EXHIBIT 10.2
DATED July 29, 1997
BY
DSI (HK) LIMITED
TO
STATE STREET BANK AND TRUST COMPANY
Hong Kong Branch
DEBENTURE
CONTENTS Page
1 INTERPRETATION ............................................... 1
2 SECURED LIABILITIES .......................................... 2
3 SECURITY ..................................................... 3
4 RESTRICTIONS ................................................. 3
5 INSURANCE .................................................... 3
6 DEEDS, POLICIES AND DEBTS .................................... 4
7 NOTICE OF CRYSTALLISATION .................................... 4
8 INFORMATION .................................................. 4
9 POWERS OF THE BANK ........................................... 4
10 RECEIVERS .................................................... 5
11 PROTECTION OF PURCHASERS AND POWER OF ATTORNEY ............... 6
12 APPROPRIATION AND SET-OFF .................................... 6
13 PROTECTION OF SECURITY ....................................... 7
14 CURRENCY ..................................................... 7
15 PAYMENTS TO BE MADE WITHOUT DEDUCTION ........................ 8
16 CERTIFICATES ................................................. 8
17 MERGER OR AMALGAMATION ....................................... 8
18 COMMUNICATIONS ............................................... 8
19 REPRESENTATIONS AND WARRANTIES ............................... 9
20 LAW AND JURISDICTION ......................................... 9
21 ASSIGNMENT AND TRANSFER ...................................... 10
22 INDEMNITY .................................................... 10
23 MISCELLANEOUS ................................................ 10
DEBENTURE
Dated: July 29, 1997.
BY: DSI (HK) LIMITED whose Hong Kong registration number is 330755 (the
"Company") and whose registered office is at Rooms 803-806 World Finance
Centre, South Tower, Harbour City, Tsimshatsui, Kowloon, Hong Kong (fax
number 2375 5633)
TO: STATE STREET BANK AND TRUST COMPANY Hong Kong Branch (the "Bank") of 32nd
Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong (fax
number 2840 5453)
1 INTERPRETATION
1.1 Definitions: In this deed:-
"CHARGED PROPERTY" means the property and assets charged by the Company to
the Bank by clause 3;
"COMPANY'S LIABILITIES" means the Company's obligations and liabilities to
the Lender covenanted to be discharged or paid under clause 2.1;
"ENCUMBRANCE" includes any mortgage, charge (fixed or floating), pledge,
hypothecation or lien and any other arrangement or interest (whether by way
of assignment, trust, title retention or otherwise) which has the effect of
creating security or payment priority;
"ENVIRONMENTAL LAW" means any applicable law (whether statutory, common,
customary or otherwise) including (without limitation) any statute,
regulation, order, code of practice, approval or similar control made or
issued by any international, national or local government or regulatory
body concerning the protection, safety or health of humans or the
environment;
"EXPENSES" means all expenses (on a full indemnity basis), including
(without limitation) legal fees, from time to time paid or incurred by the
Bank or any receiver at any time in connection with the Charged Property or
the Company's Liabilities or in taking, perfecting, preserving, defending
or enforcing the Company's Liabilities or this deed (or any of the security
created by it) or in exercising any right or power under this deed or
otherwise;
"FACILITY AGREEMENT" means the facility letter dated 6 June 1997 from the
Bank to the Company, accepted by the Company on 30 June 1997;
"INTEREST" means, in relation to any obligation or liability of the
Borrower, interest at the rate or rates agreed between the Bank and the
Company from time to time in relation to that obligation or liability
(being at the date of this deed the Bank's prime rate for the relevant
currency from time to time in relation to each obligation or liability of
the Borrower under the Facility Agreement), provided that, in the absence
of any agreed rate
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in respect of that obligation or liability, "Interest" means interest at
the rate of 3% per annum above the Bank's prime rate for the relevant
currency from time to time;
"ORDINANCE" means the Conveyancing and Property Ordinance (Cap. 219) of the
laws of Hong Kong;
"PROCEEDS ACCOUNT" means the Company's account with the Bank (account no.
