UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS
FILED PURSUANT TO 13d-1(a) AND AMENDMENTS
THERETO FILED PURSUANT TO 13d-2(a)
EMERSON RADIO CORP.
-------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK
-------------------------------------------------------------------------------
(Title of Class of Securities)
291087203
-------------------------------------------------------------------------------
(CUSIP Number)
Ruby Lee Yen Kee, Esq.
Managing Director, Legal
The Grande Holdings Limited
146 Robinson Road #01-01
Singapore 068909
011-65-6221-0010
-------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 15, 2005
-------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check
the following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
Page 1 of 12 Pages
-----------
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
-------------------------------------------------------------------------------
291087203 SCHEDULE 13D
CUSIP No.
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S&T International Distribution Ltd
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, BK
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
NUMBER OF --------------------------------------------------------------
8 SHARE VOTING POWER
SHARES
10,000,000 shares of Common Stock.
BENEFICIALLY --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
OWNED BY EACH
NONE
REPORTING --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.97%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
-------------------------------------------------------------------------------
2
-------------------------------------------------------------------------------
291087203 SCHEDULE 13D
CUSIP No.
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
Grande N.A.K.S. Ltd
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, BK
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
NUMBER OF --------------------------------------------------------------
8 SHARE VOTING POWER
SHARES
10,000,000 shares of Common Stock.
BENEFICIALLY --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
OWNED BY EACH
NONE
REPORTING --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.97%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
-------------------------------------------------------------------------------
3
-------------------------------------------------------------------------------
291087203 SCHEDULE 13D
CUSIP No.
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
The Grande Holdings Limited
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC, BK
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
NUMBER OF --------------------------------------------------------------
8 SHARE VOTING POWER
SHARES
10,000,000 shares of Common Stock.
BENEFICIALLY --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
OWNED BY EACH
NONE
REPORTING --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.97%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
-------------------------------------------------------------------------------
4
-------------------------------------------------------------------------------
291087203 SCHEDULE 13D
CUSIP No.
-------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
Christopher Ho Wing On
-------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) |_|
(b) |X|
-------------------------------------------------------------------------------
3 SEC USE ONLY
-------------------------------------------------------------------------------
4 SOURCE OF FUNDS
AF, BK
-------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(D) OR 2(E) |_|
-------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
-------------------------------------------------------------------------------
7 SOLE VOTING POWER
NONE
NUMBER OF --------------------------------------------------------------
8 SHARE VOTING POWER
SHARES
10,000,000 shares of Common Stock.
BENEFICIALLY --------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
OWNED BY EACH
NONE
REPORTING --------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON WITH
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
10,000,000 shares of Common Stock.
-------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
|_|
-------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
36.97%
-------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
-------------------------------------------------------------------------------
5
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (this "Statement") is filed with respect
to the common stock (the "Common Stock") of Emerson Radio Corp. ("Emerson"), a
company organized under the laws of Delaware. The address of Emerson is Nine
Entin Road, Parsippany, New Jersey 07054-0430.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed on behalf of each of the following persons
(collectively, the "Reporting Persons"):
(1) THE GRANDE HOLDINGS LIMITED ("Grande Holdings") (a Bermuda corporation
engaged in manufacturing, sale and distribution of audio, video and other
consumer electronics and digital products), the executive offices of which are
located at 12th Floor, The Grande Building, 398 Kwun Tong Road, Kowloon, Hong
Kong;
(2) GRANDE N.A.K.S. LTD ("N.A.K.S.") (a British Virgin Islands corporation
engaged in purchasing, selling or holding of securities or other investments),
the executive offices of which are located at 146 Robinson Road, #01-01
Singapore 068909;
(3) S&T INTERNATIONAL DISTRIBUTION LTD ("S&T") (a British Virgin Islands
corporation engaged in purchasing, selling or holding of securities or other
investments), the executive offices of which are located at 146 Robinson Road,
#01-01 Singapore 068909;
(4) CHRISTOPHER HO WING ON. Mr. Ho is a citizen of Canada. Mr. Ho's business
address is 146 Robinson Road, #01-01 Singapore 068909. Mr. Ho is the President
and Group Chief Executive of Grande Holdings.
Each of the Reporting Persons is party to that certain Joint Filing
Agreement as further described in Item 6. Accordingly, the Reporting Persons
are hereby filing a joint Schedule 13D.
As of the date of this Statement, S&T has the direct power to vote and
direct the disposition of the 10,000,000 shares of the Issuer's Common Stock
held by it (the "Acquired Shares"). As the sole parent of S&T, N.A.K.S. has
the indirect power to vote and dispose of the Acquired Shares. As the sole
parent of N.A.K.S., Grande Holdings has the indirect power to vote and dispose
of the Acquired Shares. As the owner of 62.72% of the share capital of Grande
Holdings, Barrican Investments Corporation ("Barrican") has the indirect power
to vote and dispose of the Acquired Shares. As the sole parent of Barrican,
The Grande International Holdings Ltd ("Grande International") has the
indirect power to vote and dispose of the Acquired Shares. As the sole owner
of Grande International, the Ho Family Trust has the indirect power to vote
and dispose of the Acquired Shares. As the sole the beneficiary of the Ho
Family Trust, Mr. Ho has the indirect power to vote and dispose of the
Acquired Shares. In such capacities, Grande Holdings, N.A.K.S. and Mr. Ho may
be deemed to be the beneficial owners of the Acquired Shares.
Set forth on Annex A to this Schedule 13D is a chart setting forth, with
respect to each executive officer, director and controlling person of a
Reporting Person, his or her name, residence or business address, present
principal occupation or employment (along with the name,
6
principal business and address of any corporation or other organization in
which such employment is conducted) and citizenship, in each case as of the
date hereof.
During the last five years, no Reporting Person or a person listed on
Annex A has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last five years, none of the
Reporting Persons or persons listed on Annex A has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceedings was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On December 5, 2005, pursuant to an Agreement for the Sale and Purchase
of Certain Shares in Emerson (the "Acquisition Agreement") between Mr.
Guttfried Ludwig Prentice Jurick ("Mr. Jurick") and S&T, S&T purchased from
Mr. Jurick 10,000,000 Common Stock (i.e. the Acquired Shares) for $26 million
in cash and a convertible debenture issued by Grande Holdings with a face
value of $26 million (the "Consideration").
The source of the funds that S&T used to pay the cash component of the
purchase price was (1) Grande Holdings' working capital/cash on hand and (2) a
term loan facility provided by ABN AMRO Bank N.V., Hong Kong Branch in the
amount of US$26 million, under a facility agreement entered into by S&T,
Grande Holdings and ABN AMRO Bank N.V., Hong Kong Branch. Grande Holdings has
guaranteed all of S&T's obligations under the facility agreement. As
additional security for its obligations, S&T (1) pledged and granted to ABN
AMRO a security interest in the Acquired Shares, and (2) assigned to ABN AMRO,
by way of fixed security with first-ranking priority, enforceable upon an
event of default, all of its rights under the Acquisition Agreement.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons purchased the Acquired Shares for investment
purposes. Except as indicated in this Schedule 13D, none of the Reporting
Persons or, to the best of their knowledge, any of the other persons
identified in response to Item 2, currently has any plans or proposals that
relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Depending on prevailing market, economic and other conditions, the
Reporting Persons may from time to time acquire additional shares of the
capital stock of Emerson. The Reporting Persons intend to review their
investment in Emerson on a continuing basis and, depending upon the price and
availability of shares of Common Stock, subsequent developments affecting
Emerson, Emerson's business and prospects, other investment and business
opportunities available to the Reporting Persons, general stock market and
economic conditions, tax considerations and other factors considered relevant,
may decide at any time to increase or to decrease the size of their investment
in Emerson.
7
In December 2005, Mr. Michael Andrew Barclay Binney, a director of
N.A.K.S. and Grande Holdings, was appointed to the Board of Directors of
Emerson. The Reporting Persons expect to put up for election one or more
additional directors at the next annual meeting of Emerson's shareholders. As
a director of Emerson, Mr. Binney may have influence over the corporate
activities of Emerson, including activities which may relate to transactions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
S&T is the record owner of the Acquired Shares. As the sole stockholder
of S&T, N.A.K.S. may be deemed to own beneficially the Acquired Shares. As the
sole stockholder of N.A.K.S, Grande Holdings may be deemed to own beneficially
the Acquired Shares. Mr. Ho has a beneficial interest in approximately 62.72%
of the capital stock of Grande Holdings. By virtue of such interest and his
position with Grande Holdings, Mr. Ho is deemed to have power to vote and
power to dispose of the Acquired Shares beneficially held by Grande Holdings.
a. Each of the Reporting Persons may be deemed to own beneficially 36.97%
of the Common Stock of Emerson, which percentage is calculated based
upon 27,047,666 shares of Common Stock reported to be outstanding as of
December 5, 2005. Each of the Reporting Persons, except S&T, disclaims
beneficial ownership of the Acquired Shares.
b. Regarding the number of shares as to which such person has:
i. sole power to vote or to direct the vote: 0 shares for each
Reporting Person.
ii. shared power to vote or to direct the vote: 10,000,000
shares for each Reporting Person.
iii. sole power to dispose or to direct the disposition: 0 shares
for each Reporting Person.
iv. shared power to dispose or to direct the disposition:
10,000,000 shares for each Reporting Person.
c. Except as set forth above, none of the Reporting Persons has effected
any transaction in the Common Stock during the last 60 days.
d. No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or any proceeds from the sale of,
the Common Stock beneficially owned by any of the Reporting Persons.
e. Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
8
Except as described herein in items 2-5, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) between
each of the Reporting Persons and any other person or persons with respect to
the Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1: Joint Filing Agreement, dated December 14, 2005 by and among
Grande Holding, N.A.K.S., S&T and Mr. Ho.
Exhibit 2: Agreement for the Sale and Purchase of Certain Shares in
Emerson Radio Corp., dated as of August 20, 2005, between Mr. Jurick and
S&T ("Stock Purchase Agreement").
Exhibit 3: Supplemental Agreement to the Stock Purchase Agreement, dated
as of September 28, 2005, between Mr. Jurick and S&T.
Exhibit 4: Convertible Debenture dated December 5, 2005 issued by Grande
Holdings in favor of Mr. Jurick.
Exhibit 5: Facility Agreement, dated August 22, 2005 among S&T, Grande
Holdings and ABN AMRO Bank N.V., Hong Kong Branch.
Exhibit 6: Assignment of Acquisition Agreement, dated August 22, 2005
between S&T and ABN AMRO Bank N.V., Hong Kong Branch.
Exhibit 7: Pledge Agreement, dated August 22, 2005 between S&T and ABN
AMRO Bank N.V., Hong Kong Branch.
9
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and
correct.
Dated: December 14, 2005
/s/ Christopher Ho Wing On
-----------------------------
CHRISTOPHER HO WING ON
THE GRANDE HOLDINGS LIMITED
By: /s/ Christopher Ho Wing On
----------------------------------
Name: Christopher Ho Wing On
Title: Director
GRANDE N.A.K.S. LTD.
By: /s/ Christopher Ho Wing On
----------------------------------------
Name: Christopher Ho Wing On
Title: Director
S&T INTERNATIONAL DISTRIBUTION LTD.
By: /s/ Christopher Ho Wing On
----------------------------------------
Name: Christopher Ho Wing On
Title: Director
ANNEX A
Set forth below is the name, business address, present principal
occupation or employment and citizenship of each director and executive
officer of Reporting Person. The principal address of the Reporting Persons,
and unless otherwise indicated below, is the current business address for each
individual listed below (146 Robinson Road, #01-01 Singapore 068909).
-------------------------------------------------------------------------------
Name and Business Position with Present Principal Citizenship
Address Reporting Person Occupation or
Employment
--------------------------------------------------------------------------------
Grande N.A.K.S. Ltd Director of S&T Not applicable Incorporated in
International British Virgin
Distribution Islands
Limited
--------------------------------------------------------------------------------
Christopher Ho Director of Grande Group Chief Canadian
Wing-On N.A.K.S. Ltd and Executive
The Grande
Holdings Limited
--------------------------------------------------------------------------------
Michael Andrew Director of Grande Group Executive British
Barclay Binney N.A.K.S. Ltd and
The Grande
Holdings Limited
--------------------------------------------------------------------------------
Adrian Ma Chi Chiu Director of Grande Group Executive British
N.A.K.S. Ltd and
The Grande
Holdings Limited
--------------------------------------------------------------------------------
Lam Chuck Fai Director of The Group Executive British
Grande Holdings
Limited
--------------------------------------------------------------------------------
Paul Law Kwok Fai Director of The Group Executive British
Grande Holdings
Limited
--------------------------------------------------------------------------------
Christine Asprey Director of The Group Executive British
Lai Shan Grande Holdings
Limited
--------------------------------------------------------------------------------
Herbert Tsoi Hak Director of The Solicitor, Herbert British
Kong Grande Holdings Tsoi & Partners
Room 602, Aon China Limited
Building, 29
Queen's Road
Central, Hong Kong
--------------------------------------------------------------------------------
Johnny Lau Wing Hung Director of The Chairman, Jacobson Singaporean
15/F, China Trade Grande Holdings Medical (HK) Ltd
Centre, No.122-124 Limited
Wai Yip Street,
Kwun Tong, Kowloon,
Hong Kong
--------------------------------------------------------------------------------
Martin Ian Wright Director of The Accountant, Green British
404 Fook Hong Grande Holdings Cartridge Company
Industrial Limited Limited
Building, 19 Sheung
Yuet Road, Kowloon
Bay, Kowloon, Hong
Kong
--------------------------------------------------------------------------------
11
Exhibit 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k)(1)(iii) under the Securities
Exchange Act of 1934, as amended, the persons named below agree to the joint
filing on behalf of each of them of a Statement on Schedule 13D dated December
15, 2005 (including amendments thereto) with respect to the Common Stock of
Emerson Radio Corp. This Joint Filing Agreement shall be filed as an Exhibit
to such Statement.
Dated: December 14, 2005
/s/ Christopher Ho Wing On
----------------------------------------
CHRISTOPHER HO WING ON
THE GRANDE HOLDINGS LIMITED
By: /s/ Christopher Ho Wing On
----------------------------------------
Name: Christopher Ho Wing On
Title: Director
GRANDE N.A.K.S. LTD
By: /s/ Christopher Ho Wing On
----------------------------------------
Name: Christopher Ho Wing On
Title: Director
S&T INTERNATIONAL DISTRIBUTION LTD
By: /s/ Christopher Ho Wing On
----------------------------------------
Name: Christopher Ho Wing On
Title: Director
12
SC 13D EXHIBIT 2 Execution Copy
---------------- --------------
Dated August 20, 2005
---------------------
GOTTFRIED LUDWIG PRENTICE JURICK
and
S&T INTERNATIONAL DISTRIBUTION LIMITED
--------------------------------------------------------
AGREEMENT FOR THE
SALE AND PURCHASE OF CERTAIN SHARES IN
EMERSON RADIO CORP.
--------------------------------------------------------
Baker & McKenzie
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
Telephone: (852) 2846-1888
Fax: (852) 2845-0476
LKL/CSML\32137319-000642
TABLE OF CONTENTS
-----------------
1 INTERPRETATION....................................................1
2 SALE AND PURCHASE OF SALE SHARES .................................4
3 CONDITIONS........................................................4
4 COMPLETION........................................................6
5 REPRESENTATIONS AND WARRANTIES....................................6
6 INDEMNIFICATION...................................................7
7 RESTRICTIONS ON ANNOUNCEMENT......................................7
8 MISCELLANEOUS.....................................................9
9 GOVERNING LAW AND JURISDICTION....................................10
SCHEDULE 1 Completion Requirements
---------
SCHEDULE 2 Representations, Warranties and Undertakings
---------
SCHEDULE 3 Actions of the Company between Signing and Completion
---------
EXHIBIT A Form of Representation Letters
---------
EXHIBIT B Form of Convertible Debenture
---------
EXHIBIT C Transfer Agent Letter
---------
THIS AGREEMENT is made on the day of August 2005
BETWEEN :
(1) GOTTFRIED LUDWIG PRENTICE JURICK, of Suite 2520, 25/F, Sutton Court,
Gateway Apartments, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong (the
"Vendor"); and
(2) S&T INTERNATIONAL DISTRIBUTION LIMITED, a company incorporated in the
British Virgin Islands, whose registered office is at TrustNet Chambers,
P.O. Box 3444, Road Town, Tortola, British Virgin Islands (the
"Purchaser").
RECITALS :
(A) The Vendor is the beneficial owner of the Sale Shares (as defined below)
in the capital of Emerson Radio Corp., a Delaware corporation, subject
to a share mortgage between the Vendor and the Seng Heng Bank Limited
dated 19 January 2005 (the "Share Mortgage").
(B) The Vendor has agreed to sell and the Purchaser has agreed to purchase
the Sale Shares on the terms and subject to the conditions set out in
this agreement.
NOW IT IS HEREBY AGREED as follows:
1 INTERPRETATION
--------------
1.1 In this Agreement (which includes the recitals, schedules and exhibits),
unless the context requires otherwise:
"Business Day" a day on which banks in both Hong Kong and
New York City are open for normal banking
business (excluding Saturdays and
Sundays);
"Cash Sale Consideration" has the meaning ascribed to such term in
Clause 2.1;
"Company" Emerson Radio Corp., a Delaware
corporation, whose principal executive
offices are at Nine Entin Road,
Parsippany, New Jersey 07054-0430, U.S.A.;
"Completion" completion of the sale and purchase of the
Sale Shares in accordance with Schedule 1;
"Completion Date" on or before 5:00 p.m. (Hong Kong time)
falling two (2) Business Days after
satisfaction or waiver, as the case may
be, of Conditions and in any event no
later than the date provided for in Clause
3.4 (or the deferred Completion Date in
accordance with
Clause 4.3 or such later date as the
parties may agree in writing);
"Conditions" the conditions set out in Clause 3.1 and
Clause 3.2;
"Convertible Debenture" a debenture of GHL, in the face amount of
US$26 million, convertible into shares of
GHL, substantially in a form as set out in
Exhibit B attached to this Agreement;
"GHL" The Grande Holdings Limited, whose shares
are listed on the Main Board of the HKSE;
"Hong Kong" the Hong Kong Special Administrative
Region of the People's Republic of China;
"HKSE" the Stock Exchange of Hong Kong Limited;
"Material Adverse Change" with respect to an entity that is either
the Company or GHL, any fact, event or
development that, individually or when
taken together with any other fact, event,
or development, has or is reasonably
likely to have a material adverse effect
on the business, operations, conditions
(financial or otherwise), assets or
prospects of such entity and its
subsidiaries, other than any fact, event
or development (i) relating solely to the
economy or financial markets in general or
(ii) relating generally to the consumer
electronics industry (it being understood
and agreed that the phrase "material
adverse change" when used with respect to
assets of such entity shall mean a fact,
event or development that causes or is
reasonably likely to cause the
consolidated net asset value of such
entity and its subsidiaries as would be
shown in its management accounts as at the
Completion Date to be less than ten
percent (10%) of such net asset value of
such entity and its subsidiaries as would
be shown in the management accounts of
such entity and its subsidiaries as at the
date of this Agreement);
"Pending Litigation" Re Emerson Radio Corp. Securities
Litigation, 03cv4201;
"Purchaser's Warranties" the representations, warranties and
undertakings referred to in Clause 5.2 and
Part B of Schedule 2;
2
"Representation Letters" the representation letters to be executed
by the Vendor and the Purchaser
substantially in the form attached hereto
as Exhibit A;
"Sale Consideration" US$52 million;
"Sale Shares" 10 million common shares in the
capital of the Company, representing
approximately 37% of the entire issued
share capital of the Company on a fully
diluted basis as at the date of this
Agreement;
"SEC" the Securities and Exchange Commission of
the United States of America;
"Securities Act" US Securities Act of 1933, as amended;
"Share Mortgage" has the meaning ascribed to such term in
Recital (A);
"Transfer Agent Letter" has the meaning ascribed to such term in
Clause 3.2(h);
"Transfer Documents" has the meaning ascribed to such term in
Clause 3.2(h);
"US" United States of America;
"Vendor's Warranties" the representations, warranties and
undertakings referred to in Clause 5.1 and
Part A of Schedule 2;
"Warranties" the Vendor's Warranties and the
Purchaser's Warranties;
"US$" United States Dollars, being the lawful
currency of the United States of America.
1.2 References herein to Clauses, Schedules and Exhibits are to clauses in,
schedules and exhibits to this Agreement unless the context requires
otherwise and the Schedules and Exhibits to this Agreement shall be
deemed to form part of this Agreement.
1.3 The expressions the "Purchaser" and "Vendor" shall, where the context
permits, include their respective successors and permitted assigns.
1.4 The headings are inserted for convenience only and shall not affect the
construction of this Agreement.
1.5 The parties hereto acknowledge and agree that Vendor is entering into
and executing this agreement on an individual basis, and not as a
director, officer, employee or agent of the
3
Company or its subsidiaries (the "Emerson Group") and the Emerson Group
is not a party hereto and is not obligated hereunder or under any of the
schedules or exhibits hereto.
2 SALE AND PURCHASE OF SALE SHARES
--------------------------------
2.1 Subject to the terms of this Agreement, the Vendor shall sell the Sale
Shares and the Purchaser shall purchase the Sale Shares at the Sale
Consideration, which shall be payable as follows: (1) US$26 million in
cash (the "Cash Sale Consideration"), and (2) US$26 million in the form
of the Convertible Debenture.
2.2 The Sale Shares shall be sold free from all liens, charges and
encumbrances and together with all rights now or hereinafter attaching
to them, including all rights to any dividend or other distribution
declared, made or paid after the Completion Date.
2.3 The Convertible Debenture and any securities issuable thereunder
(together with all rights now or hereinafter attaching to any of them,
including all rights to any interest, dividend or other distribution
declared, made or paid after the Completion Date) shall be issued free
from all liens, charges and encumbrances.
3 CONDITIONS
----------
3.1 The Vendor's obligations to complete this Agreement is conditional upon
the satisfaction of the following conditions (any of which may be waived
by the Vendor except where such waiver relates to a representation,
warranty or undertaking which if breached would subject the sale of the
Sale Shares to the registration requirements of the Securities Act or
any state securities laws or which would be in violation of law):
(a) the due execution of the Representation Letter by the Purchaser;
(b) there shall have been no material breach of any representation,
warranty or undertaking under this Agreement by the Purchaser,
including without limitation the Completion Requirements
applicable to the Purchaser set forth in Schedule 1;
(c) Mr. Christopher Ho (Passport No. BC 257411) who indirectly holds
approximately 62.76% of the total issued share capital of GHL
procuring the transactions contemplated under this Agreement,
including but not limited to, the acquisition of the Sale Shares,
the issuance of the Convertible Debenture and the issuance of the
shares of GHL to be converted under the Convertible Debenture, be
approved in writing in accordance with the Rules Governing the
Listing of Securities on the HKSE;
(d) since the date hereof, there shall have been no Material Adverse
Change with respect to GHL; and
(e) the securities to be issued pursuant to the Convertible Debenture,
assuming full conversion thereof on the Completion Date, would
represent approximately 6% of the issued and outstanding shares of
GHL on a fully-diluted basis and GHL has
4
sufficient shareholders' mandate to issue and allot the securities
convertible under the Convertible Debenture in compliance with the
Rules Governing the Listing of Securities on the HKSE.
3.2 The Purchaser's obligations to complete this Agreement is conditional
upon the satisfaction of the following conditions (any of which may be
waived by the Purchaser except where such waiver relates to a
representation, warranty or undertaking which if breached would subject
the sale of the Sale Shares to the registration requirements of the
Securities Act or any state securities laws or which would be in
violation of law):
(a) the due execution of the Representation Letters by the Vendor;
(b) there shall have been no material breach of any representation,
warranty or undertaking under this Agreement by the Vendor,
including without limitation the Completion Requirements
applicable to the Vendor set forth in Schedule 1;
(c) since the date hereof, there shall have been no Material Adverse
Change with respect to the Company;
(d) the Sale Shares represent approximately 37% of the issued and
outstanding shares of the Company on a fully-diluted basis;
(e) the Company shall not have taken any of the actions set forth in
Schedule 3;
(f) if required, the HKSE granting its approval for (i) the issue of
the Convertible Debenture and (ii) the listing of, and permission
to deal in any shares of par value of HK$0.10 in the share capital
of GHL issuable thereby upon the exercise of the conversion right
under the Convertible Debenture;
(g) if required, the Bermuda Monetary Authority granting its
permission for the issuance of the Convertible Debenture and the
free transferability of the shares to be issued on conversion in
full of the Convertible Debenture; and
(h) the Vendor shall have delivered to the Purchaser those documents
(the "Transfer Documents") listed in items 1, 2 and 4 of the
letter attached as Exhibit C hereto (the "Transfer Agent Letter")
and shall have complied with any formalities described therein.
3.3 Each party shall use its best endeavours to ensure that the Conditions
set out in Clause 3.1 and Clause 3.2 (as the case may be) shall be
fulfilled by the date referred to in Clause 3.4.
3.4 If the Completion has not occurred at or before 5:00 p.m. (Hong Kong
time) on 1 September, 2005 (or by such later time and date as the
parties hereto may agree in writing), this Agreement and everything
herein contained shall, subject to the liability of any party to the
others in respect of any antecedent breaches of the terms hereof,
including the obligations under Clause 3.3, antecedent thereto, be null
and void and of no
5
effect (save for the provisions in Clauses 6 to 8 (inclusive) and those
other provisions which are expressed to survive after termination of
this Agreement for whatever reason).
4 COMPLETION
----------
4.1 Completion shall take place at the Completion Date at the offices of the
Vendor's solicitors, Baker & McKenzie, at 14/F, Hutchison House, 10
Harcourt Road, Hong Kong or the Macau offices of Seng Heng Bank,
provided that neither the Vendor nor the Purchaser shall be obliged to
perform their respective obligations under this Clause if the other does
not simultaneously perform (or have not already performed) its
respective obligations under this Clause.
4.2 At Completion, each of the Vendor and the Purchaser shall perform its
respective obligations set out in Schedule 1.
4.3 The Purchaser or the Vendor shall not be obliged to complete this
Agreement or perform any obligations hereunder unless the other party
complies in all material respects with the requirements of Clause 4.2.
Without prejudice to any other remedies which may be available to a
party on the Completion Date, a non-defaulting party may:
(a) defer Completion to a date falling not more than 28 days after the
original Completion Date (so that the provisions of this Clause 4
shall apply to the deferred Completion) provided that, time shall
be of the essence as regards the deferred Completion and if
Completion is not effected on such deferred date, the
non-defaulting party may rescind this Agreement and claim damages
from the defaulting party; or
(b) proceed to Completion so far as practicable (but without prejudice
to the non-defaulting party's rights hereunder) insofar as the
defaulting party shall not have complied with its obligations
hereunder; or
(c) treat this Agreement as terminated for breach by the defaulting
party of a condition of this Agreement.
5 REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 The Vendor hereby represents and warrants to the Purchaser that each of
the Vendor's Warranties in the terms set out in Part A of Schedule 2 is
true and accurate and will at all times from the date of this Agreement
and up to the Completion be true and accurate, that it will observe its
undertakings set out in Part A of Schedule 2, and acknowledges that the
Purchaser in entering into this Agreement is relying on the Vendor's
Warranties.
5.2 The Purchaser hereby represents and warrants to the Vendor that each of
the Purchaser's Warranties in the terms set out in Part B of Schedule 2
is true and accurate and will at all times from the date of this
Agreement and up to the Completion be true and accurate, that it will
observe its undertakings set out in Part B of Schedule 2 and
acknowledges that the Vendor in entering into this Agreement is relying
on the Purchaser's Warranties.
6
5.3 Each of the Warranties shall be separate and independent to the intent
that the Purchaser or the Vendor, as the case may be, shall have a
separate claim and right of action in respect of any breach thereof and
save as expressly provided herein shall not be limited by reference to
anything else in this Agreement.
5.4 The Vendor or the Purchaser, as the case may be, undertakes to disclose
to the other in writing any matter, whether occurring before or after
Completion, which constitutes a breach of or is inconsistent with any of
the Warranties or which renders any of the Warranties inaccurate or
misleading immediately upon becoming aware of the same. In the event any
such matter renders any of the Warranties of a party inaccurate or
misleading, the other party shall not be required to complete this
transaction unless and until such time as all Warranties of the first
party are materially true and correct as of the Completion Date.
5.5 The Vendor's Warranties and the Purchaser's Warranties contained in
Schedule 2 will survive for a period of six (6) months after the
Completion Date.
5.6 At any time or from time to time after the Completion, the Vendor and
the Purchaser shall execute and deliver to the other party such other
documents and instruments, provide such materials and information, and
take such other actions as the other party may reasonably request to
make effective the transactions contemplated in this Agreement.
6 INDEMNIFICATION
---------------
6.1 The Vendor shall indemnify and hold the Purchaser and each of its
affiliates harmless against any loss, liability, damage or expense
(including without limitation attorneys' fees and expenses) ("Losses")
incurred by any of them, to the extent resulting or arising directly or
indirectly from:
(a) any breach of any of Vendor's Warranties that survives the
Completion; or
(b) any breach of any covenant or undertaking of the Vendor contained
in this Agreement.
6.2 The Purchaser shall indemnify and hold the Vendor harmless against any
Loss incurred by the Vendor, to the extent resulting or arising directly
or indirectly from:
(a) any breach of any of the Purchaser's Warranties that survives the
Completion; or
(b) any breach of any covenant or undertaking of the Purchaser
contained in this Agreement.
7 RESTRICTIONS ON ANNOUNCEMENT
----------------------------
7.1 Each of the parties hereto undertakes that prior to Completion and
thereafter it will not (save as required for either of the parties or
the Company to comply with any law or any applicable rules and
regulations of any relevant securities exchange or any supervisory or
7
regulatory authority, including, where applicable, filings of Schedule
13, Form 3, Form 4 and providing information to the Company regarding
the transaction herein to enable it to comply with stock exchange
regulations and disclosure obligations under applicable rules and
regulations) make or permit or authorise the making of any press release
or other public statement or disclosure or announcement in connection
with this Agreement or the transactions contemplated hereunder unless
the other parties hereto shall have given their respective consents to
such announcement (which consents may not be unreasonably withheld or
delayed and may be given either generally or in a specific case or cases
and may be subject to conditions).
7.2 Each of the parties hereto undertakes that it will not and will procure
(where applicable) that its respective officers, employees, agents,
subsidiaries and other persons which it controls and the respective
officers, employees and agents of each such person, will not during the
period of this Agreement and after its termination (for whatever reason)
use or divulge to any person, or publish or disclose or permit to be
published or disclosed, any secret or confidential information which it
has received or obtained, or may receive or obtain, (whether or not, in
the case of documents, they are marked as confidential) from the other
party to this Agreement;
PROVIDED THAT the obligations of this Clause 7.2 shall not apply to:
(i) the disclosure of information which the recipient can reasonably
demonstrate is in the public domain through no fault of its own;
(ii) the disclosure of information where the disclosure is required by
law, pursuant to a court order or by any recognised stock exchange
or governmental or other regulatory body when the party concerned
shall, if practicable, supply an advance copy of the required
disclosure to the other parties and incorporate any additions or
amendments reasonably requested by them;
(iii) the disclosure of information in confidence to any professional
adviser or lender by any of the parties for the purposes of
obtaining advice or assistance in connection with its obligations
or rights, or the obligations or rights of any the parties hereto
or the Sale Shares, or in connection with the obtaining of
financing in connection with this transaction; or
(iv) the disclosure of information in confidence to or by any adviser
to any of the parties for the purposes of giving or obtaining
advice or acting on behalf of the relevant party in connection
with a matter where disclosure of information is permitted
pursuant to the provisions hereof.
7.3 For the purposes of Clause 7.2, "information" includes, without
limitation, the following:
(a) information concerning the Sale Shares, any of the parties hereto
or the Company, or any transaction in which the Sale Share or any
of the parties hereto may be or may have been concerned or
interested; or
(b) information on the terms of this Agreement.
8
8 MISCELLANEOUS
-------------
8.1 Except as otherwise agreed amongst the parties hereto, all expenses
incurred by or on behalf of the parties, including all fees of agents,
representatives, solicitors and accountants employed by any of them in
connection with the negotiation, preparation or execution of this
Agreement, shall be borne solely by the party who incurred the
liability.
8.2 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 fax number set out below (or such other address
or fax number as the addressee has by five (5) days' prior written
notice specified to the other parties):
To the Purchaser: (c/o) The Grande Holdings Limited
12th Floor, The Grande Building,
398 Kwun Tong Road,
Kowloon,
Hong Kong
Fax Number: (852) 2343 2329 and (65) 6222 2153
Attention: Ms. Ruby Lee, Esq.
To the Vendor: Suite 2520, 25/F,
Sutton Court, Gateway Apartments,
Harbour City, Tsim Sha Tsui,
Kowloon,
Hong Kong
and
705-711, Tower 2, The Gateway,
25-27 Canton Road,
Kowloon,
Hong Kong
Fax Number: (852) 2119 1226 and (852) 2956 1322
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, when actually delivered to the relevant address; and (b) if
given or made by fax, when despatched.
8.3 No failure or delay by any part hereto 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 any party hereto of any breach by
the other party or parties of any provision hereof shall be deemed to be
a waiver of any
9
subsequent breach of that or any other provision hereof. 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.
8.4 No party shall assign any of its rights and obligations under this
Agreement without the prior written consent of all the other parties
hereto; provided that (a) the Purchaser may assign and/or grant a
security interest all of its rights hereunder to (1) GHL or (2) to any
third-party lender in connection with the financing by such lender to
the Purchaser or its nominee and (b) the Vendor may assign all of its
rights hereunder (including the Convertible Debenture) to any
third-party lender in connection with the financing by such lender to
the Vendor or its nominee.
8.5 This Agreement (together with any documents referred to herein)
constitutes the whole agreement between the parties hereto and it is
expressly declared that no variations hereof shall be effective unless
made in writing.
8.6 The provisions of this Agreement insofar as the same shall not have been
fully performed at Completion, shall remain in full force and effect
notwithstanding Completion.
8.7 Any right of rescission conferred upon any party hereto hereby shall be
in addition to and without prejudice to all other rights and remedies
available to it.
8.8 Each party agrees to do everything reasonably necessary to give effect
to this agreement and the transactions contemplated by it (including the
execution of documents) and to use all reasonable endeavours to cause
relevant third parties to do likewise.
8.9 This Agreement may be executed in one or more counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart and each such counterpart
shall constitute an original of this Agreement but all the counterparts
shall together constitute one and the same instrument.
9 GOVERNING LAW AND JURISDICTION
------------------------------
9.1 This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong and the parties hereto hereby irrevocably submit to
the non-exclusive jurisdiction of the Hong Kong courts.
10
IN WITNESS WHEREOF this Agreement has been executed on the day and year first
above written.
VENDOR:
------------------------
GOTTFRIED LUDWIG PRENTICE JURICK
PURCHASER:
------------------------
For and on behalf of
S&T INTERNATIONAL DISTRIBUTION LIMITED
11
SCHEDULE 1
----------
Completion Requirements
-----------------------
1 Obligations of the Vendor
-------------------------
1.1 The Vendor shall at or (at its discretion) prior to Completion deliver
or cause to be delivered to the Purchaser:
(a) the Transfer Documents, including, for the avoidance of doubt: (i)
valid share certificates for the Sale Shares and, if any such
certificate is not in the name of the Vendor, evidence reasonably
satisfactory to the Purchaser that the relevant shares are
beneficially owned by the Vendor; (ii) duly executed and valid
instruments of transfer in relation to the Sale Shares, including,
if requested by the Purchaser, a stock power in a form reasonably
acceptable to the Purchaser; and (iii) the legal opinion
referenced in the Transfer Agent Letter;
(b) an original copy of the Representation Letter duly executed by the
Vendor;
(c) the release by Seng Heng Bank of any lien which it may hold on the
Sale Shares, in form reasonably satisfactory to the Purchaser
(including, if applicable, a UCC-3 termination statement); and
(d) a letter sent on or about 22 August 2005 by the Vendor to the
Company confirming that, so long as Completion takes place in
accordance with this Agreement, the Vendor will resign as Chairman
and Chief Executive Officer of the Company, effective as of the
earlier of the appointment of his successor(s) or 31 October 2005.
For the avoidance of doubt, to the extent permissible under
applicable laws (including the requirements and/or regulations of
the American Stock Exchange LLC), the Vendor may remain as a
Director and advisor of the Company.
2. Obligations of the Purchaser
----------------------------
2.1 On the Completion Date, the Purchaser shall:
(a) pay (or cause to be paid) to Seng Heng Bank that portion of the
Cash Sale Consideration necessary to cause Seng Heng Bank to
release any lien which it may hold on the Sale Shares, and pay the
balance of the Cash Sale Consideration to the Vendor, in United
States dollars, by bank draft or telegraphic transfer;
(b) deliver (or cause to be delivered) the Convertible Debenture, duly
executed by GHL and issued in favour of the Vendor or its
designated nominee, to the Vendor;
(c) deliver (or cause to be delivered) to the Vendor a certified copy
of the Representation Letter duly executed by the Purchaser; and
1
(d) deliver (or cause to be delivered) to the Vendor a copy of the
board minutes of the Purchaser confirming and approving the
execution of this Agreement and the transactions contemplated
herein in such form reasonably acceptable to the Vendor.
2
SCHEDULE 2
----------
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
--------------------------------------------
Part A - Vendor's Representations, Warranties, and Undertakings
---------------------------------------------------------------
1. The Vendor is the beneficial owner of and has good and valid title to the
Sale Shares, and has the full right to sell, convey, transfer and deliver
the Sale Shares. Except for the Share Mortgage, the Sale Shares are free
and clear of all mortgages, liens, security interests, covenants, options,
claims, restrictions or encumbrances of any kind, material defects as to
title or restrictions against transfer or assignment thereof.
2. The Vendor will at Completion, upon release of the Share Mortgage, have
full power and right to transfer the legal and beneficial title in the
Sale Shares.
3. The Vendor, in entering into this Agreement and completing the
transactions contemplated herein, does not do so in breach of any existing
obligation, applicable legislation or other applicable law. To the best of
the Vendor's knowledge, no consent, approval, license, permit, order or
authorization (a "Consent") of, or registration, declaration or filing
(other than the filing of Form 4 with the SEC) with any government or any
court of competent jurisdiction (a "Governmental Entity") is required to
be obtained or made by or with respect to the Vendor or the Company in
connection with (i) the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated herein or
(ii) following the Closing, the conduct by the Company of its business
substantially as conducted on the date hereof (the "Business"), other than
(A) such filings as may be required pursuant to applicable US federal
securities laws and (B) Consents, registrations, declarations and filings
the absence of which, or the failure to make which, individually or in the
aggregate, would not be reasonably likely to have a material adverse
effect on the business or results of operations of the Company (a "Company
Material Adverse Effect").
4. This Agreement when duly executed will constitute the legal, valid and
binding obligation of the Vendor enforceable against the Vendor in
accordance with its terms.
5. Neither the Vendor, its affiliates (as defined in Rule 501(b) of
Regulation D promulgated under the Securities Act) nor any person acting
on its behalf has, directly or indirectly:
(a) made offers or sales of any security, or solicited offers to buy, or
otherwise negotiated in respect of, any security, under circumstances
that would require the registration of the Sale Shares under the
Securities Act; or
(b) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D promulgated under the Securities
Act) in connection with any offer of the Sale Shares in the U.S. or to
a U.S. Person (within the meaning of Regulation S promulgated under
the Securities Act).
6. Neither the Vendor, nor any of its affiliates (as defined in Rule 405
under the Securities Act), nor any person acting on their behalf has
engaged in any "directed selling efforts" (as defined in Regulation S)
with respect to the Sale Shares.
7. Neither the Vendor, nor any of its affiliates (as defined in Rule 501(b)
of Regulation D), nor any person acting on its or their behalf will,
directly or indirectly offer to sell, sell or solicit offers to buy, or
otherwise seek to effect the transfer or pledge of any of any securities
in any manner or by any means which would subject the sale of the Sale
Shares to the registration requirements of the Securities Act or any state
securities laws or which would be in violation of law and/or which could
cause the sale of the Sale Shares under this Agreement, when viewed in the
light of any such subsequent offer to sell, sale or solicitation of offers
to buy or other transfer, to have been a violation of law.
8. The transfer of the Sale Shares from the Vendor to Purchaser is not part
of a plan or scheme to evade the registration requirements of the
Securities Act.
9. The Vendor will use his best endeavours to effect such filings, including
Schedule 13D and Form 4, as may be required of him under applicable US
federal securities laws, within the required statutory periods.
10. To the best of the Vendor's knowledge, there is no pending suit, action or
proceeding ("Proceeding") or claim with respect to which the Company has
been contacted in writing by counsel for the plaintiff or claimant or
threatened Proceedings or claims arising out of the conduct of the
Business (other than the Pending Litigation) that (a) relate to or involve
more than US$500,000, (b) seek any material injunctive relief or (c) may
give rise to any legal restraint on or prohibition against the
transactions contemplated by this Agreement. The Pending Litigation is
being defended by or in consultation with the Company's insurance
carriers, and, to the best of the Vendor's knowledge, the Company
maintains adequate insurance to cover all damages which may be awarded to
the plaintiffs (or to which they may agree by settlement) in, as well as
any costs (including the fees and expenses of counsel) associated with,
the Pending Litigation. To the best of the Vendor's knowledge, the Company
is not a party or subject to or in default under any judgment, order or
decree ("Judgment") other than for such Judgments that, individually and
in the aggregate, could not reasonably be expected to have a Company
Material Adverse Effect.
11. To the best of the Vendor's knowledge, the Business will not suffer any
material disruption as a result of the announcement by the Vendor of his
intention to sell the Sale Shares except that the information communicated
by the Vendor to the Purchaser regarding the possible change in one of the
primary bankers of the Company may or may not lead to any material
disruption. In particular, but without limiting the generality of the
foregoing, the Vendor has no knowledge that (i) any supplier or customer
of the Business intends to cancel or otherwise substantially modify its
relationship with the Company or to decrease materially or limit its
services, supplies or materials to the Company, or its usage or purchase
of the Company's services or products, or (ii) the consummation of the
transactions contemplated hereby will adversely affect the relationship of
the Company with any such supplier or customer. To the best of the
Vendor's knowledge, no senior employee will leave the Business as a result
of the announcement by the Vendor of sale of the Sale Shares so long as
the Company continues to offer compensation and benefits to such employee
that is substantially similar to the compensation and benefits enjoyed by
such employee immediately prior to Completion. To the best of the Vendor's
knowledge, since 1 January,
2
2005, the Company has caused the Business to be conducted in the ordinary
course and in substantially the same manner as previously conducted.
12. To the best of the Vendor's knowledge, the execution of this Agreement and
the consummation of the transactions contemplated hereby will not, by
itself or in combination with any other event (regardless of whether that
other event has or will occur), result in any payment (whether of
severance pay or otherwise) becoming due from any benefit plan to any
current or former director, officer, consultant or employee of the Company
or result in the vesting, acceleration of payment or increases in the
amount of any benefit payable to or in respect of any such current or
former director, officer, consultant or employee. ).
13. Without limiting the specificity of the foregoing representations and
warranties, to the best of the Vendor's knowledge: (i) any factual
information provided by or on behalf of the Company (under applicable
statute or regulation or otherwise) (including company accounts, whether
published or preliminary) was true and accurate in all material respects
as at the date (if any) it was provided or as at the date (if any) at
which it is stated and (ii) nothing has occurred or been omitted from the
information so provided and no information has been given or withheld that
results in the information provided by or on behalf of the Company being
untrue or misleading in any material respect.
