AGREEMENT FOR THE SALE AND PURCHASE

(1)

Kenabell Holding Limited, a company incorporated in the British Virgin Islands with registered number 573155 whose registered office is at Trident Chambers Road Town, 146 Tortola, British Virgin Islands (the “Vendor” ); and

(2)

Fervent Group Limited, a company incorporated in British Virgin Islands with registered number 550235 whose registered office is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (the “Purchaser” ).

(A)

The Vendor is the registered holder and beneficial owner of all of the issued shares in the capital of Measurement Ltd. ( “the Company” ). Particulars of the Company are set out in Schedule 1.

(B)

The Vendor wishes to sell and the Purchaser wishes to purchase the said shares on the terms and conditions set out in this Agreement.

1.1

In this Agreement where the context so admits the following words and expressions shall have the following meanings:

1.2

Save where the context otherwise requires words and phrases the definitions of which are contained or referred to in the Companies Ordinance shall be construed as having the meaning thereby attributed to them.

1.3

Any references, express or implied, to statutes or statutory provisions shall be construed as references to those statutes or provisions as respectively amended or re-enacted or as their application is modified from time to time before the date hereof by other provisions and shall include any statutes or provisions of which they are re-enactments (whether with or without modification) and any orders, regulations, instruments or other subordinate legislation under the relevant statute or statutory provision. References to Sections of consolidating legislation shall, wherever necessary or appropriate in the context, be construed as including references to the Sections of the previous legislation from which the consolidating legislation has been prepared.

1.4

References in this Agreement to Clauses and Schedules are to clauses in and schedules to this Agreement (unless the context otherwise requires). The Recitals and Schedules to this Agreement shall be deemed to form part of this Agreement.

1.5

Headings are inserted for convenience only and shall not affect the construction of this Agreement.

1.6

The expressions “the Vendor” and “the Purchaser” include their respective successors.

1.7

References to “persons” shall include bodies corporate, unincorporated associations and partnerships (whether or not having separate legal personality).

1.8

References to writing shall include any methods of producing or reproducing words in a legible and non-transitory form.

1.9

The masculine gender shall include the feminine and neuter and the singular number shall include the plural and vice versa.

1.10

A document expressed to be “in the approved terms” means a document the terms of which have been approved by or on behalf of the Parties and a copy of which has been signed for the purposes of identification by or on behalf of each Party.

In construing this Agreement:

1.11.1

the rule known as the ejusdem generis rule shall not apply and, accordingly, general words introduced by the word “other” shall not be given a restrictive meaning by reason of the fact that they are preceded by words indicating a particular class of acts, matters or things; and

1.11.2

general words shall not be given a restrictive meaning by reason of the fact that they are followed by particular examples intended to be embraced by the general words.

2.1

Subject to the terms of this Agreement, the Vendor shall sell as beneficial owner and the Purchaser shall purchase, free from all liens, charges and encumbrances and together with all rights now or hereafter attaching to them, including all rights to any dividend or other distribution declared, made or paid after the date of this Agreement, the Sale Share.

2.2

The Vendor hereby waives and agrees to procure the waiver of any restrictions on transfer (including pre-emption rights) which may exist in relation to the Sale Share, whether under the articles of association of the Company or otherwise.

3.1

The total consideration payable for the Sale Share shall be US$17,393,000.00 (seventeen million, three hundred and ninety-three thousand United States Dollars) (subject to adjustment in accordance with Clause 7).

The Initial Consideration shall be payable on Completion in accordance with Clause 5.4.1 (subject to adjustment in accordance with Clause 7).

The Retained Consideration shall be payable in eight quarterly equal instalments of US$625,000.00 each (subject to adjustment in accordance with Clause 7). The Purchaser shall pay each such instalment on the last day of the end of every 3 months commencing from the fifteenth month after the Completion Date. The Earn-out Guarantee duly executed on behalf of River Display Limited shall be provided to the Vendor in respect of the Retained Consideration on Completion.

The balance of the Consideration, being the sum of US$4,000,000.00, shall be satisfied by the Purchaser by way of a Promissory Note which shall be payable in eight quarterly instalments of US$500,000.00 each (subject to adjustment in accordance with Clause 7). The Purchaser shall pay each such instalment on the last day of the end of every 3 months during the 2 years after the Completion Date. A personal guarantee in the form set out in Schedule 8 shall be provided by Mr. Lee Man Ban and Mr. Chan Po Sang to the Vendor in respect of the Promissory Note on Completion.

The sale and purchase of the Sale Share is conditional upon:

4.1.1

the Warranties remaining true and accurate and not misleading in any material respect at Completion as if repeated at Completion;

4.1.2

the Vendor having complied with the obligations specified in Clauses 15.1 and 15.2;

4.1.3

the consent to the sale by the Vendor of the Sale Share contemplated under this Agreement being granted by General Electric Capital Corporation and no statute, regulation or decision which would prohibit, restrict or materially delay the sale and purchase of the Sale Share or the operation of the Company after Completion having been proposed, enacted or taken by any governmental or official authority;

4.2

The Purchaser may waive all or any of the Conditions at any time by notice in writing to the Vendor.

4.3

The Vendor shall use its best endeavours to procure the fulfilment of the Conditions on or before the Completion Date.

4.4

In the event that any of the Conditions shall not have been fulfilled (or waived pursuant to Clause 4.2) prior to the Completion Date, this Agreement shall automatically terminate and cease to be of any effect except Clauses 1, 12, 14, 15, 16.1 to 16.4, 17 and 18, which shall remain in force and save in respect of claims arising out of any antecedent breach of this Agreement.

5.1

Subject to the provisions of Clause 4, Completion shall take place on the Completion Date at the offices of Baker & McKenzie on 14/F, Hutchison House, 10 Harcourt Road, Hong Kong, or at such other place as the Parties may mutually agree in writing when all (but not some only) of the events described in this Clause 5 shall occur.