121900101) or such other account as the Bank may specify from time to time;
"RELEVANT CURRENCY" means in relation to each of the Company's Liabilities
the currency in which it is from time to time denominated;
"TAX" includes any form of taxation, levy, duty, charge, contribution or
impost of whatever nature (including any applicable fine, penalty,
surcharge or interest) imposed by a Tax Authority;
"TAX AUTHORITY" means any local, municipal, governmental, state, federal or
other fiscal, revenue, customs and/or excise authority, body or official
anywhere in the world competent to impose Tax.
1.2 REFERENCES: In this deed, each reference to:-
"COMPANY'S LIABILITIES" or "Charged Property" is deemed to include a
reference to any part of them or it;
"COMPANY" or "BANK", where the context so admits, is deemed to include a
reference to its successors, assigns and/or transferees;
any document or agreement (including this deed) is deemed to include a
reference to such document or agreement as amended, novated, supplemented,
substituted or replaced from time to time;
a provision of a statute, rule or regulation is, unless otherwise
indicated, deemed to include a reference to such provision as amended,
modified or re-enacted from time to time;
the singular, where the context so admits, is deemed to include the plural
and vice versa; and
a person is deemed to include a reference to a company, partnership,
unincorporated body and any other entity and vice versa.
1.3 TITLES: The title of any provision of this deed shall not affect the
meaning of that or any other provision.
2 SECURED LIABILITIES
The Company covenants to:-
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2.1 GENERAL: discharge on demand from time to time all the Company's
obligations and liabilities to the Bank of any kind and in any currency
(whether present or future, actual or contingent and whether owed by the
Company as principal or surety or incurred alone or jointly with another
and whether owed to the Bank as original obligee or as assignee or
transferee), including (without limitation) (1) all such obligations and
liabilities under the Facility Agreement and (2) interest, fees, charges,
commission and expenses;
2.2 EXPENSES: pay to the Bank on demand from time to time the Expenses; and
2.3 INTEREST: pay to the Bank on demand from time to time Interest on the
Company's obligations and liabilities to the Bank covenanted to be
discharged and/or paid by the Company under clauses 2.1 and 2.2 from (1)
the date on which the Company has agreed to pay Interest on them or, if
there is no such agreement, from the date on which they become due or (in
the case of any Expense paid by the Bank) the date of the Bank's payment
until (2) the date of discharge or payment.
3 SECURITY
As a continuing security for the discharge on demand of the Company's
Liabilities and as beneficial owner, the Company charges to the Bank by way of
floating charge (1) all book debts and other debts and receivables now and in
the future owing to the Company and the proceeds of payment or realisation of
each of them and (2) all inventory and stock-in-trade now and in the future
belonging to the Company.
4 RESTRICTIONS
The Company will not without the previous written consent of the Bank do any of
the following:-
4.1 NEGATIVE PLEDGE: create or permit to arise or continue any Encumbrance
affecting the Charged Property or increase or extend any liability of the
Company secured on any of the Charged Property;
4.2 DEALING WITH DEBTS: deal with the Company's book debts and other debts and
receivables otherwise than by collecting them in the ordinary course of the
Company's business or (without limitation) realise its book debts and other
debts and receivables by means of block discounting, factoring or the like;
or
4.3 DISPOSALS OF CHARGED PROPERTY: dispose of the Charged Property, except in
the ordinary course of, and for the purposes of, carrying on its trading
business while the floating charge remains uncrystallised.
5 INSURANCE
5.1 COVER: The Company will to the Bank's reasonable satisfaction keep
comprehensively insured for its full reinstatement cost (due allowance
being made for inflation during the period of insurance and reinstatement)
all of the Charged Property which is of an insurable nature in such name
and in such offices as the Bank shall in writing approve and on such terms,
for such amounts and of such types as would be effected by prudent
companies carrying on business similar to the Company (including in respect
of
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environmental pollution) and on terms requiring the insurers not to cancel
the policy without giving at least 14 days' prior notice to the Bank.
5.2 POLICY ENDORSEMENT/PREMIUMS: The Company will have the policies of
insurance of the Charged Property endorsed with notice of the Bank's
interest and will punctually pay when due all premiums payable in respect
of any insurance of the Charged Property and if required by the Bank will
deliver to the Bank evidence satisfactory to the Bank of payment of such
premiums.
