EXHIBIT 10.30

 

 

 

 

 

DATED April 14, 2005

 

 

 

 

 

 

 

 

EASTERN PACIFIC CIRCUITS HOLDINGS LIMITED

 

AND

 

MERIX CORPORATION

 

 

 

 

 

 

 

 

MASTER SALE AND PURCHASE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

Baker & McKenzie, Hong Kong

14th Floor, Hutchison House

10 Harcourt Road

Hong Kong

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CONTENTS

 

Clause

   Page

1.      Interpretation

   1

2.      Sale And Purchase

   16

3.      Initial Consideration

   17

4.      Conditions

   17

5.      Completion

   20

6.      Post-Completion Working Capital Adjustments

   22

7.      Escrow Amount

   24

8.      Pro-Forma Accounts And Ebitda Earnout Consideration

   25

9.      The Seller’s Warranties And Pre-Completion Conduct

   30

10.    The Buyer’s Remedies

   31

11.    The Buyer’s Warranties And Undertakings

   32

12.    Release Of Security

   34

13.    Transfer Of Businesses (Protection Of Creditors) Ordinance

   34

14.    Responsibility For Liabilities

   35

15.    Accounts Receivable

   36

16.    Third Party Consents

   36

17.    Transferring Employees And Pensions

   38

18.    Insurance

   44

19.    Post-Completion Undertakings

   45

20.    Tax Matters

   45

21.    Records

   47

22.    Confidential Information

   48

23.    Announcements

   49

24.    Assignment

   50

25.    Costs

   50

26.    Entire Agreement

   50

27.    General

   50

28.    Notices

   51

29.    Governing Law Arbitration And Service Of Process

   53

SCHEDULE 1 DEFINITIONS

   55

 

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SCHEDULE 2 COMPLETION REQUIREMENTS

   71 SCHEDULE 3 SELLER’S WARRANTIES    75 SCHEDULE 4 LIMITATIONS ON THE
SELLER’S LIABILITY    88 SCHEDULE 5 ACTION PENDING COMPLETION    92 SCHEDULE 6
CAPITAL EXPENDITURE    95 SCHEDULE 7 FORM OF THE ESCROW AGREEMENT    96 SCHEDULE
8 NOTE    105 SCHEDULE 9 ESCROW AMOUNT    108 SCHEDULE 10 WORKING CAPITAL    109
SCHEDULE 11 EPCI HK GROUP    110 SCHEDULE 12 EPCI SINGAPORE GROUP    113
SCHEDULE 13 TAX DEED    116 SCHEDULE 14    125

PART A—Determination Of Actual Adjusted 2005 Ebitda

   125

PART B—Operation Of The Business During The Relevant Period

   128

EXECUTION

   130

 

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THIS AGREEMENT is made on April 14, 2005

 

BETWEEN:

 

(1) EASTERN PACIFIC CIRCUITS HOLDINGS LIMITED, a company incorporated under the
laws of the Cayman Islands, whose registered office is at Century Yard, Cricket
Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West
Indies (the “Seller”); and

 

(2) MERIX CORPORATION, a company incorporated in the State of Oregon, whose
registered office is at 1521 Poplar Lane, P.O. Box 3000, F4-234, Forest Grove,
OR 97116, United States of America (the “Buyer”).

 

RECITALS:

 

(A) Each of the companies listed in part 1 of schedule 1 (the “Business
Sellers”), Eastern Pacific Circuits (Cayman) Limited (“EPC Cayman”), a company
incorporated under the laws of the Cayman Islands, and Eastern Pacific Circuits
Limited (“EPCL”), a company incorporated under the laws of the Cayman Islands,
is a direct or indirect wholly-owned subsidiary of the Seller.

 

(B) EPC Cayman is the beneficial owner of all of the issued shares in the
capital of Eastern Pacific Circuits Investments Limited (“EPCI HK”), a company
incorporated under the laws of Hong Kong, and EPCL is the registered holder and
beneficial owner of all of the issued shares in the capital of Eastern Pacific
Circuits Investments (Singapore) Pte Ltd (“EPCI Singapore”), a company
incorporated under the laws of Singapore.

 

(C) The Seller has agreed to procure (a) the sale by each of the Business
Sellers of its business and assets, (b) the sale by EPC Cayman of all of the
issued shares in the capital of EPCI HK (the “HK Shares”) and (c) the sale by
EPCL of all of the issued shares in the capital of EPCI Singapore (the
“Singapore Shares”), in each case on the terms and subject to the conditions set
forth in this Agreement.

 

THE PARTIES AGREE as follows:

 

1.        INTERPRETATION

 

1.1      In this Agreement:

 

“Accepting Employees -HK” has the meaning set forth in clause 17.2.4;

 

“Accounts Receivable” means, in relation to each Business, all the book and
trade debts, notes, receivables and other debts and amounts owing to the
relevant Business Seller in connection with the relevant Business (and whether
or not yet due and payable) at Completion (including, without limitation, trade
debts, deposits, prepayments, retrospective rebates and overpayments) all rights
in relation thereto and the benefit of all guarantees or other security in
respect thereof and interest thereon;

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“Acquiring Buyer Company” has the meaning set forth in clause 11.1.2;

 

“Actual Closing Cash Amount” means the aggregate amount of the bank balances,
cash, cash on deposit, short-term securities and investment accounts, including
amounts for which cheques have been received by the relevant member of the EPCI
HK Group and the EPCI Singapore Group or deposited in the bank accounts of the
relevant member of the EPCI HK Group and the EPCI Singapore Group for which
cheques have not cleared the drawer’s bank accounts at Completion and which were
collected prior to the delivery of the Completion Statement, of each member of
the EPCI HK Group and the EPCI Singapore Group as at the close of business on
the day immediately before the Completion Date provided that there shall be
deducted from such aggregate amount amounts for which cheques have been written
by the relevant member of the EPCI HK Group and the EPCI Singapore Group, which
cheques have not cleared the bank account as of Completion;

 

“Actual Adjusted 2005 EBITDA” means the audited consolidated profit before
taxation, interest, depreciation and amortisation in respect of each Business
and each member of the EPCI Hong Kong Group and EPCI Singapore Group for the
financial year ended 31 December 2005 determined in accordance with clause 8.3
and adjusted in accordance with Part A of schedule 14;

 

“Amount Claimed” has the meaning set out in clause 7.1.1;

 

“Approval” has the meaning set forth in paragraph 8 of Schedule 3;

 

“Assumed Liabilities” means all Liabilities of the Business Sellers as at
Completion (including accounts payable) in connection with the relevant Business
and/or the Business Assets, including, without limitation, those Liabilities set
out in part 4 of schedule 1 and excluding the Excluded Liabilities;

 

“Auditors” means PricewaterhouseCoopers, the auditors of the Group and the
Buyer;

 

“Available Records” has the meaning set out in clause 21.1;

 

“Borrowings” means all sums outstanding under (a) the credit agreement dated
10 August 2000 (as amended and supplemented from time to time) between, inter
alia, (i) Eastern Pacific Circuits Limited (formerly known as Pacific Circuits
Limited) as parent borrower, (ii) Eastern Pacific Circuits (HK) Ltd (formerly
known as Wong’s Circuits Limited) as subsidiary borrower, (iii) Standard
Chartered Bank (Hong Kong) Limited as administrative agent and a group of
lenders, pursuant to which the lenders agreed to provide US$150,000,000 to
Eastern Pacific Circuits Limited and Eastern Pacific Circuits (HK) Limited; and
(b) a facility agreement dated 28 April 2004 between Eastern Pacific Investments
(Singapore) Pte Limited and Standard Chartered Bank (Hong Kong) Limited as
administrative agent, and a group of lenders pursuant to which the lenders
agreed to provide a US$5,100,000 facility to Eastern Pacific Circuits

 

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Investments (Singapore) Pte Limited, being all interest bearing borrowings and
Indebtedness in the nature of borrowings of the Group from financial
institutions;

 

“Business” means, in relation to each Business Seller, the business carried on
by that Business Seller as at Completion, and excluding only the Excluded
Assets;

 

“Business Assets” means, in relation to each Business, all the property,
undertaking, benefits, title, rights and assets of the relevant Business Seller,
including, without limitation, the categories of assets set out in part 2 of
schedule 1 and excluding only the Excluded Assets;

 

“Business Claims” means the benefit of all rights and claims arising from, or
coming into existence as a result of, the carrying on of any Business by a
Business Seller whether arising on, prior to or after Completion, other than
rights and claims relating to the Excluded Assets or the Excluded Liabilities;

 

“Business Goodwill” means the goodwill relating to each Business, together with
the right for the Buyer or relevant Buyer’s Group Company to represent itself as
carrying on that Business in succession to the relevant Business Seller;

 

“Business IP” means, in relation to each Business, the Intellectual Property
owned by the relevant Business Seller which is used in connection with the
Business;

 

“Business Contracts” means, in relation to each Business Seller, all the
contracts, engagements, licences, guarantees, sale and purchase orders and other
commitments relating to the relevant Business at Completion, which have been
entered into or undertaken by or on behalf of, or the benefit of which are held
on trust for or have been assigned to, that Business Seller which in any case
are current uncompleted or unperformed or in respect of which that Business
Seller has any rights, claims, benefits entitlements, Liabilities or obligations
relating to the Business, including the Business Insurance Policies, the Hong
Kong Lease (provided that consent of assignment of the Hong Kong Lease is
obtained from the Hong Kong Science and Technology Park Corporation) and
agreements or other documents relating to ownership or occupation of the
Business Properties, but excluding all employment contracts;

 

“Business Day” means a day other than a Saturday or Sunday or public holiday in
Hong Kong, Canada, Singapore, the Cayman Islands or the United States of
America;

 

“Business Insurance Policies” means the insurance policies set out in part 8 of
schedule 1;

 

“Business Motor Vehicles” means, in relation to each Business, the motor
vehicles owned by the relevant Business Seller and used by it for the purposes
of that Business;

 

“Business Plant and Equipment” means, in relation to each Business, all the
loose plant, machinery, equipment, tooling and furniture of the relevant
Business Seller (not

 

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being business fixtures and fittings forming part of the Business Properties)
used for the purposes of that Business;

 

“Business Properties” means the properties owned by and occupied by the Business
Sellers, details of which are set out in part 6A of schedule 1;

 

“Business Records” means, in relation to each Business, any lists of present and
former customers and suppliers, business plans and forecasts, notices,
enquiries, orders, correspondence, computer disks, tapes or other machine
readable or other records of a financial or marketing nature to the extent that
they relate to the Business and are owned by the Business Seller but excluding
any of the foregoing to the extent that they are Excluded Assets;

 

“Business Sellers” has the meaning set forth in Recital (A);

 

“Business Tax” means, all forms of taxation, deductions, withholdings, duties,
imposts, levies, fees, charges and rates imposed, levied, collected, withheld or
assessed by any Government Authority and any interest, additional taxation
penalty, surcharge or fine in connection therewith payable by any Business
Seller relating to the use and ownership of the Business Assets and the
operation of the Business prior to the Completion Date;

 

“Buyer MPF Scheme” means the mandatory provident fund scheme established by the
Buyer or the relevant Buyer’s Group Company for its Hong Kong employees;

 

“Buyer Obligation” means any representation, warranty or undertaking to
indemnify given by the Buyer to the Seller under this Agreement or any of the
Other Documents;

 

“Buyer’s Completion Documents” has the meaning set out in clause 11.1.4;

 

“Buyer’s Group” means the Buyer or a company which is its ultimate parent
company and each subsidiary of the Buyer and of its ultimate parent company from
time to time and includes, for the avoidance of doubt, after Completion, each of
EPCI HK, EPCI Singapore and their subsidiaries, and “Buyer’s Group Company”
means any one of them;

 

“Canadian Property” means all of Eastern Pacific Circuits (Canada) Limited’s
rights, title and interest in the property situated at Units 37, 38 and 39,
Level 1, York Region Condominium Corporation No. 711, 145 Royal Crest Court,
Markham, Ontario, Canada;

 

“Cash” means, in relation to each Business, all cash (including cash in-hand and
cash at bank), cash on deposit and short-term securities and investment accounts
held by the relevant Business Seller for the purposes of the Business;

 

“Closing Working Capital” means Working Capital as at the Completion Date;

 

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“Completion” means completion of the sale and purchase of the Businesses, the
Business Assets, the HK Shares and the Singapore Shares in accordance with this
Agreement;

 

“Completion Date” means the later of: (i) 15 June 2005; and (ii) the date which
is five (5) Business Days after the date on which the last of the Conditions is
satisfied or waived provided that this date shall not be earlier than the date
which is 60 days after the date on which the Condition in clause 4.1.1(a) is
satisfied or waived or such other date as may be agreed by both parties in
writing;

 

“Completion Statement” has the meaning set out in clause 6.1;

 

“Condition” means a condition set out in clause 4.1 and “Conditions” means all
those conditions;

 

“Consent” has the meaning set out in clause 16.3;

 

“Costs” means obligations, Liabilities, losses, damages, costs (including
reasonable legal costs) and expenses (including interest and Tax), actions,
proceedings, claims, demands, penalties and compensation awards in each case of
any nature whatsoever;

 

“Debt Amount” means the Borrowings of the Group on the Completion Date, as
determined by the Lenders and notified in writing to the parties no later than
three (3) Business Days before the Completion Date and, for the avoidance of
doubt, such amount shall be expressed in US$;

 

“Deduction” has the meaning set out in clause 7.1.1;

 

“Defaulting Party” has the meaning set out in clause 5.4;

 

“Depreciation Claw-back Shortfall” has the meaning set out in clause 20.2;

 

“Desay Land Premium Payment” means 50% of RMB5,915,133 being the amount payable
to LOGO [g971561.jpg] (Desay) pursuant to the contribution of the land use right
agreement dated 18 November 2004 between Eastern Pacific Circuits Investments
(Singapore) Pte Limited, LOGO [g971562.jpg] (Desay) and Eastern Pacific Circuits
(Huiyang) Ltd
( LOGO [g971563.jpg]) in respect of the transfer by LOGO [g971564.jpg] (Desay)
of the land to Eastern Pacific Circuits (Huiyang) Ltd. by way of capital
contribution less the aggregate of any instalment payments made by Eastern
Pacific Circuits (Huiyang) Ltd to LOGO [g971565.jpg] (Desay) during the period
from and including 1 January 2005 up to and including the Completion Date
provided that where this results in a negative figure then, for the purposes of
clause 6.6.1, the negative amount shall be added to the Closing Working Capital
rather than subtracted from the Closing Working Capital;

 

“Disclosed” means referred to in the Disclosure Letter;

 

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“Disclosed Financial Statements” has the meaning given to it in paragraph 6.2 of
schedule 3;

 

“Disclosure Letter” means a letter of the date hereof from the Seller to the
Buyer making disclosures in respect of the Warranties;

 

“EA Transferring Employees—Singapore” means the Transferring Employees—Singapore
who fall within the ambit of the Singapore Employment Act;

 

“Earnout Statement” has the meaning set out in clause 8.1;

 

“EBITDA Earnout Consideration” shall be determined in accordance with
clause 8.4;

 

“Encumbrance” means a lien, charge, pledge, any interest or equity of any
persons (including, without limitation, any right to acquire, option or right of
pre-emption) and any charge, pledge, mortgage, security interest, assignment,
power of sale or other encumbrance or right exercisable by a third party
(whether or not perfected) having similar effect but excluding the Permitted
Encumbrances;

 

“Environmental Laws” means any statute, ordinance, regulation, rule, policy,
interpretation, guideline or decree (including consent decrees, guidance
documents and administrative orders) in effect as of Completion, applicable to
any Target Group Company, its business, or the real property from which it
conducts its business, enacted or promulgated by any Government Authority having
jurisdiction over any Target Group Company for the activities it conducts that
(i) regulates the exposure to, the amount, form, presence, emission, discharge,
release, threat of release, processing, use, treatment, storage, disposal,
handling, generation or production of any hazardous substance, including any
permit, license, approval, consent or authorization required therefor;
(ii) requires any reporting or dissemination of or access to information
regarding hazardous substances, including warnings or notices to employees; or
(iii) relates to or addresses human health or safety, including occupational
health and safety;

 

“EPC Cayman” has the meaning set forth in Recital (A);

 

“EPCI HK” has the meaning set forth in Recital (B);

 

“EPCI HK Group” means EPCI HK, Eastern Pacific Circuits (Dongguan) Ltd and
Lomber Circuits (Huizhou) Limited;

 

“EPCI Singapore” has the meaning set forth in Recital (B);

 

“EPCI Singapore Group” means EPCI Singapore, Eastern Pacific Circuits (Huiyang)
Limited and Eastern Pacific Circuits (Huizhou) Limited;

 

“EPCL” has the meaning set forth in Recital (A);

 

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“Escrow Account” has the meaning set out in clause 5.2.4.1(c);

 

“Escrow Agent” means Richards Butler of 20th Floor, Alexandra House, 16-20
Chater Road, Central, Hong Kong;

 

“Escrow Agreement” means the agreement to be entered into among the Seller, the
Buyer and the Escrow Agent in the form set out in schedule 7;

 

“Escrow Amount” means, as of a given date, the amount standing to the credit,
less an amount equal to the accrued interest, of the Escrow Account as of that
date;

 

“Escrow Consideration” has the meaning set out in clause 7.9;

 

“Escrow Period” means the period from the Completion Date to 31 July 2006 or the
period from 1 August 2006 to 31 December 2006 or the period from 1 January 2007
to 30 June 2007;

 

“Escrow Release Amount” means such portion of the Escrow Amount as set out in
column (2) of schedule 9 that may, subject to clause 7.8, be released by the
Escrow Agent to the Seller by reference to the relevant Escrow Consideration set
opposite to it in column (1) of schedule 9 and on the relevant date set out in
sub-columns (2) (a) to (c) in accordance with the provisions of this Agreement
and the Escrow Agreement provided that in relation to the Escrow Amount set out
in column (2) of schedule 9, (A) the Escrow Release Amount on 1 August 2006
shall be the lesser of: (i) the relevant amount set out in column (2)(a); and
(ii) the prevailing Escrow Amount less the relevant amounts set out in columns
(2)(b) plus (2)(c); (B) the Escrow Release Amount on 1 January 2007 shall be the
lesser of: (i) the relevant amount in column (2)(b); and (ii) the prevailing
Escrow Amount less the relevant amount set out in column (2)(c); and (C) the
Escrow Release Amount on 1 July 2007 shall be the greater of (i) the relevant
amount set out in column (2)(c) and the then prevailing Escrow Amount provided
that if any of (A), (B) or (C) above produces be a negative amount, such amount
shall be deemed to be zero;

 

“Estimated Closing Cash Amount” means the aggregate amount estimated by the
Seller of the bank balances, cash, cash on deposit, short-term securities and
investment accounts, including amounts for which cheques have been received by
the relevant member of the EPCI HK Group and the EPCI Singapore Group or
deposited in the bank accounts of the relevant member of the EPCI HK Group and
the EPCI Singapore Group which cheques have not cleared the drawer’s bank
accounts, of each member of the EPCI HK Group and the EPCI Singapore Group as at
the close of business on the day immediately before the Completion Date provided
that there shall be deducted from such aggregate amount amounts for which
cheques have been written by the relevant member of the EPCI HK Group and the
EPCI Singapore Group, which cheques have not cleared the bank account as of
Completion;

 

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“Event” means an event, act, transaction or omission including, without
limitation, a receipt or accrual of income or gains, distribution, failure to
distribute, acquisition, disposal, transfer, payment, loan or advance;

 

“Excluded Assets” means the assets set out in part 3 of schedule 1;

 

“Excluded Liabilities” means the liabilities set out in part 5 of schedule 1;

 

“Expert” means an independent firm of chartered accountants mutually appointed
by the parties hereto or by the President of the Hong Kong Society of
Accountants for the time being, as the case may be, in accordance with clause
6.3 and/or clause 8.5;

 

“Financial Statements” means the audited consolidated financial statements of
the Group for each of the financial years ended 31 December 2004, 31 December
2003, 31 December 2002 and 31 December 2001 (such financial statements including
without limitation, in each case a balance sheet, profit and loss account and
cash flow statement together with the notes thereon);

 

“Fundamental Warranty” means a statement contained in paragraphs 1, 2, 2A, 3, 4
and 5.2 in schedule 3 and “Fundamental Warranties” means all those statements;

 

“Fundamental Warranty Claim” means a claim by the Buyer under or pursuant to the
provisions of clause 9.1 in respect of any Fundamental Warranty;

 

“FY2003 Audited Accounts” means the Financial Statements of the Group for the
year ended 31 December 2003;

 

“FY2004 Audited Accounts” means the Financial Statements of the Group for the
year ended 31 December 2004;

 

“FY2004 EBITDA” means the audited consolidated profit before taxation, interest,
depreciation and amortisation of the Group for the financial year ended
31 December 2004 and derived from the FY2004 Audited Accounts, adjusted to add
back all costs and expenses relating to or incurred in connection with the
restructuring of the Debt Amount;

 

“FY2004 Working Capital” means the Working Capital as at 31 December 2004,
derived from the FY2004 Audited Accounts;

 

“FY2005 Monthly Management Accounts” means the unaudited consolidated monthly
management accounts of the Group, together with the notes thereon (if any), and
the consolidation worksheets of the Group for the period from 1 January 2005 to
the last day of the calendar month immediately preceding the Completion Date,
provided that if the Completion Date is less than four (4) weeks after the end
of any calendar month, then the unaudited consolidated monthly management
accounts of the Group together with the notes thereon (if any) and the
consolidation worksheets of the

 

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Group shall be delivered in respect of the period from 1 January 2005 to the
last day of the calendar month immediately preceding such month end;

 

“Government Authority” means any nation or government, any state, municipality,
or other political subdivision thereof, and any agency, bureau, board
commission, department or other entity exercising executive, legislative,
judicial, regulatory, administrative or other similar functions;

 

“Group” means EPCL and each of its subsidiaries and “Group Company” means any
one of them;

 

“HK GAAP” means the generally accepted accounting standards, principles and
practices applicable in Hong Kong;

 

“HK Shares” has the meaning set forth in Recital (C);

 

“HKIAC” has the meaning set out in clause 29.2;

 

“Hong Kong” means the Hong Kong Special Administrative Region of the People’s
Republic of China;

 

“Hong Kong Lease” means the lease for the property situated at Section F of
Tseung Kwan O Town Lot No. 39 and Extensions thereto, New Territories, Hong Kong
dated 17 July 2000 between The Hong Kong Science and Technology Park Corporation
and Eastern Pacific Circuits Property Limited, as amended;

 

“Indebtedness” means, in relation to the Target Group, any borrowings and
indebtedness (including by way of acceptance credits, finance leases, loan
stocks, bonds, debentures, notes, debt or inventory financing or sale and lease
back arrangements, overdrafts or any other arrangements the purpose of which is
to borrow money) owed to any banking, financial, acceptance credit, lending or
other similar institution or organisation and any institutional investor which
is not another member of the Target Group;

 

“Initial Consideration” has the meaning set forth in clause 3.1;

 

“Initial Escrow Amount” means the amount that shall be deposited into the Escrow
Account as at the Completion Date by the Buyer in accordance with clause
5.2.4.1(c);

 

“Intellectual Property” means (a) all patents, trademarks, service marks, logos,
and corporate names registered designs, applications and rights to apply for any
of those rights, internet domain names, copyrights and unregistered trade marks
and service marks; (b) research and development information, financial,
marketing and business data, pricing and costs information, trade secrets and
confidential business information; and (c) the right to sue for past
infringements of any of the foregoing rights;

 

“Intellectual Property Rights” means the all Intellectual Property owned or used
by the Target Group (including the Business IP);

 

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“Intra-Group Indebtedness” means all outstanding amounts owing immediately prior
to Completion to or from the Target Group, on the one hand, and the EPC Group
(which for the purposes of this definition shall mean the Seller’s Group
excluding the Target Group) on the other hand;

 

“Inventory” means, in relation to each Business, all raw materials, supplies,
work in progress, parts and components and finished goods held, used or owned by
the relevant Business Seller at Completion;

 

“Law” means any law, rule, regulation, order, writ, judgment, decree,
injunction, determination or award;

 

“Lenders” means the financial institutions to which the Borrowings are owed;

 

“Liabilities” means all liabilities, duties and obligations of every
description, whether deriving from contract, common law, statute or otherwise,
whether present or future, actual or contingent or ascertained or unascertained
and whether owed or incurred severally or jointly or as principal or surety;

 

“Management Accounts” means the unaudited consolidated financial statements of
the Group for each of the financial years ended 31 December 2003 and 31 December
2004 (such financial statements including without limitation, in each case a
balance sheet, profit and loss account and cash flow statement together with the
notes thereon, (if any));

 

“Material Adverse Change” means any event, condition, circumstance, incident or
fact that is or would reasonably be expected to have a material adverse effect
on the business or financial position of the Target Group as a whole, or the
assets (including intangible assets) or liabilities of the Target Group as a
whole;

 

“Material Contracts” has the meaning set forth in paragraph 13.1 of schedule 3;

 

“Non-EA Transferring Employees—Singapore” means the Transferring
Employees—Singapore who do not fall within the ambit of the Singapore Employment
Act;

 

“Non-Defaulting Party” has the meaning set out in clause 5.4;

 

“Note” means the promissory note to be issued by the Buyer to the Seller in
accordance with clause 5.2.4.2(c) (if applicable), the principal terms of which
are summarised in schedule 8

 

“Notice” has the meaning set out in clause 28.1;

 

“Other Documents” means all other documents, agreements and certificates that
are, or are required to be, executed pursuant to this Agreement;

 

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“Permitted Encumbrances” means security interests or liens arising by operation
of law or pursuant to title retention provisions under sales contracts,
equipment leases or hire purchase agreements with third parties entered into in
the ordinary course of business;

 

“Policies” has the meaning set out in paragraph 16.1 of schedule 3;

 

“Post-Cash Working Capital Shortfall” has the meaning set out in clause 6.8.

 

“PRC” means the People’s Republic of China excluding, for the purposes of this
Agreement, Hong Kong, the Macau Special Administrative Region of the People’s
Republic of China and Taiwan;

 

“Property” means the property or properties of the Target Group, details of
which are set out in part 6B of schedule 1;

 

“Recipient” has the meaning set forth in clause 20.6;

 

“Reference Banks” means The Hongkong and Shanghai Banking Corporation Limited
and Standard Chartered Bank;

 

“Relevant Claim” means a claim by the Buyer under or pursuant to the provisions
of clause 9.1 or the Tax Deed or any other provision of this Agreement or the
Other Documents;

 

“Relevant Element” has the meaning set out in clause 16.3;

 

“Relevant Period” means the period from the Completion Date up to and including
31 December 2005;

 

“Representation” has the meaning set out in clause 26;

 

“Retained Group” means the Group excluding the EPCI HK Group and the EPCI
Singapore Group and “Retained Group Company” means any one of them;

 

“Rules” has the meaning set out in clause 29.2;

 

“Sale Business and Assets” has the meaning set forth in clause 3.1;

 

“Security” means any surety, guarantee and security provided by the Group to the
Lenders to secure the obligations of the relevant Group Companies in respect of
the Borrowings;

 

“Security Release Documents” means the documents required to be executed by the
Lenders and the relevant Seller’s Group Companies for the purposes of releasing
the Security upon the repayment of the Debt Amount to the Lenders on Completion;

 

11

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“Seller MPF Scheme” means the mandatory provident fund scheme established by or
on behalf of the Seller or Eastern Pacific Circuits (HK) Limited in respect of
the Transferring Employees—HK;

 

“Seller Obligation” means any representation, warranty or undertaking to
indemnify given by the Seller to the Buyer under this Agreement or any of the
Other Documents, including, without limitation, pursuant to a Relevant Claim;

 

“Seller’s Group” means the Seller and each subsidiary of the Seller from time to
time and includes, for the avoidance of doubt, each of the Business Sellers and,
before Completion, each member of the EPCI HK Group and the EPCI Singapore
Group, and “Seller’s Group Company” means any one of them;

 

“Seller’s Group RRSP” has the meaning set forth in clause 17.1.4;

 

“Settled Amount” has the meaning set out in clause 7.8;

 

“Singapore Employment Act” means the Singaporean Employment Act (Cap 91);

 

“Singapore Shares” has the meaning set forth in Recital (C);

 

“Singapore Statutory Transfers” means the transfers of employees contemplated
under Section 18A of the Singapore Employment Act;

 

“Stock” means, in relation to each Business, the Inventory, stock-in-trade and
work-in-progress owned or agreed to be purchased by the relevant Business Seller
in connection with the Business at Completion, wherever held;

 

“Target Group” means the EPCI HK Group, the EPCI Singapore Group and the
Business Sellers, and “Target Group Company” means any company that is a member
of the EPCI HK Group or the EPCI Singapore Group or that is a Business Seller;

 

“Tax” or “Taxes” means all (i) forms of taxation, taxes, deductions,
withholdings, duties, imposts, levies, fees, charges and rates or other like
assessments or charges of any kind (including, without limitation, net income,
gross income, receipts, profit, business and occupation, license, excise,
registration, franchise, employment, payroll, withholding, ad valorem, transfer,
gains, stamp duty, capital, paid-up capital, profits, premium, value-added,
business tax, real property, personal property, inventory and merchandise,
commercial rent or environmental tax) imposed, levied, collected, withheld or
assessed by any Government Authority and any interest, additional taxation,
penalty, surcharge or fine in connection therewith, (ii) liability in respect of
any items described in clause (i) payable by any member of the EPCI HK Group or
the EPCI Singapore Group with respect to any period (or portion thereof) prior
to the Completion Date by reason of being a member of any affiliated, combined,
unitary, consolidated or similar group (including any arrangement for group or
similar relief

 

12

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within a jurisdiction), and (iii) liability in respect of any items described in
clause (i) or (ii) payable by reason of contract, assumption, transferee
liability, operation of Law or otherwise;

 

“Tax Deed” means the deed to be entered into among the Seller, the Buyer, EPCI
HK and EPCI Singapore in the form set out in schedule 13;

 

“Tax Return” means any and all reports, returns, estimates, information
statements or other information, including any schedules or attachments thereto
and any amendment thereof, required to be supplied to a Government Authority in
connection with any Taxes;

 

“Transferring Employees” means the Transferring Employees – Canada, the
Transferring Employees – HK, the Transferring Employees - Singapore, the
Transferring Employees – UK and the Transferring Employees – US, and
“Transferring Employee” means any of them;

 

“Transferring Employees – Canada” means the employees of Eastern Pacific
Circuits (Canada) Limited set out in part 7.1 of schedule 1 and who continue to
be employed by Eastern Pacific Circuits (Canada) Limited on the Completion Date
and any person who becomes an employee of Eastern Pacific Circuits (Canada)
Limited after the last practicable date prior to signing of this Agreement but
before the Completion Date;

 

“Transferring Employees – HK” means the employees of Eastern Pacific Circuits
(HK) Limited set out in part 7.2 of schedule 1 and who continue to be employed
by Eastern Pacific Circuits (HK) Limited on the Completion Date and any person
who becomes an employee of Eastern Pacific Circuits (HK) Limited after the last
practicable date prior to signing of this Agreement but before the Completion
Date;

 

“Transferring Employees – Singapore” means the employees of Eastern Pacific
Circuits (Singapore) Pte Ltd set out in part 7.3 of schedule 1 and who continue
to be employed by Eastern Pacific Circuits (Singapore) Pte Ltd on the Completion
Date and any person who becomes an employee of Eastern Pacific Circuits
(Singapore) Pte Ltd after the last practicable date prior to signing of this
Agreement but before the Completion Date;

 

“Transferring Employees – UK” means the employees of Eastern Pacific Circuits
(UK) Limited set out in part 7.4 of schedule 1 and who continue to be employed
by Eastern Pacific Circuits (UK) Limited on the Completion Date and any person
who becomes an employee of Eastern Pacific Circuits (UK) Limited after the last
practicable date prior to signing of this Agreement but before the Completion
Date;

 

“Transferring Employees – US” means the employees of Eastern Pacific Circuits
(USA) Corporation set out in part 7.5 of schedule 1 and who continue to be
employed

 

13

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by Eastern Pacific Circuits (USA) Corporation on the Completion Date and any
person who becomes an employee of Eastern Pacific Circuits (USA) Corporation
after the last practicable date prior to signing of this Agreement but before
the Completion Date;

 

“UK Transfer Regulations” means the United Kingdom Transfer of Undertakings
(Protection of Employment) Regulations 1981;

 

“Warranty” means a statement contained in schedule 3 and “Warranties” means all
those statements;

 

“Warranty Claim” means a claim by the Buyer under or pursuant to the provisions
of clause 9.1;

 

“Working Capital” means, as of a given date, the aggregated working capital of
the Group as at that date and which shall be determined on the basis of and
taking into account the line items set out in schedule 10.

