Exhibit 10.36
Dated the 1st day of September, 2000
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▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
and
▇▇. ▇▇ XIAOHU
and
IDG TECHNOLOGY VENTURE INVESTMENT INC.
and
SOFTBANK CHINA VENTURE INVESTMENTS NO.10 LIMITED
(as the Contracting Vendors)
and
SAWSTON DEVELOPMENTS LIMITED
(as the Purchaser)
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AGREEMENT
for the acquisition of the entire issued share capital of
SHARKWAVE ASIA PACIFIC LIMITED
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WOO, ▇▇▇▇, ▇▇▇ & LO
27th Floor, Jardine House
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
CONTENTS
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Clause Page
------ ----
1. PURPOSE AND DEFINITIONS...................................................2
2. SALE AND PURCHASE.........................................................7
3. CONSIDERATION.............................................................7
4. CONDITIONS PRECEDENT......................................................9
5. COMPLETION...............................................................13
6. REPRESENTATIONS, WARRANTIES, UNDERTAKINGS AND INDEMNITIES................13
7. RESTRICTION RELATING TO THE NEW SHARES...................................16
8. EMPLOYMENT CONTRACTS.....................................................18
9. NON-COMPETITION RESTRICTIONS.............................................19
10. CLAIMS AFTER COMPLETION..................................................19
11. ENTIRE AGREEMENT.........................................................19
12. FURTHER ASSURANCES.......................................................19
13. CONFIDENTIALITY..........................................................20
14. SUCCESSORS AND ASSIGNS...................................................20
15. TIME OF ESSENCE..........................................................21
16. NOTICES..................................................................21
17. COSTS AND EXPENSES.......................................................22
18. COUNTERPARTS.............................................................22
19. SEVERABILITY.............................................................23
20. GOVERNING LAW AND JURISDICTION...........................................23
Schedules
---------
Schedule 1A Particulars of the Company
Schedule 1B Particulars of the PRC Subsidiary
Schedule 2 Particulars of the Sale Shares and the Sale Loans
Schedule 3 Completion Requirements
Schedule 4 The Warranties
Schedule 5 Form of the Indemnity Deed
Schedule 6 Form of the Loan Assignment Deed
Schedule 7 Form of the Employment Contract
Schedule 8 Form of the Non-Competition Undertaking
THIS AGREEMENT
is made on the 1st day of September, 2000
BETWEEN :-
(1) ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of Room 207-209, North Tower, Grand
Pacific Building, 8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China ("▇▇. ▇▇▇▇▇▇▇▇▇▇");
(2) ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ of Room 207-209, North Tower Grand Pacific Bldg,
8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, People's Republic
of China ("▇▇. ▇▇▇▇");
(3) ▇▇. ▇▇ XIAOHU of ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ An Bldg., ▇▇.▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ("▇▇. ▇▇");
(4) IDG TECHNOLOGY VENTURE INVESTMENT INC. (formerly known as PTV-CHINA INC.),
a company incorporated in Massachusetts whose registered office is
situated at ▇▇/▇▇/ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of
America ("IDG");
(5) SOFTBANK CHINA VENTURE INVESTMENTS NO.10 LIMITED, a company incorporated
in the Cayman Islands whose registered office is situated at ▇.▇. ▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Softbank"); and
(6) SAWSTON DEVELOPMENTS LIMITED, a company incorporated in the British Virgin
Islands and having its correspondence address at 48th Floor, The Center,
▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "Purchaser").
WHEREAS :-
(A) (1) Sharkwave Asia Pacific Limited (the "Company") whose registered
office is situated at ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, is a company incorporated in Hong Kong under the
Companies Ordinance and is validly existing. The amount and
particulars of the share capital and certain other particulars of
the Company are as set out in Schedule 1A.
(2) Sharkwave Information Technology (Beijing) Co., Ltd. (the "PRC
Subsidiary") is a wholly foreign owned enterprise established under
the laws of the People's Republic of China and is validly existing.
The amount and particulars of the share capital and certain other
particulars of the PRC Subsidiary are as set out in Schedule 1B.
(3) The Company is the registered holder and beneficial owner of 100%
equity interest in the PRC Subsidiary.
(B) Each of the Vendors (as hereinafter defined) is the beneficial owner of
the relevant Sale Shares (as hereinafter defined) as set out against its
name in column (2) of Schedule 2 and (in the case of the Loan Vendors (as
hereinafter defined)) the relevant
1
amount of Sale Loans (as hereinafter defined) as set out against its name
in column (3) of Schedule 2, and has the right, power and authority to
sell and transfer or procure the sale and transfer of their respective
Sale Shares, and (in the case of the Loan Vendors) to assign or procure
the assignment of their respective amount of Sale Loans, free from any
claims, mortgages, charges, liens, equities or other third party rights or
encumbrances of any description.
(C) On the terms and subject to the conditions hereinafter mentioned, the
Contracting Vendors have agreed to sell or procure the sale of, and the
Purchaser has agreed to purchase or procure the purchase of, the Sale
Shares and the Sale Loans.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS :-
1. Purpose and Definitions
1.1. This Agreement sets out the terms and conditions under and subject to
which the Contracting Vendors shall sell or procure the sale of, and the
Purchaser shall purchase or procure the purchase of, the Sale Shares and
the Sale Loans.
1.2 In this Agreement (including the Recitals and Schedules), the words and
expressions set out below shall have the meanings attributed to them below
unless the context otherwise requires :-
Words Meanings
----- --------
"Accounts" means all of the Audited Accounts, the Latest Accounts
and the Completion Accounts;
"Accounts Date" means 31/st/July 2000;
"Agreement" means this agreement (including its schedules), as
the same may be amended or supplemented from time to
time;
"Applicable means accounting principles, standards and practices
Accounting generally accepted in Hong Kong;
Principles"
"Audited Accounts" means the audited consolidated accounts of the Company
comprising its balance sheet and all the notes thereto
as at 30/th/ June 2000 and its profit and loss account
for the period from 3/rd/ September 1999 to 30/th/
June 2000, a copy of which has been delivered by the
Contracting Vendors to the Purchaser prior to the
execution of this Agreement;
"Business Day"
means a day (other than a Saturday or a Sunday) on
2
which banks are open for business in Hong Kong;
"Companies Ordinance"
means the Companies Ordinance (Chapter 32 of the Laws of Hong Kong);
"Completion"
means completion of the Sale and Purchase pursuant to this Agreement and
in accordance with Schedule 3;
"Completion Accounts"
means the unaudited consolidated accounts of the Company as at the
Completion Date to be prepared in accordance with Clause 3.5, comprising
its balance sheet and all the notes thereto as at the Completion Date;
"Completion Date"
means the third Business Day after the Conditions Precedent (except the
Condition Precedent in paragraph (h) of Clause 4.1) have been fulfilled
(or waived as provided in Clause 4.4) or such other date as the
Contracting Vendors and the Purchaser may agree;
"Conditions Precedent"
means the conditions precedent as set out in Clause 4.1;
"Consideration"
means the aggregate consideration for the sale of the Sale Shares and the
sale of the Sale Loans;
"Contracting Vendors"
means ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇, IDG and Softbank;
"Designated Entity"
shall have the meaning ascribed to that term in Clause 4.5(a);
"Disclosed"
means specifically disclosed fully and fairly in writing to the Purchaser
prior to the signing of this Agreement, either in this Agreement or in the
Disclosure Bundle;
"Disclosure Bundle"
means the documents (if any) disclosed by the Contracting Vendors to the
Purchaser prior to the signing of this Agreement and contained in a bundle
of documents identified as such and initialled by or on behalf of the
Purchaser for the purposes of identification;
"Employment Contract"
means the employment contract to be entered into by ▇▇. ▇▇▇▇▇▇▇▇▇▇ with
the Company pursuant to Clause 8;
"GEM Listing Rules"
means the Rules Governing the Listing of Securities on the Growth
Enterprise Market of the Stock Exchange;
"Group Companies"
means the Company and the PRC Subsidiary, and "Group Company" shall mean
either one of them;
3
"Holding Company"
means ▇▇▇.▇▇▇ LIMITED, a company incorporated in the Cayman Islands with
limited liability;
"Holding Company Shares"
means ordinary shares of HK$0.10 each in the share capital of the Holding
Company;
"Hong Kong"
means the Hong Kong Special Administrative Region of the PRC;
"Indemnity Deed"
means a deed of indemnity to be executed by the Ordinary Shareholders in
favour of the Purchaser and the Company, in the form and substance as set
out in Schedule 5 (or in such other form as may be agreed by all the
parties thereto);
"Intel"
means Intel Pacific, Inc, a company incorporated in Delaware;
"Intellectual Property Rights"
means patents, trade marks, service marks, trade names, design rights,
copyright (including rights in computer software), rights in know-how and
other intellectual property rights, in each case whether registered or
unregistered and including applications for the grant of any such rights
and all rights or forms of protection having equivalent or similar effect
anywhere in the world;
"Latest Accounts"
means the unaudited consolidated management accounts of the Company
comprising its balance sheet and all the notes thereto as at the Accounts
Date and its profit and loss account for the period from 1/st/ July 2000
to the Accounts Date, a copy of which has been delivered by the
Contracting Vendors to the Purchaser prior to the execution of this
Agreement;
"Liabilities"
means the aggregate of all consolidated liabilities and provisions
including but not limited to shareholders loans, provisions for taxation,
bad and doubtful debts, accounts payable, dividends or other distributions
payable, all other liabilities;
"Loan Assignment Deed"
means a loan assignment deed to be executed by each of the Loan Vendors in
favour of the Purchaser (or as the Purchaser may direct), with the consent
of the Company, in the form and substance as set out in Schedule 6 (or in
such other form as may be agreed by all the parties thereto);
"Loan Vendors"
means ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇, and "Loan Vendor" shall mean
any one of them;
4
"New Shares"
means the Holding Company Shares to be issued and allotted pursuant to
Clause 3.2;
"Non-Competition Undertaking"
means the non-competition undertaking to be entered into by each of ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇ in favour of the Company and the
Purchaser, pursuant to Clause 9;
"Ordinary Sale Shares"
means 5,000,000 Ordinary Shares, representing all the issued Ordinary
Shares ;
"Ordinary Shares"
means ordinary shares of the par value of HK$0.00002 each in the share
capital of the Company;
"Ordinary Shareholders"
means ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇ ;
"PRC"
means the People's Republic of China;
"Preferred Sale Shares"
means 4,028,251 Series A Preferred Shares, representing all the issued
Series A Preferred Shares;
"Preferred Shareholders"
means IDG, Intel and Softbank;
"Sale and Purchase"
means the sale of the Sale Shares by the Vendors, the sale of the Sale
Loans by the Loan Vendor, and the acquisition of the Sale Shares and the
Sale Loans by or procured by the Purchaser, pursuant to this Agreement;
"Sale Loans"
means the entire amount of loans owing by the Company to the Loan Vendors
as at Completion;
"Sale Shares"
means the Ordinary Sale Shares and the Preferred Sale Shares, together
representing the entire issued share capital of the Company;
"Series A Preferred Shares"
means series A preferred shares of the par value of HK$0.00002 each in the
share capital of the Company;
"Stock Exchange"
means The Stock Exchange of Hong Kong Limited;
"taxation" or "tax"
means all forms of taxation whenever created or imposed and whether of
Hong Kong or elsewhere and whether imposed by a local, municipal,
governmental, state, federal or other body and, without prejudice to the
generality of the foregoing, includes profit tax, property tax, estate
duty, transfer tax, transfer duty, stamp duty, sales tax and customs,
import duty, all fines, penalties, costs, charges, expenses and interest
relating to any claim for taxation;
"Vendors"
means ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇, IDG, Intel and Softbank, and
"Vendor" shall mean any one of them;
5
"Warranties"
means the representations, warranties and undertakings set out in Clause 6
and Schedule 4 given by the Vendors and any other representations,
warranties and undertakings made by the Vendors in any other part of this
Agreement;
"HK$"
means the lawful currency of Hong Kong;
"US$"
means the lawful currency of the United States of America.
1.3 Words and phrases defined in section 2 of the Companies Ordinance shall
where the context so admits be construed as having the same respective
meanings when used in this Agreement.
1.4 References to statutory provisions shall where the context so admits or
requires be construed as references to those provisions as respectively
amended, consolidated, extended, or re-enacted from time to time, and
shall, where the context so admits or requires, be construed as including
references to the corresponding provisions of any earlier legislation
(whether repealed or not) directly or indirectly amended, consolidated,
extended, or replaced thereby or re-enacted therein, which may be
applicable to any relevant tax year or other period, and shall include any
orders, regulations, instruments or other subordinate legislation made
under the relevant statute.
1.5 References in Schedule 4 to "law(s)", "legal requirement(s)",
"legislation" and "regulation(s)" are not to be construed being confined
to the law(s), legal requirement(s), legislation and regulation(s) of any
particular jurisdiction but shall refer to all law(s), legal
requirement(s), legislation and regulation(s) in any jurisdiction
whatsoever which are applicable to or relevant to the subject matters
mentioned in any paragraph of Schedule 4.
1.6 Headings in this Agreement are for convenience only and do not form part
of and shall not affect the construction of this Agreement.
1.7 Unless the context otherwise requires, words importing the singular shall
include the plural and vice versa; words importing one gender shall
include all genders; and words importing natural persons shall include
corporations and un-incorporated associations and vice versa.
1.8 References to Clauses are to clauses hereof and references to Sub-clauses
are, unless otherwise stated, to the sub-clauses of the Clause in which
the reference appears.
1.9 The Schedules hereto form an integral part of this Agreement and shall be
construed and shall have the same full force and effect as if expressly
set out in the body of this Agreement and any reference to this Agreement
shall, unless the context otherwise requires, includes the schedules
hereto.
6
2. Sale and Purchase
2.1 Subject to the Conditions Precedent having been fulfilled (or waived as
provided in Clause 4.4) :-
(a) each of the Vendors shall as legal and beneficial owner sell the
relevant Sale Shares as set out against its name in column (2) in
Schedule 2 (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall procure Intel to sell the
relevant Sale Shares as set out against the name of Intel in column
(2) in Schedule 2), with effect from Completion free from all
claims, charges, mortgages, liens, encumbrances, equities and other
third party rights whatsoever and together with all rights attached,
accrued or accruing thereto including the right to all dividends and
distributions declared, made or paid on or after the Completion
Date, and the Purchaser shall purchase or shall procure the purchase
of the Sale Shares; and
(b) each of the Loan Vendors shall as legal and beneficial owner sell
the relevant Sale Loan of the principal amount set out against its
name in column (3) in Schedule 2 (and all outstanding Sale Loans
owing to the relevant Loan Vendor as at Completion), with effect
from Completion free from all claims, charges, mortgages, liens,
encumbrances, equities and other third party rights whatsoever and
together with all rights attached, accrued or accruing thereto on or
after the Completion Date, and the Purchaser shall purchase or
procure the purchase of the Sale Loans.
2.2 Unless otherwise elected by the Purchaser, the sale and purchase of all of
the Sale Shares and the sale and purchase of all of the Sale Loans shall
be completed simultaneously, and neither shall be completed unless both
are completed at the same time.
2.3 Each of the Contracting Vendors hereby irrevocably waive (and ▇▇.
▇▇▇▇▇▇▇▇▇▇ shall procure Intel to waive) any and all of its rights of
first refusal, pre-emptive rights and co-sale rights in relation to any
and all of the Sale Shares and Sale Loans to enable the Sale and Purchase
to proceed as contemplated under this Agreement.
3. Consideration
3.1 The Consideration shall be of the total sum of HK$132,288,306.30 (Hong
Kong Dollars One Hundred Thirty Two Million Two Hundred Eighty Eight
Thousand Three Hundred and Six and Cents Thirty Only), and:-
(a) the consideration for the Sale Loans shall be an amount equal to the
principal amount of the Sale Loans, and the consideration for the
Sale Shares shall be an amount equal to the Consideration less the
consideration for the Sale Loans ;
(b) the part of the Consideration payable to each of the Vendors for the
relevant Sale Shares and (in the case of the Loan Vendors only) the
relevant amount of Sale Loans sold by the relevant Vendor shall in
aggregate be as follows :
7
Vendor Relevant part of
------ ----------------
the Consideration
-----------------
▇▇. ▇▇▇▇▇▇▇▇▇▇ HK$36,631,764.00
▇▇. ▇▇▇▇ HK$29,305,411.20
▇▇. ▇▇ HK$7,326,352.80
IDG HK$20,634,689.50
Intel HK$19,195,044.40
Softbank HK$19,195,044.40;
(c) the Consideration shall be satisfied in the manner set out in Clause
3.2(a) and (b).
3.2 Subject to Clauses 3.3 and 3.4 and at Completion :-
(a) the Purchaser shall procure that the Consideration shall be
satisfied by the allotment and issue by the Holding Company to each
of the Vendors (or as it may direct) of such number of New Shares as
shall be determined in accordance with Clause 3.2(b), and such New
Shares shall be allotted and issued credited as fully paid at the
price of HK$5.50 per share;
(b) the number of New Shares to be allotted and issued to each Vendor
shall be determined by dividing the relevant amount of the
Consideration payable to the relevant Vendor by the amount HK$5.50,
provided that no odd lots of New Shares shall be issued (each board
lot of the New Shares currently being 2,000 shares) and any part of
the Consideration not satisfied by the New Shares shall be settled
by cash; and
(c) the Purchaser shall procure that a total of 4,128,000 New Shares be
allotted and issued by the Holding Company to the Designated Entity,
and shall pay or procure to pay a sum of HK$7,693.70 to the
Designated Entity, as referred to in Clause 4.5(a).
3.3 The New Shares to be allotted and issued to each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ and ▇▇. ▇▇ pursuant to Clause 3.2 shall be allotted and issued to
each of them in accordance with the following timetable :-
8
Date on which the relevant part of
the New Shares are to be allotted
Relevant part of the New Shares and issued
50% of the New Shares to be Upon Completion
allotted and issued to each of
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ or ▇▇.
▇▇
25% of the New Shares to be Upon the expiration of 12 months
allotted and issued to each of from the date of Completion
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ or ▇▇.
▇▇
The remaining 25% of the New Upon the expiration of 24 months
Shares to be allotted and issued from the date of Completion.
to each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇ or ▇▇. ▇▇
For the avoidance of doubt, subject only to the fulfilment (or waiver) of
the Conditions Precedent, the Vendors shall (and, in addition, ▇▇.
▇▇▇▇▇▇▇▇▇▇ shall procure Intel to) transfer all the Sale Shares and the
Loan Vendor shall assign all the Sale Loans to the Purchaser (or as the
Purchaser may direct) at Completion notwithstanding that part of the New
Shares are to be allotted and issued on dates subsequent to the date of
Completion in accordance with this Clause 3.3.
3.4 Each of the Contracting Vendors agree that any sale or dealing of the New
Shares shall be subject to the restrictions as set out in Clause 7. ▇▇.
▇▇▇▇▇▇▇▇▇▇ shall procure Intel to execute and deliver to the Purchaser on
or before Completion a deed of undertakings in favour of the Purchaser and
the Company in form and substance satisfactory to the Purchaser to reflect
the restrictions as set out in Clauses 7.2 and 7.3 in respect of the New
Shares to be issued to Intel.
3.5 The Vendors shall procure that the Completion Accounts shall be prepared
and delivered to the Vendors and the Purchaser, within 21 days after the
Completion Date. The Completion Accounts shall be prepared in accordance
with Applicable Accounting Principles consistently applied by the Group
Companies so as to give a true and fair view of the affairs of the Group
Companies, and the Completion Accounts so delivered shall be subject to
the agreement of the Purchaser.
3.6 The New Shares to be issued pursuant to Clause 3.2 shall rank pari passu
in all respects with the existing Holdings Company Shares in issue as at
the date of issue of the relevant New Shares and shall carry the right to
receive in full all dividends declared, made or paid on or after the date
of issue of the relevant New Shares.
