Invitation for the Public Sale of the PSE Trading Right Held by Sapphire Securities Philippines, Inc.

March 26, 2013 PSE MEMORANDUM NO. CN-0008-13 TO : All Interested Parties SUBJECT : Invitation for the Public Sale of the PSE Trading Right Held by Sapphire Securities Philippines, Inc. Please be informed that the Trading Participants Relations Section of The Philippine Stock Exchange, Inc. ("PSE") will commence the proceedings for the public sale of the PSE trading right held by Sapphire Securities Philippines, Inc. The details of the said sale are provided in the attached Invitation to Bid. The schedule/deadlines for the public sale are: Deadline for registration & May 16, 2013, on or before submission of requirements 4:00 p.m. Deadline for submission of bid June 5, 2013, on or before forms and bid envelopes (for 4:00 p.m. who passed pre-qualification process) Date of opening of sealed bid July 5, 2013, 10:00 a.m. envelopes Please be guided accordingly. (SGD.) J. ARGEL G. ASTUDILLO Vice President & Head, Governance, Risk & Compliance ATTACHMENT Invitation to Bid The Philippine Stock Exchange, Inc. ("Exchange") invites all interested parties to participate in and bid for the PSE Trading Right held by SAPPHIRE SECURITIES PHILIPPINES, INC. ("Trading Right"). The Trading Right is the subject of a Sheriff's Certificate of Sale dated April 23, 2007 issued in NLRC-NCR 00-06-06341-99 entitled "Kevin G. Khoe vs. Sapphire Securities Phils., Inc., et al.". In the said Sheriff's Certificate of Sale, the Trading Right was sold/transferred/conveyed unto NEZPERCEZ TRADING CORPORATION with address at 5A Greenrich Mansion, Pearl Drive cor. Lourdes Road, Ortigas Center, Pasig City. The validity of said Sheriff's Certificate of Sale was affirmed with finality by the Supreme Court in a Decision dated March 24, 2010. A summary of the facts concerning the said Sheriff's Certificate of Sale is stated in Annex "A" hereof. TcCSIa Given the involuntary loss of the Trading Right, the same is deemed ipso facto vacant and its disposition shall be invested solely in the Board of Directors of the Exchange pursuant to the Exchange's Amended By-Laws and Rules Governing Trading Rights and Trading Participants. The public bidding of the Trading Right shall be held on July 5, 2013, ten o'clock in the morning at the 3rd Floor, Conference Room, PSE Plaza, Ayala Triangle, Ayala Avenue, Makati City. The minimum bid price for the Trading Right shall be Pesos: Ten Million Only (PhP10,000,000.00) . The Exchange, through its Trading Participants Relations Section, shall conduct the public bidding in accordance with the Rules on the Public Sale of the Trading Right of Sapphire Securities Philippines, Inc. ("Rules"), a copy of which is attached hereto as Annex "B". Registration: Interested parties should register as a bidder and submit the following documents: a. Application Letter expressing the intention to acquire the Trading Right; b. Name, contact number and address of bidder or, if in case of a corporation or partnership, the name, contact number and address of its duly authorized representative, who shall automatically be the contact person; c. Tax Identification Number of bidder; d. Two (2) valid and acceptable Identification cards of bidder or its representative; e. Certified true copy of the proof or relevant authority (For corporation and partnerships Articles of Incorporation/Partnership, Bylaws, and Board or Partnership Resolution/Secretary's Certificate authorizing the corporation or partnership to acquire the Trading Right. The agent/representative's signature must appear on the face of the board or partnership Resolution/Secretary's Certificate); DAcaIE f. Company profile and latest financial statements audited by a SEC-accredited external auditor; g. Curriculum Vitae, latest Income Tax Return and Statement of Assets and Liabilities of all stockholders owning 5% or more of the outstanding shares of stock of the applicant-corporation and, for corporate shareholders of the applicant, latest Audited Financial Statements and General Information Sheet; h. Reference letters from at least three (3) reputable persons or institutions in the Philippines, one of which must be a commercial bank; i. Certified true copy of license from the SEC to operate as broker and dealer of securities and a copy of the Certificate from the Securities Clearing Corporation of the Philippines, if available; and j. Duly executed agreement to be bound by the Rules and the results of the public sale. Interested parties must register with, and submit the above-mentioned requirements on or before four o'clock in the afternoon of May 16, 2013 . All documentary requirements, inquiries and clarifications should be addressed to: J. ARGEL G. ASTUDILLO Vice President & Head Governance, Risk & Compliance The Philippine Stock Exchange, Inc. Philippine Stock Exchange Plaza, Ayala Triangle, Ayala Avenue, Makati City Tel. No. : (02) 688-7472; E-mail: [emailprotected] Submission of Bids: Bidders who passed the pre-qualification process (see Annex "B") conducted by the Exchange must pay, upon receipt of the appropriate notice from the Exchange, the