 

1.2 In this Agreement, a reference to:

 

  1.2.1 “HK$” means the lawful currency of Hong Kong;

 

  1.2.2 “US$” means the lawful currency of the United States of America;

 

  1.2.3 “S$” means the lawful currency of Republic of Singapore;

 

  1.2.4 a document in the “agreed form” is a reference to a document in a form
approved and for the purposes of identification initialled by or on behalf of
each party;

 

  1.2.5 a law or statutory provision (or equivalent thereof) includes a
reference to the law or statutory provision (or equivalent thereof) as modified
or re-enacted or both from time to time before the date of Completion;

 

  1.2.6 a “person” includes a reference to any individual, firm, company,
corporation or other body corporate, government, state or agency of a state or
any joint venture, association or partnership (whether or not having separate
legal personality);

 

  1.2.7 a “party” includes a reference to that party’s successors;

 

  1.2.8 where any statement is to the effect that the Seller is not aware of a
matter or circumstance or a statement is qualified by the expression “to the
Seller’s knowledge” or “so far as the Seller is aware”, or any similar or like
expression, that statement shall be deemed to include a further statement that
the original statement was made after due and careful enquiry of the board of
directors of the Seller and senior management of the Seller, EPCL and Eastern
Pacific Circuits (HK) Limited;

 

14

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  1.2.9 a clause, paragraph, Recital, schedule or Annexure, unless the context
otherwise requires, is a reference to a clause or paragraph of, or Recital,
schedule or Annexure to, this Agreement; and

 

  1.2.10 except where otherwise stated, all times of the day are to Hong Kong
time.

 

1.3 In this Agreement:

 

  1.3.1 a company shall be deemed to be a “subsidiary” of another company, its
“holding company”, if that other company (a) holds a majority of the voting
rights in it, or (b) is a member of it and has the right to appoint or remove a
majority of its board of directors, or (c) is a member of it and controls alone,
pursuant to an agreement with other shareholders or members, a majority of the
voting rights in it; or if it is a subsidiary of a company which is itself a
subsidiary of that other company; and

 

  1.3.2 a person shall be deemed to be an “affiliate” of a company if that
person is a subsidiary or a holding company of that company.

 

1.4 The headings in this Agreement do not affect its interpretation.

 

1.5 For the purposes of determining the amount of any payment under this
Agreement, any monetary sum which is not in US$ shall be translated into US$ at
the average of the spot rates of exchange quoted by the Reference Banks for the
purchase of US$ with such foreign currency in the Hong Kong foreign exchange
market at or about 11:00 a.m. (Hong Kong time) on the three (3) Business Days
before the date on which the payment is due or such other exchange rate agreed
between the Seller and the Buyer.

 

1.6 All payments to be made pursuant to clauses 3, 5.2.4, 5.2.5, 6.6, 7 and 8
shall be made in immediately available funds by transfer of funds for same day
value to such accounts and in such amounts as shall be notified by the Seller,
the Buyer or the Lenders or the Escrow Agent, as the case may be, at least three
Business Days before the date on which the payment is due.

 

1.7 If any payment is made pursuant to this Agreement in respect of a liability
arising under a Seller Obligation or a Buyer Obligation, it shall be made on the
following basis:

 

  1.7.1 if such payment is specifically referable to any particular Business or
Business Asset, it shall so far as possible adjust the price paid for the
relevant Business or Business Asset;

 

  1.7.2 if such payment is specifically referable to the EPCI HK Group or the
EPCI Singapore Group, it shall so far as possible adjust the price paid for the
HK Shares or the Singapore Shares, as applicable; and

 

15

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  1.7.3 if any payment is not so specifically referable, an adjustment shall be
made pro rata to the price paid for all of the Businesses, Business Assets, HK
Shares and Singapore Shares.

 

2. SALE AND PURCHASE

 

2.1 Subject to and in accordance with this Agreement:

 

  2.1.1 the Seller shall procure the sale and transfer by the relevant Business
Seller of, and the Buyer relying on the several representations, Warranties and
undertakings contained in this Agreement shall purchase, each Business
(including the Business Assets in relation to each Business), in each case as a
going concern with effect from Completion and free of any Encumbrance;

 

  2.1.2 the Seller shall procure the sale by EPC Cayman of, and the Buyer shall
purchase, all of the HK Shares, and the sale by EPCL of all of the Singapore
Shares, and each right attaching to the HK Shares and the Singapore Shares at or
after Completion, free of any Encumbrance; and

 

  2.1.3 the Buyer relying on the several representations, Warranties and
undertakings contained in this Agreement shall, and shall procure that the
relevant Buyers’ Group Company shall, assume and discharge any Assumed
Liabilities in relation to each Business in accordance with clause 14.1.

 

2.2 Nothing in this Agreement or in any of the Other Documents shall transfer
any of the Excluded Assets to the Buyer or any Buyer’s Group Company or make the
Buyer or any Buyer’s Group Company liable for any of the Excluded Liabilities.

 

2.3 All title, rights, benefits, advantages and risks (including risk of loss or
damage) to the Business Assets shall pass to the Buyer or the relevant Buyer’s
Group Company on Completion, except as otherwise provided in this Agreement or
as otherwise agreed in writing.

 

2.4 Without prejudice to any other rights or remedies of the Buyer, the Seller
or a Business Seller under this Agreement, if any right, claim or asset which
does not form part of a Business has been transferred to or is vested in a
Buyer’s Group Company and the Seller gives written notice to the Buyer of the
same at any time in the six months following Completion, the Buyer shall (and
the Seller shall provide such assistance to the Buyer as the Buyer reasonably
requires for this purpose), so far as it is able, transfer, or procure the
transfer of, such right, claim or asset, together with any benefit or sum (net
of Tax and other out of pocket expenses) accruing to any Buyer’s Group Company
as a result of holding such right, claim or asset since Completion, as soon as
practicable, to such person as the Seller shall direct on terms that no
consideration is provided by any person for such transfer.

 

16

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2.5 Except as provided in clauses 15 and 16, and without prejudice to any other
rights or remedies of the Buyer, the Seller or a Business Seller under this
Agreement, if any right, claim or asset which forms part of the Business (other
than an Excluded Asset) has not been transferred to or is not vested in a
Buyer’s Group Company and the Buyer gives written notice to the Seller of the
same at any time in the six months following Completion, the Seller shall (and
the Buyer shall provide such assistance to the Seller as the Seller reasonably
requires for this purpose), so far as it is able, transfer, or procure the
transfer of, such right, claim or asset, together with any benefit or sum (net
of Tax and other out of pocket expenses) accruing to any Seller’s Group Company
as a result of holding such right, claim or asset since Completion, as soon as
practicable, to such person as the Buyer shall direct on terms that no
consideration is provided by any person for such transfer.

 

2.6 The Seller undertakes to the Buyer that it will procure the compliance of
all Business Sellers with any obligation which is referred to in this Agreement
as an obligation of a Business Seller, and will procure the compliance of each
Seller’s Group Company with all Seller Obligations, including without
limitation, the Tax Deed.

 

2.7 The Buyer undertakes to the Seller that it will procure the compliance of
all Buyer’s Group Companies with any obligation which is referred to in this
Agreement as an obligation of a Buyer’s Group Company and will procure the
compliance of each Buyer’s Group Company with all Buyer Obligations, including
without limitation, the Tax Deed.

 

3. INITIAL CONSIDERATION

 

3.1 The initial consideration payable by the Buyer to the Seller for the
Business (with the Business Assets), the HK Shares and the Singapore Shares
(collectively the “Sale Business and Assets”) shall be US$120,000,000 (the
“Initial Consideration”).

 

3.2 As soon as reasonably practicable after signing of this Agreement, the Buyer
and the Seller shall use their reasonable endeavours to agree in writing the
apportionment of the Initial Consideration among the respective Sale Business
and Assets.

 

4. CONDITIONS

 

4.1 Completion is conditional on the following Conditions being satisfied (or in
the case of the Conditions in clause 4.1.1, 4.1.4, 4.1.5, 4.1.9, 4.1.10, 4.1.12
or 4.1.13 waived by the Buyer, or in the case of the Condition in clause 4.1.7,
waived by the Seller) on or before 11.00 a.m. on 30 July 2005:

 

  4.1.1

(a) the Seller having delivered to the Buyer a copy of the FY2003 Audited
Accounts and the FY2004 Audited Accounts; and (b) that the financial position of
the Group as reflected in the FY2003 Audited Accounts and the FY2004 Audited
Accounts does not constitute a Material Adverse Change when

 

17

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compared with the financial position of the Group as reflected in the Management
Accounts in respect of the same financial year;

 

  4.1.2 the Seller having obtained the consent of the Lenders, conditional on
the Buyer complying with clause 5.2.4.1(a) or clause 5.2.4.2(a), for the
proposed sale of the HK Shares, the Singapore Shares, each Business and the
Business Assets to the Buyer and for the release of the Security upon the
repayment of the Debt Amount to the Lenders on Completion and such consent
remaining in full force and effect and if such consent is given subject to any
conditions then, in relation to any conditions that relate to the repayment of
the Debt Amount, such conditions being acceptable to the Seller;

 

  4.1.3 the Lenders having confirmed in writing that the Debt Amount does not
exceed US$92,888,736.68;

 

  4.1.4 the Warranties remaining true and accurate and not misleading in any
material respect at Completion as if repeated at Completion, provided, however,
that unless a breach of any Warranty is or is reasonably likely to amount to,
when aggregated with all other breaches of any Warranty, a Material Adverse
Change, the Seller shall be deemed to have satisfied the Condition in this
clause 4.1.4;

 

  4.1.5 EPCI HK having transferred the 5,468,040 shares in Lomber Investments
Limited held by it to Universal Enterprise Limited at book value;

 

  4.1.6 the Seller and the Buyer having obtained the consent of The Hong Kong
Science and Technology Park Corporation for the assignment of the Hong Kong
Lease to a Buyer’s Group Company, or the surrender and replacement of that Hong
Kong Lease with a new lease with a Buyer’s Group Company over the same property
that is the subject of the Hong Kong Lease, on terms reasonably satisfactory to
the Buyer;

 

  4.1.7 either:

 

  4.1.7.1 the Buyer having delivered to the Seller evidence which is reasonably
satisfactory to the Seller from a financial institution acceptable to the Seller
that the Buyer will have on Completion immediately available the necessary cash
resources to meet its obligations under clauses 5.2.4.1 and 5.2.5; or

 

  4.1.7.2 the Buyer having delivered to the Seller (i) evidence which is
reasonably satisfactory to the Seller from a financial institution acceptable to
the Seller that the Buyer will have on Completion immediately available the
necessary cash resources to meet its

 

18

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obligations under clauses 5.2.4.2 (a) and (b), and clause 5.2.5; and (ii) a duly
executed Note;

 

  4.1.8 the Seller and the Buyer confirming in writing that neither party has
had any claim notified to it in relation to the Excluded Liabilities in response
to the notices served by it under the Transfer of Businesses (Protection of
Creditors) Ordinance pursuant to clause 13, other than those claims in relation
to the Excluded Liabilities which are paid, compromised, or settled with or by
the Seller (at its own cost);

 

  4.1.9 the Seller having delivered to the Buyer the FY2005 Monthly Management
Accounts;

 

  4.1.10 the Seller having delivered evidence which is reasonably satisfactory
to the Buyer that the Tax Return for EPCI Singapore in respect of the financial
year ended 31 December 2003 has been filed with the respective tax authority in
Singapore and Hong Kong;

 

  4.1.11 no order or judgement of any court or governmental, statutory or
regulatory body having been issued or made prior to Completion, which has the
effect of making unlawful or otherwise prohibiting the purchase of the Sale
Business and Assets by the Buyer;

 

  4.1.12 the FY2004 EBITDA being not less than US$13,000,000;

 

  4.1.13 the Seller shall provide (at the same time when the Seller provides the
Estimated Closing Cash Amount to the Buyer) to the Buyer a certificate
containing reasonable details issued by a director of the Seller an estimate of
the amount of the Working Capital as at the close of business on the day
immediately before the Completion Date determined on the basis of and taking
into account the line items set out in schedule 10 and such estimated amount
shall not be less than negative US$2,000,000.

 

4.2 The Seller shall make all reasonable efforts to achieve satisfaction of or
procure the satisfaction of the Conditions in clauses 4.1.1(a), 4.1.2, 4.1.3,
4.1.5, 4.1.9 and 4.1.10 as soon as possible.

 

4.3 The Buyer shall make all reasonable efforts to achieve satisfaction of the
Condition in clause 4.1.7 as soon as possible.

 

4.4 The Buyer and the Seller shall make all reasonable efforts to achieve
satisfaction of the Conditions in clauses 4.1.6 and 4.1.8 as soon as possible.

 

4.5 If, at any time, the Seller or the Buyer becomes aware of a fact or
circumstance that might prevent a Condition being satisfied, it shall
immediately inform the other party of the matter.

 

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4.6 At any time on or before 11.00 a.m. on 30 July 2005, the Seller may waive
the Condition set out in clause 4.1.7 by notice to the Buyer on any terms it
decides.

 

4.7 At any time on or before 11.00 a.m. on 30 July 2005, the Buyer may waive any
of the Conditions set out in clauses 4.1.1, 4.1.4, 4.1.5, 4.1.9, 4.1.10, 4.1.12
and 4.1.13 by notice to the Seller on any terms it decides.

 

4.8 If any of the Conditions has not been satisfied (or waived pursuant to
clause 4.6 or 4.7) by 11.00 a.m. on 30 July 2005, this Agreement shall
automatically terminate with immediate effect.

 

4.9 Each party’s further rights and obligations cease immediately on
termination, other than in respect of clauses 1, 20.3 to 20.6, 22, 23, 24, 25,
26, 27.6, 28, and 29 which shall survive such termination, but termination does
not affect a party’s accrued rights and obligations at the date of termination
and, for the avoidance of doubt, any accrued rights of the parties in connection
with any breach by each other of the warranties set out in this Agreement.

 

5. COMPLETION

 

5.1 Completion shall take place at the offices of Baker & McKenzie at 14th
Floor, Hutchison House, 10 Harcourt Road, Hong Kong on the Completion Date.

 

5.2 At Completion:

 

  5.2.1 the Seller and the Buyer shall execute, and shall procure that the
Escrow Agent executes, the Escrow Agreement;

 

  5.2.2 the Seller and the Buyer shall execute, and the Seller shall procure
EPCI HK and EPCI Singapore to execute the Tax Deed;

 

  5.2.3 the Seller and the Buyer shall do, and shall respectively procure that
each Seller’s Group Company and Buyer’s Group Company shall do, all those things
respectively required of them in schedule 2;

 

  5.2.4 the Buyer shall pay the Initial Consideration as follows:

 

5.2.4.1

 

  (a) the Buyer shall pay the equivalent of the Debt Amount to the Lenders;

 

  (b) the Buyer shall pay US$11,111,263.32 to the Seller; and

 

  (c)

the Buyer shall pay the balance of the Initial Consideration (after deduction of
the amount set out in sub-paragraphs (a) and (b) above) to the Escrow Agent and
the Seller and the Buyer shall procure that the Escrow Agent immediately
deposits such amount into a separately

 

20

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designated interest-bearing account with Standard Chartered Bank Limited in the
Escrow Agent’s name (the “Escrow Account”) to be held pursuant to the terms of
the Escrow Agreement and clause 7; or

 

5.2.4.2

 

  (a) the Buyer shall pay the equivalent of the Debt Amount to the Lenders;

 

  (b) the Buyer shall pay US$11,111,263.32 to the Seller; and

 

  (c) the balance of the Initial Consideration (after deduction of the amount
set out in sub-paragraphs (a) and (b) above) shall be satisfied by the issue of
the Note by the Buyer to the Seller;

 

  5.2.5 the Buyer shall pay the Estimated Closing Cash Amount to the Seller.

 

5.3 The parties are not obliged to complete this Agreement unless:

 

  5.3.1 the Buyer and each Buyer’s Group Company and the Seller and each
Seller’s Group Company complies with all their respective obligations under this
clause 5 and schedule 2; and

 

  5.3.2 the sale and purchase of all of the Businesses, the Business Assets, the
HK Shares and the Singapore Shares is completed simultaneously.

 

5.4 If Completion does not take place immediately on the Completion Date because
a party (the “Defaulting Party”) fails to comply with any of its obligations
under this clause 5 and schedule 2 (whether such failure amounts to a
repudiatory breach or not) and the other party (the “Non-Defaulting Party”) is
otherwise in a position to comply with its obligations under this clause 5 and
schedule 2, the Non-Defaulting Party may, without prejudice to any other right
of or remedy available to the Non-Defaulting Party, by notice to the Defaulting
Party:

 

  5.4.1 proceed to Completion to the extent reasonably practicable;

 

  5.4.2 postpone Completion to a date not more than five (5) Business Days after
the Completion Date and not later than 14 August 2005; or

 

  5.4.3 terminate this Agreement. Each party’s further rights and obligations
cease immediately on termination, other than in respect of clauses 1, 20.3 to
20.6, 22, 23, 24, 25, 26, 27.6, 28, and 29 which shall survive such termination,
but termination does not affect a party’s accrued rights and obligations at the
date of termination

 

5.5 If the Non-Defaulting Party postpones Completion to another date in
accordance with clause 5.4.2, the provisions of this Agreement apply as if that
other date is the Completion Date.

 

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5.6 Effective as at Completion:

 

  (a) each member of the Retained Group and the Seller hereby releases each
Buyer’s Group Company from any liability in respect of Intra-Group Indebtedness;
and

 

  (b) each Buyer’s Group Company hereby releases each member of the Retained
Group and the Seller from any liability in respect of Intra-Group Indebtedness.

 

6. POST-COMPLETION WORKING CAPITAL ADJUSTMENTS

 

6.1 As soon as practicable following Completion, the Buyer and the Seller shall
direct the Auditors to undertake a completion audit and to prepare its
calculation of the FY2004 Working Capital, the Closing Working Capital and the
Actual Closing Cash Amount (the “Completion Statement”) and to deliver, in any
event no later than forty (40) Business Days after the Completion Date, the
Completion Statement to the Seller and the Buyer. The Seller and the Buyer shall
each pay one half of the Auditors’ costs in preparing the Completion Statement.

 

6.2 The FY2004 Working Capital and the Closing Working Capital shall be
determined on the basis of and taking into account the line items set out in
schedule 10 and shall be calculated on a basis consistent with the FY2004
Audited Accounts, using the same accounting principles, policies and practices
and, so far as consistent with the foregoing, applicable standards, principles
and practices generally accepted in Hong Kong.

 

6.3 If either the Seller or the Buyer does not accept the Auditors’ calculation
of the FY2004 Working Capital, the Closing Working Capital and/or the Actual
Closing Cash Amount, the Seller or the Buyer shall notify the other party of
such non-acceptance within ten (10) Business Days of receipt of the Completion
Statement. The parties shall thereafter refer the determination of the FY2004
Working Capital, the Closing Working Capital and/or the Actual Closing Cash
Amount to an independent firm of chartered accountants agreed by the parties in
writing or, failing agreement on the identity of the partner or firm of
chartered accountants, appointed, on the application of either party, by the
President of the Hong Kong Society of Accountants for the time being.

 

6.4 The Expert shall act on the following basis:

 

  6.4.1 the Expert shall act as an independent expert and not as an arbitrator;

 

  6.4.2 the Expert shall be instructed to notify the Seller and the Buyer of his
determination within ten (10) Business Days of his appointment;

 

  6.4.3

the Expert’s determination shall, in the absence of fraud or manifest error, be
final and binding on the parties and shall be deemed to constitute the FY2004

 

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Working Capital, the Closing Working Capital and/or the Actual Closing Cash
Amount for all purposes of this Agreement; and

 

  6.4.4 the Seller and the Buyer shall each pay one half of the Expert’s costs.

 

6.5 For the purposes of determining the FY2004 Working Capital, the Closing
Working Capital and the Actual Closing Cash Amount, the Seller and the Buyer
shall give the Expert and each other all information relating to the FY2004
Working Capital, the Closing Working Capital and the Actual Closing Cash Amount
which the Expert may reasonably require and the Expert shall be entitled (to the
extent he considers appropriate) to base his opinion on such information and on
the accounting and other records of the Group, provided always that the Closing
Working Capital shall be determined on the basis of and taking into account the
line items set out in schedule 10 and shall be determined on a basis consistent
with the FY2004 Audited Accounts, using the same accounting principles, policies
and practices and, so far as consistent with the foregoing, applicable
standards, principles and practices generally accepted in Hong Kong.

 

6.6 Following the determination of the FY2004 Working Capital and the Closing
Working Capital, the adjustment to the Initial Consideration shall be determined
and paid as follows:

 

  6.6.1 if the Closing Working Capital less the Desay Land Premium Payment is
greater than the FY2004 Working Capital, an amount equal to the amount of the
difference shall be paid by the Buyer to the Seller within five (5) Business
Days; and

 

  6.6.2 if the Closing Working Capital less the Desay Land Premium Payment is
less than the FY2004 Working Capital, an amount equal to the amount of the
difference shall be paid by the Seller to the Buyer within five (5) Business
Days. Such amount shall be payable in accordance with clause 6.8.

 

6.7 Following the determination of the Actual Closing Cash Amount, the Seller or
the Buyer (as the case may be) shall pay to the other an amount in cash
determined as follows:

 

  6.7.1 if the Actual Closing Cash Amount (less any deduction pursuant to clause
6.8) is greater than the Estimated Closing Cash Amount, an amount equal to the
amount of the difference shall be paid by the Buyer to the Seller within five
(5) Business Days. Such amount shall be payable in US$ in accordance with clause
1.5; and

 

  6.7.2 if the Actual Closing Cash Amount (less any deduction pursuant to clause
6.8) is less than the Estimated Closing Cash Amount, an amount equal to the
difference (but in any event not exceeding the Estimated Closing Cash

 

23

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Amount) shall be paid by the Seller to the Buyer within five (5) Business Days.
Such amount shall be payable in US$ in accordance with clause 1.5.

 

6.8 If the Seller owes any amount to the Buyer pursuant to clause 6.6.2, such
amount shall first be deducted from the Actual Closing Cash Amount for the
purposes of the payment to be made under clause 6.7. If the adjustment referred
to in the preceding sentence is not sufficient to pay the full amount due to the
Buyer pursuant to clause 6.6.2 (the remaining unpaid amount being the “Post-Cash
Working Capital Shortfall”), then the Post-Cash Working Capital Shortfall shall
be paid to the Buyer from the Escrow Account.

 

7. ESCROW AMOUNT

 

7.1 If the Buyer wishes to use the Escrow Amount in settling any payments to be
made by the Seller to the Buyer under this Agreement including, but not limited
to, a Relevant Claim:

 

  7.1.1 subject to the provisions of schedule 4, the Buyer shall notify the
Seller of a claim for reduction of the Escrow Amount (each, a “Deduction”)
whether the claim is a Fundamental Warranty Claim or a claim other than a
Fundamental Warranty Claim stating in reasonable detail the nature of the claim
for Deduction and the amount claimed (detailing the Buyer’s calculation of the
payments to be made by the Seller to the Buyer) (the “Amount Claimed”);

 

  7.1.2 without prejudice to clause 7.1.3, if the Seller accepts liability in
respect of a claim for Deduction but accepts part only of the Amount Claimed,
that part of the Amount Claimed which is accepted shall be paid out of the
Escrow Amount; and

 

  7.1.3 if the Seller accepts the Amount Claimed or there is a determination of
the amount payable in respect of the claim for Deduction by an arbitral tribunal
appointed in accordance with this Agreement, the amount so accepted or
determined (in the latter case less any money previously paid pursuant to clause
7.1.2 in respect of the claim for Deduction) shall be paid out of the Escrow
Amount.

 

7.2 The Escrow Amount shall, subject to clause 7.8, be paid to the Seller in
accordance with clause 1.6 and in accordance with schedule 9. The interest
accruing on the Escrow Amount shall be paid to the Seller in accordance with
clause 1(d) of the Escrow Agreement.

 

7.3

If the Seller or the Buyer is entitled to any payment from the Escrow Amount,
the Seller and the Buyer shall within five (5) Business Days commencing on the
date on which the entitlement arises jointly instruct the Escrow Agent in
writing to release the amount of such payment to the Seller or the Buyer, as the
case may be. The Seller and

 

24

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the Buyer further agree that the Escrow Agent shall act only in accordance with
the joint written instructions of the Seller and the Buyer or a decision of the
arbitral tribunal appointed in accordance with this Agreement.

 

7.4 Interest accruing from time to time on the Escrow Amount shall belong to the
Seller and shall not be added to the Escrow Amount and shall not form part of it
for the purposes of this clause 7 or schedule 9.

 

7.5 The Seller and the Buyer shall each pay one half of the Escrow Agent’s costs
in respect of any work done pursuant to this clause 7.

 

7.6 All payments from the Escrow Account shall be made in US$ pursuant to clause
1.5.

 

7.7 The Seller shall not be wound up or liquidated until the later of:
(i) 1 July 2007; and (ii) the date on which all Relevant Claims have been
settled or otherwise determined.

 

7.8 If a Relevant Claim is notified to the Seller in accordance with paragraphs
1.1, 2 and 3 of schedule 4 but such Relevant Claim has not been settled or
otherwise determined prior to the expiry of the relevant Escrow Period, then the
parties agree that the Amount Claimed in respect of such Relevant Claim shall be
retained in the Escrow Account. Upon final settlement or determination of the
amount in respect of such Relevant Claim (the “Settled Amount”), if the Settled
Amount is less than the Amount Claimed then the difference shall forthwith be
released to the Seller from the Escrow Account.

 

7.9 For the purposes of schedule 9, the Escrow Consideration shall mean the
Initial Consideration plus the EBITDA Earnout Consideration (if any).

 

8. PRO-FORMA ACCOUNTS AND EBITDA EARNOUT CONSIDERATION

 

8.1 As soon as practicable following 31 December 2005, the Buyer shall direct
the Auditors to prepare audited consolidated pro-forma accounts in respect of
each Business and each member of the EPCI Hong Kong Group and EPCI Singapore
Group for the period from 1 January 2005 to 31 December 2005 on the basis as if
Completion had taken place on 1 January 2005 (the “Pro-forma Accounts”) and to
prepare a statement showing their calculation of the Actual Adjusted 2005 EBITDA
and the EBITDA Earnout Consideration (the “Earnout Statement”) and to deliver by
either: (i) sixty (60) Business Days after 31 December 2005; or (ii) if the
Buyer gives written notice to the Seller within 30 days following 31 December
2005 that it shall take the option referred to in clause 8.10(b)(1) in respect
of any Relevant Claim arising during the period referred to in clause 8.10(b)
and such Relevant Claim has not been settled or otherwise determined prior to or
on 31 December 2005, 5 Business Days following the date on which such Relevant
Claim has been settled or otherwise determined, the Pro-forma Accounts and the
Earnout Statement to the Seller and the Buyer. The Buyer shall pay the Auditor’s
costs in preparing the Pro-forma Accounts and the Earnout

 

25

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Statement if the EBITDA Earnout Consideration is zero or a negative amount. If
the EBITDA Earnout Consideration is a positive amount, the Seller shall be
liable for the lesser of: (i) 50% of the Auditor’s costs in preparing the
Pro-forma Accounts and the Earnout Statement; and (ii) the EBITDA Earnout
Consideration and if such amount is less than 50% of the Auditor’s costs in
preparing the Pro-forma Accounts and the Earnout Statement, the Seller shall not
be liable to pay any further amount in respect of such costs.

 

8.2 The Buyer shall deliver to the Seller as soon as practicable after
31 December 2005, but in any event by 31 January 2006 unaudited consolidated
management accounts in respect of each Business and the business of the EPCI
Hong Kong Group and the EPCI Singapore Group for the period from 1 January 2005
to 31 December 2005. As soon as practicable following receipt by the Seller of
such management accounts, and in any event prior to 14 February 2006, senior
representatives of the Buyer and the Seller shall meet with a view to discussing
and settling in good faith any Relevant Claims arising from any fact, matter,
event or circumstance which occurred during the period from and including
1 January 2005 up to and including 31 December 2005, that have not been settled
or otherwise determined prior to 31 December 2005. If the Buyer and the Seller
are not able to reach agreement in respect of such Relevant Claims, or the
amount claimed in respect of such Relevant Claim, by 31 March 2006, the matter
shall be promptly be referred to arbitration by either party in accordance with
clause 29.

