Document:

Exhibit
10.8

 

LLC INTEREST
PURCHASE AGREEMENT

 

THIS LLC INTEREST PURCHASE AGREEMENT (this “Agreement”), entered into
as of the 17`h day of April, 2003 by and between LOTUS PACIFIC,
INC., a Delaware corporation, having offices at 18200 Von Karman Avenue Suite
730, Irvine, CA 92612 (the “Purchaser”), and CARMCO INVESTMENTS, LLC, a
Connecticut limited liability company, having offices at 47 Cherry Gate Lane,
Trumbull, CT 06611 (the “Seller”).

 

WITNESSETH:

 

WHEREAS,
Purchaser and Opta Systems, LLC, a Delaware limited liability company (the
“Company”) are parties to that certain Loan and Security Agreement dated of
even date herewith (the “Loan Agreement”), pursuant to which Purchaser loaned
the Company the sum of $5,986,019.48 for the purchase (the “Business Purchase”)
from SONICbIue Incorporated (“SONICbIue”), a Delaware corporation and Sensory
Science Corporation, a Delaware corporation and wholly-owned subsidiary of
SONICbIue (collectively, “Prior Owners”) of the Prior Owners’ design,
production, marketing and servicing of video electronics products business,
which Prior Owners conducted generally, but not exclusively, as a business unit
under the name “Sensory Science” (the “Business”), pursuant to the Asset
Purchase Agreement dated as of March 20, 2003 by and among the Company and
the Prior Owners (“Asset Purchase Agreement”);

 

WHEREAS,
Seller is the record and beneficial owner of all of the issued and outstanding
membership interests of Opta Systems, LLC, a Delaware limited liability company
(the “Company”), which Company was formed for the sole purpose of acquiring the
Business;

 

WHEREAS,
Seller desires to sell to Purchaser all, and not less than all, of the
outstanding membership interests of the Company and the Business as a going
concern, and to consummate the other transactions contemplated by this
Agreement, all upon the terms and subject to the conditions set forth in this
Agreement;

 

WHEREAS,
Purchaser desires to purchase from Seller all, and not less than all, of the
outstanding membership interests of the Company, and to consummate the.
other transactions contemplated by this Agreement, all upon the terms and
subject to the conditions set forth in this Agreement;

 

WHEREAS,
it is a condition to the Loan Agreement that Seller agree to sell to Purchaser
all of the issued and outstanding membership interests of the Company.

 

NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein set forth, the parties hereby covenant and agree as follows:

 

1.                                       SALE AND PURCHASE OF THE MEMBERSHIP INTEREST.

 

Seller
hereby sells, assigns, transfers, and conveys to-Purchaser all right, title and
interest in all outstanding membership interests in the Company, all of its
right, title and interest in any other equity or ownership interest in or
obligation of the Company of any kind

 

 

whatsoever (collectively
the “Membership Interest”). Upon execution of this Agreement, Seller shall make
and deliver to the Purchaser an assignment of the Membership Interest to the
Purchaser in the form attached hereto as Exhibit A (the “Assignment”).

 

2.                                                 CONSIDERATION FOR THE MEMBERSHIP INTEREST:

 

2.1                                 Purchase and Sale.  In
consideration for Seller’s sale of the Membership Interest and upon delivery of
the Assignment, Purchaser shall pay and deliver to Seller by wire transfer of
immediately available funds to the accounts designated by the Seller therefor,
the sum of $420,000 (the “Purchase Price”). The Purchase Price hereunder shall
be allocated and used to satisfy the following claims and costs as follows:

 

(a)                                  the sum of $250,000 as return to the Seller
of Seller’s investment in the Company for the Company’s deposit held in escrow
to secure the Company’s purchase of the Business pursuant to the Asset Purchase
Agreement; and

 

(b)                                 the sum of $170,000 to reimburse Carmine
Adimando, the Chairman of the Company, and Roger Hacket, the Vice-Chairman of
the Company for their costs and expenses in connection with the Company’s
acquisition of the Business.

 

Purchaser
further agrees that it shall be solely responsible for the reasonable fees and
expenses of Greenberg Traurig, LLP, legal counsel to the Seller and the
Company, as incurred on behalf of the Seller and the Company in connection with
the acquisition of the Business, to a maximum aggregate amount of $200,000.
Purchaser agrees to reimburse the Seller for any legal fees and expenses of
Greenberg Traurig if the Purchaser or the Company does not fully pay such fees
and expenses (to a maximum of $200,000) and Seller is required to pay such fees
and expenses.

 

2.2                                 Vendor Retention Payment.  Purchaser and the Company agree,
jointly and severally to pay to Seller the sum of $100,000 (the “Retention
Payment”) in immediately available U.S. funds on October 17, 2003 (the
“Payment Date”), so long as a Non-Payment Event shall not have occurred on or
prior to the Payment Date. For purposes hereof, a “NonPayment Event” shall mean
the occurrence of the termination by either Samsung Electronics Co. Ltd. or LG
Electronics, Inc. (each, a “Vendor”) of its relationship with the Company to
supply product to the Company, consistent with past practices by such Vendor,
provided, such termination shall be continuing on the Payment Date and the
Company is operating in the ordinary course. Notwithstanding the foregoing,
Purchaser and the Company jointly and severally shall be required to pay the
Seller the Retention Payment if such Vendor terminates its relationship with
the Company for any reason other than as a result of a commercially reasonable
business decision made solely by such Vendor, which decision shall not be
caused by the bad faith or willful misconduct of the Company or the Purchaser.
If a Non-Payment Event shall have occurred, the Purchaser and the Company
agrees that it shall deliver to the Seller a certificate from an authorized
officer of a Vendor which has terminated its relationship with the Company
detailing the reasons for such termination, prior to the Payment Date.

 

 

3.                                       REPRESENTATIONS AND WARRANTIES OF THE SELLER.

 

The
Seller hereby represents and warrants to and for the benefit of Purchaser as
follows:

 

3.1                                 Authority Relative to this Agreement.  (a)                      Seller is a limited liability company, duly formed, validly existing
and in good standing under the laws of the jurisdiction of formation and has
the requisite power and authority to own, lease and operate its respective
properties and carry on its business as now being conducted. Seller has all
limited liability company power and authority necessary to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
Company is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which the nature of
its activities and of its properties (both owned and leased) makes such qualification
necessary, except for those jurisdictions in which failure to do so would not
have a material adverse effect on the Company or its business.

 

(b)                                 The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the managing member of the Seller and no other company
proceedings on the part of the Seller are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by Seller, and, assuming that this
Agreement constitutes a valid and binding agreement of Purchaser, constitutes a
valid and binding agreement of Seller, enforceable against Seller in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors’ rights generally or general principles of equity.

 

3.2                                 Title to Membership Interest. (a) Since the date of formation of the
Company, as evidenced by the initial filing of the Certificate of Formation of
the Company with the Delaware Secretary of State, the Seller is and has been
the sole owner and holder of the Membership Interest: Upon payment of the
Purchase Price therefor pursuant to this Agreement, the Purchaser will receive
good and marketable title to the Membership Interest, constituting 100% of the
outstanding membership interests and economic interests of the Company, free
and clear of all liens, options, encumbrances and restrictions of any kind or
nature whatsoever other than restrictions imposed by federal and state
securities laws with respect to the transfer of the Membership Interest.

 

:                                                      (b)                                  There are no outstanding options, warrants,
rights (including conversion or preemptive rights and rights of first refusal),
proxy or agreements among members or potential members, or agreements of any
kind for the purchase or acquisition from the Company of any of its equity
interests or securities.

 

(c)                                  Other than under the Asset Purchase Agreement
and the transactions contemplated therein, the Company does not own or control
any equity security or other interest of any other corporation, limited
partnership or other business entity.        The
Company is not a participant in any joint venture, partnership or similar
arrangement.