4. Conditions Precedent
4.1 Completion of the Sale and Purchase is conditional upon the following
conditions precedent having been fulfilled (or waived in accordance with
Clause 4.4) :-
9
(a) completion to the satisfaction of the Purchaser of its due diligence
investigation of the corporate matters, the business and the
financial and other condition of the Group Companies;
(b) the Listing Committee of the Growth Enterprise Market of the Stock
Exchange granting the listing of and permission to deal in the New
Shares, either unconditionally or subject to conditions to which
neither the Vendors nor the Purchaser reasonably objects;
(c) the receipt by the Purchaser of:-
(i) legal opinions satisfactory to the Purchaser issued by legal
advisers in the PRC in relation to such questions relating to
the Group Companies and their assets and businesses, the Sale
and Purchase, and such other questions of PRC law as required
by the Purchaser;
(ii) legal opinion satisfactory to the Purchaser issued by legal
advisers in Delaware in relation to the sale by Intel of its
Sale Shares, the validity and enforceability of deeds and
undertakings to be executed by Intel as contemplated
hereunder, and such other questions of Delaware law as
required by the Purchaser;
(iii) legal opinion satisfactory to the Purchaser issued by legal
advisers in the Cayman Islands in relation to the due and
proper execution of this Agreement by Softbank, the validity
and enforceability of this Agreement against Softbank, and
such other questions of Cayman Islands law as required by the
Purchaser;
(iv) legal opinion satisfactory to the Purchaser issued by legal
advisers in the Massachusetts in relation to the due and
proper execution of this Agreement by IDG, the validity and
enforceability of this Agreement against IDG, and such other
questions of Massachusetts law as required by the Purchaser,
each of such legal opinions to be in such form and substance
acceptable to the Purchaser;
(d) the receipt by the Purchaser of a written confirmation duly executed
by the Company of its waiver in respect of its right of first
refusal against the Vendors in respect of the Sale Shares;
(e) all authorisations, registration, filings, licences, confirmations,
clearances, rulings, decisions, consents, permissions and approvals
necessary or appropriate for or in connection with the transactions
contemplated under this Agreement having been obtained or made;
10
(f) the opening of the Restricted Account by ▇▇. ▇▇▇▇▇▇▇▇▇▇ in
accordance with Clause 7.1, and the entering into of an agreement
relating to the Restricted Account between him, his relevant Account
Institution and the Purchaser in accordance with Clause 7.1(g);
(g) receipt by the Purchaser of evidence satisfactory to the Purchaser
that Intel has waived any and all its rights of first refusal,
pre-emptive rights and co-sale rights in relation to any and all of
the Sale Shares and Sale Loans;
(h) the completion of the sale by Intel of its Sale Shares and the
purchase thereof by or procured by the Purchaser, at the same time
with the completion of the sale of the other Sale Shares and the
Sale Loans by the Contracting Vendors, on the terms set out in this
Agreement;
(i) receipt by the Purchaser of evidence satisfactory to the Purchaser
that :
(i) any and all agreement and arrangement by either of the Group
Companies to grant share options or warrants (or to give
similar rights) to any employees or officers of either of the
Group Companies; and
(ii) any and all share options or warrants granted (or similar
rights given) to any employee or officer of either of the
Group Companies
have been released, cancelled, waived and surrendered by all
relevant employee or officer of all Group Companies in favour of the
Group Companies, such release, cancellation, waiver and surrender to
be unconditional except only the condition referred to in Clause
4.5(a) below; and
(j) approval of this Agreement and the transactions hereunder by the
shareholders of the Holding Company, if so required by the Stock
Exchange.
4.2 (a) Each of the Contracting Vendors and the Purchaser agrees to (and ▇▇.
▇▇▇▇▇▇▇▇▇▇ shall procure Intel to) use all its respective reasonable
endeavours to procure, as far as it is within its control, that the
Conditions Precedent in paragraphs (a), (b) and (c) of Clause 4.1
are fulfilled as early as practicable, and each of them shall give
to the other such reasonable assistance as shall be necessary for
that purpose.
(b) Each of the Contracting Vendors shall (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall
procure Intel to) procure that the Conditions Precedent in
paragraphs (d) and (e) of Clause 4.1 are fulfilled as early as
practicable. ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall further procure that the
Conditions Precedent in paragraphs (f), (g), (h) and (i) of Clause
4.1 are fulfilled as early as practicable.
11
(c) For the purpose of enabling the Purchaser to conduct its due
diligence investigation referred to in Clause 4.1(a), each of the
Contracting Vendors shall (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall procure Intel
to), in a timely manner, provide the Purchaser and its shareholders
and their respective legal, financial and other advisors and key
personnel with all documents and information as any of them may
request in connection with such due diligence investigation.
(d) Each of the Contracting Vendors and the Purchaser shall notify the
other party in writing as soon as possible following it becoming
aware of the fulfilment of the Conditions Precedent or any item
thereof (such notification to be accompanied by copies of such
documentation and/or other reasonable evidence that the Conditions
Precedent (or the relevant item thereof) have been fulfilled).
4.3 In the event that the Conditions Precedent are not fulfilled (or waived as
provided in Clause 4.4) on or before the expiry of 90 days from the date
of this Agreement, or such later date as the parties may agree, this
Agreement (except Clauses 1, 11 to 20 and this Clause 4) shall become null
and void and be of no further effect whatsoever and all the obligations
and liabilities of the parties hereunder shall cease and terminate (save
for any antecedent breaches of this Agreement).
4.4 The Conditions Precedent in any one or more of paragraphs (a), (c), (d),
(e), (f), (g), (h), (i) and (j) of Clause 4.1 (but not in any other
paragraphs) may be waived by the Purchaser at its sole absolute discretion
by sending a notice in writing to the Contracting Vendors.
4.5 (a) The release, cancellation, waiver and surrender referred to in
paragraph (i) of Clause 4.1 (in respect of any agreement,
arrangement, options, warrants and/or rights therein referred to)
shall be unconditional, except only the condition that (subject to
the Conditions Precedent having been fulfilled, or waived as
provided in Clause 4.4, and upon Completion), (i) a total of
4,128,000 New Shares be allotted and issued by the Holding Company
to an entity (the "Designated Entity") designated and notified in
writing by ▇▇. ▇▇▇▇▇▇▇▇▇▇ to the Purchaser not later than 3 Business
Days before the Completion Date, and (ii) a sum of HK$7,693.70 be
paid or procured to be paid by the Purchaser to the Designated
Entity.
(b) ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall ensure that any arrangement which may be made
by ▇▇. ▇▇▇▇▇▇▇▇▇▇ with the employees and officers of the Group
Companies and any arrangement which may be made amongst the said
employees and officers shall not give rise to or result in any
adverse impact on the employee relations, business, operations or
financial or tax position of the Group Companies or of the Purchaser
and are satisfactory to the Purchaser in all other respects. ▇▇.
▇▇▇▇▇▇▇▇▇▇ shall ensure that, in connection with the said
arrangements, no commitment will be made, and no obligation or
liability will be incurred, by any Group Company. In the event that
there is any such commitment, obligation or liability (including
without limitation, liability in relation to tax) in respect of any
Group Company, ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall indemnify the Group Company
against all losses, claims, damages, costs and expenses arising from
any such commitment, obligation or liability. The Condition
Precedent in
12
paragraph (i) of Clause 4.1 shall not be regarded as fulfilled if
the requirements of this Clause 4.5(b) are not met to the
satisfaction of the Purchaser.
5. Completion
Subject to the Conditions Precedent having been fulfilled (or waived as
provided in Clause 4.4), Completion shall take place at 4:00 p.m. on the
Completion Date at the offices of Messrs. Woo, ▇▇▇▇, ▇▇▇ & Lo at ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (or at such
other place and/or time as the Contracting Vendors and the Purchaser may
agree), at which the transactions set out in Schedule 3 shall take place
simultaneously, and each party hereto shall perform its respective
obligations set out therein at Completion.
6. Representations, warranties, undertakings and indemnities
6.1 (a) Save as Disclosed, the Ordinary Shareholders hereby unconditionally
and irrevocably represent, warrant and undertake to and in favour of
the Purchaser in the terms of the Warranties and acknowledge that
the Purchaser is entering into this Agreement strictly in reliance
on each of the Warranties.
(b) Each of IDG and Softbank hereby unconditionally and irrevocably
represents, warrants and undertakes (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall
procure Intel to represent, warrant and undertake unconditionally
and irrevocably) to and in favour of the Purchaser in the terms of
:-
(i) paragraph 2 of Schedule 4; and
(ii) all Warranties with respect to itself in Schedule 4
and acknowledges that the Purchaser is entering into this Agreement
strictly in reliance on each of those representations, warranties
and undertakings.
6.2 (a) Save as Disclosed, the Ordinary Shareholders hereby unconditionally
and irrevocably represent, warrant and undertake to and in favour of
the Purchaser that each of the Warranties and the matters Disclosed
are at the date of this Agreement, and will at all times from the
date of this Agreement up to and including Completion be, true,
complete and accurate in all material respects.
(b) Each of IDG and Softbank hereby unconditionally and irrevocably
represents, warrants and undertakes (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall
procure Intel to represent, warrant and undertake unconditionally
and irrevocably) to and in favour of the Purchaser that :-
(i) the Warranties in paragraph 2 of Schedule 4; and
(ii) all Warranties with respect to itself in Schedule 4
13
and the matters Disclosed are at the date of this Agreement, and
will at all times from the date of this Agreement up to and
including Completion be, true, complete and accurate in all material
respects.
6.3 Each of the representations, warranties and undertakings in Clauses 6.1
and 6.2 are given by the Vendors on a joint and several basis.
6.4 Pending Completion, the Vendors shall jointly and severally procure that
neither the Company nor the PRC Subsidiary shall without the prior written
consent of the Purchaser :-
(a) issue or agree to issue any of its equity or loan capital or other
securities or grant or agree to grant any option or warrant over or
right to acquire or convertible into any equity or loan capital; or
(b) borrow or otherwise raise money, or incur any indebtedness, of any
amount (other than under the Loan Agreement); or
(c) incur any liabilities or enter into any transactions, agreements or
arrangements for a value in excess of HK$100,000 (or an equivalent
amount in any other currency) either in each case or in aggregate;
or
(d) dispose or agree to dispose of or acquire or agree to acquire any
material asset for a value exceeding HK$100,000 (or an equivalent
amount in any other currency) either in each case or in aggregate;
or
(e) create or permit to arise any lien, charge, encumbrance, pledge,
mortgage or any security or other third party right or interest
(legal or equitable whatsoever) on or in respect of any of its
undertaking, property or assets or grant or issue or agree to grant
or issue any guarantee; or
(f) declare, pay or make any dividends or other distributions of any
kind whatsoever, or pay or repay any loans owing by either of the
Group Companies to any of the Vendors or any of their associates or
related companies (or any interest on any such loans); or
(g) other than to effect the appointment of the directors referred to in
Schedule 3, appoint any director; or
(h) enter into any transaction or arrangement other than for full
consideration on normal commercial terms and on an arm's length
basis; or
(i) in any respect depart from the ordinary course of its day to day
business; or
(j) increase or agree to increase the remuneration (including, without
limitation, bonuses, commissions and benefits in kind) of any of
their directors or employees or provide or agree to provide any
gratuitous payment or benefit to any such person or any of their
dependents, and no employees shall be engaged or dismissed or have
their terms of employment altered; or
(k) acquire or agree to acquire or dispose or agree to dispose of any
asset or stocks or enter into any contract other than in the normal
course of business; or
14
(l) make any payments out of or into any bank or deposit account or
increase the cash held by it or reduce current liabilities (except
for payments or receipts in the ordinary course of business); or
(m) alter or agree to alter or terminate or agree to terminate any
agreement to which they are parties or enter into any unusual or
abnormal contract or commitment; or
(n) enter into any litigation or arbitration proceedings; or
(o) terminate the existing insurance policies or do anything to render
such policies void or voidable; or
(p) enter into any agreement or arrangement to, or grant any power of
attorney or otherwise authorise any other person to, do any of the
above,
and each of the Vendors shall procure that the Purchaser be kept fully
informed of the affairs of the Group Companies at all times until the date
of Completion. Each of the Vendors further undertakes to procure that, if
any unpaid amount of the registered capital of the PRC Subsidiary shall
become due for payment before the Completion Date, such amount shall be
duly paid in full before the relevant due date.
6.5 Each of the Warranties given under and in the terms of each of Clauses
6.1, 6.2 and 6.3 is given notwithstanding any investigation which the
Purchaser may have or ought to have conducted and notwithstanding anything
which the Purchaser knows or ought to have known (whether before or after
the entering into of this Agreement).
6.6 The Vendors hereby jointly and severally, unconditionally and irrevocably,
agree with the Purchaser to indemnify, and always keep indemnified, the
Purchaser on a full indemnity basis and hold the Purchaser harmless from
and against all losses, claims, damages, costs, expenses (including legal
expenses), liabilities and reduction in value which the Purchaser may
sustain, suffer or incur in connection with the acquisition by the
Purchaser of the Sale Shares and the Sale Loans and as a result of any
breach of any of the Warranties or any of the Warranties being or becoming
incorrect, untrue or misleading, both as such Warranties are originally
given and as they are repeated on the basis and in the terms as set out in
this Clause 6.
6.7 (a) Each of the Vendors shall forthwith notify the Purchaser upon it
becoming aware of any thing or any event which may show, reveal or
cause any of the Warranties as or to be incorrect, untrue,
misleading or breached in any material respect or which may have any
material adverse effect on the assets or liabilities of the Company
or of the PRC Subsidiary.
(b) The Purchaser shall forthwith notify the Vendors upon it becoming
aware of any thing or any event which may show, reveal or cause any
warranties given by the Purchaser hereunder as or to be incorrect,
untrue, misleading or breached in any material respect.
6.8 Each of the Warranties shall be separate and independent and save as
expressly provided shall not be limited by reference to any of the other
Warranties or anything in this Agreement.
15
6.9 The liability of the Vendors in respect of any breach of the Warranties
shall be limited as follows :
(a) the Vendors shall be under no liability in respect of a breach of
any of the Warranties unless the Vendors or the relevant Vendor
shall have received written notice from the Purchaser prior to the
seventh anniversary of the Completion Date (in relation to any
Warranties in paragraph 13 of Schedule 4 or any other Warranties
relating to taxation) or the second anniversary of the Completion
Date (in relation to any other Warranties) specifying in reasonable
detail the nature of the relevant claim and any such claim shall (if
not previously satisfied, settled or withdrawn) be deemed to have
been waived at the expiration of 6 months after the seventh
anniversary or second anniversary of the Completion Date (as the
case may be) unless proceedings in respect thereof shall then have
been commenced against the Vendors or the relevant Vendor;
(b) no liability shall attach to the Vendors unless the amount in
respect of any individual claim or the aggregate amount thereof
shall exceed HK$78,000 (or the equivalent thereof) in which case the
Vendors shall be liable for the full amount thereof; and
(c) the aggregate amount of the liability of the Vendors in respect of
any claim for breach of any of the Warranties shall not exceed the
aggregate amount of (i) the Consideration under this Agreement; (ii)
the number of the New Shares allotted under Clause 3.2(c) multiplied
by HK$5.50 per share; and (iii) and the amount in cash paid or
procured to be paid by the Purchaser under Clause 3.2(c).
6.10 Notwithstanding any other provision of this Agreement, the limitations of
any kind whatsoever (including, without prejudice to the generality of the
foregoing, the limitations provided in Clause 6.9 on making claims within
particular time periods or limiting claims or the aggregate of claims to
any particular sums of money) shall not apply to any claim made hereunder
against the Vendors when such claim is based on any dishonest or
fraudulent act or omission or fraudulent misrepresentation of or by the
Vendors, gross negligence, wilful misconduct or illegality.
7. Restriction relating to the New Shares
7.1 ▇▇. ▇▇▇▇▇▇▇▇▇▇ undertakes to and agrees with the Purchaser as follows :-
(a) 80% of the New Shares to be allotted and issued to him upon
Completion in accordance with Clause 3.3 (the "Restricted
Securities") shall be deposited in an account (the "Restricted
Account") to be opened under his name and maintained with a
financial institution (the "Account Institution") proposed by him
and approved by the Purchaser;
(b) the Restricted Securities shall not be sold, mortgaged, charged,
lent or otherwise disposed of or dealt with unless ▇▇. ▇▇▇▇▇▇▇▇▇▇
shall have given a
16
written notice to the Purchaser of his intention so to do at 3
Business Days before the date of the intended disposal or dealing;
(c) in addition to the requirements in Clause 7.1(b), the intended
disposal or other dealing by ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall only be effected
by or through the Account Institution, and on the condition that all
proceeds received or derived from the disposal or other dealing
shall be deposited into, and remain in, the Restricted Account (the
"Invested Funds");
(d) at all times until the date of expiry or termination of the
Employment Contract, the Invested Funds shall not be withdrawn or
used by ▇▇. ▇▇▇▇▇▇▇▇▇▇ or by any other person, except for the
purpose of investing in debt or equity securities listed on an
internationally recognised stock exchange (and any such listed debt
or equity securities so invested, together with all income and
proceeds thereof, shall also be maintained in the Restricted Account
and subject to restrictions similar to those in this Clause 7.1);
(e) all securities and other assets derived from the Restricted
Securities shall be deposited into and maintained in the Restricted
Account, shall form part of the Restricted Securities, and shall be
subject to the same restrictions as set out in this Clause 7.1;
(f) any interest and other income derived from the Restricted
Securities, the Invested Funds and other assets in the Restricted
Account shall be maintained in the Restricted Account, shall form
part of the Invested Funds, and shall be subject to the same
restrictions as set out in this Clause 7.1;
(g) the Restricted Account shall be opened and maintained with the
Account Institution under terms reflecting the restrictions in
paragraphs (a) to (f) of this Clause 7.1, such terms to be agreed
between ▇▇. ▇▇▇▇▇▇▇▇▇▇ and the Purchaser and to be contained in an
agreement to be entered into between ▇▇. ▇▇▇▇▇▇▇▇▇▇, the Account
Institution and the Purchaser, and such agreement shall also provide
that the said restrictions shall not be varied or waived without the
prior written consent of the Purchaser;
(h) ▇▇. ▇▇▇▇▇▇▇▇▇▇ agrees and acknowledges that the Account Institution
with which he opens and maintains the Restricted Account shall be
selected by himself, and that the Purchaser shall have no obligation
or liability whatsoever in connection with the Restricted Account or
the maintenance of the Restricted Securities and Invested Funds
(notwithstanding the approval by the Purchaser of the Account
Institution and any other involvement of the Purchaser in relation
to the Restricted Account);
(i) for the avoidance of doubt, the remaining 20% of the New Shares to
be allotted and issued to ▇▇. ▇▇▇▇▇▇▇▇▇▇ upon Completion in
accordance with Clause 3.3 may be disposed of by him without any
restriction under this Agreement (other than those imposed under
Clause 7.2 below); and
(j) all costs and expenses in connection with the Restricted Account and
the maintenance and operation thereof shall be borne solely by ▇▇.
▇▇▇▇▇▇▇▇▇▇.
17
7.2 Each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇, IDG, Intel and Softbank agrees
that (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall procure each of Intel and the Designated
Entity to undertake to the Purchaser in a separate deed that) all of the
New Shares to be allotted and issued to him or it pursuant to Clause 3
shall be subject to each of the following conditions and restrictions :
(a) not more than 1% of the New Shares received by each of them may be
sold, lent, mortgaged or otherwise disposed of or dealt with in any
one trading day; and
(b) the New Shares received by each of them may be sold, lent, mortgaged
or otherwise disposed of or dealt with only if the selling price of
each New Share received by each of them shall not be less than
HK$5.50.
In relation to each of IDG, Intel and Softbank, the restriction in
paragraph (b) of this Clause 7.2 shall apply only during the period of 6
months after Completion.
7.3 In relation to the restrictions in Clause 7.2, each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
▇▇▇▇, ▇▇. ▇▇, IDG, Intel and Softbank further agrees with the Purchaser
(and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall procure each of Intel and the Designated Entity
to undertake to the Purchaser in a deed) as follows :
(a) each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇, IDG, Intel and Softbank
shall notify the Purchaser in writing the details of any sale,
lending, mortgage or other disposal or dealing of any New Share not
later than the next trading day following the relevant disposal,
dealing or agreement so to do, such notification to include the
relevant share numbers, prices, dates, the precise nature of the
disposal or dealing (with breakdowns in each case), together with
such other details as the Purchaser may request for the purpose of
monitoring the compliance of Clause 7.2;
(b) in relation to each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇, for the
purpose of calculating the 1% in Clause 7.2(a) as at any trading
day, only the New Shares already allotted and issued to the relevant
Vendor before the relevant trading day shall be taken into account;
(c) for the purpose of Clause 7.2(a), if less than one 1% of the
relevant New Shares are sold, lent, mortgaged or otherwise disposed
of or dealt with in any one trading day, the shortfall may not be
sold, lent, mortgaged or otherwise disposed of or dealt with in any
subsequent trading day; and
(d) the condition in Clause 7.2(b) shall not be regarded as fulfilled if
(even though the average selling price of a number of New Shares is
not less than HK$5.50 per share) the selling price of any of the New
Shares is less than HK$5.50.
8. Employment Contract
8.1 ▇▇. ▇▇▇▇▇▇▇▇▇▇ agrees that he shall upon Completion enter into an
employment contract with the Company in the form set out in Schedule 7
(with such variations, if
18
any, as may be agreed between ▇▇. ▇▇▇▇▇▇▇▇▇▇ and the Purchaser), on the
terms and conditions as set out therein.