 

8.3 The Actual Adjusted 2005 EBITDA shall be determined on the basis of and
taking into account the principles set out in Part A of schedule 14 and on a
basis consistent with the FY2004 Audited Accounts, using the same accounting
principles, policies and practices and, so far as consistent with the foregoing,
applicable standards, principles and practices generally accepted in Hong Kong.
For the avoidance of doubt, only Relevant Claims that can be recognised as an
expense under such accounting principles, policies, practices, applicable
standards, principles and practices generally accepted in Hong Kong and only
Relevant Claims that have been settled or otherwise determined may be taken into
account in the Actual Adjusted 2005 EBITDA amount.

 

8.4 The EBITDA Earnout Consideration shall be determined in accordance with the
following formula:

 

 

EBITDA Earnout Consideration = [ [EBITDAA – 13,218,750] ×

 

  (   128
14.1   )  

 

]

 

 

where:

 

EBITDAA is the Actual Adjusted 2005 EBITDA,

 

provided that the EBITDA Earnout Consideration shall, in no event, be (a) a
negative amount ; or (b) more than US$8,000,000.

 

26

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8.5 If the Seller notifies the Buyer in writing that it is satisfied with the
Pro-forma Accounts and the Earnout Statement, then the Actual Adjusted 2005
EBITDA and the EBITDA Earnout Consideration shall be determined on the basis of
the Pro-forma Accounts and the Earnout Statement, as so agreed. If the Seller
does not accept the Pro-forma Accounts or the Earnout Statement, the Seller
shall notify the Buyer of such non-acceptance within ten (10) Business Days of
receipt of the Pro-forma Accounts and the Earnout Statement. The parties shall
thereafter refer the preparation of the Pro-forma Accounts and the determination
of the Actual Adjusted 2005 EBITDA and/or the EBITDA Earnout Consideration to an
independent firm of chartered accountants agreed by the parties in writing or,
failing agreement on the identity of the partner or firm of chartered
accountants, appointed, on the application of either party, by the President of
the Hong Kong Society of Accountants for the time being.

 

8.6 The Expert shall act on the following basis:

 

  8.6.1 the Expert shall act as an independent expert and not as an arbitrator;

 

  8.6.2 the Expert shall be instructed to notify the Seller and the Buyer of his
determination within ten (10) Business Days of his appointment;

 

  8.6.3 the Expert’s determination shall, in the absence of fraud or manifest
error, be final and binding on the parties and shall be deemed to constitute the
Pro-forma Accounts and the Actual Adjusted 2005 EBITDA and the EBITDA Earnout
Consideration for all purposes of this Agreement; and

 

  8.6.4 the Seller and the Buyer shall each pay one half of the Expert’s costs.

 

8.7 For the purposes of preparing the Pro-forma Accounts and determining the
Actual Adjusted 2005 EBITDA and the EBITDA Earnout Consideration, the Seller and
the Buyer shall give the Expert and each other all information relating to or
relevant for the preparation of the Pro-forma Accounts and the determination of
the Actual Adjusted 2005 EBITDA and the EBITDA Earnout Consideration which the
Expert may reasonably require and the Expert shall be entitled (to the extent he
considers appropriate) to base his opinion on such information, provided always
that the Pro-forma Accounts and the Actual Adjusted 2005 EBITDA and the EBITDA
Earnout Consideration shall be determined on a basis consistent with the FY2004
Audited Accounts, using the same accounting principles, policies and practices
and, so far as consistent with the foregoing, applicable standards, principles
and practices generally accepted in Hong Kong and that the Actual Adjusted 2005
EBITDA shall be determined in accordance with the principles set out in Part A
of schedule 14.

 

8.8    (a) The EBITDA Earnout Consideration, after deduction of any payment to
the Auditors pursuant to clause 8.1, shall be paid by the Buyer into the Escrow
Account within two (2) Business Days of the EBITDA Earnout Consideration being
agreed or otherwise determined in accordance with this clause 8, or if

 

27

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paid after 1 January 2007, the EBITDA Earnout Consideration shall be paid
directly to the Seller, provided that if any Relevant Claims have not been
settled or otherwise determined by 1 January 2007, an amount equal to the Amount
Claimed, less the then prevailing Escrow Amount, shall be paid by the Buyer into
the Escrow Account and the balance (if any) shall be paid directly to the Seller
.

 

  (b) Subject to clause 8.8(a), if the Initial Consideration is paid by the
Buyer in the manner set out in clause 5.2.4.1, the Buyer shall pay to the Seller
an amount equivalent to the interest (at a rate charged under the Escrow
Account) which would have been accured on the EBITDA Earnout Consideration from
the Completion Date to the date on which the EBITDA Earnout Consideration is
deposited into the Escrow Account or paid directly to the Seller, as the case
may be.

 

  (c) Subject to clause 8.8(a), if the Initial Consideration is paid by the
Buyer in the manner set out in clause 5.2.4.2 and the Note has not been paid in
full on the date on which the EBITDA Earnout Consideration is determined,
payment of the EBITDA Earnout Consideration may be satisfied by an increase in
the principal amount of the Note by an amount equal to the EBITDA Earnout
Consideration. The interest accruing on the EBITDA Earnout Consideration shall
be determined in accordance with the Note.

 

8.9 The Buyer agrees that it will use its best endeavours to procure that each
member of the Buyer’s Group which has acquired a Business and each member of the
EPCI HK Group and EPCI Singapore Group shall be conduct its business at all
times during the Relevant Period in accordance with the principles set out in
Part B of schedule 14.

 

8.10 The Seller and the Buyer agree that:

 

  (a) in respect of any Relevant Claim arising from any fact, matter, event or
circumstance which has occurred prior to and including 31 December 2004, (i) the
amount that has been settled or otherwise determined in respect of any Relevant
Claim; (ii) the amount of the loss suffered or incurred by the relevant Buyer’s
Group Company in respect of which such Relevant Claim has been settled or
otherwise determined; or (iii) the Amount Claimed in respect of any Relevant
Claim that has not been settled or otherwise determined during such period,
shall not be taken into account in the calculation of the Actual Adjusted 2005
EBITDA and the Buyer shall use the Escrow Amount in accordance with clause 7 in
settling any payments to be made by the Seller to the Buyer in respect of any
amount that has been settled or otherwise determined in respect of such Relevant
Claim.

 

28

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  (b) in respect of any Relevant Claim arising from any fact, matter, event or
circumstance which occurs during the period from and including 1 January 2005 up
to and including 31 December 2005, the Buyer shall have the option to either:
(1) take into account in the calculation of the Actual Adjusted 2005 EBITDA the
amount that has been settled or otherwise determined in respect of such Relevant
Claim, provided that schedule 4 shall apply to limit or exclude, as the case may
be, the liability determined in respect of such Relevant Claim (which for the
avoidance of doubt shall include Relevant Claims made pursuant to the Tax Deed),
with the exception of paragraph 1.1.2 of schedule 4 which shall not apply; or
(2) to use the Escrow Account in accordance with clause 7 in settling the amount
of such Relevant Claim. For the avoidance of doubt, if the Actual Adjusted 2005
EBITDA is determined to be equal to or less than US$13,218,750 when the amount
referred to in clause 8.10(b)(1) is taken into account in the calculation of the
Actual Adjusted 2005 EBITDA, the Buyer shall have the right to use the Escrow
Account pursuant to clause 7 in settling the outstanding portion of the amount
of such Relevant Claim which has not been settled hereunder, provided that such
portion is not less than US$100,000 and, for the avoidance of doubt, the terms
set out in schedule 4 shall apply to such outstanding portion.

 

8.11 If the Buyer shall take the option referred to in clause 8.10(b)(1) above,
then at the same time when the Buyer provides the Pro-forma Accounts and the
Earnout Statement in accordance with clause 8.1 above, the Buyer shall provide a
certificate issued by a director of the Buyer containing reasonable details of
the Relevant Claims that have been taken into account in the calculation of the
Actual Adjusted 2005 EBITDA.

 

8.12 As soon as practicable following the end of each full calendar month during
the Relevant Period, the Buyer shall deliver to the Seller unaudited
consolidated monthly management accounts in respect of each Business and the
business of the EPCI Hong Kong Group and the EPCI Singapore Group. Such monthly
management accounts shall consist of a consolidated profit and loss account,
balance sheet and cash flow statement together with the notes thereon (if any)
for the Relevant Period. The Buyer shall promptly deliver to the Seller any
management updates in respect of the business carried on by the Target Group as
a whole as at Completion. During the Relevant Period, the Buyer shall allow the
Seller and its representatives reasonable access, upon notice and during normal
business hours, to senior management of the Buyer and senior management of the
business previously carried on by the Target Group, for the purpose of
clarifying or discussing any matters arising from the consolidated monthly
management accounts or the management updates referred to above. The Seller
acknowledges that the above information to be provided by the Buyer shall be
subject to clause 22 and will constitute material and non-public information as
defined under US securities laws.

 

29

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9. THE SELLER’S WARRANTIES AND PRE-COMPLETION CONDUCT

 

9.1 The Seller acknowledges that, in entering into this Agreement the Buyer has
relied upon the several representations, the Warranties and the undertakings
contained in this Agreement. The Seller warrants and represents to the Buyer
that each of the Warranties set out in schedule 3 is true and accurate and not
misleading all material respects. The Warranties shall be deemed to be repeated
at Completion and any expressed reference to the date of this Agreement shall be
replaced by the Completion Date. In relation to any warranty that relates to the
FY2003 Audited Accounts and/or the FY2004 Audited Accounts, the Seller shall
only give such warranty at the date of satisfaction of Condition 4.1.1(a) and
upon the Completion Date. Save as provided in paragraph 6 on page 2 of the
Disclosure Letter, the Warranties are qualified by the facts and circumstances
accurately and fairly disclosed in the Disclosure Letter.

 

9.2 The Seller’s liability for Relevant Claims (which for the avoidance of doubt
shall include Relevant Claims made pursuant to the Tax Deed) shall be limited or
excluded, as the case may be, as set out in schedule 4.

 

9.3 Between the execution of this Agreement and Completion:

 

  9.3.1 the Seller shall use its reasonable endeavours to ensure that each
Target Group Company complies with its respective obligations under schedule 5;

 

  9.3.2 the Seller shall cause each of the Target Group Companies to allow the
Buyer and its agents and representatives reasonable access during normal
business hours upon notice to the senior management of the Seller and the
accountants and legal advisers of the Seller, for the purpose of enabling the
smooth transition of the control of EPCI HK and EPCI Singapore and each Business
to the Buyer on Completion, it being acknowledged that any such access shall be
solely for the purpose of obtaining information and the Buyer shall not have any
rights to influence the policies or business of any Seller’s Group Company prior
to Completion. However, the parties acknowledge that any member of the EPCI HK
Group and the EPCI Singapore Group may agree to enter into a supply agreement
with the Buyer on an arm’s length basis during the period between execution and
Completion of this Agreement;

 

  9.3.3 the Seller shall deliver to the Buyer the FY2005 Management Accounts for
the preceding calendar month as soon as practicable and in any event within four
(4) weeks from the end of each calendar month. The Buyer hereby acknowledges
receipt of the FY2005 Management Accounts for January 2005 and February 2005;
and

 

  9.3.4

with respect to the land use right for the manufacturing plant located in
Dongguan and operated by Eastern pacific Circuits (Dongguan) Limited, the Seller
shall (at its own cost) use its reasonable endeavours to procure that the

 

30

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records of LOGO [g971566.jpg] (Land Administrative Authority) are updated to
change the name in respect of which such land use right is recorded in the
records of LOGO [g971567.jpg] (Land Administrative Authority) from “Universal
Enterprise (Dongguan) Limited” ( LOGO [g971568.jpg]). to Eastern Pacific
Circuits (Dongguan) Limited” ( LOGO [g971569.jpg]).

 

9.4 Each of the Warranties shall be construed as a separate warranty and shall
not be otherwise limited or restricted by reference to or inference from the
terms of any other Warranty or any other term of this Agreement.

 

9.5 The Seller undertakes to the Buyer that, except in the case of wilful
misconduct, fraud or fraudulent misrepresentation, the Seller and each Seller’s
Group Company:

 

  9.5.1 has no rights against; and

 

  9.5.2 may not make any claim against,

 

any employee, director, agent, officer, shareholder or adviser of the Target
Group on whom it may have relied before agreeing to any term of, or entering
into, this Agreement or any other agreement or document referred to herein.

 

9.6 If the principal amount of the Note is reduced in respect of the settlement
of any Relevant Claims as contemplated by paragraph 4 of the Note terms, the
Buyer agrees that the Seller’s liability in respect of such Relevant Claims
shall be fully discharged and satisfied to the extent of the amount so reduced.

 

10. THE BUYER’S REMEDIES

 

10.1 Each of the Seller and the Buyer undertakes that if before Completion it
shall become aware of any fact or circumstance which gives or may give rise to a
Relevant Claim, it shall promptly notify the other in writing stating in
reasonable detail the nature of such fact or circumstance which gives or may
give rise to a Relevant Claim. The Buyer acknowledges that it has conducted due
diligence from October 2004 to the end of February 2005 in respect of the Sale
Business and Assets and the assets of each member of the EPCI HK Group and the
EPCI Singapore Group and during this period has been given access to a data
room.

 

10.2 If, at any time before Completion, the Buyer becomes aware of any fact or
circumstance which gives or may give rise to a Relevant Claim referred to in
clause 10.1 and such matter is reasonably unlikely to give rise to a Material
Adverse Change, the Buyer shall proceed to Completion and shall waive its rights
to claim for damages or exercise any other right, power or remedy under this
Agreement or as provided by law in respect of such Relevant Claim.

 

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10.3 If, at any time before Completion, the Buyer becomes aware of a fact or
circumstance which gives rise to a Relevant Claim and such matter is reasonably
likely to give rise to a Material Adverse Change, the Buyer may by notice to the
Seller served promptly after the Buyer becomes aware of the relevant matter
elect to proceed to Completion or to terminate this Agreement.

 

10.4 If the Buyer terminates this Agreement pursuant to clause 10.3, or if this
Agreement is terminated pursuant to clause 5.4.3 each party’s further rights and
obligations cease immediately on termination other than in respect of clauses 1,
20.3 to 20.6, 22, 23, 24, 25, 26, 27.6, 28, and 29 which shall survive such
termination, but termination does not affect a party’s accrued rights and
obligations at the date of termination.

 

10.5 If the Buyer elects to proceed to Completion pursuant to clause 10.3, the
Buyer shall not be entitled to claim damages or exercise any other right, power
or remedy under this Agreement or as otherwise provided by law in respect of the
matter giving rise to the election, other than any such rights in respect of
fraud.

 

10.6 If, following Completion, the Buyer becomes aware of a fact or circumstance
which gives rise to a Relevant Claim, the Buyer shall not be entitled to rescind
this Agreement or treat this Agreement as terminated but shall only be entitled
to claim damages in respect of such matter and, accordingly, the Buyer waives
all and any rights of rescission it may have in respect of any such matter
(howsoever arising or deemed to arise), other than any such rights in respect of
fraud.

 

11. THE BUYER’S WARRANTIES AND UNDERTAKINGS

 

11.1 The Buyer warrants to the Seller that:

 

  11.1.1 it is a corporation duly organized and validly existing under the laws
of the State of Oregon and it has all requisite corporate power and authority to
own, operate and lease its properties and assets and to carry on its business as
now conducted and as proposed to be conducted;

 

  11.1.2 each Buyer’s Group Company to or by whom any of the HK Shares,
Singapore Shares or Business Assets are being transferred or acquired (each an
“Acquiring Buyer Company”) will, upon its incorporation or establishment, be a
corporation duly organized and validly existing under the laws of its respective
place of incorporation or establishment and has all requisite corporate power
and authority to own, operate and lease its properties and assets and to carry
on its business as now conducted and as proposed to be conducted;

 

  11.1.3

it has the right, power and authority, and has taken all corporate action on the
part of the Buyer and its respective officers, directors and shareholders
necessary for the authorisation, execution, delivery and performance of this

 

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Agreement and the Other Documents to which it is a party and the performance of
its obligations under this Agreement and the Other Documents to which it is a
party has been taken or will be taken as of or prior to Completion. This
Agreement has been, and each of the Other Documents to which the Buyer is a
party, will have been at Completion, duly executed and delivered by the Buyer
and, as the case may be, and this Agreement is, and each of the Other Documents
to which the Buyer is a party will be, (assuming due authorization, execution
and delivery by the Seller) at Completion, a legal, valid and binding obligation
of and enforceable against the Buyer in accordance with its terms;

 

  11.1.4 its obligations under this Agreement and the Other Documents to which
it is expressed to be a party (the “Buyer’s Completion Documents”) are, or when
the relevant Buyer’s Completion Document is executed will be, enforceable in
accordance with their respective terms and this Agreement and the Buyer’s
Completion Documents when executed will constitute valid and binding obligations
of the Buyer;

 

  11.1.5 the execution, delivery and performance of this Agreement and the
Buyer’s Completion Documents by it will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any law applicable to
it or any Acquiring Buyer Company, (b) require any consent, approval or
authorization of any person, (c) conflict with or result in a breach of, or
constitute a default under, any provision of its or any Acquiring Buyer
Company’s articles of incorporation;

 

  11.1.6 except for CIBC World Markets Corp., no broker, finder or investment
banker is entitled to any brokerage, finder’s or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Buyer; and

 

  11.1.7 there is no claim, action, suit, arbitration, criminal or civil
investigation or proceeding pending or involving or, to its knowledge,
threatened against it with respect to this Agreement or the Buyer’s Completion
Documents, or in connection with the transactions contemplated hereby or
thereby, and there is no valid basis for any such claim, action, suit,
proceeding or investigation.

 

11.2 The Buyer undertakes to the Seller that except in the case of wilful
misconduct, fraud or fraudulent misrepresentation, the Buyer and each Buyer’s
Group Company:

 

  11.2.1 has no rights against; and

 

  11.2.2

may not make any claim against,

 

33

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any employee, director, agent, officer, shareholder or adviser of the Seller and
any Seller Group Company (including for these purposes each member of the EPCI
HK Group and the EPCI Singapore Group) on whom it may have relied before
agreeing to any term of, or entering into, this Agreement or any other agreement
or document referred to herein.

 

11.3 The Buyer agrees that it shall be responsible for and will pay any and all
expenses and premiums that may arise and become payable as a result of or in
connection with the assignment of the Hong Kong Lease and the assignment of any
leasehold interests of the Business Sellers in connection with the transactions
contemplated pursuant to this Agreement and the Other Documents and shall
reimburse any Seller’s Group Company for any expenses or premiums paid by any
Seller’s Group Company in relation thereto.

 

12. RELEASE OF SECURITY

 

Within 14 days after Completion, the Seller shall (at its own cost) make, and
shall procure that each Business Seller shall make, such filings with the
Registrar of Companies of Hong Kong and each such other Government Authority as
may be necessary to effect and/or to record the discharge and release of the
Security.

 

13. TRANSFER OF BUSINESSES (PROTECTION OF CREDITORS) ORDINANCE

 

As soon as practicable after the execution of this Agreement, the parties shall
procure that a notice of transfer relating to the sale and purchase of the
Business of Eastern Pacific Circuits (HK) Limited is published in accordance
with the provisions of the Transfer of Businesses (Protection of Creditors)
Ordinance. Any such notice shall be in the agreed form and shall be given
without prejudice to the rights and obligations of the parties, as against each
other, under this Agreement. The parties agree to waive compliance with the Bulk
Sales Act (Ontario).

 

14. RESPONSIBILITY FOR LIABILITIES

 

14.1 The Buyer hereby undertakes to the Seller (for itself and on behalf of each
of the Seller’s Group Companies) that after Completion:

 

  14.1.1 it shall duly and properly perform, assume and pay and discharge when
due any Assumed Liabilities and any and all Costs incurred or suffered by the
Seller and/or any of the Seller’s Group Companies as a result of or relating to
any Assumed Liabilities; and

 

  14.1.2 it shall indemnify and hold harmless the Seller and each of the
Seller’s Group Companies against any Assumed Liabilities and any and all Costs
incurred or suffered by the Seller and/or any of the Seller’s Group Companies as
a result of or relating to any Assumed Liabilities.

 

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14.2 The Seller hereby undertakes to the Buyer (for itself and on behalf of each
of the Buyer’s Group Companies) that:

 

  14.2.1 it shall duly and properly perform, assume and pay and discharge when
due any Excluded Liabilities and any and all Costs incurred or suffered by the
Buyer and/or any of the Buyer’s Group Companies as a result of or relating to
any Excluded Liabilities; and

 

  14.2.2 it shall indemnify and hold harmless the Buyer and each of the Buyer’s
Group Companies against any Excluded Liabilities and any and all Costs incurred
or suffered by the Buyer and/or any of the Buyer’s Group Companies as a result
of or relating to any Excluded Liabilities.

 

14.3 The Buyer undertakes with the Seller that, at any time and from time to
time on or after Completion, it will at the cost of the Buyer execute and
deliver all such further documents of assumption and acknowledgement and/or take
such other action as the Seller may reasonably request in order to effect the
release and discharge in full of the relevant Seller’s Group Company from any
Assumed Liabilities or the assumption by a Buyer’s Group Company as the primary
obligor in respect of any Assumed Liabilities in substitution for the relevant
Seller’s Group Company.

 

14.4 The Seller undertakes with the Buyer that, at any time and from time to
time on or after Completion, it will at the reasonable cost of the Seller
execute and deliver all such further documents of assumption and acknowledgement
and/or take such other action as the Buyer may reasonably request in order to
effect the release and discharge in full of the relevant Buyer’s Group Company
from any Excluded Liabilities or the assumption by a Seller’s Group Company as
the primary obligor in respect of any Excluded Liabilities in substitution for
the relevant Buyer’s Group Company.

 

14.5

The Buyer (for itself and on behalf of each of the Buyer’s Group Companies)
shall be responsible for and shall indemnify the Seller (for itself and on
behalf of each of the Seller’s Group Companies) against any claims from
customers for repair or replacement duly made before, on or after Completion
under any warranties, representations or guarantees given expressly or by
implication of law by any Business Seller in respect of any product sold or
service supplied to the relevant customers by the relevant Business Seller prior
to Completion in the ordinary course of the Business of the relevant Business
Seller (save to the extent that such claims relate to the Excluded Liabilities).
If any such claim is threatened or brought against the Seller or any of the
Seller’s Group Companies, the Seller shall not, and shall procure that the
relevant Seller’s Group Company shall not, compromise or settle the same but
shall notify the Buyer or the relevant Buyer’s Group Company in writing thereof
and, subject to being indemnified to its reasonable satisfaction, the Seller
shall, and shall procure that the relevant Seller’s Group Company shall, at the
request of the Buyer take

 

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such action in respect thereof (including lending its name to any legal action)
as the Buyer may reasonably require.

 

15. ACCOUNTS RECEIVABLE

 

15.1 The Buyer shall from the Completion Date be entitled to the benefits of the
Accounts Receivable.

 

15.2 The Seller shall procure that the relevant Business Seller shall use all
reasonable endeavours with the co-operation of the Buyer or the relevant Buyer’s
Group Company to procure the assignment by Completion or as soon as practicable
thereafter.

 

15.3 Insofar as the Accounts Receivable cannot effectively be assigned to the
Buyer except by the agreement or consent to the assignment from the third
parties concerned:

 

  15.3.1 until the Accounts Receivable is assigned the Seller shall procure that
the relevant Business Seller shall hold any payment which it receives in respect
of the Accounts Receivable in trust for the Buyer absolutely; and

 

  15.3.2 until the Accounts Receivable is assigned the Seller shall procure that
the relevant Business Seller shall (so far as it lawfully may) give all
reasonable assistance to the Buyer (at the Buyer’s request and expense) to
enable the Buyer to enforce its rights under Accounts Receivable provided that
no member of the Seller’s Group shall be obliged to make any payment (in money
or money’s worth) under this unless it has first been paid the amount concerned
by the Buyer.

 

16. THIRD PARTY CONSENTS

 

16.1 Subject to the remaining provisions of this clause 16, the Buyer shall (so
far as it lawfully may) from Completion carry out, perform and discharge all the
obligations and liabilities created by or arising under the Business Contracts
and undertakes to the Seller (for itself and on behalf of each of the Seller’s
Group Companies) to indemnify the Seller and each of the Seller’s Group
Companies against all Costs suffered or incurred by the Seller or any of the
Seller’s Group Companies as a result of any failure on its part to carry out,
perform and discharge those obligations and liabilities (save to the extent that
such Costs relate to the Excluded Liabilities).

 

16.2 The Seller shall use all reasonable endeavours with the co-operation of the
Buyer to procure by Completion or as soon as practicable thereafter a novation
or Consent and to provide or procure the provision of any information reasonably
requested in connection with the related discussions by the person concerned.

 

16.3

If the benefit or burden of any of the Business Contracts and Business Claims
cannot be, or are not permitted to be, assigned or transferred to the Buyer,
except by an agreement of novation or without obtaining a consent, approval,
waiver or the like to

 

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the assignment or transfer from a third party (a “Consent”) unless or until the
relevant Business Contract or Business Claim or, as applicable, the relevant
element of the benefit and burden of it (the “Relevant Element”) is novated or
assigned or any necessary Consent is obtained in respect of it:

 

  (a) the transfer of that Business Contract or Business Claim or, as the case
may be, of the Relevant Element, shall not take effect and the Seller or the
relevant Business Seller shall from Completion hold it on trust for the Buyer
(save to the extent that any of the rights under it are Excluded Assets) and as
soon as reasonably practicable after receipt of the same shall account for and
pay or deliver to the Buyer any moneys, goods and other benefits which it
receives to the extent that they relate to such Business Contract or Business
Claim or the Relevant Element, as the case may be (save in each case to the
extent they comprise, or represent the proceeds from, an Excluded Asset);

 

  (b) in the case of any Business Contract, the Buyer shall (so far as it
lawfully may) (if subcontracting or agency is permissible under the relevant
Business Contract), as the Seller’s or the relevant Business Seller’s
sub-contractor or agent, perform all or, as the case may be, the Relevant
Element of the obligations of the Seller or of the relevant Business Seller
under the Business Contract to be discharged after Completion (save to the
extent that such obligations relate to the Excluded Assets) and the Buyer
undertakes to the Seller to indemnify the Seller and each relevant Business
Seller against all Costs suffered or incurred as a result of any failure on the
part of the Buyer to perform those obligations (save to the extent that such
Costs relate to the Excluded Liabilities);

 

  (c) the Seller shall (so far as it lawfully may) from Completion give all
reasonable assistance to the Buyer (at the Buyer’s request and expense) to
enable the Buyer to enforce its rights under the Business Contract or Business
Claim or, as the case may be, the Relevant Element of it, provided that no
member of the Seller’s Group shall be obliged to make any payment (in money or
money’s worth) under this paragraph (c) unless it has first been paid the amount
concerned by the Buyer, and the Buyer shall not agree to any amendment or waiver
of those rights under the Business Contract or Business Claim without prior
written approval of the Seller or of the relevant member of the Seller’s Group
(which shall not be unreasonably withheld); and

 

  (d)

in the case of any Business Contract that contains a licence in favour of a
Business Seller to use any Intellectual Property Rights, the Seller shall, or
shall procure that the relevant Business Seller shall, grant such sub-licence
under the Business Contract to the Buyer as may be reasonably required for

 

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use in the Business and as is within the power and authority of the Seller of
the relevant Business Seller to grant.

 

16.4 Without limiting the other provisions of this clause 16, if any necessary
novation or Consent is not obtained on or before 1 August 2006 or is refused and
the procedure set out in this clause 16 does not enable the full burden of any
Business Contract or Business Claim to be assumed by the Buyer or another
Buyer’s Group Company after the Completion Date, the Seller and the relevant
Business Seller shall be entitled to terminate the relevant Business Contract or
Business Claim and the obligations of the parties under this Agreement in
relation to such Business Contract or Business Claim shall cease forthwith.

 

16.5 Where any consent or agreement of any third party is required to the
transfer of any of the Business Assets (other than in relation to the transfer
of any Business Claim, Business Contract, the Hong Kong Lease or the Canadian
Property) and such consent or agreement has not been obtained at or before
Completion, the transfer of the relevant Business Asset shall not take effect,
notwithstanding Completion, until that consent or agreement has been obtained
and the Seller shall use its reasonable endeavours, with the co-operation of the
Buyer, after Completion, to obtain it as soon as possible.

 

16.6 Where the benefit and burden of a Business Contract can be assigned or
transferred to the Buyer but, under the terms of the Business Contract, the
Buyer and/or the relevant Business Seller are obliged to notify the other party
to that contract of the assignment or transfer, each of the Buyer and the Seller
shall use their respective reasonable endeavours to comply with such
notification requirements.

 

17. TRANSFERRING EMPLOYEES AND PENSIONS

 

17.1 Transferring Employees – Canada

 

  17.1.1 The Buyer shall, or shall procure that the relevant Buyer’s Group
Company shall, no later than two weeks before the Completion Date, make offers
of employment to all of the Transferring Employees – Canada, whether active or
inactive, on terms and conditions of employment including benefit plans,
substantially the same as those then enjoyed with Eastern Pacific Circuits
(Canada) Limited. Those Transferring Employees – Canada who are offered and
accept employment with the Buyer or the relevant Buyer’s Group Company shall
become employees of the Buyer or the relevant Buyer’s Group Company immediately
following Completion. The Seller shall use, and shall procure that Eastern
Pacific Circuits (Canada) Limited shall use, its reasonable efforts to ensure
that all Transferring Employees – Canada accept such offers of employment.

 

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  17.1.2 The Buyer agrees that the Buyer or the relevant Buyer’s Group Company
shall maintain such terms and conditions of employment and such benefit plans
for at least one (1) year from and after the Completion Date. The Buyer agrees
that the Buyer or the relevant Buyer’s Group Company shall credit each
Transferring Employee – Canada’s service with the Seller as service with the
Buyer or the relevant Buyer’s Group Company for all purposes and shall honour
all accrued payroll obligations in respect of the Transferring Employees –
Canada, including but not limited to, vacation, holiday and bonus payments
accrued prior to the Completion Date.

