EXHIBIT 4.10
PRIVATE & CONFIDENTIAL EXECUTION COPY
DATED MARCH 31, 2004
XX. XXXX TOE XXXXX
AND
NAM TAI ELECTRONICS, INC.
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AGREEMENT
RELATING TO THE SALE AND PURCHASE OF
THE ENTIRE ISSUED SHARE CAPITAL OF
JASPER ACE LIMITED
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(MSR/6716628/5/#96637v3)
XXX.XXX.XXX
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CONTENTS
CLAUSE HEADING PAGE
1 Definitions and Interpretation.................................. 1
2 Conditions...................................................... 5
3 Sale and Purchase............................................... 5
4 Consideration................................................... 6
5 Completion...................................................... 9
6 Pre-Completion Undertakings..................................... 9
7 Warranties...................................................... 9
8 Tax Indemnity................................................... 10
9 Miscellaneous................................................... 10
10 Expenses........................................................ 11
11 Confidentiality................................................. 11
12 Notices......................................................... 12
13 Law and Jurisdiction............................................ 12
SCHEDULES
NUMBER DESCRIPTION PAGE
1 Basic Information Concerning the Company........................ 13
2 The Warranties.................................................. 14
3 Matters to be Transacted at Completion.......................... 19
4 Legend.......................................................... 22
5 JAMF Shareholding Transfer Letter............................... 23
EXECUTION................................................................. 25
EXHIBITS
A JA Accounts
B Unaudited Huizhou TCL Accounts
C Huizhou TCL Board Resolutions (declaration of dividends)
THIS AGREEMENT is dated March 31, 2004 and is made
BETWEEN
(1) XX. XXXX TOE XXXXX (I.D. Card Number X000000(0)) of 00xx Xxxxx, Xxxxx 0,
Xxx Xxxxxxxx Xxxx, 2B Broadwood Road, Hong Kong ("XX. XXXX"); and
(2) NAM TAI ELECTRONICS, INC., an International Business Company incorporated
in the British Virgin Islands having its registered office at McW. Xxxxxx
& Co., XxXxxxxx Xxxxxxxx, P O Box 3342, Road Town, Tortola, the British
Virgin Islands ("NTEI").
Background
(A) Xx. Xxxx indirectly holds a 9% shareholding interest in Huizhou TCL. This
interest is held through Xx. Xxxx'x direct 100% shareholding interest in
Top Scale, which in turn holds a direct 100% shareholding interest in JA,
which in turn directly holds 9% of Huizhou TCL.
(B) NTEI indirectly holds a 3.033% shareholding interest in Huizhou TCL. This
interest is held through a 72.2% owned subsidiary, MF, which directly
holds 4.2% of Huizhou TCL. JA holds the remaining 27.8% shareholding
interest in MF.
(C) The parties have agreed that NTEI will increase its indirect shareholding
interest in Huizhou TCL from 3.033% to 9%, through its acquisition of Top
Scale's 100% shareholding in JA. This transaction is conditional upon JA
transferring its 27.8% shareholding in MF to another special purpose
vehicle wholly owned by Xx. Xxxx prior to Completion.
BY WHICH IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Defined Terms
In this Agreement unless the context requires otherwise:
"ACCOUNTS" means collectively the JA Accounts and the Unaudited Huizhou
TCL Accounts;
"ACCOUNTS DATE" means December 31, 2003;
"ADJUSTED COMPLETION BENCHMARK VALUATION" has the meaning given in Clause
4.2(b);
"ADJUSTED IPO BENCHMARK VALUATION" has the meaning given in Clause 4.2(c);
"ADJUSTMENT AMOUNT" has the meaning given in Clause 4.2(e);
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"BENCHMARK VALUATION" has the meaning given in Clause 4.2(a);
"BUSINESS DAY" means a day other than a Saturday, Sunday on which banks
are open in Hong Kong to the general public for business;
"CASH CONSIDERATION" means the sum of US$25,000,000.00 (Twenty-five
million);
"COMPANIES ORDINANCE" means the Companies Ordinance (Chapter 32, as
amended, of the Laws of Hong Kong);
"COMPLETION" means completion of the sale and purchase of the JA Shares in
accordance with Clause 5;
"COMPLETION DATE" means April 21, 2004(or such later date as the parties
may mutually agree in writing);
"CONDITION" means the condition set out in Clause 2.1;
"CONSIDERATION" means the total consideration to be paid by NTEI to Top
Scale for the JA Shares, specified in Clause 4.1;
"EMV" has the meaning given in Clause 4.2(a);
"ENCUMBRANCE" means a mortgage, charge, pledge, lien, option, restriction,
right of first refusal, right of pre-emption, third-party right or
interest, other encumbrance or security interest of any kind, or another
type of preferential arrangement (including, without limitation, a title
transfer or retention arrangement) having similar effect and any agreement
or obligation to create or grant any of the aforesaid;
"HUIZHOU TCL" means Huizhou TCL Mobile Communication Company Limited,
(name in Chinese) T C L name in Chines, a company incorporated in the
People's Republic of China, Registration Number GH003740, having its
registered office at Xx. 00 Xxxx, Xxxxx Kai High Technology Development
Zone, Huizhou, Guangdong, China;
"IPO" means an initial public offering of the ordinary shares of Huizhou
TCL or of any of its holding company or subsidiaries set up for this
purpose ("LISTCO") and the listing of the share capital of Listco