8.2 Before Completion, the Purchaser and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall continue with
their discussions and negotiations in good faith regarding tax related
matters in the Employment Contract.
9. Non-Competition Restrictions
Each of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇ agrees that he shall on or
before Completion enter into a non-competition undertaking in favour of
the Company and the Purchaser in the form set out in Schedule 8, on the
terms and conditions as set out therein.
10. Claims after Completion
10.1 Subject to Clause 6.9 (which shall be without prejudice to Clause 6.10),
the representations, warranties, indemnities, undertakings and agreements
contained in this Agreement shall remain in full force and effect after
and notwithstanding Completion.
10.2 The Purchaser may take action for any breach or non-fulfilment of any of
such representations, warranties, indemnities, undertakings and agreements
given by the Vendors herein either before or after Completion.
10.3 The rights conferred upon the Purchaser by this Agreement are in addition
to, and without prejudice to, any other rights of the Purchaser and
failure to exercise any of them shall not constitute a waiver of any such
right.
11. Entire Agreement
This Agreement sets out and constitutes the entire agreement and
understanding between the parties relating to the Sale and Purchase (and
the other transactions contemplated under this Agreement) and supersedes
any previous or contemporaneous discussions, negotiations, agreements or
understandings relating thereto, whether written or oral (including the
memorandum of understanding between ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇ and
▇▇▇.▇▇▇ INTERNATIONAL LIMITED dated 12/th/ August 2000), and no party
shall rely on any representations or warranties except those expressly
stated herein.
12. Further Assurances
12.1 Subject to Completion, each of the Vendors agrees with and undertakes to
the Purchaser that at any time and from time to time upon the written
request of the
19
Purchaser, it shall do, execute and perform such further acts, deeds,
documents and things as the Purchaser may reasonably require :-
(a) effectively to vest beneficial ownership of the Sale Shares and the
Sale Loans in the Purchaser or as it may direct free from all
encumbrances;
(b) otherwise to give the full effect of this Agreement and confer the
full benefit of this Agreement on the Purchaser (or such other
person as it may direct); and
(c) for the purpose of enforcing the Purchaser's rights under this
Agreement against any third party.
12.2 ▇▇. ▇▇▇▇▇▇▇▇▇▇ undertakes to the Purchaser to procure that Intel shall
comply with, fulfill and perform all agreements and obligations of Intel
under this Agreement.
13. Confidentiality
13.1 Each of the Vendors and the Purchaser shall use its best endeavours to
keep confidential and not without the prior written approval of the other
parties to disclose to any party as to matters concerning the Sale and
Purchase, the allotment and issue of the New Shares and any transaction
contemplated hereunder and any oral or written information exchanged
between them with respect to the subject matter of this Agreement,
Provided that the above restriction shall not apply to such information
which :-
(a) is or become generally available to the public otherwise than as a
result of any unauthorised disclosure into the public domain of such
information by the relevant party; or
(b) is required to be disclosed by law or an order of a court of
competent jurisdiction or any stock exchange or any regulatory or
governmental authority or their respective rules and regulations; or
(c) is made available by any party to its legal or financial advisors or
relevant personnel, on a need to know basis, in connection with any
transaction contemplated in this Agreement provided that such legal
or financial advisor or relevant personnel is bound by
confidentiality obligations similar to those set out in this Clause
13.1.
13.2 The restrictions contained in this Clause 13 shall continue to apply after
Completion without limit in time.
14. Successors and Assigns
This Agreement shall be binding upon and enure for the benefit of
successors of the respective parties hereto but shall not be assignable.
20
15. Time of Essence
Any date or period mentioned in this Agreement may be varied or extended
by agreement of all the parties hereto, but, as regards any date or period
so varied or extended as aforesaid, or not having been so varied or
extended, time shall be of the essence of this Agreement.
16. Notices
16.1 Any notice or other communication given or to be given pursuant to this
Agreement shall be in writing sent or delivered to the party at the
address set out below or as may be notified by such party to the others :-
to ▇▇. ▇▇▇▇▇▇▇▇▇▇: Address : Room ▇▇▇-▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
to ▇▇. ▇▇▇▇: Address : Room 207-209, North Tower
Grand Pacific Bldg,
8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
to ▇▇. ▇▇: Address : ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ An Bldg.,
▇▇.▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
to IDG: Address : ▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇,
▇▇▇▇▇ ▇▇▇▇▇,
▇ Jianguomennei Dajie,
Beijing 100005
People's Republic of China
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
Attn: ▇▇. ▇▇ Jianguang
to Softbank: Address : 11/th/ Floor, Man ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇
▇▇▇▇ ▇▇▇▇
Fax no.: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attn: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇
to the Purchaser: Address : ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇
Fax no.: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attn: The Company Secretary
16.2 Any notice or other communication shall be deemed to have been received if
sent by facsimile, at the time of transmission; or if delivered
personally, when delivered.
16.3 Any notice or other communication sent by facsimile shall be deemed to
have been received upon receipt of the correct transmission report,
provided that if any such notice or other communication is sent outside
business hours, it shall be deemed to have been given on the next
succeeding Business Day.
17. Costs and expenses
17.1 Each party shall bear its own legal, accountancy and other costs and
expenses incurred in connection with the preparation, negotiation,
settlement and performance of this Agreement.
17.2 Any stamp duty and capital duty payable in connection with the Sale and
Purchase shall be borne by (i) the Vendors and (ii) the Purchaser in each
shares.
17.3 The Purchaser shall procure that any capital duty payable in connection
with the issue and allotment of the New Shares shall be borne by the
Holding Company.
17.4 Any transaction levy charged by the Stock Exchange in connection with any
New Shares shall be borne by (i) the Holding Company and (ii) the allottee
of the relevant New Shares in equal shares.
18. Counterparts
This Agreement may be signed in any number of copies or counterparts (and
by the different parties hereto on separate copies or counterparts), each
of which when so signed and delivered shall be an original, but all the
counterparts shall together constitute one and the same instrument. For
the avoidance of doubt, this Agreement shall not be binding on any party
hereto unless and until it shall have been executed by or on behalf of all
persons expressed to be party hereto.
22
19. Severability
Any provision of this Agreement being prohibited by or unlawful or
unenforceable under any applicable law actually applied by any court of
competent jurisdiction shall, to the extent required by such law, be
severed from this Agreement and rendered ineffective so far as is possible
without modifying the remaining provisions of this Agreement.
20. Governing Law and Jurisdiction
20.1 This Agreement shall be governed by and construed in all respects in
accordance with the laws of Hong Kong.
20.2 Each party hereto irrevocably agrees that the courts of Hong Kong shall
have jurisdiction to hear and determine any suit, action or proceeding,
and to settle any disputes which may arise out of or in connection with
this Agreement and for such purposes irrevocably submits to the
non-exclusive jurisdiction of such courts.
20.3 Each of the Vendors hereby irrevocably appoints the Company as its agent
to accept on its or his behalf service of process in respect of any
proceedings in the courts of Hong Kong arising out of this Agreement. If
for any reason the agent appointed above (or its successor) no longer
serves as agent of any Vendor for this purpose, such Vendor shall promptly
appoint a successor agent and notify the other parties hereto provided
that service effected on the outgoing agent shall continue to be effective
until a successor has been appointed and notified to the other parties.
Each Vendor agrees that any such legal process shall be sufficiently
served on it or him if delivered to its or his agent appointed for service
as aforesaid at the agent's registered office for the time being in Hong
Kong whether or not such agent gives notice thereof to such Vendor.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto on the
day and year first above written.
SIGNED by )
MR. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
▇▇▇▇▇▇▇▇▇▇ )
in the presence of :- )
SIGNED by )
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ )
in the presence of :- )
23
SIGNED by )
▇▇. ▇▇ XIAOHU )
in the presence of :- )
SIGNED by )
)
for and on behalf of )
IDG TECHNOLOGY VENTURE )
INVESTMENT INC. )
in the presence of :- )
SIGNED by )
)
for and on behalf of )
SOFTBANK CHINA VENTURE )
INVESTMENTS NO.10 LIMITED )
in the presence of :- )
SIGNED by )
)
for and on behalf of SAWSTON )
DEVELOPMENTS LIMITED )
in the presence of / whose signature(s) )
are verified by :- )
24
Schedule 1A
-----------
Particulars of the Company
--------------------------
1. Name of the company : Sharkwave Asia Pacific Limited
2. Registered office : ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇
3. Date of incorporation : 3 September 1999
Incorporation number : 687515
Place of incorporation : Hong Kong
4. Directors : ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇
LI Jianguang
5. Share capital Authorised : HK$10,100 divided into :-
(i) 500,000,000 Ordinary Shares of
HK$0.00002 par value each; and
(ii) 5,000,000 Series A Preferred
Shares of HK$0.00002 par value
each
Issued : HK$180.56502 divided into :-
(i) 5,000,000 Ordinary Shares of
HK$0.00002 par value each; and
(ii) 4,028,251 Series A Preferred
Shares of HK$0.00002 par value
each.
6. Shares held as follows :-
Beneficial Shareholder No. of Shares
---------------------- -------------
Registered Shareholder
----------------------
Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Mr. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,500,000 Ordinary
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Shares
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ Kok 2,000,000 Ordinary
Hui Shares
▇▇. ▇▇ Xiaohu ▇▇. ▇▇ Xiaohu 500,000 Ordinary Shares
IDG Technology Venture IDG Technology Venture 1,408,251 Series A
Investment Inc. Investment Inc. Preferred Shares
Intel Pacific, Inc. Intel Pacific, Inc. 1,310,000 Series A
Preferred Shares
25
Softbank China Venture Softbank China Venture 1,310,000 Series A
Investments No.10 Limited Investments No.10 Preferred Shares
Limited
26
Schedule 1B
-----------
Particulars of the PRC Subsidiary
---------------------------------
1. Name of the company : [Company Name in chinese]
(Sharkwave Information Technology
(Beijing) Co., Ltd.)
2. Registered address : [Address in chinese]
3. Date of incorporation : 24 December 1999
Place of incorporation : People's Republic of China
4. Directors : [Name in chinese]
[Name in chinese]
[Name in chinese]
[Name in chinese]
[Name in chinese]
5. Legal Representative : [Name in chinese]
6. Registered capital : US$2,000,000
7. Total investment : US$2,800,000
8. Registered capital held as follows :-
Registered Shareholder Beneficial Shareholder Amount of registered
---------------------- ---------------------- --------------------
capital paid up as at the
-------------------------
date of this Agreement
----------------------
Sharkwave Asia Sharkwave Asia Pacific US$1,400,000
Pacific Limited Limited
27
Schedule 2
----------
Particulars of the Sale Shares and the Sale Loans
(1) (2) (3)
Principal amount of
-------------------
Sale Loans as at the
--------------------
date of this Agreement
----------------------
Vendor Sale Shares
(a) ▇▇. ▇▇▇▇▇▇▇▇▇▇ 2,500,000 Ordinary Shares HK$471,483
(b) ▇▇. ▇▇▇▇ 2,000,000 Ordinary Shares HK$309,193
(c) ▇▇. ▇▇ 500,000 Ordinary Shares HK$154,597
(d) IDG 1,408,251 Series A Preferred (Not applicable)
Shares
(e) Intel 1,310,000 Series A Preferred (Not applicable)
Shares
(f) Softbank 1,310,000 Series A Preferred (Not applicable)
Shares
28
Schedule 3
----------
Completion Requirements
-----------------------
1. Obligations of the Vendors
--------------------------
1.1 At Completion, each of the Vendors shall (and ▇▇. ▇▇▇▇▇▇▇▇▇▇ shall procure
Intel to) deliver to the Purchaser :-
(a) the share certificate in respect of the relevant Sale Shares (as set
out against in name in column (2) in Schedule 2) in the name of the
relevant Vendor, and (where applicable) evidence reasonably
satisfactory to the Purchaser that those Sale Shares are
beneficially owned by the relevant Vendor free from encumbrances;
(b) an instrument of transfer in respect of the said relevant Sale
Shares, duly executed by the relevant Vendor as the transferor in
favour of the Purchaser or as the Purchaser may direct, together
with related sold note signed by the relevant Vendor in compliance
with the Stamp Duty Ordinance (Cap.117, Law of Hong Kong);
(c) any power of attorney or other authority under which such instrument
of transfer or sold note has been executed;
(d) a cashier order or cheque for a sum in payment of the vendors' stamp
duty on the Sale and Purchase (such sum to be calculated on the
basis of the part of the Consideration in respect of the relevant
Vendor as set out in Clause 3.1(b), and taking into account the then
market value of the New Shares to be allotted and issued to the
relevant Vendor, if higher), together with an undertaking (in a form
acceptable to the Collector of Stamp Revenue) to pay any further sum
of stamp duty.
(e) a certified true copy of the minutes of meetings of the boards of
directors of the Company and the PRC Subsidiary recording the
resolutions as set out in paragraph 1.2 of this Schedule 3;
(f) a written resignation of each of such persons (if any) as may be
required by the Purchaser to resign from their directorships and all
other offices in the Company and the PRC Subsidiary (as the case may
be) with effect from Completion, with acknowledgements executed by
each of them under seal to the effect that he or she has no claim
whatsoever against the Company or the PRC Subsidiary (as the case
may be) for compensation for loss of office or otherwise;
(g) the certificate of incorporation, business registration certificate
(if applicable), business licence (if applicable), minutes books,
other statutory books and records, common seal and company chops of
the Company and of the PRC Subsidiary, all accounts books and all
documents and papers in connection with its affairs and all
documents of title to their assets in so far as not already
delivered to the Purchaser or its agents;
29
(h) all the contracts, insurance policies (and premium receipts), and
all other documents, deeds and instruments entered into by the
Company or the PRC Subsidiary, in favour of the Company or the PRC
Subsidiary, or to which the Company or the PRC Subsidiary is
otherwise a party;
(i) a Loan Assignment Deed duly executed by each of the Loan Vendors in
respect of the relevant amount of the Sale Loans;
(j) the Indemnity Deed duly executed by ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇.
▇▇;
(k) the Employment Contract duly executed by ▇▇. ▇▇▇▇▇▇▇▇▇▇;
(l) the Non-Competition Undertaking duly executed by each of ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇ in favour of the Company and the
Purchaser; and
(m) (in the case of each Vendor which is a company or a corporation, if
not previously delivered) a certified true copy of the minutes of
meeting of the board of directors of the relevant Vendor approving
this Agreement and the execution and completion thereof and of all
documents contemplated thereunder.
1.2 The Vendors shall procure that a meeting of the board of directors of the
Company and the PRC Subsidiary (as the case may be) shall be held before
Completion, at which :-
(a) as regards the Company only, it shall be resolved that the
instrument of transfer in respect of the Sale Shares as referred to
in paragraph 1.1(b) of this Schedule 3 be approved for registration
and passed for registration by the directors of the Company, and
that new share certificates in respect of the Sale Shares made out
in the name of the Purchaser (and/or as it may direct) be sealed
with the Common Seal of the Company and issued to the Purchaser
(and/or as it may direct);
(b) the persons (if any) nominated by the Purchaser shall be appointed
directors and/or secretary of the Company or the PRC Subsidiary (as
the case may be) such appointments to take effect from Completion;
and
(c) (if required by the Purchaser) the resignations of the existing
directors and secretary of the Company and/or the PRC Subsidiary (as
the case may be) be approved, such resignations to take effect from
Completion.
2. Obligations of the Purchaser
----------------------------
2.1 At Completion, the Purchaser shall deliver to the Vendors :-
(a) share certificates in respect of the relevant New Shares (or, in the
case of ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇, those New Shares which,
in accordance with Clause 3.3, are to be allotted and issued to each
of them upon Completion) registered in the name of the relevant
Vendor (or as the relevant Vendor may direct), such certificates to
be issued in such reasonable
30
denomination as may be requested by the relevant Vendor at
reasonable time in advance;
(b) a cheque or cheques for any part of the Consideration not satisfied
by the New Shares and to be settled by cash, as referred to in
Clause 3.2(b); and
(c) (if not previously delivered) a certified true copy of the minutes
of meeting of the board of directors of the Purchaser approving this
Agreement and the execution and completion thereof and of all
documents contemplated thereunder.
31
SCHEDULE 4
THE WARRANTIES
Subject as Disclosed:-
1. INFORMATION DISCLOSED TO THE PURCHASER CORRECT
1.1 (a) All information and documents as provided by each of the Vendors to
the Purchaser or the Purchaser's auditors or legal adviser relating
to the business, activities, affairs, or assets or liabilities of
each of the Group Companies or for the purpose of the transactions
contemplated by this Agreement or for the purposes of inclusion in
any announcement or shareholders circular in connection with this
Agreement was, when given, and is now true, accurate and complete in
all material respects.
(b) All information and documents to be provided by each of the Vendors
to the Purchaser or the Purchaser's auditors or legal adviser
relating to the business, activities, affairs, or assets or
liabilities of each of the Group Companies or for the purpose of the
transactions contemplated by this Agreement or for the purposes of
inclusion in the any announcement or shareholders circular in
connection with this Agreement will, when given, be true, accurate
and complete in all material respects.
1.2 There are no material facts or circumstances, in relation to the assets,
business or financial condition of either of the Group Companies which
have not been Disclosed by each of the Vendors to the Purchaser or it's
auditors or legal adviser, and which, if Disclosed, might reasonably have
been expected to affect the decision or willingness of the Purchaser to
enter into this Agreement.
2. CORPORATE MATTERS
2.1 Directors
---------
The only directors of each of the Group Companies are the persons whose
names are listed in Schedule 1A and Schedule 1B respectively. None of the
directors of any of the Group Companies who have resigned from their
respective directorships or other offices in any of the Group Companies
prior to the execution of this Agreement or Completion has or shall have
any claim against any of the Group Companies for compensation for loss of
office or otherwise.
2.2 Interest in companies
---------------------
Save for its 100% interests in the issued share capital of the PRC
Subsidiary, the Company is not and will not at Completion be the owner or
the registered holder of any
- D-1 -
share, equity, registered or loan capital or interest in or other security
of or directly or indirectly interested in any body corporate,
partnership, consortium, joint venture or any form of equity wherever
incorporated or established or other unincorporated association or any
branch, agency or place of business, or any permanent establishment,
whether outside Hong Kong, the PRC or otherwise nor has the Company agreed
nor will it prior to Completion agree to become the owner or registered
holder of or directly or indirectly interested in any such share, interest
or security.
The PRC Subsidiary is not and will not at Completion be the owner or the
registered holder of any share, equity, registered or loan capital or
interest in or other security of or directly or indirectly interested in
any body corporate, partnership, consortium, joint venture or any form of
equity wherever incorporated or established or other unincorporated
association or any branch, agency or place of business, or any permanent
establishment, whether outside Hong Kong, the PRC or otherwise nor has the
PRC Subsidiary agreed nor will it prior to Completion agree to become the
owner or registered holder of or directly or indirectly interested in any
such share, interest or security.
2.3 Options over capital
--------------------
There are no agreements or arrangements in force which provide for the
present or future issue, allotment or transfer of or grant to any person
the right (whether conditional or otherwise) to call for the issue,
allotment or transfer of any share, interest or loan capital of the Group
Companies (including any option or right of pre-emption or conversion).
2.4 New issues of capital
---------------------
No share or loan capital has been issued or allotted, or agreed to be
issued or allotted, by any of the Group Companies (other than referred to
in the relevant Schedule 1) since the Accounts Date and there will not be
any prior to Completion.
2.5 Memorandum and articles of association, statutory books and resolutions
-----------------------------------------------------------------------
(a) Each of the Vendors has delivered or will deliver to the Purchaser
(i) complete copies of the Accounts and (ii) a true and complete
copy of the memorandum and articles of association or such other
similar constitutional documents of each of the Group Companies
containing full details of the rights and restrictions attached to
the share capital of each of the Group Companies and having attached
thereto copies of all such resolutions and agreements as are
required by law to be delivered to relevant authority for
registration and all other resolutions passed by each of the Group
Companies, other than resolutions relating to ordinary business at
any annual general meeting.
(b) Since the Accounts Date, no alteration has been made to the
memorandum or articles of association or other corresponding
constitutional documents of each of the Group Companies and no
resolution of any kind of the shareholders of either
- D-2 -
of the Group Companies has been passed and, pending Completion, no
resolution shall be passed without the prior written consent of the
Purchaser.
(c) The register of members and other statutory books of each of the
Group Companies have been properly kept and maintained in accordance
with all laws applicable thereto and contain an accurate and
complete record of the matters which they should contain.
(d) No notice or allegation that any of the foregoing is incorrect or
should be rectified has been received.