non-refundable Participation Fee in the amount of Pesos: Five Thousand Only (PhP5,000.00) . Following said payment, the Exchange shall provide the bidder with the bid envelope and the bid form. The bidder shall seal in the bid envelope to be submitted to the Exchange: TcSHaD i. The duly accomplished bid form indicating the offered price; and ii. A manager's/cashier's check payable to NEZPERCEZ TRADING CORPORATION in the amount of the bid issued by a Metro Manila commercial bank acceptable to the Exchange as stated in the bid form. The bidder or its authorized representative shall sign the bid form which shall also be deemed the bidder's conformity to the Rules, result of the public sale and the rules of the Exchange. All bid forms and bid envelopes must be submitted to the Exchange at the latest by four o'clock in the afternoon of June 5, 2013 . Opening of sealed envelopes shall start promptly on July 5, 2013 at ten o'clock in the morning at the 3rd Floor, Conference Room, PSE Plaza, Ayala Triangle, Ayala Avenue, Makati City. The Exchange shall only accept a bid showing that the bidder (i) unconditionally agrees to be bound by, and comply with, the Rules and the result of the public sale; and (ii) irrevocably and unconditionally offers to pay the purchase price immediately. The selected winning bidder shall pay all costs and expenses, including taxes, for the conveyance of the Trading Right to the winning bidder. Note, however, that notwithstanding the award of the Trading Right to the winning bidder, the approval of the Board of Directors of the Exchange on (i) the conveyance of the Trading Right to the winning bidder; and (ii) the admission of the winning bidder as a trading participant of the Exchange is still necessary. The Exchange shall have the right to reject any and all bids and declare a failure of bidding when circumstances warrant. The Exchange shall also have the right to interpret, modify, supplement or revise any aspect of the Rules and other aspects of the public bidding, for any reason whatsoever, and without giving prior notice when the circumstances warrant. Interested parties and/or bidders shall be notified subsequently of such modifications, supplements or changes. aDcHIC ANNEX A Background of the Certificate of Sale in favor of Nezpercez Trading Corporation covering the PSE Trading Right currently in the name of Sapphire Securities Philippines, Inc. On April 16, 2007, The Philippine Stock Exchange, Inc. ("Exchange") received a copy of the Notice of Levy on Execution of Personal Property dated April 16, 2007 issued by the Sheriffs of the National Labor Relations Commission stating that a levy/attachment was made on the trading right in the name of Sapphire Securities Phils., Inc. ("Sapphire Securities") and directing the Exchange not to deliver, transfer or otherwise dispose of the said trading right under its possession or control to any person or entity except to the court. Said Notice of Levy gave rise to the execution sale conducted on April 23, 2007 involving the trading right of Sapphire Securities in the case entitled "Kevin G. Khoe vs. Sapphire Securities Phils., Inc., et al." docketed as NLRC NCR 00-06-06341-99. Nezpercez Trading Corporation ("Nezpercez") , pursuant to the Special Power of Attorney issued in its favor, won the bid and a Sheriff's Certificate of Sale in the name of the Nezpercez was issued. Sapphire Securities assailed the validity of the above-mentioned Sheriff's Certificate of Sale with the Court of Appeals and the Supreme Court. On March 24, 2010, the Supreme Court-Second Division issued a Decision in the case entitled "Sapphire Securities Phils. and Jeremias A. Cruzabra vs. Kevin Khoe" docketed as G.R. No. 186020 dismissing the petition and affirming the earlier decisions issued by the Court of Appeals. In the aforementioned Decision, the Supreme Court denied the appeal filed by Sapphire Securities and affirmed the Decision of the Court of Appeals affirming the validity of the Certificate of Sale issued in the name of Nezpercez. On June 16, 2010, the Supreme Court denied the Motion for Reconsideration filed by Sapphire Securities. The above-mentioned Decision of the Supreme Court in G.R. No. 186020 is already final and executory. cTAaDC ANNEX B Rules on the Public Sale of the Trading Right of Sapphire Securities Philippines, Inc. (pursuant to the Memorandum of Agreement dated July 12, 2012 entered into by the Exchange and Nezpercez Trading Corporation) 1. The Philippine Stock Exchange, Inc., through its Trading Participants Relations Section ("Exchange") , shall conduct the public sale and oversee all procedures in the public sale, including but not limited to the pre-bidding process, conduct of the bid, evaluation of the bids, awarding of the contract, ensuring proper legal documentation and any and all acts necessary, subject to certain participation by Nezpercez Trading Corporation ("Nezpercez") as stated in Sections 16 and 17 hereof. 2. The minimum offer of any bidder should be PESOS: TEN MILLION ONLY (PHP10,000,000.00). 