Assets and Business Restructuring Agreement - Sohu ITC Information Technology (Beijing) Co. Ltd. and Beijing Sohu Online Network Information Services Co. Ltd.
Execution Copy
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Assets and Business
Restructuring Agreement
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between
Sohu ITC Information Technology (Beijing) Co., Ltd.
and
Beijing Sohu Online Network Information Services Co., Ltd.
TransaSia Lawyers
June, 2000
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THIS ASSETS AND BUSINESS RESTRUCTURING AGREEMENT (this "Agreement") is made on
this [ ] day of June 2000 in Beijing, People's Republic of China ("PRC")
by and between
(1) Sohu ITC Information Technology (Beijing) Co., Ltd., a wholly foreign-owned
company duly established and registered under the laws of the PRC with its
registered address at Suite 1519, Tower 2 Bright China Chang An Building, 7
Jianguomen Nei Avenue, Beijing 100005, PRC ("Party A")
and
(2) Beijing Sohu Online Network Information Services Co., Ltd., a limited
liability company duly established and registered under the laws of the PRC
with its registered address at No 7, Beibingmasi Hutong, Dongcheng
District, Beijing 100027, PRC ("Party B")
(individually a "Party" and collectively the "Parties").
WHEREAS
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A. Party A is engaged in the development of technology and provision of
services relating to Internet portals, e-commerce and on-line advertising,
as well as the development and application of Internet software and on-line
databases. Party A has accumulated advanced operational and managerial
expertise and has acquired related technology and equipment, especially
through the development of the Chinese language Internet portal
www.Sohu.com (the "Website").
B. Party B is engaged in the development of computer hardware, technical
support and services, and has obtained approval to develop as an Internet
content provider to engage in the provision of Internet information
services, including the collection, classification, editing and supervision
of Website content.
C. Based on the requirements of the relevant governmental departments, the
Parties, through mutual consultation, agreed to restructure their
respective assets and businesses in view of to the establishment of an
exclusive cooperative relationship between them and of their respective
areas of expertise, as well as to the development stage of the Website.
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THE PARTIES THEREFORE AGREE AS FOLLOWS:
1. Transfer of Equipment
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1.1 Party A shall transfer to Party B the equipment listed in Appendix I
hereto (the "Equipment"), valued according to its net book value on
the date first indicated above (as determined by an accredited
accounting firm) at RMB seven hundred and forty thousand (740,000)
1.2 Party B shall use the Equipment for the sole purpose of providing
information services in relation to the Website.
1.3 Party B shall pay to Party A in six (6) equal monthly instalments in
an aggregate of RMB seven hundred forty thousand (740,000) in
consideration of the transfer of the Equipment. Such total amount
shall be paid in full in this manner within six (6) months of the date
first indicated above, at which time the ownership rights to the
equipment shall be transferred to Party B. The specific payment
method shall be determined jointly by the Parties in a separate
agreement.
1.4 Within ten (10) days of the date of execution hereof, Party A shall
deliver the Equipment to Party B, together with any related written
technical instructions and specifications. Party B shall operate the
Equipment in accordance with such technical instructions and
specifications.
2. Hosting of Servers and Leasing of Private Leased Line
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2.1 Party A shall terminate any existing server hosting agreements
relating to the servers included in the Equipment, subsequent to which
Party B shall sign with the Beijing Telecom Administration a separate
hosting agreement for the said servers.
2.2 Party B shall independently apply to, and sign a contract with, the
Designated Leased Line Business Center of the Beijing Telecom
Administration to lease a DDN private leased line.
3. Transfer of Personnel
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3.1 Depending on the actual work requirements and pursuant to Party B's
request, Party A agrees to Party B a total of no more than twenty-five
(25) personnel responsible for content collection and supervision.
3.2 Party B shall be responsible for undertaking the relevant procedures
in relation to its lawful employment of such personnel and the payment
of their compensation and social welfare contributions.
3.3 Party B shall be responsible for arranging for such personnel to
execute and deliver all relevant confidentiality and non-competition
agreements with Party A.
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4. Confidentiality
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4.1 Each Party undertakes to maintain as confidential any trade secrets
concerning the other Party that, in connection with the execution and
performance hereof, such Party learns or receives during the term of
this Agreement. The Parties agree to use such information solely in
connection with the performance of their respective obligations
hereunder. Without written permission from the other Party, neither
Party shall allow any third party to use such trade secrets, nor
disclose any such secrets, including the execution, performance or
contents of this Agreement, to any third party. Failure to abide by
this provision shall constitute a breach of this Agreement, and shall
result in the liability of the breaching Party for any corresponding
damages.
