DATED THIS DAY OF 1999
BETWEEN
1. VIKAY INDUSTRIAL LTD
------------------------
(In Judicial Management)
2. VIKAY INDUSTRIAL (HONG KONG) LTD
--------------------------------
(as "Vendors")
AND
INTERNATIONAL DISPLAYWORKS. INC.
(as "Purchaser")
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SALE AND PURCHASE AGREEMENT
relating to
A. VIKAY SCIENCE & TECHNOLOGY
DEVELOPMENT (SHENZHEN) CO LTD
B. MULCD MICROELECTRONICS
(SHENZHEN) CO LTD
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RAJAH & ▇▇▇▇
SINGAPORE
C O N T E N T S
CLAUSE HEADING PAGE
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1. DEFINITIONS...................................................................2
2. DEPOSIT.......................................................................4
3. SALE OF EQUITY INTERESTS......................................................4
4. CONDITIONS PRECEDENT..........................................................5
5. COMPLETION....................................................................6
6. MANAGEMENT OF PRC COMPANIES...................................................7
7. ASSETS, RECEIVABLES AND LIABILITIES..........................................10
8. REPRESENTATIONS AND WARRANTIES...............................................11
9. SEPARATE TRANSFER AGREEMENT..................................................13
10. OWN EVALUATION...............................................................13
11. CONFIDENTIALITY..............................................................13
12. RELEASE AND INDULGENCE.......................................................13
13. CONTINUING EFFECT OF AGREEMENT...............................................14
14. SUCCESSORS AND ASSIGNS.......................................................14
15. JUDICIAL MANAGERS............................................................14
16. TIME OF ESSENCE..............................................................14
17. COSTS AND EXPENSES...........................................................15
18. NOTICES......................................................................15
19. PARTIAL INVALIDITY...........................................................15
20. GOVERNING LAW................................................................15
CLAUSE HEADING PAGE
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21. ENTIRE AGREEMENT.............................................................15
22. COUNTERPARTS.................................................................15
SCHEDULE 1-1..........................................................................16
SCHEDULE 1-2..........................................................................17
SCHEDULE 1-3..........................................................................18
SCHEDULE 2-1..........................................................................19
SCHEDULE 2-2..........................................................................20
SCHEDULE 2-3..........................................................................21
THIS AGREEMENT is made on day of 1999
BETWEEN:-
(1) VIKAY INDUSTRIAL LTD (In Judicial Management) care of ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇-▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
facsimile no: (▇▇) ▇▇▇ ▇▇▇▇ Attention: ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ("▇▇▇");
(▇) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇) care of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, #▇▇-▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, facsimile no: (65) 221
7204 Attention: ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ("VKHK");
AND
(3) INTERNATIONAL DISPLAYWORKS. INC., a company incorporated in the
State of Delaware, United States of America and having its place
of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, facsimile no: (▇▇▇) ▇▇▇ ▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
for and on behalf of INTERNATIONAL DISPLAYWORKS (HONG KONG)
LTD., a Hong Kong company to be formed prior to the Completion
Date (the "PURCHASER").
WHEREAS:-
(A) VKS is a company limited by shares incorporated in Singapore
and has at the date of this Agreement an authorised share capital of
S$87,500,000 consisting of 350,000,000 ordinary shares of S$0.25 each, of
which 170,802,000 of the said ordinary shares have been issued, are fully
paid-up and are listed on the Stock Exchange of Singapore Dealing and
Automated Quotation System. The Vendor has been placed under judicial
management pursuant to an order of court made 6 December 1997, which order of
court has been extended to 31 July 2000.
(B) VKHK is a company limited by shares incorporated in Hong Kong
and is, at the date of this Agreement, a wholly-owned subsidiary of VKS.
(C) Vikay Science & Technology Development (Shenzhen) Co., Ltd.
("VKSTD") is a wholly foreign-owned enterprise established in the People's
Republic of China with a total investment of US$8,000,000 and a registered
capital of US$6,000,000. VKS has contributed US$6,000,000 to the registered
capital of VKSTD, representing 100% of the equity interest in VKSTD, and is
in the process of injecting further assets into VKSTD thereby increasing the
total investment amount and registered capital of VKSTD.
(D) MULCD Microelectronics (Shenzhen) Co., Ltd. ("MULCD") is a
wholly foreign-owned enterprise established in the People's Republic of China
with a total investment of US$15,000,000 and a registered capital of
US$6,000,000. VKHK has contributed US$6,000,000 to the registered capital of
MULCD, representing 100% of the equity interest in MULCD, and is in the
process of injecting further assets into MULCD thereby increasing the total
investment amount and registered capital of MULCD.
(E) At a creditors' meeting held under section 227M of the
Companies Act, Singapore on 5 May 1999, the creditors of VKS approved a
Statement of Proposal which included, inter alia, the proposed sale of the
equity interests in each of VKSTD and MULCD.