 

  17.1.3 Transferring Employees – Canada who are absent from work as of the
Completion Date due to statutory pregnancy, parental or emergency leave, or
short term absence due to illness or injury (excluding those absent and either
entitled to or receiving short term disability benefits under a company
sponsored disability plan), or other short-term absence, whether paid or unpaid,
including vacation, holiday, jury duty or other scheduled time off, shall be
deemed to be active employees who shall be offered employment by the Buyer or
the relevant Buyer’s Group Company effective as of the Completion Date in
accordance with this clause 17.1. In the case of any Transferring Employees –
Canada who are not actively at work as of the Completion Date due either to
short or long-term disability in respect of which the employee is entitled to or
receiving benefits under a company sponsored disability plan, or absence due to
a work-related injury in respect of which the employee is entitled to or is
receiving workers compensation or workplace safety and insurance benefits, such
inactive employees shall be offered employment by the Buyer or the relevant
Buyer’s Group Company as of the Completion Date, with such employment to
commence when such employee gives notice of his or her intention to return to
work following the Completion Date.

 

  17.1.4 The Transferring Employees – Canada shall cease to participate in the
group registered retirement savings plan of Eastern Pacific Circuits (Canada)
Limited (the “Seller’s Group RRSP”) effective as of the Completion Date.
Effective as of the Completion Date, the Buyer or the relevant Buyer’s Group
Company shall offer or extend to the Transferring Employees – Canada a pension
or retirement savings plan with benefit or contribution levels and investment
options that are substantially similar to or no less favourable than those
provided under the Seller’s Group RRSP on the Completion Date, for which the
Transferring Employees – Canada shall be immediately eligible for membership.

 

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17.2 Transferring Employees – HK

 

  17.2.1 The Buyer agrees that the Transferring Employees—HK shall be offered
employment with a Buyer’s Group Company with effect from the Completion Date on
terms no less favourable than those then enjoyed with Eastern Pacific Circuits
(HK) Limited.

 

  17.2.2 Not less than 7 days before Completion (or such longer period as may be
required under law or under their contracts of employment), the Seller and the
Buyer shall procure, respectively, that Eastern Pacific Circuits (HK) Limited
and the relevant Buyer’s Group Company will jointly inform each of the
Transferring Employees—HK in writing of the sale of the relevant Business hereby
agreed and will issue a joint letter in the agreed form to each Transferring
Employee – HK giving notice of termination of his employment with Eastern
Pacific Circuits (HK) Limited and containing an offer by the relevant Buyer’s
Group Company of re-engagement of such employee on terms no less favourable than
his then existing terms of employment. The joint letter shall contain a term
which requires the Transferring Employees—HK to transfer their benefits accrued
under the Seller MPF Scheme to the Buyer MPF Scheme upon cessation of
participation in the Seller MPF Scheme.

 

  17.2.3 The Seller shall use, and shall procure that Eastern Pacific Circuits
(HK) Limited shall use, all reasonable endeavours to persuade the Transferring
Employees – HK to accept employment with the relevant Buyer’s Group Company on
such terms as aforesaid.

 

  17.2.4 The Buyer shall enrol, and shall procure that the relevant Buyer’s
Group Company shall enrol, as soon as practicable after Completion, the
Transferring Employees—HK who accept the offer by the relevant Buyer’s Group
Company (the “Accepting Employees -HK”) as members of the Buyer MPF Scheme with
effect from the Completion Date and provide the Accepting Employees—HK with
retirement benefits which shall be no less favourable than those provided under
the Seller MPF Scheme. In respect of the participation of each Accepting
Employee—HK in the Buyer MPF Scheme, the Buyer agrees that the years of service
of the Accepting Employee—HK under the Buyer MPF Scheme shall include the years
of service of such Accepting Employee—HK with Eastern Pacific Circuits (HK)
Limited and any years of service currently recognised by Eastern Pacific
Circuits (HK) Limited, and the Buyer shall procure the trustee of the Buyer MPF
Scheme to give effect to the same.

 

  17.2.5

In respect of the Accepting Employees—HK who transfer all their benefits accrued
under the Seller MPF Scheme to the Buyer MPF Scheme, the Seller shall procure
that Eastern Pacific Circuits (HK) Limited shall transfer to the Buyer MPF
Scheme any unvested portion of voluntary contributions made by

 

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or Eastern Pacific Circuits (HK) Limited. The relevant Buyer’s Group Company
which re-engages such Accepting Employees—HK undertakes that such unvested
portion of voluntary contributions shall continue to vest in the Accepting
Employees—HK under the Buyer MPF Scheme, taking into account the years of
service of such Accepting Employees—HK with Eastern Pacific Circuits (HK)
Limited.

 

17.3 Transferring Employees – Singapore

 

  17.3.1 Transfer of EA Transferring Employees—Singapore. The employment of EA
Transferring Employees—Singapore shall be the subject of Singapore Statutory
Transfers. By virtue of the Singapore Statutory Transfers, all of Eastern
Pacific Circuits (Singapore) Pte Ltd’s rights, duties, powers, liabilities and
obligations still in force immediately before Completion in respect of any
contract of employment with the each such Transferring Employee—Singapore shall
be transferred to the relevant Buyer’s Group Company. The Seller and the Buyer
shall procure, respectively, that Eastern Pacific Circuits (Singapore) Pte Ltd
and the relevant Buyer’s Group Company shall each comply with its obligations
under the Singapore Employment Act with respect to the Singapore Statutory
Transfers. Not later than one week before Completion, the Seller shall procure
that Eastern Pacific Circuits (Singapore) Pte Ltd delivers to all EA
Transferring Employees—Singapore a letter informing them of their change in
employment and all other matters required pursuant to the Singapore Statutory
Transfer in the agreed form.

 

  17.3.2 Transfer of Non-EA Transferring Employees—Singapore. The Buyer shall
procure that the relevant Buyer’s Group Company shall offer, terms and
conditions of employment to each of the Non-EA Transferring Employees—Singapore.
Such employment offer shall be on the following terms and conditions:-

 

  (a) the terms and conditions of the employment by the relevant Buyer’s Group
Company of each Non-EA Transferring Employee—Singapore shall be no less
favourable to those of his present employment with the Eastern Pacific Circuits
(Singapore) Pte Ltd; and

 

  (b) such employment with the relevant Buyer’s Group Company shall commence on
Completion.

 

The Seller shall use its reasonable endeavours, and shall procure that Eastern
Pacific Circuits (Singapore) Pte Ltd shall use its reasonable endeavours, to
persuade the Non-EA Transferring Employees—Singapore to accept employment with
the relevant Buyer’s Group Company. The Seller shall procure that Eastern
Pacific Circuits (Singapore) Pte Ltd shall terminate the

 

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employment of the Non-EA Transferring Employees—Singapore who have accepted the
employment offer in writing in accordance with the provisions of their
respective contracts of employment, which termination shall be contemporaneous
with Completion. Not later than one week before Completion, the Seller shall
procure that Eastern Pacific Circuits (Singapore) Pte Ltd shall deliver to all
Non-EA Transferring Employees—Singapore a letter informing them of their change
in employment pursuant to this Agreement in the agreed form.

 

17.4 Transferring Employees – UK

 

  17.4.1 The Seller and the Buyer acknowledge and agree that the sale of the
Business of Eastern Pacific Circuits (UK) Limited by Eastern Pacific Circuits
(UK) Limited to the Buyer or relevant Buyer’s Group Company is subject to the
application of the UK Transfer Regulations and that accordingly:

 

  (a) the employment of any of the Transferring Employees – UK who are employed
in such Business immediately prior to Completion shall not be terminated for a
reason arising from or connected in any way with this Agreement; and

 

  (b) by virtue of the UK Transfer Regulations all of Eastern Pacific Circuits
(UK) Limited’s rights, powers, duties and liabilities under or in connection
with any contract of employment (except for any provisions or liabilities
arising under or in connection with any occupational pension scheme and excluded
from transfer under the UK Transfer Regulations) with the Transferring Employees
– UK still in force immediately before Completion shall be transferred to the
Buyer or relevant Buyer’s Group Company on Completion; and

 

  (c) the Seller shall procure that Eastern Pacific Circuits (UK) Limited shall
comply with its obligations under the UK Transfer Regulations.

 

  17.4.2 The Buyer or the relevant Buyer’s Group Company shall meet all its
respective legal obligations under the UK Transfer Regulations regarding pension
benefits on and from Completion and, in particular, the Buyer or the relevant
Buyer’s Group Company shall ensure that each of the Transferring Employees—UK
who is entitled to pension contributions under his or her contract of employment
before Completion shall continue to be entitled to the same pension
contributions from his or her new employer on and from Completion.

 

  17.4.3 If, as a result of the UK Transfer Regulations, any contract of
employment of any employee of Eastern Pacific Circuits (UK) Limited (other than
those of the Transferring Employees—UK) shall transfer to the Buyer or relevant
Buyer’s Group Company on Completion, then:

 

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  (a) the Buyer or relevant Buyer’s Group Company may, upon becoming aware of
the application of the UK Transfer Regulations, immediately terminate it; and

 

  (b) the Seller shall indemnify the Buyer or relevant Buyer’s Group Company
against all Liabilities and Costs which it or they may suffer or incur in
relation to such contract of employment or its termination.

 

17.5 Transferring Employees – US

 

  17.5.1 The Buyer agrees that it will offer employment to the Transferring
Employees – US on terms and conditions no less favourable than those then
presently enjoyed with Eastern Pacific Circuits (USA) Corporation, such
employment to commence on the Completion Date.

 

  17.5.2 On or before the Completion Date, Eastern Pacific Circuits (USA)
Corporation shall deliver to each of the Transferring Employees—US its letter of
termination of employment whereby the employment of the Transferring Employees –
US with Eastern Pacific Circuits (USA) Corporation will terminate on the close
of business on the day immediately preceding the Completion Date and, subject to
any rights or options they may have under applicable law and in consideration of
the offer of employment from the Buyer and the comparable severance, vacation
and other benefits, the Transferring Employees – US will agree to waive any
severance benefits under Eastern Pacific Circuits (USA) Corporation’s policy,
plan or practice or any agreement and will agree that all unused vacation time
then accrued by the Transferring Employees—US while employed by Eastern Pacific
Circuits (USA) Corporation under its current vacation policy, plan or practice
or any agreement will be transferred to and assumed by the Buyer in full.

 

  17.5.3 The Buyer will agree to assume all accrued vacation liability for the
Transferring Employees – US and to provide credit for the period of service with
Eastern Pacific Circuits (USA) Corporation under any severance policy maintained
in respect of its current US employees for the Transferring Employees – US.

 

  17.5.4

With respect to the one Transferring Employee – US who is participating in the
401(k) plan adopted by Eastern Pacific Circuits (USA) Corporation, on the day
immediately prior to the Completion Date, Eastern Pacific Circuits (USA)
Corporation shall terminate the 401(k) plan and all benefits currently held
therein for the Transferring Employee—US will be distributed to the Transferring
Employee – US, or rolled over to a personal individual retirement account or to
the Buyer’s comparable 401(k) plan as directed by the Transferring Employee—US.
The Buyer agrees to accept any such direct

 

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rollover to its comparable 401(k) plan, subject to a finding by such plan’s
fiduciary that such direct rollover does not violate applicable law.

 

17.6 Transferring Employees—General

 

The Buyer shall for itself and for and on behalf of each member of the Buyer’s
Group indemnify the Seller (for itself and on behalf of each member of the
Seller’s Group) from and against:

 

  17.6.1 any Costs which arise in connection with the employment of the
Transferring Employees or which arise directly or indirectly from any act or
omission by any member of the Buyer’s Group in relation to any of the
Transferring Employees on or after the Completion Date;

 

  17.6.2 any Costs arising directly or indirectly in connection with statements,
representations, expressions of opinion by, or discussions with, any member of
the Buyer’s Group about plans, proposals or intentions in relation to the
Transferring Employees;

 

  17.6.3 any Costs arising from any claim brought against any Seller’s Group
Company by any of the Transferring Employees in connection with the transfer of
the Transferring Employees to any member of the Buyer’s Group; and

 

  17.6.4 any Costs (including severance costs) arising directly or indirectly in
connection with the termination of the employment of any of the Transferring
Employees.

 

18. INSURANCE

 

18.1 The Buyer shall pay all additional premiums relating to the Business
Insurance Policies arising as a result of the transactions contemplated by this
Agreement.

 

18.2 Other than in relation to the Business Insurance Policies, the Seller shall
be entitled to arrange for all insurance provided by the Seller’s Group in
relation to any Business, the Business Assets, the EPCI HK Group and the EPCI
Singapore Group (whether under policies maintained with third party insurers or
other members of the Seller’s Group) to cease upon Completion. The Seller shall
give the Buyer not less than 14 days written notice of its intention to
terminate any insurance policy relating to any Business and Business Assets, and
shall provide the Buyer with a copy of the relevant insurance policy.

 

19. POST-COMPLETION UNDERTAKINGS

 

19.1 The Seller shall, and shall procure that each Business Seller shall, as
soon as practicable upon receipt, send to the Buyer:

 

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  19.1.1 all monies or other items belonging to the Buyer or a Buyer’s Group
Company which should have properly been paid or provided to the Buyer or a
Buyer’s Group Company in relation to the Business; and

 

  19.1.2 all notices, correspondence, orders or enquiries to the extent they
relate to the Business,

 

which are received by the Seller or the relevant Business Seller after
Completion.

 

19.2 The Buyer shall, and shall procure that each member of the Buyer’s Group
shall, as soon as practicable upon receipt, send to the Seller all monies or
other items belonging to the Seller or any Business Seller which should have
properly been paid or provided to the Seller or any Business Seller in relation
to the Business in relation to the period up to and including Completion, and
which are received by the Buyer or any member of the Buyer’s Group after
Completion.

 

19.3 To the extent legally permitted, the Seller will at the request of the
Buyer allow Buyer’s Group Company to rely on the Seller’s Approvals pending
issuance of new Approvals to the relevant member of the Buyer’s Group.

 

20. TAX MATTERS

 

20.1 The Buyer shall bear and pay, and shall reimburse any Seller’s Group
Company for any amount borne or paid by it, all stamp duty, sales tax, goods and
services tax, value added tax and other transfer taxes, capital gains taxes
(which would not have arisen but for the transfer of the Sale Business and
Assets hereunder), land transfer tax and/or fees(which would not have arisen but
for the transfer of the Sale Business and Assets hereunder) and other such Taxes
(including interest and penalties) arising pursuant to this Agreement. The Buyer
shall be responsible for preparing and submitting all tax filings with the
relevant tax authority in respect of such taxes to the extent they are
chargeable against any Buyer Group Company. At the request of the Buyer and at
the Buyer’s expense, the Seller shall provide, and shall procure that each of
the Business Sellers shall provide, reasonable assistance to the Buyer to comply
with this clause 20.1. The Buyer shall indemnify the Seller (on an after tax
basis and for itself and on behalf of each Seller’s Group Company) any Costs
(including interest and penalties) arising directly or indirectly in connection
with such tax filings or as a result of the Buyer’s failure to comply with this
clause 20.1.

 

20.2

The Seller shall bear and pay any profits tax liability in respect of any
balancing charge or deemed trading receipt that may arise at any time in
relation to the tax depreciation allowances or deductions that have been claimed
by Eastern Pacific Circuits Property Limited and Eastern Pacific Circuits (HK)
Limited prior to the Completion Date in relation to the assets of Eastern
Pacific Circuits Property Limited and Eastern Pacific Circuits (HK) Limited (the
“Depreciation Claw-back”) up to a maximum amount of US$2,000,000. If the amount
of the Depreciation Claw-back exceeds US$2,000,000,

 

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the Buyer shall bear and pay, and shall reimburse any Seller’s Group Company any
amount borne or paid by any Seller’s Group Company in respect of the excess
above US$2,000,000. If the Seller is required to pay any amount in respect of
Depreciation Claw-back (which shall in no event exceed US$2,000,000), such
amount shall first be paid by the Seller from the Actual Closing Cash Amount. If
the Actual Closing Cash Amount is not sufficient to pay the full amount of such
Depreciation Claw-back following any payment by the Seller to the Buyer in
accordance with clause 6.8 (the remaining unpaid amount being the “Depreciation
Claw-back Shortfall”), then the Depreciation Claw-back Shortfall shall be paid
to the tax authorities from the Escrow Account. In the event that there are tax
losses available to the Business Sellers to offset any Depreciation Claw-back
which has arisen as a result of the transfer of the Sale Business and Assets,
the Seller shall use such tax losses to reduce such liability.

 

20.3 All sums payable under this Agreement shall be paid free and clear of all
deductions or withholdings whatsoever save only as provided in this Agreement or
as may be required by law.

 

20.4 If any deduction or withholding is required by law from any payment in
respect of a Buyer Obligation or a Seller Obligation, then, except in relation
to interest, the person making the payment shall be obliged to pay the other
person such additional sum as will, after such deduction or withholding has been
made, leave the other party with the same amount as it would have been entitled
to receive in the absence of any such requirement to make a deduction or
withholding.

 

20.5 If any tax authority brings into charge to tax any sum paid by a person to
any other person in respect of a Buyer Obligation or a Seller Obligation, then,
except in relation to interest, the amount so payable shall be grossed up by
such amount as will ensure that, after payment of the tax so charged, there will
be left a sum equal to the amount that would otherwise have been payable had the
sum in question not been so charged to tax.

 

20.6 If any person receiving payment (the “Recipient”) in respect of a Buyer
Obligation or a Seller Obligation receives a refund of or relief from any tax or
other monies payable by it or similar benefit by reason of any deduction or
withholding for or on account of tax or by reason of any tax charged in respect
of which there is a gross up under clause 20.4 or clause 20.5, then it shall
reimburse to the other relevant persons such part of such additional payments
paid to it pursuant to clause 20.4 or clause 20.5 by such other persons as the
Recipient, acting reasonably, certifies to the other persons will leave it
(after such reimbursement) in no better or worse position than it would have
been in if no deduction or withholding had been required or no tax charge had
arisen or (where applicable) if the matter giving rise to the payment had not
arisen.

 

20.7

In determining the amount payable in respect of any Buyer Obligation or Seller
Obligation, account shall be taken of any relief or other benefit available to
the

 

46

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Recipient or any of its holding companies or subsidiaries in respect of the
matter giving rise to the payment, insofar as not taken into account pursuant to
clause 20.6.

 

20.8 For the avoidance of doubt, all sums payable by or on behalf of the Buyer
to the Seller under this Agreement or any of the Other Documents are exclusive
of any applicable taxes referred to in clause 20.1 or clause 20.2.

 

20.9 Each party shall (at the expense of the requesting party) provide the other
with such assistance as may reasonably be required in connection with the
preparation of any Tax Return or to otherwise carry out the provisions of this
clause 20.

 

21. RECORDS

 

21.1 The Buyer shall, and shall procure that each member of the Buyer’s Group
shall, provide to the Seller and each Business Seller as the Seller or relevant
Business Seller may reasonably require such access to the Business Records held
by it after Completion to the extent that such Business Records relate
exclusively to the Business and relate to the period up to Completion (the
“Available Records”) and shall make available necessary Transferring Employees
(provided that such employees are still employed by the Buyer’s Group at the
time of the request made by the Seller or the relevant Business Seller) (during
normal business hours and at a time acceptable to the Buyer or any relevant
member of the Buyer’s Group) solely for the purpose of enabling the Seller (at
its own cost) and each Business Seller (at its own cost) to wind down the
operations of each Business Seller, to wind-up or liquidate each Business Seller
and in order comply with the obligations of the Seller and each Business Seller
under this Agreement.

 

21.2 For the period from the Completion Date to the earlier of: (i) the date on
which the last member of the Seller’s Group is wound up or liquidated; and
(ii) the date falling four (4) years following the Completion Date, the Buyer
shall not, and shall procure that each Buyer’s Group Company shall not, dispose
of or destroy, any of the Available Records or the Business Records without
first giving the Seller at least two months’ notice of its intention to do so
and giving the Seller the opportunity to remove and retain any of them (at the
Seller’s expense).

 

22. CONFIDENTIAL INFORMATION

 

22.1 Subject to clauses 22.2 and 23, the Seller undertakes to the Buyer, and the
Buyer undertakes to the Seller, that it shall treat, and shall procure that each
of its affiliates and their employees, officers, agents, advisers and
representative shall treat, as confidential and not disclose or use any
information received or obtained which relates to:

 

  22.1.1 the other party and its affiliates;

 

47

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  22.1.2 the provisions or the subject matter of this Agreement or any document
referred to herein and any claim or potential claim thereunder;

 

  22.1.3 in the event that Completion does not take place, any information held
or received by the Buyer’s Group in relation to the Seller’s Group;

 

  22.1.4 in the event that Completion does not take place, any information held
or received by the Seller’s Group in relation to the Buyer’s Group; or

 

  22.1.5 the negotiations relating to this Agreement or any documents referred
to herein.

 

22.2 Clause 22.1 does not apply to disclosure or use of any such information as
is referred to in clause 22.1:

 

  22.2.1 which is required to be disclosed by law, by a rule of a listing
authority or stock exchange (or equivalent thereof) to which any party or its
affiliate is subject or submits or by a Government Authority or other authority
with relevant powers to which any party or its affiliate is subject or submits,
whether or not the requirement has the force of law;

 

  22.2.2 to an adviser for the purposes of advising in connection with the
transactions contemplated by this Agreement provided that such disclosure is
essential for these purposes and is on the basis that clause 22.1 applies to the
disclosure by the adviser;

 

  22.2.3 to a director, officer or employee of the Buyer or of the Seller or of
the Seller’s affiliate whose function requires him to have the relevant
confidential information;

 

  22.2.4 to the extent that the information has been made public by, or with the
consent of, the other party; or

 

  22.2.5 to any of the Seller’s shareholders or to any partner, shareholder,
investor, affiliate, investment committee or investment adviser of any of the
Seller’s shareholders provided that such disclosure is on the basis that
clause 22.1 applies to disclosure to such parties.

 

22.3 The restrictions contained in this clause 22 shall continue to apply after
the termination of this Agreement without limit in time.

 

22.4 Nothing in this Agreement shall prevent the Buyer from disclosing any
information whatsoever about the Business or any Buyer’s Group Company after
Completion.

 

48

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23. ANNOUNCEMENTS

 

23.1 Subject to clause 23.2, neither party may, before or after Completion, make
or send a public announcement, communication or circular concerning the
transactions referred to in this Agreement unless it has first obtained the
other party’s written consent, which may not be unreasonably withheld or
delayed.

 

23.2 Clause 23.1 does not apply to a public announcement, communication or
circular:

 

  23.2.1 made or sent by the Buyer after Completion to a customer, client or
supplier of the Target Group informing it of the Buyer’s purchase of each
Business, the HK Shares and/or the Singapore Shares. provided that the Buyer may
not make any such announcement, communication or circular containing any
reference to the shareholders of the Seller, without first consulting the Seller
or such shareholders;

 

  23.2.2 required by law, by a rule of a listing authority or stock exchange (or
equivalent thereof) to which any party or its affiliate is subject or submits or
by a Government Authority or other authority with relevant powers to which any
party or its affiliate is subject or submits, whether or not the requirement has
the force of law;

 

  23.2.3 made or sent by the Seller to its shareholders and to the partners,
shareholders, investors, affiliates, investment committees and investment
advisers of the Seller’s shareholders;

 

  23.2.4 made or sent by the Seller, its advisers or the advisers of the
Seller’s shareholders after Completion in relation to customary tombstone and
league table announcements; or

 

  23.2.5 where such public announcement, communication or circular contains only
information which has already been made public.

 

23.3 The restrictions contained in this clause 23 shall continue to apply after
the termination of this Agreement without limit in time.

 

23.4 Nothing in this Agreement shall prevent the Buyer from disclosing any
information whatsoever about the Business or any Buyer’s Group Company after
Completion.

 

24. ASSIGNMENT

 

A party shall not assign, transfer or in any other way alienate any of its
rights under this Agreement whether in whole or in part without the prior
written consent of the other party.

 

49

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25. COSTS

 

Except where this Agreement provides otherwise, each party shall pay its own
costs relating to the negotiation, preparation, execution and performance by it
of this Agreement and of each document referred to in it.

 

26. ENTIRE AGREEMENT

 

In this clause 26, the following definition applies:

 

“Representation” means representation, statement, assurance, covenant,
undertaking, indemnity, guarantee or commitment (whether contractual or
otherwise).

 

26.1 Subject to the provisions of clause 26.2, this Agreement and each document
referred to in it constitute the entire agreement and supersede any previous
agreements between the parties relating to the subject matter of this Agreement.

 

26.2 The parties are not liable to each other for a Representation that is not
set out in this Agreement. Each of the parties agree that its only remedy or
remedies for an untrue statement (whether through negligence or otherwise)
contained in this Agreement are those set out in this Agreement.

 

26.3 The parties agree that none of them or any adviser to the relevant party
shall have any liability to each other for a Representation that is not set out
in this Agreement. Each party or an adviser to the relevant party may enforce
the terms of this clause 26.3 and clause 26.4 as if they were a party hereto.

 

26.4 The Buyer and the Seller agrees that no party shall have any remedy or
bring any action against the other in relation to (a) any previous agreements
between them relating to the subject matter of this Agreement or (b) any
Representation other than the Warranties or otherwise as set out in this
Agreement.

 

26.5 Nothing in this clause 26 shall have the effect of limiting or restricting
any liability arising as a result of any fraud.

 

27. GENERAL

 

27.1 A variation of this Agreement is only valid if it is in writing and signed
by or on behalf of each party.

 

27.2 The failure to exercise or delay in exercising a right or remedy provided
by this Agreement or by law does not impair or constitute a waiver of the right
or remedy or an impairment of or a waiver of other rights or remedies. No single
or partial exercise of a right or remedy provided by this Agreement or by law
prevents further exercise of the right or remedy or, save as referred to in
clauses 10 and 26, the exercise of another right or remedy.

 

50

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27.3 Except to the extent that they have been performed and except where this
Agreement provides otherwise, the obligations contained in this Agreement remain
in force after Completion.

 

27.4 If a party fails to pay a sum due from it under this Agreement on the due
date of payment in accordance with the provisions of this Agreement, that party
shall pay interest on the overdue sum from the due date of payment until the
date on which its obligation to pay the sum is discharged at 3 per cent. above
the base rate from time to time of Standard Chartered Bank (accrued daily and
compounded monthly).

 

27.5 Save as otherwise provided herein, any payment to be made by any party
under this Agreement shall be made in full without any set-off, restriction,
condition or deduction for or on account of any counterclaim.

 

27.6 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable under the laws of any jurisdiction, that shall not
affect:

 

  27.6.1 the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or

 

  27.6.2 the legality, validity or enforceability under the Law of any other
jurisdiction of that or another provision of this Agreement.

 

27.7 This Agreement may be executed in any number of counterparts, each of which
when executed and delivered is an original and all of which together evidence
the same agreement. The parties agree that the execution of the Agreement may be
effected by the exchange of facsimile signature pages, with the exchange of the
executed originals as soon as reasonably possible thereafter.

 

27.8 Each of the Seller and the Buyer agrees, and the Seller agrees to procure
EPC Cayman, EPCL and the Business Sellers and the Buyer agrees that it shall
procure any Buyer’s Group Company to execute (or procure the execution of) such
further documents as may be required by Law or as may be necessary to implement
and give effect to this Agreement notwithstanding Completion. In the absence of
specific agreement to the contrary, each party shall be responsible for its own
costs and expenses incurred in giving effect to the provisions of clause 27.8.

 

28. NOTICES

 

28.1 A notice or other communication under or in connection with this Agreement
(a “Notice”) shall be:

 

  28.1.1 in writing;

 

  28.1.2 in the English language; and

 

51

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  28.1.3 delivered personally or sent by mail, (if overseas) air mail, or by fax
to the party due to receive the Notice to the address set out in clause 28.3 or
to another address, person or fax number specified by that party by not less
than 5 Business Day’s written notice to the other party received before the
Notice was despatched.

 

28.2 Unless there is evidence that it was received earlier, a Notice is deemed
given if:

 

  28.2.1 delivered personally, when left at the address referred to in
clause 28.1.3;

 

  28.2.2 sent by internationally recognised next-day courier, two Business Days
after delivery to the courier;

 

  28.2.3 sent by air mail, five Business Days after posting it; and

 

  28.2.4 sent by fax, when confirmation of its transmission has been recorded by
the sender’s fax machine.

 

28.3 The address referred to in clause 28.1.3 is:

 

Name of party

--------------------------------------------------------------------------------

  

Address

--------------------------------------------------------------------------------

       

Fax No.

--------------------------------------------------------------------------------

  

Marked for the

attention of

--------------------------------------------------------------------------------

    

The Seller

  

Suite 2804, 28th Floor

One Exchange Square

8 Connaught Place

Central

Hong Kong

        852 3102 8325    Ng Lak Chuan          

with a copy to:

Baker & McKenzie

1401 Hutchison House

10 Harcourt Road

Central

Hong Kong

        852 2845 0476    Milton Cheng     

The Buyer

  

1521 Poplar Lane

P.O. Box 3000, F4-234

Forest Grove OR 97116

United States of America

        1 503 357 1504    Mark R. Hollinger     

 

52

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Name of party

--------------------------------------------------------------------------------

  

Address

--------------------------------------------------------------------------------

       

Fax No.

--------------------------------------------------------------------------------

  

Marked for the

attention of

--------------------------------------------------------------------------------

         

with a copy to:

Perkins Coie LLP

1120 NW Couch Street

Tenth Floor

Portland, OR 97209

United States of America

        1 503 727 2222    Patrick J. Simpson          

Jones Day

31st Floor, Edinburgh

Tower

The Landmark

15 Queen’s Road Central

Hong Kong

        852 2868 5871    Barbara Mok     

 

29. GOVERNING LAW ARBITRATION AND SERVICE OF PROCESS

 

29.1 This Agreement is governed by the laws of Hong Kong.

 

29.2 Any disputes arising under, out of or in connection with this Agreement,
including any question regarding its existence, validity or termination, shall
be referred to and finally resolved by arbitration in Hong Kong in accordance
with the Domestic Arbitration Rules (the “Rules”) of the Hong Kong International
Arbitration Centre (the “HKIAC”) for the time being in force, which Rules are
deemed to be incorporated by reference in this clause 29.2.

 

29.3 The arbitral tribunal constituted in accordance with the Rules shall
consist of one arbitrator to be appointed by the Chairman of the HKIAC, unless
otherwise agreed by the parties.

 

29.4 The language of the arbitration shall be English.

 

29.5 The applicable law of the arbitration shall be Hong Kong law.

 

29.6 The foregoing shall not preclude any party from seeking interim relief or
orders for interim preservation in any Court of competent jurisdiction. Any such
application to Court shall not demonstrate an intention to act inconsistently in
any way with the agreement to settle disputes by arbitration set out in this
clause 29.

