Memorandum of Association and Articles of Association - Xinhua Finance Media Ltd.
THE COMPANIES LAW
EXEMPTED COMPANY LIMITED BY SHARES
AMENDED AND RESTATED
MEMORANDUM OF ASSOCIATION
OF
XINHUA FINANCE MEDIA LIMITED
(Adopted pursuant to Special Resolutions passed on
20 September, 2006)
1. The name of the Company is XINHUA FINANCE MEDIA LIMITED.
2. The Registered Office of the Company shall be at the offices of Codan Trust
Company (Cayman) Limited, Century Yard, Cricket Square, Hutchins Drive,
P.O. Box 2681 GT, George Town, Grand Cayman, British West Indies.
3. Subject to the following provisions of this Memorandum, the objects for
which the Company is established are unrestricted.
4. Subject to the following provisions of this Memorandum, the Company shall
have and be capable of exercising all the functions of a natural person of
full capacity irrespective of any question of corporate benefit, as
provided by Section 27(2) of The Companies Law.
5. Nothing in this Memorandum shall permit the Company to carry on a business
for which a licence is required under the laws of the Cayman Islands unless
duly licensed.
6. The Company shall not trade in the Cayman Islands with any person, firm or
corporation except in furtherance of the business of the Company carried on
outside the Cayman Islands; provided that nothing in this clause shall be
construed as to prevent the Company effecting and concluding contracts in
the Cayman Islands, and exercising in the Cayman Islands all of its powers
necessary for the carrying on of its business outside the Cayman Islands.
7. The liability of each member is limited to the amount from time to time
unpaid on such member's shares.
8. The share capital of the Company is US$134,690.37 divided into 69,035,751 A
common shares of a nominal or par value of US$0.001 each and 50,054,619 B
common shares of a nominal or par value of US$0.001 each and 15,600,000
preferred shares of a nominal or par value of US$0.001.
9. The Company may exercise the power contained in the Companies Law to
deregister in the Cayman Islands and be registered by way of continuation
in another jurisdiction.
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AMENDED AND RESTATED
ARTICLES OF ASSOCIATION
OF
XINHUA FINANCE MEDIA LIMITED
(Adopted pursuant to Special Resolutions passed on
20 September, 2006)
<PAGE>
TABLE OF CONTENTS
TABLE A
INTERPRETATION
1. Definitions
SHARES
2. Power to Issue Shares
3. Redemption and Purchase of Shares
4. Rights Attaching to Shares
5. Calls on Shares
6. Joint and Several Liability to Pay Calls
7. Forfeiture of Shares
8. Share Certificates
9. Fractional Shares
REGISTRATION OF SHARES
10. Register of Members
11. Registered Holder Absolute Owner
12. Transfer of Registered Shares
13. Transmission of Registered Shares
ALTERATION OF SHARE CAPITAL
14. Power to Alter Capital
15. Variation of Rights Attaching to Shares
DIVIDENDS AND CAPITALISATION
16. Dividends
17. Power to Set Aside Profits
18. Method of Payment
19. Capitalisation
MEETINGS OF MEMBERS
20. Annual General Meetings
21. Extraordinary General Meetings
22. Requisitioned General Meetings
23. Notice
24. Giving Notice
25. Postponement of General Meeting
26. Participating in Meetings by Telephone
27. Quorum at General Meetings
28. Chairman to Preside
29. Voting on Resolutions
30. Power to Demand a Vote on a Poll
31. Voting by Joint Holders of Shares
32. Instrument of Proxy
33. Representation of Corporate Member
34. Adjournment of General Meeting
35. Written Resolutions
36. Directors Attendance at General Meetings
DIRECTORS AND OFFICERS
37. Election of Directors
38. Number of Directors
39. Term of Office of Directors
40. Alternate Directors
41. Removal of Directors
42. Vacancy in the Office of Director
43. Remuneration of Directors
44. Defect in Appointment of Director
45. Directors to Manage Business
46. Powers of the Board of Directors
47. Register of Directors and Officers
48. Officers
49. Appointment of Officers
50. Duties of Officers
51. Remuneration of Officers
52. Conflicts of Interest
53. Indemnification and Exculpation of Directors and Officers
MEETINGS OF THE BOARD OF DIRECTORS
54. Board Meetings
55. Notice of Board Meetings
56. Participation in Meetings by Telephone
57. Quorum at Board Meetings
58. Board to Continue in the Event of Vacancy
59. Chairman to Preside
60. Written Resolutions
61. Validity of Prior Acts of the Board
CORPORATE RECORDS
62. Minutes
63. Register of Mortgages and Charges
64. Form and Use of Seal
ACCOUNTS
65. Books of Account
66. Financial Year End
AUDITS
67. Audit
68. Appointment of Auditors
69. Remuneration of Auditors
70. Duties of Auditor
71. Access to Records
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VOLUNTARY WINDING-UP AND DISSOLUTION
72. Winding-Up
CHANGES TO CONSTITUTION
73. Changes to Articles
74. Changes to the Memorandum of Association
75. Discontinuance
76. Conflicts with Schedule
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TABLE A
The regulations in Table A in the First Schedule to the Law (as defined
below) do not apply to the Company.
INTERPRETATION
1. DEFINITIONS
1.1 In these Articles, the following words and expressions shall, where
not inconsistent with the context, have the following meanings,
respectively:
A Common Share an A common share of US$0.001 par value
in the share capital of the Company with
the rights set out in these Articles,
including Schedule 1 to these Articles;
Affiliate (i) in the case of a natural person,
such person's parents, parents-in-law,
spouse, children or grandchildren, a
trust for the benefit of any of the
foregoing, a company, partnership or any
natural person or entity wholly or
jointly owned by any of the foregoing,
(ii) in the case of an entity, a
partnership, a corporation or any
natural person or entity which directly,
or indirectly through one or more
intermediaries, controls, is controlled
by, or is under common control with,
such entity;
Alternate Director an alternate director appointed in
accordance with these Articles;
Articles these Articles of Association as altered
from time to time which term shall
include the Schedule hereto;
Auditor includes an individual or partnership;
B Common Share a B common share of US$0.001 par value
in the share capital of the Company with
the
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rights set out in these Articles,
including Schedule 1 to these Articles;
Board the board of directors appointed or
elected pursuant to these Articles and
acting at a meeting of directors at
which there is a quorum or by written
resolution in accordance with these
Articles;
Common Share an A Common Share or a B Common Share;
Company the company for which these Articles are
approved and confirmed;
control the ownership, directly or indirectly,
of shares possessing more than fifty
percent (50%) of the voting power of the
corporation, or the partnership or other
entity (other than, in the case of
corporation, share having such power
only by reason of the happening of a
contingency), or having the power to
control the management or elect a
majority of members to the board of
directors or equivalent decision-making
body of such corporation, partnership or
other entity.
Convertible Preferred Share a Preferred Share with the rights,
including as to conversion, set out in
Schedule 2 to these Articles;
Director a director, including a sole director,
for the time being of the Company and
shall include an Alternate Director;
Law The Companies Law of the Cayman Islands
and every modification, reenactment or
revision thereof for the time being in
force;
Member the person registered in the Register of
Members as the holder of shares in the
Company and, when two or more persons
are so registered as joint holders of
shares, means the person whose name
stands first in the Register of Members
as one of such joint
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holders or all of such persons, as the
context so requires;
Memorandum the memorandum of association of the
Company as originally registered or as
from time to time amended;
month calendar month;
notice written notice as further provided in
these Articles unless otherwise
specifically stated;
Officer any person appointed by the Board to
hold an office in the Company;
ordinary resolution a resolution which:
(a) has been passed by a simple
majority of such Members as, being
entitled to do so, vote in person
or by proxy at a general meeting of
which notice specifying the
intention to propose the resolution
as an ordinary resolution has been
duly given; or
(b) has been approved in writing by all
of the Members entitled to vote at
a general meeting of the company in
one or more instruments each signed
by one or more of the Members
aforesaid.
paid-up paid-up or credited as paid-up;
Preferred Share a preferred share of US$0.001 par value
in the share capital of the Company with
the rights set out in these Articles;
Register of Directors the register of directors and officers
and Officers referred to in these Articles;
Register of Members the register of Members referred to in
these Articles;
Registered Office the registered office for the time being
of the Company;
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Seal the common seal or any official or
duplicate seal of the Company;
Secretary the person appointed to perform any or
all of the duties of secretary of the
Company and includes any deputy or
assistant secretary and any person
appointed by the Board to perform any of
the duties of the Secretary;
share a share or shares of any class and
series in the Company including a Common
Share or a Convertible Preferred Share,
and includes a fraction of a share;
Special Resolution a resolution which:
(a) has been passed by a majority of
not less than two-thirds of such
Members as, being entitled to do
so, vote in person or by proxy at a
general meeting of which notice
specifying the intention to propose
the resolution as a special
resolution has been duly given; or
(b) has been approved in writing by all
of the Members entitled to vote at
a general meeting of the company in
one or more instruments each signed
by one or more of the Members
aforesaid.
written resolution a resolution passed in accordance with
Article 35 or 60; and
year calendar year.
1.2 In these Articles, where not inconsistent with the context:
(a) capitalised terms used herein but not defined have the meaning
set out in Schedule 2 to these Articles;
(b) words denoting the plural number include the singular number and
vice versa;
(c) words denoting the masculine gender include the feminine and
neuter genders;
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(d) words importing persons include companies, associations or bodies
of persons whether corporate or not;
(e) the words:-
(i) "may" shall be construed as permissive; and
(ii) "shall" shall be construed as imperative;
(f) a reference to statutory provision shall be deemed to include any
amendment or re-enactment thereof; and
(g) unless otherwise provided herein, words or expressions defined in
the Law shall bear the same meaning in these Articles.
1.3 In these Articles expressions referring to writing or its cognates
shall, unless the contrary intention appears, include facsimile,
printing, lithography, photography, electronic mail and other modes of
representing words in visible form.
1.4 Headings used in these Articles are for convenience only and are not
to be used or relied upon in the construction hereof.
SHARES
2. POWER TO ISSUE SHARES
Subject to these Articles and to prior written consent being obtained from
the Majority Holders for the issuance of any shares which are senior in
rights in any respect to the Convertible Preferred Shares, the Preferred
Shares or the Common Shares and to any resolution of the Members to the
contrary, and without prejudice to any special rights previously conferred
on the holders of any existing shares or class of shares, the Board shall
have the power to issue any unissued shares of the Company on such terms
and conditions as it may determine and any shares or class and series of
shares (including the issue or grant of options, warrants and other rights,
renounceable or otherwise in respect of shares) may be issued with such
preferred, deferred or other special rights or such restrictions, whether
in regard to dividend, voting, return of capital, or otherwise as the
Company may by resolution of the Members prescribe, provided that no share
shall be issued at a discount except in accordance with the Law.
The Board and the Company may not, without the prior written consent of the
Majority Holders, issue, allot or otherwise dispose of any Preferred Shares
other than those contemplated by and specified in Schedule 2 to these
Articles.
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3. REDEMPTION AND PURCHASE OF SHARES
3.1 Subject to the Law and to prior written consent being obtained from
the Majority Holders for the issuance of any shares which are senior
in rights in any respect to the Convertible Preferred Shares, the
Preferred Shares or the Common Shares, the Company is authorised to
issue shares which are to be redeemed or are liable to be redeemed at
the option of the Company or a Member.
3.2 The Company is hereby authorised to make payments in respect of the
redemption of its shares out of capital or out of any other account or
fund which can be authorised for this purpose in accordance with the
Law. The Convertible Preferred Shares may be redeemed on the basis set
out in Schedule 2 to these Articles.
3.3 The redemption price of a redeemable share, or the method of
calculation thereof, shall, in the absence of any provisions set out
in the terms of the shares in question, be fixed by the Directors at
or before the time of issue. The redemption price of the Convertible
Preferred Shares shall be determined on the basis set out in Schedule
2 to these Articles.
3.4 Every share certificate representing a redeemable share shall indicate
that the share is redeemable.
3.5 In the case of shares redeemable at the option of a Member a
redemption notice from a Member may not be revoked without the
agreement of the Directors.
3.6 At the time or in the circumstances specified for redemption the
redeemed shares shall be cancelled and shall cease to confer on the
relevant Member any right or privilege, without prejudice to the right
to receive the redemption price, which price shall become payable so
soon as it can with due despatch be calculated, but subject to
surrender of the relevant share certificate for cancellation (and
reissue in respect of any balance).
3.7 The redemption price may be paid in any manner authorised by these
Articles for the payment of dividends.
3.8 A delay in payment of the redemption price shall not affect the
redemption but, in the case of a delay of more than thirty days,
interest shall be paid for the period from the due date until actual
payment at a rate which the Directors, after due enquiry, estimate to
be representative of the rates being offered by Class A banks in the
Cayman Islands for thirty day deposits in the same currency where no
provision as to the rate of interest has been included in the terms of
the shares in question.
3.9 The Directors may exercise as they think fit the powers conferred on
the Company by Section 37(5) of the Law (payment out of capital).
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3.10 Subject as aforesaid, the Directors may determine, as they think fit
all questions that may arise concerning the manner in which the
redemption of the shares shall or may be effected.
3.11 No share may be redeemed unless it is fully paid-up.
3.12 So long as any of the Convertible Preferred Shares are outstanding, no
Company Junior Shares shall be redeemed or repurchased. Subject
thereto, the Board may exercise all the powers of the Company to
purchase all or any part of its own shares in accordance with the Law.
Shares purchased by the Company shall be cancelled and shall cease to
confer any right or privilege on the Member from whom the shares are
purchased.
3.13 The Directors may redeem or cause the Company to redeem all or some of
the Convertible Preferred Shares held by any person if, and only if,
such redemption is necessary to give effect to the conversion mechanic
for the Convertible Preferred Shares set out in Schedule 2 to these
Articles, which mechanic may be implemented by means of the compulsory
redemption of the relevant Convertible Preferred Shares and the
immediate re-subscription on behalf of the relevant Members of the
redemption proceeds in paying up relevant Common Shares.
4. RIGHTS ATTACHING TO SHARES
Subject to Article 2, the Memorandum and any resolution of the Members to
the contrary and without prejudice to any special rights conferred thereby
on the holders of any other shares or class of shares, the share capital of
the Company shall be divided into A Common Shares and B Commons Shares (the
rights of which are set out in Schedule 1 to these Articles) and Preferred
Shares, including Convertible Preferred Shares the rights of which are set
out in Schedule 2 to these Articles.
5. CALLS ON SHARES
5.1 The Board may make such calls as it thinks fit upon the Members in
respect of any monies (whether in respect of nominal value or premium)
unpaid on the shares allotted to or held by such Members and, if a
call is not paid on or before the day appointed for payment thereof,
the Member may at the discretion of the Board be liable to pay the
Company interest on the amount of such call at such rate as the Board
may determine, from the date when such call was payable up to the
actual date of payment. The Board may differentiate between the
holders as to the amount of calls to be paid and the times of payment
of such calls.
5.2 The Company may accept from any Member the whole or a part of the
amount remaining unpaid on any shares held by him, although no part of
that amount has been called up.
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5.3 The Company may make arrangements on the issue of shares for a
difference between the Members in the amounts and times of payments of
calls on their shares.
6. JOINT AND SEVERAL LIABILITY TO PAY CALLS
The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
7. FORFEITURE OF SHARES
7.1 If any Member fails to pay, on the day appointed for payment thereof,
any call in respect of any share allotted to or held by such Member,
the Board may, at any time thereafter during such time as the call
remains unpaid, direct the Secretary to forward such Member a notice
in writing in the form, or as near thereto as circumstances admit, of
the following:
Notice of Liability to Forfeiture for Non-Payment of Call
o(the "Company")
You have failed to pay the call of [amount of call] made on the [ ]
day of [ ], 200[ ], in respect of the [number] share(s) [number in
figures] standing in your name in the Register of Members of the
Company, on the [ ] day of [ ], 200[ ], the day appointed for payment
of such call. You are hereby notified that unless you pay such call
together with interest thereon at the rate of [ ] per annum computed
from the said [ ] day of [ ], 200[ ] at the registered office of the
Company the share(s) will be liable to be forfeited.
Dated this [ ] day of [ ], 200[ ]
------------------------------------------
[Signature of Secretary] By Order of the Board
7.2 If the requirements of such notice are not complied with, any such
share may at any time thereafter before the payment of such call and
the interest due in respect thereof be forfeited by a resolution of
the Board to that effect, and such share shall thereupon become the
property of the Company and may be disposed of as the Board shall
determine. Without limiting the generality of the foregoing, the
disposal may take place by sale, repurchase, redemption or any other
method of disposal permitted by and consistent with these Articles and
the Law.
7.3 A Member whose share or shares have been forfeited as aforesaid shall,
notwithstanding such forfeiture, be liable to pay to the Company all
calls owing on such share or shares at the time of the forfeiture and
all interest due thereon.