5.2

Subject to the provisions of Clause 4, neither Party is obliged to complete this Agreement unless:

the other Party complies with its obligations under this Clause 5; and

the sale and purchase of all the Sale Share is completed simultaneously.

At Completion, the Vendor shall:

deliver to the Purchaser:

5.3.1.1

duly executed instruments of transfer in respect of all of the Sale Share in favour of the Purchaser or its nominee together with the relative share certificate;

5.3.1.2

a duly executed Deed of Design Patents Assignment (non-PRC) and a duly executed Deed of Design Patents Assignment (PRC) for each of the Design Patents;

5.3.1.3

a duly executed Deed of Utility Patents Assignment (non-PRC) and a duly executed Deed of Utility Model Patents Assignment (PRC) for each of the Utility Patents;

5.3.1.4

a duly executed Deed of Utility Patents Licence (non-PRC) and a duly executed Deed of Design Patents Licence (PRC) for each of the Loadcell Patents;

5.3.1.5

a duly executed Deed of Trademarks Assignment for each of the Trademarks;

5.3.1.6

the duly signed acknowledgments of receipt by the Transferring Employees, in the form set out in Schedule 17, of a sum for the full and final payment of all salaries, allowance, compensation, severance payments and other entitlements relating to such termination that are required to be paid in accordance with the applicable laws and, if any, the relevant employment contracts;

5.3.1.7

the resignation of the Auditors as the auditors of the Company with effect from the Completion Date, such resignation to contain a statement that there are no circumstances connected with their resignation which they consider should be brought to the attention of the members or creditors of the Company;

5.3.1.8

all the statutory books and records duly written up to date of the Company and its certificate of incorporation, current business registration certificate(s) and common seals and a written confirmation from the Vendor that the other books and records (including financial records) and any other papers and documents of the Company in its possession or under its control have been stored at the offices of its authorized representatives or company secretarial service provider;

5.3.1.9

written confirmation in the approved terms that the Vendor is not aware of any matter or thing which is a breach of or inconsistent with any of the Warranties;  

5.3.1.10

certified copies of any powers of attorney under which any of the documents referred to in this Clause 5.3 is executed or evidence satisfactory to the Purchaser of the authority of any person signing on behalf of the Vendor;

5.3.1.11

Letters of Resignation from each of the Directors and the secretary of the Company, such resignations to take effect from close of the meeting of the Board referred to in Clause 5.3.2;

5.3.1.12

a duly executed release under seal, in the approved terms, releasing the Company from any liability whatsoever (whether actual or contingent) which may be owing to the Vendor and/or any member of the MSI Group by the Company at Completion;

5.3.1.13

a duly executed release under seal, in the approved terms, releasing the Vendor or Directors or other officers of the Company or any member of the MSI Group of all loans or other indebtedness due or owing to the Company;

5.3.2

cause the Directors to hold a meeting of the Board at which the Directors shall pass resolutions in the approved terms (inter alia) to:-

5.3.2.1

approve the registration of the Purchaser or its nominees as members of the Company subject only to the production of completed transfers in respect of the Sale Share;

5.3.2.2

appoint new auditors of the Company as nominated by the Purchaser;

5.3.3

cause such persons as the Purchaser may nominate to be appointed as directors of the Company and upon such appointment forthwith cause the Directors, and the secretary of the Company to resign from their respective offices and as employees, each delivering to the Purchaser a letter under seal in the form set out in Schedule 6 acknowledging that the person so retiring has no claim outstanding for compensation or otherwise against the Company;

5.3.4

revoke each existing mandate given by the Company of its bank accounts and pass such resolutions containing the new mandate(s) giving authority to such persons as the Purchaser may nominate to operate the same.

At Completion, the Purchaser shall:

5.4.1

pay the Initial Consideration (subject to adjustment in accordance with Clause 7) to the Vendor or as the Vendor directs in writing by transfer of funds for same day value to such account as shall have been notified to the Purchaser by the Vendor at least three Business Days before the Completion Date;

5.4.2

deliver to the Vendor duly executed counterparts of the documents referred to in Clauses 5.3.1.2, 5.3.1.3, 5.3.1.4 and 5.3.1.5;

deliver to the Vendor the Deed of Guarantee duly executed by Mr. Lee Man Ban and Mr. Chan Po Sang and the Earn-out Guarantee duly executed by River Display Limited;  

5.4.4

deliver to the Vendor certified copies of any powers of attorney under which any of the documents referred to in this Clause 5.4 is executed or other evidence satisfactory to the Vendor of the authority of the person signing on the Purchaser’s behalf.

5.5

At Completion, the Vendor shall procure that the relevant transactions contemplated under the Asset Purchase Agreements are completed before the Completion of this Agreement.

5.6

Without prejudice to any other remedies available to each Party, if in any respect the provisions of this Clause 5 are not complied with by the other Party on the Completion Date the Party not in default may by giving a written notice to the other Party:

5.6.1

defer Completion to a date not more than 28 days after the Completion Date (and so that the provisions of this Clause 5.6 shall apply to Completion as so deferred); or

5.6.2

proceed to Completion so far as practicable (without prejudice to its rights under this Agreement); or

5.6.3

terminate this Agreement and this Agreement shall immediately cease to be of any effect except for this Clause 5.6, Clauses 1, 12, 14, 15, 16.1 to 16.4, 17 and 18 which shall remain in force.

5.7

If either Party defers Completion to another date in accordance with Clause 5.6.1, the provisions of this Agreement apply as if that other date is the Completion Date.

5.8

If either Party terminates this Agreement pursuant to Clause 5.6.3, each party’s further rights and obligations cease immediately on termination, but termination does not affect a party’s accrued rights and obligations at the date of termination.

