EXHIBIT 10.19
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DATED THIS 8th DAY OF SEPTEMBER, 2006
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BETWEEN
YONG CHOY LIN @ YONG CHAI LIN
AND
ENGlobal Engineering, Inc
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OPTION TO PURCHASE SHARE AGREEMENT
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This Option To Purchase Share Agreement
is made on between the following parties:
1. Yong Choy Lin @ Yong Chai Lin
NRIC No. 460330-04-5154
of 10, Jalan USJ 14/1J, 47630 Subang Jaya, Selangor Darul Ehsan.
(Vendor)
2. Englobal Engineering Inc.
(Company No: 0106962700)
Texas, USA chartered
(Purchaser)
Recitals:
A. SchmArt Technologies Sdn Bhd (Company No.655264-W) (Company) is a
company incorporated in Malaysia under the Companies Act 1965, the
corporate particulars of which are set out in Schedule 1.
B. The Vendor is the registered and beneficial owner of 210,000 ordinary
shares of RM 1.00 each in the Company, representing 100% of the entire
issued and paid-up share capital of the Company (Sale Shares). Among
the 210,000 ordinary shares, 63,000 of the ordinary shares are
registered in the name of the Vendor, 126,000 of the ordinary shares
were registered in the name of the shareholder named Mohamed Ghazali
Bin Ismail (NRIC No.490302-11-5041) who holds the said 126,000 of the
ordinary shares on trust for the Vendor and 21,000 of the ordinary
shares were registered in the name of the shareholder named Edwin Pang
Loo Chee (NRIC No.660224-04-5173) who holds the said 21,000 of the
ordinary shares on trust for the Vendor (both, Other Shareholders).
C. The Vendor has agreed to grant/sell and the Purchaser has agreed to
purchase the option, to purchase the Sale Shares (Option To Purchase)
on the terms and subject to the conditions set out in this option to
purchase share agreement.
1 GRANT/SALE AND PURCHASE OF OPTION
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1.1 Grant/sale
The Vendor grants/sells to Purchaser and the Purchaser agrees to
purchase the Option to Purchase from the Vendor on the terms and
subject to the conditions set out in this option to purchase share
agreement.
1.2 Basis of sale
The Option to Purchase is granted/ sold -
(a) On the basis that the Purchaser can exercise this Option to
Purchase, for all or any lesser portion of the Sale Shares as
Purchaser shall determine in its sole discretion, at any time up
to ninety (90) days immediately after the 3rd year from the date
of this option to purchase share agreement, or such extended
period as may be agreed between the parties (Option Period) for
the payment to the Vendor of additional price of USD$1.00 (Share
Consideration) and the Purchaser shall, subject to the Purchaser
obtaining the approval from and conditions to be imposed by the
Malaysia Foreign Investment Committee for such acquisition of the
Vendor's shares, become the registered and/or beneficial owner of
the Sale Shares;
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(b) In the event that the Purchaser exercises this Option to Purchase
after paying the additional price of $1.00, both Vendor and
Purchaser further agree to execute Share Sales Agreement to
effect and complete the sales of the said Sale Shares.
(c) On the basis that the Purchaser and Company will enter into a
Management Agreement on an even date herewith;
(d) On the basis that the Vendor is to procure that the Company and
SchmArt Engineering, Inc. will enter into a licensing agreement
for use of the relief ++ system and software for all work in
Malaysia;
(e) On the basis that the Vendor will be retained as a paid Director
of the Company for a minimum of three (3) years from the date of
this option to purchase share agreement regardless of whether the
Purchaser exercises the Option to Purchase or not; and
(f) On the basis of the Warranties given by the Vendor as referred to
in clause 4.1.
1.3 Waiver of pre-emption rights
(a) The Vendor [and each of the Other Shareholders] waives all rights
of pre-emption, rights of first refusal or options over any of
the Sale Shares conferred by the Articles of Association of the
Company or in any other way.
