<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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: 33-10639-NY
MAN SANG HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0539570
(State or other jurisdiction
of incorporation or organization) (IRS Employer No.)
21/F Railway Plaza, 39 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong
(Address of principal executive officers)
(852) 2317 5300
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __
As of September 30, 1997, 4,305,960 shares of common stock of the
registrant were outstanding.
<PAGE> 2
MAN SANG HOLDINGS, INC.
INDEX
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1997 and March 31, 1997......................F-1
Consolidated Statements of Income -
For the three months ended September 30, 1997 and
1996 and six months ended September 30, 1997
and 1996...................................................F-3
Consolidated Statements of Cash Flows -
For the six months ended September 30,1997
and 1996...................................................F-4
Notes to Condensed Consolidated
Financial Statements.......................................F-5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................................1
PART II - OTHER INFORMATION....................................................4
SIGNATURE......................................................................7
<PAGE> 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(Amounts expressed in thousands except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
----------------------- --------------
US$ HK$ HK$
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 19,820 153,206 16,928
Accounts receivable, net of allowance for doubtful 7,213 55,756 47,505
accounts of HK$1,266 in September 30, 1997 and
HK$1,000 in March 31, 1997
Inventories
Raw materials 780 6,032 12,432
Work in progress 5,326 41,171 39,531
Finished goods 14,311 110,624 87,600
-------- -------- --------
20,417 157,827 139,563
Prepaid expenses 325 2,510 1,357
Other current assets 2,333 18,035 3,795
Income taxes receivable 4 34 437
-------- -------- --------
Total current assets 50,112 387,368 209,585
Property, plant and equipment 5,692 43,995 41,086
Accumulated depreciation (1,229) (9,502) (8,224)
-------- -------- --------
4,463 34,493 32,862
Real estate investment 4,042 31,244 28,009
Accumulated depreciation (291) (2,247) (1,981)
-------- -------- --------
3,751 28,997 26,028
======== ======== ========
Total assets 58,326 450,858 268,475
======== ======== ========
</TABLE>
F-1
<PAGE> 4
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED) - CONTINUED
(Amounts expressed in thousands except share data)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
--------------------- --------------
US$ HK$ HK$
<S> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings 5,932 45,851 51,596
Current portion of long-term debts
Secured bank loans 244 1,886 1,404
Capital lease obligations 13 99 94
------- ------- -------
257 1,985 1,498
Accounts payable 3,554 27,473 23,882
Accrued payroll and employee benefits 766 5,919 7,832
Other accrued liabilities 2,887 22,316 9,375
Income taxes payable 610 4,716 395
------- ------- -------
Total current liabilities 14,006 108,260 94,578
Long-term debts
Secured bank loans 1,477 11,416 8,333
Capital lease obligations 15 118 169
------- ------- -------
1,492 11,534 8,502
Minority interest 10,539 81,467 --
Stockholders' equity:
Common stock, par value US$0.001 4 33 33
- authorized: 25,000,000 shares;
issued and outstanding: 4,305,960 shares
Series A preferred stock, par value US$0.001 -- 1 1
- authorized, issued and outstanding: 100,000 shares;
(entitled in liquidation to US$2,500 (HK$19,325))
Series B convertible preferred stock, par value US$0.001 -- -- --
- authorized: 100,000 shares
Additional paid-in capital 17,628 136,264 46,059
Retained earnings 14,556 112,515 117,840
Cumulative translation adjustments 101 784 1,462
------- ------- -------
Total stockholders' equity 32,289 249,597 165,395
======= ======= =======
Total liabilities and stockholders' equity 58,326 450,858 268,475
======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-2
<PAGE> 5
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30
(Amounts expressed in thousands except share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, SIX MONTHS ENDED SEPTEMBER 30,
-------------------------------- ------------------------------
1997 1996 1997 1996
--------------------- ------- ------------------------ --------------
US$ HK$ HK$ US$ HK$ HK$
<S> <C> <C> <C> <C> <C> <C>
Net sales 9,448 73,034 63,403 18,118 140,055 119,250
Cost of goods sold 5,708 44,119 41,356 10,933 84,510 75,268
------- ------- ------- ------- ------- -------
Gross profit 3,740 28,915 22,047 7,185 55,545 43,982
Rental income, gross 191 1,475 1,186 380 2,934 2,323
Business tax 9 69 58 17 132 118
------- ------- ------- ------- ------- -------
182 1,406 1,128 363 2,802 2,205
Selling, general and administrative expenses
- Pearls 1,842 14,243 9,557 3,562 27,537 18,643
- Real estate investment 103 795 979 195 1,504 1,493
------- ------- ------- ------- ------- -------
Operating income 1,977 15,283 12,639 3,791 29,306 26,051
Non-operating items
- Gain on disposal of fixed assets -- -- -- 1,089 8,421 --
- Interest income 1,520 11,754 179 1,541 11,914 268
- Other income 35 272 609 57 437 851
- Interest expense 149 1,155 1,378 321 2,484 3,020
------- ------- ------- ------- ------- -------
Income before income taxes 3,383 26,154 12,049 6,157 47,594 24,150
Income taxes 552 4,266 (66) 666 5,147 903
------- ------- ------- ------- ------- -------
Income before minority interest 2,831 21,888 12,115 5,491 42,447 23,247
Minority interest 459 3,550 -- 459 3,550 --
======= ======= ======= ======= ======= =======
Net income 2,372 18,338 12,115 5,032 38,897 23,247
======= ======= ======= ======= ======= =======
Basic earnings per common share 0.55 4.26 3.50 1.17 9.03 7.19
======= ======= ======= ======= ======= =======
Diluted earnings per common share 0.55 4.23 2.82 1.16 9.00 6.08
======= ======= ======= ======= ======= =======
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-3
<PAGE> 6
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED SEPTEMBER 30
(Amounts expressed in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
------------------------------
1997 1996
------------------------- ------------------
US$ HK$ HK$
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income 5,032 38,897 23,247
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 255 1,967 1,263
(Gain) Loss on sale of property, plant and equipment (1,088) (8,415) 222
Provision for doubtful debts 35 266 --
Minority interests 459 3,550 --
Changes in operating assets and liabilities:
Accounts receivable (1,102) (8,518) (13,183)
Inventories (2,385) (18,435) (25,546)
Prepaid expenses (149) (1,153) 723
Other current assets (1,843) (14,245) 731
Income taxes receivable 52 402 --
Accounts payable 473 3,660 (4,961)
Accrued payroll and employee benefits (247) (1,912) 1,190
Other accrued liabilities 1,675 12,950 (435)
Income taxes payable 559 4,322 264
-------- -------- --------
Net cash provided by (used in) operating activities 1,726 13,336 (16,485)
-------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (768) (5,935) (4,685)
Expenditure on real estate investment (421) (3,257) --
Proceeds from sale of property, plant and equipment 1,426 11,025 199
-------- -------- --------
Net cash provided by (used in) investing activities 237 1,833 (4,486)
-------- -------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in long-term debts 575 4,450 --
Repayment of long-term debts (120) (931) (263)
Increase in short-term bank borrowings 9,027 69,783 55,286
Repayment of short-term bank borrowings (9,204) (71,146) (57,595)
Increase in bank overdrafts 26,146 202,107 (169,174)
Repayment of bank overdrafts (26,710) (206,468) (172,828)
Advances from related parties -- -- 139
Repayments to related parties -- -- (2,904)
Net proceeds from issuance of shares by a subsidiary 15,993 123,621 --
Net proceeds from issuance of convertible preferred stock -- -- 39,853
-------- -------- --------
Net cash provided by financing activities 15,707 121,416 30,862
-------- -------- --------
Net increase in cash and cash equivalents 17,670 136,585 9,891
Cash and cash equivalents at beginning of period 2,190 16,928 9,602
Exchange adjustments (40) (307) 8
======== ======== ========
Cash and cash equivalents at end of period 19,820 153,206 19,501
======== ======== ========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest and financing charges 277 2,145 3,020
-------- -------- --------
Income taxes 55 423 639
-------- -------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements
F-4
<PAGE> 7
MAN SANG HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. INTERIM FINANCIAL PRESENTATION
The interim financial statements are prepared pursuant to the requirements for
reporting on Form 10-Q. The March 31, 1997 balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles. The interim financial statements and
notes thereto should be read in conjunction with the financial statements and
notes included in the annual report of Man Sang Holdings, Inc. (the "Company")
on Form 10-KSB for the fiscal year ended March 31, 1997. In the opinion of
management, the interim financial statements reflect all adjustments of a normal
recurring nature necessary for a fair presentation of the results for the
interim periods presented.
2. CURRENCY PRESENTATION AND FOREIGN CURRENCY TRANSLATION
Assets and liabilities of foreign subsidiaries are translated at period end
exchange rates, while revenues and expenses are translated at average exchange
rates during the period. Adjustments arising from translating foreign currency
financial statements are reported as a separate components of stockholders'
equity. Gains or losses from foreign currency translations are included in
income. Aggregate net foreign currency gains or losses were immaterial for all
periods.
The consolidated financial statements of the Company are maintained, and its
consolidated financial statements are expressed, in Hong Kong dollars. The
translations of Hong Kong dollar amounts into United States dollars are for
convenience only and have been made at the rate of HK$7.73 to US$1, the
approximate free rate of exchange at September 30, 1997. Such translations
should not be construed as representations that Hong Kong dollars amounts could
be converted into United States dollars at that rate or any other rate.
3. EARNINGS PER SHARE ("EPS")
Per share data is calculated using the weighted average number of shares of
common stock outstanding during the period.
In February 1997, the Financial Standard Board ("FASB") issued Statement of
Financial Accounting Standard No. 128, Earnings Per Share. This statement
provides for the calculation of basic and diluted earnings per share, which is
different from the current
F-5
<PAGE> 8
calculation of primary and fully diluted earnings per share, and requires
statement of such earnings per share information for all prior periods
presented. In this regard, the computation of the basic and diluted earnings per
share of common stock of the Company for the quarter ended September 30, 1996
and for the six-month period ended September 30, 1996 are disclosed as follows:
The Company has 100,000 shares of authorized Series B Convertible Preferred
Stock, par value US$0.001 per share ("Series B Preferred Stock"). During the
period from April to July 1996, the Company sold and issued 6,760 shares of
Series B Preferred Stock for an aggregate purchase price of US$6.76 million.
Shares of Series B Preferred Stock were convertible into shares of common stock
commencing on or after 45 days following the sales of such shares of Series B
Preferred Stock. Each share of Series B Preferred Stock was convertible into the
number of shares of common stock determined by dividing US$1,000 by an amount
equal to the lesser of (i) the market price of the common stock on the closing
date of the sale of such shares of Series B Preferred Stock or (ii) 70% of the
average closing bid price of the common stock for the five trading days
preceding the conversion. All 6,760 shares of Series B Preferred Stock were
converted into shares of common stock in fiscal 1997. As a result, 5,219,448
shares of common stock were issued in fiscal 1997 and the remaining 1,098
shares, representing 4,390 shares of common stock prior to the 1-for-4 reverse
stock split, were issued during the six-month period ended September 1997.
For the quarter ended September 30, 1996, the weighted average number of shares
of common stock issued upon the conversion of Series B Preferred Stock was
1,839,086. After giving effect to the 1-for-4 reverse stock split effected in
October 1996, the weighted average number of shares of common stock outstanding
for the quarter was 3,459,772.
For the six-month period ended September 30, 1996, the weighted average number
of shares of common stock issued upon the conversion of Series B Preferred Stock
was 924,568. After giving effect to the 1-for-4 reverse stock split effected in
October 1996, the weighted average number of shares of common stock outstanding
for the period was 3,231,142.
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1996
Earnings Shares
(Numerator) (Denominator) EPS
HK$'000 HK$
<S> <C> <C> <C>
Basic EPS
Net income available
to common stockholders 12,115 3,459,772 3.50
====
Effect of dilutive
Securities Series B
Preferred Stock -- 839,706
--------- ---------
</TABLE>
F-6
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
Diluted EPS
Net income available to
common stockholders,
including conversion 12,115 4,299,478 2.82
=========== ========== ====
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended September 30, 1996
Earnings Shares
(Numerator) (Denominator) EPS
HK$'000 HK$
<S> <C> <C> <C>
Basic EPS
Net income available
to common stockholders 23,247 3,231,142 7.19
====
Effect of dilutive
Securities Series B
Preferred Stock -- 591,509
--------- ---------
Diluted EPS
Net income available to
common stockholders,
including conversion 23,247 3,822,651 6.08
========= ========= ====
</TABLE>
Pursuant to the Man Sang Holdings, Inc. 1996 Stock Option Plan (the "Plan"), the
Company granted, on September 16, 1997, non-qualified stock options to the
directors and certain senior employees of the Company to purchase, in aggregate,
850,000 shares of common stock of the Company. The exercise price is US$1.22 per
share, representing 85% of the fair market value of the common stock on the date
of grant, as determined pursuant to Article 6.2 of the Plan. Fifty percent (50%)
of the options are exercisable on or after September 16, 1998 and the remaining
fifty percent (50%) are exercisable on or after September 16, 1999, but no
options may be exercised after September 16, 2007. In light of the dilutive
effect of the options, the computation of the basic and diluted earnings per
share of common stock of the Company for the quarter and the six-month period
ended on September 30, 1997 are disclosed as follows:
F-7
<PAGE> 10
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1997
Earnings Shares
(Numerator) (Denominator) EPS
HK$'000 HK$
<S> <C> <C> <C>
Basic EPS
Net income available to
common stockholders 18,338 4,305,960 4.26
====
Effect of dilutive
share option -- 32,914
--------- ---------
Diluted EPS
Income available to
common stockholders and
assumed conversions 18,338 4,338,874 4.23
========= ========= ====
</TABLE>
<TABLE>
<CAPTION>
For the six months ended September 30, 1997
Earnings Shares
(Numerator) (Denominator) EPS
HK$'000 HK$
<S> <C> <C> <C>
Basic EPS
Net income available to
common stockholders 38,897 4,305,960 9.03
====
Effect of dilutive
share option -- 16,547
--------- ---------
Diluted EPS
Income available to
common stockholders and
assumed conversions 38,897 4,322,507 9.00
========= ========= ====
</TABLE>
Based on the above calculations, there was no material dilutive effect on the
basic earnings per share for the quarter ended September 30, 1997 and the
six-month period ended
F-8
<PAGE> 11
September 30, 1997. The fair value of each option granted was calculated to be
US$0.63 using the Black-Scholes Model based the following the assumptions:
(a) risk free interest rate of 5.9%;
(b) no payment of dividends;
(c) expected life of 2 years; and
(d) expected volatility of 63%.
The Company has elected to account for stock options using the Intrinsic Value
Method. Had the Company elected the Fair Value Method, net income and earnings
per share for the quarter ended September 30, 1997 would have been US$2,361,844
and US$0.55, respectively.
4. NEW ACCOUNTING STANDARDS NOT YET ADOPTED
In June 1997, the FASB issued two new disclosure standards. Results of
operations and financial position will not be affected by implementation of
these new standards.
Statement of Financial Standard (SFAS) No. 130, Reporting Comprehensive Income,
establishes standards for reporting and display of comprehensive income, its
components and accumulated balances. Comprehensive income is defined to include
all changes in equity except those resulting from investments by, and
distributions to, owners. Among other disclosures, SFAS No. 130 requires that
all items that are required to be recognized under current accounting standards
as components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements.
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise, establishes standards for the way that public enterprises
report information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS No. 131
defines operating segments as components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.
Both of these new standards are effective for financial statements for periods
beginning after December 15, 1997 and requires comparative information for
earlier years to be restated. Due to the recent issuance of these standards,
management has been unable to fully evaluate the impact, if any, they may have
on future financial statement disclosures.
F-9
<PAGE> 12
5. SIGNIFICANT EVENT
Man Sang International Limited ("MSIL"), an indirect wholly-owned subsidiary of
the Company and a company incorporated on July 30, 1997 as an exempted company
under the Companies Act 1981 of Bermuda, applied for listing on The Stock
Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") of shares of
HK$0.1 each of the capital stock (the "Shares") and the warrants to purchase the
Shares (the "Warrants"), including, inter alia, 127.5 million Shares (the "New
Issue") to be offered and sold to the investing public in Hong Kong at HK$1.08
per share for an aggregate offering price of HK$137.7 million, together with the
Warrants in the proportion of one Warrant for every five Shares. Each Warrant
entitles the holder thereof to subscribe for one Share at an exercise price of
HK$1.3 each from the date of issue up to and including March 31, 1999.
On September 25, 1997, the Hong Kong Stock Exchange granted the listing and
permission to deal the Shares and the Warrants of MSIL and the trading of such
Shares and Warrants commenced on the Hong Kong Stock Exchange on September 26,
1997. Following the initial public offering of the New Issue, the Company holds,
through Man Sang International (B.V.I.) Limited, 73.02% or 345 million shares
of the capital stock of MSIL, whereas the investors in Hong Kong participated
in the offering hold the remaining 26.98% or 127.5 million shares of the
capital stock of MSIL. In connection with the initial public offering of the
New Issue, the net proceeds of approximately HK$123.6 million were raised and
an interest income of approximately HK$11.4 million was earned from the funds
deposited for the subscription of the New Issue in the initial public offering.