6.1

A draft of the Effective Date Accounts (the “ Draft Effective Date Accounts ”) shall be prepared by the Vendor as soon as reasonably practicable and no later than 9 December 2005 (or such other date as the Parties may agree in writing) and such accounts:

6.1.1

shall be prepared in accordance with the provisions of Schedule 2 and, insofar as they do not conflict with the provisions of Schedule 2, on the same accounting bases and in accordance with the same accounting and valuation principles and practices as the Accounts; and

6.1.2

shall in all respects comply with current legislation and standard accounting principles and practice in Hong Kong.

6.2

On or before 9 December 2005 (or such later date as the Parties may agree in writing) , the Vendor shall submit the Draft Effective Date Accounts to the Purchaser’s Accountants who shall then conduct an audit applying the same bases and principles as referred to in Clause 6.1.

6.3

If the Purchaser’s Accountants and the Vendor are able to agree to the form and content of the Draft Effective Date Accounts, the Draft Effective Date Accounts so agreed shall be the Effective Date Accounts.

6.4

If the Purchaser’s Accountants and the Vendor are unable to agree as to the form and content of the Draft Effective Date Accounts on or before 16 December 2005 (or such later date as the Parties may agree in writing), the matter may be referred by the Vendor or the Purchaser to an independent firm of chartered accountants appointed by agreement between the Vendor and the Purchaser or, failing such agreement, nominated by the President for the time being of the Hong Kong Society of Accountants on the application of the Vendor or the Purchaser and such independent firm of chartered accountants shall, by no later than 23 December 2005,:

6.4.1

settle any matter in dispute, applying the same bases and principles as referred to in Clause 6.1 and (unless both the Vendor and the Purchaser shall otherwise direct in writing) determine the form and content of the Draft Effective Date Accounts; and

6.4.2

determine (if any) the form and content of the Draft Effective Date Accounts and such determination, shall, in the absence of manifest error, be final and binding on the Parties and such chartered accountants shall be deemed to act as experts and not as arbitrators.

6.5

The costs of the Purchaser's Accountants in respect of the audit of the Draft Effective Date Accounts shall be borne by the Purchaser. The costs of the independent chartered accountant, if any, shall be borne by the Vendor and the Purchaser in equal share.

7.1

The Initial Consideration shall be reduced by the amount, if any, by which the net asset value of the Company (being the total net tangible assets less total liabilities) as shown in the Effective Date Accounts falls short of the amount of US$1,893,000.00.

7.2

The Initial Consideration shall be increased by the amount, if any, by which the net asset value of the Company (being the total net tangible assets less total liabilities) as shown in the Effective Date Accounts exceeds the amount of US$1,893,000.00.

7.3

The sum of US$4,000,000.00 to be settled by way of the Promissory Note shall be adjusted based on the amount of tax liabilities incurred by the Company calculated at 17.5% in respect of profits generated by the Company for the period from the Accounting Date to the Completion Date as shown in the Effective Date Accounts; and the amount payable for each of the eight quarterly instalments pursuant to the Promissory Note shall be adjusted on a pro rata basis.

7.4

In the event that the Margin in respect of Non-Conair Sales of the Company for the 12-month period ending on 30 November 2006 is less than US$2,700,000.00 and the Tire Gauge Sales of the Company for the 12-month period ending on 30 November 2006 is less than US$10,000,000.00, the Retained Consideration shall be reduced in the following manner:

7.4.1

as to US$3,000,000.00 of the Retained Consideration in relation to the Non-Conair Sales, such reduction shall be calculated in accordance with the following formula:

7.4.2

as to US$2,000,000.00 of the Retained Consideration in relation to the Tire Gauge Sales, such reduction shall be calculated in accordance with the following formula:

For the avoidance of doubt, the calculation of the adjustment and the adjustment itself in relation to the Retained Consideration in respect of the Non-Conair Sales in Clause 7.4.1 and Tire Gauge Sales in Clause 7.4.2 are mutually exclusive and the adjustment amount cannot be more than US$3,000,000.00 and US$2,000,000.00 with respect to Clauses 7.4.1 and 7.4.2 respectively.

7.5

For the purpose of Clause 7.4,

7.5.1

“ Cost ” shall mean:

for products that are manufactured by a third party manufacturer, the amount shown on the invoice issued to the Company by such third party manufacturer and

for products that are manufactured by a Purchaser’s Group Company, the amount that would otherwise have been shown on the invoice that would have been issued to the Company by a third party manufacturer.

7.5.2

“ Margin ” shall mean the aggregate amount of Non-Conair Sales less the Cost of the Non-Conair Sales;

7.5.3

“ Non-Conair Sales ” shall mean the sale of scale products by the Company to its customers other than Conair Corporation, a company incorporated in the United States of America, and its affiliates;

7.5.4

“ Tire Gauge Sales ” shall mean the aggregate amount of sales of the Company in relation to the Tire Gauge Business for the 12-month period ending on 30 November 2006.

Adjustment

7.6.1

The adjustments to the Retained Consideration (if any) contemplated under Clause 7.4 shall be made by no later than 15 December 2006. On or before 15 December 2006, the Purchaser shall notify the Vendor in writing of any reduction to the Retained Consideration (“ Reduction ”) in accordance with Clause 7.4 and shall provide the Vendor with documentary and other evidence supporting the calculation of the Reduction.

7.6.2

At the request of the Vendor, the Purchaser shall give and shall procure that the Vendor or any persons authorised by it will for the purpose of satisfying the accuracy of the Reduction be given such access to the premises and all books, records and accounts of the Company as the Vendor may reasonably request.

In the event that the Vendor does not agree with the amount of Reduction as notified by the Purchaser pursuant to Clause 7.6.1, the Parties shall use their respective reasonable endeavours to resolve any difference,

7.6.4

In the event that the Parties are unable to agree to the amount of the Reduction by 20 December 2006, the matter may be referred by the Vendor or the Purchaser to an independent firm of chartered accountants appointed by agreement between the Vendor and the Purchaser or, failing such agreement, nominated by the President for the time being of the Hong Kong Society of Accountants on the application of the Vendor or the Purchaser and such independent firm of chartered accountants shall by no later than 1 January 2007, settle any matter in dispute, and (unless both the Vendor and the Purchaser shall otherwise direct in writing) determine the amount of the Reduction in accordance with the provisions of Clause 7.4; and the determination of such independent firm of chartered accountants shall in the absence of manifest error, be final and binding on the Parties and such chartered accountants shall be deemed to act as experts and not as arbitrators.