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7.4 The Board may accept the surrender of any shares which it is in a
position to forfeit on such terms and conditions as may be agreed.
Subject to those terms and conditions, a surrendered share shall be
treated as if it had been forfeited.
8. SHARE CERTIFICATES
8.1 Every Member shall be entitled to a certificate under the seal of the
Company (or a facsimile thereof) specifying the number and, where
appropriate, the class of shares held by such Member and whether the
same are fully paid up and, if not, how much has been paid thereon.
The Board may by resolution determine, either generally or in a
particular case, that any or all signatures on certificates may be
printed thereon or affixed by mechanical means.
8.2 If any share certificate shall be proved to the satisfaction of the
Board to have been worn out, lost, mislaid, or destroyed the Board may
cause a new certificate to be issued and request an indemnity for the
lost certificate if it sees fit.
8.3 Share certificates may not be issued in bearer form.
9. FRACTIONAL SHARES
The Company may issue its shares in fractional denominations and deal with
such fractions to the same extent as its whole shares and shares in
fractional denominations shall have in proportion to the respective
fractions represented thereby all of the rights of whole shares including
(but without limiting the generality of the foregoing) the right to vote,
to receive dividends and distributions and to participate in a winding-up.
REGISTRATION OF SHARES
10. REGISTER OF MEMBERS
The Board shall cause to be kept in one or more books a Register of Members
which may be kept outside the Cayman Islands at such place as the Directors
shall appoint and shall enter therein the following particulars:-
(a) the name and address of each Member, the number, and (where
appropriate) the class of shares held by such Member and the
amount paid or agreed to be considered as paid on such shares;
(b) the date on which each person was entered in the Register of
Members; and
(c) the date on which any person ceased to be a Member.
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11. REGISTERED HOLDER ABSOLUTE OWNER
11.1 The Company shall be entitled to treat the registered holder of any
share as the absolute owner thereof and accordingly shall not be
bound to recognise any equitable claim or other claim to, or
interest in, such share on the part of any other person.
11.2 No person shall be entitled to recognition by the Company as holding
any share upon any trust and the Company shall not be bound by, or
be compelled in any way to recognise, (even when having notice
thereof) any equitable, contingent, future or partial interest in
any share or any other right in respect of any share except an
absolute right to the entirety of the share in the holder. If,
notwithstanding this Article, notice of any trust is at the holder's
request entered in the Register or on a share certificate in respect
of a share, then, except as aforesaid:
(a) such notice shall be deemed to be solely for the holder's
convenience;
(b) the Company shall not be required in any way to recognise any
beneficiary, or the beneficiary, of the trust as having an
interest in the share or shares concerned;
(c) the Company shall not be concerned with the trust in any way,
as to the identity or powers of the trustees, the validity,
purposes or terms of the trust, the question of whether
anything done in relation to the shares may amount to a breach
of trust or otherwise; and
(d) the holder shall keep the Company fully indemnified against
any liability or expense which may be incurred or suffered as
a direct or indirect consequence of the Company entering
notice of the trust in the Register or on a share certificate
and continuing to recognise the holder as having an absolute
right to the entirety of the share or shares concerned.
12. TRANSFER OF REGISTERED SHARES
12.1 An instrument of transfer shall be in writing in the form of the
following, or as near thereto as circumstances admit, or in such
other form as the Board may accept:
Transfer of a Share or Shares
(the "Company")
FOR VALUE RECEIVED....................[amount], I, [name of
transferor] hereby sell, assign and transfer unto [transferee] of
[address], [number] of shares of the Company.
DATED this [ ] day of [ ], 200[ ]
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Signed by: In the presence
of:
------------------------------ ------------------------------
Transferor Witness
------------------------------ ------------------------------
Transferee Witness
12.2 Such instrument of transfer shall be signed by or on behalf of the
transferor and transferee, provided that, in the case of a fully
paid share, the Board may accept the instrument signed by or on
behalf of the transferor alone. The transferor shall be deemed to
remain the holder of such share until the same has been transferred
to the transferee in the Register of Members.
12.3 The Board may refuse to recognise any instrument of transfer unless
it is accompanied by the certificate in respect of the shares to
which it relates and by such other evidence as the Board may
reasonably require to show the right of the transferor to make the
transfer.
12.4 The joint holders of any share may transfer such share to one or
more of such joint holders, and the surviving holder or holders of
any share previously held by them jointly with a deceased Member may
transfer any such share to the executors or administrators of such
deceased Member.
12.5 The Board may in its absolute discretion and without assigning any
reason therefor refuse to register the transfer of a share. If the
Board refuses to register a transfer of any share the Secretary
shall, within three months after the date on which the transfer was
lodged with the Company, send to the transferor and transferee
notice of the refusal.
13. TRANSMISSION OF REGISTERED SHARES
13.1 In the case of the death of a Member, the survivor or survivors
where the deceased Member was a joint holder, and the legal personal
representatives of the deceased Member where the deceased Member was
a sole holder, shall be the only persons recognised by the Company
as having any title to the deceased Member's interest in the shares.
Nothing herein contained shall release the estate of a deceased
joint holder from any liability in respect of any share which had
been jointly held by such deceased Member with other persons.
Subject to the provisions of Section 39 of the Law, for the purpose
of this Article, legal personal representative means the executor or
administrator of a deceased Member or such other person as the Board
may, in its absolute discretion, decide as being properly authorised
to deal with the shares of a deceased Member.
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13.2 Any person becoming entitled to a share in consequence of the death
or bankruptcy of any Member may be registered as a Member upon such
evidence as the Board may deem sufficient or may elect to nominate
some person to be registered as a transferee of such share, and in
such case the person becoming entitled shall execute in favour of
such nominee an instrument of transfer in writing in the form, or as
near thereto as circumstances admit, of the following:
Transfer by a Person Becoming Entitled on
Death/Bankruptcy of a Member
(the "Company")
I/We, having become entitled in consequence of the
[death/bankruptcy] of [name and address of deceased Member] to
[number] share(s) standing in the Register of Members of the Company
in the name of the said [name of deceased/bankrupt Member] instead
of being registered myself/ourselves, elect to have [name of
transferee] (the "Transferee") registered as a transferee of such
share(s) and I/we do hereby accordingly transfer the said share(s)
to the Transferee to hold the same unto the Transferee, his or her
executors, administrators and assigns, subject to the conditions on
which the same were held at the time of the execution hereof; and
the Transferee does hereby agree to take the said share(s) subject
to the same conditions.
DATED this [ ] day of [ ], 200[ ]
Signed by: In the presence
of:
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Transferor Witness
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Transferee Witness
13.3 On the presentation of the foregoing materials to the Board,
accompanied by such evidence as the Board may require to prove the
title of the transferor, the transferee shall be registered as a
Member. Notwithstanding the foregoing, the Board shall, in any case,
have the same right to decline or suspend registration as it would
have had in the case of a transfer of the share by that Member
before such Member's death or bankruptcy, as the case may be.
13.4 Where two or more persons are registered as joint holders of a share
or shares, then in the event of the death of any joint holder or
holders the remaining joint holder or holders shall be absolutely
entitled to the said share or shares and the Company shall recognise
no claim in respect of the estate of any joint holder except in the
case of the last survivor of such joint holders.
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ALTERATION OF SHARE CAPITAL
14. POWER TO ALTER CAPITAL
14.1 Subject to the Law and subject to prior written consent being obtained
from the Majority Holders, the Company may from time to time by
ordinary resolution alter the conditions of the Memorandum to increase
its share capital by new shares of such amount as it thinks expedient
or, if the Company has shares without par value, increase its share
capital by such number of shares without nominal or par value, or
increase the aggregate consideration for which its shares may be
issued, as it thinks expedient.
14.2 Subject to the Law, the Company may from time to time by ordinary
resolution alter the conditions of the Memorandum to:
(a) consolidate and divide all or any of its share capital into
shares of larger amount than its existing shares;
(b) subdivide its shares or any of them into shares of an amount
smaller than that fixed by the Memorandum; or
(c) cancel shares which at the date of the passing of the resolution
have not been taken or agreed to be taken by any person, and
diminish the amount of its share capital by the amount of the
shares so cancelled or, in the case of shares without par value,
diminish the number of shares into which its capital is divided.
14.3 For the avoidance of doubt it is declared that paragraph 14.2(a) and
(b) above do not apply if at any time the shares of the Company have
no par value.
14.4 Subject to the Law, the Company may from time to time by Special
Resolution reduce its share capital in any way or, subject to Article
77, alter any conditions of the Memorandum relating to share capital.
15. VARIATION OF RIGHTS ATTACHING TO SHARES
The rights attached to the Convertible Preferred Shares may only be varied
with the prior written consent of the Majority Holders. Subject thereto,
if, at any time, the share capital is divided into different classes of
shares, the rights attached to any class (unless otherwise provided by the
terms of issue of the shares of that class) may, whether or not the Company
is being wound-up, be varied with the consent in writing of the holders of
three-fourths of the issued shares of that class or with the sanction of a
resolution passed by a majority of the votes cast at a separate general
meeting of the holders of the shares of the class at which meeting the
necessary quorum shall be two persons at least holding or representing by
proxy one-third of the issued shares of the class. The rights conferred
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upon the holders of the shares of any class issued with preferred or other
rights shall not, unless otherwise expressly provided by the terms of issue
of the shares of that class, be deemed to be varied by the creation or
issue of further shares ranking pari passu therewith.
DIVIDENDS AND CAPITALISATION
16. DIVIDENDS
16.1 The written consent of the Majority Holders must be obtained before
any dividends can be paid on any shares other than the Convertible
Preferred Shares. Subject thereto, the Board may, subject to these
Articles and the Law and any direction of the Company in general
meeting, declare a dividend to be paid to the Members or any class of
them, in proportion to the number of shares held by them, and such
dividend may be paid in cash or wholly or partly in specie in which
case the Board may fix the value for distribution in specie of any
assets. No unpaid dividend shall bear interest as against the Company.
16.2 Dividends may be declared and paid out of profits of the Company,
realised or unrealised, or from any reserve set aside from profits
which the Directors determine is no longer needed, or not in the same
amount. Dividends may also be declared and paid out of share premium
account or any other fund or account which can be authorised for this
purpose in accordance with the Law.
16.3 With the sanction of an ordinary resolution of the Company, the
Directors may determine that a dividend shall be paid wholly or partly
by the distribution of specific assets (which may consist of the
shares or securities of any other company) and may settle all
questions concerning such distribution. Without limiting the foregoing
generally, the Directors may fix the value of such specific assets,
may determine that cash payments shall be made to some Members in lieu
of specific assets and may vest any such specific assets in trustees
on such terms as the Directors think fit.
16.4 The Company may pay dividends in proportion to the amount paid up on
each share where a larger amount is paid up on some shares than on
others.
16.5 The Board may declare and make such other distributions (in cash or in
specie) to the Members as may be lawfully made out of the assets of
the Company. No unpaid distribution shall bear interest as against the
Company.
16.6 The Board may fix any date as the record date for determining the
Members entitled to receive any dividend or other distribution, but,
unless so fixed, the record date shall be the date of the Directors'
resolution declaring same.
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17. POWER TO SET ASIDE PROFITS
17.1 The Board may, before declaring a dividend, set aside out of the
surplus or profits of the Company, such sum as it thinks proper as a
reserve to be used to meet contingencies or for equalising dividends
or for any other purpose. Pending application, such sums may be
employed in the business of the Company or invested, and need not be
kept separate from other assets of the Company. The Directors may
also, without placing the same to reserve, carry forward any profit
which they decide not to distribute.
17.2 Subject to any direction from the Company in general meeting, the
Directors may on behalf of the Company exercise all the powers and
options conferred on the Company by the Law in regard to the Company's
share premium account.
18. METHOD OF PAYMENT
18.1 Any dividend, interest, or other monies payable in cash in respect of
the shares may be paid by cheque or draft sent through the post
directed to the Member at such Member's address in the Register of
Members, or to such person and to such address as the holder may in
writing direct.
18.2 In the case of joint holders of shares, any dividend, interest or
other monies payable in cash in respect of shares may be paid by
cheque or draft sent through the post directed to the address of the
holder first named in the Register of Members, or to such person and
to such address as the joint holders may in writing direct. If two or
more persons are registered as joint holders of any shares any one can
give an effectual receipt for any dividend paid in respect of such
shares.
18.3 The Board may deduct from the dividends or distributions payable to
any Member all monies due from such Member to the Company on account
of calls or otherwise.
19. CAPITALISATION
19.1 The Board may resolve to capitalise any sum for the time being
standing to the credit of any of the Company's share premium or other
reserve accounts or to the credit of the profit and loss account or
otherwise available for distribution by applying such sum in paying up
unissued shares to be allotted as fully paid bonus shares pro rata to
the Members.
19.2 The Board may resolve to capitalise any sum for the time being
standing to the credit of a reserve account or sums otherwise
available for dividend or distribution by applying such amounts in
paying up in full partly paid or nil paid shares of those Members who
would have been entitled to such sums if they were distributed by way
of dividend or distribution.
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MEETINGS OF MEMBERS
20. ANNUAL GENERAL MEETINGS
The Company may in each year hold a general meeting as its annual general
meeting. The annual general meeting of the Company may be held at such time
and place as the Chairman or any two Directors or any Director and the
Secretary or the Board shall appoint.
21. EXTRAORDINARY GENERAL MEETINGS
21.1 General meetings other than annual general meetings shall be called
extraordinary general meetings.
21.2 The Chairman or any two Directors or any Director and the Secretary or
the Board may convene an extraordinary general meeting of the Company
whenever in their judgment such a meeting is necessary.
22. REQUISITIONED GENERAL MEETINGS
22.1 The Board shall, on the requisition of Members holding at the date of
the deposit of the requisition not less than one-tenth of such of the
paid-up share capital of the Company as at the date of the deposit
carries the right to vote at general meetings of the Company,
forthwith proceed to convene an extraordinary general meeting of the
Company. To be effective the requisition shall state the objects of
the meeting, shall be in writing, signed by the requisitionists, and
shall be deposited at the Registered Office. The requisition may
consist of several documents in like form each signed by one or more
requisitionists.
22.2 If the Directors do not within twenty-one days from the date of the
requisition duly proceed to call an extraordinary general meeting, the
requisitionists, or any of them representing more than one half of the
total voting rights of all of them, may themselves convene an
extraordinary general meeting; but any meeting so called shall not be
held more than ninety days after the requisition. An extraordinary
general meeting called by requisitionists shall be called in the same
manner, as nearly as possible, as that in which general meetings are
to be called by the Directors.
23. NOTICE
23.1 At least five days' notice of an annual general meeting shall be given
to each Member entitled to attend and vote thereat, stating the date,
place and time at which the meeting is to be held and if different,
the record date for determining Members entitled to attend and vote at
the general meeting, and, as far as practicable, the other business to
be conducted at the meeting.
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23.2 At least five days' notice of an extraordinary general meeting shall
be given to each Member entitled to attend and vote thereat, stating
the date, place and time at which the meeting is to be held and the
general nature of the business to be considered at the meeting.
23.3 The Board may fix any date as the record date for determining the
Members entitled to receive notice of and to vote at any general
meeting of the Company but, unless so fixed, as regards the
entitlement to receive notice of a meeting or notice of any other
matter, the record date shall be the date of despatch of the notice
and, as regards the entitlement to vote at a meeting, and any
adjournment thereof, the record date shall be the date of the original
meeting.
23.4 A general meeting of the Company shall, notwithstanding that it is
called on shorter notice than that specified in these Articles, be
deemed to have been properly called if it is so agreed by (i) all the
Members entitled to attend and vote thereat in the case of an annual
general meeting; and (ii) in the case of an extraordinary general
meeting, by seventy-five percent of the Members entitled to attend and
vote thereat.
23.5 The accidental omission to give notice of a general meeting to, or the
non-receipt of a notice of a general meeting by, any person entitled
to receive notice shall not invalidate the proceedings at that
meeting.
24. GIVING NOTICE
24.1 A notice may be given by the Company to any Member either by
delivering it to such Member in person or by sending it to such
Member's address in the Register of Members or to such other address
given for the purpose. For the purposes of this Article, a notice may
be sent by letter mail, courier service, cable, telex, telecopier,
facsimile, electronic mail or other mode of representing words in a
legible form.
24.2 Any notice required to be given to a Member shall, with respect to any
shares held jointly by two or more persons, be given to whichever of
such persons is named first in the Register of Members and notice so
given shall be sufficient notice to all the holders of such shares.
24.3 Any notice shall be deemed to have been served at the time when the
same would be delivered in the ordinary course of transmission and, in
proving such service, it shall be sufficient to prove that the notice
was properly addressed and prepaid, if posted, and the time when it
was posted, delivered to the courier or to the cable company or
transmitted by telex, facsimile, electronic mail, or such other method
as the case may be.