F-10
<PAGE> 13
ITEMS 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MATERIAL CHANGES AND RESULTS OF OPERATIONS
Net sales during the six-month period ended September 30, 1997 totalled HK$140.1
million, representing a 17.4% increase, compared to net sales of HK$119.3
million during the same period in 1996. The increase in net sales was mainly
attributable to the increase by 29.0% in the sales of cultured pearls during the
period over the same period in 1996.
Gross profit for the six-month period ended September 30, 1997 increased by
HK$11.5 million to HK$55.5 million, representing a 26.1% increase over the gross
profit of HK$44.0 million for the same period in 1996. As a percentage of net
sales, gross profit increased from 36.9% for the six-month period ended
September 30, 1996 to 39.7% for the same period in 1997. The increase in gross
profit and gross profit margin were resulted from increased sales and a large
proportion of sales of higher margin cultured pearls. Cultured pearls, including
Chinese cultured pearls, Japanese cultured pearls, Tahitian pearls and South Sea
pearls, represented 75.8% of net sales during the six-month period ended
September 30, 1997, compared with 68.0% during the same period in 1996.
Gross rental income for the six-month period ended September, 1997 increased by
HK$0.6 million to HK$2.9 million, representing a 26.1% increase from HK$2.3
million for the same period in 1996. The increase in gross rental income was due
to the improvement of the occupancy rate in the Man Sang Industrial City
facility located in Shenzhen, the People's Republic of China from 86.0% for the
six-month period ended September 30, 1996 to 93% for the same period in 1997.
Selling, general and administrative expenses ("SG & A") during the six-month
period ended September 30, 1997 totalled HK$29.0 million, consisting of HK$27.5
million attributable to pearl operations and HK$1.5 million attributable to real
estate operations, compared with HK$20.1 million, consisting of HK$18.6 million
attributable to pearl operations and HK$1.5 million attributable to real estate
operations, during the same period in 1996, an increase of HK$8.9 million, or
44.3%. The increase in SG & A was primarily due to increased salaries for
additional staff to support expanded operations, increased management
compensation for one additional executive officer, an accrual for a special
performance bonus of HK$2.5 million which was accrued at the end of fiscal 1997,
increased provision for legal and professional fees due to increasing legal and
professional fees expected to be incurred by MSIL, increased rental payments for
the current administrative office, increased depreciation expenses in connection
with the depreciation charged for certain fixed assets acquired in October 1996.
As a percentage of net sales, SG & A for pearl operations increased from 15.6%
for the six-month period ended September 30, 1996 to 19.7% for the same period
in 1997, while SG & A for real estate operations decreased from 1.3% for the
six-month period ended September 30, 1996 to 1.1% for the same period in 1997.
- 1 -
<PAGE> 14
Gain on the disposal of fixed assets for the six-month period ended September
30, 1997 was HK$8.4 million which was principally derived from the sale of a
leasehold property ("Leasehold Property") on May 1, 1997 for HK$11.0 million.
Interest income for the six-month period ended September 30, 1997 increased by
HK$11.6 million to HK$11.9 million. The increase was primarily due to an
interest income derived from the funds deposited for the subscription of the New
Issue of MSIL.
Interest expense for the six-month period ended September 30, 1997 decreased by
HK$0.5 million to HK$2.5 million, representing a 16.7% decrease from the
interest expense of HK$3.0 million for the same period in 1996. The decrease was
due principally to the decrease in the short-term bank borrowings. The decrease
in short-term bank borrowings was due to the increased cash flow generated from
internal operations and the sale of the Leasehold Property. The Company's
average borrowing rate decreased to 9.7% per annum for the six-month period
ended September 30, 1997 from 10.7% per annum for the same period in 1996.
Income taxes for the six-month period ended September 30, 1997 increase by
HK$4.2 million to HK$5.1 million, representing a 466.7% increase from the income
taxes of HK$0.9 million for the same period in 1996. The significant increase in
the income taxes was due principally to the interest income of approximately
HK$11.4 million derived from the funds deposited for the subscription of the New
Issue of MSIL. Such interest income was treated as Subpart F income, taxable at
34% pursuant to the provisions of Section 951 through 964 of the Internal
Revenue Code of 1986, as amended.
Although the Company has experienced strong growth during the six-month period
ended September 30, 1997, the recent developments in the financial and currency
markets in Asia and the general state of economy in certain South East Asian
countries may affect, to a certain extent, the results of operations and
financial condition of the Company for the remaining of the fiscal 1998, as some
of the pearl products of the Company may be considered luxury consumer goods,
the demand for which may be affected by the changes in the overall demand for
luxury goods in Asian markets. However, because the Company produces, markets
and sells a full range of pearls and pearl jewelry products and the Company has
increased its marketing efforts in Europe and North America, resulting in Europe
and North America accounting for an increased share of the Company's net sales
for the six-month period ended September 30, 1997, compared with the same period
in 1996, the Company is positioned to minimize any material adverse impact such
recent developments in Asia may have on the Company.
Material Changes in Financial Condition, Liquidity and Capital Resources
At September 30, 1997, the Company had working capital of HK$ 279.1 million and
a cash balance of HK$ 153.2 million, compared with working capital of HK$115.0
million and a cash balance of HK$16.9 million at March 31, 1997. The significant
increase in working capital was attributable to the following reasons:
- 2 -
<PAGE> 15
(a) net proceeds of approximately HK$123.6 million were received from the
New Issues of MSIL;
(b) an interest income of about HK$11.4 million was earned from the funds
deposited for the subscription of the New Issue of MSIL; and
(c) a combination of increased cash flow generated from internal operations
and the proceeds from the sale of the Leasehold Property during the
period ended September 30, 1997.
In addition, the Company had available working capital facilities totalling
HK$88.1 million with various banks at September 30, 1997. Such banking
facilities include letter of credit arrangements, import loans, overdraft
protection and other facilities commonly utilized in jewelry business. All such
banking facilities bear interest at floating rates generally based on prime
lending rates and are subject to annual review. At September 30, 1997, the
Company had utilized approximately HK$45.9 million of its credit facilities with
HK$42.2 million unutilized.
The Company believes that funds to be generated from internal operations, the
existing banking facilities and the proceeds from the offering of the New Issue
will enable the Company to meet the working capital requirements in the
foreseeable future. Additionally, the Company intends to use the proceeds from
the initial public offering of MSIL to fund certain of its operating
subsidiaries to expand the processing facilities for Chinese cultured and
freshwater pearls, invest in pearl farms in major pearl producing countries,
expand the purchasing power and processing facilities for South Sea pearls and
Tahitian pearls, expand and promote the pearl jewellery business, improve and
develop bleaching and polishing techniques and fund additional general working
capital.
- 3 -
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 8, 1997, the 1997 annual meeting of shareholders of the Company was
held at the Company's principal place of business in Hong Kong. 2,750,000 shares
of common stock and 100,000 shares of Series A preferred stock, $.001 par value,
representing in aggregate 76% of voting power were present either in person or
by proxy. The following matters were submitted for voting in the meeting and
were approved by all shareholders holding such 76% of voting power:
1. Election of eight directors of the Company nominated by the Board of
Directors; and
2. Ratification of the continuing appointment of Deloitte Touche Tohmatsu
as the Company's independent accounts.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORT OF FORM 8-K
(A) Exhibits
Exhibit No. Description
3.1 Restated Articles of Incorporation of Man Sang Holdings, Inc.,
including the Certificate of Designation, Preferences and Rights of a
Series of 100,000 Shares of Preferred Stock, $.001 Par Value,
Designated "Series A Preferred Stock", filed on January 12, 1996 (1)
3.2 Certificate of Designation, Preferences and Rights of a Series of
100,000 Shares of Preferred Stock, $.001 Par Value, Designated "Series
B Preferred Stock", dated April 1, 1996 (2)
- 4 -
<PAGE> 17
3.3 Amended Bylaws of Man Sang Holdings, Inc., effective as of January 10,
1996 (1)
10.1 Acquisition Agreement, Dated December __, 1995, between Unix Source
America, Inc. and the Shareholders of Man Sang International (B.V.I.)
Limited (1)
10.2 Tenancy Agreement, dated June 24, 1996, between Same Fast Limited and
Man Sang Jewellery Company Limited (3)
10.3 Man Sang Holding, Inc. 1996 Stock Option Plan (3)
10.4 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Cheng Chung Hing
10.5 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Cheng Tai Po
10.6 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Hung Kwok Wing
10.7 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Sio Kam Seng
10.8 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Ng Hak Yee
10.9 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Yan Sau Man Amy
13.1 Annual report to security holders (4)
27.1 Financial data schedule
- --------------------------------------
(1) Incorporated by reference to the exhibits filed with the Company's
Current Report on Form 8-K dated January 8, 1996
(2) Incorporated by reference to the exhibits filed with the Company's
Registration Statement on Form 8-A dated June 17, 1996
(3) Incorporated by reference to the exhibits filed with the Company's
Quarterly Report on Form 10-QSB for the quarterly period ended December
31, 1996
- 5 -
<PAGE> 18
(4) Incorporated by reference to the Form 10-KSB/A for the fiscal year
ended March 31, 1997
(B) Report on Form 8-K:
Form 8-K
Dated September 12, 1997
Item reported : Item 5 - MSIL's initial public offering
Form 8-K/A
Date of earlier event reported: September 12, 1997
Item reported: Item 5 - MSIL's initial public offering
- 6 -
<PAGE> 19
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MAN SANG HOLDINGS, INC.
Date: November 14, 1997
/s/ Patrick Ng
Patrick Ng
Chief Financial Officer
- 7 -
<PAGE> 20
INDEX TO EXHIBITS
The following documents are filed herewith or have been included as exhibits to
previous filings with the Securities and Exchange Commission and are
incorporated by reference as indicated below.
Exhibit No. Description
3.1 Restated Articles of Incorporation of Man Sang Holdings, Inc.,
including the Certificate of Designation, Preferences and Rights of a
Series of 100,000 Shares of Preferred Stock, $.001 Par Value,
Designated "Series A Preferred Stock", filed on January 12, 1996 (1)
3.2 Certificate of Designation, Preferences and Rights of a Series of
100,000 Shares of Preferred Stock, $.001 Par Value, Designated "Series
B Preferred Stock", dated April 1, 1996 (2)
3.3 Amended Bylaws of Man Sang Holdings, Inc., effective as of January 10,
1996 (1)
10.1 Acquisition Agreement, Dated December __, 1995, between Unix Source
America, Inc. and the Shareholders of Man Sang International (B.V.I.)
Limited (1)
10.2 Tenancy Agreement, dated June 24, 1996, between Same Fast Limited and
Man Sang Jewellery Company Limited (3)
10.3 Man Sang Holding, Inc. 1996 Stock Option Plan (3)
10.4 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Cheng Chung Hing
10.5 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Cheng Tai Po
10.6 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Hung Kwok Wing
10.7 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Sio Kam Seng
10.8 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Ng Hak Yee
10.9 Service Agreement, dated September 8, 1997, between Man Sang
International Limited and Yan Sau Man Amy
13.1 Annual report to security holders (4)
<PAGE> 21
27.1 Financial data schedule
- --------------------------------------
(1) Incorporated by reference to the exhibits filed with the Company's
Current Report on Form 8-K dated January 8, 1996
(2) Incorporated by reference to the exhibits filed with the Company's
Registration Statement on Form 8-A dated June 17, 1996
(3) Incorporated by reference to the exhibits filed with the Company's
Quarterly Report on Form 10-QSB for the quarterly period ended December
31, 1996
(4) Incorporated by reference to the Form 10-KSB/A for the fiscal year
ended March 31, 1997
<PAGE> 1
DATED THE 8TH DAY OF SEPTEMBER, 1997
MAN SANG INTERNATIONAL LIMITED
AND
CHENG CHUNG HING
-----------------
SERVICE AGREEMENT
-----------------
BAKER & McKENZIE
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
(LKL/EC/IW)
<PAGE> 2
CONTENT
CLAUSE DESCRIPTION PAGE
- ------ ----------- ----
1. INTERPRETATION...................................................... 1
2. APPOINTMENT......................................................... 2
3. DURATION............................................................ 2
4. EXECUTIVE'S DUTIES.................................................. 2
5. REMUNERATION........................................................ 3
6. OTHER BENEFITS...................................................... 3
7. EXPENSES............................................................ 4
8. DEDUCTIONS.......................................................... 4
9. LEAVE............................................................... 4
10. TERMINATION......................................................... 5
11. EXECUTIVE'S UNDERTAKINGS............................................ 6
12. INTELLECTUAL PROPERTY RIGHTS........................................ 8
13. MISCELLANEOUS....................................................... 9
EXECUTION.................................................................... 10
<PAGE> 3
THIS AGREEMENT is made on the 8th day of September, 1997
BETWEEN:
(1) MAN SANG INTERNATIONAL LIMITED, a company incorporated under the laws
of Bermuda and having its registered office at Clarendon House, 2
Church Street, Hamilton HM 11, Bermuda and its principal place of
business in Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road
South, Tsim Sha Tsui, Kowloon, Hong Kong (the "Company"); and
(2) CHENG CHUNG HING of Apartment 1, 17th Floor, Silvercrest, 24 MacDonnell
Road, Hong Kong (the "Executive").
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.01 In this Agreement, unless the context requires otherwise:
"Board" means the board of directors for the time being
of the Company;
"Group" means the Company and its subsidiaries from time
to time and "member of the Group" shall be construed
accordingly;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative
Region of the People's Republic of China;
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (as the same may be amended
from time to time);
"month" means calendar month; and
"subsidiary" has the meaning attributed to it in Section
2 of the Companies Ordinance (Cap. 32 of the Laws of Hong
Kong) (as amended from time to time).
1.02 References herein to Clauses are to clauses in this
Agreement unless the context requires otherwise.
1.03 The headings are inserted for convenience only and shall
not affect the construction of this Agreement.
<PAGE> 4
1.04 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
2. APPOINTMENT
The Company will employ the Executive and the Executive hereby agrees
to serve the Company as an executive director upon the terms and
subject to the conditions hereinafter appearing.
3. DURATION
Subject to termination as hereinafter provided, the Company will employ
the Executive with effect from 1 September 1997 for an initial term of
three (3) years until terminated by either party giving to the other
not less than three (3) months' notice in writing.
4. EXECUTIVE'S DUTIES
The Executive shall, during the continuance of his employment
hereunder:
(a) serve the Company as the Chairman and an executive
director and, in such capacity, perform the duties
and exercise the powers from time to time assigned
to or vested in him by the Board (including (without
further remuneration unless otherwise agreed)
serving on the board of directors, or in any other
office, of any member(s) of the Group, as the Board
may require) and he will perform those duties at
such place or places in Hong Kong or elsewhere as
the Board may from time to time determine;
(b) comply with and conform to any lawful instructions or
directions from time to time given or made by the Board, or
with the authority of the Board, and shall comply with the
Company's rules, regulations, policies and procedures from
time to time in force;
(c) faithfully and diligently serve the Group and use
his best endeavours to promote the business and
interests thereof;
(d) devote himself exclusively and diligently to the
business and interests of the Group and personally
attend thereto at all times during usual business
hours and during such other times as the Company may
reasonably require except in case of incapacity
through illness or accident in which case he shall
forthwith notify the Secretary of the Company of
such incapacity and shall furnish to the Board such
evidence thereof as it may require;
<PAGE> 5
(e) keep the Board promptly and fully informed (in writing if so
requested) of his conduct of the business or affairs of the
Group and provide such explanations as the Board may require
in connection therewith;
(f) carry out his duties and exercise his powers jointly with any
other director or executive of any member of the Group as
shall from time to time be appointed by the Board to act
jointly with the Executive and the Board may at any time
require the Executive to cease performing or exercising any of
his duties or powers under this Agreement; and
(g) comply with the relevant requirements of all applicable laws,
regulations, codes of practice and rules (including Securities
(Insider Dealing) Ordinance, the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited and
the Model Code for Securities Transactions by Directors of
Listed Companies set out in Appendix 10 therein and the rules
of any other stock exchange, market or dealing system on which
the securities of any member of the Group is traded and the
applicable laws, regulations, codes of practice in that
jurisdiction).
5. REMUNERATION
The remuneration of the Executive shall be:
(a) a monthly salary of HK$250,000.00 payable in arrears by no
later than the seventh day of the following month, such salary
to include any sum receivable as director's fees or other
remuneration from any other member of the Group (if any). This
salary will be reviewed by the Board in each year at the time
of the annual salary reviews for senior executives provided
that the Executive shall abstain from voting and shall not be
counted in the quorum in respect of any resolution regarding
the amount payable to himself in relation to his employment
under this Agreement which is proposed at any meeting of the
Board; and
(b) in respect of every financial year of the Company (which
expression shall include any other financial period in respect
of which the Company's accounts are made up), a discretionary
bonus of such amount as shall be determined by the Board
(provided that the aggregate of such amount and all
discretionary bonuses payable by the Company to its executive
directors in any financial year shall not exceed ten per cent.
of the net profits (after tax and after extraordinary items)
of the Company for such year as shown in its audited
accounts), payable within thirty (30) days after the Company's
accounts for the relevant year have been audited and
certified, provided that such discretionary bonus shall be
paid only on a pro rata basis in respect of any financial year
of the Company during a portion only of which the Executive
has served the Company hereunder, unless his employment shall
have been terminated pursuant to Clause 10.02, in which case
no discretionary bonus is payable.
