Exhibit 10.65
Dated 28 January, 2004
XXXXXXXXX GLOBAL COMMUNICATIONS HOLDINGS LIMITED
(as the Vendor)
and
VANDA SYSTEMS & COMMUNICATIONS HOLDINGS LIMITED
(as the Purchaser)
and
XXXXXXXXX INTERNATIONAL LIMITED
(as the Guarantor)
--------------------------------------------------------------------------------
AGREEMENT
for the acquisition of
the entire issued share capital of
XXXXXXXXX GLOBAL COMMUNICATIONS INVESTMENTS LIMITED
--------------------------------------------------------------------------------
WOO, XXXX, XXX & LO
Solicitors & Notaries
27th Xxxxx Xxxxxxx Xxxxx
0 Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxx Xxxx
Ref.: AL/FY/KT
TABLE OF CONTENTS
1. INTERPRETATION....................................................... 1
2. SALE AND PURCHASE OF THE SALE SHARES................................. 10
3. CONSIDERATION........................................................ 10
4. CONDITIONS PRECEDENT................................................. 10
5. VENDOR'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS................ 14
6. PURCHASER'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS............. 18
7. COMPLETION........................................................... 24
8. DISCLOSURE........................................................... 28
9. GUARANTEE............................................................ 28
10. CONFIDENTIALITY...................................................... 30
11. FULL EFFECT.......................................................... 30
12. SEVERABILITY......................................................... 30
13. NOTICE............................................................... 30
14. COUNTERPARTS......................................................... 31
15. TIME OF ESSENCE...................................................... 31
16. COSTS................................................................ 31
17. FURTHER ASSURANCE.................................................... 31
18. ENTIRE AGREEMENT..................................................... 31
19. NO WAIVER............................................................ 32
20. ASSIGNMENT........................................................... 32
21. JURISDICTION......................................................... 32
SCHEDULE 1 - PARTICULARS OF THE GROUP
SCHEDULE 2 - CORPORATE STRUCTURE OF THE GROUP
SCHEDULE 3 - CORPORATE STRUCTURE OF THE PURCHASER GROUP
SCHEDULE 4 - VENDOR'S WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
SCHEDULE 5 - PURCHASER'S WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
SCHEDULE 6 - FORM OF FACILITY AGREEMENT
SCHEDULE 7 - FORM OF THE CERTIFICATE
THIS AGREEMENT is made on the 28th day of January, 2004
BETWEEN:
(1) XXXXXXXXX GLOBAL COMMUNICATIONS HOLDINGS LIMITED, a company incorporated in
the British Virgin Islands and having its registered office at Trident
Xxxxxxxx, PO Box 146, Wickhams Cay, Road Town, Tortola, the British Virgin
Islands (the "Vendor");
(2) VANDA SYSTEMS & COMMUNICATIONS HOLDINGS LIMITED, a company incorporated in
Bermuda and having its registered office at Xxxxxxxxx Xxxxx, Xxxxxx Xxxxxx,
Xxxxxxxx XX 00, Xxxxxxx and its principal place of business at Xxxxxxx
Xxxxx 000, Xxxxxx Xxxxx, 000 Xxxx'x Xxxx, Xxxxxx Xxx, Xxxx Xxxx (the
"Purchaser"); and
(3) XXXXXXXXX INTERNATIONAL LIMITED, a company incorporated in Hong Kong and
having its registered office at 00/X, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxx Xxxx (the "Guarantor").
WHEREAS:
(A) The Company was incorporated in the British Virgin Islands and has an
authorised share capital of US$50,000 divided into 50,000 shares of US$1.00
each, of which 10,000 shares have been issued to and are legally and
beneficially owned by the Vendor.
(B) The Purchaser is a company incorporated in Bermuda, the issued share
capital of which is listed on the Stock Exchange. As at the date of this
Agreement, the Purchaser has an authorised share capital of HK$400,000,000
divided into 4,000,000,000 Shares of which 1,537,871,325 Shares are in
issue and are fully paid or credited as fully paid. There are also
outstanding Purchaser Share Options upon the full exercise of which the
Purchaser would have to issue not more than 48,990,000 new Shares.
(C) The Vendor wishes to sell and the Purchaser wishes to buy the Sale Shares
on the terms and subject to the conditions set out below.
(D) The Vendor is an indirect wholly-owned subsidiary of the Guarantor and the
Guarantor has agreed to guarantee the due and punctual performance by the
Vendor of its obligations hereunder.
IT IS AGREED as follows:
1. INTERPRETATION
In this Agreement, including the Recitals and Schedules hereto, unless the
context otherwise requires:
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(a) the following expressions have the following meanings:
"Affiliate" in respect of a company, means any
subsidiaries or holding companies of such
company or any subsidiaries of any of the
holding companies of such company;
"associate" has the meaning ascribed to that term
under the Listing Rules;
"Business Day" a day on which banks in Hong Kong are
generally open for business (excluding
Saturday);
"CCASS" the Central Clearing and Settlement System
operated by HKSCC;
"Certificate" the certificate to be issued in respect of
the Consideration Convertible Note
substantially in the form set out in
Schedule 7;
"CKE" Xxxxxx Kong Enterprises Limited, a
subsidiary of Xxxxxx Kong (Holdings)
Limited;
"CLPT" CLP Telecommunications Limited;
"Companies Ordinance" Companies Ordinance (Cap. 32 of the Laws
of Hong Kong);
"Company" Xxxxxxxxx Global Communications
Investments Limited, further details of
which are contained in Schedule 1;
"Company Accounts Date" 31 December 2003;
"Company Audited Accounts" the audited consolidated balance sheet of
the Group as at 31 December 2003 and its
audited consolidated profit and loss
account for the year ended 31 December
2003, a copy of which has been initialled
on behalf of the Parties for the purpose
of identification;
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"Company Leased Properties" the properties occupied or leased by the
Group, the particulars of which are set
out in Part B of Exhibit C, a copy of
which has been initialled on behalf of the
Parties for the purpose of identification;
"Company Owned Properties" the properties owned by the Group, the
particulars of which are set out in Part A
of Exhibit C, a copy of which has been
initialled on behalf of the Parties for
the purpose of identification;
"Company Properties" the Company Owned Properties and the
Company Leased Properties;
"Completion" the completion of the sale and purchase of
the Sale Shares in accordance with the
provisions of Clause 7;
"Conditions" the terms and conditions to be attached to
the Certificate substantially in the form
set out in Schedule 7 (with such
amendments thereto as the Purchaser and
the Vendor may agree), and "Condition"
refers to the relative numbered paragraph
of the Conditions;
"Consent" includes any licence, consent, approval,
authorisation, permission, waiver, order
or exemption;
"Consideration" the consideration for the transfer of the
Sale Shares pursuant to Clause 2 in the
aggregate amount of HK$7,100,000,000,
which shall be satisfied in accordance
with Clause 3;
"Consideration Convertible the convertible note in the principal sum
Note" of HK$3,200,000,000 to be issued by the
Purchaser to the Vendor (or other
subsidiary of HWL as the Vendor may
direct) in accordance with the terms and
conditions of this Agreement with the
benefit of and subject to the provisions
of the Conditions;
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"Consideration Shares" the 4,875,000,000 new Shares to be
allotted and issued to the Vendor (or as
it may direct) to satisfy part of the
Consideration payable by the Purchaser to
the Vendor pursuant to Clause 3;
"Conversion Date" any date on which the Conversion Rights
(or any of them) are exercised in
accordance with the Conditions;
"Conversion Price" HK$0.96 per Share (subject to adjustments
pursuant to the Conditions);
"Conversion Rights" the rights attached to the Consideration
Convertible Note to convert the principal
amount (or any part thereof) thereof into
new Shares;
"Conversion Shares" the new Shares to be issued by the
Purchaser upon exercise by the Noteholder
of the Conversion Rights, and a
"Conversion Share" shall be construed
accordingly;
"Convertible Notes" the Consideration Convertible Note and the
Facility Convertible Notes;
"Equity Share Capital" the issued share capital of the Purchaser
excluding any part thereof which does not
either as respects dividends or as
respects capital carry any right to
participate beyond a specified amount or
beyond an amount calculated by reference
to a specified rate in a distribution;
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"Event" includes (without limitation) any act,
transaction or omission (whether or not
any of the Purchaser Group Companies or
any of the Group Companies, as the case
may be, is a party thereto) and, but
without limitation, any distribution,
failure to distribute, acquisition,
disposal, transfer, payment, loan or
advance and reference to any event on or
before a date shall be deemed to include
any combination of two or more events the
first of which shall have taken place on
or before the date;
"Executive" the Executive Director of the Corporate
Finance Division of the Securities and
Futures Commission or any delegate for the
time being of the Executive Director;
"Facility Agreement" a loan facility agreement to be entered
into on Completion between the Guarantor
(as the lender) and the Purchaser (as the
borrower), substantially in form and
substance set out in Schedule 6;
"Facility Convertible Notes" the convertible notes to be issued by the
Purchaser to the Guarantor (or other
subsidiary of HWL as the Guarantor may
direct) in accordance with the terms and
conditions of the Facility Agreement and
substantially in the form set out in
Schedule 7 (except as specifically
provided in that Schedule), and "Facility
Convertible Note" shall be construed
accordingly;
"Group" the Company and its subsidiaries (the
corporate structure of which is set out in
Schedule 2) and "members of the Group" and
"Group Companies" shall be construed
accordingly;
"HKSCC" Hong Kong Securities Clearing Company
Limited;
"HK$" or "Hong Kong Dollars" Hong Kong dollars, the lawful currency of
Hong Kong;
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"Hong Kong" the Hong Kong Special Administrative
Region of the People's Republic of China;
"HWL" Xxxxxxxxx Whampoa Limited, a company
incorporated in Hong Kong the shares of
which are listed on the Stock Exchange and
an Affiliate of the Vendor prior to
Completion;
"Intellectual Property Rights" all industrial and intellectual property,
including without limitation, patents,
trade marks, service marks, trade names,
designs and copyrights (including in each
case applications therefor) in any part of
the world and whether or not registered or
registrable and all know-how, software
programs, inventions, formulae, trade
secrets, data, confidential or secret
processes and information, business names
and domain names and any similar rights
situated in any country; and the benefit
of all licences in connection with any of
the foregoing;
"Leased Properties" the properties occupied or leased by the
Purchaser Group, the particulars of which
are set out in Part B of Exhibit A, a copy
of which has been initialled on behalf of
the Parties for the purpose of
identification;
"Listing Rules" the Rules Governing the Listing of
Securities on the Stock Exchange;
"Noteholder" the person who is for the time being the
registered holder of the Consideration
Convertible Note;
"Owned Properties" the properties owned by the Purchaser
Group, the particulars of which are set
out in Part A of Exhibit A, a copy of
which has been initialled on behalf of the
Parties for the purpose of identification;
"Parties" the parties to this Agreement, and "Party"
means any of them;
"PowerCom" PowerCom Network Hong Kong Limited;
6
"PowerCom Acquisition the agreement dated the same date as this
Agreement" Agreement and entered into between CKE,
CLPT, the Purchaser and Xxxxxx Kong
(Holdings) Limited relating to the sale
and purchase of the entire issued share
capital of PowerCom;
"PRC" the People's Republic of China (excluding
Taiwan, Hong Kong and the Macau Special
Administrative Region for the purpose of
this definition);
"Properties" the Owned Properties and the Leased
Properties;
"Purchaser Accounts Date" 31 March 2003;
"Purchaser Audited Accounts" the audited consolidated balance sheet of
the Purchaser Group as at 31 March 2003
and its audited consolidated profit and
loss account for the year ended 31 March
2003;
"Purchaser Group" the Purchaser and its subsidiaries and
associated companies (the corporate
structure of which is set out in Part A of
Schedule 3 and particulars of the
principal members of which are set out in
Part B of Schedule 3) and "members of the
Purchaser Group" and "Purchaser Group
Company" shall be construed accordingly;
"Purchaser Management the audited consolidated balance sheet of
Accounts" the Purchaser Group as at 30 September
2003 and its audited consolidated profit
and loss account for the period from 1
April 2003 to 30 September 2003, a copy of
which has been initialled on behalf of the
Parties for the purpose of identification;
"Purchaser Management Accounts 30 September 2003;
Date"
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"Purchaser Share Options" outstanding and unexercised options
granted under the share option schemes of
the Purchaser carrying subscription rights
upon the exercise of which the Purchaser
is required to issue new Shares at
predetermined prices;
"Purchaser's Warranties" the representations, warranties and
undertakings provided by the Purchaser as
contained in Schedule 5;
"Relief" means, for Taxation purposes, any loss,
relief, allowance, exemption, set-off,
deduction, right to repayment or credit or
other relief of similar nature granted by
or available in relation to Tax pursuant
to any legislation or otherwise;
"Sale Shares" 10,000 shares of US$1.00 each representing
the entire issued share capital of the
Company, which are registered in the name
of and beneficially owned by the Vendor;
"Share(s)" share(s) of HK$0.10 each in the share
capital of the Purchaser existing on the
date of this Agreement and all other (if
any) stock or shares from time to time and
for the time being ranking pari passu
therewith and all other (if any) stock or
shares in the Equity Share Capital
resulting from any sub-division,
consolidation or re-classification
thereof;
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
"Takeovers Code" The Hong Kong Code on Takeovers and
Mergers;
"Tax" (a) any form of tax whenever created or
imposed and whether of Hong Kong or
elsewhere, payable to or imposed by
any Taxation Authority and includes,
without limitation, profits tax,
provisional profits tax, interest
tax, salaries tax, property tax,
taxes on income, estate duty, capital
duty,
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stamp duty, payroll tax and other
similar liabilities or contributions
and any other taxes, levies, duties,
charges, imposts or withholdings
similar to, corresponding with, or
replacing or replaced by any of the
foregoing; and
(b) all charges, interest, penalties and
fines, incidental or relating to any
taxation falling within (a) above,
and "Taxation" shall have the
corresponding meaning;
"Taxation Authority" the Inland Revenue Department of Hong Kong
or any other revenue, customs, fiscal
governmental, xxxxxxxxx, xxxxxxx,
xxxxxxxx, xxxxx, provincial, local
governmental or municipal authority, body
or person, whether of Hong Kong or
elsewhere;
"US$" United States dollars, the lawful currency
of the United States;
"Vendor's Warranties" the representations, warranties and
undertakings provided by the Vendor as
contained in Schedule 4.
(b) the terms "subsidiary" and "subsidiaries" shall have the meaning ascribed
thereto under the Companies Ordinance;
(c) the singular includes the plural and vice versa, words importing one gender
include both genders and the neuter and references to persons include
bodies corporate or unincorporate;
(d) references to statutory provisions are references to those provisions as
respectively amended or re-enacted from time to time and shall include any
provision of which they are re-enactments and any subordinate legislation
made under such provisions;
(e) a reference to a "Clause" or a "Schedule" is a reference to a Clause of or
a Schedule to this Agreement and a reference to this Agreement includes a
reference to each Schedule; and
(f) the headings are for convenience only and shall not affect its
interpretation.
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2. SALE AND PURCHASE OF THE SALE SHARES
The Vendor shall, as beneficial owner, sell the Sale Shares and the
Purchaser shall buy (or procure a wholly-owned subsidiary of the Purchaser
to buy) all of the Sale Shares on the terms and subject to the conditions
of this Agreement free from all rights of pre-emption, options, liens,
claims, equities, charges, encumbrances or third party rights of any nature
whatsoever and with all rights now or becoming attached or accruing thereto
after Completion.
3. CONSIDERATION
3.1 Subject to fulfilment of the conditions set out in Clause 4.1, the
Consideration shall be satisfied at Completion:-
(a) as to HK$3,900,000,000, by way of the issue and allotment of the
Consideration Shares at an issue price of HK$0.80 per share by the
Purchaser to the Vendor (or as it may direct); and
(b) as to the remaining HK$3,200,000,000, by way of the issue of the
Consideration Convertible Note by the Purchaser to the Vendor (or
other subsidiary of HWL as the Vendor may direct) in its full face
value equal to HK$3,200,000,000, upon and subject to the Conditions
and the Certificate.
3.2 The Consideration Shares shall be allotted and issued in accordance with
Clause 3.1 credited as fully paid at the issue price and shall rank pari
passu among themselves and with all Shares in issue on or after the date of
Completion.
3.3 The Consideration Convertible Note shall be issued in accordance with
Clause 3.1 credited as fully paid at its full face value.
4. CONDITIONS PRECEDENT
4.1 This Agreement is subject to the following conditions:
(a) the passing of a resolution by the shareholders of the Purchaser at a
general meeting of the Purchaser approving the increase in the
authorised share capital of the Purchaser from HK$400,000,000 to
HK$3,000,000,000 by the creation of an additional 26,000,000,000
Shares;
(b) approval by the independent shareholders of the Purchaser of (a) the
acquisition by the Purchaser of the Sale Shares; (b) issue and
allotment of the Consideration Shares to the Vendor (or as it may
direct); (c) issue of the Consideration Convertible Note to the Vendor
(or to another subsidiary of HWL as the Vendor may direct); (d) the
entering into of the Facility Agreement with the Guarantor (if such
approval is required under the Listing Rules or otherwise required by
the Stock Exchange); (e) the issue of the Facility Convertible Notes
to the Guarantor (or to
10
another subsidiary of HWL as the Guarantor may direct) (if such
approval is required under the Listing Rules or otherwise required by
the Stock Exchange); (f) issue and allotment of the Shares to be
issued from time to time upon exercise of the conversion rights under
the Convertible Notes; and (g) all other transactions contemplated
under this Agreement at a general meeting of the Purchaser;
(c) (i) the passing of an ordinary resolution by an independent vote
(within the meaning of Note 1 of the Notes on dispensations from
Rule 26 of the Takeovers Code or as may be required by the
Executive) of the shareholders of the Purchaser approving a
waiver of the obligation of the Vendor and parties acting in
concert with it (including CKE) to make a mandatory offer for all
the shares of the Purchaser under Rule 26 of the Takeovers Code
as a result of the issue of the Consideration Shares to the
Vendor (or as it may direct), and/or the issue of consideration
Shares to CKE and CLPT (or as they may direct respectively) under
the PowerCom Acquisition Agreement; and
(ii) such a waiver having been obtained from the Executive and not
having been revoked or amended and, where such waiver is granted
subject to conditions, such conditions being reasonably
acceptable to the Vendor and, to the extent any such conditions
are required to be fulfilled before the waiver becomes effective,
they are so fulfilled; -
(d) (i) the passing of an ordinary resolution by an independent vote
(within the meaning of Note 1 of the Notes on dispensations from
Rule 26 of the Takeovers Code or as may be required by the
Executive) of the shareholders of the Purchaser approving a
waiver of the obligation of the Vendor and parties acting in
concert with it (including the Guarantor) to make a mandatory
offer for all the Shares under Rule 26 of the Takeovers Code as a
result of the issue of Shares pursuant to a partial or full
exercise of the conversion rights under the Consideration
Convertible Note and/or the Facility Convertible Notes or any of
them to the Vendor or the Guarantor (or as they may direct
respectively); and
(ii) such a waiver having been obtained from the Executive and not
having been revoked or amended and, where such waiver is granted
subject to conditions, such conditions being reasonably
acceptable to the Vendor and, to the extent any such conditions
are required to be fulfilled before the waiver becomes effective,
they are so fulfilled;
(e) the Listing Committee of the Stock Exchange granting the listing of
and permission to deal in the Consideration Shares, the Conversion
Shares and the Shares to be issued upon exercise of the conversion
rights under the Facility Convertible Notes (in each case, either
unconditionally or
11
subject only to conditions to which the Vendor and the Purchaser have
no reasonable objection);
(f) (i) the compliance of announcement and shareholders' approval
requirements under the Listing Rules or otherwise of the Stock
Exchange in relation to present and future transactions
contemplated as at the date of this Agreement with HWL and/or any
of its subsidiaries and/or their respective associates (both as
at the date of this Agreement and immediately after Completion)
which will constitute connected transactions of the Purchaser
following Completion, including, if required, the approval by
independent shareholders of the Purchaser in respect of those
connected transactions and in respect of any waivers relating
thereto as referred to in paragraph (f)(ii) below; and
(ii) the granting by the Stock Exchange of such waivers relating to
those connected transactions on such terms as may be reasonably
acceptable to both the Vendor and the Purchaser;
(g) the compliance of any other requirements under the Listing Rules or
otherwise of the Stock Exchange in relation to the sale and purchase
of the Sale Shares, the issue of the Consideration Shares, the issue
of the Convertible Notes, the issue of the Conversion Shares upon
exercise of the Conversion Rights, the issue of the Shares to be
issued upon exercise of the conversion rights under the Facility
Convertible Notes and the other transactions contemplated under this
Agreement, to the reasonable satisfaction of the Vendor and the
Purchaser (in relation to matters regarding the compliance of
requirements applicable solely to HWL and its subsidiaries, to the
reasonable satisfaction of the Vendor only);
(h) (where required) the Bermuda Monetary Authority granting its
permission to the issue of the Consideration Convertible Note, the
issue of the Facility Convertible Notes, and the issue and allotment
of the Consideration Shares, the issue and allotment of the Conversion
Shares and the issue and allotment of the Shares to be issued upon
exercise of any of the conversion rights under the Facility
Convertible Notes;
(i) the obtaining of all Consents from government or regulatory
authorities or other third parties which are necessary or desirable in
connection with the execution and performance of this Agreement and
any of the transactions contemplated under this Agreement;
(j) the Vendor having obtained a legal opinion of a firm of Bermuda
lawyers acceptable to the Vendor covering such issues and matters of
laws and requirements in Bermuda in respect of the Purchaser, this
Agreement, the issue of the Consideration Shares, the issue of the
Consideration Convertible Note, the issue of the Facility Convertible
Notes, the issue of the Conversion Shares, and the issue of the Shares
upon any exercise of the conversion rights under the Facility
Conversion
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Notes, in such form and substance reasonably satisfactory to the
Vendor;
(k) all the Vendor's Warranties being true and correct in all material
respects as at the date of Completion by reference to the facts and
circumstances subsisting as at that date; and
(l) all the Purchaser's Warranties being true and correct in all material
respects as at the date of Completion by reference to the facts and
circumstances subsisting as at that date.
4.2 The Vendor shall use all reasonable endeavours to procure the fulfilment of
the conditions set out in Clauses 4.1(c)(ii), d(ii), (i) (in the case of
Clause 4.1(i), as far as Consents relating to the Vendor are concerned),
(j) and (k) and the Purchaser shall use all reasonable endeavours to
procure the fulfilment of the conditions set out in Clauses 4.1(a), (b),
(c)(i), (d)(i), (e), (f), (g), (h), (i) (in the case of Clause 4.1(i), as
far as Consents relating to the Purchaser are concerned) and (1) as soon as
reasonably practicable and in any event before 13 March 2004 (or such later
date as the Vendor and the Purchaser may agree).
4.3 Subject to compliance with relevant laws, rules and regulations, approval
from shareholders or independent shareholders of the Purchaser in respect
of the matters required to be so approved as referred to in Clauses 4.1(a),
(b), (c)(i), (d)(i) and (f) above shall be sought in such number and
combination of resolutions as the Vendor and the Purchaser may require, so
that some or all of those matters shall be contained in the same resolution
in the notice of the relevant special general meeting or meetings of the
Purchaser.
4.4 The Purchaser may at any time waive in writing the condition set out in
Clause 4.1(k) and such waiver may be made subject to such terms and
conditions as are determined by the Purchaser.
4.5 The Vendor may at any time waive in writing any of the condition set out in
Clause 4.1(1) and such waiver may be made subject to such terms and
conditions as are determined by the Vendor.
4.6 The Vendor and the Purchaser may at any time jointly waive in writing the
condition set out in Clause 4.l(i) if it is agreed that the Consents which
have not been obtained are not material to the business of the Purchaser
Group and the Group taken as a whole, and such waiver may be made subject
to such terms and conditions determined by the Vendor and the Purchaser
jointly. The conditions set out in Clauses 4.1(a), (b), (e), (f), (g), (h)
and (j) shall not be waived unless all Parties so agree in writing, and the
conditions set out in Clauses 4.l(c) and (d) shall not be waived in any
event.
4.7 Each of the Vendor and the Purchaser shall provide such reasonable
assistance as requested by the other to assist the other to procure the
fulfilment of those conditions set out in Clauses 4.1(a) to (j) which the
other is to procure to fulfill.
4.8 If any of the conditions set out in Clause 4.1 has not been fulfilled (or
waived by
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the relevant Party) by 13 March 2004 (or such other date as the Parties may
agree in writing) (except the conditions set out in Clauses 4.1(k) and (1)
which shall be fulfilled simultaneously upon Completion), this Agreement
shall lapse and be terminated and thereafter all rights, obligations and
liabilities of all Parties hereunder shall cease and determine and no Party
shall have any claim against the other under this Agreement except for
antecedent breach.
4.9 The Purchaser shall, as soon as practicable after the fulfillment of any of
the conditions set out in Clauses 4.1(a), (b), (c)(i), (d)(i), (e), (f),
(g), (h) and (i), provide to the Vendor certified copies of the documents
(or such other evidence as is satisfactory to the Vendor) which evidence
such fulfillment.
4.10 The Vendor shall, as soon as practicable after the fulfillment of any of
the conditions set out in Clauses 4.1(c)(ii), (d)(ii) and (i), provide
to the Purchaser certified copies of the documents (or such other evidence
as is reasonably satisfactory to the Purchaser) which evidence such
fulfillment. The Vendor shall, as soon as practicable after the fulfillment
of the condition set out in Clause 4.1(j), inform the Purchaser of such
fulfillment.
5. VENDOR'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
5.1 The Vendor hereby represents and warrants to the Purchaser that the
Vendor's Warranties are true and accurate in all material respects and not
misleading in any material respect as at the date of this Agreement and
will remain true and accurate in all material respects and not misleading
in any material respect at all times up to and as at Completion by
reference to the facts and circumstances then subsisting.
5.2 The Vendor accepts that the Purchaser is entering into this Agreement in
reliance upon the Vendor's Warranties notwithstanding any information
regarding the Group which may otherwise have or will come into the
Purchaser's possession.
5.3 The Vendor shall indemnify and hold harmless the Purchaser against any
costs (including all court and legal costs), expenses or other liabilities
which it may incur arising out of or in connection with any breach of the
Vendor's Warranties.
5.4 Each of the Vendor's Warranties shall be construed as a separate
representation and warranty and (save as expressly provided to the
contrary) shall not be limited or restricted by reference to or inference
from the terms of any other Vendor's Warranties or any other terms of this
Agreement.
5.5 The rights of the Purchaser in respect of the Vendor's Warranties (as far
as they relate to the Purchaser's acquisition of the Sale Shares under this
Agreement) shall be restricted in the following manner:
(a) no claim shall be made against the Vendor in respect of any breach of
Vendor's Warranties unless: (i) in respect of any Vendor's Warranties
in
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respect of Taxation, written notice thereof shall have been given by
the Purchaser to the Vendor within three years from the date of
Completion; or (ii) in respect of any other Vendor's Warranties,
written notice thereof shall have been given by the Purchaser to the
Vendor within one year from the date of Completion;
(b) no claim shall be made in respect of any breach of Vendor's Warranties
unless the amount of the claim or the aggregate amount of the claims
is over HK$100,000,000, and for this purpose no claim shall be
aggregated unless its amount is over HK$10,000,000;
(c) the maximum liability of the Vendor for the breach of Vendor's
Warranties or otherwise shall not exceed the amount which is equal to
the Consideration together with any reasonable costs and expenses
properly incurred by the Purchaser in seeking compensation and damages
from the Vendor pursuant to this Agreement.
5.6 The Vendor shall procure that, save with the prior written consent of the
Purchaser (which consent shall not be unreasonably withheld or delayed) or
as otherwise contemplated in this Agreement:
(a) the business of the Group will continue to be operated on a normal and
prudent basis and in the ordinary course of day-to-day operations
consistent with past practice; and
(b) the Group will not do or omit to do (or allow to be done) any act or
thing:
(i) which would or would likely to constitute a breach of the
Vendor's Warranties or any of the Vendor's undertakings set out
in this Agreement; or
(ii) which has or is likely to have a material adverse effect on the
Group taken as a whole,
from the date of this Agreement until the date of Completion.
5.7 The Vendor undertakes to the Purchaser to procure that from the date of
this Agreement until the date of Completion, save with the prior written
consent of the Purchaser (which consent shall not be unreasonably withheld
or delayed) or as otherwise expressly contemplated in this Agreement, none
of the Group Companies will:
(a) issue or agree to issue any of its share or loan capital or grant or
agree to grant, redeem or amend the terms of any option over or right
to acquire any of its share or loan capital;
(b) purchase or redeem any shares or make any repurchases or reduction of
its share capital or provide financial assistance for any such
purchase;
15
(c) borrow or otherwise raise money or incur or discharge any indebtedness
or create any security (except (i) in the ordinary course of business
which do not exceed HK$20,000,000 from external lenders in aggregate
for all Group Companies, and (ii) borrowings from the Guarantor or its
Affiliates, of an amount not exceeding HK$4,000 million);
(d) resolve to alter the provisions of its memorandum or bye-laws or
constitutive documents or adopt or pass any regulations or resolutions
inconsistent therewith;
(e) enter into any material contract or any material capital commitment or
undertake or incur any material contingent liability (otherwise than
in the ordinary course of business);
(f) make any substantial change (including, but not limited to, any change
by way of incorporation, acquisition or disposal of a subsidiary or a
business) in the nature, extent or terms of organisation of its
business, or carry on any business other than its existing business;
(g) in any respect depart from the ordinary course of its day to day
business;
(h) create or permit to be arisen any lien, charge, pledge, mortgage,
encumbrance or other security interest on or in respect of any of its
undertaking, property or assets (except in the ordinary course of
business);
(i) declare, pay or make any dividends or other capital distributions;
(j) appoint any directors, secretary or auditors;
(k) sell, transfer, lease, sub-lease, license, sub-license, assign, grant
any option over or otherwise dispose of, or purchase, take on lease or
licence or assume possession of, any interests in land, or agree to do
any of the foregoing, except in the ordinary course of business;
(l) increase (save for normal annual salary review, and except for any
increase pursuant to any agreement or arrangement in existence before
the date of this Agreement) or agree to increase the remuneration
(including, without limitation, bonuses, commissions and benefits in
kind) of its directors, employees or consultants or provide or agree
to provide any gratuitous payment or benefit to any such person or any
of their dependents or have their terms of employment materially
altered;
(m) hire or engage the service of any new employee or consultant whose
monthly remuneration (including benefits) is or would be in excess of
HK$200,000 per month;
(n) establish any pension, retirement scheme, share option scheme, profit
16
sharing or bonus scheme or any other benefit scheme;
(o) acquire or agree to acquire or dispose or agree to dispose of any
material asset or stock other than in the normal course of business;
(p) make any payments out of any bank or deposit account exceeding
HK$500,000 in aggregate for all Group Companies except for payments in
the ordinary course of business;
(q) enter into, alter or agree to alter the terms of, any borrowing,
factoring or other financing or lending arrangement, facility letter,
undertaking, guarantee, indemnity, comfort letter or commitment of any
kind whatsoever (except (i) borrowings from the Guarantor or its
Affiliates, of an amount not exceeding HK$4,000 million and (ii) for
any renewal or amendment of any such arrangement, letter, undertaking,
guarantee, indemnity or commitment from any other external lender upon
the expiry of previous ones in the ordinary course of business which
(A) do not involve any increase in the principal amount of the
relevant facility; (B) are at normal market rates and on normal
commercial terms; and (C) do not exceed HK$20,000,000, in aggregate
for all Group Companies);
(r) make any advances or other credits to any person or give any guarantee
or indemnity or act as surety, or otherwise accept any direct or
indirect liability, for the liabilities or obligations of any person
other than a Group Company, in each case other than in the ordinary
course of business;
(s) alter or agree to alter, terminate or agree to terminate or waive any
right under, any agreement to which it is party and which has or is
likely to have a material adverse effect on the Group taken as a
whole, or enter into any unusual or abnormal material commitment
except in the ordinary course of business;
(t) commence, compromise, settle, release, discharge or compound any
civil, criminal, arbitration or other proceedings or any liability,
claim, action, demand or dispute or waive any right in relation to any
of the foregoing, which in each case would or would likely to have a
material adverse effect on the Group taken as a whole;
(u) release, compromise or write off any amount recorded in its books of
account as owing by any debtors which would or would likely to have a
material adverse effect on the Group taken as a whole;
(v) terminate or allow to lapse any insurance policy except in the
ordinary course of business or in connection with the transactions
contemplated under this Agreement, or (other than the transactions
contemplated under this Agreement) do anything to render any insurance
policy void or voidable;
17
(w) dispose of the ownership, possession, custody or control of any
corporate or other books or records which are required under any law,
regulation, rule or code to be kept or which should be kept on a
prudent basis;
(x) propose or pass any shareholders' resolution other than a resolution
at any annual general meeting which is not special business;
(y) grant any power of attorney or otherwise authorise any other person to
do any of the above;
(z) enter into any transaction with or for the benefit of or which confers
a personal benefit to any person who is connected (within the meaning
of the Listing Rules) with the Vendor or with the Purchaser after
Completion (save for (i) any transactions to be disclosed in the
circular to shareholders of the Purchaser to be issued in connection
with the transactions contemplated under this Agreement; and (ii) any
transactions to be exempted from disclosure or independent
shareholders' approval requirements either under the Listing Rules or
pursuant to waivers by the Stock Exchange);
(aa) enter into any partnership or joint venture arrangement; or
(bb) establish or open or close any branch or office which is material to
the business of the Group taken as a whole,
and the Vendor shall procure that the Purchaser be kept informed of the
affairs of the Group which are of material importance to the Group taken as
a whole until the date of Completion.
5.8 If, prior to Completion, any of the Vendor's Warranties are found to be
untrue, misleading or incorrect in any material respect or any of the
undertaking set out in Clauses 5.6 and 5.7 has not been fully complied with
in any material respect the Purchaser shall not be bound to complete the
purchase of the Sale Shares and the Purchaser may by notice to the Vendor
rescind this Agreement without liability on its part. The right conferred
upon the Purchaser by this Clause 5.8 is in addition to and without
prejudice to any other rights and remedies of the Purchaser in respect of
any antecedent breach.
6. PURCHASER'S REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 The Purchaser hereby represents and warrants to each of the Vendor and the
Guarantor that the Purchaser's Warranties are true and accurate in all
material respects and not misleading in any material respect as at the date
of this Agreement and will remain true and accurate in all material
respects and not misleading in any material respect at all times up to and
as at Completion by reference to the facts and circumstances then
subsisting.
18
6.2 The Purchaser accepts that each of the Vendor and the Guarantor is entering
into this Agreement in reliance upon the Purchaser's Warranties
notwithstanding any information regarding the Purchaser Group which may
otherwise have or will come into the Vendor's possession and/or the
Guarantor's possession.