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25. POSTPONEMENT OF GENERAL MEETING
The Board may postpone any general meeting called in accordance with the
provisions of these Articles provided that notice of postponement is given
to each Member before the time for such meeting. Fresh notice of the date,
time and place for the postponed meeting shall be given to each member in
accordance with the provisions of these Articles.
26. PARTICIPATING IN MEETINGS BY TELEPHONE
Members may participate in any general meeting by means of such telephone,
electronic or other communication facilities as permit all persons
participating in the meeting to communicate with each other simultaneously
and instantaneously, and participation in such a meeting shall constitute
presence in person at such meeting.
27. QUORUM AT GENERAL MEETINGS
27.1 At any general meeting of the Company two or more persons present in
person and representing in person or by proxy in excess of 50% of the
total issued voting shares (including Convertible Preferred Shares) in
the Company throughout the meeting shall form a quorum for the
transaction of business, provided that (i) if the Company shall at any
time have only one Member, one Member present in person or by proxy
shall form a quorum for the transaction of business at any general
meeting of the Company held during such time and (ii) if the business
of the general meeting includes considering a Special Resolution to
wind-up the Company or to alter or add to these Articles or the
Memorandum, the quorum must include the Majority Holders.
27.2 Except where the business of the general meeting includes considering
a Special Resolution to wind-up the Company, or to alter or add to
these Articles or the Memorandum, the quorum must include the Majority
Holders, if within half an hour from the time appointed for the
meeting a quorum is not present, the meeting shall stand adjourned to
the same day one week later, at the same time and place or to such
other day, time or place as the Board may determine.
28. CHAIRMAN TO PRESIDE
Unless otherwise agreed by a majority of those attending and entitled to
vote thereat, the Chairman, if there be one, shall act as chairman at all
meetings of the Members at which such person is present. In his absence a
chairman shall be appointed or elected by those present at the meeting and
entitled to vote.
29. VOTING ON RESOLUTIONS
29.1 Subject to the provisions of the Law and these Articles, any question
proposed for the consideration of the Members at any general meeting
shall be decided by the
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affirmative votes of the requisite majority of the votes cast in
accordance with the provisions of these Articles and the Law.
29.2 No Member shall be entitled to vote at a general meeting unless such
Member has paid all the calls on all shares held by such Member.
29.3 At any general meeting a resolution put to the vote of the meeting
shall, in the first instance, be voted upon by a show of hands and,
subject to any rights or restrictions for the time being lawfully
attached to any class of shares and subject to the provisions of these
Articles, every Member entitled to vote and present in person or by
proxy at such meeting shall be entitled to one vote and may cast such
vote by raising his hand.
29.4 At any general meeting if an amendment shall be proposed to any
resolution under consideration and the chairman of the meeting shall
rule on whether the proposed amendment is out of order, the
proceedings on the substantive resolution shall not be invalidated by
any error in such ruling.
29.5 At any general meeting a declaration by the chairman of the meeting
that a question proposed for consideration has, on a show of hands,
been carried, or carried unanimously, or by a particular majority, or
lost, and an entry to that effect in a book containing the minutes of
the proceedings of the Company shall, subject to the provisions of
these Articles, be conclusive evidence of that fact.
30. POWER TO DEMAND A VOTE ON A POLL
30.1 Notwithstanding the foregoing, a poll may be demanded by the Chairman
or at least one Member.
30.2 Where a poll is demanded, subject to any rights or restrictions for
the time being lawfully attached to any class of shares, every person
present at such meeting shall have one vote for each share of which
such person is the holder or for which such person holds a proxy and
such vote shall be counted by ballot as described herein, or in the
case of a general meeting at which one or more Members are present by
telephone, in such manner as the chairman of the meeting may direct
and the result of such poll shall be deemed to be the resolution of
the meeting at which the poll was demanded and shall replace any
previous resolution upon the same matter which has been the subject of
a show of hands. A person entitled to more than one vote need not use
all his votes or cast all the votes he uses in the same way.
30.3 A poll demanded for the purpose of electing a chairman of the meeting
or on a question of adjournment shall be taken forthwith and a poll
demanded on any other question shall be taken in such manner and at
such time and place at such meeting as the chairman of the meeting may
direct and any business other than
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that upon which a poll has been demanded may be proceeded with pending
the taking of the poll.
30.4 Where a vote is taken by poll, each person present and entitled to
vote shall be furnished with a ballot paper on which such person shall
record his vote in such manner as shall be determined at the meeting
having regard to the nature of the question on which the vote is
taken, and each ballot paper shall be signed or initialed or otherwise
marked so as to identify the voter and the registered holder in the
case of a proxy. At the conclusion of the poll, the ballot papers
shall be examined and counted by a committee of not less than two
Members or proxy holders appointed by the chairman for the purpose and
the result of the poll shall be declared by the chairman.
31. VOTING BY JOINT HOLDERS OF SHARES
In the case of joint holders, the vote of the senior who tenders a vote
(whether in person or by proxy) shall be accepted to the exclusion of the
votes of the other joint holders, and for this purpose seniority shall be
determined by the order in which the names stand in the Register of
Members.
32. INSTRUMENT OF PROXY
32.1 An instrument appointing a proxy shall be in writing or transmitted by
electronic mail in substantially the following form or such other form
as the chairman of the meeting shall accept:
Proxy
(the "Company")
I/We, [insert names here], being a Member of the Company with [number]
shares, HEREBY APPOINT [name] of [address] or failing him, [name] of
[address] to be my/our proxy to vote for me/us at the meeting of the
Members held on the [ ] day of [ ], 200[ ] and at any adjournment
thereof. (Any restrictions on voting to be inserted here.)
Signed this [ ] day of [ ], 200[ ]
-----------------------------------------------
Member(s)
32.2 The instrument of proxy shall be signed or, in the case of a
transmission by electronic mail, electronically signed in a manner
acceptable to the chairman, by the appointor or by the appointor's
attorney duly authorised in writing, or if the appointor is a
corporation, either under its seal or signed or, in the case of a
transmission by electronic mail, electronically signed in a manner
acceptable to the chairman, by a duly authorised officer or attorney.
32.3 A member who is the holder of two or more shares may appoint more than
one proxy to represent him and vote on his behalf.
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32.4 Save and except for the irrevocable proxy stipulated in Article 32.5,
the decision of the chairman of any general meeting as to the validity
of any appointment of a proxy shall be final.
32.5 Any Member may irrevocably appoint a proxy and in such case (i) such
proxy shall be irrevocable in accordance with the terms of the
instrument of appointment (ii) the Member may not vote at any meeting
at which the holder of such proxy votes and (iii) the Company shall be
obliged to recognise the holder of such proxy until such time as the
Company is notified in writing that the proxy has been revoked in
accordance with its terms.
33. REPRESENTATION OF CORPORATE MEMBER
33.1 A corporation which is a Member may, by written instrument, authorise
such person or persons as it thinks fit to act as its representative
at any meeting of the Members and any person so authorised shall be
entitled to exercise the same powers on behalf of the corporation
which such person represents as that corporation could exercise if it
were an individual Member, and that Member shall be deemed to be
present in person at any such meeting attended by its authorised
representative or representatives.
33.2 Notwithstanding the foregoing, the chairman of the meeting may accept
such assurances as he thinks fit as to the right of any person to
attend and vote at general meetings on behalf of a corporation which
is a Member.
34. ADJOURNMENT OF GENERAL MEETING
The chairman of a general meeting may, with the consent of a majority in
number of those present at any general meeting at which a quorum is
present, and shall if so directed, adjourn the meeting. Unless the meeting
is adjourned for more than 60 days fresh notice of the date, time and place
for the resumption of the adjourned meeting shall be given to each Member
entitled to attend and vote thereat, in accordance with the provisions of
these Articles.
35. WRITTEN RESOLUTIONS
35.1 Anything which may be done by resolution of the Company in general
meeting or by resolution of a meeting of any class of the Members may,
without a meeting and without any previous notice being required, be
done by resolution in writing signed by, or in the case of a Member
that is a corporation whether or not a company within the meaning of
the Law, on behalf of, all the Members who at the date of the
resolution would be entitled to attend the meeting and vote on the
resolution.
35.2 A resolution in writing may be signed by, or in the case of a Member
that is a corporation whether or not a company within the meaning of
the Law, on behalf
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of, all the Members, or all the Members of the relevant class thereof,
in as many counterparts as may be necessary.
35.3 A resolution in writing made in accordance with this Article is as
valid as if it had been passed by the Company in general meeting or by
a meeting of the relevant class of Members, as the case may be, and
any reference in any Article to a meeting at which a resolution is
passed or to Members voting in favour of a resolution shall be
construed accordingly.
35.4 A resolution in writing made in accordance with this Article shall
constitute minutes for the purposes of the Law.
35.5 For the purposes of this Article, the date of the resolution is the
date when the resolution is signed by, or in the case of a Member that
is a corporation whether or not a company within the meaning of the
Law, on behalf of, the last Member to sign and any reference in any
Article to the date of passing of a resolution is, in relation to a
resolution made in accordance with this Article, a reference to such
date.
36. DIRECTORS ATTENDANCE AT GENERAL MEETINGS
The Directors of the Company shall be entitled to receive notice of, attend
and be heard at any general meeting.
DIRECTORS AND OFFICERS
37. ELECTION OF DIRECTORS
37.1 The Board shall be elected or appointed in writing in the first place
by the subscribers to the Memorandum or by a majority of them. There
shall be no shareholding qualification for Directors unless prescribed
by Special Resolution.
37.2 The Directors may from time to time appoint any person to be a
Director, either to fill a casual vacancy or as an addition to the
existing Directors, subject to any upper limit on the number of
Directors prescribed pursuant to this Article.
38. NUMBER OF DIRECTORS
The Board shall consist of not less than one Director or such number in
excess thereof as the Board may determine.
39. TERM OF OFFICE OF DIRECTORS
An appointment of a Director may be on terms that the Director shall
automatically retire from office (unless he has sooner vacated office) at
the next or a subsequent annual
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general meeting or upon any specified event or after any specified period;
but no such term shall be implied in the absence of express provision.
40. ALTERNATE DIRECTORS
40.1 A Director may at any time appoint any person (including another
Director) to be his Alternate Director and may at any time terminate
such appointment. An appointment and a termination of appointment
shall be by notice in writing signed by the Director and deposited at
the Registered Office or delivered at a meeting of the Directors.
40.2 The appointment of an Alternate Director shall determine on the
happening of any event which, if he were a Director, would cause him
to vacate such office or if his appointor ceases for any reason to be
a Director.
40.3 An Alternate Director shall be entitled to receive notices of meetings
of the Directors and shall be entitled to attend and vote as a
Director at any such meeting at which his appointor is not personally
present and generally at such meeting to perform all the functions of
his appointor as a Director; and for the purposes of the proceedings
at such meeting these Articles shall apply as if he (instead of his
appointor) were a Director, save that he may not himself appoint an
Alternate Director or a proxy.
40.4 If an Alternate Director is himself a Director or attends a meeting of
the Directors as the Alternate Director of more than one Director, his
voting rights shall be cumulative.
40.5 Unless the Directors determine otherwise, an Alternate Director may
also represent his appointor at meetings of any committee of the
Directors on which his appointor serves; and the provisions of this
Article shall apply equally to such committee meetings as to meetings
of the Directors.
40.6 If so authorised by an express provision in his notice of appointment,
an Alternate Director may join in a written resolution of the
Directors adopted pursuant to these Articles and his signature of such
resolution shall be as effective as the signature of his appointor.
40.7 Save as provided in these Articles an Alternate Director shall not, as
such, have any power to act as a Director or to represent his
appointor and shall not be deemed to be a Director for the purposes of
these Articles.
40.8 A Director who is not present at a meeting of the Directors, and whose
Alternate Director (if any) is not present at the meeting, may be
represented at the meeting by a proxy duly appointed, in which event
the presence and vote of the proxy shall be deemed to be that of the
Director. All the provisions of these Articles
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regulating the appointment of proxies by Members shall apply equally
to the appointment of proxies by Directors.
41. REMOVAL OF DIRECTORS
The Members may from time to time by ordinary resolution remove any
Director from office, whether or not appointing another in his stead.
42. VACANCY IN THE OFFICE OF DIRECTOR
The office of Director shall be vacated if the Director:
(a) is removed from office pursuant to these Articles;
(b) dies or becomes bankrupt, or makes any arrangement or composition
with his creditors generally;
(c) is or becomes of unsound mind or an order for his detention is
made under the Mental Health Law of the Cayman Islands or any
analogous law of a jurisdiction outside the Cayman Islands, or
dies; or
(d) resigns his office by notice in writing to the Company.
43. REMUNERATION OF DIRECTORS
The remuneration (if any) of the Directors shall, subject to any direction
that may be given by the Company in general meeting, be determined by the
Directors as they may from time to time determine and shall be deemed to
accrue from day to day. The Directors may also be paid all travel, hotel
and other expenses properly incurred by them in attending and returning
from the meetings of the Board, any committee appointed by the Board,
general meetings of the Company, or in connection with the business of the
Company or their duties as Directors generally.
44. DEFECT IN APPOINTMENT OF DIRECTOR
All acts done in good faith by the Board or by a committee of the Board or
by any person acting as a Director shall, notwithstanding that it be
afterwards discovered that there was some defect in the appointment of any
Director or person acting as aforesaid, or that they or any of them were
disqualified, be as valid as if every such person had been duly appointed
and was qualified to be a Director.
45. DIRECTORS TO MANAGE BUSINESS
The business of the Company shall be managed and conducted by the Board. In
managing the business of the Company, the Board may, subject to the
restrictions on the Company and the rights of the Convertible Preferred
Shares set out in Schedule 2 to these
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Articles, exercise all such powers of the Company as are not, by the Law or
by these Articles, required to be exercised by the Company in general
meeting subject, nevertheless, to these Articles, the provisions of the Law
and to such directions as may be prescribed by the Company in general
meeting.
46. POWERS OF THE BOARD OF DIRECTORS
Without limiting the generality of Article 45, the Board may:
(a) appoint, suspend, or remove any manager, secretary, clerk, agent
or employee of the Company and may fix their remuneration and
determine their duties;
(b) exercise all the powers of the Company to borrow money and to
mortgage or charge its undertaking, property and uncalled
capital, or any part thereof, and may issue debentures, debenture
stock and other securities whether outright or as security for
any debt, liability or obligation of the Company or any third
party;
(c) appoint one or more Directors to the office of managing director
or chief executive officer of the Company, who shall, subject to
the control of the Board, supervise and administer all of the
general business and affairs of the Company;
(d) appoint a person to act as manager of the Company's day-to-day
business and may entrust to and confer upon such manager such
powers and duties as it deems appropriate for the transaction or
conduct of such business;
(e) by power of attorney, appoint any company, firm, person or body
of persons, whether nominated directly or indirectly by the
Board, to be an attorney of the Company for such purposes and
with such powers, authorities and discretions (not exceeding
those vested in or exercisable by the Board) and for such period
and subject to such conditions as it may think fit and any such
power of attorney may contain such provisions for the protection
and convenience of persons dealing with any such attorney as the
Board may think fit and may also authorise any such attorney to
sub-delegate all or any of the powers, authorities and
discretions so vested in the attorney. Such attorney may, if so
authorised under the seal of the Company, execute any deed or
instrument under such attorney's person seal with the same effect
as the affixation of the seal of the Company;
(f) procure that the Company pays all expenses incurred in promoting
and incorporating the Company;
(g) delegate any of its powers (including the power to sub-delegate)
to a committee of one or more persons appointed by the Board and
every such
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committee shall conform to such directions as the Board shall
impose on them. Subject to any directions or regulations made by
the Directors for this purpose, the meetings and proceedings of
any such committee shall be governed by the provisions of these
Articles regulating the meetings and proceedings of the Board,
including provisions for written resolutions;
(h) delegate any of its powers (including the power to sub-delegate)
to any person on such terms and in such manner as the Board sees
fit;
(i) present any petition and make any application in connection with
the liquidation or reorganisation of the Company;
(j) in connection with the issue of any share, pay such commission
and brokerage as may be permitted by law; and
(k) authorise any company, firm, person or body of persons to act on
behalf of the Company for any specific purpose and in connection
therewith to execute any agreement, document or instrument on
behalf of the Company.
47. REGISTER OF DIRECTORS AND OFFICERS
47.1 The Board shall cause to be kept in one or more books at the
registered office of the Company a Register of Directors and Officers
in accordance with the Law and shall enter therein the following
particulars with respect to each Director and Officer:
(a) first name and surname; and
(b) address.
47.2 The Board shall, within the period of thirty days from the occurrence
of:-
(a) any change among its Directors and Officers; or
(b) any change in the particulars contained in the Register of
Directors and Officers,
cause to be entered on the Register of Directors and Officers the
particulars of such change and the date on which such change occurred,
and shall notify the Registrar of Companies of any such change that
takes place.
48. OFFICERS
The Officers shall consist of a Secretary and such additional Officers as
the Board may determine all of whom shall be deemed to be Officers for the
purposes of these Articles.