<PAGE> 6
6. OTHER BENEFITS
6.01 In addition to the foregoing remuneration and benefits, the Executive
shall also be entitled to the following during the continuance of his
employment hereunder, subject to determination by the Board as to the
appropriate level of cost of each item:
(a) the use of a residential property of the Company for
accommodation as approved by the Board and the Company shall
pay all rates, government rents, utilities and other outgoings
for maintenance and repair in respect of the use of such
premises;
(b) the use (whether for business or personal purposes) of a motor
car of such type as may be approved by the Board and the
Company shall pay all vehicle registration fees, taxes and
insurance premiums in respect of the car and shall pay or
reimburse against receipts all maintenance, repair and other
running costs in respect of the car and the cost of petrol;
and
(c) the use of the corporate membership of the Group at Tower Club
and the payment of all entrance fees, debentures, monthly
subscriptions but not chits in connection therewith.
6.02 In addition to the above benefits, the Executive shall also be entitled
to such other benefits under any applicable employee benefit plan and
employee share option scheme adopted by the Company and any member of
the Group of which the Executive is a director or holds office for
their respective employees (including the Executive) as the Board shall
from time to time determine.
7. EXPENSES
The Company shall reimburse the Executive (against receipts or such
other reasonable evidence of expenditure as the Board may require) for
all reasonable expenses properly incurred in the course of his
employment hereunder or in promoting or otherwise in connection with
the business of the Company.
8. DEDUCTIONS
The Company shall be entitled, subject to any laws or agreements to the
contrary, at any time to deduct from the Executive's remuneration
hereunder any monies due from him to any member of the Group including,
but not limited to, any outstanding loans, advances, the cost of
repairing any damage to or loss of the Company's property caused by him
(and of recovering the same) and any other monies owed by him to the
Company or any of its subsidiaries.
<PAGE> 7
9. LEAVE
The Executive shall be entitled after completion of each year of
service with the Company to fifteen (15) days' leave (in addition to
public holidays) with full pay, which leave shall be taken at such time
or times as may be convenient to the Board having regard to the
exigencies of the Group's business provided that:
(a) if the employment of the Executive hereunder is to cease on
the completion of any year of service, the Executive shall be
entitled to take his said leave immediately prior to the end
of such year of service notwithstanding that at that time such
year of service shall not have been completed;
(b) if the employment of the Executive hereunder is to cease (for
any reason other than termination pursuant to Clause 10.02)
during any year of service, the Executive shall be entitled to
an amount of leave proportionate to the part of the year
during which he has been employed by the Company, such leave
to be taken immediately prior to the termination of his
employment; and
(c) if for any reason the Executive shall not have taken his full
entitlement of leave in any particular year he shall not have
any claim against the Company in respect thereof nor, unless
the reason is the exigencies of the Company's business (of
which the Board shall be the sole judge), shall he be entitled
to additional leave in any year in respect of leave not taken
in previous years.
10. TERMINATION
10.01 If the Executive is at any time incapacitated by illness, injury or
accident from performing his duties hereunder and (if so required)
furnishes the Board with evidence satisfactory to it of such incapacity
and the cause thereof he shall be entitled to receive his full salary
for the first three (3) months or any shorter period during which such
incapacity continues and if he continues so incapacitated for a longer
period than three (3) consecutive months or if he is so incapacitated
at different times for more than ninety (90) days in any one period of
fifty-two (52) consecutive weeks then and in either of such cases his
employment may be terminated by the Company by one (1) month's notice
in writing.
10.02 If at any time during the term of his employment hereunder the
Executive shall be guilty of or commit any serious misconduct which in
the absolute opinion of the Board is in any way detrimental to the
interests of any member of the Group, or shall be in breach of any of
the terms of this Agreement, or shall commit any act of bankruptcy or
become insolvent, or make any arrangements or composition with his
creditors generally, or become through mental disorder incapable of
managing his own affairs, or fail to pay his personal debts or shall be
guilty of persistent insobriety or be convicted of any criminal offence
involving his integrity or honesty, the Company may terminate the
Executive's employment hereunder forthwith without any notice or
payment in lieu of notice and upon such termination, the Executive
shall not be entitled
<PAGE> 8
to any bonus or any payment whatsoever (other than salary actually
accrued due and payable pursuant to Clause 5(a)) for or in respect of
the then current year of service or to claim any compensation or
damages for or in respect of or by reason of such termination.
10.03 In the event that: (a) the Executive is lawfully removed from his
office as a director of the Company by virtue of a resolution passed by
the members of the Company; or (b) the Executive, having retired from
the office of director of the Company in accordance with the Bye-laws
of the Company or any other applicable regulation or law, is not
re-elected as a director of the Company by the shareholders of the
Company at an annual general meeting of the Company, the Company may
within seven (7) days of the date of such vacation from office by the
Executive, terminate this Agreement forthwith by written notice to the
Executive.
10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:
(a) (if not already vacated from such office(s)) forthwith resign
as a director of the Company and from all directorships or
other offices held by him in any member of the Group (and the
Executive irrevocably authorises the Company in his name and
on his behalf to execute all documents and do all things
necessary to effect such resignation in the event of his
failure to do so);
(b) shall cease to be entitled to any benefits under this
Agreement;
(c) immediately return the car provided by the Company under
Clause 6.01(b) and the keys in respect thereof to the Company
at its principal place of business in Hong Kong or such other
place in Hong Kong as the Company may reasonably request; and
(d) immediately vacate from the residential property of the
Company provided for use by the Executive pursuant to Clause
6.01(a) and forthwith return the keys in respect thereof to
the Company at its principal place of business in Hong Kong or
such other place in Hong Kong as the Company may reasonably
request
and the Executive shall not be entitled to claim any other compensation
whatsoever from the Company in respect of such termination except where
the Board otherwise agrees or as expressly provided for under this
Agreement.
10.05 Any delay or forbearance by the Company in exercising any right to
terminate this Agreement shall not constitute a waiver of such right.
10.06 If notice is served by either party pursuant to Clause 3, then for up
to a maximum period of three (3) months, the Company shall not be
obliged, at any time after the notice of termination is served, to
provide any work for the Executive or to assign to or vest in the
Executive any powers, duties or functions and may in its absolute
<PAGE> 9
discretion suspend the Executive from work, and suspend the contractual
benefits of the Executive set out in Clause 5(b) and 6 and to require
the Executive to refrain from entering any premises of any member(s) of
the Group and to refrain from contacting any customers, clients,
employees or suppliers of any member(s) of the Group.
11. EXECUTIVE'S UNDERTAKINGS
11.01 The Executive agrees to take good care of the car supplied by the
Company under Clause 6.01(b) and the residential property provided by
the Company under the Clause 6.01(a), and to ensure that the terms and
conditions of the insurance policies in respect of the car and the
residential property are observed.
11.02 The Executive shall not either during the continuance of his employment
hereunder or at any time thereafter divulge to any person whomsoever or
to any body corporate or unincorporated (except to those officers of
the Group whose province it is to know the same) or use for his own
purposes or for any purposes other than those of the Group and shall
use his best endeavours to prevent the unauthorised publication or
disclosure of any trade secret or any confidential information
concerning the business or finances of any member of the Group or any
of its dealings, transactions or affairs or those of its customers,
suppliers, management and shareholders which may come to his knowledge
during or in the course of his employment. Confidential information
shall include, without limitation, lists or details of customers and
suppliers, information relating to the working of any process of
invention carried on or used by any member of the Group, information
relating to research and other projects, prices, discounts, mark-ups,
future business strategy and development, marketing, price-sensitive
information and any other information which is not generally available
to the public.
11.03 Forthwith upon the termination of the employment of the Executive
hereunder, and/or at any other time if the Company shall so request,
the Executive shall deliver to the Company all documents (including
correspondence, lists of customers, notes, memoranda, plans, drawings
and other documents of whatsoever nature), models or samples made or
compiled by or delivered to the Executive during his employment
hereunder and concerning the business, finances or affairs of any
member of the Group and credit cards and any equipment used by or made
available to the Executive by the Company or any member of the Group.
For the avoidance of doubt it is hereby declared that the property in
all such documents as aforesaid shall at all times be vested in the
relevant member of the Group.
11.04 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter,
in any country or place where any member of the Group has carried on
business, carry on or be employed or interested directly or indirectly
in (whether as shareholder, director, partner, agent or otherwise and
whether alone or jointly with others) any business carried on by any
member of the Group during the continuance of the said employment in
competition with any member of the Group (other than as a holder of not
more than five (5) per cent of the issued shares, debentures or other
securities of any company listed on any
<PAGE> 10
recognised stock exchange) provided that the provisions of this Clause
11.04 shall only apply in respect of business activities or services
with which the Executive was personally concerned or for which he was
responsible during his said employment.
11.05 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
either on his own account or in conjunction with or on behalf of any
other person or body corporate or unincorporated in competition with
any member of the Group directly or indirectly solicit or entice away
from any member of the Group, any person or body corporate or
unincorporated who now is or at any time during or at the date of the
termination of the said employment may have been or become a customer
or supplier or prospective customer or supplier of any member of the
Group and with whom the Executive had personal contact or dealings
during his said employment.
11.06 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
solicit or entice away from any member of the Group or employ or
otherwise engage any person who now is or at any time during or at the
date of the termination of the said employment may have become an
employee of any member of the Group and with whom the Executive had
contact during his said employment, whether or not such person would
commit any breach of his contract of employment by reason of leaving
the service of the relevant member of the Group.
11.07 The Executive shall not at any time or for any purpose after
termination of his employment hereunder use either the English or
Chinese name of the Company or any name similar thereto in connection
with his own or any other name in any way calculated to suggest that he
is or has been connected with the Company's business, nor in any way
hold himself out as having had any such connection.
11.08 While the restrictions contained in Clauses 11.02 to 11.07 are
considered by the parties to be reasonable for the protection of the
business and interest of the Group and in all the circumstances and do
not work harshly upon the Executive it is recognised that restrictions
of the nature in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any such
restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the member(s) of the Group but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof were reduced or
the range of products or area dealt with thereby were reduced in scope,
the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
12. INTELLECTUAL PROPERTY RIGHTS
12.01 The Company (or any other member of the Group as the case may be) shall
be entitled free of charge to the sole ownership and exclusive use of
any invention or improvement made or discovered by the Executive and of
any copyright, design right, trade mark, service mark or trade name
created or used by the Executive (hereinafter referred to
<PAGE> 11
as the "intellectual property rights") in the course of or for the
purpose of providing services hereunder to the Company or any other
member of the Group.
12.02 The Executive shall forthwith and from time to time both during and
after the term of this Agreement and at the request and cost of the
Company, insofar as it is within his power, do such acts and things and
execute such documents, as may in the opinion of the Company be
reasonably necessary for obtaining letters patent, registration or
other protection for any such intellectual property rights in any part
of the world and shall effect such registration and vest such letters
patent or other protection in the Company (or any other member of the
Group as the case may be) or its nominees. The Executive irrevocably
authorises the Company for the purposes aforesaid in the name of the
Executive and execute any document or do anything on his behalf. The
Executive shall at the cost and request of the Company render all
reasonable assistance to the Company (or any other member of the Group
as the case may be) for and in connection with the purposes aforesaid.
12.03 The Executive shall not during or after the termination of the
Agreement use to the detriment or prejudice of the Group or divulge to
any person any confidential information concerning the intellectual
property rights of the Group which may have come to his knowledge.
13. MISCELLANEOUS
13.01 This Agreement shall be in substitution for any subsisting agreement or
arrangement (oral or otherwise) made between the Company and the
Executive which shall be deemed to have been terminated by mutual
consent as from the date on which the Executive's employment under this
Agreement commences.
13.02 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as in accordance
with their terms are expressed to operate or have effect thereafter.
13.03 In the event of any variation of the remuneration payable to the
Executive hereunder being made by consent of the parties hereto, such
variation shall not constitute a new agreement but (subject to any
express agreement to the contrary) the employment of the Executive
hereunder shall continue subject in all respects to the terms and
conditions of this Agreement with such variation as aforesaid.
13.04 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days'
prior written notice specified to the other parties):
To the Company: Man Sang International Limited
21st Floor, Railway Plaza
39 Chatham Road South
<PAGE> 12
Tsim Sha Tsui, Kowloon
Hong Kong
Fax number: (852) 2317 5243
Attention: Mr. Cheng Tai Po
To the Executive: Cheng Chung Hing
Apartment 1, 17th Floor, Silvercrest
24 MacDonnell Road
Hong Kong
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, by post, two (2) clear business days after the date of posting,
or by recorded delivery, when actually delivered to the relevant
address; and (b) if given or made by facsimile, when despatched subject
to receipt of machine-printed confirmation of error-free despatch of
the whole of the notice, demand or communication to the facsimile
number of the intended addressee.
13.05 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not
be affected or impaired thereby.
13.06 No failure or delay by the Company in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or remedy.
Without limiting the foregoing, no waiver by the Company of any breach
by the Executive of any provision in this Agreement shall be deemed to
be a waiver of any subsequent breach of that or any other provision in
this Agreement.
13.07 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the Hong Kong courts.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
for and on behalf of MAN SANG )
INTERNATIONAL LIMITED )
in the presence of: )
<PAGE> 13
SIGNED by )
CHENG CHUNG HING )
in the presence of: )
<PAGE> 1
DATED THE 8TH DAY OF SEPTEMBER, 1997
MAN SANG INTERNATIONAL LIMITED
AND
CHENG TAI PO
-----------------
SERVICE AGREEMENT
-----------------
BAKER & McKENZIE
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
(LKL/EC/IW)
<PAGE> 2
CONTENT
CLAUSE DESCRIPTION PAGE
- ------ ----------- ----
1. INTERPRETATION..................................................... 1
2. APPOINTMENT........................................................ 2
3. DURATION........................................................... 2
4. EXECUTIVE'S DUTIES................................................. 2
5. REMUNERATION....................................................... 3
6. OTHER BENEFITS..................................................... 3
7. EXPENSES........................................................... 4
8. DEDUCTIONS......................................................... 4
9. LEAVE.............................................................. 4
10. TERMINATION........................................................ 5
11. EXECUTIVE'S UNDERTAKINGS........................................... 6
12. INTELLECTUAL PROPERTY RIGHTS....................................... 8
13. MISCELLANEOUS...................................................... 8
EXECUTION................................................................... 10
<PAGE> 3
THIS AGREEMENT is made on the 8th day of September, 1997
BETWEEN:
(1) MAN SANG INTERNATIONAL LIMITED a company incorporated under the laws of
Bermuda and having its registered office at Clarendon House, 2 Church
Street, Hamilton HM11, Bermuda and its principal place of business in
Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road South, Tsim Sha
Tsui, Kowloon, Hong Kong (the "Company"); and
(2) CHENG TAI PO of Flat A, 22nd Floor, Park Mansion, 27-29 MacDonnell
Road, Hong Kong (the "Executive").
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.01 In this Agreement, unless the context requires otherwise:
"Board" means the board of directors for the time being of the Company;
"Group" means the Company and its subsidiaries from time to time and
"member of the Group" shall be construed accordingly;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (as the same may be amended
from time to time); and
"month" means calendar month.
1.02 References herein to Clauses are to clauses in this Agreement unless
the context requires otherwise.
1.03 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.04 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
<PAGE> 4
2. APPOINTMENT
The Company will employ the Executive and the Executive hereby agrees
to serve the Company as an executive director upon the terms and
subject to the conditions hereinafter appearing.
3. DURATION
Subject to termination as hereinafter provided, the Company will employ
the Executive with effect from 1 September 1997 for an initial term of
three (3) years until terminated by either party giving to the other
not less than three (3) months' notice in writing.
4. EXECUTIVE'S DUTIES
The Executive shall, during the continuance of his employment
hereunder:
(a) serve the Company as Vice Chairman and an executive director
and, in such capacity, perform the duties and exercise the
powers from time to time assigned to or vested in him by the
Board (including (without further remuneration unless
otherwise agreed) serving on the board of directors, or in any
other office, of any member(s) of the Group, as the Board may
require) and he will perform those duties at such place or
places in Hong Kong or elsewhere as the Board may from time to
time determine;
(b) comply with and conform to any lawful instructions or
directions from time to time given or made by the Board, or
with the authority of the Board, and shall comply with the
Company's rules, regulations, policies and procedures from
time to time in force;
(c) faithfully and diligently serve the Group and use his best
endeavours to promote the business and interests thereof;
(d) devote himself exclusively and diligently to the business and
interests of the Group and personally attend thereto at all
times during usual business hours and during such other times
as the Company may reasonably require except in case of
incapacity through illness or accident in which case he shall
forthwith notify the Secretary of the Company of such
incapacity and shall furnish to the Board such evidence
thereof as it may require;
(e) keep the Board promptly and fully informed (in writing if so
requested) of his conduct of the business or affairs of the
Group and provide such explanations as the Board may require
in connection therewith;
<PAGE> 5
(f) carry out his duties and exercise his powers jointly with any
other director or executive of any member of the Group as
shall from time to time be appointed by the Board to act
jointly with the Executive and the Board may at any time
require the Executive to cease performing or exercising any of
his duties or powers under this Agreement; and
(g) comply with the relevant requirements of all applicable laws,
regulations, codes of practice and rules (including Securities
(Insider Dealing) Ordinance, the Rules Governing the Listing
of Securities on The Hong Kong Stock Exchange Limited and the
Model Code for Securities Transactions by Directors of Listed
Companies set out in Appendix 10 therein and the rules of any
other stock exchange, market or dealing system on which the
securities of any member of the Group is traded and the
applicable laws, regulations, codes of practice in that
jurisdiction).
