES, DAY, REAVIS & POGUE OF 29TH FLOOR, ENTERTAINMENT BUILDING,
30 QUEEN'S ROAD CENTRAL, HONG KONG AS ITS AUTHORISED AGENT FOR THE PURPOSE
OF ACCEPTING SERVICE OF PROCESS FOR ALL PURPOSES IN CONNECTION WITH THIS
AGREEMENT AND ALL DOCUMENTS ANCILLARY HERETO.
135. ASIAN STAR DEVELOPMENT, INC. HEREBY IRREVOCABLY APPOINTS MESSRS. LO AND LO
OF ROOM 3501, 35TH FLOOR, GLOUCESTER TOWER, THE LANDMARK, CENTRAL, HONG
KONG AS ITS AUTHORISED AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF
PROCESS FOR ALL PURPOSES IN CONNECTION WITH THIS AGREEMENT AND ALL
DOCUMENTS ANCILLARY HERETO.
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IN WITNESS whereof the parties hereto have executed this
Agreement the day and year first above written.
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<PAGE>
SCHEDULE 1
PART I
LIST OF DIRECTORS
1. Yiu Siu Hung
2. Ho Kin Man
3. Chan Sik Hong, David
PART II
LIST OF SHAREHOLDERS
1. Yiu Siu Hung of House No.D1, Fortune Garden, No.72 Ting Kok Road, Tai
Po, New Territories, Hong Kong.
2. World Media Group Limited whose registered office is situate at Craig-
muir Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands.
3. Packwood Business Corporation whose registered office is situate at
Salduba Buildings, Top Floor, 53rd East Street, Urbanizacion, Obarrio,
P.O. Box 7284, Panama 5, Panama.
4. Parama Profits Limited whose registered office is situate at Craigmuir
Chambers, P.O. Box 71, Road Town, Tortola, British Virgin Islands.
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SCHEDULE 2
List of Subsidiaries of the Company
-----------------------------------
1. Harmonic Hall Optical Disc Limited (Company No.:325583)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Fan Kai Leung
Shareholders : Harmonic Hall Investment Holdings Limited
Fan Kai Leung
Yiu Siu Hung (held in trust of Harmonic Hall
Investment Holdings Limited
Place of Incorporation : Hong Kong SAR
Principal Activities:
2. Siam Orchid International Limited (BVI) (Company No.199762)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholder : Harmonic Hall Optical Disc Limited
Place of Incorporation : British Virgin Islands
Principal Activities :
3. Harmonic Hall Recordable Media Limited (Company No.643725)
Directors : Yiu Siu Hung
Ho Kin Man
Fan Kai Leung
Shareholders : Harmonic Hall Optical Disc Limited
Yiu Siu Hung (held in trust of Harmonic Hall
Optical Disc Limited)
Place of Incorporation : Hong Kong SAR
Principal Activities :
4. Anwell Industrial Limited (Company No.183020)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Harmonic Hall Optical Disc Limited
Yiu Siu Hung (held in trust of Harmonic Hall
Investment Holdings Limited)
Place of Incorporation : Hong Kong SAR
Principal Activities :
5. Kiat Koon Limited (BVI) (Company No.205628)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Anwell Industrial Limited
Place of Incorporation : British Virgin Islands
Principal Activities :
6. Rich Union International Limited (BVI) (Company No.162892)
Directors : Yiu Siu Hung
Ho Kin Man
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<PAGE>
Shareholders : Harmonic Hall Investment Holdings Limited
Place of Incorporation : British Virgin Islands
Principal Activities :
7. Daiichi Records Limited (Company No.145968)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Rich Union International Limited
Yiu Siu Hung (held in trust of Rich Union
International Limited)
Place of Incorporation : Hong Kong SAR
Principal Activities :
8. City Laser & Video Company Limited (Company No.618714)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Rich Union International Limited
Yiu Siu Hung (held in trust of Rich Union
International Limited)
Place of Incorporation : Hong Kong SAR
Principal Activities :
9. Tap Investment Limited (Company No.181488)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Harmonic Hall Investment Holdings Limited
Yiu Siu Hung (held in trust of Harmonic Hall
Investment Holdings Limited)
Place of Incorporation : Hong Kong SAR
Principal Activities :
10. City Entertainment Services Limited (BVI) (Company No.128627)
Directors : Yiu Siu Hung
Ho Kin Man
Shareholders : Harmonic Hall Investment Holdings Limited
