SUPPLEMENTAL AGREEMENT RELATING TO THE MASTER SALE AND PURCHASE AGREEMENT dated 14 April 2005

Exhibit 10.1

 

DATED 29 SEPTEMBER 2005

 

EASTERN PACIFIC CIRCUITS HOLDINGS LIMITED

 

AND

 

MERIX CORPORATION

 

 

SUPPLEMENTAL AGREEMENT RELATING TO

THE MASTER SALE AND PURCHASE AGREEMENT

dated 14 April 2005

 

 

Baker & McKenzie

14th Floor Hutchison House

Hong Kong

 

Telephone: (852) 2846-1888

Fax: (852) 2845-0476

CONTENTS

 

THIS SUPPLEMENTAL AGREEMENT is made on 29 September 2005

 

BETWEEN:

 

(1)	EASTERN PACIFIC CIRCUITS HOLDINGS LIMITED , a company incorporated under the laws of the Cayman Islands, whose registered office is at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies (the “ Seller ”); and

 

(2)	MERIX CORPORATION , a company incorporated in the State of Oregon, whose registered office is at 1521 Poplar Lane, P.O. Box 3000, F4-234, Forest Grove, OR 97116, United States of America (the “ Buyer ”).

 

RECITALS:

 

(A)

By a master sale and purchase agreement dated 14 April 2005, as varied by letter agreements dated 28 July 2005 and 16 September 2005 (the “ SPA ”) between the Seller and the Buyer, the Seller has agreed to sell and the Buyer has agreed to acquire certain businesses and assets/shares of certain subsidiaries directly and indirectly owned by the Seller, upon the terms and subject to the conditions set out in the SPA (the “ Acquisition ”).

 

(B)	As at the date hereof, Completion of the Acquisition has not taken place. Prior to Completion, the Seller and the Buyer have agreed to amend certain terms of the SPA on the terms and subject to the conditions set out herein.

 

THE PARTIES AGREE as follows:

 

1.	INTERPRETATION

 

1.1	Capitalised terms used, but not defined, herein shall have the meaning given to them in the SPA.

 

1.2	The provisions of Clauses 1.2.5, 1.2.7 and 1.4 of the SPA shall apply mutatis mutandis to the terms of this Supplemental Agreement.

 

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2.	AMENDMENTS TO THE SPA

 

2.1

It is agreed by the parties hereto that, with effect from the date of this Supplemental Agreement (the “ Effective Date ”) the SPA shall be amended and restated by the terms of the Amended and Restated Master Sale and Purchase Agreement in the form set out in the Annex to this Supplemental Agreement.

 

2.2

The Seller and the Buyer hereby confirm that the accrued rights and obligations of the parties under the terms of the SPA remain in full force and effect following the execution of this Supplemental Agreement and that, save as amended by this Supplemental Agreement, the terms of the SPA will remain in full force and effect from the Effective Date.

 

2.3	Nothing in this Supplemental Agreement shall reduce or limit any right of the Seller or the Buyer or any liability of the Seller or the Buyer under the SPA.

 

3.

GENERAL

 

3.1

This Supplemental Deed may be executed in any number of counterparts and by different parties on separate counterparts which when taken together shall be deemed to constitute one instrument. The parties agree that the execution of this Supplemental Agreement may be effected by the exchange of facsimile signature pages, with the exchange of the executed originals as soon as reasonably possible thereafter.

 

3.2	Neither party shall assign, transfer or in any other way alienate any of its rights under this Supplemental Agreement whether in whole or in part without the prior written consent of the other party.

 

3.3	A variation of this Supplemental Agreement is only valid if it is in writing and signed by or on behalf of each party.

 

3.4	Any notice or other communication under or in connection with this Supplemental Agreement shall be served in accordance with Clause 28 of the SPA.