 

29.7

The Buyer hereby irrevocably appoints Jones Day of 31st Floor, Edinburgh Tower,
The Landmark, 15 Queen’s Road Central, Hong Kong as its agent to receive and
acknowledge on its behalf service of any writ, summons, order, judgment or other
notice of legal process in Hong Kong and any writ, summons, order, judgement or
other notice of legal process in Hong Kong shall be sufficiently served on the
Buyer if

 

53

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delivered to such agent at its address for the time being in Hong Kong. The
Buyer undertakes not to revoke the authority of this agent. If for any reason
the agent named above (or its successor) no longer serves as agent of the Buyer
for this purpose, the Seller shall be entitled to appoint on behalf of the Buyer
at the expense of the Buyer, and the Seller shall notify the Buyer thereof.

 

29.8 The Seller hereby irrevocably appoints Baker & McKenzie of 1401 Hutchison
House, 10 Harcourt Road Central, Hong Kong as its agent to receive and
acknowledge on its behalf service of any writ, summons, order, judgment or other
notice of legal process in Hong Kong and any writ, summons, order, judgement or
other notice of legal process in Hong Kong shall be sufficiently served on the
Seller if delivered to such agent at its address for the time being in Hong
Kong. The Seller undertakes not to revoke the authority of this agent. If for
any reason the agent named above (or its successor) no longer serves as agent of
the Seller for this purpose, the Buyer shall be entitled to appoint on behalf of
the Seller at the expense of the Seller, and the Buyer shall notify the Seller
thereof.

 

54

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SCHEDULE 1

 

PART 1 – BUSINESS SELLERS

 

     Name of Business Seller    Place of incorporation

1.

   Eastern Pacific Circuits (HK) Limited    Hong Kong 2.    Eastern Pacific
Circuits (USA) Corporation    California 3.    Eastern Pacific Circuits (Canada)
Limited    Ontario, Canada 4.    Eastern Pacific Circuits Property Limited   
Hong Kong 5.    Eastern Pacific Circuits (UK) Limited    England 6.    Eastern
Pacific Circuits (Singapore) Pte Ltd    Singapore

 

PART 2 – CATEGORIES OF BUSINESS ASSETS

 

1. the Business Properties;

 

2. the Business Plant and Equipment;

 

3. the Stock;

 

4. the Accounts Receivable;

 

5. all benefits, rights and entitlements under all Business Contracts;

 

6. the Business Claims;

 

7. the Business Records;

 

8. the Business IP;

 

9. the Business Goodwill;

 

10. the Business Motor Vehicles;

 

11. all monetary deposits paid to third parties for the provision of utility
services to the Business Sellers in connection with the Business; and

 

12. prepayments of expenses to third parties paid by any Business Seller in
connection with the Business.

 

55

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PART 3 – EXCLUDED ASSETS

 

1. all of the issued shares in the capital of each of the Business Sellers;

 

2. all of the issued shares in the capital of Universal Enterprise Limited;

 

3. the business and assets (if any) of Universal Enterprise Limited;

 

4. all of the issued shares in the capital of Lomber Investment Limited;

 

5. the business and assets (if any) of Lomber Investment Limited;

 

6. the Cash;

 

7. any rights of the Seller or any Seller’s Group Company under this Agreement
or the Other Documents;

 

8. the benefit of all insurance policies other than the Business Insurance
Policies or insurance claims arising after Completion other than insurance
Claims arising in relation to the Business Insurance Policies;

 

9. the statutory registers and minute books, share certificate books and common
seal of each of the Business Sellers;

 

10. the Approvals which are incapable of transfer, without prejudice to the
provisions of clause 19.3;

 

11. the License for Eastern Pacific Circuits (UK) Ltd to occupy Unit 15,
Greenlands Business Centre, Studley Road, Redditch, B98 7HD, England;.

 

12. the Agreement of Lease entered into as of August 15, 2000 by and between
Shelvin Plaza Associates ( as Owner) and Wong’s Circuits Corporation (as Tenant)
regarding the premises located at 600 Old Country Road, Suite 226, Garden City,
New York 11530 for a term of five (5) years ending September 30, 2005; and

 

13. the Sublease Agreement dated May 1, 2003 by and between Eastern Pacific
Circuits (USA) Corporation (as Overtenant) and PB Consulting, LLC (as
Undertenant) regarding the premises located at 600 Old Country Road, Suite 226,
Garden City, New York 11530 for a term of two (2) years and five (5) months
ending September 30, 2005.

 

PART 4 – ASSUMED LIABILITIES

 

All Liabilities relating to the Business Assets arising in the ordinary course
of business.

 

56

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PART 5 – EXCLUDED LIABILITIES

 

1. the Debt Amount;

 

2. any Liabilities arising solely in relation to the Security;

 

3. any Liabilities arising solely in relation to the Excluded Assets;

 

4. any Liabilities and Costs relating to the restructuring of the Borrowings and
the Security;

 

5. any obligations of the Seller or any Seller’s Group Company under this
Agreement or the Other Documents; and

 

6. the Business Tax, except for those taxes to be borne or paid by the Buyer as
expressly provided for in clause 20.1.

 

PART 6A – BUSINESS PROPERTIES

 

1. the Canadian Property;

 

2. the property that is the subject of the Hong Kong Lease; and

 

3. Eastern Pacific Circuits (Singapore) Pte Ltd’s leasehold interest in the
property situated at #03-07, United House, 20 Kramat Lane, Singapore 228773.

 

PART 6B—PROPERTY

 

1. the Business Properties;

 

2. Eastern Pacific Circuits (Dongguan) Ltd’s rights, title and interest in the
property situated at Hing Yu Industrial District, Tongxia Town, Dongguan City,
Guangdong Province, PRC. LOGO [g9715610.jpg], formerly known as Wen Keng
Section, Tangxia Town LOGO [g9715611.jpg];

 

3. Lomber (Huizhou) Ltd’s leasehold interest in the property situated at Gu Tang
Au Industrial District, Huizhou City Guangdong Province, PRC LOGO
[g9715612.jpg];

 

4. Eastern Pacific Circuits (Huiyang) Ltd’s rights, title and interest in the
property situated at 23 Yin Ling Rd., The 3rd Ind. District, Chen Jiang Town,
Huizhou City, Guangdong Province, PRC. LOGO [g9715613.jpg], formerly known as
Shuang Guang, Zhong Kai Da Dao, Chen Jiang Town, Huizhou City LOGO
[g9715614.jpg];

 

57

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5. Eastern Pacific Circuits (Huizhou) Ltd’s leasehold interest in the property
situated at Gu Tang Au Industrial District, Huizhou City Guangdong Province, PRC
LOGO [g9715615.jpg]; and

 

6. Eastern Pacific Circuits (Huizhou) Ltd’s rights, title and interest in the
property situated at LOGO [g9715616.jpg].

 

 

PART 7 – TRANSFERRING EMPLOYEES

 

7.1 Transferring Employees – Canada

 

1.    Stephen Leung

  Sales Engineer

2.    W.F. Yip

  Technical Manager

3.     Emil Wong

  Technician

4.     Mary Chu

  Sales Manager

5.     Vivien Cheung

  Customer Service & account manager

7.2    Transferring Employees – HK

   

1.      Kung Yun King, Kings

  VP Manufacturing

2.      Tsang Ki Lo, Joseph

  VP Finance

3.      Leung Wai Chiu

  Manager

4.      Cheng Chau Yuet

  Amah

5.      Yiu Yuk Yin Janice

  Personnel & Training Officer

6.      Chan Mei Kin

  Messenger

7.      Cheung Shui Hung

  Amah

8.      Liu Wai Man

  Manager

9.      Yeung Kam Yuen

  Sr. Engineer

10.    Choy Kam Lun

  Manager

11.    Lam Kai Yick Rudolf

  Asst. Finance Manager

12.    Lui Chi Keung

  PMC Manager

13.    Ip Chi Po

  Sr. Buyer

14.    Nip Kit Chi

  Supervisor

15.    Chan Wai Yim

  Sr. Clerk

16.    Yau Wah Keung

  Superintendent

17.    Ng Lai Kuen Pauline

  Sr. Clerk

18.    Wong Lee Po

  Store Keeper

19.    Yeung Chi Ming

  Store Keeper

20.    Wong Ching Lau

  Operator

21.    Cheng Hoi Ngan

  Operator

22.    Lee King Yung

  Engineer

23.    Huang Tien Fu

  Technician

24.    So Chun Sun

  Technician

25.    Ng Wa Po

  Technician

 

58

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26.    Yip Ting Kwan

  Sr. Engineer

27.    Wong Shek Ming

  Technician

28.    Wong Luen Kwan

  Sr. Technician

29.    Ip Kim Hung

  Technician (CNC)

30.    Lai Chong Fai

  Technician (CNC)

31.    Li Fung Chun

  Operator

32.    Wu Mau Wah

  Technician (Other)

33.    Fung Kin Hung Coley

  Technician

34.    Lau Tze Wan

  Superintendent (Electric)

35.    Wong Kam Tim

  Sr. Technician (Mech.)

36.    Siu Kwun Ming

  Sr. Technician (Other)

37.    Luk Ying Chau

  Technician (Mech.)

38.    Lai Kam Wong

  Leader (Electric)

39.    Lee Chun Kwong

  Sr. Technician (Mech.)

40.    Ng Fai Kwok

  Technician (Mech.)

41.    Lau Chun Kong

  Superintendent

42.    Chuang Mao Nan

  Superintendent

43.    Poon Yau Keung

  Supervisor

44.    Kwok Lam Lam

  Supervisor

45.    Tsang Shiu On

  Asst. Supervisor

46.    Lau Hoi Hung

  Superintendent

47.    Tsoi Wai Chung

  Supervisor

48.    Kwok Wai Wai

  Forelady

49.    Fan Oi Kuen

  Operator

50.    Sham Yin Lam

  Forelady

51.    Ng Ah Fo

  Operator

52.    Kwong Sun Mui

  Operator

53.    Chong Chik Fung

  Operator

54.    Cheung Sau Yam

  Operator

55.    So Kan Chi

  Operator

56.    Kwok Wan Lai

  Operator

57.    Fong Tjoi Peng

  Operator

58.    Sze Lai Na

  Operator

59.    Kam Yan Lai

  Operator

60.    Ho Bing Tak

  Foreman

61.    Wong Sau Kam

  Operator

62.    Choi Kwok Man

  Foreman

63.    Hui Tsz Fan

  Operator

64.    Lau Wai Nam

  Operator

65.    Cheng Hau Wan

  Operator

66.    Poon Chun

  Operator

67.    Lau Wing Kwong

  Operator

68.    Chan So Ling

  Operator

69.    Ng Yuet Shuen

  Operator

70.    Liu Chin So

  Operator

71.    Yip Yin Yu

  Operator

72.    Pak Chi Man

  Operator

73.    Siu San Wan

  Operator

74.    Hung Mei Yung

  Operator

75.    Huang Chin Fa

  Operator

76.    Suen Tak Tsang

  Foreman

 

59

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77.      Chan King Fa

  Operator

78.      Wong Siu Fai

  Setter

79.      Yick Chuk Ping

  Operator

80.      Lam King Cheong

  Foreman

81.      Lui Cheung Pui

  Operator

82.      Cheng Ngan Yuk

  Technician

83.      Wong Sau Ha

  Operator

84.      Poon Kam Chung Leon

  Technician

85.      Chu Po Wing

  Operator

86.      Li Cho Leung

  Operator

87.      Lui Chun Tin

  Operator

88.      Ng Yat Wa

  Operator

89.      Ma Chun Pan

  Operator

90.      Ng Cheung Wing

  Operator

91.      Yiu Hang Wa

  Operator

92.      Wai Kit Fong

  Operator

93.      Wong Ah Sing

  Operator

94.      Wong San Ping

  Foreman

95.      Lam Kwan On

  Operator

96.      Tsang Kim Wai

  Operator

97.      Chan Kam Yung

  Forelady

98.      Cheung Shui Wing

  Operator

99.      Li Pik Kuen

  Operator

100.    Chong Nung Choi

  Operator

101.    Tse Wai Mui

  Operator

102.    Ng Shuk Nui

  Operator

103.    Hui Wah Yin

  Foreman

104.    Koon Kwok Chung

  Operator

105.    Li A E

  Operator

106.    Lau Chiu Ping

  Operator

107.    Ma Wai Lan

  Operator

108.    Ng Sau Lung

  Operator

109.    Wong Wing Mei

  Operator

110.    Chan Mei Lei

  Operator

111.    Yu Yuet Chi

  Operator

112.    Lam Lai Na

  Operator

113.    Ng Chau Ha

  Forelady

114.    Yung Sau Wan

  Operator

115.    Lam Mei Lin

  Operator

116.    Chan Yee Muk

  Setter

117.    Lee Yan Fau

  Foreman

118.    Tam Chung Hing

  Operator

119.    Wong Wan Leung

  Operator

120.    Cheung Ming Kang

  Foreman

121.    Ng Kai Fu

  Operator

122.    Cheng Lai Tuen

  Forelady

123.    Wong Yuet Lai

  Operator

124.    Hung Lai Yuk

  Operator

125.    Chan Yee Hong

  Operator

126.    Chan Kwai Fa

  Operator

 

60

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127.    Ng Tan Fong

  Operator

128.    Wong Shuk Ming

  Operator

129.    Wong Wo Kwai

  Setter

130.    Tam Yuk Lan

  Operator

131.    Li Wai Shun

  Operator

132.    San Ka Ngan

  Foreman

133.    Lam Choi Ha

  Operator

134.    Cheung Siu Sang

  Operator

135.    Lai So Lin

  Operator

136.    Lam Lai Ying

  Operator

137.    Chan Kam Tak

  Foreman

138.    Tong Kin Shun

  Foreman

139.    Chu Yuen Tak

  Operator

140.    Kam Lai Sheung

  Operator

141.    Chan Shun Chi

  Operator

142.    Lau Shing Kwai

  Foreman

143.    Chan So Man

  Operator

144.    Kwok Mei Chun

  Operator

145.    Cheung Lin Hing

  Operator

146.    Suen Kwok Fong

  Operator

147.    Tang Kam Kuen

  Operator

148.    Chan Lai Heung

  Technician

149.    Chan Man Bun

  Sr. Technician

150.    Lau Chi Fai

  Sr. Technician

151.    Lam Lai Yung

  Inspector

152.    Lau Wai Yip

  Inspector

153.    To Hok Fung

  Inspector

154.    Lee Kam Wan

  Technician

155.    Wong Yuet Lai

  Technician

156.    Kung Shun Chun

  Inspector

157.    Sze Yim Hung

  Inspector

158.    Yip Lai Ming

  Inspector

159.    Li Pak Mei

  Inspector

160.    Cheong Wai Ha

  Inspector

161.    Lam Ching Yin

  Inspector

162.    Kwok Sau Chu

  Inspector

163.    Cheung Kin Lam

  Inspector

164.    Cheung Kwai Chun

  Superintendent

165.    Chu Sau Man

  Forelady

166.    Cheung Sau Mei

  Inspector

167.    Heung Doi Hung

  Inspector

168.    Wong Wai Kin

  Inspector

169.    Chan Siu Ying

  Forelady

170.    Wong Lai Chun

  Inspector

171.    Wong Kam Fa

  Operator

172.    Tsoi Suet Loi

  Inspector

173.    Kam Po Wai

  Sr. Technician

174.    Li Cheung Loi

  Operator

175.    Poon Pek Lan

  Operator

176.    Yeung Ngan Choi

  Forelady

 

61

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177.    Lam Yuet Mui

  Operator

178.    Teng Lie Suan

  Operator

179.    Lam Wai Chun

  Operator

180.    Wong Wing Lim

  Operator

181.    Chan Kwok Lung

  Operator

182.    Chan Lin Chu

  Operator

183.    Louie Yuet Ying

  Operator

184.    Lee Hoi Yin

  Operator

185.    Cheng Miu Wa

  Operator

186.    Lam Chung Lai

  Operator

187.    Lam Ming Dei

  Foreman

188.    Wong Mei Kam

  Operator

189.    Tung Oi Mui

  Operator

190.    Tsang Shing Wah

  Operator

191.    Wan Sau Yuk

  Operator

192.    Tsoi Ying Ki

  Manager

193.    Yip Yuk Lin

  Technician

194.    To Mui Ying

  Operator

195.    Wong Yuk Wa

  Operator

196.    Li Lai King

  Inspector

197.    Chan Kam Lam

  Foreman

198.    Cheung Yat Sun

  Technician

199.    Chong Muk Chun

  Technician

200.    Chan Hoi Bun

  Operator

201.    Yau Mei Yan

  Forelady

202.    Hung Kan Chuen

  Driver

203.    Shum Yin Yuk

  Inspector

204.    Kui Shiu Po

  Group Leader

205.    Chan Yu Chik

  Operator

206.    Chan Lai Fong

  Operator

207.    Chin Pui Man

  Engineer

208.    O Mei Nog

  Operator

209.    Wong Ping Fai

  Engineer

210.    Fu Siu Chu

  Operator

211.    Yip So Chu

  Operator

212.    Ma Dik Yi

  Operator

213.    Wong Sik Ping

  Inspector

214.    Su Chin Mu

  Operator

215.    Li Mei Na

  Operator

216.    O Mei Na

  Operator

217.    Chan Kwan

  Operator

218.    So Sai Muk

  Operator

219.    Limbu Shyam Kumar

  Security Supervisor

220.    Lam Lai Ngo

  Amah

221.    Li Siu Yu

  Operator

222.    Wong Yin Ming

  Amah

223.    Wong Yuk Chun

  Operator

224.    Ting Chun Tao

  Operator

225.    Chan Fuk Sui

  Operator

226.    Ng Mei Mei Shirley

  Executive Assistant

 

62

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227.    Tse Mui Ying

  Operator

228.    Lau So Mei

  Operator

229.    Wong Yan Chun

  Operator

230.    Lam Shuk Chu

  Operator

231.    Cheng Yau Ling

  Operator

232.    Lin Chih Ming

  Operator

233.    Lam Ho Man

  Operator

234.    Wong Hau Yu

  Operator

235.    Yuen Fat Lan

  Operator

236.    Liu Wing Keung

  Technician (Electric)

237.    Wong Luen Chu

  Operator

238.    Chow Tim Hei

  Technician (Electric)

239.    Cheu Sau Wan

  Operator

240.    Lam Hau Chun

  Amah

241.    Lau Ying Chat

  Supervisor

242.    Chow Kam Tong

  Engineer

243.    Lau Wang Wa

  Manager

244.    Huang Tien Ming

  Foreman

245.    Fung Wai Yung

  Operator

246.    Lau Choi Ling

  Operator

247.    Hui Fai Wong

  Operator

248.    Wong Yu Kai

  Cook

249.    Poon Ching Kwok

  Security Guard

250.    Tong Yin Chu

  Operator

251.    Chiu Wai Kwong

  Asst. Technician

252.    Tsang Siu Bond

  Asst. Technician

253.    Wong Sum Ying

  Operator

254.    Huang Hang Shan

  Operator

255.    Ho Siu Mui

  Operator

256.    Wan Shun Lit

  Technician (Mech.)

257.    Fung Pui Ling

  Technician

258.    Lam Lai Lai

  Operator

259.    Tsui Mou Fat

  Leader

260.    Chiu Fung Gau

  Operator

261.    Fong Chiu Lai

  Operator

262.    Lam Tit Yeung

  Technician (Electric)

263.    Lee Lap Wai

  Manufacturing Manager

264.    Tam Kam Fong

  Operator

265.    Ng Hung Fai

  Operator

266.    Tsoi Shuk Hing

  Operator

267.    Kok Wai Hang

  Operator

268.    Ku Siu Ping

  Operator

269.    Lai So Ching

  Operator

270.    Wong Miu Wong

  Operator

271.    Ko Mui Kwai

  Operator

272.    Chan Chun Tai

  Operator

273.    Ho Wai Kwong

  Operator

274.    Ng Kam Lung

  Technician

275.    Wong Lai King

  Operator

276.    Yam Shing Wing

  Technician (Other)

 

63

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277.    Cheng Kai Ching

  Operator

278.    Wong Hiu Hong

  Operator

279.    Lai Cheung Mui

  Operator

280.    Ip Suet Ho

  Technician

281.    Wong Tuen Chung

  Technician (Other)

282.    Leung Lai Ling

  Operator

283.    Ho Man Wai

  Systems Analyst

284.    Lau Mai Yue Ai

  Operator

285.    Chan Sun Chi

  Operator

286.    Kong Kam Fung

  Operator

287.    Cheung Chung Ming

  Operator

288.    Wong On Chi

  Operator

289.    To Sau Wan

  Operator

290.    Ng Yuen Mei

  Operator

291.    Chu Kim Miu

  Operator

292.    Leung Ngai Lung

  Section Head

293.    Wong Ngan Suet

  Inspector

294.    Wong Sum

  Security Guard

295.    Wong Wai Fui

  Operator

296.    Kwok Hiu Wang

  Senior Engineer

297.    Pun Shui Ping

  Operator

298.    Choi Chi Ming Andy

  Operator

299.    Yau Lin Fung

  Technician (Mech.)

300.    Law Man Ching

  Operator

301.    Wong Chi Keung

  Asst. Cook

302.    Mak Yin Chun

  Operator

303.    Wong Mei Nga

  Operator

304.    So Chi Lung

  Senior Planner

305.    Poon Siu Ling

  Operator

306.    Tsang Hon Wing

  Operator

307.    Wong Siu Fai

  Operator

308.    Li Chun Fung

  Operator

309.    Wong Siu Ho

  Technician

310.    Wong So Chun

  Operator

311.    Wong Yin Yuk

  Operator

312.    Wong Sau Fong

  Operator

313.    Chan Tsan Sum

  Technician

314.    Yuen Chung Kee Roy

  Manager

315.    Cheung Yiu Ko

  Network Administrator

316.    Liu Tze King Stefan

  Account Manager

317.    Tse Mau Fung

  Account Manager

318.    Chan Tak Kuen

  Assistant Manager

319.    Chan Sze Chung

  Operator

320.    Leung Yu Yan

  Technician

321.    Cheung Wai Nog

  Operator

322.    Tsui Man Ying

  Operator

323.    Chan Wai Man

  Technician

324.    Cheng Chun Yung

  Asst. Technician

325.    Poon Kwok Fai

  Security Guard

326.    Tang Pak Yin

  Technician

 

64

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327.    Leung Kwai Ying

  Operator

328.    Hung Hiu Chun

  Operator

329.    Chan Mong Sing

  Operator

330.    Wong Kwai Fun

  Inspector

331.    Shih Man Koi

  Foreman

332.    Cheng Kong Fan

  Driver

333.    Kwan Kwok Ming

  Technician (Mech.)

334.    Chan Chung Lam

  Operator

335.    Li Hon Ming, Danny

  Sales Engineer

336.    Leung Ping Choi

  Technician

337.    Chan Chun Chun

  Asst. Engineer

338.    Ma Chun Wa

  Operator

339.    Lai Lai Chu

  Operator

340.    Lam So Fun

  Inspector

341.    Ho Yuen Hung

  Operator

342.    Lam Chi Fan

  Operator

343.    Xu Hong Qi

  Operator

344.    Lui Mei Sui

  Operator

345.    Sze King Shan

  Operator

346.    Lam Chun Yuen

  Operator

347.    Yeung Man Tan

  Project Engineer

348.    Sze Chui Ching

  Operator

349.    Liu Xiaohua

  Inspector

350.    Lau Oi Ying

  Inspector

351.    Wong Yuet Kwan

  Operator

352.    Tsoi Pan Lin

  Operator

353.    Ting Shan Shan

  Operator

354.    Chan Tuen Ling

  Operator

355.    Leung Yuen Ki

  Operator

356.    Tong Yun Kong

  General Manager

357.    Yau Wan Mui

  Operator

358.    Cheng Wai Tat

  Business Development Officer

359.    Tsoi Yuen Mei

  Operator

360.    Lam Chi Kin

  Operator

361.    Wong Lun Cheung

  Operator

362.    Chan Chiu Man

  Operator

363.    Tong Yu Man

  Superintendent

364.    Lin Meng Jung

  Technical Director

365.    Li Yiu To

  Foreman

366.    Lam Hung Chiu

  Operator

367.    Mui Chi Wang

  Group Leader

368.    Ko Chi Yin

  Asst. Training Supervisor

369.    Chui Chung Hau

  Operator

370.    Lam King Sum

  Asst. General Manager

371.    Cheng Chung Man

  Operator

372.    Yuen Kin Yan Alan

  Finance Manager

373.    Tang Siu Hung

  Engineer

374.    Yu Oi Ying

  Operator

375.    Kei Kwan Wah

  Operator

376.    Lai Kai Pang

  Asst. Manager

 

65

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377.    Cheung Yat Shun

  Engineer

378.    Tsang Suet Ping Novem

  Senior Finance Manager

379.    Chan Ling Ling

  Operator

380.    Chan Sze Yuen

  Operator

381.    Chan Ka Wai

  Clerk

382.    Wong Suet Ping

  Operator

383.    Yau Wai Heung

  Operator

384.    Wu Ha Fong

  Operator

385.    Yeung Pik

  Operator

386.    Lau Mei Kam

  Operator

387.    Au Choi Ling Sylvia

  Asst. Accountant

388.    Yiu Kam Man

  Asst. Engineer

389.    Wong Chin Fai

  Foreman

390.    Yang Yanru

  Operator

391.    Yip Wing Ching

  Technician (Other)

392.    Chau Miu Kam, Vivian

  Officer

393.    Chiu Ching Fa

  Operator

394.    Chiu Wing Hing

  Business Report Analyst

395.    Lau Ying Hung

  Operator

396.    Wong Chi Kwan

  Operator

397.    Lo Tak Shing

  Planner

398.    Leung Wai Ki

  Store Keeper

399.    Yan Wai Kwok

  Operator

400.    Chiu Shuk Ying

  Operator

401.    Leung Sheung Mei

  Clerk

402.    Chong Chum Wing

  Helper

403.    Ng Kwan Sin Sunny

  Material Director

404.    Quek Seow Cher

  Sr. VP Operation

405.    Chow Yuen Mei Mary

  Customer Services Director

406.    Ngai Kai Loong Dominic

  MIS Director

407.    Tse Lai Ling

  Operator

408.    Lo Siu Hing

  Operator

409.    Tsoi Chun Mui

  Operator

410.    Tsang Shu Kei

  Engineer

411.    Ng Yau Chung

  Inspector

412.    Yang Rong

  Operator

413.    Li Qiugan

  Operator

414.    Tsang Kam Fai

  Operator

415.    He Qiu Xiu

  Operator

416.    Yu Kwok Kei

  Operator

417.    Mok Kwai Man

  Operator

418.    Lam Siu Tat

  Operator

419.    Tam Siu Hung

  Operator

420.    Wun Sze Lim Freddy

  VP Marketing

421.    Chuk Cheung Hoi

  Operator

422.    Chim Wan Lung

  Operator

423.    Tam Wai Po

  Driver

424.    Chui Ho Ki

  Temp. Clerk

425.    Nanthakumar Kanniah

  Senior Manager

426.    Chong Guan Thong

  Purchasing Director

 

66

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427.    Nie Ling

  Inspector

428.    Cheung Chin Pong

  Asst. Engineer

429.    Ng Chak Wo

  Operator

430.    Yeung Ching Ping

  Operator

431.    Lau Hung Helen

  Account Manager

432.    Ho Ka Kui Edmond

  C.S. Officer

433.    Li Wai Lung

  Operator

434.    Tse Wai Hung

  Inspector

435.    Lee Chun Fai

  Support Analyst

436.    Wong Shui Man

  Operator

437.    Wong Pan Wa

  Operator

438.    Chan Man Kuen

  Operator

439.    Ho Mei Ling

  Operator

440.    Ng Yim Lai Amy

  Secretary

441.    Choi Wai Ming

  Clerk

442.    Au Mei Ting Meggy

  C.S. Officer

443.    Wong Ka Fai

  Operator

444.    Fung Sau Fong

  Amah

445.    Shek Yin

  Operator

446.    Fan Chiu Wui

  Operator

447.    Yau Chi Leung

  Operator

448.    Chan Yuen Ying Lorraine

  Asst. Accountant

449.    Pang Keng Chi Rebecca

  Asst. Accountant

450.    Chan Sze Kar

  Senior Programmer

451.    Li Yue Yun

  Operator

452.    Kwok Chun Him

  Senior Buyer

453.    Cheng Nok Yin

  Accountant

454.    Lai Wai

  Operator

455.    Yip Yuen Cheung Eppie

  Sr. HR Manager

456.    Tan Enna

  Sr. Buyer

457.    Ng Chun Ming Luxemburg

  Account Manager

458.    Kwok Chuk Wan

  Clerk

459.    Shek Wai Yin

  Buyer

460.    Sze Ki Mong

  Sr. Engineer

461.    Li Yin Wa

  Amah

462.    Leung Ho Yin

  Asst. Finance Manager

463.    Lau Yuk Ping

  Secretary

464.    Lui Hin Hai

  Application Manager

465.    Lee Sin Lam Carol

  Asst. Adm. Officer

466.    Wong Shing Ming

  Temp. Helper

467.    Lin Hing Yuen, Dave

  Engineering Director

468.    Poon Yiu Wa, Steve

  Financial Controller

469.    Lau Ho Cheung

  Sr. Engineer

470.    Ng Yee Ling

  Officer

471.    Wu Ka Kit

  Accountant

472.    Cheng Cheuk Fun

  Asst. Accountant

473.    Lam Chun Kei

  Asst. Finance Manager

474.    Jerry Rodrigues

  CEO

475.    Yau Man Ki

  Personnel Assistant

476.    Lam Wing Keung

  Technician

 

67

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477.    Wong Yuen Kwai

  Operator

478.    Leung Hung Sum

  Operator

479.    Au Tim Lun

  Senior Programmer

480.    Li Wai Kin

  Superintendent

481.    Lai Wing Mui

  Operator

482.    Tsang Wai Wai

  Operator

483.    Li Pak Hang

  Technician

484.    Leung Lai Yan

  Asst. Engineer

485.    Choy Ma Fat

  Operator

486.    Lam Ching Yee

  Technician

487.    Chan Wai Lun

  Temp. Fitter

488.    Wong Ching Yee Agnes

  C.S. Officer

489.    Choi Yau Cheung

  Store Keeper

490.    Wong Yuk Kam

  Operator

491.    Chu Kok Sang

  Temp. Fitter

492.    Tsui Suet Kwan

  Asst. Cook

493.    Pang Hiu Tung

  Asst. Accountant

494.    Wu Hoi Fai

  Temp. Clerk

495.    Tsang Woon Hung

  Driver

496.    Yim Tze Kin

  Sr Analyst Programmer

497.    Wong Ping Ho

  Accountant

498.    Fung Ying Bill

  Security Guard

499.    Fung Ka Ming Henry

  Asst. Accountant

500.    Chan Chung Ki Allan

  Accountant

501.    Au Ho Yin

  Asst Accountant

502.    Chan Ka Wing

  Receptionist

503.    Chong Yik Man

  Operator

504.    Chung Wai Keung

  Operator

505.    Chu Po Ling

  Temp Operator

506.    Foo Chee Shin

  General Manager

507.    Fok Wai Shan

  Temp Technician

508.    Ho Ling

  Operator

509.    Kwok Mei Ling

  Operator

510.    Lee Ching Cheung

  Temp Security Guard

511.    Law Tsz Tun

  Technician

512.    Lee Kong Hon

  Quality Assurance Director

513.    Lee Ki Kin

  Asst Engineer

514.    Li Tung Wing

  Asst Engineer

515.    Lui Xin Mei

  Temp Amah

516.    Ng Teik Ming

  Sr Manager

517.    Tse Nga Shan

  Technician

518.    Tsoi Leung Chin

  Inspector

519.    Wong Chun Man

  Technician

520.    Wong Wing Wa

  Technician

521.    Eddie Sik Yin Wong

  VP-Global Sales

522.    Chan Kwan On

  Engineer

523.    Tsang Kwong Pan

  Senior Engineer

 

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7.3 Transferring Employees – Singapore

 

1.

