1
Execution Copy
PRIVATE & CONFIDENTIAL
DATED 26TH SEPTEMBER 2000
J.I.C. HOLDINGS (B.V.I) LIMITED
XX. XXXXXX XX XXX XXXX
XX. XXXX XXX XXX
AND
NAM TAI ELECTRONICS, INC.
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AGREEMENT
RELATING TO THE SALE AND PURCHASE
OF THE ENTIRE ISSUED SHARE CAPITAL OF
THE J.I.C. GROUP
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CONTENTS
AGREEMENT
CLAUSE HEADING PAGE
1 Definitions and Interpretation 1
2 Conditions 5
3 Sale and Purchase 6
4 Consideration 7
5 Earnings Adjustment 7
6 Completion 9
7 Pre-Completion Undertakings of the Seller and the Guarantors 11
8 Warranties 12
9 Indemnity 13
10 Post-Completion Obligations 14
11 Miscellaneous 14
12 Notices 15
13 Confidentiality 17
14 Costs and Expenses 18
15 Time 18
16 Governing Law 18
17 Guarantee 18
18 Process Agent 19
SCHEDULE
NUMBER DESCRIPTION PAGE
1 Target Group Organisational Chart 20
2 Basic Information Concerning the Subsidiaries 21
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3 The Included Property 27
4 The Warranties 28
5 Form of Tax Indemnity 46
6 Form of Services Agreements 53
7 Form of Lock-Up Agreement 75
EXECUTION
EXHIBITS DESCRIPTION PAGE
A. Audited Accounts 79
B. Management Accounts 80
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THIS AGREEMENT is dated 2000 and is made
BETWEEN:
(1) J.I.C. HOLDINGS (B.V.I) LIMITED, a company incorporated in the British
Virgin Islands, with registration No.247602, (the "SELLER");
(2) XX. XXXXXX XX XXX XXXX, (I.D. Card Number X000000(0)) ("XX. XX") of x/x
X.X.X. Xxxxx, Xxxx 000, Xxxxx X, Xxxxxxx Commercial Centre, 37 Ma Xxx
Xxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxx Xxxx and XX. XXXX XXX XXX, (I.D. Card
Number X000000(0)) ("XX. XXXX") of x/x X.X.X. Xxxxx, Xxxx 000, Xxxxx X,
Xxxxxxx Commercial Centre, 37 Ma Xxx Xxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxx
Xxxx (individually a "GUARANTOR" and together the "GUARANTORS"); and
(3) NAM TAI ELECTRONICS, INC., a company incorporated in the British Virgin
Islands, with registration No. 3805, (the "BUYER").
BACKGROUND:-
(A) The Seller has agreed to sell the Sale Shares and the Buyer has agreed
to purchase the Sale Shares, subject to and on the terms and conditions
of this Agreement.
(B) As at the date hereof and as at Completion, the entire issued share
capital of the Seller is and will be beneficially owned and controlled
by Xx Xx and Xx Xxxx. Xx Xx and Xx Xxxx have agreed to join in this
Agreement for the purposes of guaranteeing the obligations of the Seller
under this Agreement and giving certain other representations,
warranties and undertakings under this Agreement.
BY WHICH IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless the context requires otherwise:-
"ACCOUNTS" means together the Audited Accounts and the Management
Accounts;
"ACCOUNTS DATE" means 31st August 2000;
"AUDITED ACCOUNTS" means the audited consolidated financial statements
of the Seller and its subsidiaries in respect of the last financial year
of the Seller ended on 31st March 2000, a copy of which is attached
hereto as Exhibit "A";
"BUSINESS DAY" means any day on which banks in Hong Kong are officially
open for business except for Saturdays;
"COMPANIES ORDINANCE" means the Companies Ordinance (Chapter 32, as
amended, of the Laws of Hong Kong);
"COMPANY" means a company to be newly incorporated in the British Virgin
Islands in such manner as may be directed by the Buyer between the
period from signing up to
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Completion, to become a wholly owned subsidiary of the Seller and for
the purposes of holding the Subsidiaries;
"COMPLETION" means subject to the fulfilment of the Conditions,
completion of the sale and purchase of the Sale Shares and, where the
context requires, the performance by the parties of the several
obligations contained in Clause 6;
"COMPLETION DATE" means 27th October 2000 or such other date as the
parties may agree being the date upon which Completion is to take place
pursuant to Clause 6;
"COMPUTER EQUIPMENT" means the computer equipment presently installed or
located at the premises of each member of the Target Group and used in
the business of the Target Group including all associated hardware and
software, ancillary and communication equipment connected to it or
located at the premises and capable of connection to it and all
operating systems software comprised in such equipment and ancillary and
communication equipment.
"CONDITIONS" means the conditions set out in Clause 2.1;
"DATE COMPLIANT" means having the ability: (i) to process and continue
to process data correctly and consistently with reference to any and all
dates, including any dates in any century or leap year; (ii) to perform
and function without interruption or without being adversely affected by
any date or change of date including any date in any century or leap
year; and (iii) to produce output (including any output for any
interface to other hardware, software or systems) which will, in
relation to any date contained within such output, explicitly and
unambiguously identify the date in full including the century within
which the date falls.
"EARNINGS ADJUSTMENT" means the amount of any shortfall to be repaid
partly in cash and partly in shares by the Seller to the Buyer pursuant
to Clause 5;
"EARNINGS ADJUSTMENT INTEREST" means interest payable at the prime rate
of The Hongkong and Shanghai Banking Corporation Limited for HK$ in Hong
Kong from time to time, on the Earnings Adjustment for the period from
the Completion Date until the date of payment of the cash element of the
Earnings Adjustment pursuant to Sub-clause 5.8(a);
"EARNINGS ADJUSTMENT PERIOD" means the period from 1st April 2000 to
31st March 2001 (inclusive);
"EMPLOYEES" means all the employees of the Target Group;
"GUARANTEED PROFIT AMOUNT" means HK$30,000,000 (Thirty million);
"HK$" means Hong Kong dollars;
"HONG KONG" means Hong Kong Special Administrative Region of the PRC;
"HONG KONG GAAP" means Hong Kong Generally Accepted Accounting
Principles;
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"INITIAL CASH CONSIDERATION" means a HK$ sum amounting to one third of
the Initial Consideration, rounded down or up to the nearest HK$;
"INITIAL CONSIDERATION" means HK$255,000,000 (Two hundred and Fifty-five
million) less the NAV Adjustment, to be satisfied by the Buyer on
Completion in accordance with Clause 4.2;
"JETUP" means Jetup Development Limited, a company under the laws of
Hong Kong, having registered number 383237;
"JETUP SHARES" means the entire issued and outstanding share capital of
Jetup;
"JIEDA" means Jieda Electronics (Shenzhen) Co. Ltd. ( ) a
wholly owned foreign enterprise established in the PRC;
"JIEDA EQUITY INTEREST" means the entire investment and equity interest
of JIC Holding in Jieda;
"JIC HOLDINGS" means J.I.C. (Holdings) Company Limited, a company
incorporated in Hong Kong, having registered number 161258, being the
present owner of the Included Property but not a member of the Target
Group;
"INCLUDED PROPERTY" means the property owned by JIC Holdings,
particulars of which are set out in Part 1 of Schedule 3;
"LOCK-UP AGREEMENT" means the lock-up agreement to be entered into on
Completion by the Seller, substantially in the form set out in Schedule
7;
"MANAGEMENT ACCOUNTS" means the unaudited consolidated management
accounts of the Seller and its subsidiaries for the five month period
ended on the Accounts Date, copies of which are attached hereto as
Exhibit "B";
"NAMTAI COMMON STOCK" means such number of shares of the common stock of
the Buyer which is the result of the following formula :- (Two thirds of
the Initial Consideration, as adjusted) divided by the average market
closing price of one share of the common stock of the Buyer as reported
on NASDAQ for each day during the period from 26th September to 24th
October 2000 (inclusive) on which NASDAQ is open for trading and on
which at least 10,000 shares of Namtai Common Stock are traded (the
"AVERAGE MARKET CLOSING PRICE"), rounded down or up to the nearest whole
number;
"NASDAQ" means "The Nasdaq Stock Market" of and in the United States of
America;
"NAV ADJUSTMENT" means any shortfall between the Certified NAV and the
net asset value of the Target Group as shown in the Management Accounts;
"NET INCOME" means the Total Revenues less operating costs, expenses,
taxation and minority interests, but excluding extraordinary items, for
the Earnings Adjustment Period;
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"XXX" xxxxx xxx Xxxxxx'x Xxxxxxxx of China, and for the purposes of this
Agreement, excluding Hong Kong, Macau Special Administrative Region of
the PRC and Taiwan;
"SALE SHARES" means the entire issued share capital of the Company;
"SELLER'S AUDITORS" means such auditors as the Seller may appoint for
the purpose of reviewing the Draft Accounts in accordance with Clause 5;
"SERVICES AGREEMENTS" means service contracts to be entered into on
Completion by the Company with Xx. Xx and Xx. Xxxx respectively,
substantially in the form of the draft Services Agreements set out in
Schedule 6;
"SUBSIDIARIES" means, for the purposes of this Agreement, each of the
companies and other corporations and bodies corporate shown in the
organisational chart set out in Schedule 1 (with the exception of JIC
Holdings, the Seller and the Company), details of which are set out in
Schedule 2;
"TARGET GROUP" means the Company together with the Subsidiaries and
references to "TARGET GROUP COMPANY" and to any "MEMBER OF THE TARGET
GROUP" shall be construed accordingly;
"TARGET GROUP'S AUDITORS" means Messrs. Deloitte Touche Tohmahtsu,
Certified Public Accountants, Hong Kong or such other auditors as the
Target Group may appoint from time to time;
"TAXATION" means taxation as defined in the Tax Indemnity;
"TAX INDEMNITY" means the tax indemnity referred to in Clause
6.1(a)(iii) and in the form set out in Schedule 5;
"TOTAL REVENUES" means the turnover of the Target Group, interest income
and the income arising from and/or incidental to the Target Group's
operations during the Earnings Adjustment Period;
"TRANSFERRING ASSETS" is defined in Clause 7.2;
"WARRANTIES" means the representations, warranties and undertakings set
out in Schedule 4;
(a) words and expressions defined in the Companies Ordinance shall
bear the same respective meanings when used herein;
(b) reference to any statute or statutory provision shall include
any statute or statutory provision which amends or replaces, or
has amended or replaced, it and shall include any subordinate
legislation made under the relevant statute or statutory
provision;
(c) a body corporate shall be deemed to be associated with another
body corporate if it is a holding company or a subsidiary of
that other body corporate or a subsidiary of a holding company
of that body corporate;
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(d) references to Clauses, Sub-clauses, Schedules and Exhibits are
to Clauses and Sub-clauses of and Schedules and Exhibits to this
Agreement;
(e) references to writing shall include typewriting, printing,
lithography, photography, telefax and telex messages and other
modes of reproducing words in a legible and non-transitory form;
and
(f) words importing the singular include the plural and vice versa,
words importing a gender include every gender and references to
persons include bodies corporate or unincorporate.
1.2 Headings are for convenience only and shall not affect the construction
of this Agreement.
1.3 In construing this Agreement:-
(i) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall
not be given a restrictive meaning by reason of the fact that
they are preceded by words indicating a particular class of
acts, matters or things and a particular class of acts, matters
or things; and
(ii) general words shall not be given a restrictive meaning by reason
of the fact that they are followed by particular examples
intended to be embraced by the general words.
1.4 The Schedules and Exhibits form part of this Agreement and shall have
the same force and effect as if expressly set out in the body of this
Agreement and any reference to this Agreement shall include the Exhibits
and the Schedules.
2. CONDITIONS
2.1 Completion of this Agreement is conditional upon:-
(a) the Buyer being reasonably satisfied in all respects with the
legal, financial and commercial due diligence exercise which it,
it's professional advisors and other agents and representatives
may conduct in relation to the Target Group, which due diligence
exercise the parties agree shall commence as soon as practicable
after execution of this Agreement;
(b) the Guarantors providing evidence reasonably satisfactory to the
Buyer that the Transferring Assets vested in JIC Holdings have
been transferred to a Target Group Company or Target Group
Companies nominated by the Buyer, in accordance with Clause 7.2;
(c) the accountant's report being duly prepared and delivered to the
Buyer in accordance with Clause 4.4;
(d) the number of shares of Namtai Common Stock calculated in
accordance with
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the formula set out in Clause 1.1 not exceeding 19.9% of the total
number of shares of common stock of the Buyer outstanding immediately
prior to Completion;
(e) JIC Holdings executing and delivering to the Buyer a declaration
of trust, in a form to be prepared by the Buyer's solicitors and
in all respects acceptable to the Buyer, whereby JIC Holdings
declares that with effect from Completion it shall hold its
legal interest in the Jieda Equity Interest on trust for the
relevant Target Group Company pending the transfer of such legal
interest to the relevant Target Group Company in accordance with
Clause 10.2; and
(f) the establishment of the Company to the satisfaction of the
Buyer.
2.2 The Seller shall use its best endeavours to procure the fulfilment of
the Conditions referred to in Sub-clauses 2.1(b), 2.1(c), 2.1(e) and
2.1(f) prior to the Completion Date.
2.3 To the extent that any of the Conditions is or may not be satisfied in
full prior to Completion, such Condition or Conditions may be waived by
the Buyer at its absolute discretion and to such extent it thinks fit by
giving notice in writing to the Seller.
2.4 If any of the Conditions is not duly fulfilled (or waived by the Buyer)
on or before the Completion Date, the Buyer shall be entitled to
terminate this Agreement without penalty by giving notice to the Seller,
whereupon all liabilities of the Buyer hereunder shall cease and
determine (without prejudice to any of the other rights or remedies
available to the Buyer).
3. SALE AND PURCHASE
3.1 The Seller as legal and beneficial owner shall sell the Sale Shares free
from all liens charges encumbrances equities and adverse interests and
with all rights now attached thereto including, in the case of the Sale
Shares, the right to receive all dividends and other distributions
declared, made or paid on or after the Accounts Date and the Buyer
relying on the representations, warranties, undertakings and indemnities
of the Seller contained or referred to herein shall purchase the Sale
Shares with effect from Completion.
3.2 The Seller hereby waives any right of pre-emption which it may have in
respect of the Sale Shares, whether pursuant to the Articles of
Association of the Company or otherwise howsoever arising.
3.3 Pending Completion or the Conditions failing, the Seller shall procure
that the Buyer and any person authorised by him shall be given full
access to all the books and records of the Target Group and that the
directors, officers and employees of the Target Group will be instructed
to give promptly all such information and explanations as the Buyer or
any such person may reasonably request.
4. CONSIDERATION
4.1 The consideration for the sale of the Sale Shares shall be the Initial
Consideration less the Earnings Adjustment (if any).
