UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended December 31, 1998
OR
Transition Report Pursuant to Section 13 OR 15(d) of the Securities
Exchange Act of 1934 For the Transition period from ______ to ________
Commission File Number 1-13205
KING POWER INTERNATIONAL GROUP CO., LTD.
(Exact name of registrant as specified in its charter)
NEVADA 75-2641513
(State of incorporation) (I.R.S. Employer
Identification No.)
26th & 27th Floors, Siam Tower, 989 Rama I Road,
Patumwan, Bangkok 10330 Thailand
(Address of principal executive offices)
Registrant's telephone number, including area code: 011 (662) 658-0090
Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, $.001 par value per share
Name of exchange on which registered: American Stock Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation 8-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in a definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
Number of share of Common Stock of the registrant outstanding as of February 26,
1999: 20,250,000 shares.
The approximate aggregate market value of the voting stock held by
non-affiliates of the registrant based upon the closing price of $2.31 per share
for the registrant's common stock as reported by the American Stock Exchange as
of February 26, 1999 was approximately $19,200,720.
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TABLE OF CONTENTS
Item Number Page
Part I
1. Business 4
2. Properties 9
3. Legal Proceedings 9
4. Submission of Matters to a Vote of Security Holders 9
Part II
5. Market for the Company's Common Stock and Related Stockholder
Matters 9
6. Selected Financial Data 10
7. Management's Discussion and Analysis of Financial Condition
And Results of Operations 11
7A. Quantitative and Qualitative Disclosures of Market Risk 14
8. Financial Statements 20
9. Changes In and Disagreements with Accountants on Accounting
And Financial Disclosure 44
Part III
10. Directors, Executive officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 45
11. Executive Compensation 48
12. Security Ownership of Certain Beneficial Owners and Management 49
13. Certain Relationships and Related Transactions 50
Part IV
14. Exhibits and Reports on Form 8-K 52
2
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CAUTION REGARDING FORWARD-LOOKING INFORMATION
This report contains certain forward-looking statements and information relating
to the Company that is based on the beliefs of the Company or its management as
well as assumptions made by and information currently available to the Company
or its management. When used in this document, the words "anticipate",
"believe", "estimate", "expect", and "intend" and similar expressions, as they
relate to the Company or its management, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company regarding future events and are subject to certain risks, uncertainties
and assumptions, including the risks and uncertainties noted. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those described herein
as anticipated, believed, estimated, expected or intended. In each instance,
forward-looking information should be considered in light of the accompanying
meaningful cautionary statements herein.
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PART I
ITEM 1 BUSINESS
General
The global duty free business is a multi-billion dollar industry in
which luxury and brand name merchandise such as perfumes and cosmetics, liquor
and tobacco and general merchandise products are sold to travelers exempt from
import duties and taxes, within certain allowances, at their respective
destinations. Since 1993, the global duty free business grew at a compounded
annual growth rate of 5.4 % in terms of revenue from US$17 billion in 1993 to
US$21 billion in 1997.
The travel-retail industry, which is defined as all of the business
activities involved in the duty-free and tax-free businesses, including selling
goods at traveling ports (principally airports) and on airplanes, at tourist
centers, at resorts and in major cities, etc., began to develop in 1964 when
Japanese retailers began establishing duty free shops around the region. As
trade among the countries within the region increased, the Asian duty free
business began to grow. The Asian travel-retail industry was given additional
impetus when trade between Asian countries and the United States and European
countries began to grow further. This increase in trade resulted in an increase
in tourism by travelers from the United States and Europe. Consequently,
Thailand became the most popular travel destination among Southeast Asia's
countries, welcoming more than 33 million passengers traveling through the
International Airports in Thailand during 1998. During the 1990's the number of
passengers has increased at a compounded average growth rate of 7% from 19
million in 1990 to 33 million passengers in 1998, according to Airports
Authority of Thailand (AAT).
King Power International Group Co., Ltd. (the "Company") is currently
the leading travel-retail operator in Thailand. The Company operates and manages
27 duty free and 28 tax free stores, via two concession agreements with the AAT,
throughout all of Thailand's major airports. At the end of 1998, the Company has
approximately 51,100 square feet of retail space at the Bangkok and Provincial
International Airports, which represented growth in retail space from the end of
1997 of approximately 20%.
Background and Organization of the Company
- ------------------------------------------
The Company (formerly known as Immune America, Inc.) was incorporated
under the laws of the State of Nevada in 1985. Until June 12, 1997, this Company
was inactive and was regarded as a development stage company.
On June 12, 1997, the Company engaged in a reverse merger transaction
with the shareholders of J.M.T. Group Company Limited and J.M.T. Duty Free
Company Limited, whereby an aggregate 18,800,000 shares of restricted,
unregistered common stock was exchanged for 99.94% of the issued and outstanding
shares of J.M.T Group Company Limited and 94.95% of the issued and outstanding
shares of J.M.T. Duty Free Company Limited.
The reverse merger was treated as a re-capitalization of the Company.
Accordingly, the assets, liabilities and business operations of J.M.T. Group
Company Limited and J.M.T. Duty Free Company Limited are recognized at
historical cost. The consolidated historical financial statements of J.M.T.
Group Company Limited and J.M.T. Duty Free Company Limited became the historical
financial statements of the Company.
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Concurrent with the reverse merger, the Company changed its corporate
name from Immune America, Inc. to King Power International Group Co., Ltd.
Subsequently, on September 9, 1997 J.M.T. Duty Free Company Limited changed its
corporate name to King Power Duty Free Company Limited and on October 10, 1997
J.M.T. Group Company Limited changed its corporate name to King Power Tax Free
Company Limited.
The Company operates its current businesses through two divisions:
the Tax Free Division and the Duty Free Division.
Tax Free Division
- -----------------
King Power Tax Free Company Limited (the "Tax Free Division" or,
sometimes, "KPD") is a Thai corporation engaged in selling various souvenirs and
consumer products in the International and Domestic terminals of all the major
airports located in Thailand to international and local travelers. The Tax Free
Division holds the exclusive operating license granted by the AAT for all shops
of this specific nature.
At the end of 1998, the Tax Free Division operated 28 stores within
Thailand's major international and domestic airports, totaling more than 22,250
square feet of retailing space compared to 6,181 square feet in 1993 when it
first began operations. There are now 18 shops located in the various terminals,
which comprise the Bangkok International Airport; 11 of these shops are located
in the airside departure terminals. The landside shops are established in seven
different locations in the departure and arrival halls of both terminals. The
Tax Free Division sells domestically manufactured general merchandise including
Thai silk, pewter, Benjarong porcelain, Thai dolls, jewelry, watches, pens,
lighters, leather goods and confectionery, free of Thailand's value-added-tax.
There are ten shops, located in the domestic terminals at the Bangkok,
Chiang Mai and Phuket domestic and international airports, selling indigenous
general merchandise of Thailand, together with local specialty goods.
The Company is proud to be active participant in the promotional
campaign known as "Amazing Thailand" for the years 1998 and 1999. Of the four
new shops, two shops were opened in joint operations with AAT, the Tourism
Authority of Thailand ("TAT"), and the Department of Industrial Promotion from
the Ministry of Industry and dedicated to the "Amazing Thailand" promotion.
Duty Free Division
- ------------------
King Power Duty Free Company Limited (the "Duty Free Division" or,
sometimes, "KPD" ) is a Thai corporation engaged in selling duty free
merchandise to the traveling public under the supervision of Thai customs in
duty free shops located in the international terminals of all of the major
airports in Thailand. The Duty Free Division holds a non-exclusive license to
operate duty free shops from the AAT for shops of this specific nature until
December 2001.
The Duty Free Division operates 27 duty free stores, with approximately
28,850 square feet of retail space, in Thailand's International Airports at
Bangkok, Chiang Mai, Phuket and Hat Yai. The Duty Free Division accounts for 60%
of the total duty free retail space currently used in these four airports. The
Duty Free Division's merchandise mix consists of top quality brand name liquor
and tobacco products, luxury goods such as watches, perfumes, cosmetics, fashion
accessories, gourmet food and chocolates. In Thailand all imported merchandise
is subject to import duties and governmental taxes. However, the Duty Free
Division's goods are sold exclusively for departing passengers and are free of
all import duties, excise taxes and the value-added-tax imposed by the Thai
government.
The Duty Free Division started its operation on January 1, 1997. During 1998,
the Duty Free Division successfully introduced Harrods of Knightsbridge U.K as
the first duty-free Harrods in Asia located in both Terminals of the Bangkok
International Airport. Additionally, the Company has also introduced specialty
stores focusing on well known fashion designers, such as Ferragamo, Versace,
Cartier, Dunhill, Etro, Fendi, Bally, Lanvin, and Givenchy located in the
Terminal I of the Bangkok International Airport.
5
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Both the Duty Free Division's and the Tax Free Division's sales and
their overall performance and results are subject to the influence of external
factors, some of which are beyond the Company's control. These include the
distribution of airlines at particular terminals, the routes that are serviced
by those airlines, loading levels of airline passengers, and economic and other
conditions affecting the airlines servicing Thailand in general. The Company
strategically manages those factors within its control in order to maximize its
performance and minimize the effect of those that it cannot control. The Company
believes that the devaluation of the Thai Baht, relative to the U.S. dollar,
will continue to encourage a greater number of tourists and travelers to come to
Thailand in the future which should result in a significant positive effect on
the Company's business, both as to sales volumes and profits.
King Power International Group (Thailand) Co., Ltd.
- ---------------------------------------------------
King Power International Group (Thailand) Co., Ltd. was principally
formed to lease the Company's Head Office in the Siam Tower in Bangkok in 1997.
The rental expenses for this facility are allocated according to the actual
usage by each of the Company's subsidiaries. Management has decided to have the
subsidiaries lease their premises directly from the leasor effective as of
January 1999 in order to prevent unnecessary repetitive payment of corporate
income taxes among the Company's subsidiaries.
Regulation
- ----------
The Duty Free operations are subject to the regulated supervision of
the Customs Department of Thailand ("Customs"). All imported merchandise is
received and stored in the Company's bonded warehouses in Thailand where it is
exempt from all import duties, excise taxes and value-added-taxes of Thailand.
Since the merchandise is sold without duties or taxes, it must remain within the
bonded warehouses until it is requested to transfer to the respective Duty Free
stores for sales.
The Company has a total of four bonded warehouses located in Bangkok,
Chiang Mai, Phuket and Hat Yai serving all of the Duty Free Division's shops in
Thailand. Transfer of any bonded merchandise must be documented and approved by
Customs before these products are transferred for sale to the traveling public
at the various retail stores. Customs makes regular inspections of the inventory
in the bonded warehouses and shop premises. With this tightly regulated control
from Customs, customers are assured that all products sold by the Company are
genuine and of the highest quality.
Suppliers, Distribution and Inventory Control
- ---------------------------------------------
The Company purchases both local and imported merchandise from more
than 550 vendors worldwide. This supplier base gives the Company a choice to
selectively purchase the highest quality products and to negotiate with vendors
for the lowest cost, in order for the Company to supply its customers with the
best possible value for their money. Currently, the Company does not have any
long-term purchase commitments.
Through the Company's historically strong relationships with many of
its suppliers, the Company has secured exclusive agreements from numerous
suppliers to be the sole agent for the sale of their products in Thailand in the
duty free shops. Furthermore, the Company receives significant sales support
from these vendors. These supports include in-store displays, gift-with-purchase
items, sales incentives, advertisements, staff training, signage and sales
personnel.
Merchandise is generally shipped directly from vendors to the Company's
bonded warehouses for the Duty Free Division and delivered to the Company's
warehouses at the airport or downtown for the Tax Free Division. The Company's
inventories are strictly controlled to comply with Customs' regulations.
Detailed records documenting the receipt, the transfer and sale of all
merchandise are kept by the Company to certify the authenticity and excellence
of the products sold by the Company.
The Company uses an outside shipping contractor to provide the services
of customs clearing for the imported merchandise into Thailand and directly to
the Company's bonded warehouses.
6
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In order to control inventory levels, the Company uses automated
replenishment systems. Transfers are made to stores in accordance with demands
identified by respective store's managers. The Company maintains the overall
control of enough stock displays in respective stores and repurchasing point of
inventory level in respective warehouses.
The Company's computerized inventory control system allows the Company
to: (1) identify the merchandise needs at each store, (2) promptly reorder
merchandise from the vendors, and (3) comply with the Customs' record-keeping
requirements. Through the Company's automated system, appropriate product mixes
are maintained to maximize merchandise turnovers. The Company has rarely
experienced problems with obsolescence because the turnover frequency for most
products is rapid and slow moving products are quickly identified.
Employees
- ---------
The Company's business as conducted in it shops is labor intensive.
The Company currently employes approximately 1500 persons. Each member of the
sales staff is equipped with special selling skills geared to the Travel-Retail
business, that is, they are fluent in many languages and have extensive product
knowledge in order to handle sales discussions with foreign customers.
Management promotes job enhancement at every level of the staff to ensure
maximum job satisfaction in return for the highest productivity by each
employee. For example, the Company maintains a Training Center to encourage the
learning of managerial skills, languages, product knowledge, etc. and has
implemented the ISO 9002 standards of operation. Employee turn-over continues to
be very low and Management foresees no problems in maintaining its capable staff
of employees as long as the Company sustains its market share and the growth of
its businesses.
Competition
- -----------
The Company foresees no competition for the Tax Free Division. During
1997, the Company was granted an extension by the AAT of the Tax Free Division's
license for the exclusive right to operate and sell gifts and general
merchandise at the Bangkok International Airport, for a further five year term
extending from 1998 to 2003.
The Company has developed strong relationships with the AAT over the
years and as a result of this and the major contributions which the Company has
made to increase tourism to Thailand, the Company believes that the renewal and
extension of the Duty Free Division's license will be on terms favorable to the
Company.
In Thailand, there are several barriers for parties wishing to enter
into the duty free business. Any new entrant company must be of Thai ownership
who have proven Asian regional duty free experience, particularly with regard to
serving international passengers and Thai Nationals. For a new entrant, the
company's management must be comprised of Thai nationals and it must reach a
minimum turnover in duty free business. Additionally, the new entrant must
possess bonded warehouse facilities located in Thailand and should be already
carrying all major international brands in its portfolio of merchandise.
Economic Conditions and Exchange Rates
- --------------------------------------
The principal customers of the Company are the traveling public
utilizing the International and Domestic Airports at Bangkok, Chiang Mai, Phuket
and Hat Yai. The Company's businesses closely tie up with economic conditions of
countries where the travelers come from. The Company has strategically
confronted the current economic turmoil of the Asia Pacific region with decisive
actions to minimize the adverse effects on its operations.
In 1998 the Tax Free Division was able to maintain its operational
trends because most of its merchandise consists of products purchased in Thai
Baht. Additionally, the Tax Free Division has always been able to sell its
merchandise in U.S. dollars. Although Thai Baht was floated there was a minimal
impact on this division's operations because there was very little difference in
the purchasing power of the customers.
7
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The Duty Free Division imports all of its products from suppliers
across the world whereas the purchasing commitments are tied to either U.S.
dollars or currencies of the originating countries. The Company partially offset
the impact of the weak Thai Baht by adjusting, as often as daily, both the
Company's pricing policy and point of sale exchange rates reflecting the current
exchange rate of the Thai banks. By this policy, the Company is able to minimize
the realized and unrealized loss of exchange when purchasing activities are
denominated in foreign currencies.
BUSINESS STRATEGIES
- -------------------
The Company began operating its Tax Free Division in 1993 after
obtaining the five-year sole license to operate its business from the AAT. This
license was renewed in 1998, extending for a period of five additional years
(until 2003) the Division's license to operate in Thailand. In 1997, the Company
obtained its five-year Duty Free license and since that time the Duty Free
Division has become the principal contributor of profits to the Company's
operations. Even though merchandise sold by the Tax Free Division generally
carry a higher profit margin compared to the profit margin for merchandise sold
by the Duty Free Division, the value of each item (measured by its selling
price) is less, thus, the profitability of the Tax Free Division has been
generally lower. Management intends to concentrate on improving the
profitability of the Tax Free Division in the future, principally through
reduction of concession fee and rent cost, selecting higher value merchandise,
and lower operating costs. For Duty Free Division, the Company will continue to
expand its facilities and increase sales volumes. The Company also intends to
expand the existing operation through the acquisition of profitable related
companies and by incorporating new projects into the Company or its
subsidiaries, and to develop additional retail space for sales outside of AAT's
premises.
Improving Profitability for the Tax Free Division
- -------------------------------------------------
The Company has on-going negotiations with the AAT to lower the
concession fees charged by the AAT, to exchange space between the Tax Free and
the Duty Free Divisions, and to discontinue some of the shops to decrease losses
which are caused by increased concession fees. The Tax Free Division is in the
process of re-engineering its entire operation to be more compatible with new
international trends for this business. It is anticipated that implementation
will progress in phrases throughout 1999 and beyond. The main components of this
re-engineering targets are (1) increased efficiency in selecting the merchandise
to be sold and emphasizing the potential for increased sales volumes and the
profitability of each item of merchandise selected; (2) downsizing the amount
and types of merchandise displayed from the concept of "something for everyone"
to becoming more selective in the types of merchandise displayed at different
locations; (3) developing premium brands in order to create brand awareness, the
uniqueness of product availability, to upgrade quality and design, and to
improve packaging and marketing; and (4) utilizing the Company's overall
resources more efficiently through the implementation of the Management and
Quality Assurance Standard "ISO 9002".
Expansion of the Duty Free Division
- ------------------------------------
Since the current trend for the Duty Free Division's products is
continued high demand driven by the increased number of Asian tourists who have
made plans or arrangements to visit Thailand in 1999 and 2000, as announced by
the Tourism Authorities of Thailand (TAT), this Division will focus on ensuring
adequate supplies of, and more variety in, the merchandise it offers for sale in
order to cater to these customers. Similar to the introduction of Harrods of
Knightsbridge U.K. during 1998, this Division will attempt to open more
internationally recognized Concept Stores in the AAT's facilities during 1999
and beyond.
General Expansion of Business
- ------------------------------
There are related companies (see Item 13 of this report), which operate
in the same or similar businesses and which are profitable, that Management is
currently assessing with a goal to acquire one or more of these in order to
expand the Company's businesses in Thailand. It is hoped that one or more of
these possible acquisitions or mergers would be completed within the 1999 fiscal
year; thus giving the Company the opportunity to increase its sales volume, to
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improve profitability since economies of scale should reduce various costs of
operation and the unit cost of merchandise acquired for sale, and to reduce
operating risks as a result of a more diversified business structure.
ITEM 2 PROPERTIES
The Company's principal office is located at the 26th and 27th Floors of the
Siam Tower, at 989 Rama I Road, Patumwan, Bangkok 10330. The telephone number is
011-(662) 658-0090. This office which is leased from the Bangkok
Intercontinental Hotels Co., Ltd. contains 29,353 square feet of space and is
leased for three years expiring in October 2000 at an annual cost of $79,175 at
an average exchange rate 40.795 Thai Baht to 1 US Dollar for 1998.
The Company operates 55 retail stores with retail space totaling 51,100 square
feet, located in the international and domestic airports of Thailand located in
Bangkok, Chiang Mai, Phuket, and Hat Yai. All of the stores are leased from the
Airports Authority of Thailand (the "AAT") under varying lease agreements for
the Company's two subsidiaries. Under these lease agreements, the Company is
subject to a monthly rental fee (exclude duty charge and other expenses) for the
actual utilized space. During the 1998 fiscal year the Company paid a total of
$1,220,636 to the AAT under these lease agreements. The Company anticipates that
the total sum due under these lease agreements for the 1999 fiscal year will be
approximately $1,615,257 at the exchange rate of 36.5948 Thai Baht to 1 US
Dollar as of December 31, 1998.
The Company leases five warehouses containing almost 30,000 square feet in
Bangkok, Chiang Mai, Phuket, and Hat Yai from the AAT. The bonded warehouses
contain 25,000 square feet of space for the Duty Free Division and 4,100 square
feet of warehouse space for the Tax Free Division. The Company believes its
facilities are adequate for its current operations.
All payments with regards to properties are made in Thai Baht. The Company used
the average exchange rate, 40.795 Thai Baht to 1 US Dollar, to translate these
expenses into US Dollars during 1998.
ITEM 3 LEGAL PROCEEDINGS
The Company is not currently a party to any material litigation, or any
litigation which if it were decided against the Company would likely have a
result which would be materially adverse to the Company, its current or future
financial condition, or the Company's present or anticipated methods of
operation.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5 MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on the American Stock Exchange under the
ticker symbol "KPG". The approximate number of holders of record of shares of
common stock, excluding the number of beneficial owners whose securities are
held in street name, was 365 of February 26, 1999. The Company believes that
approximately 900 stockholders currently own and hold the stock in street name.
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The following table set out the high and low reported sales prices for the
common stock as reported by the American Stock Exchange since it was listed on
July 30, 1997:
High Low
First Quarter of 1999
(Through February 26, 1999) $2.88 $2.13
Fourth Quarter of 1998 $4.50 $1.75
Third Quarter of 1998 $4.50 $1.88
Second Quarter of 1998 $6.38 $3.50
First Quarter of 1998 $9.75 $1.19
Fourth Quarter of 1997 $13.38 $12.88
Third Quarter of 1997 $16.75 $12.88
The Company has never paid any cash dividends. Future earnings will be retained
for use in the Company's business, and the Company does not intend to pay any
cash dividends on its common stock for the foreseeable future.
ITEM 6 SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
The following data should be read in conjunction with "the Company,"
"Management's Discussion and analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and notes thereto and the
Unaudited Pro Forma Information and notes thereto included elsewhere in this
Prospectus.
Year Ended December 31,
1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Income data:
Revenues..................................... $ 14,895 $ 26,461 $ 41,869 $ 95,997 $ 91,125
Gross Profit................................. (5,413) 192 7,383 23,154 27,051
Selling, general and administrative
expenses.................................. 2,313 3,179 6,273 14,621 31,931
------------ ----------- ----------- ----------- --------
Operating Income ( loss)..................... (7,726) (2,986) 1,110 8,533 (4,880)
Operating Income (expenses),net.............. 332 399 493 (1,846) 541
Income (loss) before minority interest and
income tax................................ (7,394) (2,587) 1,603 6,687 (4,339)
Net Income (loss)............................ $ (7,389) $ (2,586) $ 1,643 $ 7,935 $ (4,287)
======== ====== ====== ====== =====
Net Income (loss) per share:
Basic..................................... (0.39) $ ( 0.14) $ 0.09 $ 0.40 $ (0.21)
Diluted................................... $ - $ - - $ - $ -
Weighted Average Share Outstanding:
Basic..................................... 18,800 18,800 18,800 19,779 20,250
Diluted................................... - - - - -
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Consolidated Balance Sheet Data:
Working Capital.............................. $ (3,001) $ (6,109) $ (7,351) 17 2,793
Total Assets................................. 1,320 1,952 23,742 35,078 48,076
Total Long - Term Debt ...................... - - 55 227 403
Stockholders' Equity......................... (2,647) (5,258) 3,927 9,764 8,751
</TABLE>
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Caution Regarding Forward-Looking Information
- ---------------------------------------------
This annual report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or its management as well as assumptions made by and information currently
available to the Company or its management. When used in this document, the
words "anticipate", "believe", "estimate", "expect", and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
Results of operations, comparing fiscal years ended December 31, 1998 and 1997
- ------------------------------------------------------------------------------
King Power Duty Free Co., Ltd. (KPD) began retail operations in 1997
and the revenue of this subsidiary is a direct result of the increase in the
number of tourists coming to Thailand as a result of the social and government
stability, the Thai Baht devaluation and its fully functional retail stores. In
1998 additional growth was experienced in general merchandise sales at King
Power Tax Free Co., Ltd. (KPT) stores in Thailand airports, principally due to
an increase in tourism traffic. Management anticipates that Thailand will
continue to be an attractive tourist destination during future periods and will
expand as a focal point for air travel throughout Asia.
Sales revenue for the year ended December 31, 1998 was approximately
$91.1 million, compared to approximately $96.0 million for 1997. This decrease
is directly attributable to the devaluation of Baht that took place during the
last half of 1997. Overall sales revenue, measured in Thai Baht, increased
14.29% from Baht 3,252.7 million for the year ended December 31,1997 to Baht
3,717.5 million for the same period in 1998. However, the average exchange rate
of Baht 40.795 to 1 was used to convert the 1998 figure into US Dollars, while
the average exchange rate of Baht 33.883 to 1 was used for 1997. Also commencing
in the last half of 1997, the Thai Government began the "Amazing Thailand"
marketing campaign for the 1998-1999 time period to coincide with various events
occurring in Thailand or other countries located near Thailand. This marketing
campaign is international in scope and directly targeted to attract additional
new and repeat visitors to Thailand. The Company expects that this promotional
campaign will continue to directly impact the Company's operations in a positive
manner during 1999 and in subsequent years.
The cost of merchandise sold for the years ended December 31, 1998 and
1997 was approximately $39.1 million and $38.5 million, respectively. The
principal factor causing this slight increase is directly related to the change
in product mix during 1998 resulting from the decision to concentrate more on
products that have higher turnover and to sacrifice some profit margin in order
to increase sales volumes and decrease carrying costs. In addition, KPT's
concession agreement to maintain its locations within the Thai airports requires
payments based upon a fixed amount. As a result, comparing the year ended
December 31, 1997 to the year ended December 31, 1998, the ratio of the
Company's concession fee to sales revenue dropped favorably from approximately
35.77% in 1997 to approximately 27.40% in 1998. Additionally, during the first
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quarter of 1998, the Thai government permanently waived the Customs Fee (which
is reported as part of concession fee) previously imposed at the rate of 15% of
gross sales.
Selling and administrative expenses, excluding depreciation and others,
also reflect the expansion of KPD's business and the increase in traffic at
KPT's stores. These expenses were approximately $16.2 million for the year ended
December 31, 1998 and approximately $14.6 million for the same period in 1997.
In terms of percentage of sales, 1998 expenses were approximately 17.76% of
sales and 1997 expenses were approximately 15.23% of sales. Management has made
a commitment to improve this ratio by improving the effectiveness and efficiency
of the Company's sales force that should result from additional training and
management supervision.
For 1998 the Company provided an allowance for doubtful accounts in the
amount of approximately $15.7 million for advances to related companies and
directors. This allowance was necessary due to liquidity constraints of the
related parties, including businesses in Hong Kong which have suffered
unexpected and severe losses as a result of the dramatic decrease in tourists
visiting that country.
The Company's profit, before this provision for doubtful accounts, for
the 1998 fiscal year was approximately $10.8 million, compared to a profit from
operations of approximately $8.5 million for the year ended December 31, 1997.
The net loss for the year ended December 31, 1998 (including this provision for
doubtful accounts) was approximately $4.3 million, or $0.21 per share (basic),
compared to net income of approximately $7.9 million, or $0.40 per share
(basic), for the year ended December 31, 1997. This decrease was caused by a
one-time charge of approximately $15.7 million, resulting from a provision for
doubtful accounts. As a result of a substantial increase in the total amount of
Advances to Related Companies and Loans to Directors which increased from $4.9
million at December 31, 1997 to $23.1 million at December 31,1998, and liquidity
constraints on those businesses, under generally accepted accounting principles
the Company was required to make this provision. Even though an allowance has
been provided, Management will aggressively pursue collection of these accounts.
The ratio of inventory divided by revenue for the years ended December
31, 1998 and 1997 was approximately 16.36% and 13.69%, respectively. This slight
increase is a result of the commencement of operation by the Company's new
stores, including Harrods (Knightsbridge) and nine boutiques shops.
Results of operations, comparing fiscal years ended December 31, 1997 and 1996
- ------------------------------------------------------------------------------
KPD began retail operations in 1997 and the revenue of this subsidiary
is a direct result of the increase in tourists to Thailand as a result of the
Thai Baht devaluation. Further growth was experienced in general merchandise
sales at the KPT stores in the Thailand airports due to an increase in tourism
traffic. Management anticipates that Thailand will continue to be an attractive
tourist destination during future periods and will expand as a focal point for
air travel throughout Asia.
Sales revenue for 1997 was approximately $96.0 million as compared to
approximately $41.9 million for 1996. This increase is directly attributable to
the factors previously discussed. Additionally, as a result of the Thai Baht
devaluation, KPD has increased its retailing prices three times or approximately
54%, during 1997. Further, commencing in the last half of 1997, the Thai
Government began the "Amazing Thailand" marketing campaign for the 1998-1999
time period to coincide with various events occurring in Thailand or other
countries located near Thailand. This marketing campaign is international in
scope and directly targeted to attract additional new and repeat visitors to
Thailand. The Company expects that this promotional campaign will directly
impact the Company's operations in a positive manner during and subsequent to
this time period.
Cost of sales for the years ended December 31, 1997 and 1996 were
approximately $38.5 million and $14.5 million, respectively. The factors for
this increase relate to the expansion of the KPD subsidiary and a larger number
of customers at the KPT stores for consumer goods. In addition, KPT's concession
agreement to maintain its locations within the Thai airports requires payments
based upon fixed amount. In the time period from the year ended December 31,
1996 to the year ended December 31, 1997, the Company's concession fee as
percentage to sales revenue dropped from approximately 47.84% in 1996 to
approximately 35.77% in 1997.
12
<PAGE>
Direct selling expenses, excluding depreciation and others, also
reflect the commencement of KPD's business and the increase in traffic at KPT's
stores. These expenses were approximately $4.8 million for 1996 and
approximately $8.7 million in 1997. In terms of percentage of sales, 1996
expenses were approximately 11.5% of sales and 1997 expenses were approximately
9.1% of sales. The improvement of these expenses as a percentage of sales is
attributable to the effectiveness and efficiency of the Company's sales force
through improvements in training and management supervision.
Administrative expenses for the years ended December 31, 1997 and 1996
were approximately $3.8 million and $0.9 million, respectively. As a percentage
of total sales, these expenses were approximately 4.0% and 2.2%, respectively.
Administrative expenses have grown due to the growth in the Company's business.
Management has designated these expenses for constant monitoring in order to
control their levels in relation to the Company's size, sales volume and
operational necessity.
Net income for the year ended December 31, 1997 was approximately $7.9
million, or $0.40 per share (basic), and approximately $1.6 million, or $0.09
per share (basic), for the year ended December 31, 1996. However, included as a
component of net income is the cumulative effect of both realized and unrealized
gains and losses from foreign exchange caused charges to operations of
approximately $4.4 million or approximately $0.22 per share (basic)for the year
ended December 31, 1997.
The ratio of inventory divided by revenue for the year ended December
31, 1997 and 1996 was approximately 13.7% and 16.1%, respectively. This
reduction is due to the significant increase in sales volume during 1997, which
exceed the inventory level as projected.
Results of Operations, comparing fiscal years ended December 31, 1996 and 1995
- ------------------------------------------------------------------------------
Sales revenue for 1996 was approximately $42 million as compared to
approximately $26 million for 1995. This increase is attributable to the exempt
of Value Added Tax at 7% waived by the Government in order to promote tourism
and increase spending on local merchandise in 1996, as well as the Company's
expansion in the shops area in the Bangkok domestic airport and the first phase
of Terminal 2, a newly constructed area which is part of the expansion of
Bangkok International Airport.
Cost of sales for the years ended December 31, 1996 and 1995 were
approximately $14.5 million and $10.7 million, respectively. The increase is
directly related to the increase in sales of inventory. Further, the KPT's
concession agreement with the AAT requires payments based upon fixed amount and
the concession fee on Terminal 2 is significantly less than the original
concession fee charged on Terminal 1. The Company's concession fee as percentage
to sales revenue dropped from 58.91% in 1995 to 47.84% in 1996.
Direct selling expenses, excluding depreciation and others, increased
as a result of the expansion in the area occupied by the Company's stores. These
expenses were approximately $2.7 million for 1995 and approximately $4.8 million
in 1996. In terms of percentage of sales, 1995 expenses were approximately 10.3%
of sales and 1996 expenses were approximately 11.5% of sales. The increase in
the percentage of sales is attributable to the under utilization of the rented
space while the stores were being constructed.
Administrative expenses for the years ended December 31, 1996 and 1995
were approximately $0.9 million and $0.2 million, respectively. As a percentage
of sales, these expenses were approximately 2.2% and 0.9%, respectively.
Administrative expenses have increased due to the growth in the Company's
business. Management has designated these expenses for constant monitoring in
order to control their levels in relation to the Company's size, sales volume,
and operational necessity.
Net income for the year ended December 31, 1996 was approximately $1.6
million, or $0.09 per share (basic), contracted to a loss of approximately ($2.6
million), or a loss of ($0.14) per share (basic), for the year ended December
31, 1995. This turnaround resulted directly from the significant increase in
sales revenue achieved by the Company.
13
<PAGE>
Liquidity and Capital Resources
- -------------------------------
For the years ended December 31, 1998 and 1997, the Company had working
capital of approximately $2.8 million and $0.02 million, respectively. The
improvement in this figure is due to the Company's ability to significantly
expand operations, thereby increasing current assets. The Company experienced a
negative cash flow from operations of approximately $4.9 million at December 31,
1998, compared to a positive cash flow of $3.8 million during the same period of
1997. This decrease is mainly due to the significant increase in advances to
related companies for the purpose of pilot projects for future expansion. In
order to prevent any realization of losses attributed from the usual stage of
start-up operation, the Company's management decided not to have the Company
directly own these related companies until these companies become profitable.
Management is trying to reduce this exposure by exploring ways that these
related companies can pay down or eliminate these loan balances or the Company
could eliminate them by acquiring these profitable related companies as
according to the original objective.
Management is also currently engaged in a corporate reorganization
process in order to ultimately enhance the profitability and cash flows of the
Company by investing in profitable related companies and incorporating new
potential projects into the operations of Company or its subsidiaries, KPT and
KPD.
Recently Issued Accounting Principles
- -------------------------------------
New Accounting Standards Not Yet Adopted - Accounting for Derivative
Instruments and Hedging Activities - Statement of Financial Accounting Standards
No. 133 is effective for fiscal year beginning after June 15, 1999. This
Statement requires that certain derivative instruments be recognized in balance
sheet at fair value and for changes in fair value to be recognized in
operations. Additional guidance is also provided to determine when hedge
accounting treatment is appropriate whereby hedging gains and losses are offset
by losses and gains related directly to the hedged item. The Company believes
that adoption will not have a significant impact on financial condition or
operating results.
Year 2000 effect
- ---------------
The Company's previous computer software system was not Year 2000
compliant. Due to the expansion of the Company's business and the necessity to
operate more efficiently, the Company's management decided to change computer
software and related hardware system to fully support the integration of all
systems and all subsidiaries in order to generate centralized management
reporting and ensure more effective control of the business. The new system was
installed in October 1998, it was tested in February 1999 and will be fully
operational by the end of May 1999. The total cost for this new computer system
is estimated to be $650,000.
The Company does not have the ability to contact all of its numerous
suppliers to confirm that each one has effectively dealt with this problem. The
Company believes that if any of its suppliers fail to become Year 2000 compliant
and, thus, cannot deliver the needed merchandise, the Company can, for the most
part, obtain similar or comparable merchandise from suppliers that are Year 2000
compliant. The banks and other financial institutions with which the Company and
its subsidiaries deal have reported that they are, or will be shortly, Year 2000
complaint.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
On July 2, 1997, the Thai Government announced that the Thai Baht would
thereafter be converted to a "Managed Float" system for the relationship of the
Baht to other international currencies. This change had an immediate impact on
the Company's operations and the results of its operations.
The Company's subsidiaries conduct their business with selling and
purchase prices based on Thai Baht, US Dollars, and other currencies. Sales are
made both in Thai Baht and other currencies, but eventually will be converted
14
<PAGE>
into Thai Baht. Accordingly, the Company bears foreign currency transaction
risks between the date of purchase of goods for resale and the ultimate payment
of the goods in the appropriate negotiated currency.
King Power Duty Free Company, Limited (KPD) incurred an economic and
financial loss as a result of the devaluation and subsequent float of the Thai
Baht on the settlement of accounts in currencies owed other than Thai Baht.
However, as the Thai Baht has been stabilized and KPD began to buy forward
contracts in order to prevent any exchange risk from its foreign currencies
financial obligations, the losses from this transaction have been significantly
reduced.
King Power Tax Free Company, Limited (KPT) has been selling goods at
prices based upon the US Dollar since its inception. Further, KPT deals in
predominately Thailand produced goods whereby all purchases are settled in Thai
Baht. Therefore, the devaluation of the Thai Baht had minimal effect on the
settlement of open trade payables of KPT. Accordingly, the devaluation had an
opposite economic impact on the operations of KPT whereby the Thai Baht
devaluation increased the overall profitability of this subsidiary.
The overall effect of the Thai Baht devaluation was an increase in the
attractiveness of Thailand as a tourist destination. This increase in tourists
had a direct impact on increasing the Company's sales in the post-devaluation
time period.
The Company's financial statements and all accompanying discussions in
this document are presented in US Dollars.
