EXHIBIT 10.29
DATED THE 8TH DAY OF OCTOBER 2003
JITTER BUG HOLDINGS LIMITED
(as "Vendor")
and
THE PERSONS WHOSE NAMES ARE SET OUT IN SCHEDULE 1
(as "Purchasers")
AND
NINETOWNS DIGITAL WORLD TRADE HOLDINGS LIMITED
----------------------------------------------
SALE AND PURCHASE AGREEMENT
RELATING TO SHARES IN
NINETOWNS DIGITAL WORLD TRADE HOLDINGS LIMITED
(THE "COMPANY")
----------------------------------------------
LI & PARTNERS
[Name in Chinese]
▇▇/▇., ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
[Name in Chinese]
Tel\[Name in Chinese]: (▇▇▇)▇▇▇▇ ▇▇▇▇ Fax\[Name in Chinese]: (▇▇▇)▇▇▇▇ ▇▇▇▇
Our Ref :RL/GS/1710(1)/03
TABLE OF CONTENTS
Title Page No.
------ --------
1. INTERPRETATION............................................................................ 1
2. CONDITION PRECEDENT....................................................................... 4
3. SALE AND PURCHASE OF THE SALE SHARES...................................................... 4
4. CONSIDERATION............................................................................. 5
5. COMPLETION ............................................................................... 5
6. VENDOR'S WARRANTY OF PROFITS.............................................................. 6
7. PURCHASERS' RIGHTS........................................................................ 8
8. QUALIFIED IPO............................................................................. 10
9. DIVIDEND POLICY........................................................................... 10
10. WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS BY THE VENDOR................................ 10
11. WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS BY THE VENDOR AND THE COMPANY................ 11
12. COSTS AND EXPENSES........................................................................ 11
13. RESTRICTIONS ON COMMUNICATION AND ANNOUNCEMENTS........................................... 12
14. NOTICES................................................................................... 13
15. GENERAL................................................................................... 15
16. SEVERANCE................................................................................. 16
17. PREVALENCE OF AGREEMENT................................................................... 16
18. GOVERNING LAW AND JURISDICTION............................................................ 16
19. COUNTERPARTS.............................................................................. 16
SCHEDULE 1 The Purchasers
SCHEDULE 2 Particulars of the PRC Subsidiaries
SCHEDULE 3 Form of shareholders' agreement
SCHEDULE 4 Warranties, Representations and Undertakings by Vendor
SCHEDULE 5 Warranties, Representation and Undertakings by Vendor and Company
SCHEDULE 6 Form of subscription price adjustment as contained in the AIG
subscription agreement
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THIS AGREEMENT is made on the 8th day of October 2003.
BETWEEN:
(1) JITTER BUG HOLDINGS LIMITED, a company incorporated in the British Virgin
Islands, having its registered office at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands ("the
VENDOR"); and
(2) THE PERSONS WHOSE PARTICULARS ARE SET OUT IN SCHEDULE 1 (collectively, the
"PURCHASERS" and individually a "PURCHASER"); and
(3) NINETOWNS DIGITAL WORLD TRADE HOLDINGS LIMITED, a company incorporated in
the Cayman Islands with limited liability, having its registered office at
Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇ Drive, P.O. Box 2681 GT, ▇▇▇▇▇▇
Town, Grand Cayman, British West Indies, and its principal place of
business in Hong Kong at Units ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (the "COMPANY").
WHEREAS:
(a) The Company has, as at the date hereof, an authorized share capital of
HK$200,000,000 divided into 2,000,000,000 Shares of HK$0.10 each.
(b) Following the Initial Group Reorganization, the Company has now an issued
share capital of HK$550,000, divided into 5,500,000 Shares of HK$0.10
each, all of which have been issued and credited as fully paid.
(c) As at the date hereof, the Vendor is the legal and beneficial owner, free
from all charges, liens and other encumbrances, of the Sale Shares.
(d) The Purchasers have agreed to purchase the Sale Shares from the Vendor on
the terms and subject to the conditions set out in this Agreement.
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement, including the Recitals, the following expressions shall
have
1
the following meanings except where the context otherwise requires -
"Articles" the articles of association of the
Company as the same may be amended from
time to time;
"Board" the board of directors of the Company;
"Business Day" a day (other than a Saturday) on which
banks are generally open for business
in Hong Kong;
"Completion" the completion of the sale and purchase
of the Sale Shares pursuant to the terms
of this Agreement;
"Completion Date" any Business Day no later than 17
October 2003;
"Directors" the directors for the time being of the
Company and "Director" means any of
them;
"Group" the Company and its subsidiaries;
"HK$" the lawful currency of HKSAR;
"HKSAR" Hong Kong Special Administrative Region
of the PRC;
"Initial Group Reorganization" the group reorganization involving the
Company entering into a sale and
purchase agreement with the Vendor,
pursuant to which the Company acquired
all the issued shares of Ixworth
Enterprises Limited (which is an
investment holding company holding the
PRC Subsidiaries) from the Vendor in
consideration of the Company issuing
5,499,999 consideration shares, credited
as fully paid, to the Vendor and
crediting as fully paid at par the 1
Share issued nil paid by the Company to
the Vendor on 7 May 2002;
"IPO" the initial public offering of the
Shares on the Main Board of the Stock
Exchange;
"Memorandum" the memorandum of association of the
Company as the same may be amended
2
from time to time;
"PRC" the People's Republic of China;
"PRC Subsidiaries" the subsidiaries of the Company in the
PRC as at the date hereof, namely
Beijing New Take e-Commerce Limited
[Name in Chinese], Beijing Ninetowns
Times e-Commerce Limited [Name in
Chinese], Beijing Ninetowns Digital
Technology Co., Ltd. [Name in Chinese],
Shanghai New Take Digital Technology
Co., Ltd. [Name in Chinese] and Beijing
Ninetowns Ports Software and Technology
Co., Ltd. [Name in Chinese], particulars
of which are set out in Schedule 2;
"Purchase Price" HK$100 per Share;
"Qualified IPO" the initial public offering of the
Shares on the Main Board of the Stock
Exchange, which is expected to take
place on or before 31 December 2004 at a
price that will generate an annual
return rate of at least 35% (net of
withholding tax but including dividend
received) on the initial investment
amount from the date of the effective
transfer of the Sale Shares by the
Vendor to the Purchasers;
"Sale Shares" 312,000 Shares to be sold by the Vendor
and purchased by the Purchasers at the
Purchase Price pursuant to Clause 2;
"Shareholders" the holders of Shares;
"Shareholders' Agreement" the shareholders' agreement
substantially in the form set out in
Schedule 3 to be entered into between
the Shareholders;
"Share(s)" the ordinary share(s) of HK$0.10 each in
the share capital of the Company;
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
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"US$" the lawful currency of the United States
of America;
"Warranties" the warranties, representations and
undertakings given by the Vendor and the
Company in Schedule 3 and Schedule 4
hereof.