5.3 PROCEEDS: The Company will hold in trust for the Bank all money received
under any insurance of the Charged Property and at the Bank's option will
apply the same in making good the relevant loss or damage or in or towards
discharge of the Company's Liabilities.
5.4 DEFAULT: If the Company defaults in its obligations under this clause 5 the
Bank may enter the Charged Property and effect insurance as specified in
clause 5.1 (without becoming liable to account as mortgagee in possession).
6 DEEDS, POLICIES AND DEBTS
6.1 DEEDS AND POLICIES: The Company will from time to time deposit with the
Bank all deeds and documents of title relating to the Charged Property and
all insurance policies relating to the Charged Property.
6.2 DEBTS: The Company will pay into the Proceeds Account the proceeds of
payment or realisation of all the Company's book debts and other debts and
receivables.
7 NOTICE OF CRYSTALLISATION
The Bank may at any time by written notice to the Company convert the floating
charge created by this deed into a fixed charge as regards any of the Charged
Property specified in the notice.
8 INFORMATION
The Company covenants with the Bank from time to time to furnish to the Bank
such information regarding the assets, liabilities, business and affairs of the
Company (including, without limitation, the Charged Property) as the Bank may
reasonably require.
9 POWERS OF THE BANK
9.1 EXERCISE OF POWERS: Paragraph 11 of the fourth schedule to the Ordinance
shall not apply and the Bank may exercise its power of sale and other
powers under the Ordinance or any other law or this deed at any time after
the date of this deed.
9.2 RECEIVERS: The Bank may, under the hand of any person authorised by it to
do so or by a deed, appoint or remove a receiver or receivers of the
Charged Property, fix and pay the fees of a receiver and remove any
receiver so appointed and appoint another in his place, but any receiver
shall be deemed to be the agent of the Company and the Company shall be
solely responsible for the receiver's acts, defaults and remuneration.
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9.3 OTHER POWERS: All or any of the powers conferred on a receiver by clause 10
may be exercised by the Bank without first appointing a receiver or despite
any such appointment.
9.4 POSSESSION: The Bank will not be liable to account to the Company as
mortgagee in possession for any money not actually received by the Bank and
if the Bank or any receiver takes possession of the Charged Property it or
he may at any time relinquish such possession.
10 RECEIVERS
10.1 POWERS: Any receiver appointed by the Bank shall be a receiver and manager
and shall (in addition to the powers conferred upon receivers under the
laws of Hong Kong, including without limitation the Ordinance) have the
following powers exercisable upon such terms and conditions as he thinks
fit:-
10.1.1 POSSESSION/MANAGEMENT: to take possession of and generally to
take the benefit of and manage the Charged Property and any
business of the Company in relation to the Charged Property;
10.1.2 CONTRACTS: to enter into, carry into effect, complete, deliver,
perform, repudiate, rescind or vary any deed, contract,
transaction or arrangement to which the Company is or is to be a
party in relation to the Charged Property;
10.1.3 DISPOSALS: to sell, charge or otherwise deal with and dispose of
the Charged Property without restriction;
10.1.4 EXECUTION OF DOCUMENTATION: to carry into effect and complete any
transaction in relation to the Charged Property by executing
deeds or documents in the name of or on behalf of the Company;
10.1.5 INSURANCE/BONDS: to insure the Charged Property and effect
indemnity insurance or other similar insurance and obtain bonds
or give commitments, guarantees, indemnities and security in
relation to the Charged Property;
10.1.6 ADVISERS/EMPLOYEES: to engage, rely on the advice of and
discharge advisers, consultants, officers, managers, agents,
workmen and others in relation to the Charged Property;
10.1.7 SUPPLIES: to purchase materials, tools, equipment, goods or
supplies for the purpose of the realisation of the Charged
Property;
10.1.8 LITIGATION: to bring, continue or defend any claim, dispute,
action or legal proceedings and enter into any arrangement or
compromise in relation to the Charged Property;
10.1.9 BORROWING AND SECURITY: to redeem any security over the Charged
Property and to borrow or raise any money and secure the payment
of any money on the Charged Property in priority to the Company's
Liabilities for the purpose of the exercise of his powers and/or
defraying any costs or liabilities incurred by him in such
exercise;
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10.1.10 ACCESS: to have access to and make use of the premises and the
accounting and other records of the Company and the services of
its staff for all or any of the purposes set out in this clause;
10.1.11 OTHER ACTS: to do any other acts which he may consider to be
incidental or conducive to any of his powers or to the
realisation of the Charged Property.
