Exhibit 2.1
DATED 17TH THIS DAY OF SEPTEMBER 2004
BETWEEN
SECURED DIGITAL APPLICATIONS (M) SDN BHD (Co. No.: 174661-U )
("THE INVESTOR")
AND
XXXXXXX SERVICE CENTRE (M) SDN BHD ( Company No: 497893-T)
("GSC")
AND
XXXXXXX IT HOLDINGS SDN BHD (Company No: 504264-K))
("THE COMPANY")
AND
THE PERSONS NAMED IN APPENDIX 1 HERETO
("THE EXISTING SHAREHOLDERS")
*****************************************************
SUBSCRIPTION AGREEMENT
*****************************************************
MESSRS. XXXXXX XXXXXXXXX
ADVOCATES & SOLICITORS
Xxx 0X, Xxxxx 0, Xxxxx X,
Xxxxxxxx Xxxxxxx Xxxxxxxxx,
Xxxxx Xxxxxx
00000 Xxxxx Xxxxxx
Tel: 00-00000000
Fax: 00- 00000000
(REF:RZ /2/1003)
THIS AGREEMENT is dated this 17th day of September 2004
BY AND BETWEEN
(1) SECURED DIGITAL APPLICATIONS (M) SDN BHD (Company No.:174661_-U) a private
limited company incorporated in Malaysia and having its registered 00X,
Xxxxx 0/00, 00000,Xxxxxxxx Xxxx, Xxxxxxxx Darul Ehsan (hereinafter referred
to as "the Investor");
AND
(2) XXXXXXX SERVICE CENTRE (M) SDN BHD (Co. No.: 497893-T) a private limited
company incorporated in Malaysia and having its registered office at 00-X,
Xxxxx 00/00, Xxxxxxxx Xxxx Xxxxxxxx ( hereinafter referred to as "GSC")
AND
(3) XXXXXXX IT HOLDINGS SDN BHD (Co No: 504264-K) a private limited company
incorporated in Malaysia and having its registered office at 00-X, Xxxxx
00/00, Xxxxxxxx Xxxx Xxxxxxxx (hereinafter referred to as "the Company");
AND
(4) The persons named in Appendix 1 hereto ("the Existing Shareholders").
WHEREAS :-
(A) GSC is in the business of providing computer sales and services and other
services in the information technology industry.
(B) The Company is in the business of trading and retailing of computers in
particular Apple Computers, computer software and in other related
information technology.
(C) The Company presently has investments in the Related Companies;
------------------------- ---------------------- --------------------
Company Ordinary shares of Percentage of
RM1.00 each ordinary shares (%)
------------------------- ---------------------- -------------------
GZ 100,000 50%
------------------------- ---------------------- --------------------
GITD 500,000 100%
------------------------- ---------------------- --------------------
GF 915,000 100%
------------------------- ---------------------- --------------------
(D) The Company is desirous of raising additional capital to fund its working
capital needs, retail activities and other operations and the working
capital needs of the Related Companies.
(E) The Existing Shareholders are the founders of the Company and the Related
Companies.
1
(F) The Investor is desirous of investing in the Company through GSC and the
Existing Shareholders are desirous of such investment and the Investor and
the Existing Shareholders did execute the LOI.
(G) Pursuant to the LOI, the parties agreed that the investment by the Investor
into the Company shall be structured and will involve the execution of the
following agreements;
i. the GSC Share Sale Agreement;
ii. this agreement being the Subscription Agreement, the Shareholders
Agreement and the GITH Management Agreements;
(H) The maximum amount proposed to be invested by the Investor is
RM2,500,000.00 ("the Principal Amount") comprising:
(i) a sum of RM100,000.00 to the Existing Shareholders pursuant to the GSC
Share Sale Agreement; and
(ii) a sum of up to RM2,400,000.00 for subscription of the Subscription
Shares and the Subscription RCPS on the terms following.
(I) The Agreements set out in Recital G above shall be executed simultaneously
with each other on the terms herein contained.
NOW THEREFORE THIS AGREEMENT WITNESSETH as follows :-
1. INTERPRETATION AND DEFINITIONS
In this Agreement, unless otherwise required or indicated by the context,
the singular shall include the plural and vice versa, words indicating any
one gender shall include the other genders, words indicating natural
persons shall include legal persons and bodies corporate and vice versa,
terms defined elsewhere in this Agreement shall have the meanings
respectively assigned to them and the following terms shall have the
meanings respectively assigned to them hereunder, namely :-
"Act" meansthe Malaysian Companies Act, 1965, as amended or
revamped from time to time;
"Agreement" means this Subscription Agreement to govern the terms of the
subscription by GSC for the Shares and RCPS in the Company;
"Advances' means the loans and advances (but excluding Accrued
Salaries) made;
(i) to the Company and/or its subsidiaries by GC and/or the
Existing Shareholders and/or Directors and that remain
outstanding as at the date of this Agreement ("Advances to
the Company");
(ii) by the Company and/or its subsidiaries to GC and/or to the
Existing Shareholders and/or Directors and that remain
outstanding as at the date of this Agreement ("Advances from
the Company");
2
"Accrued Salaries" means salaries or any portion thereof due and payable to the
Existing Shareholders by the Company up until 31st August
2004 but that has been accrued and remains unpaid todate;
"Audited Accounts" means the audited balance sheet and profit and loss accounts
of the Company for the financial year ending 31st December
2003;
"Balance Sheet Date"means the management accounts of the Company and the Related
Companies which shall include profit and loss statements,
balance sheets and cash flow statements drawn up until
31/8/04;
"Bank Guarantees" means any and all personal guarantees that have been
provided by the Existing Shareholders to financial
institutions to secure credit facilities granted to the
Company and/or the Related Companies;
"Board" means the board of Directors of the Company for the time
being;
"Business" means the business as described in the Recitals hereto
"Business days" means all days of the week excluding Saturdays, Sundays and
public holidays in Malaysia;
"Company" means Xxxxxxx IT Holdings Sdn Bhd (Company No.: 504264-k)
presently with an authorised share capital of Ringgit
Malaysia Five Million only (RM5,000,000.00) divided into
five million (5,000,000) ordinary shares of RM1.00 each only
of which One Million Eight Hundred and Eighty Six Thousand
(1,886,000-00) ordinary shares have been issued and are
fully paid-up ("the Company's Existing Paid Up Capital").
