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Exhibit 10.2
DATED THE 29th DAY OF NOVEMBER 1996
Between
FLEXTRONICS INTERNATIONAL LTD
as Purchaser
FICO FOREST INDUSTRIAL CO. LIMITED
as Vendor
and
FICO INVESTMENT HOLDING LIMITED
as the Company
SALE AND PURCHASE AGREEMENT
relating to 4,000 ordinary shares
consisting of
40% of all the ordinary shares
in the share capital of
FICO INVESTMENT HOLDING LIMITED
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TABLE OF CONTENTS
Clause Heading Page
------ ------- ----
1. DEFINITIONS AND INTERPRETATION ......................... 2
2. SALE OF THE SALE SHARES ................................ 6
3. CONDITIONS ............................................. 6
4. CONSIDERATION FOR THE SALE SHARES ...................... 7
5. POST-CLOSING ADJUSTMENT ................................ 8
6. COMPLETION ............................................. 8
7. VENDOR'S WARRANTIES .................................... 11
8. VENDOR'S AND COMPANY'S UNDERTAKINGS .................... 14
9. INDEMNITY .............................................. 14
10. PROFIT TARGET .......................................... 15
11. COVENANTS AND UNDERTAKINGS ............................. 16
12. CONFIDENTIALITY ........................................ 19
13. RESTRICTION ON ANNOUNCEMENTS ........................... 20
14. COSTS .................................................. 20
15. GENERAL ................................................ 20
16. ILLEGALITY ............................................. 21
17. NOTICES ................................................ 21
18. REMEDIES AND WAIVERS ................................... 22
19. TIME OF ESSENCE ........................................ 22
20. GOVERNING LAW AND DISPUTE RESOLUTION ................... 22
21. COUNTERPARTS ........................................... 23
SCHEDULE 1 PARTICULARS OF THE COMPANY ............... 25
SCHEDULE 2 CALL OPTION AGREEMENT .................... 26
SCHEDULE 3 CHARGE ................................... 46
SCHEDULE 4 EMPLOYMENT AGREEMENT - LAW SING HONG ..... 55
EMPLOYMENT AGREEMENT - LAW SHUN HANG ..... 64
EMPLOYMENT AGREEMENT - LAW KIN PING ...... 73
SCHEDULE 5 ESCROW AGREEMENT ......................... 82
SCHEDULE 6 FICO CALL OPTION AGREEMENT ............... 89
SCHEDULE 7 PARTICULARS OF FICO(PRC) ................. 97
SCHEDULE 8 DEED OF INDEMNITY ........................ 98
SCHEDULE 9 MEMORANDUM OF DISCLOSURE ................. 105
SCHEDULE 10 PRC PROPERTY ............................. 108
SCHEDULE 11 PUT OPTION AGREEMENT ..................... 109
SCHEDULE 12 SHAREHOLDERS' AGREEMENT .................. 117
SCHEDULE 13 REPRESENTATIONS AND WARRANTIES ........... 136
SCHEDULE 14 ASSUMPTIONS AND POLICIES REGARDING
THE PROFIT TARGET UNDER CLAUSE 10 ....... 158
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THIS AGREEMENT is made on the 29th day of November 1996 BETWEEN
(1) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in Singapore and
having its registered office at 00 Xxxxxxxx Xxxx, Xxxx Xxxxx, #00-00,
Xxxxxxxxx 000000 ("Purchaser");
(2) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
and having its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx
Xxx Ind. Building, 603 Castle Peak Road, Tsuen Wan, New Territories,
Hong Kong ("Vendor"); and
(3) FICO INVESTMENT HOLDING LIMITED, a company incorporated in Hong Kong
and having its registered office at Xx 00, 00/X, Xxx X, Xxxx Xxx Xxx.
Building, 603 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
("Company").
WHEREAS:
(A) The Company and FICO(PRC) (as defined below) are in the business of the
sale and manufacture of plastic material products and its by-products.
(B) The Company was incorporated in Hong Kong on 12 September 1996 and has,
at the date hereof, an authorized share capital of 10,000 ordinary
shares of HK$1.00 each of which 10,000 ordinary shares are issued and
paid-up. The relevant particulars of the Company are set out in
Schedule 1.
(C) FICO(PRC) has, at the date hereof, an authorised capital of
HK$55,000,000 and pursuant to the Capital Verification Certificate
dated 9 April 1996 from Shenzhen Baoan Certified Public Accountants,
HK$42,981,525 has been paid up.
(D) The Vendor is the legal and beneficial owner of all the issued shares
in the share capital of the Company and the owner of FICO(PRC).
(E) The Vendor has agreed to transfer ownership of FICO(PRC) to the Company
such that, by the Completion Date of this Agreement, FICO(PRC) shall be
a subsidiary of the Company. FICO(PRC) will be the only subsidiary of
the Company.
(F) The Vendor has offered to sell to the Purchaser 4,000 Shares (as
defined below) consisting of forty percent. (40%) of the issued and
paid-up share capital of the Company, which are or shall, be legally
and beneficially held by the Vendor by the Completion Date of this
Agreement.
(G) The Vendor is desirous of selling, and the Purchaser is desirous of
purchasing, all the Sale Shares (as defined below) for the
consideration and on the terms and subject to the conditions, contained
in this Agreement and further to that, have agreed to the terms and
execution of, and agreed to procure the execution of the Employment
Agreements (as defined below), the Put Option Agreement (as defined
below), the Call Option Agreement (as defined below), the Escrow
Agreement (as defined below), the Fico Call Option Agreement (as
defined below), the Shareholders' Agreement (as defined below) the Deed
of Indemnity (as defined below) and the Charge (as defined below), upon
the Completion of this Agreement.
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NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and in the Schedules unless the context requires
otherwise:
"Articles" means the articles of association of each Group Company;
"Audited Accounts" means the consolidated pro-forma audited accounts
for the financial period ended the Balance Sheet Date prepared by the
Purchaser's Auditors;
"Audited Net Asset Value" shall have the meaning ascribed to it in
Clause 5.1;
"Balance Consideration" shall have the meaning ascribed to it in Clause
4.2(ii);
"Balance Sheet Date" means 30 September 1996;
"Business" shall have the meaning ascribed to it in Clause 11.3(vi);
"Business Day" means a day (other than a Saturday, a Sunday or a public
holiday in Hong Kong) on which commercial banks are open for business
in Hong Kong;
"Call Option Agreement" means the conditional call option agreement to
be entered into between the Vendor and the Purchaser substantially in
the form set out in Schedule 2;
"Charge" means the first fixed charge to secure the various covenants,
guarantees and undertakings of the Vendor under and pursuant to this
Agreement, the Call Option Agreement, Fico Call Option Agreement, Put
Option Agreement, Escrow Agreement, Deed of Indemnity and the
Shareholders' Agreement, over the Shares constituting sixty per cent.
(60%) of the issued and paid-up capital of the Company, to be executed
by the Vendor in favour of the Purchaser substantially in the form set
out in Schedule 4;
"Chinese Party" means any governmental, regulatory, provincial, state
or statutory authority in the PRC or any person exercising such
functions;
"Companies Ordinance" means the Hong Kong Companies Ordinance;
"Completion" means completion of the sale and purchase of the Sale
Shares as specified in Clause 6;
"Completion Date" means the date falling twenty (20) Business Days
after the fulfillment of the last of the conditions in Clause 3.1 but
in any event, not later than 15 December 1996 or such other date as the
parties may mutually agree;
"Confidential Information" means any information which is proprietary
and confidential to a party including but not limited to the terms and
conditions of this Agreement, information concerning or relating in any
way whatsoever to its distributorship arrangements, principals, any of
the trade secrets or confidential operations, processes or inventions
carried on or used by a party, any information concerning the
Organisation, business, finances, transactions or affairs of a party,
dealings of a party, secret or confidential information which relates
to the business or party or any of its principals', clients' or
customers' transactions or affairs, any party's technology, designs,
documentation, manuals, budgets, financial statements or information,
accounts, dealers' lists, customer lists, marketing studies, drawings,
notes, memoranda and the information contained therein, any information
therein in respect of trade secrets, technology and technical or other
information relating to the development, manufacture, clinical testing,
analysis, marketing,
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sale or supply or proposed development, manufacture, clinical testing,
analysis, marketing, sale or supply of any products or services by a
party; and plans for the development or marketing of such products or
services and information and material which is either marked
confidential or is by its nature intended to be exclusively for its
knowledge of the recipient alone;
"Consideration" means the consideration for the Sale Shares as
specified in Clause 4;
"Deed of Indemnity" means a deed of indemnity entered or to be entered
into between the Vendor, the Purchaser and the Group Companies
substantially in the form set out in Schedule 8;
"Deferred Consideration Payment Date" means the date falling four (4)
calendar months after the Completion Date;
"Encumbrance" means any mortgage, assignment of receivables, debenture,
lien, charge, pledge, title retention, right to acquire, security
interest, options, rights of first refusal and any other encumbrance or
condition whatsoever;
"Employment Agreements" means the employment agreements to be executed
by Law Sing Hong, Law Shun Hang and Law Kin Ping substantially in the
forms respectively set out in Schedule 4;
"Escrow Agent" means Ernst & Young, an international accounting firm
having its place of business at 0X/X Xxxxx 0, Xxx Xxxxxxx 25-27, Canton
Road, Kowloon, Hong Kong, or any successor escrow agent appointed by
the Purchaser;
"Escrow Agreement" means the escrow agreement to be executed by the
Vendor, the Purchaser and the Escrow Agent pursuant to the terms of
this Agreement which is substantially set out in Schedule 5;
"Fico Call Option Agreement" means the conditional call option
agreement to be entered into between the Vendor and the Purchaser
substantially in the form set out in Schedule 6;
"FICO (PRC)" means Forest Keyboard Manufacturing (Shenzhen) Ltd., a
company registered and validly existing in Shenzhen, the PRC, relevant
particulars of which are set out in Schedule 7;
"FICO (PRC) Litigation" means the claim initiated by FICO(PRC) against
Shenzhen City Number Four Construction Engineering Company
("Defendant"), a company having its place of business in Shenzhen, PRC,
for an order by the Shenzhen City Special Economic Zone Peoples' Court
to (i) terminate the Shenzhen City Construction Engineering Works
Contract signed between FICO(PRC) and the Defendant on 21 July 1995 for
the failure by the Defendant to comply with certain quality standards
stipulated in the said contract, (ii) order the Defendant to refund to
FICO(PRC) the advance of 600,000 RMB paid by FICO(PRC) for the
construction of a factory building located at BaoAn Gong Min Town,
YuLui Village, and (iii) order the Defendant to bear the costs and
expenses of the FICO(PRC) Litigation;
"FIL Group Companies" means the Purchaser and the FIL Subsidiaries and
"FIL Group Company" means any of them;
"FIL Subsidiaries" means the subsidiaries and related companies of the
Purchaser at any time and from time to time and "FIL Subsidiary" means
any of them;
"Financial Period" shall have the meaning ascribed to it in Clause
10.1(i);
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"FY96 Audited Accounts" means the consolidated audited accounts of the
Company for the financial year ending 31 December 1 996 prepared by the
Purchaser's Auditors pursuant to Clause 5.4;
"Group Companies" means the Company and FICO(PRC) and "Group Company"
shall mean any one of them;
"HK$" or "Hong Kong Dollars" means the lawful currency of Hong Kong;
"HKIAC" means the Hong Kong International Arbitration Centre;
"HKIAC Rules" means the HKIAC Procedures for Arbitration in force at
the date of this Agreement, including such additions to the UNCITRAL
Arbitration Rules as are therein contained;
"Intellectual Property Right" means any trademark, pending trademark
application, patent, pending patent application, know-how, registered
and unregistered design, copyright, trade secrets, licences relating to
any of the above or other similar industrial or commercial right;
"Management Accounts" means the management accounts of the Group
Companies for the month immediately preceding the Completion Date;
"Memorandum of Disclosure" means the memorandum of disclosure dated on
or before the Completion Date from the Vendor to the Purchaser, in the
form set out in Schedule 9 disclosing information constituting
exceptions to the Warranties;
"Net Profits After Taxation of the Company" shall have the meaning
ascribed to it in Clause 10.1(ii);
"Notice of Dispute" shall have the meaning ascribed to it in Clause
20.4;
"Post-Closing Adjustment" shall have the meaning ascribed to it in
Clause 5.3;
"PRC" means the People's Republic of China;
"PRC Property" means the land and building currently being constructed
by FICO(PRC) at Shenzhen relevant particulars of which are set out in
Schedule 10;
"Profit Target" shall have the meaning ascribed to it in Clause
10.1(iii);
"Purchaser's Auditors" mean each of (a) Ernst & Young, an international
accounting firm and having its place of business in Hong Kong and (b)
Shenzhen Shekou Schinda Certified Public Accountants having its place
of business at Shekou, Shenzhen, PRC;
"Put Option Agreement" means the conditional put option agreement, to
be executed by the Vendor and the Purchaser substantially in the form
set out in Schedule 11;
"RMB" means the Renmimbi, lawful currency of PRC;
"S$" or "Singapore Dollars" means the lawful currency of Singapore;
"Sale Shares" means the 4,000 ordinary shares of HK$1.00 each
consisting of forty per cent. (40%) of the issued and paid-up share
capital of the Company, which collectively, are or shall be, legally
and beneficially held by the Vendor immediately prior to or by the
Completion Date;
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"Shares' means all or any part of the ordinary shares of HK$1.00 each
in the share capital of the Company;
"Shareholders' Agreement" means the shareholders' agreement to be
executed by the Vendor and the Purchaser substantilly in the form set
out in Schedule 12;
"SIAC" means the Singapore International Arbitration Centre;
"SIAC Rules" means the SIAC Arbitration Rules in force at the date of
this Agreement, including such additions to the UNCITRAL Arbitration
Rules as are therein contained;
"Special Accounts" shall have the meaning ascribed to it in Clause
10.2(i);
"Specific Indemnities" shall have the meaning ascribed to it in Clause
7.14;
"Taxes" or "Taxation" means all forms of taxation whether of Singapore,
Hong Kong, or the PRC including all state or local taxation, past,
present and deferred (including, without limitation, income tax
(including net income and gross income), corporate, value added,
occupation, real and personal property, social security, gross
receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, occupation,
premium or windfall profit taxes, estate duty, stamp duty, customs and
other import or export duties, or charges of any kind whatsoever,
estimated and other taxes, together with any interest and levies and
all penalties, charges, costs and additions to tax, payable by or due
from any of the Group Companies, or any additional amounts imposed by
any government, governmental agency, statutory body or any revenue
authority, upon any Group Company;
"US GAAP" means generally accepted accounting principles in the United
States;
"Warranties" means the representations, warranties, indemnities and
undertakings made by the Vendor on the Group Companies contained or
referred to in Clause 7 and Schedule 13; and
"$" or "Dollars" means the lawful currency of the United States of
America.
1.2 References to statutory provisions shall be construed as references to
those provisions as respectively amended or re-enacted or as their
application is modified by other provisions (whether before or after
the date hereof) from time to time and shall include any provisions of
which they are re-enactments (whether with or without modification).
1.3 References herein to Clauses and the Schedules are to clauses in and
the schedules to this Agreement (unless the context otherwise
requires). The Schedules form part of this Agreement and have the same
force and effect as if expressly set out in the body of this Agreement.
1.4 All warranties, representations, indemnities, covenants, agreements and
obligations given or entered into by more than one person are given or
entered into jointly and severally.
1.5 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.6 Words importing the singular shall include the plural and vice versa;
words importing a specific gender shall include the other genders
(male, female or neuter); and "person" shall include an individual,
corporation, company, partnership, firm, trustee, trust, executor,
administrator or other legal personal representative, unincorporated
association, joint venture, syndicate or other business enterprise, any
governmental, administrative or
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regulatory authority or agency (notwithstanding that "person" may be
sometimes used herein in conjunction with some of such words), and
their respective successors, legal personal representatives and
assigns, as the case may be, and pronouns shall have a similarly
extended meaning.
1.7 Any thing or obligation to be done under this Agreement which requires
or falls to be done on a Business Day, shall be done on the next
succeeding Business Day, if the day upon which that thing or obligation
to be done falls on a day which is not a Business Day.
1.8 The word "subsidiary" shall have the same meaning in this Agreement as
its definition in the Companies Ordinance.
2. SALE OF THE SALE SHARES
2.1 Subject to the terms and conditions of this Agreement, the Vendor shall
sell as legal and beneficial owner and the Purchaser, relying on the
several representations, warranties and undertakings contained in this
Agreement, shall purchase free from all Encumbrances and together with
all rights and benefits now and hereafter attaching thereto, all the
Sale Shares.
2.2 The Purchaser shall not be obliged to complete the purchase of any of
the Sale Shares unless the purchase of all the Sale Shares is completed
simultaneously.
3. CONDITIONS
3.1 The sale and purchase of the Sale Shares is conditional upon:
(i) the Memorandum of Disclosure to be delivered to the Purchaser
on Completion being in form and substance satisfactory to the
Purchaser;
(ii) completion of a special audit by the Purchaser and the
Purchaser's Auditors (if the Purchaser so chooses to conduct)
and a due diligence exercise over the business and records of
the Group Companies and the results of the special audit and
the due diligence exercise, being satisfactory to the
Purchaser in its sole and absolute discretion;
(iii) the Warranties remaining true and not misleading in any
respect at Completion, as if repeated at Completion and at all
times between the date of this Agreement and Completion;
(iv) the Vendor having performed all of the covenants and
agreements required to be performed or caused to be performed
by it under this Agreement on or before the Completion Date;
(v) the Vendor supplying, or procuring each of the Group Companies
or its officers to supply to the Purchaser, all of the
information (in such detail as may be satisfactory to the
Purchaser) requested by the Purchaser from time to time before
the Completion Date;
(vi) all other consents and approvals required under any and all
applicable laws for the sale and purchase of the Sale Shares
and to give effect to the transactions contemplated hereunder
being obtained; and
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(vii) the transfer of the ownership of FICO(PRC) to the Company and
all consents and approvals required under all applicable laws
relating thereto, whether in the PRC or Hong Kong, being
obtained.
3.2 The Vendor shall procure the fulfilment of the conditions set out in
Clause 3.1 by the Completion Date. Unless specifically waived by the
parties hereto, if any of the conditions stated in Clause 3.1 shall not
be fulfilled on or before the Completion Date or such other date as the
parties shall mutually agree, this Agreement shall ipso facto cease and
determine and neither party shall have any claim against the other for
costs, damages, compensation or otherwise, save for any claim by the
Purchaser against the Vendor arising from antecedent breach of the
terms hereof including its undertaking contained in this Clause 3.2.
4. CONSIDERATION FOR THE SALE SHARES
4.1 The Consideration for the purchase of the Sale Shares shall be the
aggregate sum of $5,200,000 (Dollars Five Million Two Hundred Thousand)
for all the Sale Shares which shall be paid in accordance with Clause
4.2.
4.2 The Consideration shall be satisfied:
(i) by the payment of $3,000,000 (Dollars Three Million) on
Completion; and
(ii) by the payment of the balance of $2,200,000 (Dollars Two
Million Two Hundred Thousand) on the Deferred Consideration
Payment Date ("Balance Consideration"), as may be adjusted
pursuant to Clause 4.2(B),
Provided that the Balance Consideration shall not be paid unless the
Purchaser is satisfied with the state of affairs of the Company as
reported in the audited accounts of the Company for the financial year
ending 31 December 1996 and that all the Warranties are true in all
respects, on the Deferred Consideration Payment Date. In the event that
the Purchaser, at its sole and absolute discretion and determination:
(A) is not satisfied with the state of affairs of the Company as
reported in the audited accounts of the Company for the
financial year ending 31 December 1996, the Purchaser shall
exercise its rights under the Put Option Agreement; and
(B) is satisfied with the state of affairs of the Company as
reported in the FY96 Audited Accounts, the Purchaser shall pay
to the Vendor the Balance Consideration pursuant to Clause 4.3
save that the Purchaser shall deduct from the Balance
Consideration, such amounts payable by the Vendor to the
Company pursuant to Clauses 11.1 (ii) and (iii) and pay the
same to the Company on the Deferred Consideration Payment Date
and the payment of the Balance Consideration as adjusted
hereunder shall constitute full and final payment of all sums
due as Consideration under this Agreement and the Vendor shall
have no further claim to the same.
4.3 Payment of the Consideration in the manner set out in Clause 4.2 above
shall be effected by way of telegraphic transfer of the amount payable
to an account designated by the Vendor and notified to the Purchaser
not later than three (3) Business Days prior to the date of payment or
by way of a cashier's order or banker's draft issued by a bank licensed
in Singapore or in Hong Kong or in such other form as the Vendor and
the Purchaser may agree.
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4.4 The Consideration stated herein to be paid to the Vendor, and the
manner in which it is proposed to be paid, may be adjusted further
according to the outcome and results of the due diligence
investigations and special audit referred to in Clause 3.1 (ii) to be
conducted by the Purchaser of the Group Companies.
5. POST-CLOSING ADJUSTMENT
5.1 In the event the net asset value of the Group (excluding the PRC
Property) calculated in accordance with US GAAP as recorded in the
audited accounts for the financial year ending 31 December 1996 (in
this Clause 5.1, the "Audited Net Asset Value") exceeds $5,000,000, the
Vendor shall be entitled to be paid by the Company in cash as
additional consideration for the transfer of the ownership of FICO(PRC)
to the Company an amount equal to the difference between the Audited
Net Asset Value and $5,000,000.
5.2 In the event that the Audited Net Asset Value is less than $5,000,000,
the Vendor shall pay to the Company in cash by way of additional moneys
payable by the Vendor for the transfer of the ownership of FICO(PRC) to
the Company, an amount equal to the difference between $5,000,000 and
the Audited Net Asset Value. Such sum shall be credited to the
Company's share premium account.
5.3 The sum payable by the Company or, as the case may be, the Vendor
pursuant to Clause 5.1 or Clause 5.2 (as the case may be) shall be
referred to as the "Post-Closing Adjustment".
5.4 The determination of the Audited Net Asset Value shall be as follows:
(i) As promptly as practicable (but in no event later than 16
April 1997), the Purchaser's Auditors shall submit to the
Purchaser and the Vendor the FY96 Audited Accounts of the
Group Companies;
(ii) The FY96 Audited Accounts of the Company and FICO(PRC) shall
be prepared according to US GAAP; and
(iii) The FY96 Audited Accounts shall be final and binding on the
Vendor and the Purchaser and shall set forth the Audited Net
Asset Value as of 31 December 1996.
5.5 Payment of the Post-Closing Adjustment determined in accordance with
Clause 5.1 or, as the case may be, Clause 5.2 shall be effected on the
Deferred Consideration Payment Date.
6. COMPLETION
6.1 Subject to Clause 3, Completion shall take place on the Completion Date
in Hong Kong at the Hong Kong branch office of FIL (or at such other
place as may be agreed) where all of the events described below shall
occur.
6.2 At Completion, the Vendor shall deliver to or, in the case of Clauses
6.2 (vi), (vii) and (viii) below make available for inspection by, the
Purchaser:
(i) evidence satisfactory to the Purchaser of the satisfaction of
the conditions specified in Clause 3.1 above;
(ii) a certificate signed by a director of the Vendor and a
director of the Company confirming that all the
representations and warranties contained in Clause 7 and
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Schedule 13 have been complied with and would be correct in all
respects as if repeated on the Completion Date by reference to the
circumstances then existing and that all the undertakings on the part
of the Vendor contained in Clause 11 have been fully performed and
observed by the Vendor;
(iii) duly executed transfers and duly executed sold notes in respect of the
Sale Shares in favour of the Purchaser (including all powers of
attorney or other authorities under which the transfers and sold notes
in respect of the Sale Shares have been executed) or as it may direct
accompanied by the relative share certificates for the Sale Shares;
(iv) certified true copies of the resolutions passed by the board of
directors of the Company:
(a) approving the transfer of the Sale Shares to the Purchaser, or
the transfer of any part of the Sale Shares to a nominee
appointed by the Purchaser, save that such approval shall be
conditional on the instruments of transfer being duly stamped
in accordance with the Stamp Duty Ordinance;
(b) authorising the issue of the new share certificates in respect
of the Sale Shares in favour of the Purchaser or such nominee
of the Purchaser;
(c) approving the entering in the Register of Members of the
Company, the name of the Purchaser as holder of the Sale
Shares or that of its nominee, save that such approval shall
be conditional on the instruments of transfer being duly
stamped in accordance with the Stamp Duty Ordinance;
(d) appointing as directors of the Company, the persons nominated
by the Purchaser as notified to the Vendor in writing upon
execution of this Agreement with effect from the Completion
Date;
(e) revoking all existing authorities to bankers in respect of the
operation of its bank accounts and giving authority in favor
of such persons as the Purchaser and the Vendor may nominate
(such nomination to be communicated to the Vendor prior to
Completion) to operate such accounts;
(f) authorising the execution and delivery of the Deed of
Indemnity by the Company and its execution under seal of the
Company; and
(g) authorising the execution and delivery by the Company of each
of the Shareholders' Agreement and the Employment Agreements;
(v) certified true copies of the resolutions passed by the shareholders of
the Vendor:
(a) approving the sale of the Sale Shares to the Purchaser; and
(b) authorising the execution and delivery by the Vendor of each
of the Put Option Agreement, the Call Option Agreement, the
Fico Call Option Agreement, the Shareholders' Agreement, the
Escrow Agreement, the Charge and the Deed of Indemnity;
(vi) all necessary corporate or other approvals necessary to be passed by
all relevant person or persons for the adoption of the Articles;
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(vii) all the statutory and other books (duly written up to date) of
each Group Company, the certificate of incorporation, the
common seal and any other papers and documents of each Group
Company in the Vendor's possession;
(viii) the title deeds, land use right certificates, building
ownership certificates, leases and tenancy agreements in
respect of properties, if any, owned or leased by the Group
Companies in Hong Kong and the PRC, together with all other
documents relating to such properties and of all other
properties of the Group Companies;
(ix) the certificates of incorporation, certificates of
incorporation on change of name, common seals (if any), the
memoranda and articles of association, cheque books and
statutory books and records and current business registration
certificates and business licenses of each Group Company (duly
written up-to-date);
(x) such waivers or consents as may be necessary to enable the
Purchaser or its nominee to be registered as holder of any and
all of the Sale Shares;
(xi) deeds executed by the vendor and each of the existing
directors of each Group Company confirming that they each have
no claim against such Group Company and if there are any
claims that they shall release and disclaim all their rights
to such claims, which letters shall be in such form as parties
shall agree;
(xii) the Shareholders' Agreement duly executed by the Vendor;
(xiii) the Employment Agreements duly executed by each Law Sing Hong,
Law Shun Hang and Law Kin Ping;
(xiv) the Put Option Agreement duly executed by the Vendor;
(xv) the Call Option Agreement duly executed by the Vendor;
(xvi) the Fico Call Option Agreement duly executed by the Vendor;
(xvii) the Charge duly executed by the Vendor;
(xviii) the Deed of Indemnity duly executed by the Vendor;
(xix) the Escrow Agreement duly executed by the Vendor and the
Escrow Agent;
(xx) a list of all bank accounts maintained by each of the Group
Companies; and
(xxi) a legal opinion by the Vendor's solicitors in a form and
substance satisfactory to the Purchaser.
6.3 On Completion and against compliance with the respective provisions of
Clauses 2.2 and 6.2, the Purchaser shall deliver to the Vendor:
(i) the sum of $3,000,000 referred to in Clause 4.2(i) in the
manner set out in Clauses 4.3 and 4.4;
(ii) the Shareholders' Agreement duly executed by the Purchaser;
(iii) the Put Option Agreement duly executed by the Purchaser;
(iv) the Call Option Agreement duly executed by the Purchaser;
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(v) the Fico Call Option Agreement duly executed by the Purchaser;
(vi) the Charge duly executed by the Purchaser;
(vii) the Deed of Indemnity duly executed by the Purchaser; and
(viii) the Escrow Agreement duly executed by the Purchaser.
