Exhibit 4.2
[LINKLATERS & ALLIANCE LOGO]
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Dated 16 May 2002
CHINA MOBILE HONG KONG (BVI) LIMITED
CHINA MOBILE (HONG KONG) LIMITED
CHINA MOBILE COMMUNICATIONS CORPORATION
CONDITIONAL SALE AND PURCHASE
AGREEMENT
LINKLATERS
00xx Xxxxx, Xxxxxxxxx Xxxxx
00-00 Xxxxxx Xxxx
Xxxx Xxxx
Telephone: (000) 0000 0000
Facsimile: (000) 0000 0000
Ref: CCLL/CLLW/05380105301
TABLE OF CONTENTS
CONTENTS PAGE
1 INTERPRETATION 2
2 SALE OF THE TARGET BVI SHARES AND PRICE 8
3 CONDITIONS PRECEDENT 12
4 PRE-COMPLETION UNDERTAKINGS 13
5 COMPLETION 14
6 POST-COMPLETION UNDERTAKINGS 17
7 WARRANTIES 17
8 LIMITATIONS ON CLAIMS 18
9 PURCHASER'S RIGHTS TO RESCISSION 18
10 WITHHOLDING TAX AND GROSSING UP 18
11 ENTIRE AGREEMENT 19
12 VARIATION 19
13 ASSIGNMENT 19
14 ANNOUNCEMENTS 19
15 COSTS 20
16 CONFIDENTIALITY 20
17 SEVERABILITY 20
18 COUNTERPARTS 20
19 WAIVER 20
20 FURTHER ASSURANCE 21
21 NOTICES 21
22 GOVERNING LAW AND JURISDICTION 22
SCHEDULE 1 PART A Details of the Target BVI Companies 23
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CONTENTS PAGE
PART B Details of the Target Companies 31
SCHEDULE 2 THE WARRANTIES Part A: General 39
Part B: Tax and Property Warranties 52
APPENDIX 1 Connected Transactions 54
APPENDIX 2 The Restructuring Agreements 56
APPENDIX 3 Form of Tax Indemnity 58
SIGNATURE PAGE 64
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THIS AGREEMENT is made on 16 May 2002
BETWEEN:
(1) CHINA MOBILE HONG KONG (BVI) LIMITED a company incorporated under the laws
of the British Virgin Islands whose registered office is at P.O. Box 957,
Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands
(the "VENDOR");
(2) CHINA MOBILE (HONG KONG) LIMITED a company incorporated under the laws of
Hong Kong whose registered office is at 60th Floor, The Center, 99 Queen's
Road Central, Hong Kong, PRC (the "PURCHASER"); and
(3) CHINA MOBILE COMMUNICATIONS CORPORATION a company incorporated under the
laws of the PRC whose registered office is at 53A Xibianmennei Dajie,
Xuanwuqu, Beijing, PRC (the "WARRANTOR").
WHEREAS:
(A) Each of Anhui Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI,
Sichuan Mobile BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile BVI
and Shanxi Mobile BVI (each, as defined below and, together, the "TARGET
BVI COMPANIES") is a private company limited by shares incorporated on
10 May 2002 in the British Virgin Islands. Anhui Mobile BVI, Jiangxi
Mobile BVI, Chongqing Mobile BVI, Sichuan Mobile BVI, Hubei Mobile BVI,
Hunan Mobile BVI, Shaanxi Mobile BVI and Shanxi Mobile BVI are or will be
the sole beneficial owners of Anhui Mobile, Jiangxi Mobile, Chongqing
Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and
Shanxi Mobile (each as defined below), respectively.
(B) The Vendor is the sole legal and beneficial owner of the entire issued
share capital of each of the Target BVI Companies.
(C) The Warrantor has effected certain reorganisations in relation to the
mobile communications assets and businesses in each of Anhui, Jiangxi,
Chongqing, Sichuan, Hubei, Hunan, Shaanxi and Shanxi, and each of the
Target Companies (as defined below) became or will become a wholly-owned
subsidiary of Anhui Mobile BVI, Jiangxi Mobile BVI, Chongqing Mobile BVI,
Sichuan Mobile BVI, Hubei Mobile BVI, Hunan Mobile BVI, Shaanxi Mobile BVI
and Shanxi Mobile BVI, respectively, through a series of transfers
pursuant to a Transfer of Interests Agreement dated 15 May 2002 (the
"REORGANISATION").
(D) The Vendor has agreed to sell the entire issued share capital of each of
the Target BVI Companies to the Purchaser for the consideration and upon
the terms and conditions set out in this Agreement.
(E) The Vendor and the Warrantor have agreed to make certain representations,
warranties and undertakings in relation to the Target Companies Group (as
defined below).
IT IS AGREED as follows:
1 INTERPRETATION
1.1 In this Agreement, the following expressions shall have the following
meanings:
"ACCOUNTS" means in relation to the Target Companies:
(a) the combined audited balance sheets of the Target Companies as of
the relevant Accounts Date in respect of that financial period;
and
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(b) the combined statements of income, owner's equity and cash flows
of the Target Companies for the financial period ended on the
relevant Accounts Date,
together with any notes, reports or statements included in or annexed
to them;
"ACCOUNTS DATE" means 31 December 1999, 2000 or 2001, as the case may
be;
"ANHUI MOBILE" means [Company name in Chinese] (Anhui Mobile
Communication Company Limited), a company established on 30 January
2002 under the laws of the PRC;
"ANHUI MOBILE BVI" means Anhui Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"APPRAISAL REPORT" means the appraisal report prepared by PRC
appraisers in respect of the Target Companies;
"BUSINESS DAY" means a day (excluding Saturdays) on which banks
generally are open in Hong Kong and the PRC for the transaction of
normal banking business;
"CHINESE DEPOSITARY RECEIPTS" means transferable depositary receipts
each representing a specified number of Shares which may be issued by
the Purchaser to the public in the PRC and may be listed on a
recognised stock exchange in the PRC;
"CHONGQING MOBILE" means [Company name in Chinese] (Chongqing Mobile
Communication Company Limited), a company established on 7 February
2002 under the laws of the PRC;
"CHONGQING MOBILE BVI" means Chongqing Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"CIRCULAR" means the shareholders' circular to be issued by the
Company to its shareholders and containing, among other things, the
details of the acquisition contemplated under this Agreement;
"CLAIM" means any claim for breach of a Warranty;
"COMPANIES ORDINANCE" means the Companies Ordinance, Chapter 32 of the
Laws of Hong Kong;
"COMPLETION" means completion of the sale and purchase of the Target
BVI Shares under this Agreement pursuant to clause 5;
"CONDITIONS PRECEDENT" means the conditions specified in clause 3.1;
"CONNECTED TRANSACTIONS" means those transactions effected pursuant to
the operating agreements as listed in Appendix 1;
"CONSIDERATION SHARES" means the new Shares to be issued and allotted
to the Vendor in accordance with Clause 2.2.1(b);
"CONVERTIBLE NOTES" means the US$690 million convertible notes due
2005 issued by the Purchaser in November 2000;
"COSTS" means liabilities, losses, damages, costs (including legal
costs) and expenses (including taxation), in each case of any nature
whatsoever;
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"DEFERRED CONSIDERATION" means US$2,800 million, being the balance of
the Total Price after payment of the Initial Consideration, which is
calculated in accordance with Clause 2.2.2;
"ENCUMBRANCE" means any claim, charge, mortgage, security, lien,
option, equity, power of sale, hypothecation or third party rights,
retention of title, right of pre-emption, right of first refusal or
security interest of any kind;
"FINANCIAL STATEMENTS" means the combined audited balance sheets of
the Target Companies as of 31 December 1999, 2000 and 2001, and the
related combined statements of income, owner's equity and cash flows
for each of the years in the three-year period ended 31 December 2001;
"HOLDING COMPANY" shall be construed in accordance with section 2 of
the Companies Ordinance;
"HONG KONG" means the Hong Kong Special Administrative Region of the
PRC;
"HUBEI MOBILE" means [Company name in Chinese] (Hubei Mobile
Communication Company Limited), a company established on 1 February
2002 under the laws of the PRC;
"HUBEI MOBILE BVI" means Hubei Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"HUNAN MOBILE" means [Company name in Chinese] (Hunan Mobile
Communication Company Limited), a company established on 6 February
2002 under the laws of the PRC;
"HUNAN MOBILE BVI" means Hunan Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"HK$" or "HK DOLLARS" means Hong Kong dollars, the lawful currency of
Hong Kong;
"INDEBTEDNESS" means any indebtedness in respect of all obligations to
repay borrowed money, all indebtedness evidenced by notes, bonds, loan
stock, debentures or similar obligations, acceptances or documentary
credit facilities, all rental obligations under finance leases, and
hire purchase contracts, any other transaction having the commercial
effect of a borrowing or raising of money, the net amount of any
liability under any swap, hedging or other similar treasury
instrument, and all guarantees, sureties, indemnities,
counter-indemnities or letters of comfort of obligations of others of
the foregoing types;
"INDEPENDENT SHAREHOLDERS" means the holders of shares in the
Purchaser other than the Vendor and its Associates (as defined in the
Listing Rules);
"INITIAL CONSIDERATION" means such part of the Total Price to be paid
by the Purchaser to the Vendor on Completion in accordance with Clause
2.2.1;
"INTELLECTUAL PROPERTY RIGHTS" means patents, trade marks, service
marks, trade names, design rights, copyright (including rights in
computer software), rights in know-how and other intellectual property
rights, in each case whether registered or unregistered and including
applications for the grant of any such rights and all rights or forms
of protection having equivalent or similar effect anywhere in the
world;
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"INTRA-GROUP GUARANTEES" means all guarantees, indemnities,
counter-indemnities and letters of comfort of any nature whatsoever
(a) given to any third party by any member of the Target Companies
Group in respect of a liability of any Vendor Group Company, and/or
(as the context may require) (b) given to any third party by any
Vendor Group Company in respect of a liability of any member of the
Target Companies Group;
"INTRA-GROUP LOANS" means all debts outstanding between any member of
the Target Companies Group and any Vendor Group Company;
"JIANGXI MOBILE" means [Company name in Chinese] (Jiangxi Mobile
Communication Company Limited), a company established on 31 January
2002 under the laws of the PRC;
"JIANGXI MOBILE BVI" means Jiangxi Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"LAST ACCOUNTS" means the Accounts of the Target Companies in respect
of the financial period ended on the Last Accounts Date;
"LAST ACCOUNTS DATE" means 31 December 2001;
"LISTING RULES" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited;
"NOTES" means the US$600 million 7 7/8% notes due 2004 issued by the
Purchaser in November 1999;
"PRC" means the People's Republic of China;
"PRC RELEVANT GOVERNMENTAL APPROVALS" means the approvals, consents
and authorisations from all relevant regulatory authorities in the PRC
including, but not limited to, the State Council, the State
Development Planning Commission, the Ministry of Information Industry,
the Ministry of Foreign Trade and Economic Cooperation, the Ministry
of Finance, the Ministry of Land and Resources and the China
Securities Regulatory Commission, which are necessary to effect the
transactions contemplated by the Restructuring Agreements and this
Agreement;
"PROPERTIES" means the properties and land use rights stated in the
Property Legal Opinions that are owned by the Target Companies;
"PROPERTY LEGAL OPINIONS" means the legal opinions to be issued by
Haiwen & Partners, PRC counsel for the purposes of the acquisition
contemplated hereunder in relation to the properties and land use
rights owned by the Target Companies;
"RESTRUCTURING AGREEMENTS" means the agreements listed in Appendix 2
pursuant to which the Warrantor transferred its business, assets and
liabilities related to mobile communication services in Anhui, Hunan,
Hubei, Jiangxi, Sichuan, Chongqing, Shaanxi and Shanxi to the
respective Target Companies;
"RMB" means Renminbi, the lawful currency of the PRC;
"SCHEDULES" means Schedules 1 and 2 to this Agreement and Schedule
shall be construed accordingly;
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"SHAANXI MOBILE" means [Company Name in Chinese] (Shaanxi Mobile
Communication Company Limited), a company established on 3 February
2002 under the laws of the PRC;
"SHAANXI MOBILE BVI" means Shaanxi Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"SHANXI MOBILE" means [Company Name in Chinese] (Shanxi Mobile
Communication Company Limited), a company established on 4 February
2002 under the laws of the PRC;
"SHANXI MOBILE BVI" means Shanxi Mobile Communication (BVI) Limited, a
company incorporated in the British Virgin Islands;
"SHARES" means ordinary shares of par value HK$0.10 each in the share
capital of the Purchaser;
"SICHUAN MOBILE" means [Company Name in Chinese] (Sichuan Mobile
Communication Company Limited), a company established on 4 February
2002 under the laws of the PRC;
"SICHUAN MOBILE BVI" means Sichuan Mobile (BVI) Limited, a company
incorporated in the British Virgin Islands;
"SUBSIDIARY" and "SUBSIDIARIES" shall be construed in accordance with
section 2 of the Companies Ordinance;
"TARGET BVI COMPANIES" means Anhui Mobile BVI, Jiangxi Mobile BVI,
Chongqing Mobile BVI, Sichuan Mobile BVI, Hubei Mobile BVI, Hunan
Mobile BVI, Shaanxi Mobile BVI and Shanxi Mobile BVI, details of each
of which are set out in Part A of Schedule 1;
"TARGET BVI SHARES" means all the issued shares in the capital of each
of the Target BVI Companies;
"TARGET COMPANIES" means Anhui Mobile, Jiangxi Mobile, Chongqing
Mobile, Sichuan Mobile, Hubei Mobile, Hunan Mobile, Shaanxi Mobile and
Shanxi Mobile, details of each of which are set out in Part B of
Schedule 1, and shall, in each case if the context so requires,
include any predecessor entity or person carrying on the business of
such Target Company, whether before or after the Reorganisation;
"TARGET COMPANIES GROUP" means the Target BVI Companies and the Target
Companies;
"TAX INDEMNITY" means the Tax Indemnity to be entered into by the
Vendor and the Warrantor in favour of the Purchaser on Completion, in
the agreed form set out in Appendix 3;
"TAX WARRANTIES" means the warranties set out in paragraphs 1.1 to 1.9
in Part B of Schedule 2;
"TOTAL PRICE" means US$8,573 million, being the total price payable by
the Purchaser to the Vendor for the Target BVI Shares;
"TRADEMARK LICENSING AGREEMENT" means the trademark licensing
agreement dated 24 April 2002 between, inter alia, the Warrantor and
the Purchaser;
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"TRANSFER OF INTERESTS AGREEMENT" means the transfer of interests
agreement referred to in paragraph 17 of Appendix 2;
"US$" or "US DOLLARS" means United States dollars, the lawful currency
of the United States of America;
"VENDOR GROUP COMPANY" means the Vendor, the Warrantor, any holding
company from time to time of the Vendor (including the Warrantor) and
any subsidiary from time to time of the Vendor or any of its holding
company (but excluding the Purchaser, any of the Purchaser's
subsidiaries, the Target BVI Companies and the Target Companies); and
"WARRANTIES" means the representations and warranties set out in
Schedule 2.