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4.2 The Initial Consideration shall be satisfied by:-
(a) the payment of the Initial Cash Consideration to the Seller in
cash on Completion; and
(b) the issuance by the Buyer of the Namtai Common Stock to the
Seller in accordance with Sub-clause 6.1(f) and Clause 6.3. The
Buyer shall procure that such Namtai Common Stock is issued
credited as fully paid and non assessable and free from all
pre-emption and priority rights, options, claims, equities,
liens, charges, encumbrances and third party rights of any kind,
and that the Namtai Common Stock will rank pari passu with all
other common stock of Namtai in issue on the date of such issue.
The Buyer shall take such steps as may be required to authorize
such Namtai Common Stock for quotation on NASDAQ in accordance
with the applicable rules of NASDAQ.
4.3 The Earnings Adjustment (if any) shall be calculated and the Seller
shall satisfy the same in accordance with Clause 5.
4.4 Forthwith following the signing of this Agreement, the Seller shall
procure that the Target Group's Auditors shall perform a limited scope
review of the Management Accounts and shall thereafter prepare an
accountant's report, prepared in accordance with Hong Kong GAAP, in
respect of such Management Accounts together with a statement (the "NAV
STATEMENT") showing a valuation as at 31st August 2000 of the net assets
of the Target Group and the parties agree that such valuation shall be
the "CERTIFIED NAV" for the purposes of calculating the amount of the
NAV Adjustment. The Seller shall procure that such accountant's report
is delivered to the Buyer not later than five (5) Business Days prior to
the Completion Date.
5. EARNINGS ADJUSTMENT
5.1 The amount of the Earnings Adjustment (if any) shall be the amount of
the shortfall (if any) between the Net Income and the Guaranteed Profit
Amount, multiplied by eight point five (8.5).
5.2 The unaudited financial statements of the Target Group for the Earnings
Adjustment Period shall be prepared in accordance with Hong Kong GAAP
and audited by the Target Group's Auditors.
5.3 The Buyer shall procure that the Target Group's Auditors shall prepare
and deliver to the Seller a copy of the draft audited consolidated
financial statements of the Target Group for the Earnings Adjustment
Period accompanied by a draft certificate stating the Net Income and
Earnings Adjustment (if any) (together, the "DRAFT ACCOUNTS") as soon as
practicable after the end of the Earnings Adjustment Period and in any
event within a period of three (3) months thereafter.
5.4 When the Draft Accounts have been prepared the Buyer shall forthwith
deliver a copy thereof to the Seller for review. The Seller and the
Seller's Auditors shall be entitled to discuss the Draft Accounts with
the Target Group's Auditors.
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5.5 Within 20 Business Days after the Buyer has delivered the Draft Accounts
to the Seller the parties shall procure that the Seller's Auditors and
the Target Group's Auditors meet to review the Draft Accounts and to
satisfy themselves that they have been duly prepared in accordance with
this Agreement and that the Net Income and Earnings Adjustment (if any)
figures have been correctly certified. The Seller shall then within ten
Business Days following the meeting either:-
(a) confirm in writing to the Buyer that they agree that the Draft
Accounts have been duly prepared and that the Net Income and
Earnings Adjustment (if any) figures have been correctly
certified; or
(b) give notice in writing to the Buyer explaining (in reasonable
detail) why they are unable so to confirm.
5.6 If the Seller fails so to confirm or to give such notice in accordance
with Clause 5.5, the Draft Accounts and the certificate of the Net
Income and Earnings Adjustment (if any) figures shall be conclusively
deemed to have been accepted and agreed by the Seller and the Buyer.
5.7 If the Seller gives notice in accordance with Sub-clause 5.5(b), the
parties shall endeavour to resolve all matters in dispute as soon as
practicable. In the event of their failing to resolve such matters
within 10 Business Days of the giving of such notice (the "RESOLUTION
PERIOD") either the Buyer or the Seller may refer all matters in dispute
for resolution to an independent chartered accountant. The identity of
such accountant shall be agreed between the parties and he shall be
appointed within five Business Days of the expiry of the Resolution
Period (the "APPOINTMENT PERIOD"). If there is a failure to make such
appointment within the Appointment Period, the appointment shall be made
by the President for the time being of the Hong Kong Society of
Accountants within five Business Days of the expiry of the Appointment
Period, on the application of either the Buyer or the Seller. Such
accountant shall be instructed to determine the dispute in accordance
with the provisions of this Clause 5 and to make such determination as
soon as practicable and in any event within 20 Business Days of his
being instructed. In making such determination such accountant shall act
as an expert and not as an arbitrator and his decision shall (in the
absence of manifest error) be final and binding on the parties. The
costs of such accountant shall be borne by the parties in the
proportions he may direct or, in the absence of direction, as to one
half by the Buyer and as to the other half by the Seller.
5.8 Payment and satisfaction of the Earnings Adjustment (if any) shall be
made as follows:
(a) On the twentieth Business Day after the amount of the same has
been agreed or finally determined in accordance with Clause 5.7
the Seller shall pay to the Buyer one third of the amount of the
Earnings Adjustment together with the amount of the Earnings
Adjustment Interest;
(b) The payment to be made pursuant to Sub-clause 5.8(a) shall be
made by telegraphic transfer to such bank account of the Buyer
as the Buyer may specify and shall be deemed made when credited
to that account as cleared funds; and
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(c) The balance (two thirds) of the Earnings Adjustment shall be
satisfied by the immediate cancellation by the Buyer of such
number of shares of the Namtai Common Stock as were issued to
the Seller pursuant to Sub-clause 4.2(b) which is the result of
the following formula:- (Two thirds of the total amount of the
Earnings Adjustment) divided by the Average Market Closing
Price, rounded down or up to the nearest whole number.
5.9 The Seller shall pay to the Buyer all amounts which become payable
pursuant to this Clause 5 in full free from any deduction, withholding,
counterclaim or set-off whatsoever.
6. COMPLETION
6.1 Completion shall, subject to the Conditions having been duly fulfilled,
take place at the Mandarin Oriental Hotel, Macau (or such other place as
may be mutually agreed by the parties) on or before the Completion Date
when all (but not part only) of the following business shall be
transacted:-
(a) the Seller shall deliver to the Buyer or procure the delivery to
the Buyer of:-
(i) duly executed share transfer instruments (in a form
complying with all applicable laws) in respect of the
Sale Shares in favour of the Buyer and/or his nominees
together with the relative certificates therefor;
(ii) such other documents as may be required to give good
title to the Sale Shares or which may be necessary to
enable the Buyer or his nominees to procure the
registration of the same in the name of the Buyer or his
nominees;
(iii) the Tax Indemnity duly executed by the Seller and by
each Target Group Company;
(iv) the statutory and minutes books (which shall be written
up to but not including the date of Completion), Common
Seal, Certificate of Incorporation, all business
registration certificates, licences, approvals and
consents, together with copies of the Memorandum and
Articles of Association (or equivalent constitutional
documents), cheque books, books of account (all complete
and written up to Completion), copies of all tax
return(s) filed and related correspondence (if any), all
current insurance policies, all contracts (if any) to
which any member is a party and all other documents and
records of each Target Group Company;
(v) one execution copy of the Lock-Up Agreement duly
executed by the Seller.
(vi) all original title deeds of the Included Property and
including without limitation the relevant Agreement for
Sale and Purchase and Assignment for the Included
Property duly executed by JIC Holdings and the relevant
number of the Target Group together with questionnaire
for
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stamp duty and duly completed memorial for registration;
(vii) evidence reasonably satisfactory to the Buyer that the
Jetup Shares and the Jieda Equity Interest have been
transferred in accordance with Clause 7.2;
(viii) a certified true copy of a resolution of the
shareholders of JIC Holdings approving the transfer of
the Transferring Assets as contemplated in Clause 7.2;
(ix) a certified true copy of the accountant's report as
referred to in Sub-clause 2.1(c);
(x) one execution copy of the declaration of trust referred
to in Sub-clause 2.1(e) duly executed by JIC Holdings;
and
(xi) evidence (to the Buyer's satisfaction) of the authority
of any person signing on any instrument or document on
behalf of the Seller and JIC Holdings.
(b) the Seller shall procure a board meeting to be held of the
Company and each other member of the Target Group at which
resolutions shall be passed (where appropriate):-
(i) to approve and give effect to all of the matters
referred to above;
(ii) to approve (subject to stamping, where necessary) the
Buyer and his nominees for registration as the holders
of the Sale Shares;
(iii) to appoint such additional directors of any members of
the Target Group as the Buyer may require, all with
effect from the close of business of the relevant
meeting;
(iv) where requested by the Buyer, to change the authorised
signatories of each member of the Target Group to
operate its bank accounts and otherwise conduct its
business as the Buyer may require;
(vi) to deal with and resolve upon such other matters as the
Buyer shall reasonably require for the purposes of
giving effect to the provisions of this Agreement.
(c) Xx. Xx and Xx. Xxxx shall each deliver to the Buyer one
counterpart of each of the Services Agreements duly executed by
Xx. Xx and Xx. Xxxx respectively.
(d) the Buyer shall pay to the Seller the Initial Cash Consideration
in cash in immediately available funds as partial satisfaction
of the Initial Consideration;
(e) the Buyer shall deliver to Xx. Xx and Xx. Xxxx respectively one
counterpart of each of the Services Agreements duly executed by
the Buyer; and
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(f) the Buyer shall hold a board meeting or otherwise adopt
resolutions authorizing and approving the issuance of the Namtai
Common Stock to the Seller.
6.2 No party shall be obliged to complete this Agreement or perform any
obligations hereunder unless the other parties comply fully with the
requirements of Clause 6.1.
6.3 The Seller agrees that the share certificates representing the Namtai
Common Stock may be held by the Buyer in security of the completion of
the transfer of the legal ownership of JIC Holdings to the Jieda Equity
Interest to the relevant Target Group Company in accordance with Clause
10.2.
7. PRE-COMPLETION UNDERTAKINGS OF THE SELLER AND THE GUARANTORS
7.1 The Seller hereby undertakes to procure that pending Completion no
member of the Target Group will (save as contemplated by this Agreement
or as the Buyer may agree in writing):-
(a) issue or agree to issue any share or loan capital or grant or
agree to grant any option over or right to acquire any share or
loan capital;
(b) enter into any transaction, agreement or contract, trade or
carry on business, acquire or dispose of any interest in any
asset (in each case other than in the ordinary course of normal
day to day trading as carried on at the date of this Agreement
and for full consideration) or create or undertake any capital
commitment or actual or contingent liability whatsoever;
(c) create or permit to arise any lien, charge, encumbrance, pledge,
mortgage or other third party right or interest on or in respect
of any of its undertaking, property or assets;
(d) borrow any money other than in the ordinary course of normal day
to day business of the Target Group as carried on at the date of
this Agreement;
(e) declare, pay or make any dividends or other distributions; or
(f) appoint any directors, secretaries or (pursuant to any power of
attorney or similar authority) attorneys.
7.2 The Guarantors undertake to procure that the legal and beneficial
ownership of the Included Property and the Jetup Shares and the
beneficial ownership of the Jieda Equity Interest (together the
"TRANSFERRING ASSETS") vested in JIC Holdings shall be transferred to
the Target Group (and to such members of the Target Group as the Buyer
shall direct) prior to or on Completion for an aggregate consideration
not exceeding HK$10,000,000 to be paid by the Target Group in cash. The
Guarantors further jointly and severally undertake that such
Transferring Assets shall be transferred to the relevant member or
members of the Target Group free from all mortgages, charges,
encumbrances, claims, equities, liens and third party rights of any
kind. All costs and disbursements including stamp duty and any
registration fees in respect of the transfer of the Transferring Assets
shall be borne by the Guarantors.
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7.3 The Seller undertakes to procure that pending Completion each member of
the Target Group will operate the businesses of the Target Group in
compliance with the Buyer's Payment Approval and Authorisation
procedures.
8. WARRANTIES
8.1 The Seller represents, warrants and undertakes to and with the Buyer in
the terms set out in Schedule 4.
8.2 The Seller accepts that the Buyer is entering into this Agreement in
reliance upon each of the Warranties notwithstanding any investigations
which the Buyer, his agents or advisors may have made and jointly and
severally undertake to indemnify the Buyer against any costs (including
all legal costs on a solicitor and own client basis), expenses or other
liabilities which he may incur in connection with:-
(i) the settlement of any claim that any of the Warranties are
untrue or misleading or have been breached;
(ii) any legal proceedings in which the Buyer claims that any of the
Warranties are untrue or misleading or have been breached and in
which judgment is given for the Buyer; or
(iii) the enforcement of any such settlement or judgment.
8.3 Each of the Warranties shall be construed as a separate Warranty and
(save as expressly provided to the contrary) shall not be limited or
restricted by reference to or inference from the terms of any other
Warranty or any other terms of this Agreement.
8.4 Any rights to which the Buyer may be or become entitled by reason of any
of the Warranties and all remedies which may be available to the Buyer
in consequence of any of the Warranties being untrue or misleading or
breached shall enure for the benefit of any subsidiary of the Buyer
which is the beneficial owner for the time being of the Sale Shares and
accordingly any loss which is sustained by such beneficial owner for the
time being of the Sale Shares in consequence of any of the Warranties
being untrue misleading or breached shall be deemed to be that of the
Buyer and the Buyer may bring proceedings and exercise any other remedy
on the footing that he has been the beneficial owner of the Sale Shares
at all times from Completion.
8.5 The Seller hereby undertakes that it will from time to time and at any
time, whether before or after Completion, forthwith disclose in writing
to the Buyer any event, fact or circumstance which may become known to
them after the date hereof and which is materially inconsistent with any
of the Warranties or which could reasonably be expected materially to
affect a purchaser for value of the Sale Shares or which may entitle the
Buyer to make any claim under this Agreement.
9. INDEMNITY
The Guarantors hereby jointly and severally undertake to indemnify the
Buyer on demand, for itself or as trustee for each Target Group Company,
from and against any and all loss, liability, Taxation, costs and
expenses which the Buyer or any Target
16
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Group Company may incur as a result of or arising in connection with:-
(a) the transfer of any of the Transferring Assets pursuant to
Clause 7.2 being deemed or held or challenged as a transfer at
undervalue within the meaning of the relevant laws of Hong Kong;
(b) any corporate restructuring which has occurred to the Seller and
its subsidiaries (including but not limited to the Target Group)
prior to Completion; and
(c) JIC Holdings holding the legal interest to the Jieda Equity
Interest for any period after Completion, as contemplated in
Clause 10.2 and/or the Guarantors' failure to comply with their
obligation to procure the transfer of such interest to the
Target Group in accordance with Clause 10.2.
17
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10. POST-COMPLETION OBLIGATIONS
10.1 The Seller undertakes to the Buyer that it will do all such acts and
things and execute all such deeds and documents as may be necessary or
desirable to carry into effect or to give legal effect to the provisions
of this Agreement and the transactions hereby contemplated.
10.2 The Guarantors hereby jointly and severally undertake to the Buyer that
the legal ownership of JIC Holdings to the Jieda Equity Interest shall
be transferred to the Company (or such other member of the Target Group
as the Buyer may direct), within a period of six (6) months after the
Completion Date, and free from all mortgages, charges, encumbrances,
claims, equities, liens and third party rights of any kind.
