Agreement for the Sale and Purchase of Equity Interest and Subscription - Wei Xie, Qinyong Lu, James Win, Jing Yang, Hui Shi, L Pang, Weidong Yang, Xinhua Finance Ltd. and Shanghai Hyperlink Market Research Co. Ltd.
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AGREEMENT
FOR THE SALE AND PURCHASE OF EQUITY INTEREST AND SUBSCRIPTION
IN
SHANGHAI HYPERLINK MARKET RESEARCH CO., LTD.
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Dated as of 14 June 2006
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THIS is made between the following parties in Shanghai, PRC:
(1) XIE, Wei, a citizen of PRC and holder of PRC identity card number
310103196911060835 with an address of Rm. 302, No. 46, Guilin West Street,
Xuhui District, Shanghai ("TRANSFEROR 1");
(2) LU, Qinyong, a citizen of PRC and holder of PRC identity card number
310109197010053614 with an address of Rm.301, No. 7, Tiyuhui Road, Shanghai
("Transferor 2", and together with Transferor1, the "Transferors";
"Transferor" means each of them);
(3) Win Jei-Ching, James, holding the passport of the Republic of China (with
number of 210781340) and Taiwanese ID (with number of 0063987803) and with
an address of 1/F, No. 14, Zhongzheng Road, Yonghe City, Taipei, Taiwan
("Warrantor 1");
(4) YANG ,Jing, a citizen of PRC and holder of PRC identity card number
330602197307110022 with an address of Rm. 802, No. 3, Liangcheng Road,
Shanghai("Warrantor 2")
(5) SHI, Hui,a citizen of PRC and holder of PRC identity card number
422323197309020046 with an address of Rm. 502, 7th District, Zaobao Road,
Shanghai("Warrantor 3")
(6) PANG, L, a citizen of PRC and holder of PRC identity card number
440105196906120911 with an address of Rm. 1504, No. 25, Jinan Road,
Zhuhai District, Guangzhou("Warrantor 4")
(7) YANG, Weidong, a citizen of PRC and holder of PRC identity card number
440102197306190014 with an address of Rm. 502, No. 2, Yuexiu District,
Guangzhou ("Warrantor 5")
(Warrantor 1, Warrantor 2, Warrantor 3, Warrantor 4 and Warrantor 5,
collectively as "Warrantors" and "Warrantor" means each of them).
(Transferor 1, Transferor 2, Warrantor 1, Warrantor 2, Warrantor 3,
Warrantor 4 and Warrantor 5 are collectively referred to as "Vendors" and
"Vendor" means each of them.)
(8) Xinhua Finance Limited (the "PARENT"), a limited liability company duly
incorporated and existing under the laws of Cayman Islands and listed on
the Mothers Booard of the Tokyo Exchange (Symbol:9399)
(9) Beijing Taide Advertising Co Ltd ("Taide"), a limited liability company
duly incorporated and existing under the laws of PRC and having its
registered office situated at Rm. 103, Unit 2, No.16, Beijing Tiyu
University, Yuan Ming Garden, Beijing, which is indirectly controlled by
the Parent.
(Parent and Taide collectively as "Purchasers" and "Purchaser" means each
of them.)
(10) Shanghai Hyperlink Market Research Co Ltd ("Company")
The Transferors, Warrantors and the Purchasers are collectively referred to as
"PARTIES" and "PARTY" means each of the Purchaser, Transferors and Warrantors.
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RECITAL
WHEREAS:
(A) The Company is engaged in the business of providing market research and
information consultancy service.
(B) On the date of the execution of this Agreement, Transferor 1 is the legal
and record owner of 80% of the total share equity interests in the
registered capital of the Company, of which (i) 23.30%, 4.66%, 4.66%, 3.40%
and 2.03% of the total share equity of the Company are held by Transferor 1
for and on behalf of the Warrantor 1, Warrantor 2, Warrantor 3, Warrantor 4
and Warrantor 5 respectively, and (ii) 41.95% of the total share equity of
the Company is legally and beneficially held by Transferor 1.
(C) On the date of the execution of this Agreement, Transferor 2 is the legal
and record owner of 20% of the total share equity interests in the
registered capital of the Company of which (i) 1.36% of the total share
equity of the Company are held by Transferor 2 for and on behalf of
Warrantor 5; and (ii) 18.64% of the total share equity of the Company is
legally and beneficially held by Transferor 2.
(D) Subject to the terms and conditions of this Agreement, the Parent wishes,
through Taide, to purchase from the Vendors, and the Vendors wish to sell
to the Purchasers all the legal and beneficial interest in fifty one
percent (51%) of all the share equity of the Company held by Transferor 1
and Transferor 2 ((a) with respect to Transferor 1, 40.8% share equity of
the Company held by him (including (i) the 21.39% share equity of the
Company legally and beneficially held by Transferor 1, (ii) the 11.88%,
2.38%, 2.38%, 1.73% and 1.04% share equity of the Company held by
Transferor 1 for and on behalf of Warrantor 1, Warrantor 2, Warrantor 3,
Warrantor 4 and Warrantor 5 respectively); (b) with respect to Transferor
2, 10.2% share equity of the Company held by him (including: (i) the 9.51%%
share equity of the Company legally and beneficially held by Transferor 2
himself; and (ii) the 0.69%% share equity of the Company held by Transferor
2 for and on behalf of Warrantor 5.); the aforesaid share equity as set
forth in (a) and (b) collectively as the "SALE EQUITY"). After the purchase
of the Sale Equity by the Purchasers, Taide shall hold 51%, Transferor 1
hold 39.2% of the Company and Transferor 2 hold 9.80% share equity of the
Company respectively.
(E) Following the purchase of the Sale Equity both the Transferors
(representing themselves and all Warrantors) and Taide agree to
additionally increase the registered capital of the Company by RMB4,000,000
(from RMB500,000 to RMB4,500,000) on a pro rata basis: Taide shall
contribute RMB2,040,000; Transferor 1 shall contribute RMB 1,568,000; and
Transferor 2 shall contribute RMB 392,000. Following such increase of the
registered capital, Taide hold 51% , Transferor 1 hold 39.2% and Transferor
2 hold 9.80% share equity of the Company respectively.
(F) In addition, the Parent, the Transferors and the Warrantors are undertaking
to directly or indirectly engage in the market research online business.
NOW, THEREFORE, in consideration of the premises and the mutual agreements and
covenants hereinafter set forth, the Purchasers and the Vendors hereby agree as
follows:
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ARTICLE 1
DEFINITIONS
SECTION 1.01 Certain Defined Terms
As used in this Agreement, the following terms shall have the following meanings
unless the context requests otherwise:
"2006 Consideration" has the meaning set forth in Section 2.02.
"2006 Financials" has the meaning set forth in Section 2.02.
"2006 Net Income" has the meaning set forth in Section 2.02.
"2007 Consideration" has the meaning set forth in Section 2.02
"2007 Financials" has the meaning set forth in Section 2.02.
"2007 Net Income" has the meaning set forth in Section 2.02.
"Acquisition Transaction" has the meaning set forth in Section 2.01
"Action" means any claim, litigation, arbitration or
inquiry, or judicial, administrative,
regulatory or other proceeding, brought by
or before (or in the case of a claim,
capable of being brought by or before) any
court, government agency or other
Governmental Authority or any person.
"Accounts" has the meaning set forth in Schedule 4.
"Affiliates" means (a) in relation to any corporate or
non-corporate legal person, any other
person which, directly or indirectly,
controls or is controlled by or is under
common control with such person and for the
purposes of this definition "CONTROL" when
used with respect to any specified person
means the power to direct the management
and policies of such person, directly or
indirectly, whether through the ownership
of voting securities, by contract or
otherwise, and the terms "CONTROLLING" and
"CONTROLLED" have meanings correlative to
the foregoing, and (b) in relation to any
natural person, his or her spouse,
children, parents and parents-in-law.
"AOA" means Company's new articles of association
adopted by both Transferors(for and on
behalf of themselves and all other
Warrantors) and Purchaser, the specific
details of which has been set forth in
Annex 1..
"Balance Sheet" has the meaning set forth in Schedule 4.
"Business" has the meaning set forth in Section
7.02(a).
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"Business Day"or "Business Days" means any day that is not a Saturday, a
Sunday or other day on which banks are
required or authorized by Law to be closed
in Hong Kong or Shanghai, PRC.
"Charter Documents" has the meaning set forth in Schedule 4.
"Clients" has the meaning set forth in Section
7.02(b).
"Closing" has the meaning set forth in Section 2.04.
"Closing Date" has the meaning set forth in Section 2.04.
"Company" means Shanghai Hyperlink Market Research Co
Ltd.
"Confidential Information" has the meaning set forth in Section 7.03
or Schedule 4, as the case may be.
"Contracts" has the meaning set forth in Schedule 4.
"Dollars" or "$" means United States dollars.
"E-Business" has the meaning set forth in Section 6.01.
"EBITDA" means Company's earnings before interest,
taxes, depreciation, and amortization.
"Earnout Period" has the meaning set forth in Section 8.02.
"Edata Agreements" has the meaning set forth in Section 6.01.
"Edata Transaction" has the meaning set forth in Section 6.02.
"Encumbrance" has the meaning set forth in Schedule 4.
"Financial Statements" has the meaning set forth in Schedule 4.
"FIE" means the foreign invested enterprise as
defined by PRC laws.
"Force Majeure" has the meaning set forth in Section 11.07(a).
"Government Approval" means any approval, consent or
authorization from, registration or filing
with, notice to, or license, permit or
certification from, any Governmental
Authority. Government Approvals with
respect to any Action to be taken by any
party hereunder means such Government
Approvals as are required for the Action
under applicable Law. Whenever any form of
requirement of "GOVERNMENT APPROVAL" is
referred to herein, it shall be interpreted
and construed to include the
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requirement that such approval be in form
and substance reasonably acceptable to the
parties hereto.
"Governmental Authority" means any government, governmental,
regulatory or administrative authority,
agency or commission or any court,
tribunal, or judicial or arbitral body.
"Governmental Order" means any order, judgment, injunction or
award entered by or with any Governmental
Authority.
"Group" means the Company and Guangzhou Hyperlink.
"Guangzhou Hyperlink" means Guangzhou Hyperlink Research Co Ltd,
the existing general corporate information
of which are set out in Schedule 1.
"Group Member" means each member of the Group, i.e. the
Company or Guangzhou Hyperlink.
"Hong Kong" means Hong Kong Special Administrative
Region of PRC
"IFRS" means the International Financial Reporting
Standards promulgated by the International
Accounting Standards Board from time to
time
"Initial Consideration" has the meaning set forth in Section 2.02.
"Initial Purchase" has the meaning set forth in Section 6.02.
"Intellectual Property" has the meaning set forth in Schedule 4.
"Last Accounting Date" has the meaning set forth in Schedule 4.
"Law" means any (i) national, provincial, state,
or local statutes, regulations, ordinances,
rules, codes, judgments, awards, orders or
policies of Governmental Authorities, and
any other rules, standards or
specifications having the force or effect
of law, whether PRC or non-PRC; and (ii)
treaties, conventions, protocols and other
promulgations having transnational legal
effect.
"Leases" has the meaning set forth in Schedule 4.
"Licensed Intellectual Property" has the meaning set forth in Schedule 4.
"Losses" has the meaning set forth in Section 10.02.
"Management Team" means the person as set forth in Schedule
3.
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"Material Adverse Change" means any change that results or could
result in a Material Adverse Effect.
"Material Adverse Effect" means any effect which, alone or together
with any other such effect, (i) is
materially adverse to the business,
operations, assets or liabilities, employee
relationships, customer or supplier
relationships, prospects, results of
operations or the condition (financial or
otherwise) of the Group take as a whole; or
(ii) materially impairs the ability of the
Group member to conduct its business in the
ordinary course of business; or (iii)
materially impairs the ability of the
Vendors or each Group Member to perform
their obligations under this Agreement.
"Maximum Subsequent Consideration" has the meaning set forth in Section 2.02.
"Merger Consideration" has the meaning set forth in Section 2.02.
"New Cos" has the meaning set forth in Section 6.02.
"Offshore Co" has the meaning set forth in Section 6.02.
"Owned Intellectual Property" has the meaning set forth in Schedule 4.
"Person" or "person" means a natural person, partnership,
limited liability partnership, corporation,
joint stock company, trust, unincorporated
association, joint venture or other entity,
and pronouns have a similarly extended
meaning.
"PBOC" People's Bank of China.
"PRC" means the Peoples' Republic of China (for
the purpose of this Agreement, excluding
Hong Kong (Special Administrative Region),
Macau (Special Administrative Region) and
the district of Taiwan, unless expressed to
the contrary).
"Pre-closing Tax Period" has the meaning set forth in Section
10.03(c).
"Purchaser Indemnified Person" has the meaning set forth in Section 10.02.
"Related Agreements" has the meaning set forth in Schedule 4.
"Restricted Period" has the meaning set forth in Section 7.02.
"Returns" has the meaning set forth in Schedule 4.