1.2 In this Agreement, unless the context otherwise requires:
(a) references to persons shall include individuals, bodies corporate
(wherever incorporated), unincorporated associations and partnerships;
(b) the headings are inserted for convenience only and shall not affect
the construction of this Agreement;
(c) references to one gender include all genders;
(d) any reference to an enactment or statutory provision is a reference to
it as it may have been, or may from time to time be, amended,
modified, consolidated or re-enacted;
(e) any statement qualified by the expression "to the best knowledge of
the Vendor and the Warrantor" or "so far as the Vendor and the
Warrantor are aware" or any similar expression shall be deemed to
include an additional statement that it has been made after due and
careful enquiry and shall be deemed also to include the best of the
knowledge of each Vendor Group Company;
(f) any reference to a document in the agreed form is to the form of the
relevant document agreed between the parties and for the purpose of
identification initialled by each of them or on their behalf (in each
case with such amendments as may be agreed by or on behalf of the
Vendor and the Purchaser); and
(g) references to any Hong Kong legal term for any action, remedy, method
of judicial proceeding, legal document, legal status, court, official
or any other legal concept shall, in respect of any jurisdiction other
than Hong Kong, be deemed to include the legal concept which most
nearly approximates in that jurisdiction to the Hong Kong legal term.
1.3 The Schedules and Appendices comprise schedules and appendices to this
Agreement and form part of this Agreement.
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2 SALE OF THE TARGET BVI SHARES AND PRICE
2.1 The Vendor agrees to sell as legal and beneficial owner, and the
Purchaser agrees to purchase, the Target BVI Shares. The Target BVI
Shares shall be sold free from all Encumbrances, together with all
rights attaching to them.
2.2 The consideration for the purchase of the Target BVI Shares shall be
the Total Price of US$8,573 million, which shall be satisfied by the
payment of the Initial Consideration and the Deferred Consideration by
the Purchaser in accordance with clauses 2.2.1 and 2.2.2 respectively.
2.2.1 On Completion, the Purchaser shall pay to the Vendor the
Initial Consideration of US$5,773 million, comprising:-
(a) US$3,150 million payable in cash, in Hong Kong dollars,
Renminbi or US dollars or a combination of the above
currencies as the Purchaser may in its absolute discretion
determine (where payment is made in Hong Kong dollars, the
amount paid shall be determined using the exchange rate of
US$1.00 to HK$7.7993 (being the exchange rate prevailing
at 12:00 noon (New York City time) on the day which is two
Business Days immediately prior to the date of this
Agreement (the "US$/HK$ EXCHANGE RATE")); where payment is
made in Renminbi, the amount paid shall be determined
using the exchange rate of US$1.00 to RMB8.2770 (being the
exchange rate prevailing at 12:00 noon (New York City
time) on the day which is two Business Days immediately
prior to the date of this Agreement (the "US$/RMB EXCHANGE
RATE")); and
(b) US$2,623 million (the "SHARE CONSIDERATION") to be
satisfied by the allotment by the Purchaser to the Vendor
of such number of Shares, credited as fully paid,
calculated by dividing the Share Consideration by the
Consideration Share Price calculated as follows, and at
the US$/HK$ Exchange Rate set out in clause 2.2.1(a),
rounded down to the nearest whole number:
(i) where the Average Daily VWAP is between HK$
HK$21.0134 (being 15 per cent. below the initial
price) and HK$28.4300 (being 15 per cent. above the
initial price), the Consideration Share Price shall
be HK$24.7217 (the "INITIAL PRICE"), being the
average closing price of the Shares as stated in the
daily quotation sheets of The Stock Exchange of Hong
Kong Limited for the thirty (30) Trading Days
immediately preceding the date of this Agreement;
(ii) where the Average Daily VWAP is above (but not equal
to) HK$28.4300, the Consideration Share Price shall
be:
Average Daily VWAP - HK$24.7217 x 115%
HK$24.7217 + --------------------------------------
2
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; or
(iii) where the Average Daily VWAP is below (but not
equal to) HK$21.0134, the Consideration Share Price
shall be:
HK$24.7217 x 85% - Average Daily VWAP
HK$24.7217 - -------------------------------------
2
For the purposes of this clause 2.2.1(b), the following
expressions shall have the following meanings:
"AVERAGE DAILY VWAP" means the simple arithmetic average Daily
VWAP for the 10 consecutive Trading Days immediately after the
date of this Agreement;
"DAILY VWAP" means in respect of a Trading Day, the
volume-weighted average price (VWAP) for the entire duration of
that Trading Day for the Shares as shown on the Bloomberg
Screen VOLUME AT PRICE Page as given by the ticker "941 HK
Equity VAP" and listed on the VWAP field, up to four decimal
places, but if for any reason such price does not so appear, or
if such page is unavailable, the VWAP shall be calculated by
dividing the turnover of all Shares traded on The Stock
Exchange of Hong Kong Limited on the Trading Day by the number
of Shares so traded, as shown on the daily quotation sheets of
The Stock Exchange of Hong Kong Limited in respect of the
Purchaser, up to four decimal places; and
"TRADING DAY" means a day on which Shares are generally traded
on The Stock Exchange of Hong Kong Limited.
2.2.2 The Deferred Consideration shall be an amount equivalent to the
Total Price after deduction of the following:-
(a) US$3,150 million as stated in clause 2.2.1 (a); and
(b) the Share Consideration of US$2,623 million as stated in
clause 2.2.1(b).
2.3 The Vendor hereby agrees with the Purchaser that the obligation of the
Purchaser to pay the Deferred Consideration shall be subordinated to
all payment obligations of the Purchaser under the Senior Debts as
referred to in clause 2.6, including but not limited to the payment
obligations of the Purchaser under the Notes and the Convertible
Notes.
2.4 Without prejudice to the provisions in clause 2.5, the Vendor and the
Purchaser agree that the Deferred Consideration or the unpaid portion
of the Deferred Consideration, together with unpaid accrued interest
thereon, shall be paid in full by the date falling fifteen (15) years
after the date of Completion, or if that date falls on a non-Business
Day, then on the next Business Day.
2.5
2.5.1 The Purchaser may determine to make early payment of all or
part of the Deferred Consideration if either or both of the
following are satisfied:-
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(a) the early payment of the Deferred Consideration is made
out of net proceeds from the issue of Chinese Depositary
Receipts or RMB denominated bonds; or
(b) the early payment of the Deferred Consideration will not
have any significant impact on the Purchaser's ability to
repay the principal and interest of any Senior Debts to
which the Deferred Consideration is subordinated.
2.5.2 The Purchaser undertakes to use its reasonable endeavours,
subject to market conditions and receiving all necessary
regulatory and governmental approvals, to issue Chinese
Depositary Receipts and RMB denominated bonds (whether by
itself or through its subsidiaries) and agrees to make early
payment of the Deferred Consideration up to the amount
representing the net proceeds from the issue of the Chinese
Depositary Receipts and/or the RMB denominated bonds after such
proceeds are received. The Purchaser acknowledges that the
Vendor relied on this undertaking by the Purchaser in agreeing
to having the Deferred Consideration as part of the Total Price
and to the provisions relating to the payment mechanism for the
Deferred Consideration and otherwise as set out in clauses 2.3
to 2.9.
2.5.3 Subject to either clause 2.5.1 or clause 2.5.2, the Purchaser
may make early payment of all or part of the Deferred
Consideration after Completion and in any amount in Hong Kong
dollars, Renminbi or US dollars (or other currencies as may be
agreed between the Vendor and the Purchaser ("OTHER
CURRENCIES")). Where payments are made in Hong Kong dollars,
RMB or Other Currencies, the amounts of Deferred Consideration
paid shall be determined using the US$/HK$ Exchange Rate or the
US$/RMB Exchange Rate as referred to in clause 2.2.1 or the
Reference Exchange Rate as referred to in clause 2.6,
respectively.
2.6 For the purposes of clauses 2.3, 2.5, 2.6 and 2.7, the following
expressions shall have the following meanings:
"DEFERRED CONSIDERATION INTEREST RATE" means, for the period of the
first two years commencing on the date of the Completion, 3.801 per
cent. per annum (being the two-year US$-ISDA LIBOR Swap Rate in
respect of the Interest Determination Date that falls on a day which
is two Business Days prior to the date of this Agreement), and for
each subsequent two-year period the US$-ISDA LIBOR Swap Rate in
respect of the relevant Interest Determination Date. For the avoidance
of doubt, if any part of the Deferred Consideration is unpaid after
the fourteenth anniversary of the date of the Completion, the Deferred
Consideration Interest Rate for such unpaid portion shall be that in
respect of the Interest Determination Date that falls on 14 May 2016
(or if that date falls on a non-Business Day, then on the next
Business Day) irrespective of the remaining period within which the
Deferred Consideration must be paid in full in accordance with clause
2.4;
"INTEREST DETERMINATION DATE" means each of the following dates (or if
that date falls on a non-Business Day, then on the next Business Day):
two Business Days prior to the date of this Agreement being 14 May
2002, 14 May 2004, 14 May 2006, 14 May 2008, 14 May 2010, 14 May 2012,
14 May 2014 and 14 May 2016;
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"INTEREST PAYMENT DATE" means, before the payment of the Deferred
Consideration and any unpaid accrued interest thereon in full, each of
the following dates (or if that date falls on a non-Business Day, then
on the next Business Day): 16 November 2002, 16 May 2003, 16 November
2003, 16 May 2004, 16 November 2004, 16 May 2005, 16 November 2005, 16
May 2006, 16 November 2006, 16 May 2007, 16 November 2007, 16 May
2008, 16 November 2008, 16 May 2009, 16 November 2009, 16 May 2010, 16
November 2010, 16 May 2011, 16 November 2011, 16 May 2012, 16 November
2012, 16 May 2013, 16 November 2013, 16 May 2014, 16 November 2014, 16
May 2015, 16 November 2015, 16 May 2016, 16 November 2016 and 16 May
2017;
"REFERENCE EXCHANGE RATE" means the Federal Reserve noon-buying rate
between US dollars and the relevant Other Currency which is quoted as
of 12:00 noon (New York City time) on the day which is two Business
Days immediately prior to the date of this Agreement on the relevant
page on the website of the Federal Reserve Bank of New York
(xxx.xx.xxx.xxx) which displays the exchange rate between US dollars
and the relevant Other Currency, but if no such exchange rate appears,
the exchange rate shall be the selling rate between US dollars and the
relevant Other Currency as quoted by The Hong Kong and Shanghai
Banking Corporation at or about 12:00 noon (Hong Kong time) on the
Business Day immediately prior to the date of this Agreement;
"SENIOR DEBTS" means debts owed or owing by the Purchaser from time to
time which are not subordinated to other debts owed by the Purchaser;
and
"US$-ISDA LIBOR SWAP RATE" means, in respect of an Interest
Determination Date, the rate which is quoted as of 11:00 a.m. (New
York City time) on that Interest Determination Date on the Reuters
Screen ISDAFIX1 Page as being the rate for US dollar swaps with a
maturity of two years, expressed as a percentage, but if for any
reason such rate does not so appear, or if such page is unavailable,
the rate shall be the arithmetic mean (rounded, if necessary upwards,
to the next 1/16 per cent. per annum) of the respective two-year
mid-market semi-annual swap rates (as quoted to the Vendor at its
request) of Xxxxxxx Xxxxx International, Xxxxxx Xxxxxxx Xxxx Xxxxxx
and The Hong Kong and Shanghai Banking Corporation Limited at or about
11:00 a.m. on that Interest Determination Date.
2.7 The Purchaser shall pay interest to the Vendor on the Deferred
Consideration. Interest shall accrue at the Deferred Consideration
Interest Rate as referred to in clause 2.6 on the unpaid portion of
the Deferred Consideration from the date of Completion until full
payment of the Deferred Consideration, and shall be calculated on the
basis of the actual number of days elapsed. Interest shall be paid on
each of the Interest Payment Date and on the day on which the Deferred
Consideration is paid in full. The Purchaser may pay the interest in
Hong Kong dollars, Renminbi or US dollars as the Purchaser may in its
absolute discretion determine or in other currencies as may be agreed
between the Vendor and the Purchaser ("OTHER CURRENCIES"). Where
payments are made in Hong Kong dollars, Renminbi or Other Currencies,
the amount of interest payable shall be determined using the US$/HK$
Exchange Rate or the US$/RMB Exchange Rate as referred to in clause
2.2.1 or the Reference Exchange Rate as referred to in clause 2.6,
respectively. No penalty or additional interest shall be payable by
the Purchaser to the Vendor for early payment of the Deferred
Consideration at any time after Completion.