3. The potential bidders must submit the following documentary requirements to the Exchange: a. Application Letter expressing the intention to acquire the trading right held by Sapphire Securities Philippines, Inc. ("Sapphire Securities") ; b. Name, contact number and address of the bidder or, in case of a corporation or partnership, the name, contact number and address of its duly authorized representative, who shall automatically be the contact person; c. Tax Identification Number of the bidder; d. Two (2) valid and acceptable identification cards of the bidder or its authorized representative; aTSEcA e. Certified true copy of the proof or relevant authority (For corporation and partnerships Articles of Incorporation/Partnership, Bylaws, and Board or Partnership Resolution/Secretary's Certificate authorizing the corporation or partnership to acquire the trading right held by Sapphire Securities. The agent/representative's signature must appear on the face of the board or partnership Resolution/Secretary's Certificate); f. Company profile and latest financial statements audited by a SEC-accredited external auditor; g. Curriculum Vitae, latest Income Tax Return and Statement of Assets and Liabilities of all stockholders owning 5% or more of the outstanding shares of stock of the applicant-corporation and, for corporate shareholders of the applicant, latest Audited Financial Statements and General Information Sheet; h. Reference letters from at least three (3) reputable persons or institutions in the Philippines, one of which must be a commercial bank; i. Certified true copy of license from the SEC to operate as broker and dealer of securities and a copy of the Certificate from the Securities Clearing Corporation of the Philippines, if available; and j. Duly executed Undertaking to be bound by the rules of the Exchange and the result of the public sale. 4. All bid documents must be submitted to the Trading Participants Relations Section of the Exchange not later than four o'clock in the afternoon of May 16, 2013. 5. Following the deadline for submission of the bid documents, the Exchange shall inform Nezpercez in writing about the number of persons/entities that submitted a bid ("Potential Bidders") . The Exchange shall not however inform Nezpercez about the identity or personal circumstances of the Potential Bidders. aCIHAD 6. Within two (2) weeks from the submission of the bid documents, the Exchange shall conduct a pre-qualification process on all Potential Bidders. Pre-qualification procedure shall include, but shall not be limited to, review of documents submitted to the Exchange, background check on the Potential Bidders and/or its officers, directors/trustees and shareholders or members, and whenever applicable, inspection of registration and other documents submitted to the SEC and/or other regulatory or government agencies. The Exchange may likewise request additional documents from the Potential Bidders for evaluation in the course of the pre-qualification process. 7. The Exchange reserves the right to refuse the registration of a Potential Bidder if sufficient ground exists for the disqualification, such as, but not limited to the following: a. The Potential Bidder, any of its directors or principal stakeholders, is/are the subject of a pending case or proceedings before any court, the SEC, PSE or other SRO's, or quasi-judicial, executive or administrative body for violation of any provision of the Securities Regulation Code, the Corporation Code, or any other law, rule, regulation, or any crime involving fraud, gross negligence, dishonesty or moral turpitude; b. The Potential Bidder, any of its directors or principal stockholders, has filed a petition for bankruptcy or insolvency, has been or is currently the subject of rehabilitation, receivership, bankruptcy, insolvency or similar proceedings; and c. Such other grounds which, in the determination of the Exchange will not serve and promote investor protection, bearing in mind the fiduciary nature of the relationship between trading participants and the investing public. 8. Following the completion of the pre-qualification process, the Exchange shall notify Potential Bidders whose registration have been accepted or rejected. Notification shall be done by phone and through fax, mail, or electronic mail. 9. Upon receipt of the confirmation from the Exchange, the Potential Bidders whose registration has been accepted during the pre-qualification process ("Qualified Bidders") shall pay unto the Exchange the non-refundable Participation Fee in the amount of PESOS: FIVE THOUSAND ONLY (PHP5,000.00). aAEHCI 10. The Participation Fees paid by the Qualified Bidders shall cover the expenses of the public sale. Should the expenses of the public sale exceed the amount of the Participation Fees collected, the difference shall be paid to the Exchange by Nezpercez from the proceeds of the public sale and in case there be no such proceeds, the difference shall be paid to the Exchange by Nezpercez. Any unused participation fees shall be retained by the Exchange. 