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EXHIBIT 4.1


Sales And Purchase Agreement On Shares of CEC Telecom Limited


This agreement is executed on 23 May, 2002.



	 	 	 
	Seller:	 	
Tianjian Taida Limited (hereafter known as “Party A”)
	 	 	
Address: 16, Third Main Street
	 	 	
                     Tianjian Economics And Technology Development Area
	 	 	
Authorized Representative: LIU Huiwen




	 	 	 	 	 
	Purchaser:	 	
Qiao Xing Universal Telephone, Inc.		
	 	 	
Address:	PO Box 344
	 	 	
		Road Town
	 	 	
		Tortola, British Virgin Island
	 	 	
Authorized Representative: WU Ruilin		



Whereas




	 	1.	 	Both Party A and Party B are on-going enterprises situated at their
respective addresses.
	 
	 	2.	 	Party A is the legal owner of 35% shares of CEC Telecom Limited
(hereafter known as “CECT”).
	 
	 	3.	 	Party B intends to purchase from Party A 25% of the shares of CECT,
(and) Party B agrees to sell the said shares to Party B.



Parties A and B, after negotiation on equal and voluntary basis, agree on the
sale and purchase of Party A’s CECT shares and execute this agreement.


Clause 1        Subject of share transfer



The subject of this agreement is the CECT shares owned by Party A, representing
25% of the registered capital of CECT.


Clause 2        Covered scope



2.1     The subject of this agreement covers all the assets, liabilities and
owners’ equity of CECT before and after the date of execution of this
agreement. All these are based on the report and attachments of the auditor
appointed by Party A.


2.2     From the date of the audit till the date when registration of the share
transfer is completed, the income, profit, expenses and charges generated in
the normal operation of CECT, are included in the scope of the subject of
transfer of this agreement.


2.3     The date of audit is December 31, 2001.


2.4     Both Parties agree not to have an independent valuation on the value of the
share transfer.


 






 


Clause 3        Price of share transfer and related charges




	3.1	 	 The price of the shares of Party A is calculated on 145% of the original
capital contribution by Party A, a total value of RMB108.75 million (RMB
One Hundred And Eight Million Seventy-Five Thousand Only).
	 
	3.2	 	Each party shall be responsible individually for any tax or charges in
relation to this share transfer in accordance with relevant laws of China.



Clause 4        Payment of price of share transfer




	4.1	 	RMB is the currency used in the calculation and payment of share transfer
price.
	 
	4.2	 	Method of payment by Party B:
	 
	4.2.1	 	RMB 1 million to be paid as deposit within 10 days from this agreement
date.
	 
	4.2.2	 	Within 10 days from the completion of audited report by the appointed
auditor stating that there are no major discrepancies in the financial
statements of CECT, a sum of RMB 20 million.
	 
	4.2.3	 	Within 10 days from the completion of change of registration with the
authorities of the share transfer, a sum of RMB 40 million.
	 
	4.2.4	 	Within 6 months from the completion of change of registration with the
authorities of the share transfer, a sum equal to the remainder of the
share transfer price (RMB 47.75 million.
	 
	4.2.4	 	 Party B shall transmit the above said amounts and schedule into an
account specified by Party A



Clause 5        Audit and registration of change



5.1     On the date of payment of deposit or any time before that agreed by Party
A, Party B can appoint its auditor to audit the financial statements of CECT as
at the date of audit stipulated in Clause 2.3. The audit shall proceed
continuously and as soon as practicable. Party B shall assist in the audit, if
needed.


5.2     Upon the presentation of the auditor’s report stating that there are no
major discrepancies in the financial statements of CECT, and upon the payment
by Party B of the amount stipulated in Clause 4.2.2, change of registration
with the authorities shall proceed.


5.3     Upon the completion of change of registration with the authorities, Party B
should inform Party A in writing, that on the date of such change of
registration, all the rights and obligations of Party A, due to its share
ownership in CECT, shall become those of Party B.


5.4     Party A shall take whatever necessary actions to assist Party B and CECT to
carry out all the necessary procedures in the registration of change, until
such is completed.


 






 


Clause 6        Conditions for Agreement to be effective



6.1     This Agreement shall be effective with the following prerequisites.


6.1.1    The shareholders of CECT in a meeting of shareholders agree to the
transfer of CECT shares, and all the shareholders agree to forfeit their first
right of refusal for such share transfer, and the pledging of the shares by
Party B to Party A after the share transfer.