8.1

The Vendor undertakes with the Purchaser (for itself and as agent and trustee for the Company) that, except with the consent in writing of the Purchaser and subject to the provisions of Clause 8.4:

8.1.1

for the period of three years after Completion it will not within any country or place in which the Company has carried on business during the year preceding the Completion either on its own account or in conjunction with or on behalf of any person, firm or company carry on or be engaged, concerned or interested, directly or indirectly, in carrying on any business carried on by the Company within such preceding year (other than as a holder of not more than 5 per cent of the issued share or debentures of any company listed on a recognised stock exchange). For the avoidance of doubt, the business carried on by the Company shall include the Tire Gauge Business;

8.1.2

for the period of three years after Completion it will not within any country or place sell loadcells and/or license its Microfused Technology for the production and manufacture of loadcells to any of the following scale companies: Fooktin Technologies Limited, Bonso Electronics Limited, Precision Press Limited, Management Investment & Technology Company Ltd, Charder Electronic Company, Beaverite, Camry Industries (HK) Limited, Kenwell Industries Company, Shine (HK) Development Limited and Tanita Corporation, or the Affiliates (other than Affiliates not in the scale business), successors or assigns of any of these companies.

8.2

The Purchaser undertakes with the Vendor (for itself and as agent and trustee for each Vendor’s Group Company) that, except with the consent in writing of the Vendor and subject to the provisions of Clause 8.4:

8.2.1

(i) it will not at any time hereafter sell or offer for sale loadcells produced or manufactured using the Vendor’s Microfused Technology as stand alone parts; or (ii) use the Vendor's Microfused Technology for manufacture of loadcell products used as pressure sensors or sensors which are competitive to the business of any Vendor’s Group Company;

8.2.2

for the period of three years after Completion it will limit its sale, in any country or place, of loadcells produced or manufactured using the Vendor’s Microfused Technology, to loadcells (i) incorporated in end products for Scale Use, or (ii) incorporated in end products other than for Scale Use and exclusively for Home Use and not used as pressure sensors or products competitive with the business of Vendor, or (iii) incorporated in subassemblies for Scale Use, including but not limited to, loadcell plus module, loadcell in a plastic housing, loadcell plus an electronic circuit and loadcell packaged in housing plus module, or (iv) incorporated in subassemblies other than for Scale Use and exclusively for Home Use and not used as pressure sensors or sensors which are competitive to the business of any Vendor’s Group Company, thereafter, the Company, the Purchaser or any of the Purchaser’s Group Company may sell or offer to sell loadcells produced or manufactured using the Vendor’s Microfused Technology, either (1) sold incorporated in end products for Scale Use, or (2) sold incorporated in subassemblies for Scale Use, including but not limited to, loadcell plus module, loadcell in a plastic housing, loadcell plus an electronic circuit and loadcell packaged in housing plus module, or (3) sold incorporated in end products not used as a pressure sensor or sensors which are competitive to any Vendor’s Group Company or (4) sold incorporated in subassemblies not used as a pressure sensor or sensors which are competitive to any Vendor’s Group Company .

8.3

Each Party shall use its best endeavours to procure that all companies directly or indirectly owned or Controlled by each party shall be bound by and observe the provisions of this Clause 8 as if they were parties covenanting with the other party in the same terms.

8.4

While the restrictions contained in this Clause 8 are considered by the Parties to be reasonable in all the circumstances, it is recognised that restrictions of the nature in question may fail for technical reasons and accordingly it is hereby agreed and declared that if any of such restrictions shall be adjudged to be void as going beyond what is reasonable in all the circumstances for the protection of the legitimate interests of the Purchaser or the Vendor, as the case may be, but would be valid if part of the wording thereof were deleted or the periods thereof reduced or the range of activities or area dealt with thereby reduced in scope the said restriction shall apply with such modifications as may be necessary to make it valid and effective.

9.1

The Vendor represents and warrants to the Purchaser that each of the statements set out in Schedule 3 is now and will at Completion be true and accurate.

9.2

The Warranties are given subject to matters fairly disclosed in the Disclosure Letter, the Accounts or any of the documents annexed to the Disclosure Letter.

9.3

The Vendor acknowledges that the Purchaser has entered into this Agreement in reliance upon the Warranties and has been induced by them to enter into this Agreement.

9.4

Without restricting the rights of the Purchaser or otherwise affecting the ability of the Purchaser to claim damages on any other basis available to it, in the event that any of the Warranties is broken or (as the case may be) proves, by way of mutual agreement between the Purchaser and the Vendor, or, if mutual agreement cannot be reached, adjudged by a court of competent jurisdiction, to be untrue or misleading, the Vendor shall, on demand, pay to the Purchaser or, at the Purchaser’s direction, the Company, the amount necessary to put the Company into the position which would have existed if the Warranties had not been broken or (as the case may be) had been true and not misleading.

Notwithstanding any other provisions in the Agreement, the Vendor hereby agrees to indemnify the Purchaser against and hold the Purchaser harmless from all damages or losses suffered by the Purchaser as a result of:

the patent infringement litigation by the SEB Group as disclosed under Warranty number 9.2(1) of the Specific Disclosures in Part B of the Disclosure Letter; and

9.5.2

the billing dispute between the Company and Precision Press Limited as disclosed under Warranty number 9.3(1) of the Specific Disclosures in Part B of the Disclosure Letter;

9.6

Each of the Warranties shall be separate and independent and, save as expressly provided to the contrary, shall not be limited by reference to or inference from any other Warranty or any other term of this Agreement.