 

3.5

If any provision or part of a provision of this Supplemental Agreement shall be, or be found by any authority or court of competent jurisdiction to be, invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions or parts of such provisions of this Supplemental Agreement, all of which shall remain in full force and effect.

 

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3.6	No failure of a party to exercise, and no delay or forbearance in exercising, any right or remedy in respect of any provision of this Supplemental Agreement shall operate as a waiver of such right or remedy.

 

4.	GOVERNING LAW AND JURISDICTION

 

This Supplemental Agreement is governed by the laws of the Hong Kong Special Administrative Region of the People’s Republic of China. Any dispute arising under this Supplemental Agreement shall be resolved in accordance with Clause 29 of the SPA.

 

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IN WITNESS WHEREOF the parties hereto have executed this Supplemental Agreement on the date first above written.

 

 

 

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ANNEX

 

Form of Amended and Restated Master Sale and Purchase Agreement

 

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DATED 14 APRIL 2005

 

EASTERN PACIFIC CIRCUITS HOLDINGS LIMITED

 

AND

 

MERIX CORPORATION

 

AMENDED AND RESTATED

MASTER SALE AND PURCHASE AGREEMENT

 

Baker & McKenzie, Hong Kong

14th Floor, Hutchison House

10 Harcourt Road

Hong Kong

CONTENTS

 

 

i

 

ii

B&M comments: 28 September 2005

 

THIS AGREEMENT is made on 14 April 2005

 

BETWEEN:

 

(1)	EASTERN PACIFIC CIRCUITS HOLDINGS LIMITED , a company incorporated under the laws of the Cayman Islands, whose registered office is at Century Yard, Cricket Square, Hutchins Drive, P.O. Box 2681GT, George Town, Grand Cayman, British West Indies (the “Seller” ); and

 

(2)	MERIX CORPORATION , a company incorporated in the State of Oregon, whose registered office is at 1521 Poplar Lane, P.O. Box 3000, F4-234, Forest Grove, OR 97116, United States of America (the “ Buyer ”).

 

RECITALS:

 

(A)

Each of the companies listed in part 1 of schedule 1 (the “ Business Sellers ”), Eastern Pacific Circuits (Cayman) Limited (“ EPC Cayman ”), a company incorporated under the laws of the Cayman Islands, and Eastern Pacific Circuits Limited (“ EPCL ”), a company incorporated under the laws of the Cayman Islands, is a direct or indirect wholly-owned subsidiary of the Seller.

 

(B)

EPC Cayman is the beneficial owner of all of the issued shares in the capital of Eastern Pacific Circuits Investments Limited (“ EPCI HK ”), a company incorporated under the laws of Hong Kong, and EPCL is the registered holder and beneficial owner of all of the issued shares in the capital of Eastern Pacific Circuits Investments (Singapore) Pte Ltd (“ EPCI Singapore ”), a company incorporated under the laws of Singapore.

 

(C)

The Seller has agreed to procure (a) the sale by each of the Business Sellers of its business and assets, (b) the sale by EPC Cayman of all of the issued shares in the capital of EPCI HK (the “ HK Shares ”) and (c) the sale by EPCL of all of the issued shares in the capital of EPCI Singapore (the “ Singapore Shares ”), in each case on the terms and subject to the conditions set forth in this Agreement.

 

THE PARTIES AGREE as follows:

 

1.	INTERPRETATION

 

1.1	In this Agreement:

 

“ Accepting Employees -HK ” has the meaning set forth in clause 17.2.4 ;

 

“ Accounts Receivable ” means, in relation to each Business, all the book and trade debts, notes, receivables and other debts and amounts owing to the relevant Business Seller in connection with the relevant Business (and whether or not yet due and payable) at Completion (including, without limitation, trade debts, deposits, prepayments, retrospective rebates and overpayments) all rights in relation thereto and the benefit of all guarantees or other security in respect thereof and interest thereon;

“ Acquiring Buyer Company ” has the meaning set forth in clause 11.1.2 ;