11. MISCELLANEOUS
11.1 Any provision of this Agreement which is capable of being performed
after but which has not been performed at or before Completion and all
Warranties and indemnities and other undertakings contained in or
entered into pursuant to this Agreement shall remain in full force and
effect notwithstanding Completion and shall, in the case of the
Warranties, be repeated with reference to the facts and circumstances
subsisting at Completion.
11.2 This Agreement shall be binding on and enure for the benefit of the
successors of each of the parties but subject to Clause 8.4, shall not
be assignable.
11.3 Any remedy conferred on any party hereto for breach of this Agreement
(including the breach of any Warranty) or under the Tax Indemnity shall
be in addition and without prejudice to all other rights and remedies
available to him and the exercise of or failure to exercise any remedy
shall not constitute a waiver by such party of any of his rights or
remedies.
11.4 This Agreement constitutes the whole agreement between the parties
relating to the sale and purchase of the Sale Shares (no party having
relied on any representation made by the other party which is not a term
of this Agreement) and no future variation shall be effective unless
made in writing and signed by each of the parties.
11.5 This Agreement shall supersede all and any previous agreements or
arrangements between the parties hereto or any of them relating to the
Company or to any other matter referred to in this Agreement and all or
any such previous agreements or arrangements (if any) shall cease and
determine with effect from the date hereof.
11.6 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the remaining provisions hereof
shall in no way be affected or impaired thereby.
11.7 This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which is an original
but, together, they constitute one and the same agreement.
11.8 If this Agreement is terminated by the Buyer pursuant to Clause 2.4 as a
result of the
18
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non-fulfilment of the Condition referred to in Sub-clause 2.1(d), the
Seller undertakes and agrees that during the period from such date of
termination until [date] it will not and will procure that each of its
subsidiaries and associated companies and each of their respective
directors, officers, shareholders, employees, agents or advisers will
not, without the prior written consent of the Buyer, directly or
indirectly solicit or initiate any approach from or enter into or pursue
any discussions with or provide information to any third party other
than the Buyer or its advisers in relation to the proposed sale and
purchase of the Sale Shares or any of them.
12. NOTICES
12.1 In Writing and Methods of Delivery
Every notice or communication under this Agreement must be in writing
and may, without prejudice to any other form of delivery, be delivered
personally or sent by post or transmitted by fax.
12.2 Authorised Addresses and Numbers
(a) In the case of posting, the envelope containing the notice or
communication must be addressed to the intended recipient at the
authorised address of that party and must be properly stamped or
have the proper postage prepaid for delivery by the most
expeditious service available (which will be airmail if that
service is available) and, in the case of a fax or telex, the
transmission must be sent to the intended recipient at the
authorised number of that party.
(b) Subject to Clause 12.3, the authorised address, fax and telex
numbers of each party, for the purpose of Clause 12, are as
follows:-
J.I.C. Holdings (BVI) Limited
Address:
Room 000, Xxxxx X,
Xxxxxxx Xxxxxxxxxx Xxxxxx,
00 Xx Xxx Xxx Xxxx,
Xxxxxxx,
Xxxxxxx,
Xxxx Xxxx
Fax: (000) 0000 0000
For the attention of Xx. Xxxxxx Xx Xxx Xxxx and Xx. Xxxx Xxx Xxx
19
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Xx. Xxxxxx Xx Xxx Xxxx
Address:
x/x X.X.X. Xxxxx
Xxxx 000, Xxxxx X,
Xxxxxxx Commercial Centre,
37 Ma Xxx Xxx Xxxx,
Xxxxxxx,
Xxxxxxx,
Xxxx Xxxx
Fax: (000) 0000 0000
Xx. Xxxx Xxx Xxx
Address:
x/x X.X.X. Xxxxx
Xxxx 000, Xxxxx X,
Xxxxxxx Commercial Centre,
37 Ma Xxx Xxx Xxxx,
Xxxxxxx,
Xxxxxxx,
Xxxx Xxxx
Fax: (000) 0000 0000
NAM TAI Electronics Inc.
Address:
c/o Nam Tai Electronic & Electrical Products Ltd.,
Xxxx 0, 0/X., Xxxxx 0,
Xxxxx Xxxx Xxxx City,
00 Xxxxxx Xxxx,
XXX,
Xxxxxxx,
Xxxx Xxxx
Fax: (000) 0000 0000
For the attention of Xx. X. X. Xxx
12.3 Notification of Changes
No change in any of the particulars set out in Clause 12.2(b) will be
effective against a party until it has been notified to that party.
12.4 Deemed Giving of Notice and Receipt
20
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A notice or communication will be deemed to have been duly given and
received:-
(a) on personal delivery to any director or the secretary of an
addressee or on a business day to a place for the receipt of
letters at that addressee's authorised address;
(b) in the case of posting, where the addressee's authorised address
is in the same country as the country of posting, at 10 a.m.
(local time at the place where the address is located) on the
second business day after the day of posting;
(c) in the case of posting, where the addressee's authorised address
is not in the same country as the country of posting, at 10 a.m.
(local time at the place where that address is located) on the
fifth business day after the day of posting;
(d) in the case of a fax, on issue to the sender of an O.K. result
confirmation report or, if the day of issue is not a business
day, at 10 a.m. (local time where the authorised fax number of
the intended recipient is located) on the next business day.
12.5 Business Days
For the purpose of Clause 12.4, a "BUSINESS DAY" means a day which is
not a Saturday or a Sunday or a public holiday in the country of posting
or transmission or in the country where the authorised address or fax
number of the intended recipient is located and, where a notice is
posted, which is not a day when there is a disruption of postal services
in either country which prevents collection or delivery.
13. CONFIDENTIALITY
13.1 Subject to any applicable statutory or regulatory rules, none of the
parties hereto shall make any public announcement or divulge or
otherwise make public in any manner any information in relation to this
Agreement or the transactions or arrangements hereby contemplated or
herein referred to (including without prejudice to the foregoing
generality the fact that this Agreement has been entered into between
the parties) or any matter ancillary hereto or thereto without the prior
consent of the other parties (which consent shall not be unreasonably
withheld or delayed).
13.2 The Buyer shall not by itself or through its professional advisers and
other agents or representatives disclose, release or otherwise dispose
of any information, data, accounts, reports and documents of or relating
to the Seller, the Target Group, JIC Holdings, Xx. Xx and Xx. Xxxx which
the Buyer could not have obtained or have access to but for the
negotiation, execution and performing the obligations of this Agreement
and the Buyer shall indemnify the aforesaid for any losses and damages
suffered as a result of any unauthorised disclosure of such information,
save where such information, data, accounts, reports and documents is
already within the public domain or save where disclosure is required by
applicable law. This shall survive Completion and/or termination of this
Agreement for whatever reason.
14. COSTS AND EXPENSES
21
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14.1 Each party shall pay his own costs and expenses in relation to the
negotiations leading up to the sale and purchase of the Sale Shares and
to the preparation and execution and performance of this Agreement.
14.2 The Seller shall pay all stamp duty or other transfer taxes (if any) on
the sale of the Sale Shares.
14.3 The Buyer shall pay all stamp duty or other transfer taxes (if any) on
the purchase of the Sale Shares.
15. TIME
Time shall be of the essence of this Agreement.
16. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong and each party hereby irrevocably submits to the
non-exclusive jurisdiction of the courts of Hong Kong.
17. GUARANTEE
17.1 Performance Guarantee
The Guarantors hereby jointly and severally guarantee to the Buyer the
performance of the Seller's obligations in accordance with this
Agreement.
17.2 Payment Guarantee
The Guarantors guarantee hereby jointly and severally to pay, on demand,
any sum which the Seller fails to pay to the Buyer in accordance with
this Agreement.
17.3 Continuing Guarantee
This is a continuing guarantee which will remain in force until all the
Sellers' obligations under this Agreement have been fulfilled.
17.4 Liability Unaffected
The Guarantors' liabilities under Clause 16 will not be discharged or
affected by any act, omission or circumstance which, but for this
provision, would discharge the Guarantors to any extent, including any
legal limitation, disability or incapacity or any amendment, waiver or
release affecting any of the parties, any other person, this Agreement
or any or other document referred to in this Agreement or the death or
insanity of either of the Guarantors.
17.5 No Claims against the Seller
22
- 19 -
The Guarantors shall not exercise any rights of subrogation,
contribution, indemnity or set-off or counterclaim against the Seller so
long as any obligation of the Seller under this Agreement remains
unfulfilled.
17.6 Guarantors' Payments
Payments by the Guarantors shall be made without set-off, counterclaim,
withholding or condition of any kind.
17.7 Guarantors as Principal Debtors and Indemnities
Any guaranteed moneys which are not recoverable from the Seller for any
reason will, nevertheless, be recoverable from the Guarantors as
principal debtors, by way of indemnity, on the Buyer's demand.
17.8 Default Interest
If the Guarantors fail to pay any sum under this Agreement, including a
sum payable under this Clause 17.8, on its due date for payment the
Guarantors shall pay default interest on such sum from the due date to
the date of payment (both before and after any judgment) at the rate of
3% per annum above the prime rate of The Hongkong & Shanghai Banking
Corporation Limited, for HK$ in Hong Kong from time to time. Such
interest shall accrue and be calculated daily (on a 365 day year basis),
be payable on demand and be compounded monthly on the first day of each
calender month and shall itself bear interest accordingly.
18. PROCESS AGENT
The service of any process connected with proceedings in the Hong Kong
courts and relating to this Agreement will be deemed to have been
validly served on the Seller if they are served on the process agent
whose name and present address are set out below against the name of the
Seller and service will be deemed to have been acknowledged by the
Seller if it is acknowledged by that process agent:-
Messrs. Xxx & Xxxxx
Rooms 601-3 & 6,
Unicorn Trade Centre,
000-000 Xxx Xxxxx Xxxx Xxxxxxx,
Xxxx Xxxx
23
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SCHEDULE 1
Target Group Organisational Chart
24
- 21 -
SCHEDULE 2
BASIC INFORMATION CONCERNING THE SUBSIDIARIES
J.I.C. ELECTRONICS COMPANY LIMITED
1. Registered Number : 483085
2. Former Name : Nil
3. Date of Incorporation : 23th June 1994
4. Place of Incorporation : Hong Kong
5. Address of Registered Office: : Xxxx 000, Xxxxx X, Xxxxxxx
Commercial Centre, 37 Ma Tau
Wai Road, Hunghom, Kowloon.
6. Authorised Share Capital : HK$10,000 divided into 10,000
shares of HK$1 each
7. Issued Share Capital : 10,000 shares registered as to
9,999 shares in the name of
J.I.C. Electronics (B.V.I.)
Limited and as to 1 shares in
the name of J.I.C. Enterprises
(Hong Kong) Limited and
beneficially owned by J.I.C.
Electronics (B.V.I.) Limited
8. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxxxxx Xxxxxxxx
Xx. Xxxxxxxxx Xxxxxx
Xx. Xxxxx Xxxxxxxx
9. Secretary : Ng Xxx Xxxx
10. Financial Year End : March 31
11. Auditors : Deloitte Touche Tohmatsu
00
- 00 -
X.X.X. XXXXXXXXXXX (XXXX XXXX) LIMITED
1. Registered Number : 121718
2. Former Name : Nil
3. Date of Incorporation : 18th February 1983
4. Place of Incorporation : Hong Kong
5. Address of Registered Office : Xxxx 000, Xxxxx X, Xxxxxxx
Commercial Centre, 37 Ma Tau
Wai Road, Hunghom, Kowloon.
6. Authorised Share Capital : HK$500,000 divided into
500,000 shares of HK$1 each
7. Issued Share Capital : 500,000 shares registered as
to 499,999 shares in the name
of J.I.C. Enterprises (B.V.I.)
Limited and as to 1 shares in
the name of J.I.C. Electronics
Company Limited and
beneficially owned by J.I.C.
Enterprises (B.V.I.) Limited
8. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
9. Secretary : Ng Xxx Xxxx
10. Financial Year End : March 31
11. Auditors : Deloitte Touche Tohmatsu
J.I.C. ENTERPRISES (B.V.I.) LIMITED
1. Registered Number : 247603
2. Former Name : Nil
3. Date of Incorporation : 5th September 1997
4. Place of Incorporation : British Virgin Islands
5. Address of Registered Office : X.X. Xxx 000, Xxxxxxxx
Incorporations Centre, Road
Town, Tortola, British Virgin
Islands
26
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6. Authorised Share Capital : US$50,000 divided into 50,000
shares of US$1 each
7. Issued Share Capital : One shares in the name of
J.I.C. Group (B.V.I.) Limited
8. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
9. Secretary : B&M Secretary Limited
10. Financial Year End : March 31
J.I.C. ELECTRONICS (B.V.I.) LIMITED
1. Registered Number : 247604
2. Former Name : Nil
3. Date of Incorporation : 5th September 1997
4. Place of Incorporation : British Virgin Islands
5. Address of Registered Office : X.X. Xxx 000, Xxxxxxxx
Incorporations Centre, Road
Town, Tortola, British Virgin
Islands
6. Authorised Share Capital : US$50,000 divided into 50,000
shares of US$1 each
7. Issued Share Capital : One shares in the name of
J.I.C. Group (B.V.I.) Limited
8. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
9. Secretary : B&M Secretary Limited
10. Financial Year End : March 31
J.I.C. MANUFACTURING (CHINA) LIMITED
1. Registered Number : 3842
2. Former Name : Nil
27
- 24 -
3. Date of Incorporation : 16th September 1997
4. Place of Incorporation : Western Samoa
5. Address of Registered Office : Xxxxxxxx Xxxxxxxx, X.X. Xxx
000, Xxxx, Xxxxxxx Samoa
6. Authorised Share Capital : US$50,000 divided into 50,000
shares of US$1 each
7. Issued Share Capital : One shares in the name of
J.I.C. Group (B.V.I.) Limited
8. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
Xx. Xxxxxxx Xxxxxxxx
Xx. Xxxxxxxxx Xxxxxx
Xx. Xxxxx Xxxxxxxx
9. Secretary : B&M Secretary Limited
10. Financial Year End : March 31
JETUP DEVELOPMENT LIMITED
1. Registered Number : 383237
2. Former Name : Nil
3. Date of Incorporation : 6 October, 1992
4. Place of Incorporation : Hong Kong
5. Address of Registered Office : Xxxx 000, Xxxxx X, Xxxxxxx
Commercial Centre, 37 Ma Tau
Wai Road, Hunghom, Kowloon.