incidental to such offering of the shares on a stock exchange;
"JA" means Jasper Ace Limited (name in Chinese), an International
Business Company incorporated in the British Virgin Islands, Registration
Number 269914, having its registered office at Sea Meadow House,
Blackburne Highway, Road Town, Tortola, British Virgin Islands particulars
of which are set out in Schedule 1;
"JA ACCOUNTS" means the unaudited profit and loss account of JA for the
period February 1, 1999 to March 31, 2004 and the unaudited balance sheet
of JA as at March 31, 2004, copies of which are attached as Exhibit A;
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"JA HUIZHOU TCL SHAREHOLDING" means US$ 2,682,000 paid-up capital in the
capital of Huizhou TCL registered in the name of JA, which will at
Completion represent 9% of the entire capital of Huizhou TCL;
"JA SHARES" means 100,000 ordinary shares of US$ 1.00 each in the capital
of JA to be sold to NTEI pursuant to this Agreement, being all the issued
shares in the capital of JA held by, or as nominee for, Top Scale;
"JAMF SHAREHOLDING" means the 1167 ordinary shares of US$1.00 each in the
capital of MF (representing a 27.8% shareholding interest in MF) in
respect of which the share certificates are presently held by JA (as
trustee and agent for Crystal Island Investment Limited) and which
pursuant to Clause 2.1 will be returned to Crystal Island Investment
Limited prior to Completion,;
"JAMF SHAREHOLDING TRANSFER LETTER" means a letter from JA addressed to
Crystal Island Investment Limited substantially in the form set out in
Schedule 5;
"LEGEND" means the legend affixed to the share certificate representing
the Namtai Common Stock substantially in the form set out in Schedule 4;
"MF" means Mate Fair Group Limited (name in chinese), an International
Business Company incorporated in the British Virgin Islands, Registration
Number 370066, having its registered office at Sea Meadow House,
Blackburne Highway, Road Town, Tortola, British Virgin Islands;
"MF SHARES" means 3033 ordinary shares of US$1.00 each in the capital of
MF registered in the name of NTEI and representing as at Completion a
72.2% shareholding interest in MF;
"NAMTAI COMMON STOCK" means 2,389,974 new shares of the common stock of
NTEI, being the result of the following formula:-
US$58,793,367.40 divided by the average market closing price of one share
of the common stock of NTEI as reported on NYSE for each day during the
period from March 3, 2004 to March 30, 2004 (inclusive) on which NYSE is
open for trading and on which at least 10,000 shares of NTEI common stock
are traded (the "AVERAGE MARKET CLOSING PRICE"), rounded down or up to the
nearest whole number;
"NYSE" means the New York Stock Exchange;
"RELIEF" includes any relief, allowance, set-off or deduction in computing
profits or credit or right to repayment of Taxation granted by or pursuant
to any legislation concerning or otherwise relating to Taxation;
"RMB" means Renminbi, the lawful currency for the time being of the
People's Republic of China;
"TAXATION" means (i) any liability to any form of taxation, duty, impost,
levy, rate, or
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other amount payable to any revenue, customs or fiscal authorities
whenever created or imposed and of any part of the world, including,
without limitation, profits tax, provisional profits tax, interest tax,
salaries tax, property tax, taxes on income, estate duty, capital duty,
stamp duty, payroll tax, rates, customs and excise duties and other
similar liabilities, (ii) such an amount or amounts as is referred to in
Clause 8.2 and (iii) all interest, penalties, costs, charges and expenses
incidental or relating to the liability to Taxation or the deprivation of
any Relief which is the subject of the indemnity under Clause 8.1 to the
extent that the same is payable or suffered by JA;
"TOP SCALE" means Top Scale Company Limited, a company incorporated in the
British Virgin Islands, Registration Number 46750, having its registered
office at International Trust Building, Wickhams Cay, Road Town, Tortola,
the British Virgin Islands, a company which is 100% beneficially owned and
controlled by Xx. Xxxx;
"UNAUDITED HUIZHOU TCL ACCOUNTS" means the unaudited financial statements
of Huizhou TCL for the period of 12 months ended on the Accounts Date,
copies of which are attached as Exhibit B;
"US$" means United States Dollars;
"WARRANTIES" means the representations, warranties and undertakings set
out in Schedule 2;
"2003 UNAUDITED PROFIT AMOUNT" has the meaning given in Clause 4.2(a).
1.2 Construction of References
In this Agreement, unless the context requires otherwise, any reference:
(a) to a Clause or Schedule is a reference to a Clause of or a Schedule
to this Agreement;
(b) to this Agreement, any other document or any provision of this
Agreement or that document is a reference to this Agreement, that
document or that provision as in force for the time being or from
time to time amended in accordance with the terms of this Agreement
or that document; and
(c) to a "SUBSIDIARY" or "HOLDING COMPANY" is to be construed in
accordance with Section 2 of the Companies Ordinance.
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1.3 Interpretation
In this Agreement, unless the context otherwise requires:
(a) words importing the plural include the singular and vice versa; and
(b) words importing a gender include every gender.
1.4 Headings and Contents
The headings and the tables of contents in this Agreement do not affect
its interpretation.
