NOTICE OF AUCTION

Associated Surveyors & Auctioneers Limited

An auction for sale of mortgaged fishing vessels will be held by Associated Surveyors & Auctioneers Limited at Unit A1, 10th Floor, Summit Building, 30 Man Yue Street, Hunghom, Kowloon at 11:30 a.m. and on the date specified in the auction list attached hereto ("Auction List").

Terms and conditions of the auction sale ("Conditions")

1. The Auctioneer's Capacity

Associated Surveyors & Auctioneers Limited ("Auctioneer") has received orders from the Government of the Hong Kong Special Administrative Region (“Government”) acting through the Agriculture, Fisheries and Conservation Department ("AFCD") to sell for and on behalf of the Financial Secretary Incorporated ("FSI') mortgaged fishing vessels possessed by FSI as mentioned in the Auction List in execution of a writ, warrant or other process of execution.

2. Auction List

The mortgaged fishing vessels listed in the Auction List ("fishing vessel") will be available for inspection at the location specified therein ("Location") on the date of the newspaper announcement concerning the auction of the fishing vessel.

3. Bidders' obligation to inspect

(a) Fishing vessels auctioned have usually been used and experienced wear and tear. All fishing vessels are sold with all faults and imperfections and errors of description. Bidders shall also note that the Auctioneer has not tested any electrical or mechanical goods prior to the sale (whether in respect of their ability to function, their safety of operation or otherwise) and bidders are solely responsible for testing such goods before using them.

(b) As regards any fishing vessel in which bidders are interested, each bidder undertakes:

(i) To inspect and satisfy himself prior to the sale as to the condition and description of the fishing vessel;

(ii) To rely on his own judgment as to whether the fishing vessel accords with its description; and

(iii) To seek any independent expert advice reasonable (in light of his particular expertise and the value of the fishing vessel) to satisfy himself as to authorship, attribution, authenticity genuineness, origin, date, age, provenance and condition of the fishing vessel.

(c) Bidders will be deemed to have inspected the fishing vessels and acknowledged the conditions of the fishing vessels whether an inspection of fishing vessels is made or not. Bidders will be deemed to have knowledge of all matters which they could reasonably have been expected to find out given their particular expertise and the exercise by them of reasonable due diligence.

4. Exclusion of Liability

(a) In relation to the Fishing Vessel for which a bidder has made the highest bid accepted by the Auctioneer, the Auctioneer gives no guarantees or warranties to that bidder (or his disclosed principal) ("Buyer") and any implied warranties or conditions are excluded (save in so far as such obligations cannot be excluded by statute).

(b) In particular, any representation, or oral, and including those in the Auction List, report, commentary, valuation, in relation to any aspect or quality of any fishing vessels including price or value:

(i) Are statements of opinion only; and

(ii) May be revised prior to the fishing vessels being offered for sale (including whilst the fishing vessels are in public view); and

(iii) None of the Auctioneer or any agent, employee, director of the Auctioneer shall be liable for any errors or omission in any such representation.

5. Limitation on Claims by Buyers

Without prejudice to clause 4 above, and save insofar as it relates to any liability which the Auctioneer may have for personal injury or death, any claim against the Auctioneer by the Buyer shall be limited to the price at which the fishing vessels is knocked down by the Auctioneer to the Buyer ("hammer price") with regard to those fishing vessels.

6. Government/FSI’s Liability to the Buyer

The Government/FSI’s liability to the Buyer are limited to the same extent as the Auctioneer's obligations to that Buyer. Any express or implied conditions or warranties are excluded save insofar as it is not possible to exclude obligations implied by statute.

7. At the Sale

(a) If a bidder makes a bid at auction, he does so as principal and will be held personally and solely liable for that bid, unless the Auctioneer has previously agreed with the bidder in writing that he does so on behalf of an identified third party who is acceptable to the Auctioneer. In circumstances where the Auctioneer has so agreed, both the bidder and the third party will be jointly and severally liable for all obligations arising from the bid and the third party shall be bound by these terms and conditions by the bidder's bidding as his agent in the same way as if he were bidding personally.