"Conversion" means the conversion of the Subscription RCPS into Shares in
the Company pursuant to the terms contained herein;
"Completion" means in respect of the Subscription Shares and the
Subscription RCPS respectively the completion of the
subscription of the Subscription Shares or the Subscription
RCPS by the Investor subject and pursuant to the terms and
conditions of this Agreement;
"Default" means any breach by the Company or the Existing Shareholders
of any material covenant, warranty or undertaking in this
Agreement or the Shareholders Agreement and where such
breach is capable of being remedied is not remedied within
thirty (30) days from the date of a notice in writing from
the Investor and/or GSC to remedy;
3
"Digital Boutique
Business" means the new business of setting up an IT lifestyle store
selling IT products and accessories by introducing customers
to the concept of living a digital lifestyle, proposed by
the Existing Shareholders to be undertaken by GF;
"Director and
Directors" means one or more directors of the Company for the time
being;
"Due Diligence" means the legal, technical and financial due diligence
exercise conducted or to be conducted by the Investor
pursuant to this Agreement;
"Existing
Shareholders" means the holders of the ordinary shares in the Company as
at the date of this Agreement and more specifically
described in Appendix 1 hereto;
"GC" means Xxxxxxx Connection (M) Sdn Bhd (Company No.:
490780-M);
"GF" means Xxxxxxx Focus (M) Sdn Bhd (Company No.: 316966-M) a
company incorporated in Malaysia which presently has an
authorised share capital of Ringgit Malaysia One Million
(RM1,000,000) only of which Nine Hundred Fifteen Thousand
(915,000) ordinary shares of par value RM1.00 each only have
been issued and are fully paid-up;
"GITD means Xxxxxxx IT Distribution (M) Sdn Bhd (Company No.:
480471-V) a company incorporated in Malaysia which presently
has an authorised share capital of Ringgit Malaysia Five
Hundred Thousand (RM500,000) only of which Five Hundred
Thousand (500,000) ordinary shares of par value RM1.00 each
only have been issued and are fully paid-up;
"GITH Management
Agreements" means the;
(i) agreement between the Existing Shareholders and the
Company to regulate the provision of management
services, particularly in relation to sales and
operations, by the Existing Shareholders to the
Company, to be executed in the form annexed hereto as
Annexure 2.
(ii) agreement between the Investor and the Company to
regulate the provision of management services,
particularly in relation to finance and administration
services by the Investor to the Company, to be executed
in the form annexed hereto as Annexure 3.
"GSC" means Xxxxxxx Service Centre (M) Sdn Bhd (Company No.:
497893-T), a company incorporated in Malaysia which
presently has an authorised share capital of Ringgit
Malaysia
4
One Hundred Thousand only (RM100,000.00) of which One
Hundred Thousand (100,000) ordinary shares of par value
RM1.00 each only have been issued and are fully paid-up
("the GSC Issued Shares");
"GSC Share Sale
Agreement" means the agreement for the sale of the entire GSC Issued
Shares by Ng Siew Choo and Xxxx Twee Yom to the Investor for
RM100,000.00 ("xxx XXX Share Sale Consideration") only to be
executed simultaneously with this Agreement;
"GZ" means Xxxxxxx Zone (M) Sdn Bhd (Company No.: 498849-X), a
company incorporated in Malaysia with an authorized capital
of RM500,000 of which 200,000 ordinary shares of par value
RM1.00 each only have been issued and fully paid up ("the GZ
Issued Shares");
"Issue Price" means the price at which each Share and/or RCPS shall be
issued to GSC which shall be RM1.00 each only;
"IPR" means all intellectual property rights of the Company
including without limitation all know- how, confidential
information, copyrights in all R & D (in any and all media
however made or stored), patents, trademarks and registered
designs owned by and used by the Company and/or its
subsidiaries and /or developed by the Company and/or its
subsidiaries whether registered or not;
"LOI" " means the Letter of Intent dated 20th July 2004 executed
between the Existing Shareholders and the Investor;
"Material Contracts" means any arrangement, agreement or contract which is;
(i) onerous on the Company; and
(ii) outside the ordinary course of Business;
(iii) exceeds a sum of RM250,000.00
"Operating Profit" means the operating profit of the subject company before
adjustments for depreciation term loan interest and tax but
excluding all gains and losses arising from the disposal of
assets;
"Parties" means the Investor, GSC, the Company and the Existing
Shareholders;
"Person or Persons" means one or more individuals, partnerships, limited
liability companies, corporations, trusts, unincorporated
associations or government authorities or agencies;
5
"RCPS" means the one hundred thousand (100,000) redeemable
convertible preference shares with a par value of RM1.00
each only in the Company with the rights and benefits as set
out in Appendix 3 herein, to be subscribed for at the Issue
Price, by the Investor through GSC;
"Related Companies" means GF, GITD and GZ where the Company is a shareholder;
"Ringgit Malaysia
or RM" means the lawful currency of Malaysia
"Share(s)" means ordinary shares of Ringgit Malaysia One (RM1.00) each
only in the Company;
"Shareholder(s)" means the holders of Shares or RCPS in the Company;
"Shareholders
Agreement" means the agreement between GSC and the Existing
Shareholders to regulate their agreement as members of the
Company to be executed simultaneously with the execution of
this Agreement in the form annexed hereto as Annexure 1;
"Subsidiary" means the meaning ascribed to it in Section 5 of the
Act;
"Subscription Date" means in relation to the subscription by the Investor of the
Shares and RCPS, the date falling fourteen (14) business
days after the Unconditional Date;
"Subscription
Shares" means the 500,000 Shares in the Company to be subscribed for
by GSC at the Issue Price per Share on the terms herein
contained;
"Subscription RCPS" means the 100,000 RCPS in the Company to be subscribed for
by GSC at the Issue Price per RCPS on the terms herein
contained;
"Unconditional
Date" means the date this Agreement has become unconditional
pursuant to Clause 3.2 herein;
"Warranties" means the representations, warranties and undertakings
contained in Appendix 2 hereto.