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2.8 If the Purchaser does not pay the Deferred Consideration or any
accrued interest payable when due under clauses 2.4 and 2.7, it shall
pay interest on the overdue amount for the period beginning on its due
date and ending on the date of its receipt by the Vendor ("RELEVANT
PERIOD"). Interest under this clause 2.8 shall accrue daily at the
rate of the Deferred Consideration Interest Rates applicable during
the Relevant Period plus one percentage point, per annum and
calculated on the basis of a year of 360 days. For the avoidance of
doubt, the Purchaser's obligation to pay interest on the Deferred
Consideration under and in accordance with clause 2.7 is not affected
by this clause 2.8.
2.9 The transfer of the Target BVI Shares shall take effect immediately
upon Completion and the Purchaser shall be entitled to enjoy all
rights attached to the Target BVI Shares on Completion free from all
encumbrances irrespective of the Deferred Consideration payable by the
Purchaser to the Vendor. The Vendor hereby irrevocably waives all
rights, liens or other securities interest over the Target BVI Shares
which the Vendor may have under law arising from the Deferred
Consideration or otherwise with effect from Completion.
3 CONDITIONS PRECEDENT
3.1 Completion of the sale and purchase of the Target BVI Shares shall be
conditional upon the fulfilment of the following conditions:
(a) the passing of resolutions by the Independent Shareholders
approving the transactions contemplated by this Agreement and the
issue of the Consideration Shares to the Vendor upon Completion,
and the Connected Transactions (other than Connected Transactions
which The Stock Exchange of Hong Kong Limited has confirmed that
no approval by the Independent Shareholders is required);
(b) the Purchaser having received adequate funding or financing to
satisfy the cash portion of the Initial Consideration as referred
to in clause 2.2.1;
(c) the granting by the Listing Committee of The Stock Exchange of
Hong Kong Limited of listing of, and permission to deal in, the
Consideration Shares to be issued by the Purchaser upon
Completion;
(d) there having been no material adverse change to the financial
conditions, business operations or prospects of any of the Target
Companies Group;
(e) the receipt of the PRC Relevant Governmental Approvals; and
(f) the completion of the transactions contemplated in the respective
Restructuring Agreements.
3.2 Each of the Vendor and the Warrantor undertakes to use all reasonable
endeavours to ensure that the Conditions Precedent set out in clauses
3.1(d) and (e) are fulfilled as soon as reasonably practicable and in
any event by 30 September 2002.
3.3 The Purchaser undertakes to use all reasonable endeavours to ensure
that the Conditions Precedent set out in clauses 3.1(a), 3.1(b),
3.1(c) and 3.1(e) are fulfilled as soon as reasonably practicable and
in any event by 30 September 2002.
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3.4 The Purchaser shall be entitled in its absolute discretion, by written
notice to the Vendor, to waive any or all of the Conditions Precedent
set out in clauses 3.1(b) and 3.1(d) either in whole or in part.
3.5 If any of the Conditions Precedent has not been fulfilled (or waived)
on or before the date specified in clauses 3.2 and 3.3 or such other
date as the parties to this Agreement may agree in writing, this
Agreement (other than clauses 14, 16 and 22) shall automatically
terminate and no party shall have any claim of any nature whatsoever
against the other parties under this Agreement (save in respect of its
accrued rights arising from any prior breach of this Agreement).
4 PRE-COMPLETION UNDERTAKINGS
4.1 Pending Completion, each of the Vendor and the Warrantor shall ensure
that:
(a) each member of the Target Companies Group shall carry on its
business in the ordinary and usual course and shall not make (or
agree to make) any payment other than routine payments in the
ordinary and usual course of trading;
(b) each member of the Target Companies Group shall take all
reasonable steps to preserve and protect its assets;
(c) the Purchaser's representatives shall be allowed, upon reasonable
notice and during normal business hours, access to the books and
records of each member of the Target Companies Group (including,
without limitation, all statutory books, minute books, leases,
contracts, supplier lists and customer lists) together with the
right to take copies;
(d) no member of the Target Companies Group shall do, allow or
procure any act or omission which would constitute or give rise
to a breach of any Warranty if the Warranties were to be repeated
on or at any time before Completion by reference to the facts and
circumstances then existing;
(e) prompt disclosure is made to the Purchaser of all relevant
information which comes to the notice of the Vendor or the
Warrantor in relation to any fact or matter (whether existing on
or before the date of this Agreement or arising afterwards) which
may constitute a breach of any Warranty if the Warranties were to
be repeated on or at any time before Completion by reference to
the facts and circumstances then existing;
(f) no dividend or other distribution shall be declared, paid or made
by any member of the Target Companies Group;
(g) no share capital shall be allotted or issued or agreed to be
allotted or issued by any member of the Target Companies Group;
(h) all transactions between each member of the Target Companies
Group and each Vendor Group Company shall be on arm's length
commercial terms and in their respective ordinary and usual
course of business;
(i) otherwise than in the ordinary course of business, the amount of
any Indebtedness owed by each member of the Target Companies
Group or existing as at the date of this Agreement shall not be
increased or extended
- 13 -
and no new Indebtedness shall be entered into or assumed by any
such company; and
(j) no action is taken by any member of the Target Companies Group or
any Vendor Group Company which is inconsistent with the
provisions of this Agreement or the consummation of the
transactions contemplated by this Agreement.
4.2 Pending Completion, each of the Vendor and the Warrantor shall ensure
that the Target Companies Group consults fully with the Purchaser in
relation to any matters which may have a material effect upon the
Target Companies Group. Without the prior written consent of the
Purchaser, the Target Companies Group shall not, and each of the
Vendor and the Warrantor shall ensure that the Target Companies Group
does not:
(a) enter into any contract or commitment (or make a bid or offer
which may lead to a contract or commitment) having a material
value or involving material expenditure or which is of a long
term or unusual nature or which could involve an obligation of a
material nature or which may result in any material change in the
nature or scope of the operations of such member of the Target
Companies Group;
(b) agree to any variation or termination of any existing contract to
which that member of the Target Companies Group is a party and
which may have a material effect upon the nature or scope of the
operations of such member of the Target Companies Group;
(c) (whether in the ordinary and usual course of business or
otherwise) acquire or dispose of, or agree to acquire or dispose
of, any material business or any material asset; or
(d) enter into any agreement, contract, arrangement or transaction
(whether or not legally binding) other than in the ordinary and
usual course of business.
5 COMPLETION
5.1 The sale and purchase of the Target BVI Shares shall be completed at
00xx Xxxxx, Xxx Xxxxxx, 00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx (or such
other place as the Vendor, the Purchaser and the Warrantor may agree
upon) on:
(a) the third Business Day after the passing of the resolutions
referred to in clause 3.1(a), or
(b) such other date as may be agreed between the Vendor and the
Purchaser,
whichever is later, following notification by the Purchaser to the
Vendor of the fulfilment (or waiver) of all the Conditions Precedent.
5.2 On Completion, the Vendor shall deliver (or cause to be delivered) to
the Purchaser:
(a) duly executed transfers into the name of the Purchaser or such
wholly-owned subsidiary of the Purchaser as notified by the
Purchaser to the Vendor two days before Completion or their
respective nominee in respect of all of the Target BVI Shares,
together with the related share certificates evidencing the title
and ownership of such shares;
- 14 -
(b) the certificates of incorporation, common seal, share register,
share certificate book (with any unissued share certificates),
business licence, the documents evidencing the PRC Relevant
Governmental Approvals (as the case may be) and all minute books
and other statutory books (which shall be written up to but not
including Completion) of each member of the Target Companies
Group;
(c) all such other documents (including any necessary waivers of
pre-emption rights or other consents) as may be required to
enable the Purchaser and/or such wholly-owned subsidiary of the
Purchaser as notified by the Purchaser to the Vendor two days
before Completion and/or their respective nominee to be vested
with the full beneficial ownership of the Target BVI Shares and
to enable the Purchaser and/or such wholly-owned subsidiary
and/or their respective nominee to be registered as the holder(s)
of the Target BVI Shares;
(d) a counterpart of the Tax Indemnity duly executed by the Vendor;
(e) a copy of a resolution of the board of directors (certified by an
officer of the Vendor duly appointed by the Vendor as true and
correct) of the Vendor, authorising the execution of and the
performance by the Vendor of its obligations under this Agreement
and each of the other documents to be executed by the Vendor;
(f) a certified copy of the Transfer of Interests Agreement pursuant
to which the equity interest of each of the Target Companies is
transferred from the Warrantor and the Vendor to each of the
Target BVI Companies, respectively, through a series of
transfers, duly executed by each of the parties thereto; and
(g) a legal opinion from Haiwen & Partners, PRC counsel, in form and
substance acceptable to the Purchaser.
5.3 On Completion, the Warrantor shall deliver (or cause to be delivered)
to the Purchaser:
(a) a counterpart of the Tax Indemnity duly executed by the
Warrantor; and
(b) all such other documents (including any necessary waivers of
pre-emption rights or other consents) as may be required to
enable the Purchaser and/or such wholly-owned subsidiary of the
Purchaser as notified by the Purchaser to the Vendor two days
before Completion and/or their respective nominee to be vested
with the full beneficial ownership of the Target BVI Shares and
to enable the Purchaser and/or such wholly-owned subsidiary
and/or their respective nominee to be registered as the holder(s)
of the Target BVI Shares.
5.4 On Completion, the Vendor shall procure that resolutions of the board
of directors of each Target BVI Company are passed to approve the
registration of the transfers in respect of the Target BVI Shares
referred to in clause 5.2.
5.5 Against compliance by the Vendor and the Warrantor of their respective
obligations under clauses 5.2, 5.3 and 5.4, the Purchaser shall:
- 15 -
(a) in satisfaction of its obligations under clause 2.2.1(a), cause
the amounts set out in clause 2.2.1(a) to be paid on Completion
or such later date as may be agreed between the Vendor and the
Purchaser by electronic funds transfer (or such other modes of
payment as may be agreed between the Vendor and the Purchaser) to
the bank account(s) of the Vendor or such other party as the
Vendor may direct, details of which shall be notified in writing
to the Purchaser at least two Business Days prior to Completion;
(b) in satisfaction of its obligations under clause 2.2.1(b), cause
the Consideration Shares to be allotted to the Vendor credited as
fully paid, the Vendor's name to be entered in the register of
members and a certificate in respect of the Consideration Shares
to be delivered to the Vendor; and
(c) deliver to the Vendor a copy of the board minutes (certified by a
duly appointed officer as true and correct) of the Purchaser
authorising the execution and performance by the Purchaser of its
obligations under this Agreement.
5.6 If the Vendor or the Warrantor fails or is unable to perform any
material obligations (including the transfer of all Target BVI Shares
to the Purchaser or its nominees simultaneously upon Completion)
required to be performed by the Vendor or the Warrantor (as the case
may be) pursuant to clause 3.2, clause 5.2 and clause 5.3,
respectively, by the last date on which Completion is required to
occur, the Purchaser shall not be obliged to complete the sale and
purchase of the Target BVI Shares and may, in its absolute discretion,
by written notice to the Vendor and the Warrantor:
(a) rescind this Agreement without liability on the part of the
Purchaser; or
(b) elect to complete this Agreement on that date, to the extent that
the Vendor and the Warrantor are ready, able and willing to do
so, and specify a later date on which the Vendor and the
Warrantor shall be obliged to complete the outstanding
obligations of the Vendor and the Warrantor; or
(c) elect to defer the completion of this Agreement by not more than
90 days to such other date as it may specify in such notice, in
which event the provisions of this clause 5.6 shall apply,
mutatis mutandis, if the Vendor and/or the Warrantor fails or is
unable to perform any such obligations on such other date,
provided that clause 5.6(b) will not apply where the Vendor is unable
or fails to effect transfer of all Target BVI Shares to the Purchaser
or its nominee simultaneously upon Completion.
5.7 Each of the Vendor and the Warrantor jointly and severally undertakes
that it shall pay in cash to the Purchaser by way of indemnity all
Costs which the Purchaser may suffer or incur and all Costs which the
Purchaser has incurred in relation to the preparation and execution of
this Agreement if the Vendor or the Warrantor breaches any of its
obligations under this Agreement (including to effect the transfer of
all Target BVI Shares to the Purchaser or its nominee simultaneously
upon Completion).
- 16 -
6 POST-COMPLETION UNDERTAKINGS
6.1 Within 60 Business Days following Completion or such other date to be
agreed upon between the Vendor, the Purchaser and the Warrantor, each
of the Vendor and the Warrantor undertakes to the Purchaser to use all
reasonable endeavours to obtain the release of each member of the
Target Companies Group from any Intra-Group Guarantees to which it is
a party and, pending such release, to indemnify the relevant member of
the Target Companies Group against all amounts paid by it to any third
party pursuant to any such Intra-Group Guarantee in respect of any
liability of any Vendor Group Company (and all Costs incurred in
connection with such liability) included in the Last Accounts or
arising after the Last Accounts Date.
6.2 Within 60 Business Days following Completion or such other date to be
agreed upon between the Vendor, the Purchaser and the Warrantor, the
Purchaser undertakes to the Vendor to use all reasonable endeavours to
obtain the release of each Vendor Group Company from any Intra-Group
Guarantees to which it is a party and, pending such release, to
indemnify the relevant Vendor Group Company against all amounts paid
by it to any third party pursuant to any Intra-Group Guarantees in
respect of any liability of any member of the Target Companies Group
(and all Costs incurred in connection with such liability) included in
the Last Accounts or arising after the Last Accounts Date.