Place of Incorporation : British Virgin Islands
Principal Activities :
11. Harmonic Hall International Limited (BVI) (Company No.150032)
Directors : Yiu Siu Hung
Ho Kin Man
Yiu Siu Keung
Shareholders : Harmonic Hall Investment Holdings Limited
Place of Incorporation : British Virgin Islands
Principal Activities :
12. Harmonic (Holdings) Limited (BVI) (Company No.44074)
Directors : Yiu Siu Hung
Ho Kin Man
Chan Sik Hong, David
Shareholders : Harmonic Hall Investment Holdings Limited
Place of Incorporation : British Virgin Islands
Principal Activities :
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<PAGE>
13. Guangzhou Anwell Moulding Injection Industries Limited
Directors : Yiu Siu Hung
Ho Kin Man
Xu Wei Cong
Liu Xin Yuen
Shareholders : Anwell Industrial Limited
Jiangnan Chemical Electronic & Instrument
Development Company
Place of Incorporation : People's Republic of China
Principal Activities :
14. Guangzhou Rosedale Studio Limited
Directors : Yiu Siu Hung
Yao Rui Rong
Liu Feng Xuan
Xu Wei Cong
Shareholders : Yiu Siu Hung (held in trust of Harmonic Hall
Optical Disc Limited)
Ho Kin Man (held in trust of Harmonic Hall
Optical Disc Limited)
Yao Rui Rong (held in trust of Harmonic Hall
Optical Disc Limited)
Liu Feng Xuen (held in trust of Harmonic
Hall Optical Disc Limited)
Xu Wei Cong (held in trust of Harmonic Hall
Optical Disc Limited)
Place of Incorporation : People's Republic of China
Principal Activities :
18
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 3
PROPERTIES OF THE GROUP COMPANIES
PART I
Properties occupied by the Group Companies
- ------------------------------------------------------------------------------------------------------------------------------
Particulars Owned by Occupied by
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Lorry Car Park No.26, Success Industrial Building, Tap Investment Limited Harmonic Hall Optical Disc Ltd.
7 Kin Fat Street, Tuen Mun, New Territories, Hong Kong.
- ------------------------------------------------------------------------------------------------------------------------------
2. Lorry Car Park No.L17, 3/F and 18/F, Tap Investment Limited Harmonic Hall Optical Disc Ltd.
Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan,
New Territories, Hong Kong.
- ------------------------------------------------------------------------------------------------------------------------------
3. Private Car Park No.P24 & P25, 3/F and 19/F, Tap Investment Limited Harmonic Hall Optical Disc Ltd.
Cable TV Tower, 9 Hoi Shing Road, Tsuen Wan,
New Territories, Hong Kong.
- ------------------------------------------------------------------------------------------------------------------------------
4. North Bridge Road, Shiqiao, Panyu, PRC GZ Anwell Moulding Injection GZ Anwell Moulding Injection
Industrial Limited Industrial Ltd.
[Except for the fourth floor thereof, which has been let
to a jewellery factory prior to the signing of this
Agreement to which this Schedule is attached.
This fourth floor has a size of approximately 20% of
the property in terms of floor area.]
- ------------------------------------------------------------------------------------------------------------------------------
5. Lorry Car Park No.17, Success Industrial Building, Tap Investment Limited Vacant
7 Kin Fat Street, Tuen Mun, New Territories, Hong Kong.
(Vacant)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
PART II
Properties Rented to Third Parties
- ------------------------------------------------------------------------------------------------------------------------------------
Particulars Registered Owner Name of Tenant Term of Tenancy/Monthly Rent
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. 3/F, Success Industrial Building, Anwell Industrial Limited Ng Vai Lon 1/11/1999 to 31/10/2002
7 Kin Fat Street, Tuen Mun,
New Territories, Hong Kong.
- ------------------------------------------------------------------------------------------------------------------------------------
2. Lorry Car Park No.6, Anwell Industrial Limited Ng Vai Lon 1/11/1999 to 31/10/2002
Success Industrial Building,
7 Kin Fat Street, Tuen Mun,
New Territories, Hong, Kong.