 

(d)                             The Membership Interest (i) has been duly
authorized and validly issued and are fully paid and nonassessable, (ii) was
issued in compliance with all applicable state and federal laws concerning the
issuance of securities (assuming due filing of all post-sale notices under
applicable securities laws).

 

3.3                                 Legal Proceedings and Judgments.  There are no claims, actions,
proceedings or investigations pending or, to Seller’s actual knowledge,
threatened against or

 

 

relating to Seller before
any court or other governmental authority acting in an adjudicative capacity
that could have an adverse effect on Seller’s ability to consummate the
transactions contemplated hereby.

 

3.4                                 Brokers.  No person is entitled to any brokerage, financial advisory,
finder’s or similar fees or commissions payable by Seller or any of its
affiliates in connection with the transactions contemplated by this Agreement
or associated with the Business Purchase based upon arrangements made by or on
behalf of Seller.

 

3.5                                 Business Purchase Documentation.  Attached hereto as Schedule 3.5
is a true and complete copy of the Asset Purchase Agreement, together with
all exhibits and schedules associated therewith. Seller has provided to
Purchaser copies of all documents required under the Asset Purchase Agreement
to consummate the transactions contemplated thereby.

 

3.6                                 Interim Operations of the Company.  The Company was formed solely for
the purpose of acquiring the Business and has engaged in no business other than
in connection with the Business Purchase and the transactions contemplated in
the Asset Purchase Agreement.

 

3.7                                 No Conflict.  Seller has delivered to the Purchaser true and complete copies
of the Certificate of Formation and Operating Agreement of the Company, as
amended to date and the Certificate of Formation and Operating Agreement of the
Seller, as amended to date. The execution, delivery, and performance of and
compliance with this Agreement and the sale of the Membership Interest pursuant
hereto will not, with or without the passage of time or giving of notice,
result in any such violation, or be in conflict with or constitute a default
under the Certificate of Formation and Operating Agreement of the Company or
the Asset Purchase Agreement, or result in the creation of any mortgage,
pledge, lien, encumbrance or charge upon any of the properties or assets of the
Company or the suspension, revocation, impairment, forfeiture or nonrenewal of
any permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.

 

3.8                                 No Other Assets or Liabilities. (a) Other than  the Asset Purchase
Agreement and as otherwise set forth in Section 2.2, there are no
agreements, understandings, instruments, contracts, commitments, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or, to its knowledge, by which it is bound.

 

(b)                                 Other than reimbursement of Carmine Adimando
and Roger Hacket for their costs and expenses and the fees and expenses of
Greenberg Traurig, LLP, each as described in Section 2.1 hereof and as
otherwise set forth in Section 2.2, the Company has no liabilities and, to
the knowledge of Seller and the Company, there are no contingent liabilities of
the Company other than pursuant to or as contemplated by the Asset Purchase
Agreement.

 

3.9                                 Asset Purchase Agreement; Compliance. The Company has satisfied, and the Seller
has caused the Company to satisfy, all of the conditions to closing that have
not otherwise been waived set forth in Article VI, Section 4.3 of the
Asset Purchase Agreement and all of the representations and warranties of the
Company set forth in the Asset Purchase Agreement are true, complete and correct
in all material respects as of the date hereof.

 

 

3.10                        Notice; Third-Party Consents:  To Seller’s knowledge, the Prior
Owners have delivered timely and proper notice to, and received the written
consent of, all third-parties required to consummate the transactions
contemplated under the Asset Purchase Agreement and this Agreement.

 

4.                                                 REPRESENTATIONS AND WARRANTIES OF PURCHASER.

 

Purchaser
hereby represents and warrants to the Seller as follows:

 

4.1                                 Authority Relative to this Agreement. The Purchaser is a corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of formation and has the requisite power and authority to own,
lease and operate its respective properties and carry on its business as now being
conducted. Purchaser has all corporate power and authority necessary to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
the board of directors of the Purchaser and no other corporate proceedings on
the part of the Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Purchaser, and, assuming that this
Agreement constitutes a valid and binding agreement of Seller, constitutes a
valid and binding agreement of Purchaser, enforceable against Purchaser in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to enforcement of creditors’ rights generally or general principles of equity.

 

.                                                               4:2                                  Legal Proceedings and Judgments.  There are no material claims,
actions, proceedings or investigations pending or, to Purchaser’s actual
knowledge, threatened against or relating to Purchaser before any court or
other governmental authority acting in an adjudicative capacity that could have
a material adverse effect on Purchaser’s ability to consummate the transactions
contemplated hereby.

 

4.3                                 Purchase of Membership Interest for
Investment.  The
Purchaser has been informed that the Membership Interest has not been
registered under the Securities Act of 1933, as amended or under any applicable
state securities laws. Purchaser will be acquiring ownership of the Membership
Interest for its own account, for investment purposes only, and not with a view
to the resale or distribution thereof in violation of any applicable securities
laws.

 

5.                                                 COVENANTS OF THE PARTIES.

 

5.1                                 Further Assurances. (a) Subject to the terms and conditions of
this Agreement; each of the parties hereto agrees to execute and deliver,
before and after the Closing, such other documents, instruments, certificates
and agreements and to take such other action as may be reasonably necessary or
desirable for the implementation of this Agreement and the consummation of the
transactions contemplated hereby.

 

(b)
Seller agrees to execute and deliver such other documents, instruments,
certificates and agreements and to take such other action as Purchaser and its
counsel may deem reasonably necessary or desirable in order to consummate the
Closing (as defined in the Asset Purchase Agreement) of the transactions
contemplated by the Asset Purchase Agreement.

 

 

6.                                       INDEMNITY BY THE PURCHASER AND THE SELLER.

 

6:1                                 Indemnification of the Seller by the
Purchaser:  The
Purchaser shall indemnify and hold harmless the Seller from, against and in
respect of the full amount of any and all liabilities, damages, claims,
deficiencies, assessments, losses, penalties, interest, costs and expenses;
including, without limitation, reasonable fees and disbursements of trial and
appellate counsel, arising from, in connection with, or incident to any breach
or violation of any of the representations, warranties, covenants or agreements
of the Purchaser set forth in this Agreement.

 

6.2                                 Indemnification of the Purchaser by the
Seller.  The Seller
shall indemnify and hold harmless the Purchaser from, against and in respect of
the full amount of any and all liabilities, damages, claims, deficiencies,
assessments, losses, penalties, interest, costs and expenses, including,
without limitation; reasonable fees and disbursements of trial and appellate
counsel arising from, in connection with, or incident to any breach or
violation of any of the representations, warranties, covenants or agreements of
the Seller set forth in this Agreement. In no event shall Seller indemnify and
hold harmless the Purchaser from, against and in respect of the full amount of
any and all liabilities, damages, claims, deficiencies, assessments, losses,
penalties, interest, costs and expenses, including, without limitation,
reasonable fees and disbursements of trial and appellate counsel arising from,
in connection with, or incident to any breach or violation by the Prior Owners`
of any of the representations, warranties, covenants or agreements of the Prior
Owners set forth in the Asset Purchase Agreement.

 

6.3                                 Claims for Indemnification.  A claim for indemnity pursuant to
Section 6.1 or 6.2 of this Agreement may be made by any indemnified party
at any time by the giving of written notice thereof to the indemnifying party. The
notice shall set forth in reasonable detail the basis upon which the claim for
indemnity is made.