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49. APPOINTMENT OF OFFICERS
The Secretary (and additional Officers, if any) shall be appointed by the
Board from time to time.
50. DUTIES OF OFFICERS
The Officers shall have such powers and perform such duties in the
management, business and affairs of the Company as may be delegated to them
by the Board from time to time.
51. REMUNERATION OF OFFICERS
The Officers shall receive such remuneration as the Board may determine.
52. CONFLICTS OF INTEREST
52.1 Any Director, or any Director's firm, partner or any company with whom
any Director is associated, may act in any capacity for, be employed
by or render services to the Company and such Director or such
Director's firm, partner or company shall be entitled to remuneration
as if such Director were not a Director. Nothing herein contained
shall authorise a Director or Director's firm, partner or company to
act as Auditor to the Company.
52.2 A Director who is directly or indirectly interested in a contract or
proposed contract or arrangement with the Company shall declare the
nature of such interest as required by law.
52.3 Following a declaration being made pursuant to this Article, and
unless disqualified by the chairman of the relevant Board meeting, a
Director may vote in respect of any contract or proposed contract or
arrangement in which such Director is interested and may be counted in
the quorum for such meeting.
53. INDEMNIFICATION AND EXCULPATION OF DIRECTORS AND OFFICERS
53.1 The Directors, Officers and Auditors of the Company and any trustee
for the time being acting in relation to any of the affairs of the
Company and every former director, officer, auditor or trustee and
their respective heirs, executors, administrators, and personal
representatives (each of which persons being referred to in this
Article as an "indemnified party") shall be indemnified and secured
harmless out of the assets of the Company from and against all
actions, costs, charges, losses, damages and expenses which they or
any of them shall or may incur or sustain by or by reason of any act
done, concurred in or omitted in or about the execution of their duty,
or supposed duty, or in their respective offices or trusts, and no
indemnified party shall be answerable for the acts, receipts, neglects
or defaults of the others of them or for joining in any receipts for
the sake
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of conformity, or for any bankers or other persons with whom any
moneys or effects belonging to the Company shall or may be lodged or
deposited for safe custody, or for insufficiency or deficiency of any
security upon which any moneys of or belonging to the Company shall be
placed out on or invested, or for any other loss, misfortune or damage
which may happen in the execution of their respective offices or
trusts, or in relation thereto, PROVIDED THAT this indemnity shall not
extend to any matter in respect of any fraud or dishonesty which may
attach to any of the said persons. Each Member agrees to waive any
claim or right of action such Member might have, whether individually
or by or in the right of the Company, against any Director or Officer
on account of any action taken by such Director or Officer, or the
failure of such Director or Officer to take any action in the
performance of his duties with or for the Company, PROVIDED THAT such
waiver shall not extend to any matter in respect of any fraud or
dishonesty with may attach to such Director or Officer.
53.2 The Company may purchase and maintain insurance for the benefit of any
Director or Officer of the Company against any liability incurred by
him in his capacity as a Director or Officer of the Company or
indemnifying such Director or Officer in respect of any loss arising
or liability attaching to him by virtue of any rule of law in respect
of any negligence, default, breach of duty or breach of trust of which
the Director or Officer may be guilty in relation to the Company or
any subsidiary thereof.
MEETINGS OF THE BOARD OF DIRECTORS
54. BOARD MEETINGS
The Board may meet for the transaction of business, adjourn and otherwise
regulate its meetings as it sees fit. A resolution put to the vote at a
meeting of the Board shall be carried by the affirmative votes of a
majority of the votes cast and in the case of an equality of votes the
resolution shall fail.
55. NOTICE OF BOARD MEETINGS
A Director may, and the Secretary on the requisition of a Director shall,
at any time summon a meeting of the Board. Notice of a meeting of the Board
shall be deemed to be duly given to a Director if it is given to such
Director verbally (in person or by telephone) or otherwise communicated or
sent to such Director by post, cable, telex, telecopier, facsimile,
electronic mail or other mode of representing words in a legible form at
such Director's last known address or any other address given by such
Director to the Company for this purpose.
56. PARTICIPATION IN MEETINGS BY TELEPHONE
Directors may participate in any meeting of the Board by means of such
telephone, electronic or other communication facilities as permit all
persons participating in the
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meeting to communicate with each other simultaneously and instantaneously,
and participation in such a meeting shall constitute presence in person at
such meeting.
57. QUORUM AT BOARD MEETINGS
The quorum necessary for the transaction of business at a meeting of the
Board shall be two Directors, provided that if there is only one Director
for the time being in office the quorum shall be one.
58. BOARD TO CONTINUE IN THE EVENT OF VACANCY
The Board may act notwithstanding any vacancy in its number.
59. CHAIRMAN TO PRESIDE
Unless otherwise agreed by a majority of the Directors attending, the
Chairman, if there be one, shall act as chairman at all meetings of the
Board at which such person is present. In his absence a chairman shall be
appointed or elected by the Directors present at the meeting.
60. WRITTEN RESOLUTIONS
60.1 Anything which may be done by resolution of the Directors may, without
a meeting and without any previous notice being required, be done by
resolution in writing signed by, or in the case of a Director that is
a corporation whether or not a company within the meaning of the Law,
on behalf of, all the Directors.
60.2 A resolution in writing may be signed by, or in the case of a Director
that is a corporation whether or not a company within the meaning of
the Law, on behalf of, all the Directors in as many counterparts as
may be necessary.
60.3 A resolution in writing made in accordance with this Article is as
valid as if it had been passed by the Directors in a directors'
meeting, and any reference in any Article to a meeting at which a
resolution is passed or to Directors voting in favour of a resolution
shall be construed accordingly.
60.4 A resolution in writing made in accordance with this Article shall
constitute minutes for the purposes of the Law.
60.5 For the purposes of this Article, the date of the resolution is the
date when the resolution is signed by, or in the case of a Director
that is a corporation whether or not a company within the meaning of
the Law, on behalf of, the last Director to sign (or Alternate
Director to sign if so authorised under Article 40.6), and any
reference in any Article to the date of passing of a resolution is, in
relation to a resolution made in accordance with this Article, a
reference to such date.
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61. VALIDITY OF PRIOR ACTS OF THE BOARD
No regulation or alteration to these Articles made by the Company in
general meeting shall invalidate any prior act of the Board which would
have been valid if that regulation or alteration had not been made.
CORPORATE RECORDS
62. MINUTES
The Board shall cause minutes to be duly entered in books provided for the
purpose:
(a) of all elections and appointments of Officers;
(b) of the names of the Directors present at each meeting of the
Board and of any committee appointed by the Board; and
(c) of all resolutions and proceedings of general meetings of the
Members, meetings of the Board, meetings of managers and meetings
of committees appointed by the Board.
63. REGISTER OF MORTGAGES AND CHARGES
63.1 The Directors shall cause to be kept the Register of Mortgages and
Charges required by the Law.
63.2 The Register of Mortgages and Charges shall be open to inspection in
accordance with the Law, at the office of the Company on every
business day in the Cayman Islands, subject to such reasonable
restrictions as the Board may impose, so that not less than two hours
in each such business day be allowed for inspection.
64. FORM AND USE OF SEAL
64.1 The Seal shall only be used by the authority of the Directors or of a
committee of the Directors authorised by the Directors in that behalf;
and, until otherwise determined by the Directors, the Seal shall be
affixed in the presence of a Director or the Secretary or an assistant
secretary or some other person authorised for this purpose by the
Directors or the committee of Directors.
64.2 Notwithstanding the foregoing, the Seal may without further authority
be affixed by way of authentication to any document required to be
filed with the Registrar of Companies in the Cayman Islands, and may
be so affixed by any Director, Secretary or assistant secretary of the
Company or any other person or institution having authority to file
the document as aforesaid.
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64.3 The Company may have one or more duplicate Seals, as permitted by the
Law; and, if the Directors think fit, a duplicate Seal may bear on its
face of the name of the country, territory, district or place where it
is to be issued.
ACCOUNTS
65. BOOKS OF ACCOUNT
65.1 The Board shall cause to be kept proper records of account with
respect to all transactions of the Company and in particular with
respect to:-
(a) all sums of money received and expended by the Company and the
matters in respect of which the receipt and expenditure relates;
(b) all sales and purchases of goods by the Company; and
(c) all assets and liabilities of the Company.
65.2 Such records of account shall be kept and proper books of account
shall not be deemed to be kept with respect to the matters aforesaid
if there are not kept, at such place as the Board thinks fit, such
books as are necessary to give a true and fair view of the state of
the Company's affairs and to explain its transactions.
65.3 No Member (not being a Director) shall have any right of inspecting
any account or book or document of the Company.
66. FINANCIAL YEAR END
The financial year end of the Company shall be 31st December in each year
but, subject to any direction of the Company in general meeting, the Board
may from time to time prescribe some other period to be the financial year,
provided that the Board may not without the sanction of an ordinary
resolution prescribe or allow any financial year longer than eighteen
months.
AUDITS
67. AUDIT
Nothing in these Articles shall be construed as making it obligatory to
appoint Auditors.
68. APPOINTMENT OF AUDITORS
68.1 The Company may in general meeting appoint Auditors to hold office for
such period as the Members may determine.
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68.2 Whenever there are no Auditors appointed as aforesaid the Directors
may appoint Auditors to hold office for such period as the Directors
may determine or earlier removal from office by the Company in general
meeting.
68.3 The Auditor may be a Member but no Director, Officer or employee of
the Company shall, during his continuance in office, be eligible to
act as an Auditor of the Company.
69. REMUNERATION OF AUDITORS
Unless fixed by the Company in general meeting the remuneration of the
Auditor shall be as determined by the Directors.
70. DUTIES OF AUDITOR
The Auditor shall make a report to the Members on the accounts examined by
him and on every set of financial statements laid before the Company in
general meeting, or circulated to Members, pursuant to this Article during
the Auditor's tenure of office.
71. ACCESS TO RECORDS
71.1 The Auditor shall at all reasonable times have access to the Company's
books, accounts and vouchers and shall be entitled to require from the
Company's Directors and Officers such information and explanations as
the Auditor thinks necessary for the performance of the Auditor's
duties and, if the Auditor fails to obtain all the information and
explanations which, to the best of his knowledge and belief, are
necessary for the purposes of their audit, he shall state that fact in
his report to the Members.
71.2 The Auditor shall be entitled to attend any general meeting at which
any financial statements which have been examined or reported on by
him are to be laid before the Company and to make any statement or
explanation he may desire with respect to the financial statements.
VOLUNTARY WINDING-UP AND DISSOLUTION
72. WINDING-UP
72.1 The Company may be voluntarily wound-up by a Special Resolution.
72.2 The assets available for distribution among the Members shall then be
applied in the following priority:
72.2.1 firstly, to each holder of Convertible Preferred Shares, either
(i) an amount equal to the Preference Amount, or (ii) a ratable
distribution in lieu thereof in accordance with Schedule 2;
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72.2.2 secondly, to the holders of Common Shares.
72.3 If the Company shall be wound up the liquidator may, with the sanction
of a Special Resolution, divide amongst the Members in specie or in
kind the whole or any part of the assets of the Company (whether they
shall consist of property of the same kind or not) and may, for such
purpose, set such value as he deems fair upon any property to be
divided as aforesaid and may subject to the rights of the Convertible
Preferred Shares determine how such division shall be carried out as
between the Members or different classes of Members. The liquidator
may, with the like sanction, vest the whole or any part of such assets
in the trustees upon such trusts for the benefit of the Members as the
liquidator shall think fit, but so that no Member shall be compelled
to accept any shares or other securities or assets whereon there is
any liability.
CHANGES TO CONSTITUTION
73. CHANGES TO ARTICLES
Subject to the Law, to the conditions contained in the Memorandum, the
Company may, by Special Resolution, alter or add to these Articles.
74. CHANGES TO THE MEMORANDUM OF ASSOCIATION
Subject to the Law, the Company may from time to time by Special Resolution
alter the Memorandum with respect to any objects, powers or other matters
specified therein.
75. DISCONTINUANCE
The Board may exercise all the powers of the Company to transfer by way of
continuation the Company to a named country or jurisdiction outside the
Cayman Islands pursuant to the Law.
76. CONFLICTS WITH SCHEDULE
For the avoidance of doubt, in the event of any inconsistency between the
terms of Schedule 2 hereto or the remainder of these Articles in connection
with the rights attaching to the Convertible Preferred Shares, the terms of
Schedule 2 hereto shall, the necessary changes being made therein and
hereto, prevail.
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Schedule 1
Terms of Common Shares
1. The A Common Shares shall:
(a) entitle the holder to one vote per share;
(b) entitle the holder to such dividends as the Board may from time to time
declare;
(c) in the event of a winding-up or dissolution of the Company, whether
voluntary or involuntary or for the purpose of a reorganization or
otherwise or for the purpose of a reorganization or otherwise or upon any
distribution of capital, entitle to the surplus assets of the Company; and
(d) generally entitle the holder to enjoy all of the rights attaching to A
Common Shares.
2. The B Common Shares shall:
(a) entitle the holder to ten votes per share;
(b) entitle the holder to convert such shares into A Common Shares on a one to
one (1:1) basis at any time upon delivery of written notice to the Board of
Directors;
(c) upon any sale, pledge, transfer, assignment or disposition of B Common
Shares by a holder thereof to any person or entity which is not at any time
a wholly-owned and wholly-controlled subsidiary of Xinhua Finance Limited,
automatically convert into A Common Shares (and, for the avoidance of
doubt, at any time such subsequent holder ceases to be a wholly-owned and
wholly-controlled subsidiary of Xinhua Finance Limited, the B Common Shares
held by such holder shall automatically convert into A Common Shares; and
(d) otherwise rank pari passu with the A Common Shares.
3. Attendance at General Meetings and Voting
Holders of Common Shares have the right to receive notice of, attend, speak
and vote at general meetings of the Company. Holders of shares of A Common
Shares and B Common Shares shall at all time vote together as one class on
all matters submitted to a vote for Members' consent.
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SCHEDULE 2
Terms of Convertible Preferred Shares
Convertible Preferred Shares. The board of directors (the "Board") of Xinhua
Finance Media Limited (the "Company") hereby establishes out of the authorized
and unissued Share Capital of the Company a series of Preferred Shares
designated as "Convertible Preferred Shares" (each such share, a "Convertible
Preferred Share"). The authorized number of Convertible Preferred Shares and the
preferences, limitations and relative rights and other matters pertaining to
Convertible Preferred Shares are described below. Capitalized terms used herein
but not otherwise defined in the individual sections have the meanings given to
them in Section 9 or in the body of the Articles.
Section 1. Number of Shares. The Convertible Preferred Shares shall consist of
fifteen million, five hundred eighty-five thousand, two hundred fifty-four
(15,585,254) Preferred Shares.
Section 2. Dividends. The right of payment of dividends (whether or not
declared) on the Convertible Preferred Shares shall be senior in right of
payment to dividends, if any, payable on any other shares, including, without
limitation, Common Shares and any other Preferred Shares (all such classes of
shares other than the Convertible Preferred Shares are referred to herein as
"Company Junior Shares"). Without the written consent of the Majority Holders of
Convertible Preferred Shares then outstanding, no dividend may be paid on any
Company Junior Shares and no Company Junior Shares shall be redeemed,
repurchased or otherwise acquired by the Company so long as any Convertible
Preferred Shares remain outstanding.
Section 3. Liquidation Preference. In the event of (i) any liquidation,
dissolution, or winding up of the Company, (ii) any distribution of assets to
its shareholders or (iii) any merger, consolidation or other business
combination involving the Company, a sale of all or substantially all of the
Company's assets, a capital reorganization of the Company or a reclassification
of the Common Shares, in each case whether voluntary or involuntary, each Holder
shall be entitled to receive for each of its Convertible Preferred Shares, out
of any lawfully available assets of the Company, in preference to the holders of
Company Junior Shares, an amount equal to the Liquidation Preference Amount,
determined as of the date of payment of the Liquidation Preference Amount,
before any distribution shall be made to the holders of Company Junior Shares.
After payment in full of the Liquidation Preference Amount to the Holders in
respect of each Convertible Preferred Share, the Convertible Preferred Shares
shall be entitled to a share of 1% of the remaining assets of the Company. In
the event that assets so distributable to Holders are insufficient to permit
payment of the full Liquidation Preference Amount with respect to each
Convertible Preferred Share, all assets of the Company legally available for
distribution to shareholders shall be distributed ratably among each Convertible
Preferred Share. In case the Company's Board shall desire to liquidate,
dissolve, or wind up the Company, it shall give notice of such intention to the
Holders by first class mail to the last address as may appear in the Company's
records not less than thirty (30) calendar days prior to the date of the general
meeting at which the resolution relating to such liquidation, dissolution, or
winding up is to be considered. Each Holder shall be provided with thirty (30)
calendar days prior notice of any intended merger, consolidation or other
business combination involving the Company, a sale of
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all or substantially all of the Company's assets, a capital reorganization of
the Company or a reclassification of the Common Shares.