In accordance with generally accepted accounting principles, the
Company has reported gain on foreign exchange-net of $0.03 million for the year
ended December 31, 1998 with the following showing the calculation supporting
the figure:
CHART A
The calculation of Unrealized gain on foreign exchange of US$=559,674.11 was
calculated on accumulated basis with quarterly adjustment on financial
obligations, receivable and cash on hand in foreign currency as shown below:
Accounts payable in foreign currency as of 12/31/98
- --------------------------------------------------------------------------------
Currency Amount Exchange Rate Total
12/31/98
- --------------------------------------------------------------------------------
Swiss Franc 175,617.95 27.1097 4,760,949.94
German Deutschmark 32,541.70 22.1134 719,607.63
French Franc 790,520.00 6.6054 5,221,700.81
Hong Kong Dollar 2,316,261.77 4.7766 11,063,855.97
Italian Lire 18,708,500.00 0.0226 422,812.10
British Pound Sterling 160,386.91 62.1749 9,972,040.09
Singapore Dollar 573.30 22.4134 12,849.60
Japanese yen 490.00 32.0466 15,702.83
US Dollar 2,652,140.15 36.8900 97,837,450.13
- --------------------------------------------------------------------------------
Total 130,026,969.11
BALANCE PER GENERAL LEDGER 142,710,477.78
Unrealized gain on accounts payable in foreign currency 12,683,508.67
- --------------------------------------------------------------------------------
15
<PAGE>
Loan from bank(Trust receipt) in foreign currency as of 12/31/98
- --------------------------------------------------------------------------------
Currency Amount Exchange Rate Total
12/31/98
- --------------------------------------------------------------------------------
German Deutschmark 433,430.34 22.1134 9,584,618.48
Hong Kong dollar 7,237,083.71 4.7766 34,568,654.05
Italian Lire 926,405,459.50 0.0226 20,936,763.38
Singapore Dollar 69,634.08 22.4134 1,560,736.49
US Dollar 4,851,988.97 36.8900 178,989,873.10
Swiss Franc 175,770.32 27.1097 4,765,080.64
British Pound Sterling 15,487.50 62.1749 962,933.76
Australian Dollar 101,182.46 22.7192 2,298,784.55
Franch Franc 2,082,357.40 6.6054 13,754,820.72
Jamanese Yen 3,292,720.00 0.3205 1,055,204.81
- --------------------------------------------------------------------------------
Total 268,477,469.99
BALANCE PER GENERAL LEDGER 274,296,081.91
Unrealized gain on Trust Receipt in foreign currency 5,818,611.92
16
<PAGE>
Unrealized gain on Cash on hand as at 12/31/98
- --------------------------------------------------------------------------------
Currency Amount Exchange Rate Total
12/31/98 Baht
- --------------------------------------------------------------------------------
US Dollar 208,855.92 36.5948 7,643,040.62
British Pound Sterling 56,253.78 61.3766 3,452,665.75
German Deutschmark 6,740.00 21.8162 147,041.19
Singapore Dollar 9,993.00 21.9126 218,972.61
Malaysian Ringgit 747.00 9.3687 6,998.42
Hong Kong Dollar 337,497.60 4.7131 1,590,659.94
Japanese Yen 12,050,491.00 0.3153 3,799,061.89
Swiss Franc 1,230.00 26.6926 32,831.90
French Franc 5,800.00 6.5038 37,722.04
Korean Won 4,363,000.00 0.0302 131,762.60
Netherland Guilder - 19.3063 -
China Renminbi Yuan 43,621.00 4.2875 187,025.04
Canadian Dollar 65.00 23.5640 1,531.66
Australian Dollar 7,803.97 22.2361 173,529.86
Taiwanese Dollar 58,300.00 1.1321 66,001.43
- --------------------------------------------------------------------------------
total 17,488,844.95
- --------------------------------------------------------------------------------
BALANCE PER GENERAL LEDGER 16,471,579.07
Unrealized gain on cash in hand in foreign currency 1,017,265.88
Unrealized gain on accounts payable in foreign currency 12,683,508.67
Unrealized gain on Trust Receipt in foreign currency 5,818,611.92
Net Unrealized gain on exchange rate as at 12/31/98 19,519,386.47
(US$1 =40.80 Baht ) 478,416.34
Unrealized gain from advanced from companies as at 12/31/98
- --------------------------------------------------------------------------------
Currency Amount BAHT Exchange Rate Total
12/31/98 US DOLLAR
BAHT CURRENCY 38,428,217.25 36.89 1,041,697.40
- --------------------------------------------------------------------------------
BALANCE PER GENERAL LEDGER 1,122,955.18
Unrealized gain on advanced from companies 81,257.78
Add: Net unrealized gain on exchange rate as at 12/31/98 478,416.34
Total unrealized gain on foreign exchange 559,674.11
17
<PAGE>
CHART B
The calculation of Unrealized loss on foreign exchange of US$ = 48,840.29 was
calculated on accumulated basis with quarterly adjustment on financial
receivable and cash on hand in foreign currency as shown below:
CASH ON HAND IN FOREIGN CURRENCY AS OF 12/31/98
- -------------------------------------------------------------------------------
Currency Amount Exchange Rate Total
12/31/98 Baht
- -------------------------------------------------------------------------------
US Dollar 39,809.25 36.5948 1,456,811.54
British Pound Sterling 682.46 61.3766 41,887.07
German Deutschmark 590.00 21.8162 12,871.56
Singapore Dollar 947.00 21.9126 20,751.23
Malaysian Ringgit - 9.3687 -
Hong Kong Dollar 870.00 4.7131 4,100.40
Japanese Yen 2,436,266.00 0.315262 768,062.09
Swiss Franc - 26.6926 -
French Franc 300.00 6.5038 1,951.14
Korean Won 754,000.00 0.0302 22,770.80
Netherland Guilder - 19.3063 -
China Renminbi Yuan 5,154.00 4.2875 22,097.78
Canadian Dollar - 23.5640 -
Australian Dollar 1,529.35 22.2361 34,006.78
Taiwanese Dollar 20,500.00 1.1321 23,208.05
- -------------------------------------------------------------------------------
Total 2,408,518.44
- -------------------------------------------------------------------------------
BALANCE PER GENERAL LEDGER 12/31/98 2,772,136.21
Unrealized loss from cash in hand in foreign currency (363,617.77)
18
<PAGE>
Unrealized loss on account receivable as at 12/31/98
- --------------------------------------------------------------------------------
Currency Amount Exchange Rate Total
12/31/98 Baht
- --------------------------------------------------------------------------------
Swiss Franc 36,417.53 26.6926 972,078.56
US Dollar 67,929.03 36.5948 2,485,849.27
French Franc 420,065.52 6.5038 2,732,022.13
Japanese Yen 2,142,710.00 0.3152 675,382.19
German Deutschmark 16,693.00 21.8162 364,177.83
Hong Kong Dollar 652,184.86 4.7131 3,073,812.46
Netherland Guilder 52,641.60 19.3063 1,016,314.52
Australian Dollar 24,696.00 22.2361 549,142.73
British Pound Sterling 28,326.12 61.3766 1,738,560.94
- --------------------------------------------------------------------------------
Total 13,607,340.62
- --------------------------------------------------------------------------------
BALANCE PER GENERAL LEDGER 14,895,256.09
Unrealized loss from account receivable in foreign currency (1,287,915.47)
Unrealized loss from cash in hand in foreign currency (363,617.77)
Net Unrealized exchange loss as of 12/31/98 (1,651,533.24)
Net Unrealized exchange loss as of 12/31/98 in US Dollar (40,478.76)
Unrealized loss on interest payable as at 12/31/98
- --------------------------------------------------------------------------------
Currency Amount Baht Exchange Rate Total
12/31/98 US DOLLAR
- --------------------------------------------------------------------------------
Thai Baht 3,379,491.19 36.89 91,609.95
- --------------------------------------------------------------------------------
BALANCE PER GENERAL LEDGER 83,248.42
Unrealized loss on interest payable (8,361.53)
Net Unrealized exchange as of 12/31/98 (8,361.53)
Add: Net unrealized exchange loss as at 12/31/98 (40,478.76)
Total unrealized loss on foreign exchange as at 12/31/98 (48,840.29)
NET FOR REALIZED/UNREALIZED GAIN/LOSS EXCHANGE OF 12/31/98
(BAHT) (US)
Net Unrealized gain on exchange rate as at 12/31/98 559,674.11
Net Unrealized loss on exchange rate as at 12/31/98 (48,840.29)
NET UNREALIZED GAIN ON EXCHANGE RATE as at 12/31/98 510,833.82
NET FOR REALIZED GAIN/LOSS EXCHANGE OF 12/31/98
Net realized loss on exchange rate of KPT
as at 12/31/98 (21,923,223.92) (537,333.92)
Net realized gain on exchange rate of KPD
as at 12/31/98 2,091,836.90 51,270.51
- ------------------------------------------------
Net realized gain on exchange rate of KPG(US)
as at 12/31/98 1,138.97
NET REALIZED EXCHANGE (19,831,387.02) (484,924.44)
NET REALIZED EXCHANGE 25,909.38
TOTAL NET REALIZED/UNREALIZED EXCHANGE RATE 25,909.38
19
<PAGE>
Monetary Assets and Liabilities Denominated in Thai Baht
As of December 31, 1998 the amount of monetary assets and liabilities
which are denominated in Thai Baht are as follows:
TYPE OF MONETARY ASSET US DOLLARS
Cash and equivalents 829,337
Accounts Receivable
Trade A/R 279,422
Advances to related companies 6,281,280
Loans to directors 5,314,018
Restricted deposit 5,254,485
Other current assets 3,124,462
Other assets 531,406
TYPE OF MONETARY LIABILITY
Bank overdraft & loan from bank 2,863,298
Current portion of long-term debt 1,346,820
Trade accounts payable 7,853,579
Accrued concession fee 10,797,835
Other current liabilities 4,849,894
Long-term loan - net 402,927
ITEM 8 FINANCIAL STATEMENTS
Consolidated Financial Statements of the Company (Audited)
Independent Auditor's Report - Deloitte Touche Tohmatsu Jaiyos dated
April 1, 1999
Independent Auditor's Report - BDO International Limited dated
February 27, 1998
Balance Sheets as of December 31, 1998 and 1997
Statements of Income for the Years Ended December 31, 1998,
1997 and 1996
Statements of Cash Flows for the Years Ended December 31, 1998,
1997 and 1996
Statements of Changes Shareholder's Equity for the Years Ended
December 31, 1998, 1997 and 1996
Notes to Financial Statements
20
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
We have audited the consolidated balance sheet of King Power International Group
Co., Ltd. and subsidiaries as at December 31, 1998 and the related consolidated
statements of operations, comprehensive income, changes in shareholders' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Company's Management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance as to whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of King Power
International Group Co., Ltd. and subsidiaries as at December 31, 1998, and the
results of operations, the changes in shareholders' equity and the cash flows
for the year then ended, in conformity with generally accepted accounting
principles.
DELOITTE TOUCHE TOHMATSU JAIYOS
April 1, 1999
BANGKOK, THAILAND
21
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To The Board of Directors and Shareholders of
King Power International Group Co., Ltd.
We have audited the accompanying consolidated balance sheets of King Power
International Group Co., Ltd. (the "Company") as of December 31, 1997, and the
related consolidated statements of income, comprehensive income, changes in
shareholders' equity, and cash flows for each of the years in the two-year
period ended December 31, 1997. We have also audited the financial statement
schedules listed in the accompanying index. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial statement schedules are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements and financial statement schedules.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
financial statements and financial statement schedules. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, financial position of King Power International
Group Co., Ltd. as of December 31, 1997, and the results of its operations, and
its cash flow of each of the years in the two-year period ended December 31,
1997, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, the related financial statement
schedules, presents fairly, in all material respects, the information set forth
therein.
BDO International Limited
Bangkok, Thailand
February 27, 1998
22
<PAGE>
<TABLE>
<CAPTION>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,
1998 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,371,739 $ 1,316,880
Trade accounts receivable - net of allowance for doubtful
accounts $ 1.87 million for 1998 (Note 11) 334,015 861,189
Loans to and receivables from
related companies and directors - net of allowance for
doubtful accounts of $ 11.16 million for 1998 (Note 11) 11,911,642 4,925,115
Merchandise inventories-net 14,910,164 13,140,356
Restricted fixed deposits (Note 3) 5,254,485 --
Deferred income tax assets (Note 10) 4,464,606 874,465
Other current assets (Note 4) 3,124,462 3,814,415
----------- -----------
Total current assets 41,371,113 24,932,420
PROPERTY, PLANT AND EQUIPMENT-NET (Note 5) 6,173,610 3,402,452
RESTRICTED FIXED DEPOSITS (Note 3) -- 6,465,680
INVESTMENTS AND OTHER ASSETS 531,406 277,647
=========== ===========
TOTAL ASSETS $48,076,129 $35,078,199
=========== ===========
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
23
<PAGE>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,
<TABLE>
1998 1997
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft and loans from banks (Note 6) $ 10,185,747 $ 6,218,494
Current portion of long-term debt (Note 8) 1,346,820 28,649
Trade accounts payable 11,398,114 11,504,418
Accrued concession fee (Note 7) 10,797,835 6,216,070
Other current liabilities 4,849,894 948,076
------------
------------
Total current liabilities 38,578,410 24,915,707
LONG-TERM LIABILITIES - NET (Note 8) 402,927 227,486
------------ ------------
TOTAL LIABILITIES 38,981,337 25,143,193
------------ ------------
MINORITY INTEREST 343,473 170,712
COMMITMENTS AND CONTINGENCIES (Note 12)
SHAREHOLDERS' EQUITY (Note 9)
Common stock-$0.001 par value
100,000,000 shares authorized
20,250,000 shares issued and outstanding 20,250 20,250
Additional paid in capital 20,848,145 20,848,145
Retained earnings (Deficit) (11,916,895) (7,629,761)
Translation adjustments (200,181) (3,474,340)
------------ ------------
Total shareholders' equity 8,751,319 9,764,294
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 48,076,129 $ 35,078,199
============ ============
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
24
<PAGE>
<TABLE>
<CAPTION>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1996
<S> <C> <C> <C>
SALES $ 91,125,385 $ 95,996,663 $ 41,869,197
------------ ------------ ------------
COST OF SALES
Cost of merchandise sold 39,104,944 38,504,886 14,453,584
Concession fee 24,969,793 34,337,536 20,032,406
------------ ------------ ------------
Total cost of sales 64,074,737 72,842,422 34,485,990
------------ ------------ ------------
GROSS PROFIT 27,050,648 23,154,241 7,383,207
OPERATING EXPENSES
Selling and administrative expenses 16,184,976 14,621,272 6,273,079
Provision for doubtful accounts 15,745,552 -- --
------------ ------------ ------------
Total operating expenses 31,930,528 14,621,272 6,273,079
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (4,879,880) 8,532,969 1,110,128
------------ ------------ ------------
OTHER INCOMES (EXPENSES)
Interest income 1,439,169 1,826,763 592,317
Interest expense (1,364,628) (1,226,176) (539,337)
Gain (loss) on foreign exchange-net 25,909 (2,746,497) 464,743
Unrealized loss on foreign exchange due to
Baht devaluation -- (1,625,558) --
Management fee income 254,243 1,647,548 --
Other income (expenses) - net 186,795 278,285 (24,580)
------------ ------------ ------------
541,488 (1,845,635) 493,143
------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAX (4,338,392) 6,687,334 1,603,271
INCOME TAX BENEFIT (Note 10) 113,955 1,219,387 --
------------ ------------ ------------
INCOME (LOSS) BEFORE MINORITY
INTEREST (4,224,437) 7,906,721 1,603,271
LOSS (PROFIT) SHARED BY MINORITY
INTEREST (62,697) 28,115 39,517
------------ ------------ ------------
NET INCOME (LOSS) $ (4,287,134) $ 7,934,836 $ 1,642,788
============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 20,250,000 19,779,011 18,800,000
BASIC EARNINGS (LOSS) PER SHARE $ (0.21) $ 0.40 $ 0.09
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
25
<PAGE>
<TABLE>
<CAPTION>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1996
<S> <C> <C> <C>
Net income (loss) $(4,287,134) $ 7,934,836 $ 1,642,788
Other comprehensive income (loss) before tax
foreign currency translation adjustments 3,274,159 (3,984,828) 510,488
=========== =========== ===========
Comprehensive income (loss) $(1,012,975) $ 3,950,008 $ 2,153,276
=========== =========== ===========
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
26
<PAGE>
<TABLE>
<CAPTION>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1996, 1997 AND 1998
Additional Retained Translation
Shares Amount Paid in Earnings Adjustments Total
Capital
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1996 18,800,000 $ 18,800 $ 11,602,130 $(17,207,385) $ 385,104 $ (5,201,351)
Initial investment in King Power Duty
Free at February 26, 1996 -- -- 7,360,465 -- -- 7,360,465
Net income (loss) -- -- -- 1,642,788 -- 1,642,788
Translation adjustments -- -- -- -- 125,384 125,384
------------ ------------ ------------ ------------ ------------ ------------
Balances, December 31, 1996 18,800,000 18,800 18,962,595 (15,564,597) 510,488 3,927,286
============ ============ ============ ============ ============ ============
Balances, January 1, 1997 18,800,000 18,800 18,962,595 (15,564,597) 510,488 3,927,286
Recapitalization at June 12, 1997 1,200,000 1,200 (1,200) -- -- --
Regulation S issuance at August 19, 1997 250,000 250 1,886,750 -- -- 1,887,000
Net income -- -- -- 7,934,836 -- 7,934,836
Translation adjustments -- -- -- -- (3,984,828) (3,984,828)
------------ ------------ ------------ ------------ ------------ ------------
Balances, December 31, 1997 20,250,000 20,250 20,848,145 (7,629,761) (3,474,340) 9,764,294
============ ============ ============ ============ ============ ============
Balances, January 1, 1998 20,250,000 20,250 20,848,145 (7,629,761) (3,474,340) 9,764,294
Net income (loss) -- -- -- (4,287,134) -- (4,287,134)
Translation adjustments -- -- -- -- 3,274,159 3,274,159
------------ ------------ ------------ ------------ ------------ ------------
Balance at, December 31, 1998 20,250,000 $ 20,250 $ 20,848,145 $(11,916,895) $ (200,181) $ 8,751,319
============ ============ ============ ============ ============ ============
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
27
<PAGE>
<TABLE>
<CAPTION>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (4,287,134) $ 7,934,836 $ 1,642,788
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 953,908 779,002 180,831
Unrealized (gain) loss on foreign exchange (517,287) 3,553,568 --
Provision for damage stock (reversal) (617,652) 743,747 --
Allowance for doubtful accounts 15,745,552 -- --
Deferred tax assets (3,338,336) (874,465) --
Trade accounts receivable 777,840 (956,125) (73,335)
Loans and receivables to related companies
and directors (22,131,676) (2,373,415) (3,697,380)
Merchandise inventories 2,631,652 (5,803,278) (6,115,974)
Other current assets 1,788,326 (769,608) (2,141,000)
Other assets 665,430 (677,430) (38,573)
Trade accounts payable (3,078,966) (3,859,315) 6,958,849
Accrued concession fee 2,791,828 6,216,070 --
Other current liabilities 3,628,816 (69,038) 769,233
Other 102,218 (29,283) 390,044
------------ ------------ ------------
Net cash provided (used) by
operating activities (4,885,481) 3,815,266 (2,124,517)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase and sale of fixed assets - net (2,564,547) (2,430,519) (1,476,670)
Decrease (increase) in restricted fixed deposit 3,073,008 3,081,772 (9,547,452)
------------ ------------ ------------
------------ ------------ ------------
Net cash used by investing Activities 508,461 651,253 (11,024,122)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayment) in bank overdrafts 2,176,618 (1,305,625) 2,325,030
Proceeds (repayment) from bank loan 1,578,472 (1,072,033) 3,903,201
Proceeds (repayment) from installment purchase
payable -- (71,028) 118,498
Proceeds from long-term loan -- 208,665 --
Capital injection in KPD -- -- 7,360,455
Net proceeds from Regulation S issuance -- 1,887,000 --
------------ ------------ ------------
Net cash provided (used) by financing
activities 3,755,090 (353,021) 13,707,184
------------ ------------ ------------
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
28
<PAGE>
<TABLE>
<CAPTION>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31,
1998 1997 1996
<S> <C> <C> <C>
Effect of exchange rate changes on cash and cash
equivalents 676,789 (3,935,821) 125,384
----------- ----------- -----------
Increase in cash and cash equivalents 54,859 177,677 683,929
Cash and cash equivalents - as at January 1, 1,316,880 1,139,203 455,274
----------- ----------- -----------
Cash and cash equivalents-as at December 31, $ 1,371,739 $ 1,316,880 $ 1,139,203
=========== =========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period
Interest paid 1,469,280 588,403 539,337
Income taxes paid 5,466 -- --
Non-cash transaction
Common stock -- 1,200 --
Additional paid-in capital -- (1,200) --
</TABLE>
Notes to the consolidated financial statements are an integral part of these
statements
29
<PAGE>
KING POWER INTERNATIONAL GROUP CO., LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 and 1996
1. BASIS OF PRESENTATION
King Power International Group Co., Ltd. (formerly Immune America, Inc.) (herein
the "Company") was incorporated under the laws of the State of Nevada on July
30, 1985.
On June 12, 1997, the Company exchanged 18,800,000 shares of its common stock
for 99.94% of issued and outstanding common shares of King Power Tax Free
Company Limited [(formerly J.M.T. Group Company Limited) - KPT thereafter] and
94.95% of the issued and outstanding common shares of King Power Duty Free
Company Limited [(formerly J.M.T. Duty Free Company Limited) - KPD thereafter].
This exchange of the Company's common stock to the former KPT and KPD
shareholders resulted in those former shareholders obtaining a majority voting
interest in the Company. Generally accepted accounting principles require that
the company whose stockholders retain the majority interest in a combined
business be treated as the acquirer for accounting purpose. Consequently, this
transaction has been accounted for as a "reverse acquisition" for financial
reporting purpose and KPT and KPD are deemed to have acquired 94% of equity
interest in the Company as of the date of acquisition. The relevant acquisition
process utilizes the capital structure of Immune America, Inc. and the assets
and liabilities of KPT and KPD are recorded at historical cost.
KPT and KPD are the operating entities for financial reporting purpose, and the
financial statements prior to June 12, 1997 represent KPT and KPD's financial
position and results of operations. The assets, liabilities and results of
operations of both KPT and KPD are included as of June 12, 1997. Although KPT
and KPD are deemed to be the acquiring corporations for financial accounting and
reporting purpose, the legal status of the Company as the surviving corporation
does not change.
Concurrent with the reverse acquisition, the Company changed its corporate name
from Immune America, Inc. to King Power International Group Co., Ltd.
KPD is a Thailand-based corporation engaged in selling duty free merchandise to
the traveling public under the supervision of Thai customs in various stores
located in the international terminals of the various airports located in
Thailand. KPD holds from the Airports Authority of Thailand a non-exclusive
license to operate duty free stores for all stores of this specific nature. For
the duty free store operation, KPD is exempt from input value added tax on
purchases of merchandise and from output value added tax on sales of
merchandise.
30
<PAGE>
KPT is a Thailand-based corporation engaged in selling various souvenirs and
consumer products in the international and domestic terminal of the various
airports located within Thailand to the general public. KPT holds the exclusive
operating license granted by the Airports Authority of Thailand for all shops of
this specific nature. For the tax free operation, KPT is subject to input value
added tax on purchases of merchandise and is exempt from output value added tax
on sales of merchandise.
On October 10, 1997, the Company acquired 4,900 shares of common stock in King
Power International Group (Thailand) Company Limited ("KPG Thai"), equivalent to
49% of the registered capital. KPG Thai was established in Thailand on September
11, 1997 and has registered capital totaling Baht 1 million divided into 10,000
shares of common stock with Baht 100 per share. KPT acquired 5,093 shares of
common stock in KPG Thai equivalent to 50.93% of the registered capital. The
Company owns 99.93% of equity interest in KPG Thai.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements are prepared
in accordance with accounting principles generally accepted in the United States
of America which include the accounts of the Company and its subsidiaries. All
significant inter-company accounts and transactions have been eliminated in
consolidation. Investment in other companies under 20% of interest was accounted
for using the cost method. The consolidated financial statements are presented
in U.S. dollars.
Cash and Cash Equivalents - The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.
Merchandise Inventories - Merchandise inventories are stated at the lower of
cost or market. Cost is determined on a weighted average basis.
Allowance for Doubtful Accounts - The allowance for doubtful accounts of the
Company is provided at the estimated collection losses on receivables, based on
the Company's collection experience together with a review of the financial
position of each debtor.
Foreign Currency Translation and Transactions - The financial position and
results of operations of the Company's foreign subsidiaries are determined using
the local currency as the functional currency. Assets and liabilities of these
subsidiaries are translated at the prevailing exchange rates in effect at each
year end. Contributed capital accounts are translated using the historical rate
of exchange when capital was injected. Income statement accounts are translated
at the average rate of exchange during the year. Translation adjustments arising
from the use of different exchange rates from period to period are included in
the cumulative translation adjustment account in shareholders' equity. Gains and
losses resulting from foreign currency transactions are included in operations.
Gains or losses on exchange are recognized as income or expenses in the year.
Differences between the forward rate and the spot rate in forward exchange
contracts are amortized as revenue and expense over the period of the contract.
31
<PAGE>
The exchange rates as of December 31, 1998 and 1997 are $1= Thai Baht 36.688 and
Baht 47.247, respectively. The average rates of exchange during 1998, 1997 and
1996 are $1= Thai Baht 40.795, Baht 33.883 and 25.408, respectively.
Property, Plant and Equipment - Property, plant and equipment is stated at cost.
Depreciation is computed utilizing the straight-line method over the estimated
useful lives of the assets as follows:
Building 20 Years
Leasehold improvements Term of lease
Selling office equipment and fixtures 5 Years
Vehicles 5 Years
Maintenance, repairs and minor renewals are charged directly to expenses as
incurred.
Store Pre - Opening Costs - Store pre - opening costs are expensed as incurred.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.
Revenue Recognition - The Company recognizes revenue from sales of merchandise
at the point of sale.
Concession Fees - According to the concession agreement with Airports Authority
of Thailand, KPT is required to pay concession fees, rental and services fees,
and other related expenses at the fixed charges per month as defined in the
agreement. According to the concession agreement with Airports Authority of
Thailand, KPD is required to pay concession fee at the fixed percentage of sales
but at least equal to the fixed charges as defined in agreement, and pay rental
and service fee and other related expenses.
Concentration of Credit Risk - The Company's retail businesses are cash flow
businesses. Most sales take place with cash receipts or credit card payments.
The Company maintains its cash accounts with various financial institutions. See
Note 11 with respect to loans and advances to directors and affiliated
companies.
Fair Value of Financial Instruments - The carrying amount of cash, trade
accounts receivable, notes receivable, trade accounts payable and accrued
payable are reasonable estimates of their fair value because of the short
maturity of these items. The carrying amounts of the Company's credit facilities
approximate fair value because the interest rates instruments are subject to
change with market interest rates.
Income Taxes - The Company accounts for income taxes using the liability method,
under Statement of Financial Accounting Standard No. 109.
32
<PAGE>
The Company does not provide for United States income taxes on unremitted
earnings of its Thailand-based subsidiaries since the Company's intention is to
reinvest these earnings in their operations.
Earnings Per Share - Basic earnings per share has been computed based on the
average number of common shares outstanding for the period. There are no
potential dilutive securities outstanding.
Reclassification - Certain 1996 and 1997 amounts have been reclassified to
conform with the 1998 presentation.
New Accounting Standards Not Yet Adopted-Accounting for Derivative Instruments
and Hedging Activities Statement of Financial Accounting Standards No. 133 is
effective for fiscal years beginning after June 15, 1999. This Statement
requires that certain derivative instruments be recognized in balance sheets at
fair value and for changes in fair value to be recognized in operations.
Additional guidance is also provided to determine when hedge accounting
treatment is appropriate whereby hedging gains and losses are offset by losses
and gains related directly to the hedged item. The Company believes that
adoption will not have a significant impact on financial condition or operating
results.
3. RESTRICTED FIXED DEPOSITS
1998 1997
Restricted fixed deposits $ 5,254,485 $ 6,465,680
Interest rates 6.00% - 15.00% 9.25% - 11.25%
In 1998, the restricted fixed deposits with maturities from six to
twelve months are pledged as a collateral to a commercial bank for bank credit
facilities of subsidiaries. As these are current obligations of the Company, the
deposits are shown as current assets. In 1997, the restricted fixed deposits
were primarily collateral for bank credit facilities of subsidiaries and a
related company (Forty Seven Co., Ltd.) and for the issuance of a letter of
guarantee required by the Airports Authority of Thailand pursuant to the
operating agreement with the Company and are, therefore, shown as non - current
assets.
4. OTHER CURRENT ASSETS
Other current assets consist of the following :
1998 1997
Management fee receivable
- related companies (see Note 11) $2,714,184 $ 2,174,893
Refundable value added tax 2,238,862 963,528
Other 885,600 675,994
------------- ------------
5,838,646 3,814,415
Less Allowance for doubtful account (2,714,184) -
----
============= ============
$ 3,124,462 $ 3,814,415
============= ============
33
<PAGE>
In the Company's Thailand-based subsidiaries, refundable value added tax (VAT)
represents, on a cumulative basis, the excess of input tax (charged by suppliers
on purchases of merchandise and services) over the output tax (charged to
customers on sales of merchandise and services). Value added tax is levied on
the value added at each stage of production and distribution including
servicing, generally at the rate of 7% and at the rate of 10% starting at August
16, 1997.
In 1998, KPG Thai charged a management fee amounting to $ 267,284 to King Power
International Co., Ltd. (a related company) for office rental, operating
expenses, advertising and consulting. The fee is based on actual expenses plus
20%. The period of agreement was for one year, commencing from January 1, 1998
to December 31, 1998.
In 1997, KPT charged a management fee to Downtown D.F.S (Thailand) Co., Ltd. (a
related company) for management and consulting service. The period of agreement
was for one year, commencing from January 1, 1997 to December 31, 1997. The fee
amounted to $ 182,000 per month, and totaled $ 2,184,000. In 1998, no such
services were provided by KPT and accordingly, no management fees were charged.
5. PROPERTY, PLANT AND EQUIPMENT-NET
1998 1997
Land $ 716,393 $ 111,753
Building 140,870 109,375
Leasehold improvements 4,556,110 2,334,382
Sales office equipment and fixtures 2,160,045 983,794
Vehicles 654,010 294,023
Construction in process - 354,486
------------- ------------
Total cost 8,227,428 4,187,813
Less Accumulated depreciation (2,053,818) (785,361)
============= ============
Net book value $ 6,173,610 $ 3,402,452
============= ============
As at December 31, 1998 and 1997, land and building are pledged as collateral
for credit line of trust receipt and long - term loan from bank. (see Note 6)
6. BANK OVERDRAFT AND LOANS FROM BANKS
1998 1997
Bank overdrafts $ 516,589 $ 958,635
Loan from bank - 1,693,229
Trust receipts 9,669,158 3,143,323
Promissory note - 423,307
============ ============
$ 10,185,747 $ 6,218,494
============ ============
34
<PAGE>
As at December 31, 1998 and 1997, the Company has an overdraft facility with a
commercial bank in Thailand totaling Baht 20.74 million ($ 570,000) and Baht 25
million ($ 530,000) carrying interest rates of at MOR (Minimum Overdraft Rate)
plus 1% per annum. For the years ended December 31, 1998 and 1997 the average
rate of MOR was 15.00% - 21.75% and 15.50% - 24.00% per annum, respectively.
Available lines of credit for the bank overdrafts are guaranteed by certain
directors and pledge of fixed deposits. (see Note 3)
As at December 31, 1998 and 1997, trust receipts incurred by KPD bear interest
at the rates varying from 7.14% - 17.50% and 12.50% - 19.50% per annum,
respectively, and are guaranteed by fixed deposits, KPD's land, and two
directors of KPD together with a related company. Trust receipts are as follows
as of December 31, 1998:
Currencies Amount Interest rate
( % )
1998
Foreign currency borrowing by subsidiaries in Thailand
- -under forward contract USD 2,308,958 2,308,958
- -without forward contract AUD 101,182 62,665 11.47 - 15.50
BAHT 1,522,526 41,504 14.50 - 15.50
DEM 433,430 261,277 9.75 - 14.00
FRF 2,082,357 374,956 9.10 - 12.00
GBP 15,488 26,250 13.50
HKD 7,237,084 942,342 9.06 - 17.50
ITL 926,405,459 570,736 9.06 - 13.00
SFR 175,770 129,896 7.75 - 14.50
SGD 69,634 42,545 9.50 - 14.50
USD 4,851,989 4,879,264 9.06 - 15.50
YEN 3,292,720 28,765 7.14
============
$ 9,669,158
============
KPT had a short-term loan with a Thailand bank for Baht 100 million of which the
balance as at December 31, 1997 is amounting to Baht 80 million ($ 1,693,229)
carrying interest rate at MLR (Minimum Loan Rate), plus 1.5% per annum. The
repayments schedule was by ten installments of Baht 10 million, starting from
November, 1996. The short-term loan was guaranteed by two directors of KPT
together with a related company, and one million shares of KPD's stock. The loan
was repaid in 1998.
For the year ended December 31, 1997, the average rate of MLR was 17% per annum.
As of December 31, 1997, KPT issued a 30-day promissory note payable to a local
commercial bank, which bears interest at rates varying from 13% - 14.25% per
annum. The amount was repaid in 1998.
35
<PAGE>
<TABLE>
<CAPTION>
7. CONCESSION FEES
Accrued concession fees consist of the following :
1998 1997
<S> <C> <C> <C>
Accrued concession fee :
- Customs Department $ 2,881,077 $ 709,661
- Airports Authority of Thailand 7,916,758 5,506,409
============ ===========
$ 10,797,835 $ 6,216,070
============ ===========
1998 1997 1996
Concession fee expense $ 24,969,793 $ 34,337,537 $ 20,032,406
============ ============ ============
</TABLE>
In order to obtain the necessary rights to operate at the international and
domestic airports in Thailand, the Company has entered into various agreements
with the Airports Authority of Thailand and the Customs Department of Thailand
to operate at the international and domestic airports and to rent office space.
Both KPD and KPT are required to pay concession fees, rental and service fees,
property tax, and other expenses and to pledge cash or obtain a letter of bank
guarantee of a local commercial bank as collateral under the aforementioned
agreements with the Airports Authority of Thailand and pay concession fees under
the aforementioned agreements with the Customs Department. A summary of the
concession and rental fees payable and collateral for the remaining periods of
the agreement are as follows:
<TABLE>
KPT KPD
Airport Rental, Service Collateral Airport and Rental, Service Collateral
Concession fee and other expense Customs and other expense
Year Concession fee
<S> <C> <C>
'000 '000
1999 14,590 680 8,553 9,560 930 9,541
2000 14,590 650 8,085 9,900 930 9,882
2001 14,590 220 7,935 10,240 930 10,223
2002 14,590 - 7,851 - - -
2003 6,080 - 7,851 - - -
</TABLE>
Effective March 19, 1998, the Thai Customs Department agreed to waive the
concession fees which KPD is required to pay for the duration of KPD's
concession through 2001 thus reducing the total amount required. Amounts
expensed by KPD under Thai Customs Department concession were $ 9,024,251 for
1997 and $ 1,988,951 from January 1 to March 19, 1998. Additionally, the Customs
Department approved on November 6, 1998 to extend the repayment of concession
fee for December 1997 and January 1998 amounting to $ 1,716,107 (Bath
62,953,299) as installment payments, carrying interest rate of 1% per month and
due in October 1999.
36
<PAGE>
8. LONG - TERM LIABILITIES
1998 1997
Long-term loans $1,575,401 $ 208,665
Installment purchase payable 59,556 47,470
----------- -----------
1,634,957 256,135
Less Current portion of long-term debt 1,346,820) (28,649)
----------- -----------
Long-term liabilities 288,137 227,486
----------- -----------
Other liabilities 114,790 -
---------- -----------
$ 402,927 $ 227,486
=========== ===========
As at December 31, 1998 and 1997 long-term loans consist of loans from banks and
financial institution, carrying interest rate of 17.25% - 21.50% and 13.50% per
annum, respectively. The long-term loans are secured by the Company's land,
building and guaranteed by a director of the Company. (see Note 5)
Loans are due as follows:
Installment Purchase Obligation
1998 1997
1998 $ - $ 22,930
1999 38,340 22,930
2000 8,859 1,610
2001 6,740 -
2002 5,617 -
------------ ---------
Total $ 59,556 $ 47,470
============ ==========
Long-term Loan Installment Payments
1998 $ - $ 5,719
1999 1,346,820 6,528
Thereafter 228,581 196,418
------------ --------
Total $ 1,575,401 $208,665
============ =========
9. SHAREHOLDERS' EQUITY
(a) Per the reverse acquisition agreement, the two Thailand-based
companies together received a total of 18,800,000 shares of common
stock of Immune America, Inc. which represented 94% of equity interest
as of the date the reverse acquisition agreement was effective.
Therefore, the 18,800,000 shares were assumed to be issued and
outstanding as of January 1, 1996 for the purpose of presenting
comparative financial statements.
37
<PAGE>
(b) Per reverse acquisition agreement, 752,000 shares out of the total
18,800,000 shares were put in escrow subject to certain requirements
including that the Company shall have financial statements prepared in
accordance with U.S. GAAP and shall have reached certain criteria of
financial performance as of December 31, 1997. If, as of December 31,
1997, the Company failed to satisfy any of these conditions the
752,000 shares were to be released to a financial consultant which was
also a party to the reverse requisition agreement. During the first
quarter of 1998, these shares were released from escrow and issued to
the financial consultant.