10.2 JOINT RECEIVERS: In the case of joint receivers any power may be exercised
jointly or severally.
10.3 APPLICATION OF RECEIPTS: The receiver shall apply all money he receives
first in repayment of all money borrowed by him and in payment of his
expenses and liabilities (including the payment of preferential debts),
secondly in payment of his fees and thirdly in or towards satisfaction of
the Company's Liabilities (with expenses incurred by the Bank in connection
with this deed being satisfied first, interest being satisfied second and
principal thereafter) and the surplus (if any) shall be paid to the Company
or other persons entitled to it.
11 PROTECTION OF PURCHASERS AND POWER OF ATTORNEY
11.1 PROTECTION OF PURCHASERS: No purchaser or other person shall be obliged or
concerned to see or enquire whether the right of the Bank to appoint a
receiver or the right of the Bank or any receiver to exercise any of the
powers conferred by this deed has arisen or become exercisable nor be
concerned with notice to the contrary or with the propriety of the exercise
or purported exercise of such powers.
11.2 POWER OF ATTORNEY: The Company by way of security irrevocably appoints the
Bank and any receiver severally to be the attorney for the Company (with
full power of substitution and delegation) in the name of the Company, the
Bank or such receiver and on the Company's behalf and as the Company's act
and deed to sign or execute all such deeds, instruments and documents and
do all such acts and things as may be required by the Bank or any receiver
pursuant to this deed or the exercise of any of their powers.
12 APPROPRIATION AND SET-OFF
12.1 APPROPRIATION: Subject to clause 12.2, the Bank may apply all payments
received in respect of the Company's Liabilities in or towards discharge of
such part of the Company's Liabilities as it thinks fit.
12.2 NOTICE OF OTHER INTEREST: The Bank may open a new account or accounts upon
the Bank receiving actual or constructive notice of any charge or interest
affecting the Charged Property and whether or not the Bank opens any such
account no payment received by the Bank after receiving such notice shall
(if followed by any payment out of or debit to the relevant account) be
appropriated towards or have the effect of discharging the Company's
Liabilities outstanding at the time of receiving such notice.
12.3 SET-OFF: The Bank shall be entitled at any time or times without notice
(both before and after demand) to set off any liability of the Company to
the Bank against any liability of
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the Bank to the Company (in either case whether actual or contingent,
present or future and irrespective of the branch or office, currency or
place of payment) and may for such purpose convert or exchange any
currency.
12.4 RESTRICTION: Despite any term to the contrary in relation to any deposit or
credit balance at any time on any account of the Company with the Bank, no
such deposit or balance shall be repayable or capable of being assigned,
mortgaged, charged or otherwise disposed of or dealt with by the Company
before every liability of the Company to the Bank has been discharged, but
the Bank may permit any withdrawal without affecting the continued
application of this clause.
13 PROTECTION OF SECURITY
13.1 PRESERVATION OF SECURITY AND RIGHTS: This deed is in addition to any other
rights or security, present or future, held by the Bank from the Company or
any other person for the Company's Liabilities and shall not merge with or
prejudice or be prejudiced by any such rights or security or any other
contractual or legal rights of the Bank, all or any of which the Bank may
take, perfect, enforce, renew, vary, release or refrain from taking,
perfecting or enforcing without releasing, reducing or otherwise affecting
the Bank's rights under this deed.
13.2 CHANGE IN COMPANY'S CONSTITUTION: The Bank's rights under this deed shall
not be affected by any change in the Company's constitution or composition
or by the bankruptcy, liquidation, insolvency, death, incapacity or
disability of the Company.