1.5 Schedules
This Agreement includes its Schedules and any reference to a paragraph is
a reference to the paragraph of the relevant Schedule.
2. CONDITIONS
2.1 Completion of this Agreement is conditional upon Xx. Xxxx procuring that
JA has transferred its interest in the JAMF Shareholding to another
special purpose vehicle wholly owned by Xx. Xxxx, by JA executing the JAMF
Shareholding Transfer Letter.
2.2 Xx. Xxxx shall procure the fulfilment of the Condition prior to the
Completion Date.
2.3 To the extent that the Condition is or may not be satisfied in full prior
to Completion, such Condition or Conditions may be waived by NTEI at its
absolute discretion and to such extent it thinks fit by giving notice in
writing to Xx. Xxxx.
2.4 If the Condition is not duly fulfilled (or waived by NTEI) on or before
the Completion Date, NTEI shall be entitled to terminate this Agreement
without penalty by giving notice to Xx. Xxxx, whereupon all liabilities of
NTEI hereunder shall cease and determine (without prejudice to any of the
other rights or remedies available to NTEI).
3. SALE AND PURCHASE
3.1 Sale and Purchase
Xx. Xxxx shall procure the sale by Top Scale as legal and beneficial owner
of the JA Shares free from all Encumbrances and with all rights now
attached to the JA Shares including the right to receive all dividends and
other distributions declared, made or paid on or after the Accounts Date
and NTEI relying on the representations, warranties and undertakings of
Xx. Xxxx contained or referred to in this Agreement shall purchase the JA
Shares with effect from Completion.
3.2 Pre-emption Rights
Xx. Xxxx hereby waives and shall procure that Top Scale and any other
person
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(including any other transferor of the legal or beneficial interest in the
JA Shares) waives any right of pre-emption which each may have in respect
of the JA Shares, whether pursuant to the Articles of Association of JA or
otherwise howsoever arising.
4. CONSIDERATION
4.1 Consideration
Subject to adjustment in accordance with Clause 4.2, the Consideration
shall be US$126,385,169.40 (One hundred and twenty-six million three
hundred and eighty-five thousand one hundred and sixty-nine dollars and
forty cents) which shall satisfied by:-
(a) the transfer by NTEI to Top Scale of the MF Shares in accordance
with paragraph 2(a) of Schedule 3. In accordance with Clause 4.2(a)
the valuation which the parties have provisionally attributed to the
MF Shares has been calculated as : 3.033% x Benchmark Valuation =
US$42,591,802 (Forty two million five hundred and ninety-one
thousand eight hundred and two);
(b) the payment of the Cash Consideration to Top Scale in accordance
with paragraph 2(b) of Schedule 3; and
(c) the issuance by NTEI of the Namtai Common Stock to Top Scale in
accordance with paragraph 2(c) of Schedule 3. The share certificate
evidencing the Namtai Common Stock shall bear the Legend and shall
be dated the Completion Date. NTEI shall procure that such Namtai
Common Stock is issued credited as fully paid and non assessable and
free from all Encumbrances, and that the Namtai Common Stock will
rank pari passu with all other common stock of NTEI in issue on the
date of such issue.
4.2 Adjustment of Consideration
(a) The benchmark valuation of Huizhou TCL for the purpose of the
transactions contemplated in this Agreement has been agreed with
reference to the expected market value ("EMV") of Listco at the time
of its IPO (prior to the public investors participating therein).
For the purpose of calculating such provisional valuation, the
parties have valued Huizhou TCL at US$1,404,279,660 (One thousand
four hundred and four million two hundred seventy nine thousand six
hundred and sixty) (the "BENCHMARK VALUATION") based on an unaudited
net profit of US$100,305,690 (One hundred million three hundred and
five thousand six hundred and ninety) as shown in the Unaudited
Huizhou TCL Accounts ("2003 UNAUDITED PROFIT AMOUNT") for Huizhou
TCL's financial year ended December 31, 2003 and an historical P/E
of 14 times, representing the P/E multiple of 15 times which the
parties currently expect to achieve at IPO minus 1 (one) = 14 times.
Accordingly, assuming a P/E multiple at IPO of 15 times, the parties
have estimated that the EMV of Huizhou TCL at the time of its IPO is
US$1,504,585,350 (One thousand five hundred and four million five
hundred eighty five thousand three hundred and fifty) based on the
2003 Unaudited Profit Amount.
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(b) (i) Xx Xxxx undertakes to provide to NTEI a copy of the signed,
audited financial statements of Huizhou TCL for the period of 12
months ended on the Accounts Date, duly certified as true and
complete by the Directors of Huizhou TCL, as soon as practicable
following Completion and in any event within three (3) months
thereafter. Forthwith following NTEI's receipt of such signed,
audited financial statements, the parties agree, subject to Clause
4.2(d), that the Consideration shall be subject to adjustment in
accordance with the following formula :-
A = (B x C) - (D x C)
Where: A is the amount of the adjustment to the Consideration
(expressed in US$);
B is the Benchmark Valuation;
C is 5.967%, representing the percentage increase in NTEI's
indirect shareholding interest in Huizhou TCL which will
result upon Completion;
D is the Adjusted Completion Benchmark Valuation calculated
in accordance with Clause 4.2(b)(ii).