14. The Vendor shall use his best endeavours to procure that, after the date
hereof and prior to the Completion Date, except as expressly provided in
this Agreement or as may be agreed in writing by the Purchaser, the
business of the Company shall be conducted in the same manner as
heretofore conducted and only in the ordinary course, and the Vendor shall
use his best endeavours to cause the Company to use its best endeavours to
preserve the business organization of the Company intact, keep available
the services of the current officers and employees of the Company and
maintain the existing relations with franchisees, customers, suppliers,
creditors, business partners and others having business dealings with the
Company, to the end that the goodwill and ongoing business of the Company
shall be unimpaired at the Completion Date. Without limiting the
foregoing; the Vendor shall, in so far as not inconsistent with his role,
obligations and duties as a director, Chairman and Chief Executive Officer
of the Company, use his best endeavours to procure that the Company does
not, between the date hereof and the Completion Date, take any of the
actions set forth in Schedule 3 hereof.
15. The Vendor understands and agrees that upon his resignation as Chairman
and Chief Executive Officer of the Company in accordance with Sub-Clause
1.1(e) of Schedule 1, his employment agreement with the Company will
terminate, and he will have no claim against the Company for any amounts
payable thereunder (other than amounts due for any period of employment
ending on or prior to such termination date and not theretofore paid),
including without limitation any claim based on premature termination or
in respect of any "golden parachute."
16. To the best of the Vendor's knowledge, there has been no Material Adverse
Change with respect to the Company since March 31, 2005.
3
17. Following Completion, and in the event the Transfer Documents are not
adequate for this purpose, the Vendor will take such action as may be
reasonably required by the Company's stock transfer agent to cause the
Sale Shares to be registered, and a certificate representing such Sale
Shares to be issued , in the name of the Purchaser or its designee.
18. As at the date of this Agreement, the Vendor beneficially owns options in
respect of 200,000 common shares of the Company which were granted to the
Vendor by the Company on 19 October 2004. To the best knowledge of the
Vendor, no other option entitling the Vendor for additional common share
in the Company is forthcoming.
Part B - Purchaser's Representations, Warranties, and Undertakings
------------------------------------------------------------------
1. The Purchaser has full power and authority to enter into and perform this
Agreement and in entering into this Agreement and completing the
transactions contemplated herein, does not do so in breach of any existing
obligation, applicable legislation or other applicable law.
2. This Agreement when duly executed will constitute legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms.
3. The Purchaser understands that the Sale Shares it is purchasing are
characterized as "restricted securities" as that term is defined in Rule
144 under the Securities Act and are being acquired from an affiliate of
the Company in a transaction not involving a public offering and that
under such laws and applicable regulations the Sale Shares may be resold
without registration under the Securities Act only in certain limited
circumstances. It agrees that, if in the future it decides to resell,
pledge or otherwise transfer such Sale Shares, such Sale Shares may be
offered, resold, pledged or otherwise transferred only (i) to a person who
is not a U.S. person pursuant to an offshore transaction in compliance
with Rule 903 or Rule 904 of Regulation S under the Securities Act, (ii)
pursuant to an exemption from registration under the Securities Act, or
(iii) pursuant to an effective registration statement under the Securities
Act, and in each of such cases in accordance with any applicable
securities laws of any state of the United States; provided that the
Vendor acknowledges that the Purchaser expects to pledge the Sale Shares
to a financial institution in connection with the granting by such
institution of financing for their acquisition. The Purchaser also agrees
that it will not engage in hedging transactions with regard to the Sale
Shares unless in accordance with regulations issued under the Securities
Act; it acknowledges that no representation has been made to it as to the
availability of the exemption provided by Rule 144 under the Securities
Act for resales of the Sale Shares; and it further understands that any
Sale Shares acquired by it will be in the form of individual definitive
physical certificates and that such certificates will bear legends set
forth in Clause 9 of Part B of Schedule 2.
4. The Convertible Debenture is being, and any securities issuable thereunder
(together with all rights now or hereinafter attaching to any of them,
including all rights to any interest, dividend or other distribution
declared, made or paid after the Completion Date) shall be issued, free
from all liens, charges and encumbrances. Except with respect to the
granting by the HKSE of its approval, if required, for (i) the issue of
the Convertible Debenture and
4
(ii) the listing of, and permission to deal in any shares of par value of
HK$0.10 in the share capital of GHL issuable thereby upon the exercise of
the conversion right under the Convertible Debenture (both of which, if
required, will be obtained prior to Completion) and except with respect to
the granting by the Bermuda Monetary Authority of its permission for the
issuance of the Convertible Debenture and the free transferability of the
shares to be issued on conversion in full of the Convertible Debenture, no
Consent of, or registration, declaration or filing with any Governmental
Entity (including but not limited to the HKSE) or its shareholders is
required to be obtained or made by or with respect to GHL in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated herein, including but not
limited to the Convertible Debenture and all such securities of GHL
issuable thereunder and the obtaining of the permission of listing of such
securities on the HKSE.
5. The Purchaser is acquiring the Sale Shares for investment for its own
account, not as a nominee or agent, and not with a view to resale or
distribution. It has no present intention of selling, transferring or
distributing the Sale Shares or any of them (except for granting a lien
therein to its lender at Completion). It has not entered into any
contract, undertaking, agreement or arrangement with any third party to
sell, transfer or distribute the Sale Shares or any of them (except for
granting a lien therein to its lender at Completion).
6. The Purchaser understands and acknowledges that the Company does not have
any obligation or intention to, and that the Purchaser has no right to
require the Company to (i) file any registration statement with the SEC
under the Securities Act covering offers and sales of Sale Shares by the
Purchaser or any other party, (ii) offer to the Purchaser to exchange
shares of its common stock and/or any other of its securities for any Sale
Shares in any transaction covered by a registration statement under the
Securities Act, or (iii) to prepare or provide to the Purchaser or any
other party any information which could, were it so prepared and provided,
enable the Purchaser to sell, transfer or otherwise dispose of Sale Shares
pursuant to an exemption from the registration requirement of the
Securities Act.
7. The Purchaser will advise any transferee of Sale Shares of the
restrictions on transfer as described herein, and will procure that any
such transferee delivers to the Purchaser a written undertaking to observe
and be bound by such restrictions, and either (i) there is then in effect
a registration statement under the Securities Act covering such transfer
or (ii) such disposition will not require registration of the Sale Shares
under the Securities Act.
8. The Purchaser is not a U.S. person, within the meaning of Rule 902 under
the Securities Act, and is purchasing the Sale Shares in an offshore
transaction (as defined in Regulation S under the Securities Act).
9. It is understood that the certificates evidencing the Sale Shares may bear
one or all of the following legends (to the extent such legends appear on
any other shares of the Company not registered under the Securities Act):
(a) "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE
5
DISPOSED OF WITHIN THE UNITED STATES, ITS STATES, TERRITORIES AND
POSSESSIONS, OR TO ANY CITIZEN OR RESIDENT OF THE UNITED STATES, OR
ANY STATE, TERRITORY OR POSSESSION THEREOF, INCLUDING ANY ESTATE OF
SUCH PERSON OR ANY CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY
CREATED OR EXISTING UNDER THE LAWS THEREOF, ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT, OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS
COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. "; and
(b) Any legend imposed or required by the Company's articles of
incorporation or applicable state securities laws.
10. The Purchaser will not engage in hedging transactions with regard to the
Sale Shares unless in compliance with the Securities Act.
11. The Purchaser agrees that it will not offer to sell, sell or solicit
offers to buy, or otherwise seek to effect the transfer of any of the Sale
Shares in any manner or by any means which would subject the sale of the
Sale Shares to the registration requirements of the Securities Act or any
state securities laws or which would be in violation of law and/or which
could cause the sale of the Sale Shares under this Agreement, when viewed
in the light of any such subsequent offer to sell, sale or solicitation of
offers to buy or other transfer, to have been a violation of law.
12. The Purchaser is duly incorporated and validly existing under the laws of
the British Virgin Islands with power to conduct its business in the
manner presently conducted.
13. A copy of the memorandum of association and articles of association of the
Purchaser which has been supplied to the Vendor and, for the purposes of
identification, signed by a director of the Purchaser is up-to-date,
complete and accurate in all respects.
14. The Purchaser will effect such filings, including Schedule 13D and Form 3,
as may be required pursuant to applicable U.S. federal securities laws,
within the required statutory periods.
15. The entering into of this Agreement will not result in any breach of the
terms of the memorandum of association and the articles of association of
the Purchaser.
16. The Purchaser's principal business address is located outside the United
States.
17. To the best of the Purchaser's knowledge, there is no pending Proceeding
or claim with respect to which GHL has been contacted in writing by
counsel for the plaintiff or claimant or threatened Proceedings or claims
arising out of the conduct of the Purchaser's business as it is presently
conducted that (a) relate to or involve more than US$500,000, (b) seek any
material injunctive relief or (c) may give rise to any legal restraint on
or prohibition against the transactions contemplated by this Agreement. To
the best of the Purchaser's knowledge, GHL is not a party or subject to or
in default under any Judgment other than for such Judgments that,
individually and in the aggregate, could not reasonably be expected to
have
6
a material adverse effect on the business or results of operations of the
business of GHL as it is presently conducted.
18. To the best of the Purchaser's knowledge, the business of the GHL as it is
presently conducted will not suffer any material disruption as a result of
the announcement by the Purchaser of its intention to purchase the Sale
Shares. In particular, but without limiting the generality of the
foregoing, the Purchaser has no knowledge that (i) any supplier or
customer GHL's business as it is presently conducted intends to cancel or
otherwise substantially modify its relationship with GHL or to decrease
materially or limit its services, supplies or materials to GHL, or its
usage or purchase of GHL's services or products, or (ii) the consummation
of the transactions contemplated hereby will adversely affect the
relationship of GHL with any such supplier or customer. To the best of the
Purchaser's knowledge, no senior employee will leave GHL as a result of
the announcement by the Purchaser of the purchase of the Sale Shares and
the issue of securities pursuant to the Convertible Debenture so long as
GHL continues to offer compensation and benefits to such employee that is
substantially similar to the compensation and benefits enjoyed by such
employee immediately prior to Completion. To the best of the Purchaser's
knowledge, since 1 January, 2005, GHL has conducted its business in the
ordinary course and in substantially the same manner as previously
conducted.
19. To the best of the Purchaser's knowledge, the execution of this Agreement
and the consummation of the transactions contemplated hereby will not, by
itself or in combination with any other event (regardless of whether that
other event has or will occur), result in any payment (whether of
severance pay or otherwise) becoming due from any benefit plan to any
current or former director, officer, consultant or employee of GHL or
result in the vesting, acceleration of payment or increases in the amount
of any benefit payable to or in respect of any such current or former
director, officer, consultant or employee.
20. Without limiting the specificity of the foregoing representations and
warranties, to the best of the Purchaser's knowledge: (i) any factual
information provided by or on behalf of GHL (under applicable statutes or
regulation or otherwise) (including company accounts, whether published or
preliminary) was true and accurate in all material respects as at the date
it was provided or as at the date (if any) at which it is stated and (ii)
nothing has occurred or been omitted from the information so provided and
no information has been given or withheld that results in the information
provided by or on behalf of GHL being untrue or misleading in any material
respect.
7
SCHEDULE 3
----------
ACTIONS OF THE COMPANY BETWEEN SIGNING AND COMPLETION
-----------------------------------------------------
Between the date hereof and the Completion Date:
1. The Company shall not: (i) amend its certificate of incorporation or
by-laws or similar organizational documents in a material manner; (ii)
issue, sell, transfer, pledge, dispose of or encumber any shares of any
class or series of its capital stock or indebtedness having general voting
rights and debt convertible into securities having such rights ("Voting
Debt"), or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares
of any class or series of its capital stock or any Voting Debt; (iii)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to any shares of any class or series
of its capital stock; (iv) split, combine or reclassify any shares of any
class or series of its capital stock; or (v) redeem, purchase or otherwise
acquire directly or indirectly any shares of any class or series of its
capital stock, or any instrument or security which consists of or includes
a right to acquire such shares;
2. The Company shall not incur any new indebtedness other than trade debt
incurred in the ordinary course of business;
3. The Company shall not make any material change in the compensation payable
or to become payable to any of the officers, employees, agents or
consultants of the Company (other than normal recurring increases in the
ordinary course of business consistent with past practice in wages payable
to employees who are not officers of the Company) or to persons providing
management services to the Company, or enter into or materially amend any
employment, severance, consulting, termination or other agreement with, or
employee benefit plan for, or make any loan or advance to, any of the
officers, employees, affiliates, agents or consultants of the Company or
make any material change in its existing borrowing or lending arrangements
for or on behalf of any of such persons pursuant to an employee benefit
plan or otherwise;
4. The Company shall not enter into any contract or transaction relating to
the purchase of assets other than (i) in the ordinary course of business
consistent with past practices or (ii) purchases for which the aggregate
purchase consideration is US$100,000 or less;
5. The Company shall not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization;
6. The Company shall not take, or agree to or commit to take, any action that
would or is reasonably likely to result in any of the conditions to the
Completion set forth in Article 3 not being satisfied, or would make any
representation or warranty of the Vendor contained herein inaccurate in
any respect at, or as of any time prior to, the Completion Date, or that
would materially impair the ability of the Vendor or the Purchaser to
consummate the Completion in accordance with the terms hereof or
materially delay such consummation; and
7. The Company shall not enter into any agreement, contract, commitment or
arrangement to do any of the foregoing, or authorize, recommend, propose
or announce an intention to do, any of the foregoing.
2
EXHIBIT A
REPRESENTATION LETTERS
FORM OF VENDOR'S REPRESENTATIONAL LETTER
[Date]
Emerson Radio Corp.
Nine Entin Road,
Parsippany, New Jersey 07054-0430,
U.S.A.
Baker & McKenzie
14th Floor, Hutchison House
10 Harcourt Road
Hong Kong SAR, China
Ladies and Gentlemen:
Re: Transfer of Shares of Emerson Radio Corp.
I (the "Vendor") am delivering this letter in connection with the transfer of
10 million common shares, (the "Sale Shares") of Emerson Radio Corp., a
Delaware corporation (the "Company") pursuant to an Agreement for the Sale and
Purchase of Shares dated [o] August, 2005 (the "Agreement"). Unless otherwise
defined herein, capitalized terms used herein shall have the meanings given to
them under the Agreement.
The Vendor hereby represents, warrants, and undertakes as follows:
1. These representations, warranties and undertakings are true and correct as
of the date hereof, and will be true and correct on the date and as of the
time the transaction under the Agreement is consummated.
2. The Vendor acknowledges that the representations, warranties and
undertakings herein are being made for the benefit of, and may be relied
upon by you, as well as the transfer agent for the Company's common shares
and counsel for the Company, for purposes in connection with ensuring
compliance with United States securities laws. The Vendor agrees to notify
you promptly in writing if any of the foregoing ceases to be accurate and
complete. The Vendor agrees that this letter or a copy hereof may be
produced to any interested party in any administrative or legal proceeding
or official inquiry with respect to the matters covered hereby. These
representations, warranties and undertakings shall survive the closing of
the transaction under the Agreement and shall remain in full force and
effect.
3. The Vendor is the beneficial owner of and has good and valid title to the
Sale Shares, and has the full right to sell, convey, transfer and deliver
the Sale Shares. Except for the Share Mortgage, the Sale Shares are free
and clear of all mortgages, liens, security interests,
covenants, options, claims, restrictions or encumbrances of any kind,
material defects as to title or restrictions against transfer or
assignment thereof.
4. The Vendor will at Completion, upon release of the Share Mortgage, have
full power and right to transfer the legal and beneficial title in the
Sale Shares.
5. The Vendor, in entering into the Agreement and completing the transactions
contemplated herein, does not do so in breach of any existing obligation,
applicable legislation or other applicable law. To the best of the
Vendor's knowledge, no Consent of, or registration, declaration or filing
(other than the filing of Form 4 with the SEC) with any Governmental
Entity is required to be obtained or made by or with respect to the Vendor
or the Company in connection with (i) the execution, delivery and
performance of the Agreement or the consummation of the transactions
contemplated herein or (ii) following the Closing, the conduct by the
Company of its Business substantially as conducted on the date hereof,
other than (A) such filings as may be required pursuant to applicable US
federal securities laws and (B) Consents, registrations, declarations and
filings the absence of which, or the failure to make which, individually
or in the aggregate, would not be reasonably likely to have a Company
Material Adverse Effect.
6. The Agreement when duly executed will constitute the legal, valid and
binding obligation of the Vendor enforceable against the Vendor in
accordance with its terms.
7. Neither the Vendor, its affiliates (as defined in Rule 501(b) of
Regulation D promulgated under the Securities Act) nor any person acting
on its behalf has, directly or indirectly:
(a) made offers or sales of any security, or solicited offers to buy, or
otherwise negotiated in respect of, any security, under circumstances
that would require the registration of the Sale Shares under the
Securities Act; or
(b) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D promulgated under the Securities
Act) in connection with any offer of the Sale Shares in the U.S. or to
a U.S. Person (within the meaning of Regulation S promulgated under
the Securities Act).
8. Neither the Vendor, nor any of its affiliates (as defined in Rule 405
under the Securities Act), nor any person acting on their behalf has
engaged in any "directed selling efforts" (as defined in Regulation S)
with respect to the Sale Shares.
9. Neither the Vendor, nor any of its affiliates (as defined in Rule 501(b)
of Regulation D), nor any person acting on its or their behalf will,
directly or indirectly offer to sell, sell or solicit offers to buy, or
otherwise seek to effect the transfer or pledge of any of any securities
in any manner or by any means which would subject the sale of the Sale
Shares to the registration requirements of the Securities Act or any state
securities laws or which would be in violation of law and/or which could
cause the sale of the Sale Shares under the Agreement, when viewed in the
light of any such subsequent offer to sell, sale or solicitation of offers
to buy or other transfer, to have been a violation of law.
2
10. The transfer of the Sale Shares from the Vendor to Purchaser is not part
of a plan or scheme to evade the registration requirements of the
Securities Act.
11. The Vendor will use his best endeavours to effect such filings, including
Schedule 13D and Form 4, as may be required of him under applicable US
federal securities laws, within the required statutory periods.
12. To the best of the Vendor's knowledge, there is no pending Proceeding or
claim with respect to which the Company has been contacted in writing by
counsel for the plaintiff or claimant or threatened Proceedings or claims
arising out of the conduct of the Business (other than the Pending
Litigation) that (a) relate to or involve more than US$500,000, (b) seek
any material injunctive relief or (c) may give rise to any legal restraint
on or prohibition against the transactions contemplated by the Agreement.
The Pending Litigation is being defended by or in consultation with the
Company's insurance carriers, and, to the best of the Vendor's knowledge,
the Company maintains adequate insurance to cover all damages which may be
awarded to the plaintiffs (or to which they may agree by settlement) in,
as well as any costs (including the fees and expenses of counsel)
associated with, the Pending Litigation. To the best of the Vendor's
knowledge, the Company is not a party or subject to or in default under
any Judgment other than for such Judgments that, individually and in the
aggregate, could not reasonably be expected to have a Company Material
Adverse Effect.
13. To the best of the Vendor's knowledge, the Business will not suffer any
material disruption as a result of the announcement by the Vendor of his
intention to sell the Sale Shares except that the information communicated
by the Vendor to the Purchaser regarding the possible change in one of the
primary bankers of the Company may or may not lead to any material
disruption. In particular, but without limiting the generality of the
foregoing, the Vendor has no knowledge that (i) any supplier or customer
of the Business intends to cancel or otherwise substantially modify its
relationship with the Company or to decrease materially or limit its
services, supplies or materials to the Company, or its usage or purchase
of the Company's services or products, or (ii) the consummation of the
transactions contemplated hereby will adversely affect the relationship of
the Company with any such supplier or customer. To the best of the
Vendor's knowledge, no senior employee will leave the Business as a result
of the announcement by the Vendor of sale of the Sale Shares so long as
the Company continues to offer compensation and benefits to such employee
that is substantially similar to the compensation and benefits enjoyed by
such employee immediately prior to Completion. To the best of the Vendor's
knowledge, since 1 January, 2005, the Company has caused the Business to
be conducted in the ordinary course and in substantially the same manner
as previously conducted.
14. To the best of the Vendor's knowledge, the execution of the Agreement and
the consummation of the transactions contemplated hereby will not, by
itself or in combination with any other event (regardless of whether that
other event has or will occur), result in any payment (whether of
severance pay or otherwise) becoming due from any benefit plan to any
current or former director, officer, consultant or employee of the Company
or result in the vesting, acceleration of payment or increases in the
amount of any benefit payable to or in respect of any such current or
former director, officer, consultant or employee.
3
15. Without limiting the specificity of the foregoing representations and
warranties, to the best of the Vendor's knowledge: (i) any factual
information provided by or on behalf of the Company (under applicable
statute or regulation or otherwise) (including company accounts, whether
published or preliminary) was true and accurate in all material respects
as at the date (if any) it was provided or as at the date (if any) at
which it is stated and (ii) nothing has occurred or been omitted from the
information so provided and no information has been given or withheld that
results in the information provided by or on behalf of the Company being
untrue or misleading in any material respect.
16. The Vendor shall use his best endeavours to procure that, after the date
hereof and prior to the Completion Date, except as expressly provided in
the Agreement or as may be agreed in writing by the Purchaser, the
business of the Company shall be conducted in the same manner as
heretofore conducted and only in the ordinary course, and the Vendor shall
use his best endeavours to cause the Company to use its best endeavours to
preserve the business organization of the Company intact, keep available
the services of the current officers and employees of the Company and
maintain the existing relations with franchisees, customers, suppliers,
creditors, business partners and others having business dealings with the
Company, to the end that the goodwill and ongoing business of the Company
shall be unimpaired at the Completion Date. Without limiting the
foregoing; the Vendor shall, in so far as not inconsistent with his role,
obligations and duties as a director, Chairman and Chief Executive Officer
of the Company, use his best endeavours to procure that the Company does
not, between the date hereof and the Completion Date, take any of the
actions set forth in Schedule 3 of the Agreement.
17. The Vendor understands and agrees that upon his resignation as Chairman
and Chief Executive Officer of the Company in accordance with Sub-Clause
1.1(e) of Schedule 1 to the Agreement, his employment agreement with the
Company will terminate, and he will have no claim against the Company for
any amounts payable thereunder (other than amounts due for any period of
employment ending on or prior to such termination date and not theretofore
paid), including without limitation any claim based on premature
termination or in respect of any "golden parachute."
18. To the best of the Vendor's knowledge, there has been no Material Adverse
Change with respect to the Company since March 31, 2005.
19. Following Completion, and in the event the Transfer Documents are not
adequate for this purpose, the Vendor will take such action as may be
reasonably required by the Company's stock transfer agent to cause the
Sale Shares to be registered, and a certificate representing such Sale
Shares to be issued , in the name of the Purchaser or its designee.
20. As at the date of the Agreement, the Vendor beneficially owns options in
respect of 200,000 common shares of the Company which were granted to the
Vendor by the Company on 19 October 2004. To the best knowledge of the
Vendor, no other option entitling the Vendor for additional common share
in the Company is forthcoming.
4
IN WITNESS WHEREOF, the undersigned has hereunto set forth his/her name as of
the date first above written.
------------------------------------
GOTTFRIED LUDWIG PRENTICE JURICK
5
FORM OF PURCHASER'S REPRESENTATIONAL LETTER
[Date]
Emerson Radio Corp.
Nine Entin Road,
Parsippany, New Jersey 07054-0430,
U.S.A.
Baker & McKenzie
14th Floor, Hutchison House
10 Harcourt Road
Hong Kong SAR, China
Ladies and Gentlemen:
Re: Transfer of Shares of Emerson Radio Corp.
I/We (the "Purchaser") am/are delivering this letter in connection with the
transfer of 10 million common shares, (the "Sale Shares") of Emerson Radio
Corp., a Delaware corporation (the "Company") pursuant to an Agreement for the
Sale and Purchase of Shares dated [o] August, 2005 (the "Agreement"). Unless
otherwise defined herein, capitalized terms used herein shall have the
meanings given to them under the Agreement.
The Purchaser hereby represents, warrants, and undertakes as follows:
1. These representations, warranties and undertakings are true and correct as
of the date hereof, and will be true and correct on the date and as of the
time the transaction under the Agreement is consummated.
2. The Purchaser acknowledges that the representations, warranties and
undertakings herein are being made for the benefit of, and may be relied
upon by you, as well as the transfer agent for the Company's common shares
and counsel for the Company, for purposes in connection with ensuring
compliance with United States securities laws. The Purchaser agrees to
notify you promptly in writing if any of the foregoing ceases to be
accurate and complete. The Purchaser agrees that this letter or a copy
hereof may be produced to any interested party in any administrative or
legal proceeding or official inquiry with respect to the matters covered
hereby. These representations, warranties and undertakings shall survive
the closing of the transaction under the Agreement and shall remain in
full force and effect.
3. The Purchaser has full power and authority to enter into and perform the
Agreement and in entering into the Agreement and completing the
transactions contemplated herein, does not do so in breach of any existing
obligation, applicable legislation or other applicable law.
4. The Agreement when duly executed will constitute legal, valid and binding
obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms.
1
5. The Purchaser understands that the Sale Shares it is purchasing are
characterized as "restricted securities" as that term is defined in Rule
144 under the Securities Act and are being acquired from an affiliate of
the Company in a transaction not involving a public offering and that
under such laws and applicable regulations the Sale Shares may be resold
without registration under the Securities Act only in certain limited
circumstances. It agrees that, if in the future it decides to resell,
pledge or otherwise transfer such Sale Shares, such Sale Shares may be
offered, resold, pledged or otherwise transferred only (i) to a person who
is not a U.S. person pursuant to an offshore transaction in compliance
with Rule 903 or Rule 904 of Regulation S under the Securities Act, (ii)
pursuant to an exemption from registration under the Securities Act, or
(iii) pursuant to an effective registration statement under the Securities
Act, and in each of such cases in accordance with any applicable
securities laws of any state of the United States; provided that the
Vendor acknowledges that the Purchaser expects to pledge the Sale Shares
to a financial institution in connection with the granting by such
institution of financing for their acquisition. The Purchaser also agrees
that it will not engage in hedging transactions with regard to the Sale
Shares unless in accordance with regulations issued under the Securities
Act; it acknowledges that no representation has been made to it as to the
availability of the exemption provided by Rule 144 under the Securities
Act for resales of the Sale Shares; and it further understands that any
Sale Shares acquired by it will be in the form of individual definitive
physical certificates and that such certificates will bear legends set
forth in Clause 9 of Part B of Schedule 2 of the Agreement.
6. The Convertible Debenture is being, and any securities issuable thereunder
(together with all rights now or hereinafter attaching to any of them,
including all rights to any interest, dividend or other distribution
declared, made or paid after the Completion Date) shall be issued, free
from all liens, charges and encumbrances. Except with respect to the
granting by the HKSE of its approval, if required, for (i) the issue of
the Convertible Debenture and (ii) the listing of, and permission to deal
in any shares of par value of HK$0.10 in the share capital of GHL issuable
thereby upon the exercise of the conversion right under the Convertible
Debenture (both of which, if required, will be obtained prior to
Completion) and except with respect to the granting by the Bermuda
Monetary Authority of its permission for the issuance of the Convertible
Debenture and the free transferability of the shares to be issued on
conversion in full of the Convertible Debenture, no Consent of, or
registration, declaration or filing with any Governmental Entity
(including but not limited to the HKSE) or its shareholders is required to
be obtained or made by or with respect to GHL in connection with the
execution, delivery and performance of the Agreement or the consummation
of the transactions contemplated herein, including but not limited to the
Convertible Debenture and all such securities of GHL issuable thereunder
and the obtaining of the permission of listing of such securities on the
HKSE.
7. The Purchaser is acquiring the Sale Shares for investment for its own
account, not as a nominee or agent, and not with a view to resale or
distribution. It has no present intention of selling, transferring or
distributing the Sale Shares or any of them (except for granting a lien
therein to its lender at Completion). It has not entered into any
contract, undertaking, agreement or arrangement with any third party to
sell, transfer or distribute the Sale Shares or any of them (except for
granting a lien therein to its lender at Completion).
2
8. The Purchaser understands and acknowledges that the Company does not have
any obligation or intention to, and that the Purchaser has no right to
require the Company to (i) file any registration statement with the SEC
under the Securities Act covering offers and sales of Sale Shares by the
Purchaser or any other party, (ii) offer to the Purchaser to exchange
shares of its common stock and/or any other of its securities for any Sale
Shares in any transaction covered by a registration statement under the
Securities Act, or (iii) to prepare or provide to the Purchaser or any
other party any information which could, were it so prepared and provided,
enable the Purchaser to sell, transfer or otherwise dispose of Sale Shares
pursuant to an exemption from the registration requirement of the
Securities Act.
9. The Purchaser will advise any transferee of Sale Shares of the
restrictions on transfer as described herein, and will procure that any
such transferee delivers to the Purchaser a written undertaking to observe
and be bound by such restrictions, and either (i) there is then in effect
a registration statement under the Securities Act covering such transfer
or (ii) such disposition will not require registration of the Sale Shares
under the Securities Act.
10. The Purchaser is not a U.S. person, within the meaning of Rule 902 under
the Securities Act, and is purchasing the Sale Shares in an offshore
transaction (as defined in Regulation S under the Securities Act).
11. It is understood that the certificates evidencing the Sale Shares may bear
one or all of the following legends (to the extent such legends appear on
any other shares of the Company not registered under the Securities Act):
(a) "THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF WITHIN THE
UNITED STATES, ITS STATES, TERRITORIES AND POSSESSIONS, OR TO ANY
CITIZEN OR RESIDENT OF THE UNITED STATES, OR ANY STATE, TERRITORY OR
POSSESSION THEREOF, INCLUDING ANY ESTATE OF SUCH PERSON OR ANY
CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY CREATED OR EXISTING
UNDER THE LAWS THEREOF, ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."; and
(b) Any legend imposed or required by the Company's articles of
incorporation or applicable state securities laws.
12. The Purchaser will not engage in hedging transactions with regard to the
Sale Shares unless in compliance with the Securities Act.
13. The Purchaser agrees that it will not offer to sell, sell or solicit
offers to buy, or otherwise seek to effect the transfer of any of the Sale
Shares in any manner or by any means which would subject the sale of the
Sale Shares to the registration requirements of the Securities Act or any
state securities laws or which would be in violation of law and/or which
could
3
cause the sale of the Sale Shares under the Agreement, when viewed in the
light of any such subsequent offer to sell, sale or solicitation of offers
to buy or other transfer, to have been a violation of law.
14. The Purchaser shall use its best endeavours to effect such filings,
including Schedule 13D and Form 3, as may be required of him under
applicable US federal securities laws, within the required statutory
periods.
15. The Purchaser is duly incorporated and validly existing under the laws of
the British Virgin Islands with power to conduct its business in the
manner presently conducted.
16. A copy of the memorandum of association and articles of association of the
Purchaser which has been supplied to the Vendor and, for the purposes of
identification, signed by a director of the Purchaser is up-to-date,
complete and accurate in all respects.
17. The entering into of the Agreement will not result in any breach of the
terms of the memorandum of association and the articles of association of
the Purchaser.
18. The Purchaser will effect such filings, including Schedule 13D and Form 3,
as may be required pursuant to applicable U.S. federal securities laws,
within the required statutory periods.
19. The Purchaser's principal business address is located outside the United
States.
20. To the best of the Purchaser's knowledge, there is no pending Proceeding
or claim with respect to which GHL has been contacted in writing by
counsel for the plaintiff or claimant or threatened Proceedings or claims
arising out of the conduct of the Purchaser's business as it is presently
conducted that (a) relate to or involve more than US$500,000, (b) seek any
material injunctive relief or (c) may give rise to any legal restraint on
or prohibition against the transactions contemplated by the Agreement. To
the best of the Purchaser's knowledge, GHL is not a party or subject to or
in default under any Judgment other than for such Judgments that,
individually and in the aggregate, could not reasonably be expected to
have a material adverse effect on the business or results of operations of
the business of GHL as it is presently conducted.
21. To the best of the Purchaser's knowledge, the business of the GHL as it is
presently conducted will not suffer any material disruption as a result of
the announcement by the Purchaser of its intention to purchase the Sale
Shares. In particular, but without limiting the generality of the
foregoing, the Purchaser has no knowledge that (i) any supplier or
customer GHL's business as it is presently conducted intends to cancel or
otherwise substantially modify its relationship with GHL or to decrease
materially or limit its services, supplies or materials to GHL, or its
usage or purchase of GHL's services or products, or (ii) the consummation
of the transactions contemplated hereby will adversely affect the
relationship of GHL with any such supplier or customer. To the best of the
Purchaser's knowledge, no senior employee will leave GHL as a result of
the announcement by the Purchaser of the purchase of the Sale Shares and
the issue of securities pursuant to the Convertible Debenture so long as
GHL continues to offer compensation and benefits to such employee that is
substantially similar to the compensation and benefits enjoyed by such
employee
4
immediately prior to Completion. To the best of the Purchaser's knowledge,
since 1 January, 2005, GHL has conducted its business in the ordinary
course and in substantially the same manner as previously conducted.
22. To the best of the Purchaser's knowledge, the execution of the Agreement
and the consummation of the transactions contemplated hereby will not, by
itself or in combination with any other event (regardless of whether that
other event has or will occur), result in any payment (whether of
severance pay or otherwise) becoming due from any benefit plan to any
current or former director, officer, consultant or employee of GHL or
result in the vesting, acceleration of payment or increases in the amount
of any benefit payable to or in respect of any such current or former
director, officer, consultant or employee.
23. Without limiting the specificity of the foregoing representations and
warranties, to the best of the Purchaser's knowledge: (i) any factual
information provided by or on behalf of GHL (under applicable statutes or
regulation or otherwise) (including company accounts, whether published or
preliminary) was true and accurate in all material respects as at the date
(if any) it was provided or as at the date (if any) at which it is stated
and (ii) nothing has occurred or been omitted from the information so
provided and no information has been given or withheld that results in the
information provided by or on behalf of GHL being untrue or misleading in
any material respect.
IN WITNESS WHEREOF, the undersigned has hereunto set forth his/her name as of
the date first above written.
--------------------------------
S&T INTERNATIONAL DISTRIBUTION
LIMITED
5
EXHIBIT B
FORM OF CONVERTIBLE DEBENTURE
CERTIFICATE
-----------
Certificate No. [_________]
The Grande Holdings Limited
(Incorporated in Bermuda with limited liability)
US$26,000,000 CONVERTIBLE DEBENTURE DUE AUGUST , 2008
THIS IS TO CERTIFY that Gottfried Ludwig Prentice Jurick whose address is
Suite 2520, 25/F, Sutton Court, Gateway Apartments, Harbour City, Tsim Sha
Tsui, Kowloon, Hong Kong is the registered holder (the "Debentureholder") of a
convertible debenture due August , 2008 issued by The Grande Holdings Limited
(the "Company") and dated August , 2005 (the "Debenture ").
The Debenture in respect of which this Certificate is issued is a convertible
debenture issued pursuant to the bylaws of the Company and a resolution of
[______] of the Company passed on August [___], 2005.
The Debentureholder is entitled to require the Company to convert the whole or
any part(s) of the principal amount outstanding under the Debenture into
ordinary shares in the capital of the Company subject to and in accordance
with the terms and conditions attached hereto which shall form an integral
part of this Certificate (the "Conditions").
Subject to the foregoing, the Company, for value received, promises to redeem
the Debenture and pay the principal sum of US$26,000,000 and such other
amounts as shall become due in respect of the Debenture to the Debentureholder
in accordance with the Conditions.
GIVEN under the Seal of The Grande Holdings Limited on August [___], 2005.
---------------------------------------
Director
---------------------------------------
Secretary/Director
Note:
6
The Debenture cannot be transferred to bearer on delivery and is transferable
only to the extent permitted by Condition 2 of the Conditions. The Debenture
must be delivered to the Registrar for cancellation and reissue of an
appropriate certificate in the event of any such transfer.
(For endorsement of any partial conversion)
Date Amount Converted Amount Outstanding
---- ---------------- ------------------
7
TERMS AND CONDITIONS
The Debenture is in the principal amount of US$26,000,000 is issued by, and
convertible into shares of, The Grande Holdings Limited (the "Company"). The
Debenture shall be held subject to and with the benefit of the terms and
conditions set out below. Words and expressions set out below shall have the
meanings attributed to them below unless the context otherwise requires:
"Adjustment" any adjustment which may be made to the
Conversion Price pursuant to Condition 7;
"Adjustment Events" the events leading to any Adjustment;
"Business Day" a day (except Saturday) on which banks in
Hong Kong are open for business for more
than four hours;
"CCASS" the Central Clearing and Settlement System
operated by Hong Kong Securities Clearing
Company Limited;
"closing price per Share" the closing price per Share for one or
more board lots of the Shares quoted on
the daily quotation list of the Stock
Exchange, or, if the Stock Exchange begins
to operate on an extended hours basis and
does not designate the closing price, then
the last trade price of the Shares prior
to 4:00 p.m. (Hong Kong time). If such
closing price cannot be calculated for the
Shares on a particular date on the
foregoing bases, the closing price per
Share on such date shall be the fair
market value as mutually determined by the
Company and the Debentureholder from time
to time. If the Company and the
Debentureholder from time to time are
unable to agree upon the fair market value
of the Shares, then it shall be as
determined in good faith by an approved
merchant bank or auditors of the Company
for the time being (as defined in
Condition 7.2);
"Conditions" the terms and conditions attached to or
endorsed on the Debenture and "Condition"
refers to the relative numbered paragraph
of the Conditions;
"Conversion Price" HK$7.16;
"Conversion Rights" the rights attached to the Debenture to
convert the whole or any part(s) of the
principal amount into Shares;
8
"Conversion Shares" the Shares to be issued by the Company
under the Debenture (whether upon exercise
by the Debentureholder of the Conversion
Rights, or otherwise pursuant to the
Conditions);
"Debentureholder" the person who is for the time being the
registered holder of the Debenture;
"Encumbrances" (i) any mortgage, charge, pledge, lien,
encumbrance, hypothecation or other
security interest or security arrangement
of any kind; (ii) any arrangement whereby
any rights are subordinated to any rights
of any third party; and (iii) any
contractual right of set-off;
"Events of Default" shall have the meaning ascribed thereto in
Condition 10;
"Exchange Rate" shall be seven (7) U.S. Dollars and eighty
(80) cents to one (1) H.K. Dollar (US$1=
HK$7.80);
"Exercise Date" a date on which a notice is given pursuant
to Condition 8.1 in respect of the
exercise of the Conversion Rights in
accordance with the Conditions;
"Hong Kong" the Hong Kong Special Administrative
Region of the People's Republic of China;
"Listing Rules" the Rules Governing the Listing of
Securities on the Stock Exchange;
"Maturity Date" has the meaning ascribed thereto in
Condition 1;
"month" is a reference to a period starting on one
day in a calendar month and ending on the
numerically corresponding day in the next
succeeding calendar month provided that if
there is no numerically corresponding day
in the month in which that period ends,
that period shall end on the last day in
that later month;
"Purchase Agreement" the Agreement for the Sale and
Purchase of Certain Shares in Emerson
Radio Corporation, dated as of August ,
2005, by and amongst the Debentureholder,
S&T International Distribution Limited and
the Company;
"Registrar" The Grande Holdings Limited, the branch
share registrar and transfer office of the
Company at 12th Floor, The Grande
Building, 398 Kwun Tong Road, Kowloon,
Hong Kong or such other registrar and
address as notified by the Company to the
Debentureholder;
9
"Share(s)" the share(s) of par value of HK$0.10 each
in the share capital of the Company
existing on the issue date of the
Debenture and all other (if any) or shares
from time to time and for the time being
ranking pari passu therewith and all other
(if any) shares resulting from any
sub-division, consolidation or
re-classification thereof;
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
"trading day" a day on which the Shares are traded on
the Stock Exchange for a minimum of 3
hours and an official closing price per
Share is provided by the Stock Exchange;
"HK$" (or "H.K. Dollars") Hong Kong dollars and cents, respectively;
and and "HK cents"
"US$" (or "U.S. Dollars") United States dollars and cents,
and "cents" respectively.
The expressions "Company" and "Debentureholder" shall, where the context
permits, include their respective successors and permitted assigns and any
persons deriving title under them.
In the Debenture, unless the context requires otherwise:
(a) references to statutory provisions shall be construed as references to
those provisions as replaced, amended, modified or re-enacted from time
to time;
(b) words importing the singular include the plural and vice versa;
(c) words importing any gender or the neuter include both genders and the
neuter;
(d) references to the Debenture or any issue document shall be construed as
references to such document as the same may be amended or supplemented
from time to time; and
(e) Condition headings are inserted for reference only and shall be ignored
in construing the Debenture.
1 MATURITY
--------
Subject as provided herein, the Company shall repay the outstanding
principal amount of the Debenture, together with any unpaid interest
accrued thereon up to and including the date of actual payment, subject
to and in accordance with the Conditions on the third anniversary of the
issue date of the Debenture (the "Maturity Date").
2 STATUS, TRANSFER AND SPLITTING
------------------------------
2.1 The obligations of the Company arising under the Debenture constitute
general,
10
unconditional, unsecured, unsubordinated obligations of the Company and
rank, and shall rank equally among themselves and pari passu with all
other present and future unsecured and unsubordinated obligations of the
Company except for obligations accorded preference by mandatory
provisions of applicable law. No application shall be made for a listing
of the Debenture in any jurisdiction.
2.2 The Debenture or any part(s) thereof may be assigned or transferred to,
or mortgaged or charged in favour of, any third party during the period
from the issue date of the Debenture to the Maturity Date, subject only
to compliance of the conditions hereunder and further subject to the
conditions, approvals, requirements and any other provisions of or
under:
(a) the Stock Exchange (and any other stock exchange on which the
Shares may be listed at the relevant time) or their rules and
regulations; and
(b) all applicable laws and regulations.
If the Debenture is transferred to a connected person (as defined in the
Listing Rules) of the Company or its associate(s) (as defined in the
Listing Rules), the Company shall immediately notify the Stock Exchange
and such transfer shall be made subject to full compliance with the
Listing Rules.
2.3 Any assignment, transfer, mortgage or charge of the Debenture shall be
in respect of the whole or any part(s) of the outstanding principal
amount of the Debenture. The Company shall facilitate any such
assignment, transfer, mortgage or charge including making any
application to the Stock Exchange or other third parties (at the expense
of the Debentureholder) for necessary approvals. Title to the Debenture
passes only upon the issue of a new Debenture certificate to the
transferee or assignee of the Debenture in accordance with Condition
2.4(a)(ii). The Debentureholder shall (except as otherwise required by
law) be treated as the absolute owner of the Debenture for all purposes
(whether or not it is overdue and regardless of any notice of ownership,
trust or any interest in it or any writing on, or the theft or loss of,
the Debenture) and no person shall be liable for so treating the
Debentureholder.