9.7

Unless otherwise expressly provided where any statement in the Warranties is qualified by the expression “so far as the Vendor is aware” or “to the best of the Vendor’s knowledge and belief” or any similar expression, that statement shall be deemed to include an additional statement that it has been made after reasonable enquiry.

9.8

The Vendor hereby agrees with the Purchaser (for itself and as trustee for the Company) to waive any rights which it may have in respect of any misrepresentation or inaccuracy in, or omission from, any information or advice supplied or given by the Company or its officers or employees (except for any fraud or wilful concealment on the part of the Company’s officers or employees) in connection with the giving of the Warranties and preparation of the Disclosure Letter.

9.9

The Vendor hereby agrees to disclose promptly to the Purchaser in writing immediately upon becoming aware of the same, any matter, event or circumstance (including any omission to act) which may arise and become known to it after the date of this Agreement and before Completion which:-

9.9.1

constitutes a breach of or is inconsistent with any of the Warranties; or

9.9.2

has, or is likely to have, an adverse effect on the financial position or prospects of the Company.

9.10

In the event of its becoming apparent on or before Completion that the Vendor is in material breach of any of the Warranties or any other term of this Agreement the Purchaser may terminate this Agreement by notice in writing to the Vendor.

The liabilities of the Vendor under the Warranties:-

9.11.1

shall cease after two (2) years from the Completion Date except in respect of matters which have been the subject of a Relevant Claim made before such date by the Purchaser to the Vendor and except in respect of matters relating to Intellectual Property;

9.11.2

shall be limited to a maximum aggregate amount of the then remaining amount that is due from time to time of the Retained Consideration, unless in each case the Relevant Claim or Relevant Claims has/have arisen by reason of fraud or wilful concealment on the part of the Vendor or on the part of any officer of the Company or of the Vendor prior to the date of this Agreement.

9.12

No claim shall be brought against the Vendor unless written particulars thereof (stating in reasonable detail the specific matters in respect of which the Relevant Claim is made and, if practicable, the amount claimed) shall have been notified in writing to the Vendor before the expiry of a period of two (2) years from the Completion Date.

9.13

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

9.13.1

unless the amount that would otherwise be recoverable from the Vendor (but for this Clause 9.13.1) in respect of that Relevant Claim exceeds US$100,000.00; and

9.13.2

unless and until the amount that would otherwise be recoverable from the Vendor (but for this Clause 9.13.2) in respect of that Relevant Claim, when aggregated with any other amount or amounts recoverable in respect of other Relevant Claims (excluding any amounts in respect of a Relevant Claim for which the Vendor has no liability because of Clause 9.13.1), exceeds US$1,000,000.00 and in the event that the aggregated amounts exceed US$1,000,000.00 the Vendor shall only be liable for the excess.

9.14

A Relevant Claim notified in accordance with Clause 9.12 and not satisfied, settled or withdrawn is unenforceable against the Vendor on the expiry of the period of six (6) months starting on the day of notification of the Relevant Claim, unless proceedings in respect of the Relevant Claim have been properly issued and validly served on the Vendor.

9.15

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

9.15.1

to the extent that the matter giving rise to the Relevant Claim would not have arisen but for the passing of, or a change in, a law, rule, regulation, interpretation of the law or administrative practice of a government, governmental department, agency or regulatory body after the date of this Agreement or an increase in the Tax rates or an imposition of Tax, in each case not actually or prospectively in force at the date of this Agreement;

9.15.2

to the extent that the matter giving rise to the Relevant Claim arises wholly or partially from an Event before or after Completion at the request or direction of, or with the consent of, a Purchaser's Group Company (which for these purposes includes the Company only after Completion) or an authorised agent or adviser of a Purchaser's Group Company;

9.15.5

to the extent that the matter giving rise to the Relevant Claim, was taken into account in computing the amount of an allowance, provision or reserve in the Accounts or the Effective Date Accounts or was specifically referred to in the Accounts or the Effective Date Accounts or in accordance with generally accepted accounting principles, has not been so taken account of or referred to;

9.15.8

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

a claim, election, surrender or disclaimer made, or notice or consent given, or another thing done, after Completion under, or in connection with, a provision of an enactment or regulation relating to Tax by a Purchaser's Group Company the making, giving or doing of which was not taken into account in computing a provision for Tax in the Accounts or the Effective Date Accounts; or

the Company's failure or omission to make a claim, election, surrender or disclaimer, or give a notice, or consent or do another thing, under, or in connection with, a provision of an enactment or regulation relating to Tax after Completion, the anticipated making, giving or doing of which was taken into account in computing the provision for Tax in the Accounts or the Effective Date Accounts.

9.16

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

9.17

If the Purchaser becomes aware of a matter which constitutes or which would or might give rise to a Relevant Claim:

9.17.1

the Purchaser shall immediately give notice to the Vendor of the matter and shall consult with the Vendor with respect to the matter;

9.17.2

the Purchaser shall, and shall ensure that each Purchaser’s Group Company will, provide to the Vendor and its advisers reasonable access during normal business hours to premises and personnel and to relevant assets, documents and records within the power or control of each Purchaser’s Group Company for the purposes of investigating the matter and enabling the Vendor to take the action referred to in Clause 9.17.4(a);

9.17.3

the Vendor (at its cost) may take copies of the relevant documents or records, and photograph the premises or assets at reasonable hours, referred to in Clause 9.17.2;

9.17.4

the Purchaser shall, and shall ensure that each Purchaser's Group Company will:

take any action and institute any proceedings, and give any information and assistance, as the Vendor may reasonably request to:

avoid, dispute, resist, appeal, compromise, defend, remedy or mitigate the matter; or

enforce against a person (other than a Vendor's Group Company) the rights of a Purchaser's Group Company in relation to the matter; and

in connection with proceedings related to the matter (other than against a Vendor's Group Company) use advisers nominated by the Vendor and, if the Vendor requests, allow the Vendor the exclusive conduct of the proceedings in consultation with the Purchaser,

9.17.5

the Purchaser shall not, and shall ensure that no Purchaser's Group Company will, admit liability in respect of, or compromise or settle, the matter without the prior written consent of the Vendor.