1.2 The expressions the "Vendor", the "Purchasers" and the "Purchaser" shall,
where the context permits, include their respective successors and
permitted assigns and personal representatives and any persons deriving
title under them.
1.3 Words importing the singular number shall include the plural and vice
versa and words importing a gender shall include every gender.
1.4 Headings of clauses are for reference only and shall be ignored in
construing this Agreement.
2. CONDITION PRECEDENT
Completion is conditional upon AIG Asian Opportunity Fund, L.P. and
American International Assurance Company (Bermuda) Limited having
subscribed for Shares at the total consideration of not less than
US$8,000,000.00 ("the Subscription Money").
3. SALE AND PURCHASE OF THE SALE SHARES
Subject to the terms and conditions of this Agreement, the Vendor shall
sell and the Purchasers shall purchase, in the following proportions, the
Sale Shares, free from all charges, liens, encumbrances, equities or other
adverse claims or interests and with all rights now and hereafter
attaching thereto including the right to all dividends paid, declared or
made in respect thereof at the Purchase Price.
Number of Sale Purchase Price
Name of Purchaser Shares (HK$)
----------------- ------ -----
China Equity Associates L.P. 234,000 23,400,000/
US$3 million
MMFI CAPI Venture Investments Limited 78,000 7,800,000/
US$1 million
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4. CONSIDERATION
The consideration for the sale of the Sale Shares shall be HK$31,200,000
(or US$4 million) which shall be paid by the Purchasers to the Vendor on
the Completion Date.
5. COMPLETION
5.1. Subject to fulfillment of the condition stated in Clause 2, Completion
shall take place at the office of Li & Partners at ▇▇/▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ (or at such place as the parties hereto may agree) on
the Completion Date.
5.2. On the Completion Date, the Vendor shall procure the holding of a meeting
of the Directors by the Company and the passing thereat of resolutions
approving:
(a) the transfer of the Sales Shares from the Vendor to the Purchasers;
(b) the registration of the Purchasers in the register of members of the
Company in respect of the Sale Shares; and
(c) the issue by the Company to the Purchasers of share certificate
representing the Sale Shares and the delivery of these share
certificates to the Purchasers.
5.3. On the Completion Date, the Vendor shall deliver to the Purchasers:
(a) board resolutions of the Vendor approving the signing of this
Agreement and the sale of the Sale Shares to the Purchasers pursuant
to the terms thereof;
(b) instruments of transfer and bought and sold notes relating to the
Sale Shares duly signed by the Vendor and the relevant share
certificate(s) representing the Sale Shares;
(c) certified copies of the board resolutions referred to in Clause 5.2;
(d) where applicable, a waiver of pre-emptive rights signed by all the
existing shareholders of the Company; and
whereupon each Purchaser shall effect payment to the Vendor of an amount
equal
5
to the relevant number of Sale Shares being purchased by it under this
Agreement, multiplied by the Purchase Price, representing in aggregate the
sum of HK$31,200,000 or US$4 million, such payment to be made in such
means and manner as the Vendor may direct.
5.4 The Purchasers shall enter into the Shareholders' Agreement upon
Completion for the purposes of regulating the business, affairs and
management of the Group as from the date thereof.
5.5 If any of the documents required to be delivered to the Purchasers on the
Completion Date are not forthcoming for any reason or if in any other
respect the foregoing provisions of this Clause 5 are not fully complied
with, the Purchasers shall be entitled to effect Completion so far as
practicable or to extend Completion to such date as may be agreed between
the parties hereto or to rescind this Agreement.
6. VENDOR'S WARRANTY OF PROFITS
6.1 If the Company's consolidated earnings before tax, minority interests and
extraordinary items for the year ended 31 December 2003 audited by
Deloitte Touche Tohmatsu (the "EBMITEI") is an amount falling in the range
of HK$72 million to any amount below HK$100 million, the Vendor will
compensate the Purchasers by transferring to the Purchasers such number of
Shares (with the number in decimal place to be rounded up to one, if
applicable and with each Share valued at HK$100) of the Company at nil
consideration representing the difference between HK$106,791,000 and the
EBMITEI of the Group (on pro-rata basis with respect to the Purchasers'
respective shareholding % in the Company).
6.2 If the EBMITEI of the Group for the financial year ending 31 December 2003
is an amount below HK$72 million, the Vendor will compensate the
Purchasers in cash the difference between HK$106,791,000 and the EBMITEI
of the Group (on pro-rata basis with respect to the Purchasers' respective
shareholding % in the Company), plus an additional amount representing 10%
per annum of such difference.
6.3 The valuation adjustments as stated in Clauses 6.1 and 6.2 above are made
with reference to the fully diluted post money valuation, which is equal
to the profit/earning ratio ("P/E") multiplied by the EBMITEI of the Group
for the financial year ended 31 December 2003.
For the sole purpose of the above valuation adjustments, allowance shall
be given in favour of the Purchasers for the diluting effect caused by the
issuance of new Shares, if any, to any investor and/or its group company
pursuant to the
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corresponding provision in the relevant subscription agreement. (Please
see the formula cited hereinbelow.)
(1) the formula for the calculation of number of shares to be compensated by
the Vendor to the Purcahsers is as follows:-
P/E = (550,000,000+ the amount of the Subscription Money)/106,791,000
[HK$31.2 million/(EBMITEI x P/E)] x number of then issued shares of the
Company (after the issuance of new shares to the Subscribers) minus shares
already sold to the Purchasers.