(F) Pursuant to the aforesaid approval, both VKS and VKHK have
agreed to sell to the Purchaser their respective equity interests (including
the increased equities after the aforesaid asset injection) in VKSTD and
MULCD, and the Purchaser has agreed to purchase such equity interests
from each of VKS and VKHK respectively upon the terms and subject to the
conditions of this Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Agreement (including the recitals), unless the
context otherwise requires, the following words or expressions shall have the
following meanings respectively:
"BUSINESS DAY" means a day (other than a Saturday, Sunday or public holiday
in Singapore) on which commercial banks are open for business in Singapore;
"COMPLETION" means the completion of the sale and purchase of the Equity
Interests;
"COMPLETION DATE" means the date falling ninety (90) days from the date of
this Agreement (or such other date as the Parties may agree in writing);
"CONFIDENTIALITY INFORMATION" means the information and data identified or
defined as confidential information in the Confidentiality Undertaking,
including those referred to in Clause 11.2;
"CONFIDENTIALITY UNDERTAKING" means the confidentiality undertaking
dated 11 June 1998 executed by the Purchaser in favour of the Vendors;
"EFFECTIVE DATE" means:-
(i) where the Purchaser is permitted to manage the PRC Companies
pursuant to Clause 6, 31 July 1999 (or such other date as the Parties
may agree in writing); or
(ii) in any other case, the Completion Date;
"EQUITY INTERESTS" means the VKSTD Equity Interest and the MULCD Equity
Interest, which include (i) the assets listed in Schedule 1 hereto and all
other assets legally owned by either VKSTD or MULCD (excluding the Excluded
Assets), including, but not limited to VKSTD Inventory and MULCD Inventory;
and (ii) the Property;
"EXCLUDED ASSETS" means the assets set out in Schedule 2 herein, which are in
the possession or held to the order of the PRC Companies, and shall also
include such other assets (if any) falling into the possession of the PRC
Companies during the period between the date of signing of this Agreement and
the Effective Date, but do not belong to any of the PRC Companies;
"JUDICIAL MANAGERS" means the judicial managers of VKS appointed pursuant to
the order of court made on 6 December 1997 and such other judicial managers
or officers of VKS as may be appointed pursuant to an order of court in
addition to or replacement or substitution of the Judicial Managers;
"MANAGEMENT PERIOD" means the period beginning from 1 August 1999 (or such
other date as the Parties may agree in writing) and ending on the earlier of
the following dates (or such other dates as the Parties may agree in
writing):-
(i) the Completion Date, subject to Completion taking place on that date;
or
(ii) the date of termination of this Agreement;
"MULCD ASSETS" means the assets of MULCD set out in Schedule 1 herein;
"MULCD EQUITY INTEREST" means the one hundred per cent (100%) investment in
the registered capital of MULCD held by VKHK on Completion Date, together
with all rights, interests and benefits of VKHK in connection therewith;
"MULCD INVENTORY" means all goods and products (whether finished, partially
finished or otherwise), raw materials, work in progress and stock in trade of
MULCD;
"MULCD LIABILITIES" means, in respect of any period, all indebtedness,
payment obligations and liabilities (whether contingent or otherwise)
incurred by MULCD during that period;
"MULCD RECEIVABLES" means, in respect of any period, all cash, deposits,
receivables and book debts of MULCD accruing during that period;
"PARTIES" means VKS, VKHK and the Purchaser and "PARTY" means each or any one
of them;
"PRC" means the People's Republic of China;
"PRC COMPANIES" means VKSTD and MULCD and "PRC COMPANY" means each or any of
them;
"PRICE" means SINGAPORE DOLLARS EIGHTEEN MILLION TWO HUNDRED THOUSAND
(S$18,200,000.00), being the purchase consideration for the Equity Interests,
payable to the Judicial Managers as set out in Clause 5 herein subject to the
adjustments under Clause 3.4;
"PRICE ADJUSTMENT" means the aggregate total of all amounts to be adjusted
pursuant to Clause 3.3;
"PROPERTY" means the piece of land located at Heng Gang Vikay Science Park,
Heng Gang Industrial Estate, Long Gang Zone, Shenzhen, PRC with an estimated
land area of 17,901.1 square metres, and shall where the context so admits
include the buildings erected thereon;
"RENMINBI" or "RMB" means the lawful currency of the People's Republic of
China;
"SCOFTEC" means the Shenzhen Commission of Foreign Trade and Economic
Cooperation;
"SHA WAN CUSTOMS" means the customs authority in Sha Wan;
"SINGAPORE DOLLARS" or "S$" means the lawful currency of the Republic of
Singapore;
"SLAB" means the Shenzhen Land Administration Bureau;
"UNITED STATES DOLLARS" or "US$" means the lawful currency of the United
States of America;
"VEC" means Vikay Electronics Company;
"VENDORS" means VKS and VKHK;
"VKSTD ASSETS" means the assets of VKSTD set out in Schedule 1 herein;
"VKSTD EQUITY INTEREST" means the one hundred per cent (100%) investment in
the registered capital of VKSTD held by VKS on Completion Date, together with
all rights, interests and benefits of VKS in connection therewith;
"VKSTD INVENTORY" means all goods and products (whether finished, partially
finished or otherwise), raw materials, work in progress and stock in trade of
VKSTD;
"VKSTD LIABILITIES" means, in respect of any period, all indebtedness,
payment obligations and liabilities (whether contingent or otherwise)
incurred by VKSTD during that period;
"VKSTD RECEIVABLES" means, in respect of any period, all cash, deposits,
receivables and book debts of VKSTD accruing during that period; and
"XEC" means Xinhui Electronics Company.
1.2 Except to the extent that the context requires otherwise, any
reference to a statutory provision shall include such provision and any
regulations made in pursuance thereof as from time to time modified or
re-enacted whether before or after the date of this Agreement.
1.3 The headings in this Agreement are inserted for convenience
only and shall be ignored in construing this Agreement. Unless the context
otherwise requires, words (including words defined in this Agreement)
denoting the singular number only shall include the plural and vice versa.
References to Clauses in this Agreement are to be construed as references to
clauses of this Agreement.
