china new way investment limited (1) “subscriber”...matter: g/gl/30895/2014/(kh) doc: project...

FDATED THE 16

th DAY OF SEPTEMBER 2014

CHINA NEW WAY INVESTMENT LIMITED (中國新維投資有限公司中國新維投資有限公司中國新維投資有限公司中國新維投資有限公司)

(the “Subscriber”)

(1)

- and -

CHUN WO DEVELOPMENT HOLDINGS LIMITED (the “Company”)

(2)

SUBSCRIPTION AGREEMENT

in relation to the subscription of (i) 100,000,000 new shares at the subscription price of HK$0.463 per share, and (ii) convertible bonds in the principal amount of HK$84,266,000 with rights attached thereto to convert at the initial conversion price of HK$0.463 into new shares of

CHUN WO DEVELOPMENT HOLDINGS LIMITED

PETER C. WONG, CHOW & CHOW 王澤長王澤長王澤長王澤長‧‧‧‧周淑嫻周淑嫻周淑嫻周淑嫻‧‧‧‧周永健律師行周永健律師行周永健律師行周永健律師行 in association with

GUANTAO LAW FIRM (HONG KONG) 与觀韜律師事務所(香港) 聯營

Suites 1604-6, 16/F, ICBC Tower,

3 Garden Road, Central, Hong Kong 香港中環花園道 3號中國工商銀行大廈 16樓 1604-6室

電話 Tel : (852) 2878 1130 傳真 Fax : (852) 2810 0280

Ref : G/GL/30895/2014(GL/KH)

Doc: Project National-Sub Agt-execution

CONTENTS

Clause Page

1. DEFINITIONS AND INTERPRETATION ............................................................................................. 1

2. ISSUE OF SUBSCRIPTION SHARES AND CONVERTIBLE BONDS .............................................. 7

3. CONSIDERATION ............................................................................................................................... 8

4. CONDITIONS PRECEDENT ................................................................................................................ 8

5. COMPLETION ..................................................................................................................................... 9

6. COVENANTS ON PRE-COMPLETION MATTERS .......................................................................... 12

7. COMPANY’S WARRANTIES ............................................................................................................ 15

8. SUBSCRIBER’S WARRANTIES ....................................................................................................... 17

9. INDEMNITY ........................................................................................................................................ 17

10. ANNOUNCEMENTS ...................................................................................................................... 19

11. COSTS ............................................................................................................................................ 20

12. NOTICES ........................................................................................................................................ 20

13. GENERAL PROVISIONS ............................................................................................................... 21

14. GOVERNING LAW AND JURISDICTION ..................................................................................... 23

SCHEDULE I ............................................................................................................................................. 24

INFORMATION ABOUT THE GROUP .................................................................................................. 24

SCHEDULE II ............................................................................................................................................ 34

WARRANTIES GIVEN BY THE COMPANY .......................................................................................... 34

SCHEDULE III ........................................................................................................................................... 40

WARRANTIES GIVEN BY THE SUBSCRIBER ..................................................................................... 40

SCHEDULE IV ........................................................................................................................................... 41

COMPLETION ARRANGEMENTS ........................................................................................................ 41

SCHEDULE V ............................................................................................................................................ 42

FORM OF THE INSTRUMENT OF THE CONVERTIBLE BONDS ........................................................ 42

SCHEDULE VI ........................................................................................................................................... 43

EXISTING LITIGATIONS ....................................................................................................................... 43

ANNEXURE I ............................................................................................................................................. 44

EXECUTION PAGE .................................................................................................................................. 45

Matter: G/GL/30895/2014/(KH) Doc: Project National-Sub Agt-execution

1

SUBSCRIPTION AGREEMENT

THIS AGREEMENT is made the 16th day of September 2014

BETWEEN:

(1) CHINA NEW WAY INVESTMENT LIMITED（（（（中國新維投資有限公司中國新維投資有限公司中國新維投資有限公司中國新維投資有限公司））））, a company incorporated in

the Hong Kong with its registered number 2088316 whose registered office is at Unit B, 7/F,

Lockhart Centre, 301-307 Lockhart Road, Wanchai, Hong Kong (the “Subscriber”); and

(2) CHUN WO DEVELOPMENT HOLDINGS LIMITED, a company incorporated in Bermuda with

limited liability, the issued shares of which of HK$0.10 each are listed on The Stock Exchange of

Hong Kong Limited with stock code no. 00711 and having a place of business in Hong Kong at 5C,

Hong Kong Spinners Industrial Building, 601-603 Tai Nan West Street, Cheung Sha Wan,

Kowloon, Hong Kong (the “Company”).

WHEREAS:

(A) The Subscriber and GT Winners Limited (the “Vendor”) entered into a sale and purchase

agreement dated 10 September 2014 (the “SPA”), pursuant to which the Vendor agreed to sell

and the Subscriber agreed to purchase a total of 510,000,000 Shares. It is a condition under the

SPA that the Parties shall enter into this Agreement.

(B) As at the date of this Agreement, the Company has an authorised share capital of

HK$150,000,000 divided into 1,500,000,000 Shares, of which 1,092,029,576 Shares have been

issued and are fully paid or credited as fully paid.

(C) The particulars of the Company are set out in Schedule I.

(D) The Company has agreed to issue and the Subscriber has agreed to subscribe for the

Subscription Shares and the Subscription CB on the terms and conditions set out in this

Agreement (the “Subscription”).

IT IS HEREBY AGREED:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions: In this Agreement, including its recitals, schedules and annexures, unless otherwise

defined or unless the context or subject matter otherwise requires, the following words and

expressions have the following meanings:

“Accounts” means in relation to each Group Company, its audited accounts

(including the profit and loss account for the period ended on the

Accounts Date and the balance sheet as at the Accounts Date) for

the period ended on the Accounts Date and, where consolidated

accounts have been prepared, together with the consolidated

accounts for the year ended on the Accounts Date; all such

accounts have been prepared in accordance with Hong Kong

Financial Reporting Standards issued by the Hong Kong Institute

of Certified Public Accountants (a copy of the Accounts has been

provided to the Subscriber on or before the execution of this

Agreement or will be provided to the Subscriber as soon as

practicable after such Accounts have been issued);

“Accounts Date” means 31 March 2014;

“Associated Company” means, the associated companies of the Company as at the date

of this Agreement, details of which are set out in Schedule I Part C;


GUANTAO LAW FIRM (HONG KONG) 觀韜律師事務所(香港)

China New Way Investment Limited


2

“Board” means the board of directors of the Company from time to time;

“Bond” means the 7.25% bonds due 22 November 2014 issued by the

Company with an aggregate outstanding principal amount of

HK$150,000,000.00 held by Talent Effort Limited, a company

indirectly wholly-owned by Madam Li Wai Hang, Christina, Mr.

Pang Yat Ting, Dominic and Ms. Pang Yat Sum, Rita;

“Business Day” means a day on which banks are open for business in Hong Kong

(excluding Saturdays, Sundays and public holidays);

“Claim” means any and all claims (whether or not successful,

compromised or settled), actions, demands, Proceedings or

judgments which may be instituted, made, threatened, alleged,

asserted or established from time to time in any jurisdiction, for any

Liabilities, Losses, Taxes, Liens, Orders and Proceedings of

whatever kind and nature;

“Companies Ordinance” means the Companies Ordinance, Chapter 622 of the Laws of

Hong Kong;

“Company’s Warranties” means the warranties, representations and undertakings given by

the Company set out in Clause 7 and Schedule II and Company’s

Warranty” means any of them; and

“Completion” means completion of the Subscription pursuant to this Agreement;

“Completion Date” means the date (being a Business Day) on or before the Long Stop

Date (or such later date as the Company and the Subscriber may

agree) to be agreed between the Company and the Subscriber on

which Completion shall take place;

“Conditions” means the conditions precedent set out in Clause 4.1;

“Consideration” has the meaning ascribed to it in Clause 3.1;

“Constitution” means, in relation to a corporation, the memorandum and articles

of association, charter, bye laws or other document constituting or

defining the constitution of that corporation or governing the

activities or conduct of that corporation and its members;

“Contract” means any agreement, contract, obligation, promise, or

undertaking, whether written or oral and whether express or

implied, that is legally binding;

“Conversion Price” means the initial conversion price of HK$0.463 per Conversion

Share, subject to adjustment pursuant to the terms and conditions

of the Convertible Bonds;

“Conversion Shares” means new Shares which fall to be issued by the Company upon

exercising the conversion rights attached to the Convertible Bonds

pursuant to the terms and conditions of the Convertible Bonds;

“Convertible Bonds” means convertible bonds with principal amount of up to

HK$84,266,000 with rights attached thereto to entitle the holders





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thereof to subscribe for new Shares at the Conversion Price;

“Disclosed” means fully, fairly and specifically disclosed in this Agreement, the

Accounts provided by the Company to the Subscriber prior to the

execution of this Agreement;

“Distributed Business” means the Kelly Court Redevelopment, being redevelopment of

the property situated at 55-57 Wing Hong Street / 84-86 King Lam

Street, Cheung Sha Wan, Kowloon, Hong Kong;

“Distribution In Specie” means a distribution in specie of the New Privateco Shares by the

Company to the Shareholders pursuant to the Reorganization;

“Due Diligence” means the due diligence investigation to be carried out by the

Purchaser on the business, assets, liabilities and financial position

of the Group prior to the date of this Agreement;

“Encumbrances” includes without any limitation, with respect to any asset, any

option, right to acquire, right of pre-emption, mortgage, charge,

pledge, lien, hypothecation, title retention, right of set-off,

counterclaim, trust arrangement or other security or any equity or

restriction (including any restriction imposed under the Companies

Ordinance);

“Existing Litigations” means the pending or threatened proceedings, details of which are

set out in SCHEDULE VI;

“Group” means the group of companies consisting of the Company and its

Subsidiaries;

“Group Companies” means the members of the Group and “Group Company” means

any one of them;

“Hong Kong Dollars” or

“HK$”

means Hong Kong dollars, the lawful currency of Hong Kong;

“Hong Kong” or “HK” means the Hong Kong Special Administrative Region of the

People’s Republic of China;

“HSBC Loan” means the loan facility made available by The Hong Kong and

Shanghai Banking Corporation Limited to Smart Wealth Asia

Pacific Limited, an indirect wholly owned subsidiary of the

Company, pursuant to a facility agreement dated 30 January 2013,

as amended and supplemented from time to time;

“Liability” means any debt, liability or obligation (whether known or unknown,

whether absolute or contingent, whether liquidated or unliquidated,

and whether due or to become due);

“Lien” means any mortgage, deed of trust, lien, pledge, claim, charge,

security interest, option, restriction, limitation, easement, title

defect or other adverse claim of ownership or use, or other

encumbrance of any kind, character or description, whether or not

of record (including any deposit, conditional or instalment sale,

other title retention Contract or capital lease), any lease in the





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nature thereof, or any filing of, or agreement to give, any financing

statement;

“Losses” means losses, damages (including lost profits, consequential

damages, interest, penalties, fines and monetary sanctions),

liabilities and costs (including without limitation any legal costs on a

solicitor and his own client’s basis, accountants’ fees and

expenses, court costs and all other out-of pocket expenses);

“Listing Rules” means the Rules Governing the Listing of Securities on The Stock

Exchange of Hong Kong Limited;

“Long Stop Date” means 15 December 2014;

“New Privateco Shares” means ordinary share(s) in the share capital of Excel Value

International Limited, an indirect wholly-owned subsidiary of the

Company prior to the commencement of the Reorganizaion;

“Pang Family” means Madam Li Wai Hang Christina, Mr. Pang Yat Ting Dominic,

Mr. Pang Yat Bond, Derrick, Ms. Pang Yat Sum, Rita, Ms. Pang

Yat Yan, Angela and (where the context requires) include late Mr.

Pang Kam Chun;

“Parties” means the named parties to this Agreement and a “Party” means

any of them;

“PRC” means The People’s Republic of China (for the purpose of this

Agreement, excluding Hong Kong, Macau and Taiwan);

“Proceeding” means any assertion, complaint, action, notice of assertion,

complaint or action, litigation, suit, proceeding, formal

investigation, inquiry, audit or review of any nature, civil, criminal,

regulatory, administrative or otherwise, or any grievance,

arbitration or arbitration demand;

“Properties” means the real properties owned or leased by any of the Group

Companies;

“Relief” means any loss, allowance, credit, relief, deduction or set-off in

respect of, or taken into account, or capable of being taken into

account, in the calculation of a liability to, Taxes or any right to a

repayment of Taxes;

“Reorganization” means the proposed group restructuring of the Group, to separate

the Distributed Business from the existing business of the Group in

order to facilitate the Distribution In Specie, which shall be carried

out in accordance with the reorganization and distribution in specie

plan as set out in ANNEXURE I;

“SFC” means the Securities and Futures Commission of Hong Kong;

“Share Option Schemes” means the Share Option Scheme 2002 and the Share Option

Scheme 2012;





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“Share Option Scheme 2002”

means the share option scheme adopted by the Company on 28

August 2002;

“Share Option Scheme 2012”

means the share option scheme adopted by the Company on 3

September 2012;

“Share Options” means the share options granted under the Share Option Scheme

2002 and the Share Option Scheme 2012 and outstanding as at

the date of this Agreement, which entitle the holders thereof to

subscribe for a total of 6,487,200 new Shares;

“Shares” means shares of HK$0.10 each in the capital of the Company;

“SPA Completion” means completion of the sale and purchase of Shares under the

SPA;

“Stock Exchange” means The Stock Exchange of Hong Kong Limited;

“Subscriber’s Warranties” means the warranties, representations and undertakings given by

the Subscriber set out in Schedule III and “Subscriber’s

Warranty” means any of them;

“Subscription CB” means convertible bonds in the principal amount of

HK$84,266,000 with rights attached thereto to convert into new

Shares at the Conversion Price to be issued by the Company to the

Subscriber pursuant to this Agreement;

“Subscription Price” means the subscription price of HK$0.463 per Subscription Share;

“Subscription Shares” means 100,000,000 new Shares (representing approximately

9.16% of the total issued shares of the Company as at the date of

this Agreement and approximately 8.39% of the total issued shares

of the Company as enlarged by the subscription of the Subscription

Shares) to be subscribed by the Subscriber and issued by the

Company at the Subscription Price pursuant to this Agreement;

“Subsidiary” has the meaning ascribed to it in the Listing Rules;

“Takeovers Code” means the Hong Kong Code on Takeovers and Mergers

administered by the SFC;

“Tax” or “Taxation” means:

(a) any liability to any form of taxation whenever created or

imposed and whether of Hong Kong or of any other part of the

world and without prejudice to the generality of the foregoing

includes profits tax, provisional profits tax, interest tax,

salaries tax, property tax, taxes on income, estate duty,

capital duty, stamp duty, payroll tax, withholding tax, rates,

customs and excise duties and generally any tax, duty,

impost, levy or rate or any amount payable to the revenue,

customs or fiscal authorities whether of Hong Kong or of any

other parts of the world;

(b) an amount equal to any deprivation of any relief, allowance,





6

set-off or deduction in computing profits or right to repayment

of taxation granted by or pursuant to any legislation

concerning or otherwise relating to taxation; and

(c) all costs, interest, penalties, charges, surcharges and

expenses incidental or relating to taxation or to any relief,

allowance, set-off or deduction in computing profits or right to

repayment of taxation which is the subject of the Company’s

Warranties to the extent that the same is/are payable or

suffered by the Group;

“Warranties” means the Subscriber’s Warranties and the Company’s Warranties

and “Warranty” means any of them.

1.2 Interpretation: In this Agreement, including its recitals and schedules, unless otherwise defined or

unless the context or subject matter otherwise requires:

(A) any reference to the Parties shall include their respective permitted assignees and

successors;

(B) any reference to Recitals, Clauses or Schedules is a reference to the recitals and clauses

of, and the schedules to, this Agreement;

(C) the Recitals and Schedules form part of this Agreement and shall be construed as part

thereof and shall have the same full force and effect as if expressly set out in the main

body of this Agreement;

(D) words and phrases defined in the Companies Ordinance shall have the same meanings in

this Agreement;

(E) any reference to a statutory provision shall include a reference to that provision as

amended or re-enacted from time to time;

(F) headings are inserted for convenience only and shall be ignored in construing this

Agreement;

(G) the singular includes the plural and vice versa, words importing gender or the neuter

include both genders and the neuter;

(H) any reference to dates or times is a reference to a date or time in Hong Kong;

(I) any reference to persons shall include individuals, bodies corporate (wherever

incorporated), unincorporated associations, all forms of governmental body or authority, or

any association or partnership (whether or not having a separate legal personality) of two

or more of the foregoing;

(J) any reference to this Agreement or any other agreement or document shall be construed

as a reference to this Agreement or, as the case may be, such other agreement or

document as it may have been, or may be, amended, varied, novated or supplemented;

(K) any reference to a document being “in the agreed terms” means documents in the terms

agreed between the Parties and, for the purpose of identification, signed by them or on





7

their behalf, or such document in such other terms as may be agreed in writing by the

Parties from time to time in substitution for or in variation of such document;

(L) the rule known as the ejusdem generis rule shall not apply. Accordingly general words

introduced or followed by the word “other” or “including” or “in particular” shall not be given

a restrictive meaning because they are followed by particular examples intended to fall

within the meaning of the general words;

(M) all warranties, representations, indemnities, covenants, agreements and obligations given

or entered into by more than one person are given or entered into jointly and severally;

(N) in relation to any warranty, term or undertaking contained in this Agreement, references to

“material breach” or "material respect" or similar expressions which connote materiality of

the degree of breach, non-performance or default shall mean any such breaches,

non-performances or defaults, either singly or in aggregate, would have a material adverse

effect on the business, operations or financial conditions of the Group as a whole or in the

context of the subscription herein or the consideration to be paid hereunder; and

(O) in relation to the business, operations or financial conditions of the Group, references to

“material adverse change” or similar expressions which connote materiality of the degree of

adverse change shall mean any event, circumstance or occurrence which might

reasonably be expected to have a material adverse effect on the business, operations or

financial conditions of the Group taken as a whole.

2. ISSUE OF SUBSCRIPTION SHARES AND CONVERTIBLE BONDS

2.1 Issue of Subscription Shares: The Company shall allot and issue, and the Subscriber shall, in

reliance on the Company’s Warranties given herein, subscribe for the Subscription Shares at the

Subscription Price.

2.2 Issue of Subscription CB: The Company shall issue and the Subscriber shall, in reliance on the

Company’s Warranties given herein, subscribe for the Subscription CB in the principal amount of

HK$84,266,000 at 100% of the principal amount.

2.3 Free from Encumbrances: The Subscription Shares, the Subscription CB and the Conversion

Shares, when issued and allotted, will be free and clear from all Encumbrances and together with

all rights attaching to them, including, in respect of Shares, all rights to any dividend or other

distribution declared made or paid, the record date of which is on or after their respective date of

issue and allotment.

2.4 Simultaneous Completion:

(A) The Subscriber shall not be obliged to complete the subscription of any of the Subscription

Shares and the Subscription CB unless the Subscription Shares and the Subscription CB

are completed simultaneously.

(B) The Subscriber shall not be obliged to complete the Subscription unless the SPA

Completion and the Subscription are completed simultaneously.

2.5 Nominee: The Subscriber may nominate a wholly-owned subsidiary to be the registered holder of

the Subscription Shares and/or the Subscription CB.





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3. CONSIDERATION

3.1 Consideration: The Consideration for the Subscription Shares and the Subscription CB (the

“Consideration”) shall be:

(A) HK$46,300,000 (equivalent to HK$0.463 per Subscription Share), for the Subscription

Shares; and

(B) HK$84,266,000 (being 100% of the principal amount of the Subscription CB), for the

Subscription CB.

3.2 Manner of Payment: Unless otherwise agreed by the Parties, the Consideration (or any part

thereof) shall be satisfied by:

(A) cashier order(s) issued by a licensed bank in Hong Kong; or

(B) fund transfer to the following Hong Kong Dollars bank account of the Company with the

following bank:

Bank name: DBS Bank (Hong Kong) Limited

Bank account number: 016-451-511877520

SWIFT Code: DHBKHKHH

4. CONDITIONS PRECEDENT

4.1 Conditions: Completion of the Subscription is conditional in all respects upon fulfilment (or waiver

in accordance with Clause 4.3) of the following matters (“Conditions”):

(A) Listing status: the Shares remaining listed and traded on the Main Board of the Stock

Exchange, and no notification or indication being received from the Stock Exchange or the

SFC prior to Completion that the listing of the Shares on the Stock Exchange will or may

be, for whatever reason, withdrawn or suspended for more than seven (7) consecutive

Business Days (excluding any suspension for the purpose of obtaining clearance from the

SFC or the Stock Exchange for any notices, announcements or circulars relating to the

transactions contemplated under this Agreement or the SPA);

(B) Shareholders approval: the passing by the shareholders or independent shareholders (as

the case may be) of the Company (as required under the Listing Rules and/or the

Takeovers Code) at special general meeting of the Company all resolutions required under

the relevant laws and regulations to effect, among others, this Agreement, the issue of the

Subscription Shares, the Subscription CB and the Conversion Shares and the transactions

contemplated thereunder;

(C) Listing approval: the granting of approval by the Stock Exchange for the listing of, and the

permission to deal in, the Subscription Shares and the Conversion Shares which may only

be subject to conditions as are customarily stipulated by the Stock Exchange for listing of

shares, and such approval not having been revoked;

(D) BMA approval: (if required) the obtaining of all necessary approvals from the Bermuda

Monetary Authority for the issue and allotment of the Subscription Shares and the

Conversion Shares;





9

(E) Approvals: all necessary approvals and consents by government and regulatory

authorities (including but not limited to the Stock Exchange) in respect of this Agreement

and the transactions contemplated hereunder having been obtained;

(F) Compliance of regulatory requirements: in relation to the transactions contemplated under

this Agreement, all relevant regulatory requirements (including but not limited to those

under the Listing Rules and all relevant regulatory requirements in Hong Kong) having

been complied with and satisfied;

(G) Execution of Documents: execution of the instrument constituting the Convertible Bonds,

substantially in the form set out in Schedule V;

(H) No material adverse change: no material adverse change or prospective material adverse

change in the Group’s business, operations, financial conditions or prospects has

occurred since the date of this Agreement; and

(I) Warranties: the Company’s Warranties and the Subscriber’s Warranties having remained

true and accurate in all material respects.