6.3 The Purchaser acknowledges and agrees that:
(a) each of the Vendor and the Guarantor currently intends that steps will
be taken with a view to achieving the required public float of Shares
after Completion, such steps to include effecting possible placing of
Shares; and
(b) in connection with the appointment and engagement of placing agent and
underwriter for the possible placing of shares, the Vendor and/or the
Guarantor may have to provide representations, warranties and
undertakings to the proposed placing agents and underwriters, and in
so doing the Vendor and the Guarantor will be relying upon the
Purchaser's Warranties under this Agreement.
6.4 The Purchaser shall indemnify and hold harmless each of the Vendor and the
Guarantor against any costs (including all court and legal costs),
expenses, losses or other liabilities which they may incur arising out of
or in connection with any breach of the Purchaser's Warranties.
6.5 Each of the Purchaser's Warranties shall be construed as a separate
representation and warranty and (save as expressly provided to the
contrary) shall not be limited or restricted by reference to or inference
from the terms of any other Purchaser's Warranties or any other terms of
this Agreement.
6.6 The rights of the Vendor and the Guarantor in respect of the Purchaser's
Warranties (as far as they relate to the Vendor's acquisition of the
Consideration Shares and the Consideration Convertible Note and the
Guarantor's entering into of the Facility Agreement, in each case under
this Agreement) shall be restricted in the following manner:
(a) no claim shall be made against the Purchaser in respect of any breach
of Purchaser's Warranties unless: (i) in respect of any Purchaser's
Warranties in respect of Taxation, written notice thereof shall have
been given by the Vendor or by the Guarantor to the Purchaser within
three years from the date of Completion; or (ii) in respect of any
other Purchaser's Warranties, written notice thereof shall have been
given by the Vendor or the Guarantor to the Purchaser within one year
from the date of Completion;
(b) no claim shall be made in respect of any breach of Purchaser's
Warranties unless the amount of the claim or the aggregate amount of
the claims is over HK$10,000,000, and for this purpose no claim shall
be aggregated unless its amount is over HK$1,000,000; and
19
(c) the maximum aggregate liability of the Purchaser to the Vendor and the
Guarantor for the breach of Purchaser's Warranties or otherwise shall
not exceed the amount which is equal to the Consideration together
with any reasonable costs and expenses properly incurred by the Vendor
and/or the Guarantor in seeking compensation and damages from the
Purchaser pursuant to this Agreement.
6.7 The Purchaser shall procure that, save with the prior written consent of
the Vendor (which consent shall not be unreasonably withheld or delayed) or
as otherwise contemplated in this Agreement:
(a) the business of the Purchaser Group will continue to be operated on a
normal and prudent basis and in the ordinary course of day-to-day
operations consistent with past practice; and
(b) the Purchaser Group will not do or omit to do (or allow to be done)
any act or thing:
(i) which would or would likely to constitute a breach of the
Purchaser's Warranties or any of the Purchaser's undertakings set
out in this Agreement; or
(ii) which has or is likely to have a material adverse effect on the
Purchaser Group taken as a whole,
from the date of this Agreement until the date of Completion.
6.8 The Purchaser undertakes to the Vendor and the Guarantor to procure that
from the date of this Agreement until the date of Completion, save with the
prior written consent of the Vendor and the Guarantor (which consent shall
not be unreasonably withheld or delayed, and consent in respect of a
particular transaction shall be deemed to be given if written resolutions
approving the relevant transaction is signed by directors of the Purchaser
including at least a director nominated by the Guarantor) or as otherwise
expressly contemplated in this Agreement, none of the Purchaser Group
Companies will:
(a) issue or agree to issue any of its share or loan capital or grant or
agree to grant, redeem or amend the terms of any option over or right
to acquire any of its share or loan capital except for (i) the issue
of any Shares pursuant to the exercise of any Purchaser Share Options
granted and outstanding as at the date of this Agreement and (ii) the
issue of the Consideration Shares;
(b) purchase or redeem any shares or make any repurchases or reduction of
its share capital or provide financial assistance for any such
purchase;
(c) borrow or otherwise raise money or incur or discharge any indebtedness
or create any security (except in the ordinary course of business
which do not exceed HK$70,000,000 in aggregate for all Purchaser Group
20
Companies);
(d) resolve to alter the provisions of its memorandum or bye-laws or
constitutive documents or adopt or pass any regulations or resolutions
inconsistent therewith;
(e) enter into any material contract or any material capital commitment or
undertake or incur any material contingent liability (otherwise than
in the ordinary course of business);
(f) make any substantial change (including, but not limited to, any change
by way of incorporation, acquisition or disposal of a subsidiary or a
business) in the nature, extent or terms of organisation of its
business, or carry on any business other than its existing business;
(g) in any respect depart from the ordinary course of its day to day
business;
(h) create or permit to be arisen any lien, charge, pledge, mortgage,
encumbrance or other security interest on or in respect of any of its
undertaking, property or assets (except in the ordinary course of
business);
(i) declare, pay or make any dividends or other capital distributions;
(j) appoint any directors (except any appointment that any director of the
Purchaser nominated by HWL is aware as at the date hereof and has
approved in writing), secretaries and auditors;
(k) sell, transfer, lease, sub-lease, license, sub-license, assign, grant
any option over or otherwise dispose of, or purchase, take on lease or
licence or assume possession of, any interests in land, or agree to do
any of the foregoing, except in the ordinary course of business;
(l) increase (save for normal annual salary review, and except for any
increase pursuant to any agreement or arrangement in existence before
the date of this Agreement) or agree to increase the remuneration
(including, without limitation, bonuses, commissions and benefits in
kind) of its directors, employees or consultants or provide or agree
to provide any gratuitous payment or benefit to any such person or any
of their dependents or have their terms of employment materially
altered;
(m) hire or engage the service of any new employee or consultant whose
monthly remuneration (including benefits) is or would be in excess of
HK$100,000 per month;
(n) establish any pension, retirement scheme, share option scheme, profit
sharing or bonus scheme or any other benefit scheme;
(o) acquire or agree to acquire or dispose or agree to dispose of any
material
21
asset or stock other than in the normal course of business;
(p) make any payments out of any bank or deposit account exceeding
HK$500,000 in aggregate for all Purchaser Group Companies except for
payments in the ordinary course of business;
(q) enter into, alter or agree to alter the terms of, any borrowing,
factoring or other financing or lending arrangement, facility letter,
undertaking, guarantee, indemnity, comfort letter or commitment of any
kind whatsoever except for any renewal or amendment of any such
arrangement, letter, undertaking, guarantee, indemnity or commitment
upon the expiry of previous ones in the ordinary course of business
which (i) do not involve any increase in the principal amount of the
relevant facility; (ii) are at normal market rates and on normal
commercial terms; and (iii) do not exceed HK$70,000,000 in aggregate
for all Purchaser Group Companies;
(r) make any advances or other credits to any person or give any guarantee
or indemnity or act as surety, or otherwise accept any direct or
indirect liability, for the liabilities or obligations of any person
other than a Purchaser Group Company, in each case other than in the
ordinary course of business;
(s) alter or agree to alter, terminate or agree to terminate or waive any
right under, any agreement to which it is party and which has or is
likely to have a material adverse effect on the Purchaser Group taken
as a whole, or enter into any unusual or abnormal material commitment
except in the ordinary course of business;
(t) commence, compromise, settle, release, discharge or compound any
civil, criminal, arbitration or other proceedings or any liability,
claim, action, demand or dispute or waive any right in relation to any
of the foregoing, which in each case would or would likely to have a
material adverse effect on the Purchaser Group taken as a whole;
(u) release, compromise or write off any amount recorded in its books of
account as owing by any debtors which would or would likely to have a
material adverse effect on the Purchaser Group taken as a whole;
(v) terminate or allow to lapse any insurance policy except in the
ordinary course of business or in connection with the transactions
contemplated under this Agreement, or (other than the transactions
contemplated under this Agreement) do anything to render any insurance
policy void or voidable;
(w) dispose of the ownership, possession, custody or control of any
corporate or other books or records which are required under any law,
regulation, rule or code to be kept or which should be kept on a
prudent basis;
22
(x) propose or pass any shareholders' resolution other than a resolution
at any annual general meeting which is not special business;
(y) grant any power of attorney or otherwise authorise any other person to
do any of the above;
(z) enter into any transaction with or for the benefit of or which confers
a personal benefit to any person (other than the Vendor or its
Affiliates) who is connected (within the meaning of the Listing Rules)
with the Purchaser;
(aa) enter into any partnership or joint venture arrangement; or
(bb) establish or open or close any branch or office which is material to
the business of the Purchaser Group taken as a whole,
and the Purchaser (i) shall procure that no Purchaser Share Options will be
granted during the period from the date of this Agreement pending
Completion; and (ii) shall procure that the Vendor be kept informed of the
affairs of the Purchaser Group which are of material importance to the
Purchaser Group taken as a whole until the date of Completion.
6.9 If, prior to Completion, any of the Purchaser's Warranties are found to be
untrue, misleading or incorrect in any material respect or any of the
undertakings set out in Clauses 6.7 and 6.8 has not been fully complied
with in any material respect the Vendor shall not be bound to complete the
sale of the Sale Shares and the Vendor may by notice to the Purchaser
rescind this Agreement without liability on its part. The right conferred
upon the Vendor by this Clause 6.9 is in addition to and without prejudice
to any other rights and remedies of the Vendor in respect of any antecedent
breach.
6.10 For a period of three months starting from the day falling two Business
Days after the Completion Date, the Purchaser shall not, save pursuant to:
(1) the terms of any employee share option scheme of the Purchaser; or (2)
any outstanding subscription warrants; or (3) bonus or scrip dividend or
similar arrangements which provide for the allotment of Shares in lieu of
the whole or part of a dividend on Shares of the Purchaser in accordance
with its bye-laws; or (4) conversion of outstanding convertible bonds or
loan notes; or (5) the issue of new Shares as consideration and of
convertible notes by the Purchaser under this Agreement or the PowerCom
Acquisition Agreement; or (6) any requirements under the Listing Rules in
order to ensure that sufficient Shares are "held by the public" (within the
meaning under the Listing Rules) following Completion:
(a) allot or issue or offer to allot or issue or grant any option, right
or warrant to subscribe (either conditionally or unconditionally, or
directly or indirectly, or otherwise) any Shares or any interests in
Shares or any
23
securities convertible into or exercisable or exchangeable for or
substantially similar to any Shares or interest in Shares; or
(b) agree (conditionally or unconditionally) to enter into or effect any
such transaction with the same economic effect as any of the
transactions described in Clause 6.10(a); or
(c) announce any intention to enter into or effect any such transaction
described in Clause 6.10(a) or 6.10(b),
without first having obtained the written consent of the Vendor.
6.11 The representations and warranties in Schedule 5 in respect of the
Purchaser Group Companies or the Purchaser Group shall, in the case of
Purchaser Group Companies that are associated companies of the Purchaser,
be given to the extent as far as the Purchaser and its subsidiaries are
aware.
7. COMPLETION
7.1 The sale and purchase of the Sale Shares shall be completed at the
registered office of the Vendor (or such other venue as the parties may
otherwise agree) at 11:00 a.m. (Hong Kong time) on the fourth Business Day
after all the conditions set out in Clause 4.1 have either been fulfilled
or waived in accordance with Clause 4 (or such other date and time as may
be agreed by the Parties) (except the conditions set out in Clauses 4.1(k)
and (1) which shall be fulfilled simultaneously upon Completion) when all
(but not part only) of the following business will be, or will have been,
transacted:
(a) the Vendor shall deliver to the Purchaser:
(i) instrument of transfer in respect of the Sale Shares duly
executed by or on behalf of the Vendor in favour of the Purchaser
or a wholly-owned subsidiary of the Purchaser (as the Purchaser
may direct);
(ii) the original share certificates for all the Sale Shares for
cancellation;
(iii) a certified true copy or certified extracts of the resolutions
of the board of directors of the Vendor (and, if required under
the laws of the British Virgin Islands, resolutions of sole
shareholder or shareholders of the Vendor) approving this
Agreement and the transactions contemplated herein;
(iv) a certified true copy or certified extracts of the resolutions of
the board of directors of the Company approving the transfer of
the Sale Shares mentioned in Clause 7.1(a)(i) (subject to
execution of the instrument of transfer by the transferee) and
the issue of new certificates for the Sale Shares in the name of
the transferee;
24
(v) application by the Vendor (or such person as it may direct) to
subscribe for the Consideration Shares;
(vi) a counterpart of the Facility Agreement duly executed by the
Guarantor;
(vii) a certified true copy or certified extracts of the resolutions
of the board of directors of the Guarantor approving this
Agreement and the transactions contemplated herein;
(viii) all such other documents as may reasonably be required to
enable the Purchaser and/or its nominee to be registered as
holder(s) of the Sale Shares;
(b) the Purchaser shall:
(i) execute (or procure a wholly-owned subsidiary of the Purchaser to
execute) the instrument of transfer in respect of the Sale
Shares;
(ii) at or before 12:00 noon on the Business Day before the expected
date of Completion, allot and issue (credited as fully paid) the
Consideration Shares to such person or persons as the Vendor may
direct (by way of a written notice issued by the Vendor and
delivered to the Purchaser not later than 11:00 a.m. on the date
which is one Business Day before the expected date of
Completion), and procure that the name(s) of the person or
persons (including, where appropriate, HKSCC Nominees Limited) so
notified by the Vendor shall be entered in the register of
members of the Purchaser accordingly (without payment of any
registration fee);
(iii) allot and issue (credited as fully paid) the Consideration
Convertible Note to the Vendor (or another subsidiary of HWL as
the Vendor may direct (by way of a written notice issued by the
Vendor and delivered to the Purchaser at least one Business Day
before the expected date of Completion));
(iv) deliver to the Vendor:
(A) a certified true copy of the approval from the Stock
Exchange granting listing of and permission to deal in the
Consideration Shares (if not already delivered before
Completion);
(B) at or before 2:00 p.m. on the Business Day before the
expected date of Completion, a certified true copy of the
resolutions of the board of directors of the Purchaser
25
approving this Agreement and the issue and allotment of the
Consideration Shares to the Vendor (or as it may direct);
(C) in accordance with the written directions of the Vendor
(issued by the Vendor and to the Purchaser not later than
11.00 a.m. on the date which is one Business Day before the
expected date of Completion), (1) share certificates for
such number of the Consideration Shares as so directed in
the name of the Vendor (or as it may direct) and (2) share
certificates for such number of the Consideration Shares as
so directed in the name of HKSCC Nominees Limited to be
delivered through the facilities of HKSCC for credit to such
CCASS stock accounts pursuant to (v) below;
(D) at or before 2:00 p.m. on the Business Day before the
expected date of Completion, a copy of the Purchaser's
written instruction to its branch share registrars in Hong
Kong to update the register of members to reflect the issue
of the Consideration Shares, and evidence that each of the
Vendor (or the person(s) nominated by it) and/or HKSCC
Nominees Limited (if so directed by the Vendor pursuant to
(C) above) has been registered as a shareholder of the
Purchaser as to such number of the Consideration Shares as
directed by the Vendor under (C) above;
(E) certified true copies of resolutions of the board of
directors of the Purchaser Group Companies appointing Xx.
Xxxxx Xxxx Xxxx, Xx. Xxxx Xxxx Xxx, Xxxxx and Xx. Xxx Xx
Xxxx, Xxxxxxx to be directors of the Purchaser;
(F) the Certificate in respect of the Consideration Convertible
Note duly issued and credited as fully paid by the Purchaser
in accordance with this Agreement;
(G) a certified true copy of the resolutions of the board of
directors of the Purchaser approving this Agreement, the
issue of the Consideration Convertible Note to the Vendor
(or as it may direct), the Facility Agreement and the issue
of the Facility Convertible Notes pursuant thereto, the
issue of the Conversion Shares upon exercise of the
Conversion Rights and the issue of new Shares upon exercise
of the conversion rights under the Facility Convertible
Notes;
(H) a counterpart of the Facility Agreement duly executed by the
Purchaser (the delivery of which to be accepted by
26
the Vendor on behalf of the Guarantor); and
(I) at or before 2:00 p.m. on the Business Day before the
expected date of Completion, copies of instruction letters,
placing forms and other documents issued by the Purchaser to
its branch share registrars in Hong Kong required for the
deposit by the Vendor (or any others as the Vendor may
direct) of the Consideration Shares or any part thereof in
CCASS;
(v) (where the directions from the Vendor relating to the issue and
delivery of the Consideration Shares are such that any part of
those shares are to be delivered through the facilities of HKSCC)
procure that the relevant Consideration Shares shall be delivered
through the facilities of HKSCC for credit to the relevant CCASS
stock accounts not later than 12:00 noon on the date of
Completion as shall be notified by the Vendor to the Purchaser
for such purpose; and
(vi) promptly execute and deliver to the Vendor (or as it may direct)
such other forms, instruments or documents, and do such acts as
the Vendor and/or the Guarantor may require from time to time to
facilitate the settlement of any placing of the Consideration
Shares which the Vendor (or any other persons to whom the
Consideration Shares or any part thereof are to be allotted and
issued at the direction of the Vendor) may have undertaken.
7.2 The transactions described in Clause 7.1 shall take place at the same time
(unless expressly provided or otherwise required to take place earlier for
the purpose of giving full effect to the provisions in Clause 7.1), so that
in default of the performance of any such transactions by a Party, the
other Party shall not be obliged to complete the sale and purchase of the
Sale Shares and the issue of the Consideration Shares and the Consideration
Convertible Note contemplated in this Agreement (without prejudice to any
further legal remedies).
7.3 Without prejudice to any other remedies available to any Party, if, after
all the conditions set out in Clause 4.1 have either been fulfilled or
waived in accordance with Clause 4, the other Party fails to complete this
Agreement in accordance with Clause 7.1, such Party shall have the right to
seek specific performance of this Agreement.
7.4 The Purchaser shall make the necessary arrangements for a special general
meeting to be convened to seek its shareholders' approval to the change of
its name in such manner as the Vendor may request the Purchaser in writing
(subject to all applicable laws, rules and regulations and the approvals
and consents of the relevant authorities). Such meeting shall be convened
irrespective of whether all the conditions in Clause 4.1 have been
fulfilled or waived so long as such change of name will only take effect
from Completion. Subject to all applicable laws, rules and regulations and
the approvals and
27
consents of the relevant authorities, and subject to the approval of the
change of name by the shareholders of the Purchaser, the Purchaser shall
(before and after the special general meeting, as may be appropriate) take
such actions and make such arrangements as may be necessary or desirable to
procure the change of name to be effected, including but not limited to
application for reservation of the proposed new name, registration and
filings at relevant authorities in Bermuda and in Hong Kong, and all
necessary procedures in connection with the change of name.
8. DISCLOSURE
8.1 The Vendor shall forthwith disclose in writing to the Purchaser any event
or circumstance which may arise or become known to it after the date hereof
and prior to Completion which is materially inconsistent with any of the
Vendor's Warranties.
8.2 The Purchaser shall forthwith disclose in writing to the Vendor any event
or circumstance which may arise or become known to it after the date hereof
and prior to Completion which is materially inconsistent with any of the
Purchaser's Warranties.
8.3 Subject to any confidentiality obligations and other legal or contractual
restrictions, the Vendor shall use its reasonable endeavours to provide
promptly to the Purchaser such documents and information relating to the
Group and its assets and businesses as may be reasonably required by the
Purchaser during the period up to Completion.
8.4 Subject to any confidentiality obligations and other legal or contractual
restrictions, the Purchaser shall use its reasonable endeavours to provide
promptly to the Vendor such documents and information relating to the
Purchaser Group and its assets and businesses as may be reasonably required
by the Vendor during the period up to Completion.
8.5 (a) The Vendor shall provide such reasonable assistance as may be
requested by the Purchaser in relation to the obtaining of a
certificate of incumbency in respect of companies incorporated in the
British Virgin Islands in the Group.
(b) The Purchaser shall provide such reasonable assistance as may be
requested by the Vendor in relation to the obtaining of a certificate
of incumbency in respect of companies incorporated in the British
Virgin Islands in the Purchaser Group.
9. GUARANTEE
9.1 In consideration of the Purchaser agreeing at the request of the Vendor (as
evidenced by its execution hereof) to enter into this Agreement, the
Guarantor hereby unconditionally and irrevocably guarantees to the
Purchaser the due and
28
punctual performance and discharge by the Vendor of all obligations
(whether present or future, actual or contingent) due, owing or incurred to
the Purchaser by the Vendor under or pursuant to this Agreement including,
without limiting the generality of the foregoing, the payment of all moneys
that may at any time be or become due and payable to the Purchaser by the
Vendor, whether by way of costs, expenses, losses, damages or as a
consequence of any breach or non-fulfilment of any representation, warranty
or undertaking or otherwise (all of which obligations are hereinafter
called "Vendor's Obligations") to the intent that should the Vendor fail
duly and punctually to perform or discharge any of Vendor's Obligations,
the Guarantor shall forthwith upon demand perform and discharge or procure
the performance and discharge of Vendor's Obligations.
9.2 In addition and without prejudice to the guarantee contained above, the
Guarantor hereby unconditionally and irrevocably agrees, as a primary
obligation, to indemnify the Purchaser against all costs, expenses, losses
or damages incurred by the Purchaser as a result of the failure by the
Vendor to make any payment under this Agreement when due or as a result of
any of Vendor's Obligations being or becoming void, voidable or
unenforceable for any reason whatsoever (whether or not known to the
Purchaser), the amount of such costs, expenses, losses or damages being the
amount which the Purchaser would have otherwise been entitled to recover
from the Vendor together with all expenses which the Purchaser may
reasonably and properly incur in proceeding against the Vendor or the
Guarantor.
9.3 This guarantee shall be a continuing guarantee and shall remain in full
force and effect until all of Vendor's Obligations have been duly performed
and discharged notwithstanding the insolvency or liquidation or any
incapacity or change in the constitution or status of the Vendor or other
matter whatsoever. This guarantee is in addition to and independent of, and
shall not be affected by any dealing with, any other guarantee or other
security now or at any time hereafter held by the Purchaser.
9.4 So long as any of Vendor's Obligations remain outstanding the Guarantor
shall not exercise any right of subrogation or any other right of a surety
or enforce any security or other right or claim against the Vendor or any
other person whether in respect of its liability under this guarantee or
otherwise or claim in the insolvency, liquidation or bankruptcy of the
Vendor in competition with the Purchaser.
9.5 All payments under this guarantee shall be made in full without set-off or
counterclaim or any restriction or condition and free and clear of any
present or future taxes, duties, charges or other deductions or
withholdings of any nature. If any deduction or withholding is required to
be made from any such payment, the Guarantor shall, together with such
payment, pay to the Purchaser such additional amount as is necessary to
ensure that the Purchaser receive the full amount due hereunder.
29
10. CONFIDENTIALITY
Other than such disclosure as may be required by law, under the Listing
Rules, or otherwise by the Stock Exchange, the Securities and Futures
Commission or other competent authorities, none of the Parties shall make
any announcement or release or disclose any information concerning this
Agreement or the transactions referred to herein (save for disclosure to
its holding companies or professional advisers under a duty of
confidentiality) without the prior written consent of the other Parties.
Any announcement by any of the Parties (or its holding company) required to
be made pursuant to the requirements of the Stock Exchange, the Securities
and Futures Commission or other competent authorities shall be issued or
released only after such prior consultation with the other Party as is
reasonably practicable in the circumstances.
11. FULL EFFECT
All provisions of this Agreement shall so far as they are capable of being
performed or observed continue in full force and effect notwithstanding
Completion except in respect of those matters then already performed.
12. SEVERABILITY
If at any time one or more provisions hereof is or becomes invalid,
illegal, unenforceable or incapable of performance in any respect, the
validity, legality, enforceability or performance of the remaining
provisions hereof shall not thereby in any way be affected or impaired.
13. NOTICE
13.1 Any notice required to be given under this Agreement shall be deemed duly
served if left at or sent by registered or recorded delivery post or by
facsimile to the addresses or at the facsimile numbers provided in Clause
13.2 or to such other address or at such other facsimile number as may have
been last notified in writing by or on behalf of the relevant Party to the
other Party. Any such notice shall be deemed to be served at the time when
the same is left at the address of the Party to be served and if served by
post on the second Business Day next following the day of posting and if
sent by facsimile at the time of dispatch.
13.2 The address and facsimile number of each of the Parties for the purposes of
giving notice pursuant to Clause 13.1 are as follows:
Name of Party Address Facsimile No.
------------- ------- -------------
The Vendor and the 22/F, Xxxxxxxxx House, (000) 0000 0000
Guarantor 00 Xxxxxxxx Xxxx,
Xxxxxxx,
Xxxx Xxxx
30
Attn: The Company Secretary
The Purchaser Lincoln House 408 (852) 2197 2333
Taikoo Place
000 Xxxx'x Xxxx
Xxxxxx Xxx
Xxxx Xxxx
Attn: The Company Secretary
14. COUNTERPARTS
This Agreement may be executed in any number of copies or counterparts and
by the different Parties on separate copies or counterparts and which
together shall constitute one agreement.
15. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
16. COSTS
Each Party shall bear its own legal and professional fees, costs and
expenses incurred in connection with the negotiations, drafting, execution
and performance of this Agreement. The stamp duty (if any) payable on the
sale and purchase of the Sale Shares shall be borne by the Vendor as to one
half and by the Purchaser as to the other half.
17. FURTHER ASSURANCE
Each Party shall at the request of the other 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.
18. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the Parties and
supersedes the terms of any agreement, arrangement or understanding,
whether oral or otherwise, made prior to the entering into of this
Agreement. No purported variations of this Agreement shall be effective
unless made in writing and signed by the Parties.
31
19. NO WAIVER
No failure to exercise nor any delay in exercising any right, power or
remedy by a Party shall operate as a waiver. A single or partial exercise
of any right, power or remedy shall not preclude any other or further
exercise of that or any other right, power or remedy. A waiver shall not be
valid or binding on the Party granting that waiver unless made in writing.
20. ASSIGNMENT
This Agreement shall be binding on and shall enure for the benefit of the
successors and assigns of the Parties but shall not be assigned by any
Party without the written consent of the other Party.
21. JURISDICTION
21.1 This Agreement is governed by and shall be construed in accordance with the
laws of Hong Kong.
21.2 The Parties hereby submit to the non-exclusive jurisdiction of the courts
of Hong Kong in connection herewith but this Agreement may be enforced in
any court of competent jurisdiction.
32
SCHEDULE 1
PARTICULARS OF THE GROUP
1. Xxxxxxxxx Global Communications Investments Limited
Company No. : 442335
Place of incorporation : the British Virgin Islands
Date of incorporation : 26 April 2001
Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre,
Road Town, Tortola, British Virgin Islands
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$1.00 each
Issued and paid up
share capital : 10,000 shares of US$1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxx Xxxx
(3) Xxxxxx Xx
(4) Xxxx XxXxx
(5) Xxxxx Sng
(6) Xxxxxxx Xxxx
Registered Shareholder : Xxxxxxxxx Global Communications Holdings
Limited
Business carried on : Investment holding
33
2. Xxxxxxxxx Global Communications Limited
Company No. : 385946
Place of incorporation : Hong Kong
Date of incorporation : 22 October 1992
Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxx Xxxx
Principal Place of Business : Hong Kong
Authorised share capital : 1,000 shares of HK$10.00 each
Issued and paid up
share capital : 2 shares of HK$10.00 each, fully paid-up
Directors : (1) Canning Fok
(2) Xxxxx Xxxx
(3) Xxxxx Xxxx
(4) Xxxxx Xxxx
(5) Xxxxxxx Xxx
Registered Shareholders : Xxxxxxxxx Global Communications Investments
Limited (1 share)
Colonial Nominees Limited (1 share)
Business carried on : Telecommunications business
34
3. Robust Connection Limited
Company No. : 122437B
Place of incorporation : Bahamas
Date of incorporation : 19 December 2001
Registered office : Offshore Group Xxxxxxxx, X.X. Xxx XX-00000,
Xxxxxx, Xxx Xxxxxxxxxx, Bahamas
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$1.00 each
Issued and paid up
share capital : 2 shares of US$1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxx XxXxx
(3) Xxxxxx Xxxxxx
Registered Shareholder : Xxxxxxxxx Global Communications Investments
Limited
Business carried on : Telecommunications business
35
4. International Mega Flow Limited
Company No. : 120724B
Place of incorporation : Bahamas
Date of incorporation : 25 July 2001
Registered office : Offshore Group Xxxxxxxx, X.X. Xxx XX-00000,
Xxxxxx, Xxx Xxxxxxxxxx, Bahamas
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$1.00 each
Issued and paid up
share capital : 2 shares of US$1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxx Sng
(3) Xxxxxx Xxxxxx
Registered Shareholder : Xxxxxxxxx Global Communications Investments
Limited
Business carried on : Telecommunications business
36
5. Eagle Reach Limited
Company No. : 122439B
Place of incorporation : Bahamas
Date of incorporation : 19 December 2001
Registered office : Offshore Group Xxxxxxxx, X.X. Xxx XX-00000,
Xxxxxx, Xxx Xxxxxxxxxx, Bahamas
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$l.00 each
Issued and paid up
share capital : 2 shares of US$l.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxx XxXxx
(3) Xxxxxx Xxxxxx
Registered Shareholder : Xxxxxxxxx Global Communications Investments
Limited
Business carried on : Telecommunications business
37
6. World Diversity Limited
Company No. : 122438B
Place of incorporation : Bahamas
Date of incorporation : 19 December 2001
Registered office : Offshore Group Xxxxxxxx, X.X. Xxx XX-00000,
Xxxxxx, Xxx Xxxxxxxxxx, Bahamas
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$l.00 each
Issued and paid up
share capital : 2 shares of US$l.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxxx Xx
(3) Xxxxxxxxxxx Xxxxx
Registered Shareholder : Xxxxxxxxx Global Communications Investments
Limited
Business carried on : Investment holding
38
7. Debt Management Limited
Company No. : 358392
Place of incorporation : The British Virgin Islands
Date of incorporation : 22 December 1999
Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre,
Road Town, Tortola, British Virgin Islands
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$1.00 each
Issued and paid up
share capital : 1 share of US$1.00 each, fully paid-up
Directors : Fairwind Nominees Limited
Registered Shareholder : Xxxxxxxxxxx (Nominees) Limited
Business carried on : Collection agency
39
8. Xxxxxxxxx Limited
Company No. : 179999
Place of incorporation : The British Virgin Islands
Date of incorporation : 25 March 1996
Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre,
Road Town, Tortola, British Virgin Islands
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$1.00 each
Issued and paid up
share capital : 1 share of US$1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxxxx Xxx
Registered Shareholder : Xxxxxxxxx Global Communications Investments
Limited
Business carried on : Investment holding
40
9. Xxxxxxxxx MultiMedia Services Limited
Company No. : 539375
Place of incorporation : Hong Kong
Date of incorporation : 15 February 1996
Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxx Xxxx
Principal Place of Business : Hong Kong
Authorised share capital : 1,000 shares of HK$10.00 each
Issued and paid up
share capital : 2 shares of HK$10.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxxxx Xxx
Registered Shareholders : Xxxxxxxxx Limited (1 share)
Colonial Nominees Limited (1 share)
Business carried on : Provision of internet services
41
10. HCL Partnership Holdings Limited
Company No. : 590569
Place of incorporation : Hong Kong
Date of incorporation : 15 January 1997
Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxx Xxxx
Principal Place of Business : Hong Kong
Authorised share capital : 10,000 shares of HK$1.00 each
Issued and paid up
share capital : 2 shares of HK$1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxxxx Xxx
Registered Shareholders : Xxxxxxxxx Global Communications Limited
("HGCL") (1 share)
Colonial Nominees Limited (1 share)
Business carried on : Investment holding
42
11. Xxxxxxxxx Global Communications Pte Limited
Company No. : 200207511R
Place of incorporation : Singapore
Date of incorporation : 29 August 2002
Registered office : 0 Xxxxxxx Xxxxxx #00-00, Xxxxxxxx Xxxxx,
Xxxxxxxxx 000000
Authorised share capital : 100,000 shares of S$1.00 each
Issued and paid up
share capital : 2 shares of S$1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxx Xxxx
(3) Xxxxxx Xx
(4) Xxxxx Sng
(5) Xxxxxxx Xxxx
Registered Shareholder : World Diversity Limited
Business carried on : Telecommunications business
43
12. Xxxxxxxxx Global Communications (US) Limited
Company No. : -
Place of incorporation : Delaware, U.S.A.
Date of incorporation : 9 September 2002
Registered office : 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxxx 00000, Xxxxxx Xxxxxx
Authorised share capital : 10,000 shares of US$0.01 each
Issued and paid up
share capital : 3,000 shares of US$0.01 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxx Xxxx
(3) Xxxxxx Xx
(4) Xxxx XxXxx
(5) Xxxxx Sng
(6) Xxxxxxx Xxxx
Registered Shareholder : World Diversity Limited
Business carried on : Telecommunications business
44
13. [Company Name In Chinese]
Company No. : 80165405
Place of incorporation : Taiwan
Date of incorporation : 3 March 2003
Registered office : 9F1-7, Xx. 000, Xxxxx-Xx Xxxxx Xxxx,
Xxxx Xxx Xxxxxxxx, Xxxxxx 000, Taiwan, R.O.C.