(b) The Vendor must procure and undertakes and warrants to the
Purchaser that the Other Shareholders waive all rights of
pre-emption, rights of first refusal or options over any of the
Sale Shares conferred by the Articles of Association of the
Company or in any other way.
2 CONSIDERATION AND ADVANCE
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2.1 Amount
The consideration for the Option to Purchase is USD$150,000.00 (Option
Consideration).
2.2 Satisfaction
The Option Consideration will be paid in the following manner:
(a) A sum of USD$50,000.00 non-refundable deposit has been paid by
the Purchaser to the Vendor upon the execution of this option to
purchase share agreement.
(b) The balance of the Option Consideration will be paid by the
Purchaser in the following manner :
(1) USD$25,000.00 will be paid to the Vendor on 15th day of
September 2006;
(2) USD$25,000.00 will be paid to the Vendor on 15th day of
October 2006;
(3) USD$25,000.00 will be paid to the Vendor on 15th day of
November 2006; and
(4) USD$25,000.00 will be paid to the Vendor on 15th day of
December 2006.
2.3 The Option Consideration is non-refundable in the event that the
Purchaser decides not to exercise the Option to Purchase.
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3 OPTION EXERCISE AND COMPLETION
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3.1 Time for Exercise
The Option to Purchase may be exercised at any time during the Option
Period.
3.2 Effect of Exercise and Completion
Except to the extent already performed, all the provisions of this
option to purchase share agreement will, so far as they are capable of
being performed or observed, continue in full force and effect
notwithstanding completion of the purchase and transfer of the Sale
Shares (Completion).
4 WARRANTIES
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4.1 Warranties
The Vendor warrants to the Purchaser that during the Option Period -
(a) the warranties given by the Vendor as set out in Schedule 2
(Warranties) are as at the date of this option to purchase share
agreement and will immediately before Completion in respect of
the facts then existing be, true and accurate in all respects;
(b) the contents of any disclosure in writing, and of all
accompanying documents, are true and accurate in all respects and
fully, clearly and accurately disclose every matter to which they
relate;
(c) the Vendor will not permit the Company to introduce any new
management for which negotiations for hire were not previously
underway, or to adjust or introduce new operating or accounting
methods without the written approval of Purchaser;
(d) the Vendor will not permit the Company to sell, transfer, lease,
or encumber any material asset (if any);
(e) the Vendor will not permit the Company to make any expenditures
outside the ordinary course of business, to declare or pay any
dividends, to redeem any stock, to prepay any debt, to enter into
non-standard agreements with its officers, directors or
shareholders, to increase unreasonably the compensation to be
paid to employees, to substantially modify any existing personnel
or employee benefit policy or program or to create or modify any
bonus plan, except as previously planned, or as approved in
advance and in writing by the Purchaser;
(f) the Vendor will cause the Company to perform all its material
obligations under the debt and lease instruments and other
arrangements relating to or affecting the assets;
(g) the Vendor will not permit the Company to enter into any new, or
to amend any existing, lease agreement other than renewals of
existing leases in the ordinary course of business and on the
terms not materially less favourable to the Company than the
terms of its existing leases and equipment leases entered into
the ordinary course of business, except as previously planned and
made known to Purchaser, or as approved in advance and in writing
by the Purchaser;
(h) the Vendor will cause the Company to keep in effect its present
insurance policies or comparable insurance coverage; and
(i) the Vendor will cause the Company to use its best efforts to
maintain and preserve its business organisation, retain its
present employees, and to maintain its relationships with
suppliers, customers, and others having business relations with
the Vendor.
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4.2 Basis of warranties
(a) Each of the Warranties is without prejudice to any other warranty
or undertaking and, except where expressly stated, no Warranty
contained in this option to purchase share agreement governs or
limits the extent or application of any other Warranty.
(b) Each of the Warranties is deemed to be given as at the date of
this option to purchase share agreement and to be repeated
immediately before Completion in relation to the facts then
existing.
