Dated 17th August 1993
(1) OCEAN INFORMATION HOLDINGS LIMITED
and
(2) ARROW ELECTRONICS, INC.
SHARE SALE AGREEMENT
relating to the sale and purchase of
the whole of the issued share capital of
COMPONENTS AGENT (B.V.I.) LIMITED
STEPHENSON HARWOOD & LO
1802 Edinburgh Tower, The Landmark
15 Queen's Road Central, Hong Kong
SHARE SALE AGREEMENT
DATED 17th August 1993
PARTIES
(1) OCEAN INFORMATION HOLDINGS LIMITED a company incorporated in Bermuda
whose registered office is at Clarendon House, Church Street,
Hamilton, HM11, Bermuda (the "Vendor"); and
(2) ARROW ELECTRONICS, INC a company incorporated in the State of New
York, U.S.A. whose principal executive office is at 25 Hub Drive,
Melville, New York, 11747, U.S.A. (the "Purchaser").
PRELIMINARY
(A) Components Agent (B.V.I.) Limited is a private company incorporated in
the British Virgin Islands which has six wholly owned subsidiaries;
four in Hong Kong, one in Singapore and one in Malaysia.
(B) The Vendor has agreed to sell and the Purchaser has agreed to purchase
the Shares on the terms and conditions of this Agreement and in
particular on the basis of the representations warranties agreements
and indemnities hereinafter mentioned.
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement, unless the context otherwise requires, the
following words and expressions have the following meanings:-
Accounts the audited accounts of the
Company and of each of its
Subsidiaries (except
Components Agent Taiwan
Limited) for the last two
accounting periods (save in
respect of Components Agent
China Limited which shall be
for the last accounting
period only) which ended on
the Balance Sheet Date
comprising in each case the
audited balance sheets, the
audited profit and loss
accounts and all notes,
reports and other documents
annexed thereto, and the
audited consolidated accounts
of the Company for the
financial period ending on
the Balance Sheet Date
comprising the audited
consolidated balance sheet
and the audited consolidated
profit and loss account, and
the Management Accounts,
copies of which have been
supplied to the Purchaser
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"business day" means a day on which banks
are open for business in
Hong Kong
Balance Sheet Date 31st March 1993
Company Components Agent (B.V.I.)
Limited, a company
incorporated in the British
Virgin Islands, whose
registered office is at
Craigmuir Chambers, P 0 Box
71, Road Town Tortola,
British Virgin Islands
particulars of which are set
out in Part I of the First
Schedule
Completion completion of the sale and
purchase of the Shares in
accordance with Clause 5
Completion Date the date of this Agreement
Deed of Indemnity the deed in the form set out
in the Fifth Schedule
Disclosure Letter the letter of even date
herewith from the Vendor to
the Purchaser (including the
documents referred to in the
annexures to such letter)
disclosing certain exceptions
to the Warranties
Earnest Money the sum of HK$7,727,000
being equivalent (using the
rate of exchange prevailing
on 16th June 1993) to the sum
of US$1,000,000 paid by the
Purchaser to the Vendor
Group the Company and the
Subsidiaries
HK$ Hong Kong dollars
Intellectual Property patents, trade marks,
service marks, registered
designs applications for any
of the foregoing, design
rights, copyright or
inventions and the benefit of
any and all licences in
connection with any of the
foregoing
Listing Rules the rules governing the
listing of securities on The
Stock Exchange of Hong Kong
Limited
Management Accounts the unaudited balance sheets
of the Company and each of
the Subsidiaries (except
Components Agent Korea
Limited and Components Agent
Taiwan Limited) as at the
Management Accounts Date and
the unaudited profit and loss
accounts of the Company and
each of the Subsidiaries as
at the Management Accounts
Date
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Management Accounts Date 30th June 1993, except in
the case of Components Agent
Korea Limited which shall be
31st March 1993
Option Agreement two agreements of even date
made between, firstly, (1)
the Company and (2) TMC Fund
Company Limited and,
secondly, (1) the Company and
(2) Tam Hing Sang relating to
deferred shares in Components
Agent Limited in the agreed
terms
Mr. Tam Tam Hing Sang
Mr. Tsang Tsang Man Chung
Purchaser's Solicitors Stephenson Harwood & Lo of
18th Floor, Edinburgh Tower,
The Landmark, 15 Queen's Road
Central, Hong Kong
Purchaser's Charge over Shares a charge of even date made
between (1) the Purchaser and
(2) the Vendor in the agreed
