Loan Agreement - Linktone Ltd. and Lei Yang
LOAN AGREEMENT
The Loan Agreement (the "Agreement") is entered into as of 27 November,
2003 between the following two parties.
(1) Linktone Ltd. (the "Lender"), a limited company established and
registered in the Cayman Island.
LEGAL ADDRESS: Cayman Island in British West Indies
(2) YANG LEI (the "Borrower")
PRC ID NUMBER: 110108570422271
ADDRESS: Sun Island City Garden, Henan South Road, Shanghai
The Lender and the Borrower will each be referred to as "One Party" and
the Lender together with the Borrower will be referred to as "Both Parties".
WHEREAS, the Borrower holds 5% equity in Shanghai Unilink Computer Co.,
Ltd. (the "Borrower's Company"), a limited liability company registered in the
People's Republic of China (the "PRC").
WHEREAS, the Lender is a company registered in Cayman Islands. The Lender
intends to provide a loan to the Borrower.
NOW THEREFORE, Both Parties agree as follows:
1. LOAN
1.1 The Lender agrees to provide a long-term loan to the Borrower with
the principal as RMB 500,000 in accordance with the terms and
conditions set forth in this Agreement. Term for such loan will be
ten (10) years and shall be extended upon the agreement of Both
Parties through negotiations. During the term or extended term of
such loan, the Borrower shall refund the loan ahead of the loan term
or the extended loan term, if either of the following events occurs:
(1) the Borrower dies or becomes a person without capacity or with
limited capacity for civil acts;
(2) the Borrower quits from or dismissed by the Lender or its
affiliates;
(3) the Borrower commits a crime or involves a crime;
(4) any other third party claim more than RMB500,000 against the
Borrower;
(5) foreign investors are permitted to invest in the business of
value-added telecommunication and the relevant authorities begin
to approve such business in accordance with the applicable laws of
PRC.
1.2 The Lender agrees to remit the amount of such loan to the account
designated by the Borrower within seven (7) days after receiving the
Borrower's written notification to use the loan, provided that all
of the preconditions set forth in
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Section 2 of this Agreement are satisfied. The Borrower shall issue
confirmation notification to the Lender on the day receiving the
amount of the loan. The commitments of the Lender under this section
are effective only to the Borrower itself, but not the Borrower's
inheritor or transferee.
1.3 The Borrower agrees to accept such loan provided by the Lender and
agrees and warrants hereby such loan shall be used only for the
investment in the Borrower's Company to expand the business of the
company. Without the Lender's prior written consent, the Borrower
shall not use the amount of such loan for any other purpose or
transfer or pledge its equity in the Borrower's Company to any other
third party.
1.4 The Lender and the Borrower jointly agree and confirm that the
Borrower shall refund the loan only by transferring all of
Borrower's equity in the Borrower's Company to the Lender or other
(legal person or natural person) designated by the Lender.
1.5 The Lender and the Borrower hereby jointly agree and confirm that
any proceeds raised from the transfer of Borrower's equity in the
Borrower's Company shall be paid to the Lender, as the consideration
of the loan provided by the Lender, in the means designated by the
Lender in accordance with this Agreement and the Agreement shall
terminate simultaneously.
1.6 The Lender and the Borrower hereby jointly agree and confirm that
the Lender has the right to, but has no obligation to, at any time,
purchase or designate the other (legal person or natural person) to
purchase all or part of Borrower's equity in the Borrower's Company
at purchase price in Exclusive Purchase Right Contract entered by
the Lender, the Borrower and Borrower's Company as of November 27,
2003, subject to the permission of the law.
The Borrower warrants to issue an irrevocable proxy to confer all
its rights as a shareholder of the Borrower's Company to a person
designated by the Lender.
1.7 Interest of the Loan. In the event when the Borrower transfer its
equity in the Borrower's Company to the Lender or the person
designated by the Lender, the loan hereunder shall be deemed as the
loan without interest, if the transfer price of such equity equals
to or is less than the principal under this Agreement. However, in
case that the transfer price exceeds the amount of principal
hereunder, the exceeding amounts shall be deemed the interests of
such loan under this Agreement and shall be paid to the Lender by
the Borrower.