- ------------------------------------------------------------------------------------------------------------------------------------
3. Private Car Park No.7, Anwell Industrial Limited 1/1/2000 to 31/12/2001
Success Industrial Building,
7 Kin Fat Street, Tuen Mun,
New Territories, Hong Kong.
- ------------------------------------------------------------------------------------------------------------------------------------
4. 4th Floor, North Bridge Road, GZ Anwell Moulding (jewellery factory) 1/2/2000 to 31/1/2002
Shiqiao, Panyu, PRC (*) Injection Industrial Limited
- ------------------------------------------------------------------------------------------------------------------------------------
(*) Reference shall be made to the representative about this property as contained in Part I of this Schedule.
</TABLE>
20
<PAGE>
SCHEDULE 4
WARRANTIES
Save as disclosed in the Disclosure Letter, the Company and the Warrantor hereby
jointly and severally represents and warrants to the Subscriber, its successors
and assigns that :-
2.1.48.1.1.1.1. Accounts
2.1.48.1.1.1.1.1. The Management Accounts
2.1.48.1.1.1.1.1.1. The Management Accounts were prepared in accordance
with the historical cost convention; and the bases and
policies of accounting adopted for the purpose of
preparing the Principal Accounts are the same as those
adopted in preparing the audited accounts of each Group
Company in respect of the three last preceding accounting
periods.
2.1.48.1.1.1.1.1.2. The Management Accounts :-
(a) give a true and fair view of the assets and
liabilities of each Group Company at the Last Accounts
Date and its profits for the financial period ended
on that date;
(b) comply with the requirements of the Companies Ordi-
nance and other relevant statutes;
(c) comply with all current good accounting and auditing
principles;
(d) are not affected by any extraordinary, exceptional or
non-recurring item;
(e) properly reflect the financial position of each Group
Company as at their date;
(f) fully disclose all the assets of each Group Company as
at their date;
(g) make adequate provision or reserve for all liabilities
and capital commitments of each Group Company out-
standing at the Last Accounts Date, including
contingent, unquantified or disputed liabilities;
(h) make provision or reserve for all taxation liable
to be assessed on each Group Company or for which it
may be accountable in respect of the period ended
on the Last Accounts Date.
2.1.48.1.1.1.2. Corporate matters
2.1.48.1.1.1.2.1. Directors
2.1.48.1.1.1.2.1.1. The only directors of the Group Companies are the persons
whose names are listed in relation to each Group Company in
Schedule 2.
2.1.48.1.1.1.2.2. Subsidiaries, associations and branches
No Group Company :-
2.1.48.1.1.1.2.2.1. is the holder or beneficial owner of or has agreed to
acquire any share or loan capital of any company (whether
incorporated in Hong Kong or elsewhere) other than the
Subsidiaries list in Schedule 2;
2.1.48.1.1.1.2.2.2. has outside Hong Kong any branch, agency or place of
business, or any permanent establishment (as that
expression is defined in the relevant double taxation
relief order current at the date of this Agreement).
2.1.48.1.1.1.2.3. Options over group companies' capital
21
<PAGE>
Except as required by this Agreement, there are no agree-
ments or arrangements in force which provide for the
present or future issue, allotment or transfer or grant to
any person the right (whether conditional or otherwise)
to call for the issue, allotment or transfer of any share
or loan capital of any Group Company (including any
option or right of pre-emption or conversion).
2.1.48.1.1.1.2.4. New issues of capital No share or loan capital has been
issued or allotted, or agreed to be issued or allotted,
by any Group Company since the Last Accounts Date.
2.1.48.1.1.1.2.5. Memoranda and articles of association, statutory books and
resolutions
2.1.48.1.1.1.2.5.1. The copy of the memorandum and articles of association of
each Group Company produced to the Subscriber or its agent
is accurate and complete in all respects and has embodied
therein or annexed thereto a copy of every such resolution
as is required by the law applicable to each Group Company.
2.1.48.1.1.1.2.5.2. The register of members and other statutory books of each
Group Company have been properly kept and contain an
accurate and complete record of the matters with which they
should deal.
2.1.48.1.1.1.2.5.3. No notice or allegation that any of the foregoing is
incorrect or should be rectified has been received.