6.1.2    This Agreement is signed and sealed by authorized representatives of
Parties A and B.


6.1.3    This Agreement has been approved by the board of directors of Party A.


6.1.4    The execution of the agreement of pledging as per Clause 10 and the
completion of registration of pledging of the land use right.


6.1.5    A letter of personal guarantee from Mr. WU Ruilin, Chairman of Qiao Xing
Universal Telephone, Inc., that Party B shall pay the full amount according to
the schedule to Party A.


6.1.6    Any absence of the above prerequisites making this Agreement ineffective,
the deposit and money paid by Party B shall be refunded.


Clause 7        Disclosure of information



Each party shall be responsible for its information disclosure and the related
charges due to such disclosure.


Clause 8        Warranties and representations



8.1       Party A’s warranties and representations


8.1.1    Party A warrants that the shares of CECT to be transferred are free from
all liens and third party rights. Upon the completion of share transfer, any
claims by any third party causing any loss by Party B, Party A shall be
responsible for such loss.


8.1.2    Party A warrants that all representations on its shareholding of CECT are
true, without any omissions or misrepresentations.


8.1.3    Prior to the completion of change of registration, Party A warrants that
it shall, within the scope of its authority as a shareholder, to ensure as much
as possible the safety and integrity of the assets of CECT.


8.1.4    Prior to the completion of change of registration, Party A shall not vote
on any motion of major disposal of CECT assets, without the prior consent of
Party B.


8.1.5    To perform its obligations under the clauses of this Agreement.


8.2        Party B’s warranties and representations


8.2.1    To pay to Party A the amounts for the share transfer as stipulated in
this Agreement.


8.2.2    To complete the process of pledging as stipulated in this Agreement and
the relevant agreement of pledging.


8.2.3    To perform its obligations under the clauses of this Agreement.


Clause 9       Confidentiality



9.1    Both parties shall keep confidential of any confidential information
obtained from the other party and CECT.


9.2    Unless the current laws, regulations of China stipulate otherwise, or prior
consent in writing from the other party or CECT is obtained, any party shall
not

 






 




disclose to any third party of confidential information as stated above. The
period to keep such information confidential commences from the date of this
Agreement to the date that such information becomes public domain.


Clause 10        Pledge



10.1     Upon the execution of this Agreement, both parties agree to execute a
pledge agreement that on the completion of change of registration, all the
transfer shares shall be pledged by Party B to Party A, as guarantee before the
completion of payment for the share transfer. The pledge shall be lifted once
payment is completed.


10.2     Upon the execution of this Agreement, Party A and Huizhou Xiao Xing
Telecommunications Industry Limited shall enter into an agreement for the
pledge of land use right, which pledges all the land use right of the 313,490
square meters of land that it legally acquired at Gima Lot F-50-25-(29), Group
No. 8 and Group No. 9, Xiulingzhui, Gimadi, Loyang Town, Bolo County, Guangdong
Province, as guarantee before the completion of payment for the share transfer.
The pledge shall be lifted once payment is completed.


Clause 11        Breach of agreement



11.1     Upon the execution of this Agreement, any non-performance of obligations
by any one party under the terms of this Agreement shall constitute a breach of
agreement, and shall bear the responsibilities for such breach.


11.2     Party A shall compensate Party B for loss suffered due to breach of
agreement by Party A. Any breach of agreement by Party A, making this
Agreement not enforceable or enforcement unnecessary, Party shall have the
right to terminate this Agreement, and demand the refund of any amount paid for
the share transfer with interest calculated on bank interest rate during the
period.


11.3     Any non-payment or delay in payment by Party B as stipulated in this
Agreement shall carry a penalty rate of 4/10000 per day. If the delay exceeds
more than 20 days, Party A shall have the right to terminate this Agreement, and
Party B shall pay a penalty based on the full amount for the share transfer.
Any breach of agreement by Party B, making this Agreement not enforceable or
enforcement unnecessary, Party A shall have the right to terminate this
Agreement, and the deposit shall be forfeited. Party B shall be responsible to
Party A for compensation for its breach of agreement.