 

Ng Siu Leung Martin

   Sales Director

2.

 

Teo Soon Meng James

   Sales Manager

3.

 

Lim Ai Li Angeline

   Sales Engineer

4.

 

Chua Shu Ping Rain

   Sales Clerk

 

 

7.4 Transferring Employees – UK

 

1.

 

T. Lui Peter

   Sales Director

2.

 

Y. T. Hui Daisy

   Office Clerk

3.

 

Zhang Zheng Wen Sherman

   Technical Engineer

4.

 

Kent Wong

   Assistant Account Manager

5.

 

Li Tung Wing Edwin

   Technical Engineer

 

 

7.5 Transferring Employees—US

 

1.

 

Sheilah Alegre

   Sales Engineer

2.

 

David Valentine

   Sales Director

 

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PART 8—BUSINESS INSURANCE POLICIES

 

Refer to list attached.

 

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SCHEDULE 2

 

COMPLETION REQUIREMENTS

 

1. Seller’s obligations

 

1.1 At Completion the Seller shall deliver or procure the delivery to the Buyer
of (or make available to the Buyer):

 

  1.1.1 a copy of the duly executed Security Release Documents;

 

  1.1.2 as evidence of the authority of each person executing a document on the
Seller’s behalf:

 

  (a) a copy of the minutes of a duly held meeting of the directors of such
Seller (or a duly constituted committee thereof) authorising the execution by
the Seller of the document and, where such execution is authorised by a
committee of the board of directors of the Seller, a copy of the minutes of a
duly held meeting of the directors constituting such committee or a relevant
extract thereof; or

 

  (b) a copy of the power of attorney conferring the authority,

 

in each case certified to be true by a director or the secretary of the Seller;

 

  1.1.3 duly executed transfers and sold notes in respect of the HK Shares in
favour of the Buyer or its nominee(s) (subject to written notification of the
identity of the nominee(s) to the Seller not less than three (3) Business Days
before Completion) and the share certificates for the HK Shares;

 

  1.1.4 duly executed transfers in respect of the Singapore Shares in favour of
the Buyer or its nominee(s) (subject to written notification of the identity of
the nominee(s) to the Seller not less than three (3) Business Days before
Completion), the share certificates for the Singapore Shares and a working sheet
computing the net asset value per share of EPCI Singapore in the form prescribed
by the Stamp Duty Branch of the Inland Revenue Authority of Singapore and signed
by a director or the secretary of EPCI Singapore;

 

  1.1.5 resignations in the agreed form from each director and secretary of each
EPCI HK Group Company and each EPCI Singapore Group Company appointed by the
Seller or the relevant Seller’s Group Company expressed to take effect from the
end of the relevant meeting held pursuant to paragraph 1.2;

 

  1.1.6 possession of the Business, the Business Properties and of the other
tangible Business Assets hereby agreed to be sold including:

 

  (a) the Business Plant and Equipment;

 

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  (b) the Stock;

 

  (c) copies of the written Business Contracts;

 

  (d) the Business Records;

 

  (e) the documents relating to the Business IP;

 

  (f) the Business Motor Vehicles; and

 

  (g) all the designs and drawings, plans, manufacturing data, technical and
sales publications, advertising material and other technical and sales matter of
the Business Sellers in relation to each of the Businesses together with any
plates, blocks, negatives and other like material relating to each of the
Businesses;

 

  1.1.7 duly executed assignments or novation agreements in the agreed form of
the Business Contracts;

 

  1.1.8 duly executed assignments in the agreed form of the Accounts Receivable;

 

  1.1.9 a duly executed assignment in the agreed form of the Hong Kong Lease;

 

  1.1.10 a duly executed Transfer/Deed of Land or Authorization and Direction
permitting the electronic registration of a Transfer of the Canadian Property in
the agreed form;

 

  1.1.11 in respect of each of the Business Motor Vehicles owned by Eastern
Pacific Circuits (HK) Limited and used exclusively by Eastern Pacific Circuits
(HK) Limited for the purposes of its Business, the prescribed notice and the
vehicle registration document (and shall also deliver or procure delivery of a
duplicate of the prescribed notice to the Transport Department of Hong Kong as
soon as reasonably practicable after Completion); and

 

  1.1.12 notice of transfer relating to the sale and purchase of the Business of
Eastern Pacific Circuits (HK) Limited is published in accordance with the
provisions of the Transfer of Businesses (Protection of Creditors) Ordinance;

 

  1.1.13 the certificate of incorporation, common seal, minute books, statutory
registers duly written up to date and share certificate books and all other
statutory records of EPCI HK and EPCI Singapore;

 

  1.1.14 the title deeds and documents relating to the Properties owned or
occupied by each member of the Target Group;

 

  1.1.15

an extract of the resolution of the sole shareholder of Eastern Pacific Circuits
(Singapore) Pte Ltd approving the disposition of its Business Assets pursuant

 

72

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to Section 160 of the Singaporean Companies Act (Chapter 50) and, pursuant to
such shareholder approval, the resolution of the board of directors of Eastern
Pacific Circuits (Singapore) Pte Ltd approving such disposition on the terms of
this Agreement;

 

  1.1.16 an extract of the resolution of the sole shareholder of Eastern Pacific
Circuits (Canada) Limited approving the sale of its Business Assets and,
pursuant to such shareholder approval, the resolution of the board of directors
of Eastern Pacific Circuits (Canada) Limited approving such disposition on the
terms of this Agreement;

 

  1.1.17 a duly executed Tax Deed; and

 

  1.1.18 a duly executed Escrow Agreement.

 

1.2 Subject to the Buyer complying with all its obligations under clause 5 and
paragraph 2 below, the Seller shall procure that at Completion a meeting of the
board of directors of each of EPCI HK and EPCI Singapore is held at which the
directors:

 

  1.2.1 vote in favour of the registration of the Buyer as a member of EPCI HK
and EPCI Singapore in respect of the HK Shares and the Singapore Shares (as
applicable) subject to (i) in the case of the Singapore Shares, the stamping of
the share transfer form for the Singapore Shares, and (ii) in the case of the
HK Shares, the stamping of the instrument of transfer and the bought & sold
notes in respect of the HK Shares;

 

  1.2.2 appoint the persons nominated by the Buyer as directors and secretary of
EPCI HK and EPCI Singapore (as applicable) with effect from the end of the
meeting; and

 

  1.2.3 accept the resignations of each director and secretary referred to in
paragraph 1.1.5 above (as applicable) so as to take effect from the end of the
meeting.

 

2. Buyer’s obligations

 

2.1 At Completion the Buyer shall deliver to the Seller as evidence of the
authority of each person executing a document on the Buyer’s behalf:

 

  2.1.1 a copy of the minutes of a duly held meeting of the directors of the
Buyer (or a duly constituted committee thereof) authorising the execution by the
Buyer of the document and, where such execution is authorised by a committee of
the board of directors of the Buyer, a copy of the minutes of a duly held
meeting of the directors constituting such committee or the relevant extract
thereof; or

 

  2.1.2

a copy of the power of attorney conferring the authority,

 

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in each case certified to be a true copy by a director or the secretary of the
Buyer.

 

2.2 a certified copy of the certificate of incorporation of each new entity that
has been incorporated or established for the purposes of acquiring the Business
Assets, and if applicable, the EPCI HK Group and the EPCI Singapore Group,
together with a letter signed by a director of the Buyer that each entity is
wholly-owned by the Buyer and a certified copy of the register of members of
each such entity to evidence such fact;

 

2.3 a duly executed Tax Deed;

 

2.4 a duly executed Escrow Agreement; and

 

2.5 a duly executed Assignment in the agreed form of the Hong Kong Lease.

 

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SCHEDULE 3

 

SELLER’S WARRANTIES

 

1. ORGANIZATION

 

1.1 Each of the Seller, EPCL and EPC Cayman is an exempted company duly
incorporated, validly existing and in good standing under the laws of the Cayman
Islands.

 

1.2 Each member of the EPCI HK Group (including any of its representative
offices or branches) has been duly incorporated or established, is validly
existing and in good standing under the laws of its respective place of
incorporation or establishment, and has the corporate power, authority and the
necessary licences and permits required by applicable laws to conduct its
respective business as now conducted in its present location and to own, operate
and lease its respective properties and assets.

 

1.3 Each member of the EPCI Singapore Group (including any of its representative
offices or branches) has been duly incorporated or established, is validly
existing and in good standing under the laws of its respective place of
incorporation or establishment, and has the corporate power, authority and the
necessary licences and permits required by applicable laws to conduct its
respective business as now conducted in its present location and to own, operate
and lease its respective properties and assets.

 

1.4 Each of the Business Sellers is a company duly incorporated and validly
existing under the laws of its respective place of incorporation, and has the
corporate power, authority and the necessary licences and permits required by
applicable laws to conduct its respective Business as now conducted in its
present location and to own, operate and lease its respective Business Assets.

 

1.5 The information set out in the Recitals (A) and (B) of this Agreement and
schedules 11 and 12 is true and accurate.

 

2A. ENFORCEABILITY

 

2A.1

All corporate action on the part of each of the Seller, EPCL, EPC Cayman and the
Business Sellers and their respective officers, directors and shareholders
necessary for the authorization, execution, delivery and performance of this
Agreement and the Other Documents to which any of them is a party and the
performance of each of their respective obligations under this Agreement and the
Other Documents to which any of them is a party has been taken or will be taken
as of or prior to Completion. This Agreement has been, and each of the Other
Documents to which any of the Seller, EPCL, EPC Cayman and the Business Sellers
is a party, will have been at Completion, duly executed and delivered by the
Seller, EPCL, EPC Cayman and the Business Sellers and, as the case may be, and
this Agreement is, and each of the Other

 

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Documents to which any of them is a party will be, (assuming due authorization,
execution and delivery by Buyer) at Completion, a legal, valid and binding
obligation of and enforceable against each of them, as the case may be, in
accordance with its terms.

 

2A.2 Save as disclosed in the Disclosure Letter, the execution, delivery and
performance of this Agreement and the Other Documents by the Seller, EPCL, EPC
Cayman and the Business Sellers will not (a) constitute a violation (with or
without the giving of notice or lapse of time, or both) of any applicable Law
(including, without limitation, the provision, receipt or use of funds in
violation of any applicable antitrust laws and applicable anti-bribery or
anti-corruption regulations in any relevant jurisdiction); (b) require any
consent, approval or authorization of any person; (c) conflict with or result in
a breach of or constitute a default under any provision of the respective
constituent or charter documents of the Seller, EPCL, EPC Cayman and the
Business Sellers; or (d) result in any breach of, or constitute a default (with
or without the giving of notice or lapse of time, or both) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, or
result in the creation of any Encumbrance on any HK Shares, any Singapore Shares
or any of the assets or properties of any Target Group Company pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties, to which
the Seller, EPCL, EPC Cayman and the Business Sellers is a party or by which any
of such assets or properties is bound or affected.

 

2. CAPACITY AND AUTHORITY

 

2.1 Each of the Seller, EPCL, EPC Cayman and the Business Sellers has the right,
power and authority, and has taken all corporate action necessary, to execute,
deliver and perform its respective obligations, under this Agreement and the
Other Documents to which it is expressed to be a party and to consummate the
transactions contemplated hereby and thereby.

 

2.2 The respective obligations of the Seller, EPCL, EPC Cayman and each Business
Seller under this Agreement and each Other Document to which each of them is
expressed to be a party are, or when the relevant document is executed will be,
enforceable in accordance with their respective terms and this Agreement, and
the Other Documents to which each of them is expressed to be a party when
executed will, constitute valid and binding obligations of it.

 

2.3 The execution, delivery and performance by each of the Seller, EPCL, EPC
Cayman and the Business Sellers of this Agreement and the Other Documents to
which it is expressed to be a party and of the transactions contemplated hereby
and thereby will not conflict with or result in a breach of, or constitute a
default under, any provision of its respective articles of association.

 

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2.4 With respect to each of the Seller, EPCL, EPC Cayman and the Target Group
Companies:

 

  2.4.1 it has not passed a resolution for its winding-up;

 

  2.4.2 it is not being wound up;

 

  2.4.3 no petition or any other legal process has been presented to any court
for its winding-up or for an administration order (which is not discharged
within 14 days); and

 

  2.4.4 no liquidator, receiver, administrator or manager has been appointed to
it or over all or a substantial part of its business or assets.

 

3. EPCI HK

 

3.1 The authorized and issued share capital of EPCI HK consists of 2,000,000
ordinary shares of HK$1 each, all of which have been duly authorized and validly
issued and allotted and not issued in violation of or subject to any pre-emptive
rights.

 

3.2 EPC Cayman is the sole beneficial owner of the HK Shares.

 

3.3 The HK Shares comprise the whole of EPCI HK’s allotted and issued share
capital and are fully paid or credited as fully paid. EPCI HK has not exercised
any lien over the HK Shares and there is not any outstanding call on any of the
HK Shares.

 

3.4 Except for the HK Shares, there are no equity securities of any class or
series of EPCI HK, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. There are no
options, warrants, conversion rights or other agreements to which EPCI HK is a
party or by which EPCI HK is bound obligating EPCI HK to issue, deliver or sell
additional shares in the capital of EPCI HK.

 

3.5 EPC Cayman has not entered into any agreement or understanding with respect
to the voting of the HK Shares.

 

3.6 Save as Disclosed, on Completion, EPC Cayman will have full power and
authority to convey to the Buyer good title to all of the HK Shares and there
will be no Encumbrance in relation to any of the HK Shares.

 

3.7 EPCI HK is the registered and beneficial owner of an 85.29% equity interest
in Eastern Pacific Circuits (Dongguan) Ltd and a 90% equity interest in Lomber
(Huizhou) Limited, in each case, free and clear of Encumbrance.

 

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4. EPCI SINGAPORE

 

4.1 The authorized and issued share capital of EPCI Singapore consists of 2
ordinary shares of S$1.00 each, all of which have been duly authorized and
validly issued and allotted and not issued in violation of or subject to any
pre-emptive rights.

 

4.2 EPCL is the sole legal and beneficial owner of the Singapore Shares.

 

4.3 The Singapore Shares comprise the whole of EPCI Singapore’s allotted and
issued share capital and are fully paid or credited as fully paid. EPCI
Singapore has not exercised any lien over the Singapore Shares and there is not
any outstanding call on any of the Singapore Shares.

 

4.4 Except for the Singapore Shares, there are no equity securities of any class
or series of EPCI Singapore, or any security exchangeable into or exercisable
for such equity securities, issued, reserved for issuance or outstanding. There
are no options, warrants, conversion rights or other agreements to which EPCI
Singapore is a party or by which EPCI Singapore is bound obligating EPCI
Singapore to issue, deliver or sell additional shares in the capital of EPCI
Singapore.

 

4.5 EPCL has not entered into any agreement or understanding with respect to the
voting of the Singapore Shares.

 

4.6 Save as Disclosed, on Completion, EPCL will have full power and authority to
convey to the Buyer good title to all of the Singapore Shares and there will be
no Encumbrance in relation to any of the Singapore Shares.

 

4.7 EPCI Singapore is the registered and beneficial owner of a 95% equity
interest in Eastern Pacific Circuits (Huiyang) Ltd and an 85% equity interest in
Eastern Pacific Circuits (Huizhou) Ltd, in each case, free and clear of
Encumbrance.

 

5. BUSINESS SELLERS

 

5.1 All of the issued shares in the capital of each Business Seller is legally
and beneficially owned by a Group Company free from Encumbrances.

 

5.2 Save as Disclosed, each Business Seller is the legal and beneficial owner of
the Business Assets and Business Properties set out in Schedule 1, free and
clear of Encumbrance.

 

6. FINANCIAL STATEMENTS

 

6.1

The Seller has made available to the Buyer true and complete copies of the
Financial Statements. So far as the Seller is aware, since 31 December 2004
there has been no Material Adverse Change in comparison with the business or
financial position of the Target Group as a whole, or the assets or liabilities
of the Target Group as a whole as reflected in the FY2004 Audited Accounts. The
FY2004 Audited Accounts have not

 

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included any accrual for payment of dividend by Eastern Pacific Circuits
(Huizhou) Limited and EPCI Singapore.

 

6.2 The Disclosure Letter contains the draft Financial Statements for the
financial year ended 31 December 2003, the Financial Statements for the
financial years ended 31 December 2002 and 31 December 2001, the Management
Accounts and the FY2005 Monthly Management Accounts for January 2005 and
February 2005 (the “Disclosed Financial Statements”).

 

6.3 The Financial Statements present fairly and accurately in all material
respects, the financial condition, results of operations and cash flows of the
Seller’s Group Companies as of dates thereof and for the periods covered thereby
indicated. The Financial Statements have been prepared in accordance with HK
GAAP consistently applied throughout the periods covered thereby.

 

6.4 At Completion (subject to the Borrowings being repaid), each of the Seller,
EPCL, EPC Cayman, the Business Sellers and EPCI HK Group and EPCI Singapore
Group will be solvent.

 

6.5 Adequate provision has been made in the FY2004 Audited Accounts in
accordance with HK GAAP with respect to plant and equipment.

 

7. LITIGATION

 

So far as the Seller is aware, (a) no Target Group Company or any of its
officers or directors set out in schedule 11 and schedule 12 hereto is involved
in any civil, criminal, arbitration, administrative or other proceeding (other
than in relation to the collection of debts arising in the ordinary course of
business of the relevant Target Group Company) or investigation, (b) no civil,
criminal, arbitration, administrative or other proceedings (other than in
relation to the collection of debts arising in the usual course of business) or
investigation is pending or threatened by or against any Target Group Company,
(c) no Target Group Company has received notice of any order, writ, judgment,
injunction, decree, stipulation, consent order, determination or award of any
Government Authority court or tribunal to which it is subject; and (d) there are
no claims, actions, suits, proceedings or investigations pending or threatened
by or against the Seller, EPCL, EPC Cayman, EPCI HK Group or EPCI Singapore
Group with respect to this Agreement or the Other Documents, or in connection
with the transactions contemplated hereby or thereby.

 

8. GOVERNMENTAL AUTHORISATIONS AND REGULATIONS

 

8.1

So far as the Seller is aware, each Target Group Company has obtained all
applicable and material governmental consents, licences, permits, grants, or
other authorizations of a Government Authority that is required for the
operation of its business as now conducted in its present location (each an
“Approval”), and each such Approval is in

 

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full force and effect. So far as the Seller is aware, each Target Group Company
has fulfilled and performed its obligations in all material respects under each
of the Approvals and there are no circumstances which indicate that any of the
Approvals held by any Target Group Company will or is likely to be revoked,
terminated or not renewed (whether or not as a result of the transactions
contemplated hereunder) and which could reasonably be expected to result in a
Material Adverse Change. So far as the Seller is aware, no Target Group Company
has received any notice that it is in violation of any Law applicable to it and
which could reasonably be expected to result in a Material Adverse Change. So
far as the Seller is aware, no notice of default or of any dispute concerning
any Target Group Company Approval has been received.

 

8.2 The Disclosure Letter contains a list and description of all Approvals held
by each Target Group Company as at the date of this Agreement, complete and
correct copies of which have been made available by the Seller to the Buyer.

 

8.3 Each of the Approvals is in full force and effect.

 

9. COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

 

9.1 So far as the Seller is aware, none of the Target Group Companies (and none
of their activities carried on in the Property) is in violation of any
Environmental Laws or any environmental permits, license or approval and which
could reasonably be expected to result in a Material Adverse Change.

 

9.2 So far as the Seller is aware, none of the Target Group Companies has
received notice from any Government Authority alleging that it or any of its
assets is not in compliance with Environmental Laws, and, so far as the Seller
is aware, there are no circumstances in existence at the Completion Date that
could reasonably be expected to prevent or interfere with material compliance by
any Target Group Company with Environmental Laws which are in existence at the
Completion Date.

 

9.3 So far as the Seller is aware, the Seller has not received notice of any
claim, action, cause of action or investigation by any person alleging potential
liability of any Target Group Company (including, without limitation, potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties) or
seeking injunctive relief for material violation of Environmental Laws that is
pending or threatened against any Target Group Company, any of its respective
assets or any of the real property from which any of them conducts business and
which could reasonably be expected to result in a Material Adverse Change.

 

10. INTELLECTUAL PROPERTY

 

10.1 Each Target Group Company owns or is a licensee of or otherwise has the
right to use all Intellectual Property Rights in the manner currently used by
it.

 

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10.2 The business of each Target Group Company at the date of this Agreement
does not infringe any third party rights in Intellectual Property.

 

10.3 So far as the Seller is aware, no claims are pending against a Target Group
Company by any third party challenging the Target Group Company’s use of any of
the Intellectual Property Rights.

 

10.4 So far as the Seller is aware, there is no unauthorized use of the
Intellectual Property Rights by any third party.

 

11. PROPERTY

 

11.1 The Property comprises all of the land, premises and buildings owned, held
by, vested in, occupied or used by, or in the possession of, the Target Group.

 

11.2 Save as Disclosed, the relevant Target Group Company has a good and
marketable title to the Property (other than the Property held by the relevant
Target Group Company under a lease).

 

11.3 All real property leases to which a Target Group Company is a party are
valid, binding and enforceable against the parties thereto and in effect in
accordance with their respective terms, except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium,
or other laws affecting the enforcement of creditors’ rights generally and by
principles of equity and (b) there is not under any of such leases any existing
material default by the relevant Target Group Company.

 

11.4 Save as Disclosed, none of the owned Property is subject to any
Encumbrance. None of the Business Properties will, upon Completion, be subject
to any Encumbrance.

 

11.5 So far as the Seller is aware, none of the Target Group Companies has
received any notice of violation of any covenant or other restriction to which
any of the Properties are subject.

 

12. ASSETS

 

12.1 Save as Disclosed, each material asset included in the FY2004 Audited
Accounts (other than assets disposed of in the ordinary course of business or
which are the subject matter of operating or finance or capital leases) is owned
by the relevant Group Company free from Encumbrances.

 

12.2 All material asset leases to which a Target Group Company is a party are
valid, binding and enforceable against the parties thereto and in effect in
accordance with their respective terms, except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency, moratorium,
or other laws affecting the enforcement of creditors’ rights generally and by
principles of equity.

 

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12.3 The Disclosure Letter contains a list of all the operating leases as at the
date hereof.

 

13. MATERIAL CONTRACTS

 

13.1 The Disclosure Letter lists all of the following contracts of each Target
Group Company (“Material Contracts”):

 

  13.1.1 any outstanding or continuing contract for capital expenditures,
performance or receipt of services, or delivery or purchase of goods, in each
case that individually (a) has value or payments in excess of US$100,000 in any
calendar year or (b) is not capable of being terminated without compensation at
any time with three months’ notice or less;

 

  13.1.2 any contract guaranteeing in any way with or without security any
liability of a third party;

 

  13.1.3 any power of attorney, proxy or similar instrument;

 

  13.1.4 any contract containing restrictions on the operation of, or covenants
not to compete in, any business or with any person anywhere in the world;

 

  13.1.5 any contract entered into other than in the ordinary course of business
that is to be performed in whole or in part at or after the date of this
Agreement; and

 

  13.1.6 all real property leases and each lease of personal property.

 

13.2 So far as the Seller is aware, (a) all Material Contracts are in all
material respects valid, binding and in full force and effect in accordance with
their respective terms, (b) neither the relevant Target Group Company nor any
counterparty to any Material Contract is in material breach of any Material
Contract, and (c) the relevant Target Group Company has not received notice of
any fact or circumstance which might invalidate or give rise to a ground for
termination, avoidance or repudiation of a Material Contract which is currently
unresolved.

 

14. LABOUR

 

14.1 So far as the Seller is aware, each Target Group Company is not and has not
been engaged in any illegal labour practice nor is or has been in violation of
any applicable Laws respecting employment and employment practices, terms and
conditions of employment, and wages and hours.

 

14.2 So far as the Seller is aware, there is no pending or threatened, and there
has been no strike, labour dispute, employee, claim, slowdown or stoppage
against a Target Group Company in the 18 months prior to the date of this
Agreement. So far as the Seller is aware, no Target Group Company is a party to
nor bound by any collective bargaining agreement.

 

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14.3 Save as Disclosed, no Target Group Company maintains or contributes to (or
has ever maintained or contributed to) a defined benefits retirement plan.

 

15. TAX MATTERS

 

15.1 The Disclosure Letters sets out (i) all income Tax Returns filed by or on
behalf of each member of the EPCI HK Group and the EPCI Singapore Group relating
to the financial years ended 31 December 2001, 31 December 2002 and 31 December
2003, and (ii) all jurisdictions in which each member of the EPCI HK Group and
the EPCI Singapore Group has paid material non-income Taxes at any time during
the past three fiscal years.

 

15.2 Save as Disclosed, each member of the EPCI HK Group and EPCI Singapore
Group: (i) has timely filed on or before the applicable due date with each
appropriate Government Authority all Tax Returns required to be filed by or with
respect to it, and all such Tax Returns have been properly completed in all
material respects in compliance with applicable Law, and (ii) has fully and
timely paid, or has made adequate provision on the Financial Statements in
accordance with HK GAAP for, all Taxes required to be paid by it (whether or not
such Taxes have been reflected on any Tax Return).

 

15.3 In relation to each member of the EPCI HK Group and the EPCI Singapore
Group, all Taxes incurred prior to Completion, to the extent not required to
have been previously paid, will be reserved for on the Financial Statements in
accordance with HK GAAP. All Taxes that each member of the EPCI HK Group and the
EPCI Singapore Group have been required by Law to withhold or to collect for
payment have been duly withheld and collected, and have been paid over to the
appropriate Government Authority in compliance in all material respects with all
applicable Law, and each member of the EPCI HK Group and the EPCI Singapore
Group have complied in all material respects with all information reporting
requirements under all applicable Law, including maintenance of required records
with respect thereto.

 

15.4

Save as Disclosed, (a) there are no pending or threatened claims, actions,
assessments, suits, investigation or other proceedings by any Government
Authority with respect to Taxes relating to any member of the EPCI HK Group or
any member of the EPCI Singapore Group; (b) no extension or waiver of the
limitation period applicable to any Tax Return of, or that includes, any member
of the EPCI HK Group or any member of the EPCI Singapore Group is in effect or
has been requested; (iii) all deficiencies claimed, proposed or asserted or
assessments made as a result of any examinations by any Government Authority of
the Tax Returns of, or that include, any member of the EPCI HK Group or any
member of the EPCI Singapore Group have been fully paid or fully settled, or are
being contested in good faith by appropriate proceedings and adequate reserves
have been made for such Taxes on the Financial Statements in accordance with HK
GAAP; (iv) there are no Encumbrances for Taxes upon the

 

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Business Assets, HK Shares, Singapore Shares or any of the assets of the Target
Group, except Encumbrances for current Taxes not yet due and payable; and (v) no
power of attorney that currently is in effect has been granted by or with
respect to any member of the EPCI HK Group or any member of the EPCI Singapore
Group with respect to any Tax matter.

 

15.5 Each member of the EPCI HK Group and the EPCI Singapore Group is in full
compliance in all material respects with all terms and conditions of any Tax
exemption, Tax holiday or other Tax reduction agreement or order. So far as the
Seller is aware, the consummation of the transactions contemplated by this
Agreement does not have a material adverse effect as at Completion on the
continued validity and effectiveness of any such Tax exemption, Tax holiday or
other Tax reduction agreement or order.

 

15.6 Each member of the EPCI HK Group and the EPCI Singapore Group is and has at
all times been resident for Tax purposes in its place of incorporation or
formation and is not and has not at any time been treated as resident in any
other jurisdiction for any Tax purpose (including any double Taxation
arrangement).

 

15.7 The Seller has made available to the Buyer correct and complete copies of
all Tax Returns of, or that include any member of the EPCI HK Group or the EPCI
Singapore Group for which the statute of limitations has not yet expired and all
audit reports.

 

15.8 Neither the Seller nor any member of the EPCI HK Group nor any member of
the EPCI Singapore Group has given any Tax indemnity or been bound by any Tax
sharing, Tax allocation or similar agreement.

 

15.9 Since December 31, 2003, neither the Seller nor any member of the EPCI HK
Group nor any member of the EPCI Singapore Group has made or changed any
applicable Tax election, adopted or changed any accounting method or applicable
Tax reporting principle or practice, settled or compromised any Tax liability,
or waived or extended the statute of limitations in respect of any applicable
Taxes.

 

15.10 No Tax claim has been made by a Governmental Authority in a jurisdiction
where any member of the EPCI HK Group or the EPCI Singapore Group does not file
any Tax Return that it is or may be subject to Taxation by that jurisdiction.

 

16. INSURANCE

 

16.1 So far as the Seller is aware, (i) all of the material insurance policies
under which a Target Group Company is an insured (“Policies”) are in full force
and effect and (ii) no notice of cancellation or termination in respect of any
of the Policies has been received by the relevant Target Group Company insured.