 

6.4                                 Defense of Claims:  If any person or entity not a party
to this Agreement shall make any demand or claim, or file or threaten to file
any lawsuit, which demand, claim or lawsuit may result in any liability, damage
or loss to any party that is indemnified under Section 6.1 or 6:2 of this
Agreement or that may cause liability to any indemnified party as the result
of, arising from, in connection with or incident to any breach or violation of
any representations, warranties, covenants, or agreements contained in this
Agreement, then, in that event, after notice by the indemnified party to the
indemnifying party of the demand, claim or lawsuit, the indemnifying party
shall have the option, at the indemnifying party’s cost and expense, to retain
counsel reasonably satisfactory to the indemnified party, to defend any demand,
claim or lawsuit. Thereafter, the indemnified party shall be permitted to
participate in any defense at the indemnified party’s own expense, provided
however, that the indemnifying party shall not be entitled to settle any claim
on behalf of, or consent to any judgment against the indemnified party without
the prior written consent of the indemnified party; unless such settlement is
only for the payment of money by the indemnifying party and the indemnified
party is fully released from and against any liability. If the indemnifying
party shall fail to respond within ten (10) days after receipt of the notice of
any demand, claim or lawsuit; the indemnified party shall retain counsel and
conduct the defense of the demand, claim or lawsuit as the indemnified party
may deem proper in the discretion of the indemnified party, at the cost and
expense of the indemnifying

 

 

party. The indemnities
from the indemnifying party to the indemnified party shall include any
liability, damage or losses that the indemnified party may suffer as the result
of the demand, claim or lawsuit.

 

7:                                       CLOSING.

 

7.1                                 Timing and Location.  The closing hereunder (the
“Closing”) shall take place simultaneously upon the execution of this Agreement
at the offices of Reed Smith LLP, 1901 Avenue of the Stars, Suite 700, Los
Angeles, CA 90067 or such other location to be mutually agreed upon by the
Seller and the Purchaser.

 

7.2                                 Closing Deliveries.  At the Closing; subject to all the
terms, conditions and provisions of this Agreement, the following shall take
place as a single integrated transaction:

 

(a)                                  The Seller shall make and deliver to the
Purchaser the Assignment, as required by Section 1 hereof.

 

(b)                                 The Seller shall deliver to the Purchaser
certified copies of the resolutions duly adopted by the managing member of the
Seller authorizing the execution, delivery and performance of this Agreement
and each of the other transactions contemplated hereby.

 

(c)                                  The Seller shall deliver to the Purchaser
original or certified copies of the minute book, correspondence, files and all
other limited liability company records of the Company.

 

(d)                                 The Seller shall cause Carmine Adimando and
Roger Hacket to deliver, releases in favor of the Company, in form satisfactory
to Purchaser, releasing the Company from any further claims or rights,
including without limitation, any claims for reimbursement of expenses advanced
on behalf of the Company.

 

(e)                                  The Purchaser shall deliver to the Seller the
Purchase Price, as required by Section 2.1 hereof.                                  :

 

(f)                                    The Purchaser shall deliver to the Seller
certified- copies of the resolutions duly adopted by its board of directors
authorizing the execution, delivery and performance of this Agreement and each
of the other transactions contemplated hereby.

 

(g)                                 The parties hereto shall deliver any and all
other instruments or documents required to be delivered pursuant to, or
necessary or proper in order to give effect to, all of the terms and provisions
of this Agreement.

 

7:3                                 Conditions to the Seller’s Obligation to
Close.  The Seller’s
obligation to close the transaction contemplated by this Agreement shall be conditioned
upon fulfillment of all of the following conditions:

 

(a)                                  All of the representations and warranties of
the Purchaser set forth in Section 4 hereof shall be true, complete and
accurate in all respects.

 

(b)                                 The prior or simultaneous closing of the
transactions contemplated by the Asset Purchase Agreement.

 

(c)                                  The Purchaser shall have delivered to the
Seller all of the items that the Purchaser is required to deliver pursuant to
Section 7.2 of this Agreement.

 

 

7.4                                 Conditions to Purchaser’s Obligation to Close.  The Purchaser’s obligation to close
the transaction contemplated by this Agreement shall be conditioned upon
fulfillment of all of the following conditions:

 

(a)                                  All of the representations and warranties of
the Seller set forth in Section 3 hereof shall be true, complete and
accurate in all respects.

 

(b)                                 The prior or simultaneous closing of the
transactions contemplated by the Asset Purchase Agreement.

 

(c)                                  The Seller shall have delivered to the
Purchaser all of the items that the Seller is required to deliver pursuant to
Section 7.2 of this Agreement.

 

7.5                                 Failure to Close.          In
the event that the transaction contemplated by this Agreement shall fail to be
consummated as the result of the Seller’s inability or refusal to satisfy, as
of the scheduled Closing date, all of the conditions set forth in
Section 7:4 hereof, then the Purchaser shall have the right to obtain any
and all remedies to which the Purchaser is entitled under the laws of the State
of Delaware for any and all losses or damages arising from such failure. In the
event that the transaction contemplated by this Agreement shall fail to be
consummated as the result of the Purchaser’s inability or refusal to satisfy,
as of the scheduled Closing date, all of the conditions set forth in
Section 7.3 hereof, then the Seller shall have the right to obtain any and
all remedies to which the Seller is entitled under the laws of the State of
Delaware for any and all losses or damages arising from such failure.

 

7:6                                 Specific Performance.  The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is agreed that the parties shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity.

 

MISCELLANEOUS.

 

8.1                                 Governing Law.  This Agreement shall be governed by
and construed in accordance with the internal substantive and procedural laws
of the State of Delaware without regard to that state’s rules regarding choice
of law.

 

8.2                                 Notices. Any notices, requests, demands and other communications required or
permitted to be given hereunder shall be given in writing and shall be deemed
to have been duly given when delivered by hand, five days following the date of
deposit in the United States mail, by registered or certified mail, postage
prepaid; return receipt requested, or on the delivery date shown on a written
verification of delivery provided by a reputable private delivery service, if
addressed to the last address provided to the sender by the addressee.

 

8.3                                 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, both written and oral, among such parties with
respect to such subject matter. This Agreement may not be

 

 

amended or modified in
any way; except by a written instrument executed by all of the parties hereto:

 

8.4                                 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of all parties and
any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.

 

8.5                                 No Waiver.  No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly so provided.

 

8.6                                 No Third Party Beneficiary.  Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any person,
firm, corporation, partnership, association or other entity, other than the
parties hereto and their respective heirs, personal representatives, legal
representatives and assigns, any rights or remedies under or by reason of this
Agreement.

 

8.7                                 Severability. The invalidity of any one or more of the
words, phrases, sentences, clauses, sections or subsections contained in this
Agreement shall not affect the enforceability of the remaining portions of this
Agreement or any part hereof, all of which are inserted conditionally on their
being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this
Agreement shall be declared invalid, this Agreement shall be construed as if
such invalid word or words, phrase or phrases; sentence or sentences, clause or
clauses, section or sections, or subsection or subsections had not
been inserted.

 

8:8                                 Section Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of any provisions of this Agreement.

 

8.9                                 Pronouns and Plurals.  Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular forms of nouns, pronouns and verbs
shall include the plural and vice versa.

 

8.10                           Counterparts.  This Agreement may be executed in
multiple counterparts and all such counterparts shall collectively constitute
an original Agreement, which may be evidenced by any one counterpart.

 

8.11                           Public Disclosure.  Except as otherwise required by
applicable law (including federal and state securities laws as applicable to
Purchaser) or, as to Purchaser, by the rules and regulations of the any stock
exchange, the NASD and/or Nasdaq, no press release, announcement or other
disclosure (whether or not in response to any inquiry) of the existence of any
subject matter of, or the terms and conditions of, this Agreement shall be made
by any party hereto unless approved by both of the parties hereto prior to
release; provided, however, that such approval shall not be unreasonably
withheld or delayed:

 

Closing:

 

8.12                           Termination.  This Agreement may be terminated at any time prior to the

 

(a)                                  by agreement of all the parties hereto;

 

 

(b)                                 by the Purchaser, in its sole discretion, if
the Loan Agreement is terminated or is no longer in effect; or

 

(c)                                  by the Purchaser, in its sole discretion, if
the Asset Purchase Agreement is terminated in accordance with its terms.