terms
Purchaser's Deed of Indemnity an indemnity of even date
made between (1) the
Purchaser, (2) the Vendor and
(3) Ocean Office Automation
Limited in the agreed terms
Premises the property owned by the
Companies details of which
are set out in the Fourth
Schedule
Shares the 8,200 shares of US$1.00
each in the capital of the
Company comprising the whole
of its issued share capital
Subsidiaries the wholly owned
subsidiaries of the Company
particulars of which are set
out in Part II of the First
Schedule
subsidiary the meaning prescribed by
Section 2 of the Companies
Ordinance (Chapter 32)
Taxation the meaning given in the
Fifth Schedule
Territory Hong Kong, the People's
Republic of China, Singapore,
Malaysia, the Republic of
China (Taiwan) and the
Republic of South Korea
Vendor's Solicitors Woo, Kwan, Lee & Lo of Room
2718, Jardine House,
1 Connaught Place, Central,
Hong Kong
Warranties the warranties
representations and
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undertakings set out in Clause 4.1 and the Second Schedule
1.2 References in this Agreement to statutory provisions shall where the
context so admits be construed as references to those provisions as
respectively amended consolidated extended or re-enacted from time to
time and shall where the context so admits be construed as including
references to the corresponding provisions of any earlier legislation
directly or indirectly amended consolidated extended or replaced
thereby or re-enacted and shall include any orders regulations
instruments or other subordinate legislation made under the relevant
statute. Except as may be otherwise expressly provided herein, all
accounting and other terms and expressions used in financial reporting
not specifically defined in this Agreement shall be construed in
accordance with generally accepted Hong Kong accounting principles and
practices.
1.3 For the purposes of this Agreement:-
1.3.1 "agreed terms" means in relation to any document such document
in the terms agreed between the parties and for the purposes
of identification signed on their behalf by the Purchaser's
Solicitors and the Vendors' Solicitors;
1.3.2 any reference to a Clause sub-clause or Schedule (other than a
Schedule to a statutory provision) is a reference to a Clause
or sub-clause of or a Schedule to this Agreement and the
Schedules form part of and are deemed to be incorporated into
this Agreement and references to "this Agreement" are to be
construed accordingly;
1.3.3 "disclosed" means fully and fairly disclosed elsewhere in this
Agreement (including the Schedules) and/or in the Disclosure
Letter; and
1.3.4 where any statement is qualified by the expression "so far as
the Vendor is aware" or when reference is made to the Vendor's
knowledge that statement shall be deemed to include an
additional statement that it has been made after due and
careful enquiry by the Vendor amongst the directors, officers,
and employees of the Vendor and its subsidiaries (including
the Group).
1.4 The headings used in this Agreement are inserted for convenience only
and shall be ignored in construing this Agreement.
1.5 In this Agreement words connoting the singular number shall be deemed
to include the plural number and vice versa, words connoting any
gender shall be deemed to include all genders and words connoting
natural persons shall be deemed to include bodies corporate or
unincorporate.
2. SALE OF SHARES
2.1 Subject to the terms and conditions hereof and for the consideration
referred to in Clause 3, on and with effect from the Completion Date,
the Vendor shall sell as beneficial owner and the Purchaser shall
purchase the Shares free from any charges liens encumbrances equities
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and claims whatsoever, and together with all rights attaching or
accruing thereto and all dividends and distributions declared made or
paid on or after the Completion Date.
2.2 The Vendor hereby warrants that no dividends bonuses or distributions
have been paid, declared or made in respect of any shares or stock of
the Company or any of the Subsidiaries since the Balance Sheet Date.
3. CONSIDERATION
3.1 The aggregate consideration for the sale and purchase of the Shares
shall be the sum of HK$170,000,000 of which the sum of HK$162,273,000
(being the aggregate purchase price for the Shares less the Earnest
Money) shall be paid on Completion by a banker's draft in favour of
the Vendor and the Earnest Money (excluding interest thereon) shall be
released to the Vendor.
