EXHIBIT 10.5 (corrected)
MEMORANDUM OF UNDERSTANDING
THIS AGREEMENT is made the 18th day of February, 2003
BETWEEN
HONG YUAN ENTERPRISE LIMITED
8/21 Yen Arkard Road, Tung-Mahamek,
Yannawa, Bangkok 10120 Thailand
AND
ASIA PROPERTIES, INC.
114 W. Magnolia St, #400-115
Bellingham, WA 98225 USA
(Collectively the "Parties")
WHEREAS:-
A. Hong Yuan Enterprise Limited (hereinafter referred to as "HYEL") is a
real estate limited liability corporation based in Bangkok, organized under the
laws of Thailand.
B. Asia Properties, Inc. (hereinafter referred to as "API") is a company
organized and existing under the laws of the state of Nevada, with offices in
Bangkok, Thailand and Bellingham, WA, USA.
C. At the date hereof, API has 50 million shares of par value of US $0.001
each, of which approximately 6.6 million shares are issued and outstanding.
Following SEC clearance, API intends to meet the requirements of the NASDAQ
Bulletin Board and to commence trading on the Over the Counter Bulletin Board
within the first half of year 2003, then apply for the NASDAQ BBX which is
presently targeted to initiate trading by Q4, 2003.
API's plan is to acquire, develop and manage resorts and hotels, initially in
Thailand, then regionally in Asia and the South Pacific for significant capital
gain and yields.
D. API is interested in purchasing a 100% interest in the 101 Rai of
freehold / Nor Sor San, beach front land at Mai Khao, Phuket beach owned by
HYEL.
E. API intends to provide funding for the development of a resort on the
property.
NOW, THEREFORE, THE PARTIES HERETO HEREBY AGREE AS FOLLOWS:
1. Expression of Interest
1.1 API desires to acquire a 100% interest of the 101 Rai freehold / Nor Sor
San, at Mai Khao beach owned by HYEL for a purchase price of (Thai) Baht
404,000,000.
1.2 The parties will diligently and in good faith negotiate a definitive
agreement (the "Definitive Agreement") incorporating the principal terms of the
contemplated transaction as set forth herein and, in addition, such other terms
and provisions, including appropriate representations and warranties, of a more
detailed nature as the parties may agree upon. The Definitive Agreement shall
be subject to board and shareholders approval for API.
1.3 Upon execution of this Memorandum, API shall have a due diligence period
of sixty (60) days - the "due diligence period"). During the Due Diligence
Period API will have the right to conduct a full due diligence investigation of
and HYEL will provide all relevant information on their property, including a
recent property evaluation, tax records, and land title, business records and
any other information reasonably requested by API. API and its attorneys,
accountants and financial advisors will have full access during normal business
hours to all employees, consultants, assets, properties, books, accounts,
records, tax returns, contracts and other documents of , provided, however that
such access will not materially interfere with the normal business operations of
.. In the event the parties terminate their discussions for any reason API will
promptly return all documents and other materials so provided to it.
2. Confidentiality
2.1 API acknowledges that it owes an obligation of confidence to HYEL in
respect of any Confidential Information provided by HYEL;
2.2 API further acknowledges that the Confidential Information (including
any copies made thereof to API) is:-
a. the property of the HYEL, its subsidiaries and/or associate companies;
b. secret, confidential and valuable to HYEL, its subsidiaries and/or
associate companies;
3. Due Diligence
3.1 Upon the execution of this Agreement, HYEL shall furnish to API the
information listed in the attached sheet, Annex A, and any additional items that
may be necessary for API to make its initial evaluation of the potential
investment. The due diligence period shall not be longer than {two} months from
the date of this Agreement.
3.2 During the conduct of its due diligence the Parties will negotiate in
good faith to enter into a Definitive Agreement.
3.3 Upon completion of its due diligence and wherein API finds there is a
material change in the circumstances, resulting in dissatisfaction with its
findings API will be permitted to terminate this agreement, and this Agreement
shall be deemed terminated. Thereafter, there shall be no further right or
obligation by either party towards the other except as defined within this
Agreement.
