Exhibit 10.1
SHARE SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 18th day of October 2005
BETWEEN:
(1) Tamworth Industrial Limited, a company incorporated in the
British Virgin Islands whose registered office is situate at
Room 308, 3/F., Honwell Commercial Centre, 119 Connaught Road
Central, Hong Kong. (the "Vendor") of the one part; and
(2) Euro Tech (Far East) Limited, a company incorporated in Hong
Kong whose registered office is situate at 18/F Gee Chang Hong
Centre, 65 Wong Chuk Hang Road, Hong Kong (the "Purchaser") of
the other part.
WHEREAS:
(A) Pact Asia Pacific Limited (the "Company") is a international
business company incorporated in the British Virgin Islands with
an authorised share capital of US$50,000 divided into 50,000
shares of US$1.00 each (the "Shares") of which 10,000 Shares have
been issued and are fully paid;
(B) The Vendor is the legal and beneficial owner of the 7,000 Shares
with full right to sell the same free from all charges, liens,
and encumbrances of any kind; and
(C) The Vendor has agreed to sell 2,100 Shares ("Sale Shares") and
the Purchaser has agreed to purchase the Sale Shares on the terms
hereinafter appearing.
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 In this Agreement unless the context otherwise requires the
following words and expressions shall have the following
meanings:
the "Accounting Date" means 31 July 2005;
--------------------
the "Audited Accounts" means the audited accounts of the
--------------------- Company prepared by the Company's
Accountants for the period ending 31
July 2005 comprising a balance sheet
and a profit and loss account,
together with the notes thereon;
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the "Management Accounts" means the unaudited profit and loss
------------------------ account of the Company in respect of
the period starting on 1 August 2005
and ending on 30 September 2005 and
the unaudited balance sheet of the
Company as at 1 August 2005;
this "Agreement" means this share sale and purchase
--------------- agreement and includes all schedules
hereto;
"Business Day" means any day on which banks in Hong
------------- Kong and the People's Republic of
China are open for business;
the "Company's Accountants" means BDO McCabe Lo & Company;
--------------------------
"Completion" means completion of the sale and
----------- purchase hereby agreed to be made;
"Completion Date" means the date upon which Completion
---------------- shall take place which shall be on the
same date as the closing date of the
Equity Transfer Agreement as
determined under section 6.1 therein
or such other date as the Parties may
agree in writing;
the "Consideration" means the consideration referred to
------------------- in Clause 3;
the "Equity Transfer
Agreement" means the equity interest transfer
-------------------- agreement of even date between
the Vendor and the Purchaser pursuant
to which the Purchaser shall purchase
21% of the equity interest held by the
Vendor in Yixing PACT Environmental
Technology Co., Ltd. on the terms and
conditions set out therein;
the "Parties" means the parties to this Agreement;
-------------
1.2 In this Agreement unless the context otherwise requires:
1.2.1 references to statutory provisions shall be construed as
references to those provisions as amended or re-enacted or
as their application is modified by other provisions from
time to time and shall include references to any provisions
of which they are re-enactments (whether with or without
modification);
1.2.2 references to clauses and schedules are references to
clauses hereof and schedules hereto; references to sub-
clauses or paragraphs are, unless otherwise stated,
references to sub-clauses of the clause or paragraphs of
the schedule in which the reference appears;
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1.2.3 references to the singular shall include the plural and
vice versa and references to the masculine shall include
the feminine and/or neuter and vice versa; and
1.2.4 references to persons shall include companies,
partnerships, associations and bodies of persons, whether
incorporated or unincorporated.
2. Sale And Purchase
2.1 Subject to the terms of this Agreement the Vendor as legal and
beneficial owner shall sell and the Purchaser shall purchase the
Sale Shares free from all liens, charges and encumbrances
together with all rights now or hereafter attaching thereto.
2.2 The Purchaser shall not be obliged to complete the purchase of
any of the Sale Shares unless the purchase of the 21% of the
equity interest in Yixing Pact Environmental Technology Co. Ltd.
is effected and completed at the same time in accordance with the
terms of the Equity Transfer Agreement.