(ii) The "ADJUSTED COMPLETION BENCHMARK VALUATION" shall be the
product of the following formula :-
A x B
Where: A is the audited net profit (expressed in RMB) as shown in
the audited financial statements of Huizhou TCL in respect of
the financial year of Huizhou TCL ending on the Accounts
Date, as converted to US$ using an exchange rate of US$1.00
to RMB8.26;
B is 14, representing the P/E multiple which was applied in
calculating the Benchmark Valuation;
(c) (i) Subject to Clause 4.2(d), the parties agree that the
Consideration shall be subject to adjustment in accordance with the
following formula :-
A = (B x C) - (D x C)
Where: A is the amount of the adjustment to the Consideration
(expressed in US$);
B is the Benchmark Valuation;
C is 5.967%, representing the percentage increase in NTEI's
indirect shareholding interest in Huizhou TCL which will
result upon Completion;
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D is the Adjusted IPO Benchmark Valuation calculated in
accordance with Clause 4.2(c)(ii).
(ii) The "ADJUSTED IPO BENCHMARK VALUATION" shall be the product of
the following formula :-
A x B
Where : A is the audited net profit (expressed in RMB) as shown in
the audited financial statements of Huizhou TCL in respect
of the latest complete financial year of Huizhou TCL
immediately preceding the date of the IPO, as converted to
US$ using an exchange rate of US$1.00 to RMB8.26;
B is the historical P/E multiple achieved on IPO minus 1
(one).
(d) The parties agree that no adjustment shall be made to the
Consideration in the event that the Adjusted Completion Benchmark
Valuation or the Adjusted IPO Benchmark Valuation is equal to or
exceeds the Benchmark Valuation.
(e) Any adjustment to the Consideration pursuant to Clause 4.2(b) and/or
Clause 4.2(c) (as the case may be)(the "ADJUSTMENT AMOUNT") shall be
satisfied by the immediate cancellation by NTEI of such number of
shares of the Namtai Common Stock as were issued to Top Scale
pursuant to Clause 4.1(c) which is the result of the following
formula :-
A/B (rounded down or up to the nearest whole number)
Where: A is the Adjustment Amount; and
B is the price per share at which the Namtai Common Stock is
issued to Top Scale at Completion (i.e. US$24.60 per share).
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4.3 Form of Payment
The payment of the Cash Consideration to be made under Clause 4.1(b) shall
be made by telegraphic transfer to the account notified by Xx. Xxxx to
NTEI not later than 3 Business Days before the Completion Date.
5. COMPLETION
5.1 Subject to Clause 2, Completion shall occur in Macau Special
Administrative Region of the People's Republic of China (or at such other
place as the parties may agree in writing) on the Completion Date when the
business set out in Schedule 3 shall be transacted.
5.2 Neither party shall be obliged to complete this Agreement unless the other
party complies fully with its obligations under Schedule 3.
6. PRE-COMPLETION UNDERTAKINGS
Xx Xxxx hereby undertakes to procure that pending Completion, JA will not
(save as contemplated by this Agreement or as NTEI may agree in writing):-
(a) issue or agree to issue any share or loan capital or grant or agree
to grant any option over or right to acquire any share or loan
capital;
(b) enter into any transaction, agreement or contract, trade or carry on
business, acquire or dispose of any interest in any asset or create
or undertake any capital commitment or actual or contingent
liability whatsoever;
(c) create or permit to arise any lien, charge, encumbrance, pledge,
mortgage or other third party right or interest on or in respect of
any of its undertaking, property or assets;
(d) borrow any money;
(e) declare, pay or make any dividends or other distributions; or
(f) appoint any directors, secretaries or (pursuant to any power of
attorney or similar authority) attorneys.
7. WARRANTIES
7.1 Warranties
Xx. Xxxx hereby represents, warrants and undertakes to and with NTEI and
its successors in title that each statement contained in Schedule 2 is
true, accurate and complete in all respects and not misleading as at the
date of this Agreement, and will continue to be so on each day up to and
including the Completion Date with reference to the fact and circumstances
subsisting from time to time.
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7.2 Reliance on Warranties
Xx. Xxxx acknowledges and accepts that NTEI is entering into this
Agreement in reliance upon each of the Warranties, notwithstanding any
investigations which NTEI, its agents or advisers may have made.
7.3 Separate Warranties
Each of the Warranties shall be construed as a separate 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 Warranty or any
other terms of this Agreement.
8. TAX INDEMNITY
8.1 Xx Xxxx hereby covenants and agrees with NTEI (both for itself and as
trustee for and on behalf of JA) that he will fully and effectually
indemnify and at all times keep fully and effectually indemnified NTEI
and/or JA from and against and thus he will pay to NTEI and/or JA:-
(a) the amount of any and all Taxation falling on JA resulting from or
by reference to any income, profits, gains, transactions, events,
matters or things earned, accrued, received, entered into or
occurring up to the Completion Date, whether alone or in conjunction
with any other circumstances whenever occurring and whether or not
such Taxation is chargeable against or attributable to any other
person, firm or company, including any and all Taxation resulting
from the receipt by JA or NTEI of any amounts paid by Xx Xxxx under
this Agreement; and
(b) any and all costs (including all legal costs), expenses or other
liabilities which NTEI or JA may reasonably and properly incur in
connection with:-
(i) the settlement of any claim under this indemnity;
(ii) any legal proceedings in which NTEI or JA claims under or in
respect of this indemnity and in which judgement is given for
NTEI or JA; or
(iii) the enforcement of any such settlement or judgement.