7 WARRANTIES
7.1 Each of the Vendor and the Warrantor jointly and severally represents,
warrants and undertakes to the Purchaser in the terms of the
Warranties (save that the Warranties set out in paragraphs 2.5 to 2.10
of Part A, Schedule 2 are given by each of the Vendor and the
Warrantor in respect of itself only) and that such Warranties are true
and accurate. Each of the Vendor and the Warrantor acknowledges that
the Purchaser has entered into this Agreement in reliance upon the
Warranties.
7.2 Each of the Vendor and the Warrantor jointly and severally undertakes
(without limiting any other rights of the Purchaser in any way
including its rights to damages in respect of a claim for breach of
any Warranty on any other basis) that it shall pay in cash to the
Purchaser (or, if so directed by the Purchaser, to the member of the
Target Companies Group in question) (each an "INDEMNIFIED PERSON") by
way of indemnity on demand a sum equal to the aggregate of (a) the
amount which, if received by the Indemnified Person, would be
necessary to put that Indemnified Person into the financial position
which would have existed had there been no breach of the Warranty in
question; and (b) all Costs suffered or incurred by the Indemnified
Person, directly or indirectly, as a result of or in connection with
such breach of Warranty.
7.3 Each of the Vendor and the Warrantor agrees to waive the benefit of
all rights (if any) which the Vendor or the Warrantor may have against
any member of the Target Companies Group, or any present or former
officer or employee of any such company, on whom the Vendor or the
Warrantor may have relied in agreeing to any term of this Agreement
and the Tax Indemnity and each of the Vendor and the Warrantor
undertakes not to make any claim in respect of such reliance.
- 17 -
7.4 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 term of this Agreement.
7.5 The Warranties shall be deemed to be repeated on Completion with
reference to the facts and circumstances then existing.
7.6 Each of the Vendor and the Warrantor undertakes to notify the
Purchaser in writing promptly if it becomes aware of any circumstance
arising after the date of this Agreement which would cause any
Warranty (if the Warranties were repeated with reference to the facts
and circumstances then existing) to become untrue or inaccurate or
misleading in any respect which is material to the financial or
trading position of any member of the Target Companies Group.
8 LIMITATIONS ON CLAIMS
8.1 Subject to clause 8.2, the aggregate amount of the liability of each
of the Vendor and the Warrantor for all Claims shall not exceed the
Total Price.
8.2 The limitation contained in clause 8.1 shall not apply to any breach
of any Warranty which (or the delay in discovery of which) is the
consequence of dishonest, deliberate or reckless mis-statement,
concealment or other conduct by any Vendor Group Company or any
officer or employee, or former officer or employee, of any Vendor
Group Company.
9 PURCHASER'S RIGHTS TO RESCISSION
The Purchaser may by written notice given to the Vendor and the Warrantor
at any time prior to Completion rescind this Agreement without liability on
the part of the Purchaser if any fact, matter or event (whether existing or
occurring on or before the date of this Agreement or arising or occurring
afterwards) comes to the notice of the Purchaser at any time prior to
Completion which:
(a) constitutes a breach by the Vendor or the Warrantor of this Agreement
(including, without limitation, any breach of the pre-Completion
undertakings in clause 4); or
(b) would constitute a breach of any Warranty if the Warranties were
repeated on or at any time before Completion by reference to the facts
and circumstances then existing; or
(c) affects or is likely to affect in a materially adverse manner the
business, financial position or prospects of the Target Companies
Group taken as a whole.
10 WITHHOLDING TAX AND GROSSING UP
10.1 Each of the Vendor and the Warrantor shall pay all sums payable by it
under this Agreement free and clear of all deductions or withholdings
unless the law requires a deduction or withholding. If a deduction or
withholding is so required the Vendor or the Warrantor shall pay such
additional amount as will ensure that the net amount the payee
receives equals the full amount which it would have received had the
deduction or withholding not been required.
- 18 -
10.2 If any tax authority charges taxation on any sum paid by the Vendor
or the Warrantor under or pursuant to this Agreement, then the Vendor
or the Warrantor shall pay such additional amount as will ensure that
the total amount paid, less the tax chargeable on such amount, is
equal to the amount that would otherwise be payable under this
Agreement.
11 ENTIRE AGREEMENT
This Agreement and the Tax Indemnity constitute the entire agreement and
understanding between the parties in connection with the sale and purchase
of the Target BVI Shares. This Agreement and the Tax Indemnity supersede
all prior agreements or understandings in connection with the subject
matter hereof which shall cease to have any further force or effect. No
party has entered into this Agreement in reliance upon any representation,
warranty or undertaking which is not set out or referred to in this
Agreement and the Tax Indemnity.
12 VARIATION
12.1 No variation of this Agreement (or of any of the legally binding
agreements referred to in this Agreement) shall be valid unless it is
in writing and signed by or on behalf of each of the parties to it.
The expression "VARIATION" shall include any variation, supplement,
deletion or replacement however effected.
12.2 Unless expressly agreed, no variation shall constitute a general
waiver of any provisions of this Agreement, nor shall it affect any
rights, obligations or liabilities under or pursuant to this
Agreement which have already accrued up to the date of variation, and
the rights and obligations of the parties under or pursuant to this
Agreement shall remain in full force and effect, except and only to
the extent that they are so varied.
13 ASSIGNMENT
No party shall be entitled to assign the benefit of any provision of this
Agreement without the prior written approval of the other parties.
14 ANNOUNCEMENTS
14.1 Except as required by law or by any stock exchange or governmental or
other regulatory or supervisory body or authority of competent
jurisdiction to whose rules the party making the announcement or
disclosure is subject, whether or not having the force of law, no
announcement or circular or disclosure in connection with the
existence or subject matter of this Agreement shall be made or issued
by or on behalf of any of the Vendor Group Companies or any member of
the Target Companies Group or any of them without the prior written
approval of the Purchaser (such approval not to be unreasonably
withheld or delayed), or by or on behalf of the Purchaser without the
prior written approval of the Vendor and the Warrantor (such approval
not to be unreasonably withheld or delayed).
14.2 Where any announcement or disclosure is made in reliance on the
exception in clause 14.1, the party making the announcement or
disclosure will so far as
- 19 -
practicable consult with the other parties in advance as to the form,
content and timing of the announcement or disclosure.
15 COSTS
Each of the parties shall bear its own Costs incurred in connection with
the negotiation, preparation and completion of this Agreement and the Tax
Indemnity.
16 CONFIDENTIALITY
Each of the Vendor and the Warrantor undertakes with the Purchaser that it
shall keep confidential (and to ensure that its directors, officers,
employees, agents and professional and other advisers keep confidential)
any information in its possession (whether before or after the date of this
Agreement):
(a) in relation to the subscribers, business, assets or affairs of the
Target Companies Group (including any data held by the Target
Companies Group); or
(b) which relates to the contents of this Agreement (or any agreement or
arrangement entered into pursuant to this Agreement),
provided that the undertakings contained in this clause 16 shall not apply
to any information which is in or has entered the public domain (which
shall include any public filing or disclosure requirements of the United
States Securities and Exchange Commission or under applicable laws)
otherwise than as a result of publication or disclosure by the Vendor or
the Warrantor or their respective directors, officers, employees, agents
and professional and other advisers without the prior written consent of
the Purchaser.
Each of the Vendor and the Warrantor shall not use for its own business
purposes or disclose to any third party any such information (collectively,
"CONFIDENTIAL INFORMATION") without the consent of the Purchaser.
17 SEVERABILITY
If any provision of this Agreement is held to be invalid or unenforceable,
then such provision shall (so far as it is invalid or unenforceable) be
given no effect and shall be deemed not to be included in this Agreement
but without invalidating any of the remaining provisions of this Agreement.
The parties shall then use all reasonable endeavours to replace the invalid
or unenforceable provisions by a valid and enforceable substitute provision
the effect of which is as close as possible to the intended effect of the
invalid or unenforceable provision.
18 COUNTERPARTS
This Agreement may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which is an original but
all of which together constitute one and the same instrument.
19 WAIVER
19.1 No failure or delay by any parties hereto in exercising any right or
remedy provided by law under or pursuant to this Agreement shall
impair such right or remedy or operate or be construed as a waiver or
variation of it or preclude its exercise at any subsequent time and
no single or partial exercise of any such right or remedy shall
- 20 -
preclude any other or further exercise of it or the exercise of any
other right or remedy.
19.2 The rights and remedies of the parties hereto under or pursuant to
this Agreement are cumulative, may be exercised as often as such
party considers appropriate and are in addition to its rights and
remedies under general law.
20 FURTHER ASSURANCE
Each of the Vendor and the Warrantor agrees to perform (or procure the
performance of) all further acts and things, and execute and deliver (or
procure the execution and delivery of) such further documents, as may be
required by law or as the Purchaser may reasonably require, whether on or
after Completion, to implement and/or give effect to this Agreement and the
transaction contemplated by it and for the purpose of vesting in the
Purchaser the full benefit of the assets, rights and benefits to be
transferred to the Purchaser under this Agreement.
21 NOTICES
21.1 Any notice or other communication to be given by one party to any
other party under, or in connection with, this Agreement shall be in
writing and signed by or on behalf of the party giving it. It shall
be served by sending it by fax to the number set out in clause 21.2,
or delivering it by hand, or sending it by pre-paid recorded delivery
or registered post, to the address set out in clause 21.2 and in each
case marked for the attention of the relevant party set out in clause
21.2 (or as otherwise notified from time to time in accordance with
the provisions of this clause 21). Any notice so served by hand, fax
or post shall be deemed to have been duly given:
(a) in the case of delivery by hand, when delivered;
(b) in the case of fax, upon confirmation of transmission;
(c) in the case of prepaid recorded delivery or registered post, at
10:00 a.m. on the fifth Business Day following the date of
posting,
provided that in each case where delivery by hand or by fax occurs
after 6:00 p.m. on a Business Day or on a day which is not a Business
Day, service shall be deemed to occur at 9:00 a.m. on the next
following Business Day.
References to time in this clause are to local time in the country of
the addressee.
21.2 The addresses and fax numbers of the parties for the purpose of
clause 21.1 are as follows:
THE VENDOR:
Address: 00xx Xxxxx
Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Fax: (000) 0000 0000
For the attention of: The Directors
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THE PURCHASER:
Address: 00xx Xxxxx
Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
Fax: (000) 0000 0000
For the attention of: Legal Counsel
THE WARRANTOR:
Address: 53A Xibianmennei Dajie
Xuanwuqu
Beijing
PRC
Fax: (8610) 6360 4943
For the attention of: The Authorised Representative
21.3 A party may notify any other party to this Agreement of a change to
its name, relevant addressee, address or fax number for the purposes
of this clause 21, provided that, such notice shall only be effective
on:
(a) the date specified in the notice as the date on which the change
is to take place; or
(b) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
following five Business Days after notice of any change has been
given.
21.4 All notices under or in connection with this Agreement shall be in
the English language.
22 GOVERNING LAW AND JURISDICTION
22.1 This Agreement and the relationship between the parties shall be
governed by, and interpreted in accordance with, the laws of Hong
Kong.
22.2 Any dispute arising out of or in connection with this Agreement shall
be resolved by arbitration in Hong Kong International Arbitration
Centre by a single arbitrator in accordance with the UNCITRAL
Arbitration Rules in force from time to time. The parties agree that
the arbitral award will be final and binding.
AS WITNESS this Agreement has been signed on behalf of the parties the day and
year first before written.
- 22 -
SCHEDULE 1
PART A
DETAILS OF THE TARGET BVI COMPANIES
(1) ANHUI MOBILE BVI
1 NAME: Anhui Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495321
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDER: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 23 -
(2) JIANGXI MOBILE BVI
1 NAME: Jiangxi Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495320
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 24 -
(3) CHONGQING MOBILE BVI
1 NAME: Chongqing Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495324
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 25 -
(4) SICHUAN MOBILE BVI
1 NAME: Sichuan Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495322
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 26 -
(5) HUBEI MOBILE BVI
1 NAME: Hubei Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495325
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 27 -
(6) HUNAN MOBILE BVI
1 NAME: Hunan Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495323
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 28 -
(7) SHAANXI MOBILE BVI
1 NAME: Shaanxi Mobile (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495326
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 29 -
(8) SHANXI MOBILE BVI
1 NAME: Shanxi Mobile Communication (BVI) Limited
2 DATE OF INCORPORATION: 10 May 2002
3 PLACE OF INCORPORATION: British Virgin Islands
4 CLASS OF COMPANY: International Business Company
5 REGISTERED NUMBER: 495327
6 REGISTERED OFFICE: X.X. Xxx 000
Offshore Incorporations Centre
Road Town, Tortola
British Virgin Islands
7 DIRECTORS: Wang Xiaochu
Li Zhenqun
Ding Donghua
8 REGISTERED SHAREHOLDERS: China Mobile Hong Kong (BVI) Limited
9 AUTHORISED CAPITAL: HK$10,000.00 divided into 10,000 shares of HK$1.00 each
10 ISSUED CAPITAL: One share of HK$1.00 each
11 MORTGAGES AND CHARGES: None
- 30 -
PART B
DETAILS OF THE TARGET COMPANIES
(1) ANHUI MOBILE
1 NAME: Anhui Mobile Communication Company Limited
2 PLACE OF INCORPORATION: Xxxxx, XXX
0 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the construction and investment
of mobile telecommunication networks;
engaging in the operation of mobile
telecommunication business (including voice,
data and multimedia); engaging in IP phone
business; operating computer networks and
international internet and engaging in
value-added business relating to mobile
telecommunication business; engaging in
system integration, settlement and clearing
of roaming, technological development,
technological service, advertising business,
maintenance and installation of equipment
and projects construction etc. in relation
to mobile telecommunication business;
engaging in sale or lease of mobile
communication terminal equipment and their
accessories and spare parts and providing
after-sale services.