1.4 In the event any translation of this Agreement into Chinese
or any other language is required for the purpose of any approval,
registration, filing, legal proceedings or any other purpose whatsoever, that
translation shall be ignored in constructing this Agreement and in the event
of any inconsistency between this Agreement and any such translation, this
Agreement shall prevail.
2. DEPOSIT
The Purchaser shall, on the signing of this Agreement pay the
Vendors the sum of United States Dollars One Million (US$1,000,000.00) by way
of a cashier's order in favour of the Judicial Managers or telegraphic
transfer (with a value date not later than two (2) Business Days after the
date of this Agreement) to a bank account specified by the Judicial Managers
as a deposit (the "DEPOSIT") for the purchase of the Equity Interests, which
sum shall be placed in an interest-bearing account as determined by the
Judicial Managers. The Deposit together with interest accrued thereon shall
be applied towards payment of the Price on Completion or utilised for such
other purposes in accordance with the terms of this Agreement.
3. SALE OF EQUITY INTERESTS
3.1 Subject to the terms and conditions of this Agreement:-
(a) VKS shall sell and the Purchaser shall purchase
the VKSTD Equity Interest (excluding the
Excluded Assets); and
(b) VKHK shall sell and the Purchaser shall purchase the
MULCD Equity Interest (excluding the Excluded
Assets).
3.2 The Parties acknowledge and agree that the Price comprises:
(a) the agreed value of VKSTD Assets and MULCD Assets;
(b) the agreed value of VKSTD Inventory and MULCD
Inventory, subject to Clauses 3.3 and 7 below; and
(c) the agreed value of the Property, subject to Clause
3.4 below,
but excludes INTER ALIA all VKSTD Liabilities, VKSTD
Receivables, MULCD Liabilities, MULCD Receivables and Excluded
Assets as at the Effective Date, which shall be dealt with by
the Parties in accordance with Clause 7.
3.3 In the event that the inventory levels of VKSTD Inventory and
MULCD Inventory as at the Effective Date are at variance with those set out
in Schedule 1 herein, the Parties hereby agree to adjust the Price as follows
to take into consideration the aforesaid difference in inventory levels:-
A = B x D% x Q
whereby:-
"A" is the amount to be adjusted for each inventory item;
"B" is the gross value of that inventory item as set out in
Schedule 1 herein;
"D" is the discount to be given by the Vendors to the Purchaser
or the Purchasers to the Vendors (as the case may be) for the
adjustment of the inventory, which is agreed by the Parties to
be fifty per cent (50%).
"Q" is the quantity of an inventory item as at the Effective
Date less the quantity of that inventory item as set out in
Schedule 1.
3.4 The agreed value of the Property does not include the land
premium payable by VKSTD to SLAB for the grant of the land use rights in
respect of the Property and the Purchaser shall bear such land premium
imposed by SLAB by increasing the Price payable to the Vendors on Completion
by the same amount or by such other methods as may be agreed between the
Parties.
3.5 All toolings, drawings, process specifications and such other
items owned by the customers of the PRC Companies and which are in the
custody or possession of the PRC Companies or the Vendors on the Effective
Date shall, subject to the customers instructing otherwise, be retained in
the PRC Companies and the Purchaser shall be responsible for and be
accountable to the respective customers for such toolings, drawings,
specifications and items with effect from the Effective Date provided always
that the Vendors shall not be obliged to hand over or account for any of the
aforesaid tooling, drawings, process specifications and items to the
Purchaser and/or the PRC Companies if they comprise part of the business
assets sold to Lantech (M) Sdn. Bhd. under the Sale and Purchase Agreement
dated 24 March 1999 ("Lantech Agreement") or if such act would result in the
Vendors being in breach of the provisions under the Lantech Agreement.
4. CONDITIONS PRECEDENT
4.1 The Parties agree that the sale and purchase of the Equity
Interests is subject to the following conditions precedent:-
4.1.1 this Agreement and the transactions contemplated herein
being approved or sanctioned by the courts of Singapore;
4.1.2 the transfer of VKSTD Equity Interest from VKS to the Purchaser
and the transfer of MULCD Equity Interest from VKHK to the
Purchaser being approved by SCOFTEC and/or such other relevant
government body or regulatory authority in the PRC in accordance
with the relevant PRC laws and regulations;
4.1.3 VKSTD obtaining a grant of the land use rights of the Property
from the SLAB;
4.1.4 the transfer of the assets of VEC and XEC to VKSTD and MULCD
being approved by the Sha Wan Customs and/or such other relevant
government body or regulatory authority in the PRC in accordance
with the relevant PRC laws and regulations; and
4.1.5 the increase in the total investment amount and registered
capital of VKSTD and MULCD being approved by SCOFTEC and/or such
other relevant government body or regulatory authority in the
PRC in accordance with the relevant PRC laws and regulations.
4.2 The Purchaser undertakes to furnish all necessary information
and documents and do all such acts and things as may be required by the
Vendors in procuring the approvals or sanction set out in Clause 4.1 above.
4.3 If the condition precedent under Clause 4.1.1 above is not
satisfied by Completion Date, this Agreement shall ipso facto cease and be
determined and the Vendors shall within seven (7) Business Days thereafter
refund the Deposit together with all interest accrued thereon to the
Purchaser (subject to such deductions that the Vendors may make in accordance
with Clauses 6 and 7) and thereafter, neither Party shall have any claim
against the others for costs, damages, compensation or otherwise save for
those expressly provided herein.