Authorised share capital : 100,000 shares of NT10.00 each
Issued and paid up
share capital : 100,000 shares of NT10.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxx Xxxx
(3) Xxxxxx Xx
(4) Xxxxx Sng
(5) Xxxxxxx Xxxx
Registered Shareholders : World Diversity Limited
Business carried on : Telecommunications business
45
14. Xxxxxxxxx Global Communications (Malaysia) Sdn. Bhd.
Company No. : 615923-P
Place of incorporation : Malaysia
Date of incorporation : 22 May 2003
Registered office : Xxxxx 00 - Xxxxx X, Xxxxxx Xxxxx, Xxxxx Xxxxxx
Xxxx Xxxxxx, 00000 Xxxxx Xxxxxx, Xxxxxxxx
Authorised share capital : 100,000 shares of RM1.00 each
Issued and paid up
share capital : 2 shares of RM1.00 each, fully paid-up
Directors : (1) Xxxxx Xxxx
(2) Xxxxx Xxxx
(3) Xxxxx Sng
(4) Yiap Xxxx Xxxxx
(5) Tan Poh Oon
Registered Shareholders : World Diversity Limited
Business carried on : Telecommunications business
46
15. Xxxxxxxxx Green Limited
Company No. : 447848
Place of incorporation : British Virgin Islands
Date of incorporation : 6 June 2001
Registered office : X.X. Xxx 000, Xxxxxxxx Incorporations Centre,
Road Town, Tortola, British Virgin Islands
Principal Place of Business : N/A
Authorised share capital : 50,000 shares of US$1.00 each
Issued and paid up
share capital : 10,000 shares of US$1.00 each, fully paid-up
Directors : (1) Xxxxxxx Xxx
(2) Xxxxx Xxxx
(3) Xxxxx Xxxx
Registered Shareholders : Xxxxxxxxx Global Communications Investments
Limited
Business carried on : Investment holding
47
16. Xxxxxxxxx GlobalCenter Limited
Company No. : 745269
Place of incorporation : Hong Kong
Date of incorporation : 29 January 2001
Registered office : 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxx Xxxx
Principal Place of Business : Hong Kong
Authorised share capital : 10,000 shares of HK$1.00 each
Issued and paid up
share capital : 2 shares of HK$1.00 each, fully paid-up
Directors : (1) Xxxxxxx Xxx
(2) Xxxxx Xxxx
(3) Xxxxx Xxxx
Registered Shareholders : Xxxxxxxxx Green Limited (1 share)
Colonial Nominees Limited (1 share)
Business carried on : Data centre facility services
48
17. HCL Network Partnership
Company No. : N/A
Place of incorporation : Hong Kong
Date of Commencement : 30th June, 1994
Registered office : N/A
Principal Place of Business : 19/F., Two Harbourfront, 22 Xxx Xxxx Street,
Xxxx Xxx, Kowloon
Capital : HK$10,000
Directors : N/A
Partners : Xxxxxxxxx Global Communications Limited
(99.99%)
HCL Partnership Holdings Limited
(0.01%)
Business carried on : Telephone network equipment leasing and
provision of ancillary services
49
SCHEDULE 2
CORPORATE STRUCTURE OF THE GROUP
[FLOW CHART]
_____________________________________________________
50
SCHEDULE 3
PART A
CORPORATE STRUCTURE OF THE PURCHASER GROUP
[FLOW CHART]
Beijing Xxxxx Xxxxx IT Services Co., Ltd. is regarded as a subsidiary of the
Company because the Group has control over its financial and operating policies
even though legally the percentage of holding is zero.
51
SCHEDULE 3
Part B
PARTICULARS OF THE PRINCIPAL MEMBERS OF PURCHASER GROUP
1. Vanda Systems & Communications Holdings Limited
Place of incorporation : Bermuda
Date of incorporation : 29 November 1993
Registered office : Xxxxxxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxx
XX00, Bermuda
Principal Place of Business : Xxxxxxx Xxxxx 000, Xxxxxx Xxxxx, 000 Xxxx'x
Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : HK$400,000,000
Issued and paid up
share capital : 1,537,871,325 shares of HK$0.10 each
Directors : (1) Xxx Xxx-ning, Canning
(2) Xxx Xxx Xxxx, Xxxxxxx
(3) Chow Woo Mo Xxxx, Xxxxx
(4) Loh Xxxx Xxxx
(5) Xxxx Xxx Mee, May
(6) Xxx Xxx Xxx
(7) Xxxx Xxx
(8) Xxxxxxx Xxxxxx
(9) Xxxxxx Xxxx Xxxx, Xxxxx
(10) Xxx Xxx G.
(11) Xxxx Xxxx Chunyao (alternate to Xxxxxxx
Xxxxxx and Xxxx Xxx)
Business carried on : Investment holding; systems integration of
mid-range computers; software development and
provision of related services
52
2. Vanda Computer & Equipment Company Limited
Company No. : 156492
Place of incorporation : Hong Kong
Date of incorporation : 23 August 1985
Registered office : Xxxxxxx Xxxxx 000, Xxxxxx Xxxxx, 000 Xxxx'x
Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : HK$2,000,000 non-voting deferred shares
HK$1,000 ordinary shares
Issued and paid up
share capital : 2,000,000 non-voting deferred shares of HK$1
each, fully paid up
2 ordinary shares of HK$1 each, fully paid up
Directors : (1) Xxx Xxx Xxx
(2) Loh Xxxx Xxxx
(3) Ching Win Xxxx
Registered Shareholders : (1) Xxx Hon Nam (918,800 non-voting deferred
shares)
(2) Ma Xxxxx Xxxxx (909,200 non-voting
deferred shares)
(3) Xxx Xxx Jan (172,000 non-voting deferred
shares)
(4) Vanda (B.V.I.) Limited (1 ordinary share)
(5) Xxx Xxx Xxx (1 ordinary share)
Business carried on : System integration and trading of computer
products
53
3. Vanda Computer Service (Hong Kong) Company Limited
[Chinese name of Vanda Computer Service (Hong Kong) Company Limited]
Company No. : 521857
Place of incorporation : Hong Kong
Date of incorporation : 1 August 1995
Registered office : Xxxxxxx Xxxxx 000, Xxxxxx Xxxxx,
000 Xxxx'x Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : HK$10,000
Issued and paid up
share capital : 10,000 shares of HK$1 each
Directors : Xxx Xxx Xxx
Xxxx Ming Xxx
Xxx Xxxx Xxxx
Registered Shareholders : Interactive Technology Limited (9,999 shares)
Xxx Xxx Jan (1 share)
Business carried on : System integration and trading of computers
54
4. Vanda Computer Service (Macau) Company Limited
Vanda (Macau) - Computadores & Servicos, Limitada
[Chinese name of Vanda Computer Service (Macau) Company Limited]
Company No. : Ap.28/02061999
Place of incorporation : Macau
Date of incorporation : 14 June 1999
Registered office : Xxx Xx. Xxxxx Xxxx Xxxx, Xx. 0-0, 00 Andar,
A-C, Edif. Banco Luso Internacional, Macau
Authorised share capital : MOP$500,000
Issued and paid up
share capital : MOP$500,000
Directors : Xxx Xxx Xxx
Xxxx Xxxx Xxx
Xx Xxxx Man, Clovis
Registered Shareholders : Interactive Technology Limited (499,0000
shares)
Xxx Xxx Xxx (1,000 shares)
Business carried on : System integration and trading of computers
55
5. Janeper Development Limited
[Chinese name of Janeper Development Limited]
Company No. : 149973
Place of incorporation : Hong Kong
Date of incorporation : 19 April 1985
Registered office : Xxxxxxx Xxxxx 000, Xxxxxx Xxxxx,
000 Xxxx'x Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : HK$400,000
Issued and paid up
share capital : 300,000 non-voting deferred shares of
HK$1 each 2 ordinary shares of HK$1 each
Directors : Xxx Xxx Xxx
Xxx Xxxx Xxxx
Registered Shareholders : Xxx Hon Nam (150,000 non-voting deferred
shares)
Ma Xxxx Xxxxx (150,000 non-voting deferred
shares)
Vanda (B.V.I.) Limited (1 ordinary share)
Xxx Xxx Xxx (1 ordinary share)
Business carried on : Property investment
56
6. Vanda Systems (Singapore) Pte Ltd.
Company Registration No. : 199501472G
Place of incorporation : Singapore
Date of incorporation : 2 March 1995
Registered office : 00 Xxxxxxx Xxxxxx
#00-00 Xxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx 000000
Authorised share capital : S$10,000,000
Issued and paid up
share capital : 7,200,000 shares of S$1 each
Directors : Xxx Xxx Xxx
Xxxx Xxx Xxx Xxxxxx
Xxx Xxxx Xxxx
Registered Shareholders : Vanda (B.V.I.) Limited (6,602,368 shares)
iWave Holdings Pte Ltd (597,632 shares)
Business carried on : Investment holding
57
7. Vanda Solutions (Singapore) Pte Ltd.
Company Registration No. : 199604327R
Place of incorporation : Singapore
Date of incorporation : 14 June 1996
Registered office : 00 Xxxxxxx Xxxxxx
#00-00 Xxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx 000000
Authorised share capital : S$1,000,000
Issued and paid up
share capital : 652,896 shares of S$1 each
Directors : Xxxx Xxx Kai Xxxxxx
Xxx Xxxx Xxxx
Registered Shareholders : Vanda Systems (Singapore) Pte Ltd
(652,896 shares)
Business carried on : Provision of information technology
consultancy services and trading of computer
products
58
8. Azure Technologies Pte Ltd
Company Registration No. : 199700062G
Place of incorporation : Singapore
Date of incorporation : 6 January 1997
Registered office : 00 Xxxxxxx Xxxxxx
#00-00 Xxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxxxx 000000
Authorised share capital : S$3,000,000
Issued and paid up
share capital : 2,500,000 shares of S$l each
Directors : Xxxx Xxx Kai Xxxxxx
Xxx Xxxx Xxxx
Registered Shareholders : Vanda Systems (Singapore) Pte Ltd (2,500,000
shares)
Business carried on : Distribution of computer products and
provision of computer support services
59
9. Azure Technologies (Malaysia) Sdn. Bhd.
Company No. : 423146-T
Place of incorporation : Malaysia
Date of incorporation : 14 March 1997
Registered office : 00X, Xxxxx XX00/0X, Xxxxxxxxx Xxxxx,
00000 Xxxxxxxx Xxxx, Xxxxxxxx Darul Ehsan,
Malaysia
Authorised share capital : RM10,000,000
Issued and paid up
share capital : 7,700,000 shares of RM1 each
Directors : Xxxx Xxxx Xxx
X. Xxxxxx Xxxxxxxx Naidu A/L X. Xxxxxxx
Chiew Xxx Xxx
Loh Xxxx Xxxx
Registered Shareholders : Azure Technologies Pte Ltd (7,700,000 shares)
Business carried on : Distribution of computer products and
provision of computer support services
60
10. Vandacom (Malaysia) Sdn. Bhd.
Company No. : 395581-U
Place of incorporation : Malaysia
Date of incorporation : 25 July 1996
Registered office : 00X, Xxxxx XX00/0X, Xxxxxxxxx Xxxxx,
00000 Xxxxxxxx Xxxx, Xxxxxxxx Darul Ehsan,
Malaysia
Authorised share capital : RM1,000,000
Issued and paid up
share capital : 500,000 shares of RM1 each
Directors : Loh Xxxx Xxxx
Xxxx Xxxx Xxx
Xxxxx Xxx Xxx
J. Xxxxxx Xxxxxxxx Naidu A/L Xxxxxxx
Registered Shareholders : Vanda Systems (Singapore) Pte Ltd
Business carried on : Provision of technical services and trading of
computer products
61
11. Azure Technologies Philippines. Inc.
Company No. : A1997-00737
Place of incorporation : Philippines
Date of incorporation : 17 January 1997
Registered office : 00xx Xxxxx, Xxxxxxx Center
104 H.V. De La Costa corner San Xxxxxxx Street
Makati City
Philippines
Authorised share capital : Peso 80,000,000
Issued and paid up
share capital : Peso 27,000,000
Directors : Xxxxxxxx X. Xxxxx
Iralyn R. De Xxxxx
Xxxxxxxx Xxxxxx
Loh Tiak Xxxx
Xxxx Xxxx Xxx
Registered Shareholders : Vanda Systems (Singapore) Pte Ltd (269,995
shares)
Xxxxxx Xxxx (1 share)
Xxxxxxxx X. Xxxxxx (1 share)
Iralyn R. De Xxxxx (1 share)
Xxxxxxxx Xxxxxx (1 share)
Loh Xxxx Xxxx (1 share)
Business carried on : Distribution of computer products and
provision of computer support services
62
12. [Profile for Beijing Vanda Suntech Software Engineering Co., Ltd. in
Chinese]
63
13. [Profile for Dalian Vanda Computer Engineering Co., Ltd. in Chinese]
64
14. [Profile for Changchun Changlian Software Engineering Co., Ltd. in Chinese]
65
15. [Profile for Changchun Vanda Software Engineering Company Limited in
Chinese]
66
16. [Profile for Vanda Computer System Intergration (Shenzhen) Co. Ltd. in
Chinese]
67
17. [Profile for Vanda Computer System Intergration (Shanghai) Company Limited
in Chinese]
68
18. [Profile for Beijing Datang - Vanda Systems & Communications Co., Ltd.
in Chinese]
69
19. Vanda Systems & Communication (UK) Limited
Company No. : 4815418
Place of incorporation : London
Date of incorporation : 30.06.2003
Registered office : 0 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxx Xxxx,
Xxxxxx, XX0 0XX
Authorised share capital : 1,000 shares of GBP1.00 each
Issued and paid up
share capital : 100 shares of GBP1.00 each
Directors : Chua Xxx Xxxxxx
Registered Shareholders : Vanda Systems & Communications Holdings Ltd.
(100 shares)
Business carried on : Provision of information technology
consultancy services and trading of computer
products
70
20. [Chinese name of Vanda Software Engineering Company Limited]
Company No. : 480561
Place of incorporation : Hong Kong
Date of incorporation : 31.05.1994
Registered office : Xxxxxxx Xxxx 000, Xxxxxx Xxxxx, 000 Xxxx'x
Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : HK$1,000,000 of HK$1.00 each
Issued and paid up share
capital : HK$1,000,000 of HK$1.00 each
Directors : Xxx Xxx Xxx
Xxx Xxxx Xxxx
Registered Shareholders : Xxx Hon Nam (hold in trust for Vandasoft
Technology Holdings Ltd.) (1 share)
Vandasoft Technology Holdings Ltd. (999,999
shares)
Business carried on : Development of software
71
21. Vanda Instrument & Equipment Company Limited
[Chinese name of Vanda Instrument & Equipment Company Limited]
Company No. : 160482
Place of incorporation : Hong Kong
Date of incorporation : 18.10.1985
Registered office : Xxxxxxx Xxxxx 000, Xxxxxx Xxxxx, 000 Xxxx'x
Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : HK$1,000,000 of HK$1.00 each
(HK$500,000 Ordinary Shares; HK$500,000
Non-Voting Deferred Shares)
Issued and paid up
share capital : HK$500,002 (2 Ordinary Shares at HK$1.00 each
and 500,000 Non-Voting Deferred Shares at
HK$1.00 each)
Directors : Xxx Xxx Xxx
Xxx Xxxx Xxxx
Registered Shareholders : Xxx Hon Nam (229,700 Non-Voting Deferred
Shares)
Ma Chun Xxxxx, Xxxxxx (227,300 Non-Voting
Deferred Shares)
Xxx Xxx Jan (43,000 Non-Voting Deferred
Shares)
Vanda (B.V.I.) Limited (1 Ordinary Share)
Xxx Xxx Xxx (hold in trust for Vanda (B.V.I.)
Limited)(1 Ordinary Share)
Business carried on : Investment holding
72
22. Xxxxxxxx.xxx Limited
Company No. : 708289
Place of incorporation : Hong Kong
Date of incorporation : 15.03.2000
Registered office : Xxxxxxx Xxxxx 000, Xxxxxx Xxxxx, 000 Xxxx'x
Xxxx, Xxxxxx Xxx, Xxxx Xxxx
Authorised share capital : 100,000 shares of HK$1.00 each
Issued and paid up
share capital : 100,000 shares of HK$1.00 each
Directors : Xxx Xxx Xxx
Xxx Xxxx Xxxx
Registered Shareholders : Interactive Technology Limited (99,999 shares)
Xxx Hon Nam (hold in trust for Interactive
Technology Limited) (1 share)
Business carried on : System integration and provision of related
technical services and trading of computer
products
73
23. Wiseasia Computer Service (Macau) Company Limited
[Chinese name of Wiseasia Computer Service (Macau) Company Limited]
Company No. : Ap. 15/01032002
Place of incorporation : Macau
Date of incorporation : 27.02.2002
Registered office : Xxx Xx. Xxxxx Xxxx Xxxx, Xx. 0-0, 00 Andar,
A-C, Edif. Banco Luso Internacional, Macau
Authorised share capital : MOP$25,000
Issued and paid up
share capital : MOP25,000
Directors : Xxx Xxx Xxx
Xxxx Xxxx Xxx
Xx Xxxx Man, Clovis
Registered Shareholders : Interactive Technology Limited (24,000 shares)
Xxx Xxx Xxx (hold in trust for Interactive
Technology Limited) (1,000 shares)
Business carried on : System integration and distribution of
computers
74
24. WiseAsia (Singapore) Pte Ltd
Company No. : 199609202D
Place of incorporation : Singapore
Date of incorporation : 24.12.1996
Registered office : 00 Xxxxxxx Xxxxxx, #00-00 Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxx 000000
Authorised share capital : S$100,000
Issued and paid up
share capital : S$100,000
Directors : Xxx Xxx Xxx
Xxxx Xxx Xxx Xxxxxx
Xxx Xxxx Xxxx (Nominee Director)
Registered Shareholders : Vanda Systems (Singapore) Pte Ltd (100,000
ordinary shares of S$1.00 each)
Business carried on : Provision of technical services and trading of
computer products
75
25. Vanda Innovasia Pte Ltd
Company No. : 199609203N
Place of incorporation : Singapore
Date of incorporation : 24.12.1996
Registered office : 00 Xxxxxxx Xxxxxx, #00-00 Xxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxx 000000
Authorised share capital : S$100,000
Issued and paid up
share capital : S$100,000
Directors : Xxxx Xxx Kai Xxxxxx
Xxx Xxxx Xxxx (Nominee Director)
Registered Shareholders : Vanda Systems (Singapore) Pte Ltd (100,000
ordinary shares of S$1.00 each
Business carried on : Provision of information technology
consultancy services and trading of computer
products
76
SCHEDULE 4
VENDOR'S WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
Save as specifically disclosed in (i) the Company Audited Accounts or (ii) this
Agreement:
1. The Sale Shares and loan
(A) There is no mortgage, lien, pledge, charge, encumbrance or other security
whatsoever on, over or affecting the Sale Shares or any shares in any of
the Group Companies and no person has claimed to be entitled to, or has the
right to require the creation of, any of the foregoing. The Share Vendor is
entitled to sell and transfer the full legal and beneficial ownership of
the Sale Shares to the Purchaser or a Purchaser Group Company (as the
Purchaser may direct). Subject to the satisfaction of the conditions set
out in Clause 4.1(a) to (i), no consent of any third party is required for
the transfer of the Sale Shares.
(B) The Sale Shares represent the entire issued share capital of the Company.
(C) There is no loan or any other account outstanding from any member of the
Group to the Vendor or its Affiliates (excluding the Group for this
purpose) other than that under a loan facility agreement between Xxxxxxxxx
Global Communications Limited and the Guarantor dated as of 16 July 2003
and of which approximately HK$3,400,000,000 in principal amount had been
drawn down as at 31 December 2003. It being acknowledged by the Purchaser
that the loan amount may increase after the date hereof and the Purchaser
shall utilize the loan facility under the Facility Agreement at, or as soon
as reasonably practicable after, Completion for on-lending the same to
Xxxxxxxxx Global Communications Limited for partial repayment of such loan
so as to reduce the principal amount thereof to HK$3,400,000,000.
2. Accuracy of information
(A) All the information relating to the Group Companies set out in Schedules 1
and 2 and Recital (A) of this Agreement is true, complete and accurate. All
information, responses, replies (in either written or electronic form) and
all documents given by or on behalf of the Vendor or any of its officers,
directors, employees or advisers to Linklaters (in the course of the due
diligence conducted by Linklaters), the Purchaser or its advisers relating
to the Group Companies and all publicly available information and records
of the Group Companies (including information contained in statutory
filings and registrations) are, and were, when supplied true, complete and
accurate and not misleading and there is no fact or matter which has not
been disclosed and which may render such information, responses, replies or
documents untrue, inaccurate or misleading or which if disclosed might
reasonably be expected to influence adversely the Purchaser's decision to
acquire the Sale Shares on the terms of this Agreement. No information or
document which is material to the
77
Group and which would reasonably be expected to be of interest to any
purchaser for shares in the Company has been withheld from the Purchaser.
(B) All statements in relation to Xxxxxxxxx Whampoa Limited and its
subsidiaries in the announcement to be published by the Purchaser,
Xxxxxxxxx Whampoa Limited and Xxxxxx Kong (Holdings) Limited in respect of,
amongst other things, the transactions contemplated by this Agreement are
and will be true and accurate in all material respects and not misleading.
3. Capacity and validity
(A) Each of the Vendor and the Guarantor has full power, authority and capacity
to enter into and perform this Agreement without any further sanction or
consent by the holders of any class of shares of the Vendor or the
Guarantor and has taken all necessary actions to authorise the execution
and completion of this Agreement by it and the performance of its
obligations hereunder.
(B) This Agreement will, when executed, constitute legal, valid and binding
obligations of each of the Vendor and the Guarantor, in accordance with its
terms.
(C) Subject to the satisfaction of the conditions set out in Clauses 4.1(a) to
(i), the execution, delivery and the performance of this Agreement by each
of the Vendor and the Guarantor will not:
(i) result in a breach of any provision of the memorandum or articles of
association or other constitutional documents of each of the Vendor
and the Guarantor, any third party consent being required under, or a
breach, rescission or termination of any agreement, arrangement or
instrument to which any Group Company is a party or which is binding
upon any Group Company or any of its property or assets, and will not
result in the creation or imposition of any encumbrance or any rights
of third party on any of its assets pursuant to the provisions of any
such agreement, arrangement or instrument; or
(ii) result in a breach of any law or regulation or any order, judgment or
decree of any court, governmental agency or regulatory body to which
any Group Company is a party or by which any Group Company or its
property or assets is bound.
(D) Subject to the satisfaction of the conditions set out in Clause 4.1(a) to
(i), no consent, licence, approval or authorisation of or filing or
registration with or other requirement of the Stock Exchange or any
governmental department, authority or agency in Hong Kong or other
jurisdiction in which the Group has business as at the date of this
Agreement, or courts or any third party pursuant to any contractual or
other arrangement to which the Company or any other Group Company or the
Vendor is a party, is required of the Vendor or the Guarantor in connection
with the execution, delivery, performance, validity or enforceability of
this Agreement.
78
(E) No Group Company is a party to any material contract that may be rescinded
or terminated or otherwise affected to its detriment by reason of the
execution, delivery or performance of this Agreement or Completion.
4. Corporate status
(A) Each Group Company has been duly incorporated and constituted and validly
existing under the laws of its place of incorporation, and there has been
no resolution, petition or order for its winding-up nor is any such
resolution, petition or order imminent or likely. Each Group Company has
the corporate power and authority to own or hold under lease the properties
and assets it purports to own or hold under lease and to transact and to
carry on the business it transacts and proposes to transact.
(B) No events or omissions have occurred whereby the constitution, subsistence
or corporate status of any Group Company has been or is likely to be
adversely affected.
5. Corporate filings and statutory books
(A) All corporate or other documents required to be filed or registered in
respect of each Group Company by the laws of its jurisdiction of
incorporation have been duly filed or are in the process of being filed as
appropriate.
(B) 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 the register of members and compliance has
been made with all other legal requirements concerning all issues of
shares, debentures or other securities of the Group.
(C) All charges in favour of or created by any Group Company have (where
appropriate) been registered in accordance with the provisions of the
applicable legislation and regulations and at the relevant registries and
authorities.
6. Ownership of shares and options, rights of pre-emption etc.
There is no option, right of pre-emption, right to acquire, on, over or
affecting any shares in any Group Company or any securities convertible
into shares in any Group Company nor is there any commitment to give or
create any of the foregoing, and no person has claimed to be entitled to
any of the foregoing.
7. Litigation
(A) No Group Company is engaged in (nor is any director of any Group Company in
connection with the affairs of the Group Company engaged in) any claim,
litigation, arbitration, prosecution or other legal proceedings or any
investigation, enquiry or in any proceedings or hearings before any
statutory or governmental body, department, board or agency, which
individually or in the
79
aggregate may have a material adverse effect on the Group taken as a whole,
and the Vendor, having made all reasonable enquiries, is not aware that any
such claim, litigation, arbitration, prosecution, investigation, enquiry or
other legal proceedings are pending or threatened or of any facts or
circumstances likely to give rise to such claim, litigation, arbitration,
prosecution, investigation, enquiry or proceedings.
(B) There is no order, decree or judgement of any court or governmental agency
or regulatory body outstanding or anticipated against any Group Company
which may individually or in the aggregate have or has had a material
adverse effect upon the condition, financial or otherwise or the earnings,
business affairs or business prospects (whether or not arising in the
ordinary course of business) of the Group (taken as a whole).
8. Insolvency
(A) No liquidator, provisional liquidator, receiver or other person carrying
out any similar function has been appointed anywhere in the world in
respect of the whole or any part of the assets or undertaking of the Group.
(B) No Group Company has ceased or suspended payment of its debts, become
unable to pay its debts when they fall due or otherwise become insolvent.
(C) No unsatisfied judgment, order or award is outstanding against any Group
Company.
9. Compliance with laws
Each Group Company has at all times carried on business and conducted its
affairs in all respects in accordance with its constitutional documents,
business licence and any law, regulation, legislation, decree or order
applicable to it for the time being in force and any other documents to
which it is or has been a party in all respects and obtained and complied
with all necessary Consents required to carry on its business in Hong Kong,
Singapore, Taiwan and the United States of America and all relevant
jurisdictions in which the Group has business, including (but without
limitation) legislation relating to companies and securities, real
property, Taxation and prevention of corruption and have complied with all
legal requirements in relation to any transactions to which it is or has
been a party prior to Completion.
10. Company Audited Accounts
(A) The Company Audited Accounts:
(i) were prepared in accordance with applicable laws (including the
Companies Ordinance) and with generally accepted accounting
principles, standards and practices in Hong Kong (including all
applicable Statements of Standard Accounting Practice) at the time
they were prepared and, save as disclosed therein, on a consistent
basis with the audited consolidated financial statements of the Group
for each of
80
the two financial years ended 31 December, 2001 and 2002 (the
"Previous Company Accounts");
(ii) are true and accurate, correctly make or include adequate provision
for any bad and doubtful debts and all established liabilities
(including dividends or other distributions), make proper and adequate
provision for (or contain a note in accordance with good accounting
practice in respect thereof) all deferred, disputed or contingent
liabilities (whether liquidated or unliquidated) and all capital
commitments of the Group as at the Company Accounts Date and the
reserves and provisions (if any) made therein for all Taxation
relating to any period on or before the Company Accounts Date are
proper and adequate;
(iii) give a true and fair view of the state of affairs and financial and
trading positions of the Group at the Company Accounts Date and of the
Group's results for the financial period ended on that date;
(iv) correctly include all the assets of the Group as at the Company
Accounts Date and the rate of depreciation adopted therein is
appropriate for each of the fixed assets of the Group to be written
down to nil by the end of their estimated lives;
(v) other than the Company Properties, slow-moving stock has been written
down appropriately and unrecoverable work in progress and redundant
and obsolete stock have been wholly written off and the value
attributed to the remaining stock did not exceed the lower of cost and
net realisable book value as at the Company Accounts Date;
(vi) save as disclosed therein, the method of valuing stock and work in
progress adopted in the Company Audited Accounts and the basis of
depreciation adopted in respect of fixed assets are the same as those
adopted in the Previous Company Accounts;
(vii) are not affected by any unusual, exceptional, extraordinary or
nonrecurring items which are not disclosed therein; and
(viii) contain adequate provision for the diminution in value of the
Group's properties.
(B) Since the Company Accounts Date:
(i) none of the Group Companies has entered into any unusual or abnormal
contracts or long term or onerous or other commitments binding on it
(other than contracts entered into in the ordinary course of its
business) and there has not been any acquisition or disposal by any
Group Company of any fixed or capital assets or any agreement to
effect the same;
(ii) save and except (A) borrowings from or lending to the Guarantor or its
Affiliates, and (B) in the ordinary course of its business, none of
the Group Companies has borrowed or lent any money in excess of
HK$20,000,000 in aggregate which has not been repaid or increased any
81
liability (whether or not secured) in excess of HK$20,000,000 in
aggregate or incurred or entered into any other liability, transaction
or contract in excess of HK$20,000,000 in aggregate;
(iii) no event has occurred as regards any Group Company which would
entitle any third party to terminate any contract or any benefit
enjoyed by such Group Company or call in any amount of money before
the normal due date therefor;
(iv) none of the Group Companies has created any mortgages or charges or
granted any security or other indebtedness, financial faculties,
finance leases or hire purchase commitments or any guarantees or
contingent liabilities on the whole or any part of its assets putting
it under a prospective or contingent liability that may remain after
the date hereof;
(v) other than from bankers in the ordinary course of its day to day
trading operation, none of the Group Companies has borrowed or
increased any secured liability;
(vi) the business of each Group Company has been carried on in the ordinary
and usual course and in the same manner as in the past, both as regard
the nature and scope and manner of conducting the business so as to
maintain the business as a going concern, and no part of the business
of the Group has been affected by any abnormal factor in any respect;
(vii) no fixed asset or stock has been written up nor any debt written off,
and no unusual or abnormal contract has been entered into by any Group
Company and so far as the Vendor is aware, none of the assets of any
Group Company has been depleted by any unlawful act of any person;
(viii) the trading prospects, financial position or businesses of the Group
Companies have not been materially adversely affected as a result of
any event or circumstances arising since the Company Accounts Date and
no such material adverse effect is expected by the Vendor within the
immediate future; and
(ix) no Group Company has issued or repaid or agreed to issue or repay any
share or loan capital.
(C) Since the Company Accounts Date, no dividend has been declared or paid or
other distributions out of profits, reserves or capital made in respect of
any share capital of each Group Company save for distribution to
wholly-owned subsidiaries of the Company or to the Company.
(D) There has been no material adverse change in the condition, financial or
otherwise, or the earnings, net assets, business affairs or business
prospects (whether or not arising in the ordinary course of business) of
the Group Companies as a whole since the Company Accounts Date.
11. Conduct of business
(A) Each Group Company carries on its business intra xxxxx, solely under its
corporate name, without any known infringement of any proprietary right or
82
proprietary interest of any other person, without any known liability to
pay any royalty or similar sum and such business is not in breach of any
legislation, regulation or third party rights in Hong Kong, Singapore,
Taiwan and the United States of America and all relevant jurisdictions in
which the Group has business.
(B) All dividends or distributions (if any) declared, made or paid by any of
the Group Companies have been declared, made or paid in accordance with its
articles of association or other similar constitutional documents and the
applicable provisions of the Companies Ordinance or other relevant
legislation in Hong Kong, Singapore, Taiwan and the United States of
America and all relevant jurisdictions in which the Group has business.
(C) In respect of the business of the Group:
(i) there are requisite corporate powers in respect thereof, and all
applicable legislation, rules and regulations in Hong Kong, Singapore,
Taiwan and the United States of America and all relevant jurisdictions
in which the Group has business as at the date of this Agreement have
been complied with and observed, and there have been no breach or
contravention of the same which has an adverse impact on the business
of the Group taken as a whole;
(ii) all Consents necessary for the proper conduct of business in Hong
Kong, Singapore, Taiwan and the United States of America and all
relevant jurisdictions in which the Group has business as at the date
of this Agreement (including but not limited to the Fixed
Telecommunication Network Services Licence and the Public
Non-Exclusive Telecommunications Services (PNETS) Licence for the
Group's business in Hong Kong, the Type II Licence for the Group's
business in Taiwan and the Service-based Operator (Individual) Licence
for the Group's business in Singapore (collectively the "Operating
Licences")) have been obtained and maintained and are valid and
subsisting in full force and effect, no Group Company is in breach of
any of the terms or conditions of any such Consents and no event or
omission has occurred whereby any of such Consents or the renewal
thereof which has an adverse impact on the business of the Group taken
as a whole is or is likely to be thereby adversely affected, suspended
or revoked;
(iii) the businesses and all such Consents may continue to be carried on
and held by the Group Companies after and notwithstanding Completion;
(iv) the carrying on of such business in no way contravenes or infringes
any third party Intellectual Property Rights.
(D) Each of the Consents referred to in paragraph (C) is valid and in force,
and no Group Company is in breach of any terms of any such Consent
(including breach of any requirement relating to such Consent to make
returns or reports or supply information) and there are no circumstances
which might invalidate any such Consent or render it liable to forfeiture
or modification (to the detriment of the relevant Group Company) or (in the
case of a renewable Consent) affect its renewal.
83
(E) No Group Company has given any representation, warranty or other term
(whether express or implied) in respect of any of its services or
end-products (save as required under laws or given in its ordinary course
of business); and it has no outstanding liability (including a contingent
liability by virtue of the terms on which the end-products or services were
sold) in respect of any such end-products or services or their maintenance
or replacement.
(F) No Group Company has (except (i) for the purpose of carrying on its
business in the ordinary course and subject to an obligation of
confidentiality, and (ii) for the purpose of negotiating, preparing or
performing this Agreement) disclosed, or agreed to disclose, or authorised
the disclosure of, any of its lists of suppliers or customers, trade
secrets or confidential information concerning its business, all of which
are fully and properly recorded in writing or other appropriate form and
are not incorrect in any way.
(G) The business of each Group Company is managed exclusively by its officers
and employees, and no person has authority to bind a Group Company other
than its officers and employees and its authorised agents acting in the
ordinary and ostensible course of their duties.
(H) No Group Company is or has agreed to become a member of any partnership,
joint venture or consortium (whether incorporated or not incorporated)
outside its ordinary course of business.
(I) The Vendor is not aware of any reason why any of the Operating Licences of
the Group are likely to be revoked.
12. Assets
(A) All the plant, equipment and assets (except the Company Properties)
included in the Company Audited Accounts or acquired since the Company
Accounts Date and all assets, network (owned and operated by the Group as a
whole), computer hardware, software and database of the Group are in
reasonably good and safe condition and in working order (fair wear and tear
excepted) in all respects and have been regularly and properly maintained
and are not dangerous, inefficient, obsolete or in need of renewal or
replacement and without prejudice to the generality of the foregoing no
Group Company has manufactured, sold or supplied any product or has
provided any service which is material in the context of the business of
the Group as a whole, which does not comply with all applicable laws and
regulations in all respects or which is sub-standard, defective or
dangerous or not in accordance with any representations, warranty or other
term (express or implied) given in respect of such products.
(B) All plant, equipment and assets (except the Company Properties) included in
the Company Audited Accounts or acquired since the Company Accounts Date
and all assets, computer hardware, software and database of each Group
Company:
(i) are legally and beneficially owned by that Group Company free from any
mortgage, charge, lien or similar encumbrance, security interest or
assignment, equity, option, right of pre-emption, royalty, factoring
agreement, any hire-purchase agreement or agreement for payment on
84
deferred terms or bills of sale or lien, charge or other encumbrance
including a conditional obligation to create or enter into any of the
foregoing;
(ii) are in the possession or under the control of that Group Company; and
(iii) comprise all the assets, property and rights which that Group Company
owns or which it uses or requires for the purpose of carrying on its
business.
(C) Where any assets are used but not owned by the Group Company or any
facilities or services are provided to the Group Company by any third
party, there has not occurred any event of default or any other event or
circumstance which may entitle any third party to terminate any agreement
or licence in respect of the provision of such facilities or services.
(D) All stock of each Group Company (except for the Company Properties, and
except where provisions have been included in the Company Audited Accounts)
is in good condition (fair wear and tear excepted) and capable of being
used or sold by it in the ordinary course of trading.