(c) Per the reverse acquisition agreement, the other 4% of equity interest
were represented by 1,200,000 shares of common stock as of June 12,
1997 when the reverse acquisition was effective. These 1,200,000
shares of common stock were represented by the following components:
<TABLE>
Common stock Additional Retained Treasury Total
Shares Amount paid-in earnings stock
capital
<S> <C> <C> <C> <C> <C> <C>
Beginning Balance at
12/31/96 275,316 $ 275 $ 151,186 $(143,833) $ (6,000) $ 1,628
Form S-8 issuance at
5/8/97 924,684 925 69,717 -- -- 70,642
Reissuing of treasury stock -- -- -- -- 6,000 6,000
Net loss at 6/12/97 -- -- -- (78,270) -- (78,270)
--------- --------- --------- --------- --------- ---------
Total shareholders' equity
At June 12, 1997 1,200,000 $ 1,200 $ 220,903 $(222,103) $ -- $ --
========= ========= ========= ========= ========= =========
</TABLE>
(d) On August 18, 1997, the Company issued 250,000 shares of its common
stock to two foreign entities, 125,000 shares each, at a price of
$8.00 per share with net proceeds of $1,887,000. Both entities are
located in Taipei, Taiwan, Republic of China. 125,000 shares were
placed in escrow until May 1, 1998, subject to an additional payment
by the purchasers of $4.00 per share on all 250,000 shares issued or
$1,000,000 in the event that the earnings per share for the Company
for the calendar year ended December 31, 1997 exceeded a certain
amount per share. If the earnings per share for fiscal year 1997 were
below the specified goal, then the shares under escrow were to be
released to the purchasers without further consideration. These shares
have been released from escrow without further consideration. No
underwriter or placement agent was used. The issuance was conducted
pursuant to Regulation S promulgated under the United States
Securities Act of 1933, as amended.
10. INCOME TAX
The provision for income taxes consist of the following:
1998 1997 1996
Current (payable):
United States $ - $ - $ -
Foreign (3,476,186) - -
----------- ----------- -----------
(3,476,186) - -
----------- ----------- -----------
Deferred (benefit):
United States - - -
Foreign 3,590,141 1,219,387 -
----------- ----------- -----------
3,590,141 1,219,387 -
----------- ----------- -----------
Total income tax benefit $ 113,955 $ 1,219,387 $ -
=========== =========== ===========
38
<PAGE>
<TABLE>
<CAPTION>
Pre-tax loss for foreign companies for the year ended 1998 was $ 2,028,413.
Current taxes payable are included in other current liabilities.
A reconciliation of the Company's statutory income tax rate with its effective
income tax rate is as follow:
1998 1997 1996
<S> <C> <C> <C>
Statutory United States Federal rate (35)% 35% 35%
Foreign tax rate difference 2 (5) (5)
Use of net operating loss carry forward (1) (30) (30)
Usage of temporary difference - (4) (1)
Recognition of net operating loss carry forward - (14) (286)
Valuation allowance recorded 19 - 287
Non-deductible expenses 3 - -
Other miscellaneous (including translation) 9 - -
-------------- -------------- -----------
(3)% (18)% -
============== ============== ============
The components of deferred tax assets and liabilities were :
1998 1997 1996
Reserves $ 4,945,942 $ - $ -
Temporary difference - 264,166 20,052
Net operating loss carry forward 333,572 955,221 4,589,205
-------------- ------------- -------------
5,279,514 1,219,387 4,609,257
Translation adjustment - (344,922) -
Less Valuation allowance (814,908) - (4,609,257)
----
-------------- ------------- -------------
Deferred tax assets $ 4,464,606 $874,465 $ -
============== ============= =============
</TABLE>
As at December 31, 1998 and 1997, U.S. Parent Company and the Company's
foreign subsidiaries have deferred tax assets relating to net operating
loss carry forwards for income tax purpose of $ 333,572 and $ 955,221,
respectively, that expire in years 1999 to 2000. No valuation allowance on
the foreign loss carry forwards has been provided at December 31, 1998 and
1997 as the Company has determined that it is more likely than not to
realize these deferred income tax assets. The U.S. loss carry forward has a
full valuation allowance provided for it as management does not believe it
is more likely than not to be realized.
39
<PAGE>
<TABLE>
<CAPTION>
11. RELATED PARTIES AND DIRECTORS TRANSACTIONS
The Company has business transactions with and has advanced funds to
related companies and directors. These transactions are with companies that
have joint directors and/or shareholders with the Company. Balances at
December 31, 1998 and 1997 with related companies and directors are as
follows (in'000):
As at December 31, 1998
Accounts Loans and receivables to related Management Accounts Other
receivable companies fee payable payable
and Directors receivables
------------ ----------------------------------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Loans Interest and Total
other
receivables
1998
King Power International Co., Ltd. $ 1,690 $ 1,052 $ 156 $ 1,208 $ 199 $ - $ -
Forty Seven Co., Ltd. - 6,022 354 6,376 - - -
Downtown D.F.S. (Thailand) Co., Ltd. 184 2,070 377 2,447 2,515 - -
King Power Duty Free (CBO) Ltd. - 1,429 128 1,557 - 88 50
Top China Group Co., Ltd. - 1,302 70 1,372 - - -
Lengle (Thailand) Co., Ltd. - 299 18 317 - - -
Grand Enterprise and Trading
Partnership - 1,177 47 1,224 - - -
King Power on Board and Sale Service
Co., Ltd. - 372 25 397 - 98 -
Infotel Communication(Thailand) Co.,
Ltd. - 553 44 597 - - -
King Power Development Co., Ltd. - 121 3 124 - - -
King Power Alpha on Board and Sale
Service Co., Ltd. - 2 - 2 - - -
Thai Nishigawa International Co., Ltd. - - - - - 55 -
Niji (Thailand) Co., Ltd. - - - - - 66 -
------------ -------------- ----------- -------------- ------------- ----------- -----------
1,874 14,399 1,222 15,621 2,714 307 50
Directors - 7,228 220 7,448 - - -
------------ -------------- ----------- -------------- ------------- ----------- -----------
1,874 21,627 1,442 23,069 2,714 307 50
Less Allowance for doubtful accounts
Related companies (1,874) (8,110) (913) (9,023) (2,714) - -
Directors - (2,134) - (2,134) - - -
------------ -------------- ----------- -------------- ------------- ----------- -----------
(1,874) (10,244) (913) (11,157) (2,714) - -
------------ -------------- ----------- -------------- ------------- ----------- -----------
Total $ - $ 11,383 $ 529 $ 11,912 $ - $ 307 $ 50
============ ============== =========== ============== ============= =========== ===========
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
As at December 31, 1997
Accounts Loans and receivables to related Management Accounts
receivable companies fee payable
and Directors receivables
-------------------------------------------------------------------------------
Loans Interest Total
and
other
receivables
<S> <C> <C> <C> <C> <C> <C>
1997
King Power International Co., Ltd. $ 438 $1,961 $ -- $1,961 $ -- $ --
Forty Seven Co., Ltd. -- 345 32 377 -- --
Downtown D.F.S. (Thailand) Co., Ltd. 164 635 240 875 2,175 --
King Power Duty Free (CBO) Ltd. -- 9 -- 9 -- 280
Lengle (Thailand) Co., Ltd. -- -- -- -- -- 311
Thai Sky Travel & Intertrade Co., Ltd. -- -- -- -- -- 2
Thai Nishigawa International Co., Ltd. -- -- -- -- -- 32
Niji (Thailand) Co., Ltd. -- -- -- -- -- 20
------ ------ ------ ------ ------ ------
602 2,950 272 3,222 2,175 645
Directors -- 1,323 380 1,703 -- --
------ ------ ------ ------ ------ ------
602 4,273 652 4,925 2,175 645
Less Allowance for doubtful accounts
Related companies -- -- -- -- -- --
Directors -- -- -- -- -- --
------ ------ ------ ------ ------ ------
-- -- -- -- -- --
------ ------ ------ ------ ------ ------
Total $ 602 $4,273 $ 652 $4,925 $2,175 $ 645
====== ====== ====== ====== ====== ======
</TABLE>
Additionally, the Airports Authority of Thailand owns 5% of KPD common shares.
As at December 31, 1998 and 1997, there are accrued concession fees amounting to
$7,916,758 and $5,506,409, respectively. (see Note 7)
41
<PAGE>
An allowance for doubtful accounts of $ 15,745,552 has been provided for certain
amounts due from related companies and directors based on liquidity restraints
of such parties.
In 1998 and 1997, the Company charged interest for loans to/from related
companies at 10.00%, 14.50% - 17.50% per annum and charged interest for loans
to/from directors at 6.50%-10.00% and 14.50% - 17.50% per annum, respectively.
Such loans have no formal contracts or collateral and are due on demand.
KPD made a deposit in 1997 with a related company, Downtown D.F.S. (Thailand)
Co., Ltd.(DDC) for using credit facilities of Baht 100 million from a financial
institution which is guaranteed by DDC.
The Company had operating transactions with related parties and directors as
follows (in'000):
<TABLE>
<S> <C> <C> <C>
Related Companies
For the year ended December 31,
1998 1997 1996
Sales $ 805 $ 1,253 $ -
Interest income 843 142 -
Management fee income 254 1,648 -
Purchase 945 9,127 768
Commission 369 - -
Concession fee $ 11,092 $34,338 $20,032
Directors
For the year ended December 31,
1998 1997 1996
Interest income $ 198 $ 380 $ -
</TABLE>
12. COMMITMENTS AND CONTINGENT LIABILITIES
Lease commitments
As of December 31, 1998 and 1997, KPG Thai has a leasing commitment for
office space under a non-cancelable operating lease agreement in excess of
one year as follows (in'000):
Year ended December 31,
1998 1997
---- ----
1998 $ - $ 236
1999 415 236
2000 364 196
2001 83 -
========== =========
$ 862 $ 668
========== =========
42
<PAGE>
Letter of bank guarantee
As of December 31, 1998 and 1997, KPT and KPD were contingently liable for
bank guarantees totaling $ 13.46 million and $ 12.14 million, respectively,
issued in favor of the Excise Department and the Airports Authority of
Thailand as a performance bond.
Unused letters of credit
As of December 31, 1998 and 1997, KPT and KPD have the unused letters of
credit amounting to $6.46 million and $0.00 million, respectively.
13. SEGMENT FINANCIAL INFORMATION
The following segment information of the Company for 1998, 1997 and 1996
are disclosed in accordance with Statement of Financial Accounting Standard
No. 131 ("SFAS 131"). Information by legal entities is the reportable
segment under SFAS 131 because each entity is reported separately for
management (in'000).
<TABLE>
For the year ended December 31, 1998
Duty Free Tax Free All
Retail Retail Other Totals
<S> <C> <C> <C> <C>
Segment Information
Revenue from external customers $ 57,461 $33,664 $ - $91,125
Cost of merchandise sold 25,537 13,568 - 39,105
Concession fees 11,198 13,771 - 24,969
Gross profit 20,726 6,325 - 27,051
Interest income 1,049 264 126 1,439
Interest expenses 1,048 313 4 1,365
Segment net income (loss) 2,251 (2,781) (3,757) (4,287)
Segment total assets 35,164 11,678 1,234 48,076
Expenditures for segment assets 2,532 580 710 3,822
Depreciation 539 311 104 954
Unrealized gain (loss) on exchange (491) 539 (74) (26)
Provision for damage stock (reversal) (618) - - (618)
Allowance for doubtful accounts 8,468 4,977 2,301 15,746
Deferred tax $ 1,865 $2,540 $ 60 $ 4,465
For the year ended December 31, 1997
Duty Free Tax Free All
Retail Retail Other Totals
Segment Information
Revenue from external customers $ 59,629 $36,367 $ - $95,996
Cost of merchandise sold 25,583 12,922 - 38,505
Concession fees 17,790 16,547 - 34,337
Gross profit 16,256 6,898 - 23,154
Management fee - 1,648 - 1,648
Interest income 975 852 - 1,827
Interest expenses 643 583 - 1,226
Segment net income (loss) 1,700 6,993 (787) 7,906
Segment total assets 20,171 12,512 2,396 35,079
Expenditures for segment assets 1,405 296 317 2,018
Depreciation 595 184 - 779
Gain (loss) on exchange (6,887) 2,515 - (4,372)
Provision for damage stock 533 - - 533
Deferred tax $ $ $ - $
391 483 874
</TABLE>
43
<PAGE>
<TABLE>
For the year ended December 31, 1996
Duty Free Tax Free All
Retail Retail Other Totals
<S> <C> <C> <C> <C>
Segment Information
Revenue from external customers $ - $ 41,869 $ - $ 41,869
Cost of merchandise sold - 14,447 - 14,447
Concession fees - 20,032 - 20,032
Gross profit - 7,390 - 7,390
Interest income 156 437 - 593
Interest expenses 27 512 - 539
Segment net income (loss) (811) 2,414 - 1,603
Segment total assets 14,391 9,351 - 23,742
Expenditures for segment assets 1,168 304 - 1,472
Depreciation 26 155 - 181
Gain (loss) on exchange $ 18 $ 447 $ - $ 465
For the year ended
December 31,
1998 1997 1996
Revenue
Total revenues for reportable segments $91,787 $96,376 $ 41,869
Elimination of intersegment revenues (662) (380) -
---------- --------- --------
Total consolidated revenues $91,125 $95,996 $ 41,869
========== ========= ========
For the year ended
December 31,
1998 1997 1996
Profit or loss
Total profit or loss for reportable segments $ 6,201 $ 16,495 $ 1,643
Elimination of intersegment profits (1,914) (8,560) -
---------- --------- --------
Total consolidated profit or loss $ 4,287 $ 7,935 $ 1,643
========== ========== ========
As at December 31,
1998 1997
Assets
Total assets for reportable segments $ 67,102 $ 47,523
Elimination of intersegment assets (19,026) (12,444)
========= ==========
Total consolidated assets $ 48,076 $ 35,079
========= ==========
SCHEDULE 2-ALLOWANCES
SCHDULE 2 - ALLOWANCES
Balance at Additions charged Additions charged Deductions Balance at
the to costs and to other accounts end of year
beginning expenses
of year
For the Year Ended December 31, 1998
Allowances Deducted from Assets
Trade account receivable - 1,874,290 - - 1,874,290
Loans to and receivable from related
company and directors - 11,157,025 - - 11,157,025
Merchandise inventories 533,367 - - -533,367 0
Deferred tax - - 814,908 814,908
Management fees(other current assets) - 2,714,184 - - 2,714,184
Investments in other companies 55,666 16,177 17,845 - 89,688
Total Allowances Deducted from Assets 589,033 15,761,676 832,753 -533,367 16,650,095
===============================================================================
For the Year Ended December 31, 1997
Allowances Deducted from Assets
Merchandise inventories - 469,209 64,158 - 533,367
Deferred tax 4,609,257 - - -4,609,257 0
Investments in other companies 66,284 27,503 -38,121 - 55,666
Total Allowances Deducted from Assets 4,675,541 496,712 26,037 -4,609,257 589,033
===============================================================================
For the Year Ended December 31, 1996
Allowances Deducted from Assets
Deferred tax - - 4,609,257 - 4,609,257
Investments in other companies 37,401 29,757 -874 - 66,284
Total Allowances Deducted from Assets 37,401 29,757 4,608,383 0 4,675,541
</TABLE>
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The accounting firm of BDO Binder (Thailand) Ltd., the independent accountants
for the Company that was hired on December 12, 1997, was dismissed as of
November 15, 1998 as directed by the Board of Directors. During the fiscal year
ended December 31, 1997 and the subsequent interim period through November 15,
1998 there have been no disagreements with BDO Binder (Thailand) Ltd. on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure or any reportable events. BDO Binder (Thailand)
44
<PAGE>
Ltd.'s report on the Company's financial statements for the fiscal year ended
December 31, 1997 contained no adverse opinion or disclaimer of opinion and was
not qualified or modified as to uncertainty, audit scope or accounting
principles. During the fiscal year ended December 31, 1997 and the subsequent
interim period through November 15, 1998 there were no disagreements with the
Company's accounting firm, BDO Binder (Thailand) Ltd. or reportable events.
Because of the dismissal of the accounting firm of BDO Binder (Thailand), LLP,
on November 15, 1998, the Company engaged the accounting firm of Deloitte Touche
Tohmatsu Jaiyos as independent accountants for the Company, effective as of
November 15, 1998. During the fiscal years ended December 31, 1996 and 1997, and
the subsequent interim period through November 15, 1998, there have been no
consultations with Deloitte Touche Tohmatsu Jaiyos on any matters of accounting
principles to a specific transaction, either completed or proposed, or the type
of audit opinion that might be rendered on the Company's financial statements.
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Name Age Position
- ---- --- --------
Vichai Raksriaksorn 41 Group Chairman, Chief Executive
Officer and Director
Viratana Suntaranond 58 Group Executive Director,
Group Chief Financial Officer,
Secretary and Director
Antares Cheng 42 Group Managing Director and
Director
Aimon Boonkhundha 42 Deputy Group Managing Director
and Director
Dharmnoon Prachuabmoh 65 Director
Suwan Panyapas 55 Director
Benjamin B. Fattedad 56 Group Director of Development
And Director
Set forth below is a description of the backgrounds of the executive officers
and directors of the Company and a listing of their principal occupations for
the past five years.
Vichai Raksriaksorn
1997-Present Group Chairman, Chief Executive Officer and Director of King
Power International Group Co., Ltd.
Managing Director of King Power Duty Free Co., Ltd.
Chairman of King Power Development Co., Ltd.
Thai National Dressage Team Manager
Privilege Committee of Thailand Equestrian Federation
45
<PAGE>
1995-1998 Chairman of King Power Duty Free (Macau) Co., Ltd.
Chairman of King Power Duty Free (C.B.O.) Limited, Hong Kong
1994-Present Managing Director of Top (China) Group Co., Ltd.
Chairman of King Power International Co., Ltd.
Managing Director of Forty Seven Co., Ltd.
Chairman of Beijing Great Wall (Top) Tourist Services Co.,
Ltd.
Chairman of V&A Holdings Co., Ltd.
1994-1998 Chairman of Hong Kong Kai Tak International Airport Duty Free
Shop Co., Ltd.
1993-Present Chairman of King Power Tax Free Co., Ltd.
Chairman of Capitalux Co., Ltd.
1992-Present Chairman of Lengle (Thailand) Co., Ltd.
1991-Present Chairman of TAT (Phnompenh) Duty Free Co., Ltd.
1989-Present Managing Director of Downtown D.F.S. (Thailand) Co., Ltd.
Viratana Suntaranond
1997-Present Group Executive Director, Group Chief Financial Officer,
Secretary and Director of King Power
International Group Co., Ltd.
Executive Director and Managing Director of King Power Duty
Free Co., Ltd.
1994-1997 Director of Big Hand Co., Ltd.
1993-Present Managing Director of King Power Tax Free Co., Ltd.
1992-Present President of U.M.P. Commercial Co., Ltd.
1985-Present President of Niji (Thailand) Co., Ltd.
1984-Present Managing Director of Thai-Tai International Trading Co., Ltd.
Antares Cheng
1997-Present Group Managing Director and Director of King Power
International Group Co., Ltd.
1995-Present Managing Director of Hong Kong Kai Tak International Airport
Duty Free Shop Co., Ltd.
General Manager of King Power Duty Free (Macau) Co., Ltd.
1994-Present Director of China Ferry Terminal GM Shop
1993-Present Managing Director of Top Group (Thailand) Co., Ltd.
1992-Present Managing Director of King Power Group
Deputy Managing Director of Downtown DFS (Thailand) Co., Ltd.
1990-Present Director of TAT Phnom Penh Duty Free Co., Ltd., Cambodia
Shareholder, Director and General Manager of Europa Prince
Department store
1989-Present Managing Director of Railway Duty Free, Hong Kong
Aimon Boonkhundha
1997-Present Deputy Group Managing Director and Director of King Power
International Group Co., Ltd.
1996-Present Executive Director of King Power Duty Free Co., Ltd.
1994-Present Executive Director of Top Tourist Service Co., Ltd.
1993-Present Director of King Power Tax Free Co., Ltd.
Executive Director of TAT Phnom Penh Co., Ltd.
1989-Present Managing Director of Thai Nishikawa International Co., Ltd.
Suwan Panyapas
1997-Present Director of King Power International Group Co., Ltd.
1996-Present Senator of Thai National Assembly
1991-Present Advisor to TAT Duty Free Co., Ltd.
46
<PAGE>
1989-Present Advisor & Shareholder of Downtown DFS (Thailand) Co., Ltd.
1989-1991 Managing Director of TAT Duty Free Co., Ltd.
Some Special Positions Held:
Member of Committee Training Successful Candidates appointed to
Juvenile Court.
Member of Sub-Committee on the Development of Judicial and Ministerial
System.
Member of Committee/Secretary on Selection Test for Judicial Officer
Senior Judge of Thonburi Court
Chief Judge of Udon Thanee District Court
Chief Judge attached to the Ministry of Justice
Dharmnoon Prachuabmoh
1997-Present Director of King Power International Group Co., Ltd.
Life Member, Pacific Asia Travel Association (PATA)
1995-1996 Member of the Thai Parliament, House of Representatives
Advisor to Deputy Minister, Ministry of Communications and
Transport
Vice Chairman, Tourism Committee (House of Representatives)
1988-1995 President of Thailand Incentive and Convention Association
(TICA)
1988-1989 President of Pacific Asia Travel Association
1986-1994 Governor of Tourism Authority of Thailand (TAT)
Benjamin B. Fattedad
1997-Present Group Director of Development and Director of King Power
International Group Co., Ltd.
Director of Hong Kong Kai Tak International Airport Duty Free
Shop Co., Ltd.
Director of King Power Alpha Limited.
1996-Present Managing Director of Deveg Limited
1995-1997 Advisor of Kong Kong Kai Tak International Airport Duty Free
Shop Co., Ltd.
1993-Present Advisor of Top (China) Group Co., Ltd.
1990-Present Managing Director of Grosse Hong Kong Ltd.
1989-1995 Consultant of TAT Duty Free Co., Ltd., Thailand
Directors of the Company hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified. Vichai
Raksriaksorn and Aimon Boonkhundha are husband and wife. None of the other
directors or executive officers are related. Executive offices are elected by
the Company's Board of Directors to hold office until their respective
successors are elected and qualified.
The Company's bylaws provide that directors may be paid their expenses, if any.
Directors were not paid an annual retainer but they were each paid $2,000 -
$5,000 to attend meetings of the Board of Directors, Board of Executive
Officers, or of its committees held in 1998. All directors attended 100% of the
Board meetings held in 1998.
Committees of the Board of Directors
The Board of Directors has two committees: the Audit Committee and Compensation
Committee. The Audit Committee is composed of Vichai Raksriaksorn, Suwan
Panyapas, and Dharmnoon Prachuabmoh and Mr. Raksriaksorn is chairman. The Audit
Committee is responsible for recommending the annual appointment of the
Company's auditors, with whom the Audit Committee will review the scope of audit
and non-audit assignments and related fees, accounting principles used by the
Company in financial reporting, internal auditing procedures and the adequacy of
the Company's internal control procedures. The Compensation Committee is
composed of Vichai Raksriaksorn, Suwan Panyapas, and Dharmnoon Prachuabmoh and
Mr. Raksriaksorn is Chairman. The Compensation Committee is responsible for
reviewing and making recommendations to the Board of Directors concerning all
forms of compensation paid to the Company's executive officers.
47
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Based solely on the review of Forms 3,4 and 5 and amendments thereto provided
to the Company pursuant to Rule 16a-3(e), no individuals have failed to file on
a timely basis the reports required to be filed under that rule or as required
by Section 16(a) of the 1934 Act during the 1998 fiscal year.
ITEM 11 EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth certain information
about the cash and non-cash compensation paid by the Company to its Executive
Officers for the fiscal year ended December 31, 1996, 1997 and 1998. None of the
Company's executive officers or directors received cash and/or non-cash
compensation in excess of $100,000 for any of those fiscal years.
<TABLE>
Summary Compensation Table
- ----------------- --------------------------------------------- ------------------------------- -------------
<S> <C> <C> <C>
(a) Annual Compensation Long Term
Name and Compensation
Principal Awards (i)
Position Payouts
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
(b) (c) (d) (e) (f) (g) (h)
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
Year Salary Bonus Other Annual Restricted Option/ LTIP All Other
Compensation Stock SARs(#) Payouts Compensation
Awards
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
Vichai 1998 - - 5,000* - - - -
Raksriaksorn 1997 - - 6,800 - - - -
Group Chairman 1996 - - - - - - -
& CEO
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
Viratana 1998 - - 5,000* - - - -
Suntaranond 1997 - - 6,800 - - - -
Group Executive 1996 - - - - - - -
Director & CFO
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
Antares Cheng 1998 - - 2,000** - - - -
Group Managing 1997 - - 6,800 - - - -
Director 1996 - - - - - - -
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
Aimon 1998 53,000 - 2,000** - - - -
Boonkhundha 1997 - - 6,800 - - - -
Deputy Group 1996 - - - - - - -
Managing
Director
- ----------------- -------- ---------- ----------- ------------- ----------- --------- --------- -------------
</TABLE>
* Both Vichai Raksriaksorn and Viratana Suntaranond received meeting
compensation for the Board of Directors' Meetings and the Board of
Executive Officers' Meetings at $3,000 and $2,000, respectively.
** Both Antares Cheng and Aimon Boonkhundha received meeting compensation
from the Board of Executive Officers' Meetings.
The Company has no employment agreements with any of its executive officers or
directors.
48
<PAGE>
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 26, 1999 with
regard to the beneficial ownership of the Common Stock (i) each person known to
the Company to be beneficial owner of 5% or more of its outstanding Common
Stock, (ii) by the officers, directors and key employees of the Company
individually and (iii) by the officers and director as a group.
<TABLE>
(1) (2) (3)
Name and Address Number of Shares Beneficially Owned Percent
- ----------------------- ------------------------------------ -------
<S> <C> <C>
Vichai Raksriaksorn (1) 5,748,000 (1) 28.38%
Viratana Suntaranond (2) 3,000,000 (2) 14.81%
Aimon Boonkhundha (3) 3,000,000 (3) 14.81%
Antares Cheng 100,000 *
Benjamin B. Fattedad 90,000 *
Suwan Panyapas -0- *
Dharmnoon Prachuabmoh -0- *
Niphon Raksriaksorn (4) 1,037,883 (4) 5.12%
TOTAL 8 persons 12,975,883 (1)(2)(3)(4) 64.07%
</TABLE>
* less than 1 %
(1) This excludes 3,000,000 shares owned by his wife, Aimon Boonkhundha, as her
separate property. Mr. Raksriaksorn disclaims all beneficial interest in those
shares, as well as any right to vote or control the disposition of those shares.
(2) This excludes 1,000,000 shares owned by his wife, Umaratana Suntaranond, as
her separate property, as well as 150,000 shares in the aggregate owned by his
three children. Mr. Suntaranond disclaims all beneficial interest in those
shares, as well as any right to vote or control the disposition of those shares.
(3) This excludes 5,748,000 shares owned by her husband, Vichai Raksriaksorn, as
his separate property, as well as 5,000 shares owned by her mother, Auemporn
Boonkhant. Ms. Boonkhundha disclaims all beneficial interest in those shares, as
well as any right to vote or control the disposition of those shares.
(4) This excludes 5,748,000 shares owned by his uncle, Vichai Raksriaksorn, as
his separate property. Mr. Niphon Raksriaksorn disclaims all beneficial interest
in those shares, as well as any right to vote or control the disposition of
those shares.
49
<PAGE>
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following companies, which are owned or controlled by one or more
of the directors of the Company, had transactions with the Company during the
1998 fiscal year and are likely to have similar transactions with the Company in
the future. The related amounts are disclosed in Note 11 "Related Parties
Transactions" in Notes To Consolidated Financial Statements. All transactions
were on terms and conditions and at prices substantially similar to those that
these companies would have negotiated with unrelated third parties for the same
goods and services.
Thai Nishikawa International Co., Ltd.
Mr. Vichai Raksriaksorn and Ms. Aimon Boonkhundha are Director and Managing
Director, respectively, and owners of this company whose main business is a
manufacturer of costume jewelry for exporting.
Lengle (Thailand) Co., Ltd.
Mr. Vichai Raksriaksorn is the Chairman and Mr. Suwan Panyapas is a Director of
this company. Along with Mr. Viratana Suntaranond, Mr. Antares Cheng and Ms.
Aimon Boonkhundha, they are stockholders of this company, whose main business
was the Central Buying Office for local merchandise sold to KPT. Other than the
existing loan outstanding owed to KPG's subsidiary, there is no other business
activity currently.
Thai Sky Travel & Intertrade Co., Ltd.
Messrs. Vichai Raksriaksorn, Viratana Suntaranond, Antares Cheng and Dharmnoon
Prachuabmoh are the directors and owners of this company, whose main business is
a travel agent providing travelling arrangement for clients. There have been and
continue to be minimum business activities with this company but principally the
Company and its subsidiaries benefit from the low prices offered by this company
for its services.
King Power Duty Free (C.B.O.) Limited, Hong Kong
Mr. Vichai Raksriaksorn is the Chairman and Mr. Antares Cheng is the Managing
Director and they are owners of this company, whose main business was the
Central Buying Office of imported merchandise sold to KPD. Other than the
existing loan owed to KPG's subsidiary, there is no other business activity
currently.
Niji (Thailand) Co., Ltd.
Mr. Viratana Suntaranond is the President and owner of this company, whose main
business is the manufacturer of ballpoint and plastic-tip pens under the brand
name "Niji". In 1998, when other suppliers raised the cost of shopping bags to
an unacceptable level, KPG's subsidiaries purchased shopping bags from Niji at a
much lower cost than those offered generally in the market.
Forty Seven Co., Ltd.
Messrs. Viratana Suntaranond, and. Dharmnoon Prachuabmoh are Directors, Mr.
Vichai Raksriaksorn is the Managing Director and all are shareholders of this
company, whose main business is to act as the holding company for a duty-free
operation in Hong Kong. This company's operations are currently being liquidated
and it is in the process of recovering the owners' investment in this business.
50
<PAGE>
Top China Group Co., Ltd.
Messrs. Viratana Suntaranond, and Antares Cheng are Directors, and Mr. Vichai
Raksriaksorn is the Managing Director and all are shareholders of this company,
whose main business is acting as the holding company for a duty-free operation
in Mainland China at the Great Wall. This company operates, as a joint venture
with the Forestry Ministry of the Republic of China, a duty-free business at the
Great Wall area under the 50-year license.
King Power International Co., Ltd.
Mr. Vichai Raksriaksorn, Mr. Viratana Suntaranond, and Ms. Aimon Boonkhundha are
the Directors, Mr. Raksriaksorn is the Chairman and all are shareholders of this
company, whose main business is the operation of a duty-free store in downtown
Bangkok where merchandise is sold to international travelers.
Downtown D.F.S. (Thailand) Co., Ltd.
Messrs. Vichai Raksriaksorn, Antares Cheng and Suwan Panyapas are shareholders
of this company. Messrs. Raksriaksorn, Cheng and Ms. Aimon Boonkhundha are the
Directors. Mr. Raksriaksorn and Mr. Cheng are Managing Director and Deputy
Managing Director, respectively. The main business of this company is the
operation of a duty-free store in downtown Bangkok. This company is also engaged
in selling general merchandise to the general public.
Airport Authority of Thailand (AAT)
AAT is a governmental agency and it owns five percent of the stock of King Power
Duty Free Co., Ltd. In its capacity as a governmental agency and following the
rules and procedures established by the government of Thailand, it has granted
the concessions and leases under which both King Power Duty Free Co., Ltd. and
King Power Tax Free Co., Ltd. operate.
King Power on Board and Sale Service Co., Ltd.
Messrs. Vichai Raksriaksorn and Viratana Suntaranond and Ms. Aimon Boonkhundha
are the Directors and shareholders of this company. The main business of this
company is intended in the future to be the operation of duty-free sales on
board the airplanes owned and operated by Thai Airways International Public
Co., Ltd.
Infotel Communication (Thailand) Co., Ltd.
Messrs. Vichai Raksriaksorn and Viratana Suntaranond and Ms. Aimon Boonkhundha
are the shareholders of this company. Mr. Suntaranond and Ms. Boonkhundha are
the Directors. The main business of this company, which holds the appropriate
license from the Telecommunications Authorities in Thailand, is to operate an
information providing service to the public.
King Power Development Co., Ltd.
Messrs. Vichai Raksriaksorn and Viratana Suntaranond and Ms. Aimon Boonkhundha
are the Directors and shareholders of this company. The main business of this
company, under an appropriate license, is to operate souvenir shops, food
courts, and recreational facilities at the Bangkok Zoo.
King Power Alpha on Board and Sale Service Co., Ltd.
Mr. Vichai Raksriaksorn and Ms Aimon Boonkhundha are shareholders of this
company and Mr. Raksriaksorn is the Director. The main business of this company
is intended in the future to be the operation of duty-free sales on board the
airplanes owned and operated by Thai Airways International Public Co., Ltd.
Grand Enterprise and Trading Partnership
Mr. Vichai Raksriaksorn is the controlling party of this company. The main
business of this company was a supplier for imported merchandise sold to KPT.
Other than the existing loan outstanding owed to KPG's subsidiary, there is no
other business activity currently.
51
<PAGE>
PART IV
ITEM 14 EXHIBITS AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
PART IV
ITEM 14 EXHIBITS AND REPORTS ON FORM 8-K
There follows a list of all exhibits filed with this Form 10-K, including those
incorporated by reference. .
Exhibit No. Name or Description
<S> <C> <C>
3.1* Articles of Incorporation of King Power International Group Co., Ltd.
3.2* By-Laws of King Power International Group Co., Ltd.
3.3* Certification Document of King Power Duty Free Co., Ltd.
3.4* Certification Document of King Power Tax Free Co., Ltd.
3.5* Memorandum of Association of King Power International Group Co., Ltd.
10.1* Siam Tower Lease dated 10/17/97
10.2* Contract with Airports Authority of Thailand (AAT) dated 03/06/96
10.3* Contract of Lease - Warehouse with AAT dated 12/13/96
10.4* Contract of Lease - Hatyai Airport with AAT dated 03/03/97
10.5* Office Lease at Chaingmai Airport with AAT dated 07/17/97 (was 10.7)
10.6* Contract of Lease with AAT re: Domestic Terminal of Bangkok Airport
dated 05/24/96 (was 10.16)
10.7* Contract for Phuket Airport AAT dated 02/10/97 (was 10.17)
10.8* Contract of Lease - Chiangmai Airport AAT dated 07/09/97 (was 10.18)
10.9* Contract of Lease - Bangkok Airport AAT dated 10/02/97 (was 10.19)
10.10* Letter of Guarantee dated 05/08/96 (was 10.25)
10.11* Letter of Guarantee dated 10/18/96 (was 10.26)
10.12* Letter of Guarantee dated 01/24/97 (was 10.27)
10.13* Letter of Guarantee dated 01/24/97 (was 10.28)
10.14* Letter of Guarantee dated 06/13/97 (was 10.29)
10.15* Letter of Guarantee dated 06/13/97 (was 10.30)
10.16* Agreement for Pledge dated 03/04/97 (was 10.35)
10.17* Fee Latter dated 05/07/97 (was 10.44)
10.18** Contract-Permission to Sell- Phuket Airport with AAT dated 02/10/97
10.19** Contract-Permission to Sell- Chaingmai Airport with AAT dated 07/09/97
10.20** Lease of Office - Bangkok International Airport with AAT dated 01/15/97
10.21** Contract- Permission to Sell- Bangkok Airport with AAT dated 10/02/97
10.22** Letter from AAT dated 04/20/98 commence operations & rent payments
10.23** Letter from AAT dated 05/27/98 commence operations & rent payments
10.24** Letter from AAT dated 06/04/98 commence operations & rent payments-Harrods
10.25** Letter from AAT dated 06/16/98 - display tables
10.26** Letter from AAT dated 08/17/98 - bear symbol-Harrods
10.27** Hiring Contract between Downtown DFS (Thailand) Co., Ltd., as employer, and King Power Duty Free Co.,
Ltd., as consultant, dated 01/01/97
10.28** Computer Terminals Agreement with Logic Company Limited,
dated 09/09/98 for King Power Tax Free Co., Ltd.
52
<PAGE>
10.29** Maintenance & Repairs Agreement with Logic Company Limited, dated 09/01/98 for King Power Tax Free
Co., Ltd.
10.30** Computer Terminals Agreement with Logic Company Limited, dated 09/16/98 for King Power Duty Free Co.,
Ltd.
10.31** Maintenance & Repairs Agreement with Logic Company Limited, dated 09/01/98 for King Power Duty Free
Co., Ltd.
10.32** Software End-User License Agreement with SAP Thailand Ltd. dated 09/16/98
10.33** Memorandum with Thai Military Bank dated 08/21/98
10.34** Guarantee for Thai Military Bank dated 08/21/98
10.35 ** Guarantee for Thai Military Bank dated 08/21/98
10.36** Guarantee for Thai Military Bank dated 08/21/98
10.37** Memorandum with Thai Military Bank dated 11/19/98
10.38** Memorandum with Thai Military Bank dated 11/19/98
10.39** Guarantee for Thai Military Bank dated 11/19//98
10.40** Guarantee for Thai Military Bank dated 11/19//98
10.41** Guarantee for Thai Military Bank dated 11/19//98
10.42** Guarantee for Thai Military Bank dated 11/19//98
10.43** Notice for Deduction with Thai Military Bank dated 11/25/98
10.44** Pledge for Thai Military Bank dated 12/03/98
10.45** Letter of Consent with Thai Military Bank dated 12/03/98
10.46** Letter of Consent with Thai Military Bank dated 12/03/98
10.47** Loan Agreement with Siam City Bank dated 06/23/98
10.48** First Amendment to Loan Agreement with Siam City Bank dated 06/23/98
10.49** Guarantee for Siam City Bank dated 06/23/98
10.50** Guarantee for Siam City Bank dated 11/12/98
10.51** Letter of Consent with Siam City Bank dated 11/27/98
10.52** Pledge for Siam City Bank dated 11/27/98
10.53** Letter of Consent with Siam City Bank dated 12/30/98
10.54** Pledge for Siam City Bank dated 12/30/98
10.55** Guarantee to AAT from Bangkok Metropolitan Bank dated 06/18/98
21.1** List of Subsidiaries
27.1** Financial Data Schedule
</TABLE>
* As filed with the Company's Form 10-KSB/A on May 7, 1998.