Clause 12        Force Majeure



12.1     Force majeure includes wars, riots, strikes, epidemics, fires, floods,
earthquakes, storms, tides or any other disasters of nature, and any factors
and incidents, which are unforeseeable, unpreventable, unavoidable, or not
surmountable by both parties.


12.2     Any party, because of force majeure, cannot perform some or all its
obligations under this Agreement, shall notify the other party as soon as
practicable,

 






 




and shall report in writing to the other on the details and the effects of
force majeure on this Agreement.


12.3     Any party, because of force majeure, shall not be responsible for any loss
suffered by the other party due to non-performance or delay in performance of
its obligations under this Agreement. The party that is affected by force
majeure shall have the responsibility to take appropriate or necessary actions
to reduce or eliminate the effects of force majeure on the other party, and
shall be responsible for the loss of the other party due to its non-performance
of taking such actions.


12.4     Both parties shall determine in joint consultation whether to terminate or
continue with this Agreement, based on the effects of force majeure on the
enforcement of this Agreement.



	13.	 	Applicable Law
	 
	13.1	 	The execution, validity, construction, enforceability, and resolution of
disputes of this Agreement shall be under the jurisdiction of the laws of
China.
	 
	13.2	 	Any new laws after the date of this Agreement shall not be retrospective
on this Agreement, unless clearly stated otherwise or agreed in writing by
both parties.
	 
	14.	 	Notice
	 
	14.1	 	Any notice or permissible notice under this Agreement, shall be in
writing in Chinese. Such notice shall be valid upon the actual receipt by
the receiving party.
	 
	14.2	 	The term “actual receipt” means the authorized representative or his
designated representative of the receiving party has acknowledged receipt
of the contents of the notice, or the notice has arrived at the legal
address or the designated correspondence address, and the person who has
the authority to acknowledge receipt of such notice has done so.
	 
	14.3	 	Any change of address shall be notified to the other party within 3 days
from such change.
	 
	14.4	 	The party who changes its address and fails to notify the other party as
stipulated above shall be legally responsible for any consequences due to
its non-performance.
	 
	15.	 	Conservation of rights
	 
	15.1	 	Any party that does not exercise its rights or take any action against
the other party because of the latter’s breach of agreement, shall not be
interpreted as giving up its rights or giving up its rights to pursue such
breach of agreement. Any party giving up certain rights or giving up
certain rights to pursue the other for breach of agreement shall not be
interpreted as giving up its other



 






 





	 	 	rights. Any such giving up of rights shall be in writing and shall
notify the other party.
	 
	15.2	 	Any clauses or terms of this Agreement, if considered invalid or
non-enforceable according to current laws or regulations, such clauses or
terms shall not affect the validity and enforceability of other clauses or
terms in this Agreement. Both parties shall jointly adjust such terms and
clauses, in accordance with current laws and regulations, making such
adjustments valid and enforceable, and as far as possible to reflect the
original spirit and principles of the Agreement.
	 
	16.	 	Amendments and changes
	 
	16.1	 	Any issues not completely covered in this Agreement shall be stipulated
in supplementary agreement executed by both parties. Such supplementary
agreements shall be as legal as this Agreement.
	 
	16.2	 	Any changes in conditions during the enforcement of this Agreement making
it necessary to amend the terms of this Agreement, both parties shall
jointly agree in writing on such amendments.
	 
	17.	 	Reasons for termination of agreement
	 
	17.1	 	The completion of the Agreement.
	 
	17.2	 	Both parties agree to terminate this Agreement.
	 
	17.3	 	Force majeure makes the enforcement of this Agreement impossible or
unnecessary.
	 
	17.4	 	Any one party exercises its right to terminate this Agreement.
	 
	18.	 	Dispute resolution



Any dispute in relation to the enforcement of this Agreement shall be resolved
initially by consultation. Failure to resolve the dispute by consultation,
either party may settle the dispute through trial by the People’s Court in
Beijing.



	19.	 	Agreement construction



The heading of each clause is merely for convenience, it does not have any
effect on the construction of the contents of each clause.




	20.	 	Miscellaneous







 






 


There are four copies of this Agreement. Each copy has the same legal rights.
Each party holds one copy and the other two copies are for the performance of
relevant legal procedures.


Signed and sealed By:

Party A:        Tianjin Taida Limited


Authorized Representative


Party B:        Qiao Xing Universal Telephone, Inc


Authorized Representative