 

In
the event of a valid termination of this Agreement as provided in this
Section 8.12, this Agreement shall forthwith become void and there shall
be no liability or obligation on the part of Purchaser, Seller or the Company,
or their respective officers, directors or shareholders or members; provided,
however, that each party shall remain liable for any breaches of this Agreement
prior to its termination; and provided further that, the provisions of Sections
6.1, 6.2, 6:3, 6.4, 8.11 and 8.13 shall remain in full force and effect and
survive any termination of this Agreement.

 

8:13.                        Waiver of Jury Trial.  THE PARTIES EACH HEREBY WAIVE TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO WHICH THE SELLER OR THE PURCHASER MAY BE
PARTIES, ARISING OUT OF, OR IN ANY WAY PERTAINING TO, THIS AGREEMENT. IT IS
AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY JURY OF ALL CLAIMS
AGAINST ALL PARTIES TO SUCH - ACTIONS OR PROCEEDINGS. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY THE PARTIES, AND EACH PARTY HEREBY REPRESENTS
THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO
INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS
EFFECT. EACH OF THE PARTIES FURTHER REPRESENTS THAT EACH HAS BEEN REPRESENTED
IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF EACH PARTY’S OWN FREE WILL, AND THAT
EACH PARTY HAS HAD THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.

 

[The remainder of this page intentionally left blank.]

 

 

LOTUS PACIFIC, INC.

18200 Von Karman
Avenue, Suite 730, Irvine, CA 92612 Tel. (949) 475-1880 • Fax (949) 475-1808

 

 

April 17,
2003

 

Carmco
Investments, LLC 47 Cherry Gate Lane Trumbull, CT 06611

Attn:
Mr. Carmine Adimando

 

 

Re:                               LLC Interest Purchase Agreement dated
April 17. 2003 (the “Purchase Agreement”)

 

Dear
Carmine:

 

Reference
is made to the above referenced agreement and the other agreements by and among
Carmco Investments, LLC and Lotus Pacific, Inc. of even date herewith.
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Purchase Agreement.

 

As
of this date, we understand Seller may be not in good standing under the laws
of the state of Connecticut, which could constitute a breach of Seller’s
representation and warranty set forth in Section 3.1(a) of the Purchase
Agreement. As such, pursuant to Section 7.4(a) of the Purchase Agreement,
Purchaser is not required to consummate the transactions contemplated by the
Purchase Agreement.

 

As
a material inducement to Purchaser to waive such condition to close, Seller and
Purchaser hereby agree to amend the Purchase Agreement as follows:

 

1.                                       Seller agrees (and the members of Seller
agree to cause Seller) to promptly become in good standing (or confirm its
current good standing) in the records of the State of Connecticut and upon
doing so all members of the Seller undertake to deliver to Purchaser documents
expressly reaffirming and ratifying the Purchase Agreement and the agreements
and other documents to which Seller is a party in connection with the Purchase
Agreement.

 

2.                                       Purchaser shall deposit the Purchase Price
into the client trust account of Greenberg Traurig LLP, counsel to Seller.
Greenberg Traurig shall not be entitled to deliver the Purchase Price to Seller
until Seller and its members fully comply with the covenants set forth in
Paragraph 1 above.

 

3.                                       The parties agree that maximum aggregate
amount of legal fees and expenses of Greenberg Traurig to be paid by Purchaser
and the Company shall be reduced to $194,435.85.

 

 

4.                                       The legal opinion of Greenberg Traurig
previously delivered in connection with the Closing shall be specifically
amended to include an opinion as to the enforceability of the Purchase
Agreement.

 

Except
as set forth herein, the Purchase Agreement shall remain unaffected and in full
force and effect. This letter agreement may be executed in one or more
counterparts, all of which together shall constitute one original document.

 

Kindly
acknowledge your agreement to the foregoing by signing where indicated below.

 

Very
truly yours, LOTUS PACIFIC, INC.

 

	
  By:

  
	
   

  
	
  /s/
  Yimin Foo

  	
   

  
	
  Yimin
  Foo, CFO

  
	
   

  
	
   

  
	
  Acknowledged
  and Agreed:

  
	
  CARMCO
  INVESTMENTS, LLC

  
	
  :

  
	
   

  
	
  Name:

  	
  /s/
  Carm Adimando

  	
  Title:
  Member of Seller

  
	
  Name:

  	
  /s/
  Josephine Adimando

  	
  Title:
  Member of SellerExhibit 10.9

 

EQUITY PURCHASE
AGREEMENT

 

 

This EQUITY PURCHASE AGREEMENT,
dated as of December 20,
2003 (this “Agreement”), is made and entered into by and among Lotus Pacific,
Inc., a Delaware corporation (“Seller”), TCL Information Technology Industrial (Group)
Ltd., a corporation incorporated in the British Virgin Islands (“Buyer”) and
TCL Digital Technologies, Ltd., a corporation incorporated in the People’s
Republic of China (the “Company”) with reference to the following facts:

 

 

RECITALS

 

A.            Seller is the record and beneficial owner of 50% of the
equity (the “Equity”) of the Company.

 

B.            Seller desires to sell the Equity, which represents all
of the Equity of the Company held by Seller, to Buyer and Buyer desires to
purchase the Equity from Seller upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in
consideration of the above premises, and the representations, warranties,
covenants, conditions, and promises exchanged by the parties hereto, Buyer and
Seller hereby agree as follows:

 

ARTICLE 1

DEFINITIONS

 

1.1           Defined Terms.  Unless otherwise defined in this Agreement,
the capitalized terms used in the above premises and throughout this Agreement
shall have the meanings set forth in this Section 1.1.

 

Claim:  Any claim, legal or equitable cause of
action, suit, litigation, proceeding (including a regulatory or administrative
proceeding), grievance, complaint, demand, charge, investigation, audit,
arbitration, mediation, or other process for settling disputes or
disagreements, including without limitation, any of the foregoing processes or
procedures in which injunctive or equitable relief is sought.

 

Liability:  Any liability, loss, cost, debt,
indebtedness, lien, Claim, expense, loss of tax benefits or deductions,
assessment, fine, penalty, deficiency, interest, payment, contract, judgment,
damages of every kind and nature or other obligation (whether due or payable,
absolute or contingent, liquidated or unliquidated, secured or unsecured).

 

Person:  Any individual, trustee, corporation, general
or limited partnership, limited liability company or partnership, joint
venture, joint stock company, bank, firm, Governmental Authority, trust,
association, organization or unincorporated entity of any kind.

 

1

 

1.2           Use of Defined Terms.  Any defined term used in the plural shall
refer to all members of the relevant class and any defined term used in the
singular shall refer to any one or more of the members of the relevant class.

 

ARTICLE 2

PURCHASE OF THE EQUITY

 

2.1           Sale of the Equity.  Upon the terms and subject to the conditions
contained in this Agreement, as of the Closing, Seller shall fully and
irrevocably sell, assign, transfer, convey, and deliver to Buyer the Equity,
free and clear of any all encumbrances, pledges, Claims, restrictions,
judgments, defects in title, limitations, Liabilities, restrictions on
transferability, or other liens, together with all of the right, title,
interest, and other incidents of ownership in and to such Equity which Seller
may have or possess.  Such sale,
assignment, transfer, conveyance, and delivery shall be effected by Seller’s
delivery at Closing (as defined in Section 6.1) to Buyer of (i) the
certificates representing the Equity held by such Seller, all duly endorsed in
blank, if any, and with all necessary documentary stamps affixed thereto, or
(ii) such other assignments, documents of transfer, instruments, or other items
as reasonably requested by Buyer for the purpose of assigning, assuming,
transferring, conveying, perfecting, confirming, and/or reducing to possession
the Equity held by Seller.

