SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
January 13, 1999
CUNNINGHAM GRAPHICS INTERNATIONAL, INC.
(Exact name of Registrant as specified in Charter)
New Jersey 0-24021 22-3561164
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
629 Grove Street, Jersey City, New Jersey 07310
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (201) 217-1990
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(Former name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition or Disposition of Assets
Pursuant to a stock purchase agreement dated as of January 13, 1999 (the
"Agreement") among Evan Lam Hok Ling, Timothy Tung Hok Ki (collectively, the
"Sellers"), Cunningham Graphics International, Inc., a New Jersey corporation
(the "Company"), and Cunningham Graphics International, S.A., a British Virgin
Island corporation ("CGISA"), the Company, through its wholly-owned subsidiary,
CGISA, acquired all of the issued and outstanding capital stock of Workable
Company Limited, a Hong Kong corporation ("Workable"). In addition, the Company
acquired from the Sellers the 60% of the outstanding capital stock of Plainduty
Limited, a Hong Kong corporation, which was not already held by Workable.
Workable also has a subsidiary in Singapore.
The purchase price of the acquisition was $12.3 million, which was paid as
follows: (i) the issuance of 398,216 shares of the Company's common stock, no
par value per share ("Common Stock"), at a price of $15.52 per share and (ii) a
cash payment in the amount of $6.2 million. In addition, the Company assumed
$0.7 million of indebtedness. The Company utilized proceeds from its initial
public offering of Common Stock to fund the cash portion of the purchase price.
Pursuant to the Agreement, the Company may be required to pay to the Sellers up
to an additional $3.8 million, depending upon the earnings of Workable during
the years 1999, 2000 and 2001.
Prior to the acquisition, Workable, a commercial printer of time sensitive
research reports in Hong Kong and Singapore, had been the Company's strategic
partner in Asia for more than two years. The Company intends to have Workable
continue its operations in the manner conducted prior to the acquisition.
In connection with the Agreement, Workable entered into Services Agreements
dated as of January 13, 1999 with each of its principals, Evan Lam Hok Ling and
Timothy Tung Hok Ki.
A copy of the press release is attached hereto as Exhibit 99.
This press release may contain forward-looking statements, which involve known
and unknown risks, uncertainties or other factors that could cause actual
results to materially differ from the results, performance or other expectations
implied by these forward-looking statement. Factors which could cause or
contribute to such differences include, but are not limited to, continued demand
for its services, the availability of raw materials, the impact of competitive
services and pricing, risks in technology development, changing economic
conditions and other risk factors detailed in the Company's filings with the
Securities and Exchange Commission.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired
Audited financial statements of the acquired businesses for the year ending
March 31, 1998, and for the nine months ending December 31, 1998 and additional
financial information required under Rule 3-14 of Regulation S-X are not
included in this report and will be filed by amendment.
(b) Pro Forma Financial Information
Pro forma financial information for the Company after giving effect to the
acquisitions of Workable and Plainduty is not included in this report and will
be filed by amendment.
(c) Exhibits
Exhibit No. Description
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10.18 Agreement for the sale and purchase of the entire issued
share capital of Workable Company Limited and 60% of the
issued share capital of Plainduty Limited dated as of
January 13, 1999 by and among Lam Hok Ling, Tung Hok Ki,
Hacienda Resources Limited, Cunningham Graphics
International, Inc., and Cunningham Graphics
International, S.A.
10.19 Service Agreement dated as of January 13, 1999 between
Workable Company Limited and Evan Lam.
10.20 Service Agreement dated as of January 13, 1999 between
Workable Company Limited and Timothy Tung.
10.21 Tenancy Agreement dated as of January 13, 1999 between
Workable Company Limited and Many Best Development
Limited.
10.22 Tenancy Agreement dated as of January 13, 1999 between
Workable Company Limited and Splendour Chief Development
Limited.
99 Press release of Cunningham Graphics International, Inc.
dated January 13, 1999 with respect to the completion of
the acquisition of Workable Company Limited of Hong Kong.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Cunningham Graphics International, Inc.
(Registrant)
Dated: January 25, 1999 By: /s/ Michael R. Cunningham
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Name: Michael R. Cunningham
Title: President and Chief Executive Officer
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Dated January 1999
LAM HOK LING
and
TUNG HOK KI
and
HACIENDA RESOURCES LIMITED
and
CUNNINGHAM GRAPHICS INTERNATIONAL, S.A.
and
CUNNINGHAM GRAPHICS INTERNATIONAL, INC
----------------------------------------------
AGREEMENT
for the sale and purchase of
of the entire issued share capital of
Workable Company Limited and 60% of
the issued share capital of Plainduty Limited
----------------------------------------------
Cameron McKenna
5th Floor
Tower One Lippo Centre
89 Queensway
Hong Kong
T +852 2846 9100
F +852 2845 3575
Ref: JAO/GMC/NKT/02485.0001
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Table of Contents
1. Definitions and Interpretation..............................................1
2. Sale and purchase..........................................................10
3. Consideration..............................................................11
4. Conditions.................................................................15
5. Conduct of Business Pending Completion.....................................16
6. Completion.................................................................16
7. Completion Balance Sheet...................................................18
8. The Retention .............................................................20
9. Warranties and covenants...................................................23
10. Remedies..................................................................28
11. Protection of goodwill....................................................29
12. Termination...............................................................32
13. Retirement Scheme.........................................................33
14. Further assurance.........................................................33
15. Confidentiality; announcements............................................33
16. Assignment................................................................34
17. Waiver; variation; invalidity.............................................35
18. Joint and several.........................................................36
19. Costs and expenses........................................................36
20. Payments..................................................................38
21. Entire agreement..........................................................38
22. Counterparts..............................................................39
23. Time of the essence.......................................................39
24. Notices...................................................................39
25. Governing law and jurisdiction............................................41
26. Process Agent.............................................................41
Schedule 1 Details of the Sellers.............................................43
Schedule 2 Details of the Group...............................................44
Part 1 Details of the Companies........................................44
Part 2 Details of the Subsidiary.......................................44
Schedule 3 Properties and Leases..............................................46
Part 1 HK Properties and HK Leases.....................................46
Part 2 Singapore Property and Singapore Lease..........................47
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Schedule 4 Conduct of Business Pending Completion ............................48
Schedule 5 Completion Obligations ............................................50
Schedule 6 Basis for preparation of the Completion Balance Sheet..............53
Schedule 7 Warranties.........................................................55
Part 1 General warranties..............................................55
Part 2 Taxation Warranties.............................................86
Schedule 8 List of documents in the agreed form...............................90
Schedule 9 Retirement Scheme..................................................91
Schedule10 Certificates.......................................................92
Part 1 Sellers' Certificate............................................92
Part 2 Allottee's Certificate..........................................94
Exhibit A Accounts
Exhibit B List of non-recurring expenditure
Exhibit C Calculation of the amount of the Fixed Consideration
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THIS AGREEMENT is made the _____ day of January 1999
BETWEEN:
(1) LAM HOK LING of Flat A, 20th Floor, Block 2, Eden Garden, 9-11 Lok
Fung Path, Shatin, New Territories, Hong Kong and TUNG HOK KI of 24H,
Han Kung Mansion, Taikoo Shing, Hong Kong (the "Sellers");
(2) HACIENDA RESOURCES LIMITED, a company incorporated in the British
Virgin Islands whose registered office is at Commerce Chambers, Road
Town, Tortola, British Virgin Islands (the "Allottee");
(3) CUNNINGHAM GRAPHICS INTERNATIONAL, S.A., a company incorporated in the
British Virgin Islands whose registered office is at PO Box 3340, Road
Town, Tortola, British Virgin Islands (the "Purchaser"); and
(4) CUNNINGHAM GRAPHICS INTERNATIONAL, INC., a company incorporated in New
Jersey whose executive offices are located at 629 Grove Street, Jersey
City, New Jersey 07310, the United States of America ("CGII").
RECITALS
(A) Details of Workable Company Limited and Plainduty Limited are set out
in Part 1 of Schedule 2 (Details of the Companies).
(B) The Sellers have agreed to sell the Shares to the Purchaser and the
Purchaser has agreed to purchase the Shares on and subject to the
terms and conditions of this Agreement.
NOW IT IS AGREED as follows:
1. Definitions and Interpretation
In this Agreement:
1.1 Defined terms:
"Accounts" means the audited financial statements of each of the
Companies in respect of the Financial Period prepared by the Sellers'
Accountants as at the Balance Sheet Date on a SSAP basis (comprising
in each case a balance sheet, profit and loss account, notes,
auditors' and directors' reports, a statement of the source and
application of funds or a cashflow statement) and the Closing Balance
Sheet. Copies of the Accounts have been initialled by or on behalf of
the Sellers for the purpose of identification as Exhibit A annexed to
this Agreement;
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"Affiliate" means in relation to any body corporate (i) its holding
company; or (ii) any subsidiary (within the meaning of section 2 of
the Ordinance) of such body corporate or of its holding company;
"Agreement" means this Agreement, including the Recitals and
Schedules, but not the Tax Deed;
"Allottee" means the Party identified above as the allottee of the
Fixed Consideration Shares, being a company wholly owned and
controlled by the Sellers;
"Allotment Price" means the price per every CGII Stock at which the
Fixed Consideration Shares are to be allotted pursuant to this
Agreement, being the average of the daily closing market price of the
CGII Stock on the Nasdaq National Market System over a period of 45
consecutive trading days (both dates inclusive) ending on the third
business day preceding Completion;
"Associated Company" means a company in which any Group Company holds
shares conferring the right to exercise 20 per cent or more of the
votes which could (in normal circumstances and disregarding any
exceptional or temporary suspension of any voting rights) be cast on a
poll at a general meeting of such company and which is not a
subsidiary of any Group Company;
"Balance Sheet Date" means 30 November 1998;
"Business" means collectively the businesses of the Group at the date
of this Agreement;
"Business Day" means a day (other than a Saturday or Sunday) when
banks are open for business in Hong Kong;
"Cash Payment" means the cash payment as referred to in sub-clause
3.2.2 (Satisfaction of Fixed Consideration);
"CGII Stock" means the common stock of CGII without par value;
"Closing Balance Sheet" means the proforma consolidated balance sheet
of the Companies on the basis that Plainduty is a wholly owned
subsidiary of Workable HK as at the Balance Sheet Date;
"Commercial Information" means all information (including Know How but
not limited to matters which are confidential) at any time belonging
to, or
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under the control of, any Group Company which has at any time been
used or intended to be used for the purpose of the Business (or any
aspect of it);
"Companies" means (subject to sub-clause 1.12) Workable HK and
Plainduty the respective particulars of which are set out in Part 1 of
Schedule 2 (Details of the Companies) and "Company" means any one of
them;
"Competent Authority" means (i) any person (whether autonomous or not)
having legal and/or regulatory authority; (ii) any court of law or
tribunal in any jurisdiction; and/or (iii) any Taxation Authority;
"Completion" means completion of the sale and purchase of the Shares
pursuant to this Agreement;
"Completion Balance Sheet" means the accounts referred to in clause 7
(Completion Balance Sheet) prepared in accordance with Schedule 6
(Basis for preparation of the Completion Balance Sheet);
"Completion Date" means the date of Completion;
"Conditions" means collectively the conditions to Completion set out
in sub-clause 4.1 (Conditions to Completion);
"Connected Person" means a person connected with any Group Company by
reason of any of the Sellers being a director, chief executive or
substantial shareholder (who has at least 10% of the voting power at
any general meeting);
"Copyright" is as defined in paragraph 17.1 of Part 1 of Schedule 7
(Intellectual Property);
"CSFB Debt" means the debt in the amount of HK$313,320 (being the
label printing service charges for Credit Suisse First Boston) owed to
the Companies which has not been taken into account in the calculation
of the Fixed Consideration in sub-clause 3.1 (Fixed Consideration);
"Disclosed" means accurately and fairly disclosed by the Disclosure
Documents and by the general disclosures specifically referred to in
paragraphs 1, 2, 3 and 4 of the Disclosure Letter (and "Disclosure"
shall be construed accordingly);
"Disclosure Documents" means the Disclosure Letter and the two
identical bundles of documents collated by or on behalf of the
Sellers, the outside covers of each of which have been signed for
identification by or on behalf of the Sellers and the Purchaser;
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"Disclosure Letter" means the letter described as such, dated as of
the date of this Agreement and addressed by the Sellers to the
Purchaser;
"Earn-out Consideration" means the earn-out consideration payable for
the Shares pursuant to sub-clause 3.6 (Earn-out Consideration);
"Employment Ordinance" means the Employment Ordinance (Cap 57 of the
Laws of Hong Kong);
"Encumbrance" means any interest or equity of any person (including
any right to acquire, option or right of pre-emption or conversion) or
any mortgage, charge, pledge, lien, assignment, hypothecation,
security interest, title retention or any other security agreement or
arrangement, or any agreement to create any of the above;
"Environment" and "Environment Laws" are as defined in paragraph 8.1
of Part 1 of Schedule 7 (Environment);
"Escrow Agreement" means the escrow agreement to be entered into
between the Escrow Agent, the Sellers, the Purchaser, CGII and the
Allottee in the agreed form;
"Escrow Agent" means Gibbons, Del Deo, Dolan, Griffinger & Vecchione
of One Riverfront Plaza, Newark, New Jersey, USA;
"Far East Pacific Region" includes New Zealand, India, Pakistan,
Nepal, Bhutan, Bangladesh, Laos, Vietnam, Cambodia, Brunei, Sri Lanka,
Myanmar, Brazil, Colombia, Argentina, Venezuela, Ecuador, Peru, Chile,
Paraguay;
"Financial Period" means a period of eight months ended 30 November
1998;
"Financial Year" means a financial year within the meaning of section
2 of the Ordinance;
"Fixed Consideration" means the fixed consideration payable for the
Shares pursuant to sub-clause 3.1 (Fixed Consolidation);
"Fixed Consideration Shares" means the CGII Stock to be allotted and
issued credited as fully paid pursuant to sub-clause 3.2 (Satisfaction
of Fixed Consolidation);
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"Funded Debts" include banks loans and hire purchase liabilities of
the Companies in the aggregate amount as at the Completion Date as
evidenced by such documents accepted by the Purchaser as proof
thereof;
"Group" means collectively the Companies and the Subsidiary and "Group
Company" means any one of them;
"Hardware" is as defined in paragraph 18.1 of Part 1 of Schedule 7
(Information Technology);
"Harm" and "Hazardous Matter" are as defined in paragraph 8.1 of Part
1 of Schedule 7 (Environment);
"HKSE" means The Stock Exchange of Hong Kong Limited;
"HK$" means Hong Kong dollars;
"holding company" means a holding company within the meaning of
section 2 of the Ordinance;
"Hong Kong" means The Hong Kong Special Administrative Region of The
People's Republic of China; "HK Leases" means in relation to any HK
Property, the lease under which such property is (or is to be) held by
Workable HK, the particulars of which are set out in Part 1 of
Schedule 3 (Properties and Leases);
"HK Properties" means the properties of which short particulars are
set out in Part 1 of Schedule 3 (Properties and Leases) and the
expression "HK Property" shall mean, where the context so admits, any
one or more of any part of such properties;
"Intellectual Property", "Intellectual Property Agreements" and "IP
Materials" are as defined in paragraph 17.1 of Part 1 of Schedule 7
(Intellectual Property);
"IT Contracts", "IT Services" and "IT Systems" are as defined in
paragraph 18.1 of Part 1 of Schedule 7 (Intellectual Property);
"Know How" is as defined in paragraph 17.1 of Part 1 of Schedule 7
(Intellectual Property);
"Loans" means a fixed sum of HK$29,002,000, being an amount equal to
the aggregate of the principal amounts of the loans advanced by the
Companies to their respective shareholders and of the intercompany
loans owed to either
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Workable HK or Plainduty which have been extinguished on or before 30
November 1998 as shown in the Accounts;
"Leases" means collectively the HK Leases and the Singapore Lease;
"Litigation" means any actual or prospective proceedings, whether
judicial, administrative, tribunal, arbitral, criminal or similar and
whether or not subject or intended to be subject to alternative
dispute resolution techniques;
"Losses and Expenses" means actions, proceedings, losses, damages,
liabilities, claims, demands, costs and expenses including fines,
penalties, legal and other professional fees;
"Nasdaq" means the National Association of Securities Dealers
Automatic Quotation;
"Net Assets" means in relation to the Companies, the consolidated
assets less the consolidated liabilities as set out in the Completion
Balance Sheet;
"Other Property" is as defined in paragraph 8.1 of Part 1 of Schedule
7 (Environment);
"Ordinance" means the Companies Ordinance (Cap 32 of the Laws of Hong
Kong);
"Parties" means the Purchaser, the Allottee, the Sellers and CGII (and
"Party" shall be construed accordingly);
"Patent Rights" is as defined in paragraph 17.1 of Part 1 of Schedule
7 (Intellectual Property);
"Plainduty" means Plainduty Limited the particulars of which are set
out in Part 1 of Schedule 2 (Details of the Companies);
"Plainduty Shares" means 60,000 fully paid issued ordinary shares of
HK$1 each in the capital of Plainduty;
"Proceedings" means any proceeding, suit or action (including
arbitration) arising out of or in connection with this Agreement;
"Product" is as defined in paragraph 13.1 of Part 1 of Schedule 7
(Trading);
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"Properties" means collectively the HK Properties and the Singapore
Property and the expression "Property" shall mean, where the context
so admits, any one or more or any part of such properties;
"Purchaser" means the Party identified above as the purchaser of the
Shares being a wholly-owned subsidiary of CGII;
"Purchaser's Accountants" means Ernst & Young of 15th Floor Hutchison
House, 10 Harcourt Road, Central, Hong Kong;
"Purchaser's Solicitors" means Cameron McKenna of 5th Floor, Tower One
Lippo Centre, 89 Queensway, Hong Kong;
"Registered Intellectual Property", "Relevant Action" and "Relevant
IP" are as defined in paragraph 17.1 of Part 1 of Schedule 7
(Intellectual Property);
"Regulatory Requirements" means any applicable requirement of law or
the Competent Authority;
"Retained Cash Payment" means the amount of the Cash Payment to be
paid into the Retention Account pursuant to sub-clause 8.1 (Retained
Shares and Retained Cash Payment);
"Retained Shares" means such number of the Fixed Consideration Shares
to be delivered to the Escrow Agent pursuant to sub-clause 8.1
(Retained Shares and Retained Cash Payment);
"Retention" means the retention of the Retained Cash Payment and the
Retained Shares pursuant to clause 8 (The Retention);
"Retention Account" means the interest-bearing deposit account in the
joint names of the Purchaser and the Sellers into which the Retained
Cash Payment shall be deposited, such account to be opened and
operated by the Escrow Agent in accordance with the Escrow Agreement;
"Retention Balance" means the credit balance for the time being of the
Retention Account and the number of the Retained Shares for the time
being;
"Retention Consideration" means the retention of part of the Fixed
Consideration pursuant to sub-clause 8.1 (Retained Shares and Retained
Cash Payment);
"Retirement Scheme" means agreements or arrangements (whether legally
enforceable or not) for the payment of any pensions, allowances, lump
sums
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or other like benefits on retirement or on death or during periods of
sickness or disablement for the benefit of any present or former
director, officer or employee of any Group Company or for the benefit
of the dependants of any such persons;
"S$" means Singapore dollars;
"Securities Act" means the United States of America Securities Act of
1933 (as amended);
"Sellers" means the Parties identified as Sellers in Schedule 1
(Details of the Sellers);
"Sellers' Accountants" means PricewaterhouseCoopers of 20th Floor,
Prince's Building, Central, Hong Kong;
"Service Agreements" means the service agreements to be entered into
between each of the Sellers and the Company in the agreed form;
"Singapore Lease" means the lease under which the Singapore Property
is held by the Subsidiary, the particulars of which are set out in
Part 2 of Schedule 3 (Properties and Leases);
"Singapore Property" means the property of which short particulars are
set out in Part 2 of Schedule 3 (Properties and Leases);
"Sellers' Solicitors" means the solicitors acting for the Sellers and
the Allottee, So Keung Yip & Sin of 17th Floor, Standard Chartered
Bank Building, 4 Des Voeux Road Central, Hong Kong;
"Software" is as defined in paragraph 17.1 of Part 1 of Schedule 7
(Intellectual Property);
"Shares" means the Workable Shares and the Plainduty Shares;
"SSAP" means a statement of standard accounting practice or financial
reporting standard in force at the date of this Agreement as issued by
the Hong Kong Society of Accountants;
"subsidiary" means a subsidiary within the meaning of section 2 of the
Ordinance;
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"Subsidiary" or "Workable Singapore" means Workable Printing
(Singapore) Pte Ltd the particulars of which are set out in Part 2 of
Schedule 2 (Details of the Subsidiary);
"Taxation" or "Tax" means:
(a) all forms of taxation including any charge, tax, duty, levy,
impost, withholding or liability wherever chargeable imposed
for support of national, state, federal, municipal or local
government or any other person and whether of the Hong Kong
or any other jurisdiction; and
(b) any penalty, fine, surcharge, interest, charges or costs
payable in connection with any taxation within (a) above;
"Taxation Authority" means the Hong Kong Inland Revenue Department and
any other governmental or other authority whatsoever competent to
impose any Taxation, whether in Hong Kong or elsewhere;
"Taxation Statute" means any directive, statute, enactment, law or
regulation or similar measure, wheresoever enacted or issued, coming
into force or entered into providing for or imposing any Taxation and
shall include orders, regulations, instruments, bye-laws or other
subordinate legislation made under the relevant statute or statutory
provision and any such measure which amends, extends, consolidates or
replaces, or which has been amended, extended, consolidated or
replaced by, any such measure;
"Tax Deed" means the deed in the agreed form containing certain
taxation covenants and indemnities between the Sellers and the
Purchaser;
"Tax Warranties" means the warranties set out in Part 2 of Schedule 7
(Taxation Warranties);
"Trade Marks" is as defined in paragraph 17.1 of Part 1 of Schedule 7
(Intellectual Property);
"Trade Union" is as defined in section 2 of the Trade Unions Ordinance
(Cap 332 of the Laws of Hong Kong);
"Transfer Properties" means Unit 1 of 2nd Floor, Units 1 & 2 of 14th
Floor, Units 1 & 2 of 17th Floor and carpark no.18 of Tak King
Industrial Building, 27 Lee Chung Street, Chai Wan, Hong Kong;
"Unregistered Intellectual Property" is as defined in paragraph 17.1
of Part 1 of Schedule 7 (Intellectual Property);
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"US$" means US dollars;
"Warranties" means the warranties (including the Tax Warranties) set
out in Schedule 7 (Warranties);
"Workable HK" means Workable Company Limited the particulars of which
are set out in Part 1 of Schedule 2 (Details of the Companies); and
"Workable Shares" means the 99,000 fully paid issued ordinary shares
of HK$1 each in the capital of Workable HK.
1.2 Reference to any document as being "in the agreed form" means that it
is in the form agreed between the Sellers and the Purchaser and signed
for the purposes of identification by or on behalf of the Sellers and
the Purchaser.
1.3 Where any statement is qualified as being limited by any person's
knowledge (for example, by using expressions such as "so far as he is
aware"), the statement shall be deemed to be given to the best of his
knowledge, information and belief after making due and careful
enquiries. The knowledge, information and belief of any one of the
Sellers shall in all cases be imputed to the other Seller.
1.4 The table of contents and headings and sub-headings are for
convenience only and shall not affect the construction of this
Agreement.
1.5 Unless the context otherwise requires, words denoting the singular
shall include the plural and vice versa and references to any gender
shall include all other genders. References to any person (which for
the purposes of this Agreement shall include bodies corporate,
unincorporated associations, partnerships, governments, governmental
agencies and departments, statutory bodies or other entities, in each
case whether or not having a separate legal personality) shall include
the person's successors.
1.6 The words "other", "include" and "including" do not connote limitation
in any way.
1.7 References to Recitals, Schedules, clauses and sub-clauses are to
(respectively) recitals to, schedules to, and clauses and sub-clauses
of, this Agreement (unless otherwise specified) and references within
a Schedule to paragraphs are to paragraphs of that Schedule (unless
otherwise specified).
1.8 References in this Agreement to any statutory provision or other
legislation include a reference to that statutory provision as
amended, extended,
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consolidated or replaced from time to time (whether before or after
the date of this Agreement) and include any order, regulation,
instrument or other subordinate legislation made under the relevant
statutory provision.
1.9 Words and expressions defined in the Tax Deed shall (to the extent
they are not inconsistent with this Agreement) bear the same meanings
in this Agreement.
1.10 References to any Hong Kong legal term for any action, remedy, method
of judicial proceeding, legal document, legal status, court,
organisation, body, official or any legal concept, state of affairs or
thing shall in respect of any jurisdiction other than Hong Kong be
deemed to include that which most nearly approximates in that
jurisdiction to the Hong Kong legal term.
1.11 Any reference to "writing" or "written" includes faxes, electronic
mail and any legible reproduction of words delivered in permanent and
tangible form.
1.12 References in Schedule 7 (Warranties) to (i) the Companies shall be
read as including a corresponding reference to each Group Company and
(ii) the Accounts are to those of the Companies or the Subsidiary, as
the case may be. Where any expression defined in Schedule 7
(Warranties) refers to the Companies, it shall for all purposes be
read as including a corresponding reference to each Group Company even
where it is used elsewhere in this Agreement.
1.13 Unless specified otherwise, any amount payable in this Agreement by
the Purchaser to the Sellers shall be paid in Hong Kong dollars and to
the extent that such amount must in whole or in part be paid in any
other currency in order to give due effect to this Agreement, it shall
be deemed for that purpose to have been converted into the relevant
currency immediately before the close of business on the date of this
Agreement (or, if that is not a Business Day, the Business Day
immediately before it). Subject to any applicable legal requirements
governing conversions into that currency, the rate of exchange shall
be the spot rate for the conversion of Hong Kong dollars into that
currency of The Hongkong and Shanghai Banking Corporation Limited at
the time of the deemed conversion.
1.14 References to times of the day are (unless otherwise expressly
provided) to Hong Kong time and references to a day are to a period of
24 hours running from midnight.
2. Sale and purchase
2.1 Sale as beneficial owners
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Subject to the terms of this Agreement, each Seller shall, as
beneficial owner, sell to the Purchaser those numbers of the Workable
Shares and the Plainduty Shares as are set opposite that Seller's name
in column 3 of Schedule 1 (Details of the Sellers) (together with all
rights attaching to them at the date of this Agreement and all
additional rights (if any) attaching to them at Completion); and the
Purchaser shall purchase the Shares accordingly.
2.2 Dividends and distributions
The Purchaser shall be entitled to receive all dividends and
distributions (whether of income or capital) declared, paid or made by
any Group Company on or after the date of this Agreement.
2.3 Sale of all Shares
Without prejudice to sub-clause 6.2 (Sellers' failure to comply), the
Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all the Shares is completed
simultaneously.
2.4 Waivers of pre-emption
Each of the Sellers waives all rights of pre-emption or similar rights
over any of the Shares conferred on him either by the articles of
association of the relevant Company or in any other way.
3. Consideration
3.1 Fixed Consideration
Subject to adjustment as provided in sub-clause 7.2 (Adjustment of
Fixed Consideration), the Shares shall be sold for the sum to be
calculated as follows:
(4.3 x Annualised Adjusted EBITDA) - Deductions
Where:
EBITDA= Earnings before interest, taxes, depreciation
and amortisation of the Companies for the
Financial Period as shown in the Accounts.
Adjusted EBITDA= EBITDA adjusted as follows:
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(i) adding the rental expenses incurred in
the Financial Period in respect of
Unit 1, 1st Floor, Tak King Industrial
Building, 27 Lee Chung Street, Chai
Wan, Hong Kong and the car park No.4,
as shown in the Accounts;
(ii) adding the rental expenses incurred in
the Financial Period in respect of the
6th Floor property located at Tak King
Industrial Building, 27 Lee Chung
Street, Chai Wan, Hong Kong leased
from a third party, as shown in the
Accounts;
(iii) adding depreciation and amortisation
as shown in the Accounts;
(iv) adding interest expenses as shown in
the Accounts;
(v) adding non-recurring expenditures as
shown in Exhibit B annexed to this
Agreement; and
(vi) less the amount of fair market value
rent in respect of the HK Properties
occupied by the Companies (totalling
28,600 square feet).
Annualised Adjusted EBITDA= Adjusted EBITDA / 8 x 12
Deductions= Together:
(a) the Funded Debts; and
(b) the Loans
Provided that if the Companies shall recover any amount in respect of the
CSFB Debt, then the Purchaser shall pay to the Sellers in the proportions
set opposite their respective names in column 3 of Schedule 1 (Details of
the Sellers) the amount so collected multiplied by 4.3. The calculation
of the Fixed Consideration is shown in Exhibit C annexed to this
Agreement.
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3.2 Satisfaction of Fixed Consideration
Subject to sub-clause 3.3 (Alternative cash payment), the Fixed
Consideration for the sale and purchase of the Shares shall be
satisfied by:
3.2.1 the allotment and issue, credited as fully paid up, by CGII
to the Allottee of so much of the Fixed Consideration Shares
having a value based on the Allotment Price, as shall be the
equivalent of 50% of the Fixed Consideration (with the
resulting number being rounded down to the nearest whole
share); and
3.2.2 the Cash Payment by the Purchaser to the Sellers
representing the balance of the Fixed Consideration in the
proportions set opposite their respective names in column 4
of Schedule 1 (Details of the Sellers).
3.3 Alternative cash payment
Notwithstanding sub-clause 3.2 (Satisfaction of Fixed Consideration)
if the Allotment Price shall be less than US$13 per CGII Stock then
instead of issuing the Fixed Consideration Shares, the Purchaser may
increase the Cash Payment to reflect the difference between the
Allotment Price and US$13 per CGII Stock to satisfy that relevant part
of the Fixed Consideration and the number of Fixed Consideration
Shares to be issued to the Allottee shall be calculated to be
equivalent to 50% of the Fixed Consideration divided by a price of
US$13 per CGII Stock and the additional Cash Payment shall be
calculated as follows:
50% of the Fixed Consideration - (Allotment Price x number of CGII
Stock issued)
Furthermore, notwithstanding sub-clause 3.2 (Satisfaction of Fixed
Consideration), if the Allotment Price exceeds US$17 per CGII Stock
then the Purchaser may reduce the amount of the Cash Payment to
reflect the difference between the Allotment Price and US$17 per CGII
Stock and the relevant part of the Fixed Consideration shall be deemed
to have been satisfied and the number of Fixed Consideration Shares to
be issued to the Allottee shall be calculated as equivalent to 50% of
the Fixed Consideration divided by a price of US$17 per CGII Stock and
the amount of Cash Payment shall be reduced by an amount calculated as
follows: (Allotment Price x number of CGII Stock issued) - 50% of the
Fixed Consideration
3.4 Ranking of the Fixed Consideration Shares
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All the Fixed Consideration Shares shall rank pari passu in all
respects with the existing CGII Stock together with all rights now or
hereafter attaching or accruing to them including all rights to any
dividends or other distribution declared, paid or made in respect of
them by reference to a record date falling after Completion, but shall
not rank for any dividend or rights declared, paid or granted by
reference to a record date falling before Completion.
3.5 Reduction in consideration
Any payment made by the Sellers in respect of a breach of any of the
Warranties or under the Tax Deed, or any other payment made by them
pursuant to this Agreement, shall (and shall be deemed to) reduce the
price paid for the Shares under this Agreement by a matching amount.
3.6 Earn-out Consideration
In addition to the Fixed Consideration, the Purchaser and CGII shall
jointly and severally pay to the Sellers the Earn-out Consideration in
the maximum amount of US$ 3,747,058 subject to the meeting by the
Group of certain earnings after tax targets. The Earn-out
Consideration shall be payable in US$ in three equal instalments (each
an "Earn-out Instalment") at such time and subject to the meeting of
such targets by the Group as specified as follows:
<TABLE>
<CAPTION>
Earn-out Instalment Earnings after tax targets* Time of Payment
------------------- --------------------------- ---------------
<S> <C> <C>
First Instalment HK$18,900,000 Within 30 days from the date
after tax earnings of the proforma consolidated
for the year ending audited accounts of the Companies
31 December 1999 for the fiscal year ending
31 December 1999
Second Instalment HK$19,845,000 Within 30 days from the date
after tax earnings of the proforma consolidated
for the year ending audited accounts of the Companies
31 December 2000 for the fiscal year ending
31 December 2000
Third Instalment HK$20,837,000 Within 30 days from the date
after tax earnings of the proforma consolidated
for the year ending audited accounts of the Companies
31 December 2001 for the fiscal year ending
31 December 2001
</TABLE>
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<PAGE>
*As shown in the proforma consolidated audited accounts for the
Companies for the relevant fiscal year.
3.7 Payment of the Earn-out Consideration A particular Earn-out
Consideration shall only be payable in the following circumstances:-
3.7.1 if the Group matches or exceeds the after tax earnings
target in respect of any particular instalment as set out in
sub-clause 3.6 (Earn-out Consideration) above, then 100% of
that instalment will be paid; or
3.7.2 if the Group does not fall within sub-clause 3.7.1 above,
but otherwise matches or exceeds 90% of the after tax
earnings target in respect of any particular instalment as
set out in sub-clause 3.6 (Earn-out Consideration) above,
then 50% of that instalment will be paid.
Except as provided in sub-clauses 3.7.1 and 3.7.2 above, no pro-rata
payment will be made of any Earn-out Instalment. Any amount earned in
excess of the targets in sub-clause 3.6 (Earn-out Consideration) above
cannot be carried over to the next fiscal year for the purpose of
determining whether Earn-out Consideration for that later year is
payable. The Purchaser shall pay to the Sellers so much of the
Earn-out Instalment which is payable pursuant to the above in the
proportions set opposite their respective names in column 4 of
Schedule 1 (Details of the Sellers).
3.8 Interest on the Earn-out Consideration
To the extent that any Earn-out Instalment becomes payable and is
actually paid by the Purchaser to the Sellers, the amount of such
Earn-out Instalment shall be increased to include an amount equal to
interest on the principal sum of such Earn-out Instalment as from
completion of this transaction to the payment of such Earn-out
Instalment calculated at the following respective interest rates:-
Earn-out Instalment Interest rate per annum
------------------- -----------------------
First Instalment 6.5%
Second Instalment 6.75%
Third Instalment 7%
3.9 The Securities Act
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Each of the Sellers and the Allottee hereby acknowledge and agree that
the Fixed Consideration Shares to be acquired by the Sellers and
allotted to the Allottee will not have been registered under the
Securities Act and each Seller and/or the Allottee may be considered
an "affiliate" of CGII for the purposes of the Securities Act and the
rules and regulations thereunder. Each of the Sellers and the Allottee
further agree to deliver at Completion a certificate containing the
representations and warranties set forth in Schedule 10. The Allottee
further undertakes and agrees to comply with and observe the
Securities Act and the rules and regulations thereunder.
4. Conditions
4.1 Conditions to Completion
Completion is subject to and conditional on fulfilment of the
conditions set out in this sub-clause, subject in each case to waiver
in accordance with sub-clause 4.2 (Waiver of Conditions).
Restructuring
The following pre-sale restructuring steps being taken and completed
by the Sellers to the satisfaction of the Purchaser:
(a) the transfer by the Companies of the Transfer Properties to
Splendour Chief Development Limited with a sale price
equivalent to the net book value of the respective
properties and on terms satisfactory to the Purchaser;
(b) discharge or release of the respective mortgage or charge
over the Transfer Properties and full repayment of
indebtedness thereunder;
(c) the entering into of the HK Leases by Workable HK as tenant
with the respective landlords;
(d) the transfer by the Sellers of all of the issued shares in
Workable Singapore to Workable HK such that Workable
Singapore has become a wholly owned subsidiary of Workable
HK.