5. REMUNERATION
The remuneration of the Executive shall be:
(a) a monthly salary of HK$250,000.00 payable in arrears by no
later than the seventh day of the following month, such salary
to include any sum receivable as director's fees or other
remuneration from any other member of the Group (if any). This
salary will be reviewed by the Board in each year at the time
of the annual salary reviews for senior executives provided
that the Executive shall abstain from voting and shall not be
counted in the quorum in respect of any resolution regarding
the amount payable to himself in relation to his employment
under this Agreement which is proposed at any meeting of the
Board;
(b) in respect of every financial year of the Company (which
expression shall include any other financial period in respect
of which the Company's accounts are made up), a discretionary
bonus of such amount as shall be determined by the Board
(provided that the aggregate of such amount and all
discretionary bonuses payable by the Company to its executive
directors in any financial year shall not exceed ten per cent.
of the net profits (after tax and after extraordinary items)
of the Company for such year as shown in its audited
accounts), payable within thirty (30) days after the Company's
accounts for the relevant year have been audited and
certified, provided that such discretionary bonus shall be
paid only on a pro rata basis in respect of any financial year
of the Company during a portion only of which the Executive
has served the Company hereunder, unless his employment shall
have been terminated pursuant to Clause 10.02, in which case
no discretionary bonus is payable.
6. OTHER BENEFITS
<PAGE> 6
6.01 In addition to the foregoing remuneration and benefits, the Executive
shall also be entitled to the use (whether for business or personal
purposes) of a motor car of such type as may be approved by the Board
and the Company shall pay all vehicle registration fees, taxes and
insurance premiums in respect of the car and shall pay or reimburse
against receipts all maintenance, repair and other running costs in
respect of the car and the cost of petrol during the continuance of his
employment hereunder, subject to determination by the Board as to the
appropriate level of cost of each item.
6.02 In addition to the above benefits, the Executive shall also be entitled
to such other benefits under any applicable employee benefit plan and
employee share option scheme adopted by the Company and any member of
the Group of which the Executive is a director or holds office for
their respective employees (including the Executive) as the Board shall
from time to time determine.
7. EXPENSES
The Company shall reimburse the Executive (against receipts or such
other reasonable evidence of expenditure as the Board may require) for
all reasonable expenses properly incurred in the course of his
employment hereunder or in promoting or otherwise in connection with
the business of the Company.
8. DEDUCTIONS
The Company shall be entitled, subject to any laws or agreements to the
contrary, at any time to deduct from the Executive's remuneration
hereunder any monies due from him to any member of the Group including,
but not limited to, any outstanding loans, advances, the cost of
repairing any damage to or loss of the Company's property caused by him
(and of recovering the same) and any other monies owed by him to the
Company or any of its subsidiaries.
9. LEAVE
The Executive shall be entitled after completion of each year of
service with the Company to fifteen (15) days' leave (in addition to
public holidays) with full pay, which leave shall be taken at such time
or times as may be convenient to the Board having regard to the
exigencies of the Group's business provided that:
(a) if the employment of the Executive hereunder is to cease on
the completion of any year of service, the Executive shall be
entitled to take his said leave immediately prior to the end
of such year of service notwithstanding that at that time such
year of service shall not have been completed;
(b) if the employment of the Executive hereunder is to cease (for
any reason other than termination pursuant to Clause 10.02)
during any year of service, the
<PAGE> 7
Executive shall be entitled to an amount of leave
proportionate to the part of the year during which he has been
employed by the Company, such leave to be taken immediately
prior to the termination of his employment; and
(c) if for any reason the Executive shall not have taken his full
entitlement of leave in any particular year he shall not have
any claim against the Company in respect thereof nor, unless
the reason is the exigencies of the Company's business (of
which the Board shall be the sole judge), shall he be entitled
to additional leave in any year in respect of leave not taken
in previous years.
10. TERMINATION
10.01 If the Executive is at any time incapacitated by illness, injury or
accident from performing his duties hereunder and (if so required)
furnishes the Board with evidence satisfactory to it of such incapacity
and the cause thereof he shall be entitled to receive his full salary
for the first three (3) months or any shorter period during which such
incapacity continues and if he continues so incapacitated for a longer
period than three (3) consecutive months or if he is so incapacitated
at different times for more than ninety (90) days in any one period of
fifty-two (52) consecutive weeks then and in either of such cases his
employment may be terminated by the Company by one (1) month's notice
in writing.
10.02 If at any time during the term of his employment hereunder the
Executive shall be guilty of or commit any serious misconduct which in
the absolute opinion of the Board is in any way detrimental to the
interests of any member of the Group, or shall be in breach of any of
the terms of this Agreement, or shall commit any act of bankruptcy or
become insolvent, or make any arrangements or composition with his
creditors generally, or become through mental disorder incapable of
managing his own affairs, or fail to pay his personal debts or shall be
guilty of persistent insobriety or be convicted of any criminal offence
involving his integrity or honesty, the Company may terminate the
Executive's employment hereunder forthwith without any notice or
payment in lieu of notice and upon such termination, the Executive
shall not be entitled to any bonus or any payment whatsoever (other
than salary actually accrued due and payable pursuant to Clause 5(a))
for or in respect of the then current year of service or to claim any
compensation or damages for or in respect of or by reason of such
termination.
10.03 In the event that: (a) the Executive is lawfully removed from his
office as a director of the Company by virtue of a resolution passed by
the members of the Company; or (b) the Executive, having retired from
the office of director of the Company in accordance with the Bye-laws
of the Company or any other applicable regulation or law, is not
re-elected as a director of the Company by the shareholders of the
Company at an annual general meeting of the Company, the Company may
within seven (7) days of the date of such vacation from office by the
Executive, terminate this Agreement forthwith by written notice to the
Executive.
<PAGE> 8
10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:
(a) (if not already vacated from such office(s)) forthwith resign
as a director of the Company and from all directorships or
other offices held by him in any member of the Group (and the
Executive irrevocably authorises the Company in his name and
on his behalf to execute all documents and do all things
necessary to effect such resignation in the event of his
failure to do so);
(b) shall cease to be entitled to any benefits under this
Agreement; and
(c) immediately return the car provided by the Company under
Clause 6.01 and the keys in respect thereof to the Company at
its principal place of business in Hong Kong or such other
place in Hong Kong as the Company may reasonably request
and the Executive shall not be entitled to claim any other compensation
whatsoever from the Company in respect of such termination except where
the Board otherwise agrees or as expressly provided for under this
Agreement.
10.05 Any delay or forbearance by the Company in exercising any right to
terminate this Agreement shall not constitute a waiver of such right.
10.06 If notice is served by either party pursuant to Clause 3, then for up
to a maximum period of three (3) months, the Company shall not be
obliged, at any time after the notice of termination is served, to
provide any work for the Executive or to assign to or vest in the
Executive any powers, duties or functions and may in its absolute
discretion suspend the Executive from work, and suspend the contractual
benefits of the Executive set out in Clauses 5(b) and 6 and to require
the Executive to refrain from entering any premises of any member(s) of
the Group and to refrain from contacting any customers, clients,
employees or suppliers of any member(s) of the Group.
11. EXECUTIVE'S UNDERTAKINGS
11.01 The Executive agrees to take good care of the car supplied by the
Company under Clause 6.01 and to ensure that the terms and conditions
of any insurance policy in respect thereof are observed.
11.02 The Executive shall not either during the continuance of his employment
hereunder or at any time thereafter divulge to any person whomsoever or
to any body corporate or unincorporated (except to those officers of
the Group whose province it is to know the same) or use for his own
purposes or for any purposes other than those of the Group and shall
use his best endeavours to prevent the unauthorised publication or
disclosure of any trade secret or any confidential information
concerning the business or finances of any member of the Group or any
of its dealings, transactions or affairs or those of its customers,
suppliers, management and shareholders which may come to his
<PAGE> 9
knowledge during or in the course of his employment. Confidential
information shall include, without limitation, lists or details of
customers and suppliers, information relating to the working of any
process of invention carried on or used by any member of the Group,
information relating to research and other projects, prices, discounts,
mark-ups, future business strategy and development, marketing,
price-sensitive information and any other information which is not
generally available to the public.
11.03 Forthwith upon the termination of the employment of the Executive
hereunder, and/or at any other time if the Company shall so request,
the Executive shall deliver to the Company all documents (including
correspondence, lists of customers, notes, memoranda, plans, drawings
and other documents of whatsoever nature), models or samples made or
compiled by or delivered to the Executive during his employment
hereunder and concerning the business, finances or affairs of any
member of the Group and credit cards and any equipment used by or made
available to the Executive by the Company or any member of the Group.
For the avoidance of doubt it is hereby declared that the property in
all such documents as aforesaid shall at all times be vested in the
relevant member of the Group.
11.04 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter,
in any country or place where any member of the Group has carried on
business, carry on or be employed or interested directly or indirectly
in (whether as shareholder, director, partner, agent or otherwise and
whether alone or jointly with others) any business carried on by any
member of the Group during the continuance of the said employment in
competition with any member of the Group (other than as a holder of not
more than five (5) per cent of the issued shares, debentures or other
securities of any company listed on any recognised stock exchange)
provided that the provisions of this Clause 11.04 shall only apply in
respect of business activities or services with which the Executive was
personally concerned or for which he was responsible during his said
employment.
11.05 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
either on his own account or in conjunction with or on behalf of any
other person or body corporate or unincorporated in competition with
any member of the Group directly or indirectly solicit or entice away
from any member of the Group, any person or body corporate or
unincorporated who now is or at any time during or at the date of the
termination of the said employment may have been or become a customer
or supplier or prospective customer or supplier of any member of the
Group and with whom the Executive had personal contact or dealings
during his said employment.
11.06 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
solicit or entice away from any member of the Group or employ or
otherwise engage any person who now is or at any time during or at the
date of the termination of the said employment may have become an
employee of any member of the Group and with whom the Executive had
contact during his said employment, whether or not such person would
commit any
<PAGE> 10
breach of his contract of employment by reason of leaving the service
of the relevant member of the Group.
11.07 The Executive shall not at any time or for any purpose after
termination of his employment hereunder use either the English or
Chinese name of the Company or any name similar thereto in connection
with his own or any other name in any way calculated to suggest that he
is or has been connected with the Company's business, nor in any way
hold himself out as having had any such connection.
11.08 While the restrictions contained in Clauses 11.02 to 11.07 are
considered by the parties to be reasonable for the protection of the
business and interest of the Group and in all the circumstances and do
not work harshly upon the Executive it is recognised that restrictions
of the nature in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any such
restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the member(s) of the Group but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof were reduced or
the range of products or area dealt with thereby were reduced in scope,
the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
12. INTELLECTUAL PROPERTY RIGHTS
12.01 The Company (or any other member of the Group as the case may be) shall
be entitled free of charge to the sole ownership and exclusive use of
any invention or improvement made or discovered by the Executive and of
any copyright, design right, trade mark, service mark or trade name
created or used by the Executive (hereinafter referred to as the
"intellectual property rights") in the course of or for the purpose of
providing services hereunder to the Company or any other member of the
Group.
12.02 The Executive shall forthwith and from time to time both during and
after the term of this Agreement and at the request and cost of the
Company, insofar as it is within his power, do such acts and things and
execute such documents, as may in the opinion of the Company be
reasonably necessary for obtaining letters patent, registration or
other protection for any such intellectual property rights in any part
of the world and shall effect such registration and vest such letters
patent or other protection in the Company (or any other member of the
Group as the case may be) or its nominees. The Executive irrevocably
authorises the Company for the purposes aforesaid in the name of the
Executive and execute any document or do anything on his behalf. The
Executive shall at the cost and request of the Company render all
reasonable assistance to the Company (or any other member of the Group
as the case may be) for and in connection with the purposes aforesaid.
12.03 The Executive shall not during or after the termination of the
Agreement use to the detriment or prejudice of the Group or divulge to
any person any confidential information concerning the intellectual
property rights of the Group which may have come to his knowledge.
<PAGE> 11
13. MISCELLANEOUS
13.01 This Agreement shall be in substitution for any subsisting agreement or
arrangement (oral or otherwise) made between the Company and the
Executive which shall be deemed to have been terminated by mutual
consent as from the date on which the Executive's employment under this
Agreement commences.
13.02 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as in accordance
with their terms are expressed to operate or have effect thereafter.
13.03 In the event of any variation of the remuneration payable to the
Executive hereunder being made by consent of the parties hereto, such
variation shall not constitute a new agreement but (subject to any
express agreement to the contrary) the employment of the Executive
hereunder shall continue subject in all respects to the terms and
conditions of this Agreement with such variation as aforesaid.
13.04 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days'
prior written notice specified to the other parties):
To the Company: Man Sang International Limited
21st Floor, Railway Plaza
39 Chatham Road South
Tsim Sha Tsui, Kowloon
Hong Kong
Fax number: (852) 2317 5243
Attention: Mr. Cheng Chung Hing
To the Executive: Cheng Tai Po
Flat A, 22nd Floor, Park Mansion
27-29 MacDonnell Road
Hong Kong
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, by post, two (2) clear business days after the date of posting,
or by recorded delivery, when actually delivered to the relevant
address; and (b) if given or made by facsimile, when despatched subject
to receipt of machine-printed confirmation of error-free despatch of
the whole of the notice, demand or communication to the facsimile
number of the intended addressee.
13.05 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not
be affected or impaired thereby.
<PAGE> 12
13.06 No failure or delay by the Company in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or remedy.
Without limiting the foregoing, no waiver by the Company of any breach
by the Executive of any provision in this Agreement shall be deemed to
be a waiver of any subsequent breach of that or any other provision in
this Agreement.
13.07 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the Hong Kong courts.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
for and on behalf of MAN SANG )
INTERNATIONAL LIMITED )
in the presence of: )
SIGNED by )
CHENG TAI PO )
in the presence of: )
<PAGE> 1
DATED THE 8TH DAY OF SEPTEMBER, 1997
MAN SANG INTERNATIONAL LIMITED
AND
HUNG KWOK WING
-----------------
SERVICE AGREEMENT
-----------------
BAKER & McKENZIE
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
(LKL/EC/IW)
<PAGE> 2
CONTENT
CLAUSE DESCRIPTION PAGE
- ------ ----------- ----
1. INTERPRETATION..................................................... 1
2. APPOINTMENT........................................................ 2
3. DURATION........................................................... 2
4. EXECUTIVE'S DUTIES................................................. 2
5. REMUNERATION....................................................... 3
6. OTHER BENEFITS..................................................... 4
7. EXPENSES........................................................... 4
8. DEDUCTIONS......................................................... 4
9. LEAVE.............................................................. 4
10. TERMINATION........................................................ 5
11. EXECUTIVE'S UNDERTAKINGS........................................... 6
12. INTELLECTUAL PROPERTY RIGHTS....................................... 8
13. MISCELLANEOUS...................................................... 8
EXECUTION................................................................... 10
<PAGE> 3
THIS AGREEMENT is made on the 8th day of September, 1997
BETWEEN:
(1) MAN SANG INTERNATIONAL LIMITED, a company incorporated under the laws
of Bermuda and having its registered office at Clarendon House, 2
Church Street, Hamilton HM11, Bermuda and its principal place of
business in Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road
South, Tsim Sha Tsui, Kowloon, Hong Kong (the "Company"); and
(2) HUNG KWOK WING of Room 3103, Choi Tin House, Hing Tin
Estate, Lam Tin, Kowloon, Hong Kong (the "Executive").
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.01 In this Agreement, unless the context requires otherwise:
"Board" means the board of directors for the time being of the Company;
"Group" means the Company and its subsidiaries from time to time and
"member of the Group" shall be construed accordingly;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (as the same may be amended
from time to time); and
"month" means calendar month.
1.02 References herein to Clauses are to clauses in this Agreement unless
the context requires otherwise.
1.03 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.04 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
<PAGE> 4
2. APPOINTMENT
The Company will employ the Executive and the Executive hereby agrees
to serve the Company as an executive director upon the terms and
subject to the conditions hereinafter appearing.
3. DURATION
Subject to termination as hereinafter provided, the Company will employ
the Executive with effect from 1 September 1997 for an initial term of
three (3) years until terminated by either party giving to the other
not less than three (3) months' notice in writing.