(E) The amount of all debts owing to each Group Company (less the amount of any
provision or reserve for bad and doubtful debts included in the Company
Audited Accounts) will be substantially recoverable in the ordinary course
and no debt is owing to a Group Company by the Company.
(F) No Group Company owns, or has agreed to acquire, any shares or debentures
in any other undertaking (other than shares in another Group Company) or
any other securities.
(G) Each Group Company has done everything prudent (whether by way of giving
notice, registration, filing or otherwise), required or permitted to be
done by it for the protection of its title to, or for the enforcement or
the preservation of any order of priority of its title to, any property or
rights (including the benefit of any debt, mortgage or charge) owned by it.
(H) All records or other documents recording or evidencing any contract,
licence, consent or other right of each Group Company or required for the
exercise of any such right are in the possession or under the control of
that Group Company.
13. Insurance
(A) Each Group Company has or has procured the effect of all insurances
required by the applicable law to be effected by it in the jurisdiction in
which it has business (including public liability insurance) or which ought
reasonably to have been effected over its business in Hong Kong or
elsewhere (including the undertakings and assets and in particular all the
Company Properties) for a substantial part of its value and covering third
party liability of each Group Company having taken into account the nature
of the business of the relevant Group Company, the place in which it
carries on business and those risks normally insured by persons carrying on
similar businesses.
85
(B) All premiums due on the said policies have been paid, all the conditions of
the said policies have been performed and observed in all respects in each
place in which the Group carries on business, and (other than the
transactions contemplated under this Agreement) nothing has been done or
has been omitted to be done whereby any of the said policies has or may
become void or voidable.
(C) No material claim is outstanding either by the insurer or the insured under
any of the said policies and no material claim against any Group Company by
any third party is outstanding in respect of any risk covered by any of the
policies or by any policy previously held by any Group Company.
(D) Save and except for transactions contemplated under this Agreement, none of
the Group Companies is aware of any circumstances which would or are likely
to entitle any Group Company to make a claim under any of the said policies
or which would or are likely to be required under any of the said policies
to be notified to the insurers.
14. Taxation
(A) Each Group Company has complied with all relevant legal requirements
relating to registration or notification for Taxation purposes in all
respects.
(B) Each Group Company has:
(i) paid all Taxation (if any) due to be paid as at the date of
Completion; and
(ii) taken all necessary steps to obtain any repayment of or relief from
Taxation available to it.
(C) All returns, notifications, documents, computations and payments for
Taxation purposes which ought to have been made by or in respect of each of
the Group Companies to the Taxation Authorities whether in Hong Kong or in
any other part of the world have been duly made and all such returns,
notifications, documents, computations are up to date, correct and on a
proper basis and are not the subject of any material dispute with the
relevant Taxation, revenue or other appropriate authorities.
(D) The provisions (if any) included in the Company Audited Accounts are
adequate to cover all Taxation in respect of all periods ending on or
before the Company Accounts Date for which any Group Company was then or
might at any time thereafter become or have become liable.
(E) None of the Group Companies is in material dispute with any Taxation
Authority or revenue authority in the jurisdiction of its incorporation or
in the jurisdiction where it conducts its business, and to the knowledge of
the Group Companies after due and careful enquiries, no such dispute is
pending or threatened.
(F) (i) There is no liability for Tax in relation to any member of the Group
which arises in consequence of an Event occurring on or before the
date of Completion whether or not the Tax is chargeable against or
attributable to any other person.
86
(ii) There is no liability for Tax in relation to any member of the Group
which arises in consequence of a series of related Events only the
first or some of which have taken place on or before the date of
Completion whether or not Tax is chargeable against or attributable to
any other person but only to the extent that the liability for Tax is
attributable to such Event or Events occurring on or before the date
of Completion.
(iii) There is no liability for Tax in relation to any member of the Group
which would have been saved but for the loss, reduction, modification
or cancellation of some Relief in consequence of an Event occurring on
or before the date of Completion where the availability of Relief has
been shown as an asset in, or referred to in the notes to, the Company
Audited Accounts or has been taken into account in computing (and so
reducing) any provision (whether for deferred Tax or otherwise) which
appears in the Company Audited Accounts or has resulted in no
provision for deferred Tax being shown in the Company Audited
Accounts, provided that any Tax which would have been repaid but for
the loss, reduction, set-off or cancellation of any right to repayment
of the Tax in consequence of an Event occurring on or before the date
of Completion is for the purposes of this paragraph (F)(iii) deemed to
be Tax for which the relevant member of the Group is liable and which
arises in consequence of the Event.
(iv) There is no liability for Tax in relation to any member of the Group
which would have arisen in consequence of an Event occurring on or
before the date of Completion Date which is not and will not be
payable in consequence of the utilisation or set-off of some Relief,
where the Relief arises in respect of an Event occurring after the
date of Completion.
(v) There is no liability to pay any amount in respect of Tax in relation
to any member of the Group under an indemnity, guarantee, mortgage or
charge created on or before the date of Completion.
(G) Paragraph (F) does not apply to any liability to the extent that:
(i) a specific provision has been made for such Tax in the Company Audited
Accounts, or to the extent that such liability for Tax has been
discharged by the relevant member of the Group;
(ii) the liability arises as a result only of a provision or reserve in
respect of the liability made in the Company Audited Accounts being
insufficient by reason of any increase in rates of Tax announced after
the date of Completion with retrospective effect; or
(iii) the liability arises as a result of legislation which comes into
force after the date of Completion and which is retrospective in
effect.
(H) None of the following shall be regarded for the purposes of paragraph
(F)(iii) above as an Event which has occurred in the ordinary course of the
business of the relevant member of the Group:
(i) an Event to which any of Sections 20 (liability of certain
non-resident persons), 20A (persons chargeable on behalf of a
non-resident), 20B (persons chargeable in respect of certain profits
of a non-resident), 39 (replacement of plant or machinery), 61
(certain transactions and
87
dispositions to be disregarded), 61A (transactions designed to avoid
tax) or 61B (utilisation of losses to avoid tax) of the Inland Revenue
Ordinance (Chapter 112) may apply;
(ii) an acquisition, disposal or supply or deemed acquisition, disposal or
supply of assets, goods, services or business facilities of any kind
(including a loan of money or a letting, hiring or licensing of
tangible or intangible property) for a consideration which is treated
for Tax purposes as different from the actual consideration;
(iii) an Event which results in the relevant member of the Group being
liable for Tax for which it is not primarily liable;
(iv) an Event in respect of which Tax arises as a result of a failure by
the relevant member of the Group to deduct or account for Tax; and
(v) a disposal of capital assets.
(I) As at 31 December 2002, the following members of the Group have claimed for
the following losses to be carried forward from previous years for setting
off against profits of the relevant member in subsequent years for the
purpose of profits tax or income tax in the jurisdictions set out below:
--------------------------------------------------------------------------------
Tax loss claimed to be
Name of member of the Group carried forward Jurisdiction
--------------------------------------------------------------------------------
Xxxxxxxxx Global HK$4,119,817,950 Hong Kong
Communications Limited
--------------------------------------------------------------------------------
Xxxxxxxxx MultiMedia HK$253,172,070 Hong Kong
Services Ltd
--------------------------------------------------------------------------------
HCL Partnership HK$25,564 Hong Kong
Holdings Limited
--------------------------------------------------------------------------------
Xxxxxxxxx GlobalCenter HK$100,426,131 Hong Kong
Limited
--------------------------------------------------------------------------------
15. Employment arrangements
(A) Except for those (if any) notified to the Purchaser in writing prior to the
entering into of this Agreement, all contracts of service to which any
Group Company is a party can be terminated by it by not more than three
months' notice or less without compensation (other than compensation
required to be paid in accordance with the Employment Ordinance, Chapter 57
of the Laws of Hong
88
Kong or the relevant legislation).
(B) No loan has been granted by any Group Company to any director or employee
of any Group Company.
(C) None of the Group Companies is under any obligation (whether actual or
contingent and whether or not disputed by the relevant Group Company) to
any former employee whether for breach of any contract of service, for
compensation for wrongful dismissal or for unfair dismissal or for payment
of any salaries, wages, pensions, gratuities, severance pay, long service
payment, bonuses or otherwise howsoever or whatsoever and no tax, levy,
contribution or payment in respect of any former employee whether to any
governmental authority, pension fund, scheme or trust or otherwise
howsoever or whatsoever is outstanding or disputed.
(D) All salaries and wages due to the officers and employees of each Group
Company for any period before the date of this Agreement have been paid in
full.
(E) The Group is not involved in any industrial or trade dispute with any of
its employees or any trade union or association.
(F) The Group is not bound or accustomed to pay any moneys other than in
respect of normal salary, remuneration or emoluments of employment to or
for the benefit of its employees.
(G) The Group has in relation to each of its employees complied with all
obligations imposed on it by all laws relevant to the relations between it
and its employees.
(H) All retirement scheme, pensions or other retirement or death, disability
benefits that are required by laws in Hong Kong or elsewhere to be kept for
any present or past employees have been performed and complied with by each
Group Company in all respects.
16. Properties
(A) With respect to each of the Company Owned Properties and the Company Leased
Properties in Hong Kong (as the case may be):
(i) the relevant Group Company has good and marketable title in or to the
Company Owned Properties and is the legal and beneficial owner thereof
and there is no claim or dispute in respect of its ownership of the
Company Owned Properties;
(ii) all the title deeds (including valid and subsisting tenancy agreements
in respect of the Company Owned Properties in Hong Kong but excluding
all tenancy agreements which have lapsed for more than 6 years) and
documents necessary to prove the relevant Group Company has good and
marketable title to the property and in particular all the original of
such title deeds and documents which relate exclusively to the
property are in the possession and under the control of the relevant
Group Company (save for documents of title in respect of properties
which are
89
the subject of charges, mortgages, liens or encumbrances and are in
the possession of chargees, mortgagees or their agents);
(iii) the government grant is good, valid and subsisting and all land
premium management fee, registration fees, taxes, all moneys due and
payable, outstanding or reserved thereunder and all covenants, terms
and conditions contained therein have been duly paid, observed and
performed to-date;
(iv) all covenants, obligations, stipulations, restrictions, terms and
conditions affecting the Company Owned Properties or the Company
Leased Properties (as the case may be) have been duly observed,
performed and complied with in all respects and all outgoings of
whatever nature in respect thereof have been duly paid to-date;
(v) there is no dispute with any governmental or local authority or with
the owner or occupier of any adjoining or neighbouring property or
howsoever otherwise;
(vi) there is no notice or order in relation to resumption or compulsory
acquisition of the Company Owned Properties or the Company Leased
Properties (as the case may be) under any legislation the
implementation of which would or could affect the occupation or
enjoyment of the Company Owned Properties or the Company Leased
Properties (as the case may be) nor are there any monetary or other
claims or liabilities, whether actual or contingent affecting such
Company Owned Properties or the Company Leased Properties (as the case
may be);
(vii) all legislation, statutory requirements, governmental or other
orders, rules, directives or instruments affecting or pertaining to
the use, occupation or enjoyment of the Company Owned Properties or
the Company Leased Properties (as the case may be) have been duly
complied with to-date;
(viii) the Company Owned Properties or the Company Leased Properties (as
the case may be) is free from any charge, mortgage, lien, encumbrance,
and there are no third party rights, conditions, defects, adverse
interest, equities, orders, regulations or other restrictions which
could or might have adverse effect on the title or value of the
Company Owned Properties or the Company Leased Properties (as the case
may be) or limit, restrict or otherwise adversely affect the ability
of any member of the Group to occupy and utilise the Company Owned
Properties or the Company Leased Properties (as the case may be), and
the relevant Group Company has not entered into any agreement in
relation to any of the foregoing;
(ix) there is no agreement to sell or part with possession of or let or
license or grant any option over or otherwise dispose of any interest
in the property or any part thereof;
(x) the relevant Group Company has not received and is not aware of there
being any notice from the government or any other competent authority
90
or the management body of the property requiring that Group Company to
demolish or reinstate any part of the Company Owned Properties or the
Company Leased Properties (as the case may be);
(xi) the Group has not made erected or constructed, and is not aware of,
any unauthorised or illegal structure or alteration (which have not
been duly rectified) at, on or within the Company Owned Properties or
the Company Leased Properties (as the case may be) or any part
thereof;
(xii) no competent authority has issued any order or notice which may
adversely affect the Company Owned Properties or the Company Leased
Properties (as the case may be) and none of the Group Companies has
received nor is aware of any complaints, proposals, schemes,
resolutions, notices, orders, requirements or recommendations of any
authority affecting the Company Owned Properties or the Company Leased
Properties (as the case may be) or the use thereof or the interest
therein or the owner or occupier thereof;
(xiii) no default or event which with notice or lapse of time or both will
constitute a default by the relevant Group Company has occurred or is
continuing under the government grant or other documents applicable to
the Company Owned Properties or the Company Leased Properties (as the
case may be) and none of the Group Companies is in breach of any laws,
rules, regulations, guidelines, notices, circulars, orders, judgments,
decrees or rulings of any court, government, governmental or
regulatory authorities in respect of the use, occupation and enjoyment
of the Company Owned Properties or the Company Leased Properties (as
the case may be);
(xiv) all requisite licenses, certificates and authorities necessary for
the existing use of the Company Owned Properties or the Company Leased
Properties (as the case may be) by the relevant Group Company have
been duly obtained and are valid, in full force and effect;
(xv) the Company Owned Properties or the Company Leased Properties (as the
case may be) is in good state of repair and good physical conditions
(fair wear and tear excepted) and none of the Group Companies is aware
of any matters or things which materially and adversely affect the
Company Owned Properties or the Company Leased Properties (as the case
may be) or which may subject the owner or occupier thereof to any
charge or liability or which should be revealed to a purchaser for
value;
(xvi) the particulars of tenancies set out in Part B of Exhibit C are true
and accurate particulars of all tenancies in respect of the Company
Leased Properties in Hong Kong;
(xvii) the Company Leased Properties are not subject to the payment of any
outgoings other than rent, service charges and rates and other normal
outgoings;
(xviii) each of the Group Companies has complied in all material respects
with all legislation, statutory requirements, governmental or other
orders,
91
rules, directives, instruments affecting or pertaining to the use,
occupation or enjoyment of the Company Leased Properties;
(xx) all the terms of the leases, tenancies, licences, concessions or other
agreements have not been varied, modified, amended or supplemented
verbally or by means of supplemental agreement or correspondence
between the landlord and any of the Group Companies or otherwise; and
(xxi) the terms of any material lease, tenancy, licence, concession or
agreement will not be breached in consequence of the entering into or
implementation of this Agreement.
(B) With respect to each of the Company Leased Properties in the PRC:
(i) the relevant Group Company has validly acquired the relevant
certificates or licence in respect of the Company Leased Properties
and such certificates or licence are valid, subsisting and in full
force and effect;
(ii) the Company Leased Properties are not used for any unlawful purposes
and have not violated any relevant land or construction regulations;
(iii) the Company Leased Properties are free from any mortgage, charge,
lien, lease, encumbrance or any other third party rights and the
relevant Group Company has not entered into any agreement to do any of
the foregoing;
(iv) the relevant Group Company has not received from the PRC government
nor any competent authority any notice or order which may adversely
affect its right to use the Company Leased Properties for the purpose
for which it is presently being used;
(v) all requisite Consents necessary for the use of the Company Leased
Properties as it is presently being used by the relevant Group Company
have been duly obtained and are valid and in full force and effect;
(vi) all the land user's covenants contained in the documents applicable to
the Company Leased Properties have been duly performed and observed to
the extent that such obligations have fallen due;
(vii) no default or event which with notice or lapse of time or both will
constitute a default by the relevant Group Company has occurred or is
continuing under the documents applicable to the Company Leased
Properties and none of the Group Companies is in breach of any PRC
laws, rules, regulations, guidelines, notices, circulars, orders,
judgments, decrees or rulings of any court, government, governmental
or regulatory authorities in respect of the use occupation and
enjoyment of the Company Leased Properties;
(viii) all requisite licences, certificates and authorities necessary for
the existing use of the Company Leased Properties by the relevant
Group Company have been duly obtained and are valid and in full force
and
92
effect;
(ix) all the terms of the leases, tenancies, licences, concessions or other
agreements of the Company Leased Properties have not been varied,
modified, amended or supplemented verbally or by means of supplemental
agreement or correspondence between the landlord and any of the Group
Companies or otherwise; and
(x) the terms of any such lease, tenancy, licence, concession or agreement
of the Company Leased Properties will not be breached in consequence
of the entering into or implementation of this Agreement.
17. Loans
(A) In relation to all debentures, acceptance credits, overdrafts, loans or
other financial facilities outstanding or available to the Group (referred
to in this paragraph as "facilities"):
(i) the aggregate amount of all facilities drawn down at the relevant
accounts date has been disclosed in the Company Audited Accounts;
(ii) there has been no contravention of, or non-compliance with any
provision of any of the facilities nor are there any circumstances
whereby the confirmation of any of the facilities might be prejudiced;
(iii) no steps for the early repayment of any indebtedness thereunder have
been taken or threatened;
(iv) there have not been, nor are there, any circumstances whereby the
continuation of any of the facilities might be prejudiced, or which
may give rise to any alteration in terms and conditions of any of the
facilities;
(v) none of the facilities is dependent on the guarantee or indemnity of,
or any security provided by, a third party other than its Affiliates:
(vi) none of the facilities will or might be terminated or mature prior to
its stated maturity as a result of the execution of this Agreement or
any transactions contemplated herein; and
(vii) the entering into and consummation of this Agreement will not result
in a breach of any terms of any of the facilities, nor will the same
result in any payment or repayment under any of the facilities being
accelerated.
(B) No Group Company is a party to nor has it any liability (present or future)
nor has it created or agreed or permitted any loans, mortgages, charges,
debentures or other loan capital or bank overdrafts, or other similar
indebtedness, financial facilities, credit sale or conditional sale
agreement, financial leases or hire purchase, letter of credit or leasing,
commitments or any guarantees, indemnities or other contingent liabilities
or rights of security or third party rights of any kind whatsoever to be
made to or by any Group Company which are outstanding except as shown in
the Company Audited Accounts.
93
(C) None of the Group Companies has factored any of its debts or engaged in any
financing of a type which would not be required to be shown or reflected in
the Company Audited Accounts.
(D) The total amount borrowed by each Group Company (as determined in
accordance with the provisions of the relevant instrument or document) does
not exceed any limitation on its borrowing powers contained in its articles
of association or equivalent constitutional document, or in any debenture
or other deed or document binding upon it.
(E) No outstanding indebtedness of any Group Company has become payable by
reason of default by the Group Company and no event of default has occurred
or is pending which with the lapse of time or the fulfillment of any
condition or the giving of notice may result in any such indebtedness
becoming so payable prior to maturity.
18. Contracts and commitments
(A) Since the Company Accounts Date each Group Company has carried on its
business in the ordinary and normal course and, save as mentioned in or as
contemplated by this Agreement, no Group Company has entered into any
transaction or incurred any liabilities except in the ordinary course of
its day-to-day business on normal commercial terms and on an arm's length
basis for full value.
(B) No Group Company has received any formal or informal notice to repay under
any agreement relating to any borrowing (or indebtedness in the nature of
borrowing) which is repayable on demand and which exceeds an aggregate
amount of HK$500,000.
(C) No party to any agreement or arrangement with or under an obligation to any
Group Company is in default under it, being a default which would be
material in the context of such Group Company's financial or trading
position and as far as the Group Companies are aware there are no
circumstances likely to give rise to such a default.
(D) No Group Company is:
(i) in default under or in breach of any agreement or obligation to which
it is party or in respect of any other obligations or restrictions
binding upon it nor is it aware of any invalidity or of any grounds
for determination, recession, avoidance or repudiation of any
agreement to which any Group Company is a party; or
(ii) liable in respect of any representation or warranty (whether express
or implied) which has a material adverse effect on the Group as a
whole.
(E) In respect of each Group Company, there are no outstanding contracts,
engagements or liabilities, whether quantified or disputed, except (i) as
shown in the Company Audited Accounts or (ii) entered into in the ordinary
course of the Group Company's day to day business operations on normal
commercial terms.
94
(F) With respect to each of the Group Companies, subject to the fulfilment of
the conditions in Clause 4.1(a) to (i) of this Agreement, there are no:
(i) contractual arrangements between the Group Company and any party which
will or may be legally terminated as a result of the execution or
completion of this Agreement or which requires any Consent from any
party to be obtained in connection with the execution or completion of
this Agreement;
(ii) other than contained in the banking facilities documents, powers of
attorney which are still outstanding or effective to or in favour of
any person to enter into any contract or commitment or to do anything
on its behalf other than in the ordinary course of business;
(iii) agreements or arrangements entered into by it otherwise than by way
of bargain at arm's length;
(iv) contracts or any obligations binding upon it (other than that entered
into in the ordinary course of business) which are unusual or of a
long-term nature or involving or which may involve obligations on it
of a nature or magnitude calling for special mention or which cannot
be fulfilled or performed on time or without undue or unusual
expenditure of money or effort; or
(v) contracts or arrangements between itself and the parties to this
Agreement or their associates other than contracts in the ordinary
course of their day to day trading or operations on normal commercial
terms.
(G) No agreement or arrangement to which any Group Company is a party is, is
required or, following the execution and completion of this Agreement, will
be required to be registered with any authority or governmental agency
(save for the purpose of implementing this Agreement).
19. Intellectual property
(A) Save and except those listed in Exhibit D and those licensed to any Group
Company for use by the Group in administration or office support or those
for the equipments, systems, networks or infrastructure in connection with
the operations and business of the Group, none of the Group Companies uses
in the conduct of its business any Intellectual Property Rights registered
or owned by any other person which are material in the context of the
Group's business.
(B) The Intellectual Property Rights listed in Exhibit D and those referred to
in paragraph 19(A) above comprise all the Intellectual Property Rights used
or required for the purposes of the business of the Group which are
material in the context of the Group's business and the Intellectual
Property Rights listed in Exhibit D are valid, in full force and effect,
registered (where applicable) in the name of the relevant licensor.
(C) No Group Company has granted or is obliged to grant any licences or
assignments under or in respect of any Intellectual Property Rights listed
in Exhibit D (except in the ordinary course of business) or to disclose or
provide know-how, trade secrets, technical assistance, confidential
information or lists
95
of customers or suppliers to any person (except in the ordinary course of
business to the extent that is necessary or for the purpose of this
Agreement) and no such disclosure has been made.
(D) The conduct of the business of the Group in the ordinary and usual course
as at present will not (i) infringe, and has not at any time in the past
infringed, any Intellectual Property Rights of any third party or (ii)
except in the ordinary and usual course of business, give rise to any
commission, royalty or like fee of any amount or require any Consent to be
obtained in the context of the Group's business.
(E) All fees for the owning, registration, grant or renewal of the Intellectual
Property Rights of or used in the Group's business have been paid when due
or will be paid in due course and so far as the Company is aware, no
circumstances exist which might lead to the termination of or any claim for
damages under any licence of Intellectual Property Rights to the relevant
Group Company.
(F) There is no fact, matter or circumstances which would or would be likely
to:
(i) render void or voidable any right to own or use the Intellectual
Property Rights listed in Exhibit D; or
(ii) lead to any revocation of the grant of licence in respect of the
Intellectual Property Rights used by the Group.
(G) No Group Company has entered into any agreement or arrangement involving
the sale, mortgage, pledge, granting of options or any other rights over
the Group Companies' interest in any of their Intellectual Property Rights.
(H) The Group Companies have taken all steps and actions (as owner, or as the
case may be, as licensees if so required under the relevant licences)
necessary or desirable in order to protect, defend, enforce or maintain
their respective rights in or to the Intellectual Property Rights listed in
Exhibit D.
(I) There has not at any time been a claim made that:
(i) the conduct of the businesses and operations of the Group Companies
using any of the Intellectual Property listed in Exhibit D infringes
the Intellectual Property Rights of any third parties or involves the
unauthorised use of confidential information; or
(ii) any of the Intellectual Property Rights licensed for the use by the
relevant Group Companies are invalid, liable to cancellation or
removal, or unlikely to be granted in their current form, whether in
whole or in part.
(J) There exists no actual or threatened infringement by any third party of any
Intellectual Property Rights listed in Exhibit D (including misuse of
confidential information) or any event likely to constitute such an
infringement nor has the Group acquiesced in the unauthorised use by any
third party of any such Intellectual Property Rights.
(K) Each Group Company is licensed to use all software necessary to enable it
to continue to use its computerised records for the foreseeable future in
the same manner in which they have been used prior to the date of this
Agreement.
20. Trading
96
(A) Since the Company Accounts Date:
(i) full and proper records and books of account of the transactions,
dealings and affairs of the Group Companies have been and will be
kept, and full and proper entries have been and will be made;
(ii) there has been no material deterioration in the turnover or the
financial or trading position or prospects of the Group taken as a
whole;
(iii) no Group Company has, by doing or omitting to do anything, prejudiced
its goodwill and no goodwill of any Group Company will be prejudiced
in any way as a result of the transactions contemplated by this
Agreement;
(iv) no part of the businesses of the Group Companies has been affected by
any abnormal factor not affecting similar businesses to a like extent
and the Vendor, having made due and careful enquiries, are not aware
of any facts which may reasonably be considered as likely to give rise
to any such effect;
(v) no resolutions have been passed by any Group Company in general
meeting or by its directors in directors' meetings and nothing has
been or will be done prior to Completion in the conduct or management
of the affairs of the Group which may reasonably be considered as
likely to prejudice the interests of the other parties to this
Agreement;
(vi) save as contemplated by this Agreement, the Group has not undergone
and will not prior to the Completion undergo any capital
reorganization or change in its capital structure.
(B) The Vendor has no knowledge, information or belief that the entering into
of this Agreement (whether by reason of an existing agreement or
arrangement or otherwise) or as a result of any other matter contemplated
in this Agreement:
(i) any supplier of the Group will cease or be entitled to cease supplies
or may substantially reduce its supplies to it;
(ii) any customer and client of the Group will cease or be entitled to
cease to deal with it or may substantially reduce its existing level
of business with it;
(iii) the Group will lose the benefit of any right or privilege which it
enjoys (in particular, preferential tax treatment relating to (i)
profit tax, and (ii) import tax (if any) on purchase of materials or
machinery from outside the jurisdiction of its incorporation,
currently enjoyed by the Group); or
(iv) any officer or senior employee of any Group Company having salary of
more than HK$200,000 per month will leave.
(C) None of the activities or contracts or rights of each of the Group
Companies is ultra xxxxx, unauthorised, invalid, void or voidable. All
documents to which each Group Company is a party and in the enforcement of
which the relevant Group Company may be interested have been duly stamped,
if required, and are in the possession of the relevant Group Company.
97
(D) Save for the purpose of implementing the transactions contemplated under
this Agreement, there are no arrangements or understandings (whether
legally enforceable or not) between any Group Company and any person who is
a shareholder or the beneficial owner of any interest in such Group Company
in which such shareholder or beneficial owner is (directly or indirectly)
interested, relating to the management of any Group Company's business, or
the appointment or removal of directors of any Group Company, or the
ownership or transfer of ownership or the letting of any of the assets of
any Group Company, or the provision, supply or purchase of finance, goods,
services or other facilities to, by or from any Group Company, or in any
other respect relating to the affairs of any Group Company, and there are
no amounts owing (other than as a result of transactions entered into in
the ordinary course of business of the relevant Group Company and
negotiation on an arm's length basis and on normal commercial terms)
between any Group Company and any person who is a shareholder or the
beneficial owner of any interest in such Group Company in which such
shareholder or beneficial owner is (directly or indirectly) interested.
(E) Save for those entered into in the ordinary course of business, no Group
Company is a party to any agency, distributorship, marketing, purchasing,
manufacturing, licensing or service agreement or arrangement, or any
restrictive trading or other agreement or arrangement which in any way
restricts its freedom to carry on the whole or any part of its business in
any part of the world in such manner as it thinks fit.
(F) No Group Company is a party to any undertaking or assurances given to any
court or governmental agency (other than that entered into in its ordinary
course of business) which is still in force.
(G) There are not outstanding with respect to any Group Company:
(i) any agreements or arrangements not entered into in the ordinary course
of business to which any Group Company is a party for profit sharing,
share incentives or share options;
(ii) any agreement (whether by way of guarantee, indemnity, warranty,
representation or otherwise) under which any Group Company is under
any actual or contingent liability in respect of:
(a) any disposal of its assets or business or any part thereof except
such as are usual in the ordinary and proper course of its normal
day-to-day trading as carried on at the date hereof; or
(b) the obligations of any other person.
21. Capital Commitment
No member of the Group has any material capital commitment or is engaged in
any scheme or project requiring the expenditure of capital of a significant
amount save in the ordinary course of business.
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SCHEDULE 5
PURCHASER'S WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS
Save as specifically disclosed in (i) the Purchaser Audited Accounts, (ii) the
Purchaser Management Accounts, (iii) this Agreement or (iv) Exhibit E, a copy of
which has been initialled on behalf of the Parties for the purpose of
identification:
1. Accuracy of information
(A) All the information relating to the Purchaser Group Companies set out in
Schedule 3 and Recital (B) of this Agreement is true, complete and
accurate. All information (in either written or electronic form) given by
or on behalf of the Purchaser or any of its officers, directors, employees
or advisors to the Vendor relating to the Purchaser Group Companies and all
publicly available information and records of the Purchaser Group Companies
(including information contained in annual reports, statutory filings and
registrations) is, and was, when supplied or published, true, complete and
accurate and not misleading and there is no fact or matter which has not
been disclosed and which may render such information untrue, inaccurate or
misleading or which if disclosed might reasonably be expected to influence
adversely the Vendor's decision to subscribe for the Consideration Shares,
the Vendor's decision to acquire the Consideration Convertible Note, or the
Guarantor's agreement to enter into the Facility Agreement, in each case on
the terms of this Agreement. No information which is material to the
Purchaser Group and which would reasonably be expected to be of interest to
any subscriber for Shares has been withheld from the Vendor.
(B) All principal members of the Purchaser Group Companies (being all members
of the Purchaser Group except (i) companies which only perform the function
of intermediate holding companies in the Purchaser Group, and (ii) dormant
companies) are included in Part B of Schedule 3.
(C) All statements in relation to the Purchaser Group Companies in the
announcement to be published by the Purchaser, Xxxxxxxxx Whampoa Limited
and Xxxxxx Kong (Holdings) Limited (the "Announcement") (and any subsequent
circular to be issued by the Purchaser, whether on its own or together with
other parties ("Circular")) in respect of, amongst other things, the
transactions contemplated by this Agreement are and will be true and
accurate in all material respects and not misleading.
(D) All statements of opinion, intention or expectation in relation to the
Purchaser Group Companies contained in the Announcement (if any) are truly
and honestly held and have been made on reasonable grounds after due and
careful consideration, and there is no other fact or matter omitted
therefrom the omission of which would make any statement therein misleading
in any material respect or which is otherwise material.
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(E) All statements of opinion, intention or expectation in relation to
Purchaser Group Companies to be contained in the Circular to the
Purchaser's shareholders and other announcements in connection with the
transactions contemplated by this Agreement will be truly and honestly held
and will be made on reasonable grounds after due and careful consideration,
and there will be no other fact or matter omitted therefrom the omission of
which would make any statement therein misleading in any material respect
or which would otherwise be material.
(F) All financial information in relation to the Purchaser Group Companies
contained in the Announcement has been prepared in accordance with
generally accepted accounting principles, standards and practice in Hong
Kong.
(G) There is no non-public information relating to the Purchaser Group
Companies or their respective businesses which has not been disclosed to
the Vendor the release of which could adversely affect the trading price of
the Shares in a material respect and there is not in existence any material
or information relating to the Purchaser which will be required to be
disclosed by the Purchaser under the Listing Rules and/or the listing
agreement it made with the Stock Exchange.
2. Capacity and validity
(A) Subject to the satisfaction of the conditions set out in Clause 4.1(a) to
(i), the Purchaser has full power, authority and capacity to perform this
Agreement without any further sanction or consent by the holders of any
class of shares of the Purchaser and has taken all necessary actions to
authorise the execution and completion of this Agreement by it and the
performance of its obligations hereunder.
(B) This Agreement will, when executed, constitute legal, valid and binding
obligations of the Purchaser, in accordance with its terms.
(C) The execution, delivery and the performance of this Agreement by the
Purchaser will not:
(i) result in a breach of any provision of the memorandum or bye-laws of
the Purchaser, any third party consent being required under, or a
breach, rescission or termination of any agreement, arrangement or
instrument to which any Purchaser Group Company is a party or which is
binding upon any Purchaser Group Company or any of its property or
assets, and will not result in the creation or imposition of any
encumbrance or any rights of third party on any of its assets pursuant
to the provisions of any such agreement, arrangement or instrument; or
(ii) result in a breach of any law or regulation or any order, judgment or
decree of any court, governmental agency or regulatory body to which
any Purchaser Group Company is a party or by which any Purchaser
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Group Company or its property or assets is bound.
(D) Subject to the satisfaction of the conditions set out in Clause 4.1(a) to
(i), no consent, licence, approval or authorisation of or filing or
registration with or other requirement of the Stock Exchange or any
governmental department, authority or agency in Hong Kong or Bermuda or
other jurisdictions in which the Purchaser Group has business as at the
date of this Agreement, or courts or any third party pursuant to any
contractual or other arrangement to which the Purchaser or any other
Purchaser Group Company is a party, is required of the Purchaser in
connection with (i) the execution, delivery, performance, validity or
enforceability of this Agreement or (ii) the issue of the Consideration
Shares as contemplated hereunder.
(E) No Purchaser Group Company is a party to any material contract that may be
rescinded or terminated or otherwise affected to its detriment by reason of
the execution, delivery or performance of this Agreement or Completion.
3. Corporate status
(A) Each Purchaser Group Company has been duly incorporated and constituted and
validly existing under the laws of its place of incorporation, and there
has been no resolution, petition or order for its winding-up nor is any
such resolution, petition or order imminent or likely. Each Purchaser Group
Company has the corporate power and authority to own or hold under lease
the properties and assets it purports to own or hold under lease and to
transact and to carry on the business it transacts and proposes to
transact.
(B) No events or omissions have occurred whereby the constitution, subsistence
or corporate status of any Purchaser Group Company has been or is likely to
be adversely affected.
4. Corporate filings and statutory books
(A) All corporate or other documents required to be filed or registered in
respect of each Purchaser Group Company by the laws of its jurisdiction of
incorporation have been duly filed or are in the process of being filed as
appropriate.
(B) The statutory books and minute books of each Purchaser Group Company have
been properly written up and no Purchaser Group Company has received any
application or request for rectification of the register of members and
compliance has been made with all other legal requirements concerning all
issues of shares, debentures or other securities of the Purchaser Group.
(C) All charges in favour of or created by any Purchaser Group Company have
(where appropriate) been registered in accordance with the provisions of
the applicable legislation and regulations and at the relevant registries
and authorities.