5 REGISTERED OFFICE: Xxxxxxx Xxxxxxxx, Xx. 000 Xxxxxx Xxxx,
Xxxxx, Xxxxx Xxxxxxxx, PRC
6 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Anhui Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 31 -
(2) JIANGXI MOBILE
1 NAME: Jiangxi Mobile Communication Company Limited
2 PLACE OF INCORPORATION: Jiangxi, PRC
3 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the construction and investment
of mobile telecommunication networks;
engaging in the operation of mobile
telecommunication business (including voice,
data and multimedia); engaging in IP phone
business; engaging in system integration,
settlement and clearing of roaming,
technological development, technological
service, advertising business maintenance
and installation of equipment and projects
construction etc. in relation to mobile
communication business; engaging in sale or
lease of mobile telecommunication terminal
equipment and their accessories and spare
parts; providing after-sale services;
operating other businesses as approved or
consented by the State in accordance with
market development and demand.
5 REGISTERED OFFICE: Jinyuan Building, Taoyuan Xiao District,
Nanchang, Jiangxi Province, PRC
6 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Jiangxi Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 32 -
(3) CHONGQING MOBILE
1 NAME: Chongqing Mobile Communication Company Limited
2 PLACE OF INCORPORATION: Chongqing, PRC
3 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the construction and investment
of mobile telecommunication networks;
engaging in the operation of mobile
telecommunication business (including voice,
data and multimedia); engaging in IP phone
business; operating computer networks and
international internet and engaging in
value-added business relating to mobile
telecommunication business; engaging in
system integration, settlement and clearing
of roaming, technological development,
technological service, equipment maintenance
in relation to mobile telecommunication
business; engaging in sale or lease of
mobile telecommunication terminal equipment
and their accessories and spare parts.
5 REGISTERED OFFICE: Xx. 000, Xxxxxx Xxxx, Xxxxxxxxx Xxxxxxxx,
Xxxxxxxxx Xxxxxxxxxxxx, XXX
0 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Chongqing Municipality, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 33 -
(4) SICHUAN MOBILE
1 NAME: Sichuan Mobile Communication Company Limited
0 XXXXX XX XXXXXXXXXXXXX: Xxxxxxx, XXX
0 NATURE: Limited liability company
4 SCOPE OF BUSINESS: operating mobile communication, IP phone,
computer networks, international internet
and engaging in value-added business
relating to mobile telecommunication
business; engaging in system integration,
settlement and clearing of roaming in
relation to mobile telecommunication
business; engaging in sale or lease of
mobile telecommunication terminal equipment
and their accessories and spare parts;
engaging in the maintenance, installation
and construction of mobile telecommunication
equipment; engaging in mobile
telecommunication technological service.
5 REGISTERED OFFICE: Xx. 00 Xxxxxxxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx Xxxxxxxx, XXX
0 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Sichuan Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 34 -
(5) HUBEI MOBILE
1 NAME: Hubei Mobile Communication Company Limited
0 XXXXX XX XXXXXXXXXXXXX: Xxxxx, XXX
0 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the operation of phone business;
operating computer networks and
international internet and engaging in
value-added business relating to mobile
telecommunication business; engaging in
system integration, settlement and clearing
of roaming, technological development,
technological service, maintenance and
installation of equipment and projects
construction etc. in relation to mobile
telecommunication business; engaging in sale
or lease of mobile telecommunication
terminal equipment and their accessories and
spare parts and providing after-sale
services.
5 REGISTERED OFFICE: Xx. 00 Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx,
Xxxxx, Xxxxx Xxxxxxxx, XXX
0 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Hubei Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 35 -
(6) HUNAN MOBILE
1 NAME: Hunan Mobile Communication Company Limited
2 PLACE OF INCORPORATION: Xxxxx, XXX
0 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the construction and investment
of mobile telecommunication networks;
engaging in the operation of mobile
telecommunication business (including voice,
data and multimedia); engaging in IP phone
business; operating computer networks and
international internet and engaging in
value-added business relating to mobile
telecommunication business; engaging in
system integration, settlement and clearing
of roaming, technological development,
technological service, installation of
equipment and projects construction etc. in
relation to mobile telecommunication
business; engaging in sale or lease of
mobile telecommunication terminal equipment
and their accessories and spare parts and
providing after-sale services; engaging in
the design, production of advertisements,
distribution of outdoor advertisements;
engaging in television, broadcast,
publication, printed material and gift
advertising agency.
5 REGISTERED OFFICE: Xx. 000 Xxxxxxxxx Xxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxxx, Xxxxx Xxxxxxxx, XXX
0 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Hunan Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 36 -
(7) SHAANXI MOBILE
1 NAME: Shaanxi Mobile Communication Company Limited
2 PLACE OF INCORPORATION: Shaanxi, PRC
3 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the construction and investment
of mobile telecommunication networks;
engaging in the operation of mobile
telecommunication business; engaging in IP
phone business; operating computer networks
and international internet and engaging in
value-added business relating to mobile
telecommunication business; engaging in
system integration, settlement and clearing
of roaming, technological development,
technological service, advertising business,
maintenance and installation of equipment
and projects construction etc. in relation
to mobile telecommunication business;
engaging in sale or lease of mobile
telecommunication terminal equipment and
their accessories and spare parts and
providing after-sale services; other
business as approved or consented by the
State.
5 REGISTERED OFFICE: Xx.0 Xxx Xxxxxx Xxxx Xxxxxx, Xxxx, Xxxxxxx
Xxxxxxxx, XXX
0 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Shaanxi Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 37 -
(8) SHANXI MOBILE
1 NAME: Shanxi Mobile Communication Company Limited
2 PLACE OF INCORPORATION: Xxxxxx, XXX
0 NATURE: Limited liability company
4 SCOPE OF BUSINESS: engaging in the construction and investment
of mobile telecommunication networks;
engaging in the operation of mobile
telecommunication business; engaging in IP
phone business; operating computer networks
and international internet and engaging in
value-added business relating to mobile
telecommunication business; engaging in
system integration, settlement and clearing
of roaming, technological development,
technological service, and equipment
maintenance in relation to mobile
telecommunication business; engaging in sale
or lease of mobile telecommunication
terminal equipment and their accessories and
spare parts and providing after-sale
services of the above businesses.
5 REGISTERED OFFICE: Xx. 00 Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxx
Xxxxxxxx, XXX
0 REGISTERED CAPITAL: RMB10,000,000
7 TAX RESIDENCE: Shanxi Province, PRC
8 SUBSIDIARIES: None
9 MORTGAGES AND CHARGES: None
- 38 -
SCHEDULE 2
THE WARRANTIES
PART A: GENERAL
1 INFORMATION
1.1 All information relating to the Target Companies Group provided to the
Purchaser or its representatives and advisers for the purposes of
inclusion in the Circular or preparation of the Financial Statements
and the Appraisal Report is true, accurate and not misleading and does
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
1.2 Save as already disclosed in writing to the Purchaser, there are no
other facts or matters which might reasonably be expected to have a
material adverse effect on the financial or trading position or
prospects of any member of the Target Companies Group.
2 CORPORATE MATTERS
THE TARGET COMPANIES GROUP
2.1 (a) All of the Target BVI Shares are fully-paid or properly credited
as fully-paid and the Vendor is the sole legal and beneficial
owner of them free from all Encumbrances. The Target BVI Shares
constitute the entire issued share capital of each of the Target
BVI Companies.
(b) The information in respect of each of the Target BVI Companies
set out in Part A of Schedule 1 is true and accurate and not
misleading.
(c) Each of the Target BVI Companies has been duly incorporated and
is validly existing under the laws of the British Virgin Islands,
with legal right, power and authority (corporate and other) to
own, use, lease and operate its properties and conduct its
business in the manner presently conducted and as described in
the Circular, and is duly qualified to transact business in any
jurisdiction in which it owns or leases properties or conducts
any business and such qualification is required, or is subject to
no material liability or disability by reason of the failure to
be so qualified in any such jurisdiction; the Memorandum of
Association and Articles of Association of each Target BVI
Company comply with the requirements of applicable laws of the
British Virgin Islands and are in full force and effect.
2.2 (a) The Target BVI Companies are, or will by Completion be, the sole
legal and beneficial owner of the whole of the registered capital
of each of the Target Companies, respectively, free from all
Encumbrances.
(b) The information in respect of each of the Target Companies set
out in Part B of Schedule 1 is true and accurate and not
misleading.
(c) Each of the Target Companies is (or a valid application has been
made for it to be registered as) a wholly-foreign owned
enterprise with limited liability and has been duly organised and
is validly existing under the laws of the PRC, and its business
licence is in full force and effect; the Articles of
- 39 -
Association of each Target Company comply with the requirements
of applicable PRC law and are in full force and effect; each
Target Company has all consents, approvals, authorizations,
orders, registrations, clearances and qualifications of or with
any court, governmental agency or body having jurisdiction over
each Target Company or any of its properties in each jurisdiction
in which the ownership or lease of property by it or the conduct
of its business (as described in the Circular) requires such
qualification, except for such consents, approvals,
authorizations, orders, registrations, clearances and
qualifications the absence of which is disclosed in the Circular
or which is not material to such Target Company, and has the
legal right and authority to own, use, lease and operate its
assets and to conduct its business in the manner presently
conducted and as described in the Circular.
2.3 Save for the unlisted equity securities in the PRC as disclosed in the
Accounts and the interest of the Target BVI Companies in the Target
Companies at Completion, no member of the Target Companies Group (that
is, the Target BVI Companies and the Target Companies) owns or has any
interest of any nature whatsoever in any shares, debentures or other
securities issued by any undertaking.
2.4 No Target BVI Company carries on any business other than holding the
respective Target Companies, or owns any asset other than the shares
of the respective Target Companies at Completion or has any
liabilities.
THE VENDOR AND THE WARRANTOR
2.5 Each of the Vendor and the Warrantor is duly incorporated or
established and is validly existing under the laws of its jurisdiction
of incorporation, with full power and authority to own, lease and
operate its properties and assets and to execute and perform its
obligations under this Agreement and the Tax Indemnity.
2.6 The execution, delivery and performance by each of the Vendor and the
Warrantor of this Agreement and the Tax Indemnity has been duly
authorised by it and this Agreement and the Tax Indemnity constitute a
legal, valid and binding obligation of the Vendor or the Warrantor
enforceable in accordance with its terms, subject to the laws of
bankruptcy and other similar laws affecting the rights of creditors
generally.
2.7 All regulatory, corporate and other approvals (including shareholder
approvals) and authorisations required by the Vendor and the Warrantor
for the execution and delivery of this Agreement and the Tax Indemnity
and any agreement or instrument contemplated hereby, the performance
of the terms hereof and thereof and the sale of the Target BVI Shares
have been obtained, are unconditional and are in full force and
effect.
2.8 All consents, approvals and authorisations of any court, government
department or other regulatory body required with respect to the
Vendor and the Warrantor for the execution of this Agreement and the
Tax Indemnity and the performance of its terms have been obtained and
are unconditional and in full force and effect.
2.9 The execution and delivery by the Vendor and the Warrantor of this
Agreement and the Tax Indemnity, and the performance and completion of
the transactions herein contemplated: (a) will not infringe any
applicable laws or regulations; (b) will not
- 40 -
result in any breach of the terms of, or constitute a default under,
its constitutional documents and business licence (as applicable) or
any instrument, agreement or governmental, regulatory or other
judgement, decree or order to which the Vendor or the Warrantor is a
party or by which it or its property is bound; and (c) will not
conflict with any of the certificates, licences or permits of the
Vendor or the Warrantor that enable it to carry on the business or
operations now operated by it.
2.10 Each of the Vendor and the Warrantor is not: (a) in breach of the
terms of, or in default under, any instrument, agreement or order to
which it is a party or by which it or its property is bound to an
extent which is material in the context of the transactions herein
contemplated; (b) involved in or the subject of any current or
pending investigation or proceedings (whether administrative,
regulatory or otherwise), whether in the PRC or elsewhere.
3 FINANCIAL MATTERS
FINANCIAL STATEMENTS
3.1 (a) The Financial Statements give a true and fair view of the state
of affairs and financial results of the Target Companies for the
periods and as at the dates stated therein.
(b) Without limiting the generality of paragraph (a):
(i) the Accounts of the Target Companies either make full
provision for or disclose all liabilities (whether actual,
contingent or disputed and including financial lease
commitments and pension liabilities), all outstanding
capital commitments and all bad or doubtful debts of the
Target Companies as at the Accounts Dates, in each case in
accordance with applicable accounting principles;
(ii) the Accounts of the Target Companies for each of the
periods ended on the Accounts Dates were prepared under
the historical convention, complied with the requirements
of all relevant laws and regulations then in force and
with all statements of standard accounting practice (or
financial reporting standards) and applicable accounting
principles then in force;
(iii) the rate of depreciation adopted by the Target Companies
in its Accounts for each of the periods ended on the
Accounts Dates was sufficient for each of the fixed assets
of the Target Companies to be written down to nil by the
end of its useful life;
(iv) except as stated in its Accounts, no changes in the
accounting policies were made by any of the Target
Companies in any of the periods ended on the Accounts
Dates; and
(v) the results shown by the Accounts of the Target Companies
for each of the periods ended on the Accounts Dates were
not (except as therein disclosed) affected by any
extraordinary or exceptional item or by any other factor
rendering such results for all or any of such periods
unusually high or low.