4. EXECUTIVE'S DUTIES
The Executive shall, during the continuance of his employment
hereunder:
(a) serve the Company as an executive director and, in such
capacity, perform the duties and exercise the powers from time
to time assigned to or vested in him by the Board (including
(without further remuneration unless otherwise agreed) serving
on the board of directors, or in any other office, of any
member(s) of the Group, as the Board may require) and he will
perform those duties at such place or places in Hong Kong or
elsewhere as the Board may from time to time determine;
(b) comply with and conform to any lawful instructions or
directions from time to time given or made by the Board, or
with the authority of the Board, and shall comply with the
Company's rules, regulations, policies and procedures from
time to time in force;
(c) faithfully and diligently serve the Group and use his best
endeavours to promote the business and interests thereof;
(d) devote himself exclusively and diligently to the business and
interests of the Group and personally attend thereto at all
times during usual business hours and during such other times
as the Company may reasonably require except in case of
incapacity through illness or accident in which case he shall
forthwith notify the Secretary of the Company of such
incapacity and shall furnish to the Board such evidence
thereof as it may require;
(e) keep the Board promptly and fully informed (in writing if so
requested) of his conduct of the business or affairs of the
Group and provide such explanations as the Board may require
in connection therewith;
<PAGE> 5
(f) carry out his duties and exercise his powers jointly with any
other director or executive of any member of the Group as
shall from time to time be appointed by the Board to act
jointly with the Executive and the Board may at any time
require the Executive to cease performing or exercising any of
his duties or powers under this Agreement; and
(g) comply with the relevant requirements of all applicable laws,
regulations, codes of practice and rules (including Securities
(Insider Dealing) Ordinance, the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited and
the Model Code for Securities Transactions by Directors of
Listed Companies set out in Appendix 10 therein and the rules
of any other stock exchange, market or dealing system on which
the securities of any member of the Group is traded and the
applicable laws, regulations, codes of practice in that
jurisdiction).
5. REMUNERATION
The remuneration of the Executive shall be:
(a) an annual salary of HK$1,000,000.00, such salary to include
any sum receivable as director's fees or other remuneration
from any other member of the Group (if any). This salary will
be reviewed by the Board in each year at the time of the
annual salary reviews for senior executives provided that the
Executive shall abstain from voting and shall not be counted
in the quorum in respect of any resolution regarding the
amount payable to himself in relation to his employment under
this Agreement which is proposed at any meeting of the Board;
(b) in respect of every financial year of the Company (which
expression shall include any other financial period in respect
of which the Company's accounts are made up), a discretionary
bonus of such amount as shall be determined by the Board
(provided that the aggregate of such amount and all
discretionary bonuses payable by the Company to its executive
directors in any financial year shall not exceed ten per cent.
of the net profits (after tax and after extraordinary items)
of the Company for such year as shown in its audited
accounts), payable within thirty (30) days after the Company's
accounts for the relevant year have been audited and
certified, provided that such discretionary bonus shall be
paid only on a pro rata basis in respect of any financial year
of the Company during a portion only of which the Executive
has served the Company hereunder, unless his employment shall
have been terminated pursuant to Clause 10.02, in which case
no discretionary bonus is payable.
<PAGE> 6
6. OTHER BENEFITS
6.01 In addition to the foregoing remuneration and benefits, the Executive
shall also be entitled to the use of the corporate membership of the
Group at Tower Club and the payment of all entrance fees, debentures,
monthly subscriptions but not chits in connection therewith during the
continuance of his employment hereunder, subject to determination by
the Board as to the appropriate level of cost of each item.
6.02 In addition to the above benefits, the Executive shall also be entitled
to such other benefits under any applicable employee benefit plan and
employee share option scheme adopted by the Company and any member of
the Group of which the Executive is a director or holds office for
their respective employees (including the Executive) as the Board shall
from time to time determine.
7. EXPENSES
The Company shall reimburse the Executive (against receipts or such
other reasonable evidence of expenditure as the Board may require) for
all reasonable expenses properly incurred in the course of his
employment hereunder or in promoting or otherwise in connection with
the business of the Company.
8. DEDUCTIONS
The Company shall be entitled, subject to any laws or agreements to the
contrary, at any time to deduct from the Executive's remuneration
hereunder any monies due from him to any member of the Group including,
but not limited to, any outstanding loans, advances, the cost of
repairing any damage to or loss of the Company's property caused by him
(and of recovering the same) and any other monies owed by him to the
Company or any of its subsidiaries.
9. LEAVE
The Executive shall be entitled after completion of each year of
service with the Company to fifteen (15) days' leave (in addition to
public holidays) with full pay, which leave shall be taken at such time
or times as may be convenient to the Board having regard to the
exigencies of the Group's business provided that:
(a) if the employment of the Executive hereunder is to cease on
the completion of any year of service, the Executive shall be
entitled to take his said leave immediately prior to the end
of such year of service notwithstanding that at that time such
year of service shall not have been completed;
(b) if the employment of the Executive hereunder is to cease (for
any reason other than termination pursuant to Clause 10.02)
during any year of service, the
<PAGE> 7
Executive shall be entitled to an amount of leave
proportionate to the part of the year during which he has been
employed by the Company, such leave to be taken immediately
prior to the termination of his employment; and
(c) if for any reason the Executive shall not have taken his full
entitlement of leave in any particular year he shall not have
any claim against the Company in respect thereof nor, unless
the reason is the exigencies of the Company's business (of
which the Board shall be the sole judge), shall he be entitled
to additional leave in any year in respect of leave not taken
in previous years.
10. TERMINATION
10.01 If the Executive is at any time incapacitated by illness, injury or
accident from performing his duties hereunder and (if so required)
furnishes the Board with evidence satisfactory to it of such incapacity
and the cause thereof he shall be entitled to receive his full salary
for the first three (3) months or any shorter period during which such
incapacity continues and if he continues so incapacitated for a longer
period than three (3) consecutive months or if he is so incapacitated
at different times for more than ninety (90) days in any one period of
fifty-two (52) consecutive weeks then and in either of such cases his
employment may be terminated by the Company by one (1) month's notice
in writing.
10.02 If at any time during the term of his employment hereunder the
Executive shall be guilty of or commit any serious misconduct which in
the absolute opinion of the Board is in any way detrimental to the
interests of any member of the Group, or shall be in breach of any of
the terms of this Agreement, or shall commit any act of bankruptcy or
become insolvent, or make any arrangements or composition with his
creditors generally, or become through mental disorder incapable of
managing his own affairs, or fail to pay his personal debts or shall be
guilty of persistent insobriety or be convicted of any criminal offence
involving his integrity or honesty, the Company may terminate the
Executive's employment hereunder forthwith without any notice or
payment in lieu of notice and upon such termination, the Executive
shall not be entitled to any bonus or any payment whatsoever (other
than salary actually accrued due and payable pursuant to Clause 5(a))
for or in respect of the then current year of service or to claim any
compensation or damages for or in respect of or by reason of such
termination.
10.03 In the event that: (a) the Executive is lawfully removed from his
office as a director of the Company by virtue of a resolution passed by
the members of the Company; or (b) the Executive, having retired from
the office of director of the Company in accordance with the Bye-laws
of the Company or any other applicable regulation or law, is not
re-elected as a director of the Company by the shareholders of the
Company at an annual general meeting of the Company, the Company may
within seven (7) days of the date of such vacation from office by the
Executive, terminate this Agreement forthwith by written notice to the
Executive.
<PAGE> 8
10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:
(a) (if not already vacated from such office(s)) forthwith resign
as a director of the Company and from all directorships or
other offices held by him in any member of the Group (and the
Executive irrevocably authorises the Company in his name and
on his behalf to execute all documents and do all things
necessary to effect such resignation in the event of his
failure to do so); and
(b) shall cease to be entitled to any benefits under this
Agreement
and the Executive shall not be entitled to claim any other compensation
whatsoever from the Company in respect of such termination except where
the Board otherwise agrees or as expressly provided for under this
Agreement.
10.05 Any delay or forbearance by the Company in exercising any right to
terminate this Agreement shall not constitute a waiver of such right.
10.06 If notice is served by either party pursuant to Clause 3, then for up
to a maximum period of three (3) months, the Company shall not be
obliged, at any time after the notice of termination is served, to
provide any work for the Executive or to assign to or vest in the
Executive any powers, duties or functions and may in its absolute
discretion suspend the Executive from work, and suspend the contractual
benefits of the Executive set out in Clause 5(b) and 6 and to require
the Executive to refrain from entering any premises of any member(s) of
the Group and to refrain from contacting any customers, clients,
employees or suppliers of any member(s) of the Group.
11. EXECUTIVE'S UNDERTAKINGS
11.01 The Executive shall not either during the continuance of his employment
hereunder or at any time thereafter divulge to any person whomsoever or
to any body corporate or unincorporated (except to those officers of
the Group whose province it is to know the same) or use for his own
purposes or for any purposes other than those of the Group and shall
use his best endeavours to prevent the unauthorised publication or
disclosure of any trade secret or any confidential information
concerning the business or finances of any member of the Group or any
of its dealings, transactions or affairs or those of its customers,
suppliers, management and shareholders which may come to his knowledge
during or in the course of his employment. Confidential information
shall include, without limitation, lists or details of customers and
suppliers, information relating to the working of any process of
invention carried on or used by any member of the Group, information
relating to research and other projects, prices, discounts, mark-ups,
future business strategy and development, marketing, price-sensitive
information and any other information which is not generally available
to the public.
<PAGE> 9
11.02 Forthwith upon the termination of the employment of the Executive
hereunder, and/or at any other time if the Company shall so request,
the Executive shall deliver to the Company all documents (including
correspondence, lists of customers, notes, memoranda, plans, drawings
and other documents of whatsoever nature), models or samples made or
compiled by or delivered to the Executive during his employment
hereunder and concerning the business, finances or affairs of any
member of the Group and credit cards and any equipment used by or made
available to the Executive by the Company or any member of the Group.
For the avoidance of doubt it is hereby declared that the property in
all such documents as aforesaid shall at all times be vested in the
relevant member of the Group.
11.03 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter,
in any country or place where any member of the Group has carried on
business, carry on or be employed or interested directly or indirectly
in (whether as shareholder, director, partner, agent or otherwise and
whether alone or jointly with others) any business carried on by any
member of the Group during the continuance of the said employment in
competition with any member of the Group (other than as a holder of not
more than five (5) per cent of the issued shares, debentures or other
securities of any company listed on any recognised stock exchange)
provided that the provisions of this Clause 11.03 shall only apply in
respect of business activities or services with which the Executive was
personally concerned or for which he was responsible during his said
employment.
11.04 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
either on his own account or in conjunction with or on behalf of any
other person or body corporate or unincorporated in competition with
any member of the Group directly or indirectly solicit or entice away
from any member of the Group, any person or body corporate or
unincorporated who now is or at any time during or at the date of the
termination of the said employment may have been or become a customer
or supplier or prospective customer or supplier of any member of the
Group and with whom the Executive had personal contact or dealings
during his said employment.
11.05 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
solicit or entice away from any member of the Group or employ or
otherwise engage any person who now is or at any time during or at the
date of the termination of the said employment may have become an
employee of any member of the Group and with whom the Executive had
contact during his said employment, whether or not such person would
commit any breach of his contract of employment by reason of leaving
the service of the relevant member of the Group.
11.06 The Executive shall not at any time or for any purpose after
termination of his employment hereunder use either the English or
Chinese name of the Company or any name similar thereto in connection
with his own or any other name in any way calculated to suggest that he
is or has been connected with the Company's business, nor in any way
hold himself out as having had any such connection.
<PAGE> 10
11.07 While the restrictions contained in Clauses 11.01 to 11.06 are
considered by the parties to be reasonable for the protection of the
business and interest of the Group and in all the circumstances and do
not work harshly upon the Executive it is recognised that restrictions
of the nature in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any such
restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the member(s) of the Group but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof were reduced or
the range of products or area dealt with thereby were reduced in scope,
the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
12. INTELLECTUAL PROPERTY RIGHTS
12.01 The Company (or any other member of the Group as the case may be) shall
be entitled free of charge to the sole ownership and exclusive use of
any invention or improvement made or discovered by the Executive and of
any copyright, design right, trade mark, service mark or trade name
created or used by the Executive (hereinafter referred to as the
"intellectual property rights") in the course of or for the purpose of
providing services hereunder to the Company or any other member of the
Group.
12.02 The Executive shall forthwith and from time to time both during and
after the term of this Agreement and at the request and cost of the
Company, insofar as it is within his power, do such acts and things and
execute such documents, as may in the opinion of the Company be
reasonably necessary for obtaining letters patent, registration or
other protection for any such intellectual property rights in any part
of the world and shall effect such registration and vest such letters
patent or other protection in the Company (or any other member of the
Group as the case may be) or its nominees. The Executive irrevocably
authorises the Company for the purposes aforesaid in the name of the
Executive and execute any document or do anything on his behalf. The
Executive shall at the cost and request of the Company render all
reasonable assistance to the Company (or any other member of the Group
as the case may be) for and in connection with the purposes aforesaid.
12.03 The Executive shall not during or after the termination of the
Agreement use to the detriment or prejudice of the Group or divulge to
any person any confidential information concerning the intellectual
property rights of the Group which may have come to his knowledge.
13. MISCELLANEOUS
13.01 This Agreement shall be in substitution for any subsisting agreement or
arrangement (oral or otherwise) made between the Company and the
Executive which shall be deemed to have been terminated by mutual
consent as from the date on which the Executive's employment under this
Agreement commences.
<PAGE> 11
13.02 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as in accordance
with their terms are expressed to operate or have effect thereafter.
13.03 In the event of any variation of the remuneration payable to the
Executive hereunder being made by consent of the parties hereto, such
variation shall not constitute a new agreement but (subject to any
express agreement to the contrary) the employment of the Executive
hereunder shall continue subject in all respects to the terms and
conditions of this Agreement with such variation as aforesaid.
13.04 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days'
prior written notice specified to the other parties):
To the Company: Man Sang International Limited
21st Floor, Railway Plaza
39 Chatham Road South
Tsim Sha Tsui, Kowloon
Hong Kong
Fax number: (852) 2317 5243
Attention: Mr. Cheng Chung Hing
To the Executive: Hung Kwok Wing
Room 3103, Choi Tin House
Hing Tin Estate
Lam Tin, Kowloon
Hong Kong
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, by post, two (2) clear business days after the date of posting,
or by recorded delivery, when actually delivered to the relevant
address; and (b) if given or made by facsimile, when despatched subject
to receipt of machine-printed confirmation of error-free despatch of
the whole of the notice, demand or communication to the facsimile
number of the intended addressee.
13.05 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not
be affected or impaired thereby.
13.06 No failure or delay by the Company in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or remedy.
Without limiting the foregoing, no waiver by the Company of any breach
by the Executive of any provision in this Agreement shall be deemed to
be a waiver of any subsequent breach of that or any other provision in
this Agreement.
<PAGE> 12
13.07 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the Hong Kong courts.
<PAGE> 13
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
for and on behalf of MAN SANG )
INTERNATIONAL LIMITED )
in the presence of: )
SIGNED by )
HUNG KWOK WING )
in the presence of: )
<PAGE> 1
DATED THE 8TH DAY OF SEPTEMBER, 1997
MAN SANG INTERNATIONAL LIMITED
AND
SIO KAM SENG
-----------------
SERVICE AGREEMENT
-----------------
BAKER & McKENZIE
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
(LKL/EC/IW)
<PAGE> 2
CONTENT
CLAUSE DESCRIPTION PAGE
- ------ ----------- ----
1. INTERPRETATION.................................................... 1
2. APPOINTMENT....................................................... 2
3. DURATION.......................................................... 2
4. EXECUTIVE'S DUTIES................................................ 2
5. REMUNERATION...................................................... 3
6. OTHER BENEFITS.................................................... 4
7. EXPENSES.......................................................... 4
8. DEDUCTIONS........................................................ 4
9. LEAVE............................................................. 4
10. TERMINATION....................................................... 5
11. EXECUTIVE'S UNDERTAKINGS.......................................... 6
12. INTELLECTUAL PROPERTY RIGHTS...................................... 8
13. MISCELLANEOUS..................................................... 9
EXECUTION.................................................................. 10
<PAGE> 3
THIS AGREEMENT is made on the 8th day of September, 1997
BETWEEN:
(1) MAN SANG INTERNATIONAL LIMITED a company incorporated under the laws of
Bermuda and having its registered office at Clarendon House, 2 Church
Street, Hamilton HM11, Bermuda and its principal place of business in
Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road South, Tsim Sha
Tsui, Kowloon, Hong Kong (the "Company"); and
(2) SIO KAM SENG of Flat 1002, Block 3, Heng Fa Chuen, Hong Kong (the
"Executive").
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.01 In this Agreement, unless the context requires otherwise:
"Board" means the board of directors for the time being of the Company;
"Group" means the Company and its subsidiaries from time to time and
"member of the Group" shall be construed accordingly;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (as the same may be amended
from time to time); and
"month" means calendar month.
1.02 References herein to Clauses are to clauses in this Agreement unless
the context requires otherwise.
1.03 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.04 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
<PAGE> 4
2. APPOINTMENT
The Company will employ the Executive and the Executive hereby agrees
to serve the Company as an executive director upon the terms and
subject to the conditions hereinafter appearing.
3. DURATION
Subject to termination as hereinafter provided, the Company will employ
the Executive with effect from 1 September 1997 for an initial term of
three (3) years until terminated by either party giving to the other
not less than three (3) months' notice in writing.