3.2 Upon Completion, all interest accrued on the Earnest Money shall be
paid within two business days by the Vendor to the Purchaser's
Solicitors in the lawful currency of the United States of America.
3.3 The Vendor's Solicitors are hereby irrevocably authorised and
instructed to hold the Earnest Money and all interest accrued thereon
on the terms and conditions stated in this Agreement and to deal with
the same as and when provided for in this Agreement.
4. WARRANTIES
4.1 Save as disclosed and subject to Clause 4.2 below, the Vendor hereby
represents warrants and undertakes to the Purchaser as at the date
hereof (to the intent that the provisions of this Clause shall
continue to have full force and effect notwithstanding Completion) in
the terms set out in the Second Schedule and acknowledges that the
Purchaser in entering into this Agreement is relying on such
representations and warranties and undertakings and on the indemnities
to be given in the Deed of Indemnity.
4.2 The Warranties are given subject only to :-
(a) the matters disclosed;
the limitation on the Vendor's liability set out in the Third
Schedule; and
(c) any act or omission to act after execution of this Agreement
carried out at the written request of or with the prior
approval in writing of the Purchaser.
4.3 Other than as disclosed no other information relating to the Company
or the Subsidiaries of which the Purchaser has knowledge (actual or
constructive), including in connection with any due diligence
investigation by the Purchaser, shall prejudice any claim made by the
Purchaser under the Warranties.
4.4 Each of the Warranties set out in each sub-paragraph of the Second
Schedule shall be separate and independent and save as expressly
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provided shall not be limited by reference to any other sub-paragraph
or anything in this Agreement.
4.5 Where as a result of any breach of any of the Warranties the net
assets of the Company are diminished or are less than they would have
been had there been no such breach, or any payment is made or required
to be made by the Purchaser, the Purchaser shall be entitled to elect
that the amount of such diminution or shortfall or payment, together
with any reasonable costs and expenses incurred in connection
therewith, shall be taken to be the loss suffered by the Purchaser by
reason of such breach. If in respect of or in connection with any
breach of any of the Warranties any sum payable to the Purchaser by
the Vendor pursuant to this Agreement by way of compensation is
subject to Taxation in Hong Kong, then such further amount shall be
paid to the Purchaser by the Vendor so as to secure that the net
amount received by the Purchaser is equal to the amount of the
compensation due to it as aforesaid.
4.6 The amount of any successful claim against the Vendor under the
Warranties or the Deed of Indemnity shall be deemed to constitute a
reduction in the purchase consideration payable for the Shares.
4.7 The Purchaser has full power to enter into and perform this Agreement
and the Deed of Indemnity respectively and this Agreement constitutes
and the Deed of Indemnity will, when executed, constitute legally
valid and binding obligations on the Purchaser enforceable against it
in accordance with its terms, and the Purchaser has obtained all
necessary consents, approvals and has made or will make any necessary
filings with any regulatory authorities in connection with the sale of
the Shares.
5. COMPLETION
5.1 Completion shall take place at the offices of the Vendor's Solicitors
on the Completion Date immediately upon the signing of this Agreement
or at such other place and time as shall be mutually agreed when the
events set out in Clauses 5.2 and 5.3 shall take place.
5.2 The Vendor shall:-
5.2.1 cause to be delivered to the Purchaser duly executed
instrument(s) of transfer of the Shares in favour of the
Purchaser (or as it in writing directs) accompanied by the
relative share certificate(s) for all of the Shares and
together with certified copy board resolutions of the Vendor
approving the execution and performance of this Agreement and
such transfers;
5.2.2 deliver to the Purchaser the Deed of Indemnity executed by the
Vendor, the Company and the Subsidiaries (other than in
Singapore and Malaysia) together with certified copy board
resolutions of their respective boards of directors approving
such executions and the performance of the Deed of Indemnity;
5.2.3 deliver to the Purchaser written resignations of Mr. Tsang
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Man Chung and Mr. Andrew Leung as directors of the Company and
each relevant Subsidiary with an acknowledgment under seal
signed by each of them that he has no claim against the
relevant company for compensation for loss of office or
otherwise howsoever (except only for any accrued remuneration
and expenses remaining to be reimbursed, details of which are
set out in the Disclosure Letter);
5.2.4 procure the passing of Board resolutions of the Company and
the Subsidiaries incorporated in Hong Kong revoking the
authority of Mr. Tsang in respect of the operation of all bank
accounts and shall hand to the Purchaser certified copies of
such resolutions;
5.2.5 cause to be delivered to the Purchaser the Certificate of
Incorporation the seal and the statutory books of each member
of the Group;
5.2.6 deliver to the Purchaser a certified copy of a letter
addressed to the Vendor whereby Mr. Tsang, who holds in excess
of 50% of the voting rights exercisable at general meetings of
the Vendor, irrevocably approves the transaction contemplated
by this Agreement; and
5.2.7 deliver to the Purchaser the Option Agreements, executed by
Mr. Tam and Ocean (B.V.I.) Limited in relation to the deferred
shares in Components Agent Limited.