2.6 Documents filed
---------------
All returns, particulars, resolutions and documents required by any
relevant legislations to be filed with authority in Hong Kong, the PRC or
elsewhere (as the case may be) in respect of each of the Group Companies
have been duly filed and were correct; and due compliance has been made
with all the provisions of all relevant legal requirements in Hong Kong,
the PRC or elsewhere (as the case may be) in connection with the formation
of any of the Group Companies, the allotment or issue of shares,
debentures and other securities, the payment of dividends and the conduct
of its business.
2.7 Possession of documents
-----------------------
All title deeds (if any) relating to the assets of each of the Group
Companies and an executed copy of all agreements to which any of the Group
Companies is a party, and the original copies of all other documents which
are owned by or which ought to be in the possession of each of the Group
Companies are in their possession or available to their access.
2.8 Investigation
-------------
There are not pending, or in existence, any investigations or enquiries
by, or on behalf of, any governmental or other body in respect of the
affairs of any of the Group Companies.
2.9 Sale Shares and registered capital of Interest
----------------------------------------------
(a) The Sale Shares represents (and will at Completion represent) the
entire issued share capital of the Company, and subject to (d) below
is and will at Completion be free from all liens, charges,
encumbrances and third party rights whatsoever (including rights of
pre-emption). Each of the Vendors is and will at Completion be
solely beneficially entitled to and able to procure the sale and
transfer or otherwise disposal of the respective Sale Shares as set
out against its name in Schedule 2. The Company has not exercised
any lien over any of its shares and there is outstanding no call on
the Sale Shares and the Sale Shares are fully-paid.
- D-3 -
(b) The issued shares of the PRC Subsidiary which are referred to in
Schedule 1B as beneficially owned by the Company are and will at
Completion be, free from all liens, charges, encumbrances and third
party rights whatsoever and the PRC Subsidiary is and will at
Completion be solely beneficially entitled to and able to procure
the sale and transfer or otherwise disposal of such issued shares.
The PRC Subsidiary has not exercised any lien over any of such
issued shares and there is outstanding no call on any of such issued
shares and all of such issued shares are fully-paid.
(c) The issued share capital of each of the Group Companies are duly and
validly issued, fully paid and non assessable, and such issued
shares, and all outstanding shares, options and other securities of
each of the Group Companies have been issued in full compliance with
the requirements of all applicable securities laws and regulations.
(d) The Company has reserved sufficient unissued Ordinary Shares for
possible issuance upon the conversion of the Series A Preferred
Shares. Except for the conversion privileges of the Series A
Preferred Shares, there are no options, warrants, conversion
privileges, preemptive rights or other rights, or agreements with
respect to the issuance thereof, presently outstanding to purchase
or acquire any share of the Company. Apart from the exceptions noted
herein, no Ordinary Shares or Series A Preferred Shares, or shares
issuable upon exercise or exchange of any outstanding options,
warrants or rights, or other shares issuable by the Company, are
subject to any rights of first refusal or other rights to purchase
or acquire such shares (whether in favor of the Company or any other
person), pursuant to any agreement or commitment of the Company.
(e) Other than the Vendors herein, no other companies owns or has any
interest of any nature whatsoever in any shares of any class,
debentures or other securities issued by any of the Group Companies
and other than the Company, no other companies owns or has any
interest of any nature whatsoever in any shares of any class,
debentures or other securities issued by the PRC Subsidiary.
(f) Each of the Vendors or the Company is not aware of any event or
circumstances has arisen or shall arise prior to Completion which
would enable the Series A Preferred Shareholders the right to
receive the payments under Article 11C of its memorandum and
articles of association.
(g) Each of the Vendors or the Company is not aware of any event or
circumstances has arisen or shall arise prior to Completion which
would lead to a conversion of the Series A Preferred Shares.
2.10 Other corporate matters
-----------------------
- D-4 -
(a) The Company is duly incorporated and validly existing under the laws of
the Hong Kong, and the amount and particulars of its share capital and
other particulars set out in Schedule 1A are and will on Completion be
true and accurate in all respects.
(b) The PRC Subsidiary is duly incorporated and validly existing under the
laws of the PRC, and the amount and particulars of its share capital and
other particulars set out in Schedule 1B are and will on Completion be
true and accurate in all respects.
(c) Each of the Group Companies has full power, authority and legal right to
own its assets and carry on its business and is not in receivership or
liquidation, it has taken no steps to enter liquidation and no petition
has been presented for winding up of any of the Group Companies and there
are no grounds on which a petition or application could be based for the
winding up or appointment of a receiver of any of the Group Companies.
(d) Each of the Series A Preferred Shareholders is duly incorporated or
established and is validly existing under the laws of its relevant
jurisdiction of incorporation, with full power and authority to own, lease
and operate its properties and assets and to execute and perform its
obligations under this Agreement.
(e) The execution, delivery and performance by each of the Series A Preferred
Shareholders of this Agreement has been duly authorised by it and this
Agreement constitutes a legal, valid and binding obligation of each of the
Ordinary Shareholders and the Series A Preferred Shareholders enforceable
in accordance with its terms, subject to the laws of bankruptcy and other
similar laws affecting the rights of creditors generally.
(f) Each of the Vendors is not: (i) in breach of the terms of, or in default
under, any instrument, agreement or order to which it is a party or by
which it or its property is bound; or (ii) involved in or the subject of
any current or pending investigation or proceedings (whether
administrative, regulatory or otherwise), to an extent which is material
in the context of the transactions herein contemplated.
2.11 Sale Loan
---------
(a) Each of the Loan Vendors is and will at Completion be the sole legal and
beneficial owner of the relevant amount of the Sale Loans as set out
against its name in Schedule 2.
(b) The Sale Loans is and will at Completion be valid and subsisting, due and
owing in full from the Company to each of the Loan Vendors without default
and be free from all liens, charges, prior equities, encumbrances,
compromises, releases, waivers and dealings of any nature whatsoever or
any agreement for any of the same.
(c) Each of the Loan Vendors has and will have at Completion the right, power
and authority to sell and transfer the full legal and beneficial ownership
and his benefit of and in the Sale Loans to the Purchaser in the manner as
set out in the Loan Assignment Deed.
- D-5 -
(d) Each of the Loan Vendors has not previously assigned or agreed to assign
his relevant Sale Loans to any third party whether absolutely or
conditionally.
3. FINANCIAL MATTERS
3.1 Financial Statements
--------------------
(a) The Accounts :-
(i) have been prepared in good faith and in accordance with the
Applicable Accounting Principles;
(ii) comply in all material respects with all other applicable
ordinances, statutes and regulations;
(iii) are true, accurate and complete in all material respects with
regard to the capital commitments, assets and liabilities
(actual and contingent), profits and loss and the financial
position of each of the Group Companies as at the date to
which the Accounts were made up and of the results for the
financial period ended on such date and are not materially
affected by any unusual or non-recurring items not disclosed
therein;
(iv) make provision for all material liabilities of each of the
Group Companies as at the date to which the Accounts were
made up including, without limitation, all taxation, bad and
doubtful debts, depreciation, amortization, and all disputed,
deferred or contingent liabilities or capital or burdensome
commitments of each of the Group Companies whether liquidated
or unliquidated were properly noted in the notes to the
balance sheets; and
(v) fully disclose all the assets of each of the Group Companies
as at the date to which the Accounts were made up,
and no notice or allegation that any of the above is incorrect has
been received by each of the Vendors or either of the Group
Companies.
(b) All the accounts, books, ledgers and records of whatever nature of
each of the Group Companies have been fully and properly maintained
so that they accurately present and reflect in accordance with the
Applicable Accounting Principles all transactions entered into by
any of the Group Companies or to which any of them has been a party.
3.2 Valuation of stock-in-trade and work in progress
------------------------------------------------
(a) In the Accounts, the stock-in-trade and work in progress of each of
the Group Companies has been treated in accordance with the
Applicable Accounting
- D-6 -
Principles.
(b) In the Accounts, all redundant, obsolete and slow-moving
stock-in-trade has been written off or written down, as appropriate.
3.3 Depreciation of fixed assets
----------------------------
In the Accounts, the fixed assets of each of the Group Companies have been
depreciated in accordance with the Applicable Accounting Principles.
3.4 Deferred taxation
-----------------
Deferred tax is fully provided for in the Accounts based on the liability
method, in respect of timing differences between profit as computed for
taxation purposes and profit as stated in the financial statements to the
extent that the liability will crystallise in the foreseeable future.
3.5 Books and records
-----------------
(a) All the accounts, books, ledgers, financial and other records
(including but not limited to statutory and accounting records), of
whatsoever kind, of each of the Group Companies :-
(i) are in its possession or access;
(ii) have been fully properly and accurately kept, completed and
brought up to date;
(iii) do not contain any material inaccuracies or discrepancies of
any kind;
(iv) give and reflect a true and fair view of its trading
transactions, and its financial, contractual and trading
position; and
(v) have been properly kept and maintained in accordance with
relevant laws applicable thereto,
(b) All accounts, documents and returns required by law to be delivered
or made by each of the Group Companies to any government authority
or regulatory body or any other authority have been duly and
correctly delivered or made and no notice or allegation that any of
them is materially incorrect or should be rectified has been
received by any of the Vendors or any of the Group Companies.
3.6 Position since Accounts Date
----------------------------
(a) Since the Accounts Date and compared to the Accounts, there has been
no adverse
- D-7 -
change in the financial or trading position or in the prospects of
any of the Group Companies and no event, fact or matter has occurred
which is likely to give rise to any such change.
(b) Since the Accounts Date and compared to the Accounts:
(i) the business of each of the Group Companies has not been
affected by any abnormal factor not affecting to a similar
extent generally all companies carrying on similar
businesses;
(ii) full and proper records and books of accounts of the
transactions dealings and affairs of each of Group Companies,
have been and will be kept, and full and proper entries have
been and will be made;
(iii) no fixed asset or stock has been written up nor any debt
written off, and no unusual or abnormal contract has been
entered into by any of the Group Companies;
(iv) there has been no deterioration in the turnover or the
finance or trading position or prospects of any of the Group
Companies;
(v) none of the Group Companies has, by doing or omitting to do
anything, prejudiced its goodwill and its goodwill will not
be prejudiced in any way as a result of the execution of this
Agreement or of any other matters contemplated by this
Agreement or of any other things;
(vi) none of the Group Companies has disposed and will not prior
to Completion dispose of any assets other than in the
ordinary course of business, and no material capital
expenditure nor material liabilities (including contingent
liabilities) have been or will be incurred by it before
Completion;
(vii) no resolutions have been passed by any of the Group Companies
in general meetings or by the directors in directors'
meetings and nothing has been or will be done prior to
Completion in the conduct or management of the affairs of any
of the Group Companies which may reasonably be considered as
likely to prejudice the interests of the Purchaser;
(viii) none of the Group Companies has given nor agreed to give any
guarantee, indemnity or surety putting it under a prospective
or contingent liability that may remain after the date
hereof;
(ix) no dividend or other distribution has been declared, paid or
made by any of the Group Companies;
- D-8 -
(x) there has been no material change in the level of borrowing
or in the working capital requirements of any of the Group
Companies;
(xi) all transactions between any of the Group Companies and any
of the Vendors or their respective group have been on an
arm's length basis and commercial terms;
(xii) no contract, liability or commitment (whether in respect of
capital expenditure or otherwise) has been entered into by
any of the Group Companies which is of a long term or unusual
nature or which involved or could involve an obligation of a
material nature or magnitude;
(xiii) no debtor has been released by any of the Group Companies on
terms that it pays less than the book value of its debt and
no material debt owing to any of the Group Companies has been
deferred, subordinated or written off or has proved to any
extent irrecoverable;
(xiv) no change has been made in terms of employment and any
benefits in kind payable to employees and other employment
related matters by any of the Group Companies or any of the
Vendors (other than those required by law) which could
materially increase the total costs attributable to
employment and employee benefits of any of the Group
Companies;
(xv) there has been no material increase or decrease in the levels
of debtors or creditors or in the average collection or
payment periods for the debtors and creditors respectively of
any of the Group Companies; and
(xvi) none of the Group Companies has repaid any borrowing or
indebtedness in advance of its stated maturity.
(c) The trading prospects, financial position or business of each of the
Group Companies have not been adversely affected as a result of any
event or circumstances arising since the Accounts Date and no such
adverse effect is expected by any of the Group Companies within the
immediate future.
3.7 Working Capital
---------------
Having regard to existing bank and other financial facilities (including
financial support from the Purchaser) each of the Group Companies has
sufficient working capital available to it as at the date of this
Agreement and up to Completion to enable it to continue to carry on its
business in its present form and at its present level of turnover and for
the purpose of performing in accordance with their terms all orders,
projects and other obligations and discharging all liabilities which ought
properly to be discharged.
4. DEBT POSITION
- D-9 -
4.1 Bank and other borrowings
-------------------------
(a) None of the Group Companies has outstanding borrowing or
indebtedness in the nature of borrowing directly or indirectly
created, incurred, assumed or guaranteed or with respect to which
any of them has otherwise become directly or indirectly liable
(including, without limitation, any indebtedness for moneys borrowed
or raised under any acceptance credit, bond, note, ▇▇▇▇ of exchange
or commercial paper, finance lease, hire purchase agreement or
commitments, trade bills (other than those on terms normally
obtained), forward sale or purchase agreement or conditional sale
agreement or other transaction having the commercial effect of a
borrowing) other than:
(i) the Intra-Group Loans; and
(ii) moneys borrowed from or otherwise owed to third parties which
do not exceed HK$200,000 (other than the liability accrued in
the Latest Accounts) in aggregate for all of the Group
Companies.
(b) No material outstanding indebtedness of any of the Group Companies
has become payable by reason of default by any of the Group
Companies (as the case may be) and no event of default has occurred
or is pending which with the lapse of time or the fulfilment of any
condition or the giving of notice may result in any such
indebtedness becoming so payable prior to maturity.
(c) All amounts outstanding and appearing in the books of any of the
Group Companies as loan accounts or as due to directors or
shareholders wholly represent money or moneys worth paid or
transferred to any of the Group Companies or remuneration accrued
due and payable for services rendered and (save for such
remuneration and save for dividends) no part thereof has been
provided directly or indirectly out of the assets of any of the
Group Companies.
4.2 Liabilities
-----------
(a) There are no liabilities (including contingent liabilities) which
are outstanding on the part of any of the Group Companies other than
those liabilities incurred in the ordinary and proper course of
business since the Accounts Date.
(b) There has been no exercise, purported exercise or claim for any
charge, lien, encumbrance or equity over any of the assets of any of
the Group Companies and there is no dispute directly or indirectly
relating to any of its assets.
(c) There are no debts owing to any of the Group Companies other than
trade debts incurred in the ordinary and usual course of business
which do not exceed HK$200,000 (other than the liability accrued in
the Latest Accounts) in aggregate
- D-10 -
for any of the Group Companies as a whole.
4.3 Continuation of facilities
--------------------------
(a) In relation to all debentures, acceptance credits, overdrafts, loans
or other financial facilities outstanding and owing by, or available
to any of the Group Companies (referred to in this paragraph as
"facilities"):
(i) there has been no contravention of or non-compliance with any
provision of any of those documents;
(ii) there has not occurred any event of default or any other
event or circumstance which would entitle any person to call
for early repayment and no steps for the early repayment of
any indebtedness have been taken or threatened;
(iii) there have not been nor are there any circumstances whereby
the continuation of any of the facilities might be
prejudiced, or which might give rise to any alteration in the
terms and conditions of any of the facilities;
(iv) none of the facilities is dependent on the guarantee or
indemnity of any security provided by any party other than
the Company or the PRC Subsidiary (as the case may be);
(v) none of the Vendors has knowledge or information that, as a
result of the transactions contemplated in this Agreement,
any of the facilities might be terminated or mature prior to
its stated maturity; and
(vi) none of the Vendors or the Group Companies has received any
notice to repay under any agreement relating to any borrowing
or indebtedness in the nature of borrowing which is repayable
on demand.
5. EFFECT OF TRANSACTIONS CONTEMPLATED UNDER THIS AGREEMENT
5.1 (a) none of the Vendors, having made due and careful enquiries, has
knowledge, information or belief that after the entering into of
this Agreement (whether by reason of an existing agreement or
arrangement or otherwise) or as a result of any other matter
contemplated under this Agreement and none of the Group Companies
will lose the benefit of any right or privilege which it enjoys.
(b) Neither the execution of this Agreement nor the compliance with the
terms of this Agreement does and will:-
(i) conflict with, or result in the breach of, or constitute a
default under, any
- D-11 -
of the terms, conditions or provisions of applicable law,
rule or regulation or the articles of association, other
constitutional documents or the certificates business licence
or permits of any of the Group Companies that enable it to
carry on the business or operations now operated by it or
contravene the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, note, lease or other agreement or instrument
binding upon any of the Group Companies that, singly or in
the aggregate, is material to any of the Group Companies, or
any judgement, rule or regulation, order or decree of any
governmental body, agency or court having jurisdiction over
any of the Group Companies and will not result in the
creation or imposition of any lien, charge, encumbrance or
other restriction upon any assets of each of the Group
Companies;
(ii) relieve any person from any obligation to any of the Group
Companies or cause any person to determine any such
obligation or any right or benefit enjoyed by any of the
Group Companies, or to exercise any right, whether under an
agreement with or otherwise in respect of any of the Group
Companies;
(iii) result in the creation, imposition, crystallisation or
enforcement of any encumbrance whatsoever on any of the
assets of any of the Group Companies; and
(iv) result in any present or future indebtedness of any of the
Group Companies becoming due and payable or capable of being
declared due and payable prior to its stated maturity.
5.2 Conduct of businesses in accordance with memorandum and articles of
-------------------------------------------------------------------
association or other constituted documents
------------------------------------------
Each of the Group Companies has at all times carried on business and
conducted its affairs in all respects in accordance with its memorandum
and articles of association, business licence or other corresponding
constitutional documents for the time being in force and any other
documents to which it is or has been a party.
5.3 Agreements restricting business
-------------------------------
(a) None of the Group Companies is a party to any agency,
distributorship, marketing, purchasing, manufacturing or licensing
agreement or arrangement, or any restrictive trading or other
agreement or arrangement which in any way restricts its freedom to
carry on the whole or any part of its business in any part of the
world.
(b) None of the Group Companies is a party to any undertaking or
assurances given
- D-12 -
to any court or governmental agency which is still in force.
6. REGULATORY MATTERS
6.1 (a) Each of the Group Companies has obtained all licences, permissions,
approvals, orders, registration, authorisations and consents
required for carrying on its business effectively in the places and
in the manner in which such business is now carried on. All
consents, regulatory or corporate approvals, orders, authorizations
or registrations, qualifications, designations, declarations or
filings with any governmental authority, agency or political
subdivision thereof, or any other entity ("Governmental
Authorizations") on the part of any of the Group Companies and any
of the Vendors required in connection with the execution, delivery
and performance by any of the Vendors and by any of the Group
Companies of this Agreement in order to consummate the transactions
contemplated herein shall have taken place or been obtained, in
accordance with all applicable laws and regulations, at or prior to
Completion, and shall be unconditional and are in full force and
effort at Completion. The offer, sale and issuance or conversion of
the Sale Shares in conformity with the terms of this Agreement.
(b) The licences, permissions, authorisations and consents referred to
in paragraph (a) are in full force and effect, not limited in
duration or subject to any unusual or onerous conditions, have been
complied with in all material respects.
(c) None of the Group Companies has received any indication that any of
the licences, permissions, authorisations or consents referred to in
paragraph (a) will or are likely to be revoked or not renewed, in
whole or in part, in the ordinary course of events (whether as a
result of the acquisition of the Sale Shares by the Purchaser or
otherwise).
6.2 (a) Each of the Group Companies has conducted its business and corporate
affairs in all material respects in accordance with its business
licence and with all applicable laws and regulations in accordance
with the applicable laws and regulations of its relevant
jurisdiction.
(b) None of the Group Companies is in default of any order, decree or
judgement of any court or any governmental or regulatory authority
in accordance with the applicable laws and regulations of its
relevant jurisdiction.
6.3 Powers of attorney and authority
--------------------------------
Neither any power of attorney given by any of the Group Companies, nor any
authority (express or implied) by which any person may enter into any
contract or commitment to do anything on behalf of them, is in force other
than those as referred to in this Agreement or necessitated in the usual
and ordinary course of business of any of the
- D-13 -
Group Companies.
6.4 There are no legal or government proceedings pending against any of the
Group Companies in Hong Kong, the PRC or elsewhere challenging the
effectiveness or validity of the events and transactions contemplated by
this Agreement and no such proceedings are threatened or contemplated by
any governmental agencies in Hong Kong, the PRC or elsewhere.