(2) the formula for the calculation of the amount of compensation to be made
by the Vendor to the Purchasers in cash is as follows:-
[HK$31.2 million - [31.2 million/(550,000,000+ the amount of the
Subscription Money)]] x EBMITEI xP/E] x [1 + 10% x (y/365)]
Note : y = number of days between the Completion Date and the day when the
compensation is made
Scenarios
EBMITEI ("E") in HK$ Compensation method Example
-------------------- ------------------- -------
$100 million > E > $106.791 million No Compensation Not applicable
$72 million = or < E < $100 million Compensation by shares Example 1
Below $72 million Compensation by cash Example 2
Example 1:
Assumptions:
1. Actual EBMITEI = HK$90 million
2. Subscription Money = HK$93.6 million
3. P/E = (HK$550 million + HK$93.6 million) / HK$106.791 million = 6.0267
4. Number of issued shares = 6,436,000 Shares (HK$100 per Share)
5. Number of Sales Shares sold to the Purchasers =312,000 Shares
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Number of Shares to be compensated:
= $31.2 million / (HK$90 million x 6.0267) x 6,436,000 Shares - 312,000 Shares
= 58,211 Shares
Example 2:
Assumptions:
1. Actual EBMITEI = HK$70 million
2. Subscription Money = HK$93.6 million
3. P/E = (HK$550 million + HK$93.6 million) / HK$106.791 million = 6.0267
4. Number of issued shares = 6,436,000 Shares (HK$100 per Share)
5. Number of Sales Shares sold to the Purchasers = 312,000 Shares
6. Number of days between the Completion Date and the day when the
compensation is made=180 days
The amount of cash to be compensated:
= {HK$31.2 million - [HK$31.2 million / (HK$550 million + HK$93.6 million) x
HK$70 million x 6.0267]} x (1 + 10% x 180 / 365)
= HK$11.28 million
6.4 All payments payable or share adjustment pursuant to Clauses 6.2 or 6.3
above (as the case may be) will be made (in such manner as aforementioned)
by the Vendor to the Purchasers within 15 Business Days after the release
of the Company's audited consolidated accounts for the 2003 financial
year, but in any event not later than 31 May 2004.
7. PURCHASERS' RIGHTS
7.1. The Purchasers shall have the Shareholders' rights as stipulated in the
Shareholders' Agreement.
7.2. The Purchasers shall be free to transfer the Shares in whole or in part
after six months from the IPO date.
7.3. In consideration of the investment made by the Purchasers in the Company
by acquiring the Sale Shares from the Vendor and in consideration of the
payment of HK$1 by each Purchaser to the Vendor (receipt of which is
hereby acknowledged), the Vendor hereby grants to each of the Purchasers
an option (the
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"PUT OPTION") to require the Vendor to purchase from the Purchasers, upon
the Purchasers' exercising the Put Option, all their Shares (as reduced or
increased by any reorganization of the Company which takes place prior to
the sale of the Shares pursuant to the exercise of the Put Option) in the
Company at a price (denominated in US$) equal to the Purchase Price per
Share, as adjusted in accordance with Clause 7, together with an annual
rate of return thereon of 10% if the Company is not successful in
implementing the Qualified IPO by 31 December 2004. Such Put Option will
be exercisable by written notice in respect of all Shares (but not any
part thereof) served by the Purchasers upon the Vendor during the period
from 1 January 2005 to 30 June 2005 (both days inclusive) and within 14
days upon receipt of the said written notice, the Vendor will make payment
for the Shares to the Purchasers in such manner as the Purchasers may
direct. The Purchasers shall waive such Put Option immediately before the
Qualified IPO. Without prejudice to the generality of the foregoing and
provided that the Qualified IPO is successfully implemented on or before
30 June 2005, the Purchasers are entitled, at any time prior to such
Qualified IPO, to invest in such number of old Shares of the Company from
the Vendor equivalent to the number of the Sale Shares at the same entry
valuation as that of the "Sale Shares" referred to in Clause 1.1, with
each Share valued at HK$100. The Purchasers shall refund the amount
(representing the amount of the re-invested Shares or any part thereof) it
has received from the Vendor as a result of the exercise of the Put Option
and (as the case may be) pay up any balance of the amount of the
re-invested Shares in cash to the Vendor if the Purchasers re-invest in
the Shares of the Company.
7.4. The Purchasers will be provided with, and have access to all information
and material, financial or otherwise, provided to a member of the Board.
The Purchasers will have the right to discuss and consult with the
management of the Group. In particular, the Group will provide to the
Purchasers:
(a) monthly consolidated management accounts including income statement,
balance sheet and cash flow statement of the Group within 20 days
from the last day of each calendar month;
(b) consolidated annual management accounts of the Group within 45 days
from the end of each calendar year;
(c) consolidated annual audited accounts of the Group within 120 days
from the end of each calendar year;
(d) annual business plan, annual budget and projected financial
statements relating to the Company at least 30 days before the
calendar/financial year end;
9
(e) the opportunity to discuss and review with the Board the management
accounts within 30 days from the Purchasers receipt of the same;
(f) such other operating statistics, and other trading and financial
information in such form as the Purchasers may require in order for
them to be kept properly informed about the Company's interest and
to generally protect the interest of the Purchasers; and
(g) all minutes of the Board meetings within 14 days from the date of
the meetings.
8. QUALIFIED IPO
For the avoidance of doubt, the parties hereto agree to terminate this
Agreement on the receipt by the Company of an in-principle approval for
the Qualified IPO or, conditional upon the Qualified IPO occurring as
envisaged, on such date prior to the Qualified IPO as may be required by
the relevant regulatory body in order to achieve the Qualified IPO, by
executing a termination agreement conditional upon the occurrence of the
Qualified IPO and to take effect from the date of the listing of the
Company, and in the event of the Qualified IPO not taking place by 31
December 2004, the termination agreement shall lapse and this Agreement
and all the rights, obligation and provisions hereto shall continue to
apply to the parties with full force and effect.
9. DIVIDEND POLICY
Subject to any agreement or restriction binding the Company from time to
time, any declaration of dividend by the Company for each financial year
shall be determined by Board taking into account those profits of the
Company available for distribution after appropriation of prudent and
proper reserves including allowance for future working capital, provision
for tax, interest payments and repayments of amounts borrowed. In deciding
whether in respect of any financial year the Company has profits available
for distribution, the parties hereto shall procure that the auditors of
the Company shall certify whether such profits are available or not and
the amount thereof (if any). In giving such certificate, the auditors
shall act as experts and not as arbitrators and their determination shall
be binding.
10. WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS BY THE VENDOR
10.1 The Vendor hereby represents, warrants and undertakes to the Purchasers
(to the intent that the provisions of this Clause shall continue to have
full force and effect
10
notwithstanding Completion) in the terms set out in Schedule 4 and
acknowledge that the Purchasers in entering into this Agreement are
relying on such representations, warranties and undertakings and that the
Purchasers, unless granting a waiver in this regard, shall be entitled to
treat the same as conditions of this Agreement
10.2 The Warranties shall remain in full force and effect and shall continue to
subsist after and notwithstanding Completion.
10.3 The Vendor shall not (save only as may be necessary to give effect to this
Agreement) do or allow and shall procure that no act or omission shall
occur before Completion which would constitute a breach of any of the
Warranties if they were given at Completion or which would make any such
Warranties inaccurate or misleading if they were so given.
11. WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS BY THE VENDOR AND THE COMPANY
11.1 The Vendor and the Company jointly and severally represent, warrant and
undertake to the Purchasers in the terms set out in Schedule 5.
11.2 The Warranties contained in Schedule 5 shall remain in full force and
effect and shall continue to subsist after and notwithstanding Completion.
11.3 The Vendor and the Company further warrant that the terms offered to the
purchasers/subscribers under the relevant sale and purchase of shares
agreement(s)/subscription agreement(s) in respect of (a) post money
valuation; (b) lock up period; (c) profits adjustment; (d) the Purchase
Price or subscription price (save and except the manner of payment of the
relevant subscription price to be made by AIG Asian Opportunity Fund, L.P.
and American International Assurance Company (Bermuda) Limited (as well as
the other subscribers in the present round of financing) to the Company as
set out in Schedule 6, which is annexed hereto for reference purpose only
and the subscription price stated therein, though involving the escrow
arrangement, is calculated at the subscription price of HK$100 for each
subscription share, as adjusted by the EBTMIEI); and (e) the Put Option
are not more favourable than those offered to the Purchasers by the Vendor
hereunder.
12. COSTS AND EXPENSES
12.1 The Vendor will be responsible for all pre-approved legal costs (including
the
11
arrangement fee) reasonably and properly incurred and other pre-approved
expenses in connection with or incidental to the negotiation, finalization
and execution of this Agreement and the Shareholders' Agreement any other
related agreement(s), and the sale and purchase of the Sale Shares.
13. RESTRICTIONS ON COMMUNICATION AND ANNOUNCEMENTS
13.1 Subject to Clause 13.3 hereof, each of the Purchasers hereto undertakes to
the Vendor and the Company that it shall not at any time after the date of
this Agreement divulge or communicate any confidential information
concerning the business, accounts, finance or contractual arrangements or
other dealings, transactions or affairs of the Company which may be within
or may come to its knowledge in connection with the transactions
contemplated by this Agreement to any person other than to its
professional advisers, or among the Shareholders of the Company, or when
required by law or any rule of any relevant stock exchange body, or to its
respective officers or employees who are required to review and consider
the same and who prior to receiving such confidential information shall be
made aware of the restrictions in respect of such confidential information
and shall observe the same as are contained herein, and each of the
Purchasers hereto shall use its best endeavours to prevent the publication
or disclosure of any such confidential information concerning such
matters. This restriction shall not apply to information or knowledge
which is or which properly comes into the public domain, through no fault
of any of the parties to this Agreement or to information or knowledge
which is already known to the Purchasers at the time of its receipt.
13.2 Each of the parties hereto undertakes that it shall not at any time (save
as required by law or any rule of any relevant stock exchange or
regulatory body) 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 withhold or delayed
and may be given either generally or in a specific case or cases and may
be subject to conditions). If any party is required by law or any rule of
any relevant stock exchange or regulatory body to make any announcement in
connection with this Agreement, the other party agrees to supply all
relevant information relating to itself that is within its knowledge or in
its possession as may be reasonably necessary or as may be required by any
exchange and regulatory body to be included in the announcement.
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13.3 The Purchasers hereto undertake to the Vendor and the Company that they
shall not at any time after the date of this Agreement disclose any
information relating to the conditions and terms of this Agreement, which
is treated as confidential information, to any person (including but not
limited to the other Shareholders of the Company) other than to their
respective professional advisers, or when required by law or any rule of
any relevant stock exchange body, or to their respective officers or
employees who are required to review and consider the same and who prior
to receiving such confidential information shall be made aware of the
restrictions in respect of such confidential information and shall observe
the same as are contained herein.
14. NOTICES
14.1 Any notice, claim, demand, court process, document or other communication
to be given under this Agreement (collectively "COMMUNICATION" in this
Clause) shall be in writing in the English or Chinese language and may be
served or given personally or sent to the telex or facsimile numbers (if
any) of the relevant party and marked for the attention and/or copied to
such other person as specified in Clause 14.4.
14.2 A change of address or telex or facsimile number of the person to whom a
communication is to be addressed or copied pursuant to this Agreement
shall not be effective until five days after a written notice of change
has been served in accordance with the provisions of this Clause 14.2 on
all other parties to this Agreement with specific reference in such notice
that such change is for the purposes of this Agreement.
14.3 All communications shall be served by the following means and the
addressee of a communication shall be deemed to have received the same
within the time stated adjacent to the relevant means of despatch:
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MEANS OF DESPATCH TIME OF DEEMED RECEIPT
----------------- ----------------------
Local mail or courier 24 hours
Telex on despatch
Facsimile on despatch
Air courier/Speed-post 3 days
Airmail 7 days
14.4 The initial addresses and facsimile numbers of the parties for the service
of communications, the person for whose attention such communications are
to be marked and the person to whom a communication is to be copied are as
follows:
IF TO THE VENDOR:
JITTER BUG HOLDINGS LIMITED
Address: Units ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇
Facsimile no.: (▇▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ Shuang / Mr. ▇▇▇▇▇ Fork
IF TO THE COMPANY:
NINETOWNS DIGITAL WORLD TRADE HOLDINGS LIMITED
Address: ▇▇▇▇▇ ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Facsimile no.: (▇▇▇) ▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇ Shuang / Mr. ▇▇▇▇▇ Fork
IF TO THE PURCHASERS:
CHINA EQUITY ASSOCIATES L.P. C
▇/▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇) LIMITED
Address: ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Facsimile no.: (▇▇▇) ▇▇▇▇ ▇▇▇▇
14
Attention: ▇▇. ▇▇▇ ▇▇▇ / ▇▇. ▇▇▇▇▇ ▇▇▇
MMFI CAPI VENTURE INVESTMENTS LIMITED
▇/▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇) CO. LTD.
Address: Suite 1112, Two ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇.