2.1.48.1.1.1.2.5.4. Since the Last Accounts Date no alteration has been made to
the memorandum or articles of association of any Group
Company and no resolution of any kind of the shareholders
of any Group Company has been passed (other than
resolutions relating to business at annual general
meetings which was not special business) and, pending
Completion, no resolution shall be passed without the
prior written consent of the Subscriber.
2.1.48.1.1.1.2.6. Documents filed
2.1.48.1.1.1.2.6.1. All returns, particulars,resolutions and documents required
by the law or any other legislation to be filed with the
Registrar of Companies or any other relevant regulatory
authorities, in respect of each Group Company have been
duly filed and were correct; and due compliance has been
made with all the provisions of the Companies Ordinance
and other legal requirements in connection with the forma-
tion of each Group Company, the allotment or issue of
shares, debentures and other securities, the payment
of dividends and the conduct of its business.
2.1.48.1.1.1.2.6.2. All charges in favour of any Group Company have (if
appropriate) been registered in accordance with the pro-
visions of the applicable laws.
2.1.48.1.1.1.2.7. Possession of documents
Other than mortgaged properties, all title deeds relating
to the assets of each Group Company, and an executed copy
of all agreements to which any Group
22
<PAGE>
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 Group Company are in its possession.
2.1.48.1.1.1.2.8. Investigations
There are not pending, or in existence, any investigations
or enquiries by, or on behalf of, any governmental or other
body in respect of the affairs of any Group Company.
2.1.48.1.1.1.2.9. Information disclosed to Subscriber correct
2.1.48.1.1.1.2.9.1. All information given by the Company and the Warrantor, the
Warrantor's Solicitors or the Company's Accountants to the
Subscriber, the Subscriber's Solicitors or the Subscriber's
Accountants relating to the business, activities, affairs,
or assets or liabilities of any Group Company was, when
given, accurate and comprehensive in all respects.
2.1.48.1.1.1.2.9.2. There are no material facts or circumstances,in relation to
the assets, business or financial condition of any Group
Company, which have not been fully and fairly disclosed
in writing to the Subscriber or the Subscriber's
Solicitors, and which, if disclosed, might reasonably have
been excepted to affect the decision of the Subscriber to
enter into this Agreement.
2.1.48.1.1.1.3. Taxation
2.1.48.1.1.1.3.1. Administration
2.1.48.1.1.1.3.1.1. All returns, computations and payments which should be or
should have been made by any Group Company for any Taxation
purpose have been made within the requisite periods and are
up-to-date, correct and on a proper basis and none of them
is or is likely to be the subject of any dispute with the
Inland Revenue or other Taxation authorities.
2.1.48.1.1.1.3.1.2. All particulars furnished to the Inland Revenue or other
Taxation authorities, in connection with the application
for any consent or clearance on behalf of any Group Company
or affecting any Group Company, made since the Last
Accounts Date, fully and accurately disclosed all facts
and circumstances material for the decision of those
authorities; any consent or clearance is valid and
effective; and any transaction, for which consent or
clearance has previously been obtained, has been carried
into effect (if at all) only in accordance with the
terms of the relative application and consent or clearance.
2.1.48.1.1.1.3.1.3. No Group Company has, since the Last Accounts Date, taken
any action which has had, or might have, the result
of altering, prejudicing or in any way disturbing any
arrangement or agreement which it has previously negotiated
with the Commissioners of Inland Revenue or other Taxation
authorities.
23
<PAGE>
2.1.48.1.1.1.3.1.4. No Group Company has, since the Last Accounts Date, paid or
become liable to pay any penalty or interest charged
by virtue of the provisions of Inland Revenue Ordinance or
any other Taxation statute.
2.1.48.1.1.1.3.2. Taxation claims, liabilities and reliefs
2.1.48.1.1.1.3.2.1. Full details of all matters relating to Taxation have been
disclosed to the Subscriber in writing prior to the
signing of this Agreement in respect of which any Group
Company (either alone or jointly with any other person)
has, or at Completion will have, an outstanding
entitlement :-
(a) to make any claim (including a supplementary claim)
for relief under Inland Revenue Ordinance or any
other Taxation statute;
(b) to make any appeal (including a further appeal)
against an assessment to Taxation;
(c) to make any application for the postponement of
Taxation;
(d) to disclaim or require the postponement or reduction
of any allowance.