2.4 (a) In relation to any assignment or transfer of the Debenture
permitted under or otherwise pursuant to this Condition 2:
(i) the Debenture or any part(s) thereof may only be transferred
by execution of a form of transfer (the "Transfer Form") as
set out in Exhibit 2 attached hereto obtainable from the
Registrar by the transferor and the transferee (or their
duly authorised representatives) or, where either the
transferor or transferee is a corporation, under its common
seal (if any) and under the hand of one of its officers duly
authorised in writing or otherwise executed by a duly
authorised officer thereof. In this Condition, "transferor"
shall, where the context permits or requires, include joint
transferors or can be construed accordingly;
11
(ii) the Debenture must be delivered for cancellation to the
Registrar accompanied by:
(A) a duly executed Transfer Form;
(B) in the case of the execution of the Transfer Form on
behalf of a corporation by its officers, the authority
of that person or those persons to do so; and
(C) such other evidence as the Company may reasonably
require if the Transfer Form is executed by some other
person on behalf of the Debentureholder;
and the Registrar shall, within five (5) Business Days of receipt
of such documents from the Debentureholder, cancel the existing
certificate for the Debenture and issue new certificate(s) for the
Debenture or any part(s) thereof in respect of the whole or such
part(s) of the principal amount of the Debenture so transferred,
in favour of the transferee or assignee as applicable and (if
appropriate) issue to the Debentureholder a new certificate for
such part of the Debenture in respect of any balance thereof
retained by the Debentureholder; and
(b) the Company shall maintain at such location outside Hong Kong as
it shall from time to time determine and give a full and complete
register of the Debentureholders, the conversion, cancellation and
destruction of the Debenture, any replacement certificate issued
in substitution for any defaced, lost, stolen or destroyed
certificate and of details of all Debentureholders from time to
time. The Company shall make available such register to the
Debentureholder for inspection at all reasonable times.
2.5 In relation to any mortgage or charge of this Debenture, the
Debentureholder shall give the Company written notice at least ten (10)
Business Days prior to the completion of such mortgage or charge. In
addition, prior to granting the mortgage or charge, the Debentureholder
will procure from the mortgagee an undertaking (in form and substance
reasonably acceptable to the Company) to comply with all of the terms of
this Agreement with respect to transfers and assignments.
2.6 The Debenture certificate may be split at the request of the
Debentureholder, provided that the principal amount of the Debenture to
be split shall be the multiple of US$1 million (with a minimum of US$5
million) and the principal amount of each new Debenture certificate to
be issued after the splitting shall be US$ 1 million or its multiple
(with a minimum of US$5 million).
2.7 The Debentureholder may present the original Debenture certificate(s) to
the Registrar at the Registrar's address specified in Condition 15 for
splitting. The Registrar shall, within ten (10) Business Days of receipt
of the original Debenture certificate(s) from the Debentureholder,
cancel the existing certificate(s) for the Debenture and subject to
Condition 2.6, issue new certificate(s) for the Debenture in respect of
the principal
12
amount of the Debenture so split and in the number of Debentures
certificates the Debentureholder so requested, in the name of the
Debentureholder.
2.8 Scrip fee of HK$2.50 (as may be revised as time to time) will be charged
to the Debentureholder for the issue of each new Debenture certificate.
Any reasonable legal and other costs and expenses which may be properly
incurred by the Company in connection with any transfer or assignment or
splitting of the Debenture or any part(s) thereof or any request
therefor shall be borne by the Debentureholder.
2.9 Neither the Debenture nor the Conversion Shares shall be registered
under the United States Securities Act of 1933, as amended (the
"Securities Act"), and the Debentureholder agrees that it will not
reoffer, resell, pledge or otherwise transfer the Debentures or the
Conversion Shares except (a) in an offshore transaction complying with
Rule 903 or Rule 904 of Regulation S of the Securities Act or (b) in a
transaction exempt from the registration requirements of the Securities
Act.
3 INTEREST
--------
3.1 No interest shall be payable on the Debenture for the period beginning
on the issue date of the Debenture and ending one (1) day prior to the
first anniversary of such issue date. Subject as provided herein, for
the period from the first anniversary of the issue date of the Debenture
until the Maturity Date, interest shall accrue on the principal amount
outstanding under the Debenture at the rate of three percent (3%) per
annum.
4 PAYMENTS
--------
4.1 All payments by the Company hereunder shall be made in immediately
available funds after deduction of any withholdings or deductions for
any present or future taxes, imposts, levies, duties or other charges
payable by the Company as required by law.
4.2 All payments by the Company hereunder shall be made no later than 5 p.m.
on the due date, by remittance to such bank account in Hong Kong as the
Debentureholder may notify the Company from time to time.
4.3 If the due date for payment of any amount in respect of the Debenture is
not a Business Day, the Debentureholder shall be entitled to payment on
the next following Business Day in the same manner together with any
interest accrued in respect of any such delay.
4.4 The Company shall not be obliged to make any payment on the redemption
of the outstanding principal amount of the Debenture until it has
received the certificate for the Debenture.
4.5 If the Company defaults in the payment of any sum due and payable under
the Debenture, the Company shall pay interest on such sum to the
Debentureholder from the due date to the date of actual payment in full
(both before and after judgment) calculated at the rate of two per cent
(2%) per annum over the otherwise applicable interest rate.
13
5 REDEMPTION
5.1 Unless previously converted in accordance with these Conditions, upon
presentation on the Maturity Date of the original of the certificate for
the Debenture to the Company at its address specified in Condition 15,
the Debenture shall be redeemed by the Company at its principal amount
outstanding in U.S. Dollars.
5.2 The Company shall have the right, at any time by a 30-day prior written
notice to the Debentureholder, to redeem the whole or part of the
outstanding principal amount of this Debenture.
6 CONVERSION
----------
6.1 Subject to receipt by the Company of the documents referred to in
Condition 8.1, the Debentureholder shall have the right to convert on
any Business Day prior to five (5) Business Days prior to the Maturity
Date (for the avoidance of doubt, such right to covert can be exercised
even if the Debentureholder has received a written redemption notice
issued by the Company in accordance with Condition 5.2 so long as such
is exercised prior to the expiry of the 30-day notice period), the whole
or any part(s) of the principal amount of the Debenture into Shares at
any time and from time to time at the Conversion Price provided that
such part of the principal amount of the Debenture to be converted shall
not be less than the H.K. Dollar equivalent of US$5 million (determined
by applying the Exchange Rate) and shall be in a multiple of US$1
million, so that the number of Shares which fall to be issued (subject
to Condition 6.2) shall be calculated by applying the formula:
n = x
------
y
where n = number of Conversion Shares to be issued
x = the whole of the H.K. Dollar equivalent of the
principal amount of the Debenture being converted
(determined by applying the Exchange Rate); and
y = the Conversion Price applicable on the relevant
Exercise Date.
The Conversion Shares shall be allotted and issued in the name of the
Debentureholder or its nominee and shall be delivered to the
Debentureholder or its nominee within ten (10) Business Days after the
date of presentation of the original certificate for the Debenture and
the duly executed conversion notice.
6.2 No fraction of a Share shall be issued on conversion of the Debenture.
Fractional entitlements shall be ignored and any sum paid in respect
thereof shall be retained by the Company for its own benefit. Shares
issued upon conversion pursuant to Condition 6.1 shall rank pari passu
in all respects with all other existing Shares outstanding at the
14
Exercise Date and be entitled to all dividends and other distributions
the record date of which falls on a date on or after the date of the
conversion notice.
6.3 Unless otherwise requested by the Debentureholder, only one Share
certificate will be issued upon conversion.
6.4 Under normal circumstances, no charge will be imposed for the issue of
the Share certificate upon conversion of the Debenture. If the
Debentureholder, who applies for conversion of the Conversion Shares,
requests for the issue of a number of Share certificates each with a
denomination unreasonably small, appropriate charges will be imposed on
the Debentureholder as the Company may reasonably determine and it would
take longer than five (5) Business Days to issue the Share certificates.
7 ADJUSTMENTS
-----------
7.1 Subject as hereinafter provided, the Conversion Price shall from time to
time be adjusted in accordance with the following relevant provisions
and so that if the event giving rise to any such adjustment shall be
such as would be capable of falling within more than one of
sub-paragraphs (a) to (g) inclusive of this Condition 7.1, it shall fall
within the first of the applicable paragraphs to the exclusion of the
remaining paragraphs.
(a) If and whenever the Shares by reason of any consolidation or
sub-division which will decrease or increase the number of Shares
in issue, the Conversion Price in force immediately prior thereto
shall be adjusted by multiplying it by the following fraction:
A
-
B
where:
A = the number of the Shares in issue immediate before the
Share consolidation or sub-division; and
B = the revised number of the Shares in issue as a result
of the Share consolidation or sub-division.
Each such adjustment shall be effective from the close of business
in Hong Kong on the day immediately preceding the date on which
the consolidation or sub-division becomes effective.
(b) If and whenever the Company shall issue (other than in lieu of a
cash dividend) any Shares credited as fully paid by way of
capitalisation of profits or reserves (including any share premium
account or capital redemption reserve fund), the Conversion Price
in force immediately prior to such issue shall be adjusted by
multiplying it by the following fraction:
15
C
--------
C + D
where:
C = the aggregate number of the issued Shares immediately
before such issue; and
D = the aggregate number of the Shares issued in such
capitalisation.
Each such adjustment shall be effective (if appropriate
retroactively) from the commencement of the day next following the
record date for such issue.
(c) If and whenever the Company shall make any Capital Distribution
(as defined in Condition 7.2) (except where, and to the extent
that, the Conversion Price falls to be adjusted under
sub-paragraph (b) above) to holders (in their capacity as such) of
Shares (whether on a reduction of capital or otherwise), the
Conversion Price in force immediately prior to such distribution
shall be adjusted by multiplying it by the following fraction:
E - F
-----
E
where:
E = the market price (as defined in Condition 7.2) on the
date on which the Capital Distribution is publicly
announced or (failing any such announcement) next
preceding the date of the Capital Distribution; and
F = the fair market value on the day of such announcement
or (as the case may require) the next preceding day,
as determined in good faith by the auditors of the
Company for the time being or an approved merchant
bank of the portion of the Capital Distribution which
is attributable to one Share;
Provided that:
(i) if in the opinion of the auditors of the Company for the
time being or an approved merchant bank (as the case may
be), the use of the fair market value as aforesaid produces
a result which is significantly inequitable, it may instead
determine, and in such event the above formula shall be
construed as if F meant the amount of the said market price
which should properly be attributed to the value of the
Capital Distribution; and
(ii) the provisions of this sub-paragraph (c) shall not apply in
relation to the issue of Shares paid out of profits or
reserves of the Company and/or its subsidiaries and issued
in lieu of a cash dividend.
16
Each such adjustment shall be effective (if appropriate
retroactively) from the commencement of the day next following the
record date for the Capital Distribution or grant.
(d) If and whenever the Company shall after the date hereof offer to
holders of Shares new Shares for subscription by way of rights, or
shall grant to holders of Shares any options, warrants or other
rights to subscribe for or purchase any Shares and the total
amount (if any) payable for the rights, options, warrants or other
rights to subscribe for each new Share, plus the subscription
price payable for each new Share is less than 90% of the market
price (as defined in Condition 7.2), the Conversion Price shall be
adjusted by multiplying the Conversion Price in force immediately
before the date of the announcement of such offer by the following
fraction:
H x I
G + -----
J
-----------
G + H
where:
G = the number of Shares in issue immediately before the
date of such announcement;
H = the aggregate number of Shares so offered for
subscription;
I = the amount (if any) payable for the rights, options or
warrants or other rights to subscribe for each new
Share, plus the subscription price payable for each
new Share; and
J = the greater of either the closing price per Share on
the trading day immediately prior to such announcement
or the Conversion Price in effect immediately prior to
the trading day immediately prior to such
announcement.
Such adjustment shall become effective (if appropriate
retroactively) from the commencement of the next day following the
record date for the offer or grant provided that the adjustment
referred to in this sub-paragraph (d) shall not apply if the offer
on substantially the same terms is extended to the
Debentureholder.
(e) (i) If and whenever the Company shall issue wholly for cash any
securities which by their terms are convertible into or
exchangeable for or carry rights of subscription for new
Shares, and the Total Effective Consideration per Share (as
defined below in this sub-paragraph (e)) initially
receivable for such securities is less than 90% of the
market price (as defined in Condition 7.2) as at the date of
announcement of the terms of such securities (for the
purpose of this section (i), the "Applicable Price"), the
Conversion Price shall be adjusted by multiplying the
17
Conversion Price in force immediately prior to the issue by
a fraction of which the numerator is the number of Shares in
issue immediately before the date of the issue plus the
number of Shares which the Total Effective Consideration
receivable for the securities issued would purchase at the
Applicable Price and the denominator is the number of Shares
in issue immediately before the date of the issue plus the
number of Shares to be issued upon conversion or exchange
of, or the exercise of the subscription rights conferred by,
such securities, at the initial conversion or exchange rate
or subscription price. Such adjustment shall become
effective (if appropriate retrospectively) from the close of
business in Hong Kong on the Business Day next preceding
whichever is the earlier of the date on which the issue is
announced and the date on which the Company determines the
conversion or exchange rate or subscription price.
(ii) If and whenever the rights of conversion or exchange or
subscription attached to any such securities as are
mentioned in section (i) of this sub-paragraph (e) are
modified so that the Total Effective Consideration (as
defined below in this sub-paragraph (e)) per Share initially
receivable for such securities shall be less than 90% of the
market price (as defined in Condition 7.2) at the date of
announcement of the proposal to modify such rights of
conversion or exchange or subscription (for the purpose of
this section (ii), the "Applicable Price"), the Conversion
Price shall be adjusted by multiplying the Conversion Price
in force immediately prior to such modification by a
fraction of which the numerator is the number of Shares in
issue immediately before the date of such modification plus
the number of Shares which the Total Effective Consideration
receivable for the securities issued at the modified
conversion price would purchase at the Applicable Price and
of which the denominator is the number of Shares in issue
immediately before such date of modification plus the number
of Shares to be issued upon conversion of or the exercise of
the subscription rights conferred by such securities at the
modified conversion or exchange rate or subscription price,
such adjustment shall take effect as at the date upon which
such modification takes effect. A right of conversion or
subscription shall not be treated as modified for the
foregoing purposes where it is adjusted to take account of
rights or capitalisation issues and other events normally
giving rise to adjustment of conversion or exchange terms.
For the purposes of this sub-paragraph (e), the "Total Effective
Consideration" receivable for the securities issued shall be
deemed to be the consideration receivable by the Company for any
such securities plus the additional minimum consideration (if any)
to be received by the Company upon (and assuming) the conversion
or exchange thereof or the exercise of such subscription rights,
and the Total Effective Consideration per Share initially
receivable for such securities shall be such aggregate
consideration divided by the number of Shares to be issued upon
(and assuming) such conversion or exchange at the initial
conversion or exchange rate or the exercise of such subscription
rights at the initial subscription price, in
18
each case without any deduction for any commissions, discounts or
expenses paid, allowed or incurred in connection with the issue.
(f) If and whenever the Company shall issue wholly for cash any Shares
at a price per Share which is less than 90% of the market price
(as defined in Condition 7.2) at the date of the announcement of
the terms of such issue (for the purpose of this sub-paragraph
(f), the "Applicable Price"), the Conversion Price shall be
adjusted by multiplying the Conversion Price in force immediately
before the date of such announcement by a fraction of which the
numerator is the number of Shares in issue immediately before the
date of such announcement plus the number of Shares which the
aggregate amount payable for the issue would purchase at the
Applicable Price and the denominator is the number of Shares in
issue immediately before the date of such announcement plus the
number of Shares so issued for cash. Such adjustment shall become
effective on the date of the issue.
(g) If and whenever the Company shall issue Shares for the acquisition
of assets at a Total Effective Consideration (as defined below in
this sub-paragraph (g)) per Share which is less than 90% of the
market price (as defined in Condition 7.2) at the date of the
announcement of the terms of such issue, the Conversion Price
shall be adjusted in such manner as may be determined by an
approved merchant bank or the auditors of the Company for the time
being, such adjustment to become effective on the date of issue.
For the purposes of this sub-paragraph (g), "Total Effective
Consideration" shall be the aggregate consideration credited as
being paid for such Shares by the Company on acquisition of the
relevant asset without any deduction of any commissions, discounts
or expenses paid, allowed or incurred in connection with the issue
thereof, and the "Total Effective Consideration per Share" shall
be the Total Effective Consideration divided by the number of
Shares issued as aforesaid.
7.2 For the purposes of this Condition 7:
"announcement" shall include the release of an announcement to the press
or the delivery or transmission by telephone, facsimile transmission,
telex or otherwise of an announcement to the Stock Exchange and "date of
announcement" shall mean the date on which the announcement is first so
released, delivered or transmitted;
"approved merchant bank" means a merchant bank of repute in Hong Kong
selected by the Company and approved by the Debentureholder for the
purpose of providing a specific opinion or calculation or determination
hereunder;
"Capital Distribution" shall (without prejudice to the generality of
that phrase) include distributions in cash or specie. Any dividend
charged or provided for in the accounts for any financial period shall
(whenever paid and however described) be deemed to be a Capital
Distribution provided that any such dividend shall not be deemed or
regarded as Capital Distribution if it is paid out of (i) the aggregate
of the net profits (less losses) attributable to the holders of Shares
for all financial periods after December 31, 2004 as shown in the
19
audited consolidated profit and loss account of the Company and its
subsidiaries for each financial period ended December 31, 2005 or other
financial year end date from time to time adopted by the Company; (ii)
and/or distributable reserves of the Company and its subsidiaries.
"issue" shall include allot;
"market price" mean the average of the closing price per Share for each
of the last five (5) Stock Exchange trading days on which dealings in
the Shares on the Stock Exchange took place ending on such trading day
last preceding the day on or as of which the market price is to be
ascertained;
"reserves" includes inappropriate profits and distributable reserves; and
"rights" includes rights in whatsoever form issued.
7.3 The provisions of Condition 7.1 shall not apply to:
(a) an issue of fully paid Shares upon the exercise of options granted
under the share option scheme of the Company for the time being or
any conversion rights attached to securities convertible into
Shares or upon exercise of any rights (including any conversion of
the Debenture) to acquire Shares (except a rights issue) provided
that an adjustment (if required) has been made under this
Condition 7 in respect of the issue of such securities or granting
of such rights (as the case may be);
(b) an issue of fully-paid Shares by way of capitalisation of all or
part of any subscription right reserve, or any similar reserve
which has been or may be established pursuant to the terms of any
securities wholly or partly convertible into, or rights to
acquire, Shares; or
(c) an issue of Shares pursuant to a scrip dividend scheme.
7.4 Any adjustment to the Conversion Price shall be made to the nearest
one-tenth of one cent.
7.5 Notwithstanding anything contained herein, no adjustment shall be made
to the Conversion Price in any case in which the amount by which the
same would be reduced in accordance with the foregoing provisions of
this Condition would be less than one-tenth of one cent and any
adjustment that would otherwise be required then to be made shall not be
carried forward and/or if as a result of such adjustment, the Conversion
Price shall fall below the then nominal value of each Share.
7.6 Whenever the Conversion Price is adjusted as herein provided the Company
shall as soon as possible but no later than ten (10) Business Days after
the relevant adjustment has been determined give notice of the same to
the Debentureholder (setting forth the event giving rise to the
adjustment, the Conversion Price in effect prior to such adjustment, the
adjusted Conversion Price and the effective date thereof).
20
0
7.7 Notwithstanding any other provision of this Condition 7, no adjustment
shall be made which would (but for this Condition 7.7) result in the
Conversion Price being reduced so that on conversion, Shares would fall
to be issued at a discount to their nominal value, and in such case an
adjustment shall be made to the effect that the Conversion Price shall
be reduced to the nominal value of the Shares.
7.8 Any adjustment to the Conversion Price shall not involve an increase in
the Conversion Price (except upon any consolidation of the Shares
pursuant to Condition 7.1(a)).
7.9 Every adjustment to the Conversion Price shall be certified in writing
by the auditors of the Company for the time being or an approved
merchant bank (as defined in Condition 7.2).
7.10 The Company shall make available for inspection at its principal place
of business in Hong Kong at all times after the effective date of the
adjustment in the Conversion Price and so long as the Debenture remains
outstanding, a signed copy of the certificate of the approved merchant
bank or the auditors and a certificate signed by a director of the
Company setting forth brief particulars of the event giving rise to the
adjustment, the Conversion Price in effect prior to the adjustment, the
adjusted Conversion Price and the effective date thereof and shall, on
request, send a copy thereof to the Debentureholder.
8 PROCEDURE FOR CONVERSION AND SHARE ISSUE
----------------------------------------
8.1 The Conversion Rights may, subject as provided herein, be exercised on
any Business Day, prior to five (5) Business Days prior to the Maturity
Date, by the Debentureholder delivering a written notice in a form as
set out in Exhibit 1 attached hereto to the Registrar in accordance with
Condition 15 stating the intention of the Debentureholder to convert the
whole or any part(s) of the principal amount of the Debenture into
Shares. Any such conversion notice shall be in the form accompanying
with the Debenture certificate or obtainable from the Registrar. A
conversion notice once given may not be withdrawn without the consent in
writing of the Company.
8.2 Taxes and stamp duty, issue and registration duties (if any) and levies
and charges (if any) arising on any conversion will normally be borne by
the Company except under the circumstances where the Debentureholder
requests for the issue of a large number of Share certificates each with
a denomination unreasonably small upon conversion, any taxes and stamp
duty, issue and registration duties (if any) and levies and charges (if
any) arising thereon shall be borne by the Debentureholder as the
Company may reasonably determine.
8.3 (a) The Conversion Shares shall be allotted and issued by the Company
free from all Encumbrances, credited as fully paid to the
Debentureholder or as it may direct, within ten (10) Business Days
after, and with effect from, the later of the Exercise Date or the date
on which the certificate for the Debenture is delivered to and received
by the Company. The Conversion Shares shall rank pari passu with all the
then issued Shares.
21
(b) The certificate(s) for the Conversion Shares to which the
Debentureholder or such person as it may direct shall become entitled in
consequence of any conversion shall, if the Debentureholder so requests
in the notice, be deposited in the CCASS participant's stock account set
out in the notice or in the absence of such request by the
Debentureholder, shall be issued in board lots to the extent possible,
with one certificate for any odd lot of Shares arising from conversion
and made available for collection at the Company's address specified in
Condition 15, in each case, within the five (5) Business Day period, or
such longer days that the Company may reasonably determine, provided for
in sub-paragraph (a) above, and (if appropriate) the certificate for the
Debenture with an endorsement thereon by a director of the Company for
any balance of the Debenture not converted shall be made available for
collection at the Registrar's address specified in Condition 15 with the
same period.
9 PROTECTION OF THE DEBENTUREHOLDER
---------------------------------
9.1 So long as the Debenture is outstanding, unless with prior written
approval of the Debentureholder:
(a) the Company shall from time to time keep available for issue, free
from pre-emptive rights, out of its authorised but unissued
capital, sufficient Shares to satisfy in full the Conversion
Rights at the Conversion Price and all other rights for the time
being outstanding of subscription for and conversion into Shares;
(b) the Company undertakes to the Debentureholder that it will at all
times have sufficient shareholders' mandate to issue and allot the
Conversion Shares in compliance with the Listing Rules and all
applicable laws and regulations;
(c) the Company shall not in any way modify the rights attached to the
Shares as a class or attach any special restrictions thereto;
(d) the Company shall procure that at no time shall there be in issue
Shares of different nominal values;
(e) the Company shall use its best endeavours to:
(i) maintain a listing for all the issued Shares on the Stock
Exchange;
(ii) obtain and maintain a listing on the Stock Exchange for all
the Conversion Shares issued on the exercise of the
Conversion Rights; and
(iii) obtain and maintain a listing for all the Conversion Shares
issued on the exercise of the Conversion Rights on any other
stock exchange on which any of the Shares are for the time
being listed;
(iv) and shall forthwith give notice to the Debentureholder in
accordance with Condition 15 of the listing or delisting of
the Shares by any such stock exchange;
22
(f) the Company shall ensure that all Conversion Shares issued upon
conversion of the Debenture shall be duly and validly issued fully
paid and registered; and
(g) the Company shall comply with and procure the compliance of all
conditions imposed by the Stock Exchange or by any other competent
authority (in Hong Kong or elsewhere) for approval of the issue of
the Debenture or for the listing of and permission to deal in the
Shares issued or to be issued on the exercise of the Conversion
Rights and ensure the continued compliance thereof (provided in
each case that the Debentureholder complies with and satisfies all
such conditions).
(h) the Company shall:
(i) maintain in full force and effect all authorisations
required from any governmental or other authority or from
any shareholders or creditors of the Company for or in
connection with the execution, validity and performance of
this Debenture have been obtained and are in full force and
effect, and take immediate steps to obtain and thereafter
maintain in full force and effect any other authorisations
which may become necessary or advisable for the purposes
stated therein;
(ii) ensure that its obligations under this Debenture at all
times rank at least pari passu with all other unsecured
obligations of the Company; and
(iii) promptly inform the Debentureholder of any occurrence of
which it becomes aware which might adversely affect its
ability to perform its obligations under this Debenture and
which otherwise would not be required to be disclosed to its
shareholders pursuant to applicable statute and rules of the
HKSE.
9.2 If an offer is made to all holders of Shares (or such holders other than
the offeror and/or any company controlled by the offeror and/or persons
associated or acting in concert with the offeror) to acquire all or a
portion of the Shares and such offer comes to the knowledge of the
Company, the Company shall forthwith give notice of such offer to the
Debentureholder and shall use all its reasonable endeavours to procure
that a similar offer is extended in respect of this Debenture or in
respect of any Shares issued on conversion of this Debenture during the
period of the offer.
9.3 The Company shall not do any act or engage in any transaction the result
of which, having regard to the provisions of Condition 7, would be to
reduce the Conversion Price to below the nominal amount of a Share.
9.4 The Company shall not make any reduction or redemption of share capital,
share premium account or capital redemption reserve involving the
repayment of money to shareholders of the Company (other than to
shareholders of the Company having the right on a winding-up to a return
of capital in priority to the holders of Shares) or reduce any uncalled
liability in respect thereof unless, in any such case, the same gives
rise (or would, but for the provisions of Condition 7(e) give rise) to
an adjustment of the
23
Conversion Price in accordance with Condition 7.
9.5 The Company shall not issue or pay up any securities by way of
capitalisation of profits or reserves other than (i) by the issue of
fully paid Shares to holders of its Shares; or (ii) as mentioned in
Condition 7.3(b); or (iii) by the issue of Shares in lieu of a cash
dividend in the manner referred to in Condition 7.3(c).
9.6 The Company shall not make any distribution in specie to holders of
Shares unless the Debentureholder is entitled to the Specie Distribution
Right (as defined in Condition 14) in accordance with Condition 14.
9.7 The Company shall not close its register of shareholders for more than
ten (10) Business Days each year (in addition to any period required by
law or regulation including the Listing Rules) or take any other action
which prevents the transfer of its Shares generally unless, under the
laws of Hong Kong and the bylaws of the Company as then in effect, the
Debenture may be converted legally into Shares and the Shares so
converted may be transferred at all times during the period of such
closure. The Company shall not take any action which prevents the
conversion of the Debenture or delivery of Shares in respect thereof.
10 EVENTS OF DEFAULT
-----------------
If any of the following events ("Events of Default") occurs, the
Debentureholder may give notice to the Company that the Debenture, on
the giving of such notice, are immediately due and payable at their
principal amount then outstanding:
(a) the listing of the Shares (as a class) on the Stock Exchange:
(i) ceases; or
(ii) is suspended for a continuous period of thirty (30) Business
Days on each of which the Stock Exchange is generally open
for trading due to the default of the Company or any of its
directors, officers, employees or agents;
(b) the Company defaults in performance or compliance with any of its
material obligations contained in the Conditions, which breach or
default is incapable of remedy or, if capable of remedy, is not
remedied within fourteen (14) Business Days after notice of such
breach or default is sent to the Company;
(c) an encumbrancer takes possession or a receiver, manager or other
similar officer is appointed of the whole or any material part of
the undertaking, property, assets or revenues of the Company or
any of its material subsidiaries;
(d) the Company or any of its material subsidiaries becomes insolvent
or is unable to pay its debts as they mature or applies for or
consents to the appointment of any administrator, liquidator or
receiver of the whole or any material part of its
24
undertaking, property, assets or revenues or enters into a general
assignment or compromise with or for the benefit of its creditors;
(e) an order is made or an effective resolution passed for winding-up
of the Company or any of its material subsidiaries;
(f) the Company defaults in the payment of the principal in respect of
the Debenture when and as the same ought to be paid and such
default is not remedied by the Company within seven (7) Business
Days of the due date thereof; or
(g) a moratorium is agreed or declared in respect of any indebtedness
of the Company or any material subsidiaries or any governmental
authority or agency condemns, seizes, compulsorily purchases or
expropriates all or any material part of the assets of the Company
or any material subsidiaries;
provided that notwithstanding the foregoing, if the Company shall fail
to issue the Conversion Shares in accordance with the Conditions, the
Debentureholder shall be entitled to bring an action against the Company
for either specific performance or damages. The Company will forthwith
on becoming aware of any such event as is mentioned in this Condition
give notice in writing thereof to the Debentureholder. At any time after
any interest amount or the principal amount of the Debenture has become
payable, the Debentureholder may without further notice institute such
proceedings as it may think fit to enforce payment of the monies due.
11 VOTING
------
The Debentureholder shall not be entitled to receive notices of, attend
or vote at any meetings of the Company by reason only of it being the
Debentureholder.
12 EXPERTS
-------
In giving any certificate or making the Adjustment, any approved
merchant bank (as defined in Condition 7.2) or independent auditors
appointed shall be deemed to be acting as experts and not as arbitrators
and, in the absence of manifest error, their decision shall be
conclusive and binding on the Company and the Debentureholder and all
persons claiming through or under them respectively.
13 REPLACEMENT DEBENTURE
---------------------
13.1 If the certificate for the Debenture is lost or mutilated, the
Debentureholder shall notify the Company as soon as practicable and a
replacement certificate shall be issued, at the cost of the
Debentureholder, if the Debentureholder provides the Company with a
declaration by the Debentureholder or its officer that the certificate
for the Debenture had been lost or mutilated (as the case may be) or
other evidence that the certificate for the Debenture had been lost or
mutilated, together with the mutilated certificate for the
25
Debenture (if applicable) and an appropriate indemnity in such form and
content as the Company may reasonably require.
13.2 The certificate for the Debenture replaced in accordance with this
Condition shall forthwith be cancelled.
14 DISTRIBUTION IN SPECIE
----------------------
If the Company declares a distribution in specie other than an issue of
Shares in lieu of a cash dividend falling under Condition 7.3(c) (a
"Specie Distribution") to shareholders at any time during the period in
which the Debentureholder can exercise its Conversion Rights, the
Debentureholder will, unless an adjustment to the Conversion Price has
been made under Condition 7 in respect of the Specie Distribution in
full, be entitled to an amount (the "Specie Distribution Right") which
shall be determined as follows:
(a) the Company and the Debentureholder will forthwith on the date of
announcement of the Specie Distribution instruct the approved
merchant bank to value the Specie Distribution which would have
been payable to the Debentureholder on the Shares falling to be
issued if the Debentureholder had exercised its Conversion Rights
immediately prior to the record date for the Specie Distribution
in respect of the whole or any part(s) of the principal amount of
the Debenture then outstanding (the "Notional Specie
Distribution); and
(b) upon the determination of the approved merchant bank's valuation
of the Notional Specie Distribution (which valuation shall be
final and binding on both the Company and the Debentureholder) the
Company will pay a cash amount equal to the value of the Notional
Specie Distribution to the Debentureholder.
15 NOTICES
-------
Any notice required or permitted to be given by delivering it to the
party:
(a) in the case of the Debentureholder, at the registered address
shown in the register of the Debentureholder as kept by the
Registrar.
(b) in the case of the Company, at the following address:
Address : 12th Floor, The Grande Building
398 Kwun Tong Road, Kowloon
Hong Kong
Facsimile : (852) 2343 2329 and (65) 6222 2153
Attention : General Counsel
(c) in the case of the Registrar, at the following address:
Address: 12th Floor, The Grande Building
26
398 Kwun Tong Road, Kowloon
Hong Kong
Facsimile : [(852) 2343 2329 and (65) 6222 2153]
Attention : [_____________]
or to such other Hong Kong address or facsimile as the Company or the
Registrar may have notified to the Debentureholder or vice versa or such
other registrar, address or facsimile as the Company may have notified
to the Debentureholder. Any notice made pursuant to this Condition 15
may be given by sending it by ordinary post or by hand to such address
or to such other address as the party concerned may have notified to the
other parties in accordance with this Condition and such notice shall be
deemed to be served on the day of delivery (or on the immediately
following Business Day, if the day of delivery is not a Business Day or
if the delivery or transmission is made after 5:00 p.m. (Hong Kong
time)), or in the case of ordinary post 48 hours after posting, or if
sooner upon acknowledgement of receipt by or on behalf of the party to
which it is addressed, or if given or made by facsimile, when despatched
with confirmation of successful transmission (and if the deemed date of
delivery is not a Business Day, on the immediately following Business
Day). Acknowledgement in writing of receipt of a notice by or on behalf
of a party, signed or initialled by any employee of such party, shall be
evidence that such notice has been duly served in accordance with this
Condition.
16 AMENDMENT
---------
The terms and conditions of the Debenture may be varied, expanded or
amended by agreement in writing between the Company and the
Debentureholder from time to time.
17 GOVERNING LAW AND JURISDICTION
------------------------------
The Debenture is governed by and shall be construed in accordance with
Hong Kong law and the Company and the Debentureholder agree to submit to
the non-exclusive jurisdiction of the courts of Hong Kong in connection
herewith.
27
Exhibit 1
---------
The Grande Holdings Limited
CONVERSION NOTICE
-----------------
FOR THE CONVERTIBLE DEBENTURE DUE AUGUST , 2008
--------------------------------------------------------
Terms defined in the certificate for the Debenture (as may be amended) shall
bear the same meanings in this Conversion Notice.
The undersigned hereby irrevocably elects to convert the following amount of
the Debenture into shares of HK$[___] each in The Grande Holdings Limited
("the Company") in accordance with the terms and conditions of the Debenture
and the terms below.
Amount to be converted ("Conversion Amount") (Note 1):
US$________________________ (at least US$5 million and a multiple of US$1
million) (the certificate of the Debenture must be attached to this notice)
Balance Amount (Note 2): US$
---------------------------------------------------
(a certificate in respect of the Debenture representing the outstanding
principal amount (after deducting the Conversion Amount) shall be issued by
the Company upon presentation and cancellation of the existing Certificate)
Name of Debentureholder: Gottfried Ludwig Prentice Jurick
Exercise Date:
--------------------------------------------------------------
(the date this notice is given, or deemed to be given, by the Debentureholder)
Conversion Price:
-----------------------------------------------------------
Name in which Shares to be issued:
Address of shareholder:
-----------------------------------------------------
Signature of Debentureholder:
-----------------------------------------------
Note 1
Please insert the amount of the Debenture to be converted into the shares of
the Company, which should be at least US$5 million and a multiple of US$1
million.
Note 2
Please insert the balance of the outstanding principal amount of the
Debenture after deducting the Conversion Amount.
28
Exhibit 2
---------
The Grande Holdings Limited
FORM OF TRANSFER
FOR THE CONVERTIBLE DEBENTURE DUE AUGUST , 2008
--------------------------------------------------------
To: Grande Holdings LTD (the "Company")
I am the holder of the convertible debenture due August _____, 2008 in the
principal amount of US$ 26,000,000 (the "Debenture") issued by the Company on
August ______, 2005.
References in this Transfer Form to "Conditions" are to the terms and
conditions on which the Debenture was issued, as the same may have been
amended from time to time pursuant to the terms thereof. Terms defined in the
Conditions shall have the same meaning herein, save where the context
otherwise requires.
1. I hereby transfer all/part* of the Debenture registered in my name in
the Register to:
---------------------------------------------------------------------
whose registered office address is at
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(the "Transferee")
2. Total principal amount and Certificate number of the transferred
Debenture:
Total principal amount to be transferred
--------------
Certificate number of Certificate for Debenture
being transferred --------------
3. +Total principal amount of Debenture to be retained:
+Total principal amount to be retained --------------
29
4. I hereby request that a Certificate in respect of the transferred
Debenture (as referred to in paragraph 2 above) be issued to the
person(s) whose name(s) and address(es) are set out in paragraph 1 above
and that such Certificate:
(a) be despatched by ordinary post at my own risk to the person whose
name and address are given below and in the manner specified
below:
Name :
---------------------------
Address :
---------------------------
---------------------------
---------------------------
(b) if no name and address are given in (a) above, be made available
for collection at the office of the Registrar referred to for that
purpose in the Conditions.
5. The Certificate in respect of the transferred Debenture (as referred to
in paragraph 2 above) is enclosed with this Transfer Form.
6. + I hereby request that a Certificate in respect of the Debenture to be
retained by us as set out in paragraph 3 above be issued to the
person(s) whose name(s) and address(es) is/are set out below:
+Name :
---------------------------
+Address :
---------------------------
---------------------------
---------------------------
and that such Certificate:
+(a) be despatched by ordinary post at my/our own risk to the
person whose name and address are given below and in the
manner specified below:
+Name :
---------------------------
+Address :
---------------------------
---------------------------
---------------------------
30
+(b) if no name and address are given above, then such
certificate shall be made available for collection at the
office of the Registrar specified or referred to for that
purpose in the Conditions.
7. The registered account of the Transferee (being a HK$ account) for the
purposes of receipt of principal and any other amounts in respect of the
Debenture is (unless otherwise instructed by the Transferee) as follows:
Name of Account :
---------------------------
Account No :
---------------------------
Sort Code :
---------------------------
Name of Bank :
---------------------------
Address of Bank :
---------------------------
---------------------------
+ complete/or applicable if only transferring part of the Debenture of
which the transferring Debentureholder is the holder, otherwise delete.
Name of Transferor :
---------------------------
Signature of Transferor :
---------------------------
Date :
---------------------------
Signature of witness :
---------------------------
Name of witness :
---------------------------
Date :
---------------------------
Name of Transferee :
---------------------------
Signature of Transferee :
---------------------------
Date :
---------------------------
31
Signature of witness :
---------------------------
Name of witness :
---------------------------
Date :
---------------------------
EXHIBIT C
Transfer Agent Letter
See attached.
SC 13D EXHIBIT 3
----------------
Dated September 28, 2005
------------------------
GOTTFRIED LUDWIG PRENTICE JURICK
and
S&T INTERNATIONAL DISTRIBUTION LIMITED
--------------------------------------------------
SUPPLEMENTAL AGREEMENT
TO
THE AGREEMENT FOR THE
SALE AND PURCHASE OF CERTAIN SHARES IN
EMERSON RADIO CORP.
--------------------------------------------------
Baker & McKenzie
14th Floor Hutchison House
10 Harcourt Road
Hong Kong
Telephone: (852) 2846-1888
Fax: (852) 2845-0476
LKL/CSML\32137319-000642
1
THIS SUPPLEMENTAL AGREEMENT made on the 28th day of September 2005
BETWEEN:
(1) GOTTFRIED LUDWIG PRENTICE JURICK, of Suite 2520, 25/F, Sutton Court,
Gateway Apartments, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong (the
"Vendor"); and
(2) S&T INTERNATIONAL DISTRIBUTION LIMITED, a company incorporated in the
British Virgin Islands, whose registered office is at TrustNet Chambers,
P.O. Box 3444, Road Town, Tortola, British Virgin Islands (the
"Purchaser").
is supplemental to the sale and purchase agreement dated 20 August 2005
entered into between the same parties hereof (the "SPA") under which the
Vendor has agreed to sell and the Purchaser has agreed to purchase 10 million
common shares in the capital of Emerson Radio Corp. for a total consideration
of US$52 million.
RECITALS:
A. The Parties have agreed to enter into this Supplemental Agreement to
modify the SPA upon terms hereinafter appearing.
TERMS AGREED:
1. INTERPRETATION
1.1 Unless the context otherwise requires, terms and expressions defined in
or construed for the purposes of the SPA shall have the same meanings or
be construed in the same manner when used in this Supplemental
Agreement.
1.2 Unless the context requires otherwise, references herein to the SPA or
any other documents shall be construed as references to such documents
as the same may be amended, modified or supplemented from time to time.
1.3 This Supplemental Agreement shall be read and construed as a supplement
to, and shall form part of, the SPA as if the terms of this Supplemental
Agreement were amended therein by way of addition, deletion or
substitution, as the case may be.
2
2. AMENDMENTS TO THE SPA
2.1 It is agreed by the Parties that, with effect from the date of this
Supplemental Agreement:
(a) paragraph 1.1(d) set out in schedule 1 (Completion Requirements)
to the SPA be deleted entirely and be replaced by the following:
"(i) a letter sent on or about 22 August 2005 by the Vendor to the
Company confirming that, so long as Completion takes place in
accordance with this Agreement, the Vendor will resign as Chairman
and Chief Executive Officer of the Company, effective as of the
appointment of his successor(s); and (ii) a letter by the Vendor
to the Board of Directors of the Company confirming his
resignation as an executive (i.e., non-independent) Director of
the Company effective as of the appointment of his successor(s).
For the avoidance of doubt, to the extent permissible under
applicable laws (including the requirements and/or regulations of
the American Stock Exchange LLC), the Vendor may remain as an
advisor to the Company."
2.2 Each of the Parties hereby expressly agrees that the provisions of the
SPA, as amended hereby, shall continue to remain in full force and
effect and are enforceable in accordance with its terms, as so amended.
2.3 Each of the Parties hereby further expressly agrees and confirms that:
(a) notwithstanding the amendments to the SPA made hereby and referred
to in clause 2.1 of this Supplemental Agreement, its respective
obligations and liabilities under the SPA shall remain in full
force and effect and shall not in any respect be impaired or
diminished by such amendment; and
(b) such amendment shall not impair, prejudice or otherwise affect any
of the Parties' rights, powers or remedies under the SPA.
2.4 Each of the Parties hereby represents, warrants and undertakes to the
other Party that:
(a) it has full power, authority and legal right to enter into and
engage in the transactions contemplated by this Supplemental
Agreement and has taken or obtained all necessary corporate and
other action and consents to authorise the execution and
performance of this Supplemental Agreement; and
(b) this Supplemental Agreement constitutes legal, valid and binding
obligations of it enforceable in accordance with its terms.
3. MISCELLANEOUS
3.1. Each Party shall pay its own costs and disbursements of and incidental
to the preparation and execution of this Supplemental Agreement.
3.2 If any provision or part of a provision of this Supplemental Agreement
or its
3
application to any Party shall be, or be found by any authority of
competent jurisdiction to be, invalid or unenforceable, such invalidity
or unenforceability shall not affect the other provisions or parts of
such provisions of this Supplemental Agreement, all of which shall
remain in full force and effect.
3.3 This Supplemental Agreement may be entered into on separate
engrossments, each of which when so executed and delivered shall be an
original but each engrossment shall together constitute one and the same
instrument and shall take effect from the time of execution of the last
engrossment.
3.4 This Supplemental Agreement shall be governed by and construed in
accordance with the laws of Hong Kong and the Parties irrevocably submit
to the non-exclusive jurisdiction of the courts of Hong Kong for the
purpose of enforcing any claim arising hereunder.
IN WITNESS WHEREOF this Supplemental Agreement has been executed on the day
and year first above written.
SIGNED BY:
------------------------
GOTTFRIED LUDWIG PRENTICE JURICK
SIGNED BY:
------------------------
For and on behalf of
S&T INTERNATIONAL DISTRIBUTION LIMITED
4
SC 13D EXHIBIT 4
----------------
CERTIFICATE
Certificate No. 001
The Grande Holdings Limited
(Incorporated in Bermuda with limited liability)
US$26,000,000 CONVERTIBLE DEBENTURE DUE DECEMBER 5, 2008
THIS IS TO CERTIFY that Gottfried Ludwig Prentice Jurick whose address is
Suite 2520, 25/F, Sutton Court, Gateway Apartments, Harbour City, Tsim Sha
Tsui, Kowloon, Hong Kong is the registered holder (the "Debentureholder") of a
convertible debenture due December 5, 2008 issued by The Grande Holdings
Limited (the "Company") and dated December 5, 2005 (the "Debenture ").