** As filed herewith.
Reports on Form 8-K
The Company filed the following reports with the SEC on FORM 8-K
(A) November 16, 1998 -- Reporting a change in Company's independent
accountants, with Deloitte Touche Tohmatsu Jaiyos replacing
BDO Binder (Thailand) Ltd.
(B) January 14, 1999 -- A Form 8-K/A, which amended the Form 8-K filed on
November 16, 1998.
53
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, this 9th day of April,
1999.
KING POWER INTERNATIONAL GROUP CO., LTD.
By: /s/ Vichai Raksriaksorn
-----------------------
Vichai Raksriaksorn
Group Chairman, Chief Executive Officer and Director
By: /s/ Viratana Suntaranond
-------------------------
Viratana Suntaranond
Group Executive Director, Chief Financial Officer, Secretary,
Director and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
/s/ Vichai Raksriaksorn Group Chairman, Chief Executive April 9, 1999
------------------- Officer and Director
Vichai Raksriaksorn
/s/ Viratana Suntaranond Group Executive Director, Chief April 9, 1999
-------------------- Financial Officer, Secretary and
Viratana Suntaranond Director
/s/ Group Managing Director April __, 1999
------------- and Director
Antares Cheng
/s/ Aimon Boonkhundha Deputy Group Managing Director April 9, 1999
----------------- and Director
Aimon Boonkhundha
/s/ Director April __, 1999
Dharmnoon Prachuabmoh
/s/ Director April __, 1999
---------------
Suwan Panyapas
/s/ Benjamin B. Fattedad Group Director of Operation April 9, 1999
-------------------- and Director
Benjamin B. Fattedad
54
Contract of Permission for Operating the Business
of Selling Merchandize and Souvenir
at Phuket International Airport
Contract No. 6-23/2539
This contract is made at Airports Authority of Thailand on 10 February 1997
between Airports Authority of Thailand, represented by Group Captain Panya
Siangcharoen, Deputy Governor, Acting Governor of Airports Authority of
Thailand, hereinafter called "AAT" of one part, and J.M.T. Group Co., Ltd.,
registered as a juristic person Company Limited under the Civil and Commercial
Code,- with the head office at 189/58 Soi Wat Daowadung, Somdej Phra Pinklao
Road, Kwang Bang Yee Khan, Khet Bangkok Noi, Bangkok, represented by Mr.
Viratana Suntaranond, the authorized person to enter juristic act binding J.M.T.
Group Co., Ltd. according to the Certificate No. Chor. 1153 dated 22 January
1997 issued by the Office of Partnership/Company Registration, Bangkok,
hereinafter called "the Company" of the other part.
Whereas Airports Authority of Thailand is desirous to have private sector
participate in or operate the business of selling merchandize and souvenir at
Phuket International Airport and the Company is competent and desirous to
participate in or operate the said business.
Therefore, both parties agree to enter into a contract. as follows.
<PAGE>
1. Business Operation
AAT agrees to give permission and the Company agrees to receive the
permission to operate the business of selling merchandize and souvenir at
Phuket International
Airport under the terms and conditions of this contract, including the
Annexes, for a period of three years, from 1 February 1997 to 31 January
2000.
2. In operating the business according to Clause 1, the Company shall invest
in renovation and decoration as well as acquire tools and equipment.
3. The Company agrees to pay remuneration to AAT by making monthly payment in
advance by the 5th of every month
The first year, from 1 February 1997 or the opening date of business,
whichever comes first, to 31 January 1998, Baht 810,008.- (Eight
Hundred and Ten Thousand and Eight Baht) per month
The second year, from 1 February 1998 to 31 January 1999, Baht
891,008.80 (Eight Hundred Ninety-One Thousand and Eight Baht Eighty
Satang) per month
The third year, from 1 February 1999 to 31 January 2000, Baht
980,109.68 (Nine Hundred Eighty Thousand One Hundred and Nine Baht
Sixty-Eight Satang) per month
<PAGE>
The said remuneration does not include value added tax, for which the
Business Operator has the duty to pay at the rate stipulated by law.
4. The monthly remuneration the Company agrees to pay to AAT in Clause 3 is
calculated from the business premises area of approximately 87 square
metre. If it appears, after completion of the renovation and decoration,
that such area shall be increased or decreased from the original, the
Company agrees to pay the increased or decreased remuneration to AAT
accordingly to the increased or decreased space multiplied by the average
remuneration per square metre.
5. The Company shall be responsible for payment of taxes and/or miscellaneous
expenses incurred from business operation under this contract at the rate
stipulated by law and/or Airports Authority of Thailand's directive.
6. All payment under this contract shall be made to Administrative Section,
Phuket International Airport or Finance Division, Finance Department, of
Airports Authority of Thailand. After the Company has made payment to AAT,
AAT shall issue a receipt to the Company as evidence.
If the Company is in default of payment due to AAT under this contract, the
Company shall pay a fine at a rate 1. 5 % (one point five) per month of the
outstanding amount. Fraction of a month shall be calculated as one month.
This clause shall not impair AAT's right to terminate the contract under
Clause 10 and the right of claim.
<PAGE>
7. The Company shall not transfer the rights and duties under this contract to
a third party; unless a written permission has been obtained from AAT
first. However, the Company shall remain to be responsible for the rights
and duties which have been transferred in all respects.
8. On the signing date of this contract, the Company has submitted the Letter
of Guarantee No. L/G L-40-0224 dated 24 January 1997 of Metropolitan Bank
Public Company Limited for Baht 4,900,548.40 (Four Million Nine Hundred
Thousand Five Hundred Forty-Eight Baht Forty Satang) to AAT as security for
performance according to the contract. The said Letter of Guarantee shall
have the validity throughout the period that the Company is liable under
the contract, and shall be returned after the Company has been relieved
from all obligations under this contract.
9. All Annexes shall be deemed part of this contract. Any statement in the
Annexes contradicts with this contract, the contract shall prevail. In case
of a contradiction among the Annexes, the Company agrees to comply with
AAT's decision with no dispute.
Annex I Details of Business Operation of Selling Merchandize and
Souvenir, two pages
Annex 2 - Affidavit of the Office of Partnership/Company
Registration, 1 each
- Memorandum of Understanding, 1 each
- Certificate of Commercial Registration, 1 each
<PAGE>
- Certificate of Registration of the Office of
Partnership/Company Registration, 1 each
- Other relevant documents
10. AAT and the Company may exercise the right to terminate the contract as
follows:
10.1 AAT or the Company may exercise the right to terminate the
contract prior to the expiration date; provided that a written
notice shall be given to the other party at least 180 days in
advance.
In the case where AAT terminates the contract, the Company has no
right to claim for any damages or expenses from AAT. In the case
where the Company terminates the contract, AAT reserves the right
to collect the remuneration and damages incurred from the Company
until a new business operator shall take over the Company's
business.
10.2 If there is reasonable grounds to believe that the Company shall
not be able to operate the business under this contract
successfully or the Company is in breach of any clause of the
contract, AAT has the right to terminate this contract and permit
a third party to operate the business thereafter. Furthermore,
the Company shall be responsible for paying damages to AAT as
well.
11. In case of any dispute arisen in connection with this contract between AAT
and the Company, both parties agree that the case shall be presented to the
court in Bangkok.
<PAGE>
This contract is made in duplicate. Both parties, having read and understood it
entirely, hereunder sign their names and affix seal (if any) in the presence of
witnesses and each retaining one copy.
AAT Business Operator
(Signed) Group Captain (Signed)
(Panya Siangcharoen) (Mr. Viratana Suntaranond)
Witness Witness
(Signed) (Signed)
(Miss Chanalai Chayakun) (Miss Chadaporn Punpotong)
Contract of Permission for Operating the Business
of Selling Merchandize and Souvenir
at Chiangmai International Airport
Contract No. ChorMor. 1-20/2540
This contract is made at Airports Authority of Thailand on 9 July 1997 between
Airports Authority of Thailand, represented by Group Captain Panya Siangcharoen,
Deputy Governor of Airports Authority of Thailand, hereinafter called "AAT" of
one part, and J.M.T. Group Co., Ltd., registered as a juristic person Company
Limited under the Civil and Commercial Code, with the head office at 189/58 Soi
Wat Daowadung, Somdej Phra Pinklao Road, Kwang Bang Yee Khan, Khet Bang Plad,
Bangkok, and a branch office at International Passengers Building, Bangkok
International Airport, represented by Mr. Viratana Suntaranond, the authorized
person to enter juristic act binding J.M.T. Group Co., Ltd. according to the
Certificate No. Chor 1903 dated 5 February 1997 issued by the Office of
Partnership/Company Registration, Bangkok, hereinafter called "the Business
Operator" of the other part.
Whereas Airports Authority of Thailand is desirous to have a business operation
selling merchandize and souvenir at Chiangmai International Airport and the
Business Operator is competent and desirous to operate the said business.
Therefore, both parties agree to enter into a contract, as follows:
1. Business Operation
AAT agrees to give permission and the Business Operator agrees to receive
the permission to operate the business of selling merchandize and souvenir
to the airport's passengers or service users in the passengers building at
Chiangmai International Airport under the terms and conditions of this
contract. for a period of three years, from 1 June 1997 to 31 May 2000.
<PAGE>
2. Fee, Remuneration, Tax & Duty, Miscellaneous Expenses and Method of
Payment
2.1 The Business Operator agrees to pay a fee for entering into the
contract and remuneration for receiving permission to operate the
business of selling merchandize and souvenir under this contract to
AAT, as follows:
2.1.1 Fee for entering into the contract, Baht 5,000.- (Five Thousand
Baht), not including value added tax.
2.1.2 Regarding remuneration for receiving permission to operate the
business of selling merchandize and souvenir under this
contract, the Business Operator agrees to make monthly payment
to AAT in advance by the 5th of every month:
The first year, from 1 June 1997 or the opening date of
business, whichever comes first, to 31 May 1998, Baht
22,000.- (Twenty Two Thousand Baht) per month
The second year, from 1 June 1998 to 31 May 1999, Baht
24,200.(Twenty Four Thousand Two Hundred Baht) per month
The third year, from I June 1999 to 31 May 2000, Baht
26,620.(Twenty Six Thousand Six Hundred Twenty Baht) per
month
The said remuneration does not include value added tax, for which
the Business Operator has the duty to pay at the rate stipulated
by law.
<PAGE>
2.2 The remuneration the Business Operator agrees to pay to AAT according
to Clause 2.1.2 is calculated from the business premises of
approximately 67.25 square metre. If it appears, after completion of
the renovation and decoration, that the business premises shall be
increased or decreased from the original, the Business Operator agrees
to pay the increased or decreased remuneration to AAT accordingly to
the increased or decreased space multiplied by the average
remuneration per square metre.
2.3 The Business Operator shall be responsible for payment of taxes and/or
miscellaneous expenses incurred from business operation under this
contract at the rates stipulated by law and/or AAT's directives.
2.4 All payment under this contract shall be made to Administrative
Section, Chiangmai International Airport. After the Business Operator
has made payment to AAT, AAT shall issue a receipt to the Business
Operator as evidence. The receipt shall have the signatures of
Director, Finance Division, Finance Department, of AAT or the
designated person, jointly with finance officer, Administrative
Section, Chiangmai International Airport or the designated person.
If the Business Operator is in default of payment due to AAT under
this contract, the Business Operator agrees to pay a fine to AAT at a
rate of 1.5% (one point five) per month of the outstanding amount.
Fraction of a month shall be calculated as one month.
The Business Operator acknowledges that this context is separate and
shall not impair AAT's right to terminate the contract or the right of
claim.
3. Duties and Responsibilities of the Business Operator
3.1 In operating the business under this contract, the Business Operator
agrees to invest in renovation and decoration of the premises to be
beautiful and modern, and acquire tools and equipment at the Business
Operator's own expense.
<PAGE>
3.2 The Business Operator shall not transfer the business operation under
this contract or permit a third party to operate it, either in part or
in whole; unless a written permission has been obtained from AAT
first. In view of this, though the Business Operator may have obtained
permission from AAT, the Business Operator shall remain to be liable
to the business operation under this contract.
3.3 The Business Operator shall operate the business under this contract
with expertise, caution and abilities in accordance with the standard
of operators in this particular business, whereby the Business
Operator shall take into account AAT's reputation and image.
3.4 In operating the business of selling merchandize and souvenir under
this contract, the Business Operator agrees to sell only ceramics,
silverware, music records and tape, video tape, souvenir,
miscellaneous items, cigarettes and cigars only.
It is prohibited for the Business Operator to provide services or sell
the following:
snacks and beverages
food court
packaged local food
materials and products made of silk, cotton
accessories
flower and fruit
book, magazine, map, postcard, postal products, CDROM, tourism
tape, video and book, and stationery
3.5 The Business Operator shall sell the merchandize at the prices and
quality equivalent to those in the Business Operator's branch or the
same type of shop located in department store in Chiangmai Province.
<PAGE>
3.6 The Business Operator shall have price tags visibly displayed, in Baht
and other foreign currencies as deemed appropriate. In case the
Business Operator has received a different foreign currency from the
price tag, the Business Operator shall use the same exchange rate as
the bank in Chiangmai International Airport. Moreover, the exchange
rates shall be visibly displayed.
3.7 The Business Operator shall forward a written price list of
merchandize to AAT prior to opening the business. In case of any
change of price or merchandize, AAT shall be notified on every
occasion.
3.8 Should there be any complaint regarding the price or quality of the
merchandize, AAT reserves the right to request the Business Operator
to adjust the price or quality thereof as AAT deems appropriate.
3.9 If the Business Operator has other income from advertising, such
advertising shall be of the merchandize on sale only; whereby a
written permission must be obtained from AAT first.
3.10 AAT reserves the right to specify the type of merchandize and notify
the Business Operator to refrain from selling certain types of
merchandize that AAT deems inappropriate, for which the Business
Operator shall strictly comply.
3.11 The Business Operator shall open the business under this contract
daily, at least from 08.00 to 21.00 hrs. If the Business Operator is
desirous of changing the opening and closing time of business, a
written permission must be obtained from AAT first.
3.12 The Business Operator shall oversee the staff or employees or the
persons whom the Business Operator have appointed, assigned, hired or
asked to perform various works in the business operation to dress in
neat uniforms. Especially, the staff and employees who provide
services shall pin their name tags and perform their duties politely
and in good manner.
<PAGE>
3.13 In operating the business under this contract, if any damage occurred
to the property or reputation of AAT, whether by any action of the
Business Operator or the person whom the Business Operator has
appointed, assigned, hired or asked to perform various works in the
business operation, the Business Operator shall make compensation for
such damage.
3.14 The Business Operator shall facilitate staff of AAT, who have been
appointed or assigned to oversee the Business Operator's business
under this contract, to have access to the premises or documents
related thereto, as well as to audit the Business Operator's accounts
from time to time during reasonable hours.
3.15 The Business Operator shall comply with the laws governing the
business operation under this contract, be it existing or to be issued
in the future.
3.16 The Business Operator shall show the total monthly income from the
business operation under this contract to AAT by the 20th of the
following month. Of the amounts received in foreign currencies, the
Business Operator shall convert them into Baht, using the same
exchange rates of the bank in Chiangmai International Airport as at
the last day of the month.
4. Performance Guarantee
In entering into this contract, the Business Operator has submitted the
Letter of Guarantee No. L/G L40-1433 dated 13 June 1997 of Metropolitan
Bank Public Company Limited for Baht 133,100, - (One Hundred Thirty-Three
Thousand One Hundred Baht) to AAT as security for performance according to
the contract. The said Letter of Guarantee shall be returned after the
Business Operator has been relieved from all obligations under this
contract.
5. Exercising the Right to Terminate the Contract
<PAGE>
5.1 During the contract period, if AAT is desirous to terminate the
contract prior to the expiration date specified in Clause 1, AAT has
the right to do so; provided that a written notice shall be given not
less than 30 (thirty) days in advance. In this respect, the Business
Operator has no right to claim for any damages from AAT.
5.2 If there is reasonable grounds to believe that the Business Operator
shall not be able to operate the business under this contract
successfully or the Business Operator is in breach of any clause of
the contract, AAT has the right to terminate this contract and permit
a third party to operate the business thereafter. Furthermore, the
Business Operator shall be responsible for paying damages to AAT as
well.
6. Dispute
In case of any dispute arisen from this contract, both parties agree that
the case shall be presented to the court in Bangkok.
This contract is made in duplicate. Both parties, having read and understood it
entirely, hereunder sign their names and affix seal (if any) in the presence of
witnesses and each retaining one copy.
AAT Business Operator
(Signed) Group Captain (Signed)
(Panya Siangcharoen) (Mr. Viratana Suntaranond)
Witness Witness
(Signed) (Signed)
(Miss Chor. Jaruwan Petpaisit) (Mrs. Manunya Benjakun)
Lease Agreement for a Room in Building
at Bangkok International Airport
Agreement No. 1-07/2539
This agreement is made at Airports Authority of Thailand on 15 January 1997
between Airports Authority of Thailand, represented by Air Chief Marshal Chanin
Chantrubeksa, Governor of Airports Authority of Thailand, hereinafter called
"the Lessor" of one part, and J.M.T. Duty Free Co., Ltd., registered as a
juristic person Company Limited under the Civil and Commercial Code, with the
head office at 888/60-62 Ploenchit Road, Kwang Lumpini, Khet Pathumwan, Bangkok,
represented by Mr. Viratana Suntaranond, the authorized person to enter juristic
act binding J.M.T. Duty Free Co., Ltd., hereinafter called "the Lessee" of the
other part.
Whereas the Lessor agrees to lease out and the Lessee agrees to lease the
property of the Lessor for the purpose of making it an office of the Lessee.
Therefore, both parties agree to enter into an agreement, as follows
The Lessor agrees to lease out and the Lessee agrees to lease the property
under the terms and conditions in the "Agreement on Lease" and the Annexes
which shall be deemed part of this agreement :
Annex A Details of the leased property, lease period, rents, fees and
charges, chart showing location of the leased premises
Annex B Guarantee on Lease
<PAGE>
Annex C Documentary evidence of registration as a juristic person of the
Lessee, and document showing authorization to sign as the Lessee
Annex D Others (if any)
This agreement is made in duplicate. Both parties, having read and understood
it entirely, hereunder sign their names and affix seal (if any) in the presence
of witnesses and each retaining one copy.
The Lessor The Lessee
---------- ----------
Chanin Chantrubeksa
(Signed) Air Chief Marshal (Signed)
(Chanin Chantrubeksa) (Mr. Viratana Suntaranond)
Witness Witness
------- -------
(Signed) (Signed)
(Miss Chor. Jaruwan Petpaisit) (Mrs. Manunya Benjakun)
-2-
<PAGE>
Agreement on Lease
1 General Agreement
2. Special Agreement
-------------------------------
1. General Agreement
1.1 Scope of Lease
The Lessee agrees to lease the property of the Lessor, hereinafter
called the "leased premises" according to the details in Annex A.
1.2 Period of Lease
The Lessor agrees to lease out the leased premises under this
agreement for the period prescribed in Annex A.
If the Lessee is desirous to request for extension of the lease, the
Lessee shall forward a written notice to the Lessor at least forty
five (45) days in advance prior to the expiration date. However, the
Lessor reserves the right to consider it as the Lessor deems
appropriate.
1.3 Rents and Method of Payment
1.3.1 The Lessee agrees to pay rents to the Lessor as follows:
<PAGE>
(a) Fee for entering into the agreement, Baht 5,000.- (Five Thousand
Baht), not including value added tax.
(b) Rents, fees and charges, are as indicated in Annex A.
1.3.2 Payment of the fee under Clause 1. 3. 1 (a) shall be made to the
Lessor on the signing date of this agreement.
1.3.3 For the rents, fees and charges indicated in Annex A, the Lessee
agrees to make monthly payment to the Lessor in advance by the
5th of every month.
1.3.4 The Lessee agrees to be responsible for all expenses such as
electricity, telephone, water supply charges or other expenses
incurred from the lease under this agreement, and shall pay them
to the Lessor within the due date indicated in the invoices.
1.3.5 The Lessee agrees to be responsible for all taxes, duties and
fees incurred from the lease under this agreement such as value
added tax which is subject to payment according to the existing
law or those to be issued in the future, on behalf of the
Lessor.
The housing and land taxes indicated in Annex A are estimated
average monthly amount. Should the rate of housing and land taxes
changes, the Lessee consents the Lessor to collect at the
adjusted rate accordingly.
1.3.6 All payment under this contract shall be made to Finance
Division, Finance Department, of the Lessor. After the Lessee
has made payment to the Lessor, the Lessor shall issue a receipt
to the Lessee as evidence. The receipt shall have the signatures
of Director, Finance Division, Finance Department, of the Lessor
or the designated person, jointly with cashier of Finance
Division, Finance Department, or the designated person.
<PAGE>
1.3.7 If the Lessee is in default of payment of rents, duties and
expenses payable to the Lessor under this contract, the Lessee
agrees to pay a fine to the Lessor at a rate 1.5 % (one point
five) per month of the outstanding amount throughout the whole
period thereof. Fraction of a month shall be calculated as one
month.
The Lessee acknowledges that this context is separate which shall
not impair the Lessor's right to terminate the agreement or claim
damages.
1.4 Duties and Responsibilities of the Lessee
1.4.1 The Lessee shall not make use of the leased premises for any
business other than the purpose specified in the agreement;
unless a written permission has been obtained from the Lessor
first.
1.4.2 The Lessee shall not sub-lease the leased premises, in whole
or in part, or transfer the leasehold to a third party or
allow a third party to make use of the leased premises, in
whole or in part; unless a written permission has been
obtained from the Lessor first.
1.4.3 The Lessee shall not renovate, alter, make extension to the
leased premises; unless a written permission has been
obtained from the Lessor first.
If any renovation, alteration, extension or repair, either
minor or major repair in the leased premises due to whatever
reasons, such property shall belong to the Lessor from the
date of action onwards, and the Lessee shall not claim for
expenses or damages from the Lessor.
<PAGE>
1.4.4 The Lessee shall keep the leased premises in proper
condition and clean at all times. If the leased premises
appears to be dirty, unbecoming, or damaged, the Lessee shall
arrange for cleaning or repair at the Lessee's own expense.
1.4.5 The Lessee shall have available, at the Lessee's own expense,
the fire extinguisher at the location approved by the Lessor
in the leased premises.
1.4.6 The Lessee shall comply, and ensure that the Lessee's
dependents or the persons whom the Lessee has appointed,
assigned, hired or asked to perform various works in the
business operation shall comply with the relevant
instructions, regulations, or directives of the Lessor; both
existing and to be issued in the future. The Lessee shall be
cautious, not allowing any person to take any illegal action
in the leased premises, or keep or hide any illegal item
therein. If any damage derived therefrom, the Lessee shall be
liable to the Lessor in all respects for the consequences of
that person's action as if committed by the Lessee.
1.4.7 Throughout the lease period, the Lessee shall facilitate and
allow the Lessor or the Lessor's staff to enter into and
inspect the leased premises from time to time during
reasonable hours.
1.5 Right to Adjust Rents, Fees and Charges
During the period of this agreement, the Lessor reserves the right to
adjust the rents, fees and charges as deemed appropriate, whereby the
Lessee shall be notified in advance. The Lessee agrees to pay the newly
adjusted rents, fees and charges accordingly.
1.6 Termination of Agreement
<PAGE>
1.6.1 During the period of this agreement, if the Lessor or the
Lessee is desirous to terminate the agreement prior to the
expiration date, the Lessor or the Lessee may do so; provided
that a written notice shall be given to the other party at
least 30 (thirty) days in advance. In case the Lessor
terminates the agreement prior to the expiration date, the
Lessee agrees not to sue or claim for any damages from the
Lessor.
1.6.2 All clauses of this agreement are deemed essential, if it
appears that the Lessee has acted or omitted to act which is a
breach of or failure to comply with any clause thereof, or
becomes bankrupted, the Lessor has the right to immediately
terminate this agreement. Furthermore, the Lessor is entitled
to claim for damages and forfeit the Performance Guarantee as
well.
1.7 Return of the Leased Premises
1.7.1 Upon expiration date or termination of this agreement by the
Lessor or the Lessee according to Clause 1.6, as the case may
be, it shall be deemed that this agreement becomes extinct
immediately. The Lessee shall promptly arrange for removal of
the Lessee's property out of the leased premises and return it
to the Lessor within seven (7) days from the expiration date
or the termination date, as the case may be.
1.7.2 If the Lessee fails to comply with Clause 1.7. 1, the Lessee
consents the Lessor to Immediately repossess the leased
premises and lift away or remove the Lessee's property from
the leased premises, whereby the Lessee consents to reimburse
the amount the Lessor has had to pay in carrying it out, and
should any damage occurred the Lessee shall not claim for
compensation.
<PAGE>
1.7.3 Besides the consent for the Lessor to repossess the leased
premises according to Clause 1.7.2, the Lessee also consents
to pay a daily fine to the Lessor at the rate specified in
Annex A, from the supposed date of returning the leased
premises until the date on which the Lessee and attendants
have vacated the leased premises and returned the same to the
Lessor or the Lessor has carried out according to Clause
1.7.2, as the case may be.
1.8 Performance Guarantee
Unless otherwise specified in Clause 2 of Agreement on Lease, the Lessee
shall submit cash or Letter of Guarantee of a domestic bank for the amount
equivalent to three (3) times of the monthly rent to the Lessor as
Performance Guarantee.
The above shall be returned after the Lessee has been relieved from all
obligations under this agreement.
In case of any amendment of the agreement thereby the rent has been
increased, the Lessee shall submit guarantee for the additional amount
accordingly.
1.9 Notice
All notices under this agreement shall be made in writing and shall be
deemed as legally forwarded if having been forwarded by one of the
following;
- delivered to the person who has duty concerned with each party; or
registered mail
- to the addresses of both parties prescribed in Clause 2.
<PAGE>
1.10 Dispute
In case of any dispute arisen in connection with this contract, both
parties agree that the case shall be presented to the court in Bangkok.
Clause 2 Special Agreement
Notice
Name and Address of the Lessor
Airports Authority of Thailand
Vibhavadi Rangsit Road, Khet Don Muang
Bangkok 10210
Tel. 535-1405, 535-1815
Telefax 531-5559
Name and Address of the Lessee
J.M.T. Duty Free Co., Ltd.
888/60-62 Ploenchit Road
Kwang Lumpini, Khet Pathumwan
Bangkok
Tel. 253-6451-9, 254-6840-2, 535-3961-3
Telefax 254-6852, 535-3964
<PAGE>
<TABLE>
<CAPTION>
Details of Rents and Chart Showing Location of the Leased Premises
Lease Agreement No. 1-07/2539 dated 15 January 1997
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Location of Lease Area, Square Rent, Rent, Fee for Building and Fine,
Premises Metre (Sq.m.) Baht/Sq.m./month Baht/Month Services, Land Taxes, Baht/Month Lease Period
Baht/Month Baht/Month
From to
- -----------------------------------------------------------------------------------------------------------------------------------
Room in Office Building, Bangkok International Airport
---------------------------------------------------------
No. 2091, 2092, 217.50 325. - 70,687.50 10,603.13 8,835.94 6,008.44 16 Sept. 15 Sept.
1996 1999
2093 and 2094
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Lessor The Lessee
- ---------- ----------
(Signed) Air Chief Marshal Chanin Chantrubeksa (Signed)
(Chanin Chantrubeksa) (Mr. Viratana Suntaranond)
Witness Witness
- ------- -------
(Signed) (Signed)
(Miss Chor. Jaruwan Petpaisit) (Mrs. Manunya Benjakun)
Contract of Permission for Operating the Business
of Selling Merchandize and Souvenir
at Bangkok International Airport
Contract No. 6-01/2541
This contract is made at Airports Authority of Thailand on 2 October 1997
between Airports Authority of Thailand, represented by Group Captain Panya
Siangcharoen, Deputy Governor, Acting Governor of Airports Authority of
Thailand, hereinafter called "AAT" of one part, and J.M.T. Group Co., Ltd.,
registered as a juristic person Company Limited under the Civil and Commercial
Code, with the head office at 189/58 Soi Wat Daowadung, Somdej Phra Pinklao
Road, Kwang Bang Yee Khan, Khet Bangkok Noi, Bangkok, represented by Mr.
Viratana Suntaranond, the authorized person to enter juristic act binding J.M.T.
Group Co., Ltd. according to the Certificate No. SorOr. 0092543 dated 16 July
1997 issued by the Office of Partnership/Company Registration, Bangkok,
hereinafter called "the Company" of the other part.
Whereas Airports Authority of Thailand is desirous to have private sector
participate in or operate the business of selling merchandize and souvenir at
Bangkok International Airport and the Company is competent and desirous to
participate in or operate the said business.
Therefore, both parties agree to enter into a contract, as follows
<PAGE>
1. Business Operation
AAT agrees to give permission and the Company agrees to receive the
permission to operate the business of selling merchandize and souvenir at
Bangkok International Airport under the terms and conditions of this
contract, including the Annexes, for a period of five years, from 1 April
1998 to 31 March 2003.
2. Fee, Remuneration, Tax & Duty, Miscellaneous Expenses and Method of Payment
2.1 The Company agrees to pay a fee for entering into the contract and
remuneration for receiving permission to operate the business under
this contract to AAT, as follows
2.1.1 Fee for entering into the contract, Baht 8,334.- (Eight Thousand
Three Hundred Thirty-Four Baht), not including value added tax.
2.1.2 Regarding remuneration for receiving permission to operate the
business under this contract, the Company agrees to make monthly
payment to AAT in advance by the 5th of every month:
- The first year, from 1 April 1998 to 31 March 1999, Baht
46,500,000.(Forty-Six Million Five Hundred Thousand Baht)
per month
- The second year, from 1 April 1999 to 31 March 2000, Baht
48,825,000.- (Forty-Eight Million Eight Hundred TwentyFive
Thousand Baht) per month
- The third year, from 1 April 2000 to 31 March 2001, Baht
51,266,250.(Fifty-One Million Two Hundred Sixty-Six Thousand
Two Hundred Fifty Baht) per month
<PAGE>
- The fourth year, from I April 2001 to 31 March 2002, Baht
54,342,225.(Fifty-Four Million Three Hundred Forty-Two
Thousand Two Hundred Twenty-Five Baht) per month
- The fifth year, from 1 April 2002 to 31 March 2003, Baht
57,602,758.50 (Fifty-Seven Million Six Hundred and Two
Thousand Seven Hundred Fifty-Eight Baht) per month
The said remuneration does not include value added tax, for which
the Company has the duty to pay at the rate stipulated by law.
2.2 The Company shall be responsible for payment of taxes and/or miscellaneous
expenses incurred from business operation under this contract at the rate
stipulated by law and/or Airports Authority of Thailand's directive.
2.3 All payment under this contract shall be made to Finance Division, Finance
Department, of the Lessor. After the Lessee has made payment to the Lessor,
the Lessor shall issue a receipt to the Lessee as evidence. The receipt
shall have the signatures of Director, Finance Division, Finance
Department, of the Lessor or the designated person, jointly with cashier of
Finance Division, Finance Department, or the designated person.
If the Company is in default of payment, the Company shall pay a fine to
AAT at a rate 1.5% (one point five) per month of outstanding amount.
Fraction of a month shall be calculated as one month.
This clause shall not impair AAT's rights to terminate the contract under
Clause 5 and claim for damages.
<PAGE>
3. Duties and Responsibilities of the Company
3.1 The Company shall invest in renovation and acquire tools and equipment
for operating the business under this contract.
3.2 The Company shall not transfer the rights and duties under this
contract to a third party; unless a written permission has been
obtained from AAT first. However, the Company shall remain to be
responsible for the rights and duties that have been transferred in
all respects.
3.3 The Company shall operate the business under this contract with
expertise, caution and competence in accordance with the standard of
operators in this particular business, whereby the Company shall take
into account Airports Authority of Thailand's reputation and image.
3.4 The merchandize and souvenir being sold shall be made in Thailand, and
those made abroad shall have license for distribution in Thailand. The
merchandize and souvenir shall be of the same quality as those being
sold in leading department stores in Bangkok. The Company shall fix
selling prices according to Annex A.
If any merchandize and souvenir usually has warranty, the Company
shall issue warranty certificate to the purchaser accordingly.
3.5 It is prohibited for the Company to sell the following
3.5.1 fresh, dry, artificial flowers
3.5.2 fresh, dry, all kinds of preserved fruit and canned fruit
3.5.3 all kinds of food such as fresh, dry, canned food, chocolate,
spice and condiment, beverages
<PAGE>
3.5.4 illegal item or not being permitted to hand carry onto
airplane
3.6 The Company shall have price tags visibly displayed, in Baht and other
foreign currencies as deemed appropriate.
3.7 AAT reserves the right to notify the Company to change selling prices of
the merchandize and souvenir if complaints have been received that such
prices are too high.
3.8 The Company shall open the shop selling merchandize and souvenir daily, at
least from 06.00 to 24.00 hrs.
If the Company is desirous of changing the opening and closing time of the
shop from time to time, a written permission must be obtained from AAT
first.
3.9 The Company shall oversee the staff or employees or the persons whom the
Company have appointed, assigned, hired or asked to perform various works
in the business operation to dress in neat uniforms. Especially, the staff
and employees who sell merchandize and souvenir shall pin their name tags
and perform their duties politely and with good manner.
3.10 In operating the business under this contract, if any damage occurred to
the property or reputation of AAT, whether by any action of the Company or
the person whom the Company have appointed, assigned, hired or asked to
perform various works in the business operation, the Company shall be
responsible for making compensation for the said damage.
3.11 The Company shall facilitate staff of AAT, who have been appointed or
assigned to oversee the Company's business under this contract, to have
access to the premises or documents related thereto from time to time
during reasonable hours.
<PAGE>
4. Performance Guarantee
The Company shall submit cash or the Letter of Guarantee of a domestic bank
for Baht 288,013,793.- (Two Hundred Eighty-Eight Million Thirteen Thousand
Seven Hundred NinetyThree Baht) to AAT not less than 90 days prior to
commencement of the business under this contract as security for
performance according to the contract.
The said security shall have the validity throughout the period the Company
is liable under this contract. AAT shall return it after the Company has
been relieved from all obligations under this contract.
5. Right to Terminate the Contract of AAT and the Company
5.1 AAT or the Company may exercise the right to terminate the contract
prior to the expiration date; provided that a written notice shall be
given to the other party at least 30 (thirty) days in advance.
In the case where AAT terminates the contract, the Company has no
right to claim for any damages or expenses from AAT. In the case where
the Company terminates the contract, AAT reserves the right to collect
the remuneration and damages incurred from the Company until a new
business operator shall take over the Company's business.
5.2 If there is reasonable grounds to believe that the Company shall not
be able to operate the business under this contract successfully or
the Company is in breach of any clause of the contract, AAT has the
right to terminate this contract and permit a third party to operate
the business thereafter. Furthermore, the Company shall be responsible
for paying damages to AAT as well.
<PAGE>
6. Miscellaneous
6.1 All Annexes shall be deemed part of this contract. Any statement in
the Annexes contradicts with this contract, the contract shall
prevail. In case of a contradiction among the Annexes, the Company
agrees to comply with AAT's decision with no dispute.
Annex 1 Details of Business Operation of Selling Merchandize and
Souvenir, three pages
Annex 2 Documentary evidence of registration as a juristic person
of the Company and document showing authorization to sign
on behalf of the Company
6.2 In case of any dispute arisen in connection with this contract between
AAT and the Company, both parties agree that the case shall be
presented to the court in Bangkok.
This contract is made in duplicate. Both parties, having read and understood it
entirely, hereunder sign their names and affix seal (if any) in the presence of
witnesses and each retaining one copy.
AAT Business Operator
(Signed) Group Captain (Signed)
(Panya Siangcharoen) (Mr. Viratana Suntaranond)
Witness Witness
(Signed) (Signed)
(Miss Chanalai Chayakun) (Miss Chadaporn Punpotong)
Ref. TorOrTor. 2158/2541,
20 April 1998
Subject Commencement of Agreement and Collection of Rents
To Managing Director, King Power Duty Free Co., Ltd.
Reference Letter of the Airports Authority of Thailand, Ref.
TorOrTor. 0538/2541 dated 29 January 1998
Enclosure Chart showing location of the leased area, 2 sheets
Pursuant to the referenced letter, the Airports Authority of Thailand (AAT) has
given permission to King Power Duty Free Co., Ltd. to lease additional areas for
selling duty free merchandize, as detailed therein.
