Asia Securities Industry & Financial Markets Association
Block Trade Agreement for Hong Kong
Working Document, Version 1.0
Last Updated: 13 Mar 2013
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(ii) All market participants signing block trade agreements are responsible for exercising their own independent judgment as to: (a) what information, and in what form, they should require the seller/manager to comply with their legal and regulatory obligations; (b) the sufficiency, accuracy, completeness and relevance of any information provided by any seller/manager; and (c) whether a particular agreement is appropriate under the particular circumstances and conditions applicable to them.
(iii) For the avoidance of doubt, the fact that a seller/manager has submitted disclosures in accordance with the Template should not be regarded as an endorsement of that seller/manager by ASIFMA or an indication that the seller/manager is necessarily fit, proper or suitable for any particular user or purpose. ASIFMA accepts no responsibility for any information disclosed pursuant to or in accordance with this Template.
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Draft of 13 March 2013Block Trade Agreement for Hong Kong
[Note: This Form assumes that (1) the Company is a "foreign private issuer" (as defined in Rule 405 under the Securities Act); (2) there is no substantial U.S. market interest (as defined in Regulation S) in the equity securities of the Company; and (3) the Seller is an affiliate of the Company. If any of these assumptions does not apply to the trade at hand, appropriate modifications should be made in preparing the draft Block Trade Agreement. This Form also provides alternative provisions for instances in which the Seller is both an affiliate and a controlling shareholder; however, appropriate consideration should be given to the extent of due diligence and Company-related representations and/or requiring that the Company be a party to the agreement where the Seller has a controlling position and/or a board seat. In addition, this Form is tailored for shares of issuers listed on the Hong Kong Stock Exchange; appropriate modifications will need to be made to the Form for issuers listed in other jurisdictions.]
SECONDARY BLOCK TRADE AGREEMENT, made on [l]
[BETWEEN] [among]
(1) [Full legal name] (the "Seller"), a [company] registered in [jurisdiction] and having its registered address at [l]; [and] [
(2) [Full legal name] (the "Guarantor"), a [company] registered in [jurisdiction] and having its registered address at [l]; [and]][1]
(3) [Full legal name] (the "Manager"), a [company] registered in Hong Kong and having its registered address at [l].
WHEREAS
(A) Subject to the terms and conditions set out in this secondary block trade agreement (the "Agreement"), the Seller agrees to sell, and the Manager agrees, as agent of the Seller, to procure [on a best effort basis] purchasers to purchase[, or failing which, to purchase itself] certain [ordinary shares][2] of [par value] each (the "Shares") in the issued share capital of [description of issuer] (the "Company") (the "Sale"). [
(B) Subject to the terms and conditions set out in this Agreement, and in consideration of the Manager entering into this Agreement, receipt of which the Guarantor duly acknowledges, the Guarantor agrees to unconditionally and irrevocably guarantee to the Manager[, on an indemnity basis] the due and punctual performance and observation by Seller of all of its obligations, commitments, agreements, undertakings and covenants under this Agreement].
THE PARTIES AGREE AS FOLLOWS
1. Purchase and Sale
(a) The Seller hereby appoints the Manager, to the exclusion of all others, to act as its agent for the purpose of effecting the Sale on the terms and subject to the conditions set out in this Agreement and the Manager accepts such appointment.[3]
(b) Subject to the terms and conditions of this Agreement, the Seller agrees to sell, and the Manager agrees, as agent of the Seller, to procure [on a best effort basis] purchasers to purchase [l][4] Shares (the "Sale Shares") [or, failing which, to purchase the Sale Shares,] at a price of HK$[l] per Share (the "Purchase Price")].
[Alternative: use the following alternative language if this Agreement is to be signed before completion of bookbuild]
[Subject to the terms and conditions of this Agreement, the Seller agrees to sell, and the Manager agrees, as agent of the Seller, to procure [on a best effort basis] purchasers to purchase the Shares [or, failing which, to purchase the Shares,] at a price per Share (the "Purchase Price") to be determined pursuant to an accelerated bookbuilding process. The number of Shares to be sold (the "Sale Shares") and the Purchase Price will be subject to agreement by the parties following completion of the bookbuilding process and shall be set forth in an executed version of the Terms of Sale (the "Terms of Sale"), which shall be substantially in the form set forth in Annex A hereto. The date of execution of the Terms of Sale shall be the "Pricing Date". [It is agreed that if the Manager fails to procure purchasers for [minimum number of backstop Shares] Sale Shares (the "Backstop Shares") at or above the price of HK$[l] per Share (the "Backstop Price"), the Manager will, at its option, either (i) purchase the Backstop Shares at the Backstop Price; or (ii) procure purchasers for the Backstop Shares at the Purchase Price and in the event of (ii) occurring, the commission due to be paid to the Manager pursuant to Clause 4(a) will be reduced by an amount equal to the difference between the Backstop Price and the Purchase Price multiplied by the number of Backstop Shares, provided that the commission shall not be reduced to below zero.][5]]
(c) The Seller hereby acknowledges that the Manager is authorised to appoint one or more sub-placing [or sub-underwriting] agents or selling agents in the United States and/or elsewhere and that such agents shall be agents of the Seller relating to the Sale, and the Seller hereby authorises and confirms that it will ratify and approve all actions lawfully, properly and reasonably taken or to be taken by the Manager and such agents in connection with the Sale in accordance with the terms of this Agreement.