 

2.2           Purchase of the Equity.  Upon the terms and subject to the conditions
contained in this Agreement, as of the Closing, Buyer shall purchase, all and
not less than all, of the Equity and, in consideration of and in exchange for
the purchase of the Equity, Buyer shall pay Seller the Purchase Price for the
Equity held by Seller in the amount and in the manner hereinafter set forth:

 

2.2.1        Purchase Price.  At Closing, Buyer shall pay Seller cash in
the aggregate amount of US$5,622,000 (the “Purchase Price”).

 

2.2.2        Manner of Payment.  Payment of the Purchase Price shall, at
Buyer’s election, be paid via wire transfer or other form of electronic funds
transmission pursuant to payment instructions delivered by Seller to Buyer no
later than two (2) business days prior to the Closing Date (as defined in
Section 6.2).

 

2.3           Disclaimer.  EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, SELLER HAS NOT MADE AND DOES NOT MAKE (NOR SHALL SELLER BE DEEMED TO
HAVE MADE OR TO MAKE BY VIRTUE OF THE SALE OF THE EQUITY TO BUYER OR ANY OTHER
FACT OR CIRCUMSTANCE WHATSOEVER) TO BUYER OR ANY OTHER PERSON ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO OR IN CONNECTION
WITH THE EQUITY, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY
OF TITLE, WHICH IS EXPRESSLY DISCLAIMED AND EXCLUDED.  THERE ARE NO SUCH REPRESENTATIONS OR WARRANTIES WHATSOEVER OF
SELLER OTHER THAN THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN
THIS AGREEMENT, WHICH REPRESENTATIONS AND WARRANTIES ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER REPRESENTATIONS AND WARRANTIES OF SELLER

 

2

 

WITH RESPECT TO THE SALE
OF THE SHARES, ANY ASSET OR PROPERTY OF THE COMPANY OR ITS BUSINESS, WHETHER
STATUTORY, WRITTEN, ORAL OR IMPLIED.

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents,
warrants, and covenants to Seller the accuracy and completeness of the matters
set forth in this Article 3 as of the date hereof and as of the Closing Date.

 

3.1           Corporate Authority.  Buyer has the requisite corporate power and
authority to enter into this Agreement and any related documents to which Buyer
is a party and to carry out its obligations hereunder and thereunder.  The execution, delivery, and performance of
this Agreement and any related documents, and the consummation of the
transactions contemplated hereby and thereby have been duly and validly authorized
by all necessary corporate action on the part of Buyer.  This Agreement and any related documents
will have been duly and validly executed and delivered by Buyer, and are the
valid and binding agreements of Buyer, enforceable against Buyer in accordance
with their terms, subject to (i) laws of general application relating to
bankruptcy, insolvency, and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief, and other equitable
remedies.

 

3.2           No Violation.  The execution, delivery, and performance of
this Agreement and any related document, and the consummation of the
transactions contemplated hereby and thereby will not constitute, nor with
notice or lapse of time or both would constitute: (i) a violation of Buyer’s
charter documents (as amended or restated to date), bylaws or operating
agreements (as amended or restated to date) or resolutions or actions of
Buyer’s owners or governing body or duly authorized committees thereof, or (ii)
a breach of or default under any contract or judgment to which Buyer is subject
or bound.

 

3.3           Investment.  Buyer is acquiring the Equity for investment
purposes only for its own account, and not with a view to, or for resale in
connection with, any distribution thereof, and it has no present intention of
selling or distributing any such securities.

 

3.4           No Public Market. Buyer
understands that no public market now exists for any of the Securities issued
by the Company and that it is uncertain whether a public market will ever exist
for the Equity.

 

3.5           Access to Data.  Buyer has had an opportunity to discuss the
Company’s business, management and financial affairs with its management and to
obtain any additional information necessary or appropriate for deciding whether
or not to purchase the Equity.

 

3.6           Knowledge And Experience.  Buyer has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of an investment in the Equity, and it is able to bear the economic risk
of such investment.  Further, Buyer has
such knowledge and experience in financial and business matters that he, she or
it is capable of utilizing the information made available to him, her or it in
connection with the

 

3

 

purchase of the Equity,
of evaluating the merits and risks of an investment in the Equity and of making
an informed investment decision with respect to the Equity.

 

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company
represents, warrants, and covenants to Buyer and Seller the accuracy and
completeness of the matters set forth in this Article 4 as of the date hereof
and as of the Closing Date.

 

4.1           Organization and Corporate Power.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the People’s Republic
of China and is qualified in all jurisdictions in which the nature of its
property owned or leased by it or the conduct of its business requires such
qualification, except for such jurisdictions where the failure to so qualify
would not individually or in the aggregate materially and adversely affect the
business, operations or financial condition of the Company.  The Company has all requisite corporate
power and authority necessary to own and operate its properties and to carry on
its business as now conducted and to enter into and to carry out the provisions
of this Agreement and the transactions contemplated hereby.  The Company has no subsidiaries or
affiliated companies and does not otherwise directly or indirectly control or
own any other corporation, association, partnership, joint venture or other
business entity or arrangement.

 

4.2           Capitalization.  Immediately prior to the Closing, the
Company’s equity is held by the following entities and individuals in the
following respective percentages: Seller (50%), five individuals, Liu Dongyuan
(29.8279%), Cheng Fei (10.1528%), Gao Jianou (3.1379%), Wang Huansheng
(1.6745%), and Han Jingzhe (0.2069%), and TCL Computer Technology (5%).

 

4.3           Title to Property.  The Company has good and marketable title to
all of its properties and assets, free and clear of restrictions or conditions
on transfer or assignment and free and clear of mortgages, liens, pledges,
charges, encumbrances, equities, claims, easements, rights of way, covenants,
conditions or restrictions, except for current taxes and assessments not
delinquent and for matters that are not material, individually or in the
aggregate, and do not materially detract from or interfere with the present or
intended use of any of these assets, nor materially impair the business,
operation or proposed operation of the Company.

 

4.4           Patents and Other Intangible
Rights.  The Company has good title
(without any unlawful misappropriation) to all Intellectual Property (as
defined hereinafter) of the Company, or adequate licenses and rights to use the
Intellectual Property of others, which is necessary for the conduct of the
business of the Company as now conducted, and, to the knowledge of the Company,
no individual or entity (other than the Company) owns any interest in, or has
made any claim with respect to any Intellectual Property.  To the knowledge of the Company, the Company
is not infringing upon or otherwise acting adversely to the right or claimed
right of any person with respect to any of the foregoing.  None of the Intellectual Property is subject
to any mortgage, pledge, lien, charge, security interest or encumbrance or
lease or license or any claim or litigation proceedings alleging a violation of
the right of any third party.  To the
knowledge of the Company, no officer, director or employee of the Company is
under any restriction, whether

 

4

 

contractual, or by virtue
of previous employment or otherwise, that would prevent him from performing his
duties for the Company or prevent the Company from using the Intellectual
Property.  For the purposes of this
Section 4.4, the term “Intellectual Property” means, with respect to the
Company, (a) inventions, whether or not reduced to practice and whether or not
yet made the subject of a pending patent application or applications, (b) ideas
and conceptions of potentially patentable subject matter, including, without
limitation, any patent disclosures, whether or not reduced to practice and whether
or not yet made the subject of a pending patent application or applications,
(c) statutory invention registrations, patents, patent registrations and patent
applications and all improvements to the inventions covered in each such
registration, patent or application, (d) trademarks, service marks, trade
dress, logos, symbols, trade names and corporate names and registrations and
applications for registration thereof, (e) copyrights (registered or otherwise)
and registrations and applications for registration thereof, (f) computer
software, source code, data and documentation, (g) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions, and conceptions of inventions whether patentable or unpatentable
and whether or not reduced to practice), technology (including know-how and
show-how), manufacturing and production processes and techniques, research and
development information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial, marketing and business data,
pricing and cost information, business and marketing plans and customer and
supplier lists and information, (h) copies and tangible embodiments of all of
the foregoing, in whatever form or medium, (i) all rights to obtain and rights
to apply for patents, and to register trademarks and copyrights, and (j) all
rights to sue for present and past infringement of any of the Intellectual
Property rights hereinabove set out.