Now that the Company has completed renovation and decoration of certain area,
thus having entered into and made use thereof, AAT would like to inform further
details as follows:
1. The area under the stairs of the restaurant of Thai International Public
Company Limited, in the North, 3rd Floor, Departure Lounge, Building 1, the
Company has renovated and entered into and made use not at the same time,
the locations of which are shown in Sheet 1, namely
1.1 Plot No. 3342 A/2, 45.50 square metre, the Company has entered into
and made use on 24 November 1997
1.2 Plot No. 3342 A/l, 17.50 square metre, the Company has entered into
and made use on 6 February 1998
2. The area around column, 3rd Floor, Departure Lounge, Building 2, the
Company has made new arrangements and removed the following showcases:
<PAGE>
2.1 Removal of three showcases, Plot No. 3715 B, 6.30 square metre, on 25
December 1997 (selling merchandize up to 25 December 1997)
2.2 Install four new showcases around the column, which has been
designated Plot No. 3715A, 29.50 square metre, the locatio of which is
shown in Sheet 2, the Company has entered into and made use on 26
December 1997
3. The Company's representative (Mr. Sombat Dechapanichkun) has signed his
name verifying the area and commencement date of making use thereof in the
attached charts. therefore, AAT would like to commence the lease and
collect the rents, fees and taxes atr the rates already notified the
Company as follows:
4. the Company is requested to proceed with the Lease Agreement at Legal
Divsiion, Administration Department, 2nd Floor of AAT's Head Office,
Vibhavadi Rangsit Road, Tel. 535-1405 or 535-1815.
Please be informed accordingly.
Yours sincerely,
Wing Commander
(Uthai Thaisanthad)
General Manager, Bangkok International Airport
On behalf of Governor
Airport Department
Tel. 535-1262
Fax 535-1065
Ref. TorOrTor. 2812/2541
27 May 1998
Subject Commencement of Agreement and Collection of Rents
To Managing Director, King Power Duty Free Co., Ltd.
Reference Letter of the Airports Authority of Thailand, Ref.
TorOrTor. 0538/2541 dated 29 January 1998
Enclosure Chart showing location of the leased area, 1 sheet
Pursuant to the referenced letter, the Airports Authority of Thailand (AAT) has
given permission to King Power Duty Free Co., Ltd. to lease the area connecting
between Building 2 and south corridor, 3 Floor, Departure Lounge, Building 2, of
two locations of 60 square metre for selling general duty free merchandize, as
detailed therein.
Now that the Company has completed renovation and decoration of certain area and
opened for business since 7 April 1998, thus AAT would like to inform further
details as follows:
<PAGE>
1. The area AAT has given permission to the Company to lease has been
designated Plot No. 3772/1 -- connecting between Building 2 and south
corridor, 3 Floor, Departure Lounge, Building 2, 31 square metre, the
location of which indicated in the attached chart.
2. The Company's representative (Mr. Sombat Dechapanichkun) has signed his
name verifying the area and commencement date of making use thereof in the
attached chart. Therefore, AAT would like to commence the lease and collect
the rents, fees and taxes from 7 April 1998 at the rates already notified
the Company.
3. The Company is requested to proceed with the Lease Agreement at Legal
Division, Administration Department, 2nd Floor of AAT's Head Office,
Vibhavadi Rangsit Road, Tel. 535-1405 or 535-1815.
Please be informed accordingly.
Yours sincerely,
Wing Commander
(Uthai Thaisanthad)
General Manager, Bangkok International Airport
On behalf of Governor
Airport Department
Tel. 535-1262
Fax 535-1065
Ref. TorOrTor. 2956/2541
4 June 1998
Subject Commencement of Agreement and Collection of Rents
To Managing Director, King Power Duty Free Co., Ltd.
Reference 1. Letter of the Airports Authority of Thailand, Ref.
TorOrTor. 0538/2541 dated 29 January 1998
2. Your letter, Ref. KorFor. 168/2541 dated 19. May 1998
Enclosure Chart showing location of the leased area, 1 sheet
Pursuant to the referenced letter 1, the Airports Authority of Thailand (AAT)
has given permission to King Power Duty Free Co., Ltd. to lease the area
connecting between Building 2 and south corridor, 3 Floor, Departure Lounge,
Building 2, of two locations of 60 square metre for selling general duty free
merchandize, and for selling duty free merchandize from Harrods of 60 square
metre. In the referenced letter 2, the Company expressed the intention to lease
additional space in front of the Harrods duty free shop, 3rd Floor, Departure
Lounge, Building 2, for setting five tables displaying the merchandize, as
detailed therein
AAT has considered the matter and would be pleased to permit the Company to
lease additional space as requested. Meanwhile, the Company has completed the
renovation and decoration, and opened for business since 18 May 1998. AAT has
measured and checked the area and would like to inform additional details, as
follows
1. The area that AAT has given permission to the Company to lease the area
connecting between Building 2 and south corridor, 3rd Floor, Departure
Lounge, Building 2, after renovation AAT has designated as follows:
<PAGE>
1.1 Duty Free Shop for Harrods merchandize, Plot No. 3715 E, 91.50 square
metre
1.2 The area for setting five tables displaying merchandize, Plot No. 3715
D, 7.50 square metre
1.3 The original area for placing five showcases, Plot No. 3715 C, 8.50
square metres, which during renovation the Company has removed four
showcases. Thus, there remains one showcase, Plot No. 3715 C, 2.50
square metres
2. The Company's representative (Mr. Sombat Dechapanichkun) has signed his
name verifying the area and commencement date of making use thereof in the
attached chart. Therefore, AAT would like to commence the lease and collect
the rents, fees and taxes at the rates already notified the Company as
follows
2.1 The rents of the areas, under 1.1 and 1.2, are to be collected from
18 May 1998.
2.2 The rents of the area, under 1.3, will be collected, as follows
2.2.1 Plot No. 3715 C, 8.50 square metres, to be collected up to
17 May 1998
2.2.2 Plot No. 3715 C, 2.50 square metres, to be collected from 18 May 1998
<PAGE>
3. The Company is requested to proceed with the Lease Agreement at Legal
Division, Administration Department, 2nd Floor of AAT's Head Office,
Vibhavadi Rangsit Road, Tel. 5351405 or 535-1815.
Please be informed accordingly.
Yours sincerely,
Wing Commander
(Uthai Thaisanthad)
General Manager, Bangkok International Airport
On behalf of Governor
Airport Department
Tel. 535-1262
Fax 535-1065
Ref. TorOrTor. 3219/2541
16 June 1998
Subject Permission for Additional Area for Duty Free Shop under the name
Harrods
To Managing Director, King Power Duty Free Co., Ltd.
Reference Your letter, Ref. KorFor. 174/2541 dated 22 May 1998
Enclosure Chart showing location of the leased area, 1 sheet
Pursuant to the referenced letter, King Power Duty Free Co., Ltd. has expressed
an intention to lease additional area in front of Duty Free Shop of Harrods
merchandize, Departure Lounge, Building 1, for setting tables displaying the
merchandize, three points of 1 square metre each, as detailed therein.
Airports Authority of Thailand (AAT) has considered the matter and would be
pleased to permit the Company to lease additional space as requested. The
details are as follows:
1. The area AAT has given permission to the Company to lease for setting table
for displaying merchandize, three points, has been designated Plot No. 3265
P/l, in front of Plot No. 3265 P, 3 Floor, Departure Lounge, Building 1,
for 4.50 square metre, the location of which indicated in the attached
chart.
2. AAT will commence the lease and collect the rents, fees and taxes from 16
June 1998, as follows:
<PAGE>
2.1 Rent is Baht 750.- (Seven Hundred Fifty Baht) per square metre per
month
2.2 Fee for using services in the airport building at 15 % of the monthly
rent
2.3 Building and land taxes at 12.50% of the monthly rent, whereby
fraction of a month will be calculated as one month.
3. The Company is requested to proceed with the Lease Agreement at Legal
Division, Administration Dhepartment, 2nd Floor of AAT's Head Office,
Vibhavadi Rangsit Road, Tel. 5351405 or 535-1815.
Please be informed accordingly.
Yours sfficerely,
Wing Commander
(Uthai Thaisanthad)
General Manager, Bangkok International Airport
On behalf of Governor
Airport Department
Tel. 535-1262
Fax 535-1065
Ref. TorOrTor. 4452/2541
17 August 1998
Subject Permission for Additional Area for Duty Free Shop under the
name Harrods
To Managing Director, King Power Duty Free Co., Ltd.
Reference Your letter, Ref. KorFor. 226/2541 dated 3 August 1998
Enclosure Chart showing location of the leased area, I sheet
Pursuant to the referenced letter, King Power Duty Free Co., Ltd. has expressed
an intention to lease additional area in front of Duty Free Shop of Harrods
merchandize, Departure Lounge, Building 1, for 0.36 square metre (size 0.60 x
0.60) for displaying a bear which is the symbol of Harrods, as detailed therein.
Airports Authority of Thailand (AAT) has considered the matter and would be
pleased to permit the Company to lease additional space as requested. The
details are as follows:
1. The area AAT has given permission to the Company to lease for displaying
the bear, has been designated Plot No. 3265 P/2, in front of Plot No. 3265
P, 3 Floor, Departure Lounge, Building 1, 1 square metre, the location of
which indicated in the attached chart.
2. AAT will commence the lease and collect the rents, fees and taxes from 16
August 1998, as follows:
<PAGE>
2.1 Rent is Baht 750.- (Seven Hundred Fifty Baht) per square metre per
month
2.2 Fee for using services in the airport building at 15% of the
monthly rent
2.3 Building and land taxes at 12.50% of the monthly rent, whereby
fraction of a month will be calculated as one month.
3. Regarding the remuneration for giving permission to lease the area, AAT
will notify the Company in due course.
4. The Company is requested to proceed with the Lease Agreement at Legal
Division, Administration Department, 2nd Floor of AAT's Head Office,
Vibhavadi Rangsit Road, Tel. 535-1405 or 535-1815.
Please be informed accordingly.
Yours sincerely,
Wing Commander
(Uthai Thaisanthad)
General Manager, Bangkok International Airport
On behalf of Governor
Airport Department
Tel. 535-1262
Fax 535-1065
Hiring Contract
This contract is made at J.M.T. Group Co., Ltd., 189/58 Soi Wat Daowadung,
Somdej Phra Pinklao Road, Kwang Bang Yee Khan, Khet Bangkok Noi, Bangkok, on 1
January 1997.
This contract is made between
- ------------------------------
Downtown D.F.S. (Thailand) Co., Ltd., represented by Mrs. Aimon Boonkhundha, the
authorized Director, with offices at 888/60-62 Ploenchit Road, Kwang Lumpini,
Khet Pathumwan, Bangkok, hereinafter called "the Employer" of one part, and
J.M.T. Group Co., Ltd., represented by Mr. Viratana Suntaranond, the authorized
Director, with offices at .189/58 Soi Wat Daowadung, Somdej Phra Pinklao Road,
Kwang Bang Yee Khan, Khet Bang Phlad, Bangkok, hereinafter called "the
Consultant" of other part.
Both parties agree as follows
1. The Employer agrees to hire and the Consultant agrees to be hired as the
Consultant in the business operation of the Employer according to the
details in Annex 1 (which both parties agree to be deemed part of this
contract). Should there be additional documents related to this contract,
both parties agree that they shall be deemed part of this contract as well.
2. Both parties agree that the contract period shall be one year, from I
January 1997 to 31 December 1997. The contract shall become extinct after
the final payment has been made (according to Clause 3.2) by 31 January
1998.
<PAGE>
3. In carrying out the tasks as the Consultant to the Employer within the
period prescribed in Clause 2, the Employer agrees to pay remuneration to
the Consultant as follows :
3.1 US$ 182,000 per month for 12 months, totalling US$ 2,184,000, to be
paid according to the invoice submitted by J.M.T. Group Co., Ltd.
3.2 The Employer agrees to pay value added tax thereby submitting it to
the authorities, as the case may be.
4. The Consultant agrees to carry out the tasks as the Consultant under this
contract with knowledge, competence and honesty in order that the
Employer's business shall achieve the utmost success at the minimum
expenses. The Consultant shall not disclose any information on trade and
business of the Employer to a third party. If the Consultant, or the
Consultant's personnel, fails to proceed with the scope of responsibilities
and the mutually agreed guidelines or take any action intentionally or
negligently causing damage to the Employer, the Consultant agrees to
reimburse all remuneration already received plus interest to the Employer,
besides the above damages.
5. If either party is in breach of any clause, this contract shall be
terminated immediately without having to give an advance notice. Or, if
either party is desirous to terminate the contract prior to the expiration
date or both parties agree to terminate this contract, either party or both
parties shall forward a written notice to the other party for a reasonable
period of time in advance.
<PAGE>
This contract is made in duplicate. Both parties, having read and understood it
entirely, hereunder sign their names and affix seal (if any) in the presence of
witnesses and each retaining one copy.
Signed .......................Employer Signed ........................Consultant
(Mrs. Aimon Boonkhundha) (Mr. Viratana Suntaranond)
Downtown D.F.S. (Thailand) Co., Ltd. J.M.T. Group Co., Ltd.
Signed .......................Witness Signed ............................Witness
(Malee Awirut) (Chawnun Chaiwisudiakun)
<PAGE>
Annex 1
Details of Hiring of the Consultant
Period from 1 January - 31 December 1997
- ------
Objectives
- ----------
1. Downtown D.F.S. (Thailand) Co., Ltd. shall hire J.M.T. Group Co., Ltd. as
the Consultant.
2. J.M.T. Group Co., Ltd. shall assist in marketing plans, advertisement and
sale promotion activities.
3. J.M.T. Group Co., Ltd. shall assist in overseeing construction of the shops
totally.
4. J.M.T. Group Co., Ltd. shall assist in displaying the merchandize in the
shop and decoration of shelves.
5. J.M.T. Group Co., Ltd. shall study working system of Downtown D.F.S.
(Thailand) Co., Ltd. in order to be able to analyze and evaluate
performance of the staff for the whole system, and propose ways to
efficiently enhance the performance.
Project Owner J.M.T. Group Co., Ltd.
Details of Project
- ------------------
1. The work structure that J.M.T. Group Co., Ltd. shall cooperate with
Downtown D. F. S. (Thailand) Co., Ltd. are:
0 Train staff at all levels, which means executives and operational
staff 0 campaign promotions for every festival, advertisement,
public relations, advertising medium
0 shop and shelf decoration
0 acquire merchandize samples, premium and gift with purchase
0 shop improvement
0 printed matters
0 computer system for controlling the works
<PAGE>
Additional Document
J.M.T. Group Co., Ltd., or the Consultant according to the Hiring Contract dated
1 January 1997, has registered the change of the Company's name to "King Power
Duty Free Co., Ltd." on 30 September 1997.
<PAGE>
Memorandum of Understanding
----------------------------
This Memorandum of Understanding is made at King Power Duty Free Co., Ltd., 989
Rama I Road, 2627 Floors Siam Tower, Kwaeng Pathumwan, Khet Pathumwan, Bangkok,
on 7 August 1998.
This Memorandum of Understanding is made between Downtown D.F.S. (Thailand) Co.,
Ltd., represented by Mrs. Em-orn Bunkhan, the authorized Director, with offices
at 888/60-62 Ploenchit Road, Kwang Lumpini, Khet Pathurnwan, Bangkok,
hereinafter called "the Employer" of one part, and King Power Duty Free Co.,
Ltd., represented by Mr. Virat Suntornnont, with offices at 989 Rama I Road,
26-27 Floors Siam Tower, Kwaeng Pathurmwan, Khet Pathumwan, Bangkok, hereinafter
called "the Consultant" of the other part. Both parties agree as follows:
Whereas Downtown D.F.S. (Thailand) Co., Ltd., the Employer, has agreed to hire
J.M.T. Group Co., Ltd., which has changed its name to King Power Duty Free Co.,
Ltd. according to the attached copy of certificate, as the Consultant for the
Employer's business according to the Hiring Contract dated 1 January 1997.
Whereas the obligation with regard to payment of remuneration of the Hiring
Contract dated 1 January 1997 has not been fulfilled, the Employer and the
Consultant agree that this Memorandum of Understanding shall be deemed part of
the Hiring Contract dated I January 1997.
1. The Employer acknowledges that on the signing date of this Memorandum of
Understanding, the Employer has not paid the remuneration for the
consulting services according to Clause 3 of the contract, US$2,184,000,
to the Consultant.
<PAGE>
2. The Employer and the Consultant mutually agree that payment of the
remuneration according to Clause 3 shall be made in Baht, using the bank's
selling exchange rate prevailing on the signing date of this Memorandum of
Understanding -- US$ 1.00 = Baht 42.25. Thus, the total remuneration of US$
2,184,000 are equivalent to Baht 92,274,000 (Ninety-Two Million Two Hundred
Seventy-Four Thousand Baht).
This Memorandum of Understanding is made in duplicate. Both parties, having read
and understood it entirely, hereunder sign their names and affix seal (if any)
in the presence of witnesses and each retaining one copy.
Signed ..........................Employer Signed ..................Consultant
(Mrs. Airnon Boonkhundha) (Mr. Viratana Suntaranond)
Downtown D. F. S. (Thailand) Co., Ltd. J.M.T. Group Co., Ltd.
Signed ..........................Witness Signed ....................Witness
(Malee Awirut) (Chawnun Chaiwisuthakun)
Logic Company Limited
----------------------
Computer Terminal and Program Sales Agreement
Made at Logic Co., Ltd.
No. 202, Nanglinchi Road,
CDG House
Chongnonsi, Yannawa,
Bangkok
on the 9th date of September, 1998
This Agreement is made between King Power Tax Free Co., Ltd. by Mr.
Viratana Suntaranond, authorized to sign in obligation of the Company, office
located at No. 989, 26th-27th Floors, Siam Tower, Rama I Road, Pathumwan,
Phayathai, Bangkok 10330, hereinafter called, "Buyer"; and Logic Co., Ltd., by
Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich, authorized to sign in
obligation of the Company, office located at No. 202, Nanglinchi Road, CDG
House, Chongnonsi, Yannawa, Bangkok 10120, hereinafter called "Seller". Both
parties have agreed as follows:
1. The Seller agrees to sell and the Buyer agrees to buy Sun
Enterprise 1OS computer equipment and software as specified in the appendix on
which the Buyer and Seller sign their names and have their company seal affixed
and shall be considered part of the Agreement, totalling US$23,050.10 which Will
be changed into Thai Baht on the Agreement signing date or Bt910,479.00 (Nine
Hundred and Ten Thousand Four Hundred and Seventy-Nine Baht Only) VAT not
included. The equipment shall be installed at King Power Tax Free Co., Ltd.,
26th floor, Siam Tower, Bangkok.
2. The Buyer agrees to make payment according to the contractual price
as follows:
2.1 The Buyer shall make payment of the first installment of
US$11,525.05 or Bt455,239.00 (Four Hundred Fifty-five Thousand Two Hundred and
Thirty-Nine Baht Only) to the Seller 30 days after the Buyer has received the
equipment.
<PAGE>
2.2 The Buyer shall make payment of the second installment of
US$11,525.05 or Bt455,240 (Four Hundred Fifty-Five Thousand Two Hundred and
Forty Baht Only) to the Seller 90 days after the Buyer has made payment of the
first installment.
3. The Seller agrees to install the computer equipment and hand over
the equipment, program, documents, manuals and supplementary equipment to the
Buyer within 60 days after signing the Sales Agreement.
In case the Seller is unable to hand over the computer equipment by the
deadline, the Seller shall install a temporary computer system with similar
efficiency for the Buyer to use for the time being.
4. The Buyer shall prepare equipment necessary to control the
installation site environment such as air-conditioners, voltage controllers,
humidifiers, dust cleaners, etc. recommended by the Seller before installation
of the computer system and equipment.
5. The Seller shall recommend the Buyer how to prepare the
installation site, and the Buyer shall get it done by the deadline.
As soon as the Seller is ready install the equipment, the Seller shall
notify the Buyer at least 5 days in advance and the Buyer shall have to get the
site ready. The Seller shall extend the handover time equivalent to the time
delayed. The installation site of the computer system and supplementary
equipment under this Agreement is at King Power Tax Free Co., Ltd., Bangkok.
6. Ownership of the computer system and equipment as specified in the
appendix shall be transferred to the Buyer as soon as the Buyer pays the Seller
all the installments stated in Section 2.
7. The Seller shall provide a warranty against defect or deficiency of
the computer system and equipment as well as spare parts under this Agreement
(except Application Software) for a period of 13 months after the Buyer has
accepted the computer system and equipment and program from the Seller and the
system can function properly. By the warranty period, the Seller agrees to
provide maintenance and repairs of the computer system and equipment as follows:
7.1 At least 4 times a year inspection of the computer system
and 2 times of Preventive Maintenance, which needs to shut
down the computer equipment and will be done on Saturday and
Sunday.
<PAGE>
7.2 Repairs or correction service during 8.00 - 17.00 hrs. daily
on working days
7.3 The Seller shall send in an engineer in 4 hours after
receiving a notice from the Buyer that the computer system
and equipment under this Agreement breaks down and does not
function properly.
7.4 The Seller shall not be responsible to the Buyer concerning
Section 7.3 if the breakdown or defect is caused by
7.4.1 the Buyer's misuse of the system and equipment
7.4.2the Buyer's failure to maintain the environment of the
installation site as recommended by the Seller.
7.5 Repairs and services under warranty shall be provided to the
Buyer at the Buyer's site in Bangkok only, except agree upon
otherwise.
7.6 After the 13-month warranty period, the Buyer agrees to make
a separate computer system and equipment maintenance service
contract with the Seller.
8. The Seller shall hand over an Application Software with Revision
Point as agreed upon, and the Buyer has the right to make a separate Software
maintenance contract with the Seller.
9. In case the Buyer makes a maintenance service contract for the
Application Software and when a new Software Revision Point is released, the
Seller shall update the computer system and equipment and offer a training (if
required) with no charge to the Buyer.
10. The Buyer accepts the fact that the Operating System With
Utilities and Programming Language as well as Application Software is not owned
by the Seller but the Seller has received permission from the manufacturer to
offer right of utilization to the Buyer, and the Buyer agrees not to sell or
offer the right of utilization to other persons and shall keep Software
information confidential. The Buyers agrees that the right to utilize the
Software will end as soon as the Buyer does not own the computer equipment any
more.
11. The Buyer agrees not to relocate the installation site of the
computer system and equipment under this Agreement without advance notice to the
Seller.
<PAGE>
This Agreement is made in two identical copies. Both parties have
hereby read and understood all the statements, and then signed their names and
had company seal affixed in the presence of witnesses on the specified date:
...................signed.........................Buyer
(Mr. Viratana Suntaranond)
King Power Tax Free Co., Ltd.
...................signed.........................Seller
(Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich)
Logic Co., Ltd.
....................signed........................Witness
(Miss Somjitr Techaaiemamorn)
King Power Tax Free Co., Ltd.
....................signed........................Witness
(Mrs. Kiratiya Sujaritkul)
Logic Co., Ltd.
Logic Company Limited
- --------------------------------------------------------------------------------
Agreement No............
LogicFix Gold Computer System
Maintenance and Repair Agreement
Made at Logic Co., Ltd.
No. 202, Nanglinchi Road,
CDG House
Chongnonsi, Yannawa,
Bangkok
on the 1st date of September, 1998
This Agreement is made between King Power Tax Free Co., Ltd. by Mr.
Viratana Suntaranond, authorized to sign in obligation of the Company, office
located at No. 989, 26th-27th Floors, Siam Tower, Rama I Road, Phayathai,
Pathumwan, Bangkok 10330, hereinafter called, "Employer"; and Logic Co., Ltd.,
by Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich, authorized to sign in
obligation of the Company, office located at No. 202, Nanglinchi Road, CDG
House, Chongnonsi, Yannawa, Bangkok 10120, hereinafter called "Contractor". Both
parties have agreed as follows:
Section 1. The Employer agrees to hire and the Contractor agrees to be
hired to provide a LogicFix Gold computer system maintenance and repair service
contract as specified in Appendix 1, installed on the 26th-27th floors, No. 989,
Siam Tower, Rama I Road, Phayathai, Pathumwan, Bangkok 10330, Tel: 658-0020-49
Section 2. The Employer agrees to pay Bt203,648.00 (Two Hundred and Three
Thousand, Six Hundred and Forty-Eight Baht Only) to the Contractor as service
fees for the 2nd-4th years. Payment shall be made in installments -- 3 (three)
installments a year -within 30 (thirty) days from the date of sending the
invoice and Service Report to the Employer. The Employer agrees bear valueadded
taxes.
<PAGE>
In case of late payment, if the Employer fails to make payment by the
period later fixed by the Contractor, the Employer agrees to pay interest on
overdue service fees along with other expenses at the rate of 3 (three) percent
per month.
Section 3. This Agreement shall be enforced from the................date of
..................to the........date of .............., totalling 48 months
(4 years.)
Section 4. The scope of service by the Contractor is as follows:
4.1 The Contractor shall provide maintenance services and repair
the computer system under this Agreement upon the Employer'
request at the site specified in Section 1.
4.2 The Contractor shall provide a service to the Employer under
this Agreement during the Contractor's working days and
hours as specified in Appendix 1.
4.3 The Contractor shall provide consultation services in the
maintenance and repairs of the computer system under this
Agreement to the Employer through telephone, facsimile,
electronic mail upon the Employer's request depending on the
nature of problems and equipment.
4.4 If the Employer's computer system under this Agreement
breaks down, the Contractor shall assign one of his
employees to provide consultation through telephone by:
4.4.1 In case the whole system breaks down and cannot
function, the Contractor shall provide an immediate
consultation.
4.4.2 In case of a breakdown in which the system can still
function but not completely, the Contractor shall
provide a consultation in 2 hours from the time of
notification.
4.4.3 In case of a slight defect not affecting the
Employer's work, the Contractor shall provide a
consultation in 4 hours from the time of
notification.
4.5 In case the Employer's computer system under this Agreement
breaks down and the Employer wants the Contractor to repair
it, the Contractor shall send its officers to repair it by:
<PAGE>
4.5.1 In case the whole system breaks down and cannot
function, the Contractor shall send its officer to
repair in 4 hours from the time of notification.
4.5.2 In case of a breakdown in which the system can still
function but not completely, the Contractor shall
send its officer to repair in 1 day from the time of
notification.
4.5.3 In case of a slight defect not affecting the
Employer's work, the Contractor shall send its
officer to repair at the time both parties are
comfortable.
4.6 The Contractor shall hand over part of the manufacturer's program
to correct the patches to the Employer upon request if the
manufacturer allows the Contractor to disseminate and/or
distribute, give away the said program. The Employer has the
right to ask the Contractor to install such part of the program
for the Employer.
4.7 The Contractor shall hand over a Solaris new version of
Enhancement Release and Maintenance Release which the
manufacturer releases to the market and/or allows it to be
distributed or given away to the Employer. The Employer has the
right to ask the Contractor to install such release for the
Employer -one installation per one version -- at the site
specified in Section 1.
4.8 The Contractor shall hand over the Sun Solve Software to the
Employer. The Employer has the right to ask the Contractor to
install such release for the Employer -- one installation per one
version - at the site specified in Section
4.9 The Contractor shall explain the defect of the system as
described by the manufacturer to the Employer if the said
information is not classified as confidential by the manufacturer
and can be publicized. The Employer can receive such services via
an electronic mail in the Internet.
4.10 The Contractor shall inspect the computer system under this
Agreement four times a year. And each PM visit to the 2 sets
which requires to shut down the computer system shall be made on
Saturday-Sunday.
<PAGE>
Section 5. The Employer's duties and responsibilities
5.1 The Employer shall be cooperative to the Contractor while
offering services to the Employer under this Agreement.
5.2 In case the Contractor feels that a defect of the computer system
under this Agreement may be caused by other equipment outside
this Agreement, the Employer shall coordinate and seek
cooperation from a person responsible for the maintenance of that
equipment to correct that defect.
5.3 The Employer shall notify a problem or defect and ask for a
service from the Contractor through telephone numbers or hot
lines provided by the Contractor as follows:
Normal business hours (08:00 - 17:00 hours)
-------------------------------------------
Telephone 678-0487, 678-0488 and 287-4992
Facsimile 678-0321
For customers who have purchased
additional services
Electronic Mail [email protected]
Outside normal business hours
-----------------------------
Telephone 01-4339285
Pager (1144)724093,719437
5.4 Within 15 days after the Agreement signing, the Employer shall
specify in writing not more than 5 persons responsible for
contacting the Contractor to report a problem and/or ask for a
service.
5.5 To report a problem and/or ask for a service from the Contractor
under this Agreement, the Employer shall have to assign only the
persons listed in Section 5.4 to contact the Contractor.
In case the Employer wants to change the persons responsible for
contacting the Contractor to report a problem and/or ask for a
service, the Employer shall notify in writing of the change along
with names of persons newly assigned.
Section 6. Asking for the following services shall be considered outside
the maintenance and repair service agreement:
<PAGE>
6.2 Administration services such as
6.2.1 Back up and restore information
6.2.2 Increase or decrease the number of users, printers,
computer system, etc.
6.2.3 Performance tuning
6.3 Integration services, for instance, asking the Contractor to
install equipment not supplied by the Contractor to integrate
with the system which the Contractor offers maintenance and
repair service under this Agreement.
6.4 Damage caused by misuse, accident, natural disaster, riot, war,
loss or strange items leaked in to damage the equipment under
this Agreement.
6.5 Damage caused by careless use.
6.6 Damage caused by disassembling, studying components, repairing,
modifying, or trying to modify the equipment without consent in
writing from the Contractor.
6.7 Damage caused by adding other equipment outside the Agreement to
integrate with the equipment under this Agreement without consent
in writing from the Contractor.
Section 7. In case the Employer asks for a maintenance service or to
correct a defect asides what's agreed upon in this Agreement at the Employer's
site stated in Section I and the Contractor can handle that for the Employer,
the Employer shall pay time and material service fees to the Contractor who will
offer a 15% discount of the normal rate, except travelling expenses of field
officers.
<PAGE>
This Agreement is made in two identical copies. Both parties have hereby
read and understood all the statements, and then signed their names and had
company seal affixed in the presence of witnesses on the specified date:
...................signed......................Employer
(Mr. Viratana Suntaranond)
King Power Tax Free Co., Ltd.
...................signed......................Contractor
(Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich)
Logic Co., Ltd.
...................signed......................Witness
(Miss Somjitr Techaaiemamorn)
...................signed......................Witness
(Miss Soipetr Mutasintu)
Logic Company Limited
- --------------------------------------------------------------------------------
Computer Terminal and Program Sales Agreement
Made at Logic Co., Ltd.
No. 202, Nanglinchi Road,
CDG House
Chongnonsi, Yannawa,
Bangkok
on the 16th date of September, 1998,
This Agreement is made between King Power Duty Free Co., Ltd. by Mr.
Viratana Suntaranond, authorized to sign in obligation of the Company, office
located at No. 989, 26th-27th Floors, Siam Tower, Rama I Road, Pathumwan,
Phayathai, Bangkok 10330, hereinafter called, "Buyer"; and Logic Co., Ltd., by
Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich, authorized to sign in
obligation of the Company, office located at No. 202, Nanglinchi Road, CDG
House, Chongnonsi, Yannawa, Bangkok 10120, hereinafter called "Seller". Both
parties have agreed as follows:
1. The Seller agrees to sell and the Buyer agrees to buy Sun Enterprise 450
computer equipment and software as specified in the appendix on which the Buyer
and Seller sign their names and have their company seal affixed and shall be
considered part of theAgreement, totalling US$60,961.40 which will be changed
into Thai Baht on the Agreement signing date or Bt2,407,976.00 (Two Million Four
Hundred and Seven Thousand Nine Hundred and Seventy-Six Baht Only) VAT not
included. The equipment shall be installed at King Power Duty Free Co., Ltd.,
26th floor, Siam Tower, Bangkok.
2. The Buyer agrees to make payment according to the contractual price as
follows:
2.1 The Buyer shall make payment of the first installment of
US$30,480.70 or Btl,203,988 (One Million Two Hundred and Three Thousand
Nine Hundred and Eighty-Eight Baht Only) to the Seller 30 days after the
Buyer has received the equipment.
<PAGE>
2.2 The Buyer shall make payment of the second installment of
US$30,480.70 or Btl,203,988 (One Million Two Hundred and Three Thousand
Nine Hundred and Eighty-Eight Baht Only) to the Seller 90 days after the
Buyer has made payment of the first installment.
3. The Seller agrees to install the computer equipment and hand over the
equipment, program, documents, manuals and supplementary equipment to the Buyer
within 60 days after signing the Sales Agreement.
In case the Seller is unable to hand over the computer equipment by the
deadline, the Seller shall install a temporary computer system with similar
efficiency for the Buyer to use for the time being.
4. The Buyer shall prepare equipment necessary to control the installation
site environment such as air-conditioners, voltage controllers, humidifiers,
dust cleaners, etc. recommended by the Seller before installation of the
computer system and equipment.
5. The Seller shall recommend the Buyer how to prepare the installation
site, and the Buyer shall get it done by the deadline.
As soon as the Seller is ready install the equipment, the Seller shall
notify the Buyer at least 5 days in advance and the Buyer shall have to get the
site ready. The Seller shall extend the handover time equivalent to the time
delayed. The installation site of the computer system and supplementary
equipment under this Agreement is at King Power Duty Free Co., Ltd., Bangkok.
6. Ownership of the computer system and equipment as specified in the
appendix shall be transferred to the Buyer as soon as the Buyer pays the Seller
all the installments stated in Section 2.
7. The Seller shall provide a warranty against defect or deficiency of the
computer system and equipment as well as spare parts'under this Agreement
(except Application Software) for a period of 13 months after the Buyer has
accepted the computer system and equipment and program from the Seller and the
system can function properly. By the warranty period, the Seller agrees to
provide maintenance and repairs of the computer system and equipment as follows:
7.1 At least 4 times a year inspection of the computer system and 2
times of Preventive Maintenance, which needs to shut down the computer
equipment and will be done on Saturday and Sunday.
<PAGE>
7.2 Repairs or correction service 24 hours a day and 7 days a
week.
7.3 The Seller shall send in an engineer in 4 hours after
receiving a notice from the Buyer that the computer system
and equipment under this Agreement breaks down and does not
function properly.
7.4 The Seller shall not be responsible to the Buyer concerning
Section 7.3 if the breakdown or defect is caused by
7.4.1 the Buyer's misuse of the system and equipment
7.4.2 the Buyer's failure to maintain the environment of the
installation site as recommended by the Seller.
7.5 Repairs and services under warranty shall be provided to the
Buyer at the Buyer's, site in Bangkok only, except agree
upon otherwise.
After the 13-month warranty period, the Buyer agrees to make
a separate computer system and equipment maintenance service
contract with the Seller.
8. The Seller shall hand over an Application Software with Revision Point
as agreed upon, and the Buyer has the right to make a separate Software
maintenance contract with the Seller.
9. In case the Buyer makes a maintenance service contract for the
Application Software and when a new Software Revision Point is released, the
Seller shall update the computer system and equipment and offer a training (if
required) with no charge to the Buyer.
10. The Buyer accepts the fact that the Operating System With Utilities and
Programming Language as well as Application Software is not owned by the Seller
but the Seller has received permission from the manufacturer to offer right of
utilization to the Buyer, and the Buyer agrees riot to sell or offer the right
of utilization to other persons and shall keep Software information
confidential. The Buyers agrees that the right to utilize the Software will end
as soon as the Buyer does not own the computer equipment any more.
11. The Buyer agrees not to relocate the installation site of the computer
system and equipment under this Agreement without advance notice to the Seller.
<PAGE>
12. The Seller agrees to provide training to the Buyer's personnel to work
on the computer equipment at the Seller's training facilities. Training expenses
shall be absorbed by the Seller. Training will cover the following topics:
12.1 Unix For User 4 persons
12.2 Solaris 2.X Administration Essential 4 persons
And the Seller agrees to offer a 20% discount from the normal training rate
for other training within a period of one year.
13. The Seller agrees to provide training to the Buyer's personnel on other
topics at the Buyer's facilities. Training expenses shall be borne by the
Seller. Training topics shall cover:
- Network Infrastructure between Production and Development System
- Design Backup and Recovery Strategies
- Operating System Backup and Recovery (Design of High Availability
Configuration)
- Mirroring, Cloning, RAID Base Management Techniques
- Sun Solstice Software Management System (System Monitor, DiskSuite,
Backup, Volume Manager and Admin.)
- Detection, Repair and Recovery for System Failure
This Agreement is made in two identical copies. Both parties have hereby
read and understood all the statements, and then signed their names and had
company seal affixed in the presence of witnesses on the specified date:
....................signed.....................Buyer
(Mr. Viratana Suntaranond)
King Power Duty Free Co., Ltd.
....................signed.....................Seller
(Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich)
Logic Co., Ltd.
....................Signed......................Witness
(Miss Somjitr Techaaiemamorn)
King Power Duty Free Co., Ltd.
....................Signed......................Witness
(Mrs. Kiratiya Sujaritkul)
Logic Co., Ltd.
Logic Company Limited
- --------------------------------------------------------------------------------
Agreement No....................
LogicFix Gold Computer System
Maintenance and Repair Agreement
Made at Logic Co., Ltd.
No. 202, Nanglinchi Road,
CDG House
Chongnonsi, Yannawa,
Bangkok
on the 1st date of September, 1998
This Agreement is made between King Power Duty Free Co., Ltd. by Mr.
Viratana Suntaranond, authorized to sign in obligation of the Company, office
located at No. 989, 26th-27th Floors, Siam Tower, Rama I Road, Phayathai,
Pathumwan, Bangkok 10330, hereinafter called, "Employer"; and Logic Co., Ltd.,
by Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich, authorized to sign in
obligation of the Company, office located at No. 202, Nanglinchi Road, CDG
House, Chongnonsi, Yannawa, Bangkok 10120, hereinafter called "Contractor". Both
parties have agreed as follows:
Section 1. The Employer agrees to hire and the Contractor agrees to be
hired to provide a LogicFix Gold computer system maintenance and repair service
contract as specified in Appendix 1, installed on the 26th-27th floors, No. 989,
Siam Tower, Rama I Road, Phayathai, Pathumwan, Bangkok 10330, Tel: 658-0020-49
Section 2. The Employer agrees to pay Btl,394,404 (One Million Three
Hundred and Ninety-Four Thousand Four Hundred and Four Baht Only) to the
Contractor as service fees for the 2nd-4th years. Payment shall be made in
installments -- 3 (three) installments a year -- within 30 (thirty) days from
the date of sending the invoice and Service Report to the Employer. The Employer
agrees bear value-added taxes.