Section 4. Redemption.
(a) Redemption. Except as provided in this Section 4(a)(i), the
Convertible Preferred Shares may not be redeemed without the consent
of the Holder of such shares.
(i) Optional Redemption. If prior to January 7, 2009 the Company
elects to optionally redeem the Convertible Preferred Shares,
then at the date of optional redemption (the "Optional Redemption
Date"), the Company shall either (i) pay each Holder the
Preference Amount (determined as of the Optional Redemption Date)
for such Holder, or (ii) deliver to each Holder the Parent
Conversion Shares (determined as of the Optional Redemption Date)
for such Holder; provided, Company may not elect to deliver the
Parent Conversion Shares (and therefore must pay the Preference
Amount) unless such Shares are listed on a Qualified Exchange and
are freely tradable subject only to the rules and regulations of
the Qualified Exchange generally applicable to stock actively
traded on the Qualified Exchange; provided further, that such
Holder may reject any such payment of the Preference Amount or
delivery of the Parent Conversion Shares and instead elect to
convert its Convertible Preferred Shares into A Common Shares
pursuant to Section 7 hereof. The Company shall provide five (5)
Business Days prior written notice to the Holders of its election
pursuant to this Section 4(a)(ii) to either pay the Preference
Amount or to provide the Parent Conversion Shares, and the
Holders shall have three (3) Business Days from the date it
receives such notice from Company to elect to convert into A
Common Shares pursuant to Section 7 hereof. For purposes of
clarification, if any Holder elects to convert to A Common Shares
pursuant to Section 7 hereof, the Company shall not have the
option of paying the Preference Amount or delivering Parent
Conversion Shares. If either: (x) the Company fails to make the
election to either pay the Preference Amount or deliver the
Parent Conversion Shares by the fifth Business Day prior to the
Optional Redemption Date, or (y) the Company elects to deliver
Parent Conversion Shares and fails to deliver Parent Conversion
Shares within two (2) Business Days after the Optional Redemption
Date, then the Company shall be deemed to have elected to pay the
Preference Amount and such payment obligation of the Company
shall be a senior obligation of the Company immediately due and
payable in full. If the Preference Amount is payable and has not
been paid in full, in addition to all other remedies, interest
shall accrue thereon from the Optional Redemption Date until paid
in full at the rate of 15% per annum, payable immediately and
compounded monthly from the Optional Redemption Date until paid
in full. Notwithstanding the foregoing, the Company may not
optionally redeem the Convertible Preferred Shares unless either
(i) the Loans and the other amounts payable under the Credit
Agreement have been repaid in full or (ii) the Required Lenders
(as defined in the Credit Agreement) shall have consented
thereto.
(b) Mechanics of Redemption. If the Company shall elect to exercise its
right to redeem all of the outstanding Convertible Preferred Shares,
it shall give notice of such redemption to
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the Holders by first class mail to the last address as may appear in
the Company's records not less than five (5) Business Days prior to
the Optional Redemption Date. Each notice shall specify the date of
redemption and the Preference Amount. The Holders shall have three (3)
Business Days from the date it receives such notice from Company to
elect to convert into A Common Shares pursuant to Section 7 hereof.
Notwithstanding the foregoing, each Holder shall continue to have the
conversion rights specified in Section 7 until its Convertible
Preferred Shares are in fact redeemed. Until such time as the
Convertible Preferred Shares held by such Holder are in fact redeemed,
such Holder may reject any payment of the Preference Amount or
delivery of the Parent Conversion Shares and instead elect to convert
its Convertible Preferred Shares into A Common Shares pursuant to
Section 7 hereunder. For purposes of clarification, if any Holder
elects to convert to A Common Shares pursuant to Section 7 hereunder,
the Company shall not have the option of paying the Preference Amount
or delivering Parent Conversion Shares. Shares shall not be considered
redeemed until all amounts payable with respect thereto have been paid
in full. Any shares that are redeemed or otherwise acquired by the
Company shall be canceled and shall be restored to the status of
authorized but unissued shares in the capital of the Company without
designation as to series, and may thereafter be issued, but not as
Convertible Preferred Shares. The Company may fund the redemption of
the Convertible Preferred Shares in any manner permitted by law and
may, subject to the Law, make payments out of capital in connection
therewith.
Section 5. Voting Rights. Except as otherwise required by law and herein, each
Holder shall be entitled to vote at any general or other meeting of the Company
on an as converted basis with the A Common Shares as a single group and have all
other voting rights granted by law and the Articles.
Section 6. Additional Class Votes by Convertible Preferred Shares. Except to the
extent otherwise required by law, the Company may not, without the prior written
consent of the Majority Holders take any of the actions listed below:
(a) Indebtedness. Create, incur, permit to exist or assume, or cause or
permit any of its Covered Subsidiaries or Subsidiaries to create,
incur, permit to exist or assume, any Indebtedness other than the
Permitted Indebtedness;
(b) Liens. Create or incur, or cause or permit any of its Covered
Subsidiaries to create or incur, any Liens on any of its property or
assets other than the Permitted Liens;
(c) Sales and Lease-Backs. Become or remain liable, or cause or permit any
of its Covered Subsidiaries to become or remain liable, directly or
indirectly, as lessee or as a guarantor or other surety with respect
to any lease of any property where the market value of such property
or the aggregate obligations are in excess of $100,000 (whether real,
personal or mixed), whether now owned or hereafter acquired, which the
Company or any Covered Subsidiary (i) has sold or transferred or is to
sell or to transfer to any other Person (other than the Company or any
Covered Subsidiary), or (ii) intends to use for substantially the same
purpose as any other property which has been or is to be sold or
transferred by the
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Company or such Covered Subsidiary to any Person (other than the
Company or any other Covered Subsidiary) in connection with such
lease;
(d) Transactions with Shareholders and Affiliates. Enter into or permit to
exist, or cause or permit any of its Covered Subsidiary to enter into
or permit to exist, any transaction (including the purchase, sale,
lease or exchange of any property or the rendering of any service, but
excluding the transactions contemplated by the Equity Documents in
connection therewith) that is a Transaction with Shareholders and
Affiliates;
(e) Mergers; Asset Sales. (i) Become, or cause or permit any of its
Covered Subsidiary to become, party to a merger, consolidation or
other business combination, (ii) sell, lease or otherwise dispose of,
or cause any of its Covered Subsidiaries to sell, lease or otherwise
dispose of, assets other than (A) in the ordinary course and not to
exceed in the aggregate $500,000 per Fiscal Year and (B) disposals of
obsolete, worn out or surplus property, (iii) make any changes in the
corporate structure or identity of the Company or any other Covered
Subsidiary which has a Material Adverse Effect on the Company and/or
such Covered Subsidiary or (iv) enter into any agreement to do any of
the foregoing; provided, that, any Covered Subsidiary (other than the
Company) may merge with and into the Company or any other Covered
Subsidiary upon not less than thirty (30) days' prior written notice
to the Agent of such merger;
(f) Restricted Payments. Order, pay, make or set apart any sum, or cause
or permit any of its Covered Subsidiaries to order, pay, make, or set
apart any sum, directly or indirectly, for (i) any Restricted Junior
Payment or (ii) Indebtedness owed to any Affiliate of a Covered
Subsidiary other than (A) payments in respect of Permitted
Indebtedness made to the Company or to a wholly-owned Subsidiary or
(B) Repayment of EconWorld Indebtedness;
(g) Limitations on Exchange and Issuance of Share Capital. Create, issue,
or sell (i) any class or series of Common Shares (other than an Exempt
Issuance) or Preferred Shares (other than the Convertible Preferred
Shares), (ii) any class, series or shares of Share Capital that is
senior in rights in any respect (including, without limitation, right
of payment, right of repayment, rights in liquidation, right of
redemption or right to dividends) to the Common Shares or the common
shares of the Covered Subsidiaries (other than the Convertible
Preferred Shares), (iii) any class or series of Share Capital that is
convertible or exchangeable into Indebtedness, Preferred Shares, or
Share Capital that is senior in rights in any respect (including,
without limitation, right of payment, right of repayment, rights in
liquidation, right of redemption or right to dividends) to the Common
Shares or the common shares of the Covered Subsidiaries, or (iv) any
Convertible Preferred Shares other than those shares issued under the
Share Purchase Agreement;
(h) Subsidiaries. Form or cause or permit to be formed or cause or permit
to exist, or cause or permit any of its Covered Subsidiaries to form
or cause or permit to be formed or cause or permit to exist, any other
Foreign Subsidiary, unless (i) such Foreign Subsidiary does not
(directly or indirectly) hold any Media Asset and does not (directly
or indirectly) hold
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any outstanding shares of Share Capital of a Subsidiary which is party
to an Internal Control Agreement with respect to such Media Asset or
(ii) if such Foreign Subsidiary directly or indirectly holds any Media
Assets or directly or indirectly holds any outstanding shares of Share
Capital of a Subsidiary which is party to an Internal Control
Agreement with respect to such Media Asset, such Foreign Subsidiary is
wholly-owned by a Covered Subsidiary and (x) all property and assets
of such newly formed Foreign Subsidiary and (y) all stock of any class
of such newly formed Foreign Subsidiary, in each case, are pledged to
the Holders in accordance with the terms of the Equity Documents.
(i) Conduct of Business. From and after the Original Issuance Date, engage
in, or cause or permit any of its Covered Subsidiaries to engage in,
in any business other than (i) the Permitted Business, and (ii) such
other lines of business as may be consented to by the Holders;
(j) Organizational Documents. Agree to, or cause or permit any Covered
Subsidiary to agree to, any material amendment, restatement,
supplement or other modification to, or waiver of (x) any provision in
the Articles of Association, or (y) any of its organizational or
constitutive documents in a manner adverse to the rights of any
Holder, after the Original Issuance Date;
(k) Bankruptcy. Institute, or cause or permit any of its Covered
Subsidiaries to institute, any proceeding seeking to adjudicate it
bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or
composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seek the entry
of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any of its assets,
or make a general assignment for the benefit of creditors;
(l) Liquidation or Dissolution. Seek, or cause or permit, the liquidation,
dissolution or winding up of the Company;
(m) Change of Control. Cause or permit a Change of Control;
(n) IPO. Cause or permit any IPO which is not a QIPO; and
(o) Issuance of Common Stock. Cause or permit any issuance of Common Stock
at a price per share less than $3.66 (other than an Exempt Issuance).
Section 7.Conversion. Each Convertible Preferred Share shall be convertible as
follows:
(a) Conversion into A Common Shares.
(i) Conversion Ratio. Each Convertible Preferred Share shall be
convertible into such number of fully paid and nonassessable A Common
Shares as is determined by dividing (A) the quotient of (i) the
aggregate Face Amount of all outstanding
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Convertible Preferred Shares plus $19,040,638.04 (the "Preferred
Conversion Amount") divided by (ii) the number of outstanding
Convertible Preferred Shares by (B) the applicable Conversion Price in
effect on the applicable conversion date.
(ii)Optional Conversion. Each Convertible Preferred Share shall be
convertible into A Common Shares at the option of the Holder at any
time after the Original Issuance Date, by written notice to the
Company. The Conversion Price shall be determined as of the date such
conversion is effected. The Company will promptly thereafter, issue
and deliver to such Holder or its designee a certificate for the
number of A Common Shares to which such Holder shall be entitled after
the conversion. The conversion will be deemed to have been completed
immediately prior to the close of business on the date of such
Holder's notice to the Company and the Person entitled to receive the
A Common Shares issuable upon such conversion shall be treated as the
record holder of such A Common Shares as of such date.
(iii) Mandatory Conversion. Each Convertible Preferred Share shall be
converted automatically into A Common Shares immediately upon a QIPO
of the Company that occurs prior to the 31 December 2008. The
Conversion Price will be determined as of the QIPO Date. Upon the
occurrence of such event, the Company shall promptly issue and deliver
to each Holder or its designee in such Holder's or its designee's name
a certificate or certificates for the number of A Common Shares into
which the Convertible Preferred Shares were converted.
(b) Conversion into Parent Shares. At any time after 7 January 2009, all,
and not less than all, of the Convertible Preferred Shares shall be
convertible at the option of the Majority Holders into the Parent
Share Amount by written notice to the Company. The Company will
promptly thereafter deliver to each Holder or its designee a
certificate for the number of Parent Shares to which such Holder shall
be entitled after the conversion.
(c) [Reserved]
(d) Accrued Cumulative Dividends. Company shall have the option to pay all
accrued cumulative but unpaid dividends prior to the date at which the
Convertible Preferred Shares are converted to A Common Shares.
(e) Conversion Price Adjustments. The Conversion Price shall be subject to
adjustment from time to time as described below:
(i) Dividend or Split. If there is (1) a split or subdivision of
the outstanding A Common Shares or (2) a dividend or other
distribution payable in A Common Shares or Options or Convertible
Securities without payment of any consideration, then, as of such
record date for such event, the Conversion Price shall be
appropriately decreased so the number of A Common Shares issuable
on conversion of the Convertible Preferred Shares shall be
increased in proportion to such increase in the aggregate number
of A Common Shares outstanding or issuable with respect to such
Options or Convertible Securities.
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(ii) Combinations. If the number of A Common Shares outstanding
is decreased by a combination of the outstanding A Common Shares,
then, as of the record date of such combination, the Conversion
Price shall be appropriately increased so the number of A Common
Shares issuable on conversion of each share of such series shall
be decreased in proportion to such decrease in outstanding A
Common Shares.
(iii) Recapitalization, Consolidation, Merger, Etc. In case of
any change in the A Common Shares through recapitalization,
reclassification, or other change in the Share Capital of the
Company (other than a combination of shares or the issuance of
additional A Common Shares by stock split or stock dividend) or
through any merger or consolidation which is effected such that
holders of A Common Shares are entitled to receive shares,
Securities, cash, or other assets in exchange for A Common
Shares, then, as a condition of the change in capital structure
or merger, provision shall be made so that the Holders of
Convertible Preferred Shares will have the right thereafter to
receive upon conversion the kind and amount of shares of stock or
other Securities or property to which such Holders would have
been entitled if, immediately prior to such change in capital
structure, such Holders had held the number of A Common Shares
issuable upon conversion of the Convertible Preferred Shares. In
addition, appropriate provision will be made with respect to the
Holder's rights and interests to ensure that the provisions in
this Section 7 will thereafter be applicable in relation to any
shares, Securities, cash, or other assets thereafter deliverable
upon the conversion of Convertible Preferred Shares.
(iv)Protection Against Dilution. If any event occurs as to which,
in the mutual opinion of the Company's Board and the Majority
Holders, the other provisions of this Section 7(e) are not
strictly applicable or would not fairly protect the rights of the
Holders in accordance with the intent of these anti-dilution
provisions, then the Company's Board and the Majority Holders
shall agree to an adjustment in accordance with the intent of
these provisions to protect the Holders' rights under this
Section 7, but in no event shall any adjustment have the effect
of increasing the Conversion Price (except in the case of a
combination of A Common Shares as described in Section 7(e)(ii)).
(v)Reservation of Shares. The Company shall at all times reserve
and keep available from its authorized but unissued A Common
Shares such number of A Common Shares as shall be sufficient to
effect the conversion of all outstanding Convertible Preferred
Shares; and if at any time the number of authorized but unissued
A Common Shares shall not be sufficient to effect the conversion
of all then outstanding Convertible Preferred Shares, the Company
and Members will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued A Common Shares to such number of A Common Shares as
shall be sufficient for such purposes, including, without
limitation, engaging in reasonable efforts to obtain and provide
the requisite shareholder approval of any necessary amendment to
the Company's Memorandum and the Articles of Association.
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(vi) No Fractional Shares. No fractional shares shall be issued
upon the conversion of Convertible Preferred Shares, and the
number of A Common Shares to be issued shall be rounded to the
nearest whole share. The Company shall, in lieu of issuance of
such fractional share, pay the Holder otherwise entitled to such
fractional share cash for the outstanding Convertible Preferred
Shares not converted.
(vii) Mechanics of Conversion. The Company may adopt any manner
of conversion permitted by law to effect conversion including by
way of redemption or purchase of the Convertible Preferred Shares
and the issue of new A Common Shares and the Company may, subject
to the Law, make payments out of capital in connection therewith.
(f) Parent Share Amount Adjustments. The Parent Share Amount shall be
subject to adjustment from time to time as described below:
(i)Dividend or Split. If there is (1) a split or subdivision of
the outstanding Parent Shares or (2) a dividend or other
distribution payable in Parent Shares or Parent Options or Parent
Convertible Securities without payment of any consideration,
then, as of such record date for such event, the Parent Share
Amount deliverable on conversion of the Convertible Preferred
Shares shall be increased in proportion to such increase in the
aggregate number of Parent Shares outstanding or issuable with
respect to such Parent Options or Parent Convertible Securities.