The Debenture in respect of which this Certificate is issued is a convertible
debenture issued pursuant to the bylaws of the Company and a resolution of the
Executive Committee of the Board of Directors of the Company passed on August
22, 2005.
The Debentureholder is entitled to require the Company to convert the whole or
any part(s) of the principal amount outstanding under the Debenture into
ordinary shares in the capital of the Company subject to and in accordance
with the terms and conditions attached hereto which shall form an integral
part of this Certificate (the "Conditions").
Subject to the foregoing, the Company, for value received, promises to redeem
the Debenture and pay the principal sum of US$26,000,000 and such other
amounts as shall become due in respect of the Debenture to the Debentureholder
in accordance with the Conditions.
GIVEN under the Seal of The Grande Holdings Limited on December 5, 2005.
---------------------------------------
Director
---------------------------------------
Secretary/Director
Note:
The Debenture cannot be transferred to bearer on delivery and is transferable
only to the extent permitted by Condition 2 of the Conditions. The Debenture
must be delivered to the Registrar for cancellation and reissue of an
appropriate certificate in the event of any such transfer.
(For endorsement of any partial conversion)
Date Amount Converted Amount Outstanding
---- ---------------- ------------------
2
TERMS AND CONDITIONS
--------------------
The Debenture is in the principal amount of US$26,000,000 is issued by, and
convertible into shares of, The Grande Holdings Limited (the "Company"). The
Debenture shall be held subject to and with the benefit of the terms and
conditions set out below. Words and expressions set out below shall have the
meanings attributed to them below unless the context otherwise requires:
"Adjustment" any adjustment which may be made to the
Conversion Price pursuant to Condition 7;
"Adjustment Events" the events leading to any Adjustment;
"Business Day" a day (except Saturday) on which banks in Hong
Kong are open for business for more than four
hours;
"CCASS" the Central Clearing and Settlement System
operated by Hong Kong Securities Clearing
Company Limited;
"closing price per Share" the closing price per Share for one or more
board lots of the Shares quoted on the daily
quotation list of the Stock Exchange, or, if the
Stock Exchange begins to operate on an extended
hours basis and does not designate the closing
price, then the last trade price of the Shares
prior to 4:00 p.m. (Hong Kong time). If such
closing price cannot be calculated for the
Shares on a particular date on the foregoing
bases, the closing price per Share on such date
shall be the fair market value as mutually
determined by the Company and the
Debentureholder from time to time. If the
Company and the Debentureholder from time to
time are unable to agree upon the fair market
value of the Shares, then it shall be as
determined in good faith by an approved merchant
bank or auditors of the Company for the time
being (as defined in Condition 7.2);
"Conditions" the terms and conditions attached to or endorsed
on the Debenture and "Condition" refers to the
relative numbered paragraph of the Conditions;
"Conversion Price" HK$7.16;
"Conversion Rights" the rights attached to the Debenture to convert
the whole or any part(s) of the principal amount
into Shares;
3
"Conversion Shares" the Shares to be issued by the Company under the
Debenture (whether upon exercise by the
Debentureholder of the Conversion Rights, or
otherwise pursuant to the Conditions);
"Debentureholder" the person who is for the time being the
registered holder of the Debenture;
"Encumbrances" (i) any mortgage, charge, pledge, lien,
encumbrance, hypothecation or other security
interest or security arrangement of any kind;
(ii) any arrangement whereby any rights are
subordinated to any rights of any third party;
and (iii) any contractual right of set-off;
"Events of Default" shall have the meaning ascribed thereto in
Condition 10;
"Exchange Rate" shall be seven (7) H.K. Dollars and eighty (80)
HK cents to one (1) U.S. Dollar (HK$7.80 =
US$1);
"Exercise Date" a date on which a notice is given pursuant
to Condition 8.1 in respect of the exercise of
the Conversion Rights in accordance with the
Conditions;
"Hong Kong" the Hong Kong Special Administrative Region of
the People's Republic of China;
"Listing Rules" the Rules Governing the Listing of Securities on
the Stock Exchange;
"Maturity Date" has the meaning ascribed thereto in Condition 1;
"month" is a reference to a period starting on one day
in a calendar month and ending on the
numerically corresponding day in the next
succeeding calendar month provided that if there
is no numerically corresponding day in the month
in which that period ends, that period shall end
on the last day in that later month;
"Purchase Agreement" the Agreement for the Sale and Purchase of
Certain Shares in Emerson Radio Corporation,
dated as of August 20, 2005, by and amongst the
Debentureholder, S&T International Distribution
Limited and the Company;
"Registrar" The Grande Holdings Limited, the branch share
registrar and transfer office of the Company at
12th Floor, The Grande Building, 398 Kwun Tong
Road, Kowloon, Hong Kong or such other registrar
and address as notified by the Company to the
Debentureholder;
4
"Share(s)" the share(s) of par value of HK$0.10 each in the
share capital of the Company existing on the
issue date of the Debenture and all other (if
any) or shares from time to time and for the
time being ranking pari passu therewith and all
other (if any) shares resulting from any
sub-division, consolidation or re-classification
thereof;
"Stock Exchange" The Stock Exchange of Hong Kong Limited;
"trading day" a day on which the Shares are traded on the
Stock Exchange for a minimum of 3 hours and an
official closing price per Share is provided by
the Stock Exchange;
"HK$" (or "H.K. Dollars") Hong Kong dollars and cents, respectively;
and "HK cents" and
"US$" (or "U.S. Dollars") United States dollars and cents,
and "cents" respectively.
The expressions "Company" and "Debentureholder" shall, where the context
permits, include their respective successors and permitted assigns and any
persons deriving title under them.
In the Debenture, unless the context requires otherwise:
(a) references to statutory provisions shall be construed as references to
those provisions as replaced, amended, modified or re-enacted from time
to time;
(b) words importing the singular include the plural and vice versa;
(c) words importing any gender or the neuter include both genders and the
neuter;
(d) references to the Debenture or any issue document shall be construed as
references to such document as the same may be amended or supplemented
from time to time; and
(e) Condition headings are inserted for reference only and shall be ignored
in construing the Debenture.
1. Maturity
--------
Subject as provided herein, the Company shall repay the outstanding
principal amount of the Debenture, together with any unpaid interest
accrued thereon up to and including the date of actual payment, subject
to and in accordance with the Conditions on the third anniversary of the
issue date of the Debenture (the "Maturity Date").
2. Status, Transfer and Splitting
------------------------------
2.1 The obligations of the Company arising under the Debenture constitute
general, unconditional, unsecured, unsubordinated obligations of the
Company and rank, and shall
5
rank equally among themselves and pari passu with all other present and
future unsecured and unsubordinated obligations of the Company except
for obligations accorded preference by mandatory provisions of
applicable law. No application shall be made for a listing of the
Debenture in any jurisdiction.
2.2 The Debenture or any part(s) thereof may be assigned or transferred to,
or mortgaged or charged in favour of, any third party during the period
from the issue date of the Debenture to the Maturity Date, subject only
to compliance of the conditions hereunder and further subject to the
conditions, approvals, requirements and any other provisions of or
under:
(a) the Stock Exchange (and any other stock exchange on which the
Shares may be listed at the relevant time) or their rules and
regulations; and
(b) all applicable laws and regulations.
If the Debenture is transferred to a connected person (as defined in the
Listing Rules) of the Company or its associate(s) (as defined in the
Listing Rules), the Company shall immediately notify the Stock Exchange
and such transfer shall be made subject to full compliance with the
Listing Rules.
2.3 Any assignment, transfer, mortgage or charge of the Debenture shall be
in respect of the whole or any part(s) of the outstanding principal
amount of the Debenture. The Company shall facilitate any such
assignment, transfer, mortgage or charge including making any
application to the Stock Exchange or other third parties (at the expense
of the Debentureholder) for necessary approvals. Title to the Debenture
passes only upon the issue of a new Debenture certificate to the
transferee or assignee of the Debenture in accordance with Condition
2.4(a)(ii). The Debentureholder shall (except as otherwise required by
law) be treated as the absolute owner of the Debenture for all purposes
(whether or not it is overdue and regardless of any notice of ownership,
trust or any interest in it or any writing on, or the theft or loss of,
the Debenture) and no person shall be liable for so treating the
Debentureholder.
2.4 (a) In relation to any assignment or transfer of the Debenture
permitted under or otherwise pursuant to this Condition 2:
(i) the Debenture or any part(s) thereof may only be transferred
by execution of a form of transfer (the "Transfer Form") as
set out in Exhibit 2 attached hereto obtainable from the
Registrar by the transferor and the transferee (or their
duly authorised representatives) or, where either the
transferor or transferee is a corporation, under its common
seal (if any) and under the hand of one of its officers duly
authorised in writing or otherwise executed by a duly
authorised officer thereof. In this Condition, "transferor"
shall, where the context permits or requires, include joint
transferors or can be construed accordingly;
6
(ii) the Debenture must be delivered for cancellation to the
Registrar accompanied by:
(A) a duly executed Transfer Form;
(B) in the case of the execution of the Transfer Form on
behalf of a corporation by its officers, the authority
of that person or those persons to do so; and
(C) such other evidence as the Company may reasonably
require if the Transfer Form is executed by some other
person on behalf of the Debentureholder;
and the Registrar shall, within five (5) Business Days of receipt
of such documents from the Debentureholder, cancel the existing
certificate for the Debenture and issue new certificate(s) for the
Debenture or any part(s) thereof in respect of the whole or such
part(s) of the principal amount of the Debenture so transferred,
in favour of the transferee or assignee as applicable and (if
appropriate) issue to the Debentureholder a new certificate for
such part of the Debenture in respect of any balance thereof
retained by the Debentureholder; and
(b) the Company shall maintain at such location outside Hong Kong as
it shall from time to time determine and give a full and complete
register of the Debentureholders, the conversion, cancellation and
destruction of the Debenture, any replacement certificate issued
in substitution for any defaced, lost, stolen or destroyed
certificate and of details of all Debentureholders from time to
time. The Company shall make available such register to the
Debentureholder for inspection at all reasonable times.
2.5 In relation to any mortgage or charge of this Debenture, the
Debentureholder shall give the Company written notice at least ten (10)
Business Days prior to the completion of such mortgage or charge. In
addition, prior to granting the mortgage or charge, the Debentureholder
will procure from the mortgagee an undertaking (in form and substance
reasonably acceptable to the Company) to comply with all of the terms of
this Agreement with respect to transfers and assignments.
2.6 The Debenture certificate may be split at the request of the
Debentureholder, provided that the principal amount of the Debenture to
be split shall be the multiple of US$1 million (with a minimum of US$5
million) and the principal amount of each new Debenture certificate to
be issued after the splitting shall be US$ 1 million or its multiple
(with a minimum of US$5 million).
2.7 The Debentureholder may present the original Debenture certificate(s) to
the Registrar at the Registrar's address specified in Condition 15 for
splitting. The Registrar shall, within ten (10) Business Days of receipt
of the original Debenture certificate(s) from the Debentureholder,
cancel the existing certificate(s) for the Debenture and subject to
Condition 2.6, issue new certificate(s) for the Debenture in respect of
the principal
7
amount of the Debenture so split and in the number of Debentures
certificates the Debentureholder so requested, in the name of the
Debentureholder.
2.8 Scrip fee of HK$2.50 (as may be revised as time to time) will be charged
to the Debentureholder for the issue of each new Debenture certificate.
Any reasonable legal and other costs and expenses which may be properly
incurred by the Company in connection with any transfer or assignment or
splitting of the Debenture or any part(s) thereof or any request
therefor shall be borne by the Debentureholder.
2.9 Neither the Debenture nor the Conversion Shares shall be registered
under the United States Securities Act of 1933, as amended (the
"Securities Act"), and the Debentureholder agrees that it will not
reoffer, resell, pledge or otherwise transfer the Debentures or the
Conversion Shares except (a) in an offshore transaction complying with
Rule 903 or Rule 904 of Regulation S of the Securities Act or (b) in a
transaction exempt from the registration requirements of the Securities
Act.
3. Interest
--------
3.1 No interest shall be payable on the Debenture for the period beginning
on the issue date of the Debenture and ending one (1) day prior to the
first anniversary of such issue date. Subject as provided herein, for
the period from the first anniversary of the issue date of the Debenture
until the Maturity Date, interest shall accrue on the principal amount
outstanding under the Debenture at the rate of three percent (3%) per
annum.
4. Payments
--------
4.1 All payments by the Company hereunder shall be made in immediately
available funds after deduction of any withholdings or deductions for
any present or future taxes, imposts, levies, duties or other charges
payable by the Company as required by law.
4.2 All payments by the Company hereunder shall be made no later than 5 p.m.
on the due date, by remittance to such bank account in Hong Kong as the
Debentureholder may notify the Company from time to time.
4.3 If the due date for payment of any amount in respect of the Debenture is
not a Business Day, the Debentureholder shall be entitled to payment on
the next following Business Day in the same manner together with any
interest accrued in respect of any such delay.
4.4 The Company shall not be obliged to make any payment on the redemption
of the outstanding principal amount of the Debenture until it has
received the certificate for the Debenture.
4.5 If the Company defaults in the payment of any sum due and payable under
the Debenture, the Company shall pay interest on such sum to the
Debentureholder from the due date to the date of actual payment in full
(both before and after judgment) calculated at the rate of two per cent
(2%) per annum over the otherwise applicable interest rate.
8
5. Redemption
----------
5.1 Unless previously converted in accordance with these Conditions, upon
presentation on the Maturity Date of the original of the certificate for
the Debenture to the Company at its address specified in Condition 15,
the Debenture shall be redeemed by the Company at its principal amount
outstanding in U.S. Dollars.
5.2 The Company shall have the right, at any time by a 30-day prior written
notice to the Debentureholder, to redeem the whole or part of the
outstanding principal amount of this Debenture.
6. Conversion
----------
6.1 Subject to receipt by the Company of the documents referred to in
Condition 8.1, the Debentureholder shall have the right to convert on
any Business Day prior to five (5) Business Days prior to the Maturity
Date (for the avoidance of doubt, such right to covert can be exercised
even if the Debentureholder has received a written redemption notice
issued by the Company in accordance with Condition 5.2 so long as such
is exercised prior to the expiry of the 30-day notice period), the whole
or any part(s) of the principal amount of the Debenture into Shares at
any time and from time to time at the Conversion Price provided that
such part of the principal amount of the Debenture to be converted shall
not be less than the H.K. Dollar equivalent of US$5 million (determined
by applying the Exchange Rate) and shall be in a multiple of US$1
million, so that the number of Shares which fall to be issued (subject
to Condition 6.2) shall be calculated by applying the formula:
n = x
------
y
where n = number of Conversion Shares to be issued
x = the whole of the H.K. Dollar equivalent of the principal
amount of the Debenture being converted (determined by
applying the Exchange Rate); and
y = the Conversion Price applicable on the relevant Exercise
Date.
The Conversion Shares shall be allotted and issued in the name of the
Debentureholder or its nominee and shall be delivered to the
Debentureholder or its nominee within ten (10) Business Days after the
date of presentation of the original certificate for the Debenture and
the duly executed conversion notice.
6.2 No fraction of a Share shall be issued on conversion of the Debenture.
Fractional entitlements shall be ignored and any sum paid in respect
thereof shall be retained by the Company for its own benefit. Shares
issued upon conversion pursuant to Condition 6.1 shall rank pari passu
in all respects with all other existing Shares outstanding at the
Exercise Date and be entitled to all dividends and other distributions
the record date of
9
which falls on a date on or after the date of the conversion notice.
6.3 Unless otherwise requested by the Debentureholder, only one Share
certificate will be issued upon conversion.
6.4 Under normal circumstances, no charge will be imposed for the issue of
the Share certificate upon conversion of the Debenture. If the
Debentureholder, who applies for conversion of the Conversion Shares,
requests for the issue of a number of Share certificates each with a
denomination unreasonably small, appropriate charges will be imposed on
the Debentureholder as the Company may reasonably determine and it would
take longer than five (5) Business Days to issue the Share certificates.
7. Adjustments
-----------
7.1 Subject as hereinafter provided, the Conversion Price shall from time to
time be adjusted in accordance with the following relevant provisions
and so that if the event giving rise to any such adjustment shall be
such as would be capable of falling within more than one of
sub-paragraphs (a) to (g) inclusive of this Condition 7.1, it shall fall
within the first of the applicable paragraphs to the exclusion of the
remaining paragraphs.
(a) If and whenever the Shares by reason of any consolidation or
sub-division which will decrease or increase the number of Shares
in issue, the Conversion Price in force immediately prior thereto
shall be adjusted by multiplying it by the following fraction:
A
-
B
where:
A= the number of the Shares in issue immediate before the
Share consolidation or sub-division; and
B= the revised number of the Shares in issue as a result of
the Share consolidation or sub-division.
Each such adjustment shall be effective from the close of business
in Hong Kong on the day immediately preceding the date on which
the consolidation or sub-division becomes effective.
(b) If and whenever the Company shall issue (other than in lieu of a
cash dividend) any Shares credited as fully paid by way of
capitalisation of profits or reserves (including any share premium
account or capital redemption reserve fund), the Conversion Price
in force immediately prior to such issue shall be adjusted by
multiplying it by the following fraction:
C
-----
C + D
10
where:
C = the aggregate number of the issued Shares immediately
before such issue; and
D = the aggregate number of the Shares issued in such
capitalisation.
Each such adjustment shall be effective (if appropriate
retroactively) from the commencement of the day next following the
record date for such issue.
(c) If and whenever the Company shall make any Capital Distribution
(as defined in Condition 7.2) (except where, and to the extent
that, the Conversion Price falls to be adjusted under
sub-paragraph (b) above) to holders (in their capacity as such) of
Shares (whether on a reduction of capital or otherwise), the
Conversion Price in force immediately prior to such distribution
shall be adjusted by multiplying it by the following fraction:
E - F
-----
E
where:
E = the market price (as defined in Condition 7.2) on the
date on which the Capital Distribution is publicly
announced or (failing any such announcement) next
preceding the date of the Capital Distribution; and
F = the fair market value on the day of such announcement or
(as the case may require) the next preceding day, as
determined in good faith by the auditors of the Company
for the time being or an approved merchant bank of the
portion of the Capital Distribution which is
attributable to one Share;
Provided that:
(i) if in the opinion of the auditors of the Company for the
time being or an approved merchant bank (as the case may
be), the use of the fair market value as aforesaid produces
a result which is significantly inequitable, it may instead
determine, and in such event the above formula shall be
construed as if F meant the amount of the said market price
which should properly be attributed to the value of the
Capital Distribution; and
(ii) the provisions of this sub-paragraph (c) shall not apply in
relation to the issue of Shares paid out of profits or
reserves of the Company and/or its subsidiaries and issued
in lieu of a cash dividend.
Each such adjustment shall be effective (if appropriate
retroactively) from the commencement of the day next following the
record date for the Capital Distribution or grant.
11
(d) If and whenever the Company shall after the date hereof offer to
holders of Shares new Shares for subscription by way of rights, or
shall grant to holders of Shares any options, warrants or other
rights to subscribe for or purchase any Shares and the total
amount (if any) payable for the rights, options, warrants or other
rights to subscribe for each new Share, plus the subscription
price payable for each new Share is less than 90% of the market
price (as defined in Condition 7.2), the Conversion Price shall be
adjusted by multiplying the Conversion Price in force immediately
before the date of the announcement of such offer by the following
fraction:
H x I
G + -----
J
-----------
G + H
where:
G = the number of Shares in issue immediately before the
date of such announcement;
H = the aggregate number of Shares so offered for
subscription;
I = the amount (if any) payable for the rights, options or
warrants or other rights to subscribe for each new Share,
plus the subscription price payable for each new Share; and
J = the greater of either the closing price per Share on the
trading day immediately prior to such announcement or the
Conversion Price in effect immediately prior to the trading
day immediately prior to such announcement.
Such adjustment shall become effective (if appropriate
retroactively) from the commencement of the next day following the
record date for the offer or grant provided that the adjustment
referred to in this sub-paragraph (d) shall not apply if the offer
on substantially the same terms is extended to the
Debentureholder.
(e) (i) If and whenever the Company shall issue wholly for cash any
securities which by their terms are convertible into or
exchangeable for or carry rights of subscription for new
Shares, and the Total Effective Consideration per Share (as
defined below in this sub-paragraph (e)) initially
receivable for such securities is less than 90% of the
market price (as defined in Condition 7.2) as at the date of
announcement of the terms of such securities (for the
purpose of this section (i), the "Applicable Price"), the
Conversion Price shall be adjusted by multiplying the
Conversion Price in force immediately prior to the issue by
a fraction of which the numerator is the number of Shares in
issue immediately before the date of the issue plus the
number of Shares which the Total Effective Consideration
receivable for the securities issued would purchase at the
12
Applicable Price and the denominator is the number of Shares
in issue immediately before the date of the issue plus the
number of Shares to be issued upon conversion or exchange
of, or the exercise of the subscription rights conferred by,
such securities, at the initial conversion or exchange rate
or subscription price. Such adjustment shall become
effective (if appropriate retrospectively) from the close of
business in Hong Kong on the Business Day next preceding
whichever is the earlier of the date on which the issue is
announced and the date on which the Company determines the
conversion or exchange rate or subscription price.
(ii) If and whenever the rights of conversion or exchange or
subscription attached to any such securities as are
mentioned in section (i) of this sub-paragraph (e) are
modified so that the Total Effective Consideration (as
defined below in this sub-paragraph (e)) per Share initially
receivable for such securities shall be less than 90% of the
market price (as defined in Condition 7.2) at the date of
announcement of the proposal to modify such rights of
conversion or exchange or subscription (for the purpose of
this section (ii), the "Applicable Price"), the Conversion
Price shall be adjusted by multiplying the Conversion Price
in force immediately prior to such modification by a
fraction of which the numerator is the number of Shares in
issue immediately before the date of such modification plus
the number of Shares which the Total Effective Consideration
receivable for the securities issued at the modified
conversion price would purchase at the Applicable Price and
of which the denominator is the number of Shares in issue
immediately before such date of modification plus the number
of Shares to be issued upon conversion of or the exercise of
the subscription rights conferred by such securities at the
modified conversion or exchange rate or subscription price,
such adjustment shall take effect as at the date upon which
such modification takes effect. A right of conversion or
subscription shall not be treated as modified for the
foregoing purposes where it is adjusted to take account of
rights or capitalisation issues and other events normally
giving rise to adjustment of conversion or exchange terms.
For the purposes of this sub-paragraph (e), the "Total Effective
Consideration" receivable for the securities issued shall be
deemed to be the consideration receivable by the Company for any
such securities plus the additional minimum consideration (if any)
to be received by the Company upon (and assuming) the conversion
or exchange thereof or the exercise of such subscription rights,
and the Total Effective Consideration per Share initially
receivable for such securities shall be such aggregate
consideration divided by the number of Shares to be issued upon
(and assuming) such conversion or exchange at the initial
conversion or exchange rate or the exercise of such subscription
rights at the initial subscription price, in each case without any
deduction for any commissions, discounts or expenses paid, allowed
or incurred in connection with the issue.
(f) If and whenever the Company shall issue wholly for cash any Shares
at a price
13
per Share which is less than 90% of the market price (as defined
in Condition 7.2) at the date of the announcement of the terms of
such issue (for the purpose of this sub-paragraph (f), the
"Applicable Price"), the Conversion Price shall be adjusted by
multiplying the Conversion Price in force immediately before the
date of such announcement by a fraction of which the numerator is
the number of Shares in issue immediately before the date of such
announcement plus the number of Shares which the aggregate amount
payable for the issue would purchase at the Applicable Price and
the denominator is the number of Shares in issue immediately
before the date of such announcement plus the number of Shares so
issued for cash. Such adjustment shall become effective on the
date of the issue.
(g) If and whenever the Company shall issue Shares for the acquisition
of assets at a Total Effective Consideration (as defined below in
this sub-paragraph (g)) per Share which is less than 90% of the
market price (as defined in Condition 7.2) at the date of the
announcement of the terms of such issue, the Conversion Price
shall be adjusted in such manner as may be determined by an
approved merchant bank or the auditors of the Company for the time
being, such adjustment to become effective on the date of issue.
For the purposes of this sub-paragraph (g), "Total Effective
Consideration" shall be the aggregate consideration credited as
being paid for such Shares by the Company on acquisition of the
relevant asset without any deduction of any commissions, discounts
or expenses paid, allowed or incurred in connection with the issue
thereof, and the "Total Effective Consideration per Share" shall
be the Total Effective Consideration divided by the number of
Shares issued as aforesaid.
7.2 For the purposes of this Condition 7:
"announcement" shall include the release of an announcement to the press
or the delivery or transmission by telephone, facsimile transmission,
telex or otherwise of an announcement to the Stock Exchange and "date of
announcement" shall mean the date on which the announcement is first so
released, delivered or transmitted;
"approved merchant bank" means a merchant bank of repute in Hong Kong
selected by the Company and approved by the Debentureholder for the
purpose of providing a specific opinion or calculation or determination
hereunder;
"Capital Distribution" shall (without prejudice to the generality of
that phrase) include distributions in cash or specie. Any dividend
charged or provided for in the accounts for any financial period shall
(whenever paid and however described) be deemed to be a Capital
Distribution provided that any such dividend shall not be deemed or
regarded as Capital Distribution if it is paid out of (i) the aggregate
of the net profits (less losses) attributable to the holders of Shares
for all financial periods after December 31, 2004 as shown in the
audited consolidated profit and loss account of the Company and its
subsidiaries for each financial period ended December 31, 2005 or other
financial year end date from time to time adopted by the Company; (ii)
and/or distributable reserves of the Company and its subsidiaries.
14
"issue" shall include allot;
"market price" mean the average of the closing price per Share for each
of the last five (5) Stock Exchange trading days on which dealings in
the Shares on the Stock Exchange took place ending on such trading day
last preceding the day on or as of which the market price is to be
ascertained;
"reserves" includes inappropriate profits and distributable reserves;
and
"rights" includes rights in whatsoever form issued.
7.3 The provisions of Condition 7.1 shall not apply to:
(a) an issue of fully paid Shares upon the exercise of options
granted under the share option scheme of the Company for the
time being or any conversion rights attached to securities
convertible into Shares or upon exercise of any rights
(including any conversion of the Debenture) to acquire Shares
(except a rights issue) provided that an adjustment (if
required) has been made under this Condition 7 in respect of
the issue of such securities or granting of such rights (as
the case may be);
(b) an issue of fully-paid Shares by way of capitalisation of all or
part of any subscription right reserve, or any similar reserve
which has been or may be established pursuant to the terms of any
securities wholly or partly convertible into, or rights to
acquire, Shares; or
(c) an issue of Shares pursuant to a scrip dividend scheme.
7.4 Any adjustment to the Conversion Price shall be made to the nearest
one-tenth of one cent.
7.5 Notwithstanding anything contained herein, no adjustment shall be made
to the Conversion Price in any case in which the amount by which the
same would be reduced in accordance with the foregoing provisions of
this Condition would be less than one-tenth of one cent and any
adjustment that would otherwise be required then to be made shall not be
carried forward and/or if as a result of such adjustment, the Conversion
Price shall fall below the then nominal value of each Share.
7.6 Whenever the Conversion Price is adjusted as herein provided the Company
shall as soon as possible but no later than ten (10) Business Days after
the relevant adjustment has been determined give notice of the same to
the Debentureholder (setting forth the event giving rise to the
adjustment, the Conversion Price in effect prior to such adjustment, the
adjusted Conversion Price and the effective date thereof).
7.7 Notwithstanding any other provision of this Condition 7, no adjustment
shall be made which would (but for this Condition 7.7) result in the
Conversion Price being reduced so that on conversion, Shares would fall
to be issued at a discount to their nominal value, and in such case an
adjustment shall be made to the effect that the Conversion Price shall
15
be reduced to the nominal value of the Shares.
7.8 Any adjustment to the Conversion Price shall not involve an increase in
the Conversion Price (except upon any consolidation of the Shares
pursuant to Condition 7.1(a)).
7.9 Every adjustment to the Conversion Price shall be certified in writing
by the auditors of the Company for the time being or an approved
merchant bank (as defined in Condition 7.2).
7.10 The Company shall make available for inspection at its principal place
of business in Hong Kong at all times after the effective date of the
adjustment in the Conversion Price and so long as the Debenture remains
outstanding, a signed copy of the certificate of the approved merchant
bank or the auditors and a certificate signed by a director of the
Company setting forth brief particulars of the event giving rise to the
adjustment, the Conversion Price in effect prior to the adjustment, the
adjusted Conversion Price and the effective date thereof and shall, on
request, send a copy thereof to the Debentureholder.
8. Procedure for Conversion and Share Issue
----------------------------------------
8.1 The Conversion Rights may, subject as provided herein, be exercised on
any Business Day, prior to five (5) Business Days prior to the Maturity
Date, by the Debentureholder delivering a written notice in a form as
set out in Exhibit 1 attached hereto to the Registrar in accordance with
Condition 15 stating the intention of the Debentureholder to convert the
whole or any part(s) of the principal amount of the Debenture into
Shares. Any such conversion notice shall be in the form accompanying
with the Debenture certificate or obtainable from the Registrar. A
conversion notice once given may not be withdrawn without the consent in
writing of the Company.
8.2 Taxes and stamp duty, issue and registration duties (if any) and levies
and charges (if any) arising on any conversion will normally be borne by
the Company except under the circumstances where the Debentureholder
requests for the issue of a large number of Share certificates each with
a denomination unreasonably small upon conversion, any taxes and stamp
duty, issue and registration duties (if any) and levies and charges (if
any) arising thereon shall be borne by the Debentureholder as the
Company may reasonably determine.
8.3 (a) The Conversion Shares shall be allotted and issued by the Company
free from all Encumbrances, credited as fully paid to the
Debentureholder or as it may direct, within ten (10) Business Days
after, and with effect from, the later of the Exercise Date or the date
on which the certificate for the Debenture is delivered to and received
by the Company. The Conversion Shares shall rank pari passu with all the
then issued Shares.
(b) The certificate(s) for the Conversion Shares to which the
Debentureholder or such person as it may direct shall become entitled in
consequence of any conversion shall, if the Debentureholder so requests
in the notice, be deposited in the CCASS participant's stock account set
out in the notice or in the absence of such request by the
Debentureholder, shall be issued in board lots to the extent possible,
with one certificate for any odd lot of Shares arising from conversion
and made available for collection at the
16
Company's address specified in Condition 15, in each case, within the
five (5) Business Day period, or such longer days that the Company may
reasonably determine, provided for in sub-paragraph (a) above, and (if
appropriate) the certificate for the Debenture with an endorsement
thereon by a director of the Company for any balance of the Debenture
not converted shall be made available for collection at the Registrar's
address specified in Condition 15 with the same period.
9. Protection of the Debentureholder
---------------------------------
9.1 So long as the Debenture is outstanding, unless with prior written
approval of the Debentureholder:
(a) the Company shall from time to time keep available for issue, free
from pre-emptive rights, out of its authorised but unissued
capital, sufficient Shares to satisfy in full the Conversion
Rights at the Conversion Price and all other rights for the time
being outstanding of subscription for and conversion into Shares;
(b) the Company undertakes to the Debentureholder that it will at all
times have sufficient shareholders' mandate to issue and allot the
Conversion Shares in compliance with the Listing Rules and all
applicable laws and regulations;
(c) the Company shall not in any way modify the rights attached to the
Shares as a class or attach any special restrictions thereto;
(d) the Company shall procure that at no time shall there be in issue
Shares of different nominal values;
(e) the Company shall use its best endeavours to:
(i) maintain a listing for all the issued Shares on the Stock
Exchange;
(ii) obtain and maintain a listing on the Stock Exchange for all
the Conversion Shares issued on the exercise of the
Conversion Rights; and
(iii) obtain and maintain a listing for all the Conversion Shares
issued on the exercise of the Conversion Rights on any other
stock exchange on which any of the Shares are for the time
being listed;
and shall forthwith give notice to the Debentureholder in
accordance with Condition 15 of the listing or delisting of the
Shares by any such stock exchange;
(f) the Company shall ensure that all Conversion Shares issued upon
conversion of the Debenture shall be duly and validly issued fully
paid and registered; and
(g) the Company shall comply with and procure the compliance of all
conditions imposed by the Stock Exchange or by any other competent
authority (in Hong Kong or elsewhere) for approval of the issue of
the Debenture or for the listing of and permission to deal in the
Shares issued or to be issued on the exercise of the
17
Conversion Rights and ensure the continued compliance thereof
(provided in each case that the Debentureholder complies with and
satisfies all such conditions).
(h) the Company shall:
(i) maintain in full force and effect all authorisations
required from any governmental or other authority or from
any shareholders or creditors of the Company for or in
connection with the execution, validity and performance of
this Debenture have been obtained and are in full force and
effect, and take immediate steps to obtain and thereafter
maintain in full force and effect any other authorisations
which may become necessary or advisable for the purposes
stated therein;
(ii) ensure that its obligations under this Debenture at all
times rank at least pari passu with all other unsecured
obligations of the Company; and
(iii) promptly inform the Debentureholder of any occurrence of
which it becomes aware which might adversely affect its
ability to perform its obligations under this Debenture and
which otherwise would not be required to be disclosed to its
shareholders pursuant to applicable statute and rules of the
HKSE.
9.2 If an offer is made to all holders of Shares (or such holders other than
the offeror and/or any company controlled by the offeror and/or persons
associated or acting in concert with the offeror) to acquire all or a
portion of the Shares and such offer comes to the knowledge of the
Company, the Company shall forthwith give notice of such offer to the
Debentureholder and shall use all its reasonable endeavours to procure
that a similar offer is extended in respect of this Debenture or in
respect of any Shares issued on conversion of this Debenture during the
period of the offer.
9.3 The Company shall not do any act or engage in any transaction the result
of which, having regard to the provisions of Condition 7, would be to
reduce the Conversion Price to below the nominal amount of a Share.
9.4 The Company shall not make any reduction or redemption of share capital,
share premium account or capital redemption reserve involving the
repayment of money to shareholders of the Company (other than to
shareholders of the Company having the right on a winding-up to a return
of capital in priority to the holders of Shares) or reduce any uncalled
liability in respect thereof unless, in any such case, the same gives
rise (or would, but for the provisions of Condition 7(e) give rise) to
an adjustment of the Conversion Price in accordance with Condition 7.
9.5 The Company shall not issue or pay up any securities by way of
capitalisation of profits or reserves other than (i) by the issue of
fully paid Shares to holders of its Shares; or (ii) as mentioned in
Condition 7.3(b); or (iii) by the issue of Shares in lieu of a cash
dividend in the manner referred to in Condition 7.3(c).
18
9.6 The Company shall not make any distribution in specie to holders of
Shares unless the Debentureholder is entitled to the Specie Distribution
Right (as defined in Condition 14) in accordance with Condition 14.
9.7 The Company shall not close its register of shareholders for more than
ten (10) Business Days each year (in addition to any period required by
law or regulation including the Listing Rules) or take any other action
which prevents the transfer of its Shares generally unless, under the
laws of Hong Kong and the bylaws of the Company as then in effect, the
Debenture may be converted legally into Shares and the Shares so
converted may be transferred at all times during the period of such
closure. The Company shall not take any action which prevents the
conversion of the Debenture or delivery of Shares in respect thereof.
10. Events of default
-----------------
If any of the following events ("Events of Default") occurs, the
Debentureholder may give notice to the Company that the Debenture, on
the giving of such notice, are immediately due and payable at their
principal amount then outstanding:
(a) the listing of the Shares (as a class) on the Stock Exchange:
(i) ceases; or
(ii) is suspended for a continuous period of thirty (30) Business
Days on each of which the Stock Exchange is generally open
for trading due to the default of the Company or any of its
directors, officers, employees or agents;
(b) the Company defaults in performance or compliance with any of its
material obligations contained in the Conditions, which breach or
default is incapable of remedy or, if capable of remedy, is not
remedied within fourteen (14) Business Days after notice of such
breach or default is sent to the Company;
(c) an encumbrancer takes possession or a receiver, manager or other
similar officer is appointed of the whole or any material part of
the undertaking, property, assets or revenues of the Company or
any of its material subsidiaries;
(d) the Company or any of its material subsidiaries becomes insolvent
or is unable to pay its debts as they mature or applies for or
consents to the appointment of any administrator, liquidator or
receiver of the whole or any material part of its undertaking,
property, assets or revenues or enters into a general assignment
or compromise with or for the benefit of its creditors;
(e) an order is made or an effective resolution passed for winding-up
of the Company or any of its material subsidiaries;
(f) the Company defaults in the payment of the principal in respect of
the Debenture when and as the same ought to be paid and such
default is not remedied by the
19
Company within seven (7) Business Days of the due date thereof; or
(g) a moratorium is agreed or declared in respect of any indebtedness
of the Company or any material subsidiaries or any governmental
authority or agency condemns, seizes, compulsorily purchases or
expropriates all or any material part of the assets of the Company
or any material subsidiaries;
provided that notwithstanding the foregoing, if the Company shall fail
to issue the Conversion Shares in accordance with the Conditions, the
Debentureholder shall be entitled to bring an action against the Company
for either specific performance or damages. The Company will forthwith
on becoming aware of any such event as is mentioned in this Condition
give notice in writing thereof to the Debentureholder. At any time after
any interest amount or the principal amount of the Debenture has become
payable, the Debentureholder may without further notice institute such
proceedings as it may think fit to enforce payment of the monies due.
11. Voting
------
The Debentureholder shall not be entitled to receive notices of, attend
or vote at any meetings of the Company by reason only of it being the
Debentureholder.
12. Experts
-------
In giving any certificate or making the Adjustment, any approved
merchant bank (as defined in Condition 7.2) or independent auditors
appointed shall be deemed to be acting as experts and not as arbitrators
and, in the absence of manifest error, their decision shall be
conclusive and binding on the Company and the Debentureholder and all
persons claiming through or under them respectively.
13. Replacement Debenture
---------------------
13.1 If the certificate for the Debenture is lost or mutilated, the
--------------------------------------------------------------
Debentureholder shall notify the Company as soon as practicable and a
replacement certificate shall be issued, at the cost of the
Debentureholder, if the Debentureholder provides the Company with a
declaration by the Debentureholder or its officer that the certificate
for the Debenture had been lost or mutilated (as the case may be) or
other evidence that the certificate for the Debenture had been lost or
mutilated, together with the mutilated certificate for the Debenture (if
applicable) and an appropriate indemnity in such form and content as the
Company may reasonably require.
13.2 The certificate for the Debenture replaced in accordance with this
Condition shall forthwith be cancelled.
20
14. Distribution in Specie
----------------------
If the Company declares a distribution in specie other than an issue of
Shares in lieu of a cash dividend falling under Condition 7.3(c) (a
"Specie Distribution") to shareholders at any time during the period in
which the Debentureholder can exercise its Conversion Rights, the
Debentureholder will, unless an adjustment to the Conversion Price has
been made under Condition 7 in respect of the Specie Distribution in
full, be entitled to an amount (the "Specie Distribution Right") which
shall be determined as follows:
(a) the Company and the Debentureholder will forthwith on the date
of announcement of the Specie Distribution instruct the
approved merchant bank to value the Specie Distribution which
would have been payable to the Debentureholder on the Shares
falling to be issued if the Debentureholder had exercised its
Conversion Rights immediately prior to the record date for the
Specie Distribution in respect of the whole or any part(s) of
the principal amount of the Debenture then outstanding (the
"Notional Specie Distribution); and
(b) upon the determination of the approved merchant bank's valuation
of the Notional Specie Distribution (which valuation shall be
final and binding on both the Company and the Debentureholder) the
Company will pay a cash amount equal to the value of the Notional
Specie Distribution to the Debentureholder.
15. Notices
-------
Any notice required or permitted to be given by delivering it to the
party:
(a) in the case of the Debentureholder, at the registered address
shown in the register of the Debentureholder as kept by the
Registrar.
(b) in the case of the Company, at the following address:
Address : 12th Floor, The Grande Building
398 Kwun Tong Road, Kowloon
Hong Kong
Facsimile : (852) 2343 2329 and (65) 6222 2153
Attention : General Counsel
(c) in the case of the Registrar, at the following address:
Address: 12th Floor, The Grande Building
398 Kwun Tong Road, Kowloon
Hong Kong
Facsimile : (852) 2343 2329 and (65) 6222 2153
Attention : Secretary
21
or to such other Hong Kong address or facsimile as the Company or the
Registrar may have notified to the Debentureholder or vice versa or such
other registrar, address or facsimile as the Company may have notified
to the Debentureholder. Any notice made pursuant to this Condition 15
may be given by sending it by ordinary post or by hand to such address
or to such other address as the party concerned may have notified to the
other parties in accordance with this Condition and such notice shall be
deemed to be served on the day of delivery (or on the immediately
following Business Day, if the day of delivery is not a Business Day or
if the delivery or transmission is made after 5:00 p.m. (Hong Kong
time)), or in the case of ordinary post 48 hours after posting, or if
sooner upon acknowledgement of receipt by or on behalf of the party to
which it is addressed, or if given or made by facsimile, when despatched
with confirmation of successful transmission (and if the deemed date of
delivery is not a Business Day, on the immediately following Business
Day). Acknowledgement in writing of receipt of a notice by or on behalf
of a party, signed or initialled by any employee of such party, shall be
evidence that such notice has been duly served in accordance with this
Condition.
16. Amendment
---------
The terms and conditions of the Debenture may be varied, expanded or
amended by agreement in writing between the Company and the
Debentureholder from time to time.
17. Governing law and jurisdiction
------------------------------
The Debenture is governed by and shall be construed in accordance with
Hong Kong law and the Company and the Debentureholder agree to submit to
the non-exclusive jurisdiction of the courts of Hong Kong in connection
herewith.
22
Exhibit 1
The Grande Holdings Limited
CONVERSION NOTICE
-----------------
FOR THE CONVERTIBLE DEBENTURE DUE DECEMBER 5, 2008
Terms defined in the certificate for the Debenture (as may be amended) shall
bear the same meanings in this Conversion Notice.
The undersigned hereby irrevocably elects to convert the following amount of
the Debenture into shares of HK$[-__] each in The Grande Holdings Limited
("the Company") in accordance with the terms and conditions of the Debenture
and the terms below.
Amount to be converted ("Conversion Amount") (Note 1):
US$________________________ (at least US$5 million and a multiple of US$1
million) (the certificate of the Debenture must be attached to this notice)
Balance Amount (Note 2): US$
---------------------------------------------------
(a certificate in respect of the Debenture representing the outstanding
principal amount (after deducting the Conversion Amount) shall be issued by
the Company upon presentation and cancellation of the existing Certificate)
Name of Debentureholder: Gottfried Ludwig Prentice Jurick
Exercise Date:
--------------------------------------------------------------
(the date this notice is given, or deemed to be given, by the
Debentureholder)
Conversion Price:
-----------------------------------------------------------
Name in which Shares to be issued:
Address of shareholder:
-----------------------------------------------------
Signature of Debentureholder:
-----------------------------------------------
Note 1
Please insert the amount of the Debenture to be converted into the shares of
the Company, which should be at least US$5 million and a multiple of US$1
million.
Note 2
Please insert the balance of the outstanding principal amount of the
Debenture after deducting the Conversion Amount.