7. THE ASSETS
7.1 Ownership
---------
Each of the assets included in the Accounts of each of the Group Companies
or acquired by it since the Accounts Date is the absolute property of each
of the Group Companies. Save as disclosed in the Accounts, those assets
are not the subject of any security interest or any assignment, equity,
option, right of pre-emption, royalty, factoring arrangement, leasing or
hiring agreement, hire purchase agreement, conditional sale or credit sale
agreement, agreement for payment on deferred terms or any similar
agreement or arrangement (or any agreement or obligation, including a
conditional obligation, to create or enter into any of the foregoing).
7.2 Status of Proprietary Assets
----------------------------
(a) Each of the Group Companies has full title and ownership of, or is
duly licensed to use, all assets that are necessary to enable it to
carry on its business as now conducted and as presently proposed to
be conducted without any conflict with or infringement of the rights
of others (the "Proprietary Assets").
(b) No third party has any ownership rights, title, interest, claim in
or lien on any of the Group Companies' Proprietary Assets and there
has not occurred any event of default or any other event or
circumstance which may entitle any third party to terminate any
agreement or licence in respect of the provision of such facilities
or services (or any event or circumstance which with the giving of
notice and/or the lapse of time and/or a relevant determination
would constitute such an event or circumstance) and each of the
Group Companies has taken, and in the future it will use its best
efforts to take, all steps reasonably necessary to preserve its
legal rights in, and the secrecy of, all its Proprietary Assets,
except those for which disclosure is required for legitimate
business or legal reasons.
(c) None of the Group Companies has received any notice or claim of, nor
does it have any knowledge of, any infringement or misappropriation
by any of them of the asserted rights of others and none of the
Group Companies is aware of any infringement or misappropriation by
others of its respective Proprietary Assets. Each of the Group
Companies has taken all reasonable steps necessary or appropriate to
establish and maintain its ownership of its Proprietary Assets.
- D-14 -
(d) None of the Group Companies is aware that any of its employees of
any of them is obligated under any contract or other agreement, or
subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of its best
efforts to promote the interest of any of them or that would
conflict with any of the their business as proposed to be conducted.
(e) None of the Group Companies believe it is or will be necessary to
utilize any inventions, trade secrets or proprietary information or
any of its employees made prior to their employment by any of them,
except for inventions, trade secrets or proprietary information that
have been assigned to any of them.
7.3 Adequacy of Assets
------------------
(a) The assets of each of the Group Companies and the facilities and
services to which each of the Group Companies has a contractual
right include all rights, properties, assets, facilities and
services necessary for the carrying on of the business of each of
the Group Companies in the manner in which it is currently carried
on.
(b) The assets of each of the Group Companies and the facilities and
services to which each of the Group Companies has a contractual
right include all assets, facilities and services necessary to
enable each of the Group Companies to conduct its business after
Completion in the same manner as it was conducted immediately prior
to Completion.
7.4 Condition
---------
(a) All the plant, machinery, systems, equipment and vehicles used by
each of the Group Companies :
(i) are in a good state of repair (fair wear and tear excepted)
and have been regularly and properly maintained in accordance
with appropriate technical specifications, safety regulations
and the terms and conditions of any applicable agreement;
(ii) are capable of being efficiently and properly used for the
purposes for which they were acquired or are retained;
(iii) are not dangerous, inefficient, obsolete or in need of
renewal or replacement.
7.5 Insurances
----------
- D-15 -
(a) The business, undertakings, properties and other assets of each of
the Group Companies are adequately insured against such risks as are
normally insured by persons carrying on similar businesses in Hong
Kong and such insurances include all the insurances which each of
the Group Companies is required under the terms of any leases or any
contracts in respect of any of its properties to undertake and such
insurances are in full force and effect and there are no
circumstances which could render any of such insurances void or
voidable and all due premiums in respect thereof have (if due) been
paid.
(b) Each of the Group Companies has obtained, or will obtain (within
fifteen (15) days of Completion) and will maintain, fire and
casualty insurance policies with extended coverage, sufficient in
amount (subject to reasonable deductibles) to allow it to replace
any of its properties that might be damaged or destroyed.
(c) No claim is outstanding by either of the Group Companies under any
such policy of insurance and, to the best knowledge of each of the
Vendors, there are no circumstances likely to give rise to such a
claim.
8. MILLENNIUM COMPLIANCE AND INTELLECTUAL PROPERTY RIGHTS
8.1 The computer systems and any related hardware and software of each of the
Group Companies (the System) are Millennium Compliant.
8.2 Registered Rights
-----------------
(a) Each of the Group Companies is the sole legal owner of all
Intellectual Property Rights registered or sought to be registered
in any jurisdiction which are held or beneficially owned by each of
the Group Companies and save as the disclosed there are no pending
applications of any Intellectual Property Rights and any licence or
other agreement therefor to which any of the Group Companies is a
party thereto are
(b) No act has been done or omitted to be done and no event has occurred
or is likely to occur which can reasonably be expected render any of
such Intellectual Property Rights subject to revocation, compulsory
licence, cancellation or amendment or may prevent the grant or
registration of a valid Intellectual Property Right pursuant to a
pending application.
(c) The Company is and will before Completion be the sole sole legal
owner of the domain name ▇▇▇.▇▇▇▇▇▇.▇▇▇ (the "Domain Name") properly
registered under its name in the relevant jurisdiction in which it
is held and the Domain Name is not subject to any licence,
agreements or any third party rights whatsoever. Save for the Domain
Name, none of the Group Companies has registered and there are no
pending applications for any other domain names nor is there any
agreements or arrangements, licence of domain names which any of the
Group Companies is
- D-16 -
entitled to or for the benefit of any of the Group Companies. The
Company will cause to be registered the Domain Name as a
Intellectual Property Right or procure to be done all such acts
which is necessary for the protection of the Domain Name in any part
of the world.
8.3 Infringement
------------
(a) None of the operations of any of the Group Companies infringes any
rights held by any third party or involve the unauthorised use of
confidential information disclosed to any of the Group Companies in
circumstances which can reasonably be expected to entitle a third
party to make a claim against any of the Group Companies.
(b) No claim has been made by any third party which alleges any
infringing act or process which would fall within paragraph (a)
above or which otherwise disputes the right of any of the Group
Companies or any of its employees or consultants to use any
Intellectual Property Rights relating to its business and none of
the Vendors is aware of any circumstances (including any act or
omission to act) likely to give rise to such a claim.
(c) There exists no actual or threatened infringement by any third party
of any Intellectual Property Rights held or used by any of the Group
Companies (including misuse of Confidential Information) or any
event likely to constitute such an infringement nor has any of the
Group Companies acquiesced in the unauthorised use by any third
party of any such Intellectual Property Rights.
8.4 Intellectual Property Licences
------------------------------
All licences, sub-licences or assignments granted to any of the Group
Companies in respect of any Intellectual Property Rights used by it are
Disclosed to the Purchaser and none of the Group Companies is in default
under any such licences, sub-licences or assignments.
8.5 Loss of Rights
--------------
No Intellectual Property Rights owned or used by any of the Group
Companies and no licence of Intellectual Property Rights of which any of
the Group Companies has the benefit will be lost, or will be rendered
liable to any right of termination or cessation by any third party, by
virtue of the transactions contemplated by this Agreement.
8.6 Records and Software
--------------------
(a) All the accounting records and systems (including but not limited to
computerised accounting systems) of any of the Group Companies are
recorded, stored, maintained or operated or otherwise held by any of
them and are not wholly or
- D-17 -
partly dependent on any facilities or systems which are not under
the exclusive ownership or control of any of the Group Companies.
(b) Each of the Group Companies is licensed to use all software
necessary to enable it to continue to use its computerised records
for the foreseeable future in the same manner in which they have
been used prior to the date of this Agreement and does not share any
user rights in respect of such software with any other person.
8.7 Computer Systems and Software
-----------------------------
(a) All software supplied by or used by each of the Group Companies (all
"Software") is fit in all respects for its intended purpose, of
satisfactory quality, performs in all respects in accordance with
its specifications and user or other manuals or documentation and
does not contain any defect or feature which does or may adversely
affect its performance or the performance of any other software,
hardware or system. None of the Group Companies has at any time had
any dispute with any person relating to the functionality, quality
or fitness for purpose of the Software or relating to its compliance
with its specifications or with any warranties given by any of the
Group Companies or any other person relating to it.
(b) All Software, hardware and equipment owned or used by any of the
Group Companies or used or operated by third parties on behalf of
any of the Group Companies in relation to its business, which
performs or is or may be required to perform functions involving
dates or the computation of dates or containing date-related data,
has the programming, design and performance capabilities to ensure
that:-
(i) it will not suffer or cause a malfunction of the type
referred to in (a) above; and
(ii) it will not be adversely affected by, nor require changes in
inputting or operating practices nor produce invalid or
incorrect output or results, nor cause any abnormal ending
scenario or suffer any diminution in functionality or
performance as a result of the date change at the end of the
twentieth century or the input, processing, storage or use of
dates up to and including 31 December 2001.
(iii) All date-related data stored electronically by or on behalf
of any of the Group Companies is in such a form that its
input, processing, storage or use by or on behalf of any of
the Group Companies will not, directly or indirectly, cause a
malfunction of the type referred to in (ii) above in any
Software, hardware or equipment.
(c) Each of the Group Companies has taken all reasonable steps to ensure
that all Software and all software used by it is free of any virus
and none of the Group
- D-18 -
Companies has any grounds for believing that any virus has or will
come into contact with the Software and all software used by it.
(d) Each of the Group Companies has security procedure in place to
prevent the unauthorised access, amendment or damage to, or use of,
any of the Group Companies data or data of third parties held on any
of the Group Companies computer systems or Software by any third
party, and no such unauthorised access, amendment, damage or use has
taken place.
(e) Each of the Group Companies has access to the source code of
Software licensed or sub-licensed to it through and subject to
source code deposit agreements between the owner(s) of the copyright
in such Software and appropriate deposit agents.
9. CONTRACTUAL MATTERS
9.1 Material Contracts
------------------
Save as disclosed in the Accounts, there is not outstanding any material
agreement or material arrangement to which any of the Group Companies is a
party:
(a) which, by virtue of the transactions contemplated by this Agreement
or other performance of the terms of this Agreement, will result in:
(i) any other party being relieved of any obligation or becoming
entitled to exercise any right (including any right of
termination or any right of pre-emption or other option); or
(ii) any of the Group Companies being in default under any such
agreement or arrangement or losing any benefit, right or
licence which it currently enjoys or in a liability or
obligation of any of the Group Companies being created or
increased;
(b) to which the Purchaser or its group is a party or in which any
connected person (as defined under the Listing Rules) is interested
or from which any such person takes benefit, whether directly or
indirectly.
(c) which has been entered into otherwise than by way of a bargain at
arm's length and on commercial terms.
(d) which establishes any guarantee, indemnity, suretyship, form of
comfort or support (whether or not legally binding) given by any of
the Group Companies in respect of the obligations or solvency of any
third party.
(e) pursuant to which any of the Group Companies has sold or otherwise
disposed of any Group Companies or business in circumstances such
that it remains subject to
- D-19 -
any liability (whether contingent or otherwise) which is not fully
provided for in its Accounts.
(f) which, upon completion by the relevant Group Company of its work or
the performance of its other obligations under it, is likely to
result in a loss for the relevant Group Company which is not fully
provided for in its Accounts or which either is not expected to make
a normal profit margin or involves an abnormal degree of risk.
(g) which establishes any joint venture, consortium, partnership or
profit (or loss) sharing agreement or arrangement to which any of
the Group Companies is a party.
(h) which constitutes any power of attorney given by any of the Group
Companies or any other authority which would enable any person not
employed by the relevant Group Company to enter into any contract or
commitment on behalf of the relevant Group Company.
(i) which involves or is likely to involve: (i) material expenditure by
any of the Group Companies; or (ii) material obligations or
restrictions of any of the Group Companies of an unusual or
exceptional nature or magnitude and not in the ordinary and usual
course of business.
(j) which establishes any material agency, distributorship, marketing,
purchasing, manufacturing or licensing agreement or arrangement to
which any of the Group Companies is a party.
(k) which is a currency and/or interest rate swap agreement, asset swap,
future rate or forward rate agreement, interest cap, collar and/or
floor agreement or other exchange or rate protection transaction or
combination thereof or any option with respect to any such
transaction or any other similar transaction to which any of the
Group Companies is a party.
(l) which is any other agreement or arrangement having or likely to have
a material effect on the financial or trading position or prospects
of any of the Group Companies.
(m) which is a bid, tender, proposal or offer which, if accepted, would
result in any of the Group Companies becoming a party to any
agreement or arrangement of a kind described in paragraphs (a) to
(l) above.
9.2 Defaults
--------
- D-20 -
(a) None of the Group Companies is in material default under any
agreement to which it is a party and there are no circumstances
likely to give rise to any such material default.
(b) No party with whom any of the Group Companies has entered into any
agreement or arrangement is in default under such agreement or
arrangement and there are no circumstances likely to give rise to
any such default or incapable of performing its obligations or
granting any rights thereunder.
9.3 Binding Obligations
-------------------
None of the Vendors and the Group Companies is aware of the invalidity of,
or a ground for termination, avoidance or repudiation of, any agreement,
arrangement or obligation to which any of the Group Companies is a party
(the "Contracts") which will or is likely to have a material adverse
impact on the business or operations of any of the Group Companies. No
party with whom any of the Group Companies has entered into a Contract has
given notice of its intention to terminate, or has sought to repudiate or
disclaim, the relevant Contract which will or is likely to have a material
adverse impact on the business or operations of any of the Group
Companies. The obligations of the parties to the Contracts are legal,
valid, binding and enforceable in accordance with their respective terms.
10. LITIGATION AND INVESTIGATIONS
10.1 Litigation
----------
(a) None of the Vendors and the Group Companies is a plaintiff or
defendant in or otherwise a party to any litigation, arbitration or
administrative proceedings which are in progress or threatened or
pending by or against or concerning any of the Group Companies or
any of its assets.
(b) So far as any of the Vendors is aware, no governmental or official
investigation or inquiry concerning any of the Group Companies is in
progress or pending.
(c) None of the Vendors is aware of any circumstances which are likely
to give rise to any such proceeding, investigation or inquiry as is
referred to in paragraph (a) or paragraph (b).
(d) There is no action, suit, proceeding, claim, arbitration or
investigation ("Action") pending (or, to the best knowledge of each
of the Group Companies and each of the Vendors, currently
threatened) against any of the Vendors or any of the Group
Companies, any Group Companies activities, properties or assets or,
to the best of knowledge of any of the Group Companies and the
Vendors, against any officer, director or employee of any of the
Group Companies in connection with such officer's, director's or
employee's relationship with, or actions taken on behalf of
- D-21 -
any of the Group Companies. To the best knowledge of any of the
Group Companies and any of the Vendors, there is no factual or legal
basis for any such Action that might result, individually or in the
aggregate, in any material adverse change in the business,
properties, assets, financial condition, affairs or prospects of the
Companies. There are no Actions pending or, to the best knowledge of
any of the Group Companies and any of the Vendors, threatened (or
any basis therefor), relating to the prior employment of any of the
Group Companies employees or consultants, their use in connection
with any of the Group Companies business of any information,
technology or techniques allegedly proprietary to any of their
former employers, clients or other parties, or their obligations
under any agreements with prior employers, clients or other parties.
None of the Group Companies is a party to or subject to the
provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality and there is no Action
by any of the Group Companies currently pending or which it intends
to initiate.
(e) There is no dispute with any revenue or other official, department
in Hong Kong, the PRC or elsewhere, in relation to the affairs of
any of the Group Companies, and to the best information and belief
of each of the Vendors and the Group Companies there are no facts
which may give rise to any dispute.
(f) There is no unsatisfied judgment order or decree of any court
tribunal or any governmental agency outstanding against any of the
Group Companies or which may have an adverse effect upon any of the
Group Companies or its business, operations, assets or liabilities
or any part of the same.
(g) No event has occurred causing, or which upon intervention or notice
by any third party may cause, any floating charge created by any of
the Group Companies, to crystallise or any charge created by it to
become enforceable, nor has any such crystallisation occurred nor is
such enforcement in process.
11. DIRECTORS AND EMPLOYEES
11.1 Employees
---------
Save as otherwise agreed in writing between Mr. Demopolous and the
Purchaser as soon as practicable on or after the signing of this
Agreement, none of the Group Companies has entered into any arrangements
regarding any future variation in any contract of employment in respect of
any of its directors and employees or any agreement imposing an obligation
on any of the Group Companies to increase the basis and/or rates of
remuneration and/or the provision of other benefits in kind to or on
behalf of any of its directors or employees at any future date.
11.2 Compliance
----------
- D-22 -
Each of the Group Companies has in relation to each of its employees (and
so far as relevant to each of its former employees) complied in all
material respects with all statutes, regulations, codes of conduct,
collective agreements, terms and conditions of employment, orders and
awards relevant to their conditions of service or to the relations between
it and its employees (or former employees, as the case may be) or any
recognised trade union.
11.3 No Breach by Employee
---------------------
To the best knowledge of each of the Group Companies and each of the
Vendors, no employee or consultant of any of the Group Companies is
obligated under any agreement (including licenses, covenants or
commitments of any nature) or subject to any judgment, decree or order of
any court or administrative agency, or any other restriction that would
interfere with the use of his or her best efforts to carry out his or her
duties for the respective Group Companies or to promote the interests of
the respective Group Companies or that would conflict with the business of
any of the Group Companies as proposed to be conducted. The carrying on of
each of the Group Company's business by the employees and contractors of
such Group Companies and the conduct of its business as presently
proposed, will not, to the best knowledge of each of the Group Companies
and each of the Vendors, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees or contractors or
any of the Group Companies is now obligated. To the best knowledge of each
of the Group Companies and each of the Vendors, at no time during the
conception of or reduction of any of the Group Companies' Proprietary
Assets to practice was any developer, inventor or other contributor to
such patents operating under any grants from any governmental entity or
agency or private source, performing research sponsored by any
governmental entity or agency or private source or subject to any
employment agreement or invention assignment or nondisclosure agreement or
other obligation with any third party that could adversely affect any of
the Group Company's rights in such Proprietary Assets.
11.4 Incentive Schemes
-----------------
Save as Disclosed, none of the Group Companies has in existence (or is
proposing to introduce) any share incentive scheme, share option scheme or
profit sharing scheme for all or any of its directors or employees.
11.5 Payments on Termination
-----------------------
Except to the extent (if any) to which provision or allowance has been
made in the Accounts of each of the Group Companies:
(a) no outstanding liability has been incurred by any of the Group
Companies for breach of any contract of employment or for services
or for long service or redundancy payments, protective awards,
compensation for dismissal or for any
- D-23 -
other liability accruing from the termination of any contract of
employment or for services, and no such liability will be incurred
by any of the Group Companies as a result of the acquisition of the
Sale Shares by the Purchaser or other performance of the terms of
this Agreement;
(b) no gratuitous payment has been made or benefit given (or promised to
be made or given) by any of the Group Companies in connection with
the actual or proposed termination or suspension of employment, or
variation of any contract of employment, of any present or former
director or employee of any of the Group Companies;
(c) there is not in existence any contract of employment with any
director or employee of any of the Group Companies, nor any
consultancy agreements with any of the Group Companies, which cannot
be terminated by three months' notice or less without giving rise to
any claim for damages or compensation (other than a statutory
redundancy payment or statutory compensation for unfair dismissal).
11.6 Retirement Benefits
-------------------
Save for the mandatory contributions under the social security
participation or other contributions as required by the applicable laws of
Hong Kong, the PRC or elsewhere, there are no occupational retirement
schemes, retirement benefits, pension, provident, superannuation, share
option, share incentive, life assurance, disability or similar schemes,
arrangements or obligations of either of the Group Companies for any of
its employees or any of their spouses or dependants. Neither of the Group
Companies has any obligation (whether legally binding or established by
custom other than long service payment liability under the applicable laws
of Hong Kong, the PRC or elsewhere) to pay any pension, allowance or
gratuity or make any other payment on termination of service, death or
retirement or to make any payment for the purpose of providing any similar
benefits to or in respect of any of its employees or any spouse or
dependant of any such persons and is not a party to any scheme or
arrangement having as its purpose or one of its purposes the making of
such payments or the provision of such benefits. Neither of the Group
Companies has any proposals to establish any such schemes, arrangements or
obligations.
12. INSOLVENCY ETC.
(a) No order has been made, petition presented or meeting convened for
the purpose of considering a resolution for the winding up of any of
the Group Companies or for the appointment of any provisional
liquidator. No petition has been presented for an administration
order to be made in relation to any of the Group Companies, and no
receiver (including any administrative receiver) has been appointed
in respect of the whole or any part of any of the property, assets
and/or undertaking of either of the Group Companies.
- D-24 -
(b) No composition in satisfaction of the debts of any of the Group
Companies, or scheme of arrangement of its affairs, or compromise or
arrangement between it and its creditors and/or members or any class
of its creditors and/or members, has been proposed, sanctioned or
approved.