(ii) Combinations. If the number of Parent Shares outstanding is
decreased by a combination of the outstanding Parent Shares,
then, as of the record date of such combination, the Parent Share
Amount deliverable on conversion of the Convertible Preferred
Shares shall be decreased in proportion to such decrease in
outstanding Parent Shares.
(iii) Recapitalization, Consolidation, Merger, Etc. In case of
any change in the Parent Shares through recapitalization,
reclassification, or other change in the Share Capital of the
Parent (other than a combination of shares or the issuance of
additional Parent Shares by stock split or stock dividend) or
through any merger or consolidation which is effected such that
holders of Parent Shares are entitled to receive shares,
Securities, cash, or other assets in exchange for Parent Shares,
then, as a condition of the change in capital structure or
merger, provision shall be made so that the Holders of
Convertible Preferred Shares will have the right thereafter to
receive upon conversion the kind and amount of shares of stock or
other Securities or property to which such Holders would have
been entitled if, immediately prior to such change in capital
structure, such Holders had held the Parent Share Amount issuable
upon conversion of the Convertible Preferred Shares. In addition,
appropriate provision will be made with respect to the Holder's
rights and interests to ensure that the provisions in this
Section 7 will thereafter be applicable in relation to any
shares, Securities, cash, or other assets thereafter deliverable
upon the conversion of Convertible Preferred Shares.
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(iv)Protection Against Dilution. If any event occurs as to which,
in the mutual opinion of the Company's Board and the Majority
Holders, the other provisions of this Section 7(f) are not
strictly applicable or would not fairly protect the rights of the
Holders in accordance with the intent of these anti-dilution
provisions, then the Company's Board and the Majority Holders
shall agree to an adjustment in accordance with the intent of
these provisions to protect the Holders' rights under this
Section 7, but in no event shall any adjustment have the effect
of decreasing the Parent Share Amount below 160,000 Parent Shares
(except in the case of a combination of Parent Shares as
described in Section 7(f)(ii)).
Section 8.Definitions
"Affiliate" of a Person means any other Person (a) that directly or indirectly
controls, is controlled by or is under common control with, the Person or any of
its Subsidiaries, (b) that directly or indirectly beneficially owns or holds 5%
or more of any class of equity Security or other similar interests of the Person
or any of its Subsidiaries or (c) 5% or more of the equity Securities of which
is directly or indirectly beneficially owned or held by the Person or any of its
Subsidiaries. For purposes of this definition, the term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting Securities, by contract, agreement or otherwise.
Notwithstanding the foregoing, no Holder or any Affiliate of any Holder shall be
an Affiliate of the Parent, the Company or any of its Subsidiaries.
"Agent" means Patriarch Partners Agency Services, LLC.
"Asset Sale" means a sale, lease or sublease (as lessor or sublessor), sale and
leaseback, assignment, conveyance, transfer or other disposition to, or any
exchange of property with, any Person, in one transaction or a series of
transactions, of all or any part of the businesses of the Company or any of its
Subsidiaries, assets or properties of any kind, whether real, personal, or mixed
and whether tangible or intangible, whether now owned or hereafter acquired,
including, without limitation, the Share Capital of any Subsidiary of the
Company, but excluding (i) inventory (or other assets) sold or leased in the
ordinary course of business and (ii) disposals of obsolete, worn out or surplus
property.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Business Day" means a day other than Saturday or Sunday or other day on which
commercial banks in New York City, New York, Charlotte, North Carolina, Hong
Kong or Tokyo, Japan, are authorized or required by law or other governmental
action to close and a day on which dealings are carried on for deposits in
Dollars by and among banks in the London interbank market.
"Capital Lease" means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
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"Change of Control" means any one or more of the following events:
(i) Any individual, corporation, partnership, trust, association,
pool, syndicate, or any other entity or any group of persons acting in
concert (other than any Holder, any Affiliate of any Holder, the Parent or
any of its Subsidiaries) becomes the beneficial owner, as that concept is
defined in Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Exchange Act of Securities of the Company possessing either (A)
fifty percent (50%) or more of the voting power for the election of
directors of the Company or (B) fifty percent (50%) or more in value of the
outstanding equity Securities (or the right to acquire fifty percent (50%)
or more) of the Company;
(ii) There shall be consummated any consolidation, merger, or other
business combination involving the Company or the Securities of the Company
in which (A) holders of voting Securities of the Company immediately prior
to such consummation own, as a group, immediately after such consummation,
voting Securities of the Company (or, if the Company does not survive such
transaction, voting Securities of the corporation surviving such
transaction) having less than fifty percent (50%) of the total voting power
in an election of directors of the Company (or such other surviving
corporation) or (B) holders of equity Securities of the Company immediately
prior to such consummation own, as a group, immediately after such
consummation, equity Securities of the Company (or, if the Company does not
survive such transaction, voting Securities of the corporation surviving
such transaction) having less than fifty percent (50%) of the equity
Securities of the Company (or such other surviving corporation);
(iii) There shall be consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of assets
representing all or substantially all of the assets of the Company (on a
consolidated basis) to a party which is not controlled by or under common
control with the Company either before or after such transaction or series
of related transactions; or
(iv) The Parent ceases to possess total voting power of the
outstanding equity Securities of the Company sufficient to elect a majority
of the members of the board of directors of the Company.
"Collateral Documents" means the Security Agreement, the Pledge Agreement, and
all other instruments, documents and agreements delivered by the Company or any
Covered Subsidiary pursuant to the Share Purchase Agreement or any of the other
Equity Documents (including, without limitation, all UCC financing statements)
in order to grant to the Holders a Lien on any property of the Company or any
Covered Subsidiary as security for the Obligations.
"Conversion Price" means the Initial Conversion Price, as may be adjusted in
accordance with Section 7 herein.
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"Convertible Securities" means any Securities or other rights to acquire
Securities, other than the Convertible Preferred Shares, which are directly or
indirectly convertible into or exchangeable for A Common Shares.
"Covered Subsidiary" means each of (i) Ming Shing International Limited, a
British Virgin Islands company, (ii) Upper Will Enterprises Limited, a British
Virgin Islands company and (iii) Active Advertising Agency Limited, a Hong Kong
company.
"Credit Agreement" means the Credit Agreement, dated as of March 16, 2006, among
the Company, the Holders, the Guarantors named therein and the Agent named
therein.
"Credit Document" means "Credit Document" as defined under the Credit Agreement.
"Domestic Subsidiary" means any Subsidiary organized under the laws of the PRC.
"Equity Documents" means this Schedule 2, the Share Purchase Agreement, the
Collateral Documents, the Investor Rights Agreement and all other documents or
instruments or agreements executed or delivered by the Company or a Covered
Subsidiary for the benefit of any Holder.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended from time to time, and any successor statute
"Exempt Issuance" means the issuance of any A Common Shares: (a) to the extent
that any issuance to an Exempt Plan is in excess of the maximum numbers listed
on Annex A, under any employee benefit plan, employee share option plan, share
incentive plan or other similar plan adopted by the Company's Board (an "Exempt
Plan") only to the extent that the total number of A Common Shares issued to
such Exempt Plan on a fully-diluted as converted basis does not exceed 20% of
the Fully-Diluted A Common Shares determined as of the date immediately prior to
such issuance; (b) to any Person listed on Annex A (each, an "Exempt Issuee") in
consideration for the contribution of assets as indicated on Annex A (the
"Specified Contributed Assets"), (i) at an effective per share price equal to or
greater than $3.00 per Common Share and (ii) only to the extent that (A) the
total number of A Common Shares issued to such Exempt Issuee on a fully-diluted
as converted basis does not exceed the maximum number of shares set forth next
to such Exempt Issuee's name on Annex A and (B) the Exempt Issuee contributes
the Specified Contributed Assets in consideration for the issuance of such A
Common Shares; or (c) not exceeding 0.5% of the lesser of (i) the Fully-Diluted
A Common Shares determined as of the date immediately prior to such issuance and
(ii) the number equal to the sum of (A) the number of outstanding Fully-Diluted
A Common Shares determined as of the Original Issuance Date plus (B) the number
of Fully-Diluted A Common Shares issued pursuant to any Exempt Issuance under
clauses (a) and (b) of this definition, each of (A) and (B) as adjusted in
accordance with the provisions of Section 7. For the avoidance of doubt, any
issuance of A Common Shares pursuant to clause (a) of this definition for
numbers of A Common Shares in excess of the maximum numbers listed on Annex A
shall be null and void and any issuance of A Common Shares pursuant to clause
(b) of this definition (w) for an effective per share price less than $3.00, (x)
in consideration for assets other than the Specified Contributed Assets, (y) to
any
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Person not listed on Annex A, or (z) for numbers of A Common Shares in excess of
the maximum numbers listed on Annex A shall be null and void.
"Face Amount" means $3.66 per Convertible Preferred Share, as adjusted for any
split, consolidation or similar event with respect to the Convertible Preferred
Shares.
"Fiscal Year" means the fiscal year of the Company and its Subsidiaries ending
on December 31 of each calendar year.
"Foreign Subsidiary" means any Subsidiary that is not a Domestic Subsidiary.
"Fully-Diluted A Common Shares" means, as of the time of determination, all
issued and outstanding A Common Shares of the Company and all A Common Shares of
the Company issuable upon conversion or exercise of any rights, options,
warrants or other Securities convertible into or exercisable for A Common
Shares, including, without limitation, the Convertible Preferred Shares.
"GAAP" means International Financial Reporting Standards as in effect from time
to time, consistently applied throughout the periods to which reference is made.
"Holder" and "Holders" mean the Persons from time to time holding the
Convertible Preferred Shares.
"Hong Kong" means the Hong Kong Special Administrative Region of the People's
Republic of China.
"HK Dollars" and the sign "HK$" mean the lawful money of Hong Kong.
"Indebtedness" means, with respect to any Person, without duplication, the
following: (i) all indebtedness of such Person for borrowed money, (ii) all
obligations of such Person for the deferred purchase price of property or
services other than accounts payable and accrued liabilities that would be
classified as current liabilities under GAAP which payables and expenses are
incurred in respect of property or services purchased in the ordinary course of
business, (iii) all obligations of such Person evidenced by notes, bonds,
debentures or similar borrowing or Securities instruments, (iv) all obligations
of such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (v) all
obligations of such Person as lessee under Capital Leases, (vi) all obligations
of such Person in respect of banker's acceptances and letters of credit, (vii)
all obligations of such Person secured by Liens on the assets and property of
such Person, (viii) all obligations of such Person to purchase, redeem, retire,
defease or otherwise make any payment in respect of any Share Capital or other
ownership or profit interest in such Person or any other Person or any warrants,
rights or options to acquire such Share Capital, (ix) all obligations of such
Person in respect of any guaranty by such Person of any obligation of another
Person of the type described in clauses (i) through (viii) of this definition
and (x) all obligations of another Person of the type described in clauses (i)
through (ix) secured by a Lien on the property or assets of such Person (whether
or not such Person is otherwise liable for such obligations of such other
Person).
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"Initial Conversion Price" means $3.66
"Internal Control Agreement" means (i) any appointment or indemnification
arrangement or agreement with a natural Person, who is a citizen of the PRC,
designated by Parent or Company or any Affiliate or Subsidiary of Parent or
Company to act as nominee shareholder and legal representative of any Domestic
Subsidiary, and any action, arrangement, declaration, or agreement undertaken by
such Person, or caused to be undertaken by such Person, in connection with the
fulfillment of such role, including, without limitation, the acquisition of any
beneficial interest or the holding of record in the Securities (including Share
Capital) of such Domestic Subsidiary and the execution, either with Parent,
Company, Affiliate or Subsidiary of Parent or Company or any other third party
whether or not affiliated with Parent or Company, of any secured promissory
note, equity pledge agreement, equity purchase option agreement, subrogation
agreement, declaration of waiver of pre-emption rights, and declaration of
waiver of spousal communal rights or (ii) any arrangement or agreement
(including, without limitation, any consulting or service arrangements or
agreements) pursuant to which Company or any Subsidiary of Company indirectly
receives the economic benefit of revenue generated by any Media Asset.
"IPO" means an initial public offering of common shares of the Company which has
been admitted for listing and trade on a Qualified Exchange.
"IPO Date" means the date of the initial IPO.
"Joint Venture" means a joint venture, partnership or other similar arrangement,
whether in corporate, partnership or other legal form; provided, in no event
shall any corporate Subsidiary of any Person be considered to be a Joint Venture
to which such Person is a party.
"Liens" means any encumbrance, mortgage, pledge, hypothecation, charge,
assignment, lien, restriction or other security interest of any kind securing
any obligation of any Person.
"Liquidation Preference Amount" means, with respect to each Holder, as of any
date of determination, for each Convertible Preferred Share held by each Holder,
the sum of (i) two times the Face Amount (i.e. $7.32 as of the date hereof) plus
(ii) any accrued and unpaid dividends due on such Convertible Preferred Share on
such date of determination plus (iii) after December 31, 2008, 15% per annum
multiplied by the sum of (i) and (ii) above.
"Loans" means the Term Loan made by the Holders to the Company pursuant to the
Credit Agreement.
"Majority Holders" means the Holders holding a majority in number of the
outstanding Convertible Preferred Shares from time to time.
"Market Price" of any security means the average of the closing prices of such
security's sales on the Qualified Exchange, averaged over a period of five days
consisting of the day as of which "Market Price" is being determined and the
four consecutive business days prior to such day. If at any time such security
is not listed on a Qualified Exchange then the "Market Price" will be
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the fair value thereof determined in good faith by mutual agreement between the
Company's Board and the Holders.
"Material Adverse Effect" means any (i) material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole that may affect the ability of the
Company or any Covered Subsidiary to perform its material obligations under any
of the Equity Documents, (ii) material impairment of the ability of the Company
or any of its Covered Subsidiary to perform its obligations under any of the
Equity Documents, (iii) material adverse effect on the legality, validity,
binding effect or enforceability of the Equity Documents against the Company or
any of its Covered Subsidiaries or (iv) material adverse effect on the rights or
remedies available to the Holders under any Equity Document, excluding any
written waivers or releases by the Holders.
"Media Assets" means the assets set forth in Annex B of this Schedule 2.
"Notional Amount" has the meaning set forth under the definition of "Parent
Conversion Shares" hereunder.
"Obligations" means all amounts owed, obligations and liabilities of the Company
or any of its Covered Subsidiaries from time to time owed to any Holder or its
Affiliates direct or indirect, joint or several, absolute or contingent, matured
or unmatured, liquidated or unliquidated, secured or unsecured, arising by
contract, operation of law or otherwise, arising or incurred under the Equity
Documents.
"Options" means any Securities or other rights to subscribe for or purchase,
directly or indirectly, A Common Shares or Convertible Securities.
"Original Issuance Date" means March 16, 2006.
"Parent" means Xinhua Finance Limited.
"Parent Conversion Shares" means, with respect to the Holder, as of any date of
determination, the aggregate number of Parent Shares equal in value to (i)
$20,983,971.37 plus (ii) the outstanding Face Amount of Convertible Preferred
Shares held by such Holder on such date of determination, minus (iii) the
aggregate amount of all dividends paid to the Holder up to and including such
date of determination multiplied by 1.131156371 (the difference of the amount in
(i) minus the amount in (iii), the "Notional Amount"), with the price per share
of such Parent Shares determined at a 10% discount to the 30 Trading Day
trailing average closing price of such Parent Shares on the Relevant Exchange as
of the date that is three (3) days prior to the Optional Redemption Date.
"Parent Convertible Securities" means any Securities or other rights to acquire
Securities which are directly or indirectly convertible into or exchangeable for
Parent Shares.
"Parent Options" means any Securities or other rights to subscribe for or
purchase, directly or indirectly, Parent Shares or Parent Convertible
Securities.
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"Parent Shares" means fully paid and non-assessable common shares, par value
HK$20, of the Parent (as such shares shall then be constituted).
"Parent Share Amount" means 160,000 Parent Shares (subject to adjustment in
accordance with Section 7(f)) which the Company shall use its best efforts to
procure either through purchasing in the market or procuring the issue of Parent
Shares by Parent.
"Permitted Business" means the business of investing in the Media Assets and
other related media businesses.
"Permitted Indebtedness" means (i) Indebtedness arising under the Credit
Documents, (ii) Indebtedness of the Company or any Covered Subsidiary existing
as of the date of the Share Purchase Agreement set forth on the Schedule of
Exceptions of such Share Purchase Agreement, (iii) Indebtedness in respect of
taxes or other governmental charges contested in good faith by appropriate
proceedings and for which the Company or any Covered Subsidiary has made
appropriate reserves, (iv) Indebtedness of the Company or any Covered Subsidiary
incurred under Capital Leases entered into in the ordinary course of business in
an aggregate amount not to exceed $500,000 on any date of determination, (v)
Indebtedness in RMB which is entirely secured by a Dollar deposit and which is
incurred solely for the purpose of converting Dollars into RMB required for
working capital purposes in the PRC, or (vi) trade or other similar Indebtedness
on normal commercial terms incurred in the ordinary course of business in an
aggregate amount not to exceed $500,000 on any date of determination and payable
within ninety (90) days.