Exhibit 2
The Grande Holdings Limited
FORM OF TRANSFER
----------------
FOR THE CONVERTIBLE DEBENTURE DUE DECEMBER 5, 2008
--------------------------------------------------
To: Grande Holdings LTD (the "Company")
I am the holder of the convertible debenture due December 5, 2008 in the
principal amount of US$ 26,000,000 (the "Debenture") issued by the Company on
December 5, 2005.
References in this Transfer Form to "Conditions" are to the terms and
conditions on which the Debenture was issued, as the same may have been
amended from time to time pursuant to the terms thereof. Terms defined in the
Conditions shall have the same meaning herein, save where the context
otherwise requires.
1. I hereby transfer all/part* of the Debenture registered in my name in
the Register to:
---------------------------------------------------------------------
whose registered office address is at
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
(the "Transferee")
2. Total principal amount and Certificate number of the transferred
Debenture:
Total principal amount to be transferred
--------------
Certificate number of Certificate for Debenture
being transferred
--------------
3. +Total principal amount of Debenture to be retained:
+Total principal amount to be retained
--------------
24
4. I hereby request that a Certificate in respect of the transferred
Debenture (as referred to in paragraph 2 above) be issued to the
person(s) whose name(s) and address(es) are set out in paragraph 1 above
and that such Certificate:
(a) be despatched by ordinary post at my own risk to the person whose
name and address are given below and in the manner specified
below:
Name :
---------------------------
Address :
---------------------------
---------------------------
---------------------------
(b) if no name and address are given in (a) above, be made available
for collection at the office of the Registrar referred to for that
purpose in the Conditions.
5. The Certificate in respect of the transferred Debenture (as referred to
in paragraph 2 above) is enclosed with this Transfer Form.
6. + I hereby request that a Certificate in respect of the Debenture to be
retained by us as set out in paragraph 3 above be issued to the
person(s) whose name(s) and address(es) is/are set out below:
+Name :
---------------------------
+Address :
---------------------------
---------------------------
---------------------------
and that such Certificate:
+ (a) be despatched by ordinary post at my/our own risk to the
person whose name and address are given below and in the manner
specified below:
+Name :
---------------------------
+Address :
---------------------------
---------------------------
---------------------------
25
+ (b) if no name and address are given above, then such certificate
shall be made available for collection at the office of the
Registrar specified or referred to for that purpose in the
Conditions.
7. The registered account of the Transferee (being a HK$ account) for the
purposes of receipt of principal and any other amounts in respect of the
Debenture is (unless otherwise instructed by the Transferee) as follows:
Name of Account :
---------------------------
Account No :
---------------------------
Sort Code :
---------------------------
Name of Bank :
---------------------------
Address of Bank :
---------------------------
---------------------------
+ complete/or applicable if only transferring part of the Debenture of
which the transferring Debentureholder is the holder, otherwise
delete.
Name of Transferor :
___________________________
Signature of Transferor :
___________________________
Date :
___________________________
Signature of witness :
___________________________
Name of witness :
___________________________
Date : ___________________________
Name of Transferee :
___________________________
Signature of Transferee :
___________________________
26
Date : ___________________________
Signature of witness :
___________________________
Name of witness :
___________________________
Date :
___________________________
27
MALLESONS STEPHENS JAQUES
SC 13D EXHIBIT 5
----------------
US$26,000,000
FACILITY AGREEMENT
dated 22 August 2005
for
S&T International Distribution Limited
as Borrower
The Grande Holdings Limited
as Guarantor
with
ABN AMRO Bank N.V., Hong Kong Branch
acting as Lender
-----------------------------------------------
FACILITY AGREEMENT
------------------------------------------------
Mallesons Stephen Jaques
37th Floor Two International Finance Centre
8 Finance Street
Central Hong Kong
T +852 3443 1000
F +852 3443 1299
www.mallesons.com
CONTENTS
CLAUSE PAGE
SECTION 1
INTERPRETATION
1. Definitions and interpretation.........................................1
SECTION 2
FACILITY
2. Facility..............................................................10
3. Purpose...............................................................10
4. Conditions of Utilisation.............................................10
SECTION 3
UTILISATION
5. Utilisation...........................................................12
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
6. Repayment.............................................................13
7. Prepayment and cancellation...........................................13
SECTION 5
COSTS OF UTILISATION
8. Interest..............................................................15
9. Interest Periods......................................................15
10. Changes to the calculation of interest................................16
11. Up-front Fees.........................................................17
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
12. Tax gross up and indemnities..........................................18
13. Increased costs.......................................................20
14. Other indemnities.....................................................21
15. Mitigation by the Lender..............................................22
16. Costs and expenses....................................................22
SECTION 7
GUARANTEE
17. Guarantee and Indemnity...............................................24
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
18. Representations.......................................................27
19. Information undertakings..............................................32
20. Financial covenants...................................................33
21. General undertakings..................................................36
22. Events of Default.....................................................39
SECTION 9
CHANGES TO PARTIES
23. Changes to the Lender.................................................43
------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement i
24. Changes to the OBLIGOR.................................................44
SECTION 10
THE LENDER
25. Conduct of business by the lender......................................45
SECTION 11
ADMINISTRATION
26. Payment mechanics......................................................46
27. Set-off................................................................47
28. Notices................................................................47
29. Calculations and certificates..........................................49
30. Partial invalidity.....................................................49
31. Remedies and waivers...................................................49
32. Amendments and waivers.................................................50
33. Counterparts...........................................................50
SECTION 12
GOVERNING LAW AND ENFORCEMENT
34. Governing law..........................................................51
35. Enforcement............................................................51
THE SCHEDULES
SCHEDULE PAGE
SCHEDULE 1 Conditions precedent..............................................52
SCHEDULE 2 Requests..........................................................54
SCHEDULE 3 Form of Compliance Certificate....................................55
SCHEDULE 4 Existing Security.................................................56
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement ii
THIS AGREEMENT is dated 22 August 2005 and made between:
(1) S&T International Distribution Limited as borrower (the "Borrower");
(2) The Grande Holdings Limited as borrower (the "Guarantor");
(3) ABN AMRO Bank N.V., Hong Kong Branch as lender (the "Lender")
IT IS AGREED as follows:
SECTION 1
INTERPRETATION
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement:
"Acquisition" means the acquisition by the Borrower of the Acquisition
Shares pursuant to the Acquisition Documents.
"Acquisition Agreement" means the sale and purchase agreement dated 20
August 2005 between the Seller and the Borrower relating to the sale and
purchase of the Acquisition Shares.
"Acquisition Completion Time" means the time on the "Completion Date",
as defined in the Acquisition Agreement, at which the Acquisition takes
effect and the Borrower obtains sole beneficial ownership of all of the
Acquisition Shares.
"Acquisition Documents" means:
(a) the Acquisition Agreement;
(b) the Representation Letters; and
(c) the Acquisition Share Documents,
and any other document designated as such by the Lender and the
Borrower.
"Acquisition Shares" means 10,000,000 issued shares of and ownership
interests (of each class) in Target.
"Acquisition Share Documents" means, in respect of the Acquisition
Shares:
(a) share certificates;
(b) such instruments of transfer as are necessary to complete the
transfer of the Acquisition Shares to the Borrower and to the
Lender pursuant to the Pledge Agreement and to complete the
perfection of the Security pursuant to the Pledge Agreement; and
(c) all other stock powers and other documents required to effect such
transfers and security,
each as may be required by the Lender, and which must be duly executed
and stamped.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 1
"Affiliate" means, in relation to any person, a Subsidiary of that
person or a Holding Company of that person or any other Subsidiary of
that Holding Company.
"American Stock Exchange" means the American Stock Exchange and/or any
other stock exchange approved by the Lender.
"APLMA" means the Asia Pacific Loan Market Association Limited.
"Assignment of Acquisition Agreement" means the security document given
that title and entered into by the Borrower and the Lender creating
security over the Borrower's rights under the Acquisition Agreement.
"Authorisation" means:
(a) an authorisation, consent, approval, resolution, licence,
exemption, filing, notarisation, lodgement or registration; or
(b) in relation to anything which will be fully or partly prohibited
or restricted by law or regulation if a Governmental Agency
intervenes or acts in any way within a specified period after
lodgement, filing, registration or notification, the expiry of
that period without intervention or action.
"Availability Period" means the period from and including the date of
this Agreement to and including the date which is 1 Month after the date
of this Agreement.
"Borrowings" has the meaning given to it in Clause 20 (Financial
covenants).
"Break Costs" means the amount (if any) by which:
(a) the interest which the Lender should have received for the period
from the date of receipt of all or any part of the Loan or Unpaid
Sum to the last day of the current Interest Period in respect of
that Loan or Unpaid Sum, had the principal amount of that Loan or
Unpaid Sum received been paid on the last day of that Interest
Period;
exceeds:
(b) the amount which the Lender would be able to obtain by placing an
amount equal to the principal amount or Unpaid Sum received by it
on deposit with a leading bank in the Relevant Interbank Market
for a period starting on the Business Day following receipt or
recovery and ending on the last day of the current Interest
Period.
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are open for general business in Hong Kong and (in relation to any
date for payment or purchase of US Dollars) New York City and London.
"Cash" has the meaning given to it in Clause 20 (Financial covenants).
"Cash Equivalent Investments" has the meaning given to it in Clause 20
(Financial covenants).
"Commitment" means the lower of:
(a) US$26,000,000; and
(b) the amount equal to 50 per cent. of the total consideration
payable for the Acquisition Shares under the Acquisition Document,
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 2
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Compliance Certificate" means a certificate substantially in the form
set out in Schedule 3 (Form of Compliance Certificate) which is required
to be delivered to the Lender from time to time pursuant to Clause 19.2
(Compliance Certificate).
"Consolidated Current Assets" has the meaning given to it in Clause 20
(Financial covenants).
"Consolidated Current Liabilities" has the meaning given to it in Clause
20 (Financial covenants).
"Consolidated Tangible Net Worth" has the meaning given to it in Clause
20 (Financial covenants).
"Consolidated Net Debt" has the meaning given to it in Clause 20
(Financial covenants).
"Convertible Debenture" has the same meaning as given to it in the
Acquisition Agreement.
"Default" means an Event of Default or any event or circumstance which
would (with the expiry of a grace period, the giving of notice, the
making of any determination under the Finance Documents or any
combination of any of the foregoing) be an Event of Default.
"EBITDA" has the meaning given to it in Clause 20 (Financial covenants).
"Event of Default" means any event or circumstance specified as such in
Clause 22 (Events of Default).
"Facility" means the term loan facility made available under this
Agreement as described in Clause 2 (Facility).
"Facility Office" means the office or offices notified by the Lender to
the Borrower in writing as the office or offices through which it will
perform its obligations under this Agreement.
"Finance Document" means this Agreement, any Security Document and any
other document designated as such by the Lender and the Borrower.
"Financial Indebtedness" means any indebtedness for or in respect of:
(a) moneys borrowed;
(b) any amount raised under any acceptance credit, bill acceptance or
bill endorsement facility;
(c) any amount raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or any similar
instrument;
(d) the amount of any liability in respect of any lease or hire
purchase contract which would, in accordance with GAAP, be treated
as a finance or capital lease;
(e) receivables sold or discounted (other than any receivables to the
extent they are sold on a non-recourse basis);
(f) any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial effect
of a borrowing;
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 3
(g) any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or
price (and, when calculating the value of any derivative
transaction, only the marked to market value shall be taken into
account);
(h) shares which are expressed to be redeemable;
(i) any counter-indemnity obligation in respect of a guarantee,
indemnity, bond, standby or documentary letter of credit or any
other instrument issued by a bank or financial institution; and
(j) the amount of any liability in respect of any guarantee or
indemnity for any of the items referred to in paragraphs (a) to
(i) above.
"GAAP" means generally accepted accounting principles, standards and
practices in Hong Kong.
"Governmental Agency" means any government or any governmental agency,
semi-governmental or judicial entity or authority (including, without
limitation, any stock exchange or any self-regulatory organisation
established under any law or regulation).
"Group" means the Guarantor and its Subsidiaries for the time being
including, without limitation, Target with effect from the Acquisition
Completion Time and "Group Member" means any member of the Group.
"Holding Company" means, in relation to a company or corporation, any
other company or corporation in respect of which it is a Subsidiary.
"Hong Kong" means the Hong Kong Special Administrative Region of the
People's Republic of China.
"Hong Kong Stock Exchange" means The Stock Exchange of Hong Kong Limited
and/or any other stock exchange approved by the Lender.
"Indirect Tax" means any goods and services tax, consumption tax, value
added tax or any Tax of a similar nature.
"Interest Expense" has the meaning given to it in Clause 20 (Financial
covenants).
"Interest Payment Date" means the last day of each Interest Period.
"Interest Period" means, in relation to the Loan, each period determined
in accordance with Clause 9 (Interest Periods) and, in relation to an
Unpaid Sum, each period determined in accordance with Clause 8.3
(Default interest).
"LIBOR" means, in relation to the Loan:
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for US Dollars for the Interest
Period of that Loan) the rate quoted by the Lender to leading
banks in the London interbank market,
as of 11.00am on the Quotation Day for the offering of deposits in US
Dollars for a period comparable to the Interest Period for that Loan.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 4
"Loan" means the loan made or to be made under the Facility or the
principal amount outstanding for the time being of the loan.
"Loan-to-value ratio" means, as at any date, the ratio of the aggregate
principle amount of the outstanding Loan as at that date to the market
value of the Acquisition Shares as reasonably determined by the Lender
as at the close of business on that date and confirmed by an independent
broker nominated by the Lender.
"London Business Day" means a day (other than a Saturday or Sunday) on
which deposits may be dealt in on the Relevant Interbank Market and
banks are open for general business in London.
"LVR Adjustment" has the meaning given to it in Clause 7.5 (Mandatory
Prepayment of LVR Adjustment).
"Margin" means:
(a) subject to paragraph (b) below, 1.50 per cent. per annum; and
(b) in relation to a Quotation Date which is four months after the
Utilisation Date, 2.00 per cent. per annum.
"Material Adverse Effect" means a material adverse effect on or material
adverse change in:
(a) the condition (financial or otherwise), assets, operations,
prospects or business of the Obligor or the consolidated condition
(financial or otherwise), assets, operations, prospects or
business of the Group taken as a whole;
(b) the ability of the Obligor to perform and comply with its
obligations under any Finance Document;
(c) the validity, legality or enforceability of, or the rights or
remedies of the Lender under, any Finance Document; or
(d) the validity, legality or enforceability of any Security expressed
to be created pursuant to any Security Document or the priority
and ranking of any of that Security.
"Material Group Member" means at any time each Obligor and a Group
Member as to which one or more of the following conditions are satisfied
at that time:
(a) its net profits or (in the case of a Group Member which has
Subsidiaries) consolidated net profits attributable to the
Guarantor (before taxation and extraordinary items) are at least 5
per cent. of the consolidated net profits (before taxation and
extraordinary items but after deducting minority interests in
Subsidiaries) of the Group;
(b) its net assets or (in the case of a Group Member which has
Subsidiaries) consolidated net assets attributable to the
Guarantor represent 5 per cent. or more of the consolidated net
assets (after deducting minority interests in Subsidiaries) of the
Group; or
(c) its gross assets or (in the case of a Group Member which has
Subsidiaries) consolidated gross assets attributable to the
Guarantor represent 5 per cent. or more of the consolidated gross
assets (after deducting minority interests in Subsidiaries) of the
Group,
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 5
all as calculated by reference to the latest available consolidated
accounts of the Group.
"Month" means a period starting on one day in a calendar month and
ending on the numerically corresponding day in the next calendar month,
except that:
(a) (subject to paragraph (c) below) if the numerically corresponding
day is not a Business Day, that period shall end on the next
Business Day in that calendar month in which that period is to end
if there is one, or if there is not, on the immediately preceding
Business Day;
(b) if there is no numerically corresponding day in the calendar month
in which that period is to end, that period shall end on the last
Business Day in that calendar month; and
(c) if an Interest Period begins on the last Business Day of a
calendar month and, consistent with the terms of this Agreement,
that Interest Period is to be of a duration equal to a whole
number of Months, that Interest Period shall end on the last
Business Day in the calendar month in which that Interest Period
is to end.
The above rules will only apply to the last Month of any period.
"Net Sales Proceeds" has the meaning given to it in Clause 7.4
(Mandatory Prepayment of Net Sales Proceeds).
"Net Worth" has the meaning given to it in Clause 20 (Financial
covenants).
"Obligors" means the Borrower and the Guarantor and "Obligor" means each
of them.
"Original Financial Statements" means the audited financial statements
of the Guarantor and the audited consolidated financial statements of
the Group, each for the financial year ended 31 December 2004.
"Party" means a party to this Agreement.
"Pledge Agreement" means the security document given that title and
entered into by the Borrower and the Lender creating Security over the
Acquisition Shares.
"Quotation Day" means, in relation to any period for which an interest
rate is to be determined two London Business Days before the first day
of that period unless market practice differs in the Relevant Interbank
Market for a currency, in which case the Quotation Day for that currency
will be determined by the Lender in accordance with market practice in
the Relevant Interbank Market (and if quotations for that currency and
period would normally be given by leading banks in the Relevant
Interbank Market on more than one day, the Quotation Day will be the
last of those days).
"Relevant Interbank Market" means the London interbank market.
"Relevant Period" has the meaning given to it in Clause 20 (Financial
covenants).
"Repayment Date" means the earlier of:
(a) the date which is six Months after the date of this Agreement; and
(b) the date on which the Borrower or Guarantor raises any Financial
Indebtedness to refinance the Facility.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 6
"Repeating Representations" means each of the representations set out in
Clause 18 (Representations) other than 18.11 (No misleading
information), 18.18 (Solvency) and 18.21 (The Acquisition Documents).
"Representation Letter" means each "Representation Letter" as defined in
the Acquisition Agreement, signed by the Borrower or by the Seller.
"Sale" means a disposal (whether in a single transaction or a series of
related transactions) of any of the Acquisition Shares.
"Screen Rate" means the British Bankers' Association Interest Settlement
Rate for US Dollars for the relevant period displayed on page "LIBOR01"
of the Reuters screen. If the agreed page is replaced or service ceases
to be available, the Lender may specify another page or service
displaying the appropriate rate after consultation with the Borrower.
"Secured Obligations" means all present and future moneys, debts and
liabilities due, owing or incurred by the Borrower to the Lender under
or in connection with any Finance Document (whether actually or
contingently and whether as principle, surety or otherwise).
"Security" means a mortgage, charge, pledge, lien or other security
interest securing any obligation of any person or any other agreement or
arrangement having a similar effect.
"Security Document" means:
(a) the Pledge Agreement; and
(b) the Assignment of Acquisition Agreement,
any other security document that may at any time be executed in favour
of the Lender by a member of the Group as Security for any of the
Secured Obligations pursuant to or in connection with any Finance
Document and which the Lender and the Borrower agree will be a "Security
Document".
"Security Perfection Requirements" means:-
(a) registration of the Pledge Agreement at the Companies Registry of
Hong Kong; and
(b) registration of the Assignment of Acquisition Agreement at the
Companies Registry of Hong Kong; and
in respect of any Security Documents relating to an Obligor or assets
located outside Hong Kong, any other registration or notice requirements
which the Lender may request or which may be identified as being
necessary or desirable in any legal opinion accepted pursuant to Clause
4 (Conditions of Utilisation).
"Seller " means Gottfried Ludwig Prentice Jurick.
"Share Release Documents" means a release letter and any other evidence
required by the Lender to confirm that the Acquisition Shares will not,
from the time of the Utilisation, be secured in favour of Seng Heng
Bank.
"Stock Exchange" means:
(a) the Hong Kong Stock Exchange; and
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 7
(b) the American Stock Exchange.
"Subsidiary" means a subsidiary within the meaning of section 2 of the
Companies Ordinance (Cap. 32) but also includes any person whose profit
or loss is required by GAAP to be included in the consolidated annual
profit and loss statements of that person or would be required if that
person were a company.
"Target" means Emerson Radio Corporation, a Delaware corporation.
"Tax" means any tax, levy, impost, duty or other charge or withholding
of a similar nature (including any penalty or interest payable in
connection with any failure to pay or any delay in paying any of the
same).
"Transaction Document" means:
(a) the Finance Documents; and
(b) the Acquisition Documents.
"Unpaid Sum" means any sum due and payable but unpaid by an Obligor
under the Finance Documents.
"Utilisation" means a utilisation of the Facility.
"Utilisation Date" means the date on which the Loan is, on is to be
made.
"Utilisation Request" means a notice substantially in the form set out
in Schedule 2 (Requests).
1.2 Construction
(a) Unless a contrary indication appears, any reference in this
Agreement to:
(i) "acting in concert" has the meaning given to it in the Codes
on Takeovers and Mergers and Share Repurchases published
from time to time by the Securities and Futures Commission
of Hong Kong;
(ii) the "Lender", "Obligor" or any "Party" shall be construed so
as to include its successors in title, permitted assigns and
permitted transferees;
(iii) "assets" includes present and future properties, revenues
and rights of every description;
(iv) the "control" of one person (the "first person") by another
person (the "second person") or the first person being
"controlled" by the second person means that the second
person (whether directly or indirectly and whether by the
ownership of share capital, the possession of voting power,
contract or otherwise) has the power to appoint and/or
remove all or a majority of the members of the board of
directors or other governing body of the first person or
otherwise controls or has the power of control over the
affairs and policies of the first person;
(v) a "Finance Document" or any other agreement or instrument is
a reference to that Finance Document or other agreement or
instrument as amended or novated;
(vi) "indebtedness" includes any obligation (whether incurred as
principal or as surety) for the payment or repayment of
money, whether present or future, actual or contingent;
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 8
(vii) a "person" includes any person, firm company, corporation,
government, state or agency of a state or any association,
trust or partnership (whether or not having separate legal
personality) or two or more of the foregoing;
(viii) a "regulation" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law) of any governmental, intergovernmental or
supranational body, agency, department or regulatory,
self-regulatory or other authority or organisation;
(ix) a provision of law is a reference to that provision as
amended or re-enacted; and
(x) a time of day is a reference to Hong Kong time.
(b) Section, Clause and Schedule headings are for ease of reference
only.
(c) Unless a contrary indication appears, a term used in any other
Finance Document or in any notice or certificate given under or in
connection with any Finance Document has the same meaning in that
Finance Document, notice or certificate as in this Agreement.
(d) A Default (other than an Event of Default) is "continuing" if it
has not been remedied or waived and an Event of Default is
"continuing" if it has not been remedied or waived, provided that
in the case of any Event of Default arising under Clause 22.4
(Misrepresentation) by virtue of any inaccurate or misleading
information, any subsequent provision of accurate information
shall not constitute a remedy for such Event of Default.
(e) "$", "US$", "dollars" and "US Dollars" denote the lawful currency
of the United States of America, "HK$" and "HK Dollars" denote the
lawful currency of Hong Kong.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 9
SECTION 2
FACILITY
2. FACILITY
Subject to the terms of this Agreement, the Lender makes available to
the Borrower a term loan facility in an aggregate amount equal to the
Commitment.
3. PURPOSE
The Borrower shall apply all amounts borrowed by it under Facility
towards the financing the payment of the consideration payable by the
Borrower for the Acquisition pursuant to the Acquisition Documents.
4. CONDITIONS OF UTILISATION
4.1 Initial conditions precedent
The Borrower may not deliver a Utilisation Request unless the Lender has
received all of the documents and other evidence listed in Schedule 1
(Conditions precedent) in form and substance satisfactory to the Lender.
The Lender shall notify the Borrower promptly upon being so satisfied.
4.2 Further conditions precedent
The Lender will only be obliged to comply with Clause 5.4 (Availability
of Loan) if on the proposed Utilisation Date (prior to or simultaneously
with the advance of the Loan):
(a) the Lender has:
(i) received all of the documents and other evidence appearing
to comply with the requirements of and listed in Schedule 1
(Conditions precedent) (other than those already received
under Clause 4.1 (Initial conditions precedent)) in form and
substance satisfactory to the Lender and/or received
evidence satisfactory to it that all of such documents and
other evidence so complying with such requirements are held
in escrow (on terms satisfactory to the Lender) and will be
released to the Lender simultaneously with the making of the
Loan, or
(ii) (to the extent not so received) waived the requirement to
receive those;
(b) no Default is continuing or would result from the proposed Loan;
(c) the Repeating Representations to be made by each Obligor are true
in all material respects;
(d) the Lender has received evidence satisfactory to it that the
Borrower has issued the Convertible Debenture to the Seller no
later than the time of making of the Loan; and
(e) the Lender has received:
(i) the Acquisition Share Documents;
(ii) copies of the Representation Letters; and
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 10
(iii) a signed acknowledgment from the Seller in the form required
by the Assignment of Acquisition Agreement.
4.3 Post-completion undertaking
The Borrower shall, no later than 15 Business Days after the Acquisition
Completion Time, provide to the Lender evidence satisfactory to the
Lender (acting reasonably) that Form 13D and Form 3 have been filed by
the Borrower with the U.S. Securities and Exchange Commission.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 11
SECTION 3
UTILISATION
5. UTILISATION
5.1 Delivery of a Utilisation Request
The Borrower may utilise the Facility by delivery to the Lender of a
duly completed Utilisation Request not later than 12 noon three Business
Days before the Utilisation Date.
5.2 Completion of a Utilisation Request
(a) Each Utilisation Request is irrevocable and will not be regarded as
having been duly completed unless:
(i) the proposed Utilisation Date is a Business Day within the
Availability Period applicable to that Facility;
(ii) the currency and amount of the Utilisation comply with Clause 5.3
(Currency and amount);
(iii) the proposed Interest Period complies with Clause 9 (Interest
Periods); and
(iv) it specifies the accounts and banks to which the proceeds of the
Utilisation are to be credited provided that it specifies
instructions so that:
(A) the amount which is required to be paid to Seng Heng Bank
Ltd in order for Seng Heng Bank Ltd to release its Security
over the Acquisition Shares (as such amount confirmed in the
document accepted in satisfaction of paragraph 6(c) of
Schedule 1 (Conditions Precedent) is requested to be paid to
that bank; and
(B) the balance which is to be paid in accordance with
instructions from the Seller in order to fully satisfy the
consideration payable for the Acquisition Shares is
requested to be paid to the Seller.
(b) Only one Loan may be requested under the Facility.
5.3 Currency and amount
(a) The currency specified in a Utilisation Request must be US Dollars.
(b) The amount of the proposed Loan must be equal to the Commitment.
5.4 Availability of Loan
If the conditions set out in this Agreement have been met, the Lender
shall make the Loan available by the Utilisation Date through its
Facility Office.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 12
SECTION 4
REPAYMENT, PREPAYMENT AND CANCELLATION
6. REPAYMENT
6.1 Repayment of Loan
(a) The Borrower shall repay the Loan in full in one amount on the Repayment
Date.
(b) The Borrower may not reborrow any part of the Facility which is repaid
or pre-paid.
7. PREPAYMENT AND CANCELLATION
7.1 Illegality
If it becomes unlawful in any applicable jurisdiction for the Lender to
perform any of its obligations as contemplated by this Agreement or to
fund or maintain the Loan:
(a) the Lender shall promptly notify the Borrower upon becoming aware
of that event;
(b) upon the Lender notifying the Borrower, the Commitment will be
immediately cancelled; and
(c) the Borrower shall repay the Loan on the last day of the Interest
Period relating to the Loan occurring after the Lender has
notified the Borrower or, if earlier, the date specified by the
Lender in the notice delivered to the Borrower (being no earlier
than the last day of any applicable grace period permitted by
law).
7.2 Voluntary cancellation
If the Loan has not been drawn down by the close of business in Hong
Kong on the last day of the Availability Period, the Facility shall
automatically be cancelled on that date.
7.3 Voluntary prepayment of Loan
The Borrower may, if it gives the Lender not less than five Business
Days' prior notice, prepay the whole Loan on any Interest Payment Date.
7.4 Mandatory Prepayment of Net Sales Proceeds
(a) If a Sale occurs, the Borrower shall promptly notify the Lender.
(b) In this Clause 7.4, "Net Sales Proceeds" means the aggregate
amount of all cash (or, in the case of any non-cash consideration
including by way of set-off, the monetary value thereof) received
by or paid to the order of the Borrower as a result of or in
connection with a Sale after deducting all costs and expenses
properly incurred and payable in connection with that Sale.
(c) The Borrower shall prepay the Loan by an amount equal to the full
amount of the Net Sales Proceeds.
7.5 Mandatory Prepayment of LVR Adjustment
(a) The Borrower shall ensure that the Loan-to-value ratio shall not
at any time exceed 90 per cent.
(b) If the Loan-to-value ratio is at any time greater than 85 per
cent. but less than 90 per cent., the Borrower shall prepay,
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 13
within five Business Days, the Loan by an amount ("LVR Adjustment") that
is sufficient to ensure compliance with the undertaking under paragraph
(a) of Clause 7.5 (Mandatory Prepayment of LVR Adjustment).
7.6 Restrictions
(a) Any notice of cancellation or prepayment given by any Party under
this Clause 7 shall be irrevocable and, unless a contrary
indication appears in this Agreement, shall specify the date or
dates upon which the relevant cancellation or prepayment is to be
made and the amount of that cancellation or prepayment.
(b) Any prepayment under this Agreement shall be made together with
accrued interest on the amount prepaid and, subject to any Break
Costs payable under Clause 10.3 (Break Costs), without premium or
penalty.
(c) The Borrower shall not repay or prepay all or any part of the Loan
or cancel all or any part of the Commitment except at the times
and in the manner expressly provided for in this Agreement.
(d) No amount of the Commitment cancelled under this Agreement may be
subsequently reinstated.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 14
SECTION
COSTS OF UTILISATION
8. INTEREST
8.1 Calculation of interest
The rate of interest on the Loan for each Interest Period is the
percentage rate per annum which is the aggregate of the applicable:
(a) Margin; and
(b) LIBOR.
8.2 Payment of interest
The Borrower shall pay accrued interest on the Loan on each Interest
Payment Date.
8.3 Default interest
(a) If an Obligor fails to pay any amount payable by it under a
Finance Document on its due date, interest shall accrue on the
Unpaid Sum from the due date up to the date of actual payment
(both before and after judgment) at a rate which, subject to
paragraph (b) below, is the sum of two per cent. and the rate
which would have been payable if the Unpaid Sum had, during the
period of non-payment, constituted a Loan in the currency of the
Unpaid Sum for successive Interest Periods, each of a duration
selected by the Lender (acting reasonably). Any interest accruing
under this Clause 8.3 shall be immediately payable by the Obligor
on demand by the Lender.
(b) If any Unpaid Sum consists of all or part of the Loan which became
due on a day which was not the last day of an Interest Period
relating to that Loan:
(i) the first Interest Period for that Unpaid Sum shall have a
duration equal to the unexpired portion of the current
Interest Period relating to that Loan; and
(ii) the rate of interest applying to the Unpaid Sum during that
first Interest Period shall be the sum of two per cent. and
the rate which would have applied if the Unpaid Sum had not
become due.
(c) Default interest (if unpaid) arising on an Unpaid Sum will be
compounded with the unpaid sum at the end of each Interest Period
applicable to that Unpaid Sum but will remain immediately due and
payable.
8.4 Notification of rates of interest
The Lender shall promptly notify the Borrower of the determination of a
rate of interest under this Agreement.
9. INTEREST PERIODS
9.1 Selection of Interest Periods
(a) The Borrower may select an Interest Period for the Loan in the
Utilisation Request.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 15
(b) Subject to this Clause , the Borrower may select an Interest Period of
one week, two weeks, one Month, two Months or three Months or any other
period agreed between the Borrower and the Lender.
(c) An Interest Period for the Loan shall not extend beyond the Repayment
Date.
(d) Each Interest Period for the Loan shall start on the Utilisation Date or
(if already made) on the last day of its preceding Interest Period.
9.2 Non-Business Days
If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period will instead end on the next Business
Day in that calendar month (if there is one) or the preceding Business
Day (if there is not).
9.3 Division of Loan
The Loan shall not be divided.
10. CHANGES TO THE CALCULATION OF INTEREST
10.1 Market disruption
(a) If a Market Disruption Event occurs in relation to the Loan for any
Interest Period, then the rate of interest on that Loan for the Interest
Period shall be the rate per annum which is the sum of:
(i) the Margin; and
(ii) the rate notified to the Borrower by the Lender as soon as
practicable and in any event before interest is due to be paid in
respect of that Interest Period, to be that which expresses as a
percentage rate per annum the cost to the Lender of funding that
Loan from whatever source it may reasonably select.
(b) In this Agreement "Market Disruption Event" means:
(i) at or about noon on the Quotation Day for the relevant Interest
Period the Screen Rate is not available and the Lender is unable
to provide a quotation to determine LIBOR for the relevant
currency and Interest Period; or
(ii) before close of business in Hong Kong or London on the Quotation
Day for the relevant Interest Period, the Borrower receives
notifications from the Lender that the cost to it of obtaining
matching deposits in the Relevant Interbank Market would be in
excess of LIBOR.
10.2 Alternative basis of interest or funding
(a) If a Market Disruption Event occurs and the Lender or the Borrower so
requires, the Lender and the Borrower shall enter into negotiations (for
a period of not more than thirty days) with a view to agreeing a
substitute basis for determining the rate of interest.
(b) Any alternative basis agreed pursuant to paragraph (a) above shall, with
the prior consent of the Lender and the Borrower, be binding on all
Parties.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 16
10.3 Break Costs
(a) The Borrower shall, within three Business Days of demand by the Lender,
pay to the Lender its Break Costs attributable to all or any part of the
Loan or Unpaid Sum being paid by the Borrower on a day other than the
last day of an Interest Period for that Loan or Unpaid Sum.
(b) The Lender shall, as soon as reasonably practicable after a demand by
the Borrower, provide a certificate confirming the amount of its Break
Costs for any Interest Period in which they accrue.
11. UP-FRONT FEES
The Borrower shall pay to the Lender an up-front fee of US$125,000
within one Business Day of the date of this Agreement.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 17
SECTION 6
ADDITIONAL PAYMENT OBLIGATIONS
12. TAX GROSS UP AND INDEMNITIES
12.1 Definitions
(a) In this Agreement:
"Tax Credit" means a credit against, relief or remission for, or
repayment of any Tax.
"Tax Deduction" means a deduction or withholding for or on account of
Tax from a payment under a Finance Document.
"Tax Payment" means either the increase in a payment made by an Obligor
to the Lender under Clause 12.2 (Tax gross-up) or a payment under Clause
12.3 (Tax indemnity).
(b) Unless a contrary indication appears, in this Clause 12 a reference to
"determines" or "determined" means a determination made in the absolute
discretion of the person making the determination.
12.2 Tax gross-up
(a) All payments to be made by an Obligor to the Lender under or in
connection with a Finance Document shall be made free and clear of and
without any Tax Deduction, unless such Obligor is required to make a Tax
Deduction, in which case the sum payable by such Obligor shall be
increased to the extent necessary to ensure that the Lender receives a
sum net of any Tax Deduction, equal to the sum which it would have
received if no Tax Deduction had been required.
(b) The Borrower shall promptly upon becoming aware that an Obligor must
make a Tax Deduction (or that there is any change in the rate or the
basis of a Tax Deduction) notify the Lender accordingly. Similarly, the
Lender shall notify the Borrower on becoming so aware in respect of a
payment payable to the Lender.
(c) If an Obligor is required to make a Tax Deduction, that Obligor shall
make that Tax Deduction and any payment required in connection with that
Tax Deduction within the time allowed and in the minimum amount required
by law.
(d) Within thirty days of making either a Tax Deduction or any payment
required in connection with that Tax Deduction, the Obligor making that
Tax Deduction shall deliver to the Lender evidence reasonably
satisfactory to the Lender that the Tax Deduction has been made or (as
applicable) any appropriate payment has been paid to the relevant taxing
authority.
12.3 Tax indemnity
(a) Without prejudice to Clause 12.2 (Tax gross-up), if the Lender is
required to make any payment of or on account of Tax on or in relation
to any sum received or receivable under or in connection with the
Finance Documents (including any sum deemed for purposes of Tax to be
received or receivable by the Lender whether or not actually received or
receivable) or if any liability in respect of any such payment is
asserted, imposed, levied or assessed against the Lender, the Borrower
shall (within three Business Days of demand by the Lender) promptly
indemnify the
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 18
Lender an amount equal to the loss or liability which the Lender
determines will be or has been (directly or directly) suffered for or on
account of Tax by it in respect of a Finance Document, together with any
interest, penalties, costs and expenses payable or incurred in
connection therewith.
(b) Paragraph (a) above shall not apply:
(i) with respect to any Tax imposed:
(A) by the jurisdiction in which the Lender is incorporated; or
(B) by the jurisdiction in which its Facility Office is located,
which is calculated by reference to the net income actually
received or receivable (but, for the avoidance of doubt, not
including any sum deemed for purposes of Tax to be received or
receivable by the Lender but not actually received or receivable)
by the Lender; or
(ii) to the extent a loss, liability or cost is compensated for by an
increased payment under Clause 12.2 (Tax gross-up).
(c) The Lender making, or intending to make, a claim under paragraph (a)
above shall promptly notify the Borrower of the event which will give,
or has given, rise to the claim.
12.4 Tax Credit
If an Obligor makes a Tax Payment and the Lender determines that:
(a) a Tax Credit is attributable either to an increased payment of
which that Tax Payment forms part or to that Tax Payment; and
(b) the Lender has obtained, utilised and fully retained that Tax
Credit on an affiliated group basis,
the Lender shall pay an amount to the Obligor which the Lender
determines will leave it (after that payment) in the same after-Tax
position as it would have been in had the Tax Payment not been required
to be made by the Obligor.
12.5 Stamp taxes
The Borrower shall pay and, within three Business Days of demand,
indemnify the Lender against any cost, loss or liability the Lender
incurs in relation to all stamp duty, registration and other similar
Taxes payable in respect of any Finance Document.
12.6 Indirect Tax
(a) All consideration expressed to be payable under a Finance Document by
any Party to the Lender shall be deemed to be exclusive of any Indirect
Tax. If any Indirect Tax is chargeable on any supply made by the Lender
to any Party in connection with a Finance Document, that Party shall pay
to the Lender (in addition to and at the same time as paying the
consideration) an amount equal to the amount of the Indirect Tax.
(b) Where a Finance Document requires any Party to reimburse the Lender for
any costs or expenses, that Party shall also at the same time pay and
indemnify the Lender against all
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 19
Indirect Tax incurred by the Lender in respect of the costs or expenses
except to the extent that the Lender determines that it is entitled to
credit or repayment in respect of the Indirect Tax.
13. INCREASED COSTS
13.1 Increased costs
(a) Subject to Clause 13.3 (Exceptions) the Borrower shall, within three
Business Days of a demand by the Lender, pay for the account of the
Lender the amount of any Increased Costs incurred by the Lender or any
of its Affiliates as a result of (i) the introduction of or any change
in (or in the interpretation, administration or application of) any law
or regulation or (ii) compliance with any law or regulation made after
the date of this Agreement. The terms "law" and "regulation" in this
paragraph (a) shall include, without limitation, any law or regulation
concerning capital adequacy, prudential limits, liquidity, reserve
assets or Tax.
(b) In this Agreement "Increased Costs" means:
(i) a reduction in the rate of return from the Facility or on the
Lender's (or its Affiliate's) overall capital (including, without
limitation, as a result of any reduction in the rate of return on
capital brought about by more capital being required to be
allocated by the Lender or one of its Affiliates);
(ii) an additional or increased cost; or
(iii) a reduction of any amount due and payable under any Finance
Document,
which is incurred or suffered by the Lender or any of its Affiliates to
the extent that it is attributable to the Lender having entered into its
Commitment or funding or performing its obligations under any Finance
Document.
13.2 Increased cost claims
(a) If the Lender intends to make a claim pursuant to Clause 13.1 (Increased
costs) shall notify the Borrower of the event giving rise to the claim.
(b) The Lender shall, as soon as practicable after a demand by the Borrower,
provide a certificate confirming the amount of its Increased Costs.
13.3 Exceptions
(a) Clause 13.1 (Increased costs) does not apply to the extent any Increased
Cost is:
(i) attributable to a Tax Deduction required by law to be made by an
Obligor;
(ii) compensated for by Clause 12.3 (Tax indemnity) (or would have been
compensated for under Clause 12.3 (Tax indemnity) but was not so
compensated solely because any of the exclusions in paragraph (b)
of Clause 12.3 (Tax indemnity) applied); or
(iii) attributable to the wilful breach by the Lender or its Affiliates
of any law or regulation.
(b) In this Clause 13.3, a reference to a "Tax Deduction" has the same
meaning given to the term in Clause 12.1 (Definitions).
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 20
14. OTHER INDEMNITIES
14.1 Currency indemnity
(a) If any sum due from an Obligor under the Finance Documents (a "Sum"), or
any order, judgment or award given or made in relation to a Sum, has to
be converted from the currency (the "First Currency") in which that Sum
is payable into another currency (the "Second Currency") for the purpose
of:
(i) making or filing a claim or proof against that Obligor; or
(ii) obtaining or enforcing an order, judgment or award in relation to
any litigation or arbitration proceedings,
that Obligor shall as an independent obligation, within three Business
Days of demand, indemnify the Lender against any cost, loss or liability
arising out of or as a result of the conversion including any
discrepancy between (A) the rate of exchange used to convert that Sum
from the First Currency into the Second Currency and (B) the rate or
rates of exchange available to that person at the time of its receipt of
that Sum.
(b) Each Obligor waives any right it may have in any jurisdiction to pay any
amount under the Finance Documents in a currency or currency unit other
than that in which it is expressed to be payable.
14.2 Other indemnities
Each Obligor shall, within three Business Days of demand, indemnify the
Lender against any cost, loss or liability incurred by the Lender as a
result of:
(a) the occurrence of any Event of Default;
(b) any enquiry, investigation, subpoena (or similar order) or
litigation with respect to any Obligor or with respect to the
transactions contemplated or financed under the Finance Documents;
(c) a failure by an Obligor to pay any amount due under a Finance
Document on its due date;
(d) funding, or making arrangements to fund, the Loan requested by the
Borrower in a Utilisation Request but not made by reason of the
operation of any one or more of the provisions of this Agreement
(other than by reason of default or negligence by the Lender
alone), including where conditions to funding have not been
fulfilled either by the time required under this Agreement or by
any later time specified by the Lender; or
(e) the Loan not being prepaid in accordance with a notice of
prepayment given by the Borrower.
14.3 Indemnity to the Lender
The Borrower shall promptly indemnify the Lender against any cost, loss
or liability incurred by the Lender (acting reasonably) as a result of:
(a) investigating any event which it reasonably believes is a Default;
or
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 21
(b) acting or relying on any notice, request or instruction which it
reasonably believes to be genuine, correct and appropriately
authorised.
15. MITIGATION BY THE LENDER
15.1 Mitigation
(a) The Lender shall, in consultation with the Borrower, take all reasonable
steps to mitigate any circumstances which arise and which would result
in any amount becoming payable under or pursuant to, or cancelled
pursuant to, any of Clause 7.1 (Illegality), Clause 12 (Tax gross up and
indemnities) (other than Clause 12.6 (Indirect Tax)) or Clause 13
(Increased costs) including (but not limited to) transferring its rights
and obligations under the Finance Documents to another Affiliate or
Facility Office.
(b) Paragraph (a) above does not in any way limit the obligations of any
Obligor under the Finance Documents.
15.2 Limitation of liability
(a) The Borrower shall indemnify the Lender for all costs and expenses
reasonably incurred by the Lender as a result of steps taken by it under
Clause 15.1 (Mitigation).
(b) The Lender is not obliged to take any steps under Clause 15.1 () if, in
its opinion (acting reasonably), to do so might be prejudicial to it.