5. COMPLETION
5.1 Subject to the satisfaction of the conditions precedent
contained in Clause 4.1, Completion shall take place on Completion Date at
the Singapore office of the Judicial Managers (or at such other place as the
Parties may mutually agree in writing).
5.2 On Completion Date,
5.2.1 the Purchaser shall pay to the Judicial Managers the
difference between:-
(a) the Price (after taking into account the Price
Adjustment and any adjustment to the Price pursuant
to Clause 3.4); and
(b) the aggregate total of the Deposit and all interest
accrued thereon (which amount shall be converted from
the currency of the Deposit to the currency of the
Price based on such exchange rate to be agreed
between the Parties two (2) Business Days prior to
the Completion Date and failing such agreement, it
shall be the United States Dollars buying rate quoted
by Keppel TatLee Bank in Singapore two (2) Business
Days prior to the Completion Date); and
by way of a cashier's order in favour of the Judicial Managers
or telegraphic transfer (with a value date not later than the
Completion Date) to such account of the Judicial Managers as
they may notify in writing to the Purchaser at least two (2)
Business Days prior to the Completion Date;
5.2.2 in addition to the amount set forth in Clause 5.2.1, the
Purchaser shall (where applicable) pay to the Judicial Managers
a further sum equal to the Cash Balance referred to in Clause
6.1.5 in the same currency or such other currency as the Parties
may agree in writing (and if necessary, such amount shall be
converted from Renminbi to Singapore Dollars (or such other
currency to be agreed between the Parties) based on such
exchange rate to be agreed between the Parties two (2) Business
Days prior to the Completion Date and failing such agreement, it
shall be the official rate quoted by State Administration of
Foreign Exchange in PRC two (2) Business Days prior to the
Completion Date) by way of a cashier's order in favour of the
Judicial Managers or telegraphic transfer (with a value date not
later than the Completion Date) to such account of the Judicial
Managers as they may notify in writing to the Purchaser at least
two (2) Business Days prior to the Completion Date;
5.2.3 the Vendors shall, against payment by the Purchaser as referred
to in Clauses 5.2.1 and 5.2.2 above, deliver to the Purchaser
the following:-
(a) an investment certificate in respect of VKSTD Equity
Interest, duly issued by VKSTD in favour of the
Purchaser;
(b) an investment certificate in respect of MULCD Equity
Interest, duly issued by MULCD in favour of the
Purchaser;
(c) the approvals (or certified copies thereof)
referred to in Clauses 4.1.2 and 4.1.5; and
(d) the duly executed Sale and Purchase Agreement in
respect of the Property with SLAB.
5.3 If any of the provisions of Clause 5.2 are not complied with
on Completion Date, the Party not in default may (without prejudice to its
other rights and remedies) elect to:-
5.3.1 defer Completion to a date not later than seven (7) days after
the Completion Date (so that the provisions of this Clause 5
shall apply to Completion as so deferred); or
5.3.2 rescind this Agreement,
and shall forthwith inform the defaulting Party of its decision in writing.
5.4 In the event that the Purchaser fails to comply with its
payment obligation under Clause 5.2.1 above and the Vendors elect to rescind
the Agreement, the Vendors shall (in addition to and without prejudice to all
other rights and remedies available to it) be entitled to forfeit the Deposit
together with all interests accrued thereon and thereafter, this Agreement
shall ipso facto cease and be determined and thereafter, neither Party shall
have any claim against the others for costs, damages, compensation or
otherwise, save for those expressly provided herein.
5.5 In the event that the Vendors fail to deliver the documents
under Clause 5.2.2 above and the Purchaser elects to rescind the Agreement,
the Vendors shall, within seven (7) Business Days of their receipt of the
Purchaser's notice under Clause 5.3, refund the Deposit together with all
interests accrued thereon to the Purchaser (subject to such deductions that
the Vendors may make in accordance with Clauses 6 and 7) and thereafter,
neither Party shall have any claim against the others for costs, damages,
compensation or otherwise, save for those expressly provided herein.
5.6 Upon the termination of this Agreement (for any reason
whatsoever), if the approval under Clause 4.1.2 has been obtained, the
Purchaser shall, in addition, sign all necessary documents and do all such
acts and things as may be required by the Vendors to reverse the transaction
so that the Vendors remain the legal and beneficial owner of the VKSTD Equity
Interest and MULCD Equity Interest respectively.
6. MANAGEMENT OF PRC COMPANIES
6.1 Pending Completion, the Vendors shall, at the Purchaser's
request, permit the Purchaser to manage and operate the PRC Companies during
the Management Period subject to the following terms and conditions:-
6.1.1 the Purchaser shall be entitled to the profits but shall also
bear the losses of the PRC Companies accrued during the
Management Period. For the purpose of this provision:-
(a) the term "profits" shall be construed as the net
operating income of the PRC Companies after interest,
tax and (subject to sub-paragraph (b) below)
depreciation expenses;
(b) the Parties agree that a fixed depreciation sum of
Singapore Dollars Ninety-Five Thousand (S$95,000.00)
per month shall be taken into account for the
computation of the "profits" of the PRC Companies for
the purpose of this provision provided that if the
PRC Companies are deemed to have suffered losses
after such computation, the Purchaser need not bear
such losses if they are less than the aggregate total
of the aforesaid depreciation sum during such period.