13.3 FURTHER ASSURANCE: The Company will at its own cost at the Bank's or any
receiver's request execute any deed or document and take any action
required by the Bank or any receiver to perfect or protect this security or
its priority or further to secure on the Charged Property the Company's
Liabilities or for facilitating the realisation of the Charged Property or
the exercise of any rights or powers of the Bank or any receiver or for
establishing the nature or extent of the Charged Property.
14 CURRENCY
14.1 RELEVANT CURRENCY: The Company's liability under this deed is to discharge
the Company's Liabilities in the Relevant Currency.
14.2 RECEIPT IN WRONG CURRENCY: If at any time the Bank receives a payment
(including by set-off) referable to any of the Company's Liabilities from
any source in a currency other than the Relevant Currency, then:-
14.2.1 EFFECT: such payment shall take effect as a payment to the Bank
of the amount in the Relevant Currency which the Bank is able to
purchase (after deduction of any relevant costs) with the amount
of the payment so received in accordance with its usual practice;
and
14.2.2 INDEMNITY: if such payment is made under a court order and is
treated by clause 14.2.1 as a payment of an amount which falls
short of the relevant liability of the Company expressed in the
Relevant Currency, the Company as a separate and
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independent obligation shall on demand from time to time
indemnify the Bank against such shortfall and pay Interest on
such shortfall from the date of such payment to the date on which
the shortfall is paid.
15 PAYMENTS TO BE MADE WITHOUT DEDUCTION
15.1 NO DEDUCTIONS: All sums payable by the Company to the Bank shall be paid in
the Relevant Currency in immediately available funds and shall be paid to
the credit of such account as the Bank may designate. All such payments
shall be made in full without set-off of any sum owing by the Bank to the
Company or counter-claim and free and clear of any deduction of or
withholding for or on account of any Tax or for any other reason, except to
the extent that any such deduction or withholding is required by law.
15.2 GROSSING-UP: If at any time the Company is required by law to make any
deduction or withholding from any payment due from the Company to the Bank,
the Company shall simultaneously pay to the Bank whatever additional amount
is necessary to ensure that the Bank receives a net sum equal to the
payment it would have received had no deduction or withholding been made.
16 CERTIFICATES
A certificate signed by an official of the Bank as to the amount due or owing
from the Company shall be conclusive evidence against the Company, except in the
case of manifest error or any question of law.
17 MERGER OR AMALGAMATION
The Company's Liabilities shall extend to all liabilities of the Company to the
Bank notwithstanding any change of name of the Bank and/or the Bank's absorption
by or in or amalgamation with any other entity or the acquisition of all or part
of its undertaking by any other entity and to all sums in respect of advances
and other banking facilities from such other entity.
18 COMMUNICATIONS
18.1 WRITTEN: All communications under this deed must be in writing.
18.2 ADDRESSES: Any communication may be sent by prepaid post, fax or delivered
to the Bank or the Company at its address or fax number shown on page 1
above unless it has communicated another address or fax number to the other
in which case it must be sent to the last address or fax number so
communicated to the other for this purpose. Communications to the Company
may also be (1) sent in such manner or delivered to a place of business for
it last known to the Bank or the Company's registered office in Hong Kong
from time to time or (2) delivered to one of its officers.
18.3 DELIVERY: A communication by the Bank by post will be deemed made on the
day after posting, postage prepaid (but, if to another country, five days
after posting by airmail, postage prepaid). A communication by the Bank by
fax will be deemed made when the Bank's fax machine records a complete
transmission. A communication by the Company will be deemed made only when
actually received by the Bank.