(c) No distress, distrain, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole
or any part of any of the property, assets and/or undertaking of any
of the Group Companies.
(d) No facts are known to any of the Vendors or any of the Group
Companies which are likely to result in any such proceedings being
brought by or against any of the Group Companies or against any
person for whose acts or defaults any of the Group Companies may be
vicariously liable or in respect of which any of the Group Companies
is liable to indemnify any party concerned therein.
13. TAXATION
13.1 Administration
--------------
(a) All returns, notifications, documents, computations and payments
which should be or should have been made by any of the Group
Companies for any taxation purpose have been duly made within the
requisite periods and are up-to-date, correct and on a proper basis
and to the best of the belief and knowledge of each of the Vendors
none of them is or is likely to be the subject of any dispute with
taxation authorities whether in the Hong Kong, the PRC or elsewhere.
All such information was when provided and remain complete and
accurate and all such returns and notices were when provided and
remain complete and accurate and were made on a proper basis.
(b) All particulars which had been furnished to taxation authorities
whether in the Hong Kong, the PRC or elsewhere, in connection with
the application for any consent or clearance on behalf of any of the
Group Companies or affecting any of them, fully and accurately
disclosed all facts and circumstances material for the decision of
those authorities; and all such consents or clearances are valid and
effective; and any transaction, for which consent or clearance has
previously been obtained, has been carried into effect (if at all)
only in accordance with the terms of the relative application and
consent or clearance.
(c) None of the Group Companies has taken any action which has had, or
might have, the result of altering, prejudicing or in any way
disturbing any arrangement or agreement which it has previously
negotiated with any taxation authorities.
(d) No tax authority has agreed to operate any special arrangement
(being an arrangement which is not based on a uniform application of
the relevant
- D-25 -
legislation whether expressly provided for in the relevant
legislation or operated by way of extra statutory concession or
otherwise) in relation to either of the Group Companies.
13.2 Taxation claims, liabilities and reliefs
----------------------------------------
(a) None of the Group Companies has received any notice or allegation
from any tax authorities that it has not complied with any relevant
legal requirement relating to registration or notification for
taxation purposes and is not involved in any dispute or
investigation with any tax authority and there are no facts or
matters which it reasonably believes will cause any such dispute or
investigation or any liability for taxation (present or future).
(b) None of the Group Companies is or will become liable to pay, or make
reimbursement or indemnity in respect of, any taxation (or any
amount corresponding to taxation) in consequence of the failure by
any other person to discharge that taxation or amount within any
specified period or otherwise, where the taxation or amount relates
to a profit, income or gain, transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur (whether
wholly or partly) prior to Completion.
(c) No relief (whether by way of deduction, reduction, set-off
exemption, repayment or allowance, or otherwise) from, against or in
respect of any taxation has been claimed and/or given to any of the
Group Companies which could or might be effectively withdrawn,
postponed, restricted or otherwise lost as a result of any act,
omission, event or circumstance arising or occurring at any time
after Completion.
(d) None of the Group Companies is under any liability to pay any
penalty or interest in connection with any taxation.
(e) Each of the Group Companies has paid all taxation for which they are
respectively liable to all relevant fiscal authority on the due date
for payment thereof other than liabilities for any taxation (which
together with any sums due and payable to any taxation authorities
in respect of emoulments paid and benefits provided to the employees
of any of the Group Companies in 13.8 below) that do not in
aggregate exceeds HK$100,000 for all of the Group Companies;
(f) Each of the Group Companies has made all deductions and withholdings
in respect or on account of taxation which it is required or
entitled by any relevant legislation to make from any payments made
by it including, without limitation, interest annuities or other
annual payments, royalties, rent, remuneration payable to employees
or sub-contractors or payments to a non-resident and where
appropriate each of the Group Companies has accounted in full to the
relevant fiscal authority for any taxation so deducted or withheld.
- D-26 -
(g) Each of the Group Companies has taken all necessary steps to obtain
any repayment of or relief from taxation available to it.
(h) None of the Group Companies has made and is not under any obligation
to make any payment of interest which is or may be wholly or partly
be disallowed as deductions against its profits.
(i) None of the Vendors is aware of any event or circumstance which has
occurred and which can reasonably be expected to give rise to a
claim under the Indemnity Deed.
13.3 Carrying forward of losses
--------------------------
Nothing has been done, and no event or series of events has occurred,
which might cause in relation to any of the Group Companies the
disallowance of the carrying forward of losses or excess charges under the
provisions of relevant tax legislation.
13.4 Transactions not at arm's length
--------------------------------
(a) None of the Group Companies owns or has agreed to acquire any asset,
the consideration for the acquisition or provision of which was or
will be determined otherwise than on an arm's length basis.
(b) None of the Group Companies has engaged in any transaction in
respect of which there may be substituted for any purpose of
taxation a different consideration for the actual consideration
given or received by it.
13.5 Stamp duty
----------
(a) Each of the Group Companies has duly paid all stamp duty and
interest, fines and penalties thereon payable in accordance with the
provisions of the Stamp Duty Ordinance (Chapter 117) (if applicable)
or any other similar legislation in the Hong Kong, the PRC, or
elsewhere whether or not the due date for payment has passed.
(b) Since the Accounts Date, no further liability or contingent
liability for taxation has arisen otherwise than as a result of
trading activities in the ordinary course of business of any of the
Group Companies.
13.6 Sufficient records
------------------
Where applicable, each of the Group Companies has sufficient and accurate
records relating to past events during the period from the date of
incorporation to Completion to
- D-27 -
calculate the tax liability or relief which would arise on any disposal or
realisation of any asset owned at the date to which the Accounts were made
up or acquired since such date.
13.7 Capital allowances
------------------
(a) All expenditure which any of the Group Companies incurred on the
provision of machinery or plant has qualified (if not deductible as
a trading expense of the trade carried on by any of the Group
Companies as the case may be) for allowances under the applicable
tax legislation.
(b) All capital allowances made or to be made to any of the Group
Companies in respect of capital expenditure incurred prior to the
date of this Agreement or to be incurred under any subsisting
commitment have been made in taxing its trade.
13.8 Employees
---------
(a) All sums due and payable to any taxation authority in respect of
emoluments paid and benefits provided to the employees of any of the
Group Companies at the date of this Agreement have been paid other
than liabilities for any taxation (which together with any
liabilities for any taxation due and outstanding from either of the
Group Companies under 13.2 (e) to any fiscal authority) that do not
in aggregate exceeds HK$100,000 for all of the Group Companies and
all such deductions and retentions as are required under the laws of
Hong Kong or any applicable laws to any of the Group Companies have
been made.
(b) All remuneration, compensation payments, payments on retirement or
removal from an office or employment and other sums paid or payable
to employees or officers or former employees or officers of any of
the Group Companies and all interest, annuities, royalties, rent and
other annual payments paid or payable by any of the Group Companies
(whether before or after the date hereof) pursuant to any obligation
in existence at the date hereof are and will (on the basis of the
taxation legislation in force at the date hereof) be deductible for
incomes tax purposes either in computing the profits of any of the
Group Companies or as a charge on the income of any of the Group
Companies.
14. ENVIRONMENTAL COMPLIANCE
14.1 (a) Each of the Group Companies is in full compliance with the
Environmental Laws (as defined below), which compliance includes,
but is not limited to, the possession by each of the Group Companies
of all permits and other government authorizations required under
applicable Environmental Laws and compliance with the terms and
conditions thereof. No Group Companies has received any
communication (written or oral), whether from a governmental
authority, citizens group, employee, or otherwise, that alleges that
it is not in such full compliance
- D-28 -
and, to the best knowledge of each the Group Companies and each of
the Vendors, there are no circumstances that may prevent or
interfere with such full compliance in the future.
(b) There is no Environmental Claim (as defined below) pending or
threatened against any Group Companies or any person or entity whose
liability for an Environmental Claim which any of the Group
Companies has retained or assumed either contractually or by
operation of law.
(c) There are no past or present actions, activities, circumstances,
conditions, events, or incidents, including, without limitation, the
release, emission, discharge, presence, or disposal of any Material
of Environmental Concern (as defined below), that could form the
basis of any Environmental Claim against any Group Companies or any
person or entity whose liability for any Environmental Claim a Group
Companies has retained or assumed either contractually or by
operation of law.
In this Agreement, "Environmental Claim" means any claim, action, cause of
action, investigation, or notice (written or oral) by any person or entity
alleging potential liability (including, without limitation, potential
liability for investigation costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal injuries, or
penalties) arising out of, based on, or resulting from: (i) the presence,
or release into the environment, of any Material of Environmental Concern
at any location, whether or not owned or operated by any party; or (ii)
circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law. "Environmental Laws" means all laws and regulations
of any jurisdiction relating to pollution or protection of human health or
the environment (including, without limitation, ambient air, surface
water, ground water, land surface, or subsurface strata), including,
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Materials of Environmental
Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern and "Materials of Environmental
Concern" means chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum, and petroleum products.
15. INTERESTED PARTY TRANSACTIONS
To the best knowledge of each of the Group Companies and each of the
Vendors, no officer or director of any of the Group Companies or any
affiliate or associate of any such person has had, either directly or
indirectly, a material interest in: (a) any person or entity which
purchases from or sells, licenses or furnishes to any of the Group
Companies any goods, property, technology, intellectual or other property
rights or services; or (b) any contract or agreement to which any of the
Group Companies is a party or by which it may be bound or affected.
- D-29 -
16. BUSINESS PLAN
The business plan prepared by each of the Group Companies and delivered to
the Purchaser at or prior to the date hereof (the "Business Plans") were
prepared in good faith and is not materially misleading.
17. NO OTHER BUSINESS
The Company was formed solely to acquire and hold an equity interest in
the PRC Subsidiary and since its formation has not engaged in any
business, has not incurred any liability except in the ordinary course of
acquiring and holding its equity interest in the PRC Subsidiary and has
never carried on and is not carrying on any business in Hong Kong, the PRC
or elsewhere.
18. DISCLOSURE
Each of the Group Companies has fully provided the Purchaser with all the
information that the Purchaser has reasonably requested for deciding
whether to purchase the Sale Shares and all information that each of the
Group Companies believes is reasonably necessary to enable the Purchaser
to make such decision. Neither this Agreement nor any other statements or
certificates made or delivered in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading.
19. OTHER REPRESENTATIONS AND WARRANTIES RELATING TO THE PRC SUBSIDIARY
(a) The incorporation and operation documents relating to the PRC
Subsidiary are valid and have been duly approved or issued (as
applicable) by competent PRC authorities.
(b) All consents, approvals, authorizations, permits and licenses
requisite under the PRC laws, rules and regulations for the due and
proper establishment and operation of the PRC Subsidiary in
accordance with the Business Plans have been duly obtained from the
relevant and competent PRC authorities and are in full force and
effect.
(c) All relevant consent, filings, approvals and registrations with the
relevant PRC governmental or regulatory authorities required in
respect of the PRC Subsidiary and its operations, including but not
limited to the registrations with the Ministry of Foreign Trade and
Economic Cooperation and/or its local entity, the State
Administration of Industry and Commerce and/or its local entity, the
State Administration for Foreign Exchange and/or its local entity,
the Ministry of
- D-30 -
Information Industry and/or its local entity, the China Securities
Regulatory Committee, the tax bureau, customs authorities, product
registration authorities and PRC health regulatory authorities have
been duly completed in accordance with the relevant rules and
regulations and all necessary procedures, applications have been
made or are in the process of making in relation to the applications
for such relevant consent, filings, approvals and registrations with
the relevant PRC governmental or regulatory authorities and to the
opinion of a PRC legal counsel confirming no forseeable obstacles in
law or otherwise is expected in obtaining such relevant consent,
filings, approvals and registrations with the relevant PRC
governmental or regulatory authorities where the same has not been
obtained by any of the Group Companies before the date of this
Agreement or prior to Completion.
(d) The registered capital of the PRC Subsidiary as they become due has
been fully paid up and all the equity interests therein are duly
vested in the Group Companies as investor and owner in accordance
with applicable PRC laws, rules and regulations. The Company legally
and beneficially owns one hundred percent (100)% equity interest in
the PRC Subsidiary. There are no outstanding rights, or commitments
made by the PRC Subsidiary or any of the Group Companies, to
purchase or sell any equity interest in the PRC Subsidiary.
(e) The PRC Subsidiary is not in receipt of any letter or notice from
any relevant authority notifying revocation of any permits or
licenses issued to it for non-compliance or the need for compliance
or remedial actions in respect of the activities carried out
directly or indirectly by the PRC Subsidiary.
(f) With respect to the land use rights, building property and
investments held by the PRC Subsidiary, the PRC Subsidiary has
exclusive, full and unimpaired legal and beneficial ownership of its
respective rights, property and investments free from any mortgages
or security interests of any nature, third party rights, conditions,
orders or other restrictions and has obtained all necessary
approvals and effected all necessary registrations with government
authorities with respect thereto.
(g) With respect to the property which the PRC Subsidiary leases, so far
as the Vendors or the Company are aware, it is in compliance with
such leases and holds a valid leasehold interest free of any lien
and encumbrance and no charge, rights of security or third party
rights of any kind whatsoever have been created or agreed to be
created or permitted to arise over any of such property.
(h) All requisite formalities in respect of the importation of the
machinery, equipment, parts, tools and materials by the PRC
Subsidiary have been and will be complied with in accordance with
the relevant PRC laws, rules and regulations.
(i) The PRC Subsidiary has been conducting and will conduct its business
activities within the permitted scope of business or it otherwise
operating its business in full
- D-31 -
compliance with all relevant legal requirements, including without
limitation, producing, processing and/or distributing products with
all requisite consents, authorisations, licenses, permits and
approvals granted by competent PRC authorities.
(j) In respect of consents, authorisations, approvals, licenses or
permits requisite for the conduct of any part of the PRC
Subsidiary's business which are subject to periodic renewal, neither
the Company, the PRC Subsidiary nor any shareholder has any reason
to believe that such requisite renewals will not be granted by the
relevant PRC authorities.
(j) All applicable laws, rules and regulations with respect to the
opening and operation of foreign exchange accounts and foreign
exchange activities of the PRC Subsidiary, including, where
applicable, the registration of foreign exchange laws, have been and
will continue to be fully complied with, and all requisite approvals
from the State Administration of Foreign Exchange and/or its local
entity in relation thereto have been duly obtained.
(k) With regard to employment and staff or labour management, the PRC
Subsidiary has complied with all applicable PRC laws, rules and
regulations, including without limitation, laws, rules and
regulations, pertaining to welfare funds, social benefits, medical
benefits, insurance, retirement benefits, pensions or the like.
- D-32 -
Schedule 5
----------
Form of the Indemnity Deed
--------------------------
Dated the ________ day of ___________ 2000
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
and
▇▇. ▇▇ XIAOHU
and
SAWSTON DEVELOPMENTS LIMITED
and
21. SHARKWAVE ASIA PACIFIC LIMITED
--------------------------------------------------------
22. INDEMNITY DEED
--------------------------------------------------------
WOO, ▇▇▇▇, ▇▇▇ & LO
27th Floor, Jardine House,
1 Connaught Place,
Central,
Hong Kong.
- E-1 -
THIS INDEMNITY DEED is made on the _____ day of _____ 2000
BETWEEN :-
(1) ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of Room 207-209, North Tower, Grand
Pacific Building, 8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China ("▇▇. ▇▇▇▇▇▇▇▇▇▇");
(2) ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ of Room 207-209, North Tower Grand Pacific Bldg,
8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, People's Republic
of China ("▇▇. ▇▇▇▇");
(3) ▇▇. ▇▇ XIAOHU of ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇., ▇▇.▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China ("▇▇. ▇▇").;
(Parties (1) to (3) shall hereafter be collectively referred to as the
"Covenantors" and each of them individually as a "Covenantor")
(4) SAWSTON DEVELOPMENTS LIMITED, a company incorporated in the British Virgin
Islands and having its correspondence address at 48th Floor, The Center,
▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "Covenantee"); and
(5) SHARKWAVE ASIA PACIFIC LIMITED, a company incorporated in the Hong Kong
and whose registered office is situate at [Suite 1508, Central Building, 1
Pedder Street, Central, Hong Kong] (the "Company").
WHEREAS :-
(A) The Covenantors, the Covenantee and other parties have on 1/st/ September,
2000 entered into an agreement for the sale and purchase of shares in and
loans to the Company (the "Sale and Purchase Agreement").
(B) It is a provision of the Sale and Purchase Agreement that at Completion
(as defined in the Sale and Purchase Agreement) this Deed be entered into.
NOW THIS DEED WITNESSETH as follows:-
1. Interpretation
--------------
In this Deed where the subject and context so permit:-
- E-2 -
(A) Words and expressions defined or used in the Sale and Purchase
Agreement and in the relevant legislation relating to taxation or
other relevant matters shall have the same meanings in this Deed.
(B) "Business Day" has the same meaning as defined in the Sale and
Purchase Agreement.
(C) "claim" includes (without limitation) any assessment, claim, notice,
demand, letter, direction, counterclaim or other document issued or
action taken by or on behalf of any fiscal, revenue or other
authority or official anywhere in the world whereby the Covenantee,
the Company, the PRC Subsidiary or any of them is liable or is
sought to be made liable to make any payment of increased or further
payment of taxation or is denied or sought to be denied any Relief
from taxation other than Relief from taxation arising from losses
available as at the date to be carried forward to set off against
profits.
(D) "event" includes (without limitation) any act, transaction or
omission (whether or not the Covenantee, the Company or the PRC
Subsidiary is a party thereto) and, but without limitation, any
distribution, failure to distribute, acquisition, disposal,
transfer, payment, loan or advance and reference to any event on or
before the date shall be deemed to include any combination of two or
more events the first of which shall have taken place on or before
the date.
(E) "Relief from taxation" means, for taxation purposes, any loss,
relief, allowance, set-off, deduction, right to repayment or credit
granted by or available pursuant to any legislation or otherwise.
(F) (i) "taxation" means all forms of taxation whenever created or
imposed and whether in Hong Kong, the PRC or elsewhere and
whether imposed by a local, municipal, governmental, state,
federal or other body and, without prejudice to the
generality of the foregoing, includes profits tax, property
tax, interest tax, salaries tax, estate duty, stamp duty,
sales tax and customs and import duty.
(ii) "taxation" shall include in addition and without prejudice to
the foregoing, all fines, penalties, costs, charges, expenses
and interest relating to any claim for taxation.
(G) Any reference to income, profits or gains earned, accrued or
received shall include income, profits or gains deemed to have been
or treated as or regarded as earned, accrued or received.
(H) References to Clauses, Schedules and paragraphs are to Clauses,
Schedules and paragraphs of this Deed.
- E-3 -
2. The indemnity
-------------
2.1 The Covenantors hereby jointly and severally covenant with and undertake
to the Covenantee and the Company to indemnify and keep indemnified the
Covenantee and (as a separate covenant) the Company, as the case may be,
on a continuing basis against :-
(a) (i) the amount of any claim for taxation which has been made or
may hereafter be made against the Company; and
(ii) the amount of any claim for taxation which has been made or
may hereafter be made against the PRC Subsidiary,
in each case wholly or partly in respect of or in consequence of any
event occurring or any income, profits or gains earned, accrued or
received by the Company or the PRC Subsidiary on or before
Completion and which has not been fully provided for in the Audited
Accounts or the Latest Accounts, whether or not such taxation is
chargeable against or attributable to any other person;
(b) any claim for taxation arising on the death of any person under the
Estate Duty Ordinance (Cap.111) at any time by reason of any
transfer of any property to the Company made or deemed to have been
made on or before Completion; and
(c) any claim for taxation arising on the death of any person under the
Estate Duty Ordinance (Cap.111) at any time by reason of any
transfer of any property to the PRC Subsidiary or any of them (as
the case may be) made or deemed to have been made on or before
Completion
2.2 No claim under this Deed shall be made if a claim in respect thereof has
been successfully made and satisfied under the Sale and Purchase Agreement
up to that extent and up to that amount.
2.3 Any payment to any of the Covenantee or the Company ("Covenanted Party")
of any amount of indemnity to which such Covenanted Party is entitled
under this Deed shall, to the extent such payment is received by such
Covenanted Party, be treated as satisfaction of the entitlement of the
other Covenanted Party of the same amount of indemnity to which any of
such other Covenanted Party is or would be entitled under this Deed.