16. COSTS AND EXPENSES
16.1 Transaction expenses
The Borrower shall, within three Business Days of demand pay the Lender
the amount of all costs and expenses (including legal fees) reasonably
incurred by any of them in connection with the negotiation, preparation,
printing and execution of:
(a) this Agreement and any other documents referred to in this
Agreement; and
(b) any other Finance Documents executed after the date of this
Agreement. 16.2 Amendment costs If (a) an Obligor requests an
amendment, waiver or consent or (b) an amendment is required
pursuant to Clause 26.8 (Change of currency), the Borrower shall,
within three Business Days of demand, reimburse the Lender for the
amount of all costs and expenses (including legal fees) reasonably
incurred by the Lender in responding to, evaluating, negotiating
or complying with that request or requirement.
16.3 Enforcement costs
The Borrower shall, within three Business Days of demand, pay to the
Lender the amount of all costs and expenses (including legal fees)
incurred by the Lender in connection with the enforcement of, or the
preservation of any rights under, any Finance Document or in
connection with anything referred to in Clause 14.2(c) (Other
indemnities).
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 22
16.4 Transaction indemnity
The Borrower undertakes to pay the Lender within three Business Days of
demand an amount equal to any liability, damages, cost, loss or expense
(including legal fees, costs and expenses) directly incurred by the
Lender or any of its Affiliates or any of its (or its Affiliates')
directors, officers, employees or agents (each a "Relevant Finance
Party") arising out of, in connection with or based on:
(a) the Acquisition (whether or not made);
(b) any Relevant Finance Party financing or refinancing, or agreeing
to finance or refinance, any acquisition of any shares or interest
in Target by any Group Member or the Borrower or any person acting
in concert with any Group Member or the Borrower; or
(c) the use of proceeds of the Loan,
(d) except to the extent that or those liability, damages, cost, loss
or expense:
(e) is or are resulted primarily from the gross negligence or wilful
misconduct of that Relevant Finance Party;
(f) relate to fees payable under Clause 11 (Up-front Fees) or the cost
of work to which those fees relate or claims for loss of profits
by the Lender under the Finance Documents; or
(g) relate to costs and expenses of the type payable under Clause 16.1
(Transaction expenses).
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 23
SECTION 7
GUARANTEE
17. GUARANTEE AND INDEMNITY
17.1 Guarantee and indemnity
(a) guarantees to the Lender punctual performance by the Borrower of all of
the Borrower's obligations under the Finance Documents;
(b) undertakes with the Lender that whenever the Borrower does not pay any
amount when due under or in connection with any Finance Document, the
Guarantor shall immediately on demand pay that amount as if it was the
principal obligor; and
(c) indemnifies the Lender immediately on demand against any cost, loss or
liability suffered by the Lender if any obligation guaranteed by it (or
anything which would have been an obligation if not unenforceable,
invalid or illegal) is or becomes unenforceable, invalid or illegal. The
amount of the cost, loss or liability shall be equal to the amount which
the Lender would otherwise have been entitled to recover.
17.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the ultimate
balance of sums payable by the Borrower under the Finance Documents,
regardless of any intermediate payment or discharge in whole or in part.
17.3 Reinstatement
If any payment to or any discharge given by the Lender (whether in
respect of the obligations of any Obligor or any security for those
obligations or otherwise) is avoided or reduced for any reason
including, without limitation, as a result of insolvency, breach of
fiduciary or statutory duties or any similar event:
(a) the liability of the Borrower shall continue as if the payment,
discharge, avoidance or reduction had not occurred; and
(b) the Lender shall be entitled to recover the value or amount of
that security or payment from the Borrower, as if the payment,
discharge, avoidance or reduction had not occurred.
17.4 Waiver of defences
The obligations of the Guarantor under this Clause 17 will not be
affected by an act, omission, matter or thing which, but for this Clause
17, would reduce, release or prejudice any of its obligations under this
Clause 17 (without limitation and whether or not known to it or the
Lender) including:
(a) any time, waiver or consent granted to, or composition with, the
Borrower or other person;
(b) the release of the Borrower or any other person under the terms of
any composition or arrangement with any creditor of any member of
the Group;
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 24
(c) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, execute, take up or enforce,
any rights against, or security over assets of, the Borrower or
other person or any non-presentation or non-observance of any
formality or other requirement in respect of any instrument or any
failure to realise the full value of any security;
(d) any incapacity or lack of power, authority or legal personality of
or dissolution or change in the members or status of the Borrower
or any other person;
(e) any amendment (however fundamental) or replacement of a Finance
Document or any other document or security;
(f) any unenforceability, illegality or invalidity of any obligation
of any person under any Finance Document or any other document or
security;
(g) any insolvency or similar proceedings; or
(h) this Agreement or any other Finance Document not being executed by
or binding against any party.
17.5 Immediate recourse
The Guarantor waives any right it may have of first requiring the Lender
(or any trustee or agent on its behalf) to proceed against or enforce
any other rights or security or claim payment from any person before
claiming from the Guarantor under this Clause 17. This waiver applies
irrespective of any law or any provision of a Finance Document to the
contrary.
17.6 Appropriations
Until all amounts which may be or become payable by the Borrower under
or in connection with the Finance Documents have been irrevocably paid
in full, the Lender (or any trustee or agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by the Lender (or any trustee or agent on
its behalf) in respect of those amounts, or apply and enforce the
same in such manner and order as it sees fit (whether against
those amounts or otherwise) and the Guarantor shall not be
entitled to the benefit of the same; and
(b) hold in an interest-bearing suspense account any moneys received
from the Guarantor or on account of the Guarantor's liability
under this Clause 17.
17.7 Deferral of Guarantors' rights
Until all amounts which may be or become payable by the Borrower under
or in connection with the Finance Documents have been irrevocably paid
in full and unless the Lender otherwise directs, the Guarantor will not
exercise any rights which it may have by reason of performance by it of
its obligations under the Finance Documents:
(a) to be indemnified by the Borrower;
(b) to claim any contribution from any other guarantor of or provider
of security for the Borrower's obligations under the Finance
Documents; and/or
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 25
(c) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Lender under the
Finance Documents or of any other guarantee or security taken
pursuant to, or in connection with, the Finance Documents by the
Lender.
17.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by any
other guarantee or security now or subsequently held by the Lender.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 26
SECTION 8
REPRESENTATIONS, UNDERTAKINGS AND EVENTS OF DEFAULT
18. REPRESENTATIONS
(a) Each Obligor makes the representations and warranties set out in this
Clause 18 to the Lender on the date of this Agreement.
(b) For the representations and warranties made on the date of this
Agreement:
(i) references to Group Members or an Obligor exclude Target; and
(ii) references to Subsidiaries exclude Target.
(c) For the representations and warranties made on the Utilisation Date
and/or at the Acquisition Completion Time:
(i) references to the Group include Target; and
(ii) references to Subsidiaries include Target and its Subsidiaries
(if any), except that for the purposes of the representations and
warranties made on the Utilisation Date and/or at the Acquisition
Completion Time under Clauses 18.19 (Taxes), any reference therein to
the Group or Subsidiaries shall be deemed not to include Target.
18.1 Status
(a) It is a corporation, duly incorporated and validly existing under the
law of its jurisdiction of incorporation.
(b) It and each of its Subsidiaries has the power to own its assets and
carry on its business as it is being conducted.
18.2 Binding obligations
The obligations expressed to be assumed by it in each Transaction
Document are legal, valid, binding and enforceable, subject to:
(a) any general principles of law limiting its obligations which are
specifically referred to in any legal opinion accepted pursuant to
Clause 4 (Conditions of Utilisation); or
(b) in the case of any Security Document, the Security Perfection
Requirements.
18.3 Non-conflict with other obligations
None of the execution and delivery of this Agreement by it, the
performance of its obligations under this Agreement or the consummation
of the transactions contemplated by this Agreement will:
(a) violate, conflict with or result in any breach of any provision of
the certificate or articles of incorporation or bylaws (or
equivalent constitutional documents) of any member of the Group;
(b) violate, conflict with, or result in a violation or breach of, or
constitute a default under the terms, conditions or provisions of,
any material note, bond, mortgage, indenture or deed
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 27
of trust or any material license, lease or agreement to which a
member of the Group is a party; or
(c) violate any order, writ, judgment, injunction, decree, statute,
rule or regulation of any court or other Governmental Agency
applicable to a member of the Group or of a Stock Exchange,
nor (except as provided in any Security Document) result in the
existence of, or oblige it to create, any Security over any of its
assets.
18.4 Consents and Approvals
No filing or registration with, no notice to and no permit,
authorization, consent or approval of, any third party or any
Governmental Agency is or will be necessary for the consummation of the
Acquisition other than (a) those already obtained that have been
disclosed to the Lender, and (b) any other consents, approvals,
authorizations, permits, filings or notifications which, individually or
in the aggregate, are not reasonably likely to have a Material Adverse
Effect.
18.5 Power and authority
As of the Acquisition Completion Time, it has the power to enter into,
perform and deliver, and has taken all necessary action to authorise its
entry into, performance and delivery of, the Transaction Documents to
which it is a party and the transactions contemplated by those
Transaction Documents.
18.6 Validity and admissibility in evidence
All Authorisations required or desirable:
(a) to enable it lawfully to enter into, exercise its rights and
comply with its obligations in the Transaction Documents to which
it is a party;
(b) to make the Transaction Documents to which it is a party
admissible in evidence in its jurisdiction of incorporation; and
(c) to enable it to create the Security to be created by it pursuant
to any Security Document and to ensure that such Security has the
priority and ranking it is expressed to have,
have been obtained or effected and are in full force and effect except:
(i) for any applicable Security Perfection Requirements that are
yet to be complied with in accordance with the Finance
Documents; and
(ii) as specifically referred to in any legal opinion accepted
pursuant to Clause 4 (Conditions of Utilisation).
18.7 Governing law and enforcement
(a) The choice of Hong Kong law as the governing law of the Finance
Documents will be recognised and enforced in its jurisdiction of
incorporation.
(b) Any judgment obtained in Hong Kong or any jurisdiction referred to in
Clause 35 (Enforcement) in relation to a Finance Document will be
recognised and enforced in its jurisdiction of incorporation.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 28
18.8 Deduction of Tax
It is not required under the law applicable where it is incorporated or
resident or at its address for the purpose of this Agreement to make any
deduction for or on account of Tax from any payment it may make under
any Transaction Document.
18.9 No filing or stamp taxes
Under the law of its jurisdiction of incorporation it is not necessary
that the Transaction Documents be filed, recorded or enrolled with any
court or other authority in that jurisdiction or that any stamp,
registration or similar tax be paid on or in relation to the Transaction
Documents or the transactions contemplated by the Transaction Documents.
18.10 No default
(a) No Event of Default is continuing or might reasonably be expected to
result from the making of any Utilisation.
(b) No other event or circumstance is outstanding which constitutes a
default under any other agreement or instrument which is binding on it
or any of its Subsidiaries or to which its (or any of its Subsidiaries')
assets are subject which might reasonably be expected to have a Material
Adverse Effect.
18.11 No misleading information
(a) Any factual information provided by or on behalf of any member of the
Group was true and accurate in all material respects as at the date it
was provided or as at the date (if any) at which it is stated.
(b) Any financial projections provided by or on behalf of an Obligor were
prepared on the basis of recent historical information and on the basis
of reasonable assumptions.
(c) Nothing has occurred or been omitted from the information so provided
and no information has been given or withheld that results in the
information provided by or on behalf of an Obligor being untrue or
misleading in any material respect.
18.12 Financial statements
(a) Its Original Financial Statements were prepared in accordance with GAAP
consistently applied.
(b) Its Original Financial Statements give a true and fair view of its
financial condition and operations (consolidated in the case of the
Group) as at the end of and for the relevant financial year.
(c) There has been no material adverse change in its condition (financial or
otherwise), assets, operations, prospects or business (or the
consolidated condition (financial or otherwise), assets, operations,
prospects or business of the Group (excluding Target) in the case of the
Guarantor) since 31 December 2004.
(d) There has been no material adverse change in the consolidated condition
(financial or otherwise), assets, operations, prospects or business of
the Group (including Target) in the case of the Guarantor since 31 March
2005.
18.13 Pari passu ranking
(a) Subject to the requirements specified at the end of Clause 18.6
(Validity and admissibility in evidence), each Security Document creates
(or, once entered into, will create) in favour of the
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 29
Lender the Security which it is expressed to create with the ranking and
priority it is expressed to have.
(b) Without limiting paragraph (a) above, its payment obligations under the
Finance Documents rank at least pari passu with the claims of all its
other unsecured and unsubordinated creditors, except for obligations
mandatorily preferred by law applying to companies generally.
18.14 No proceedings pending or threatened
No litigation, arbitration, investigative or administrative proceedings
of or before any court, arbitral body or agency which, if adversely
determined, might reasonably be expected to have a Material Adverse
Effect have (to the best of its knowledge and belief) been started or
threatened against it or any of its Subsidiaries.
18.15 Title
It has good and marketable title to the assets expressed to subject to
the Security created by it pursuant to each Security Document, free from
all Security except the Security created pursuant to, or permitted by,
the Finance Documents.
18.16 Authorised signatories
Each person specified as its authorised signatory in any document
accepted by the Lender pursuant to paragraph 1(c) of Schedule 1
(Conditions precedent) or delivered to the Lender pursuant to paragraph
(d) of Clause 19.4 (Information: miscellaneous) is, subject to any
notice to the contrary delivered to the Lender pursuant to Clause 19.4,
authorised to sign all Utilisation Requests (in the case of the Borrower
only) and other notices on its behalf under or in connection with the
Finance Documents.
18.17 Acquisition Shares
(a) The Acquisition Shares represent at least 10,000,000 and 37 per cent. of
the issued, outstanding and allotted share capital of and ownership
interests in Target and all of the Acquisition Shares are duly
authorized, validly issued, fully paid and non-assessable. There are no
outstanding options, warrants or other securities convertible or
exchangeable into shares or ownership interests in Target or any
obligation by Target to issue additional shares of or ownership
interests in Target which have been exercised as at the Acquisition
Completion Time.
(b) As of the Acquisition Completion Time:
(i) the Borrower owns the Acquisition Shares, legally and
beneficially, free and clear of any Security (other than Security
created under the Security Documents); and
(ii) there is no Security (other than Security created under the
Security Documents) or other third party rights over or affecting
the Acquisition Shares and there is no agreement to give or create
any such Security or right and to its knowledge, no person has
claimed to be entitled to any such Security or right.
(c) No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the allotment, issue, sale or
transfer of any share in the capital of any Group Member under any
option or other agreement (including conversion rights and rights of
pre-emption) other than:
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 30
(i) any such rights in respect of any share in the capital of Target;
and
(ii) the rights of the Seller under the Convertible Debenture.
18.18 Solvency
Neither any Obligor, nor any Group Member, Target or any of their
respective Subsidiaries is unable to pay its debts as and when such
debts come due.
18.19 Taxes
(a) Each of the Obligors and the Group Members has timely filed (taking into
account all available extensions) all Tax Returns concerning Taxes (or
such Tax Returns have been filed on behalf of it) required to be filed
by it by applicable law during the past five (5) years and has paid all
amounts due in respect of Taxes (whether or not actually shown on such
Tax Returns) other than amounts due which are being or were disputed in
good faith by it and for which it has made adequate reserve on its
books. All such Tax Returns are true, correct and complete in all
material respects.
(b) On or prior to the Acquisition Completion Time, no Tax audits or
administrative or judicial Tax proceedings are pending or being
conducted with respect to an Obligor or Group Member and at any time
after the Acquisition Completion Time, no such audits or proceedings are
pending or being conducted except to the extent that any such audits or
proceedings would not, and would not reasonably be expected to, have a
Material Adverse Effect.
18.20 No Unlawful Financial Assistance
None of the Transaction Documents, and none of the transactions
contemplated by any of the Transaction Documents, contravenes any of the
provisions of Sections 47A to 47E and 48 of the Companies Ordinance
(Cap.32) of the Laws of Hong Kong, or any provisions of any applicable
laws or regulations in any jurisdiction concerning financial assistance
by any company or any of its Subsidiaries for the acquisition of or
subscription for shares of or ownership interests in such company or
concerning the protection of shareholders' capital.
18.21 The Acquisition Documents
The Acquisition Documents:
(a) contain all the terms of the agreements and arrangements between
Target and the Borrower in relation to investment (whether by way
of equity, debt or otherwise) in connection with the Acquisition
and there are no other agreements or other documents relating or
relevant thereto or the arrangements contemplated thereby which
are not included therein or which have not otherwise been
disclosed to the Lender prior to the date hereof;
(b) are in full force and effect; and
(c) have not been amended or waived (in whole or in part), save in
each case for amendments or waivers which are not and might not be
adverse to the interests of the Lender.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 31
18.22 Repetition
The Repeating Representations are deemed to be made by each Obligor by
reference to the facts and circumstances then existing on the date of
each Utilisation Request and the first day of each Interest Period.
19. INFORMATION UNDERTAKINGS
The undertakings in this Clause 19 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance
Documents or any Commitment is in force.
19.1 Financial statements
The Guarantor shall supply to the Lender as soon as the same become
available, but in any event within 90 days after the end of each half of
each of its financial years its consolidated financial statements for
that financial half year.
19.2 Compliance Certificate
(a) The Guarantor shall supply to the Lender, with each set of financial
statements delivered pursuant to Clause 19.1 (), a Compliance
Certificate setting out (in reasonable detail) computations as to
compliance with Clause 20 (Financial covenants) as at the date as at
which or, as applicable, during the period in respect of which those
financial statements were drawn up.
(b) Each Compliance Certificate shall be signed by two directors of the
Guarantor and, in the case of financial statements delivered pursuant to
Clause 19.1 (Financial statements), shall be reported on by the auditors
for the Guarantor in the form specified in Schedule 3 (Form of
Compliance Certificate).
19.3 Requirements as to financial statements
(a) Each set of financial statements received by the Lender pursuant to
Clause 19.1 (Financial statements) shall be certified by a director of
the Guarantor as giving a true and fair view of its (or, as the case may
be, the Group's consolidated) financial condition and operations as at
the end of and for the period in relation to which those financial
statements were drawn up.
(b) The Guarantor shall procure that each set of financial statements of the
Guarantor received pursuant to Clause 19.1 (Financial statements) is
prepared using GAAP, accounting practices and financial reference
periods consistent with those applied in the preparation of the Original
Financial Statements unless, in relation to any set of financial
statements, it notifies the Lender that there has been a change in GAAP,
the accounting practices or reference periods and the Guarantor's
auditors deliver to the Lender:
(a) a description of any change necessary for those financial
statements to reflect the GAAP, accounting practices and reference
periods upon which the Original Financial Statements were
prepared; and
(b) sufficient information, in form and substance as may be reasonably
required by the Lender, to enable the Lender to determine whether
Clause 20 (Financial covenants) has been complied with and make an
accurate comparison between the financial position indicated in
those financial statements and the Original Financial Statements.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 32
Any reference in this Agreement to those financial statements shall be
construed as a reference to those financial statements as adjusted to
reflect the basis upon which the Original Financial Statements were
prepared.
19.4 Information: miscellaneous
(a) The Borrower shall supply (or procure to be supplied) to the Lender:
(i) promptly upon becoming aware of them, the details of any
litigation, arbitration, investigative or administrative
proceedings which are current, threatened or pending against any
member of the Group, and which might, if adversely determined,
have a Material Adverse Effect;
(ii) promptly, such further information regarding the Acquisition or
financial condition, business and operations of Target or any
member of the Group as the Lender may reasonably request; and
(iii) promptly, notice of any change in the authorised signatories of
the Borrower signed by a Director or the secretary of the
Borrower, a specimen whose signature has previously been provided
to the Lender, accompanied (where relevant) by a specimen
signature of each new signatory,
(b) Each Obligor shall supply to the Lender such information as it
reasonably requires for the performance of its rights and obligations
under the Finance Documents.
19.5 Notification of default
(a) Each Obligor shall notify the Lender of any Default (and the steps, if
any, being taken to remedy it) promptly upon becoming aware of its
occurrence (unless that Obligor is aware that a notification has already
been provided by another Obligor).
(b) Promptly upon a request by the Lender, the Borrower shall supply to the
Lender a certificate signed by two of its directors or senior officers
on its behalf certifying that no Default is continuing (or if a Default
is continuing, specifying the Default and the steps, if any, being taken
to remedy it).
20. FINANCIAL COVENANTS
20.1 Financial condition
The Guarantor shall ensure that:
(a) Consolidated Tangible Net Worth shall at all times exceed
HK$1,000,000,000;
(b) Consolidated Net Debt to Consolidated Tangible Net Worth shall not
at any time exceed 0.85:1;
(c) Consolidated Current Assets to Consolidated Current Liabilities
shall at all times exceed 0.9:1; and
(d) the ratio of EBITDA to Interest Expense for any Relevant Period
shall at all times exceed 4:1.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 33
20.2 Financial covenant calculations
Borrowings, EBITDA, Interest Expense and Net Worth shall be calculated
and interpreted on a consolidated basis in accordance with the GAAP
applicable to the Original Financial Statements of the Guarantor and
shall be expressed in HK Dollars.
20.3 Definitions for financial ratios
In this Clause 20.3:
"Cash" means, at any time, cash at bank credited to an account in the
name of the Guarantor with a reputable financial institution and to
which the Guarantor is alone beneficially entitled and for so long as
(a) that cash is repayable on demand; (b) repayment of that cash is not
contingent on the prior discharge of any other indebtedness of any Group
Member or of any other person whatsoever or on the satisfaction of any
other condition; (c) there is no Security over that cash.
"Cash Equivalent Investments" means investments that are short term
investments (excluding equity investments) which are readily convertible
into cash without incurring any significant premium or penalty.
"Consolidated Current Assets" means, at any time, the aggregate at such
time of:
(a) the cash, stocks, marketable securities and prepayments of the
Group;
(b) the debtors and deposits of the Group payable on demand or within
one year from the date of computation; and
(c) any other assets of the Group which would, in accordance with
generally accepted accounting standards in Hong Kong (as used in
the Group's then most recent audited annual financial statements)
be considered as current assets.
"Consolidated Current Liabilities" at any time means the aggregate at
such time of the obligations of the Group to pay money on demand or
within one year from the date of computation and any other obligations
of the Group which would, in accordance with generally accepted
accounting standards in the Hong Kong (as used in the Group's then most
recent audited annual financial statements), be considered as a current
liability.
"Consolidated Tangible Net Worth" means at any time the aggregate of the
amounts paid up or credited as paid up on the issued ordinary share
capital of the Guarantor and the amount standing to the credit of the
reserves of the Group, including any amount credited to the share
premium account,
but deducting:
(a) any debit balance on the consolidated profit and loss account of
the Group;
(b) (to the extent included) any amount shown in respect of goodwill
(including goodwill arising only on consolidation) or other
intangible assets of the Group (including, without limitation,
brands, trademarks and patents);
(c) any amount in respect of interests of non-Group Members in Group
Subsidiaries;
(d) (to the extent included) any provision for deferred taxation or
deferred development costs;
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 34
(e) (to the extent included) any amounts arising from an upward
revaluation of assets made at any time after 31 December 2004; and
(f) any amount in respect of any dividend or distribution declared,
recommended or made by the any member of the Group and to the
extent such distribution is not provided for in the most recent
financial statements,
and so that no amount shall be included or excluded more than once.
"Consolidated Net Debt" means at any time the aggregate amount of all
obligations of the Group for or in respect of Financial Indebtedness
but:
(a) excluding any such obligations to any other member of the Group;
and
(b) deducting the aggregate amount of freely available Cash and Cash
Equivalent Investments held by the Group at such time,
and so that no amount shall be included or excluded more than once.
"EBITDA" means, in relation to any Relevant Period, the total
consolidated operating profit of the Group for that Relevant Period:
(a) before taking into account:
(i) Interest Expense;
(ii) Tax;
(iii) any share of the profit of any associated company or
undertaking, except for dividends received in cash by any
member of the Group; and
(iv) extraordinary and exceptional items ; and
(b) after adding back all amounts provided for depreciation and
amortisation for that Relevant Period,
as determined (except as needed to reflect the terms of this Clause 20)
from the financial statements of the Group and Compliance Certificates
delivered under Clause 19.1 (Financial statements) and Clause 19.2
(Compliance Certificate).
"Group" means the Guarantor and its Subsidiaries for the time being,
excluding Target unless Target is a Subsidiary of the Guarantor, and
"Group Member" means any member of the Group.
"Interest Expense" means, in relation to any Relevant Period, the
aggregate amount of interest and any other finance charges (whether or
not paid, payable or capitalised) accrued by the Group in that Relevant
Period in respect of Financial Indebtedness including:
(a) the interest element of leasing and hire purchase payments;
(b) commitment fees, commissions, arrangement fees and guarantee fees;
and
(c) amounts in the nature of interest payable in respect of any shares
other than equity share capital,
adjusted (but without double counting) by :
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 35
(i) adding back the net amount payable (or deducting the net amount
receivable) by members of the Group in respect of that Relevant
Period under any interest or (so far as they relate to interest)
currency hedging arrangements ; and
(ii) deducting interest income of the Group in respect of that Relevant
Period to the extent freely distributable to the Guarantor in
cash,
as determined (except as needed to reflect the terms of this Clause 20)
from the financial statements of the Group and Compliance Certificates
delivered under Clause 19.1 (Financial statements) and Clause 19.2
(Compliance Certificate).
"Relevant Period" means:
(a) each financial year of the Guarantor; and
(b) each period beginning on the first day of the second half of a
financial year of the Guarantor and ending on the last day of the
first half of its next financial year.
21. GENERAL UNDERTAKINGS
The undertakings in this Clause 21 remain in force from the date of this
Agreement for so long as any amount is outstanding under the Finance
Documents or any Commitment is in force.
21.1 Authorisations
(a) Each Obligor shall promptly:
(i) obtain, comply with and do all that is necessary to maintain in
full force and effect; and
(ii) supply certified copies to the Lender of
any Authorisation required under any law or regulation to enable it to
perform its obligations under the Finance Documents and to ensure the
legality, validity, enforceability or admissibility in evidence in its
jurisdiction of incorporation of any Finance Document.
(b) Each Obligor shall promptly (and in any event within four days of the
date of this Agreement) ensure that all the Security Perfection
Requirements have been done or obtained (as the case may be).
21.2 Compliance with laws
(a) Each Obligor shall comply in all respects with all laws and rules of any
stock or securities exchange to which it may be subject, if failure so
to comply would materially impair its ability to perform its obligations
under the Finance Documents.
(b) The Borrower shall use its best efforts to effect promptly or maintain
all necessary filings and to obtain all necessary permits, consents,
approvals, orders and authorizations of, or any exemptions by, all third
parties, including all applicable Stock Exchanges, and Governmental
Agencies necessary to consummate the transactions contemplated by this
Agreement and the Acquisition.
21.3 Negative pledge
(a) No Obligor shall (and the Guarantor shall ensure that no other member of
the Group will) create or permit to subsist any Security over any of its
assets.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 36
(b) Paragraphs (a) above does not apply to:
(i) any Security listed in Schedule 4 (Existing Security) except to
the extent the principal amount secured by that Security exceeds
the amount stated in that Schedule;
(ii) in the event of a refinancing of any existing Financial
Indebtedness of a Group Member, any Security granted in
replacement of an existing Security so long as the existing
Security has been notified to the Lender in accordance with
paragraph (a) above and so long as the replacement Security is
limited to substantially the same assets as the existing Security
that it is replacing.
(iii) any lien arising by operation of law and in the ordinary course of
trading so long as the debt which it secures is paid when due or
contested in good faith by appropriate proceedings and properly
provisioned; or
(iv) any Security created pursuant to any Finance Document.
(c) No Obligor shall (and the Guarantor shall ensure that no other Group
member will) sell, transfer or otherwise dispose of any of its
receivables on recourse terms.
21.4 Disposals
(a) No Obligor shall (and the Guarantor shall ensure that no other member of
the Group will) enter into a single transaction or a series of
transactions (whether related or not and whether voluntary or
involuntary) to sell, lease, transfer or otherwise dispose of any asset.
(b) Paragraph (a) above does not apply to any sale, lease, transfer or other
disposal of any asset made in the ordinary course of trading of the
disposing entity.
21.5 Restrictive agreements, negative pledges
No Obligor shall enter into any agreement or arrangement (other than the
Finance Documents) prohibiting or restricting:
(a) the creation or existence of any Security on any assets required
to be secured under the Security Documents; or
(b) its ability to make any payments, directly or indirectly, to the
Lender (whether by way of dividends, advances, repayments of or
payments of interest on advances, reimbursement of management and
other intercompany charges, expenses, accruals or other returns on
investments, or otherwise).
21.6 Change of business
The Guarantor shall procure that no substantial change is made to the
general nature of the business of the Obligors or the Group taken as a
whole from that carried on at the date of this Agreement.
21.7 Hong Kong Stock Exchange and American Stock Exchange
The Guarantor shall comply with:
(a) any law or regulation applicable to it; and
(b) any rules of the Stock Exchanges applicable to it.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 37
21.8 The Acquisition
(a) The Borrower shall:
(i) perform and comply with its obligations under or in connection
with the Acquisition Documents;
(ii) notify the Lender (promptly upon becoming aware of the same) of
any breach by any party to any Acquisition Document of its
obligations under the Acquisition Documents;
(iii) take all reasonable steps to enforce any material claim or right
which (A) it has under or in connection with any Acquisition
Document and (B) it would be reasonable to enforce, taking into
account the likelihood of success, the expected cost and the
amount potentially recoverable;
(iv) notify the Lender promptly of any claim made by any Group Member
under an Acquisition Document;
(v) provide the Lender with reasonable details of that claim and its
progress and notify the Lender as soon as practicable upon that
claim being resolved;
(vi) comply with all applicable laws in all respects material in the
context of the Acquisition; and
(vii) pay any stamp, registration or similar tax payable in respect of
the Acquisition Documents (including any stamp duty) within 15
Business Days of it becoming due (or any applicable shorter
period).
(b) The Borrower shall not (and shall ensure that no Group Member will)
after the date of this Agreement without the consent of the Lender
amend, rescind, terminate, give any waiver or consent under, or agree or
decide not to enforce, in whole or in part, any term or condition of any
Acquisition Document, or accept any disclosure in respect of any
representation or warranty given by any Seller under any Acquisition
Document which would, or could reasonably be considered to be material.
(c) The Borrower shall keep the Lender informed and consult with them as to
any terms or conditions proposed in connection with any Authorisation
necessary in connection with the Acquisition.
(d) The Borrower shall ensure that the Acquisition Completion Time shall
occur on or before the Utilisation Date, and that with effect from the
Acquisition Completion Time, the Borrower shall beneficially own at
least 37 per cent. of the issued share capital of, and ownership
interest in Target.
21.9 Pari passu
Each Obligor shall ensure that its obligations under the Finance
Documents will rank at least pari passu with the claims of all its other
unsecured and unsubordinated creditors, except for obligations
mandatorily preferred by laws applying to companies generally.
21.10 Conduct of Borrower
The Borrower shall not carry on any business, own any assets or create
any Security other than:
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 38
(a) subscribing for, and holding the Acquisition Shares;
(b) borrowing the loan, and paying any interest, fees, costs and
expenses permitted by the terms of the Finance Documents;
(c) incurring liabilities and granting security under the Finance
Documents;
(d) consummating the Acquisition;
(e) activities expressly contemplated by the Finance Documents;
(f) payment of the consideration payable by the Borrower for the
Acquisition pursuant to the Acquisition Documents,
and shall not enter into any other material agreements or contracts
other than the Transaction Documents to which it is a party.
The Borrower shall not establish or acquire any direct Subsidiary other
than Target.
21.11 Security Perfection Requirements
Each Obligor shall, at its own expense, promptly procure that the
Security Perfection Requirements are satisfied. In respect of the
Security Perfection Requirements which are not required to be satisfied
prior to the delivery of the Utilisation Request under Clause 4.1
(Initial conditions precedent) or proposed Utilisation Date under Clause
4.2 (Further conditions precedent), each Obligor must procure that such
Security Perfection Requirements are satisfied within two Business Days
of the making of the Loan.
22. EVENTS OF DEFAULT
Each of the events or circumstances set out in Clause 22 is an Event of
Default.
22.1 Non-payment
An Obligor does not pay on the due date any amount payable pursuant to a
Finance Document at the place at and in the currency in which it is
expressed to be payable.
22.2 Financial covenants
Any requirement of Clause 20 (Financial covenants) is not satisfied.
22.3 Other obligations and conditions
(a) An Obligor does not comply with any provision of the Finance Documents
(other than those referred to in Clause 22.1 (Non-payment) and Clause
22.2 (Financial covenants)).
(b) Any condition attached to any waiver or consent given under this
Agreement is not fulfilled.
(c) No Event of Default under paragraph (a) above in relation to Clause 21.1
(Authorisations) will occur if the failure to comply is capable of
remedy and is remedied within five Business Days of the Lender giving
notice to the Borrower or the Borrower becoming aware of the failure to
comply.
22.4 Misrepresentation
Any representation or statement made or deemed to be made by an Obligor
in the Finance Documents or any other document delivered by or on behalf
of any Obligor under or in
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 39
connection with any Finance Document is or proves to have been incorrect
or misleading in any material respect when made or deemed to be made.
22.5 Cross default
(a) Any Financial Indebtedness of any member of the Group is not paid when
due nor within any originally applicable grace period.
(b) Any Financial Indebtedness of any member of the Group is declared to be
or otherwise becomes due and payable prior to its specified maturity as
a result of any actual or potential default, event of default, credit
review event or any similar event (however described).
(c) Any commitment for any Financial Indebtedness of any member of the Group
is cancelled or suspended by a creditor of any member of the Group as a
result of any actual or potential default, event of default, credit
review event or any similar event (however described).
(d) Any creditor of any member of the Group becomes entitled to declare any
Financial Indebtedness of any member of the Group due and payable prior
to its specified maturity as a result of any actual or potential
default, event of default, credit review event or any similar event
(however described).
(e) No Event of Default will occur under this Clause 22.5 if the aggregate
amount of Financial Indebtedness or commitment for Financial
Indebtedness of the Guarantor falling within paragraphs (a) to (d) above
is less than US$3,000,000 (or its equivalent in any other currency or
currencies).
22.6 Insolvency
(a) A member of the Group is unable to, is presumed or deemed to be unable
to or admits its inability to, pay its debts, suspends making payments
on any of its debts or, by reason of actual or anticipated financial
difficulties, commences negotiations with one or more of its creditors
with a view to rescheduling any of its indebtedness.
(b) The value of the assets of any member of the Group is less than its
liabilities (taking into account contingent and prospective
liabilities).
(c) A moratorium is declared in respect of any indebtedness of any member of
the Group.
22.7 Insolvency proceedings
Any corporate action, legal proceedings or other procedure or step is
taken in relation to:
(a) the suspension of payments, a moratorium of any indebtedness,
winding-up, dissolution, administration, provisional supervision,
supervision or reorganisation (by way of voluntary arrangement,
scheme of arrangement or otherwise) of any Material Group Member
other than a solvent liquidation or reorganisation of any member
of the Group which is not an Obligor;
(b) a composition, assignment or arrangement with any creditor of any
Material Group Member;
(c) the appointment of a liquidator (other than in respect of a
solvent liquidation of a Material Group Member which is not an
Obligor, receiver, administrator, administrative receiver,
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 40
compulsory manager, provisional supervisor, supervisor or other
similar officer in respect of any Material Group Member or any of
its assets; or
(d) the enforcement of any Security over any assets of any Material
Group Member,
or any analogous procedure or step is taken in any jurisdiction.
22.8 Judgments, creditors' process
(a) A Material Group Member fails to comply with, or pay any sum due from it
under, any final judgment or any final order made or given by a court of
competent jurisdiction.
(b) Any expropriation, attachment, sequestration, distress or execution
affects any asset or assets of a member of the Group and is not
discharged within 10 Business Days.
22.9 Ownership and control of the Obligor
(a) The Guarantor is not or ceases to be at least 50 per cent. directly or
indirectly owned and controlled by Mr Christopher Ho.
(b) The Borrower is not or ceases to be 100 per cent. directly or indirectly
owned and controlled by the Guarantor.
22.10 Unlawfulness
It is or becomes unlawful for an Obligor to perform any of its
obligations under the Finance Documents.
22.11 Repudiation
An Obligor repudiates a Finance Document or evidences an intention to
repudiate a Finance Document.
22.12 Security
Any Security Document is not in full force and effect or does not create
in favour of the Lender the Security which it is expressed to create
with the ranking and priority it is expressed to have.
22.13 Material adverse change
Any event, series of events or circumstance occurs which the Lender
determines might reasonably be expected to have a Material Adverse
Effect.
22.14 Carry on business
An Obligor or any Group Member suspends or ceases (or threatens to
suspend or cease) to carry on all or a material part of its business.
22.15 Acquisition Documents
(a) Any Acquisition Document:
(i) ceases to be legal, valid, binding and enforceable on or against
any party thereto and in full force and effect in any material
respect, or is terminated or rescinded or becomes avoidable at the
instance of any person, except with the prior written consent of
the Lender;
(ii) is amended or any right or remedy thereunder is waived in any
material respect, except with the prior written consent of the
Lender;
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 41
(b) Any event occurs or circumstance arises which would, (if
applicable) with the giving of any notice, entitle any party to
terminate any Acquisition Document.
22.16 Suspension or cessation of listing
(a) The listing of the shares in the Guarantor on the Hong Kong Stock
Exchange is:
(i) suspended for 10 or more consecutive days on which it is trading;
or
(ii) terminated or otherwise ceases.
(b) The listing of the shares in the Target on the American Stock Exchange
is:
(i) suspended for 10 or more consecutive days on which it is trading;
or
(ii) terminated or otherwise ceases.
22.17 Loan-to-value ratio
The Loan-to-value ratio is greater than 90 per cent.
22.18 Acceleration
On and at any time after the occurrence of an Event of Default which is
continuing the Lender may, by notice to the Borrower:
(a) cancel the Commitment whereupon it shall immediately be cancelled;
(b) declare that all or part of the Loan, together with accrued
interest, and all other amounts accrued or outstanding under the
Finance Documents be immediately due and payable, whereupon it
shall become immediately due and payable; and/or
(c) declare that all or part of the Loan be payable on demand,
whereupon it shall immediately become payable on demand by the
Lender.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 42
SECTION 9
CHANGES TO PARTIES
23. CHANGES TO THE LENDER
23.1 Assignments and transfers by the Lender Subject to this Clause 23, the
Lender (the "Existing Lender") may:
(a) assign any of its rights; or
(b) transfer by novation any of its rights and obligations,
to another bank or financial institution or to a trust fund or other
entity which is regularly engaged in or established for the purpose of
making, purchasing or investing in loans, securities or other financial
assets (the "New Lender") without the prior consent of the Borrower.
23.2 Conditions of assignment or transfer
If:
(a) the Lender assigns or transfers any of its rights or obligations
under the Finance Documents or changes its Facility Office; and
(b) as a result of circumstances existing at the date the assignment,
transfer or change occurs, an Obligor would be obliged to make a
payment to the New Lender or the Lender acting through its new
Facility Office under Clause 12 (Tax gross up and indemnities) or
Clause 13 (Increased costs),
then the New Lender or the Lender acting through its new Facility Office
is only entitled to receive payment under those Clauses to the same
extent as the Existing Lender or the Lender acting through its previous
Facility Office would have been entitled if the assignment, transfer or
change had not occurred.
23.3 Disclosure of information
The Lender may disclose to any of its Affiliates and any other person:
(a) to (or through) whom the Lender assigns or transfers (or may
potentially assign or transfer) all or any of its rights and
obligations under this Agreement;
(b) with (or through) whom the Lender enters into (or may potentially
enter into) any sub-participation in relation to, or any other
transaction under which payments are to be made by reference to,
this Agreement or any Obligor; or
(c) to whom, and to the extent that, information is required to be
disclosed by any applicable law or regulation,
any information about any Obligor, the Group and the Finance Documents
as that Lender shall consider appropriate if, in relation to paragraphs
(a) and (b) above, the person to whom the information is to be given has
entered into a confidentiality undertaking substantially in a
recommended form of the APLMA or in any other form agreed between the
Borrower and the Lender. This Clause supersedes any previous agreement
relating to the confidentiality of this information.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 43
24. CHANGES TO THE OBLIGOR
24.1 Assignments and transfer by Obligor
No Obligor shall assign any of its rights or transfer any of its rights
or obligations under the Finance Documents.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 44
SECTION 10
THE LENDER
25. CONDUCT OF BUSINESS BY THE LENDER
No provision of this Agreement will:
(a) interfere with the right of the Lender to arrange its affairs (tax
or otherwise) in whatever manner it thinks fit;
(b) oblige the Lender to investigate or claim any credit, relief,
remission or repayment available to it or the extent, order and
manner of any claim; or
(c) oblige the Lender to disclose any information relating to its
affairs (tax or otherwise) or any computations in respect of Tax.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 45
SECTION 11
ADMINISTRATION
26. PAYMENT MECHANICS
26.1 Payments to the Lender
(a) On each date on which an Obligor is required to make a payment under a
Finance Document, that Obligor shall make the same available to the
Lender for value on the due date at the time and in such funds specified
by the Lender as being customary at the time for settlement of
transactions in the relevant currency in the place of payment.
(b) Payment shall be made to such account in the principal financial centre
of the country of that currency in Hong Kong with such bank as the
Lender specifies.
26.2 Payments by the Lender
On each date on which the Lender is required to make a payment to an
Obligor under a Finance Document, the Lender shall make the same
available to that Obligor for value on the due date at the time and in
such funds specified by the Lender as being customary at the time for
settlement of transaction in the relevant currency in the place of
payment.
26.3 Distributions to an Obligor
The Lender may (with the consent of the Obligor or in accordance with
Clause 27 (Set-off)) apply any amount payable by it to that Obligor in
or towards payment (on the date and in the currency and funds of
receipt) of any amount due from that Obligor under the Finance Documents
or in or towards purchase of any amount of any currency to be so
applied.
26.4 Partial payments
(a) If the Lender receives a payment that is insufficient to discharge all
the amounts then due and payable by an Obligor under the Finance
Documents, the Lender shall apply that payment towards the obligations
of that Obligor under the Finance Documents in any order selected by the
Lender.
(b) Paragraph (a) above will override any appropriation made by an Obligor.
26.5 No set-off by Obligors
All payments to be made by an Obligor under the Finance Documents shall
be calculated and be made without (and free and clear of any deduction
for) set-off or counterclaim.
26.6 Business Days
(a) Any payment which is due to be made on a day that is not a Business Day
shall be made on the next Business Day in the same calendar month (if
there is one) or the preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal or an
Unpaid Sum under this Agreement interest is payable on the principal or
Unpaid Sum at the rate payable on the original due date.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 46
26.7 Currency of account
(a) Subject to paragraphs (b) to (e) below, US Dollars is the currency of
account and payment for any sum due from an Obligor under any Finance
Document.
(b) A repayment of the Loan or Unpaid Sum or a part of the Loan or Unpaid
Sum shall be made in the currency in which that Loan or Unpaid Sum is
denominated on its due date.
(c) Each payment of interest shall be made in the currency in which the sum
in respect of which the interest is payable was denominated when that
interest accrued.
(d) Each payment in respect of costs, expenses or Taxes shall be made in the
currency in which the costs, expenses or Taxes are incurred.
(e) Any amount expressed to be payable in a currency other than US Dollars
shall be paid in that other currency.