4.2 Long Stop Date: The Company and the Subscriber shall use their respective best endeavours to

procure the fulfilment of the Conditions (so far as it is within its power and practicable to do so) as

soon as practicable and in any event before the Long Stop Date.

4.3 Waiver: The Subscriber may at any time waive in writing any of Conditions 4.1(A), 4.1(H) and 4.1(I)

(in respect of the Company’s Warranties) and such waiver may be made subject to such terms and

conditions as may be determined by the Subscriber. The Company may at any time waive in

writing Condition 4.1(I) (in respect of the Subscriber’s Warranties) and such waiver may be made

subject to such terms and conditions as may be determined by the Company. Save for Conditions

4.1(A), 4.1(H) and 4.1(I), all other Conditions may not be waived.

4.4 Conditions not fulfilled nor waived: If the Conditions have not been fulfilled or waived by the

Subscriber or the Company (as the case may be) in accordance with Clause 4.3 at or before 12:00

noon on the Long Stop Date (or such later date as the Company and the Subscriber may agree),

this Agreement shall lapse, whereupon all rights and obligations of the Parties shall cease to have

effect except in respect of any accrued rights and obligations of the Parties and shall be without

prejudice to the continued application of Clause 1 and Clauses 11 to 14 inclusive.

4.5 Effect of Completion: After Completion, all Conditions shall be deemed to have been satisfied or

waived by the Subscriber or the Company (as the case may be) PROVIDED THAT such deemed

satisfaction or waiver shall not prejudice in any manner whatsoever any of the Subscriber’s rights

or the Company’s rights (as the case may be) in respect of or claims pursuant to the Company’s

Warranties or the Subscriber’s Warranties (as the case may be) and the undertakings given by the

Company under this Agreement.

5. COMPLETION

5.1 Simultaneous Completion: Subject to the Conditions having been satisfied (or waived in

accordance with Clause 4.3), Completion shall take place simultaneously with the SPA

Completion at the principal place of business of the Company on the Completion Date between

9:30 a.m. and 5:00 p.m. or at such other place and time as may be agreed by the Company and the

Subscriber (time in either case being of the essence).





10

5.2 Automatic Postponement: Notwithstanding anything herein provided, if the date fixed for

Completion and/or any of the date(s) stipulated for payment herein shall fall on a day which is not a

Business Day or shall fall on a day on which typhoon signal No.8 or above is hoisted, or black

rainstorm warning is in force in Hong Kong at any time between 9:30 a.m. to 3:00 p.m. on a

Business Day (“the said business hours”), such date for Completion or date(s) of payment (as

the case may be) shall automatically be postponed to the next Business Day on which no typhoon

signal No.8 or above is hoisted and no black rainstorm warning is in force in Hong Kong at any time

during the said business hours (as the case may be).

5.3 Completion Arrangement: At Completion, each Party shall fulfil all (or part only if mutually agreed)

of the obligations imposed on it under Schedule IV. All (or part only if mutually agreed) of the

transactions described in Schedule IV shall take place at the same time, so that in default of

performance of any such transactions or any part thereof by either the Company or the Subscriber,

the other Party shall not be obliged to complete the Subscription (without prejudice to any other

rights and remedies in respect of such default).

5.4 Company’s Default: Without prejudice to any other rights or remedies of the Subscriber arising

under this Agreement or otherwise, if at any time before Completion:

(A) any of the provisions in Clauses 6.1 and 6.2 is not satisfied or has not been duly and

promptly fulfilled or performed;

(B) the Company shall not have complied in all material respects with the covenants or

agreements contained in this Agreement to be complied with by it;

(C) in the reasonable opinion of the Subscriber, there is any fact or event (not being a fact or

event provided for or contemplated by this Agreement) which:

(I) is a breach of or is in any way inconsistent with any of the Company’s Warranties

or would or may be a breach of or be inconsistent with any of the Company’s

Warranties when repeated at Completion or would or may give rise to a claim of

indemnity under Clause 9;

(II) is evident that any Company’s Warranty is misleading in any respect material to

the Subscriber or that any obligation of the Company has not been or will or may

not be complied with within the period required by this Agreement;

(III) would be likely to prevent or hinder the Group Companies from having effective

use and possession of or from disposing of any of its assets which is material to

the Group or from carrying on its business in substantially the same manner as it is

now carried on;

(IV) would have a material and adverse effect on the business, financial or trading

position or prospects of the Group; or

(V) would cause the Group to sustain loss or damage on account of any act of God,

war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic,

terrorism, death, strike, lock-out or any other cause (whether similar or not) and

thus affect materially and adversely the value of the Subscription Shares and/or

the Subscription CB or the manner in which the Group can continue to carry on its

business; or

(D) at Completion the Company fails to or will be unable to fulfil or comply with any of its major

obligations under Schedule IV,

then the Subscriber may in its sole discretion without any liability on its part, by notice in writing to

the Company:





11

(I) defer Completion to a date not more than 20 Business Days after the original

Completion Date and require the Company to rectify all its default no later than

12:00 noon on the deferred Completion Date; or

(II) proceed to Completion so far as practicable (without prejudice to its other rights

hereunder); or

(III) rescind or terminate this Agreement forthwith,

PROVIDED THAT the exercise of any such right by the Subscriber shall not affect or prejudice or

constitute a waiver of any other right, remedy or claim which the Subscriber may have as at or after

Completion in relation to any event or circumstances referred to in this Clause or otherwise nor

shall termination or rescission of this Agreement affect or prejudice any provision hereof

expressed to survive or operate in the event of termination of this Agreement.

5.5 Subscriber’s Default: Without prejudice to any other rights or remedies of the Company arising

under this Agreement or otherwise, if:

(A) the Subscriber shall not have complied in all material respects with the covenants or

agreements contained in this Agreement to be complied with by it;

(B) at any time before Completion any of the Subscriber’s Warranties in material aspects is

found to be incorrect or misleading as at the date of its being made or has not been duly

and promptly fulfilled or performed or is incapable of due and prompt fulfilment or

performance by the Subscriber (as the case may be); or

(C) at Completion the Subscriber fails to or will be unable to fulfil or comply with any of its

major obligations under Schedule IV,

then the Company may in its sole discretion without any liability on its part, by notice in writing to

the Subscriber:

(I) defer Completion to a date not more than 20 Business Days after the original

Completion Date and require the Subscriber to rectify all its default no later than

12:00 noon on the deferred Completion Date; or

(II) proceed to Completion so far as practicable (without prejudice to its other rights

hereunder); or

(III) rescind or terminate this Agreement forthwith.

PROVIDED THAT the exercise of any such right by the Company shall not affect or prejudice or

constitute a waiver of any other right, remedy or claim which the Company may have as at or after

Completion in relation to any event or circumstances referred to in this Clause or otherwise nor

shall termination or rescission of this Agreement affect or prejudice any provision hereof expressed

to survive or operate in the event of termination of this Agreement.

5.6 Provisions to Survive Completion: All provisions of this Agreement shall, so far as they remain to

be performed or observed, shall continue in full force and effect notwithstanding Completion.





12

6. COVENANTS ON PRE-COMPLETION MATTERS

6.1 Positive Covenants: The Company hereby warrants and undertakes that except for the

transactions described herein or contemplated to be done hereunder or otherwise with the prior

written consent of the Subscriber, it shall, to the extent permitted by applicable laws and

regulations and the Listing Rules, cause each of the Group Companies at all times prior to

Completion to:

(A) Conduct of the business:

(I) conduct its business in the ordinary course and in a normal and prudent manner;

(II) maintain the nature of its business substantially the same as presently conducted

unless business is diversified with the prior written consent of the Subscriber;

(III) at all times comply with the provisions of all material contracts, agreements and

leases to which it is a party, unless contested in good faith by appropriate

proceedings;

(IV) keep proper, true and correct records of all transactions entered into;

(V) take all necessary and appropriate actions to safeguard its assets;

(B) Compliance with laws and regulatory requirements:

(I) maintain in full force and effect its existence;

(II) maintain in full force and effect all necessary licences (including statutory licences),

permits, consents and authorities (public and private) for the proper and effective

carrying on of its business and in the manner in which such business is now

carried on;

(III) ensure compliance with all applicable laws and regulatory requirements in all

material respects;

(IV) duly observe all material requirements of governmental and regulatory authorities

unless contested in good faith by appropriate proceedings;

(C) Taxation and other charges:

(I) promptly and timely prepare and file all reports and tax returns;

(II) promptly pay and discharge, or cause to be paid and discharged, when due and

payable, all lawful taxes, assessments and governmental charges, duties, levies

or penalties imposed upon its income, profits, property or business, and any other

fees and charges required to maintain its existence and conduct its business in the

ordinary course and in a normal and prudent manner, unless contested in good

faith by appropriate proceedings with the prior written consent of the Subscriber;

(D) Personnel: unless otherwise directed by the Subscriber, use its best endeavours to

procure that the key employees, officers and directors of each Group Company as at the

date of this Agreement remain and continue as employees after Completion;

(E) Information available to the Subscriber:

(I) as soon as reasonably practicable, notify the Subscriber of:

(a) any material litigation, arbitration or administrative proceedings which are

brought against it;

(b) any occurrence, event or circumstance which could cause any material

adverse change or prospective material adverse change in its business,

financial condition, assets or operations; and





13

(II) as soon as reasonably practicable, provide any information pertaining to its

financial, business and/or shareholding status as the Subscriber may reasonably

require from time to time.

The Company will notify the Subscriber of any decision by the Management Committee on material

matters (as the Board may in its reasonable discretion determine) as soon as practicable after

such decision is made and the Board and Management Committee will take full responsibility for

the decision made therein.

6.2 Negative Covenants: The Company hereby warrants and undertakes that at all times prior to

Completion, except for the transactions described herein or contemplated to be done hereunder or

otherwise with the prior written consent of the Subscriber or the performance of the obligations of

the Group Company under existing agreements or arrangements (details of which have been

properly, fully and fairly disclosed to the Subscriber prior to signing of this Agreement), the

Company shall cause each Group Company not to do or to omit to do (or not to allow to be done)

any act or thing (in either case whether or not in the ordinary course of day-to-day operations)

which may have a material effect on the business of the respective Group Company and in

particular (but without limiting the generality of the foregoing) each Group Company shall not at all

times prior to Completion, without the prior written consent of the Subscriber:

(A) Capital structure:

(I) issue, redeem, sell or dispose of, or create any obligation to issue (save for the

shares issued pursuant to the exercise of the share options granted under the

Share Option Schemes and not yet exercised as at the date of this Agreement),

any shares of its capital stock or equity interest or loan capital;

(II) grant or agree to grant or redeem any option or amend the terms of any existing

option over or right to acquire or subscribe any of its share or loan capital;

(III) effect any stock split, reclassification or consolidation (other than pursuant to the

Reorganization);

(B) Financing activities:

(I) modify agreements and other obligations with respect to its long-term

indebtedness including, but not limited to its loan agreements, indentures,

mortgages, debentures, notes and security agreements (other than any

agreement(s) in respect of the HSBC Loan and the obligations thereunder or any

agreement(s) or obligations with respect to long-term indebtedness which is

required to be modified in order to obtain the relevant third party consent for the

Completion and/or the SPA Completion);

(II) borrow or raise money, incur, assume, guarantee, indemnify, give surety or

otherwise become obligated or liable for any indebtedness (other than in the

ordinary course of business to finance operations on normal commercial terms

and without material adverse effect on the business, operations or financial

conditions of the Group as a whole);

(III) make any advance or loan to any person or entity (other than in the ordinary

course of business to finance operations on normal commercial terms or deposit

with licensed banks in Hong Kong and without material adverse effect on the

business, operations or financial conditions of the Group as a whole);

(IV) create or permit to arise any mortgage, charge, lien (other than lien arising by

operation of law), pledge, other form of security or encumbrance of equity of

whatsoever nature, whether similar to the foregoing or not, on or in respect of any





14

part of its undertaking, property or assets (other than in the ordinary course of

business, on normal commercial terms and in a manner consistent with past

practices);

(C) Investing activities:

(I) acquire any shares of any other company or participate in any partnership or joint

venture (other than in the ordinary course of business on normal commercial

terms without material adverse effect on the business, operations or financial

conditions of the Group as a whole);

(II) become a party to any merger or consolidation or any other business combination

with any corporation or other entity, except as contemplated by this Agreement;

(III) enter into any contract or transaction or capital commitment or undertake, accept

or allow to arise any contingent liabilities (other than in the ordinary course of

business on normal commercial terms without material adverse effect on the


(IV) make any acquisition of all or substantially all of the stock or assets of any other

person or entity (other than in the ordinary course of business on normal

commercial terms without material adverse effect on the business, operations or

financial conditions of the Group as a whole);

(V) dispose or agree to dispose of or acquire or agree to acquire any asset (other than

in the ordinary course of business on normal commercial terms without material

adverse effect on the business, operations or financial conditions of the Group as

a whole);

(VI) dispose or agree to dispose of any substantial business, investment or joint

venture (other than pursuant to the Reorganization or in the ordinary course of

business on normal commercial terms and without material adverse effect on the


(D) Constitution: modify, alter or supplement its Constitution;

(E) Winding up and arrangement with creditors:

(I) institute, or permit to be instituted against it, any proceeding, which remains

undismissed for a period of 15 days after the filing thereof, seeking to adjudicate it

as bankrupt or insolvent, or seeking liquidation, winding-up, reorganization,

arrangement, adjustment, protection, relief or composition of it under any law

relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking

the entry of any order or relief or the appointment of receiver, trustee or other

similar official for them or for any substantial part of its property;

(II) make a general assignment for the benefit of its creditors;

(F) Distribution to shareholders: declare or make any dividend, distribution or payment

(whether in cash or otherwise) of any of its profit or reserves to shareholders (other than

the final dividend for the year ended 31 March 2014 which is expected to be paid on or

about 19 September 2014 and the Distribution In Specie);

(G) Matters adversely affecting the financial position and the entitlement of rights:

(I) take or omit to take any action which could be reasonably anticipated to have a

materially adverse effect upon its financial position;





15

(II) terminate any agreement, arrangement or understanding, or waive any right (other

than in the ordinary course of business on normal commercial terms and without

material adverse effect on the business, operations or financial conditions of the

Group as a whole);

(III) terminate any or allow to lapse any insurance policy now in effect or default under

any provision thereof; or

(IV) release, compromise or write off any debt (other than in the ordinary course of

business on normal commercial terms and without material adverse effect on the

business, operations or financial conditions of the Group as a whole); and

(H) Property: let or agree to let or otherwise part with possession or ownership of the whole or

any part of the Properties nor purchase, take on lease or assume possession of any real

property (other than in the ordinary course of business on normal commercial terms);

(I) Legal Proceedings:

(I) compromise, settle, release, discharge or compound any material civil, criminal,

arbitration or other proceedings or any material liability, claim, action, demand or

dispute or waive any right in relation to any of the foregoing, which may have

material adverse effect on the business, operations or financial conditions of the

Group as a whole;

(II) institute any material civil, criminal, arbitration or other proceedings;

(J) Books and records: dispose of the ownership, possession, custody or control of any

corporate or other books or records.

7. COMPANY’S WARRANTIES

7.1 Incorporation of Schedules: The Company warrants and represents to the Subscriber and its

successors in title on the terms set out in Schedule II subject only to the matters Disclosed or to

any matter or thing hereafter done or omitted to be done pursuant to this Agreement or otherwise

at the request in writing or with the approval in writing of the Subscriber.

7.2 Subscriber’s Reliance: The Company acknowledges that the Subscriber has entered into this

Agreement in reliance upon the Company’s Warranties.

7.3 Company’s Warranties: The Company hereby represents, warrants and undertakes to the

Subscriber (for itself and as trustee for its successors in title) that each of the Company’s

Warranties in Schedule II is now as at the date of this Agreement be true and correct in all material

respects and not misleading in any material respects.

7.4 Independent Warranties: Each of the Company’s Warranties shall be separate and independent.

7.5 Post-Completion Effectiveness: Liability under any Company’s Warranty shall not be confined to

breaches discovered before Completion nor in any way be modified or discharged by Completion.

7.6 No Implied Waiver: The rights and remedies of the Subscriber in respect of any breach of the

Company’s Warranties shall not be affected by Completion, by any investigation made by or on

behalf of the Subscriber into the affairs of the Company, by any failure to exercise or delay in

exercising any right or remedy or by any event or matter whatsoever, except a specific and duly

authorized written waiver or release. The right to indemnification or other remedy resulting from,

based on or arising from the Company’s representations, warranties, covenants or obligations will

not be affected by any investigation conducted with respect to, or any knowledge acquired (or

capable of being acquired) at any time, whether before or after the Completion Date, with respect





16

to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant

or obligation.

7.7 Waiver: The Company waives any and all claims which it might otherwise have against any of the

Group Companies or their officers, directors, employees or advisers in respect of the

completeness or accuracy of any information or advice supplied or given, or of any failure to supply

or give any information and advice, by or on behalf of the respective Group Companies or their

officers, directors, employees or advisers in connection with this Agreement or otherwise prior to

the date of this Agreement.

7.8 Interpretation: Where any statement in the Company’s Warranties is qualified by the expression

“so far as the Company is aware” or “to the best of the Company’s knowledge and belief”

or any similar expression, that statement shall be deemed to include an additional statement that it

has been made after due and careful enquiry which are reasonable in the circumstances.

Where any statement in the Company’s Warranties is an expression of an opinion or belief made

by or on behalf of the Company, it is believed by the Company to be fair and reasonable and

accurately sets forth the opinion bona fide held by the Company; and the facts on which such

opinion or belief is based are particularly within the knowledge of the Company after due and

careful enquiry which are reasonable in the circumstances.

7.9 The Company shall not be liable for the Company’s Warranties:

(A) to the extent the facts, circumstances, matters and information giving rise to the claim have

been Disclosed;

(B) to the extent that provision or reserve in respect thereof has been made in the Accounts; or

(C) which, being a liability in respect of taxation, arises by reason of an increase in the rates of

taxation since the date of this Agreement or of an increase in the rates of taxation made

after the date hereof with retrospective effect or for which any member of the Group is

primarily liable.

7.10 The amount of any compensation or damages payable by the Company in respect of any claim for

breach of any Company’s Warranty shall be computed after taking into account and giving full

credit for:

(A) any increase in the amount or value of any assets or discharge from or satisfaction of or

reduction in any liability of the Company as a result of or arising out or attributable to the

fact, matter, event or thing giving rise to any relevant claim;

(B) any liability of the Company included in the Accounts having been discharged or satisfied

for less than the amount attributed thereto;

(C) any provision for Taxation, bad or doubtful debts or contingent or other liabilities of the

Company included in the Accounts having been proved to have been over provided for;

and

(D) the amount of any taxation credits, taxation relief or set-offs due to or received by the

Company except to the extent that the same shall have been taken into account in the

Accounts.

7.11 Investigation or knowledge: The right to indemnification or other remedy resulting from, based on

or arising from the Company’s representations, warranties, covenants or obligations will not be

affected by any investigation conducted with respect to, or any knowledge acquired (or capable of





17

being acquired) at any time, whether before or after the execution and delivery of this Agreement

or the Completion Date, with respect to the accuracy or inaccuracy of or compliance with, any such

representation, warranty, covenant or obligation.

8. SUBSCRIBER’S WARRANTIES

8.1 Incorporation of Schedules: The Subscriber warrants and represents to the Company and its

successors in title on the terms set out in Schedule III subject only to any matter or thing hereafter

done or omitted to be done pursuant to this Agreement or otherwise at the request in writing or with

the approval in writing of the Company.

8.2 Vendor’s Reliance: The Subscriber acknowledges that the Company has entered into this

Agreement in reliance upon, amongst other things, the Subscriber’s Warranties.

8.3 Subscriber’s Warranties: The Subscriber represents and warrants to the Company and its

successor in title that each of the Subscriber’s Warranties in Schedule III is now and as at

Completion, be true, accurate and not misleading in all material respects.

8.4 Independent Warranties: Each of the Subscriber’s Warranties shall be separate and independent

and except as expressly provided, shall not be limited by reference to any other paragraph or

sub-paragraph of the Subscriber’s Warranties or to anything in this Agreement or the Schedules.

8.5 Post-Completion Effectiveness: Liability under any Subscriber’s Warranty shall not be confined to

breaches discovered before Completion nor in any way be modified or discharged by Completion.

8.6 No Implied Waiver: The rights and remedies of the Company in respect of any breach of the

Subscriber’s Warranties shall not be affected by Completion, by any failure to exercise or delay in

exercising any right or remedy or by any event or matter whatsoever, except a specific and duly

authorized written waiver or release. The right to indemnification or other remedy resulting from,

based on or arising from the Subscriber’s representations, warranties, covenants or obligations will

not be affected by any investigation conducted with respect to, or any knowledge acquired (or

capable of being acquired) at any time, whether before or after the Completion Date, with respect

to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant

or obligation.