6. Authorised Share Capital : HK$1,000,000 divided into
1,000,000 shares of HK$1 each
7. Issued Share Capital : 1,000,000 shares registered as
to 999,999 shares in the name
of J.I.C. (Holdings) Company
Limited and as to 1 shares in
the name of Xxxxxx Xxx Xxxx Xx
and beneficially owned by
J.I.C. (Holdings) Company
Limited
28
- 25 -
8. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
9. Secretary : Ng Xxx Xxxx
10. Financial Year End : March 31
JIEDA ELECTRONICS (SHENZHEN) COMPANY LIMITED
1. Registered Number : 0055475
2. Former Name : Nil
3. Date of Incorporation : April 1992
4. Place of Incorporation : PRC
5. Address of Registered Office : 47th district, Bao An New
City, Bao An Shenzhen, China
6. Registered Capital : HK$10,000,000
7. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
Xx. Xxxxxxx Xxxxxxxx
0. Financial Year End : December 31
JIEYAO ELECTRONICS (SHENZHEN) CO., LTD
1. Registered Number : 303980
2. Former Name : Nil
3. Date of Incorporation : September 1995
4. Place of Incorporation : PRC
5. Address of Registered Office : 47th district, Bao An New
City, Bao An Shenzhen, China
6. Registered Capital : HK$3,000,000
7. Directors : Xx. Xxxxx Xxxxxxxx
Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxxxxx Xxxxxxxx
29
- 26 -
Xx. Xxxxxxxxx Xxxxxx
8. Financial Year End : December 31
JETUP ELECTRONICS (SHENZHEN) CO., LIMITED
1. Registered Number : 301553
2. Former Name : Nil
3. Date of Incorporation : April 1993
4. Place of Incorporation : PRC
5. Address of Registered Office : 47th district, Bao An New
City, Bao An Shenzhen, China
6. Registered Capital : HK$10,000,000
7. Directors : Mr. Xx Xxx Xxxx, Xxxxxx
Xx. Xxxx Xxx Xxx
8. Financial Year End : December 31
30
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SCHEDULE 3
The Included Property
(1) Xxxx 00, 0/X, Xxxxx X, Xxxxxxx Commercial Centre, 37 Ma Tau Wai Road,
Kowloon
(2) C/P 142, in the garage at the third basement of Whampoa Garden Site 11,
Xx.0 Xxx Xxxx Xxxxxx, Xxxxxxx
(3) C/P 371, 408 and R11 in the second basement garage Xx.0 Xxxxx Xxxx
Xxxxxx, Xxxxxxx Garden Site 2, Kowloon
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SCHEDULE 4
THE WARRANTIES
1. THE SALE SHARES
(A) The Seller is the sole beneficial owner of the Sale Shares and
is entitled to sell and transfer the full legal and beneficial
ownership of the same to the Buyer or his nominees.
(B) There is no option, right to acquire, mortgage, charge, pledge,
lien or other form of security or encumbrances on, over or
affecting any of the Sale Shares or any part of the unissued
share capital or registered capital (as the case may be) of any
of the Target Group Companies and there is no agreement or
commitment to give or create any of the foregoing and no claim
has been made by any person to be entitled to any of the
foregoing which has not been waived in its entirety or satisfied
in full.
(C) The Sale Shares comprise the whole of the issued and allotted
share capital of the Company and all of them are fully paid up.
(D) There is no agreement or commitment outstanding which calls for
the allotment or issue of or accords to any person the right to
call for the allotment or issue of any shares or debentures in
the Company.
(E) The Company has no subsidiaries or associated companies (as
defined in the Companies Ordinance) and no shareholding or other
interest in any company, partnership, firm or other entity, save
as specified in the Target Group's organisational chart set out
in Schedule 1.
(F) The Company has not repaid, redeemed or purchased any of its
share capital or issued any share capital or registered capital
(as the case may be) as paid up otherwise than by receipt of
consideration therefor.
(G) No Target Group Company has been directly or indirectly engaged
or involved in any scheme of reconstruction or amalgamation or
any reorganisation or reduction of share capital or registered
capital (as the case may be) or conversion of securities nor has
any Target Group Company transferred any business carried on by
it.
(H) Subject to the approval of the Board of Directors of the Company
and the relevant provisions, if any, in the Articles of
Association of the Company and applicable laws to the contrary,
no consent of any third party is required to the sale of the
Sale Shares.
2. ACCURACY AND ADEQUACY OF INFORMATION
(A) The information given in the Recitals and the Schedules and in
the Accounts is true and accurate in all respects and is not
misleading because of any omission or ambiguity or for any other
reason.
32
- 29 -
(B) The copies of the Memorandum and Articles of Association or (as
the case may be) the business licence and articles of
association of each member of the Target Group which has been
supplied to the Buyer and, for the purposes of identification,
signed by the Seller and the Buyer are current, complete and
accurate in all respects, have attached to them copies of all
resolutions and other documents required by law to be so
attached, and fully set out the rights and restrictions
attaching to each class, if any, of the share or registered
capital of the relevant Target Group Company.
(C) All the accounts, books, ledgers and financial and other records
of the Target Group have been properly kept in accordance with
normal business practice and are in the possession of the Target
Group or under its control and all transactions relating to its
business have been duly and correctly recorded therein and there
are, as at the date hereof, no inaccuracies or discrepancies of
any kind contained or reflected in such accounts, books, ledgers
and financial and other records and at the date hereof they are
sufficient to give a true and fair view of the state of the
Target Group's affairs and to explain its transactions.
(D) The statutory books (including all registers and minute books)
of each member of the Target Group have been properly kept and
contain (in respect of matters up to but not including
Completion) an accurate and complete record of the matters which
should be dealt with in those books and contain no inaccuracies
or discrepancies of any kind and no notice or allegation that
any of them is incorrect or should be rectified has been
received.
(E) All copies of documents supplied to the Buyer or its
professional advisors, agents or representatives have been true
and complete copies of such documents.
(F) All information relating to the Target Group which would be
expected to influence the decision of a purchaser for value of
the Sale Shares has been given to the Buyer by the Seller.
3. COMPLIANCE WITH LEGAL REQUIREMENTS
(A) Compliance has been made with all legal and procedural
requirements and other formalities in connection with the Target
Group concerning (a) the Memorandum and Articles of Association,
business licence or other constitutional documents of each
Target Group Company (including all resolutions passed or
purported to have been passed), (b) the filing of all documents
required by the applicable law to be filed with any government
authorities or regulatory bodies, (c) issues of shares
debentures or other securities, (d) payments of interest and
dividends and making of other distributions, and (e) their
Directors and other officers.
(B) Each Target Group Company is empowered and duly qualified to
carry on its business in Hong Kong and in each other country,
state or territory in which such business is presently carried
on.
33
- 30 -
(C) There has been no breach by any Target Group Company or by the
Seller or any of its officers or employees (in their capacity as
such) of any legislation or regulations affecting the Target
Group or its business.
4. ACCOUNTS
(A) The Audited Accounts :-
(i) comply with the requirements of all other applicable
legislation;
(ii) were prepared on the same basis and in accordance with
the same accounting policies as the audited accounts of
the Seller prepared in the three preceding years and in
accordance with Hong Kong GAAP at the time they were
prepared and commonly adopted by companies carrying on
businesses similar to that carried on by the Target
Group;
(iii) are complete and accurate in all material respects and,
in particular, do or will make full provision for all
established liabilities or make proper provision for (or
contain a note in accordance with good accounting
practice respecting) all deferred or contingent
liabilities (whether liquidated or unliquidated) at the
date thereof including deferred Taxation where
appropriate;
(iv) give a true and fair view of the state of affairs and
financial position of the Target Group at the date
thereof and of the Target Group's results for the
financial period ended on such date; and
(v) are not adversely affected by any unusual or
non-recurring items which are not disclosed in the
Audited Accounts.
(B) The Management Accounts:-
(i) were prepared on the same basis and in accordance with
the same accounting policies as the Audited Accounts and
in accordance with Hong Kong GAAP and commonly adopted
by companies carrying on a business similar to that
carried on by the Target Group;
(ii) are complete and accurate in all material respects and
in particular make full provision for all established
liabilities or make proper provision for (or contain a
note in accordance with good accounting practice
respecting) all deferred or contingent liabilities
(whether liquidated or unliquidated) at the date thereof
including deferred Taxation;
(iii) give a true and fair view of the state of affairs and
financial position of the Target Group at the date
thereof and of its results for the financial period
ended on that date; and
(iv) are not adversely affected by any unusual or
non-recurring items which are not disclosed in the
Management Accounts.
34
- 31 -
(C) Without limitation to paragraphs (A) and (B), due provision has
been made in the Audited Accounts and the Management Accounts:-
(i) for depreciation of assets;
(ii) for any foreseeable liabilities in relation to the
disposal of any assets or the cessation or diminution of
any part of the business of the Target Group; and
(iii) for bad or doubtful debts.
(D) No member of the Target Group has any outstanding liability for
Taxation of any kind which has not been provided for or is not
provided for in the Accounts.
(E) No member of the Target Group has any capital commitment or is
engaged in any scheme or project requiring the expenditure of
capital.
(F) Each member of the Target Group owns and will own free from
encumbrances all its undertaking and assets shown or comprised
in the relevant accounts and all such assets are in its
possession or under its control.
(G) No member of the Target Group holds any security (including any
guarantee or indemnity) which is not valid and enforceable by
such member against the grantor thereof in accordance with its
terms.
(H) The accountant's report and the NAV Statement referred to in
Clause 4.4 shall be or have been prepared in accordance with
Hong Kong GAAP.
5. EVENTS SINCE THE ACCOUNTS DATE
Since the Accounts Date:-
(i) there has been no adverse change in the financial condition or
prospects of any member of the Target Group and each Target
Group Company has entered into transactions and incurred
liabilities solely in the ordinary course of trading;
(ii) no resolution of any members of any Target Group Company in
general meeting has been passed other than resolutions relating
to the business of the annual general meeting which was not
special business;
(iii) no Target Group Company has declared, paid or made or is
proposing to declare, pay or make any dividend or other
distribution;
(iv) the financial year end of the Target Group has not changed from
31st March;
(v) no event has occurred which would entitle any third party (with
or without the giving of notice) to call for the repayment of
indebtedness prior to its normal maturity date;
(vi) the business of each member of the Target Group has been carried
on in the
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ordinary and usual course and in the same manner (including
nature and scope) as in the past, no fixed asset or stock has
been written up nor any debt written off, and no unusual or
abnormal contract has been entered into by any member of the
Target Group;
(vii) no asset of any member of the Target Group has been acquired or
disposed of on capital account, or has been agreed to be
acquired or disposed of, otherwise than in the ordinary course
of business and no member of the Target Group has disposed of or
parted with possession of any of its property, assets (including
know-how) or stock in trade or made any payments, and no
contract involving expenditure by it on capital account has been
entered into by any member of the Target Group, and no liability
has been created or has otherwise arisen (other than in the
ordinary course of business as previously carried on);
(viii) there has been no disposal of any asset (including stock) or
supply of any service or business facility of any kind
(including a loan of money or the letting, hiring or licensing
of any property whether tangible or intangible) in circumstances
where the consideration actually received or receivable for such
disposal or supply was less than the consideration which could
be deemed to have been received for tax purposes;
(ix) no event has occurred which gives rise to a tax liability to any
member of the Target Group on deemed (as opposed to actual)
income, profits or gains or which results in any member of the
Target Group becoming liable to pay or bear a tax liability
directly or primarily chargeable against or attributable to
another person, firm or company;
(x) no remuneration (including bonuses) or benefit payable to any
officer or employee of the Company has been increased nor has
any member of the Target Group undertaken any obligation to
increase any such remuneration at any future date with or
without retrospective effect;
(xi) all book debts of each member of the Target Group shown in the
Accounts which have been realised since the Accounts Date have
been realised at the amounts at which they were included in the
Accounts and no indication has been received that any debt now
owing to any member of the Target Group is bad or doubtful; and
(xii) no transaction of any importance to which any member of the
Target Group has been party has taken place, which if it had
taken place on or before the Accounts Date would require to be
disclosed or reflected in the audited accounts of the relevant
Target Group Company as at the date thereof or in the report of
the Directors accompanying such accounts.
6. CONTRACTS, COMMITMENTS AND FINANCIAL AND OTHER ARRANGEMENTS
(A) There are not now outstanding, nor will there be outstanding at
Completion, with respect to the Target Group:-
(i) any contracts of service with directors or employees
which cannot be
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terminated by one month's notice or less or (where not
reduced to writing) by reasonable notice without giving
rise to any claim for damages or compensation (other
than a statutory redundancy payment);
(ii) any agreements or arrangements to which any member of
the Target Group is a party for profit sharing, share
incentives, share options, incentive payments or payment
to employees of bonuses;
(iii) any obligation or arrangement to pay any pension,
gratuity, retirement annuity or benefit or any similar
obligation or arrangement in favour of any person;
(iv) any agreement (whether by way of guarantee indemnity
warranty representation or otherwise) under which any
member of the Target Group is under any actual or
contingent liability in respect of:-
(a) any disposal by any Target Group Company of its
assets or business or any part thereof except
such as are usual in the ordinary and proper
course of its normal day to day trading as
carried on at the date hereof; or
(b) the obligations of any other person;
(v) any contract to which any member of the Target Group is
a party which is of a long-term and non-trading nature
or which contains any unusual or unduly onerous
provision disclosure of which could reasonably be
expected to influence the decision of a purchaser for
value of any or all of the Sale Shares;
(vi) any agreement entered into by any member of the Target
Group otherwise than by way of bargain at arm's length;
(vii) any arrangements (contractual or otherwise) between any
member of the Target Group and any party which will or
may be terminated or prejudicially affected as a result
of the sale of the Sale Shares or of compliance with any
other provision of this Agreement; or
(viii) any contract which restricts the freedom of any member
of the Target Group to carry on the business now carried
on by it in any part of the world.
(B) There are no invalidity, or any grounds for determination,
rescission, avoidance or repudiation, of any agreement to which
any member of the Target Group is a party.
(C) Compliance with this Agreement does not and will not conflict
with or result in the breach of or constitute a default under
any agreement or instrument to which any member of the Target
Group is now a party or any loan to or mortgage created by any
member of the Target Group or relieve any other party to a
contract with any member of the Target Group of its obligations
under such
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contract or entitle such party to terminate such contract,
whether summarily or by notice.
(D) Neither entering into nor completing this Agreement will or is
likely to cause any member of the Target Group to lose the
benefit of any right or privilege it currently enjoys or any
person who normally does business with or gives credit to any
member of the Target Group not to continue to do so on the same
basis or any officer or senior employee of any Target Group
Company to leave its employment.
(E) No charges, rights of security or third party rights of any kind
whatsoever have been created or agreed to be created or
permitted to arise over any of the assets of any member of the
Target Group other than liens arising in the ordinary course of
business.
(F) No member of the Target Group is under any obligation, nor is it
a party to any contract, which cannot readily be fulfilled or
performed by it on time and without undue or unusual expenditure
of money or effort.
(G) No member of the Target Group is under any obligation, nor is it
a party to any forward contract relating to foreign currency.
(H) No member of the Target Group is a party to nor has it any
liability (present or future) under any loan agreement,
debenture, guarantee, indemnity or letter of credit or leasing,
hiring, hire purchase, credit sale or conditional sale agreement
nor has it entered into any contract or commitment involving, or
likely to involve, obligations or expenditure of an unusual or
exceptional nature or magnitude.
(I) There are no debts owing by any member of the Target Group other
than the debts which have arisen in the ordinary course of
business and shown in the Accounts.