8.2 In the event of any deprivation of any Relief, there shall be treated as
an amount of Taxation for which liability has arisen the amount of such
Relief multiplied by the relevant rates of Taxation in force in the period
or periods in respect of which Relief would have applied or (where the
rate has at the relevant time not been fixed) the last known rate and
assuming that such amount of Relief was capable of full utilisation by JA.
9. MISCELLANEOUS
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9.1 This Agreement contains the entire agreement between the parties as to
their subject matter.
9.2 The rights of the parties under this Agreement are cumulative and do not
exclude or restrict any other rights (except as otherwise provided in the
Agreement).
9.3 No failure or delay by a party to exercise any right under this Agreement
or otherwise will operate as a waiver of that right or any other right nor
will any single or partial exercise of any such right preclude any other
or further exercise of that right or the exercise of any other right.
9.4 Time is of the essence of this Agreement as regards any time, date or
period specified for the performance of an obligation.
9.5 No amendment to this Agreement will be effective unless in writing and
executed by all the parties.
9.6 This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which is an original
but, together, they constitute one and the same agreement.
9.7 This Agreement is binding on the successors of each party.
9.8 Neither party may assign any of the rights or obligations of that party
under this Agreement without the prior written consent of the other party
to this Agreement.
9.9 The Warranties shall remain in full force and effect notwithstanding
Completion.
10. EXPENSES
10.1 Each of the parties is responsible for that party's own legal and other
expenses incurred in the negotiation, preparation and completion of this
Agreement.
10.2 Xx. Xxxx shall pay all stamp duty or other transfer taxes (if any) on the
sale of the JA Shares and on the purchase of the MF Shares.
10.3 NTEI shall pay all stamp duty or other transfer taxes (if any) on the
purchase of the JA Shares and on the sale of the MF Shares.
11. CONFIDENTIALITY
None of the parties to this Agreement shall make any public announcement
or communication or divulge or otherwise make public in any manner any
information in connection with this Agreement, the negotiations leading up
to this Agreement or the transactions or arrangements contemplated or
referred to in this Agreement (including without prejudice to the
foregoing generality the fact that this Agreement has been entered into
between the parties) or any matter ancillary to this Agreement without the
prior written consent of the other party, provided that nothing shall
restrict the making by NTEI (or any holding company or subsidiary of NTEI
or any fellow subsidiary of
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such holding company) (even in the absence of agreement by Xx Xxxx) of any
announcement, press release, communication, divulgence or disclosure which
may be required by law or by any stock exchange or by any regulatory
authority.
12. NOTICES
Every notice or communication under this Agreement must be in writing and
may, without prejudice to any other form of delivery, be delivered
personally or sent by post or transmitted by fax to the address given in
this Agreement or at such other address as the recipient may have notified
to the other parties in writing.
13. LAW AND JURISDICTION
13.1 Governing Law
This Agreement is governed by and will be construed in accordance with
Hong Kong law.
13.2 Hong Kong Jurisdiction
The parties submit to the non-exclusive jurisdiction of the Hong Kong
courts and each party waives any objection to proceedings in Hong Kong on
the grounds of venue or inconvenient forum.
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SCHEDULE 1
BASIC INFORMATION CONCERNING THE COMPANY
Name of Company: Jasper Ace Limited (name in Chinese)
Registration number: 269914
Date of Incorporation: March 2, 1998
Place of Incorporation: British Virgin Islands (International Business Company)
Registered office: Sea Meadow House, Blackburne Highway, Road Town,
Tortola, British Virgin Islands
Authorised share capital: US$100,000.00 divided into 100,000 Shares of US$1.00 par
value each
Issued share capital: 100,000 Shares in the name of Top Scale Company Limited
Directors: Xxxx Toe Xxxxx
Xxxxx Xxx Xxxx
Secretary: N/A
Registered Agent: CCS Management Limited
Auditors: N/A
Financial Year End: N/A
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SCHEDULE 2
THE WARRANTIES
1. Xx. Xxxx is the sole legal and beneficial owner of the entire issued share
capital of Top Scale. Top Scale is the sole legal and beneficial owner of
the JA Shares. Xx. Xxxx is fully empowered, authorised and entitled to
procure the sale and transfer by Top Scale of, and Top Scale is fully
empowered, authorised and entitled to sell and transfer, the full legal
and beneficial ownership of the JA Shares to NTEI or its nominees free
from all Encumbrances and with all rights now and hereafter relating to
such JA Shares.
2. There are no Encumbrances on, over or affecting any of the JA Shares or
any part of the issued or unissued share capital of JA and there is no
agreement or commitment to give or create any Encumbrance and no claim has
been made by any person to be entitled to any Encumbrance which has not
been waived in its entirety or satisfied in full.
3. The JA Shares comprise the whole of the issued and allotted share capital
of JA and all of the JA Shares are fully paid up or credited as fully paid
up.