9. INDEMNITY

9.1 Indemnity given by the Company: The Company shall indemnify and shall keep indemnified and

save harmless the Subscriber, its officers, directors, representatives, agents and employees

(collectively the “Indemnified Parties” and each an “Indemnified Party”) from and against any

and all Losses actually incurred or suffered by any Indemnified Parties by reason of, resulting from,

in connection with, or arising in any manner whatsoever out of any Claims in respect of the

following matters (notwithstanding anything Disclosed):

(A) any Tax for which the Group is (or is asserted by any relevant Taxation Authority to be)

liable and arising in relation to any transaction, payment or other operation or a similar act,

event or omission which occurred, or which is deemed to have occurred, on or before

Completion and such Claim can be reasonably expected to have an adverse effect on the

financial conditions of the Group as a whole, excluding (i) any Tax which has been fully

discharged or settled on or before Completion or full provisions therefor have been made

in the Accounts and (ii) any Tax arising from an increase in fair value of any Property or a

gain on disposal of any Property at fair value; or

(B) any Relief or right to repayment of Tax to which the Group has, prior to Completion,

claimed to be entitled to, being found to be unavailable (either in whole or in part) to the





18

Group and such Claim can be reasonably expected to have an adverse effect on the

financial conditions of the Group as a whole; or

(C) any actions taken, or policies implemented, by the Group prior to Completion the purpose

or a purpose (being more than a merely incidental purpose) of which is avoiding, mitigating

or reducing its liability to Taxation and such Claim can be reasonably expected to have a

material adverse effect on the financial conditions of the Group as a whole; or

(D) the failure of the Group on or before Completion to:

(I) discharge any liability in respect of Taxation of the Group on a timely basis; or

(II) properly file complete and correct returns, and all other necessary declarations or

documents in relation to the Group with the relevant taxation authority; or

(III) comply in all other respects with any law relating to Taxation,

and such Claim can be reasonably expected to have an adverse effect on the financial

conditions of the Group as a whole; or

(E) the breach by the Company of any undertaking, covenant, agreement or other obligation

under this Agreement;

including, but not limited to, any diminution in the value of the assets of and any payment made or

required to be made by the Subscriber or any Group Companies and any costs and expenses

incurred as a result of such breach, PROVIDED THAT the indemnity contained in this Clause shall

be without prejudice to any other rights and remedies available to the Subscriber, and PROVIDED

FURTHER THAT the maximum aggregate amount which the Company may be liable under the

indemnity contained in this Clause 9.1 and other provisions of this Agreement (including the

Company’s Warranties) shall not exceed the amount of the Consideration and the Company shall

be under no liability in respect of any Claim thereunder unless notice of such Claim shall have been

served upon the Company by the Subscriber by no later than twelve (12) months from the

Completion Date.

9.2 Rights to Indemnity exercisable after Completion: The rights of the Subscriber to indemnification

under Clause 9.1(A) to (D) shall only be exercised after Completion. The rights of the Subscriber to

indemnification under Clause 9.1(E) shall be exercisable from the date of this Agreement.

9.3 Notice of Third Party Claims: An Indemnified Party shall notify promptly the indemnifying party (the

“Indemnifying Party”) in writing of the commencement of any Claim, PROVIDED THAT the

failure of any Indemnified Party to provide such notice shall not relieve the Indemnifying Party of its

obligations under this Agreement.





19

9.4 Conduct of Third Party Claims: In case any Claim is brought against an Indemnified Party and the

Indemnified Party notifies the Indemnifying Party of the commencement thereof, the Indemnifying

Party shall be entitled to participate therein and to assume the defence thereof, to the extent that it

chooses, with lawyers reasonably satisfactory to such Indemnified Party, and after notice from the

Indemnifying Party to the Indemnified Party that it so chooses, the Indemnifying Party shall not be

liable to the Indemnified Party for any legal or other expenses subsequently incurred by the

Indemnified Party in connection with the defence thereof other than reasonable costs of

investigation; PROVIDED THAT if:

(A) the Indemnifying Party fails to take reasonable steps necessary to defend diligently the

action or proceeding within twenty (20) calendar days after receiving notice from the

Indemnified Party that the Indemnified Party believes it has failed to do so; or

(B) the Indemnified Party who is a defendant in any claim or proceeding which is also brought

against the Indemnifying Party reasonably shall have concluded that there may be one or

more legal defences available to such Indemnified Party which are not available to the

Indemnifying Party; or

(C) representation of both parties by the same lawyers is otherwise inappropriate under

applicable standards of professional conduct,

then, in any such case, the Indemnified Party shall have the right to assume or continue its own

defence as set forth above (but with no more than one firm of lawyers for all Indemnified Parties in

each jurisdiction), and the Indemnifying Party shall be liable for any costs and expenses therefor.

9.5 Settlement of Third Party Claims: No Indemnifying Party shall, without the written consent of the

Indemnified Party, effect the settlement or compromise of, or consent to the entry of any judgment

with respect to, any pending or threatened action or claim in respect of which indemnification may

be sought hereunder (whether or not the Indemnified Party is an actual or potential party to such

action or claim) unless such settlement, compromise or judgment:

(A) includes an unconditional release of such Indemnified Party from all liability arising out of

such action or claim;

(B) does not include a statement as to or an admission of fault, culpability or a failure to act, by

or on behalf of any Indemnified Party; and

(C) does not include any injunctive or other non-monetary relief.

9.6 Set-off by Indemnified Party: The Indemnified Party may, in its sole discretion, offset any

payments payable by the Indemnified Party to the Indemnifying Party under this Agreement

against any and all Losses incurred or suffered by the Indemnified Party and for which the

Indemnified Party is entitled to be indemnified in this Agreement.

10. ANNOUNCEMENTS

No announcement or information concerning this Agreement or any ancillary matter shall be made

or released after Completion to the public or to the press (English or Chinese, local or overseas) or

the suppliers or customers of the Group by any of the Parties without the prior written consent of

the other Party PROVIDED THAT nothing shall restrict the making by any of the Parties (even in

the absence of agreement by the other Party) of any statement or disclosure that may be required

by law or the requirements of the Stock Exchange or any regulatory authorities (including SFC)

PROVIDED THAT Party shall engage in such prior consultation with the other Parties as to the

contents and timing of release of such announcement as may be reasonable in the circumstances.





20

11. COSTS

11.1 All stamp duty, levies, taxes or similar taxes (if any) in connection with the issue of the Subscription

Shares, the Subscription CB and the Conversion Shares shall be borne by the Company.

11.2 Subject to Clause 11.1, each Party shall bear its own costs in connection with the negotiation,

preparation, execution and performance of this Agreement and the transactions contemplated

herein, including but not limited to legal costs, costs relating to the production of any document and

the due diligence investigation, incurred in connection with the transaction contemplated herein.

Any tax, cost or governmental fees incurred in connection with the transaction contemplated

herein shall be borne by the relevant Party in accordance with the applicable laws and regulations.

12. NOTICES

12.1 Manner of Notice: Any notice or other communication to be given under this Agreement shall be in

writing and may be delivered personally or by courier or sent by prepaid letter (airmail if overseas)

or facsimile transmission. A notice shall be sent to the addressee (marked for the attention of the

appropriate person) at its address or facsimile number set out in Clause 12.2 below or to such

other address or facsimile number as may be notified by such addressee to the other Party from

time to time for the purposes of this Clause 12.

12.2 Address and Facsimile Number: The initial address and facsimile number of each of the Parties for

the purposes of this Clause 12 are as follows:

(A) To the Subscriber:

Address: Unit B, 7/F, Lockhart Centre, 301-307 Lockhart Road,

Wanchai, Hong Kong

Facsimile: (852) 3104-0188

For the attention of: Mr. Xu Jianhua

with copy to Peter C. Wong, Chow and Chow

Address: Suites 1604-6, ICBC Tower, 3 Garden Road, Hong Kong

Facsimile: (852) 2810-0280

For the attention of: Mr. Anthony Chow / Mr. George Lee

(B) To the Company:

Address: 5C, Hong Kong Spinners Industrial Building, 601-603 Tai

Nan West Street, Cheung Sha Wan, Kowloon, Hong Kong

Facsimile: (852) 2743-1025

For the attention of: Mr. Clement Kwok

with copy to Messrs. Troutman Sanders

Address: 34/F., Two Exchange Square, 8 Connaught Place, Central, Hong Kong

Facsimile: (852) 2533-7898

For the attention of: Ms Rossana Chu / Mr. Dennis Yeung





21

12.3 Time of Service: A notice shall be deemed to have been served:

(A) if delivered personally or by courier, at the time of delivery;

(B) if posted, if to an addressee within the same country, two (2) working days (or if to an

addressee in a different country, five (5) working days, when it shall be sent airmail) after

the envelope containing the notice was delivered into the custody of the postal authorities;

(C) if communicated by facsimile transmission, at the time of transmission;

PROVIDED THAT where, in the case of delivery by hand or by courier or transmission by facsimile,

such delivery or transmission occurs after 4 p.m. (local time) on a working day or on a day which is

not a working day in the place of receipt, service shall be deemed to occur at 9 a.m. (local time) on

the next following working day in such place; and for this purpose, in this Clause 12 “working day”

means a day on which banks in the place of receipt are open for business in the ordinary course,

other than Saturdays and Sundays.

12.4 Proof of Service: In proving service, it shall be sufficient to prove if personal delivery or courier

delivery was made or if the envelope containing the notice was properly addressed and delivered

into the custody of postal authorities authorized to accept the same, or if sent by facsimile, by

receipt of automatic confirmation of transmission PROVIDED THAT a notice shall not be deemed

to be served if communicated by facsimile transmission which is not legible in all material respects;

such transmission shall be deemed to have been so legible if a request for retransmission is not

made before the end of the next working day following the transmission.

13. GENERAL PROVISIONS

13.1 Further Assurance: Each Party agrees to perform (or procure the performance of) all further acts

and things, and execute and deliver (or procure the execution and delivery of) such further

documents, as may be required by law or as may be necessary or reasonably desirable to

implement and/or give effect to this Agreement and the transactions contemplated by it.

13.2 Entire Agreement: This Agreement (together with any document described in or expressed to be

entered into in connection with this Agreement) constitutes the entire agreement between the

Parties in relation to the transaction(s) referred to it or in them and supersedes any previous

agreement between the Parties in relation to such transaction(s) (including without limitation the

confidentiality agreement dated 11 July 2014 between the Company and the Subscriber). It is

agreed that:

(A) no Party has entered into this Agreement in reliance upon any representation, warranty or

undertaking of any other Party which is not expressly set out or referred to in this

Agreement; and

(B) except for any breach of an express representation or warranty under this Agreement, no

Party shall have any claim or remedy under this Agreement in respect of

misrepresentation or untrue statement made by any other Party, whether negligent or

otherwise, and whether made prior to or after this Agreement, PROVIDED THAT this

Clause shall not exclude liability for fraudulent misrepresentation.

13.3 Remedies Cumulative: Any right, power or remedy expressly conferred upon any Party under this

Agreement shall be in addition to, not exclusive of, and without prejudice to all rights, powers and

remedies which would, in the absence of express provision, be available to it; and may be

exercised as often as such Party considers appropriate.





22

13.4 Waivers: No failure, relaxation, forbearance, indulgence or delay of any Party in exercising any

right or remedy provided by law or under this Agreement shall affect the ability of that Party

subsequently to exercise such right or remedy or to pursue any other rights or remedies, nor shall

such failure or delay constitute a waiver or variation of that or any other right or remedy. No single

or partial exercise of any such right or remedy shall preclude any other or further exercise of it or

the exercise of any other right or remedy.

13.5 Severability: The Parties intend that the provisions of this Agreement shall be enforced to the

fullest extent permissible under the laws applied in each jurisdiction in which enforcement is

sought. If any particular provision of this Agreement shall be held to be invalid or unenforceable,

then such provision shall (so far as invalid or unenforceable) be given no effect and shall be

deemed not to be included in this Agreement but without invalidating any of the remaining

provisions of this Agreement. The Parties shall use all reasonable endeavours to replace the

invalid or unenforceable provisions by a valid and enforceable substitute provision the effect of

which is as close as possible to the intended effect of the invalid or unenforceable provision.

13.6 Variation: No variation of any of the terms of this Agreement (or of any document described in or

expressed to be entered into in connection with this Agreement) shall be effective unless such

variation is made in writing and signed by or on behalf of each of the Parties. The expression

“variation” shall include any variation, supplement, deletion or replacement however effected.

13.7 Assignment: This Agreement shall be binding upon, and enure to the benefit of, the Parties and

their respective successors and permitted assigns. No Party shall take any steps to assign,

transfer, charge or otherwise deal with all or any of its rights and/or obligations under or pursuant to

this Agreement without the prior written consent of the other Party. In the absence of the prior

written consent of the Parties, this Agreement shall not be capable of assignment.

13.8 Counterparts: This Agreement may be executed in any number of counterparts all of which, taken

together, shall constitute one and the same agreement. Any Party may enter into this Agreement

by executing any such counterpart.

13.9 Legal Relationship: The Parties are independent principals and no Party is nor shall hold itself out

as the agent or partner of another, and no Party shall have any authority to bind or incur any liability

on behalf of any other Party.

13.10 Punctual Performance: Any time, date or period mentioned in any Clause in this Agreement may

be varied by mutual agreement between the Company and the Subscriber, made in writing and

signed by or on behalf of each of the Parties, but, as regards any time, date or period originally

fixed and not so varied, or any time, date or period so varied, as aforesaid, time shall be of the

essence of this Agreement.

13.11 Continuing Obligations: Each of the obligations, indemnities and undertakings accepted or given

by the Parties pursuant to this Agreement, excluding those having been fully performed at

Completion, shall continue in full force and effect notwithstanding Completion.

13.12 No deduction or withholding: All payments to be made by the Company under this Agreement shall

be made in full without set-off or counterclaim and free and clear of and without any deduction or

withholding whatsoever except to the extent required by law, and if any such deduction or

withholding is required by law or the payment is taxable (other than tax chargeable on the overall

net income of the recipient), the Company shall pay such further amount as will ensure that after

taking account of those deductions and withholdings, and after payment of tax chargeable on the

original and the additional payment, there shall be paid a net sum equal to the amount of the

original sum owed.





23

14. GOVERNING LAW AND JURISDICTION

14.1 Governing Law: This Agreement (together with all documents referred to in it) shall be governed by

and construed and take effect in accordance with the laws of Hong Kong (which each of the Parties

considers to be suitable to govern the international commercial transactions contemplated by this

Agreement).

14.2 Jurisdiction: With respect to any question, dispute, suit, action or proceedings arising out of or in

connection with this Agreement (the “Proceedings”), each Party irrevocably:

(A) submits to the non-exclusive jurisdiction of the courts of Hong Kong; and

(B) waives any objection which it may have at any time to the laying of venue of any

Proceedings brought in any such court, waives any claim that such Proceedings have

been brought in an inconvenient forum and further waives the right to object, with respect

to such Proceedings, that such court does not have any jurisdiction over such Party.





24

SCHEDULE I

INFORMATION ABOUT THE GROUP

Part A: Company

1. Name: Chun Wo Development Holdings Limited

2. Date of Incorporation: 4 December 1991

3. Place of Incorporation: Bermuda

4. Company Registration Number: 16958

5. Registered Office: Clarendon House, 2 Church Street, Hamilton HM11

Bermuda

6. Authorized Share Capital: HK$ 150,000,000 divided into 1,500,000,000 shares of

HK$0.10 each

7. Issued Share Capital: HK$ 109,202,957.6 divided into 1,092,029,576 shares

of HK$0.10 each

8. Shareholders holding: Name No. of Shares Percentage

Vendor 610,042,884 55.86%

Pang Family 23,886,875 2.19%

Other shareholders 458,099,817 41.95%

1,092,029,576 100%

9. Directors: Mr. Pang Yat Ting, Dominic

Mr. Pang Yat Bond, Derrick

Mr. Kwok Yuk Chiu, Clement

Madam Li Wai Hang, Christina

Mr. Au Son Yiu

Mr. Chan Chiu Ying, Alec

Mr. Hui Chiu Chung, Stephen

Mr. Lee Shing See

10. Company Secretary: Ms. Chan Sau Mui, Juanna

11. Subsidiaries: Refer to Part B of this Schedule





25

Part B: Subsidiaries (as at 11 September 2014)

No. Name of Company Place of

Incorporation Date of

Incorporation Status

1. A & L Consultancy Limited H.K. 14-Nov-97 Non-operating

2. Able Eagle Limited H.K. 17-Mar-14 Non-operating

3. Bestking Developments Limited 佳君發展有限公司

B.V.I. 15-Sep-04 Non-operating

4. Beyond Talent Investments Limited 邁智投資有限公司

B.V.I. 5-Jan-12 Non-operating

5. Bloom Team Building Construction Company Limited 佳誠建築工程有限公司

H.K. 20-Apr-98 Construction

project

6. Brilliant Stone Development Limited 俊石發展有限公司

H.K. 6-Nov-08 Financing Vehicle

7. Broughton Limited B.V.I. 25-Mar-96 Non-operating

8. Caine Developments Limited H.K. 20-Apr-95 Non-operating

9. Capital Pacific Properties Limited 僑興置業有限公司

H.K. 23-Jan-02 Non-operating

10. Champ Success Development Limited 隆成發展有限公司 (60%)

H.K. 25-Apr-13 PD project co

11. Champion King Trading Limited 俊基貿易有限公司

H.K. 25-Feb-98 Non-operating

12. Champion Surveying & Engineering Co., Limited 俊威測繪工程有限公司

H.K. 1-Aug-01 Construction

project

13. Charmfield Enterprises Limited B.V.I. 8-Nov-13 Non-operating

14. China Rise Engineering Limted 華升工程有限公司

H.K. 20-May-05 Non-operating

15. Chun Loong Management Company Limited 駿龍(香港)橋隧運營管理有限公司 (70%)

H.K. 27-Jun-06 Non-operating

16. Chun Shing Construction (Macau) Limited 俊誠建築(澳門)有限公司

Macau 30-Nov-05 Non-operating

17. Chun Wo (BVI) Limited B.V.I. 21-Jan-94 Non-operating

18. Chun Wo Building Construction Limited 俊和建築有限公司

H.K. 19-Sep-80 Construction

project

19. Chun Wo China Construction Limited B.V.I. 14-Dec-93 Non-operating





26

20. Chun Wo (China) Limited 俊和(中國)有限公司


21. Chun Wo Construction and Engineering Company Limited 俊和建築工程有限公司

H.K. 10-Dec-74 Construction

project

22. Chun Wo Construction (Taiwan) Limited 俊和建築(台灣)有限公司


23. Chun Wo Development Partners Limited H.K. 17-May-00 Non-operating

24. Chun Wo E & M Engineering Limited 俊和機電工程有限公司


project

25. Chun Wo E & M Engineering (Macau) Limited 俊和機電工程(澳門)有限公司

Macau 21-Jan-06 Non-operating

26. Chun Wo E & M (Environmental) Engineering Limited 俊和機電(環保)工程有限公司

H.K. 25-Mar-04 Non-operating

27. Chun Wo Elegant Decoration Engineering Company Limited 俊和高雅裝飾工程有限公司

H.K. 16-May-95 Construction

project

28. Chun Wo Engineering (Macau) Company Limited 俊和工程(澳門)有限公司

Macau 8-Oct-92 Construction

project

29.

Chun Wo Environmental Engineering Company Limited 俊和環保建設有限公司


30. Chun Wo Environmental Engineering (Hong Kong) Limited 俊和環保建設(香港)有限公司

H.K. 28-Nov-03 Construction

project

31. Chun Wo Foundation Specialist Limited 俊和土力工程有限公司

H.K. 28-Dec-93 Dormant

32. Chun Wo Foundations Limited 俊和地基工程有限公司


project

33. Chun Wo Foundations (Macau) Engineering Limited 俊和地基(澳門)工程有限公司

Macau 21-Jun-06 Construction

project

34. Chun Wo Hong Kong Limited B.V.I. 18-Nov-91 Non-operating

35. Chun Wo Infrastructure Limited 俊和基建有限公司


36. Chun Wo Investment Limited B.V.I. 2-Feb-00 Non-operating

37. Chun Wo Property Development Limited 俊和地產發展有限公司

H.K. 1-Aug-97 Investment

Holding

38. Chun Wo Railway Engineering Limited 俊和鐡路工程有限公司

H.K. 1-Aug-08 Dormant

39. Chun Wo-San Meng Fai Joint Venture 俊和-新明輝合作經營

Macau 21-Jul-05 Non-operating





27

40. Chun Wo Secretarial Limited H.K. 4-Aug-06 Non-operating

41. City Professional Management Limited 城市專業管理有限公司

H.K. 3-Dec-96 Professional

Services

42. City Security Company Limited 城市護衞有限公司

H.K. 12-Dec-95 Professional

Services

43. Citytop Group Limited 城高集團有限公司

B.V.I. 15-Sep-04 Non-operating

44. Conforming Holdings Limited B.V.I. 16-Mar-00 Non-operating

45. Core Limited 酷亞有限公司

H.K. 5-Mar-97 Dormant

46. CW Construction (Macau) Limited 俊和建築(澳門)有限公司

Macau 23-May-02 Dormant

47. Discreet Holdings Limited B.V.I. 13-Feb-14 Non-operating

48. Duckworth Group Limited B.V.I. 8-Dec-99 Non-operating

49. Dynamic Unicorn Limited B.V.I. 9-Mar-12 Non-operating

50. Eagle Sky Investments Limtied H.K. 28-Mar-08 Non-operating

51. East Glory Engineering Limited 東溢工程有限公司


52. Easy On Enterprise Limited 順康企業有限公司 (51%)

H.K. 11-Jul-14 Non-operating

53. Elegant Decoration Engineering (Macau) Limited 高雅裝飾工程(澳門)有限公司

Macau 15-Apr-08 Non-operating

54. Ever Rich Construction Engineering Limited 恒發建築工程有限公司


project

55. Excel Smart Investment Limited 佳駿投資有限公司


56. Excel Value International Limited B.V.I. 23-Apr-12 Non-operating

57. Expert Fortune Limited B.V.I. 31-Mar-00 Non-operating

58. Falcon Sky Investments Limited H.K. 28-Mar-08 Non-operating

59. Fortune International Investment Limited 順風國際投資有限公司

H.K. 17-Dec-03 Non-operating

60. Fortune Property Services Limited 富達物業服務有限公司






28

61. Full Fame Development Limited 廣譽發展有限公司


62. Gemstone Trading Limited B.V.I. 6-Oct-92 Non-operating

63. Global Chance International Limited B.V.I. 26-Jan-12 Non-operating

64. Glorious Prospects Holdings Limited 亮程控股有限公司


65. Glory Year Holdings Limited 安賢集團有限公司

H.K. 22-Oct-99 Non-operating

66. Golden Ascend Limited 金晉有限公司

B.V.I. 13-Dec-11 Non-operating

67. Grand Palace Global Limited B.V.I. 2-Aug-13 Non-operating

68. Great Prosper Development Limited 瀋隆發展有限公司


69. Green Solution Interior Design And Decoration Company Limited 佳朗室內設計及裝修有限公司

H.K. 30-Apr-04 Construction

project

70. Healthy Investment Limited 康健投資有限公司


71. HKPFH Limited 中港建築物流有限公司 (50%)


project

72. HKPFH Operation Limited 中港建築物流營運有限公司 (50%)


project

73. Hong Kong OVM Engineering (Macau) Company Limited 香港歐維姆工程(澳門)有限公司

Macau 12-Sep-05 Dormant

74. Joy Smart Construction Engineering Limited 俊穎建築工程有限公司

H.K. 26-Mar-09 Dormant

75. Kamlight Construction Company Limited 錦明發展有限公司


76. Keen Leap Holdings Limited B.V.I. 28-Oct-11 Non-operating

77. Lifewire Limited 齊助網有限公司


78. Linkstep Development Limited 聯卓發展有限公司


79. Loyal Faith Enterprise Limited 信康企業有限公司


80. Lucky Rich Ventures Limited B.V.I. 6-Mar-14 Non-operating

81. Mandarin Group Ltd B.V.I. 22-Nov-93 Non-operating





29

82. Marvel Hero Limited B.V.I. 5-Mar-14 Non-operating

83. Maxtrade Corporation Limited 萬貿有限公司

H.K. 20-Jul-06 Dormant

84. Merit Global Developments Limited 優宇發展有限公司

B.V.I. 12-Jun-12 Non-operating

85. Middle East Ventures Ltd H.K. 8-Jun-01 Non-operating

86. Modern Top Group Limited B.V.I. 23-May-06 Non-operating

87. Oasis Development & Environmental Consultancy Limited 奧廸顧問有限公司


project

88. Perfect Year Investment Limited 寶利年投資有限公司


89. Premier General Partners Limited (Limited Liability Company) 卓譽合夥人有限公司

Cayman Islands 29-May-12 Non-operating

90. Profit City International Limited B.V.I. 9-Feb-05 Non-operating

91. Property Growth Fund L.P. (Exempted Limited Partnership)

Cayman Islands 6-Jun-12 Non-operating

92.