- 41 -
3.2 None of the financial information provided to the Purchaser or its
representatives and advisers is misleading in any material respect nor
materially over-state the value of the assets nor materially
under-state the liabilities of any Target Company as at the dates to
which they were drawn up and do not materially over-state the profits
of any Target Company in respect of the periods to which they relate.
POSITION SINCE LAST ACCOUNTS DATE
3.3 (a) Since the Last Accounts Date and compared to the Last Accounts,
there has been no material adverse change in the financial or
trading position or in the prospects of any Target Company and no
event, fact or matter has occurred which is likely to give rise
to any such change.
(b) Since the Last Accounts Date and compared to the Last Accounts:
(i) the business of each Target Company has been carried on
in the ordinary and usual course and no Target Company
has made or agreed to make any payment other than
routine payments in the ordinary and usual course of
trading;
(ii) no dividend or other distribution has been declared,
paid or made by any Target Company;
(iii) there has been no material change in the level of
borrowing or in the working capital requirements of any
Target Company;
(iv) all transactions between each Target Company and any
Vendor Group Company have been on an arm's length basis
and commercial terms;
(v) save for the Restructuring Agreements, the Connected
Transactions and the Trademark Licensing Agreement, no
contract, liability or commitment (whether in respect of
capital expenditure or otherwise) has been entered into
by any Target Company which is of a long term or unusual
nature or which involved or could involve an obligation
of a material nature or magnitude;
(vi) save as provided in the Restructuring Agreements or in
the usual and ordinary course of business of the Target
Companies, no Target Company has (whether in the
ordinary and usual course of business or otherwise)
acquired or disposed of, or agreed to acquire or dispose
of any material business or any material asset having a
value in excess of RMB50,000,000;
(vii) no debtor has been released by any Target Company on
terms that it pays less than the book value of its debt
and no material debt owing to any Target Company has
been deferred, subordinated or written off or has proved
to any extent irrecoverable;
(viii) no change has been made in terms of employment and any
benefits in kind payable to employees and other
employment related matters by any Target Company or any
Vendor Group Company (other than those required by law)
which could materially
- 42 -
increase the total costs attributable to employment and
employee benefits of the Target Companies;
(ix) there has been no material increase or decrease in the
levels of debtors or creditors or in the average
collection or payment periods for the debtors and
creditors respectively;
(x) no Target Company has repaid any borrowing or
indebtedness in advance of its stated maturity;
(xi) there has been no material reduction in the cash balances
of any Target Company;
(xii) no resolution of the members of any Target Company has
been passed whether in general meeting or otherwise
(other than resolutions relating to the routine business
of annual general meetings);
(xiii) the business of each Target Company has not been
affected by any abnormal factor not affecting to a
similar extent generally all companies carrying on
similar businesses; and
(xiv) no Target Company has agreed to any variation or
termination of any existing contract to which that
Target Company is a party and which may have a material
effect upon the nature or scope of the operations of
such Target Company.
WORKING CAPITAL
3.4 Having regard to existing bank and other financial facilities, each
Target Company has sufficient working capital available to it as at
the date of this Agreement to enable it to continue to carry on its
business in its present form and at its present level of turnover and
for the purpose of performing in accordance with their terms all
orders, projects and other obligations and discharging all liabilities
which ought properly to be discharged during the period of 12 months
after Completion.
ACCOUNTING AND OTHER RECORDS
3.5 (a) The books of account and other records of each Target Company:
(i) are up-to-date and have been maintained in accordance with
all applicable laws and generally accepted accounting
practices on a proper and consistent basis;
(ii) comprise complete and accurate records of all information
required to be recorded therein;
(iii) are in its possession or under its control together with
all documents of title and executed copies of all existing
agreements to which the relevant Target Company is a
party.
(b) All accounts, documents and returns required by law to be
delivered or made by any Target Company to any government
authority or regulatory body or any other authority have been
duly and correctly delivered or made.
- 43 -
4 DEBT POSITION
DEBTS OWED TO THE TARGET COMPANIES
4.1 There are no debts owing to any Target Company other than;
(i) the Intra-Group Loans; and
(ii) trade debts incurred in the ordinary and usual course of
business which do not exceed 120% of the trade debts as set out
in the Last Accounts.
DEBTS OWED BY THE TARGET COMPANIES
4.2 (a) No Target Company has outstanding any borrowing or indebtedness
in the nature of borrowing (including, without limitation, any
indebtedness for moneys borrowed or raised under any acceptance
credit, bond, note, xxxx of exchange or commercial paper, finance
lease, hire purchase agreement, trade bills (other than those on
terms normally obtained), forward sale or purchase agreement or
conditional sale agreement or other transaction having the
commercial effect of a borrowing) other than:
(i) the Intra-Group Loans; and
(ii) moneys borrowed from or otherwise owed to third parties
which do not exceed 120% of the money borrowed from or
otherwise owed to third parties as set out in the Last
Accounts.
(b) No Target Company has received any notice to repay under any
agreement relating to any borrowing or indebtedness in the nature
of borrowing which is repayable on demand.
(c) There has not occurred any event of default or any other event or
circumstance which would entitle any person to call for early
repayment under any agreement relating to any borrowing or
indebtedness of any Target Company or to enforce any security
given by any Target Company (or, in either case, any event or
circumstance which with the giving of notice and/or the lapse of
time and/or a relevant determination would constitute such an
event or circumstance).
5 REGULATORY MATTERS
5.1 (a) Each Target Company has, or will by Completion have, obtained all
licences, permissions, authorisations and consents required for
carrying on its business effectively in the places and in the
manner in which such business is now carried on.
(b) The licences, permissions, authorisations and consents referred
to in paragraph (a) are (or will by Completion be) in full force
and effect, not limited in duration or subject to any unusual or
onerous conditions, have been (or will by Completion have been)
complied with in all respects.
(c) To the best knowledge of the Vendor and the Warrantor, there are
no circumstances which indicate that any of the licences,
permissions, authorisations or consents referred to in paragraph
(a) will or are likely to be revoked or not renewed, in whole or
in part, in the ordinary course of events
- 44 -
(whether as a result of the acquisition of the Target BVI Shares
by the Purchaser or otherwise).
5.2 (a) Each Target Company has conducted its business and corporate
affairs in accordance with its business licence and with all
applicable laws and regulations (whether of the PRC or any other
jurisdiction).
(b) No Target Company is in default of any order, decree or judgment
of any court or any governmental or regulatory authority (whether
of the PRC or any other jurisdiction).
6 THE REORGANISATION AND THE ASSETS
THE REORGANISATION
6.1 The property and other assets transferred into the Target Companies
pursuant to the Reorganisation comprise all the assets necessary for
the carrying on of the business carried on or to be carried on by the
Target Companies in the manner it is presently conducted and as
described in the Circular and the liabilities assumed by the Target
Companies pursuant to the Reorganisation represent the only
liabilities of the Target Companies and are fully, fairly and
accurately provided for in, the Financial Statements.
6.2 The events and transactions contemplated by the Reorganisation do not
contravene any provision of applicable law, rule or regulation and do
not contravene the Articles of Association, other constitutional
documents or the business licence of the Target Companies or
contravene the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement, note, lease or
other agreement or instrument binding upon the Target Companies that,
singly or in the aggregate, is material to the Target Companies, or
any judgement, rule or regulation, order or decree of any governmental
body, agency or court having jurisdiction over the Target Companies
and will not result in the creation or imposition of any Encumbrance
or other restriction upon any assets of the Target Companies.
6.3 All consents, approvals, authorisations, orders, registrations and
qualifications required in the PRC in connection with the events and
transactions contemplated by the Reorganisation have been (or will by
Completion have been) made or unconditionally obtained in writing
(including, without limitation, all PRC Relevant Governmental
Approvals), and no such consent, approval, authorisation, order,
registration or qualification has been withdrawn or is subject to any
condition precedent which has not been fulfilled or performed.
6.4 There are no legal or government proceedings pending against any of
the Target Companies in the PRC challenging the effectiveness or
validity of the events and transactions contemplated by the
Reorganisation and, to the best knowledge of the Vendor and the
Warrantor, no such proceedings are threatened or contemplated by any
governmental agencies in the PRC or elsewhere.
OWNERSHIP
6.5 (a) For the purpose of this Warranty 6.5, assets shall not include
the Properties, to which the provisions of Part B of this
Schedule shall apply.
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(b) Each of the assets included in the Last Accounts of each Target
Company or acquired by it since the Last Accounts Date (other
than assets disposed of in the ordinary course of business and
pursuant to the Reorganisation) is the absolute property of that
Target Company. Save as disclosed in the Last Accounts, those
assets are not the subject of any security interest or any
assignment, equity, option, right of pre-emption, royalty,
factoring arrangement, leasing or hiring agreement, hire purchase
agreement, conditional sale or credit sale agreement, agreement
for payment on deferred terms or any similar agreement or
arrangement (or any agreement or obligation, including a
conditional obligation, to create or enter into any of the
foregoing).
POSSESSION AND THIRD PARTY FACILITIES
6.6 (a) All of the assets owned by each Target Company, or in respect of
which any Target Company has a right of use, are in the
possession or under the control of that Target Company.
(b) Where any assets are used but not owned by any Target Company or
any facilities or services are provided to any Target Company by
any third party, there has not occurred any event of default or
any other event or circumstance which may entitle any third party
to terminate any agreement or licence in respect of the provision
of such facilities or services (or any event or circumstance
which with the giving of notice and/or the lapse of time and/or a
relevant determination would constitute such an event or
circumstance).
ADEQUACY OF ASSETS
6.7 (a) The assets of each Target Company and the facilities and services
to which each Target Company has a contractual right include all
rights, properties, assets, facilities and services necessary or
desirable for the carrying on of the business of that Target
Company in the manner in which it is currently carried on.
(b) The assets of each Target Company and the facilities and services
to which the relevant Target Company has a contractual right
include all assets, facilities and services necessary to enable
such Target Company to conduct its business after Completion in
the same manner in all material respects as it was conducted
immediately prior to the transfer of such business to the
relevant Target Company pursuant to the Reorganisation.
(c) Save as otherwise provided in the Connected Transactions and the
Trademark Licensing Agreement, no Target Company depends in any
material respect upon the use of assets owned by, or facilities
or services provided by, any Vendor Group Company.
CONDITION
6.8 All the plant, machinery, systems, equipment and vehicles used by each
Target Company:
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(a) are in a good state of repair and have been regularly and
properly maintained in accordance with appropriate technical
specifications, safety regulations and the terms and conditions
of any applicable agreement;
(b) are capable of being efficiently and properly used for the
purposes for which they were acquired or are retained;
(c) are not dangerous, inefficient, obsolete or in need of renewal or
replacement.
INSURANCES
6.9 (a) The insurances for the business, undertakings, properties and
other assets of each Target Company are in full force and effect
and there are no circumstances which could render any of such
insurances void or voidable and all due premiums in respect
thereof have (if due) been paid.
(b) No claim is outstanding by any Target Company under any such
policy of insurance and, to the best knowledge of the Vendor and
the Warrantor, there are no circumstances likely to give rise to
such a claim.
7 INTELLECTUAL PROPERTY RIGHTS
REGISTERED RIGHTS
7.1 (a) Each of the Target Companies is the sole legal owner of all
Intellectual Property Rights registered or sought to be
registered in any jurisdiction which are held or beneficially
owned by such Target Company.
(b) No act has been done or omitted to be done and no event has
occurred or is likely to occur which may render any of such
Intellectual Property Rights subject to revocation, compulsory
licence, cancellation or amendment or may prevent the grant or
registration of a valid Intellectual Property Right pursuant to a
pending application.
INFRINGEMENT
7.2 (a) None of the operations of any Target Company infringe, or are
likely to infringe, any rights held by any third party or involve
the unauthorised use of confidential information disclosed to any
Target Company (or any Vendor Group Company) in circumstances
which might entitle a third party to make a claim against a
Target Company.
(b) No claim has been made by any third party which alleges any
infringing act or process which would fall within paragraph (a)
above or which otherwise disputes the right of any Target Company
to use any Intellectual Property Rights relating to its business
and the Vendor and the Warrantor are not aware of any
circumstances (including any act or omission to act) likely to
give rise to such a claim.
(c) There exists no actual or threatened infringement by any third
party of any intellectual Property Rights held or used by a
Target Company (including misuse of confidential information) or
any event likely to constitute such an infringement nor has a
Target Company (or any Vendor Group Company)
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acquiesced in the unauthorised use by any third party of any such
Intellectual Property Rights.
INTELLECTUAL PROPERTY LICENCES
7.3 No Target Company is in default under any licence, sub-licence or
assignment granted to it in respect of any Intellectual Property
Rights used by any Target Company.
LOSS OF RIGHTS
7.4 No Intellectual Property Rights owned or used by a Target Company and
no licence of Intellectual Property Rights of which a Target Company
has the benefit will be lost, or rendered liable to any right of
termination or cessation by any third party, by virtue of the
acquisition by the Purchaser of the Target BVI Shares.
RECORDS AND SOFTWARE
7.5 (a) All the accounting records and systems (including but not limited
to computerised accounting systems) of the Target Companies are
recorded, stored, maintained or operated or otherwise held by a
Target Company and are not wholly or partly dependent on any
facilities or systems which are not under the exclusive ownership
or control of a Target Company.
(b) Each Target Company is licensed to use all software necessary to
enable it to continue to use its computerised records for the
foreseeable future in the same manner in which they have been
used prior to the date of this Agreement and does not share any
user rights in respect of such software with any other person.
