Sample Business Contracts

Assets and Business Restructuring Agreement - Sohu ITC Information Technology (Beijing) Co. Ltd. and Beijing Sohu Online Network Information Services Co. Ltd.

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                                                                  Execution Copy


                              Assets and Business
                            Restructuring Agreement



              Sohu ITC Information Technology (Beijing) Co., Ltd.


          Beijing Sohu Online Network Information Services Co., Ltd.

                               TransaSia Lawyers
                                   June, 2000


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")


(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").


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 (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.




1.   Transfer of Equipment

     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

     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

2.   Hosting of Servers and Leasing of Private Leased Line

     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

     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.



4.   Confidentiality

     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

     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

     5.1  Each Party represents and warrants that, as of the date of signing

          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

     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

6.1  In the event that either Party breaches this Agreement or fails to fully
     carry out any of its representations, warranties, agreements or



          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

     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

          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

     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



          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

     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

          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



               this Agreement to observe their commitments in respect of

     8.4  Upon the termination of this Agreement, Party B shall, as soon as

          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

      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

10.  Notices

     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
          Contact person:  Mr Tom Gurnee

          Party B:         Beijing Sohu Online Network Information Services
                           Co., Ltd.
          Address:         No.7 Beibingmasi Hutong, Dongcheng District,



                           Beijing, PRC
          Zip code:        100027
          Telephone:       (86 10) 6510 1234
          Facsimile:       (86 10) 6510 1234
          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

     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



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)

Signature of authorised representative

Name       :  He Jinmei

Title      :



                                   Appendix I

                                List of Equipment

     Type of Equipment        Serial No. / Standard    Quantity
         Servers              Compaq Proliant 3000        10
                                 Compaq PL800
                                 Compaq PS720
                              Compaq Proliant 1850
    Desktop Computers        Celeron 300 (Compatible)     25
      Fax Machines                 Canon L550             1
        Printers                     HP 6L                2