Property Growth Fund Management Limited (Limited Liability Company) 置盛物業基金管理有限公司

Cayman Islands 5-Jun-12 Non-operating

93. Racing Way Group Limited B.V.I. 8-Dec-99 Non-operating

94. Regal Rich Limited 富睿有限公司 (50%)


project

95. Reliance-Tech Limited H.K. 7-Apr-08 Dormant

96. Reliance-Tech (Singapore) Pte. Ltd. Singapore 12-Apr-08 Dormant

97. Rich Resource Development Limited 鴻厚發展有限公司

H.K. 2-Aug-00 Property

Investment

98. Rich Score Development Limited 益鉅發展有限公司

H.K. 21-Nov-96 Non-operating

99. Rich Wide Development Limited 富茂發展有限公司


100. Right Elite Ventures Limited B.V.I. 4-Mar-14 Non-operating

101. Significant Developments Limited B.V.I. 6-Sep-01 Non-operating

102. SINORAK FZ - LLC UAE 21-Nov-10 PD project co





30

103. Sky One Engineering Limited 天一工程有限公司


104. Smart Rise Investment Limited 晉昌投資有限公司

H.K. 28-Aug-02 Dormant

105. Smart Wealth Asia Pacific Limited 駿寶亞太有限公司

H.K. 26-Apr-12 PD project co

106. Smartlink International Development Limited 俊盈國際發展有限公司

H.K. 9-Feb-06 Property

Investment

107. Smartwill Asia Limited 駿偉亞洲有限公司

H.K. 16-Jul-04 PD project co

108. Strategic Champ Holdings Limited B.V.I. 3-May-13 Non-operating

109. Swift Quest Limited B.V.I. 28-Feb-14 Non-operating

110. Talent Ascent Development Limited 智升發展有限公司


111. Talent Year Group Limited B.V.I. 31-Jan-02 Non-operating

112. The Brilliant Mission Engineering Company Limited 彥信工程有限公司

H.K. 7-Jun-12 Construction

project

113. Topmarks Consultancy Services Limited B.V.I. 13-Jul-94 Non-operating

114. Trade Success Investments Limited B.V.I. 8-Aug-02 Non-operating

115. Treasure New Global Limited B.V.I. 3-May-13 Non-operating

116. Treasure Rise Investment Limited 億陞投資有限公司


117. Treasure Spread Limited 拓運有限公司

H.K. 26-Apr-02 Non-operating

118. True Champion Limited B.V.I. 8-Feb-05 Non-operating

119. Union Success Holdings Limited B.V.I. 26-Oct-01 Non-operating

120. Vasteam Construction Limited 浩隆建築有限公司

H.K. 26-Nov-96 Construction

project

121. Wealth Anchor Investments Limited B.V.I. 16-Aug-13 Investment

Holding

122. Wealth Honest Asia Pacific Limited 誠亞太有限公司


123. Wealth More Limited 祥旺有限公司






31

124. Wealthy Top Investment Limited 裕峰投資有限公司


125. Win Creation Development Limited 鍵勝發展有限公司


126. Wing Cheong Electrical Engineering & Contracting Company Limited 永昌電器工程有限公司


project

127. Wisdom Year Investments Limited B.V.I. 30-Apr-02 Non-operating

128. WITS Appointment Limited 偉思人事顧問有限公司

H.K. 23-Feb-00 Dormant

129. Yieldful Property Investment Limited 怡富物業投資有限公司

H.K. 7-Jul-00 Non-operating

130.

上海金俊和建設工程有限公司 SHANGHAI JINCHUN WO CONSTRUCTION AND ENGINEERING CO., LTD (99%) P.R.C. 18-Mar-93 Non-operating

131. 廣州市俊和置業有限公司 GuangZhou Chun Wo Land Co. Ltd. P.R.C. 18-Feb-04 Non-operating

132. 石家莊俊景房地產開發有限公司 P.R.C. 16-Nov-04 PD project co

133. 俊和建築工程(石家莊)有限公司 P.R.C. 28-Jun-05 Non-operating

134. 深圳俊和譽信信息咨詢有限公司 P.R.C. 30-Jul-08 Construction

project

135. 汕尾市紅海大酒店有限公司 P.R.C. 31-Dec-03 PD project co

136. 深圳前海俊和投資咨詢有限公司 P.R.C. 12-Dec-13 Financing Vehicle

137. 中山市俊置投資咨詢有限公司 P.R.C. 10-Jun-14 Investment

Holding





32

Part C: Associated Companies (as at 11 September 2014)

No. Name of Company Place of

Incorporation Date of

Incorporation Status

1 Advance Fame Development Limited 進菲發展有限公司 (40%)

H.K. 23-Jul-13 Dormant

2 Bin Khaled & Chun Wo Foundations LLC (49%)

UAE 14-May-08 Non-operating

3 Global Conqueror Limited 楷寶有限公司 (30%)

H.K. 2-Apr-13 Dormant

4 Golden Concept Development Limited 創金發展有限公司 (10%)

H.K. 19-Aug-13 Operating

5 Grand View Properties Limited 宏景置業有限公司 (40%)

H.K. 5-Nov-96 Operating

6 Hoi Wing Construction Development Company Limited 海泳建築置業有限公司 (20%)

Macau 25-Jul-94 Non-operating

7 Hong Kong OVM Engineering Company Limited 香港歐維姆工程有限公司 (45%)

H.K. 26-Feb-03 Construction Project

8 Keng Fong Lei Investment Limited 京豐利投資有限公司 (20%)

Macau 8-Oct-93 Non-operating

9 Pacific Region Investment Limited 僑海投資有限公司 (45%)

H.K. 14-Apr-00 Non-operating

10 Vietnam Land (HK) Ltd. (20%) B.V.I. 18-Dec-03 PD Project co.

11 Vietnam Land SSG Limited (50%) Vietnam 6-Aug-04 PD Project co.

12 安慶佳俊旅遊開發有限公司 (40%) P.R.C. 9-Apr-04 Non-operating





33

Part D: Unincorporated Joint Venture (as at 11 September 2014)

Name of unincorporated joint venture

1 Hip Hing – Chun Wo Joint Venture

2 Chun Wo Joint Venture

3 Chun Wo – Fujita Joint Venture

4 Chun Wo – Fujita – Henryvicy Joint Venture

5 Chun Wo – CRGL Joint Venture

6 Vibro – Chun Wo Joint Venture

7 Chun Wo – Leader Joint Venture

8 Chun Wo – CRGL – MBEC Joint Venture

9 Chun Wo – Muni Joint Venture

10 Chun Wo – Hip Hing Joint Venture (Contract 907)

11 Chun Wo – Hip Hing Joint Venture (Contract 1002)

12 Chun Wo – CEC Joint Venture

13 Chun Wo – CRGL – QR Joint Venture

14 Bloom Team – Muni Joint Venture

15 JEC-CW E & M Joint Venture

16 Chun Wo-Henryvicy-GTECH Joint Venture

17 CW-SELI Joint Venture

18 Kaden-Chun Wo Joint Venture

19 HKPFH Joint Venture

20 Leighton – Chun Wo Joint Venture

21 Chun Wo-STEC Joint Venture

22 Chun Wo-Cheng Long-Chan Chun Joint Venture





34

SCHEDULE II

WARRANTIES GIVEN BY THE COMPANY

(as referred to in Clause 1.1)

Except where it is expressly provided or where the context otherwise requires, the Company's Warranties

in this Schedule II shall apply not only to the Company but also to each of the Group Companies mutatis

mutandis as if each had been expressly repeated with respect to each of the Group Companies, naming it

in place of the Company throughout.

1. DEFINITIONS

Definitions: In this Schedule, unless otherwise defined or unless the context otherwise requires,

the following words and expressions have the following meanings:

“Previous

Publications”

means all the annual report of the Company for the year ended on the

Accounts Date and interim results announcement and all other

announcements and circulars issued by the Company to the

shareholders of the Company subsequently; and

“Takeovers Code” means the Hong Kong Code on Takeovers and Mergers.

2. INFORMATION

2.1 Disclosures: The facts and information set out in the Recitals and the Schedules and all

documents attached hereto are true in all material respects and all information (whether written,

electronic or in any other non-transitory visual or documented form) which has been provided to

the Subscriber or its representatives or advisers by any director, officer or other official of the

Company or by their respective professional advisers or other agents whether prior to the signing

of this Agreement or in the course of conducting the Due Diligence, was when given and is now

true, complete and correct in all material aspects. There is no fact or matter which has not been

disclosed which renders any such information untrue, inaccurate or misleading in any material

respect or the disclosure of which is likely to reasonably affect the willingness of a willing

subscriber (acting reasonably) to subscribe for the Subscription Shares and Subscription CB in

accordance with the provisions of this Agreement.

2.2 Corporate Records: The Company has made available to the Subscriber complete and correct

copies of all the corporate documents, including but not limited to, its memorandum and articles of

association/bye-laws and other constitutional documents, registers and other organizational

documents, in each case, as amended to the date hereof. The Company has delivered to the

Subscriber or its nominee complete, up-to-date and correct copies of its minute books and

corporate records, all of which contain complete, up-to-date and correct records of the material

proceedings and actions taken at all meetings of, or effected by written consent of, its shareholders

and its board of directors.

2.3 Announcements and Circulars: With respect to the Previous Publications, all statements of fact

contained therein were true and correct in all material respects and not misleading in any material

respect and all expressions of opinion or intention contained therein were made on reasonable

grounds and were truly and honestly held by the directors of the Company and were fairly based

and there were no other facts omitted so as to make any such statement or expression in any of the

Previous Publications misleading in any material respect.





35

3. WARRANTIES RELATING TO THE SUBSCRIPTION

3.1 Incorporation: The Company is duly incorporated and validly existing under the laws of its

jurisdiction of incorporation, with full power and authority to own its properties and to conduct its

business as currently conducted.

3.2 Agreements: This Agreement and the Convertible Bonds have been duly authorised, and the

Convertible Bonds have been or will on or before their issue be duly executed and delivered and

this Agreement constitutes and the Convertible Bonds on issue will constitute, valid and legally

binding obligations enforceable in accordance with their respective terms, and the performance by

the Company of the obligations to be assumed by them have been duly authorised by all corporate

or other action.

3.3 Authorisation: The Company has the necessary power and authority to enter into this Agreement

and issue the Convertible Bonds, the Subscription Shares and upon exercise of the conversion

rights under the Convertible Bonds, the Conversion Shares.

3.4 Shares: The Conversion Shares and the Subscription Shares have been duly authorised and will

be validly issued, credited as fully-paid and unencumbered and free and clear of any security

interests, claims (including pre-emptive rights), liens or encumbrances and will be freely

transferable and shall rank pari passu in all respects with all other Shares then in issue;

3.5 Consents: All consents, clearances, approvals, authorisations, orders, registrations or

qualifications of or with any court, regulatory authority or governmental agency or body of Bermuda

and Hong Kong required for the execution and delivery of this Agreement, the issue and allotment

of the Subscription Shares, the issue and delivery of the Convertible Bonds and the Conversion

Shares to be issued upon conversion of the Convertible Bonds will have been obtained and will be

in full force and effect and the Subscription Shares shall be entitled to all dividends and other

distributions the record date of which falls on a date after the issue and allotment date and the

Conversion Shares shall be entitled to all dividends and other distributions the record date of which

falls on a date after the issue and allotment date.

3.6 No conflict: The execution and delivery by or on behalf of the Company of this Agreement and the

issue and delivery of the Convertible Bonds, the consummation of the transactions herein and

therein contemplated and compliance with the terms hereof and thereof (i) do not conflict with or

result in a breach of the Memorandum of Association and Bye-laws of the Company or any existing

applicable treaty, law, bye-laws or rule, regulation, judgment, order or decree of any government,

governmental body or court in Bermuda or Hong Kong; and (ii) do not conflict with or result in a

breach of any of the terms or provisions of, or constitute a default under, any indenture, trust deed,

mortgage or other agreement or instrument to which the Company or any Subsidiary of the

Company is a party or by which any of its properties or assets are bound, which conflict, breach or

default could adversely affect the legality, validity or enforceability of this Agreement and the

Convertible Bonds or could adversely affect the Company’s ability to perform its obligations

hereunder and thereunder or is otherwise material in the context of the issue of the Subscription

Shares and/or the Subscription CB.

4. CAPITAL STRUCTURE

4.1 Ownership: All the shares representing the Company’s direct or indirect interest in each Group

Company (other than the Company) (the “Subsidiary Shares”) are solely legally and beneficially

owned by and registered in the name of the Company or another Group Company and the

Subsidiary Shares and the unissued share capital of the Company and the Group Companies are

free from any Encumbrances and there are no arrangements in force or claims entitling or

allegedly entitling any person to any Encumbrances.





36

4.2 Group Structure: The Company does not presently own or control, directly or indirectly, any

interest in any company, association, or other business entity, and is not a participant in any joint

venture, partnership, or similar arrangement, other than those set out in Schedule I..

5. ACCOUNTS

5.1 General: The Accounts have been prepared in accordance with Hong Kong Financial Reporting

Standards issued by the Hong Kong Institute of Certified Public Accountants and the applicable

legislation at the time they were prepared, and show a true and fair view of the state of affairs of

the Company and the Group as at the Accounts Date, and the profit and loss of the Company and

its group for the period ended on the Accounts Date, and are prepared on a basis consistent with

the accounting policies adopted by the Company in the immediately preceding accounting periods

of the Company;

5.2 Accounts Receivable: All of the accounts receivable shown on the Accounts have and all of its

receivables as of Completion Date will have arisen out of bona fide transactions in its ordinary

course of business and have been collected or are good and collectible in the aggregate recorded

amounts thereof (less the provision for doubtful accounts also appearing in the Accounts and net

of returns and payment discounts allowable by its policies).

5.3 Liabilities: As at the Accounts Date the Company had no liabilities known, actual or contingent

(including contingent liabilities to customers and contingent liabilities for tax) which were not

disclosed in the Accounts.

5.4 Books of account: All accounts, books, ledgers, financial and other necessary records of

whatsoever kind of the Company (including all invoices and other records required for tax):

(A) have been fully, properly and accurately maintained, are in the possession of the

Company and contain true, up-to-date and accurate records of all matters including those

required to be entered in them by applicable laws and no notice or allegation that any of

the same is incorrect or should be rectified has been received;

(B) do not contain or reflect any material inaccuracies or discrepancies;

(C) give and reflect a true and fair view of the matters which ought to appear in them and in

particular of the financial, contractual and trading position of the Company and of its plant

and machinery, fixed and current assets and liabilities (actual and contingent), debtors and

creditors and stock-in-trade and work-in-progress; and

(D) contain accurate information in accordance with generally accepted accounting principles

in Hong Kong relating to all transactions to which the Company has been a party and the

Accounts do not overstate the value of any asset or understate any liability of the Company

at the Accounts Date.

5.5 No Material Adverse Effect: No event or circumstance has occurred (or is likely to occur) after the

Account Date which may have material adverse effect on the business, operations or financial

conditions of the Group as a whole.

6. FINANCE

6.1 Indebtedness and obligations:

(A) The amount borrowed by the Company from each of its bankers does not exceed the

overdraft facility agreed with such banker.





37

(B) The total amount borrowed by the Company from any source does not exceed any

limitation on its borrowing contained in the articles of association of the Company (if any)

or in any debenture or loan stock trust deed or instrument or any other document executed

by the Company.

(C) Save for the Bond, the Company has no outstanding loan capital or loan stock.

(D) Particulars of all money borrowed by and guarantee and indemnity given by the Company

have been Disclosed.

(E) No circumstances or events have arisen or occurred or are likely to arise or occur such that

any person is (or would, with the giving of notice and/or lapse of time and/or fulfilment of

any condition and/or the making of any determination, become) entitled to repayment of

any material indebtedness prior to its due date for payment by the Company, or to take any

step to enforce any security for any such indebtedness of any member of the Company

and no person to whom any indebtedness for borrowed money of the Company which is

payable on demand is owed has demanded or threatened to demand repayment of the

same; neither this Agreement nor the consummation of the transactions contemplated will

constitute or give rise to a breach of or default under any agreement or other arrangement

to which the Company is party or give rise to any rights of any third party adverse to the

Company in respect of any assets of the Company.

Debts owed to the Company: The Company does not own the benefit of any debt (whether present

or future) other than debts which have accrued to it in the ordinary course of business.

6.2 Bank accounts: Full and accurate details of all material bank accounts of the Company have been

disclosed and provided to the Subscriber.

6.3 Financial facilities: In relation to any Encumbrances to which any asset of the Company is subject

and in relation to debentures, acceptance lines, overdrafts, loans or other financial facilities

outstanding or available to the Company:

(A) the Company has disclosed full details of them and true and correct copies of all

documents relating to them; and

(B) the Company has not done anything whereby the continuance of any such Encumbrance

or facility in full force and effect might be affected or prejudiced.

7. INVESTMENTS

7.1 Save for its investments in the Subsidiaries and Associated Companies, the Company does not

have any equity investment.

7.2 Subsidiary: The Company has the power to govern the financial and operating policies of the

Subsidiaries.

8. LITIGATION

8.1 No material litigation on group basis: Save as set out in SCHEDULE VI, neither the Company nor

any of its Subsidiaries is engaged in any litigation, arbitration, governmental or regulatory

proceeding, or investigation which (individually or in aggregate), if determined adversely against

the Group Company, can be reasonably expected to have or have had a material adverse change

on the financial or trading position of the Group taken as a whole or which individually or

collectively are material for disclosure in the context of this Agreement and no such litigation,

arbitration or proceeding is pending, nor to the knowledge, information or belief of the Vendor,





38

there are any circumstances which can be reasonably expected to give rise to any such litigation,

arbitration, proceeding or investigation.

8.2 Litigation, arbitration, governmental or regulatory proceeding and investigation:

(A) No injunction: No order of injunction or specific performance has been granted against the

Company which is still in force.

(B) Not a subject to any order: The Company is not subject to any order or judgment given by

any court or governmental agency or regulatory authority which is still in force.

(C) No investigation: No governmental or other investigation or inquiry is in progress or

threatened (in writing) in respect of the Company or its business and to the knowledge,

information or belief of the Company, there are no circumstances likely to lead to any of the

same.

9. COMPLIANCE WITH LAWS AND REGULATIONS (INCLUDING THE LISTING RULES AND

TAKEOVERS CODE) ETC

9.1 Licences, permits, consents and authorities: The Company has all necessary licences (including

statutory licences), permits, consents and authorities (public and private) for the proper and

effective carrying on of its business and in the manner in which such business is now carried on

and all such licences, permits, consents and authorities are valid and subsisting and the Company

knows of no reason why any of them should be suspended, cancelled or revoked whether in

connection with the transactions contemplated in this Agreement or otherwise and so far as the

Company is aware there are no factors that is likely in any way to prejudice the continuance or

renewal of any of those licences, permits, consents or authorities.

9.2 Compliance with laws: There are no material violations (so far as the Company is aware) or

claimed material violations of any such license, permit, or authorization, or any statute, law,

ordinance, rule or regulation. The Company has conducted its activities in material compliance

with all applicable laws and there has been no material breach of any laws applicable to it.

9.3 General Compliance with the Listing Rules: The Company is not in material breach of any material

rules, regulations or requirements of the Stock Exchange or (if applicable) its listing agreement

made with the Stock Exchange (and, without limiting the foregoing, all announcements required to

be made by the Company under or in accordance with any such rules, regulations or requirements,

or pursuant to such listing agreement, have been duly made).

9.4 Specific Compliance in relation to this Agreement: If applicable, the Company has complied and

will comply with all applicable rules, regulations and other requirements material or relevant to the

transactions contemplated by this Agreement (including rules governing restrictions on and/or

disclosure of dealings) and has not received any notice from the relevant regulator alleging any

breach of any such rule, regulation or other requirement by any person. If applicable, the Company

will make all appropriate disclosures pursuant to, and will comply in all respects with, the Listing

Rules, the Takeovers Code and the Securities and Futures Ordinance (Cap. 571 of the Laws of

Hong Kong) in connection with the transactions entered into or to be entered into pursuant to this

Agreement.

9.5 No defaults: The Company is not, nor has it received written notice that it would be with the

passage of time, in default or violation of any term, condition, or provision of its Constitutions; any

judgment, decree, or order to which it is a named party; or any loan or credit agreement, note, bond,

mortgage, indenture, contract, agreement, lease, license, or other instrument to which it is a party

or by which it or any of its material properties or assets is bound, except for defaults and violations





39

which have been cured or, individually or in the aggregate, would not have a material adverse

change on its business.

9.6 Previous Publications: All the Previous Publications made by the Company on the website of the

Stock Exchange are correct and in compliance with the Listing Rules in all material respects.