8 CONTRACTUAL MATTERS
MATERIAL CONTRACTS
8.1 Save for the Restructuring Agreements, the Connected Transactions and
the Trademark Licensing Agreement, there is not outstanding any
agreement or arrangement to which any Target Company is a party:
(a) which, by virtue of the acquisition of the Target BVI Shares by
the Purchaser or other performance of the terms of this
Agreement, will result in:
(i) any other party being relieved of any obligation or
becoming entitled to exercise any right (including any
right of termination or any right of pre-emption or other
option); or
(ii) any Target Company being in default under any such
agreement or arrangement or losing any benefit, right or
licence which it currently enjoys or in a liability or
obligation of any Target Company being created or
increased;
(b) to which any Vendor Group Company is a party or in which any
Vendor Group Company or any connected person (as defined under
the Listing
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Rules) is interested or from which any such person takes benefit,
whether directly or indirectly;
(c) entered into otherwise than by way of a bargain at arm's length
and on commercial terms;
(d) which establishes any guarantee, indemnity, suretyship, form of
comfort or support (whether or not legally binding) given by any
Target Company in respect of the obligations or solvency of any
third party;
(e) pursuant to which any Target Company has sold or otherwise
disposed of any company or business in circumstances such that it
remains subject to any liability (whether contingent or
otherwise) which is not fully provided for in its Last Accounts;
(f) which, upon completion by a Target Company of its work or the
performance of its other obligations under it, is likely to
result in a loss for that Target Company which is not fully
provided for in its Last Accounts or which either is not expected
to make a normal profit margin or involves an abnormal degree of
risk;
(g) which establishes any joint venture, consortium, partnership or
profit (or loss) sharing agreement or arrangement to which any
Target Company is a party;
(h) any power of attorney given by any Target Company or any other
authority which would enable any person not employed by any
Target Company to enter into any contract or commitment on behalf
of any Target Company;
(i) which involves or is likely to involve (i) material expenditure
by any Target Company or (ii) material obligations or
restrictions of any Target Company of an unusual or exceptional
nature or magnitude and not in the ordinary and usual course of
business;
(j) which establishes any material agency, distributorship,
marketing, purchasing, manufacturing or licensing agreement or
arrangement to which any Target Company is a party;
(k) which is a currency and/or interest rate swap agreement, asset
swap, future rate or forward rate agreement, interest cap, collar
and/or floor agreement or other exchange or rate protection
transaction or combination thereof or any option with respect to
any such transaction or any other similar transaction to which
any target Company is a party;
(l) which is any other agreement or arrangement having or likely to
have a material effect on the financial or trading position or
prospects of any Target Company;
(m) which is a bid, tender, proposal or offer which, if accepted,
would result in any Target Company becoming a party to any
agreement or arrangement of a kind described in paragraphs (a) to
(l) above.
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DEFAULTS
8.2 (a) No Target Company is in default under any agreement to which
it is a party and there are no circumstances likely to give
rise to any such default.
(b) No party with whom any Target Company has entered into any
agreement or arrangement is in default under such agreement
or arrangement and there are no circumstances likely to give
rise to any such default.
9 LITIGATION AND INVESTIGATIONS
LITIGATION
9.1 (a) Except as plaintiff in the collection of debts arising in the
ordinary course of business, no Target Company is a plaintiff or
defendant in or otherwise a party to any material litigation,
arbitration or administrative proceedings which are in progress
or threatened or pending by or against or concerning any Target
Company or any of its assets.
(b) No governmental or official investigation or inquiry concerning
any Target Company is in progress or pending.
(c) The Vendor and the Warrantor are not aware of any circumstances
which are likely to give rise to any such proceeding,
investigation or inquiry as is referred to in paragraph (a) or
paragraph (b).
10 DIRECTORS AND EMPLOYEES
EMPLOYEES
10.1 No Target Company has entered into any arrangements regarding any
future variation in any contract of employment in respect of any of
its directors and employees or any agreement imposing an obligation
on the Target Company to increase the basis and/or rates of
remuneration and/or the provision of other benefits in kind to or on
behalf of any of its directors or employees at any future date.
COMPLIANCE
10.2 Each Target Company has in relation to each of its employees (and so
far as relevant to each of its former employees) complied in all
material respects with all statutes, regulations, codes of conduct,
collective agreements, terms and conditions of employment, orders and
awards relevant to their conditions of service or to the relations
between it and its employees (or former employees, as the case may
be) or any recognised trade union.
INCENTIVE SCHEMES
10.3 No Target Company has in existence any share incentive scheme, share
option scheme or profit sharing scheme for all or any of its
directors or employees.
PAYMENTS ON TERMINATION
10.4 Except to the extent (if any) to which provision or allowance has
been made in the Last Accounts of each Target Company:
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(a) no outstanding liability has been incurred by any Target Company
for breach of any contract of employment or for services or for
long service or redundancy payments, protective awards,
compensation for dismissal or for any other liability accruing
from the termination of any contract of employment or for
services, and no such liability will be incurred by any Target
Company as a result of the Reorganisation or the acquisition of
the Target BVI Shares by the Purchaser or other performance of
the terms of this Agreement and the Restructuring Agreements;
(b) no gratuitous payment has been made or benefit given (or promised
to be made or given) by any Target Company in connection with the
actual or proposed termination or suspension of employment, or
variation of any contract of employment, of any present or former
director or employee of any Target Company.
11 INSOLVENCY ETC.
11.1 No order has been made, petition presented or meeting convened for
the purpose of considering a resolution for the winding up of any
member of the Target Companies Group or for the appointment of any
provisional liquidator. No petition has been presented for an
administration order to be made in relation to any member of the
Target Companies Group, and no receiver (including any administrative
receiver) has been appointed in respect of the whole or any part of
any of the property, assets and/or undertaking of any member of the
Target Companies Group.
11.2 No composition in satisfaction of the debts of any member of the
Target Companies Group, or scheme of arrangement of its affairs, or
compromise or arrangement between it and its creditors and/or members
or any class of its creditors and/or members, has been proposed,
sanctioned or approved.
11.3 No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole
or any part of any of the property, assets and/or undertaking of any
member of the Target Companies Group.
11.4 No events or circumstances analogous to any of those referred to in
Warranties 11.1 to 11.3 have occurred in any jurisdiction outside the
PRC.
11.5 No circumstances exist which are likely to give rise to the
occurrence of any events or circumstances described in Warranties
11.1 to 11.4 if the Warranties were to be repeated at any time on or
before Completion.
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PART B: TAX AND PROPERTY WARRANTIES
1 TAX
1.1 Each of the Target Companies has all necessary tax registration
certificates which are in full force and effect and no Target Company
has established any place of business or carried on any business and
has not made any filing with any tax authority in any part of the
world other than the PRC.
1.2 Each of the Target Companies has complied in all material respects
with all statutory provisions, rules, regulations, orders and
directions concerning profits or enterprise income tax, foreign
enterprise income tax, value-added tax, business tax and stamp duty
(and any similar applicable tax or taxation in the PRC).
1.3 No tax authority has agreed to operate any special arrangement (being
an arrangement which is not based on a uniform application of the
relevant legislation whether expressly provided for in the relevant
legislation or operated by way of extra statutory concession or
otherwise) in relation to any of the Target Companies.
1.4 Each of the Target Companies has duly, within all appropriate time
limits, made all returns, given all notices and supplied all
information required to be supplied to all relevant tax authorities,
All such information was when provided and remain complete and
accurate and all such returns and notices were when provided and
remain complete and accurate and were made on a proper basis.
1.5 No Target Company has received any notice or allegation from any tax
authorities that it has not complied with any relevant legal
requirement relating to registration or notification for taxation
purposes and no Target Company is involved in any dispute or
investigation with any tax authority and there are no facts or matters
which it reasonably believes will cause any such dispute or
investigation or any liability for taxation (present or future).
1.6 Each of the Target Companies:
(a) has paid or accounted for all taxation (if any) due to be paid or
accounted for by it before the date of this Agreement;
(b) is not under any liability to pay any penalty or interest in
connection with any taxation referred to in paragraph (a);
(c) has made all deductions and withholdings in respect or on account
of taxation which it is required or entitled by any relevant
legislation to make from any payments made by it including,
without limitation, interest annuities or other annual payments,
royalties, rent, remuneration payable to employees or
sub-contractors or payments to a non-resident and where
appropriate each Target Company has accounted in full to the
relevant fiscal authority for any taxation so deducted or
withheld; and
(d) has taken all necessary steps to obtain any repayment of or
relief from taxation available to it.
1.7 All sums due and payable to any taxation authority in respect of
emoluments paid and benefits provided to the employees of the Target
Companies at the date of this
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Agreement have been paid and all such deductions and retentions as are
required under the laws of the PRC have been made.
1.8 All remuneration, compensation payments, payments on retirement or
removal from an office or employment and other sums paid or payable to
employees or officers or former employees or officers of each Target
Company and all interest, annuities, royalties, rent and other annual
payments paid or payable by each Target Company (whether before or
after the date hereof) pursuant to any obligation in existence at the
date hereof are and will (on the basis of the taxation legislation in
force at the date hereof) be deductible for incomes tax purposes
either in computing the profits of each Target Company or as a charge
on the income of such Target Company.
1.9 Each of the Target Companies has made or caused to be made the returns
which ought to be made by or in respect of each Target Company for any
taxation purposes and no returns are the subject of any dispute with
any tax authority.
2 PROPERTY
2.1 The Target Companies have valid title to all of the Properties and
valid title to all material personal property owned by them, in each
case free and clear of all Encumbrances, defects or any other
restrictions except such as are described in the Property Legal
Opinions or such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be
made of such property by the Target Companies.
2.2 The Target Companies do not own, operate, manage or have any other
right or interest, directly or indirectly, in any other material real
property of any kind save for those described in the Property Legal
Opinions and the telecommunications services agreements referred to in
paragraphs 1 to 8 of Appendix 1.
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APPENDIX 1
CONNECTED TRANSACTIONS
1 Telecommunications Services Agreement between Anhui Mobile and Anhui
Communication Services Company.
2 Telecommunications Services Agreement between Jiangxi Mobile and Jiangxi
Communication Services Company.
3 Telecommunications Services Agreement between Chongqing Mobile and
Chongqing Communication Services Company.
4 Telecommunications Services Agreement between Sichuan Mobile and Sichuan
Communication Services Company.
5 Telecommunications Services Agreement between Hubei Mobile and Hubei
Communication Services Company.
6 Telecommunications Services Agreement between Hunan Mobile and Hunan
Communication Services Company.
7 Telecommunications Services Agreement between Shaanxi Mobile and Shaanxi
Communication Services Company.
8 Telecommunications Services Agreement between Shanxi Mobile and Shanxi
Communication Services Company.
9 Transmission Tower Sales, Installation and Maintenance Agreement between
the Purchaser and Hubei Communication Services Company.
10 Letters of Consent between the Warrantor, Anhui Mobile, Anhui Communication
Services Company and the relevant banks regarding the assignment of loans
from Anhui Communication Services Company to Anhui Mobile.
11 Letters of Consent between the Warrantor, Jiangxi Mobile, Jiangxi
Communication Services Company and the relevant banks regarding the
assignment of loans from Jiangxi Communication Services Company to Jiangxi
Mobile.
12 Letters of Consent between the Warrantor, Chongqing Mobile, Chongqing
Communication Services Company and the relevant banks regarding the
assignment of loans from Chongqing Communication Services Company to
Chongqing Mobile.
13 Letters of Consent between the Warrantor, Sichuan Mobile, Sichuan
Communication Services Company and the relevant banks regarding the
assignment of loans from Sichuan Communication Services Company to Sichuan
Mobile.
14 Letters of Consent between the Warrantor, Hubei Mobile, Hubei Communication
Services Company and the relevant banks regarding the assignment of loans
from Hubei Communication Services Company to Hubei Mobile.
15 Letters of Consent between the Warrantor, Hunan Mobile, Hunan Communication
Services Company and the relevant banks regarding the assignment of loans
from Hunan Communication Services Company to Hunan Mobile.
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16 Letters of Consent between the Warrantor, Shaanxi Mobile, Shaanxi
Communication Services Company and the relevant banks regarding the
assignment of loans from Shaanxi Communication Services Company to Shaanxi
Mobile.
17 Letters of Consent between the Warrantor, Shanxi Mobile, Shanxi
Communication Services Company and the relevant banks regarding the
assignment of loans from Shanxi Communication Services Company to Shanxi
Mobile.
18 Principle Agreement for Indirect Loans between the Warrantor and the
Purchaser.
19 Agreement for the Use of Spectrum and Number Resources between the
Warrantor and the Purchaser.
20 Inter-provincial Long Distance Transmission Lines Leasing Fee Sharing
Agreement between the Warrantor and the Purchaser.
21 Inter-provincial Interconnection and Domestic and International Roaming
Settlement Agreement between the Warrantor and the Purchaser.
22 Agreement for the Sharing and Settlement of Revenue from Prepaid
Value-adding Cards between the Warrantor and the Purchaser.
23 Supplemental Agreement for the Sharing and Settlement of Revenue from
Prepaid Value-Adding Cards between the Warrantor and the Purchaser.
24 Supplemental Agreement (in relation to agreements 19 to 23 above) between
the Warrantor, the Purchaser and the Target Companies.
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APPENDIX 2
THE RESTRUCTURING AGREEMENTS
1 Investment Agreement dated 15 May 2002 between the Warrantor, Anhui Mobile
and Anhui Communication Services Company, pursuant to which the Warrantor
injected all interests, assets, liabilities, personnel and businesses in
relation to the mobile telecommunications services in Anhui into Anhui
Mobile.
2 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Anhui Mobile and Anhui Communication Services Company to confirm the rights
and obligations in respect of the interests, assets, liabilities, personnel
and businesses transferred under the Investment Agreement.
3 Investment Agreement dated 15 May 2002 between the Warrantor, Jiangxi
Mobile and Jiangxi Communication Services Company, pursuant to which the
Warrantor injected all interests, assets, liabilities, personnel and
businesses in relation to the mobile telecommunications services in Jiangxi
into Jiangxi Mobile.