2.1.48.1.1.1.3.2.2. No Group Company is or will become liable to pay, or make
reimbursement or indemnity in respect of, any Taxation
(or any amount corresponding to Taxation) in consequence
of the failure by any other person (not being a Group
Company) to discharge that Taxation or amount within
any specified period or otherwise, where the Taxation
or amount within any specified period or otherwise,
where the Taxation or amount relates to a profit,
income or gain, transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur
(whether wholly or partly) prior to Completion.
2.1.48.1.1.1.3.2.3. No relief (whether by way of deduction, reduction, set-off
exemption, repayment or allowance, or otherwise) from,
against or in respect of any Taxation has been claimed and
/or given to any Group Company which could or might be
effectively withdrawn, postponed, restricted or
otherwise lost as a result of any act, omission, event
or circumstance arising or occurring at any time after
Completion.
2.1.48.1.1.1.3.2.4. Stamp duty and capital duty
(a) Within the five years ending on the date of
this Agreement, no Group Company has made any
claim for relief or exemption under Section
45 of the Stamp Duty Ordinance (Relief from
transfer stamp duty in case of transfer of
property as between associated companies).
(b) Each Group Company has duly paid all stamp
duty and interest, fines and penalties
thereon payable in accordance with the
provisions of Stamp Duty Ordinance (Stamp
duty on documents relating to chargeable
transactions of capital companies) whether
24
<PAGE>
or not the due date for payment has passed, and
all loan capital duty for which it has at any
time been liable.
2.1.48.1.1.1.4. Properties
2.1.48.1.1.1.4.1. Title
2.1.48.1.1.1.4.1.1. The Properties comprise all the properties owned,
occupied or otherwise used in connection with their
businesses by the Group Companies.
2.1.48.1.1.1.4.1.2. Those of the Properties which are occupied or otherwise
used by the Group Companies in connection with their
businesses are so occupied or used by right of ownership or
under lease or licence, and the terms of any such lease or
licence permit such occupation or use.
2.1.48.1.1.1.4.1.3. The Group Companies are the legal and beneficial owners of
the Properties.
2.1.48.1.1.1.4.1.4. The information contained in Schedule 3 as to the
Properties including the principal terms of the tenancies
and licences are true and accurate in all respects.
2.1.48.1.1.1.4.1.5. Each Group Company has good and marketable title to the
Properties respectively owned by each of them.
2.1.48.1.1.1.4.2. Encumbrances
2.1.48.1.1.1.4.2.1. Save as disclosed in writing to the Subscriber prior to the
signing of this Subscription Agreement, the Properties
are free from any mortgage, debenture, charge, lien or
other encumbrance securing the repayment of monies or
other obligation or liability of any of the Group
Companies or any other party.
2.1.48.1.1.1.4.2.2. The Properties are not subject to any outgoings other
than rates and government rent.
2.1.48.1.1.1.4.2.3. Where any such matters as are referred to in Clauses (b)(i)
and 4(b)(ii) have been disclosed in writing to the
Subscriber prior to the signing of this Agreement, the
obligations and liabilities imposed and arising under
them have been fully observed and performed and any
payments in respect of them due and payable have been duly
paid.
2.1.48.1.1.1.4.2.4. The Properties are not subject to any option, right of
pre-emption or right of first refusal.
2.1.48.1.1.1.4.3. Planning matters
2.1.48.1.1.1.4.3.1. The use of each of the Properties is the permitted use
for the purposes of the Government Lease and Occupation
Permit.
2.1.48.1.1.1.4.3.2. Building regulation consents have been obtained with
respect to all development, alterations and improvements
to the Properties.
2.1.48.1.1.1.4.4. Statutory obligations
25
<PAGE>
2.1.48.1.1.1.4.4.1. Compliance has been made with all applicable statutory and
Deed of Mutual Covenant requirements with respect to the
Properties, and in particular (but without limitation)
with the requirements as to fire precautions.
2.1.48.1.1.1.4.4.2. There is no outstanding and unobserved or unperformed
obligation with respect to the Properties necessary to
comply with the requirements (whether formal r informal)
of any competent authority exercising statutory or
delegated powers.