 

4.5           Litigation.  There are no (and the Company is not aware
of any basis for any) (a) actions, proceedings or investigations pending or any
threat thereof, or verdicts or judgments entered against the Company or any of
its officers, directors or affiliates before any court or before any administrative
agency or officer which questions the validity of the Agreement or the right of
the Company to enter into them or to consummate the transactions contemplated
thereby, or which might result, individually or in the aggregate, in any
material adverse change in the business, properties or condition, financial or
otherwise, of the Company or (b) violations by the Company of any foreign,
federal, state or local laws, rules, regulations or orders.

 

4.6           Financial Statements.  A copy of the Company’s unaudited monthly
balance sheets from March 2003 (the month the Company started its operations)
through the end of June 2003 (the “Financial Statements”) has previously been
provided to Buyer and Seller.  The
Financial Statements (a) are complete and correct in all material respects; and
(b) fairly present, in all material respects, the financial position of the
Company as of the date thereof and the results of the operations of the Company
for the periods covered thereby.  Since
the date of the last Financial Statement, there has been no material adverse
changes to the Company’s business, finances or prospects and the Company has
operated its business in the ordinary course.

 

4.7           Fees, Commissions and Expenses.  The Company has made no agreements or
arrangements for brokerage commissions, finders’ fees or similar compensation
in connection with the transactions contemplated by this Agreement.

 

5

 

4.8           Government and Equity Holder
Consents.  Other than final approval
for the change of ownership of the Equity from the relevant authorities or
regulatory bodies in China, and the filing and registration incidental thereto,
no consent, approval, order, authorization, registration, qualification,
designation, license, declaration or filing with any local, state or municipal
authority is required on the part of the Company in connection with the
consummation of the transactions contemplated herein.  This Agreement or the transactions consummated hereby do not
require approval or consent from the other equity holders of the Company who
are not party to this Agreement.

 

4.9           No Violation.  The execution, delivery, and performance of
this Agreement and any related document, and the consummation of the
transactions contemplated hereby and thereby will not constitute, nor with
notice or lapse of time or both would constitute: (i) a violation of Company’s
charter documents (as amended or restated to date), bylaws or operating
agreements (as amended or restated to date) or resolutions or actions of
Company’s owners or governing body or duly authorized committees thereof, or
(ii) a breach of or default under any contract or judgment to which Company is
subject or bound.

 

4.10         Validity of Issuance.  The Equity, when transferred, sold, and delivered,
and, assuming the accuracy and completeness of Seller’s representations
hereunder, will be free and clear of any pledges, security interests, claims,
liens or encumbrances and, assuming the accuracy and completeness of Buyer’s
representations hereunder, and will have been issued in compliance with all
applicable state and federal securities laws.

 

4.11         Disclosure.  Neither this Agreement nor any of the
materials relating hereto, or relating to the transactions contemplated hereby,
contain any untrue statements of a material fact or omit a material fact
necessary to make the statements contained herein or therein not
misleading.  The financial and similar
projections provided to Buyer with respect to the Company are merely
descriptions and estimates made by the Company and are not intended to be
commitments of the Company.  There is no
fact known to the Company which (individually or in the aggregate) materially
adversely affects the business, operations, affairs, condition, properties,
assets or prospects of the Company which has not been set forth in this
Agreement, or any other related transaction agreements.

 

4.12         Material Contracts.  The Company has made available to Buyer all
material contracts, agreements or instruments of the Company.

 

4.13         No Debt.  Except for the amounts set forth on the
Financial Statements, as of the Closing, the Company shall have no Indebtedness
(defined below).  “Indebtedness,” for
the purposes hereof, shall mean, without duplication, the outstanding principal
amount of, and all interest, penalties, premiums and other amounts accrued in
respect of, (i) all indebtedness for borrowed money of the Company, whether or
not recourse to the Company, (ii) every obligation of the Company evidenced by
bonds, debentures, notes or other similar instruments, (iii) every
reimbursement obligation of the Company with respect to letters of credit,
banker’s acceptances or similar facilities issued for the account of the
Company, (iv) every obligation of the Company issued or assumed as the deferred
purchase price of property or services of any type, (v) every capital lease
obligation of the Company, (vi) all obligations of the Company upon which
interest charges are customarily paid (but excluding trade accounts payable
arising in the ordinary course

 

6

 

of business consistent
with past practice), and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person, the payment of which the Company
has guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise.

 

4.14         Transactions with Affiliates.  The Company has no agreements,
understandings or proposed transactions, including any agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.

 

4.15         Permits.   The Company has all franchises, permits,
licenses, orders, certificates, authorizations, approvals and any similar
authority necessary for the conduct of its business as it is planned to be
conducted, the lack of which could materially affect the business, properties
prospects or financial condition of the Company.

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents,
warrants, and covenants to Buyer the accuracy and completeness of the matters
set forth in this Article 5 as of the date hereof and as of the Closing Date:

 

5.1           Authority.  Seller has the requisite corporate, entity,
or other power and authority to enter into this Agreement and any related
documents to which it is a party and to carry out its obligations hereunder and
thereunder. The execution, delivery, and performance of this Agreement and any
related documents and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate,
entity, or other action on the part of Seller. 
This Agreement and any related documents will have been duly and validly
executed and delivered by Seller and are the valid and binding agreements of
such Seller, enforceable against it in accordance with their terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.

 

5.2           No Consents. Other than final
approval for the change of ownership of the Equity from the relevant
authorities or regulatory bodies in China and the filing and registration
incidental thereto of the Chinese government, there are no approvals,
authorizations, consents, orders, licenses, permits, or other actions of,
declarations, filings, or registrations with or notices to be furnished to any
Person in connection with the execution, delivery, or performance of this
Agreement by Seller or Seller’s sale of the Equity to Buyer as contemplated
hereby which will not have been made, obtained, or furnished prior to the
Closing.

 

5.3           No Violation.  The execution, delivery, and performance of
this Agreement and any related document to which Seller is a party, and the
consummation of the transactions contemplated hereby and thereby will not
constitute, nor with notice or lapse of time or both would constitute:  (i) a violation of such Seller’s certificate
of incorporation (as amended or restated to date), bylaws (as amended or
restated to date); or (ii) the creation or imposition of any lien or
encumbrance affecting or encumbering the Equity held by such Seller.

 

7

 

5.4           Ownership of the Equity.
Seller is the sole and exclusive record, legal, and beneficial owner of, and
has good, valid, and indefeasible title to the Equity and has fulfilled its
obligation to pay or contribute additional capital or fund in the aggregate
amount of US$1,842,216.71 under the Articles of Association of the Company
dated January 18 2003 (“Capital Contribution”), and upon payment of the
Purchase Price for the Equity, Buyer will acquire the Equity free and clear of
any encumbrances, pledges, Claims, restrictions, judgments, defects in title,
limitations, Liabilities, restrictions on transferability, or other liens of
any kind or nature, together with all of the right, title, interest, and other
incidents of ownership in and to such Equity which Seller may have or possess.

 

ARTICLE 6

CLOSING; CLOSING CONDITIONS

 

6.1           The Closing.   The parties acknowledge and agree that the
consummation of the transactions contemplated under this Agreement shall occur
contemporaneously with the execution of this Agreement.  Only when all such transactions have been
consummated and the Purchase Price has been paid shall the closing (the
“Closing”) of the transactions under this Agreement have occurred.