 

16.2 So far as the Seller is aware, no claim is outstanding under any of the
Policies.

 

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16.3 So far as the Seller is aware, all premiums which are due under the
Policies have been paid.

 

16.4 The Disclosure Letter contains copies of all the material Policies in
respect of the Target Group Companies.

 

17. NO BROKERS

 

Other than UBS AG, the Seller is not obligated to pay any fees or expenses of
any broker, finder, investment banker or other person in connection with the
transactions contemplated by this Agreement.

 

18. BANK ACCOUNTS

 

The Disclosure Letter sets out the names and locations of all banks, trust
companies, savings and loan associations and other financial institutions at
which each member of the EPCI HK Group and EPCI Singapore Group maintains
accounts of any nature and the names of all persons authorized to draw thereon
or make withdrawals therefrom.

 

19. ABSENCE OF CERTAIN CHANGES OR EVENTS

 

Since 31 December 2004, (a) each Target Group Company has conducted its
businesses in the usual course consistent with its practice prior to 31 December
2004 and (b) each Target Group Company has not:

 

19.1 declared, set aside or paid any dividend or made any other distribution on
or in respect of its shares or declared any direct or indirect redemption,
retirement, purchase or other acquisition by it of such shares;

 

19.2 save as disclosed in the Disclosure Letter, issued any shares or other
securities; or

 

19.3 granted any increase in the compensation payable by it to its directors,
officers or employees, except in the ordinary course of business and in a manner
consistent with prior practice.

 

19.4 entered into any legally binding agreement transaction or commitment other
than in the ordinary course of business and consistent with past practice;

 

19.5 incurred any Indebtedness otherwise than in the ordinary course of
business;

 

19.6 sold, transferred or otherwise disposed of any of its properties or assets
(real or personal, tangible or intangible) with an aggregate net book value in
excess of US$250,000, except in respect of the transfer of equipment to another
Target Group Company the sale of Inventory, finished goods or scrap in the
ordinary course of business; or

 

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19.7 made any change in any method of accounting or accounting practices or
internal control procedures.

 

20. WARRANTIES

 

The Disclosure Letter sets forth a list of all product warranty claims
(including claims for value-add payments) individually in excess of US$100,000
paid by any Target Group Company for the period beginning December 31, 2003, up
to 28 February 2005 and such list is true, accurate and complete.

 

21. CAPITAL IMPROVEMENTS

 

Save as disclosed in the Material Contracts and the Disclosed Financial
Statements, the Disclosure Letter sets forth all the capital improvements or
purchases or capital expenditures that the Target Group Companies have committed
to or contracted for in excess of US$250,000 and that have not been completed
prior to the date hereof and the cost and expense reasonably estimated to
complete such work and purchases.

 

22. CUSTOMERS AND SUPPLIERS

 

22.1 The Disclosure Letter sets out:

 

  22.1.1 a list of the ten largest customers of each Target Group Company, in
terms of revenue during the fiscal years ended 31 December 2003 and 31
December 2004, and the current fiscal year through 28 February, 2005,
(collectively, the “Top 10 Customers”), showing the total revenue received in
each such period from each such customer; and

 

  22.1.2 a list of the ten (10) largest suppliers of each Target Group Company,
in terms of purchases during the fiscal years of the Company ended
31 December 31 2003 and 31 December 2004, and the current fiscal year through
28 February, 2005 (collectively, the “Top 10 Suppliers”), and showing the
approximate total purchases in each such period from each such supplier.

 

23. NONCOMPETITION AGREEMENTS

 

Neither the Seller or any Target Group Company is subject to any noncompetition
agreements.

 

24. BUSINESS ASSETS COMPLETE

 

The Business Assets, HK Shares and Singapore Shares to be sold to Buyer pursuant
to this Agreement include all the assets and rights used by the Target Group to
operate the Business Assets and the business of the Target Group as at the
Completion Date, in the same manner as currently conducted by the relevant
member(s) of the Target Group. The execution and delivery of the Other Documents
by the parties and the payment by Buyer of any consideration payable under this
Agreement will, subject to

 

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the terms of this Agreement, result, in Buyer’s immediate acquisition of good
title to the Business Assets, HK Shares and Singapore Shares free and clear of
any Encumbrance.

 

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SCHEDULE 4

 

LIMITATIONS ON THE SELLER’S LIABILITY

 

1. LIMITATION ON QUANTUM

 

1.1 The Seller is not liable in respect of a Relevant Claim:

 

  1.1.1 unless the amount that would otherwise be recoverable from the Seller
(but for this paragraph 1.1.1) and the liability determined in respect of that
Relevant Claim exceeds US$100,000; and

 

  1.1.2 unless and until the amount that would otherwise be recoverable from the
Seller (but for this paragraph 1.1.2) and the liability determined in respect of
that Relevant Claim, when aggregated with the Seller’s liability determined in
respect of other Relevant Claims (excluding any amounts in respect of a Relevant
Claim for which the Seller has no liability because of paragraph 1.1.1 and
excluding any amounts in respect of Relevant Claims which have been taken into
account in the determination of the Actual Adjusted 2005 EBITDA in accordance
with clause 8.10(b)(1)), exceeds US$1,000,000, and in the event that the
aggregated amounts exceed US$1,000,000, the Seller shall, provided that
paragraph 1.1.1 above has been satisfied, only be liable for the total amount of
all such Relevant Claims in excess of US$360,000.

 

  1.1.3 For the purposes of determining whether a Relevant Claim exceeds
US$100,000, all items of loss of a similar type (irrespective of the amount of
individual loss) shall be aggregated.

 

1.2 The Seller’s total liability from time to time:

 

  1.2.1 in respect of all Fundamental Warranty Claims, shall be limited to an
amount equal to: (a) the then prevailing Escrow Amount (including the EBITDA
Earnout Consideration, if any); plus (b) 50% of the aggregate amounts paid to
the Seller from the Escrow Account by way of release pursuant to clause 7.2,
clause 7.8 and/or schedule 9 (as the case may be), from time to time; plus
(c) the amount in excess of US$6,000,000 paid to the Buyer from the Escrow
Account in respect of the Post-Cash Working Capital Shortfall pursuant to clause
6.8.

 

  1.2.2

in respect of all Relevant Claims other than Fundamental Warranty Claims, shall
be limited to an amount equal to: (a) the then prevailing Escrow Amount
(including the EBITDA Earnout Consideraton, if any) less US$6,000,000; plus
(b) 50% of the aggregate amounts paid to the Seller from the Escrow Account by
way of release pursuant to clause 7.2, clause 7.8 and/or schedule 9 (as the

 

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case may be), from time to time; plus (c) the amount in excess of US$6,000,000
paid to the Buyer from the Escrow Account in respect of the Post-Cash Working
Capital Shortfall purcuant to clause 6.8,

 

Provided that the Seller’s aggregate liability in respect of all Relevant Claims
under paragraphs 1.2.1 and 1.2.2 above, whether comprising Fundamental Warranty
Claims and/or Relevant Claims other than Fundamental Warranty Claims, shall at
no time exceed the amount calculated under paragraph 1.2.1 above.

 

1.3 The Buyer shall not be entitled to claim for any punitive, indirect or
consequential loss (including loss of profit) in respect of any Relevant Claim.

 

2. TIME LIMITS FOR BRINGING CLAIMS

 

The Seller is not liable for a Relevant Claim unless the Buyer has notified the
Seller of the Relevant Claim stating in reasonable detail the nature of the
Relevant Claim and the amount claimed (detailing the Buyer’s calculation of the
loss thereby alleged to have been suffered) on or before the date that is:

 

2.1 1 January 2007, in respect of any Relevant Claim other than a Fundamental
Warranty Claim; and

 

2.2 1 July 2007, in respect of any Fundamental Warranty Claim.

 

3. NOTICE OF CLAIMS

 

A Relevant Claim notified in accordance with paragraph 2 of this schedule 4 and
not satisfied, settled or withdrawn is unenforceable against the Seller on the
expiry of the period of 6 months starting on the day of notification of the
Relevant Claim, unless proceedings in respect of the Relevant Claim have been
issued and served on the Seller.

 

4. MITIGATION

 

Nothing in this schedule 4 restricts or limits the parties general obligation at
law to mitigate any loss or damage which it may incur in consequence of a matter
giving rise to a Relevant Claim. The parties agree that the obligation at law to
mitigate any loss or damage which it may incur in consequence of a matter giving
rise to a Relevant Claim shall apply mutatis mutandis to any loss or damage it
may incur in consequence of a matter giving rise to a Relevant Claim under the
Tax Deed (notwithstanding that there is no obligation at law to mitigate loss or
damage which gives rise to a claim under an indemnity).

 

5. SPECIFIC LIMITATIONS

 

The Seller is not liable in respect of a Relevant Claim:

 

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5.1 to the extent that the matter giving rise to the Relevant Claim would not
have arisen but for:

 

  5.1.1 an Event before or after Completion at the request or direction of a
Buyer’s Group Company or a director, employee or authorised agent of a Buyer’s
Group Company; or

 

  5.1.2 the passing of, or a change in, a Law, interpretation of the Law or
administrative practice of a Government Authority after the Completion Date an
increase in the Tax rates or an imposition of Tax, in each case not actually or
prospectively in force at the Completion Date; and

 

5.2 to the extent that the matter giving rise to the Relevant Claim is a Tax
liability of any Group Company arising solely because the relevant Group
Company’s assets are more than, or its liabilities are less than, were taken
into account in computing the provision for Tax in the Financial Statements.

 

6. RECOVERY ONLY ONCE

 

The Buyer is not entitled to recover more than once in respect of any one matter
giving rise to a Relevant Claim.

 

7. CONDUCT OF RELEVANT CLAIMS

 

7.1 If the Buyer becomes aware of a matter which constitutes or which would or
could be reasonably expected to give rise to a Relevant Claim:

 

  7.1.1 the Buyer shall as soon as practicable (having regard to any applicable
time limits and other relevant circumstances), give notice to the Seller of the
matter;

 

  7.1.2 where the Relevant Claim relates to a claim against an EPCI HK Group
Company or an EPCI Singapore Group Company by a third party, the Buyer shall,
and shall ensure that each Buyer’s Group Company shall, in each case subject to
the consent, if required, of the Chinese partner to the relevant Group Company,
provide to the Seller and its advisers (during normal business hours or at a
time acceptable to the Buyer and the relevant Buyer Group Company) reasonable
access to premises and personnel and to relevant assets, documents and records
within the power or control of the Buyer solely for the purposes of
investigating that claim upon reasonable notice in writing being given by the
Seller to the Buyer;

 

  7.1.3 the Seller (at its cost) may take copies subject to the Buyer’s consent
(which shall not be unreasonably withheld or delayed) of the documents or
records, and photograph the premises or assets, referred to in paragraph 7.1.2
of this schedule 4;

 

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  7.1.4 the Buyer shall not, and shall ensure that no Buyer’s Group Company
will, admit liability in respect of, or compromise or settle, the matter without
the prior written consent of the Seller (which shall not be unreasonably
withheld or delayed); and

 

  7.1.5 the Buyer shall take all reasonable action to mitigate any loss suffered
by it or any Buyer’s Group Company in respect of a matter giving rise to a
Relevant Claim.

 

8. RECOVERY FROM ANOTHER PERSON

 

8.1 If the Seller pays to a Buyer’s Group Company an amount in respect of a
Relevant Claim, and a Buyer’s Group Company subsequently recovers from another
person an amount which is directly referable to the subject matter of the
Relevant Claim and which would not otherwise have been received by the Buyer,
the Buyer shall pay to the Seller an amount equal to the lesser of: (i) the sum
recovered from the third party less any reasonable costs and expenses incurred
in obtaining such recovery; and (ii) the amount previously paid by the Seller to
the Buyer.

 

9. MATTERS DISCLOSED

 

9.1 The Seller shall not be liable for any Relevant Claim for breach of the
Warranties if and to the extent that the fact, matter event or circumstance
giving rise to such Relevant Claim:

 

  9.1.1 is disclosed, allowed, provided or reserved in the FY2004 Audited
Accounts; or

 

  9.1.2 is reflected, provided for or otherwise taken into account in the
Completion Statement.

 

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SCHEDULE 5

 

ACTION PENDING COMPLETION

 

1. Each Target Group Company shall operate its business in the ordinary and
usual course, in the same manner and scope as conducted as at the date of this
Agreement;

 

2. the Buyer and its agents will, subject to the Buyer’s obligation of
confidentiality set out in clause 22 of this Agreement, upon reasonable notice
during normal business hours, be allowed access to the employees and premises of
each Target Group and shall also be allowed access to, and to take copies of,
the books and records of each Target Group Company including, without
limitation, the statutory books, minute books, leases, licenses, contracts
entered into by any Business Seller, details of receivables, Intellectual
Property, tax records, supplier lists and customer lists in the possession or
control of any Target Group Company provided that such access is confined to
information that is reasonably necessary to plan for integration after
Completion and that such information (together with all copies thereof) are
returned to the Seller promptly in the event Completion does not take place;

 

3. each Target Group Company shall take all reasonable steps to preserve its
property and assets and will not cancel or amend any Business Insurance Policy;

 

4. each Target Group Company shall take all reasonable steps to preserve the
validity of its Intellectual Property;

 

5. save as Disclosed to the Buyer in the 2005 business plan for the Seller’s
Group, each Target Group Company will not make any change in the existing
nature, scope or organisation of its business;

 

6. each Target Group Company will not acquire an interest in a corporate body or
merge or consolidate with a corporate body or any other person, enter into any
demerger transaction or participate in any other type of corporate
reconstruction;

 

7. save as Disclosed, each Target Group Company will not declare, pay or make a
dividend or distribution;

 

8. each Target Group Company will not, save in connection with the release of
the Security upon the repayment of the Debt Amount to the Lenders on Completion,
create, or agree to create or amend, an Encumbrance over any real property or
another asset or redeem, or agree to redeem, an existing Encumbrance over any
real property or another asset;

 

9. each Target Group Company will not give, or agree to give, a guarantee,
indemnity or other agreement to secure, or incur financial or other obligations
with respect to, another person’s obligation (other than in the ordinary course
of business);

 

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10. each Target Group Company shall use such efforts consistent with past
practice to keep available the services of its present officers and key
employees and preserve its relationship with material customers, suppliers,
distributors and others having business dealings with it;

 

11. each Target Group Company will not, without the consent of the Buyer (not to
be unreasonably withheld or delayed):

 

  11.1 incur or enter into any agreement or commitment involving any capital
expenditure in excess of US$250,000 per item and US$1,500,000 in aggregate in
respect of the capital expenditure items listed in schedule 6, or (ii) in excess
of US$50,000 per item and US$500,000 in aggregate in respect of any capital
expenditure items not listed in schedule 6.

 

  11.2 enter into or amend any Material Contract: (i) which is not capable of
being terminated without compensation at any time with three months’ notice or
less; or (ii) which is not in the ordinary course of business or (iii) which has
an aggregate amount of value or aggregate payments in excess of US$250,000 in
any calendar year.

 

  11.3 incur any Indebtedness otherwise than in the ordinary course of business;

 

  11.4 acquire, sell, transfer, assign or otherwise dispose of or agree to
acquire, sell, transfer, assign or otherwise dispose of any of property or
assets (real or personal, tangible or intangible) in each case, involving
consideration expenditure or liabilities in excess of US$250,000 in aggregate
except in respect of the transfer of equipment to another Target Group Company,
the sale of Inventory or finished goods or scrap in the ordinary course of
business;

 

  11.5 amend any of the terms on which goods, facilities or services are
supplied to the extent that any such amendment is likely to have a material
adverse impact on the business or financial position of the relevant Target
Group Company, except where required to do so in order to comply with any
applicable legal or regulatory requirement;

 

  11.6 amend or discontinue any insurance contract, fail to notify any insurance
claim in accordance with the provisions of the relevant policy or settle any
such claim materially below the amount claimed;

 

  11.7 allot, issue, redeem, vary or repurchase or agree to allot, issue,
redeem, vary or repurchase any share or loan capital (or option or right to
subscribe for the same) of EPCI HK Group and EPCI Singapore Group;

 

  11.8 acquire or agree to acquire any share, shares or other interest in any
company, partnership or other venture or incorporate any subsidiary;

 

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  11.9 make any change to its accounting practices or policies or accounting
reference date or, in relation to EPCI HK Group and EPCI Singapore Group only,
amend its memorandum or articles of association (or equivalent constitutional
documents);

 

  11.10 make or change any applicable Tax election, adopt or change any Tax
accounting method or applicable Tax reporting principle or practice, settle or
compromise any Tax liability, or waive or extend the statute of limitations in
respect of any applicable Taxes;

 

  11.11 discontinue or cease to operate all or a material part of its business
or resolve to be wound up;

 

  11.12 commence, compromise or discontinue any legal or arbitration proceedings
involving a claim in excess of US$100,000 (other than in respect of the
collection of debts which are not material in the context of the relevant Target
Group Company in the ordinary course of business);

 

  11.13 acquire or agree to acquire or dispose of or agree to dispose of any
freehold or leasehold interest in land; and

 

  11.14 save as required by Law or in connection with the transactions
contemplated by this Agreement and the Other Documents, change the terms of
employment (including, without limitation, remuneration and pension
entitlements) of any Transferring Employee or provide any gratuitous payment to
any Transferring Employee or dismiss or terminate (except with good cause) the
employment of any Transferring Employee or engage or appoint any additional
employees.

 

provided that nothing in this schedule 5 shall prevent any member of the
Seller’s Group from complying with its respective obligations under this
Agreement and no member of the Seller’s Group shall be liable for breach of this
schedule 5 for actions taken to comply with its respective obligations under
this Agreement.

 

12. To the extent that any of the restrictions in this schedule 5 relates to a
Business Seller, the restriction shall only apply to the Business and the
Business Assets of that Business Seller.

 

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SCHEDULE 6

 

CAPITAL EXPENDITURE

 

attached

 

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SCHEDULE 7

 

FORM OF THE ESCROW AGREEMENT

 

From: Eastern Pacific Circuits Holdings Limited
Century Yard, Cricket Square, Hutchins Drive
P.O. Box 2681GT, George Town
Grand Cayman, British West Indies

 

and

 

Merix Corporation
1521 Poplar Lane, P.O. Box 3000
F4-234, Forest Grove, OR
97116, United States of America

 

To: Richards Butler
20th Floor, Alexandra House
16-20 Chater Road
Central, Hong Kong

 

[·], 2005

 

 

Dear Sirs,

 

Master Sale and Purchase Agreement between Eastern Pacific Circuits Holdings
Limited

(“the Seller”) and Merix Corporation (“the Buyer”) dated [·], 2005 (the
“Agreement”)

 

We refer to the Agreement between the Seller and the Buyer.

 

For convenience, all words and expressions defined in the Agreement have the
same meanings in this letter, unless the contrary intention appears.

 

This is the Escrow Agreement referred to in the Agreement.

 

We hereby jointly instruct you to establish in your name a United States dollar
denominated interest-bearing deposit account designated as the Eastern Pacific
Circuits Escrow Account (the “Escrow Account”) with Standard Chartered Bank
Limited (the “Bank”) in respect of the Escrow Amount to be held by you in escrow
pursuant to the terms of this letter and Clause 8 of the Agreement.

 

The Buyer shall pay the amount referred to in Clause 5.2.4.1 (c), 8.8 (a) and
paragraph 2 (a) of Schedule 8 of the Agreement to you as Escrow Agent and you
are instructed to deposit such amount into the Escrow Account.

 

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The Escrow Account is to be operated in accordance with the terms of this letter
insofar as those terms are not inconsistent with the terms of the Agreement, in
which case the terms of the Agreement shall apply.

 

1. You are hereby instructed:

 

  (a) to hold the Escrow Amount (less any amount debited to that account by the
Bank in respect of its fees and charges) to our joint order;

 

  (b) to hold all interest accrued from time to time on the Escrow Amount (less
any amount debited to that account by the Bank in respect of its fees and
charges) to the order of the Seller;

 

  (c) to transfer or otherwise deal with those sums referred to in (a) above
only in such manner as we may from time to time jointly instruct you in
accordance with paragraph 2 below or as otherwise expressly provided in this
letter; and

 

  (d) to pay to the Seller those sums referred to in (b) above on the date
falling six (6) months following the Completion Date and on the expiry of each 6
month period thereafter and on the date on which the balance of the Escrow
Amount is released in full from the Escrow Account, in such manner as the Seller
may instruct you in accordance with paragraph 3 below.

 

2. Subject to paragraph 3, any instruction in relation to the Escrow Account
shall be given in writing in the form, or substantially in the form, set out in
schedule 1 to this letter, jointly signed by:

 

  (a) any one of the persons whose names and specimen signatures are set out in
schedule 2 on behalf of the Seller; and

 

  (b) any one of the persons whose names and specimen signatures are set out in
schedule 3 on behalf of the Buyer,

 

or by such other persons as may from time to time be notified to you in
accordance with the following paragraphs. Any such joint instruction may consist
of separate documents in the same form, each signed by one of the authorised
signatories.

 

3. Any instruction in relation to the payment of accrued interest on the Escrow
Amount shall be given by the Seller in writing, substantially in the form, set
out in schedule 1 to this letter provided that such instruction shall only be
signed by any one of the persons whose names and specimen signatures are set out
in schedule 2 on behalf of the Seller.

 

4. Either the Seller or the Buyer may from time to time make any change to the
authorised signatories specified by it by notice to you, signed by each of the
current authorised signatories of that party, except that in the case of a
removal of an authorised signatory, the notice need not be signed by the
signatory to be removed. In the case of an addition to the authorised
signatories, the notice shall contain a specimen of the signature of the
additional signatory.

 

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5. You may rely without enquiry on, and assume the authenticity of, any
instruction or notice (including a facsimile message) served upon you which
appears on its face to be signed on behalf of the Seller and the Buyer in
accordance with paragraphs 2, 3 or 4 above. For the avoidance of doubt, you need
not enquire as to whether any amount which you are instructed to pay has been
correctly calculated or whether it is properly payable under the terms of the
Agreement.

 

6. You may discharge any instruction to pay any sum out of any of the Escrow
Account by yourselves instructing the Bank to do so and you will not be
responsible for any delay or failure on the part of the Bank in executing any
such instruction or for any loss which either of us may suffer as a result of
any default on the part of the Bank.

 

7. You should not invest any of the monies standing to the credit of the Escrow
Account.

 

8. In making any payment out of any of the Escrow Account you may withhold or
deduct any sum which you are obliged by law to so withhold or deduct (whether in
respect of any liability to taxation or otherwise). We authorise you to pay all
bank charges, taxation and other liabilities referable to the operation of the
Escrow Account (including all interest accruing on it) out of the funds for the
time being standing to the credit of that account.

 

9. Each of the Seller and the Buyer agrees that, in consideration of you holding
the Escrow Amount as Escrow Agent pursuant to these joint instructions and upon
the terms as set out herein:-

 

  (i) each of the Seller and the Buyer shall jointly pay an aggregate fee of
HK$40,000 to you as escrow agent fee for your services rendered hereunder within
7 days of you acknowledging receipt of this letter and in the event of early
termination, you will in no circumstances be liable to refund such escrow agent
fee. You will not be responsible for any loss, claim or damage whatsoever
suffered by the Seller and/or the Buyer as a result of the services provided by
you under this Escrow Agreement save in respect of the gross negligence, wilful
default and fraud on your part;

 

  (ii) each of the Seller and the Buyer will hold you fully and effectually
indemnified against all losses, claims, costs, damages, proceedings,
liabilities, charges and expenses whatsoever or howsoever arising which you may
suffer or incur as a consequence of you acting as Escrow Agent hereunder save in
respect of gross negligence, wilful default and fraud on your part;

 

  (iii) you shall not be liable to the Seller and/or the Buyer and/or any party
whatsoever in any way for failure or delay in carrying out the instructions save
in respect of the negligence, wilful default and fraud on the part of you; and

 

  (iv) you shall not be liable to account for any shortfall in the Escrow
Amounts which is a result of any deduction by any bank as banking and/or service
charges in the course of the holding, transferring or payment of the Escrow
Amounts.

 

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10. The Seller and the Buyer may at any time by joint written instructions to
you terminate this Letter upon which you shall deal with the entire balance of
the Escrow Account in accordance with the directions in their joint written
instructions.

 

11. You may discontinue acting as Escrow Agent by giving each of us 30 days’
written notice, upon receipt of which we shall endeavour promptly to make
alternative arrangements for the holding of the Escrow Account. We shall attempt
to put the alternative arrangements in place by the expiration of the 30 day
notice period, or if this does not prove possible, as soon as possible after
that time. For the avoidance of doubt, you will continue to hold and operate the
Escrow Account in accordance with the terms of this Escrow Agreement until the
alternative arrangements have been put in place.

 

12. Termination of this Escrow Agreement shall be without prejudice to any
claims or rights which the parties hereto may have by reason of any breach of
the other parties’ obligations and, without prejudice to the generality of the
foregoing, any indemnity provisions and provisions limiting the liabilities of
the other parties shall survive termination of this Escrow Agreement.

 

13.    (a) Instructions, notices or other communications to be given hereunder
must be in writing in English and sent to the party at the following addresses,
facsimiles and for the attention of the persons specified (or to another address
specified by that party by not less than 5 Business Day’s written notice before
the dispatch):

 

Name of party

--------------------------------------------------------------------------------

 

Address

--------------------------------------------------------------------------------

  

Fax No.

--------------------------------------------------------------------------------

  

Marked for the
attention of

--------------------------------------------------------------------------------

The Escrow Agent

 

Richards Butler

20th Floor,

Alexandra House

16-20 Chater Road

Central, Hong Kong

   852 2810 0664    Christopher Williams

The Seller

 

Suite 2804, 28th Floor

One Exchange Square

8 Connaught Place

Central

Hong Kong

   852 3102 8325    Ng Lak Chuan    

with a copy to:

Baker & McKenzie

1401 Hutchison House

10 Harcourt Road

Central

Hong Kong

   852 2845 0476    Milton Cheng

The Buyer

 

1521 Poplar Lane

P.O. Box 3000, F4-234

Forest Grove OR 97116

United States of America

   1 503 357 1504    Mark R. Hollinger

 

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Name of party

--------------------------------------------------------------------------------

 

Address

--------------------------------------------------------------------------------

  

Fax No.

--------------------------------------------------------------------------------

  

Marked for the
attention of

--------------------------------------------------------------------------------

   

with a copy to:

Perkins Coie LLP

1120 NW Couch Street

Tenth Floor

Portland, OR 97209

United States of America

   1 503 727 2222    Patrick J. Simpson    

Jones Day

31st Floor, Edinburgh Tower

The Landmark 15

Queen’s Road Central

Hong Kong

   852 2868 5871    Barbara Mok

 

  (b) Unless there is evidence that it was received earlier, all instructions,
notice and other communications is deemed given if:

 

  (i) delivered personally, when left at the address referred to in (a) above;

 

  (ii) sent by internationally recognised next-day courier, two Business Days
after delivery to the courier;

 

  (iii) sent by air mail, five Business Days after posting it; and

 

  (iv) sent by fax, when confirmation of its transmission has been recorded by
the sender’s fax machine.

 

14. Except in accordance with the above arrangements or in accordance with an
order of a competent court or the decision of an arbitral tribunal appointed in
accordance with clause 29 of the Agreement, you will not permit the release of
any amount from the Escrow Account.

 

15. You will provide to us (or instruct the Bank to provide to us) such
information as to the balance for the time being credited to any of the Escrow
Account and the interest accrued on it as either of us may from time to time
request.

 

16. Please acknowledge receipt of these instructions by signing and returning to
us the attached copy of this letter.

 

This letter shall be governed by and construed in accordance with the laws of
the Hong Kong Special Administrative Region of the People’s Republic of China.
Any disputes arising under or in connection with this letter will be referred to
the Hong Kong International Arbitration Centre in accordance with clause 29 of
the Agreement.

 

The provisions of clauses 27.1, 27.2, 27.6 and 27.7 of the Agreement shall apply
mutatis mutandis to this letter.

 

100

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Please sign the enclose copy of this letter to signify your acceptance of the
above instructions.

 

Yours faithfully,

 

 

 

 

 

 

--------------------------------------------------------------------------------

for and on behalf of

Eastern Pacific Circuits Holdings Limited

 

 

 

 

We confirm our acceptance of the above instructions.

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

Richards Butler

  

--------------------------------------------------------------------------------

for and on behalf of

Merix Corporation

 

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SCHEDULE 1

 

Form of instruction

 

To: Richards Butler
20th Floor, Alexandra House
16-20 Chater Road
Central, Hong Kong

 

(Attention: Mr. Christopher Williams)

 

 

Dear Sirs,

 

We refer to the account established in your name pursuant to our joint letter of
instruction dated [·], 2005 (“[·]”) pursuant to the Master Sale and Purchase
Agreement dated [·], 2005 between us. Terms used in this letter shall have the
same meanings as set out in the letter of instruction.

 

We hereby irrevocably instruct you to authorise the Bank to transfer from that
account on or as soon as practicable after [date] the [amount of US$[·]] to the
account of [·] at:

 

[details of bank]

 

for credit to account number [                                        ].

 

 

 

 

 

Date :                                     200[·]

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

for and on behalf of

Eastern Pacific Circuits Holdings Limited

  

--------------------------------------------------------------------------------

for and on behalf of

Merix Corporation

 

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SCHEDULE 2

 

Authorised signatories on behalf of Eastern Pacific Circuits Holdings Limited

 

 

Authorised Signatory                                         
                      

 

 

 

 

 

Authorised Signatory                                         
                      

 

 

 

 

 

Authorised Signatory                                         
                      

  

NAME                                         
                                                  

 

 

 

 

 

NAME                                         
                                                  

 

 

 

 

 

NAME                                         
                                                  

 

103

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SCHEDULE 3

 

Authorised signatories on behalf of Merix Corporation

 

 

Authorised Signatory                                         
                      

 

 

 

 

 

Authorised Signatory                                         
                      

 

 

 

 

 

Authorised Signatory                                         
                      

  

NAME                                         
                                                  

 

 

 

 

 

NAME                                         
                                                  

 

 

 

 

 

NAME                                         
                                                  

 

104

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SCHEDULE 8

 

NOTE

 

Agreed Principal Terms

 

1. Principal Amount

 

The principal amount shall be the balance of the Initial Consideration to be
determined in accordance with clause 5.2.4.2 (the “Initial Consideration Balance
Amount”). If the EBITDA Earnout Consideration is satisfied in the manner set out
in clause 8.8(c) of this Agreement, the principal amount , shall be increased by
an amount equal to the EBITDA Earnout Consideration. The Initial Consideration
Balance Amount and the EBITDA Earnout Consideration are together known as the
“Principal Amount”.