 

“ Actual Closing Cash Amount ” means the aggregate amount of the bank balances, cash, cash on deposit, short-term securities and investment accounts, including amounts for which cheques have been received by the relevant member of the EPCI HK Group and the EPCI Singapore Group or deposited in the bank accounts of the relevant member of the EPCI HK Group and the EPCI Singapore Group for which cheques have not cleared the drawer’s bank accounts at Completion and which were collected prior to the delivery of the Completion Statement, of each member of the EPCI HK Group and the EPCI Singapore Group as at the close of business on the day immediately before the Completion Date provided that there shall be deducted from such aggregate amount amounts for which cheques have been written by the relevant member of the EPCI HK Group and the EPCI Singapore Group, which cheques have not cleared the bank account as of Completion;

 

“ Actual Adjusted 2005 EBITDA ” means the audited consolidated profit before taxation, interest, depreciation and amortisation in respect of each Business and each member of the EPCI HK Group and EPCI Singapore Group for the financial year ended 31 December 2005 less all payments made or accrued in respect of capital leases (as defined in HK GAAP) determined in accordance with clause 8.3 and adjusted in accordance with Part A of schedule 14 ;

 

“ Amount Claimed ” has the meaning set out in clause 7.1.1 ;

 

“ Approval ” has the meaning set forth in paragraph 8 of Schedule 3 ;

 

“ Assumed Liabilities ” means all Liabilities of the Business Sellers as at Completion (including accounts payable) in connection with the relevant Business and/or the Business Assets, including, without limitation, those Liabilities set out in part 4 of schedule 1 and excluding the Excluded Liabilities;

 

“ Auditors ” means PricewaterhouseCoopers, the auditors of the Group and the Buyer;

 

“ Available Records ” has the meaning set out in clause 21.1 ;

 

“ Borrowings ” means all sums outstanding under (a) the credit agreement dated 10 August 2000 (as amended and supplemented from time to time) between, inter alia, (i) Eastern Pacific Circuits Limited (formerly known as Pacific Circuits Limited) as parent borrower, (ii) Eastern Pacific Circuits (HK) Ltd (formerly known as Wong’s Circuits Limited) as subsidiary borrower, (iii) Standard Chartered Bank (Hong Kong) Limited as administrative agent and a group of lenders, pursuant to which the lenders agreed to provide US$150,000,000 to Eastern Pacific Circuits Limited and Eastern Pacific Circuits (HK) Limited; and (b) a facility agreement dated 28 April 2004 between Eastern Pacific Investments (Singapore) Pte Limited and Standard Chartered Bank (Hong Kong) Limited as administrative agent, and a group of lenders pursuant to

 

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which the lenders agreed to provide a US$5,100,000 facility to Eastern Pacific Circuits Investments (Singapore) Pte Limited, being all interest bearing borrowings and Indebtedness in the nature of borrowings of the Group from financial institutions;

 

“ Business ” means, in relation to each Business Seller, the business carried on by that Business Seller as at Completion, and excluding only the Excluded Assets;

 

“ Business Assets ” means, in relation to each Business, all the property, undertaking, benefits, title, rights and assets of the relevant Business Seller, including, without limitation, the categories of assets set out in part 2 of schedule 1 and excluding only the Excluded Assets;

 

“ Business Claims ” means the benefit of all rights and claims arising from, or coming into existence as a result of, the carrying on of any Business by a Business Seller whether arising on, prior to or after Completion, other than rights and claims relating to the Excluded Assets or the Excluded Liabilities;

 

“ Business Goodwill ” means the goodwill relating to each Business, together with the right for the Buyer or relevant Buyer’s Group Company to represent itself as carrying on that Business in succession to the relevant Business Seller;

 

“ Business IP ” means, in relation to each Business, the Intellectual Property owned by the relevant Business Seller which is used in connection with the Business;

 