11. Following the payment of the Participation Fee, the Exchange shall provide a Qualified Bidder with a bid envelope and bid form. The Qualified Bidder shall indicate on the bid form the offered price. The bid form must be signed by the Qualified Bidder or its authorized representative. The Qualified Bidder shall seal in the bid envelope: a. The duly accomplished bid form; and b. A Manager's/Cashier's check payable to NEZPERCEZ TRADING CORPORATION in the amount of the bid issued by a Metro Manila commercial bank acceptable to the Exchange as stated in the bid form. The Qualified Bidder shall submit the bid to the Trading Participants Relations Section of the Exchange not later than four o'clock in the afternoon of June 5, 2013 . 12. Each bid shall be a firm, irrevocable offer to buy the trading right held by Sapphire Securities and subject to the legal interest of the Nezpercez to the said trading right. Said bid shall also give rise to a binding and enforceable contract upon the Exchange's acceptance of said bid and the approval thereon of the PSE Board of Directors. By submitting a bid, the Qualified Bidder submits to the terms and conditions stated in the Memorandum of Agreement dated July 12, 2012 entered into by the Exchange and Nezpercez, the results of the public sale and the rules of the Exchange. 13. After the Qualified Bidders have submitted their respective Bids, the Exchange shall report to the PSE Board of Directors the following: a. Details on the number of persons or entities that submitted bid documents; TDESCa b. Information on the Qualified Bidders, particularly the results of the pre-qualification process of the said Qualified Bidders; and c. Information that the Qualified Bidders have submitted their respective bids and paid the required Participation Fee. 14. The PSE Board of Directors shall evaluate the report made by the Exchange and thereafter state who among the Qualified Bidders are, subject to the results of the public sale, can be approved and accepted to be a possible transferee of the trading right held by Sapphire Securities ("Approved/Eligible Bidders") . The identity and particulars of the Approved/Eligible Bidders will be known to Nezpercez only during the opening of the sealed bids. 15. For as long as there is at least one (1) Approved/Eligible Bidder, the opening of the sealed bids shall be made on July 5, 2013, ten o'clock in the morning at the 3rd Floor, Conference Room, PSE Plaza, Ayala Triangle, Ayala Avenue, Makati City. 16. Nezpercez shall be represented during the indicated date and time for the opening of the sealed bids. In case Nezpercez fails to send a representative, the Exchange shall proceed with the opening of the sealed bids. 17. The Exchange shall open publicly all the sealed bids and forthwith evaluate the bids and shall declare the winning bidder in accordance with the following procedures: a. The Exchange shall accept only a bid showing that the bidder, (i) unconditionally agrees to be bound by, and comply with, these Rules and the result of the public sale; and (ii) irrevocably and unconditionally offers to pay the purchase price immediately. b. For the highest bidder, the Exchange shall inform Nezpercez whether the PSE Board of Directors has indicated the highest bidder as an Approved/Eligible Bidder. If the highest bidder is an Approved/Eligible Bidder, it shall be declared as the winning bidder and the procedures under Sections 18, 19 and 20 hereof need to be undertaken. SDTIHA c. If the highest bidder is not an Approved/Eligible Bidder, Nezpercez has the option to accept the second highest bid. If accepted by Nezpercez, the Exchange shall inform the Company whether the PSE Board of Directors has indicated the second highest bidder as an Approved/Eligible Bidder. If the second highest bidder is an Approved/Eligible Bidder, it shall be declared as the winning bidder and the procedures under Sections 18, 19 and 20 need to be undertaken. d. If the second highest bidder is not an Approved/Eligible Bidder, Nezpercez has the option to accept other bids made. If Nezpercez accepted any other bid, the Exchange shall inform Nezpercez whether said bidder was indicated by the PSE Board of Directors as an Approved/Eligible Bidder. If such other bidder is an Approved/Eligible Bidder, it shall be declared as the winning bidder and the procedures under Sections 18, 19 and 20 hereof need to be undertaken. e. In case two or more bidders tie for the highest, second highest or accepted bid [under subsections (a), (b), (c) and/or (d) above], another round of bidding shall immediately be conducted among the tied bidders until the tie is broken. The bidders shall be required to submit new bid forms for the subsequent round of bidding but shall not be required to submit a Manager's check for the full amount of the bid price. The amount to be offered should be higher than the highest bid in the immediately preceding round of bidding. Once the tie is broken, the Exchange shall inform Nezpercez whether the bidder has been indicated by the PSE Board of Directors as an Approved/Eligible Bidder and thereafter the procedures under sub-sections (a), (b) (c) and/or (d) above shall apply. If declared as the winning bidder, the Manager's/Cashier's check covering the difference between the old and new bid shall be tendered to the Exchange within forty-eight (48) hours after the announcement. cDCEHa 18. Once the winning bidder is determined, the Exchange shall immediately announce the results by way of a notice posted in the PSE website. The results of the public sale shall be final and binding on the winning bidder and Nezpercez. Thereafter, the results of the opening of the sealed bids will be reported to the PSE Board of Directors. 