(b) The person who makes the highest bid accepted by the Auctioneer shall be the Buyer. The fall of the Auctioneer's hammer marks the acceptance of the highest bid and identifies the hammer price at which the goods are knocked down by the Auctioneer to the Buyer. The fall of the Auctioneer's hammer also marks the conclusion of a contract of sale between FSI/the Representative and the Buyer.

8. Payment

(a) Immediately after the conclusion of the relevant session of the Auction in which the fishing vessel was sold, the Buyer shall pay the full purchase price either within 2 hours after the fall of hammer by cashier order drawn by a licensed bank in Hong Kong made payable to the Auctioneer firm (“Associated Surveyors & Auctioneers Ltd.”) or by FPS (“Faster Payment System”).

(b) Time for payment is of the essence. The fishing vessel shall be at the Buyer's risk from the fall of the hammer and must be paid for in full and made good before title in the fishing vessel passes to the Buyer.

9. Collection of the Fishing Vessel

(a) Successful bidders are required to go to the Marine Department to apply for the necessary procedures to change the ownership of the vessel. This includes, but not limited to, submitting the Notification of Change of Particulars in Certificate of Ownership/Operating License [MD 511], the Notification of Transfer of Ownership [MD 513], and the Application for Permission for a Laid-up Vessel [MD 532], all of which are subject to the approval of the Marine Department.

(b) Once the buyer has successfully completed the application process, they will be able to make arrangements with the Agriculture, Fisheries and Conservation Department (AFCD) for the collection of the vessel.

(c) A delivery note will be issued by the Auctioneer to the Buyer immediately after payment by the Buyer for the fishing vessel ("Delivery Note"). The Buyer shall collect the fishing vessel from the Location by the time and date specified in the Delivery Note. Time of collection of fishing vessel is of the essence. The Buyer shall collect the fishing vessel in a peaceful and orderly manner.

10. Remedies for Non-payment

If a Buyer has defaulted in payment of the full purchase price for the fishing vessel in accordance with clause 8 above, or has defaulted in collecting the fishing vessels in accordance with clause 9 (in each case, a "defaulting Buyer") above, the Auctioneer shall, in its absolute discretion, and without prejudice to any other rights which the Government may have, be entitled, either for itself or as agent for the Government, to exercise any one or more of the following rights or remedies:

(a) To commence proceeding against the defaulting Buyer for damages for breach of contract;

(b) To rescind the sale of that or other fishing vessel sold to the defaulting Buyer at the same or any other auction;

(c) To apply any payments made by the defaulting Buyer as part of the purchase price or otherwise towards any costs or expenses incurred in connection with the sale of the fishing vessel;

(d) To resell the fishing vessel or cause it to be resold by public auction or private sale, and on such terms as the Auctioneer deems fit (in the case of a Buyer who defaults in paying the purchase price for the fishing vessel in accordance with clause 8 above). The net sale proceeds will be applied in reduction of the defaulting Buyer's debt. If a re-sale should result in a lower price than the original hammer price obtained, the Auctioneer and the Government/FSI shall be entitled to claim the balance from the defaulting Buyer together with any costs incurred in connection with the default Buyer's failure to make payment. If the re-sale shall result in a higher price than the original hammer price obtained, the entire re-sale proceeds together with the surplus shall be paid to the Government/FSI. In such case, the defaulting Buyer waives any claim which he may have to title to the fishing vessel and agrees that any re-sale price shall be deemed commercially reasonable;

(e) To remove, store and insure the fishing vessel at the expense of the defaulting Buyer;

(f) To retain that or any other goods sold to the same defaulting Buyer at the same or any other Auction and release it only after payment of the purchase price;

(g) To reject or ignore any bids made by or on behalf of the defaulting Buyer at any future auction; and

(h) To exercise a lien on any property of the defaulting Buyer which is in the Government/ FSI’s possession for any purpose.