"Permitted Liens" means (i) Liens securing the Obligations, (ii) Liens securing
taxes or other governmental charges not yet due or due but contested in good
faith by appropriate proceedings and for which the Company or any of its Covered
Subsidiary has made appropriate reserves (so long as the holder of any such Lien
is not taking any active steps to enforce or foreclose on such Lien), (iii)
Liens of landlords, carriers, warehousemen, mechanics and materialmen and other
similar statutory Liens arising in the ordinary course of the Company and such
Covered Subsidiary's business, less than 120 days old as to obligations not yet
due or due but contested in good faith by appropriate proceedings and for which
the Company and such Covered Subsidiary has made appropriate reserves (so long
as the holder of any such Lien is not taking any active steps to enforce or
foreclose on such Lien), (iv) easements, rights of way, zoning restrictions and
similar minor Liens which individually and in the aggregate do not have a
Material Adverse Effect on the Company and/or any Covered Subsidiary, and (v)
Liens securing obligations arising under the Credit Documents.
"Person" means and includes natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability
partnerships, joint stock companies, Joint Ventures, associations, companies,
trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, other legal entities and
Governmental Bodies.
"Pledge Agreement" means the Pledge Agreement and Irrevocable Proxy, dated as of
March 16, 2006, among the Company, the Covered Subsidiaries and the Holders.
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"Preference Amount" means, with respect to each Holder, as of any date of
determination, for each Convertible Preferred Share held by each Holder, the sum
of (i) the Face Amount plus (ii) any accrued and unpaid dividends due on such
Convertible Preferred Share on such date of determination plus (iii) an amount
equal to the 42.86% multiplied by the Face Amount plus (iv) the Notional Amount
divided by the number of outstanding Convertible Preferred Shares.
"Preferred Shares" means all preferred shares of the Company.
"PRC" means the People's Republic of China excluding Hong Kong, Macau Special
Administrative Region and Taiwan.
"QIPO" means an IPO of the Company in which the QIPO Valuation is no less than
$400 million.
"QIPO Date" means the date of the QIPO.
"QIPO Valuation" means an amount equal to (i) the initial price per share of
Common Shares issued in the IPO (and, if such price is not expressed in Dollars,
then its equivalent in Dollars) multiplied by (ii) the number of outstanding
Common Shares immediately following the closing of the IPO.
"Qualified Exchange" means any Designated Offshore Securities Market as defined
in Section 230.902(b) of Regulation S of the Securities Act or any securities
exchanges or inter-dealer quotation systems in the United States.
"Relevant Exchange" means the Tokyo Stock Exchange.
"Repayment of EconWorld Indebtedness" means repayment of (i) the loan dated
February 14, 2006 in the principal amount of $1,330,000 by EconWorld Media
Limited as borrower to Xinhua Financial Network Limited as lender, (ii) the loan
dated October 18, 2005 in the principal amount of $300,000 by EconWorld Media
Limited as borrower to Xinhua Financial Network Limited as lender and (iii) the
loan dated October 18, 2005 in the principal amount of $200,000 by EconWorld
Media Limited as borrower to Xinhua Financial Network Limited as lender, in each
case solely by set off of such amounts against any amounts owed by Xinhua
Financial Network Limited or the Parent to EconWorld Media Limited.
"Restricted Junior Payment" means, for the Company and/or any of its
Subsidiaries, (a) any dividend or other distribution, direct or indirect, on
account of any class of Share Capital of the Company or such Subsidiary now or
hereafter outstanding, except a dividend payable solely in shares of that class
of Share Capital to the holders of that class; (b) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of the Company or such
Subsidiary now or hereafter outstanding, and (c) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire any class of Share Capital of the Company or such Subsidiary now or
hereafter outstanding; provided, however, Restricted Junior Payments shall not
include any amounts payable under the Convertible Preferred Shares (including,
without limitation,
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<PAGE>
dividends or redemption payments); provided, further, with respect to subclauses
(a), (b) and (c) above, Restricted Junior Payments shall not include any
dividends or other distributions by a Subsidiary which are made pro rata to all
of its shareholders or members.
"RMB" means the lawful money of the PRC.
"Schedule of Exceptions" means the Schedule of Exceptions attached as Annex E to
this Schedule 2 and delivered to the Holders prior to the Original Issuance
Date.
"Security Agreement" means the Security Agreement, dated as of March 16, 2006,
among the Company, the Covered Subsidiaries and the Holders.
"Securities" means any stock, shares, limited liability company membership
interests, partnership interests, voting trust certificates, certificates of
interest or participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates of interest,
shares or participations in temporary or interim certificates for the purchase
or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing.
"Share Capital" means any and all shares, interests, participations or other
equivalents (however designated) of share capital of a corporation, any and all
equivalent ownership or equity interests in a Person (other than a corporation),
including, without limitation, partnership interests and membership interests,
and any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing.
"Share Purchase Agreement" means the Share Purchase Agreement, dated as of March
16, 2006, between the Company and the Holders.
"Significant Person" means (i) any holder of 5% or more of any class of Share
Capital of the Parent, any Covered Subsidiary or any of their Subsidiaries, (ii)
any Person holding a senior management or executive position in the Parent, any
Covered Subsidiary or any of their Subsidiaries, or (iii) any Person who is a
member of the board of directors of the Parent, any Covered Subsidiary or any of
their Subsidiaries. For purposes of clarification, "Significant Person" does not
include the Parent.
"Subsidiary" means, (i) with respect to any Person, any corporation,
partnership, limited liability company, association, Joint Venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof and (ii) the entities listed on Annex D of this Schedule 2 and their
Subsidiaries as defined in clause (i) of this definition.
51
<PAGE>
"Trading Day" means a day during which trading in Securities generally occurs on
the Relevant Exchange (provided that no day on which trading of the applicable
security is suspended on such exchange or other trading market will count as a
Trading Day).
"Transaction with Shareholders and Affiliates" means any transaction between a
Significant Person and the Company or any of its Subsidiaries, except (i)
transactions between the Company and any of its wholly-owned Subsidiaries, (ii)
transactions between any wholly-owned Subsidiaries of the Company and (iii)
those transactions that are (A) on terms no less favorable to the Company or its
Covered Subsidiaries than those that generally might be obtained at the time
from a Person who is not such a holder or an Affiliate and (B) approved by the
board of directors of the Company or its Covered Subsidiaries; provided, the
foregoing shall not apply to (x) any transaction between the Company and the
Parent and (y) compensation and expense reimbursement arrangements for
directors, officers and other employees of the Company or its Covered
Subsidiaries entered into in the ordinary course of business.
51
<PAGE>
ANNEX A
EXEMPT ISSUANCES
EXEMPT ISSUANCES
All defined terms used herein and not defined shall have the meanings set forth
in Annex A to the Credit Agreement.
----------------------------------------------------------------------------------------------------------------------
SHAREHOLDER SPECIFIED CONTRIBUTED ASSETS MAXIMUM NUMBER OF
XFM SHARES TO BE
ISSUED
----------------------------------------------------------------------------------------------------------------------
1. Best Gain Group Ltd 40% of the fully-diluted equity of EconWorld Media 955,556
2. Cheers Perfect Ltd. Limited so long as EconWorld Media Limited holds the
3. Cheung Wah Keung Financial Magazine Assets.
4. EconWorld Holdings Ltd.
5. Gainful Concept Ltd.
6. Justly Investment
International Ltd.
7. Lo Li Chun
8. Lo Shui Ling Raymond
9. Quach Fung Vi
----------------------------------------------------------------------------------------------------------------------
Sanlian Group and its Affiliates 42% of the fully-diluted equity of Beijing Jingguan 4,781,893
Xincheng Advertising Co., Ltd. (Economic Observer) so
long as Beijing Jingguan Xincheng Advertising Co., Ltd.
(Economic Observer) holds the Financial Newspaper Assets.
----------------------------------------------------------------------------------------------------------------------
Economic Observer Shareholders 8% of the fully-diluted equity of Beijing Jingguan 979,424
Xincheng Advertising Co., Ltd.(Economic Observer) so
long as Beijing Jingguan Xincheng Advertising Co., Ltd.
(Economic Observer) holds the Financial Newspaper Assets.
----------------------------------------------------------------------------------------------------------------------
Hyperlink Shareholder 49% of the fully-diluted equity of Shanghai Hyperlink 1,613,169
Market Research Co., Ltd.(Hyperlink) so long as Shanghai
Hyperlink Market Research Co., Ltd. (Hyperlink) holds
the Media Market Research Assets.
----------------------------------------------------------------------------------------------------------------------
Yu Gang 16% of the fully-diluted equity of Accord Group 125,053
Investments Limited so long as Accord Group Investments
holds the Radio Assets.
----------------------------------------------------------------------------------------------------------------------
Sino Investments Holdings Limited 37% of the fully-diluted equity of Upper Step Holdings 6,478,437
Limited so long as Upper Step Holdings Limited holds the
Television Assets.
----------------------------------------------------------------------------------------------------------------------
Sino Investments Holdings Limited 49% of the fully-diluted equity of Accord Group 451,107
Investments Limited so long as Accord Group Investments
holds the Radio Assets.
----------------------------------------------------------------------------------------------------------------------
53
<PAGE>
----------------------------------------------------------------------------------------------------------------------
Sungolden Limited 44% of the fully-diluted equity of Upper Step Holdings 6,407,018
Limited so long as Upper Step Holdings Limited holds the
Television Assets.
----------------------------------------------------------------------------------------------------------------------
Sungolden Limited 16% of the fully-diluted equity of Accord Group 125,053
Investments Limited so long as Accord Group Investments
holds the Radio Assets.
----------------------------------------------------------------------------------------------------------------------
Xinhua Finance Limited 50% of the fully-diluted equity of Beijing Jingguan 5,761,317
Xincheng Advertising Co., Ltd. (Economic Observer) so
long as Beijing Jingguan Xincheng Advertising Co., Ltd.
(Economic Observer) holds the Financial Newspaper Assets.
----------------------------------------------------------------------------------------------------------------------
Xinhua Finance Limited 51% of the fully-diluted equity of Shanghai Hyperlink 1,679,012
Market Research Co., Ltd.(Hyperlink) so long as Shanghai
Hyperlink Market Research Co., Ltd. (Hyperlink) holds
the Media Market Research Assets.
----------------------------------------------------------------------------------------------------------------------
Exempt Plan if both Newspaper Assets N/A 22,777,602
are not acquired
----------------------------------------------------------------------------------------------------------------------
Exempt Plan if both Newspaper Assets N/A 22,340,962
are acquired
----------------------------------------------------------------------------------------------------------------------
Fully-diluted capitalization of Xinhua Finance Media Limited assuming completion
of all Exempt Issuances above if both Newspaper Assets are not acquired:
----------------------------------------------------------------------------------------------------------------------
SHAREHOLDER OWNERSHIP PERCENTAGE XFM SHARES
----------------------------------------------------------------------------------------------------------------------
Xinhua Finance Limited 44.0% 50,054,619
----------------------------------------------------------------------------------------------------------------------
Patriarch Partners Media Holdings, 16.8% 19,139,080
LLC
----------------------------------------------------------------------------------------------------------------------
EconWorld Shareholders 0.8% 955,556
----------------------------------------------------------------------------------------------------------------------
Sino Investments Holdings Limited 6.1% 6,929,544
----------------------------------------------------------------------------------------------------------------------
Sungolden Limited 5.7% 6,532,070
----------------------------------------------------------------------------------------------------------------------
Yu Gang 0.1% 125,053
----------------------------------------------------------------------------------------------------------------------
Sanlian Group and its Affiliates 4.2% 4,781,893
----------------------------------------------------------------------------------------------------------------------
Economic Observer Shareholders 0.9% 979,424
----------------------------------------------------------------------------------------------------------------------
Hyperlink Shareholders 1.4% 1,613,169
----------------------------------------------------------------------------------------------------------------------
Exempt Plan 20.0% 22,777,602
----------------------------------------------------------------------------------------------------------------------
Total 100.0% 113,888,009
----------------------------------------------------------------------------------------------------------------------
54
<PAGE>
Fully-diluted capitalization of Xinhua Finance Media Limited assuming completion
of all Exempt Issuances above if both Newspaper Assets are acquired:
----------------------------------------------------------------------------------------------------------------------
SHAREHOLDER OWNERSHIP PERCENTAGE XFM SHARES
----------------------------------------------------------------------------------------------------------------------
Xinhua Finance Limited 44.8% 50,054,619
----------------------------------------------------------------------------------------------------------------------
Patriarch Partners Media Holdings, LLC 15.6% 17,392,522
----------------------------------------------------------------------------------------------------------------------
EconWorld Shareholders 0.9% 955,556
----------------------------------------------------------------------------------------------------------------------
Sino Investments Holdings Limited 6.2% 6,929,544
----------------------------------------------------------------------------------------------------------------------
Sungolden Limited 5.8% 6,532,070
----------------------------------------------------------------------------------------------------------------------
Yu Gang 0.1% 125,053
----------------------------------------------------------------------------------------------------------------------
Sanlian Group and its Affiliates 4.3% 4,781,893
----------------------------------------------------------------------------------------------------------------------
Economic Observer Shareholders 0.9% 979,424
----------------------------------------------------------------------------------------------------------------------
Hyperlink Shareholders 1.4% 1,613,169
----------------------------------------------------------------------------------------------------------------------
Exempt Plan 20.0% 22,340,962
----------------------------------------------------------------------------------------------------------------------
Total 100.0% 111,704,811
----------------------------------------------------------------------------------------------------------------------
55
<PAGE>
ANNEX B
MEDIA ASSETS
----------------------------------------------------------------------------------------------------------------------
COMPANY NAME NUMBER OF PERCENTAGE OWNED BY XFM STATUS
SHARES/EQUITY
INTEREST OWNED
----------------------------------------------------------------------------------------------------------------------
Accord Group Holdings Limited 19 19% Completed
and all of the radio assets
held directly and indirectly
by Accord Group Holdings
Limited as of the date
hereof, as illustrated
on the attached structure
chart (the "RADIO ASSETS")
----------------------------------------------------------------------------------------------------------------------
EconWorld Media Limited and 210,000 60% Completed
all of the magazine assets
held directly and indirectly
by EconWorld Media Limited
as of the date hereof, as
illustrated on the attached
structure chart (the
"FINANCIAL MAGAZINE ASSETS")
----------------------------------------------------------------------------------------------------------------------
Ming Shing International 1,000 100% Completed
Limited and all of the
advertising assets held
directly and indirectly by
Ming Shing International
Limited as of the date
hereof, as illustrated on
the attached structure chart
(the "ADVERTISING ASSETS")
----------------------------------------------------------------------------------------------------------------------
Upper Step Holdings Limited 95 19% Completed
and all of the television
assets held directly and
indirectly
----------------------------------------------------------------------------------------------------------------------
56
<PAGE>
----------------------------------------------------------------------------------------------------------------------
by Upper Step
Holdings Limited as of the
date hereof, as illustrated
on the attached structure
chart (the "TELEVISION
ASSETS")
----------------------------------------------------------------------------------------------------------------------
Beijing Jingguan Xincheng n/a 50% To be
Advertising Co., completed
Ltd.(Economic Observer) (held
through a nominee domestic
entity) and all of the
newspaper assets held
directly and indirectly by
Beijing Jingguan Xincheng
Advertising Co., Ltd.