Facsimile no.: (▇▇▇) ▇▇▇▇ ▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ / ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
14.5 A communication served in accordance with this Clause shall be deemed
sufficiently served and in proving service and/or receipt of a
communication it shall be sufficient to prove that such communication was
left at the addressee's address or that the envelope containing such
communication was properly addressed and posted or despatched to the
addressee's address or that the communication was properly transmitted by
telex, facsimile or cable to the addressee. In the case of communication
by telex, such communication shall be deemed properly transmitted upon the
receipt by the machine sending the telex answerback of the addressee; in
the case of facsimile transmission, such transmission shall be deemed
properly transmitted on receipt of a report of satisfactory transmission
printed out by the sending machine.
14.6 Nothing in this Clause shall preclude the service of communication or the
proof of such service by any mode permitted by law.
15. GENERAL
15.1 This Agreement and the documents referred to herein are in substitution
for all previous agreements between all or any of the parties hereto and
contain the whole agreement between the parties hereto relating to the
subject matter of this Agreement.
15.2 No amendment or variation of this Agreement shall be effective unless in
writing and signed by or on behalf of each of the parties hereto.
15.3 The Vendor and each of the Purchasers shall do and execute or procure to
be done and execute all such further acts, deeds, things and documents as
may be necessary
15
to give effect to the terms of this Agreement.
16. SEVERANCE
If any provision of this Agreement or part thereof is rendered void,
illegal or unenforceable by any legislation to which it is subject, it
shall be rendered void, illegal or unenforceable to that extent and no
further.
17. PREVALENCE OF AGREEMENT
In the event of any ambiguity or conflict arising between the terms of
this Agreement and those of the Memorandum and Articles of the Company,
the provisions of this Agreement shall prevail as between the Vendor and
the Purchasers.
18. GOVERNING LAW AND JURISDICTION
18.1 This Agreement shall be governed by and construed in accordance with the
laws of HKSAR.
18.2 In relation to any legal action or proceedings arising out of or in
connection with this Agreement, the Vendor and each of the Purchasers
hereby irrevocably submit to the non-exclusive jurisdiction of the Courts
of HKSAR.
19. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
when taken together shall constitute one and the same instrument, and the
parties hereto may execute this Agreement by signing as separate
counterparts. Each counterpart may be signed and executed by a
party/parties and transmitted by facsimile transmission and shall be valid
and effectual as if executed as an original.
16
IN WITNESS whereof the parties have executed this Agreement the day and year
first above written.
SIGNED by ▇▇▇▇ ▇▇▇▇▇▇ ) Ninetowns Digital World Trade Holdings
for and on behalf of ) Limited
NINETOWNS DIGITAL WORLD ) /s/ ▇▇▇▇ ▇▇▇▇▇▇
TRADE HOLDINGS LIMITED )
in the presence of :- )
/s/ Sun Xiaomin
17
SIGNED by Ng Kin Fai ) Jitter Bug Holdings Limited
)
for and on behalf of ) /s/ Ng Kin Fai
JITTER BUG HOLDINGS LIMITED )
In the presence of:- )
/s/ Fork Siu ▇▇▇ ▇▇▇▇▇
18
SIGNED by Colin Sau )
)
of CHINA EQUITY PARTNERS ) /s/ Colin Sau
LIMITED as General Partner for )
CHINA EQUITY ASSOCIATES L.P. )
in the presence of :- )
/s/ ▇▇▇▇▇ ▇▇▇ Ming
19
SIGNED by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
of JAIC International (HK) Co., Ltd. )
as Investment Manager of MMFI CAPI ) /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
VENTURE INVESTMENTS LIMITED )
in the presence of :- )
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇
20
SCHEDULE 1
NAME ADDRESS NO. OF SHARES PURCHASED
---- ------- -----------------------
CHINA EQUITY ASSOCIATES L.P. SUITE 5004, ONE EXCHANGE SQUARE, 8 ▇▇▇,▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇.
MMFI CAPI VENTURE SUITE 1112, TWO ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ 78,000
INVESTMENTS LIMITED QUEENSWAY, ADMIRALTY, HONG KONG.
21
SCHEDULE 2
PARTICULARS OF THE PRC SUBSIDIARIES
BEIJING NEW TAKE E-COMMERCE LIMITED
([Name in Chinese])
1. Business Licence No. : [Name in Chinese]
2. Date of Incorporation : 22 May 2000
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development of network
technology; research, development and
sales of internet application
softwares, e-commerce softwares,
foreign trade system application
softwares; provision of technical
service for self-developed products;
sales of self-developed products.
5. Registered Capital : US$3,500,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : ▇▇. ▇▇▇▇ Shuang
8. Directors : 1. Mr. Wai Ka ▇▇▇▇▇▇, ▇▇▇▇▇
2. Mr. Ko ▇▇▇ ▇▇▇▇
3. ▇▇. ▇▇ Kin Fai
4. ▇▇. ▇▇▇▇ Shuang
5. Mr. Ren Xiaoguang
6. ▇▇. ▇▇▇▇ Min
9. Shareholders and their US$350,000 (10%) contributed by Beijing
respective Shareholdings: Ninetowns Yadi Wall Paper Co., Ltd.
US$3,150,000 (90%) contributed by New
Take Limited
10. Financial Year End : 31st December
22
BEIJING NINETOWNS TIMES E-COMMERCE LIMITED
([Name in Chinese])
1. Business Licence No. : [Name in Chinese]
2. Date of Incorporation : 2 June 2000
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development of network
technology; research, development and
sales of internet application
softwares, e-commerce softwares,
foreign trade system application
softwares; provision of technical
service for self-developed products;
sales of self-developed products.
5. Registered Capital : US$250,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : ▇▇. ▇▇▇▇ Shuang
8. Directors : 1. ▇▇. ▇▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇▇
2. ▇▇. ▇▇▇▇ Shuang
3. Mr. Ren Xiaoguang
4. ▇▇. ▇▇▇▇ Min
9. Shareholders and their US$25,000 (10%) contributed by Beijing
respective Shareholdings: Ninetowns Yadi Wall Paper Co., Ltd.
US$225,000 (90%) contributed by
Shielder Limited
10. Financial Year End : 31st December
23
BEIJING NINETOWNS DIGITAL TECHNOLOGY CO., LTD.