4.2 Each Party shall ensure that, provided that the appropriate written
permission has been acquired from the other Party, it only discloses
trade secrets of the other Party to its respective employees,
advisors, agents or contractors for the purposes of performing this
Agreement. Furthermore, each Party guarantees to the other Party that
any such employees, advisors, agents or contractors will maintain the
confidentiality of the information thus disclosed, failing which it
shall be liable for any corresponding damages.
4.3 Upon the other Party's request, each Party shall return, destroy, or
otherwise dispose of all documents, information or software containing
trade secrets relating to the other Party, and cease to use the said
trade secrets.
5. Representations and Warranties
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5.1 Each Party represents and warrants that, as of the date of signing
hereof:
5.1.1 it has full power and authority to execute and deliver this
agreement as an independent legal person and to carry out its
responsibilities and obligations hereunder; and
5.1.2 it has executed and delivered all necessary documentation and
engaged in all necessary activities to enable it to perform this
Agreement.
5.2 Party A warrants that, all of its servers that are used for displaying
content on the Website will be transferred to Party B in accordance
with the stipulations of this Agreement.
6. Breach
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6.1 In the event that either Party breaches this Agreement or fails to fully
carry out any of its representations, warranties, agreements or
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obligations hereunder, the non-breaching Party may send a written
notice to the breaching Party, demanding rectification within ten (10)
days thereof, and that the breaching Party continue to perform the
Agreement and take sufficient, effective and timely measures to clear
up any consequences of such breach, as well as to compensate the non-
breaching Party for any losses that it may have sustained as a
consequence of such breach.
6.2 The total amount for which the breaching Party is liable to compensate
the non-breaching Party for any losses that the latter has sustained
due to it's breach shall be equivalent to the total actual and
potential losses sustained as a result of the said breach, including
contractual interests that the non- breaching Party would have been
able to obtain upon the Agreement being performed.
7. Force Majeure
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7.1 "Force Majeure" refers to any event including, but not limited to,
wars or natural disasters, that is unforeseeable or, if foreseeable,
the occurrence and effect of which is unavoidable and insurmountable.
In light of the special nature of computer networks, Force Majeure
shall also include all of the following, where they affect the normal
operation of the Parties' computer networks:
7.1.1 attacks by hackers or invasion by or activation of computer
viruses;
7.1.2 failure on the part of either or both Parties, as a result of
the damaged, paralysed or otherwise incapacitated state of their
computer systems, to perform their obligations hereunder;
7.1.3 major disruption due to technical adjustments by
telecommunications departments; or
7.1.4 temporary suspension of operations as a result of government
controls.
7.2 Should either Party, due to the occurrence of Force Majeure, fail to
perform this Agreement in full or in part, such Party shall, in
consideration of the effect of the Force Majeure, be exempted from all
or some of its responsibilities hereunder, except where PRC laws
provide otherwise.
7.3 Should either Party fail to perform in a timely manner its duties
hereunder and subsequently Force Majeure were to occur, such Party
shall not be exempted from any of its liabilities hereunder resulting
from its failure to perform said duties.
7.4 Should either Party be unable to perform this Agreement as a result of
Force Majeure, it shall inform the other Party, as soon as possible
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following the occurrence of such Force Majeure, of the situation and
the reason(s) for non-performance, so as to minimize any losses
incurred by the other Party as a consequence thereof. Furthermore,
within a reasonable period of time after the notification of Force
Majeure has been provided, the Party encountering Force Majeure shall
provide a legal certificate issued by a public notary (or other
appropriate organization) of the place where the Force Majeure has
occurred, in witness of the same.
7.5 The Party affected by Force Majeure may suspend the performance of its
obligations under this Agreement until any disruption resulting from
the Force Majeure has been resolved. However, such Party shall make
every effort to eliminate any obstacles resulting from the Force
Majeure, thereby minimising to the greatest extent possible the
adverse effects of such, as well as any resulting losses.
8. Amendments and Termination
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8.1 This Agreement shall not be amended or assigned except by means of a
written instrument executed by the duly authorised representatives of
the Parties.
8.2 This Agreement may only be terminated in the following situations:
8.2.1 with the mutual written consent of the Parties following
consultation;
8.2.2 within ten (10) days following the issue by the non-breaching
Party of a written notice in accordance with Article 6.1 of this
Agreement, the breaching Party fails to remedy the breach or to
take sufficient, effective and timely measures to resolve any
consequences of the said breach, or to compensate the non-
breaching Party for any losses it may have sustained as a
consequence of that breach, the non-breaching Party shall be
entitled to terminate this Agreement unilaterally by means of a
written notice; or
8.2.3 where Force Majeure prevails for thirty (30) or more days, such
that the continued performance of this Agreement becomes
impossible, either Party shall be entitled to terminate this
Agreement unilaterally by means of a written notice.