 

2. Payment

 

  (a) Prior to each of the relevant dates set out in columns 2(a) to (c) of
schedule 9 of this Agreement, the Buyer shall pay, by way of partial payment of
this Note, the relevant Escrow Release Amount into the Escrow Account in
immediately available funds such that on the relevant dates set out in columns
(2)(a) to (c) of schedule 9 of this Agreement the Seller will be paid the
relevant Escrow Release Amount in cash.

 

  (b) The interest on the Initial Consideration Balance Amount shall accrue
daily at a rate of 7% per annum during the 6 month period following the
Completion Date, increasing to 9% per annum during the 6 months period following
such period, and further increasing to 10% per annum thereafter (the “Interest
Rate”). The Buyer shall pay the interest accruing on the Initial Consideration
to the Seller on the expiry of each 6 month period referred to in this
sub-paragraph 2(b) (each an “Interest Payment Date”)

 

  (c) (i) During the period from the Completion Date to the date on which the
EBITDA Earnout Consideration is determined in accordance with clause 8 of this
Agreement, the interest on the EBITDA Earnout Consideration shall be an amount
equivalent to the interest which would have been accrued on the EBITDA Earnout
Consideration at the relevant Interest Rate from time to time, during such
period. The Buyer shall pay the amount of such interest to the Seller on the
next Interest Payment Date.

 

(ii) On and from the date on which the EBITDA Earnout Consideration is
determined in accordance with clause 8 of this Agreement, the interest on the
EBITDA Earnout Consideration shall accrue at the then prevailing Interest Rate
and thereafter, at the prevailing Interest Rate from time to time. The Buyer
shall pay the interest accruing on the EBITDA Earnout Consideration from time to
time to the Seller on the relevant Interest Payment Date.

 

105

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  (d) All amounts due under the Note will be payable in lawful money of the
United States of America.

 

  (e) The Principal Amount plus accrued interest may be prepaid at any time
without penalty by the Buyer.

 

3. Financing

 

If the Buyer raises other financing which in aggregate deliver proceeds in
excess of US$10,000,000, the Buyer must first apply such proceeds to pay down
the Note in full.

 

4. Relevant Claims

 

If Relevant Claims are settled or otherwise determined in any Escrow Period, the
Principal Amount of the Note shall be reduced by an amount equal to the amount
of such settled Relevant Claim.

 

5. No set-off, counterclaim, deduction or withholding

 

All sums payable under the Note shall be paid in full without set-off or
counterclaiming for any reason and without deduction of or withholding for any
taxes, duties levies, imposts or charges of any nature other than as
contemplated in paragraph 4.

 

6. Acceleration

 

The parties shall agree on customary terms relating to the acceleration of
amounts due under the Note, for example, if the Buyer fails to make any payment
due under the Note or if the Buyer becomes insolvent or a receiver or liquidator
is appointed or trustee or assignee in bankruptcy or insolvency is appointed
over all or substantially all of the Buyer’s assets ).

 

7. Unconditional and Irrevocable

 

The Note shall be unconditional and irrevocable.

 

8. Security

 

The Note will not be secured.

 

9. Assignability

 

The Note will not be assignable by either party.

 

10. Customary Provisions

 

The parties agree that they shall agree on further terms customary to a Note of
this nature in the context of the transactions contemplated in the Agreement and
the Other Documents.

 

106

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11. Governing Law

 

The Governing Law shall be Hong Kong. Any disputes arising under this Note will
be referred to the HKIAC in accordance with clause 29 of the Agreement.

 

107

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SCHEDULE 9

 

ESCROW AMOUNT

 

The relevant portion of the Escrow Amount shall, subject to clause 7.8, be paid
by the Escrow Agent to the Seller on the dates set out in columns (2) (a) to
(c) below in accordance with the Escrow Agreement and in such amount set
opposite to the Escrow Consideration set forth in column (1).

 

Column (1)    Column (2)

Escrow Consideration

(US$ million )

   Escrow Release Amount as at the respective date set out
in sub-columns (a) to (c) below
(US$ million)      (a)
1 Aug 2006    (b)
1 Jan 2007    (c)
1 July 2007

128

   8    10    6

Less than 128 but not less than 127

   8    10 - (128 - Escrow
Consideration)    6

Less than 127 but not less than 126

   8 - (127 - Escrow
Consideration)    9    6

Less than 126 but not less than 125

   7    9 - (126 - Escrow
Consideration)    6

Less than 125 but not less than 124

   7 -(125 - Escrow
Consideration)    8    6

Less than 124 but not less than 123

   6    8 - (124 - Escrow
Consideration)    6

Less than 123 but not less than 122

   6 - (123 - Escrow
Consideration)    7    6

Less than 122 but not less than 121

   5    7 - (122 - Escrow
Consideration)    6

Less than 121 but not less than 120

   5 - (121 - Escrow
Consideration)    6    6

 

108

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SCHEDULE 10

 

WORKING CAPITAL

 

  (a) net Accounts receivable of the Group, net of allowances for doubtful
accounts; plus

 

  (b) net inventory (as defined below) of the Group, net of allowances for
obsolescence; plus

 

  (c) other current assets of the Group, excluding cash and bank balances and
accounts receivable and inventory to the extent that such items have been
included in relation to paragraphs (a) or (b) above; minus

 

  (d) accounts payable of the Group, excluding accounts payable related to debt
restructuring expenses; minus

 

  (e) other current liabilities of the Group which shall include that portion of
dividends payable by Eastern Pacific Circuits (Huizhou) Ltd to LOGO
[g9715617.jpg], excluding (i) Borrowings, and (ii) RMB5,915,133, being the
amount payable to LOGO [g9715618.jpg] (Desay) pursuant to the contribution of
the land use right agreement dated 18 November 2004 between Eastern Pacific
Circuits Investments (Singapore) Pte Limited, LOGO [g9715619.jpg] (Desay) and
Eastern Pacific Circuits (Huiyang) Ltd LOGO [g9715620.jpg] in respect of the
transfer by LOGO [g9715621.jpg] (Desay) of the land to Eastern Pacific Circuits
(Huiyang) Ltd and (iii) accounts payable to the extent that such items have been
included in relation to paragraph (d) above; minus

 

  (f) provision for taxes of the Group.

 

For the purposes of paragraph (b) of this Schedule 10, “inventory” means all raw
materials, work-in-progress, and finished goods held, used or owned by the
Group.

 

109

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SCHEDULE 11

EPCI HK GROUP

 

Part A

EPCI HK

 

(Incorporated in Hong Kong)

 

Company No.    :      21934 Date of Incorporation    :      3 November 1970
Business Registration No.    :      03108346 Registered Office    :      1401
Hutchison House, 10 Harcourt Road, Hong
Kong Authorized Share Capital    :     
HK$2,000,000.00 divided into 2,000,000 shares of
HK$1.00 each Issued Share Capital    :      Same as above Shareholders    :     
     No. of Shares             1. Eastern Pacific
    Circuits (Cayman)
    Limited    1,999,999             2. Eastern Pacific
    Circuits Limited
    (nominee shareholder
    for Eastern Pacific
    Circuits (Cayman)
    Limited            1 Directors    :      1. Kung Yun King             2.
Gerard William Rodrigues             3. Tsang Ki Lo Secretary    :      B. &
McK. Nominees Limited

 

110

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Part B

Eastern Pacific Circuits (Dongguan) Ltd.

 

Nature    :      Manufacture of printed circuits boards Date of Establishment   
:      May 13, 1993 Registered Office    :     

Hing Yu Industrial District, Tongxia Town, Dongguan

City, Guangdong Province, PRC.

            LOGO [g9715622.jpg] Duration of operation    :      11.5 years     
Total Investment    :      HKD34,000,000      Registered Capital    :     
HKD34,000,000     

Joint Venture Partners &

equity ratio

   :      LOGO [g9715623.jpg] (14.71%)             Eastern Pacific Circuits
Investments Limited (85.29%) Director    :     

KUNG Yun King, Rodrigues, Gerard William, Joseph

TSANG, LOGO [g9715624.jpg]

Executive Director and Legal

Representative

          KUNG Yun King     

 

111

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Part C

Lomber (Huizhou) Limited

 

Nature    :      Manufacture of printed circuits boards Date of Establishment   
:      May 14, 1988      Registered Office    :     

Gu Tang Au Industrial District, Huizhou City

Guangdong Province, PRC

            LOGO [g9715625.jpg]      Duration of operation    :      16.5 years
     Total Investment    :      US$1,500,000      Registered Capital    :     
US$1,500,000     

Joint Venture Partners &

equity ratio

   :      LOGO [g9715626.jpg] (10%)                  Eastern Pacific Circuits
Investments Limited (90%) Director    :     

KUNG Yun King, Rodrigues, Gerard William, Joseph

TSANG, LOGO [g9715627.jpg]

Executive Director and Legal Representative           KUNG Yun King     

 

112

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SCHEDULE 12

EPCI SINGAPORE GROUP

 

Part A

EPCI Singapore

 

(Incorporated in Singapore)

 

Company Registration No.    :      199704856Z      Date of Incorporation    :
     12 July 1997      Business Registration No.    :      Not Applicable     
Registered Office    :     

1 Temasek Avenue

#27-01 Millenia Tower

Singapore 039192

Authorized Share Capital    :     

SGD$100,000.00 divided into 100,000 ordinary

shares of SGD$1.00 each

Issued Share Capital    :     

SGD$2.00 divided into 2 ordinary shares of

SGD$1.00 each

Shareholders    :           No. of Shares             Eastern Pacific Circuits
Limited            2 Directors    :     

1.      Ng Siu Leung

                

2.      Kung Yun King

                

3.      Gerard William Rodrigues

                

4.      Tsang Ki Lo

     Secretarial Agent    :     

Abogado Pte Ltd, associated with Baker &

McKenzie.Wong & Leow

Company Secretaries    :     

1.      Tang Ai Ai (Mrs Wong Ai Ai)

2.      Anthony Anne Catharine

 

113

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Part B

Eastern Pacific Circuits (Huiyang) Limited

 

Nature    :      Manufacture of printed circuits boards Date of Establishment   
:      August 25, 2000      Registered Office    :     

23 Yin Ling Rd., The 3rd Ind. District, Chen Jiang

Town, Huizhou City, Guangdong Province, PRC.

            LOGO [g9715628.jpg] Duration of operation    :      4.5 years     
Total Investment    :      USD29,980,000      Registered Capital    :     
USD12,990,000     

Joint Venture Partners &

equity ratio

   :      LOGO [g9715629.jpg] (5%)            

Eastern Pacific Circuits Investments (Singapore) Pte

Ltd (95%)

Director    :     

KUNG Yun King, Rodrigues, Gerard William, Joseph

TSANG, TONY Yun Kong, LOGO [g9715630.jpg]

Executive Director and Legal Representative           Rodrigues, Gerard William

 

114

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Part C

Eastern Pacific Circuits (Huizhou) Limited

 

Nature    :      Manufacture of printed circuits boards Date of Establishment   
:      November 8, 1988      Registered Office    :     

Gu Tang Au Industrial District, Huizhou City

Guangdong Province, PRC

            LOGO [g9715631.jpg]      Duration of operation    :      16 years   
  Total Investment    :      US$30,000,000      Registered Capital    :     
US$16,700,000     

Joint Venture Partners &

equity ratio

   :      LOGO [g9715632.jpg] (15%)                 

astern Pacific Circuits Investments (Singapore) Pte

Ltd (85%)

Director    :     

KUNG Yun King, Rodrigues, Gerard William, Joseph

TSANG, LOGO [g9715633.jpg]

Executive Director and Legal

Representative

   :      Rodrigues, Gerard William     

 

115

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SCHEDULE 13

 

TAX DEED

 

116

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DATED                                 2005

 

Eastern Pacific Circuits Holdings Limited

 

- and -

 

Merix Corporation

 

-and -

 

Eastern Pacific Circuits Investments Limited

 

-and -

 

Eastern Pacific Circuits Investments (Singapore) Pte Limited

 

--------------------------------------------------------------------------------

 

TAX DEED

 

--------------------------------------------------------------------------------

 

JONES DAY

Solicitors and International Lawyers

31st Floor, Edinburgh Tower

The Landmark

No.15 Queen’s Road Central

Hong Kong

 

Telephone No.: (852) 2526-6895

 

117

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DATE:                                                  2005

 

PARTIES:

 

(1) Eastern Pacific Circuits Holdings Limited (the “Covenantor”);

 

(2) Merix Corporation (the “Covenantee”);

 

(3) Eastern Pacific Circuits Investments Limited; and

 

(4) Eastern Pacific Circuits Investments (Singapore) Pte Limited

 

  ((3) and (4) together the “Companies”).

 

RECITAL:

 

 

This Deed is supplemental to the master sale and purchase agreement (“Sale and
Purchase Agreement”) dated [·], 2005 and made between, inter alia, the
Covenantor and the Covenantee.

 

THIS DEED WITNESSES as follows:

 

1. DEFINITIONS AND INTERPRETATION

 

1.1 The definitions contained in the Sale and Purchase Agreement and those
provisions of the Sale and Purchase Agreement dealing with interpretation shall
be deemed to be incorporated herein. The following additional words and
expressions shall, unless the context otherwise requires, have the following
meanings in this Deed:

 

“Auditors”

the auditors for the time being of the Covenantee (acting as experts not as
arbitrators);

 

“claim”

includes (without limitation) any assessment, claim, notice, demand, letter,
direction, counterclaim or other document issued or action taken by or on behalf
of any fiscal, revenue or other authority or official in the PRC, Hong Kong and
Singapore from which it appears that any of the Companies is liable to make any
payment or increased or further payment of Tax or is denied any Relief from
Taxation;

 

“event”

includes (without limitation) the death of any person, any act, transaction or
omission (whether any of the Companies is a party thereto or not) and, but
without limitation, any distribution, failure to distribute, acquisition,
disposal, transfer, payment, loan or advance and reference to any event on or
before the Completion Date; and

 

118

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“Relief from Taxation”

any loss, relief, allowance, set-off, deduction, right to repayment or credit
granted by or available pursuant to any legislation or otherwise in respect of
Tax.

 

1.2 Any reference to income, profits or gains earned, accrued or received shall
include income, profits or gains deemed to have been or treated as or regarded
as earned, accrued or received.

 

2. INDEMNITY

 

2.1 In consideration of the Sale and Purchase Agreement and of the Covenantee
completing the same the Covenantor hereby covenants with and undertakes to the
Covenantee and each of the Companies to indemnify and keep indemnified the
Covenantee and (as a separate covenant) each of the Companies on a continuing
basis for:

 

  (a) the amount of any claim for Tax which has been made or may hereafter be
made against the Covenantee or any of the Companies or the relevant Buyer’s
Group Company which has acquired the HK Shares or the Singapore Shares (as the
case may be) wholly or partly in respect of or in consequence of any event
occurring or any income, profits or gains earned, accrued or received by any of
the Companies on or before Completion;

 

  (b) any claim for Tax made against the Covenantee or any of the Companies or
the relevant Buyer’s Group Company which has acquired the HK Shares or the
Singapore Shares (as the case may be) arising on the death of any person under
section 35 of the Estate Duty Ordinance (Cap.lll) or any relevant PRC or
Singapore tax legislation at any time by reason of any transfer of any property
to the Covenantee or any of the Companies made or deemed to have been made on or
before Completion; and

 

  (c) any reasonable costs and expenses incurred by the Covenantee or any of the
Companies or the relevant Buyer’s Group Company which has acquired the HK Shares
or the Singapore Shares (as the case may be) in connection with any such claim
for Tax or in taking or defending any action under this Deed.

 

3. EXCLUSIONS AND LIMITATIONS

 

3.1 The Seller’s liability pursuant to the indemnity given by clause 2 shall be
limited or excluded, as the case may be, as set out in schedule 4 of the Sale
and Purchase Agreement and the indemnity given in clause 2 does not cover any
amount of Tax:

 

  (a) to the extent that provision or reserve in respect thereof was made in the
Financial Statements or to the extent that payment or discharge of such
liability has been duly reflected in the Financial Statements;

 

119

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  (b) to the extent that liability therefor arises or is increased as a result
of any increase in rates of Tax or changes made in the relevant Tax Law in the
PRC, Hong Kong and Singapore made after Completion with retrospective effect;

 

  (c) to the extent that the liability for Tax would not have arisen but for an
act, a failure or omission on the part of the Covenantee or any other Buyer’s
Group Company before, on and after Completion or an act, a failure or omission
on the part of the Companies after Completion. For the avoidance of doubt, any
action taken by the Covenantee or any other Buyer’s Group Company in compliance
with its respective obligations under the Sale and Purchase Agreement and this
Deed including without limitation any consent given by the Covenantee or any
other Buyer’s Group Company under the Sale and Purchase Agreement and this Deed
shall not constitute an act that has caused any liability for Tax to arise under
this sub-clause 3(c); or

 

  (d) to the extent that the liability for Tax (including interest and
penalties) arises which should have been borne by the Buyer pursuant to clause
20.1 of the Sale and Purchase Agreement.

 

4. OBLIGATIONS OF THE COVENANTEE

 

If the Covenantee shall becomes aware of any claim for Tax which it appears to
the Covenantee that the Covenantor is or may become liable to make any payment
under this Deed, it shall as soon as practicable give written notice to the
Covenantor and shall take such action as the Covenantor may reasonably request
to dispute, resist or compromise the liability. Neither the Covenantor nor the
Covenantee shall in any event be required to take any steps which would require
any admission of guilt or liability relating to matters connected with the claim
in question.

 

5. AUDITORS’ CERTIFICATES

 

If any of the Companies shall procure a certificate from the Auditors certifying
the amount of any such claim for Tax as is mentioned in clause 2 and stating
that in the opinion of the Auditors none of the exceptions from liability listed
in clause 3 are of application to the claim in question then such certificate
shall be final and binding upon the Covenantor and upon receipt of such
certificate the Covenantor shall forthwith pay to any of the Companies the
amount so certified but the Companies shall reimburse or credit the Covenantor
with any sum (less the expenses of recovering the same) which is subsequently
recovered from a third party or repaid to any of the Companies in connection
with such liability.

 

120

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6. DEMANDS

 

The liabilities of the Covenantor under this indemnity shall be payable in full
within ten (10) business days of written demand from any of the Companies or on
the date which such payment is due to be made to the relevant authority,
whichever is the later .

 

7. WAIVER

 

No failure to exercise and no delay in exercising on the part of any of the
Covenantee or any of the Companies any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise of any
right, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Deed are cumulative and not exclusive of any rights or remedies
otherwise provided by law.

 

8. NOTICES

 

8.1 Delivery

 

All notices demands or other communications which are required to be given under
this Deed shall be in writing and shall be sent to:

 

  (a) in the case of Covenantor:

 

Attention    :    Ng Lak Chuan

 

Address      :    Suite 2804, 28th Floor

     One Exchange Square

     8 Connaught Place

     Central, Hong Kong

 

Facsimile    :    852 3102 8325

 

  (b) in the case of the Covenantee or any of the Companies:

 

Attention    :    Mark R. Hollinger

 

Address      :    1521 Poplar Lane

     P.O. Box 3000, F4-234

     Forest Grove OR 97116

     United States of America

 

Facsimile    :    1 503 357 1504

 

121

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or to such other address or facsimile number or marked for the attention of such
other person as the recipient may designate by notice given in accordance with
the provisions of this clause.

 

8.2 Receipt

 

Any such notice may be delivered personally or by prepaid post or sent by
facsimile transmission and shall be deemed to have been effectively served:

 

  (a) on the day of receipt, where any personally delivered letter or facsimile
message is received on any business day before or during normal working hours;

 

  (b) on the following business day, where any personally delivered letter or
facsimile message is received either on any business day after normal working
hours or on any day which is not a business day;

 

  (c) on the second business day following the day of posting, upon despatch
from within Hong Kong of any posted letter to the address of a recipient in Hong
Kong, unless actually received sooner; or

 

  (d) on the seventh business day following the day of posting, upon despatch
from within Hong Kong of any posted letter to the address of an overseas
recipient (and vice-versa), unless actually received sooner.

 

9. GENERAL

 

9.1 The parties agree that the execution of the Agreement may be effected by the
exchange of facsimile signature pages, with the exchange of the executed
originals as soon as reasonably possible thereafter.

 

10. GOVERNING LAW AND SERVICE AGENT

 

10.1 This Deed is governed by and is to be construed in accordance with the laws
of Hong Kong and the parties hereby agree to submit to the non-exclusive
jurisdiction of the courts of Hong Kong.

 

10.2

The Covenantor hereby appoints Baker & McKenzie of 1401 Hutchison House, 10
Harcourt Road, Central, Hong Kong as its agent to receive and acknowledge on its
behalf service of any writ, summons, order, judgment or other notice of legal
process in Hong Kong. If for any reason the agent named above (or its successor)
no longer serves as the agent of the Covenantor for this purpose, the Covenantor
shall promptly appoint a successor agent and notify the other parties hereto.
The Covenantor agrees that any such legal process shall be sufficiently served
on it if delivered to such agent

 

122

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for service at its addresses for the time being in Hong Kong whether or not such
agent gives notice thereof to the other parties.

 

11. COUNTERPARTS

 

This Deed may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original but all of which shall together constitute one
and the same instrument.

 

12. INCONSISTENCY

 

Where there is any inconsistency between clause 20 of the Sale and Purchase
Agreement and this Deed, clause 20 of the Sale and Purchase Agreement prevails
to the extent of the inconsistency.

 

123

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EXECUTED by the parties or their duly authorised representatives.

 

 

 

SEALED with the Common Seal

   )     

of EASTERN PACIFIC CIRCUITS

   )     

HOLDINGS LIMITED and

   )     

SIGNED by

   )     

in the presence of:-

   )     

SIGNED by

   )     

for and on behalf of

   )     

MERIX CORPORATION

   )     

in the presence of :-

   )     

SIGNED by

   )     

for and on behalf of

   )     

EASTERN PACIFIC CIRCUITS

   )     

INVESTMENTS LIMITED

   )     

in the presence of :-

   )     

SIGNED by

   )     

for and on behalf of EASTERN PACIFIC

   )     

CIRCUITS INVESTMENTS

   )     

(SINGAPORE) PTE LIMITED

   )     

in the presence of :-

   )     

 

124

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SCHEDULE 14

Part A

 

Determination of Actual Adjusted 2005 EBITDA

 

1. In determining the Actual Adjusted 2005 EBITDA and in preparing the Earnout
Statement in accordance in accordance with clause 8 of the Agreement the Buyer’s
Auditors shall make the following adjustments.

 

2. No account shall be taken of:

 

  (a) the expense of the RMB5,915,133 being the amount payable to LOGO
[g9715634.jpg] (Desay) pursuant to the contribution of the land use right
agreement dated 18 November 2004 between Eastern Pacific Circuits Investments
(Singapore) Pte Limited, LOGO [g9715635.jpg] (Desay) and Eastern Pacific
Circuits (Huiyang) Ltd ( LOGO [g9715636.jpg]);

 

  (b) on the mutual understanding that neither the Seller nor the Seller’s
parent companies have charged management charges to any member of the Seller’s
Group, any management charges payable to any member of the Buyer’s Group (unless
such charges relate to employees who are seconded on a full-time basis to any
Buyer’s Group Company which has acquired a Business or to any member of the EPCI
Hong Kong Group or the EPCI Singapore Group and that such charges are on arm’s
length terms) and any cost overheads charged by or payable to any member of the
Buyer’s Group in excess of US$ 75,000;

 

  (c) any costs incurred in relation to any project development work, research
and/or development activities commenced or expanded by any Buyer’s Group Company
which has acquired a Business or by any member of the EPCI Hong Kong Group or
the EPCI Singapore Group after Completion to the extent that the total costs
incurred exceed the amount spent during 2004 on project development, research
and/or development activities by more than 5 percent;

 

  (d) any liability or loss incurred outside the ordinary course of business and
any expenses related thereto incurred after and attributable to events occurring
after the Completion Date, save to the extent that the Seller has agreed that
such liability or loss shall be taken into account in calculating the Actual
Adjusted 2005 EBITDA;

 

  (e) any net loss (after adjustment for taxation) attributable to any company
or business acquired by any member of the Buyer’s Group after the Completion
Date;

 

  (f)

any costs associated with the premiums that may arise and become payable as a
result of or in connection with the assignment of the Hong Kong Lease and

 

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the assignment of any leasehold interests of the Business Sellers in connection
with the transactions contemplated pursuant to this Agreement;

 

  (g) the amount of the stamp duty payable on the transfer of the Hong Kong
Shares and the Singapore Shares;

 

  (h) the costs of the completion audit referred to in clause 6 of this
Agreement, the costs of preparing the Pro-forma Accounts and the determination
of the Earnout Statement referred to in clause 8 of this Agreement, the fees of
the Escrow Agent and advisory fees (including legal and accounting fees)
incurred in connection with the transactions contemplated by this Agreement; and

 

  (i) any costs arising from the restructuring of the Borrowings and the
Security

 

3. The following items shall be added back to the Actual Adjusted 2005 EBITDA:

 

  (a) the net profit (after adjustment for taxation) arising on the sale after
the Completion Date of any items classified as fixed assets or as know-how or
intellectual property rights;

 

  (b) if, in relation to any Relevant Claim arising from any fact, matter, event
or circumstance which has occurred prior to 31 December 2004, the amount that
has been settled or otherwise determined in respect of any Relevant Claim or the
amount of the loss suffered or incurred (or alleged to be suffered or incurred)
by the relevant Buyer’s Group Company in respect of which such Relevant Claim is
made, is required to be reflected in the financial statements in respect of the
calendar year 2005 of that member of the Buyer’s Group in accordance with the
accounting principles of that Buyer’s Group Company, the amount settled or
otherwise determined in respect of such Relevant Claim or the amount of such
loss, as the case may be, shall be added back to the Actual Adjusted 2005
EBITDA.

 

  (c)

If, in relation to a Relevant Claim arising from any fact, matter, event or
circumstance which occurs during the period from 1 January 2005 up to and
including 31 December 2005, the Buyer shall take the option referred to in
clause 8.10(b)(2), and the amount that has been settled or determined in respect
of any Relevant Claim or the amount of the loss suffered or incurred (or alleged
to be suffered or incurred) by the relevant Buyer’s Group Company in respect of
which such Relevant Claim is made, is required to be reflected in the financial
statements in respect of the calendar year 2005 of the relevant member of the
Buyer’s Group in accordance with the accounting principles of that Buyer’s Group
Company, the amount settled or otherwise determined in

 

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respect of such Relevant Claim or the amount of such loss, as the case may be,
shall be added back to the Actual Adjusted 2005 EBITDA.

 

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Part B

 

Operation of the business during the Relevant Period

 

1. The Seller acknowledges that (i) upon Completion, Buyer has the right to
operate the Business, the EPCI Hong Kong Group and the EPCI Singapore Group
(collectively, the “Acquired Businesses”) and Buyer’s other businesses in any
way that Buyer deems appropriate in Buyer’s sole discretion, (ii) Buyer has no
obligation to operate the Acquired Businesses in order to achieve any Actual
Adjusted 2005 EBITDA amount or to maximise the amount of Actual Adjusted 2005
EBITDA, (iii) Buyer owes no fiduciary duty or express or implied duty to Seller,
including any implied duty of good faith and fair dealing, and (iv) the parties
solely intend the express provisions of this schedule 14 to govern their
contractual relationship with respect to the Actual Adjusted 2005 EBITDA amount.

 

The Seller hereby waives any fiduciary duty or express or implied duty of Buyer
to the Seller, including any implied duty of good faith and fair dealing.

 

Notwithstanding the foregoing, the Buyer:

 

  (a) will not enter into any transaction or take or omit to take any action the
principal purpose of which is: (i) to prejudice or adversely affect the Actual
Adjusted 2005 EBITDA amount; or (ii) to avoid or minimise payment by the Buyer
of the EBITDA Earnout Consideration;

 

  (b) will procure that, without the prior consent of the Seller, (i) no Buyer’s
Group Company will transfer or dispose of any of the issued share capital of
EPCI HK or EPCI Singapore or any other interest in EPCI HK or EPCI Singapore or
their respective businesses or any part thereof; (ii) EPCI HK will not transfer
or dispose of any of the issued share capital of Eastern Pacific Circuits
(Dongguan) Ltd and/or Lomber (Huizhou) Limited or any other interest in Eastern
Pacific Circuits (Dongguan) Ltd and/or Lomber (Huizhou) Limited or their
respective businesses or any part thereof; and (iii) EPCI Singapore will not
transfer or dispose of any of the issued share capital of Eastern Pacifics
Circuits (Huiyang) Limited and/or Eastern Pacific Circuits (Huizhou) Limited or
any other interest in Eastern Pacifics Circuits (Huiyang) Limited and/or Eastern
Pacific Circuits (Huizhou) Limited or their respective businesses or any part
thereof. For the purpose of this paragraph, “disposal” shall include (but not be
limited to) the grant of any option in respect of such shares or business or
part thereof;

 

  (b)

will procure that, without the prior consent of the Seller, no Buyer’s Group
Company which has acquired a Business, will transfer or dispose of any Business
or any part thereof and for this purpose “disposal” shall include (but

 

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not be limited to) the grant of any option in respect of Business or part
thereof; and

 

  (c) will procure that no resolution will be passed or proposed for a member’s
voluntary winding-up of: (i) any Buyer’s Group Company which has acquired a
Business; or (ii) any member of the EPCI HK Group or the EPCI Singapore Group
nor will (i) any Buyer’s Group Company which has acquired a Business; (ii) any
shareholder of any member of the EPCI HK Group or the EPCI Singapore Group
present a petition for an order for the winding-up of (i) any member of the
Buyer’s which has acquired a Business; (ii) any shareholder of any member of the
EPCI HK Group or the EPCI Singapore Group (as the case may be).

 

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EXECUTED by the parties:

         

Signed by NG LAK CHUAN

   )    /s/ Mg Lak Chuan

and WILLIAM HO duly authorised

   )    /s/ William Ho

representatives of EASTERN PACIFIC

   )     

CIRCUITS HOLDINGS LIMITED

   )     

Signed by MARK R. HOLLINGER,

   )    /s/ Mark R. Hollinger

Chairman and Chief Executive Officer and

   )     

a duly authorised representative of

   )     

MERIX CORPORATION

   )     

 

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