5. Ownership of shares and options, rights of pre-emption etc.
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Save for the Purchaser Share Options disclosed in the interim report for
the six months ended 30 September 2003 of the Purchaser, there is no
option, warrant, right of pre-emption, right to acquire, on, over or
affecting any shares in any Purchaser Group Company or any securities
convertible into shares in any Purchaser Group Company nor is there any
commitment to give or create any of the foregoing, and no person has
claimed to be entitled to any of the foregoing.
6. Litigation
(A) No Purchaser Group Company is engaged in (nor is any director of any
Purchaser Group Company in connection with the affairs of the Purchaser
Group Company engaged in) any claim, litigation, arbitration, prosecution
or other legal proceedings or any investigation, enquiry or in any
proceedings or hearings before any statutory or governmental body,
department, board or agency, which individually or in the aggregate may
have a material adverse effect on the Purchaser Group taken as a whole, and
the Purchaser, having made all reasonable enquiries, are not aware that any
such claim, litigation, arbitration, prosecution, investigation, enquiry or
other legal proceedings are pending or threatened or of any facts or
circumstances likely to give rise to such claim, litigation, arbitration,
prosecution, investigation, enquiry or proceedings.
(B) There is no order, decree or judgement of any court or governmental agency
or regulatory body outstanding or anticipated against any Purchaser Group
Company which may individually or in the aggregate have or has had a
material adverse effect upon the condition, financial or otherwise or the
earnings, business affairs or business prospects (whether or not arising in
the ordinary course of business) of the Purchaser Group (taken as a whole).
7. Insolvency
(A) No liquidator, provisional liquidator, receiver or other person carrying
out any similar function has been appointed anywhere in the world in
respect of the whole or any part of the assets or undertaking of the
Purchaser Group.
(B) No Purchaser Group Company has ceased or suspended payment of its debts,
become unable to pay its debts when they fall due or otherwise become
insolvent.
(C) No unsatisfied judgment, order or award is outstanding against any
Purchaser Group Company.
8. Listing Status
(A) The listing of the shares of the Purchaser on the Stock Exchange is not
terminated by the Stock Exchange and there is no such termination
threatened against the Purchaser. The Purchaser is not aware of any
circumstances or matters which are likely to give rise to the termination
of its listing status or which are likely to jeopardise such listing or
which may possibly result in
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disciplinary proceedings being commenced by the Stock Exchange against the
Purchaser or its past or current directors.
(B) Subject to the satisfaction of the conditions set out in Clause 4.1(a) to
(i) and save as disclosed in the Announcement, the Purchaser has obtained
from the Stock Exchange and other authorities all necessary consents (if
any) which are relevant to maintain the listing status of the Company on
the Stock Exchange or to complete the transactions under this Agreement in
the manner contemplated.
(C) The Purchaser is not in material breach of the terms of the listing
agreement that it has entered into with the Stock Exchange and it is not in
material breach of the rules, regulations and requirements of the Stock
Exchange.
(D) None of the members of the Purchaser Group is, and (to the knowledge of the
Purchaser) has been, the subject of any investigation carried out by the
Stock Exchange or the Securities and Futures Commission of Hong Kong.
9. Compliance with laws
Each Purchaser Group Company has at all times carried on business and
conducted its affairs in all respects in accordance with its constitutional
documents, business licence and any law, regulation, legislation, decree or
order applicable to it for the time being in force and any other documents
to which it is or has been a party in all respects and obtained and
complied with all necessary Consents required to carry on its business in
Hong Kong and the PRC and all relevant jurisdictions in which the Purchaser
Group has business, including (but without limitation) legislation relating
to companies and securities, real property, Taxation and prevention of
corruption and have complied with all legal requirements in relation to any
transactions to which it is or has been a party prior to Completion.
10. Accounts and Purchaser Management Accounts
(A) The Purchaser Audited Accounts and the Purchaser Management Accounts:
(i) were prepared in accordance with applicable laws (including the
Companies Ordinance) and with generally accepted accounting
principles, standards and practices in Hong Kong (including all
applicable Statements of Standard Accounting Practice) at the time
they were prepared and, save as disclosed therein, on a recognised and
consistent basis with the audited consolidated financial statements of
the Purchaser Group for each of the three financial years ended 31
March 2001, 2002 and 2003 and for the six months ended 30 September
2003 (the "Previous Purchaser Accounts");
(ii) are true and accurate, correctly make or include adequate provision
for any bad and doubtful debts and all established liabilities
(including dividends or other distributions), make proper and adequate
provision for (or contain a note in accordance with good accounting
practice in respect thereof) all deferred, disputed or contingent
liabilities (whether
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liquidated or unliquidated) and all capital commitments of the
Purchaser Group as at the Purchaser Accounts Date or the Purchaser
Management Accounts Date (as the case may be) and the reserves and
provisions (if any) made therein for all Taxation relating to any
period on or before the Purchaser Accounts Date or the Purchaser
Management Accounts Date (as the case may be) are proper and adequate;
(iii) give a true and fair view of the state of affairs and financial and
trading positions of the Purchaser Group at the Purchaser Accounts
Date or the Purchaser Management Accounts Date (as the case may be)
and of the Purchaser Group's results for the financial period ended on
that date;
(iv) correctly include all the assets of the Purchaser Group as at the
Purchaser Accounts Date or the Purchaser Management Accounts Date (as
the case may be) and the rate of depreciation adopted therein is
appropriate for each of the fixed assets of the Purchaser Group to be
written down to nil by the end of their estimated lives;
(v) other than the Properties, slow-moving stock has been written down
appropriately and unrecoverable work in progress and redundant and
obsolete stock have been wholly written off and the value attributed
to the remaining stock did not exceed the lower of cost and net
realisable book value as at the Purchaser Accounts Date or the
Purchaser Management Accounts Date (as the case may be);
(vi) save as disclosed therein, the method of valuing stock and work in
progress adopted in the Purchaser Audited Accounts and the Purchaser
Management Accounts and the basis of depreciation adopted in respect
of fixed assets are the same as those adopted in the Previous
Purchaser Accounts;
(vii) are not affected by any unusual, exceptional, extraordinary or
non-recurring items and do not include transactions not normally
undertaken by the relevant the Purchaser Group Company (in each case,
which are not disclosed in the relevant accounts); and
(viii) contain adequate provision for the diminution in value of the
Purchaser Group's properties.
(B) Since the Purchaser Management Accounts Date:
(i) none of the Purchaser Group Companies has entered into any unusual or
abnormal contracts or long term or onerous or other commitments
binding on it (other than contracts entered into in the ordinary
course of its business) and there has not been any acquisition or
disposal by any Purchaser Group Company of any fixed or capital assets
or any agreement to effect the same;
(ii) other than in its ordinary course of its business, none of the
Purchaser Group Companies has borrowed or lent any money in excess of
HK$500,000 in aggregate which has not been repaid or increased any
liability (whether or not secured) in excess of HK$500,000 in
aggregate
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or incurred or entered into any other liability, transaction or
contract in excess of HK$500,000 in aggregate;
(iii) no event has occurred as regards any Purchaser Group Company which
would entitle any third party to terminate any contract or any benefit
enjoyed by such Purchaser Group Company or call in any amount of money
before the normal due date therefor;
(iv) none of the Purchaser Group Companies has created any mortgages or
charges or granted any security or other indebtedness, financial
faculties, finance leases or hire purchase commitments or any
guarantees or contingent liabilities on the whole or any part of its
assets putting it under a prospective or contingent liability that may
remain after the date hereof;
(v) other than from bankers in the ordinary course of its day to day
trading operation, none of the Purchaser Group Companies has borrowed
or increased any secured liability;
(vi) the business of each Purchaser Group Company has been carried on in
the ordinary and usual course and in the same manner as in the past,
both as regard the nature and scope and manner of conducting the
business so as to maintain the business as a going concern, and no
part of the business of the Purchaser Group has been affected by any
abnormal factor in any respect;
(vii) no fixed asset or stock has been written up nor any debt written off,
and no unusual or abnormal contract has been entered into by any
Purchaser Group Company and so far as the Purchaser is aware, none of
the assets of any Purchaser Group Company has been depleted by any
unlawful act of any person;
(viii) the trading prospects, financial position or businesses of the
Purchaser Group Companies have not been materially adversely affected
as a result of any event or circumstances arising since the Purchaser
Management Accounts Date and no such material adverse effect is
expected by the Purchaser within the immediate future; and
(ix) no Purchaser Group Company has issued or repaid or agreed to issue or
repay any share or loan capital other than pursuant to the exercise of
any Purchaser Share Options.
(C) There has been no material adverse change in the condition, financial or
otherwise, or the earnings, net assets, business affairs or business
prospects (whether or not arising in the ordinary course of business) of
the Purchaser Group Companies as a whole since 30 September 2003.
(D) Since the Purchaser Management Accounts Date, no dividend has been declared
or paid or other distributions out of profits, reserves or capital made in
respect of any share capital of each Purchaser Group Company save for
distribution to wholly-owned subsidiaries of the Purchaser or to the
Purchaser.
11. Conduct of business
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(A) Each Purchaser Group Company carries on its business intra xxxxx, solely
under its corporate name, without any known infringement of any proprietary
right or proprietary interest of any other person, without any known
liability to pay any royalty or similar sum and such business is not in
breach of any legislation, regulation or third party rights in Hong Kong
and the PRC and all relevant jurisdictions in which the Purchaser Group has
business.
(B) All dividends or distributions (if any) declared, made or paid by any of
the Purchaser Group Companies have been declared, made or paid in
accordance with its articles of association or other similar constitutional
documents and the applicable provisions of the Companies Ordinance or other
relevant legislation in Hong Kong and the PRC and all relevant
jurisdictions in which the Purchaser Group has business.
(C) In respect of the business of the Purchaser Group:
(i) there are requisite corporate powers in respect thereof, and all
applicable legislation, rules and regulations in Hong Kong and the PRC
and all relevant jurisdictions in which the Purchaser Group has
business as at the date of this Agreement have been complied with and
observed, and there have been no breach or contravention of the same
which has an adverse impact on the business of the Purchaser Group
taken as a whole;
(ii) all Consents necessary for the proper conduct of business in Hong Kong
and the PRC and all relevant jurisdictions in which the Purchaser
Group has business as at the date of this Agreement have been obtained
and maintained and no event or omission has occurred whereby any of
such Consents or the renewal thereof which has an adverse impact on
the business of the Purchaser Group taken as a whole is or is likely
to be thereby adversely affected, suspended or revoked;
(iii) the businesses and all such Consents may continue to be carried on
and held by the Purchaser Group Companies after and notwithstanding
Completion; and
(iv) the carrying on of such business in no way contravenes or infringes
any third party Intellectual Property Rights.
(D) Each of the Consents referred to in paragraph (C) is valid and in force,
and no Purchaser Group Company is in breach of any terms of any such
Consent (including breach of any requirement relating to such Consent to
make returns or reports or supply information) and there are no
circumstances which might invalidate any such Consent or render it liable
to forfeiture or modification (to the detriment of the relevant Purchaser
Group Company) or (in the case of a renewable Consent) affect its renewal.
(E) No Purchaser Group Company has given any representation, warranty or other
term (whether express or implied) in respect of any of its services or
end-products (save as required under laws or given in its ordinary course
of business); and it has no outstanding liability (including a contingent
liability by virtue of the terms on which the end-products or services were
sold) in respect
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of any such end-products or services or their maintenance or replacement.
(F) No Purchaser Group Company has (except (i) for the purpose of carrying on
its business in the ordinary course and subject to an obligation of
confidentiality or (ii) for the purpose of negotiating, preparing or
performing this Agreement) disclosed, or agreed to disclose, or authorised
the disclosure of, any of its lists of suppliers or customers, trade
secrets or confidential information concerning its business, all of which
are fully and properly recorded in writing or other appropriate form and
are not incorrect in any way.
(G) The business of each Purchaser Group Company is managed exclusively by its
officers and employees, and no person has authority to bind a Purchaser
Group Company other than its officers and employees and its authorized
agents acting in the ordinary and ostensible course of their duties.
(H) No Purchaser Group Company is or has agreed to become, a member of any
partnership, joint venture or consortium (whether incorporated or not
incorporated outside its ordinary course of business).
12. Assets
(A) All the plant, equipment and assets (except the Properties) included in the
Purchaser Audited Accounts or acquired since the Purchaser Accounts Date
and all assets, computer hardware, software and database of the Purchaser
Group are in reasonably good and safe condition and in working order (fair
wear and tear excepted) in all respects and have been regularly and
properly maintained and are not dangerous, inefficient, obsolete or in need
of renewal or replacement and without prejudice to the generality of the
foregoing no Purchaser Group Company has manufactured, sold or supplied any
product or has provided any service which is material in the context of the
business of the Purchaser Group as a whole, which does not comply with all
applicable laws and regulations in all respects or which is sub-standard,
defective or dangerous or not in accordance with any representations,
warranty or other term (express or implied) given in respect of such
products.
(B) All plant, equipment and assets (except the Properties) included in the
Purchaser Audited Accounts or acquired since the Purchaser Accounts Date
and all assets, computer hardware, software and database of each Purchaser
Group Company:
(i) are legally and beneficially owned by that Purchaser Group Company
free from any mortgage, charge, lien or similar encumbrance, security
interest or assignment, equity, option, right of pre-emption, royalty,
factoring agreement, any hire-purchase agreement or agreement for
payment on deferred terms or bills of sale or lien, charge or other
encumbrance including a conditional obligation to create or enter into
any of the foregoing;
(ii) are in the possession or under the control of that Purchaser Group
Company; and
(iii) comprise all the assets, property and rights which that Purchaser
Group
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Company owns or which it uses or requires for the purpose of carrying
on its business.
(C) Where any assets are used but not owned by the Purchaser Group Company or
any facilities or services are provided to the Purchaser Group Company by
any third party, there has not occurred any event of default or any other
event or circumstance which may entitle any third party to terminate any
agreement or licence in respect of the provision of such facilities or
services.
(D) All stock of each Purchaser Group Company (except for the Properties, and
except where provisions have been included in the Purchaser Audited
Accounts or the Purchaser Management Accounts) is in good condition (fair
wear and tear excepted) and capable of being used or sold by it in the
ordinary course of trading.
(E) The amount of all debts owing to each Purchaser Group Company (less the
amount of any provision or reserve for bad and doubtful debts included in
the Purchaser Audited Accounts or the Purchaser Management Accounts) will
be substantially recoverable in the ordinary course.
(F) No Purchaser Group Company owns, or has agreed to acquire, any shares or
debentures in any other undertaking (other than shares in another Purchaser
Group Company) or any other securities.
(G) Each Purchaser Group Company has done everything prudent (whether by way of
giving notice, registration, filing or otherwise), required or permitted to
be done by it for the protection of its title to, or for the enforcement or
the preservation of any order of priority of its title to, any property or
rights (including the benefit of any debt, mortgage or charge) owned by it.
(H) All records or other documents recording or evidencing any contract,
licence, consent or other right of each Purchaser Group Company or required
for the exercise of any such right are in the possession or under the
control of that Purchaser Group Company.
13. Insurance
(A) Each Purchaser Group Company has or has procured the effect of all
insurances required by the applicable law to be effected by it in the
jurisdiction in which it has business (including public liability
insurance) or which ought reasonably to have been effected over its
business in Hong Kong or elsewhere (including the undertakings and assets
and in particular all the Properties) for a substantial part of its value
and covering third party liability of each Purchaser Group Company having
taken into account the nature of the business of the relevant Purchaser
Group Company, the place in which it carries on business and those risks
normally insured by persons carrying on similar businesses.
(B) All premiums due on the said policies have been paid, all the conditions of
the said policies have been performed and observed in all respects in each
place in which the Purchaser Group carries on business, and (other than the
transactions contemplated under this Agreement) nothing has been done or
has been omitted to be done whereby any of the said policies has or may
become void or
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voidable.
(C) No material claim is outstanding either by the insurer or the insured under
any of the said policies and no material claim against any Purchaser Group
Company by any third party is outstanding in respect of any risk covered by
any of the policies or by any policy previously held by any Purchaser Group
Company.
(D) None of the Purchaser Group Companies is aware of any circumstances which
would or are likely to entitle any Purchaser Group Company to make a claim
under any of the said policies or which would or are likely to be required
under any of the said policies to be notified to the insurers.
14. Taxation
(A) Each Purchaser Group Company has complied with all relevant legal
requirements relating to registration or notification for Taxation purposes
in all respects.
(B) Each Purchaser Group Company has:
(i) paid all Taxation (if any) due to be paid as at the date of
Completion; and
(ii) taken all necessary steps to obtain any repayment of or relief from
Taxation available to it.
(C) All returns, notifications, documents, computations and payments for
Taxation purposes which ought to have been made by or in respect of each of
the Purchaser Group Companies to the Taxation Authorities whether in Hong
Kong or in any other part of the world have been duly made and all such
returns, notifications, documents, computations are up to date, correct and
on a proper basis and are not the subject of any material dispute with the
relevant Taxation, revenue or other appropriate authorities.
(D) The provisions (if any) included in the Purchaser Audited Accounts are
adequate to cover all Taxation in respect of all periods ending on or
before the Purchaser Accounts Date for which any Purchaser Group Company
was then or might at any time thereafter become or have become liable.
(E) None of the Purchaser Group Companies is in material dispute with any
Taxation Authority or revenue authority in the jurisdiction of its
incorporation or in the jurisdiction where it conducts its business, and to
the knowledge of the Purchaser Group Companies after due and careful
enquiries, no such dispute is pending or threatened.
(F) (i) There is no liability for Tax in relation to any member of the
Purchaser Group which arises in consequence of an Event occurring on
or before the date of Completion whether or not the Tax is chargeable
against or attributable to any other person.
(ii) There is no liability for Tax in relation to any member of the
Purchaser Group which arises in consequence of a series of related
Events only the first or some of which have taken place on or before
the date of
109
Completion whether or not Tax is chargeable against or attributable to
any other person but only to the extent that the liability for Tax is
attributable to such Event or Events occurring on or before the date
of Completion.
(iii) There is no liability for Tax in relation to any member of the
Purchaser Group which would have been saved but for the loss,
reduction, modification or cancellation of some Relief in consequence
of an Event occurring on or before the date of Completion where the
availability of Relief has been shown as an asset in, or referred to
in the notes to, the Purchaser Audited Accounts or has been taken into
account in computing (and so reducing) any provision (whether for
deferred Tax or otherwise) which appears in the Purchaser Audited
Accounts or has resulted in no provision for deferred Tax being shown
in the Purchaser Audited Accounts, provided that any Tax which would
have been repaid but for the loss, reduction, set-off or cancellation
of any right to repayment of the Tax in consequence of an Event
occurring on or before the date of Completion is for the purposes of
this paragraph (F)(iii) deemed to be Tax for which the relevant member
of the Purchaser Group is liable and which arises in consequence of
the Event.
(iv) There is no liability for Tax in relation to any member of the
Purchaser Group which would have arisen in consequence of an Event
occurring on or before the date of Completion Date which is not and
will not be payable in consequence of the utilisation or set-off of
some Relief, where the Relief arises in respect of an Event occurring
after the date of Completion.
(v) There is no liability to pay any amount in respect of Tax in relation
to any member of the Purchaser Group under an indemnity, guarantee,
mortgage or charge created on or before the date of Completion.
(G) Paragraph (F) does not apply to any liability to the extent that:
(i) a specific provision has been made for such Tax in the Purchaser
Audited Accounts or the Purchaser Management Accounts, or to the
extent that such liability for Tax has been discharged by the relevant
member of the Purchaser Group;
(ii) the liability arises as a result only of a provision or reserve in
respect of the liability made in the Purchaser Audited Accounts being
insufficient by reason of any increase in rates of Tax announced after
the date of Completion with retrospective effect; or
(iii) the liability arises as a result of legislation which comes into
force after the date of Completion and which is retrospective in
effect.
(H) None of the following shall be regarded for the purposes of paragraph
(F)(iii) above as an Event which has occurred in the ordinary course of the
business of the relevant member of the Purchaser Group:
(i) an Event to which any of Sections 20 (liability of certain
non-resident persons), 20A (persons chargeable on behalf of a
non-resident), 20B (persons chargeable in respect of certain profits
of a non-resident), 39 (replacement of plant or machinery), 61
(certain transactions and dispositions to be disregarded), 61A
(transactions designed to avoid tax) or 61B (utilisation of losses to
avoid tax) of the Inland Revenue
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Ordinance (Chapter 112) may apply;
(ii) an acquisition, disposal or supply or deemed acquisition, disposal or
supply of assets, goods, services or business facilities of any kind
(including a loan of money or a letting, hiring or licensing of
tangible or intangible property) for a consideration which is treated
for Tax purposes as different from the actual consideration;
(iii) an Event which results in the relevant member of the Purchaser Group
being liable for Tax for which it is not primarily liable;
(iv) an Event in respect of which Tax arises as a result of a failure by
the relevant member of the Purchaser Group to deduct or account for
Tax; and
(v) a disposal of capital assets.
(I) As at the date of this Agreement, the following members of the Purchaser
Group have been informed by the relevant Taxation Authority to have the
following losses carried forward from previous years for setting off
against profits of the relevant member in subsequent years for the purpose
of profits tax or income tax in the jurisdictions set out below:
--------------------------------------------------------------------------------
Name of member of the Purchaser Group Tax loss carried forward Jurisdiction
--------------------------------------------------------------------------------
Vanda Systems & Communications HK$46,756,308 Hong Kong
Holdings Limited
--------------------------------------------------------------------------------
Vanda Instrument & Equipment HK$3,921,657 Hong Kong
Company Limited
--------------------------------------------------------------------------------
Janeper Development Limited HK$3,200,839 Hong Kong
--------------------------------------------------------------------------------
Vanda Computer & Equipment Company HK$107,861,871 Hong Kong
Limited
--------------------------------------------------------------------------------
Vanda Computer Service (Hong Kong) HK$582,303 Hong Kong
Company Limited
--------------------------------------------------------------------------------
Vanda Systems (Singapore) Pte Ltd S$382,074 Singapore
--------------------------------------------------------------------------------
Vanda InnovAsia Pte Ltd S$300,159 Singapore
--------------------------------------------------------------------------------
WiseAsia (Singapore) Pte Ltd S$519,310 Singapore
--------------------------------------------------------------------------------
Azure Technologies Pte Ltd S$l,336,036 Singapore
--------------------------------------------------------------------------------
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15. Employment arrangements
(A) Except for those notified to the Vendor in writing prior to the entering
into of this Agreement, all contracts of service to which any Purchaser
Group Company is a party can be terminated by it by not more than three
months' notice or less without compensation (other than compensation
required to be paid in accordance with the Employment Ordinance, Chapter 57
of the Laws of Hong Kong or the relevant legislation).
(B) No loan has been granted by any Purchaser Group Company to any director or
employee of any Purchaser Group Company.
(C) None of the Purchaser Group Companies is under any obligation (whether
actual or contingent and whether or not disputed by the relevant Purchaser
Group Company) to any former employee whether for breach of any contract of
service, for compensation for wrongful dismissal or for unfair dismissal or
for payment of any salaries, wages, pensions, gratuities, severance pay,
long service payment, bonuses or otherwise howsoever or whatsoever and no
tax, levy, contribution or payment in respect of any former employee
whether to any governmental authority, pension fund, scheme or trust or
otherwise howsoever or whatsoever is outstanding or disputed.
(D) All salaries and wages due to the officers and employees of each Purchaser
Group Company for any period before the date of this Agreement have been
paid in full.
(E) The Purchaser Group is not involved in any industrial or trade dispute with
any of its employees or any trade union or association.
(F) The Purchaser Group is not bound or accustomed to pay any moneys other than
in respect of normal salary, remuneration or emoluments of employment to or
for the benefit of its employees.
(G) The Purchaser Group has in relation to each of its employees complied with
all obligations imposed on it by all laws relevant to the relations between
it and its employees.
(H) All retirement scheme, pensions or other retirement or death, disability
benefits that are required by laws in Hong Kong or elsewhere to be kept for
any present or past employees have been performed and complied with by each
Purchaser Group Company in all respects.
16. Properties
(A) With respect to each of the Owned Properties and the Leased Properties in
Hong Kong (as the case may be):
(i) the relevant Purchaser Group Company has good and marketable title in
or to the Owned Properties and is the legal and beneficial owner
thereof and there is no claim or dispute in respect of its ownership
of the Owned Properties;
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(ii) all the title deeds (including valid and subsisting tenancy agreements
in respect of the Owned Properties in Hong Kong but excluding all
tenancy agreements which have lapsed for more than 6 years) and
documents necessary to prove the relevant Purchaser Group Company has
good and marketable title to the property and in particular all the
original of such title deeds and documents which relate exclusively to
the property are in the possession and under the control of the
relevant Purchaser Group Company (save for documents of title in
respect of properties which are the subject of charges, mortgages,
liens or encumbrances and are in the possession of chargees,
mortgagees or their agents);
(iii) the government grant is good, valid and subsisting and all land
premium management fee, registration fees, taxes, all moneys due and
payable, outstanding or reserved thereunder and all covenants, terms
and conditions contained therein have been duly paid, observed and
performed to-date;
(iv) all covenants, obligations, stipulations, restrictions, terms and
conditions affecting the Owned Properties or the Leased Properties (as
the case may be) have been duly observed, performed and complied with
in all respects and all outgoings of whatever nature in respect
thereof have been duly paid to-date;
(v) there is no dispute with any governmental or local authority or with
the owner or occupier of any adjoining or neighbouring property or
howsoever otherwise;
(vi) there is no notice or order in relation to resumption or compulsory
acquisition of the Owned Properties or the Leased Properties (as the
case may be) under any legislation the implementation of which would
or could affect the occupation or enjoyment of the Owned Properties or
the Leased Properties (as the case may be) nor are there any monetary
or other claims or liabilities, whether actual or contingent affecting
such Owned Properties or the Leased Properties (as the case may be);
(vii) all legislation, statutory requirements, governmental or other
orders, rules, directives or instruments affecting or pertaining to
the use, occupation or enjoyment of the Owned Properties or the Leased
Properties (as the case may be) have been duly complied with to-date;
(viii) the Owned Properties or the Leased Properties (as the case may be)
is free from any charge, mortgage, lien, encumbrance, and there are no
third party rights, conditions, defects, adverse interest, equities,
orders, regulations or other restrictions which could or might have
adverse effect on the title or value of the Owned Properties or the
Leased Properties (as the case may be) or limit, restrict or otherwise
adversely affect the ability of any member of the Purchaser Group to
occupy and utilise the Owned Properties or the Leased Properties (as
the case may be), and the relevant Purchaser Group Company has not
entered into any agreement in relation to any of the foregoing;
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(ix) there is no agreement to sell or part with possession of or let or
license or grant any option over or otherwise dispose of any interest
in the property or any part thereof;
(x) the relevant Purchaser Group Company has not received and is not aware
of there being any notice from the government or any other competent
authority or the management body of the property requiring that
Purchaser Group Company to demolish or reinstate any part of the Owned
Properties or the Leased Properties (as the case may be);
(xi) the Purchaser Group has not made erected or constructed, and is not
aware of, any unauthorised or illegal structure or alteration (which
have not been duly rectified) at, on or within the Owned Properties or
the Leased Properties (as the case may be) or any part thereof;
(xii) no competent authority has issued any order or notice which may
adversely affect the Owned Properties or the Leased Properties (as the
case may be) and none of the Purchaser Group Companies has received
nor is aware of any complaints, proposals, schemes, resolutions,
notices, orders, requirements or recommendations of any authority
affecting the Owned Properties or the Leased Properties (as the case
may be) or the use thereof or the interest therein or the owner or
occupier thereof,
(xiii) no default or event which with notice or lapse of time or both will
constitute a default by the relevant Purchaser Group Company has
occurred or is continuing under the government grant or other
documents applicable to the Owned Properties or the Leased Properties
(as the case may be) and none of the Purchaser Group Companies is in
breach of any laws, rules, regulations, guidelines, notices,
circulars, orders, judgments, decrees or rulings of any court,
government, governmental or regulatory authorities in respect of the
use, occupation and enjoyment of the Owned Properties or the Leased
Properties (as the case may be);
(xiv) all requisite licenses, certificates and authorities necessary for
the existing use of the Owned Properties or the Leased Properties (as
the case may be) by the relevant Purchaser Group Company have been
duly obtained and are valid, in full force and effect;
(xv) the Owned Properties or the Leased Properties (as the case may be) is
in good state of repair and good physical conditions (fair wear and
tear excepted) and none of the Purchaser Group Companies is aware of
any matters or things which materially and adversely affect the Owned
Properties or the Leased Properties (as the case may be) or which may
subject the owner or occupier thereof to any charge or liability or
which should be revealed to a purchaser for value;
(xvi) the particulars of tenancies set out in Part B of Exhibit A are true
and accurate particulars of all tenancies in respect of the Leased
Properties in Hong Kong;
(xvii) the Leased Properties are not subject to the payment of any
outgoings
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other than rent, service charges and rates and other normal outgoings;
(xviii) each of the Purchaser Group Companies has complied in all material
respects with all legislation, statutory requirements, governmental or
other orders, rules, directives, instruments affecting or pertaining
to the use, occupation or enjoyment of the Leased Properties;
(xx) all the terms of the leases, tenancies, licences, concessions or other
agreements have not been varied, modified, amended or supplemented
verbally or by means of supplemental agreement or correspondence
between the landlord and any of the Purchaser Group Companies or
otherwise; and
(xxi) the terms of any material lease, tenancy, licence, concession or
agreement will not be breached in consequence of the entering into or
implementation of this Agreement.
(B) With respect to each of the Owned Properties in the PRC:
(i) the ownership of the Owned Properties, in respect of which the
relevant Group Company has the right to occupy, belongs to the
Purchaser Group Company which has good title to such Owned Properties;
(ii) the relevant Purchaser Group Company has validly acquired the relevant
Real Estate and Land Ownership Certificate ("Ownership Certificate")
or other certificates or licence in respect of the Owned Properties or
the Leased Properties (as the case may be) and such Ownership
Certificate or other certificates or licence are valid, subsisting and
in full force and effect;
(iii) all the sale and transfer procedures as regards the Owned Properties
have been completed and (where applicable) the sale and transfer has
been validly registered in the relevant department;
(iv) the relevant Purchaser Group Company can legally transfer, mortgage,
or sell the Owned Properties to local or foreign corporations or
individuals;
(v) all purchase consideration payable in respect of the Owned Properties
have been paid in full and no further moneys are payable by the
relevant Purchaser Group Company under the terms of the Ownership
Certificate or otherwise under the laws of the PRC;
(vi) the Owned Properties are not currently subject to any sale or transfer
or mortgage procedures and it is not leased or transferred or given to
others as a gift, and the relevant Purchaser Group Company has not
entered into any agreement to do any of the foregoing; the Owned
Properties are not involved in any litigation or subject to any court
order for attachment or possession;
(vii) the Owned Properties or the Leased Properties (as the case may be)
are not used for any unlawful purposes and have not violated any
relevant
115
land or construction regulations;
(viii) the Owned Properties or the Leased Properties (as the case may be)
are free from any mortgage, charge, lien, lease, encumbrance or any
other third party rights and the relevant Purchaser Group Company has
not entered into any agreement to do any of the foregoing;
(ix) the relevant Purchaser Group Company has not received from the PRC
government nor any competent authority any notice or order which may
adversely affect its right to use the Owned Properties or the Leased
Properties (as the case may be) for the purpose for which it is
presently being used;
(x) all requisite Consents necessary for the use of the Owned Properties
or the Leased Properties (as the case may be) as they are presently
being used by the relevant Purchaser Group Company have been duly
obtained and are valid and in full force and effect;
(xi) all the land user's covenants contained in the Ownership Certificate
or other documents applicable to the Owned Properties or the Leased
Properties (as the case may be) have been duly performed and observed
to the extent that such obligations have fallen due;
(xii) there has been no change in the terms and conditions of the Ownership
Certificate or other documents applicable to the Owned Properties,
which are all valid and in full force and effect in favour of the
relevant Purchaser Group Company;
(xiii) no default or event which with notice or lapse of time or both will
constitute a default by the relevant Purchaser Group Company has
occurred or is continuing under the Ownership Certificate or other
documents applicable to the Owned Properties or the Leased Properties
(as the case may be) and none of the Purchaser Group Companies is in
breach of any PRC laws, rules, regulations, guidelines, notices,
circulars, orders, judgments, decrees or rulings of any court,
government, governmental or regulatory authorities in respect of the
use occupation and enjoyment of the Owned Properties or the Leased
Properties (as the case may be);
(xiv) all requisite licences, certificates and authorities necessary for
the existing use of the Owned Properties or the Leased Properties (as
the case may be) by the relevant Purchaser Group Company have been
duly obtained and are valid and in full force and effect.
(xv) all the terms of the leases, tenancies, licences, concessions or other
agreements of the Leased Properties have not been varied, modified,
amended or supplemented verbally or by means of supplemental agreement
or correspondence between the landlord and any of the Purchaser Group
Companies or otherwise; and
(xvi) the terms of any such lease, tenancy, licence, concession or
agreement of the Leased Properties will not be breached in consequence
of the
116
entering into or implementation of this Agreement.
17. Loans
(A) In relation to all debentures, acceptance credits, overdrafts, loans or
other financial facilities outstanding or available to the Purchaser Group
(referred to in this paragraph as "facilities"):
(i) the aggregate amount of all facilities drawn down at the relevant
accounts date has been disclosed in the Purchaser Audited Accounts or
the Purchaser Management Accounts;
(ii) there has been no contravention of, or non-compliance with any
provision of any of the facilities nor are there any circumstances
whereby the confirmation of any of the facilities might be prejudiced;
(iii) no steps for the early repayment of any indebtedness thereunder have
been taken or threatened;
(iv) there have not been, nor are there, any circumstances whereby the
continuation of any of the facilities might be prejudiced, or which
may give rise to any alteration in terms and conditions of any of the
facilities;
(v) none of the facilities is dependent on the guarantee or indemnity of,
or any security provided by, a third party other than its Affiliates;
(vi) none of the facilities will or might be terminated or mature prior to
its stated maturity as a result of the execution of this Agreement or
any transactions contemplated herein; and
(vii) the entering into and consummation of this Agreement will not result
in a breach of any terms of any of the facilities, nor will the same
result in any payment or repayment under any of the facilities being
accelerated.
(B) No Purchaser Group Company is a party to nor has it any liability (present
or future) nor has it created or agreed or permitted any loans, mortgages,
charges, debentures or other loan capital or bank overdrafts, or other
similar indebtedness, financial facilities, credit sale or conditional sale
agreement, financial leases or hire purchase, letter of credit or leasing,
commitments or any guarantees, indemnities or other contingent liabilities
or rights of security or third party rights of any kind whatsoever to be
made to or by any Purchaser Group Company which are outstanding except as
shown in the Purchaser Audited Accounts or the Purchaser Management
Accounts.