8.3 The termination or early termination of this Agreement for any reason
whatsoever shall not affect:
8.3.1 the validity of any provisions contained herein concerning the
settlement of accounts and damages;
8.3.2 the continuing obligations of the Parties under Article 4 of
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this Agreement to observe their commitments in respect of
confidentiality.
8.4 Upon the termination of this Agreement, Party B shall, as soon as
possible:
8.4.1 pay to Party A any outstanding fees or other payments; and
8.4.2 release from its employment any personnel assigned by Party A to
Party B pursuant to Article 3 hereof.
9. Settlement of Disputes and Applicable Law
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9.1 Should a dispute arise between the Parties in connection with the
interpretation or performance of this Agreement, they shall attempt to
resolve such dispute through friendly consultations between
themselves. If the dispute cannot be resolved in this manner within
thirty (30) days after the commencement of discussions, then either
Party may submit it to the China International Economic and Trade
Commission in Beijing for arbitration in accordance with its current
effective arbitration rules.
9.2 This Agreement shall be construed, interpreted and governed by the
laws of the PRC, as shall the resolution of any dispute arising in
respect hereof.
9.3 During arbitration, the Parties shall, to the extent possible,
continue to implement those parts of this Agreement unrelated to such
arbitration.
10. Notices
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10.1 Unless prior notice of a change of address is given by the relevant
Party, all communication between the Parties shall be delivered either
in person, by express courier, facsimile transmission, registered mail
or e-mail to the following correspondence addresses:
Party A: Sohu ITC Information Technology (Beijing) Co., Ltd.
Address: Suite 1519, Tower 2 Bright China Chang An
Building, No. 7 Jiangguomennei Avenue, Beijing, PRC
Zip code: 100005
Telephone: (86 10) 6510 2160
Facsimile: (86 10) 6510 2159
E-mail: tom@itc.com.cn
Contact person: Mr Tom Gurnee
Party B: Beijing Sohu Online Network Information Services
Co., Ltd.
Address: No.7 Beibingmasi Hutong, Dongcheng District,
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Beijing, PRC
Zip code: 100027
Telephone: (86 10) 6510 1234
Facsimile: (86 10) 6510 1234
E-mail: maxguo@sohu.com.cn
Contact person: Mr Max Guo
10.2 Notices or communications shall be deemed to have been received:
10.2.1 at the exact time displayed in the corresponding transmission
record, if delivered by facsimile, unless such facsimile is
sent after 5:00 p.m. or on a non-business day in its place of
receipt, in which case the date of receipt shall be deemed to
be the following business day in the place of receipt;
10.2.2 on the date that the receiving Party signs to acknowledge
receipt of the correspondence, in the case of delivery by
person (including express mail);
10.2.3 fifteen (15) days after the date shown on the registered mail
receipt, in the case of a registered letter; or
10.2.4 on the successful printing by the sender of a transmission
report evidencing the delivery of the relevant e-mail, in the
case of an e-mail transmission.
11. Miscellaneous
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11.1 Failure or delay on the part of either Party to exercise any right
hereunder shall not operate or be interpreted as a waiver thereof, nor
shall any single or partial exercise of any right preclude any other
future exercise thereof.
11.2 The appendices hereto form an integral part of this Agreement.
11.3 The invalidity of any provision of this Agreement shall not affect the
validity of any other provision hereof.
11.4 Any matter not specified in this Agreement shall be handled through
discussions between the Parties and resolved in accordance with the
laws of the PRC.
IN WITNESS WHEREOF, this Agreement has been signed by the Parties or their duly
authorised representatives on the date first specified above.
SIGNED for and on behalf of
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Sohu ITC Information Technology (Beijing) Co., Ltd. (affix company seal)
____________________________________
Signature of authorised representative
Name :
Title :
SIGNED for and on behalf of
Beijing Sohu Online Network Information Services Co., Ltd (affix company seal)
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Signature of authorised representative
Name : He Jinmei
Title :
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Appendix I
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List of Equipment
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Type of Equipment Serial No. / Standard Quantity
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Servers Compaq Proliant 3000 10
Compaq PL800
Compaq PS720
Compaq Proliant 1850
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Desktop Computers Celeron 300 (Compatible) 25
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Fax Machines Canon L550 1
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Printers HP 6L 2
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