4.2 Waiver of Conditions
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The Purchaser shall be entitled by notice in writing given to the
Sellers to waive (to such extent as it may think fit) compliance with
the Conditions stated in sub-clause 4.1 (Conditions to Completion).
4.3 Time limit for satisfaction of Conditions
Where fulfilment of any Condition requires a Party's active
involvement or assistance, or where a Party is capable of preventing
its fulfilment, that Party shall use all reasonable endeavours to
procure that the Condition is fulfilled as soon as possible upon
exchange of this agreement and in any event on or before 1st March
1999. The Seller shall, as soon as it comes to the attention of any of
them, disclose to the Purchaser in writing anything which will or may
prevent any of the Conditions from being fulfilled in that time.
5. Conduct of Business pending Completion
Each of the Sellers undertakes to the Purchaser that in the period
between the date of this Agreement and the Completion Date (both dates
inclusive):
5.1 the Business will be carried on in the normal course and with a view
to profit in consultation with the Purchaser and (if the Purchaser
wishes) the Purchaser's representatives shall be permitted at all
times to participate in the running of the Business;
5.2 he will use his best endeavours to preserve and retain the goodwill of
the Business and existing relationships with customers and suppliers;
5.3 he will keep the Purchaser promptly and fully informed in relation to
the Business, and the financial position and/or assets of the Group;
and
5.4 no Group Company will (except to the extent the Purchaser has given a
prior written waiver in accordance with sub-clause 17.2 (Specific
waivers to be in writing)) do, suffer or permit to be done or agree to
do any of the matters referred to in Schedule 4 (Conduct of Business
Pending Completion) or anything else which is not a routine,
unimportant nature.
6. Completion
6.1 Completion
Subject as provided in sub-clause 6.2 (Sellers' failure to comply), a
Completion meeting shall take place at the offices of the Purchaser's
Solicitors (or wherever else the Parties agree in writing) immediately
upon the satisfaction of all the Conditions. At that meeting, the
Parties shall perform their respective
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Completion obligations set out in Schedule 5 (Completion Obligations)
(but the Purchaser will not be obliged to do anything unless the
Sellers have first fully complied with their Completion obligations
under this Agreement). At Completion:-
6.1.1 all documents executed at the Completion meeting will be
dated as of the Completion Date;
6.1.2 the Sellers shall (and shall procure that any other person
controlled by them or against whom they are entitled to
assert any relevant contractual rights shall) without delay
send to the Purchaser at its registered office for the time
being all records, correspondence, documents, files,
memoranda and other papers belonging to each Group Company
but not kept at any of the Properties;
6.1.3 the Purchaser shall place the Retained Cash Payment in the
Retention Account and deliver the Retained Shares to the
Escrow Agent.
All things done at the Completion meeting in performance of Completion
obligations under this Agreement will take effect subject to and
conditional upon all the Conditions having been satisfied or waived in
accordance with this Agreement by Completion. If that condition is not
fulfilled, nothing so done will take effect and the Parties shall
immediately do whatever is necessary fully to restore each others'
respective positions as if nothing had been so done (including the
repayment of moneys, the return or destruction of documents and the
reversal of all things done in performance of any Completion
obligations under this Agreement).
6.2 Sellers' failure to comply
If in any respect material to the Purchaser the provisions of
paragraph 1 of Schedule 5 (Completion Obligations) are not complied
with on the Completion (or if, before then, the Purchaser has
reasonable grounds to conclude that the Sellers will not comply in
that respect) the Purchaser will not be obliged to complete this
Agreement and may immediately by written notice:
6.2.1 defer Completion to a date not more than 28 days after the
date set by sub-clause 6.1 (Completion) (and so that the
provisions of sub-clauses 6.1 Completion) and 6.2 (Sellers'
failure to comply) shall apply to the deferred Completion
with all necessary modifications);
6.2.2 without prejudice to its rights under this Agreement,
proceed so far as practicable with the transactions
contemplated by this Agreement;
6.2.3 terminate this Agreement without prejudice to its rights and
remedies under this Agreement; or
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6.2.4 waive all or any of the requirements contained in paragraph
1 of Schedule 5 (Completion Obligations) at its discretion.
6.3 Effect of Completion
Notwithstanding Completion:
6.3.1 each provision of this Agreement (and any other document
referred to in it) not performed at or before Completion but
which remains capable of performance;
6.3.2 the Warranties; and
6.3.3 all covenants and other undertakings contained in or entered
into pursuant to this Agreement will remain in full force
and effect and (except as otherwise expressly provided)
without limit in time.
6.4 Pending registration
Each of the Sellers declares that so long as he remains the registered
holder of any of the Shares after Completion, he will:-
6.4.1 hold those Shares and all dividends and other distributions
in respect of them, and all other rights arising out of or
in connection with them, in trust for the Purchaser and its
successors in title; and
6.4.2 at all times deal with and dispose of those Shares, and all
such dividends, distributions and rights attaching to them,
as the Purchaser or any such successor may direct.
6.5 Company records etc.
6.5.1 During the six years following Completion, each of the
Sellers will on request promptly provide the Purchaser with
all Commercial Information in tangible form which is in the
possession or under the control of any of them (but not of
the Purchaser).
6.5.2 Each of the Sellers undertakes at all times to provide the
Purchaser promptly on request with all information known to
him (or which would on reasonable enquiry to be known to
him) in relation to the Group if it is required for the
purposes of complying with Regulatory Requirements.
6.6 Post-Completion Undertaking by the Sellers
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The Sellers undertake to procure that, at their own expense, all debts
and accounts of each Group Company (of the one part) and the Sellers
or any Connected Person or any Affiliate of any of the Sellers (of the
other part) will be fully settled and satisfied within 7 days after
the date on which the Completion Balance Sheet shall have been agreed
or settled.
7. Completion Balance Sheet
7.1 Preparation of Completion Balance Sheet
7.1.1 Immediately after Completion, the Sellers shall instruct
their in-house accountants to prepare the draft Completion
Balance Sheet which shall be reviewed by the Sellers'
Accountants.
7.1.2 The draft Completion Balance Sheet shall consist of a
consolidated balance sheet for the Companies as at the close
of business on the Completion Date and shall be prepared in
accordance with the principles set out in Schedule 6 (Basis
for preparation of the Completion Balance Sheet).
7.1.3 The Sellers shall use their best endeavours to procure that
the draft Completion Balance Sheet is submitted to the
Purchaser's Accountants for review within 40 Business Days
after Completion. The Sellers shall procure that the
Companies give the Purchaser's Accountants access to all
relevant files and/or working papers (with the right to take
copies at the Sellers' expense) in the possession or control
of the Companies to the extent they are reasonably required
for the purposes of the Purchaser's Accountants' review of
the draft Completion Balance Sheet.
7.1.4 The Purchaser shall pay the charges of the Sellers'
Accountants and the charges of the Purchaser's Accountants
in connection with the preparation and approval of the
Completion Balance Sheet.
7.1.5 The draft Completion Balance Sheet shall be deemed to have
been accepted as the Completion Balance Sheet unless, within
20 Business Days of its being received by the Purchaser's
Accountants, the Purchaser's Accountants deliver to the
Sellers' Accountants notice to the contrary specifying (i)
the item or items disputed; (ii) their reasons; and (iii)
how the draft Completion Balance Sheet and the Fixed
Consideration should be adjusted. If the Purchaser and the
Sellers resolve the matters raised in the notice in the 15
Business Days following receipt of the notice, the draft
Completion Balance Sheet (adjusted, if necessary, as agreed
by the Purchaser's Accountants and the Sellers'
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Accountants) will be deemed to have been accepted by the
Parties as the Completion Balance Sheet.
7.1.6 If the Sellers and the Purchaser are unable to reach
agreement within 15 Business Days of the notice referred to
in sub-clause 7.1.5, the matter(s) in dispute may, at the
written election of the Sellers or the Purchaser, be
referred to the decision of an independent chartered
accountant (the "Independent Accountant") to be appointed
(in default of nomination by agreement between the Sellers
and the Purchaser) by the President for the time being of
the Hong Kong Society of Accountants on the written
application of the Sellers or of the Purchaser (whichever
applies first).
7.1.7 The Independent 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 Sellers and the
Purchaser for all the purposes of this Agreement. The draft
Completion Balance Sheet, as adjusted (if necessary) to
reflect the Independent Accountant's final and binding
decision, will be deemed to have been accepted by the
Parties as the Completion Balance Sheet.
7.1.8 The costs of the Independent Accountant shall be apportioned
between the Parties as the Independent Accountant shall
decide but each Party shall be responsible for its own costs
of presenting its case to the Independent Accountant.
7.2 Adjustment of Fixed Consideration
The Fixed Consideration shall be adjusted after Completion in
accordance with the following provisions of this sub-clause.
7.2.1 If the Net Assets are less than HK$30,566,000 as at the
Completion Date as shown by the Completion Balance Sheet,
the Sellers shall pay to the Purchaser the amount of the
deficiency.
7.2.2 Any amounts to be paid under sub-clause 7.2.1 shall be paid
within 14 days after the date on which the Completion
Balance Sheet shall have been agreed or settled.
7.2.3 Where an amount is to be paid by the Sellers to the
Purchaser, to the extent that the amount:
(a) is less than or equal to the Retention, sub-clause
7.2.2 shall not apply and the Parties shall
procure that the amount is released to
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the Purchaser out of the Retention pursuant to
sub-clause 8.3 (Payments out of Retention)
(together with a pro rata share of the interest
accrued on the Retention) within 14 days after the
date on which the Completion Balance Sheet have
been agreed or settled; and
(b) exceeds the Retention, the provisions of
sub-clause 7.2.2 above shall apply in relation to
the excess.
8. The Retention
8.1 Retained Shares and Retained Cash Payment
An amount equal to 7.5% of the Fixed Consideration shall be placed
into Retention ("Retention Consideration").
At Completion the Purchaser shall:
8.1.1 pay into the Retention Account an amount equal to 25% of the
Retention Consideration as the Retained Cash Payment; and
8.1.2 deliver to the Escrow Agent to be held in escrow pursuant to
the provisions of the Escrow Agreement such number of the
Fixed Consideration Shares representing 75% of the Retention
Consideration (valued at the Allotment Price) as the
Retained Shares (with any resulting fraction being rounded
down to the nearest whole share).
8.2 Retention Payment Date
The Retention Balance shall be released to the Sellers' Solicitors on
the Retention Payment Date (as defined below) less:
8.2.1 any amount paid out in accordance with sub-clause 7.2.3(a)
(Adjustment of Fixed Consideration) or sub-clause 8.3
(Payments out of Retention); and/or
8.2.2 any amount which is to be retained in the Retention Account
in accordance with sub-clause 8.4 (Outstanding claims).
The "Retention Payment Date" means the date falling fifteen (15) days
after the issuance of the proforma consolidated audited accounts of
the Companies for the Financial Year ending 31 December 1999.
8.3 Payments out of Retention
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Without prejudice to the provisions of clause 7.2 (Adjustment of Fixed
Consideration), the Purchaser may, from time to time before the
Retention Payment Date, by notice to the Sellers and the Allottee
require payment out of the Retention in/or towards satisfaction of any
claim in relation to the Warranties or under the Tax Deed and/or any
other amount claimed by it under this Agreement to the extent that:
8.3.1 the Sellers have (in case of the Retained Cash Payment) or
the Allottee (in case of the Retained Shares) has agreed to
the amount by giving written consent; or
8.3.2 the Purchaser has obtained judgment in respect of the amount
claimed, and the judgment is not at the time of the notice
capable of appeal
Provided That such amount shall be paid first from the Retained Cash
Payment in the Retention Account and if there shall be insufficient
funds in the Retention Account to satisfy such amount, then such
number of the Retained Shares valued at the Allotment Price shall be
transferred to the Purchaser as payment of the balance of such amount
to be applied (whether by way of sale, retention, cancellation or
otherwise) by the Purchaser in or towards extinguishing such balance
owing. The Allottee hereby irrevocably and unconditionally appoints
the Escrow Agent as its attorney to execute the relevant transfer
documents if the Allottee shall make default in transferring any of
such Retained Shares to the Purchaser pursuant to this sub-clause 8.3.
8.4 Outstanding claims
8.4.1 If the Purchaser has notified the Sellers in writing of a
claim in relation to the Warranties or under the Tax Deed
which has not been finally determined, settled or withdrawn
on or before the Retention Payment Date, the Purchaser shall
be entitled to require the Held-over Proportion (as defined
below) of the Retention to remain in the Retention Account
until the claim or dispute is finally determined, settled or
withdrawn.
8.4.2 On such claim or dispute being determined, settled or
withdrawn, any amount payable out of the Held-over
Proportion to:
(a) the Sellers and the Allottee will be paid to the
Sellers' Solicitors; and
(b) the Purchaser will be paid as the Purchaser
instructs.
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8.4.3 The "Held-over Proportion" means the proportion (including,
if that is the case, the whole) of the outstanding balance
on the Retention Account and such number of the Retained
Shares determined either:
(a) by the Purchaser, and agreed by the Sellers (in
case of the Retained Cash Payment) or the Allottee
(in case of the Retained Shares) in writing; or
(b) by Counsel as reasonable in the circumstances (on
the basis of the facts available to him). For this
purpose, Counsel shall be a Senior Counsel of at
least 10 years' call practising in Hong Kong
selected by the Purchaser and instructed with the
Sellers' (in case of the Retained Cash Payment) or
the Allottee's (in case of the Retained Shares)
consent (or, if that consent is not given within
15 days of that Counsel's selection by the
Purchaser, chosen by the Chairman for the time
being of the Hong Kong Bar Association on the
written application of the Purchaser or the
Sellers (in case of the Retained Cash Payment) or
the Allottee (in case of the Retained Shares),
whichever applies first), and his or her fees
shall be apportioned between the Parties as
Counsel shall decide.
8.5 Interest
Where any payment is made to the Purchaser out of the Retention
Account as provided in this clause, the Purchaser shall at the same
time be entitled to a corresponding proportion of the interest accrued
on the Retention Account. Otherwise, all interest accrued on the
Retention Account shall be payable to the Sellers (by payment to the
Sellers' solicitors) at the time of payment to them out of the
Retention in accordance with this clause.
8.6 Written instructions
The Sellers (in case of the Retained Cash Payment), the Allottee (in
case of the Retained Shares) and the Purchaser undertake to give
prompt written instructions with regard to the Retention where
necessary or desirable in order to give proper effect to the
provisions of this Agreement. Any such instructions given by the
Purchaser shall also be given to the Sellers (in case of the Retained
Cash Payment) or the Allottee (in case of the Retained Shares) and any
such instructions given by the Sellers (in case of the Retained Cash
Payment) or the Allottee (in case of the Retained Shares) shall also
be given to the Purchaser.
8.7 Tax liability
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Any tax liability of the Purchaser arising on interest paid on any
part of the Retention released to it under sub-clauses 7.2 (Adjustment
of Fixed Consideration) and 8.3 (Payments out of Retention) shall be
for the account of the Purchaser. Any tax liability of the Sellers or
the Allottee arising on interest paid on any part of the Retention
released to it under sub-clauses 8.2 (Retention Payment Date) shall be
for the account of the Sellers and the Allottee.
8.8. Substitution of Retained Shares
The Allottee may at any time and from time to time provide a
substitute in cash for all or a portion of the Retained Shares in an
amount equal to the number of the Retained Shares to be substituted
multiplied by the Allotment Price. Detailed provisions of the
substitution shall be as provided in the Escrow Agreement.
9. Warranties and covenants
9.1 Warranties, representations and undertakings
Subject to the matters Disclosed in the Disclosure Letter, the Sellers
warrant, represent and undertake to the Purchaser and CGII jointly and
severally in the terms set out in Schedule 7 (Warranties) in relation
to each Group Company. Each of the Warranties set out in the separate
paragraphs of Schedule 7 (Warranties) shall be separate and
independent and (except as expressly otherwise provided) shall not be
limited by reference to any other Warranty or by anything in this
Agreement, the Disclosure Documents or the Tax Deed. Save and except
for paragraph 2.4 of Part 1 of Schedule 7 (Share Capital), the
Warranties are made or given to the best of the information, knowledge
and belief of the Sellers up to and including Completion.
9.2 Undertakings in relation to breaches
The Sellers undertake that:
9.2.1 they shall not, and shall procure (as far as they can) that
the Group shall not, at any time before Completion do (or
permit or suffer to subsist or be done) any act or thing
which would constitute a breach of any of the Warranties or
which would make any of the Warranties untrue or misleading
at any time;
9.2.2 upon any of them becoming aware before Completion of the
actual or impending occurrence or non-occurrence of any
matter, event or circumstance (including any omission to
act) which:
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(a) would or might reasonably be expected to cause or
constitute a breach of any Warranty; or
(b) would or might reasonably be expected to make any
of the Warranties untrue or misleading; or
(c) would have caused or constituted a breach of any
Warranty had it been known to any of them before
exchange of this Agreement; or
(d) would or might reasonably be expected to give rise
to a claim under the Tax Deed they will
immediately give written notice of such event to
the Purchaser with sufficient details to enable
the Purchaser to assess accurately the impact of
such event and (if requested by the Purchaser) use
their best endeavours promptly to prevent or
remedy the event.
9.3 Investigation by Purchaser
None of the Warranties or the Tax Deed shall be deemed in any way
modified or discharged by reason of any investigation or inquiry made
or to be made by or on behalf of the Purchaser. No information
relating to any Group Company or to the Associated Companies of which
the Purchaser has knowledge (actual or constructive) other than by
reason of its being Disclosed shall prejudice any claim which the
Purchaser shall be entitled to bring or shall operate to reduce any
amount recoverable by the Purchaser under this Agreement. The benefit
conferred upon the Purchaser by this clause shall be deemed to be also
conferred upon each Group Company.
9.4 Information supplied by the Group
The Sellers undertake to the Purchaser to waive any and all claims
which they might otherwise have against the Group and/or its
respective officers, employees or agents or any of them in respect of
any information supplied to them by or on behalf of any Group Company
in connection with the Warranties, the Tax Deed and/or the information
Disclosed. This shall not preclude any Seller from claiming against
any other Seller under any right of contribution or indemnity to which
he may be entitled.
9.5 Reliance
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The Sellers accept that the Purchaser and CGII have been induced to
enter into this Agreement, and have entered into it, upon the basis of
and in reliance upon the Warranties.
9.6 Limitation of liability
9.6.1 The Sellers shall not be liable for any breach of
Warranties:
(a) to the extent that provision or reserve in respect
thereof has been specifically made in the
Accounts;
(b) which would not have arisen but for a voluntary
act, omission or transaction after Completion on
the part of the Purchaser or the Group which could
reasonably have been avoided or carried out and
which was not in the ordinary course of business;
(c) which arises as a result of legislation which
comes into force after Completion and which is
retrospective in effect;
(d) which, being a liability in respect of taxation,
arises by reason of an increase in the rates of
taxation made after Completion with retrospective
effect;
(e) which arises as a result of a change in accounting
policies after Completion.
9.6.2 The liability of the Sellers in respect of any claims for
breach of Warranties shall be limited as follows:
(a) the maximum aggregate liability of the Sellers in
respect of all claims for breach of Warranties
shall not, when taken together with the aggregate
liability of the Sellers in respect of all claims
under the Tax Deed, exceed the total aggregate sum
of the Fixed Consideration;
(b) the Sellers shall only be liable in respect of any
claim for breach of Warranties if the aggregate
liability of the Sellers for all such claims
exceeds HK$100,000 and in such event the Sellers
shall be liable for the whole amount of such
claims and not only the excess; and
(c) (save as provided below) no claims may be brought
against the Sellers in respect of a breach of
Warranties unless notification
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thereof shall have been given to the Sellers
before the expiration of six months after the
Retention Payment Date with reasonable details of
the relevant claim as known to the Purchaser and
any such claim shall (if not previously satisfied,
settled or withdrawn) be deemed to have been
waived or withdrawn at the expiry of a period of
six months thereafter unless proceedings in
respect thereof shall have already been commenced
against the Sellers Provided that notwithstanding
the above a claim for breach of Warranties
relating to Taxation may be brought within a
period of six years after Completion.
9.6.3 No claim for breach of Warranties may be brought under this
Agreement if a claim in respect of the same subject matter
thereof has been made under the Tax Deed and has been
satisfied in full. Where a claim for breach of Warranties is
made under this Agreement and has been satisfied in full,
all other rights and remedies (if any) of the Purchaser in
respect of the same subject matter thereof, whether under
this Agreement or otherwise, are hereby excluded.
9.6.4 In respect of any claim for breach of Warranties hereunder:
(a) the Purchaser shall, upon any claim, action,
demand or assessment being made or issued against
the Purchaser or any Group Company which the
Purchaser believes could lead to a claim by the
Purchaser for breach of Warranties under this
Agreement, promptly give notice thereof to the
Sellers;
(b) the Purchaser shall (subject to the Purchaser and
each Group Company being indemnified and secured
to the Purchaser's reasonable satisfaction against
any liability, costs, damages or expenses which
may be incurred thereby) take such action as the
Sellers may reasonably request to avoid, resist,
dispute, defend, compromise or appeal against such
claim, action, demand or assessment;
(c) where any claim under the Warranties has been paid
or settled by the Sellers the Purchaser will, if
so requested by the Sellers and in so far as
permitted by law so to do, use all reasonable
endeavours (at the expense of the Sellers) to
enable the Sellers (by way of subrogation or by
way of assignment for no consideration) to pursue
any remedies which might have been available to
the Purchaser or, as the case may be, to any Group
Company against any third party in respect of the
matters giving rise to a claim.
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9.6.5 If the Sellers shall pay to the Purchaser any amount by way
of compensation or damages for breach of Warranties
hereunder and the Purchaser or any member of the Group
subsequently recovers from a third party any amount relating
to such breach, the Purchaser shall forthwith repay to the
Sellers such amount previously paid by the Sellers less the
costs and expenses incurred by the Purchaser in connection
with such breach or so much thereof as does not exceed the
amount recovered from the third party.
9.6.6 If any claim for breach of Warranties is brought under this
Agreement in relation to any liability of the Purchaser or
any Group Company which is contingent only, the Sellers
shall not be liable to make any payment in respect thereof
until such contingent liability becomes an actual liability.
9.7. Repetitions
The Sellers in relation to each Group Company warrant, represent and
undertake to the Purchaser that the Warranties will be true and
accurate in all respects and not misleading at all times from the
exchange of this Agreement up to and including Completion in all
respects:
9.2.1. if they had been repeated on each such day by reference to
the circumstances at the time of repetition; and
9.2.2. on the basis that a reference to the time of repetition were
each time substituted for any express or implied reference
to the time of this Agreement (but so that any period of
time expressed to start at the date of this Agreement shall
continue to be deemed to start then)and references in this
Agreement to the Warranties shall include them as so
repeated.
9.8. Sellers' covenants
In consideration of the Purchaser and CGII entering into this
Agreement and in particular the issuance and allotment of the Fixed
Consideration Shares to the Allottee, the Sellers hereby jointly and
severally covenant with the Purchaser and CGII as primary obligors:
9.8.1 to procure that the Allottee shall duly perform all its
obligations under this Agreement and the Escrow Agreement;
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9.8.2 to procure that the Allottee shall comply with and observe
the Securities Act and the rules and regulations thereunder
and, in particular, any and all restrictions on it regarding
the re-sale, transfer or otherwise dealing in the Fixed
Consideration Shares;
9.8.3 if and whenever the Allottee shall be in default in the
payment when due of any amount payable under this Agreement
and/or the Escrow Agreement the Sellers shall within 5 days
after being given notice to the effect that the Allottee is
in default and containing the calculation of the amount
claimed by the Purchaser and/or CGII pay all amounts then
payable by the Allottee as though the Sellers instead of the
Allottee were expressed to be the principal debtor; and
9.8.4 to indemnify the Purchaser and/or CGII against all costs and
expenses (including legal fees) which the Purchaser and/or
CGII may pay or incur in collecting any amount payable by
the Allottee or the Sellers pursuant to this sub-clause 9.8.
9.9 Indulgence
The Sellers acknowledge that their liabilities under sub-clause 9.8
(Sellers' covenants) are joint and several and shall not be discharged
or affected in any way by time being given to the Allottee by the
Purchaser and/or CGII, by any other indulgence or concession being
granted to the Allottee or the other Seller or by any other act,
omission, dealing, matter or thing whatsoever which but for this
provision might operate to release the Sellers or either of them from
their respective obligations under sub-clause 9.8 (Sellers'
covenants).
9.10 Continuing obligations
The covenants and obligations contained in sub-clause 9.8 (Sellers'
covenants) are continuing covenants and obligations, and shall remain
in full force and effect until all obligations of the Allottee hereby
guaranteed have been discharged in full. It is in addition to and
shall not prejudice nor be prejudiced by any other obligation,
indemnity or other security or right against any third party which the
Purchaser and/or CGII may have for the due performance of the
obligations concerned.
9.11 Further covenants
The Sellers further covenant with and undertake to the Purchaser and
CGII that so long as the Allottee shall own or hold any Fixed
Consideration Shares, neither of the Sellers shall sell, charge,
pledge or otherwise dispose of any of
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their shares in the Allottee, or any interest in any of them without
the prior written consent of the Purchaser and CGII.
9.12 Business
The Sellers warrant that the companies or businesses under the control
(directly or indirectly) of the Sellers have been reorganised and
restructured so that the sole business of the Group immediately prior
to the sale of the Shares shall be the provision of graphic
communications services, digital communications networking, offset
printing, digital printing and multi-media services in Hong Kong and
Singapore respectively.
9.13 Building Order Indemnity
Notwithstanding any provisions herein, the Sellers hereby jointly and
severally undertake to the Purchaser (for itself and on behalf of
Workable HK) to indemnify the Purchaser and Workable HK and keep the
Purchaser and Workable HK full indemnified on demand against any
losses, costs and expenses the Purchaser and/or Workable HK may suffer
or incur in connection with the Building Order No. C/AT/1006/97/HK
issued by the Building Authority registered under Memorial No. 7405996
in respect of Workshops 1 & 4 on 14th Floor, Tak King Industrial
Building.
10. Remedies
10.1 Undertakings to pay
Subject to sub-clause 9.6 (Limitation of Liability), the Sellers
undertake to the Purchaser and CGII jointly and severally (without
restricting the rights of each of the Purchaser and CGII or any remedy
it may have on any basis available to it if any of the Warranties is
breached or untrue or misleading) at the Purchaser's and/or CGII's
direction to pay to the Purchaser and/or CGII on demand the aggregate
of:
10.1.1 the full amount by which the value of any asset or contract
of any Group Company or of the Business (including any asset
or contract warranted to exist which does not exist) is or
becomes less than it would have been if the Warranties had
not been breached or untrue or misleading;
10.1.2 an amount equal to any other loss or liability suffered or
incurred by the Purchaser or CGII, any Group Company
directly or indirectly as a result of any Warranty being
breached or untrue or misleading; and
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10.1.3 all costs, expenses and disbursements suffered or incurred
by the Purchaser or CGII or any Group Company directly or
indirectly as a result of any Warranty being breached or
untrue or misleading,
Provided that any amount so payable shall be increased so as to ensure
that the net amount received by the payee shall after Taxation be
equal to that which would have been received had the payment not been
subject to Taxation.
10.2 General law
For the avoidance of doubt, the rules of general law relating to
claims for damages for breach of warranty shall not apply to the
extent that they might limit the calculation of any amount payable
under this clause 10.
11. Protection of goodwill
11.1 Covenants
As further consideration for the Purchaser agreeing to purchase the
Shares on the terms contained in this Agreement and with the intent of
assuring to the Purchaser the full benefit and value of the goodwill
and connections of the Group and as a constituent part of the sale of
the Shares, the Sellers undertake (binding themselves and each of
their Affiliates) to the Purchaser (contracting for itself and on
behalf of CGII, each Group Company and for any successor in title to
the Shares or to part or all of the Business) that (except (i) as
directors or employees of any Group Company or (ii) to the extent that
the Purchaser has waived its rights in accordance with sub-clause 17.2
(Specific waivers to be in writing)) neither they nor their Affiliates
shall whether on their own behalf or with or on behalf of any person
and whether directly or indirectly by any person or business
controlled by them or any Connected Person:
11.1.1 during the Restricted Period, carry on or be employed,
engaged, concerned, interested or in any way assist within:-
(a) Hong Kong, Macau and Singapore;
(b) China and Taiwan;
(c) Japan;
(d) Korea;
(e) Thailand, Malaysia and Indonesia;
(f) the Philippines;
(g) Australia;
(h) the United States of America and Canada; and
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(i) other countries in the Far East Pacific Region
(together, the "Region")
in any business which may in any way be in competition with
all or any part of the Business provided that nothing in
this sub-clause 11.1.1 shall prevent the Sellers nor any of
their Affiliates from holding for investment purposes only
not more than three per cent of any class of the issued
share or loan capital of any company quoted on a stock
exchange by recognised by the HKSE;
11.1.2 during the Restricted Period, carry on or be employed,
engaged, concerned, interested or in any way assist anywhere
in the world excluding the Region in any business which may
in any way be in competition with all or any part of the
Business provided that nothing in this sub-clause 11.1.1
shall prevent the Sellers from holding for investment
purposes only not more than three per cent of any class of
the issued share or loan capital of any company quoted on a
stock exchange by recognised by the HKSE;
11.1.3 during the Restricted Period, canvass, solicit or approach
or cause to be canvassed, solicited or approached (in
relation to a business which may in any way compete with all
or part of the Business) the custom of any person who at any
time during the 12 months preceding Completion shall have
been a client or customer of any Group Company;
11.1.4 during the Restricted Period, interfere or seek to interfere
or take such steps as may interfere with supplies to any
Group Company from any suppliers who shall have been
supplying goods or services to any Group Company for use in
connection with the Business at any time during the period
of 12 months prior to the date of Completion;
11.1.5 during the Restricted Period, offer employment to or employ
or offer to conclude any contract of services with employees
of any Group Company or procure or facilitate the making of
such an offer by any person, firm or company or entice or
endeavour to entice any employees of any Group Company to
terminate their employment with such company (whether or not
such termination will constitute a breach of their
employment contracts);
11.1.6 at any time after Completion use as a trade or business name
or mark or carry on a business under a title containing the
words
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"Workable", "Plainduty" or any other word(s) colourably
resembling any such word; or
11.1.7 at any time after Completion disclose to any person
whatsoever or use to the detriment of any Group Company or
otherwise make use of, or through any failure to exercise
all due care and diligence cause any unauthorised disclosure
or use of, any Commercial Information which is confidential
or in respect of which any Group Company is bound by an
obligation of confidence to a third party or which the
Sellers are prohibited under clause 15 (Confidentiality;
announcements) from disclosing without the Purchaser's
consent.
Each undertaking contained in this sub-clause 11.1 shall be read and
construed independently of the other undertakings and as an entirely
separate and severable undertaking.
11.2 Restricted Period
For the purposes of sub-clause 11.1, the Restricted Period shall be:
11.2.1 in respect of each Seller, in the event that his employment
with Workable HK is terminated by reason of Workable HK
serving notice on him (otherwise than a notice to terminate
in circumstances entitling Workable HK to terminate
summarily):-
(a) from the Completion Date up to the first
anniversary of Completion;
(b) thereafter, from the first anniversary of
Completion up to the second anniversary of
Completion; and
(c) thereafter, from the second anniversary of
Completion up to the third anniversary of
Completion.
11.2.2 in all other circumstances:-
(a) from the Completion Date up to the first
anniversary of Completion;
(b) thereafter, from the first anniversary of
Completion up to the second anniversary of
Completion;
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(c) thereafter, from the second anniversary of
Completion up to the third anniversary of
Completion;
(d) thereafter, from the third anniversary of
Completion up to the fourth anniversary of
Completion; and
(e) thereafter, from the fourth anniversary of
Completion up to the fifth anniversary of
Completion.
provided that the relevant Seller shall, if he has ceased to
be an employee of the Company in the circumstances set out
in sub-clause 11.2.1 and a period of at least two years has
elapsed from Completion, be entitled to seek written consent
to the Purchaser to carry on or be employed, engaged,
concerned, interested or in any way assist within the Region
in any business which may in any way be in competition with
the Business.
11.3 Severability of covenants
Whilst the undertakings in sub-clause 11.1 (Covenants) are considered
by the Parties to be reasonable in all the circumstances for the
protection of the legitimate interests of the Purchaser, if any one or
more should for any reason be held to be invalid but would have been
held to be valid if part of the wording were deleted or its period
reduced or the range of activities or area covered by it reduced in
scope, the undertakings shall apply with the minimum modifications
necessary to make them valid and effective.
11.4 Information in the public domain
The restriction contained in sub-clause 11.1.7 (Covenants) shall not
extend to any confidential or secret information which may come into
the public domain otherwise than through the default of any of the
Sellers.
12. Termination
12.1 Purchaser's right to terminate
The Purchaser is entitled to treat this Agreement as terminated (in
which case it will be deemed to have been terminated on the terms of
this clause):
12.1.1 in accordance with sub-clause 6.2 (Sellers' failure to
comply); and
12.1.2 if, at any time up to Completion, it becomes aware or
concludes that:
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(a) any of the Warranties is or was untrue or
misleading at any time when it is or was given or
deemed to be given under this Agreement;
(b) there has been a breach of any Warranty (as so
given or deemed to be given) or of any other term
of this Agreement;
(c) any Condition will not nor is unlikely to be
fulfilled or waived by the date specified in
sub-clause 4.3 (Time limit for satisfaction of
Conditions).
12.2 Accrued liabilities
On termination, the rights and liabilities of the Parties which have
accrued beforehand shall subsist.
12.3 Rescission
Notwithstanding anything to the contrary in this Agreement, the
Purchaser may by written notice to the Sellers rescind this Agreement
ab initio in the circumstances referred to in sub-clause 12.1.2
(Purchaser's right to terminate).
12.4 Surviving provisions
This clause and the following provisions of this Agreement shall
survive termination, without limit of time:
12.4.1 clause 1 (Definitions and interpretation);
12.4.2 clause 9 (Warranties and covenants);
12.4.3 clause 10 (Remedies); and
12.4.4 clauses 14 (Further assurance) to 26 (Process Agent)
inclusive.
13. Retirement Scheme
Schedule 9 (Retirement Scheme) sets out the arrangements relating to
the Retirement Scheme and shall have effect as of Completion.
14. Further assurance
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The Sellers and the Allottee shall, from time to time on being
required to do so by the Purchaser, promptly and at their own cost and
expense do or procure the doing of all such acts and/or execute or
procure the execution of all such documents in a form satisfactory to
the Purchaser as the Purchaser may reasonably consider necessary for
giving full effect to this Agreement (or to such parts of it as remain
operative after termination) and securing to the Purchaser and CGII
the full benefit of the rights, powers and remedies conferred upon the
Purchaser and CGII in this Agreement.
15. Confidentiality; announcements
15.1 Prohibition on disclosure
The Sellers and the Allottee undertake with the Purchaser and CGII,
and each of the Purchaser and CGII undertakes with the Sellers and the
Allottee, to keep confidential (except as expressly provided in this
Agreement) at all times after the date of this Agreement, and not
directly or indirectly reveal, report, publish, disclose or transfer
or use for his or its own or any other purposes, any confidential
information received or obtained as a result of entering into or
performing, or supplied by or on behalf of a Party in the negotiations
leading to, this Agreement and which relates to:
15.1.1 the negotiations relating to this Agreement;
15.1.2 the subject matter and/or provisions of this Agreement; or
15.1.3 (in the Sellers' and/or the Allottee's case) the Purchaser
and/or CGII or (in the Purchaser's or CGII's case) the
Sellers and/or the Allottee.