5.3 The Purchaser shall : -
5.3.1 deliver to the Vendor the Purchaser's Deed of Indemnity and
the Purchaser's Charge over Shares, together with all
documents referred to therein;
5.3.2 deliver to the Vendor certified copy board resolutions
approving the execution and performance of this Agreement and
the documents referred to in Clause 5.3.1.
5.4 For the avoidance of doubt, in relation to any company within the
Group which is incorporated outside Hong Kong, all documents which are
required to be delivered to the Purchaser by the Vendor shall be
collected by the Purchaser at the relevant company's registered office
located in its place of incorporation.
5.5 At Completion the Earnest Money and interest thereon shall be released
in accordance with Clause 3.1.
6. COMPETITION AND CONFIDENTIALITY
6.1 The Vendor hereby undertakes to the Purchaser:-
6.1.1 not within the Territory during the period of three years
after Completion to carry on or be engaged directly or
indirectly and whether as principal, shareholder, partner,
employee, agent or otherwise (except as a shareholder in a
public listed company holding not more than five per cent.
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of the issued share capital, of any class, of such public
company) in :-
(a) the business of distributing electronic components
(as defined below) relating to computer,
telecommunications, consumer and industrial products;
or
(b) taking on any agency for the sale of electronic
components (as defined below) relating to computer,
telecommunications, consumer and industrial products,
((a) and (b) together being the "Group Business")
For the purpose of this Clause 6.1, "electronic components"
shall consist of the following:-
(i) semiconductors (including, without limitation,
integrated circuits, microprocessors and memory
devices);
(ii) passive devices (including, without limitation,
resistors and capacitors); and
(iii) electromechanical devices (including, without
limitation, connectors, fuses, relays and switches).
Provided that this restriction shall not prevent the Vendor
from:-
(i) carrying on the business of any of the design,
manufacturing, sale, distribution, trading and/or the
taking of any agency for the sale of personal
computer systems and equipment, personal computer
components (including, without limitation,
motherboards, add-on cards, power supplies and
casings), telecommunication equipments and
engineering systems, and computer peripherals
(including, without limitation, monitor, keyboards,
hard disc drive, floppy disc drive, printer and
mouse); and
(ii) selling, trading and distributing products
manufactured by the Vendor or its subsidiaries; and
(iii) selling electronic components originally and bona
fide intended to be acquired for the purpose of
incorporating into products manufactured by the
Vendor or any of its subsidiaries which components
are excess to their manufacturing requirements; and
(iv) carrying on the business of selling, distributing or
taking on any agency for the sale of computer
products (including, without limitation, add-on
cards) manufactured by persons other than the Vendor.
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6.1.2 not during the period of three years after Completion either
on its own account or on behalf of any other person firm or
company directly or indirectly solicit or endeavour to
solicit, in competition with the Group Business, the custom of
any person, firm or company who has been a client of any
member of the Group as at the date hereof for the purpose of
carrying on the Group Business except in connection with
carrying out the matters set out in the proviso numbered (i) -
(iv) in Clause 6.1.1;
6.1.3 not within the period of three years after Completion directly
or indirectly to solicit or endeavour to entice away from any
member of the Group any person who was employed by any member
of the Group at any time during the period of one year
immediately prior to Completion;
6.1.4 not at any time after Completion to carry on or be concerned
engaged or interested as aforesaid in any business under the
name or style of "Components Agent" or "Components Assembly &
Sales" any similar names which might reasonably be expected to
have any connection with the Company; and
6.1.5 not within a period of three years after Completion to employ
any person who is at the Completion Date employed by the Group
and whose job title is "Assistant Manager" or higher.