(J) No member of the Target Group has any outstanding bid or tender
or sale or service proposal which, if accepted, would be likely
to result in a loss to the relevant Target Group Company.
(K) Save for any guarantee or warranty implied by law, no member of
the Target Group has given any guarantee or warranty, or made
any representation, in respect of goods or services supplied or
contracted to be supplied by it or accepted any liability or
obligation that would apply after any such goods or services had
been supplied by it.
(L) The stock-in-trade held by any member of the Target Group at the
date hereof is in good undamaged and merchantable condition.
7. INSOLVENCY
(A) No receiver has been appointed of the whole or any part of the
assets or undertaking of any member of the Target Group.
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(B) No petition has been presented, no order has been made and no
resolution has been passed for the winding-up or dissolution of
any member of the Target Group.
(C) No member of the Target Group has not stopped payment nor is it
insolvent or unable to pay its debts within the meaning of
section 178 of the Companies Ordinance.
(D) No unsatisfied judgment is outstanding against any member of the
Target Group.
8. INSURANCE
(A) Each member of the Target Group has effected and maintains valid
policies of insurance in an amount and to the extent that it is
prudent to do so in the business carried on by the relevant
Target Group Company. All premiums due in respect of such
policies of insurance have been paid in full and all the other
conditions of the said policies have been performed and observed
in full. Nothing has been done or omitted to be done whereby any
of the said policies has or may become void or voidable and none
of the said policies is subject to any special or unusual terms
or restrictions or to the payment of any premium in excess of
the usual rate.
(B) No claim is outstanding either by the insurer or the insured
under any of the said policies and no claim against any member
of the Target Group by any third party is outstanding in respect
of any risk covered by any of the policies or by any policy
previously held by the relevant Target Group Company.
(C) There are no circumstances which would or might entitle any
member of the Target Group to make a claim under any of the said
policies or which would or might be required under any of the
said policies to be notified to the insurers.
9. LITIGATION
No member of the Target Group is engaged (whether as plaintiff,
defendant or otherwise) in any litigation or arbitration, administrative
or criminal or other proceeding and no litigation or arbitration,
administrative or criminal or other proceedings against any member of
the Target Group is pending, threatened or expected and there is no fact
or circumstance likely to give rise to any such litigation or
arbitration, administrative or criminal or other proceedings or to any
proceedings against any director, officer or employee (past or present)
of any member of the Target Group in respect of any act or default for
which any member of the Target Group might be vicariously liable.
10. THE INCLUDED PROPERTY
(A) As at the date hereof the Target Group does not own or have any
interest in real property or land (save and except the tenancy
agreements as mentioned in Section 22 of this Schedule).
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(B) JIC Holdings is the registered and beneficial owner of the
Included Property free from any incumbrances, liens, tenancy,
lease or licence and any third party rights whatsoever.
(C) The Included Property is occupied or otherwise used by the
Target Group in connection with its business. The present use of
the Included Property is not in contravention of any applicable
laws, regulations, orders or official directions and there is no
development thereon in contravention of such laws, regulations,
orders or directions.
(D) The Included Property is held by JIC Holdings by way of long
term investment and accordingly any disposal or deemed disposal
(whether now or in the future) by JIC Holdings, or subsequently
by the Target Group, of the Property or any interest therein
will not give rise to any liability of the Target Group to
Taxation.
(E) The Government Lease of the Included Property and the Deed of
Mutual Covenant in respect of the building of which the Property
forms part (if applicable) are now good, valid and subsisting
and are in no way void or voidable and the premium, rent and
other moneys reserved by or payable under the Government Lease
and the Deed of Mutual Covenant and the terms covenants and
conditions contained in the Government Lease and the Deed of
Mutual Covenant have been duly paid performed and observed up to
the date hereof and will be duly paid performed and observed up
to Completion.
(F) JIC Holdings has good right and title to the Included Property
and has vacant possession of the Property free from all adverse
claims and incumbrances, save only for any occupation by members
of the Target Group.
(G) The rates, Government rent and all other outgoings in respect of
the Included Property have been duly paid up to the date hereof
and will be duly paid up to Completion.
(H) Nothing has been done or omitted on the Included Property or any
part thereof, the doing or omission of which is a contravention
of any applicable laws, regulations, orders or official
directions.
(I) The Included Property is in good and substantial repair and fit
for the purposes for which it is currently used.
(J) There are no outstanding notices, complaints or requirements
issued by any governmental body, authority or department or any
managing authority appointed under the Deed of Mutual Covenant
to JIC Holdings in respect of the Property or any part thereof.
The Seller undertakes to notify the Buyer promptly of any notice
received by it or JIC Holdings or any Target Group Company, from
any governmental body, authority or department or any managing
authority appointed under the Deed of Mutual Covenant relating
to any of the aforesaid matters.
(K) There are no planning or other proposals made or intended to be
made by any
40
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governmental body, authority or department or any statutory
authority concerning the compulsory acquisition or resumption of
the Included Property or any part thereof or which would
adversely affect the Included Property or any part thereof or
the present use thereof.
(L) There are no outstanding actions, disputes, claims or demands
between JIC Holdings or any member of the Target Group and any
third party affecting the Included Property or any property
neighbouring the Included Property.
(M) No member of the Target Group has residual liability in respect
of any premises previously owned, controlled or occupied by it.
11. DELINQUENT ACTS
No member of the Target Group has committed nor is it liable for any
criminal, illegal, unlawful or unauthorised act or breach of any
obligation whether imposed by or pursuant to statute, contract or
otherwise.
12. TAX RETURNS
(A) All members of the Target Group has, in respect of all years of
assessment since incorporation falling before the date of this
Agreement, made or caused to be made all proper returns, and has
supplied or caused to be supplied all information regarding
taxation matters which it is required to make or supply to any
tax, revenue, finance and customs authority and there is, at the
date hereof, no dispute or disagreement nor is any contemplated
with any such authority regarding the liability or potential
liability to any tax or duty (including in each case penalties
and interest) or any member of the Target Group or regarding the
availability to any member of the Target Group of any relief
from tax or duty.
(B) The Target Group has sufficient records relating to past events
during the years prior to the date of this Agreement to
calculate the tax liability or relief which would arise on any
disposal or realisation of any asset owned at the date of this
Agreement.
(C) The Target Group has submitted or will submit all claims and
disclaimers which will be assumed to have been made for the
purposes of the Accounts.
13. ANTI-AVOIDANCE
No member of the Target Group has at any time been a party or otherwise
involved in any transaction or series of transactions involving steps
taken without any commercial or business purpose apart from the
obtaining of a tax advantage.
14. STAMP AND OTHER DUTIES
Each member of the Target Group has paid promptly all sums payable by it
under any applicable law or legislation and no sums are presently
payable by any member of the Target Group under any such law or
legislation.
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l5. EMPLOYMENT
(A) No Employee or consultant or former employee or consultant has
currently outstanding any claims against any member of the
Target Group whatsoever.
(B) Full provision has been made in the Accounts for all and any
compensation, severance payment or long service payment for
which any member of the Target Group is liable (including
accrued entitlements) in respect of loss of office, wrongful
dismissal, redundancy, unfair dismissal or termination of
employment.
(C) The Target Group is not paying, nor is it under any liability
(actual or contingent) to pay or secure, any pension or other
benefit on retirement, death or disability or on the attainment
of a specified age or on the completion of a specified number of
years of service or on termination of employment. No proposal
has been announced to establish any retirement, death or
disability benefit schemes for directors or employees nor are
there any obligations to or in respect of present or former
directors or employees with regard to retirement, death or
disability pursuant to which the Target Group is or may become
liable to make payments and no pension or retirement or sickness
gratuity is currently being paid or has been promised by any
member of the Target Group to or in respect of any former
director or former employee.
(D) No member of the Target Group has any outstanding undischarged
liability to pay to any governmental or regulatory authority in
any jurisdiction any contribution, taxation or other impose
arising in connection with the employment or engagement of
personnel by any company.
(E) There is not in existence nor is any member of the Target Group
proposing to introduce any share incentive scheme, share option
scheme or profit sharing scheme for all or any part of its
directors or employees.
(F) No member of the Target Group is a party to any agreement or
arrangement with or does not have commitment to any trade unions
or staff associations.
(G) There is no outstanding claim against any member of the Target
Group by any person who is now or has been an officer or
employee of the relevant Target Group Company or any dispute
between any member of the Target Group and a material class of
its employees.
(H) There is not outstanding any contract or arrangement to which
any member of the Target Group is a party for the payment to any
person or body of any consultancy or like fees.
16. POWERS OF ATTORNEY
No member of the Target Group has given any power of attorney or other
authority (express, implied or ostensible) which is outstanding or
effective to any person to enter into any contract or commitment on its
behalf other than to its employees and the bankers of the Target Group
to enter into routine trading contracts in the normal course
42
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of their duties.
17. INTELLECTUAL PROPERTY
(A) No patents, patentable and other inventions, trade marks, trade
names, registered designs, label designs and copyrights (the
Intellectual Property") owned by the Target Group (if any) and
used by it in connection with its business is liable to cease to
be available for use by the Target Group or has been or can be
the subject of a claim that it is not the sole property of
Target Group or is otherwise subject to encumbrances or that the
Target Group is not the sole beneficial owner thereof or for the
purposes of use other than by the Target Group.
(B) No licences, registered user or other rights have been granted
in respect of the Intellectual Property and none of the
Intellectual Property is being or has been used by any person
other than the Target Group.
(C) The Target Group does not use, require to use or otherwise have
an interest in any other intellectual property other than the
Intellectual Property.
(D) The processes employed and the products and services provided by
the Target Group do not use, embody or infringe any patents,
registered designs, know-how or trade secrets, copyrights,
trademarks or similar intellectual property rights (whether
registered or not) of third parties and no claims have been made
and no applications are pending.
18. COMPUTER EQUIPMENT
(A) The Target Group has not experienced any material mechanical or
software failure in respect of the Computer Equipment at any
time and the Computer Equipment is effective and operational for
the purposes for which it is currently used. The Computer
Equipment has been satisfactorily maintained and supported and
has the benefit of an appropriate maintenance and support
agreement.
(B) The Computer Equipment has adequate capability and capacity for
the current requirements of the Target Group.
(C) The individual components and items which together constitute
the Computer Equipment are compatible with each other and not to
any material extent redundant.
(D) The employees of the Target Group include persons familiar with
the Computer Equipment and competent in using it.
(E) Disaster recovery plans are in effect and are adequate to ensure
that the Computer Equipment can be replaced or substituted
without material disruption to the business of the Target Group.
(F) There are no restrictions relating to the use of the Computer
Equipment (and, in particular, no arbitrary limitations are
"embedded" in the software) which may
43
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prevent the Buyer and any member of the Target Group from using
the Computer Equipment to the fullest extent following
Completion.
(G) Other than third party software used in relation to the Computer
Equipment, the Target Group is the owner of all the items of
equipment relating to the Computer Equipment and all of the
records, systems, programs, controls, data, information or know
how stored, maintained, operated by or relating to the Computer
Equipment are held in the exclusive ownership and under the
direct control of the Target Group and no other person has any
claims or rights in respect of them.
(H) No member of the Target Group has infringed the rights of any
third party in using the Computer Equipment and such continued
use by the Buyer and the Target Group following Completion shall
not involve any such infringement.
(I) The Target Group has adequate procedures to ensure internal and
external security of the Computer Equipment, including
procedures for taking and storing on-site and off-site back-up
copies of programs and data.
(J) The Computer Equipment, information technology, plant,
equipment, machinery and vehicles used by the Company are Date
Compliant.
(K) So far as the Sellers are aware, all information relating to any
computer systems, information, technology, plant, equipment,
machinery and vehicles used by suppliers or other third parties
which are not or may not be Date Compliant and which may be
relevant to or affect any business of any member of the Target
Group to a material extent will be fully disclosed to the Buyer
prior to Completion.
19. ARRANGEMENTS BETWEEN THE COMPANY AND THE SELLERS
(A) No indebtedness (actual or contingent) and no contract or
arrangement is outstanding between any member of the Target
Group and the Sellers.
(B) The Sellers or any person connected with the Sellers have no
interest, direct or indirect, in any business other than that
carried on by the Target Group which is or is likely to be or
become competitive with the business or any proposed business of
the Target Group.
20. DEDUCTIONS AND WITHHOLDINGS
The Target Group has made all deductions in respect, or on account, of
any tax from any payment made by it which it is obliged or entitled to
make, and has accounted in full to the tax and/or other appropriate
authority for all amounts so deducted.
21. LICENCES
(A) All licences, consents, permissions and other approvals required
for or in connection with the carrying on of businesses now
being carried on by each member of the Target Group have been
disclosed in writing to the Buyer, are
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not limited in duration or subject to onerous conditions, and
are in full force and effect as at the date hereof, and will be
in full force and effect as at the Completion Date.
(B) All reports, returns and information required by law or, as a
condition of any licence, consent, permit or approval, required
to be made or given to any person or authority in connection
with the businesses of each member of the Target Group have been
made or given to the appropriate person or authority, and there
is no circumstance which indicates that any such licence,
consent, permission or approval required for or in connection
with the carrying on of businesses now being carried on by each
member of the Target Group is likely to be revoked for any
reason, or which may confer a right of revocation upon or
following the purchase of the Sale Shares by the Buyer.
22. TENANCY AGREEMENTS
(A) Each member of the Target Group is at the date hereof entitled
to use all the properties which it occupies and exercise all of
its rights under any tenancy agreements or licences of such
properties free from any third party rights whatsoever.
(B) The properties in relation to such tenancy or licence agreements
are occupied or otherwise used by the relevant member of the
Target Group in connection with its business, and is not in
contravention of any applicable laws, regulations, orders or
official directions and there is no development thereon in
contravention of such laws, regulations, orders or directions.
(C) The properties in relation to such tenancy or licence agreements
are in good and substantial repair and fit for the purposes for
which they are currently used.
23. NAMTAI COMMON STOCK
(A) Disclosure; Access to Information. The Seller and the Guarantors
have received or will receive prior to the Completion Date all
documents, records, books and other information pertaining to
the investment in the Buyer that has been requested by them,
including the opportunity to ask questions and receive answers.
The Buyer is subject to the periodic reporting requirements of
the United States Securities Exchange Act of 1934 (the "EXCHANGE
ACT"), and the Seller and the Guarantors have reviewed or
received copies of any such reports filed or submitted by the
Buyer with the United States Securities and Exchange Commission
("SEC") under the Exchange Act that has been requested by them.
(B) Manner of Sale. At no time was the Seller or the Guarantors
presented with or solicited by or through any leaflet, public
promotional meeting, television advertisement or any other form
of general solicitation or advertising.
(C) Registration or Exemption Requirements. The Seller and the
Guarantors further acknowledge and understand that irrespective
of any agreement with
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the Buyer restricting transferability or other disposition of
the Namtai Common Stock, the Seller is acquiring, the Namtai
Common Stock may not be transferred, resold or otherwise
disposed of in the United States except in a transaction
registered under the United States Securities Act of 1933 (the
"SECURITIES ACT") and any applicable state securities laws, or
unless an exemption from such registration is available.