([Name in Chinese])
1. Business Licence No. : 1101061304729
2. Date of Incorporation : 25 July 2000
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development, transfer and
provision of consultancy service for
technology; provision of technological
services; sales of certified and passed
technological products; household
decorations; leasing of electronic
equipment; organization of domestic
cultural interflow; provision of
business information consulting
service.
5. Registered Capital : RMB2,250,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : ▇▇. ▇▇▇▇ Shuang
8. Directors : 1. ▇▇. ▇▇▇▇ Shuang
2. Mr. Ren Xiaoguang
3. ▇▇. ▇▇▇▇ Min
9. Shareholders and their RMB1,800,000 (80%) contributed by
respective Shareholdings: Beijing New Take e-Commerce Limited
RMB450,000 (20%) contributed by Beijing
Ninetowns Times e-Commerce Limited
10. Financial Year End : 31 December
24
SHANGHAI NEW TAKE DIGITAL TECHNOLOGY CO., LTD.
([Name in Chinese])
1. Business Licence No. : 3101011022735
2. Date of Incorporation : 13 September 2001
3. Place of Incorporation : Shanghai, The People's Republic of China
4. Business Scope : Design and installation of computer
network; research, development and sales
of computer hardware and software and
provision of related service; sales of
construction materials, decoration
materials, machinery, household
electrical appliance, textile products;
provision of business information
consulting service.
5. Registered Capital : RMB500,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : Liu ▇▇▇▇ ▇▇▇▇ ([Name in Chinese])
8. Directors : ▇▇. ▇▇▇▇ Shuang
9. Shareholders and their RMB450,000 (90%) contributed by Beijing
respective Shareholdings: Ninetowns Digital Technology Co., Ltd.
RMB50,000 (10%) contributed by Beijing
Ninetowns Import & Export e-Commerce
Co., Ltd.
10. Financial Year End : 31 December
25
BEIJING NINETOWNS PORTS SOFTWARE AND TECHNOLOGY CO., LTD.
([Name in Chinese])
1. Business Licence No. : 1101061588135
2. Date of Incorporation : 1 August 2003
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development of computer
softwares, network technology; provision
of technological services for computer
softwares and network; sales of
certified and passed new products;
manufacturing of computer softwares.
5. Registered Capital : RMB20,000,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : ▇▇. ▇▇▇▇ Shuang
8. Directors : 1. ▇▇. ▇▇▇▇ Shuang
2. ▇▇. ▇▇▇▇ Min
3. Mr. Ren Xiaoguang
9. Shareholders and their RMB4,000,000 (20%) contributed by
respective Shareholdings: Beijing New Take e-Commerce Limited
RMB16,000,000 (80%) contributed by
Beijing Ninetowns Times e-Commerce
Limited
10. Financial Year End : 31 December
26
SCHEDULE 3
FORM OF SHAREHOLDERS' AGREEMENT
27
SCHEDULE 4
WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS BY VENDOR
1. GENERAL INFORMATION
The information provided and matters stated in this Agreement are true,
accurate, valid and subsisting and not misleading in any respect.
2. VENDOR AND THE COMPANY
2.1 The Vendor is the holder of Sale Shares and has full and requisite power
and authority to enter into and perform this Agreement and its obligations
hereunder and this Agreement will, when executed, constitute legal, valid
and binding on the Vendor in accordance with its terms.
2.2 The Sale Shares are issued fully paid or credited as fully paid and are
beneficially owned by the Vendor free from all pre-emption rights, liens,
charges, equities, encumbrances or interests in favour of any other person
and the same are freely transferable by the Vendor without the consent,
approval, permission, licence or concurrence of any third party.
2.3 The copies of the Memorandum and Articles of Association of the Company so
provided to the Purchasers are true and complete and have embodied in them
or annexed to them a copy of every such resolution as is required by the
relevant legislation.
3. CORPORATE STATUS
No events or omissions have occurred which the Vendor reasonably knows
whereby the constitution, subsistence or corporate status of the Company
have been or likely to be adversely affected not covered by this
Agreement.
4. INSOLVENCY
4.1 So far as the Vendor is aware, no order has been made and no resolution
has been passed for the winding up of the Company or for a provisional
liquidator to be appointed in respect of the Company and no petition has
been presented
28
and no meeting has been convened for the purpose of winding up of the
Company.
4.2 So far as the Vendor is aware, no receiver (which expression shall include
an administrative receiver) has been appointed in respect of the Company
or all or any of its assets.
4.3 So far as the Vendor is aware, the Company is neither insolvent, nor
unable to pay its debts or has stopped paying its debts as they fall due.
4.4 So far as the Vendor is aware, no event analogous to any of the foregoing
has occurred in or outside Hong Kong and no material unsatisfied judgment
is outstanding against the Company.
4.5 The Vendor has neither done nor omitted to do anything whereby the
continuance in full force and effect of any overdrafts, loans or finance
facilities extended to the Company might be affected or prejudiced.
5. REPETITION OF WARRANTIES
Prior to the Completion Date, if any of the Warranties set out in this
Schedule are found to be materially untrue, inaccurate or misleading or
have not been fully carried out in any material respect, or in the event
of any of the Vendor becoming unable or failing to do anything required
under this Agreement to be done by them at or before the Completion Date,
the Purchasers may by notice in writing rescind this Agreement.
29
SCHEDULE 5
WARRANTIES, REPRESENTATION AND UNDERTAKINGS BY VENDOR
AND COMPANY
The Vendor and the Company hereby jointly and severally represent, warrant and
undertake to each of the Purchasers that all representations and statements of
fact set out in this Schedule or otherwise contained in the Agreement are and
will be true and accurate as at the date hereof and at all times up to and
including Completion with reference to the facts and circumstances subsisting at
such time.
1. GENERAL INFORMATION
1.1 Each of the Vendor and the Company has full power to enter into this
Agreement and to exercise its rights and perform its obligations hereunder
and (where relevant) all corporate and other actions required to authorize
its execution of this Agreement and its performance of its obligations
hereunder have been duly taken and this Agreement shall, when executed be
a legal, valid and binding agreement on it, enforceable in accordance with
the terms hereof.
1.2 The execution, delivery and performance of this Agreement by the Vendor
and the Company do not and shall not violate in any respect any provision
of :
(a) any law or regulation or any order or decree of any governmental
authority, agency or court of Hong Kong;
(b) (where relevant) the laws and documents incorporating and
constituting any of the Vendor and the Company.