5. Terms and Conditions- subject to contract
5.1 API will acquire 100% interest of the 101 Rai of Mai Khao Beach at a
price of Baht 4 million per Rai. 404 million Thai Baht total acquisition price.
5.2 API will issue shares of its common stock to Koola Holding Limited or
its nominees equivalent to its equity in the land of 224 million Baht. The API
share price will be determined in the Definitive Agreement.
5.3 API will seek its own mortgage financing of 180 million Baht to pay the
debt owed to Bangkok Bank by HYEL. to HYEL.
5.4 Commencing immediately, and its respective agents will not, nor will
they permit any of their respective officers employees or agents (including and
without limitation, investment bankers, attorneys and accountants) directly or
indirectly to, solicit, or accept any offer for the purchase of the 101 Rai of
Mai Khao beach land, whether as a primary or backup offer, or take any other
action with intention or reasonable foreseeable effect of leading to any
commitment or agreement to sell such property. In addition, will conduct its
respective operations according to its ordinary and usual course of business
consistent with past practices and will not enter into any material transactions
or incur any material liabilities without obtaining the consent of API.
Termination
6.1 This Agreement shall expire in 90 days from the date of signing and
shall be renewable only with the written agreement of both Parties. If at any
time between the date of signing this Memorandum and closing there is any
material change in circumstances, which adversely affect the fundamental
understandings or spirit of this Memorandum, either party shall have the right
to terminate this Memorandum.
7. Governing Law
7.1 This Agreement shall be governed by and shall be interpreted in
accordance with the laws of {Thailand}.
Miscellaneous
8.1 This Agreement is an expression of interest on the part of API in
acquiring the 100% interest in the Mai Khao beach land 101 Rai owned by HYEL.
As such, any potential transaction is subject to contract to the execution by
both Parties of a formal Investment agreement upon agreement of full Terms and
Conditions for the transaction.
8.3 Both Parties agree that the consummation of the sale of Mai Khao Beach
land to API would be subject to obtaining all necessary comments, approvals, and
consents and making all necessary filings with all relevant government
authorities in addition to board approval of both Parties.
8.4 Each provision of this Agreement shall be deemed to be separate and
severable from each other provision. If any provision of this Memorandum shall
be invalid and not enforceable in accordance with its terms, all other
provisions, which are self-sustaining and capable of separate enforcement
without regard to any such invalid provisions, shall be and continue to be valid
and enforceable in accordance with their terms.
The above terms are meant solely to indicate API's interest in the proposed
acquisition. Except for "Confidentiality" (which shall be binding on the
Parties hereto), nothing contained herein, whether stated or implied, shall
impose any obligation of any kind upon HYEL or API.
Except as otherwise specifically set forth herein. Each party will bear its own
attorneys, brokers, investment bankers, agents, and finders employed by, such
party. The parties will indemnify each other against any claims, costs, losses,
expenses or liabilities arising from any claim for commissions, finder's fees or
other compensation in connection with the contemplated transaction which may be
asserted by any person based on any agreement or arrangement for payment by the
other party.
The parties may execute this Memorandum of Understanding in two or more
counterparts, each of which is deemed to be an original and all of which will
constitute one agreement, effective as of the date given above.
Representations, Warranties and Undertakings
9.1 API represents and warrants that the company is a qualified investor and
investment partner in good standing within the laws of USA. All relevant
liabilities will have been disclosed prior to the date of signing the Definitive
Agreement.
9.2 HYEL represents and warrants that all liabilities, liens and
encumbrances of the land the will have been disclosed prior to the date of
signing the Definitive Agreement.
9.3 Both parties agree to work together to secure the required development
approvals for a resort from the relevant authorities in Phuket.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
the day and year first above written.
SIGNED BY
for and on behalf of
ASIA PROPERTIES, INC.
Witnessed by:
SIGNED BY
for and on behalf of
HONG YUAN ENTERPRISE LIMITED
Witnessed by:
ANNEX A
API will require the following from HYEL:
1. Land title deed
2. A current property valuation
3. An opinion as to the ability to get necessary building approvals from the
Phuket Government authorities.