4.3 Rights & remedies
The rights and remedies of the Purchaser in respect of any breach of
the Warranties will not be affected by -
(a) Completion;
(b) any investigation made by or on behalf of the Purchaser into the
affairs of the Company;
(c) any failure to exercise or delay in exercising any right or
remedy or by any other event or matter whatsoever, except a
specific and duly authorised written waiver or release; or
(d) any information the Purchaser may have received or been given or
have actual implied or constructive notice of prior to the date
of this option to purchase share agreement.
4.4 Due inquiry
Vendor undertakes that in relation to any Warranty which refers to the
knowledge, information or belief of the Vendor, that the Vendor has
made full inquiry into the subject matter of that Warranty.
4.5 Disclosure prior to completion
The Vendor must promptly disclose in writing to the Purchaser any
event or circumstance, which arises or becomes known to the Vendor
after the date of this option to purchase share agreement and prior to
Completion, which is inconsistent with any of the Warranties, or which
might be material to be known by a purchaser for value of the Sale
Shares.
5 UNDERTAKINGS
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5.1 Undertakings
Upon execution of this option to purchase share agreement, the Vendor
must not do and must ensure none of the Connected Persons does,
directly or indirectly, any of the following without first obtaining
the written consent of the Purchaser: carry on (whether alone or in
partnership or joint venture with anyone else) or otherwise be
concerned with or interested in (whether as trustee, principal, agent,
shareholder, unit holder or in any other capacity) any business which
uses or includes as any part of its corporate or business name, the
words 'SchmArt Technologies', other than in respect of or through the
Company itself.
5.2 Injunction
The Vendor acknowledges that monetary damages would not be adequate
compensation to the Purchaser for the Vendor's breach of either
clauses 5.1 or 6.1 and that the Purchaser is entitled to seek an
injunction from a court of competent jurisdiction.
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6 CONFIDENTIALITY AND ANNOUNCEMENTS
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6.1 Confidentiality
(a) Each party must treat as strictly confidential all information
received or obtained as a result of entering into or performing
this option to purchase share agreement which relates to the
provisions or subject matter of this option to purchase share
agreement, to any other party to this option to purchase sale
agreement or the negotiations relating to this option to purchase
share agreement.
(b) Each party must use its reasonable endeavours to cause all of its
directors, officers, employees and agents who have or are likely
to have access to all such information as referred to in clause
6.1(a), to observe all the obligations of confidentiality under
this clause 6.
7 COSTS AND EXPENSES
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7.1 Costs
Each party will bear its own costs and expenses incurred in the
preparation, execution and implementation of this option to purchase
share agreement.
7.2 Stamp duty
The Purchaser will pay all stamp and other transfer duties and
registration fees applicable to any document to which it is a party
and which arise as a result of or in consequence of this option to
purchase share agreement.
8 NOTICES
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8.1 How notices may be given
A notice, request, demand, consent or approval (each a notice) under
this option to purchase share agreement:
(a) must be in writing;
(b) may be signed for the party giving it by the party's authorized
officer, attorney or solicitor;
(c) may be delivered personally to the person to whom it is
addressed, or left at or sent by prepaid post to the person's
address stated on page 1 of this option to purchase share
agreement or by facsimile.
8.2 When notice taken as given
A notice is taken as given by the sender and received by the intended
recipient:
(a) if delivered by hand or courier prior to 5.00 p.m. on a business
day (which expression means a business day in Texas, U.S.), at
the time of delivery to the addressee or, if delivered by hand or
courier at any other time, at 9.00 a.m. on the next business day
following the date of delivery to the addressee;
(b) if sent by mail on the 3rd business day falling after the date of
posting; or
(c) if transmitted by way of facsimile transmission prior to 5.00
p.m. on a business day, at the time of transmission, or if
transmitted by way of facsimile transmission at any other time,
at 9.00 a.m. on the next business day following the date of such
transmission.