(d) Any transaction carried out by the Manager (and any agents referred to in paragraph 1(c) above) in accordance with this Agreement on behalf of the Seller shall constitute a transaction carried out at the request of the Seller, as agent for the Seller, and not in respect of or for the benefit of the Manager’s own account.
(e) In discharging its obligations in paragraph 1(b) above, the Manager or its nominees may elect to purchase some or all of the Sale Shares as principal from the Seller at the Purchase Price and, in that event, these Sale Shares may be onsold to purchasers at any prices as the Manager may determine, without any obligation to notify the Seller of such election or of the number of Sale Shares so purchased or of the prices at which those Sale Shares are sold to purchasers.
(f) The Purchase Price does not include, and the purchasers are responsible for and shall pay brokerage (if any), The Stock Exchange of Hong Kong Limited ("Hong Kong Stock Exchange") trading fee of [0.005]%, the Securities and Futures Commission of Hong Kong ("the "SFC") transaction levy of [0.003]% and Hong Kong ad valorem stamp duty at the rate of [0.1]% as may be payable by purchasers.
2. Closing
(a) The closing of the Sale (the "Closing") shall take place on the [l] business day after [the date of this Agreement] [the Pricing Date] or at such other time and/or date as the Seller and the Manager agree (the "Closing Date").
(b) Closing shall take place in the Central Clearing and Settlement System operated by Hong Kong Securities Clearing Company Limited ("CCASS") on a free of payment basis.[6] By no later than 9:00 a.m. on the Closing Date, the Seller shall procure its designated CCASS participant(s) to give an irrevocable delivery instruction to effect a book-entry settlement of the Sale Shares in accordance with this Agreement and the General Rules and the Operational Procedures of CCASS to the credit of the stock account of the CCASS participant(s) specified by the Manager before the Closing Date.
(c) Against delivery of the Sale Shares as set out in paragraph (b) above, the Manager shall pay or procure there to be paid an amount equal to the number of Sale Shares multiplied by the Purchase Price, less any amount authorised to be deducted pursuant to Clauses 4 and 5. Such payment shall be made for value on the Closing Date to such bank account held with a bank in Hong Kong as may be notified by the Seller to the Manager at least two business days before the Closing Date.
3. Conditions Precedent to Closing
The obligations of the Manager hereunder shall be subject to the following conditions:
(a) before the Closing, there shall not have occurred:[7]
(i) any material adverse change, or any development reasonably likely to involve a material adverse change, in the condition, financial or otherwise, or in the earnings, assets, business, operations or prospects of the Company, or the Company and its subsidiaries taken as a whole; or
(ii) any suspension or limitation of trading (a) in any of the Company's securities by the Hong Kong Stock Exchange [or any other exchange or over the counter market on which the Company's securities are admitted or listed for trading], or (b) generally on the Hong Kong Stock Exchange[, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Tokyo Stock Exchange, the London Stock Exchange, the New York Stock Exchange, the Nasdaq National Market] [or] [other relevant exchanges]; or
(iii) any outbreak or escalation of hostilities, act of terrorism, the declaration by Hong Kong[, the PRC, Japan, Singapore, the United States, the United Kingdom [or] any other member of the EEA [or other applicable jurisdiction(s)]] of a national emergency or war or other calamity or crisis; or
(iv) any material disruption in commercial banking or securities settlement or clearance services in Hong Kong[, the PRC, Japan, Singapore, the United States, the United Kingdom [or] any other member of the EEA [or other applicable jurisdiction(s)]] and/or a general moratorium on commercial banking activities having been declared by the relevant authorities in Hong Kong[, the PRC, Japan, Singapore, the United States, the United Kingdom [or] any other member of the EEA [or other applicable jurisdiction(s)]]; or
(v) any material adverse change or development involving a prospective material adverse change in or affecting the financial markets in Hong Kong[, the PRC, Japan, Singapore, the United States, the United Kingdom [or] any other member of the EEA [or other applicable jurisdiction(s)]] or in international financial, political or economic conditions, currency exchange rates, exchange controls or taxation,
that, in the sole judgment of the Manager, would make the placement of the Sale Shares or the enforcement of contracts to purchase the Sale Shares impracticable or inadvisable, or would materially prejudice trading of the Sale Shares in the secondary market;
(b) the Seller's representations and warranties made pursuant to this Agreement being true and accurate and not misleading as of the date of this Agreement[, the Pricing Date][8] and the Closing Date;
(c) the Seller having complied with all of the agreements and undertakings and satisfied all of the conditions on its part to be performed or satisfied under this Agreement on or before the Closing Date;