15.2 Permitted disclosures
The prohibition in sub-clause 15.1 (Prohibition on disclosure) does
not apply if:
15.2.1 the information was in the public domain before it was
furnished to the relevant Party or, after it was furnished
to that Party, entered the public domain otherwise than as a
result of (i) a breach by that Party of this clause or (ii)
a breach of a confidentiality obligation by the disclosure,
where the breach was known to that Party;
15.2.2 disclosure is necessary in order:
(a) to comply with Regulatory Requirements or
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(b) to obtain tax or other clearances or consents from
the Inland Revenue or other relevant Taxation
Authority; or
15.2.3 disclosure is made to such of the Party's employees,
directors, agents, consultants and professional advisers as
are involved in the transactions contemplated by this
Agreement and is restricted to matters necessary for the
proper performance of their duties or services in relation
to those transactions provided that any such information
disclosable pursuant to sub-clause 15.2.2 shall be disclosed
only to the extent required by Regulatory Requirements and
(unless such consultation is prohibited by Regulatory
Requirements) only after consultation with the Purchaser or
the Sellers (as the case may be).
15.3 Announcements
Nothing in this clause 15 shall prohibit:
15.3.1 the joint release by the Parties of an announcement in the
agreed form; or
15.3.2 the release of any announcement required by any applicable
Regulatory Requirements (provided that, unless such
consultation is prohibited by Regulatory Requirements), it
is made only after consultation with the Purchaser or the
Sellers (as the case may be).
16. Assignment
16.1 Assignment by Purchaser and CGII
Each of the Purchaser and CGII is permitted to assign the benefit of,
and any of its rights under, this Agreement (including under the
Warranties) together with any cause of action arising in connection
with any of them to its successor in title, or to any purchaser from
it or to any of its Affiliates.
16.2 No assignment by Sellers
None of the Sellers nor the Allottee may assign the benefit of, or any
of their respective rights under, this Agreement except as may be
permitted by each of the Purchaser's or CGII's prior written consent.
16.3 Successors in title
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This Agreement shall be binding upon and enure for the benefit of the
personal representatives and permitted assigns and successors in title
of each of the Parties and references to the Parties shall be
construed accordingly.
17. Waiver; variation; invalidity
17.1 No waiver by omission, delay or partial exercise
No right, power or remedy provided by law or under this Agreement
shall be waived, impaired or precluded by:
17.1.1 any delay or omission to exercise it; or
17.1.2 any single or partial exercise of it on an earlier occasion;
or
17.1.3 the exercise of any other such right, power or remedy; or
17.1.4 any delay, omission to exercise or single or partial
exercise of any other such right, power or remedy.
17.2 Specific waivers to be in writing
Any waiver of any right, power or remedy under this Agreement must be
in writing and may be given subject to any conditions thought fit by
the grantor. No waiver will take effect if the person seeking the
waiver has failed to disclose to the grantor every material fact or
circumstance which (so far as the person seeking the waiver is aware)
has a bearing on its subject matter. Unless otherwise expressly
stated, any waiver shall be effective only in the instance and only
for the purpose for which it is given.
17.3 Variations to be in writing
No variation to this Agreement shall be of any effect unless it is
agreed in writing and signed by or on behalf of each Party.
17.4 Invalidity
Each of the provisions of this Agreement is severable. If any such
provision is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction:
17.4.1 that shall not affect or impair the legality, validity or
enforceability in that jurisdiction of the remaining
provisions of this Agreement; and
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17.4.2 the Parties will use reasonable endeavours to negotiate in
good faith with a view to replacing it with one or more
provisions satisfactory to any relevant Competent Authority
but differing from the replaced provision as little as
possible.
18. Joint and several
18.1 Sellers' obligations
The obligations of the Sellers under this Agreement (whether of
themselves or in respect of the Allottee) are joint and several, and
any reference to the Sellers (including any reference to them as
Parties) shall include each of them severally.
18.2 Illegality etc
If any liability to the Purchaser under this Agreement or under the
Tax Deed (when executed):
18.2.1 is or becomes illegal, invalid or unenforceable in relation
to any Seller in any respect; or
18.2.2 is in whole or in part released, compounded or compromised
by the Purchaser or, as the case may be, CGII as regards any
of the Sellers or the Allottee, or the Purchaser or, as the
case may be, CGII gives him or it any time or indulgence in
relation to it
that shall not in any way prejudice or affect the Purchaser's or, as
the case may be, CGII's rights against any other or others of the
Sellers under the same or like liability, whether joint or several or
otherwise.
19. Costs and expenses
19.1 Payment of costs and stamp duty
19.1.1 Except as otherwise stated in this Agreement, each Party
shall bear its own costs and expenses (including the stamp
duty payable in relation to the sale and purchaser of the
Shares) in relation to the negotiation, preparation,
execution and carrying into effect of this Agreement and all
other agreements forming part of the transactions
contemplated by this Agreement.
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19.1.2 The Sellers and the Allottee will on demand reimburse each
of the Purchaser and CGII for any costs and expenses
incurred in connection with the granting of any waiver or
consent by the Purchaser or, as the case may be, CGII, or
with any variation, amendment, extension or modification of
the Agreement requested by any Seller or the Allottee.
19.2 Unauthorised or invalid documents
19.2.1 The Sellers and the Allottee shall indemnify each of the
Purchaser and CGII and keep each of the Purchaser and CGII
indemnified on demand against any Losses and Expenses they
may suffer or incur as a result of any document delivered to
them pursuant to clause 6 (Completion) being unauthorised,
invalid or for any other reason ineffective for its purpose.
19.2.2 Each of the Purchaser and CGII shall indemnify the Sellers
and the Allottee and keep the Sellers and the Allottee
indemnified on demand against any Losses and Expenses which
they may suffer or incur as a result of any document
delivered to them pursuant to clause 6 (Completion) being
unauthorised, invalid or for any other reason ineffective
for its purpose.
19.3 If the Purchaser terminates
If the Purchaser elects to treat this Agreement as terminated in
accordance with clause 12 (Termination) (other than for non-fulfilment
of any of the Conditions stated in sub-clauses 4.1 (Conditions to
Completion)), the Sellers and the Allottee shall on demand indemnify
each of the Purchaser and CGII and keep each of the Purchaser and CGII
indemnified against all Losses and Expenses suffered or incurred by
them in:
19.3.1 investigating the affairs of the Group; and
19.3.2 negotiating, preparing, executing and carrying this
Agreement into effect, and the other agreements and
arrangements forming part of the transactions contemplated
by this Agreement.
19.4 Companies to pay no costs
For the avoidance of doubt, none of the member of the Group shall pay
any legal or other professional charges and expenses in connection
with any
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investigation of the affairs of the Group or the negotiation,
preparation, execution and carrying into effect of this Agreement.
20. Payments
20.1 No deduction etc
Except as otherwise expressly provided in this Agreement, all payments
to be made under this Agreement shall be made in full without any
set-off or counterclaim and free from any deduction or withholding
except as may be required by law (in which event such deduction or
withholding shall not exceed the minimum amount required by law and
the payer will simultaneously pay to the payee whatever additional
amount is required for the net amount received to equal what would
have been received if no such deduction or withholding had been
required).
20.2 Payments to Sellers' Solicitors
Where this Agreement provides for any payment to be made to the
Sellers' Solicitors (whether or not the manner of payment is
specified) in each case the Sellers and/or the Allottee irrevocably
authorise and instruct each of the Purchaser and CGII to make that
payment to the Sellers' Solicitors, whose receipt shall be an
effective discharge of the Purchaser's, or as the case may be, CGII's
obligation to pay the amount concerned. Neither the Purchaser nor CGII
shall be concerned to see to the application or be answerable for the
loss or misapplication of any such amount.
21. Entire agreement
21.1 This Agreement
In this clause, references to this Agreement include the Disclosure
Letter and all other written agreements and arrangements between the
Parties which are expressed to be supplemental to this Agreement or
which this Agreement expressly preserves or requires to be executed.
21.2 Entire agreement
This Agreement constitutes the whole and only agreement and
understanding between the parties in relation to its subject matter.
Except as provided in sub-clause 21.4 (Fraud), all previous
agreements, understandings, undertakings,
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representations, warranties and arrangements of any nature whatsoever
between the Parties or any of them with any bearing on the subject
matter of this Agreement are superseded and extinguished (and all
rights and liabilities arising by reason of them, whether accrued or
not at the date of this Agreement, are cancelled) to the extent that
they have such a bearing.
21.3 Other remedies
The rights, powers and remedies provided in this Agreement or
expressly referred to in it are independent and cumulative and do not
exclude any rights, powers or remedies (express or implied) which are
available as a matter of common law, statute, custom or otherwise.
21.4 Fraud
Nothing in this Agreement shall be read or construed as excluding any
liability or remedy in respect of fraud.
22. Counterparts
This Agreement may be executed in any number of counterparts and by
the Parties on different counterparts. Each counterpart (including
facsimile copy) shall constitute an original of this Agreement but all
the counterparts shall together constitute one and the same Agreement.
23. Time of the essence
Time shall be of the essence of this Agreement as regards any time,
date or period mentioned in it. If any such time, date or period (or
variation of any of them) is varied, such varied time, date or period
shall be of the essence.
24. Notices
24.1 Form of notices
Any communication to be given in connection with the matters
contemplated by this Agreement shall except where expressly provided
otherwise be in writing and shall either be delivered by hand or sent
by first class pre-paid post or facsimile transmission. Delivery by
courier shall be regarded as delivery by hand.
24.2 Address and facsimile
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Such communication shall be sent to the address of the relevant Party
referred to in this Agreement or the facsimile number set out below or
to such other address or facsimile number as may previously have been
communicated to the sending Party in accordance with this clause. Each
communication shall be marked for the attention of the relevant
person.
To Lam Hok Ling at Flat A, 20th Floor, Eden Garden, 9-11 Lok Fung
Path, Shatin, New Territories, Hong Kong (Facsimile number
852-2866-7505).
To Tung Hok Ki at 24H, Han Kung Mansion, Taikoo Shing, Hong Kong
(Facsimile number 852-2515-9436).
To Hacienda Resources Limited at 17th Floor, Standard Chartered Bank
Building, 4 Des Voeux Road, Central, Hong Kong (Facsimile number
852-2801-4148).
To Cunningham Graphics International, S.A. at 629 Grove Street, Jersey
City, State of New Jersey 07310, the United States of America
(Facsimile number 201-792-6981) for the attention of Mr LJ
Baillargeon.
To Cunningham Graphics International, Inc. at 629 Grove Street, Jersey
City, State of New Jersey 07310, the United States of America
(Facsimile number 201-792-6981) for the attention of Mr LJ
Baillargeon.
24.3 Deemed time of service
A communication shall be deemed to have been served:
24.3.1 if delivered by hand at the address referred to in
sub-clause 24.2 (Address and facsimile) at the time of
delivery;
24.3.2 if sent by first class pre-paid post to the address referred
to in that sub-clause, at the expiration of two clear days
after the time of posting; and
24.3.3 if sent by facsimile to the number referred to in that
sub-clause, at the time of completion of transmission by the
sender.
If a communication would otherwise be deemed to have been delivered
outside normal business hours (being 9:30 a.m. to 5:30 p.m. on a
Business Day) in the time zone of the territory of the recipient under
the preceding provisions of this clause, it shall be deemed to have
been delivered at the next opening of such normal business hours in
the territory of the recipient.
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24.4 Proof of service
In proving service of the communication, it shall be sufficient to
show that delivery by hand was made or that the envelope containing
the communication was properly addressed and posted as a first class
pre-paid letter or that the facsimile was despatched and a
confirmatory transmission report received.
24.5 Change of details
A Party may notify the other Parties of a change to its name, relevant
person, address or facsimile number for the purposes of sub-clause
24.2 (Address and facsimile) provided that such notification shall
only be effective on:
24.5.1 the date specified in the notification as the date on which
the change is to take place; or
24.5.2 if no date is specified or the date specified is less than
five clear Business Days after the date on which notice is
deemed to have been served, the date falling five clear
Business Days after notice of any such change is deemed to
have been given.
24.6 Non-applicability to Proceedings
For the avoidance of doubt, the Parties agree that the provisions of
this clause shall not apply in relation to the service of any writ,
summons, order, judgment or other document relating to or in
connection with any Proceedings.
25. Governing law and jurisdiction
25.1 Hong Kong law
This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong.
25.2 Hong Kong Courts
The Parties irrevocably agree that, for the exclusive benefit of the
Purchaser, the courts of Hong Kong shall have non-exclusive
jurisdiction to settle any dispute which may arise out of or in
connection with this Agreement and that accordingly any Proceedings
may be brought in such courts.
26. Process Agent
26.1 CGII and the Purchaser
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Without prejudice to the rights of the other parties hereto to employ
any method of service permitted by law, the Purchaser and CGII hereby
irrevocably appoint the Purchaser's Solicitors of 5th Floor, Tower
One, Lippo Centre, 89 Queensway, Hong Kong as their authorised agent
for the purpose of accepting service of process in any suit, action or
proceedings arising out of or in connection with this Agreement in
Hong Kong. If for any reason that person (or its successor) no longer
serves as agent of the Purchaser and/or CGII for this purpose, the
Purchaser and/or CGII (as the case may be) shall promptly appoint a
successor agent and notify the other parties hereto. The Purchaser and
CGII respectively agree that any such legal process shall be
sufficiently served on it if delivered to such agent for service at
its address for the time being in Hong Kong whether or not such agent
gives notice thereof to the Purchaser and/or CGII.
26.2 The Allottee
Without prejudice to the rights of the other parties hereto to employ
any method of service permitted by law, the Allottee hereby
irrevocably appoints the Sellers' Solicitors of 17th Floor, Standard
Chartered Bank Building, 4 Des Voeux Road, Central, Hong Kong as its
authorised agent for the purpose of accepting service of process in
any suit, action or proceedings arising out of or in connection with
this Agreement in Hong Kong. If for any reason that person (or its
successor) no longer serves as agent of the Allottee for this purpose,
the Allottee shall promptly appoint a successor agent and notify the
other parties hereto. The Allottee respectively agrees that any such
legal process shall be sufficiently served on it if delivered to such
agent for service at its address for the time being in Hong Kong
whether or not such agent gives notice thereof to the Allottee.
AS WITNESS the hands of the Parties or their duly authorised representatives on
the date first appearing at the head of this Agreement.
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Schedule 1
Details of the Sellers
(4)
(1) (2) (3) Proportion of
Name the Shares Number of Shares Held Consideration
- ---- ---------- --------------------- -------------
Lam Hok Ling Workable Shares 49,500 50%
Tung Hok Ki Workable Shares 49,500 50%
Lam Hok Ling Plainduty Shares 30,000
Tung Hok Ki Plainduty Shares 30,000
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Schedule 2
Details of the Group
Part 1
Details of the Companies
Name: Workable Company Limited
Date of incorporation: 18 March 1988
Place of incorporation: Hong Kong
Registered office: Unit 1, 1st Floor, Tak King Industrial Building,
27 Lee Chung Street, Chai Wan, Hong Kong
Share capital: Authorised: 100,000 ordinary shares of HK$1 each
Issued: 99,000 ordinary shares of HK$1 each
Shareholders: Lam Hok Ling (49,500 ordinary shares)
Tung Hok Ki (49,500 ordinary shares)
Directors: Lam Hok Ling
Tung Hok Ki
Secretary: Tung Hok Ki
Name: Plainduty Limited
Date of incorporation: 4 December 1987
Place of incorporation: Hong Kong
Registered office: Unit 1, 1st Floor, Tak King Industrial Building
27 Lee Chung Street, Chai Wan, Hong Kong
Share capital: Authorised: 100,000 ordinary shares of HK$1 each
Issued: 100,000 ordinary shares of HK$1 each
Shareholders: Workable Company Limited (40,000 ordinary shares)
Lam Hok Ling (30,000 ordinary shares)
Tung Hok Li (30,000 ordinary shares)
Directors: Lam Hok Ling
Tung Hok Ki
Secretary: Tung Hok Ki
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Part 2
Details of the Subsidiary
Name: Workable Printing (Singapore) Pte Limited
Date of registration: 14 May 1998
Place of incorporation: Singapore
Registered office address: 9 Harrison Road, #05-01 Harrison Industrial
Building, Singapore 369651
Share capital: Authorised: 100,000 ordinary shares of S$1 each
Issued: 100,000 ordinary shares of S$1 each
Shareholders: Workable Company Limited (100,000 ordinary shares)
Directors: Lam Hok Ling
Tung Hok Ki
Chang Mei Sheung
Secretary: Cheo Meng Choo
Auditor: Leong Kin Weng & Co
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Schedule 3
Properties and Leases
Part 1
HK Properties and HK Leases
Property: Workshops 1 & 2 on 17th Floor, Workshops 1 & 2 on 14th
Floor, Workshop 1 on 2nd Floor & the Flat Roof and Private
Car Park no. 18 on the Upper Ground Floor, Tak King
Industrial Building, No. 27 Lee Chung Street, Chai Wan, Hong
Kong.
Tenant: Workable Company Ltd.
Date of the Tenancy Agreement: 13 January 1999
Term of tenancy: Three years
Commencement date of tenancy: 13 January 1999
Landlord: Splendour Chief Development Limited
Current monthly rent: HK$167,000 (HK$8.3 per square feet)
Deposit: HK$501,000
Option to renew term: For a further term of 3 years
Rent review: Rent for new term to be determined by valuer if not agreed
Permitted use: Industrial ancillary office and warehouse purpose
Property: Workshop 1 on 1st Floor & the Flat Roof and Lorry Car Park
no. 4 on Upper Ground Floor, Tak King Industrial Building,
No. 27 Lee Chung Street, Chai Wan, Hong Kong.
Tenant: Workable Company Ltd.
Date of the Tenancy Agreement: 13 January 1999
Term of tenancy: Three years
Commencement date of tenancy: 13 January 1999
Landlord: Many Best Development Limited
Current monthly rent: HK$59,440 (HK$8.3 per square feet)
Deposit: HK$178,320
Option to renew term: For a further term of 3 years
Rent review: Rent for the new term to be determined by valuer if not agreed
Permitted use: Industrial and ancillary offices and warehouse purpose
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Part 2
Singapore Property and Singapore Lease
Property: No. 9 Harrison Road, #05-01 Harrison Industrial Building,
Singapore 369651
Tenant: Workable Printing (Singapore) Pte. Ltd.
Date of Tenancy
Agreement: 28 May 1998
Term of Tenancy: Two years
Commencement
date of Tenancy: 1 September 1998
Landlord: SPP Properties Pte. Ltd.
Current Monthly
Rent: S$8,531.60 (S$11.40 per sq. ft) (inclusive of service charge)
Deposit: S$25,594.80
Rent Free Period: One month from commencement date
Option to Renew
Term: For a further period of two years
Rent Review: Rent for the new term to be determined by the landlord
Permitted use: Industrial purpose
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Schedule 4
Conduct of Business Pending Completion
Subject to sub-clause 4.1 (Conditions to Completion), in the period up to
Completion, none of the following are to be done, suffered, permitted or agreed
to be done by or in relation to each Group Company except as provided in
sub-clause 5.3 (Conduct of Business pending Completion):
1. any disposal of or removal from any of the Properties of any material
asset used or required for the operation of any aspect of the Business
(otherwise than in the ordinary course of trading) or entry into any
unusual or onerous transaction or any transaction (including by way of
finance lease) not in the ordinary course of trading. For these
purposes, without limitation, the incurring of any capital expenditure
in excess of HK$10,000, whether on any individual item or in the
aggregate, will in all cases be considered outside the ordinary course
of trading;
2. the disposal of any person, reorganisation, change or discontinuance
of any material part of its business;
3. any failure to settle in accordance with its normal payment procedures
and timescales any debts it incurs in the normal course of its
business;
4. any failure to maintain in force policies of insurance with limits of
indemnity at least equal to, and otherwise on terms no less favourable
than, the policies of insurance maintained by it immediately before
exchange of this Agreement;
5. any entry into, modification or termination of any material contract;
6. borrowing of any money (except by way of bank overdraft in the
ordinary course of business and within limits subsisting immediately
before the exchange of this Agreement);
7. the creation, allotment, issue, repurchase, redemption or cancellation
of any shares or other securities;
8. any change to the accounting procedures or principles by reference to
which its accounts are drawn up, or its accounting reference date, or
its residence for Taxation purposes;
9. in relation to employees and other appointments:
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(a) any appointment or employment of any new employees or
consultants at an annual salary or rate of remuneration in
excess of HK$200,000;
(b) any material alteration of the terms and conditions of
employment (including benefits) of any of its employees, nor
the dismissal of any of its employees without proper cause;
(c) any inducing or endeavouring to induce (or suffering any
Seller to induce or endeavour to induce) any of such
employees to terminate their employment.
10. the passing of any resolution by any of its shareholders or any class
of its shareholders;
11. any declaration, making or payment of any dividend, bonus or other
distribution of capital or income;
12. the creation of any Encumbrance over its assets, undertaking or share
capital;
13. the giving of any guarantees or indemnities in respect of any third
party;
14. the institution, settlement or agreement to settle any legal
proceedings relating to the Business, save for debt collection in the
ordinary course of business;
15. the granting or modification or agreement to terminate any rights or
entry into any agreement relating to Intellectual Property or
otherwise the suffering of any of its rights relating to Intellectual
Property to lapse;
16. the entry into or the modification of any subsisting agreement with
any Trade Union.
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Schedule 5
Completion Obligations
1. Sellers' Completion obligations
The Sellers will be obliged to deliver to the Purchaser (or otherwise
make available to the satisfaction of the Purchaser):
(a) evidence reasonably satisfactory to the Purchaser of the
fulfilment of the Conditions set out in sub-clause 4.1
(Conditions to Completion);
(b) transfers of the Shares duly executed by the registered
holders in favour of the Purchaser and/or its nominee(s)
together with the relevant share certificates in the names
of such registered holders;
(c) certificates in respect of all issued shares in the capital
of the Subsidiary;
(d) such waivers, consents or other documents (including any
power of attorney under which any document required to be
delivered under this Schedule has been executed) in the
agreed form as are required to enable the Purchaser and its
nominee(s) to be registered as the holders of the Shares;
(e) the statutory registers and minute books (properly written
up to the time immediately prior to Completion), the common
seal (if any), the certificate of incorporation and (if
applicable) any certificate of incorporation on change of
name of each Group Company;
(f) the Tax Deed duly executed as a deed by the Sellers;
(g) written confirmations in the form approved by the Purchaser
from the respective mortgagee of the following charges or
mortgages that all indebtedness and sums under such charges
or mortgages have been paid and satisfied in full together
with written undertakings in form satisfactory to the
Purchaser that they will execute the relevant receipt on
discharge or deed of release (together "Discharge
Documents") and memorandum of satisfaction (together
"Memorandum of Satisfaction") within 14 days from
Completion: Legal Charge/Mortgage Memorial Nos.6910110,
6901514, 6931342 and 7071027
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(h) copy of the deed of assignment duly certified by a firm of
solicitors in respect of each of the Transfer Properties
(together "Transfer Documents") duly executed by the
respective vendor and buyer;
(i) the HK Leases duly executed by the respective landlords;
(j) duly and fully stamped transfer documents in respect of the
transfer of all issued shares (100,000) in the capital of
Workable Singapore from the Sellers to Workable HK together
with share certificate(s) and extract from the register of
members of Workable Singapore showing that Workable HK is
the registered holder of all such shares;
(k) Forms W-8 completed and signed by each of the Sellers,
together with all additional documentation required of the
Sellers under the terms of the mandate;
(l) each of the Sellers and the Allottee providing a certificate
containing the representations and warranties specified in
Schedule 10;
(m) irrevocable powers of attorney in the agreed form executed
by each of the holders of the Shares in favour of the
Purchaser and/or its nominee(s) to enable the beneficiary
(pending registration of the transfers of the Shares) to
exercise all voting and other rights attaching to the Shares
and to appoint proxies for this purpose;
(n) the Escrow Agreement duly signed by the Sellers and the
Allottee;
(o) stock power in relation to the Retained Shares duly executed
in blank on behalf of the Allottee and notarised;
(p) the Service Agreements duly signed by the respective Seller
and Workable HK;
(q) a solicitors' undertaking from the Sellers' Solicitors in
the form approved by the Purchaser that they will deliver
the following documents to the Purchaser within the time
limit set out in the said undertaking:
(i) the Transfer Documents;
(ii) the Discharge Documents;
(iii) the Memorandum of Satisfaction; and
(iv) the HK Leases
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and to cause a board meeting of each of the Group Company to be held
at which:
(i) in the case of the Companies only, the transfers
of the Shares will be approved for registration
(subject to their being duly stamped);
(ii) all persons nominated by the Purchaser (in the
case of directors subject to any maximum number
imposed by the relevant articles of association)
will be appointed additional directors and
appointed secretaries;
(iii) the accounting reference date will be changed to
31 December; and
and to cause a shareholders' meeting of each of the Group Company to
be held which the relevant provisions of the respective articles of
association be amended so that:
(i) in the case of Workable HK and Plainduty only, the
quorum for any board meeting shall be any three
directors and the quorum for any general meeting
shall be any two members; and
(ii) in the case of Workable Singapore only, the quorum
for any board meeting shall be any four directors.
2. Purchaser's and CGII's Completion obligations
The Purchaser's and, as the case may be, CGII's obligations (which are
subject to the Sellers complying with their obligations under
paragraph 1) are to:
(a) (in the case of CGII) deliver to the Sellers a copy of the
letter of CGII to its stock transfer agent authorising the
issuance of the Fixed Consideration Shares;
(b) (in the case of CGII) hold a board meeting at which this
Agreement and the transactions contemplated herein including
the allotment of the Fixed Consideration Shares, credited as
fully paid, to the Allottee according to sub-clause 3.2.1
(Satisfaction of Fixed Consideration) are approved;
(c) (in the case of the Purchaser) deliver to the Sellers in
Hong Kong dollars through CHATS the Cash Payment (less the
Retained Cash Payment) aggregating HK$46,044,010 (being
HK$23,022,005 to Lam Hok Ling at
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his account, No. 110-329018-833, with The Hongkong and
Shanghai Banking Corporation Limited and HK$23,022,005 to
Tung Hok Ki at his account No. 21-200-4848-9, with Wing Lung
Bank Limited);
(d) (in the case of the Purchaser) deliver to the Sellers the
Tax Deed duly executed by the Purchaser;
(e) (in the case of the Purchaser) deliver to the Sellers
evidence of the deposit with the Escrow Agent of the
Retained Cash Payment; and
(f) deliver to the Sellers a counterpart of the Escrow Agreement
duly signed by the Purchaser and CGII.
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Schedule 6
Basis for preparation of the Completion Balance Sheet
1. General requirements
Subject to the provisions of paragraphs 2 to 3 below, the Completion
Balance Sheet shall be prepared, in accordance with SSAP and (to the
extent that it is consistent with SSAP) on a basis consistent with the
Accounts. Paragraph 2 shall have priority over paragraph 3.
2. Completion Balance Sheet
Unless already taken into account, the following principles shall be
observed in drawing up the Completion Balance Sheet:
2.1 sums receivable in respect of debtors shall not be included
at sums higher than the amounts collectable, making
appropriate provision for doubtful debts;
2.2 stocks and work-in-progress shall be valued at the lower of
cost and net realisable value;
2.3 liabilities shall include accruals at the close of business
on the Completion Date;
2.4 no value shall be attributable to goodwill or any other
intangible asset;
2.5 immovable property and other fixed assets shall be included
at their net book value as at the Balance Sheet Date (or at
cost if purchased after the Balance Sheet Date) less
depreciation on cost at the following rates:
2.5.1 plant and machinery 30% per annum;
2.5.2 fixtures and fittings 20% per annum;
2.5.3 motor vehicles 30% per annum; and
2.5.4 computer software 30% per annum;
2.6 full provision shall be made for all Taxation, including
deferred Taxation.
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3. True and fair view
The Completion Balance Sheet shall show a true and fair view of the
state of affairs of the Group at the close of business on the
Completion Date.
4. Changes in SSAP
Unless otherwise taken into account in accordance with the preceding
provisions of this schedule, the Completion Balance Sheet shall be
prepared without regard to any changes in SSAP as applied in the
preparation of the Accounts.
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Schedule 7
Warranties
(Under sub-clause 1.12, references to the Companies shall be deemed to include a
corresponding reference to the Group and each Group Company severally and
references to the Accounts are to those of the Companies or the Subsidiary, as
the case may be.)
Part 1
General warranties
1. Preliminary
1.1 Information
1.1.1 The facts set out in the Recitals and Schedules 1 to 4
(inclusive) and all information contained in the Disclosure
Documents are complete, true, accurate and not misleading
and all information which has been given to the Purchaser
or, as the case may be, CGII or its representatives or
professional advisers by the Sellers or by any director,
officer or other official of any Group Company or by their
respective professional advisers or other agents in the
course of the negotiations leading to this Agreement was
when given and is now complete, true and accurate in all
respects and not misleading. Insofar as any such information
amounts to a forecast or an expression of opinion, intention
or expectation, such information is fair and honest and made
on reasonable grounds.
1.1.2 There is no fact or matter which has not been disclosed
which renders any such information untrue, inaccurate or
misleading.
1.1.3 The information disclosed to the Purchaser or, as the case
may be, CGII or its representatives or professional advisers
of the Purchaser or, as the case may be, CGII by the Sellers
and the directors, officers or other officials of any Group
Company regarding the current financial and trading position
and prospects of the Group comprises all information which
is material for the reasonable assessment of the financial
and trading prospects of the Group.
1.1.4 No representation or warranty of the Sellers in this
Agreement and no statement in the Disclosure Letter omits to
state a material fact necessary to make the statements
herein or therein, in light of the circumstances in which
they are made, not misleading.
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1.2 Power to contract
1.2.1 The Sellers
Each Seller has full power to enter into and perform this Agreement,
the Service Agreements, the Escrow Agreement and the Tax Deed
respectively and these agreements and the Tax Deed when executed will
constitute binding obligations on each Seller in accordance with their
terms.
1.2.2 The Allottee
The Allottee has full power to enter into and perform this Agreement
and the Escrow Agreement respectively and this Agreement and the
Escrow Agreement when executed will constitute binding obligations on
the Allottee in accordance with their terms.
2. The Group
2.1 Memorandum and articles of association
The copy of the memorandum and articles of association of each Group
Company which has been produced to the Purchaser's Solicitors is true
and complete in all respects and has embodied in it or annexed to it a
copy of every such resolution and agreement as is referred to in
section 117 of the Ordinance. Each Group Company has at all times
carried on its business and affairs in all respects in accordance with
its memorandum and articles of association and all such resolutions
and agreements.
2.2 Statutory books
The statutory books (including all registers and minute books) of each
Group Company have been properly kept and contain an accurate and
complete record of the matters which should be dealt with in those
books and no notice or allegation that any of them is incorrect or
should be rectified has been received.
2.3 Statutory returns
Each Group Company has complied with the provisions of the Ordinance
and all returns, particulars, resolutions and other documents required
to be filed with or delivered to the Registrar of Companies or to any
other authority whatsoever by each Group Company have been correctly
and properly prepared and so filed or delivered.
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2.4 Share capital
2.4.1 The Shares constitute the whole of the issued share capital
of the Company and each Seller is the sole beneficial owner
of that number of the Shares as is set against his name in
Part 1 of Schedule 2 (Details of the Company). There is no
Encumbrance on, over or affecting the Shares or any unissued
shares, debentures or other securities of the Company. No
claim has been made by any person to be entitled to the
benefit of any such Encumbrance and no person has the right
(exercisable now or in the future and whether contingent or
not) to call for the issue of any share or loan capital of
the Company.
2.4.2 No Group Company has at any time:
(a) repaid, redeemed or purchased any of its own
shares, or otherwise reduced its issued share
capital or any class of it or capitalised in the
form of shares, debentures or other securities or
in paying up any amounts unpaid on any shares,
debentures or other securities, any profits or
reserves of any class or description or passed any
resolution to do so, or agreed to do any of the
above;
(b) directly or indirectly provided any financial
assistance for the purpose of the acquisition of
shares in it or its holding company or for the
purpose of reducing or discharging any liability
incurred in such an acquisition whether pursuant
to section 47C of the Ordinance or otherwise.
2.4.3 The Sellers are the sole beneficial owners of the entire
issued share capital of the Allottee. There is no
Encumbrance on, over or affecting the shares representing
such share capital or any unissued shares, debenture or
other securities of the Allottee. The Sellers are the only
directors of the Allottee which is under the direct and sole
control of the Sellers.
2.4.4 The transfer by the Sellers of all of the issued shares in
Workable Singapore to Workable HK has been duly effected and
the relevant transfer documents duly and adequately stamped
and Workable Singapore has become a wholly owned subsidiary
of Workable HK.
2.5 Solvency
No Group Company is insolvent or commits an act of bankruptcy pursuant
to section 3 of the Bankruptcy Ordinance (Cap 6 of the Laws of Hong
Kong). No order has ever been made or petition presented or resolution
passed for its winding up and no distress, execution or other process
has ever been levied on
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any of its assets. No administrative or other receiver has been
appointed by any person over the whole or any part of the business or
assets of any Group Company, nor has any order been made or petition
presented for the appointment of an administrator in respect of any
Group Company.
3. Connected business
3.1 Subsidiary
All issued shares in the Subsidiary are held by Workable HK legally
and beneficially free from all Encumbrances and with all rights now
attaching, or at any time up to Completion to be attached, to them.
3.2 Connected transactions
No Group Company:
3.2.1 is or has agreed to become the holder or other owner of any
class of any shares, debentures or other securities of any
other body corporate (whether incorporated in Hong Kong or
elsewhere) other than in case of the Company, the
Subsidiaries;
3.2.2 has agreed to become a subsidiary of any other body
corporate or under the control of any group of bodies
corporate or consortium;
3.2.3 is or has agreed to become a member of any partnership,
joint venture, consortium or other unincorporated
association other than a recognised trade association or
agreement or arrangement for sharing commissions or other
income;
3.2.4 has a branch, place of business or substantial assets
outside Hong Kong or Singapore or any permanent
establishment (as that expression is defined in Rule 5 of
the Inland Revenues Rules issued by the Board of Inland
Revenue) in any place outside Hong Kong or Singapore; and
3.2.5 has any interest, legal or beneficial, in any shares or
other capital or securities or otherwise howsoever in any
other venture or person and neither holds nor is liable on
any share or security which is not fully paid up or which
carries any liability.
3.3 Group On Investment Limited
A special resolution was passed by the members of Group On Investment
Limited ("Group On") on 28 September 1998 that Group On be wound up
voluntarily. Group On has been wound up
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pursuant to the special resolution and in accordance with the
provisions of the Ordinance regarding members' voluntary winding-up.
Group On will be struck off from the Register of Companies by the
Registrar of Companies at the expiration of three months from the
winding-up. There is no outstanding indebtedness or other liability
(actual or contingent) owing by Group On to any Group Company or the
Sellers or owing to Group On and/or its creditors by any Group Company
or the Sellers.