The conversion from Renminbi to Singapore Dollars (or
vice versa) shall be based on such exchange rate to
be agreed between the Parties and failing such
agreement, it shall be the official rate quoted by
State Administration of Foreign Exchange in PRC on
the date of computation of "profits"; and
(c) the Parties agree that the amortisation of
balances prior to the Effective Date shall be
excluded from the computation of "profits"
hereunder;
6.1.2 during the Management Period, the Purchaser shall consult with
the Judicial Managers and seek their consent (which consent
shall not be unreasonably withheld) prior to implementing any of
the matters referred to below:-
(a) the appointment, renewal of tenure of or dismissal of
any managers and employees in each of the PRC
Companies, provided always that such appointment,
renewal and/or dismissal shall comply with the
applicable law, the articles of association of the
relevant PRC Company and the terms of any employment
agreement between the relevant PRC Company and the
manager or employee;
(b) any change of use of the premises and the facilities
and/or use of intellectual property rights, goodwill,
licences, permits, computer data, confidential
information, trade secrets, know-how, price lists,
suppliers, contractors and customers list of the PRC
Companies otherwise than in the ordinary course of
business and for the benefit of the PRC Companies;
(c) the acquisition and/or disposal of any asset of the
PRC Companies;
(d) the termination of any inter-company contracts and
arrangements; and
(e) the incurring of any indebtedness or liabilities by
the PRC Companies other than in the ordinary course
of business;
6.1.3 during the Management Period, the Purchaser shall undertake to:-
(a) perform and execute all transactions dealings acts
and things as may be necessary or expedient for
managing and operating the PRC Companies;
(b) faithfully and diligently manage, operate, supervise
and run the PRC Companies in an efficient and proper
manner with prudent management practices;
(c) obey all resolutions and directions consistent with
the terms of this Agreement as may, from time to
time, be made by the Judicial Managers;
(d) provide the Judicial Managers with such periodic
reports as may be requested from time to time by the
Judicial Managers in respect of the management,
supervision and operation of the PRC Companies and
consult the Judicial Managers on and keep the
Judicial Managers informed of all significant matters
relating to the PRC Companies;
(e) second such members of its own staff to the PRC
Companies to manage and operate the PRC Companies,
where necessary, at its own cost and expenses;
(f) ensure that all machineries, equipment, properties
and assets of the PRC Companies are maintained in
proper working order and condition (fair, wear and
tear excepted) or in the same condition as received
by the Purchaser on the Effective Date;
6.1.4 during the Management Period, the Purchaser shall not and shall
procure that the PRC Companies do not:-
(a) sell, transfer, lease, grant licences over, alienate
or otherwise assign, deal with or dispose of all or
any part of the PRC Companies' business, the
Property, the VKTSD Assets or the MULCD Assets or any
part thereof;
(b) create or attempt or agree to create or permit to
arise or subsist any encumbrance whatsoever on the
Property, the VKSTD Assets or the MULCD Assets or any
part thereof;
(c) engage in any activities other than those permitted
under the respective articles of associations and
business licences of the PRC Companies; and
6.1.5 any cash, including bank account balances, owned by the PRC
Companies on the Effective Date ("Cash Balance") shall remain in
the possession and control of the PRC Companies during the
Management Period and may be utilised by the Purchaser as
working capital for the PRC Companies provided that such Cash
Balance shall not exceed United States Dollars Three Hundred
Thousand (US$300,000.00) and that the Purchaser shall account to
and pay to the Judicial Managers the full Cash Balance on the
Completion Date in accordance with Clause 5.2.2 or Clause 6.4.2
(as the case may be);
6.2 The Vendors shall be entitled forthwith to terminate the
management arrangement under Clause 6.1 by written notice to
the Purchaser if:-
6.2.1 the Purchaser commits any material breach of any of the
provisions under Clause 6.1 and, in the case of a breach capable
of remedy, fails to remedy the same within fourteen (14) days
after receipt of a written notice requiring it to be remedied;
or
6.2.2 the Purchaser goes into liquidation; or
6.2.3 a provisional liquidator, judicial manager, receiver or manager
is appointed in respect of the whole of the undertaking,
property or assets or any part thereof of the Purchaser; or
6.2.4 the Purchaser makes any voluntary arrangement with its
creditors or becomes subject to an administration order; or
6.2.5 anything analogous to any of the foregoing under the law
of any jurisdiction occurs in relation to the Purchaser.
6.3 For the purpose of Clause 6.2.1, a breach shall be considered
capable of remedy if the Purchaser can comply with the provision in question
in all respects other than as to the time of performance. The rights to
terminate the management arrangement given by Clause 6.2 shall be without
prejudice to any other right or remedy of the Vendors in respect of the
breach concerned (if any) or any other breach.
6.4 In the event that the management arrangement under Clause 6.1
is terminated pursuant to Clause 6.2 herein or this Agreement is terminated
pursuant to Clause 4.3, Clause 5.4 or Clause 5.5:-
6.4.1 the Purchaser shall immediately cease to manage and operate the
PRC Companies and shall hand over the management and operation
of the PRC Companies to the Vendors;
6.4.2 the Purchaser shall within thirty (30) calendar days thereof
account to the Vendors:-
(a) the profits and losses of the PRC Companies accrued
during the Management Period and shall forthwith
where applicable indemnify the Vendors against all
such losses, including without limitation all VKSTD
Liabilities and MULCD Liabilities incurred by the PRC
Companies during the Management Period;
(b) the VKSTD Inventory and MULCD Inventory depleted by
the PRC Companies during the Management Period and
shall forthwith where applicable indemnify the
Vendors in accordance with the formula set out in
Clause 3.3 (except that "Q" shall then refer to the
quantity of inventory item depleted during the
Management Period);
(c) the Cash Balance referred to in Clause 6.1.5 and
forthwith pay to the Judicial Managers a sum
equivalent to the full Cash Balance in the same
currency or such other currency as the Parties may
agree in writing (and if necessary, such amount shall
be converted from Renminbi to Singapore Dollars (or
such other currency as may be agreed between the
Parties) based on such exchange rate to be agreed
between the Parties two (2) Business Days prior to
the date of payment and failing such agreement, it
shall be the official rate quoted by State
Administration of Foreign Exchange in PRC two (2)
Business Days prior to the payment date); and
(d) all toolings, drawings, process specifications and
such other items owned by the customers of the PRC
Companies and which are in the custody or possession
of the PRC Companies during the Management Period and
shall indemnify the Vendors against all losses and
damages in relation thereto.
6.4.3 subject to the full payment by the Purchaser of all such sums
arising under Clause 6.4.2 and compliance by the Purchaser of
the terms and conditions in this Agreement, the Vendors shall
pay the Purchaser the balance of any VKSTD Receivables and MULCD
Receivables that accrued during the Management Period as and
when payment is received from the debtors.
6.5 The Purchaser further undertakes to indemnify the Vendors
against all liabilities, losses, damages, actions, claims, demands,
proceedings, costs and expenses (including legal costs on a full indemnity
basis) as may be suffered or incurred by any of them in relation to its
management and operation of the PRC Companies pursuant to Clause 6.1 above.
6.6 Notwithstanding anything to the contrary provided herein,
neither of the Parties shall represent itself as the agent or legal
representative of the other Party for any purpose whatsoever or shall have
any right to create or assume any obligations of any kind (express or
implied) for and on behalf of the other Party in any way whatsoever and
nothing in this Agreement shall be deemed to constitute a partnership between
the Parties for any purpose.
7. ASSETS, RECEIVABLES AND LIABILITIES
7.1 The Parties agree that:-
7.1.1 the assets and liabilities of the PRC Companies (save for the
VKSTD Assets, VKSTD Inventory, MULCD Assets, MULCD Inventory and
Property) shall be apportioned as at the Effective Date such
that:-
(a) VKS shall be entitled to the VKSTD Receivables but
shall bear the VKSTD Liabilities as reflected in the
accounts of VKSTD as at the Effective Date;
(b) VKHK shall be entitled to the MULCD Receivables but
shall bear the MULCD Liabilities as reflected in the
accounts of MULCD as at the Effective Date;
(c) subject to Clause 6, the Purchaser shall be entitled
to the VKSTD Receivables and MULCD Receivables but
shall bear the VKSTD Liabilities and MULCD
Liabilities accrued during the Management Period;
7.1.2 without prejudice to Clause 7.1.1, the Purchaser shall account
to and pay the Vendors in full all VKSTD Inventory and MULCD
Inventory ordered or paid by the PRC Companies prior to the
Effective Date but received by or delivered to the PRC Companies
on or after the Effective Date. For the avoidance of doubt, it
is hereby agreed that Clause 3.3 shall not be applicable to the
computation of the value of the inventories referred to herein
and the Purchaser is required to account for such inventories,
based on the full purchase price, ordered or paid by the PRC
Companies;
7.1.3 for the purpose of Clauses 7.1.1 and 7.1.2, the Purchaser shall,
with effect from the Effective Date, provide the Judicial
Managers a monthly report on the status of the receivables and
liabilities referred to in Clauses 7.1.1(a) and (b) and the
inventories referred to in Clause 7.1.2, together with a
statement from the General Manager of the respective PRC
Companies certifying whether there is a net gain or net loss
after effecting a contra of the payments received or made (as
the case may be) by the PRC Companies in respect of the
aforesaid receivables and liabilities during the reporting
period, as well as the amount of the aforesaid inventories
received by or delivered to the PRC Companies during the said
period;
7.1.4 within fifteen (15) Business Days after the Judicial Managers'
receipt of the report and statement under Clause 7.1.3, the
Purchaser shall, if there is a net gain or inventory payment due
to the Vendors, forthwith pay to the Judicial Managers the said
net gain and/or inventory payment (as the case may be) and the
Judicial Managers shall, if there is a net loss attributable to
the Vendors, pay the Purchaser the said net loss; and
7.1.5 the Purchaser shall hold and shall procure the PRC Companies to
hold the Excluded Assets to the order of the Vendors subject to
such other arrangements that the Parties may agree regarding the
storage and disposal of the said assets.
7.2 The Purchaser further undertakes to provide the Judicial
Managers full and immediate access to the accounting records of the PRC
Companies for purposes of verifying the report and statement referred to in
Clause 7.1.3.
7.3 The Vendors shall be entitled to deduct from the Deposit and
all sums payable by the Vendors to the Purchaser under this Agreement, any
amounts due or owing from the Purchasers to the Vendors (including, without
limitation, any amount that the Purchaser is required to indemnify or account
to the Vendors pursuant to the terms of this Agreement).
7.4 The rights and obligations of the Parties under this Clause 7
shall survive the Completion and the termination of this Agreement.
8. REPRESENTATIONS AND WARRANTIES
8.1 Each of VKS and VKHK represent and warrant to and for the
benefit of the Purchaser and its successors in title as follows:-
8.1.1 subject to the approval under Clause 4.1 being obtained, they
have or will on Completion Date, have the full power and
capacity to enter into, exercise its rights and perform and
comply with their respective obligations under this Agreement;
8.1.2 all actions, conditions and things required to be taken,
fulfilled and done (including the obtaining of any necessary
consents) in order: (a) to enable each of VKS and VKHK
respectively to lawfully enter into, exercise their respective
rights and perform and
comply with their respective obligations under this
Agreement; and (b) to ensure that such obligations are valid,
legally binding and enforceable, have been taken, authorised,
fulfilled and done;
8.1.3 subject to the approvals under Clause 4.1 being obtained, their
respective obligations under this Agreement are or will be
valid, binding and enforceable;
8.1.4 VKS will, on the Completion Date be the legal and beneficial
owner of the VKSTD Equity Interest and that the VKSTD Equity
Interest is or will at the Completion Date be free and clear
from all claims, charges, trust, liens, equities and other
encumbrances and that such VKSTD Equity Interest will be
transferred to the Purchaser together with all rights, benefits
and entitlements attached thereto on Completion Date in
accordance with the terms of this Agreement;
8.1.5 VKHK will, on the Completion Date be the legal and beneficial
owner of the MULCD Equity Interest and that the MULCD Equity
Interest is or will at the Completion Date be free and clear
from all claims, charges, trust, liens, equities and other
encumbrances and that such MULCD Equity Interest will be
transferred to the Purchaser together with all rights, benefits
and entitlements attached thereto on Completion Date in
accordance with the terms of this Agreement;
8.1.6 each of the foregoing provisions of this Clause 8.1 will be
true and accurate in all respects as at Completion.
8.2 The Purchaser represents and warrants to and for the
benefit of each of VKHK and VKS as follows:-
8.2.1 it has full power and capacity to enter into, exercise its
rights and perform and comply with its obligations under this
Agreement;
8.2.2 all actions, conditions and things required to be taken,
fulfilled and done (including the obtaining of any necessary
consents) in order: (a) to enable it to lawfully enter into,
exercise its rights and perform and comply with its obligations
under this Agreement; and (b) to ensure that such obligations
are valid, legally binding and enforceable, have been taken,
authorised, fulfilled and done;
8.2.3 its obligations under this Agreement are or will be valid,
binding and enforceable;
8.2.4 it has or will on Completion Date have sufficient financial
resources to make payment of the Price in full; and
8.2.5 each of the foregoing provisions of this Clause 8.2 will be
true and accurate in all respects as at Completion.
8.3 Each of the representations and warranties in Clause 8.1 and
Clause 8.2 shall be separate and independent and shall not be limited by
anything in this Agreement and shall continue to have full force and effect
notwithstanding Completion.
8.4 It is hereby acknowledged and confirmed that save for the
representations and warranties made by the Vendors contained in this
Agreement, the Vendors make no other representations and warranties in
relation to PRC Companies or to themselves respectively or to their
respective assets or to the assets of the PRC Companies or the VKSTD Equity
Interest or the MULCD Equity Interest and the Purchaser hereby confirms that
it has not relied on any such representations and warranties and has entered
into this Agreement based on its own independent assessment of the PRC
Companies.
9. SEPARATE TRANSFER AGREEMENT
The Parties hereby agree to execute a separate and simplified
version of this Agreement in Chinese for purposes of submission to the
relevant PRC government and/or other relevant authorities for the approval of
the transfer of the Equity Interests as referred to in Clause 4.1.2 above,
and the aforesaid agreement shall contain such terms and conditions as the
Parties may agree.
10. OWN EVALUATION
The Purchaser acknowledges and confirms that it places no
reliance on any discussions or presentations made by either VKHK or VKS and
any of their directors, officers, auditors, employees, agents, advisers and
other representatives (including the Judicial Managers) in relation to this
Agreement or any matter in connection herewith.
11. CONFIDENTIALITY
11.1 The Purchaser hereby acknowledges and confirms that the terms
of the Confidentiality Undertaking shall remain binding upon it as if it were
incorporated into this Agreement.
11.2 The Purchaser further acknowledges that it may from time to
time be in possession of confidential information about the PRC Companies,
VKS, VKHK and/or the Judicial Managers and hereby undertakes that it will use
such confidential information solely for the purpose of this Agreement and
that it shall not disclose whether directly indirectly to any person such
information other than as may be required to carry out the purpose of this
Agreement. Where such disclosure is made to any other person as aforesaid,
the Purchaser shall ensure that such other person complies with this Clause.
11.3 In the event of termination of this Agreement, the Purchaser
shall, upon the Vendors' request, promptly deliver to them or destroy (and
give written notice to either of them of such destruction) all Confidential
Information (including all copies thereof) in the Purchaser's possession or
under its control.
11.4 The Purchaser hereby irrevocably and unconditionally
undertakes to indemnify and hold harmless each of VKHK and VKS and any of
their directors, officers, advisers and other representatives (including the
Judicial Managers) from and against all and any liabilities, losses, damages,
actions, claims, demands, proceedings, costs and expenses (including legal
costs on a full indemnity basis in disputing or defending any of the
foregoing) which any of such persons may incur or suffer pursuant to or in
connection with any breach by the Purchaser or any of its directors,
officers, employees, advisers or representatives of this Clause 11.
12. RELEASE AND INDULGENCE
Any liability of any Party under this Agreement may in whole
or in part be released, compounded or compromised, or time or indulgence
given by it in its absolute discretion as regards the other Parties without
in any way prejudicing or affecting its rights against such other Party. No
failure to exercise and no delay in exercise on the part of any Party of any
right or remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right or remedy prevent any
further or other exercise thereof or the exercise of any other right or
remedy. The rights and remedies provided in this Agreement are cumulative and
not exclusive of any other rights or remedies (whether provided by law or
otherwise).
13. CONTINUING EFFECT OF AGREEMENT
All provisions of this Agreement shall so far as they are
capable of being performed or observed continue in full force and effect
notwithstanding completion of the transfer of the Equity Interests except in
respect of those matters then already duly performed.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding on and shall enure for the
benefit of each Party's successors and permitted assigns. Any reference in
this Agreement to each of the Parties shall be construed accordingly. None of
the Parties may assign or transfer any of its rights and/or obligations under
this Agreement to any person without the prior written consent of the other
Parties.
15. JUDICIAL MANAGERS
15.1 The Judicial Managers are hereby authorised by the Vendors:-
(a) to receive the Price and all sums owing and
payable to the Vendors under this Agreement; and
(b) to discharge and satisfy all sums owing and payable
by the Vendors under this Agreement,
(c) to make any arrangement or enter into any compromise
with the Purchaser in respect of this Agreement and
the transactions contemplated herein;
(d) to take or defend proceedings in the name of the
Vendors and to negotiate, compromise, abandon and
settle any claims and proceedings in respect of this
Agreement and the transactions contemplated herein;
(e) to demand, receive, give valid receipt for or
discharge any of the foregoing; and
(f) to do or cause to be done all such acts or things
incidental to the exercise of the foregoing powers or
as may be necessary for the transactions contemplated
herein.
15.2 The Purchaser hereby acknowledges and confirms that the
Judicial Managers are acting as agents for and on behalf of the Vendors in
relation to this Agreement and all matters in connection herewith and that
none of the Judicial Managers assumes any personal liability in relation to
this Agreement or any other matter in connection herewith.
16. TIME OF ESSENCE
Time shall be of the essence of this Agreement, both as
regards the dates and periods mentioned and as regards any dates and periods
which may be substituted for them in accordance with this Agreement or by
agreement in writing between the Parties, provided that any time prescribed
by this Agreement for the performance by the Purchaser of its obligations
under this Agreement may be extended by both of VKHK and VKS in their
discretion until such time and subject to such conditions as they may deem
fit.
17. COSTS AND EXPENSES
All expenses incurred by or on behalf of the Parties in
connection with the negotiation, preparation and execution of this Agreement
shall be borne solely by the Party which incurred them save that the
Purchaser shall bear any goods and services tax, stamp duty or any other
taxes imposed by any governmental, statutory or taxing authority in
connection with this Agreement and the sale and purchase of the Equity
Interests.
18. NOTICES
All notices, demands or other communications required or
permitted to be given or made under or in connection with this Agreement
shall be in writing and delivered personally or sent by prepaid registered
post or by fax addressed to the intended recipient thereof at its address or
fax number, and marked for the attention of such person (if any), set out
under its name at the beginning of this Agreement (or to such other address
or fax number as such Party may from time to time notify the other). Any such
notice, demand or communication shall be deemed to have been duly served (if
given or made by fax) immediately or (if given or made by letter) immediately
if hand delivered or seven days after posting and in proving the same it
shall be sufficient to show that the envelope containing the same was duly
addressed, stamped and posted.
19. PARTIAL INVALIDITY
If any term or provision in this Agreement shall be held to
be illegal or unenforceable, in whole or in part, under any applicable law,
such term or provision or part shall to that extent be deemed not to form
part of this Agreement but the enforceability of the remainder of this
Agreement shall not be affected.
20. GOVERNING LAW
This Agreement shall be governed by, and construed in
accordance with, the laws of Singapore and the Parties hereby irrevocably
submit to the non-exclusive jurisdiction of the courts of Singapore and waive
any objection to proceedings in any such court on the grounds of venue or on
the grounds that the proceedings have been brought in an inconvenient forum.
21. ENTIRE AGREEMENT
This Agreement sets out the entire agreement and
understanding between the Parties in connection with the matters dealt with
herein. This Agreement supersedes any previous agreement (oral or otherwise)
between the Parties in relation to the matter dealt with herein and
represents the entire understanding between the Parties in relation thereto.
22. COUNTERPARTS
This Agreement may be executed and delivered in several
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the
same agreement.
SCHEDULE 1-1
FIXED ASSETS LISTING
Plant and Machinery
SCHEDULE 1-2
FIXED ASSETS LISTING
Assets other than Plant and Machinery
SCHEDULE 1-3
INVENTORY LISTING
SCHEDULE 2-1
LIST OF EXCLUDED ASSETS
Assets on Hire Purchase
SCHEDULE 2-2
LIST OF EXCLUDED ASSETS
Property owned by Related Parties
SCHEDULE 2-3
LIST OF EXCLUDED ASSETS
Property owned by PRC Companies' customers
IN WITNESS WHEREOF the Parties hereto have entered into this
Agreement on the day and year first above written.
THE VENDORS:-
SIGNED by )
)
for and on behalf of )
VIKAY INDUSTRIAL LTD ) /s/ THAM ▇▇▇ ▇▇▇▇
-------------------- ) ---------------------------------
(IN JUDICIAL MANAGEMENT) )
in the presence of:- )
SIGNED by )
)
for and on behalf of )
VIKAY INDUSTRIAL (HONG KONG) LTD ) /s/ ▇▇▇▇▇▇▇ ▇▇▇
-------------------------------- ) ---------------------------------
in the presence of:- )
THE PURCHASER:-
SIGNED by )
)
for and on behalf of )
INTERNATIONAL DISPLAYWORKS. INC. ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------- ) -----------------------------------
in the presence of:- )