4. EXECUTIVE'S DUTIES
The Executive shall, during the continuance of his employment
hereunder:
(a) serve the Company as an executive director and, in such
capacity, perform the duties and exercise the powers from time
to time assigned to or vested in him by the Board (including
(without further remuneration unless otherwise agreed) serving
on the board of directors, or in any other office, of any
member(s) of the Group, as the Board may require) and he will
perform those duties at such place or places in Hong Kong or
elsewhere as the Board may from time to time determine;
(b) comply with and conform to any lawful instructions or
directions from time to time given or made by the Board, or
with the authority of the Board, and shall comply with the
Company's rules, regulations, policies and procedures from
time to time in force;
(c) faithfully and diligently serve the Group and use his best
endeavours to promote the business and interests thereof;
(d) devote himself exclusively and diligently to the business and
interests of the Group and personally attend thereto at all
times during usual business hours and during such other times
as the Company may reasonably require except in case of
incapacity through illness or accident in which case he shall
forthwith notify the Secretary of the Company of such
incapacity and shall furnish to the Board such evidence
thereof as it may require;
(e) keep the Board promptly and fully informed (in writing if so
requested) of his conduct of the business or affairs of the
Group and provide such explanations as the Board may require
in connection therewith;
<PAGE> 5
(f) carry out his duties and exercise his powers jointly with any
other director or executive of any member of the Group as
shall from time to time be appointed by the Board to act
jointly with the Executive and the Board may at any time
require the Executive to cease performing or exercising any of
his duties or powers under this Agreement; and
(g) comply with the relevant requirements of all applicable laws,
regulations, codes of practice and rules (including Securities
(Insider Dealing) Ordinance, the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited and
the Model Code for Securities Transactions by Directors of
Listed Companies set out in Appendix 10 therein and the rules
of any other stock exchange, market or dealing system on which
the securities of any member of the Group is traded and the
applicable laws, regulations, codes of practice in that
jurisdiction).
5. REMUNERATION
The remuneration of the Executive shall be:
(a) an annual salary of HK$1,000,000.00, such salary to include
any sum receivable as director's fees or other remuneration
from any other member of the Group (if any). This salary will
be reviewed by the Board in each year at the time of the
annual salary reviews for senior executives provided that the
Executive shall abstain from voting and shall not be counted
in the quorum in respect of any resolution regarding the
amount payable to himself in relation to his employment under
this Agreement which is proposed at any meeting of the Board;
(b) in respect of every financial year of the Company (which
expression shall include any other financial period in respect
of which the Company's accounts are made up), a discretionary
bonus of such amount as shall be determined by the Board
(provided that the aggregate of such amount and all
discretionary bonuses payable by the Company to its executive
directors in any financial year shall not exceed ten per cent.
of the net profits (after tax and after extraordinary items)
of the Company for such year as shown in its audited
accounts), payable within thirty (30) days after the Company's
accounts for the relevant year have been audited and
certified, provided that such discretionary bonus shall be
paid only on a pro rata basis in respect of any financial year
of the Company during a portion only of which the Executive
has served the Company hereunder, unless his employment shall
have been terminated pursuant to Clause 10.02, in which case
no discretionary bonus is payable.
<PAGE> 6
6. OTHER BENEFITS
6.01 In addition to the foregoing remuneration and benefits, the Executive
shall also be entitled to the use of a car parking space as may be
approved by the Board and the Company shall pay all charges and fees in
respect of the car parking space during the continuance of his
employment hereunder, subject to determination by the Board as to the
appropriate level of cost of each item.
6.02 In addition to the above benefits, the Executive shall also be entitled
to such other benefits under any applicable employee benefit plan and
employee share option scheme adopted by the Company and any member of
the Group of which the Executive is a director or holds office for
their respective employees (including the Executive) as the Board shall
from time to time determine.
7. EXPENSES
The Company shall reimburse the Executive (against receipts or such
other reasonable evidence of expenditure as the Board may require) for
all reasonable expenses properly incurred in the course of his
employment hereunder or in promoting or otherwise in connection with
the business of the Company.
8. DEDUCTIONS
The Company shall be entitled, subject to any laws or agreements to the
contrary, at any time to deduct from the Executive's remuneration
hereunder any monies due from him to any member of the Group including,
but not limited to, any outstanding loans, advances, the cost of
repairing any damage to or loss of the Company's property caused by him
(and of recovering the same) and any other monies owed by him to the
Company or any of its subsidiaries.
9. LEAVE
The Executive shall be entitled after completion of each year of
service with the Company to fifteen (15) days' leave (in addition to
public holidays) with full pay, which leave shall be taken at such time
or times as may be convenient to the Board having regard to the
exigencies of the Group's business provided that:
(a) if the employment of the Executive hereunder is to cease on
the completion of any year of service, the Executive shall be
entitled to take his said leave immediately prior to the end
of such year of service notwithstanding that at that time such
year of service shall not have been completed;
(b) if the employment of the Executive hereunder is to cease (for
any reason other than termination pursuant to Clause 10.02)
during any year of service, the
<PAGE> 7
Executive shall be entitled to an amount of leave
proportionate to the part of the year during which he has been
employed by the Company, such leave to be taken immediately
prior to the termination of his employment; and
(c) if for any reason the Executive shall not have taken his full
entitlement of leave in any particular year he shall not have
any claim against the Company in respect thereof nor, unless
the reason is the exigencies of the Company's business (of
which the Board shall be the sole judge), shall he be entitled
to additional leave in any year in respect of leave not taken
in previous years.
10. TERMINATION
10.01 If the Executive is at any time incapacitated by illness, injury or
accident from performing his duties hereunder and (if so required)
furnishes the Board with evidence satisfactory to it of such incapacity
and the cause thereof he shall be entitled to receive his full salary
for the first three (3) months or any shorter period during which such
incapacity continues and if he continues so incapacitated for a longer
period than three (3) consecutive months or if he is so incapacitated
at different times for more than ninety (90) days in any one period of
fifty-two (52) consecutive weeks then and in either of such cases his
employment may be terminated by the Company by one (1) month's notice
in writing.
10.02 If at any time during the term of his employment hereunder the
Executive shall be guilty of or commit any serious misconduct which in
the absolute opinion of the Board is in any way detrimental to the
interests of any member of the Group, or shall be in breach of any of
the terms of this Agreement, or shall commit any act of bankruptcy or
become insolvent, or make any arrangements or composition with his
creditors generally, or become through mental disorder incapable of
managing his own affairs, or fail to pay his personal debts or shall be
guilty of persistent insobriety or be convicted of any criminal offence
involving his integrity or honesty, the Company may terminate the
Executive's employment hereunder forthwith without any notice or
payment in lieu of notice and upon such termination, the Executive
shall not be entitled to any bonus or any payment whatsoever (other
than salary actually accrued due and payable pursuant to Clause 5(a))
for or in respect of the then current year of service or to claim any
compensation or damages for or in respect of or by reason of such
termination.
10.03 In the event that: (a) the Executive is lawfully removed from his
office as a director of the Company by virtue of a resolution passed by
the members of the Company; or (b) the Executive, having retired from
the office of director of the Company in accordance with the Bye-laws
of the Company or any other applicable regulation or law, is not
re-elected as a director of the Company by the shareholders of the
Company at an annual general meeting of the Company, the Company may
within seven (7) days of the date of such vacation from office by the
Executive, terminate this Agreement forthwith by written notice to the
Executive.
<PAGE> 8
10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:
(a) (if not already vacated from such office(s)) forthwith resign
as a director of the Company and from all directorships or
other offices held by him in any member of the Group (and the
Executive irrevocably authorises the Company in his name and
on his behalf to execute all documents and do all things
necessary to effect such resignation in the event of his
failure to do so);
(b) shall cease to be entitled to any benefits under this
Agreement; and
(c) immediately vacate the car parking space provided by the
Company under Clause 6.01 and forthwith return any car park
entrance device in respect thereof to the Company at its
principal place of business in Hong Kong or such other place
in Hong Kong as the Company may reasonably request
and the Executive shall not be entitled to claim any other compensation
whatsoever from the Company in respect of such termination except where
the Board otherwise agrees or as expressly provided for under this
Agreement.
10.05 Any delay or forbearance by the Company in exercising any right to
terminate this Agreement shall not constitute a waiver of such right.
10.06 If notice is served by either party pursuant to Clause 3, then for up
to a maximum period of three (3) months, the Company shall not be
obliged, at any time after the notice of termination is served, to
provide any work for the Executive or to assign to or vest in the
Executive any powers, duties or functions and may in its absolute
discretion suspend the Executive from work, and suspend the contractual
benefits of the Executive set out in Clause 5(b) and 6 and to require
the Executive to refrain from entering any premises of any member(s) of
the Group and to refrain from contacting any customers, clients,
employees or suppliers of any member(s) of the Group.
11. EXECUTIVE'S UNDERTAKINGS
11.01 The Executive agrees to ensure that all rules and regulation governing
the use of the car parking space provided by the Company under Clause
6.01 are observed.
11.02 The Executive shall not either during the continuance of his employment
hereunder or at any time thereafter divulge to any person whomsoever or
to any body corporate or unincorporated (except to those officers of
the Group whose province it is to know the same) or use for his own
purposes or for any purposes other than those of the Group and shall
use his best endeavours to prevent the unauthorised publication or
disclosure of any trade secret or any confidential information
concerning the business or finances of any member of the Group or any
of its dealings, transactions or affairs or those of its customers,
suppliers, management and shareholders which may come to his knowledge
during or in the course of his employment. Confidential information
shall
<PAGE> 9
include, without limitation, lists or details of customers and
suppliers, information relating to the working of any process of
invention carried on or used by any member of the Group, information
relating to research and other projects, prices, discounts, mark-ups,
future business strategy and development, marketing, price-sensitive
information and any other information which is not generally available
to the public.
11.03 Forthwith upon the termination of the employment of the Executive
hereunder, and/or at any other time if the Company shall so request,
the Executive shall deliver to the Company all documents (including
correspondence, lists of customers, notes, memoranda, plans, drawings
and other documents of whatsoever nature), models or samples made or
compiled by or delivered to the Executive during his employment
hereunder and concerning the business, finances or affairs of any
member of the Group and credit cards and any equipment used by or made
available to the Executive by the Company or any member of the Group.
For the avoidance of doubt it is hereby declared that the property in
all such documents as aforesaid shall at all times be vested in the
relevant member of the Group.
11.04 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter,
in any country or place where any member of the Group has carried on
business, carry on or be employed or interested directly or indirectly
in (whether as shareholder, director, partner, agent or otherwise and
whether alone or jointly with others) any business carried on by any
member of the Group during the continuance of the said employment in
competition with any member of the Group (other than as a holder of not
more than five (5) per cent of the issued shares, debentures or other
securities of any company listed on any recognised stock exchange)
provided that the provisions of this Clause 11.04 shall only apply in
respect of business activities or services with which the Executive was
personally concerned or for which he was responsible during his said
employment.
11.05 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
either on his own account or in conjunction with or on behalf of any
other person or body corporate or unincorporated in competition with
any member of the Group directly or indirectly solicit or entice away
from any member of the Group, any person or body corporate or
unincorporated who now is or at any time during or at the date of the
termination of the said employment may have been or become a customer
or supplier or prospective customer or supplier of any member of the
Group and with whom the Executive had personal contact or dealings
during his said employment.
11.06 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
solicit or entice away from any member of the Group or employ or
otherwise engage any person who now is or at any time during or at the
date of the termination of the said employment may have become an
employee of any member of the Group and with whom the Executive had
contact during his said employment, whether or not such person would
commit any breach of his contract of employment by reason of leaving
the service of the relevant member of the Group.
<PAGE> 10
11.07 The Executive shall not at any time or for any purpose after
termination of his employment hereunder use either the English or
Chinese name of the Company or any name similar thereto in connection
with his own or any other name in any way calculated to suggest that he
is or has been connected with the Company's business, nor in any way
hold himself out as having had any such connection.
11.08 While the restrictions contained in Clauses 11.02 to 11.07 are
considered by the parties to be reasonable for the protection of the
business and interest of the Group and in all the circumstances and do
not work harshly upon the Executive it is recognised that restrictions
of the nature in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any such
restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the member(s) of the Group but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof were reduced or
the range of products or area dealt with thereby were reduced in scope,
the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
12. INTELLECTUAL PROPERTY RIGHTS
12.01 The Company (or any other member of the Group as the case may be) shall
be entitled free of charge to the sole ownership and exclusive use of
any invention or improvement made or discovered by the Executive and of
any copyright, design right, trade mark, service mark or trade name
created or used by the Executive (hereinafter referred to as the
"intellectual property rights") in the course of or for the purpose of
providing services hereunder to the Company or any other member of the
Group.
12.02 The Executive shall forthwith and from time to time both during and
after the term of this Agreement and at the request and cost of the
Company, insofar as it is within his power, do such acts and things and
execute such documents, as may in the opinion of the Company be
reasonably necessary for obtaining letters patent, registration or
other protection for any such intellectual property rights in any part
of the world and shall effect such registration and vest such letters
patent or other protection in the Company (or any other member of the
Group as the case may be) or its nominees. The Executive irrevocably
authorises the Company for the purposes aforesaid in the name of the
Executive and execute any document or do anything on his behalf. The
Executive shall at the cost and request of the Company render all
reasonable assistance to the Company (or any other member of the Group
as the case may be) for and in connection with the purposes aforesaid.
12.03 The Executive shall not during or after the termination of the
Agreement use to the detriment or prejudice of the Group or divulge to
any person any confidential information concerning the intellectual
property rights of the Group which may have come to his knowledge.
<PAGE> 11
13. MISCELLANEOUS
13.01 This Agreement shall be in substitution for any subsisting agreement or
arrangement (oral or otherwise) made between the Company and the
Executive which shall be deemed to have been terminated by mutual
consent as from the date on which the Executive's employment under this
Agreement commences.
13.02 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as in accordance
with their terms are expressed to operate or have effect thereafter.
13.03 In the event of any variation of the remuneration payable to the
Executive hereunder being made by consent of the parties hereto, such
variation shall not constitute a new agreement but (subject to any
express agreement to the contrary) the employment of the Executive
hereunder shall continue subject in all respects to the terms and
conditions of this Agreement with such variation as aforesaid.
13.04 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days'
prior written notice specified to the other parties):
To the Company: Man Sang International Limited
21st Floor, Railway Plaza
39 Chatham Road South
Tsim Sha Tsui, Kowloon
Hong Kong
Fax number: (852) 2317 5243
Attention: Mr. Cheng Chung Hing
To the Executive: Sio Kam Seng
Flat 1002, Block 3, Heng Fa Chuen
Hong Kong
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, by post, two (2) clear business days after the date of posting,
or by recorded delivery, when actually delivered to the relevant
address; and (b) if given or made by facsimile, when despatched subject
to receipt of machine-printed confirmation of error-free despatch of
the whole of the notice, demand or communication to the facsimile
number of the intended addressee.
13.05 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not
be affected or impaired thereby.
<PAGE> 12
13.06 No failure or delay by the Company in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or remedy.
Without limiting the foregoing, no waiver by the Company of any breach
by the Executive of any provision in this Agreement shall be deemed to
be a waiver of any subsequent breach of that or any other provision in
this Agreement.
13.07 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the Hong Kong courts.
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
for and on behalf of MAN SANG )
INTERNATIONAL LIMITED )
in the presence of: )
SIGNED by )
SIO KAM SENG )
in the presence of: )
<PAGE> 1
DATED THE 8TH DAY OF SEPTEMBER, 1997
MAN SANG INTERNATIONAL LIMITED
AND
NG HAK YEE
-----------------
SERVICE AGREEMENT
-----------------
BAKER & McKENZIE
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
(LKL/EC/IW)
<PAGE> 2
CONTENT
CLAUSE DESCRIPTION PAGE
- ------ ----------- ----
1. INTERPRETATION..................................................... 1
2. APPOINTMENT........................................................ 2
3. DURATION........................................................... 2
4. EXECUTIVE'S DUTIES................................................. 2
5. REMUNERATION....................................................... 3
6. OTHER BENEFITS..................................................... 4
7. EXPENSES........................................................... 4
8. DEDUCTIONS......................................................... 4
9. LEAVE.............................................................. 4
10. TERMINATION........................................................ 5
11. EXECUTIVE'S UNDERTAKINGS........................................... 6
12. INTELLECTUAL PROPERTY RIGHTS....................................... 8
13. MISCELLANEOUS...................................................... 8
EXECUTION................................................................... 10
<PAGE> 3
THIS AGREEMENT is made on the 8th day of September, 1997
BETWEEN:
(1) MAN SANG INTERNATIONAL LIMITED, a company incorporated under the laws
of Bermuda and having its registered office at Clarendon House, 2
Church Street, Hamilton HM11, Bermuda and its principal place of
business in Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road
South, Tsim Sha Tsui, Kowloon, Hong Kong (the "Company"); and
(2) NG HAK YEE of Flat 1905, Block E, Amoy Gardens, Ngau Tau
Kok, Kowloon, Hong Kong (the "Executive").
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.01 In this Agreement, unless the context requires otherwise:
"Board" means the board of directors for the time being of the Company;
"Group" means the Company and its subsidiaries from time to time and
"member of the Group" shall be construed accordingly;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (as the same may be amended
from time to time); and
"month" means calendar month.
1.02 References herein to Clauses are to clauses in this Agreement unless
the context requires otherwise.
1.03 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.04 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
<PAGE> 4
2. APPOINTMENT
The Company will employ the Executive and the Executive hereby agrees
to serve the Company as an executive director upon the terms and
subject to the conditions hereinafter appearing.
3. DURATION
Subject to termination as hereinafter provided, the Company will employ
the Executive with effect from 1 September 1997 for an initial term of
three (3) years until terminated by either party giving to the other
not less than three (3) months' notice in writing.