(Economic Observer) as of the
date hereof (the "FINANCIAL
NEWSPAPER ASSETS")
----------------------------------------------------------------------------------------------------------------------
Shanghai Hyperlink Market n/a 51% To be
Research Co., Ltd.(Hyperlink) completed
(held through a nominee
domestic entity and after the
restructuring of its
subsidiary in Guangzhou) and
all of the media market
research assets held directly
and indirectly by Shanghai
Hyperlink Market Research
Co., Ltd. (Hyperlink) as of
the date hereof (the "MEDIA
MARKET RESEARCH ASSETS")
----------------------------------------------------------------------------------------------------------------------
57
<PAGE>
ANNEX C
[RESERVED]
58
<PAGE>
ANNEX D
SUBSIDIARIES
Upper Step Holdings Limited
Accord Group Investments Limited
59
<PAGE>
ANNEX E
SCHEDULE OF EXCEPTIONS
(1) UPPER STEP HOLDINGS LIMITED (BVI)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 500 SHARES OF US$1.00 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO. OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Fine Power Limited 80 16
---------------------------------------------------------------------------------------------------------------
Honour Rise Services Limited 220 44
---------------------------------------------------------------------------------------------------------------
Quality Idea Limited 60 12
---------------------------------------------------------------------------------------------------------------
Sino Investments Holdings Limited 45 9
---------------------------------------------------------------------------------------------------------------
Xinhua Finance Media Limited 95 19
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: 500 100
---------------------------------------------------------------------------------------------------------------
(2) CHINA LEAD PROFITS LIMITED (BVI)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 1 SHARE OF US$1. 00 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO. OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Upper Step Holdings Limited 1 100
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: 1 100
---------------------------------------------------------------------------------------------------------------
(3) JIA LUO CONSULTING LIMITED (PRC WFOE)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL US$3,200,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
China Lead Profits Limited US$3,200,000 100
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: US$3,200,000 100
---------------------------------------------------------------------------------------------------------------
Exhibit
<PAGE>
(4) SHANGHAI YUANZHI ADVERTISING CO., LTD (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB100,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Li Guang Jie RMB49,000 49
---------------------------------------------------------------------------------------------------------------
Wan Jun RMB51,000 51
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB100,000 100
---------------------------------------------------------------------------------------------------------------
(5) ACCORD GROUP INVESTMENTS LIMITED (BVI)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 100 SHARES OF US$1.00 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO. OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Sino Investments Holdings Limited 81 81
---------------------------------------------------------------------------------------------------------------
Xinhua Finance Media Limited 19 19
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: 100 100
---------------------------------------------------------------------------------------------------------------
(6) GREAT TRIUMPH INVESTMENTS LIMITED (BVI)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 1 SHARE OF US$1.00 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO. OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Accord Group Investments Limited 1 100
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: 1 100
---------------------------------------------------------------------------------------------------------------
(7) NEW CHINA MEDIA CO., LIMITED (PRC WFOE)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL US$1,400,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Great Triumph Investments Limited US$1,400,000 100
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: US$1,400,000 100
---------------------------------------------------------------------------------------------------------------
(8) BEIJING SHIJI GUANGNIAN ADVERTISING CO., LIMITED (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB3,000,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Wang Yong Hong RMB2,514,000 83.8
---------------------------------------------------------------------------------------------------------------
Yu Gang RMB486,000 16.2
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB3,000,000 100
---------------------------------------------------------------------------------------------------------------
(9) MING SHING INTERNATIONAL LIMITED (BVI)
Exhibit
<PAGE>
-----------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 1,000 SHARES OF US$1.00 EACH
-----------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO. OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
-----------------------------------------------------------------------------------------------------------------
Xinhua Finance Media Limited 1,000 100
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
TOTAL: 1,000 100
-----------------------------------------------------------------------------------------------------------------
(10) UPPER WILL ENTERPRISES LIMITED (BVI)
-----------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 2 SHARES OF US$1.00 EACH
-----------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO. OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
-----------------------------------------------------------------------------------------------------------------
Ming Shing International Limited 2 100
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
TOTAL: 2 100
-----------------------------------------------------------------------------------------------------------------
(11) ACTIVE ADVERTISING AGENCY LIMITED (HONG KONG)
-----------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 2 SHARES OF HK$1.00 EACH
-----------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
-----------------------------------------------------------------------------------------------------------------
Upper Will Enterprises Limited 2 100
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
TOTAL: 2 100
-----------------------------------------------------------------------------------------------------------------
(12) ACTIVE ADVERTISING (GUANGZHOU) CO., LTD. (PRC WFOE)
-----------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL US$300,000
-----------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
-----------------------------------------------------------------------------------------------------------------
Active Advertising Agency Limited US$300,000 100
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
TOTAL: US$300,000 100
-----------------------------------------------------------------------------------------------------------------
(13) BEIJING CENTURY MEDIA CULTURE CO., LTD. (PRC)
-----------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB1,000,000
-----------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
-----------------------------------------------------------------------------------------------------------------
An Li Zhang RMB500,000 50
-----------------------------------------------------------------------------------------------------------------
Wang Yong Hong RMB 500,000 50
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
TOTAL: RMB 1,000,000 100
-----------------------------------------------------------------------------------------------------------------
(14) BEIJING WORKSHOP COMMUNICATIONS CO., LTD. (PRC)
-----------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB1,000,000
-----------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
-----------------------------------------------------------------------------------------------------------------
Exhibit
<PAGE>
---------------------------------------------------------------------------------------------------------------
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Beijing Century Media Culture Co., Ltd. RMB 900,000 90
---------------------------------------------------------------------------------------------------------------
Yu Gang RMB 50,000 5
---------------------------------------------------------------------------------------------------------------
Xia Huai RMB50,000 5
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB 1,000,000 100
---------------------------------------------------------------------------------------------------------------
Exhibit
<PAGE>
(15) BEIJING GOLDEN WAYS CULTURE DEVELOPMENT CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB300,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Beijing Century Media Culture Co., Ltd. RMB 270,000 90
---------------------------------------------------------------------------------------------------------------
Yu Gang RMB 15,000 5
---------------------------------------------------------------------------------------------------------------
Xia Huai RMB 15,000 5
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB300,000 100
---------------------------------------------------------------------------------------------------------------
(16) SHENZHEN ACTIVE TRINITY CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB300,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
An Li Zhang RMB150,000 50
---------------------------------------------------------------------------------------------------------------
Wang Yong Hong RMB150,000 50
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB 300,000 100
---------------------------------------------------------------------------------------------------------------
(17) BEIJING TAIDE ADVERTISING CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB10,000,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
An Li Zhang RMB5,000,000 50
---------------------------------------------------------------------------------------------------------------
Wang Yong Hong RMB5,000,000 50
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB10,000,000 100
---------------------------------------------------------------------------------------------------------------
Exhibit
<PAGE>
(18) SHANGTUO ZHIYANG INTERNATIONAL ADVERTISING (BEIJING) CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB1,000,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Beijing Taide Advertising Co., Ltd. RMB800,000 80
---------------------------------------------------------------------------------------------------------------
Wang Xiao Yu RMB200,000 20
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB1,000,000 100
---------------------------------------------------------------------------------------------------------------
(19) BEIJING LONGMEI TELEVISOIN AND BROADCAST ADVERTISING CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB500,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Beijing Taide Advertising Co., Ltd. RMB400,000 80
---------------------------------------------------------------------------------------------------------------
Zhou Jia RMB50,000 10
---------------------------------------------------------------------------------------------------------------
Zhang Yiran RMB50,000 10
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB500,000 100
---------------------------------------------------------------------------------------------------------------
(20) BEIJING JINLONG RUNXIN ADVERTISING CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB500,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Beijing Taide Advertising Co., Ltd. RMB400,000 80
---------------------------------------------------------------------------------------------------------------
Zhou Jia RMB50,000 10
---------------------------------------------------------------------------------------------------------------
Zhang Yu Yu RMB50,000 10
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB500,000 100
---------------------------------------------------------------------------------------------------------------
Exhibit
<PAGE>
(21) SHANGHAI YUANXIN ADVERTISING CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL RMB2,000,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
Beijing Taide Advertising Co., Ltd. RMB1,600,000 80
---------------------------------------------------------------------------------------------------------------
Mo Hai Hong RMB400,000 20
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: RMB2,000,000 100
---------------------------------------------------------------------------------------------------------------
(22) ECONWORLD MEDIA LIMITED (HONG KONG)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 350,000 SHARES OF HK$0.01 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
---------------------------------------------------------------------------------------------------------------
Best Gain Group Ltd. 10,000 2.86
---------------------------------------------------------------------------------------------------------------
Cheers Perfect Ltd. 20,000 5.71
---------------------------------------------------------------------------------------------------------------
Cheung Wah Keung 10,000 2.86
---------------------------------------------------------------------------------------------------------------
EconWorld Holdings Ltd. 15,000 4.29
---------------------------------------------------------------------------------------------------------------
Gainful Concept Ltd. 30,000 8.57
---------------------------------------------------------------------------------------------------------------
Justly Investment International Ltd. 5,000 1.42
---------------------------------------------------------------------------------------------------------------
Lo Li Chun 30,000 8.57
---------------------------------------------------------------------------------------------------------------
Lo Shui Ling Raymond 10,000 2.86
---------------------------------------------------------------------------------------------------------------
Quach Fung Vi 10,000 2.86
---------------------------------------------------------------------------------------------------------------
Xinhua Finance Media Limited 210,000 60.00
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: 350,000 100
---------------------------------------------------------------------------------------------------------------
(23) FINANCIAL WORLD (SHANGHAI) CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL US$210,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
EconWorld Media Limited US$210,000 100
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: US$210,000 100
---------------------------------------------------------------------------------------------------------------
(24) ECONWORLD (SHANGHAI) CO., LTD. (PRC)
---------------------------------------------------------------------------------------------------------------
REGISTERED CAPITAL US$140,000
---------------------------------------------------------------------------------------------------------------
EQUITY INTEREST HOLDER EQUITY INTEREST EQUITY INTEREST
PERCENTAGE (%)
---------------------------------------------------------------------------------------------------------------
EconWorld Media Limited US$140,000 100
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
TOTAL: US$140,000 100
---------------------------------------------------------------------------------------------------------------
(25) ECONWORLD PUBLISHING LIMITED (HONG KONG)
Exhibit
<PAGE>
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 100,000 SHARES OF HK$0.01 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
---------------------------------------------------------------------------------------------------------------
ECONWORLD MEDIA LIMITED 99,999 100
---------------------------------------------------------------------------------------------------------------
Fan Cho Tak Alex 1
(hold in trust for EconWorld
Media Limited)
---------------------------------------------------------------------------------------------------------------
TOTAL: 100,000 100
---------------------------------------------------------------------------------------------------------------
(26) MONEY JOURNAL PUBLICATION LIMITED (HONG KONG)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 1,000 SHARES OF HK$0.01 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
---------------------------------------------------------------------------------------------------------------
ECONWORLD MEDIA LIMITED 999 100
---------------------------------------------------------------------------------------------------------------
Fan Cho Tak Alex 1
(hold in trust for EconWorld
Media Limited)
---------------------------------------------------------------------------------------------------------------
TOTAL: 1,000 100
---------------------------------------------------------------------------------------------------------------
(27) MONEY JOURNAL ADVERTISING COMPANY LIMITED (HONG KONG)
---------------------------------------------------------------------------------------------------------------
ISSUED SHARE CAPITAL 10,000 SHARES OF HK$1.00 EACH
---------------------------------------------------------------------------------------------------------------
SHAREHOLDER NO OF ORDINARY SHARES SHAREHOLDING
PERCENTAGE(%)
---------------------------------------------------------------------------------------------------------------
MONEY JOURNAL PUBLICATION LIMITED 10,000 100
---------------------------------------------------------------------------------------------------------------
TOTAL: 10,000 100
---------------------------------------------------------------------------------------------------------------
Exhibit
<PAGE>
Material Contracts
COMPANY CLIENT NAME IN ENGLISH NATURE OF CONTRACT RMB USD CONTRACT PERIOD
@8.05
Yuanxin Shanghai Christine Food Co., Ltd. Advertising 1,700,000.00 211,180.12 1/06 -- 12/06
Shanghai Yangzhi Media Co., Ltd. 6,000,000.00 745,341.61 2/06 -- 12/06
------------ ----------
7,700,000.00 956,521.74
Taide Beijing Be-one Advertising Co., Ltd. Advertising 2,400,000.00 298,136.65 2/06 --
Beijing Longmei Chuangli Media Group Advertising 3,023,030.00 375,531.68 1/06 -- 5/06
Beijing Fulite Industrial Co.,Ltd. Advertising 2,400,000.00 298,136.65 1/06 -- 12/06
Beijing diantong Advertising co.,Ltd. Advertising 2,343,036.00 297,060.37 1/06 -- 5/06
co.,Ltd.
Guangzhou Tianhen Xingzhi Advertising 2,000,000.00 248,447.20 3/06 -- 12/06
Advertising Co., Ltd.
Shengshi Greatwall Advertising Co., Advertising 1,821,490.00 226,272.05 1/06 -- 5/06
Ltd.
Beijing Yuanqi East Advertising Advertising 1,800,000.00 223,602.48 3/06 -- 12/06
co., Ltd.
Guangdong Kailuo Advertising Co., Advertising 1,453,800.00 180,596.27 1/06 -- 5/06
Ltd.
Beijing Jianguo Hospital Advertising 1,339,200.00 166,360.25 1/06 -- 12/06
Beijing Hongzhi Shidai Advertising Advertising 1,311,860.00 162,963.98 1/06 -- 5/06
Co., Ltd.
Shanghai Liaobeina Advertising Co., Advertising 1,096,810.00 136,249.69 1/06 -- 5/06
Ltd. ------------ ----------
18,589,226.00 2,309,220.62
Exhibit
<PAGE>
Active Advertising Agency King Sturge LLP Advertising 811,973.84 100,866.32 2/06 -- 3/06
Limited
Beijing Century Media Haishi Tourism Weishi Media Co., Production 2,954,880.00 367,065.84 1/06 -- 12/07
Culture Co., Ltd. Ltd.
Beijing Century Media China Radio International (for Advertising 1,475,000.00 183,229.81 1/06 -- 12/06
Culture Co., Ltd. FM91.5) --
Beijiatong Wanwei Yihua Golf Sports
Technology Service Co., Ltd.
China Radio International Advertising 817,000 101,490.68 4/06 -- 12/06
(for FM91.5) --
Mingsheng Bank
Exhibit
<PAGE>
SCHEDULE OF INDEBTEDNESS
List of Indebtedness of Credit Parties existing as of the date of the Credit
Agreement :-
Date of loan Lender Borrower Amount of Repayment
------------ ------ -------- ---------- ---------
Indebtedness Date
------------ ----
Mar 2, 06 Xinhua Xinhua US$2 million On demand
Financial Finance Media plus interest at
Network Limited 4% per annum
Feb 28, 2006 Xinhua Upper Step US$2,000,000 On demand
Finance Media Holdings
Limited Limited
Mar 6, 2006 Upper Step China Lead US$2,000,000 On demand
Holdings Profits
Limited Limited
Mar 10, 2006 China Lead Jia Luo US$2,000,000 On demand
Profits Consulting
Limited
Oct 18, 2005 Xinhua Econworld US$300,000 June 30, 2006
Financial Media Limited plus interest at
Network 4% per annum
Oct 18, 2005 Xinhua Econworld US$200,000 June 30, 2006
Financial Media Limited plus interest at
Network 4% per annum
Feb 14, 2006 Xinhua Econworld US$1,330,000 June 30, 2006
Financial Media Limited plus interest at
Network 4% per annum
3
<PAGE>
[Financial Projections of the Company]
4
<PAGE>
PROPOSED AMENDMENT TO THE AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF
ASSOCIATION OF THE REGISTRANT, AS CURRENTLY IN EFFECT
Below is an extract of the resolutions adopted on February 7, 2007:
SPECIAL RESOLUTION NO. 2 -- AMENDMENT OF ARTICLES OF ASSOCIATION
RESOLVED as a Special Resolution that Section 7(a)(i) of Schedule 2 to the
Articles of Association of the Company be deleted in its entirety and
replaced by the following with effect from the consummation of the closing
of a QIPO (as defined in the Articles of Association of the Company) but
only if such QIPO is consummated prior to 30 June 2007:-
Conversion Ratio. Each Convertible Preferred Share shall be convertible
into such number of fully paid and nonassessable A Common Shares as is
determined by dividing (A) the quotient of (i) the aggregate Face Amount of
all outstanding Convertible Preferred Shares plus all accrued unpaid
dividends on the Convertible Preferred Shares (the "Preferred Conversion
Amount") divided by (ii) the number of outstanding Convertible Preferred
Shares by (B) the applicable Conversion Price in effect on the applicable
conversion date. Any dividends which have been declared but have not yet
accrued upon the conversion of the Convertible Preferred Shares into Common
Shares shall be cancelled upon such conversion; provided that dividends
shall accrue on a daily basis and that the amount of dividends with respect
to a period that has commenced but not ended upon the conversion of the
Convertible Preferred Shares into Common Shares shall be determined on a
pro-rata basis and such dividends shall be paid by the Company within two
days following the conversion of the Convertible Preferred Shares into
Common Shares.
SPECIAL RESOLUTION NO. 3-- AMENDMENT OF ARTICLES OF ASSOCIATION
RESOLVED as a Special Resolution that in the event that the consummation of
the closing of a QIPO (as defined in the Articles of Association of the
Company) does not occur prior to 30 June 2007, Section 7(a)(i) of Schedule
2 to the Articles of Association of the Company be deleted in its entirety
and replaced by the following with effect from 1 July 2007:-
Conversion Ratio. Each Convertible Preferred Share shall be convertible
into such number of fully paid and nonassessable A Common Shares as is
determined by dividing (A) the quotient of (i) the aggregate Face Amount of
all outstanding Convertible Preferred Shares plus $19,040,638.04 less all
dividends paid on the Convertible Preferred Shares and accrued from 30 June
2006 to 30 June 2007 (the "Preferred Conversion Amount") divided by (ii)
the number of outstanding Convertible Preferred Shares by (B) the
applicable Conversion Price in effect on the applicable conversion date.