“ Business Contracts ” means, in relation to each Business Seller, all the contracts, engagements, licences, guarantees, sale and purchase orders and other commitments relating to the relevant Business at Completion, which have been entered into or undertaken by or on behalf of, or the benefit of which are held on trust for or have been assigned to, that Business Seller which in any case are current uncompleted or unperformed or in respect of which that Business Seller has any rights, claims, benefits entitlements, Liabilities or obligations relating to the Business, including the Business Insurance Policies, the Hong Kong Lease (provided that consent of assignment of the Hong Kong Lease is obtained from the Hong Kong Science and Technology Park Corporation) and agreements or other documents relating to ownership or occupation of the Business Properties, but excluding all employment contracts;

 

“ Business Day ” means a day other than a Saturday or Sunday or public holiday in Hong Kong, Canada, Singapore, the Cayman Islands or the United States of America;

 

“ Business Insurance Policies ” means the insurance policies set out in part 8 of schedule 1 ;

 

“ Business Motor Vehicles ” means, in relation to each Business, the motor vehicles owned by the relevant Business Seller and used by it for the purposes of that Business;

 

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“ Business Plant and Equipment ” means, in relation to each Business, all the loose plant, machinery, equipment, tooling and furniture of the relevant Business Seller (not being business fixtures and fittings forming part of the Business Properties) used for the purposes of that Business;

 

“ Business Properties ” means the properties owned by and occupied by the Business Sellers, details of which are set out in part 6A of schedule 1 ;

 

“ Business Records ” means, in relation to each Business, any lists of present and former customers and suppliers, business plans and forecasts, notices, enquiries, orders, correspondence, computer disks, tapes or other machine readable or other records of a financial or marketing nature to the extent that they relate to the Business and are owned by the Business Seller but excluding any of the foregoing to the extent that they are Excluded Assets;

 

“ Business Sellers ” has the meaning set forth in Recital (A) ;

 

“Business Tax” means, all forms of taxation, deductions, withholdings, duties, imposts, levies, fees, charges and rates imposed, levied, collected, withheld or assessed by any Government Authority and any interest, additional taxation penalty, surcharge or fine in connection therewith payable by any Business Seller relating to the use and ownership of the Business Assets and the operation of the Business prior to the Completion Date;

 

“ Buyer MPF Scheme ” means the mandatory provident fund scheme established by the Buyer or the relevant Buyer’s Group Company for its Hong Kong employees;

 

“ Buyer Obligation ” means any representation, warranty or undertaking to indemnify given by the Buyer to the Seller under this Agreement or any of the Other Documents;

 

“ Buyer’s Completion Documents ” has the meaning set out in clause 11.1.4 ;

 

“ Buyer’s Group ” means the Buyer or a company which is its ultimate parent company and each subsidiary of the Buyer and of its ultimate parent company from time to time and includes, for the avoidance of doubt, after Completion, each of EPCI HK, EPCI Singapore and their subsidiaries, and “ Buyer’s Group Company ” means any one of them;

 

“ Canadian Property ” means all of Eastern Pacific Circuits (Canada) Limited’s rights, title and interest in the property situated at Units 37, 38 and 39, Level 1, York Region Condominium Corporation No. 711, 145 Royal Crest Court, Markham, Ontario, Canada;

 

“ Cash ” means, in relation to each Business, all cash (including cash in-hand and cash at bank), cash on deposit and short-term securities and investment accounts held by the relevant Business Seller for the purposes of the Business;

 

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“ Closing Working Capital ” means Working Capital as at the Completion Date;

 

“ Completion ” means completion of the sale and purchase of the Businesses, the Business Assets, the HK Shares and the Singapore Shares in accordance with this Agreement;

 

“ Completion Date ” means the later of: (i) 15 June 2005; and (ii) the date which is five (5) Business Days after the date on which the last of the Conditions is satisfied or waived provided that this date shall not be earlier than the date which is 60 days after the date on which the Condition in clause 4.1.1(a) is satisfied or waived or such other date as may be agreed by both parties in writing;