2. AGREEMENT
2.1 At the request of the Existing Shareholders and the Company, the Investor
hereby agrees to subscribe through GSC for;
(a) the Subscription Shares at the Issue Price per Share; and
(b) the Subscription RCPS at the Issue Price per RCPS
subject to the achievement of the conditions precedent set out in Clause 3
hereto and the Existing Shareholders hereby agree to cause the Company to
6
issue the Subscription Shares and the Subscription RCPS to GSC on the terms
and conditions contained herein.
3. CONDITIONS PRECEDENT
3.1 This Agreement is conditional upon the achievement of the following
conditions precedent ("the CP's") within seven (7) Business Days from the
date of this Agreement unless extended by mutual agreement of the parties;
(a) the completion of the GSC Share Sale Agreement on the terms therein
contained;
(b) the execution of the Shareholders Agreement and the GITH Management
Agreements;
(c) the receipt by the Investor of a certified true copy of a resolution
of the board of directors of the Company ;
(i) duly authorising any director or directors to execute this
Agreement and any other agreements or documentation related
thereto;
(ii) approving the issuance of the Subscription Shares and the
Subscription RCPS in favour of GSC on the terms and conditions of
this Agreement;
(iii)approving the appointment of three (3) persons nominated by the
Investor as Directors to the Board of the Company with effect
from the Completion Date;
(iv) approving the reclassification of the share capital of the
Company to include the RCPS;
(d) receipt by the Investor of a certified true copy of a resolution of
the Existing Shareholders of the Company approving;
(i) the waiver of their pre-emption rights in connection with the
issuance of the Subscription Shares and Subscription RCPS;
(ii) the issuance of the Subscription Shares and the Subscription RCPS
to GSC on the terms and conditions of this Agreement and the
Shareholders Agreement.
(iii)the appointment of three (3) persons nominated by the Investor
as Directors to the Board of the Company with effect from the
Completion Date;
(e) receipt by the Investor of a certified true copy of a resolution of
the Existing Shareholders of the Company approving all requisite
amendments to the Company's Articles of Association to ensure
conformity with the terms of this Agreement and the Shareholders
Agreement.
(f) all other requisite resolutions, duly executed and completed, relating
to the issuance of the Subscription Shares and the Subscription RCPS
shall be deposited with the Investor's solicitors;
7
(g) the execution and return to the Investor of ;
(i) a statutory declaration executed by any two (2) directors of the
Company confirming that no legal proceedings have been commenced
against the Company and/or the Related Companies, that no winding
up petitions have been issued against the Company and/or the
Related Companies and that neither the Company nor any of the
Related Companies have been wound up;
(ii) statutory declarations executed by the Existing Shareholders
declaring that no legal proceedings have been commenced against
them and that no bankruptcy petitions have been issued against
them and that they have not been declared bankrupt;
(iii)a letter of undertaking from the Existing Shareholders and/or
Directors of the Company confirming that they shall ensure that
all technical information required or necessary for the Business
of the Company and/or the Related Companies, where developed by
the Company or the Related Companies whether solely or jointly
with others is or shall forthwith be owned by the Company or the
Related Companies respectively either solely or jointly with
others (as the case may be) and that they shall ensure that all
future technical information developed by the Company or the
Related Companies whether solely or jointly with others will
belong either solely by the Company or the Related Companies
respectively or jointly with others (as the case may be);
(iv) all letters and undertakings as may be required pursuant to the
legal due diligence exercise undertaken.
(h) The Company having forwarded to the Investor the following
information/documents;
(i) all documentation in connection with approvals, consents,
licences, authorizations and exemptions from the relevant
authorities in connection with the Business of the Company and/or
the Related Companies; and
(ii) a business plan for the Company and the Related Companies,
particularly in relation to the proposed Digital Boutique
Business acceptable to the Investor;
(i) the receipt by the Investor of the audited accounts of the Company and
each of the Related Companies for the financial years ended
31/12/2001, 31/12/2002 and 31/12/2003 and the management accounts of
the Company and each of the Related Companies as at the Balance Sheet
Date;
(j) completion of the Due Diligence exercise and the Investor being
satisfied with the results of the Due Diligence exercise particularly
that the warranties and representations are true and that there has
been no material adverse change in the condition (financial or
otherwise) of the Company and/or the Related Companies since the date
of the LOI;
8
(k) the full compliance with and satisfaction of all such other conditions
as may be advised by the Investor's legal counsel.
(l) the Investor shall have obtained the approval of its Board of
Directors for this investment and to enter into this Agreement; and
(m) the Investor and the Existing Shareholders have arrived at mutually
agreed terms in relation to the treatment and/or settlement of the
Accrued Salaries and/or the Advances.
(n) the receipt by the Investor of certified true copies of resolution of
both the respective Shareholders and the respective Boards' of
Directors of each of the Related Companies approving the appointment
of three (3) persons nominated by the Investor as Directors to the
respective Boards' of each of the Related Companies with effect from
the Completion Date and to subsist for such times as GSC is the holder
of the Subscription Shares or the Subscription RCPS.
3.2 The date falling on the day on which the last of the CP's have been
achieved and fulfilled shall be the Unconditional Date for this Agreement.