(D) No Legal, Tax or Investment Advice. The Seller and the
Guarantors understand that nothing in the Agreement relating to
the sale and purchase of the entire issued share capital of the
Company (the "AGREEMENT") or any other materials presented to it
in connection with the acquisition of Namtai Common Stock
constitutes legal, tax or investment advice. The Seller and the
Guarantors have relied on, and have consulted with, such legal,
tax and investment advisors as they, in their sole discretion,
have deemed necessary or appropriate in connection with his
acquisition of the Namtai Common Stock.
(E) No Registration, Review or Approval. The Seller and the
Guarantors acknowledge and understand that the offering and sale
of Namtai Common Stock pursuant to the Agreement has not been
reviewed or approved by the SEC or by any securities commission
of any state of the United States or other securities
commission, authority or agency, and is not registered under the
Securities Act or under the securities or "blue sky" laws, rules
or regulations of any state of the United States. The Seller and
the Guarantors acknowledge, understand and agree that the shares
of Namtai Common Stock are being offered and sold under the
Agreement pursuant to an offshore offering exemption to the
registration provisions of the Securities Act pursuant to
Regulation S promulgated under such Act. The Seller and the
Guarantors understand that the Buyer is relying upon the truth
and accuracy of the representations, warranties, agreements,
acknowledgments and understandings set forth herein in order to
determine the applicability of such exemptions and the
suitability of such person to acquire the Namtai Common Stock.
(F) Investment Intent. The Seller and the Guarantors acknowledge
that the Seller is acquiring the Namtai Common Stock solely for
its own account and not with a view to the distribution,
assignment or resale to others. They understand and agree that
the Seller must bear the economic risk of its investment in the
Namtai Common Stock for an indefinite period of time.
(G) Offering Outside the United States. Neither the Seller or either
of the Guarantors is a "U.S. Person" as defined in Regulation S
(as the same may be amended from time to time) promulgated under
the Securities Act. At the time the buy order for this
transaction was originated, the Seller and the Guarantors were
outside the United States and no offer to purchase the Namtai
Common Stock was made in the United States. The Seller and the
Guarantors agree not to reoffer or sell the Namtai Common Stock,
or to cause any transferee, if any, permitted under the
Agreement to reoffer or sell the Namtai Common Stock, within the
United States, or for the account or benefit of a U.S. person,
(i) as part of the distribution of the Namtai Common Stock at
any time, or (ii) otherwise, only in a transaction meeting the
requirements of Regulation S under the Securities Act, including
without limitation, where the
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offer (i) is not made to a person in the United States and
either (a) at the time the buy order is originated, the buyer is
outside the United States or the Buyer and any person acting on
its behalf reasonably believe that the buyer is outside the
United States, or (b) the transaction is executed in, on or
through the facilities of a designated offshore securities
market and neither the seller nor any person acting on his
behalf knows that the transaction has been pre-arranged with a
buyer in the United States, and (ii) no direct selling efforts
shall be made in the United States by the buyer, an affiliate or
any person acting on their behalf, or in a transaction
registered under the Securities Act or pursuant to an exemption
from such registration.
(H) Regulation S Offering Transfer Restrictions. The transaction
restrictions in connection with this offshore offer and sale
restrict the Seller and the Guarantors from offering and selling
to U.S. Persons, or for the account or benefit of a U.S. Person,
for a period of time (the "Distribution Compliance Period"). The
Distribution Compliance Period for the Namtai Common Stock is
one (1) year from the Completion Date under the Agreement.
(I) Legend. A legend substantially in the following form will be
placed on any certificates or other documents evidencing the
Namtai Common Stock so as to restrict the resale, pledge,
hypothecation or other transfer thereof in accordance with the
provisions hereof and the provisions of Regulation S promulgated
under the Securities Act:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(TOGETHER WITH THE REGULATIONS PROMULGATED THEREUNDER, THE
"SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED WITHIN THE UNITED STATES
(AS THAT TERM IS DEFINED IN REGULATION S PROMULGATED UNDER THE
SECURITIES ACT) OR TO A U.S. PERSON (AS THAT TERM IS DEFINED IN
REGULATION S) IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT."
(J) Permitted Offers and Sales. Offers and sales of Namtai Common
Stock prior to the expiration of the Distribution Compliance
Period may be made (only if otherwise so permitted by the
Agreement) pursuant to the following conditions:
(i) The purchaser of the Namtai Common Stock, other than a
distributor, certifies that it is not a U.S. Person and
is not acquiring the Namtai Common Stock for the account
or benefit of any U.S. Person or is a U.S. Person who
purchased the Namtai Common Stock in a transaction that
did not require registration under the Securities Act;
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(ii) The purchaser of the Namtai Common Stock agrees to sell
such securities only in accordance with Regulation S as
promulgated under the Securities Act, pursuant to
registration under the Securities Act, or pursuant to an
available exemption from registration; and agrees not to
engage in hedging transactions with regard to such
Namtai Common Stock unless in compliance with the
Securities Act; and
(iii) The Namtai Common Stock contains a legend, substantially
in the form of Section 23(I) above, to the effect that
transfer of the Namtai Common Stock is prohibited except
in accordance with Regulation S, pursuant to
registration under the Securities Act, or pursuant to an
available exemption from registration; and that hedging
transactions involving those Namtai Common Stock may not
be conducted unless in compliance with the Securities
Act.
(K) No Hedging. The Seller and the Guarantors agree not to engage in
hedging transactions with respect to the Namtai Common Stock
prior to the expiration of the Distribution Compliance Period.
For offers and sales of the Namtai Common Stock prior to the
expiration of the Distribution Compliance Period, such offering
materials must state that hedging transactions involving those
securities may not be conducted unless in compliance with the
Securities Act and Regulation S promulgated thereunder.
24. SHARE TRANSFERS
As at Completion the Company will be the legal and beneficial owner of
the entire issued and outstanding share capital of the Jetup Shares and
the beneficial owner of the Jieda Equity Interest.
25. COMPLETION
All the warranties, representations and undertakings contained in the
foregoing paragraphs of this Schedule shall be deemed to be repeated
immediately before Completion and relate to the facts then existing.
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SCHEDULE 5
FORM OF TAX INDEMNITY
Dated 2000
---------------
J.I.C. HOLDINGS (BVI) LIMITED
XX. XXXXXX XX XXX XXXX
XX. XXXX XXX XXX (1)
and
NAM TAI ELECTRONICS, INC. (2)
-------------------------------------------
DEED OF INDEMNITY
in respect of
TAXATION
-------------------------------------------
[XXXXXXX XXXXXX & MASTER LOGO]
49
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THIS DEED OF INDEMNITY is dated , 2000 is made
BETWEEN:-
(1) J.I.C. HOLDINGS (B.V.I) LIMITED, a company incorporated in the British
Virgin Islands, with registration No.247602, XX. XXXXXX XX XXX XXXX,
(I.D. Card Number A977918(6)) of x/x X.X.X. Xxxxx, Xxxx 000, Xxxxx X,
Xxxxxxx Commercial Centre, 37 Ma Xxx Xxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxx
Xxxx and XX. XXXX XXX XXX, (I.D. Card Number X000000(0)) of x/x X.X.X.
Xxxxx, Xxxx 000, Xxxxx X, Xxxxxxx Commercial Centre, 37 Ma Xxx Xxx Xxxx,
Xxxxxxx, Xxxxxxx, Xxxx Xxxx (individually a "COVENANTOR" and together
the "COVENANTORS"); and
(2) NAM TAI ELECTRONICS, INC., a company incorporated in the British Virgin
Islands, with registration No. 3805, (the "BUYER").
1. DEFINITIONS AND INTERPRETATION
1.1 In this Deed, in addition to the above definitions, the following words
and expressions shall have the following meanings:-
"AGREEMENT" means the Agreement dated , 2000 between the Covenantors (1)
and the Buyer (2), relating to, inter alia, the sale and purchase of the
Sale Shares;
"CLAIM" includes any assessment, notice, demand or other document issued
or action taken by or on behalf of the Inland Revenue Department of Hong
Kong or any other statutory or central, provincial, regional or local
governmental authority whatsoever in Hong Kong or in any other part of
the world from which it appears that any Target Group Company is liable
or is sought to be made liable for any payment of any form of Taxation
or to be deprived of any Relief which Relief would, but for the Claim,
have been available to such Target Group Company;
"RELIEF" includes any relief, allowance, set-off or deduction in
computing profits or credit or right to repayment of Taxation granted by
or pursuant to any legislation concerning or otherwise relating to
Taxation;
"SALE SHARES" has the meaning in the Agreement;
"TARGET GROUP COMPANY" and "MEMBER OF THE TARGET GROUP" have the
meanings in the Agreement;
"TAXATION" means (i) any liability to any form of taxation, duty,
impost, levy, rate, or other amount payable to any revenue, customs or
fiscal authorities whenever created or imposed and of any part of the
world, including, without limitation, profits tax, provisional profits
tax, interest tax, salaries tax, property tax, taxes on income, estate
duty, capital duty, stamp duty, payroll tax, rates, customs and excise
duties and other similar liabilities, (ii) such an amount or amounts as
is referred to in Clause 1.4 and (iii) all interest, penalties, costs,
charges and expenses incidental or relating to the liability to Taxation
or the deprivation of any Relief which is the subject of this indemnity
to the extent that the same is payable or suffered by any Target Group
Company;
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1.2 In addition and without prejudice to Clause 1.1 words and expressions
defined in the Agreement shall, unless the context otherwise requires,
have the same meanings when used herein.
1.3 In this Deed, references to Clauses are to clauses of this Deed, words
importing the singular include the plural and vice versa, words
importing the gender include any gender, references to persons include
bodies corporate or unincorporate and the headings to the Clauses in
this Deed are for convenience only and have no legal effect.
1.4 In the event of any deprivation of any Relief, there shall be treated as
an amount of Taxation for which liability has arisen the amount of such
Relief multiplied by the relevant rates of Taxation in force in the
period or periods in respect of which Relief would have applied or
(where the rate has at the relevant time not been fixed) the last known
rate and assuming that such amount of Relief was capable of full
utilisation by the Target Group Companies.
2. INDEMNITY
2.1 Subject as hereinafter provided, the Covenantors hereby jointly and
severally covenant and agree with the Buyer that they will fully and
effectually indemnify and at all times keep fully and effectually
indemnified the Buyer (for itself and as trustee for each Target Group
Company) and/or each Target Group Company from and against and thus they
will pay to the Buyer and/or each Target Group Company:-
(a) the amount of any and all Taxation falling on any Target Group
Company resulting from or by reference to any income, profits,
gains, transactions, events, matters or things earned, accrued,
received, entered into or occurring up to the date hereof,
whether alone or in conjunction with any other circumstances
whenever occurring and whether or not such Taxation is
chargeable against or attributable to any other person, firm or
company, including any and all Taxation resulting from the
receipt by any Target Group Company or the Buyer of any amounts
paid by the Covenantors under this Deed; and
(b) any and all costs (including all legal costs), expenses or other
liabilities which the Buyer or any Target Group Company may
reasonably and properly incur in connection with:-
(i) the settlement of any claim under this Tax Indemnity;
(ii) any legal proceedings in which the Buyer or any Target
Group Company claims under or in respect of this Tax
Indemnity and in which judgement is given for the Buyer
or any Target Group Company; or
(iii) the enforcement of any such settlement or judgement.
2.2 No claim under this indemnity shall be made by both a Target Group
Company and the Buyer in respect of the same Taxation;
2.3 No claim under this indemnity shall be made if a claim in respect
thereof has been made
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under the Agreement; and
2.4 No claim under this indemnity shall be made more than seven (7) years
after the date hereof.
3. CLAIMS
3.1 In the event of any Claim arising, the relevant Target Group Company
and/or the Buyer shall, by way of covenant but not as a condition
precedent to the liability of the Covenantors hereunder, give or procure
that notice thereof is given, as soon as reasonably practicable, to the
Covenantors and, as regards any Claim, the relevant Target Group Company
and/or the Buyer shall take such action to cause the Claim to be
withdrawn, or to dispute, resist, appeal against, compromise or defend
the Claim and any determination in respect thereof, but subject to it
being indemnified and secured to its reasonable satisfaction by the
Covenantors from and against any and all losses, liabilities (including
additional Taxation), damages, interest, penalties, costs, charges and
expenses which may be thereby sustained or incurred.
3.2 Without the prior approval of the Buyer, the Covenantors shall make no
settlement of any Claim nor agree any matter in the course of disputing
any Claim likely to affect the amount thereof or the future taxation
liability of any Target Group Company.
4. NOTICES
The provisions of Clause 12 of the Agreement (mutatis mutandis) shall be
incorporated in and be deemed to be part of this Deed.
5. BINDING EFFECT
This Deed shall enure to the benefit of and be binding on each party and
their respective successors and assigns.
6. ENTIRETY OF DEED AND SEVERABILITY
6.1 The terms and conditions herein contained constitute the entire
agreement between the parties relating to the subject matter hereof and
shall supersede all previous communications, oral or written, between
the parties with respect to the subject matter hereof which are
inconsistent with the provisions of this Deed.
6.2 Any provision of this Deed prohibited by or unlawful or unenforceable
under any applicable law actually applied by any court of competent
jurisdiction shall, to the extent required by such law, be severed from
this Deed and rendered ineffective so far as is possible without
modifying the remaining provisions of this Deed. Where, however, the
provisions of any such applicable law may be waived, they are hereby
waived by the parties hereto to the full extent permitted by such law to
the end that this Deed shall be valid, binding and enforceable in
accordance with its terms.
7. AMENDMENT
This Deed may be varied, amended or modified only by agreement under
seal of all
52
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parties.
8. RELEASE OF OBLIGATIONS
Any liability of the Covenantors under this Deed may, in whole or in
part, be released, compounded or compromised by any Target Group Company
and/or the Buyer, in its sole and absolute discretion, and time or any
other indulgence may be granted to the Covenantors by any Target Group
Company and/or the Buyer, in its/their sole and absolute discretion,
without in any way prejudicing or affecting any of its/their other
rights, powers or remedies against the Covenantors under any other
liability hereunder.
9. TIME
Time shall be of the essence of this Deed.
10. LAW AND JURISDICTION
This Deed shall be governed by and construed in all respects in
accordance with the laws of Hong Kong and the parties irrevocably submit
to the non-exclusive jurisdiction of the Hong Kong courts in relation to
any proceedings arising out of or in connection with this Deed, but this
Deed may be enforced in any other courts of competent jurisdiction.
53
- 50 -
EXECUTED as a deed under seal by the parties.