"Sale Equity" has the meaning set forth in (c) of
Recital.
"Subscription Amount" has the meaning set forth in Section 2.05.
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"Subscription Transaction" has the meaning set forth in Section 2.04.
"Subsequent Payment" has the meaning set forth in Section 2.02.
"Taide's Contribution" has the meaning set forth in Section 2.05.
"Tax" means any tax, levy, duty or other charges
of any kind imposed by any Governmental
Authority, including without limitation,
taxes and charges upon or in respect of
income, payroll, employment, excise,
severance, stamp, occupation, education,
stock transfer, capital gains, withholding,
social security, property, sales, use,
license or registration; value added taxes;
customs duties and tariffs; and any
interest, penalty or addition thereto,
whether disputed or not.
"Termination Date" has the meaning set forth in Section
9.02(b).
"Transaction" refer to the transaction as contemplated in
this Agreement.
"Transferor 1 Contribution" has the meaning set forth in Section 2.05.
"Transferor 2 Contribution" has the meaning set forth in Section 2.05.
"Vendors Indemnified Person" has the meaning set forth in Section 10.03.
"Warranties" means the warranties, representations and
undertakings of the Vendors contained in or
referred to in Article 4 hereof and
Schedule 4.
"WFOE" has the meaning set forth in Section 6.02.
"Transferors Dividends" means an amount equal to the sum of (a) the
current assets as of 30 April 2006 less (b)
the current liabilities as of 30 April
2006, and less (c) 3 month working capital
requirements to the operation of the
Company as a going concern as calculated
having a reference to the actual financial
reports in the calendar year of 2005 and
determined by the Purchaser (such
determination to be final and binding
except in the case of manifest error) based
on PRC local tax statutory reporting
standards.
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ARTICLE 2
PURCHASE AND SALE OF THE SALE EQUITY AND SUBSCRIPTION OF THE
ADDITIONAL REGISTERED CAPTIAL OF THE COMPANY
SECTION 2.01 Purchase and Sale of the Sale Equity.
Upon the terms and subject to the conditions of this Agreement, the Purchasers
shall, through Taide, purchase from each of the Vendors, and each of the
Vendors shall procure the sale to Taide, of the Sale Equity (the "ACQUISITION
TRANSACTION") which in aggregate shall represent fifty one percent (51%) of the
total share equity of the Company, free from all charges, liens, Encumbrances
and other third party claims and interests and together with all rights now or
hereafter attached to them, including any and all rights and benefits arising
from or associated with such equity interests (including, but not in anyway
limited to, all rights and benefits in connection with the Company's retained
earnings, and any dividend or other distribution declared, made or paid after
the date of this Agreement).
SECTION 2.02 Merger Consideration Amount
The purchase price (the "MERGER CONSIDERATION") for the Sale Equity shall be
comprised of (i) the Initial Consideration and (ii) the Subsequent Consideration
(as defined below), determined and payable by the Purchaser or Taide to the
Vendors in the manner, at the times and in the amounts set forth in this Section
2.02.
(a) The "INITIAL CONSIDERATION" shall be $2,500,000.00 (US Dollar two million
and five hundred thousand only) or its equivalent RMB payable by the
Purchaser as follows:
(i) $31,875.00 or its equivalent RMB255,000 shall be payable by the Parent
or Taide to the bank account in PRC jointly designated by the
Transferors no later than ten (10) Business Days following the
Closing;
(ii) $500,000 shall be paid by the Parent or Taide in Dollars to the bank
account of the Offshore Co (as defined below) no later than ten (10)
Business Days following the Closing, which shall be deemed to be the
capital of Offshore Co, which Warrantor 1 is liable to contribute to
the Offshore Co.; and
(iii) the remaining part of the Initial Consideration, $1,968,125.00, shall
be paid by the Parent or Taide to one bank account jointly designated
by the Transferors no later than ten(10) Business Days following the
Closing.
(b) The "SUBSEQUENT PAYMENT" shall be a maximum of $3,620,000 (the "MAXIMUM
SUBSEQUENT CONSIDERATION"), and shall be paid by the Purchasers no later
than twenty (20) Business Days after receipt by the Parties of the 2006
Financials or 2007 Financials as the case may be (the date of such payment,
the "SUBSEQUENT PAYMENT DATE".).
(i) If the 2006 Net Income is equal to or greater than RMB 8,000,000, then
the Subsequent Payment shall be the lesser of:
(aa) 2006 Consideration; and
(bb) the Maximum Subsequent Consideration,
and the Merger Consideration shall be paid in full and the Purchaser
shall have no further liability in respect thereof.
(ii) If the 2006 Net Income is less than RMB8,000,000, the Transferors may,
by serving a joint written notice to the Purchasers within 3 Business
Days of the
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receipt by the 2006 Financials, elect to forego the 2006
Consideration, in which case the Subsequent Payment shall be paid to
the Transferors in 2007 and shall be equal to the lesser of:
(aa) the Maximum Subsequent Consideration; and
(bb) the greater of the 2006 Consideration and the 2007 Consideration.
(iii) "2006 CONSIDERATION" shall mean the product of (A) 2006 Net Income,
(B) 10 and (C) 0.51 minus $2,500,000 (US Dollar two million and five
hundred thousand.
(iv) "2006 NET INCOME" shall mean the Company's aggregate net income after
tax for the period from 1 July 2006 to 30 June 2007 as set out in the
2006 Financials.
(v) "2006 FINANCIALS" means the Company's audited financial statements for
the period from 1 July 2006 to 30 June 2007, prepared by a firm of
qualified auditors in the PRC selected by the Purchaser in accordance
with IFRS.
(vi) "2007 CONSIDERATION" shall mean the product of (A) 2007 Net Income,
(B) 10 and (C) 0.51 minus $2,500,000 (US Dollar two million and five
hundred thousand).
(vii) "2007 NET INCOME" shall mean the Company's aggregate net income after
tax for the period from 1 July 2007 to 30 June 2008 as set out in the
2007 Financials.
(viii) "2007 FINANCIALS" means the Company's audited financial statements
for the period from 1 July 2007 to 30 June 2008, prepared by a firm of
qualified auditors in the PRC selected by the Purchaser in accordance
with IFRS.
(c) The Subsequent Payment shall be paid by the Purchasers to the bank accounts
in and/or outside PRC jointly designated by the Transferors, and shall be
paid within 20 Business Days after delivery to the Purchaser of the
information required under 2.02(d) below.
(d) At least 3 (three) Business Days in advance of Subsequent Payment Date and
Closing Date, the Transferors shall in writing advise the Purchasers of the
manner in which the Purchaser should deliver such portion of the Merger
Consideration payment unless specified in this Agreement.
(e) Any portion of the Merger Consideration that is payable by the Purchasers
in cash pursuant to Section 2.02 shall be transferred by wire transfer of
immediately available funds.
(f) Within 90 calendar days subsequent to June 30, 2007 (and/or, if necessary
and as the case may be, 30 June 2008), the Purchasers and the Vendors shall
cause to be prepared and shall deliver the 2006 Financials (and/or, if
necessary and as the case may be, 2007 Financials) to each of the
Purchasers and Vendors.
(g) Any dispute regarding the determination of 2006 Net Income (and, as the
case may be, 2007 Net Income) will be resolved in accordance with Section
11.05.
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(h) Whenever payments or calculations to be made pursuant to this Agreement
require the conversion or comparison of RMB and Dollar amounts, the
exchange rate to be applied shall be the middle rate of exchange of Dollar
and RMB published by People's Bank of China ("PBOC") through the authorized
China Foreign Exchange Trading Centre (or if not available from such
entity, the other entity authorized by PBOC) on the day of the actual
payment date.
SECTION 2.03 Transferors Dividends
(a) The Transferors are entitled to the Transferors Dividends on a pro rata
basis (i.e. with respect to Transferor 1, 80% thereof; with respect to
Transferor 2, 20% thereof). The Purchasers acknowledge (relying on the
representation and Warranties given by the Vendors) and the Vendors agree
that the amount of such Transferors Dividends shall be RMB2,880,000.00.
(b) Within 7 Business Days following the Closing,
(i) RMB1,960,000 out of such Transferors Dividends shall be converted to
the Transferor 1 Contribution and Transferor 2 Contribution (as
defined below) which the Transferors are committed to pay to the
Company as contemplated in Subscription Transaction; and
(ii) the remaining portion of the Transferors Dividends, RMB920,000, shall
be paid to the bank account jointly designated by the Transferors.
SECTION 2.04 Closing.
(a) Subject to the provisions of Section 5.01 and Section 5.02 and other terms
and conditions of this Agreement, the sale and purchase of the Sale Equity
contemplated by this Agreement shall take place at a closing (the
"CLOSING") to be held at the business office of the Company at 10:00A.M.
Beijing time on the third (3rd ) Business Day following satisfaction or
waiver in writing of the conditions to the Closing by the relevant parties
set forth in Article 5, or at such other place or at such other time or on
such other date as the Vendors and the Purchasers may agree upon in writing
(the day on which the Closing takes place being the "CLOSING DATE").
(b) Immediately following Closing, the share structure of the Group shall be as
follows:
(i) Taide is the legal, beneficial and registered shareholder of the
Company holding 51% share equity thereof;
(ii) Transferor 1 is the registered shareholder of the Company holding
39.2% share equity of the Company (among which holding 20.56%% for
himself and holding 11.42%%, 2.28%%, 2.28%%, 1.67%% and 0.99% for and
on behalf of Warrantor 1, Warrantor 2, Warrantor 3, Warrantor 4 and
Warrantor 5 respectively);
(iii) Transferor 2 is the registered shareholder of the Company holding
9.8% share equity of the Company (among which holding 9.13% for
himself and holding 0.67%% for and on behalf of Warrantor 5); and
(iv) The Company is the sole shareholder of Guangzhou Hyperlink.
SECTION 2.05 Increasing of the Registered Capital of the Company after the
Closing
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(a) The Parties agree, within 60 calendar days immediately following the
Closing, to cause the Company to complete the increasing of the registered
capital by RMB4,000,000 (the "SUBSCRIPTION AMOUNT") by subscription by
Taide and Transferors jointly ("SUBSCRIPTION TRANSACTION"). For the purpose
of such Subscription Transaction, Taide shall contribute RMB2,040,000
("TAIDE'S CONTRIBUTION"), Transferor 1 shall contribute RMB1,568,000 (the
"TRANSFEROR 1 CONTRIBUTION") and Transferor 2 shall contribute RMB392,000
(the "TRANSFEROR 2 CONTRIBUTION") thereof respectively.
(b) For the purpose of the aforesaid Subscription Transaction, all the Parties
agree that RMB1,960,000 out of the Transferors Dividends(as referred to in
Section 2.03(b)(i)) may be converted to the Transferor 1 Contribution and
Transferor 2 Contribution which the Transferors are committed to pay to the
Company as contemplated in the Subscription Transaction.
(c) All the Parties are committed to sign and execute any documents and do any
things (including without limitation, the registration in the local company
registration) to cause the Company to complete such Subscription
Transaction.
(d) Following the Subscription Transaction, the amount of the Company's
registered capital shall be RMB4,500,000 of which Taide shall hold 51
percent of the share equity thereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each of the Purchasers hereby represents and warrants to the Vendors as follows:
SECTION 3.01 Authority to Execute and Perform this Agreement.
The execution and delivery of this Agreement by the Purchaser, the performance
by the Purchaser and of its obligations hereunder and the consummation by the
Purchaser of the Transaction have been duly authorized by all requisite action
on the part of the Purchaser. This Agreement has been duly executed and
delivered by the Purchaser, and (assuming due authorization, execution and
delivery by the Vendors) constitutes a legal, valid and binding obligation of
the Purchaser enforceable against it in accordance with its terms.
SECTION 3.02 No Conflict.
The execution, delivery and performance of this Agreement by the Purchaser do
not and will not (a) violate, conflict with or result in the breach of any
provision of the articles of association of the Purchaser or (b) conflict with
or violate any Law or Governmental Order applicable to the Purchaser or any of
their assets, properties or businesses.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE VENDORS
SECTION 4.01 In consideration of the Purchaser entering into this Agreement,
each of the Vendors hereby warrants and represents to and undertakes with the
Purchaser on a joint and several basis that each of the Warranties is now and
will, at all times from the date hereof be complete, true and accurate in all
respects and will not be in any way misleading.
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SECTION 4.02 The Vendors acknowledge that the Purchaser has entered into this
Agreement on the basis of the Warranties and that the Purchaser is relying on
the Warranties. Each Warranty shall be construed independently.
SECTION 4.03 The Purchaser's right or ability to make a claim under or in
respect of the Warranties or to damages or other relief in respect of any breach
of the Warranties shall not be affected or limited, and the amount recoverable
shall not be reduced, by any other information of which the Purchaser has or may
have actual or constructive or imputed knowledge and, in particular the rights
and remedies of the Purchaser shall not be affected or limited in any way by any
investigation made by or on behalf of the Purchaser into the Group.
SECTION 4.04 The right or ability of the Purchaser to make a claim under or in
respect of the Warranties shall be without prejudice to any other right of the
Purchaser to damages or other relief in respect of any breach of the Warranties.
SECTION 4.05 The execution and delivery of this Agreement by each Vendor, the
performance by each Vendor of his/her obligations hereunder and the consummation
by each Vendor of the Transaction have been duly authorized by all requisite
action on the part of each Vendor. This Agreement has been duly executed and
delivered by the Vendors, and (assuming due authorization, execution and
delivery by the Purchaser) constitutes a legal, valid and binding obligation of
the Vendors enforceable against the Vendors in accordance with its terms. The
execution, delivery and performance of this Agreement by the Vendors do not and
will not (a) violate, conflict with or result in the breach of any provision of
the organizational documents of the Vendors and Group Member; or (b) conflict
with or violate any Law or Governmental Order applicable to the Vendors or Group
Member, or any of their/its assets, properties or businesses.
SECTION 4.06 The execution, delivery and performance of this Agreement by the
Vendors do not and will not require any consent, approval, authorization or
other order of, action by, filing with or notification to, any Governmental
Authority or its designated organizations, except for the relevant registrations
on Transaction in the competent company registration authorities. If either any
of the Parties is notified by any Governmental Authority that any relevant
approval or consent whatsoever has deficiencies or is not perfect whether before
or after the Closing Date, the Vendors shall obtain or perfect such approval or
consent whatsoever within a period of 3 (three) months from the date of such
notification or such shorter period as the applicable law may stipulate from
time to time. If such approvals or consent whatsoever are not obtained or
perfected within the aforesaid period, the Purchaser is entitled to, at its sole
and absolute discretion, request that each Vendor to immediately return all or
any portion of the paid Merger Consideration as contemplated in the Acquisition
Transaction back to the Parent and Taide in the same currency of the said Merger
Consideration paid by the Parent and Taide without delay and the Vendors are
responsible for any aforesaid repayment on a joint and several basis and shall
make such payment without delay.
SECTION 4.07 Each of the Vendors represents and warrants to the Purchaser that
each of the statements contained in Schedule 4 are correct and complete as of
the date of this Agreement and will be true and accurate for all periods up to
and including the Closing Date.
ARTICLE 5
CONDITIONS TO OBLIGATIONS
SECTION 5.01 Conditions to Obligations of the Vendors
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The obligations of the Vendors to consummate the Acquisition Transaction shall
be subject to the fulfillment, at or prior to the Closing, of each of the
following conditions:
(a) The representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date, with the same force and effect as if made as of the Closing
Date except where any such failure of the representations and warranties in
the aggregate to be true and correct in all respects would not reasonably
be expected to have a Material Adverse Effect.
(b) No Action shall have been commenced or threatened by or before any
Governmental Authority or non-Governmental Authority against the Vendors or
the Purchasers, seeking to restrain the Acquisition Transaction which, in
the reasonable, good faith determination of the Vendors, is likely to
render it impossible or unlawful to consummate such Acquisition
Transactions; provided, however, that the provisions of this Section
5.01(b) shall not apply if any of the Vendors has directly or indirectly
solicited or encouraged any such Action; and
(c) the Purchaser shall have performed in all material respects each obligation
and agreement and shall have complied in all material respects with each
covenant to be performed and complied with by it under this Agreement at or
prior to the Closing Date.
SECTION 5.02 Conditions to Obligations of the Purchaser. The obligation of the
Purchaser to consummate the Acquisition Transaction shall be subject to the
fulfillment of each of the following conditions.
(a) The Warranties shall be true and correct in all material respects on the
Closing Date with the same force and effect as if made as on each such
date, except where any such failure of the representations and warranties
in the aggregate to be true and correct in all respects would not
reasonably be expected to have a Material Adverse Effect.
(b) On each of the Closing Date, and Subsequent Payment Date, no Action shall
have been commenced or threatened by or before any Governmental Authority
against the Vendors or the Purchasers seeking to restrain the Acquisition
Transaction which, in the reasonable, good faith determination of the
Purchaser, is likely to render it impossible or unlawful to consummate such
transactions.
(c) All members of the Management Team shall have signed the executive service
agreement (the substance of which has been listed in Schedule 2) with the
Company reasonably acceptable to the Purchaser, for a period of four years
and the said signed executive service agreement shall have been delivered
to the Purchasers.
(d) Since the date of this Agreement, no fact, circumstance, event or change
shall have occurred, or be reasonably likely to occur, which has had, or
could reasonably be expected to have, a Material Adverse Effect.
(e) Each of the Vendors shall have performed in all material respects each
obligation and agreement and shall have complied in all material respects
with each covenant to be performed and complied with by it under this
Agreement at and/or prior to the Closing Date.
(f) Each of the Vendors shall have waived any pre-emptive rights it may have
relating thereto as contemplated by this Transaction by the articles of
association of each Group Member and the applicable Law and the relevant
written consents evidencing
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such waive executed by such Vendors respectively shall have been delivered
to the Purchaser, in the form satisfactory to the Purchaser.
(g) The shareholders, the board of directors and/or equivalent internal power
authority of the Purchasers have approved the Transaction and the relevant
documents shall have been delivered to the Purchasers, in the form
satisfactory to the Purchasers.
(h) The Purchasers shall have completed their due diligence inquiry of each
Group Member and be reasonably satisfied with the results thereof.
(i) Each Group Member's outstanding debt owing to any of the Vendors, including
without limited to the outstanding loans whatsoever, shall have been waived
by each of the Vendors and an acknowledgement from each of the Vendors in
the form satisfactory to the Purchaser, addressed to each Group
Member and the Purchasers, shall have been delivered to the
Purchasers, expressly confirming that any Group Member has no any
indebtedness owing to such Vendor at the date thereof and if any, the said
Vendor expressly waive such indebtedness.
(j) The Company's AOA, in the form and substance as set forth in Annex 1, shall
have been executed by each of the Transferors and been delivered to the
Purchaser.
(k) The duly executed instrument shall have been delivered to the Purchaser,
expressly evidencing the alteration to each Group Member's shareholding
registration as contemplated herein (including without limited to (i) the
registration of the new directors of the board of the Company appointed by
Taide in accordance with the AOA, (ii) the registration of Taide as the new
shareholder of the Company holding 51% equity of the Company, (iii) the
registration of the AOA).
(l) The minutes of Company's shareholders meeting approving this Agreement,
AOA, the related agreements as contemplated in the Transaction shall have
been delivered to the Purchaser.
(m) The resolution of the board of directors of the Company approving and
authorizing this Agreement, AOA, the related agreements as contemplated in
this Agreement, the Transaction shall have been delivered to the Purchaser;
(n) The letters of resignation from all the current directors of the board or
(in the case of no board of the directors) the executive director of the
Company shall have been delivered to the Purchasers;
(o) The Company shall issue to the Purchasers a capital contribution
certificate in the form satisfactory to the Purchasers evidencing Taide's
holding of 51% share equity interest in the registered capital of the
Company.
(p) The shareholder agreement and subscription agreement, the form and
substance of which are material same as Annex 2 and 3 has been executed by
the relevant parties thereof.
(q) The necessary documents certifying that the Company is the sole shareholder
of Guangzhou Hyperlink shall have been delivered to the Purchasers; and
(r) Any other documents to give to the Purchaser good title to the Sale Equity,
to enable Taide to become the 51% registered holder of the Company, to
control each
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Group Member, and to understand the financial situation and operation of
each Group Member, shall have been delivered to the Purchaser.
The Parties shall make best efforts to fulfill the conditions set out in this
Section 5.01 and 5.02, including without limitation to obtain all approvals from
relevant authorities for the purpose of the Acquisition Transaction. If due to
either party's default the Closing does not take place on or prior to the
Termination Date (as defined in Section 9.02 hereof), the other party which is
not at default has the right to terminate this Agreement by giving written
notice to such defaulting party and claim any damages and/or loss incurred by
it.
Closing shall not prejudice the rights of the Purchasers with respect to the
above conditions or the obligations of the Vendors to provide or procure the
same except as explicitly waived by the Purchasers in writing.
ARTICLE 6
E-BUSINESS
Section 6.01 Engagement In Market Research On Line Business In PRC
In addition to the Acquisition Transaction and Subscription Transaction
contemplated hereof, the Vendors and Parent(or its nominee) intend to jointly
engage in the market research online business("E-BUSINESS") subject to the terms
and conditions hereof and other related agreements ("EDATA AGREEMENTS", as
defined below). For the purpose of this Agreement, the Edata Agreements mean the
shareholders agreement and subscription agreement, the substance of which are
set forth in Annex 2 and Annex 3.
Section 6.02 Arrangement on the Edata Transaction
For the purpose to the engagement in the E-Business, the Vendors and the
Parent(or its nominee) shall cooperate in the following manner ("EDATA
TRANSACTION").
(a) At the date of this Agreement, the Warrantor 1 is the sole equity and legal
shareholder of Hyperlink E-data International Limited("OFFSHORE CO")
incorporated in Brisith Virgin Islands.
(b) Subject to the terms and conditions as set forth in the Edata Agreements,
the Parent is entitled to acquire 19% of total share equity of the Offshore
Co ("INITIAL PURCHASE") and additionally has the option to acquire up to
50% share equity of the Offshore Co.
(c) Following the completion of Initial Purchase, the Parent(or its nominee)
and the Vendors shall cause the Offshore Co to incorporate a limited
liability subsidiary with registered capital of $1,000,000 (US Dollar one
million) in PRC with the registered office at 21st floor of New City
Building, No.167 Jiangning Road, Shanghai PRC (the "WFOE") of which the
Offshore Co legally and beneficially holds 100% share equity. Both
Offshore Co and WFOE (collectively as "NEW COS") will be directly involved
in E-Business in PRC.
(d) In addition, the Parent agrees to make or cause a 3 year term loan, the
total amount of which shall be $750,000 or the equivalent amount of RMB, to
fund the Offshore Co with interest at between 2% to 4% annually, the
detailed arrangements of which shall be additionally determined by the
Parent and Offshore Co.
(e) Based on the representation and Warranties of the Vendors, all the Parent
and Vendors agree that they will cause the WFOE, after its incorporation,
to purchase or assume the assets or costs (as listed in Schedule 9)
relating to the E-Business from the Company at the consideration of
RMB1,528,362.93.
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ARTICLE 7
NON COMPETITION
SECTION 7.01 Acknowledgements.
Each Vendor hereby acknowledges and agrees as follows:
(a) the Vendors' relationship with the Group involves and has involved the
understanding of and access to certain trade secrets and confidential
information pertaining to the property, business and operations of each
Group Member, New Cos, and their Affiliates;
(b) the Vendors' competition with the Group Member, Purchaser, New Cos and/or
their Affiliates, the solicitation of the Group Member, Purchaser and New
Cos Clients (as defined in Section 7.02(b) or employees of the Group,
Purchasers, New Cos, and their Affiliates, or the Vendors' disclosure of
trade secrets or confidential information relating to the Group Member and
New Cos, the Purchaser, and their Affiliates, following the transfer of the
Sale Equity to the Purchaser, would substantially and negatively impact the
results and success of the operation of each Group Member, New Cos and/or
their Affiliates beyond that which would arise from the competition of an
unrelated third party;
(c) all Clients of each Group Member and New Cos and their Affiliates,
regardless of when or by whom acquired, are or will be the assets of the
Group Member and their Affiliates, and not assets of the Vendors;
(d) the Vendors have carefully considered the restrictions contained in this
Article 7, and each of the Vendors specifically agrees that the same are
reasonable, necessary and essential to the preservation of the business of
each of Group Member, New Cos and their Affiliates for the benefit of the
Purchaser; and
(e) the Vendors' covenants set forth in this Article 7 are an essential part of
the inducement of each Purchaser to enter into this Agreement, and but for
the covenants contained herein, the Purchaser would not have entered into
this Agreement.
SECTION 7.02 Non-Compete.
Each of the Vendors agrees with the Purchaser that he/she will not, and will
procure that each of his/her Affiliates will not, directly or indirectly,
whether by himself/herself, by his/her/its employees or agents and whether on
his/her/its own account or on behalf of or in conjunction with or through the
medium of, or as manager, adviser, consultant or agent for, any other person or
otherwise howsoever, for a period of holding directly or indirectly the share
equity of any Group Member or their respective Affiliates (including the
successor of such aforesaid entities) and 4(four) years thereafter (the
"RESTRICTED PERIOD"), without the express written permission of the Purchaser or
pursuant to the performance of its duties and obligations under this Agreement:
(a) engage in, assist or have any active interest in a business located in PRC
or any other place in which the Group Member, Purchaser, New Cos or their
Affiliates carries on business, on his or her own behalf or for others,
that provides, sells, develops, markets or conducts a business that
directly or indirectly competes with or is substantially similar to the
business conducted by the Group Member, Purchaser, New Cos or their
Affiliates on the date of this Agreement, and/or of the Group
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Member, New Cos, Purchaser, or their Affiliates during the Restricted
Period (the "BUSINESS");
(b) solicit or canvass or otherwise deal with any person, firm, company or
other organisation which at any time during the three (3) years prior to
the date of this Agreement was a customer of any of the Group Member,
Purchaser, New Cos or their Affiliates in relation to the Business or any
of them or was, at such the date in the process of negotiating or
contemplating doing business with any of the Group Member, Purchaser, New
Cos or their Affiliates in relation to any the Business ("CLIENTS");
(c) solicit or entice away or endeavour to solicit or entice away from the
Group Member, Purchaser or New Cos or employ or otherwise engage any of the
Group Member's, Purchaser's or New Cos' employees, whether or not such
person would commit any breach of his contract of employment by reason of
his leaving the service of the Group Member, Purchaser or New Cos;
(d) engage or assist in any manner in any trade or business using, or be
associated with any person engaged in any trade or business using (whether
as a corporate name or trading name or trademarks or otherwise) any of the
names, trademarks, logos, design, get up or packaging used by any Group
Member, New Cos or Purchaser or their Affiliates or any names, trade marks,
logos, design, get up or packaging which are confusingly similar to any
names, trade marks, logos, design, get up or packaging used by any Group
Member or New Cos or Purchaser or Affiliates; or
(e) in the course of carrying on any trade or business, claim, represent or
otherwise indicate any present association with the Business or, for the
purpose of obtaining or retaining any business or custom, claim, represent
or otherwise indicate any past association with the Business.
SECTION 7.03 Confidential Information.
Without the prior written consent of the Purchasers, the Vendors shall not use,
whether for itself or on behalf of any third party, or divulge to any third
party other than the Group Member, the Purchaser, New Cos or any of their
Affiliates or their or the Vendors' respective professional advisers, employees,
officers and directors for the benefit of any Group Member, the Purchaser, or
their Affiliates, any trade secrets or other Confidential Information (as
defined below) learned or obtained by such Vendor, whether prior to, on or after
the date of the execution of this Agreement. As used herein, the term
"CONFIDENTIAL INFORMATION" means information disclosed to or known by the
Vendors (whether before, on or after the date of this Agreement) as a
consequence of the Vendors' relationship with any Group Member and not generally
known in the industry in which any Group Member, the Purchaser, the New Cos or
any Affiliate of theirs is engaged and that in any way relates to the business
of the Group Member, the Purchaser, the New Cos or any Affiliate of theirs, and
regardless of the format in which it is presented or embodied (written, graphic,
electromagnetic or otherwise). The term "CONFIDENTIAL INFORMATION," as used
herein, does not include information (a) which was already in the public domain
through authorized disclosures, or (b) which is disclosed as a matter of right
by a third party source after the date of this Agreement provided that such
third party source is not bound by confidentiality obligations in favour of the
Group Member, the Purchaser, the New Cos or their Affiliates.
SECTION 7.04 Limitations.
While the parties hereto consider that the aforesaid non-compete restrictions
are reasonable in all the circumstances, it is agreed that if such restrictions
by themselves or taken together shall be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the
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interests of the Group Member, New Cos, Purchasers and their Affiliates but
would be adjudged reasonable if part or parts of the wording thereof were
deleted or the periods thereof were reduced or the range of businesses or area
dealt with thereby were reduced in scope, the relevant restriction or
restrictions shall apply with such modifications as may be necessary to make it
or them valid and effective.
ARTICLE 8
ADDITIONAL AGREEMENT
SECTION 8.01 Further Action.
(a) Each of the Parties shall (i) take all reasonable actions necessary to
comply promptly with all legal and regulatory requirements which may be
imposed on any of them with respect to the transactions contemplated by
this Agreement and will promptly cooperate with and furnish information to
each other in connection with any such requirements imposed on any of them
in connection with the transactions contemplated hereby and (ii) take all
reasonable actions necessary to obtain (and shall cooperate with each other
in obtaining) any consent, authorization, order or approval of, or any
exemption by, any Governmental Authority or other public or private third
party, required to be obtained by any of the Parties in connection with the
transactions contemplated by this Agreement, including without limited to
the approval from the Approval Authority.
(b) Following the Closing, the Vendors hereby undertake to follow and/or cause
the Group Member to follow the instruction from the Purchasers on the
rectification of the business operation of the Group Member, including
without limited to as follows:
(i) The existing business address located at 12th floor of New City
Building, No.167 Jiangning Road, Shanghai PRC shall been registered as
a branch office of the Company;
(ii) The Group Member's lease with respect to the site (i)12th floor and
21st floor of New City Building, No.167 Jiangning Road, Shanghai PRC,
(ii) Unit 1601, No.20, Chaowai Avenue, Chaoyang District, Beijing,
PRC, and (iii) Unit 905 and 906, A, No. 195 Dongfeng Road(west),
Yuexiu District, Guangzhou, PRC, shall been duly registered in the
competent real estate registration authority;
(iii) The tax registration certificate(State) of Beijing branch of the
Company shall have been obtained by the Company and shall have been
delivered to the Purchaser;
(iv) Each Group Member shall fully make the payment on social welfare for
all of its employees in accordance with the applicable Laws; and
(v) others which not comply with the applicable laws or the Purchaser's
policy.
SECTION 8.02 Continuing Business.
For the period commencing on the date of this Agreement through and including
the Subsequent Payment Date (the "EARNOUT PERIOD"), each of the Vendors shall
act in good faith with regard to operating each Group Member's business in a
manner that is consistent with past practice. During the Earnout Period, none of
the Vendors shall, without the prior written approval of the Purchasers, (i)
require or permit the Group Member to incur any
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financial expenditures or commitments (including employee benefit costs) outside
the ordinary course of business consistent with past practice; (ii) impose any
consolidated group costs or expenses in the operation of the Group Member's
business that are not approved by the Purchaser; (iii) engage the Group Member
in the trading of securities; (iv) increase the Group Member's indebtedness for
borrowed money or make any loan or advance or assume, guarantee or otherwise
become liable with respect to the liabilities or obligations of any other Person
outside the ordinary course of business consistent with past practice; (v) make
any bonus or profit sharing distribution or similar payment of any kind outside
the normal course of business; or (vi) pay or declare any dividends of the Group
Member. During the Earnout Period, without prejudice to the foregoing and
subject to any other covenants and provisions in this agreement, any of the
Vendors shall have primary responsibility and reasonable control over for
operating expenses, the hiring and firing of employees and pricing, in each case
relating to the Group Member's business, in each case subject to the
requirements of the Purchaser with respect to the overall business as conducted
by the Purchaser and its Affiliates and subject to the oversight of the board of
directors of the Purchaser.
SECTION 8.03 The Vendors undertake that after the signing of this Agreement they
will cause the Group Member to provide, on an ongoing basis, in such formats and
at such time as requested by the Purchaser with information in relation to the
Group Member, including but not limited to its operations, financial affairs or
management sufficient to enable the Purchasers to meet its ongoing operation,
budgeting and audit requirements. In addition, after the signing of this
Agreement, the Vendors will cause each Group Member to provide the Purchasers
with access to, and give the Purchaser the opportunities to understand, all the
operations of each Group Member.
SECTION 8.04 At any time after the Closing, Taide shall have the right to cause
itself to sell and transfer any portion or all of its share equity in the
Company to one or more entities designated by the Purchasers. The Vendors hereby
undertake to the Purchasers that they will fully cooperate with the Purchasers
and the entity/entities designated by the Purchasers to consummate the transfer
and corporate restructure and conversion (including without limitation, (i) to
cause the Company to be converted as a foreign invested enterprise as defined by
PRC Laws, if so requested by the Purchasers; (ii) to cause the Company to change
the current registered address to effect such share transfer (if necessary); and
(iii) any other things necessary to effect such share transfer.).
SECTION 8.05 Immediately following the signing of this Agreement, Taide shall be
entitled to appoint 3 out of all 5 the directors of the board of the Company,
all of which shall be registered in the competent company registration authority
in PRC, and the Parties shall complete such appointments and registrations prior
to the Closing.
SECTION 8.06 Each of the Warrantor 1, Warrantor 2, Warrantor 3, Warrantor 4 and
Warrantor 5 represents to each Purchaser that Transferor 1 has been vested the
full authorities to do all the things for and on behalf of all and each of
aforesaid Warrantors with respect to any rights and obligations in connection
with or arising from this Agreement or his/her interests in the share equity in
the Company beneficially held by such aforesaid Warrantor (but legally held by
the Transferor 1) (including without limitation to (i) sign any documents and do
any things contemplated by and in connection with the Agreement; (ii) do any
things whatsoever even if this Agreement expires.) and all Transferor 1's such
actions shall be fully binding upon such aforesaid Warrantors.
In addition, the Warrantor 5 represents to each Purchaser that Transferor 2 has
been vested the full authorities to do all the things for and on behalf of
Warrantor 5 with respect to his rights and obligations in connection with or
arising from this Agreement or his interests in the share equity in the Company
beneficially held by the Warrantor 5 (but legally held by the
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Transferor 2) (including without limitation to (i) sign any documents and do any
things contemplated by and in connection with the Agreement; (ii) do any things
whatsoever even if this Agreement expires.) and all Transferor 2's such actions
shall be fully binding upon Warrantor 5.
SECTION 8.07 In the case that after the Closing the Purchasers or their
Affiliates are directly or indirectly involved in any initial public offering in
or outside PRC, the Vendors and the Company shall are committed to make their
best endeavors to cooperate on such initial public offering, including without
limited, (i) to sell their corresponding share equity in the Company to one or
more entities as designated by the Purchasers at the agreed consideration; or
(ii) to allow the Company directly or indirectly to be involved in such initial
public offering.
ARTICLE 9
EFFECTIVE DATE AND TERMINATION
SECTION 9.01 Effective Date.
This Agreement shall come into effect on the date of this Agreement.
SECTION 9.02 Termination.
This Agreement may be terminated at any time prior to the Closing in accordance
with the following provisions:
(a) By mutual written consent of the Vendors and the Purchasers;
(b) By either (i) Vendors or (ii) the Purchasers if the Closing does not occur
on or before the date that is nine months after the date hereof or any
other date additionally agreed by both Vendors and Purchaser in writing
(the "TERMINATION DATE"); provided, however, that the right to terminate
this Agreement pursuant to this Section 9.02(b) shall not be available to
any party whose breach of any provision of this Agreement has been the
cause of, or resulted in, the failure of the Acquisition Transaction to be
consummated by the Termination Date;
(c) Subject to Section 11.06, either the Vendors or the Purchasers shall be
entitled to elect not to complete the Transaction and, accordingly, to
terminate this Agreement upon prior written notice to the other parties
hereto if on or before the Closing Date:
(i) it becomes aware that one or more of the representations or warranties
of the other party contained in this Agreement is or are untrue,
incorrect or misleading in any material respect; or
(ii) there is a material breach of any covenant or obligation of the other
party under this Agreement; or
(iii) any Action shall have been commenced or threatened by or before any
Governmental Authority or non-Governmental Authority against the
Vendors or the Purchaser, seeking to restrain the Acquisition
Transaction or Edata Transaction which, in its reasonable, good faith
determination, is likely to render it impossible or unlawful to
consummate such transactions; provided, however, that the provisions
of this Section 9.02(c)(iii) may not be invoked by a party which has
directly or indirectly solicited or encouraged such Action; or
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(iv) The party desiring to terminate this Agreement pursuant to this
Section 9.02 (other than pursuant to Section 9.02(a)) shall give
written notice of such termination to the other party.
ARTICLE 10
WAIVER, RELEASE OF CLAIMS AND INDEMNIFICATION
SECTION 10.01 Waiver.
Either party to this Agreement may (a) extend the time for the performance of
any of the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto or (c)
waive compliance with any of the terms or conditions of the other party
contained therein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party not to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a
waiver of any other term or condition, of this Agreement. The failure of either
party to assert any of its rights hereunder shall not constitute a waiver of any
of such rights.
SECTION 10.02 Indemnification by the Purchaser.
The Purchasers shall indemnify, defend and hold harmless the Vendors (each, a
"PURCHASER INDEMNIFIED PERSON") from and against all actions, causes of action,
suits, debts, obligations, losses, damages, amounts paid in settlement,
liabilities, costs and expenses (including but not limited to interest,
penalties and reasonable attorneys' fees and expenses) ("LOSSES") arising out
of, in connection with or in relation to:
(a) the material breach of any representation or warranty made by the Purchaser
scontained in this Agreement; or
(b) the material breach of any covenant or agreement by the Purchasers
contained in this Agreement.
SECTION 10.03 Indemnification by the Vendors.
The Vendors shall indemnify, defend and hold harmless each of the Purchasers and
the Group Member and their employees, officers and directors (each, a "VENDORS
INDEMNIFIED PERSON") on a joint and several basis from and against all Losses
arising out of, in connection with or in relation to:
(a) the breach of any representation or warranty made by any of the Vendors
contained in this Agreement;
(b) the breach of any covenant or agreement by any of the Vendors contained in
this Agreement
(c) (i) any and all Taxes (or the non-payment thereof) of the Group member for
all taxable periods ending on or before the Closing Date and the portion
through the end of the Closing Date for any taxable period that includes
(but does not end on) the Closing Date ("PRE-CLOSING TAX PERIOD"), and (ii)
any and all Taxes of any person (other than the Group Member) imposed on
the Group Member as a transferee or successor, by contract or pursuant to
any law, rule, or regulation, which Taxes relate to an event or transaction
occurring before the Closing. Payment in full of any amount due from the
Vendors under this Section 10.03 (c) shall be made to the Vendors
Indemnified Person in immediately available funds at least two business
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days before the date payment of the Taxes to which such payment relates is
due, or, if no Tax is payable, within fifteen days after written demand is
made for such payment.
SECTION 10.04 Deductible; Limitations on Liability.
(a) Neither the Purchaser Indemnified Person nor Vendors Indemnified Person
shall be entitled to indemnification for any Losses under Section 10.02 or
Section 10.03, respectively, unless and until the aggregate amount of
Losses suffered, sustained, or incurred by all of the Purchaser Indemnified
Persons or the Vendors Indemnified Persons, as the case may be, and giving
rise to a claim for indemnification hereunder exceeds U.S. $10,000,
calculated on a cumulative basis and not on a per item basis and then only
to the extent of such excess. However, none of the limitations contained in
aforesaid of this provision shall apply to any breach of Warranties which
(or the delay in discovery of which) is the consequence of dishonest,
deliberate or reckless mis-statement, concealment or other conduct by any
of the Vendors.
(b) Neither the Purchaser Indemnified Person nor Vendors Indemnified Person
shall be entitled to more than one recovery for any single Loss even though
such Loss may have resulted from the breach or inaccuracy of more than one
of the representations, warranties, covenants and agreements made by the
Purchaser or Vendors, as the case may be, in or pursuant to this Agreement.
SECTION 10.05 Joint and Several Liability of the Vendors.
Each of the Vendors shall be jointly and severally responsible for all of the
Vendors' obligations and covenants hereunder and jointly and severally liable
for any and all damages or liabilities relating to or arising from this
Agreement.
ARTICLE 11
GENERAL PROVISIONS
SECTION 11.01 Expenses.
All costs and expenses, including but not limited to, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the Transaction shall be paid by the party incurring such costs
and expenses.
SECTION 11.02 Notices.
Notices and communications between the parties hereunder shall be in writing and
shall be sent by personal delivery, prepaid registered or certified first class
mail, prepaid air courier or facsimile to the parties' addresses set forth
below. Any notice given by personal delivery, registered or certified mail or
air courier shall be deemed to have been received on the date of receipt; and
any notice given by facsimile shall be deemed received after electronic
answerback has been received and twenty-four (24) hours have elapsed at the
place of the party receiving such notice.
To the Vendors: To the Purchasers:
Attention: Xie Wei Attention: Mr. John McLean
Title: Manager Title: General Counsel
FL. 12, Xincheng Mansion, 167 Jiang Suite 2003-4 Vicwood Plaza,
Ning Rd.,Shanghai, PRC 200041 199 Des Voeux Road Central,
Hong Kong
Tel: (86) (21) 62537766 Tel: (852) 3196 3939
Fax: (86) (21) 62534548 Fax: (852) 2541 8266
23
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SECTION 11.03 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible.'
SECTION 11.04 Amendment.
This Agreement may not be amended or modified except by an instrument in writing
signed by, or on behalf of, the Vendors and the Purchasers.
SECTION 11.05 Governing Law and Arbitration.
This Agreement shall be governed by and construed in accordance with the laws of
Hong Kong. Any dispute arising out of or in connection with this Agreement,
including a dispute as to the validity or existence of this Agreement, shall be
submitted to International Chamber of Commerce Court of Arbitration and resolved
by arbitration in Hong Kong conducted in English by an arbitration
committee(including 3 arbitrators) of International Chamber of Commerce Court of
Arbitration in accordance with the rules of the United Nations Commission on
International Trade Law (UNCITRAL); provided, that, unless the parties agree
otherwise: (i) each party shall be required only to produce specific, identified
documents which are relevant to the dispute; and (ii) the parties agree the
arbitration award shall be final. In addition, the parties hereto agree that no
party shall have any right to commence or maintain any suit or legal proceeding
concerning a dispute hereunder until the dispute has been determined in
accordance with the arbitration procedure provided for herein and then only to
enforce or facilitate the execution of the award rendered in such arbitration.
The parties agree not to contest or seek relief from the award in any court.
SECTION 11.06 Prevailing Party Attorneys' Fees.
If any action or proceeding is commenced to construe or enforce this Agreement
or the rights and duties of the parties hereunder, then the party prevailing in
that action, and any appeal thereof, shall be entitled to recover its attorneys'
fees and costs in that action or proceeding, as well as all costs and fees of
any appeal or action to enforce any judgment entered therein.
SECTION 11.07 Force Majeure(a).
(a) "FORCE MAJEURE" shall mean any act or event which is reasonably
unforeseeable or unavoidable and which is beyond the control of the
affected party, including, but not limited to, earthquake, storm,
lightning, typhoon, fire, flood, outbreak to escalation of hostilities,
declaration of national emergency, war, insurrection or similar military
actions, strikes and any other act or event which is generally accepted as
Force Majeure in international commercial practice.
(b) If a party has been prevented from performing its obligations provided in
this Agreement because of an event of Force Majeure, it shall notify the
other party in writing promptly after the occurrence of the event of Force
Majeure. If an event of Force Majeure occurs, neither party shall be
responsible for any damage, increased costs, or losses which the other
party may sustain by reason of the failure or delay in performance. The
party claiming Force Majeure shall take appropriate means to minimize or
remove the effects of Force Majeure and, within the shortest possible time,
attempt to resume performance of the obligation affected by Force Majeure.
If
24
<PAGE>
the affected party is unable to perform all or part of its obligations
under this Agreement for six (6) months after the date of the notice of the
occurrence of Force Majeure, any party shall have the right to terminate
this Agreement.
SECTION 11.08 Survival of Warranties.
The Warranties of the Parties contained in this Agreement shall be operative and
in full force and effect, regardless of any investigation made at any time with
respect thereto, and shall remain in full force and effect until the date
falling ten (10) years after the date of the execution of this Agreement.
SECTION 11.09 Assignment.
This Agreement may not be assigned to any third party, except Affiliates of the
Purchasers, by operation of Law or otherwise without the express written consent
of the Vendors and the Purchasers.
SECTION 11.10 Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and undertakings, both written and oral, among the Vendors
and the Purchasers with respect to the subject matter hereof.
SECTION 11.11 Headings. The descriptive headings contained in this Agreement are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 11.12 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 11.13 Right of Set-Off
Notwithstanding anything in this Agreement to the contrary, the Purchasers shall
have the right to set-off any indemnification payment obligation of which any
Purchaser Indemnified Person has given notice of to the Vendors pursuant to this
Agreement against any other payment to be made to any Vendor. No exercise by the
Purchasers of such right of set-off shall constitute a default in the payment of
any amount against which such set-off is made.
IN WITNESS WHEREOF, the Vendors and the Purchasers have caused this
Agreement to be executed by their duly authorized representatives as of the date
first written above.
25
<PAGE>
Execution Page of the Agreement for the Sale and Purchase of Equity Interest and
Subscription in Shanghai Hyperlink Market Research Co., Ltd.
VENDORS :
Transferor 1
/s/ Xie Wei
-------------------------------------
Xie Wei
Transferor 2
/s/ Lu Qinyong
-------------------------------------
Lu Qinyong
Warrantor 1
/s/ Win Jie-Ching, James
-------------------------------------
Win Jie-Ching, James
Warrantor 2
/s/ Yang Jing
-------------------------------------
Yang Jing
Warrantor 3
/s/ Shi Hui
-------------------------------------
Shi Hui
Warrantor 4
/s/ Pang Lu
-------------------------------------
Pang Lu
Warrantor 5
/s/ Yang Weidong
-------------------------------------
Yang Weidong
THE PURCHASER
Parent
/s/
-------------------------------------
Xinhua Finance Limited
/s/
-------------------------------------
Beijing Taide Advertising
Co., Ltd.(Taide)
/s/
-------------------------------------
Shanghai Hyperlink Market
Research Co., Ltd.(Company)
26
<PAGE>
SCHEDULE 1
EXISTING CORPORATE DETAILS OF THE COMPANY
NAME Shanghai Hyperlink Market Research Co.,Ltd
REGISTRATION NUMBER 3102292019423
ESTABLISHMENT DATE 6 August 1997
COMPANY TYPE Limited liability company
LEGAL REPRESENTATIVE Transferor 1
LEGAL ADDRESS Unit B-123, No. 1 Hexiang Road, Baihe Town, Qingpu
District, Shanghai, PRC
STATUS Live Company
BUSINESS SCOPE To provide marketing research and information
consultancy service.
ADMINISTRATION AUTHORITY Shanghai Administration for Industry and Commerce
REGISTERED CAPITAL RMB500,000(fully paid up)
SHAREHOLDER(S) (1) Name of the registered shareholder in the
company registry:
Transferor 1(i) 23.30%, 4.66%, 4.66%, 3.4% and
2.03% of the share equity of the Company are
held by Transferor 1 for and on behalf of the
Warrantor 1, Warrantor 2, Warrantor 3, Warrantor
4 and Warrantor 5 respectively, and (ii) 41.95%
of the share equity of the Company is legally
and beneficially held by Transferor 1 himself.
(2) Name of the registered shareholder in the
company registry:
Transferor 2 (i) 1.36% of the share equity of
the Company is held by Transferor 2 for the on
behalf of the Warrantor 5; and (ii) 18.64% of
the share equity of the Company is legally and
beneficially hold by Transferor 2 himself.
NOTE: the name of Warrantor 1, Warrantor 2, Warrantor
3, Warrantor 4 and Warrantor 5 has not been
registered in the company registry in PRC as the
shareholders of the Company.
BRANCH (1) Shanghai Branch
(2) Beijing Branch
SUBSIDIARY Guangzhou Hyperlink
27
<PAGE>
EXISTING CORPORATE DETAILS OF GUANGZHOU HYPERLINK
NAME Guangzhou Hyperlink Research Co., Ltd.
REGISTRATION NUMBER 4401042003286
ESTABLISHMENT DATE 4 July 1997
COMPANY TYPE Limited liability company
LEGAL REPRESENTATIVE Transferor 1
LEGAL ADDRESS Unit 905 and 906, A, No. 195 Dongfeng Road(west),
Yuexiu District, Guangzhou, PRC
STATUS Live Company
BUSINESS SCOPE To provide marketing research and planning service.
ADMINISTRATION AUTHORITY Guangzhou Administration for Industry and Commerce
REGISTERED CAPITAL RMB450,000(fully paid up)
SHAREHOLDER(S) Company legally and beneficially holding 100% share
equity in Guangzhou Hyperlink
BRANCH Nil
SUBSIDIARY Nil
28
<PAGE>
SCHEDULE 2
EXECUTIVE SERVICE AGREEMENT
29
<PAGE>
SCHEDULE 3
MANAGEMENT TEAM
List of names of the management team
30
<PAGE>
SCHEDULE 4
VENDORS' WARRANTY
In this Schedule 4, terms defined in the main text of this Agreement shall have
the same meanings, and the following terms shall have the following meanings:
"BALANCE SHEET" has the meaning set forth in clause 4.1(b) of Schedule 4.
"CHARTER DOCUMENTS" has the meaning set forth in clause 1.3 of Schedule 4.
"CONTRACTS" means the contracts as listed in Schedule 7.
"INTELLECTUAL PROPERTY" means the Owned Intellectual Property and the Licensed
Intellectual Property.
"CONFIDENTIAL INFORMATION" means all know-how, lists of customers or suppliers,
trade secrets, technical processes or other confidential information belonging
to the Group or to any related third party.
"ENCUMBRANCE" means a mortgage, charge, pledge, lien, option, restriction, right
of first refusal, right of pre-emption, third-party right or interest, other
encumbrance or security interest of any kind, or any other type of preferential
arrangement (including without limitation a title retention or trust
arrangement) having similar effect.
"FINANCIAL STATEMENTS" has the meaning set forth in clause 4.5(b) of Schedule 4.
"LAST ACCOUNTING DATE" means 31 December 2005.
"LEASES" mean the leases, sub-leases, tenancy agreements, sub-tenancy
agreements, licenses or other documents (including any options for extension
relating thereto) granted or agreed to be granted to the Group Member or
pursuant to which the Group Member holds or occupies any property. All the
Leases are listed in Schedule 6 (each of Leases, the "Lease".).
"LICENSED INTELLECTUAL PROPERTY" has the meaning set forth in clause 8.1 of
Schedule 4.
"OWNED INTELLECTUAL PROPERTY" has the meaning set forth in clause 8.1of Schedule
4.
"RELATED AGREEMENTS" has the meaning set forth in clause 1.3 of Schedule 4.
"RETURNS" has the meaning set forth in clause 6.1(f) of Schedule 4.
1. CAPACITY AND AUTHORITY
1.1 Each of the Vendors has the right, power and authority and has taken all
actions necessary to execute and deliver, and to exercise its rights and
perform its obligations under, this Agreement and each document to be
executed at or before the Closing Date.
1.2 Each Group Member is duly organized, validly existing, and in good standing
under the laws of the PRC, has all requisite right, corporate power and
authority to carry on its business, and is duly qualified and in good
standing to do business in each
31
<PAGE>
jurisdiction in which it conducts business. The Vendors have made available
to the Purchaser complete and correct copies of the Group Member's articles
of association, bylaws, and/or other organizational documents ("CHARTER
DOCUMENTS"), as amended to the date hereof. The minute books and records of
the Group Member, complete and correct copies of which have been made
available and delivered to the Purchaser, contain correct and complete
records of all material proceedings and actions taken at all meetings of,
or effected by written consent of, the interest holders of the Group Member
and its board of directors, and all original issuances and subsequent
transfers, repurchases, and cancellations of the Group Member's equity.
1.3 The execution, delivery and performance of this Agreement and all other
agreements contemplated in this Transaction ("RELATED AGREEMENTS") to be
entered into by the Group Member have been duly authorized by all necessary
action of the Group Member's board of directors(or in the case of no board
of directors, the legal representative of such Group Member). Certified
copies or original copies of the resolutions adopted by the Group Member's
board of directors(or in the case of no board of directors, the legal
representative of such Group Member) approving this Agreement, the Related
Agreements and transactions contemplated hereby and thereby will been
provided to the Purchaser prior to the Closing. Each of the Vendors has
duly and validly executed and delivered this Agreement and the Related
Agreements, and this Agreement and the Related Agreements constitute valid,
binding and enforceable obligations of the Vendors in accordance with their
terms.
2. INFORMATION
2.1 All information given by, or on behalf of, the Vendors to the Purchasers,
its advisers or agents before or during the negotiations leading to this
Agreement is true, complete, accurate and not misleading.
2.2 All information about the Sale Equity, the Group Member which might be
material for disclosure to a buyer of the Sale Equity has been disclosed to
the Purchaser in writing.
2.3 The Vendors are not aware of any facts pertaining to the Group Member or
its proposed business which could materially adversely affect the Group
Member or which are likely in the future to materially adversely affect the
Group Member.
2.4 To the best of the knowledge and belief of the Vendors after having made
due enquiries, no representation or warranty in this Agreement, nor any
statement or certificate furnished or to be furnished to the Purchaser
pursuant to or in connection with this Agreement contains or will contain
any untrue statement of material fact, or omits or will omit to state a
material fact necessary to make the statements contained herein or therein
not misleading.
3. SALE EQUITY
3.1 The corporate structure as set forth in Schedule 1 is true and not any
misleading.
3.2 There are not any options, warrants, calls, conversion rights, commitments,
agreements, contracts, restrictions, or rights of any character to which
any of the Group Member or the Vendors is a party or by which any of them
may be bound obligating the Group Member to issue, deliver or sell, or
cause to be issued, delivered
32
<PAGE>
or sold, additional equity interest, or obligating the Group Member to
grant, extend or enter into any such option, warrant, call, conversion
right, commitment, agreement, contract, understanding, restriction,
arrangement or right. The Group Member does not have any outstanding bonds,
debentures, notes or other indebtedness.
3.3 The Vendors (collectively) legally and beneficially hold the Sale Equity.
There is no Encumbrance and there is no agreement, arrangement or
obligation to create or give an Encumbrance, in relation to the Sale Equity
or any part of it. No person has claimed to be entitled to an Encumbrance
in relation to the Sale Equity or any part of it.
3.4 SUBSIDIARIES
Save for as stated in Schedule 1, the Group Member does not directly or
indirectly own or control any voting or equity, membership or similar
interest in, or any interest convertible into, exchangeable or exercisable
for, or carrying the rights to acquire, any voting, equity, membership or
similar interest in, any corporation, partnership, joint venture or other
business association or entity. The particulars of the Group Member set out
in Schedule 1 are true and accurate in all respects and the percentage of
the equity interest shown therein as owned or controlled by any party is
beneficially owned free from all and any Encumbrance. There is no agreement
or arrangement in force which calls for the present or future issue or sale
of, or grant to any person the right (whether conditional or otherwise) to
call for the issue, sale of transfer of any share or loan capital of the
Group Member(including any option, notes, warrants or other securities or
rights convertible or ultimately convertible in to shares or equity
interests in the Group Member.).
4. ACCOUNTS
4.1 FINANCIAL STATEMENTS
With respect of each Group Member, there has been delivered to the
Purchaser:
(a) audited balance sheets as of 31 December 2005 and the related audited
statements of operations, statements of stockholders' equity and
statements of cash flows for each of the fiscal years then ended ; and
(b) an unaudited balance sheet as at 30 April 2006 (including the notes
thereto, the "BALANCE SHEET") and the related statements of operations
and statements of cash flows for the Company then ended including the
notes thereto where applicable (collectively, the "FINANCIAL
STATEMENTS") as listed in Schedule 10.
The Financial Statements: (i) have been prepared from the books and records
of the relevant Group Member; (ii) present fairly in all material respects,
the financial position of the Group as of and for the periods indicated;
and (iii) have been prepared in accordance with which accounting principles
consistently applied. There are no liabilities in excess of US$10,000 in
the aggregate, claims or obligations of any nature, whether absolute,
contingent, anticipated or otherwise, whether due or to become due, that
are not shown in the Financial Statements.
4.2 DEBTS AND LIABILITIES
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<PAGE>
(a) Adequate provision for bad and doubtful debts and all liabilities
(whether actual, contingent or otherwise) and all financial
commitments in existence at the Last Accounting Date have been made in
the Financial Statements.
(b) All liabilities (actual, contingent or otherwise) and all financial
commitments of the Group Member have been accurately reflected and
disclosed in the Financial Statements.
4.3 PROVISION FOR TAX
The Financial Statements reserve in full for all Taxes to which the Group
Member may become liable under PRC law, for all periods starting on or
before the Last Accounting Date. The Financial Statements reserve in full
for contingent or deferred liabilities to Tax for all periods starting on
or before the Last Accounting Date.
4.4 ACCOUNTING RECORDS
The accounting records of the Group Member are up-to-date, in the Group
Member's possession and fully and accurately completed in accordance with
PRC law and applicable standards, principles and practices generally
accepted in the PRC.
4.5 INSURANCE AND BANKING FACILITIES.
Schedule 8 contains a complete and correct list of the names and locations
of all banks in which each Group Member has accounts or safe deposit boxes,
the designation of each such account and safe deposit box, and the names of
all persons authorized to draw on or have access to each such account and
safe deposit box.
5. CHANGES SINCE THE LAST ACCOUNTING DATE
5.1 GENERAL
Since the Last Accounting Date:
(a) the Group Member business has been operated in the usual way so as to
maintain it as a going concern;
(b) there has been no adverse change in the financial or trading position
or prospects of the Group Member; and
(c) no material change has occurred in the assets and liabilities shown in
the Accounts and there has been no reduction in the value of the net
tangible assets of the Group Member on the basis of the valuations
used in the Accounts.
5.2 SPECIFIC
With respect to the Group Member, since the Last Accounting Date:
(a) other than in the usual course of its business, the Group Member has
not:
(i) acquired or disposed of, or agree to acquire or dispose of, any
asset; or
34
<PAGE>
(ii) assumed or incurred, or agreed to assume or incur, any liability,
obligation or expense (actual or contingent);
(b) the Group Member has not factored, sold or agreed to sell a debt other
than in the usual course of its business;
(c) the Group Member business has not been materially and adversely
affected by the loss of a customer or supplier, or by termination or a
change in the terms of an agreement, or by an abnormal factor not
affecting similar businesses, and to the best of the Vendors'
knowledge, information and belief, no fact or circumstances exists
which might have a Material Adverse Effect;
(d) no dividends, bonuses or distributions have been declared, paid or
made except as provided for in the Accounts;
(e) there has not been any transaction involving more than $10,000 entered
into by the Group Member other than in the ordinary course of
business;
(f) there has not been any termination, modification, or rescission of, or
waiver by the Group Member of rights under, any contract having or
reasonably likely to have a Material Adverse Effect;
(g) there has not been any discharge or satisfaction by the Group Member
of any lien or Encumbrance, or any payment of any obligation or
liability (absolute or contingent) other than liabilities shown on the
balance sheet included in the Financial Statements as of 30 April 2006
and liabilities incurred since the Last Accounting Date in the
ordinary course of business;
(h) there has not been any mortgage, pledge, imposition of any security
interest, claim, Encumbrance, or other restriction created on any of
the assets, tangible or intangible, of the Group Member having or
reasonably likely to have a Material Adverse Effect;
(i) there has not been any settlement amount of any claim, dispute, suit,
proceeding or investigation regarding the Group Member; or
(j) there has not been any event or condition resulting in a Material
Adverse Change on the business of the Group Member.
6. TAX
6.1 GENERAL
(a) The Group Member has paid all Taxes which it has become liable to pay
and is not, and has not been liable to pay a penalty, surcharge, fine
or interest in connection with any Tax.
(b) There is no existing, contingent or deferred liability for Tax other
than any liability for Tax which arises solely in the ordinary course
of its business.
(c) The Group Member is not and does not expect to be involved in a
dispute in relation to Tax. No tax authority has investigated or
indicated that it intends to
35
<PAGE>
investigate the Tax affairs of the Group Member and there are no facts
which are likely to cause such an investigation to be instituted.
(d) The Tax preferential treatments that the Group Member is enjoying were
legally and validly granted by the relevant tax authorities, and the
Group Member will continue to enjoy such tax preferential treatments
after Closing.
(e) The Group Member has fully withheld and paid within the statutory time
limit to the relevant tax authority the individual income tax on the
salaries, wages, and other taxable benefits provided to its directors,
officers and employees.
(f) The Group Member has timely filed (or caused to be filed) all tax
returns ("RETURNS") required to be filed by it. All Taxes required to
be paid (whether or not shown on any Return) in respect of the periods
covered by such Returns have been paid or fully accrued on the
Closing. The Group Member has not requested or been granted any
extension of time to file any Return. The Vendors shall procure that
there will be made available to the Purchaser upon the Purchaser's
request true and correct copies of all Returns, and all material
correspondence with any taxing authority.
(g) No deficiencies or adjustments for any Tax of the Group Member has
been claimed, proposed or assessed or threatened in writing and not
paid. There is currently no claim outstanding by an authority in a
jurisdiction where the Group Member does not file Returns that the
Group Member is or may be subject to taxation by that jurisdiction.
The Group Member is not subject to any pending or threatened tax audit
or examination. The Group Member has not entered into any agreements,
waivers or other arrangements in respect of the statute of limitations
in respect of its Taxes or Returns.
(h) There are no liens for Taxes upon the assets of the Group Member
except for Taxes that are not yet payable. The Group Member has
withheld all Taxes required to be withheld in respect of wages,
salaries and other payments to all employees, officers and directors
and any Taxes required to be withheld from any other person and has
timely paid all such amounts withheld to the proper taxing authority.
6.2 ENTERPRISE INCOME TAX
(a) The Group Member has paid all enterprise income tax which it has
become liable to pay and has not been liable to pay a penalty,
surcharge, fine or interest in connection with the enterprise income
tax.
(b) The Group Member has timely filed the enterprise income tax returns as
required under the PRC laws and regulations.
(c) The Group Member has made, given, obtained and kept up-to-date full
and accurate records, invoices, approvals and documents appropriate or
required for the purpose of the enterprise income tax returns under
PRC laws and regulations.
(d) The Group Member has adopted appropriate or required procedures and
treatment for the enterprise income tax which is in compliance with
the PRC laws and regulations.
36
<PAGE>
(e) There is no existing, contingent or deferred liability for the
enterprise income tax of any of the Group Member.
6.3 BUSINESS TAX
Each Group Member:
(a) is validly registered with the relevant tax authority for the purpose
of PRC business tax laws and regulations;
(b) has made, given, obtained and kept up-to-date, full and accurate
records, invoices and documents appropriate or required for the
purposes of payment of business tax under PRC laws and regulations;
and
(c) is not in arrears with payment or returns of business tax due under
PRC laws and regulations.
7. ASSETS
7.1 Each asset such as all inventory, receivables, furniture, machinery,
equipment and any other assets, tangible or otherwise, included in the
Accounts or acquired by the Group Member since the Last Accounting Date
(other than inventories subsequently disposed of in the ordinary course of
business) and all assets used by the Group Member as of the date of such
Balance sheet even if not reflected thereon:
(a) are legally and beneficially owned by it free from all title defects,
security interests, pledges, options, claims, liens, and any other
Encumbrance of any nature whatsoever;
(b) are not the subject of any agreement for lease, hire, hire purchase or
sale on deferred terms; and
(c) where capable of possession, are in the exclusive possession or under
the exclusive control of it.
7.2 The assets owned, possessed or used by the Group Member comprise all the
assets required to enable it to carry on its business fully and effectively
in the ordinary course.
7.3 All machinery, real estate properties, vehicles and equipment owned,
possessed or used by the Group Member are in good condition, repair and
working order and have been regularly and properly maintained.
8. CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY
8.1 "INTELLECTUAL PROPERTY" shall mean:
(a) any and all of the following that are owned (including joint
ownership) or held by the Group anywhere in the world: trademarks,
trade names, service marks and trade dress, and all goodwill
associated with trademarks, trade names, service marks and trade
dress; patents; mask works; utility models; domain names; copyrights
and copyrightable works; databases; graphics; schematics;
37
<PAGE>
marketing, sales and user data;technology; trade secrets, including
confidential know-how, inventions, specifications and processes;
computer software programs of any kind (in both source and object code
form); application programming interfaces; protocols; and any renewal,
extension, reissue, continuation or division rights, applications
and/or registrations for any of the foregoing;
(b) any and all license rights granted to the Group Member in any third
party intellectual property or other proprietary or personal rights,
including the types of intellectual property described in (a)above;
and
(c) GROUP'S INTELLECTUAL PROPERTY described in Clause (a) above is
referred to herein as "OWNED INTELLECTUAL PROPERTY" and Group's
Intellectual Property described in Clause (b) above is referred to
herein as "LICENSED INTELLECTUAL PROPERTY" (collectively,
"INTELLECTUAL PROPERTY"). The Schedule 5 give a inexhaustive list of
Owned Intellectual Property and Licensed Intellectual Property.
8.2 The Group Member owns or has the right to use all the Group Member
Intellectual Property used or held for use in the conduct of its business
without any conflict with the rights of others. All products and technology
that have been or currently are published and/or offered by the Group
Member or are under development by the Group Member, and all products
and/or technology underlying any and all services that have been or
currently are offered by the Group Member or are under development by the
Group Member is either: (i) owned by such Group Member, (ii) in the public
domain, or (iii) rightfully used by the Group Member pursuant to a valid
written license or other agreement.
8.3 Each Group Member is not, as a result of the execution or delivery of this
Agreement, nor performance of the Group Member's obligations hereunder nor
will the Group Member be in violation of any license, sublicense or other
agreement relating to the Intellectual Property or of any non-disclosure
agreement to which the Group Member is a party or otherwise bound.
8.4 The Group Member is not obligated to provide any financial consideration or
other consideration to any third party, nor is any third party otherwise
entitled to any financial consideration or other consideration, with
respect to any exercise of rights by the Group Member or its successors in
the Owned Intellectual Property.
8.5 The Group Member's use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights in any Owned
Intellectual Property by the GroupiiMember or its licensees does not
infringe, misappropriate or violate any copyright, patent, trade secret,
trademark, service mark, trade name, firm name, logo, trade dress, database
right, other intellectual property right, right of privacy, right of
publicity or right in personal or other data of any person. Further, the
use, reproduction, modification, distribution, licensing, sublicensing,
sale, or any other exercise of rights in any Licensed Intellectual Property
or any other authorized exercise of rights in or to Licensed Intellectual
Property by the Group Member or its licensees does not infringe,
misappropriate or violate any copyright, patent, trade secret, trademark,
service mark, trade name, firm name, logo, trade dress, moral right,
database right, other intellectual property right, right of privacy, right
of publicity or right in personal or other data of any person. Further, the
distribution, licensing, sublicensing, sale, or other provision of products
and services by the Group Member or its resellers or licensees does not
infringe, misappropriate or violate any copyright,
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patent, trade secret, trademark, service mark, trade name, firm name, logo,
trade dress, moral right, database right, other intellectual property
right, right of privacy, right of publicity or right in personal or other
data of any person.
8.6 No action, suit or proceeding (i) challenging the validity, enforceability,
or ownership by the Group Member of any of Owned Intellectual Property or
(ii) to the effect that the use, reproduction, modification, manufacturing,
distribution, licensing, sublicensing, sale or any other exercise of rights
in any Owned Intellectual Property by the Group Member or its licensees
infringes, misappropriate or violates any intellectual property or other
proprietary or personal right of any person is pending or is threatened by
any person. Further, no claim to the effect that the distribution,
licensing, sublicensing, sale or other provision of products and services
by the Group Member or its resellers or licensees infringes,
misappropriates or violates any intellectual property or other proprietary
or personal right of any person is pending or, to the knowledge of the
Group Member and the Vendors, is threatened by any person. There is no
unauthorized use, infringement or misappropriation of any of Owned
Intellectual Property by any third party, employee or former employee.
8.7 No other party has any security interests in any Intellectual Property.
8.8 The Group Member has secured from all parties who have created any portion
of, or otherwise have any rights in or to, Owned Intellectual Property,
other than employees of the Group Member whose work product was created by
them entirely within the scope of their employment by the Group Member and
constitutes work made for hire owned by the Group Member, valid written
assignments or licenses of any such work or other rights to the Group
Member that are enforceable by the Group Member and has made available true
and complete copies of such assignments or licenses to the Purchaser.
8.9 The Group Member owns all right, title and interest in and to all data the
Group Member collect from or discloses about users of its products and
services. The Group Member's practices regarding the collection and use of
consumer personal information are in accordance in all respects with
applicable laws and regulations of all jurisdictions in which the Group
Member operates.
8.10 None of any Vendors or the officer, director, stockholder or employee of
the Group Member, nor any spouse, or relative thereof, owns directly or
indirectly, in whole or in part, any the Group Member Intellectual
Property.
9. DEBTORS
9.1 No debt (including a receivable) shown in the Accounts or accounting
records is the subject of an arrangement not made in the usual course of
the Group Member business. The Group Member has not released a debt
(including a receivable) shown on the Accounts or accounting records so
that the debtor has paid or will pay less than the debt's book value. None
of those debts (including receivables) has been deferred, subordinated or
written off or become irrecoverable to any extent. The Vendors have no
reason to believe that any of those debts (including receivables) will fail
to realise its book value in the usual course of collection.
9.2 All of the accounts receivable shown in the Financial Statements have and
all of the Group Member's receivables as of the Closing Date will have
arisen out of bona fide transactions of the Group Member in the ordinary
course of business and have been
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collected or are good and collectible in the aggregate recorded amounts
thereof (less the allowance for doubtful accounts also appearing in such
Financial Statements and net of returns and payment discounts allowable by
the Group's policies) and can reasonably be anticipated to be paid in full
without outside collection efforts within ninety (90) days of the due date.
10. EFFECT OF TRANSACTION
Neither the execution nor the performance of this Agreement or any related
document to be executed at or before Closing will:
10.1 conflict with or result in any breach of the Group Member's Charter
Documents;
10.2 require any Governmental Approvals;
10.3 result in the Group Member losing the benefit of an asset, licence, permit,
right, grant, privilege, preferential treatment or subsidy which it enjoys
at the date of this Agreement in any jurisdiction, including without
limitation any rights in its own or third party owned Intellectual
Property;
10.4 conflict with, result in breach or default of, or give rise to any right of
termination, cancellation or acceleration or result in the creation of any
lien, charge, Encumbrance, or restriction upon any of the properties or
assets of the Group Member or equity interest in the Group Member under any
law, statute, rule, regulation, judgment, decree, order, government permit,
license or order or any mortgage, indenture, note, license, trust,
agreement or other agreement, instrument or obligation to which the Group
Member is a party.
11. INSURANCE
11.1 The Group Member has purchased and maintained insurance for personal
accident and serious disease of its employees in accordance with the
applicable laws.
11.2 Each of the current insurance and indemnity policies in respect of which
the Group Member has an interest is valid and enforceable and is not void
or voidable. The Group Member has not done anything or has omitted to do
anything which might make any such policies void or voidable. Closing will
not have the effect of terminating, or entitling any insurer to terminate
cover under any such policies.
11.3 All premiums and other payments due from the Group Member with respect to
any such contracts of insurance or indemnity have been paid, and the
Vendors do not know of any fact, act, or failure to act that has or might
cause any such contract to be cancelled or terminated. All known claims for
insurance or indemnity have been presented.
12. LEASES AND REAL PROPERTY
12.1 The Group Member is not the legal or beneficial owner of any real
properties and all the Leases in which the Group Member has interest are
listed in Schedule 6. The Group Member has a valid leasehold interest under
such Leases. There are no existing defaults, and the Group Member has not
received or given any written notice
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of default or claimed default with respect to any Lease nor is there any
event that with notice or lapse of time, or both, would constitute a
default thereunder. All real property occupied by the Group Member is
subject to a written lease. The Group Member does not hold any interest in
real property other than the Leases.
12.2 The Leases are properly completed and stamped and are in the possession and
under the control of the related Group Member. All necessary consents for
the grant of the Leases were obtained before such grant and the landlords
named in the Leases were and still are the registered legal and beneficial
owners thereof. The Leases contain no unusual or onerous provisions and no
right of termination by the landlord thereof except on grounds of
non-payment of rent or breach of covenant by the Group Member. The Leases
comprise all properties held or occupied by the Group Member.
12.3 The properties subject to the Leases are not:
(a) subject to any outgoings other than water rates, rent, management
charges of a non-capital nature and utility charges, and the Group
Member is not responsible for payment of government rent,
(b) subject to any options or rights of pre-emption or first refusal in
favour of any third parties;
(c) to the best knowledge of the Vendors, adversely affected or likely to
be adversely affected by any planning, highways, transport, utility or
other proposals; or
(d) in violation of any insurance policy.
12.4 Policies of insurance relating to the properties subject to the Lease are
current and valid, cover the full reinstatement value thereof and are not
subject to any special or unusual terms or restrictions or to the payment
of any premium in excess of the normal rate for policies of the same kind.
12.5 The Vendors know of no reason why the properties subject to the Lease will
not be or are likely not to be renewed on their expiry on similar terms to
those in the existing Leases, save as regards reasonable commercial
increases in rent.
12.6 The Group Member does not own any real estate properties.
13. ENVIRONMENTAL MATTERS
13.1 The Group Member has not committed any breach of PRC legal or regulatory
requirements for the protection of the environment or of human health or
amenity, and has acted at all times in conformity with all relevant PRC
laws, regulations, codes of practice, guidance, notes, standards and other
advisory materials issued by any local and national Governmental Authority
in the PRC with regard to environmental protection and the protection of
human health or amenity.
14. AGREEMENTS
14.1 Other than the Contracts (as listed in Schedule 7), the Group Member is not
a party to or bound by:
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(a) Any union contract, collective bargaining agreement or any employment
contract or arrangement providing for annual salary in excess of
US$10,000 with any officer or employee or with any consultant or
director providing for annual compensation in excess of US$10,000;
(b) Any plan or contract or arrangement, written or oral, providing for
bonuses, pensions, deferred compensation, retirement payments,
profit-sharing, severance, acceleration of vesting of benefits,
payments upon change of control events, or the like;
(c) Any joint venture contract or arrangement or any other agreement that
has involved or is expected to involve a sharing of profits;
(d) Reseller or distribution agreement, volume purchase agreement,
corporate end user sales or service agreement, reproduction or
replication agreement or manufacturing agreement in which the amount
involved exceeds annually, US$20,000 or pursuant to which the Group
Member has granted or received manufacturing rights, most favored
nation pricing provisions, or exclusive marketing, reproduction,
publishing or distribution rights related to any product, group of
products or territory;
(e) Any lease for real or personal property in which the amount of
payments which the Group Member is required to make on an annual basis
exceeds US$20,000;
(f) Any agreement, franchise, or indenture where the amount of
consideration payable thereunder is greater than US$10,000 in any year
during the term of such agreement, franchise or indenture and which
has not been terminated or performed in its entirety and not renewed
which may be, by its terms, terminated, impaired, or adversely
affected by reason of the execution of this Agreement and the Related
Agreements, Closing, or the consummation of the transactions
contemplated;
(g) Any license, permit, or authorization which has not been terminated or
performed in its entirety and not renewed which may be, by its terms,
terminated, impaired, or adversely affected by reason of the execution
of this Agreement and the Related Agreements, the Closing or the
consummation of the transactions contemplated;
(h) Except for trade indebtedness incurred in the ordinary course of
business, any instrument evidencing or related in any way to
indebtedness incurred in the acquisition of companies or other
entities or indebtedness for borrowed money by way of direct loan,
sale of debt securities, purchase money obligation, conditional sale,
guarantee, or otherwise which individually is in the amount of
US$10,000 or more; or
(i) Any contract containing covenants purporting to limit the Group
Member's freedom to compete in any line of business in any geographic
area.
All Contracts are listed and are fully described in Schedule 7, and
all such Contracts are valid and in full force and effect and the
Group Member has not, nor, to the knowledge of the Vendors, has any
other party thereto, breached any material provisions of, or entered
into default in any material
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respect under the terms thereof other than such beaches or defaults
that have been cured or would not, individually or in the aggregate,
have a Material Adverse Change on the business of the Group Member.
The Vendors have procured that the Group Member has made available to
the Purchaser a copy of each Contract together with all amendments,
material written waivers or other material written changes thereto.
None of the parties to any of the Contracts have terminated, or, to
the knowledge of the Vendors, in ay way expressed to the Group Member
an intent to reduce or terminate the amount of its business with the
Group Member in the future.
15. CREDITORS
Each Group Member has paid its creditors within the times agreed with them.
No customer or supplier of the Group Member has:
15.1 stopped, or indicated an intention to stop, trading with or supplying the
Group Member;
15.2 reduced, or indicated an intention to reduce, substantially its trading
with or supplies to the Group Member; or
15.3 changed, or indicated an intention to change, substantially the terms on
which it is prepared to trade with or supply the Group Member.
16. LICENCES AND STATUTORY COMPLIANCE
16.1 Each Group Member holds and at all times has held all licences, permits,
approvals and other authorisations as are necessary in order to enable it,
pursuant to all applicable statues, laws, ordinances, rules and regulations
of all such authorities having jurisdiction over it or any part of its
operations, to own, operate, and use all its assets, to conduct its
business as it is currently being conducted, and to sell and provide
products and services as they are currently sold and provided. All such
licences, permits, approvals, and authorisations are in full force and
effect. No violations or claimed violations have been recorded or alleged
in respect of any such licences, permits, approvals or authorisations, or
any such statute, law, ordinance, rule or regulation, and no proceeding is
pending or, to the knowledge of the Vendors, threatened or contemplated
with respect to the revocation or limitation of the same. The Acquisition
Transaction and Subscription Transaction will not cause such license,
permits, approvals and other authorizations to be revoked or limited in any
respects and will not cause the breach of any such any such statute, law,
ordinance, rule or regulation by the Group Member.
16.2 The Group Member has conducted its business and its corporate affairs in
accordance with all applicable PRC laws and has not done or omitted to do
anything in contravention or breach of any law of the PRC or elsewhere
applicable to it or the business of it which would have a Material Adverse
Effect upon the assets or business of the Group.
16.3 The Group Member has at all times carried on business in all respects in
accordance with, and all acts and things done or performed by it are
within, the scope of business
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specified in its articles of association and the business licence of such
Group Member, respectively.
16.4 None of the Group Member nor any of its respective Affiliates, directors,
officers, agents, employees or other persons acting on its behalf, has used
any corporate or other funds for unlawful contributions, payments, gifts,
or entertainment, or made any unlawful expenditures relating to political
activity to government officials or others or established or maintained any
unlawful or unrecorded funds. None of the Group Member nor any of its
respective Affiliates, directors, officers, agents, employees or other
persons acting on their behalf, has accepted or received any unlawful
contributions, payments, gifts, or expenditures.
17. EMPLOYEES
17.1 The Group Member has not received notice of resignation from any member of
the Management Team.
17.2 There is no employment or other contract of engagement between the Group
Member and any person which is in suspension or has been terminated but is
capable of being revived or enforced or in respect of which it has a
continuing obligation.
17.3 The Group Member has in relation to each of its employees (and, so far as
relevant, to each of its former employees):
(a) complied with applicable national and local labour regulations, and
all other obligations imposed on it by, and all orders and awards made
under all regulations, codes of conduct and practice, collective
agreements, customs and practices relevant to the relations between it
and its employees or any trade union or the conditions of service of
its employees;
(b) maintained current, adequate and suitable records regarding the
service of each of its employees; and
(c) entered into appropriate agreements with each employee stating that
all work product, inventions (patentable or unpatentable), trade
secrets and copyrights, together with any applications for patents and
the patents which may issue thereunder and registrations of
copyrights, to which he has made a creative contribution to a
substantive feature of any invention which he made in connection with
the performance of tasks under his employment contract or made mainly
by making use of the Group Member's money, equipment, parts, materials
or technical data not disclosed to the public are the property of the
Group Member and agreeing to treat all Group Member information or
third party owned Confidential Information as confidential.
17.4 The Group Member has fully paid or contributed to pension, medical care,
unemployment and all other social security funds or employees benefits
required by Law or agreement for some of the all employees of the Group
Member and the Vendors undertake that they will cause the Group Member to
fully paid such funds or benefits for all the employees of the Group Member
pursuant to related Law or agreement at Closing, and there is no dispute or
(save for potential dispute with respect to the aforesaid currently unpaid
funds or benefits) potential dispute in connection with any such funds or
benefits.
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17.5 The Group Member has no written or oral contract of employment or other
employment agreement with any of its employees (including any contracts
relating to the temporary use or loaning of employees) that are not
terminable at will by the Group Member without payment of severance or
termination payments or benefits. The Group Member is not a party to any
pending or threatened labor dispute concerning such the Group Member's
business or employment practices or the subject of any organizing drive,
labor grievance or petition to certify a labor union. The Group Member has
complied with all applicable laws, treaties, ordinances, rules, and
regulations and requirements relating to the employment of labor. There are
no claims pending or threatened to be brought against the Group Member, in
any court or administrative agency by any former or current Group Member
employees.
17.6 Neither the execution and delivery of this Agreement nor the Related
Agreements will:
(a) result in any payment by the Group Member (including severance,
unemployment compensation, parachute payment, bonus or otherwise)
becoming due to any director, employee, or independent contractor of
the Group Member under any employee benefit plan, agreement, or
otherwise,
(b) increase any benefits otherwise payable under any employee benefit
plan or agreement, or
(c) result in the acceleration of the time of payment or vesting of any
such benefits.
18. LIABILITIES
18.1 INDEBTEDNESS
Except as disclosed in the Accounts, the Group Member does not have
outstanding and has not agreed to create or incur loan capital, borrowing
or indebtedness in the nature of borrowing.
18.2 THIRD PARTY SECURITY
The Group Member has no powers of attorney outstanding nor any obligations
or liabilities (absolute or contingent) as guarantor, surety, cosigner,
endorser, co-maker, or otherwise respecting the obligations or liabilities
of any person, corporation, partnership, joint venture, association,
organization, or other entity under a mortgage, pledge, guarantee,
indemnity or other agreement or arrangement, other than as an endorser of
negotiable instruments in the ordinary course of business.
18.3 EVENTS OF DEFAULT
No event has occurred or been alleged to have occurred which:
(a) constitutes or will constitute an event of default, or otherwise gives
rise to an obligation to repay, under an agreement relating to
borrowing or indebtedness in the nature of borrowing; or
(b) will lead to an Encumbrance created or constituted in connection with
borrowing or indebtedness in the nature of borrowing, a guarantee, an
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indemnity or other obligation of any of the Group Member becoming
enforceable.
18.4 NO DEFAULTS
The Group Member is not, nor has it received written notice that it would
be with the passage of time, in default or violation of any term,
condition, or provision of (i) its Charter Documents; (ii) any judgment,
decree, or order to which the Group Member is a named party; or (iii) any
loan or credit agreement, note, bond, mortgage, indenture, contract,
agreement, lease, license, or other instrument to which the Group Member is
now a party or by which it or any of its properties or assets is bound,
except for defaults and violations which have been cured or, individually
or in the aggregate, would not have a Material Adverse Change on the
business of the Group Member.
18.5 BROKERS AND FINDERS
The Group Member has not retained any broker, finder, or investment banker
in connection with this Agreement or any of the transactions contemplated
by this Agreement, nor does it owe any fee or other amount to any broker,
finder, or investment banker in connection with this Agreement or the
transactions contemplated by this Agreement.
19. INSOLVENCY
19.1 No order has been made or application for bankruptcy presented to the court
or resolution passed for the winding up of the Group Member; no distress,
execution or other process has been levied on any of its assets; it has not
stopped payment or become unable to pay its debts or become insolvent under
Laws and it has not applied for conciliation in order to settle its debts;
no liquidation committee has been appointed by it, the court or any other
person for the purpose of liquidating the business or assets of it or any
part thereof; no meeting of the creditors of it has been held or is in
prospect; no ruling declaring the bankruptcy of it has been made and no
public announcement in respect of the same has been pronounced by the
court, and there is no unfulfilled or unsatisfied judgement or order of the
court or other authorities outstanding against it; and there has been no
delay by it in the payment of any obligation due for payment.
20. LITIGATION AND COMPLIANCE WITH LAW
20.1 LITIGATION AND OTHER PROCEEDINGS
None of the Group Member nor any of its past or present officers,
directors, employees, or agent is a party to any pending or, threatened
action, suit, labor dispute (including any union representation
proceeding), proceeding, investigation, or discrimination claim in or by
any court or governmental board, commission, agency, department, or
officer, or any arbitrator, arising from the actions or omissions of the
Group Member or agent or, in the case of an individual, from acts in his or
her capacity as an officer, director, employee, agent or contractor of the
Group Member, which individually or in the aggregate would have a Material
Adverse Effect. The Group Member is not a named party to any order, writ,
judgment, decree, or injunction.
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20.2 COMPLIANCE WITH LAW
The Group Member has conducted its business and dealt with its assets in
all material respects in accordance with all applicable legal and
administrative requirements in any relevant jurisdiction.
21. ARRANGEMENTS WITH CONNECTED PERSONS ETC.
21.1 All amounts outstanding and appearing in the books of the Group Member as
loan accounts or as due to directors or shareholders wholly represent money
or money's worth paid or transferred to the Group Member as the case may be
or remuneration accrued due and payable for services rendered. All amounts
outstanding between the Vendors and the Group Member are specifically
disclosed in the Accounts.
21.2 All costs incurred by the Group Member have been charged to the Group
Member.
21.3 None of the Vendors (or any person connected with the Vendors) is at the
date hereof either individually or collectively or with any other person or
persons engaged in any other business or concerned or interested in any way
whatsoever in any other business of a similar nature to or competitive with
that carried on by the Group Member.
21.4 Notwithstanding the aforesaid, except:
(a) for relationships with the Group Member as an officer, director, or
employee thereof (and compensation by the Group Member in
consideration of such services);
(b) for relationships with the Group Member as shareholders
none of the directors, officers, or holders of 5% or more of the equity
interest (or any family member of any of the foregoing), is presently a
party to, or was a party to during the year preceding the date of this
Agreement, any transaction with the Group Member, involving more than
US$20,000, including, any contract, agreement, or other legally binding
arrangement (i) providing for the furnishing of services to or by, (ii)
providing for rental of real or personal property to or from, or (iii)
otherwise requiring payments to or from, any such person or any
corporation, partnership, trust, or other entity in which any such person
has or had a 5% or more interest (as a shareholder, partner, beneficiary,
or otherwise) or is or was a director, officer, employee, or trustee. None
of any Group Member's officers or directors has any interest in any
property, real or personal, tangible or intangible, used in the business of
the Group Member.
22. CONSTITUTION AND RETURNS
22.1 The Group Member's current shareholders agreement and articles of
association were duly executed and delivered by the relevant parties
thereto and are legal, valid, binding and enforceable in accordance with
their respective terms. There is no circumstance which would give rise to
the early termination or changes of the current articles of association of
the Group Member or the term of operation of the Group Member as stated in
its business licence and no order or petition has been made or presented
save for the necessity of the adoption of the AOA and JVA as contemplated
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in the Acquisition Transaction and Subscription Transaction which will
replace or amend Company's current articles of association.
22.2 Save for the appointment of new directors of the board of the Company as
contemplated in the Acquisition Transaction and Subscription Transaction,
no changes will be imposed on the Group Member's current board of the
directors(or in the case of no board of the directors, the statutory
executive director) from the date of the signing of the Agreement.
22.3 The Group Member is operating and has always operated its business in all
respects in accordance with its shareholders agreement, articles of
association and business licence.
22.4 All returns, particulars, resolutions and other documents required to be
filed with or delivered to the PRC State Administration for Industry and
Commerce or any other authority in respect of the Group Member have been
properly filed or delivered.
23. RELIANCE
The foregoing representations and warranties are made by the Vendors with
the knowledge and expectation that the Purchaser are placing reliance
thereon.
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SCHEDULE 5
1. THE LISTS OF OWNED INTELLECTUAL PROPERTY:
www.hycon.cn
www.hyperlink-china.com
www.datandata.com
www.edata-china.com
www.chinaindia.com.cn
www.chinadia.com.cn
2. THE LISTS OF LICENSED INTELLECTUAL PROPERTY
WINCATI SOFTWARE SYSTEM
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SCHEDULE 6
List of all the Leases
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SCHEDULE 7
List of all contracts where
1. The Company is one party to the agreement
2. Guangzhou Hyperlink is one party to the agreement
51
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SCHEDULE 8
LIST OF BANK ACCOUNTS AND DETAILS
52
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SCHEDULE 9
LIST OF ASSETS
53
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SCHEDULE 10
FINANCIAL STATEMENTS
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ANNEX 1
ARTICLES OF ASSOCIATION FOR COMPANY
55
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ANNEX 2
SHAREHOLDERS AGREEMENT
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ANNEX 3
SUBSCRIPTION AGREEMENT
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