In assessing any damages or other amounts recoverable for a Relevant Claim there shall be taken into account any corresponding savings by, or net benefit to, a Purchaser's Group Company.

If the Vendor pays to a Purchaser's Group Company an amount in respect of a Relevant Claim and the Purchaser or a Purchaser's Group Company subsequently recovers from another person an amount which is referable to the matter giving rise to the Relevant Claim:

9.19.1

if the amount paid by the Vendor in respect of the Relevant Claim is more than the Sum Recovered, the Purchaser shall immediately pay to the Vendor the Sum Recovered; and

9.19.2

if the amount paid by the Vendor in respect of the Relevant Claim is less than or equal to the Sum Recovered, the Purchaser shall immediately pay to the Vendor an amount equal to the amount paid by the Vendor.

For the purposes of Clause 9.19, "Sum Recovered" means an amount equal to the total of the amount recovered from the other person less any Tax computed by reference to the amount recovered from the person payable by a Purchaser's Group Company and less all reasonable costs incurred by a Purchaser's Group Company in recovering the amount from the person.

Nothing in this Agreement restricts or limits the Purchaser's general obligation at law to mitigate any loss or damage which it may incur in consequence of a matter giving rise to a Relevant Claim.

If, at any time after the date of this Agreement, the Vendor wants to insure against its liabilities in respect of Relevant Claims, the Purchaser shall provide such information as a prospective insurer may reasonably require before effecting the insurance.

The Purchaser shall, and shall ensure that the Company will, preserve all documents, records, correspondence, accounts and other information whatsoever relevant to a matter which may give rise to a Relevant Claim.

If the Purchaser or the Company becomes aware that:

9.24.1

any provision for Tax in the Accounts or the Effective Date Accounts is likely to be an overprovision (an " Overprovision "); or

9.24.2

the Company is entitled to any repayment of Tax overpaid by the Company (other than a repayment which has been shown as an asset in the Accounts or the Effective Date Accounts) and/or any interest in respect of any period before Completion (a " Repayment "),

Where it is provided under Clause 9.24 that any amount (the " Relevant Amount ") is to be dealt with in accordance with this Clause:

9.25.1

the Relevant Amount shall first be set off against any payment then due from the Vendor in respect of a Relevant Claim;

9.25.2

to the extent that there is an excess, a refund shall be made to the Vendor of any previous payment or payments made in respect of a Relevant Claim and not previously refunded under this Clause up to the amount of such excess; and

9.25.3

to the extent that the excess referred to in Clause 9.25.2 is not exhausted under that Clause, the remainder of that excess shall be carried forward and set off against future payment or payments which become due from the Vendor in respect of a Relevant Claim.

9.26

If any sum payable by the Vendor under this Clause 9 shall be subject to Tax (whether by way of deduction or withholding or direct assessment of the person entitled thereto) such payment shall be increased by such an amount as shall ensure that after deduction, withholding or payment of such Tax the recipient shall have received a net amount equal to the payment otherwise required hereby to be made.

9.27

If any potential Relevant Claim arises by reason of a liability which is contingent only or otherwise not capable of being quantified, the Purchaser shall not be entitled to enforce a Relevant Claim until such liability ceases to be contingent and becomes actual or capable of being quantified.

Notwithstanding that the Purchaser becomes aware at any time after Completion (whether or not by reason of the Disclosure Letter or any of the documents annexed to the Disclosure Letter)of a fact or circumstance which gives rise to or which would or might give rise to a Relevant Claim; the Purchaser shall not be entitled to rescind this Agreement or treat this Agreement as terminated but shall only be entitled to claim damages in respect of such matter and, accordingly, the Purchaser waives all and any rights of rescission it may have in respect of any such matter (howsoever arising or deemed to arise), other than any such rights in respect of fraud.

11.1

The Purchaser represents and warrants to the Vendor that:

11.1.1

the Purchaser has the right, power and authority, and has taken all action necessary, to execute, deliver and exercise its rights and perform its obligations under this Agreement and each document to be executed at or before Completion to which it is expressed to be a party (the “ Purchaser’s Completion Documents ”);

11.1.2

the Purchaser’s obligations under this Agreement and the Purchaser’s Completion Documents are, or when the relevant Purchaser’s Completion Document is executed will be, enforceable in accordance with their respective terms;

11.1.3

the execution and delivery of, and the performance by the Purchaser of its obligations under, this Agreement and the Purchaser’s Completion Documents will not:

result in a breach of any provision of the memorandum or articles of association or by-laws or equivalent constitutional documents of the Purchaser;

result in a breach of, or constitute a default under, any instrument to which it is a party or by which the Purchaser is bound and which is material in the context of the transactions contemplated by this Agreement;

result in a breach of any order, judgment or decree of any court or governmental agency to which the Purchaser is a party or by which it is bound or submits; or

require the Purchaser to obtain any consent or approval of, or give any notice to or make any registration with, any governmental or other authority which has not been obtained or made at the date hereof both on an unconditional basis and on a basis which cannot be revoked (save pursuant to any legal or regulatory entitlement to revoke the same other than by reason of any misrepresentation or misstatement); and

11.1.4

the Purchaser is not aware as at the date of this Agreement of any fact, matter or circumstance which might entitle the Purchaser either at Completion or with the passing of time to make a Relevant Claim against the Vendor.

11.2

The Purchaser undertakes to the Vendor for itself and as agent and trustee for each other Vendor’s Group Undertaking that (in the absence of fraud) the Purchaser:

11.2.1

has no rights against; and

11.2.2

may not make any claim against

11.3

The Purchaser represents and warrants to the Vendor that at Completion it will have immediately available on an unconditional basis (subject only to Completion) the necessary cash resources to meet its obligations under this Agreement and the Purchaser’s Completion Documents.