26.8 Change of currency
(a) Unless otherwise prohibited by law, if more than one currency or
currency unit are at the same time recognised by the central bank of any
country as the lawful currency of that country, then:
(i) any reference in the Finance Documents to, and any obligations
arising under the Finance Documents in, the currency of that
country shall be translated into, or paid in, the currency or
currency unit of that country designated by the Lender (after
consultation with the Borrower); and
(ii) any translation from one currency or currency unit to another
shall be at the official rate of exchange recognised by the
central bank for the conversion of that currency or currency unit
into the other, rounded up or down by the Lender (acting
reasonably).
(b) If a change in any currency of a country occurs, this Agreement will, to
the extent the Lender (acting reasonably and after consultation with the
Borrower) specifies to be necessary, be amended to comply with any
generally accepted conventions and market practice in the Relevant
Interbank Market and otherwise to reflect the change in currency.
27. SET-OFF
The Lender may set off any matured obligation due from an Obligor under
the Finance Documents (to the extent beneficially owned by the Lender)
against any obligation owed by the Lender to that Obligor (whether or
not matured), regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the Lender may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set-off.
28. NOTICES
28.1 Communications in writing
Any communication to be made under or in connection with the Finance
Documents shall be made in writing and, unless otherwise stated, may be
made by fax, letter or (under Clause 28.4 (Electronic transmission of
notice by or to the Lender)) by email.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 47
28.2 Addresses
The address, fax number and (if applicable) email address (and the
department or officer, if any, for whose attention the communication is
to be made) of each Party for any communication or document to be made
or delivered under or in connection with the Finance Documents is that
identified with its name below or any substitute address, fax number,
email address or department or officer as the Party may notify to the
other Parties by not less than five Business Days' notice.
28.3 Delivery
(a) Any communication or document made or delivered by the Lender to another
Party under or in connection with the Finance Documents will only be
effective:
(i) if by way of fax, when received in legible form; or
(ii) if by way of letter, when it has been left at the relevant address
or five Business Days after being deposited in the post postage
prepaid in an envelope addressed to it at that address; or
(iii) if by way of email:
(a) when received and opened by the recipient;
(b) if it complies with the rules under Clause 28.4 (Electronic
transmission of notice by or to the Lender),
and, if a particular department or officer is specified as part of its
address details provided under Clause 28.2 (Addresses), if addressed to
that department or officer.
(b) Any communication or document to be made or delivered to the Lender will
be effective only when actually received by the Lender and then only if
it is expressly marked for the attention of the department or officer
identified with its signature below (or any substitute department or
officer as it shall specify for this purpose).
(c) Any communication or document made or delivered to the Borrower in
accordance with this Clause will be deemed to have been made or
delivered to the Guarantor.
28.4 Electronic transmission of notice by or to the Lender
Commencing on a date to be determined by the Lender and notified to the
other parties to this Agreement, notices, requests, demands, consents,
approvals, agreements or other communications to or by the Lender:
(a) may be given by means of a secure website access to which is
restricted to the parties to the Finance Documents (and, where
applicable, their financial and legal advisers) established by the
Lender or other electronic means in a manner and subject to rules
established by the Lender and agreed with the Borrower; and
(b) will be taken to be given or made in accordance with those rules
referred to in Clause 28.3 (Delivery).
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 48
28.5 Reliance
(a) Any notice sent under this Clause 28 can be relied on by the recipient
if the recipient reasonably believes the notice to be genuine and if it
bears what appears to be the signature (original or facsimile) of an
authorised signatory of the sender or, as applicable, if it is sent from
an email address notified for this purpose pursuant to Clause 28.4
(Electronic transmission of notice by or to the Lender) (in each case
without the need for further enquiry or confirmation).
(b) Each Party must take reasonable care to ensure that no forged, false or
unauthorised notices are sent to another Party.
28.6 English language
(a) Any notice given under or in connection with any Finance Document must
be in English.
(b) All other documents provided under or in connection with any Finance
Document must be:
(i) in English; or
(ii) if not in English, and if so required by the Lender, accompanied
by a certified English translation and, in this case, the English
translation will prevail unless the document is a constitutional,
statutory or other official document.
29. CALCULATIONS AND CERTIFICATES
29.1 Accounts
In any litigation or arbitration proceedings arising out of or in
connection with a Finance Document, the entries made in the accounts
maintained by the Lender are prima facie evidence of the matters to
which they relate.
29.2 Certificates and Determinations
Any certification or determination by the Lender of a rate or amount
under any Finance Document is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
29.3 Day count convention
Any interest, commission or fee accruing under a Finance Document will
accrue from day to day and is calculated on the basis of the actual
number of days elapsed and a year of 360 days or, in any case where the
practice in the Relevant Interbank Market differs, in accordance with
that market practice.
30. PARTIAL INVALIDITY
If, at any time, any provision of the Finance Documents is or becomes
illegal, invalid or unenforceable in any respect under any law of any
jurisdiction, neither the legality, validity or enforceability of the
remaining provisions nor the legality, validity or enforceability of
such provision under the law of any other jurisdiction will in any way
be affected or impaired.
31. REMEDIES AND WAIVERS
No failure to exercise, nor any delay in exercising, on the part of the
Lender, any right or remedy under the Finance Documents shall operate as
a waiver, nor shall any single or partial exercise
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 49
of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies provided
in this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.
32. AMENDMENTS AND WAIVERS
No term of any of the Finance Documents may be amended or waived without
the prior consent of the Lender and the Obligors and any such amendment
or waiver will be binding on all Parties.
33. COUNTERPARTS
Each Finance Document may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts were
on a single copy of the Finance Document.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 50
SECTION 12
GOVERNING LAW AND ENFORCEMENT
34. GOVERNING LAW
This Agreement is governed by Hong Kong law.
35. ENFORCEMENT
35.1 Jurisdiction
(a) The courts of Hong Kong have exclusive jurisdiction to settle any
dispute arising out of or in connection with this Agreement (including a
dispute regarding the existence, validity or termination of this
Agreement) (a "Dispute").
(b) The Parties agree that the courts of Hong Kong are the most appropriate
and convenient courts to settle Disputes and accordingly no Party will
argue to the contrary.
(c) This Clause 35.1 is for the benefit of the Lender only. As a result, the
Lender shall not be prevented from taking proceedings relating to a
Dispute in any other courts with jurisdiction. To the extent allowed by
law, the Lender may take concurrent proceedings in any number of
jurisdictions.
35.2 Service of process
Without prejudice to any other mode of service allowed under any
relevant law, each Obligor:
(a) irrevocably appoints The Grande Holdings Limited, 12/F, The Grande
Building, 398-402 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong as
its agent for service of process in relation to any proceedings
before the Hong Kong courts in connection with any Finance
Document; and
(b) agrees that failure by a process agent to notify that Obligor of
the process will not invalidate the proceedings concerned.
This Agreement has been entered into on the date stated at the beginning of
this Agreement.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 51
SCHEDULE 1
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT TO FUNDING
1. Obligors
(a) A copy of the certificate of incorporation, memorandum and articles of
association or bye-laws and business registration certificate, or the
analogous constitutional documents of each Obligor.
(b) A copy of a resolution of the board of directors of each Obligor:
(i) approving the terms of, and the transactions contemplated by, the
Transaction Documents to which it is a party and resolving that it
execute the Transaction Documents to which it is a party;
(ii) authorising a specified person or persons to execute the
Transaction Documents to which it is a party; and
(iii) authorising a specified person or persons, on its behalf, to sign
and/or despatch all documents and notices (including, if relevant,
any Utilisation Request) to be signed and/or despatched by it
under or in connection with the Transaction Documents to which it
is a party.
(c) A specimen of the signature of each person authorised by the resolution
referred to in paragraph (b) above.
(d) A certificate of a director or the secretary of each Obligor:
(ii) certifying that each copy document relating to it specified in
this Schedule 1 is correct, complete and in full force and effect
as at a date no earlier than the date of this Agreement;
(iii) confirming that borrowing or guaranteeing, as appropriate the
Commitments would not cause any borrowing, guaranteeing or similar
limit binding on any Obligor to be exceeded; and
(iv) certifying that the Obligor is solvent on the date of the
certificate.
2. Security
Confirmation from the Lender that it has received each of the following
documents in form and substance satisfactory to it:
(a) An original of each Security Document, duly executed by the
Parties to it.
(b) Copies of all Acquisition Share Documents.
3. Legal opinions
(a) A legal opinion of Mallesons Stephen Jaques, legal advisers to the
Lender in Hong Kong, substantially in the form distributed to the Lender
prior to signing this Agreement.
(b) A legal opinion of Thacher Proffitt & Wood LLP, legal advisers to the
Lender in respect of the enforceability of Finance Documents against the
Borrower, in form and substance satisfactory to the Lender.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 52
(c) A legal opinion of Conyers Dill & Pearman, legal advisers to the Lender
as to Bermuda law in form and substance satisfactory to the Lender.
(d) A legal opinion of Conyers Dill & Pearman, legal advisers to the Lender
as to the laws of the British Virgin Islands in form and substance
satisfactory to the Lender.
4. Acquisition Documents
(a) A certified copy of the Acquisition Agreement.
(b) A copy of any Authorisation necessary in connection with the
Acquisition.
(c) Evidence satisfactory to the Lender that all the conditions precedent
set out in clause 3 (Conditions) of the Acquisition Agreement have been
satisfied and that, on the issue of the Convertible Debenture and the
application of the Loan in the manner described in Clause 5
(Utilisation) Completion will occur.
5. Convertible Debenture
Evidence satisfactory to the Lender that the date of issue of the
Convertible Debentures is, or will be, on or before the Acquisition
Completion Time.
6. Other documents and evidence
(a) Evidence that the process agent referred to in Clause 35.2 (Service of
process) has accepted its appointment.
(b) A copy of any other Authorisation or other document, opinion or
assurance which the Lender considers to be necessary or desirable (if it
has notified the Borrower accordingly) in connection with the entry into
and performance of the transactions contemplated by any Finance Document
or for the validity and enforceability of any Finance Document.
(c) The Original Financial Statements of the Guarantor.
(d) Evidence that the fees, costs and expenses then due from the Borrower
pursuant to Clause 11 (Up-front Fees) and Clause 16 (Costs and expenses)
have been paid or will be paid by the first Utilisation Date.
(e) Evidence of the amount required to be paid to Seng Heng Bank Ltd in
order for it to release its Security over the Acquisition Shares.
(f) Instructions from the Seller, confirming the account to which the
balance of the Loan should be paid in satisfaction of the Sale
Consideration.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 53
SCHEDULE 2
REQUESTS
UTILISATION REQUEST
From: S&T International Distribution Limited
To: ABN AMRO Bank N.V., Hong Kong Branch
Dated:
Dear Sirs
S&T International Distribution Limited - US$26,000,000 Facility Agreement
dated 22 August 2005 (the "Facility Agreement")
1. We refer to the Facility Agreement. This is a Utilisation Request. Terms
defined in the Facility Agreement shall have the same meaning in this
Utilisation Request unless given a different meaning in this Utilisation
Request.
2. We wish to borrow the Loan on the following terms:
Proposed Utilisation Date: [o] (or, if that is not a Business Day,
the next Business Day)
Amount: US[o] or, if less, the Commitment
Interest Period: [one week / two weeks / one Month /
two Months / three Months]
3. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Utilisation
Request.
4. The proceeds of this Loan should be credited to [account].
5. This Utilisation Request is irrevocable.
Yours faithfully
.......................................
authorised signatory for
S&T International Distribution Limited
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 54
SCHEDULE 3
FORM OF COMPLIANCE CERTIFICATE
To: ABN AMRO Bank N.V., Hong Kong Branch as Lender
From: The Grande Holdings Limited
Dated:
Dear Sirs
S&T International Distribution Limited - US$26,000,000 Facility Agreement
dated 22 August 2005 (the "Facility Agreement")
1. We refer to the Facility Agreement. This is a Compliance Certificate.
Terms defined in the Facility Agreement have the same meaning when used
in this Compliance Certificate unless given a different meaning in this
Compliance Certificate.
2. [We confirm that no Default is continuing.]*
3. We confirm that:
(a) as at [o] Consolidated Tangible Net Worth was [HK$o];
(b) as at [o], the ratio of Consolidated Net Debt to Consolidated
Tangible Net Worth was [o];
(c) as at [o], the ratio of Consolidated Current Assets to
Consolidated Current Liabilities was [o]; and
(d) the ratio of EBITDA to Interest Expense for [that Relevant Period]
[the Relevant Period ended on [o]] was [o] to 1.
Signed:
............................. .....................................
............................. .....................................
Director Director
of of
The Grande Holdings Limited The Grande Holdings Limited
We have reviewed the Facility Agreement and the audited consolidated
financial statements of the Borrower for the year ended [o].
On the basis of that review and audit, nothing has come to our attention
which would require any modification to the confirmations in paragraph 3
of the above Compliance Certificate [or which we know to be a continuing
Default].
-------------------------------------------------
for and on behalf of
[name of auditors of The Grande Holdings Limited]
-------------------------------------------------------------------------------
* If this statement cannot be made, the certificate should identify any
Default that is continuing and the steps, if any, being taken to remedy it.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 55
MALLESONS STEPHEN JAQUES
SCHEDULE 4
EXISTING SECURITY
Name of Member of Group Security Total Principal Amount of
Indebtedness Secured
Emerson Radio Corporation Security in respect of all tangible US$42,500,000
assets of Emerson Radio Corporation
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 56
MALLESONS STEPHEN JAQUES
SC 13D EXHIBIT 5
----------------
Borrower
S&T International Distribution Limited
Address: c/- The Grande Holdings Limited
12th Floor, The Grande Building
398 Kwun Tong Road
Kowloon, Hong Kong
Fax No: (852) 2343 2329 and (65) 6222 2153
Email Address: ryk@grande.com.sg
Attention: Ms Ruby Lee, Esq.
By:
Guarantor
The Grande Holdings Limited
Address: 12th Floor, The Grande Building
398 Kwun Tong Road
Kowloon, Hong Kong
Fax No: (852) 2343 2329 and (65) 6222 2153
Email Address: ryk@grande.com.sg
Attention: Ms Ruby Lee, Esq.
By:
Lender
ABN AMRO Bank N.V., Hong Kong Branch
Address: 38/F, Cheung Kong Center
2 Queen's Road Central
Hong Kong
Fax No: (852) 2700 3202
Attention: Ms Shirley Yiu / Ms Helen Fei
By:
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 57
Lender
ABN AMRO Bank N.V., Hong Kong Branch
Address: 38/F, Cheung Kong Center
2 Queen's Road Central
Hong Kong
Fax No: (852) 2700 3202
Attention: Ms Shirley Yiu / Ms Helen Fei
By:
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Facility Agreement 58
[LOGO OMITTED] MALLESONS STEPHEN JAQUES
SC 13D EXHIBIT 6
----------------
ASSIGNMENT OF ACQUISITION AGREEMENT
dated 22 August 2005
created by
S&T INTERNATIONAL DISTRIBUTION LIMITED
as the Assignor
in favour of
ABN AMRO BANK N.V., HONG KONG
acting as Lender
-------------------------------------------------------
ASSIGNMENT OF ACQUISITION AGREEMENT
-------------------------------------------------------
Mallesons Stephen Jaques
37th Floor Two International Finance Centre
8 Finance Street
Central Hong Kong
T +852 3443 1000
F +852 3443 1299
www.mallesons.com
CONTENTS
CLAUSE PAGE
1. DEFINITIONS AND INTERPRETATION........................................1
2. UNDERTAKING TO PAY....................................................2
3. ASSIGNMENT............................................................2
4. FURTHER ASSURANCE.....................................................2
5. NEGATIVE PLEDGE, NO DISPOSALS.........................................4
6. GENERAL UNDERTAKINGS..................................................4
7. REPRESENTATIONS AND WARRANTIES........................................5
8. ENFORCEMENT...........................................................7
9. APPOINTMENT AND RIGHTS OF RECEIVERS...................................8
10. THE LENDER'S RIGHTS..................................................11
11. ORDER OF DISTRIBUTIONS...............................................11
12. LIABILITY OF THE LENDER, RECEIVERS AND DELEGATES.....................12
13. POWER OF ATTORNEY....................................................12
14. PROTECTION OF THIRD PARTIES..........................................13
15. SAVING PROVISIONS....................................................13
16. DISCHARGE OF SECURITY................................................16
17. EXPENSES, STAMP DUTY AND INTEREST....................................16
18. PAYMENTS.............................................................17
19. TAX GROSS UP.........................................................17
20. CONDUCT OF BUSINESS BY THE LENDER....................................17
21. OTHER INDEMNITIES....................................................17
22. SET-OFF..............................................................18
23. ASSIGNMENTS AND TRANSFERS............................................18
24. RIGHTS, AMENDMENTS, WAIVERS AND DETERMINATIONS.......................18
25. COUNTERPARTS.........................................................19
26. GOVERNING LAW........................................................19
27. JURISDICTION.........................................................19
28. SERVICE OF PROCESS...................................................19
THE SCHEDULES
SCHEDULE PAGE
SCHEDULE 1 RIGHTS OF RECEIVERS................................................20
SCHEDULE 2 FORM OF NOTICE OF ASSIGNMENT OF ACQUISITION AGREEMENT..............22
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement ii
[LOGO OMITTED] MALLESONS STEPHENS JAQUES
THIS DEED is dated 22 August 2005 and made between:
(1) S&T International Distribution Limited, a company incorporated in the
British Virgin Islands whose registered office is at TrustNet
Chambers, P.O. Box 3444, Road Town, Tortola, British Virgin Islands
as the assignor (the "Assignor"); and
(2) ABN AMRO Bank N.V., Hong Kong Branch (the "Lender").
Background
(A) The Assignor is entering into this Deed in connection with the
Finance Documents (as defined in the Facility Agreement (defined
below)).
(B) The Board of Directors of the Assignor is satisfied that entering
into this Deed is for the purposes and to the benefit of the Assignor
and its business.
THIS Deed witnesses the following:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Deed, unless a contrary indication appears, terms used in the
Facility Agreement have the same meaning and construction herein. In
addition:
"Assigned Assets" means any and all rights and assets from time to
time subject, or expressed to be subject, to Security created or
expressed to be created by or pursuant to this Deed.
"Currency of Account" means, in relation to any indebtedness, the
currency in which such indebtedness is denominated or, if different,
is payable.
"Delegate" means a delegate or sub-delegate appointed under Clause
10.2 (Delegation).
"Facility Agreement" means the facility agreement dated 22 August
2005 between S&T International Distribution Limited as the Borrower,
The Grande Holdings Limited as Guarantor and ABN AMRO Bank N.V., Hong
Kong Branch as Lender.
"Party" means a party to this Deed.
"Receiver" means a receiver and/or manager or other receiver
appointed in respect of any or all of the Assigned Assets pursuant to
this Deed.
"Secured Obligations" means all present and future moneys, debts and
liabilities due, owing or incurred by the Borrower to the Lender
under or in connection with any
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 1
Finance Document (whether actually or contingently and whether as
principle, surety or otherwise).
"Winding-up" means one of the events or circumstances mentioned in
Clauses 22.6 (Insolvency) and/or 22.7 (Insolvency proceedings) of the
Facility Agreement or any analogous procedure or step in any
jurisdiction.
1.2 Construction
The provisions in Clause 1.2 (Construction) of the Facility Agreement
apply to this Deed with all necessary changes.
2. UNDERTAKING TO PAY
The Borrower shall pay the Secured Obligations when due in accordance
with its terms or, if they do not specify a time for payment,
immediately on demand by the Lender.
3. ASSIGNMENT
3.1 Assignment
The Assignor as beneficial owner and as continuing security for the
due and punctual payment and discharge of all Secured Obligations
assigns absolutely in favour of the Lender by way of fixed security
with first-ranking priority free from all other Security, all its
present and future right, title and interest in and to (including the
right to receive payment under) the Acquisition Agreement, and any
and all proceeds of Acquisition Agreement.
3.2 Notices and acknowledgements
The Assignor undertakes to the Lender that promptly after the
execution of this Deed, it shall give such notices of assignment to
the other parties of the Acquisition Agreement and it shall ensure
that the Lender receives such acknowledgements the Lender reasonably
considers necessary to perfect the Security hereunder. Unless the
Lender otherwise agrees, those notices and acknowledgements must be
in the appropriate form set out in the Schedule 2 (Form of Notice of
Assignment of Acquisition Agreement) or in such other form approved
by the Lender (acting reasonably).
4. FURTHER ASSURANCE
4.1 Further assurance
The Assignor shall, at its own expense, promptly take all such action
the Lender may reasonably require:
(a) for the purpose of perfecting or protecting the Lender's rights
under and preserving the Security intended to be created or
evidenced by this Deed or the priority of such Security;
(b) for the purpose of conferring on the Lender any Security on
property and assets of the Assignor located in any jurisdiction
outside Hong Kong equivalent
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 2
or similar to the Security intended to be created or evidenced
by this Deed; and/or
(c) following the occurrence of an Event of Default, for the
purpose of facilitating the realisation of the Assigned Assets
or the exercise of any rights vested in the Lender or any
Receiver,
including the execution of any transfer, conveyance, charge,
mortgage, assignment or assurance of the Assigned Assets (whether to
the Lender or its nominees or otherwise), the making of any
registration and the giving of any notice, order or direction.
4.2 Implied covenants for title
The obligations of the Assignor under this Deed shall be in addition
to the covenants for title deemed to be included in this Deed by
virtue of the Conveyancing and Property Ordinance (Cap. 219) or
otherwise by law.
5. NEGATIVE PLEDGE, NO DISPOSALS
5.1 Negative Pledge
The Assignor shall not create or permit to subsist any Security over
all or any part of the Assigned Assets (except for the Security
constituted by this Deed).
5.2 No Disposals
The Assignor shall not enter into a single transaction or a series of
transactions (whether related or not and whether voluntary or
involuntary) to sell, factor, transfer or otherwise dispose of all or
any part of any of the Assigned Assets.
6. GENERAL UNDERTAKINGS
6.1 Registration at Companies registry
The Assignor shall ensure that this Deed shall be duly delivered,
together with the relevant prescribed particulars, for registration
with the Hong Kong Companies Registry promptly after registration of
the Assignor as an overseas company under Part XI of the Companies
Ordinance (Cap.32) of the Laws of Hong Kong (in any event within five
weeks of the date of such registration under Part XI of the Companies
Ordinance).
6.2 Authorisations
The Assignor shall promptly obtain, comply with and do all that is
necessary to maintain in full force and effect (and supply certified
copies to the Lender of) any Authorisation required under any
applicable law or regulation:
(a) to enable it to perform its obligations under this Deed; and/or
(b) to ensure the legality, validity, enforceability or
admissibility in evidence in its jurisdiction of incorporation
of this Deed.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 3
6.3 Discharge other debts
The Assignor shall punctually pay and discharge all debts and
obligations which by law have priority, in respect of the Assigned
Assets, over the Security created by or pursuant to this Deed.
6.4 Depreciation of Assigned Assets
The Assignor shall not do or cause or permit to be done anything
which may in any way materially depreciate, jeopardise or otherwise
prejudice the value of any of the Assigned Assets.
6.5 Registrar of Corporate Affairs - British Virgin Islands
(a) The Assignor will (and, if applicable, will procure that its
nominees will) enter particulars of this Deed in its register of
mortgages, charges and other encumbrances and file and maintain
such register at the Registrar of Corporate Affairs in the British
Virgin Islands and at its registered office in the British Virgin
Islands pursuant to sections 70A and 111A of the International
Business Companies Act 1984 of the British Virgin Islands
respectively. The Assignor will deliver, or cause to be delivered,
to the Lender evidence of the filing of such register at the
Registrar of Corporate Affairs.
(b) Contemporaneous with the Assignor being re-registered as a company
under the Business Companies Act 2004 of the British Virgin
Islands, as amended, (the "BC Act") the Assignor will immediately
enter particulars of this Deed in its register of charges
maintained at its registered office in accordance with the
provisions of the BC Act and make application to the Registrar of
Corporate Affairs in the British Virgin Islands to register the
Deed. The Assignor will deliver, or cause to be delivered, to the
Lender evidence of the registration of the Deed.
(c) The Assignor undertakes not to apply for re-registration as a
company under the BC Act without giving the Lender prior notice in
writing of its intention to do so.
7. REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties
The Assignor warrants and represents to the Lender on the date of
this Deed:
(a) it is the sole and absolute beneficial owner of the Assigned
Assets free from any and all Security (other than Security
created or expressed to be created by or pursuant to this
Deed);
(b) without limiting the priority of the Security created
hereunder, its payment obligations under this Deed rank at
least pari passu with the claims of all its other unsecured and
unsubordinated creditors, except for obligations mandatorily
preferred by law applying to companies generally;
(c) except as specifically referred to in any legal opinion
accepted pursuant to Clause 4 (Conditions of Utilisation) of
the Facility Agreement and subject to the Perfection
Requirements set out in Clause 6.1 (Registration at Companies
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 4
registry), this Deed creates in favour of the Lender, the
Security which it is expressed to create over the assets which
are expressed to be secured, fully perfected and with the
ranking and priority it is expressed to have; and
(d) the representations and warranties set out in Clause 18
(Representations) of the Facility Agreement.
7.2 Repetition
Each of the representations and warranties are deemed to be made by
the Assignor, by reference to the facts and circumstances then
existing:
(a) on the date of any Utilisation Request;
(b) at the Acquisition Completion Time; and
(c) on the first day of each Interest Period relating to the Loan.
8. ENFORCEMENT
8.1 When enforceable
At any time when an Event of Default is continuing or if the Assignor
requests in writing the Lender to exercise any of its powers under
this Deed, the Security created by or pursuant to this Deed shall be
immediately enforceable and the Lender may, without notice to the
Assignor or prior authorisation from any court, in its discretion:
(a) enforce all or any part of that Security (at the times, in the
manner and on the terms it thinks fit) and take possession and
hold or dispose of all or any part of the Assigned Assets; and
(b) whether or not it has appointed a Receiver exercise all or any
of the powers, authorities and discretions given to mortgagees
and/or Receivers by the Conveyancing and Property Ordinance
(Cap. 219) (as varied and extended by this Deed) or otherwise
conferred by law on mortgagees and/or Receivers.
8.2 Extensions of powers
(a) The powers of sale or other disposal conferred on the Lender
and/or on any Receiver by this Deed shall operate as a
variation and extension of the statutory powers of sale under
Sections 51 and 53 of the Conveyancing and Property Ordinance
(Cap. 219) and such powers shall arise (and the Secured
Obligations shall be deemed due and payable for that purpose)
on execution of this Deed, and the requirements of paragraph
11 of the Fourth Schedule to the Conveyancing and Property
Ordinance (Cap. 219) shall not apply.
(b) The restrictions contained in paragraph 11 of the Fourth
Schedule to the Conveyancing and Property Ordinance (Cap. 219)
shall not apply to this Deed or to the exercise by the Lender
of its right to consolidate all or any of the Security created
by or pursuant to this Deed with any other Security in
existence at any time or to its power of sale, which powers may
be exercised
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 5
by the Lender without notice to the Assignor on or at any time
after the occurrence of an Event of Default (which is
continuing).
(c) Without prejudice to Clause 15.6 (Appropriations), if the Lender
enforces the security constituted by this Deed or receives or
recovers any amount pursuant to any Security created by or
pursuant to this Deed or in connection with any Assigned Assets at
a time when no amounts are due under the Finance Documents but at
a time when amounts may or will become so due, the Lender (or any
Receiver or any Delegate) may elect to pay the proceeds of any
receipt or recovery made by it pursuant to such enforcement or the
amount so received or recovered by it into an escrow account
(pending the application of the same from time to time in
accordance with the provisions of this Deed).
8.3 No requirement of notice period
Neither the Lender nor any Receiver is required to give any prior
notice of non- payment or default to the Assignor before enforcing
any or all of the Security created by or pursuant to this Deed, there
is no minimum period for which Secured Obligations must remain due
and unpaid before that Security can be enforced.
8.4 No Liability as mortgagee in possession
Neither the Lender nor any Receiver shall be liable to account as a
mortgagee in possession in respect of all or any part of the Assigned
Assets or be liable for any loss upon realisation or for any neglect,
default or omission in connection with all or any part of the
Assigned Assets to which a mortgagee in possession might otherwise be
liable.
8.5 Wide construction of enforcement powers
The enforcement powers of the Lender and any Receiver under this Deed
shall be construed in the widest possible sense and all Parties
intend that the Lender and any Receiver shall have as wide and
flexible a range of enforcement powers as may be conferred (or, if
not expressly conferred, as is not restricted) by any applicable law
and/or the provisions of this Deed.
9. APPOINTMENT AND RIGHTS OF RECEIVERS
9.1 Appointment of Receivers
If:
(a) requested, in writing, by the Assignor; or
(b) any Event of Default has occurred and is continuing (whether or
not the Lender has taken possession of any of the Assigned
Assets),
without any notice or further notice (whether to the Assignor or
otherwise), the Lender may, by deed, or otherwise in writing signed
by any officer or manager of the Lender or any person authorised for
this purpose by the Lender, appoint one or more persons to be a
Receiver. The Lender may similarly remove any Receiver and appoint
any person as replacement or additional Receiver(s). If the Lender
appoints more than one person as Receiver, the Lender may give those
persons power to act either jointly or severally
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 6
or jointly and severally. The powers of appointment of Receiver shall
be in addition to all statutory and other powers of appointment of
the Lender under the Conveyancing and Property Ordinance (Cap. 219)
(as varied and extended by this Deed) or otherwise and such powers
shall remain exercisable from time to time by the Lender in respect
of all or any part of the Assigned Assets.
9.2 Scope of appointment
Any Receiver may be appointed Receiver of all of the Assigned Assets
or Receiver of a part of the Assigned Assets specified in its
appointment. In the latter case, the rights conferred on a Receiver
as set out in Schedule 1 (Rights of Receivers) shall have effect as
though every reference in that Schedule to any Assigned Assets were a
reference to the part of those assets so specified in such
appointment of such Receiver or any part of those assets.
9.3 Powers and rights of Receivers
Any Receiver appointed pursuant to this Clause 9 (Appointment and
rights of Receivers) shall (subject to any restrictions in the
instrument appointing him but notwithstanding any winding-up or
dissolution of the Assignor) have, in relation to the Assigned Assets
in respect of which he is appointed:
(a) the rights, powers, discretions, privileges and immunities
conferred on mortgagors, mortgagees in possession and/or
receivers by the Conveyancing and Property Ordinance (Cap. 219)
(as varied and/or extended by this Deed) and/or any other
applicable law;
(b) the powers and rights of an absolute owner and power to do or
omit to do anything which the Assignor itself could do or omit
to do;
(c) the powers and rights conferred on the Lender; and
(d) the powers and rights set out in Schedule 1 (Rights of
Receivers),
all of which rights, powers, discretions, privileges and immunities
are exercisable without further notice. Each Receiver shall in the
exercise of such Receiver's rights, powers, discretions, privileges
and immunities conform to the directions and regulations from time to
time given or made by the Lender.
9.4 Agent of Assignor
Any Receiver shall be the agent of the Assignor for all purposes. The
Assignor alone shall be responsible for the Receiver's contracts,
engagements, acts, omissions, defaults and losses and for liabilities
incurred by the Receiver.
9.5 Remuneration
The Lender may determine the remuneration of any Receiver and any
maximum rate specified in any applicable legislation shall (to the
extent capable of being excluded) not apply. The Lender may direct
payment of that remuneration out of moneys such Receiver receives in
its capacity as such. The Assignor alone shall be liable for the
remuneration and all other costs, losses, liabilities and expenses of
any Receiver.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 7
9.6 No liability for exercise of powers
Neither the Lender nor any Receiver shall be liable for any losses,
involuntary or otherwise, which arise in the exercise by the Lender
or such Receiver of its powers under this Deed unless caused by its
wilful default or gross negligence.
10. THE LENDER'S RIGHTS
10.1 Same rights as Receiver
Any rights conferred by any Finance Document upon a Receiver may be
exercised by the Lender, while any Security created by or pursuant to
this Deed is enforceable, whether or not the Lender shall have taken
possession or appointed a Receiver of any or all of the Assigned
Assets.
10.2 Delegation
Each of the Lender and any Receiver may delegate in any manner to any
person any rights exercisable by it under any Finance Document. Any
such delegation may be made upon such terms and conditions (including
power to sub-delegate) as the Lender or, as the case may be, such
Receiver thinks fit.
10.3 Terms of disposition
In making any sale or other disposal of all or any part of the
Assigned Assets or any acquisition in the exercise of their
respective powers, any Receiver or Delegate or the Lender may accept
or dispose of as, and by way of consideration for, such sale or other
disposal or acquisition, cash, shares, loan capital or other
obligations, including without limitation consideration fluctuating
according to or dependent upon profit or turnover and consideration
the amount whereof is to be determined by a third party. Any such
consideration may, if thought expedient by such Receiver or Delegate
or the Lender, be nil or may be payable or receivable in a lump sum
or by instalments. Any contract for any such sale, disposal or
acquisition by any Receiver or Delegate or the Lender may contain
conditions excluding or restricting the personal liability of such
Receiver or Delegate or the Lender.
11. ORDER OF DISTRIBUTIONS
11.1 Application of proceeds
All amounts received or recovered by the Lender or any Receiver or
Delegate in exercise of their rights or otherwise under this Deed
shall, subject to Clause 15.6 (Appropriations) and subject to the
claims of any person having prior rights thereto and any mandatory
provisions of the Conveyancing and Property Ordinance (Cap. 219)
where applicable, be applied in the order provided in Clause 11.2
(Order of distributions). Such application shall be notwithstanding
any purported application by the Assignor.
11.2 Order of distributions
The order referred to in Clause 11.1 (Application of proceeds) is:
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 8
(a) in or towards the payment of all costs, losses, liabilities and
expenses of and incidental to the appointment of any Receiver or
Delegate and the exercise of any of his rights, including his
remuneration and all outgoings paid by him;
(b) in or towards the payment of the Secured Obligations in such
order as the Lender thinks fit; and
(c) in payment of any surplus to the Assignor or other person
entitled to it.
12. LIABILITY OF THE LENDER, RECEIVERS AND DELEGATES
12.1 Possession
If the Lender, any Receiver or any Delegate takes possession of the
Assigned Assets, it or he may at any time relinquish possession.
Without prejudice to Clause 12.2 (Lender's liability), the Lender
shall not be liable as a mortgagee in possession by reason of viewing
or repairing any of the present or future assets of the Assignor.
12.2 Lender's liability
Neither the Lender nor any Receiver or Delegate shall (either by
reason of taking possession of the Assigned Assets or for any other
reason) be liable to the Assignor or any other person for any costs,
losses, liabilities or expenses relating to the realisation of any
Assigned Assets or from any act, default, omission or misconduct of
the Lender, any Receiver, any Delegate or their respective officers,
employees or agents in relation to any of all of the Assigned Assets
or in connection with any or all of the Finance Documents except to
the extent caused by its or his own gross negligence or wilful
misconduct.
13. POWER OF ATTORNEY
13.1 Appointment
The Assignor by way of security irrevocably (within the meaning of
Section 4 of the Powers of Attorney Ordinance (Cap.31)) appoints the
Lender, every Receiver and every Delegate severally as its attorney
(with full power of substitution), on its behalf and in its name or
otherwise, at such time and in such manner as the attorney thinks
fit:
(a) to do anything which the Assignor is obliged to do (but has not
done) under any Finance Document to which it is party
(including to execute charges over, transfers, conveyances,
assignments and assurances of, and other instruments, notices,
orders and directions relating to, the Assigned Assets or any
part thereof); and
(b) to exercise any of the rights conferred on the Lender, any
Receiver or any Delegate in relation to the Assigned Assets or
any part thereof or under this Deed and/or applicable laws and
regulations.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 9
13.2 Ratification
The Assignor ratifies and confirms and agrees to ratify and confirm
whatever any such attorney shall do in the exercise or purported
exercise of the power of attorney granted by it in Clause 13.1
(Appointment).
14. PROTECTION OF THIRD PARTIES
14.1 No duty to enquire
No person dealing with the Lender, any Receiver or any Delegate shall
be concerned to enquire:
(a) whether the powers or rights conferred by or pursuant to any
Finance Document are exercisable;
(b) whether any consents, regulations, restrictions or directions
relating to such rights have been obtained or complied with;
(c) otherwise as to the propriety or regularity of acts purporting
or intended to be in exercise of any such powers or rights; or
(d) as to the application of any money borrowed or raised, or of
any proceeds of any disposition or realisation.
14.2 Protection to purchasers
The protection given to purchasers from a mortgagee in Sections 52
and 55 of the Conveyancing and Property Ordinance (Cap.219) shall
apply to any person purchasing from or dealing with the Lender, any
Receiver or any Delegate.
15. SAVING PROVISIONS
15.1 Continuing Security
Subject to Clause 16 (Discharge of Security), any Security created by
or pursuant to this Deed is continuing Security and will extend to
the ultimate balance of the Secured Obligations, regardless of any
intermediate payment or discharge in whole or in part.
15.2 Reinstatement
If any payment by or recovery from the Assignor or any discharge
given by the Lender (whether in respect of the obligations of any
Obligor or any security for those obligations or otherwise) is
avoided or reduced any reason including, without limitation, as a
result of insolvency breach of fiduciary and statutory duties or any
similar event:
(a) the liability of the Assignor hereunder and any Security
created by or pursuant to this Deed shall continue as if such
payment, recovery, discharge or release had not occurred; and
(b) the Lender shall be entitled to recover the value or amount of
that payment or recovery and any and all Security hereunder
from the Assignor, as if such payment, recovery, discharge or
release had not occurred.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 10
15.3 Cumulative rights
The security created by or pursuant to this Deed, and the rights,
powers and remedies of the Lender provided by or pursuant to this
Deed, shall be cumulative, in addition to and independent of every
other security which the Lender may at any time hold for the Secured
Obligations or any other obligations or any rights, powers and
remedies provided by law. No prior security held by the Lender
(whether in its capacity as trustee or otherwise) over the whole or
any part of the Assigned Assets shall merge into the security
constituted by this Deed.
15.4 Waiver of defences
Neither the obligations of the Assignor under this Deed nor any
Security created by or pursuant to this Deed will be affected by an
act, omission, matter or thing which, but for this Clause, would
reduce, release or prejudice any of its obligations under any Finance
Document or any Security created by or pursuant to this Deed (without
limitation and whether or not known to it or the Lender) including:
(a) any time, waiver or consent granted to, or composition with,
any Obligor or other person;
(b) the release of any other Obligor or any other person under the
terms of any composition or arrangement with any creditor of
any such Obligor or other person;
(c) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce any
rights against, or security over assets of, the Assignor, any
Obligor or other person or any non-presentation or
non-observance of any formality or other requirement in respect
of any instrument or any failure to realise the full value of
any security;
(d) any incapacity or lack of power, authority or legal personality
of or dissolution or change in the members or status or
constitution of the Assignor, an Obligor or any other person;
(e) any amendment (however fundamental) or replacement of a Finance
Document or any other document or security;
(f) any variation of the terms of the trust upon which the Lender
holds the security constituted by this Deed;
(g) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security;
(h) any insolvency or similar proceedings;
(i) this Deed or any other Finance Document not being validly
executed by or binding against any party; or
(j) the death, insanity or incapacity of the Seller or any other
person.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 11
15.5 Immediate recourse
The Assignor waives any right it may have of first requiring the
Lender (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Assignor under this Deed. This waiver
applies irrespective of any law or any provision of a Finance
Document to the contrary.
15.6 Appropriations
Until all the Secured Obligations have been irrevocably paid in full
and no further Secured Obligations may become outstanding, the Lender
(or any trustee or agent on its behalf) may whether any of the
Secured Obligations is overdue:
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by the Lender (or any trustee or
agent on its behalf), or apply and enforce the same in such
manner and order as it sees fit (save as otherwise expressly
provided in this Deed) and the Assignor shall not be entitled
to the benefit of the same; and
(b) hold in an interest-bearing suspense account any moneys
received or recovered from the Assignor or on account of any
Assigned Asset or the Assignor's liability under this Deed.
15.7 Deferral of Assignor's rights
Until all the Secured Obligations have been irrevocably paid in full
and no further Secured Obligations may become outstanding and unless
the Lender otherwise directs, the Assignor will not exercise any
rights which it may have by reason of performance by it of its
obligations under the Finance Documents:
(a) to be indemnified by any Obligor or Group Member;
(b) to claim any contribution from any guarantor of any Obligor's
obligations under the Finance Documents; and/or
(c) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Lender under the
Finance Documents or of any guarantee or other security taken
pursuant to, or in connection with, the Finance Documents by
the Lender.
15.8 Additional Security
Any Security created by or pursuant to this Deed is in addition to
and are not in any way prejudiced by any other guarantees or Security
now or subsequently held by the Lender.
15.9 Subsequent Security interests
If the Lender (or any trustee or agent on its behalf) at any time
receives or is deemed to have received notice of any subsequent
Security affecting all or any part of the Assigned Assets or any
assignment, transfer or disposition of all or any part of the
Assigned Assets which is prohibited by the terms of any Finance
Document, all
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 12
payments thereafter by or on behalf of the Assignor to the Lender (or
any trustee or agent on its behalf) shall be treated as having been
credited to a new account of the Assignor and not as having been
applied in reduction of the Secured Obligations as at the time when
the Lender (or any trustee or agent on its behalf) received such
notice.
15.10 Tacking
The Lender shall comply with its obligations under the Finance
Documents (including any obligation to make further advances).
16. DISCHARGE OF SECURITY
16.1 Final redemption
Subject to Clauses 15.2 (Reinstatement) and 16.2 (Retention of
security), if the Lender is satisfied that all the Secured
Obligations have been irrevocably paid in full and no further Secured
Obligations may become outstanding, the Lender shall at the request
and cost of the Assignor release, reassign or discharge (as
appropriate) the Assigned Assets from the Securities created herein
(except to the extent already disposed of or enforced against in
accordance with this Deed) in each case without recourse to, or any
representation or warranty by, the Lender or any of their respective
nominees.
16.2 Retention of security
If the Lender has reasonable grounds to believe that any amount paid
or credited to or recovered by the Lender under any Finance Document
is capable of being avoided or otherwise set aside on the Winding-up
of the Assignor or any other person, or otherwise, that amount shall
not be considered to have been paid for the purposes of determining
whether all the Secured Obligations have been irrevocably paid.
16.3 Consolidation
Any restrictions on the consolidation of Security shall be excluded
to the fullest extent permitted by law and the Lender shall, so far
as it is lawful and subject to other provisions of this Deed, be
entitled to consolidate all or any Security created by or pursuant to
this Deed with any other Security whether in existence on the date of
this Deed or in the future.
17. EXPENSES, STAMP DUTY AND INTEREST
The provisions of Clauses 8.3 (Default Interest), 12.5 (Stamp taxes),
16.1 (Transaction expenses), 16.2 (Amendment Costs) and 16.3
(Enforcement Costs) of the Facility Agreement (with any necessary
consequential amendments) shall be deemed to be incorporated into
this Deed as if they were set out in full in this Deed and as if any
reference therein to the Borrower were a reference to the Assignor,
as if references to the Facility Agreement were to this Deed and for
the Assignor in respect of all amounts payable or unpaid by the
Assignor.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 13
18. PAYMENTS
The provisions of Clauses 26.1 (Payments to the Lender), 26.7
(Currency of account), 26.8 (Change of currency) and 26.5 (No set-off
by Obligors) of the Facility Agreement (with any necessary
consequential amendments) shall be deemed to be incorporated into
this Deed as if they were set out in full in this Deed. All payments
by the Assignor under this Deed (including damages for its breach)
shall be made to such account, with such financial institution and in
such other manner as the Lender may, by written notice, direct.
