Vtech 2001 Annual Report Download - page 31

2. On 23rd October 2000, a sale and purchase agreement was entered into between VTech Information Systems
Holdings Limited (``VTI''), a wholly-owned subsidiary of the Company, and Mr. David MAK Wing Kwong, a
director and substantial shareholder of VTCS, pursuant to which VTI acquired 1,000,000 VTCS shares,
representing approximately 30% of the issued share capital of VTCS, from Mr. David MAK Wing Kwong. The
acquisition of the VTCS shares from Mr. David MAK Wing Kwong by VTI constituted a connected transaction for
the Company and was approved by the shareholders of the Company at a special general meeting held on
27th November 2000. Following the completion of the acquisition, VTCS became a wholly-owned subsidiary of
VTI.
3. On 28th November 2000, an agreement was entered into between VTech Electronics Holdings Limited (``VTE''),
a wholly-owned subsidiary of the Company, and Mr. Jean VINCENT, a person who was within the preceding 12
months a director of certain subsidiaries of the Company, for the incorporation of Fagoe Limited and VJV
Management SAS. Pursuant to the agreement, VTE subscribed for 32,000,000 shares in Fagoe Limited
(representing approximately 64% of its issued share capital) and 11,000,000 shares in VJV Management SAS
(representing approximately 73% of its issued share capital). The entering into of the agreement constituted a
connected transaction for the Company.
PROPOSED SEPARATE LISTING OF THE COMPANY'S SUBSIDIARY
On 23rd October 2000, the Company made a formal application to The Stock Exchange of Hong Kong Limited for a
proposed separate listing of shares of VTech eLearning Holdings Limited, a subsidiary of the Company, on the
Growth Enterprise Market of The Stock Exchange of Hong Kong Limited. Since there was a change in market
sentiment and together with market volatility, the initial public offering has been rescheduled.
MATERIAL LEGAL PROCEEDINGS
On 31st March 2000, the Group acquired from Lucent Technologies Consumer Products, L.P. (``LTCP'') and Lucent
Technologies Inc. (``Lucent'') its consumer wired business for the sum of US$126.1 million. The Agreement for the
Purchase and Sale of Stock and Assets (``APSA'') included certain representations, warranties and covenants by
LTCP and Lucent with respect to the consumer wired business.
On 25th January 2001, the Company and VTech Electronics Netherlands BV (collectively ``VTech'') filed a complaint
in the United States District Court for the Southern District of New York seeking damages in excess of US$300.0
million against Lucent Technologies Inc. and Lucent Technologies Consumer Products, L.P. for fraud and breaches
of the APSA.
Although an actual evaluation of the potential success of the outcome of this matter cannot be determined at this time
since the litigation is still in the early stages, the directors believe the Group has a strong case.
ANNUAL GENERAL MEETING SPECIAL BUSINESS
The following special business will be proposed at the annual general meeting to be held on 10th August 2001 :
1. the grant to the directors of the Company of a general mandate to repurchase shares of the Company;
2. the grant to the directors of the Company of a general mandate to allot, issue and deal with additional shares of
the Company;
3. the extension of the general mandate which will be granted to the directors of the Company to allot, issue and
deal with additional shares of the Company by adding to the number of shares repurchased under the
repurchase mandate; and
4. the adoption of the 2001 Share Option Scheme.
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VTech Holdings Ltd Annual Report 2001
Report of the Directors