11.4

During the 12-month period ending on 30 November 2006, the Purchaser shall procure that the Company shall not (save with the prior written consent of the Vendor, such consent not to be unreasonably withheld or delayed):

11.4.1

sell, transfer, assign or otherwise dispose of a material part of its assets or undertaking (or any interest therein) or contract so to do in respect of Non-Conair Business or Tire Gauge Business;

11.4.2

alter the nature of its Non-Conair Business and Tire Gauge Business;

11.4.3

commence any action for winding up or dissolution;

11.4.4

save in the event of fraud or other gross misconduct, dismiss any key employee;

11.4.5

and shall procure that no Purchaser’s Group Company shall, by any positive act divert away from the Company any existing customer of the Non-Conair Business or the Tire Gauge Business .

11.5

For the purpose of Clause 11.4, “ Non-Conair Business ” shall mean the business of supplying scales by the Company to its customers other than Conair Corporation, a company incorporated in the United States of America, and its affiliates.

13.1

The Vendor shall procure that the business of the Company is operated until Completion in the same manner as it was operated prior hereto.

13.2

As from the date of this Agreement, the Vendor shall give and shall procure that the Purchaser or any persons authorised by it will for the purpose of satisfying itself as to the accuracy of the Warranties be given such access to the premises and all books, title deeds, records and accounts of the Company as the Purchaser may reasonably request and be permitted to take copies of any such books, deeds, records and accounts and that the Directors and employees of the Company shall be instructed to give promptly all such information and explanations to any such persons as aforesaid as may be requested by it or them.

13.3

The Vendor will, for a period of 18 months after Completion, and at the request of the Purchaser, and subject to the availability of the necessary and relevant documents, information or records, provide for free any and all Knowhow and technical assistance to the Purchaser, any member of the Purchaser's Group Company and the Company, for the setting up of a loadcell production line, such technical assistance, which shall include, but is not limited to following:

13.3.1

vendor list, part numbers, contact information for all materials and suppliers used in all aspect of loadcell productions;

13.3.2

complete drawing package, technical details, materials, methods, apparatus, process work instructions for saw, ETCH / release of strain gauge from wafer;

13.3.3

ability to order and/or duplicate any custom equipment developed by the Vendor used in all processes from die fab to actual loadcell production;

13.3.4

ability to build tools for fabricating loadcell substrate and documentation package for loadcell manufacturing;

13.3.5

test procedures and data for in process WIP as well as final part;

13.3.6

qualification test regimes and test data;

13.3.7

follow up support.

13.4

The Vendor undertakes to transfer, or to use its best endeavours to procure the transfer, by way of assignment, license or sub-license, as appropriate, all Intellectual Property rights that are used, or required to be used, in the conduct of the business as currently conducted by the Company and/or the Vendor’s Group Company relating to the development, manufacture, marketing, sale, distribution and promotion of scales and the Tire Gauge Business, including all rights of the same or similar effect or nature and which now or in the future may subsist.

13.5

The Vendor will, within three years of Completion, disclose to the Purchaser, any of the Purchaser’s Group Company and the Company, any and all improvements to the loadcell Knowhow and technology specifically designed for loadcells to be used in products consistent to those produced by the Company or the Vendor during the period of 18 (eighteen) months prior to the Completion Date, applicable in the field of scales and tire gauges, and shall license Purchaser, any of the Purchaser’s Group Company and the Company to use such improvements, on a non-exclusive, royalty-free basis, subject to the provisions of Section 8.2.2 hereof. 

13.6

At the Purchaser’s request, the Vendor shall exercise reasonable efforts to provide information and documents in its possession and make its employees available to Vendor or Vendor’s intellectual property counsel to assist the Company and the Purchaser’s Group Company to overcome any objection to the grant of any Company’s Intellectual Property (as defined in Schedule 3) or any action challenging the validity of the Company’s Intellectual Property and to provide all reasonable assistance to the Company and the Purchaser’s Group Company to defend any action challenging the sole and legitimate ownership of the Company in the rights, title and interest in or to the Company’s Intellectual Property.

13.7

The Vendor shall grant to the Purchaser and its subsidiaries the right to access, inspect, observe, and use on demand and without any fees or charges whatsoever from the Purchaser for 4 calendar months counting from the first working date after the Completion Date during normal business hours, and at a fee of US$10,000.00 per month thereafter, any computer software system previously used for the operation of the scale business of the Company, including but not limited to databases containing customer information, marketing records, advertising records, sales and purchase orders, delivery records, accounting information and related operating software systems;

13.8

The Vendor shall procure MSI China to grant to the Purchaser and its subsidiaries the right to use 5,000 square feet of the office premises situated at Block 4A, Tian Fa Building, Tian Au Cyber Park, Fu Tian District, Shenzhen China 518048 and to use all the furniture and fittings at the office premises that are necessary for the operation, during normal business hours, of the Company's scale and Tire Gauge Businesses in the PRC on demand and without any fees or charges whatsoever from the Purchaser for 4 calender months counting from the first working date after the Completion Date except for any operating costs (including but not limited to telephone lines rental, electricity, etc) which shall be borne by the Purchaser.

13.9

To the extent that monies are received by the Company on or after Completion in respect of any invoices issued by the Vendor or a Vendor’s Group Company on or prior to 30 November 2005 in connection with the Tire Gauge Business, the Purchaser undertakes to hold and shall procure that the Company shall hold such monies on trust for the Vendor and to pay such monies to the Vendor promptly and in any event within 7 days of receipt.

To the extent that monies are received by the Vendor or a Vendor’s Group Company on or after Completion in respect of any invoices issued by the Company on or after 30 November 2005 in connection with the Tire Gauge Business, the Vendor undertakes to hold and shall procure that the relevant Vendor’s Group Company shall hold such monies on trust for the Company and to pay such monies to the Company promptly and in any event within 7 days of receipt.