2. PRECONDITIONS OF THE LOAN
The Lender will be liable to provide loan to the Borrower in accordance
with Section 1.1 when all of the following conditions are satisfied or are
waived by the Lender in writing.
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2.1 Subject to the terms of Section 1.2, the Lender receives the drawing
notice formally issued by the Borrower.
2.2 The Lender, the Borrower and Shanghai Huitong Information Co., Ltd.
have formally executed an equity pledge contract (the "Equity Pledge
Contract"), by virtue of which the Borrower agrees to pledge all its
equity in the Borrower's Company to the Shanghai Huitong Information
Co., Ltd.
2.3 The Borrower, Lender and Borrower's Company have executed an
exclusive purchase contract (the "Exclusive Purchase Contract"),
according to which the Borrower shall grant the Lender an
irrevocable option to purchase all of the Borrower's equity in the
Borrower's Company, provided that it is permitted by laws of PRC.
2.4 The above-mentioned Equity Pledge Contract and Exclusive Purchase
Contract are in full effectiveness, of which there is none of
default event and all relevant filing procedures, approval,
authorization, registration and governmental proceedings have been
obtained or completed (if needed).
2.5 The representation and warranties under Section 3.2 are, and shall
be true, integrate, correct and un-misleading, on the day of drawing
notification and on the drawing day, just as the representation and
warranties are made on such days.
2.6 The Borrower breaches none of its commitments under Section 4 and no
event which will affect the Borrower's performance of the
obligations hereunder, happens or threatens to happen.
3. REPRESENTATION AND WARRANTIES
3.1 The Lender hereby represents and warrants to the Borrower that,
from the execution date of this Agreement until the date this
Agreement terminates,
(a) the Lender is a company registered and validly existing under
the laws of Cayman Islands ;
(b) subject to its business scope, articles of association and
other organizational documents, the Lender has full right,
power and all necessary and appropriate approval and
authorization to execute and perform this Agreement;
(c) the execution and the performance of this Agreement shall not
be against any enforceable and effective laws and regulations,
governmental approval, authorization and notification, other
government documents and any contracts executed with, or
commitments made to, any third party; and
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(d) this Agreement shall constitute the legal, valid and binding
obligations of the Lender, which is enforceable against the
Lender in accordance with its terms upon its execution.
3.2 The Borrower hereby represents and warrants that, from the execution
date of this Agreement until the date this Agreement terminates,
(a) the Borrower's Company is a limited liability company
registered and validly existing under the laws of PRC and the
Borrower is the legal owner of its equity interest in the
Company;
(b) subject to its articles of association and other
organizational documents, the Borrower has full right, power
and all necessary and appropriate approval and authorization
to execute and perform this Agreement;
(c) the execution and the performance of this Agreement shall not
be against any enforceable and effective laws and regulations,
governmental approval, authorization and notification, other
government documents and any contracts executed with, or
commitments made to, any third party;
(d) this Agreement shall constitute the legal and valid
obligations of the Borrower, which is enforceable against the
Borrower in accordance with its terms upon its execution;
(e) the Borrower has paid contribution in full for its equity in
the Borrower's Company in accordance with applicable laws and
regulations and has acquired capital contribution verification
report issued by the qualified accounting firm;
(f) the Borrower neither create pledge or any other security, nor
make third party any offer to transfer the Borrower's equity
nor make acceptance for the offer of any third party to
purchase Borrower's equity, nor execute agreement with any
third party to transfer Borrower's equity, except the terms of
the Equity Pledge Contract;
(g) there are no disputes and legal or other proceedings pending
or threatened before any court, tribunal or other regulatory
authority and involving the Borrower; and
(h) the Borrower's Company has completed all governmental
approval, authorization, license, register, filing and
otherwise necessary to carry out the business subject to its
business license and to possess its assets.