3.3 The CPs provided herein are provided for the benefit of the Investor and
may be waived in part or whole at the sole and absolute discretion of the
Investor without in any prejudicing the rights of the Investor.
4. THE SUBSCRIPTION
4.1 Within seven (7) days from the fulfilment /satisfaction of all Conditions
Precedents, the parties shall do the following for the Completion of the
subscription of the Subscription Shares and the Subscription RCPS;
(i) GSC shall deliver to the Company a bankers cheque/cashiers order or
confirmation of a telegraphic transfer in favour of the Company for
the sum of Ringgit Malaysia Six Hundred Thousand (RM600,000.00) only;
and
(ii) The Company shall in exchange therefore, issue and deliver to GSC the
share certificates pertaining to the Subscription Shares and the
Subscription RCPS duly executed by the Company and shall enter the
name of GSC as the holder of the Subscription Shares and the
Subscription RCPS ("the Completion Date")
4.2 Until Conversion on the terms of this Agreement the holders of the
Subscription RCPS shall in addition to the rights set out in Appendix 3
hereto be entitled to receive notices and to vote at all general meetings
of the Company and at any such meeting, each Subscription RCPS shall have
and be entitled to eighteen (18) votes.
4.3 The RCPS issued to GSC pursuant to the terms of this Agreement shall upon
conversion allotment and issue ("the Converted RCPS") rank for all
dividends and shall thereafter be entitled to all rights, bonus issues,
stock splits accruing to the Converted RCPS or the Shares and in all other
respects rank pari passu with the existing Shares of the Company except
that the Converted RCPS shall not carry any entitlement to any dividends
declared on the Shares of the Company prior to the date of issue and
allotment of the Converted RCPS.
9
4.4 For the avoidance of any doubt, neither the Investor nor GSC shall be
obliged to exercise the Conversion rights attached to the Subscription RCPS
in the event the Company and/or the Existing Shareholders are in material
breach of any of the Warranties made by it/them in this Agreement or the
Shareholders Agreement or in the event there has been a material adverse
change in the condition (financial or otherwise) of the Company.
4.5 At the request of the Existing Shareholders, the Investor hereby agrees to
indemnify the Existing Shareholders to the extent of fifty-six percent
(56%) of any amount for which the Existing Shareholders may become liable
pursuant to the Bank Guarantees.
4.6 It is further agreed between the Investor, the Company and the Existing
Shareholders that any or all amounts owing by GSC to the Company as at the
Balance Sheet Date shall continue to remain as a debt owing by GSC to the
Company on the existing terms until such time that the financial position
of GSC permits the repayment of the debt.
5. THE WARRANTIES
5.1 The Company and the Existing Shareholders jointly and severally make the
Warranties (as set out in Appendix 2) to the Investor and GSC or to any
person to whom the benefit of the Warranties are assigned pursuant to this
Agreement. Any disclosures made to the Investor by the Company and/or
Existing Shareholders shall be of no force or effect unless made in
writing.
5.2 The company and the Existing Shareholders acknowledge that the Investor and
GSC are entering into this Agreement in reliance upon the Warranties. The
Investor and GSC may rescind this Agreement at any time prior to the
Completion in the event of a material breach of any of the Warranties
without thereby incurring any liability to any of the other parties and
shall be entitled to avail itself to all remedies at law.
5.3 Each of the Warranties is without prejudice to any of the other Warranties
and no paragraph or sub-paragraph of Appendix 2 shall limit or govern the
extent or application of any other paragraph or sub-paragraph.
5.4 Each of the Warranties shall be construed as a separate and independent
warranty to the intent that the Investor and GSC shall have a separate
right of action in respect of each breach of them.
5.5 The Warranties shall continue in full force after Completion.
5.6 Each Existing Shareholder waives any right which he may have against the
Company or otherwise in respect of any misrepresentations or inaccuracies
in, or omission from, any information or advice supplied to them by
officers or employees or agents of the Company to enable them to give the
Warranties.
5.7 Where any statement in Appendix 2 is qualified by the expression "to the
best of the knowledge, information and belief of " or "as far as... is
aware" or any similar expression it shall be deemed to include an
additional statement that it has been made after due and careful inquiry.
5.8 At the Subscription Date, the Existing Shareholders and the Company shall
be deemed to have repeated the Warranties to the Investor , GSC and to any
person to whom the benefit of the Warranties has been assigned pursuant to
the terms of this Agreement with reference to the facts and circumstances
then subsisting.
10
5.9 The Warranties and indemnities contained herein shall not be affected by
any investigation by or on behalf of the Investor into the affairs of the
Company and notwithstanding the due diligence exercise carried out prior to
the signing of this Agreement.
5.10 All disclosure made by the Existing Shareholders to the Investors and GSC
pursuant hereto shall be made in writing.
5.11 The Existing Shareholders and the Company shall indemnify and keep the
Investor and GSC indemnified in respect of any loss, damage, liability,
claim, cost or expense which the Investor may incur, suffer or sustain,
whether directly or indirectly as a result of any breach of any of the
Warranties.
6. UNDERTAKINGS
6.1 The Company and the Existing Shareholders undertake to GSC that the terms
and conditions of the Shareholders Agreement shall be observed and
performed by the parties herein.
6.2 Each Existing Shareholder undertakes to GSC to exercise his/her votes as a
director of the Company and to manage the Company so that the terms and
conditions of the Shareholders Agreement are observed and performed by the
parties herein.