 

6.2           Closing Logistics.  The Closing shall occur at the offices of
the Company, on August         , 2003
(the “Closing Date”) or such other time, date and place, as mutually agreed
upon by all of the parties.   All acts,
deliveries, and confirmations comprising the Closing, including satisfaction of
all conditions precedent to Closing, regardless of chronological sequence,
shall be deemed to occur contemporaneously and simultaneously as of 11:59 p.m.
on the Closing Date and no such act, delivery, confirmation, or condition shall
be effective unless and until the last of all such items shall have
occurred.  The parties shall use good
faith efforts to effectuate the Closing on the day on which this Agreement is
fully executed by all parties.

 

6.3           Buyer’s Closing Conditions.  The obligations of Buyer to proceed to
Closing are subject to the full satisfaction, at or prior to Closing, of the
following conditions precedent:

 

6.3.1        Representations and Warranties are
True.  The representations and
warranties made by Company in Article 4 and Seller in Article 5 of this
Agreement shall be true and correct as of the Closing Date as though made on
and as of the Closing Date.

 

6.3.2        Deliver Share Certificates; Perform
Covenants.  Seller shall have
delivered to Buyer the certificates representing the Equity and shall have
satisfied their other covenants, obligations, and agreements set forth in this
Agreement which are required to be fulfilled by Seller prior to or at the
Closing.

 

6.3.3        Delivery of Signature Page.  Seller and the Company shall have delivered
to Buyer an executed signature page to this Agreement and such other
instruments, assignments, and documents as Buyer’s legal counsel may reasonably
request, consistent with the intent and purposes of this Agreement.

 

6.3.4        Examination of Books and Records.  The Company will have made available to
Buyer (who may appoint representatives to perform such inspection) during
normal

 

8

 

business hours, for
inspection and copying, all of the Company’s books, records, contracts and
documents of or relating to the Company.

 

6.3.5        Suits/Proceedings.  No action, suit, proceeding or investigation
by or before any court, administrative agency or other governmental authority
shall have been instituted or threatened to restrain, prohibit or invalidate
the transactions contemplated by this Agreement.

 

6.3.6        Performance.  The Company and Seller will have duly
performed and complied in all material respects with each of the terms,
agreements and conditions required by this Agreement to be performed and
complied with by it prior to or at the Closing.

 

6.3.7        Compliance with Laws and Regulations.  The sale of the Equity to Buyer shall be
permitted by all applicable laws and regulations.

 

6.3.8        Deliver proof of Capital Contribution.  Seller shall have delivered to Buyer
satisfactory documentary evidence that Seller has fully fulfilled its Capital
Contribution obligations.

 

6.4           Seller’s Closing Conditions.  The obligations of Seller to proceed to
Closing are subject to the full satisfaction, at or prior to Closing, of the
following conditions precedent:

 

6.4.1        Representations and Warranties are
True. The representations and warranties of Buyer made in Article 3 and the
Company in Article 4 of this Agreement shall be true and correct as of the
Closing Date as though made on and as of the Closing Date.

 

6.4.2        Purchase Price; Perform Covenants.  Buyer shall have paid to Seller the Purchase
Price and satisfied Buyer’s other covenants, obligations, and agreements as set
forth in this Agreement which are required to be fulfilled by Buyer prior to or
at the Closing.

 

6.4.3        Delivery of Signature Page.  Buyer and the Company shall have delivered
to Seller an executed signature page to this Agreement and such other
instruments, assignments and documents as Seller’s legal counsel may reasonably
request, consistent with the intent and purposes of this Agreement.

 

6.4.4        Performance.  Buyer and the Company will have duly
performed and complied in all material respects with each of the terms,
agreements and conditions required by this Agreement to be performed or
complied with by it prior to or at the Closing.

 

6.4.5        Suits/Proceedings.  No action, suit, proceeding or investigation
by or before any court, administrative agency or other governmental authority
will have been instituted or threatened to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.

 

6.4.6        Compliance with Laws and Regulations.  The sale of the Equity to Buyer shall be
permitted by all applicable laws and regulations.

 

6.5           Closing Assurances.  If at any time before or after the Closing
legal counsel for any party hereto shall deem it necessary or reasonably
appropriate to take further or additional

 

9

 

steps or to execute
further or additional agreements, instruments, documents, or certificates for
the purpose of confirming, evidencing, or fully consummating any of the
transactions contemplated under this Agreement or any transaction incident
thereto, then all applicable parties shall execute, acknowledge, and deliver
any such agreements, instruments, documents, or certificates or take such
further or additional steps consistent with the intent and purposes of this
Agreement.

 

ARTICLE 7

MISCELLANEOUS PROVISIONS

 

7.1           Notices.  Any and all notices, requests, consents,
demands, or other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given (i)
when delivered, if sent by United States registered or certified mail (return
receipt requested), (ii) when delivered, if delivered personally by commercial
courier, (iii) on the second (or the seventh, for overseas address) following
business day, if sent by United States Express Mail or overnight courier, or
(iv) upon the date reflected on a fax confirmation from the transmitting fax
machine, if sent by facsimile transmission and delivery of the facsimile
transmission is confirmed telephonically within one (1) business day, in each
case to the parties at the following addresses or facsimile numbers (or at such
other addresses or facsimile numbers as shall be specified by like notice) with
applicable postage or delivery charges prepaid:

 

	
   

  	
  If to Seller:

  	
   

  
	
   

  	
   

  	
  Lotus Pacific, Inc.

  
	
   

  	
   

  	
  2402 Michelson Drive,
  Suite 220

  
	
   

  	
   

  	
  Irvine, CA 92612

  
	
   

  	
   

  	
  Attn: CFO

  
	
   

  	
   

  	
  Fax:  949-475-1808

  
	
   

  	
   

  	
   

  
	
   

  	
  With a copy to:

  	
   

  
	
   

  	
   

  	
  Reed Smith LLP

  
	
   

  	
   

  	
  1901 Avenue of the
  Stars, Suite 700

  
	
   

  	
   

  	
  Los Angeles, CA 90067

  
	
   

  	
   

  	
  Attn: John M. Iino,
  Esq.

  
	
   

  	
   

  	
  Fax: 310-734-5299

  
	
   

  	
   

  	
   

  
	
   

  	
  If to Buyer:

  	
   

  
	
   

  	
   

  	
  TCL Information
  Technology Industrial (Group) Ltd.

  
	
   

  	
   

  	
  13/F TCL Tower

  
	
   

  	
   

  	
  8 Tai Chung Road

  
	
   

  	
   

  	
  Tsuen Wan

  
	
   

  	
   

  	
  New Territories

  
	
   

  	
   

  	
  Hong Kong

  

 

10

 

	
   

  	
  If to Company:

  	
   

  
	
   

  	
   

  	
  TCL Digital
  Technologies, Ltd.

  
	
   

  	
   

  	
  A18 Sanhuan Xi Road,
  North, Suite B409

  
	
   

  	
   

  	
  Haidian District,
  Beijing, China

  

 

7.2           Expenses.  Each party hereto shall pay its own costs
and expenses (including all legal and accounting fees) arising from the
negotiation, execution, and performance of this Agreement, whether or not the
transactions contemplated hereunder are consummated.