<PAGE>
In case of late payment, if the Employer fails to make payment by the
period later fixed by the Contractor, the Employer agrees to pay interest on
overdue service fees along with other expenses at the rate of 3 (three) percent
per month.
Section 3. This Agreement shall be enforced from the ............. date of
...............to the ..............date of totalling 48 months (4 years.)
Section 4. The scope of service by the Contractor is as follows:
4.1 The Contractor shall provide maintenance services and repair
the computer system under this Agreement upon the Employer'
request at the site specified in Section 1.
4.2 The Contractor shall provide a service to the Employer under
this Agreement during the Contractor's working days and
hours as specified in Appendix 1.
4.3 The Contractor shall provide consultation services in the
maintenance and repairs of the computer system under this
Agreement to the Employer through telephone, facsimile,
electronic mail upon the Employer's request 24 hours a day
every day depending on the nature of problems and equipment.
4.4 The Contractor shall extend computer maintenance and repair
service hours as specified in Appendix I to 08:00 20:00
hours, Monday to Friday, except annual holidays of Logic
Co., Ltd.
4.5 If the Employer's computer system under this Agreement
breaks down, the Contractor shall assign one of his
employees to provide consultation through telephone by:
4.5.1 In case the whole system breaks down and cannot
function, the Contractor shall provide an immediate
consultation.
4.5.2 In case of a breakdown in which the system can still
function but not completely, the Contractor shall
provide a consultation in 2 hours from the time of
notification.
4.5.3 In case of a slight defect not affecting the
Employer's work, the Contractor shall provide a
consultation in 4 hours from the time of
notification.
<PAGE>
4.6 In case the Employer's computer system under this Agreement
breaks down and the Employer wants the Contractor to repair
it, the Contractor shall send its officers to repair it by:
4.6.1 In case the whole system breaks down and cannot
function, the Contractor shall send its officer to
repair in 4 hours from the time of notification.
4.6.2 In case of a breakdown in which the system can still
function but not completely, the Contractor shall send
its officer to repair in 1 day from the time of
notification.
4.6.3 In case of a slight defect not affecting the
Employer's work, the Contractor shall send its officer
to repair at the time both parties are comfortable.
4.7 The Contractor shall analyze and correct the defect notified
by the Employer through a modem according to the nature of
problems and equipment.
4.8 The Contractor shall send a message of how to maintain and
repair the computer system under this Agreement to the
Employer via a facsimile according to the nature of problems
and equipment.
4.9 The Contractor shall hand over part of the manufacturer's
program to correct the patches to the Employer upon request
if the manufacturer allows the Contractor to disseminate
and/or distribute, give away the said program, The Employer
has the right to ask the Contractor to install such part of
the program for the Employer.
4.10 The Contractor shall hand over a Solaris new version of
Enhancement Release and Maintenance Release which the
manufacturer releases to the market and/or allows it to be
distributed or given away to the Employer. The Employer has
the right to ask the Contractor to install such release for
the Employer - one installation per. one version -- at the
site specified in Section 1.
4.11 The Contractor shall hand over the Sun Solve Software to the
Employer. The Employer has the right to ask the Contractor
to install such release for the Employer -- one installation
per one version -- at the site specified in Section 1.
<PAGE>
4.12 The Contractor shall explain the defect of the system as
described by the manufacturer to the Employer if the said
information is not classified as confidential by the
manufacturer and can be publicized. The Employer can receive
such services via an electronic mail in the Internet.
4.13 The Contractor shall provide a personal technical account
support responsible for the correction of problems with the
computer system under this Agreement during working days and
hours of the Contractor.
4.14 The Contractor shall make a log book available at the
Employer's installation site specified in Section I to order
to keep a record of services provided by the Contractor
under this Agreement.
4.15 The Contractor shall inspect the computer system under this
Agreement four times a year. And each PM visit to the 2 sets
which requires to shut down the computer system shall be
made on Saturday-Sunday.
4.16 The Contractor shall arrange for a joint meeting between the
Contractor and Employer twice a year to analyze problems
arisen from the computer system and recommend how to enhance
efficiency of the Employer's computer system.
Section 5. Request for additional services
The Employer wishes the Contractor to offer services under
Section 4.1 to the Employer 24 hours a day every day.
Section 6. The Employer's duties and responsibilities
6.1 The Employer shall be cooperative to the Contractor while
offering services to the Employer under this Agreement.
6.2 In case the Contractor feels that a defect of the computer
system under this Agreement may be caused by other equipment
outside this Agreement, the Employer shall coordinate and
seek cooperation from a person responsible for the
maintenance of that equipment to correct that defect.
6.3 The Employer shall notify a problem or defect and ask for a
service from the Contractor through telephone numbers or hot
lines provided by the Contractor as follows:
<PAGE>
Normal business hours (08:00 - 17:00 hours)
-------------------------------------------
Telephone 678-0487, 678-0488 and 287-4992
Facsimile 678-0321
To the Answering Center on the 9th fl.
Electronic Mail [email protected]
Outside normal business hours
-----------------------------
Telephone 01-4339285
Pager (1144)724093,719437
6.4 Within 15 days after the Agreement signing, the Employer
shall specify in writing not more than 5 persons responsible
for contacting the Contractor to report a problem and/or ask
for a service.
6.5 To report a problem and/or ask for a service from the
Contractor under this Agreement, the Employer shall have to
assign only the persons listed in Section 6.4 to contact the
Contractor.
In case the Employer wants to change the persons responsible
for contacting the Contractor to report a problem and/or ask
for a service, the Employer shall notify in writing of the
change along with names of persons newly assigned.
6.6 The Employer shall keep the log book provided by the
Contractor as stated in Section 4.14 for the Contractor to
check and update.
6.7 The Employer shall not modify or correct the log book
provided by the Contractor as stated in Section 4.14 without
consent in writing from the Contractor.
Section 7. Asking for the following services shall be considered outside
the maintenance and repair service agreement:
7.1 Installation/Set up not originated from a defect of the
equipment under this Agreement.
7.2 Administration services such as
7.2.1 Back up and restore information
7.2.2 Increase or decrease the number of users, printers,
computer system, etc.
7.2.3 Performance tuning
<PAGE>
7.3 Integration services, for instance, asking the Contractor to
install equipment not supplied by the Contractor to
integrate with the system which the Contractor offers
maintenance and repair service under this Agreement.
7.4 Damage caused by misuse, accident, natural disaster, riot,
war, loss or strange items leaked in to damage the equipment
under this Agreement.
7.5 Damage caused by careless use.
7.6 Damage caused by disassembling, studying components,
repairing, modifying, or trying to modify the equipment
without consent in writing from the Contractor.
7.7 Damage caused by adding other equipment outside the
Agreement to integrate with the equipment under this
Agreement without consent in writing from the Contractor.
Section 8. In case the Employer asks for a maintenance service or to
correct a defect asides what's agreed upon in this Agreement at the Employer's
site stated in Section 1 and the Contractor can handle that for the Employer,
the Employer shall pay time and material service fees to the Contractor who will
offer a 15% discount of the normal rate, except travelling expenses of field
officers.
This Agreement is made in two identical copies. Both parties have hereby
read and understood all the statements, and then signed their names and had
company seal affixed in the presence of witnesses on the specified date:
...................signed...........................Employer
(Mr. Viratana Suntaranond)
King Power Duty Free Co., Ltd.
...................signed...........................Contractor
(Mr. Trairat Jaisamran and Miss Netchanok Tangsupanich)
Logic Co., Ltd.
....................signed............................Witness
(Miss Somjitr Techaaiemamorn)
....................signed............................Witness
(Miss Soipetr Mutasintu)
Version 98/05/01 Thailand/Individual
SAP THAILAND LTD
R/3 SOFTWARE INDIVIDUAL END-USER LICENSE AGREEMENT
("Agreement")
This Agreement is made effective this 16th day of September, 1998, by and
between SAP SYSTEMS, APPLICATIONS AND PRODUCTS IN DATA PROCESSING (THAILAND)
LTD, a Thailand corporation, with offices at 9th Floor Liberty Square Building,
287 Silom Road, Bangrak, Bangkok 10500, Thailand ("SAP"), and KING POWER DUTY
FREE Co. LTD., a Thailand corporation, with offices at 26th - 27th Floor, 989
Siam Tower, Rama 1 Road, Pathumwan, Bangkok 10330, Thailand ("Licensee').
RECITAL
WHEREAS, SAP desires to grant to Licensee and Licensee desires to accept
from SAP, a license to Use (as defined herein) SAP's proprietary R/3 Software
(as defined herein) upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, SAP and Licensee agree as follows:
1. DEFINITIONS
1.1 "ABAP/4 Development Workbench Users ("D/W Users")" means those
individuals authorized to log on to the Software to use the ABAP/4 Development
Workbench tools. Each D/W User must also be licensed as a Basis/Workflow User.
1.2 "Basis/Workflow Users" means those individuals authorized to access the
licensed Software solely for the purpose of executing the following
transactions: (i) document management, including optical archiving; (ii)
workflow organizational management; (iii) monitoring and administration of the
Software; (iv) creating lDocs; (v) initializing workflows; (vi) all Enterprise
Office/HR User transactions solely for such individual's own purposes; and (vii)
in the event Human Resources functionality is licensed, all transactions
contained in such Human Resources functionality.
1.3 "Business Third Party" means any third party that requires access to
the Software in connection with the operation of Licensee's business including,
but not limited to, customers, distributors and suppliers.
1.4 "Correction Level" means an update to, correction of, or further
developmental work in the Software as between Versions and is identified by the
letter following the Version identifier (e.g., 2. 1 (a)).
1.5 "Designated Unit" means each individual computer located at a Designated
Site in which the Software System is installed. Each Designated Unit must be
approved by SAP as compatible with the Software System and must be identified as
specified in Appendices hereto.
1.6 "Designated Site" means those facilities of Licensee located in the
Territory in which one or more Designated Units are located and which are
identified in Appendices to this Agreement.
<PAGE>
Version 98/05/01 Thailand/Individual
1.7 "Documentation" means SAP AG's standard documentation, in human- or
machinereadable format, in any medium, which is delivered to Licensee under this
Agreement, including SAP AG's standard manuals, program listings, data models,
flow charts, logic diagrams, input and output forms, functional specifications
and instructions, and complete or partial copies of the foregoing.
1.8 "Enterprise Office/HR Users" means those individuals authorized to
access the licensed Software solely for the purpose of executing the following
transactions: (i) employee records maintenance; (ii) employee time and
attendance entry; (iii) employee travel and expense report filing; (iv) employee
directory; (v) employee training registration; (vi) employee opportunity inquiry
and response; (vii) calendar functions; (viii) employee specific purchase
requisition; and (ix) e-mail. Each Enterprise Office/HR User may execute the
above transactions solely for such individual's own purposes and may not execute
transactions for or on behalf of other individuals.
1.9 "Extension" means an addition to the software which does not require a
Modification.
1.10 "Information User" means those individuals who by password allocation are
authorized to log on to the Software solely to "read only" Software transactions
for internal information purposes and are not authorized to input data, write
data, or execute Software transactions. Each Information User must also be
licensed as a Basis/Workflow User.
1.11 "Modification" means a change to the Software which changes the source
code.
1.12 "Operational User" means those individuals who by password allocation are
authorized to log on to the Software and execute Software transactions. Each
Operational User must also be licensed as a Basis/Workflow User.
1.13 "Non-Productive Use" means Use of the Software solely for Licensee's
internal training, testing or developmental work.
1.14 "Productive Use" means Use of the Software solely to operate Licensee's
business, including Electronic Data Interchange transactions.
1.15 "Program Concepts" means the concepts, techniques, ideas and know-how
embodied and expressed in any computer programs or modules included in the
Software, including the structure, sequence and organization of such programs or
modules.
1.16 "Proprietary Information" means: (i) with respect to SAP & SAP AG: the
Software and Documentation and any complete or partial copies thereof, the
Program Concepts, Third-Party Database, any other third-party software licensed
with or as part of the Software, benchmark results; and (ii) information
reasonably identifiable as confidential and proprietary information of SAP or
Licensee or their licensors excluding, any part of the SAP or Licensee
Proprietary Information which: (a) is or becomes publicly available through no
act or failure of the other party; or (b) was or is rightfully acquired by the
other party from a source other than the disclosing party prior to receipt from
the disclosing party; or (c) be comes independently available to the other party
as a matter of right.
1.17 "Release" means each issuance of the Software, excluding third party
software, identified by the numeral to the left of the decimal point (e.g.,
3.0).
1.18 "Requisition and Confirmation Users" ("R/C Users") means those
individuals authorized to access the licensed Software solely for the purpose of
submitting purchase requisitions or entering production order completion
confirmations. Each R/C User must also be licensed as a Basis/Workflow User.
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1.19 "SAP AG" means SAP Aktiengesellschaft, a German corporation, with offices
located in Walldorf, Germany.
1.20 "Session Users" means (i) that number of individuals, other than
employees of Licensee, or identifiable employees of Business Third Parties,
licensed to simultaneously execute sessions on an internet server or Third Party
Front-End interfaced to the Software or; (ii) that number of devices authorized
to simultaneously execute sessions on an internet server or Third Party
Front-End interfaced to the Software.
1.21 "Software" means: (i) all software specified in agreed upon Appendices
hereto, developed by or licensed to SAP or SAP AG and delivered to Licensee
hereunder; (ii) any Releases, Versions, or Correction Levels of the Software as
contemplated by this Agreement, and (iii) any complete or partial copies or
replacements of any of the foregoing.
1.22 "Territory" means Thailand and any additional countries as agreed upon in
advance in writing by the parties.
1.23 "Third-Party Front-End" means any Licensee or third party software and/or
device interfaced to the Software.
1.24 "Third-Party Database" means a third-party proprietary database software
licensed through SAP to Licensee, or by a Third-Party Database vendor directly
to Licensee. as provided in Section 2.5.
1.25 "Use" means to load, execute, employ, utilize, store, or display the
Software.
1.26 "Users" means any combination of Operational Users, Information Users,
Development Workbench Users, Basis/Workflow Users, Enterprise Office/HR Users or
Session Users licensed under this Agreement. Users may also be referred to as
"Named Users".
1.27 "Version" means each issuance of each Release of the Software, excluding
third party software, identified by the numeral to the right of the decimal
point (e.g., 3.1).
2. LICENSE GRANT.
2.1 Grant of License.
(a) Subject to this Agreement, SAP grants and Licensee accepts a
non-exclusive license to Use the Software, Documentation, other SAP Proprietary
Information and Third-Party Database provided by SAP to Licensee, at specified
site(s) within the Territory for Productive and NonProductive Uses. This license
does not permit Licensee to: (i) Use the Software and Third-Party Database for a
service bureau application; or (ii) sublicense, or rent the Software System.
(b) Licensee agrees to install the Software and Third-Party Database only
on Designated Unit(s), intranet server(s), internet server(s) or Third-Party
Front-End(s) as identified by Licensee pursuant to this Agreement. Designated
Units must have been previously approved by SAP in writing or otherwise
officially made known to the public as appropriate for Use or interoperation
with the Software. The maximum number of Users licensed to access the Software,
and Third-party Database, shall be specified in Appendices to this Agreement.
Licensee shall promptly provide written notice to SAP if the number of Users
exceeds such maximum number.
(c) Licensee may transfer the Software and Third-Party Database from one
Designated Unit to another at no additional license fee, and shall provide
written notice to SAP within five business days of such installation. Licensee
shall be responsible for the cost of any migration tools, Third-Party Database
costs, third-party software or additional Software required for the new
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Designated Unit. The Software and Third-Party Database must be promptly deleted
in their entirety from the Designated Unit no longer in use and from each
back-up copy for that Designated Unit.
2.2 Authorization of Business Third Parties to Access the Software.
Business Third Parties may have access to the Software provided: (i) each
Business Third Party shall execute a nondisclosure agreement pursuant to Section
6.2 herein; (ii) all Business Third Parties accessing the Software shall be
licensed as Users; (ii) Business Third Parties are expressly limited to screen
access to the Software; (iv) in no circumstances may Business Third Parties have
access to Software source code; (v) in no circumstances shall Business Third
Parties Use the Software to operate or manage the business of such Business
Third Parties (vi) such Use shall be subject to the following: (A) Licensee
accepts responsibility for the acts or omissions of such Business Third Parties
as if they were Licensee's acts or omissions; (B) Licensee shall indemnify SAP &
SAP AG against losses or damages suffered by SAP or SAP AG arising from breach
of this Agreement by any such Business Third Party as if effected by Licensee.
2.3 Audit Right. During normal business hours and at any time during which
the Software, Documentation, Third-Party Database, or other SAP Proprietary
Information are being utilized, SAP, or its authorized representative or
licensors, shall have the right upon reasonable advance notice, to audit and
inspect Licensee's utilization of such items, in order to verify compliance with
the terms of this Agreement. If Proprietary Information is given to Business
Third Parties pursuant to this Agreement, Licensee shall secure the right for
SAP to audit such Business Third Party as specified in this Section.
2.4 Archival Copy: Restriction on Copies: Legends to be Reproduced.
(a) Licensee may make one copy of the Software for archival purposes and
such number of backup copies of the Software as are consistent with Licensee's
normal periodic backup procedures. Licensee shall maintain a log of the number
and location of all originals and copies of the Software.
(b) Licensee shall include SAP's, SAP AG's and their licensors' copyright,
trademark, service mark, and other proprietary notices on any complete or
partial copies of the Software, Documentation, Third-Party Database, or SAP
Proprietary Information in the same form and location as the notice appears on
the original work. The inclusion of a copyright notice on any portion of the
Software, Documentation, Third-Party Database, or SAP Proprietary Information
shall not cause or be construed to cause it to be a published work.
2.5 Runtime License for Application Database. The Software requires a
Third-Party Database which may be licensed through SAP ("Runtime License") or
directly as a full license ("Full License") from a third-party database licensor
approved by SAP. In the event Licensee obtains a Full License directly from a
third-party database licensor, the license grant in this Section 2. shall be
restricted to such extent required to implement those restrictions imposed on
Licensee directly by such third-party database licensor. This Agreement shall
terminate automatically if, for any reason: (i) Licensee fails to obtain or
maintain a Runtime License or Full License; or (ii) Licensee's Runtime License
or Full License terminates prior to the termination of this Agreement. SAP makes
no representations or warranties as to the Third-Party Database or its
operation.
3. DELIVERY AND INSTALLATION.
3.1 Delivery. The licensed Software in machine-readable format, and the
Documentation, shall be delivered as specified in Appendices hereto
("Delivery"). Licensee shall be responsible for installation of the Software.
4. PRICE AND PAYMENT.
4.1 License Fees. In consideration of the license granted hereunder, Licensee
shall pay to SAP license fees for the Software as set forth in Appendices hereto
("License Fees"). The amount of License Fees shall be calculated based on the
total number of Users and Software licensed, and
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Version 98/05/01 Thailand/Individual
the payment terms for such License Fees shall be specified in Appendices hereto.
- - Fees for Maintenance Service ("Maintenance Fees") shall be paid as set forth
in Section 7.3.
4.2 Taxes. License and Maintenance Fees and other charges described in this
Agreement and its Appendices, or in SAP's most recent List of Prices and
Conditions, do not include federal, state, or local sales, goods and service,
use, property, excise, service, stamp duty or other taxes now or hereafter
levied, all of which shall be for Licensee's account. Any taxes or amounts in
lieu thereof paid or payable by SAP in respect of any such taxes on such fees or
charges (excepting only taxes on net income) shall be for Licensee's account and
remitted by Licensee directly to the applicable tax authorities.
5. TERM AND TERMINATION.
5.1 Term. This Agreement and the license granted hereunder shall become
effective upon execution by both parties and shall continue in effect thereafter
unless terminated under Section 5.2.
5.2 Termination. This Agreement and the license granted hereunder shall
terminate upon the earliest to occur of the following: (i) thirty days after
Licensee gives SAP written notice of Licensee's desire to terminate this
Agreement, for any reason, but only after payment of all License and Maintenance
Fees then due and owing; (ii) thirty days after SAP gives Licensee notice of
Licensee's material breach of any provision of the Agreement (other than
Licensee's breach of its obligations under Sections 6 or 12, which breach shall
result in immediate termination), including more than thirty days delinquency in
Licensee's payment of any money due hereunder, unless Licensee has cured such
breach during such thirty day period; (ii) immediately if any of the following
events, which exist as to Licensee, remain uncured for more than sixty days: (A)
entry of an order for relief under applicable bankruptcy laws; (B) the making of
a general assignment for the benefit of creditors; (C) the appointment of a
general receiver or trustee in bankruptcy of Licensee's business or property; or
(D) action under any applicable insolvency or similar law in effect in the
Territory for the purpose of bankruptcy, reorganization, or liquidation, unless
within the specified sixty-day period, Licensee, its receiver, or its trustee in
bankruptcy provides to SAP adequate written assurances, reasonably acceptable to
SAP, of Licensee's continuing ability and willingness to fulfill all its
obligations under this Agreement.
5.3 Effect of Termination. Upon any termination of this Agreement: Sections
6, 8.4, 9, 10, 11, 13.7, 13.8 and 13.9 shall survive such termination;
Licensee's rights under Section 2 shall immediately cease; and SAP and Licensee
each shall perform promptly its obligations under Section 6.3.
5.4 No Refund. In the event of any termination hereunder, Licensee shall
not be entitled to any refund of any payments made by Licensee.
6. PROPRIETARY RIGHTS.
6.1 SAP Proprietary Information.
(a) Licensee acknowledges that ownership of and title in and to all
intellectual property rights, including patent, trademark, service mark,
copyright, and trade secret rights, in the SAP Proprietary Information are and
shall remain in SAP, SAP AG and their respective licensors. Licensee acquires
only the right to use the Software System under the terms and conditions of this
Agreement and does not acquire any ownership rights or title in or to the SAP
Proprietary Information and that of SAP's and SAP AG's respective licensors.
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(b) Licensee shall not copy, translate, disassemble, or decompile, nor
create or attempt to create, by reverse engineering or otherwise, the source
code from the object code of the Software or use it to create derivative works,
unless authorized in writing by SAP. In the event source code is provided to
Licensee, SAP, in its sole discretion, reserves the right to delete, or to
require the deletion of, such source code and all copies thereof in Licensee's
possession or control whenever a future Release, Version, or Correction Level
provides for like functionality in an object code format. Other than as
specified herein, any tools licensed with or included in the Software may not be
copied, in whole or in part, without the express written consent of SAP.
(c) Licensee shall not remove any proprietary, copyright, trademark, or
service mark legend from any SAP Proprietary Information.
(d) All Modifications and Extensions to the Software and Documentation
shall be considered part of the Software and Documentation for purposes of this
Section 6.
6.2 Protection of Proprietary Information. In order to protect the rights
of SAP and its licensors and Licensee in their respective Proprietary
Information, SAP and Licensee acknowledges that any disclosure to third parties
of the other's Proprietary Information may cause irreparable and immediate harm
to the owner of the disclosed Proprietary Information from disclosure to third
parties as with its own proprietary and confidential information. Neither party
shall, without the other party's prior written consent, disclose, provide, or
make available any of the Proprietary Information of the other party in any form
to any person, except to its bona fide employees, officers, directors or third
parties whose access is necessary to enable such party to exercise its rights
hereunder. Each party agrees that prior to disclosing any Proprietary
Information of the other party to any third party, including identifiable
Business Third Parties, it will obtain from that third party a written
acknowledgment that such third party will be bound by the same terms as
specified in this Section 6 with respect to the Proprietary Information and
naming SAP as a third party beneficiary.
6.3 Duties Upon Termination. Upon any termination hereunder, Licensee shall
immediately cease Use of the Software System and shall irretrievably delete
and/or remove such items from all computer hardware and storage media. Within
thirty days after any termination, Licensee shall deliver to SAP at Licensee's
expense (adequately packaged and insured for safe delivery) or, at SAP's request
destroy ail copies of the SAP Proprietary Information in every form. Licensee
further agrees to erase the Software System from any storage media. Licensee
agrees that an officer of Licensee's organization with the express authority to
make such a representation shall certify in writing to SAP that it has performed
the foregoing. Within thirty days after any termination, SAP shall return the
Licensee Proprietary Information to Licensee.
6.4 Modifications and Extensions.
(a) Licensee may make Modifications and Extensions to the Software, other
than third party software, for Use on the Designated Unit(s) under the terms set
forth in this Section 6.4. Licensee shall register all Modifications to the
Software with SAP prior to making such Modifications. Licensee agrees to insert
in all copies of the Software as modified all copyright, trade secret, or other
notices thereon or therein as SAP may from time to time direct.
(b) In the event Licensee without SAP's participation develops any
Extension or Modification (hereinafter referred to as "Licensee Extension" or
"Licensee Modification") to the Software, Licensee shall have all rights, title
and interest in such Licensee Extension or Licensee Modification subject to
SAP's rights in the Software. Licensee agrees to offer SAP the first right to
negotiate a license to or assignment of such Licensee Modification or Licensee
Extension and the parties agree to negotiate such rights in good faith. Licensee
agrees that prior to SAP's exercise or waiver of its first right to negotiate,
such Licensee Modification or Licensee Extension will be used solely in
connection with Licensee business's operations, and that such Licensee
Modification or
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Licensee Extension will not be marketed, licensed or sublicensed, sold,
assigned, or otherwise transferred or made available to any third party or other
entity.
(c) In the event SAP develops either independently, or jointly with
Licensee, any Extension or Modification to the licensed Software, such Extension
or Modification will be the exclusive property of SAP and SAP AG, and Licensee
will not grant, either expressly or impliedly, any rights, title, interest, or
licenses to such Modifications or Extensions to any third party. Licensee shall
be entitled to Use such Modifications or Extensions developed for or with
Licensee on the Designated Unit(s) at the Designated Site(s) under the terms set
forth in this Agreement. Licensee agrees to assign all right, title and interest
in and to jointly developed Modifications and Extensions to SAP. Licensee agrees
to execute, acknowledge and deliver to SAP all documents and do all things
necessary, at SAP's expense, to enable SAP to obtain and secure such
Modifications or Extensions throughout the world. Licensee agrees to secure the
necessary rights and obligations from relevant employees, or third parties in
order to satisfy the above obligations.
(d) The parties hereto agree that the granting of any rights, title, or
interest to Licensee in any Extension or Modification (including Licensee
Extensions and Licensee Modifications) shall not be construed by the parties
hereto, or any court of law or equity, or any arbitration panel to mean that SAP
has granted or given up any rights, title, or interest in or to the SAP
Proprietary Information or any part thereof.
(e) Licensee agrees not to take any action that would limit SAP's
independent development, sale, assignment, licensing, or use of its own Software
or Modifications or Extensions thereto.
7. MAINTENANCE.
7.1 Maintenance Services.
Upon Delivery, but only to such degree as SAP makes such services
generally available in the Territory, Licensee may request and SAP shall
provide, Maintenance Service ("Maintenance Services") from SAP with respect
to the Software. Maintenance Service by SAP includes the delivery of Releases
and Versions, support via telephone, remote correction of defects, remote
support/update, SAP's On-line Software Services, and, if separately purchased
at fees and terms to be agreed upon, SAP's EarlyWatch Services. Maintenance
does not include the adaptation of any Modifications or Extensions developed
by or for Licensee to new Releases or Versions. In order to receive
Maintenance Service hereunder, Licensee must make all required remote support
and update connections to each Designated Unit, at its expense, as requested
by SAP. Maintenance will only be offered for the most recent Release and the
Release immediately prior thereto. If, at Licensee's request, SAP corrects a
defect of any unsupported Release, SAP may request, and Licensee shall pay,
additional charges.
7.2 Other Services. All other services not referred to in this Section 7
shall be agreed upon separately and shall be subject to additional charges.
7.3 Payment of Maintenance Fees. Unless otherwise specified in Appendices
hereto, Maintenance Fees shall be paid annually in advance in an amount
calculated as the then current percentage factor multiplied by the then current
list price of the Software licensed hereunder.
7.4 Termination of Maintenance Services. Maintenance Services may be
terminated by either party in writing at any time upon three months prior
written notice. In the event of termination of Maintenance by SAP under this
Section, Licensee shall be entitled to a pro-rata refund of prepaid Maintenance
fees.
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8. PERFORMANCE WARRANTY.
8.1 Warranty Period; Warranty. SAP warrants that the Software will
substantially conform to the functional specifications contained in the
Documentation for six months following Delivery ("Warranty Period") when used
without material alteration on the Designated Unit(s). SAP's warranty is subject
to Licensee providing SAP or SAP AG necessary access, including remote access,
to the Software. Licensee shall provide SAP with sufficient test time and
support on Licensee's Designated Unit(s) to rectify such defect.
8.2 SAP's Obligation to Correct or Replace Defects. Should any component of
the Software fail to meet the Warranty standard stated above, SAP's sole
obligation shall be, at SAP's option, to bring the performance of the Software
into substantial compliance with the functional specifications or to replace the
defective component.
8.3 Scope of Warranty.
(a) The warranty set forth in this Section 8 shall not apply: (i) if the
Software is not used in accordance with the Documentation; or (ii) to any
Extensions or Modifications; or (iii) if the defect is caused by a Modification
or Extension; or (iv) if the Software is not installed on a Designated Unit or
other authorized platform; or (v) to the extent that the defect is caused by or
is contributed to by Licensee; or (vi) if Licensee does not provide access,
including remote access, to the Software as required under Section 8.1; or (vii)
if the defect is caused by a Third-Party Database malfunction.
(b) SAP does not warrant that the Software will operate uninterrupted or
that it will be free from minor defects or errors which do not materially affect
such performance or that the applications contained in the Software are designed
to meet all of Licensee's business requirements.
8.4 Express Disclaimer. SAP DISCLAIMS ALL OTHER WARRANTIES EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE EXCEPT TO THE EXTENT THAT
ANY WARRANTIES IMPLIED BY LAW CANNOT BE VALIDLY WAIVED.
9. LIMITATION OF LIABILITY.
9.1 Licensee's Remedies. Subject to the limited warranty set forth in
Section 8, Licensee's sole and exclusive remedies for any damages or loss in any
way connected with the Software or services furnished by SAP and its licensors,
whether due to SAP's negligence or breach of any other duty, shall be, at SAP's
option, (i) replacement of the Software or performance of services or (ii)
return or credit of an appropriate portion of any payment made or to be made by
Licensee with respect to the applicable portion of the Software or services. The
foregoing limitation of liability does not apply to (i) infringement of the
property rights referred to in Section 10 which shall be limited to the
aggregate payments actually made by Licensee to SAP under this Agreement, and if
there should be more than one claim of infringement, the amount payable under
such indemnity in respect of each claim shall be divided pro rata; (ii) personal
injury or death caused solely by the gross negligence or willful misconduct of
SAP; or (iii) tangible property damage up to the amount by which such damage is
paid by SAP's liability insurance.
9.2 SAP Not Responsible. SAP will not be responsible under this Agreement
for (i) any alteration of the Software to fit the particular requirements of
Licensee; or (ii) the correction of any defects resulting from Modifications or
Extensions; or as a result of misuse of the Software by Licensee (iii)
preparation or conversion of data into the form required for use with the
Software or (iv) ensuring the security of Licensee's networked installation of
the Software. THE SOFTWARE IS NOT SPECIFICALLY DEVELOPED OR LICENSED HEREUNDER
FOR USE IN ANY DIRECT AND ACTIVE OPERATIONS OF ANY EQUIPMENT IN ANY NUCLEAR,
AVIATION, MASS TRANSIT, OR MEDICAL APPLICATIONS, OR IN ANY OTHER INHERENTLY
DANGEROUS APPLICATIONS. THE
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PARTIES HERETO AGREE THAT USE OF THE SOFTWARE AND THIRD-PARTY SOFTWARE FOR
FINANCIAL APPLICATION PURPOSES OR SUCH OTHER ADMINISTRATIVE PURPOSES SHALL NOT
BE DEEMED INHERENTLY DANGEROUS APPLICATIONS IF SUCH USE DOES NOT AFFECT THE
OPERATIONS OR MAINTENANCE OF SUCH EQUIPMENT. SAP, SAP AG AND THEIR LICENSORS
SHALL NOT BE LIABLE FOR ANY CLAIMS OR DAMAGES ARISING FROM INHERENTLY DANGEROUS
USE OF THE SOFTWARE AND/OR THIRD-PARTY SOFTWARE LICENSED HEREUNDER.
9.3 Exclusion of Damages. ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING,
UNDER NO CIRCUMSTANCES SHALL SAP, SAP AG AND THEIR LICENSORS BE LIABLE TO
LICENSEE OR ANY OTHER PERSON OR ENTITY FOR SPECIAL, INCIDENTAL, CONSEQUENTIAL,
OR INDIRECT DAMAGES, LOSS OF GOODWILL OR BUSINESS PROFITS, WORK STOPPAGE, DATA
LOSS, COMPUTER FAILURE OR MALFUNCTION, ANY AND ALL OTHER COMMERCIAL DAMAGES OR
LOSS, OR EXEMPLARY OR PUNITIVE DAMAGES.
9.4 Severability of Actions. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT
EACH AND EVERY PROVISION OF THIS AGREEMENT WHICH PROVIDES FOR A LIMITATION OF
LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF DAMAGES, IS INTENDED BY THE
PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER PROVISION AND TO BE
ENFORCED AS SUCH.
9.5 Professional Advice. LICENSEE ACKNOWLEDGES THAT THE SOFTWARE IS
LICENSED WITH THE UNDERSTANDING THAT SAP AND THEIR LICENSORS ARE NOT ENGAGED IN
THE BUSINESS OF RENDERING LEGAL, TAX, OR OTHER PROFESSIONAL SERVICES AND THAT
THE SOFTWARE IS NOT INTENDED TO PROVIDE LEGAL, TAX, OR OTHER EXPERT ADVICE, OR
BE A SUBSTITUTE FOR A LAWYER, ACCOUNTANT, OR OTHER PROFESSIONAL. IF LEGAL OR TAX
ADVICE OR OTHER EXPERT ASSISTANCE IS NEEDED, THE SERVICES OF A COMPETENT
ATTORNEY, ACCOUNTANT, OR OTHER PROFESSIONAL LICENSED TO PRACTICE IN THE
APPLICABLE JURISDICTION SHOULD BE SOUGHT. LICENSEE ACKNOWLEDGES AND AGREES THAT
ALL DECISIONS MADE WITH THE ASSISTANCE OR USE OF THE SOFTWARE WILL BE
EXCLUSIVELY THE RESPONSIBILITY OF THE LICENSEE.
10. INDEMNIFICATION.
10.1 SAP Representation. SAP represents that SAP AG and its licensors own
the Proprietary Information licensed by SAP hereunder, including all
intellectual property rights therein, and that SAP has all rights from SAP AG
and its licensors necessary to license, in accordance with the terms of this
Agreement, such Proprietary Information to Licensee.
10.2 No Representation Regarding Combination Use. SAP makes no representation
with respect to the possibility of infringement by Combination Use of the
Software. The parties agree that SAP has no duty to investigate nor to warn
Licensee of any such possibility. As used herein, "Combination Use" means Use of
the Software in combination or conjunction with any of the following unless such
Use is prescribed in the Documentation: (i) any software other than the Software
(including any Licensee Extension or Licensee Modification); (ii) any apparatus
other than a Designated Unit; and/or (iii) any activities of Licensee not
licensed under this Agreement.
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10.3 Indemnification of Licensee.
Subject to Section 9.2 and 10.2, SAP shall indemnify Licensee against all
claims, liabilities and costs, including reasonable attorneys' fees, solicitors'
fees and clients' costs, up to the maximum amount described in Section 9.1,
reasonably incurred in the defense of any claim brought against Licensee in the
Territory by third parties alleging that Licensee's Use of the Software System
infringes or misappropriates: (i) any patent of which SAP is aware, or (ii) a
copyright, or (iii) trade secret rights; provided that Licensee promptly
notifies SAP in writing of any such claim and SAP is permitted to control fully
the defense and any settlement of such claim. Licensee shall cooperate fully in
the defense of such claim and may appear, at its own expense through counsel
reasonably acceptable to SAP. SAP may, in its sole discretion, settle any such
claim on a basis requiring SAP to substitute for the Software System alternative
substantially equivalent non-infringing programs and supporting documentation.
10.4 Indemnification of SAP and SAP AG. Licensee shall indemnify SAP, SAP AG
and their licensors against all third party claims, liabilities, and costs,
including reasonable attorneys' fees, solicitors' fees and clients' costs,
reasonably incurred in the defense of any claim (other than for the infringement
of intellectual property rights specified in Section 10.3 above), arising out of
Licensee's unlicensed Use of the Software System, Documentation, Third Party
Database, and other SAP Proprietary Information, licensed under this Agreement;
provided that, SAP promptly notifies Licensee in writing of such claim and that
Licensee is permitted to control fully the defense and any settlement of the
claim.
10.5 SAP's Right to Commence Infringement Actions. SAP alone shall be
responsible for taking such actions which it determines are reasonably necessary
or desirable in its sole discretion in connection with any infringement or
alleged infringement by a third party of any portion of the Software System.
Licensee shall not undertake any action in response to any infringement or
alleged infringement of the Software System and Documentation without the prior
written consent of SAP, which consent shall not be unreasonably withheld.