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19 REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Bank that:-
19.1 COMPLIANCE WITH LEGAL RESTRICTIONS: none of the provisions, covenants and
obligations on its part contained in this deed contravenes any of the
provisions of its memorandum or articles of association or other
constitutional documents nor will this deed or its performance infringe any
law or obligation binding upon it;
19.2 STATUS: (1) it is duly constituted and in good standing under the laws of
Hong Kong and is not insolvent or in liquidation or administration or
subject to any other insolvency procedure, (2) no receiver, manager,
trustee, custodian or analogous officer has been appointed in respect of
any part of its property, undertaking or assets and (3) it has the
appropriate power and authority to own its property and assets and to carry
on its business as now conducted;
19.3 OBLIGATIONS BINDING: the obligations expressed as being assumed by it under
this deed constitute its valid, legal and binding obligations;
19.4 CORPORATE CAPACITY AND APPROVALS FOR THIS DEED: it has the appropriate
power to enter into and perform the terms and conditions of this deed and
has taken all necessary action to authorise the execution, delivery and
performance of this deed;
19.5 AUTHORISATIONS: it holds (and has at all times complied with in all
material respects) all authorisations required to carry on its business and
is not aware of any event or circumstance which could reasonably be
expected adversely to affect its right to hold and/or to obtain renewal of
all such authorisations and/or to obtain any new authorisations which will
or may be required in the future pursuant to any regulatory provisions in
order to carry on its business;
19.6 OTHER APPROVALS FOR THIS DEED: no consent, permit, licence, approval,
authorisation or registration of or with any governmental, judicial or
other authority or other third party is required or desirable in connection
with the execution, performance, validity or enforceability of this deed
other than the registration of this deed at the Companies Registry;
19.7 NO ENCUMBRANCES: there is no Encumbrance affecting any of the Company's
property, undertaking or assets other than (1) the Encumbrance created by
the Company in the Bank's favour over a deposit of US$150,000 by the
Company with the Bank by an assignment of deposit dated 3 May 1992 and (2)
the charge created by this deed; and
19.8 HEALTH, SAFETY AND ENVIRONMENT: except as previously disclosed in writing
to the Bank, the Company has complied with Environmental Law.
20 LAW AND JURISDICTION
20.1 LAW: This deed is governed by and will be construed in accordance with Hong
Kong law.
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20.2 JURISDICTION OF HONG KONG COURTS: The Company irrevocably agrees that the
Hong Kong courts are to have non-exclusive jurisdiction to settle any
disputes and to entertain any suit, action or proceedings in each case
arising out of or in connection with this deed.
21 ASSIGNMENT AND TRANSFER
21.1 COMPANY'S CONSENT TO ASSIGNMENT BY BANK: By this deed the Company gives its
irrevocable consent and continuing agreement to the assignment by the Bank
of any one or more of its rights under this deed.
21.2 NO ASSIGNMENT/TRANSFER BY COMPANY: The Company may not assign and/or
transfer any one or more of its rights and/or obligations under this deed.
21.3 CONFIDENTIALITY: The Bank may give such information relating to the Company
or this deed as it thinks fit to any person proposing to take an assignment
and/or transfer from the Bank and/or to enter into contractual relations
with the Bank with respect to this deed.
22 INDEMNITY
The Company will indemnify the Bank on demand against any loss or expense
(including, without limitation, legal fees) sustained or incurred as a result
either of a failure by the Company to perform any of its obligations under this
deed or of any representation or warranty made in this deed having been
incorrect when made.
23 MISCELLANEOUS
23.1 INTEREST: Interest payable by the Company to the Bank will accrue both
before and after judgment on a daily basis and on the basis of a 360 or 365
days' year (as the Bank shall determine) and shall be compounded (both
before and after judgment) at such intervals as the Bank shall determine.
Interest will be payable on demand made by the Bank from time to time.
After a demand Interest will also be calculated on the Company's
Liabilities together with accrued Interest as at the date of the demand.
23.2 SEVERABILITY: Each of the provisions of this deed shall be severable and
distinct from one another and if at any time any one or more of those
provisions (or any part thereof) is or becomes invalid, illegal or
unenforceable the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired.
23.3 VARIATIONS: No variation of the terms of this deed shall be valid unless in
writing signed by the Company and confirmed in writing by the Bank.
23.4 DELAY OR OMISSION BY BANK: The Bank's rights and powers under this deed
will not be affected or impaired by any delay or omission by the Bank in
exercising them or any previous exercise of any such rights or powers.
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This deed was duly signed and sealed as a deed and delivered on the date which
first appears on page 1.
The common seal of DSI (HK) )
LIMITED was affixed in the presence of:- )
Authorised signatory's signature /S/Yau Wing Kong, Tommy
Full name Yau Wing Kong, Tommy
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