4. EXECUTIVE'S DUTIES
The Executive shall, during the continuance of his employment
hereunder:
(a) serve the Company as an executive director and, in such
capacity, perform the duties and exercise the powers from time
to time assigned to or vested in him by the Board (including
(without further remuneration unless otherwise agreed) serving
on the board of directors, or in any other office, of any
member(s) of the Group, as the Board may require) and he will
perform those duties at such place or places in Hong Kong or
elsewhere as the Board may from time to time determine;
(b) comply with and conform to any lawful instructions or
directions from time to time given or made by the Board, or
with the authority of the Board, and shall comply with the
Company's rules, regulations, policies and procedures from
time to time in force;
(c) faithfully and diligently serve the Group and use his best
endeavours to promote the business and interests thereof;
(d) devote himself exclusively and diligently to the business and
interests of the Group and personally attend thereto at all
times during usual business hours and during such other times
as the Company may reasonably require except in case of
incapacity through illness or accident in which case he shall
forthwith notify the Secretary of the Company of such
incapacity and shall furnish to the Board such evidence
thereof as it may require;
(e) keep the Board promptly and fully informed (in writing if so
requested) of his conduct of the business or affairs of the
Group and provide such explanations as the Board may require
in connection therewith;
<PAGE> 5
(f) carry out his duties and exercise his powers jointly with any
other director or executive of any member of the Group as
shall from time to time be appointed by the Board to act
jointly with the Executive and the Board may at any time
require the Executive to cease performing or exercising any of
his duties or powers under this Agreement; and
(g) comply with the relevant requirements of all applicable laws,
regulations, codes of practice and rules (including Securities
(Insider Dealing) Ordinance, the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited and
the Model Code for Securities Transactions by Directors of
Listed Companies set out in Appendix 10 therein and the rules
of any other stock exchange, market or dealing system on which
the securities of any member of the Group is traded and the
applicable laws, regulations, codes of practice in that
jurisdiction).
5. REMUNERATION
The remuneration of the Executive shall be:
(a) an annual salary of HK$1,000,000.00, such salary to include
any sum receivable as director's fees or other remuneration
from any other member of the Group (if any). This salary will
be reviewed by the Board in each year at the time of the
annual salary reviews for senior executives provided that the
Executive shall abstain from voting and shall not be counted
in the quorum in respect of any resolution regarding the
amount payable to himself in relation to his employment under
this Agreement which is proposed at any meeting of the Board;
(b) in respect of every financial year of the Company (which
expression shall include any other financial period in respect
of which the Company's accounts are made up), a discretionary
bonus of such amount as shall be determined by the Board
(provided that the aggregate of such amount and all
discretionary bonuses payable by the Company to its executive
directors in any financial year shall not exceed ten per cent.
of the net profits (after tax and after extraordinary items)
of the Company for such year as shown in its audited
accounts), payable within thirty (30) days after the Company's
accounts for the relevant year have been audited and
certified, provided that such discretionary bonus shall be
paid only on a pro rata basis in respect of any financial year
of the Company during a portion only of which the Executive
has served the Company hereunder, unless his employment shall
have been terminated pursuant to Clause 10.02, in which case
no discretionary bonus is payable.
<PAGE> 6
6. OTHER BENEFITS
6.01 In addition to the foregoing remuneration and benefits, the Executive
shall also be entitled to the use of the corporate membership of the
Group at Tower Club and the payment of all entrance fees, debentures,
monthly subscriptions but not chits in connection therewith during the
continuance of his employment hereunder, subject to determination by
the Board as to the appropriate level of cost of each item.
6.02 In addition to the above benefits, the Executive shall also be entitled
to such other benefits under any applicable employee benefit plan and
employee share option scheme adopted by the Company and any member of
the Group of which the Executive is a director or holds office for
their respective employees (including the Executive) as the Board shall
from time to time determine.
7. EXPENSES
The Company shall reimburse the Executive (against receipts or such
other reasonable evidence of expenditure as the Board may require) for
all reasonable expenses properly incurred in the course of his
employment hereunder or in promoting or otherwise in connection with
the business of the Company.
8. DEDUCTIONS
The Company shall be entitled, subject to any laws or agreements to the
contrary, at any time to deduct from the Executive's remuneration
hereunder any monies due from him to any member of the Group including,
but not limited to, any outstanding loans, advances, the cost of
repairing any damage to or loss of the Company's property caused by him
(and of recovering the same) and any other monies owed by him to the
Company or any of its subsidiaries.
9. LEAVE
The Executive shall be entitled after completion of each year of
service with the Company to fifteen (15) days' leave (in addition to
public holidays) with full pay, which leave shall be taken at such time
or times as may be convenient to the Board having regard to the
exigencies of the Group's business provided that:
(a) if the employment of the Executive hereunder is to cease on
the completion of any year of service, the Executive shall be
entitled to take his said leave immediately prior to the end
of such year of service notwithstanding that at that time such
year of service shall not have been completed;
(b) if the employment of the Executive hereunder is to cease (for
any reason other than termination pursuant to Clause 10.02)
during any year of service, the
<PAGE> 7
Executive shall be entitled to an amount of leave
proportionate to the part of the year during which he has been
employed by the Company, such leave to be taken immediately
prior to the termination of his employment; and
(c) if for any reason the Executive shall not have taken his full
entitlement of leave in any particular year he shall not have
any claim against the Company in respect thereof nor, unless
the reason is the exigencies of the Company's business (of
which the Board shall be the sole judge), shall he be entitled
to additional leave in any year in respect of leave not taken
in previous years.
10. TERMINATION
10.01 If the Executive is at any time incapacitated by illness, injury or
accident from performing his duties hereunder and (if so required)
furnishes the Board with evidence satisfactory to it of such incapacity
and the cause thereof he shall be entitled to receive his full salary
for the first three (3) months or any shorter period during which such
incapacity continues and if he continues so incapacitated for a longer
period than three (3) consecutive months or if he is so incapacitated
at different times for more than ninety (90) days in any one period of
fifty-two (52) consecutive weeks then and in either of such cases his
employment may be terminated by the Company by one (1) month's notice
in writing.
10.02 If at any time during the term of his employment hereunder the
Executive shall be guilty of or commit any serious misconduct which in
the absolute opinion of the Board is in any way detrimental to the
interests of any member of the Group, or shall be in breach of any of
the terms of this Agreement, or shall commit any act of bankruptcy or
become insolvent, or make any arrangements or composition with his
creditors generally, or become through mental disorder incapable of
managing his own affairs, or fail to pay his personal debts or shall be
guilty of persistent insobriety or be convicted of any criminal offence
involving his integrity or honesty, the Company may terminate the
Executive's employment hereunder forthwith without any notice or
payment in lieu of notice and upon such termination, the Executive
shall not be entitled to any bonus or any payment whatsoever (other
than salary actually accrued due and payable pursuant to Clause 5(a))
for or in respect of the then current year of service or to claim any
compensation or damages for or in respect of or by reason of such
termination.
10.03 In the event that: (a) the Executive is lawfully removed from his
office as a director of the Company by virtue of a resolution passed by
the members of the Company; or (b) the Executive, having retired from
the office of director of the Company in accordance with the Bye-laws
of the Company or any other applicable regulation or law, is not
re-elected as a director of the Company by the shareholders of the
Company at an annual general meeting of the Company, the Company may
within seven (7) days of the date of such vacation from office by the
Executive, terminate this Agreement forthwith by written notice to the
Executive.
<PAGE> 8
10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:
(a) (if not already vacated from such office(s)) forthwith resign
as a director of the Company and from all directorships or
other offices held by him in any member of the Group (and the
Executive irrevocably authorises the Company in his name and
on his behalf to execute all documents and do all things
necessary to effect such resignation in the event of his
failure to do so); and
(b) shall cease to be entitled to any benefits under this
Agreement
and the Executive shall not be entitled to claim any other compensation
whatsoever from the Company in respect of such termination except where
the Board otherwise agrees or as expressly provided for under this
Agreement.
10.05 Any delay or forbearance by the Company in exercising any right to
terminate this Agreement shall not constitute a waiver of such right.
10.06 If notice is served by either party pursuant to Clause 3, then for up
to a maximum period of three (3) months, the Company shall not be
obliged, at any time after the notice of termination is served, to
provide any work for the Executive or to assign to or vest in the
Executive any powers, duties or functions and may in its absolute
discretion suspend the Executive from work, and suspend the contractual
benefits of the Executive set out in Clause 5(b) and 6 and to require
the Executive to refrain from entering any premises of any member(s) of
the Group and to refrain from contacting any customers, clients,
employees or suppliers of any member(s) of the Group.
11. EXECUTIVE'S UNDERTAKINGS
11.01 The Executive shall not either during the continuance of his employment
hereunder or at any time thereafter divulge to any person whomsoever or
to any body corporate or unincorporated (except to those officers of
the Group whose province it is to know the same) or use for his own
purposes or for any purposes other than those of the Group and shall
use his best endeavours to prevent the unauthorised publication or
disclosure of any trade secret or any confidential information
concerning the business or finances of any member of the Group or any
of its dealings, transactions or affairs or those of its customers,
suppliers, management and shareholders which may come to his knowledge
during or in the course of his employment. Confidential information
shall include, without limitation, lists or details of customers and
suppliers, information relating to the working of any process of
invention carried on or used by any member of the Group, information
relating to research and other projects, prices, discounts, mark-ups,
future business strategy and development, marketing, price-sensitive
information and any other information which is not generally available
to the public.
<PAGE> 9
11.02 Forthwith upon the termination of the employment of the Executive
hereunder, and/or at any other time if the Company shall so request,
the Executive shall deliver to the Company all documents (including
correspondence, lists of customers, notes, memoranda, plans, drawings
and other documents of whatsoever nature), models or samples made or
compiled by or delivered to the Executive during his employment
hereunder and concerning the business, finances or affairs of any
member of the Group and credit cards and any equipment used by or made
available to the Executive by the Company or any member of the Group.
For the avoidance of doubt it is hereby declared that the property in
all such documents as aforesaid shall at all times be vested in the
relevant member of the Group.
11.03 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter,
in any country or place where any member of the Group has carried on
business, carry on or be employed or interested directly or indirectly
in (whether as shareholder, director, partner, agent or otherwise and
whether alone or jointly with others) any business carried on by any
member of the Group during the continuance of the said employment in
competition with any member of the Group (other than as a holder of not
more than five (5) per cent of the issued shares, debentures or other
securities of any company listed on any recognised stock exchange)
provided that the provisions of this Clause 11.03 shall only apply in
respect of business activities or services with which the Executive was
personally concerned or for which he was responsible during his said
employment.
11.04 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
either on his own account or in conjunction with or on behalf of any
other person or body corporate or unincorporated in competition with
any member of the Group directly or indirectly solicit or entice away
from any member of the Group, any person or body corporate or
unincorporated who now is or at any time during or at the date of the
termination of the said employment may have been or become a customer
or supplier or prospective customer or supplier of any member of the
Group and with whom the Executive had personal contact or dealings
during his said employment.
11.05 The Executive shall not at any time during the continuance of his
employment hereunder or for a period of twelve (12) months thereafter
solicit or entice away from any member of the Group or employ or
otherwise engage any person who now is or at any time during or at the
date of the termination of the said employment may have become an
employee of any member of the Group and with whom the Executive had
contact during his said employment, whether or not such person would
commit any breach of his contract of employment by reason of leaving
the service of the relevant member of the Group.
11.06 The Executive shall not at any time or for any purpose after
termination of his employment hereunder use either the English or
Chinese name of the Company or any name similar thereto in connection
with his own or any other name in any way calculated to suggest that he
is or has been connected with the Company's business, nor in any way
hold himself out as having had any such connection.
<PAGE> 10
11.07 While the restrictions contained in Clauses 11.01 to 11.06 are
considered by the parties to be reasonable for the protection of the
business and interest of the Group and in all the circumstances and do
not work harshly upon the Executive it is recognised that restrictions
of the nature in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any such
restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the member(s) of the Group but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof were reduced or
the range of products or area dealt with thereby were reduced in scope,
the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
12. INTELLECTUAL PROPERTY RIGHTS
12.01 The Company (or any other member of the Group as the case may be) shall
be entitled free of charge to the sole ownership and exclusive use of
any invention or improvement made or discovered by the Executive and of
any copyright, design right, trade mark, service mark or trade name
created or used by the Executive (hereinafter referred to as the
"intellectual property rights") in the course of or for the purpose of
providing services hereunder to the Company or any other member of the
Group.
12.02 The Executive shall forthwith and from time to time both during and
after the term of this Agreement and at the request and cost of the
Company, insofar as it is within his power, do such acts and things and
execute such documents, as may in the opinion of the Company be
reasonably necessary for obtaining letters patent, registration or
other protection for any such intellectual property rights in any part
of the world and shall effect such registration and vest such letters
patent or other protection in the Company (or any other member of the
Group as the case may be) or its nominees. The Executive irrevocably
authorises the Company for the purposes aforesaid in the name of the
Executive and execute any document or do anything on his behalf. The
Executive shall at the cost and request of the Company render all
reasonable assistance to the Company (or any other member of the Group
as the case may be) for and in connection with the purposes aforesaid.
12.03 The Executive shall not during or after the termination of the
Agreement use to the detriment or prejudice of the Group or divulge to
any person any confidential information concerning the intellectual
property rights of the Group which may have come to his knowledge.
13. MISCELLANEOUS
13.01 This Agreement shall be in substitution for any subsisting agreement or
arrangement (oral or otherwise) made between the Company and the
Executive which shall be deemed to have been terminated by mutual
consent as from the date on which the Executive's employment under this
Agreement commences.
<PAGE> 11
13.02 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as in accordance
with their terms are expressed to operate or have effect thereafter.
13.03 In the event of any variation of the remuneration payable to the
Executive hereunder being made by consent of the parties hereto, such
variation shall not constitute a new agreement but (subject to any
express agreement to the contrary) the employment of the Executive
hereunder shall continue subject in all respects to the terms and
conditions of this Agreement with such variation as aforesaid.
13.04 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days'
prior written notice specified to the other parties):
To the Company: Man Sang International Limited
21st Floor, Railway Plaza
39 Chatham Road South
Tsim Sha Tsui, Kowloon
Hong Kong
Fax number: (852) 2317 5243
Attention: Mr. Cheng Chung Hing
To the Executive: Ng Hak Yee
Flat 1905, Block E, Amoy Gardens
Ngau Tau Kok, Kowloon
Hong Kong
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, by post, two (2) clear business days after the date of posting,
or by recorded delivery, when actually delivered to the relevant
address; and (b) if given or made by facsimile, when despatched subject
to receipt of machine-printed confirmation of error-free despatch of
the whole of the notice, demand or communication to the facsimile
number of the intended addressee.
13.05 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not
be affected or impaired thereby.
13.06 No failure or delay by the Company in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or remedy.
Without limiting the foregoing, no waiver by the Company of any breach
by the Executive of any provision in this Agreement shall be deemed to
be a waiver of any subsequent breach of that or any other provision in
this Agreement.
<PAGE> 12
13.07 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the Hong Kong courts.
<PAGE> 13
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
for and on behalf of MAN SANG )
INTERNATIONAL LIMITED )
in the presence of: )
SIGNED by )
NG HAK YEE )
in the presence of: )
<PAGE> 1
DATED THE 8TH DAY OF SEPTEMBER, 1997
MAN SANG INTERNATIONAL LIMITED
AND
YAN SAU MAN AMY
-----------------
SERVICE AGREEMENT
-----------------
BAKER & McKENZIE
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
(LKL/EC/IW)
<PAGE> 2
CONTENT
CLAUSE DESCRIPTION PAGE
- ------ ----------- ----
1. INTERPRETATION..................................................... 1
2. APPOINTMENT........................................................ 2
3. DURATION........................................................... 2
4. EXECUTIVE'S DUTIES................................................. 2
5. REMUNERATION....................................................... 3
6. OTHER BENEFITS..................................................... 4
7. EXPENSES........................................................... 4
8. DEDUCTIONS......................................................... 4
9. LEAVE.............................................................. 4
10. TERMINATION........................................................ 5
11. EXECUTIVE'S UNDERTAKINGS........................................... 6
12. INTELLECTUAL PROPERTY RIGHTS....................................... 8
13. MISCELLANEOUS...................................................... 8
EXECUTION................................................................... 10
<PAGE> 3
THIS AGREEMENT is made on the 8th day of September, 1997
BETWEEN:
(1) MAN SANG INTERNATIONAL LIMITED, a company incorporated under the laws
of Bermuda and having its registered office at Clarendon House, 2
Church Street, Hamilton HM11, Bermuda and its principal place of
business in Hong Kong at 21st Floor, Railway Plaza, 39 Chatham Road
South, Tsim Sha Tsui, Kowloon, Hong Kong (the "Company"); and
(2) YAN SAU MAN AMY of Flat A, 10th Floor, Amigo Mansion, 79A
Wong Ngai Chung Road, Happy Valley, Hong Kong (the
"Executive").
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.01 In this Agreement, unless the context requires otherwise:
"Board" means the board of directors for the time being of the Company;
"Group" means the Company and its subsidiaries from time to time and
"member of the Group" shall be construed accordingly;
"HK$" means Hong Kong dollars;
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"Listing Rules" means the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited (as the same may be amended
from time to time); and
"month" means calendar month.