(C) None of the Purchaser Group Companies has factored any of its debts or
engaged in any financing of a type which would not be required to be shown
or reflected in the Purchaser Audited Accounts or the Purchaser Management
Accounts.
(D) The total amount borrowed by each Purchaser Group Company (as determined in
accordance with the provisions of the relevant instrument or document) does
not exceed any limitation on its borrowing powers contained in its articles
of
117
association or equivalent constitutional document, or in any debenture or
other deed or document binding upon it.
(E) No outstanding indebtedness of any Purchaser Group Company has become
payable by reason of default by the Purchaser Group Company and no event of
default has occurred or is pending which with the lapse of time or the
fulfillment of any condition or the giving of notice or otherwise may
result in any such indebtedness becoming so payable prior to maturity.
18. Contracts and commitments
(A) Since the Purchaser Management Accounts Date each Purchaser Group Company
has carried on its business in the ordinary and normal course and, save as
mentioned in or as contemplated by this Agreement, no Purchaser Group
Company has entered into any transaction or incurred any liabilities except
in the ordinary course of its day-to-day business on normal commercial
terms and on an arm's length basis for full value.
{B) No Purchaser Group Company has received any formal or informal notice to
repay under any agreement relating to any borrowing (or indebtedness in the
nature of borrowing) which is repayable on demand and which exceeds an
aggregate amount of HK$500,000.
(C) No party to any agreement or arrangement with or under an obligation to any
Purchaser Group Company is in default under it, being a default which would
be material in the context of such Purchaser Group Company's financial or
trading position and so far as the Purchaser Group Companies are aware
there are no circumstances likely to give rise to such a default.
(D) No Purchaser Group Company is:
(i) in default under or in breach of any agreement or obligation to which
it is party or in respect of any other obligations or restrictions
binding upon it nor is it aware of any invalidity or of any grounds
for determination, recession, avoidance or repudiation of any
agreement to which any Purchaser Group Company is a party; or
(ii) liable in respect of any representation or warranty (whether express
or implied) which has a material adverse effect on the Purchaser Group
as a whole.
(E) In respect of each Purchaser Group Company, there are no outstanding
contracts, engagements or liabilities, whether quantified or disputed,
except (i) as shown in the Purchaser Audited Accounts or the Purchaser
Management Accounts or (ii) entered into in the ordinary course of the
Purchaser Group Company's day to day business operations on normal
commercial terms.
(F) With respect to each of the Purchaser Group Companies, subject to the
fulfillment of the conditions in Clause 4.l(a) to (i) of this Agreement,
there are no:
(i) contractual arrangements between the Purchaser Group Company and
118
any party which will or may be legally terminated as a result of the
execution or completion of this Agreement or which require any Consent
from any party to be obtained in connection with the execution or
completion of this Agreement;
(ii) other than contained in the banking facilities documents, powers of
attorney which are still outstanding or effective to or in favour of
any person to enter into any contract or commitment or to do anything
on its behalf other than in the ordinary course of business;
(iii) agreements or arrangements entered into by it otherwise than by way
of bargain at arm's length;
(iv) contracts or any obligations binding upon it (other than that entered
into in the ordinary course of business) which are unusual or of a
long-term nature or involving or which may involve obligations on it
of a nature or magnitude calling for special mention or which cannot
be fulfilled or performed on time or without undue or unusual
expenditure of money or effort; or
(v) contracts or arrangements between itself and the parties to this
Agreement or their associates other than contracts in the ordinary
course of their day to day trading operations on normal commercial
terms.
(G) No agreement or arrangement to which any Purchaser Group Company is a party
is, is required or, following the execution and completion of this
Agreement, will be required to be registered with any authority or
governmental agency (save for the purpose of implementing this Agreement).
19. Intellectual property
(A) The Purchaser Group Companies are the legal and beneficial owners of the
Intellectual Property Rights listed in Part A of Exhibit B.
(B) Save and except those listed in Part B of Exhibit B and those licensed to
any Purchaser Group Company for use by the Purchaser Group in
administration or office support or those for the equipments, systems,
networks or infrastructure in connection with the operations and business
of the Purchaser Group, none of the Purchaser Group Companies uses in the
conduct of its business any Intellectual Property Rights registered or
owned by any other person which are material in the context of the Group's
business.
(C) The Intellectual Property Rights listed in Parts A and B of Exhibit B and
those referred to in paragraph 19(B) above comprise all the Intellectual
Property Rights used or required for the purposes of the business of the
Purchaser Group which are material in the context of the Purchaser Group's
business and all the same are valid, in full force and effect, registered
(where applicable) in the name of the relevant Purchaser Group Company or
the relevant licensor, and if any of the same are subject to renewal or
re-registration within three months of the date hereof and is not so
renewed or re-registered, there will be no material adverse effect on the
business of the Purchaser Group taken as a whole.
(D) No Purchaser Group Company has granted or is obliged to grant any licences
or assignments under or in respect of any Intellectual Property Rights
listed in Part
119
A or B of Exhibit B (except in the ordinary course of business) or to
disclose or provide know-how, trade secrets, technical assistance,
confidential information or lists of customers or suppliers to any person
(except in the ordinary course of business to the extent that is necessary
or for the purpose of this Agreement) and no such disclosure has been made.
(E) The conduct of the business of the Purchaser Group in the ordinary and
usual course as at present will not (i) infringe, and has not at any time
in the past infringed, any Intellectual Property Rights of any third party
or (ii) except in the ordinary and usual course of business, give rise to
any commission, royalty or like fee of any amount or require any Consent to
be obtained in the context of the Purchaser Group's business.
(F) All fees for the owning, registration, grant or renewal of the Intellectual
Property Rights of or used in the Purchaser Group's business have been paid
when due or will be paid in due course and so far as the Purchaser is
aware, no circumstances exist which are likely to lead to the cancellation,
revocation, forfeiture or modification, compulsory licence or may prevent
the grant or registration of a valid Intellectual Property Right pursuant
to a pending application (if any) of any such Intellectual Property or to
the termination of or any claim for damages under any licence of
Intellectual Property Rights to the relevant Purchaser Group Company.
(G) There is no fact, matter or circumstances which would or would be likely
to:
(i) render void or voidable any right to own or use the Intellectual
Property Rights listed in Parts A and B of Exhibit B; or
(ii) lead to any revocation of the registration or grant of licence in
respect of the Intellectual Property Rights owned or used by the
Purchaser Group.
(H) No Purchaser Group Company has entered into any agreement or arrangement
involving the sale, mortgage, pledge, granting of options or any other
rights over the Purchaser Group Companies' interest in any of their
Intellectual Property Rights and no rights in or to any of the Intellectual
Property Rights listed in Part A of Exhibit B are held by any other person.
(I) The Purchaser Group Companies have taken all steps and actions (as owner,
or as the case may be, as licensees if so required under the relevant
licences) necessary or desirable in order to protect, defend, enforce or
maintain their respective rights in or to the Intellectual Property Rights
listed in Part A or B of Exhibit B.
(J) There has not at any time been a claim made that:
(i) the conduct of the businesses and operations of the Purchaser Group
Companies using any of the Intellectual Property listed in Parts A and
B of Exhibit B infringes the Intellectual Property Rights of any third
parties or involves the unauthorised use of confidential information;
or
(ii) the Purchaser Group Companies are not the sole beneficial and legal
owner of the Intellectual Property Rights listed in Part A of Exhibit
B; or
(iii) any of the Intellectual Property Rights registered in the names of or
licensed for the use by the relevant Purchaser Group Companies are
invalid, liable to cancellation or removal, or unlikely to be granted
in their current form, whether in whole or in part.
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(K) There exists no actual or threatened infringement by any third party of any
Intellectual Property Rights listed in Parts A and B of Exhibit B
(including misuse of confidential information) or any event likely to
constitute such an infringement nor has the Purchaser Group acquiesced in
the unauthorised use by any third party of any such Intellectual Property
Rights.
(L) Part C of Exhibit B contains a complete list of all information technology
services provided by the Purchaser Group to its customers and clients.
(M) Part D of Exhibit B contains a complete list of all information technology
services used by the Purchaser Group which is provided by a third party
(not being a member of the Purchaser Group) to the Purchaser Group. The
Purchaser Group has the right to use (and will continue to have the right
to use) all such information technology services. Neither the signing of
this Agreement nor any transaction under or contemplated by this Agreement
will in any way adversely affect such right.
(N) To the best of the Purchaser's knowledge after due and careful enquiry, and
after the relevant Purchaser Group Company having taken reasonably prudent
anti virus and other protective measures of a nature and standard
comparable to those commonly followed in the same or similar businesses, no
portion of the information technology (including, without limitation, any
computer hardware, software, networks, data storage devices, equipment,
peripherals, data stored in electronic form and other information
technology) owned by, used by or licensed to the Purchaser Group Companies
contains any "backdoor", "time bomb", "Trojan Horse", "worm", "drop dead
device", "virus" or any other computer software code which is intended or
designed to:
(i) permit unauthorised access to or use of the information technology or
a Purchaser Group Company's computer systems by a person not
authorised by the relevant Purchaser Group Company; or
(ii) disable, damage or erase, or disrupt or impair the normal operation
of, the information technology or any other software or data on a
Purchaser Group Company's computer systems.
(O) All the accounting records and systems (including but not limited to
computerised accounting systems) of the Purchaser Group are recorded,
stored, maintained or operated or otherwise held by the Purchaser Group and
are not wholly or partly dependent on any facilities or systems which are
not under the exclusive ownership or control of the Purchaser Group. Each
Purchaser Group Company is licensed to use all software necessary to enable
it to continue to use its computerised records for the foreseeable future
in the same manner in which they have been used prior to the date of this
Agreement and does not share any user rights in respect of such software
with any other person.
20. Software development
In respect of all contracts, commitments, arrangements and understandings
to which any Purchaser Group Company is party or by which it is bound, or
has during the period of two years prior to the date hereof been party or
bound, for the design, writing, programming, development, supply or
installation of computer software or the like:
121
(i) all such software has been designed, written, programmed and developed
in accordance with computer methodologies that are generally
recognised in the industry;
(ii) where a Purchaser Group Company has the obligation to provide computer
software that conforms to a particular specification, that Purchaser
Group Company has the technical and other capabilities and the human
and other resources to produce computer software that satisfies such
specifications as the same may be modified or amended from time to
time or otherwise accepted by the customers concerned, with no claims
having been made by the customers concerned;
(iii) where such contracts, commitments, arrangements or understandings
have been completed, all computer software that has been supplied or
installed has been fully accepted, no money owing to any Purchaser
Group Company has been retained by any client or customer for any
reason and no complaint or claim has been received by any Purchaser
Group Company in relation to any computer software; and
(iv) all computer software and data supplied or installed by any Purchaser
Group Company which performs or is or may be required to perform
functions involving dates or the computation thereof has the
programming, design and performance capabilities to ensure that it
will:
(a) accurately recognise dates falling before, upon and after the
year 2000;
(b) accurately record, store, retrieve and process data input and
date information;
(c) function in a manner which does not create any ambiguity as to
century; and
(d) accurately manage and manipulate single century and multi-
century formulae, including leap year calculations.
21. Computer systems and software
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(A) All software supplied by or used by any Purchaser Group Company
(collectively "Software") and other information technology (including,
without limitation, any hardware, networks, data storage devices,
peripherals and equipment) supplied by or used by any Purchaser Group
Company (collectively "Hardware") are fit in all respects for intended
purposes, of satisfactory quality, perform in all respects in accordance
with their specifications and user or other manuals or documentation and do
not contain any defect or feature which do or may adversely affect their
performance or the performance of any other software, hardware or system,
in each case save and except as may be accepted by the relevant customers.
Each Purchaser Group Company has not at any time had any dispute with any
person relating to the functionality, quality or fitness for purpose of the
Software or Hardware relating to their compliance with their specifications
or with any warranties given by any Purchaser Group Company or any other
person relating to it to the extent that the Software has been accepted by
the customers concerned and no claims have been made by the customers
concerned and not settled.
(B) (i) All Software and Hardware and all software and hardware used or
operated by third parties on behalf of any Purchaser Group Company in
relation to its business, which perform or are or may be required to
perform functions involving dates or the computation of dates or
contain date-related data, have the programming, design and
performance capabilities to ensure that they will not be adversely
affected by, nor require changes in inputting or operating practices
nor produce invalid or incorrect output or results, nor cause any
abnormal ending scenario or suffer any diminution in functionality or
performance as a result of the date change at the end of the twentieth
century or the input, processing, storage or use of dates falling
before, upon or after the year 2000.
(ii) All date-related data stored electronically by or on behalf of any
Purchaser Group Company are in such a form that their input,
processing, storage or use by or on behalf of the Purchaser Group
Company will not, directly or indirectly, cause a malfunction of the
type referred to in (i) above in any software, hardware or equipment.
(C) Each Purchaser Group Company has taken all reasonable steps to ensure that
all Software supplied or used by it is free of any virus and has no grounds
for believing that any virus has or will come into contact with such
Software.
(D) Each Purchaser Group Company has security procedure in place to prevent the
unauthorised access, amendment or damage to, or use of, the Purchaser Group
Company's data or data of third parties held on the Purchaser Group
Company's computer systems or Software by any third party, and no such
unauthorised access, amendment, damage or use has taken place.
(E) Save as set out in Part B of Exhibit B, the Purchaser Group Company has
access to the source code of Software licensed or sub-licensed to it.
22. Trading
(A) Since the Purchaser Management Accounts Date:
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(i) full and proper records and books of account of the transactions,
dealings and affairs of the Purchaser Group Companies have been and
will be kept, and full and proper entries have been and will be made;
(ii) there has been no deterioration in the turnover or the financial or
trading position or prospects of the Purchaser Group taken as a whole;
(iii) no Purchaser Group Company has, by doing or omitting to do anything,
prejudiced its goodwill and no goodwill of any Purchaser Group Company
will be prejudiced in any way as a result of the transactions
contemplated by this Agreement;
(iv) no part of the businesses of the Purchaser Group Companies has been
affected by any abnormal factor not affecting similar businesses to a
like extent and the Purchaser, having made due and careful enquiries,
are not aware of any facts which may reasonably be considered as
likely to give rise to any such effect;
(v) no resolutions have been passed by any Purchaser Group Company in
general meeting or by its directors in directors' meetings and nothing
has been or will be done prior to Completion in the conduct or
management of the affairs of the Purchaser Group which may reasonably
be considered as likely to prejudice the interests of the other
parties to this Agreement;
(vi) save as contemplated by this Agreement, the Purchaser Group has not
undergone and will not prior to the Completion undergo any capital
reorganization or change in its capital structure.
(B) The Purchaser has no knowledge, information or belief that the entering
into of this Agreement (whether by reason of an existing agreement or
arrangement or otherwise) or as a result of any other matter contemplated
in this Agreement:
(i) any supplier of the Purchaser Group will cease or be entitled to cease
supplies or may substantially reduce its supplies to it;
(ii) any customer and client of the Purchaser Group will cease or be
entitled to cease to deal with it or may substantially reduce its
existing level of business with it;
(iii) the Purchaser Group will lose the benefit of any right or privilege
which it enjoys (in particular, preferential tax treatment relating to
(i) profit tax, and (ii) import tax (if any) on purchase of materials
or machinery from outside the jurisdiction of its incorporation,
currently enjoyed by the Purchaser Group); or
(iv) any officer or senior employee of any Purchaser Group Company having
salary of more than HK$100,000 per month will leave.
(C) None of the activities or contracts or rights of each of the Purchaser
Group Companies is ultra xxxxx, unauthorised, invalid, void or voidable.
All documents to which each Purchaser Group Company is a party and in the
enforcement of which the relevant Purchaser Group Company may be interested
have been duly stamped, if required, and are in the possession of the
relevant Purchaser Group Company.
124
(D) Save for the purpose of implementing the transactions contemplated under
this Agreement, there are no arrangements or understandings (whether
legally enforceable or not) between any Purchaser Group Company and any
person who is a shareholder or the beneficial owner of any interest in such
Purchaser Group Company in which such shareholder or beneficial owner is
(directly or indirectly) interested, relating to the management of any
Purchaser Group Company's business, or the appointment or removal of
directors of any Purchaser Group Company, or the ownership or transfer of
ownership or the letting of any of the assets of any Purchaser Group
Company, or the provision, supply or purchase of finance, goods, services
or other facilities to, by or from any Purchaser Group Company, or in any
other respect relating to the affairs of any Purchaser Group Company, and
there are no amounts owing (other than as a result of transactions entered
into in the ordinary course of business of the relevant Purchaser Group
Company and negotiation on an arm's length basis and on normal commercial
terms) between any Purchaser Group Company and any person who is a
shareholder or the beneficial owner of any interest in such Purchaser Group
Company in which such shareholder or beneficial owner is (directly or
indirectly) interested.
(E) Save for those entered into in the ordinary course of business, no
Purchaser Group Company is a party to any agency, distributorship,
marketing, purchasing, manufacturing, licensing or service agreement or
arrangement, or any restrictive trading or other agreement or arrangement
which in any way restricts its freedom to carry on the whole or any part of
its business in any part of the world in such manner as it thinks fit.
(F) No Purchaser Group Company is a party to any undertaking or assurances
given to any court or governmental agency (other than those entered in its
ordinary course of business) which is still in force.
(G) There are not outstanding with respect to any Purchaser Group Company:
(i) any agreements or arrangements not entered into in the ordinary course
of business to which any Purchaser Group Company is a party for profit
sharing, share incentives or share options;
(ii) any agreement (whether by way of guarantee, indemnity, warranty,
representation or otherwise) under which any Purchaser Group Company
is under any actual or contingent liability in respect of:
(a) any disposal of its assets or business or any part thereof except
such as are usual in the ordinary and proper course of its normal
day-to-day trading as carried on at the date hereof; or
(b) the obligations of any other person.
23. Capital commitment
No member of the Purchaser Group has any material capital commitment or is
engaged in any scheme or project requiring the expenditure of capital of a
significant amount save in the ordinary course of business.
24. Other matters relating to the Convertible Notes
(A) Subject to the fulfillment of the conditions set out in Clause 4.1(a) to
(i), the Purchaser will at Completion have sufficient authorised but
unissued share
125
capital for the Purchaser to perform its obligations under the Convertible
Notes (taking into account the obligation of the Purchaser to issue the
Consideration Shares, any share options which have been issued or which may
be issued under any share option scheme of the Purchaser, any Shares agreed
to be issued by the Purchaser, any other convertible or subscription rights
granted or agreed to be granted by the Purchaser, and any Shares which may
be issued or agreed to be issued under the general mandate to issue Shares
which may be granted to the directors of the Purchaser) and the directors
of the Purchaser will be authorised to issue the Convertible Notes and the
Conversion Shares upon exercise of the Conversion Rights and the Conversion
Shares, when issued, will be duly authorised and shall rank pari passu in
all respects with all other existing Shares outstanding at the date of
conversion and be entitled to all dividends, bonuses and distributions the
record date for which falls on a date on or after the date of the relevant
conversion notice.
(B) Subject to the fulfillment of the conditions set out in Clause 4.1(a) to
(i), the issue of the Convertible Notes and the Certificate and the
allotment and issue of the Conversion Shares will not infringe and will not
be contrary to any laws or regulations of any governmental or regulatory
body of Hong Kong or Bermuda or any other relevant jurisdiction and will
not result in any breach of the terms of the memorandum of association and
bye-laws of the Purchaser or constitute a breach (with or without the
giving of notice or lapse of time, or both) or acceleration of any
obligations of any Purchaser Group Company under any deed, agreement,
mortgage or other instrument which is binding on any Purchaser Group
Company (save and except with respect to any member of the Purchaser Group,
any such conflict, breach or acceleration which does not have a material
adverse effect on any Purchaser Group Company or on the Purchaser's ability
to perform any of its obligations contemplated hereunder) and upon issue of
the Convertible Notes and the execution of the Certificate by the Purchaser
and delivery of the same, the Convertible Notes and the Conditions will
constitute legal, valid and binding obligations of the Purchaser
enforceable against it.
(C) Other than the options issued pursuant to the share option schemes adopted
by the Purchaser on 22 March 1995 and 2 April 2002 respectively, there are
no options, rights to acquire, or any other form of security or encumbrance
on, over or affecting any part of the unissued share capital of the
Purchaser and there is no agreement or commitment to give or create any of
the foregoing and no claim has been made by any person to be entitled to
any of the foregoing.
(D) Without the prior written consent of the Vendor, from the date hereof until
the issue of the Consideration Convertible Note, no act will be done and no
circumstance will arise which will had the Consideration Convertible Note
been issued as at the date hereof (or but for Conditions 7.3, 7.5 and 7.9
of the Conditions would) give rise to an adjustment of the Conversion Price
(as defined in the Conditions) under Condition 7 of the Consideration
Convertible Note.
25. Miscellaneous
126
(A) Neither the Purchaser nor any of its affiliates (as defined in Rule 405
under the Securities Act of 1933 of the United States of America (the
"Security Act")), nor any person acting on behalf of any such person has
engaged or will engage in any "directed selling efforts" (as defined in
Regulation S of the Security Act) with respect to the Consideration Shares.
(B) Neither the Purchaser nor any of its affiliates (as defined in Rule 405
under the Securities Act), nor any person acting on behalf of any such
person has, directly or indirectly, taken or will take any action designed
to cause or to result in, or that has constituted or which might reasonably
be expected to cause or result in, the stabilisation in violation of
applicable laws or manipulation of the price of any security of the
Purchaser to facilitate the sale or resale of the Consideration Shares.
(C) The Purchaser has complied and will comply with the "offering restrictions"
(as such term is defined in Regulation S of the Security Act).
(D) The Purchaser is not, and as a result of issue and allotment of the
Consideration Shares will not be, an "investment company" under, and as
such term is defined in, the Investment Company Act of 1940 of the United
States of America.
(E) The Purchaser is a "foreign issuer" (as such term is defined in Regulation
S of the Security Act) which reasonably believes that there is no
"substantial US market interest" (as such term is defined in Regulation S
of the Security Act) in the Consideration Shares or securities of the
Purchaser of the same class as the Consideration Shares.
127
SCHEDULE 6
FORM OF FACILITY AGREEMENT
AGREEMENT
DATED [DATE]
HK$1,000,000,000
CREDIT FACILITY
FOR
VANDA SYSTEMS & COMMUNICATIONS HOLDINGS LIMITED
PROVIDED BY
XXXXXXXXX INTERNATIONAL LIMITED
128
THIS AGREEMENT is dated [DATE] between:-
(1) VANDA SYSTEMS & COMMUNICATIONS HOLDINGS LIMITED (HKSE Stock Code: 757), a
limited liability company incorporated under the laws of Bermuda as
borrower (the "Company"); and
(2) XXXXXXXXX INTERNATIONAL LIMITED, a limited liability company incorporated
under the laws of Hong Kong as lender (the "Lender").
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Definitions
In this Agreement:-
"Affiliate"
means, in respect of a person, a Subsidiary or a Holding Company of that
person or any other Subsidiary of that Holding Company.
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks are open for
business in Hong Kong.
"Certificate"
means a certificate substantially in the form set out in Schedule 7 of the
HGC Acquisition Agreement, with all necessary modifications referred to in
Clause 13.2 (Issuance of Certificate).
"Commitment"
means HK$1,000,000,000 to the extent not cancelled or reduced under this
Agreement.
"Commitment Period"
means the period from the date of this Agreement to the Term Date (both
dates inclusive).
"Consideration Convertible Note"
means the convertible note of an initial principal sum of HK$3,200,000,000
issued by the Company in accordance with the terms of the HGC Acquisition
Agreement.
"Cost of Funds"
129
means, in respect of an Interest Period, the rate per annum notified by the
Lender to the Company as the rate reflecting the Lender's cost of funding
the relevant Loan(s) for that Interest Period from whatever sources it may
reasonably select.
"Default"
means an Event of Default or an event which, with the giving of notice,
lapse of time, determination of materiality or fulfilment of any other
applicable condition (or any combination of the foregoing), would
constitute an Event of Default.
"Drawdown Date"
means the date of the advance of a Loan.
"Event of Default"
means an event specified as such in Clause 16.1 (Events of Default).
"Facility Convertible Notes"
means the convertible notes to be issued by the Company to the Lender (or
such other subsidiary of Xxxxxxxxx Whampoa Limited, the holding company of
the Lender, as the Lender may direct) in accordance with Clause 13
(Conversion into Convertible Notes).
"Finance Document"
means this Agreement or any other document designated as such by the Lender
and the Company.
"Financial Indebtedness"
means any indebtedness in respect of:-
(a) moneys borrowed and debit balances at banks;
(b) any debenture, bond, note, loan stock or other security;
(c) any acceptance credit;
(d) receivables sold or discounted (otherwise than on a non-recourse
basis);
(e) the acquisition cost of any asset to the extent payable before or
after the time of acquisition or possession by the party liable where
the advance or deferred payment is arranged primarily as a method of
raising finance or financing the acquisition of that asset;
130
(f) leases entered into primarily as a method of raising finance or
financing the acquisition of the asset leased;
(g) currency swap or interest swap, cap or collar arrangements;
(h) amounts raised under any other transaction having the commercial
effect of a borrowing or raising of money; or
(i) any guarantee, indemnity or similar assurance against financial loss
of any person.
"Group"
means the Company and its Subsidiaries.
"HGC Acquisition Agreement"
means the agreement for the acquisition of the entire issued share capital
of Xxxxxxxxx Global Communications Investments Limited dated [*] 2004
between Xxxxxxxxx Global Communications Holdings Limited, the Company and
the Lender.
"HIBOR"
means, in respect of an Interest Period, the Hong Kong Inter Bank Offer
Rate for that Interest Period.
"Hong Kong"
means the Hong Kong Special Administrative Region of the People's Republic
of China.
"Hong Kong Dollars" or "HK$"
means the lawful currency for the time being of Hong Kong.
"Initial Interest Period End Date"
means 1, 2, 3 or 6 months after the first Drawdown Date as the Company may
specify in writing to the Lender by the first Drawdown Date (subject to the
provisions of Clause 8.1 (Interest Periods)).
"Interest Period"
means each period determined in accordance with Clause 8 (Interest
Periods).
"Loan"
means the principal amount of each borrowing by the Company under this
Agreement or the principal amount outstanding of that borrowing.
131
"Margin"
means 1.8% per annum.
"Original Group Accounts"
means the audited consolidated accounts of the Group for the six months
ended 30 September 2003.
"Party"
means a party to this Agreement.
"Repayment Date"
means 17th July, 2008.
"Request"
means a request made by the Company for a Loan, substantially in the form
of Schedule 2.
"Security Interest"
means any mortgage, pledge, lien, charge, assignment, hypothecation or
security interest or any other agreement or arrangement having the effect
of conferring security (including any title retention arrangement).
"Subsidiary"
means, in respect of any person, each company which is deemed to be a
subsidiary of that person pursuant to Section 2 of the Companies Ordinance
(Cap 32 of the Laws of Hong Kong).
"Term Date"
means the date falling 24 months after the date of this Agreement.
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a reference to:-
(i) "assets" includes properties, revenues and rights of every
description;
an "authorisation" includes an authorisation, consent, approval,
resolution, licence, exemption, filing and registration;
132
a "month" is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
calendar month, except that, if there is no numerically corresponding
day in the month in which that period ends, that period shall end on
the last day in that calendar month;
a "regulation" includes any regulation, rule, official directive,
request or guideline (whether or not having the force of law) of any
governmental body, agency, department or regulatory, self-regulatory
or other authority or organisation;
(ii) a provision of law is a reference to that provision as amended or
re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a schedule to
this Agreement;
(iv) a person includes its successors and assigns;
(v) a Finance Document or another document is a reference to that Finance
Document or other document as amended, novated or supplemented; and
(vi) a time of day is a reference to Hong Kong time.
(b) Unless the contrary intention appears, a term used in any other Finance
Document or in any notice given under or in connection with any Finance
Document has the same meaning in that Finance Document or notice as in this
Agreement.
(c) The index to and the headings in this Agreement are for convenience only
and are to be ignored in construing this Agreement.
2. THE FACILITY
Subject to the terms of this Agreement, the Lender agrees to make Loans
during the Commitment Period to the Company up to an aggregate principal
amount not exceeding the Commitment.
3. PURPOSE
The Company shall apply each Loan (a) for on-lending to Xxxxxxxxx Global
Communications Limited for its purpose of repayment of the amount
outstanding under a loan facility agreement between Xxxxxxxxx Global
Communications Limited and the Lender dated 31 July 2003 (the "July 2003
Facility Agreement"); and (b) after the amount outstanding under the July
2003 Facility Agreement is reduced to HK$3,400,000,000, towards its general
corporate funding requirement. Without affecting the obligations of the
133
Company in any way, the Lender is not bound to monitor or verify the
application of any Loan.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of the Lender to the Company under this Agreement are
subject to the condition precedent that the Lender has notified the Company
that it has received all of the documents set out in Schedule 1 in form and
substance satisfactory to the Lender.
4.2 Further conditions precedent
The obligation of the Lender to make any amount available under Clause 5.3
(Advance of Loan) is subject to the further conditions precedent that on
both the date of the Request and the Drawdown Date:-
(a) the representations and warranties in Clause 14 (Representations and
warranties) to be repeated on those dates are correct and will be
correct immediately after the Loan is made; and
(b) no Default is outstanding or might result from the making of the Loan.
5. DRAWDOWN
5.1 Commitment Period
The Company may borrow a Loan during the Commitment Period if the Lender
receives, not later than 3 Business Days before the proposed Drawdown Date,
a duly completed Request (except that the first drawdown may be made even
if the Request is received by the Lender less than 3 Business Days before
the proposed Drawdown Date, so long as the Request is received by the
Lender before the time of execution of this Agreement). The undrawn amount
(if any) of the Commitment shall automatically be cancelled at close of
business on the Term Date.
5.2 Completion of Requests
A Request will not be regarded as having been duly completed unless:-
(a) the Drawdown Date is a Business Day falling on or before the Term
Date;
(b) the principal amount of the Loan is a minimum of HK$1,000,000 and an
integral multiple of HK$1,000,000 or the balance of the undrawn
Commitment;
(c) the payment instructions comply with Clause 9 (Payments).
134
Each Request must specify one Loan only, but the Company may, subject to
the other terms of this Agreement, deliver more than one Request on any one
day.
5.3 Advance of Loan
Subject to the terms of this Agreement, the Lender shall make the Loan
available to the Company on the relevant Drawdown Date.
6. REPAYMENT
The Company shall repay the Loans in full on the Repayment Date.
7. PREPAYMENT AND CANCELLATION
7.1 Voluntary Prepayment
The Company may, by giving not less than 30 days' prior notice to the
Lender, prepay any Loan on the last day of an Interest Period in whole or
in part (but, if in part, in an integral multiple of HK$1,000,000).
7.2 Voluntary Cancellation
The Company may, by giving not less than 30 days' prior notice to the
Lender, cancel the undrawn amount of the Commitment in whole or in part
(but, if in part, in an integral multiple of HK$1,000,000).
7.3 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable.
(b) All prepayments under this Agreement shall be made together with accrued
interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in accordance with the
express terms of this Agreement.
(d) No amount prepaid under this Agreement may subsequently be re-borrowed. No
amount of the Commitment cancelled under this Agreement may subsequently be
reinstated.
8. INTEREST
8.1 Interest Periods
(a) The Company may select an Interest Period for a Loan in a notice received
by the Lender not later than the commencement of that Interest Period. Each
Interest Period for a Loan will commence on its Drawdown Date or the expiry
135
of its preceding Interest Period.
(b) Subject to the following provisions of this Clause 8.1 (Interest Periods),
each Interest Period will be 1, 2, 3 or 6 months as selected by the
Company.
(c) If an Interest Period would otherwise end on a day which is not a Business
Day, that Interest Period shall instead end on the next Business Day in
that calendar month (if there is one) or the preceding Business Day (if
there is not).
(d) If an Interest Period commences on the last Business Day of a calendar
month and if there is no corresponding day in the calendar month in which
it is to end, then it shall end on the last Business Day of such calendar
month.
(e) Notwithstanding paragraph (a) above:
(i) the first Interest Period for the first Loan shall end on the Initial
Interest Period End Date; and
(ii) the first Interest Period for each subsequent Loan shall end on the
same day as the current Interest Period for any other Loan. On the
last day of those Interest Periods, those Loans shall be consolidated
and treated as one Loan.
(f) If an Interest Period would otherwise overrun the Repayment Date, it shall
be shortened so that it ends on the Repayment Date.
(g) The Lender and the Company may enter into such other arrangements as they
may agree for the adjustment of Interest Periods and the consolidation
and/or splitting of Loans.
(h) The Lender shall notify the Company of the duration of each Interest Period
promptly after ascertaining its duration.
8.2 Interest rate
The rate of interest on each Loan for each of its Interest Periods is the
rate per annum determined by the Lender to be the aggregate of:-
(a) the Margin; and
(b) HIBOR.
8.3 Due dates
Except as otherwise provided in this Agreement, accrued interest on each
Loan is payable by the Company on the last day of each Interest Period for
that Loan.
8.4 Default interest
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(a) If the Company fails to pay any amount payable by it under this Agreement,
it shall forthwith on demand by the Lender pay interest on the overdue
amount from the due date up to the date of actual payment, as well after as
before judgment, at a rate (the "default rate") determined by the Lender to
be 1 per cent. per annum above the rate which would have been payable if
the overdue amount had, during the period of non-payment, constituted a
Loan in the currency of the overdue amount for such successive interest
periods of such duration as the Lender may determine (each a "Designated
Interest Period").
(b) The default rate will be determined by the Lender by reference to Cost of
Funds on the first day of the relevant Designated Interest Period
(c) Default interest if not paid when due will be compounded at the end of each
Designated Interest Period.
8.5 Notification
The Lender shall promptly notify the Company of the determination of a rate
of interest under this Agreement.
9. PAYMENTS
9.1 Place
All payments by the Company under this Agreement shall be made to the
Lender to its account at such office or bank as it may notify to the
Company for this purpose.
9.2 Funds
Payments under this Agreement to the Lender shall be made for value on the
due date at such times and in such funds as the Lender may specify to the
Company concerned as being customary at the time for the settlement of
transactions in Hong Kong Dollars.
9.3 Currency
(a) Amounts payable in respect of costs, expenses and taxes and the like are
payable in the currency in which they are incurred.
(b) Any other amount payable under this Agreement is, except as otherwise
provided in this Agreement, payable in Hong Kong Dollars.
9.4 Set-off and counterclaim
All payments made by the Company under this Agreement shall be made without
set-off or counterclaim.
137
9.5 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a Business
Day, the due date for that payment shall instead be the next Business Day
in the same calendar month (if there is one) or the preceding Business Day
(if there is not).