2.4 Notwithstanding any terms herein, the indemnities given by this Deed do
not cover any claim:
(a) to the extent that provision or reserve in respect thereof has been
made in the Audited Accounts or the Latest Accounts or to the extent
that payment or discharge of such claim has been taken into account
therein;
- E-4 -
(b) for which the Company or the PRC Subsidiary are or may become
primarily liable as a result of transactions in the ordinary course
of their business after the date hereof or for which the Company or
the PRC Subsidiary may become liable as a result of legislation
which comes into force after the date hereof and which is
retrospective in effect;
(c) in respect of which provision or reserve has been made in the
Audited Accounts or the Latest Accounts which is insufficient only
by reason of any increase in rates of taxation made after the date
hereof; and
(d) which would not have arisen but for a voluntary act or transaction
which could reasonably have been avoided or carried out by the
Purchaser (or persons deriving title from it) or the Company or the
PRC Subsidiary after the date hereof otherwise than in the ordinary
course of business and which the Purchaser was aware or should
reasonably have been aware could give rise to a claim.
3. Waiver
------
No delay or omission by the Covenantee or the Company in exercising any
rights, powers or privileges hereunder shall impair such rights, powers or
privileges or be construed as a waiver thereof and any single or partial
exercise of any such rights, powers or privileges shall not preclude the
further exercise of any right, power or privilege. The rights and remedies
of the Covenantee and the Company provided in this Deed are cumulative and
not exclusive of any rights and remedies provided by law.
4. The due date and interest
-------------------------
The Covenantors undertakes jointly and severally to pay to the Covenantee
or the Company, as the case may be, an amount equal to the amount of any
taxation payable in relation to any claim for taxation on or before the
date which is:
(i) the third Business Day prior to the date on which the taxation in
question is payable to the authority or official or person demanding
the same (on the assumption that no deferment or appeal against such
claim is granted or made); or
(ii) if it is later and the Covenantors provide security satisfactory to
the Covenantee or the Company, as the case may be, for the
Covenantors' liability under this Deed, the third Business Day prior
to the date to which payment of the taxation in question is deferred
following application or appeal to the appropriate authority,
official, court, tribunal or body of the jurisdiction concerned.
5. Notice of claims
----------------
- E-5 -
In the event of any claim arising the Covenantee or the Company (as the
case may be) shall by way of covenant, but not as a condition precedent to
the liability of the Covenantors hereunder, give or procure that notice
thereof is as soon as reasonably practicable given to the Covenantors or
any of them in the manner provided in Clause 10 and as regards any claim
the Covenantee or the Company (as the case may be) shall at the joint
request of the Covenantors take such action as the Covenantors may
reasonably request jointly to cause the claim to be withdrawn, or to
dispute, resist, appeal against, compromise or defend the claim and any
determination in respect thereof but subject to the Covenantee or the
Company (as the case may be) being indemnified and secured to its
reasonable satisfaction by the Covenantor against all losses (including
additional taxation), costs, damages and expenses which may be thereby
incurred Provided that none of the Covenantors shall make any settlement
the effect of which is likely to increase the future taxation liability of
the Covenantee or the Company or any of them, as the case may be, (other
than liability which would have arisen from a proper determination of the
dispute) Provided further that the obligations of the Covenantee or the
Company under this clause shall in so far as they concern any obligation
to be observed by the Covenantee or the Company be on a best endeavours
basis.
6. Effect of new laws
------------------
The indemnity given by Clause 2 does not cover any claim to the extent
that such claim arises or is incurred as a result of the imposition of
taxation as a consequence of any retrospective change in the law coming
into force after the date of Completion or to the extent that such claim
arises or is increased by an increase in rates of taxation after the date
of Completion with retrospective effect.
7. Release of the Covenantors
--------------------------
7.1 Any liability of the Covenantors to the Covenantee or the Company under
this Deed may, with the agreement in writing of the Covenantee or the
Company (as the case may be) in whole or in part be released, compounded
or compromised by the Covenantee or the Company (as the case may be), and
time or other indulgence may, with the agreement in writing of the
Covenantee be granted to the Covenantor by the Covenantee or the Company
(as the case may be) without in any way prejudicing or affecting any of
their other rights powers or remedies against the Covenantors or any of
them under this Deed.
7.2 If after the Covenantors or any of them have made any payment to any of
the Covenanted Party of any amount of indemnity to which such Covenanted
Party is entitled under this Deed, the Covenantee, the Companyor the PRC
Subsidiary shall receive a refund, or recover from a third party, of all
or part of the relevant taxation in respect of which the relevant
Covenantor(s) has made such payment of indemnity under this Deed, such
Covenanted Party shall as soon as practicable, and in any event within 14
Business Days
- E-6 -
repay to the relevant Covenantor(s) a sum corresponding or proportionate
to the amount of such refund or recovery.
8. Partial validity
----------------
If at any time any provision is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of such provision under the law
of any other jurisdiction shall in any way be affected or impaired
thereby.
9. Assignment
----------
None of the parties hereto shall assign any of their respective
obligations under this Deed without the prior written consent of all the
other parties. The whole or any part of the benefit of this Deed may be
assigned by the Covenantee or the Company (as the case may be) without
consent of the other parties hereto in favour of any other persons who are
or shall become shareholders of the Company or owner of the Sale Loans or
any part thereof. This Deed shall be binding upon each party's personal
representatives successors and assigns, as the case may be.
10. Notices
-------
10.1 Any notice or other communication given or to be given pursuant to this
Agreement shall be in writing sent or delivered to the party at the
address set out below or as may be notified by such party to the others :-
to ▇▇. ▇▇▇▇▇▇▇▇▇▇: Address : Room ▇▇▇-▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
to ▇▇. ▇▇▇▇: Address : Room 207-209, North Tower
Grand Pacific Bldg,
8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China
- E-7 -
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
to ▇▇. ▇▇: Address : ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ An Bldg.,
▇▇.▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Fax no.: ▇▇(▇▇) ▇▇▇▇ ▇▇▇▇
to the Covenantee: Address : ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Fax no.: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attn: The Company Secretary
to the Company: Address : [Suite ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇ Kong]
Fax no.: [*]
Attn: [*]
10.2 Any notice or other communication shall be deemed to have been received if
sent by facsimile, at the time of transmission; or if delivered
personally, when delivered.
10.3 Any notice or other communication sent by facsimile shall be deemed to
have been received upon receipt of the correct transmission report,
provided that if any such notice or other communication is sent outside
business hours, it shall be deemed to have been given on the next
succeeding Business Day.
11. Headings
--------
The headings to the Clauses of this Deed are given for convenience only
and shall not affect the interpretation.
12. Law
---
This Deed shall be governed by and construed in all respects in accordance
with the Laws of Hong Kong and the parties hereto submit to the
non-exclusive jurisdiction of the Hong Kong courts.
- E-8 -
AS EVIDENCE whereof this Deed has been duly executed under seal on the date
first above written.
SIGNED, SEALED AND DELIVERED by )
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ )
)
in the presence of :- )
SIGNED, SEALED AND DELIVERED by )
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ )
)
in the presence of :- )
SIGNED, SEALED AND DELIVERED by )
▇▇. ▇▇ XIAOHU )
)
in the presence of :- )
SEALED with the COMMON SEAL of )
SAWSTON DEVELOPMENTS LIMITED )
and SIGNED by )
)
- E-9 -
in the presence of :- )
SEALED with the COMMON SEAL of )
SHARKWAVE ASIA PACIFIC LIMITED )
and SIGNED by )
)
in the presence of :- )
- E-10 -
Schedule 6
Form of the Loan Assignment Deed
--------------------------------
Dated the____________ day of ___________ 2000
[Loan Vendor]
(the "Assignor")
SAWSTON DEVELOPMENTS LIMITED
(the "Assignee")
and
SHARKWAVE ASIA PACIFIC LIMITED
(the "Company")
--------------------------------------------------------
LOAN ASSIGNMENT DEED
--------------------------------------------------------
WOO, ▇▇▇▇, ▇▇▇ & LO
27th Floor, Jardine House,
1 Connaught Place,
Central,
Hong Kong.
- F-1 -
THIS DEED is made on the _____ day of _____ 2000
BETWEEN :-
(1) [Loan Vendor] of [*] (the "Assignor");
(2) SAWSTON DEVELOPMENTS LIMITED, a company incorporated in the British Virgin
Islands and whose correspondence address is at ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "Assignee"); and
(3) SHARKWAVE ASIA PACIFIC LIMITED, a company incorporated in Hong Kong and
whose registered office is situate at [Suite 1508, Central Building, 1
Pedder Street, Central, Hong Kong] (the "Company").
WHEREAS :-
(A) As at the date hereof, the Company is indebted to the Assignor in the sum
of HK$[ * ], which is interest free and repayable on demand (the "Loan").
(B) By an agreement (the "Agreement") for the sale and purchase of shares in
and loans to the Company entered into on 1 September, 2000 between, inter
alia, the Assignor and Sawston Developments Limited, the Assignor has
agreed, inter alia, to assign to, and Sawston Developments Limited has
agreed, inter alia, to acquire or procure the acquisition all of the
Assignor's rights, title, interest and benefits in and to and arising from
or in respect of the Loan on the terms and conditions set out in this
Deed.
(C) The Assignee now acquires the Loan from the Assignor on the terms and
conditions set out in this Deed.
NOW THIS DEED WITNESSES as follows:
1. Interpretation
--------------
1.1 References to the Assignor and the Assignee shall include their respective
successors and permitted assigns.
1.2 References herein to the Agreement shall be construed as references to the
Agreement as the same may be amended or supplemented from time to time.
1.3 Unless the context requires otherwise, words and expressions and other
rules of interpretation defined, used or set out in the Agreement have the
same meanings and application in this Deed, and those provisions of the
Agreement dealing with construction
- F-2 -
or interpretation, governing law, jurisdiction, service of notice and
agents for the service of process shall (except where otherwise provided)
apply equally herein.
2. Assignment of Rights
--------------------
2.1 For good and valuable consideration, the Assignor as legal and beneficial
owner hereby unconditionally and irrevocably assigns and agrees to assign
to the Assignee and the Assignee hereby accepts absolutely with effect
from the date hereof all of the Assignor's rights, title and benefits in
and to and arising from or in respect of the Loan.
2.2 The Assignee shall be entitled to all rights and benefits in and to the
Loan assigned to it.
2.3 The Assignor hereby covenants with the Assignee immediately on receipt to
pay to the Assignee any payments or other money which may be received by
the Assignor from the Company in respect of the Loan and until such
payment to hold the same on trust for the Assignee.
3. Representations and Warranties
------------------------------
3.1 The Assignor represents and warrants to the Assignee that at the date
hereof:
(a) all information contained in Recital (A) is true and accurate;
(b) the Assignor is, and the Assignee will immediately upon the
execution of this Deed be, the sole legal and beneficial owner of
the relevant rights and benefits hereby assigned subject to the
provisions hereof;
(c) the Loan is free from all liens, charges, prior equities,
encumbrances, compromises, releases, waivers and dealings of any
nature whatsoever or any agreement for any of the same;
(d) the Assignor has not previously assigned or agreed to assign the
Loan to any third party whether absolutely or conditionally; and
(e) the Loan is presently due and owing in full from the Company to the
Assignor without default and is valid and subsisting.
3.2 Each party hereto represents and warrants to the other party that:
(a) it/he has full power, authority and legal right to execute and
perform this Deed;
(b) it/he has taken all necessary legal and corporate action (if
applicable) to authorise the execution and performance of this Deed;
and
- F-3 -
(c) this Deed constitutes the legal, valid and binding obligations of
such party in accordance with its terms.
3.3 Each of the representations and warranties set out in Clauses 3.1 and 3.2
hereof shall be separate and independent.
4. Expenses
--------
Each party hereto shall pay its own costs and expenses in connection with
the preparation, negotiation and execution of this Deed.
5. Appointment as Agent and Attorney
---------------------------------
5.1 If and so far as is necessary for the purposes of this Deed, the Assignor
hereby appoints the Assignee as the agent and attorney of the Assignor to
demand, ▇▇▇ for, recover, receive and discharge the Loan.
5.2 (a) The Assignor hereby irrevocably appoints the Assignee to be its
attorney for it and on its behalf and in its name or, as the
Assignee may think fit, in the name of the Assignee, to execute and
as its act and deed or otherwise to do all such assurances, acts and
things which the Assignor ought to do under the covenants herein
contained and to execute, seal and deliver or otherwise perfect any
deed, assurance or act which may be required or deemed proper by the
attorney for the purpose of exercising such power or authority.
(b) The Assignor agrees to ratify and confirm whatever the Assignee as
its attorney shall do or purport to do in exercise or purported
exercise of the powers and authorities referred to in sub-clause (a)
of this Clause 5.2.
6. Lending of Assignor's Name
--------------------------
The Assignor agrees, upon request from the Assignee and at the Assignee's
cost, to give or lend its name to any reasonable act, deed, document,
instrument, action or proceeding (including any legal action or
proceeding) or other matter or thing for the purpose of the exercise by
the Assignee of its rights, powers and remedies referred to in this Deed.
7. Company's Consent
-----------------
The Company hereby gives, and covenants with the Assignor and the Assignee
to give, its full consent to the assignment of the Loan pursuant to this
Deed and further
- F-4 -
undertakes to the Assignor and the Assignee that it will make all payments
of the Loan and discharge all its obligations in respect thereof to the
Assignee directly instead of to the Assignor so that the Loan shall
accordingly be payable to the Assignee.
8. Miscellaneous
-------------
8.1 This Deed (together with any documents referred to herein) constitutes the
entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes any previous expression of intent,
undertaking or agreement with respect to this transaction.
8.2 This Deed may be executed in any number of counterparts and by the
different parties to this Deed on separate counterparts, each of which
when executed and delivered shall be an original but all the counterparts
shall together constitute one and the same instrument.
8.3 The parties shall do and execute or procure to be done and executed all
such further acts, deeds, things and documents as may be necessary to give
full effect to the terms of this Deed.
8.4 This Deed shall be executed and take effect as a deed.
9. Governing Law and Jurisdiction
------------------------------
This Deed shall be governed by and construed in accordance with the laws
of Hong Kong. Each of the parties hereby submits to the non-exclusive
jurisdiction of the courts of Hong Kong.
IN WITNESS WHEREOF this Deed has been executed on the day and year first above
written.
SIGNED, SEALED AND DELIVERED by )
[Loan Vendor] )
)
in the presence of :- )
- F-5 -
SEALED with the COMMON SEAL of )
SAWSTON DEVELOPMENTS LIMITED )
and SIGNED by )
)
in the presence of :- )
SEALED with the COMMON SEAL of )
SHARKWAVE ASIA PACIFIC LIMITED )
and SIGNED by )
)
in the presence of: )
- F-6 -
Schedule 7
----------
Form of the Employment Contract
-------------------------------
Dated the ___________ day of ____________ 2000
SHARKWAVE ASIA PACIFIC LIMITED
and
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------------------
(a)EMPLOYMENT AGREEMENT
--------------------------------------------------------
WOO, ▇▇▇▇, ▇▇▇ & LO
27th Floor, Jardine House,
1 Connaught Place,
Central,
Hong Kong.
- G-1 -
THIS AGREEMENT is made as of __________ , 2000
BETWEEN :-
1. SHARKWAVE ASIA PACIFIC LIMITED (the "Company"); and
2. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (the "Executive")
WHEREAS :-
The Board of Directors of the Company (the "Board") recognizes that the
Executive's employment by the Company is important to the growth and success of
the Company and desires to assure the Executive's employment with the Company as
a member of senior management and to compensate him therefor, and the Executive
is willing to be employed by the Company for a fixed term of two (2) years on
and subject to the terms and conditions herein provided.
IN CONSIDERATION OF the foregoing and the respective covenants and agreements of
the parties herein contained, the parties hereto AGREE as follows:
1. Employment and Acceptance
-------------------------
The Company hereby employs the Executive and the Executive hereby accepts
employment from the Company, upon the terms and conditions set forth in
this Agreement, for the period from [to insert the Completion Date] (the
"Commencement Date") and ending as provided in Clause 4 hereof (the
"Employment Period").
2. Duties and Title
----------------
(a) The Executive agrees to use his best efforts, skill and abilities to
promote the Company's interest in his capacity as the Chief Executive
Officer of the Company and of the Company's subsidiaries and to perform
such duties (consistent with his status as set forth in this Clause 2 and
the long-range business plan of the Company) as may be assigned to him by
the Board. To the extent that the Executive shall serve in any capacity
for subsidiaries of the Company, including as their chief strategic
officer or member of their boards of directors, he shall do so without
additional compensation.
(b) The Executive agrees that he shall actively assist ▇▇▇.▇▇▇ LIMITED to
integrate the Company's business and activities with those of ▇▇▇.▇▇▇
LIMITED's other sports or sports related business or strategic alliances
or commitments.
- G-2 -
(c) The Executive agrees that during the Employment Period, he shall devote
all of his business time and effort to the performance of his duties under
this Agreement and shall not engage in any other business, profession or
occupation for compensation or otherwise that would conflict with the
rendition of such services either directly or indirectly, without the
prior written consent of the Board.
3. Compensation and Benefits
-------------------------
3.1 Compensation. As compensation for services to be rendered pursuant to this
Agreement, the Company shall pay the Executive a base salary (the "Base
Salary"), payable in regular installments in accordance with the Company's
usual payment practices, but no less frequently than monthly, such Base
Salary to be less such deductions or amounts to be withheld as shall be
required by applicable law and regulations. The Base Salary shall be
reviewed annually by the Board.
3.2 Housing Allowance. The Company shall pay the Executive a housing allowance
(the "Housing Allowance"), payable in regular installments in accordance
with the Company's usual payment practices, but no less frequently than
monthly.
3.3 Bonus. For each fiscal year ending during the Employment Period, the
Executive will be eligible for a performance-based annual bonus (the
"Bonus") as determined by the Board (or its compensation committee) in its
sole discretion.
3.4 Level of Base Salary, Housing Allowing and Bonus. The Base Salary, the
Housing Allowance and the minimum amount of the Bonus shall in aggregate
be HK$1,500,000 per annum, and the split of that figure amongst the three
items shall be further agreed between the Company and the Executive. For
the fiscal year in which the Commencement Date falls or for any part of
the Employment Period which is shorter than one year, the total sum of the
Base Salary, the Housing Allowance and the minimum amount of the Bonus
payable shall be calculated in proportion to the length of the relevant
part of the Employment Period.
3.5 Employee Benefit Plans. During the Employment Period, the Executive shall
be entitled to all employee benefit plans, programs and arrangements
maintained by the Company for its senior executives generally, to the
extent he is eligible under the terms of such plans, and to receive such
insurance benefits as the Company generally provides for its senior
executives.
3.6 Vacation. The Executive shall be entitled to 24 days of paid vacation per
calendar year, in accordance with Company vacation policies.
- G-3 -
3.7 Business Expenses. The Company shall pay or reimburse the Executive
promptly for all reasonable business expenses actually incurred and paid
by him during the Employment Period in the performance of services under
this Agreement, upon presentation to the Company of expense statements or
vouchers or such other supporting information as the Company may require;
provided, however, that a reasonable maximum amount available for such
expenses during any period may be fixed in advance by the Board; and
provided, further, that the Executive shall not be required to incur any
such expenses in excess of such maximum amount that have not been approved
by the Board.
4. Term
----
(a) The Employment Period shall initially end on the second anniversary from
the Commencement Date and, subject to Clause 4(b) below, shall continue
thereafter.
(b) (i) After the second anniversary from the Commencement Date, the
Employment Period shall terminate :-
(aa) subject to Clause 4(c) below, upon the Executive giving to
the Company prior written notice of three months; or
(bb) upon the Company giving to the Executive prior written notice
of three months.
(ii) The Employment Period shall terminate at any time:
(aa) upon the Executive's death; or
(bb) upon the permanent disability or incapacity of the Executive
that causes the Executive to be unable to perform his duties
under this Agreement (as determined by the good faith
judgment of a physician reasonably satisfactory to the
Company and the Executive).
(iii) The Employment Period may be terminated immediately by the Company
at any time prior to such date for Cause (as defined below) or
without Cause.
(c) If the Executive has expressed his intention to discontinue the employment
upon or after the second anniversary from the Commencement Date, the
Executive shall source his successor, whose identity and qualification
shall meet with the requirements and prior approval of ▇▇▇.▇▇▇ LIMITED and
the Company. In the event that a suitable
- G-4 -
successor acceptable to ▇▇▇.▇▇▇ LIMITED and the Company is unable to be
sourced within two months, the Executive agrees that he shall continue his
employment with the Company for a further term of one (1) year from the
date of the written notice given by the Executive to the Company
expressing his intention to discontinue the employment.
(d) If the Employment Period is terminated by the Company without Cause, then
the Executive shall be entitled to receive:
(i) his Base Salary and Housing Allowance; and
(ii) the pro rata portion of the Bonus which the Executive would have
received,
in each case for the 12 month period (starting from the Commencement Date
or anniversary thereof, as the case may be) in which his employment was
terminated, and in each case so long as the Executive has not materially
breached any provision of Clauses 5, 6.1, 6.2 or 7 hereof.