10. WINDING UP, INSOLVENCY AND RECEIVERSHIP

10.1 No insolvency proceedings: There has been no delay by the Company in the payment of any

material obligation due for payment. The Company is not insolvent nor is it unable to pay its debts

as they fall due. The Company has not made a general assignment for the benefit of creditors.

There are no proceedings instituted by or against the Company seeking to adjudicate the

Company bankrupt or insolvent, or seeking liquidation, winding up or reorganization under any law

related to bankruptcy, insolvency or reorganization.

10.2 No winding up: None of the followings has happened or is in contemplation:

(A) the appointment of a receiver or manager either by any court having jurisdiction or under

the terms of a debenture or any application to any court having jurisdiction for the

appointment of a receiver or manager, or equivalent action in the country of incorporation

or other establishment, in respect of the business or any material part of the business of

any Group Companies as at the date of this Agreement;

(B) the presentation (based on valid grounds) of any winding-up petition, or equivalent

application in the country of incorporation or other establishment, or the making of any

winding-up order or the appointment of a provisional liquidator, or equivalent action in the

country of incorporation or other establishment, against or in respect of any Group

Companies as at the date of this Agreement;

(C) the passing of any resolution by any Group Companies as at the date of this Agreement

that it be wound-up by way of members’ or creditors’ voluntary winding-up, or equivalent

action in the country of incorporation or other establishment;

(D) the entry into possession of or the sale by any mortgagee of a material portion of any

assets of any Group Company as at the date of this Agreement; or

(E) the making of any final judgment, declaration or order by any court or tribunal of competent

jurisdiction whether on appeal or at first instance which is not subject to any or further

appeal, which may materially and adversely affect any Group Companies’ enjoyment of

any portion of its assets.





40

SCHEDULE III

WARRANTIES GIVEN BY THE SUBSCRIBER


1. AUTHORITY AND CAPACITY OF THE SUBSCRIBER

1.1 Incorporation: The Subscriber is duly incorporated and validly existing under the laws of its

jurisdiction of incorporation, with full power and authority to own its properties and to conduct its

business as currently conducted.

1.2 Agreements: This Agreement has been duly authorized and constitutes valid and legally binding

obligations of the Subscriber enforceable in accordance with its terms, and the performance by the

Subscriber of the obligations to be assumed by it has been duly authorised by all corporate or other

action.

1.3 Authorisation: The Subscriber has the necessary power and authority to enter into and perform this

Agreement and any other documents in connection with this Agreement. The execution, delivery,

and performance of this Agreement and all other documents of and incidental to this Agreement to

be entered into by it have been duly authorized by all necessary action of its board and (if

applicable) its shareholders.

1.4 Consents: All consents, clearances, approvals, authorisations, orders, registrations or

qualifications of or with any court, regulatory authority or governmental agency or body of Hong

Kong or elsewhere required for the execution and delivery of this Agreement and the subscription

of the Subscription Shares and the Subscription CB have been obtained and will be in full force and

effect.

1.5 No conflict: The execution and delivery by or on behalf of the Subscriber of this Agreement and the

consummation of the transactions herein and therein contemplated and compliance with the terms

hereof and thereof (i) do not conflict with or result in a breach of the Memorandum and Articles of

Association of the Subscriber or any existing applicable treaty, law, articles of association or rule,

regulation, judgment, order or decree of any government, governmental body or court in British

Virgin Islands or Hong Kong; and (ii) do not conflict with or result in a breach of any of the terms or

provisions of, or constitute a default under, any indenture, trust deed, mortgage or other agreement

or instrument to which the Subscriber is a party or by which any of its properties or assets are

bound, which conflict, breach or default could adversely affect the legality, validity or enforceability

of this Agreement or could adversely affect the Subscriber’s ability to perform its obligations

hereunder and thereunder.





41

SCHEDULE IV

COMPLETION ARRANGEMENTS


1. OBLIGATION OF THE SUBSCRIBER

At Completion, the Subscriber shall:

(A) make payment to the Company in accordance with Clause 3.2 for settlement of the

Consideration; and

(B) deliver or cause to be delivered to the Company copy, certified as true and complete by a

director of the Subscriber or a solicitor practising in Hong Kong, of resolutions of the board

of directors of the Subscriber approving this Agreement and the transaction contemplated

hereunder.

2. OBLIGATIONS OF THE COMPANY

Subject to the settlement of the Consideration in accordance with Clause 1(A) of this Schedule, the

Company shall:

(A) documents relating to the acquisition of the Subscription Shares:

(I) allot and issue the Subscription Shares to the Subscriber and shall register without

registration fee the Subscriber as the registered holder of the Subscription Shares;

(II) deliver or cause to be delivered to the Subscriber or its nominee:

(a) definitive share certificate(s) in respect of the Subscription Shares;

(b) copy, certified as true and complete by a director of the Company or a

solicitor practising in Hong Kong, of resolutions of the board of the

Company approving this Agreement and the transaction contemplated

hereunder;

(c) copy, certified as true and complete by a director of the Company or a

solicitor practising in Hong Kong, of resolutions of the shareholders of the

Company or an extract thereof approving this Agreement and the

transaction contemplated hereunder.

(B) documents relating to the acquisition of the Subscription CB:

(I) enter in the Company’s register of bondholders the name of the Subscriber to be

the holder of the Subscription CB;

(II) deliver or cause to be delivered to the Subscriber or its nominee:

(a) definitive bond certificate(s) in respect of the Subscription CB duly

executed, representing the aggregate principal amount of the

Subscription CB subscribed for by the Subscriber;

(b) copy, certified as true and complete by a director of the Company or a

solicitor practising in Hong Kong, of the Convertible Bonds instrument,

duly executed by the Company under its common seal.

3. TIME

All (but not part only) of the transactions set out in this Schedule shall be performed at Completion.





42

SCHEDULE V

FORM OF THE INSTRUMENT OF THE CONVERTIBLE BONDS

(as referred to in Clause 4.1(G))

DATED the day of 2014

CHUN WO DEVELOPMENT HOLDINGS LIMITED (Incorporated in Bermuda with limited liability)

INSTRUMENT

by way of deed poll

in relation to the Zero Coupon Convertible Bonds Due 2017

in the registered form and convertible into ordinary shares in the capital of CHUN WO DEVELOPMENT HOLDINGS LIMITED

in the aggregate principal amount of up to HK$84,266,000

SCHEDULE V TO THE SUBSCRIPTION AGREEMENT

DATED 16 SEPTEMBER 2014

PETER C. WONG, CHOW & CHOW

王泽长‧周淑娴‧周永健律师行

in association with GUANTAO LAW FIRM (HONG KONG)

与

观韬律师事务所(香港)

联营

Suites 1604-6, 16/F, ICBC Tower,

3 Garden Road, Central, Hong Kong

香港中环花园道 3号中国工商银行大厦 16楼 1604-6室

电话 Tel : (852) 2878 1130

传真 Fax : (852) 2810 0280

Ref : G/GL/30895/2014(GL)

Doc: Project National-CB Instrument-20140916-final

CONTENTS

Clause Page

1. DEFINITIONS AND INTERPRETATION ................................................................................. 1

2. ISSUE OF THE BONDS .......................................................................................................... 3

3. AMOUNT OF THE BONDS ...................................................................................................... 3

4. BOND CERTIFICATES ............................................................................................................ 3

5. TRANSFER RESTRICTION .................................................................................................... 4

6. COVENANTS ........................................................................................................................... 4

7. REDEMPTION ......................................................................................................................... 5

8. CONSOLIDATION, AMALGAMATION, MERGER AND FURTHER ISSUES ......................... 5

9. MODIFICATIONS, WAIVERS AND SEVERABILITY............................................................... 5

10. SUIT BY BONDHOLDERS ...................................................................................................... 6

11. NOTICE .................................................................................................................................... 6

12. GOVERNING LAW AND JURISDICTION ............................................................................... 6

SCHEDULE I ................................................................................................................................................ 7

BOND CERTIFICATE ....................................................................................................................... 7

APPENDIX 1 ............................................................................................................................................... 28

CONVERSION MECHANICS AND CONVERSION NOTICES ...................................................... 28

EXECUTION PAGE .................................................................................................................................... 33

Matter: G/GL/30895/2014(GL) Doc: Project National-CB Instrument-20140916-final

1

THIS INSTRUMENT is executed by way of Deed Poll on [*] 2014 by CHUN WO DEVELOPMENT

HOLDINGS LIMITED, a company incorporated under the laws of Bermuda whose registered office is at

Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda and whose head office and principal place

of business is at 5C, Hong Kong Spinners Industrial Building, 601-603 Tai Nan West Street, Cheung Sha

Wan, Kowloon, Hong Kong (the “Company”).

WHEREAS:

(A) By the subscription agreement dated 16 September 2014 (the “Subscription Agreement”)

between the Company (as issuer) and China New Way Investment Limited (as subscriber) (the

“Subscriber”), the Company agreed, among other, to issue and the Subscriber agreed to

subscribe for the Subscription CB (as defined in the Subscription Agreement).

(B) This Instrument is executed by the Company by way of deed poll to set out the rights and interests

of the Bondholders (as defined below).

NOW THIS INSTRUMENT WITNESSES and the Company hereby declares as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 In this Instrument the following words and expressions shall have the following meanings, unless

the context otherwise requires:

“Bondholders” means holders of the Bonds and “Bondholder” means any of

them;

“Bonds” means the zero coupon convertible bonds due 2017 in the

aggregate principal amount of up to HK$84,266,000

substantially in the form set out in Schedule I and “Bond” shall

be construed accordingly;

“Business Day” means a day (excluding Saturday) on which licensed banks are

open for business in Hong Kong through out their normal

business hours and “Business Days” shall be construed

accordingly;

“Certificate” means a certificate in or substantially in the form set out in

Schedule I issued in the name of the Bondholder in respect of

its registered holdings of the Bond;

“Conditions” means the terms and conditions (as set out in Schedule I)

endorsed on the Bond in definitive form as they may from time

to time be modified in accordance with their provisions and/or of

this Instrument, and reference in this Instrument to a particular

numbered Condition shall be construed accordingly;

“Conversion Period” means any time from and including [*] 2014 (being the date of

issue of the Bonds), up to the close of business (at the place

where the Bond is deposited for conversion, namely, Hong

Kong) on the day falling fourteen (14) days prior to the Maturity

Date;

“Conversion Price” shall have the same meaning as defined in the Conditions;

“Conversion Rights” shall have the same meaning as defined in the Conditions;

“Conversion Shares” means the shares in the capital of the Company falling to be

allotted and issued upon the exercise of the Conversion Rights;


王澤長‧周淑嫻‧周永健律師行 in association with

GUANTAO LAW FIRM (HONG KONG)

觀韜律師事務所(香港)

BOND INSTRUMENT


2

“Directors” means directors of the Company and “Director” means any

one of them;

“Hong Kong” means the Hong Kong Special Administrative Region of the

People’s Republic of China;

“Hong Kong Dollar” and

“HK$”

means the dollar denomination in the lawful currency of Hong

Kong and “Hong Kong Dollars” shall be construed

accordingly;

“Instrument” means this Instrument and the Schedules hereto (as from time

to time modified in accordance with the terms hereof) and

includes any instrument supplemental thereto which is

executed in accordance with the provisions hereof (as from

time to time modified aforesaid);

“Listing Rules” means the Rules Governing the Listing of Securities on the

Stock Exchange;

“Maturity Date” means [*] 2017, being the third anniversary from the issue of

the Subscription CB (as defined in the Subscription

Agreement);

“Shareholders” means holders of the Shares;

“Shares” means ordinary shares of par value HK$0.10 each in the capital

of the Company as at the date of this Instrument, or shares of

any class or classes resulting from any sub-division,

consolidation or re-classification of such shares, which as

between themselves have no preference in respect of

dividends or of amounts payable in the event of any voluntary

or involuntary liquidation or distribution of the Company;


“Subsidiary” shall have the meaning ascribed to it under Rule 1.01 of the

Listing Rules and “Subsidiaries” shall be construed

accordingly; and

“Trading Day” means a day when the Stock Exchange is open for trading in

Hong Kong and “Trading Days” shall be construed

accordingly.

1.2 The following terms are defined elsewhere in this Instrument as follows:

“Company” Preamble

“Issue Price” Clause 2

“Subscription Agreement” Preamble

“Subscriber” Preamble





BOND INSTRUMENT


3

1.3 The headings in this Instrument are inserted for convenience only and shall be ignored in

construing this Instrument. Unless the context otherwise requires, words denoting the singular

number only shall include the plural and vice versa. The words “written” and “in writing” include

printing, engraving, lithography or other means of visible reproduction.

1.4 Reference in this Instrument to:

(A) “it, etc.” includes “him, her, them, etc.” and vice versa;

(B) “month” means a period calculated from any specified day to and including the day

numerically corresponding to such specified day, (or, if there shall be no day numerically

corresponding to such specified day, the last day) in the relevant subsequent calendar

month;

(C) a “person” includes any individual, company, corporation, firm, partnership, joint venture,

association, organisation or trust (in each case, whether or not having separate legal

personality) and references to any of the same shall include a reference to the others;

(D) provisions of statutes, any law, directive or agreement shall be to the same as from time to

time re-enacted, amended or modified (as the case may be) and without prejudice to any

provision in this Instrument concerning the same;

(E) Clauses and Schedule are references to clauses of and schedule to this Instrument;

(F) a sub-clause and a paragraph is, unless otherwise stated, a reference to the relevant

sub-clause and paragraph of the clause in which the reference appears;

(G) any reference to parties to this Instrument or any other agreement shall including their

respective permitted successors, assignees and personal representatives; and

(H) any collective definition shall be to the persons or things comprising it as a whole or to any

one or more of them.

2. ISSUE OF THE BONDS

According to clause 2.2 of the Subscription Agreement, the Company shall issue the Bonds in the

principal amount of HK$84,266,000 to the Subscriber in accordance with the terms and conditions

of the Subscription Agreement, as fully paid, at the issue price of 100 per cent. (100%) of the

principal amount of the relevant Bonds (the “Issue Price”) subject to the other provisions of this

Instrument and the Conditions. No application will be made for the listing of the Bonds.

3. AMOUNT OF THE BONDS

The aggregate principal amount of the Bonds shall be up to HK$84,266,000.

4. BOND CERTIFICATES

4.1 On the issue of the Bond, the Bondholder will be entitled to a definitive Certificate with Conditions

in or substantially in the form set out in Schedule I.

4.2 The definitive Certificates will be signed manually or in facsimile by two Directors or by a Director

and the secretary of the Company.

4.3 Issue and delivery of the Bond shall be completed on the issue and delivery of the Certificate to the

Bondholder (or its representative) by, or by the order of, the Company and the registration of the

Bondholder as holder of the Bond on the Company’s register of Bondholders by or on behalf of the

Company.





BOND INSTRUMENT


4

4.4 The Company will pay any stamp, issue, registration, documentary or other similar taxes and

duties, including interest and penalties, payable in Hong Kong in respect of the creation and

original issue of the Bond and the execution or delivery of this Instrument.

4.5 The Company hereby covenants with the Bondholder that it will comply with and perform and

observe all the provisions of this Instrument and the Conditions which are expressed to be binding

on it. The Conditions shall be binding on the Company and the Bondholder.

5. TRANSFER RESTRICTION

No Bond may be transferred to any person who is a connected person (as defined under the

Listing Rules) of the Company unless with: (i) full compliance with the Listing Rules; (ii) full

compliance with the requirements (if any) that the Stock Exchange may impose from time to time;

and (ii) the consent (if applicable) of the Stock Exchange.

6. COVENANTS

6.1 So long as any Bond is outstanding, the Company covenants to and with each Bondholder that:

(A) Notice of Events of Default: the Company will notify the Bondholders in writing

immediately upon becoming aware of the occurrence of any event of default under

Condition 12;

(B) Bonds held by Company etc: the Company will send to the Bondholders as soon as

reasonably practicable and in any event within five (5) Business Days after being so

requested in writing by any Bondholders a certificate of the Company signed by any one

Director or the secretary of the Company on behalf of the Company setting out, based on

the register of Bondholder maintained by or on behalf of the Company, the total number of

Bonds which, at the date of such certificate, were held by or on behalf of the Company and

which had not been cancelled;

(C) Compliance: the Company will comply with and perform and observe all the provisions of

this Instrument which are expressed to be binding on it and any filing, registration,

reporting and similar requirements required in accordance with applicable law, regulation

and rules of a stock exchange on which it is listed;

(D) Conversion Rights: upon the exercise of any Conversion Rights during the Conversion

Period pursuant to the Conditions, the Company will allot the number of Shares in respect

of which Conversion Rights are exercised subject to and in accordance with the

Conditions;

(E) Ranking: all Conversion Shares allotted pursuant to an exercise of the Conversion Rights

shall rank pari passu in all respects with the fully paid Shares in issue on the relevant

registration date and shall accordingly entitle the holders to participate in full in all

dividends or other distributions paid or made on the Shares on or after the relevant

registration date other than any dividend or other distribution previously declared, or

recommended or resolved to be paid or made if the record date therefor falls before the

relevant registration date and notice of the amount and record date for which shall have

been given to the Stock Exchange and the Bondholders prior to the relevant registration

date and, for this purpose, notice shall be deemed to have been given to the Bondholders

if the relevant announcement of the Company has been published on the website of the

Stock Exchange in accordance with the requirements of the Listing Rules;

(F) Public float: the Company shall at all times use its reasonable endeavours to ensure that

the minimum public shareholding requirement of the Listing Rules is complied with;





BOND INSTRUMENT


5

(G) Further acts: the Company will, so far as permitted by applicable law, do all such further

things as may be necessary having regard to the interests of Bondholders to give effect to

this Instrument and the Bonds; and

(H) Payments: the Company shall make all payments to Bondholders hereunder free and

clear of, and without any, set off, counterclaim, withholding or deduction, unless such

withholding or deduction is required by law. In that event, the Company shall pay such

additional amounts as will result in the receipt by the Bondholders of such amounts as

would have been received by it if no such withholding or deduction had been required.

7. REDEMPTION

7.1 The Company shall not be entitled to redeem the Bonds (or any party thereof) prior to the Maturity

Date except by mutual consent of the Bondholder and the Company.

7.2 Any principal amount of the Bond which remains outstanding on the Maturity Date shall be

mandatorily redeemed at the price of 100% of the outstanding principal amount of such Bond.

8. CONSOLIDATION, AMALGAMATION, MERGER AND FURTHER ISSUES

8.1 In the case of any consolidation, amalgamation or merger of the Company with any other

corporation (other than a consolidation, amalgamation or merger in which the Company is the

continuing corporation), or in the case of any sale or transfer of all, or substantially all, of the assets

of the Company, the Company will forthwith notify the Bondholder of such event in accordance with

Condition 14 and (subject to any restriction prescribed by law) cause the corporation resulting from

such consolidation, amalgamation or merger or the corporation which shall have acquired such

assets, as the case may be, to execute an Instrument supplemental to this Instrument to ensure

that the holder of the Bond will have the right (during the period in which such Bond shall be

convertible) to convert the Bond then outstanding into the class and amount of shares and other

securities and property receivable upon such consolidation, amalgamation, merger, sale or

transfer by a holder of the number of Shares which would have become liable to be issued upon

conversion of the Bond immediately prior to such consolidation, amalgamation, merger, sale or

transfer. The above provisions of this Clause 8.1 will apply in the same way to any subsequent

consolidations, amalgamations, mergers, sales or transfers.

8.2 The Company shall, subject to the Listing Rules, from time to time be at liberty to issue further

convertible bond and other securities, including convertible bond ranking pari passu with the Bond.

9. MODIFICATIONS, WAIVERS AND SEVERABILITY

9.1 Any modification to this Instrument may be effected only by deed poll, executed by the Company

and expressed to be supplemental hereto, and (save for minor amendments by the Company

which shall not adversely affect the rights of the Bondholder under this Instrument) only if it shall

first have been approved by the Bondholders holding in aggregate 51 per cent. or more of the

principal amount of the Bonds then outstanding.

9.2 A memorandum of every such supplemental deed shall be endorsed on this Instrument.

9.3 Notice of every modification to this Instrument shall be given to the Bondholder as soon as

reasonably practicable.

9.4 No failure or delay by the parties in exercising any right, power or remedy under this Instrument

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 one party of any breach by the other party of any provision hereof shall be





BOND INSTRUMENT


6

deemed to be a waiver of any subsequent breach of that or any other provision hereof and any

forbearance or delay by the party in exercising any of its rights hereunder shall not be construed as

a waiver thereof. If at any time any provision of this Instrument is or becomes illegal, invalid or

unenforceable in any respect, the legality, validity and enforceability of the remaining provisions of

this Instrument shall not be affected or impaired thereby.

10. SUIT BY BONDHOLDERS

10.1 The Company hereby acknowledges and covenants that the benefit of the covenants, obligations

and conditions on the part of or binding upon it contained in this Instrument shall enure to each and

every Bondholder.

10.2 Each Bondholder shall be entitled severally to enforce the said covenants, obligations and

conditions against the Company insofar as each such Bondholder’s Bonds are concerned, without

the need to join the allottee of any such Bond or any intervening or other Bondholder in the

proceedings for such enforcement.

11. NOTICE

11.1 Any notice or communication to the Company shall be by letter delivered personally or by facsimile

transmission to it at 5C, Hong Kong Spinners Industrial Building, 601-603 Tai Nan West Street,

Cheung Sha Wan, Kowloon, Hong Kong, fax no. (852) 2743-1025 (or such other address or fax

number as shall be notified in writing by the Company to the Bondholders from time to time with

specific reference to this Instrument).

11.2 Any such notice or communication will take effect, in the case of personal delivery, at the time of

receipt by the Company or, in the case of facsimile transmission, at the time of despatch which

shall be deemed properly transmitted on receipt of a report of satisfactory transmission printed out

by the sending machine.

12. GOVERNING LAW AND JURISDICTION

12.1 This Instrument shall be governed by and construed in accordance with Hong Kong law.

12.2 The courts of Hong Kong shall have non-exclusive jurisdiction to settle any disputes which may

arise out of or in connection with this Instrument or the Bond and accordingly any legal action or

proceedings arising out of or in connection with this Instrument or the Bond (“Proceedings”) may

be brought in such courts. The Company and the Bondholder irrevocably submits to the jurisdiction

of such courts and waives any objections to Proceedings in such courts on the ground of venue or

on the ground that the Proceedings have been brought in an inconvenient forum.





