Exhibit 10.1
Hong Kong Offer
Underwriting Agreement
among
(1) ▇▇▇ Online Inc.
as the Company
(2) ▇▇▇ Group Limited (formerly ▇▇▇.▇▇▇ LIMITED)
as ▇▇▇
(3) Citigroup Global Markets Asia Limited
as Citigroup
(4) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Asia Limited
as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
(5) The companies named in Schedule 1
as the Hong Kong Underwriters
relating to
a public offer of 100,000,000 ordinary shares (subject to adjustment) and a
preferential offering of 38,782,700 ordinary shares (subject to adjustment) of
par value HK$0.01 each in the capital of ▇▇▇ Online Inc. in Hong Kong, as part
of a global offering
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
35th Floor ▇▇▇▇▇▇ Kong Center ▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
T (▇▇▇) ▇▇▇▇ ▇▇▇▇ F (▇▇▇) ▇▇▇▇ ▇▇▇▇ DX 009121 Central 1
CONTENTS
1. INTERPRETATION..................................................... 2
2. THE GLOBAL OFFERING................................................ 12
3. THE HONG KONG OFFER................................................ 15
4. COSTS, EXPENSES, FEES AND COMMISSIONS.............................. 23
5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS....................... 24
6. FURTHER UNDERTAKINGS............................................... 25
7. INDEMNITY.......................................................... 28
8. TERMINATION IN EXCEPTIONAL CIRCUMSTANCES........................... 29
9. GENERAL PROVISIONS................................................. 31
schedule 1 : HONG KONG UNDERWRITERS..................................... 35
schedule 2 : CONDITIONS PRECEDENT DOCUMENTS............................. 36
schedule 3 : WARRANTIES................................................ 39
3. Reorganisation..................................................... 40
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THIS AGREEMENT is made on 1 March 2004
BY:
(1) ▇▇▇ ONLINE INC. (the "Company"), a company incorporated in the Cayman
Islands and having its registered office at ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ Church Street, ▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands, British
West Indies and its principal place of business at 8/th/ Floor, Tower W3,
Oriental Plaza, ▇▇.▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, the People's Republic of China;
(2) ▇▇▇ GROUP LIMITED ("▇▇▇") (formerly ▇▇▇.▇▇▇ LIMITED), a company
incorporated in the Cayman Islands and having its registered office at ▇.▇.
▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ Church Street, ▇▇▇▇▇▇ Town, Grand Cayman,
Cayman Islands, British West Indies and its principal place of business in
Hong Kong at ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇;
(3) CITIGROUP GLOBAL MARKETS ASIA LIMITED ("Citigroup"), a company incorporated
in Hong Kong and having its principal place of business in Hong Kong at
20/th/ Floor, Three Exchange Square, ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇;
(4) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ASIA LIMITED ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇"), a company
incorporated in Hong Kong and having its principal place of business in
Hong Kong at ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇; and
(5) THE COMPANIES NAMED IN SCHEDULE 1 (the "Hong Kong Underwriters"), the names
and addresses of which are set out in Schedule 1.
RECITALS:
(A) The Company was incorporated in the Cayman Islands on 28 August 2001 and
was registered in Hong Kong as an oversea company under Part XI of the
Companies Ordinance on 7 October 2003.
(B) As at the date hereof, the authorised share capital of the Company is
HK$100,000,000 divided into 10,000,000,000 Shares, of which 2,800,000,000
Shares have been allotted and issued and are fully paid or credited as
fully paid.
(C) As at the date hereof, ▇▇▇ is the sole registered and beneficial owner of
all the issued share capital of the Company. The shares of ▇▇▇ are listed
on GEM.
(D) The Company has made arrangements for (1) the Hong Kong Offer Shares to be
offered for subscription to the public, (2) the Reserved Shares to be
offered for subscription to the Qualifying Shareholders, (3) the
International Offering Shares to be offered for subscription by way of an
international placing outside the United States and Canada, and (4) the US
Offering Shares to be offered for subscription in the United States and
Canada.
(E) The Hong Kong Underwriters have severally agreed to underwrite the Hong
Kong Public Offering on the terms and subject to the conditions set out in
this Agreement.
(F) The Company proposes to appoint The Hongkong and Shanghai Banking
Corporation Limited and Bank of China (Hong Kong) Limited to act as
receiving bankers for the Hong Kong Public Offering and the Preferential
Offering.
(G) The Company proposes to appoint Computershare Hong Kong Investor Services
Limited to act as the Company's Hong Kong share registrar and transfer
office.
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(H) As part of the Global Offering, the Company, ▇▇▇, the US Underwriters, the
International Underwriters and Joint Global Coordinators have separately
entered into the International Underwriting Agreement providing for the
underwriting of the International Offering and the US Offering by the
International Underwriters and US Underwriters, subject to the terms and
conditions set out in the International Underwriting Agreement.
(I) Citigroup and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, as joint sponsors to the Company, have, on
behalf of the Company, submitted an application to the Stock Exchange for
the listing of, and permission to deal in, the Shares in issue and the
Shares to be issued and listed on GEM as described in the Prospectus.
(J) The Warrantors have agreed to give certain representations. warranties and
undertakings as contained in this Agreement.
IT IS AGREED as follows:
1. INTERPRETATION
1.1 Definitions
In this Agreement (including the Recitals and the Schedules), the following
expressions shall, unless the context otherwise requires, have the
following meanings:
"Acceptance Date" 5 March 2004, being the date on
which the Application Lists closes
in accordance with the provisions of
Clause 3.1(C) (subject to
postponement as set out in that
Clause);
"Accepted Hong Kong Public Offering the Hong Kong Public Offering
Applications" Applications which have been
accepted (whether in whole or in
part) pursuant to Clause 3.1(D);
"Accepted Preferential Offering the Preferential Offering
Applications" Applications which have been
accepted (whether in whole or in
part) pursuant to Clause 3.1(D);
"Accounts Date" 31 December 2003;
"ADSs" American depositary shares to be
issued by the Citibank, N.A. which
are to be included for quotation on
NASDAQ, each of which representing
80 Shares;
"affiliates" shall have the meaning as set out in
Regulation S-X, namely that an
"affiliate" of, or a person
"affiliated" with, a specific person
is a person that directly, or
indirectly through one or more
intermediaries, controls, or is
controlled by, or is under common
control with, the person specified;
"Application Lists" the application lists for the Hong
Kong Public Offering and the
Preferential Offering;
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"Approvals" includes all approvals, sanctions,
consents, permissions,
authorisations, filings,
certificates, permits, licences,
clearances, orders, declarations,
waivers, exemptions, authority and
registrations;
"Articles" the articles of association of the
Company as at the date of this
Agreement;
"Associate" has the meaning ascribed to the term
"associate" in the GEM Listing
Rules;
"Board" the board of directors of the
Company;
"Business Day" any day (other than a Saturday or
Sunday) on which banks in Hong Kong
are generally open for banking
business;
"CCASS" the Central Clearing and Settlement
System established and operated by
Hong Kong Securities Clearing
Company Limited;
"Companies Law" the Companies Law (2003 Revision),
Chapter 22 of the Laws of the Cayman
Islands;
"Companies Ordinance" the Companies Ordinance (Chapter 32
of the Laws of Hong Kong);
"Conditions" the conditions set out in Clauses
2.1(A) and 2.1(E);
"Conditions Precedent Documents" the documents listed in Schedule 2;
"Deed of Indemnity" the deed in relation to, inter alia,
the tax indemnity provided in
connection with the Hong Kong Public
Offering entered into between ▇▇▇
and the Company on the date of this
Agreement;
"Deed of Non-competition" the deed of non-competition entered
into between ▇▇▇ and the Company,
dated 27 February 2004;
"Directors" the directors of the Company whose
names are set out in the section
headed "Directors, senior management
and staff" in the Prospectus;
"dispose" sell, transfer, assign, create any
option, lien or third party rights,
charge, pledge or encumber or agree
to or allow any of the above and
"disposal" shall be construed
accordingly;
"Escrow Agreements" the two escrow agreements to be
entered into between The Hongkong &
Shanghai Banking Corporation Limited
and (i) ▇▇▇ and (ii) Cranwood
Company Limited;
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"Exchange Act" the US Securities Exchange Act of
1934, as amended;
"Force Majeure Expiry Date" the date being the Listing Date;
"Force Majeure Expiry Time" 8:00 a.m. on the Force Majeure
Expiry Date;
"Formal Notice" the formal notice to be published in
connection with the Hong Kong Public
Offering in the agreed form;
"GEM" the Growth Enterprise Market of the
Stock Exchange;
"GEM Listing Committee" the listing sub-committee of the
board of the Stock Exchange with
responsibility for GEM;
"GEM Listing Rules" the Rules Governing the Listing of
Securities on the Growth Enterprise
Market of The Stock Exchange of Hong
Kong Limited;
"GEM Website" the Internet website operated by the
Stock Exchange for the purposes of
GEM;
"Global Offering" the Hong Kong Public Offering, the
Preferential Offering, the
International Offering and the US
Offering;
"Group" the Company and the Subsidiaries or,
where the context refers to any time
prior to the effective date of the
Reorganisation, the Company's
present subsidiaries or the
businesses operated by such
subsidiaries or their respective
predecessors (as the case may be);
"HK dollars" or "HK$" Hong Kong dollars, the lawful
currency of Hong Kong;
"Hong Kong" the Hong Kong Special Administrative
Region of the PRC;
"Hong Kong Offer" the Hong Kong Public Offering and
the Preferential Offering;
"Hong Kong Offer Documents" the Hong Kong Public Offering
Documents and the Preferential
Offering Documents;
"Hong Kong Offer Shares" the Hong Kong Public Offering Shares
and the Reserved Shares;
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"Hong Kong Pricing Letter" the letter agreement to be entered
into between the Joint Global
Coordinators, on behalf of the Hong
Kong Underwriters, and the Company
immediately following the
determination of the Issue Price in
accordance with Clause 2.2 to record
the price so determined;
"Hong Kong Public Offering" the offer of the Hong Kong Public
Offering Shares to members of the
public in Hong Kong on and subject
to the terms and conditions set out
in the Hong Kong Public Offering
Documents;
"Hong Kong Public Offering the white and yellow application
Application Forms" forms on which Hong Kong Public
Offering Applications may be made,
copies of which have been furnished
by the Company to the Joint Global
Coordinators prior to signing of
this Agreement;
"Hong Kong Public Offering application moneys received in
Application Moneys" respect of the Hong Kong Public
Offering Applications;
"Hong Kong Public Offering applications for the Hong Kong
Applications" Public Offering Shares made on the
Hong Kong Public Offering
Application Forms and accompanied by
cheques or cashier's orders for the
full amount payable on application
which are honoured on first (or, at
the Joint Global Coordinators'
option, subsequent) presentation and
otherwise in compliance with the
terms of the Hong Kong Public
Offering Documents;
"Hong Kong Public Offering Documents" the Prospectus and the Hong Kong
Public Offering Application Forms;
"Hong Kong Public Offering means a situation where the number
Over-Subscription" of Hong Kong Public Offering Shares
comprised in Accepted Hong Kong
Public Offering Applications is
greater than the aggregate number of
the Hong Kong Public Offering
Shares;
"Hong Kong Public Offering Shares" the Shares initially to be offered
pursuant to the Hong Kong Public
Offering, being 100,000,000 in
number, subject to adjustment under
Clauses 2.3 and 2.4;
"Hong Kong Public Offering Under- has the meaning ascribed thereto in
Subscription" Clause 3.4(B);
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"Hong Kong Public Offering in relation to any Hong Kong
Underwriting Commitment" Underwriter, the maximum number of
Hong Kong Public Offering Shares,
the application for which such Hong
Kong Underwriter has agreed to
underwrite pursuant to the terms of
this Agreement as shown opposite its
name in column (II) in Clause
3.4(B)(1), subject to adjustment as
set out in Clauses 2.3 and 2.4;
"International Offering" the conditional placing of the
International Offering Shares to
investors outside the US and Canada
as referred to in the Prospectus;
"International Offering Shares" the ADSs initially to be placed
under the International Offering,
being 5,625,000 ADSs in number
(equivalent to 450,000,000 Shares)
(which may, at the option of
investors, be delivered in the form
of Shares), subject to adjustment as
set out in the International
Underwriting Agreement, the
Intersyndicate Agreement and Clauses
2.3 and 2.4;
"International Underwriters" the underwriters of the
International Offering as set out in
the International Underwriting
Agreement;
"International Underwriting Agreement" the agreement relating to the
underwriting of the US Offering and
the International Offering to be
entered into between the Company,
the US Underwriters, the
International Underwriters and the
Joint Global Coordinators on the
Price Determination Date;
"Intersyndicate Agreement" the agreement among the Hong Kong
Underwriters, the US Underwriters
and the International Underwriters
and the Joint Global Coordinators
expected to be entered into on the
Price Determination Date;
"Issue Price" the Hong Kong dollar price per Share
at which the Hong Kong Offer Shares
are to be subscribed, being
initially HK$1.50 per Share, subject
to final determination in accordance
with Clause 2.2;
"Joint Global Coordinators" Citigroup and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
"Laws" include all laws, rules,
regulations, guidelines, opinions,
notices, circulars, orders,
judgments, decrees or rulings of any
court, government. governmental or
regulatory authority (including,
without limitation, the Stock
Exchange);
"Listing Date" the day on which dealings in the
Shares commence on GEM;
6
"NASDAQ" the Nasdaq National Market in the
US;
"Nominees" HSBC Nominees (Hong Kong) Limited;
"Offer Shares" the Hong Kong Public Offering
Shares, the Reserved Shares, the
International Offering Shares and
the US Offering Shares;
"Operative Documents" the Reorganisation Documents, the
Receiving Bankers Agreement, the
Registrar Agreement, the Deed of
Non-competition, the Deed of
Indemnity and the Escrow Agreements;
"Over-allotment Option" the option to be granted by ▇▇▇ to
the Joint Global Coordinators to
require ▇▇▇ to sell the
Over-allotment Shares pursuant to
the provisions of the International
Underwriting Agreement;
"Over-allotment Shares" up to 150,000,000 Shares which ▇▇▇
▇▇▇ be required to sell at the Issue
Price pursuant to the Over-allotment
Option;
"Overseas Shareholders" holders of shares in ▇▇▇ whose
addresses on the register of members
of ▇▇▇ were outside Hong Kong as at
close of business on the Record
Date;
"PRC" the People's Republic of China
(which shall for the purposes of
this Agreement, unless otherwise
expressly provided, excludes Hong
Kong, the Macau Special
Administrative Region of the PRC and
Taiwan);
"Preferential Offering" the preferential offering to the
Qualifying Shareholders to subscribe
for the Reserved Shares on a
preferential basis pursuant to
assured entitlements on and subject
to the terms and conditions set out
in the Preferential Offering
Documents;
"Preferential Offering Application the blue application forms on which
Forms" the Preferential Offering
Applications may be made, a copy of
which has been furnished by the
Company to the Joint Global
Coordinators prior to signing of
this Agreement;
"Preferential Offering Application subscription moneys received in
Moneys" respect of the Preferential
Offering;
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"Preferential Offering Applications" applications for the Reserved Shares
made on the Preferential Offering
Application Forms and accompanied by
cheques or cashier's orders for the
full amount payable on application
which are honoured on first (or, at
the Joint Global Coordinators'
option, subsequent) presentation and
otherwise in compliance with the
terms of the Preferential Offering
Documents;
"Preferential Offering Documents" the Prospectus and the Preferential
Offering Application Forms;
"Pre-IPO Share Option Plan" the pre-IPO share option plan of the
Company, the principal terms of
which are summarised in the
paragraph headed "Share Options" in
Appendix VII to the Prospectus;
"Price Determination Date" means 5 March 2003 (New York time)
or such other time or date as the
Company and the Joint Global
Coordinators may agree, being the
date on which the Issue Price is
fixed for the purposes of the Hong
Kong Public Offering in accordance
with Clause 2.2;
"Property Valuers" American Appraisal China Limited;
"Prospectus" the prospectus to be issued by the
Company in connection with the Hong
Kong Public Offering and the
Preferential Offering, a copy of
which has been furnished by the
Company to Joint Global Coordinators
prior to signing of this Agreement;
"Prospectus Date" the date of issue of the Prospectus,
which is intended to be on or about
2 March 2004;
"Qualifying Shareholders" the shareholders of ▇▇▇ whose names
appeared on the register of members
of ▇▇▇ as holding shares in ▇▇▇ as
at the close of business on the
Record Date, other than the Overseas
Shareholders;
"Receiving Bankers" The Hongkong and Shanghai Banking
Corporation Limited and Bank of
China (Hong Kong) Limited;
"Receiving Bankers Agreement" the agreement
entered into by the Company, the
Receiving Bankers, the Nominees and
the Joint Global Coordinators on the
date of this Agreement;
"Record Date" Date" 24 February 2004, being the
record date for ascertaining the
assured entitlements of the
Qualifying Shareholders to apply for
the Reserved Shares;
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"Reference Public Offering Amount" the amount obtained by A x (B - C)
where A = the Issue Price, B = the
initial Hong Kong Public Offering
Shares, C = the number of unsubscribed
Hong Kong Public Offering Shares which
are reallocated to the International
Offering and/or the US Offering in
accordance with Clause 2.4;
"Registrar" Computershare Hong Kong Investor
Services Limited;
"Registrar Agreement" the registrar and transfer agent
agreement entered into between the
Company and the Registrar, dated 1
March 2004, a copy of which has been
furnished by the Company to the Joint
Global Coordinators prior to signing of
this Agreement;
"Regulation S" Regulation S under the Securities Act;
"Relevant Public Offering In relation to any Hong Kong
Application" Underwriter, a Hong Kong Public
Offering Application made or procured
to be made by such Hong Kong
Underwriter, the number of Hong Kong
Public Offering Shares comprised in
which is applied to reduce the Hong
Kong Public Offering Underwriting
Commitment of such Hong Kong
Underwriter pursuant to the provisions
of Clause 3.4(A);
"Reorganisation" the corporate reorganisation of the
business operations, assets and
liabilities of the Group as described
in the paragraph headed "Corporate
reorganization" in Appendix VII to the
Prospectus;
"Reorganisation Documents" the documents referred to in the
section headed "Corporate
reorganization" in Appendix VII to the
Prospectus;
"Reporting Accountants" PricewaterhouseCoopers, certified
public accountants;
"Reserved Shares" the Shares initially to be offered
pursuant to the Preferential Offering,
being 38,782,700 in number, subject to
any adjustment as provided in the
Intersyndicate Agreement and the
International Underwriting Agreement;
"Securities Act" the United States Securities Act of
1933, as amended;
"SFC" the Securities and Futures Commission
in Hong Kong;
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"Share Option Scheme" the share option scheme of the Company,
the principal terms of which are
summarised in the paragraph headed
"Share Options" in Appendix VII to the
Prospectus;
"Shares" ordinary shares of nominal value
HK$0.01 each in the share capital of
the Company;
"Stock Exchange" The Stock Exchange of Hong Kong
Limited;
"Subsidiaries" the subsidiaries of the Company, the
names of which are listed in the
accountants' report included as
Appendix I to the Prospectus;
"Takeovers Code" the Code on Takeovers and Mergers of
Hong Kong;
"Underwriters" the Hong Kong Underwriters, the US
Underwriters and the International
Underwriters;
"United States or Canadian Person" any national or resident of the United
States or Canada, or any corporation,
pension, profit-sharing or other trust
or other entity organized under the
laws of the United States or Canada or
any political subdivision thereof
(other than a branch located outside
the United States and Canada of any
United States or Canadian Person), and
shall include any United States or
Canadian branch of a person who is
otherwise not a United States or
Canadian Person;
"US" or "United States" the United States, as defined in
Regulation S;
"US dollars" or "US$" United States dollars, the lawful
currency of the United States;
"US Offering" the offering of the US Offering Shares
by the US Underwriters in the United
States and Canada;
"US Offering Shares" 5,625,000 ADSs (representing
450,000,000 Shares) (which may, at the
option of investors, be delivered in
the form of Shares) pursuant to the US
Offering, subject to adjustment as
provided in the International
Underwriting Agreement, the
Intersyndicate Agreement and Clauses
2.3 and 2.4;
"US Underwriters" the underwriters of the US Offering led
by Citigroup Global Markets Inc. and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated as
set out in the International
Underwriting Agreement;
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"Verification Notes" the verification notes prepared by
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ in connection with
the verification of the Prospectus;
"Warranties" the representations, warranties and
undertakings to be given by the
Warrantors referred to in Clause 5 and
Schedule 3; and "Warranty" shall be
construed accordingly; and
"Warrantors" the Company and ▇▇▇.