19. The PSE Board of Directors shall thereafter approve the transfer of the trading right held by Sapphire Securities to the winning bidder (as determined pursuant to Section 17 hereof), unless circumstances warrant otherwise, such as the occurrence of a supervening fact or circumstance not known to the Exchange during the pre-qualification process which will severely affect the authority or capacity of the winning bidder to be the holder of the trading right held by Sapphire Securities. 20. Thereafter, the trading right held by Sapphire Securities will be transferred to the winning bidder and the Manager's/Cashier's Check covering the bid price will be released by the Exchange to Nezpercez only after the winning bidder and Nezpercez have submitted to the Exchange the following documents: a. Duly notarized copy of Affidavit of Undertaking by Nezpercez and the winning bidder that (i) they ratify and confirm any and all actions undertaken in accordance with the public sale; (ii) that other than the aforementioned offer price, no other amount was given by the winning bidder to Nezpercez; and (iii) they hold the Exchange free and harmless from any and all third party claims, taxes, liabilities and other claims arising or related to the public sale. b. Payment by Nezpercez and/or winning bidder to the Exchange of all fees and charges incurred relative to the processing of the winning bidder's offer and transfer of the trading right which is currently in the name of Sapphire Securities; c. Appropriate clearance from the Bureau of Internal Revenue; d. Certified true copy of the Order or Sheriff's Report issued by the National Labor Relations Commission concerning the Manifestation filed by Nezpercez with the NLRC (as stated in sub-section (e) below); and IHcTDA e. Original copy of the Manifestation filed by Nezpercez with the Labor Arbiter stating that the Judgement in NLRC Case No. 00-06-06341-99 is already deemed fully satisfied as far as the execution of the trading right held by Sapphire Securities is concerned. 21. The Exchange reserves the right to reject any and all bids or declare a failure of bidding when circumstances warrant. 22. The Exchange reserves the right to interpret, modify, supplement or revise any aspect of the public sale, for any reason whatsoever and without giving prior notice when the circumstances warrant. Nezpercez and/or bidders shall be notified subsequently of such modifications, supplements or changes. 23. The following shall be considered as instances of a failed public sale: a. Absence of a Potential Bidder; b. Absence of a Qualified Bidder; c. Absence of an Approved/Eligible Bidder; d. No winning bidder is declared in accordance with Section 17 hereof; e. No bid in accordance with these Rules was submitted; f. The transfer of the trading right to the winning bidder was not approved by the PSE Board of Directors (as stated in Section 19 hereof); and g. Other facts and circumstances analogous to the foregoing. 24. In case of a failed public sale, the Parties may conduct another public sale, in accordance with the procedures stated herein, as the prevailing market conditions may dictate. Provided that, no public sale shall be made within one (1) month from a previous public sale. CITcSH 25. All procedures for the transfer of the trading right held by Sapphire Securities shall be between the Exchange and the winning bidder only. 26. In any event that the trading right was not transferred to the winning bidder for any reason whatsoever, Nezpercez and the winning bidder relieves the Exchange of any liability. 27. After the trading right held by Sapphire Securities is transferred to the winning bidder, the latter is still required to comply with all requirements of the Exchange for its application as a trading participant in the Exchange. In any event that the winning bidder is not admitted as a trading participant in the Exchange, for any reason whatsoever, Nezpercez and the winning bidder relieves the Exchange of any liability. 28. The bidders and Nezpercez shall forever and unconditionally release, waive, and discharge the Exchange, its affiliates, subsidiaries and/or their stockholders, directors, officers, agents and employees from all cause of action, sums of money, accounts, damages claims and demands, in law, in contract, or in equity under prevailing laws and regulations, criminal, civil or administrative, past, present or contingent, which they or their successors-in-interest, representatives and assigns had, have or may against the PSE its affiliates, subsidiaries, and/or their stockholders, directors, officers, agents and employees in connection with or arising from the conduct and/or result of the bid, sale, or proceedings conducted pursuant to these rules.