4. Accounts
4.1 General
The Accounts:
4.1.1 were prepared in accordance with SSAP, the requirements of
all relevant statutes and on a basis consistent with the
preceding three accounting periods of the Companies and with
the books of three account of the relevant company;
4.1.2 comprise all the notes, reports, statement and other
documents required by law to be annexed to them;
4.1.3 are true and accurate in all respects and disclose a true
and fair view of the assets, liabilities and state of
affairs of the Companies at the Balance Sheet Date and of
its profits for the financial year ended on such date;
4.1.4 contain full provision or reserve for bad and doubtful
debts, obsolescent or slow-moving stocks and for
depreciation on fixed assets, which provision or reserve was
when made and is now adequate;
4.1.5 contain a note of all capital commitments of the Companies
at the Balance Sheet Date, which note was when made and is
now adequate, fair and not misleading;
4.1.6 contain proper and adequate reserves or provision for all
Taxation, including deferred taxation as defined in SSAP
2.112 (sufficient provision being made in a deferred
taxation account for any corporation tax on chargeable gains
and balancing charges that would arise on the sale of all
fixed assets at the values attributed to them in the
Accounts);
4.1.7 disclose, note or provide for all liabilities of the
Companies which were known, actual or contingent (including
contingent liabilities to customers and contingent
liabilities for Taxation) to the extent that such
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contingent liabilities are required to be provided in the
Accounts pursuant to SSAP;
4.1.8 value the stock-in-trade at the lower of cost and net
realisable value and such stock-in-trade does not include
any redundant, obsolete or unsaleable items or any items
which are the subject of any dispute (other than minor
disputes in the ordinary course of business) with a supplier
or customer;
4.1.9 value the work-in-progress on a basis that excludes profit
and includes adequate provision for losses which have arisen
or could reasonably be anticipated to arise on uncompleted
contracts and on completed contracts in respect of which the
maintenance period is unexpired, and the amount included in
the Accounts in respect of work-in-progress is reasonable
and has been determined in accordance with SSAP 2.103; and
4.1.10 reflect all the fixed and loose plant and machinery,
equipment, furniture, fittings and vehicles owned by each of
the Companies at the Balance Sheet Date and full provisions
in accordance with SSAP have been made on them and none has
been acquired for any consideration otherwise than by way of
a bargain at arm's length.
4.2 Stock-in-trade and work-in-progress
The basis of valuation for stock-in-trade and work-in-progress has
remained in all material respects consistent with that adopted for the
purpose of the audited accounts each of the Companies in respect of
the beginning and end of each of the preceding three accounting
periods of each of the Companies since its incorporation.
4.3 Profits
The profits of each of the Companies for the three years ended on the
Balance Sheet Date as shown by the Accounts and by the audited
accounts of each of the Companies for previous periods delivered to
the Purchaser and the trend of profits shown by them have not (except
as Disclosed in them) been affected to a material extent by
inconsistencies of accounting practices, by the inclusion of
non-recurring items of income or expenditure, by transactions entered
into otherwise than on normal commercial terms or by any other factors
rendering such profits for all or any of such periods exceptionally
high or low.
4.4 Books of account
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All accounts, books, ledgers, financial and other necessary records of
whatsoever kind of each of the Companies for the preceding seven
accounting periods:
4.4.1 have been fully, properly and accurately maintained, are in
its possession and contain true and accurate records of all
matters including those required to be entered in them by
the Ordinance and no notice or allegation that any of them
is incorrect or should be rectified has been received;
4.4.2 do not contain or reflect any material inaccuracies or
discrepancies;
4.4.3 give and reflect a true and fair view of the matters which
ought to appear in them and in particular of the financial,
contractual and trading position of the relevant company and
of its plant and machinery, fixed and current assets and
liabilities (actual and contingent), debtors and creditors
and stock-in-trade and work-in-progress.
5. Post-Balance Sheet Date events
5.1 Since the Balance Sheet Date:
5.1.1 each of the Companies has carried on its business in the
ordinary and usual course and without entering into any
transaction, assuming any liability or making any payment
not provided for in the Accounts which is not in the
ordinary course of trading and without any interruption or
alteration in the nature, scope or manner of its business
and nothing has been done which would be likely to prejudice
the interests of the Purchaser as a prospective purchaser of
the Shares;
5.1.2 none of the Companies has experienced any material
deterioration in its financial position or prospects or
turnover or suffered any diminution of its assets by the
wrongful act of any person and the value of its net assets
is not materially less than the value of its net assets at
the Balance Sheet Date and it has not had its business,
profitability or prospects materially and adversely affected
by the loss of any important customer or source of supply or
by any abnormal factor not affecting similar businesses to a
like extent and there are no facts which are likely to give
rise to any such effects;
5.1.3 none of the Companies has acquired or disposed of or agreed
to acquire or dispose of any assets or assumed or incurred
or agreed to assume or incur any material liabilities
(actual or contingent) otherwise than in the ordinary course
of business;
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5.1.4 none of the Companies has declared, made or paid any
dividend, bonus or other distribution of capital or income
(whether a qualifying distribution or otherwise) and
(excluding fluctuations in overdrawn current accounts with
bankers) no loan or its loan capital has been repaid in
whole or in part or has become due or is liable to be
declared due by reason of either service of a notice or
lapse of time or otherwise howsoever;
5.1.5 none of the Companies has carried out or entered into any
transaction and no other event has occurred in consequence
of which (whether alone or together with any one or more
transactions or events occurring before, on or after the
date of this Agreement) any of its liability to Taxation has
arisen or will arise (or would have arisen or would or might
arise but for the availability of any relief, allowance,
deduction or credit) other than profits tax on its actual
income (not chargeable gains or deemed income) arising from
transactions entered into in the ordinary course of
business;
5.1.6 none of the Companies has made any change to the
remuneration, terms of employment, emoluments or pension
benefits of any its present or former director, officer or
employee who on the Balance Sheet Date was entitled to
remuneration in excess of HK$300,000 per annum and has not
appointed or employed any additional director, officer or
employee who is so entitled;
5.1.7 all debts owing to it as shown in the Accounts are
collectable in the ordinary course of business and none of
the Companies has released any debts in whole or in part nor
written off debts in an amount exceeding HK$35,000 in the
aggregate;
5.1.8 none of the Companies has entered into contracts involving
capital expenditure in an amount exceeding HK$200,000 in the
aggregate;
5.1.9 none of the Companies has become aware that any event has
occurred which would entitle any third party to terminate
any contract or any benefit enjoyed by it or call in any
money before the normal due date;
5.1.10 none of the Companies has purchased stocks in quantities or
at prices materially greater than was its practice before
the Balance Sheet Date;
5.1.11 each of the Companies has paid its creditors within the
times agreed with such creditors and does not have any debts
outstanding which are overdue for payment by more than four
weeks;
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5.1.12 none of the Companies has created or agreed to create any
Encumbrance or entered into any factoring arrangement,
hire-purchase, conditional sale or credit sale agreement
which has not been Disclosed and which is not in the
ordinary course of business (and there has been no default
by it in the performance or observance of any of the
provisions of any such Encumbrance, arrangement or agreement
disclosed);
5.1.13 none of the Companies has borrowed or raised any money or
taken any financial facility (except such short term
borrowings from bankers as are within the amount of any
overdraft facility which was available to it at the Balance
Sheet Date) or since the Balance Sheet Date renegotiated or
received any notice from any banker that such banker wishes
to renegotiate any overdraft facility available to it at the
Balance Sheet Date;
5.1.14 each of the Companies has ensured that its management
accounts have been prepared in accordance with SSAP and on a
basis consistent with the basis on which the Accounts have
been prepared;
5.1.15 none of the Companies has made any change to its accounting
reference date and no accounting period of it has ended
since the Balance Sheet Date;
5.1.16 none of the Companies has made a payment or incurred an
obligation to make a payment which will not be deductible in
computing trading profits for the purposes of profits tax or
as a management expense of it; and
5.1.17 none of the Companies (including any class of its members)
has passed any resolution whether in general meeting or
otherwise.
6. Transactions with the Sellers, directors and Connected Persons
6.1 Loans and debts
There is no outstanding:
6.1.1 indebtedness or other liability (actual or contingent) owing
by any Group Company to any Seller or any Affiliate of any
Seller or director of any Group Company or any Connected
Person or owing to any Group Company by any Seller or any
Affiliate of any Seller or director of any Group Company or
any Connected Person; or
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6.1.2 guarantee or security for any such indebtedness or
liability.
6.2 Arrangements with Connected Persons
6.2.1 There is no outstanding, and there has not at any time
during the last six years been outstanding, any agreement,
arrangement or understanding (whether legally enforceable or
not) to which any Group Company is a party and in which any
Seller, Affiliate of any Seller, director or former director
of any Group Company or any Connected Person is or has been
interested whether directly or indirectly.
6.2.2 No Group Company is a party to or has its profits or
financial position during the last six years been affected
by any agreement or arrangement which is not entirely of an
arm's length nature.
6.3 Competitive interests
6.3.1 No Seller, Affiliate of any Seller, director or former
director of any Group Company nor any Connected Person,
either individually, collectively or with any other person
or persons, has any estate, right or interest, directly or
indirectly, in any business other than that now carried on
by any Group Company which is or is likely to be or become
competitive with any aspect of the Business of any Group
Company save as registered holder or other owner of any
class of securities of any company if such class of
securities is listed on any investment exchange recognised
by the HKSE and if such person (together with Connected
Persons and Affiliates) holds or is otherwise interested in
less than three per cent of such class of securities.
6.3.2 The Sellers either individually, collectively or with any
other person or persons are not interested in any way
whatsoever in any Intellectual Property used and not wholly
owned by any Group Company.
6.4 Benefits
No Connected Person or Affiliate of any Seller, director or former
director of any Group Company is entitled to or has claimed
entitlement to any remuneration, compensation or other benefit from
any Group Company.
7. Finance
7.1 Borrowings
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Particulars of all money borrowed by each Group Company have been
Disclosed. The total amount borrowed by each Group Company from any
source does not exceed any limitation on its borrowing contained in
the articles of association of the relevant company or in any
debenture or loan stock trust deed or instrument or any other document
executed by the relevant company and the amount borrowed by each Group
Company from each of its bankers does not exceed the overdraft
facility agreed with such banker. No Group Company has outstanding
loan capital.
7.2 Debts owed to the Group
All debts owed to each Group Company are collectable in the ordinary
course of business and each such debt will realise in full its face
value at the time of payment. No Group Company nor the Sellers
consider any of the debts owing to any Group Company (but which are
not yet due) to be irrecoverable in whole or in part. No Group Company
owns the benefit of any debt (whether present or future) other than
debts which have accrued to it in the ordinary course of business.
7.3 Working capital
Having regard to its existing banking and other facilities, each Group
Company has sufficient working capital for the purpose of continuing
to carry on its business in its present form and at its present level
of turnover for the foreseeable future and for the purposes of
executing, carrying out and fulfilling in accordance with their terms
all orders, projects and contractual obligations which have been
placed with or undertaken by that company.
7.4 Financial facilities
The Sellers have Disclosed full details and true and correct copies of
all documents relating to all debentures, acceptance lines,
overdrafts, loans or other financial facilities outstanding or
available to any Group Company and all Encumbrances to which any asset
of any Group Company is subject. Neither the Sellers nor any Group
Company have done anything whereby the continuance of any such
facility or Encumbrance in full force and effect might be affected or
prejudiced.
7.5 Options and guarantees
7.5.1 No Group Company is responsible for the indebtedness of any
other person nor party to any option or pre-emption right or
any guarantee, suretyship or any other obligation (whatever
called) to pay, purchase or provide funds (whether by the
advance of money, the purchase of or
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subscription for shares or other securities or the purchase
of assets or services or otherwise) for the payment of, or
as an indemnity against the consequence of default in the
payment of, any indebtedness of any other person.
7.5.2 No party other than the Group has given any guarantee of or
security for any overdraft, loan or loan facility granted to
any Group Company.
7.6 Payment of obligations
The Group is able to effect payment of any material obligation as and
when due for payment.
8. Environment
8.1 In this Agreement:
"Environment" means any and all organisms (including man), ecosystems,
property and the following media: air (including the air within
buildings and the air within other natural or man-made structures,
whether above or below ground); water (including water under or within
land or in drains or sewers and coastal and inland waters); and land
(including land under water);
"Environment Laws" means any and all laws, whether civil, criminal or
administrative applicable to any Group Company and/or conduct of the
Business and which have as a purpose or effect the protection of the
Environment and/or the prevention of Harm and/or the provision of
remedies in respect of Harm, including: directives, decisions and
recommendations; statutes and subordinate legislation; regulations,
orders and ordinances; codes of practice, circulars, guidance notes
and the like; common law, local laws and bye-laws; and judgments,
notices, orders, directions, instructions or awards of any Competent
Authority;
"Harm" means material harm or damage to, or other interference with,
the Environment and includes any detrimental effects on the health of
living organisms or other interference with the ecosystems of which
they form part and, in the case of man, includes offence caused to any
of his senses or harm or damage to his property;
"Hazardous Matter" means any and all matter (whether alone or in
combination with other matter) including electricity, heat, vibration,
noise or other vibration which may cause Harm;
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"Other Property" means any and all land or property, other than the
Property, owned or occupied at any time by any Group Company;
8.2 Compliance with Environment Laws
8.2.1 The Property and the Other Property have been used, and the
Business has been conducted, at all times in compliance with
Environment Laws.
8.2.2 No material work, repairs, remedy, construction, or capital
expenditure is required under any Environment Laws or in
order to carry on lawfully the Business at the Property and
the Other Property.
8.3 Hazardous Matter
All Hazardous Matters generated or used in the Business have been
used, kept, treated, transported (including transportation in pipes
and pipeworks), disposed of, discharged or otherwise dealt with in
accordance with the Environment Laws.
9. Other assets
9.1 Title
9.1.1 Each Group Company has legal and beneficial title to all its
assets which
(a) are included in the Accounts; or
(b) have otherwise been represented as being its
property; or
(c) were at the Balance Sheet Date used or held for
the purposes of its business; or
(d) have been acquired by it since the Balance Sheet
Date (except for those assets disposed of in the
ordinary course of business) and all such assets
are in its possession and control and are sited
within Hong Kong or Singapore.
9.1.2 Except for assets disposed of or realised by any Group
Company in the ordinary course of trading, it retains such
title to all such assets free from any Encumbrance, hire or
hire purchase agreement or leasing agreement or agreement
for payment on deferred terms.
9.1.3 No Group Company has acquired or agreed to acquire any
material asset on terms that title does not pass to it until
full payment is made.
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9.2 Condition of assets
The plant and machinery (including fixed plant and machinery) and all
vehicles and office and other equipment shown in the Accounts or
acquired since the Balance Sheet Date or otherwise used in connection
with the Business which have not been disposed of in the ordinary
course of business:
9.2.1 do not contravene any requirement or restriction having the
force of law;
9.2.2 are in good repair and condition and are regularly
maintained, fully serviceable and in satisfactory working
order;
9.2.3 are each capable of doing the work for which they were
designed and/or purchased and will each be so capable
(subject to fair wear and tear) during the period of time
over which the value of such assets will be written down to
nil in the accounts of the relevant Group Company;
9.2.4 are not surplus to the relevant Group Company's
requirements; and
9.2.5 are not dangerous, inefficient, out of date, unsuitable or
in need of renewal or replacement,
and the vehicles owned by the Group are road-worthy and duly licensed
for the purposes for which they are used.
9.3 Condition of stock
The stock-in-trade of each Group Company is in good condition and is
capable of being sold by it in the ordinary course of business in
accordance with its current price list without rebate or allowance to
a purchaser.
9.4 Rental payments
Rentals payable by each Group Company under any leasing, hire-purchase
or other similar agreement to which it is a party are set out in the
Disclosure Documents and have not been increased and all such rentals
are fully deductible by the relevant Group Company for tax purposes.
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10. Insurance
10.1 Extent of insurance
All the assets of each Group Company which are of an insurable nature
are and have at all material times been fully insured to their
replacement value with a well established and reputable insurer
against fire and all other risks normally insured against by companies
carrying on similar businesses or owning property of a similar nature
to the Business and each Group Company is and has at all material
times been adequately covered against all legal liability and risks
normally insured against by such companies (including liability to
employees or third parties for personal injury or loss or damage to
property, product liability and loss of profit).
10.2 Premiums and claims
Particulars of all policies of insurance of each Group Company now in
force have been disclosed and such particulars are true and correct
and all premiums due on such policies have been duly paid and all such
policies are valid and in force. So far as the Sellers are aware there
are no circumstances which might lead to any liability under such
insurance being avoided by the insurers or the premiums being
increased. There is no claim outstanding under any such policies and
there are no circumstances likely to give rise to a claim.
11. Litigation
11.1 Litigation
11.1.1 Except as plaintiff in the collection of debts (not
exceeding HK$35,000 in the aggregate) arising in the
ordinary course of trading, no Group Company is now engaged
in any Litigation, and no Litigation is in prospect, in
either case by or against any Group Company or any person
for whose acts or defaults any Group Company may be
vicariously liable.
11.1.2 No Group Company has, in the last five years preceding the
date of this Agreement, been involved in any Litigation with
any person who is or was a supplier or customer of
importance to it or the Business, or where such Litigation
resulted in adverse publicity or loss of goodwill.
11.1.3 There is no matter or fact in existence which might give
rise to any Litigation involving any Group Company which
might form the basis of any criminal prosecution against any
Group Company.
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11.2 Injunctions, etc
No injunction or order for specific performance has been granted
against any Group Company which has not been discharged or fully
complied with or is otherwise no longer in force.
11.3 Orders and judgments
No Group Company is subject to any order or judgment given by any
court, tribunal or governmental agency which is still in force and no
Group Company has given any undertaking to any court or tribunal or to
any third party arising out of any Litigation.
12. Licences
12.1 General
Each Group Company has all necessary licences (including statutory
licences), permits, consents and authorities (public and private) for
the proper and effective carrying on of the Business and in the manner
in which the Business is now carried on and all such licences,
permits, consents and authorities are valid and subsisting and the
Sellers know of no reason why any of them should be suspended,
cancelled or revoked whether in connection with the sale to the
Purchaser or otherwise and, so far as the Sellers are aware, there are
no factors that might in any way prejudice the continuance or renewal
of any of those licences, permits, consents or authorities and no
Group Company is restricted by contract from carrying on any activity
in any part of the world.
13. Trading
13.1 Definition
In this Agreement, "Product" means any goods (includes a product which
is comprised in another product, whether by virtue of being a
component part or raw material or otherwise) and/or services which any
Group Company has supplied or agreed to supply to any person or
intends to turn to account.
13.2 Tenders, etc
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No offer, tender or the like made outside the ordinary course of
business is outstanding which is capable of being converted into an
obligation of any Group Company by an acceptance or other act of some
other person.
13.3 Delegation of powers
There are in force no powers of attorney given by any Group Company
other than to the holder of an Encumbrance solely to facilitate its
enforcement nor any other authority (express, implied or ostensible)
given by any Group Company to any person to enter into any contract or
commitment or do anything on its behalf other than any authority of
employees to enter into routine trading contracts in the normal course
of their duties.
13.4 Consequence of acquisition of Shares by Purchaser
The acquisition of the Shares by the Purchaser or compliance with the
terms of this Agreement will not:
13.4.1 cause any Group Company to lose the benefit of any right or
privilege it presently enjoys or cause any person who
normally does business with it not to continue to do so on
the same basis as previously;
13.4.2 cause any Group Company to lose the benefit of any licence,
permit, authorisation, consent or other approval required by
law or by any governmental agency or by any other person
with a legitimate interest relating to the manufacture,
marketing or supply of any Product;
13.4.3 relieve any person of any obligation to any Group Company
(whether contractual or otherwise) or legally entitle any
person to determine any such obligation or any right or
benefit enjoyed by any Group Company or to exercise any
right whether under an agreement with or otherwise in
respect of any Group Company;
13.4.4 conflict with or result in the breach of or constitute a
default on the part of any Group Company or any Seller (i)
under any of the terms, conditions or provisions of any
agreement or instrument to which it is now a party; or any
loan to or mortgage created by it; or (ii) of its memorandum
or articles of association;
13.4.5 result in any present or future indebtedness of any Group
Company becoming due and payable or capable of being
declared due and payable prior to its stated maturity;
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13.4.6 cause any director, officer or senior employee of any Group
Company to leave employment; or
13.4.7 conflict with, violate or result in a breach of any law,
regulation, order, decree or writ applicable to any Group
Company, the Sellers or any of them, or entitle any person
to receive from any Group Company any finder's fee,
brokerage or other commission,
and will not prejudicially affect the attitude or actions of clients,
customers and suppliers with regard to any Group Company.
13.5 Product regulatory requirements
13.5.1 Each Group Company has duly obtained all necessary licences,
permits, authorisations and other approvals required by law,
by any government agency or by any other person with a
legitimate interest relating to or required for the
manufacture, marketing or supply of any Product.
13.5.2 No Group Company has manufactured, marketed or supplied any
Product which was at the material times not fully compliant
with:
(a) the requirements of all applicable Hong Kong laws
and the laws of any territory in which the
Products have been placed on the market;
(b) the terms of any applicable recognised national or
international product standards;
(c) any representation or warranty (whether express or
implied) given in respect of the Products.
13.5.3 At no time has any Group Company had knowledge of or
received any notice, claim, governmental enforcement action
or other communication from any person alleging any defect
in any Product or any contravention of any applicable law or
standard relating to the Products.
13.6 Guarantees and warranties
No Group Company has given any guarantee or warranty or made any
representation in respect of the Products, save for any warranty or
guarantee implied by law.
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13.7 Restrictions on trading
No Group Company is and has been a party to any agreement,
arrangement, understanding or practice restricting its freedom to
provide and take goods and services by such means and from and to such
persons and into or from such place as it may from time to time think
fit.
13.8 Possession of records
13.8.1 All title deeds and agreements to which any Group Company is
a party and all other documents owned by, or which ought to
be in its possession of or held unconditionally to the order
of it, are in its possession.
13.8.2 No Group Company has any of its records, systems, controls,
data or information recorded, stored, maintained, operated
or otherwise wholly or partly dependent on or held by any
means (including any electronic, mechanical or photographic
process, whether computerised or not) which (including all
means of access thereto and therefrom) are not under its
exclusive ownership and direct control.
13.9 Business names
No Group Company uses on its letterhead, books or vehicles or
otherwise carry on the Business under any name other than its
corporate name.
13.10 Unlawful acts
Neither the Group nor any officer have been prosecuted for any
criminal, illegal or unlawful act connected with any Group Company.
13.11 Sensitive payments
No officer or employee of any Group Company has made or received any
Sensitive Payment in connection with any contract or otherwise. For
the purposes of this clause the expression "Sensitive Payments"
(whether or not illegal) shall include (i) commercial bribes, bribes
or kickbacks paid to any person, firm or company including central or
local government officials or employees or (ii) amounts received with
an understanding that rebates or refunds will be made in contravention
of the laws of any jurisdiction either
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directly or through a third party or (iii) political contributions or
(iv) payments or commitments (whether made in the form of commissions,
payments or fees for goods received or otherwise) made with the
understanding or under circumstances that would indicate that all or
part of the payment is to be paid by the recipient to central or local
government officials or as a commercial bribe influence payment or
kickback.
13.12 Business
The Business is the provision of graphic communications services,
digital communications networking, offset printing, digital printing
and multi-media services in Hong Kong and Singapore.
14. Contracts
14.1 Onerous contracts
There are no long term contracts (that is, contracts not terminable by
any Group Company without penalty on six months' notice or less) or
onerous or unusual or abnormal contracts (that is, contracts for
capital commitments or contracts differing from those necessitated by
the ordinary course of business) binding upon any Group Company, nor
is any Group Company a party to any contract which contains any
onerous or other provision material for disclosure to an intending
purchaser of the Shares and no expenses or liabilities have been
incurred before the date of this Agreement by any Group Company
otherwise than for the purpose of its business.
14.2 Material contracts
All contracts to which any Group Company is a party with a value in
excess of HK$35,000 have been disclosed and no Group Company is a
party to or subject to any agreement, transaction, obligation,
commitment, understanding, arrangement or liability which:
14.2.1 is incapable of complete performance in accordance with its
terms within six months after the date on which it was
entered into or undertaken;
14.2.2 is likely to result in a loss to it on completion of
performance;
14.2.3 cannot readily be fulfilled or performed by it on time and
without undue or unusual expenditure of money and effort;
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14.2.4 involves or is likely to involve obligations, restrictions,
expenditure or receipts of an unusual, onerous or
exceptional nature and not in the ordinary course of
business;
14.2.5 requires an aggregate consideration payable by it in excess
of HK$35,000;
14.2.6 involves or is likely to involve the supply of goods by or
to any Group Company the aggregate sales value of which will
represent in excess of five per cent of its turnover for the
year ended on the Balance Sheet Date;
14.2.7 is a contract for services (other than contracts for the
supply of electricity or normal office services);
14.2.8 requires it to pay any commission, finder's fee, royalty or
the like; or
14.2.9 is in any way otherwise than in its ordinary and proper
course of the business.
14.3 Performance of contracts
14.3.1 The terms of all contracts of the Group have been complied
with by the relevant Group Company and by the other parties
to the contracts in all material respects and there are no
circumstances likely to give rise to a default by the
relevant Group Company or by the other parties under any
such contract.
14.3.2 All the contracts of the Group except those between the
relevant Group Company and its employees may be assigned by
the relevant Group Company without the consent of any other
person.
14.3.3 There are no outstanding claims, separately or in the
aggregate, of a sum in excess of HK$100,000, against any
Group Company on the part of customers or other persons in
respect of defects in quality or delays in delivery or
completion of contracts or deficiencies of design or
performance or otherwise relating to liability for goods or
services sold or supplied by any Group Company and no such
claims are threatened or anticipated and there is no matter
or fact in existence in relation to goods or services
currently sold or supplied by any Group Company which might
give rise to any such claim.
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14.3.4 No Group Company has knowledge of the invalidity of or
grounds for rescission, avoidance or repudiation of any
existing agreement to which it is a party and has received
no notice of any intention to terminate, repudiate or
disclaim any such agreement.
14.4 Agency and distribution agreements
No Group Company is a party to any subsisting agency or
distributorship agreement.
15. Employees
15.1 Particulars of employees
The particulars shown in the schedule of employees comprised in the
Disclosure Documents are true and complete and show in respect of each
director, officer and employee of each Group Company his date of
birth, the date on which he commenced continuous employment with the
relevant Group Company and all remuneration payable and other benefits
provided or which such Group Company is bound to provide (whether now
or in the future) to each such person and include full particulars of
all remuneration arrangements (particularly profit sharing, incentive
and bonus arrangements to which any Group Company is a party whether
binding or not) and each director, officer and employee of each Group
Company is listed there.
15.2 Service contracts
There is no contract of service in force between any Group Company and
any of its directors, officers or employees which is not terminable by
that Group Company without compensation (other than any compensation
payable under the Employment Ordinance) on three months' notice given
at any time or otherwise in accordance with the Employment Ordinance.
There are no consultancy or management services agreements in
existence between any Group Company and any other person, firm or
company, and there are no agreements or other arrangements (binding or
otherwise) between any Group Company or any employers' or trade
association of which any Group Company is a member and any Trade
Union. There are no outstanding pay negotiations with any employees or
Trade Unions.
15.3 Benefits
There are no amounts owing to present or former directors, officers or
employees of any Group Company other than not more than one month's
arrears of remuneration accrued or due or for reimbursement of
business
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expenses incurred within a period of three months preceding the date
of this Agreement and no moneys or benefits other than in respect of
remuneration or emoluments of employment are payable to or for the
benefit of any present or former director, officer or employee of any
Group Company, nor any dependant of any present or former director,
officer or employee of any Group Company.
15.4 Liabilities and payments
Save to the extent (if any) to which provision or allowance has been
made in the Accounts:
15.4.1 no liability has been incurred or is anticipated by any
Group Company for breach of any contract of employment or
for services or for severance payments or for redundancy
payments or protective awards or for compensation for unfair
dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee or for sex or
race discrimination or for any other liability accruing from
the termination or variation of any contract of employment
or for services;
15.4.2 no gratuitous payment has been made or promised by any Group
Company in connection with the actual or proposed
termination, suspension or variation of any contract of
employment or for services of any present or former
director, officer or any dependant of any present or former
director, officer or employee of any Group Company; and
15.4.3 no Group Company has made or agreed to make any payment to
or provided or agreed to provide any benefit for any of its
present or former director, officer or employee.
15.5 Relevant legislation
15.5.1 Each Group Company has in relation to each of its employees
(and so far as relevant to each of its former employees)
complied with:
(a) all obligations imposed on it by all relevant
statutes, regulations and codes of conduct and
practice affecting its employment of any persons
and all relevant orders and awards made thereunder
and has maintained current, adequate and suitable
records regarding the service, terms and
conditions of employment of each of its employees;
and
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(b) all collective agreements, recognition agreements
and customs and practices for the time being
affecting its employees or their conditions of
service.
15.5.2 There is no liability or claim against any Group Company
outstanding or anticipated under the Sex Discrimination
Ordinance (Cap 480 of the Laws of Hong Kong), the Disability
Discrimination Ordinance (Cap 487 of the Laws of Hong Kong)
and Family Status Discrimination Ordinance (Cap 527 of the
Laws of Hong Kong).
15.6 Termination of employment
15.6.1 No present director, officer or employee of any Group
Company has given or received notice terminating his
employment except as expressly contemplated under this
Agreement and Completion of this Agreement will not entitle
any employee to terminate his employment or trigger any
entitlement to a severance payment or liquidated damages.
15.7 Share and other schemes
No Group Company has in existence nor is it proposing to introduce,
and none of its directors, officers or employees participates in
(whether or not established by any Group Company) any employee share
trust, share incentive scheme, share option scheme or profit sharing
scheme for the benefit of all or any of its present or former
directors, officers or employees or the dependants of any of such
persons or any scheme under which any of its present or former
director, officer or employee is entitled to a commission or
remuneration of any other sort calculated by reference to the whole or
part of its turnover, profits or sales or any other person, firm or
company including any profit related pay scheme.
15.8 Disputes and claims
15.8.1 No dispute exists or can reasonably be anticipated between
any Group Company and a material number or category of its
employees or any Trade Union(s) and so far as the Sellers
are aware there are no wage or other claims outstanding
against any Group Company by any person who is now or has
been a director, officer or employee of any Group Company.
15.8.2 No Group Company has had during the last three years any
strike, work stoppages, slow-down or work-to-rule by its
employees or lock-out, nor, so far as the Sellers are aware,
is any anticipated, which
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has caused, or is likely to cause, it to be materially
incapable of carrying on its business in the normal and
ordinary course.
15.9 Agreements with Trade Unions
No Group Company is a party to any agreement or arrangement with or
commitment to any Trade Unions or staff association nor are any of its
employees members of any Trades Union or staff association.
16. Retirement Scheme
16.1 The Retirement Scheme comprises, in respect of each of the Companies
and Plainduty, a group retirement benefit trust policy named "The
Plainduty Limited Retirement Scheme" and "The Workable Company Limited
Retirement Scheme" respectively. The Trust policies are arranged with
American International Assurance Company Limited.
16.2 Other than under the Retirement Scheme, there are no pension,
provident, superannuation or retirement benefit funds, scheme or
arrangements under which any Group Company is obliged, either morally
or contractually, to provide to any of its employees or officers or
former employees or officers or any spouse or other dependant of any
of the same retirement benefits of any kind (which expression shall
include benefits payable upon retirement, leaving service, death,
disablement and any other benefits which are commonly provided for
under provident or retirement schemes).
16.3 Complete and accurate copies of the trust policies, rules and all
other documents, records and materials relating to the establishment
and operation of the Retirement Scheme have been supplied to the
Purchaser prior to the date hereof.
16.4 No power to augment benefits under the Retirement Scheme has been
exercised in relation to any employees or officers or former employees
or officers of the Companies or any spouse or other dependant of any
of the same.
16.5 Each of the Companies has been duly admitted to participate in the
Retirement Scheme and has fulfilled all its obligations thereunder
(including any obligation to pay contributions thereto) and it has
made all contributions to the Retirement Scheme which are due. There
are no contributions to the Retirement Scheme which are due from the
employees but unpaid.
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16.6 The Companies and the trustees of the Retirement Scheme have duly
complied with their respective obligations under the trust deeds and
the rules thereof and under all relevant legislation. All amounts due
to the trustees thereof or to any insurance company in connection
therewith have been paid and no recommendation contained in any
report, actuarial or otherwise, relating to the Retirement Scheme has
been received by the Company and Plainduty within the three (3) years
immediately preceding the date hereof which has not been complied with
in full and in respect of which complete and accurate copies have not
been supplied to the Purchaser.
16.7 The Retirement Scheme is duly approved under Section 87A of the Inland
Revenue Ordinance and neither the trustees thereof nor any of the
Companies has taken, or omitted to take, any action which would
prejudice the continued approval of the Commissioner for Inland
Revenue.
16.8 The Retirement Scheme is duly registered with the Registrar of
Occupational Retirement Schemes pursuant to the Occupational
Retirement Schemes Ordinance (Cap 426 of the Laws of Hong Kong) and
has been complying with all provisions and requirements of such
ordinance and the rules and regulations thereunder.
16.9 In respect of Workable Singapore:-
16.9.1 All deductions and payments required to be made by Workable
Singapore in respect of contributions (including employer's
contributions) to any relevant competent authority have been
so made.
16.9.2 Proper records have been maintained in respect of all such
deductions and payments and all regulations applicable
thereto have been complied with.
17. Intellectual Property
17.1 In this Agreement:
"Copyright" means copyright, design rights, topography rights and
database rights, whether registered or unregistered (including any
applications for registration of any such thing) and any similar or
analogous rights to any of the above, whether arising or granted under
the law of Hong Kong or of any other jurisdiction;
"Know How" means trade secrets and confidential business information,
including details of supply arrangements, customer lists and pricing
policy;
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sales targets, sales statistics, market share statistics, marketing
surveys and reports; marketing research; unpatented technical and
other information including inventions, discoveries, processes and
procedures, ideas, concepts, formulae, specifications, procedures for
experiments and tests and results of experimentation and testing;
information comprised in Software; together with all common law or
statutory rights protecting any such thing, including by any action
for breach of confidence and any similar or analogous rights to any of
the above, whether arising or granted under the law of Hong Kong or
any other jurisdiction;
"Intellectual Property" means Patent Rights, Know How, Copyright
(including rights in Software), Trade Marks and IP Materials owned,
licensed, used or exploited by any Group Company;
"Intellectual Property Agreements" means agreements or arrangements
relating to the Relevant IP;
"IP Materials" means all documents, records, tapes, discs, diskettes
and any other materials whatsoever containing Copyright works, Know
How or Software;
"Patent Rights" means patent applications or patents, author
certificates, inventor certificates, utility certificates, improvement
patents and models and certificates of addition, including any
divisions, renewals, continuations, refilings, confirmations-in-part,
substitutions, registrations, confirmations, additions, extensions or
reissues of any such thing and any similar or analogous rights to any
of the above, whether arising or granted under the law of Hong Kong or
any other jurisdiction;
"Registered Intellectual Property" means the Intellectual Property
owned, licensed, used or exploited by any Group Company;
"Relevant Action" means Registered Intellectual Property and
Unregistered Intellectual Property;
"Relevant IP" means all Registered Intellectual Property and
Unregistered Intellectual Property;
"Software" means any and all computer programs in both source and
object code form, including all modules, routines and sub-routines
such programs and all source and other preparatory materials relating
to them, including user requirements, functional specifications and
programming specifications, ideas, principles, programming languages,
algorithms, flow charts, logic, logic diagrams, orthographic
representations, file structures, coding sheets, coding
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and any manuals or other documentation relating to them and computer
generated works;
"Trade Marks" means trade or service mark applications or registered
trade or service marks, registered protected designations of origin,
registered protected geographic origins, refilings, renewals or
reissues of any of the above, unregistered trade or service marks, get
up and company names in each case with any and all associated goodwill
and all rights or forms of protection of a similar or analogous
nature, including rights which protect goodwill, whether arising or
granted under the law of Hong Kong or of any other jurisdiction;
"Unregistered Intellectual Property" means Intellectual Property
owned, licensed, used or exploited by any Group Company other than the
Registered Intellectual Property;
17.2 Ownership and rights
17.2.1 The relevant Group Company is the sole beneficial owner of
all Relevant IP.