 

“ Completion Statement ” has the meaning set out in clause 6.1 ;

 

“ Condition ” means a condition set out in clause 4.1 and “ Conditions ” means all those conditions;

 

“ Consent ” has the meaning set out in clause 16.3 ;

 

“ Costs ” means obligations, Liabilities, losses, damages, costs (including reasonable legal costs) and expenses (including interest and Tax), actions, proceedings, claims, demands, penalties and compensation awards in each case of any nature whatsoever;

 

“ Debt Amount ” means the Borrowings of the Group on the Completion Date, as determined by the Lenders and notified in writing to the parties no later than three (3) Business Days before the Completion Date and, for the avoidance of doubt, such amount shall be expressed in US$;

 

“ Deduction ” has the meaning set out in clause 7.1.1 ;

 

“ Defaulting Party ” has the meaning set out in clause 5.4 ;

 

“ Desay Land Premium Payment ” means 50% of RMB5,915,133 being the amount payable to (Desay) pursuant to the contribution of the land use right agreement dated 18 November 2004 between Eastern Pacific Circuits Investments (Singapore) Pte Limited, (Desay) and Eastern Pacific Circuits (Huiyang) Ltd in respect of the transfer by (Desay) of the land to Eastern Pacific Circuits (Huiyang) Ltd. by way of capital contribution less the aggregate of any instalment payments made by Eastern Pacific Circuits (Huiyang) Ltd to (Desay) during the period from and including 1 January 2005 up to and including the Completion Date provided that where this results in a negative figure then, for the purposes of clause 6.6.1 , the negative amount shall be added to the Closing Working Capital rather than subtracted from the Closing Working Capital;

 

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“ Disclosed ” means referred to in the Disclosure Letter;

 

“ Disclosed Financial Statements ” has the meaning given to it in paragraph 6.2 of schedule 3 ;

 

“ Disclosure Letter ” means a letter of the date hereof from the Seller to the Buyer making disclosures in respect of the Warranties;

 

“ EA Transferring Employees - Singapore ” means the Transferring Employees-Singapore who fall within the ambit of the Singapore Employment Act;

 

“ Earnout Statement ” has the meaning set out in clause 8.1 ;

 

“ EBITDA Earnout Consideration ” shall be determined in accordance with clause 8.4 ;

 

“ Encumbrance ” means a lien, charge, pledge, any interest or equity of any persons (including, without limitation, any right to acquire, option or right of pre-emption) and any charge, pledge, mortgage, security interest, assignment, power of sale or other encumbrance or right exercisable by a third party (whether or not perfected) having similar effect but excluding the Permitted Encumbrances;

 

“ Environmental Laws ” means any statute, ordinance, regulation, rule, policy, interpretation, guideline or decree (including consent decrees, guidance documents and administrative orders) in effect as of Completion, applicable to any Target Group Company, its business, or the real property from which it conducts its business, enacted or promulgated by any Government Authority having jurisdiction over any Target Group Company for the activities it conducts that (i) regulates the exposure to, the amount, form, presence, emission, discharge, release, threat of release, processing, use, treatment, storage, disposal, handling, generation or production of any hazardous substance, including any permit, license, approval, consent or authorization required therefor; (ii) requires any reporting or dissemination of or access to information regarding hazardous substances, including warnings or notices to employees; or (iii) relates to or addresses human health or safety, including occupational health and safety;

 

“ EPC Cayman ” has the meaning set forth in Recital (A) ;

 

“ EPCI HK ” has the meaning set forth in Recital (B) ;

 

“ EPCI HK Group ” means EPCI HK, Eastern Pacific Circuits (Dongguan) Ltd and Lomber Circuits (Huizhou) Limited;

 

“ EPCI Singapore ” has the meaning set forth in Recital (B) ;

 