BOND INSTRUMENT


7

SCHEDULE I

BOND CERTIFICATE


(incorporated with limited liability under the laws of Bermuda)

Zero Coupon Convertible Bonds due 2017

convertible into ordinary shares of


Certificate Number [ ]

CHUN WO DEVELOPMENT HOLDINGS LIMITED (the “Company”) hereby CERTIFIES that [*] is, at the

date hereof, entered in the Company’s register of Bondholders as the holder of a Convertible Bond due

2017 (the “Bonds”) in the principal amount of HK$[*] (Hong Kong Dollar [*] Million only). For value

received, the Company promises to pay the person who appears at the relevant time on the register of

Bondholders as holder of the Bonds in respect of which this Certificate is issued such amount or amounts

as shall become due in respect of such Bonds in accordance with and otherwise to comply with the terms

and conditions of the Bonds endorsed hereon (the “Conditions”).

The Bonds are issued with the benefit and subject to the Conditions. The Bonds in respect of which this

Certificate is issued are convertible into ordinary shares of the Company in accordance with and subject to

the Conditions and the provisions contained in the Subscription Agreement (as defined in the Conditions).

The Bonds in respect of which this Certificate is issued are in registered form. This Certificate is evidence

of entitlement only. Title to the Bonds passes only on due registration in the register of Bondholders and

only the duly registered holder is entitled to payments on the Bonds in respect of which this Certificate is

issued.

The Bonds have not been registered under the United States Securities Act of 1933 (the “Securities Act”)

or applicable states securities law and may not be offered, sold, pledged or otherwise transferred in the

absence of such registration except pursuant to an exemption from, or in a transaction not subject to, the

registration requirements of the Securities Act and applicable securities laws of the states of the United

States and other jurisdictions and the respective rules and regulations thereunder.

No Bond may be transferred to any person who is a connected person (as defined under the Rules (the

“Listing Rules”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the

“Stock Exchange”)) of the Company unless with: (i) full compliance of the Listing Rules; (ii) full

compliance with the requirements (if any) that the Stock Exchange may impose from time to time; and (iii)

the consent (if applicable) of the Stock Exchange.

This Certificate is governed by and shall be construed in accordance with the laws of the Hong Kong

Special Administrative Region of the People’s Republic of China.

In witness whereof the Company has caused this Certificate to be signed on its behalf by its directors.

Dated the day of 20XX

EXECUTED and DELIVERED as a DEED under the COMMON SEAL of CHUN WO DEVELOPMENT HOLDINGS LIMITED and SIGNED by its director(s) /authorised signatory in the presence of :-

))))) ) ) ) )





BOND INSTRUMENT


8

Form of Transfer

FOR VALUE RECEIVED the undersigned hereby transfers to

....................................................................

....................................................................

(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF TRANSFEREE)

HK$............................................. (Hong Kong Dollar ....................................................................only)

principal amount of the Bonds in respect of which this Certificate is issued, and all rights in respect thereof.

All payments in respect of the Bonds hereby transferred are to be made (unless otherwise instructed by the

transferee) to the following account:

Name of bank:

HK$ account number:

For the account of:

Dated:

Certifying Signature

Name:

Notes:

A representative of the holder of the Bonds should state the capacity in which he signs, e.g. executor.

The signature of the persons effecting a transfer shall conform to any list of duly authorised specimen

signatures supplied by the registered holder or be certified by a notary public or in such other manner as

the Company may require.

This form of transfer should be dated as of the date it is deposited with the Company.

Transfers of the Bonds are subject to the restrictions set out in Condition 3.5.





BOND INSTRUMENT


9

Terms and Conditions of the Bonds

This Bond is one of a series of up to HK$84,266,000 Zero Coupon Convertible Bonds due 2017 (the

“Bonds”) issued by CHUN WO DEVELOPMENT HOLDINGS LIMITED (the “Company”) pursuant to a

Subscription Agreement dated 16 September 2014 (the “Subscription Agreement”) entered into

between the Company and China New Way Investment Limited, the initial subscriber of the Bonds.

1. DEFINITION

1.1 In these Conditions, unless the context otherwise requires, the following words and expressions

have the following meanings:-

“Business Day” means a day (excluding Saturday) on which licensed banks are open for

business in Hong Kong throughout their normal business hours and “Business Days” shall be

construed accordingly;

“Capital Distribution” means (i) any distribution of assets in specie by the Company for any

financial period (whenever paid or made and however described) (and for these purposes a

distribution of assets in specie includes without limitation an issue of Shares or other securities

credited as fully or partly paid by way of capitalisation of reserves and (ii) any cash dividend or

distribution of any kind by the Company for any financial period (whether paid and however

described) unless:

(A) (and to the extent that) the value of the Capital Distribution does not, when taken together

with any other dividend or distribution previously made or paid in respect of all periods after

31 March 2014, exceed the aggregate of the consolidated net profits for such periods (less

the aggregate of any consolidated net losses) attributable to shareholders after deducting

minority interests and preference dividends (if any) but (a) deducting any amounts in

respect of any asset previously credited to the Company’s reserves (in respect of any

period or date up to and including 31 March 2014) pursuant to any revaluation of such

asset, where amounts arising on the disposal of such asset have contributed to such

profits and (b) deducting any exceptional and extraordinary items, (and for the avoidance

of doubt after excluding any amount arising as a result of any reduction in registered

capital, share premium account or capital redemption reserve), in each case calculated by

reference to the audited consolidated profit and loss accounts (where appropriate as

restated pursuant to the prevailing Hong Kong Financial Reporting Standards) for such

periods of the Company and its Subsidiaries, or

(B) it comprises a purchase or redemption of Shares by or on behalf of the Company in

accordance with the Listing Rules.

In making any such calculation, such adjustments (if any) shall be made as the

Independent Accountant, or failing which, an independent investment bank of international

repute in Hong Kong selected by the Company and approved by Bondholders holding 51

per cent or more of the outstanding principal amount of Bonds, may consider appropriate

to reflect (a) any consolidation or subdivision of the Shares, (b) issues of Shares by way of

capitalisation of profits or reserves, or any like or similar event or (c) the modification of any

rights to dividends of Shares;

“closing price” for the Shares for any Trading Day shall be the closing price published in the Daily

Quotation Sheet published by the Stock Exchange;

“Condition” means a condition numbered and set out in these Conditions;





BOND INSTRUMENT


10

“connected person” shall have the meaning defined in the Listing Rules;

“Current Market Price” means, in respect of a Share at a particular date, the average of the

closing prices published in the Daily Quotation Sheet of the Stock Exchange for one Share (being

a Share carrying full entitlement to dividend) for the five consecutive Trading Days ending on the

Trading Day immediately preceding such date, provided that if at any time during the said five

Trading Day period the Shares shall have been quoted ex-dividend and during some other part of

that period the Shares shall have been quoted cum-dividend then:

(I) if the Shares to be issued in such circumstances do not rank for the dividend in question,

the quotations on the dates on which the Shares shall have been quoted cum-dividend

shall for the purpose of this definition be deemed to be the amount thereof reduced by an

amount equal to the amount of that dividend per Share; or

(II) if the Shares to be issued in such circumstances rank for the dividend in question, the

quotations on the dates on which the Shares shall have been quoted ex-dividend shall for

the purpose of this definition be deemed to be the amount thereof increased by such

similar amount;

and provided further that if the Shares on each of the said five Trading Days have been quoted

cum-dividend in respect of a dividend which has been declared or announced but the Shares to be

issued do not rank for that dividend, the quotations on each of such dates shall for the purpose of

this definition be deemed to be the amount thereof reduced by an amount equal to the amount of

that dividend per Share;

“Days Outstanding” means the number of days from, and including, Issue Date to, but excluding

any of the following date, whichever shall first occur:

(A) date of redemption pursuant to Condition 8.2; or

(B) the date the Bonds become immediately due and payable pursuant to Condition12;

“Disclosed” means such disclosures as shall be made by the Company prior to the Issue Date in

its annual reports, interim reports, announcements to the Stock Exchange, circulars and/or

documents published in the press or (as the case may be) despatched to its respective

shareholders, and disclosures prior to the Issue Date regarding the Company pursuant to the

Listing Rules or the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

“Early Redemption Amount” in relation to a Bond of principal amount of HK$1,000,000, means

an amount rounded up to the nearest cent, determined in accordance with the following formula:

Early Redemption = HK$1,000,000 Amount

“Fair Market Value” means, with respect to any assets, security, option, warrants or other right on

any date, the fair market value of that asset, security, option, warrant or other right as determined

by the Independent Accountant, or failing which, by an independent investment bank of

international repute in Hong Kong selected by the Company and approved by Bondholders holding

51 per cent or more of the outstanding principal amount of Bonds, provided that (i) the fair market

value of a cash dividend paid or to be paid per Share shall be the amount of such cash dividend per

Share determined as at the date of announcement of such dividend; (ii) where options, warrants or

other rights are publicly traded in a market of adequate liquidity (as determined by such merchant

bank or accountant firm), the fair market value of such options, warrants or other rights shall equal

the arithmetic mean of the daily closing prices of such options, warrants or other rights during the





BOND INSTRUMENT


11

period of five trading days on the relevant market commencing on the first such trading day such

options, warrants or other rights are publicly traded;

“Hong Kong” means Hong Kong Special Administrative Region of the People’s Republic of

China;

“Hong Kong Dollar” or “HK$” means the dollar denomination in the lawful currency of Hong

Kong and “Hong Kong Dollars” shall be construed accordingly;

“Independent Accountant” means a certified public accountant jointly appointed by the

Company and Bondholders holding 51 per cent. or more of the outstanding principal amount of

Bonds;

“Issue Date” means the [*] day of [*] 2014, being the date of issue of the Bonds;

“Listing Rules” means the Rules Governing the Listing of Securities on the Stock Exchange;


“Subsidiary” shall have the meaning ascribed to it under Rule 1.01 of the Listing Rules and

“Subsidiaries” shall be construed accordingly;

“Takeovers Code” means the Hong Kong Code on Takeovers and mergers; and

“Trading Day” means a day when the Stock Exchange is open for trading in Hong Kong, provided

that if no closing price is reported in respect of the relevant Shares on the Stock Exchange for one

or more consecutive dealing days such day or days will be disregarded in any relevant calculation

and shall be deemed not to have existed when ascertaining any period of dealing days and

“Trading Days” shall be construed accordingly.

1.2 The following terms are defined elsewhere in these Conditions as follows:

“Accounts” Condition 12

“Bonds” Preamble

“Bondholder” Condition 2

“Certificate” Condition 2.1

“Conversion Date” Condition 6.2(A)

“Conversion Period” Condition 6.1(A)

“Conversion Price” Condition 6.1(C)

“Conversion Right” Condition 6.1(A)

“Conversion Shares” Condition 6.2(A)

“Delivery Date” Condition 6.2(A)

“Designated Office” Condition 3.1

“Indebtedness” Condition 12(C)

“Listing Approval” Condition 6.1(A)





BOND INSTRUMENT


12

“long form Conversion Notice” Condition 6.2(A)

“Maturity Date” Condition 8.1

“Principal Subsidiary” Condition 12

“Subscriber” Preamble

“Shares” and “Share” Condition 6.2

“short from Conversion Notice” Condition 6.2(A)

“Stock Split” Condition 6.2

“Subscription Agreement” Preamble

1.3 For the purpose of these Conditions, in relation to the Bonds, “outstanding” Bonds refers to all the

Bonds issued other than:

(A) those which have been redeemed or in respect of which Conversion Rights have been

exercised and which have been cancelled in accordance with the Conditions;

(B) those in respect of which the date for redemption in accordance with the Conditions has

occurred and the redemption moneys (including all premium or yield accrued on such

Bonds to the date for such redemption ) have been duly paid to the relevant Bondholder or

on its behalf;

(C) those mutilated or defaced Bonds which have been surrendered in exchange for

replacement Bonds pursuant to Condition 13;

(D) (for the purpose only of determining how many Bonds are outstanding and without

prejudice to their status for any other purpose) those Bonds alleged to have been lost,

stolen or destroyed and in respect of which replacement Bonds have been issued

pursuant to Condition 13;

(E) those which have been purchased and cancelled as provided in this Condition 8; and

(F) those which have been discharged as provided in this Condition 8.

2. FORM, DENOMINATION, STATUS AND TITLE

2.1 The Bonds are issued in registered form, serially numbered, in the denomination of

HK$1,000,000.00 (or integral multiple thereof) each. A certificate (“Certificate”) will be issued by

execution in manual or facsimile form by duly authorised officers of the Company to each

Bondholder in respect of its registered holding of Bonds.

2.2 Save as Disclosed, the Bonds constitute direct, unconditional, unsubordinated and unsecured

obligations of the Company, ranking pari passu and rateably without any preference among

themselves, and with other direct, unconditional, unsubordinated and unsecured obligations of the

Company. No application will be made for a listing of the Bonds.

2.3 Title to the Bonds passes only by transfer and registration in the Company’s register of

Bondholders. The holder of any Bond will (except as otherwise required by law) be treated as its

absolute owner 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 Certificate issued in

respect of it) and no person will be liable for so treating the holder. In these Conditions,





BOND INSTRUMENT


13

“Bondholder” and (in relation to a Bond) “holder” means the person in whose name a Bond is

registered on the register of Bondholders.

3. TRANSFER OF BONDS; ISSUE OF CERTIFICATES

3.1 Transfers

A Bond may be transferred by depositing the Certificate issued in respect of that Bond, with the

form of transfer attached thereto duly completed and signed, at the principal place of business (or

other office notified to the Bondholders in accordance with Condition 14) of the Company which

shall be in Hong Kong (the “Designated Office”). No transfer of title to any Bond will be effective

unless and until entered on the register of Bondholders kept by or on behalf of the Company. The

Company shall register the transfer of a Bond on the day of deposit of the Certificate issued in

respect of such Bond, with the form of transfer attached thereto duly completed and signed. A

Bond may only be transferred if:

(a) such transfer shall be in compliance with these terms and conditions and such transferee

takes the Bond with the benefit and subject to the restrictions in these Conditions; and

(b) such transfer shall be further subject to (where applicable) the conditions, approvals,

requirements and any other provisions of or under (i) the Listing Rules; (ii) the Takeovers

Code; and (iii) all applicable laws and regulations.

3.2 Transfer to connected person

No Bond may be transferred to any person who is a connected person (as defined under the

Listing Rules) of the Company unless with: (i) full compliance of the Listing Rules; (ii) full

compliance with the requirements (if any) that the Stock Exchange may impose from time to time;

and (iii) the consent (if applicable) of the Stock Exchange.

3.3 Delivery of new certificates

Each new Certificate to be issued upon a transfer of Bonds will (following execution in manual or

facsimile form by duly authorised officers of the Company), within three (3) Business Days of

receipt by the Company of the duly completed form of transfer, be sent by courier (if the address of

the transferee is in Hong Kong) or by express mail (if the transferee’s address is outside Hong

Kong) at the risk of the holder entitled to the Bonds to the address specified in the form of transfer.

3.4 Formalities free of charge

Registration of a transfer of Bonds will be effected without charge by or on behalf of the Company,

but upon payment (or the giving of such indemnity as the Company may reasonably require) in

respect of any tax or other governmental charges which may be imposed in relation to such

transfer.

3.5 Closed periods

No Bondholder may require the transfer of a Bond to be registered (i) during the period of fifteen

(15) Business Days ending on the due date for any payment of principal of the Bonds or (ii) after

the Certificate in respect of such Bond has been deposited for conversion pursuant to Condition 6.

4. INTEREST

The Bonds shall bear no interest.





BOND INSTRUMENT


14

5. PAYMENTS

5.1 Payments in respect of principal and premium or yield (if any) thereon will be made to the

registered Bondholder by a Hong Kong Dollar cheque or cashier order drawn on a licensed bank in

Hong Kong, or by transfer to a Hong Kong Dollar account maintained by the Bondholder (or as it

may direct) (details of which shall have been notified to the Company), subject in all cases to any

fiscal or other laws and regulations applicable thereto, but without prejudice to the provisions of

Condition 9. Cashier orders or cheques will be mailed to the address of the Bondholder appearing

on the register of the Bondholders at the risk of the Bondholder. The Certificates shall be

surrendered to the Company within thirty (30) days of the payment of the principal at maturity.

5.2 In the event that the Company fails to pay any principal, premium, yield (if any) or any other amount

payable hereunder when due, it shall pay an additional interest on the overdue amount from the

due date of payment until the date of actual payment at the rate of five per cent. (5.00 %) per

annum. Interest accrued on any overdue amount shall be payable on demand by the Bondholders

made at any time and from time to time.

5.3 If the due date for payment of any amount of principal, premium or yield (if any) in respect of any

Bond is not a Business Day, then the holder thereof shall not be entitled to payment of the amount

due until the next following Business Day and no interest or other payment will be made as a

consequence of the due date not being a Business Day.

6. CONVERSION

6.1

(A) The right of a Bondholder to convert any Bond hereunder is hereinafter called the

“Conversion Right”. Subject to and upon compliance with the provisions of these

Conditions and subject to listing approval (the “Listing Approval”) having been granted

by the Stock Exchange for listing of and permission to deal in such Conversion Shares,

any Bond may be converted into duly authorised, validly issued, fully-paid and

unencumbered Shares at the option of the holder thereof at any time from and including [*]

2014 (being the issue date of the Bond), up to the close of business (at the place where the

Bond is deposited for conversion, namely, Hong Kong) on the day falling fourteen (14)

days prior to the Maturity Date (the “Conversion Period”).

The number of Shares to be issued on conversion of a Bond shall be determined by

dividing the principal amount of a Bond with the applicable Conversion Price (as defined in

Condition 6.1(C)), determined as hereinafter provided, in effect on the Conversion Date

(as hereinafter defined) PROVIDED THAT such number of Shares must be in integral

multiples of the board lot of the Shares on each conversion and odd lot of the Shares will

not be issued on conversion but equivalent cash payment on redemption of the

unconverted principal amount of such Bond will be made in respect thereof (save in cases

where any such cash payment shall be less than HK$100, then no payment will be made).

(B) Fractions of a Share will not be issued on conversion but equivalent cash payment will be

made in respect thereof (save in cases where any such cash payment shall be less than

HK$100, then no payment will be made).

(C) The price at which each Share shall be issued upon conversion (the “Conversion Price”)

shall initially be HK$0.463, subject to adjustment in the manner provided in Condition 6.3

PROVIDED THAT the Conversion Price shall not be less than the par value of the Shares

on the Conversion Date (as defined in Condition 6.2(A)) unless permitted by law and in

compliance with the Listing Rules.





BOND INSTRUMENT


15

(D) The Conversion Rights shall only be exercisable so long as and to the extent that

immediately after such exercise, there will be sufficient public float of the Shares as

required under the Listing Rules.

(E) The Conversion Rights shall only be exercisable by the Bondholder so long as such

Bondholder and parties acting in concert (as defined in the Takeovers Code) with it

immediately after such exercise shall not be required to make a general offer under Rule

26 of the Takeovers Code (unless waiver from making a general offer has been obtained

from the Securities and Futures Commission of Hong Kong).

6.2 As used in this Condition 6, the expression “Shares” means (i) shares of the class of share capital

of the Company which is designated as ordinary shares of the Company, together with shares of

any class or classes resulting from any Stock Split, consolidation or re-classification thereof, which

have no preference in respect of dividends or of amounts payable in the event of any voluntary or

involuntary liquidation, dissolution or winding-up of the Company, and (ii) fully-paid and

unencumbered shares of any other class or classes of the share capital of the Company which

have no preference in respect of dividends or of amounts payable in the event of any voluntary or

involuntary liquidation, dissolution or winding-up of the Company and which have the same

nominal value as the Shares; and the expression “Stock Split” means any kind of stock split in

relation to the Shares, including a bonus share distribution, a stock dividend or a sub-division of

Shares and “Share” shall be construed accordingly.

(A) To exercise the Conversion Right attached to any Bond, the holder thereof shall, on a

Trading Day, facsimile or deliver to the Designated Office at the holder’s own expense a

completed notice of conversion in the short form as set out in Appendix 1 (Part C) herein

(the “short form Conversion Notice”), and then deliver or mail to the Designated Office

an original completed and signed Conversion Notice in the long form as set out in

Appendix 1 (Part B) herein (the “long form Conversion Notice”) together with the

relevant Certificates by 4:30 pm on the Trading Day following the Conversion Date (as

defined below). The Company shall acknowledge receipt of the short form Conversion

Notice by fax to the sender of the short form Conversion Notice by 4:30 pm (Hong Kong

time) on the Trading Day following the Conversion Date. Failure of the Company to deliver

such an acknowledgement shall not affect the validity of the short form Conversion Notice

provided that the relevant Bondholder shall retain a mechanical or electronically generated

confirmation of the successful transmission of such fax or, if the short form Conversion

Notice is delivered by hand or mail, evidence of delivery of the short form Conversion

Notice to the Company.

As conditions precedent to conversion the Bondholder must pay to the Company (or make

arrangements satisfactory to the Company for the payment of) all stamp, issue,

registration or other similar taxes and duties (if any) payable arising on conversion and

issue and delivery of Shares (“Conversion Shares”) to a place outside Hong Kong to or

to the order of a person other than the converting Bondholder. Except as aforesaid, the

Company will pay the expenses arising on the issue of Shares on conversion of the Bonds.

Unless otherwise agreed between the Company and the relevant Bondholder which

exercises the right of conversion attaching to the Bonds, all Conversion Shares will be

allotted on the Hong Kong branch register of members of the Company.

The date on which the short form Conversion Notice is received by the Company (as

evidenced by the transmission report of the Bondholder’s facsimile machine or evidence of

delivery or acknowledgment of receipt by the Company) (or the next Trading Day if the

short form Conversion Notice is received by the Company after 4:30 pm Hong Kong time)





BOND INSTRUMENT


16

is herein referred to as the “Conversion Date” applicable to such Bond. The date on

which any Certificate and the original, signed long form Conversion Notice is received by

the Company, or on which all conditions precedent to the conversion thereof (which are to

be fulfilled by the Bondholders) are fulfilled, whichever shall be later, is herein referred to

as the “Delivery Date” applicable to such Bond. The Company shall deliver an allotment

advice and (if applicable) instructions to issue certificate(s) for shares in respect of the

Conversion Shares to its branch share registrar and transfer agent in Hong Kong by 4:30

pm (Hong Kong time) on the Trading Day immediately following the Delivery Date. A short

form Conversion Notice or long form Conversion Notice once deposited shall not be

withdrawn without the consent in writing of the Company.