1.3 The information and particulars in respect of the Company and the
subsidiaries set out in this Agreement are true and accurate and all
shares held by any Group company in any other Group company are legally
and beneficially held fully paid up free from any liens, charges,
encumbrances and other third party right.
1.4 All written information given by or on behalf of the Vendor and the
Company to the Purchasers or any of their representatives was when given
and is now true, complete and accurate in all respects and not misleading
in any respect.
2 REGULATORY COMPLIANCE
2.1 Each Group company has been validly incorporated or established pursuant
to the
30
laws of its country of incorporation or establishment, all legal and
procedural requirements and all other formalities concerning the said
incorporation or establishment have been duly and properly complied with,
and each group Company is in good standing.
2.2 All corporate or other documents required to be filed or registered in
respect of each Group company with the authorities in the relevant place
of incorporation of such Group company have been duly filed.
2.3 The statutory books and minute books of each Group company have been
properly written up and no Group company has received any application or
request for rectification of its register of shareholders and compliance
has been made with all other applicable regulatory requirements concerning
each Group company and all issues of shares, debentures or other
securities of each Group company.
2.4 Each Group company has complied with all legislation and obtained all
necessary licences, consents and other permissions and approvals relevant
to the business of the Group company whether in the country, territory or
state in which it is incorporated or operated and each Group company has
complied with all applicable regulatory requirements in relation to any
transactions to which it has been a party prior to Completion.
2.5 All licences, consents and other permissions and approvals required for or
in connection with the carrying on of the business now being carried on by
each Group company are in full force and effect and have been duly
complied with and there is no circumstance which might invalidate any
licence, consent, permission or approval or render it liable to forfeiture
or modification or affect its renewal.
3 ACCOUNTS
3.1 The accounting books and records of each Group company have been properly
written up and present a true and fair view of all the transactions to
which that Group company has been a party and there are at the date hereof
no material inaccuracies or discrepancies of any kind contained or
reflected in the said books and records.
3.2 Having regard to the existing facilities available to it, each Group
company has
31
sufficient working capital with which to carry on its business, in its
present form and at its present level of turnover, for the period of
twelve months following Completion and for the purposes of performing all
orders and obligations placed with or undertaken by it before Completion.
4 ASSETS
4.1 All assets of the Group used or owned by or in the possession of any Group
company (including, without limitation all assets referred to in the
accounts):
(a) are legally and beneficially owned free from any mortgage, charge,
lien other encumbrance by the relevant Group Company;
(b) are in the possession or under the control of the relevant Group
Company which has good and marketable title thereto; and
(c) are not subject to any hire purchase, leasing arrangements or other
arrangements of a similar nature.
4.2 All assets owned or used by the Group are in good repair and capable of
being used for the purposes for which they were designed, acquired or used
by the Group and have throughout their period of ownership by the Group
been maintained and serviced.
4.3 All title deeds and all other documents necessary to prove title or
contractual rights relating to the assets or contractual rights of the
Group are in the possession of the Group.
5 TAXATION
5.1 Each Group company has complied with all other relevant legal requirements
relating to registration or notification for taxation purposes.
5.2 Each Group company has:
(a) paid or accounted for all taxation (if any) due to be paid or
accounted for by it before the date of this Agreement; and
32
(b) taken all reasonable steps to obtain any repayment of or relief from
taxation available to it.
5.3 The returns which ought to have been made by or in respect of each Group
company for any taxation purposes have been made and all such returns have
been prepared on a correct and proper basis.
6 LITIGATION
No Group company is a party to any material litigation, arbitration,
prosecutions, disputes, investigations or to any other material legal or
contractual proceedings (together "Proceedings") and there are no facts or
circumstances subsisting which might give rise to such Proceedings and
there are no unfulfilled or unsatisfied judgments or court orders against
any Group Company.
7 INSOLVENCY
7.1 No order has been made or petition presented or resolution passed for the
winding up of the any Group company, nor has any distress, execution or
other process been levied against any Group company or action taken to
repossess goods in the possession of any Group company.
7.2 No steps have been taken for the appointment of an administrator or
receiver of any part of any Group company's property.
7.3 No floating charge created by Group company has crystallised and there are
no circumstances likely to cause such a floating charge to crystallise.
7.4 No Group company is a party to any transaction which could be avoided in a
winding up.
7.5 No Group company has made or proposed any arrangement or composition with
its creditors or any class of its creditors.
8 INSURANCE
All premiums due in respect of all policies of insurance taken out by the
Group have been paid in full and all the other material conditions of the
said policies have
33
been performed and observed in full. Nothing has been done or omitted to
be done whereby any of the said policies has or may become void or
voidable.
9 PROPERTIES
With respect to each of the properties occupied or leased by the Group in
Hong Kong and the PRC:
(a) the relevant Group company has the legal right to occupy the
property upon the terms set out in the relevant tenancy or lease
agreement (each, a "Tenancy Agreement") and the property is being
used for lawful purposes, which are permitted by the relevant
Tenancy Agreement;
(b) all the rent and other payments payable by the Group have been paid
up to date, and the user of the property occupied by the Group is in
accordance with that provided for in the relevant Tenancy Agreement,
and the terms of the relevant Tenancy Agreement have been duly
complied with and the tenancy /lease is not subject to avoidance or
revocation or early termination due to default of the Group.
10 INTELLECTUAL PROPERTY
10.1 The Group company is the sole and exclusive proprietor of the intellectual
property rights which are owned or registered in the name of and developed
by any Group company and has not previously transferred, assigned or
granted exclusive licences in respect of any intellectual property rights
whatsoever anywhere in the world or otherwise encumbered any of them.
10.2 In respect of all agreements and licences (the "IP Licences") for the use
by any Group company of intellectual property rights not owned by the
relevant Group company:
(a) the IP Licences are valid and subsisting;
(b) the relevant Group company is not in breach of any of the provisions
of the IP Licences; and
(c) all of the IP Licenses contain statements to the effect that the
licensor or
34
grantor of the rights to the Group company under the IP Licences has
the power to licence or grant such rights.
10.3 The use by the Group of the intellectual property rights referred to above
and the operation of each Group company's business generally does not
infringe the intellectual property rights of any third party.
11 MISCELLANEOUS
No Group company has:
(a) committed any breach of any statutory provision, order, bye-law or
regulation binding upon it or any provision of its memorandum of
association or articles of association or of any trust deed,
agreement or licence to which it is a party or of any covenant,
mortgage, charge or debenture given by it;
(b) omitted to do anything required or permitted to be done by it
necessary for the protection of its respective title to or for the
enforcement or the preservation of any order or priority of any
properties or rights owned by it.