1.2 Other interpretation
In this Agreement, unless otherwise specified:
(A) References to Recitals, Clauses, paragraphs, sub-paragraphs or
Schedules are to recitals, clauses, paragraphs, sub-paragraphs of or
schedules to this Agreement and the Recitals and the Schedules shall
form part of this Agreement and shall have the same force and effect
as if expressly set out in the body of this Agreement.
(B) The headings are for convenience only and do not affect interpretation
of this Agreement.
(C) Unless the context otherwise requires:
(1) words in the singular include the plural, and vice versa;
(2) words importing any gender or the neuter include all genders and
the neuter;
(3) a reference to a "person" shall be construed so as to include any
individual, firm, business, company, body corporate or
unincorporated or other juridical person, government, federation,
state or agency thereof or any joint venture, association,
partnership or trust (whether or not having separate legal
personality); and
(4) a reference to a "company" shall be construed so as to include
any company, corporation or other body corporate, wherever and
however incorporated or established.
(D) A reference to a statute, statutory provision or regulation shall be
construed as a reference to:
(1) that statute, provision or regulation as from time to time
amended, modified or re-enacted;
(2) any repealed statute, statutory provision or regulation which it
re-enacts (with or without modification); and
(3) any orders, regulations, instruments or other subordinate
legislation made under the relevant statute, statutory provision
or regulation.
(E) References to writing shall include any modes of reproducing words in
a legible and non-transitory form.
(F) References to times of the day are to Hong Kong time, unless otherwise
stated.
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(G) Except as otherwise expressly provided, words and expressions defined
in the Companies Ordinance as at the date hereof have the same
meanings when used in this Agreement.
(H) (1) The rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that
they are preceded by words indicating a particular class of acts,
matters or things.
(2) General words shall not be given a restrictive meaning by reason
of the fact that they are followed by particular examples
intended to be embraced by the general words.
(I) References to any document (including this Agreement) are references
to that document as amended, consolidated, supplemental, novated or
replaced from time to time.
(J) References to documents being "in the agreed form" are to the form of
he draft or final or executed version thereof signed for
identification by or on behalf of the Company and the Joint Global
Coordinators with such alterations as may be agreed between the
Company and the Joint Global Coordinators but such documents in the
agreed form do not form part of this Agreement.
(K) Where the phrase "best endeavours" is used in this Agreement, it shall
be given its common law meaning provided that it shall not be
construed to require the party giving the undertaking to incur any
expenditure beyond that which would reasonably be expected to be
incurred by such party based on current Hong Kong market practice and
having also regard to the relevant circumstances at that time.
2. THE GLOBAL OFFERING
2.1 Conditions precedent
(A) Obligations conditional
The obligations of the Hong Kong Underwriters under this Agreement are
subject to the following conditions having been fulfilled on or before
the dates and times respectively set out below and remaining fulfilled
at all times thereafter:
(1) the Joint Global Coordinators (or ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ on their
behalf), on behalf of the Hong Kong Underwriters, receiving from
the Company the Conditions Precedent Documents listed in Schedule
2, Part A in form and substance satisfactory to the Joint Global
Coordinators not later than 6:00 p.m. on the Business Day before
the Prospectus Date;
(2) the Registrar of Companies in Hong Kong registering:
(a) one copy of the Prospectus certified by two Directors (or by
their agents duly authorised in writing) as having been
approved by resolution of the Board or a duly authorised
committee of the Board and having endorsed thereon or
attached thereto all necessary consents and other documents;
and
(b) one copy of each of the Hong Kong Public Offering
Application Forms and the Preferential Offering Application
Forms signed by two Directors (or by their agents duly
authorised in writing),
12
in each case in compliance with section 342C of the Companies
Ordinance not later than 3:00 p.m. on the Business Day before the
Prospectus Date;
(3) the GEM Listing Committee granting of the approval in principle
for the listing of, and permission to deal in, the Shares in
issue and the Shares to be issued as mentioned in the Prospectus
(subject only to allotment and despatch of Share certificates in
respect thereof) and the approval for listing and permission not
subsequently having been revoked prior to the Force Majeure
Expiry Time;
(4) the International Underwriting Agreement being duly executed and
delivered by the parties on the Price Determination Date;
(5) the International Underwriting Agreement having become
unconditional in accordance with the terms and conditions thereof
and not having been terminated prior to the Force Majeure Expiry
Time, save for the condition that this Agreement shall become
unconditional; and
(6) the Issue Price being duly determined and the Hong Kong Pricing
Letter being executed by the Joint Global Coordinators and the
Company pursuant to Clause 2.2 on the Price Determination Date.
(B) Undertaking
The Company and ▇▇▇ jointly and severally undertake to use their best
endeavours to procure that the Conditions are fulfilled by the time
specified for each such Condition provided that the obligation of the
Company and ▇▇▇ under this sub-clause (B) shall not apply to any
Condition which shall be required to be fulfilled by the Joint Global
Coordinators.
(C) Joint Global Coordinators' waiver
The Joint Global Coordinators shall have the right, in their sole and
absolute discretion, by giving notice to the Company and the other
Hong Kong Underwriters on or before the latest time on which any
Condition under Clause 2.1(A) or 2.1(E) may be fulfilled:
(1) to extend the deadline for the fulfilment of such Condition by
such number of days and/or hours or in such manner as the Joint
Global Coordinators may determine in their sole and absolute
discretion on behalf of the Hong Kong Underwriters; or
(2) to waive any or all of the Conditions (other than those required
by law to be satisfied) on behalf of the Hong Kong Underwriters.
(D) Termination
If any of the Conditions is not fulfilled or waived in accordance with
Clause 2.1(C) on or before 31 March 2004, this Agreement shall
terminate automatically forthwith and the Global Offering will not be
effective. In this event, the provisions of Clause 8.2 shall apply and
Clauses 7 and 9.7, 9.10, 9.11 and 9.12 shall subsist and continue in
full force and effect.
(E) Payment obligations conditional
The payment obligations contained in Clause 3.5(A) are conditional
upon the Joint Global Coordinators, on behalf of the Hong Kong
Underwriters, receiving from the
13
Company the Conditions Precedent Documents listed in Schedule 2, Part
B in form and substance satisfactory to the Joint Global Coordinators
at or prior to the Force Majeure Expiry Time.
2.2 Price Determination
The Issue Price for the Hong Kong Offer Shares will be based on the Hong
Kong dollar equivalent of the US dollar price at which ADSs are to be
offered in the International Offering and the US Offering. The price of
such ADSs will be fixed in accordance with the International Underwriting
Agreement on the Price Determination Date. The Issue Price will be
determined as that amount which, when increased by brokerage at the rate of
1 per cent., Stock Exchange trading fee at the rate of 0.005 per cent., SFC
transaction levy at the rate of 0.005 per cent. and SFC investor
compensation levy at the rate of 0.002 per cent. thereon, is (subject to
any necessary rounding) equal to the US dollar per ADS (i) converted into
Hong Kong dollars at the average of the bid and offered exchange rates
quoted by The Hongkong and Shanghai Banking Corporation Limited at the
close of business on the Business Day prior to the Price Determination Date
and (ii) divided by 80 (being the number of Offer Shares represented by
each ADS), provided that the Issue Price (net of brokerage, Stock Exchange
trading fee, SFC transaction levy and SFC investor compensation levy) shall
not exceed HK$1.50 and shall not be less than H$1.04, unless otherwise
agreed in writing by the Company and the Joint Global Coordinators. The
Issue Price shall upon its determination be recorded in the Hong Kong
Pricing Letter to be executed at such time.
2.3 Reallocation from the International Offering and/or the US Offering to the
Hong Kong Public Offering
The Joint Global Coordinators may at their sole and absolute discretion
reallocate all or any of the International Offering Shares and/or the US
Offering Shares from the International Offering to the Hong Kong Public
Offering. In the event of such reallocation, such reallocation shall have
no effect on the Company's obligations to pay the commission due to the
Hong Kong Underwriters which shall be determined pursuant to Clause 4.1,
and the Hong Kong Underwriters shall not be entitled to any additional
underwriting commission in respect of such additional Hong Kong Offer
Shares.
Any Shares which are reallocated from the International Offering and/or the
US Offering to the Hong Kong Public Offering shall, subject to the terms
and conditions set out in the Hong Kong Offer Documents, be allocated in
such manner as the Joint Global Coordinators may in their absolute
discretion determine.
2.4 Reallocation from the Hong Kong Public Offering to the International
Offering and/or the US Offering in the event of a Hong Kong Public Offer
Under-Subscription
If a Hong Kong Public Offer Under-Subscription shall occur, the Joint
Global Coordinators may at their sole and absolute discretion (and subject
to Clause 3.4(G)) reallocate all or any of the Hong Kong Public Offering
Shares comprised in any such Hong Kong Public Offering Under-Subscription
from the Hong Kong Public Offering to the International Offering and/or US
Offering and the total Hong Kong Public Offering Underwriting Commitments
of the Hong Kong Underwriters shall be automatically reduced accordingly in
the same proportion as the aggregate amount of Hong Kong Public Offering
Shares is reduced as a result of any such reallocation. Any Shares which
are reallocated from the Hong Kong Public Offering to the International
Offering and/or the US Offering pursuant to this Clause shall be deemed to
be International Offering Shares and/or US Offering Shares, and shall be
applied in accordance with the terms of the International Underwriting
Agreement or otherwise allocated in such manner as the Joint Global
Coordinators may in its sole and absolute discretion determine. The Company
shall pay a
14
combined underwriting and management commission and selling concession or
commissions (as the case may be) in respect of any reallocated Shares to
the International Underwriters and/or the US Underwriters in accordance
with Clause 4.1 and the International Underwriting Agreement, and for the
avoidance of doubt, the Hong Kong Underwriters shall not be entitled to the
commissions payable under Clause 4.1 in respect of such reallocated Shares.
Notwithstanding the above paragraph, if Accepted Hong Kong Public Offering
Applications are received pursuant to the Hong Kong Public Offering in
respect of more than the total number of Shares initially available under
the Hong Kong Public Offering, then reallocations from the Hong Kong Public
Offering to the International Offering and/or the US Offering shall not
result in the number of Shares comprised in the Hong Kong Public Offering
being less than 10% of the total number of Shares available under the
Global Offering.
2.5 Stabilisation
To the extent permitted by and in compliance with all applicable laws and
regulatory requirements of Hong Kong or elsewhere including but without
limitation the Securities and Futures (Price Stabilizing) Rules made under
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
(the "Stabilizing Rules"), Citigroup, as stabilizing manager and in
connection with the Global Offering, may at its absolute discretion effect
such transactions as are permissible under, and in accordance with, the
Stabilizing Rules with a view to stabilizing or maintaining the market
price of the Offer Shares within a period prescribed under the Stabilizing
Rules. Such stabilizing actions, if commenced, may be discontinued at any
time. All stabilization and related activities in connection with the
Global Offering will be undertaken for the account and at the cost and
expenses of the Underwriters (and not as agents for the Company or ▇▇▇) and
neither the Company nor ▇▇▇ shall be liable for any costs, expenses or
losses arising from or in connection with any such activities.
2.6 Appointment of joint sponsors, Joint Global Coordinators, joint bookrunners
and joint lead managers
Subject to the terms and conditions of this Agreement, the Company hereby
appoints, to the exclusion of all others, Citigroup and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as
(A) its joint sponsors, and joint global coordinators to manage and
co-ordinate the Hong Kong Offer and to assist the Company in such other
aspects in relation to the Hong Kong Offer as the Company, Citigroup and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ may agree in writing, and (B) joint bookrunners and lead
managers, and each of the Joint Global Coordinators, relying on the
representations, warranties, undertakings and indemnities contained in this
Agreement and subject to the terms of this Agreement, accepts its
appointments hereunder.
3. THE HONG KONG OFFER
3.1 The Hong Kong Offer
(A) Appointment of Hong Kong Underwriters and public offering of Hong Kong
Offer Shares
The Company hereby appoints the Hong Kong Underwriters together to be
its sole agents in respect of the Hong Kong Offer and to procure
members of the public in Hong Kong to subscribe for the Hong Kong
Public Offering Shares, and the Hong Kong Underwriters hereby accept
the appointment upon and subject to the terms of this Agreement. The
Company will offer the Hong Kong Public Offering Shares for
subscription by the public at the Issue Price, plus brokerage at the
rate of one
15
per cent., Stock Exchange trading fee at the rate of 0.005 per cent.,
SFC transaction levy at the rate of 0.005 per cent. and SFC investor
compensation levy of 0.002 per cent. of the Issue Price, which is
payable in full on application in HK dollars on and subject to the
terms and conditions set out in the Hong Kong Public Offering
Documents and this Agreement. The Company will, subject to
registration of the Hong Kong Public Offering Documents in accordance
with Clause 2.1(A)(2), cause the Formal Notice to be published in the
newspapers and on the GEM Website on the date(s) set out in Schedule 4
(or such other newspapers, publications and/or date(s) as the Company
and the Joint Global Coordinators may reasonably agree).
(B) Preferential Offering of the Reserved Shares
The Company will offer the Reserved Shares for subscription by the
Qualifying Shareholders on a preferential basis pursuant to assured
entitlements at the Issue Price, plus brokerage at the rate of one per
cent., Stock Exchange trading fee at the rate of 0.005 per cent., SFC
transaction levy at the rate of 0.005 per cent. and SFC investor
compensation levy of 0.002 per cent. of the Issue Price, which is
payable in full on application in HK dollars, on and subject to the
terms and conditions set out in the Preferential Offering Documents
and this Agreement.
The Company agrees that the Joint Global Coordinators shall also have
the right in its sole and absolute discretion, on and subject to the
terms and conditions set out in the Preferential Offering Documents
and this Agreement, to accept or reject (in whole or in part) any
Preferential Offering Application.
(C) Application Lists
The Application Lists will, subject as mentioned below, open at 11 :45
a.m. on the Acceptance Date and close at 12:00 noon on the same day.
In the event of a tropical cyclone warning signal No. 8 or above or a
"black" rainstorm warning signal (in any such case, a "signal") being
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on
the Acceptance Date, then the Application Lists will open at 11:45
a.m. and close at 12:00 noon on the next Business Day on which there
is no signal in force in Hong Kong at any time between 9:00 a.m. and
12:00 noon. All references in this Agreement to the time of opening
and closing of the Application Lists shall be construed accordingly.
(D) Basis of allotment
The Company agrees that the Joint Global Coordinators shall have the
right in their sole and absolute discretion, on and subject to the
terms and conditions set out in the Hong Kong Public Offering
Documents and this Agreement, to accept or reject (in whole or in
part) any Hong Kong Public Offering Application and, where there is a
Hong Kong Public Offering Over-Subscription, to determine the basis of
allotment of the Hong Kong Public Offering Shares.
The Company agrees that the Joint Global Coordinators shall also have
the right in their sole and absolute discretion, on and subject to the
terms and conditions set out in the Preferential Offering Documents
and this Agreement, to accept or reject (in whole or in part) any
Preferential Offering Application.
The Company shall use its reasonable endeavours to procure that the
Receiving Bankers and the Registrar to provide each of the Company and
the Joint Global Coordinators with such information and assistance as
the Company and/or the Joint Global Coordinators may require for the
purposes of determining:
16
(1) in respect of a Hong Kong Public Offering Over-Subscription, the
basis of allotment of the Hong Kong Public Offering Shares;
(2) in respect of a Hong Kong Public Offer Under-Subscription, the
number of Hong Kong Public Offer Shares in respect of which
Accepted Hong Kong Public Offering Applications have not been
received; or
(3) in respect of the Reserved Shares, the number of Reserved Shares
in respect of which Accepted Preferential Offering Applications
have not been received.
(E) Receiving Bankers and Nominees
The Company will appoint the Receiving Bankers to act as the receiving
bankers in connection with the receiving of Hong Kong Public Offering
Applications and Preferential Offering Applications and the Nominees
in connection with the receiving and holding of Hong Kong Public
Offering Application Moneys and Preferential Offering Application
Moneys and any interest accruing thereon, in both cases on and subject
to the terms and conditions of the Receiving Bankers Agreement.
(F) Registrar
The Company will appoint the Registrar to provide services in
connection with the processing of Hong Kong Public Offering
Applications and Preferential Offering Applications on and subject to
the terms and conditions of the Registrar Agreement.
(G) Further assurance
Without prejudice to the foregoing obligations, the Company undertakes
to the Hong Kong Underwriters that it will use its best endeavours to
do all such other acts and things as may reasonably be required by the
Joint Global Coordinators to implement the Hong Kong Public Offering
and the Preferential Offering and that it will comply with all
requirements so as to enable listing of, and permission to deal in,
the Shares to be granted by the GEM Listing Committee.
3.2 Hong Kong Public Offering Documents and Preferential Offering Documents
(A) Issue
Subject to the satisfaction of Clause 2.1(A)(2) and without prejudice
to Clause 2.1(B), the Company will, on the Prospectus Date, issue the
Hong Kong Public Offering Documents and will cause such number of
copies as the Joint Global Coordinators may direct of the Hong Kong
Public Offering Documents to be delivered to the Joint Global
Coordinators or as the Joint Global Coordinators may direct for the
purpose of issuing the same generally in Hong Kong.
Subject to the satisfaction of Clause 2.1(A)(2) and without prejudice
to Clause 2.1(B), the Company will, on the Prospectus Date, issue the
Preferential Offering Documents and cause the Preferential Offering
Documents to be sent by prepaid post to each Qualifying Shareholder at
the address of such Qualifying Shareholder as recorded on the register
of members of ▇▇▇ as at the Record Date.
(B) Other documents
17
Except for the Hong Kong Public Offering Documents and the
Preferential Offering Documents and except as otherwise provided
pursuant to the provisions of this Agreement, and save for anything
done or to be done by the Joint Global Coordinators on behalf of the
Company, the Company undertakes that it shall not, without the prior
approval of the Joint Global Coordinators, issue, publish, distribute
or otherwise make available any document (including any prospectus),
material or information in connection with the Hong Kong Public
Offering and/or the Preferential Offering.
3.3 Issue of Hong Kong Public Offering Shares and Reserved Shares
As soon as practicable after the Application Lists close, the Company shall
procure that the Receiving Bankers shall deliver to the Registrar the Hong
Kong Public Offering Application Forms and the Preferential Offering
Application Forms for the Accepted Hong Kong Public Offering Applications
and the Accepted Preferential Offering Applications, and as soon as
practicable after receipt by the Registrar of the same and in any event not
later than 9:00 a.m. on the second Business Day immediately preceding the
Listing Date (subject to the Hong Kong Offer having become unconditional):
(A) the Company will allot and issue the Hong Kong Public Offering Shares
and the Reserved Shares in accordance with the relevant sections of
the Hong Kong Public Offering Documents and/or the Preferential
Offering Documents (as the case may be) and this Agreement to the
applicants and in the numbers specified by the Joint Global
Coordinators on behalf of the Hong Kong Underwriters (such details to
be notified in writing to the Company no later than 8:00 a.m. on the
second Business Day immediately preceding the Listing Date) on terms
that they rank pari passu in all respects inter alia and with the
existing issued Shares, including the right to rank in full for all
distributions hereafter declared, paid or made by the Company, and
that they will rank pari passu in all respects amongst themselves and
with the International Offering Shares and the US Offering Shares;
(B) the Company shall procure that the names of the successful applicants
(or, where appropriate, HKSCC Nominees Limited) shall be entered in
the share register of the Company accordingly (without payment of any
registration fee); and
(C) the Company shall procure that share certificates in respect thereof
(each in a form complying with the GEM Listing Rules) shall be issued
and despatched or made available for collection, or, as the case may
be, delivered to the depository of Hong Kong Securities Clearing
Company Limited for credit to relevant CCASS stock accounts as shall
be notified by the Joint Global Coordinators to the Company for such
purpose (such details to be notified in writing to the Company no
later than 8:00 a.m. on the Business Day immediately preceding the
Listing Date), as provided for in the Hong Kong Public Offering
Documents or the Preferential Offering Documents (as the case may be)
and this Agreement.
3.4 Underwriting of the Hong Kong Public Offering
(A) Hong Kong Underwriters' set-off
In relation to each Hong Kong Public Offering Application made or
procured to be made by any of the Hong Kong Underwriters otherwise
than pursuant to the provisions of Clause 3.4(B), the Hong Kong Public
Offering Underwriting Commitment of such Hong Kong Underwriter shall,
subject to the Hong Kong Public Offering Application Forms having been
duly completed and marked with the name of such Hong Kong Underwriter
(or any sub-underwriter of such Hong Kong Underwriter and designated
as such) and such Hong Kong Public Offering
18
Application having been accepted (whether in whole or in part)
pursuant to the provisions of Clause 3.1(D), be reduced pro tanto by
the number of Hong Kong Public Offering Shares comprised in such Hong
Kong Public Offering Application to the extent that such Hong Kong
Public Offering Application has been accepted until the Hong Kong
Public Offering Underwriting Commitment of such Hong Kong Underwriter
is reduced to zero. Hong Kong Public Offering Application Forms and
cheques or cashier's orders for the full amount payable on application
in respect of Hong Kong Public Offering Applications to which this
Clause applies may be submitted in the manner provided for in the Hong
Kong Public Offering Documents or otherwise delivered to the Joint
Global Coordinators on or before 10:00 a.m. on the Acceptance Date.
(B) Several underwriting commitments
On and subject to Clause 2.1 and other terms and conditions of this
Agreement and in reliance upon the Warranties, if and to the extent
that, by 12:00 noon on the Acceptance Date, there shall remain any
Hong Kong Public Offering Shares which have not been validly applied
for pursuant to Accepted Hong Kong Public Offering Applications (a
"Hong Kong Public Offering Under-Subscription"), the Hong Kong
Underwriters (other than any Hong Kong Underwriter whose Hong Kong
Public Offering Underwriting Commitment has been reduced by the
Relevant Public Offer Applications to zero pursuant to Clause 3.4(A))
shall, subject as provided in Clauses 3.4(G). 2.3 and 2.4, apply or
procure applications for such Hong Kong Public Offering Shares at the
Issue Price in accordance with the terms and conditions set out in the
Hong Kong Public Offering Documents (other than as to the deadline for
making applications and the timing of payment) and shall pay or
procure to be paid the full amount payable on application, provided
that the obligations of the Hong Kong Underwriters in respect of such
Hong Kong Public Offering Shares under this Clause shall be several
(and not joint or joint and several) on the basis that each Hong Kong
Underwriter shall apply or procure applications for such number of
Hong Kong Public Offering Shares up to but not exceeding the number of
Hong Kong Public Offering Shares set opposite the name of such Hong
Kong Underwriter in column (II) below, subject to adjustment as
referred to in Clauses 2.3 and 2.4 (if applicable), and each Hong Kong
Underwriter's obligations to apply for, or procure applications for
such Hong Kong Public Offering Shares shall be borne in the proportion
which:
(1) the number of Hong Kong Public Offering Shares set opposite the
name of such Hong Kong Underwriter in column (II) below:
(I) Name of Hong Kong Underwriter (II) Commitment
--------------------------------- ---------------
Citigroup Global Markets Asia Limited 44,583,333
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Asia Limited 44,583,332
Cazenove Asia Limited 2,500,000
Deutsche Bank AG, Hong Kong Branch 2,500,000
UOB Asia (Hong Kong) Limited 2,500,000
CITIC Capital Markets Limited 666,667
First Shanghai Securities Limited 666,667
19
▇▇▇ Eng Securities (Hong Kong) Limited 666,667
South China Securities Limited 666,667
Sun Hung Kai International Limited 666,667
---------------
Total: 100,000,000
===============
less the number of Hong Kong Public Offering Shares comprised in
Relevant Public Offering Applications of such Hong Kong
Underwriter which have been accepted (to the extent that the same
have been accepted) bears to
(2) the aggregate of the number of Hong Kong Public Offering
Shares less the aggregate number of Hong Kong Public
Offering Shares comprised in Relevant Public Offering
Applications of all Hong Kong Underwriters.
Subject to the provisions of the Intersyndicate Agreement, none of
the Hong Kong Underwriters will be liable for any failure on the
part of any of the other Hong Kong Underwriters to perform its
obligations under this Clause. Notwithstanding the foregoing, each
of the Hong Kong Underwriters shall be entitled to enforce any or
all of its rights under this Agreement either alone or jointly
with any or all of the other Hong Kong Underwriters.
(C) Acceptance of applications
The Company agrees with the Hong Kong Underwriters that all
completed Hong Kong Public Offering Application Forms duly and
validly completed in accordance with the terms and conditions of
the Hong Kong Public Offer Documents, received prior to the
Application Lists being closed and accepted by the Joint Global
Coordinators pursuant to Clause 3.1(C), either in whole or in
part, will, if accompanied with a remittance which has been duly
cleared, be accepted by the Company before calling upon the Hong
Kong Underwriters or any of them to perform the obligations
imposed on them by this Clause 3.4.
(D) Calculation of Hong Kong Public Offering Shares applied for
Following the closing of the Application Lists, the Company shall
cause the Receiving Bankers and the Registrar as soon as possible,
and in any event within 24 hours of the closing of the Application
Lists, to calculate the number of Hong Kong Offer Shares for which
duly completed Hong Kong Public Offering Application Forms and/or
Preferential Offer Application Forms (as the case may be) have
been received and not rejected and to complete the processing of
the Hong Kong Public Offering Applications and the Preferential
Offering Applications, and to notify the Joint Global Coordinators
forthwith of the numbers of the unsubscribed Hong Kong Public
Offering Shares and Reserved Shares respectively.
(E) Notification to Hong Kong Underwriters
In the event of a Hong Kong Public Offering Under-Subscription so
that the Hong Kong Underwriters are obliged to apply for or
procure applicants for the Hong Kong Public Offering Shares
representing the shortfall pursuant to Clause 3.4(B), the Company
will use its reasonable endeavours to procure the Registrar to as
soon as possible and in any event not later than 4:00 p.m. on the
Business Day which falls immediately after the date on which the
calculation of the number of Hong
20
Kong Public Offering Shares for which duly completed Hong Kong Public
Offering Application Forms have been received (and not rejected) is
completed in accordance with Clause 3.4(D), notify the Joint Global
Coordinators (on behalf of the Hong Kong Underwriters) of the number
of Hong Kong Public Offering Shares falling to be taken up pursuant to
Clause 3.4(B). If there is no Hong Kong Public Offering
Under-Subscription, then the obligations of the Hong Kong Underwriters
in relation to the underwriting of the Hong Kong Public Offering
pursuant to this Clause 3.4 shall cease.
(F) Hong Kong Underwriters' subscription obligations
On or before 8 a.m. on the second Business Day immediately preceding
the Listing Date and subject to the Conditions having been fulfilled
(or waived by the Joint Global Coordinators on behalf of the Hong Kong
Underwriters), each of the Hong Kong Underwriters will:
(1) deliver, or procure to be delivered, to the Company duly
completed Hong Kong Public Offering Application Forms for such
number of Hong Kong Public Offering Shares as fall to be taken up
by it pursuant to Clause 3.4(B), specifying the names and
addresses of the applicants and the number of Hong Kong Public
Offering Shares to be allocated to each such applicant; and
(2) pay, or procure to be paid, to the Nominees the aggregate amount
of the Issue Price and other amounts payable on application for
such Hong Kong Offer Shares as fall to be taken up by it pursuant
to Clause 3.4(B) (which shall include all amounts on account of
brokerage, Stock Exchange trading fee, the SFC transaction levy
and SFC investor compensation levy in accordance with the terms
of the Hong Kong Public Offering),
and the Company will, as soon as practicable and in any event before
9:00 a.m. on the Business Day immediately preceding the Listing Date,
duly allot and issue to such applicants the Hong Kong Public Offering
Shares accordingly and duly issue and deliver the share certificates
in respect of such Hong Kong Public Offering Shares in each case in
accordance with and on the basis set out in Clause 3.3.
(G) Joint Global Coordinators' option
If a Hong Kong Public Offering Under-Subscription shall occur, the
Joint Global Coordinators shall have the right (but shall not be
obliged) to apply or procure applications for (subject to and in
accordance with this Agreement) all or any of the Hong Kong Public
Offering Shares which any Hong Kong Underwriter is required to apply
or procure applications for pursuant to Clause 3.4(B). Any application
submitted or procured to be submitted by the Joint Global Coordinators
pursuant to this Clause 3.4(G) in respect of which payment is made in
accordance with Clause 3.4(F), specifying the relevant Hong Kong
Underwriter whose obligations the Joint Global Coordinators are
thereby satisfying, shall satisfy pro tanto the obligation of the
relevant Hong Kong Underwriter under Clause 3.4(B) and shall not
affect any agreement or arrangement between the Hong Kong Underwriters
regarding the payment of underwriting commissions.
3.5 Payment obligations relating to the Hong Kong Public Offering
(A) Payment to the Company
21
The Hong Kong Public Offering Application Moneys and Preferential
Offering Application Moneys with interest thereon held by the Nominees
will, in accordance with the provisions of the Receiving Bankers
Agreement and subject to Clauses 3.5(B) to (D), be paid over to the
Company in HK dollars as soon as possible and in any event not later
than 5:00 p.m. on the date on which the Nominees receives written
confirmation in accordance with clause 4.3 of the Receiving Bank
Agreement from the Joint Global Coordinators (on behalf of the Hong
Kong Underwriters) and the Joint Global Coordinators (on behalf of the
Hong Kong Underwriters) agrees to give such written confirmation to
the Nominees as soon as reasonably practical after it has been
notified by the Company of the issue and allotment of the Hong Kong
Offer Shares and Reserved Shares, and the Registrar has despatched, or
delivered in accordance with Clause 3.3, valid share certificates in
the name of successful applicants (or, where applicable, HKSCC
Nominees Limited) for the Hong Kong Offer Shares and the Reserved
Shares provided that the Nominees will, in accordance with the
provisions of the Receiving Bankers Agreement, deduct from the amount
so payable to the Company and pay to the Joint Global Coordinators
(where a person other than the Joint Global Coordinators is entitled
to any amount so paid pursuant to the terms of this Agreement, as
agent on behalf of such person) or to such person as the Joint Global
Coordinators may instruct:
(1) the underwriting commissions payable under Clauses 4.1; and
(2) an amount representing the Joint Global Coordinators' estimate of
the whole or such portion of the fees, costs and expenses payable
under Clause 4.2 provided that the Joint Global Coordinators
shall have the right to deduct therefrom to pay such fees, costs
and expenses on behalf of the Company and provided further that
the Joint Global Coordinators shall as soon as reasonably
practicable and in any event within 2 weeks of the date of this
Agreement pay to the Company an amount equal to the balance of
such amount, if any, after payment of the aforementioned fees,
costs and expenses and other amounts (if any) payable by the
Company in relation to the Hong Kong Public Offering provided,
however, that if the amount deducted pursuant to this clause is
insufficient for the purposes of covering the aforementioned
fees, costs and expenses, the Company shall pay to the Joint
Global Coordinators (where a person other than the Joint Global
Coordinators is entitled to any amount so paid pursuant to the
terms of this Agreement, as agent on behalf of such person) an
amount equal to such shortfall forthwith upon receipt of the
demand for the same from the Joint Global Coordinators.
(B) Payment of brokerage
The Joint Global Coordinators, on behalf of the Hong Kong
Underwriters, will arrange for the payment by the Nominees to the
persons entitled thereto of brokerage at the rate of 1 per cent. in
respect of the Accepted Hong Kong Public Offering Applications and
Accepted Preferential Offering Applications, such amounts to be paid
out of the Hong Kong Public Offering Application Moneys and the
Preferential Offering Application Moneys, respectively, retained by
the Joint Global Coordinators under Clause 3.5(A)(2) above.
(C) Payment of levy on behalf of the Company
The Joint Global Coordinators on behalf of the Company will arrange
for the payment by the Nominees of the Stock Exchange trading fee at
the rate of 0.005 per cent., SFC transaction levy at the rate of 0.005
per cent. and SFC investor
22
compensation levy at the rate of 0.002 per cent. of the Issue Price
payable by the Company to the Stock Exchange in respect of Accepted
Hong Kong Public Offering Applications and Accepted Preferential
Offering Applications, such amount to be paid out of the Hong Kong
Public Offering Application Moneys and the Preferential Offering
Application Moneys, respectively, retained by the Joint Global
Coordinators under Clause 3.5(A)(2) above and to be paid on or before
the relevant due dates.
(D) Refund of application moneys
In accordance with the terms of the Receiving Bankers Agreement and
the Registrar Agreement, the Company shall procure the Nominees to
pay, and the Registrar to arrange for the distribution of cheques, to
applicants under the Hong Kong Offer who are entitled to receive any
refund of Hong Kong Public Offering Application Moneys and
Preferential Offering Application Moneys in accordance with the terms
of the Hong Kong Public Offering Documents or the Preferential
Offering Documents (as the case may be).
3.6 Discharge from Hong Kong Underwriter's Obligations
As soon as the Hong Kong Public Offering Shares comprising the Hong Kong
Public Offering Underwriting Commitment of a Hong Kong Underwriter and
falling to be taken up by that Hong Kong Underwriter in accordance with
Clause 3.4(B) shall be subscribed and paid for by such Hong Kong
Underwriter or otherwise subscribers procured by or on behalf of such Hong
Kong Underwriter pursuant to the above provisions, such Hong Kong
Underwriter shall be discharged from all further liability under this
Agreement in respect of the underwriting of the Hong Kong Public Offering
save in respect of Clauses 9.7 and 9.8.
4. COSTS, EXPENSES, FEES AND COMMISSIONS
4.1 Underwriting commissions
Subject to the obligations of the Hong Kong Underwriters under this
Agreement becoming unconditional, in consideration of the services of the
Hong Kong Underwriters under this Agreement, the Company shall pay to the
Joint Global Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) an underwriting commission calculated at the rate of 2.5 per
cent. of the Reference Public Offering Amount, out of which the Hong Kong
Underwriters will meet all (if any) sub-underwriting commissions and as to
which the respective entitlements of the Hong Kong Underwriters will be in
the proportion of their respective Hong Kong Public Offering Underwriting
Commitments (or as the Hong Kong Underwriters may separately agree among
themselves). For the avoidance of doubt:
(A) if the number of Hong Kong Public Offering Shares is increased in
accordance with Clause 2.3, the Hong Kong Underwriters shall not be
entitled to any commission in relation to those International Offering
Shares and/or US Offering Shares which are withdrawn from the
International Offering and/or the US Offering (as the case may be) and
made available for subscription under the Hong Kong Public Offering;
and
(B) if the number of Hong Kong Public Offering Shares is reduced in
accordance with Clause 2.4, the Hong Kong Underwriters shall not be
entitled to the commission of 2.5 per cent. in relation to those
unsubscribed Hong Kong Public Offering Shares which are reallocated to
the International Offering and/or the US Offering pursuant to Clause
2.4.
23
4.2 Hong Kong Underwriters' expenses
The Company shall also pay to the Joint Global Coordinators on behalf of
the Hong Kong Underwriters all amounts of costs, fees and expenses incurred
by the Underwriters or any of them under this Agreement or in connection
with the Hong Kong Offer as set out in the International Underwriting
Agreement.
5. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
5.1 Representations, Warranties and undertakings by the Warrantors
The Warrantors jointly and severally represent, warrant and undertake to
the Hong Kong Underwriters and each of them on the terms set out in
Schedule 3, and accept that each of the Underwriters is entering into this
Agreement in reliance upon each of such representations, warranties and
undertakings.
5.2 Rights In relation to the Warranties
(A) Each of the Warranties shall be construed separately and shall not be
limited or restricted by reference to or inference from the terms of
any other of the Warranties or any other term of this Agreement.
(B) The Warranties shall remain in full force and effect notwithstanding
completion of the Hong Kong Offer.
(C) The Warranties are given on and as at the date of this Agreement with
respect to the facts and circumstances subsisting at the date of this
Agreement. In addition, the Warranties shall be deemed to be given on
and as at:
(1) the Prospectus Date;
(2) the Acceptance Date;
(3) The Price Determination Date;
(4) the Force Majeure Expiry Time; and
(5) immediately prior to the commencement of trading of the Shares on
GEM,
with reference to the facts and circumstances then subsisting, and, in
relation to any Warranties, on the basis that each reference to "Hong
Kong Offer Documents" in the Warranties shall be deemed to be a
reference to the Hong Kong Offer Documents as amended or supplemented
as at such date pursuant to Clause 5.2(E)(1).
(D) Each of the Warrantors undertake to give notice to the Joint Global
Coordinators (on behalf of the Underwriters) forthwith of any matter
or event coming to its attention at any time on or prior to the last
date on which the Warranties are deemed to be given pursuant to the
provisions of Clause 5.2(C) which shows any of the Warranties to be or
to have been or may become untrue, inaccurate or misleading or
breached.
(E) If at any time, by reference to the facts and circumstances then
subsisting, on or prior to the last date on which the Warranties are
deemed to be given pursuant to the provisions of Clause 5.2(C), any
matter, event or circumstances (an "Event") comes to the attention of
any of the Warrantors as a result of which any Warranties, if repeated
immediately after the occurrence of such matter or event,
24
would be untrue, inaccurate or misleading or breached or which would
or might render untrue, inaccurate or misleading any statement,
whether of fact or opinion, contained in the Hong Kong Public Offering
Documents if the same were issued immediately after the occurrence of
such Event, or if for any reason it shall be necessary to amend or
supplement the Hong Kong Offer Documents, such Warrantor shall
forthwith notify and consult with Hong Kong Underwriters (but without
prejudice to any other rights of any party).
(F) The Joint Global Coordinators shall in their sole and absolute
discretion determine, if any of the Hong Kong Offer Documents has
already been issued, published, distributed or made publicly
available, what amendments or supplements thereto and what other
announcement or circular or document, if any, should be issued,
published, distributed or made publicly available or what other act or
thing should be done. The Company will, with the prior written
approval of the Joint Global Coordinators, so amend or supplement the
Hong Kong Offer Documents and will issue and publish such other
announcement or circular or document and do such other act or thing as
may be required by the Joint Global Coordinators and will, without
charge, supply to the Joint Global Coordinators as many copies as the
Joint Global Coordinators may from time to time request of the amended
or supplement to the Hong Kong Public Offering Documents and the
aforesaid announcement, circular or document (if any). The Company and
the Hong Kong Underwriters (other than the Joint Global Coordinators)
agree not to issue, publish, distribute or make publicly available any
such announcement, circular or document without the prior consent of
the Joint Global Coordinators (for which purpose such consent may only
be given by anyone of the Relevant Global Co-ordinate Persons);
(G) The provisions of paragraph 4.4 of Schedule 5 shall be deemed to be
repeated as of the date of each such amendment or supplement to the
Hong Kong Offer Documents on the basis that each reference to "Hong
Kong Offer Documents" in such paragraph shall be deemed to be a
reference to the Hong Kong Offer Documents as amended or supplemented
as at such date; and
(H) If any Event shall have occurred prior to the Force Majeure Expiry
Time, no actions taken pursuant to the provisions of this Clause
5.2(E) shall prejudice any rights of the Joint Global Coordinators
arising pursuant to Clause 8.
6. FURTHER UNDERTAKINGS
6.1 Further undertakings by the Company
(A) The Company undertakes to each of the Hong Kong Underwriters that it
will, and ▇▇▇ undertakes to each of the Hong Kong Underwriters to
procure that the Company will:
(1) comply in all respects with the terms and conditions of the Hong
Kong Offer as provided for in the Hong Kong Offer Documents and
this Agreement;
(2) comply in a timely manner with its obligations under the
requirements of the Stock Exchange in connection with the Hong
Kong Offer (including, without limitation, the GEM Listing Rules
and the Companies Ordinance);
(3) maintain the listing of the Shares on the Stock Exchange for at
least two years after the Conditions have been fulfilled except
following a withdrawal of such listing which has been approved by
the relevant shareholders of the Company in accordance with the
GEM Listing Rules or following an offer
25
(within the meaning of the Takeovers Code) to acquire the Shares
of the Company becoming unconditional;
(4) procure that the Registrar and the Receiving Bankers shall comply
in all respects with the terms of their respective appointments
under the terms of the Registrar Agreement and the Receiving
Bankers Agreement;
(5) procure that there shall be delivered to the Stock Exchange as
soon as practicable the declaration in the form set out in
▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇ ▇ of the GEM Listing Rules;
(6) comply with the obligations imposed upon it by the Companies
Ordinance, the Companies Law and the GEM Listing Rules in
relation to or by reason of the matters contemplated by this
Agreement, including but without limitation:
(a) the making of all necessary registrations with the Registrar
of Companies in Hong Kong; and
(b) the making available for inspection at the offices of
Freshfields Bruckhaus ▇▇▇▇▇▇▇▇ of the documents referred to
in Appendix VIII to the Prospectus during the period
referred to therein;
(7) pay any tax, duty, levy, fee and other charge or expense which
may be payable by the Company in Hong Kong or elsewhere whether
pursuant to the requirement of any Law or otherwise, in
connection with the creation, allotment and issue of the Hong
Kong Offer Shares, the Hong Kong Public Offering and the
Preferential Offering, the execution and delivery of, or the
performance of any of the provisions under, this Agreement and
will indemnify and hold harmless the Hong Kong Underwriters
against any such tax, duty, fee, charge and expenses (including
any interest or penalty);
(8) not, without the prior written approval of the Joint Global
Coordinators, issue, publish, distribute or otherwise make
available any document, material or information in connection
with the Hong Kong Offer (except for the Hong Kong Public
Offering Documents and the Preferential Offering Documents); and
(9) use the net proceeds received by it from the issue of the Offer
Shares pursuant to the Global Offering in the manner specified
under the section headed "Use of proceeds" in the Prospectus.
(B) The Company (for itself and on behalf of the directors and officers of
the Company) undertakes to the Joint Global Coordinators that, and ▇▇▇
undertakes to the Joint Global Coordinators that it will procure that,
the Company will not, without the prior written consent of the Joint
Global Coordinators (on behalf of the Hong Kong Underwriters) within
six months of the Listing Date and unless in compliance with the GEM
Listing Rules, (a) issue, offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any of its
Shares (directly or in the form of ADSs) or any securities convertible
into or exercisable or exchangeable for, or that represent the right
to receive, such Shares or ADSs or (b) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of such Shares or ADSs, whether any
such transaction described in paragraph (a) or (b) above is to be
settled by delivery of share capital or such other securities, in cash
or otherwise or publicly announce an intention to effect any such
26
transactions. The foregoing sentence shall not apply to (a) the Hong
Kong Offer Shares, (b) the issuance by the Company of ADSs or Offer
Shares upon the exercise of an option or a warrant or the conversion
of a security outstanding on the date hereof of which the Underwriters
have been advised by the Company in writing, (c) the grant of any
option pursuant to the Pre-IPO Share Option Plan or the Share Option
Scheme or (d) the loan of the Shares by ▇▇▇ to any Joint Global
Coordinator pursuant to the stock borrowing arrangements to be entered
into between ▇▇▇ and such Joint Global Coordinator.
6.2 Restrictions on Dealings and Related Matters
(A) (1) ▇▇▇ undertakes with each of the Company and to the Joint Global
Coordinators (on behalf of the Underwriters) that it will not and
will procure that none of its Associates or companies controlled
by it (within the meaning under the Takeovers Code) or nominees
or trustees holding in trust for it will (unless with the prior
written consent of the Joint Global Coordinators and unless in
compliance with the GEM Listing Rules), within 6 months from the
Listing Date, (a) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any
ADSs or Shares or any securities convertible into, or exercisable
or exchangeable for ADSs or Shares, (b) file any registration
statement with the Securities and Exchange Commission relating to
the offering of any ADSs or shares of share capital or any
securities convertible into or exercisable or exchangeable for
ADSs or shares of share capital or (c) enter into any swap or
other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of ADSs or Shares,
whether any such transaction described in paragraph (a), (b) or
(c) above is to be settled by delivery of ADSs or Shares or such
other securities, in cash or otherwise. The foregoing sentence
shall not apply to transactions relating to the Shares or other
securities of the Company acquired by ▇▇▇ in open market
transactions after the completion of the Global Offering. In
addition, ▇▇▇ agrees that, without the prior written consent of
the Joint Global Coordinators (on behalf of the Underwriters), it
will not, within six months after the Listing Date, make any
demand for or exercise any right with respect to, the
registration of any Shares or any security convertible into or
exercisable or exchangeable for Shares. ▇▇▇ also agrees and
consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of
TOM's Shares except in compliance with the foregoing
restrictions.
(2) In the event that ▇▇▇ fails to comply with this Clause 6.2(A),
the Company covenants and undertakes to procure that any proposed
transfer in breach of this Clause will not be registered in its
share register.
(B) The Company agrees that it will not, and ▇▇▇ undertakes to exercise
its power of control to procure that the Company will not, effect any
purchase of the Company's own shares, or agree to do so, which may
reduce the holdings of Shares held by the public (as defined in Rule
11.23 of the GEM Listing Rules) below 20 per cent. without first
having obtained the prior written consent of the Joint Global
Coordinators.
(C) The Company undertakes to the Joint Global Coordinators (on behalf of
the Underwriters) that it will not without the prior written consent
of the Joint Global Coordinators, and unless in compliance with the
GEM Listing Rules, consent to any disposal of Shares issued to
Cranwood Company Limited pursuant to clause
27
4.10(b) of the sale and purchase agreement ("S&P Agreement") dated 25
September 2003 entered into among Cranwood Company Limited, Bright
Horizon Enterprises Limited, ▇▇▇ and the Company in respect of the
acquisition of Puccini International Limited by Bright Horizon
Enterprises Limited at any time within six months from the Listing
Date or otherwise release, waive or modify the restriction on Cranwood
Company Limited in relation to disposal of shares under the S&P
Agreement.
6.3 Obligations of the Warrantors and liability to the Underwriters
(A) The obligations of each of the Warrantors shall be binding on his or
its personal representatives, successors and permitted assigns (as the
case may be).
(B) Any liability to the Hong Kong Underwriters or any of them hereunder
may in whole or in part be released, compounded or compromised and
time or indulgence may be given by the Joint Global Coordinators (on
behalf of the Hong Kong Underwriters) as regards any person under such
liability without prejudicing the Hong Kong Underwriters' rights
against any other person under the same or a similar liability or the
other of the Hong Kong Underwriters' rights against such person.
7. INDEMNITY
7.1 Each of the Warrantors (collectively, the "Indemnifying Parties" and
individually, an "Indemnifying Party") undertakes, jointly and severally,
to indemnify and keep indemnified (on an after-tax basis) and hold harmless
each of the Joint Global Coordinators (and their respective successors),
and the Hong Kong Underwriters, and its affiliates, their directors,
officers, employees and agents and assignees for any loss suffered by it
(collectively, the "Indemnified Parties" and individually, an "Indemnified
Party") from and against all actions, claims (whether or not any such claim
involves or results in any actions or proceedings), demands, investigations
and proceedings from time to time threatened or made (together the
"Actions") against, any and all losses and damages suffered and all
liabilities, payments, fees, costs or expenses reasonably made or incurred
(including, without limitation, all payments, fees, costs or expenses
reasonably made or incurred arising out of or in connection with the
settlement of any Action, or the enforcement of any such settlement or any
judgment obtained in respect of any Action) and any other losses, damages
and liabilities whatsoever (the "Loss") suffered, sustained or incurred or
payable by, that Indemnified Party arising out of or in connection with:
(A) the due and proper performance by the Joint Global Coordinators, Hong
Kong Underwriters or any of them of their obligations under and in
accordance with this Agreement or otherwise in connection with the
Hong Kong Offer Documents and/or the Global Offering, whether in
performance of its duties as underwriter, manager, sponsor, financial
advisor or otherwise; and/or
(B) the issue, publication, distribution or making available of any of the
Hong Kong Offer Documents, the Formal Notice and any announcement in
accordance with the terms of this Agreement and all public notices,
announcements and advertisements in connection with the Global
Offering; and/or
(C) the creation, offer, allotment and/or issue, as the case may be, of
the Offer Shares; and/or
(D) any breach or alleged breach on the part of any of the Warrantors of
any of the provisions of this Agreement or the International
Underwriting Agreement; and/or
28
(E) the settlement of any investigation or proceeding by any
governmental or regulatory authority, commenced or threatened;
and/or
(F) any of the Warranties being untrue, inaccurate or misleading in
any respect or having been breached in any respect or being
alleged to be untrue, inaccurate or misleading in any respect or
to have been breached in any respect; and/or
(G) an untrue statement or alleged untrue statement of a material
fact contained in any Hong Kong Offer Document or any amendment
or supplement thereto, or an omission or alleged omission to
state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading,
and the Indemnifying Party shall reimburse each Indemnified Party for
any legal or other expenses incurred by such Indemnified Party in
connection with investigating or defending any such loss, claim,
damage, liability or action to which the aforesaid indemnity applies
as such expenses are incurred, save and except caused by the gross
negligence, wilful default or fraud or solely caused by the breach of
the terms of this Agreement on the part of such Indemnified Party.
7.2 The provisions of the indemnities contained in this Clause 7 are not
affected by any other terms of this Agreement and does not restrict
the rights of the Indemnified Parties to claim damages on any other
basis.
7.3 None of the Indemnifying Parties shall, without the prior written
consent of the Indemnified Parties, settle or compromise or consent to
the entry of any judgement with respect to any litigation, or any
investigation or proceeding by any governmental or regulatory
authority or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under
this Clause 7 (whether or not the Indemnified Parties are actual or
potential parties thereto).
7.4 The provisions of this Clause 7 shall continue in full force and
effect notwithstanding the termination of this Agreement due to any
reason whatsoever or the Hong Kong Public Offering becoming
unconditional and/or its completion.
8. TERMINATION IN EXCEPTIONAL CIRCUMSTANCES
8.1 The obligations of the Hong Kong Underwriters to subscribe or procure
subscribers for the Hong Kong Public Offering Shares will be subject to
termination by notice in writing from the Joint Global Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) to the Company if
any of the following events develop, occur, exist or come into effect
before the Force Majeure Expiry Time:
(A) (1) any new law or regulation or any change in existing laws or
regulations or any change in the interpretation or application
thereof by any court or other competent authority of any relevant
jurisdiction; or
(2) any change or development, or any event or series of events
likely to result in any change or development, in local, national
or international financial, political, economic or currency or
market conditions or any monetary or trading settlement system
(including but not limited to a material devaluation of the Hong
Kong currency or the Renminbi against any foreign currencies) in
the PRC, Hong Kong or the US; or
29
(3) the imposition of any moratorium, suspension or material
restriction on trading in securities generally on the GEM or
NASDAQ due to exceptional financial circumstances; or
(4) a change, or development occurs involving a prospective change,
in taxation or exchange control in the PRC, Hong Kong or the US;
or
(5) any outbreak or escalation of hostilities or calamity or crisis
involving the PRC, Hong Kong or the US,
which, in the sole opinion of the Joint Global Coordinators acting
jointly (for themselves and on behalf of the Hong Kong Underwriters):
(a) is or will be or is likely to be materially adverse to the
business, financial or other condition or prospects of the
Company or the Group or, in the case of Clause 8.1(A)(4), to
any present or prospective shareholder of the Company in
his/its capacity as such; or
(b) has or will have or is likely to have a material adverse
effect on the success of the Global Offering or the level of
Offer Shares being applied for or accepted or the
distribution of Offer Shares; or
(c) makes it inadvisable or impracticable to proceed with the
Global Offering or the delivery of the Offer Shares on the
terms and in the manner contemplated by the Prospectus; or
(B) there comes to the notice of the Joint Global Coordinators any matter
or event showing any of the Warranties in this Agreement to be untrue
or misleading in any respect which is material in the context of the
Global Offering when given or repeated; or
(C) there comes to the notice of the Joint Global Coordinators any breach
on the part of the Company and/or ▇▇▇ of any of the provisions of this
Agreement which is material in the context of the Global Offering.
8.2 Upon the termination of this Agreement pursuant to the provisions of Clause
8.1 or 2.1:
(A) each of the parties hereto shall cease to have any rights or
obligations under this Agreement, save in respect of the provisions of
this Clause and Clauses 7, 9.7 to 9.10, 9.12 and this Clause 8.2 and
any rights or obligations which may have accrued under this Agreement
prior to such termination;
(B) all payments made by the Hong Kong Underwriters or any of them and/or
by successful applicants under Accepted Hong Kong Public Offering
Applications shall be refunded forthwith;
(C) the Company shall pay to the Joint Global Coordinators the fees, costs
and expenses as provided in Clause 4.2 and the parties agree that none
of the commission referred to in Clause 4.1 shall be payable to any of
the Hong Kong Underwriters; and
(D) the Company shall procure that the Registrar and the Nominees despatch
refund cheques to all applicants under the Hong Kong Offer in
accordance with the Registrar Agreement, the Receiving Bankers
Agreement and the Hong Kong Offer Documents.
30
9. GENERAL PROVISIONS
9.1 Release
The Joint Global Coordinators may (on behalf of the Hong Kong Underwriters)
release, compound or compromise the liability of any Warrantor or grant
time or other indulgence to a Warrantor without releasing, compounding or
reducing the liability of the other Warrantor or any other party hereto.
9.2 Remedies and waivers
(A) No delay or omission on the part of any party hereto in exercising any
right, power or remedy under this Agreement shall:
(1) impair such right, power or remedy; or
(2) operate as a waiver thereof.
(B) Any single or partial exercise of any right, power or remedy under
this Agreement shall not preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(C) The rights, powers and remedies provided in this Agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by Law.
9.3 Assignment
(A) This Agreement shall be binding on, and enure for the benefit of, the
parties hereto and their respective successors, personal
representatives and permitted assigns.
(B) Each of the Joint Global Coordinators and the Hong Kong Underwriters
may assign the benefit of the representations, warranties,
undertakings and agreements (in whole or in part) made by the
Warrantors as contained in this Agreement together with the benefit of
the indemnity in Clause 7. Save as aforesaid, no party hereto may
assign or transfer all or any part of any benefit of, or interest or
right in, this Agreement, or any benefit, interest, right or
obligation arising under this Agreement.
9.4 Further assurance
Each of the parties hereto (other than the Joint Global Coordinators) shall
from time to time, on being reasonably required to do so by the other
parties hereto now or at any time in the future, do or procure the doing of
such acts and/or execute or procure the execution of such documents as the
Joint Global Coordinators may consider necessary or desirable for giving
full effect to this Agreement in accordance with its terms and conditions
or to comply with the applicable Laws and securing to such other parties or
any of them the full benefit of the rights, powers and remedies conferred
upon them or any of them in this Agreement in accordance with its terms and
conditions or to comply with applicable Laws.
9.5 Entire agreement
(A) This Agreement, together with any document referred to herein as being
in the agreed form, constitutes the whole and only agreement between
the Company, the Warrantors, the Joint Global Coordinators, and the
Hong Kong Underwriters, relating to the underwriting of the Hong Kong
Public Offering Shares and supersedes and extinguishes any prior
drafts, agreements, undertakings,
31
representations, warranties, promises and arrangements of any nature
whatsoever, whether or not in writing, relating thereto.
(B) Each party hereto acknowledges that in entering into this Agreement it
is not relying upon any representation, warranty, promise or assurance
made or given by any other party or any other person, whether or not
in writing, at any time prior to the execution of this Agreement which
is not expressly set out herein.
(C) This Agreement may only be varied by agreement in writing among all of
the parties hereto.
9.6 Time of essence
Save as otherwise expressly provided, time is of the essence of this
Agreement.
9.7 Public announcements
(A) Subject to Clause 9.7(B) or as otherwise expressly provided in this
Agreement, no announcement concerning this Agreement or the Global
Offering (including the Hong Kong Offer, the International Offering
and the US Offering) may be made by any of the parties hereto (or by
any of their respective directors, officers or agents) without the
prior written consent of the other parties hereto, such consent not to
be unreasonably withheld or delayed.
(B) Any party hereto may make an announcement concerning this Agreement or
the Global Offering (including the Hong Kong Offer, the International
Offering and the US Offering), if and to the extent:
(1) required by Laws; or
(2) required by any securities exchange or regulatory or governmental
body to which such party is subject or submits, wherever
situated, including, without limitation, the Stock Exchange,
whether or not the requirement has the force of Law,
provided that in such case the relevant party shall first consult with
the other parties to this Agreement in so far as it is reasonably
practicable to do so.
(C) The restrictions contained in Clause 9.7 (A) shall continue to apply
for a period of six months from the Listing Date notwithstanding
termination of this Agreement and after completion of the Hong Kong
Offer.
(D) During the period of the second 6 months from the Listing Date, no
announcement concerning this Agreement or the Global Offering
(including the Hong Kong Offer, the International Offering and the US
Offering) may be made by the Company or ▇▇▇ without first consulting
the Joint Global Coordinators so far as it is reasonably practicable
to do so.
9.8 Invalidity
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the Laws of any jurisdiction,
that shall not affect or impair:
(A) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
32
(B) the legality, validity or enforceability under the Laws of any other
jurisdiction of that or any other provision of this Agreement.
9.9 Counterparts
This Agreement may be executed by the parties in any number of
counterparts, and by different parties on separate counterparts, each of
which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same document.
9.10 Governing law
This Agreement shall be governed by and construed in accordance with the
law of Hong Kong.
9.11 Jurisdiction and immunity
(A) Each of the parties hereto irrevocably agrees that, subject as set out
above, any suit, action or proceeding ("Proceeding") arising out of or
in connection with this Agreement may be brought in the Hong Kong
courts, submits to the jurisdiction of such courts in connection
therewith and waives any objection which it may have now or hereafter
to the laying of the venue of any such Proceeding in any such court
and any claim that any such Proceeding have been brought in an
inconvenient forum.
(B) Subject as set out above, the submission to such jurisdiction shall
not (and shall not be construed so as to) limit the right of any party
to take any Proceeding against any other party in whatsoever
jurisdictions that party seems fit nor shall the taking of any
Proceeding in anyone or more jurisdictions preclude the taking of any
Proceeding in any other jurisdiction, whether concurrently or not.
(C) Each of the Warrantors irrevocably agrees that any writ, judgment or
other notice of process shall be sufficiently and effectively served
on it if delivered to the address appearing next to its/his name in
Clause 9.14(C) and marked for the attention of the person referred to
in Clause 9.14(C) or to such other person or address in Hong Kong as
may be notified by such Warrantors to the other parties hereto.
(D) To the extent that any party hereto may in any court or arbitration
proceedings arising out of or in connection with this Agreement or in
any proceedings taken for the enforcement of any determination,
decision, order or award made in such court or arbitration proceedings
claim for itself or its assets immunity from suit or other legal
process or to the extent that in any such court or arbitration or
enforcement proceedings there may be attributed to itself or its
assets such immunity (whether or not claimed), such party hereby
irrevocably waives such immunity and consents, in respect of any such
court or arbitration or enforcement proceedings, to the giving of any
relief or the issue of any process including, without limitation, the
taking of proceedings, enforcement or execution against property
whatsoever (irrespective of its use or intended use) to the full
extent permitted by applicable Laws.
9.12 Notices
(A) Any notice or other communication given or made under or in connection
with the matters contemplated by this Agreement shall be in writing
and shall be in the English language.
33
(B) Any such notice or other communication shall be addressed as provided
in Clause 9.14(C) and, if so addressed, shall be deemed to have been
duly given or made as follows:
(1) if sent by personal delivery upon delivery at the address of the
relevant party;
(2) if sent by post on the third Business Day after the date of
posting;
(3) if sent by facsimile, when despatched with confirmed receipt as
evidenced by the transmission report generated at the end of the
transmission of such facsimile by the facsimile machine used for
such transmission.
(C) The relevant addresses and facsimile numbers of each party hereto for
the purposes of this Agreement, subject to Clause 9.14(D), are:
NAME OF PARTY ADDRESS FACSIMILE NO.
------------- ------- -------------
▇▇▇ Online Inc. 8/th/ Floor, Tower W3 (8610) 8518 5555
Oriental Plaza
▇▇.▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
The PRC
▇▇▇ Group Limited 48/th/ Floor (▇▇▇) ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Citigroup Global 20/th/ Floor (▇▇▇) ▇▇▇▇ ▇▇▇▇
Markets Asia Limited Three Exchange Square
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ 30/th/ Floor (▇▇▇) ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Asia Limited Three Exchange Square
Central
Hong Kong
(D) A party may notify the other parties to this Agreement of a change to
its relevant address or facsimile number for the purposes of Clause
9.14(C), provided that such notification shall only be effective on:
(1) the date specified in the notification as the date on which the
change is to take place; or
(2) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
falling five Business Days after notice of any such change has
been given.
IN WITNESS whereof this Agreement has been executed by or on behalf of the
parties on the date first stated above.
34
SCHEDULE 1: HONG KONG UNDERWRITERS
Name Address
1. Citigroup Global Markets Asia 20/th/ Floor, Three Exchange Square, ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
2. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 26/th/ Floor, Three Exchange Square, 8 Connaught
Asia Limited Place, Central, Hong Kong
3. Cazenove Asia Limited 5001, ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
4. Deutsche Bank AG, Hong 55/th/ Floor, ▇▇▇▇▇▇ Kong Center, ▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
5. UOB Asia (Hong Kong) Limited ▇▇▇▇▇ ▇▇▇, ▇/▇▇/ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇'▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
6. CITIC Capital Markets Limited ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇
7. First Shanghai Securities 19/th/ Floor, Wing On House, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
8. ▇▇▇ Eng Securities (Hong Kong) Room 1901, Bank of America Tower, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
9. South China Securities Limited ▇▇/▇▇/ ▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
10. Sun Hung Kai International Limited ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
35
SCHEDULE 2: CONDITIONS PRECEDENT DOCUMENTS
PART A
1. A certified copy of the resolutions of the Board passed on 12 February
2004, inter alia:
(A) approving and authorising execution of this Agreement and each of the
documents as may be required to be executed by the Company for the
purposes of the Hong Kong Public Offering;
(B) approving the Global Offering; and
(C) approving and authorising the issue and the registration with the
Registrar of Companies in Hong Kong of the Hong Kong Public Offering
Documents.
2. A certified copy of the written resolutions of the shareholders of the
Company passed on 12 February 2004 approving, inter alia, the Global
Offering and the adoption of the Pre-IPO Share Option Plan and the Share
Option Scheme.
3. A certified copy of the minutes of a meeting or resolutions of the board of
directors of ▇▇▇ approving and authorising execution of this Agreement and
each of the Operative Documents to which ▇▇▇ is a party.
4. Certified copies of the resolutions of the directors of the relevant
companies of the Group approving the Deed of Indemnity and the Deed of
Non-compete, and the performance by each of them of their respective
obligations under each such agreement.
5. Three printed copies of each of the Hong Kong Public Offering Documents
duly signed by two Directors or their respective duly authorised agents
and, if signed by their respective duly authorised agents, copies of the
relevant authorisation documents.
6. The Verification Notes signed by or on behalf of each party to whom
responsibility is therein assigned (except the Joint Global Coordinators
and their legal advisers).
7. Certified copies of the responsibility letters, powers of attorney and
statements of interests signed by all the Directors.
8. A certified copy of each of the certified material contracts referred to in
the paragraph headed "Summary of material contracts" in Appendix VII to the
Prospectus (other than this Agreement).
9. One signed original or certified copy of each of the accountants' reports
dated the Prospectus Date by the Reporting Accountants, the texts of which
are contained in Appendices I and II to the Prospectus.
10. One signed original or certified copy of the property valuation report
dated the Prospectus Date from the Property Valuers to the Directors in
connection with the valuation of the property interests of the Group, the
text of which is contained in Appendix IV to the Prospectus.
11. One signed original or certified copy of each of the letters dated the
Prospectus Date from the Reporting Accountants to Company and the Joint
Global Coordinators (on behalf of the Hong Kong Underwriters) (A)
confirming the indebtedness statement contained in the Prospectus, and (B)
commenting on the statement contained in the Prospectus as to the
sufficiency of working capital, such letters to be in the form previously
agreed by the
36
Reporting Accountants with the Company and the Joint Global Coordinators
(on behalf of the Hong Kong Underwriters).
12. A certified copy of each of the letter dated the Prospectus Date from each
of the experts referred to in Appendix VII to the Prospectus consenting to
the issue of the Prospectus with the inclusion of references to it and of
its letter and/or report and/or valuation certificate in the form and
context in which they are included.
13. A certified copy of the letter dated the Prospectus Date from ▇▇▇▇▇▇ and
Calder Asia to the Company in relation to the summary of the constitution
of the Company and Cayman Islands company law in Appendix VI to the
Prospectus.
14. A letter from Freshfields Bruckhaus ▇▇▇▇▇▇▇▇ to the Joint Global
Coordinators confirming that a copy of each of the Hong Kong Public
Offering Documents, together with the documents specified in the section
headed "Documents Delivered to the Registrar of Companies" in Appendix VIII
to the Prospectus have been delivered to the Registrar of Companies in Hong
Kong for registration as required by section 342C of the Companies
Ordinance, and a certified copy of the letter from the Registrar of
Companies in Hong Kong confirming registration of the Prospectus.
15. A certified copy of each of the Reorganisation Documents.
16. A certified copy of the Receiving Bankers Agreement.
17. A certified copy of the Registrar Agreement.
18. A certified copy of the multiple applications letter.
19. One signed original of a legal opinion dated the date of this Agreement
from ▇▇▇▇▇▇ and Calder Asia regarding, inter alia, due incorporation of the
Company.
20. A certified copy of the translation certificate issued by the translator in
respect of the Hong Kong Public Offering Documents.
21. One signed original or certified copy of the comfort letter dated the
Prospectus Date, in form satisfactory to the Joint Global Coordinators,
issued by the Reporting Accountants confirming certain information set out
in the Prospectus.
22. A certified copy of the certificate of incorporation and memorandum and
articles of association of the Company.
23. A certified copy of the certificate of registration of the company as an
oversea company under Part XI of the Companies Ordinance.
24. A certified copy of the current business registration of the Company.
25. A certified copy of the Pre-IPO Share Option Plan.
26. A certified copy of the Share Option Scheme.
27. A certified copy of each of the signed service agreements entered into by
each of the executive Directors.
28. One signed original of each of the legal opinions issued by Commerce &
Finance Law Offices addressed to, inter alia, the Company and the Joint
Global Coordinators (on behalf of the Hong Kong Underwriters) (in the form
satisfactory to the Joint Global Coordinators) in connection with: (A)
general corporate matters; (B) the contractual arrangements; (C)
37
property; (D) Cernet Information Technology Company Limited, Cernet Online
Co Ltd and Guangzhou Hong Xiang Audio-Video Production Company Limited; and
(E) approvals and other matters (the supplemental legal opinion). All such
legal opinions to be dated the date of this Agreement.
29. One certified copy of the certificate of good standing of each of Lahiji
Vale Limited, Laurstinus Limited, Bright Horizon Enterprises Limited and
Puccini International Limited. (If not available, to be provided by Price
Determination Date)
PART B
1. Signed originals of the bring-down Cayman legal opinions
2. One signed original of the Hong Kong legal opinion
3. One signed original of the stock borrowing agreement between ▇▇▇ and
Citigroup in a form to be reasonably agreed by them
4. One signed original of the Escrow Agreement
38
SCHEDULE 3: WARRANTIES
Where any defined term used in this Schedule is not defined in this Agreement,
it shall be given the meaning ascribed to it in the International Underwriting
Agreement.
1. Incorporation, capacity and authority
-------------------------------------
1.1 The Company is duly registered in Hong Kong as an oversea company under
Part XI of the Companies Ordinance.
1.2 ▇▇▇ has been duly incorporated and is validly existing as a limited
liability company under the Laws of the Cayman Islands and is a legal
person and has the requisite power and authority to enter into this
Agreement and to perform and carry out all the transactions and
obligations contemplated under this Agreement and the execution by ▇▇▇
of this Agreement will not, (i) conflict with or result in any breach
or violation of any of 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 ▇▇▇, (ii)
will not result in any violation of the provisions of the Memorandum of
Association, Articles of Association or business licenses or other
constitutional documents of ▇▇▇ or (iii) any law or statute or any
order, rule, regulation, judgment, order or decree of any Governmental
Agency having jurisdiction over ▇▇▇.
1.3 No provisions of this Agreement contravene in any way the applicable
Laws to each of the Company and ▇▇▇ is subject and the law by which the
relevant agreement and document is expressed to be governed.
1.4 The Articles of the Company comply with the requirements of the GEM
Listing Rules.
1.5 The obligations of the Company under this Agreement are not and will
not be subject to any conditions precedent other than as specified in
the relevant agreement.
1.6 Save to the extent already warranted in warranty (P) from the
International Underwriting Agreement above, each member of the Group
has full power (corporate and other) to execute, deliver and perform
each of its agreements and arrangements as described in the Prospectus
and has duly authorised, executed and delivered each such agreement and
contract. Each such agreement or contract constitutes a legal, valid
and binding agreement, enforceable in accordance with its term against
such member of the Group except as such enforceability may be limited
under applicable bankruptcy, insolvency, fraudulent transfer,
reorganisation, moratorium or similar Laws of general applicability
relating to or affecting creditors' rights and to general equitable
principles.
1.7 The Articles are the existing articles of association of the Company
and have been validly approved by the Company in accordance with the
requirements of the Laws of the Cayman Islands.
2. Group Structure
---------------
2.1 The Company does not own or control, directly or indirectly, any equity
interest (whether in the form of shareholding or otherwise) in any
other company, enterprise or undertaking save as described in the
Prospectus and does not have any other branch, agency, place of
business or permanent establishment save as disclosed in the
Prospectus.
2.2 No member of the Group has any branch, agency, place of business or
permanent establishment outside the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ and the PRC.
39
2.3 Save as disclosed in the Prospectus, no member of the Group acts or
carries on business in partnership with any other person or is a member
of any corporate or unincorporated body, undertaking or association or
holds or is liable on any share or security which is not fully paid up
or which carries any liability.
2.4 None of the members of the Group is engaged in any business activity or
has any material asset or liability (whether actual, contingent or
otherwise) which is not directly or indirectly related to the business
of the Group as described in the Prospectus.
3. Reorganisation
--------------
Save as disclosed in the Prospectus, so far as the Warrantors are
aware, no legal, arbitral or governmental proceedings have been
threatened or contemplated, that challenge the effectiveness, validity
or enforceability of the Reorganisation, the Reorganisation Documents
and the Corporate Documents or any of the contracts listed or otherwise
referred to in the paragraph headed "Summary of material contracts" in
Appendix VIII to the Prospectus.
4. The Offer
---------
Save as disclosed in the Prospectus, the Hong Kong Offer will not
require any approvals from any governmental or regulatory body or, in
the case of the Company, the sanction or consent of its shareholders
which is outstanding.
The Hong Kong Offer will not result in the creation or imposition of
any lien, charge, encumbrance or other restriction upon any assets of
any member of the Group.
The Shares to be issued pursuant to the Hong Kong Offer will be free
from any lien, charge, encumbrance or other security interest or third
party rights or interests.
Except as set out in the Prospectus, there are no limitations on the
rights of holders of Shares to hold or vote or transfer their shares.
There are no contracts, agreements or understandings between any Group
company and any person that would give rise to a valid claim against
the Group or the Global Co-ordinators or any of the Underwriters for
any brokerage, commission, finders' fee or other like payment in
connection with the Share Offer.
All public notices, announcements and advertisements in connection with
the Hong Kong Offer and authorised by the Company to be issued, made
and published comply and will comply with all applicable statutory
provisions and regulatory requirements and all statements of fact
contained therein are and will be true and complete (as of the
respective dates thereof).
5. Accountants' etc Reports
------------------------
All material information requested from the Company by the Reporting
Accountants for the purposes of their reports, letters, and
certificates to the Company and/or the Underwriters has been supplied
to them and such information is true accurate and not misleading in any
material respect and was given in good faith. No material information
was withheld from the Reporting Accountants and the Company does not
disagree with any aspect of the reports, letters or certificates
prepared by the Reporting Accountants respectively and the opinions
attributed to the Directors in such reports or letters are honestly
held by the Directors and are fairly based upon facts within their
knowledge after due and careful consideration.
6. Verification Notes
------------------
40
The replies to the questions set out in the Verification Notes relating
to the Hong Kong Underwriting Agreement given by the Company or the
Directors were so given by persons having appropriate knowledge and
duly authorised for such purposes and all such replies have been given
in full and in good faith and were, and remain, true and accurate and
not misleading in any material respect.
7. Offer Documents
---------------
All statements of material fact contained in the Offer Documents (and
any amendment or supplement thereto) are true and accurate, complete in
all material respects and not misleading and there are no facts known
or which on reasonable enquiry could have been known to any member of
the Group and/or the Warrantors (or any of them) which are not
disclosed in the Offer Documents, the omission of which would make any
statement therein misleading in any respect or which in the
circumstances of the Offer are material for disclosure therein
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance and conformity
with information furnished in writing to the Company by a Hong Kong
Underwriter. All expressions of opinion or intention therein (including
but not limited to the statement regarding the sufficiency of working
capital, use of proceeds, indebtedness, prospects, dividends, future
plans and prospects, Company's liquidity, financial resources and
capital structure, material contracts and litigation) are made after
due and careful consideration and are and will be founded on bases and
assumptions that are fair and reasonable and are and will be truly and
honestly held by the Warrantors and there are no other facts known or
which on reasonable enquiry could have been known to the Warrantors the
omission of which would make any such statement or expression
misleading in any material respect or which will or might be material
in the context of the Offer as a whole.
The Offer Documents contain and, when each of them is issued, will
contain all such information and particulars required to comply with
all statutory and other provisions (including, without limitation, the
Companies Law, the Companies Ordinance and the GEM Listing Rules) so
far as applicable.
The Prospectus contains all particulars and information reasonably
necessary to enable the Stock Exchange to asses the Company's
suitability for listing and all information as investors would
reasonably expect to find there for the purpose of to making an
informed assessment of the assets and liabilities, financial position
and prospects of the Group and its profits and losses and of the rights
attaching to the Shares and there are no other facts the omission of
which would make any statement in the Prospectus misleading in any
material respect or which is in the context of the Hong Kong Offer as a
whole material for disclosure. Taken as a whole, the Prospectus gives a
view of the Group, including its prospects, which is reasonable and not
misleading.
All statements of fact in the section of the Prospectus headed "Risk
Factors" are true and accurate in all material respects and each
expression of opinion, belief and expectation in respect of that
section is reasonable, truly and honestly held.
The report prepared by the Company in respect of the adequacy of the
Group's working capital has been properly compiled by the Company on
the basis of the assumptions stated therein and is presented on a basis
consistent with the accounting principles and policies adopted by the
Reporting Accountants in relation to the preparation of the
accountants' report contained in Appendix I to the Prospectus after
making proper provision for all known material liabilities (whether
actual or contingent or otherwise); and the assumptions upon which the
report are based are fair and reasonable in the context of the Group
and that there are no material facts known or which could on reasonable
enquiry have been known to the Company or the Warrantors or the
Directors which have
41
not been taken into account in the preparation of the report and which
could be expected to have a material impact thereon.
The directors of the Company have made sufficient enquiries as to
enable them to give the confirmations set out in their respective
responsibility statements relating to the Hong Kong Offer.
8. Directors Interests
-------------------
All the interests of the Directors in the securities of the Company and
its associated corporations (within the meaning of the Securities and
Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (the "SFO"))
which will be required to be notified to the Company and the Stock
Exchange pursuant to the SFO and Rules 5.40 to 5.59 of the GEM Listing
Rules once the Shares are listed on the Stock Exchange are fully and
accurately disclosed in the Prospectus.
9. Financial Statements
--------------------
The audited consolidated financial statements of the Group for the two years
ended 31 December 2003 contained in the accountants' report prepared by the
Reporting Accountants and set out in Appendices 1 the Prospectus have been
prepared so as to give a true and fair view of the financial position of the
Group at the Accounts Date and of the results of the Group for the accounting
reference period of two years ending 31 December 2003:
.. such summaries are accurate in all material respects, make full
provision for any bad or doubtful debts and make appropriate provision
for (or contain a note in accordance with good accounting practice
respecting) all deferred or contingent liabilities, whether liquidated
or unliquidated at the date thereof; and
.. save as disclosed in the Prospectus, the profits and losses shown by
such accounts have not in any material respect been affected by any
unusual or exceptional item or by any other matter which has rendered
such profits or losses unusually high or low.
The financial information and financial data set forth in the Prospectus in the
sections headed "Summary" and "Financial information" are derived from the
accounting records of the Group and are a fair presentation of the data
purported to be shown.
There are no material contingent liabilities of the Group which are not
appropriately provided for or disclosed in the financial statements in the
Accountants' Report or the notes thereto.
10. Profit Forecast
---------------
The memorandum on the combined profit and cash flow forecast for the Group
provided to the Stock Exchange, which has been approved by the Directors and
reviewed by the Accountants in connection with the Hong Kong Offer, has been
prepared after due and careful enquiry and on the bases and assumptions stated
in such memorandum which the Directors believe to be reasonable and: (a) all
statements of fact in such memorandum are true and accurate in all material
respects and not misleading in any material respect; (b) all expressions of
opinion contained in such memorandum are fair and reasonable, are honestly held
by the Directors based on facts known to the directors of the Company having
made all due investigation and enquiries as they could reasonably be expected to
make; and (c) there are no other material facts or assumptions which in any case
ought reasonably to have been taken into account which have not been taken into
account in the preparation of such memorandum.
11. Events Since The Accounts Date
------------------------------
Save as disclosed in the Prospectus, since 31 December 2003:
42
.. each member of the Group has carried on business in the ordinary and
usual course so as to maintain it as a going concern and in the same
manner as previously carried on and since such date has not entered
into any material contract, transaction or commitment outside the
ordinary course of business or of an unusual or onerous nature;
.. each member of the Group has continued to pay its creditors in the
ordinary course of business;
.. cancelled or waived or released or discounted in whole or in part any
debts or claims which are material in the context of the Group as a
whole;
.. no member of the Group has declared, paid or made any dividend or
distribution of any kind on any class of shares;
.. no transaction has taken place which has given rise, or may give rise,
to any tax liability of any member of the Group which could reasonably
be considered material in the context of the Hong Kong Offer, other
than transactions in respect of or arising in the ordinary course of
day to day business of the relevant member of the Group;
12. Connected transactions
----------------------
In respect of the connected transactions (as defined in the GEM Listing Rules)
of the Company (the "Connected Transactions"):
.. there are no Connected Transactions which have not been disclosed or
reflected in the Prospectus;
.. all written information (including but not limited to historical
figures) and documentation provided by the Company to the Joint Global
Co-ordinators and the Underwriters are true and accurate and complete
in all material respects and there is no other information or document
which have not been provided the result of which would make the
information and documents so received misleading;
13. Joint Ventures
--------------
In relation to the contractual arrangements relating to the ownership and
control of Beijing Lei Ting, Shenzen Freenet and ▇▇ ▇▇ Network (each as defined
in the Prospectus) described in the "Our Corporate Structure", "Business -
Connected Transactions" and "Risk Factors" sections of the Prospectus, no Group
Company is in material dispute with any of the employees/nominee shareholders
named therein and, after due enquiry, there are no circumstances known to the
Company which may give rise to any such material dispute with any such person.
14. Capital and contractual commitments, etc.
-----------------------------------------
Save as disclosed in the Prospectus, no member of the Group has any material
outstanding liabilities, term loans, other borrowings or indebtedness in the
nature of borrowings, including bank overdrafts and loans, debt securities or
similar indebtedness, hire purchase commitments or any mortgages and charges.
The description contained in the Prospectus of the Group's capital commitments
and/or requirements with respect to existing and further projects is true and
complete in all material respects. No member of the Group has any capital
commitment which is sufficiently material to merit disclosure in the Prospectus
but is not so disclosed.
43
In the opinion of the Directors, taking into account the net proceeds to be
received by the Group from the Share Offer, the working capital available to the
Group is and will be sufficient for the Group's present requirements and, in all
events, for at least 12 months from the Listing Date.
No Group Company is in material dispute with any member of the China Mobile
group of companies or any member of the China Unicom group of companies and,
after due enquiry, there are no circumstances known to the Company which may
give rise to any such material dispute with any member of the China Telecom
group of companies or any member of the China Unicom group of companies, or
which may otherwise materially and adversely affect the relationship of any
Group Company with any member of the China Telecom group of companies or any
member of the China Unicom group of companies.