17.2.2 No Group Company requires any further Intellectual Property
in relation to the development, manufacture, marketing or
sale of its products or services or in relation to any of
the processes employed in the Business.
17.3 Enforcement
17.3.1 The Relevant IP is valid and subsisting and none of the
Registered Intellectual Property is the subject of
outstanding or threatened disputes, claims or proceedings
for cancellation, revocation, opposition, interference,
rectification or contested ownership.
17.3.2 Where registration is available, applications for
registration of all Relevant IP are being diligently
prosecuted in all key industrial nations of the world and no
Group Company has received adverse opinion whether from any
registry concerned or its own advisers in relation to any
such application.
17.3.3 All Registered Intellectual Property has been maintained and
all renewal fees have been paid on time.
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17.3.4 All Know-How owned, used or exploited by any Group Company
has been kept secret and confidential and has not been
disclosed to third parties.
17.3.5 Nothing has been done to diminish or otherwise affect the
reputation of unregistered Trade Marks, owned, used or
otherwise exploited by any Group Company.
17.4 Intellectual Property Agreements
17.4.1 The relevant Group Company has entered into all Intellectual
Property Agreements whereby:
(a) it uses or exploits any Intellectual Property
belonging to a third party ("Licences-In");or
(b) it has authorised or otherwise permitted,
expressly or by implication, any use whatsoever of
any Intellectual Property, or granted to any third
party any right or interest in respect of any
Intellectual Property ("Licences-Out").
17.4.2 None of the Relevant IP has been charged, mortgaged,
licensed or otherwise encumbered.
17.4.3 All Intellectual Property Agreements are valid and binding
and none has been the subject of any breach or default by
any party or of any event which with notice or lapse of time
or both would constitute a default.
17.4.4 There are no disputes, claims or proceedings arising out of
or relating to the Intellectual Property Agreements.
17.4.5 All Intellectual Property Agreements have been duly recorded
or registered with the proper authorities whenever a
requirement to do so exists.
17.5 Infringement
17.5.1 No Group Company has infringed and infringes any
Intellectual Property of a third party as a result of its
use or exploitation of the Relevant IP, nor will such use or
exploitation give rise to any infringement dispute , claims
or proceedings against it.
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17.5.2 There are not and have not been any disputes, claims or
proceedings threatened or in existence in any court or
tribunal in respect of any of the Relevant IP as such or in
respect of any use or exploitation of it by any Group
Company.
17.5.3 There has been and is no current or anticipated infringement
by any third party of any Relevant IP.
18. Information technology and telecommunications
18.1 In this Agreement:
"Hardware" means any and all computer, telecommunications and network
equipment owned or used by any Group Company;
"IT Contracts" means any agreements or arrangements with third parties
relating to IT Systems or IT Services, including all hire purchase
contracts or leases of Hardware, licences of Software, and other IT
procurement;
"IT Services" means any services relating to the IT Systems or to any
other aspect of any Group Company's data processing or data transfer
requirements, including facilities management, bureau services,
hardware maintenance, software development or support, consultancy,
source code deposit, recovery and network services;
"IT Systems" means Hardware and/or Software owned or used by any Group
Company.
18.2 Identification and ownership
18.2.1 All IT Systems and data referred to in the Disclosure
Documents are owned by the Group, and are not wholly or
partly dependent on any facilities or services not under the
exclusive ownership and control of the Group.
18.2.2 All the IT Contracts are valid and binding. None of the IT
Contracts has been the subject of any breach or default, or
of any event which (with notice or lapse of time or both)
would constitute a default, or is liable to be terminated or
otherwise adversely affected by the transaction contemplated
by this Agreement.
18.2.3 Each Group Company has in its possession or in its control
the source code of all Software.
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18.3 Computer operation and maintenance
18.3.1 All IT Systems are in good working order, function in
accordance with all applicable specifications, and have been
and are being properly and regularly maintained and
replaced. No part of the IT Systems has materially failed to
function at any time during the five years prior to the date
of this Agreement.
18.3.2 All IT Services are being and have been provided in
accordance with all applicable specifications.
18.3.3 Each Group Company has full and unrestricted access to and
use of the IT Systems, and no third party agreements or
consents are required to enable it to continue such access
and use following completion of the transaction contemplated
by this Agreement.
18.3.4 So far as the Sellers are aware:
(a) it is not necessary or desirable to incur any
further expenditure on the modification,
development, expansion or (save in the normal
course of business) replacement of the IT Systems;
and
(b) the present capacity of the IT Systems is
sufficient in order to satisfy the requirements of
any Group Company with regard to data processing
and communications during the period ending three
years from the date of this Agreement.
18.3.5 No part of the IT Systems is or has been infected by any
virus or other extraneously-induced malfunction, and no
person has had unauthorised access to the IT Systems or any
data stored thereon. Each Group Company operates a
documented procedure to avoid such infections and
unauthorised access.
18.3.6 All data processed using the IT Systems and/or the IT
Services has been regularly archived in hard copy form. Such
hard copies have been properly stored and catalogued, and
are available for inspection as required by any Group
Company from time to time.
18.3.7 Each Group Company has taken all steps necessary to ensure
that its business can continue in the event of a failure of
the IT Systems (whether due to natural disaster, power
failure or otherwise).
18.4 Year 2000
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The operation of the IT Systems and the provision of the IT Services
will be unaffected by the change in year from 1999 to 2000 or by any
related change in the field configurations containing date information
within the IT Systems. In particular:
18.4.1 there will be no error, malfunction or change in the
operation, functionality or performance of the IT Systems or
the provision of the IT Services;
18.4.2 no value for current date will cause any interruption in the
operation of the IT Systems or the provision of the IT
Services;
18.4.3 all manipulations of time-related data will produce the
desired results for all valid date values within the
applicable domain;
18.4.4 date-based functionality will behave consistently for dates
prior to, during and after the year 2000;
18.4.5 date elements in interfaces and data storage will permit
specifying the century to eliminate date ambiguity without
human intervention, including leap year calculations; and
18.4.6 where any date element is represented without a century, the
correct century shall be unambiguous for all manipulations
involving the element and in all interfaces and data
storage, the century in any date shall be specified either
explicitly or by unambiguous algorithms or inferencing
rules.
19. Legislation
No Group Company is in breach of or has received notice of or is aware
of any allegation of breach of the requirements of any legislation
which is applicable to it.
20. Properties
20.1 General
20.1.1 The Properties comprise all the property owned, controlled,
used or occupied by the Group and all the estates, interests
or rights vested in any of the Group relating to any
property and land.
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20.1.2 No Group Company has liability (whether actual, contingent
or otherwise) as tenant, assignee, guarantor, covenantor or
otherwise arising from or relating to any estate, interest
or right in any land other than the Properties.
20.1.3 No Group Company has surrendered any lease or tenancy to the
landlord without first satisfying itself that the landlord
had good title to accept such surrender and without
receiving from the landlord an absolute release from all
liability arising under such lease or tenancy.
20.1.4 No structural or other defects have appeared in respect of
or affecting the buildings in which the Properties are
situated and structures on or comprising the Properties or
any part thereof and all such buildings and structures are
in good and substantial repair and condition.
20.2 HK Properties
In relation to each HK Property:
20.2.1 Collateral assurances and undertakings
No collateral assurances, undertakings, waivers, releases or
concessions have been made by any party to the relevant
lease.
20.2.2 Head lease
The relevant lease is a head lease.
20.2.3 Consents
Any consents (including, without limitation, mortgagee's
consent) required for the grant of the relevant lease or the
vesting of the relevant lease in Workable HK or for the
grant of any sub-lease or for any works carried out by or
change of use effected by the tenant have been obtained and
placed with the documents of title along with evidence of
the registration of any such grant or vesting where
requisite.
20.2.4 Restrictions on use
There are no restrictions in the relevant lease, the
relevant deed of mutual covenants, the relevant land grant
or the relevant planning or building regulations which
prevent the property from being used now in the ordinary
course of business of the Companies which prevent the
property from being used now
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in the ordinary course of business of the Companies or in
the future for the present use.
20.2.5 Adverse matters
There are no matters affecting the property (other than any
referred to in the relevant lease) which are protected by
registration against any owner in the relevant Land
Registry.
20.2.6 Loading Capacity
The weight of all plant, machinery and equipment currently
situated at the property is not in excess of the maximum
loading capacity allowed under the deed of mutual covenants
to which the property is subject.
20.3 Singapore Property
In relation to the Singapore Property:
20.3.1 Details of Leases
The details of the Singapore Lease set out in Part 2 of
Schedule 3 (Properties and Leases) are complete and accurate
in all respects.
20.3.2 Collateral assurances and undertakings
No collateral assurances, undertakings, waivers, releases or
concessions have been made by any party to the Singapore
Lease.
20.3.3 Terms
The terms of the Singapore Lease are equivalent to those
which would have been negotiated at arm's length as between
a willing landlord and a willing tenant at the time of its
grant and it contains nothing which is materially adverse to
the interests of Workable Singapore.
20.3.4 Head lease
The Singapore Lease is a head lease.
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20.3.5 Consents
Any consents (including, without limitation, mortgagee's
consent) required for the grant of the Singapore Lease or
the vesting of the Singapore Lease in Workable Singapore or
for the grant of any sub-lease or for any works carried out
by or change of use effected by the tenant have been
obtained and placed with the documents of title along with
evidence of the registration of any such grant or vesting
where requisite.
20.3.6 Payment of rent
The last instalment of rent (and service charge if any) was
paid to and was accepted by the landlord or its agents
without qualification.
20.3.7 Memoranda of rent review
Where the current annual rent is not the same as the annual
rent originally reserved by the Singapore Lease, evidence of
its agreement or determination has been placed with the
documents of title.
20.3.8 Rent review
All steps in rent reviews have been duly taken and no rent
reviews are or should be currently under negotiation or the
subject of a reference to an expert or arbitrator or the
courts.
20.3.9 Restrictions on use
There are no restrictions in the Singapore Lease, the
relevant land grant, the relevant deed of mutual covenants
or the relevant planning and building regulations which
prevent the Singapore Property from being used now in the
ordinary course of business of the Subsidiary or in the
future for the present use in the ordinary course of
business of Workable Singapore.
20.3.10 Rights of re-entry
The Singapore Lease is not expressed to be subject to a
right of re-entry on any ground except non-payment of rent
or breach of covenant by the tenant.
20.3.11 Improvements
Where the Singapore Lease provides for review of rent, any
alterations or improvements carried out by Workable
Singapore or any predecessor in title are to be disregarded
for review purposes save where any such
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alterations or improvements were carried out pursuant to an
obligation to the landlord.
20.3.12 Adverse matters
There are no matters affecting the Singapore Property (other
than any referred to in the Singapore Lease) which are
protected by registration against any owner in the relevant
land registry in Singapore.
20.3.13 Loading Capacity
The weight of all plant, machinery and equipment currently
situated at the Singapore Property is not in excess of the
maximum loading capacity allowed under the deed of mutual
covenants to which the Singapore Property is subject.
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Part 2
Taxation Warranties
21. Taxation
21.1 General
21.1.1 Notices and returns
All notices, returns, computations and registrations of the
relevant Group Company for the purposes of Taxation have
been made punctually on a proper basis and are correct and
none of them is, or is likely to be, the subject of any
dispute with any Taxation Authority.
21.1.2 Information
All information supplied by the relevant Group Company for
the purposes of Taxation was when supplied and remains
complete and accurate in all material respects.
21.1.3 Payment of Tax due
All Taxation which the relevant Group Company is liable to
pay prior to Completion has been or will be so paid prior to
Completion.
21.1.4 Penalties or interest on Tax
No Group Company has within the period of six years ending
on the date of this Agreement paid or become liable to pay
any penalty, fine, surcharge or interest charged by virtue
of the provisions of any Taxation Statute.
21.1.5 Investigations
No Group Company has been subject to any visit, audit,
investigation, discovery or access order by any Taxation
Authority and there are no circumstances existing which make
it likely that a visit, audit, investigation, discovery or
access order will be made.
21.1.6 Residence
Each Group Company is and always has been resident for
Taxation purposes only in the jurisdiction in which it is
incorporated.
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21.1.7 Tax provision
Full provision or reserve has been made in the Accounts for
all Taxation assessed or liable to be assessed on the
relevant Group Company or for which it is accountable in
respect of income, profits or gains earned, accrued or
received or deemed to be earned, accrued or received on or
before the Balance Sheet Date, including distributions made
down to such date or provided for in the Accounts and proper
provision has been made in the Accounts for deferred
Taxation in accordance with generally accepted accounting
principles.
21.1.8 Concessions and arrangements
The amount of Taxation chargeable on the relevant Group
Company during any accounting period ending on or within the
six years before the Balance Sheet Date has not depended on
any concessions, agreements or other formal or informal
arrangements with any Taxation Authority.
21.1.9 Anti-avoidance provisions
No Group Company is a party to any scheme or arrangement of
which the main purpose, or one of the main purposes, was the
avoidance of or the reduction in or the deferral of a
liability to Taxation.
21.1.10 Transactions requiring clearance or consent
All particulars furnished to any Taxation Authority in
connection with an application for clearance or consent by
the relevant Group Company or on its behalf or affecting the
relevant Group Company has been made and obtained on the
basis of full and accurate disclosure to the relevant
Taxation Authority of all relevant material facts and
considerations; and any transaction for which clearance or
consent was obtained has been carried into effect only in
accordance with the terms of the relevant clearance or
consent.
21.1.11 Calculation of Taxation liability
Each Group Company has sufficient records relating to the
past seven years to permit accurate calculation of the
Taxation liability or relief which would arise upon a
disposal or realisation on completion of each asset owned by
the relevant Group Company at the Balance Sheet Date or
acquired by the relevant Group Company since that date but
before Completion.
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21.1.12 Claims and disclaimers
Each Group Company has duly submitted all claims and
disclaimers the making of which has been assumed for the
purposes of the Accounts.
21.1.13 Outstanding claims, elections and appeals
No Group Company is entitled:
(a) to make any claim (including a supplementary
claim), disclaimer or election for relief under
any Taxation Statute;
(b) to appeal against any assessment or determination
relating to Taxation; or
(c) to apply for a postponement of Taxation.
21.2 Estate Duty
There has been no transfer of any property to any Group Company which
has given or may give rise to any claim, assessment or demand in
relation to estate duty under Section 35 of the Estate Duty Ordinance
(Cap 111 of the Laws of Hong Kong) and there is no charge or potential
charge on any property or assets of any Group Company under Section 18
or Section 43(6) of the Estate Duty Ordinance.
21.3 Profits Tax
All remuneration, compensation payments, payments on retirement or
removal from an office or employment and other sums paid or payable to
employees or officers or former employees or officers of each Group
Company and all interest, annuities, royalties, rent and other annual
payments paid or payable by that Group Company (whether before or
after the date hereof) pursuant to any obligation in existence at the
date hereof are and will (on the basis of the Taxation Statute in
force at the date hereof) be deductible for profits tax purposes
either in computing the profits of that Company or as a charge on its
income.
21.4 Stamp duty
Save for the documents signed on Completion, all stampable documents
wheresoever executed (other than those which have ceased to have any
legal effect) to which any Group Company is a party have been
adequately, duly and fully stamped or stamped with a particular stamp
denoting that no stamp duty is chargeable. Since the Balance Sheet
Date there have been and are no
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circumstances or transactions to which any Group Company is or has
been a party such that a liability to stamp duty or any penalty in
respect of such duty will arise on any Group Company. All documents
signed on Completion will be fully and duly stamped as soon as
practicable after Completion and in any event within statutory time
limits so that no penalty shall be payable for late stamping.
21.5 Tax registration of Workable Singapore
In relation to goods and services tax and/or value-added or other
similar tax, Workable Singapore:
21.5.1 has been duly registered and is a taxable person;
21.5.2 has complied with all statutory requirements, orders,
provisions, directions, or conditions;
21.5.3 maintains complete, correct and up to date records as is
required by the applicant legislation; and
21.5.4 has not been required by the relevant authorities of customs
and excise to give security.
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<PAGE>
Schedule 8
List of documents in the agreed form
1. Tax Deed (Schedule 5 paragraphs 1(f) and 2(d) (Completion
Obligations))
2. Escrow Agreement (Schedule 5 paragraphs 1(n) and 2(f) (Completion
Obligations))
3. Powers of attorney (Schedule 5 paragraph 1(m) (Completion
Obligations))
4. Service Agreements (Schedule 5 paragraph 1(p) (Completion Obligations)
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Schedule 9
Retirement Scheme
1. Notwithstanding Clause 13, there is no requirement in connection with
the transaction contemplated by this Agreement to set out provisions
in this Agreement in connection with any applicable Retirement Scheme.
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<PAGE>
Schedule 10
Certificates
Part 1
Sellers' Certificate
Each of the Sellers shall deliver a certificate dated the Completion Date
containing the following representations and warranties, namely that:
1. He understands that the Purchaser and CGII are relying upon the
following statements in determining whether CGII may issue the Fixed
Consideration Shares to Hacienda Resources Limited the ("Allottee")
under applicable securities laws of the United States.
2. He understands that the Fixed Consideration Shares are not being
registered under the Securities Act, and that such shares are being
issued to the Allottee in reliance on an exemption from the
registration requirements under the Securities Act for a transaction
not involving any public offering.
3. He understands that the Fixed Consideration Shares cannot be resold by
the Allottee unless they are registered under the Securities Act or
unless an exemption from registration is available, and that an
appropriate legend to the foregoing effect will be placed on the
certificates representing the Fixed Consideration Shares and "stop
transfer" instructions will be given to CGII's transfer agent.
4. He has been afforded the opportunity to ask questions of and receive
answers from, directors and executive officers of CGII concerning CGII
and the terms and conditions of the Fixed Consideration Shares.
5. He has been afforded the opportunity to consult with United States
securities counsel regarding the restricted nature of the Fixed
Consideration Shares.
6. The Fixed Consideration Shares are being acquired by him through
allotment thereof to the Allottee for his own account for investment
and not for distribution or resale, directly or indirectly, within the
meaning of the Securities Act other than pursuant to registration
thereunder or in accordance with an exemption therefrom, such
exemption (if other than Rule 144, Rule 144A or Regulation S) to be
evidenced by an opinion of counsel to Allottee, acceptable to CGII.
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<PAGE>
7. He has been provided with copies of the following documents (the "SEC
Documents") filed by CGII with the United States Securities and
Exchange Commission:
(a) the final prospectus forming part of CGII's Registration
Statement on Form S-1, as amended (File No.333-46541); and
(b) CGII's report on Form 10-Q for each of the fiscal quarters
ended 31 March 1998, 30 June 1998 and 30 September 1998.
8. He acknowledges that neither the Purchaser nor CGII nor their
respective officers and agents have made any representations or
warranties, whether orally or in writing, or express or implied, as to
the financial condition, assets, operations, business, prospects or
condition of CGII and the CGII Stock, and that he has relied solely on
the information contained in the SEC Documents in making the decision
to acquire the Fixed Consideration Shares.
9. He, together with , are the sole owners of the issued and outstanding
capital stock of Hacienda Resources Limited ("Allottee"). There are no
outstanding options, contracts, calls, commitments or agreements of
any character relating to the capital stock of Allottee generally, and
there are no outstanding securities or other instruments convertible
into or exchangeable for shares of capital stock of Allottee, and
there are no commitments to issue any such securities or instruments.
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Schedule 10
Part 2
Allottee's Certificate
The Allottee shall deliver a certificate dated the Completion Date containing
the following representations and warranties, namely that:
1. It understands that the Purchaser and CGII are relying upon the
following statements in determining whether CGII may issue the Fixed
Consideration Shares to it under applicable securities laws of the
United States.
2. It understands that the Fixed Consideration Shares are not being
registered under the Securities Act, and that such shares are being
issued to it in reliance on an exemption from the registration
requirements under the Securities Act for a transaction not involving
any public offering.
3. It understands that the Fixed Consideration Shares cannot be resold by
it unless they are registered under the Securities Act or unless an
exemption from registration is available, and that an appropriate
legend to the foregoing effect will be placed on the certificates
representing the Fixed Consideration Shares and "stop transfer"
instructions will be given to CGII's transfer agent.
4. It has been afforded the opportunity to ask questions of and receive
answers from, directors and executive officers of CGII concerning CGII
and the terms and conditions of the Fixed Consideration Shares.
5. It has been afforded the opportunity to consult with United States
securities counsel regarding the restricted nature of the Fixed
Consideration Shares.
6. The Fixed Consideration Shares are being acquired by it for its own
account for investment and not for distribution or resale directly or
indirectly within the meaning of the Securities Act other than
pursuant to registration thereunder or in accordance with an exemption
therefrom, such exemption (if other than Rule 144, Rule 144A or
Regulation S) to be evidenced by an opinion of counsel to Allottee
acceptable to CGII.
7. It has been provided with copies of the following documents (the "SEC
Documents") filed by CGII with the United States Securities and
Exchange Commission:
(a) the final prospectus forming part of CGII's Registration
Statement on Form S-1, as amended (File No.333-46541); and
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<PAGE>
(b) CGII's report on Form 10-Q for each of the fiscal quarters
ended 31 March 1998, 30 June 1998 and 30 September 1998.
8. It acknowledges that neither the Purchaser nor CGII nor their
respective officers and agents have made any representations or
warranties, whether orally or in writing, or express or implied, as to
the financial condition, assets, operations, business, prospects or
condition of CGII and the CGII Stock, and that it has relied solely on
the information contained in the SEC Documents in making the decision
to acquire the Fixed Consideration Shares.
9. Lam Hok Ling and Tung Hok Ki are the sole owners of its issued and
outstanding capital stock. There are no outstanding options,
contracts, calls, commitments or agreements of any character relating
to its capital stock generally, and there are no outstanding
securities or other instruments convertible into or exchangeable for
shares of its capital stock, and there are no commitments to issue any
such securities or instruments.
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THIS PAGE IS DELIBERATELY BLANK
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<PAGE>
SIGNED SEALED and DELIVERED )
by LAM HOK LING in the presence of:- )
SIGNED SEALED and DELIVERED )
by TUNG HOK KI in the presence of:- )
SEALED with the Common Seal of and )
SIGNED by )
for and on behalf of )
HACIENDA RESOURCES LIMITED )
in the presence of:- )
SIGNED SEALED and DELIVERED )
by )
duly appointed attorney of )
CUNNINGHAM GRAPHICS )
INTERNATIONAL, S.A. )
in the presence of:- )
SIGNED SEALED and DELIVERED )
by )
duly appointed attorney of )
CUNNINGHAM GRAPHICS )
INTERNATIONAL, INC. )
in the presence of:- )
-108-
Dated ___________________ 1999
WORKABLE COMPANY LIMITED
and
LAM HOK LING
---------------------------------------------------
SERVICE AGREEMENT
---------------------------------------------------
Cameron McKenna
5th Floor
Tower One Lippo Centre
89 Queensway
Hong Kong
T +852 2846 9100
F +852 2845 3575
Ref: JAO/GMC/NKT/02485.0001
<PAGE>
THIS AGREEMENT is made the day of 1999
BETWEEN:-
(1) The Company: WORKABLE COMPANY LIMITED, a company incorporated in Hong
Kong whose registered office is at Unit 1, 1st Floor, Tak King Industrial
Building, 27 Lee Chung Street, Chai Wan, Hong Kong; and
(2) You: LAM HOK LING of Flat A, 20th Floor, Block 2, Eden Garden, 9-11 Lok
Tung Path, Shatin New Territories, Hong Kong.
1. Employment
1.1 Your employment under this Agreement will commence on the date of this
Agreement (the "Commencement Date") and will continue until terminated by
either party giving to the other not less than six months' prior notice
to expire on or at any time after the date which is 36 months after the
Commencement Date.
1.2 Your period of continuous employment with the Group commenced on 1 April
1988.
1.3 You are employed as a senior executive of the Company and will perform
such duties as may be reasonably assigned to you from time to time by or
with the authority of the Board. At the Commencement Date, your job title
is Joint Managing Director.
1.4 You will (without further remuneration), if and for as long as the
Company requires, during this Agreement:
1.4.1 carry out duties for the benefit of or on behalf of any Group
Company; and/or
1.4.2 hold any office and/or other appointment in or on behalf of the
Group;
1.5 You will, at all times during the period of this Agreement:
1.5.1 devote the whole of your time, attention and ability during your
hours of work (as set out in Clause 1.6) to the duties of your
employment;
1.5.2 faithfully and diligently perform your duties and exercise only
such powers as are consistent with them;
1.5.3 obey all and any lawful and reasonable directions of the Board;
1.5.4 act only in accordance with the Memorandum and Articles of
Association of the Company or, where acting pursuant to Clause
1.4, of the relevant Group Company;
1.5.5 use your best endeavours to promote the interests of the Group;
and
1.5.6 keep the Board promptly and fully informed (in writing if so
requested) of your conduct of the business or affairs of the Group
and provide such explanations as they may require.
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1.6 Your hours of work are the normal hours of business of the Company
together with such additional hours as may be necessary for you to
perform your duties properly.
1.7 Your normal place of work is the Company's office at Tak King Industrial
Building, 27 Lee Chung Street, Chai Wan, Hong Kong and/or such other
place of business of the Group as the Board may reasonably require from
time to time. You will, if and for as long as required by the Company,
make visits in the ordinary course of your duties to such places anywhere
in the world as it may specify.
2. Pay
2.1 During your employment, the Company will reimburse you at the rate of
HK$1,300,000 each year (or such higher rate as may be awarded to you
pursuant to Clause 2.3) which will accrue from day to day and be payable
in equal monthly instalments in arrears on or about the last working day
of each month (the "Remuneration"). The Remuneration is inclusive of all
and any fees receivable by you as the holder of offices or appointments
within the Group or on behalf of the Company or any Group Company and is
to be apportioned by you between salary (the "Salary") and housing
allowance (the "Housing Allowance") in accordance with relevant
provisions of Hong Kong law in proportions to be agreed by the Board.
2.2 The Housing Allowance must be supported by receipts or other
documentation evidencing the expenditure in accordance with procedures
which will be advised to you by the Board.
2.3 On or about 31 December in each year (starting on 31 December 1999), your
Remuneration will be reviewed by the Board and the Board may in its sole
discretion decide to increase the rate of the Remuneration.
2.4 Subject to and in accordance with rules of the bonus or incentive
compensation plan of the Company or Cunningham Graphics International,
Inc. ("CGI") for the time being in force, you will be eligible to receive
a bonus each year, payable within 90 days after the end of the relevant
fiscal year of the Company, of such amount, if any, as the Compensation
Committee of CGI determines in its absolute discretion to be an
appropriate bonus for the Managing Director of the Company, having regard
to your and the Company's achievement of performance goals set annually
in advance by the Compensation Committee in consultation with you.
3. Fringe Benefits
3.1 You are entitled to be and remain a member of the Company's pension
scheme (the "Scheme") subject to the terms of the deed and rules
governing its operation from time to time. The Company is entitled at any
time to terminate the Scheme or your membership of it subject to
procuring membership for you of another pension scheme (the "New Scheme")
providing you with benefits which are not, in aggregate, less favourable
than the benefits provided to you under the Scheme and subject to
procuring that you are fully credited in the New Scheme for your past
pensionable service under the Scheme.
3.2 The Company will, subject to Inland Revenue limits for the time being,
contribute (in monthly instalments in arrears) to the Scheme for each
year of your employment an amount equal to 10% of your Remuneration at
the rate then payable.
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<PAGE>
3.3 The Company will provide you with life assurance cover of four times your
Remuneration payable in the event of your death in service.
3.4 You, your spouse and your children (if any) who are less than 18 years
old are entitled to participate in any permanent health and medical
expenses insurance schemes maintained by the Company from time to time
for the benefit of its senior executives, subject always to the rules of
such schemes, including without limitation, each of you, your spouse and
children undertaking a medical for the purposes of such insurance
schemes.
3.5 The Company will reimburse you for reasonable Automobile Expenses in
connection with the car currently used by you. Subject to the aforesaid,
the Company will provide a suitable (having regard to the image of the
Company and to your status within the Company) car for use on Company
business and you agree to ensure that it is appropriately maintained,
repaired, cleaned, taxed and insured for such use. For the purposes of
this clause, Automobile Expenses shall mean:-
3.5.1 petrol expenses; and
3.5.2 tunnel charges; and
3.5.3 the cost of comprehensive motor vehicle insurance; and
3.5.4 the cost of road tax and the licence fee applicable in Hong Kong;
and
3.5.5 the costs of maintaining the car in proper working order including
the cost of workshop repairs.
3.6 You must comply with all Group regulations relating to Company cars,
notify the Company immediately of any accident involving your car while
being used on Company business and of any charge brought against you for
a traffic offence.
4. Expenses
4.1 The Company will reimburse you with your reasonable travelling,
telephone, hotel, entertainment and other business expenses incurred in
the course of your duties provided that you comply with Group regulations
from time to time in this respect and provide the Company with receipts
or other proof of payment as the Company may require.
4.2 You must make available for business use your home telephone. The Company
will reimburse you with the cost of bills for your home telephone
provided you use any supplier or system designated by the Company and
provided you disclose to the Company any overseas telephone calls not for
the purposes of the business, in respect of which the Company reserves
the right not to reimburse you.
5. Holiday
5.1 In addition to public holidays, you are entitled to 21 working days'
holiday without loss of pay in each holiday year (which runs from January
to December) to be taken at such time or times as may be authorised in
advance by the Board. In any holiday year you may carry forward to the
next subsequent holiday year upto a maximum of 6 untaken working days'
holiday so that, for the avoidance of doubt, the maximum number of
working days' holiday which you may take in any holiday year shall not
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<PAGE>
exceed 27 working days. You may not, except as provided in this clause,
carry forward any unused part of your holiday entitlement to a subsequent
holiday year and no payment in lieu will be paid therefor.
5.2 In the first holiday year and in the holiday year in which you leave,
your entitlement to holiday will be calculated at the rate of 1.25
working days' holiday for each complete calendar month of your employment
by the Company during that holiday year. Unless you are dismissed
pursuant to Clause 8.2, you will be entitled on termination to pay in
lieu of any unused holiday entitlement. If you have taken holiday in
excess of your accrued entitlement, you will be required to repay any
excess Remuneration you have received for such holiday. The basis for
payment and repayment is 1/360th of your Remuneration for each day.
6. Incapacity
6.1 If you are absent from work because of illness, mental disorder or injury
("Incapacity"), you must report that fact immediately to the Company
Secretary and, after seven continuous days' absence, provide medical
practitioners' certificate(s) of your Incapacity and its cause for
sickness allowance purposes covering the whole period of your absence.
For sickness allowance purposes, your qualifying days are your normal
working days.
6.2 If you are absent from work due to Incapacity and have complied with the
provisions of Clause 6.1, you will continue to be paid sickness allowance
in accordance with the Ordinance. If your absence exceeds 30 consecutive
days, the Company will be entitled to appoint a temporary replacement to
cover your absence.
6.3 You will, whenever requested by the Board (in circumstances where the
Board has reasonable grounds to believe that you may be suffering from
any Incapacity or that you may not be fit to carry out your duties),
submit to examination by a medical practitioner selected and paid for by
the Company. You hereby authorise such medical practitioner to disclose
to and discuss with the Board any matters which, in his opinion, might
hinder or prevent you (if during a period of Incapacity) from returning
to work for any period or (in other circumstances) from properly
performing your duties at any time.
7. Confidentiality and Integrity
7.1 During your employment under this Agreement, you will not:-
7.1.1 directly or indirectly receive or obtain any discount, rebate,
commission or other inducement (whether in cash or in kind) which
is not authorised by regulations or guidelines from time to time
governing dealings by executives on behalf of the Company, or, if
you do, you will account immediately to the Company for the amount
so received;
7.1.2 directly or indirectly disclose or make use of any Confidential
Information for any purpose other than a legitimate purpose of the
Company;
7.1.3 (except in the proper course of your duties under this Agreement)
remove from Company premises or copy or allow others to copy the
contents of any
4
<PAGE>
document, computer disk, tape or other tangible item which
contains any Confidential Information or which belongs to the
Company; or
7.1.4 at any time make any untrue or misleading statement relating to
the Group.
8. Termination of agreement
8.1 This Agreement will automatically terminate:
8.1.1 when you reach your 65th birthday; or
8.1.2 if you are prohibited by law from being a director;
8.2 The Company will be entitled, by giving notice, to terminate this
Agreement with immediate effect if you:
8.2.1 commit any act of gross misconduct or repeat or continue any other
breach of your obligations under this Agreement; or
8.2.2 engage in any conduct which, in the reasonable opinion of the
Board, is likely to cause your continued employment to be
detrimental to the interests of the Group and fail, within 60 days
of receiving written notice from the Company, to cure the matter;
or
8.2.3 are convicted of any criminal offence; or
8.2.4 commit any act of dishonesty, whether or not relating to your
employment; or
8.2.5 become bankrupt or make any arrangement or composition with your
creditors generally; or
8.2.6 resign or vacate your office as a director of the Company or any
Group Company; or
8.2.7 are, in the reasonable opinion of the Board, incompetent in the
performance of your duties having failed within 60 days of written
notice from the Company, to remedy the position.
8.3 The Company will be entitled to terminate this Agreement notwithstanding
Clause 6.2 or your entitlement at that time to sick pay or benefits under
the Company's permanent health insurance scheme, by notice which is not
less than your then entitlement to statutory minimum notice plus a week
given at any time when you have been absent from work due to Incapacity
for a period or periods aggregating 120 days in the preceding 12 months
provided that the Company will withdraw any such notice if, before it
expires, you resume your duties full time and provide medical evidence
satisfactory to the Board that you are fully recovered and that no
recurrence of your Incapacity can reasonably be anticipated.
8.4 On serving or receiving notice to terminate this Agreement or at any time
thereafter during the currency of such notice the Company is, at its
discretion, entitled to pay you your Remuneration (at the rate then
payable under Clause 2.1 hereof) together
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<PAGE>
with monetary compensation for loss of all fringe benefits and
reimbursement of expenses in lieu of notice.
8.5 At any time after notice (including summary notice) to terminate this
Agreement has been served or received by the Company, the Company may:-
8.5.1 require you to resign (without any claim for compensation) from
any offices and/or appointments which you hold as a director,
nominee or representative of the Company or any Group Company;
and/or
8.5.2 require you to transfer, without payment, to the Company (or as
the Company may direct) any qualifying shares or nominee
shareholdings provided to you by or held by you in or on behalf of
any Group Company; and/or
8.5.3 require you to return to the Company on request any documents,
computer disks and tapes and other tangible items in your
possession or under your control which belong to the Company or
which contain or refer to any Confidential Information; and/or
8.5.4 require you to delete all Confidential Information from any
computer disks, tapes or other re-usable material in your
possession or under your control and destroy all other documents
and tangible items in your possession or under your control which
contain or refer to any Confidential Information; and/or
8.5.5 suspend you from the performance of all or any of your duties
under this Agreement provided that the period of any such
suspension may not exceed 6 months and provided further that where
such action is taken following notice being provided to the
Company by you in circumstances where you are in full compliance
with your obligations under this Agreement, such suspension shall
be without prejudice to the benefits accruing to you under this
Agreement; and/or
8.5.6 appoint a replacement to hold the same or similar job title as you
and/or to carry out all or any of your duties instead of you;
and/or
8.5.7 exclude you from all or any premises of the Group; and/or
8.5.8 require you not, without the prior consent of the Board, to engage
in any contact (whether or not at your own instance) with any
customer, supplier, employee, director, officer or agent of any
company in the Group which touches and concerns any of the
business affairs of the Group.