 

7.3           Indemnification.  Subject to Section 2.3, the parties hereto
agree to indemnify, defend and hold harmless the other parties and the other
parties’ officers, directors, employees, stockholders, parent companies, direct
and indirect subsidiaries, joint venture partners, affiliates, partners,
agents, attorneys, independent accountants, auditors, insurers,
representatives, predecessors, successors and assigns (collectively,
“Indemnitees”), from and after the Closing Date, for a period of such claim’s
applicable statute of limitations, against any damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses, including
without limitation, reasonable attorneys’ fees and other costs and expenses
incident to any action, investigation, claim or proceeding (all hereafter
referred to as “Losses”), arising out of or relating to any misrepresentation
or breach of or default in connection with any representation, warranty,
covenant or agreement given or made by the indemnifying party hereto (the
“Indemnifying Party”) in this Agreement. 
In the event an Indemnitee become aware of a third-party claim which
Indemnitee believes may result in an indemnification demand under this Section
7.3, the Indemnitee shall promptly notify the Indemnifying Party of such claim,
and Indemnifying Party shall be entitled, at its expense, to participate in any
defense of such claim.  Indemnitee shall
have the right in its sole discretion to settle any such claim; provided,
however, that the Indemnitee may not effect the settlement of any such claim
without the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.  In the event
that the Indemnifying Party has consented to any such settlement, Indemnifying
Party shall have no power or authority to object to the amount of any claim by
Indemnitee for indemnity under this Section 7.3 with respect to such
settlement.

 

7.4           Confidentiality of this Agreement;
Publicity.  Each of the terms and
conditions of this Agreement shall be confidential and each of the parties
hereto agrees to maintain the confidentiality of this Agreement and each of its
terms and provisions hereof.  Unless
required by court order, other legal process, applicable law or regulations
(including without limitation, applicable securities laws and stock exchange
rules), or if consented to by all other parties hereto, this Agreement may not
be disclosed by any party hereto and no party may issue or release any public
announcement, press release, statement, or acknowledgment of the existence of,
or reveal publicly the terms, conditions, or status of, the transactions
provided for herein without the prior written consent of all of the other
parties as to the content and timing of release of and the media in which such
statement or announcement is to be made. Each party hereto agrees that he, she
or it will not unreasonably withhold any such consent or clearance to public
announcements.

 

7.5           Headings.  The headings of the several sections of this
Agreement are inserted for convenience of reference only and are not intended
to affect the meaning or interpretation of this Agreement.

 

11

 

7.6           Entire Agreement.  This Agreement and the documents relating
thereto constitute the final written integrated expression of all of the
agreements between the parties hereto with respect to the matters addressed
herein.  This Agreement supersedes all
prior or contemporaneous, written or oral, memoranda, arrangements, contracts,
or understandings between or among the parties hereto relating to the subject
matter hereof.  Any representations,
promises, warranties, or statements made by any party which differ in any way
from the terms of this Agreement, shall be given no force or effect.  The parties specifically represent, each to
the other, that there are no additional or supplemental agreements or contracts
between them related in any way to the matters herein contained unless specifically
included or referred to herein.

 

7.7           Amendments.  This Agreement may not be amended, modified,
supplemented, or changed, in any minor or material respect, or any provision
hereof waived, unless accomplished through a dated, written instrument which
has been signed by the parties hereto.

 

7.8           Waiver. Neither consummation
of the transactions contemplated hereunder nor any action taken pursuant to
this Agreement, including without limitation any investigation by or on behalf
of any party, shall be deemed to constitute a waiver by the party taking such
action or waiver of compliance with any representation, warranty, condition or
agreement contained herein.  Waiver of
the breach of any one or more provisions of this Agreement shall not be deemed
or construed to be a waiver of other breaches or subsequent breaches of the
same provisions.

 

7.9           Severability.  In the event that any provision in this
Agreement shall be found by a governmental authority or arbitrator of competent
jurisdiction to be invalid, illegal or unenforceable, such provision shall be
construed and enforced as if it had been narrowly drawn so as not to be
invalid, illegal or unenforceable, and the validity, legality, and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.

 

7.10         Successors and Assigns.  None of the parties hereto may assign this
Agreement or delegate any obligations or duties hereunder, whether voluntarily,
involuntarily, or by operation of law, except with the prior written consent of
all of the other parties to this Agreement; provided, however, that Buyer may
assign this Agreement or delegate its duties to any of its affiliates without
obtaining the consent of any party hereto; provided, further however, the assigning
party shall not be released from its obligations hereunder.  If this Agreement is assigned or duties
hereunder delegated as permitted hereunder, then this Agreement shall be
binding upon the respective successors, successors-in-interests, transferees,
and assigns of all of the parties hereto.

 

7.11         Governing Law; Consent to
Jurisdiction.  This Agreement and
the rights and obligations of the parties hereunder shall be construed,
interpreted, and enforced in accordance with, and governed by, the laws of the
State of California, without regard to principles relating to conflicts of law,
and of the laws of the United States. 
Any legal action, suit or proceeding arising out of or relating to this
Agreement may be instituted in any state or federal court located within the
County of Los Angeles or County of Orange, State of California, and each party
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to the jurisdiction
of such court in an inconvenient forum, that the venue of the action, suit or
proceeding is improper or that this

 

12

 

Agreement or the subject
matter hereof may not be enforced in or by such court.  EACH PARTY FURTHER IRREVOCABLY SUBMITS TO
THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING.  Any and all service of process shall be
effective against any party if given personally or by registered or certified
mail, return receipt requested, or by any other means of mail that requires a
signed receipt, postage prepaid, mailed to such party as herein provided.  Nothing herein contained shall be deemed to
affect the right of any party to serve process in any manner permitted by law
or to commence legal proceedings or otherwise-proceed against any other party
in any jurisdiction.

 

7.12         Construction.  This Agreement has been drafted with the
joint participation of each of the parties hereto and shall be construed to be
neither against nor in favor of any party hereto, but rather in accordance with
the fair meaning hereof.

 

7.13         Voluntary Execution of Agreement.  This Agreement is executed voluntarily and
without any duress or undue influence on the part of any of the parties hereto.  Each of the parties acknowledge and agree
that:  (i) it has read this
Agreement;  (ii) it has been represented
in the preparation, negotiation, and execution of this Agreement by legal
counsel of its own choice or that it has voluntarily declined to seek such
counsel; and (iii) is fully aware of the legal and binding effect of this
Agreement.

 

7.14         Attorneys’ Fees.  In the event of any dispute with respect to
the subject matter of or construction of this Agreement (including an
arbitration or mediation), the prevailing party shall be entitled to recover
its reasonable attorneys’ fees and court, arbitration, or mediation costs
incurred in resolving or settling the dispute, in addition to any and all other
damages or relief which a court, arbitrator or mediator may deem proper.

 

7.15         No Third Party Beneficiaries.  This Agreement is not intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.

 

7.16         Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be binding and collectively shall
constitute one and the same agreement.

 

7.17         Waiver
of Jury Trial.  EACH OF THE PARTIES HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO WHICH HE, SHE OR IT MAY BE PARTIES, ARISING
OUT OF, OR IN ANY WAY PERTAINING TO, THIS AGREEMENT.  IT IS AGREED THAT THIS WAIVER CONSTITUTES A WAIVER OF TRIAL BY
JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR PROCEEDINGS.  THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE BY THE PARTIES AND EACH PARTY HEREBY REPRESENTS THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON TO INDUCE THIS
WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.

 

13

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed and delivered as
of the date first above written.

 

	
  Seller:

  	
  LOTUS PACIFIC, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Yiming Foo

  	
   

  
	
   

  	
  Name:  Yimin Foo, Chief Financial Officer

  
	
   

  	
   

  
	
  Buyer:

  	
  TCL INFORMATION TECHNOLOGY

  INDUSTRIAL (GROUP) LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Li Dongsheng

  	
   

  
	
   

  	
  Name: Li Dongsheng

  
	
   

  	
  Title: Chairman

  
	
   

  	
   

  
	
  Company:

  	
  TCL DIGITAL TECHNOLOGIES, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Li Dongsheng

  	
   

  
	
   

  	
  Name: Li Dongsheng

  
	
   

  	
  Title:  Chairman

  

 

14

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