6.3 The Company and the Existing Shareholders undertake that GSC shall;
a) be furnished with a copy of the annual business plan for the Company
and the Related Companies, (setting out inter alia strategies, plans
and targets of the Business) and including but not limited to
operating and capital budgets no later than one (1) month before the
start of each financial year of the Company and the Related Companies
provided always that in respect of any financial year, GSC may at the
request of the Company and/or the Related Companies agree to extend
the time for submission of such budgets and/or information to GSC;
b) have access to the records and facilities of the Company at all times
and on a timely basis;
c) be entitled to appoint an accountant or such other qualified party to
oversee the accounting and/or finance function for the account of the
Company;
d) be promptly furnished with all such information as GSC may reasonably
require;
e) to appoint an auditor acceptable to GSC as auditor of the Company;
f) have the right of first refusal in relation to the Shares of the
Company as more specifically set out in the Shareholders Agreement;
6.4 The Existing Shareholders hereby undertake and confirm with the Investor
and GSC that the Principal Amount shall save and except with GSC's written
consent be applied for the following purposes;
11
Application Amount (RM)
(a) GSC Share Sale Consideration 100,000.00
(b) Working Capital for the Company 900,000.00
(c) Start up funding and Working capital for the
Digital Boutique Business 1,500,000.00
------------
Total 2,500,000.00
------------
6.5 The Existing Shareholders covenant and undertake with the Investor that
they shall take and do all necessary things to bring all corporate
secretarial matters of the Company and the Related Companies up-to-date
including the lodgement of all annual returns of the Company and/or the
Related Companies and/or to rectify any errors or omissions in its
corporate matters and/or books at their cost and expenses and shall
indemnify the Investor, GSC and the Company against all fines, penalties or
losses suffered by the Company and/or the Related Companies resulting
therefrom. 6.6 The Existing Shareholders hereby covenant and undertake with
the Investor and GSC that;
(a) that GC shall not participate in or in any way be involved in any
business that may be in competition, directly or indirectly, with the
Company and/or the Related companies;
(b) that the word "Xxxxxxx" shall be removed from the name of GC as soon
as possible and in any event before the expiry of three(3) months from
the date hereof;
(c) all existing and future patents or intellectual property rights
whatsoever at any time developed or created or acquired by or
developed or created in collaboration with or financed or sponsored by
the Company and/or the related Companies and all subsequent R & D
works shall belong solely to the Company or the Related companies
respectively;
(d) that the mandates given to all financial institutions with which
either the Company and/or the Related Companies maintain banking
accounts shall be forthwith cancelled and be replaced with a fresh
mandate whereby all cheques and/or other instructions to the financial
institutions by any of the Company or the Related Companies must be
signed by two (2) signatories, one (1) of which shall be a nominee of
GSC.
6.7 The Existing Shareholders have, in connection with the proposed investment
of the Principal Amount by the Investor through GSC, warranted to the
Investor and GSC that for the 12 month period commencing from the
Completion Date that;
6.7.1the Company and GZ shall collectively achieve an Operating Profit, on
a consolidated basis, which at a minimum shall be RM350,000.00 ("the
Group Profit Guarantee");
6.7.2and the Existing Shareholders have accordingly agreed to make up any
shortfall in the Group Profit Guarantee by paying in cash the
differential amount into the Company respectively for such shortfalls
within seven (7) days of the determination of such shortfall (if any)
by the Auditors.
6.8 The Existing Shareholders shall ensure that the following bank accounts are
closed:
i) Current Account No 3993366600 opened by GITH in Public Bank Bhd , PJ
Section 14 Branch;
12
ii) Current Account No 3104888628, opened by GZ in Public Bank Bhd , PJ
New Town 14 Branch
6.9 The Existing Shareholders hereby covenant, undertake and agree with GSC and
the Investor that pending the completion of this transaction that they
shall not breach or cause to be breached any of the matters set out in
Appendix 2 hereto.
7. COSTS
7.1 The Company shall pay all secretarial costs in connection with all matters
related to or incidental to the requisite amendments to be made to its
articles including but not limited to all costs and expenses in relation to
the issuance of the Shares and the RCPS and the stamp duties on this
Agreement.
7.2 The Existing Shareholders, GSC and the Investor shall each bear their own
legal and third party professional fees with respect to the transaction
including but not limited to the legal, technical and financial Due
Diligence fees, if any.
8. LETTER OF INTENT
The LOI shall be deemed to be superceded by the terms of this Agreement.
9. CONFIDENTIALITY
9.1 The parties hereto hereby covenant and undertake with each other that they
shall, NOT during the period of this Agreement or at any time thereafter,
divulge or communicate to any person or Persons any confidential
information, research and development, trade secrets and the like relating
to, belonging to or disclosed by the Company, the Related Companies and/or
the Investor to the other parties to this Agreement and such confidential
information shall include all corporate, financial or marketing information
relating to the respective parties and/or the Business or any dealings,
transactions or affairs or other information relating to the parties
pertaining to the Company and its Business. For the purposes of this Clause
9 "confidential information" shall mean all information including but not
limited to this Agreement, know-how, data, specifications, reports and
other materials, whether in written, oral, electronic or visual form, but
does not include information which at the time of disclosure thereof, is in
the public domain or, after disclosure, becomes part of the public domain
by publication or otherwise, through no fault of the parties or any of
them.
10. MUTUAL SUPPORT
10.1 The parties undertake to do or to procure the doing of such things and to
perform or procure the performance of all acts necessary for or incidental
to the putting into effect or the maintenance of this Agreement and to deal
with each other and with the Company in good faith.
11. LAW
11.1 The parties hereto hereby agree to and shall submit to the jurisdiction of
the Malaysian Courts.
13
11.2 This Agreement shall be governed by and interpreted by the laws of
Malaysia.
12. NOTICES
12.1 Any notice given by or to any of the parties hereto or by or to the Company
in terms of this Agreement shall be given in writing and shall be delivered
by hand to the person present or sent by prepaid certificate of post to the
persons and addresses as stated in this Agreement or as may be as notified
to the Company Secretary from time to time whereupon such notice shall be
deemed to have been received when so delivered by hand or sent by telefax
or five (5) days after being sent by prepaid certificate of post.