In furtherance, the Vendor and the Company hereby jointly and severally
represent, warrant and undertake to each of the Purchasers as follows:-
1. PAYMENT OF TAXES AND CLAIM
The Company will pay all lawful taxes, assessments, and levies on it or
its income or property before they become in default.
2. PROPERTY AND LIABILITY INSURANCE
The Company will maintain insurance against hazards, risks and liability
to persons and property to the extent customary for companies engaged in
the same or similar business.
35
3. MAINTENANCE OF CORPORATE EXISTENCE
The Company will maintain its corporate existence and all rights,
licenses, patents, copyrights, trademarks, etc., used in its business and
will engage only in the type of business described in the business plan.
4. LEGAL COMPLIANCE
The Company will comply with all applicable laws and regulations in the
conduct of its business.
5. PROTECTION OF PROPRIETARY RIGHTS
The Company agrees to take all necessary steps to protect proprietary
rights developed in the future, including causing all key employees to
sign confidentiality and proprietary rights agreement.
6. CHANGE IN BUSINESS
The Company will not change the nature of its business as described in its
business plan.
36
SCHEDULE 6
FORM OF SUBSCRIPTION PRICE ADJUSTMENT AS CONTAINED IN THE AIG
SUBSCRIPTION AGREEMENT
NAMES OF, THE NUMBER OF SUBSCRIPTION SHARES TO BE SUBSCRIBED
AND THE TOTAL SUBSCRIPTION PRICE PAYABLE BY AIG
Terms defined in the Share Subscription Agreement have the same meanings in this
schedule 3.
PART I
(A) (B) (C)
Number of First Subscription
Name Shares to be Subscribed First Subscription Price, in US$
AOF 468,000 3,750,000
AIAB 156,000 1,250,000
1. FIRST SUBSCRIPTION PRICE
The First Subscription Price for the First Subscription Shares shall be
HK$39,000,000 payable by the Investors to the Company in cash in US$
denomination on Completion.
PART II
(A) (B)
Name Number of Second Subscription
Shares to be Subscribed
AOF 3
AIAB 1
1. SECOND SUBSCRIPTION PRICE
1.1 On Completion, the Investors shall deposit US$3,000,000 (comprising of
US$2,250,000 paid by AOF and US$750,000 paid by AIAB) ("ESCROW AMOUNT")
with the Escrow Agent to be held on the terms and conditions set out
below.
2. ESCROW TERMS AND SECOND SUBSCRIPTION PRICE CALCULATION
2.1 The Escrow Agent shall on receipt of the Escrow Amount immediately deposit
the Escrow Amount into a separate interest bearing account in its name
with:
Bank: Citibank N.A. New York
Address: 10/F, Harbour Front II, ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
37
Account Name: Dibb ▇▇▇▇▇▇ ▇▇▇▇▇ Clients' A/C
Account No.: ▇▇▇▇▇▇▇▇ (US$ Saving A/C)
ABA No.: ▇▇▇▇▇▇▇▇▇
SWIFT No.: ▇▇▇▇▇▇▇▇ for the account of Citibank N.A.
Hong Kong
("ESCROW ACCOUNT"),
and subject to paragraph 4 of this schedule 3, to hold the same as escrow
agent and stakeholders on and subject to the provisions of this schedule
3.
2.2 The Second Subscription Price for each of the Second Subscription Shares
shall be:
2.2.1 US$750,000, if the Company's consolidated audited earnings before
tax, minority interests and extraordinary items ("EBTMI") for the
2003 financial year are not less than HK$100,000,000; or
2.2.2 if the Company's EBTMI for the 2003 financial year is less than
HK$100,000,000, calculated as follows:
(Escrow Amount - (A x ((1-(EBTMI / 106,791,000)) x 100)) / 4
where A is 624,000, the Escrow Amount is expressed in the above
equation in HK$, and provided always that the product of the
equation shall be at least HK$0.10
2.3 Within 15 Business Days after the publication and release of the Company's
consolidated audited accounts for the 2003 financial year, the Company and
the Investors undertake to jointly notify and instruct the Escrow Agent to
pay:
2.3.1 the Second Subscription Price for the Second Subscription Shares to
the Company; and
2.3.2 the balance of the Escrow Amount to AOF and AIAB in a ratio of 3:1,
respectively,
and any interest earned on the Escrow Amount shall be distributed on a
pro-rata basis in proportion to the distribution of the Escrow Amount
between the Company and the Investors.
3. NO NOTIFICATION
3.1 The parties undertake to act in good faith in signing the joint
notification in accordance with this schedule 3.
3.2 Notwithstanding paragraph 3.1 of part II of this schedule 3, in the event
that by 30 July 2004 no joint notification has been issued by the Company
and the Investors pursuant to paragraphs 2.2 and 3.1 of part II of this
schedule 3 or if on such date any amount of principal and interest remain
held in the Deposit Escrow Account, then the Escrow Agent may at any time
thereafter issue a request to the Company and the Investors to seek the
joint notification of them on the manner of distribution of the Escrow
Amount and interest accrued thereon and in the event that no such joint
instructions are received by the Escrow Agent after the expiry of 30 days
following the date of the request, the
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Escrow Agent shall pay the Escrow Amount together with interest earned
thereon into the Hong Kong courts.
4. EXERCISE OF PUT OPTION
If at any time prior to the Company and the Investors issuing a joint
notification to the Escrow Agent under paragraph 2.3 of part II of this
schedule 3, the Investors have exercised the Put Option in the terms of
the Share Subscription Agreement, the Investors may contemporaneously
notify the Escrow Agent of the same (serving a copy of the Put Option
notice to the Escrow Agent) and direct that the Escrow Amount, together
with interest earned thereon, be paid to the Investors as the Investors
shall direct.
5. In no other case shall the Escrow Amount be paid to any person.
6. The parties acknowledge that part II of this schedule 3 contains the price
adjustment mechanism in respect of the Investors' total investment in the
Company and, regardless of the value of the First Subscription Price and
the value of the Second Subscription Price as reflected respectively by
the First Subscription Shares and the Second Subscription Shares, the
Investors are investing in the Company under the Share Subscription
Agreement at a pre-money valuation of US$70,500,000 and a post-money
valuation of US$82,500,000.
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