4 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Jiangxi Mobile and Jiangxi Communication Services Company to confirm the
rights and obligations in respect of the interests, assets, liabilities,
personnel and businesses transferred under the Investment Agreement.
5 Investment Agreement dated 15 May 2002 between the Warrantor, Chongqing
Mobile and Chongqing Communication Services Company, pursuant to which the
Warrantor injected all interests, assets, liabilities personnel and
businesses in relation to the mobile telecommunications services in
Chongqing into Chongqing Mobile.
6 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Chongqing Mobile and Chongqing Communication Services Company to confirm
the rights and obligations in respect of the interests, assets,
liabilities, personnel and businesses transferred under the Investment
Agreement.
7 Investment Agreement dated 15 May 2002 between the Warrantor, Sichuan
Mobile and Sichuan Communication Services Company, pursuant to which the
Warrantor injected all interests, assets, liabilities, personnel and
businesses in relation to the mobile telecommunications services in Sichuan
into Sichuan Mobile.
8 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Sichuan Mobile and Sichuan Communication Services Company to confirm the
rights and obligations in respect of the interests, assets, liabilities,
personnel and businesses transferred under the Investment Agreement.
9 Investment Agreement dated 15 May 2002 between the Warrantor, Hubei Mobile
and Hubei Communication Services Company, pursuant to which the Warrantor
injected all interest, assets, liabilities, personnel and businesses in
relation to the mobile telecommunications services in Hubei into Hubei
Mobile.
10 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Hubei Mobile and Hubei Communication Services Company to confirm the rights
and obligations in respect of the interests, assets, liabilities, personnel
and businesses transferred under the Investment Agreement.
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11 Investment Agreement dated 15 May 2002 between the Warrantor, Hunan Mobile
and Hunan Communication Services Company, pursuant to which the Warrantor
injected all interests, assets, liabilities, personnel and businesses in
relation to the mobile telecommunications services in Hunan into Hunan
Mobile.
12 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Hunan Mobile and Hunan Communication Services Company to confirm the rights
and obligations in respect of the interests, assets, liabilities, personnel
and businesses transferred under the Investment Agreement.
13 Investment Agreement dated 15 May 2002 between the Warrantor, Shaanxi
Mobile and Shaanxi Communication Services Company, pursuant to which the
Warrantor injected all interests, assets, liabilities, personnel and
businesses in relation to the mobile telecommunications services in Shaanxi
into Shaanxi Mobile.
14 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Shaanxi Mobile and Shaanxi Communication Industrial Company to confirm the
rights and obligations in respect of the interests, assets, liabilities,
personnel and businesses transferred under the Investment Agreement.
15 Investment Agreement dated 15 May 2002 between the Warrantor, Shanxi Mobile
and Shanxi Communication Services Company, pursuant to which the Warrantor
injected all interests, assets, liabilities, personnel and businesses in
relation to the mobile telecommunications services in Shanxi into Shanxi
Mobile.
16 Confirmation of Rights and Obligations Agreement dated 15 May 2002 between
Shanxi Mobile and Shanxi Communication Services Company to confirm the
rights and obligations in respect of the interests, assets, liabilities,
personnel and businesses transferred under the Investment Agreement.
17 Transfer of Interests Agreement between the Warrantor, China Mobile (Hong
Kong) Group Company Limited, the Vendor, Anhui Mobile BVI, Jiangxi Mobile
BVI, Chongqing Mobile BVI, Sichuan Mobile BVI, Hubei Mobile BVI, Hunan
Mobile BVI, Shaanxi Mobile BVI and Shanxi Mobile BVI.
- 57 -
APPENDIX 3
FORM OF TAX INDEMNITY
Dated 0000
XXXXX MOBILE HONG KONG (BVI) LIMITED
CHINA MOBILE (HONG KONG) LIMITED
CHINA MOBILE COMMUNICATIONS CORPORATION
TAX INDEMNITY
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THIS DEED OF TAX INDEMNITY is made on 2002
BETWEEN:
(1) CHINA MOBILE HONG KONG (BVI) LIMITED a company incorporated under the laws
of the British Virgin Islands whose registered office is at PO Box 957,
Offshore Incorporation Centre, Road Town, Tortola, British Virgin Islands
(the "VENDOR");
(2) CHINA MOBILE (HONG KONG) LIMITED a company incorporated under the laws of
Hong Kong whose registered office is at 00xx Xxxxx, Xxx Xxxxxx, 00 Xxxxx'x
Xxxx Xxxxxxx, Xxxx Xxxx (the "PURCHASER"); and
(3) CHINA MOBILE COMMUNICATIONS CORPORATION a company incorporated under the
laws of the PRC whose registered office is at 53A Xibianmennei Dajie,
Xuanwuqu, Beijing, PRC (the "WARRANTOR").
WHEREAS:
(A) By a Conditional Sale and Purchase Agreement dated 16 May 2002 (the
"AGREEMENT") made between the Vendor, the Warrantor and the Purchaser, the
Vendor has agreed to sell and the Purchaser has agreed to purchase the
Target BVI Shares (as defined in the Agreement) on the terms and conditions
therein contained.
(B) It is a term of the Agreement that the Vendor and the Warrantor deliver to
the Purchaser this Deed of Tax Indemnity on Completion (as defined in the
Agreement).
NOW THIS DEED WITNESSES as follows:
1 INTERPRETATION
1.1 In this Deed, unless the context requires otherwise:
(a) words and expressions and other rules of interpretation defined,
used or set out in the Agreement have the same meanings and
application in this Deed;
(b) "TAXATION" means and includes all forms of tax, levy, duty,
charge, impost, fee, deduction or withholding of any nature now
or hereafter imposed, levied, collected, withheld or assessed by
any taxing or other authority in any part of the world and
includes any interest, additional tax, penalty or other charge
payable or claimed in respect thereof,
(c) "CLAIM" means any assessment, notice, demand, letter or other
document issued or action taken by or on behalf of any person,
authority or body whatsoever and of whatever country from which
it appears that any member of the Target Companies Group is
liable or is sought to be made liable to make any payment or is
deprived or is sought to be deprived of any relief or allowance
or credit or right to repayment of taxation;
(d) "EVENT" includes (without limitation) the death of any person,
any action, omission or transaction whether or not any member of
the Target Companies Group is a party thereto and includes
completion of the sale of the Target BVI Shares to the Purchaser
and references to the result of events on or before the date
hereof shall include the combined result of two or more events
one or more of which shall have taken place before the date
hereof;
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(e) references to income or profits or gains earned, accrued or
received shall include income or profits or gains deemed to have
been or treated as or regarded as earned, accrued or received for
the purposes of any legislation;
(f) references to a Claim shall include any Claim whether made before
or after the date hereof and whether satisfied or unsatisfied at
the date hereof and shall also include:
(i) the loss of any relief, allowance or credit granted by or
pursuant to any legislation or otherwise for taxation
purposes which could but for the Claim in question have
been available to the Purchaser or any member of the
Target Companies Group whether or not the said loss
results in any taxation being payable at the time of such
loss; and
(ii) the nullifying or cancellation of a right to repayment of
taxation which would have been so available or is at the
date hereof assumed by the Vendor, the Warrantor or the
Purchaser to be available;
and in such a case the amount of taxation which could otherwise
have been relieved, allowed or credited by the relief, allowance
or credit so lost or the amount of repayment which would
otherwise have been obtained shall be treated as an amount of
taxation for which a liability has arisen;
(g) references to the Agreement shall be construed as references to
the Agreement as amended or supplemented from time to time.
1.2 The expressions the VENDOR, THE WARRANTOR, the TARGET COMPANIES GROUP
and the PURCHASER shall, where the context permits, include their
respective successors and assigns.
2 INDEMNITY
Subject as hereinafter provided, each of the Vendor and the Warrantor
hereby jointly and severally undertakes to indemnify and keep indemnified
the Purchaser (for itself and as trustee for the Target Companies Group)
against any loss or liability suffered by the Purchaser or any member of
the Target Companies Group including, but not limited to, any diminution in
the value of the assets of or shares in any member of the Target Companies
Group, any payment made or required to be made by the Purchaser or any
member of the Target Companies Group and any costs and expenses incurred as
a result of or in connection with any Claim falling on any member of the
Target Companies Group resulting from or by reference to any income,
profits or gains earned, accrued or received on or before the date hereof
or any event on or before the date hereof whether alone or in conjunction
with other circumstances and whether or not such taxation is chargeable
against or attributable to any other person, firm or company.
3 EXCEPTIONS
The indemnities given by this Deed do not cover any Claim to the extent
that provision or reserve in respect thereof has been made in the Last
Accounts or to the extent that payment or discharge of such Claim has been
taken into account therein.
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4 COSTS AND EXPENSES
The indemnities given by this Deed shall cover all costs and expenses
incurred by the Purchaser or any member of the Target Companies Group in
connection with any Claim, and any penalties, fines or interest payable by
the Purchaser or any member of the Target Companies Group relating to any
Claim for which the Vendor or the Warrantor is liable under this Deed.
5 REIMBURSEMENT
In the event that any Claim which is the subject of an indemnity hereunder
is or has been discharged (whether by payment or by the loss of any relief,
allowance, credit or right to repayment of taxation) or suffered by any
member of the Target Companies Group, the indemnity given hereunder shall
take effect as a covenant by the Vendor and the Warrantor forthwith to
reimburse the relevant member of the Target Companies Group (through the
Purchaser) for any amount so paid or to compensate the relevant member of
Target Companies Group for any loss of relief, allowance, credit or right
to repayment so suffered.
6 CONDUCT OF CLAIMS
If the Purchaser becomes aware of a Claim relevant for the purposes of this
Deed, it shall as soon as reasonably practicable give notice thereof to the
Vendor and the Warrantor and shall (subject to the Purchaser and the Target
Companies Group being indemnified to the Purchaser's satisfaction against
any liability, costs, damages or expenses which may be incurred thereby)
take such action and procure that the Target Companies Group shall take
such action as the Vendor and the Warrantor may reasonably request to
avoid, resist, dispute, defend, compromise or appeal against the Claim,
provided that neither the Purchaser nor any member of the Target Companies
Group shall be required to take any steps which would require any admission
of guilt or liability relating to matters connected with the Claim in
question or which would affect the future conduct of the business of the
Purchaser or any member of the Target Companies Group or affect the rights
or reputations of any of them nor shall they be required to take any such
action unless the Vendor and the Warrantor shall have produced to them a
leading barrister's opinion that such action is reasonable.
7 SET-OFF AND DEDUCTIONS
All payments to be made by the Vendor and the Warrantor under this Deed
shall be made in full without set-off or counterclaim or any restriction or
condition and free and clear of any present or future taxes, duties,
charges or other deductions or withholdings of any nature. If any deduction
or withholding is required to be made from any such payment the Vendor and
the Warrantor shall, together with such payment, pay such additional amount
as is necessary to ensure that the recipient receives the full amount due
hereunder.
8 WAIVER AND SEVERABILITY
No failure or delay by the Purchaser or any member of the Target Companies
Group in exercising any right, power or remedy under this Deed shall
operate as a waiver thereof, nor shall any single or partial exercise of
the same preclude any further exercise thereof or the exercise of any other
right, power or remedy. If at any time any provision of this Deed is or
becomes illegal, invalid or unenforceable in any respect, the legality,
validity and enforceability of the remaining provisions of this Deed shall
not be affected or impaired thereby.
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9 ASSIGNMENT
The Purchaser and any member of the Target Companies Group may assign its
respective rights and benefits under this Deed.
10 NOTICES
Each notice, demand or other communication given or made hereunder shall be
in writing and delivered or sent to the relevant party at its address or
telex number or fax number set out in the Agreement. The provisions of
clause 21 of the Agreement shall apply to this Deed as though they have
been fully set out herein.
11 GOVERNING LAW AND JURISDICTION
11.1 This Deed shall be governed by and construed in accordance with the
laws of Hong Kong.
11.2 Any dispute arising out of or in connection with this Deed shall be
resolved by arbitration in Hong Kong International Arbitration Centre
by a single arbitrator in accordance with the UNCITRAL Arbitration
Rules in force from time to time. The parties agree that the arbitral
award will be final and binding.
IN WITNESS WHEREOF this Deed has been executed on the day and year first above
written.
THE COMMON SEAL OF )
CHINA MOBILE HONG KONG (BVI) LIMITED )
was affixed hereto in the presence of: )
--------------------------------- -----------------------------------
[NAME OF DIRECTOR] [NAME OF DIRECTOR]
Director Director
THE COMMON SEAL OF )
CHINA MOBILE (HONG KONG) LIMITED )
was affixed hereto in the presence of: )
--------------------------------- -----------------------------------
[NAME OF DIRECTOR] [NAME OF DIRECTOR]
Director Director
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SIGNED, SEALED AND DELIVERED )
BY )
a duly authorised representative on behalf of )
CHINA MOBILE COMMUNICATIONS CORPORATION )
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SIGNATURE PAGE
SIGNED by WANG XIAOCHU )
for and on behalf of ) /s/ Wang Xiaochu
CHINA MOBILE HONG KONG (BVI) LIMITED )
in the presence of: )
/s/ Xxxxx Xxx
SIGNED by WANG XIAOCHU )
for and on behalf of ) /s/ Wang Xiaochu
CHINA MOBILE (HONG KONG) LIMITED )
in the presence of: )
/s/ Xxxxx Xxx
SIGNED by XUE TAOHAI )
for and on behalf of ) /s/ Xue Taohai
CHINA MOBILE COMMUNICATIONS CORPORATION )
in the presence of: )
/s/ Xxxxx Xxx
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