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4. COMMITMENTS OF BORROWER
4.1 The Borrower, as major shareholder of the Borrower's Company, agrees that
it shall cause the Borrower's Company, during the term of this Agreement,
(a) not to supply, amend or modify its articles of association, to
increase or decrease its registered capital, or to change its
capital structure in any way without the Lender's prior
written consent;
(b) subject to good financial and business rules and practices, to
maintain and operate its business and handle matters prudently
and effectively;
(c) not to sell, transfer, mortgage, dispose of in any other way,
or to create other security interest on, any of its assets,
business or legal right to collect interests without the
Lender's prior written consent;
(d) without the Lender's prior written consent, not to create,
succeed to, guarantee or permit any debt, except (i)the debt
arising in the course of the ordinary or daily business
operation, but not arising from the loan, and (ii)the debt
being reported to the Lender or having approved by the Lender
in writing;
(e) to operate persistently all the business of the Borrower's
Company and to maintain the value of its assets;
(f) without the Lender's prior written consent, not to execute any
material contracts (during this stage, a contract will be
deemed material if the value of it exceeds RMB100,000) except
those executed during the ordinary operation;
(g) not to provide loan or credit to any person without the
Lender's prior written consent;
(h) to provide information concerning all of its operation and
financial affairs subject to the Lender's request;
(i) to purchase insurance from the insurance company accepted by
the Lender and maintain persistently such insurance, provided
that the amount and type of such insurance are as the same as,
or equivalent to, the insurance amount and insurance type
taken out generally by the company which operates, in the same
territory, the similar business and possesses the similar
properties or assets;
(j) not to merger or combine with, buy or invest in, any other
person without the Lender's prior written consent;
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(k) to inform promptly the Lender of the pending or threatened
suit, arbitration or regulatory procedure concerning the
assets, business or income of the Borrower's Company;
(l) to execute all necessary or appropriate documents, to take all
necessary or appropriate action and to bring all necessary or
appropriate lawsuit or to make all necessary and appropriate
defending against all claims, in order to maintain the
ownership of the Borrower's Company for all its assets;
(m) without the Lender's prior written consent, not to issue
dividends to each shareholder in any form, provided however,
the Borrower's Company shall promptly allocate all its
allocable profits to each of its shareholders upon the
Lender's request;
(n) to appoint any person designated by the Lender to be the
director of the Borrower's Company subject to the Lender's
request;
(o) to comply strictly with the terms under the Exclusive Purchase
Contract and to do nothing affecting the validity and
enforceability of such contract;
4.2 The Borrower agrees that it shall, during the term of this Agreement,
(a) not sell, transfer, mortgage, dispose of in any other way, or
create other security interest on, any of its legal right of
equity or equity interest without the Lender's prior written
consent, except the terms of the Equity Pledge Contract;
(b) cause the shareholder's meeting appointed by the Lender not to
sell, transfer, mortgage, dispose of in any other way, or to
create other security interest on, any of the Borrower's legal
right of equity or equity interest without the Lender's prior
written consent, except that the counter party is the Lender
or those designated by the Lender;
(c) cause the shareholder's meeting appointed by the Lender not to
merge or combine with, buy or invest in, any person without
the Lender's prior consent;
(d) promptly inform the Lender of the pending or threatened suit,
arbitration or regulatory procedure concerning the Borrower's
equity in the Borrower's Company;
(e) execute all necessary or appropriate documents, take all
necessary or appropriate action and bring all necessary or
appropriate lawsuit or make all necessary and appropriate
defending against all claims, in order to maintain the
ownership of the Borrower's Company for all its assets;
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(f) do nothing that may materially affect the assets, business and
liabilities of the Borrower's Company without the Lender's
prior written consent;
(g) appoint any person to be the director of the Borrower's
Company subject to the Lender's request;
(h) transfer promptly and unconditionally, at any time, all of the
Borrower's equity in the Borrower's Company to the Lender or
representative designated by the Lender and cause the other
shareholder of the Borrower's Company to waive its option to
purchase such equity hereof, subject to the requesting of the
then holding company of the Lender, provided that such
transfer is permitted under the laws of PRC;
(i) cause the other shareholder of the Borrower's Company to
transfer promptly and unconditionally, at any time, all equity
of the other shareholder in the Borrower's Company to the
representative designated by the Lender and the Borrower
hereby waive its option to purchase such equity hereof,
subject to the requesting of the then holding company of the
Lender, provided that such transfer is permitted under the
laws of PRC;
(j) refund the loan to the Lender with such amount arising from
transferring Borrower's equity in the Borrower's Company if
the Lender purchases the Borrower's equity subject to the
Exclusive Purchase Contract; and
(k) comply strictly with the terms of this Agreement, Equity
Pledge Contract and Exclusive Purchase Contract, fully perform
all obligations under such contracts and do nothing affecting
the validity and enforceability of such contracts.
