C&D Property Management Group Co., Ltd — M&A Activity 2000

Apr 5, 2000

Listed Company Information

GOOD FELLOW GP<0910> - Announcement The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. GOOD FELLOW GROUP LIMITED (incorporated in Bermuda with limited liability) DISCLOSEABLE TRANSACTION All the conditions of the Letter of Intent have been fulfilled and the Agreements have been entered into on 1st April, 2000 to formalise the terms agreed in the Letter of Intent. The transaction contemplated under the Agreements constitutes a discloseable transaction of the Company for the purpose of the Listing Rules. A circular containing further details of the Agreements will be despatched to the shareholders of the Company as soon as practicable. INTRODUCTION Reference is made to the announcement dated 9th February, 2000 (the "Announcement") of Good Fellow Group Limited (the "Company", together with its subsidiaries, the "Group") relating to the signing of a letter of intent by the Company with independent third parties for the investment in a joint venture to develop an online translation software system. Capitalised terms used herein have the same meaning as defined in the Announcement unless otherwise specified herein. The Directors are pleased to announce that all the conditions of the Letter of Intent have been fulfilled and the parties have entered into the following formal agreements (collectively, the "Agreements") on 1st April, 2000 to formalise the terms of the Letter of Intent: (i) a subscription and shareholders agreement (the "Invesco Agreement") between Crown Hero Assets Limited ("Crown Hero"), a wholly-owned subsidiary of the Company, and Upwell Profits in respect of the formation of an investment company, Profit Making Assets Limited ("Profit Making"); (ii) a joint venture agreement (the "JV Agreement") between Profit Making, Clear Winner and Hua Jian relating to the formation of a joint venture company, Jin Wei Hua Jian Web Translation Centre Company Limited (the "JV"); (iii) a system development and technical support agreement (the "Technical Agreement") between the JV and Hua Jian; and (iv) a licence agreement (the "Licence Agreement") between Clear Winner, the JV and Hua Jina relating to the licensing of the Exclusive Right by Clear Winner to the JV. THE INVESCO AGREEMENT 1. Parties Crown Hero and Upwell Profits 2. Subscription Each of Crown Hero and Upwell Profits agrees and undertakes to subscribe for new shares of HK$1.00 each together representing the entire interest in the capital of Profit Making at par in cash as follows: Number of shares % Total subscription price HK$ Crown Hero 24,480,000 51 24,480,000 Upwell Profits 23,520,000 49 23,520,000 48,000,000 100 48,000,000 Crown Hero and Upwell Profits have agreed that Profit Making shall cooperate with Clear Winner and Hua Jian in the establishment and operation of the business of bilingual (English and Chinese) translation on a website to be set up in Hong Kong through the formation of the JV. Payment of the subscription price by Crown Hero and Upwell Profits shall be payable within 10 days after the incorporation of the JV. The amount of HK$24.48 million to be contributed by Crown Hero will be from internal resources of the Group. 3. Directors The board of directors of Profit Making will consist of a total of 3 members. Crown Hero is entitled to appoint 2 directors (including the chairman of the board of directors) of Profit Making while Upwell Profits is entitled to appoint 1 director. THE JV AGREEMENT 1. Parties Profit Making, Clear Winner and Hua Jian 2. Subscription The parties to the JV Agreement have agreed to set up the JV for the purpose of providing online translation software system and related services through a website developed on the Internet in Hong Kong and Macau. The registered and paid up capital of the JV will be contributed by the parties in the following proportion: Amount of capital % HK$ Profit Making 48,000,000 60 Clear Winner 20,800,000 26 Hua Jian 11,200,000 14 80,000,000 100 The capital contribution to the JV by the respective parties will be satisfied as follows: (i) by cash in the amount of HK$48 million by Profit Making; (ii) by the licensing of the Exclusive Right to the JV by Clear Winner under the terms of the Licence Agreement; and (iii) by Hua Jian agreeing to the licensing of the Exclusive Right as referred to in (ii) above and the provision of technical support to the set up of the System for the JV under the terms of the Technical Agreement. The capital contribution by Profit Making will be made on the date of the JV Agreement becoming effective. The terms of the JV Agreement have been arrived at after arm's length negotiations. 3. Conditions The JV Agreement is conditional on: (i) the Licence Agreement being executed; (ii) the Technical Agreement being executed; (iii) documentary evidence being provided by Hua Jian relating to its ownership of the intellectual property right over the System, its appointment of Clear Winner as the sole agent for the System in Hong Kong and Macau and the approval of relevant PRC authorities for the licensing of the Exclusive Right by Clear Winner to the JV; (iv) (if necessary) the approval of the Ministry of Foreign Trade and Economic Cooperation of the PRC to the Licence Agreement, the Technical Agreement and the JV Agreement; and (v) a legal opinion being issued by a PRC lawyer acceptable to all the shareholders of the JV relating to, among other things, the legality and validity of the JV Agreement, the Licence Agreement and the Technical Agreement, and the validity of the documents in (iii) above to be provided by Hua Jian. If the above conditions cannot be fulfilled or waived by 30th June, 2000 or such later date as the parties may agree, the JV Agreement will lapse. 4. Directors It has been agreed that the board of directors of the JV will comprise 4 directors, 2 of whom are to be nominated by Profit Making, and 1 from each of Clear Winner and Hua Jian. TECHNICAL AGREEMENT 1. Parties The JV and Hua Jian 2. Principal terms (i) The JV agreed to appoint Hua Jian to construct the System and install related accessories for the JV for a total fee of HK$40,000,000. The fee is payable by the JV in the following manner: - as to 50% or HK$20,000,000 within 10 days from the date the JV Agreement becomes effective; - as to 40% or HK$16,000,000 upon the System is ready for trial run; and - as to the remaining 10% balance or HK$4,000,000 upon the development of the System has been completed and tested. (ii) The JV also agreed to appoint Hua Jian to provide technical support services for the future operation of the System. In consideration of Hua Jian agreeing to provide such service, 5% of the annual net profit after tax of the JV will be paid to Hua Jian. 3. Condition The Technical Agreement will only become effective upon the JV Agreement becoming effective. LICENCE AGREEMENT 1. Parties Clear Winner, the JV and Hua Jian 2. Principal terms (i) Hua Jian is the owner of the intellectual property right over the System. Clear Winner is the exclusive agent of Hua Jian which has the Exclusive Right to use the technology of the System in Hong Kong and Macau only. Hua Jian have agreed to the licensing of the Exclusive Right by Clear Winner to the JV in satisfaction of the HK$20.8 million capital contribution required to be made by Clear Winner to the JV under the JV Agreement. (ii) The Licence Agreement will become effective from the date the JV Agreement becomes unconditional. REASONS FOR THE AGREEMENTS The Group is principally engaged in the design, manufacture and sale of men's suits under the Group's own Good Fellow brand name as well as other renowned private labels of the Group's customers. The Directors believe that the Internet business offers immense commercial potential in future. The Directors consider that the investment in the JV will provide an opportunity for the Group to diversify its business scope into high-tech business and broaden its income base. GENERAL The transaction contemplated under the Agreements constitute a discloseable transaction of the Company under Chapter 14 of the Listing Rules. A circular containing further details of the Agreements will be despatched to the shareholders of the Company as soon as practicable. By Order of the Board Ng Leung Ho Chairman Hong Kong, 3rd April, 2000