The above restrictions are considered reasonable by the parties hereto
but in the event that any such restriction shall be found to be
invalid but would be valid if some part thereof were deleted or the
period of application or the area or the extent of the business
affected were reduced such restriction shall apply with such
modification as may be necessary to make it valid and effective.
6.2 The Vendor hereby agrees with the Purchaser that it will not at any
time hereafter use for its own purposes or divulge or cause or enable
any person to become aware of any confidential information of any
nature whatsoever directly or indirectly concerning the business
affairs, finances, suppliers, clients, trade processes or contractual
or other arrangements of the Company or the Subsidiaries which is in
the possession or knowledge of the Vendor, its subsidiaries or any of
its or their directors, officers or employees as at Completion (except
where such disclosure is required by law and/or regulations applicable
to it).
6.3 The Purchaser hereby agrees with the Vendor that it will procure that
no member of the Group will at any time hereafter use for its own
purposes or divulge or cause or enable any person to become aware of
any confidential information of any nature whatsoever directly or
indirectly concerning the business affairs, finances, suppliers,
clients, trade processes or contractual or other arrangements of the
Vendor or any of its subsidiaries (other than any member of the Group)
which is in the possession or knowledge of any member of the Group or
of any director, officer or employee of any member of the Group as at
Completion (except where such disclosure is required by law and/or
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regulations applicable to such member of the Group).
7. WAIVER
No waiver by any party of any breach by the other party of any
provision hereof shall be deemed to be a waiver of any subsequent
breach of that or any other provision hereof and any forbearance or
delay by any party in exercising any of its rights hereunder shall not
be construed as a waiver thereof.
8. SUCCESSORS AND ASSIGNS
The parties hereto agree that the benefit of any provision in this
Agreement may not be assigned by the Purchaser and its successors in
title without the consent of any of the other parties hereto save that
no such consent shall be required in relation to any assignment by the
Purchaser of the benefit of the Purchaser under this Agreement to any
direct or indirect wholly-owned subsidiary of the Purchaser provided
that such direct or indirectly wholly-owned subsidiary shall at all
times while it has the benefit of this Agreement remain a wholly-owned
subsidiary of the Purchaser and the Purchaser shall not be entitled to
assign the benefit of any provision of this Agreement until Ocean is
reasonably satisfied that all the Purchaser's obligations and
liabilities under the Deed of Indemnity have been discharged in full
and further provided that the position of the Vendor shall not be
prejudiced in any respect on or after such assignment as compared with
the position of the Vendor before such assignment.
9. NON-MERGER ON COMPLETION
This Agreement shall notwithstanding Completion remain in full force
and effect as regards any of the provisions remaining to be performed
or carried into effect and (without prejudice to the generality of the
foregoing) as regards all undertakings, warranties, representations
and indemnities.
10. TIME TO BE OF THE ESSENCE
Time shall be of the essence as regards any date or period mentioned
in this Agreement and any date or period substituted for the same
by agreement of the parties hereto or otherwise.
11. ANNOUNCEMENTS
No announcement or circular in connection with this Agreement or any
matter arising therefrom shall be made or issued by or on behalf of
any of the parties hereto without the prior written approval of the
other party, such approval not to be unreasonably withheld or delayed,
provided:-
(i) that in the case of any announcement or circular required by
the Stock Exchange or under the laws of Hong Kong to be issued
by the Vendor, the Purchaser shall be given such opportunity
to review the same as the circumstances may reasonably permit;
and
(ii) that in the case of any announcement or circular required by the
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regulatory authorities of the New York Stock Exchange or under
the laws of the United States to be issued by the Purchaser,
the Vendor shall be given such opportunity to review the same
as the circumstances may reasonably permit.
12. FURTHER ASSURANCE
Subject to Completion, each party agrees with and undertakes to the
other that at any time and from time to time upon the written request
of the other party, such party will promptly and duly execute and
deliver any and all such further instruments and documents and do or
procure to be done all and any such acts or things as the other party
may reasonably require for the purpose of obtaining the full benefits
of this Agreement and, in the case of the Purchaser, of the rights and
ownership of the Shares herein granted.