SEALED with the COMMON SEAL of )
)
J.I.C HOLDINGS (B.V.I) LIMITED )
)
and SIGNED BY )
) ------------------------------
Witnessed by
-----------------------------
Name:
Title:
SIGNED SEALED AND DELIVERED BY )
)
XX. XXXXXX XX XXX XXXX ) ------------------------------
Witnessed by
-----------------------------
Name:
Title:
SIGNED SEALED AND DELIVERED BY )
)
XX. XXXX XXX XXX ) ------------------------------
Witnessed by
-----------------------------
Name:
Title:
SEALED with the COMMON SEAL of )
)
54
- 51 -
NAM TAI ELECTRONICS, INC. )
)
and SIGNED BY )
) ------------------------------
Witnessed by
-----------------------------
Name:
Title:
55
- 52 -
SCHEDULE 6
FORM OF SERVICES AGREEMENTS
DATED 2000
[ ]
and
XXXXXX XX XXX XXXX
-----------------------------
SERVICE AGREEMENT
as Executive Director
-----------------------------
[XXXXXXX XXXXXX & MASTER LOGO]
56
- 53 -
CONTENTS
1. Appointment and Term
2. Duties
3. Remuneration
4. Pension and Insurance Benefits
5. Expenses
6. Annual Leave
7. Sickness/Incapacity
8. Confidential Information
9. Restrictive Covenants
10. Termination on the Happening of Certain Events
11. Obligations upon termination of employment
12. Effect of Termination of this Agreement
13. Other Terms and Conditions
14. Applicable Law
57
- 54 -
SERVICE AGREEMENT
THIS AGREEMENT made the ____ day of ______________ 2000
BETWEEN:
(1) [____________________________], a company incorporated in the British
Virgin Islands, with registration no. [________] (the "COMPANY"); and
(2) XX. XXXXXX XX XXX XXXX of _____________________________________________
_______________________________ (the "EXECUTIVE").
WHEREAS:
The Company wishes to employ the Executive and the Executive has agreed to serve
the Company as Executive Director on the terms and conditions set out in this
Agreement.
IT IS AGREED:
1. APPOINTMENT AND TERM
1.1 The Company shall employ the Executive and the Executive shall serve the
Company as Executive Director for a period of 3 years from the date of
this Agreement.
1.2 This Agreement shall terminate automatically on the third anniversary of
this Agreement.
2. DUTIES
2.1 During his employment hereunder the Executive shall:
(a) perform the duties and exercise the powers and functions which
from time to time may reasonably be assigned to or vested in him
by the Board of Directors (the "BOARD") in relation to the
Company at such place or places both within and outside the Hong
Kong Special Administrative Region of the People's Republic of
China ("HONG KONG") as the Board shall determine;
(b) during working hours devote the whole of his time, attention and
ability to his duties hereunder and shall faithfully and loyally
serve the Company to the best of his ability and use his utmost
endeavours to promote its interests in all respects;
(c) comply with all reasonable requests, instructions and
regulations given or made by the Board (or by any one authorised
by it) and promptly provide such explanations, information and
assistance as to his activities or the business of the Company
as the Board may reasonably require; and
(d) not engage in any activities which would detract from the proper
performance of his duties hereunder, nor without the prior
written consent of the Board in any capacity including as
director, shareholder, principal, consultant, agent,
58
- 55 -
partner or employee of any other company, firm or person (save
as the holder for investment of securities which do not exceed
three per cent (3%) in nominal value of the share capital or
stock of any class of any company quoted on a recognised stock
exchange) engage or be concerned or interested directly or
indirectly in any other trade, business or occupation
whatsoever.
2.2 Notwithstanding the provisions of clause 2.1 the Company shall:
(a) be entitled at any time to appoint another person or persons to
act jointly with the Executive;
(b) have the right to require the Executive at any time to carry out
such special projects or functions commensurate with his
abilities as the Company shall in its absolute discretion
determine; and
(c) be under no obligation to assign to or vest in the Executive any
powers, duties or functions or to provide any work for the
Executive and may at any time suspend the Executive from the
performance of any duties or exclude him from any premises of
the Company.
3. REMUNERATION
3.1 As remuneration for his services hereunder the Company shall pay to the
Executive a gross salary at the following rates (which shall be deemed
to accrue from day to day) payable in arrears on or before the last day
of each month such salary being inclusive of any fees to which the
Executive may be entitled as a director of the Company:-
(a) For the period from the date of this Agreement until 31st March
2001, at an annual rate of HK$1,500,000 which is equivalent to a
rate of HK$125,000 per month;
(b) For the period from 1st April 2001 until 31st December 2001, at
an annual rate of HK$1,800,000 which is equivalent to a rate of
HK$150,000 per month; and
(c) For the period from 1st January 2002 until the third anniversary
of this Agreement, at a rate to be agreed between the Board and
the Executive.
3.2 The Executive shall be entitled to participate in the share incentive
scheme, details of which are set out in the Schedule.
3.3 The Executive shall account to the appropriate authorities for all taxes
payable by him under any applicable law or regulation in respect of all
sums received by him hereunder and shall indemnify the Company for any
losses, costs, or expenses incurred by the Company resulting from his
failure to do so.
4. PENSION AND INSURANCE BENEFITS
The Executive shall be entitled to such pension, medical insurance and
other benefits as are available generally to staff of the Company, as
the Board may determine from time to time.
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5. EXPENSES
The Executive shall adhere to the Payment Approval and Authorisation
procedures as may be specified by the Company from time to time.
6. ANNUAL LEAVE
6.1 In addition to statutory holidays the Executive shall be entitled to 21
working days' paid annual leave during each calendar year to be taken at
such time or times as may be agreed with the Board. The Executive may
not without the consent of the Board carry forward any unused part of
his annual leave entitlement (except statutory entitlement) to a
subsequent calendar year and no payment will be made in lieu of any
accrued but unused annual leave. All annual leave will be taken to cover
the statutory entitlement first.
6.2 For the calendar year during which the Executive's employment hereunder
commences or terminates he shall be entitled to such proportion of his
annual leave entitlement as the period of his employment in each such
year bears to one calendar year. Upon termination of his employment for
whatever reason he shall if appropriate either be entitled to a payment
in lieu of any outstanding annual leave entitlement or be required to
pay to the Company any salary received in respect of annual leave taken
in excess of his proportionate annual leave entitlement.
7. SICKNESS/INCAPACITY
7.1 If the Executive shall be prevented by illness, accident or other
incapacity from properly performing his duties hereunder he shall report
this fact forthwith to the Company Secretary's office and if he is so
prevented for more than four consecutive days he shall provide an
appropriate doctor's certificate.
7.2 If the Executive shall be absent from his duties hereunder owing to
illness, accident or other incapacity duly certified in accordance with
the provisions of clause 7.1 he shall be paid his full remuneration for
the first 60 days of such absence and thereafter subject to the
provisions of clause 10 such remuneration as the Board shall in its
discretion allow PROVIDED THAT there shall be deducted from such
remuneration any benefits payable to the Executive including any sums
recoverable from a third party and any sums payable to the Executive
under any permanent health insurance arrangements as may be offered to
the Executive pursuant to Clause 4 above.
8. CONFIDENTIAL INFORMATION
The Executive shall not during his employment hereunder (save in the
proper course thereof) or at any time after its termination for any
reason whatsoever disclose to any person whatsoever or otherwise make
use of any confidential or secret information which he has or may have
acquired in the course of his employment concerning the business,
affairs, finance, customers or trade connections of the Company or any
of its suppliers, agents, distributors or customers and shall use his
best endeavours to prevent the unauthorised publication or disclosure of
any such confidential or secret information.
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9. RESTRICTIVE COVENANTS
9.1 Since the Executive will in the course of his employment hereunder have
dealings with customers and obtain knowledge of the trade secrets and
other confidential information in regard to the business of the Company,
the Executive hereby agrees and undertakes with the Company that he
shall not without the prior written consent of the Board (such consent
to be withheld only so far as may be reasonably necessary to protect the
legitimate interests of the Company):
(a) for a period of 36 months after the termination for whatever reason of
his employment hereunder be engaged or interested (whether as a
director, shareholder, principal, consultant, agent, partner or
employee) in any business concern (of whatever kind) which shall in Hong
Kong, Macau, Taiwan, Singapore, Thailand and the People's Republic of
China be in competition with the Company in the provision of services or
the manufacture, sale or supply of goods, being services or goods of a
kind with which the Executive was concerned to a material extent during
the period of one year prior to the termination of his employment with
the Company PROVIDED ALWAYS that nothing in this clause 9.1(a) shall
restrain the Executive from engaging or being interested as aforesaid in
any such business concern in so far as his duties or work relate
principally to services or goods of a kind with which the Executive was
not concerned during the period of one year prior to the termination of
his employment hereunder;
(b) for a period of 36 months after the termination for whatever reason of
his employment hereunder either on his own behalf or on behalf of any
other person, firm or company in respect of any services of a kind
provided or any goods of a kind sold or supplied by the Company in
respect of the provision or sale or supply of which the Executive may
have been engaged during his employment with the Company:
(i) canvass, solicit or approach or cause to be canvassed, solicited
or approached for orders; or
(ii) directly or indirectly deal with
any person, firm or company who at the date of the termination of this
Agreement or within one year prior to such date is or was a client or
customer of the Company or was in the habit of dealing under contract
with the Company; and
(c) for a period of 36 months after the termination for whatever reason of
his employment hereunder either on his own behalf or on behalf of any
other person, firm or company:
(i) directly or indirectly solicit or entice or endeavour to solicit
or entice away from the Company any employee of executive or
managerial status engaged in its or their business; and
(ii) interfere or seek to interfere with the continuance of supplies
to the Company (or the terms relating to such supplies) from any
suppliers who have been supplying goods, materials or services
to the Company at any time during the last year of his
employment hereunder.
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9.2 Whilst each of the restrictions in clauses 9.1(a), 9.1(b) and 9.1(c) are
considered by the parties to be reasonable in all the circumstances as
at the date hereof it is hereby agreed and declared that if any one or
more of such restrictions shall be judged to be void as going beyond
what is reasonable in all the circumstances for the protection of the
interests of the Company but would be valid if words were deleted
therefrom the said restrictions shall be deemed to apply with such
modifications as may be necessary to make them valid and effective and
any such modification shall not thereby affect the validity of any other
restriction contained herein.
10. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS
The Company without prejudice to any remedy which it may have against
the Executive for the breach or non-performance of any of the provisions
of this Agreement may by notice in writing to the Executive forthwith
determine this Agreement if the Executive shall:
(a) become unable to pay his debts as they fall due or make any
arrangement or composition with his creditors; or
(b) have been disqualified from being a director of the Company; or
(c) be convicted of any criminal offence (other than an offence
under road traffic legislation for which a penalty other than
imprisonment is imposed); or
(d) commit any act of dishonesty whether relating to the Company,
other employees or otherwise; or
(e) be guilty of any serious misconduct, any conduct tending to
bring the Company or himself into disrepute, or any material
breach or non-observance of an of the provisions of this
Agreement or shall neglect, fail or refuse to carry out duties
properly assigned to him hereunder; or
(f) shall become of unsound mind or seriously ill so as to be unable
to carry out the inherent requirements of this Agreement.
11. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT
Upon the termination of his employment hereunder for whatever reason the
Executive shall:
(a) forthwith tender his resignation as a Director of the Company
without compensation. To secure his obligation under this
Agreement the Executive irrevocably appoints the Company to be
his attorney in his name and on his behalf to sign any documents
and do any things necessary to give effect thereto, if the
Executive shall fail to sign or do the same himself;
(b) deliver up to the Company all vehicles, keys, credit cards,
correspondence, documents, specifications, reports, papers and
records (including any computer material such as discs or tapes)
and all copies thereof and any other
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property (whether or not similar to the foregoing or any of
them) belonging to the Company which may be in his possession or
under his control, and (unless prevented by the owner thereof)
any such property belonging to others which may be in his
possession or under his control and which relates in any way to
the business or affairs of the Company or any supplier, agent,
distributor or customer of the Company, and he shall not without
written consent of the Board retain any copies thereof;
(c) if so requested send to the Company Secretary a signed statement
confirming that he has complied with clause 11(b); and
(d) not at any time represent himself still to be connected with the
Company.
12. EFFECT OF TERMINATION OF THIS AGREEMENT
The expiry or termination of this Agreement howsoever arising shall not
operate to affect any of the provisions hereof which are expressed to
operate or have effect thereafter and shall not prejudice the exercise
of any right or remedy of either party accrued beforehand.
13. OTHER TERMS AND CONDITIONS
13.1 The provisions of the Company's handbook (if any) shall apply to the
Executive's employment hereunder except so far as inconsistent herewith.
13.2 The Executive's continuous employment began on __________________ _____.
13.3 If the Executive is dissatisfied with any disciplinary decision or if he
has any grievance relating to his employment hereunder he should refer
such disciplinary decision or grievance to the Board and the reference
will be dealt with by discussion at and the decision of a Board Meeting.
14. APPLICABLE LAW
The laws of Hong Kong shall apply to this Agreement and the parties
submit to the jurisdiction of the Hong Kong Court.
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The Schedule
Share incentives to be issued to the Executive
(as attached)
64
- 61 -
IN WITNESS whereof this Agreement has been entered into the day and year first
above written
SIGNED by )
for and on behalf of [ )
] )
in the presence of :- )
SIGNED by )
XXXXXX XX XXX XXXX )
in the presence of :- )
Acknowledged by :
------------------------------------
For and on behalf of
NAM TAI ELECTRONICS, INC.
65
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DATED 2000
---------------------
[ ]
and
XXXX XXX XXX
-----------------------------
SERVICE AGREEMENT
as Executive Director
-----------------------------
[XXXXXXX XXXXXX & MASTER LOGO]
66
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CONTENTS
1. Appointment and Term
2. Duties
3. Remuneration
4. Pension and Insurance Benefits
5. Expenses
6. Annual Leave
7. Sickness/Incapacity
8. Confidential Information
9. Restrictive Covenants
10. Termination on the Happening of Certain Events
11. Obligations upon termination of employment
12. Effect of Termination of this Agreement
13. Other Terms and Conditions
14. Applicable Law
67
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SERVICE AGREEMENT
THIS AGREEMENT made the _____ day of ______________ 2000
BETWEEN:
(1) [_____________________________], a company incorporated in the British
Virgin Islands, with registration no. [___________] (the "COMPANY"); and
(2) XX. XXXX XXX XXX of ___________________________________________________
_______________________________ (the "EXECUTIVE").
WHEREAS:
The Company wishes to employ the Executive and the Executive has agreed to serve
the Company as Executive Director on the terms and conditions set out in this
Agreement.
IT IS AGREED:
1. APPOINTMENT AND TERM
1.1 The Company shall employ the Executive and the Executive shall serve the
Company as Executive Director for a period of 3 years from the date of
this Agreement.
1.2 This Agreement shall terminate automatically on the third anniversary of
this Agreement.