6.4 On Completion, the Vendor shall procure:
(i) the execution by the Company of the Shareholders' Agreement;
(ii) the execution by the Company of the Deed of Indemnity;
(iii) the execution by the Company of the Employment Agreements; and
(iv) that the Company shall hold a shareholders meeting to amend
the Articles to conform the Articles with the terms and
conditions of the Shareholders' Agreement and for such
amendment to be effective by the Completion Date.
6.5 Without prejudice to any other remedies available, if in any respect
the provisions of this Clause 6 are not complied with by the Vendor or,
as the case may be the Purchaser ("Defaulting Party") on the Completion
Date, the party not in default ("Non-Defaulting Party") may:
(i) defer Completion to a date not more than twenty-eight (28)
days after the Completion Date (and so that the provisions of
this sub-clause shall apply to Completion as so deferred); or
(ii) proceed to Completion so far as practicable (without prejudice
to their rights hereunder); or
(iii) rescind this Agreement.
6.6 No party shall be obliged to perform any of its obligations under
Clauses 6.2, 6.3 and 6.4 unless (simultaneously with such performance)
the other parties perform their respective obligations under such
Clauses.
6.7 In the event that Completion should not take place due to any failure
to satisfy any or all the conditions precedent mentioned in Clause 3.1
or the occurrence of any event which is beyond the control of the
Purchaser, this Agreement shall ipso facto cease and all parties hereto
shall have no claims against each other save for antecedent breaches of
any representations or undertakings and all the rights and obligations
of the parties hereto shall cease.
7. VENDOR'S WARRANTIES
7.1 The Vendor hereby represents, warrants and undertakes to and with the
Purchaser (with the intent that the provisions of this Clause 7.1 shall
continue to have full force and effect notwithstanding Completion)
that:
(i) the Vendor is currently the legal and beneficial holder of the
Sale Shares, and that the Sale Shares, in aggregate,
represent, and shall on Completion represent, forty per cent.
(40%) of the issued and paid-up share capital of the Company;
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(ii) on Completion, it shall be the legal and beneficial owner of
and is entitled to sell and transfer the Sale Shares to the
Purchaser and/or its nominee, free from all and any
Encumbrances together with all rights and benefits attaching
thereto as at the Completion Date and no other person has or
shall have any rights of pre-emption over such Sale Shares;
(iii) on Completion, the Sale Shares are and shall have been
authorised, validly issued, allotted and fully paid-up;
(iv) on Completion, the ownership of FICO(PRC) shall have been
legally and validly transferred, free from Encumbrances, to
the Company and that the Company shall be the legal and
beneficial owner of FICO(PRC);
(v) the execution and delivery of, and the performance by it of
its obligations under this Agreement shall not:
(a) result in a breach of, or constitute a default under,
any instrument, contract, document or agreement, to
which it or the Company or FICO(PRC) is a party or by
which it or the Company or FICO(PRC) is bound; and/or
(b) result in a breach of any law, rules, regulations,
ordinances, order, judgment or decree of or
undertaking to any court, government body, statutory
authority or regulatory body (including, without
limitation, any relevant stock exchange or securities
council) to which it or the Company or FICO(PRC) is a
party or by which it or the Company or FICO(PRC) is
bound, whether in Hong Kong or the PRC or anywhere
else in the world; and
(vi) each of the Warranties is true and accurate in all respects
save as expressly disclosed in the Memorandum of Disclosure,
save that notwithstanding specific disclosure has or will be
made of the FICO(PRC) Litigation in the Memorandum of
Disclosure, the Vendor shall continue to be liable for all
costs and expenses arising from the FICO(PRC) Litigation in
the manner determined in Clause 8.1.
Each of the representations, warranties and undertakings above shall be
separate and independent and shall not be limited by anything in this
Agreement. The representations, warranties and undertakings given under
or pursuant to this Clause 7.1 above shall not in any respect be
extinguished or affected by Completion except by a specific and duly
authorised waiver or release in writing by the Purchaser.
7.2 The Vendor represents and warrants to the Purchaser that the Company is
a company duly incorporated and validly existing under the laws of Hong
Kong and has all requisite power and authority (corporate and
otherwise) to own its properties and assets and carry on its business
as now being conducted and that the Company has full power and
authority to execute and deliver this Agreement and the agreements
contemplated herein, and to consummate the transactions contemplated
hereby and thereby.
7.3 The Vendor further warrants and undertakes to and with the Purchaser
(with the intent that the provisions of this Clause 7.3 shall continue
to have full force and effect notwithstanding Completion) that:
(i) all Warranties herein contained will be fulfilled and will be
true and correct at Completion in all respects as if they had
been entered into afresh at Completion; and
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(ii) in relation to any Warranty which refers to the knowledge,
information or belief of the Vendor, that the Vendor has made
reasonable enquiry into the subject matter of that Warranty.
7.4 The Vendor warrants and undertakes to the Purchaser that each of the
Group Companies shall be free of any debt or liability of any nature
whatsoever (whether actual, contingent or otherwise) as at the Deferred
Consideration Payment Date.
7.5 The Warranties are given subject to matters fully, fairly and
specifically disclosed in the Memorandum of Disclosure.
7.6 The Vendor acknowledges that the Purchaser has entered into this
Agreement in reliance upon and on the basis of each of the Warranties.
7.7 The Warranties shall be separate and independent and save as expressly
provided shall not be limited by reference to any other Clause or
anything in this Agreement or any other paragraph of Schedule 13, the
Specific Indemnities or the Deed of Indemnity.
7.8 If prior to Completion, any event shall occur which results or may
result in any of the Warranties being unfulfilled, untrue or incorrect
at Completion, the Vendor shall immediately notify the Purchaser in
writing thereof prior to Completion and the Vendor shall make any
investigation concerning the event or matter which the Purchaser may
reasonably require.
7.9 The Vendor shall procure that it shall not do, allow or procure any act
or omission before Completion which would constitute a breach of any of
the Warranties if they were given at Completion or which would make any
of the Warranties inaccurate or misleading if they were so given.
7.10 In the event of it becoming apparent on or before Completion that the
Vendor is in breach of any of the Warranties or any other term of this
Agreement, the Purchaser may, at its sole discretion, rescind this
Agreement by notice in writing to the Vendor. Upon termination of this
Agreement under this Clause 7.10, the Purchaser shall, in addition to
its rights to damages, be entitled to be paid legal, accounting and
other costs and expenses incurred by the Purchaser in connection with
this Agreement.
7.11 The Vendor shall use its best endeavours to give to the Purchaser, and
its solicitors, financiers, consultants, advisers and accountants and
the Purchaser's Auditors up to Completion all such information and
documentation relating to the Company and FICO(PRC) in his power,
custody, possession or control as the Purchaser shall require to enable
it to be satisfied as to the accuracy and due observance of the
Warranties.
7.12 Save for this Clause 7 and Schedule 13, each of the parties hereto
makes no other representations or warranties, express or implied, to
the other parties and each of the parties hereto acknowledges to the
other parties that it has not relied on or been induced by any other
warranties or representations made by the relevant party or its agents
or representatives to enter into this Agreement.
7.13 The Warranties and all other provisions of this Agreement and the Deed
of Indemnity insofar as the same shall not have been performed at
Completion shall not in any respect be extinguished or affected by
Completion, or by any other event or matter whatsoever, except by a
specific and duly authorised written waiver or release by the
Purchaser.
7.14 In addition to and without prejudice to all other rights and remedies
available to the Purchaser, including the right to damages, the Vendor
indemnifies the Purchaser against any claim, action, damage, loss,
liability, expense or outgoing (including all expenses of investigation
and enforcement of these indemnities and all legal fees and expenses)
which
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the Purchaser or any of the Group Companies (either jointly or
severally) pays, suffers, incurs or is liable for in respect of or in
connection with the following (collectively, the "Specific
Indemnities"):
(i) any claim by the Chinese Party arising out of the Chinese
Party's entitlement or claim of entitlement to any equity or
shareholding interest in FICO(PRC);
(ii) any claim by the Chinese Party or any other third party,
including any relevant authorities (whether or not
governmental or regulatory) of whatsoever nature in connection
with the change in ownership of the Company arising out of the
sale and purchase of the Sale Shares under this Agreement; or
(iii) any claim by the Chinese Party after the Completion Date for
the return to it by FICO(PRC) or the Company of all or part of
the rights and interests in and to any of the PRC Property
that were originally contributed by the Chinese Party to
FICO(PRC) or any claim by the Chinese Party to any
distribution of the assets of FICO(PRC) upon the liquidation
of FICO(PRC).
8. VENDOR'S AND COMPANY'S UNDERTAKINGS
8.1 The Vendor undertakes with the Company and the Purchaser that,
notwithstanding Completion:
(i) any and all losses, costs, damages, claims, demands, actions,
proceedings, liabilities and expenses whatsoever (including
but not limited to all legal costs or attorney's fees on a
full indemnity basis) arising out of the FICO(PRC) Litigation
shall be borne solely and fully by the Vendor and the Vendor
shall keep the Purchaser and the Group Companies fully and
effectively indemnified against any and all such losses,
costs, damages, claims, demands, actions, proceedings,
liabilities and expenses whatsoever (including but not limited
to all legal costs or attorney's fees on a full indemnity
basis) that the Purchaser or any Group Company may incur or
suffer in connection with or arising from the FICO(PRC)
Litigation; and
(ii) all proceeds arising from the FICO(PRC) Litigation shall be
for the benefit of the Vendor and in the event that such
monies are received by any Group Company, all such monies
shall be paid to the Vendor by the Company or FICO(PRC (as the
case may be) within fourteen (14) days of such receipt.
8.2 The Vendor and the Company jointly and severally undertake:
(i) to assist and procure that the Company and any and/or all of
the Company's directors, officers, agents and servants,
provide the necessary assistance to the Purchaser and the
Purchaser's Auditors in the conduct of the special audit and
due diligence exercise referred to in Clause 3.1(ii) above and
the preparation and issue of the Audited Accounts; and
(ii) pay or cause to be paid, at the times required by any relevant
revenue authority all unpaid Taxes, of the Company and
FICO(PRC) for all periods, or portions thereof, ended on or
before the Completion Date,
and all costs and expenses incurred thereon shall be borne by the
Vendor.
8.3 The Vendor agrees that the Group Companies shall adopt the standard
employment contract in the form prescribed by the Purchaser from time
to time, for the employment of all employees of the Group Companies
(save for its directors and executive officers).
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9. INDEMNITY
9.1 The Vendor hereby irrevocably undertakes to keep the Purchaser and the
Group Companies fully and effectively indemnified against any and all
losses, costs, damages, claims, demands, actions, proceedings,
liabilities and expenses whatsoever (including but not limited to all
legal costs or attorney's fees on a full indemnity basis) that the
Purchaser or any Group Company may incur or suffer in connection with
or arising from any breach of or inaccuracies of any of the Warranties
and/or any breach of the Deed of Indemnity and/or the Specific
Indemnities and/or any default by the Vendor of its obligations under
this Agreement. The Purchaser shall not make a claim against the Vendor
under this Clause 9.1 for losses, costs, damages, claims, demands,
actions, proceedings, liabilities and expenses that the Purchaser or
any Group Company may incur if such breach of or inaccuracies of any of
the Warranties and/or any breach of the Deed of Indemnity and/or the
Specific Indemnities and/or any default by the Vendor of its
obligations under this Clause shall occur after the date falling after
the third anniversary date of this Agreement save in respect of the
Warranties contained in Clause 7.1.
9.2 in the event of default by the Vendor in the payment on demand of any
sum due under Clause 8.1 or this Clause 9 determined by agreement or
pursuant to an order of a court or by the Purchaser's Auditors
hereunder, the liability of the Vendor shall be increased to include
interest on such sum from the due date of payment of such sum by the
Vendor toward satisfaction of any liability of the Vendor under or
pursuant to Clause 9.1 as the case may be, above to the date of actual
payment by the Vendor (as well after as before judgment) at a rate per
annum being two per cent. (2%) above the prime lending rate for Dollars
as quoted by Citibank, Singapore Branch from time to time. Interest
determined in accordance with this Clause 9.2 shall be calculated on
the basis of a 360-day year and on the actual number of days elapsed
and shall accrue from day to day.
9.3 Where the Vendor is required by law to make any deductions or
withholding from any sum payable by it to the Purchaser or any Group
Company under this Agreement, the Vendor shall forthwith pay to the
Purchaser or such Group Company (as the case may be), such additional
amount or amounts so as to ensure that the net amount received by the
Purchaser or such Group Company shall be equal to the full amount which
it or they would have received had no such deduction or withholding
been made or required to be made.
9.4 Any liability to the Purchaser and any Group Company hereunder may in
whole or in part be released, compounded or compromised or time or
indulgence given by the Purchaser in its absolute discretion without in
any way prejudicing or affecting its rights against the Vendor. Any
release or waiver or compromise shall be in writing and shall not be
deemed to be a release, waiver or compromise of similar conditions in
the future.
10. PROFIT TARGET
10.1 For the purposes of Clauses 10 and 11
(i) the expression "Financial Period" shall mean the financial
period commencing on 1 January 1997 and ending on 31 December
1997;
(ii) the expression "Net Profits After Taxation of the Company"
shall be determined in accordance with Clause 10.2 below; and
(iii) the expression "Profit Target" shall mean, in respect of the
Financial Period, $2,500,000.
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10.2 The Net Profits After Taxation of the Company shall mean the audited
consolidated net profits of the Company and FICO(PRC) and shall be
determined as follows:
(i) the consolidated accounts of the Company and FICO(PRC) for the
relevant financial period ("Special Accounts") shall be
prepared and audited by the Purchaser's Auditors in accordance
with the assumptions and policies set out in Schedule 14 and
US GAAP no later than sixty (60) days after the end of the
relevant financial period to determine the audited
consolidated net profits after taxation of the Company;
(ii) the Special Accounts will be delivered by the Purchaser's
Auditors to the Purchaser, the Vendor and the Company; and
(iii) the Special Accounts in respect of the relevant financial
period shall be binding on each of the Vendor, the Purchaser
and the Company.
10.3 In the event that the Net Profit After Taxation of the Company for the
Financial Period as set out in the Special Accounts shall exceed the
Profit Target, the Purchaser may exercise its rights under the Call
Option Agreement.
10.4 In the event that the Profit Target shall have exceeded the Net Profit
After Taxation of the Company for the Financial Period as set out in
the Special Accounts, the Purchaser may exercise its rights under the
Put Option Agreement.
11. COVENANTS AND UNDERTAKINGS
11.1 The Vendor hereby undertakes to the Purchaser and the Company that:
(i) it shall transfer or procure the transfer of the ownership of
FICO(PRC) to the Company by the Completion Date and do all
necessary things so that such transfer shall be legal and
valid pursuant to the relevant laws of the PRC;
(ii) all products manufactured by FICO(PRC) and sold to the Company
up until the Completion Date ("Finished Products") shall be
sold at prices not exceeding eighty per cent. (80%) of the
price at which the Company is able to sell the Finished
Products to its customers. In the event that the Company is
unable to sell all such Finished Products at the expiry of
three (3) months from the Completion Date, the Vendor
undertakes that it shall purchase all such remaining Finished
Products from the Company at the same price upon which these
same Finished Products were purchased from FICO(PRC);
(iii) all raw materials purchased by the Company which is not
utilised by the Company at the expiry of three (3) months from
the Completion Date shall be purchased by the Vendor from the
Company at the price at which the said raw materials (or any
part thereof) were originally purchased by the Company from
its suppliers or the Vendor (as the case may be);
(iv) it shall purchase from FICO(PRC) the PRC Property so that, by
the Completion Date, the PRC Property shall not constitute any
part of the assets of FICO(PRC);
(v) it shall utilise the sum of $3,000,000 paid pursuant to Clause
4.2(i) to discharge all the debts of FICO(PRC) and the Company
by the Deferred Consideration Payment Date so that the Group
Companies shall be free of debt and all liabilities (whether
actual, contingent or otherwise) by the Deferred Consideration
Payment Date;
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(vi) the Net Profit After Taxation of the Company for the Financial
Period shall be not less than the Profit Target; and
(vii) neither of the Group Companies shall engage in any transaction
or have an interest in any transaction in which any company,
partnership, joint venture or sole proprietorship in which it
has an interest or shall be engaged or otherwise have an
interest,
and in the event that payments to be made by the Vendor to the Company
under Clauses 11.1(ii) and (iii) above shall not have been discharged
in full as at the Deferred Consideration Payment Date, the Vendor
herewith authorises the Purchaser (in the event that Clause 4.2(B)
shall apply) to deduct all sums payable by the Vendor to the Company
under Clauses 11.1(ii) and (iii) above, from the Balance Consideration
on the Deferred Consideration Payment Date.
11.2 The Vendor undertakes to the Purchaser to procure that, between the
date of this Agreement and Completion:
(i) each of the Group Companies shall preserve and maintain in
full force and effect its corporate existence;
(ii) each of the Group Companies shall carry on business only in
the ordinary course;
(iii) each of the Group Companies shall preserve and maintain all of
its properties and assets, owned or used in the conduct of its
business, in good working order and condition, ordinary wear
and tear excepted; and keep insured so much of its properties
and assets, in such amounts and against such risks, as are
presently insured by each such Group Company as at the date of
this Agreement;
(iv) each of the Group Companies shall comply in all material
respects with all applicable laws, rules, regulations and
orders to which it is subject;
(v) each of the Group Companies shall keep such books of record
and accounts, in which full and in all material respects
correct entries shall be made of all its financial
transactions and its assets and business in accordance with
the present practice of each such Group Company as at the date
of this Agreement and generally accepted accounting principles
consistently applied;
(vi) each of the Group Companies shall pay and discharge in
accordance with the present practice of such Group Company as
at the date of this Agreement, (a) all taxes, assessments and
governmental charges imposed upon it or upon its property and
(b) all lawful and valid claims which, if unpaid, might by law
become a lien upon its property; and maintain such reserves in
respect of taxes, assessments, governmental charges and levies
as are required under generally accepted accounting principles
consistently applied;
(vii) each of the Group Companies shall provide the Purchaser, the
Purchaser's Auditors and their respective authorised
representatives reasonable access during normal business hours
to all its books, records, offices and other facilities and
properties, and allow the Purchaser and the Purchaser's
Auditors to make such inspections thereof and copies of and
extracts from such books and records, as the Purchaser or the
Purchaser's Auditors may reasonably request, and cause its
officers to furnish the Purchaser or the Purchaser's Auditors
with such financial and operating data, including all
financial statements prepared or used by its management, and
other information with respect to its financial condition,
business and property, as the Purchaser or the Purchaser's
Auditors may from time to time reasonably
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request whether in connection with the special audit referred
to in Clause 3.1(ii), the preparation of the Audited Accounts,
the preparation of the Special Accounts or otherwise;
(viii) each of the Group Companies shall promptly upon obtaining
knowledge thereof, give notice to the Purchaser of (a) any
litigation, investigation or proceeding affecting it that
could reasonably be expected to have a material adverse effect
on its business, operations, properties, prospects or
financial condition or (b) any event or matter that has
resulted in a material adverse change in its business,
operations, prospects or financial condition;
(ix) each of the Group Companies shall not declare any dividends or
make any other distributions to its shareholders prior to
Completion; and
(x) the Vendor shall not discuss, negotiate or finalise any
arrangements with any third party with a view to or in
connection with (a) the sale of the Sale Shares or any of
them, (b) any acquisition or purchase of all or substantially
all of the assets of any Group Company or (c) any other
material transaction incompatible with the acquisition
contemplated hereby.
11.3 The Vendor covenants with and undertakes to each of the Purchaser and
the Company that it shall not do any of the following without first
obtaining the written consent of the Purchaser:
(i) directly or indirectly carry on (whether alone or in
partnership or joint venture with anyone else) or otherwise be
concerned with or interested in (whether as trustee,
principal, agent, shareholder, unit holder or in any other
capacity) any business similar to or competitive with the
Business (as defined below) of the Group Companies for two (2)
years after Completion, in any countries where the Group
Companies carry on the Business and/or sell their products,
including, without limitation, Hong Kong and the PRC;
(ii) solicit or persuade any person or corporation which is a
customer or client of either of the Company or any other Group
Company, or who was in the twelve (12) month period before the
Completion Date a customer or client of or in respect of the
Business, to cease doing business with the Company or any
other Group Company or reduce the amount of business which the
customer or client would normally do in respect of the
Business for two (2) years after Completion;
(iii) accept from a customer or client referred to in Clause
11.3(ii) above any business of the kind ordinarily forming
part of the Business for two (2) years after Completion;
(iv) at any time use or disclose to any third party any trade
secrets, product information or Confidential Information of
the Business which is not generally known or available in the
market place or which but for a breach of this Clause 11.3
would not be generally known or available in the market place;
(v) at any time induce or attempt to induce any person who is at
the time of Completion or who later becomes an employee of the
Group Companies in the Business to terminate his or her
employment with the Group Companies;
(vi) for the purposes of this Clause 11.3, the expression
"Business" shall mean the sale and manufacture of plastic
material products and its by-products (including all
associated importation, exportation, marketing and related
activities) carried on by the Group Companies anywhere in the
world;
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(vii) each and every obligation under this Clause11.3 shall be
treated as a separate obligation and shall be severally
enforceable as such and in the event of any obligation or
obligations being or becoming unenforceable in whole or in
part such part or parts as are unenforceable shall be deleted
from this Clause11.3and any such deletion shall not affect the
enforceability of all such parts of this Clause 11.3 as remain
not so deleted; and
(viii) while the restrictions contained in this Clause 11.3 are
considered by the parties to be reasonable in all the
circumstances it is recognised that restrictions of the nature
in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any of
such restrictions shall be adjudged to be void as going beyond
what is reasonable in all the circumstances for the protection
of the interests of the Group Companies and the Purchaser but
would be valid if part of the wording thereof were deleted or
the periods thereof reduced or the range of activities or area
dealt with thereby reduced in scope the said restriction shall
apply with such modifications as may be necessary to make it
valid and effective.
11.4 As a separate and independent obligation, the Vendor hereby undertakes
to keep the Purchaser fully and effectively indemnified against any and
all losses, costs, damages, claims, demands, actions, proceedings,
liabilities and expenses whatsoever (including but not limited to legal
costs on an indemnity basis) that the Purchaser may incur or suffer in
connection with or arising from the breach by the Vendor of any of the
covenants, undertakings and agreements contained in this Clause 11.
11.5 Each of the obligations of the Vendor under this Clause 11 is a
separate and independent primary obligation and shall survive and shall
not be extinguished in any way by Completion. Each and every such
obligation shall be severally enforceable and in the event of any
obligation or obligations being or becoming unenforceable shall be
deleted from this Clause 11 and any such deletion shall not affect the
enforceability of all such parts of this Clause 11 as remain not so
deleted.
12. CONFIDENTIALITY
12.1 Each of the parties agrees to keep strictly secret and confidential,
and under no circumstances to disclose to any person or entity which is
not a party hereto, any Confidential Information arising from or in
connection with this Agreement unless disclosure of such information is
expressly permitted by the prior written consent in writing of all the
other parties.
12.2 Notwithstanding Clause 12.1, the confidentiality obligation shall not
apply to:
(i) any information obtained from any party hereto which becomes
generally known to the public, other than by reason of any
wilful or negligent act or omission of any party hereto or any
of their agents, advisers or employees;
(ii) any information which is required to be disclosed to any
competent governmental or statutory authority or pursuant to
rules or regulations of any relevant regulatory body
(including, without limitation, any relevant stock exchange or
securities council);
(iii) any information which is required to be disclosed pursuant to
any legal process issued by any court or tribunal whether in
Hong Kong, the PRC or elsewhere; and
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(iv) any information disclosed by any of the parties to their
respective bankers, financial advisers, consultants and legal
or other advisers for the purpose of this Agreement.'
13. RESTRICTION ON ANNOUNCEMENTS
Save as may be required to be disclosed pursuant to any applicable
requirement issued by any competent governmental or statutory authority
or rules or regulations of any relevant regulatory body (including,
without limitation, any relevant stock exchange or securities council),
each party undertakes that prior to Completion it will not make any
announcement in connection with this Agreement unless the other party
hereto shall have given its consent to such announcement (which consent
may not be unreasonably withheld).
14. COSTS
14.1 Each party to this Agreement shall pay its own costs of and incidental
to this Agreement and the sale and purchase hereby agreed to be made.
14.2 The Purchaser shall bear any and all stamp duties payable in connection
with the transfer of the Sale Shares from the Vendor to the Purchaser.
15. GENERAL
15.1 This Agreement shall be binding upon and inure for the benefit of the
successors and estates of the parties and the assignees or nominees of
the Purchaser. The Vendor agrees that the Purchaser shall be entitled
to assign the benefit of the Warranties and any cause of action in
connection therewith to any member of the FIL Group or to any other
party. Any reference in this Agreement to either of the parties shall
be construed accordingly.
15.2 The provisions of this Agreement including the representations,
warranties, covenants and undertakings herein contained (insofar as the
same shall not have been fully performed at Completion) shall remain in
full force and effect notwithstanding Completion. Completion shall not
prejudice any rights of any of the parties which may have accrued
hereunder prior to Completion.
15.3 The Vendor and the Purchaser shall do and execute or procure to be done
and executed all such further acts, deeds, things and documents as may
be necessary to give effect to the terms of this Agreement, and to
provide such assistance and record as the other may reasonably request
in connection with any tax return, tax investigation or audit, judicial
or administrative proceeding or other similar matter relating to the
Group Companies.
15.4 This Agreement sets out the entire agreement and understanding between
the parties in connection with the sale and purchase of the Sale Shares
and none of the parties has entered into this Agreement in reliance
upon any representation, warranty or undertaking of any other party
which is not set out or referred to in this Agreement. The parties
agree that no variations or modifications shall be made to this
Agreement unless agreed to by the parties in writing.
15.5 Save as expressly provided herein, any right of termination conferred
upon the Purchaser or the Vendor shall be in addition to and without
prejudice to all other rights and remedies available to it and no
exercise or failure to exercise such a right of termination shall
constitute a waiver of any such other right or remedy.
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15.6 As all parties have participated in the drafting of this agreement, the
parties agree that any applicable rule requiring the construction of
this Agreement against the party drafting this Agreement, shall not
apply.
16. ILLEGALITY
The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
17. NOTICES
Any notice required to be given by any party hereto to any other party
shall be deemed validly served by hand delivery or by telefax or by
prepaid registered letter or by a recognised courier service sent to
its address or facsimile number given herein or such other address or
facsimile number as may from time to time be notified for this purpose.
The initial addresses and telefax numbers of the parties are:
The Purchaser: Flextronics International Ltd
000 Xxxx Xxxx Xxxx, #00-00
Xxxxxxxxx 000000
Fax Number: (00) 000-0000
Attention: Xx Xxx Xxxx Xxxx
The Vendor Fico Forest Industrial Co. Limited
Xx 00, 00/X
Xxx X, Xxxx Xxx Xxx. Building
000 Xxxxxx Xxxx Xxxx, Xxxxx Xxx
Xxx Xxxxxxxxxxx
Xxxx Xxxx
Fax Number: (000) 0000-0000
Attention Mr Law Sing Hong
The Company Fico Investment Holding Limited
Xxxx 00, 00/X
Xxx X, Xxxx Xxx Xxx. Xxxxxxxx
000 Xxxxxx Xxxx Xxxx, Xxxxx Xxx
Xxx Xxxxxxxxxxx
Xxxx Xxxx
Fax Number: (000) 0000-0000
Attention: Mr Law Sing Hong
Any such notice or communication shall be deemed to have been served:
(i) if delivered by hand, at the time of delivery; or
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(ii) if posted by prepaid ordinary mail, at the expiration of three
(3) days after the envelope containing the same shall have
been put into the post; or
(iii) if sent by facsimile, upon the receipt by the sender of the
confirmation note indicating that the notice or communication
has been sent in full to the recipient's facsimile machine, or
such other similar medium of receipt; or
(iv) if sent by courier, at the expiration of two (2) days after
the package containing the same shall have been received by
the relevant courier company.