3. Consideration
The total consideration for the Sale Shares shall be US$ 525,077.
4. Completion Arrangements
4.1 Completion shall take place on the Completion Date at the offices
of the Company (or at such other time and place as the Parties
may agree in writing) when:
4.1.1 the Vendor shall deliver to the Purchaser or procure the
delivery to the Purchaser of:
(a) duly executed transfers for all of the Sale Shares in
favour of the Purchaser and/or its nominees together
with the relevant share certificates;
(b) board resolutions of the Company authorising the
transfer of the Sale Shares; and
(c) updated share register of the Company reflecting the
shareholding of the Company post acquisition of the
Sale Shares,
4.1.2 the Vendor shall procure that there shall be held a meeting
of the board of directors of the Company at which there
shall be duly passed resolutions:
(a) approving the share transfers referred to in Sub-
clause 4.1.1(a); and
(b) appointing nominees of the Purchaser as additional
directors of the Company (or shall convene a meeting
of the members of the Company for such purpose); and
4.1.3 the Purchaser shall deliver a bankers draft for the
Consideration.
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5. Warranties
5.1 The Vendor hereby represents, warrants and undertakes with the
Purchaser that the statements set out in Schedule 1 (the
"Warranties") are at the date hereof, and shall be at Completion,
true and accurate.
5.2 Each of the Warranties shall constitute a separate and
independent Warranty and save as provided in Clause 10.4 shall
not be limited by reference to any other paragraphs or sub-
paragraphs or anything in this Agreement.
5.3 The Vendor acknowledges:
5.3.1 that it has given the Warranties to the Purchaser with the
intention of inducing the Purchaser to enter into this
Agreement; and
5.3.2 that the Purchaser was induced to enter into this Agreement
by the Warranties given by the Vendor and has entered into
this Agreement on the basis of, and in full reliance upon,
them.
6. Further Assurances
The Vendor hereby agrees at the request and at the cost of the
Purchaser to do, execute and perform such further acts, deeds,
documents and things as the Company or the Purchaser may
reasonably require effectively to vest the beneficial ownership
of the Sale Shares in the Purchaser or its nominees and the
property, business and goodwill of the Company in the Purchaser's
control free from all charges, liens, costs, expenses and
encumbrances.
7. Conditions To The Obligations Of The Purchaser
7.1 Notwithstanding anything herein contained, the obligation of the
Purchaser to complete the transactions provided for herein will
be subject to the fulfilment of the following conditions at or
prior to Completion:
7.1.1 the Warranties shall be true and accurate on the date
hereof and at Completion with the same force and effect as
though such Warranties had been made as of Completion
(regardless of the date as of which such information is
given), and the Vendor shall have complied with all
covenants and agreements herein agreed to be performed or
caused to be performed by the Vendor at or prior to
Completion;
7.1.2 no order, decision or ruling of any court, tribunal or
regulatory authority having jurisdiction shall have been
made, and no action or proceeding shall be pending or
threatened which is likely to result in an order, decision
or ruling,
(a) to disallow, enjoin, prohibit or impose any
limitations or conditions on the sale and purchase of
the Sale Shares contemplated hereby or the right of
the Purchaser to own the Sale Shares; or
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(b) to impose any limitations or conditions which may have
a material adverse affect on the business of the
Company; and
7.1.3 all consents required to be obtained in order to carry out
the transactions contemplated hereby in compliance with all
laws and agreements binding upon the Parties shall have
been obtained.
8. Conditions Subsequent
8.1 After the Completion Date, the parties agree to procure that:
8.1.1 the Company complies with the US Sarbane-Oxley Act
requirements on internal control and such compliance costs
shall be borne by the Company;
8.1.2 the Company appoints an accountant for both the Company and
Yixing Pact Environmental Technology Co. Ltd. recommended
by the Purchaser;
8.1.3 the Company prepares monthly financial accounts in
compliance with US GAAP requirements; and
8.1.4 the Company appoints auditors nominated by the Purchaser.