13.11

If a payment of outgoings and expenses in the ordinary course of business in respect of the Company for any period after 30 November 2005 has been or is made by the Vendor, the Purchaser shall repay to the Vendor all amount equal to such payment on the Completion Date.

13.12

If a payment is received by the Vendor or a Vendor’s Group Company on behalf of the Company on or after 1 December 2005, the Vendor or the relevant Vendor’s Group Company shall promptly remit such relevant payment into the Company’s bank account.

14.1

Each Party shall treat as confidential all information received or obtained as a result of entering into or performing this Agreement which relates to:

14.1.1

the provisions of this Agreement;

14.1.2

the negotiations relating to this Agreement;

14.1.3

the subject matter of this Agreement or

14.1.4

the other Party or any member of the MSI Group or the Purchaser’s Group (as the case may be).

14.2

The restrictions contained in Clause 14.1 shall not apply so as to prevent either Party from making any disclosure required by law or by any securities exchange or supervisory or regulatory or governmental body pursuant to rules to which the relevant Party is subject or from making any disclosure to any professional adviser for the purposes of obtaining advice (provided always that the provisions of this Clause 14 shall apply to and the relevant Party shall procure that it applies to and is observed in relation to, the use or disclosure by such professional adviser of the information provided to itself) nor shall the restrictions apply in respect of any information which comes into the public domain otherwise than by a breach of this Clause 14 by the relevant Party.

15.1

Each party to this Agreement shall pay its own costs of and incidental to this Agreement and the sale and purchase hereby agreed to be made.

15.2

The Vendor confirms that no expense of whatever nature relating to the sale of the Sale Share has been or is to be borne by the Company.

16.1

This Agreement shall be binding upon and enure for the benefit of the estates, personal representatives or successors of the Parties.

16.2

A Party may not assign, or purport to assign, all or any part of the benefit of, or its rights or benefits under, this Agreement without the prior written consent of the other Party.

16.3

This Agreement (together with any documents referred to herein or executed contemporaneously by the Parties in connection herewith) constitutes the whole agreement between the Parties and supersedes any previous agreements or arrangements between them relating to the subject matter hereof; it is expressly declared that no variations hereof shall be effective unless made in writing signed by duly authorised representatives of the Parties.

16.4

All of the provisions of this Agreement shall remain in full force and effect notwithstanding Completion (except insofar as they set out obligations which have been fully performed at Completion).

16.5

If any provision or part of a provision of this Agreement shall be, or be found by any authority or court of competent jurisdiction to be, invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions or parts of such provisions of this Agreement, all of which shall remain in full force and effect.

16.6

The Purchaser may release or compromise the liability of the Vendor hereunder or grant to the Vendor time or other indulgence.

16.7

No failure of either party to exercise, and no delay or forbearance in exercising, any right or remedy in respect of any provision of this Agreement shall operate as a waiver of such right or remedy.

16.8

Upon and after Completion either Party shall do and execute or procure to be done and executed all such further acts, deeds, documents and things as may be necessary to give effect to the terms of this Agreement and to place control of the Company in the hands of the Purchaser and pending the doing of such acts, deeds, documents and things the Vendor shall as from Completion hold the legal estate in the Sale Share in trust for the Purchaser.

16.9

This Agreement may be executed in one or more counterparts, and by the Parties on separate counterparts, but shall not be effective until each party has executed at least one counterpart and each such counterpart shall constitute an original of this Agreement but all the counterparts shall together constitute one and the same instrument.

The Accounts

1.1

The Accounts have been prepared in accordance with the requirements of all relevant applicable laws and applicable statements of standard accounting practice and with generally accepted accountancy principles and practice and show a true and fair view of the state of affairs of the Company and of its results and profits for the financial period ended on the Accounting Date.

1.2

The Accounts disclose and make adequate provision for all actual liabilities.

1.3

The Accounts disclose and make adequate provision for or note all contingent, unquantified or disputed liabilities, capital commitments and deferred or provisional Tax.

1.4

Adequate provision or reserve has been made in the Accounts for all Tax including deferred or provisional taxation which the Company was, as at the Accounting Date, or might at any time thereafter become or have become liable including (without limitation) Tax:

1.4.1

on or in respect of or by reference to the profits, gains or income for any period ended on or before the Accounting Date;

1.4.2

in respect of any event before the Accounting Date including distributions made and charges on profits, income or assets on or before such date.

1.5

The trade accounts receivable of the Company as shown in the Effective Date Accounts due from the Company’s customers other than Conair Corporation shall be collectible in full within 120 days of the Completion Date subject to the Company using all reasonable endeavours to collect the same. Notwithstanding Clause 9.11.2 of this Agreement, the liabilities of the Vendor under the Warranty contained in this paragraph 1.5 shall be limited to the maximum amount of US$120,000.00.

1.6

The Company has not factored any of its debts or entered into any financing arrangement of a type which would not require to be shown or reflected in the Accounts.

1.7

Except as disclosed in the Accounts there are at the date hereof:-

1.7.1

no loans, guarantees, material undertakings, material commitments on capital account or unusual liabilities, actual or contingent, made, given, entered into or incurred by or on behalf of the Company;

1.7.2

no mortgages, charges, liens or other similar encumbrances on the assets of the Company or any part thereof; and

1.7.3

no outstanding loan capital or other loans to the Company.

2.

Management Accounts

3.

Tax, Records and Returns

3.1

All returns, computations, notices and information made or provided or required to be made or provided by the Company for any Tax purpose have been made or given within the requisite periods and on a proper basis and when made were true and accurate in all material respects and are up to date.

3.2

The Company has not effected any transactions which would require any consent or clearance from a relevant Tax authority.

3.3

Since the date of its incorporation, neither the Company nor any director or officer of the Company has paid or become liable to pay any fine, penalty, surcharge or interest in relation to Tax.

3.4

Since the date of its incorporation and ended on the Accounting Date, there has been no major change in the nature or conduct of a trade or business of the Company nor has the scale of the activities in such a trade or business become small or negligible.

3.5

No act or transacti