In proving such service it shall be sufficient to prove that delivery
by hand was made or that the envelope containing such notice or
document was properly addressed and posted as a prepaid ordinary mail
letter or that the facsimile confirmation note indicates the
transmission was successful, or the package as the case may be
containing such notice or document was properly addressed and sent to
the relevant courier company.
18. REMEDIES AND WAIVERS
No failure on the part of any party to this Agreement to exercise, and
no delay on its part in exercising, any right or remedy under this
Agreement will operate as a waiver thereof, nor will any single or
partial exercise of any right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy. The
rights provided in this Agreement are cumulative and not exclusive of
any rights or remedies provided by law.
19. TIME OF ESSENCE
Any date, time or period mentioned in any provision of this Agreement
may be extended by mutual agreement between the parties hereto but as
regards any time, date or period originally fixed and not extended or
any time, date or period so extended as aforesaid time shall be of the
essence.
20. GOVERNING LAW AND DISPUTE RESOLUTION
20.1 This Agreement shall be governed by, and construed in accordance with,
the laws of Hong Kong.
20.2 Any dispute or difference arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration
in Hong Kong on or before 31 March 1997 and thereafter in Singapore. In
respect of arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the SIAC Rules.
The HKIAC Rules and the SIAC Rules are deemed to be incorporated by
reference into this Clause 20.2 save to the extent that they are
inconsistent with the express terms of this Agreement.
20.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Purchaser, one of
whom shall be appointed by the Vendor, and the third (who shall act as
Chairman of the arbitral tribunal) to be appointed by the Chairman of
SIAC or HKIAC, as the case may be.
20.4 For the purpose of this Agreement a dispute shall be deemed to arise
when one party serves on the other party a notice in writing (in this
Clause, a "Notice of Dispute") stating the nature of the dispute.
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20.5 The party serving any Notice of Dispute shall appoint one arbitrator in
such Notice of Dispute.
20.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time as may be
agreed between the parties or directed by the Chairman of SIAC or
HKIAC, as the case may be. In default of such appointment by any party
that arbitrator shall also be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within fourteen (14) days after such time
period. The third arbitrator shall be appointed by the Chairman of SIAC
or HKIAC, as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
20.7 The prevailing party in the Arbitration shall be awarded the costs and
expenses (including legal fees and expenses) reasonably incurred in
connection with any such arbitration.
21. COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any
party may enter into this Agreement by signing any such counterpart and
each counterpart may be signed and executed by the parties and
transmitted by facsimile transmission and shall be as valid and
effectual as if executed as an original.
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IN WITNESS WHEREOF this Agreement has been entered into on the date appearing at
the head hereof.
The Purchaser
SIGNED by /s/ X. X. Xxxx )
-------------------- )
for and on behalf of )
FLEXTRONICS INTERNATIONAL LTD )
in the presence of: )
/s/ Xxxxxxxxx Xxxxxx
-------------------------------
Xxxxxxxxx Xxxxxx
Solicitor
Hong Kong
The Vendor
SIGNED by ) [LOGO] For and On Behalf of
)
----------------------------------- ) FICO FOREST INDUSTRIAL CO., LTD.
for and behalf of )
FICO FOREST INDUSTRIAL ------------------
CO. LIMITED Authorized Signature
in the presence of:
-----------------
-----------------
Solicitor, Hong Kong
FICO
SIGNED by ) [LOGO] For and On Behalf of
)
----------------------------------- ) FICO INVESTMENT HOLDING LIMITED
for and behalf of )
FICO INVESTMENT HOLDING LIMITED ------------------
in the presence of: Authorized Signature
-----------------
-----------------
Solicitor, Hong Kong
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SCHEDULE 1
PARTICULARS OF THE COMPANY
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SCHEDULE 1
PARTICULARS OF THE COMPANY
(i) Company Registration Number: 565060
(ii) Business Registration Certificate: 20258126-000-09-96-1
(iii) Registered Office: Xx 00, 00/X, Xxx X
Xxxx Xxx Xxx. Building
603 Castle Peak Road
Tsuen Wan, New Territories
Hong Kong
(iv) Date and Place of Incorporation: 12 September 1996,
Hong Kong
(v) Authorised Share Capital: HK$10,000.00
(vi) Issued and Fully Paid-up Share Capital: HK$10,000.00
(vii) Shareholders:
Name Number of Shares Percentage of Shares
Law Sing Hong 1 0.0001% (held on
trust for
Xxxx Xxxxxxx
Industrial
Co. Limited)
Xxxx Xxxxxxx Industrial Co. 9,999 99.9999%
Limited
(viii) Directors: Law Sing Hong
Law Kin Ping
Law Shun Hang
(ix) Secretary: Siu Xxx Xxxx
(x) Auditors: (Not currently appointed)
(xi) Accounting Reference Date: 31 March
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SCHEDULE 2
CALL OPTION AGREEMENT
DATED THIS 20th Day of December 1996
Between
FLEXTRONICS INTERNATIONAL LTD
And
FICO FOREST INDUSTRIAL CO. LIMITED
CALL OPTION AGREEMENT
relating to 6,000 ordinary shares
consisting of
60% of all the ordinary shares
in the share capital of
FICO INVESTMENT HOLDING LIMITED
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TABLE OF CONTENTS
Clause Heading Page
1. INTERPRETATION .................................................. 1
2. CALL OPTION ..................................................... 3
3. PURCHASE PRICE .................................................. 3
4. ADJUSTMENT TO PURCHASE PRICE .................................... 5
5. CALL OPTION COMPLETION .......................................... 5
6. DURATION OF OBLIGATIONS ......................................... 6
7. VENDOR'S WARRANTIES ............................................. 6
8. FIL'S WARRANTIES ................................................ 7
9. COMMUNICATIONS .................................................. 8
10. GENERAL ......................................................... 8
11. GOVERNING LAW AND DISPUTE RESOLUTION ............................ 9
APPENDIX A FORM OF FIRST CONSIDERATION NOTE ................... 00
XXXXXXXX X FORM OF SECOND CONSIDERATION NOTE .................. 15
31
THIS AGREEMENT is made the 20th day of December 1996 BETWEEN:
(1) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in Singapore and
having its registered office at 00 Xxxxxxxx Xxxx, Xxxx Xxxxx, #00-00,
Xxxxxxxxx 000000 ("FIL");
(2) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
and having its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx
Xxx Ind. Building, 603 Castle Peak Road, Tsuen Wan, New Territories,
Hong Kong ("VENDOR").
WHEREAS:
(A) Fico Investment Holding Limited ("COMPANY") is a company limited by
shares and incorporated in Hong Kong and has at the date hereof an
authorised share capital of HK$10,000 ordinary shares of HK$1.00 each,
of which 10,000 of the said ordinary shares have been issued and are
fully paid-up.
(B) The Vendor is the legal and beneficial owner of 6,000 ordinary shares
of HK$1.00 each in the Company consisting sixty per cent, (60%) of the
issued and paid-up capital of the Company.
(C) This Agreement is entered into pursuant to a Sale and Purchase
Agreement ("SALE AND PURCHASE AGREEMENT") dated 29 November 1996, made
between (1) FIL as purchaser, (2) the Vendor and (3) the Company. The
Vendor wishes to grant to FIL a call option, being the right of FIL to
purchase from the Vendor the Call Option Shares (as defined below) for
the consideration and on the terms and conditions set out in this
Agreement.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement except to the extent that the context otherwise
requires:
"BANKER'S DRAFT" means a banker's draft drawn on a bank in Singapore;
"CALL OPTION" shall have the meaning ascribed to it in Clause 2.1;
"CALL OPTION NOTICE" means a notice exercising the Call Option given
pursuant to Clause 2.3;
"CALL OPTION COMPLETION" means the performance by the Vendor and FIL of
the obligations assumed by them respectively under Clause 5.2;
"CALL OPTION COMPLETION DATE" means 11.00 a.m. on the date falling
fourteen (14) days from the Exercise Date;
"CALL OPTION PERIOD" means the period commencing on the date of receipt
by FIL of the signed audited accounts (including the profit and loss
account and the balance sheet) of the Company for the Financial Period
and expiring on the date falling three (3) calendar months of such date
(both dates inclusive);
"CALL OPTION SHARES" means the 6,000 Shares consisting sixty per cent,
(60%) of the issued and paid-up capital of the Company;
"CASH CONSIDERATION" shall mean the amount determined in accordance
with Clause 3.3;
"CONSIDERATION SHARES" shall have the meaning ascribed to it in Clause
3.4;
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"EXERCISE DATE" means the date of service of a Call Option Notice under
Clause 2.3;
"FIL AVERAGE SHARE PRICE" means the average of the "closing prices" per
FIL Share on each of the Trading Days for the twenty-one (21) Trading
Days prior to the Call Option Completion Date. On any such Trading Day,
the "closing price" per FIL Share means the last sale price as reported
through the NASDAQ National Market or, if no sale occurred on any such
Trading Day, the average of the highest closing "bid" price and the
lowest closing "asked" price on such Trading Day as reported through
the NASDAQ National Market;
"FIL SHARES" means ordinary shares of S$0.01 each in the capital of FIL
and "FIL SHARE" shall be construed accordingly;
"FIRST CONSIDERATION NOTE" shall mean the promissory note substantially
in the form of Appendix A (or in such other form as FIL and the Vendor
may agree in writing) and issued pursuant to Clause 3 of this
Agreement;
"FIRST DEFERRED CONSIDERATION DATE" means the first anniversary date of
the Call Option Completion Date;
"PURCHASE PRICE" shall have the meaning ascribed to it in Clause 3.1;
"SEC" means the United States Securities and Exchange Commission;
"SECOND CONSIDERATION NOTE" shall mean the promissory note
substantially in the form of Appendix B (or in such other form as FIL
and the Vendor may agree in writing) and issued pursuant to Clause 3 of
this Agreement;
"SECOND DEFERRED CONSIDERATION DATE" means the second anniversary date
of the Call Option Completion Date;
"SECOND FINANCIAL PERIOD" shall have the meaning ascribed to it in
Clause 3.6;
"SHARES" means ordinary shares of HK$1.00 each in the share capital
of the Company;
"TRADING DAY" means any day on which the New York Stock Exchange is
open for business, provided that any day on which trading on the New
York Stock Exchange or the NASDAQ National Market is suspended or
halted, or on which trading in FIL Shares is suspended or halted by the
SEC, the National Association of Securities Dealers, Inc., NASDAQ or
any regulatory or self-regulatory body in the United States of America,
shall not be a Trading Day;
"TRANSFER TERMS" means the entire legal and beneficial interest in all
the Call Option Shares shall be sold and purchased free from any
Encumbrance and together with all rights attaching thereto as at the
Exercise Date or at any time thereafter and that the consideration for
the Call Option Shares shall be the Purchase Price;
"US$" means the lawful currency of the United States of America; and
"VALUATION" means the fair market value of the Company as determined
under Clause 3.3.
1.2 All terms and references used in this Agreement and which are defined
or construed in the Sale and Purchase Agreement but are not defined or
construed in this Agreement shall have the same meaning and
construction in this Agreement. All references in this Agreement to the
Sale and Purchase Agreement are to the Sale and Purchase Agreement as
from time to time amended, modified or supplemented.
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33
1.3 References to Recitals and Clauses are to recitals and clauses of this
Agreement. The headings in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement. Words importing
the singular number include the plural number and vice versa.
References to documents include variations and replacements thereof and
supplements thereto. References to a party include its permitted
assigns and transferees and its successors-in-title.
2. CALL OPTION
2.1 In consideration of the sum of US$1.00 (receipt of which the Vendor
hereby acknowledges), the Vendor hereby grants to FIL the right to
require the Vendor to sell to FIL all the Call Option Shares on the
terms and subject to the conditions of this Agreement ("CALL OPTION").
2.2 On the exercise of the Call Option, the Vendor will become bound to
sell and FIL will become bound to complete the purchase of the Call
Option Shares on the Transfer Terms.
2.3 The Call Option must be exercised by notice in writing by FIL served
only during the Call Option Period, failing which it will lapse and
cease to have any further effect.
3. PURCHASE PRICE
3.1 The consideration for the purchase of the Call Option Shares ("PURCHASE
PRICE") pursuant to the exercise of the Call Option shall comprise
the following:
(i) the Cash Consideration (as adjusted by Clause 3.4);
(ii) (where Clause 3.4 applies) the Consideration Shares;
(iii) the First Consideration Note; and
(iv) the Second Consideration Note,
subject to the rights of FIL under Clause 4. The Purchase Price shall
be paid in accordance with Clause 3.2.
3.2 The Purchase Price shall be satisfied:
(i) by the payment of the Cash Consideration (and where Clause 3.4
applies, the Consideration Shares) on Call Option Completion;
(ii) by the issue of the First Consideration Note to the Vendor on
Call Option Completion, payment in respect of which shall be
made on the First Deferred Consideration Date; and
(iii) by the issue of the Second Consideration Note to the Vendor on
Call Option Completion, payment in respect of which shall be
made on the Second Deferred Consideration Date,
subject to the rights of FIL under Clause 4.
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3.3 The Cash Consideration as part consideration for the purchase of the
Call Option Shares is the sum which is sixty per cent. (60%) of the
Valuation. The Valuation is the sum derived by the following formula:
Y = (A X 10 x 0.6)
where
Y = the Valuation;
A = Net Profit After Taxation of the Company for the Financial Period.
Payment of the Cash Consideration (or any part thereof, in the event
that Clause 3.4 applies) shall be effected by way of telegraphic
transfer to an account designated by the Vendor and notified to the
Purchaser not later than three (3) Business Days prior to the Call
Option Completion Date or by way of a banker's draft or in such other
form as the Vendor and FIL may agree.
3.4 FIL shall have the option of satisfying up to a maximum of forty per
cent. (40%) of the Cash Consideration by allotting and issuing FIL
Shares to the Vendor on Call Option Completion. The number of FIL
Shares to be allotted and issued to the Vendor on Call Option
Completion rounded downwards to the nearest whole FIL Share
("CONSIDERATION SHARES") shall be derived by dividing that part of the
Cash Consideration which FIL elects to have satisfied by the issue of
FIL Shares by the FIL Average Share Price. The Cash Consideration
payable on Call Option Completion shall be reduced accordingly. FIL
shall use its reasonable best efforts to file, within ninety (90) days
of the issuance of any Consideration Shares, a registration statement
with the SEC covering the resale of such Consideration Shares.
3.5 The First Consideration Note and the Second Consideration Note as part
consideration for the purchase of the Call Option Shares shall be
issued and delivered to the Vendor on Call Option Completion.
3.6 The liability of FIL to the Vendor under and in respect of the First
Consideration Note shall be contingent upon the Net Profit After
Taxation of Company for the period commencing 1 January 1998 and ending
on 31 December 1998 ("SECOND FINANCIAL Period") (and shall be
determined in accordance with the terms of Clause 10.2 of the Sale and
Purchase Agreement) exceeding the Net Profit After Taxation of the
Company for the Financial Period by twenty per cent. (20%). In such
event, the amount payable by FIL to the Vendor under the First
Consideration Note shall be a cash sum equal to twenty per cent. (20%)
of the Valuation as determined pursuant to Clause 3.3. The First
Consideration Note shall not bear interest and the principal amount
thereof (as determined in accordance with this Clause 3.6 as adjusted
pursuant to Clause 4) shall be due and payable by FIL to the Vendor on
the First Deferred Consideration Date.
3.7 The liability of FIL to the Vendor under and in respect of the Second
Consideration Note shall be contingent upon the Net Profit After
Taxation of the Company for the period commencing on 1 January 1999 and
ending on 31 December 1999 (and shall be determined in accordance with
the terms of Clause 10.2 of the Sale and Purchase Agreement) exceeding
the Net Profit After Taxation of the Company for the Financial Period
by forty-four per cent. (44%). In such event, the amount payable by FIL
to the Vendor under the Second Consideration Note shall be a cash sum
equal to twenty per cent. (20%) of the Valuation as determined pursuant
to Clause 3.3. The Second Consideration Note shall not bear interest
and the principal amount thereof (as determined in accordance with
Clause 3.7 as adjusted pursuant to Clause 4) shall be due and payable
by FIL to the Vendor on the Second Deferred Consideration Date.
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4. ADJUSTMENT TO PURCHASE PRICE
4.1 The Cash Consideration and the principal amount of each of the First
Consideration Note and the Second Consideration Note shall be subject
to any claim in respect of the Deed of Indemnity, the Post-Closing
Adjustment, the Warranties and the Specific Indemnities. In the event
(a) any claim arises under the Deed of Indemnity, (b) the Company is
entitled to the Post-Closing Adjustment as against the Vendor under and
pursuant to Clause 5 of the Sale and Purchase Agreement, (c) there is a
breach of any of the Warranties by the Vendor or (d) any claim arises
in respect of any of the Specific Indemnities, such claim, entitlement
or breach (and the amount in respect thereof) as determined by FIL
shall be offset by FIL deducting such amount of the principal amount
and interest thereon from the Cash Consideration and each of the First
Consideration Note and the Second Consideration Note as shall in the
aggregate equal the amount of such claim, entitlement or breach in the
manner as provided in Clause 4.2.
4.2 The rights of offset of FIL in relation to the Deed of Indemnity, the
Post-Closing Adjustment, any breach of the Warranties or the Specific
Indemnities shall be exercisable by FIL as far as is practicable in the
order as each of the Cash Consideration, First Consideration Note and
the Second Consideration Note is due to be paid.
5. CALL OPTION COMPLETION
5.1 Completion of the sale and purchase of the Call Option Shares shall
take place in Hong Kong at the Hong Kong branch office of FIL (or at
such other place as may be agreed) on the Call Option Completion Date,
provided that if a such day is not a Business Day then Call Option
Completion shall take place at 12 noon on the first Business Day
thereafter.
5.2 On Call Option Completion:
(a) the Vendor shall deliver to FIL duly executed transfers and
duly executed sold notes in favour of FIL or as it may direct
in respect of the Call Option Shares accompanied by the
relative share certificate(s) and shall do all things and
execute such documents as shall be necessary or as FIL may
reasonably request to give effect to the sale of the Call
Option Shares pursuant to Clause 2 on the Transfer Terms;
(b) the Vendor shall procure the passing of a board resolution of
the Company approving the registration of the said share
transfers, subject to the same being duly stamped;
(c) the Vendor shall procure the resignations of the existing
Directors of the Company nominated by them pursuant to Clause
4(B) of the Shareholders' Agreement, which said resignations
shall take effect on the Call Option Completion;
(d) (subject to Clause 4) FIL shall pay the Cash Consideration
(or, where Clause 3.4 applies, the relevant part thereof) to
the Vendor in any manner contemplated by Clause 3.3;
(e) FIL shall deliver to the Vendor copies of the board
resolutions of FIL authorising:
(i) the payment of the Cash Consideration (or, where
Clause 3.4 applies, the relevant part thereof);
(ii) (where Clause 3.4 applies) the allotment and issue of
the Consideration Shares to the Vendor; and
5
36
(iii) the issuance of the First Consideration Note and the
Second Consideration Note;
(f) (where Clause 3.4 applies), FIL shall deliver to the Vendor
the Consideration Shares duly allotted and issued by FIL in
the name of the Vendor; and
(g) FIL shall deliver to the Vendor the First Consideration Note
and the Second Consideration Note subject to FIL's rights of
offset pursuant to Clause 4.
5.3 If any of the provisions of Clause 5.2 are not complied with on the
Call Option Completion Date the party not in default may (without
prejudice to his other rights and remedies):
(a) defer Call Option Completion to a date not more than
twenty-eight (28) days after the Call Option Completion Date
(and so that the provisions of this Clause 5 shall apply to
Call Option Completion as so deferred); or
(b) proceed to Call Option Completion so far as practicable
(without prejudice to his rights hereunder); or
(c) rescind the contract of sale arising by virtue of the exercise
of the Call Option.
6. DURATION OF OBLIGATIONS
6.1 This Agreement shall terminate on the date falling on the first
anniversary of the last day of the Call Option Period if no Call Option
Notice shall have been served on or prior to such date.
6.2 If the Call Option Notice shall have been served on or prior to the
date mentioned in Clause 6.1 this Agreement shall continue in force
after such date until the fulfilment of the parties' obligations
hereunder in relation to the Call Option Notice whereupon it shall
terminate.
7. VENDOR'S WARRANTIES
7.1 The Vendor warrants to FIL that it is and will remain until the
exercise or expiry of the Call Option the legal and beneficial owner of
the Call Option Shares, subject only to the Call Option and has and
will have full power and authority to grant an option in respect of the
same upon the terms and conditions of this Agreement.
7.2 The Vendor shall not prior to the exercise or expiry of the Call Option
transfer, dispose of or permit an Encumbrance save for the Call Option,
over its interest in any of the Call Option Shares and the Call Option
Shares shall upon Call Option Completion be sold free of any
Encumbrance.
7.3 At the date of this Agreement the Call Option Shares represent sixty
per cent. (60%) of the issued and paid-up capital of the Company issued
or agreed to be issued and there is no option or right outstanding in
favour of any third party to subscribe for any share or loan capital of
the Company.
7.4 The Vendor warrants that at Call Option Completion, the Call Option
Shares shall constitute sixty per cent. (60%) of the issued and paid-up
capital of the Company issued or agreed to be issued.
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37
7.5 Such information relating to the Company as is known to the Vendor and
which is material to be known by a purchaser for value of the Call
Option Shares has been disclosed in writing to FIL prior to the date of
this Agreement and, upon the written request of FIL during the Call
Option Period, the Vendor shall provide such further information of
which the Vendor may become aware.
8. FIL'S WARRANTIES
8.1 FIL hereby represents and warrants to the Vendor as follows:
(i) FIL is a company validly existing under the laws of Singapore,
and has all requisite power and authority (corporate and
otherwise) to own its properties and carry on its business as
now being conducted. FIL has full power to execute and deliver
this Agreement and the agreements contemplated herein, and to
consummate the transactions contemplated hereby and thereby.
Certified copies of the Memorandum and Articles of Association
of FIL, as amended to date, have been previously delivered to
the Vendor, are complete and correct, and no amendments have
been made thereto or have been authorised since the date
thereof;
(ii) On 30 September 1996, FIL's authorised share capital consists
of 100,000,000 ordinary shares, S$0.01 par value, of which
13,324,759 ordinary shares were issued and outstanding. All of
the outstanding share capital of FIL have been duly and
validly issued and are fully paid and not subject to any call;
(iii) The delivery of this Agreement by FIL, and the agreements
provided for herein, and the consummation by FIL of the
transactions contemplated hereby and thereby, have been duly
authorised by all requisite corporate action. This Agreement
and all such other agreements and written obligations entered
into and undertaken in connection with the transactions
contemplated hereby constitute the valid and legally binding
obligations of FIL, enforceable against FIL in accordance with
their respective terms. The delivery and performance of this
Agreement and the agreements provided for herein, and the
consummation by FIL of the transactions contemplated hereby
and thereby, will not in any material respect (a) violate the
provisions of any law, rule or regulation applicable to FIL,
(b) violate the provisions of FIL's Memorandum or Articles of
Association, (c) violate any judgment, decree, order or award
of any court, governmental body or arbitrator, or (d) conflict
with or result in the breach or termination of any term or
provision of, or constitute a default under, or cause any
acceleration under, or cause the creation of any lien, charge
or encumbrance upon the properties or assets of FIL pursuant
to, any indenture, mortgage, deed of trust or other material
agreement or instrument to which FIL is a party;
(iv) The payment of the Cash Consideration, the issue of the First
Consideration Note and the Second Consideration Note, and the
allotment and issue of the Consideration Shares in payment of
the Call Option Consideration and the transactions
contemplated hereby will comply with the constitutional
documents of FIL and with all relevant material requirements
of all applicable laws, rules and regulations of Singapore;
(v) The directors of FIL have all necessary powers to pay the Cash
Consideration, issue the First Consideration Note and the
Second Consideration Note, allot and issue the Consideration
Shares in payment of the Call Option Consideration, and to pay
the expenses in the manner proposed hereby and to cause FIL to
enter into this Agreement;
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38
(vi) The Consideration Shares, if any, to be issued in connection
with the Call Option Consideration will be allotted and issued
free from all claims, equities, liens, charges and
encumbrances whatsoever and will be issued with all rights
attaching and accruing to the FIL shares; and
(vii) All material consents, approvals, authorisations and other
requirements prescribed by any law, rule or regulation which
must be obtained or satisfied by FIL and which are necessary
for the consummation of the transactions contemplated by this
Agreement have been obtained and satisfied.
8.2 If prior to the Call Option Completion it shall be found that any of
the warranties on the part of FIL as set out in Clause 8.1 above have
not been carried out or complied with to the Vendor's reasonable
satisfaction or are otherwise untrue or misleading in any material
respect the Vendor shall be entitled by notice in writing to FIL to
terminate this Agreement and neither party shall thereafter have any
claim against the other under or in respect of this Agreement.
9. COMMUNICATIONS
9.1 Except as otherwise provided in the Agreement, all notices required or
permitted to be given hereunder shall be in writing and in the English
language and shall be sent by facsimile or in writing.
9.2 Any notice hereunder shall be addressed as follows:
In the case of the Vendor: Fico Forest Industrial Co. Limited
Xxxx 00, 00/X
Xxx X, Xxxx Xxx Xxx. Xxxxxxxx
000 Xxxxxx Xxxx Xxxx, Xxxxx Xxx
Xxx Xxxxxxxxxxx
Xxxx Xxxx
Fax Number: (000) 0000-0000
Attention: Mr Law Sing Hong
In the case of FIL: Flextronics International Ltd
000 Xxxx Xxxx Xxxx, #00-00
Xxxxxxxxx 000000
Fax Number: (00) 000-0000
Attention: Xx Xxx Xxxx Xxxx
9.3 Any party may from time to time by notice hereunder change its address
or telefax number for notice. Notice given by facsimile shall be deemed
to have been served on the next Business Day in the place of address
following the day of transmission.
10. GENERAL
10.1 This Agreement may be assigned in whole or in part by FIL.
Notwithstanding this, this Agreement shall not be assigned in whole or
in part by the Vendor. It is expressly agreed that this Agreement shall
be binding upon and shall enure for the benefit of the parties'
successors.
8
39
10.2 This Agreement supersedes any previous agreement between the parties
hereto in relation to the matters dealt with herein, represents
(together with any documents referred to herein) the entire agreement
between the parties herein in relation to such matters and no variation
hereof shall be effective unless made in writing.
10.3 The failure of any of the parties hereto at any time to require
performance by any other party or to claim a breach of any term of this
Agreement shall not be deemed to be a waiver of any right under this
Agreement.
10.4 The parties hereto shall, and shall use their respective reasonable
endeavours to procure that any necessary third parties shall, execute
and do all such further deeds, documents and things as either party may
reasonably require by notice in writing to the other party to carry the
provisions of this Agreement into full force and effect and (so far as
they are able) shall do anything necessary (including, without
limitation, exercising their powers as shareholders) to give effect to
the spirit and intent of this Agreement).
10.5 Any date or period mentioned in this Agreement may be extended by
agreement between the parties hereto (or such of the parties as may be
affected thereby), but as regards any date or period (whether or not
extended as aforesaid) time shall be of the essence of this Agreement.
10.6 Subject as specifically provided herein, each of the parties hereto
shall bear its own costs and expenses relating to this Agreement, save
that FIL shall bear all stamp duty payable in respect of the grant of
the Call Option and the purchase of the Call Option Shares.