11. Fishing Vessels

(a) Without prejudice to the generality of clause 3 above, fishing vessels are sold with no warranty, statement or representation that they comply in any respects with the provisions of any enactment relating to the construction and use of fishing vessels. These fishing vessels may be registered and licensed provided that the Buyer is able to satisfy the Director of Marine's requirements for such registration and licensing, including that all particulars shown on the fishing vessel have not been tampered with and that the fishing vessel in question can pass the required inspection conducted by the Marine Department. No warranty, statement or representation is given that the Director of Marine's approval will be given. The Buyer is required to register the fishing vessel in his name to effect the change in ownership or to report destruction of the fishing vessel together with the necessary documents to the Marine Department in accordance with Merchant Shipping (Local Vessels) Ordinance (Cap. 548) and any other relevant legislations of Hong Kong.

(b) Certificate of ownership number of the fishing vessel is not included in the auction sale and for identification purposes only.

(c) The Buyer shall observe the following phase in the delivery note:

(i) Subject to the final decision of the Marine Department, the successful Buyer is to be responsible for the payment of fixed penalties, other expenses and costs (if any) imposed on the fishing vessel he has acquired; and

(ii) The successful Buyer is required to comply with any requirements which may be imposed by the Marine Department and other authority (if any) on the fishing vessel he has acquired.

(d) The Buyer must also note that:

(i) In order to apply for the transfer of vessel ownership, there might be some requirements from the Marine Department such as application for a "laid-up vessel" status, submission on notification of change of particulars in the certificate of ownership or operating license.

(ii) The Agriculture, Fisheries and Conservation Department ("AFCD"), the Financial Secretary Incorporated ("FSI') and Auctioneer will not guarantee the successful application of vessel registration, transfer of ownership, and other post-documentation requirements.

(iii) All conditions of goods mentioned for sale on the auction lists shall rely on buyer's own judgement at site and the government will not guarantee the quality of good or the fitness for other purposes

12. Prevention of Bribery Ordinance (Cap. 201)

Potential bidders are reminded that they shall comply fully with the provisions of Prevention of Bribery Ordinance (Cap. 201). In particular, note shall be taken of Section 7 of this Ordinance, which relates to auction conducted by or on behalf of a public body. Copies of Section 7 (Bribery in relation to auctions) and Section 12 (Penalty for offences) of this Ordinance are freely available from the Auctioneers upon request.

13. Cartel Bidding

Bidders shall not collude with each other in their bidding or their abstention from bidding for the fishing vessels. Without prejudice to the generality of clause 16 below, the Auctioneer shall have the right to refuse admission of bidders whom the Auctioneer has reasonable ground to suspect or believe are involved in such collusion. In the event a Buyer and other colluding bidders are found to be in default of this requirement, each of them shall indemnify the Government/FSI from and against all claims, actions, liabilities, losses (including all pecuniary and financial losses), costs and expenditures which the Government/FSI may suffer or incur arising from their default.

14. Environmental Awareness in Disposal of Stores

The Buyer shall at all times comply with all applicable laws, regulations, codes of practice and other similar controls and advice made or issued by the Government or any other regulatory body relating to the protection of environment (including without limitation the prevention of pollution of any land, water or air due to the release, escape or other emission of any substance including radioactive substances or the production, transportation, storage, treatment, recycling or disposal of waste or the making of noise).

15. Personal Data (Privacy) Ordinance (Cap. 486)

The Buyer as well as its agents, shall ensure the compliance with the requirements in data protection principles under the Personal Data (Privacy) Ordinance (Cap. 486).

16. Auctioneer's Right

The Auctioneer has the right to, as its absolute discretion, to refuse to allow any person/organization to participate in the auction and to refuse admission to the auction venue to any person.

17. Governing Law

These Conditions and any amendment to them shall be governed by and interpreted and construed in accordance with the laws of Hong Kong.