19. TAX GROSS UP
The provisions of Clauses 12.1 (Definitions), 12.2 (Tax gross-up),
Clause 12.4 (Tax Credit) and Clause 12.6 (Indirect tax) of the
Facility Agreement (with any necessary consequential amendments)
shall be deemed to be incorporated into this Deed as if they were set
out in full in this Deed, as if any reference therein to the Borrower
were a reference to the Assignor and as if references to the Facility
Agreement were to this Deed.
20. CONDUCT OF BUSINESS BY THE LENDER
No provision of this Deed will:
(a) interfere with the right of the Lender to arrange its affairs
(tax or otherwise) in whatever manner it thinks fit;
(b) oblige the Lender to investigate or claim any credit, relief,
remission or repayment available to it or the extent, order and
manner of any claim; or
(c) without prejudice to Clause 19 (Tax gross up), oblige the
Lender to disclose any information relating to its affairs (tax
or otherwise) or any computations in respect of Tax.
21. OTHER INDEMNITIES
21.1 Currency and other Indemnities
The provisions of Clause 14.1 (Currency indemnity) of the Facility
Agreement (with any necessary consequential amendments) shall be
deemed to be incorporated into this Deed as if they were set out in
full in this Deed and as if any reference therein to the Borrower is
a reference to the Assignor and any reference to the Facility
Agreement were a reference to this Deed and in respect of any amounts
payable by the Assignor, any amounts payable generally.
21.2 Indemnity
The Assignor shall, within three Business Days demand, indemnify the
Lender against any cost, loss or liability incurred by the Lender as
a result of breach by the Assignor of any provision in this Deed.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 14
21.3 Indemnities separate
Each indemnity in each Finance Document shall:
(a) constitute a separate and independent obligation from the other
obligations in that or any other Finance Document;
(b) give rise to a separate and independent cause of action;
(c) apply irrespective of any indulgence granted by the Lender;
(d) continue in full force and effect despite any judgment, order,
claim or proof for a liquidated amount in respect of any
Liability or any other judgment or order; and
(e) apply whether or not any claim under it relates to any matter
disclosed by the Assignor or otherwise known to the Lender.
22. SET-OFF
The provisions of Clause 27 (Set-off) of the Facility Agreement (with
any necessary consequential amendments) shall be deemed to be
incorporated into this Deed as if they were set out in full in this
Deed.
23. ASSIGNMENTS AND TRANSFERS
23.1 No Assignments or Transfers by the Assignor
The Assignor may not assign or transfer any or all of its rights
and/or obligations under this Deed.
23.2 Assignment by the Lender
The Lender may, in conjunction with a transfer and/or assignment of
all or any of its rights and/or obligations under any Finance
Document, assign its rights under this Deed (whether direct or
indirect).
24. RIGHTS, AMENDMENTS, WAIVERS AND DETERMINATIONS
24.1 Ambiguity
Where there is any ambiguity or conflict between the rights conferred
by law and those conferred by or pursuant to this Deed, the terms of
this Deed shall prevail (to the maximum extent permitted by law).
24.2 Remedies, Waivers and Certificates, etc.
The provisions of Clauses 28 (Notices), 29.2 (Certificates and
Determinations), 30 (Partial Invalidity), 31 (Remedies and Waivers)
and 32 (Amendments and Waivers) of the Facility Agreement (with any
necessary consequential amendments) shall be deemed to be
incorporated into this Deed as if they were set out in full in this
Deed.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 15
24.3 Perpetuity Period
The perpetuity period under the rule against perpetuities, if
applicable to this Deed, shall be the period of eighty years less one
day from the date of this Deed.
24.4 Separate and independent obligations
The Security created by the Assignor by or in connection with any
Finance Document is separate from and independent of the Security
created or intended to be created by the Assignor by or in connection
with any Finance Document.
25. COUNTERPARTS
This Deed may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a
single copy of this Deed.
26. GOVERNING LAW
This Deed is governed by the laws of Hong Kong.
27. JURISDICTION
(a) The courts of Hong Kong have non-exclusive jurisdiction to
settle any dispute arising out of or in connection with this
Deed (including a dispute regarding the existence, validity or
termination of this Deed) (a "Dispute").
(b) The Parties agree that the courts of Hong Kong are the most
appropriate and convenient courts to settle Disputes and
accordingly no Party will argue to the contrary.
(c) This Clause 27 (Jurisdiction) is for the benefit of the Lender
only. As a result, the Lender shall not be prevented from
taking proceedings relating to a Dispute in any other courts
with jurisdiction. To the extent allowed by law, the Lender may
take concurrent proceedings in any number of jurisdictions.
28. SERVICE OF PROCESS
Without prejudice to any other mode of service allowed under any
relevant law, the Assignor:
(a) irrevocably appoints The Grande Holdings Limited, 12/F, The
Grande Building, 398-402 Kwun Tong Road, Kwun Tong, Kowloon,
Hong Kong as its agent for service of process in relation to
any proceedings before the courts of Hong Kong in connection
with this Deed; and
(b) agrees that failure by a process agent to notify the Assignor
of any such process will not invalidate the proceedings
concerned.
In witness whereof this Deed has been duly executed as a deed on the date
stated at the beginning of this Deed.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 16
SCHEDULE 1
RIGHTS OF RECEIVERS
Any Receiver appointed pursuant to Clause 9 (Appointment and rights of
Receivers) shall have the right, either in his own name or in the name of
the Assignor (notwithstanding any dissolution or winding-up of the
Assignor) or otherwise and in such manner and upon such terms and
conditions as that Receiver thinks fit, and either alone or jointly with
any other person:
(a) Deal with Assigned Assets
to sell, transfer, assign, exchange, hire out, lend or otherwise
dispose of or realise the Assigned Assets to any person either by
public offer or auction, tender or private contract (in each case
with or without consideration) and it made with consideration, for a
consideration of any kind (which may be payable or delivered in one
amount or by instalments spread over a period or deferred);
(b) Rights of ownership
to manage and use the Assigned Assets and to exercise and do (or
permit the Assignor or any nominee of it to exercise and do) all such
rights and things as the Receiver would be capable of exercising or
doing if he were the absolute beneficial owner of the Assigned
Assets;
(c) Claims
to settle, adjust, refer to arbitration, compromise and arrange any
claims, accounts, disputes, questions and demands with or by any
person who is or claims to be a creditor of the Assignor or relating
to the Assigned Assets;
(d) Legal actions
to bring, prosecute, enforce, defend and abandon actions, suits and
proceedings in relation to the Assigned Assets;
(e) Redemption of Security
to redeem any Security (whether or not having priority to the
Security created by or pursuant to this Deed) over the Assigned
Assets and to settle the accounts of any person with an interest in
the Assigned Assets;
(f) Spend money
in the exercise of any of the above powers, to spend such sums as he
may properly think fit and the Assignor shall forthwith on demand
repay to the Lender or that Receiver (as the case may be) all sums so
spent together with interest on those sums at such rates as the
Lender may from time to time properly determine from the time they
are paid or incurred and until repayment those sums (together with
such interest) shall be secured by the Security created by or
pursuant to this Deed;
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 17
(g) Receipts
to give valid receipts for all moneys and execute all assurances and
things which may be proper or desirable for realising any Assigned
Asset;
(h) Delegation
to delegate his powers in accordance with Clause 10.2 (Delegation);
and
(i) Other powers
to do anything else he may think fit for the realisation of the
Assigned Assets or incidental to the exercise of any of the rights
conferred on the Lender or any Receiver under or by virtue of any
Finance Document to which the Assignor is party, the Conveyancing and
Property Ordinance (Cap. 219) and other applicable statutory
provisions and common law.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 18
SCHEDULE 2
FORM OF NOTICE OF ASSIGNMENT OF ACQUISITION AGREEMENT
To: [each relevant counterparty under the Acquisition [Date]
Agreement ]
[Address]
1. ABN AMRO Bank N.V., Hong Kong Branch in its capacity as the lender
for and on behalf of certain creditors (the "Lender", which
expression shall include its successors, assigns and transferees) and
S&T International Distribution Limited (the "Company") give you
notice that, by an assignment by way of security contained in an
Assignment of Acquisition Agreement dated 22 August 2005 between the
Company and ABN AMRO Bank N.V., Hong Kong Branch, as Lender (as
amended from time to time, the "Assignment of Acquisition
Agreement"), the Company assigned by way of security to the Lender
(subject to a provision for re-assignment) all its present and future
right, title and interest in and to and all benefit accruing to it
under the Agreement for the Sale and Purchase of certain Shares in
Emerson Radio Corporation dated 20 August 2005 between Gottfried
Ludwig Prentice Jurick, S&T International Distribution Limited and
The Grande Holdings Limited (as amended from time to time, the
"Acquisition Agreement").
2. After receiving notice from the Lender that the security created by
the Assignment of Acquisition Agreement has become enforceable in
accordance with the terms thereof you will pay all amounts payable by
you under or in respect of the Acquisition Agreement as directed by
the Lender and only deal with the Lender in respect of the
Acquisition Agreement, and all rights and remedies under or in
connection with the Acquisition Agreement shall become solely
exercisable by the Lender.
3. You agree not to claim or exercise any set-off or counterclaim in
respect of the Acquisition Agreement or amounts payable by you
thereunder.
4. You are hereby notified that the Company may not amend, terminate,
give any waiver or consent under, or agree or decide not to enforce,
in whole or in part, any term or condition of the Acquisition
Agreement without the prior written consent of the Lender, and any
such amendment, termination, waiver, consent, agreement or decision
by the Company in the absence of a copy of such written consent being
delivered to you shall be invalid and ineffective.
5. You confirm that you have not received any other notice of or any
assignment or charge of the Acquisition Agreement or any right or
interest therein or charge of any other interest of any third party
in the Acquisition Agreement.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 19
6. You are entitled to rely without enquiry on any notice given to you
by the Lender that the security created by the Assignment of
Acquisition Agreement has become enforceable.
7. This notice (including the instructions contained herein) cannot be
amended or revoked without the prior written consent of the Lender.
This notice shall be governed by and construed in accordance with the laws
of Hong Kong.
Please acknowledge this notice by signing the enclosed acknowledgement and
returning that copy to the Lender at 38/F Cheung Kong Center, 2 Queen's
Road Central, Hong Kong marked for the attention of Ms Shirley Yiu / Ms
Helen Fei.
--------------------------------- -------------------------------
--------------------------------- -------------------------------
For and on behalf of For and on behalf of
[ABN AMRO Bank N.V., Hong Kong [S&T International
Branch] Distribution Limited ]
as Lender as Company
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 20
[on duplicate]
To: [ABN AMRO Bank N.V., Hong Kong Branch] as Lender
[Date]
I/We hereby acknowledge receipt of the above notice dated [ ] from S&T
International Distribution Limited (the "Company") and ABN AMRO Bank N.V.,
Hong Kong Branch (the "Notice of Assignment"). Terms and expressions
defined in the Notice of Assignment shall have the same meaning herein.
I/We agree to comply with the terms of the Notice of Assignment and consent
to the assignment by way of security by the Company of all its present and
future right, title and interest in and to and all benefit accruing to it
under the Acquisition Agreement to the Lender. I/We confirm that I/we have
not received any other notice of charge or assignment or notice that any
other person claims any rights in respect of the Acquisition Agreement or
any right or interest therein.
This acknowledgment shall be governed and construed in accordance with the
laws of Hong Kong.
-----------------------------------
-----------------------------------
For and on behalf of
[each relevant counterparty under
the Acquisition Agreement]
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 21
[LOGO OMITTED] MALLESONS STEPHEN JAQUES
EXECUTION
In witness whereof this Deed has been executed and delivered as a deed by
the Parties on the date specified above.
The Common Seal of S&T International [Signature]
Distribution Limited was hereunto affixed in the
presence of:
................................
Name:
Address: (c/o) The Grande Holdings Limited
12th Floor, The Grande Building,
398 Kwun Tong Road,
Kowloon, Hong Kong
Fax No: (852) 2343 2329 and (65) 6222 2153
Attention: Ms. Ruby Lee, Esq.
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 22
SIGNED, SEALED AND DELIVERED by [Signature of authorised signatory]
for and on behalf of ABN AMRO Bank N.V., Hong
Kong Branch in the presence of .........................
Address: 38/F, Cheung Kong Center
2 Queen's Road Central
Hong Kong
Fax No: (852) 2700 3202
Attention: Ms Shirley / Ms Helen Fei
-------------------------------------------------------------------------------
(C) Mallesons Stephen Jaques Assignment of Acquisition Agreement 23
Exhibit 7
EXECUTION COPY
PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of August 22, 2005 (this "Agreement"),
made between the Borrower referred to below (the "Pledgor"), and ABN AMRO Bank
N.V., Hong Kong Branch (the "Pledgee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, S&T International Distribution Limited, a British Virgin
Islands company with limited liability (the "Borrower"), and the Pledgee are
parties to the Facility Agreement, dated as of the date hereof (such
agreement, as amended, restated, supplemented or otherwise modified from time
to time, being hereinafter referred to as the "Facility Agreement"), pursuant
to which the Pledgee has agreed to make certain loans (collectively, the
"Loans") to the Borrower;
WHEREAS, it is a condition precedent to the making of any Loan by
the Pledgee pursuant to the Facility Agreement that the Pledgor shall have
executed and delivered to the Pledgee a pledge and security agreement
providing for the pledge to the Pledgee, and the grant to the Pledgee of a
security interest in and Lien on the Acquisition Shares (as defined in the
Facility Agreement) referred to in the Acquisition Agreement between the
Borrower and Gottfried Ludwig Prentice Jurick, of even date herewith, owned or
to be owned by the Pledgor; and
WHEREAS, the Pledgor has determined that the execution, delivery
and performance of this Agreement directly benefit and are in the best
interest of the Pledgor;
NOW, THEREFORE, in consideration of the premises and the
agreements herein and in order to induce the Pledgee to make and maintain the
Loans pursuant to the Facility Agreement, the Pledgor hereby agrees with the
Pledgee as follows:
SECTION 1. Definitions. Reference is hereby made to the Facility
Agreement for a statement of the terms thereof. All terms used in this
Agreement which are defined in the Facility Agreement or in Article 8 or
Article 9 of the Uniform Commercial Code (the "Code") in effect from time to
time in the State of New York and which are not otherwise defined herein shall
have the same meanings herein as set forth therein; provided, that terms used
herein which are defined in the Code as in effect in the State of New York on
the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as the Pledgee may otherwise
determine.
SECTION 2. Pledge and Grant of Security Interest. As collateral
security for all of the Obligations (as defined in Section 3 hereof), the
Pledgor hereby pledges and collaterally assigns to the Pledgee a continuing
security interest in and Lien on the Pledgor's right, title and interest in
and to the following (the "Pledged Collateral"):
the shares of stock, partnership interests, membership interests
and other equity interests described in Schedule I hereto (the "Pledged
Shares"), whether or not evidenced or represented by any stock certificate,
certificated security or other instrument, issued by the Persons described in
such Schedule I (the "Pledged Issuer"), the certificates representing the
Pledged Shares, all options and other rights, contractual or otherwise, in
respect thereof and all
dividends, distributions, cash, instruments, investment property and other
property (including, but not limited to, any stock dividend and any
distribution in connection with a stock split) from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Pledged Shares;
SECTION 3. Security for Obligations. The security interest created
hereby in the Pledged Collateral constitutes continuing collateral security
for all of the following obligations, whether now existing or hereafter
incurred (collectively, the "Obligations"):
(a) the prompt payment by the Pledgor, as and when due and
payable (by scheduled maturity, required prepayment, acceleration, demand or
otherwise), of all amounts from time to time owing by the Pledgor to the
Pledgee in respect of the Facility Agreement and all other Finance Documents,
including, without limitation (i) principal of and interest on the Loans
(including, without limitation, all interest that accrues after the
commencement of any Insolvency Proceeding of the Pledgor whether or not the
payment of such interest is unenforceable or is not allowable due to the
existence of such Insolvency Proceeding), and (ii) all fees, commissions,
expense reimbursements, indemnifications and all other amounts due or to
become due to the Pledgee under the Facility Agreement and any other Finance
Document; and
(b) the due performance and observance by the Pledgor of all of
its other obligations from time to time existing in respect of the Facility
Agreement and all other Financing Documents.
SECTION 4. Delivery of the Pledged Collateral.
(a) (i) All certificates representing the Pledged Shares shall
be delivered to the Pledgee promptly following issuance thereof in the name of
the Pledgor by the Pledged Issuer's stock transfer agent. All other
certificates and instruments constituting Pledged Collateral from time to time
required to be pledged to the Pledgee pursuant to the terms hereof (the
"Additional Collateral") shall be delivered to the Pledgee promptly upon
receipt thereof by or on behalf of the Pledgor. All such certificates and
instruments shall be held by or on behalf of the Pledgee pursuant hereto and
shall be accompanied by duly executed instruments of transfer or assignment or
undated stock powers executed in blank, all in form and substance reasonably
satisfactory to the Pledgee. If any Pledged Collateral consists of
uncertificated securities, unless the immediately following sentence is
applicable thereto, the Pledgor shall cause the Pledgee (or its custodian,
nominee or other designee) to become the registered holder thereof, or cause
each issuer of such securities to agree that it will comply with instructions
originated by the Pledgee with respect to such securities without further
consent by the Pledgor. If any Pledged Collateral consists of security
entitlements, the Pledgor shall transfer such security entitlements to the
Pledgee (or its custodian, nominee or other designee) or cause the applicable
securities intermediary to agree that it will comply with entitlement orders
by the Pledgee without further consent by the Pledgor.
(ii) Within 5 Business Days of the receipt by the Pledgor of
any Additional Collateral, a Pledge Amendment, duly executed by the Pledgor,
in substantially the form of Annex I hereto (a "Pledge Amendment"), shall be
delivered to the Pledgee in respect
2
of the Additional Collateral to be pledged pursuant to this Agreement and the
Facility Agreement. The Pledge Amendment shall from and after delivery thereof
constitute part of Schedule I hereto. The Pledgor hereby authorizes the Pledgee
to attach each Pledge Amendment to this Agreement and agrees that all
certificates or instruments listed on any Pledge Amendment delivered to the
Pledgee shall, for all purposes hereunder, constitute Pledged Collateral and
the Pledgor shall be deemed upon delivery thereof to have made the
representations and warranties set forth in Section 5 with respect to such
Additional Collateral.
(b) If the Pledgor shall receive, by virtue of the Pledgor's
being or having been an owner of any Pledged Collateral, any (i) stock
certificate (including, without limitation, any certificate representing a
stock dividend or distribution in connection with any increase or reduction of
capital, reclassification, merger, consolidation, sale of assets, combination
of shares, stock split, spin-off or split-off), promissory note or other
instrument, (ii) option or right, whether as an addition to, substitution for,
or in exchange for, any Pledged Collateral, or otherwise, (iii) dividends
payable in cash (except such dividends permitted to be retained by the Pledgor
pursuant to Section 7 hereof) or in securities or other property, or (iv)
dividends or other distributions in connection with a partial or total
liquidation or dissolution, the Pledgor shall receive such stock certificate,
promissory note, instrument, option, right, payment or distribution in trust
for the benefit of the Pledgee, shall segregate it from the Pledgor's other
property and shall deliver it forthwith to the Pledgee, in the exact form
received, with any necessary endorsement and/or appropriate stock powers duly
executed in blank, to be held by the Pledgee as Pledged Collateral and as
further collateral security for the Obligations.
SECTION 5. Representations and Warranties. The Pledgor
represents and warrants as follows:
(a) The Pledgor (i) is a company with limited liability duly
organized, validly existing and in good standing under the laws of the state
or jurisdiction of its organization, and (ii) has all requisite power and
authority to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance by the Pledgor of
this Agreement (i) have been duly authorized by all necessary company action,
(ii) do not and will not contravene its constitutional documents or any
applicable law or any material contractual restriction binding on or affecting
it or any of its properties, and (iii) do not and will not result in or
require the creation of any Lien upon or with respect to any of its properties
other than pursuant to this Agreement.
(c) The Pledged Shares have been duly authorized and validly
issued and are fully paid and nonassessable and the holders thereof are not
entitled to any preemptive, first refusal or other similar rights. Except as
noted in Schedule I hereto, the Pledged Shares represent approximately
thirty-seven percent (37%) of the entire issued share capital of the Pledged
Issuer on a fully diluted basis as of the date hereof. All shares constituting
Pledged Collateral will be duly authorized and validly issued, and fully paid
and nonassessable.
3
(d) The Pledgor is and will be at all times the legal and
beneficial owner of its Pledged Collateral free and clear of all Liens, except
for the Lien created by this Agreement.
(e) The exercise by the Pledgee of any of its rights or
remedies in accordance with the terms of this Agreement will not contravene
any law or any material contractual restriction binding on or affecting the
Pledgor or any of the properties of the Pledgor and will not result in or
require the creation of any Lien upon or with respect to any of the properties
of the Pledgor other than pursuant to this Agreement or the other Finance
Documents.
(f) No authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority is required to be
obtained or made by the Pledgor for (i) the due execution, delivery and
performance by the Pledgor of this Agreement, (ii) the grant by the Pledgor or
the perfection of the Lien created hereby in the Pledged Collateral, or (iii)
the exercise by the Pledgee of any of its rights and remedies hereunder,
except (A) as may be required in connection with any sale of any Pledged
Collateral by laws affecting the offering and sale of securities generally and
(B) for the filing under the Code as in effect in the applicable jurisdiction
of the applicable financing statements, all of which financing statements have
been duly filed and are in full force and effect.
(g) This Agreement creates a valid Lien in favor of the Pledgee
in the Pledged Collateral as security for the Obligations. The filing of
financing statements and the Pledgee's possession of any certificates
representing the Pledged Shares and all other certificates, instruments and
cash constituting Pledged Collateral from time to time results in the
perfection of such Lien. Such Lien is, or in the case of Pledged Collateral in
which the Pledgor obtains rights after the date hereof, will be, a perfected,
first-priority Lien. All action necessary or desirable to perfect and protect
such Lien has been duly taken, except for the filing of the financing
statements and the Pledgee's acquisition of possession of certificates,
instruments and cash constituting Pledged Collateral to take place after the
date hereof.
SECTION 6. Covenants as to the Pledged Collateral. So long as
any Obligation shall remain outstanding, the Pledgor will, unless the Pledgee
shall otherwise consent in writing:
(a) keep adequate records concerning the Pledged Collateral and
permit the Pledgee or any designee or representative thereof at any time or
from time to time to examine and make copies of and abstracts from such
records pursuant to the terms of the Facility Agreement;
(b) at the Pledgor's sole expense, promptly deliver to the
Pledgee a copy of each material notice or other material communication
received by it in respect of the Pledged Collateral;
(c) at the Pledgor's sole expense, defend the Pledgee's right,
title and security interest in and to the Pledged Collateral against the
claims of any Person;
(d) subject to Section 9(b), at the Pledgor's sole expense, at
any time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that may be necessary or
that the Pledgee may reasonably request in order
4
to (i) perfect and protect, or maintain the perfection of, the security
interest and Lien created hereby, (ii) enable the Pledgee to exercise and
enforce its rights and remedies hereunder in respect of the Pledged
Collateral, and (iii) otherwise effect the purposes of this Agreement,
including, without limitation, delivering to the Pledgee, after the occurrence
and during the continuance of an Event of Default, irrevocable proxies in
respect of the Pledged Collateral;
(e) not sell, assign (by operation of law or otherwise),
exchange or otherwise dispose of any Pledged Collateral or any interest
therein except as expressly permitted by the Facility Agreement;
(f) not create or suffer to exist any Lien upon or with respect
to any Pledged Collateral, except for the Lien created hereby;
(g) not make or consent to any amendment or other modification
or waiver with respect to any Pledged Collateral or enter into any agreement
or permit to exist any restriction with respect to any Pledged Collateral
other than to the extent permitted pursuant to any of the Finance Documents;
and
(h) not take or fail to take any action which would in any
manner materially impair the value or enforceability of the Pledgee's security
interest in and Lien on any Pledged Collateral, except as permitted under the
Finance Documents.
SECTION 7. Voting Rights, Dividends, Etc. in Respect of the
Pledged Collateral.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) the Pledgor may exercise any and all voting and other
consensual rights pertaining to any Pledged Collateral for any purpose not
inconsistent with the terms of this Agreement or the Facility Agreement or the
other Finance Documents; provided, however, that (A) the Pledgor will not
exercise or refrain from exercising any such right, as the case may be, if the
Pledgee gives it notice that, in the Pledgee's reasonable business judgment,
such action (or inaction) could reasonably be expected to have a Material
Adverse Effect, and (B) the Pledgor will give the Pledgee at least three (3)
Business Days' notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right which could reasonably
be expected to have a Material Adverse Effect;
(ii) the Pledgor may receive and retain any and all dividends,
interest payments or other distributions paid in respect of the Pledged
Collateral to the extent permitted by the Facility Agreement; provided,
however, that any and all (A) dividends and interest paid or payable other
than in cash in respect of, and any instruments and other property received,
receivable or otherwise distributed in respect of or in exchange for, any
Pledged Collateral, (B) dividends and other distributions paid or payable in
cash in respect of any Pledged Collateral in connection with a partial or
total liquidation or dissolution, and (C) cash paid, payable or otherwise
distributed in redemption of, or in exchange for, any Pledged Collateral to
the extent not permitted to be retained by the Pledgor under the Facility
Agreement, together with any dividend, interest payment or other distribution,
in each case, which at the time of such
5
dividend, interest payment or other distribution was not permitted by the
Facility Agreement, shall be, and shall forthwith be delivered to the Pledgee
to hold as, Pledged Collateral and shall, if received by the Pledgor, be
received in trust for the benefit of the Pledgee, shall be segregated from the
other property or funds of the Pledgor, and shall be forthwith delivered to
the Pledgee in the exact form received with any necessary endorsement and/or
appropriate stock powers duly executed in blank, to be held by the Pledgee as
Pledged Collateral and as further collateral security for the Obligations; and
(iii) the Pledgee will execute and deliver (or cause to be
executed and delivered) to the Pledgor all such proxies and other instruments
as the Pledgor may reasonably request for the purpose of enabling the Pledgor
to exercise the voting and other rights which it is entitled to exercise
pursuant to Section 7(a)(i) hereof and to receive the dividends, interest
and/or other distributions which it is authorized to receive and retain
pursuant to Section 7(a)(ii) hereof.
(b) Upon the occurrence and during the continuance of an Event
of Default:
(i) all rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 7(a)(i) hereof, and to receive the dividends, distributions, interest
and other payments which it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) hereof, shall cease, and all such rights
shall thereupon become vested in the Pledgee, which shall thereupon have the
sole right to exercise such voting and other consensual rights and to receive
and hold as Pledged Collateral such dividends and interest payments;
(ii) without limiting the generality of the foregoing, the
Pledgee may, at its option, exercise any and all rights of conversion,
exchange, subscription or any other rights, privileges or options pertaining
to any of the Pledged Collateral as if it were the absolute owner thereof,
including, without limitation, the right to exchange, in its discretion, any
and all of the Pledged Collateral upon the merger, consolidation,
reorganization, recapitalization or other adjustment of the Pledged Issuer, or
upon the exercise by the Pledged Issuer of any right, privilege or option
pertaining to any Pledged Collateral, and, in connection therewith, to deposit
and deliver any and all of the Pledged Collateral with any committee,
depository, transfer agent, registrar or other designated agent upon such
terms and conditions as it may determine; and
(iii) all dividends, distributions, interest and other payments
which are received by the Pledgor pursuant to the provisions of Section
7(a)(ii) hereof and, pursuant to Section 7(b)(i) hereof, shall be received in
trust for the benefit of the Pledgee, shall be segregated from other funds of
the Pledgor, and shall be forthwith paid over to the Pledgee as Pledged
Collateral in the exact form received with any necessary endorsement and/or
appropriate stock powers duly executed in blank, to be held by the Pledgee as
Pledged Collateral and as further collateral security for the Obligations.
SECTION 8. Additional Provisions Concerning the Pledged
Collateral.
6
(a) To the maximum extent permitted by applicable law, the
Pledgor (i) authorizes the Pledgee to execute any such agreements, instruments
or other documents in the Pledgor's name as are necessary, required or
advisable to facilitate and preserve the Pledgee's rights in and to the
Pledged Collateral as set forth in this Agreement and to file such agreements,
instruments or other documents in the Pledgor's name in any appropriate filing
office, (ii) authorizes the Pledgee to file any financing statements required
hereunder or under any other Finance Document, and any continuation statements
or amendments with respect thereto, in any appropriate filing office without
the signature of the Pledgor, and (iii) ratifies the filing of any financing
statement, and any continuation statement or amendment with respect thereto,
filed without the signature of the Pledgor prior to the date hereof. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Pledged Collateral or any part thereof shall be sufficient to
constitute a financing statement where permitted by law.
(b) The Pledgor, after the occurrence and during the
continuance of an Event of Default, hereby irrevocably appoints the Pledgee as
the Pledgor's attorney-in-fact and proxy, with full authority in the place and
stead of the Pledgor and in the name of the Pledgor or otherwise, from time to
time in the Pledgee's discretion, to take any action and to execute any
agreement, instrument or other document which the Pledgee may deem necessary
or advisable to accomplish the purposes of this Agreement (subject to the
rights of the Pledgor under Section 7(a) hereof), including, without
limitation, to receive, endorse and collect all instruments made payable to
the Pledgor representing any dividend, distribution, interest or other payment
in respect of any Pledged Collateral and to give full discharge for the same.
This power is coupled with an interest and is irrevocable until all of the
Obligations (other than contingent indemnity obligations for which no claim
has been made) are paid in full after the termination of all of the
Commitments.
(c) Upon the occurrence and during the continuance of an Event
of Default, if the Pledgor fails to perform any agreement or obligation
contained herein, the Pledgee itself may perform, or cause performance of,
such agreement or obligation, and the expenses of the Pledgee incurred in
connection therewith shall be payable by the Pledgor pursuant to Section 10
hereof and shall be secured by the Pledged Collateral.
(d) The powers conferred on the Pledgee hereunder are solely to
protect its interest in the Pledged Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any
Pledged Collateral in its possession and the accounting for monies actually
received by it hereunder, the Pledgee shall have no duty as to any Pledged
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Pledged Collateral
and shall be relieved of all responsibility for the Pledged Collateral upon
surrendering it or tendering surrender of it to the Pledgor. The Pledgee shall
be deemed to have exercised reasonable care in the custody and preservation of
the Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which the Pledgee accords its own
property, it being understood that the Pledgee shall not have responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relating to any Pledged
Collateral, whether or not the Pledgee has or is deemed to have knowledge of
such matters or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.
7
(e) The Pledgee may, in its discretion, at any time after the
occurrence and during the continuation of an Event of Default (i) without
notice to the Pledgor, transfer or register in the name of the Pledgee or any
of its nominees any or all of the Pledged Collateral, subject only to the
revocable rights of the Pledgor under Section 7(a) hereof, and (ii) exchange
certificates or instruments constituting Pledged Collateral for certificates
or instruments of smaller or larger denominations.
SECTION 9. Remedies Upon Default. Subject to the terms hereof,
if any Event of Default shall have occurred and be continuing:
(a) The Pledgee may exercise in respect of the Pledged
Collateral, in addition to any other rights and remedies provided for herein
or otherwise available to it, all of the rights and remedies of a secured
party on default under the Code then in effect in the State of New York; and
without limiting the generality of the foregoing and without notice except as
specified below, may sell the Pledged Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange or broker's board or
elsewhere, at such price or prices and on such other terms as the Pledgee may
deem commercially reasonable, in accordance with applicable law. The Pledgor
agrees that, to the extent notice of sale shall be required by law, at least
10 days' notice to the Pledgor of the time and place of any public sale of
Pledged Collateral owned by the Pledgor or the time after which any private
sale is to be made shall constitute reasonable notification. The Pledgee shall
not be obligated to make any sale of Pledged Collateral regardless of whether
or not notice of sale has been given. The Pledgee may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.
(b) In the event that the Pledgee determines to exercise its
right to sell all or any part of the Pledged Collateral pursuant to Section
9(a) hereof, each of the Pledgee and the Pledgor agrees that the Pledgor shall
have all of the following obligations: (i) to execute and deliver, and cause
each issuer of such Pledged Collateral and the directors and officers thereof
to execute and deliver, all such instruments and documents, and do or cause to
be done all such other acts and things, as may be necessary or, in the opinion
of the Pledgee, advisable to register such Pledged Collateral under the
provisions of the Securities Act of 1933, as amended (the "Securities Act"),
and to cause the registration statement relating thereto to become effective
and to remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to the
related prospectus which, in the opinion of the Pledgee, are necessary or
advisable, all in conformity with the requirements of the Securities Act and
the rules and regulations of the Securities and Exchange Commission applicable
thereto, (ii) to cause each issuer of such Pledged Collateral to qualify such
Pledged Collateral under the state securities or "Blue Sky" laws of each
jurisdiction, and to obtain all necessary governmental approvals for the sale
of the Pledged Collateral, as requested by the Pledgee, (iii) to cause the
Pledged Issuer to make available to its securityholders, as soon as
practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act, and (iv) to do or cause to be done all
such other acts and things as may be necessary to make such sale of such
Pledged Collateral valid and binding and in compliance with applicable law.
8
(c) The Pledgor recognizes that the Pledgee may deem it
impracticable to effect a public sale of all or any part of the Pledged Shares
or any other securities constituting Pledged Collateral and that the Pledgee
may, therefore, determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be obligated to agree,
among other things, to acquire such securities for their own account, for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges that any such private sale may be at prices and on terms
less favorable to the seller than the prices and other terms which might have
been obtained at a public sale and, notwithstanding the foregoing, agrees that
such private sales shall be deemed to have been made in a commercially
reasonable manner and that the Pledgee shall have no obligation to delay the
sale of the Pledged Shares or any other Pledged Collateral for the period of
time necessary to permit the Pledgor or the Pledged Issuer to register such
securities for public sale under the Securities Act. The Pledgor further
acknowledges and agrees that any offer to sell such securities which has been
(i) publicly advertised on a bona fide basis in a newspaper or other
publication of general circulation in the financial community of New York, New
York (to the extent that such an offer may be so advertised without prior
registration under the Securities Act) or (ii) made privately in the manner
described above to not less than fifteen (15) bona fide offerees shall be
deemed a "public disposition" for the purposes of Section 9-610(c) of the Code
(or any successor or similar applicable statutory provision) as then in effect
in the State of New York, notwithstanding that such sale may not constitute a
"public offering" under the Securities Act, and that the Pledgee may, in such
event, bid for the purchase of such securities.
(d) Any cash held by the Pledgee as Pledged Collateral and all
cash proceeds received by the Pledgee in respect of any sale of, collection
from, or other realization upon, all or any part of the Pledged Collateral
may, in the discretion of the Pledgee, be held by the Pledgee as collateral
for and/or then or at any time thereafter applied (after payment of any
amounts payable to the Pledgee pursuant to Section 10 hereof) in whole or in
part by the Pledgee against all or any part of the Obligations in such order
as the Pledgee shall elect so long as such election is consistent with the
provisions of the Facility Agreement and any other Finance Document. Any
surplus of such cash or cash proceeds held by the Pledgee and remaining after
payment in full of all of the Obligations after all Commitments have been
terminated shall be paid over to the Pledgor or to such other Person as may be
lawfully entitled to receive such surplus.
(e) In the event that the proceeds of any such sale, collection
or realization are insufficient to pay all amounts to which the Pledgee is
legally entitled, the Pledgor shall be liable for the deficiency, together
with interest thereon at the highest rate specified in the Facility Agreement
for interest on overdue principal thereof or such other rate as shall be fixed
by applicable law, together with the costs of collection and the reasonable
fees, costs and expenses of any attorneys employed by the Pledgee to collect
such deficiency.
SECTION 10. Indemnity and Expenses.
(a) The Pledgor agrees to defend, protect, indemnify and hold
harmless the Pledgee and the Pledgee's officers, directors, employees,
attorneys, consultants and agents, subject to and in accordance with Section 6
of the Facility Agreement.
9
(b) The Pledgor agrees to pay to the Pledgee, upon demand, the
amount of any and all reasonable costs and expenses, including the fees,
costs, expenses and disbursements of the Pledgee's counsel and of any experts
and agents, which the Pledgee may incur in connection with the preparation and
enforcement of this Agreement, subject to and in accordance with Section 6 of
the Facility Agreement.
SECTION 11. Notices, Etc. All notices and other communications
provided for hereunder shall be in writing and shall be mailed (by certified
mail, postage prepaid and return receipt requested), telecopied or delivered
by hand, Federal Express or other reputable overnight courier, if to the
Pledgor, to it at its address specified in the Facility Agreement and if to
the Pledgee to it at its address specified in the Facility Agreement; or as to
any other Person, at such other address as shall be designated by such Person
in a written notice complying as to delivery with the terms of this Section
11. All such notices and other communications shall be effective (a) if mailed
(certified mail, postage prepaid and return receipt requested), when received
or three (3) days after being deposited into the mails, whichever occurs
first, (b) if telecopied, when transmitted, at the time confirmation is
received, or (c) if delivered by hand, Federal Express or other reputable
overnight courier, upon delivery.
SECTION 12. Security Interest Absolute. All rights of the
Pledgee and all Liens and all obligations of the Pledgor hereunder shall be
absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of the Facility Agreement or any other agreement or instrument
relating thereto, (ii) any change in the time, manner or place of payment of,
or in any other term in respect of, all or any of the Obligations, or any
other amendment or waiver of or consent to any departure from the Facility
Agreement or any other Finance Document, (iii) any exchange or release of, or
non-perfection of, any Lien on any Collateral, or any release or amendment or
waiver of, or consent to departure from, any guaranty for all or any of the
Obligations, or (iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations. All authorizations and agencies contained herein with respect to
any of the Pledged Collateral are irrevocable and constitute powers coupled
with an interest.
SECTION 13. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be
effective unless it is in writing and signed by the Pledgor and the Pledgee,
and no waiver of any provision of this Agreement, and no consent to any
departure by the Pledgor therefrom, shall be effective unless it is in writing
and signed by the Pledgee, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Pledgee to exercise, and no
delay in exercising, any right hereunder or under the Facility Agreement or
any other Finance Document shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The rights and remedies
of the Pledgee provided herein and in the Facility Agreement and the other
Finance Documents are cumulative and are in addition to, and not exclusive of,
any other rights or remedies provided by law. The rights of the Pledgee under
the applicable Finance Document against any party thereto are not conditional
or contingent on any attempt by the Pledgee to
10
exercise any of its rights under any other document against such party or
against any other Person.
(c) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
(d) This Agreement shall create a continuing security interest
in and Lien upon the Pledged Collateral and shall (i) remain in full force and
effect until the payment in full or other termination of the Obligations
(other than contingent indemnity obligations for which no claim has been made)
after the termination of all of the Commitments and (ii) be binding on the
Pledgor and, by its acceptance hereof, the Pledgee, and their respective
successors and assigns, and shall inure, together with all rights and remedies
of the Pledgee hereunder, to the benefit of the Pledgee and its respective
successors, transferees and assigns. Subject to the terms of the Facility
Agreement, without limiting the generality of clause (ii) of the immediately
preceding sentence, the Pledgee may assign or otherwise transfer its rights
and obligations under this Agreement and any other Finance Document to any
other Person in accordance with the terms of the Facility Agreement, and such
other Person shall thereupon become vested with all of the benefits in respect
thereof granted to the Pledgee herein or otherwise. Upon any such assignment
or transfer, all references in this Agreement to the Pledgee shall also mean
the assignee of the Pledgee. None of the rights or obligations of the Pledgor
hereunder may be assigned or otherwise transferred without the prior written
consent of the Pledgee, and any such attempted assignment or transfer without
such consent shall be null and void.
(e) Upon the satisfaction in full of the Obligations (other
than contingent indemnity obligations for which no claim has been made) after
the termination of all of the Commitments (i) this Agreement and the security
interest and Lien created hereby shall terminate and all rights to the Pledged
Collateral shall revert to the Pledgor and (ii) the Pledgee will, at the
Pledgor's expense (A) promptly return to the Pledgor such of the Pledged
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof and (B) execute and deliver to the Pledgor,
without recourse, representation or warranty of any kind, whether express or
implied, such documents as the Pledgor shall reasonably request to evidence
such termination, including, if necessary, a written notice to the stock
transfer agent for the Pledged Issuer advising that the Pledgee's security
interest in and Lien upon the Pledged Collateral has been released by the
Pledgee.
(f) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity and
perfection or the perfection and the effect of perfection or non-perfection of
the security interest and Lien created hereby, or remedies hereunder, in
respect of any particular Pledged Collateral, are governed by the laws of a
jurisdiction other than the State of New York.
(g) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK,
11
IN EACH CASE WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, THE PLEDGOR HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS. THE PLEDGOR HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL JURISDICTION
OVER THE PLEDGOR, AND AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT BROUGHT IN ANY OF THE AFORESAID
COURTS THAT ANY SUCH COURT LACKS PERSONAL JURISDICTION OVER THE PLEDGOR. THE
PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY CERTIFIED MAIL, POSTAGE PREPAID AND RETURN RECEIPT
REQUESTED, TO THE PLEDGOR AT ITS ADDRESS FOR NOTICES AS PROVIDED IN THE
FACILITY AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. THE PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE
OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN
ANY ACTION OR PROCEEDING COMMENCED HEREUNDER THAT SUCH SERVICE OF PROCESS WAS
IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE PLEDGEE UNDER THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE PLEDGOR IN ANY OTHER JURISDICTION.
(h) THE PLEDGOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (g) ABOVE AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(i) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(j) This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Delivery of an executed counterpart of
this Agreement by telecopier or electronic transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement.
(k) In the event of any conflict between the terms and
conditions of this Agreement and the terms and conditions of the Finance
Documents solely with respect to the
12
delivery of the Pledged Collateral or taking any required actions with respect
to the Pledged Collateral, the terms and conditions of the Finance Documents
shall control.
[NEXT PAGE IS THE SIGNATURE PAGE.]
13
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be
executed and delivered by its officer thereunto duly authorized, as of the
date first above written.
PLEDGOR:
-------
S&T International Distribution Limited
By:
-------------------------------
Name:
Title:
PLEDGEE:
-------
ABN AMRO Bank N.V., Hong Kong Branch
By: _______________________________
Name:
Title:
SCHEDULE I
TO
PLEDGE AND SECURITY AGREEMENT
Pledged Shares
--------------
Number of Certificate
Pledgor Name of Issuer Shares Class Number
------- -------------- --------- ----- ------------
S&T International Emerson 10,000,000 Common
Distribution Limited Radio
Corporation
ANNEX I
TO
PLEDGE AND SECURITY AGREEMENT
PLEDGE AMENDMENT
----------------
This Pledge Amendment, dated _______________, is delivered
pursuant to Section 4 of the Pledge and Security Agreement referred to below.
The undersigned hereby agrees that this Pledge Amendment may be attached to
the Pledge and Security Agreement, dated as of __________, 200_, as it may
heretofore have been or hereafter may be amended or otherwise modified or
supplemented from time to time and that the promissory notes or shares listed
on this Pledge Amendment shall be hereby pledged and assigned to the Pledgee
and become part of the Pledged Collateral referred to in such Pledge and
Security Agreement and shall secure all of the Obligations referred to in such
Pledge and Security Agreement.
Pledged Shares
--------------
Number Certificate
Pledgor Name of Issuer of Shares Class Number(s)
------- -------------- --------- ----- ---------
S&T International Distribution
Limited
By:
-----------------------------
Name:
Title: