Transfer Contract - Shangdong Sanlian Group Co. Ltd., Shandong Economic Observing Newspaper Co. Ltd., Economic Observer Press Office and Beijing Jingguan Xincheng Advertising Co. Ltd.
Translation
TRANSFER CONTRACT OF
THE ECONOMIC OBSERVER NEWSPAPER
AMONG
SHANGDONG SANLIAN GROUP CO. LTD
SHANDONG ECONOMIC OBSERVING NEWSPAPER CO., LTD
ECONOMIC OBSERVER PRESS OFFICE
AND
BEIJING JINGGUAN XINCHENG ADVERTISING CO. LTD
<PAGE>
This contract (hereafter as "this Contract") was signed on November 6, 2006
in Beijing, People's Republic of China (hereafter as "PRC") by the following
parties:
Party A: Shandong Sanlian Group Co. Ltd (hereafter as "Sanlian Group")
Party B: Shandong Economic Observing Newspaper Co. Ltd (hereafter as "Newspaper
Co.")
Party C: Economic Observer Press Office (hereafter as "EOPO")
Party D: Beijing Jingguan Xincheng Advertising Co. Ltd (hereafter as "JGXC")
The above signing parties are collectively referred to as the parties and
individually referred to as a party.
Whereas:
1. EOPO is a legally subsisting publishing unit set up according to PRC laws,
and is a lawful business unit registered with the Business Registration
Administration in Shandong Province;
2. Sanlian Group is a legally subsisting corporation with limited liabilities
incorporated according to PRC laws, and is the chief operating and managing
unit for EOPO;
3. The Newspaper Co. is a legally subsisting corporation with limited
liabilities incorporated according to PRC laws, and is a subsidiary of
Sanlian Group. It was previously responsible for the advertising agency and
other businesses of EOPO;
4. JGXC is an effectively subsisting corporation with limited liabilities
incorporated according to the PRC laws, and is a registered lawful operator
of advertisements; and
5. The parties signed the "Amended and Restated Contract on Business
Cooperation" on November 6, 2006; pursuant to that contract, JGXC has the
right, during the validity period of the contract and within the premise of
the relevant state laws, to request Sanlian Group and the Newspaper Co. to
transfer EOPO to JGXC.
In order to define the rights and duties of the parties, after friendly
consultation and pursuant to the rules of the PRC laws, the parties have reached
consensus, with respect to the transfer of EOPO, on the following contract.
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1. AUTHORIZATION OF RIGHTS
1.1 Sanlian Group, the Newspaper Co. and EOPO hereby irrevocably agree
that during the validity period of the contract and within the premise
of relevant state laws and regulations, pursuant to the terms and
conditions in the articles of this contract, EOPO or the related
rights and benefits of EOPO (including but not limited to the
operational rights of the "Economic Observer Newspaper", all the
assets and businesses of EOPO, hereafter collectively as "rights and
benefits of EOPO") are to be transferred to JGXC.
1.2 To the extent allowed by the PRC Laws, JGXC has the right to request,
from time to time and not limited to just once, Sanlian Group/the
Newspaper Co/EOPO to transfer the whole or part of EOPO's rights and
benefits to JGXC or a person designated by JGXC.
1.3 Sanlian Group, Newspaper Co. and EOPO undertake that, during the
validity period of this contract and before JGXC has been transferred
and obtained the whole of EOPO's rights and benefits to the extent
allowed by PRC Laws, they will not transfer any of the publishing and
distributions rights, operating rights or the operating rights of the
advertisements of the "Economic Observer Newspaper" to a third party;
or promote, allow or do anything to cause the publishing or
distribution rights to be cancelled or not to be granted the
extension, unless it is approved by JGXC in writing.
1.4 Sanlian Group, Newspaper Co. and EOPO undertake that, during the
validity period of this contract and before JGXC has been transferred
and obtained the whole of EOPO's rights and benefits to the extent
allowed by PRC Laws, except where there is written consent from JGXC,
not any of the assets and businesses can be transferred, sold to or
held as a collateral by a third party.
1.5 During the validity period of the contract, if EOPO, pursuant to the
requirement of the laws, regulations, government conduct or policies,
needs restructuring, system changing, etc. which will change the
nature of the legal person, or needs to transfer the assets of the
legal person or to change the actual person in control, or if the
operational rights have shifted, Sanlian Group, the Newspaper Co. and
EOPO should in the first time notify JGXC in a written format and
should protect the rights and benefits of JGXC to the maximum, and
only upon obtaining the written consent from JGXC, can the above
mentioned actions be taken.
2. PRICE
2.1 Except where it is otherwise stipulated in laws, the parties of this
contract all agree that JGXC receives the whole of the rights and
benefits of EOPO
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worth of RMB 220,000,000 ("Transfer Price"). JGXC should, within 5
years upon the execution of the contract (i.e.: 2007 - 2011), make a
payment of RMB 44,000,000 annually to EOPO.
2.2 Sanlian Group and Newspaper Co. have both agreed and confirmed that
the payments that JGXC makes pursuant to the terms of 2.1 constitute
lawful and effective payments and that they, as the transferring
parties, will never raise any doubts about the above mentioned
consideration and payments.
2.3 If at the time the PRC laws and regulations have other rules and
requirements with respect to the transfer price, the two parties
should resort to consultation to handle it by as much as possible
implementing the intent stated in 2.1 and 2.2.
3. TO COMPLETE TRANSFER
3.1 Where the PRC laws and regulations allow JGXC or its designated
transferee to receive EOPO or the rights and benefits of EOPO, Sanlian
Group, the Newspaper Co. or EOPO (according to specific situations at
the time) should, according to the request of JGXC and the stipulated
procedures in relevant laws and regulations, without delay, transfer
EOPO or the whole or part of the rights and benefits of EOPO
(according to specific situations at the time) to JGXC or its
designated person (according to specific situations at the time), and
should at the same time submit all relevant documents, assist the
completion of all the legal procedures, and enable JGXC or its
designated person to be able to lawfully and effectively own EOPO or
the whole of the rights and benefits of EOPO.
3.2 To avoid doubts, where at the time the applicable PRC laws allow JGXC
and/or its designated other person(s) to receive the whole of the
equity of EOPO or similar assets or the rights and benefits of EOPO,
JGXC has the right to choose to receive, at one time or multiple
times, the whole of the equity of EOPO or similar assets or the rights
and benefits of EOPO; where at the time the applicable PRC laws allow
JGXC and/or its designated person to receive part of the equity of
EOPO or similar assets or the rights and benefits of EOPO, JGXC,
within the equity proportion upper limit (hereafter as "equity upper
limit") stipulated by the PRC laws, has the right to decide on its own
to accept, at one time or multiple times, the equity quota of EOPO or
similar assets or the rights and benefits of EOPO; under the latter
circumstance, JGXC has the right, pursuant to the specific arrangement
for the equity upper limit to be gradually relaxed as allowed under
the PRC laws, to continuously receive the equity of EOPO or similar
assets or the rights and benefits of EOPO, and ultimately obtain
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the whole of the equity of EOPO or similar assets or the rights and
benefits of EOPO.
4. COVENANTS
4.1 With respect to the signing and implementation of this contract, where
there is a need for any review-and-approval or record keeping
procedure, the parties should all jointly proceed or offer necessary
assistance.
4.2 Where the transfer of the equity of EOPO or of the rights and benefits
of EOPO requires an advance approval from several third parties and
several departments of the PRC government pursuant to the PRC laws,
the parties agree to respectively do their very best to obtain the
necessary approval.
5. VALIDITY PERIOD AND EXTENSION OF THE CONTRACT UPON EXPIRY
5.1 This contract is effective upon the execution of the contract and is
valid for 50 years starting from the date of execution.
5.2 When the validity period of the contract expires, this contract is
automatically extended, which requires no party to pay for any
expenses related to that extension.
6. TAX OBLIGATIONS
The parties are to submit their own taxes pursuant to applicable PRC laws
at the time and pursuant to the relevant taxation regulations.
7. FORCE MAJEURE
Due to the occurrence of unforeseeable, non-preventable and unavoidable
events of force majeure, when this contract cannot be implemented or implemented
up to the terms and conditions, the parties should consult with each other
according to the degree of impact from the event(s) of force majeure and decide
whether or not to exempt from or delay the implementation of this contract.
Losses caused from force majeure shall not be borne by any of the parties;
however, the parties should try to minimize the losses.
8. RESOLUTION OF DISPUTES
8.1 All disputes caused by or related to this contract should be resolved
between the 2 parties through consultation; where consultation fails,
the dispute should be submitted to China International Economic and
Trade Arbitration Committee to be mediated in Beijing pursuant to the
committee's current effective arbitration rules at the time of
submission. The decision from the arbitration is final and is binding
on both sides.
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8.2 In the course of resolution of a dispute, except for the issue(s) in
the dispute, both parties should continue to observe terms of other
articles and clauses under this contract and fulfill other duties
under this contract.
9. GOVERNING LAWS
9.1 This contract should be governed under the laws of the PRC and to the
interpretations thereof.
10. WAIVER AND TRANSFER
10.1 Where a party requests to waive its implementation of any article or
clause, this does not affect the party from subsequently requesting
the implementation of that article or clause or of any other article
or clause in this contract.
10.2 No party can transfer its right and/or duty in this contract to a
non-contract party, unless with written consents from all other
parties.
11. OTHER ISSUES
11.1 The subtitle added to each article and clause is only for convenient
reference and does not affect the interpretation of the articles and
clauses in this contract.
11.2 If any article or clause and terms in this contract are deemed as
illegal or unable to be executed with force according to applicable
laws, then the article or clause is deemed to have been deleted from
this contract and is already invalid; however, this contract is still
effective and further it should be deemed that from the very beginning
that article or clause has not existed. The parties should consult
with each other to replace the deleted article or clause with one that
is acceptable, satisfactory, legal, and effective to the parties.
11.3 The time, dates, and length of terms stipulated in this contract are
critically important to this contract and anything departing from the
time, dates or length of terms as stipulated in this contract should
be deemed as a breach of contract.
11.4 All the expenses to enable this contract to be legally effective,
including but not limited to notary fees, stamp taxes, and
registration fees are to be borne by the relevant party (parties) or
the party that incurs the expense(s), pursuant to the rules in the PRC
laws.
11.5 The schedules appended to this contract constitute an inseparable part
of this contract and have the same effects as the main body of this
contract.
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11.6 This contract comes in 4 counterparts, with 1 counterpart for each
party, and all counterparts have the same legal effects.
[The signatory page is attached.]
<PAGE>
The Signature Page for the "Business Cooperation Contract"
Shandong Economic Observing Newspaper Co., Ltd. [Company chop of Shandong
Economic Observing Newspaper Co., Ltd.]
Authorized Representative: /s/
--------------------------------
Shangdong Sanlian Group Co. Ltd. [Company chop of Shangdong Sanlian Group Co.
Ltd.]
Authorized Representative: /s/
--------------------------------
Economic Observer Press Office [Company chop of Economic Observer Press Office]
Authorized Representative:
--------------------------------
Beijing Jingguan Xincheng Advertising Co. Ltd. [Company chop of Beijing Jingguan
Xincheng Advertising Co. Ltd.]
Authorized Representative: /s/
--------------------------------