13. ILLEGALITY AND UNENFORCEABILITY
The illegality invalidity or unenforceability of any part of this
Agreement shall not affect the legality validity or enforceability of
any other part of this Agreement.
14. DOCUMENTS CONSTITUTING AGREEMENT
This Agreement and the Disclosure Letter, the Option Agreement, the
Purchaser's Deed of Indemnity and the Purchaser's Charge over Shares
together with any documents referred to herein constitute the whole
agreement between the parties hereto and no variation thereof shall be
effective unless made in writing signed by or by the duly authorised
representatives of both of the parties hereto.
15. COSTS AND EXPENSES AND STAMP DUTY
15.1 Each party will pay its own costs and expenses in relation to the
preparation, execution and carrying into effect of this Agreement.
15.2 If any stamp duty is payable in connection with the transfer of the
Shares contemplated by this Agreement (or in relation to the Option
Agreement or the transfer of the non-voting deferred shares as
contemplated in the Option Agreement) such stamp duty shall be paid by
the Vendor as to one half and the Purchaser as to the other half.
16. EXECUTION AND COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be binding on each party by whom or on whose behalf it is
so executed, but which together shall constitute a single instrument.
For the avoidance of doubt, this Agreement shall not be binding on any
party hereto unless and until it shall have been executed by or on
behalf of all persons expressed to be party hereto.
17. LAW AND JURISDICTION
17.1 This Agreement shall be construed and take effect in all
respects in accordance with the laws of Hong Kong.
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17.2 The parties irrevocably agree that the courts of Hong Kong are to have
jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and that accordingly any suit, action
or proceedings (together hereinafter referred to as "proceedings")
arising out of or in connection with this Agreement may be brought in
such courts.
17.3 Each of the parties hereby irrevocably waives any objection which it
may have now or hereafter to the laying of the venue of any
proceedings in any such court as is referred to in Clause 17.2 or
Clause 17.4 and any claims that any such proceedings have been brought
in an inconvenient forum and further irrevocably agrees that a
judgment in any proceedings brought in the courts of Hong Kong shall
be conclusive and binding upon such party and may be enforced in the
courts of any other jurisdiction.
17.4 Nothing contained in Clause 17.2 or elsewhere in this Agreement shall
limit the right of either party to take proceedings against the other
party hereto in any other court of competent jurisdiction, nor shall
the taking of proceedings by any party in one or more jurisdictions
preclude the taking of proceedings by such party in any other
jurisdiction, whether concurrently or not.
17.5 The Vendor hereby appoints Ocean Office Automation Limited as its
agent for service of process, or such other agent with an office in
Hong Kong as the Vendor may notify to the Purchaser for the purpose.
17.6 The Purchaser hereby appoints the Purchaser's Solicitors as its agent
for service of process, or such other agent with an office in Hong
Kong as the Purchaser may notify to the Vendor for the purpose.
18. NOTICES
18.1 Any notice under this Agreement shall be in writing and signed (or, in
the case of a notice served by facsimile, despatched with the correct
answerback) by or on behalf of the party giving it and may be served
by leaving it at or sending it by facsimile or prepaid registered post
to:-
18.1.1 in the case of the Vendor, Mr. Francis Li at 4th and 5th
Floors, Kader Industrial Building, 22 Kai Cheung Road, Kowloon
Bay, Kowloon, Hong Kong. Fax : (852) 799 2398;
18.1.2 in the case of the Purchaser, Mr. Robert E. Klatell at Arrow
Electronics, Inc. of 25 Hub Drive, Melville, New York, 11747,
U.S.A. Fax : (516) 391 1683
or to such other office or address as the relevant party may hereafter
specify to the other party hereto by notice in writing expressed to be
for the purposes of this sub-clause 18.1.
18.2 In the case of such a notice which is served by telex or prepaid
registered post the same shall be deemed (in the absence of proof to
the contrary) to have been received:-
18.2.1 in the case of facsimile, 12 hours after the time of
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despatch;
18.2.2 in the case of prepaid registered post, 48 hours (or 120 hours
if to another country) from the date of posting.
AS WITNESS the hands of the parties hereto or their duly authorised
representatives the day and year first before written.
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