10.7 The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
10.8 Notwithstanding the completion of the sale and purchase herein, the
terms and condition of this Agreement shall not merge with the transfer
or conveyance and be extinguished but shall remain in full force and
effect as between the Vendor and FIL insofar as the same shall not have
been fulfilled.
11. GOVERNING LAW AND DISPUTE RESOLUTION
11.1 This Agreement shall be governed by, and construed in accordance with,
the laws of Hong Kong.
11.2 Any dispute or difference arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration
in Hong Kong on or before 31 March 1997 and thereafter in Singapore. In
respect of arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the SIAC Rules.
The HKIAC Rules and the SIAC Rules are deemed to be incorporated by
reference into this Clause 11.2 save to the extent that they are
inconsistent with the express terms of this Agreement.
11.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by FIL, one of whom shall
be appointed by the Grantors, and the third (who shall act as Chairman
of the arbitral tribunal) to be appointed by the Chairman of SIAC or
HKIAC, as the case may be.
9
40
11.4 For the purpose of this Agreement a dispute shall be deemed to arise
when one party serves on the other party a notice in writing (in this
Clause, a "NOTICE OF DISPUTE") stating the nature of the dispute.
11.5 The party serving any Notice of Dispute shall appoint one arbitrator in
such Notice of Dispute.
11.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time as may be
agreed between the parties or directed by the Chairman of SIAC or
HKIAC, as the case may be. In default of such appointment by any party
that arbitrator shall also be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within fourteen (14) days after such time
period. The third arbitrator shall be appointed by the Chairman of SIAC
or HKIAC, as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
11.7 The prevailing party in the arbitration shall be awarded the costs and
expenses (including legal fees and expenses) reasonably incurred in
connection with any such arbitration.
10
41
APPENDIX A
FORM OF FIRST CONSIDERATION NOTE
PROMISSORY NOTE
Due [name actual date of First Deferred Consideration Date],
1999
[ ], 1996
This Promissory Note issued pursuant to the call option agreement
dated [ ] entered into between (1) Flextronics International
Ltd and (2) Fico Forest Industrial Co. Limited ("CALL OPTION
AGREEMENT") Terms defined in the Call Option Agreement shall unless the
context otherwise require, bear the same meaning in this First
Consideration Note. For value received, Flextronics International Ltd,
a corporation organized and existing under the laws of Singapore
("COMPANY"), hereby promises to pay, conditional upon the Net Profit
After Taxation of Fico Investment Holding Limited for the Second
Financial Period (as defined in the Call Option Agreement) (which shall
be determined in accordance with the terms of Clause 10.2 of the Sale
and Purchase Agreement) exceeding the Net Profit After Taxation of Fico
Investment Holding Limited for the Financial Period by twenty percent.
(20%) on the First Deferred Consideration Date, to the order of Fico
Forest Industrial Co. Limited a Hong Kong corporation ("HOLDER"), at
the offices of the Holder, the sum equal to twenty per cent. (20%) of
the Valuation (as defined in the Call Option Agreement), subject to
any rights of offset and adjustments pursuant to Clause 4 of the Call
Option Agreement.
1. INTEREST. This Promissory Note does not bear any interest.
2. PRINCIPAL. The Company promises to pay the principal in full on the
First Deferred Consideration Date, provided that the Company may at any
time prepay the principal or any part of it without premium or penalty
at any time.
3. EVENTS OF DEFAULT; ACCELERATION. In case one or more of the following
Events of Default shall have occurred and be continuing:
3.1 Default in the payment of the principal of this Promissory
Note as and when the same shall become due and payable either
at maturity, by declaration or otherwise; or
3.2 A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing
a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up
or liquidation of its affairs, and such decree or order shall
remain unstayed and in effect for a period of sixty (60)
consecutive days; or
3.3 The Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any
substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or
11
42
3.4 If all of Law Sing Hong, Law Shun Hang and Law Kin Ping shall
have their Employment Agreements terminated by Fico Investment
Holding Limited for any reason other than in accordance with
Clause 11 of their respective Employment Agreements,
then and in each and every such case, unless the principal of this
Promissory Note shall have already become due and payable, the Holder
of this Promissory Note, by notice in writing to the Company, may
declare the principal of this Promissory Note to be due and payable
immediately, and upon any such declaration the same shall become and
shall be immediately due and payable.
4. RIGHT OF OFFSET. The obligations of the Company under this Promissory
Note shall at all times be subject to the right of the Company to
offset against the principal of this Promissory Note such amount or
amounts in the aggregate as shall equal the amount or amounts of (a)
any claim under the Deed of Indemnity (as defined in the Call Option
Agreement), (b) the Post-Closing Adjustment (as defined in the Call
Option Agreement), (c) any damage, loss, liability or expense arising
out of or in connection with a breach of any of the Warranties (as
defined in the Call Option Agreement) and/or (d) any breach of the
Specific Indemnities, in accordance with the terms and conditions of
the Call Option Agreement.
5. ASSIGNMENT AND NEGOTIABILITY. This Promissory Note shall be freely
assignable and transferable by the Company to any of its affiliates and
shall be freely negotiable by the Holder.
6. GOVERNING LAW AND ARBITRATION.
6.1 This Promissory Note, and the rights of the parties hereunder,
shall be governed by, and construed and interpreted in
accordance with, the laws of Hong Kong.
6.2 (i) Any dispute or difference arising out of or in
connection with this Promissory Note, including any
question regarding its existence, validity or
termination, shall be referred to and finally
resolved by arbitration in Hong Kong on or before 31
March 1997 and thereafter in Singapore;
(ii) In respect of arbitration in Hong Kong, the
arbitration shall be in accordance with the HKIAC
Rules (as defined in the Agreement);
(iii) In respect of arbitration in Singapore, the
arbitration shall be in accordance with the SIAC
Rules (as defined in the Agreement); and
(iv) The HKIAC Rules and the SIAC Rules are deemed to be
incorporated by reference into this Clause 6.2 save
to the extent that they are inconsistent with the
express terms of this Promissory Note.
6.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Company,
one of whom shall be appointed by the Holder, and the third
(who shall act as Chairman of the arbitral tribunal) to be
appointed by the Chairman of SIAC or HKIAC (as such terms are
defined in the Agreement), as the case may be.
6.4 For the purpose of this Promissory Note a dispute shall be
deemed to arise when one party serves on the other party a
notice in writing (in this Clause, a "NOTICE OF DISPUTE")
stating the nature of the dispute.
12
43
6.5 The party serving any Notice of Dispute shall appoint one
arbitrator in such Notice of Dispute.
6.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time
as may be agreed between the parties or directed by the
Chairman of HKIAC or SIAC, as the case may be. In default of
such appointment by any party that arbitrator shall also be
appointed by the Chairman of HKIAC or SIAC, as the case may
be, within fourteen (14) days after such time period. The
third arbitrator shall be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within twenty-eight (28) days of
the receipt of such Notice of Dispute.
6.7 The prevailing party in the Arbitration shall be awarded the
costs and expenses (including legal fees and expenses)
reasonably incurred in connection with any such arbitration.
7. SUCCESSORS. The provisions of this Promissory Note shall inure to the
benefit of and be binding upon any successor to the Company.
8. AMENDMENTS. Any amendment of this Promissory Note shall be effective
only if made in writing and executed by the Company and the Holder.
13
44
IN WITNESS WHEREOF, the Company has caused this Promissory Note to be signed and
dated as of , 19 .
----------------
FLEXTRONICS INTERNATIONAL LTD
By:
----------------------
Name:
Title:
------------------------------------------------------
FLEXTRONICS INTERNATIONAL LTD
Promissory Note Due [ ], 1999
14
45
APPENDIX B
FORM OF SECOND CONSIDERATION NOTE
PROMISSORY NOTE
Due [name actual date of Second Deferred Consideration Date], 2000
[ ], 1996
This Promissory Note issued pursuant to the call option agreement dated
[ ] entered into between (1) Flextronics International Ltd and
(2) Fico Forest Industrial Co. Limited ("CALL OPTION AGREEMENT"). Terms
defined in the Call Option Agreement shall unless the context otherwise
require, bear the same meaning in this Second Consideration Note. For
value received, Flextronics International Ltd, a corporation organized
and existing under the laws of Singapore ("COMPANY"), hereby promises
to pay, conditional upon the Net Profit After Taxation of Fico
Investment Holding Limited for the period commencing on 1 January 1999
and ending on 31 December 1999 (which shall be determined in accordance
with the terms of Clause 10.2 of the Sale and Purchase Agreement)
exceeding the Net Profit After Taxation of Fico Investment Holding
Limited for the Financial Period by forty-four per cent. (44%) on the
Second Deferred Consideration Date, to the order of Fico Forest
Industrial Co. Limited, a Hong Kong corporation ("HOLDER"), at the
offices of the Holder, the sum equal to twenty per cent. (20%) of the
Valuation (as defined in the Call Option Agreement), subject to any
rights of offset and adjustments pursuant to Clause 4 of the Call
Option Agreement.
1. Interest. This Promissory Note does not bear any interest.
2. Principal. The Company promises to pay the principal in full on the
Second Deferred Consideration Date, provided that the Company may at
any time prepay the principal or any part of it without premium or
penalty at any time.
3. EVENTS OF DEFAULT; ACCELERATION. In case one or more of the following
Events of Default shall have occurred and be continuing:
3.1 Default in the payment of the principal of this Promissory
Note as and when the same shall become due and payable either
at maturity, by declaration or otherwise; or
3.2 A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an
involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appointing
a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any
substantial part of its property, or ordering the winding-up
or liquidation of its affairs, and such decree or order shall
remain unstayed and in effect for a period of sixty (60)
consecutive days; or
3.3 The Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case under any such law, or shall
consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian,
sequestrator (or similar official) of the Company or for any
substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or
15
46
3.4 If all of Law Sing Hong, Law Shun Hang and Law Kin Ping shall
have their Employment Agreements terminated by Fico Investment
Holding Limited for any reason other than in accordance with
Clause 11 of their respective Employment Agreements,
then and in each and every such case, unless the principal of this
Promissory Note shall have already become due and payable, the Holder
of this Promissory Note, by notice in writing to the Company, may
declare the principal of this Promissory Note to be due and payable
immediately, and upon any such declaration the same shall become and
shall be immediately due and payable.
4. Right of Offset. The obligations of the Company under this Promissory
Note shall at all times be subject to the right of the Company to
offset against the principal of this Promissory Note such amount or
amounts in the aggregate as shall equal the amount or amounts of (a)
any claim under the Deed of Indemnity (as defined in the Call Option
Agreement), (b) the Post-Closing Adjustment (as defined in the Call
Option Agreement), (c) any damage, loss, liability or expense arising
out of or in connection with a breach of any of the Warranties (as
defined in the Call Option Agreement) and/or (d) any breach of the
Specific Indemnities, in accordance with the terms and conditions of
the Call Option Agreement.
5. Assignment and Negotiability. This Promissory Note shall be freely
assignable and transferable by the Company to any of its affiliates and
shall be freely negotiable by the Holder.
6. Governing Law and Arbitration.
6.1 This Promissory Note, and the rights of the parties hereunder,
shall be governed by, and construed and interpreted in
accordance with, the laws of Hong Kong.
6.2 (i) Any dispute or difference arising out of or in
connection with this Promissory Note, including any
question regarding its existence, validity or
termination, shall be referred to and finally
resolved by arbitration in Hong Kong on or before 31
March 1997 and thereafter in Singapore;
(ii) In respect of arbitration in Hong Kong, the
arbitration shall be in accordance with the HKIAC
Rules (as defined in the Agreement);
(iii) In respect of arbitration in Singapore, the
arbitration shall be in accordance with the SIAC
Rules (as defined in the Agreement); and
(iv) The HKIAC Rules and the SIAC Rules are deemed to be
incorporated by reference into this Clause 6.2 save
to the extent that they are inconsistent with the
express terms of this Promissory Note.
6.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Company,
one of whom shall be appointed by the Holder, and the third
(who shall act as Chairman of the arbitral tribunal) to be
appointed by the Chairman of SIAC or HKIAC (as such terms are
defined in the Agreement), as the case may be.
6.4 For the purpose of this Promissory Note a dispute shall be
deemed to arise when one party serves on the other party a
notice in writing (in this Clause, a "NOTICE OF DISPUTE")
stating the nature of the dispute.
16
47
6.5 The party serving any Notice of Dispute shall appoint one
arbitrator in such Notice of Dispute.
6.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time
as may be agreed between the parties or directed by the
Chairman of HKIAC or SIAC, as the case may be. In default of
such appointment by any party that arbitrator shall also be
appointed by the Chairman of HKIAC or SIAC, as the case may
be, within fourteen (14) days after such time period. The
third arbitrator shall be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within twenty-eight (28) days of
the receipt of such Notice of Dispute.
6.7 The prevailing party in the Arbitration shall be awarded the
costs and expenses (including legal fees and expenses)
reasonably incurred in connection with any such arbitration.
7. Successors. The provisions of this Promissory Note shall inure to the
benefit of and be binding upon any successor to the Company.
8. Amendments. Any amendment of this Promissory Note shall be effective
only if made in writing and executed by the Company and the Holder.
17
48
IN WITNESS WHEREOF, the Company has caused this Promissory Note to be signed and
dated as of , 19 .
FLEXTRONICS INTERNATIONAL LTD
By:
--------------------------
Name:
Title:
--------------------------------------------------
FLEXTRONICS INTERNATIONAL LTD
Promissory Note Due [ ], 2000
18
49
IN WITNESS WHEREOF the parties have hereunto entered into this Agreement the
date first above written.
FIL
SIGNED by )
)
)
----------------- )
X. X. Xxxx ) /s/ X.X. XXXX
)
for and on behalf of )
FLEXTRONICS INTERNATIONAL LTD )
in the presence of: )
/s/ XXXXXX XXXX CIN TZIEH
------------------------------------
Xxxxxx Xxxx Cin Tzieh
Advocate & Solicitor
Singapore
FICO(HK)
SIGNED by )
)
for and on behalf of )
FICO FOREST INDUSTRIAL )
CO. LIMITED )
in the presence of: )
19
50
IN WITNESS WHEREOF the parties have hereunto entered into this Agreement the
date first above written.
FIL
SIGNED by )
)
for and on behalf of )
FLEXTRONICS INTERNATIONAL LTD )
in the presence of: )
FICO(HK)
SIGNED by )
)
)
) /s/ LAW SING HONG
Law Sing Hong and Law Shun Hang ) ------------------
)
for and on behalf of ) /s/ LAW SHUN HANG
FICO FOREST INDUSTRIAL ) ------------------
CO. LIMITED )
in the presence of: )
/s/ XXXXXXXXX X. XXXXXX
-------------------------------
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
19
51
SCHEDULE 3
CHARGE
DATED THIS 20th DAY OF DECEMBER 1996
Between
FLEXTRONICS INTERNATIONAL LTD
(the Chargee)
And
FICO FOREST INDUSTRIAL CO. LIMITED
(the Chargor)
------------------------
CHARGE
------------------------
52
TABLE OF CONTENTS
Clause Heading Page
------ ------- ----
1. INTERPRETATION ..................................................... 1
2. COVENANT AND CHARGE ................................................ 2
3. CONTINUING SECURITY ................................................ 2
4. REPRESENTATIONS AND WARRANTIES ..................................... 2
5. ADDITIONAL UNDERTAKINGS ............................................ 3
6. DIVIDENDS .......................................................... 3
7. POWER OF ATTORNEY .................................................. 3
8. REMEDIES AND SALE BY FIL ........................................... 4
9. SECURITY ........................................................... 4
10. WAIVER AND SEVERABILITY ............................................ 5
11. SUSPENSE ACCOUNT ................................................... 5
12. PROTECTION OF THIRD PARTIES ........................................ 5
13. NOTICE ............................................................. 5
14. GOVERNING LAW AND JURISDICTION ..................................... 6
15. FEES AND EXPENSES .................................................. 7
16. MISCELLANEOUS PROVISIONS ........................................... 7
17. APPLICABILITY OF THE S&P AGREEMENT ................................. 7
18. COUNTERPARTS ....................................................... 7
53
THIS CHARGE is made on the 20th day of December 1996
BETWEEN:
(1) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in Singapore and
having its registered office at 00 Xxxxxxxx Xxxx, Xxxx Xxxxx #00-00,
Xxxxxxxxx 000000 ("FIL"); and
(2) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
and having its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx
Xxx Ind. Building, 603 Castle Peak Road, Tsuen Wan, New Territories,
Hong Kong ("CHARGOR").
WHEREAS:
Pursuant to a sale and purchase agreement dated 29 November 1996 and entered
into between, the Chargor, FIL and Fico Investment Holding Limited ("COMPANY"),
("S&P AGREEMENT"), the Chargor has agreed with FIL to execute and deliver this
Charge to FIL on the terms set out herein as security for the obligations and
liabilities of the Chargor under the terms and conditions of the Agreements (as
defined below).
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 Unless the context otherwise requires terms and expressions defined in
the S&P Agreement shall have the same meaning when used in this Charge:
"AGREEMENTS" means the S&P Agreement, the Call Option Agreement, the Put
Option Agreement, the Fico Call Option Agreement, the Escrow Agreement,
the Deed of Indemnity and the Shareholders' Agreement;
"COMPANY" means Fico Investment Holding Limited, a company incorporated
in Hong Kong, and having its registered office at Xx 00, 00/X, Xxx X,
Xxxx Xxx Xxx. Building, 603 Castle Peak Road, Tsuen Wan, New
Territories, Hong Kong;
"OBLIGATIONS" means the obligations of the Chargor under the Agreements;
"RELATED CORPORATIONS" in relation to any entity means any subsidiary or
holding company or other subsidiary of the holding company of such
entity; and
"SHARES" means all the ordinary shares of HK$1.00 each in the share
capital of the Company beneficially owned by the Chargor which, in
aggregate, represent sixty per cent. (60%) of the issued and paid-up
share capital of the Company beneficially owned by the Chargor at the
date hereof, and such number of any and all other shares in the share
capital of the Company issued to and beneficially owned by the Chargor
subsequent to the date hereof consisting of, at any time all of the
ordinary shares in the Company issued to and beneficially owned by the
Chargor and, where the context permits, includes those rights, monies
and other property referred to in Clause 2.4.
1.2 Unless the context otherwise requires, words importing the singular
include the plural and vice versa and words importing a gender include
every gender; references to this Charge or the Agreements shall be
construed as references to such document as the same may be amended or
supplemented from time to time; unless stated otherwise, references to
clauses and schedule are to clauses and schedule of this Charge.
54
2. COVENANT AND CHARGE
2.1 The Chargor covenants with FIL that it shall discharge the Obligations
when due to FIL pursuant to the terms of the Agreements (as may be
amended from time to time).
2.2 The Chargor as legal and beneficial owner of the Shares and as security
for the discharge to FIL of the Obligations charges by way of a first
fixed charge all of the Chargor's right, title and interest in and to
the Shares and all rights, monies and property whatsoever which may at
any time be derived from, accrue on or be offered in respect of the
Shares whether by way of redemption, exchange, conversion, rights,
bonus, capital reorganisation or otherwise, as specified in Clause 2.4.
2.3 The Chargor hereby undertakes forthwith to deposit or procure that
there will be deposited with FIL or, as the case may be, the Escrow
Agent (pursuant to the Escrow Agreement) the share certificate(s) in
respect of the Shares together with registrable instruments of transfer
and the sold notes in respect thereof duly executed by the Chargor in
blank to the intent that the Shares may be registered in the name of FIL
or its nominees as and in accordance with the terms of this Charge.
2.4 This Charge shall (subject as provided by Clause 6) extend to and
include all dividends or interest (if any) paid or payable after the
date hereof in respect of the Shares and all stocks, shares (and the
dividends or interest in respect thereof), rights, monies or other
property accruing or offered at any time in respect of the Shares
(including any sums paid upon or with respect to the Shares upon the
liquidation or dissolution of the Company and properties distributed
upon reduction of capital or other capital reorganisation of the
Company) and all allotments, accretions, offers, rights, benefits
(including all shares of the Company issued subsequent to the date
hereof) and advantages at any time accruing, made, offered or arising in
respect of any of the same. If the Chargor acquires any other stocks or
shares in the Company, it shall forthwith deliver or procure that there
be delivered to FIL the share certificate(s) in respect thereof together
with registrable instruments of transfer in respect thereof duly
executed by the Chargor in blank.
2.5 Without prejudice to anything else contained in this Charge, the
Chargor shall at any time at the request of FIL but at the cost of the
Chargor promptly sign seal execute deliver and do all deeds instruments
transfers renunciations proxies notices documents acts and things in
such form as FIL or the Escrow Agent may from time to time require for
perfecting or protecting the security over the Shares or any part of it
or for facilitating its realisation, including but not limited to
attending any board meeting and approving any transfer of the Shares
made in accordance with this Charge, the cancellation of the share
certificates representing the Shares held in the name of the Chargor and
the issue of the new share certificate(s) under the common seal of the
Company in accordance with its Articles of Association in the name of
FIL or its nominees or any third party purchasing the Shares.
3. CONTINUING SECURITY
This Charge shall be a continuing security, and shall remain in full
force and effect until the Obligations have been discharged in full
notwithstanding the bankruptcy, insolvency or liquidation of any person
or any intermediate settlement of account or other matter whatsoever.
4. REPRESENTATIONS AND WARRANTIES
The Chargor represents and warrants that:
2
55
(a) the Chargor has good, unencumbered, marketable title to the
Shares and all the Shares are validly issued and fully
paid-up;
(b) no Encumbrance exists over all or any part of the Shares
(except as created by the Agreements and this Charge); and
(c) save for the Call Option, the Chargor has not granted or
resolved or agreed to grant in favour of any other person any
interest in or any option or other rights in respect of any of
the Shares.
5. ADDITIONAL UNDERTAKINGS
5.1 The Chargor further agrees from time to time to:
(a) pay to FIL, upon demand and upon receiving evidence in writing
in respect thereof, the amount of all expenses which it may
incur in, about or with a view to perfecting or enforcing this
Charge or otherwise in connection therewith together with
interest on the amount on any payments made by the Chargor
from the date of payment until the date of repayment before as
well as after judgement; and
(b) promptly pay all calls and other payments which may become due
in respect of the Shares and, in the event of default by the
Chargor, FIL may do so on the Chargor's behalf and paragraph
(a) above shall apply accordingly.
5.2 The Chargor undertakes throughout the continuance of this Charge that
the Chargor shall, unless FIL otherwise agrees in writing:
(a) not to dispose of or create or agree to dispose of or create
or permit to arise or exist any Encumbrance over all or any
part of the Shares (except as created by the Agreements and
this Charge) and any purported sale, transfer, disposal,
mortgage, charge or security interest created without FIL's
prior consent shall be absolutely void;
(b) not grant in favour of any other person any interest in or any
option or other rights in respect of any of the Shares; and
(c) at all times remain the beneficial owner of the Shares.
6. DIVIDENDS
FIL agrees with the Chargor that (subject to Clause 8.2) until the
Obligations are discharged in full, FIL shall hold all interest,
dividends and property paid on and received by FIL in respect of the
Shares on trust for the Chargor.
7. POWER OF ATTORNEY
The Chargor hereby irrevocably appoints FIL to be the attorney of the
Chargor with full power of substitution of its name and in its name and
on its behalf and as its act and deed to execute, seal and deliver and
otherwise perfect any deed, assurance, agreement, instrument or act it
may deem necessary for any of the purposes of this Charge and in
particular, but without limitation to do all or any of the following:
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(a) to effect any transfer of the Shares or any of them and to
register and/or procure the registration of the same whether
in the name of FIL or otherwise; and
(b) to call or to procure the calling of and to attend any
shareholders' meeting of the Company and to vote or to
instruct any proxy to vote at such meeting in such manner as
FIL may think fit.
The Chargor hereby ratifies and confirms and agrees to ratify and
confirm anything FIL shall lawfully and properly do or purport to do by
virtue of this Clause 7 and all money expended by FIL shall be deemed
to be expenses incurred by FIL under this Charge.
8. REMEDIES AND SALE BY FIL
8.1 If the Obligations are not discharged in full in the manner stipulated
in the Agreements and within the time limits set forth therein, the
security constituted herein shall become immediately enforceable and
FIL or its nominee, may without limitation to its other rights in law,
at its option do one or more of the following:
(a) sell or otherwise dispose of all or any title and interest in
the Shares upon such terms and in such manner and for such
consideration as FIL may in its sole and absolute discretion
think fit, and FIL may apply the proceeds of any such sale or
disposition in or towards the discharge of costs thereby
incurred (including sale and/or attorneys' fees), with any
surplus being retained by FIL but FIL shall not be liable for
any loss or damage occasioned by such sale or disposal, unless
caused by FIL's own wilful default;
(b) transfer the Shares to itself but without prejudice to any
other rights or remedies which FIL may have in law against the
Chargor; and
(c) complete and date the sold note(s), the instrument(s) of
transfer and any other documents delivered pursuant to Clause
2.3 and appoint additional and/or replacement directors to the
Board of the Company.
8.2 At any time after the power of sale has arisen, any interest, dividend
or other payments which have been or may be received or receivable by
FIL or any nominee of FIL in respect of any of the Shares (including
any or all of those interests set forth in Clause 2.4) may be applied
or retained by FIL as though they were proceeds of sale hereunder.
8.3 FIL is hereby authorized to give a good discharge for any monies
received by it pursuant to the exercise of its power of sale and a
purchaser shall not be bound to inquire whether the power of sale has
arisen as herein provided nor be concerned with the manner of
application of the proceeds of sale.
9. SECURITY
Neither the liability of the Chargor nor the validity or enforceability
of this Charge shall be prejudiced, affected or discharged by:
(a) the granting of any time or indulgence to the Chargor or any
other person;
(b) any variation or modification of the Agreements or any
documents referred to therein;
(c) any irregularity in the exercise of this Charge;
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57
(d) any other security document, charge, debenture, guarantee or
other security being or becoming held by or available to FIL
or by any of the same or any right or remedy of FIL against
the Company or the Chargor or any other person being or
becoming wholly or partly void, voidable or unenforceable or
by FIL at any time releasing, refraining from enforcing,
varying or in any other way dealing with any of the same or
any power, right or remedy FIL may now or hereafter have from
or against the Chargor or any other person;
(e) any waiver, exercise, omission to exercise, compromise,
renewal or release of any rights against the Chargor or any
other person or any compromise arrangement or settlement with
any of the same; and
(f) any act, omission, event or circumstance which would or may
but for this provision operate to prejudice, affect or
discharge this Charge or the Agreements or the liability of
the Chargor hereunder or under the Agreements.
10. WAIVER AND SEVERABILITY
No failure or delay by FIL in exercising any right, power or remedy
hereunder shall impair such right, power or remedy or operate as a
waiver thereof nor shall any single or partial exercise of the same
preclude any further exercise thereof or the exercise of any other
right, power or remedy. The rights, powers and remedies herein provided
are cumulative and do not exclude any other rights, powers and remedies
provided by law. If at any time any provision of this Charge is or
becomes illegal, invalid or unenforceable in any respect under the law
of any jurisdiction, the legality, validity and enforceability of such
provision under the laws of any other jurisdiction, and of the
remaining provisions of this Charge, shall not be affected or impaired
thereby.
11. SUSPENSE ACCOUNT
Subject to Clause 8, FIL may place and keep any monies received by
virtue of this Charge (whether before or after the bankruptcy or
liquidation of the Chargor or any other person) to the credit of a
suspense account for so long as FIL may think fit in order to preserve
the rights of FIL to xxx or prove for the whole amount of its claim
against the Chargor or any other person. Upon final settlement of all
amounts and payments due to FIL, the Chargor shall have the right to
verify any and all records of the suspense account pertaining to any
and all monies received by virtue of this Charge and to the application
and proceeds of the same.
12. PROTECTION OF THIRD PARTIES
No purchaser, mortgagee or other person dealing with FIL shall be
concerned to enquire whether any power which it is purporting to
exercise has become exercisable or whether any money is due under this
Charge or as to the application of any money paid raised or borrowed or
as to the propriety or regularity of any sale by or other dealing with
FIL.