9. First Right of Refusal
9.1 Both the Purchaser and the Vendor agree to grant to the other a
first right of refusal should either of them elect to sell some
or all of their Shares to a third party at the same price and
with the same conditions as that offered by the third party.
10. Put Option
10.1 The Purchaser hereby grants the Vendor a put option exercisable
by the Vendor any time after three (3) years from Completion
Date, to require the Purchaser to acquire part or all the
remaining Shares ("Remaining Shares") from the Vendor. The
acquisition price for each Remaining Share is based on the
following formula:
5.2 times the Average Net Profit of the latest 3 years of the Company
---------------------------------------------------------------------
Total Number of Shares Outstanding
11. Notices
Any notice required to be given hereunder shall be in writing in
the English language and shall be served by sending the same by
prepaid recorded post, facsimile or by delivering the same by
hand to the address of the Party or Parties in question as set
out below (or such other address as such Party or Parties shall
notify the other Parties of in accordance with this clause). Any
notice sent by post as provided in this clause shall be deemed to
have been served five Business Days after dispatch and any notice
sent by facsimile as provided in this clause shall be deemed to
have been served at the time of dispatch and in proving the
service of the same it will be sufficient to prove in the case of
a letter that such letter was properly stamped, addressed and
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placed in the post; and in the case of a facsimile that such
facsimile was duly dispatched to a current facsimile number of
the addressee.
Name: Tamworth Industrial Limited
Address: Room 308, 3/F
Honwell Commercial Centre
119 Connaught Road Central
Hong Kong
Fax: 2815 1383
Name: Euro Tech (Far East) Limited
Address: 18/F Gee Chang Hong Centre
65 Wong Chuk Hang Road
Hong Kong
Fax: 2873 4887
Costs
Each Party shall bear its own costs in connection with the
negotiation, preparation and implementation of this Agreement and
all matters ancillary thereto save that all stamp duty payable on
this Agreement and any documents executed in connection herewith
shall be borne as to 50% by the Vendor and as to 50% by the
Purchaser.
12. Miscellaneous
12.1 No Party shall issue any press release, publish any circular or
issue or release any other public statement or disclose to any
person any information, in each case relating to or connected
with or arising out of this Agreement or the matters contained
herein, without the prior written approval of the other Party or
Parties to its contents and the manner of its presentation and
publication (such approval not to be unreasonably withheld or
delayed).
12.2 Notwithstanding anything in Clause 10.1, the Vendor will at the
request of the Purchaser join with the Purchaser in sending out a
notice in such form as the Purchaser may reasonably request to
all or any of the suppliers, clients and customers of the Company
and such other persons as the Purchaser may require informing
them of the transfer of ownership of the Company.
12.3 Notwithstanding Completion the provisions of this Agreement and
the representations, warranties, undertakings and indemnities
contained or referred to herein shall (except insofar as they are
fully satisfied on Completion) continue thereafter to subsist for
so long as may be necessary for the purpose of giving effect to
each and every one of those clauses in accordance with the terms
hereof.
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12.4 If any of the clauses, conditions, covenants or restrictions of
this Agreement or any deed or document emanating from it shall be
found to be void but would be valid if some part thereof were
deleted or modified, then such clause, condition, covenant or
restriction shall apply with such deletion or modification as may
be necessary to make it valid and effective.
12.5 This Agreement shall be binding and inure for the benefit of the
successors of the Parties but shall not be assignable.
12.6 This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the Parties relating to
its subject matter and no variations hereof shall be effective
unless made in writing and signed by each of the Parties.
12.7 Unless expressly provided to the contrary, all representations,
warranties, undertakings, covenants, agreements and obligations
made, given or entered into in this Agreement by more than one
person are made, given or entered into jointly and severally.
12.8 The headings in this Agreement are inserted for convenience only
and shall not affect the construction of this Agreement.
12.9 This Agreement may be executed in counterparts each of which when
executed and delivered shall constitute an original but all such
counterparts together shall constitute one and the same
instrument.