1.02 References herein to Clauses are to clauses in this Agreement unless
the context requires otherwise.
1.03 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.04 Unless the context requires otherwise, words importing the singular
include the plural and vice versa and words importing a gender include
every gender.
<PAGE> 4
2. APPOINTMENT
The Company will employ the Executive and the Executive hereby agrees
to serve the Company as an executive director upon the terms and
subject to the conditions hereinafter appearing.
3. DURATION
Subject to termination as hereinafter provided, the Company will employ
the Executive with effect from 1 September 1997 for an initial term of
three (3) years until terminated by either party giving to the other
not less than three (3) months' notice in writing.
4. EXECUTIVE'S DUTIES
The Executive shall, during the continuance of her employment
hereunder:
(a) serve the Company as an executive director and, in such
capacity, perform the duties and exercise the powers from time
to time assigned to or vested in her by the Board (including
(without further remuneration unless otherwise agreed) serving
on the board of directors, or in any other office, of any
member(s) of the Group, as the Board may require) and she will
perform those duties at such place or places in Hong Kong or
elsewhere as the Board may from time to time determine;
(b) comply with and conform to any lawful instructions or
directions from time to time given or made by the Board, or
with the authority of the Board, and shall comply with the
Company's rules, regulations, policies and procedures from
time to time in force;
(c) faithfully and diligently serve the Group and use her best
endeavours to promote the business and interests thereof;
(d) devote herself exclusively and diligently to the business and
interests of the Group and personally attend thereto at all
times during usual business hours and during such other times
as the Company may reasonably require except in case of
incapacity through illness or accident in which case she shall
forthwith notify the Secretary of the Company of such
incapacity and shall furnish to the Board such evidence
thereof as it may require;
(e) keep the Board promptly and fully informed (in writing if so
requested) of her conduct of the business or affairs of the
Group and provide such explanations as the Board may require
in connection therewith;
<PAGE> 5
(f) carry out her duties and exercise her powers jointly with any
other director or executive of any member of the Group as
shall from time to time be appointed by the Board to act
jointly with the Executive and the Board may at any time
require the Executive to cease performing or exercising any of
her duties or powers under this Agreement; and
(g) comply with the relevant requirements of all applicable laws,
regulations, codes of practice and rules (including Securities
(Insider Dealing) Ordinance, the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited and
the Model Code for Securities Transactions by Directors of
Listed Companies set out in Appendix 10 therein and the rules
of any other stock exchange, market or dealing system on which
the securities of any member of the Group is traded and the
applicable laws, regulations, codes of practice in that
jurisdiction).
5. REMUNERATION
The remuneration of the Executive shall be:
(a) an annual salary of HK$1,000,000.00, such salary to include
any sum receivable as director's fees or other remuneration
from any other member of the Group (if any). This salary will
be reviewed by the Board in each year at the time of the
annual salary reviews for senior executives provided that the
Executive shall abstain from voting and shall not be counted
in the quorum in respect of any resolution regarding the
amount payable to herself in relation to her employment under
this Agreement which is proposed at any meeting of the Board;
(b) in respect of every financial year of the Company (which
expression shall include any other financial period in respect
of which the Company's accounts are made up), a discretionary
bonus of such amount as shall be determined by the Board
(provided that the aggregate of such amount and all
discretionary bonuses payable by the Company to its executive
directors in any financial year shall not exceed ten per cent.
of the net profits (after tax and after extraordinary items)
of the Company for such year as shown in its audited
accounts), payable within thirty (30) days after the Company's
accounts for the relevant year have been audited and
certified, provided that such discretionary bonus shall be
paid only on a pro rata basis in respect of any financial year
of the Company during a portion only of which the Executive
has served the Company hereunder, unless her employment shall
have been terminated pursuant to Clause 10.02, in which case
no discretionary bonus is payable.
<PAGE> 6
6. OTHER BENEFITS
6.01 In addition to the foregoing remuneration and benefits, the Executive
shall also be entitled to the use of the corporate membership of the
Group at Tower Club and the payment of all entrance fees, debentures,
monthly subscriptions but not chits in connection therewith during the
continuance of her employment hereunder, subject to determination by
the Board as to the appropriate level of cost of each item.
6.02 In addition to the above benefits, the Executive shall also be entitled
to such other benefits under any applicable employee benefit plan and
employee share option scheme adopted by the Company and any member of
the Group of which the Executive is a director or holds office for
their respective employees (including the Executive) as the Board shall
from time to time determine.
7. EXPENSES
The Company shall reimburse the Executive (against receipts or such
other reasonable evidence of expenditure as the Board may require) for
all reasonable expenses properly incurred in the course of her
employment hereunder or in promoting or otherwise in connection with
the business of the Company.
8. DEDUCTIONS
The Company shall be entitled, subject to any laws or agreements to the
contrary, at any time to deduct from the Executive's remuneration
hereunder any monies due from her to any member of the Group including,
but not limited to, any outstanding loans, advances, the cost of
repairing any damage to or loss of the Company's property caused by her
(and of recovering the same) and any other monies owed by her to the
Company or any of its subsidiaries.
9. LEAVE
The Executive shall be entitled after completion of each year of
service with the Company to fifteen (15) days' leave (in addition to
public holidays) with full pay, which leave shall be taken at such time
or times as may be convenient to the Board having regard to the
exigencies of the Group's business provided that:
(a) if the employment of the Executive hereunder is to cease on
the completion of any year of service, the Executive shall be
entitled to take her said leave immediately prior to the end
of such year of service notwithstanding that at that time such
year of service shall not have been completed;
(b) if the employment of the Executive hereunder is to cease (for
any reason other than termination pursuant to Clause 10.02)
during any year of service, the
<PAGE> 7
Executive shall be entitled to an amount of leave
proportionate to the part of the year during which she has
been employed by the Company, such leave to be taken
immediately prior to the termination of her employment; and
(c) if for any reason the Executive shall not have taken her full
entitlement of leave in any particular year she shall not have
any claim against the Company in respect thereof nor, unless
the reason is the exigencies of the Company's business (of
which the Board shall be the sole judge), shall she be
entitled to additional leave in any year in respect of leave
not taken in previous years.
10. TERMINATION
10.01 If the Executive is at any time incapacitated by illness, injury or
accident from performing her duties hereunder and (if so required)
furnishes the Board with evidence satisfactory to it of such incapacity
and the cause thereof she shall be entitled to receive her full salary
for the first three (3) months or any shorter period during which such
incapacity continues and if she continues so incapacitated for a longer
period than three (3) consecutive months or if she is so incapacitated
at different times for more than ninety (90) days in any one period of
fifty-two (52) consecutive weeks then and in either of such cases her
employment may be terminated by the Company by one (1) month's notice
in writing.
10.02 If at any time during the term of her employment hereunder the
Executive shall be guilty of or commit any serious misconduct which in
the absolute opinion of the Board is in any way detrimental to the
interests of any member of the Group, or shall be in breach of any of
the terms of this Agreement, or shall commit any act of bankruptcy or
become insolvent, or make any arrangements or composition with her
creditors generally, or become through mental disorder incapable of
managing her own affairs, or fail to pay her personal debts or shall be
guilty of persistent insobriety or be convicted of any criminal offence
involving her integrity or honesty, the Company may terminate the
Executive's employment hereunder forthwith without any notice or
payment in lieu of notice and upon such termination, the Executive
shall not be entitled to any bonus or any payment whatsoever (other
than salary actually accrued due and payable pursuant to Clause 5(a))
for or in respect of the then current year of service or to claim any
compensation or damages for or in respect of or by reason of such
termination.
10.03 In the event that: (a) the Executive is lawfully removed from her
office as a director of the Company by virtue of a resolution passed by
the members of the Company; or (b) the Executive, having retired from
the office of director of the Company in accordance with the Bye-laws
of the Company or any other applicable regulation or law, is not
re-elected as a director of the Company by the shareholders of the
Company at an annual general meeting of the Company, the Company may
within seven (7) days of the date of such vacation from office by the
Executive, terminate this Agreement forthwith by written notice to the
Executive.
<PAGE> 8
10.04 In the event of termination of the Executive's employment for whatever
reason, the Executive shall:
(a) (if not already vacated from such office(s)) forthwith resign
as a director of the Company and from all directorships or
other offices held by her in any member of the Group (and the
Executive irrevocably authorises the Company in her name and
on her behalf to execute all documents and do all things
necessary to effect such resignation in the event of her
failure to do so); and
(b) shall cease to be entitled to any benefits under this
Agreement
and the Executive shall not be entitled to claim any other compensation
whatsoever from the Company in respect of such termination except where
the Board otherwise agrees or as expressly provided for under this
Agreement.
10.05 Any delay or forbearance by the Company in exercising any right to
terminate this Agreement shall not constitute a waiver of such right.
10.06 If notice is served by either party pursuant to Clause 3, then for up
to a maximum period of three (3) months, the Company shall not be
obliged, at any time after the notice of termination is served, to
provide any work for the Executive or to assign to or vest in the
Executive any powers, duties or functions and may in its absolute
discretion suspend the Executive from work, and suspend the contractual
benefits of the Executive set out in Clause 5(b) and 6 and to require
the Executive to refrain from entering any premises of any member(s) of
the Group and to refrain from contacting any customers, clients,
employees or suppliers of any member(s) of the Group.
11. EXECUTIVE'S UNDERTAKINGS
11.01 The Executive shall not either during the continuance of her employment
hereunder or at any time thereafter divulge to any person whomsoever or
to any body corporate or unincorporated (except to those officers of
the Group whose province it is to know the same) or use for her own
purposes or for any purposes other than those of the Group and shall
use her best endeavours to prevent the unauthorised publication or
disclosure of any trade secret or any confidential information
concerning the business or finances of any member of the Group or any
of its dealings, transactions or affairs or those of its customers,
suppliers, management and shareholders which may come to her knowledge
during or in the course of her employment. Confidential information
shall include, without limitation, lists or details of customers and
suppliers, information relating to the working of any process of
invention carried on or used by any member of the Group, information
relating to research and other projects, prices, discounts, mark-ups,
future business strategy and development, marketing, price-sensitive
information and any other information which is not generally available
to the public.
<PAGE> 9
11.02 Forthwith upon the termination of the employment of the Executive
hereunder, and/or at any other time if the Company shall so request,
the Executive shall deliver to the Company all documents (including
correspondence, lists of customers, notes, memoranda, plans, drawings
and other documents of whatsoever nature), models or samples made or
compiled by or delivered to the Executive during her employment
hereunder and concerning the business, finances or affairs of any
member of the Group and credit cards and any equipment used by or made
available to the Executive by the Company or any member of the Group.
For the avoidance of doubt it is hereby declared that the property in
all such documents as aforesaid shall at all times be vested in the
relevant member of the Group.
11.03 The Executive shall not at any time during the continuance of her
employment hereunder or for a period of twelve (12) months thereafter,
in any country or place where any member of the Group has carried on
business, carry on or be employed or interested directly or indirectly
in (whether as shareholder, director, partner, agent or otherwise and
whether alone or jointly with others) any business carried on by any
member of the Group during the continuance of the said employment in
competition with any member of the Group (other than as a holder of not
more than five (5) per cent of the issued shares, debentures or other
securities of any company listed on any recognised stock exchange)
provided that the provisions of this Clause 11.03 shall only apply in
respect of business activities or services with which the Executive was
personally concerned or for which she was responsible during her said
employment.
11.04 The Executive shall not at any time during the continuance of her
employment hereunder or for a period of twelve (12) months thereafter
either on her own account or in conjunction with or on behalf of any
other person or body corporate or unincorporated in competition with
any member of the Group directly or indirectly solicit or entice away
from any member of the Group, any person or body corporate or
unincorporated who now is or at any time during or at the date of the
termination of the said employment may have been or become a customer
or supplier or prospective customer or supplier of any member of the
Group and with whom the Executive had personal contact or dealings
during her said employment.
11.05 The Executive shall not at any time during the continuance of her
employment hereunder or for a period of twelve (12) months thereafter
solicit or entice away from any member of the Group or employ or
otherwise engage any person who now is or at any time during or at the
date of the termination of the said employment may have become an
employee of any member of the Group and with whom the Executive had
contact during her said employment, whether or not such person would
commit any breach of her contract of employment by reason of leaving
the service of the relevant member of the Group.
11.06 The Executive shall not at any time or for any purpose after
termination of her employment hereunder use either the English or
Chinese name of the Company or any name similar thereto in connection
with her own or any other name in any way calculated to suggest that
she is or has been connected with the Company's business, nor in any
way hold herself out as having had any such connection.
<PAGE> 10
11.07 While the restrictions contained in Clauses 11.01 to 11.06 are
considered by the parties to be reasonable for the protection of the
business and interest of the Group and in all the circumstances and do
not work harshly upon the Executive it is recognised that restrictions
of the nature in question may fail for technical reasons unforeseen and
accordingly it is hereby agreed and declared that if any such
restrictions shall be adjudged to be void as going beyond what is
reasonable in all the circumstances for the protection of the interests
of the member(s) of the Group but would be valid if part of the wording
thereof were deleted or the periods (if any) thereof were reduced or
the range of products or area dealt with thereby were reduced in scope,
the said restriction shall apply with such modifications as may be
necessary to make it valid and effective.
12. INTELLECTUAL PROPERTY RIGHTS
12.01 The Company (or any other member of the Group as the case may be) shall
be entitled free of charge to the sole ownership and exclusive use of
any invention or improvement made or discovered by the Executive and of
any copyright, design right, trade mark, service mark or trade name
created or used by the Executive (hereinafter referred to as the
"intellectual property rights") in the course of or for the purpose of
providing services hereunder to the Company or any other member of the
Group.
12.02 The Executive shall forthwith and from time to time both during and
after the term of this Agreement and at the request and cost of the
Company, insofar as it is within her power, do such acts and things and
execute such documents, as may in the opinion of the Company be
reasonably necessary for obtaining letters patent, registration or
other protection for any such intellectual property rights in any part
of the world and shall effect such registration and vest such letters
patent or other protection in the Company (or any other member of the
Group as the case may be) or its nominees. The Executive irrevocably
authorises the Company for the purposes aforesaid in the name of the
Executive and execute any document or do anything on her behalf. The
Executive shall at the cost and request of the Company render all
reasonable assistance to the Company (or any other member of the Group
as the case may be) for and in connection with the purposes aforesaid.
12.03 The Executive shall not during or after the termination of the
Agreement use to the detriment or prejudice of the Group or divulge to
any person any confidential information concerning the intellectual
property rights of the Group which may have come to her knowledge.
13. MISCELLANEOUS
13.01 This Agreement shall be in substitution for any subsisting agreement or
arrangement (oral or otherwise) made between the Company and the
Executive which shall be deemed to have been terminated by mutual
consent as from the date on which the Executive's employment under this
Agreement commences.
<PAGE> 11
13.02 The expiration or termination of this Agreement howsoever arising shall
not operate to affect such of the provisions hereof as in accordance
with their terms are expressed to operate or have effect thereafter.
13.03 In the event of any variation of the remuneration payable to the
Executive hereunder being made by consent of the parties hereto, such
variation shall not constitute a new agreement but (subject to any
express agreement to the contrary) the employment of the Executive
hereunder shall continue subject in all respects to the terms and
conditions of this Agreement with such variation as aforesaid.
13.04 Each notice, demand or other communication given or made under this
Agreement shall be in writing and delivered or sent to the relevant
party at its address or facsimile number set out below (or such other
address or facsimile number as the addressee has by five (5) days'
prior written notice specified to the other parties):
To the Company: Man Sang International Limited
21st Floor, Railway Plaza
39 Chatham Road South
Tsim Sha Tsui, Kowloon
Hong Kong
Fax number: (852) 2317 5243
Attention: Mr. Cheng Chung Hing
To the Executive: Yan Sau Man Amy
Flat A, 10th Floor, Amigo Mansion
79A Wong Ngai Chung Road
Happy Valley
Hong Kong
Any notice, demand or other communication so addressed to the relevant
party shall be deemed to have been delivered (a) if given or made by
letter, by post, two (2) clear business days after the date of posting,
or by recorded delivery, when actually delivered to the relevant
address; and (b) if given or made by facsimile, when despatched subject
to receipt of machine-printed confirmation of error-free despatch of
the whole of the notice, demand or communication to the facsimile
number of the intended addressee.
13.05 If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect, the legality, validity and
enforceability of the remaining provisions of this Agreement shall not
be affected or impaired thereby.
13.06 No failure or delay by the Company in exercising any right, power or
remedy under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any further
exercise thereof or the exercise of any other right, power or remedy.
Without limiting the foregoing, no waiver by the Company
<PAGE> 12
of any breach by the Executive of any provision in this Agreement shall
be deemed to be a waiver of any subsequent breach of that or any other
provision in this Agreement.
13.07 This Agreement shall be governed by and construed in accordance with
the laws of Hong Kong and the parties hereby irrevocably submit to the
non-exclusive jurisdiction of the Hong Kong courts.
<PAGE> 13
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
SIGNED by )
)
for and on behalf of MAN SANG )
INTERNATIONAL LIMITED )
in the presence of: )
SIGNED by )
YAN SAU MAN AMY )
in the presence of: )
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