4. There is no agreement or commitment outstanding which calls for the
transfer, allotment or issue of or accords to any person the right to call
for the transfer, allotment or issue of any shares or debentures in JA
(including any option or right of pre-emption or conversion).
5. JA has no subsidiaries (as defined in the Companies Ordinance) and no
shareholding or other interest in any company, partnership, firm or other
entity, except for those mentioned in paragraph 9(g) of this Schedule.
6. JA has not repaid, redeemed or purchased any of its share capital or
issued any share capital as paid up otherwise than by receipt of
consideration therefor.
7. No consent of any third party is required to be obtained in respect of the
sale of the JA Shares.
8. The obligations of Xx. Xxxx under this Agreement and each document to be
executed at Completion are, or when the relevant document is executed,
will be binding in accordance with their terms. Each document to be
executed by Top Scale at Completion will be binding on Top Scale in
accordance with its terms.
9. JA is not and has never been engaged in any manner whatsoever in the
carrying on of any trade or business or engaged in any activities of any
sort except in connection with incorporation, the appointment of directors
and the filing of documents pursuant to the Companies Ordinance or The
International Business Companies Act (Cap 291 of the Laws of the British
Virgin Islands) and accordingly JA:-
(a) has no indebtedness, mortgages, charges, debentures, guarantees or
other commitments or liabilities (actual, accrued or contingent)
outstanding;
(b) has no employees or executive officers;
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(c) is not party to any contract whatsoever;
(d) has not given any power of attorney;
(e) is not a party to any litigation or arbitration and no litigation or
arbitration is pending or threatened;
(f) is not a lessee of any property; and
(g) is not the owner of, or interested in, any assets whatsoever
including, without limitation, the share capital of any other body
corporate, save and except for :- (i) the JA Huizhou TCL
Shareholding; (ii) the JAMF Shareholding; and (iii) a Hong Kong -
PRC vehicle license.
10. JA owns and will at Completion own free from Encumbrances all of its
undertaking and assets shown or comprised in the JA Accounts, which assets
include the JA Huizhou TCL Shareholding and all such assets are in its
possession and under its sole and absolute control.
11. In this paragraph 11, the "COMPANY" refers to each of JA and Huizhou TCL,
as the context requires.
(a) The Accounts:
(i) comply with the requirements of all applicable legislation;
(ii) were prepared on the same basis and in accordance with the
same accounting policies consistently applied as the audited
accounts of the Company prepared in the three preceding years
and in accordance with accounting principles generally
accepted in the relevant country of incorporation at the time
they were prepared;
(iii) are complete and accurate in all respects and in particular
make full provision for all established liabilities or make
proper provision for (or contain a note in accordance with
good accounting practice respecting) all deferred or
contingent liabilities (whether liquidated or unliquidated) at
the date thereof including deferred Taxation where
appropriate;
(iv) give a true and fair view of the state of affairs and
financial position of the relevant Company at the accounts
date thereof and of the relevant Company's results for the
financial period ended on such date; and
(v) are not adversely affected by any unusual or non-recurring
items which are not disclosed as such in the Accounts.
(b) Without limitation to paragraph 11(a), full provision has been made
in the Accounts:
Page 15
(i) for depreciation of assets;
(ii) for any foreseeable liabilities in relation to the disposal of
any assets or the cessation or diminution of any part of the
business of the relevant Company;
(iii) for bad or doubtful debts and all debts which were, as at the
relevant accounts date, more than six months overdue;
(iv) for long service payments;
(v) for all tax exposures (including contingent exposures);
(vi) for any exposures (including contingent exposures) relating to
supplier discount arrangements;
(vi) in respect of all litigation;
(vii) in respect of all claims and returns;
(viii) for all management fees;
(ix) for bonuses payable; and
(x) in respect of all customer rebates.
(c) The Company has no outstanding liability for Taxation of any kind
which has not been fully provided for or is not provided for in the
Accounts.
(d) The Company does not have any liability for any matter (whether
actual, accrued, contingent or potential) which is not shown or
otherwise specifically provided for or noted in the Accounts.
(e) All of the debts which are reflected in the Accounts as owing to the
Company (apart from bad and doubtful debts to the extent to which
they have been provided for in the Accounts) or which have
subsequently been recorded in the books of the Company have realised
or will realise in the normal course of collection and within three
months of Completion their full value as included in the Accounts or
in the books of the Company, and no such debt nor any part of it has
been outstanding for more than two months from its due date for
payment.