13. Governing Law
The terms and conditions of this Agreement and the rights of the
parties hereunder shall be governed by and construed in all
respects in accordance with the laws of the British Virgin
Islands. The parties to this Agreement hereby irrevocably agree
that the courts of the British Virgin Islands shall have exclusive
jurisdiction in respect of any dispute, suit, action, arbitration
or proceedings ("Proceedings") which may arise out of or in
connection with this Agreement and waive any objection to
Proceedings in the courts of the British Virgin Islands on the
grounds of venue or on the basis that the Proceedings have been
brought in an inconvenient forum.
IN WITNESS WHEREOF, the undersigned, intending to be bound hereby, have
duly executed this Agreement as of the date first written above.
SIGNED on behalf of )
THE VENDOR ) /s/George Hayek
in the presence of: ) ------------------------------------
Name:
Title:
Witness: [Illegible]
--------------------------
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SIGNED on behalf of )
THE PURCHASER ) ------------------------------------
in the presence of: ) Name:
Title:
Witness:
--------------------------
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SCHEDULE 1
Vendor's Covenants and Warranties
1. Recitals
The statements contained in the recitals (A) - (B) of this
Agreement are true, and the Company has been duly incorporated,
is validly existing and in good standing under the laws of
British Virgin Islands.
2. Authorisation
2.1 The execution, delivery and performance by the Vendor of this
Agreement and the completion of the transactions contemplated
hereby will not constitute or result in a violation or breach of
or default under:
2.1.1 any term or provision of the Memorandum of Association,
Articles of Association or other constitutional documents
of the Vendor;
2.1.2 the terms of any agreement or other obligation or
restriction to which the Vendor is a party or by which the
Vendor is bound; or
2.1.3 any term or provision of any licenses or any order of any
court, governmental authority or regulatory body or any law
or regulation of any jurisdiction in which the Vendor
carries on business.
3. Sale Shares
None of the Sale Shares is subject to any charge, lien,
encumbrance or option.
4. Audited Accounts and Management Accounts
4.1 The Audited Accounts have been prepared and audited on a proper
and consistent basis in accordance with the law and applicable
standards, principles and practices generally accepted in United
States of America and present a true and fair view of the
financial position of the Company as at the Accounting Date and,
in particular, make full provision where required under generally
accepted accounting principles for all liabilities whether
actual, contingent or disputed and all capital commitments,
whether actual or contingent, of the Company.
4.2 The Management Accounts have been prepared on a basis consistent
with the Audited Accounts and fairly represent the asset and
liabilities, profits and losses of the Company as at 30 September
2005.
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5. Position Since Accounting Date
5.1 There has been no material adverse change in the financial
position or prospects of the Company since the Accounting Date.
5.2 All payments, receipts and invoices of the Company since the
Accounting Date have been recorded in the books of the Company.
6. Borrowing
The Company has no borrowing of any description.
7. Attorneys
There is not in existence any Power of Attorney given by the
Company which remains in force.
8. Unusual Contracts
8.1 Since the Accounting Date except in the ordinary course of
business of the Company:
8.1.1 No guarantees, contracts, undertakings, mortgages, charges
or debentures have been made, given or incurred by or on
behalf of the Company;
8.1.2 No capital assets have been disposed of;
8.1.3 The Company has not committed to make any capital
expenditures, nor have any capital expenditures been
authorised by the Company;
8.1.4 The Company has contracted or agreed to no extraordinary or
long-term contracts, payments or liabilities;
8.1.5 None of the Company's suppliers or customers has advised
the Company formally or informally that it will or may
terminate any material contract or arrangement or course of
dealing for the sale to or purchase from the Company of all
or any of the goods or services the subject of any such
contract, arrangement or course of dealing;
8.1.6 There has been no material adverse change in the turnover
or the trading, commercial, competitive or financial
position of the Company; and
8.1.7 No resolution has been passed at any general meeting of the
Company by way of special business.