(b) During any extension of the due date for payment of any principal under
this Agreement interest is payable on that principal at the rate payable on
the original due date.
10. TAXES
10.1 Gross-up
All payments by the Company under the Finance Documents shall be made
without any deduction and free and clear of and without deduction for or on
account of any taxes, except to the extent that the Company is required by
law to make payment subject to any taxes. If any tax or amounts in respect
of tax must be deducted, or any other deductions must be made, from any
amounts payable or paid by the Company under the Finance Documents, the
Company shall pay such additional amounts as may be necessary to ensure
that the Lender receives a net amount equal to the full amount which it
would have received had payment not been made subject to tax.
10.2 Tax receipts
All taxes required by law to be deducted or withheld by the Company from
any amounts paid or payable under the Finance Documents shall be paid by
the Company when due and the Company shall, within 15 days of the payment
being made, deliver to the Lender evidence satisfactory to the Lender
(including all relevant tax receipts) that the payment has been duly
remitted to the appropriate authority.
11. INCREASED COSTS
11.1 Increased costs
(a) Subject to Clause 11.2 (Exceptions), the Company shall forthwith on demand
by the Lender pay to the Lender the amount of any increased cost incurred
by it as a result of any law or regulation (including any law or regulation
relating to taxation).
(b) In this Agreement "increased cost" means:-
(i) an additional cost incurred by the Lender as a result of it having
entered into, or performing, maintaining or funding its obligations
under, this Agreement; or
(ii) that portion of an additional cost incurred by the Lender in making,
138
funding or maintaining the Loans made or to be made under this
Agreement; or
(iii) a reduction in any amount payable to the Lender or the effective
return to the Lender under this Agreement or on its capital; or
(iv) the amount of any payment made by the Lender, or the amount of any
interest or other return foregone by the Lender, calculated by
reference to any amount received or receivable by the Lender from the
Company under this Agreement.
11.2 Exceptions
Clause 11.1 (Increased costs) does not apply to any increased cost:-
(a) compensated for by the operation of Clause 10 (Taxes); or
(b) attributable to any change in the rate of Tax on the overall net
income of the Lender imposed in the jurisdiction in which its
principal office for the time being is situate.
12. ILLEGALITY
If it is or becomes unlawful in any jurisdiction for the Lender to give
effect to any of its obligations as contemplated by this Agreement or to
fund any Loan, then:-
(a) the Lender may notify the Company accordingly; and
(b) (i) the Company shall forthwith prepay all the Loans together with
all other amounts payable by it to the Lender under this
Agreement; and
(ii) the Commitment shall forthwith be cancelled.
13. CONVERSION INTO CONVERTIBLE NOTES
13.1 Conversion
On each of the first and second anniversaries of the date of this Agreement
(or if such date is not a Business Day, on the next Business Day), all
Loans which have been drawn and remain outstanding together with all
interest accrued but not paid (the "Outstandings") shall be mandatorily and
automatically converted into a Facility Convertible Note in the principal
sum of the Outstandings. Upon such conversion, an amount of the Commitment
equal to the aggregate amount of the Loans so converted shall be deemed to
be cancelled.
13.2 Issuance of Certificate
139
The Company shall, on the date of each conversion of the Outstandings
referred to in Clause 13.1 above, deliver to the Lender a certificate in
respect of the Facility Convertible Note in the form of the Certificate
duly issued and credited as fully paid by the Lender, except that:
(a) conversion rights under the Facility Convertible Note may be exercised
at any time on or after the date of issue to (and including) the
Maturity Date (as defined in the Certificate); and
(b) (i) in the case of the Facility Convertible Note to be issued on the
first anniversary of the date of this Agreement (the "First
Facility Convertible Note"), the initial Conversion Price (as
defined in the Certificate) shall be the same as that under the
Consideration Convertible Note then in force; and
(ii) in the case of the Facility Convertible Note to be issued on the
second anniversary of the date of this Agreement, the initial
Conversion Price (as defined in the Certificate) shall be the
same as that under the First Facility Convertible Note then in
force (in the event that the conversion rights under the First
Facility Convertible Note have been fully exercised by then, as
if the First Facility Convertible Note had not been fully
converted and taking into account all adjustments to the
Conversion Price thereof which were to be made if the First
Facility Convertible Note had not been fully converted).
13.3 Deemed Repayment
Upon the conversion of the Outstandings into a Facility Convertible Note
and the issue and delivery to the Lender of the Certificate in accordance
with Clause 13.2 (Issuance of Certificate) above, the amount of outstanding
Loans and interest so converted shall be deemed to be repaid or paid (as
the case may be) in full.
14. REPRESENTATIONS AND WARRANTIES
14.1 Representations and warranties
The Company makes the representations and warranties set out in this Clause
14 (Representations and warranties) to the Lender.
14.2 Status
(a) It is a limited liability company, duly incorporated and validly existing
under the laws of the jurisdiction of its incorporation; and
(b) each member of the Group has the power to own its assets and carry on its
business as it is being conducted.
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14.3 Powers and authority
It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into, performance and delivery of, the
Finance Documents to which it is or will be a party and the transactions
contemplated by those Finance Documents.
14.4 Legal validity
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid and binding obligation enforceable in accordance with its terms.
14.5 Non-conflict
The entry into and performance by it of, and the transactions contemplated
by, the Finance Documents do not and will not:-
(a) conflict with any law or regulation or judicial or official order; or
(b) conflict with the constitutional documents of any member of the Group;
or
(c) conflict with any document which is binding upon any member of the
Group or any asset of any member of the Group.
14.6 No default
(a) No Default is outstanding or might result from the making of any Loan; and
(b) no other event is outstanding which constitutes (or with the giving of
notice, lapse of time, determination of materiality or the fulfilment of
any other applicable condition or any combination of the foregoing, might
constitute) a default under any document which is binding on any member of
the Group or any asset of any member of the Group to an extent or in a
manner which might have a material adverse effect on the business or
financial condition of the Group taken as a whole or on the ability of the
Company to perform its obligations under this Agreement.
14.7 Authorisations
All authorisations required or desirable in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been or (in respect of Finance
Documents other than this Agreement) will upon execution thereof be
obtained or effected (as appropriate) and are in full force and effect.
141
14.8 Accounts
The audited consolidated accounts of the Group most recently delivered to
the Lender (which, at the date of this Agreement, are the Original Group
Accounts):-
(a) have been prepared in accordance with accounting principles and
practices generally accepted in Hong Kong consistently applied; and
(b) fairly represent the consolidated financial condition of the Group as
at the date to which they were drawn up,
and there has been no material adverse change in the consolidated financial
condition of the Group since the date to which those accounts were drawn
up.
14.9 Litigation
No litigation, arbitration or administrative proceedings are current or, to
its knowledge, pending or threatened, which might, if adversely determined,
have a material adverse effect on the business or financial condition of
the Group taken as a whole or the ability of the Company to perform its
obligations under the Finance Documents.
14.10 Times for making representations and warranties
The representations and warranties set out in this Clause 14
(Representations and warranties):-
(a) are made on the date of this Agreement; and
(b) are deemed to be repeated by the Company on the date of each Request
and the first day of each Interest Period with reference to the facts
and circumstances then existing.
15. UNDERTAKINGS
15.1 Duration
The undertakings in this Clause 15 (Undertakings) remain in force from the
date of this Agreement for so long as any amount is or may be outstanding
under this Agreement or the Commitment is in force.
15.2 Financial Information
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The Company shall supply to the Lender:-
(a) as soon as the same are available (and in any event within 180 days of
the end of each of its financial years), the audited consolidated
accounts of the Group for that financial year; and
(b) as soon as the same are available (and in any event within 120 days of
the end of the first half-year of each of its financial years), the
unaudited consolidated accounts of the Group for that half-year.
15.3 Information -- Miscellaneous
The Company shall supply to the Lender:-
(a) all documents despatched by it to its shareholders (or any class of
them) or its creditors (or any class of them) at the same time as they
are despatched;
(b) promptly upon becoming aware of them, details of any litigation,
arbitration or administrative proceedings which are current,
threatened or pending, and which might, if adversely determined, have
a material adverse effect on the financial condition of the Group
taken as a whole or on the ability of the Company to perform its
obligations under this Agreement; and
(c) promptly, such further information in the possession or control of any
member of the Group regarding its financial condition and operations
as the Lender may request.
15.4 Notification of Default
The Company shall notify the Lender of any Default (and the steps, if any,
being taken to remedy it) promptly upon its occurrence.
15.5 Compliance certificates
The Company shall supply to the Lender promptly upon request by the Lender,
a certificate signed by two of its directors on its behalf certifying that
no Default is outstanding or, if a Default is outstanding, specifying the
Default and the steps, if any, being taken to remedy it.
15.6 Authorisations
The Company shall promptly:-
(a) obtain, maintain and comply with the terms of; and
(b) supply certified copies to the Lender of,
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any authorisation required under any law or regulation to enable it to
perform its obligations under, or for the validity or enforceability of,
any Finance Document.
15.7 Pari passu ranking
The Company shall procure that its obligations under the Finance Documents
do and will rank at least pari passu with all its other present and future
unsecured obligations, except for obligations which are mandatorily
preferred by law applying to companies generally.
15.8 Negative pledge
(a) The Company shall not, and shall procure that no other member of the Group
will, create or permit to subsist any Security Interest on any of its
assets without the consent of the Lender.
(b) Paragraph (a) does not apply to any lien arising by operation of law in the
ordinary course of business and securing amounts not more than 30 days
overdue.
15.9 Disposals
(a) The Company shall not, and shall procure that no other member of the Group
will, either in a single transaction or in a series of transactions,
whether related or not and whether voluntarily or involuntarily, sell,
transfer, grant or lease or otherwise dispose of all or any substantial
part of its assets.
(b) Paragraph (a) does not apply to:-
(i) disposals made in the ordinary course of business of the disposing
entity; or
(ii) disposals of assets in exchange for other assets comparable or
superior as to type, value and quality.
15.10 Change of business
The Company shall procure that no substantial change is made to the general
nature or scope of the business of the Company or the Group from that
carried on at the date of this Agreement after completion of the HGC
Acquisition Agreement.
15.11 Mergers and acquisitions
(a) The Company shall not enter into any amalgamation, demerger, merger or
reconstruction without the prior written consent of the Lender.
(b) The Company shall not, and shall procure that no other member of the Group
144
will, acquire any assets or business or make any investment if the assets,
business or investment is substantial in relation to the Group without the
prior written consent of the Lender.
16. DEFAULT
16.1 Events of Default
An Event of Default shall occur upon the Lender's declaration to the
Company of the occurrence of any of the events set out in Clauses 16.2
(Non-payment) to 16.13 (Material adverse change) (inclusive) (whether or
not caused by any reason whatsoever outside the control of the Company or
any other person).
16.2 Non-payment
The Company does not pay on the due date any amount payable by it under the
Finance Documents at the place at and in the currency in which it is
expressed to be payable.
16.3 Breach of other obligations
The Company does not comply with any provision of the Finance Documents
(other than those referred to in Clause 16.2 (Non-Payment)).
16.4 Misrepresentation
A representation, warranty or statement made or repeated in or in
connection with any Finance Document or in any document delivered by or on
behalf of the Company under or in connection with any Finance Document is
incorrect in any respect when made or deemed to be made or repeated.
16.5 Cross-default
(a) Any Financial Indebtedness of a member of the Group is not paid when due;
or
(b) an event of default howsoever described (or any event which with the giving
of notice, lapse of time, determination of materiality or fulfilment of any
other applicable condition or any combination of the foregoing would
constitute such an event of default) occurs under any document relating to
Financial Indebtedness of a member of the Group; or
(c) any Financial Indebtedness of a member of the Group becomes prematurely due
and payable or is placed on demand as a result of an event of default
(howsoever described) under the document relating to that Financial
Indebtedness; or
(d) any commitment for, or underwriting of, any Financial Indebtedness of a
member of the Group is cancelled or suspended as a result of an event of
default (howsoever described) under the document relating to that Financial
Indebtedness; or
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(e) any Security Interest securing Financial Indebtedness over any asset of a
member of the Group becomes enforceable.
16.6 Insolvency
(a) A member of the Group is, or is deemed for the purposes of any law to be,
unable to pay its debts as they fall due or to be insolvent, or admits
inability to pay its debts as they fall due; or
(b) a member of the Group suspends making payments on all or any class of its
debts or announces an intention to do so, or a moratorium is declared in
respect of any of its indebtedness; or
(c) a member of the Group, by reason of financial difficulties, begins
negotiations with one or more of its creditors with a view to the
readjustment or rescheduling of any of its indebtedness.
16.7 Insolvency proceedings
(a) Any step (including petition, proposal or convening a meeting) is taken
with a view to a composition, assignment or arrangement with any creditors
of any member of the Group; or
(b) a meeting of any member of the Group is convened for the purpose of
considering any resolution for (or to petition for) its winding-up or for
its administration or any such resolution is passed; or
(c) any person presents a petition for the winding-up or for the administration
of any member of the Group; or
(d) an order for the winding-up or administration of any member of the Group is
made; or
(e) any other step (including petition, proposal or convening a meeting) is
taken with a view to the rehabilitation, administration, custodianship,
liquidation, winding-up or dissolution of any member of the Group or any
other insolvency proceedings involving any member of the Group.
16.8 Appointment of receivers and managers
(a) Any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or the like is
appointed in respect of any member of the Group or any part of its assets;
or
(b) the directors or a member of the Group requests the appointment of a
liquidator, trustee in bankruptcy, judicial custodian, compulsory manager,
receiver, administrative receiver, administrator or the like; or
146
(c) any other steps are taken to enforce any Security Interest over any part of
the assets of any member of the Group.
16.9 Creditors' process
Any attachment, sequestration, distress or execution affects any asset of a
member of the Group and is not discharged within 14 days.
16.10 Analogous proceedings
There occurs, in relation to a member of the Group, any event anywhere
which, in the opinion of the Lender, appears to correspond with any of
those mentioned in Clauses 16.6 to 16.9 (inclusive).
16.11 Cessation of business
A member of the Group ceases, or threatens to cease, to carry on all or a
substantial part of its business.
16.12 Unlawfulness
It is or becomes unlawful for the Company to perform any of its obligations
under the Finance Documents.
16.13 Material adverse change
Any event or series of events occurs which, in the opinion of the Lender,
might have a material and adverse effect on the financial condition or
operations of the Group taken as a whole or on the ability of the Company
to comply with its obligations under the Finance Documents.
16.14 Acceleration
On and at any time after the occurrence of an Event of Default the Lender
may by notice to the Company:-
(a) cancel the Commitment; and/or
(b) demand that all or part of the Loans, together with accrued interest
and all other amounts accrued under this Agreement be immediately due
and payable, whereupon they shall become immediately due and payable;
and/or
(c) demand that all or part of the Loans be payable on demand, whereupon
they shall immediately become payable on demand.
17. (NOT USED)
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18. EXPENSES
18.1 Initial and special costs
The Company shall forthwith on demand pay the Lender the amount of all
costs and expenses (including legal fees) incurred by either of them in
connection with:-
(a) the negotiation, preparation, printing and execution of:-
(i) this Agreement and any other documents referred to in this
Agreement; and
(ii) any other Finance Document executed after the date of this
Agreement;
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of the
Company and relating to a Finance Document or a document referred to
in any Finance Document; and
(c) any other matter, not of an ordinary administrative nature, arising
out of or in connection with a Finance Document.
18.2 Enforcement costs
The Company shall forthwith on demand pay to the Lender the amount of all
costs and expenses (including legal fees) incurred by it:-
(a) in connection with the enforcement of, or the preservation of any
rights under, any Finance Document; or
(b) in investigating any possible Default.
19. STAMP DUTIES
The Company shall pay and forthwith on demand indemnify the Lender against
any liability it incurs in respect of, any stamp, registration and similar
tax which is or becomes payable in connection with the entry into,
performance or enforcement of any Finance Document.
20. INDEMNITIES
20.1 Currency indemnity
(a) If the Lender receives an amount in respect of the Company's liability
under the Finance Documents or if that liability is converted into a claim,
proof, judgment or order in a currency other than the currency (the
"contractual currency") in which the amount is expressed to be payable
under the relevant Finance
148
Document:-
(i) the Company shall indemnify the Lender as an independent obligation
against any loss or liability arising out of or as a result of the
conversion;
(ii) if the amount received by the Lender, when converted into the
contractual currency at a market rate in the usual course of its
business is less than the amount owed in the contractual currency, the
Company shall forthwith on demand pay to the Lender an amount in the
contractual currency equal to the deficit; and
(iii) the Company shall pay to the Lender forthwith on demand any exchange
costs and taxes payable in connection with any such conversion.
(b) The Company waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency other than that in which
it is expressed to be payable.
20.2 Other indemnities
The Company shall forthwith on demand indemnify the Lender against any loss
or liability which the Lender incurs as a consequence of:-
(a) the occurrence of any Default;
(b) the operation of Clause 16.14 (Acceleration);
(c) any payment of principal or an overdue amount being received from any
source otherwise than on the last day of an Interest Period or a
Designated Interest Period (as defined in Clause 8.4 (Default
interest)) relative to the amount so received; or
(d) (other than by reason of negligence or default by the Lender) a Loan
not being made after the Company has delivered a Drawdown Request or a
Loan (or part of a Loan) not being prepaid in accordance with a notice
of prepayment.
The Company's liability in each case includes any loss of margin or other
loss or expense on account of funds borrowed, contracted for or utilised to
fund any amount payable under any Finance Document, any amount repaid or
prepaid or any Loan.
21. EVIDENCE AND CALCULATIONS
21.1 Accounts
Accounts maintained by the Lender in connection with this Agreement are
prima facie evidence of the matters to which they relate.
149
21.2 Certificates and determinations
Any certification or determination by the Lender of a rate or amount under
this Agreement is, in the absence of manifest error, conclusive evidence of
the matters to which it relates.
21.3 Calculations
Interest and the fee payable under Clause 17 (Commitment Fee) accrue from
day to day and are calculated on the basis of the actual number of days
elapsed and a year of 365 days.
22. WAIVERS AND REMEDIES CUMULATIVE
The rights of the Lender under the Finance Documents:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general law;
and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver of
that right.
23. CHANGES TO THE PARTIES
23.1 Transfers by the Company
The Company may not assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Agreement.
23.2 Transfers by Lender
The Lender may at any time assign, transfer, novate or dispose of any of,
or any interest in. its rights and/or obligations under this Agreement.
24. DISCLOSURE OF INFORMATION
The Lender may disclose to one of its Affiliates or any person with whom it
is proposing to enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement:-
(a) a copy of any Finance Document; and
(b) any information which the Lender has acquired under or in connection
with any Finance Document.
150
25. SET-OFF
The Lender may set off any matured obligation owed by the Company under
this Agreement (to the extent beneficially owned by the Lender) against any
obligation (whether or not matured) owed by the Lender to the Company,
regardless of the place of payment, booking branch or currency of either
obligation. If the obligations are in different currencies, the Lender may
convert either obligation at a market rate of exchange in its usual course
of business for the purpose of the set-off. If either obligation is
unliquidated or unascertained, the Lender may set off in an amount
estimated by it in good faith to be the amount of that obligation.
26. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect:-
(a) the validity or enforceability in that jurisdiction of any other
provision of the Finance Documents; or
(b) the validity or enforceability in other jurisdictions of that or any
other provision of the Finance Documents.
27. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Agreement.
28. NOTICES
28.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by facsimile. Any such notice will
be deemed to be given as follows:-
(a) if in writing, when delivered; and
(b) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will only
be deemed to be given on the next working day in that place.
28.2 Addresses for notices
(a) The address and facsimile number of the Company are:-
151
Vanda Systems & Communications Holdings Limited
Lincoln Xxxxx 000
Xxxxxx Xxxxx
000 Xxxx'x Xxxx
Xxxxxx Xxx
Xxxx Xxxx
Fax No.: (000) 0000 0000
or such other as the Company may notify to the Lender by not less than 5
Business Days' notice.
(b) The address and facsimile number of the Lender are:-
XXXXXXXXX INTERNATIONAL LIMITED
00/X Xxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxx Xxxx
Fax No.: (000) 0000 0000
or such other as the Lender may notify to the Company by not less than 5
Business Days' notice.
29. LANGUAGE
(a) Any notice given under or in connection with any Finance Document shall be
in English.
(b) All other documents provided under or in connection with any Finance
Document shall be:-
(i) in English; or
(ii) if not in English, accompanied by a certified English translation and,
in this case, the English translation shall prevail unless the
document is a statutory or other official document.
30. GOVERNING LAW
This Agreement is governed by Hong Kong law.
This Agreement has been entered into on the date stated at the beginning of this
Agreement.
152
SCHEDULE 1 TO THE FACILITY AGREEMENT
CONDITIONS PRECEDENT DOCUMENTS
1. A copy of the memorandum and articles of association and certificate of
incorporation of the Company.
2. A copy of a resolution of the board of directors of the Company:-
(i) approving the terms of, and the transactions contemplated by, this
Agreement and resolving that it executes this Agreement;
(ii) authorising a specified person or persons to execute this Agreement on
its behalf; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents and notices to be signed and/or
despatched by it under or in connection with this Agreement.
3. A specimen of the signature of each person authorised by the resolution
referred to in paragraph 2 above ("Authorised Signatory").
4. A certificate of a director of the Company confirming that the borrowing of
the Commitment in full would not cause any borrowing limit binding on the
Company to be exceeded.
5. A certificate of an Authorised Signatory of the Company certifying that
each copy document specified in this Schedule 1 is correct, complete and in
full force and effect as at a date no earlier than the date of this
Agreement.
6. A copy of any other authorisation or other document, opinion or assurance
which the Lender considers to be necessary or desirable in connection with
the entry into and performance of, and the transactions contemplated by,
any Finance Document or for the validity and enforceability of any Finance
Document.
153
SCHEDULE 2 TO THE FACILITY AGREEMENT
FORM OF REQUEST
To: Xxxxxxxxx International Limited as Lender
From: Vanda Systems & Communications Holdings Limited
Date:[ ]
--------
Vanda Systems & Communications Holdings Limited
HK$l,000,000,000 Credit Agreement dated [DATE]
1. We wish to borrow a Loan as follows:-
(a) Drawdown Date: [ ]
---------
(b) Amount: [ ]
------
(c) Payment Instructions: [ ].
---------
(d) Duration of first Interest Period: [ ]
---------
2. We confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Request.
By:
Vanda Systems & Communications Holdings Limited
Authorised Signatory
154
(Signature page for the Facility Agreement)
SIGNATORIES
Company
VANDA SYSTEMS & COMMUNICATIONS HOLDINGS LIMITED
By:
Lender
XXXXXXXXX INTERNATIONAL LIMITED
By:
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SCHEDULE 7
FORM OF THE CERTIFICATE
VANDA SYSTEMS & COMMUNICATIONS HOLDINGS LIMITED
(incorporated in Bermuda with limited liability)
Certificate No.: [*]
HK$[*] CONVERTIBLE NOTE
Issued pursuant to the memorandum of association and bye-laws of Vanda Systems &
Communications Holdings Limited (the "Issuer"), a resolution of the board of
directors of the Issuer passed on [*] 2004 and a resolution of the shareholders
of the Issuer passed on [*] 2004.
THIS IS TO CERTIFY that [*] whose registered office is situate at [*] is the
registered holder (the "Noteholder") of the above-mentioned Convertible Note
(the "Note"). The Noteholder is entitled to require the Issuer to convert the
whole or any part(s) of the principal amount outstanding under this Note into
ordinary shares in the capital of the Issuer subject to and in accordance with
the terms and conditions attached hereto which shall form an integral part of
this Certificate (the "Conditions").
Subject to the foregoing, the Issuer, for value received, promises to redeem the
Note and pay the principal sum of HK$[ * ] to the Noteholder in accordance with
the Conditions.
The Issuer shall pay interest on the principal amount of the Note in accordance
with the Conditions.
GIVEN under the seal of Vanda Systems & Communications Holdings Limited this day
of 2004.
----------
---------------------------------
Director
---------------------------------
Secretary/Director
Notes:
The Note cannot be transferred to bearer on delivery and is only transferable to
the extent permitted by Condition 2 of the terms and conditions thereof. This
Certificate must be delivered to the company secretary of the Issuer for
cancellation and reissue of an appropriate certificate in the event of any such
transfer.
156
(For endorsement in the event of partial conversion or redemption)
Amount Converted/Redeemed
Date (please specify) Amount Outstanding
------- ------------------------- ------------------
157
TERMS AND CONDITIONS OF THE NOTE
The Note shall be held subject to and with the benefit of the terms and
conditions set out below and such terms and conditions shall be binding on Vanda
Systems & Communications Holdings Limited (the "Issuer") and the Noteholder.
Expressions defined in the agreement between Xxxxxxxxx Global Communications
Holdings Limited, the Issuer and Xxxxxxxxx International Limited dated 28
January, 2004 relating to, inter alia, the acquisition of the entire issued
share capital of Xxxxxxxxx Global Communications Investments Limited and the
issue of the Note (the "Agreement") shall bear the same meaning in this
Certificate. In addition, "Issue Date" means the date of issue of the Note. The
definitions and rules of construction set out in the Agreement shall apply in
the interpretation of the terms of the Note and of the Conditions.
1. PERIOD
Subject as provided herein, the Issuer shall repay the outstanding
principal amount of the Note (together with all unpaid interests accrued
thereon up to and including the date of actual repayment) subject to and in
accordance with the terms of the Note on the Business Day immediately
preceding the fifth anniversary of the Issue Date ("Maturity Date").
2. STATUS AND TRANSFER
2.1 The obligations of the Issuer arising under the Note constitute general
unsubordinated, direct, unconditional unsecured obligations of the Issuer
and shall at all times rank equally among themselves and pari passu with
all other present and future unsecured and unsubordinated obligations of
the Issuer except for obligations accorded preference by mandatory
provisions of applicable law. No application will be made for a listing of
the Note on any stock exchange.
2.2 Subject to the conditions, approvals, requirements and any other provisions
of or under: (a) the Stock Exchange (and any other stock exchange on which
the Shares may be listed at the relevant time) or their rules and
regulations; (b) the approval for listing in respect of the Conversion
Shares; and (c) all applicable laws and regulations, the Note may (subject
further to Condition 2.4) be transferred to any Affiliate of the
Noteholder.
2.3 Any assignment or transfer of the Note shall be of the whole or any part of
the outstanding principal amount of the Note in whole multiples of
HK$1,000,000 and the Issuer shall use all reasonable endeavours to
facilitate any such assignment or transfer of the Note, including making
any necessary applications to the Stock Exchange for approval.
2.4 Notwithstanding any other provisions of this Condition 2, without the prior
written approval of the Issuer (which may be granted or withheld at the
absolute discretion of the Issuer and subject to such reasonable conditions
as the Issuer sees fit) and (if required) the Stock Exchange, the Note or
any part thereof shall
158
not be transferred to any company or any other person which is a connected
person (as defined in the Listing Rules) of the Issuer other than to an
Affiliate of the Vendor.
2.5 In relation to any assignment or transfer of the Note permitted under or
otherwise pursuant to this Condition 2:
(a) The Note may only be transferred by execution of a form of transfer
("Transfer Form") which shall be in a form previously agreed between
the Issuer and the Noteholder by the transferor and the transferee (or
their duly authorised representatives). In this Condition,
"transferor" shall, where the context permits or requires, include
joint transferors or can be construed accordingly.
(b) The Certificate of the Note must be delivered to the Issuer
accompanied by: (i) a duly executed (and if required, duly stamped)
Transfer Form; and (ii) in the case of the execution of the Transfer
Form on behalf of a corporation by its officers, the authority of that
person or those persons to do so and a copy of the constitutional
document of such corporation. The Issuer shall, within three (3)
Business Days of receipt of such documents from the Noteholder, cancel
the existing Certificate and issue a new certificate under the seal of
the Issuer, in favour of the transferee or assignee in respect of the
Note (or the transferred or assigned part of the Note) as applicable
and, if the Note is assigned or transferred in part only, issue a new
certificate under the seal of the Issuer, in favour of the transferor
in relation to the part of the Note not assigned or transferred.
(c) The total amount of interest payable by the Issuer under the Note
shall not in any manner be increased as a result of the assignment or
transfer.
2.6 For the purpose of this Condition 2, if the Noteholder shall cease to be an
Affiliate of the Vendor, it shall be regarded as a transfer of the Note,
and the Noteholder shall procure that the conditions, requirements and
other provisions regarding transfer under this Condition 2 shall be
followed and complied with (to the extent that they are applicable), by the
beneficial owner of the Note and/or by its ultimate controller and ultimate
beneficial shareholder, as the case may be.
2.7 It shall be a condition of any transfer of the Note or any part thereof to
a transferee who is an Affiliate of the Noteholder that in the event that
the transferee ceases to be an Affiliate of the Noteholder, the transferee
shall transfer the Note and the Noteholder shall procure that the Note
shall be transferred to a party who is an Affiliate of the original
Noteholder. It shall be a term of every transfer of this Note under this
Condition 2.7 that a Noteholder shall remain bound by this Condition
notwithstanding any transfer by it of the whole or any part of this Note.
2.8 Any reasonable legal and other costs and expenses properly incurred by the
Issuer in connection with any transfer or assignment of the Note or any
request
159
therefor shall be borne by the Noteholder.
3. INTEREST
3.1 Subject to Condition 3.2, the Note will bear interest from the Issue Date
at a rate of one per cent. (1%) per annum on the principal amount of the
Note outstanding from time to time. The interest will, subject as provided
herein, be payable by the Issuer once every six (6) months in arrears at
the end of each six-month period between the Issue Date and the Maturity
Date. The first payment shall be made on the date falling six (6) months
after the Issue Date.
3.2 In the event that the Noteholder has converted any part or the whole of the
principal amount of the Note and upon delivery to the Issuer of the
Certificate for the Note, the Noteholder shall be entitled to interest in
respect of such part or the whole of the principal amount being converted
for the period from the immediately preceding interest payment date (or the
Issue Date, as the case may be) up to and including the Conversion Date
concerned.
3.3 Interest shall accrue from day to day and shall be calculated on the basis
of the actual number of days elapsed and a 365-day year, including the
first day of the period during which it accrues and including the last.
4. PAYMENTS
4.1 Payment of the interest and principal (if any is payable under the terms
and conditions of the Note) in respect of the Note shall be made for value
on the due dates into such bank account in Hong Kong as the Noteholder may
notify the Issuer in writing from time to time. All payments by the Issuer
shall be made in Hong Kong dollars in immediately available funds free and
clear of any withholdings or deductions for any present or future taxes,
imposts, levies, duties or other charge payable by the Issuer. In the event
that the Issuer is required by law to make any such deduction or
withholding from any amount paid (except where such deduction or
withholding represents tax on the overall income of the Noteholder), the
Issuer shall pay to the Noteholder such additional amount as shall be
necessary so that the Noteholder continues to receive a net amount equal to
the full amount which it would have received if such withholding or
deduction had not been made.
4.2 All payments by the Issuer hereunder shall be made, not later than 11:00
a.m. (Hong Kong time) on the due date, by remittance to such bank account
as the Noteholder may notify the Issuer from time to time.
4.3 If the due date for payment of any amount in respect of the Note is not a
Business Day, the Noteholder will be entitled to payment on the next
following Business Day in the same manner together with interest accrued in
respect of any such delay.
4.4 The Issuer shall not be liable to make any payment in respect of the
outstanding principal amount of the Note unless and until the original of
the Certificate is
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presented to the Issuer at its address specified in Condition 16. The
Issuer shall retain the original of the Certificate upon the redemption or
conversion thereof in full.
4.5 Save as provided under the terms of the Note, the outstanding principal
amount of the Note or any part thereof shall not be repaid or prepaid by
the Issuer.
4.6 If the Issuer defaults in the payment of any sum due and payable under this
Note, the Issuer shall pay interest on such sum to the Noteholder from the
due date to the date of actual payment in full (both before and after
judgment) calculated at the rate of 3% per annum.
5. REDEMPTION
5.1 Unless previously converted in accordance with these Conditions, upon
presentation on the Maturity Date of the original of the Certificate to the
Issuer at its address specified in Condition 16, the Issuer shall redeem
the Note at its principal amount outstanding together with accrued interest
thereon up to and including the Maturity Date in Hong Kong Dollars as
provided in Condition 4.
[For the Consideration Convertible Note:
6. CONVERSION
The Noteholder may at any time on or after the first anniversary of the
Issue Date and on or prior to the Maturity Date, in compliance with the
provisions of Condition 8, require the Issuer to convert the whole or any
part of the principal amount outstanding under this Note into Shares at the
Conversion Price. The Shares shall be allotted and issued in the name of
the Noteholder or if it so directs any other persons pursuant to such
conversion and shall be delivered to the Noteholder within three (3)
Business Days after the date of presentation of the relevant original
Certificate. No fraction of a Share will be issued on conversion but
(except in cases where any such cash payment would amount to less than
HK$10) a cash payment will be made to the Noteholder in respect of such
fraction. Such Shares shall rank pari passu in all respects with all other
Shares in issue on the date of the conversion notice and shall be entitled
to all dividends, bonuses and other distributions the record date of which
falls on a date on or after the date of the conversion notice.]
[For the Facility Convertible Notes:
6. CONVERSION
The Noteholder may at any time on or after the Issue Date and on or prior
to the Maturity Date, in compliance with the provisions of Condition 8,
require the Issuer to convert the whole or any part of the principal amount
outstanding under this Note into Shares at the Conversion Price. The Shares
shall be allotted and issued in the name of the Noteholder or if it so
directs any other persons pursuant to such conversion and shall be
delivered to the Noteholder within
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three (3) Business Days after the date of presentation of the relevant
original Certificate. No fraction of a Share will be issued on conversion
but (except in cases where any such cash payment would amount to less than
HK$10) a cash payment will be made to the Noteholder in respect of such
fraction. Such Shares shall rank pari passu in all respects with all other
Shares in issue on the date of the conversion notice and shall be entitled
to all dividends, bonuses and other distributions the record date of which
falls on a date on or after the date of the conversion notice.]
7. ADJUSTMENTS
7.1 Subject as hereinafter provided, the Conversion Price shall from time to
time be adjusted in accordance with the following relevant provisions and
so that if the event giving rise to any such adjustment shall be such as
would be capable of falling within more than one of sub-paragraphs (a) to
(g) inclusive of this Condition 7.1, it shall fall within the first of the
applicable paragraphs to the exclusion of the remaining paragraphs provided
that if such event would be capable of falling within sub-paragraph (h) as
well, sub-paragraph (h) shall apply:
(a) If and whenever the Shares by reason of any consolidation or sub-
division become of a different nominal amount, the Conversion Price in
force immediately prior thereto shall be adjusted by multiplying it by
the following fraction:
A
---
B
where:
A = the revised nominal amount; and
B = the former nominal amount.