(B) The Company shall, as soon as practicable, and in any event within two (2) Trading Days

after the relevant Delivery Date, deliver or cause to be delivered to the order of the person

named for that purpose in the relevant Conversion Notice in accordance with normal

practice for settlement of transactions on the Stock Exchange and as designated by the

Bondholder, Central Clearing and Settlement System account credit instructions or a

certificate or certificates for the relevant Shares in board lots or otherwise directed by the

Bondholder and, if appropriate, together with an endorsement on the Bond certificate by a

director of the Company for any balance of the Bonds not converted. The Shares shall be

registered in the name of the Bondholder or its nominee, together with any such other

securities, property or cash required to be delivered on conversion and such assignments

and other documents (if any) as may be required by law to effect the transfer thereof.

(C) If the Conversion Date falls on or before the record date for determining entitlement of

shareholders to any dividend or other distribution or of participation in any rights issue in

respect of the Shares (notwithstanding the Conversion Date falling on the period of closure

of register of members in connection with the determination of such entitlement), the

converting Bondholder shall be entitled to a sum equal to any such dividend or other

distribution to which he would have been entitled or to participate in such rights issue as if

he had on that record date been such a shareholder of record and the Company shall

make the payment at the same time as it makes payment of the dividend or other

distribution, or as soon as practicable thereafter, but, in any event, not later than seven

days thereafter or seven days after the Delivery Date (whichever is later).

6.3 The Conversion Price will be subject to adjustment as follows:

(A) if the Company shall (i) make a Stock Split, (ii) consolidate its outstanding Shares into a

smaller number of shares, or (iii) re-classify any of its Shares into other securities of the

Company, then the Conversion Price shall be appropriately adjusted so that the holder of

any Bond, the Conversion Date in respect of which occurs after the coming into effect of

the adjustment described in this Condition 6.3(A), shall be entitled to receive the number of

Shares and/or other securities of the Company which it would have held or have been

entitled to receive after the happening of any of the events described above had such

Bond been converted immediately prior to the happening of such event (or, if the Company

has fixed a prior record date for the determination of shareholders entitled to receive any

such Shares or other securities issued upon any such Stock Split, consolidations or

re-classification, immediately prior to such record date), but without prejudice to the effect

of any other adjustment to the Conversion Price made with effect from the date of the

happening of such event (or such record date) or any time thereafter. An adjustment made

pursuant to this Condition 6.3(A) shall become effective immediately on the relevant event

becoming effective or, if a prior record date is fixed therefor, immediately after the record

date; PROVIDED THAT in the case of a relevant transaction which must, under applicable





BOND INSTRUMENT


17

Hong Kong or Bermuda law, be submitted for approval to a general meeting of

shareholders or to a meeting of the Board of Directors of the Company before being legally

effective, and which is so approved after the record date fixed for the determination of

shareholders entitled to receive such Shares or other securities, such adjustment shall,

immediately upon such approval being given by such meeting, become effective

retroactively to immediately after such record date.

The Company shall, promptly after the date upon which any adjustment becomes effective

under this Condition 6.3(A), give notice to the Bondholders in accordance with Condition

14, stating particulars of the event giving rise to the adjustment, the Conversion Price after

such adjustment, the date on which such adjustment takes effect, and such particulars and

information as the Bondholders may reasonably require.

(B) if and whenever the Company shall make any Capital Distribution to the Shareholders, the

Conversion Price shall be adjusted by multiplying the prevailing Conversion Price in force

immediately before such Capital Distribution by the following fraction:

A

BA

Where:

A is the Current Market Price of one Share on the last Trading Day preceding

the date on which the Capital Distribution is publicly announced; and

B is the Fair Market Value of the portion of the Capital Distribution attributable

to one Share on the date of such announcement, as determined in good

faith by the Independent Accountant, or failing which, by an independent

investment bank of international repute in Hong Kong selected by the

Company and approved by Bondholders holding 51 per cent or more of the

outstanding principal amount of the Bonds.

Such adjustment shall become effective on the date that such Capital Distribution is

actually made.

(C) if and whenever the Company shall issue Shares to all or substantially all Shareholders as

a class by way of rights, or issue or grant to all or substantially all Shareholders as a class,

by way of rights, of options, warrants or other rights to subscribe for or purchase any

Shares, in each case at less than 90 per cent. of the Current Market Price per Share on the

last Trading Day preceding the date of the announcement of the terms of the issue or grant,

the Conversion Price shall be adjusted by multiplying the Conversion Price in force

immediately before such issue or grant by the following fraction:

CA

BA

Where:

A is the number of Shares in issue immediately before such announcement;

B is the number of Shares which the aggregate amount (if any) payable for

the Shares issued by way of rights or for the options or warrants or other

rights issued or granted by way of rights and for the total number of Shares





BOND INSTRUMENT


18

comprised therein would purchase at such Current Market Price per Share;

and

C is the aggregate number of Shares issued or, as the case may be,

comprised in the grant (excluding Shares not taken up).

Such adjustment shall become effective on the date of issue of such Shares or issue or

grant of such options, warrants or other rights (as the case may be).

(D) if and whenever the Company shall issue any securities (other than Shares or options,

any securities convertible or exchangeable into Shares, warrants or other rights to

subscribe or purchase Shares) to all or substantially all Shareholders as a class by way of

rights or issue or grant to all or substantially all Shareholders as a class by way of rights, of

options, warrants or other rights to subscribe for or purchase any securities (other than

Shares or options, any securities convertible or exchangeable into Shares, warrants or

other rights to subscribe or purchase Shares), the Conversion Price shall be adjusted by

multiplying the prevailing Conversion Price in force immediately before such issue or grant

by the following fraction:

A

BA

Where:

A is the Current Market Price of one Share on the last Trading Day preceding

the date on which such issue or grant is publicly announced; and

B is the Fair Market Value of the portion of the securities or rights attributable

to one Share in connection with the securities or rights comprised in such

issue or grant on the date of such announcement, as determined in good

faith by the Independent Accountant, or failing which, by an independent

investment bank of international repute in Hong Kong selected by the

Company and approved by Bondholders holding 51 per cent or more of the

outstanding principal amount of Bonds.

Such adjustment shall become effective on the date of issue of the securities or date of

issue or grant of such rights, options or warrants (as the case may be).

(E) if and whenever the Company shall issue any Shares, whether for cash or non-cash

consideration (other than Shares issued on the exercise of Conversion Rights or on the

exercise of any other rights of conversion into, or exchange or subscription for, Shares) or

the issue or grant of options, warrants or other rights to subscribe for or purchase Shares

or securities convertible or exchangeable into Shares, in each case at a price per Share

which is less than 90 per cent. of the Current Market Price on the last Trading Day

preceding the date of announcement of the terms of such issue, the Conversion Price shall

be adjusted by multiplying the prevailing Conversion Price in force immediately before

such issue or grant by the following fraction:

C

BA

Where:





BOND INSTRUMENT


19

A is the number of Shares in issue immediately before the issue of such

additional Shares or the grant of such options, warrants or other rights to

subscribe for or purchase any Shares;

B is the number of Shares which the aggregate consideration receivable by

the Company for the issue of such additional Shares would purchase at

such Current Market Price per Share; and

C is the number of Shares in issue immediately after the issue of such

additional Shares.

References to additional Shares in the above formula shall, in the case of an issue or grant

by the Company of options, warrants or other rights to subscribe for or purchase Shares,

mean such Shares to be issued assuming that such options, warrants or other rights are

exercised in full at the initial exercise price on the date of issue of such options, warrants or

other rights.

Such adjustment shall become effective on the date of issue of such additional Shares or,

as the case may be, the issue or grant of such options, warrants or other rights.

(F) save in the case of an issue of securities arising from a conversion or exchange of other

securities in accordance with the terms applicable to such securities themselves falling

within this Condition 6.3(F), if and whenever the Company (otherwise than as mentioned in

Conditions 6.3(C), 6.3(D) or 6.3(E)), or (at the direction or request of or pursuant to any

arrangements with the Company) any other person or entity shall issue any securities

(other than the Bonds) which by their terms of issue carry rights of conversion into, or

exchange or subscription for, Shares issued or to be issued by the Company on

conversion, exchange or subscription at a consideration per Share which is less than 90

per cent. of the Current Market Price on the last Trading Day preceding the date of

announcement of the terms of issue of such securities, the Conversion Price shall be

adjusted by multiplying the prevailing Conversion Price in force immediately before such

issue by the following fraction:

CA

BA

Where:

A is the number of Shares in issue immediately before such issue;

B is the number of Shares which the aggregate consideration receivable by

the Company for the Shares to be issued on conversion or on exercise of

the right of subscription attached to such securities would purchase at such

Current Market Price per Share; and

C is the maximum number of Shares to be issued on conversion or exchange

of such securities or on the exercise of such rights of subscription attached

thereto at the initial conversion, exchange or subscription price or rate.

Such adjustment shall become effective on the date of issue of such securities.

6.4 Any adjustment to the Conversion Price shall be made to the nearest one cent so that any amount

under half of one cent shall be rounded down and any amount of half of one cent or more shall be

rounded up. In addition to any determination which may be made by the directors of the Company,





BOND INSTRUMENT


20

every adjustment to the Conversion Price shall be certified by the Independent Accountant, or

failing which, by an independent investment bank of repute in Hong Kong selected by the

Company and approved by Bondholders holding 51 per cent, or more of the outstanding principal

amount of Bonds.

The Conversion Price may not be reduced so that, on conversion of Bonds, Shares would fall to be

issued at a discount to their par value.

Where more than one event which gives or may give rise to an adjustment to the Conversion Price

occurs within such a short period of time that in the opinion of the Independent Accountant, or

failing which, by an independent investment bank of repute in Hong Kong selected by the

Company and approved by Bondholders holding 51 per cent or more of the outstanding principal

amount of Bonds, the foregoing provisions would need to be operated subject to some

modification in order to give the intended result, such modification shall be made to the operation

of the foregoing provisions as may be advised by such accountants or such independent

investment bank to be in its opinion appropriate in order to give such intended result.

No adjustment involving an increase in the Conversion Price will be made, except in the case of a

consolidation of the Shares as referred to in Condition 6.3(A) above.

6.5 The provisions of Condition 6.3 shall not apply to:

(A) (i) an issue of fully paid Shares upon the exercise of any conversion rights attached to

securities convertible into Shares or upon exercise of any rights (including any conversion

of the Bonds) to acquire Shares or (ii) any adjustment in the conversion price of any

securities convertible into the Shares of the Company, if such adjustment is in accordance

with the existing terms of such securities, provided that an adjustment has been made (if

appropriate) under this Condition 6 in respect of the issue of such securities or granting of

such rights (as the case may be);

(B) an issue of Shares or other securities of the Company or any of its Subsidiaries wholly or

partly convertible into, or rights to subscribe for or acquire, Shares pursuant to any scheme

established in accordance with Chapter 17 or any similar sections of the Listing Rules;

(C) an issue by the Company of Shares or by the Company or any of its Subsidiaries of

securities wholly or partly convertible into or rights to acquire Shares, in any such case in

consideration or part consideration for the acquisition of any other securities, assets or

business provided that an adjustment has been made (if appropriate) under this Condition

6 in respect of the issue of such securities or granting of such rights (as the case may be);

(D) an issue of Shares pursuant to a scrip dividend scheme where an amount not less than the

nominal amount of the Shares so issued is capitalised and the market value of such

Shares is not more than 110 per cent. of the amount of dividend which holders of the

Shares could elect to or would otherwise receive in cash, for which purpose the "market

value" of a Share shall mean the average of the closing prices for such Stock Exchange

dealing days on which dealings in the Shares took place (being not less than five such

days) as are selected by the directors of the Company in connection with determining the

basis of allotment in respect of the relevant scrip dividend and which fall within the period

of one month ending on the last day on which holders of Shares may elect to receive or (as

the case may be) not to receive the relevant dividend in cash; or

(E) any issues of exchangeable securities which are exchangeable into existing shares of the

Company in a non-dilutive manner.





BOND INSTRUMENT


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6.6 Whenever the Conversion Price is adjusted as herein provided the Company shall give notice to

the holders of the Bonds that the Conversion Price has been adjusted (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) and shall at all times thereafter so long as the

Bonds remain outstanding make available for inspection at its principal place of business in Hong

Kong 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 such adjustment, the adjusted

Conversion Price and the effective date thereof and shall, on request, send a copy thereof to the

Bondholders.

7. COVENANTS IN RELATION TO THE CONVERSION RIGHT

7.1 The Company covenants with and undertakes to the Bondholders that, so long as any of the

Bonds are outstanding and subject to any approvals otherwise given in writing by the Bondholders:

(A) it shall keep available free from pre-emptive or other rights for the purpose of effecting the

conversion of the Bonds such number of its authorised but unissued Shares to satisfy fully

the Conversion Right under the outstanding Bonds and will ensure that all Shares

delivered upon conversion of Bonds pursuant to these Conditions will be duly authorised,

validly issued, fully-paid and unencumbered Shares and registered in the name of the

Bondholders or their respective nominee(s);

(B) it shall not close its register of shareholders or take any other action which prevents the

transfer of its Shares generally unless, as permitted under the articles of association of the

Company as then in effect, the Bonds may be converted legally into Shares and the

Shares issued upon conversion may (subject to any limitation imposed by law and, to the

extent required by law and the Company’s articles of association) be transferred (as

between transferor and transferee although not as against the Company) at all times

during the period of such closure or while such other action is effective, nor shall it take any

action which prevents conversion of the Bonds or the issue of Shares in respect thereof;

(C) it shall give notice to the Bondholders in accordance with Condition 14 as soon as

practicable after it effects any change of its financial year;

(D) it shall not take any action which would result in an adjustment of the Conversion Price if,

after giving effect thereto, the Conversion Price would be decreased to such an extent that

the Shares to be issued on exercise of the Conversion Right could not, under any

applicable law then in effect, be legally issued as fully-paid and unencumbered;

(E) it will use its reasonable endeavours to (a) procure the maintenance of the listing of all the

issued and outstanding Shares on the Stock Exchange; and (b) obtain and maintain a

listing on the Stock Exchange for the Shares which shall be allotted on the exercise of the

Conversion Right;

(F) if any 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 exceeding 30 per cent of the issued

share capital of the Company, and such offer comes to the knowledge of the Company, it

will give notice of such offer to the Bondholders in accordance with Condition 14 within 14

days after obtaining such knowledge;

(G) it will in the case of any consolidation or amalgamation of the Company with, or merger of

the Company into, any other corporation (other than a consolidation, amalgamation or

merger in which the Company is the continuing corporation), or in the case of any sale or





BOND INSTRUMENT


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transfer of all or substantially all of the assets of the Company, it shall forthwith give notice

to the Bondholders of such event in accordance with Condition 14 and it shall cause the

corporation formed by such consolidation or amalgamation or the corporation into which

the Company shall have merged or the corporation which shall have acquired such assets,

as the case may be, to execute a deed providing (a) that such corporation will assume

obligations to the holder of each Bond then outstanding analogous to all of the obligations

of the Company under the Bonds; (b) for including the right (during the period such Bond

shall be convertible) to convert such Bond into the class and amount of shares and other

securities and property receivable upon such consolidation, amalgamation, merger, sale

or transfer by a holder of the number of Shares into which such Bond could be converted

immediately prior to such consolidation, amalgamation, merger, sale or transfer; and (c)

for an adjustment to the Conversion Price which shall be as nearly equivalent as may be

practicable to the adjustment provided for in Condition 6.3. The above provisions of this

Condition 7.1(G) shall apply in the same way to any subsequent consolidations,

amalgamations, mergers, sales or transfers;

(H) if it is a party to any transaction referred to in Condition 7.1(G) above, it shall use its

reasonable endeavours to obtain all consents which may be necessary or appropriate

under Hong Kong law to enable the relevant continuing corporation to give effect to the

arrangement as provided in Condition 7.1(G) above;

(I) within three (3) Trading Days after an adjustment in the Conversion Price, apply for listing

approval (if required) to the issue and allotment of the Conversion Shares at such adjusted

price from the Stock Exchange;

(J) as soon as possible and in any event not later than three (3) Trading Days after the

announcement of the terms of any issue referred to in Condition 6.3 give notice to the

Bondholders advising them of the date on which the relevant adjustment of the Conversion

Price is likely to become effective and of the effect of exercising their Conversion Rights

pending such date;

(K) 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 Bonds 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 to ensure the

continued compliance thereof;

(L) the Company shall, within three (3) Trading Days upon a request by the Bondholders,

provide to the Bondholders such financial and other information relating to the Company,

its businesses and operations which are public information; and

(M) the Company shall not enter into any deed, agreement, assignment, instrument or

documents whatsoever which may result in any breach of the terms of the Bonds.

7.2 The Company hereby covenants with and undertakes to the Bondholders that, so long as any

Bond is outstanding, copies of all circulars or reports required by the articles of association of the

Company or the Listing Rules to be provided or otherwise made available to shareholders of the

Company shall be sent to the Bondholders in the manner provided by Condition 14 as soon as

possible after the issue of such circulars or reports.

8. REDEMPTION AND PURCHASE; DISCHARGE

8.1 Maturity: Unless previously converted, purchased and cancelled or discharged as herein provided,

the Company shall redeem the Bonds at 100% of their principal amount on [*] 2017, being the third





BOND INSTRUMENT


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anniversary from the issue of the Subscription Bonds (as defined in the Subscription Agreement)

(the “Maturity Date”).

8.2 Redemption: The Company shall not be entitled to redeem the Bonds (in whole or in part) at any

time prior to the Maturity Date, except by mutual consent of the Bondholder and the Company.

8.3 Purchase: The Company and/or any of its Subsidiaries may at any time purchase Bonds at any

price as agreed between the Company (or its relevant Subsidiary) and the relevant Bondholder.

Such Bonds may, at the option of the Company (or its relevant Subsidiary) and subject to the

applicable laws, be held or cancelled in accordance with Condition 8.4 below.

8.4 Cancellation: All Bonds which are purchased or converted will forthwith be cancelled by the

Company and may not be reissued or resold.

9. TAXATION

All payments of principal, premium or yield (if any) by the Company in respect of the Bonds will be

made without withholding of, or deduction for or on account of, any present or future taxes (other

than tax on the overall net income of the relevant Bondholder), duties, assessments or

governmental charges of whatever nature imposed or levied by or on behalf of Hong Kong or

Bermuda, or any authority therein or thereof having power to tax, unless the withholding or

deduction of such taxes, duties, assessments or governmental charges is required by law. If such

withholding or deduction is so required, the Company will pay such additional amounts as may be

necessary in order that the net amounts received by the Bondholders after such withholding or

deduction shall equal the amounts of principal, premium or yield (if any) which would have been

receivable in respect of the Bonds in the absence of such withholding or deduction; except that no

such additional amounts shall be payable with respect to any Bond:

(A) to any Bondholder (or to a third party on behalf of a holder) (i) who is for Hong Kong or

Bermuda tax purposes treated as a resident of Hong Kong or Bermuda or a Hong Kong or

Bermuda corporation or (ii) who is otherwise subject to such taxes, duties, assessments or

governmental charges by reason of his being connected with Hong Kong or Bermuda

otherwise than by reason only of the holding of any Bond or the receipt of principal,

premium or yield in respect of any Bond; or

(B) if the Certificate in respect of such Bond is surrendered more than 30 days after any due

date except to the extent that the holder thereof would have been entitled to such

additional amounts on presenting the same for payment as at the expiry of such 30-day

period.

Without prejudice to the Company’s obligation to pay such additional amounts as aforesaid, the

Company may request the Bondholders to comply with any reporting requirements under

applicable Hong Kong or Bermuda law to enable such Bondholders to be treated as non-residents

of Hong Kong or Bermuda or non-Hong Kong or non-Bermuda corporations for Hong Kong or

Bermuda tax purposes. Bondholders may comply with any such request if it is reasonable.

Any reference in the Bonds to principal, premium or yield shall be deemed also to refer to any

additional amounts which may be payable under this Condition.

10. PRESCRIPTION

Claims in respect of principal, premium or yield will become void unless made within the period of

6 years, from the due date for the payment thereof.





BOND INSTRUMENT


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11. VOTING

The Bondholder will not be entitled to attend or vote at any meetings of the Company by reason

only of it being the Bondholder.