13. NOTICE
All notices, consents, approvals, waivers and other communication under
this Charge shall be in writing and shall be deemed to have been duly
given when delivered by telecopier and confirmed by delivery in person
or by reputable air courier or certified or registered mail, return
receipt requested, with postage prepaid addressed as follows:
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(a) To FIL: Flextronics International Ltd
000 Xxxx Xxxx Xxxx, #00-00
Xxxxxxxxx 000000
Fax Number: (00) 000-0000
Attention: Xx Xxx Xxxx Xxxx
(b) To the Chargor: Fico Forest Industrial Co. Limited
Xxxx 00, 00/X
Xxx X, Xxxx Xxx Xxx. Xxxxxxxx
000 Xxxxxx Xxxx Xxxx, Xxxxx Xxx
Xxx Xxxxxxxxxxx
Xxxx Xxxx
Fax Number: (000) 0000-0000
Attention: Mr Law Sing Hong
or to such other telecopier number and/or address as the parties may
from time to time designate in writing.
14. GOVERNING LAW AND JURISDICTION
14.1 This Charge shall be governed by, and construed in accordance with, the
laws of Hong Kong.
14.2 Any dispute or difference arising out of or in connection with this
Charge, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration
in Hong Kong on or before 31 March 1997 and thereafter in Singapore. In
respect of arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the SIAC Rules.
The HKIAC Rules and the SIAC Rules are deemed to be incorporated by
reference into this Clause 14.2 save to the extent that they are
inconsistent with the express terms of this Charge.
14.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by FIL, one of whom shall
be appointed by the Chargor, and the third (who shall act as Chairman
of the arbitral tribunal) to be appointed by the Chairman of SIAC or
HKIAC, as the case may be.
14.4 For the purpose of this Charge a dispute shall be deemed to arise when
one party serves on the other party a notice in writing (in this
Clause, a "NOTICE OF DISPUTE") stating the nature of the dispute.
14.5 The party serving any Notice of Dispute shall appoint one arbitrator in
such Notice of Dispute.
14.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time as may be
agreed between the parties or directed by the Chairman of SIAC or
HKIAC, as the case may be. In default of such appointment by any party
that arbitrator shall also be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within fourteen (14) days after such time
period. The third arbitrator shall be appointed by the Chairman of SIAC
or HKIAC, as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
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14.7 The prevailing party in the Arbitration shall be awarded the costs and
expenses (including legal fees and expenses) reasonably incurred in
connection with any such arbitration.
15. FEES AND EXPENSES
The Chargor shall pay all legal fees on a full indemnity basis and
other costs and disbursements incurred in connection with demanding and
enforcing payment of monies due hereunder or otherwise howsoever in
enforcing this security and/or any of the covenants, undertakings,
stipulations, terms and conditions or provisions of this Charge.
16. MISCELLANEOUS PROVISIONS
16.1 Neither this Charge nor any term hereof may be changed, waived,
discharged or terminated except by a written instrument expressly
referring to this Charge and to the provisions so modified or limited,
and executed by the parties hereto. This Charge and all obligations of
the Chargor shall be binding upon the successors and permitted assigns
of the Chargor and shall together with the rights and remedies of FIL
hereunder, inure to the benefit of FIL, its successors or assigns.
16.2 Nothing herein shall be deemed or construed to derogate from or
abrogate any of the covenants and obligations to be performed and
observed on the part of the Chargor contained in the Agreements.
16.3 The Chargor certifies that neither the execution of this Charge nor the
creation of the charges herein contained contravenes any of the
provisions of the Memorandum and Articles of Association of the Company
or of the Chargor or any agreement or transaction entered into by the
Chargor.
17. APPLICABILITY OF THE S&P AGREEMENT
In the event of any inconsistency or conflict between the provisions of
this Charge and the provisions of the S&P Agreement, the terms of this
Charge shall prevail.
18. COUNTERPARTS
This Charge may be executed in any number of counterparts, all of which
when taken together shall constitute one and the same instrument.
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IN WITNESS whereof this Charge has been executed the day and year first above
written.
FIL
The Common Seal of )
FLEXTRONICS INTERNATIONAL LTD )
has been affixed in the )
presence of: )
/s/ X.X. Xxxx
-----------------------
Director
/s/ Goh Xxxx Xxxx
-----------------------
Authorised Signatory
Chargor
The Common Seal of )
FICO FOREST INDUSTRIAL )
CO. LIMITED has been affixed in the )
presence of: )
-----------------------
Director
-----------------------
Director/Secretary
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IN WITNESS whereof this Charge has been executed the day and year first above
written.
FIL
The Common Seal of )
FLEXTRONICS INTERNATIONAL LTD )
has been affixed in the )
presence of: )
____________________
Director
____________________
Director/Secretary
Chargor
The Common Seal of )
FICO FOREST INDUSTRIAL )
CO. LIMITED has been affixed in the )
presence of: )
/s/ Law Sing Hong
____________________
Director
/s/ Law Shun Hang
____________________
Director/Secretary
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
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SCHEDULE 4
EMPLOYMENT AGREEMENT
DATED THE 20TH DAY OF DECEMBER 1996
Between
FICO INVESTMENT HOLDING LIMITED
(as the Company)
and
LAW SING HONG
(as Employee)
----------------------
EMPLOYMENT AGREEMENT
----------------------
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THIS AGREEMENT is made on the 20th day of December 1996
BETWEEN:
(1) FICO INVESTMENT HOLDING LIMITED, a company incorporated in Hong Kong
and having its registered office at Xx 00, 00/X, Xxx X, Xxxx Xxx Xxx.
Building, 603 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
("COMPANY"); and
(2) LAW SING HONG of 9/17 Xxxxxx Tower, TMTL 196 Area 20, Tuen Mun, New
Territories,Hong Kong ("EMPLOYEE").
NOW IT IS HEREBY AGREED as follows:
1. The Company shall employ the Employee and the Employee shall serve the
Company in a senior executive capacity and in such capacity, for the
period and upon and subject to the terms and conditions hereinafter
contained.
2. As a senior executive of the Company, the Employee shall devote
substantially his time and attention and whole skill to the affairs of
the Company and in the discharge of his duties hereunder:
(a) in undertaking such duties and exercising such powers in
relation to the Company and its business as the board of
directors of the Company ("BOARD") shall from time to time
assign to or vest in him;
(b) in the discharge of such duties and in the exercise of such
powers conform to observe and comply with all resolutions
regulations and directions from time to time made or given by
the Board; and
(c) undertake to do such other and additional work as may
reasonably be requested of him and to perform such services
for the Company's subsidiaries or holding company as the Board
may from time to time reasonably require without further
remuneration unless otherwise agreed.
3. The Employee shall not (without the previous written consent of the
Board) during the continuance of this Agreement (either directly or
indirectly) be engaged or interested in any capacity in any trade
business profession or occupation whatsoever other than the business of
the Company. In this Clause 3, the expression "OCCUPATION"shall include
any other private work which in the opinion of the Board may hinder or
otherwise interfere with the performance by the Employee of his duties
under this Agreement.
4. The Employee shall at all times keep the Board promptly and fully
informed of his conduct of the business or affairs of the Company and
its subsidiaries and associated companies (where relevant) and provide
such explanations as the Board may require.
5. The Employee shall not, except as required by law, or authorised or
required by his duties reveal to any person, firm or company any trade
secrets, secret or confidential operations processes or dealings or any
information concerning the organization, business, finances,
transactions or affairs of the Company or any of its subsidiaries,
associated companies or holding company which may come to his knowledge
during his employment hereunder and shall keep with complete secrecy
all confidential information entrusted to him and shall not use or
attempt to use such information in any manner which may injure or cause
loss either directly or indirectly to the Company or its business or
may be likely so to do at any time. This restriction shall continue to
apply and be binding on him after the termination of this Agreement
without limit in point of time but shall cease to apply to information
or knowledge which may come into the public domain.
64
6. (a) Any discovery or invention or secret process or improvement in
procedure made or discovered by the Employee while in the
service of the Company in connection with or in any way
affecting or relating to the business of the Company or of any
subsidiaries or capable of being used or adapted for use
therein or in connection therewith shall forthwith be
disclosed to the Company and shall belong to and be the
absolute property of the Company or such one of its subsidiary
companies as the Company may nominate for the purpose;
(b) The Employee if and whenever required so to do (whether during
or after the termination of his appointment) shall at the
expense of the Company or its nominee apply or join in
applying for letters patent or other protection in Hong Kong
or any other part of the world for any such discovery,
invention, process or improvements as aforesaid and execute
all instruments and do all things necessary for vesting the
said letters patent or other protection when obtained and all
rights and title to and interest in the same in the Company
(or its nominee) absolutely and as sole beneficial owner or in
such other person as the Company may require;
(c) The Employee hereby irrevocably appoints the Company to be his
attorney in his name and on his behalf to execute and do any
such instrument or thing and generally to use his name for the
purpose of giving to the Company (or its nominee) the full
benefit of the provisions of this clause and in favour of any
third party a certificate in writing signed by any director or
the secretary of the Company that any instrument or act falls
within the authority hereby conferred shall be conclusive
evidence that such is the case;
(d) The Employee shall take all reasonable precautions to
safe-guard his health and keep himself fit to perform his
duties under this Agreement and submit to such medical
examination and/or treatment as the Company's medical advisers
may from time to time consider necessary or advisable;
(e) The Employee shall not promote encourage or participate in any
public tumult or disorder nor do anything which might cause
public scandal or bring the Company or any of its subsidiaries
or associated companies or holding company into disrepute; and
(f) The Employee may not without the prior written consent of the
Board accept any gift and/or favour of whatever kind from any
customer, client or supplier of the Company or any prospective
customer, client or supplier of the Company.
7. This Agreement and all the provisions herein contained (either
expressly or by implication) shall come into force as from 1 January
1997 and shall continue for a term of 3 years, subject to earlier
termination as provided in Clause 11 hereof.
8. (a) Subject as hereinafter provided the Company shall pay to the
Employee during the continuance of his employment hereunder a
salary at the sum of US$85,000 per month which said salary is
inclusive of any sum receivable by the Employee as director's
fee, car allowance, housing allowance or other remuneration
from the Company (or such higher rate as may from time to time
be agreed between the parties or determined upon and notified
to the Employee by the Company). In the event of any increase
of salary being so agreed or notified such increase shall
thereafter have effect as if it were specifically provided for
as a term of this Agreement. The said salary (less any
deductions as shall be required by law to be made) shall be
payable in arrears on the last day of each month;
(b) In addition to his salary, the Employee shall participate in
the Company's profit sharing bonus scheme for key senior
officers authorised by the Board from time to time; and
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(c) The Employee shall also participate in the employee stock
option scheme for all key employees of Flextronics
International Ltd.
9. The Company will reimburse the Employee for the following:
(a) all travelling and hotel expenses when the Employee is
required by the Company to travel to other countries in the
discharge of his duties; and
(b) all entertainment expenses incurred in the discharge of the
Employee's duties to the Company.
10. The Employee will be entitled to annual leave at the rate of fourteen
(14) working days per annum and such leave shall be taken only at a
time or times convenient to the Company.
11. Notwithstanding anything herein contained, this Agreement may be
determined:
(a) by either party hereto giving to the other not less than three
(3) calendar months' notice in writing; or
(b) by the Company summarily without notice or payment of
compensation whatsoever in any of the following events:
(i) if the Employee is guilty of dishonesty or grave
misconduct or commits any act or wilful neglect as in
the opinion of the Company is likely to bring the
Company or any of its subsidiaries or associated
companies or its holding company or any of its or
their officials or employees into disrepute whether
such dishonesty, misconduct, act or neglect is or is
not directly related to the affairs of the Company;
(ii) if the Employee becomes of unsound mind or becomes
permanently incapacitated by accident or ill-health
and is unable to perform his duties under this
Agreement;
(iii) if the Employee becomes bankrupt or makes any
arrangement or composition with his creditors;
(iv) if the Employee commits any material breach of any of
his duties or obligations under this Agreement;
(v) if the Employee is convicted of any criminal offence
other than an offence which in the reasonable opinion
of the Board does not affect his position as an
employee of the Company;
(vi) if the Employee is found to have made illegal
monetary profit or received any gratuities or other
rewards (whether in cash or kind) out of any of the
Company's affairs; or
(vii) if the Company is required or requested by any
authority (whether governmental or statutory) to
terminate the services of the Employee.
(c) Upon the termination of this Agreement for whatsoever reason
the Employee shall upon the request of the Company resign
without claim for compensation from office as a Employee of
the Company and from all offices held by him in subsidiary or
associated companies or the holding company of the Company and
in the event of his failure to do so the Company is hereby
irrevocably authorised to appoint such person in his name and
on his behalf to execute any documents and to do all things
requisite to give effect thereto.
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12. The exercise by the Company of its rights of summary dismissal under
the preceding clause hereof shall not debar it from exercising such
other rights or remedies as may be available to it by law or otherwise
by reason of any of the matters aforesaid.
13. The Employee undertakes that any question or matter relating to the
following shall be determined by the Board and in so far as the Call
Option (as defined in the Call Option Agreement) has not been
exercised, such matters shall be determined pursuant to Clause 9 of the
Shareholders' Agreement:
(i) any investment by the Company of $10,000 or more;
(ii) appointment of (and any subsequent change in) the auditors,
secretary and principal bankers and any subsequent change in
the financial year end and the registered office of the
Company;
(iii) entry by the Company or its subsidiaries into any transaction
of a financial nature including the incurring of any borrowing
under any existing or future banking and credit facilities and
granting of any guarantee, indemnity, performance bond, lien,
pledge, charge (including fixed and floating charge), mortgage
or other security and the incurring of any other form of
indebtedness in excess of US$50,000.00;
(iv) the incurring of any capital expenditure including the making
or disposal of any investment in excess of (a) US$1,000,000
for the period commencing from 1 January 1997 and ending on 31
December 1997; (b) US$1,500,000 for the period commencing from
1 January 1998 and ending on 31 December 1998 and (c)
US$1,875,000 for the period commencing from 1 January 1999 and
ending on 31 December 1999;
(v) the payment of any remuneration or Director's fees;
(vi) loans to Directors or to any corporation in which any Director
or the Directors cumulatively has or have a controlling
interest within the meaning of Section 157H of the Companies
Ordinance in the issued share capital of that corporation;
(vii) a substantial change in the primary business of the Company;
(viii) inter-company transactions with any company or businesses in
which the Company have a financial interest;
(ix) the declaration, recommendation, making and payment of any
distribution (whether in cash or in kind);
(x) sale transfer or disposal of the whole or a substantial part
of the Company's undertaking, assets or property or purchase,
sale, transfer, disposal, lease or licence of any real
property or any interest therein;
(xi) increase, reduction or other alteration to the authorised or
issued share capital;
(xii) commencement or carrying on of any type of business not being
ancillary or incidental to or extension of the scope of
operation or type of the Businesses;
(xiii) merger, consolidation or amalgamation with any company,
association, partnership or legal entity and acquisition of
any shares in any body corporate or participation in any
partnership or joint venture arrangement;
(xiv) amendment to the Memorandum and Articles of Association;
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(xv) sale, transfer or disposal of any asset or investment with a
value in excess of US$10,000.00;
(xvi) approval of the audited balance sheet and profit and loss
account of the Company and any report or statement
accompanying such balance sheet and profit and loss account;
(xvii) establishment of any special reserves, provisions or
retentions not in the ordinary course of business and
application or utilisation of the same;
(xviii) entry into any contract or arrangement with any Director or
the Company or any person connected with such person;
(xix) redemption purchase or cancellation of any shares or issue of
further shares or other dilution of the interest of the
shareholders of the Company or variation of any rights
attaching to any shares of the Company;
(xx) issue of partly-paid shares and making of any call upon moneys
unpaid in respect of any issued shares;
(xxi) subject to the provisions of this Agreement, the winding-up or
dissolution of the Company unless it shall have become
insolvent;
(xxii) any material change in the Company's accounting or reporting
practices;
(xxiii) lending of any moneys other than placing of deposits with
banks and financial institutions;
(xxiv) commencement or settlement of any litigation or arbitration
proceedings having a value or likely value in excess of
US$10,000.00;
(xxv) approval of the Company's annual operating budget and
strategic plans;
(xxvi) any change in the number of Directors of the Company;
(xxvii) save as is otherwise provided herein, any matter involving the
Company with any Director or with another firm, company or
corporation in which any Director is interested as a
proprietor, partner, director or other officer or creditor of
or a shareholder in, except as a shareholder of a public
company or a public corporation whose shares are listed on a
stock exchange;
(xxviii) any public issue of Shares of the Company or any of its
subsidiaries with a view to obtaining the listing of the
Company or such subsidiary on any other stock exchange;
(xxix) the authorised signatories of all and any banking or credit
facilities or accounts; and
(xxx) the appointment of any Managing Director, Executive Director,
General Manager, Financial Controller or similar senior
executive or officer of the Company.
14. The Employee hereby further covenants with and undertakes to the
Company that for a period of two (2) years from the date of the
termination of his employment with the Company, he shall not do any of
the following without first obtaining the written consent of the
Company:
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(a) directly or indirectly carry on (whether alone or in
partnership or joint venture with anyone else) or otherwise be
concerned with or interested in (whether as trustee,
principal, agent, shareholder, unit holder or in any other
capacity) any business similar to or competitive with the
Business (as defined below) of the Company, its subsidiaries
or holding company for two (2) years after the date of
termination of this Agreement, in any country where the
Company, its subsidiaries or holding company currently carries
on the Business and/or sells its products, including, without
limitation, Europe, Hong Kong, Japan, Korea, Malaysia, Mexico,
the People's Republic of China, Singapore and the United
States of America;
(b) solicit or persuade any person or corporation which is a
customer or client of the Company, its subsidiaries or holding
company, or who is or was a customer or client of or in
respect of the Business, to cease doing business with the
Company, its subsidiaries or holding company or reduce the
amount of business which the customer or client would normally
do in respect of the Business for two (2) years after the date
of termination of this Agreement;
(c) accept from a customer or client referred to in Clause 14(b)
above any business of the kind ordinarily forming part of the
Business, of the Company, its subsidiaries or holding company
for two (2) years after the date of termination of this
Agreement;
(d) at any time use or disclose to any third party any trade
secrets, product information or confidential information of
the Business of the Company, its subsidiaries and holding
company which is not generally known or available in the
market place or which but for a breach of this Clause 14 would
not be generally known or available in the market place;
(e) at any time induce or attempt to induce any person who is at
the date of this Agreement or who later becomes an employee of
the Company, its subsidiaries or holding company in the
Business to terminate his or her employment with the Company,
its subsidiaries or holding company;
(f) for the purposes of this Clause 14, the expression "BUSINESS"
shall mean the sale and manufacture of plastic material
products and its by-products (including all associated
importation, exportation, marketing and related activities)
carried on by the Company, its subsidiaries, holding company
or related corporations, anywhere in the world;
(g) each and every obligation under this Clause 14 shall be
treated as a separate obligation and shall be severally
enforceable as such and in the event of any obligation or
obligations being or becoming unenforceable in whole or in
part such part or parts as are unenforceable shall be deleted
from this Clause 14 and any such deletion shall not affect the
enforceability of all such parts of this Clause 14 as remain
not so deleted; and
(h) while the restrictions contained in this Clause 14 are
considered by the parties to be reasonable in all the
circumstances it is recognised that restrictions of the nature
in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any of
such restrictions shall be adjudged to be void as going beyond
what is reasonable in all the circumstances for the protection
of the interests of the Company, its subsidiaries, holding
company and related corporations but would be valid if part of
the wording thereof were deleted or the periods thereof
reduced or the range of activities or area dealt with thereby
reduced in scope the said restriction shall apply with such
modifications as may be necessary to make it valid and
effective.
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15. This Agreement is in substitution for all previous contracts of service
between the Company and the Employee which shall be deemed to have been
terminated by mutual consent as from the date on which this Agreement
commences.
16. In case any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law,
such invalidity, illegality or unenforceability shall not in any way
affect or impair any other provisions of this Agreement but this
Agreement shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein.
17. (a) This Agreement shall be governed by, and construed in
accordance with, the laws of Hong Kong.
(b) Any dispute or difference arising out of or in connection with
this Agreement, including any question regarding its
existence, validity or termination, shall be referred to and
finally resolved by arbitration in Hong Kong on or before 31
March 1997 and thereafter in Singapore. In respect of
arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the
SIAC Rules. The HKIAC Rules and the SIAC Rules are deemed to
be incorporated by reference into this Clause 17 save to the
extent that they are inconsistent with the express terms of
this Agreement.
(c) The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Company,
one of whom shall be appointed by the Employee, and the third
(who shall act as Chairman of the arbitral tribunal) to be
appointed by the Chairman of SIAC or HKIAC, as the case may
be.
(d) For the purpose of this Agreement a dispute shall be deemed to
arise when one party serves on the other party a notice in
writing (in this Clause, a ("NOTICE OF DISPUTE") stating the
nature of the dispute.
(e) The party serving any Notice of Dispute shall appoint one
arbitrator in such Notice of Dispute.
(f) The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time
as may be agreed between the parties or directed by the
Chairman of SIAC or HKIAC, as the case may be. In default of
such appointment by any party that arbitrator shall also be
appointed by the Chairman of SIAC or HKIAC, as the case may
be, within fourteen (14) days after such time period. The
third arbitrator shall be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within twenty-eight (28) days of
the receipt of such Notice of Dispute.
(g) The prevailing party in the Arbitration shall be awarded the
costs and expenses (including legal fees and expenses)
reasonably incurred in connection with any such arbitration.
7
70
AS WITNESS the hands of the parties hereto.
SIGNED BY LAW SHUN HANG )
& LAW SING HONG ) /s/ Law Shun Hang
for and on behalf of the ) /s/ Law Sing Hong
Company in the presence of: )
/s/ Xxxxxxxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
SIGNED BY )
LAW SING HONG ) /s/ Law Sing Hong
in the presence of: )
/s/ Xxxxxxxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
8
71
DATED THE 20th DAY OF December 1996
Between
FICO INVESTMENT HOLDING LIMITED
(as the Company)
and
LAW SHUN HANG
(as Employee)
----------------------------------------------------------------------------
EMPLOYMENT AGREEMENT
-----------------------------------------------------------------------------
72
THIS AGREEMENT is made on the 20th day of December 1996
BETWEEN:
(1) FICO INVESTMENT HOLDING LIMITED, a company incorporated in Hong Kong
and having its registered office at Xx 00, 00/X, Xxx X, Xxxx Xxx Xxx.
Building, 603 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
("COMPANY"); and
(2) LAW SHUN HANG of Xxxx X, 0/X, Xxxxx 0, Xxxxxxx House, 6 Tsing Xxxx
Xxxxxx, Xxxx Xxx, Xxx Xxxxxxxxxxx, Xxxx Xxxx ("EMPLOYEE").
NOW IT IS HEREBY AGREED as follows:
1. The Company shall employ the Employee and the Employee shall serve the
Company in a senior executive capacity and in such capacity, for the
period and upon and subject to the terms and conditions hereinafter
contained.
2. As a senior executive of the Company, the Employee shall devote
substantially his time and attention and whole skill to the affairs of
the Company and in the discharge of his duties hereunder:
(a) in undertaking such duties and exercising such powers in
relation to the Company and its business as the board of
directors of the Company ("BOARD") shall from time to time
assign to or vest in him;
(b) in the discharge of such duties and in the exercise of such
powers conform to observe and comply with all resolutions
regulations and directions from time to time made or given by
the Board; and
(c) undertake to do such other and additional work as may
reasonably be requested of him and to perform such services
for the Company's subsidiaries or holding company as the Board
may from time to time reasonably require without further
remuneration unless otherwise agreed.
3. The Employee shall not (without the previous written consent of the
Board) during the continuance of this Agreement (either directly or
indirectly) be engaged or interested in any capacity in any trade
business profession or occupation whatsoever other than the business of
the Company. In this Clause 3, the expression "OCCUPATION" shall
include any other private work which in the opinion of the Board may
hinder or otherwise interfere with the performance by the Employee of
his duties under this Agreement.
4. The Employee shall at all times keep the Board promptly and fully
informed of his conduct of the business or affairs of the Company and
its subsidiaries and associated companies (where relevant) and provide
such explanations as the Board may require.
5. The Employee shall not, except as required by law, or authorised or
required by his duties reveal to any person, firm or company any trade
secrets, secret or confidential operations processes or dealings or any
information concerning the organization, business, finances,
transactions or affairs of the Company or any of its subsidiaries,
associated companies or holding company which may come to his knowledge
during his employment hereunder and shall keep with complete secrecy
all confidential information entrusted to him and shall not use or
attempt to use such information in any manner which may injure or cause
loss either directly or indirectly to the Company or its business or
may be likely so to do at any time. This restriction shall continue to
apply and be binding on him after the termination of this Agreement
without limit in point of time but shall cease to apply to information
or knowledge which may come into the public domain.
73
6. (a) Any discovery or invention or secret process or improvement in
procedure made or discovered by the Employee while in the
service of the Company in connection with or in any way
affecting or relating to the business of the Company or of any
subsidiaries or capable of being used or adapted for use
therein or in connection therewith shall forthwith be
disclosed to the Company and shall belong to and be the
absolute property of the Company or such one of its subsidiary
companies as the Company may nominate for the purpose;
(b) The Employee if and whenever required so to do (whether during
or after the termination of his appointment) shall at the
expense of the Company or its nominee apply or join in
applying for letters patent or other protection in Hong Kong
or any other part of the world for any such discovery,
invention, process or improvements as aforesaid and execute
all instruments and do all things necessary for vesting the
said letters patent or other protection when obtained and all
rights and title to and interest in the same in the Company
(or its nominee) absolutely and as sole beneficial owner or in
such other person as the Company may require;
(c) The Employee hereby irrevocably appoints the Company to be his
attorney in his name and on his behalf to execute and do any
such instrument or thing and generally to use his name for the
purpose of giving to the Company (or its nominee) the full
benefit of the provisions of this clause and in favour of any
third party a certificate in writing signed by any director or
the secretary of the Company that any instrument or act falls
within the authority hereby conferred shall be conclusive
evidence that such is the case;
(d) The Employee shall take all reasonable precautions to
safe-guard his health and keep himself fit to perform his
duties under this Agreement and submit to such medical
examination and/or treatment as the Company's medical advisers
may from time to time consider necessary or advisable;
(e) The Employee shall not promote encourage or participate in any
public tumult or disorder nor do anything which might cause
public scandal or bring the Company or any of its subsidiaries
or associated companies or holding company into disrepute; and
(f) The Employee may not without the prior written consent of the
Board accept any gift and/or favour of whatever kind from any
customer, client or supplier of the Company or any prospective
customer, client or supplier of the Company.
7. This Agreement and all the provisions herein contained (either
expressly or by implication) shall come into force as from 1 January
1997 and shall continue for a term of 3 years, subject to earlier
termination as provided in Clause 11 hereof.
8. (a) Subject as hereinafter provided the Company shall pay to the
Employee during the continuance of his employment hereunder a
salary at the sum of US$85,000 per month which said salary is
inclusive of any sum receivable by the Employee as director's
fee, car allowance, housing allowance or other remuneration
from the Company (or such higher rate as may from time to time
be agreed between the parties or determined upon and notified
to the Employee by the Company). In the event of any increase
of salary being so agreed or notified such increase shall
thereafter have effect as if it were specifically provided for
as a term of this Agreement. The said salary (less any
deductions as shall be required by law to be made) shall be
payable in arrears on the last day of each month;
(b) In addition to his salary, the Employee shall participate in
the Company's profit sharing bonus scheme for key senior
officers authorised by the Board from time to time; and
2
74
(c) The Employee shall also participate in the employee stock
option scheme for all key employees of Flextronics
International Ltd.