2.1.48.1.1.1.4.5. Adverse orders
2.1.48.1.1.1.4.5.1. There are no compulsory purchase notices, orders or
resolutions affecting any of the Properties nor are there
any circumstances likely to lead to any being made.
2.1.48.1.1.1.4.5.2. There are no changing orders, enforcement notices or
stop notices affecting the Properties nor are there any
circumstances likely to lead to any being made.
2.1.48.1.1.1.4.6. Condition of the Properties
2.1.48.1.1.1.4.6.1. The Properties are in good and substantial repair and
fit for the purposes for which they are presently used.
2.1.48.1.1.1.4.6.2. There are no disputes with any adjoining or neighbouring
owner with respect to boundary walls and fences or with
respect to any easement, right or means of access to the
Properties.
2.1.48.1.1.1.4.7. Insurance
2.1.48.1.1.1.4.7.1. The Properties are insured in their respective full
reinstatement values and against third party and public
liabilities to an adequate extent.
2.1.48.1.1.1.4.7.2. All premiums payable in respect of insurance policies with
respect to the Properties which have become due have been
duly paid and no circumstances have arisen which would
vitiate or permit the insurers to avoid such policies.
2.1.48.1.1.1.4.8. Tenancies
2.1.48.1.1.1.4.8.1. The relevant Group Companies have paid the rent and
observed and performed the covenants on the part of the
tenant and the conditions contained in any leases (which
expressions includes underleases) under which the
Properties are held, and the last demand (or receipts for
rent if issued) were unqualified, and all such leases are
valid and in full force.
2.1.48.1.1.1.4.8.2. All licences, consents and approvals required from the
landlords and any superior landlords under any leases of
the Properties have been obtained and the covenants on the
part of the tenant contained in such licences, consents
and approvals have been duly performed and observed.
2.1.48.1.1.1.4.8.3. There are no rent reviews under the leases of the
Properties held by the Group Companies currently in
progress.
26
<PAGE>
2.1.48.1.1.1.4.8.4. There is not outstanding and unobserved or unperformed any
obligation necessary to comply with any notice or other
requirement given by the landlord under any leases of the
Properties.
2.1.48.1.1.1.4.8.5. There is no obligation to reinstate any of the Properties
by removing or dismantling any alteration made to it by
Group Companies or any predecessor in title to the Group
Companies or any predecessor in title to the Group
Companies.
2.1.48.1.1.1.4.9. The Company are not aware of any material or persistent
breaches of covenant by a tenant of any of the Properties
including the covenants to pay rent.
27
<PAGE>
SIGNED by )
)
for and on behalf of Asian Star (Hong Kong) Limited )
in the presence of :- )
)
)
)
Solicitor, Hong Kong SAR
SIGNED by )
)
for and on behalf of Harmonic Hall Investment )
Holdings Limited in the presence of :- )
)
)
)
)
)
Solicitor, Hong Kong SAR
SIGNED by Yiu Siu Hung )
SIGNED by )
)
for and on behalf of Asian Star Development, Inc. )
in the presence of :- )
)
)
)
Solicitor, Hong Kong SAR
28
<PAGE>
SIGNED by )
)
)
)
for and on behalf of Asian Star )
)
Development, Inc. in the presence of:- )
Solicitor, Hong Kong SAR
29
<PAGE>
DATED the 28th day of March 2000
----------------------------------------------------------------------------
ASIAN STAR (HONG KONG) LIMITED
and
HARMONIC HALL INVESTMENT
HOLDINGS LIMITED
and
YIU SIU HUNG
and
ASIAN STAR DEVELOPMENT, INC.
----------------------------------------------------------------------------
SUBSCRIPTION AGREEMENT
----------------------------------------------------------------------------
30
<PAGE>
EXHIBIT 10
SHARE OWNERSHIP TRANSFER AGREEMENT
Party A: (China) Shilong Town House and Properties Corporation
Party B: (The United States) Asian Star Development Inc.