12. EVENTS OF DEFAULT

If any of the following events occurs:

(A) there is default in the payment of the principal, premium or yield (if any) in respect of the

Bonds or any of them when and as the same ought to be paid and such default is not

remedied within ten (10) Trading Days; or

(B) there is default by the Company in the performance or observance of any covenant,

condition, provision or obligation contained in the Bonds and on its part to be performed or

observed (other than the covenant to pay the principal, premium or yield (if any) in respect

of any of the Bonds) and such default continues for the period of 30 days following the

service by any Bondholder on the Company of notice specifying in reasonable details such

default and requiring the same to be remedied; or

(C) any other bonds, debentures, notes or other instruments of indebtedness or any other loan

indebtedness having an aggregate outstanding amount of at least HK$10,000,000 or the

equivalent in any other currency or currencies (hereinafter collectively called

“Indebtedness”) of the Company or any of its Subsidiaries become or becomes

prematurely repayable following a default in respect of the terms thereof which have not

been remedied, or steps are taken to enforce any security therefor, or the Company or any

of its Subsidiaries defaults in the repayment of any such Indebtedness at the maturity

thereof or at the expiration of any applicable grace period therefor (if a grace period is

applicable) or any guarantee of or indemnity in respect of any Indebtedness of others

having an aggregate outstanding amount of at least HK$10,000,000 given by the

Company or any of its Subsidiaries are not honoured when due and called upon

PROVIDED THAT the threshold amounts set out in this Condition 12(C) shall be

cumulative for any period of three (3) months and shall be aggregated together in the

event of any breach of this Condition 12(C); or

(D) a resolution is passed or a petition for winding up (based on valid grounds) or an order of a

court of competent jurisdiction is made that the Company or any of the Principal

Subsidiaries be wound up or dissolved otherwise than (i) for the purposes of or pursuant to

a consolidation, amalgamation, merger, reconstruction or reorganisation the terms of

which have previously been approved in writing by Bondholders holding 51 per cent. or

more of the outstanding principal amount of Bonds and upon which the continuing

corporation effectively assumes the entire obligations of the Company or any of the

Principal Subsidiaries, as the case may be, under the Bonds; and (ii) as provided in

Condition 12(E)(i) and Condition 12(E)(ii); or

(E) a resolution is passed or a petition for winding up or an order of a court of competent

jurisdiction is made that any Principal Subsidiary be wound up or dissolved otherwise than

(i) for the purposes of or pursuant to a consolidation, amalgamation, merger,

reconstruction or reorganisation (other than as described in (ii) below) the terms of which

have previously been approved in writing by Bondholders holding 51 per cent. or more of

the outstanding principal amount of Bonds, (ii) for the purposes of or pursuant to a

consolidation, amalgamation, merger or reconstruction with or into the Company or

another of its Subsidiary or (iii) by way of a voluntary winding up or dissolution where there





BOND INSTRUMENT


25

are surplus assets in such Subsidiary and such surplus assets attributable to the Company

and/or any of its Subsidiary are distributed to the Company and/or such Subsidiary; or

(F) an encumbrancer takes possession or a receiver is appointed of the whole or a material

part of the assets or undertaking of the Company or any Principal Subsidiary; or

(G) (i) the Company or any Principal Subsidiary without any lawful cause stops payment

(within the meaning of any applicable bankruptcy law) or is unable to pay its debts as and

when they fall due; or (ii) the Company or any Principal Subsidiary (otherwise than for the

purposes of such a consolidation, amalgamation, merger, reconstruction or reorganisation

as is referred to in Condition 12(D) or Condition 12(E)) ceases or through an official action

of the Board of Directors of the Company or any Principal Subsidiary, as the case may be,

threatens to cease to carry on a substantive part of its business; or

(H) proceedings shall have been initiated against the Company or any Principal Subsidiary

under any applicable bankruptcy, reorganisation or insolvency law and such proceedings

have not been discharged or stayed within a period of 60 days; or

(I) the Company or any Principal Subsidiary shall initiate or consent to proceedings seeking

with respect to itself adjudication of bankruptcy or a decree of commencement of

composition or reorganisation or other similar procedures or the appointment of an

administrator or other similar official under any applicable bankruptcy, reorganisation or

insolvency law or make a general assignment for the benefit of, or enter into any

composition with, its creditors; or

(J) a distress, execution or seizure before judgement is levied or enforced upon or sued out

against a part of the property of the Company or any Principal Subsidiary, which is material

and adverse in its effect upon the operations of the Group taken as a whole, as the case

may be, and is not discharged within 30 days thereof; or

(K) the delisting of the Shares on the Stock Exchange or a suspension of trading of such

shares on the Stock Exchange for a period of thirty (30) consecutive Trading Days or more

(save in the case where such suspension is for the purposes of clearing a notice,

announcement or circular with the Stock Exchange or any other regulatory authorities and

the subject matter under the notice announcement, or circular does not constitute, or does

not potentially constitute, an event of default herein);

then any Bondholder(s) holding in aggregate 51 per cent. or more of the principal amount of the

Bonds then outstanding may, by notice in writing given to the Company at the Designated Office by

the holder(s), declare that the Bond(s) is/are, immediately due and payable whereupon the Bond(s)

shall become immediately due and payable at an amount equal to 100% of the principal amount

such Bonds outstanding together with the accrued interest thereon without further formality.

For the purposes of Condition 12(C), any amount which is in a currency other than HK dollars shall

be translated into HK dollars at the spot rate for the sale of HK dollars against the purchase of the

relevant currency in the Hong Kong foreign exchange market quoted by The Hongkong &

Shanghai Banking Corporation Limited or, if such quotation is not available from such bank, such

other major independent international merchant bank selected by any Bondholder on any day

when it requests such a quotation for such purposes.

For the purposes of this Condition 12:-

“Accounts” means the audited consolidated financial statements of the Company

and its Subsidiaries for the year ended 31 March 2014 and thereafter





BOND INSTRUMENT


26

the most recent audited consolidated financial statements of the

Company;

“Principal Subsidiary” means at any time any Subsidiary of the Company:

(A) whose profits, or (in the case of a Subsidiary which has

Subsidiaries) consolidated profits, before taxation and

extraordinary items as shown by its latest audited profit and

loss account are at least 10 per cent. of the consolidated

profits before taxation and extraordinary items of the

Company as shown by the Accounts; or

(B) whose total assets or (in the case of a Subsidiary which has

Subsidiaries) total consolidated assets as shown by its latest

audited balance sheet are at least 10 per cent. of the total

consolidated assets of the Company as shown by the

Accounts; or

(C) whose revenues, or (in the case of a Subsidiary which has

Subsidiaries) consolidated revenues as shown by its latest

audited profit and loss account are at least 10 per cent. of the

consolidated revenues of the Company as shown by the

Accounts; or

(D) to which is transferred the whole or substantially the whole of

the assets and undertaking of a Subsidiary which

immediately prior to such transfer is a Principal Subsidiary,

provided that, in such a case, the Subsidiary so transferring

its assets and undertaking shall thereupon cease to be a

Principal Subsidiary; and

13. REPLACEMENT OF CERTIFICATES

Should any Certificate be lost, stolen, destroyed, mutilated or defaced, it may be replaced by the

Company, upon payment by the claimant of the expenses incurred in connection therewith and on

such terms as to evidence and indemnity (which shall require, inter alia, that, if the allegedly lost,

stolen or destroyed Certificate is subsequently deposited for conversion into Shares, or if such

Certificate is subsequently repurchased by the Company, there shall be paid to the Company on

demand the Early Redemption Amount of the Bonds outstanding of such Bonds represented by

such Certificate) as the Company may reasonably require. Mutilated or defaced Certificates must

be surrendered before replacements will be issued.

14. NOTICES

14.1 All notices to the Bondholders will be valid if sent to them by express courier or by facsimile at their

respective addresses or facsimile numbers (as appropriate) in the Company’s register of

Bondholders. Such notices shall be deemed to have been validly given to Bondholders in the case

of express courier, at the time of delivery, and in the case of facsimile, at the time of despatch

(provided that the Company retains a mechanical or electronically generated confirmation of the

successful transmission of such facsimile). The Company shall give notice to the Bondholders in

accordance with this paragraph of any change in the Designated Office.

14.2 Every Bondholder shall register with the Company an address in Hong Kong and facsimile number

to which notices can be sent and if any Bondholder shall fail to do so, notice may be given to such





BOND INSTRUMENT


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Bondholder by sending the same in any of the manners hereinbefore mentioned to his last known

place of business or facsimile number or, if there be none, by posting up the same for three days at

the Designated Office.

15. MODIFICATION AND WAIVER

Any modification by the Company of the Bonds (including these Conditions) or any waiver or

authorisation of any non-compliance, proposed non-compliance, breach or proposed breach by

the Company of the Bonds requires the written approval of holders of 51 per cent. or more of the

aggregate principal amount of Bonds then outstanding.

16. GOVERNING LAW

The Bonds are governed by, and shall be construed in accordance with, Hong Kong law.

17. TIME OF ESSENCE

Time shall be of the essence in respect of the performance of obligations under the Bonds.





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APPENDIX 1

CONVERSION MECHANICS AND CONVERSION NOTICES

PART A

Conversion Mechanics

Terms used herein are as defined in the terms and conditions of the Bonds (the “Conditions”). This

Appendix is subject to the more detailed provisions of the Conditions.

Action Timing(1)

Responsibility

1. Bondholder exercises Conversion Right

by facsimile or delivery to the Designated

Office in Hong Kong of a completed short

form Conversion Notice

Conversion Date(2)

Bondholder

2. Company to acknowledge receipt of short

form Conversion Notice by facsimile to

sender of short form Conversion Notice

By 4:30pm on the Trading

Day following the

Conversion Date

Company

3. Long form Conversion Notice and relevant

Bond Certificates delivered to Designated

Office


Day following the

Conversion Date (the

“Delivery Date”)

Bondholder

4. Company to deliver the allotment advice

or instructions to issue the Conversion

Shares to its branch share registrar in

Hong Kong


Day following the Delivery

Date

Company

5. Company to deliver or cause to be

delivered certificate for Shares

By 4:30pm within two

Trading Days of the Delivery

Date

Company /

the branch share

registrar

______________

Note

(1) All times stated are Hong Kong time.

(2) If the Conversion Notice is received after 4:30pm the Conversion Notice is deemed to be received on

the next succeeding Trading Day.





BOND INSTRUMENT


29

PART B

Form of Long Form Conversion Notice





CONVERSION NOTICE

(To be completed in duplicate)

(Please read the notes overleaf before completing this Notice.)

Name:…............................................................... Date:............................................................

Address:..............................................................

Signature:............................................................

To: CHUN WO DEVELOPMENT HOLDINGS LIMITED (the “Company”)

I/We, by or on behalf of the holder or beneficial owner of the Bonds (the “Bonds”) specified below, hereby

elect to convert such Bonds into ordinary shares of the Company (the “Shares”) in accordance with

Condition 6 of the terms and conditions of the Bonds.

1. Total principal amount and certificate numbers of Bonds to be converted:-

Total principal amount:...........................................................................................................

Certificate numbers of Bonds:.............................................................................

N.B. If necessary, the certificate numbers of Bonds attached need not be in consecutive serial

number.

2. Conversion Price on Conversion Date:

3. Total number of Shares to be issued:

4. Name(s), address(es) and signature(s) of person(s) in whose name(s) the Shares required to be

delivered on conversion are to be registered:-

Name:..............................................................................

Address:......................................................................….

.........................................................................................

.........................................................................................

Signature:.........................................................................





BOND INSTRUMENT


30

5. (A) the relevant number of Shares be issued in the name(s) of the person(s) whose name(s)

stand(s) on the Register as the Bondholder(s) represented by the Certificate representing

the Bonds and the certificate for such Shares be delivered to the address of the following

participant of the Central Clearing and Settlement System (“CCASS”) operated by the

Hong Kong Securities Clearing Company Limited:

Participation I.D. of the designated CCASS participant;

CCASS participant’s contact person;

CCASS participant’s contact telephone number and fax number;

CCASS participant’s address for delivery of share certificates

OR

(B) I/We hereby request that the certificates for the Shares (or other securities) required to be

delivered upon conversion be despatched (at my/our risk and expense) to the person

whose name and address is given below and in the manner specified below:

Name:.............................................................................

Address:.........................................................................

.......................................................................................

.......................................................................................

Manner of despatch (if other

than by ordinary mail):....................................................

6. I/We hereby request that any cash amount (or property) required to be delivered upon conversion

be despatched (at my/our risk and expense) to the person whose name and address is given

below and in the manner specified below:

Name:.............................................................................

Address:.........................................................................

.......................................................................................

.......................................................................................

7. The Certificates representing the Bonds converted hereby accompany this Conversion Notice.

8. I/We hereby declare that all approvals, consents and authorisations (if any) required by the laws to

which I am / we are subject and to be obtained by me/us prior to the said conversion have been

obtained and are in full force and effect and that any applicable condition thereto has been

complied with by me/us.

9. The Company has notified the Bondholders that the Company’s register of shareholders will be

closed on the following dates:

.......................................................................................

.......................................................................................





BOND INSTRUMENT


31

Notes:

(i) This Conversion Notice will be void unless the introductory details, Sections 1, 2, 3, 4 and (if

applicable) 5 are completed.

(ii) Your attention is drawn to Condition 6.2(A) of the Bonds with respect to the conditions precedent

which must be fulfilled before the Bonds specified above will be treated as effectively eligible for

conversion.

(iii) Despatch of share certificates or other securities or property will be made at the risk and expense

of the converting Bondholder and the converting Bondholder will be required to prepay the

expenses of, and submit any necessary documents required in order to effect despatch in the

manner specified.

(iv) If an adjustment contemplated by the terms and conditions of the Bonds is required in respect of a

conversion of Bonds where additional Shares are to be issued, certificates for the additional

Shares deliverable pursuant to such adjustment (together with any other securities, property or

cash) will be delivered or despatched in the same manner as the Shares, other securities, property

and cash previously issued pursuant to the relevant Conversion Notice.

.............................

For Company’s use only:-

1 (A) Bonds conversion identification reference:..........………..........

(B) Conversion Date:......................................................………………...

(C) Delivery Date: ......................................................………………...

2 (A) Aggregate principal amount of Bonds in respect of which Certificates have been deposited for

conversion:........................................................................

(B) Conversion Price on Conversion Date:...................……………….....

(C) Number of Shares issuable:..............................………………...........(disregard fractions)

3 (If applicable) amount of cash payment due to converting Bondholder under Condition 6.2(C):

………………………………………………………………………….

---------

Note: The Company must complete items 1, 2 and (if applicable) 3.





BOND INSTRUMENT


32

PART C

Form of Short Form Conversion Notice





CONVERSION NOTICE

(To be sent by facsimile only)

Name:................................................................... Date:............................................................

Address:..............................................................

To: CHUN WO DEVELOPMENT HOLDINGS LIMITED (the “Company”)

I/We, by or on behalf of the holder or beneficial owner of the Bonds (the “Bonds”) specified below, hereby

elect to convert such Bonds into ordinary shares of the Company (the “Shares”) in accordance with

Condition 6 of the terms and conditions of the Bonds.

Total principal amount: (A)

Certificate numbers of Bonds: (B)

Total number of Shares to be issued: (C)

Name of the person in whose name the Shares required to be delivered

on conversion are to be registered: (D)

CCASS Settlement or Name and address of the custodian in Hong Kong

to whom certificates for Shares and any cash amount shall be delivered:

(E)

Regards,

________________________________________________

Signatures





BOND INSTRUMENT


33

EXECUTION PAGE

In witness whereof this Instrument has been executed as a deed poll on the day and the year first above

written.

EXECUTED and DELIVERED as a DEED under the COMMON SEAL of CHUN WO DEVELOPMENT HOLDINGS LIMITED and SIGNED by its director(s) /authorised signatory in the presence of :-

))))) ) ) ) ) )





43

SCHEDULE VI

EXISTING LITIGATIONS


Court Case No. Parties Matter

(1) HCA 613/2014 Cheung Shun Yee v. Rich

Resource Development

Limited

Disputes on a sale and purchase of

commercial units of No. 8 Clear Water Bay

Road for a claim against a Group Company

(2) HCA 2449/2013 Goldbay Fortis Limited v. Rich

Resource Development

Limited



Road for a claim against a Group Company

(3) HCA 371/2014 Goldbay Fortis v. Chun Wo

Development Holdings Limited



Road for a claim against the Company

(4) HCCT 29/2013 Chun Wo Building Construction

Limited v. Metta Resources

Limited

Disputes on a development project of the

Tsz Shan Monastery located at Tung Tsz,

Tai Po District, Hong Kong for a Group

Company claims against the defendant and

counterclaim by the defendant against the

Group Company.





44

ANNEXURE I

REORGANIZATION AND DISTRIBUTION IN SPECIE PLAN


1 180140v1

Reorganization and Distribution In Specie Plan

Existing group structure

Smart Wealth Asia Pacific Limited (“Smart Wealth”), a Hong Kong company, is holding

37 out of 40 undivided shares of the Remaining Portion of New Kowloon Inland Lot

No. 2835 and the building erected thereon known as Kelly Court (collectively, the

“Properties”). Smart Wealth is 100% held by a BVI company, Excel Value International

Limited (“Excel Value”).

A facility agreement (“Facility Agreement”) was entered into between Smart Wealth

and HSBC on 30 January 2013 in respect of HK$520,000,000 term loan facilities (the

“Loan Facilities”) which are to partially finance the acquisition cost of the Properties

and to finance 100% of the construction costs. On the same date, the Company

signed a deed of guarantee (“Guarantee”) in favour of HSBC for Smart Wealth’s

liabilities under the Loan Facilities. A supplemental agreement to the Facility

Agreement has recently been signed to deal with the delay in the acquisition of the

remaining units of the Properties beyond the original deadline of 30 Jun 2014.

Company Chun Wo (BVI) Limited

Excel Value International Limited Smart Wealth Asia Pacific Limited

(Hong Kong) Other subsidiaries

owes money to

100%

Chun Wo (BVI) Limited (BVI)

Excel Value International Limited (BVI)

100%

100%

Other subsidiaries

Company

Smart Wealth Asia Pacific Limited (Hong Kong)

2 180140v1

Procedures of the Reorganization and the Distribution In Specie

1. Internal re-positioning

1.1 Chun Wo (BVI) Limited and the Company will enter into a share sale and

purchase agreement pursuant to which Chun Wo (BVI) Limited will transfer

all shares in Excel Value to the Company at the then latest available

consolidated net asset value of Excel Value. If the consideration for the

transfer is not settled by the Company immediately, the Company will owe

Chun Wo (BVI) such amount. After this step, the Company will directly hold

100% shares of Excel Value.

1.2 Then Excel Value shall replace its Articles of Association with a more

sophisticated set of Articles that are similar to those for a listed company.

2. Inter-company loans

2.1 If Smart Wealth owes any money to the Company’s subsidiaries, such

subsidiaries shall assign to the Company all their rights in the loans

extended to Smart Wealth, so that the only inter-company between Smart

Wealth and the rest of the Group is the loan owed by Smart Wealth to the

Company.

After the above steps, the relationship with Excel Value and the rest of the Group will

be as follows:

Company

Company Chun Wo (BVI) Limited

Excel Value International Limited Smart Wealth Asia Pacific Limited

(Hong Kong) Subsidiaries

100%

100%

Other subsidiaries

Smart Wealth (Hong Kong)


100%

Excel Value (BVI)

Chun Wo (BVI) Limited (BVI)

owes money to

3 180140v1

3. Loan Facilities

3.1 The Company will communicate with HSBC beforehand in respect of the

proposed Distribution In Specie, with the aim of seeking HSBC’s consent on

(a) the change of ultimate control of Smart Wealth, (b) the replacement of

the Guarantee and (c) the removal of references to the Company from the

Loan Facilities.

3.2 Further, Smart Wealth will give sufficient notice to HSBC to prepay part of

the outstanding loan under the Loan Facilities, such that the outstanding

amount will be reduced to HK$50,000,000 before the Distribution In

Specie. A fee is payable for such prepayment the Facility Agreement.

4. Replacement of the Company’s loan

4.1 The Company will extend to Excel Value a shareholder’s loan of the

aggregate amount of (a) the loan owed by Smart Wealth to the Company

and (b) the prepayment of the HSBC loan. Excel Value shall use the same

amount to extend a shareholder’s loan to Smart Wealth. Smart Wealth will

repay in full its loan owed to the Company. It will also make the

prepayment to HSBC in due course. After this step, only Excel Value (but

not Smart Wealth) will owe a loan to the Company.

After the above steps, the relationship between Excel Value and the rest of the

Group will be as follows:

Company


100%

Other subsidiaries Smart Wealth Asia Pacific Limited

(Hong Kong)

100%

Excel Value (BVI)

owes money to

owes money to

4 180140v1

5. The Company’s distributable reserve amount

5.1 The amount of the Distribution In Specie is usually fixed by referring to the

net asset value (on a consolidated basis) of Excel Value or the fair value of

the Excel Value shares (as the Company’s auditors may advise)

immediately before such distribution is made.

5.2 The Company is a Bermuda company and any distribution to its

shareholders is subject to its Bye-laws and the Bermudan law. If the

amount of Distribution In Specie may exceed the Company’s distributable

reserve amount, then the Company may have to apply part of the amounts

standing to the credit of its share premium account and other

non-distributable reserves for the implementation of part of the

Distribution In Specie. This application requires the prior approval of the

Company’s shareholders.

6. Distribution In Specie

6.1 The Company shall issue a circular (“Circular”), and convene a special

general meeting (“SGM”), in respect of the Distribution In Specie and (if

applicable) the application of the Company’s share premium amount. The

SGM may also cover other aspects such as increase in the Company’s

authorized share capital.

6.2 At the time of issuing the Circular, if certain shareholders of the Company

have addresses outside Hong Kong (“Overseas Shareholders”), the

Company has to seek foreign legal advice on whether the Company needs

to take additional steps to comply with the local laws and regulations in

those jurisdictions to make the Distribution In Specie to those

shareholders.

6.3 The Company will fix a record date for entitlement to the Distribution In

Specie. Such date is usually a few days after the SGM. Any shares issued by

the Company before that date upon exercise of the Company’s share

options will be included in the entitlement. Such record date and other key

days will be set out in the Circular.

6.4 After the above steps are taken and after the Company’s shareholders give

5 180140v1

the necessary approvals at the SGM, the Company shall pass resolutions to

(a) sub-divide Excel Value’s issued and unissued shares and (b) increase

Excel Value’s authorized share capital.

6.5 All outstanding loans extended by the Company to Excel Value will be

capitalized so that the Company will issue and allot the same number of

shares as the number of the Company shares as at the record date minus

the shares already held by the Company – at the aggregate amount of the

loan owed to the Company. Such new shares will be issued and allotted as

fully paid shares and rank pari passu in all respects with each other and

with the existing shares already held by the Company. The Company loan

will no longer exist in the books of Excel Value.

6.6 The Company may then distribute the Excel Value shares to the Company’s

own shareholders at a one-to-one ratio. For those Overseas Shareholders

who may not obtain Excel Value shares without the Company incurring

substantial time and costs in complying with the local laws and regulations,

those Excel Value shares will be distributed to a person authorized by the

Company and such person will sell such Excel Value shares to the Vendor at

the intended price of the voluntary general offer that the Vendor intends

to make in respect of the shares of Excel Value (“VGO”). The proceeds of

such sale (if exceeding a nominal amount) will be distributed to those

Overseas Shareholders.

6.7 No share certificate will be issued in respect of the new Excel Value shares

upon completion of the Distribution In Specie and before completion of

the VGO.

6 180140v1

Immediately after the Distribution In Specie, the shareholdings of Excel Value and the

Company will be as follows:

* * *

Shareholders


100%


100%

Excel Value (BVI)

owes money to Subsidiaries

Company

100%