8.6 If you fail to comply with Clauses 8.5.1 and/or 8.5.2 within seven days
of being so required, the Company is hereby irrevocably authorised to
appoint some person in your name and on your behalf to sign any document
or do any thing necessary or requisite to effect such resignation(s)
and/or transfer(s) (without prejudice to any claims which you may have
against the Company arising out of this Agreement or its termination).
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9. Intellectual Property
9.1 In relation to each and every improvement, invention or discovery which
relates either directly or indirectly to the business of the Company
which you (jointly or alone) make at any time during your employment, you
will:-
9.1.1 promptly disclose full details, including any drawings and models,
of it to enable the Company to determine whether or not, applying
the provisions of section 57 of the Patents Ordinance (Cap 514 of
the Laws of Hong Kong), it is the property of the Company (a
"Company Invention");
9.1.2 hold any Company Invention in trust for the Company and, at its
request and expense, do all things necessary or desirable to
enable the Company or its nominee to exploit the Company Invention
for commercial purposes and to secure patent or other appropriate
forms of protection for it anywhere in the world. Decisions as to
the patenting and exploitation of any Company Invention are at the
sole discretion of the Company;
9.2 In relation to each and every copyright work or design which relates
either directly or indirectly to the business of the Company (a "Company
Work") which you (jointly or alone) originate, conceive, write or make at
any time during the period your employment:-
9.2.1 you will promptly disclose such Company Work to the Company.
Company Works made wholly outside your normal working hours which
are wholly unconnected with your employment are excluded from the
ambit of Clause 9.2;
9.2.2 you hereby assign to the Company by way of future assignment all
copyright, design right and other proprietary rights (if any)
throughout the world in such Company Work;
9.2.3 you hereby irrevocably and unconditionally waive in favour of the
Company any and all moral rights conferred on you by Division IV
of Part II of the Copyright Ordinance (Cap 528 of the Laws of Hong
Kong) in relation to any such Company Works;
9.2.4 you acknowledge that, for the purposes of section 3(3) of the
Registered Designs Ordinance (Cap 522 of the Laws of Hong Kong),
such Company Works is created in the course of your employment;
9.3 You agree that (at the request and expense of the Company) you will do
all things necessary or desirable to substantiate the rights of the
Company to each and every Company Invention or Company Work and that you
will permit the Company (whom you hereby irrevocably appoint as your
attorney for this purpose) to execute documents, to use your name and to
do all things which may be necessary or desirable for the Company to
obtain for itself or its nominee the full benefit of each and every
Company Invention or Company Work. A certificate in writing signed by any
Director or the Secretary of the Company that any instrument or act falls
within the authority hereby conferred will be conclusive evidence to that
effect so far as any third party is concerned.
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10. Restrictive Covenants
10.1 For the period of 12 months after the termination of your employment
under this Agreement, you will not directly or indirectly:-
10.1.1 be engaged or concerned or interested in any business carried on
within the Restricted Area wholly or partly in competition with
any Restricted Business (save for the holding as a passive
investor only of not more than 3% of the issued ordinary shares of
any company of a class which are listed or traded on the Hong Kong
Stock Exchange, any other recognised stock exchange or NASDAQ).
10.1.2 seek or accept, in any capacity whatsoever, any business, orders
or custom which is wholly or partly in competition with any
Restricted Business from any Customer.
10.1.3 induce or attempt to persuade any Employee to leave employment or
engagement by the Company or any Group Company or offer employment
or engagement to any Employee.
10.2 You will not at any time after the termination of your employment under
this Agreement, directly or indirectly:-
10.2.1 induce or seek to induce, by any means involving the disclosure or
use of Confidential Information, any Customer to cease dealing
with the Company or any Group Company or to restrict or vary the
terms upon which it deals with the Company or any Group Company;
10.2.2 disclose or make use of any Confidential Information; or
10.2.3 represent yourself or permit yourself to be held out as having any
connection with or interest in the Company or any Group Company.
10.3 Each restriction in Clause 10 (whether drafted separately or together
with another) is independent and severable from the other restrictions
and enforceable accordingly. If any restriction is unenforceable for any
reason but would be enforceable if part of the wording were deleted, it
will apply with such deletions as may be necessary to make it
enforceable.
10.4 The Company may transfer or assign its rights under this Clause 10 to its
successors in title. You may not transfer or assign any rights or
obligations under this Clause 10.
11. Interpretation
11.1 The headings to the clauses are for convenience only and shall not affect
the construction or interpretation of this Agreement.
11.2 Any reference in this Agreement to any ordinance or delegated legislation
shall include any statutory modification or re-enactment of it or of the
provision referred to.
11.3 In this Agreement:
8
<PAGE>
"Board" means the board of directors of the Company and includes any
committee of such board duly authorised to act on its behalf.
"Confidential Information" means all and any information (whether or not
recorded in documentary form or on computer disk or tape) of the Company,
any Group Company or any of its or their customers, suppliers or agents
which the Company or the relevant Group Company regards as confidential
or in respect of which it owes an obligation of confidentiality to a
third party which is not part of your own stock in trade and which is not
readily ascertainable to persons not connected with the Company either at
all or without a significant expenditure of labour, skill or money.
"Customer" means any person with whom you or anyone working under your
supervision or control deals personally who, at the termination of your
employment, is negotiating with the Company or any Group Company for
Restricted Business or with whom the Company or any Group Company has
conducted any Restricted Business at any time during the final two years
of your employment with the Group.
"Employee" means any person who is and was, at any time during the period
of two years prior to the termination of your employment, employed or
engaged by the Company or any Group Company in a senior management,
senior technical or senior sales position and who, by reason of such
position, possesses any Confidential Information or is likely to be able
to solicit the custom of any Customer or to induce any Customer to cease
dealing with the Company or any Group Company, were he to accept
employment or engagement in a business which is similar to or in
competition with any Restricted Business.
"Group Company" means a member of a group of companies as defined in
Section 2 of the Companies Ordinance (Cap 32 of the Laws of Hong Kong).
"Group" means the Company and each Group Company.
"NASDAQ" means the National Association of Securities Dealers Automatic
Quotation.
"Ordinance" means the Employment Ordinance (Cap 57 of the Laws of Hong
Kong).
"Restricted Area" means each of Hong Kong , China, Taiwan, Singapore and
any other country in which the Company or any Group Company carries on or
intends to carry on any Restricted Business as at the termination of your
employment.
"Restricted Business" means time-sensitive financial printing and all or
any other commercial activities carried on or to be carried on by the
Company or any Group Company in which you worked or about which you knew
Confidential Information to a material extent at any time during the
final two years of your employment with the Group.
12. General
12.1 You are not subject to any particular disciplinary rules or procedures
but should conduct yourself in a thoroughly professional manner at all
times. In order to investigate a complaint of breach of contract or
misconduct against you, the Company
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<PAGE>
is entitled to suspend you on full pay for so long as the Board considers
appropriate in all the circumstances to carry out a disciplinary
investigation and/or hearing.
12.2 If you have a grievance relating to your employment (other than one
relating to a disciplinary decision), you should refer that grievance to
the Board whose decision will be final and binding on you.
12.3 This Agreement is in substitution for any representations and warranties
made by or on behalf of the Company and any previous contracts of
employment or for services between you and the Company or any Group
Company (which are deemed to have been terminated by mutual consent).
12.4 The termination of this Agreement will not affect such of the provisions
of this Agreement as are expressed to operate or to have effect after
termination and will be without prejudice to any accrued rights or
remedies of the parties.
12.5 The validity, construction and performance of this Agreement is governed
by the law of Hong Kong.
12.6 All disputes, claims or proceedings between the parties relating to the
validity, construction or performance of this Agreement are subject to
the exclusive jurisdiction of the High Court of the Hong Kong Special
Administrative Region (the "High Court") to which the parties irrevocably
submit. Each party irrevocably consents to the award or grant of any
relief in any such proceedings before the High Court and either party is
entitled to take proceedings in any other jurisdiction to enforce a
judgment or order of the High Court.
12.7 Any notice to be given by a party under this Agreement must be in writing
in the English language and must be delivered by hand or sent by first
class post or equivalent postal service, telex, facsimile transmission or
other means of telecommunication in permanent written form (provided that
the addressee has his or its own facilities for receiving such
transmissions) to the last known postal address or appropriate
telecommunication number of the other party. Where notice is given by any
of the prescribed means, it is deemed to be received when, in the
ordinary court of that means of transmission, it would be received by the
addressee. To prove the giving of a notice, it is sufficient to show that
it has been despatched. A notice has effect from the sooner of its actual
or deemed receipt by the addressee.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written:-
SIGNED by )
for and on behalf of )
WORKABLE COMPANY LIMITED )
In the presence of : )
10
<PAGE>
SIGNED by LAM HOK LING )
In the presence of: )
11
Dated __________ 1999
WORKABLE COMPANY LIMITED
and
TUNG HOK KI
---------------------------------------------------
SERVICE AGREEMENT
---------------------------------------------------
Cameron McKenna
5th Floor
Tower One Lippo Centre
89 Queensway
Hong Kong
T +852 2846 9100
F +852 2845 3575
Ref: JAO/GMC/NKT/02485.0001
<PAGE>
THIS AGREEMENT is made the day of 1999
BETWEEN:-
(1) The Company: WORKABLE COMPANY LIMITED, a company incorporated in Hong
Kong whose registered office is at Unit 1, 1st Floor, Tak King Industrial
Building, 27 Lee Chung Street, Chai Wan, Hong Kong; and
(2) You: TUNG HOK KI of 24H, Han Kung Mansion, Taikoo Shing, Hong Kong.
1. Employment
1.1 Your employment under this Agreement will commence on the date of this
Agreement (the "Commencement Date") and will continue until terminated by
either party giving to the other not less than six months' prior notice
to expire on or at any time after the date which is 36 months after the
Commencement Date.
1.2 Your period of continuous employment with the Group commenced on 1 April
1988.
1.3 You are employed as a senior executive of the Company and will perform
such duties as may be reasonably assigned to you from time to time by or
with the authority of the Board. At the Commencement Date, your job title
is Joint Managing Director.
1.4 You will (without further remuneration), if and for as long as the
Company requires, during this Agreement:
1.4.1 carry out duties for the benefit of or on behalf of any Group
Company; and/or
1.4.2 hold any office and/or other appointment in or on behalf of the
Group;
1.5 You will, at all times during the period of this Agreement:
1.5.1 devote the whole of your time, attention and ability during your
hours of work (as set out in Clause 1.6) to the duties of your
employment;
1.5.2 faithfully and diligently perform your duties and exercise only
such powers as are consistent with them;
1.5.3 obey all and any lawful and reasonable directions of the Board;
1.5.4 act only in accordance with the Memorandum and Articles of
Association of the Company or, where acting pursuant to Clause
1.4, of the relevant Group Company;
1.5.5 use your best endeavours to promote the interests of the Group;
and
1.5.6 keep the Board promptly and fully informed (in writing if so
requested) of your conduct of the business or affairs of the Group
and provide such explanations as they may require.
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1.6 Your hours of work are the normal hours of business of the Company
together with such additional hours as may be necessary for you to
perform your duties properly.
1.7 Your normal place of work is the Company's office at Tak King Industrial
Building, 27 Lee Chung Street, Chai Wan, Hong Kong and/or such other
place of business of the Group as the Board may reasonably require from
time to time. You will, if and for as long as required by the Company,
make visits in the ordinary course of your duties to such places anywhere
in the world as it may specify.
2. Pay
2.1 During your employment, the Company will reimburse you at the rate of
HK$1,300,000 each year (or such higher rate as may be awarded to you
pursuant to Clause 2.3) which will accrue from day to day and be payable
in equal monthly instalments in arrears on or about the last working day
of each month (the "Remuneration"). The Remuneration is inclusive of all
and any fees receivable by you as the holder of offices or appointments
within the Group or on behalf of the Company or any Group Company and is
to be apportioned by you between salary (the "Salary") and housing
allowance (the "Housing Allowance") in accordance with relevant
provisions of Hong Kong law in proportions to be agreed by the Board:-
2.2 The Housing Allowance must be supported by receipts or other
documentation evidencing the expenditure in accordance with procedures
which will be advised to you by the Board.
2.3 On or about 31 December in each year (starting on 31 December 1999), your
Remuneration will be reviewed by the Board and the Board may in its sole
discretion decide to increase the rate of the Remuneration.
2.4 Subject to and in accordance with rules of the bonus or incentive
compensation plan of the Company or Cunningham Graphics International,
Inc. ("CGI") for the time being in force, you will be eligible to receive
a bonus each year, payable within 90 days after the end of the relevant
fiscal year of the Company, of such amount, if any, as the Compensation
Committee of CGI determines in its absolute discretion to be an
appropriate bonus for the Managing Director of the Company, having regard
to your and the Company's achievement of performance goals set annually
in advance by the Compensation Committee in consultation with you.
3. Fringe Benefits
3.1 You are entitled to be and remain a member of the Company's pension
scheme (the "Scheme") subject to the terms of the deed and rules
governing its operation from time to time. The Company is entitled at any
time to terminate the Scheme or your membership of it subject to
procuring membership for you of another pension scheme (the "New Scheme")
providing you with benefits which are not, in aggregate, less favourable
than the benefits provided to you under the Scheme and subject to
procuring that you are fully credited in the New Scheme for your past
pensionable service under the Scheme.
2
<PAGE>
3.2 The Company will, subject to Inland Revenue limits for the time being,
contribute (in monthly instalments in arrears) to the Scheme for each
year of your employment an amount equal to 10% of your Remuneration at
the rate then payable.
3.3 The Company will provide you with life assurance cover of four times your
Remuneration payable in the event of your death in service.
3.4 You, your spouse and your children (if any) who are less than 18 years
old are entitled to participate in any permanent health and medical
expenses insurance schemes maintained by the Company from time to time
for the benefit of its senior executives, subject always to the rules of
such schemes, including without limitation, each of you, your spouse and
children undertaking a medical for the purposes of such insurance
schemes.
3.5 The Company will reimburse you for reasonable Automobile Expenses in
connection with the car currently used by you. Subject to the aforesaid,
the Company will provide a suitable (having regard to the image of the
Company and to your status within the Company) car for use on Company
business and you agree to ensure that it is appropriately maintained,
repaired, cleaned, taxed and insured for such use. For the purposes of
this clause, Automobile Expenses shall mean:-
3.5.1 petrol expenses; and
3.5.2 tunnel charges; and
3.5.3 the cost of comprehensive motor vehicle insurance; and
3.5.4 the cost of road tax and the licence fee applicable in Hong Kong;
and
3.5.5 the costs of maintaining the car in proper working order including
the cost of workshop repairs.
3.6 You must comply with all Group regulations relating to Company cars,
notify the Company immediately of any accident involving your car while
being used on Company business and of any charge brought against you for
a traffic offence.
4. Expenses
4.1 The Company will reimburse you with your reasonable travelling,
telephone, hotel, entertainment and other business expenses incurred in
the course of your duties provided that you comply with Group regulations
from time to time in this respect and provide the Company with receipts
or other proof of payment as the Company may require.
4.2 You must make available for business use your home telephone. The Company
will reimburse you with the cost of bills for your home telephone
provided you use any supplier or system designated by the Company and
provided you disclose to the Company any overseas telephone calls not for
the purposes of the business, in respect of which the Company reserves
the right not to reimburse you.
5. Holiday
5.1 In addition to public holidays, you are entitled to 21 working days'
holiday without loss of pay in each holiday year (which runs from January
to December) to be taken at
3
<PAGE>
such time or times as may be authorised in advance by the Board. In any
holiday year you may carry forward to the next subsequent holiday year
upto a maximum of 6 untaken working days' holiday so that, for the
avoidance of doubt, the maximum number of working days' holiday which you
may take in any holiday year shall not exceed 27 working days. You may
not, except as provided in this clause, carry forward any unused part of
your holiday entitlement to a subsequent holiday year and no payment in
lieu will be paid therefor.
5.2 In the first holiday year and in the holiday year in which you leave,
your entitlement to holiday will be calculated at the rate of 1.25
working days' holiday for each complete calendar month of your employment
by the Company during that holiday year. Unless you are dismissed
pursuant to Clause 8.2, you will be entitled on termination to pay in
lieu of any unused holiday entitlement. If you have taken holiday in
excess of your accrued entitlement, you will be required to repay any
excess Remuneration you have received for such holiday. The basis for
payment and repayment is 1/360th of your Remuneration for each day.
6. Incapacity
6.1 If you are absent from work because of illness, mental disorder or injury
("Incapacity"), you must report that fact immediately to the Company
Secretary and, after seven continuous days' absence, provide medical
practitioners' certificate(s) of your Incapacity and its cause for
sickness allowance purposes covering the whole period of your absence.
For sickness allowance purposes, your qualifying days are your normal
working days.
6.2 If you are absent from work due to Incapacity and have complied with the
provisions of Clause 6.1, you will continue to be paid sickness allowance
in accordance with the Ordinance. If your absence exceeds 30 consecutive
days, the Company will be entitled to appoint a temporary replacement to
cover your absence.
6.3 You will, whenever requested by the Board (in circumstances where the
Board has reasonable grounds to believe that you may be suffering from
any Incapacity or that you may not be fit to carry out your duties),
submit to examination by a medical practitioner selected and paid for by
the Company. You hereby authorise such medical practitioner to disclose
to and discuss with the Board any matters which, in his opinion, might
hinder or prevent you (if during a period of Incapacity) from returning
to work for any period or (in other circumstances) from properly
performing your duties at any time.
7. Confidentiality and Integrity
7.1 During your employment under this Agreement, you will not:-
7.1.1 directly or indirectly receive or obtain any discount, rebate,
commission or other inducement (whether in cash or in kind) which
is not authorised by regulations or guidelines from time to time
governing dealings by executives on behalf of the Company, or, if
you do, you will account immediately to the Company for the amount
so received;
7.1.2 directly or indirectly disclose or make use of any Confidential
Information for any purpose other than a legitimate purpose of the
Company;
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<PAGE>
7.1.3 (except in the proper course of your duties under this Agreement)
remove from Company premises or copy or allow others to copy the
contents of any document, computer disk, tape or other tangible
item which contains any Confidential Information or which belongs
to the Company; or
7.1.4 at any time make any untrue or misleading statement relating to
the Group.
8. Termination of agreement
8.1 This Agreement will automatically terminate:
8.1.1 when you reach your 65th birthday; or
8.1.2 if you are prohibited by law from being a director;
8.2 The Company will be entitled, by giving notice, to terminate this
Agreement with immediate effect if you:
8.2.1 commit any act of gross misconduct or repeat or continue any other
breach of your obligations under this Agreement; or
8.2.2 engage in any conduct which, in the reasonable opinion of the
Board, is likely to cause your continued employment to be
detrimental to the interests of the Group and fail, within 60 days
of receiving written notice from the Company, to cure the matter;
or
8.2.3 are convicted of any criminal offence; or
8.2.4 commit any act of dishonesty, whether or not relating to your
employment; or
8.2.5 become bankrupt or make any arrangement or composition with your
creditors generally; or
8.2.6 resign or vacate your office as a director of the Company or any
Group Company; or
8.2.7 are, in the reasonable opinion of the Board, incompetent in the
performance of your duties having failed within 60 days of written
notice from the Company, to remedy the position.
8.3 The Company will be entitled to terminate this Agreement notwithstanding
Clause 6.2 or your entitlement at that time to sick pay or benefits under
the Company's permanent health insurance scheme, by notice which is not
less than your then entitlement to statutory minimum notice plus a week
given at any time when you have been absent from work due to Incapacity
for a period or periods aggregating 120 days in the preceding 12 months
provided that the Company will withdraw any such notice if, before it
expires, you resume your duties full time and provide medical evidence
satisfactory to the Board that you are fully recovered and that no
recurrence of your Incapacity can reasonably be anticipated.
8.4 On serving or receiving notice to terminate this Agreement or at any time
thereafter during the currency of such notice the Company is, at its
discretion, entitled to pay you your Remuneration (at the rate then
payable under Clause 2.1 hereof) together
5
<PAGE>
with monetary compensation for loss of all fringe benefits and
reimbursement of expenses in lieu of notice.
8.5 At any time after notice (including summary notice) to terminate this
Agreement has been served or received by the Company, the Company may:-
8.5.1 require you to resign (without any claim for compensation) from
any offices and/or appointments which you hold as a director,
nominee or representative of the Company or any Group Company;
and/or
8.5.2 require you to transfer, without payment, to the Company (or as
the Company may direct) any qualifying shares or nominee
shareholdings provided to you by or held by you in or on behalf of
any Group Company; and/or
8.5.3 require you to return to the Company on request any documents,
computer disks and tapes and other tangible items in your
possession or under your control which belong to the Company or
which contain or refer to any Confidential Information; and/or
8.5.4 require you to delete all Confidential Information from any
computer disks, tapes or other re-usable material in your
possession or under your control and destroy all other documents
and tangible items in your possession or under your control which
contain or refer to any Confidential Information; and/or
8.5.5 suspend you from the performance of all or any of your duties
under this Agreement provided that the period of any such
suspension may not exceed 6 months and provided further that where
such action is taken following notice being provided to the
Company by you in circumstances where you are in full compliance
with your obligations under this Agreement, such suspension shall
be without prejudice to the benefits accruing to you under this
Agreement; and/or
8.5.6 appoint a replacement to hold the same or similar job title as you
and/or to carry out all or any of your duties instead of you;
and/or
8.5.7 exclude you from all or any premises of the Group; and/or
8.5.8 require you not, without the prior consent of the Board, to engage
in any contact (whether or not at your own instance) with any
customer, supplier, employee, director, officer or agent of any
company in the Group which touches and concerns any of the
business affairs of the Group.
8.6 If you fail to comply with Clauses 8.5.1 and/or 8.5.2 within seven days
of being so required, the Company is hereby irrevocably authorised to
appoint some person in your name and on your behalf to sign any document
or do any thing necessary or requisite to effect such resignation(s)
and/or transfer(s) (without prejudice to any claims which you may have
against the Company arising out of this Agreement or its termination).
6
<PAGE>
9. Intellectual Property
9.1 In relation to each and every improvement, invention or discovery which
relates either directly or indirectly to the business of the Company
which you (jointly or alone) make at any time during your employment, you
will:-
9.1.1 promptly disclose full details, including any drawings and models,
of it to enable the Company to determine whether or not, applying
the provisions of section 57 of the Patents Ordinance (Cap 514 of
the Laws of Hong Kong), it is the property of the Company (a
"Company Invention");
9.1.2 hold any Company Invention in trust for the Company and, at its
request and expense, do all things necessary or desirable to
enable the Company or its nominee to exploit the Company Invention
for commercial purposes and to secure patent or other appropriate
forms of protection for it anywhere in the world. Decisions as to
the patenting and exploitation of any Company Invention are at the
sole discretion of the Company;
9.2 In relation to each and every copyright work or design which relates
either directly or indirectly to the business of the Company (a "Company
Work") which you (jointly or alone) originate, conceive, write or make at
any time during the period your employment:-
9.2.1 you will promptly disclose such Company Work to the Company.
Company Works made wholly outside your normal working hours which
are wholly unconnected with your employment are excluded from the
ambit of Clause 9.2;
9.2.2 you hereby assign to the Company by way of future assignment all
copyright, design right and other proprietary rights (if any)
throughout the world in such Company Work;
9.2.3 you hereby irrevocably and unconditionally waive in favour of the
Company any and all moral rights conferred on you by Division IV
of Part II of the Copyright Ordinance (Cap 528 of the Laws of Hong
Kong) in relation to any such Company Works;
9.2.4 you acknowledge that, for the purposes of section 3(3) of the
Registered Designs Ordinance (Cap 522 of the Laws of Hong Kong),
such Company Works is created in the course of your employment;
9.3 You agree that (at the request and expense of the Company) you will do
all things necessary or desirable to substantiate the rights of the
Company to each and every Company Invention or Company Work and that you
will permit the Company (whom you hereby irrevocably appoint as your
attorney for this purpose) to execute documents, to use your name and to
do all things which may be necessary or desirable for the Company to
obtain for itself or its nominee the full benefit of each and every
Company Invention or Company Work. A certificate in writing signed by any
Director or the Secretary of the Company that any instrument or act falls
within the authority hereby conferred will be conclusive evidence to that
effect so far as any third party is concerned.
7
<PAGE>
10. Restrictive Covenants
10.1 For the period of 12 months after the termination of your employment
under this Agreement, you will not directly or indirectly:-
10.1.1 be engaged or concerned or interested in any business carried on
within the Restricted Area wholly or partly in competition with
any Restricted Business (save for the holding as a passive
investor only of not more than 3% of the issued ordinary shares of
any company of a class which are listed or traded on the Hong Kong
Stock Exchange, any other recognised stock exchange or NASDAQ).
10.1.2 seek or accept, in any capacity whatsoever, any business, orders
or custom which is wholly or partly in competition with any
Restricted Business from any Customer.
10.1.3 induce or attempt to persuade any Employee to leave employment or
engagement by the Company or any Group Company or offer employment
or engagement to any Employee.
10.2 You will not at any time after the termination of your employment under
this Agreement, directly or indirectly:-
10.2.1 induce or seek to induce, by any means involving the disclosure or
use of Confidential Information, any Customer to cease dealing
with the Company or any Group Company or to restrict or vary the
terms upon which it deals with the Company or any Group Company;
10.2.2 disclose or make use of any Confidential Information; or
10.2.3 represent yourself or permit yourself to be held out as having any
connection with or interest in the Company or any Group Company.
10.3 Each restriction in Clause 10 (whether drafted separately or together
with another) is independent and severable from the other restrictions
and enforceable accordingly. If any restriction is unenforceable for any
reason but would be enforceable if part of the wording were deleted, it
will apply with such deletions as may be necessary to make it
enforceable.
10.4 The Company may transfer or assign its rights under this Clause 10 to its
successors in title. You may not transfer or assign any rights or
obligations under this Clause 10.
11. Interpretation
11.1 The headings to the clauses are for convenience only and shall not affect
the construction or interpretation of this Agreement.
11.2 Any reference in this Agreement to any ordinance or delegated legislation
shall include any statutory modification or re-enactment of it or of the
provision referred to.
11.3 In this Agreement:
8
<PAGE>
"Board" means the board of directors of the Company and includes any
committee of such board duly authorised to act on its behalf.
"Confidential Information" means all and any information (whether or not
recorded in documentary form or on computer disk or tape) of the Company,
any Group Company or any of its or their customers, suppliers or agents
which the Company or the relevant Group Company regards as confidential
or in respect of which it owes an obligation of confidentiality to a
third party which is not part of your own stock in trade and which is not
readily ascertainable to persons not connected with the Company either at
all or without a significant expenditure of labour, skill or money.
"Customer" means any person with whom you or anyone working under your
supervision or control deals personally who, at the termination of your
employment, is negotiating with the Company or any Group Company for
Restricted Business or with whom the Company or any Group Company has
conducted any Restricted Business at any time during the final two years
of your employment with the Group.
"Employee" means any person who is and was, at any time during the period
of two years prior to the termination of your employment, employed or
engaged by the Company or any Group Company in a senior management,
senior technical or senior sales position and who, by reason of such
position, possesses any Confidential Information or is likely to be able
to solicit the custom of any Customer or to induce any Customer to cease
dealing with the Company or any Group Company, were he to accept
employment or engagement in a business which is similar to or in
competition with any Restricted Business.
"Group Company" means a member of a group of companies as defined in
Section 2 of the Companies Ordinance (Cap 32 of the Laws of Hong Kong).
"Group" means the Company and each Group Company.
"NASDAQ" means the National Association of Securities Dealers Automatic
Quotation.
"Ordinance" means the Employment Ordinance (Cap 57 of the Laws of Hong
Kong).
"Restricted Area" means each of Hong Kong , China, Taiwan, Singapore and
any other country in which the Company or any Group Company carries on or
intends to carry on any Restricted Business as at the termination of your
employment.
"Restricted Business" means time-sensitive financial printing and all or
any other commercial activities carried on or to be carried on by the
Company or any Group Company in which you worked or about which you knew
Confidential Information to a material extent at any time during the
final two years of your employment with the Group.
12. General
12.1 You are not subject to any particular disciplinary rules or procedures
but should conduct yourself in a thoroughly professional manner at all
times. In order to investigate a complaint of breach of contract or
misconduct against you, the Company
9
<PAGE>
is entitled to suspend you on full pay for so long as the Board considers
appropriate in all the circumstances to carry out a disciplinary
investigation and/or hearing.
12.2 If you have a grievance relating to your employment (other than one
relating to a disciplinary decision), you should refer that grievance to
the Board whose decision will be final and binding on you.
12.3 This Agreement is in substitution for any representations and warranties
made by or on behalf of the Company and any previous contracts of
employment or for services between you and the Company or any Group
Company (which are deemed to have been terminated by mutual consent).
12.4 The termination of this Agreement will not affect such of the provisions
of this Agreement as are expressed to operate or to have effect after
termination and will be without prejudice to any accrued rights or
remedies of the parties.
12.5 The validity, construction and performance of this Agreement is governed
by the law of Hong Kong.
12.6 All disputes, claims or proceedings between the parties relating to the
validity, construction or performance of this Agreement are subject to
the exclusive jurisdiction of the High Court of the Hong Kong Special
Administrative Region (the "High Court") to which the parties irrevocably
submit. Each party irrevocably consents to the award or grant of any
relief in any such proceedings before the High Court and either party is
entitled to take proceedings in any other jurisdiction to enforce a
judgment or order of the High Court.
12.7 Any notice to be given by a party under this Agreement must be in writing
in the English language and must be delivered by hand or sent by first
class post or equivalent postal service, telex, facsimile transmission or
other means of telecommunication in permanent written form (provided that
the addressee has his or its own facilities for receiving such
transmissions) to the last known postal address or appropriate
telecommunication number of the other party. Where notice is given by any
of the prescribed means, it is deemed to be received when, in the
ordinary court of that means of transmission, it would be received by the
addressee. To prove the giving of a notice, it is sufficient to show that
it has been despatched. A notice has effect from the sooner of its actual
or deemed receipt by the addressee.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written:-
SIGNED by )
for and on behalf of )
WORKABLE COMPANY LIMITED )
In the presence of : )
10
<PAGE>
SIGNED by TUNG HOK KI )
In the presence of: )
11
Dated day of 1999
MANY BEST DEVELOPMENT LIMITED
and
WORKABLE COMPANY LIMITED
*******************************************
TENANCY AGREEMENT
of
All Those Workshop 1 on 1st Floor & The Flat
Roof and Lorry Car Park No. 4 on Upper
Ground Floor, Tak King Industrial Building,
No.27, Lee Chung Street, Chaiwan, Hong Kong
********************************************
REGISTERED at the Land Registry
by Memorial No.
on
p. Land Registrar.
SO KEUNG YIP & SIN
Solicitors
17th Floor,
Standard Chartered Bank Building
4 Des Voeux Road Central,
Hong Kong
Ref: 98010000/TKS/ta.1
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I
AGREEMENT
AN AGREEMENT made this day of One thousand
nine hundred and ninety-nine
Parties BETWEEN the person or company detailed as the Landlord in
Part I of the Schedule hereto (hereinafter called "the
Landlord") of the one part and the person or company
detailed as the Tenant in Part I of the Schedule hereto
(hereinafter called "the Tenant") of the other part.
W H E R E B Y :-
Premises The Landlord shall let and the Tenant shall take ALL THOSE
the premises (hereinafter referred to as "the Premises")
forming part of all that building (hereinafter referred to
as "the Building") and more particularly described and set
out in Part II of the Schedule attached hereto Together with
the use in common with the Landlord and all others having
the like right of the entrances staircases landings passages
and toilets in the Building in so far as the same are
necessary for the proper use and enjoyment of the Premises
and except in so far as the Landlord may from time to time
restrict such use (without unreasonably interfering with the
use, occupation or enjoyment of the Premises by the Tenant)
And together with the right in common with others having the
Term like right to use the lift service in the building (whenever
the same shall be operating) for the term set forth in Part
Rent III of the Schedule hereto YIELDING AND PAYING therefor
throughout the said term (but subject to Clause 10 of
Section X hereof) the rent as are set out in Part IV of the
Schedule hereto which sums shall be payable exclusive of
rates and management fees in advance without any deductions
on the first day of each calendar month the first and last
of such payments to be apportioned according to the number
of days in the month included in the said term.
User Subject as hereinafter mentioned and unless otherwise agreed
by the parties hereto, the Tenant agrees to use the Premises
for industrial and ancillary offices and warehouse purposes
only and for no other purpose whatsoever.
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II
RENT AND OTHER CHARGES
The Tenant agrees with the Landlord as follows:-
1. To pay on the days and in the manner herein
provided:-
Rent (a) the said rent;
Air-
Conditioning (b) the air-conditioning charges (if any);
Charges
Maintenance (c) the cleaning charges (if any);
Charges
Cleaning (d) the management fees payable by the owner or occupier
Charges of the Premises pursuant to or by virtue of the Deed
Management of Mutual Covenant or Management Agreement relating
Fees to the building (if any).
Rates 2. To pay and discharge all rates taxes assessments
duties impositions charges and outgoings whatsoever
now or hereafter to be imposed or levied on the
Premises or upon the owner or occupier in respect
thereof by the Government of The Hong Kong Special
Administrative Region or other lawful authority
(Government Rent, Property Tax and outgoings of a
capital or non-recurring nature excepted). Without
prejudice to the generality of this subclause the
Tenant shall pay all rates imposed on the Premises
in the first place to the Landlord who shall settle
the same with the Government of The Hong Kong
Special Administrative Region and in the event of
the Premises not yet having been assessed to rates
the Tenant shall pay to the Landlord a sum equal to
the rates which would be charged by the Government
of The Hong Kong Special Administrative Region on
the basis of a rateable value equal to twelve
months' rent payable by the Tenant on account of the
Tenant's liability under this Clause subject to
adjustment when the assessment is available.
Utilities 3. To pay and discharge all deposits and charges in
respect of gas water deposits
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electricity air conditioning and telephone as may be
shown by or operated from the Tenant's own metered
supplies or by accounts rendered to the Tenant in
respect of all such utilities consumed on or in the
Premises.
III
TENANT'S OBLIGATIONS
Compliance 1. To obey observe and comply with and to indemnify the
with Ordinances Landlord against the breach of all ordinances,
regulations, bye-laws, rules and requirements of any
Governmental or other competent authority relating
to the use and occupation of the Premises or any
other act, deed, matter or thing done, permitted,
suffered or omitted therein or thereon by the Tenant
of any employee, agent or licensee of the Tenant and
without prejudice to the foregoing to obtain any
approval licence or permit required by any
Governmental or other competent authority in
connection with the Tenant's use and occupation of
the Premises and to indemnify the Landlord against
the consequences of a breach of this provision.
Fitting Out 2. To fit out the interior of the Premises in
accordance with such plans and specifications as
shall have been first submitted to and approved by
the Landlord in writing (such approval shall not be
unreasonably withheld or delayed) in a good and
proper workmanlike fashion and safety and so to
maintain the same throughout the said term in good
condition and repair to the satisfaction of the
Landlord (fair wear and tear inherent or latent
defects excepted).
Good Repair 3. To keep all the interior of the Premises including
of Interior the flooring interior plaster or other finishing
material or rendering to the walls floors and
ceilings and the Landlord's fixtures and fittings
therein including all doors windows electrical
installations and wiring light fittings suspended
ceilings fire fighting apparatus and ducting in good
clean tenantable substantial and proper repair and
condition (fair wear and tear inherent or
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latent defects excepted) so as to maintain the same
at the expense of the Tenant, and to deliver up the
same to the Landlord at the expiration or sooner
determination of the said term in like condition.
Replacement 4. To pay to or reimburse the Landlord the cost of
of Windows replacing all broken or damaged windows whether the
same be broken or damaged by the negligence of the
Tenant or owing to circumstances beyond the control
of the Tenant.