13. GENERAL
13.1 This Agreement constitutes the entire agreement between the parties
regarding the subject matter hereof. No agreements, guarantees or
representations, whether verbal or in writing, have been concluded, issued
or made, upon which either party is relying in concluding this Agreement,
save to the extent set out herein.
13.2 The headings appearing in this Agreement have been used for reference
purposes only and will not affect its interpretation.
13.3 No indulgence, leniency or extension of time which a party (the "grantor")
may grant or show to the other, will in any way prejudice the grantor or
preclude the grantor from exercising any of his rights in the future. Any
waiver of any breach of this Agreement shall not be deemed to apply to any
future breach of that Clause or any other Clause of this Agreement.
13.4 If any particular provision and/or term of this Agreement is found to be
defective or unenforceable or is cancelled for any reason (whether by any
competent Court or otherwise) then the remaining provisions and/or terms
shall continue to be of full force and effect. Each provision and/or term
of this Agreement shall accordingly be construed as entirely separate from
the other provisions and/or terms hereof.
13.5 Time wherever mentioned in this Agreement, shall be of the essence and
shall be strictly adhered to unless otherwise extended or varied in writing
by the parties.
13.6 This Agreement shall be deemed effective from the date on which it is
signed by the last in time of the parties to sign it.
13.7 Nothing in this Agreement shall be construed as creating a partnership
between the Parties or as giving rise to any duties save as provided
herein. Save as expressly provided herein the parties hereto shall not be
entitled and nor shall they have the power or right to bind, commit or
pledge the credit of the other Party.
13.8 The rights and remedies provided herein are cumulative and not exclusive of
any rights and remedies provided by law.
13.9 Any amendment, variation or modification of this Agreement shall be in
writing and mutually signed by the parties hereto.
13.10The provisions of this Agreement shall be binding on the respective
successors-in-title of the parties and assigns of the Investor. The
Investor shall be at liberty to assign all its rights benefits and interest
in this Agreement at anytime to any third party without the consent of or
reference to the other parties hereto.
14
14. FORCE MAJEURE
14.1 The parties hereto shall not have any claim of any nature whatsoever
against each other for failure to fulfil their obligations under this
Agreement by reason of force majeure.
14.2 If any obligation of either party is delayed by reason of force majeure,
then the period for carrying out such obligation shall be extended to such
date as is agreed by the parties hereto in writing.
14.3 For purposes of this Clause 14, "force majeure" shall include, without
limitation, any acts of God, fires, strikes, wars, riots, earthquakes,
floods, storms, typhoon, lockouts, compliance with governmental requests,
laws, regulations, orders or action.
15. SEVERANCE
(a) All provisions of this Agreement shall be separate and independent
stipulations and the invalidity of any provision hereof shall not
affect the enforceability of validity of any other provisions. (b) If
any provision of this Agreement were or may be declared void but would
be valid if the period of application were reduced or if some part of
such provision were deleted, the provision in question shall apply
with such modification as may be necessary to make it valid and
effective.
(c) If any provision of this Agreement were void and no modification is
capable of being made to make it valid and effective, then the said
provision shall be deemed to have been deleted.
[THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
by their duly authorised representatives in the manner hereinbelow.
SIGNED by LIM SOON XXXX )
For and/on behalf of )
SECURED DIGITAL APPLICATIONS ) /s/ Lim Soon Xxxx
(M) SDN BHD (Company No: 174661-U) )
in the presence of :-
Xxxx Zechariah
Advocate & Solicitor
Kuala Lumpur
SIGNED by NG SIEW CHOO )
For and/on behalf of ) /s/ Ng Siew Choo
XXXXXXX SERVICE CENTRE (M) SDN BHD )
(Company No: 497893-T)
in the presence of :-
Xxxx Zechariah
Advocate & Solicitor
Kuala Lumpur
SIGNED by XXXX TWEE YOM )
For and/on behalf of ) /s/ Xxxx Twee Yom
XXXXXXX IT HOLDINGS SDN BHD )
(Company No: 504264-K)
in the presence of
Xxxx Zechariah
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
XXXX TWEE YOM ) /s/ Xxxx Twee Yom
NRIC No. 651023-06-5405 )
in the presence of: )
Xxxx Zechariah
Advocate & Solicitor
Kuala Lumpur
SIGNED by )
NG SIEW CHOO ) /s/ Ng Siew Choo
NRIC No. 650220-06-5290 )
in the presence of: )
Xxxx Zechariah
Advocate & Solicitor
Kuala Lumpur
16
APPENDIX 1
The Existing Shareholders of the Company
Name /IC/ Address No of Shares held Percentage(%)
1) XXXX TWEE YOM 943,000 50%
(NRIC No: 651023-06-5405)
Xxxxxxxxxxxxxx Xxxxxxx
0, Xxxxx XX 00/00, Xxxxx Megah
47301 Petaling Jaya,
Sealngor.
Residence Address
E-1628, Xx Xxxxx, Xxxxx Xxxxx,
00000 Xxxxxxx, Xxxxxx
2) NG SIEW CHOO 943,000 50%
(NRIC No: 650220-06-5290)
Correspondence Address
31, Xxxxx XX00/00, Xxxxx XXX,
00000 Xxxxxxxx Xxxx
Xxxxxxxx.