5. DEFAULT
The Borrower shall pay the overdue interests with 0.01% of the overdue
amount until the Borrower refunds all of the principal, overdue interests of the
principal and other money, in the event when the Borrower dose not perform its
obligation of repayment.
6. NOTIFICATIONS
Notice or other communications under this Contract shall be delivered
personally or sent by facsimile transmission or by registered mail to the
address set forth below, except that such address has been changed in writing.
The date noted on the return receipt of the registered mail is the service date
of the notice if the notice is sent by registered mail; the sending date is the
service date of the notice if the notice is sent personally or by facsimile
transmission. The original of the notice shall be sent personally or by
registered mail to the following address after the notice is sent by facsimile.
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the Lender: Linktone Ltd.
Address: Cayman Islands, British West Indies
the Borrower: Yang Lei
Address: Sun Island City Garden, Henan South Road, Shanghai
7. CONFIDENTIALITY
Both parties acknowledge and confirm that any oral or written materials
concerning this Agreement exchanged between them are confidential information.
Both parties shall protect and maintain the confidentiality of all such
confidential data and information and shall not disclose to any third party
without the other party's written consent, except (a) the data or information
that was in the public domain or later becomes published or generally known to
the public, provided that it is not released by the receiving party, (b) the
data or information that shall be disclosed pursuant to applicable laws or
regulations, and (c) the data or information that shall be disclosed to One
Party's legal counsel or financial counsel who shall also bear the obligation of
maintaining the confidentiality similar to the obligations hereof. The undue
disclosing of the confidential data or information of One Party's legal counsel
or financial counsel shall be deemed the undue disclosing of such party who
shall take on the liability of breach of this Agreement. This section shall
survive after this Agreement terminates by any reason.
8. GOVERNING LAW AND SETTLEMENT OF DISPUTES
3.1 The execution, validity, interpretation, performance,
implementation, termination and settlement of disputes of this
Agreement shall be governed by the laws of PRC.
3.2 Both Parties shall strive to settle any dispute arising from
the interpretation or performance in connection with this
Agreement through friendly consultation within 30 days after
One Party ask for consultation. In case no settlement can be
reached through consultation, One Party can submit such matter
to China International Economic and Trade Arbitration
Commission (the "CIETAC"). The arbitration shall follow the
current rules of CIETAC, and the arbitration proceedings shall
take place in Shanghai. The arbitration award shall be final
and binding upon the Both Parties and shall be enforceable in
accordance as its terms.
3.3 In case of any disputes arising out of the interpretation and
performance of this Agreement or any pending arbitration of
such dispute, Both Parties shall continue to perform their
rights and obligations under this Agreement, except that such
maters are involved in the disputes.
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9. MISCELLANEOUS
9.1 This Agreement shall be effective as of the date of execution and
shall expire when Both Parties has fully performed their obligations
under this Agreement.
9.2 This Agreement is executed in both Chinese and English forms, and in
case of conflicts, the Chinese version shall prevail.
9.3 Both Parties may amend and supply this Agreement with a written
agreement The amendment and supplement duly executed by Both Parties
shall be part of this Agreement and shall have the same legal effect
as this Agreement.
9.4 Any provision of this Agreement that is invalid or unenforceable
shall not affect the validity and enforceability of any other
provisions hereof.
9.5 The Appendices referred to in this Agreement are an integral part of
this Agreement and have the same legal effect as this Agreement.
the Lender: Linktone Ltd.
Representative: /s/ Jun Wu
the Borrower: /s/Yang Lei
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