Save for normal indemnity provisions in commercial contracts, no member of the
Group has entered into any agreement, arrangement or understanding, whether oral
or written, whereby it has assumed or become responsible for, or will assume or
become responsible for, any liability arising out of or in connection with
proceedings involving any company which is not a member of the Group which is
material in the context of the Group as a whole.
15. Indebtedness
------------
Save as disclosed in the Prospectus and for such transactions as may be entered
into by the Company pursuant to any of the Operative Documents or Reorganisation
Documents or in the ordinary course of business, no indebtedness (actual or
contingent), no contract or arrangement is outstanding between any member of the
Group and ▇▇▇ or any company (excluding the Group) or undertaking which ▇▇▇ owns
or controls (whether by way of shareholding or otherwise).
16. Insurance
---------
No material claim under any insurance pollices taken out by any member of the
Group is outstanding and there are no circumstances likely to give rise to such
a material claim.
All premiums due in respect of such insurance policies have been duly paid in
full and, to the best of the knowledge of the directors of the Company having
made all due investigation and enquiries, all conditions for the validity and
effectiveness of the said policies have been fully observed and performed.
17. Default
-------
No circumstance has arisen such that any person is now entitled to require
payment of any material indebtedness or under any guarantee of any material
liability of any member of the Group by reason of default by any such member or
any other person.
No member of the Group is in breach of, or in default (nor has any event
occurred which, with the giving of notice or the lapse of time or both would
result in a material default by any such member) under any Law or Approvals
which is binding upon or affects it or any of its assets or revenues or the
operation of its business. The consequence of breach or default might result in
a Material Adverse Effect (as defined in the warranties from the International
Underwriting Agreement set out above).
There is no event, default or breach of any agreement or other instrument which,
by the passage of time or the giving of notice or both or otherwise, would
constitute an event of default on the part of any member of the Group the effect
of which is to accelerate or to permit the acceleration (by notice or otherwise)
of repayment of any material indebtedness or give rise to an obligation or
liability or right of enforcement of such obligation or liability of any member
of the Group which is materially adverse to the financial or trading position of
the Group.
44
18. Employees
---------
No member of the Group has established or incurred any obligation to establish
or given any undertaking in respect of any retirement, death or disability
scheme or arrangement relating to any present or past employee or director or
any other person under which any obligation or liabilities have arisen or might
reasonably be expected to arise which might result in a Material Adverse Effect.
19. Directors
---------
.. The Directors have been duly and validly appointed and are the only
directors of the Company.
.. Except as disclosed in the Prospectus, none of the Directors has a
service contract with any Group Company which is required to be
disclosed in the Prospectus.
.. All interests of the Directors in any company or business which is or
was a party to an agreement or arrangement within the last two years
with any member of the Group and in any company or business in
competition with any existing businesses of the Group or which now
transacts business with any member of the Group are, to the extent
material, sufficiently disclosed in the Prospectus.
.. There are no loans or other indebtedness (actual or contingent) due or
owing to any member of the Group by any of the Directors or any person
connected with such Director (including his spouse, his children under
18 years of age and any company controlled by him (whether directly or
indirectly)).
20. Intellectual Property
---------------------
Save as disclosed in the Prospectus, all Intellectual Property which is material
to the business of the Group and owned by or licensed to a member of the Group
is not the subject of any licences, rights or other encumbrances in favour of a
third party granted by a predecessor in title to, or assignor of, such
Intellectual Property to the Group.
No member of the Group has received any notice or is otherwise aware of:
.. any infringing use by third parties of any of the Intellectual Property
used or owned by a member of the Group where that use is likely to have
a material adverse effect on the business of the Group; or
.. any pending or threatened action, suit, proceeding or claim by others
challenging the Group's rights in or to any of the Intellectual
Property used or owned by a member of the Group which, if it succeeded,
would be likely to have a material adverse effect on the business of
the Group; or
.. any pending or threatened action, suit, proceeding or claim by others
claiming infringement or other violation by any member of that Group of
any Intellectual Property or other proprietary rights of others which,
if it succeeded, would be likely to have a material adverse effect on
the business of the Group; or
So far as the directors of the Company are aware having made due enquiry, the
Company, the rights and interest held by the Group (whether as owner, licensee
or otherwise) in Intellectual Property comprises all such material rights and
interests necessary for the carrying on of the business of the Group in and to
the extent which it is presently conducted.
21. Taxation
--------
45
.. The provisions included in the accountants' report in Appendices 1 and
2 to the Prospectus were sufficient to cover all taxation (if any) in
respect of all accounting periods ended on or before the Accounts Date.
There is no material tax deficiency that has been asserted against any
member of the Group.
.. Under existing Cayman Islands and Hong Kong Law, holders of Offer
Shares are not subject to withholding tax, income tax or any other
taxes or duties imposed by any governmental or regulatory authority in
the Cayman Islands or Hong Kong in respect of any payments, dividends
or other distributions made on the Offer Shares.
22. Compliance with Laws
--------------------
The Company and each member of the Group has been conducting its business in all
material respects in accordance with, and has not been in violation of, any Law
to which the Company and each member of the Group is subject or by which it or
any of its property is bound.
23. Use Of Proceeds
---------------
The application of the net proceeds from the Offer, as set forth in and
contemplated by the Prospectus, will not contravene any provision of applicable
law, rule or regulation or the Articles or other constitutive documents of the
Company or any of its Subsidiaries 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 the Company
or any of its Subsidiaries that, singly or in the aggregate, is material to the
Company, or any judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Company or any of its Subsidiaries.
24. Insolvency
----------
Each member of the Group is validly existing and:
.. no order has been made or resolution passed by any member of the Group,
and no petition been presented, for the winding-up of the any member of
the Group or for the appointment of an administrator, provisional
supervisor, provisional liquidator or analogous officer to any member
of the Group;
.. no receiver or manager has been appointed by any person of the whole or
any part of the business or assets of any member of the Group and no
compromise or arrangement has been proposed, agreed to or sanctioned in
respect of any member of the Group;
.. no action has been taken by any member of the Group and, as far as the
Company is aware, no matter has occurred which is equivalent or in all
material respects similar in any jurisdiction to any of the actions or
matters referred to in subparagraphs (A) and (B) above; and
.. no member of the Group has stopped or suspended payments of its debts,
become unable to pay its debts or otherwise become insolvent.
46
25. Miscellaneous
-------------
(a) The Company's subsidiaries incorporated in the PRC are identified in
the Prospectus (each a "PRC Subsidiary") and the Company has no other
direct or indirect subsidiaries or any other company (other than
Beijing Lei Ting, Shenzhen Freenet, and ▇▇ ▇▇ Network, the "Operating
Companies") over which it has direct or indirect effective control
incorporated or operating in the PRC. Each PRC Subsidiary has been duly
established and is validly existing under the laws of the PRC, and its
business license is in full force and effect. The Articles of
Association of each PRC Subsidiary comply with the requirements of
applicable PRC law, including the PRC Company Law, and are in full
force and effect.
(b) Each Operating Company has been duly established and is validly
existing under the laws of the PRC, and its business license is in full
force and effect. The Articles of Association of each Operating Company
comply with the requirements of applicable PRC law, including the PRC
Company Law, and are in full force and effect.
(c) None of the businesses, activities, agreements or commitments of any
PRC Subsidiary or Operating Company, current or past, is or has been
unauthorized or exceeds the business scope of its respective business
license except to the extent failure to be so authorized or to operate
within the business scope of its respective business license would not
have a material adverse effect on the general affairs, management,
shareholders' equity, results of operations, position, financial or
otherwise, or prospects of the Company, the Subsidiaries, the PRC
Subsidiaries and the Operating Companies, taken as a whole (a "Material
Adverse Effect").
(d) Each PRC Subsidiary and Operating Company is a legal person with
limited liability and the liability of the Company or any other equity
investor in respect of equity interests held in each PRC Subsidiary and
Operating Company is limited to its investment therein. All of the
registered share capital of, or equity interest in, each PRC Subsidiary
and Operating Company have been fully authorized and are validly
issued, fully paid and non-assessable and, in the case of each PRC
Subsidiary, are owned directly or indirectly by the Company, free and
clear of all liens, charges, restrictions upon voting or transfer or
any other encumbrances, equities or claims.
(e) Neither the Company nor any of its subsidiaries incorporated outside
the PRC as identified in the Prospectus (the "Subsidiaries"), the PRC
Subsidiaries or the Operating Companies has sustained, since the date
of the latest audited financial statements included in the Prospectus,
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, or any other development reasonably likely to involve
a prospective material adverse change, in or affecting the business,
properties, management, shareholders' equity, results of operations,
condition (financial or otherwise), or prospects of the Company, the
Subsidiaries, the PRC Subsidiaries, and the Operating Companies, taken
as a whole (a "Material Adverse Change"), otherwise than as set forth
or contemplated in the Prospectus.
(f) Since the date of the latest audited financial statements included in
the Prospectus, neither the Company nor any of the Subsidiaries, the
PRC Subsidiaries, or the Operating Companies, has (i) entered into or
assumed any material contract, (ii) incurred any material liability
(including any contingent liability) or other obligation, (iii)
acquired or disposed of or agreed to acquire or dispose of any business
or asset material to the Company and the Subsidiaries, the PRC
Subsidiaries, or the Operating Companies, taken as a whole, (iv) save
for the 1,300,000,000 Ordinary Shares purchased from the Parent Company
on January 16, 2004, purchased any of its outstanding share capital,
nor declared, paid or otherwise made any dividend or distribution of
any kind on its share
47
capital, (v) incurred or sustained any material change in its share
capital, short-term debt or long-term debt, (vi) entered into a letter
of intent or memorandum of understanding (or announced an intention to
do so) relating to any matters identified in clauses (i) through (vi)
above, except in each case to the extent described in the Prospectus.
(g) The Company has been duly incorporated and is validly existing in good
standing under the laws of the Cayman Islands, with full legal right,
power and authority (corporate and other) to own, use, lease and
operate its properties and conduct its business in the manner presently
conducted and as described in the Prospectus and is duly qualified to
transact business in any jurisdiction in which it owns or leases
properties or conducts any business where such qualification is
required, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction, and
the Memorandum of Association and Articles of Association of the
Company comply with the requirements of applicable Cayman Islands law
and are in full force and effect.
(h) Each of the Subsidiaries has been duly incorporated in its jurisdiction
of incorporation and is validly existing in good standing under the
laws of its respective jurisdiction, with full legal right, power and
authority (corporate and other) to own, use, lease and operate its
properties and conduct its business in the manner presently conducted
and as described in the Prospectus and is duly qualified to transact
business in any jurisdiction in which it owns or leases properties or
conducts any business where such qualification is required, or is
subject to no material liability or disability by reason of the failure
to be so qualified in any such jurisdiction, and the Memorandum of
Association and Articles of Association of each of the Subsidiaries
comply with the requirements of the applicable law and are in full
force and effect.
(i) Each of the Company, the Subsidiaries, the PRC Subsidiaries and the
Operating Companies has valid title to, or valid leasehold interests
in, all of its material real properties and assets disclosed in the
Prospectus and valid title to all material personal properties and
assets as owned by it, in each case free and clear of liens, charges,
encumbrances, equities, claims, defects, options or restrictions,
except such as are described in the Prospectus or such as do not,
individually or in the aggregate, interfere with the uses made and
proposed to be made of such property by the Company and the relevant
Subsidiary, PRC Subsidiary or Operating Company, as the case may be.
Each lease to which the Company or any of the Subsidiaries, any of the
PRC Subsidiaries or any of the Operating Companies is a party is legal,
valid and binding, enforceable in accordance with its terms against the
other parties thereto, and no material default (or event which with
notice or lapse of time, or both, would constitute a material default)
by the Company or any of the Subsidiaries, any of the PRC Subsidiaries
or any of the Operating Companies has occurred and is continuing under
any such lease. None of the Company, the Subsidiaries, the PRC
Subsidiaries or the Operating Companies has any freehold interest in
any properties.
(j) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued share capital of the Company has been
duly authorized and is validly issued, fully paid and non-assessable.
There are no outstanding securities issued by the Company convertible
into or exchangeable for, rights, warrants or options to acquire from
the Company, or obligations of the Company to issue, Ordinary Shares or
any of the share capital of the Company, except as described in the
Prospectus. There are no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, any
shares of share capital, or direct interests in any Subsidiary, PRC
Subsidiary or Operating Company, other than as set forth in the
Prospectus.
(k) The Offer Shares, Hong Kong Offer Shares and the Reserved Shares to be
issued and sold by the Company to the Underwriters and the Qualified
Shareholders hereunder and (in the case of under subscription in the
Hong Kong Public Offering) under the Hong Kong
48
Underwriting Agreement have been duly and validly authorized, and when
issued and delivered against payment therefore pursuant to the
International Underwriting Agreement and the Hong Kong Underwriting
Agreement will be duly and validly issued and delivered and fully paid
and non-assessable; the descriptions of the Offer Shares, the ADSs
representing such Offer Shares, the Hong Kong Offer Shares and the
Reserved Shares contained in the Prospectus are true and correct in all
material respects; the holders of outstanding shares of share capital
of the Company are not, and on the Closing Date (as defined below) and
the Second Time of Delivery (as defined below), if applicable, will
not, be entitled to preemptive or other similar rights to acquire the
Offer Shares or ADSs; the ADSs, the Offer Shares and the Reserved
Shares are freely transferable by the Company to or for the account of
the several Underwriters and Hong Kong Underwriters and (to the extent
described in the Prospectus) the initial purchasers thereof; and there
are no restrictions on subsequent transfers of the Offer Shares, the
ADSs or the Reserved Shares under the laws of the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇.
(l) Approval in principle has been obtained for the listing of, and
permission to deal in, the Ordinary Shares on The Growth Enterprise
Market of The Stock Exchange of Hong Kong Limited ("GEM".)
(m) This Agreement and the Hong Kong Underwriting Agreement have been duly
authorized, executed and delivered by the Company and each constitutes
a legal, valid and binding instrument enforceable against the Company
in accordance with its terms.
(n) No consents, approvals, authorizations, orders, registrations,
clearances and qualifications of or with any national, provincial,
municipal, local, foreign or other governmental authority, agency or
body, any self-regulatory organization or any court or other tribunal
or any stock exchange authorities (hereinafter referred to collectively
as "Governmental Agencies") having jurisdiction over the Company or any
of the Subsidiaries, the PRC Subsidiaries or the Operating Companies or
any of their properties (hereinafter referred to as "Governmental
Authorizations") are required for (i) the issue and sale of the Shares
to be sold under the Hong Kong Underwriting Agreement, the compliance
by the Company with all of the provisions of the Hong Kong Underwriting
Agreement, and the consummation by the Company of the transactions
contemplated herein and in the Registration Statement as set forth in
and contemplated by the Prospectus, except (x) the registration of the
Offer Shares and the ADSs under the Securities Act, (y) such
Governmental Authorizations as have been obtained and are in full force
and effect and copies of which have been furnished to the Joint Global
Coordinators and (z) such Governmental Authorizations as may be
required by the state securities or Blue Sky laws or any laws of the
Cayman Islands, the British Virgin Islands, Hong Kong, the PRC and the
United States in connection with the purchase and distribution of the
Ordinary Offer Shares and ADSs by or for the account of the
Underwriters and (ii) the execution and delivery by the Company of the
Underwriting Agreements and the Deposit Agreement, except such
Governmental Authorizations as have been obtained and are in full force
and effect and copies of which have been furnished to the Joint Global
Coordinators.
(o) The issue and sale of the Offer Shares to be sold by the Company under
the International Underwriting Agreement and the Hong Kong Underwriting
Agreement, the deposit of the Offer Shares being deposited with the
Depositary against issuance of the ADRs evidencing the ADSs under the
Deposit Agreement and the compliance by the Company with all of the
provisions of the International Underwriting Agreement, the Hong Kong
Underwriting Agreement and the Deposit Agreement, and the consummation
by the Company of the transactions contemplated herein, therein and in
the Registration Statement, did not, and will not, (i) conflict with or
result in any breach or violation of any of 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 the
49
Company and the Subsidiaries, the PRC Subsidiaries and the Operating
Companies, (ii) will not result in any violation of the provisions of
the Memorandum of Association, Articles of Association or business
licenses or other constitutional documents of the Company or any of the
Subsidiaries, any of the PRC Subsidiaries or any of the Operating
Companies or (iii) any law or statute or any order, rule, regulation,
judgment, order or decree of any Governmental Agency having
jurisdiction over the Company or any of the Subsidiaries, any of the
PRC Subsidiaries or any of the Operating Companies or any of their
properties.