12. Since the Accounts Date:
(a) there has been no adverse change in the financial condition or
prospects of Huizhou TCL and Huizhou TCL has entered into
transactions and incurred liabilities solely in the ordinary course
of trading;
(b) no resolution of any members of Huizhou TCL in general meeting has
been passed other than resolutions relating to the business of the
annual general
Page 16
meeting which was not special business;
(c) Huizhou TCL has not declared, paid or made and is not proposing to
declare, pay or make any dividend or other distribution save and
except for the dividends declared pursuant to the copy board
resolutions of Huizhou TCL attached as Exhibit C to this Agreement;
(d) the financial year end of Huizhou TCL has not changed from December
31;
(e) no event has occurred which would entitle any third party (with or
without the giving of notice) to call for the repayment of
indebtedness owed by Huizhou TCL prior to its normal maturity date;
(f) the business of Huizhou TCL has been carried on in the ordinary and
usual course and in the same manner (including nature and scope) as
in the past, 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 Huizhou TCL;
(g) no asset of Huizhou TCL has been acquired or disposed of on capital
account, or has been agreed to be acquired or disposed of, otherwise
than in the ordinary course of business and Huizhou TCL has not
disposed of or parted with possession of any of its property, assets
(including know-how) or stock in trade or made any payments, and no
contract involving expenditure by it on capital account has been
entered into by Huizhou TCL, and no liability has been created or
has otherwise arisen (other than in the ordinary course of business
as previously carried on);
(h) there has been no disposal of any asset (including stock) or supply
of any service or business facility of any kind (including a loan of
money or the letting, hiring or licensing of any property whether
tangible or intangible) in circumstances where the consideration
actually received or receivable for such disposal or supply was less
than the consideration which could be deemed to have been received
for tax purposes;
(i) no event has occurred which gives rise to a tax liability to Huizhou
TCL on deemed (as opposed to actual) income, profits or gains or
which results in Huizhou TCL becoming liable to pay or bear a tax
liability directly or primarily chargeable against or attributable
to another person, firm or company; and
(j) no remuneration (including bonuses) or benefit payable to any
officer or employee of Huizhou TCL has been increased nor has
Huizhou TCL undertaken any obligation to increase any such
remuneration at any future date with or without retrospective
effect.
13. XX. XXXX HEREBY EXPRESSLY ACKNOWLEDGES THAT THE NAMTAI COMMON STOCK HAS
NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND IS PURCHASING THE NAMTAI
COMMON STOCK FOR HIS OWN ACCOUNT AND NOT WITH A VIEW TO ANY RESALE OR
DISTRIBUTION THEREOF IN THE UNITED STATES OR TO U.S. PERSONS. XX. XXXX
FURTHER AGREES THAT UNTIL THE DATE
Page 17
WHICH IS ONE YEAR AFTER THE COMPLETION DATE NO RESALES OR OTHER TRANSFERS
OF THE NAMTAI COMMON STOCK SHALL BE PERMITTED AT ALL AND, FOLLOWING SUCH
FIRST ANNIVERSARY OF THE COMPLETION DATE, ALL RESALES AND OTHER TRANSFERS
OF THE NAMTAI COMMON STOCK SHALL BE MADE (a) WITHIN THE UNITED STATES IN
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR (b) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT.
14. XX. XXXX ACKNOWLEDGES AND AGREES THAT PRIOR TO ANY PERMITTED RESALE OR
OTHER TRANSFER OF THE NAMTAI COMMON STOCK IN ACCORDANCE WITH CLAUSE 13,
ABOVE, THE LEGEND AFFIXED TO THE SHARE CERTIFICATE REPRESENTING THE NAMTAI
COMMON STOCK WILL NEED TO BE REMOVED AND THAT NTEI'S TRANSFER AGENT FOR
THE NAMTAI COMMON STOCK MAY REQUIRE FROM XX. XXXX CERTAIN UNDERTAKINGS,
REPRESENTATIONS AND OPINIONS OF COUNSEL AS A PRECONDITION TO REMOVING SUCH
LEGEND IN ACCORDANCE WITH NORMAL MARKET PRACTICE FOR RESALES OF SECURITIES
PURSUANT TO RULE 144 UNDER THE SECURITIES ACT.
Page 18
SCHEDULE 3
MATTERS TO BE TRANSACTED AT COMPLETION
At Completion:
1. XX. XXXX'X OBLIGATIONS
(a) Xx. Xxxx shall deliver to NTEI or procure the delivery to NTEI of:
(i) duly executed instruments of transfer (in a form complying
with all applicable laws) in respect of the JA Shares in
favour of NTEI and/or its nominee together with the relative
certificates for such JA Shares;
(ii) such other documents as may be required to give good title to
the JA Shares or which may be necessary to enable NTEI or its
nominee to procure the registration of the same in the name of
NTEI or its nominee;
(iii) letters of resignation duly executed under seal of all the
existing directors, of JA in each case acknowledging that they
have no outstanding claims whether for compensation for loss
of office or otherwise howsoever;
(iv) in respect of JA, share certificates in respect of all issued
shares together with instruments of transfer and declarations
of trust (duly stamped, where appropriate) in respect of any
shares which are held by nominees; the statutory and minutes
books (which shall be written up to but not including the date
of Completion), share certificate books; common seal,
certificate of incorporation, business registration
certificate, together with copies of the memorandum and
articles of association, cheque books, books of account (all
complete and written up to Completion), copies of all tax
return(s) filed and related correspondence (if any), all
current insurance policies, all contracts (if any) to which JA
is a party and all other documents and records of JA;
(v) copy of the latest certificate of approval of Huizhou TCL as
the evidence of the JA Huizhou Shareholding held by JA
together with a copy of the capital contribution verification
report issued by an independent accountant evidencing the fact
that US$2,682,000 registered capital has been paid in by JA to
Huizhou TCL;
(vi) such documentation as NTEI may reasonably require evidencing
the fulfilment by Xx. Xxxx of the Condition referred to in
Clause 2.1, including without limitation copies (certified by
Xx. Xxxx as a true and correct copy of the original) of the
following :-
(aa) the JAMF Shareholding Transfer Letter, duly executed for
and on behalf of JA;
Page 19
(bb) written resolution of all the directors of JA approving
the transfer referred to in sub-paragraph (aa) above.