18. Jurisdiction

The Auctioneer, all Buyers and bidders at the auction agree that the courts of Hong Kong are to have exclusive jurisdiction to settle any dispute (including claims for set-off and counterclaims) which may arise in connection with the validity, effect, interpretation, or performance of, or the legal relationships established by, these Conditions or otherwise arising in connection with these Conditions.

19. Severability

If any provision of these Conditions is found by any authority or court of competent jurisdiction to be illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall not affect the other provisions of these Conditions, all of which shall remain in full force and effect.

20. Personal Details

Upon the request of the Auctioneer, the Buyer and all bidders at the auction agree to provide (in a form acceptable to the Auctioneer) written confirmation of their names, permanent addresses, proofs of identity and creditworthiness.

21. Rainstorm Warning, Typhoon and Extreme Conditions

In case Tropical Cyclone Warning Signal No. 8 or above is hoisted, or a Black Rainstorm Warning Signal or “Extreme Conditions After Super Typhoons” announced by the Government, the Auctioneer would, after consulting the Government, arrange the auction on the scheduled auction date or on the next working day.

22. Miscellaneous

(a) The headings are inserted for ease of reference only and do not form part of these Conditions.

(b) No act, failure to act, or partial act by the Auctioneer or the Government/FSI shall be deemed a waiver of any of their respective rights hereunder.

(c) The singular includes the plural and vice versa, where the context requires.

(d) Each gender includes the others.

(e) These Conditions shall not be assignable by the Buyer without the prior written consent of the Auctioneer and the Government/FSI. However, these Conditions shall be binding on the Buyer, and any bidder or its successors, assigns, trustees, executors, administrators and representatives.

(f) For the purposes of these Conditions, "working day" means any day other than Saturday, Sunday, a public holiday or a gale warning day as defined in Sections 3 and 71(1) of Interpretation and General Clauses Ordinance (Cap. 1).

Special Conditions of Auction Sale

1. Purchase of Mortgaged Fishing Vessels

(a) The mortgaged fishing vessel will not be issued with a certificate of ownership or operating licence to operate in Hong Kong waters unless the mortgaged fishing vessel complies with Merchant Shipping (Local Vessels) Ordinance (Cap. 548) and its subsidiary regulations in respect of the issuance of certificate of ownership and operating licence of local vessels, including the applicant shall satisfy the Director of Marine that it is appropriate to issue the operating licence having regard to the material considerations; the mortgaged fishing vessel complies with Merchant Shipping (Prevention and Control of Pollution) Ordinance (Cap. 413) and its subsidiary regulations in respect of prevention of oil & air pollution from the vessel; the mortgaged fishing vessel has obtained all necessary consent, approval, licences, certifications, and certificates which complies with all relevant rules, regulations and laws in force at the time; and the documents to be submitted for any application, consent approval, licences, certifications, and certificates and the repairs and surveys to be carried out for the mortgaged fishing vessel to meet the above requirements shall be arranged by the Buyer at his own cost and expense.

(b) No representation or warranty whatsoever is given by the Government that the necessary issuance of certificate of ownership and operating licence by the competent authority will be given for the mortgaged fishing vessel to be registered or licensed for use in Hong Kong.

(c) The Buyer acknowledges that, unless otherwise specified against that mortgaged fishing vessel on the Auction List, no document including but not limited to any construction, past maintenance record, technical document and use of vessels will be available for issue to the Buyer.

2. Buyer shall also note that:

(a) Certificate of ownership numbers of the mortgaged fishing vessels are not included in the auction sale and for identification purposes only;

(b) Subject to the final decision of the Marine Department, the successful Buyer shall be responsible for the payment of fixed penalties, other expenses and costs, if any, imposed on the fishing vessel he has acquired; and

(c) The successful Buyer shall comply with any requirements which may be imposed by the Marine Department and other authority (if any) on the fishing vessel he has acquired.

Associated Surveyors & Auctioneers Limited

Tel : 2522 2088

Fax : 2810 6549