References to time are to time in Texas, U.S.
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8.3 Proof
In providing the giving of a notice or any other document under or in
respect of this option to purchase share agreement it shall be
sufficient to show -
(a) in the case of mail that the notice or other document was duly
addressed and posted; or
(b) in the case of facsimile transmission, that the notice or other
document was duly transmitted from the despatching terminal as
evidenced by a transmission report generated by the despatching
terminal.
8.4 Change of address or fax number
A party may change its address or fax number for notices by giving
notice to the other party.
9 TERMINATION
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9.1 Vendors' right to terminate
The Vendor may, at any time while such default subsists, give a Notice
of Termination to the Purchaser in the event that the Purchaser
defaults in the satisfaction of the Consideration in accordance with
the provisions of this option to purchase share agreement.
9.2 Purchaser's right to terminate
The Purchaser may, at any time while such default subsists, give a
Notice of Termination to the Vendor in the event that there has been
any material event, matter or circumstance which is inconsistent with,
contrary to or otherwise a material breach of the Warranties or the
provisions of this option to purchase share agreement.
9.3 Termination in event of bankruptcy
The Purchaser may, at any time, give a Notice of Termination to the
Vendor if -
(a) the Vendor or any of the Other Shareholders is or becomes, or is
adjudicated or found to be, bankrupt; or
(b) a distress, attachment or execution is levied or enforced upon,
any part of the assets or undertaking of the Vendor or any of the
Other Shareholders.
9.4 Consequences of termination
(a) In the event of a Notice of Termination being duly given under
the provisions of clause 9.1, clause 9.2, or clause 9.3 -
(1) the Purchaser must, within seven days from the Notice of
Termination, return all documents, if any, delivered to them
by or on behalf of the Vendor to the Vendor;
(2) the Vendor must, within seven days from the Notice of
Termination, return all documents, if any, delivered to them
by or on behalf of the Purchaser and return any part of the
Option Consideration received by or on behalf of the Vendor
to the Purchaser.
9.5 Post-termination
Following the giving of a Notice of Termination under any of the
provisions of this option to purchase share agreement, and complete
performance of the obligations under clause 9.4 and subject to clause
10, neither party will have any further obligation under this option
to purchase share agreement to the other party.
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10 INDEMNIFICATION OF PURCHASER
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a. For a period of two years from and after Completion, Vendor
hereby agrees to indemnify, defend, and hold harmless Purchaser and
its partners, officers, employees, advisors, affiliates, agents,
representatives and assigns (the "Purchaser Indemnitees") from and
against any and all liabilities, penalties, damages, losses, claims,
costs, and expenses (including reasonable attorneys fees and expenses
for the defense of any claim which, if proved, would give rise to an
obligation of indemnity hereunder, notwithstanding that such claim may
be settled prior to final judgment) arising out of or resulting
directly or indirectly from (a) breach, falsity, inaccuracy,
incompleteness or misleading nature of any warranty, representation or
covenant by Vendor contained in this option to purchase share
agreement; or (b) nonperformance of any obligations or covenants on
the part of Vendor under this option to purchase share agreement (each
hereafter a "Claim").
b. Notwithstanding anything herein to the contrary, the maximum
amount that the Vendor shall be obligated to pay in respect of any and
all obligations of indemnity under this clause 10 shall be equal to
the sum of USD$150,000. In addition, a Claim shall not be brought by
Purchaser under or pursuant to this clause 10, unless either (i) the
amount of that Claim exceeds USD$10,000, or (ii) the aggregate amount
of all Claims (whether reimbursed or unreimbursed, and including both
theretofore made and any Claims then being made) exceeds USD$10,000.