Licensee agrees to cooperate with and assist SAP in taking whatever action
(including consenting to being named as a party to any suit or other proceeding)
which SAP determines to be reasonably necessary or desirable. SAP agrees to
reimburse Licensee for reasonable legal fees and other expenses incurred in
connection with investigating or defending any such claim, suit, damage, or
loss.
10.6 SAP's Duty to Indemnify Licensee. THE PROVISIONS OF THIS SECTION 10
STATE THE SOLE, EXCLUSIVE AND ENTIRE LIABILITY OF SAP, SAP AG AND THEIR
LICENSORS TO LICENSEE, AND LICENSEE'S SOLE REMEDY WITH RESPECT TO THE
INFRINGEMENT OF THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS.
11. ARBITRATION.
Except for the right of either party to apply to a court of competent
jurisdiction for an injunction or other equitable relief available under
applicable law to preserve the status quo or prevent irreparable harm pending
the selection and confirmation of a panel or arbitrators, and for the right of
SAP to bring suit on an open account for any payments due SAP hereunder, any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in Singapore, in accordance with the
Commercial Arbitration Rules of the ICC, and judgment upon the award rendered by
the arbitrators may be entered in any court having jurisdiction thereof.
Arbitration shall be conducted in the English language by a panel of three (3)
members, one member selected by SAP, one member selected by Licensee and the
third member, who shall be chairman, selected by agreement between the other (2)
members. The chairman shall be a solicitor, and the other arbitrators shall have
a background or training in computer law, computer science, or marketing of
computer industry products. The arbitrators shall have the authority to grant
injunctive relief in a form substantially similar to that which would otherwise
be granted by a court of law. The parties' obligations under this Section 11
shall survive termination or expiration of this Agreement.
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12. ASSIGNMENT.
Licensee may not, without SAP's prior written consent, assign, delegate,
sublicense, pledge, or otherwise transfer this Agreement, or any of its rights
or obligations under this Agreement, or the Software System, to any party. Any
permitted assignment of this Agreement shall provide that the provisions of this
Agreement shall continue in full force and effect and that Licensee shall
guarantee the performance of its assignee and shall remain liable for all
obligations hereunder. SAP may assign this Agreement to SAP AG.
13. GENERAL PROVISIONS.
13.1 Agreement Binding. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
13.2 Rights to Injunctive Relief. Both parties acknowledge that remedies at
law may be inadequate to provide SAP, SAP AG or Licensee with full compensation
in the event of Licensee's material breach of Sections 2, 6, or 13.7, or SAP's
material breach of Section 6 with respect to Licensee Proprietary Information,
and that the nonbreaching party shall therefore be entitled to seek injunctive
relief in the event of any such material breach.
13.3 Entire Agreement. This Agreement and each Appendix hereto constitute
the complete and exclusive statement of the agreement between SAP and Licensee,
and all previous representations, discussions and writings are merged in, and
superseded by, this Agreement. This Agreement may be modified only in writing
signed by both parties. This Agreement and each Appendix hereto shall prevail
over any additional, conflicting or inconsistent terms and conditions which may
appear on any purchase order or other document furnished by Licensee to SAP.
13.4 Severability. It is the intent of the parties that in case any one or
more of the provisions contained in this Agreement shall be held to be invalid
or unenforceable in any respect, such invalidity or unenforceability shall not
affect the other provisions of this Agreement, and this Agreement shall be
construed as if such invalid or unenforceable provision had never been contained
herein.
13.5 No Waiver. If either party should waive any breach of any provision of
this Agreement, it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision hereof.
13.6 Counterparts. This Agreement may be signed in two counterparts, each of
which shall be deemed an original and which shall together constitute one
Agreement.
13.7 Export Control Notice. Regardless of any disclosure made by Licensee to
SAP of an ultimate destination of the Software System or any part thereof,
Licensee will not re-export or transfer, whether directly or indirectly, the
Software System or any system incorporating the Software System or any part of
the Software System to anyone outside the Territory or to anyone in such manner
that constitutes an exportation under applicable laws or regulations without
first obtaining all requisite approvals, licenses and permissions from
applicable governmental authorities or agencies and meeting any other applicable
governmental requirements. Licensee shall be responsible for complying with all
applicable governmental regulations in the Territory or any foreign countries
with respect to the use of the Software System by Licensee outside of the
Territory, including, but not limited to import and export restrictions,
obtaining any necessary consents and licenses and registering or filing any
documents. Licensee shall be solely responsible for all costs associated with
such compliance. Licensee shall defend, indemnify and hold SAP & SAP AG harmless
from and against any and all claims, judgments, costs, awards, expenses
(including reasonable attorneys' fees) and liability of any kind arising out of
the non-compliance with applicable governmental regulations, statute, decree or
other obligation with respect to the use of
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the Software System outside the Territory by Licensee. The provisions of this
Subsection 13.7 shall survive the termination or expiration of this Agreement.
13.8 Confidential Terms and Conditions. Licensee shall not disclose the terms
and conditions of this Agreement and the pricing contained therein to any
third-party. Neither party shall use the name of the other in publicity,
advertising, or similar activity without the prior written consent of the other,
except that Licensee hereby consents to SAP's inclusion of Licensee's name in
customer listings which may be published as part of SAP's marketing efforts.
13.9 Governing Law. This Agreement shall be governed by and construed under
Thai law without reference to its conflicts of law principles. Licensee consents
to the jurisdiction of any court sitting in the Territory for all claims, suits,
or actions arising under this Agreement (including claims for payments due
hereunder) or in connection with Licensee's use or possession of the Software
System and SAP or SAP AG Proprietary Information and for enforcement of any
award by an arbitrator(s) under Section 11 above. Nothing contained herein shall
in any way limit the right of SAP or SAP AG to commence any proceeding arising
out of this Agreement in any other jurisdiction they may consider appropriate.
The provisions of this Subsection 13.9 shall survive the termination or
expiration of this Agreement.
13.10 Notices. All notices or reports which are required or may be given
pursuant to this Agreement shall be in writing and shall be deemed duly given
when delivered to the respective executive offices of SAP and Licensee at the
addresses first set forth above.
13.11 Force Majeure. Any delay or nonperformance of any provision of this
Agreement (other than for the payment of amounts due hereunder) caused by
conditions beyond the reasonable control of the performing party shall not
constitute a breach of this Agreement, and the time for performance of such
provision, if any, shall be deemed to be extended for a period equal to the
duration of the conditions preventing performance.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have duly
executed this Agreement to become effective as of the date first above written.
Accepted by: Accepted by:
SAP King Power Duty Free Co. Ltd.
Systems, Applications and Products Licensee
in Data Processing (Thailand) Ltd
(SAP)
/s/ Leslie Hayman /s/ Khun Vichai raksriaksorn
- ---------------------------------- ----------------------------------
Name: Leslie Hayman Name: Khun Vichai raksriaksorn
--------------------------- --------------------------
Title: President/CEO Title: Group Chairman & CEO
--------------------------- --------------------------
South Asia Pacific
Date: Date: September 29, 1998
--------------------------- --------------------------
/s/ John H. Dubois /s/ Khun Viratana Suntranond
- ---------------------------------- ---------------------------------
Name: John H. Dubois Name: Khun Viratana Suntranond
Title: Executive vice President Title: Group Chief Financial Officer
South West Asia
Date: Date: September 16, 1998
-------------------------- --------------------------
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Appendix 1
to
SAP THAILAND
R/3 SOFTWARE INDIVIDUAL END-USER LICENSE AGREEMENT
with
King Power International Group (Thailand) Co. Ltd.
Effective 16th September, 1998
("AGREEMENT")
This Appendix 1 is hereby annexed to and made a part of the Agreement specified
above. In each instance in which provisions of this Appendix 1 contradict or are
inconsistent with the provisions of the Agreement, the provisions of this
Appendix 1 shall prevail and govern, and the contradicted or inconsistent
provisions of the Agreement shall be deemed amended accordingly.
Designated Unit(s) to be identified by Licensee to SAP in writing.
Type/Model No.: To be advised by Licensee
Serial No.:
Designated Site: King Power Duty Free Co. Ltd.
26th -27th Floor, 989 Siam Tower
Rama 1 Road, Pathumwan, Bangkok 10330, Thailand
1. Software licensed to Licensee pursuant to the above-referenced Agreement
consists of the following SAP functional modules which are to be installed
on the above referenced Designated Unit(s) at the specified Designated
Site. For the price set forth herein, Licensee is authorized to have -42
Operational Users, NIL Information Users, 50 Basis/Workflow Users, NIL
Enterprise Office/HR Users and 1 Development Workbench Users to access the
Software, as per the terms of the Agreement, at such Designated Site on
such Designated Unit(s). Software functional blocks licensed, the total
number of Operational, Information and Development Workbench Users, total
quantities of ABAP/4 Workbenches and Optional Packages licensed, and the
total List Price license Fees are as follows:
GENERAL FUNCTION BLOCKS LICENSED Oper.Users D/W Users
Licensed Licensed
FI Financial Accounting/Asset Accounting x
TR-CM Cash Management x
IM Investment Management x
CO Controlling x
EC Enterprise Controlling x
PS Project System
MM Materials Management x
PM Plant Maintenance
SD Sales and Distribution x
PP Production Planning
DW ABAP/4 Development Workbench 1
<TABLE>
<S> <C> <C>
USERS, BASIS/WORKFLOW and DATABASE Number of Users Licensed:
BC Basis/Workflow System with INFORMIX Database Users
BC Basis/Workflow System with ORACLE 7 Runtime Database 50 Users
BC Basis/Workflow System with DB2/6000 Database Users
BC Basis/Workflow System with Database Interface for SOL Server Users
BC Basis/Workflow System with Database Interface for AS/400 Users
</TABLE>
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HUMAN RESOURCE MANAGEMENT Master Records Licensed:
------------------------
PA Personnel Administration and Payroll
PD Personnel Planning and Development
OPTIONAL PACKAGES Quantity(ies) Licensed:
-----------------------
TR-TM Treasury Management Users
BC/DW R/3 Data Model in ADW Format Designated Site
PP-EH&S Environmental, Health & Safety Designated Unit
PP-PI Process Industry Designated Unit
2. Third-party software, applicable country versions, Industry Solutions
Software, and any other provided software licensed by Licensee from SAP
hereunder, which is not specified above, are as follows: Thai Version.
3. The total Net Price License Fee to Licensee for the Software specified in
items 1. and 2. above for the total number of Users is DEM 280,000,
provided the following Use restrictions are observed by Licensee and its
Affiliates for the licensed Software, and additional Software is not
subsequently licensed by Licensee. In the event such Use restrictions are
not adhered to by Licensee and/or its Affiliates, or additional Software is
licensed by Licensee, Licensee agrees, within a reasonable period of time,
to provide written notice to SAP, and SAP reserves the right to modify its
pricing accordingly. The Use restrictions are:
A. Not more than the total number of Users specified in Item 1, above,
access and/or Use the Software as specified in the Agreement;
B. Not more than the total number of Personnel Master Records as related
to PA and PD functional blocks as specified in item 1 above, are
created by the applicable Users;
C. Not more than the quantities of Optional Packages and ABAP/4
Workbenches as specified in Item 1. above, are licensed from SAP.
4. The above specified Net License Fee shall be invoiced in September, 1998,
and is due and payable as follows:
DEM 140,000 to be due and payable 30 days after date of Delivery; DEM
140,000 to be due and payable 120 days after date of Delivery.
SAP will accept payment of the License Fee in THB. The exchange rate for
the License Fee shall be 23.20 THB: 1 DEM ("the Fixed Rate"), PROVIDED that
one day before the due date the exchange rate quoted by Bank of Thailand
shall not increase or decrease by 1 THB above or below the Fixed Rate. In
the event the exchange rate quoted by Bank of Thailand one day before the
due date increases or decreases by more than 1 THB above or below the Fixed
Rate, the exchange rate for the License Fee shall be such actual exchange
rate.
5. Delivery by SAP of the Software is estimated to take place in September,
1998.
6. Maintenance Service for the Software licensed hereunder, for the
above-specified number of Users, shall commence on November 1st, 1999, and
shall be priced at 15% (or the then current factor) of DEM 280,000. This
Maintenance Fee shall be payable quarterly in advance by Licensee to SAP
within 30 days of invoice date. Until such commencement date, Maintenance
Service shall be provided free of charge for 1 year, that is, covering
period November 1st 1998 through October 31st, 1999.
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With the release of Version 3.0B and above of the Software, Licensee must
make all required remote support and update connections, including
establishing a X.25 link between each of its Designated Unit and SAP at its
own expense before Licensee is entitled to Version 3.0B and above.
7. All payments due in this Agreement shall be payable in DEM.
8. SAP shall provide Licensee without charge, the following training services
for 3 persons only:
Type of Course Number of days
-------------- --------------
SAP50 Basis Technology 2
SAP20 SAP R/3 Overview 1
L0020 Procurement Processes 5
L0510 Inventory Management 3
L0530 Warehouse Management 5
AC226 Accounts Payable 2
AC240 Consolidation Functions 5
Provided Licensee utilizes such service no later than September 30th, 2000.
All unutilized services remaining after such date shall be forfeited.
9. Delivery of (1) set of CD-ROM Documentation, in the English language, to
the above-specified Designated Site shall be initiated upon execution of
this Appendix by the parties hereto. Additional Documentation for the
above-specified Designated Site may be ordered by Licensee at SAP's then
current prices in effect.
10. Software licensed hereunder currently requires a Third-Party Database,
which has been licensed hereunder as a runtime version. Such runtime
version shall be limited to use by Licensee for the purpose of running the
Software licensed hereunder, and utilizing SAP tools to modify and/or
extend the Software as well as writing in-house developments. Such rights
apply to Productive Use and NonProductive Use of the Software.
In the event Licensee uses the licensed database other than as specified
above, a Full License, including programming tools provided through such
third-party supplier can be licensed directly from a third party database
supplier.
11. In the event Licensee is utilizing EDI functionality, Licensee is
responsible to license or purchase a required third-party EDI
translator/interpreter. Such EDI translator/interpreter shall be licensed
or provided directly from a third-party vendor to Licensee.
12. In the event Licensee elects SAP's EarlyWatch System Service, Licensee
shall be separately invoiced at SAP's then current EarlyWatch System
Service fees in effect. Accordingly, a separate order form for EarlyWatch
System Service will be provided to Licensee, and Licensee would be required
to sign, upon request of such service. Additionally, all costs associated
with telecommunication access, line charges, and remote access costs shall
be borne by Licensee for the SAP EarlyWatch System. It shall be Licensee's
responsibility to provide adequate security measures for its systems and
any data contained therein. SAP agrees to treat any tangible data remotely
accessed, which is designated as confidential, proprietary, or trade secret
information of Licensee, pursuant to the terms of the Agreement.
13. In the event Optional Packages are licensed by Licensee hereunder, all such
Optional Package Software (excluding TR-TM Treasury Management) must be
licensed at a minimum quantity
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of one (1) per Designated Site. Such quantities of Optional Packages as
well as ABAP/4 Workbenches are as specified in Item 1. above.
14. Each Productive Use copy and Non-Productive Use copy of the Software
licensed hereunder requires a license keycode. For each installation of the
Software, five (5) keycodes shall be provided; quantity one (1) for
Productive Use of the Software; and quantity four (4) for NonProductive Use
of the Software. The license keycodes will be issued by SAP AG within four
(4) weeks from the date of installation of the Software on each Designated
Unit. The required form to receive the license keycodes from SAP AG must be
executed by Licensee and faxed to SAP AG within the four (4) week period
following installation of the Software. The applicable form and fax number
will be included in each installation kit provided to Licensee upon
delivery of the Software. Licensees that subsequently change Designated
Units for Use of the licensed Software must be re-issued license keycodes
for each respective copy of the licensed Software. Failure of Licensee to
obtain necessary license keycodes for the licensed Software within four (4)
weeks of installation of such Software, will cause the Software to have
limited User access until such time as the license keycodes are issued.
15. The Software, including all third-party software, is not specifically
developed or licensed hereunder for Use in any direct and active operations
of any equipment in any nuclear, aviation, mass transit, or medical
applications, or in any other inherently dangerous applications. The
parties hereto agree that Use of the Software and third-party software for
financial application purposes or such other administrative purposes shall
not be deemed inherently dangerous applications if such Use does not affect
the operations or maintenance of such equipment. SAP, SAP AG, and their
licensors shall not be liable for any claims or damages arising from
inherently dangerous Use of the Software and/or third-party software
licensed hereunder.
16. In the event PP-PI Process Industry functionality is licensed by Licensee,
the parties acknowledge and agree the functions performed by PP-PI Software
are dependent on accurate and complete input elements and instructions, and
on the continued monitoring of the subject process. Licensee acknowledges
that it is Licensee's sole obligation to ensure the accuracy and
completeness of all data processes by the PP-PI Software. PP-PI
functionality, is not licensed hereunder for Use in the operation of
nuclear or other power generation, aviation or mass transit applications.
SAP, SAP AG, its affiliated group companies, and its and their licensors
shall not be liable for any claims or damages arising from inherently
dangerous or negligent Use of the PP-PI Software and/or third-party
software licensed hereunder.
16
<PAGE>
version 98/05/01 Thailand/Individual
17. In the event that Licensee fails to pay any sum due under this Agreement on
its due date, Licensee shall be liable to pay interest on the outstanding
sum calculated at 3% above the Lending Rate by the Head Office of Bangkok
Bank, Thailand, applicable from the due date until the date of payment.
Accepted by: Accepted by:
SAP King Power Duty Free Co. Ltd.
Systems, Applications and Products Licensee
in Data Processing (Thailand) Ltd
(SAP)
/s/ Leslie Hayman /s/ Khun Vichai raksriaksorn
- ----------------------------------- -----------------------------------
Name: Leslie Hayman Name: Khun Vichai raksriaksorn
- ----------------------------------- -----------------------------------
Title: President/CEO Title: Group Chairman & CEO
South Asia Pacific
Date: Date: September 29, 1998
/s/ John H. Dubois /s/ Khun Viratana Suntranond
- ----------------------------------- -----------------------------------
Name: John H. Dubois Name: Khun Viratana Suntranond
- ----------------------------------- -----------------------------------
Title: Executive Vice President Title: Group Chief Financial Officer
- ----------------------------------- ------------------------------------
South West Asia
Date: Date: September 16, 1998
---------------------------- -----------------------------
17
Memorandum
Made at Thai Military Bank Public Company Limited
21 August 1998
Whereas we, King Power Duty Free Co., Ltd., the Borrower, have received credit
facilities totalling Baht 250,000,000 (Two Hundred Fifty Million Baht) as
follows :
1. Additional L/C, I/L Baht 100,000,000 (One Hundred Million)
2. Additional F/X Line Baht 150,000,000 (One Hundred Fifty Million)
By means of this Memorandum, we agree and consent to pay the following fees to
the bank, namely
1. Front-End Fee at a rate of 1.00% of the total credit facilities, payable to
the bank in full on the date of this Memorandum
2. Engagement Fee at a rate of 1.50%
If we fail to pay the fees according to the amount and the date specified above,
we consent the bank to charge interest at a rate of 18.5% p.a. thereof from the
date of default of payment to the date on which such fees shall be paid in full.
As evidence, we hereunder sign our name and affix the seal (if any) in the
presence of witnesses.
(Seal of King Power Duty Free Co., Ltd.)
Signed............................................Memorandum
(Mr. Viratana Suntaranond)Preparer Authorized Director
Signed............................................Witness
(Mrs. Siriporn Leeyavanich)
Signed............................................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
21 August 1998
We, King Power International Group (Thailand) Co., Ltd., with offices at 989
Rama I Road, Pathum Wan, Bangkok Metropolis, hereinafter called the "Guarantor",
hereby made this Letter of Guarantee with Thai Military Bank Public Company
Limited, hereinafter called the "Bank", as follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 250,000,000 (Two Hundred Fifty
Million Baht), the Guarantor consents to guarantee and be liable as a joint
debtor in paying the outstanding debt including interest and compensation
as well as encumbered charges which are accessories of this debt in full,
or though the Debtor is in default of the said payment due to whatever
reasons or becomes bankrupted or dies or becomes incapacitated person or
disappears or departs from the domicile or could not be found or in any
case causing the Bank not to receive payment, the Guarantor consents to be
liable as a joint debtor in paying the debt plus interest at a rate of
21.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
4. The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
<PAGE>
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place..................................................................
.......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence
of witnesses and hand over this Agreement to the Bank ot hold.
................ signed .................Guarantor
(Mr. Viratana Suntaranond) Authorized Director
................signed...................Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
.................signed..................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
21 August 1998
We, Downtown D.F.S. (Thailand) Co., Ltd., with offices at 888/60-62 Pleonchit
Road, Lumpini, Sub-district, Pathum Wan District, Bangkok Metropolis,
hereinafter called the "Guarantor", hereby made this Letter of Guarantee with
Thai Military Bank Public Company Limited, hereinafter called the "Bank", as
follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 250,000,000.00 (Two Hundred
Fifty Million Baht), the Guarantor consents to guarantee and be liable as a
joint debtor in paying the outstanding debt including interest and
compensation as well as encumbered charges which are accessories of this
debt in full, or though the Debtor is in default of the said payment due to
whatever reasons or becomes bankrupted or dies or becomes incapacitated
person or disappears or departs from the domicile or could not be found or
in any case causing the Bank not to receive payment, the Guarantor consents
to be liable as a joint debtor in paying the debt plus interest at a rate
of 21.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
4. The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
<PAGE>
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence of
witnesses and hand over this Agreement to the Bank ot hold.
.....................signed...........................Guarantor
(Miss. Aimon Boonkhundha) Authorized Director
.....................signed.....................Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
.....................signed......................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
21 August 1998
We, Mr. Vichai Raksriakson and/or Mr. Viratana Suntaranond and/or Miss Aimon
Boonkhundha with offices at 20, Sukhumvit 64 (Soi Phongwet Anusorn), Bang Chak,
Sub-district, Phra Khanong District, Bangkok Metropolis, hereinafter called the
"Guarantor", hereby made this Letter of Guarantee with Thai Military Bank Public
Company Limited, hereinafter called the "Bank", as follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 250,000,000.00 (Two Hundred
Fifty Million Baht), the Guarantor consents to guarantee and be liable as a
joint debtor in paying the outstanding debt including interest and
compensation as well as encumbered charges which are accessories of this
debt in full, or though the Debtor is in default of the said payment due to
whatever reasons or becomes bankrupted or dies or becomes incapacitated
person or disappears or departs from the domicile or could not be found or
in any case causing the Bank not to receive payment, the Guarantor consents
to be liable as a joint debtor in paying the debt plus interest at a rate
of 21.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
4. The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
<PAGE>
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence of
witnesses and hand over this Agreement to the Bank ot hold.
....................signed....................Guarantor
(Mr. Viratana Suntaranond) Authorized Director
....................signed....................Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
....................signed....................Witness
(Mrs. Sangravee Sukhonkajorn)
Made at Thai Military Bank Public Company Limited
19 November 1998
We, King Power Duty Free Co., Ltd., the Borrower/Overdraft Withdrawer,
hereinafter called the "Debtor" hereby made this Memorandum to Thai Military
Bank Public Company Limited, hereinafter called the "Bank" as follows :
Whereas the Debtor/or - has registered mortgage of land and structure as
collateral for the obligation the Debtor has with the Bank at the time of making
this Memorandum or to be incurred in the future according to the mortgage
agreement dated - and the appendix, the Debtor or the Mortgagor consents to
arrange fire insurance of the above stated structure with the insurance company
endorsed by the Bank whereby the Bank shall be the beneficiary of the insurance
policy in the amount to be notified by the Bank from time to time. In this
respect, the Debtor or the Mortgagor consents to pay the insurance premiums
continuously until the Debtor shall have made payment to the Bank in full. If
the Debtor or the Mortgagor has failed to arrange for the fire insurance and the
Bank has done so, the Debtor or the Mortgagor consents to reimburse the Bank
within 15 days from the date of receipt of the Bank's notice. In case of default
of the insurance premiums, the Debtor or the Mortgagor consents the Bank to
immediately deduct the said amount from our current account/savings account No.
........................... without having to notify us. If the amount in the
said bank account is insufficient, the Debtor or the Mortgagor consents the Bank
to accumulate the insurance premiums with the outstanding principal owed to the
Bank and consents the Bank to charge interest according to the method and at the
same rate as debtors of loan agreement/overdraft until the Debtor shall have
made payment to the Bank in full. The Debtor or the Mortgagor consents the Bank
to keep the insurance policy.
As evidence, we hereunder sign our name and affix the seal (if any) in the
presence of witnesses.
Signed...............................................Memorandum
(Mr. Vichai Raksriaksorn) Preparer Authorized Director
(Seal of King Power Duty Free Co., Ltd.)
Signed...............................................Witness
(Ms. Janthima Sangwichien)
Signed................................................Witness
(Mrs. Sangravee Sukhonkajorn)
Memorandum
Made at Thai Military Bank Public Company Limited
19 November 1998
Whereas we, King Power Duty Free Co., Ltd., the Borrower, have received credit
facilities totalling Baht 306,000,000 (Three Hundred and Six Million Baht) as
follows :
1. Additional L/C, I/L Baht 200,000,000 (Two Hundred Million)
2. Additional F/X Line Baht 100,000,000 (One Hundred Million)
3. L/G for Bonded Goods Baht 6,000,000 (Six Million)
By means of this Memorandum, we agree and consent to pay the following fees to
the bank, namely
1. Front-End Fee at a rate of 0.50% of the total credit facilities, payable to
the bank in full on the date of this Memorandum
2. Engagement Fee at a rate of 2.50%
If we fail to pay the fees according to the amount and the date specified above,
we consent the bank to charge interest at a rate of 18.5% p.a. from the date of
default of payment to the date on which such fees shall be paid in full.
As evidence, we hereunder sign our name and affix the seal (if any) in the
presence of witnesses.
Signed...............................................Memorandum
(Mr. Vichai Raksriaksorn) Preparer Authorized Director
(Seal of King Power Duty Free Co., Ltd.)
Signed......................................Witness
(Ms. Janthima Sangwichien)
Signed......................................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
19 November 1998
We, Mr. Vichai Raksriakson and/or Mr. Viratana Suntaranond and/or Miss Aimon
Boonkhundha with offices at 20, Sukhumvit 64 (Soi Phongwet Anusorn), Bang Chak,
Sub-district, Phra Khanong District, Bangkok Metropolis, hereinafter called the
"Guarantor", hereby made this Letter of Guarantee with Thai Military Bank Public
Company Limited, hereinafter called the "Bank", as follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 306,000,000.00 (Three Hundred
and Six Million Baht only), the Guarantor consents to guarantee and be
liable as a joint debtor in paying the outstanding debt including interest
and compensation as well as encumbered charges which are accessories of
this debt in full, or though the Debtor is in default of the said payment
due to whatever reasons or becomes bankrupted or dies or becomes
incapacitated person or disappears or departs from the domicile or could
not be found or in any case causing the Bank not to receive payment, the
Guarantor consents to be liable as a joint debtor in paying the debt plus
interest at a rate of 18.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
<PAGE>
4. The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence of
witnesses and hand over this Agreement to the Bank ot hold.
......................signed...............Guarantor
(Miss. Aimon Boonkhundha) Authorized Director
......................signed...............Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
......................signed...............Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
19 November 1998
We, King Power International Group (Thailand) Co., Ltd., with offices at 989
Rama I Road, Pathum Wan, Bangkok Metropolis, hereinafter called the "Guarantor",
hereby made this Letter of Guarantee with Thai Military Bank Public Company
Limited, hereinafter called the "Bank", as follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 306,000,000.00 (Three Hundred
and Six Million Baht only), the Guarantor consents to guarantee and be
liable as a joint debtor in paying the outstanding debt including interest
and compensation as well as encumbered charges which are accessories of
this debt in full, or though the Debtor is in default of the said payment
due to whatever reasons or becomes bankrupted or dies or becomes
incapacitated person or disappears or departs from the domicile or could
not be found or in any case causing the Bank not to receive payment, the
Guarantor consents to be liable as a joint debtor in paying the debt plus
interest at a rate of 18.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
<PAGE>
The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence of
witnesses and hand over this Agreement to the Bank ot hold.
........................signed......................Guarantor
(Mr. Viratana Suntaranond) Authorized Director
.......................signed................Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
.......................signed................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
19 November 1998
We, King Power International Co., Ltd., with offices at 989 Rama I Road, Pathum
Wan, Bangkok Metropolis, hereinafter called the "Guarantor", hereby made this
Letter of Guarantee with Thai Military Bank Public Company Limited, hereinafter
called the "Bank", as follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 306,000,000.00 (Three Hundred
and Six Million Baht only), the Guarantor consents to guarantee and be
liable as a joint debtor in paying the outstanding debt including interest
and compensation as well as encumbered charges which are accessories of
this debt in full, or though the Debtor is in default of the said payment
due to whatever reasons or becomes bankrupted or dies or becomes
incapacitated person or disappears or departs from the domicile or could
not be found or in any case causing the Bank not to receive payment, the
Guarantor consents to be liable as a joint debtor in paying the debt plus
interest at a rate of 18.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
<PAGE>
The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
<PAGE>
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence of
witnesses and hand over this Agreement to the Bank ot hold.
......................signed....................Guarantor
(Mr. Vichai Raksriaksorn) Authorized Director
......................signed....................Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
......................signed....................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Guarantee
Made at Thai Military Bank Public Company Limited
19 November 1998
We, Downtown D.F.S. (Thailand) Co., Ltd., with offices at 888/60-62 Pleonchit
Road, Lumpini, Sub-district, Pathum Wan District, Bangkok Metropolis,
hereinafter called the "Guarantor", hereby made this Letter of Guarantee with
Thai Military Bank Public Company Limited, hereinafter called the "Bank", as
follows :
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor" to borrow money, draw overdraft, sell discounted
promissory note, open Letter of Credit and make trust receipt, packing
credit, or request the Bank to issue Letter of Guarantee or aval or certify
promissory note or any item incurring debt existing at present and to be
incurred in the future for an amount of Baht 306,000,000.00 (Three Hundred
and Six Million Baht only), the Guarantor consents to guarantee and be
liable as a joint debtor in paying the outstanding debt including interest
and compensation as well as encumbered charges which are accessories of
this debt in full, or though the Debtor is in default of the said payment
due to whatever reasons or becomes bankrupted or dies or becomes
incapacitated person or disappears or departs from the domicile or could
not be found or in any case causing the Bank not to receive payment, the
Guarantor consents to be liable as a joint debtor in paying the debt plus
interest at a rate of 18.50% p.a.
2. In the case where the Bank has received a demand for payment under the
Letter of Guarantee issued for the Debtor, it is in the Bank's discretion
to make such payment without having to notify the Guarantor or obtain the
Guarantor's consent, and the Guarantor consents to be liable as a joint
debtor in paying the debt plus interest at the above stated rate, including
all damages, fees and other expenses incurred therefrom with no condition
whatsoever.
3. The Guarantor confirms that the above stated domicile is a domicile of the
Guarantor. Any notice of the Bank having been forwarded to the address of
the Guarantor as appeared in this Letter of Guarantee by registered mail or
hand delivery shall be deemed as having been received legally by the
Guarantor, whether the Guarantor has personally received or signed
acceptance of such notice or not.
The Guarantor waives the right to demand the Bank to enter an action or
demand payment from the Debtor's property or the Debtor first. This shall
not deprive the Bank's right to demand or enter an action against the
Debtor or the estate or the subrogee or the Debtor's duty to repay the debt
first as the Bank deemed appropriate. In this case, if the Bank has not
received payment in full, the Guarantor consents that such action of the
Bank is done on behalf of the Guarantor. The Guarantor shall then agree to
pay the remaining debt at once as well as compensate the Bank all fees and
expenses paid by the Bank, regardless of the fact whether the Bank has
notified the Guarantor or not, or whether a demand is filed or legal action
taken against the Guarantor jointly with the Debtor or estate or debtor's
transferee.
<PAGE>
5. The guarantee shall remain effective and oblige the Guarantor as long as
the Debtor still owes the Bank since the debt stated in Section 1 or 2 is
not paid back to the Bank in full:
A. even though it appears that the debt in Section 1 does not oblige the
Guarantor since the Debtor did it mistakenly or without authority or
incompetence, the Guarantor shall not yet be deprived for the
liabilities, regardless of the fact that whether the Guarantor was
aware of it at the time of Agreement signing or not.
B. even though it appears that an act of the Bank causes the Guarantor
unable to accept the transfer of entire or partial right, pledge or
preferred rights obliged by the Debtor to the Bank before or at the
time of agreement signing, the Guarantor shall not yet be deprived of
the liabilities entirely or partially.
C. at each time the Bank agrees to relax or defer Debtor's payment even
without notice to the Guarantor, the Guarantor shall also agree with
the deferment and the Guarantor's liability shall not be deprived due
to the deferment.
6. As a guarantee to execute the Agreement, the Guarantor agrees to
place......................................................................
7. If the Debtor breaks one or all sections in the Agreement, and if it has to
be taken to court, the Bank has the right to choose a civil court or a
local court where the Debtor or Bank is situated or vicinity of a court in
which the Agreement is signed, whichever the Bank deems appropriate.
As evidence hereof, the Guarantor has signed his name in the presence of
witnesses and hand over this Agreement to the Bank ot hold.
...................signed.....................Guarantor
(Miss. Aimon Boonkhundha) Authorized Director
...................signed.....................Witness, Spouse who
(Miss Janthima Sangwichien) gives a consent
...................signed.....................Witness
(Mrs. Sangravee Sukhonkajorn)
Notice for Deduction from Bank Account
25 November 1998
We, King Power Duty Free Co., Ltd. (by Mr. Viratana Suntaranond), the owner of
Savings Deposit Account No. 001-7-38194-8 at the Head Office, Account Name King
Power Duty Free Co., Ltd., hereby notify Thai Military Bank Public Company
Limited to deduct an amount of Baht 1,000,000.- (One Million Baht) from the
above stated Savings Deposit Account No. 001-7-38194-8 for payment of the
Front-End Fee. In case the money in the current account is insufficient for such
payment and the Bank has paid it in advance due to whatever reasons though the
money in our bank account is insufficient, we consent to bind ourselves in
reimbursement of this amount to the Bank as if we have requested to withdraw the
overdraft and consent to pay interest thereof at a rate of ....... p.a. in
compliance with the Bank's practice regarding overdraft. In case of any damage
occurred, we shall be responsible therefor and the Bank shall not hold any
responsibility of such damage.
(Seal of King Power Duty Free Co., Ltd.)
Signed.......................................Account Owner
King Power Duty Free Co., Ltd.
Signed........................................Witness
(Ms. Janthima Sangwichien)
Signed........................................Witness
(Mrs. Siriporn Leeyavanich)
Bank Deposits Pledge Agreement
3 December 1998
We, King Power Duty Free Co., Ltd., hereinafter called the "Pledgor" have made
this agreement and given it to Thai Military Bank Public Company Limited, Head
Office, hereinafter called the "Pledgee." Both the Pledgee and the Pledgor agree
as follows :
1. The Pledgor agrees to give and pledge the right on bank deposits as well as
all rights existing at present and to be existed in the future. The Pledgee
agrees to accept the pledge of bank deposits with the evidence of right,
namely
Passbook of Fixed Deposits Account No. 001-3-45475-6 for Baht 125,067,500.
Total Pledge of Bank Deposits Baht 125,067,500.
(One Hundred Twenty-Five Million Sixty-Seven Thousand Five Hundred)
2. The Pledgor agrees to pledge the right on bank deposits according Clause 1
as security for various debts of the Pledgor, existing at present and to be
existed in the future, for the principal amount of Baht 125,000,000.- (One
Hundred Twenty-Five Million Baht) and all accessories as stipulated in
Section 748 of the Civil and Commercial Code. The Pledgor agrees to pay
interest at a rate of 18.5% p.a. If enforcement of the pledge is
insufficient to pay the debt, the Pledgor agrees to pay the amount in
shortage to the Pledgee accordingly.
3. The Pledgor agrees not to exercise the right to withdraw the pledged bank
account, unless for paying the debt under the pledge to the Pledgee.
4. In case the Pledgor has deposited any additional amount into the pledged
bank account or the amount has been increased due to interest, the Pledgor
agrees that the increased amount shall become the pledged property under
this agreement as well, and this shall not deprive the Pledgee's right as
stipulated in Section 761 of the Civil and Commercial Code.
5. In case the right on the pledged property becomes due before the due date of
payment, the Pledgor consents the Pledgee to withdraw or accept the money
plus interest and hold them continuously or to extend the validity of
deposits thereof; as the Pledgee shall select to do so. This shall be deemed
as continued pledge under this agreement until the Pledgor shall have made
payment to the Pledgee in full.
<PAGE>
6. Since the Pledgee is a debtor according to the deposit Agreement
obliged to return the amount deposited along with interest to the
Pledgor, and at the same time the Pledgee takes the pledge of right of
receiving the deposit, therefore the Pledgee and Pledgor agree that
this Agreement be the Pledgee's notice to enforce the pledge in
accordance to law.
7. It's apparently understood that the pledge under this Agreement does
not deprive the Pledgee's right to subtract debt without notice to the
Pledgor even though the debt is not yet due, and it's not necessary to
auction the pledged property.
The Pledgor has read and understood all the clauses in this Agreement
which meet his intent and thereby signs his name, and hands over it to the
Pledgee to hold.