(p) There are no legal, governmental or arbitral proceedings (including,
without limitation, any proceedings challenging the effectiveness or
validity of the Reorganization Transaction) pending or, to the best of
the Company and the Parent Company's knowledge, threatened to which the
Company, any of the Subsidiaries, any of the PRC Subsidiaries or any of
the Operating Companies is a party or to which any of the properties of
the Company, any of the Subsidiaries, any of the PRC Subsidiaries or
any of the Operating Companies is subject that are required to be
described in the Prospectus and that are not so described or any
statutes, regulations, contracts or other documents that are required
to be described in the Prospectus that are not described as required
that might individually or in the aggregate reasonably result in a
Material Adverse Effect.
(q) Except as disclosed in the Prospectus, no material relationships,
direct or indirect, or transactions exists between the Company, any of
the Subsidiaries, any of the PRC Subsidiaries or any of the Operating
Companies on the one hand and their respective affiliates, officers and
directors or their shareholders, customers or suppliers on the other
hand which are not disclosed or reflected in the Prospectus; and the
statements in the Prospectus in this regard are true and correct in all
material respects and do not omit anything necessary to make such
statements, in light of the circumstances under which they are made,
not misleading.
(r) Except as described in the Prospectus or the International Underwriting
Agreement, all amounts payable by the Company in respect of the Offer
Shares or pursuant to the Underwriting Agreements, including all
dividends and other distributions declared and payable in United States
dollars on the shares of share capital of the Company, shall be made
free and clear of and without deduction for or on account of any
withholding or other taxes imposed, assessed or levied by the
Government of the PRC, Hong Kong, the British Virgin Islands or the
Cayman Islands or any authority thereof or therein (except such income
taxes as may be imposed by the Government of the PRC, Hong Kong, the
British Virgin Islands or the Cayman Islands on payments hereunder to
any Underwriter whose net income is subject to tax by the PRC, Hong
Kong, the British Virgin Islands or the Cayman Islands or withholding,
if any, with respect to any such income tax).
(s) None of the Subsidiaries, the Operating Companies or the PRC
Subsidiaries are currently prohibited, directly or indirectly, from
paying any dividends or other distributions, or from making any other
distribution on the Subsidiaries', the PRC Subsidiaries' or the
Operating Companies' equity interest, except as provided for in the
Corporate Agreements or as described in or contemplated by the
Prospectus; all dividends and other distributions declared and payable
upon the equity interests in the Subsidiaries, the PRC Subsidiaries and
the Operating Companies may be converted into foreign currency that may
be freely transferred out of the PRC, Hong Kong, the British Virgin
Islands or the Cayman Islands and all such dividends and other
distributions are not and, except as disclosed in the Prospectus, will
not be subject to withholding or other taxes under the laws and
regulations of the PRC, Hong Kong, the British Virgin Islands or the
Cayman Islands and, except as disclosed in the Prospectus, are
otherwise free and clear of any other tax, withholding or deduction in
the PRC, Hong Kong, the British Virgin Islands, or the Cayman Islands
in each case without the necessity of obtaining any Governmental
Authorization in
50
the PRC, Hong Kong, the British Virgin Islands or the Cayman Islands,
except such as have been obtained.
(t) The Company, each of the Subsidiaries, each of the PRC Subsidiaries and
each of the Operating Companies maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to
permit preparation of consolidated financial statements of the Company,
the Subsidiaries, the PRC Subsidiaries and the Operating Companies in
conformity with generally accepted accounting principles in the United
States ("U.S. GAAP") and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets
is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(u) Each of the Company and the Subsidiaries, the PRC Subsidiaries and the
Operating Companies own or have valid licenses in full force and effect
or otherwise have the legal right to use, or can acquire on reasonable
terms, all material patents, patent rights, licenses, inventions,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems of
procedures), trademarks, service marks and trade names (including the
"▇▇▇.▇▇▇" name and logo) currently employed by them in connection with
the business currently operated by them and none of the Company or any
of the Subsidiaries, the PRC Subsidiaries or the Operating Companies,
whether knowingly or unknowingly, is infringing, has infringed or has
received any notice of infringement of or conflict with the asserted
rights of others with respect to any of the foregoing which,
individually or in the aggregate, if the subject of any unfavorable
decision, ruling or finding, would result in any Material Adverse
Change.
(v) The audited consolidated financial statements (and the notes thereto)
of the Company, the Subsidiaries, the PRC Subsidiaries and the
Operating Companies included in the Prospectus present fairly, in all
material respects, the financial position of the Company on a
consolidated basis as of the dates indicated, and the results of
operations and the cash flows for the periods specified in conformity
with U.S. GAAP; and PricewaterhouseCoopers, who have expressed an
opinion on the financial statements of the Company and the financial
statements of ▇▇ ▇▇ Network, based on their audits, are independent
auditors with respect to the Company within the meaning of the
Securities Act, the Exchange Act and the applicable rules and
regulations of the Commission thereunder.
(w) The unaudited pro forma consolidated statements of operations included
in the Prospectus (the "proforma financial statements") are presented
in accordance with Article 11 of Regulation S-X of the United States
Securities Laws; and the assumptions used in preparing the pro forma
financial statements provide a reasonable basis for presenting the
significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect
the proper application of those adjustments to the corresponding
historical financial statements.
(x) Each of the Company, the Subsidiaries, the PRC Subsidiaries and the
Operating Companies have filed with all appropriate taxing authorities
all income, franchise or other tax returns required to be filed through
the date hereof except for those income, franchise or other tax returns
that the failure to file will not have a Material Adverse Effect, and
no tax deficiency has been determined adversely to the Company, the
Subsidiaries, the PRC Subsidiaries or the Operating Companies which has
had (nor does the Company, the Subsidiaries, the PRC Subsidiaries or
the Operating Companies have any knowledge of any tax deficiency which,
if determined adversely to the Company, the Subsidiaries, the
51
PRC Subsidiaries or the Operating Companies, might individually or in
the aggregate have) a Material Adverse Effect.
(y) Except as disclosed in the Prospectus, no material stamp or other
issuance or transfer taxes or duties and no capital gains, income,
withholding or other taxes are payable by or on behalf of the Company
or any of the Subsidiaries, the PRC Subsidiaries or the Operating
Companies to the PRC, Hong Kong, the British Virgin Islands or the
Cayman Islands or any political subdivision or taxing authority thereof
or therein in connection with (i) the creation, allotment and issuance
of the Ordinary Shares, (ii) the deposit of the Offer Shares by the
Company with the Depositary against the issuance of ADRs evidencing
ADSs, (iii) the sale and delivery by the Company of the Offer Shares
and the ADSs to or for the respective accounts of the several
Underwriters and the Hong Kong Underwriters, as the case may be, in the
manner contemplated in the International Underwriting Agreement and in
the Hong Kong Underwriting Agreement, (iv) the execution and delivery
of the International Underwriting Agreement, the Hong Kong Underwriting
Agreement and the Deposit Agreement, (v) the sale and delivery outside
Hong Kong by the several Underwriters or within Hong Kong by the Hong
Kong Underwriters of the ADSs and the Offer Shares, respectively, to
the initial purchasers thereof in the manner contemplated in the
Prospectus or the Hong Kong Prospectus, as the case may be.
(z) The description of the Reorganization Transaction and the Corporate
Agreements as set forth in the Prospectus is true and correct in all
material respects. The Reorganization Transaction has been completed
and effected prior to the date hereof and constitutes a binding and
irrevocable transaction completed by the parties to the Reorganization
Agreements. Each of the Reorganization Agreements and Corporate
Agreements have been effected prior to the date hereof in compliance
with all applicable national, provincial, municipal and local laws,
except for such non-compliance that would not, individually or in the
aggregate, have a Material Adverse Effect, and constitutes a binding
transaction completed by the parties to the Reorganization Agreements
and Corporate Agreements. Each of the Reorganization Agreements and
Corporate Agreements has been duly authorized, executed and delivered
by the Company and each of the Subsidiaries, PRC Subsidiaries and
Operating Companies that is a party to such agreement prior to the date
hereof and each Reorganization Agreement and Corporate Agreement
constitutes a valid and legally binding agreement of the Company and
each of the Subsidiaries, PRC Subsidiaries and Operating Companies that
is a party and such agreement is enforceable in accordance with its
terms subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(aa) The Reorganization Transaction and the Corporate Agreements and the
consummation thereof and the execution and the delivery by the Company
and each of the Subsidiaries and each of the PRC Subsidiaries, as the
case may be, of each Reorganization Agreement and Corporate Agreement
to which it is a party and the performance of their respective
obligations thereunder did not, does not and will not conflict with, or
result in a breach or violation of, any of 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 to which
any of the Company, the Subsidiaries and the PRC Subsidiaries is a
party to or by which it is bound or to which any of its property or
assets is subject, that singly or in the aggregate, is material to any
of the Company, the Subsidiaries, and the PRC Subsidiaries and such
actions did not, and will not, result in any violation of the
provisions of (x) the Articles of Association or business licenses or
other constitutive documents of any of the Company, the Subsidiaries or
the PRC Subsidiaries or (y) any law or statute or any order, rule,
regulation, judgment, order or decree of any Governmental Agency having
jurisdiction over any of them or any of their properties, except, in
the case of clause (y) above, for such violations which would not,
individually or
52
in the aggregate (A) have a Material Adverse Effect or (B) affect the
valid and binding nature of the Reorganization Transaction, any
Reorganization Agreement or any Corporate Agreement. Except as
disclosed in the Prospectus and except for certain regulatory approvals
to be obtained in relation to (a) the transfer of the interest held by
▇▇▇.▇▇▇ (China) Investment Limited in Cernet Information Technology
Company Limited, (b) the transfer of the interest held by Shenzhen
Freenet in Cernet Online Company Limited and (c) the transfer of the
interest held by Shenzhen Freenet in Guangzhou Hong Xiang Audio-Video
Production Company Limited, each of the regulatory approvals associated
with (a), (b) and (c) herein which ▇▇▇.▇▇▇ (China) Investment Limited
and Shenzhen Freenet expect to receive in the normal course, all
consents, approvals, authorizations, orders, registrations and
qualifications required in all relevant jurisdictions in connection
with the Reorganization Transaction, Reorganization Agreements and
Corporate Agreements and the execution, delivery and performance of the
Reorganization Agreements and Corporate Agreements have been made or
obtained (including, without limitation (x) all actions necessary for
the approval of the Reorganization Transaction and Corporate Agreements
by any Governmental Agency and (y) third parties under joint venture
agreements, bank loans, guarantees and other contracts material to the
Company, the Subsidiaries and PRC Subsidiaries taken as a whole, if the
consent of such third party is necessary to be obtained), and no such
consent, approval, authorization, order, registration or qualification
has been withdrawn or is subject to any condition precedent which has
not been fulfilled or performed, except for such consents, approvals,
authorizations, orders, registrations and qualifications that the
failure to make or obtain would not have a Material Adverse Effect.
(bb) Other than the Reorganization Agreements, there are no other material
documents or agreements, written or oral, that have been entered into
by the Company and any of the Subsidiaries, any of the PRC Subsidiaries
or any of the Operating Companies in connection with the Reorganization
Transaction which have not been previously provided, or made available,
to the Underwriters and, to the extent material to the Company,
disclosed in the Prospectus.
(cc) The description of the Acquisition Transaction set forth in the
Prospectus is true and correct in all material respects. The
Acquisition Transaction has been effected prior to the date hereof in
compliance with all applicable national, provincial, municipal and
local laws. The Acquisition Transaction constitutes a binding and
irrevocable transaction completed by the parties to the Acquisition
Agreement. The Acquisition Agreement has been duly authorized, executed
and delivered by the Company and the Subsidiary that is a party to such
agreement prior to the date hereof and the Acquisition Agreement
constitutes a valid and legally binding agreement of the Company and
the Subsidiary that is a party to such agreement enforceable in
accordance with its terms subject, as to enforceability, to bankruptcy,
insolvency, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general
equity principles, and the consummation thereof and the execution and
the delivery of the Acquisition Agreement by the Company and the
Subsidiary that is a party to such agreement and the performance of
their respective obligations thereunder does not and will not conflict
with, or result in a breach or violation of, any of 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 to which the Company and the relevant Subsidiary is a party
or by which it is bound or to which any of its property or assets is
subject, that singly or in the aggregate, is material to the Company
and the relevant Subsidiary, and such actions did not, and will not,
result in any violation of the provisions of (x) the Articles of
Association or business licenses or other constitutive documents of the
Company or the relevant Subsidiary or (y) any law or statute or any
order, rule, regulation, judgment, order or decree of any Governmental
Agency having jurisdiction over any of them or any of their properties,
except, in the case of clause (y) above, for such violations which
would not,
53
individually or in the aggregate (A) have a Material Adverse Effect or
(B) affect the valid and binding nature of the Acquisition Transaction
or the Acquisition Agreement. Other than the Acquisition Agreement,
there are no other material documents or agreements, written or oral,
that have been entered into by the Company and any of the Subsidiaries,
any of the PRC Subsidiaries or any of the Operating Companies in
connection with the Acquisition Transaction which have not been
previously provided, or made available, to the Underwriters and, to the
extent material to the Company, disclosed in the Prospectus.
(dd) Except as disclosed in the Prospectus, each of the Company, the
Subsidiaries, the PRC Subsidiaries and Operating Companies has all
necessary licenses, consents, authorizations, approvals, orders,
certificates and permits of and from, and has made all necessary
declarations and filings with, all Governmental Agencies to conduct its
business in the manner described in the Prospectus except to the extent
that not having such licenses, consents, authorizations, approvals,
orders, certificates or permits and not making such declarations and
filings would not have a Material Adverse Effect, and such licenses,
consents, authorizations, approvals, orders, certificates or permits
contain no materially burdensome restrictions or conditions not
described in the Registration Statement or the Prospectus. Neither the
Company, any of the Subsidiaries, any of the PRC Subsidiaries nor any
of the Operating Companies has received any notice of proceedings
relating to the revocation or modification of any such licenses,
consents, authorizations, approvals, orders, certificates or permits
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect. The
Company does not have any reasonable basis to believe that the PRC
Ministry of Information Industry ("MII") or any other regulatory body
is proposing to modify, suspend or revoke any such licenses, consents,
authorizations, approvals, orders, certificates or permits, and each of
the Company and the Subsidiaries, the PRC Subsidiaries and the
Operating Companies is in compliance with the provisions of all such
licenses, consents, authorizations, approvals, orders, certificates or
permits in all material respects.
(ee) The description set forth in the Prospectus in the section captioned
"Management's Discussion and Analysis of Financial Condition and
Results of Operation - Critical Accounting Policies" of (i) the
accounting policies which the Company believes are the most important
in the portrayal of the Company's financial condition and results of
operations and which require management's most difficult, subjective or
complex judgments ("critical accounting policies") and (ii) the
judgments and uncertainties affecting the application of critical
accounting policies.
(ff) The description set forth in the Prospectus in the section captioned
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" of (i) all
material trends, demands, commitments, events, uncertainties and risks,
and the potential effects thereof, that the Company believes would
materially affect liquidity and are reasonably likely to occur and (ii)
all off-balance sheet transactions, arrangements, and obligations,
including, without limitation, relationships with unconsolidated
entities that are contractually limited to narrow activities that
facilitate the transfer of or access to assets by the Company or any of
the Subsidiaries, PRC Subsidiaries and Operating Companies such as
structured finance entities and special purpose entities (collectively,
"off-balance arrangements") that are reasonably likely to have a
material effect on the liquidity of the Company and the Subsidiaries,
PRC Subsidiaries and Operating Companies taken as a whole, or the
availability thereof or the requirements of the Company and the
Subsidiaries, PRC Subsidiaries and Operating Companies for capital
resources is true and correct in all material respects. As used herein
in this warranty (ff), the phrase "reasonably likely" refers to a
disclosure threshold lower than "more likely than not".
54
(gg) None of the Company, the Subsidiaries, the PRC Subsidiaries and the
Operating Companies and the businesses or entities operated or owned by
the Company and the Subsidiaries, the PRC Subsidiaries and the
Operating Companies, nor to the best of the Company's knowledge, any of
their respective directors (as identified in the Prospectus), directly
or indirectly, own any interest exceeding 5% of the total issued share
capital of, hold any directorships or management positions in, or are a
party to any material transaction with any entity that competes with
the Company, the Subsidiaries, the PRC Subsidiaries or the Operating
Companies, except as described in the Prospectus.
55
SIGNATURE PAGE
The Common Seal of )
▇▇▇ ONLINE INC. )
was hereunto affixed in )
the presence of: )
The Common Seal of )
▇▇▇ GROUP LIMITED )
was hereunto affixed in )
the presence of: )
SIGNED by )
duly authorised for and on behalf of )
CITIGROUP GLOBAL MARKETS )
ASIA LIMITED )
in the presence of: )
SIGNED by )
duly authorised for and on behalf of )
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ )
▇▇▇▇▇▇ ASIA LIMITED )
in the presence of: )
SIGNED by )
duly authorised for and on behalf of )
CITIGROUP GLOBAL MARKETS )
ASIA LIMITED )
as the duly authorised attorney )
of each of the Hong Kong Underwriters )
listed in Schedule 1 (other than itself) )
in the presence of: )
56