8.2 The Company is not party to any guarantee of long-term or
abnormal content, undertaking or obligation, except as are usual
in the ordinary course of business.
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8.3 The Company is not party to any contract for the purchase of
stocks, materials, equipment or services at prices in excess of
market values or for the sale of stocks, materials, equipment or
services at prices lower than current market values.
8.4 The Company is not party to any contract or arrangement nor is
aware of any act, omission or other thing which does or might
place the Company in breach of any provision of law.
8.5 All the expenditure of the Company has been properly, wholly and
exclusively incurred in the ordinary course of its business and
all income and opportunity for income arising in such business
has been duly paid to or credited to the Company.
8.6 Since the Accounting Date the Company has not paid, agreed or
declared any dividend, management charge or other distribution
whatsoever.
9. Officers
9.1 There are no amounts owed by or to the Company to or from its
past or present Officers or shareholders.
9.2 No spouse of any Officer of the Company is employed by the
Company and no Officer's spouse has any claim against the Company
whatsoever.
10. Creditors
10.1 The Company has paid all its debts in the ordinary course of
business and no unsatisfied judgment is outstanding against it.
10.2 No receiver or administrator has been appointed of the whole or
any part of the Company's assets or undertaking.
10.3 No Petition has been presented, no Order has been made and no
resolution has been passed for the winding-up of the Company.
10.4 The Company has no liability whatsoever for pensions or pension
contributions.
10.5 The Company is not insolvent or unable to pay its debts.
10.6 The Company has granted no charges or other similar interests
over any of its assets.
11. Litigation
11.1 The Company is not engaged in any litigation or arbitration
proceedings whether civil or criminal or otherwise under the law
of any jurisdiction and whether as plaintiff, prosecutor,
appellant, respondent, third party or defendant, and no such
proceedings are pending or so far as the Vendor is aware
threatened and the Vendor does not know of anything likely to
give rise to such proceedings. There is not outstanding against
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the Company any judgment or order of any Court and the Company
has not given to any Court or other authority any undertaking or
promise which is now binding upon it.
11.2 The Company has not committed and is not liable for any criminal
or illegal act or material breach of any obligation, whether
imposed by or pursuant to statute, contract or otherwise.
12. Employees
12.1 The Company has no employees other than the directors and
officers of the Company (in their capacity as such).
12.2 All obligations required to be satisfied by the Vendor or the
Company with respect to any salary or benefits payable to former
employees of the Company or with respect to any benefit plans
which may have been from time to time in existence in favour of
the employees of the Company have been satisfied and neither the
Vendor nor the Company is in default or violation with respect to
the payment of any salary or benefits or with respect to any such
benefit plans for former employees, nor are there any outstanding
actions or claims against the Vendor or the Company in respect
thereof.
12.3 The Company has no employees but has been paying part of the
salaries of Tim Barry and Xia Xiaohong, both of whom are
employees of Yixing PACT Environmental Technology Co., Ltd., in
the respective sums of US$500 per month and US$1,581 per month.
13. Insurance
All of the Company's current insurance policies have been
disclosed to the Purchaser and so far as the Vendor is aware
there is no fact or matter which could lead to such insurance
policies being vitiated, repudiated or the premiums being
substantially increased and there are no claims outstanding
pending or in so far as the Vendor is aware threatened or capable
of arising against the Company by any third party.
14. Status And Licenses
14.1 The Company is a company duly incorporated and validly existing
under the laws of British Virgin Islands and has all necessary
corporate power to own its properties and to carry on its
business as it is now being conducted.
14.2 The Company is not a member of any partnership or other
unincorporated association nor party to any joint venture or
profit sharing arrangement.
14.3 The Company is duly licensed, registered and qualified to do
business, is up-to-date in the filing of all required corporate
returns and other notices and filings, has paid all governmental
fees, taxes and stamp duty due from it and is otherwise in good
standing in all respects, in each jurisdiction in which it owns
or leases property or otherwise carries on business.