Repair of 5. To repair or replace if so required by the
Electrical appropriate company or authority by duly authorised
Installations contractor statutory undertaker or authority as the
case may be under the terms of the Electricity
Supply Ordinance or any statutory modification or
re-enactment thereof or any Orders in Council or
regulations made thereunder all the electrical
wiring installations and fittings within the
Premises and the wiring from the Tenant's meter or
meters to and within the same.
Good Repair 6. At the expense of the Tenant to maintain all toilets
to Toilets and and water apparatus as are located within the
Water Apparatus Premises (or elsewhere if used exclusively by the
Tenant its employees invitees and licensees) in good
clean and tenantable state and in proper repair and
condition (fair wear and tear inherent or latent
defects excepted) at all times during the said term
to the satisfaction of the Landlord and in
accordance with the Regulations of the Public Health
or other Government Authority concerned.
Cleaning of 7. To pay on demand to the Landlord the reasonable cost
Drains incurred by the Landlord in cleaning and clearing
any of the drains choked or stopped up owing to the
improper or careless use by the Tenant or its
employees invitees or licensees.
Indemnify 8. To be wholly responsible for any damage to the
against Loss/ Premises or any damage or injury caused to any
Damage from person whomsoever directly through the defective or
Interior Defects damaged condition of any part of the interior of the
Premises or in any way owing to the spread of fire
or smoke or the overflow of water from the Premises
or any part thereof or
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through the act default or neglect of the Tenant its
servants agents licensees or contractors and to make
good the same by payment or otherwise and to
indemnify the Landlord against all reasonable costs
claims demands actions and legal proceedings
whatsoever made upon the Landlord by any person in
respect of any such loss damage or injury and all
costs and expenses incidental thereto, and to effect
adequate insurance cover in respect of such risks
with a reputable company. The policy of such
insurance shall be endorsed to show the Landlord as
registered owner of the Building or the Premises (as
the case may be) and shall be in such amount as may
be required by the Landlord and in the reasonable
opinions of the Landlord to be sufficiently covered
all the risks mentioned above and shall contain a
clause to the effect that the insurance cover
thereby effected and the terms and conditions
thereof shall not be cancelled modified or
restricted without the prior consent of the Landlord
(which consent shall not be unreasonably withheld or
delayed). The Tenant hereby further undertakes to
produce to the Landlord as and when required by the
Landlord on reasonable prior written notice such
policy of insurance together with a receipt for the
last payment of premium and a certificate from the
insurance company that the policy is fully paid up
and in all respects valid and subsisting.
Protection 9. To take all reasonable precautions to protect the
from typhoon interior of the Premises from storm or typhoon
damage.
To permit 10. To permit the Landlord its agents and all persons
Landlord to authorised by it with or without workmen or others
enter and view and with or without appliances at all reasonable
times upon prior appointment to enter upon the
Premises to view the condition thereof and to take
inventories of the fixtures and fittings therein and
to carry out any work or repair required to be done
provided that in the event of an emergency the
Landlord its servants or agents may enter without
notice and forcibly if need be.
To execute 11. To make good all defects and wants of repair to the
repair on receipt Premises for which the Tenant may be liable within
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of notice the period of one month from the receipt of notice
of written notice from the Landlord to amend and
make good the same, and if the Tenant shall fail to
execute such works or repairs as aforementioned to
permit the Landlord on reasonable prior written
notice to enter upon the Premises and execute the
same and in such case the reasonable cost thereof
shall be a debt due from the Tenant to the Landlord
and be recoverable forthwith by action.
Inform 12. To give notice to the Landlord or its agent of any
Landlord of damage that may be suffered to the Premises and of
Damage accident to or defects in the water and gas pipes
electrical wiring or fittings, fixtures or other
facilities provided by the Landlord.
Refuse and 13. To be responsible for the removal of refuse and
Garbage Removal garbage from the Premises to such location as shall
be specified by the Landlord from time to time and
to use only that type of refuse container as is
specified by the Landlord from time to time. In the
event of the Landlord providing a collection service
for refuse and garbage the same shall be used by the
Tenant to the exclusion of any other similar service
and the use of such service provided by the Landlord
shall be at the sole cost of the Tenant.
Installation 14. The Tenant shall make its own arrangements with the
of Telephone public telephone company in Hong Kong with regard to
Cables the installation of telephones in the Premises, but
the installation of telephone lines outside the
Premises must be in accordance with the Landlord's
reasonable directions.
Government 15. To be bound by and to be observe and perform all the
Lease and Deed of terms conditions stipulations and covenants
Mutual Covenant contained Government Lease and Deed of Mutual
Covenant of the Building.
Contractors 16. To be liable for any act default negligence or
Employees omission of the Tenant's contractors, employees
Invitees and invitees or licensees as if it were the act default
Licensees negligence or omission of the Tenant and to
indemnify the Landlord against all costs claims
demands expenses or liability to any third party in
connection therewith.
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Yield up 17. To yield up the Premises with all fixtures fittings
Premises and additions therein and thereto at the expiration
and Handover or sooner determination of the Term in good clean
substantial and proper repair and condition (fair
wear and tear inherent and latent defects excepted)
AND thereupon to surrender to the Landlord all keys
leading to all parts of the Premises and if required
by the Landlord to remove at the Tenant's expense
all fixtures, fittings, additions, partitions, floor
coverings, wall finishes, false ceilings, electrical
installations and wirings, erections, and
alterations made or installed upon or in the
Premises whether by the Tenant or by a previous
occupier of the Premises and taken over by the
Tenant and to re-instate restore and make good any
damage caused by such removal or re-instatement
Provided that the Tenant's obligations relating to
removal or re-instatement under this Clause may be
modified or varied by the mutual agreement between
the Landlord and the Tenant that the Landlord
proposes without payment of any compensation to
retain all or any of the said fixtures, fittings,
additions, partitions, floor coverings, erections
and alterations which the Tenant is otherwise liable
hereunder to remove but subject to this proviso, the
Tenant shall re-instate restore and make good the
Premises or any part thereof requiring to be
re-instated restored or made good and deliver up the
Premises to the Landlord in "bare shell" condition
and in the event of the Tenant failing so to do the
Tenant shall on demand pay to the Landlord the cost
of such re-instatement restoration or making good.
IV
LANDLORD'S OBLIGATIONS
The Landlord agrees with the Tenant as follows:-
Quiet 1. To permit the Tenant (duly paying the rent the
Enjoyment management fees and the cleaning charges (if any)
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hereby agreed to be paid on the days and in manner
herein provided for payment of the same and rates
and observing and performing the agreements
stipulations terms conditions and obligations herein
contained) to have quiet possession and enjoyment of
the Premises during the said term without any
interruption by the Landlord or any person lawfully
claiming under or through or in trust for the
Landlord.
Government Rent 2. To pay the Government Rent and Property Tax and
outgoings of a capital or non-recurring nature
attributable to or payable in respect of the
Premises.
Roof and 3. To repair maintain and keep main drains water pipes
Main main cables main walls roofs and exterior window
Structure frames of the Building (except in so far as the same
are within the responsibility of the Tenant
hereunder) in a proper state of repair and condition
Provided that the Landlord shall not be liable for
breach of this Clause (so far as it relates to the
Premises) unless and until written notice of any
defect or want of repair has been given to the
Landlord by the Tenant and the Landlord has failed
to take reasonable steps to repair or remedy the
same.
4. To use its best endeavours to ensure the Manager of
the Management Office carries out his duty under the
Deed of Mutual Covenant and Management Agreement.
SECTION V
RESTRICTIONS AND PROHIBITIONS
The Tenant hereby agrees with the Landlord as follows:-
Installation 1. (a) Not to make or permit or suffer to be made any
alterations in or additions to the Premises or to
the electrical wiring installation, air-conditioning
ducting (if any), lighting fixtures or other
Landlord's fixtures or to install any plant
apparatus or machinery therein without first having
obtained the written consent of the Landlord
therefor (which consent shall not be unreasonably
withheld or delayed).
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(b) Not to place on any part of the Premises object of
any kind of the weight of which is in excess of the
floor loading of the Premises.
(c) Not to erect install or alter any partitioning of
any kind in the Premises or any part thereof without
having obtained the Landlord's prior written
approval (which approval shall not be unreasonably
withheld or delayed). Any such partitioning or
alteration thereof approved by the Landlord shall be
constructed or made at such position and with such
material and in accordance with such other
requirement (if any) as shall be reasonably directed
or approved by the Landlord. All reasonable fees and
expenses incurred by the Landlord in obtaining the
approval of the Landlord's architects or consultants
on the location of such partitioning or alteration
shall be borne by the Tenant and payment therefor to
the Landlord as may be imposed as a pre-requisite of
the Tenant receiving such permission.
Injury to 2. Not to cut maim or injure or permit or suffer to be
Main Walls cut maimed or injured any doors windows walls beams
structural members or other part of the fabric of
the Premises.
Alteration 3. Save as provided in Section V Clause 5 hereof not to
to affix anything or paint or make any alteration
Exterior whatsoever to the exterior of the Premises.
Noise 4. Not to cause or produce or suffer or permit to be
produced on or in the Premises any sound or noise
which is or are or may be a nuisance or annoyance to
the tenants or occupiers of adjacent or neighbouring
premises.
Signs 5. Not without the prior written approval of the
Landlord (which approval shall not be unreasonably
withheld or delayed if the Tenant shall have
complied with any relevant regulations and rules of
the government and the direction of the manager of
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the Building) to exhibit or display on the exterior
of the Premises any writing sign signboard or other
device whether illuminated or not which may be
visible from outside the Premises nor to affix any
writing signs signboard or other device in at or
above any common area lobby landing or corridor of
the Building provided that the Tenant may display
its name and trade name in appropriate size(s) and
in a reasonable manner acceptable to the manager of
the Building.
Auction and 6. Not to conduct or permit to be taken place any
Sales auction fire bankruptcy close out or similar sales
of things or properties of any kind on the Premises.
Illegal or 7. Not to use or cause permit or suffer to be used any
Immoral Use part of the Premises for gambling or for any illegal
immoral or improper purposes or in any way so as to
cause nuisance annoyance inconvenience or damage or
danger to the Landlord or the tenants or occupiers
of adjacent or neighbouring premises.
Sleeping or 8. Not to use the Premises or any part thereof as
Domestic USe sleeping quarters or as domestic premises within the
meaning of any ordinance for the time being in force
or to allow any person to remain on the Premises
overnight unless with the Landlord's prior
permission in writing. Such permission shall only be
given to enable the Tenant to post watchmen to look
after the contents of the Premises and the names of
the watchmen shall first be registered with the
Landlord prior to its giving such permission.
Obstructions 9. Not to place or leave or suffer or permit to be
in Passages placed or left by any contractor employee invitee or
licensee of the Tenant any boxes furniture articles
or rubbish in the entrance or any of the staircases
passages or landings of the Building used in common
with other tenants or the Landlord or otherwise
encumber the same.
Prevention 10. Not to cause or permit any offensive or unusual
of odours odours to be produced upon or emanate from the
Premises.
Animals, Pets 11. Not to keep or permit or suffer to be kept any
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and infestation animals or pets inside the Premises and to take all
such steps and precautions to the satisfaction of
the Landlord to prevent the Premises or any part
thereof from becoming infested by termites rats mice
roaches or any other pests or vermin and for the
better observance hereof the Landlord may require
the Tenant to employ at the Tenants cost such pest
extermination contractors as the Landlord may
nominate and at such intervals as the Landlord may
direct.
Subletting, 12. Not without the prior written consent of the
Assigning Landlord to assign underlet or otherwise part with
the possession of the Premises or any part thereof
in any way whether by way of sub-letting lending
sharing or other means whereby any person or persons
not a party to this Agreement obtains the use or
possession of the Premises or any part thereof
irrespective of whether any rental or other
consideration is given for such use or possession
and in the event of any such transfer sub-letting
sharing assignment or parting with the possession of
the Premises (whether for monetary consideration or
not) this Agreement shall absolutely determine and
the Tenant shall forthwith vacate the Premises on
notice to that effect from the Landlord. The Tenancy
shall be personal to the Tenant named in the First
Schedule to this Agreement and without in any way
limiting the generality of the foregoing the
following acts and events shall unless approved in
writing by the Landlord be deemed to be breaches of
this Clause :-
(a) In the case of a tenant which is a partnership the
taking in of one or more new partners whether on the
death or retirement of an existing partner or
otherwise.
(b) In the case of a tenant who is an individual
(including a sole surviving partner of a partnership
tenant) the death insanity or disability of that
individual to the intent that no right to use
possess occupy or enjoy the Premises or any part
thereof shall vest in the executors administrators
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personal representatives next of kin trustee or
committee of any such individual.
(c) In the case of a tenant which is a corporation
liquidation save for internal reconstruction or
amalgamation.
(d) The giving by the Tenant of a Power of Attorney or
similar authority whereby the donee of the Power
obtains the right to use possess occupy or enjoy the
Premises or any part thereof or does in fact use
possess occupy or enjoy the same.
Breach of 13. Not to cause suffer or permit any contravention of
Government Lease the provisions of the Government Lease under which
the Landlord holds the Premises and to indemnify the
Landlord against any such breach.
Breach of 14. Not to cause or suffer or permit to be done any act
Insurance Policy or thing whereby the policy or policies of Insurance
on the Premises against damage by fire or liability
to Third parties for the time being subsisting may
become void or voidable or whereby the rate or
premium or premiums thereon may be increased, and to
repay to the Landlord on demand all sums paid by the
Landlord by way of increased premium or premiums
thereon and all expenses incurred by the Landlord in
and about any renewal of such policy or policies
arising from or rendered necessary by a breach of
this Clause.
V
EXCLUSIONS
IT IS HEREBY FURTHER EXPRESSLY AGREED AND DECLARED that the
Landlord shall not in any circumstances be liable to the
Tenant or any other person whomsoever unless caused by the
act, negligence or default of the Landlord, its agents or
servants :-
Lift, Air- 1. In respect of any loss or damage to person or
conditioning, property sustained by the Tenant or any other person
Utilities caused by or through or in any way owing to any
defect in or breakdown of the lifts air-conditioning
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system, electric power and water supplies, or any
other building service provided in the Building, or
Fire and 2. In respect of any loss or damage to person or
overflow property sustained by the Tenant or any other person
of water caused by or through or in any way owing to the
escape of fumes smoke fire or any other substance or
thing or the overflow of water from anywhere within
the Building, or
Security 3. For the security or safekeeping of the Premises or
any contents therein and in particular but without
prejudice to the generality of the foregoing the
provision by the Landlord of watchmen and caretakers
shall not create any obligation on the part of the
Landlord as to the security of the Premises or any
contents therein and the responsibility for the
safety of the Premises and the contents thereof
shall at all times rest with the Tenants, nor shall
the rent and other charges hereinbefore mentioned or
any part thereof abate or cease to be payable on
account of any of the foregoing.
VI
ABATEMENT OF RENT
Suspension of If the Premises or the Building or any part thereof shall
rent in case at any time during the tenancy be destroyed or damaged or
of fire etc become inaccessible owing to fire water storm typhoon
defective construction white ants earthquake subsidence of
the ground or any calamity beyond the control of the
Landlord so as to render the Premises or any part thereof
unfit for industrial use or inaccessible and the policy or
policies of insurance effected by the Landlord shall not
have been vitiated or payment of the policy moneys refused
in whole or in part in consequence of any act or default of
the Tenant or if at any time during the continuance of this
tenancy the Premises or the Building or any part thereof
shall be condemned as a dangerous structure or a demolition
order or closing order shall become operative in respect of
the Premises or the Building or any part thereof then the
rent hereby reserved or a fair proportion thereof according
to the nature
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and extent of the damage sustained or order made shall
after the expiration of the then current month be suspended
until the Premises or Building or (as the case may be) the
relevant part thereof shall again be rendered accessible
and fit for industrial or warehouse use provided that
should the Premises or the Building or (as the case may be)
the relevant part thereof not have been reinstated in the
meantime either the Landlord or the Tenant may at any time
after one month from the occurrence of such damage or
destruction or order give to the other of them notice in
writing to determine this present tenancy and thereupon the
same and everything herein contained shall cease and be
void as from the date of the occurrence of such destruction
or damage or order or of the Premises or the relevant part
thereof becoming inaccessible or unfit for industrial or
warehouse use but without prejudice to the rights and
remedies of either party against the other in respect of
any antecedent claim or breach of the agreements
stipulations terms and conditions herein contained or of
the Landlord in respect of the rent payable hereunder prior
to the coming into effect of the suspension.
VII
DEFAULT
It is hereby expressly agreed and declared as follows :-
Default 1. If the rent and/or the management fees payable
hereunder or any part thereof shall be in arrear for
fifteen (15) days after the same shall have become
payable (whether formally demanded or not) or if
there shall be any breach or non-performance of any
of the stipulations conditions or agreements herein
contained and on the part of the Tenant to be
observed or performed or if the Tenant shall become
bankrupt or being a corporation go into liquidation
(save for the purposes of amalgamation or
reconstruction) or if the Tenant shall suffer
execution to be levied upon the Premises or
otherwise on the Tenant's goods then and in any such
case it shall
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be lawful for the Landlord at any time thereafter to
re-enter on and upon the Premises or any part
thereof in the name of the whole and thereupon this
Agreement shall absolutely determine but without
prejudice to any right of action by the Landlord in
respect of any outstanding breach or non-observance
or non-performance by the Tenant of any of the terms
of this Agreement. All reasonable costs and expenses
incurred by the Landlord in demanding payment of the
rent and other charges aforesaid (if the Landlord
elects to demand) arising out of this Clause shall
be paid by the Tenant and shall be recoverable from
the Tenant as a debt or be deductible by the
Landlord from any deposit held by the Landlord
hereunder.
Acceptance 2. The acceptance of any rent by the Landlord hereunder
of Rent shall not be deemed to operate as a waiver by the
Landlord of any right to proceed against the Tenant
in respect of any breach non-observance or
non-performance by the Tenant of any of the
agreements stipulations terms and conditions herein
contained and on the part of the Tenant to be
observed and performed.
Acts of 3. For the purpose of these presents any act default
Employees neglect or omission of any guest visitor servant
Invitees and contractor employee agent invitee or licensee of the
Licensees Tenant shall be deemed to be the act default neglect
or omission of the Tenant.
Distraint 4. For the purpose of Part III of the Landlord and
Tenant (Consolidation) Ordinance (Chapter 7) and of
these presents, the rent payable in respect of the
Premises shall be deemed to be in arrears if not
paid in advance at the times and in the manner
hereinbefore provided for payment thereof.
Interest etc. 5. Notwithstanding anything hereinbefore contained if
the Tenant shall fail to pay the rental and/or other
moneys herein reserved or any part thereof on due
date the Landlord shall be entitled to recover from
the Tenant as a debt the following expenses incurred
by the Landlord in the course of recovering the
rental in arrears
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and/or other moneys unpaid or any part thereof :-
(a) all Solicitors' and/or Counsels' fees (on taxed
costs basis) and court fees incurred by the Landlord
for the purpose of recovering the rental and
air-conditioning charges in arrears and/or other
moneys unpaid or any part thereof from the Tenant;
(b) any other reasonable fees paid to debt-collectors
appointed by the Landlord for the purpose of
collecting the rental and air-conditioning charges
in arrears and/or other moneys unpaid or any part
thereof from the Tenant;
(c) interest calculated at the rate of 3% over the prime
rate of The Hongkong & Shanghai Banking Corporation
Limited on the rental and air-conditioning charges
in arrears and/or other moneys unpaid or any part
thereof from the date due for payment to the date of
actual payment.
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VIII
DEPOSIT
Deposit 1. The Tenant shall on the signing hereof and at such
other times (if any) during the term of tenancy
hereby created as are specified in Part III of the
Schedule hereto deposit with the Landlord the sum or
sums specified in Part VI of the Schedule to secure
the due observance and performance by the Tenant of
the agreements stipulations terms and conditions
herein contained and on the part of the Tenant to be
observed and performed which said deposit shall be
held by the Landlord throughout the currency of this
agreement free of any interest to the Tenant with
the right for the Landlord (without prejudice to any
other right or remedy hereunder) to deduct therefrom
the amount of any rent rates and other charges
payable hereunder and any costs expenses loss or
damage sustained by the Landlord as the result of
any non-observance or non-performance by the Tenant
of any of the said agreements, stipulations
obligations or conditions. In the event of any
deduction being made by the Landlord from the said
deposit in accordance herewith during the currency
of this Agreement the Tenant shall forthwith on
demand by the Landlord make a further deposit equal
to the amount so deducted and failure by the Tenant
so to do shall entitle the Landlord forthwith to
re-enter upon the Premises and to determine this
Agreement as hereinbefore provided.
Repayment of 2. Subject as aforesaid the said deposit shall be
Deposit refunded to the Tenant by the Landlord without
interest within fourteen days after the expiration
or sooner determination of this Agreement and
delivery of vacant possession to the Landlord and
after settlement of the last outstanding claim by
the Landlord against the Tenant for any arrears of
rent rates and other charges and for any breach
non-observance or non-performance of any of the
agreements stipulations terms and conditions herein
contained and on the part of the Tenant to be
observed or performed whichever shall be the later.
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<PAGE>
Transfer of 3. If at any time during the term of the tenancy hereby
Deposit created, the Landlord shall sell or otherwise assign
the said premises to the new owner ("New Owner"),
the Landlord may at any time enter into a 3 party
agreement with the New Owner and the Tenant, at the
costs of the Landlord, to the New Owner the said
deposit (subject to the Landlord's right of
deduction aforesaid). Upon signing such 3 party
agreement, the Landlord (which in this context shall
exclude its assigns) shall be released of its
liability and obligation under this Agreement to
refund the said deposit or any balance thereof to
the Tenant. The Tenant shall claim for the refund of
the said deposit or the balance thereof from the New
Owner only.
X
INTERPRETATION AND MISCELLANEOUS
Marginal 1. The Marginal Notes, Headings and Index are intended
Notes, Headings for guidance only and do not form part of this
and Index Agreement nor shall any of the provisions of this
Agreement be construed or interpreted by reference
thereto or in any way affected or limited thereby.
As-is Basis 2. The Tenant shall take over the Premises on an "as
is" basis which include any ducting or vents
currently installed for extraction of exhaust gases,
fumes and hot air from the Premises but the Landlord
gives no warranty or representation as to the
adequacy thereof or as to their compliance with all
relevant regulations.
No Warranty 3. The Landlord does not represent or warrant that the
Premises are suitable for the user specified in the
Section I hereto or the use or purposes for the
intended user by the Tenant and the Tenant shall
satisfy itself or shall be deemed to have satisfied
itself that they are suitable for the purpose for
which they are to be used and the Tenant hereby
agrees that it will at its own expense apply for any
requisite licences or permits from all Government or
Public Authorities in
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<PAGE>
respect of the conduct of the Tenant's business in
the Premises and shall execute and comply with all
Ordinances, Regulations, Orders, Notices or Rules
made by all competent Government or Public
Authorities in connection with such business as
aforesaid and the Landlord gives no warranty or
representation as to compliance with all relevant
regulations in respect of the aforesaid use AND the
Tenant hereby further agrees to indemnify the
Landlord in respect of any breach by the Tenant of
this Clause.
Condonation 4. No condoning, excusing or overlooking by the
not a waiver Landlord of any default, breach or non-observance or
non-performance by the Tenant at any time or times
of any of the agreements stipulations terms and
conditions herein contained shall operate as a
waiver of the Landlord's rights hereunder in respect
of any continuing or subsequent default, breach or
non-observance or non-performance or so as to defeat
or affect in any way the rights and remedies of the
Landlord hereunder in respect of any such continuing
or subsequent default or breach and no waiver by the
Landlord shall be inferred from or implied by
anything done or omitted by the Landlord, unless
expressed in writing and signed by the Landlord. Any
consent given by the Landlord shall operate as a
consent only for the particular matter to which it
relates and shall in no way be considered as a
waiver or release of any of the provisions hereof
nor shall it be construed as dispensing with the
necessity of obtaining the specific written consent
of the Landlord in future, unless expressly so
provided.
Letting 5. During the three months immediately before the
Notices and expiration or sooner determination of the term of
Entry this Agreement the Landlord shall be at liberty to
affix and maintain without interference upon any
external part of the Premises a notice stating that
the Premises are to be let and such other
information in connection therewith as the Landlord
shall reasonably require during the aforementioned
period of 3 months provided that such notice will
not block any window of the Premises or part
thereof.
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<PAGE>
Service of 6. Any notice required to be served on the Tenant shall
Notice be sufficiently served if delivered to or despatched
by registered post or left at the registered office
of the Tenant. A notice sent by registered post
shall be deemed to be given at the time and date of
posting.
Gender & 7. In this Agreement if the context permits or requires
Plural words importing the singular number shall include
the plural number and vice versa and words importing
the masculine feminine or neuter gender, shall
include the other of them.
Stamp Duty 8. The Stamp Duty and registration fee (if any) on this
and Costs Agreement and its counterpart shall be borne by the
Landlord and the Tenant in equal shares. Each party
shall pay its own costs and disbursements for the
preparation, approval and completion of this
Agreement.
SECTION XI
OPTION TO RENEW
Notice to Renew 1. If the Tenant wishes to take a tenancy of the
Premises for a further term of 3 years from the
expiration of the Term at the rent and on the terms
and conditions hereinafter mentioned and shall not
less than 6 months before the expiration of the Term
give to the Landlord notice in writing of such its
desire and if it shall have paid the rent hereby
reserved and shall have reasonably performed and
observed all the terms and conditions herein
contained and on its part to be performed and
observed up to the expiration of the Term then the
Landlord will let the Premises to the Tenant for a
further term of 3 years from the 13th January 2002
at the then current market rent such rent to be
determined in manner hereinafter provided and
subject in all other respects to the same
stipulations as are herein contained except this
clause for renewal and any rent-free period allowed
to the Tenant.
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<PAGE>
New Rent 2. The rent payable for the said further term (the "new
rent") shall be notified by the Landlord to the
Tenant and shall be agreed between the parties
hereto not less than two months immediately prior to
the expiration of the Term Provided that in the
event of a failure by the parties hereto to agree on
the new rent the same shall be determined by an
independent professional valuer or firm of
professional valuers (the "valuer") to be appointed
jointly by the parties hereto in writing or in the
absence of agreement on the identity of the valuer
not less than one month prior to the expiration of
the Term the valuer shall be appointed (on the
application of either party) by the President for
the time being of the Hong Kong Institute of
Surveyors. The valuer shall act as an expert and not
as an arbitrator and the valuer's decision shall be
conclusive and binding on the parties hereto.
Market Rent 3. In determining the current market rent for the
Premises the valuer shall:
(a) make the following assumptions:
(i) that no work has been carried out on the
Premises by the Tenant its subtenants or their
predecessors in title during the Term which
has diminished the rental value of the
Premises
(ii) that the agreements contained in this
Agreement on the part of the Tenant have been
fully performed and observed
(iii) that the Premises are available to let by a
willing landlord to a willing tenant by one
Agreement without a premium being paid by
either party and with vacant possession
(iv) that the Premises are ready for and fitted out
and equipped for immediate occupation and use
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<PAGE>
for the purpose or purposes required by the
willing tenant referred to in paragraph (iii)
and that all the services required for such
occupation and use are connected to the
Premises
(v) that the Agreement referred to in paragraph
(iii) contains the same terms as this
Agreement except the amount of the rent and
any rent free period allowed to the Tenant for
fitting out the Premises for its occupation
and use at the commencement of the Term
(b) and shall disregard the following matters:
(i) any effect on rent of the fact that the Tenant
or its predecessors in title have been in
occupation of the Premises
(ii) any goodwill attributable to the Tenant's
business
(iii) any increase in rental value of the Premises
attributable to the existence at the
expiration of the Term of any improvement to
the Premises carried out by the Tenant with
consent where required otherwise than in
pursuance of an obligation to the Landlord or
its predecessors in title
Before 4. Until the new rent shall have been determined in
determination accordance with Clause 2 above, the Tenant shall pay
of new rent to the Landlord on account of the new rent the
existing monthly rent for the Premises and within
twenty-one days of such determination the Tenant
shall pay to the Landlord any shortfall between the
new rent and the payments made by the Tenant on
account.
Costs 5. The cost and expenses of the valuer shall be borne
by the parties hereto in equal shares.
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<PAGE>
THE SCHEDULE ABOVE REFERRED TO
PART I
LANDLORD: Many Best Development Limited whose registered office is
situate at Workshop 1 on 1st Floor, Tak King Industrial
Building, No.27, Lee Chung Street, Chaiwan, Hong Kong.
TENANT: Workable Company Limited whose registered office is situate at
Workshop 1 on 1st Floor, Tak King Industrial Building, No.27,
Lee Chung Street, Chaiwan, Hong Kong.
PART II
PREMISES: All Those Workshop 1 on 1st Floor & The Flat Roof Thereof and
Lorry Car Park No. 4 on Upper Ground Floor, Tak King Industrial
Building ("the Building"), No.27, Lee Chung Street, Chaiwan,
Hong Kong.
PART III
TERM: Three years commencing on 13th January 1999 and expiring on
12th January 2002.
PART IV
PARTICULARS OF RENT
The rent for the Term shall be HONG KONG DOLLARS FIFTY NINE THOUSAND FOUR
HUNDRED AND FORTY (HK$59,440.00) per calendar month payable in advance on the
first day of each calendar month and exclusive of rates and management fee.
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<PAGE>
PART V
MANAGEMENT FEE: HONG KONG DOLLARS FIVE THOUSAND SIX HUNDRED AND TWELVE
(HK$5,612.00) per calendar month payable monthly in advance on
the 1st day of each calendar month and subject to revision by
the Landlord or the Manager of the Building from time to time.
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<PAGE>
PART VI
DEPOSIT: HONG KONG DOLLARS ONE HUNDRED SEVENTY EIGHT THOUSAND THREE
HUNDRED AND TWENTY (HK$178,320.00).
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<PAGE>
AS WITNESS the hands of the parties hereto the day and year first above
written.
SIGNED by )
)
for and on behalf of the )
Landlord in the presence )
of :- )
SIGNED by )
)
for and on behalf of the )
Tenant in the presence )
of :- )
RECEIVED on or before the day )
and year first above written of and )
from the Tenant the above mentioned )
deposit of HONG KONG DOLLARS ONE HUNDRED )
SEVENTY EIGHT THOUSAND THREE HUNDRED )
AND TWENTY ONLY )HK$178,320.00
)=============
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Dated day of 1999
SPLENDOUR CHIEF DEVELOPMENT LIMITED
and
WORKABLE COMPANY LIMITED
*********************************************
TENANCY AGREEMENT
of
All Those Workshops 1 & 2 on 17th Floor,
Workshops 1 & 2 on 14th Floor, Workshop 1 on
2nd Floor & The Flat Roof and Private Car
Park No. 18 on Upper Ground Floor, Tak King
Industrial Building, No.27, Lee Chung Street,
Chaiwan, Hong Kong
*********************************************
REGISTERED at the Land Registry
by Memorial No.
on
p. Land Registrar.
SO KEUNG YIP & SIN
Solicitors
17th Floor,
Standard Chartered Bank Building
4 Des Voeux Road Central,
Hong Kong
<PAGE>
AGREEMENT
AN AGREEMENT made this day of
One thousand nine hundred and ninety-nine
Parties BETWEEN the person or company detailed as the
Landlord in Part I of the Schedule hereto
(hereinafter called "the Landlord") of the one
part and the person or company detailed as the
Tenant in Part I of the Schedule hereto
(hereinafter called "the Tenant") of the other
part.
W H E R E B Y :-
Premises The Landlord shall let and the Tenant shall take
ALL THOSE the premises (hereinafter referred to as
"the Premises") forming part of all that building
(hereinafter referred to as "the Building") and
more particularly described and set out in Part II
of the Schedule attached hereto Together with the
use in common with the Landlord and all others
having the like right of the entrances staircases
landings passages and toilets in the Building in
so far as the same are necessary for the proper
use and enjoyment of the Premises and except in so
far as the Landlord may from time to time restrict
such use (without unreasonably interfering with
the use, occupation or enjoyment of the Premises
by the Tenant) And together with the right in
common with others having the like right to use
Term the lift service in the building (whenever the
same shall be operating) for the term set forth in
Rent Part III of the Schedule hereto YIELDING AND
PAYING therefor throughout the said term (but
subject to Clause 10 of Section X hereof) the rent
as are set out in Part IV of the Schedule hereto
which sums shall be payable exclusive of rates and
management fees in advance without any deductions
on the first day of each calendar month the first
and last of such payments to be apportioned
according to the number of days in the month
included in the said term.
User Subject as hereinafter mentioned and unless
otherwise agreed by the parties hereto, the Tenant
agrees to use the Premises for industrial and
ancillary offices and warehouse purposes only and
for no other purpose
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<PAGE>
whatsoever.
II
RENT AND OTHER CHARGES
The Tenant agrees with the Landlord as follows:-
1. To pay on the days and in the manner herein
provided :-
Rent (a) the said rent;
Air- (b) the air-conditioning charges (if any);
Conditioning
Charges
Maintenance (c) the cleaning charges (if any);
Charges
Cleaning (d) the management fees payable by the owner or
Charges occupier of the Premises pursuant to or by
Management virtue of the Deed of Mutual Covenant or
Fees Management Agreement relating to the building
(if any).
Rates 2. To pay and discharge all rates taxes
assessments duties impositions charges and
outgoings whatsoever now or hereafter to be
imposed or levied on the Premises or upon the
owner or occupier in respect thereof by the
Government of The Hong Kong Special
Administrative Region or other lawful
authority (Government Rent, Property Tax and
outgoings of a capital or non-recurring
nature excepted). Without prejudice to the
generality of this subclause the Tenant shall
pay all rates imposed on the Premises in the
first place to the Landlord who shall settle
the same with the Government of The Hong Kong
Special Administrative Region and in the
event of the Premises not yet having been
assessed to rates the Tenant shall pay to the
Landlord a sum equal to the rates which would
be charged by the Government of The Hong Kong
Special Administrative Region on the basis of
a rateable value equal to twelve months' rent
payable by the Tenant on account of the
Tenant's liability under this Clause subject
to adjustment when the assessment is
available.
Utilities 3. To pay and discharge all deposits and charges
in respect of gas water deposits
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<PAGE>
electricity air conditioning and telephone
as may be shown by or operated from the
Tenant's own metered supplies or by accounts
rendered to the Tenant in respect of all
such utilities consumed on or in the
Premises.
III
TENANT'S OBLIGATIONS
Compliance 1. To obey observe and comply with and to
with Ordinances indemnify the Landlord against the breach of
all ordinances, regulations, bye-laws, rules
and requirements of any Governmental or other
competent authority relating to the use and
occupation of the Premises or any other act,
deed, matter or thing done, permitted,
suffered or omitted therein or thereon by the
Tenant of any employee, agent or licensee of
the Tenant and without prejudice to the
foregoing to obtain any approval licence or
permit required by any Governmental or other
competent authority in connection with the
Tenant's use and occupation of the Premises
and to indemnify the Landlord against the
consequences of a breach of this provision.
Fitting Out 2. To fit out the interior of the Premises in
accordance with such plans and specifications
as shall have been first submitted to and
approved by the Landlord in writing (such
approval shall not be unreasonably withheld
or delayed) in a good and proper workmanlike
fashion and safety and so to maintain the
same throughout the said term in good
condition and repair to the satisfaction of
the Landlord (fair wear and tear inherent or
latent defects excepted).