Xxxxxxxxx Xxxxxxx
X0000, Xxxxx Xxxxxxx,
00000 Xxxxxxx, Xxxxxx
17
APPENDIX 2
THE REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF THE COMPANY AND THE EXISTING
SHAREHOLDERS
Fully acknowledging that the Investor is entering into this Agreement in
reliance on the Warranties and in consideration of the Investor's agreement to
subscribe through GSC for the Subscription Shares and the Subscription RCPS, the
Company and the Existing Shareholders jointly and severally represent, warrant
and undertake to the Investor that as at the date hereof;
(a) save as envisaged in this Agreement, the authorized and issued share
capital of the Company is as recited above; that no loan capital has
been issued by the Company that remains outstanding; that no share or
loan capital of the Company is under option and pending Completion no
share or loan capital will be created or issued and no options will be
granted by the Company which could result in the issue of any share or
loan capital;
(b) that save as disclosed to the Investor or save in the ordinary course
of business or save as mentioned herein neither the Company nor the
Related Companies have disposed of any of its material assets and
pending completion will not do so;
(c) that save as disclosed to the Investor , where the Company and the
Related Companies have carried on business, it has been carried on in
the ordinary and usual course and save as has been disclosed to the
Investor no contracts other than normal contracts necessitated by
day-to-day business have been entered into by the Company and/or the
Related Companies and that pending completion the said business will
be so carried on;
(d) that, to the best of its knowledge and belief, as at the date hereof
neither the Company nor the related Companies have knowingly done or
omitted to do any act or thing in contravention or breach of any of
the provisions of the relevant statutes or any enactment's or any
regulations made thereunder and pending completion will not do so;
(e) that save as disclosed, to the best of its knowledge and belief all
the returns particulars resolutions and other documents required to be
filed with or delivered on behalf of the Company and the Related
Companies to the Registrar of Companies pursuant to the provisions of
the relevant statutes have been correctly and properly made up and
filed or delivered;
(f) that save as disclosed to the Investor, neither the Company nor the
Related Companies have incurred any commitments for capital
expenditure such as would fall to be disclosed in their respective
accounts to be made up at the end of the current financial year and
pending completion shall not do so;
(g) that to the best of its knowledge and belief neither the Company nor
the Related Companies have save as has been disclosed to the Investor
given any guarantees which are outstanding and that they are not under
any liability to give any guarantees and pending completion shall not
do so;
(h) that save as disclosed to the Investor, there are no mortgages charges
debentures or other encumbrances on or over the whole or any part of
the assets of the Company or the Related companies and pending
completion none shall be created;
18
(i) that since the date hereof and pending completion no dividend bonus or
other distribution has been declared or shall be declared paid or made
on any share in the capital of the Company or the Related Companies;
(j) that save as disclosed to the Investor as at the date hereof the
persons who are the directors of the Company or the Related Companies
have not received any remuneration that may amount to a salary and
have no claims in relation to the same and pending completion shall
not be entitled to any such remuneration;
(k) that to the best of its knowledge and belief the returns made by the
Company and the Related Companies for taxation purposes are correct,
on a proper basis and are not the subject matter of any dispute with
or claim by the appropriate revenue authorities and that the directors
are not aware of any fact which might be the occasion of any dispute
or claim and that full provision has been made in the said balance
sheet for all taxation which has been or may be assessed in respect of
or calculated by reference to profits income or gains of the Company,
and respectively for the Related Companies earned or accrued up to and
including the date hereof;
(l) the Company has the power and authority to enter into this Agreement
and to do all acts and things necessary to give full effect to the
terms and conditions of this Agreement and has taken all requisite
corporate , governmental action and obtained all the requisite
approvals to enable it to enter into and perform this Agreement.
(m) there is no option, right to acquire, mortgage, charge, pledge, lien
or other form of security or encumbrance on, over or affecting the
assets of the Company or the Related Companies 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 and pending completion, no option, right to acquire,
mortgage, charge, pledge, lien or other form of security or
encumbrance on over or affecting the assets of the company or the
Related Companies shall be granted or permitted.
(n) all information given in the Recitals, the Appendices and the
Schedules hereto are true, complete and accurate in all material
respects.
(o) the Company will promptly notify in writing the Investor of any matter
or thing which is a breach of or inconsistent with any of the
Warranties or other provisions hereof which would or might entitle the
Investor to resile from this Agreement or claim damages under it;
(p) any consent, licence, approval or authorisation of any governmental
authority in Malaysia which is required in connection with the
execution, performances, validity or enforceability of this Agreement
and the carrying out of the business of the Company and the Related
Companies has been obtained and is in full force and effect and any
conditions contained therein or otherwise applying thereto have been
duly complied with;
(q) that neither the Company nor the Related companies are in default
under any agreement to which it is a party or by which it is bound and
no tax claim, litigation, arbitration administrative proceedings or
winding up proceedings are presently current or pending or threatened
19
which default, litigation, arbitration or administrative proceedings,
as the case may be, might materially affect the solvency of the
Company or the Related Companies (as the case may be) or might
materially affect its ability to perform its obligations under this
Agreement;
(r) all information furnished by the Company and the Existing Shareholders
to the Investor and/or its agents in connection with the purposes of
this Agreement does not contain any untrue statement or omit to state
any fact the omission of which makes any statements made therein in
the light of the circumstances under which they are made, misleading
and all expressions of expectation, intention, belief and opinion and
all projections contained therein were honestly made on reasonable
grounds after due and careful inquiry by the Company and the Existing
Shareholders and that they have fully disclosed in writing to the
Investor or its agents all facts relating to them which they know or
ought reasonably to know and which are material to the Investor in
relation to the purposes of this Agreement;
(s) there has been no material adverse change in the Company or the
Related Companies financial condition or operations since its previous
published audited financial statements (where applicable) and the
audited financial statements of the Company and the Related Companies
in respect of its previous published financial years as delivered to
the Investor has been prepared in accordance with generally accepted
accounting principles and practices which have been consistently
applied and present fairly and accurately the financial position and
the results of the operations of the Company and the Related Companies
respectively as at such date and, as at such date, neither the Company
nor the Related Companies had any significant liabilities (contingent
or otherwise) which are not disclosed by, or reserved against in, such
financial statement and neither the Company nor the Related Companies
had any unrealised or anticipated losses;
(t) no step has been taken by the Company and/or the Existing Shareholders
nor have any legal proceedings been started or threatened against the
Company, or the Related Companies for the dissolution or winding up of
the Company or the Related Companies or for the appointment of a
receiver, trustee or similar officer of them or any of them, or their
respective assets;
(u) the Company and the Related Companies have paid all taxes, levies,
duties, charges and fees due in Malaysia in respect of the ownership
of their respective assets or the conduct of their respective
operations.