11 GENERAL
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11.1 Entire Agreement
This option to purchase share agreement -
(a) constitutes the entire agreement and understanding between the
parties with respect to the matters dealt with in this option to
purchase share agreement;
(b) supersedes any other agreement, letters, correspondence (oral or
written or expressed or implied) entered into prior to this
option to purchase share agreement in respect of the matters
dealt with in this option to purchase share agreement; and
(c) was not entered into by the parties in reliance of any agreement,
understanding, warranty or representation of any party not
expressly contained or referred to in this option to purchase
share agreement.
11.2 Execution
The execution of this option to purchase share agreement by or on
behalf of a party shall constitute an authority to the solicitors
acting for that party in connection with this option to purchase share
agreement to deliver and date it on behalf of that party.
11.3 Effective date
This option to purchase share agreement will take effect on the date
entered on the first page of this option to purchase share agreement
irrespective of the diverse dates upon which the respective parties
may have executed this option to purchase share agreement.
11.4 Amendments & additions
No amendment, variation, revocation, cancellation, substitution or
waiver of, or addition or supplement to, any of the provisions of this
option to purchase share agreement shall be effective unless it is in
writing and signed by both of the parties.
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11.5 Successors & assigns
This option to purchase share agreement will be binding upon and inure
for the benefit of the respective heirs, personal representatives,
successors-in-title or permitted assigns, as the case may be, of the
parties.
11.6 No Partnership or agency
The provisions of this option to purchase share agreement will not be
construed or taken to constitute -
(a) a partnership between the parties;
(b) either party to be the agent of the other party; or
(c) an authority to either party to represent or bind or pledge the
credit of the other party in any way.
11.7 Invalidity & severability
If any provision of this option to purchase share agreement is or may
become under any written law, or is found by any court or
administrative body or competent jurisdiction to be, illegal, void,
invalid, prohibited or unenforceable then -
(a) such provision will be ineffective to the extent of such
illegality, voidness, invalidity, prohibition or
unenforceability;
(b) the remaining provisions of this option to purchase share
agreement will remain in full force and effect; and
(c) the parties must use their respective best endeavours to
negotiate and agree a substitute provision which is valid and
enforceable and achieves to the greatest extent possible the
economic, legal and commercial objectives of such illegal, void,
invalid, prohibited or unenforceable term, condition,
stipulation, provision, covenant or undertaking.
11.8 Time of the essence
Time wherever mentioned is of the essence of this option to purchase
share agreement, both as regards the dates and periods specifically
mentioned and as to any dates and periods which may be agreed in
writing between the parties be substituted for them.
11.9 Knowledge & acquiescence
Knowledge or acquiescence by any party of, or in, any breach of any of
the provisions of this option to purchase share agreement will not
operate as, or be deemed to be, a waiver of such provisions and,
notwithstanding such knowledge or acquiescence, such party will remain
entitled to exercise its rights and remedies under this option to
purchase share agreement, and at law, and to require strict
performance of all of the provisions of this option to purchase share
agreement.
11.10 Rights & remedies
The rights and remedies provided in this option to purchase share
agreement are cumulative, and are not exclusive of any rights or
remedies of the parties provided at law or in equity, and no failure
or delay in the exercise or the partial exercise of any such right or
remedy or the exercise of any other right or remedy will affect or
impair any such right or remedy.
11.11 Governing Law; Arbitration.
This option to purchase share agreement shall be governed in all
respects in conformity with the intent of the parties as expressed in
the provisions of this option to purchase share agreement. To the
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extent any issue between the parties is not controlled by this
Agreement, then any dispute between the parties shall be governed and
construed in accordance with the laws of the State of Texas, U.S.
without regard to its choice of law principles. UNLESS THIS AGREEMENT
SPECIFICALLY PROVIDES FOR ANOTHER TYPE OF DISPUTE RESOLUTION WITH
RESPECT TO A PARTICULAR KIND OF DISPUTE, ANY AND ALL CONTROVERSIES AND
CLAIMS ARISING OUT OF OR RELATING TO THIS OPTION TO PURCHASE SHARE
AGREEMENT, OR THE BREACH THEREOF, SHALL BE SETTLED BY FINAL AND
BINDING ARBITRATION IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION
RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. Any such
arbitration proceedings shall be and remain confidential. The panel of
arbitrators for any such arbitration shall consist of three members of
the American Arbitration Association, one of whom shall be selected by
the Purchaser, one of whom shall be selected by the Vendor, and the
third who will be selected by the other two. Judgment upon the
decision rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The place of arbitration shall be
Houston, Texas.