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15. Contractual And Regulatory Approvals
The Vendor is under no obligation, contractual or otherwise, to
request or obtain the consent of any person, and no permits,
licenses, certifications, authorisations or approvals of, or
notifications to, any government or governmental agency, board,
commission or authority are required to be obtained by the Vendor
in connection with the execution, delivery or performance by the
Vendor of this Agreement or the completion of any of the
transactions contemplated herein.
16. Name
The Company does not on its documents or vehicles or otherwise
carry on business under any name other than its corporate name.
17. Investigations
The Company is not in so far as the Vendor is aware the subject
of any investigation or enquiry by any government department or
agency or under any statutory provision nor is the Vendor aware
of any matter that might give cause to such investigation or
enquiry.
18. Books
18.1 The Company has now in its possession or has under its control
all its books, records and papers (all of which have been
properly maintained and are properly and accurately written up-
to-date) and all its deeds and documents of title to its property
of whatever nature.
18.2 Nothing will be required to be done pursuant to this Agreement
that will render the Company in breach of any mortgage, lease,
loan or contract.
19. Beneficial Ownership
19.1 The Vendor has full right, legal capacity and authority to enter
into this Agreement and to sell the Sale Shares as beneficial
owner free from all encumbrances.
19.2 No person has any agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming
an agreement or option for the purchase from the Vendor of any of
the Sale Shares, or entitling any person other than the Vendor to
share in the proceeds from the sale of the Sale Shares, and no
person has any agreement or option or any right or privilege
(whether by law, pre-emptive or contractual) capable of becoming
an agreement or option, including convertible securities,
warrants or convertible obligations of any nature, for the
purchase, subscription, allotment or issuance of any unissued
shares in the capital of the Company or of any other unissued
securities of the Company.
19.3 The Company is the owner of, and has good and marketable title to
all of its properties and assets free from all charges, liens and
encumbrances of any kind.
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20. Debts
Save as disclosed in the Accounts, no debts are outstanding from
or to the Company otherwise than in the ordinary course of
business.
21. Claims
The Company has submitted all claims and disclaimers which have
been assumed to have been made for the purpose of the Accounts.
22. Payments Of Tax
The Company has duly and punctually paid all Governmental fees
and taxation which it has become liable to pay and has duly
allowed for all taxation reasonably foreseeable and is under no
liability to pay any penalty or interest in connection with any
claim for governmental fees or taxation and the Company has made
any and all proper declarations and returns for taxation purposes
and all information contained in such declarations and returns is
true and complete and full provision or reserves have been made
in the Accounts for all Governmental fees and taxation.
23. Capital, Etc
There have been no bonus issues or repayments (including
purchases of own shares) or re-organisations of the capital of
the Company, and the Company has not issued or agreed to issue
any securities other than the Shares.
24. Stamp Duty And Other Duty Or Tax
24.1 All documents which are liable to duty or tax and under which the
Company has any right have been properly stamped, declared and/or
produced for taxation.
24.2 The Company has paid all duty or tax in respect of which it is
liable.
25. Secondary Liability
No transaction or event has occurred in consequence of which the
Company is or has been or may be held liable for any taxation for
which some other person is primarily liable.
26. Business
The Company has not done or omitted to do anything which is or
was (or with the passage of time or giving of notice, or both,
would be) unlawful or in contravention or breach of its
memorandum of association or articles of association or of any
statute, regulation, order, judgment, writ or injunction and it
has full corporate power and lawful authority to carry on the
business which it is now carrying on.
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27. Disclosure
The Vendor has disclosed to the Purchaser all information
relevant to enable the Purchaser to properly evaluate the Company
and all such information is true and complete and not misleading.
PROVIDED THAT in this Schedule:-
(a) where the context so admits the warranties hereby given
shall be deemed to include and cover every country in the
world in which the Company has owned or leased property or
otherwise carried on its business;
(b) the Vendor shall be deemed to have knowledge of all matters
in the actual knowledge of the Company or its Officers;
(c) the titles to the Warranties are inserted for convenience
only and form no part of the Warranty referred to.
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