9. The Company will reimburse the Employee for the following:
(a) all travelling and hotel expenses when the Employee is
required by the Company to travel to other countries in the
discharge of his duties; and
(b) all entertainment expenses incurred in the discharge of the
Employee's duties to the Company.
10. The Employee will be entitled to annual leave at the rate of fourteen
(14) working days per annum and such leave shall be taken only at a
time or times convenient to the Company.
11. Notwithstanding anything herein contained, this Agreement may be
determined:
(a) by either party hereto giving to the other not less than three
(3) calendar months' notice in writing; or
(b) by the Company summarily without notice or payment of
compensation whatsoever in any of the following events:
(i) if the Employee is guilty of dishonesty or grave
misconduct or commits any act or wilful neglect as in
the opinion of the Company is likely to bring the
Company or any of its subsidiaries or associated
companies or its holding company or any of its or
their officials or employees into disrepute whether
such dishonesty, misconduct, act or neglect is or is
not directly related to the affairs of the Company;
(ii) if the Employee becomes of unsound mind or becomes
permanently incapacitated by accident or ill-health
and is unable to perform his duties under this
Agreement;
(iii) if the Employee becomes bankrupt or makes any
arrangement or composition with his creditors;
(iv) if the Employee commits any material breach of any of
his duties or obligations under this Agreement;
(v) if the Employee is convicted of any criminal offence
other than an offence which in the reasonable opinion
of the Board does not affect his position as an
employee of the Company;
(vi) if the Employee is found to have made illegal
monetary profit or received any gratuities or other
rewards (whether in cash or kind) out of any of the
Company's affairs; or
(vii) if the Company is required or requested by any
authority (whether governmental or statutory) to
terminate the services of the Employee.
(c) Upon the termination of this Agreement for whatsoever reason
the Employee shall upon the request of the Company resign
without claim for compensation from office as a Employee of
the Company and from all offices held by him in subsidiary or
associated companies or the holding company of the Company and
in the event of his failure to do so the Company is hereby
irrevocably authorised to appoint such person in his name and
on his behalf to execute any documents and to do all things
requisite to give effect thereto.
3
75
12. The exercise by the Company of its rights of summary dismissal under
the preceding clause hereof shall not debar it from exercising such
other rights or remedies as may be available to it by law or otherwise
by reason of any of the matters aforesaid.
13. The Employee undertakes that any question or matter relating to the
following shall be determined by the Board and in so far as the Call
Option (as defined in the Call Option Agreement) has not been
exercised, such matters shall be determined pursuant to Clause 9 of the
Shareholders' Agreement:
(i) any investment by the Company of $10,000 or more;
(ii) appointment of (and any subsequent change in) the
auditors, secretary and principal bankers and any
subsequent change in the financial year end and the
registered office of the Company;
(iii) entry by the Company or its subsidiaries into any
transaction of a financial nature including the
incurring of any borrowing under any existing or
future banking and credit facilities and granting of
any guarantee, indemnity, performance bond, lien,
pledge, charge (including fixed and floating charge),
mortgage or other security and the incurring of any
other form of indebtedness in excess of US$50,000.00;
(iv) the incurring of any capital expenditure including
the making or disposal of any investment in excess of
(a) US$1,000,000 for the period commencing from 1
January 1997 and ending on 31 December 1997; (b)
US$1,500,000 for the period commencing from 1 January
1998 and ending on 31 December 1998 and (c)
US$1,875,000 for the period commencing from 1 January
1999 and ending on 31 December 1999;
(v) the payment of any remuneration or Director's fees;
(vi) loans to Directors or to any corporation in which any
Director or the Directors cumulatively has or have a
controlling interest within the meaning of Section
157H of the Companies Ordinance in the issued share
capital of that corporation;
(vii) a substantial change in the primary business of the
Company;
(viii) inter-company transactions with any company or
businesses in which the Company have a financial
interest;
(ix) the declaration, recommendation, making and payment
of any distribution (whether in cash or in kind);
(x) sale transfer or disposal of the whole or a
substantial part of the Company's undertaking, assets
or property or purchase, sale, transfer, disposal,
lease or licence of any real property or any interest
therein;
(xi) increase, reduction or other alteration to the
authorised or issued share capital;
(xii) commencement or carrying on of any type of business
not being ancillary or incidental to or extension of
the scope of operation or type of the Businesses;
(xiii) merger, consolidation or amalgamation with any
company, association, partnership or legal entity and
acquisition of any shares in any body corporate or
participation in any partnership or joint venture
arrangement;
(xiv) amendment to the Memorandum and Articles of
Association;
4
76
(xv) sale, transfer or disposal of any asset or investment
with a value in excess of US$10,000.00;
(xvi) approval of the audited balance sheet and profit and
loss account of the Company and any report or
statement accompanying such balance sheet and profit
and loss account;
(xvii) establishment of any special reserves, provisions or
retentions not in the ordinary course of business and
application or utilisation of the same;
(xviii) entry into any contract or arrangement with any
Director or the Company or any person connected with
such person;
(xix) redemption purchase or cancellation of any shares or
issue of further shares or other dilution of the
interest of the shareholders of the Company or
variation of any rights attaching to any shares of
the Company;
(xx) issue of partly-paid shares and making of any call
upon moneys unpaid in respect of any issued shares;
(xxi) subject to the provisions of this Agreement, the
winding-up or dissolution of the Company unless it
shall have become insolvent;
(xxii) any material change in the Company's accounting or
reporting practices;
(xxiii) lending of any moneys other than placing of deposits
with banks and financial institutions;
(xxiv) commencement or settlement of any litigation or
arbitration proceedings having a value or likely
value in excess of US$10,000.00;
(xxv) approval of the Company's annual operating budget and
strategic plans;
(xxvi) any change in the number of Directors of the Company;
(xxvii) save as is otherwise provided herein, any matter
involving the Company with any Director or with
another firm, company or corporation in which any
Director is interested as a proprietor, partner,
director or other officer or creditor of or a
shareholder in, except as a shareholder of a public
company or a public corporation whose shares are
listed on a stock exchange;
(xxviii) any public issue of Shares of the Company or any of
its subsidiaries with a view to obtaining the listing
of the Company or such subsidiary on any other stock
exchange;
(xxix) the authorised signatories of all and any banking or
credit facilities or accounts; and
(xxx) the appointment of any Managing Director, Executive
Director, General Manager, Financial Controller or
similar senior executive or officer of the Company.
14. The Employee hereby further covenants with and undertakes to the
Company that for a period of two (2) years from the date of the
termination of his employment with the Company, he shall not do any of
the following without first obtaining the written consent of the
Company:
5
77
(a) directly or indirectly carry on (whether alone or in
partnership or joint venture with anyone else) or otherwise be
concerned with or interested in (whether as trustee,
principal, agent, shareholder, unit holder or in any other
capacity) any business similar to or competitive with the
Business (as defined below) of the Company, its subsidiaries
or holding company for two (2) years after the date of
termination of this Agreement, in any country where the
Company, its subsidiaries or holding company currently carries
on the Business and/or sells its products, including, without
limitation, Europe, Hong Kong, Japan, Korea, Malaysia, Mexico,
the People's Republic of China, Singapore and the United
States of America;
(b) solicit or persuade any person or corporation which is a
customer or client of the Company, its subsidiaries or holding
company, or who is or was a customer or client of or in
respect of the Business, to cease doing business with the
Company, its subsidiaries or holding company or reduce the
amount of business which the customer or client would normally
do in respect of the Business for two (2) years after the date
of termination of this Agreement;
(c) accept from a customer or client referred to in Clause 14(b)
above any business of the kind ordinarily forming part of the
Business, of the Company, its subsidiaries or holding company
for two (2) years after the date of termination of this
Agreement;
(d) at any time use or disclose to any third party any trade
secrets, product information or confidential information of
the Business of the Company, its subsidiaries and holding
company which is not generally known or available in the
market place or which but for a breach of this Clause 14 would
not be generally known or available in the market place;
(e) at any time induce or attempt to induce any person who is at
the date of this Agreement or who later becomes an employee of
the Company, its subsidiaries or holding company in the
Business to terminate his or her employment with the Company,
its subsidiaries or holding company;
(f) for the purposes of this Clause 14, the expression "BUSINESS"
shall mean the sale and manufacture of plastic material
products and its by-products (including all associated
importation, exportation, marketing and related activities)
carried on by the Company, its subsidiaries, holding company
or related corporations, anywhere in the world;
(g) each and every obligation under this Clause 14 shall be
treated as a separate obligation and shall be severally
enforceable as such and in the event of any obligation or
obligations being or becoming unenforceable in whole or in
part such part or parts as are unenforceable shall be deleted
from this Clause 14 and any such deletion shall not affect the
enforceability of all such parts of this Clause 14 as remain
not so deleted; and
(h) while the restrictions contained in this Clause 14 are
considered by the parties to be reasonable in all the
circumstances it is recognised that restrictions of the nature
in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any of
such restrictions shall be adjudged to be void as going beyond
what is reasonable in all the circumstances for the protection
of the interests of the Company, its subsidiaries, holding
company and related corporations but would be valid if part of
the wording thereof were deleted or the periods thereof
reduced or the range of activities or area dealt with thereby
reduced in scope the said restriction shall apply with such
modifications as may be necessary to make it valid and
effective.
6
78
15. This Agreement is in substitution for all previous contracts of service
between the Company and the Employee which shall be deemed to have been
terminated by mutual consent as from the date on which this Agreement
commences.
16. In case any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law,
such invalidity, illegality or unenforceability shall not in any way
affect or impair any other provisions of this Agreement but this
Agreement shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein.
17. (a) This Agreement shall be governed by, and construed in
accordance with, the laws of Hong Kong.
(b) Any dispute or difference arising out of or in connection with
this Agreement, including any question regarding its
existence, validity or termination, shall be referred to and
finally resolved by arbitration in Hong Kong on or before 31
March 1997 and thereafter in Singapore. In respect of
arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the
SIAC Rules. The HKIAC Rules and the SIAC Rules are deemed to
be incorporated by reference into this Clause 17 save to the
extent that they are inconsistent with the express terms of
this Agreement.
(c) The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Company,
one of whom shall be appointed by the Employee, and the third
(who shall act as Chairman of the arbitral tribunal) to be
appointed by the Chairman of SIAC or HKIAC, as the case may
be.
(d) For the purpose of this Agreement a dispute shall be deemed to
arise when one party serves on the other party a notice in
writing (in this Clause, a "NOTICE OF DISPUTE") stating the
nature of the dispute.
(e) The party serving any Notice of Dispute shall appoint one
arbitrator in such Notice of Dispute.
(f) The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time
as may be agreed between the parties or directed by the
Chairman of SIAC or HKIAC, as the case may be. In default of
such appointment by any party that arbitrator shall also be
appointed by the Chairman of SIAC or HKIAC, as the case may
be, within fourteen (14) days after such time period. The
third arbitrator shall be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within twenty-eight (28) days of
the receipt of such Notice of Dispute.
(g) The prevailing party in the Arbitration shall be awarded the
costs and expenses (including legal fees and expenses)
reasonably incurred in connection with any such arbitration.
7
79
AS WITNESS the hands of the parties hereto.
SIGNED BY Law Sing ) /s/ LAW SING HONG
------------------
Hong & Law Shun Hang ) /s/ LAW SHUN HANG
------------------
for and on behalf of the )
Company in the presence of: )
/s/ XXXXXXXXX X. XXXXXX
-------------------------
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
SIGNED BY )
LAW SHUN HANG ) /s/ LAW SHUN HANG
------------------
in the presence of: )
/s/ XXXXXXXXX X. XXXXXX
-----------------------
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
80
DATED THE 20TH DAY OF December 1996
Between
FICO INVESTMENT HOLDING LIMITED
(as the Company)
and
LAW KIN PING
(as Employee)
EMPLOYMENT AGREEMENT
81
THIS AGREEMENT is made on the 20th day of December 1996 BETWEEN:
(1) FICO INVESTMENT HOLDING LIMITED, a company incorporated in Hong Kong
and having its registered office at Xx 00, 00/X, Xxx X, Xxxx Xxx Xxx.
Building, 603 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
("COMPANY"); and
(2) LAW KIN PING of Xxxx X, 00/X, Xxxxx 2, Faraday House, 6 Tsing Xxxx
Xxxxxx, Xxxx Xxx, Xxx Xxxxxxxxxxx, Xxxx Xxxx ("EMPLOYEE").
NOW IT IS HEREBY AGREED as follows:
1. The Company shall employ the Employee and the Employee shall serve the
Company in a senior executive capacity and in such capacity, for the
period and upon and subject to the terms and conditions hereinafter
contained.
2. As a senior executive of the Company, the Employee shall devote
substantially her time and attention and whole skill to the affairs of
the Company and in the discharge of her duties hereunder:
(a) in undertaking such duties and exercising such powers in
relation to the Company and its business as the board of
directors of the Company ("BOARD") shall from time to time
assign to or vest in her;
(b) in the discharge of such duties and in the exercise of such
powers conform to observe and comply with all resolutions
regulations and directions from time to time made or given by
the Board; and
(c) undertake to do such other and additional work as may
reasonably be requested of her and to perform such services
for the Company's subsidiaries or holding company as the Board
may from time to time reasonably require without further
remuneration unless otherwise agreed.
3. The Employee shall not (without the previous written consent of the
Board) during the continuance of this Agreement (either directly or
indirectly) be engaged or interested in any capacity in any trade
business profession or occupation whatsoever other than the business of
the Company. In this Clause 3, the expression "OCCUPATION" shall
include any other private work which in the opinion of the Board may
hinder or otherwise interfere with the performance by the Employee of
her duties under this Agreement.
4. The Employee shall at all times keep the Board promptly and fully
informed of her conduct of the business or affairs of the Company and
its subsidiaries and associated companies (where relevant) and provide
such explanations as the Board may require.
5. The Employee shall not, except as required by law, or authorised or
required by her duties reveal to any person, firm or company any trade
secrets, secret or confidential operations processes or dealings or any
information concerning the organization, business, finances,
transactions or affairs of the Company or any of its subsidiaries,
associated companies or holding company which may come to her knowledge
during her employment hereunder and shall keep with complete secrecy
all confidential information entrusted to her and shall not use or
attempt to use such information in any manner which may injure or cause
loss either directly or indirectly to the Company or its business or
may be likely so to do at any time. This restriction shall continue to
apply and be binding on her after the termination of this Agreement
without limit in point of time but shall cease to apply to information
or knowledge which may come into the public domain.
82
6. (a) Any discovery or invention or secret process or improvement in
procedure made or discovered by the Employee while in the
service of the Company in connection with or in any way
affecting or relating to the business of the Company or of any
subsidiaries or capable of being used or adapted for use
therein or in connection therewith shall forthwith be
disclosed to the Company and shall belong to and be the
absolute property of the Company or such one of its subsidiary
companies as the Company may nominate for the purpose;
(b) The Employee if and whenever required so to do (whether during
or after the termination of her appointment) shall at the
expense of the Company or its nominee apply or join in
applying for letters patent or other protection in Hong Kong
or any other part of the world for any such discovery,
invention, process or improvements as aforesaid and execute
all instruments and do all things necessary for vesting the
said letters patent or other protection when obtained and all
rights and title to and interest in the same in the Company
(or its nominee) absolutely and as sole beneficial owner or in
such other person as the Company may require;
(c) The Employee hereby irrevocably appoints the Company to be her
attorney in her name and on her behalf to execute and do any
such instrument or thing and generally to use her name for the
purpose of giving to the Company (or its nominee) the full
benefit of the provisions of this clause and in favour of any
third party a certificate in writing signed by any director or
the secretary of the Company that any instrument or act falls
within the authority hereby conferred shall be conclusive
evidence that such is the case;
(d) The Employee shall take all reasonable precautions to
safe-guard her health and keep herself fit to perform her
duties under this Agreement and submit to such medical
examination and/or treatment as the Company's medical advisers
may from time to time consider necessary or advisable;
(e) The Employee shall not promote encourage or participate in any
public tumult or disorder nor do anything which might cause
public scandal or bring the Company or any of its subsidiaries
or associated companies or holding company into disrepute; and
(f) The Employee may not without the prior written consent of the
Board accept any gift and/or favour of whatever kind from any
customer, client or supplier of the Company or any prospective
customer, client or supplier of the Company.
7. This Agreement and all the provisions herein contained (either
expressly or by implication) shall come into force as from 1 January
1997 and shall continue for a term of 3 years, subject to earlier
termination as provided in Clause 11 hereof.
8. (a) Subject as hereinafter provided the Company shall pay to the
Employee during the continuance of her employment hereunder a
salary at the sum of US$55,000 per month which said salary is
inclusive of any sum receivable by the Employee as director's
fee, car allowance, housing allowance or other remuneration
from the Company (or such higher rate as may from time to time
be agreed between the parties or determined upon and notified
to the Employee by the Company). In the event of any increase
of salary being so agreed or notified such increase shall
thereafter have effect as if it were specifically provided for
as a term of this Agreement. The said salary (less any
deductions as shall be required by law to be made) shall be
payable in arrears on the last day of each month;
(b) In addition to her salary, the Employee shall participate in
the Company's profit sharing bonus scheme for key senior
officers authorised by the Board from time to time; and
2
83
(c) The Employee shall also participate in the employee stock
option scheme for all key employees of Flextronics
International Ltd.
9. The Company will reimburse the Employee for the following:
(a) all travelling and hotel expenses when the Employee is
required by the Company to travel to other countries in the
discharge of her duties; and
(b) all entertainment expenses incurred in the discharge of the
Employee's duties to the Company.
10. The Employee will be entitled to annual leave at the rate of fourteen
(14) working days per annum and such leave shall be taken only at a
time or times convenient to the Company.
11. Notwithstanding anything herein contained, this Agreement may be
determined:
(a) by either party hereto giving to the other not less than three
(3) calendar months' notice in writing; or
(b) by the Company summarily without notice or payment of
compensation whatsoever in any of the following events:
(i) if the Employee is guilty of dishonesty or grave
misconduct or commits any act or wilful neglect as in
the opinion of the Company is likely to bring the
Company or any of its subsidiaries or associated
companies or its holding company or any of its or
their officials or employees into disrepute whether
such dishonesty, misconduct, act or neglect is or is
not directly related to the affairs of the Company;
(ii) if the Employee becomes of unsound mind or becomes
permanently incapacitated by accident or ill-health
and is unable to perform her duties under this
Agreement;
(iii) if the Employee becomes bankrupt or makes any
arrangement or composition with her creditors;
(iv) if the Employee commits any material breach of any of
her duties or obligations under this Agreement;
(v) if the Employee is convicted of any criminal offence
other than an offence which in the reasonable opinion
of the Board does not affect her position as an
employee of the Company;
(vi) if the Employee is found to have made illegal
monetary profit or received any gratuities or other
rewards (whether in cash or kind) out of any of the
Company's affairs; or
(vii) if the Company is required or requested by any
authority (whether governmental or statutory) to
terminate the services of the Employee.
(c) Upon the termination of this Agreement for whatsoever reason
the Employee shall upon the request of the Company resign
without claim for compensation from office as a Employee of
the Company and from all offices held by her in subsidiary or
associated companies or the holding company of the Company and
in the event of her failure to do so the Company is hereby
irrevocably authorised to appoint such person in her name and
on her behalf to execute any documents and to do all things
requisite to give effect thereto.
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84
12. The exercise by the Company of its rights of summary dismissal under
the preceding clause hereof shall not debar it from exercising such
other rights or remedies as may be available to it by law or otherwise
by reason of any of the matters aforesaid.
13. The Employee undertakes that any question or matter relating to the
following shall be determined by the Board and in so far as the Call
Option (as defined in the Call Option Agreement) has not been exercised,
such matters shall be determined pursuant to Clause 9 of the
Shareholders' Agreement:
(i) any investment by the Company of $10,000 or more;
(ii) appointment of (and any subsequent change in) the auditors,
secretary and principal bankers and any subsequent change in the
financial year end and the registered office of the Company;
(iii) entry by the Company or its subsidiaries into any transaction
of a financial nature including the incurring of any borrowing
under any existing or future banking and credit facilities and
granting of any guarantee, indemnity, performance bond, lien,
pledge, charge (including fixed and floating charge), mortgage
or other security and the incurring of any other form of
indebtedness in excess of US$50,000.00;
(iv) the incurring of any capital expenditure including the making
or disposal of any investment in excess of (a) US$1,000,000 for
the period commencing from 1 January 1997 and ending on 31
December 1997; (b) US$1,500,000 for the period commencing from 1
January 1998 and ending on 31 December 1998 and (c) US$1,875,000
for the period commencing from 1 January 1999 and ending on 31
December 1999;
(v) the payment of any remuneration or Director's fees;
(vi) loans to Directors or to any corporation in which any Director
or the Directors cumulatively has or have a controlling interest
within the meaning of Section 157H of the Companies Ordinance in
the Issued share capital of that corporation;
(vii) a substantial change in the primary business of the Company;
(viii) inter-company transactions with any company or businesses in
which the Company have a financial interest;
(ix) the declaration, recommendation, making and payment of any
distribution (whether in cash or in kind);
(x) sale transfer or disposal of the whole or a substantial part of
the Company's undertaking, assets or property or purchase, sale,
transfer, disposal, lease or license of any real property or any
interest therein;
(xi) increase, reduction or other alteration to the authorised or
issued share capital;
(xii) commencement or carrying on of any type of business not being
ancillary or incidental to or extension of the scope of
operation or type of the Businesses;
(xiii) merger, consolidation or amalgamation with any company,
association, partnership or legal entity and acquisition of any
shares in any body corporate or participation in any partnership
or joint venture arrangement;
(xiv) amendment to the Memorandum and Articles of Association;
4
85
(xv) sale, transfer or disposal of any asset or investment with a
value in excess of US$10,000.00;
(xvi) approval of the audited balance sheet and profit and loss
account of the Company and any report or statement accompanying
such balance sheet and profit and loss account;
(xvii) establishment of any special reserves, provisions or retentions
not in the ordinary course of business and application or
utilisation of the same;
(xviii) entry into any contract or arrangement with any Director of the
Company or any person connected with such person;
(xix) redemption purchase or cancellation of any shares or issue of
further shares or other dilution of the interest of the
shareholders of the Company or variation of any rights
attaching to any shares of the Company;
(xx) issue of partly-paid shares and making of any call upon moneys
unpaid in respect of any issued shares;
(xxi) subject to the provisions of this Agreement, the winding-up or
dissolution of the Company unless it shall have become
insolvent;
(xxii) any material change in the Company's accounting or reporting
practices;
(xxiii) lending of any moneys other than placing of deposits with
banks and financial institutions;
(xxiv) commencement or settlement of any litigation or arbitration
proceedings having a value or likely value in excess of
US$10,000.00;
(xxv) approval of the Company's annual operating budget and strategic
plans;
(xxvi) any change in the number of Directors of the Company;
(xxvii) save as is otherwise provided herein, any matter involving
the Company with any Director or with another firm, company or
corporation in which any Director is interested as a
proprietor, partner, director or other officer or creditor of
or a shareholder in, except as a shareholder of a public
company or a public corporation whose shares are listed on
a stock exchange;
(xxviii) any public issue of Shares of the Company or any of its
subsidiaries with a view to obtaining the listing of the
Company or such subsidiary on any other stock exchange;
(xxix) the authorised signatories of all and any banking or credit
facilities or accounts; and
(xxx) the appointment of any Managing Director, Executive Director,
General Manager, Financial Controller or similar senior
executive or officer of the Company.
14. The Employee hereby further covenants with and undertakes to the Company
that for a period of two (2) years from the date of the termination of
her employment with the Company, she shall not do any of the following
without first obtaining the written consent of the Company;
5
86
(a) directly or indirectly carry on (whether alone or in
partnership or joint venture with anyone else) or otherwise be
concerned with or interested in (whether as trustee, principal,
agent, shareholder, unit holder or in any other capacity) any
business similar to or competitive with the Business (as defined
below) of the Company, its subsidiaries or holding company for
two (2) years after the date of termination of this Agreement,
in any country where the Company, its subsidiaries or holding
company currently carries on the Business and/or sells its
products, including, without limitation, Europe, Hong Kong,
Japan, Korea, Malaysia, Mexico, the People's Republic of China,
Singapore and the United States of America;
(b) solicit or persuade any person or corporation which is a
customer or client of the Company, its subsidiaries or holding
company, or who is or was a customer or client of or in respect
of the Business, to cease doing business with the Company, its
subsidiaries or holding company or reduce the amount of business
which the customer or client would normally do in respect of the
Business for two (2) years after the date of termination of this
Agreement;
(c) accept from a customer or client referred to in Class 14(b)
above any business of the kind ordinarily forming part of the
Business, of the Company, its subsidiaries or holding company
for two (2) years after the date of termination of this
Agreement;
(d) at any time use or disclose to any third party any trade
secrets, product information or confidential information of
the Business of the Company, its subsidiaries and holding
company which is not generally known or available in the market
place or which but for a breach of this Clause 14 would not be
generally known or available in the market place;
(e) at any time induce or attempt to induce any person who is at
the date of this Agreement or who later becomes an employee of
the Company, its subsidiaries or holding company in the Business
to terminate his or her employment with the Company, its
subsidiaries or holding company;
(f) for the purposes of this Clause 14, the expression "Business"
shall mean the sale and manufacture of plastic material products
and its by-products (including all associated importation,
exportation, marketing and related activities) carried on by the
Company, its subsidiaries, holding company or related
corporations, anywhere in the world;
(g) each and every obligation under this Clause 14 shall be treated
as a separate obligation and shall be severally enforceable as
such and in the event of any obligation or obligations being or
becoming unenforceable in whole or in part such part or parts as
are unenforceable shall be deleted from this Clause 14 and any
such deletion shall not affect the enforceability of all such
parts of this Clause 14 as remain not as deleted; and
(h) while the restrictions contained in this Clause 14 are
considered by the parties to be reasonable in all the
circumstances it is recognised that restrictions of the nature
in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any of such
restrictions shall be adjudged to be void as going beyond what
is reasonable in all the circumstances for the protection of the
interests of the Company, its subsidiaries, holding company and
related corporations but would be valid if part of the wording
thereof were deleted or the periods thereof reduced or the range
of activities or area dealt with thereby reduced in scope the
said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
6
87
15. This Agreement is in substitution for all previous contracts of service
between the Company and the Employee which shall be deemed to have been
terminated by mutual consent as from the date on which this Agreement
commences.
16. In case any provision in this Agreement shall be, or at any time shall
become invalid, illegal or unenforceable in any respect under any law,
such invalidity, illegality or unenforceability shall not in any way
affect or impair any other provisions of this Agreement but this
Agreement shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein.
17. (a) This Agreement shall be governed by, and construed in
accordance with, the laws of Hong Kong.
(b) Any dispute or difference arising out of or in connection with
this Agreement, including any question regarding its existence,
validity or termination, shall be referred to and finally
resolved by arbitration in Hong Kong on or before 31 March
1997 and thereafter in Singapore. In respect of arbitration in
Hong Kong, the arbitration shall be in accordance with HKIAC
Rules. In respect of arbitration in Singapore, the arbitration
shall be in accordance with the SIAC Rules. The HKIAC Rules and
the SIAC Rules are deemed to be incorporated by reference into
this Clause 17 save to the extent that they are inconsistent
with the express terms of this Agreement.
(c) The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Company,
one of whom shall be appointed by the Employee, and the third
(who shall act as Chairman of the arbitral tribunal) to be
appointed by the Chairman of SIAC or HKIAC, as the case may be.
(d) For the purpose of this Agreement a dispute shall be deemed to
arise when one party serves on the other party a notice in
writing (in this Clause, a "NOTICE OF DISPUTE") stating the
nature of the dispute.
(e) The party serving any Notice of Dispute shall appoint one
arbitrator in such Notice of Dispute.