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Schedule 1 - Corporate particulars
1. Registered number 655264-W
2. Date of Incorporation 8th June 2004
3. Address of registered office Unit 920, 9th Floor, Block A,
Damansara Intan, No.1, Jalan SS
20/27, 47400 Petaling Jaya,
Selangor Darul Ehsan
4. Authorized share capital RM500,000.00 divided into 500,000
ordinary shares of RM1.00 each
5. Issued share capital RM210,000.00 divided into 210,000
ordinary shares of RM1.00 each
6. Directors Yong Choy Lin @ Yong Chai Lin (F);
Mohamed Ghazali Bin Ismail; and
Zuriati Binti Mohamed Yusoff
7. Shareholders Yong Choy Lin @ Yong Chai Lin 30%
Mohamed Ghazali Bin Ismail 60%
(held on trust for Yong Choy Lin)
Edwin Pang Loo Chee 10% (held on
trust for Yong Choy Lin)
8. Secretary Rebecca Yu (MAICSA 0829744)
9. Accounting reference date 31st December
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Schedule 2 - Warranties
I. The Vendor
A. Capacity
(1) The Vendor has the requisite power and authority to enter into
and perform this option to purchase share agreement.
(2) This option to purchase share agreement constitutes and imposes
valid legal and binding obligations on the Vendor and is fully
enforceable in accordance with its terms.
(3) The Vendor has not entered into any prior option to purchase
share agreement with any party to dispose of the Sale Shares of
which the said agreement is still valid and subsisting.
II. Shares and Capital
A. Title
The Vendor is the beneficial owner of all the Sale Shares. The
registered owners of the Sale Shares are as follows :
Registered Owners Sale Shares
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Mohamed Ghazali Bin Ismail (NRIC : 490302-11-5041) 126,000
holding on trust for the Vendor
Vendor 63,000
Edwin Pang Loo Chee (NRIC : 660224-04-5173) 21,000
holding on trust for the Vendor
The Sale Shares are free of all Security Interests other than
described above.
B. Issued capital
The Sale Shares constitute 100% of the total issued and paid up
capital of the Company.
C. Capital
The authorised capital of the Company is RM500,000.00 divided into
500,000 ordinary shares of RM1.00 each. The amount of issued and paid
up capital is RM210,000.00 divided into 210,000 ordinary shares of
RM1.00 each.
D. Fully paid
The Sale Shares are fully paid and no money is owing to the Company in
respect of them.
III. Company
A. Corporate existence
The Company -
(1) is a private limited company; and
(2) has the power to own its assets and carry on its business.
B. Compliance with constituent documents
The business affairs of the Company have been conducted in accordance
with the constitution of the Company.
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IV. Corporate matters
A. Insolvency of the Company
(1) No order has been made, no resolution has been passed, no
petition presented, no meeting convened for the winding up of the
Company or for a provisional liquidator to be appointed in
respect of the Company and the Company has not been a party to
any transaction which could be avoided in a winding up.
(2) No administration order has been made and no petition for one has
been presented in respect of the Company.
(3) No receiver or administrative receiver has been appointed in
respect of the Company or any of its assets.
(4) The Company :
(a) is not insolvent,
(b) has not failed and is able to pay, and has a reasonable
prospect of being able to pay, any of its debts as they fall due,
as those expressions are defined in section 218 of the Companies
Act 1965.