Party C: (Hong Kong) Honpar (Huangzhou) Properties Ltd
After friendly negotiation, Party A and Party B have reached the agreement below
regarding Party A's acquisition of Party B's shares in Dongguan Dragon Villa
Entertainment Centre Ltd and Dongguan Dragon Villa Ltd by Party A. This
agreement, which shall be jointly executed by Party A and Party B, is as
follows:
136. THE SCOPE OF THE SHARE OWNERSHIP TRANSFER
(1) Party A shall acquire Dongguan Dragon Villa Entertainment Centre Ltd
(referred to as Dragon Villa Entertainment Centre Ltd), which is
jointly operated by Party A and Party B, and the entirety of Party B's
share holding in the Dragon Villa Entertainment Centre project. Party A
shall also acquire Dongguan Dragon Villa Entertainment Centre Ltd,
which is owned by Party B, and all assets, creditor's rights and
interests of the company.
(2) Party A shall acquire Dongguan Dragon Villa Ltd (referred to as Dragon
Villa Ltd), which is jointly operated by Party A and Party B, and all
of Party B's shares in the Dragon Villa project. Party A shall also
acquire the aforementioned Dongguan Dragon Villa Ltd, which is owned by
Party B, and all the assets, creditor's rights and interests of the
project, with the exception that Dragon Villa Water World--a subsidiary
entity of Dragon Villa Ltd--shall not fall within the scope of this
share ownership transfer.
(3) The two aforementioned projects were originally owned by Party C.
Following an agreement between Party A and the Dongguan Foreign Trades
Commission, Party C's share of investment in the joint venture, along
with its rights and obligations therein had been transferred in full to
Party B.
(4) Dragon Villa Water World, a subsidiary entity of Dongguan Dragon Villa
Ltd, operated jointly by Party A and Party B, shall be operated by
Dongguan Dragon Villa Water World Ltd (referred to hereafter as Water
World Ltd), which is a company separately formed by Party A and Party B
pursuant to the terms and conditions in the provisions of the original
joint venture agreement.
137. AMOUNT INVOLVED IN THE TRANSFER
As to Party A's acquisition of Party B's share holding in Dragon Villa
Entertainment Centre Ltd and Dragon Villa Ltd, the transfer fee shall be ONE
HUNDRED AND SIXTY RMB YUAN ((Y)160) EXACTLY in total--EIGHTY RMB YUAN ((Y)80)
EXACTLY each. In addition, Party A shall pay back Party B's entire share of
investment into the aforementioned two company projects, in the amount of EIGHT
MILLION AND FIVE HUNDRED THOUSAND RMB YUAN ((Y)8,500,000.00) EXACTLY. This
payment shall be made by Party A to Party B or Party B's designated recipient.
The combined total amount payable for the two projects shall be EIGHT MILLION
FIVE HUNDRED THOUSAND AND ONE HUNDRED AND SIXTY RMB YUAN EXACTLY
((Y)8,500,160.00). In addition, both Party A and Party B have decided that Party
A shall assume all of Dragon Villa Entertainment Centre Ltd's outstanding debts
due to Dongguan Shilong Town Second Construction Company for unpaid construction
fees, and that Party B shall no longer assume all responsibility for repaying
the aforementioned debts.
138. PARTY A'S RESPONSIBILITIES
(1) Commencing on the day this agreement is signed and activated, Party A
shall make a lum sum payment within 7 days to Party B or Party B's
designated recipient in the amount of 160 RMB YUAN (covering the
transfer fee) and 5.5 million RMB YUAN (which is a portion of the 8.5
million RMB YUAN investment made by Party B). The remaining 3 million
RMB YUAN shall be used to repay the outstanding construction fee(s)
incurred by Party B in the course of its investing in the Water World
project in Shilong Town and due to Shilong Second Construction Company.
This amount shall not be released until Party A and Party B have
provided their consent to and approval of such release.
(2) Party A shall assume all the financial and legal liabilities of
repaying Dongguan Shilong Town Second Construction Company for the
outstanding construction fee(s) owed by Dragon Villa Entertainment
Centre Ltd for the construction of the Dragon Villa Entertainment
Centre project. Party A shall arrange with Party B for the transfer of
such liabilities on the signing date of this agreement.
(3) Party A shall be responsible for liaising, on behalf of Party B, with
the administrative authorities of Shilong, Dongguan, including such
agencies as the Industry and Commerce Commission, Taxation Commission
and Foreign Trades Commission. Party A shall assist in the handling of
bureaucratic procedures to register the changes associated with the
withdrawal of Party B from Dragon Villa Entertainment Centre Ltd and
Dragon Villa Ltd.