(f) The party in receipt of any Notice of Dispute shall appoint
an arbitrator within twenty-eight (28) days or such longer
time as xxx be agreed between the parties or directed by the
Chairman of SIAC or HKIAC, as the case may be. In default of
such appointment by any party that arbitrator shall also be
appointed by the Chairman of SIAC or HKIAC, as the case may be,
within fourteen (14) days after such time period. The third
arbitrator shall be appointed by the Chairman of SIAC or HKIAC,
as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
(g) The prevailing party in the Arbitration shall be awarded the
costs and expenses (including legal fees and expenses)
reasonably incurred in connection with any such arbitration.
7
88
AS WITNESS the hands of the parties hereto.
SIGNED BY LAW SHUN HANG )
& LAW SING HONG ) /s/ Law Shun Hang /s/ Law Sing Hong
for and on behalf of the ) ----------------- -----------------
Company in the presence of: )
/s/ Xxxxxxxxx X. Xxxxxx
--------------------------
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
SIGNED BY )
LAW KIN PING ) /s/ Law Kin Ping
in the presence of: ) -----------------
/s/ Xxxxxxxxx X. Xxxxxx
--------------------------
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
8
89
SCHEDULE 5
ESCROW AGREEMENT
DATED THE 20th DAY OF DECEMBER, 1996
Between
FLEXTRONICS INTERNATIONAL LTD
FICO FOREST INDUSTRIAL CO. LIMITED
And
ERNST & YOUNG
as Escrow Agent
ESCROW AGREEMENT
90
TABLE OF CONTENTS
Clause Heading Paqe
------ ------- ----
1. DEFINITIONS AND INTERPRETATION ..................................... 1
2. ESCROW ............................................................. 1
3. APPOINTMENT OF ESCROW AGENT ........................................ 1
4. THE DOCUMENTS ...................................................... 2
5. POWER OF ATTORNEY .................................................. 2
6. FEES ............................................................... 2
7. THE ESCROW AGENT ................................................... 3
8. COMMUNICATIONS ..................................................... 3
9. FORCE MAJEURE ...................................................... 3
10. GOVERNING LAW AND DISPUTE RESOLUTION ............................... 3
11. COUNTERPARTS ....................................................... 4
APPENDIX NOTICE FROM FIL ............................................. 6
91
THIS ESCROW AGREEMENT is made on the 20TH day of December, 1996 BETWEEN:
(1) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in the Republic
of Singapore and having its registered office at 00 Xxxxxxxx Xxxx,
#00-00 Xxxx Xxxxx, Xxxxxxxxx 000000 ("FIL")
(2) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
and having its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx
Xxx Ind. Building, 603 Castle Peak Road, Tsuen Wan, New Territories,
Hong Kong ("FICO(HK)"); and
(3) ERNST & YOUNG, an international accounting firm in Hong Kong having its
place of business at 00/X Xxxxx 0, Xxx Xxxxxxx 00-00, Xxxxxx Xxxx,
Xxxxxxx, Xxxx Xxxx ("ESCROW Agent").
WHEREAS:
(A) FICO(HK) is the legal and beneficial owner of 6,000 ordinary shares of
HK$1.00 each ("SHARES") comprising sixty per cent. (60%) of all the
issued and paid-up share capital of Fico Investment Holding Limited.
("COMPANY")
(B) Pursuant to a Charge of even date entered into between FIL and
FICO(HK), FICO(HK) had agreed to deposit all the Documents (as defined
below) with the Escrow Agent pursuant to the terms of this Escrow
Agreement, and the Escrow Agent has consented to act as the escrow
agent upon the terms and conditions herein contained.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 Terms defined in the Charge shall, unless otherwise defined herein,
bear the same meaning when used in this Escrow Agreement.
1.2 References to Recitals, Clauses, Schedules and Appendices are to
recitals, clauses of and schedules and appendices to this Agreement.
2. ESCROW
The parties hereto have agreed that all the share certificate(s) in
respect of the Shares (including all right, title and interest in and
to the Shares and all rights, monies and property whatsoever which may
at any time be derived from, accrue on or be offered in respect of the
Shares whether by way of redemption, exchange, conversion, rights,
bonus, capital reorganisation or otherwise) together with registrable
instruments of transfer and sold notes in respect thereof duly executed
by FICO(HK) in blank ("DOCUMENTS") shall be delivered by FICO(HK) to
the Escrow Agent on the date of this Agreement and shall be held by the
Escrow Agent in accordance with the provisions of this Escrow
Agreement.
3. APPOINTMENT OF ESCROW AGENT
3.1 The Escrow Agent is hereby appointed as escrow agent upon the terms and
conditions of this Escrow Agreement.
92
3.2 The sole duties of the Escrow Agent shall be to act in accordance with
the provisions of this Escrow Agreement, which the Escrow Agent is
hereby unconditionally and irrevocably authorised and instructed to do
by each of the parties hereto.
4. THE DOCUMENTS
4.1 The Escrow Agent will receive and hold the Documents until it receives
notice (upon which the Escrow Agent shall be entitled to rely without
further inquiry and notwithstanding any matter or thing of which the
Escrow Agent may otherwise be aware) from time to time from FIL to
release the Documents to such persons designated by FIL and the Escrow
Agent shall release the Documents in accordance with such instructions
set out in the notice which shall be in the form set out in the
Appendix hereto or such other form as may be determined by FIL in its
discretion and such notice shall be signed by any director of FIL for
and on behalf of FIL.
4.2 The Escrow Agent shall not release any of the Documents except in
accordance with the instructions or notifications referred to in Clause
4.1.
5. POWER OF ATTORNEY
5.1 FICO(HK) hereby irrevocably appoints the Escrow Agent and FIL jointly
and severally to be its attorneys with full power of substitution and
in its name and on its behalf and as its act and deed to execute, seal
and deliver and otherwise perfect any deed, assurance, agreement,
instrument or act the Escrow Agent or FIL may deem necessary and in
particular, but without limitation to do all or any of the following:
(a) to effect any transfer of the Shares or any of them and to
register and/or procure the registration of the same whether
in the name of FIL or otherwise; and
(b) to call or to procure the calling of and to attend any
shareholders meeting of the Company and to vote or to instruct
any proxy to vote at such meeting in such manner as it may
think fit,
Provided Always that the Escrow Agent is hereby authorised and shall
act in accordance with the wishes and directions of FIL.
5.2 FICO(HK) hereby ratifies and confirms and agrees to ratify and confirm
anything the Escrow Agent and/or FIL shall lawfully and properly do or
purport to do by virtue of Clause 5.1 and all money expended by either
of the Escrow Agent or FIL shall be payable by FICO(HK) upon demand.
6. FEES
6.1 For its services as Escrow Agent hereunder, the Escrow Agent shall be
paid, within seven (7) Business Days of the signing hereof, a fee to be
agreed to be borne as to fifty per cent. (50%) of such fee by FIL and
as to the remaining fifty per cent. (50%) by FICO(HK).
6.2 The parties hereto (other than the Escrow Agent) hereby agree to
indemnify, in equal proportions between FIL on the one hand and
FICO(HK) on the other hand, the Escrow Agent and keep the Escrow Agent
fully indemnified on demand in respect of the Escrow Agent's legal
costs and other expenses which have been or may be incurred by the
Escrow Agent in the performance of its duties hereunder.
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93
7. THE ESCROW AGENT
7.1 Neither the Escrow Agent nor any of the officers, employees, partners,
servants or agents thereof shall, by reason of any matter or thing
contained in this Escrow Agreement, be deemed to be a trustee for or
have any fiduciary relationship with any of the parties hereto or any
other person.
7.2 The Escrow Agent will be entitled to rely, for the purposes of
discharging its duties hereunder, on any original notice, letter or
other document received by it pursuant to the terms of this Escrow
Agreement without any obligation on its part to investigate whether any
statement contained in the original notice, letter or other document is
correct, whether the same has been validly authorised and issued,
whether the same has been properly dated, whether any notice, letter or
other document conforms with the original, or otherwise howsoever, and
the Escrow Agent shall not be under any liability in relying and acting
on any such original notice, letter or other document.
8. COMMUNICATIONS
All notices and other communications to the Escrow Agent hereunder
shall be given in writing delivered personally or sent by first class
post (airmail if overseas) or by facsimile transmission delivered or
addressed to the Escrow Agent at the address above written or such
other address as the Escrow Agent may notify to the other parties
hereto in writing from time to time, and addressed to such person as
the Escrow Agent may notify to the other parties from time to time. Any
such communication sent by post or facsimile transmission shall be
treated as being duly delivered on its actual receipt by the Escrow
Agent (in the case of a facsimile with all pages complete) and the
Escrow Agent's certificate as to the time of actual receipt shall, in
the absence of manifest error, be conclusive.
9. FORCE MAJEURE
No party shall be held responsible for any loss, damage or delay
suffered by the other parties owing to any Act of God which shall mean
earthquakes and other such natural calamities. Any party wishing to
rely on the provisions of this Clause 9 shall give notice to the other
parties stating the relevant cause ("FORCE MAJEURE NOTICE"). The party
serving such Force Majeure Notice shall promptly resume performance of
its obligations the moment such cause or causes cease to operate.
10. GOVERNING LAW AND DISPUTE RESOLUTION
10.1 This Agreement shall be governed by, and construed in accordance with,
the laws of Hong Kong.
10.2 Any dispute or difference arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration
in Hong Kong on or before 31 March 1997 and thereafter in Singapore. In
respect of arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the SIAC Rules.
The HKIAC Rules and the SIAC Rules are deemed to be incorporated by
reference into this Clause 10.2 save to the extent that they are
inconsistent with the express terms of this Agreement.
3
94
10.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by FIL, one of whom shall
be appointed by FICO(HK), and the third (who shall act as Chairman of
the arbitral tribunal) to be appointed by the Chairman of SIAC or
HKIAC, as the case may be.
10.4 For the purpose of this Agreement a dispute shall be deemed to arise
when one party serves on the other party a notice in writing (in this
Clause, a "NOTICE OF DISPUTE") stating the nature of the dispute.
10.5 The party serving any Notice of Dispute shall appoint one arbitrator in
such Notice of Dispute.
10.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time as may be
agreed between the parties or directed by the Chairman of SIAC or
HKIAC, as the case may be. In default of such appointment by any party
that arbitrator shall also be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within fourteen (14) days after such time
period. The third arbitrator shall be appointed by the Chairman of SIAC
or HKIAC, as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
10.7 The prevailing party in the Arbitration shall be awarded the costs and
expenses (including legal fees and expenses) reasonably incurred in
connection with any such arbitration.
11. COUNTERPARTS
This Agreement may be signed in any number of counterparts, all of
which when taken together shall constitute one and the same instrument.
4
95
IN WITNESS WHEREOF this Agreement has been entered into on the date appearing at
the head hereof.
FIL
SIGNED by )
X.X. Xxxx )
for and on behalf of ) /s/ X.X. Xxxx
FLEXTRONICS INTERNATIONAL LTD )
in the presence of)
/s/ Xxxxxx Xxxx Cin Tzieh
XXXXXX XXXX CIN TZIEH
Advocate & Solicitor
Singapore
FICO(HK)
SIGNED by )
for and on behalf of )
FICO FOREST INDUSTRIAL )
CO. LIMITED )
in the presence of) )
The Escrow Agent
SIGNED by )
for and on behalf of )
ERNST & YOUNG )
in the presence of) )
5
96
IN WITNESS WHEREOF this Agreement has been entered into on the date appearing at
the head hereof.
FIL
SIGNED by )
)
for and on behalf of )
FLEXTRONICS INTERNATIONAL LTD )
in the presence of:
FICO(HK)
SIGNED by LAW SING HONG & ) /s/ Law Sing Hong
LAW SHUN HANG ) /s/ Law Shun Hang
for and on behalf of )
FICO FOREST INDUSTRIAL )
CO. LIMITED )
in the presence of: )
/s/ Xxxxxxxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
The Escrow Agent
SIGNED by Xxxxx Xx, )
Director )
for and on behalf of ) /s/ Xxxxx Xx
XXXXX & XXXXX )
in the presence of: )
/s/ Xxxxxxxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
5
97
APPENDIX
NOTICE FROM FIL
To : ERNST & YOUNG
00/X Xxxxx 0
Xxx Xxxxxxx 00-00
Xxxxxx Xxxx, Xxxxxxx
Xxxx Xxxx
Attn : [ ]
Dear Sirs
ESCROW AGREEMENT DATED 1996 ("ESCROW AGREEMENT")
We refer to the Escrow Agreement entered into among (1) Flextronics
International Ltd; (2) Fico Forest Industrial Co. Limited; and (3) Ernst & Young
("ESCROW AGENT"). Save as otherwise stated herein, terms defined in the Escrow
Agreement bear the same meanings when used herein.
Pursuant to the Escrow Agreement, we, FIL, hereby instruct you to release the
following Documents referred to below to the following person(s)/party(s):
[ ]
Yours faithfully,
for and on behalf of
FLEXTRONICS INTERNATIONAL LTD
[Name]
[Designation]
6
98
SCHEDULE 6
FICO CALL OPTION AGREEMENT
DATED THE 20TH DAY OF DECEMBER 1996
Between
FLEXTRONICS INTERNATIONAL LTD
And
FICO FOREST INDUSTRIAL CO. LIMITED
--------------------------------------------------------------------
FICO CALL OPTION AGREEMENT
relating to all the ordinary shares
in the share capital of
FICO INVESTMENT HOLDING LIMITED
held by
FLEXTRONICS INTERNATIONAL LTD
--------------------------------------------------------------------
99
TABLE OF CONTENTS
CLAUSE HEADING PAGE
------ ------- ----
1. INTERPRETATION ...................................................... 1
2. FICO CALL OPTION .................................................... 2
3. FICO CALL OPTION COMPLETION ......................................... 3
4. DURATION OF OBLIGATIONS ............................................. 4
5. FIL'S WARRANTIES .................................................... 4
6. COMMUNICATIONS ...................................................... 4
7. GENERAL ............................................................. 5
8. GOVERNING LAW AND DISPUTE RESOLUTION ................................ 5
100
THIS AGREEMENT is made on the 20th day of December 1996 BETWEEN:
(1) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in Singapore and
having its registered office at 00 Xxxxxxxx Xxxx, Xxxx Xxxxx, #00-00,
Xxxxxxxxx 000000 ("FIL");
(2) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
and having its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx
Xxx Ind. Building, 603 Castle Peak Road, Tsuen Wan, New Territories,
Hong Kong ("FICO(HK)")
WHEREAS:
(A) Fico Investment Holdings Limited ("COMPANY") is a company limited by
shares incorporated in Hong Kong and has at the date hereof an
authorised share capital of 10,000 ordinary shares of HK$1.00 each, of
which 10,000 of the said ordinary shares have been issued and are fully
paid-up.
(B) FICO(HK) is the legal and beneficial owner of 6,000 ordinary shares of
HK$1.00 each in the Company consisting sixty per cent. (60%) of the
issued and paid-up capital of the Company.
(C) By a Call Option Agreement of even date, FICO(HK) had granted to FIL a
Call Option to purchase the remaining 6,000 ordinary shares of HK$1.00
each in the Company consisting sixty per cent. (60%) of the issued and
paid-up capital of the Company to be exercised by FIL in the event that
certain conditions are met.
(D) This Agreement is entered into pursuant to the Sale and Purchase
Agreement ("SALE AND PURCHASE AGREEMENT") dated 29 November 1996, and
made between (1) FICO(HK), as purchaser (2) FIL, as Vendor and (3) the
Company and the Call Option Agreement of even date, and made between
FIL and FICO(HK). FIL wishes to grant to FICO(HK) a call option in
respect of the Fico Call Option Shares (as defined below) for the
consideration and on the terms and conditions set out in this
Agreement.
NOW IT IS HEREBY AGREED as follows:
1 . INTERPRETATION
1.1 In this Agreement except to the extent that the context
otherwise requires:
"BANKER'S DRAFT" means a banker's draft drawn on a bank in
Hong Kong;
"EXERCISE DATE" means the date of service of a Fico Call
Option Notice under Clause 2.3;
"FICO CALL OPTION COMPLETION" means the performance by
FICO(HK) and FIL of the obligations assumed by them
respectively under Clause 3.2;
"FICO CALL OPTION COMPLETION DATE" means 1 1.00 a.m. on the
date falling fourteen (14) days from the Exercise Date;
"FICO CALL OPTION PERIOD" means the period commencing on the
date of this Agreement and expiring on the date falling on the
first anniversary of the end of the Second Financial Period
(as defined in the Call Option Agreement) (both dates
inclusive);
101
"FICO CALL OPTION PRICE" means the aggregate of the Investment and
interest at the rate of FIL's cost of funds plus two per cent. (2%) per
annum (as may be certified any officer of FIL, such certification to be
final and conclusive in the absence of manifest error) from the date of
payment of the Investment (or parts thereof) under the Sale and
Purchase Agreement or the Call Option Agreement, as the case may be (or
such deferred date pursuant to Clause 3.3), such interest to be
calculated on the basis of a 360-day year and the actual number of days
elapsed;
"FICO CALL OPTION" shall have the meaning ascribed to it in Clause 2.1;
"FICO CALL OPTION NOTICE" means a notice exercising the Fico Call
Option given pursuant to Clause 2.3;
"FICO CALL OPTION SHARES" means all the Shares held by FIL in the
capital of the Company at the time the Fico Call Option is exercised;
"INVESTMENT" means the total equity investment made by FIL in the
Company and all monies paid to FICO (HK) pursuant to the Sale and
Purchase Agreement, including, without limitation, (i) the
Consideration (as defined in the Sale and Purchase Agreement) and (ii)
the Purchase Price (as defined in the Call Option Agreement);
"SHAREHOLDERS' AGREEMENT" means the shareholders' agreement of even
date and entered into between (1) FICO(HK), (2) FIL and (3) the
Company;
"SHARES" means ordinary shares of HK$1.00 each in the capital of the
Company;
"TRANSFER TERMS" means the entire legal and beneficial interest in all
the Fico Call Option Shares shall be sold and purchased free from any
Encumbrance and together with all rights attaching thereto as at the
Exercise Date or at any time thereafter and that the consideration for
the Fico Call Option Shares shall be the Fico Call Option Price; and
"US$" means the lawful currency of the United States of America.
1.2 All terms and references used in this Agreement and which are defined
or construed in the Sale and Purchase Agreement but are not defined or
construed in this Agreement shall have the same meaning and
construction in this Agreement. All references in this Agreement to the
Sale and Purchase Agreement are to the Sale and Purchase Agreement as
from time to time amended, modified or supplemented.
1.3 References to Recitals and Clauses are to recitals and clauses of this
Agreement. The headings in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement. Words importing
the singular number include the plural number and vice versa.
References to documents include variations and replacements thereof and
supplements thereto. References to a party include its permitted
assigns and transferees and its successors-in-title.
2. FICO CALL OPTION
2.1 In consideration of the sum of US$1.00 (receipt of which FIL hereby
acknowledges), FIL hereby grants to FICO(HK) the right, in the event
that (i) a court having jurisdiction in Singapore shall enter a decree
or order for relief in respect of FIL in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter
in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of FIL or for any
substantial part of its property, or ordering the winding-up or
liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive days; or
(ii) FIL is unable to discharge its liabilities under
2
102
the First Consideration Note or the Second Consideration Note pursuant
to Clauses 3.6 and 3.7 respectively of the Call Option Agreement; or
(iii) a notice of termination is served by FICO (HK) under Clause 12(B)
of the Shareholder's Agreement pursuant to Clause 12(C)(i) of the
Shareholders' Agreement (each of (i), (ii) and (iii) hereinafter
referred to as a "PRECONDITION EVENT"), to require the FIL to sell to
FICO(HK) all the Fico Call Option Shares on the terms and subject to
the conditions of this Agreement ("FICO CALL OPTION").
2.2 On the exercise of the Fico Call Option, the FICO(HK) will become bound
to purchase and FIL will become bound to complete the sale of the Fico
Call Option Shares on the Transfer Terms.
2.3 The Fico Call Option must be exercised by notice in writing by FICO(HK)
served only during the Fico Call Option Period and subject to the
fulfilment of a Precondition Event, failing which it will lapse and
cease to have any further effect.
2.4 For the purposes of this Clause, a certificate signed by a director of
FIL confirming the Fico Call Option Price shall, in the absence of
manifest error, be final and conclusive.
3. FICO CALL OPTION COMPLETION
3.1 Completion of the sale and purchase of the Fico Call Option Shares
shall take place in Hong Kong at the Hong Kong branch office of FIL (or
at such other place as may be agreed) on the Fico Call Option
Completion Date, provided that if such a day is not a Business Day then
the Fico Call Option Completion shall take place at 12 noon on the
first Business Day thereafter.
3.2 On Fico Call Option Completion:
(a) FIL shall deliver to the FICO(HK) duly executed transfers and
duly executed sold notes in favour of the FICO(HK) in respect
of the Fico Call Option Shares accompanied by the relative
share certificate(s) and shall do all things and execute such
documents as shall be necessary or as FICO(HK) may reasonably
request to give effect to the sale of the Fico Call Option
Shares pursuant to Clause 2 on the Transfer Terms;
(b) FIL shall procure the resignations of the existing Directors
of the Company, which said resignations shall take effect on
the Fico Call Option Completion; and
(c) the FICO(HK) shall pay the Fico Call Option Price to FIL by
way of telegraphic transfer to an account designated by FIL to
FICO(HK) not later than three (3) Business Days prior to the
Fico Call Option Completion Date or by way of a banker's
draft.
3.3 If any of the provisions of Clause 3.2 are not complied with on the
Fico Call Option Completion Date the party not in default may (without
prejudice to his other rights and remedies):
(a) defer Fico Call Option Completion to a date not more than
twenty eight (28) days after the Fico Call Option Completion
Date (and so that the provisions of this Clause 3 shall apply
to Fico Call Option Completion as so deferred); or
(b) proceed to Fico Call Option Completion so far as practicable
(without prejudice to his rights hereunder); or
(c) rescind the contract of sale arising by virtue of the exercise
of the Fico Call Option.
3
103
4. DURATION OF OBLIGATIONS
4.1 This Agreement shall terminate on the date falling on the first
anniversary of the end of the Second Financial Period if no Fico Call
Option Notice shall have been served on or prior to such date.
4.2 If the Fico Call Option Notice shall have been served on or prior to
the date mentioned in Clause 4.1 this Agreement shall continue in force
after such date until the fulfilment of the parties' obligations
hereunder in relation to the Fico Call Option Notice whereupon it shall
terminate.
5. FIL'S WARRANTIES
5.1 FIL warrants to FICO(HK) that it is and will remain until the expiry of
the Fico Call Option Period or the Fico Call Option Completion Date,
whichever is the later, the sole legal and beneficial owner of the Fico
Call Option Shares, subject to the Fico Call Option and the Put Option
(as defined in the Put Option Agreement).
5.2 FIL shall not prior to the expiry of the Fico Call Option Period or the
Fico Call Option Completion Date, whichever is the later, transfer,
dispose of or permit any Encumbrance save for the Fico Call Option,
over its interest in any of the Fico Call Option Shares and the Fico
Call Option Shares shall upon Fico Call Option Completion be sold free
of any Encumbrance.
6. COMMUNICATIONS
6.1 Except as otherwise provided in the Agreement, all notices required or
permitted to be given hereunder shall be in writing and in the English
language and shall be sent by facsimile or in writing.
6.2 Any notice hereunder shall be addressed as follows:
In the case of FICO(HK): Fico Forest Industrial Co. Limited
Xxxx 00, 00/X
Xxx X, Xxxx Xxx Xxx. Xxxxxxxx
000 Xxxxxx Xxxx Xxxx, Xxxxx Xxx
Xxx Xxxxxxxxxxx
Xxxx Xxxx
Fax Number: (000) 0000-0000
Attention: Mr Law Sing Hong
In the case of FIL: Flextronics International Ltd
000 Xxxx Xxxx Xxxx, #00-00
Xxxxxxxxx 000000
Fax Number: (00) 000-0000
Attention: Xx Xxx Xxxx Xxxx
6.3 Any party may from time to time by notice hereunder change its address
or telefax number for notice. Notice given by facsimile shall be deemed
to have been served on the next Business Day in the place of address
following the day of transmission.
4
104
7. GENERAL
7.1 This Agreement may be assigned in whole or in part by FIL.
Notwithstanding this, this Agreement shall not be assigned in whole or
in part by the FICO(HK). It is expressly agreed that this Agreement
shall be binding upon and shall enure for the benefit of the parties'
successors.
7.2 This Agreement supersedes any previous agreement between the parties
hereto in relation to the matters dealt with herein, represents
(together with any documents referred to herein) the entire agreement
between the parties herein in relation to such matters and no variation
hereof shall be effective unless made in writing.
7.3 The failure of any of the parties hereto at any time to require
performance by any other party or to claim a breach of any term of this
Agreement shall not be deemed to be a waiver of any right under this
Agreement.
7.4 The parties hereto shall, and shall use their respective reasonable
endeavours to procure that any necessary third parties shall, execute
and do all such further deeds, documents and things as either party may
reasonably require by notice in writing to the other party to carry the
provisions of this Agreement into full force and effect and (so far as
they are able) shall do anything necessary (including, without
limitation, exercising their powers as shareholders) to give effect to
the spirit and intent of this Agreement).
7.5 Any date or period mentioned in this Agreement may be extended by
agreement between the parties hereto (or such of the parties as may be
affected thereby), but as regards any date or period (whether or not
extended as aforesaid) time shall be of the essence of this Agreement.
7.6 Subject as specifically provided herein, each of the parties hereto
shall bear its own costs and expenses relating to this Agreement, save
that the FICO(HK) shall bear all stamp duty payable in respect of the
grant of the Fico Call Option and the purchase of the Fico Call Option
Shares.
7.7 The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
7.8 Notwithstanding the completion of the sale and purchase of the Fico
Call Option Shares herein, the terms and condition of this Agreement
shall not merge with the transfer or conveyance of the Fico Call Option
Shares and be extinguished but shall remain in full force and effect as
between FICO(HK) and FIL insofar as the same shall not have been
fulfilled.
8. GOVERNING LAW AND DISPUTE RESOLUTION
8.1 This Agreement shall be governed by, and construed in accordance with,
the laws of Hong Kong.
8.2 Any dispute or difference arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration
in Hong Kong on or before 31 March 1997 and thereafter in Singapore. In
respect of arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the SIAC Rules.
The HKIAC Rules and the SIAC Rules are deemed to be incorporated by
reference into this Clause 8.2 save to the extent that they are
inconsistent with the express terms of this Agreement.
5
105
8.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by FICO(HK), one of whom
shall be appointed by FIL, and the third (who shall act as Chairman of
the arbitral tribunal) to be appointed by the Chairman of SIAC or
HKIAC, as the case may be.
8.4 For the purpose of this Agreement a dispute shall be deemed to arise
when one party serves on the other party a notice in writing (in this
Clause, a "NOTICE OF DISPUTE") stating the nature of the dispute.
8.5 The party serving any Notice of Dispute shall appoint one arbitrator in
such Notice of Dispute.
8.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time as may be
agreed between the parties or directed by the Chairman of SIAC or
HKIAC, as the case may be. In default of such appointment by any party
that arbitrator shall also be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within fourteen (14) days after such time
period. The third arbitrator shall be appointed by the Chairman of SIAC
or HKIAC, as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
8.7 The prevailing party in the arbitration shall be awarded the costs and
expenses (including legal fees and expenses) reasonably incurred in
connection with any such arbitration.
6
106
IN WITNESS WHEREOF the parties set their hands this day and year first above
written.
FICO(HK)
Signed by )
)
/s/ LAW SING HONG & LAW XXXX XXXX )
-----------------------------------------)
Law Sing Hong & Law Xxxx Xxxx )
)
for and on behalf of )
FICO FOREST INDUSTRIAL )
CO. LIMITED )
in the presence of: )
/s/ XXXXXXXXX X. XXXXXX
-----------------------------------
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
FIL
Signed by )
)
for and on behalf of )
FLEXTRONICS INTERNATIONAL LTD )
in the presence of: )
7
107
IN WITNESS WHEREOF the parties set their hands this day and year first above
written.