(v) that all the assets of the Company and the Related Companies at the
Balance Sheet Date shall be retained and preserved pending completion
of this transaction and that no liabilities save as disclosed at the
Balance Sheet Date for the Company and/or the Related Companies shall
be created or permitted to exist pending completion of this
transaction save and except in the ordinary course of business and for
Material Contracts only with the consent in writing of the Investor
first had and obtained.
20
(w) that no encumbrances whatsoever shall be permitted to be created or to
exist over the assets of the Company and/or the Related Companies
pending completion of this transaction.
21
.
APPENDIX 3
THE RIGHTS AND TERMS OF THE RCPS HOLDERS
1. The RCPS shall confer on the holders thereof the following rights and
privileges:-
1.1 Issue Price
Each RCPS with a par value of RM1.00 each only shall be issued at a
price of Ringgit Malaysia One (RM1.00) each only ("the Issue Price");
1.2 Dividends
Such RCPS shall be entitled:-
(a) in priority both in regard to dividend and return of capital to all
other shares for the time being; and
(b) to a fixed non-cumulative dividend of three per cent (3%) per annum
("the Fixed Dividend")
1.3 RCPS rights not to be varied
Subject to the Act and notwithstanding any provisions that may be contained
herein, the rights and privileges of the holders of the RCPS shall not be
altered except with the consent of the holders of not less than
three-fourths (3/4th) of the holders of such RCPS.
1.4 Conversion Rights
a) The RCPS shall be convertible into Shares in the Company at
anytime ;
b) For the purposes of such conversion, the RCPS holder shall give
at least fourteen (14) days written notice to the Company of its
intention to convert the RCPS held into Shares;
c) The holder of each RCPS shall upon surrender to the company
secretary of the Company of the share certificate relating to the
relevant RCPS together with the payment of RM18.00 only be
entitled to receive eighteen (18) Shares in the Company credited
as fully paid-up Shares.
d) The Shares issued upon conversion of the RCPS shall rank for all
dividends and in all other respects rank pari passu with the
existing Shares of the Company except that the said Shares shall
not carry any entitlement to any dividends declared prior to the
date of issue and allotment of the same.
22
1.5 Redemption Rights
a) The holders of the RCPS shall subject to the provisos following
be entitled (but not obliged), fourteen (14) days after it has
given written notice to the Company fixing the time and place for
the redemption and surrender of the RCPS to be redeemed, require
the Company to redeem and the Company shall redeem all such RCPS
then surrendered for redemption ;
(i) at anytime after thirty-six (36) months from the issuance of
the RCPS; or
(ii) immediately upon the occurrence of any Default;
b) Following the exercise of the rights conferred on the holders of
the RCPS as set out in this paragraph 1.5(a) the Company shall be
obliged to redeem all the RCPS then outstanding in full by paying
to the holders of the RCPS who exercised their redemption rights,
the Redemption Price (as herein defined);
c) Procedure for Redemption
(i) At the time and place so fixed each such holder shall
against payment of the Redemption Price be bound to
surrender to the Company the certificate in relation to the
RCPS to be redeemed;
(ii) The Company shall pay by bankers cheque the Redemption Price
for the number of RCPS so surrendered.
1.6 The Redemption Price
The redemption price for each RCPS shall be the sum of the Issue Price
per RCPS together with the Fixed Dividend from the Subscription Date
up until the date of full payment of the same ("the Redemption
Price").
1.7 Company's right to redeem RCPS
The Company shall not have the right to redeem the RCPS save and
except pursuant to an exercise of the rights conferred on the holders
of the RCPS pursuant to paragraph 1.5(a) hereto.
1.8 Notices and meetings
a) A right to receive notice of general meetings, reports and
balance sheets of the Company and to attend and speak either in
person or proxy at any general meeting of the Company;.
b) The holders of the RCPS shall be entitled to vote at any and all
general meetings of the Company. Until converted into Shares,
each RCPS shall be deemed to carry eighteen (18) votes, that is
the equivalent of the votes attaching to 18 Shares at any general
meeting of the Company.
23
1.9 Liquidation
a) In the event of the Company being wound-up, the holders of the
RCPS shall have the right to have the surplus assets of the
Company applied to repaying to them an amount equivalent to the
sum of the Issue Price of the RCPS and the Fixed Dividend thereon
up until the date of winding up in priority to any payment to the
holders of other Shares or classes of shares in the capital of
the Company, but shall not be entitled to any further
participation in such surplus assets.
b) In the event of capital and/or premium being written off on a
reduction of capital, amounts paid or credited on the Shares
and/or any other class of Shares shall be written off before the
amounts paid or credited on the RCPS are written off;
1.10 No higher ranked shares
Except with the consent of the holders of not less than three-fourths
(3/4th) of such RCPS no further Shares or classes of shares shall be
issued by the Company ranking prior to the RCPS;
1.11 Subject to the provisions of and/or limitations set out in this
Agreement specifically, Section 61 of the Companies Act, 1965 and of
any statutory modification or re-enactment thereof for the time being
in force the RCPS shall be redeemed at the Redemption Price.
24
ANNEXURE 1
THE FORM OF THE SHAREHOLDERS AGREEMENT TO BE EXECUTED BETWEEN THE
EXISTING SHAREHOLDERS AND THE INVESTOR
25
ANNEXURE 2
THE FORM OF THE MANAGEMENT AGREEMENT TO BE EXECUTED
BETWEEN THE COMPANY AND THE EXISTING SHAREHOLDERS
26
ANNEXURE 3
THE FORM OF THE MANAGEMENT AGREEMENT TO BE EXECUTED
BETWEEN THE COMPANY AND THE INVESTOR
27