31
<PAGE>
(4) Within 15 days following the day on which this agreement becomes
effective, Party A shall apply to the appropriate authorities for
company registration and handle the procedures with respect to such
registration of Dragon Villa Water World Ltd, which is operated jointly
by Party A and Party B.
139. PARTY B'S RESPONSIBILITIES
(1) Within 15 days as of the day on which this agreement becomes effective,
Party B shall organize and hand over to Party A the basic records and
documents of Dragon Villa Entertainment Centre Ltd and Dragon Villa
Ltd, including such documents as working papers, certificate(s) of
acquisition, business license(s), contracts with foreign parties,
financial records and so on. Party B shall also hand over to Party A
the company seal and financial specimen seal of Dragon Villa
Entertainment Centre Ltd. On the day Dragon Villa Water World Ltd is
formed, Party B shall hand over the company seal and financial specimen
seal of Dragon Villa Ltd to Party A.
(2) Within 5 days following the day on which Dragon Villa Ltd is formed,
all personnel appointed by Party B to hold positions at Dragon Villa
Entertainment Centre Ltd and Dragon Villa Ltd shall submit their
letters of resignation, declaring that they shall no longer hold any
positions at Dragon Villa Entertainment Centre Ltd and Dragon Villa Ltd
without the permission of Party A, or interfere with the operation of
the two companies, or make any claims for compensation against the two
companies.
(3) Once the procedures stipulated in provisions (1) and (2) above have
been completed, Party B may no longer interfere with the operation of
Dragon Villa Entertainment Centre Ltd and Dragon Villa Ltd and Party B
shall no longer have ownership of any interests in the two companies.
(4) Within 15 days following the day on which this agreement becomes
effective, Party B shall apply to the appropriate authorities for
company information update and handle the procedures with respect to
such company information update for Dragon Villa Entertainment Centre
Ltd and Dragon Villa Ltd.
140. OTHER MATTERS
Dragon Villa Entertainment Centre Ltd and Dragon Villa Ltd have been formed and
in operation for many years. Party A is only responsible for the external debts
stipulated in this agreement. All other debts shall be borne by Party B itself.
The external creditor's rights and the external debts of Dragon Villa Water
World--a subsidiary entity of Dragon Villa Ltd's--shall be handled according to
the original joint venture contract.
141. EFFECTIVE DATE AND SUPPLEMENTARY ARTICLES
(1) This agreement becomes effective on the day it is signed and stamped by
the respective legally designated representatives of Party A and Party
B in the presence of a witness. This agreement is made in ten duplicate
copies, each of which possesses the same legal force. Party A and Party
B shall each retain two copies. The witness shall retain one copy. The
other five copies shall be submitted to the municipal authorities of
Shilong, Dongguan for their record and for company information update.
(2) Any matters not dealt with in this agreement shall be resolved by Party
A and Party B through friendly negotiation in a practical and realistic
manner. Supplementary agreement(s) shall be made. Both supplementary
agreement(s) and this agreement shall have the same legal force.
<TABLE>
<CAPTION>
<S> <C>
- ----------------------------------------------------------------------------------------------------------
Party A: Party B:
Legally Designated Representative: Legally Designated Representative:
[Signed] LAI Ming Ying [Signed] Lawrence C W Mak
[with stamp] [with stamp]
(China) Dongguan Shilong Town House and (The United States) Asian Star Development Inc.
Properties Corporation
- ----------------------------------------------------------------------------------------------------------
Witness: Party C:
[Signed] CHOW Lin Yau Legally Designated Representative:
[with stamp] [Signed] Lawrence C W Mak
People's Government, Shilong [with stamp]
(Hong Kong) Honpar (Huangzhou) Properties Ltd
March 17, 2000
Shilong, Dongguan, China
- ----------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
SIGNATURES
==========
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED HEREUNTO DULY AUTHORIZED.
ASIAN STAR DEVELOPMENT, INC.
DATED: APRIL 7, 2000 BY: /S/STEPHEN CHOW
-----------------------
Stephen Chow, President