2. DUTIES
2.1 During his employment hereunder the Executive shall:
(a) perform the duties and exercise the powers and functions which
from time to time may reasonably be assigned to or vested in him
by the Board of Directors (the "BOARD") in relation to the
Company at such place or places both within and outside the Hong
Kong Special Administrative Region of the People's Republic of
China ("HONG KONG") as the Board shall determine;
(b) during working hours devote the whole of his time, attention and
ability to his duties hereunder and shall faithfully and loyally
serve the Company to the best of his ability and use his utmost
endeavours to promote its interests in all respects;
(c) comply with all reasonable requests, instructions and
regulations given or made by the Board (or by any one authorised
by it) and promptly provide such explanations, information and
assistance as to his activities or the business of the Company
as the Board may reasonably require; and
(d) not engage in any activities which would detract from the proper
performance of his duties hereunder, nor without the prior
written consent of the Board in any capacity including as
director, shareholder, principal, consultant, agent,
68
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partner or employee of any other company, firm or person (save
as the holder for investment of securities which do not exceed
three per cent (3%) in nominal value of the share capital or
stock of any class of any company quoted on a recognised stock
exchange) engage or be concerned or interested directly or
indirectly in any other trade, business or occupation
whatsoever.
2.2 Notwithstanding the provisions of clause 2.1 the Company shall:
(a) be entitled at any time to appoint another person or persons to
act jointly with the Executive;
(b) have the right to require the Executive at any time to carry out
such special projects or functions commensurate with his
abilities as the Company shall in its absolute discretion
determine; and
(c) be under no obligation to assign to or vest in the Executive any
powers, duties or functions or to provide any work for the
Executive and may at any time suspend the Executive from the
performance of any duties or exclude him from any premises of
the Company.
3. REMUNERATION
3.1 As remuneration for his services hereunder the Company shall pay to the
Executive a gross salary at the following rates (which shall be deemed
to accrue from day to day) payable in arrears on or before the last day
of each month such salary being inclusive of any fees to which the
Executive may be entitled as a director of the Company:-
(a) For the period from the date of this Agreement until 31st March
2001, at an annual rate of HK$1,500,000 which is equivalent to a
rate of HK$125,000 per month;
(b) For the period from 1st April 2001 until 31st December 2001, at
an annual rate of HK$1,800,000 which is equivalent to a rate of
HK$150,000 per month; and
(c) For the period from 1st January 2002 until the third anniversary
of this Agreement, at a rate to be agreed between the Board and
the Executive.
3.2 The Executive shall be entitled to participate in the share incentive
scheme, details of which are set out in the Schedule.
3.3 The Executive shall account to the appropriate authorities for all taxes
payable by him under any applicable law or regulation in respect of all
sums received by him hereunder and shall indemnify the Company for any
losses, costs, or expenses incurred by the Company resulting from his
failure to do so.
4. PENSION AND INSURANCE BENEFITS
The Executive shall be entitled to such pension, medical insurance and
other benefits as are available generally to staff of the Company, as
the Board may determine from time to time.
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5. EXPENSES
The Executive shall adhere to the Payment Approval and Authorisation
procedures as may be specified by the Company from time to time.
6. ANNUAL LEAVE
6.1 In addition to statutory holidays the Executive shall be entitled to 21
working days' paid annual leave during each calendar year to be taken at
such time or times as may be agreed with the Board. The Executive may
not without the consent of the Board carry forward any unused part of
his annual leave entitlement (except statutory entitlement) to a
subsequent calendar year and no payment will be made in lieu of any
accrued but unused annual leave. All annual leave will be taken to cover
the statutory entitlement first.
6.2 For the calendar year during which the Executive's employment hereunder
commences or terminates he shall be entitled to such proportion of his
annual leave entitlement as the period of his employment in each such
year bears to one calendar year. Upon termination of his employment for
whatever reason he shall if appropriate either be entitled to a payment
in lieu of any outstanding annual leave entitlement or be required to
pay to the Company any salary received in respect of annual leave taken
in excess of his proportionate annual leave entitlement.
7. SICKNESS/INCAPACITY
7.1 If the Executive shall be prevented by illness, accident or other
incapacity from properly performing his duties hereunder he shall report
this fact forthwith to the Company Secretary's office and if he is so
prevented for more than four consecutive days he shall provide an
appropriate doctor's certificate.
7.2 If the Executive shall be absent from his duties hereunder owing to
illness, accident or other incapacity duly certified in accordance with
the provisions of clause 7.1 he shall be paid his full remuneration for
the first 60 days of such absence and thereafter subject to the
provisions of clause 10 such remuneration as the Board shall in its
discretion allow PROVIDED THAT there shall be deducted from such
remuneration any benefits payable to the Executive including any sums
recoverable from a third party and any sums payable to the Executive
under any permanent health insurance arrangements as may be offered to
the Executive pursuant to Clause 4 above.
8. CONFIDENTIAL INFORMATION
The Executive shall not during his employment hereunder (save in the
proper course thereof) or at any time after its termination for any
reason whatsoever disclose to any person whatsoever or otherwise make
use of any confidential or secret information which he has or may have
acquired in the course of his employment concerning the business,
affairs, finance, customers or trade connections of the Company or any
of its suppliers, agents, distributors or customers and shall use his
best endeavours to prevent the unauthorised publication or disclosure of
any such confidential or secret information.
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9. RESTRICTIVE COVENANTS
9.1 Since the Executive will in the course of his employment hereunder have
dealings with customers and obtain knowledge of the trade secrets and
other confidential information in regard to the business of the Company,
the Executive hereby agrees and undertakes with the Company that he
shall not without the prior written consent of the Board (such consent
to be withheld only so far as may be reasonably necessary to protect the
legitimate interests of the Company):
(a) for a period of 36 months after the termination for whatever reason of
his employment hereunder be engaged or interested (whether as a
director, shareholder, principal, consultant, agent, partner or
employee) in any business concern (of whatever kind) which shall in Hong
Kong, Macau, Taiwan, Singapore, Thailand and the People's Republic of
China be in competition with the Company in the provision of services or
the manufacture, sale or supply of goods, being services or goods of a
kind with which the Executive was concerned to a material extent during
the period of one year prior to the termination of his employment with
the Company PROVIDED ALWAYS that nothing in this clause 9.1(a) shall
restrain the Executive from engaging or being interested as aforesaid in
any such business concern in so far as his duties or work relate
principally to services or goods of a kind with which the Executive was
not concerned during the period of one year prior to the termination of
his employment hereunder;
(b) for a period of 36 months after the termination for whatever reason of
his employment hereunder either on his own behalf or on behalf of any
other person, firm or company in respect of any services of a kind
provided or any goods of a kind sold or supplied by the Company in
respect of the provision or sale or supply of which the Executive may
have been engaged during his employment with the Company:
(i) canvass, solicit or approach or cause to be canvassed, solicited
or approached for orders; or
(ii) directly or indirectly deal with
any person, firm or company who at the date of the termination of this
Agreement or within one year prior to such date is or was a client or
customer of the Company or was in the habit of dealing under contract
with the Company; and
(c) for a period of 36 months after the termination for whatever reason of
his employment hereunder either on his own behalf or on behalf of any
other person, firm or company:
(i) directly or indirectly solicit or entice or endeavour to solicit
or entice away from the Company any employee of executive or
managerial status engaged in its or their business; and
(ii) interfere or seek to interfere with the continuance of supplies
to the Company (or the terms relating to such supplies) from any
suppliers who have been supplying goods, materials or services
to the Company at any time during the last year of his
employment hereunder.
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9.2 Whilst each of the restrictions in clauses 9.1(a), 9.1(b) and 9.1(c) are
considered by the parties to be reasonable in all the circumstances as
at the date hereof it is hereby agreed and declared that if any one or
more of such restrictions shall be judged to be void as going beyond
what is reasonable in all the circumstances for the protection of the
interests of the Company but would be valid if words were deleted
therefrom the said restrictions shall be deemed to apply with such
modifications as may be necessary to make them valid and effective and
any such modification shall not thereby affect the validity of any other
restriction contained herein.
10. TERMINATION ON THE HAPPENING OF CERTAIN EVENTS
The Company without prejudice to any remedy which it may have against
the Executive for the breach or non-performance of any of the provisions
of this Agreement may by notice in writing to the Executive forthwith
determine this Agreement if the Executive shall:
(a) become unable to pay his debts as they fall due or make any
arrangement or composition with his creditors; or
(b) have been disqualified from being a director of the Company; or
(c) be convicted of any criminal offence (other than an offence
under road traffic legislation for which a penalty other than
imprisonment is imposed); or
(d) commit any act of dishonesty whether relating to the Company,
other employees or otherwise; or
(e) be guilty of any serious misconduct, any conduct tending to
bring the Company or himself into disrepute, or any material
breach or non-observance of an of the provisions of this
Agreement or shall neglect, fail or refuse to carry out duties
properly assigned to him hereunder; or
(f) shall become of unsound mind or seriously ill so as to be unable
to carry out the inherent requirements of this Agreement.
11. OBLIGATIONS UPON TERMINATION OF EMPLOYMENT
Upon the termination of his employment hereunder for whatever reason the
Executive shall:
(a) forthwith tender his resignation as a Director of the Company
without compensation. To secure his obligation under this
Agreement the Executive irrevocably appoints the Company to be
his attorney in his name and on his behalf to sign any documents
and do any things necessary to give effect thereto, if the
Executive shall fail to sign or do the same himself;
(b) deliver up to the Company all vehicles, keys, credit cards,
correspondence, documents, specifications, reports, papers and
records (including any computer material such as discs or tapes)
and all copies thereof and any other
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property (whether or not similar to the foregoing or any of
them) belonging to the Company which may be in his possession or
under his control, and (unless prevented by the owner thereof)
any such property belonging to others which may be in his
possession or under his control and which relates in any way to
the business or affairs of the Company or any supplier, agent,
distributor or customer of the Company, and he shall not without
written consent of the Board retain any copies thereof;
(c) if so requested send to the Company Secretary a signed statement
confirming that he has complied with clause 11(b); and
(d) not at any time represent himself still to be connected with the
Company.
12. EFFECT OF TERMINATION OF THIS AGREEMENT
The expiry or termination of this Agreement howsoever arising shall not
operate to affect any of the provisions hereof which are expressed to
operate or have effect thereafter and shall not prejudice the exercise
of any right or remedy of either party accrued beforehand.
13. OTHER TERMS AND CONDITIONS
13.1 The provisions of the Company's handbook (if any) shall apply to the
Executive's employment hereunder except so far as inconsistent herewith.
13.2 The Executive's continuous employment began on .
13.3 If the Executive is dissatisfied with any disciplinary decision or if he
has any grievance relating to his employment hereunder he should refer
such disciplinary decision or grievance to the Board and the reference
will be dealt with by discussion at and the decision of a Board Meeting.
14. APPLICABLE LAW
The laws of Hong Kong shall apply to this Agreement and the parties
submit to the jurisdiction of the Hong Kong Court.
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The Schedule
Share incentives to be issued to the Executive
(as attached)
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IN WITNESS whereof this Agreement has been entered into the day and year first
above written
SIGNED by )
for and on behalf of[ )
] )
in the presence of :- )
SIGNED by )
XXXX XXX XXX )
in the presence of :- )
Acknowledged by :
-------------------------------
For and on behalf of
NAM TAI ELECTRONICS, INC.
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SCHEDULE 7
FORM OF LOCK-UP AGREEMENT
NAM TAI ELECTRONICS, INC.
[Address]:
Dear Sirs,
To induce you to enter into that certain Agreement relating to the sale and
purchase of the entire issued share capital of J.I.C. Group (BVI) Limited (the
"Agreement") dated September __, 2000 by and between Nam Tai Electronics, Inc.
(the "Company"), and the undersigned as the Seller named therein (the "Seller")
and in consideration thereof and pursuant to Section __ of the Agreement, the
undersigned Seller agrees that, for a period of two (2) years from the
Completion Date of the Agreement (the "Lock-up Period"), not to offer to sell,
contract to sell, or otherwise sell, dispose of, loan, pledge or grant any
rights with respect to (collectively, a "Disposition") any shares of Common
Stock of the Company acquired directly by the undersigned pursuant to the
Agreement (the "Nam Tai Common Stock"). The foregoing restriction is expressly
agreed to preclude the undersigned from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
a Disposition of the Nam Tai Common Stock during the Lock-up Period, even if
such Common Stock would be disposed of by someone other than the undersigned.
Such prohibited hedging or other transactions includes, without limitation, any
short sale (whether or not against the box) or any purchase, sale or grant of
any right (including, without limitation, any put or call option) with respect
to any of the Nam Tai Common Stock or with respect to any security (other than a
broad-based market basket or index) that includes, relates to or derives any
significant part of its value from the Nam Tai Common Stock. The undersigned
further agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent against the transfer of the Nam Tai Common Stock held
by the undersigned except in compliance with this Agreement.
This Lock-Up Agreement shall be governed by and construed in accordance with the
laws of the State of California, applicable to contracts made and to be
performed in the State of California. The undersigned irrevocably consents to
the jurisdiction of the United States federal courts and the state courts
located in the State of California in any suit or proceeding based on or arising
under this Lock-Up Agreement and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The undersigned
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The undersigned further agrees that service of process
upon such party mailed by first class mail to the address set forth in Clause 12
of the Agreement for Notices shall be deemed in every respect effective service
of process upon the undersigned in any such suit or proceeding. Nothing herein
shall affect the right of to serve process in any other manner permitted by law.
The undersigned agrees that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
Date: ________________, 2000
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------------------------------------
(Signature)
------------------------------------
(Type or Print Name)
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EXECUTED by the parties
SIGNED BY Mr. Xx Xxx Xxxx Xxxxxx ) For and on behalf of
for and on behalf of ) J.I.C. Holdings (B.V.I.) Ltd.
J.I.C. HOLDINGS (B.V.I) LIMITED )
in the presence of:- ) /s/ [Signature illegible]
------------------------------
Witnessed by
/s/ [Signature illegible]
-------------------------------------
Name: Xxxxx Xxx Xxxx Xxxxxxx
Title: Solicitor, Hong Kong SAR
Messrs. Xxx & Xxxxx
SIGNED, SEALED AND DELIVERED BY )
MR. XX XXX XXXX, XXXXXX ) /s/ [Signature illegible]
------------------------ ------------------------------
Witnessed by
/s/ [Signature illegible]
-------------------------------------
Name: Xxxxx Xxx Xxxx Xxxxxxx
Title: Solicitor, Hong Kong SAR
Messrs. Xxx & Xxxxx
SIGNED, SEALED AND DELIVERED BY )
XX. XXXX XXX XXX ) /s/ [Signature illegible]
------------------------ ------------------------------
Witnessed by
/s/ [Signature illegible]
-------------------------------------
Name: Xxxxx Xxx Xxxx Xxxxxxx
Title: Solicitor, Hong Kong SAR
Messrs. Xxx & Xxxxx
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For and on behalf of )
)
NAM TAI ELECTRONICS, INC. )
) /s/ X.X. Xxx
by Xx. X.X. Xxx ) -------------------------------
Witnessed by
/s/ Xxxxxx Xxxxx Xxxxxxxxx
-------------------------------------
Name: Xxxxxx Xxxxx Xxxxxxxxx
Title: Solicitor, Hong Kong SAR
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EXHIBIT "A"
THE AUDITED ACCOUNTS
00
- 00 -
XXXXXXX "X"
THE MANAGEMENT ACCOUNTS