FICO(HK)
Signed by )
)
for and on behalf of )
FICO FOREST INDUSTRIAL )
CO. LIMITED )
in the presence of: )
FIL
Signed by )
)
/s/ X. X. XXXX )
-------------------------------- )
X. X. Xxxx )
)
for and on behalf of )
FLEXTRONICS INTERNATIONAL LTD )
in the presence of: )
/s/ XXXXXX XXXX CIN TZIEH
--------------------------------
Xxxxxx Xxxx Cin Tzieh
Advocate and Solicitor
Singapore
7
108
SCHEDULE 8
DEED OF INDEMNITY
Dated the 20th day of December 1996
Between
FICO FOREST INDUSTRIAL CO. LIMITED
And
FLEXTRONICS INTERNATIONAL LTD
FICO INVESTMENT HOLDING LIMITED
FOREST KEYBOARD MANUFACTURING (SHENZHEN) LTD.
---------------------------------------------------------------------------
DEED OF INDEMNITY
----------------------------------------------------------------------------
109
THIS DEED OF INDEMNITY is made on the 20th day of December 1996
BETWEEN:
(1) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
with its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx Xxx Ind.
Building, 603 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
("FICO(HK)")
(2) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in Singapore with
its registered office at 00 Xxxxxxxx Xxxx, #00-00 Xxxx Xxxxx, Xxxxxxxxx
000000 ("FIL");
(3) FICO INVESTMENT HOLDING LIMITED, a company incorporated in Hong Kong
with its registered office at Xx 00, 00/X, Xxx X, Xxxx Xxx Xxx.
Building, 603 Castle Peak Road, Tsuen Wan, New Territories, Hong Kong
("Company"); and
(4) FOREST KEYBOARD MANUFACTURING (SHENZHEN) LTD., a company registered and
validly existing in the People's Republic of China with its registered
office at Gong Xxxx Xxxx, Xxxxx Xxxx Village Industrial Zone, China
("FICO(PRC)").
WHEREAS this Deed is entered into pursuant to the provisions of a Sale and
Purchase Agreement dated 29 November 1996 ("S&P Agreement") and made between (1)
FICO(HK) as Vendor, (2) FIL as Purchaser and (3) the Company, relating to the
purchase by FIL of 4,000 ordinary shares in the share capital of the Company
consisting of forty per cent. (40%) of the issued and paid-up share capital of
the Company.
NOW IT IS HEREBY AGREED as follows:
1. In this Deed:
(i) words and expressions defined in the S&P Agreement shall have
the same meaning wherever used herein and the provisions of
Clause 1 of the S&P Agreement shall be deemed to be
incorporated herein;
(ii) the following expressions bear the following meanings, namely:
"CLAIM" means any notice, demand, assessment, letter or other
document issued or action taken by any revenue or taxing
authority in Singapore, Hong Kong or the PRC or other
statutory or governmental authority, body or official
whosoever (whether of Singapore, Hong Kong or the PRC or
elsewhere in the world) whereby any of the Group Companies is
or may be placed or sought to be placed under a liability to
make a payment on any Taxes or deprived of any relief,
allowance, credit or repayment otherwise available;
"COMPLETION" means completion of the transfer of the Sale
Shares (as defined in the S&P Agreement) under the S&P
Agreement;
"GROUP COMPANY" means the Company and FICO(PRQ, and "GROUP
COMPANY" means any one of them;
"PRC" means the People's Republic of China;
110
"TAXES" or "TAXATION" means all forms of taxation whether of
Singapore, Hong Kong or the PRC, including all state or local
taxation, past, present and deferred (including, without
limitation, income tax (including net income and gross
income), corporate, value added, occupation, real and personal
property, social security, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll,
employment, excise, severance, occupation, premium or windfall
profit taxes, estate duty, stamp duty, customs and other
import or export duties, or charges of any kind whatsoever,
estimated and other taxes, together with any interest and
levies and all penalties, charges, costs and additions to tax,
payable by or due from any of the Group Companies, or any
additional amounts, duties and levies, imposts and all
penalties, charges, fees, costs and interest deductions or
withholding relating to any Claim imposed by any government,
governmental agency, statutory body or any revenue authority,
upon any Group Company; and
"TRANSACTION" includes any transaction, act, event or omission
of whatever nature.
(iii) where any person suffers a loss of or reduction in the amount
of any relief, allowance or credit or has a right to the
repayment of Taxation nullified or cancelled in whole or in
part and such relief, allowance, credit or right to repayment
related to a Transaction effected on or before Completion or
was granted by reference to any income, profits or gains
earned, accrued or received on or before Completion, then such
person shall be treated as having incurred a corresponding
depletion in or reduction in the value of its or his assets as
a result of a Claim for Taxation made in the circumstances
falling within Clause 2(A);
(iv) references to any Transaction effected on or before Completion
include the combined result of two or more Transactions, the
first of which shall have taken place (or be deemed to have
taken place) or the commencement of which shall have occurred
(or be deemed to have occurred) on or before Completion;
(v) references to income, profits or gains earned, accrued or
received include income, profits or gains deemed to have been
or treated as earned, accrued or received for Taxation
purposes;
(vi) references to Clauses and the Schedule are to Clauses of and
the Schedule to this Deed unless the subject or context
otherwise requires; and
(vii) words and expressions defined for the purposes of any relevant
taxing or other legislation shall herein bear the same
meaning.
2. (A) Subject as hereinafter provided, FICO(HK) hereby agrees with and
undertakes to FIL and each of the Group Companies to indemnify and
keep indemnified FIL and each of the Group Companies against any
depletion in or reduction in value of its or their assets or increase
in its or their liabilities in relation to the Group Companies as a
result or in consequence of any Claim for Taxation which has been made
or may hereafter be made:
(i) in respect of or arising from any Transaction effected or
deemed to have been effected on or before Completion; or
2
111
(ii) by reference to any income, profits or gains earned,
accrued or received on or before Completion.
The indemnity in this Clause 2(A) shall include all reasonable
costs and expenses properly payable in connection with any
Claim or liability referred to herein.
(B) In the event of default by FICO(HK) in the payment on demand
of any sum due under this Deed determined by agreement or
pursuant to an order of a court or by the Purchaser's Auditors
hereunder, the liability of FICO(HK) shall be increased to
include interest on such sum from the date of payment of such
sum by the relevant Group Company toward satisfaction of any
Claim for Taxation referred to in Clause 2(A) above to the
date of actual payment by FICO(HK) (as well after as before
judgment) at a rate per annum being two per cent. (2%) above
the prime lending rate for Dollars as quoted by Citibank,
Singapore Branch from time to time. Interest determined in
accordance with this Clause 2(B) shall be calculated on the
basis of a 360-day year and the actual number of days elapsed
and shall accrue from day to day.
3. Any liability to FIL hereunder may in whole or in part be released,
compounded or compromised or time or indulgence given by FIL in its
absolute discretion without in any way prejudicing or affecting its
rights against FICO(HK).
4. In the event of FIL becoming aware of any Claim which could give rise
to a liability under this Deed, FIL shall procure that notice thereof
be given to FICO(HK) in manner hereinafter provided and as regards any
such Claim, FIL shall, or shall procure the relevant Group Company to,
take such action as it may reasonably request to avoid, dispute,
resist, appeal, compromise or defend the Claim and any adjudication in
respect thereof but subject to FIL and the relevant Group Company being
indemnified and secured to their satisfaction by FICO(HK) against all
losses (including additional Taxation), costs, damages and expenses
which may thereby be incurred.
5. (A) In the event of any dispute as to the liability hereunder of
FICO(HK) and/or any ofthe Group Companies, the matter shall be
determined by the Purchaser's Auditors.
(B) The Purchaser's Auditors shall be deemed to act as experts and
not as arbitrators in any determination made by them hereunder
and in the absence of manifest error, their determination
shall be conclusive and binding on all concerned. The proper
charges and disbursements of the Purchaser's Auditors shall be
paid and borne on each occasion by such of the parties
concerned and in such proportions as the Purchaser's Auditors
may in their absolute discretion consider fair and reasonable.
6. A notice, demand or other communication under this Deed shall be
delivered to the addresses given in Clause 17 of the S&P Agreement and
shall be given or made, and shall be deemed to have been received, in
accordance with the provisions of Clause 17 of the S&P Agreement.
7. This Deed shall come into force on the date stated at the beginning and
shall continue in force from such date.
8. This Deed shall be binding on and shall enure for the benefit of the
parties and their respective legal personal representatives, successors
and permitted assigns. Any reference in this Deed to any of the parties
shall be construed accordingly.
3
112
9. If any term or provision in this Deed shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of
law, such term or provision or part shall to that extent be deemed not
to form part of this Deed but the enforceability of the remainder of
this Deed shall not be affected.
10. This Deed may be executed in any number of counterparts, all of which
taken together and when delivered to each party hereto shall
constitute one and the same instrument. Any party may enter into this
Deed by signing any such counterpart.
11. (A) This Deed shall be governed by, and construed in accordance
with, the laws of Hong Kong.
(B) Any dispute or difference arising out of or in connection with
this Agreement, including any question regarding its
existence, validity or termination, shall be referred to and
finally resolved by arbitration in Hong Kong on or before 31
March 1997 and thereafter in Singapore. In respect of
arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the
SIAC Rules. The HKIAC Rules and the SIAC Rules are deemed to
be incorporated by reference into this Clause 11(B) save to
the extent that they are inconsistent with the express terms
of this Agreement.
(C) The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by the Purchaser,
one of whom shall be appointed by the Vendor, and the third
(who shall act as Chairman of the arbitral tribunal) to be
appointed by the Chairman of SIAC or HKIAC, as the case may
be.
(D) For the purpose of this Agreement a dispute shall be deemed to
arise when one party serves on the other party a notice in
writing (in this Clause, a "NOTICE OF DISPUTE") stating the
nature of the dispute.
(E) The party serving any Notice of Dispute shall appoint one
arbitrator in such Notice of Dispute.
(F) The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time
as may be agreed between the parties or directed by the
Chairman of SIAC or HKIAC, as the case may be. In default of
such appointment by any party that arbitrator shall also be
appointed by the Chairman of SIAC or HKIAC, as the case may
be, within fourteen (14) days after such time period. The
third arbitrator shall be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within twenty-eight (28) days of
the receipt of such Notice of Dispute.
(G) The prevailing party in the Arbitration shall be awarded the
costs and expenses (including legal fees and expenses)
reasonably incurred in connection with any such arbitration.
4
113
IN WITNESS WHEREOF this Deed has been entered into the day and year first
abovewritten.
FICO(HK)
[SEAL}
The Common Seal of )
FICO FOREST INDUSTRIAL )
CO. LIMITED has been affixed )
in the presence of: )
----------------------------------
Director
----------------------------------
Director/Secretary
FIL
[SEAL]
The Common Seal of )
FLEXTRONICS INTERNATIONAL LTD )
has been affixed )
in the presence of: )
/s/ X.X. Xxxx
----------------------------------
Director
/s/ Gon Xxxx Xxxx
----------------------------------
Authorised Signatory
5
114
IN WITNESS WHEREOF this Deed has been entered into the day and year first
abovewritten.
FICO(HK)
[SEAL}
The Common Seal of )
FICO FOREST INDUSTRIAL )
CO. LIMITED has been affixed )
in the presence of: )
/s/ Xxxxxxxxx X. Xxxxxx
------------------------------
Xxxxxxxxx X. Xxxxxx /s/ Law Sing Hong
Solicitor ------------------------
Hong Kong Director
/s/ Law Shun Hang
------------------------
Director/Secretary
FIL
[SEAL]
The Common Seal of )
FLEXTRONICS INTERNATIONAL LTD )
has been affixed )
in the presence of: )
--------------------------
Director
--------------------------
Director/Secretary
5
115
[SEAL}
The Company
The Common Seal of )
FICO INVESTMENT )
HOLDING LIMITED has been affixed )
in the presence of: )
/S/ Xxxxxxxxx X. Xxxxxx
--------------------------
Xxxxxxxxx X. Xxxxxx /s/ Law Shun Hang
Solicitor ------------------------
Hong Kong Director
/s/ Law Sing Hong
------------------------
Director/Secretary
FICO(PRC)
SIGNED BY LAW SHUN HANG )
)
as legal representative )
for and on behalf of ) /s/ Law Shun Hang
FOREST KEYBOARD ) ------------------------
MANUFACTURING (SHENZHEN) )
LTD. )
6
116
SCHEDULE 11
PUT OPTION AGREEMENT
DATED THE 20TH DAY OF DECEMBER 1996
Between
FLEXTRONICS INTERNATIONAL LTD
And
FICO FOREST INDUSTRIAL CO. LIMITED
------------------------------------
PUT OPTION AGREEMENT
relating to 4,000 ordinary shares
consisting of
40% of all the ordinary shares
in the share capital of
FICO INVESTMENT HOLDING LIMITED
------------------------------------
117
TABLE OF CONTENTS
Clause Heading Page
------ ------- ----
1. INTERPRETATION ................................................. 1
2. PUT OPTION ..................................................... 2
3. PUT OPTION COMPLETION .......................................... 3
4. DURATION OF OBLIGATIONS ........................................ 3
5. FIL'S WARRANTIES ............................................... 3
6. COMMUNICATIONS ................................................. 4
7. GENERAL ........................................................ 4
8. GOVERNING LAW AND DISPUTE RESOLUTION ........................... 5
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THIS AGREEMENT is made the 20th day of December 1996 BETWEEN:
(1) FLEXTRONICS INTERNATIONAL LTD, a company incorporated in Singapore and
having its registered office at 00 Xxxxxxxx Xxxx, Xxxx Xxxxx, #00-00,
Xxxxxxxxx 000000 ("FIL");
(2) FICO FOREST INDUSTRIAL CO. LIMITED, a company incorporated in Hong Kong
and having its registered office at Xxxx 00, 0 & 0 00/X, Xxx X, Xxxx
Xxx Ind. Building, 603 Castle Peak Road, Tsuen Wan, New Territories,
Hong Kong ("GRANTOR")
WHEREAS:
(A) Fico Investment Holdings Limited ("COMPANY") is a company limited by
shares incorporated in Hong Kong and has at the date hereof an
authorised share capital of 10,000 ordinary shares of HK$ 1.00 each, of
which 10,000 of the said ordinary shares have been issued and are
fully paid-up.
(B) FIL is the legal and beneficial owner of 4,000 ordinary shares of
HK$1.00 each in the Company consisting forty per cent. (40%) of the
issued and paid-up capital of the Company.
(C) This Agreement is entered into pursuant to a Sale and Purchase
Agreement ("SALE AND PURCHASE AGREEMENT") dated 29 November 1996, made
between (1) FIL, as purchaser (2) the Grantor as Vendor and (3) the
Company. The Grantor wishes to grant to FIL a put option in respect of
the Put Option Shares (as defined below) for the consideration and on
the terms and conditions set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement except to the extent that the context otherwise
requires:
"BANKER'S DRAFT" means a banker's draft drawn on a bank in Hong Kong;
"EXERCISE DATE" means the date of service of a Put Option Notice under
Clause 2.3;
"PUT OPTION" shall have the meaning ascribed to it in Clause 2.1;
"PUT OPTION COMPLETION" means the performance by FIL and the Grantor of
the obligations assumed by them respectively under Clause 3.2;
"PUT OPTION COMPLETION DATE" means 11.00 a.m. on the date falling
thirty (30) days from the Exercise Date;
"PUT OPTION NOTICE" means a notice exercising the Put Option given
pursuant to Clause 2.3;
"PUT OPTION PERIOD" means the period commencing on the date of this
Agreement and expiring on the date falling on the first anniversary of
the end of the Financial Period (both dates inclusive);
"PUT OPTION SHARES" means 4,000 Shares consisting forty per cent. (40%)
of the issued and paid-up capital of the Company;
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"SALE PRICE" means the aggregate of the Consideration and interest
accrued thereon at the rate of eight per cent. (8%) from the date of
payment of the Consideration (or parts thereof) under the Sale and
Purchase Agreement to the Put Option Completion Date (or such deferred
date pursuant to Clause 3.3), such interest to be calculated on the
basis of a 360-day year and the actual number of days elapsed;
"SHARES" means ordinary shares of HK$1.00 each in the capital of the
Company;
"SHAREHOLDERS' AGREEMENT" means the shareholders' agreement of even
date entered into between (1) FIL, (2) the Grantor and (3) the Company;
"TRANSFER TERMS" means the entire legal and beneficial interest in all
the Put Option Shares shall be sold and purchased free from any
Encumbrance and together with all rights attaching thereto as at the
Exercise Date or at any time thereafter and that the consideration for
the Put Option Shares shall be the Sale Price; and
"US$" means the lawful currency of the United States of America.
1.2 All terms and references used in this Agreement and which are defined
or construed in the Sale and Purchase Agreement but are not defined or
construed in this Agreement shall have the same meaning and
construction in this Agreement. All references in this Agreement to the
Sale and Purchase Agreement are to the Sale and Purchase Agreement are
to the Sale and Purchase Agreement as from time to time amended,
modified or supplemented.
1.3 References to Recitals and Clauses are to recitals and clauses of this
Agreement. The headings in this Agreement are for convenience only and
shall not affect the interpretation of this Agreement. Words importing
the singular number include the plural number and vice versa.
References to documents include variations and replacements thereof and
supplements thereto. References to a party include its permitted
assigns and transferees and its successors-in-title.
2. PUT OPTION
2.1 In consideration of the sum of US$1.00 (receipt of which the Grantor
hereby acknowledges), the Grantor hereby grants to FIL the right, in
the event that (i) it is determined pursuant to Clause 10 of the Sale
and Purchase Agreement that the Profit Target exceeded the Net Profit
After Taxation of the Company in respect of the Financial Period; (ii)
the Purchaser, at its sole and absolute discretion and determination,
is not satisfied with the state of affairs of the Company as reported
in the audited accounts of the Company for the financial year ending 31
December 1996 pursuant to Clause 4.2 of the Sale and Purchase
Agreement; (iii) a notice of termination is served under Clause 12(B)
of the Shareholders' Agreement pursuant to Clause 12(C)(ii) of the
Shareholders' Agreement; or (iv) the Balance Consideration is not paid
pursuant to Clause 4.2 of the Sale and Purchase Agreement (each of (i),
(ii) (iii) and (iv) hereinafter referred to as a "PRECONDITION EVENT"),
to require the Grantor to purchase from FIL all the Put Option Shares
on the terms and subject to the conditions of this Agreement ("PUT
OPTION").
2.2 On the exercise of the Put Option, the Grantor will become bound to
purchase and FIL will become bound to complete the sale of the Put
Option Shares on the Transfer Terms.
2.3 The Put Option must be exercised by notice in writing by FIL served
only during the Put Option Period and subject to the fulfilment of a
Precondition Event, failing which it will lapse and cease to have any
further effect.
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3. PUT OPTION COMPLETION
3.1 Put Option Completion of the sale and purchase of the Put Option Shares
shall take place in Hong Kong at the Hong Kong branch office of FIL (or
at such other place as may be agreed) on the Put Option Completion
Date, provided that if such a day is not a Business Day then Put Option
Completion shall take place at 12 noon on the first Business Day
thereafter.
3.2 On Put Option Completion:
(a) FIL shall deliver to the Grantor duly executed transfers and
duly executed sold notes in favour of the Grantor in respect
of the Put Option Shares accompanied by the relative share
certificate(s) and shall do all things and execute such
documents as shall be necessary or as the Grantor may
reasonably request to give effect to the sale of the Put
Option Shares pursuant to Clause 2 on the Transfer Terms;
(b) FIL shall procure the resignations of the existing Directors
of the Company nominated by them pursuant to Clause 4(B) of
the Shareholders' Agreement, which said resignations shall
take effect on Put Option Completion; and
(c) the Grantor shall pay the Sale Price to FIL by way of
telegraphic transfer to an account designated by FIL to the
Grantor not later than three (3) Business Days prior to the
Put Option Completion Date or by way of a banker's draft.
3.3 If any of the provisions of Clause 3.2 are not complied with on the Put
Option Completion Date the party not in default may (without prejudice
to his other rights and remedies):
(a) defer Put Option Completion to a date not more than
twenty-eight (28) days after the Put Option Completion Date
(and so that the provisions of this Clause 3 shall apply to
Put Option Completion as so deferred); or
(b) proceed to Put Option Completion so far as practicable
(without prejudice to his rights hereunder); or
(c) rescind the transaction arising by virtue of the exercise of
the Put Option.
4. DURATION OF OBLIGATIONS
4.1 This Agreement shall terminate on the date falling on the first
anniversary of the end of the Financial Period if no Put Option Notice
shall have been served on or prior to such date.
4.2 If the Put Option Notice shall have been served on or prior to the date
mentioned in Clause 4.1 this Agreement shall continue in force after
such date until the fulfilment of the parties' obligations hereunder in
relation to the Put Option Notice whereupon it shall terminate.
5. FIL'S WARRANTIES
5.1 FIL warrants to the Grantor that it is and will remain until the expiry
of the Put Option Period or the Put Option Completion Date, whichever
is the later, the sole legal and beneficial owner of the Option Shares,
subject only to the Put Option and the Fico Call Option (as defined in
the Fico Call Option Agreement).
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5.2 FIL shall not prior to the expiry of the Put Option Period or the Put
Completion Date, whichever is the later, transfer, dispose of or permit
an Encumbrance save for the Put Option and the Fico Call Option (as
defined in the Fico Call Option Agreement) over its interest in any of
the Put Option Shares and the Put Option Shares shall upon Put Option
Completion be sold free of any Encumbrance.
5.3 At the date of this Agreement the Put Option Shares represent forty per
cent. (40%) of the issued and paid-up share capital of the Company
issued or agreed to be issued and there is no option or right
outstanding in favour of any third party to subscribe for any share or
loan capital of the Company.
6. COMMUNICATIONS
6.1 Except as otherwise provided in the Agreement, all notices required or
permitted to be given hereunder shall be in writing and in the English
language and shall be sent by facsimile or in writing.
6.2 Any notice hereunder shall be addressed as follows:
In the case of FIL : Flextronics International Ltd
000 Xxxx Xxxx Xxxx, #00-00
Xxxxxxxxx 000000
Fax Number : (00) 000-0000
Attention : Xx Xxx Xxxx Xxxx
In the case of the Grantor: Gico Forest Industrial Co. Limited
Xxxx 00, 00/X
Xxx X, Xxxx Xxx Xxx. Xxxxxxxx
603 Castle Peak Road, Tsuen Wan
New Territories
Hong Kong
Fax Number : (000) 0000-0000
Attention : Mr Law Sing Hong
6.3 Any party may from time to time by notice hereunder change its address
or telefax number for notice. Notice given by facsimile shall be deemed
to have been served on the next Business Day in the place of address
following the day of transmission.
7. GENERAL
7.1 This Agreement may be assigned in whole or in part by FIL.
Notwithstanding this, this Agreement shall not be assigned in whole or
in part by the Grantor. It is expressly agreed that this Agreement
shall be binding upon and shall enure for the benefit of the parties'
successors.
7.2 This Agreement supersedes any previous agreement between the parties
hereto in relation to the matters dealt with herein, represents
(together with any documents referred to herein) the entire agreement
between the parties herein in relation to such matters and no variation
hereof shall be effective unless made in writing.
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7.3 The failure of any of the parties hereto at any time to require
performance by any other party or to claim a breach of any term of this
Agreement shall not be deemed to be a waiver of any right under this
Agreement.
7.4 The parties hereto shall, and shall use their respective reasonable
endeavours to procure that any necessary third parties shall, execute
and do all such further deeds, documents and things as either party may
reasonably require by notice in writing to the other party to carry the
provisions of this Agreement into full force and effect and (so far as
they are able) shall do anything necessary (including, without
limitation, exercising their powers as shareholders) to give effect to
the spirit and intent of this Agreement.
7.5 Any date or period mentioned in this Agreement may be extended by
agreement between the parties hereto (or such of the parties as may be
affected thereby), but as regards any date or period (whether or not
extended as aforesaid) time shall be of the essence of this Agreement.
7.6 Subject as specifically provided herein, each of the parties hereto
shall bear its own costs and expenses relating to this Agreement, save
that the Grantor shall bear all stamp duty payable in respect of the
grant of the Put Option and the purchase of the Put Option Shares.
7.7 The illegality, invalidity or unenforceability of any provision of this
Agreement under the law of any jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction nor the legality, validity or enforceability of any other
provision.
7.8 Notwithstanding the completion of the sale and purchase of the Put
Option Shares herein, the terms and conditions of this Agreement shall
not merge with the transfer or conveyance of the Put Option Shares and
be extinguished but shall remain in full force and effect as between
FIL and the Grantor insofar as the same shall not have been fulfilled.
8. GOVERNING LAW AND DISPUTE RESOLUTION
8.1 This Agreement shall be governed by, and construed in accordance with,
the laws of Hong Kong.
8.2 Any dispute or difference arising out of or in connection with this
Agreement, including any question regarding its existence, validity or
termination, shall be referred to and finally resolved by arbitration
in Hong Kong on or before 31 March 1997 and thereafter in Singapore. In
respect of arbitration in Hong Kong, the arbitration shall be in
accordance with the HKIAC Rules. In respect of arbitration in
Singapore, the arbitration shall be in accordance with the SIAC Rules.
The HKIAC Rules and the SIAC Rules are deemed to be incorporated by
reference into this Clause 8.2 save to the extent that they are
inconsistent with the express terms of this Agreement.
8.3 The arbitral tribunal shall consist of three (3) independent
arbitrators, one of whom shall be appointed by FIL, one of whom shall
be appointed by the Grantor, and the third (who shall act as Chairman
of the arbitral tribunal) to be appointed by the Chairman of SIAC or
HKIAC, as the case may be.
8.4 For the purpose of this Agreement a dispute shall be deemed to arise
when one party serves on the other party a notice in writing (in this
Clause, a "NOTICE OF DISPUTE") stating the nature of the dispute.
8.5 The party serving any Notice of Dispute shall appoint one arbitrator in
such Notice of Dispute.
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8.6 The party in receipt of any Notice of Dispute shall appoint an
arbitrator within twenty-eight (28) days or such longer time as may be
agreed between the parties or directed by the Chairman of SIAC or
HKIAC, as the case may be. In default of such appointment by any party
that arbitrator shall also be appointed by the Chairman of SIAC or
HKIAC, as the case may be, within fourteen (14) days after such time
period. The third arbitrator shall be appointed by the Chairman of SIAC
or HKIAC, as the case may be, within twenty-eight (28) days of the
receipt of such Notice of Dispute.
8.7 The prevailing party in the arbitration shall be awarded the costs and
expenses (including legal fees and expenses) reasonably incurred in
connection with any such arbitration.
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IN WITNESS WHEREOF the parties set their hands this day and year first
above written.
FIL
Signed by
/s/ X.X. Xxxx
for and on behalf of
FLEXTRONICS INTERNATIONAL LTD
in the presence of:
/s/XXXXXX XXXX CIN TZIEH
Xxxxxx Xxxx Cin Tzieh
Advocate & Solicitor
Singapore
The Grantor
Signed by
for and on behalf of
FICO FOREST INDUSTRIAL CO. LIMITED
in the presence of:
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IN WITNESS WHEREOF the parties set their hands this day and year first
above written.
FIL
Signed by
for and on behalf of
FLEXTRONICS INTERNATIONAL LTD
in the presence of:
The Grantor
Signed by
/s/ Law Shun Hang &
/s/ Law Sing Hong
for and on behalf of
FICO FOREST INDUSTRIAL
CO. LIMITED
in the presence of:
/s/ Xxxxxxxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
Solicitor
Hong Kong
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