(b) Xx. Xxxx shall procure a board meeting to be held of JA and at which
resolutions shall be passed (where appropriate):
(i) to approve and give effect to all of the matters referred to
above;
(ii) to approve NTEI and/or its nominee for registration as the
holder of the JA Shares;
(iii) to accept the resignation of the directors referred to in
paragraph 1(a)(iii) above and to appoint as new directors of
JA, such persons as NTEI may require, all with effect from the
close of business of the relevant meeting;
(iv) to change the authorised signatories of JA to operate their
bank accounts and otherwise conduct their business as NTEI may
require; and
(v) to deal with and resolve upon such other matters as NTEI shall
reasonably require for the purposes of giving effect to the
provisions of this Agreement.
2. NTEI'S OBLIGATIONS
(a) NTEI shall deliver or procure the delivery to Xx. Xxxx (as agent and
trustee for Top Scale) of :-
(i) duly executed instruments of transfer (in a form complying
with all applicable laws) in respect of the MF Shares in
favour of Top Scale and/or its nominee together with the
relative share certificates for such MF Shares;
(ii) such other documents as may be required to give good title to
the MF Shares or which may be necessary to enable Top Scale
and/or its nominee to procure the registration of the same in
the name of Top Scale and/or its nominee; and
(iii) a letter of resignation duly executed under seal of Xx. Xxx
Xxxx Xxxx as a director of MF acknowledging that he has no
outstanding claims against MF whether for compensation for
loss of office or otherwise howsoever;
(b) NTEI shall pay to Top Scale the Cash Consideration by telegraphic
transfer (to such account, details of which shall be notified by Xx.
Xxxx to NTEI 3 Business Days prior to the Completion Date);
(c) NTEI shall hold a board meeting or otherwise adopt resolutions
authorizing and approving the issuance of the Namtai Common Stock to
Top Scale.
Page 20
3. MUTUAL OBLIGATIONS
Xx. Xxxx and NTEI shall severally procure a board meeting to be held of MF
and at which resolutions shall be passed (where appropriate) to approve
and give effect to the matters referred to in paragraph 1(a)(vi)(aa) and
2(a) above.
Page 21
SCHEDULE 4
LEGEND
THE SHARES OF NAM TAI ELECTRONICS, INC. REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO A U.S. PERSON OTHER THAN IN A TRANSACTION REGISTERED OR EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT. ACCORDINGLY, UNTIL THE DATE WHICH IS ONE
YEAR AFTER THE DATE OF ISSUANCE OF THIS CERTIFICATE, NO RESALES OR OTHER
TRANSFERS OF THIS CERTIFICATE OR THE SHARES OF NAMTAI COMMON STOCK REPRESENTED
HEREBY SHALL BE PERMITTED AT ALL AND, FOLLOWING SUCH FIRST ANNIVERSARY OF THE
DATE OF ISSUANCE, ALL RESALES AND OTHER TRANSFERS OF THIS CERTIFICATE AND THE
SHARES OF NAMTAI COMMON STOCK REPRESNETED HEREBY SHALL BE MADE ONLY (A) WITHIN
THE UNITED STATES IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR (B)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER SECURITIES ACT.
Page 22
SCHEDULE 5
JAMF SHAREHOLDING TRANSFER LETTER
JASPER ACE LIMITED
Sea Meadow House
Blackburne Highway
Road Town, Tortola
British Virgin Islands
Date:
Crystal Island Investment Limited
The Xxxxxx Building
216 Man Street
Road Town
Tortola
British Virgin Islands
Dear Sirs,
We refer to your letter dated July 10, 2003. Pursuant to that letter and the
understanding between us, we, Jasper Ace Limited, have been holding the
following Bearer Share Certificates ("SHARE CERTIFICATES") of Mate Fair Group
Limited for you as your trustee and agent and to your Company's strict order.
You have instructed us that that your Company no longer wishes us to hold these
Share Certificates on such basis and, in accordance with such instruction, we
herewith return these Share Certificates to your Company for your safe custody.
Share Certificate Nos. No. of Shares
---------------------- -------------
-6- -1-
-7- -1-
-8- -1-
-9- -1-
-10- -1-
-11- -1-
-12- -1-
-13- -1-
-14- -1-
-15- -1-
-16- -1-
-00- -0-
-00- -0-
-00- -0-
-00- -0-
Xxxx 23
-21- -691-
-22- -461-
-------
-1,167-
=======
Please acknowledge receipt of the above Share Certificates by signing and
returning the duplicate of this letter to us.
Yours faithfully, Accepted by:
For and on behalf of For and on behalf of
Jasper Ace Limited Crystal Island Investment Limited
____________________________ _______________________________
( )
Name in Block Letter
Dated: _______________________
Page 24
EXECUTED by the parties in Macau Special Administrative Region of the People's
Republic of China
XX. XXXX TOE XXXXX )
) _______________________
Witnessed by
_______________________
Name:
Title:
For and on behalf of )
)
NAM TAI ELECTRONICS, INC. )
)
by XX. XXX XXXX XXXX ) _______________________
Witnessed by
_______________________
Name:
Title:
Page 25