By ...........................................Pledgor
(Mr. Vichai Raksriaksorn) Director
By ...........................................Witness
(Miss Janthima Sangwichien)
By ...........................................Witness
(Mrs. Sangravee Sukhonkajorn)
Letter of Consent
Made at Thai Military Bank Public Company Limited
3 December 1998
We, King Power Duty Free Co., Ltd., with offices at 989 Rama I Road, 26th and
27th Floor of Siam Tower, Pathum Wan, Bangkok Metropolis, hereby made this
Letter of Consent to Thai Military Bank Public Company Limited to indicate that
1. Whereas we have borrowed money or withdrew overdraft, sold discounted
promissory note, opened Letter of Credit, made trust receipt, packing
credit, or requested the Bank to issue Letter of Guarantee or aval or
certify promissory note or use of Visa credit card, Master Card credit card
and/or any item incurring debt between ourselves and the Bank, existing at
present and to be existed in the future,
2. As security for paying our debts under Clause 1, we, the owner of the Fixed
Deposits Account No. 001-3-45475-6, agree to submit the deposits plus the
interest incurred therefrom according to the Passbook for Baht 125,067,500.-
(One Hundred Twenty-Five Million Sixty-Seven Thousand Five Hundred) which
shall be deemed as a pledge to the Bank effective today.
3. If we failed to pay our debts under Clause 1 due to whatever reason or in
any case causing the Bank not to receive it in full, we consent the Bank to
deduct money from the bank account plus the interest incurred therefrom in
paying the debts under Clause 1 and the accessories thereof in full without
having to notify us in advance. We hereby confirm that we shall not object
or dispute or cite a right of claim towards the Bank in any way.
4. We consent that for as long as the Bank has not received payment of the
debts under Clause 1 in full, we shall not withdraw the deposits and the
interest incurred therefrom and shall not take any action which may impair
the said security, and should such action occurred it shall be deemed as
void and shall not affect the said security in any way.
As evidence, we hereunder sign our name and affix the seal (if any) in the
presence of witnesses.
Signed..........................................Consent Giver
(Mr. Vichai Raksriaksorn) Director
(Seal of King Power Duty Free Co., Ltd.)
Signed..........................................Witness
(Ms. Janthima Sangwichien)
Signed..........................................Witness
(Mrs. Siriporn Leeyavanich)
Letter of Consent
Made at Thai Military Bank Public Company Limited
3 December 1998
We, King Power Duty Free Co., Ltd., with offices at 989 Rama I Road, 26th and
27th Floor of Siam Tower, Pathumwan, Bangkok Metropolis, hereby made this Letter
of Consent to Thai Military Bank Public Company Limited to indicate that
1. Whereas we have borrowed money or withdrew overdraft, sold discounted
promissory note, opened Letter of Credit, made trust receipt, packing
credit, or requested the Bank to issue Letter of Guarantee or aval or
certify promissory note or use of Visa credit card, Master Card credit card
and/or any item incurring debt between ourselves and the Bank, existing at
present and to be existed in the future,
2. As security for paying our debts under Clause 1, we, the owner of the Fixed
Deposits Account No. 001-3-45475-6, agree to submit the deposits plus the
interest incurred therefrom according to the Passbook for Baht
125,067,500.- (One Hundred Twenty-Five Million Sixty-Seven Thousand Five
Hundred) which shall be deemed as a pledge to the Bank effective today.
3. If we failed to pay our debts under Clause 1 due to whatever reason or in
any case causing the Bank not to receive it in full, we consent the Bank to
deduct money from the bank account plus the interest incurred therefrom in
paying the debts under Clause 1 and the accessories thereof in full without
having to notify us in advance. We hereby confirm that we shall not object
or dispute or cite a right of claim towards the Bank in any way.
4. We consent that for as long as the Bank has not received payment of the
debts under Clause 1 in full, we shall not withdraw the deposits and the
interest incurred therefrom and shall not take any action which may impair
the said security, and should such action occurred it shall be deemed as
void and shall not affect the said security in any way.
As evidence, we hereunder sign our name and affix the seal (if any) in the
presence of witnesses.
Signed...........................................Consent Giver
(Mr. Vichai Raksriaksorn) Director
(Seal of King Power Duty Free Co., Ltd.)
Signed...........................................Witness
(Ms. Janthima Sangwichien)
Signed...........................................Witness
(Mrs. Siriporn Leeyavanich)
Loan Agreement
Agreement No. 40/2541
Made at Head Office
23 June 1998
We, King Power Duty Free Co., Ltd., with offices at 989 Rama I Road, 26th & 27th
Floor Siam Tower Building, Pathum Wan, Bangkok Metropolis, hereinafter called
the "Borrower" hereby made this agreement with Siam City Bank Public Company
Limited, hereinafter called the "Lender" as evidence that
1. The Borrower has borrowed from the Lender a sum of Baht 98,000,000
(Ninety-Eight Million Baht) and has already received from the Lender on the
signing date of this agreement a sum of Baht 98,000,000 (Ninety-Eight
Million Baht), the remaining sum of Baht ............... (..............)
the Borrower agrees to receive in installment according to the Borrower's
intention and as the Lender deems appropriate. In receiving the said loan,
the Borrower shall issue receipts which shall be deemed part of this Loan
Agreement.
2. The Borrower agrees to pay interest of the loan under Clause 1 at the
maximum rate announced by Siam City Bank Public Company Limited (at
present, it is 21.50% p.a.) on monthly basis before the end of every month
during office hours of the Lender. Thereafter, if Siam City Bank Public
Company Limited announces higher interest rate, the Borrower consents the
Lender to charge the new interest rate at the maximum rate announced by
Siam City Bank Public Company Limited effective immediately and until the
Borrower shall have performed the obligation under this agreement
accordingly; without having to notify the Borrower.
In case of outstanding interest over one year, the Borrower consents the Lender
to accumulate the same to the principal and it shall be deemed as the principal
subject to paying of interest at the rate and period specified in the first
paragraph.
3. The Borrower agrees repay the loan to the Lender within ......... months
from the signing date of this agreement, by installment of .......... month
for an amount not less than Baht ........... (.............) payable by the
end of every month, and the first installment to be paid in month
................. year.........
The Borrower agrees to repay the loan as follows : grace period is six months,
after which repayment of the principal and payment of interest shall be made on
monthly basis at Baht 7,500,000.- (Seven Million Five Hundred Thousand); to be
completed by 1 year 9 months.
The schedule of payment according to the first and second paragraph of Clause 3
shall not deprive the Lender's right in calling for loan repayment, in whole or
in part, prior to the due date. After the Lender has made such demand, the
Borrower agrees to repay the loan as requested within the period specified in
the notice and shall not cite time clause as a defence against the Lender.
<PAGE>
4. If the Borrower is in default of payment according to Clause 2 or 3 of any
installment, it shall be deemed as default of the total loan and the
Borrower agrees that the Lender can charge the maximum interest rate
specified in Clause 2 until the Borrower shall have repaid the loan to the
Lender in full. This shall not deprive the Lender's right to terminate the
agreement and call for payment of the outstanding amount.
5. If the Borrower is in breach of any clause of this agreement, the Borrower
consents to compensate for all damages occurred to the Lender due to the
Borrower's breach of agreement, including all expenses incurred from
warning, requesting, demanding, taking legal action, execution of the
judgment, investigation of property, and enforcement for loan repayment in
full.
6. Should there by any money of the Borrower and/or money that the Borrower is
a joint owner with other person(s) deposited with the Lender in all types
of account and/or money of the Borrower and/or money that the Borrower is a
joint owner with other person(s) having in hand, in possession, in keeping
or in the power of the Lender's executor, the Borrower consents the Lender
to deduct the whole amount of such money to pay the debt and/or the
Borrower's liability under this agreement at any time deemed appropriate by
the Lender, whether such debt or liability becomes due or not. In view of
this, it is not necessary for the Lender to notify the Borrower in advance.
In the case where the Borrower relocates from the above stated address in this
agreement, the Borrower shall promptly notify the bank, otherwise the Borrower
shall be liable to all expenses incurred or damages occurred to the bank for
having to locate the new address.
7. The Borrower agrees that the Lender can charge the insurance premiums and
other expenses on insurance or renewal of insurance policy of the property
placed as collateral of the Borrower's debt that the Lender has arranged
for and/or paid in advance into the principal account under this agreement
which shall be included as the principal to be repaid by the Borrower plus
interest according to Clause 2 and other conditions stipulated in this
agreement.
The Borrower has understood the contents of this agreement entirely and
hereunder sign their names (and affix seal, if any) in the presence of
witnesses.
(Seal of King Power Duty Free Co., Ltd.,)
Signed:...............signed.....................Borrower
King Power Duty Free Co., Ltd.,
Signed:...............signed.....................Witness
(Miss Wanna Thongthiang)
Signed:...............signed.....................Witness
(Mr. Wisut Kawinmuthathorn)
<PAGE>
Receipt of Payment of Loan
Made at Siam City Bank Public Company Limited Head Office
23 June 1998
Whereas we, King Power Duty Free Co., Ltd., have entered into a Loan Agreement
with Siam City Bank Public Company Limited dated 23 June 1998. Today, we, King
Power Duty Free Co., Ltd., the Borrower under the said agreement, have received
payment of the loan according to Clause 1 for a sum of Baht 98,000,000.00
(Ninety-Eight Million Baht) from Siam City Bank Public Company Limited, Head
Office, the Lender, accordingly. This receipt shall be part of the Loan
Agreement dated 23 June 1998 made between King Power Duty Free Co., Ltd., the
Borrower, and Siam City Bank Public Company Limited, the Lender.
As evidence, we, the Borrower, sign our names in the presence of witnesses.
(Seal of King Power Duty Free Co., Ltd.,)
Signed:...............signed...................Borrower
King Power Duty Free Co., Ltd.,
Signed:...............signed...................Witness
(Miss Wanna Thongthiang)
Signed:...............signed...................Witness
(Mr. Wisut Kawinmuthathorn)
Memorandum to Loan Agreement, First Revision
Made at Head Office
23 June 1998
Whereas we, King Power Duty Free Co., Ltd., with offices at 989 Rama I Road,
26th & 27th Floor Siam Tower Building, Pathumwan, Bangkok Metropolis have
entered into a Loan Agreement dated 23 June 1998. As at 23 June 1998, the
outstanding loan payable to Siam City Bank Public Company Limited is Baht
98,000,000.00 (Ninety-Eight Million Baht).
Now, we wish to change the amount and/or terms and conditions of the above
stated agreement as follows;
1. To increase/decrease loan, type -, Baht -
2. To revise Clause 4 of the above stated agreement from previously to :
4. If the Borrower is in default of payment according to Clause 2 or 3 of
any installment, it shall be deemed as default of the total loan and
the Borrower agrees that the Lender can charge the maximum interest
rate for the customers who have breached the condition, according to
the announcement of Siam City Bank Public Company Limited (at present,
it is 24% p.a.) until the Borrower shall have repaid the loan to the
Lender in full. This shall not deprive the Lender's right to terminate
the agreement and call for payment of the outstanding amount. The
previous Clause 4 is revoked entirely.
Other terms and conditions shall remain the same.
We, the "Guarantor/Mortgagor/Pledgor", having acknowledged this Memorandum
hereby bind ourselves for the guarantee/mortgage/pledge the property as security
for this debtor with the bank until the bank shall have received repayment in
full.
(Seal of King Power Duty Free Co., Ltd.,)
Signed:............signed.................Debtor
King Power Duty Free Co., Ltd.,
Signed:...........signed..................Guarantor/Mortgagor/Pledgor
(Mr. Viratana Suntaranond)
Signed:...........signed..................Guarantor/Mortgagor/Pledgor
(Mr. Vichai Raksriaksorn)
Signed................Witness Signed..................Witness
(Ms. Wanna Thongthieng) (Mr. Wisut Kawinmuthathorn)
Letter of Guarantee
Made at Head Office
23 June 1998
I, Mr. Viratana Suntaranond, aged 57, Thai race, Thai nationality, residing at
141-143-145 Sukha 1 Road, Ratchabopit Sub-district, Phra Nakorn District,
Bangkok Metropolis
I, Mr. Vichai Raksriaksorn, aged 40, Thai race, Thai nationality, residing at 20
Sukhumvit 64, Bang Chak Sub-district, Phra Khanong District, Bangkok Metropolis
hereinafter called the "Guarantor" hereby made this Letter of Guarantee with
Siam City Bank Public Company Limited, hereinafter called the "Bank" as evidence
that
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor", to borrow money or draw overdraft or create various
debts such as opening letter of credit, making trust receipt, requesting
for issuance of all kinds of letter of guarantee, aval of promissory note,
sale of discounted promissory note or transferable or non-transferable
instrument, BIBF loan, or any other financial instrument or commercial
instrument or extension of credit facilities to the Debtor in any form or
the Debtor is liable to reimbursement of money to the Bank for a total
amount of Baht 98,000,000.00 (Ninty-eight Million Baht), the Guarantor
agree to guarantee payment of the said debt, be it credit facilities or
liability existing at present or to be existed in the future, including the
outstanding interest, compensation as well as accessories thereof which
shall include transfer of the credit facilities and debt to other branch.
2. If the Debtor is in default of payment of the debt under Clause 1 due to
whatever reasons or the Debtor is subject to the court's order for
receivership, becomes bankrupted, dies, becomes incapacitated person,
disappears from the domicile or any other case causing the Bank not to
receive payment of the debt under Clause 1, either in whole or in part, and
whether it is due date according to the agreement or not, the Guarantor
consent to be liable as a joint debtor for paying the debt according to
such agreement immediately.
3. If the Bank extends period of payment of debt to the Debtor or changes the
condition of debt in any case, including change of interest rate according
to the Bank's procedure with or without notifying the Guarantor, it shall
be deemed that the Guarantor consent to it on every occasion and shall not
cite such extension or change or debt structuring as a grounds for
releasing the Guarantor's liability.
<PAGE>
4. In case the Debtor is in default of payment of the debt or is unable to
make such payment, the Guarantor shall waive the right to demand the Bank
to enforce payment from the Debtor's property before demanding payment from
the Guarantor, and shall not cite the Debtor's defence that the Guarantor
is not liable because prescription of such debt has expired for enforcing
payment from the Debtor or heir or executor of estate or the subrogee of
rights or duties of the Debtor and waives the right to make a defence on
the time of beginning or the end of the Debtor and that of the Guarantor.
This shall not deprive the Bank's right to demand or enter an action
against the Debtor or the estate or the subrogee of rights or duties to
make payment of the debt first as the Bank deemed appropriate. In this
case, if the Bank has not received payment in full, the Guarantor consents
that such action of the Bank shall be deemed for the benefit of the
Guarantor, therefore the Guarantor agrees to immediately pay the
outstanding debt and shall reimburse all fees and expenses paid by the Bank
in this regard whether having notified the Guarantor or not and though not
demanding or taking legal action against the Guarantor jointly with the
Debtor or the estate or the subrogee or rights and duties of the Debtor.
5. This guarantee shall completely bind the Guarantor though it may be cited
that the Debtor is an incapacitated person or bankrupted or subject to the
court's order for receivership or entering into the agreement and creating
the debt due to misunderstanding whether the Guarantor is aware of such
cause of becoming incapacitated person or misunderstanding. The Guarantor
shall not be released from liability for the full amount due to the fact
that the Bank has released other guarantor or liable person, or the Bank
may take any action causing the Guarantor not to be able to subrogate, in
whole in part, the right of mortgage, pledge, preferential right or any
right already given or may be given to the Bank prior to or at the time of
making this Letter of Guarantee.
6. The Guarantor agree that this Letter of Guarantee shall be valid
continuously whereby the Guarantor shall be released from liability after
the Debtor has paid the debt or the Guarantor have paid the debt on behalf
of the Debtor to the Bank accordingly. Thereby, the Bank shall permit the
release from guarantee in writing only. Restructuring of the debt or change
of the subject of obligations shall not release the Guarantor from
liability under this Letter of Guarantee.
7. Should there by any money of the Guarantor and/or money that the Guarantor
is a joint owner with other person(s) deposited with the Bank in all types
of account and/or money of the Guarantor and/or money that the Guarantor is
a joint owner with other person(s) having in hand, in possession, in
keeping or in the power of the Bank's executor, the Guarantor consent the
Bank to deduct the whole amount of such money to pay the debt and/or the
Guarantor's liability under this Letter of Guarantee at any time deemed
appropriate by the Bank, whether such debt or liability becomes due or not.
In view of this, it is not necessary for the Bank to notify the Guarantor
in advance.
<PAGE>
8. If the Guarantor is in breach of any clause of this agreement, the
Guarantor agrees to compensate for all damages occurred to the bank due to
the Guarantor's breach of agreement including all expenses incurred for
requesting, demanding, taking legal action, execution of the judgment,
investigation of property, and enforcement for paying the debt in full.
The Guarantor have understood this Letter of Guarantee entirely and hereunder
sign their names (and affix seal if any) in the presence of witnesses.
Signed.........................Guarantor Signed......................Guarantor
(Mr. Viratana Suntaranond) (Mr. Vichai Raksriaksorn)
Signed.........................Witness Signed........................Witness
(Ms. Wanna Thongthieng) (Mr. Wisut Kawinmuthathorn)
Letter of Guarantee
Made at Head Office
12 November 1998
I, Mr. Vichai Raksriaksorn, aged 40, Thai race, Thai nationality, residing at 20
Sukhumvit 64, Bang Chak Sub-district, Phra Khanong District, Bangkok Metropolis
I, Mr. Viratana Suntaranond, aged 57, Thai race, Thai nationality, residing at
141-143-145 Sukha 1 Road, Ratchabopit Sub-district, Phra Nakorn District,
Bangkok Metropolis
hereinafter called the "Guarantor" hereby made this Letter of Guarantee with
Siam City Bank Public Company Limited, hereinafter called the "Bank" as evidence
that
1. Whereas the Bank has allowed King Power Duty Free Co., Ltd., hereinafter
called the "Debtor", to borrow money or draw overdraft or create various
debts such as opening letter of credit, making trust receipt, requesting
for issuance of all kinds of letter of guarantee, aval of promissory note,
sale of discounted promissory note or transferable or non-transferable
instrument, BIBF loan, or any other financial instrument or commercial
instrument or extension of credit facilities to the Debtor in any form or
the Debtor is liable to reimbursement of money to the Bank for a total
amount of Baht 100,000,000.00 (One Hundred Million Baht), the Guarantor
agree to guarantee payment of the said debt, be it credit facilities or
liability existing at present or to be existed in the future, including the
outstanding interest, compensation as well as accessories thereof which
shall include transfer of the credit facilities and debt to other branch.
2. If the Debtor is in default of payment of the debt under Clause 1 due to
whatever reasons or the Debtor is subject to the court's order for
receivership, becomes bankrupted, dies, becomes incapacitated person,
disappears from the domicile or any other case causing the Bank not to
receive payment of the debt under Clause 1, either in whole or in part, and
whether it is due date according to the agreement or not, the Guarantor
consent to be liable as a joint debtor for paying the debt according to
such agreement immediately.
3. If the Bank extends period of payment of debt to the Debtor or changes the
condition of debt in any case, including change of interest rate according
to the Bank's procedure with or without notifying the Guarantor, it shall
be deemed that the Guarantor consent to it on every occasion and shall not
cite such extension or change or debt structuring as a grounds for
releasing the Guarantor's liability.
<PAGE>
4. In case the Debtor is in default of payment of the debt or is unable to
make such payment, the Guarantor shall waive the right to demand the Bank
to enforce payment from the Debtor's property before demanding payment from
the Guarantor, and shall not cite the Debtor's defence that the Guarantor
is not liable because prescription of such debt has expired for enforcing
payment from the Debtor or heir or executor of estate or the subrogee of
rights or duties of the Debtor and waives the right to make a defence on
the time of beginning or the end of the Debtor and that of the Guarantor.
This shall not deprive the Bank's right to demand or enter an action
against the Debtor or the estate or the subrogee of rights or duties to
make payment of the debt first as the Bank deemed appropriate. In this
case, if the Bank has not received payment in full, the Guarantor consents
that such action of the Bank shall be deemed for the benefit of the
Guarantor, therefore the Guarantor agrees to immediately pay the
outstanding debt and shall reimburse all fees and expenses paid by the Bank
in this regard whether having notified the Guarantor or not and though not
demanding or taking legal action against the Guarantor jointly with the
Debtor or the estate or the subrogee or rights and duties of the Debtor.
5. This guarantee shall completely bind the Guarantor though it may be cited
that the Debtor is an incapacitated person or bankrupted or subject to the
court's order for receivership or entering into the agreement and creating
the debt due to misunderstanding whether the Guarantor is aware of such
cause of becoming incapacitated person or misunderstanding. The Guarantor
shall not be released from liability for the full amount due to the fact
that the Bank has released other guarantor or liable person, or the Bank
may take any action causing the Guarantor not to be able to subrogate, in
whole in part, the right of mortgage, pledge, preferential right or any
right already given or may be given to the Bank prior to or at the time of
making this Letter of Guarantee.
6. The Guarantor agree that this Letter of Guarantee shall be valid
continuously whereby the Guarantor shall be released from liability after
the Debtor has paid the debt or the Guarantor have paid the debt on behalf
of the Debtor to the Bank accordingly. Thereby, the Bank shall permit the
release from guarantee in writing only. Restructuring of the debt or change
of the subject of obligations shall not release the Guarantor from
liability under this Letter of Guarantee.
7. Should there by any money of the Guarantor and/or money that the Guarantor
is a joint owner with other person(s) deposited with the Bank in all types
of account and/or money of the Guarantor and/or money that the Guarantor is
a joint owner with other person(s) having in hand, in possession, in
keeping or in the power of the Bank's executor, the Guarantor consent the
Bank to deduct the whole amount of such money to pay the debt and/or the
Guarantor's liability under this Letter of Guarantee at any time deemed
appropriate by the Bank, whether such debt or liability becomes due or not.
In view of this, it is not necessary for the Bank to notify the Guarantor
in advance.
<PAGE>
8. If the Guarantor is in breach of any clause of this Letter of Guarantee,
the Guarantor agree to compensate for all damages occurred to the Bank due
to the Guarantor's breach of agreement including all expenses incurred for
requesting, demanding, taking legal action, execution of the judgment,
investigation of property, and enforcement for paying the debt in full.
The Guarantor have understood this Letter of Guarantee entirely and hereunder
sign their names (and affix seal if any) in the presence of witnesses.
Signed............................Guarantor Signed...................Guarantor
(Mr. Vichai Raksriaksorn) (Mr. Viratana Suntaranon)
Signed............................Witness Signed...................Witness
(Mr. Siriphon Tantichokwat) (Mr. Sathian Sanehlaksana)
Letter of Consent for Bank Deposits Deduction
Made at Head Office
27 November 1998
We, King Power Duty Free Co., Ltd., Thai nationality, with offices at 989 Siam
Tower Building, Rama I Road, Pathumwan, Bangkok Metropolis, hereinafter called
the "Consent Giver", owner of
Fixed Deposits Account with Passbook No. 001-3-09768-5
Baht 10,000,000.- (Ten Million Baht)
Total Baht 10,000,000.- (Ten Million Baht)
hereinafter called the "Deposits", made the consent to Siam City Bank Public
Company Limited, hereinafter called the "Bank", as follows :
1. The Consent Giver consent the bank to bring any one or all types of debt
that the consent giver and/or - , hereinafter called "the said debtor" owe
to the bank at present and/or the future debt including interest, stamp
duties, fees, expenses, damages or compensation and other charges, whether
it is due for payment or not, to deduct payment therefor from the deposits
and/or debited into the above stated bank account, either in whole or in
part, at any time whereby disregarding whether it is due date for payment
or not, without having to notify the consent giver, and the consent giver
agree not to object or dispute or take legal action for claiming the money
back or cite right of claim to the bank.
If deduction for payment or debit into the said bank account causes insufficient
amount to pay the outstanding debt, the consent giver agree to pay the amount of
shortage to the bank accordingly.
2. In case the above bank account becomes due without having paid the debt
according to Clause 1, the Consent Giver consent the bank to extend the
validity of deposits continuously with no condition whatsoever, and the
Consent Giver agree that the extended deposits shall be binding whereby the
Bank is entitled to make deduction or debit payment of the debt according
to Clause 1 in all respects, though the Consent Giver may not indicate the
consent or endorse the new one.
3. Giving of the rights under this Letter of Consent shall also bind the
subrogee of the Consent Giver until the said debt shall be repaid in full.
The Consent Giver, having understood the contents of this Letter of Consent
entirely, hereunder sign his name (and affix seal, if any) in the presence of
witnesses.
(Seal of King Power Duty Free Co., Ltd.,)
Signed:...............signed...................The Consent Giver
King Power Duty Free Co., Ltd.,
Signed:........signed.........Witness Signed:........signed.........Witness
(Mr. Siriphon Tantichotiwat) (Miss Nithaya Traisasil)
Pledge Agreement
Made at Head Office
27 November 1998
We, King Power Duty Free Co., Ltd., Thai nationality, with offices at 989 Siam
Tower Building, Rama I Road, Pathumwan, Bangkok Metropolis, hereinafter called
the "Pledgor" have made this Pledge Agreement of the instrument issued in the
name and given it to Siam City Bank Public Company Limited, hereinafter called
the "Bank" to indicate that the Pledgor has pledged and the Bank has accepted
the pledge
Passbook of Fixed Deposits Account No. 001-3-09768-5
Baht 10,000,000.- (Ten Million Baht)
Total Baht 10,000,000.- (Ten Million Baht)
which is an "instrument issued in name of person" whereby the Bank is the debtor
of such instrument, hereinafter called the "Pledged Property" as follows :
1. The Pledgor has pledged the Pledged Property with the Bank as security for
the overdraft, loan, debt related to letter of credit, trust receipt,
issuance of letter of guarantee of all types, sale of discounted promissory
note, aval, guarantee of promissory or other debt related to the promissory
note, debt related to guarantee or any other debt the Pledgor and/or -,
hereinafter called "the said debtor" owed to the Pledgee at the time of
entering into this agreement or the future debt for an amount of Baht
10,000,000.- (Ten Million Baht) and all accessories thereof as stipulated
in Section 748 of the Civil and Commercial Code. The Pledgor agrees to pay
the maximum interest rate as announced by Siam City Bank Public Company
Limited, which at present is 19.5% p.a. If enforcement of the pledge is
insufficient to pay the debt, the Pledgor agrees to pay the amount in
shortage to the Pledgee accordingly.
2. The Pledgor confirm and promise that the Pledgor owns/has the right on the
Pledged Property legally and it is free of proprietary interest or
preferential right or right or encumbrance at the time of entering into
this agreement.
3. On the signing date of this agreement, the Pledgor has recorded the pledge
on the Pledged Property and handed it over to the Bank for retention.
4. The Pledgor agrees not to exercise the right to withdraw the money from the
Pledged Property, unless for payment of the debt to the Bank only.
5. In case the right on the Pledged Property becomes due prior to the payment
of debt, the Pledgor consents to extend validity of the deposits further
which shall be deemed the pledge under this agreement continuously.
6. Should there be any problem arisen regarding ownership/right of the Pledgor
in the Pledged Property and/or the said debtor is in default of payment of
debt or the Pledgor fails is in breach of any clause of this agreement, the
Bank is entitled to immediately call for payment of debt and enforce the
pledge.
<PAGE>
7. Due to the fact that the Bank is the debtor of the Pledged Property and also
the Pledgee, therefore the Bank and the Pledgee agree that this agreement
shall be the notice of the pledge to the debtor of instrument as stipulated
in Section 752 of the Civil and Commercial Code.
The Pledgor, having understood the contents of this pledge agreement entirely,
hereunder sign his name (and affix seal, if any) in the presence of witnesses.
(Seal of King Power Duty Free Co., Ltd.,)
Signed:...............signed......................Borrower
King Power Duty Free Co., Ltd.,
Signed:...............signed......................Witness
(Mr. Siriphon Tantichotiwat)
Signed:...............signed......................Witness
(Miss Nithaya Traisasil)
Letter of Consent for Bank Deposits Deduction
Made at Head Office
30 December 1998
We, King Power Duty Free Co., Ltd., Thai nationality, with offices at 989 Siam
Tower Building, Rama I Road, Pathumwan, Bangkok Metropolis, hereinafter called
the "Consent Giver", owner of
Fixed Deposits Account with Passbook No. 001-3-09768-5
Baht 15,000,000.- (Fifteen Million Baht Only)
Total Baht 15,000,000.- (Fifteen Million Baht Only)
hereinafter called the "Deposits", made the consent to Siam City Bank Public
Company Limited, hereinafter called the "Bank", as follows :
1. The Consent Giver consent the bank to bring any one or all types of debt
that the consent giver and/or - , hereinafter called "the said debtor" owe
to the bank at present and/or the future debt including interest, stamp
duties, fees, expenses, damages or compensation and other charges, whether
it is due for payment or not, to deduct payment therefor from the deposits
and/or debited into the above stated bank account, either in whole or in
part, at any time whereby disregarding whether it is due date for payment
or not, without having to notify the consent giver, and the consent giver
agree not to object or dispute or take legal action for claiming the money
back or cite right of claim to the bank.
If deduction for payment or debit into the said bank account causes insufficient
amount to pay the outstanding debt, the consent giver agree to pay the amount of
shortage to the bank accordingly.
2. In case the above bank account becomes due without having paid the debt
according to Clause 1, the Consent Giver consent the bank to extend the
validity of deposits continuously with no condition whatsoever, and the
Consent Giver agree that the extended deposits shall be binding whereby the
Bank is entitled to make deduction or debit payment of the debt according
to Clause 1 in all respects, though the Consent Giver may not indicate the
consent or endorse the new one.
3. Giving of the rights under this Letter of Consent shall also bind the
subrogee of the Consent Giver until the said debt shall be repaid in full.
The Consent Giver, having understood the contents of this Letter of Consent
entirely, hereunder sign his name (and affix seal, if any) in the presence of
witnesses.
Signed:..............signed...................The Consent Giver
King Power Duty Free Co., Ltd.,
(Seal of King Power Duty Free Co., Ltd.,)
Signed:......signed...........Witness Signed:........signed..........Witness
(Mr. Siriphon Tantichotiwat) (Miss Nithaya Traisasil)
Pledge Agreement
Made at Head Office
30 December 1998
We, King Power Duty Free Co., Ltd., Thai nationality, with offices at 989 Siam
Tower Building, Rama I Road, Pathumwan, Bangkok Metropolis, hereinafter called
the "Pledgor" have made this Pledge Agreement of the instrument issued in the
name and given it to Siam City Bank Public Company Limited, hereinafter called
the "Bank" to indicate that the Pledgor has pledged and the Bank has accepted
the pledge
Passbook of Fixed Deposits Account No. 001-3-09768-5
Baht 15,000,000.-
Total Baht 15,000,000.- (Fifteen Million Baht Only)
which is an "instrument issued in name of person" whereby the Bank is the debtor
of such instrument, hereinafter called the "Pledged Property" as follows :
1. The Pledgor has pledged the Pledged Property with the Bank as security for
the overdraft, loan, debt related to letter of credit, trust receipt,
issuance of letter of guarantee of all types, sale of discounted promissory
note, aval, guarantee of promissory or other debt related to the promissory
note, debt related to guarantee or any other debt the Pledgor and/or -,
hereinafter called "the said debtor" owed to the Pledgee at the time of
entering into this agreement or the future debt for an amount of Baht Baht
15,000,000.00- (Fifteen Million Baht Only) and all accessories thereof as
stipulated in Section 748 of the Civil and Commercial Code. The Pledgor
agrees to pay the maximum interest rate as announced by Siam City Bank
Public Company Limited, which at present is 19.50% p.a. If enforcement of
the pledge is insufficient to pay the debt, the Pledgor agrees to pay the
amount in shortage to the Pledgee accordingly.
2. The Pledgor confirm and promise that the Pledgor owns/has the right on the
Pledged Property legally and it is free of proprietary interest or
preferential right or right or encumbrance at the time of entering into
this agreement.
3. On the signing date of this agreement, the Pledgor has recorded the pledge
on the Pledged Property and handed it over to the Bank for retention.
4. The Pledgor agrees not to exercise the right to withdraw the money from the
Pledged Property, unless for payment of the debt to the Bank only.
5. In case the right on the Pledged Property becomes due prior to the payment
of debt, the Pledgor consents to extend validity of the deposits further
which shall be deemed the pledge under this agreement continuously.
6. Should there be any problem arisen regarding ownership/right of the Pledgor
in the Pledged Property and/or the said debtor is in default of payment of
debt or the Pledgor fails is in breach of any clause of this agreement, the
Bank is entitled to immediately call for payment of debt and enforce the
pledge.
<PAGE>
7. Due to the fact that the Bank is the debtor of the Pledged Property and
also the Pledgee, therefore the Bank and the Pledgee agree that this
agreement shall be the notice of the pledge to the debtor of instrument as
stipulated in Section 752 of the Civil and Commercial Code.
The Pledgor, having understood the contents of this pledge agreement entirely,
hereunder sign his name (and affix seal, if any) in the presence of witnesses.
(Seal of King Power Duty Free Co., Ltd.,)
Signed:...............signed...................Borrower
King Power Duty Free Co., Ltd.,
Signed:...............signed....................Witness
(Mr. Siriphon Tantichotiwat)
Signed:...............signed....................Witness
(Miss Nithaya Traisasil)
BANGKOK METROPOLITAN BANK PUBLIC COMPANY LIMITED
No.2 Chalermkhet 4 Road, Bangkok Metropolis
Tel 2230561, 2259999
LETTER OF GUARANTEE
Date June 18, 1998
We, Bangkok Metropolitan Bank Public Company Limited, of No. 2
Chalermkhet 4 Road, Kwang Thepsirin, Khet Pomprab, Bangkok Metropolis hereby
issue this Letter of Guarantee to the Airports Authority of Thailand under the
following terms:
Clause 1. According to the Contract on Permission to Sell Duty Free
Merchandise and to Lease Premises to engage in business at the Bangkok Airport
and Regional Airports dated March 6, 1996 Contract No. 6-04/2539 entered into
between King Power Duty Free Co., Ltd. and the Airports Authority of Thailand,
under which King Power Duty Free Co., Ltd. shall provide a Bank Guarantee to
secure its performance thereunder, in the amount of Baht 337,500,000. (Three
hundred thirty seven million five hundred thousand Baht only).
Clause 2. We, Bangkok Metropolitan Bank Public Company Limited hereby
warrant that if King Power Duty Free Co., Ltd. fails to comply with any
conditions of the Contract entered into with the Airports Authority of Thailand
or be in breach of any conditions stipulated therein, and by which the Airports
Authority of Thailand shall be entitled to claim for a penalty and/or damage
from King Power Duty Free Co., Ltd., Bangkok Metropolitan Bank Public Company
Limited agrees to make payment in the amount not exceeding Baht 337,500,000.
(Three hundred thirty seven million five hundred thousand Baht only) to the
Airports Authority of Thailand for King Power Duty Free Co., Ltd., and with our
consent being given in case the Airports Authority of Thailand grants any
extension of time or relaxation in the performance under the Contract for King
Power Duty Free Co., Ltd.
This Letter of Guarantee shall be effective from January 1, 1998 until
December 31, 1998. Upon the expiry of such period, Bangkok Metropolitan Bank
Public Company Limited shall be deemed released from any responsibility or
liability herein made. IN WITNESS WHEREOF, we, Bangkok Metropolitan Bank Public
Company Limited have set our hands in presence of witnesses.
For Bangkok Metropolitan Bank Public Company Limited
Signed (Signature) Guarantor Signed (Signature) Guarantor
- ------------------------------------- ------------------------------------
(Mr. Narongchai Kitipaisannont) (Mr. Pongcharoen Sanguansak)
Assistant Director of Accounting Div. Deputy Director of Credit & Security
Div.
Signed (Signature) Witness Signed (Signature) Witness
- -------------------------------------- ------------------------------------
(Mr. Sontaya Sakolwaree) (Mr. Prapas Uengcharoen)
KING POWER INTERNATIONAL GROUP CO., LTD.
SIGNIFICANT SUBSIDIARIES AND
JURISDICTIONS OF INCORPORATION
Name Jurisdiction of Incorporation Percentage Owned
King Power Tax Free
Co., Ltd. Thailand 99.94%
King Power Duty Free
Co., Ltd. Thailand 94.95%
King Power International Group
(Thailand) Co., Ltd. Thailand 99.93%
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains Summary Financial Information extracted from Balance
Sheet at 12/31/98, statement of operatiosn at 12/31/98.
</LEGEND>
<CIK> 0000787690
<NAME> King Power International Group Co., Ltd.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,371,739
<SECURITIES> 0
<RECEIVABLES> 25,267,972
<ALLOWANCES> 13,031,315
<INVENTORY> 14,910,164
<CURRENT-ASSETS> 41,371,113
<PP&E> 8,227,428
<DEPRECIATION> 2,053,818
<TOTAL-ASSETS> 48,076,129
<CURRENT-LIABILITIES> 38,578,410
<BONDS> 0
0
0
<COMMON> 20,250
<OTHER-SE> 8,731,069
<TOTAL-LIABILITY-AND-EQUITY> 48,076,129
<SALES> 91,125,385
<TOTAL-REVENUES> 93,031,501
<CGS> 39,104,944
<TOTAL-COSTS> 64,074,737
<OTHER-EXPENSES> 16,184,976
<LOSS-PROVISION> 15,745,552
<INTEREST-EXPENSE> 1,364,628
<INCOME-PRETAX> (4,338,392)
<INCOME-TAX> 113,955
<INCOME-CONTINUING> (4,224,437)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,224,437)
<EPS-PRIMARY> (0.2)
<EPS-DILUTED> (0.2)
</TABLE>