(e) If the Employment Period is terminated by the Company for Cause or is
terminated pursuant to Clause 4(b)(i) or (ii) above, the Executive shall
be entitled to receive his Base Salary and Housing Allowance only up to
the date of termination.
(f) For purposes of this Agreement, "Cause" shall mean (i) the commission of a
felony (or an equivalent crime) or a crime involving moral turpitude or
the commission of any other act involving dishonesty or fraud under the
laws of any jurisdiction applicable to the Company or any of its
subsidiaries, (ii) conduct tending to bring the Company or any of its
subsidiaries or holding companies into substantial public disgrace or
disrepute, (iii) substantial and repeated failure to perform duties within
the scope of duties as reasonably and lawfully directed by the Board, (iv)
gross negligence or willful misconduct with respect to the Company or any
of its subsidiaries or (v) any other material breach of this Agreement by
the Executive which is not cured within 15 days after written notice
thereof to the Executive, in each case as determined in the good faith
judgment of the Board.
5. Confidential Information.
------------------------
(a) The Executive acknowledges that he has been advised by the Company that it
would not enter into this Agreement unless assured of the confidentiality
covenants contained in this Clause 5 which, the Executive acknowledges,
are essential to protect the business and goodwill of the Company. The
Executive acknowledges that the proprietary information, observations and
data obtained by him while employed by the Company concerning the
organization, business, technology, finance, transactions or affairs of
the Company or any of its subsidiaries ("Confidential Information") are
the property of the Company or such subsidiary. Therefore, the Executive
agrees that he shall not disclose to any unauthorized person or use for
his own account, any Confidential Information without
- G-5 -
the prior written consent of the Board, unless and to the extent that (i)
the aforementioned matters are or become generally known to and available
for use by the members of the industry in which the Company operates other
than as a result of Executive's acts or omissions to act and (ii) the
Executive may, after giving prior notice to the Company to the extent
practicable under the circumstances and subject to any practicable
arrangements to protect confidentiality, disclose such matters to the
extent required by applicable laws or governmental regulations or judicial
or regulatory process or in connection with any judicial process or
arbitration regarding any legal action, suit or proceeding arising out of
or relating to this Agreement or the business of the Company or any of its
subsidiaries.
(b) The Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes and software and
other documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined in Clause 7) or the business of the
Company or any of its subsidiaries which he may then possess or have under
his control.
6. Non-Competition/Non-Solicitation.
--------------------------------
6.1 Non-Competition. During Executive's employment with the Company and for
the longer of (i) six (6) months following the termination of employment
for any reason, (ii) the period of time the Executive is entitled to
receive payments of Base Salary hereunder, and (iii) the period of time
for which the Executive holds a direct or indirect equity interest in the
Company (the "Restricted Period"), the Executive, without the prior
written consent of the Company, shall not establish, invest directly or
indirectly in (including through one or more interposed entities), serve
as an employee, consultant officer or director of any company or business
which operates, or otherwise operate, or enter into any negotiation,
agreement or arrangement with any other person to operate, any other
sports or sports related website(s) or any website(s) that will otherwise
compete with the websites operated by the Company or any of its
subsidiaries.
6.2 Non-Solicitation. During the Executive's employment with the Company and
for a period of six months following the Executive's termination of
employment for any reason (including expiration of the Employment Period),
the Executive will not solicit, attempt to solicit, participate in any
solicitation, or otherwise advise or encourage any current or prospective
employee, consultant, independent contractor, agent, client or
representative of, or any vendor or supplier to, the Company (or any of
its subsidiaries) to terminate his, her or its relationship with the
Company (or any of its subsidiaries) or to enter into a business or
employment relationship of any kind with any other individual or entity.
6.3 Rights and Remedies Upon Breach. If the Executive breaches, or the Company
reasonably believes the Executive threatens to commit a breach of, any of
the provisions
- G-6 -
of Clauses 5,6.1 and 6.2 (the "Restrictive Covenants"), the Company shall
have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of
which is in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity:
(a) Specific Performance. The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach
of the Restrictive Covenants would cause irreparable injury to the
Company and/or its subsidiaries and their business and that money
damages would not provide an adequate remedy to the Company.
(b) Accounting. The right and remedy to require the Executive to account
for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits ("Benefits") derived or
received by the Executive as the result of any transaction
constituting a breach of the Restrictive Covenants, and the
Executive hereby agrees to account for and pay over such Benefits to
the Company.
6.4 Severability of Covenants. The Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in geographical and
temporal scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or
unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect without regard to the
invalid portions.
6.5 Blue-Pencilling. If any court determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration
or geographic scope of such provision, such court shall have the power to
reduce the duration or scope of such provision, as the case may be, and,
in its reduced form, such provision shall then be enforceable.
7. Inventions and Work Product.
---------------------------
The Executive agrees that all inventions, innovations, improvements,
developments, methods, designs, analyses, drawings, reports, and all
similar or related information which are conceived, developed or made by
the Executive for the Company or any of its subsidiaries in respect of
their respective business while employed by the Company or any of its
subsidiaries (collectively, "Work Product") belong to the Company or such
subsidiary. The Executive will promptly disclose such Work Product to the
Board and perform all actions reasonably requested by the Board (whether
during or after the Employment Period) to establish and confirm such
ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
8. Other Provisions
----------------
- G-7 -
8.1 Governing Law. The formation, validity, interpretation, execution,
amendment and termination of and settlement of disputes under this
Agreement shall be governed by the laws of Hong Kong.
8.2 Entire Agreement; Amendments and Waivers. This instrument is the entire
agreement of the parties with respect to the subject matter hereof and may
not be amended, supplemented, cancelled or discharged except by written
instrument executed by both parties hereto. The parties do not intend to
confer any benefit hereunder on any third person, and, without limiting
the generality of the foregoing, the parties may, in writing, without
notice to or consent of any third person, at any time waive any rights
hereunder or amend this Agreement in any respect or terminate this
Agreement. If either party should waive any breach of any provision of
this Agreement, such party will not thereby be deemed to have waived any
preceding or succeeding breach of the same provision or any breach of any
other provision of this Agreement.
8.3 Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
8.4 Assignment. This Agreement, and any rights and obligations hereunder, may
not be assigned by any party hereto without the prior written consent of
the other party.
8.5 Headings. Clause headings are inserted herein for convenience only and do
not constitute a part, and shall not affect the interpretation, of this
Agreement.
8.6 Counterparts. This Agreement is executed by each party in English in one
(1) or more counterparts, each of which shall be deemed an original and
all of the counterparts together shall constitute one (1) and the same
instrument. One (1) counterpart shall be retained by each party.
8.7 Survival. Clauses 5, 6 and 7 shall survive and continue in full force in
accordance with their terms notwithstanding any termination of the
Employment Period.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
SIGNED by )
for and on behalf of )
SHARKWAVE ASIA PACIFIC LIMITED )
in the presence of :- )
- G-8 -
SIGNED SEALED AND DELIVERED by )
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ )
in the presence of :- )
- G-9 -
Schedule 8
----------
Form of Non-Competition Undertaking
-----------------------------------
Dated the___________ day of ___________ 2000
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
and
LU XIAOHU
and
SHARKWAVE ASIA PACIFIC LIMITED
and
▇▇▇.▇▇▇ LIMITED
--------------------------------------------------------
DEED OF NON-COMPETITION UNDERTAKING
--------------------------------------------------------
WOO, ▇▇▇▇, ▇▇▇ & LO
Solicitors & Notaries
▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
- H-1 -
THIS DEED is made on the_______________day of__________
BETWEEN :-
1. ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of Room 207-209, North Tower, Grand
Pacific Building, 8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China ("▇▇. ▇▇▇▇▇▇▇▇▇▇");
2. ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ of Room 207-209, North Tower, Grand Pacific
Building, 8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, People's
Republic of China ("▇▇. ▇▇▇▇");
3. ▇▇. ▇▇ XIAOHU of ▇▇▇▇ ▇▇▇, ▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇,
▇▇.▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ of China ("▇▇. ▇▇");
4. SHARKWAVE ASIA PACIFIC LIMITED whose registered office is situate at ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and ▇▇▇.▇▇▇
LIMITED a company incorporated in the Cayman Islands and having its
correspondence address at ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (collectively "the Companies")
NOW IT IS HEREBY AGREED AS FOLLOWS :-
1. Definitions and Interpretation
------------------------------
In this Deed, unless the context otherwise requires or expressly provides,
the following words and expressions shall have the respective meaning
attributed to them :
"Completion Date" means [*];
"Covenantors" means ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇ and ▇▇. ▇▇;
"Group" means the Companies and their subsidiaries and
assoicated companies from time to time;
"Restricted Website(s)" means any websites which will or may, in the
opinion of any of the Companies, be similar to
or compete with the sports or sports related
website(s) operated or maintained at any time
and from time to time by any of the Companies
or any of their respective subsidiaries or
associated companies, or in which any of the
Companies or any of their respective
subsidiaries or associated companies has an
interest at any time and from
- H-2 -
time to time.
2. Non-Competition/Non-solicitation
--------------------------------
2.1 Each of the Covenantors hereby expressly covenants and undertakes with the
Companies and each of them that each of the Covenantors will not, without
the prior written consent of the Companies, at any time within 5 years
after the Completion Date and in any country or place where the Group
carries on its business,
(a) establish, invest in, manage or otherwise be interested directly or
indirectly in (including through one or more interposed entities)
any Restricted Website(s); or
(b) serve as an employee, consultant, officer or director of or
otherwise operate or enter into any negotiation, agreement or
arrangement with any person (other than the Company or its
subsidiaries) to operate any Restricted Website(s); or
(c) either personally or by an agent directly or indirectly either on
his own account or for any other person, firm or company, or in
association with or in the employment of any other person, firm or
company, solicit or interfere with or endeavour to entice away from
the Companies or any of their respective subsidiaries or associated
companies, any person, firm or company who within 12 months prior to
or at the Completion Date was a customer of or in the habit of
dealing with any of the Companies or any of their respective
subsidiaries or associated companies engaged in sports or sports
related website business.
2.2 For the avoidance of doubt, the restrictions in Clause 2.1 shall apply
whether or not the Covenantors or any of them do any of the things therein
restricted :-
(a) either directly or indirectly;
(b) either alone or jointly with others;
(c) either as principal, or as agent or manager for others; and
(d) whether or not for gain.
3. Rights and Remedies Upon Breach
-------------------------------
If any of the Covenantors breaches, or the Companies reasonably believes
any of the Covenantors threatens to commit a breach of any of the
provisions contained herein, the Companies shall have the following rights
and remedies, each of which rights and remedies shall be independent of
the others and severally enforceable, and each of which
- H-3 -
is addition to, and not in lieu of, any other rights and remedies
available to the Companies under law or in equity :
(i) Specific Performance
--------------------
The right and remedy to have the covenants herein contained
specifically enforced by any court of competent jurisdiction, it
being that any breach or threatened breach of any of the covenants
would cause irreparable injury to the Companies and/or the business
of the Companies and that money damages would not provide an
adequate remedy to the Companies.
(ii) Accounting
----------
The right and remedy to require the Covenantors to account for and
pay over to the Companies all compensation, profits, monies,
accruals, increments or other benefits ("Benefits") derived or
received by the Covenantors as the result of any transaction
constituting a breach of the covenants, and the Covenantors hereby
agree to account for and pay over such Benefits to the Companies.
4. Restrictions Reasonable
-----------------------
It is hereby agreed and declared that if any restrictions herein contained
shall be adjudged to be void as going beyond what is reasonable in all
circumstances for the protection of the interest of the Companies but
would be valid if part of the wording thereof were deleted or the periods
(if any) thereof were reduced the said restriction shall apply with such
modifications as may be necessary to make it valid and effective.
5. Severability
------------
The various provisions of this Agreement are severable and if any
provision is held to be invalid or unenforceable because of the duration
or geographic scope of such provision by any court of competent
jurisdiction then such validity or unenforceability shall not affect the
remaining provisions of this Agreement.
6. Governing Law
-------------
This Deed shall be governed by and construed in all respects in accordance
with the laws of Hong Kong. The parties hereto agree to submit to the
non-exclusive jurisdiction of the courts of Hong Kong in connection
herewith.
IN WITNESS whereof this Deed has been duly executed the day and year first above
written.
- H-4 -
SIGNED, SEALED AND DELIVERED )
by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
▇▇▇▇▇▇▇▇▇▇ in the presence of )
SIGNED, SEALED AND DELIVERED )
by ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ )
in the presence of )
SIGNED, SEALED AND DELIVERED )
by LU XIAOHU in the presence of )
The Common Seal of )
SHARKWAVE ASIA PACIFIC LIMITED )
was hereunto affixed in the presence of:- )
- H-5 -
The Common Seal of ▇▇▇.▇▇▇ )
LIMITED )
was hereunto affixed in the presence of:- )
- H-6 -
Dated the 30/th/ day of November, 2000
--------------------------------------
▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
and
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
and
▇▇. ▇▇ XIAOHU
and
IDG TECHNOLOGY VENTURE INVESTMENTS, INC.
and
SOFTBANK CHINA VENTURE INVESTMENTS NO.10 LIMITED
(as the Contracting Vendors)
and
SAWSTON DEVELOPMENTS LIMITED
(as the Purchaser)
--------------------------------------------------------------------
SUPPLEMENTAL AGREEMENT
relating to the acquisition of the entire issued share capital of
SHARKWAVE ASIA PACIFIC LIMITED
---------------------------------------------------------------------
WOO, ▇▇▇▇, ▇▇▇ & LO
Solicitors & Notaries
27th Floor ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
-1-
THIS SUPPLEMENTAL AGREEMENT is made on the 30/th/ November, 2000.
BETWEEN:-
(1) ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of Room ▇▇▇-▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
People's Republic of China ("▇▇. ▇▇▇▇▇▇▇▇▇▇");
(2) ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ KOX HUI of Room 207-209, North Tower Grand Pacific Bldg,
8A ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, People's Republic
of China ("▇▇. ▇▇▇▇");
(3) ▇▇. ▇▇ XIAOHU of ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ An Bldg., ▇▇.▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ("▇▇. ▇▇");
(4) IDG TECHNOLOGY VENTURE INVESTMENT, INC. (formerly known as PTV-CHINA
INC.), a company incorporated in Massachusetts whose registered office is
situated at ▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
("IDG");
(5) SOFTBANK CHINA VENTURE INVESTMENTS NO.10 LIMITED, a company incorporated
in the Cayman Islands whose registered office is situated at ▇.▇. ▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Softbank"); and (together the
"Contracting Vendor")
(6) SAWSTON DEVELOPMENTS LIMITED, a company incorporated in the British Virgin
Islands and having its correspondence address at 48th Floor, The Center,
▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "Purchaser").
WHEREAS:-
(A) This Supplemental Agreement ("Agreement") is supplemental to an agreement
made on 1/st/ September, 2000 between ▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇, ▇▇. ▇▇,
IDG, Softbank and the Purchaser relating to the acquisition of the entire
issued share capital of Sharkwave Asia Pacific Limited ("Original
Agreement").
(B) The Purchaser and the Contracting Vendors have agreed to amend the terms
of the Original Agreement upon the terms set out herein.
NOW IT IS HEREBY AGREED AS FOLLOWS:-
23. Purpose and Definitions
-----------------------
23.1. This Agreement sets out the terms and conditions under and subject to
which the parties hereto have agreed to vary the terms of the Original
Agreement in the manner hereinafter appearing.
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23.2. Unless redefined in this Agreement, words and expression defined in the
Original Agreement shall have the same meaning when used in this Agreement
and in case of any conflict between the Original Agreement and this
Agreement, this Agreement shall prevail.
23.3. In all other respects, save where modified by this Agreement, the Original
Agreement and the terms and conditions thereunder shall remain in full
force and effect.
23.4. Unless the context otherwise requires, words importing the singular only
shall include the plural and vice versa and words importing natural
persons shall include corporations and un-incorporated associations; words
importing one gender only shall include all genders.
23.5. In this Agreement, the headings contained in this Agreement are for the
purposes of convenience only and do not form part of and shall not affect
the construction of this Agreement or any part thereof.
24. Amendments to the Original Agreement
------------------------------------
24.1. Clause 3.1 of the Original Agreement shall be deleted in its entirety and
be replaced with the following:-
"The Consideration shall be of the total sum of HK$99,216,229.70 (Hong
Kong Dollars Ninety Nine Million Two Hundred Sixteen Thousand Two Hundred
Twenty Nine and Cents Seventy Only), and;-
(a) the consideration for the Sale Loans shall be an amount equal to the
principal amount of the Sale Loans, and the consideration for the
Sale Shares shall be an amount equal to the Consideration less the
consideration for the Sale Loans;
(b) the part of the Consideration payable to each of the Vendors for the
relevant Sale Shares and (in the ease of the Loan Vendors only) the
relevant amount of Sale Loans sold by the relevant Vendor shall in
aggregate be as follows:
Relevant part of
Vendor the Consideration
--------------- ------------------
▇▇. ▇▇▇▇▇▇▇▇▇▇ HK$21,473,823.00
▇▇. ▇▇▇▇ HK$21,979,058.40
▇▇. ▇▇ HK$5,494,764.60
IDG HK$l5,476,017.10
Intel HK$14,396,283.30
Softbank HK$14,396,283.30;"
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24.2. Clause 3.2 (c) of the Original Agreement shall be deleted in its entirety
and replaced with the following:-
"the Purchaser shall procure that a total of 3,096,000 New Shares be
allotted and issued by the Holding Company to the Designated Entity, and
shall pay or procure to pay a sum of HK$5,770.20 to the Designated Entity,
as referred to in Clause 4.5(a)."
24.3. The words "90 days" in Clause 4.3 of the Original Agreement shall be
deleted and shall be substituted therefor by the words "98 days".
24.4. Clause 4.5(a) of the Original Agreement shall be deleted in its entirety
and replaced with the following:-
"The release, cancellation, waiver and surrender referred to in paragraph
(i) of Clause 4.1 (in respect of any agreement, arrangement, options,
warrants and/or rights therein referred to) shall be unconditional, except
only the condition that (subject to the Conditions Precedent having been
fulfilled, or waived as provided in Clause 4.4, and upon Completion), (i)
a total of 3,096,000 New Shares be allotted and issued by the Holding
Company to an entity (the "Designated Entity") designated and notified in
writing by ▇▇. ▇▇▇▇▇▇▇▇▇▇ to the Purchaser not later than 3 Business Days
before the Completion Date, and (ii) a sum of HK$5,770.20 be paid or
procured to be paid by the Purchaser to the Designated Entity."
25. Acknowledgement
---------------
The Contracting Vendors and the Purchaser acknowledge that the relevant
adjustment to the Consideration applicable to each of the Contracting
Vendors as set out in Clause 2.1 hereof is proportional to their interests
in the Sale Shares (and where applicable, the Sale Loans) and none of the
Contracting Vendors has derived any benefit out of such adjustments in the
relevant part of the Consideration, other than in such proportion.
26. Confirmation of Validity
------------------------
The Contracting Vendors and the Purchaser hereby agrees and confirms that,
save for the amendments to the Original Agreement effected by this
Agreement, each of their obligations, rights, covenants and liabilities
under the Original Agreement shall remain valid and subsisting and in full
force and effect in accordance with its terms and shall extend to and
cover the obligations and liabilities of the Contracting Vendors and the
Purchaser under this Agreement and shall not in any way be released,
impaired, waived or affected by such amendments to the Original Agreement.
27. Governing Law and Jurisdiction
------------------------------
27.1. This Agreement shall be governed by and construed in all respects in
accordance with the laws of Hong Kong.
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27.2. Each party hereto irrevocably agrees that the courts of Hong Kong shall
have jurisdiction to hear and determine any suit, action or proceeding and
to settle any disputes which may arise out of or in connection with this
Agreement and for such purposes irrevocably submits to the non-exclusive
jurisdiction of such courts.
IN WITNESS whereof this Agreement has been duly executed on the date first
above written.
SIGNED by )
MR. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ )
▇▇▇▇▇▇▇▇▇▇ )
in the presence of:- )
SIGNED by )
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇ )
in the presence of:- )
SIGNED by )
▇▇. ▇▇ XIAOHU )
in the presence of:- )
SIGNED by )
)
for and on behalf of )
IDG TECHNOLOGY VENTURE )
INVESTMENT, INC. )
in the presence of:- )
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SIGNED by )
)
for and on behalf of )
SOFTBANK CHINA VENTURE )
IN VESTMENTS NO.10 LIMITED )
in the presence of:- )
SIGNED by )
)
for and on behalf of SAWS TON )
DEVELOPMENTS LIMITED )
in the presence of/ )
whose signature(s) )
are verified by:- )
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