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“ EPCI Singapore Group ” means EPCI Singapore, Eastern Pacific Circuits (Huiyang) Limited and Eastern Pacific Circuits (Huizhou) Limited;

 

“ EPCL ” has the meaning set forth in Recital (A) ;

 

“ Estimated Closing Cash Amount ” means the aggregate amount estimated by the Seller of the bank balances, cash, cash on deposit, short-term securities and investment accounts, including amounts for which cheques have been received by the relevant member of the EPCI HK Group and the EPCI Singapore Group or deposited in the bank accounts of the relevant member of the EPCI HK Group and the EPCI Singapore Group which cheques have not cleared the drawer’s bank accounts, of each member of the EPCI HK Group and the EPCI Singapore Group as at the close of business on the day immediately before the Completion Date provided that there shall be deducted from such aggregate amount amounts for which cheques have been written by the relevant member of the EPCI HK Group and the EPCI Singapore Group, which cheques have not cleared the bank account as of Completion;

 

“ Event ” means an event, act, transaction or omission including, without limitation, a receipt or accrual of income or gains, distribution, failure to distribute, acquisition, disposal, transfer, payment, loan or advance;

 

“ Excluded Assets ” means the assets set out in part 3 of schedule 1 ;

 

“ Excluded Liabilities ” means the liabilities set out in part 5 of schedule 1 ;

 

“ Expert ” means an independent firm of chartered accountants mutually appointed by the parties hereto or by the President of the Hong Kong Society of Accountants for the time being, as the case may be, in accordance with clause 6.3 and/or clause 8.5 ;

 

“ Financial Statements ” means the audited consolidated financial statements of the Group for each of the financial years ended 31 December 2004, 31 December 2003, 31 December 2002 and 31 December 2001 (such financial statements including without limitation, in each case a balance sheet, profit and loss account and cash flow statement together with the notes thereon);

 

“ Fundamental Warranty ” means a statement contained in paragraphs 1, 2, 2A, 3, 4 and 5.2 in schedule 3 and “ Fundamental Warranties ” means all those statements;

 

“ Fundamental Warranty Cap ” means at any given time, the liability cap determined in accordance with the table set out in Part 1 of Schedule 9 by reference to the relevant Total Consideration set out in Column 1 of Part 1 of Schedule 9 on the relevant date referred to in sub-columns 2(a), (b), (c) or (d) of Part 1 of Schedule 9;

 

“ Fundamental Warranty Claim ” means a claim by the Buyer under or pursuant to the provisions of clause 9.1 in respect of any Fundamental Warranty;

 

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“ FY2003 Audited Accounts ” means the Financial Statements of the Group for the year ended 31 December 2003;

 

“ FY2004 Audited Accounts ” means the Financial Statements of the Group for the year ended 31 December 2004;

 

“ FY2004 EBITDA ” means the audited consolidated profit before taxation, interest, depreciation and amortisation of the Group for the financial year ended 31 December 2004 and derived from the FY2004 Audited Accounts, adjusted to add back all costs and expenses relating to or incurred in connection with the restructuring of the Debt Amount;

 

“ FY2004 Working Capital ” means the Working Capital as at 31 December 2004, derived from the FY2004 Audited Accounts;

 

“ FY2005 Monthly Management Accounts ” means the unaudited consolidated monthly management accounts of the Group, together with the notes thereon (if any), and the consolidation worksheets of the Group for the period from 1 January 2005 to the last day of the calendar month immediately preceding the Completion Date, provided that if the Completion Date is less than four (4) weeks after the end of any calendar month, then the unaudited consolidated monthly management accounts of the Group together with the notes thereon (if any) and the consolidation worksheets of the Group shall be delivered in respect of the period from 1 January 2005 to the last day of the calendar month immediately preceding such month end;

 