(5) The Company has not made or proposed any arrangement or
composition with its creditors or any class of them.
(6) No distress, execution or other process has been levied on any of
the Company's assets or action taken to repossess goods in the
possession of the Company.
(7) No unsatisfied judgment is outstanding against the Company and no
demand has been served on the Company under section 218 of the
Companies Act.
V. Information
B. Accuracy and adequacy of information
(1) The information contained in schedules to this option to purchase
share agreement is accurate and complete.
(2) All written information supplied to the Purchaser or its advisers
by or on behalf of the Vendor or any of their advisers or by the
Company is complete and accurate and is not misleading because of
any omission or ambiguity or for any other reason and where
information is expressed as an opinion, it is truly and honestly
held and not given casually, recklessly or without due regard for
its accuracy.
(3) So far as the Vendor is aware, there is no fact or circumstance
relating to the business and affairs of any of the Company which,
if disclosed to the Purchaser or any of its advisers, might
reasonably be expected to influence the decision of the Purchaser
to purchase the Sale Shares on the terms contained in this option
to purchase share agreement and which has not been so disclosed.
VI. Accounts
A. Basis of preparation
The Accounts -
(1) have been prepared in accordance with current standard
accountancy practices applicable to a Malaysian company;
(2) show a true and fair view of the financial position and the
assets and liabilities of the Company at the Accounts Date;
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(3) are not affected by any unusual or non-recurring item;
(4) take account of all gains and losses, whether realised or
unrealised arising from any transaction; and
(5) include all reserves and provisions for taxation that are
necessary to cover all Tax liabilities of the Company in respect
of any period up to the Accounts Date.
B. Management Accounts
The management accounts fairly reflect the trading position of the Company
as at the date and for the period to which they relate and are not affected
by any extraordinary, exceptional, unusual or non-recurring income, capital
gain or expenditure or by any other factor known by the Vendor rendering
Profits or losses for the period covered exceptionally high or low.
C. Position since Accounts Date
Since the Accounts Date -
(1) the Company's business has been conducted in the ordinary course of
business and in a proper and efficient manner;
(2) the Company has not incurred any liabilities other than in the
ordinary course of business; and
(3) there has been no material adverse change affecting the business, the
assets of the Company, or the financial or trading position or
prospects of the Company.
VII. Properties
The Company has no interest in land.
VIII. Financial
A. Financial commitments and borrowings
(1) The Company is not a party to, nor has it agreed to enter into,
any lending, or purported lending, agreement or arrangement
(other than agreements to give credit in the ordinary course of
its business).
(2) The Company is not exceeding any borrowing limit imposed upon it
by its bankers, other lenders, its articles of association or
otherwise nor has the Company entered into any commitment or
arrangement which might lead it so to do.
(3) No event has occurred or been alleged which is or, with the
passing of any time or the giving of any notice, certificate,
declaration or demand, would become an event of default under, or
breach of, any of the terms of any loan capital, borrowing or
financial facility of the Company or which would entitle any
person to call for repayment prior to normal maturity.
(4) The Company is not, nor has it agreed to become, bound by any
guarantee, indemnity, surety or similar commitment.
IX. Trading and contracts
A. Contracts and commitments
(1) The Company is not a party to any agreement, arrangement or
commitment which -
(a) has or is expected to have material consequences in terms of
expenditure or revenue;
(b) relates to matters outside its ordinary business or was not
entered into on arms' length terms;
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(c) constitutes a commercial transaction or arrangement which
deviates from the usual pattern for it;
(d) can be terminated in the event of any change in the
underlying ownership or control of it or would be materially
affected by such change;
(e) cannot readily be fulfilled or performed by it on time; or
(f) cannot be terminated, without giving rise to any liabilities
on it, by it giving three months' notice or less.
however, the Purchaser and Company will enter into a Management
Agreement on or about the date of this option to purchase share
agreement.