Good Repair 3. To keep all the interior of the Premises
of Interior including the flooring interior plaster or
other finishing material or rendering to the
walls floors and ceilings and the Landlord's
fixtures and fittings therein including all
doors windows electrical installations and
wiring light fittings suspended ceilings fire
fighting apparatus and ducting in good clean
tenantable substantial and proper repair and
condition (fair wear and tear inherent or
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<PAGE>
latent defects excepted) so as to maintain
the same at the expense of the Tenant, and to
deliver up the same to the Landlord at the
expiration or sooner determination of the
said term in like condition.
Replacement 4. To pay to or reimburse the Landlord the cost
of Windows of replacing all broken or damaged windows
whether the same be broken or damaged by the
negligence of the Tenant or owing to
circumstances beyond the control of the
Tenant.
Repair of 5. To repair or replace if so required by the
Electrical appropriate company or authority by duly
Installations authorised contractor statutory undertaker or
authority as the case may be under the terms
of the Electricity Supply Ordinance or any
statutory modification or re-enactment
thereof or any Orders in Council or
regulations made thereunder all the
electrical wiring installations and fittings
within the Premises and the wiring from the
Tenant's meter or meters to and within the
same.
Good Repair 6. At the expense of the Tenant to maintain all
to Toilets and toilets and water apparatus as are located
Water Apparatus within the Premises (or elsewhere if used
exclusively by the Tenant its employees
invitees and licensees) in good clean and
tenantable state and in proper repair and
condition (fair wear and tear inherent and
latent defects excepted) at all times during
the said term to the satisfaction of the
Landlord and in accordance with the
Regulations of the Public Health or other
Government Authority concerned.
Cleaning of 7. To pay on demand to the Landlord the
Drains reasonable cost incurred by the Landlord in
cleaning and clearing any of the drains
choked or stopped up owing to the improper or
careless use by the Tenant or its employees
invitees or licensees.
Indemnify 8. To be wholly responsible for any damage to
against Loss/ the Premises or any damage or injury caused
Damage from to any person whomsoever directly through the
Interior Defects defective or damaged condition of any part of
the interior of the Premises or in any way
owing to the spread of fire or smoke or the
overflow of water from the Premises or any
part thereof or
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<PAGE>
through the act default or neglect of the
Tenant its servants agents licensees or
contractors and to make good the same by
payment or otherwise and to indemnify the
Landlord against all reasonable costs claims
demands actions and legal proceedings
whatsoever made upon the Landlord by any
person in respect of any such loss damage or
injury and all costs and expenses incidental
thereto, and to effect adequate insurance
cover in respect of such risks with a
reputable company. The policy of such
insurance shall be endorsed to show the
Landlord as registered owner of the Building
or the Premises (as the case may be) and
shall be in such amount as may be required by
the Landlord and in the reasonable opinions
of the Landlord to be sufficiently covered
all the risks mentioned above and shall
contain a clause to the effect that the
insurance cover thereby effected and the
terms and conditions thereof shall not be
cancelled modified or restricted without the
prior consent of the Landlord (which consent
shall not be unreasonably withheld or
delayed). The Tenant hereby further
undertakes to produce to the Landlord as and
when required by the Landlord on reasonable
prior written notice such policy of insurance
together with a receipt for the last payment
of premium and a certificate from the
insurance company that the policy is fully
paid up and in all respects valid and
subsisting.
Protection 9. To take all reasonable precautions to protect
from typhoon the interior of the Premises from storm or
typhoon damage.
To permit 10. To permit the Landlord its agents and all
Landlord to persons authorised by it with or without
enter and view workmen or others and with or without
appliances at all reasonable times upon prior
appointment to enter upon the Premises to
view the condition thereof and to take
inventories of the fixtures and fittings
therein and to carry out any work or repair
required to be done provided that in the
event of an emergency the Landlord its
servants or agents may enter without notice
and forcibly if need be.
To execute 11. To make good all defects and wants of repair
repair on receipt to the Premises for which the
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<PAGE>
of notice Tenant may be liable within the period of one
month from the receipt of written notice from
the Landlord to amend and make good the same,
and if the Tenant shall fail to execute such
works or repairs as aforementioned to permit
the Landlord on reasonable prior written
notice to enter upon the Premises and execute
the same and in such case the reasonable cost
thereof shall be a debt due from the Tenant
to the Landlord and be recoverable forthwith
by action.
Inform 12. To give notice to the Landlord or its agent
Landlord of of any damage that may be suffered to the
Damage Premises and of accident to or defects in the
water and gas pipes electrical wiring or
fittings, fixtures or other facilities
provided by the Landlord.
Refuse and 13. To be responsible for the removal of refuse
Garbage Removal and garbage from the Premises to such
location as shall be specified by the
Landlord from time to time and to use only
that type of refuse container as is specified
by the Landlord from time to time. In the
event of the Landlord providing a collection
service for refuse and garbage the same shall
be used by the Tenant to the exclusion of any
other similar service and the use of such
service provided by the Landlord shall be at
the sole cost of the Tenant.
Installation 14. The Tenant shall make its own arrangements
of Telephone with the public telephone company in Hong
Cables Kong with regard to the installation of
telephones in the Premises, but the
installation of telephone lines outside the
Premises must be in accordance with the
Landlord's reasonable directions.
Government 15. To be bound by and to be observe and perform
Lease and Deed of all the terms conditions stipulations and
Mutual Covenant covenants contained Government Lease and Deed
of Mutual Covenant of the Building.
Contractors 16. To be liable for any act default negligence
Employees or omission of the Tenant's contractors,
Invitees and employees invitees or licensees as if it were
Licensees the act default negligence or omission of the
Tenant and to indemnify the Landlord against
all costs claims demands expenses or
liability
- 6 -
<PAGE>
to any third party in connection therewith.
Yield up 17. To yield up the Premises with all fixtures
Premises fittings and additions therein and thereto at
and Handover the expiration or sooner determination of the
Term in good clean substantial and proper
repair and condition (fair wear and tear
inherent and latent defects excepted) AND
thereupon to surrender to the Landlord all
keys leading to all parts of the Premises and
if required by the Landlord to remove at the
Tenant's expense all fixtures, fittings,
additions, partitions, floor coverings, wall
finishes, false ceilings, electrical
installations and wirings, erections, and
alterations made or installed upon or in the
Premises whether by the Tenant or by a
previous occupier of the Premises and taken
over by the Tenant and to re-instate restore
and make good any damage caused by such
removal or re-instatement Provided that the
Tenant's obligations relating to removal or
re-instatement under this Clause may be
modified or varied by the mutual agreement
between the Landlord and the Tenant that the
Landlord proposes without payment of any
compensation to retain all or any of the said
fixtures, fittings, additions, partitions,
floor coverings, erections and alterations
which the Tenant is otherwise liable
hereunder to remove but subject to this
proviso, the Tenant shall re-instate restore
and make good the Premises or any part
thereof requiring to be re-instated restored
or made good and deliver up the Premises to
the Landlord in "bare shell" condition and in
the event of the Tenant failing so to do the
Tenant shall on demand pay to the Landlord
the cost of such re-instatement restoration
or making good.
IV
LANDLORD'S OBLIGATIONS
The Landlord agrees with the Tenant as follows:-
Quiet 1. To permit the Tenant (duly paying the rent
Enjoyment the management fees and the cleaning charges
(if any) hereby agreed to be paid
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<PAGE>
on the days and in manner herein provided for
payment of the same and rates and observing
and performing the agreements stipulations
terms conditions and obligations herein
contained) to have quiet possession and
enjoyment of the Premises during the said
term without any interruption by the Landlord
or any person lawfully claiming under or
through or in trust for the Landlord.
Government Rent 2. To pay the Government Rent and Property Tax
and outgoings of a capital or non-recurring
nature attributable to or payable in respect
of the Premises.
Roof and 3. To repair maintain and keep main drains water
Main pipes main cables main walls roofs and
Structure exterior window frames of the Building
(except in so far as the same are within the
responsibility of the Tenant hereunder) in a
proper state of repair and condition Provided
that the Landlord shall not be liable for
breach of this Clause (so far as it relates
to the Premises) unless and until written
notice of any defect or want of repair has
been given to the Landlord by the Tenant and
the Landlord has failed to take reasonable
steps to repair or remedy the same.
4. To use its best endeavours to ensure the
Manager of the Management Office carries out
his duty under the Deed of Mutual Covenant
and Management Agreement.
SECTION V
RESTRICTIONS AND PROHIBITIONS
The Tenant hereby agrees with the Landlord as
follows:-
Installation 1. (a) Not to make or permit or suffer to be made
and Alterations any alterations in or additions to the
Premises or to the electrical wiring
installation, air-conditioning ducting (if
any), lighting fixtures or other Landlord's
fixtures or to install any plant apparatus or
machinery therein without first having
obtained the written consent of the Landlord
therefor (which consent shall not be
unreasonably
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<PAGE>
withheld or delayed).
(b) Not to place on any part of the Premises
object of any kind of the weight of which is
in excess of the floor loading of the
Premises.
(c) Not to erect install or alter any
partitioning of any kind in the Premises or
any part thereof without having obtained the
Landlord's prior written approval (which
approval shall not be unreasonably withheld
or delayed). Any such partitioning or
alteration thereof approved by the Landlord
shall be constructed or made at such position
and with such material and in accordance with
such other requirement (if any) as shall be
reasonably directed or approved by the
Landlord. All reasonable fees and expenses
incurred by the Landlord in obtaining the
approval of the Landlord's architects or
consultants on the location of such
partitioning or alteration shall be borne by
the Tenant and payment therefor to the
Landlord as may be imposed as a pre-requisite
of the Tenant receiving such permission.
Injury to 2. Not to cut maim or injure or permit or suffer
Main Walls to be cut maimed or injured any doors windows
walls beams structural members or other part
of the fabric of the Premises.
Alteration 3. Save as provided in Section V Clause 5 hereof
to not to affix anything or paint or make any
Exterior alteration whatsoever to the exterior of the
Premises.
Noise 4. Not to cause or produce or suffer or permit
to be produced on or in the Premises any
sound or noise which is or are or may be a
nuisance or annoyance to the tenants or
occupiers of adjacent or neighbouring
premises.
Signs 5. Not without the prior written approval of the
Landlord (which approval shall not be
unreasonably withheld or delayed if the
Tenant shall have complied with any relevant
regulations and rules of the government and
the direction of the
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<PAGE>
manager of the Building) to exhibit or
display on the exterior of the Premises any
writing sign signboard or other device
whether illuminated or not which may be
visible from outside the Premises nor to
affix any writing signs signboard or other
device in at or above any common area lobby
landing or corridor of the Building provided
that the Tenant may display its name and
trade name in appropriate size(s) and in a
reasonable manner acceptable to the manager
of the Building.
Auction and 6. Not to conduct or permit to be taken place
Sales any auction fire bankruptcy close out or
similar sales of things or properties of any
kind on the Premises.
Illegal or 7. Not to use or cause permit or suffer to be
Immoral Use used any part of the Premises for gambling or
for any illegal immoral or improper purposes
or in any way so as to cause nuisance
annoyance inconvenience or damage or danger
to the Landlord or the tenants or occupiers
of adjacent or neighbouring premises.
Sleeping or 8. Not to use the Premises or any part thereof
Domestic Use as sleeping quarters or as domestic premises
within the meaning of any ordinance for the
time being in force or to allow any person to
remain on the Premises overnight unless with
the Landlord's prior permission in writing.
Such permission shall only be given to enable
the Tenant to post watchmen to look after the
contents of the Premises and the names of the
watchmen shall first be registered with the
Landlord prior to its giving such permission.
Obstructions 9. Not to place or leave or suffer or permit to
in Passages be placed or left by any contractor employee
invitee or licensee of the Tenant any boxes
furniture articles or rubbish in the entrance
or any of the staircases passages or landings
of the Building used in common with other
tenants or the Landlord or otherwise encumber
the same.
Prevention 10. Not to cause or permit any offensive or
of odours unusual odours to be produced upon or emanate
from the Premises.
Animals, Pets 11. Not to keep or permit or suffer to be kept
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<PAGE>
and infestation any animals or pets inside the Premises and
to take all such steps and precautions to the
satisfaction of the Landlord to prevent the
Premises or any part thereof from becoming
infested by termites rats mice roaches or any
other pests or vermin and for the better
observance hereof the Landlord may require
the Tenant to employ at the Tenants cost such
pest extermination contractors as the
Landlord may nominate and at such intervals
as the Landlord may direct.
Subletting, 12. Not without the prior written consent of the
Assigning Landlord to assign underlet or otherwise part
with the possession of the Premises or any
part thereof in any way whether by way of
sub-letting lending sharing or other means
whereby any person or persons not a party to
this Agreement obtains the use or possession
of the Premises or any part thereof
irrespective of whether any rental or other
consideration is given for such use or
possession and in the event of any such
transfer sub-letting sharing assignment or
parting with the possession of the Premises
(whether for monetary consideration or not)
this Agreement shall absolutely determine and
the Tenant shall forthwith vacate the
Premises on notice to that effect from the
Landlord. The Tenancy shall be personal to
the Tenant named in the First Schedule to
this Agreement and without in any way
limiting the generality of the foregoing the
following acts and events shall unless
approved in writing by the Landlord be deemed
to be breaches of this Clause :-
(a) In the case of a tenant which is a
partnership the taking in of one or more
new partners whether on the death or
retirement of an existing partner or
otherwise.
(b) In the case of a tenant who is an
individual (including a sole surviving
partner of a partnership tenant) the
death insanity or disability of that
individual to the intent that no right
to use possess occupy or enjoy the
Premises or any part thereof shall vest
in the executors administrators personal
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<PAGE>
representatives next of kin trustee or
committee of any such individual.
(c) In the case of a tenant which is a
corporation liquidation save for
internal reconstruction or amalgamation.
(d) The giving by the Tenant of a Power of
Attorney or similar authority whereby
the donee of the Power obtains the right
to use possess occupy or enjoy the
Premises or any part thereof or does in
fact use possess occupy or enjoy the
same.
Breach of 13. Not to cause suffer or permit any
Government Lease contravention of the provisions of the
Government Lease under which the Landlord
holds the Premises and to indemnify the
Landlord against any such breach.
Breach of 14. Not to cause or suffer or permit to be done
Insurance Policy any act or thing whereby the policy or
policies of Insurance on the Premises against
damage by fire or liability to Third parties
for the time being subsisting may become void
or voidable or whereby the rate or premium or
premiums thereon may be increased, and to
repay to the Landlord on demand all sums paid
by the Landlord by way of increased premium
or premiums thereon and all expenses incurred
by the Landlord in and about any renewal of
such policy or policies arising from or
rendered necessary by a breach of this
Clause.
V
EXCLUSIONS
IT IS HEREBY FURTHER EXPRESSLY AGREED AND DECLARED
that the Landlord shall not in any circumstances be
liable to the Tenant or any other person whomsoever
unless caused by the act, negligence or default of
the Landlord, its agents or servants :-
Lift, Air- 1. In respect of any loss or damage to person or
conditioning, property sustained by the Tenant or any other
Utilities person caused by or through or in any way
owing to any defect in or
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<PAGE>
breakdown of the lifts air-conditioning
system, electric power and water supplies, or
any other building service provided in the
Building, or
Fire and 2. In respect of any loss or damage to person or
overflow property sustained by the Tenant or any other
of water person caused by or through or in any way
owing to the escape of fumes smoke fire or
any other substance or thing or the overflow
of water from anywhere within the Building,
or
Security 3. For the security or safekeeping of the
Premises or any contents therein and in
particular but without prejudice to the
generality of the foregoing the provision by
the Landlord of watchmen and caretakers shall
not create any obligation on the part of the
Landlord as to the security of the Premises
or any contents therein and the
responsibility for the safety of the Premises
and the contents thereof shall at all times
rest with the Tenants, nor shall the rent and
other charges hereinbefore mentioned or any
part thereof abate or cease to be payable on
account of any of the foregoing.
VI
ABATEMENT OF RENT
Suspension of If the Premises or the Building or any part thereof
rent in case shall at any time during the tenancy be destroyed or
of fire etc. damaged or become inaccessible owing to fire water
storm typhoon defective construction white ants
earthquake subsidence of the ground or any calamity
beyond the control of the Landlord so as to render
the Premises or any part thereof unfit for
industrial use or inaccessible and the policy or
policies of insurance effected by the Landlord shall
not have been vitiated or payment of the policy
moneys refused in whole or in part in consequence of
any act or default of the Tenant or if at any time
during the continuance of this tenancy the Premises
or the Building or any part thereof shall be
condemned as a dangerous structure or a demolition
order or closing order shall become operative in
respect of the Premises or the Building or any part
thereof then the rent hereby reserved or a
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<PAGE>
fair proportion thereof according to the nature and
extent of the damage sustained or order made shall
after the expiration of the then current month be
suspended until the Premises or Building or (as the
case may be) the relevant part thereof shall again
be rendered accessible and fit for industrial or
warehouse use provided that should the Premises or
the Building or (as the case may be) the relevant
part thereof not have been reinstated in the
meantime either the Landlord or the Tenant may at
any time after one month from the occurrence of such
damage or destruction or order give to the other of
them notice in writing to determine this present
tenancy and thereupon the same and everything herein
contained shall cease and be void as from the date
of the occurrence of such destruction or damage or
order or of the Premises or the relevant part
thereof becoming inaccessible or unfit for
industrial or warehouse use but without prejudice to
the rights and remedies of either party against the
other in respect of any antecedent claim or breach
of the agreements stipulations terms and conditions
herein contained or of the Landlord in respect of
the rent payable hereunder prior to the coming into
effect of the suspension.
VII
DEFAULT
It is hereby expressly agreed and declared as
follows :-
Default 1. If the rent and/or the management fees
payable hereunder or any part thereof shall
be in arrear for fifteen (15) days after the
same shall have become payable (whether
formally demanded or not) or if there shall
be any breach or non-performance of any of
the stipulations conditions or agreements
herein contained and on the part of the
Tenant to be observed or performed or if the
Tenant shall become bankrupt or being a
corporation go into liquidation (save for the
purposes of amalgamation or reconstruction)
or if the Tenant shall suffer execution to be
levied upon the
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<PAGE>
Premises or otherwise on the Tenant's goods
then and in any such case it shall be lawful
for the Landlord at any time thereafter to
re-enter on and upon the Premises or any part
thereof in the name of the whole and
thereupon this Agreement shall absolutely
determine but without prejudice to any right
of action by the Landlord in respect of any
outstanding breach or non-observance or
non-performance by the Tenant of any of the
terms of this Agreement. All reasonable costs
and expenses incurred by the Landlord in
demanding payment of the rent and other
charges aforesaid (if the Landlord elects to
demand) arising out of this Clause shall be
paid by the Tenant and shall be recoverable
from the Tenant as a debt or be deductible by
the Landlord from any deposit held by the
Landlord hereunder.
Acceptance 2. The acceptance of any rent by the Landlord
of Rent hereunder shall not be deemed to operate as a
waiver by the Landlord of any right to
proceed against the Tenant in respect of any
breach non-observance or non-performance by
the Tenant of any of the agreements
stipulations terms and conditions herein
contained and on the part of the Tenant to be
observed and performed.
Acts of 3. For the purpose of these presents any act
Employees default neglect or omission of any guest
Invitees and visitor servant contractor employee agent
Licensees invitee or licensee of the Tenant shall be
deemed to be the act default neglect or
omission of the Tenant.
Distraint 4. For the purpose of Part III of the Landlord
and Tenant (Consolidation) Ordinance (Chapter
7) and of these presents, the rent payable in
respect of the Premises shall be deemed to be
in arrears if not paid in advance at the
times and in the manner hereinbefore provided
for payment thereof.
Interest etc. 5. Notwithstanding anything hereinbefore
contained if the Tenant shall fail to pay the
rental and/or other moneys herein reserved or
any part thereof on due date the Landlord
shall be entitled to recover from the Tenant
as a debt the following
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<PAGE>
expenses incurred by the Landlord in the
course of recovering the rental in arrears
and/or other moneys unpaid or any part
thereof :-
(a) all Solicitors' and/or Counsels' fees
(on taxed costs basis) and court fees
incurred by the Landlord for the purpose
of recovering the rental and
air-conditioning charges in arrears
and/or other moneys unpaid or any part
thereof from the Tenant;
(b) any other reasonable fees paid to
debt-collectors appointed by the
Landlord for the purpose of collecting
the rental and air-conditioning charges
in arrears and/or other moneys unpaid or
any part thereof from the Tenant;
(c) interest calculated at the rate of 3%
over the prime rate of The Hongkong &
Shanghai Banking Corporation Limited on
the rental and air-conditioning charges
in arrears and/or other moneys unpaid or
any part thereof from the date due for
payment to the date of actual payment.
VIII
DEPOSIT
Deposit 1. The Tenant shall on the signing hereof and at
such other times (if any) during the term of
tenancy hereby created as are specified in
Part III of the Schedule hereto deposit with
the Landlord the sum or sums specified in
Part VI of the Schedule to secure the due
observance and performance by the Tenant of
the agreements stipulations terms and
conditions herein contained and on the part
of the Tenant to be observed and performed
which said deposit shall be held by the
Landlord throughout the currency of this
agreement free of any interest to the Tenant
with the right for the Landlord (without
prejudice to any other right or remedy
hereunder) to deduct therefrom the amount of
any rent rates and other charges payable
hereunder and any costs expenses
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<PAGE>
loss or damage sustained by the Landlord as
the result of any non-observance or
non-performance by the Tenant of any of the
said agreements, stipulations obligations or
conditions. In the event of any deduction
being made by the Landlord from the said
deposit in accordance herewith during the
currency of this Agreement the Tenant shall
forthwith on demand by the Landlord make a
further deposit equal to the amount so
deducted and failure by the Tenant so to do
shall entitle the Landlord forthwith to
re-enter upon the Premises and to determine
this Agreement as hereinbefore provided.
Repayment of 2. Subject as aforesaid the said deposit shall
Deposit be refunded to the Tenant by the Landlord
without interest within fourteen days after
the expiration or sooner determination of
this Agreement and delivery of vacant
possession to the Landlord and after
settlement of the last outstanding claim by
the Landlord against the Tenant for any
arrears of rent rates and other charges and
for any breach non-observance or
non-performance of any of the agreements
stipulations terms and conditions herein
contained and on the part of the Tenant to be
observed or performed whichever shall be the
later.
Transfer of 3. If at any time during the term of the tenancy
Deposit hereby created, the Landlord shall sell or
otherwise assign the said premises to the new
owner ("New Owner"), the Landlord may at any
time enter into 3 party agreement with the
New Owner and the Tenant, transferring to the
New Owner the said deposit (subject to the
Landlord's right of deduction aforesaid).
Upon signing such 3 party agreement the
Landlord (which in this context shall exclude
its assigns) shall be released of its
liability and obligation under this Agreement
to refund the said deposit or any balance
thereof to the Tenant. The Tenant shall claim
for the refund of the said deposit or the
balance thereof from the New Owner only.
- 17 -
<PAGE>
X
INTERPRETATION AND MISCELLANEOUS
Marginal 1. The Marginal Notes, Headings and Index are
Notes, Headings intended for guidance only and do not form
and Index part of this Agreement nor shall any of the
provisions of this Agreement be construed or
interpreted by reference thereto or in any
way affected or limited thereby.
As-is Basis 2. The Tenant shall take over the Premises on an
"as is" basis which include any ducting or
vents currently installed for extraction of
exhaust gases, fumes and hot air from the
Premises but the Landlord gives no warranty
or representation as to the adequacy thereof
or as to their compliance with all relevant
regulations.
No Warranty 3. The Landlord does not represent or warrant
that the Premises are suitable for the user
specified in the Section I hereto or the use
or purposes for the intended user by the
Tenant and the Tenant shall satisfy itself or
shall be deemed to have satisfied itself that
they are suitable for the purpose for which
they are to be used and the Tenant hereby
agrees that it will at its own expense apply
for any requisite licences or permits from
all Government or Public Authorities in
respect of the conduct of the Tenant's
business in the Premises and shall execute
and comply with all Ordinances, Regulations,
Orders, Notices or Rules made by all
competent Government or Public Authorities in
connection with such business as aforesaid
and the Landlord gives no warranty or
representation as to compliance with all
relevant regulations in respect of the
aforesaid use AND the Tenant hereby further
agrees to indemnify the Landlord in respect
of any breach by the Tenant of this Clause.
Condonation 4. No condoning, excusing or overlooking by the
not a waiver Landlord of any default, breach or
non-observance or non-performance by the
Tenant at any time or times of any of the
agreements stipulations terms and conditions
herein contained shall operate as a waiver of
the Landlord's rights hereunder in respect of
any continuing or subsequent default, breach
or non-observance or non-performance or so as
- 18 -
<PAGE>
to defeat or affect in any way the rights
and remedies of the Landlord hereunder in
respect of any such continuing or subsequent
default or breach and no waiver by the
Landlord shall be inferred from or implied by
anything done or omitted by the Landlord,
unless expressed in writing and signed by the
Landlord. Any consent given by the Landlord
shall operate as a consent only for the
particular matter to which it relates and
shall in no way be considered as a waiver or
release of any of the provisions hereof nor
shall it be construed as dispensing with the
necessity of obtaining the specific written
consent of the Landlord in future, unless
expressly so provided.
Letting 5. During the three months immediately before
Notices and the expiration or sooner determination of the
Entry term of this Agreement the Landlord shall be
at liberty to affix and maintain without
interference upon any external part of the
Premises a notice stating that the Premises
are to be let and such other information in
connection therewith as the Landlord shall
reasonably require during the aforementioned
period of 3 months provided that such notice
will not block any window of the Premises or
part thereof.
Service of 6. Any notice required to be served on the
Notice Tenant shall be sufficiently served if
delivered to or despatched by registered post
or left at the registered office of the
Tenant. A notice sent by registered post
shall be deemed to be given at the time and
date of posting.
Gender & 7. In this Agreement if the context permits or
Plural requires words importing the singular number
shall include the plural number and vice
versa and words importing the masculine
feminine or neuter gender, shall include the
other of them.
Stamp Duty 8. The Stamp Duty and registration fee (if any)
and Costs on this Agreement and its counterpart shall
be borne by the Landlord and the Tenant in
equal shares. Each party shall pay its own
costs and disbursements for the preparation,
approval and completion of this Agreement.
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<PAGE>
Rent-free 9. The Tenant will be entitled to a rent-free
Period period commencing on the 13th day of January
1999 and expiring on the 12th day of January
2000 but the Tenant shall remain responsible
to pay the rates, management fees and utility
charges for the Premises during such
rent-free period.
XI
OPTION TO RENEW
Notice to Renew 1. If the Tenant wishes to take a tenancy of the
Premises for a further term of 3 years from
the expiration of the Term at the rent and on
the terms and conditions hereinafter
mentioned and shall not less than 6 months
before the expiration of the Term give to the
Landlord notice in writing of such its desire
and if it shall have paid the rent hereby
reserved and shall have reasonably performed
and observed all the terms and conditions
herein contained and on its part to be
performed and observed up to the expiration
of the Term then the Landlord will let the
Premises to the Tenant for a further term of
3 years from the 13th January 2002 at the
then current market rent such rent to be
determined in manner hereinafter provided and
subject in all other respects to the same
stipulations as are herein contained except
this clause for renewal and any rent-free
period allowed to the Tenant.
New Rent 2. The rent payable for the said further term
(the "new rent") shall be notified by the
Landlord to the Tenant and shall be agreed
between the parties hereto not less than two
months immediately prior to the expiration of
the Term Provided that in the event of a
failure by the parties hereto to agree on the
new rent the same shall be determined by an
independent professional valuer or firm of
professional valuers (the "valuer") to be
appointed jointly by the parties hereto in
writing or in the absence of agreement on the
identity of the valuer not less than one
month prior to the expiration of the Term the
valuer shall be appointed (on the application
of either party) by the President for the
time being of the Hong
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<PAGE>
Kong Institute of Surveyors. The valuer shall
act as an expert and not as an arbitrator and
the valuer's decision shall be conclusive and
binding on the parties hereto.
Market Rent 3. In determining the current market rent for
the Premises the valuer shall:
(a) make the following assumptions:
(i) that no work has been carried out
on the Premises by the Tenant its
subtenants or their predecessors in
title during the Term which has
diminished the rental value of the
Premises
(ii) that the agreements contained in
this Agreement on the part of the
Tenant have been fully performed
and observed
(iii) that the Premises are available to
let by a willing landlord to a
willing tenant by one Agreement
without a premium being paid by
either party and with vacant
possession
(iv) that the Premises are ready for and
fitted out and equipped for
immediate occupation and use for
the purpose or purposes required by
the willing tenant referred to in
paragraph (iii) and that all the
services required for such
occupation and use are connected to
the Premises
(v) that the Agreement referred to in
paragraph (iii) contains the same
terms as this Agreement except the
amount of the rent and any rent
free period allowed to the Tenant
for fitting out the Premises for
its occupation and use at the
commencement of the Term
- 21 -
<PAGE>
(b) and shall disregard the following
matters:
(i) any effect on rent of the fact that
the Tenant or its predecessors in
title have been in occupation of
the Premises
(ii) any goodwill attributable to the
Tenant's business
(iii) any increase in rental value of the
Premises attributable to the
existence at the expiration of the
Term of any improvement to the
Premises carried out by the Tenant
with consent where required
otherwise than in pursuance of an
obligation to the Landlord or its
predecessors in title
Before 4. Until the new rent shall have been determined
determination in accordance with Clause 2 above, the Tenant
of new rent shall pay to the Landlord on account of the
new rent the existing monthly rent for the
Premises and within twenty-one days of such
determination the Tenant shall pay to the
Landlord any shortfall between the new rent
and the payments made by the Tenant on
account.
Costs 5. The cost and expenses of the valuer shall be
borne by the parties hereto in equal shares.
THE SCHEDULE ABOVE REFERRED TO
PART I
LANDLORD: Splendour Chief Development Limited whose registered office is
situate at Workshop 1 on 1st Floor, Tak King Industrial Building,
No.27, Lee Chung Street, Chaiwan, Hong Kong.
- 22 -
<PAGE>
TENANT: Workable Company Limited whose registered office is situate at
Workshop 1 on 1st Floor, Tak King Industrial Building, No.27, Lee
Chung Street, Chaiwan, Hong Kong.
PART II
PREMISES: All Those Workshops 1 & 2 on 17th Floor, Workshops 1 & 2 on 14th
Floor, Workshop 1 on 2nd Floor & The Flat Roof Thereof and Private
Car Park No. 18 on Upper Ground Floor, Tak King Industrial
Building ("the Building"), No.27, Lee Chung Street, Chaiwan, Hong
Kong.
PART III
TERM: Three years commencing on 13th January 1999 and expiring on 12th
January 2002.
PART IV
PARTICULARS OF RENT
The rent for the Term shall be HONG KONG DOLLARS ONE HUNDRED SIXTY SEVEN
THOUSAND (HK$167,000.00) per calendar month payable in advance on the first day
of each calendar month and exclusive of rates and management fee.
PART V
MANAGEMENT FEE: HONG KONG DOLLARS FIFTEEN THOUSAND FIVE HUNDRED AND SIXTY
FOUR (HK$15,564.00) per calendar month payable monthly in
advance on the 1st day of each calendar month and subject
to revision by the Landlord or the Manager of the Building
from time to time.
PART VI
DEPOSIT : HONG KONG DOLLARS FIVE HUNDRED AND ONE THOUSAND
(HK$501,000.00).
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<PAGE>
AS WITNESS the hands of the parties hereto the day and year first above
written.
SIGNED by )
)
for and on behalf of the )
Landlord in the presence )
of :- )
SIGNED by )
)
for and on behalf of the )
Tenant in the presence )
of :- )
RECEIVED on or before the day )
and year first above written of and )
from the Tenant the above mentioned )
deposit of HONG KONG DOLLARS FIVE )
HUNDRED AND ONE THOUSAND ONLY )HK$501,000.00
)=============
- 24 -
Wednesday January 13, 6:01 am Eastern Time
Company Press Release
Cunningham Graphics International Acquires Hong
Kong Printer
JERSEY CITY, N.J.--(BUSINESS WIRE)--Jan. 13, 1999--Cunningham Graphics
International, Inc. (NASDAQ NM: CGII- news) announced today that it has
completed the acquisition of Workable Company Limited (Workable), a full service
printing company with operations in Hong Kong and Singapore. Established in
1988, Workable has been Cunningham Graphics International's strategic partner in
Asia for more than 2 years and is the leading printer of research reports in
Hong Kong.
The purchase price of the transaction was approximately $12.3 million, paid 50%
in cash and 50% in common stock of the company, plus the assumption of $0.7
million of indebtedness. The purchase price may increase, depending upon the
earnings of Workable over the next 3 years, up to a maximum of an additional
$3.8 million. Management expects the acquisition of Workable to be accretive to
Cunningham Graphics' 1999 earnings. Inclusive of this acquisition, Cunningham
Graphics' annualized revenues are in excess of $70 million.
Workable, an ISO 9001 certified company, has invested in state of the art
printing, digital and data communications technology and maintains around the
clock operations to provide overnight shipments to financial centers throughout
Asia. Eight out of Workable's top ten clients are US & European financial
services companies. Workable's operations will continue to be supervised by its
current management team led by Evan Lam, the Managing Director.
Workable has been a member of the World Research Link(TM) for the past 2 years.
The World Research Link (TM), founded by Cunningham Graphics in 1994,
facilitates the expeditious distribution of time- sensitive financial research
reports throughout select international financial markets. Through the use of
high- speed electronic links among the Company's facilities in the United
States, the United Kingdom and Hong Kong, the Company is able to print research
reports concurrently through these three principal international financial
markets while eliminating certain distribution costs.
Michael Cunningham, Chairman and Chief Executive Officer of Cunningham Graphics,
commented, "We are very pleased to strengthen our position in the important
Asian market through the acquisition of this well run company. Under the
leadership of Evan Lam, Workable has grown it's revenues over the past 5 years
at a 22% compounded annual growth rate while maintaining impressive margins.
This acquisition is in line with our growth strategy to pursue strategic
acquisitions in order to expand our base of operations and capitalize on
geographic cross-selling opportunities. We are continuing to pursue aggressively
additional acquisitions within the printing industry and are currently
evaluating a number of potential acquisition candidates."
Cunningham continued, "We will continue to seek complementary operations in the
United States, the United Kingdom and other international markets which, possess
attractive characteristics, including major customers with significant printing
needs, such as insurance companies, publishing companies and universities. We
are targeting acquisition candidates with; (i) annual net sales ranging from
$3.0 to $25.0 million; (ii) attractive growth prospects within their respective
markets; (iii) complementary technological capabilities; (iv) opportunities for
economies of scale and synergies with our existing operations; (v) a solid
reputation with established customer relationships; and (vi) an experienced
management team. We are also pursuing "tuck-in" acquisitions in the New York
metro market as a means to expand our existing operations, add product lines and
services as well as expand our customer base."
Cunningham Graphics provides time-sensitive printing and distribution,
commercial printing, and outsourcing services to a blue-chip client base in the
financial services, insurance and publishing industries. Cunningham Graphics
currently operates in select international markets through its facilities in the
United States, the United Kingdom, Hong Kong and Singapore.
<PAGE>
This press release may contain forward-looking statements, which involve known
and unknown risks, uncertainties or other factors that could cause actual
results to materially differ from the results, performance or other expectations
implied by these forward-looking statement. Factors which could cause or
contribute to such differences include, but are not limited to, continued demand
for its services, the availability of raw materials, the impact of competitive
services and pricing, risks in technology development, changing economic
conditions and other risk factors detailed in the Company's filings with the
Securities and Exchange Commission.
Contact:
Gordon Mays
Executive Vice President
201-217-1990 Ext. 225
or
Robert Okin
Chief Financial Officer
201-217-1990 Ext. 305
or
Vince Daniels/John Nesbett
Lippert/Heilshorn & Associates
212-838-3777