Each such adjustment shall be effective from the close of business in
Hong Kong on the day immediately preceding the date on which the
consolidation or sub-division becomes effective.
(b) If and whenever the Issuer shall issue (other than in lieu of a cash
dividend) any Shares credited as fully paid by way of capitalisation
of profits or reserves (including any share premium account or capital
redemption reserve fund), the Conversion Price in force immediately
prior to such issue shall be adjusted by multiplying it by the
following fraction:
C
-----
C+D
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in each case, where:
C = the aggregate nominal amount of the issued Shares immediately
before such issue; and
D = the aggregate nominal amount of the Shares issued in such
capitalisation.
Each such adjustment shall be effective (if appropriate retroactively)
from the commencement of the day next following the record date for
such issue.
(c) If and whenever the Issuer shall make any Capital Distribution (as
defined in Condition 7.2) to holders (in their capacity as such) of
Shares (whether on a reduction of capital or otherwise) or shall grant
to such holders rights to acquire for cash assets of the Issuer or any
of its subsidiaries, the Conversion Price in force immediately prior
to such distribution or grant shall be adjusted by multiplying it by
the following fraction:
A-B
-----
A
where:
A = the market price (as defined in Condition 7.2) on the date on
which the Capital Distribution or, as the case may be, the grant
is publicly announced or (failing any such announcement) the date
immediately preceding the date of the Capital Distribution or, as
the case may be, of the grant; and
B = the fair market value on the day of such announcement or (as the
case may require) the immediately preceding day, as determined in
good faith by an approved merchant bank of the portion of the
Capital Distribution or of such rights which is attributable to
one Share,
Provided that:
(i) if in the opinion of the relevant approved merchant bank, the use
of the fair market value as aforesaid produces a result which is
significantly inequitable, it may instead determine (and in such
event the above formula shall be construed as if B meant) the
amount of the said market price which should properly be
attributed to the value of the Capital Distribution or rights;
and
(ii) the provisions of this sub-paragraph (c) shall not apply in
relation to the issue of Shares paid out of profits or reserves
and issued in lieu of a cash dividend.
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Each such adjustment shall be effective (if appropriately
retroactively) from the commencement of the day next following the
record date for the Capital Distribution or grant.
(d) If and whenever the Issuer shall offer to holders of Shares new Shares
for subscription by way of rights, or shall grant to holders of Shares
any options or warrants to subscribe for new Shares, at a price which
is less than ninety-five per cent. (95%) of the market price (as
defined in Condition 7.2) at the date of the announcement of the terms
of the offer or grant, the Conversion Price shall be adjusted by
multiplying the Conversion Price in force immediately before the date
of the announcement of such offer or grant by the following fraction:
QxR
P+---
S
-----
P+Q
where:
P = the number of Shares in issue immediately before the date of such
announcement;
Q = the aggregate number of Shares so offered for subscription;
R = the amount (if any) payable for the right, option or warrant to
subscribe for each new Share, plus the subscription price payable
for each new Share;
S = the market price of one Share on the trading day immediately
prior to such announcement.
Such adjustment shall become effective (if appropriate retroactively)
from the commencement of the day next following the record date for
the offer or grant.
(e) (i) If and whenever the Issuer shall issue wholly for cash any
securities which by their terms are convertible into or
exchangeable for or carry rights of subscription for new Shares,
and the total Effective Consideration per Share (as defined
below) initially receivable for such securities is less than
ninety-five per cent. (95%) of the market price (as defined in
Condition 7.2) at the date of the announcement of the terms of
issue of such securities, the Conversion Price shall be adjusted
by multiplying the Conversion Price in force immediately prior to
the issue by a fraction of which the numerator is the number of
Shares in issue immediately before the date of the issue plus the
number of Shares which the total Effective Consideration for the
securities issued would purchase at such market price and the
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denominator is the number of Shares in issue immediately before
the date of the issue plus the number of Shares to be issued upon
conversion or exchange of, or the exercise of the subscription
rights conferred by, such securities at the initial conversion or
exchange rate or subscription price. Such adjustment shall become
effective (if appropriate retrospectively) from the close of
business in Hong Kong on the Business Day next preceding
whichever is the earlier of the date on which the issue is
announced and the date on which the issuer determines the
conversion or exchange rate or subscription price
(ii) If and whenever the rights of conversion or exchange or
subscription attached to any such securities as are mentioned in
section (i) of this sub-paragraph (e) are modified so that the
total Effective Consideration per Share (as defined below)
initially receivable for such securities shall be less than
ninety-five per cent. (95%) of the market price (as defined in
Condition 7.2) at the date of announcement of the proposal to
modify such rights of conversion or exchange or subscription, the
Conversion Price shall be adjusted by multiplying the Conversion
Price in force immediately prior to such modification by a
fraction of which the numerator is the number of Shares in issue
immediately before the date of such modification plus the number
of Shares which the total Effective Consideration receivable for
the securities issued at the modified conversion or exchange
price would purchase at such market price and of which the
denominator is the number of Shares in issue immediately before
such date of modification plus the number of Shares to be issued
upon conversion or exchange of or the exercise of the
subscription rights conferred by such securities at the modified
conversion or exchange rate or subscription price. Such
adjustment shall become effective (if appropriate
retrospectively) as at the date upon which such modification
shall take effect. A right of conversion or exchange or
subscription shall not be treated as modified for the foregoing
purpose where it is adjusted to take account of rights or
capitalization issues and other events which have given rise to
adjustment of the Conversion Price under this Condition 7.
For the purpose of this sub-paragraph (e), the "total Effective
Consideration" receivable for the securities issued shall be deemed to
be the consideration receivable by the Issuer for any such securities
plus the additional minimum consideration (if any) to be received by
the Issuer upon (and assuming) the conversion or exchange thereof or
the exercise of such subscription rights, and the "total Effective
Consideration per Share" initially receivable for such securities
shall be such aggregate consideration divided by the number of Shares
to be issued upon (and assuming) such conversion or exchange at the
initial conversion or exchange rate or the exercise of such
subscription rights at
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the initial subscription price, in each case without any deduction for
any commissions, discounts or expenses paid, allowed or incurred in
connection with the issue.
(f) If and whenever the Issuer shall issue wholly for cash any Shares at a
price per Share which is less than ninety-five per cent. (95%) of the
market price (as defined in Condition 7.2) at the date of the
announcement of the terms of such issue, the Conversion Price shall be
adjusted by multiplying the Conversion Price in force immediately
before the date of such announcement by a fraction of which the
numerator is the number of Shares in issue immediately before the date
of such announcement plus the number of Shares which the aggregate
amount payable for the issue would purchase at such market price and
the denominator is the number of Shares in issue immediately before
the date of such announcement plus the number of Shares so issued.
Such adjustment shall become effective on the date of the issue.
(g) If and whenever the Issuer shall issue Shares for the acquisition of
asset at a total Effective Consideration per Share (as defined in this
sub-paragraph (g) below) which is less than ninety-five per cent.
(95%) of the market price (as defined in Condition 7.2) at the date of
the announcement of the terms of such issue, the Conversion Price
shall be adjusted in such manner as maybe determined by an approved
merchant bank (as defined in Condition 7.2). Such adjustment shall
become effective on the date of issue. For the purpose of this
sub-paragraph (g) "total Effective Consideration" shall be the
aggregate consideration credited as being paid for such Shares by the
Issuer on acquisition of the relevant asset without any deduction of
any commissions, discounts or expenses paid, allowed or incurred in
connection with the issue thereof, and the "total Effective
Consideration per Share" shall be the total Effective Consideration
divided by the number of Shares issued as aforesaid.
(h) If and whenever the Issuer shall issue any Shares at a price ("Issue
Price") less than the Conversion Price, or issue any securities which
by their terms are convertible into or exchangeable for or carry
rights of subscription for new Shares and the total Effective
Consideration per Share (as defined below) initially receivable for
such securities is less than the Conversion Price, or the rights of
conversion or exchange or subscription attached to any such securities
are modified so that the total Effective Consideration per Share (as
defined below) initially receivable for such securities shall be less
than the Conversion Price, the Conversion Price shall be adjusted to
such Issue Price or such total Effective Consideration per Share (as
the case may be). A right of conversion or exchange or subscription
shall not be treated as modified for the foregoing purpose where it is
adjusted to take account of rights or capitalization issues and other
events which have given rise to adjustment of the Conversion Price
under this Condition 7.
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For the purpose of this sub-paragraph (h), the "total Effective
Consideration" receivable for the securities issued shall be deemed to
be the value of the consideration receivable by the Issuer for any
such securities plus the additional minimum consideration (if any) to
be received by the Issuer upon (and assuming) the conversion or
exchange thereof or the exercise of such subscription rights, and the
"total Effective Consideration per Share" initially receivable for
such securities shall be such aggregate value of the consideration
divided by the number of Shares to be issued upon (and assuming) such
conversion or exchange at the initial conversion or exchange rate or
the exercise of such subscription rights at the initial subscription
price, in each case without any deduction for any commissions,
discounts or expenses paid, allowed or incurred in connection with the
issue.
(i) If the Issuer or the Noteholder determines that an adjustment should
be made to the Conversion Price as a result of one or more events or
circumstances (whether or not referred to in sub-paragraphs (a) to (h)
above) (even if the relevant event or circumstance is specifically
excluded in the Conditions from the operation of sub-paragraphs (a) to
(h) above), or that an adjustment should be made in a manner other
than in accordance with sub-paragraphs (a) to (h) above, or that an
adjustment should not be made (even if the relevant event or
circumstance is specifically provided for in sub-paragraphs (a) to (h)
above), or that the effective date for the relevant adjustment should
be a date other than that mentioned in sub-paragraphs (a) to (h)
above, the Issuer or the Noteholder may, at its own expense, request
the approved merchant bank, acting as expert, to determine as soon as
practicable (i) what adjustment (if any) to the Conversion Price is
fair and reasonable to take account thereto and is appropriate to give
the result which the approved merchant bank considers in good faith to
reflect the intentions of the provisions of this Condition 7; and (ii)
the date on which such adjustment should take effect; and upon such
determination such adjustment (if any) shall be made and shall take
effect in accordance with such determination, provided that an
adjustment shall only be made pursuant to this sub-paragraph (i) if
the approved merchant bank is so requested to make such a
determination.
7.2 For the purposes of this Condition 7:
"announcement" shall include the release of an announcement to the press or
the delivery or transmission by telephone, telex or otherwise of an
announcement to the Stock Exchange and "date of announcement" shall mean
the date on which the announcement is first so released, delivered or
transmitted and "announced" shall have a corresponding meaning;
"approved merchant bank" means a merchant bank of repute in Hong Kong
selected by the Issuer and agreed by the Noteholder for the purpose of
providing a specific opinion or calculation or determination hereunder or,
in the absence of such appointment, such merchant bank as may be appointed
by the President
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for the time being of The Hong Kong Society of Accountants upon the request
of either the Issuer or the Noteholder;
"Capital Distribution" shall (without prejudice to the generality of that
phrase) include distribution in cash or specie. Any dividend charged or
provided for in the accounts for any financial period shall (whenever paid
and however described) be deemed to be a Capital Distribution provided that
any such dividend shall not automatically be so deemed if
(a) it is paid out of the aggregate of the net profits (less losses)
attributable to the holders of Shares for all financial periods after
that ended 31 March, 2003 as shown in the audited consolidated profit
and loss account of the Issuer and its subsidiaries for each such
financial period; or
(b) to the extent that (a) above does not apply, the rate of that
dividend, together with all other dividends on the class of capital in
question charged or provided for in the accounts for the financial
period in question, does not exceed the aggregate rate of dividend on
such class of capital charged or provided for in the accounts for the
last preceding financial period. In computing such rates, such
adjustments may be made as are in the opinion of an approved merchant
bank appropriate to the circumstances and shall be made in the event
that the lengths of such periods differ materially;
"issue" shall include allot;
"market price" means the average closing price of Shares on the Stock
Exchange for each of the last twenty (20) Stock Exchange dealing days on
which dealings in the Shares on the Stock Exchange took place ending on the
last such dealing day immediately preceding the day on or as of which the
market price is to be ascertained;
"reserves" includes unappropriated profits;
"rights" includes rights in whatsoever form issued; and
"Shares" includes, for the purpose of Shares comprised in any offer
pursuant to paragraphs (c), (d), (e) or (f) of Condition 7.1, any such
ordinary shares of the Issuer as, when fully paid, will be Shares.
7.3 The provisions of sub-paragraphs (b), (c), (d), (e) and (f) of Condition
7.1 shall not apply to:
(a) an issue of fully paid Shares upon the exercise of any conversion
rights attached to securities convertible into Shares or upon exercise
of any rights (including any conversion of part or the whole of the
Note) to acquire Shares (except a rights issue) provided that an
adjustment (if required) has been made under this Condition 7 in
respect of the issue of
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such securities or granting of such rights (as the case may be);
(b) an issue of Shares or other securities of the Issuer or any subsidiary
of the Issuer wholly or partly convertible into, or rights to acquire,
Shares pursuant to any share option scheme of the Issuer adopted in
accordance with the Listing Rules;
(c) an issue of fully paid Shares by way of capitalisation of all or part
of any subscription right reserve, or any similar reserve which has
been or may be established pursuant to the terms of any securities
wholly or partly convertible into or rights to acquire Shares; or
(d) an issue of Shares pursuant to a scrip dividend scheme where an amount
not less than the nominal amount of the Shares so issued is
capitalised and the market value of such Shares is not more than 110
per cent. of the amount of dividend which holders of the Shares could
elect to or would otherwise receive in cash, for which purpose the
"market value" of a Share shall mean the average of the closing prices
for such Stock Exchange dealing days on which dealings in the Shares
took place (being not less than twenty (20) such days) as are selected
by the directors of the Issuer in connection with determining the
basis of allotment in respect of the relevant scrip dividend and which
fall within the period of one month ending on the last day on which
holders of Shares may elect to receive or (as the case may be) not to
receive the relevant dividend in cash.
7.4 Any adjustment to the Conversion Price shall be made to the nearest
one-tenth of a cent so that any amount under one-twentieth of a cent shall
be rounded down and any amount of one-twentieth of a cent or more shall be
rounded up and in no event shall any adjustment (otherwise than upon the
consolidation of Shares into Shares of a larger nominal amount) involve an
increase in the Conversion Price. In addition to any determination which
may be made by the directors of the Issuer, every adjustment to the
Conversion Price shall be certified by an approved merchant bank.
7.5 Notwithstanding anything contained herein, no adjustment shall be made to
the Conversion Price in any case in which the amount by which the same
would be reduced in accordance with the foregoing provisions of this
Condition would be less than one-tenth of a cent and any adjustment that
would otherwise be required then to be made shall be carried forward.
7.6 If the Issuer or any subsidiary of the Issuer shall in any way modify the
rights attached to any share or loan capital so as wholly or partly to
convert or make convertible such share or loan capital into, or attach
thereto any rights to acquire, Shares, the Issuer shall appoint an approved
merchant bank to consider whether any adjustment to the Conversion Price is
appropriate (and if such approved merchant bank shall certify that any such
adjustment is appropriate, the Conversion Price shall be adjusted
accordingly and the provisions of Conditions 7.4, 7.5, 7.7, 7.8 and 7.9
shall apply).
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7.7 Whenever the Conversion Price is adjusted as herein provided, the Issuer
shall as soon as possible but not later than seven (7) Business Days after
the relevant adjustment has been determined give notice to the Noteholder
that the Conversion Price has been adjusted (setting forth brief
particulars of the event giving rise to the adjustment, the Conversion
Price in effect prior to such adjustment, the adjusted Conversion Price and
the effective date thereof) and shall at all times thereafter so long as
the Note remains outstanding make available for inspection at its principal
place of business in Hong Kong a signed copy of the said certificate of the
approved merchant bank.
7.8 Notwithstanding any other provision of this Condition 7, no adjustment
shall be made which would (but for this paragraph 7.8) result in the
Conversion Price being reduced so that on conversion, Shares shall fall to
be issued at a discount to their nominal value, and in such case an
adjustment shall be made to the effect that the Conversion Price will be
reduced to the nominal value of a Share.
7.9 Notwithstanding the provisions of Condition 7.1, no adjustment shall be
made if:
(a) the Noteholder consents in writing; or
(b) the event triggering the relevant adjustment involves an issue of
Shares (other than pursuant to Clause 11 of the Agreement), a Capital
Distribution, a grant of rights to acquire assets of the Issuer or any
of its subsidiaries or an issue of new securities convertible or
exchangeable into new Shares (other than pursuant to Clause 11 of the
Agreement) wholly and exclusively to, and taken up entirely by (or
modification of such rights to the benefit of) the Noteholder and/or
its Affiliates.
8. PROCEDURE FOR CONVERSION
8.1 The Conversion Rights may, subject as provided herein and in Condition 6.1,
be exercised on any Business Day on or prior to the Maturity Date by the
Noteholder delivering to the Issuer in accordance with Condition 16 a
written notice stating the intention of the Noteholder to convert and the
address in Hong Kong for the delivery of the share certificates of the
Conversion Shares pursuant to Condition 8.2 below together with the
original of the Certificate. The conversion notice shall be in the form
annexed to these Conditions. The Issuer shall be responsible for payment of
all taxes and stamp, issue and registration duties (if any), and Stock
Exchange levies and charges (if any) arising on any such conversion.
8.2 The Conversion Shares shall be allotted and issued by the Issuer, credited
as fully paid, to the Noteholder or as it may direct within three (3)
Business Days after, and with effect from, the date the conversion notice
is served by the Noteholder against delivery of the original Certificate
(which the Noteholder is obliged to deliver to the Issuer following such
conversion), and the Issuer shall issue certificates for the Conversion
Shares to which the Noteholder or such
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person as it may direct shall become entitled in consequence of exercising
its Conversion Rights in board lots with one certificate for any odd lot of
Shares arising from conversion and shall deliver the share certificates to
the Noteholder in Hong Kong at its address set out in Condition 16, (if
appropriate) together with the original Certificate with an endorsement on
it by a director of the Issuer for any balance of the Note not converted
within the three (3) Business Day period referred to above.
9. PROTECTION OF THE NOTEHOLDER
9.1 So long as the Note is outstanding, unless with the prior written approval
of the Noteholder:
(a) the Issuer shall not amend and/or repeal any provision of its
memorandum of association or bye-laws;
(b) the Issuer shall not issue or authorise the issue of any securities of
any class having any right, preference or priority superior to or on a
parity with the Note;
(c) the Issuer shall not declare or pay any dividend on any securities
other than the Shares;
(d) the Issuer shall not authorise or effect a merger, sale or lease of
all or substantially all the assets of the Issuer or a voluntary
liquidation, recapitalisation or reorganisation of the Issuer;
(e) the Issuer shall not change the nature of its business;
(f) the Issuer shall not appoint or remove any senior executive of the
Issuer, including but not limited to the chief executive officer, the
chief operating officer and the chief financial officer;
(g) the Issuer shall keep available for issue, free from pre-emptive
rights, out of its authorised but unissued capital, sufficient Shares
to satisfy in full the Conversion Rights at the Conversion Price from
time to time and all other rights for the time being outstanding of
subscription for and conversion into Shares;
(h) the Issuer shall not in any way modify the rights attached to the
Shares (except as contemplated under Condition 7) as a class or attach
any special restrictions thereto;
(i) the Issuer shall procure that at no time shall there be in issue
Shares of different nominal values;
(j) other than as a result of, or in circumstances where, an offer made to
holders of Shares to acquire all or any proportion of the Shares
becoming unconditional, the Issuer shall use all reasonable
endeavours:
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(i) to maintain a listing for all the issued Shares on the Stock
Exchange; (ii) to obtain and maintain a listing on the Stock Exchange
for all the Conversion Shares issued on the exercise of the Conversion
Rights attaching to the Note and (iii) obtain a listing for all the
Shares issued on the exercise of the Conversion Rights attaching to
the Note on any other stock exchange on which any of the Shares are
for the time being listed and will forthwith give notice to the holder
of the Note in accordance with Condition 16 of the listing or
delisting of the Shares by any such stock exchange;
(k) the Issuer shall at all times provide the Noteholder access to such
information and records of the Issuer at the Issuer's offices as the
Noteholder may reasonably require;
(l) subject to compliance with the Listing Rules and other applicable
laws, regulations and rules, the Issuer shall deliver to the
Noteholder its monthly financial reports within 30 days of the end of
each calendar month and its annual financial reports within 120 days
of the end of each financial year;
(m) the Issuer shall provide the Noteholder with (i) a copy of its annual
reports, annual financial statements, interim reports and all other
statements and circulars sent by the Issuer to its shareholders within
three (3) Business Days after the Issuer sends the same to its
shareholders, and (ii) a copy of each press announcement and press
release, teletext announcement released or made by the Issuer in
accordance with the Listing Rules within three (3) Business Days after
date of release;
(n) the Issuer shall ensure that all the Conversion Shares will be duly
and validly issued fully paid and registered;
(o) the Issuer shall comply with and procure the compliance of all
conditions imposed by the Stock Exchange or by any other competent
authority (in Hong Kong or elsewhere) for approval of the issue of the
Note or for the listing of and permission to deal in the Conversion
Shares issued or to be issued on the exercise of the Conversion Rights
and to ensure the continued compliance thereof (provided in each case
that the Noteholder complies with and satisfies all such conditions
applicable to it);
(p) the Issuer shall not issue or pay up any securities by way of
capitalisation of profits or reserves other than (i) by the issue of
fully paid Shares to holders of its Shares; or (ii) as mentioned in
Condition 7.3(c); or (iii) by the issue of Shares in lieu of a cash
dividend in the manner referred to in Condition 7.3(d);
(q) the Issuer shall not create or permit to be in issue any Equity Share
Capital other than Shares, provided that nothing in this Condition
9.l(q)
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shall prevent (i) any consolidation or sub-division of the Shares; or
(ii) the issue of Equity Share Capital which does not participate in
dividend in respect of a certain financial period but is pari passu in
all other respects with the Shares;
(r) the Issuer shall procure that (i) no securities issued by the Issuer
shall be converted into Shares or exchanged for Shares except in
accordance with the terms of issue thereof, and (ii) no securities
issued by the Issuer without rights to convert into Shares or to be
exchanged for Shares shall subsequently be granted such rights;
(s) the Issuer shall not make any issue, grant or distribution or take any
other action if the effect thereof would be that on the exercise of
the Conversion Rights, it would but for Condition 7.8 be required to
issue Shares at a discount to their nominal value or to adjust the
Conversion Price to a level below the nominal value of the Shares;
(t) if an offer is made to holders of Shares to acquire all or any
proportion of the Shares, the Issuer shall forthwith give notice of
such offer to the Noteholder and shall use all reasonable endeavours
to procure that a similar offer is extended in respect of the Note or
in respect of any Shares issued on conversion of the Note during the
period of the offer;
(u) the Issuer shall not make any distribution in specie to holders of
Shares unless the Noteholder is entitled to the Specie Distribution
Right in accordance with Condition 11;
(v) the Issuer shall not, subject as hereinafter provided, make any
reduction or redemption of share capital, share premium account or
capital redemption reserve involving the repayment of money to
shareholders of the Issuer (other than to shareholders of the Issuer
having the right on a winding-up to a return of capital in priority to
the holders of Shares) or reduce any uncalled liability in respect
thereof unless, in any such case, the same gives rise (or would, but
for the provisions of Conditions 7.5, 7.8 or 7.9 give rise) to an
adjustment of the Conversion Price in accordance with Condition 7; and
(w) the Issuer shall not enter into any deed, agreement, assignment,
instrument or documents whatsoever binding on it which may result in
any breach of any of the terms and conditions of the Note.
10. EVENTS OF DEFAULT
If any of the following events ("Events of Default") occurs, the Noteholder
may give notice to the Issuer that the Note has, on the giving of such
notice, become immediately due and payable at its principal amount then
outstanding together with any accrued and unpaid interest under Condition
3.1 calculated up to and including the date of payment:
173
(a) other than as a result of, or in circumstances where, an offer made to
holders of Shares to acquire all or any proportion of the Shares
becoming unconditional, the listing of the Shares (as a class) on the
Stock Exchange:
(i) ceases; or
(ii) is suspended for a continuous period of fifteen (15) days on each
of which the Stock Exchange is generally open for trading due to
the default of the Issuer or any of its directors, officers,
employees or agents; or
(b) (i) the breach of any of the Issuer's Warranties which will have a
material adverse effect on the Purchaser Group or on the Issuer's
ability to perform any of its obligations contemplated hereunder;
or
(ii) the Issuer defaults in performance or observance or compliance
with any of its material obligations contained in the terms and
conditions of the Note, and such event continues to subsist for a
continuous period of fifteen (15) Business Days after notice of
such event is sent from the Noteholder to the Issuer; or
(c) the Issuer fails to pay the principal when due or the Issuer fails to
pay interest on the Note when due unless non-payment of such interest
is due solely to administrative or technical error and payment is made
within three (3) Business Days of the due date thereof; or
(d) (i) any amounts of principal repayment or interest payment in
relation to bank borrowings of the Issuer or any of its
subsidiaries are not paid when due, or as the case may be, within
any applicable grace period and the relevant bank notifies the
Issuer or the relevant subsidiary that such non-payment
constitutes an event of default under the terms of relevant loan;
or
(ii) the Issuer or any of its subsidiaries fails to pay when due or
expressed to be due any amounts payable or expressed to be
payable by it under any present or future guarantee for any
moneys borrowed from or raised through a financial institution
and the relevant financial institution notifies the Issuer or the
relevant subsidiary that such failure to pay constitutes an event
of default under the terms of the guarantee or the loan in
relation to which the guarantee was given; or
(e) an encumbrancer takes possession or a receiver, manager or other
similar officer is appointed of the whole or any material part of the
undertaking, property, assets or revenues of the Issuer or any of its
subsidiaries; or
174
(f) the Issuer or any of its material subsidiaries becomes insolvent or is
unable to pay its debts as they mature or applies for or consents to
or suffers the appointment of any administrator, liquidator or
receiver of the Issuer or any of its material subsidiaries or the
whole or any material part of the undertaking, property, assets or
revenues of the Issuer or any of its material subsidiaries or takes
any proceeding under any law for a readjustment or deferment of its
obligations or any part of them or makes or enters into a general
assignment or compromise with or for the benefit of its creditors; or
(g) an order is made or an effective resolution passed for winding-up of
the Issuer or any of its material subsidiaries, except in the case of
winding-up of subsidiaries in the course of internal reorganisation;
or
(h) a moratorium is agreed or declared in respect of any indebtedness of
the Issuer or any of its subsidiaries or any governmental authority or
agency condemns, seizes, compulsorily purchases or expropriates all or
any material part of the assets of the Issuer or any of its
subsidiaries; or
(i) the Issuer or any of its material subsidiaries consolidates or
amalgamates with or merge into any other corporation (other than a
consolidation, amalgamation or merger in which the Issuer or such
material subsidiary is the continuing corporation), or the Issuer or
any of its material subsidiaries sells or transfers all or
substantially all of its assets, or
(j) at any time any indebtedness, including any obligation (whether
present or future, actual or contingent, secured or unsecured, as
principal or surety or otherwise) for the payment or repayment of
money, of any member of the Purchaser Group becomes due and payable
prior to its stated maturity by reason of default, or event of default
(howsoever described) by any member of the Purchaser Group; or
(k) the aggregate amount of the liabilities of the Purchaser Group under
all debentures, acceptance credits, overdrafts, loans or other
financial facilities outstanding (excluding (i) the Note; (ii) any
other convertible note which may be in issue as a result of a transfer
of part of this Note; (iii) any other convertible note issued pursuant
to the Agreement; (iv) facilities provided by the Xxxxxxxxx
International Limited group to the Purchaser Group; and (v) the Loan
Agreement (as defined in the PowerCom Acquisition Agreement) which are
interest bearing and owing by any member of the Purchaser Group less
the amount of cash in hand exceeds HK$600 million as at the end of any
calendar month.
Provided that notwithstanding the foregoing, if the Issuer shall fail to
issue the Conversion Shares in accordance with the Conditions, the
Noteholder shall be entitled to bring an action against the Issuer for
either specific performance or damages. The Issuer will forthwith on
becoming aware of any such event as is
175
mentioned in this Condition give notice in writing thereof to the
Noteholder. At any time after any interest amount or the principal amount
of the Note has become payable, the Noteholder may without further notice
institute such proceedings as it may think fit to enforce payment of the
monies due.
11. DISTRIBUTION IN SPECIE
If the Issuer declares a distribution in specie other than an issue of
Shares in lieu of a cash dividend falling under Condition 7.3(d) (a "Specie
Distribution") to shareholders at any time during the period in which the
Noteholder can exercise its Conversion Rights, the Noteholder will, unless
an adjustment to the Conversion Price has been made under Condition 7 in
respect of the Specie Distribution in full, be entitled to an amount (the
"Specie Distribution Right") which shall be determined as follows:
(a) the Issuer and the Noteholder will forthwith on the date of
announcement of the Specie Distribution instruct the approved merchant
bank (as defined in Condition 7.2) to value the Specie Distribution
which would have been payable to the Noteholder on the Shares falling
to be issued if the Noteholder had exercised its Conversion Rights
immediately prior to the record date for the Specie Distribution in
respect of the whole of the principal amount of the Note then
outstanding (the "Notional Specie Distribution"); and
(b) upon the determination of the approved merchant bank's valuation of
the Notional Specie Distribution (which valuation shall be final and
binding on both the Issuer and the Noteholder) the Issuer will pay a
cash amount equal to the value of the Notional Specie Distribution to
the Noteholder.
12. VOTING
The Noteholder will not be entitled to receive notices of, attend or vote
at any meetings of the Issuer by reason only of it being the Noteholder.
13. SELLING RESTRICTIONS
The Noteholder agrees not to offer the Note or Shares issued and allotted
to it upon any exercise of the Conversion Rights for sale or subscription
to the public pursuant to a prospectus within the meaning of the Companies
Ordinance (Chapter 32 of the Laws of Hong Kong) except such as, and under
circumstances that are, permitted under the Companies Ordinance.
14. EXPERTS
In giving any certificate or making any adjustment hereunder, any approved
merchant bank appointed by the Issuer shall be deemed to be acting as
experts and not as arbitrators and, in the absence of manifest error, their
decision shall be conclusive and binding on the Issuer and the Noteholder
and all persons
176
claiming through or under them respectively.
15. REPLACEMENT NOTE
If the Certificate is lost or mutilated, the Noteholder shall notify the
Issuer as soon as practicable and a replacement Certificate shall be issued
if the Noteholder provides the Issuer with: (a) the mutilated Certificate
or a declaration by the Noteholder or its officer that the Certificate had
been lost or mutilated (as the case may be) or other evidence that the
Certificate had been lost or mutilated; and (b) an appropriate indemnity in
such form and content as the Issuer may reasonably require. Any Certificate
replaced in accordance with this Condition shall forthwith be cancelled.
16. NOTICES
Each notice, demand or other communication to be given or made under this
Agreement shall be in writing and delivered or sent to the relevant party
at its respective address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days' prior
written notice specified to the other party):
To the Issuer: Vanda Systems & Communications Holdings Limited
Lincoln Xxxxx 000
Xxxxxx Xxxxx
000 Xxxx'x Xxxx
Xxxxxx Xxx
Xxxx Xxxx
Facsimile: (000) 0000 0000
Attention: The Company Secretary
To the: [ ] Limited
--
Noteholder: 00/X, Xxxxxxxxx Xxxxx
00 Xxxxxxxx Xxxx
Xxxxxxx, Xxxx Xxxx
Facsimile: (000) 0000 0000
Attention: The Company Secretary
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered: (a) if given or made by
letter and delivered by hand or courier when actually delivered to the
relevant address; (b) if given or sent by registered mail, on the date
which is two (2) Business Days (in the case of mail sent to a local
address) or five (5) Business Days (in the case of mail sent to an overseas
address) after the posting thereof; and (c) if given or made by facsimile,
when despatched with confirmation of successful transmission (and if the
deemed date of delivery is not a Business Day, on the immediately following
Business Day).
177
17. AMENDMENT
The terms and conditions of the Note may be varied, expanded or amended by
agreement in writing between the Issuer and the Noteholder.
18. GOVERNING LAW AND JURISDICTION
The Note and the Conditions are governed by and shall be construed in
accordance with the laws of Hong Kong and the Parties agree to submit to
the non-exclusive jurisdiction of the courts of Hong Kong.
178
CONVERSION NOTICE
Terms defined in the agreement between Xxxxxxxxx Global Communications Holdings
Limited, the Issuer and Xxxxxxxxx International Limited dated 28 January, 2004
relating to, inter alia, the acquisition of the entire issued share capital of
Xxxxxxxxx Global Communications Investments Limited and the issue of the Note
and in the Certificate relating to the Note (as may be amended) shall bear the
same meaning in this Conversion Notice.
The undersigned hereby irrevocably elects to convert the following amount of the
Note into Shares of Vanda Systems & Communications Holdings Limited in
accordance with the Conditions, as of the date specified below, such Shares to
be issued in the name of the Shareholder set out below.
Name of Noteholder:
------------------------------------------------------------
Certificate Number(s):
---------------------------------------------------------
Amount to be converted:
--------------------------------------------------------
Conversion Date:
---------------------------------------------------------------
(being the date of this notice and on which the original Certificate is
presented to the Issuer)
Applicable Conversion Price:
---------------------------------------------------
Name in which Shares are to be issued:
-----------------------------------------
Address of Shareholder:
--------------------------------------------------------
Signature of Noteholder:
-------------------------------------------------------
Dated this day of in the year of
--------------- -------------------- ----------
179
IN WITNESS whereof the parties hereto have executed this Agreement on the day
and year first before written.
SIGNED by Xxx. Xxxxx Xxxx ) /s/ Xxxxx Xxxx
) -------------------------------------
for and on behalf of ) Xxx. Xxxxx Xxxx
XXXXXXXXX GLOBAL COMMUNICATIONS )
HOLDINGS LIMITED )
in the presence of: )
/s/ Xxxxxxxx X. X. Xxx
----------------------------------------
XXXXXXXX X. X. XXX
Solicitor, Hong Kong SAR
SIGNED by Xxx. Xxxxx Xxxx ) /s/ Xxx. Xxxxx Xxxx
) -------------------------------------
for and on behalf of ) Xxx. Xxxxx Xxxx
XXXXXXXXX INTERNATIONAL LIMITED )
in the presence of: )
/s/ Xxxxxxxx X. X. Xxx
----------------------------------------
XXXXXXXX X. X. XXX
Solicitor, Hong Kong SAR
SIGNED by [signature] ) [signature]
) -------------------------------------
for and on behalf of )
VANDA SYSTEMS & )
COMMUNICATIONS HOLDINGS LIMITED )
in the presence of: )
/s/ Xxxx Xxx Xxx, Xxxxxx
----------------------------------------
XXXX XXX XXX, XXXXXX
Solicitor, Hong Kong SAR
180