B. Litigation and disputes
(1) Except for actions to recover any debt incurred in the ordinary
course of the business owed to the Company -
(a) neither the Company nor any person for whose acts the
Company may be liable is engaged in any litigation,
arbitration, administrative or criminal proceedings, whether
as plaintiff, defendant or otherwise;
(b) no litigation, arbitration, administrative or criminal
proceedings by or against the Company or any person for
whose acts it may be liable are threatened or expected and,
as far as the Vendor are aware, none are pending; and
(c) there are no facts or circumstances likely to give rise to
any litigation, arbitration, administrative or criminal
proceedings against the Company or any person for whose acts
it may be liable.
(2) The Company is not subject to any order or judgment given by any
court or governmental or other authority, department, board, body
or agency or has not been a party to any undertaking or assurance
given to any court or governmental or other authority,
department, board, body or agency which is still in force.
X. Assets
A. Charges and encumbrances over assets
(1) Save as described in paragraph II(A) above, no option, right to
acquire, mortgage, charge, pledge, lien (other than a lien
arising by operation of law in the ordinary course of trading) or
other form of security or encumbrance or equity (Security
Interest) on, over or affecting the shares or the whole or any
part of the undertaking or assets of the Company, including any
investment in any other company, is outstanding and, apart from
this option to purchase share agreement, there is no agreement or
commitment to give or create any of them and no claim has been
made by any person to be entitled to any of them.
(2) The Company has not received notice from any person intimating
that it will enforce any security which it may hold over the
asset of the Company, and there are no circumstances likely to
give rise to such a notice.
XI. Intellectual Property
(1) No licences, registered user or other rights have been granted or
agreed to be granted by the Company to any person in respect of
any Intellectual Property.
(2) Except in the ordinary course of business and on a confidential
basis, no disclosure has been made of any of the confidential
information, know-how, technical processes, financial or trade
secrets or customer or supplier lists or information of the
Company (Proprietary Rights).
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(3) The Company's use of the Proprietary Rights is not infringing
upon or otherwise violating the rights of any third party in or
to such Proprietary Rights, and no proceedings have been
instituted against or notices received by the Company that are
presently outstanding alleging that the Company's use of its
Proprietary Rights infringes upon or otherwise violates any
rights of a third party in or to such Proprietary Rights.
XII. Employment
A. Industrial relations
(1) The Company is not a party to any contract, agreement or
arrangement with any trade union or other body or organisation
representing any of its employees.
(2) The Company has in relation to its employees and former employees
complied with all conditions of service, customs and practices
and, where relevant, all collective agreements and recognition
agreements for the time being.
(3) No dispute has arisen between the Company and a material number
or category of its employees nor are there any present
circumstances known to the Vendors which are likely to give rise
to any such dispute.
XIII. Taxation
(1) The Company has at all times been resident for Tax purposes in
Malaysia, which is the only country whose Tax Authorities seek to
charge tax on the Profits of the Company.
(2) Any Tax arising under any Taxation payable in respect of any
transaction, income or asset of the Company will be paid.
- --------------------------------------------------------------------------------
IN WITNESS WHEREOF the parties hereto have hereunto set their hands the day and
year first above written.
Signed by )
)
YONG CHOY LIN @ YONG CHAI LIN )
)
presence of :- ) -----------------------------------
YONG CHOY LIN @ YONG CHAI LIN
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AGREED TO PRO FORMA:
Signed by )
)
MOHAMED GHAZALI BIN ISMAIL )
)
presence of :- ) -----------------------------------
MOHAMED GHAZALI BIN ISMAIL
Signed by )
)
EDWIN PANG LOO CHEE )
)
presence of :- ) -----------------------------------
EDWIN PANG LOO CHEE
Signed by : Michael L. Burrow ) ENGlobal Engineering, Inc.
)
ENGLOBAL Engineering Inc )
)
in the presence of :- ) -----------------------------------
By: Michael L. Burrow, Chairman of
the Board
15