“ General Claim Cap ” means at any given time, the liability cap determined in accordance with the table set out in Part 2 of Schedule 9 by reference to the relevant Total Consideration set out in Column 1 of Part 2 of Schedule 9 on the relevant date referred to in sub-columns 2(a), (b) or (c) of Part 2 of Schedule 9;

 

“ Government Authority ” means any nation or government, any state, municipality, or other political subdivision thereof, and any agency, bureau, board commission, department or other entity exercising executive, legislative, judicial, regulatory, administrative or other similar functions;

 

“ Group ” means EPCL and each of its subsidiaries and “ Group Company ” means any one of them;

 

“ HK GAAP ” means the generally accepted accounting standards, principles and practices applicable in Hong Kong;

 

“ HK Shares ” has the meaning set forth in Recital (C) ;

 

“ HKIAC ” has the meaning set out in clause 29.2 ;

 

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“ Hong Kong ” means the Hong Kong Special Administrative Region of the People’s Republic of China;

 

“ Hong Kong Lease ” means the lease for the property situated at Section F of Tseung Kwan O Town Lot No. 39 and Extensions thereto, New Territories, Hong Kong dated 17 July 2000 between The Hong Kong Science and Technology Park Corporation and Eastern Pacific Circuits Property Limited, as amended;

 

“ Indebtedness ” means, in relation to the Target Group, any borrowings and indebtedness (including by way of acceptance credits, finance leases, loan stocks, bonds, debentures, notes, debt or inventory financing or sale and lease back arrangements, overdrafts or any other arrangements the purpose of which is to borrow money) owed to any banking, financial, acceptance credit, lending or other similar institution or organisation and any institutional investor which is not another member of the Target Group;

 

“ Initial Consideration ” has the meaning set forth in clause 3.1 ;

 

“ Intellectual Property ” means (a) all patents, trademarks, service marks, logos, and corporate names registered designs, applications and rights to apply for any of those rights, internet domain names, copyrights and unregistered trade marks and service marks; (b) research and development information, financial, marketing and business data, pricing and costs information, trade secrets and confidential business information; and (c) the right to sue for past infringements of any of the foregoing rights;

 

“ Intellectual Property Rights ” means the all Intellectual Property owned or used by the Target Group (including the Business IP);

 

“ Intra-Group Indebtedness ” means all outstanding amounts owing immediately prior to Completion to or from the Target Group, on the one hand, and the EPC Group (which for the purposes of this definition shall mean the Seller’s Group excluding the Target Group) on the other hand;

 

“ Inventory ” means, in relation to each Business, all raw materials, supplies, work in progress, parts and components and finished goods held, used or owned by the relevant Business Seller at Completion;

 

“ Law ” means any law, rule, regulation, order, writ, judgment, decree, injunction, determination or award;

 

“ Lenders ” means the financial institutions to which the Borrowings are owed;

 

“ Liabilities ” means all liabilities, duties and obligations of every description, whether deriving from contract, common law, statute or otherwise, whether present or future, actual or contingent or ascertained or unascertained and whether owed or incurred severally or jointly or as principal or surety;

 

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“ Management Accounts ” means the unaudited consolidated financial statements of the Group for each of the financial years ended 31 December 2003 and 31 December 2004 (such financial statements including without limitation, in each case a balance sheet, profit and loss account and cash flow statement together with the notes thereon, (if any));

 

“ Material Adverse Change ” means any event, condition, circumstance, incident or fact that is or would reasonably be expected to have a material adverse effect on the business or financial position of the Target Group as a whole, or the assets (including intangible assets) or liabilities of the Target Group as a whole;

 

“ Material Contracts ” has the meaning set forth in paragraph 13.1 of schedule 3 ;

 

“ Merix Caymans ” means Merix Caymans Trading Company Limited, an indirect wholly owned subsidiary of Buyer;

 

“ Minority Dividend ” means the dividend(s) declared by Eastern Pacific Circuits (Huizhou) Ltd. of US$1,600,000 that is payable to