Group Services Agreement - Xinhua Finance Ltd. and Xinhua Finance Media Ltd.
GROUP SERVICES AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is entered into as of this 13 day of September
2006 between:
(1) XINHUA FINANCE LIMITED, a limited liability company duly incorporated and
existing under the laws of the Cayman Islands and having its registered
address at Century Yard, Cricket Square, Hutchins Drive, PO Box 2681,
George Town, Grand Cayman, British West Indies ("XFL"); and
(2) XINHUA FINANCE MEDIA LIMITED, a limited liability company duly incorporated
and existing under the laws of the Cayman Islands and having its registered
address at Century Yard, Cricket Square, Hutchins Drive, PO Box 2681,
George Town, Grand Cayman, British West Indies ("XFM")
WHEREAS:
A. XFM is a subsidiary of XFL. XFL and all of its subsidiaries are hereafter
referred to as "THE XFL GROUP".
B. XFL acts as the global headquarters for the XFL Group and provides
executive, management, marketing, finance, legal, human resources, public
relations, corporate communications, business and finance integration,
information technology, administrative and other services (collectively the
"GROUP SERVICES") on behalf of the XFL Group for the benefit of all
companies within the XFL Group.
C. The XFL Group has during 2006 and preceding years raised significant
amounts of equity capital both privately and in the public markets and
obtained bank facilities to fund global expansion through acquisitions and
through investment in management, infrastructure, product development and
integration for the direct and indirect, present and future benefit of all
entities within the XFL Group
D. In order to execute its global strategy and expansion plan XFL has and will
continue to expand its headquarters and as a result will further enhance
and continue to provide the Group Services for the benefit all of the
companies in the XFL Group.
NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth hereinafter and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1. GROUP SERVICES
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1.1 XFL has provided and shall continue to provide to XFM the group services as
further detailed in Exhibit 1 (the "GROUP SERVICES"). The Group Services
may be expanded in scope as agreed by the parties from time to time in
accordance with the XFL Group's global business plan and strategy. Any
material change or expansion in scope will be agreed by the parties in
writing and executed by addendum to this Agreement.
ARTICLE 2. GROUP SERVICE CHARGE
2.1 In consideration for the provision of the Group Services, XFM shall pay a
service charge to XFL as provided for in this Agreement (the "GROUP SERVICE
CHARGE").
2.2 The Group Service Charge shall be based on the actual cost of the Group
Services provided by XFL to the XFL Group and this cost shall be allocated
to each company within the XFL Group on a fair and consistent basis. The
calculation method and allocation basis for each of the Group Services is
set out in Exhibit 2. The costs shall be subject to a reasonable mark-up to
cover administrative and other sundry costs, initially this mark up shall
be set at 5%.
2.3 The Service Charge shall be paid by XFM quarterly upon delivery of an
invoice by XFL to XFM or at such other times as may be agreed between the
parties from time to time. XFL shall provide XFM a detailed statement
showing the calculation of the XFM's allocation of the Group Service
Charge.
ARTICLE 3. TERM AND TERMINATION
3.1 This Agreement shall be effective as of the date of the acquisition of XFM
by XFL and any other member of the XFL Group and shall continue until
December 31, 2007. The Agreement will automatically renew for successive
two-year terms unless either party serves a 6-month written notice of
termination to the other party prior to the end of the then current term.
3.2 Either party may terminate this Agreement immediately if (a) XFM ceases to
be a controlled subsidiary of the XFL Group, meaning that XFL no longer
owns or otherwise controls, directly or indirectly, shares which carry more
than 50% of the voting rights of XFM; (b) the other party breaches any of
their material obligations under this Agreement in any material respect; or
(c) the other party, (i) becomes insolvent, (ii) files a petition in
bankruptcy, or (iii) makes an assignment for the benefit of its creditors.
ARTICLE 4. SUCCESSORS AND ASSIGNS
4.1 This Agreement shall be binding upon and inure to the benefits of the
parties and their respective successors and permitted assigns. This
Agreement may not be assigned, either in whole or in part, by any party
without the express written approval of the other non-assigning party.
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ARTICLE 5. REPRESENTATIONS AND WARRANTIES.
5.1 Representations, Warranties, and Covenants. Each Party represents, warrants
and covenants to the other as follows and acknowledges that the other Party
has relied upon the completeness and accuracy of such representations,
warranties and covenants in entering into this Agreement and acknowledges
that the other Party has relied upon the completeness and accuracy of such
representations, warranties and covenants in entering into this Agreement:
(a) it has the corporate capacity to enter into this Agreement and to
perform each of its obligations hereunder; and
(b) it has duly authorized, executed and delivered this Agreement and this
Agreement constitutes a legally valid and binding obligation of it
enforceable against it in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy, insolvency and
other laws of general application affecting the enforcement of
creditors' rights and subject to general equitable principles.
ARTICLE 6. COMMITMENT AND GUARANTEE
6.1 XFL undertakes that the administrative services shared with XFM shall be at
the same standard and level of quality as the administrative services
enjoyed by XFL and other members of the XFL Group.
6.2 XFL undertakes that XFL shall promptly inform XFM if, for any reason (save
as XFM's fault), XFM is unable to receive all or part of the administrative
services to be shared with XFM under this Agreement, and make every effort
to assist XFM in obtaining the same or similar services from other
channels.
6.3 XFM undertakes that it will pay to XFL its proportionate share of
administrative costs in strict conformity with the means and term as agreed
upon in this Agreement.
6.4 XFM undertakes to accept the administrative services provided by XFL as
agreed upon in this Agreement, and provide all necessary conditions and
assistance, and not to cause any damages to XFL due to its act or omission.
ARTICLE 7. LIABILITIES ARISING FROM BREACH OF CONTRACT
7.1 Where XFM fails to pay XFL its proportionate share of administrative costs
in a timely manner as agreed upon in this Agreement, a penalty of 0.03% of
the amount of the late payment shall be paid to XFL for each day of delay.
XFL shall have the right to terminate the corresponding services by written
notice if XFM is overdue in making payment for over 60 days. If XFM still
fails to
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make the relevant payment 30 days after the receipt of the said written
notice, XFL may terminate the corresponding administrative services or this
Agreement. However, such termination of the relevant administrative
services or this Agreement shall have no impact on the rights or
obligations of the two parties occurred or generated according to this
Agreement therebefore.
7.2 Where XFL fails to promptly provide XFM with the agreed administrative
services within a reasonable period or within the reasonable period
notified in advance by XFM, the former shall pay XFM a penalty of 0.03% of
its share of administrative costs for the relevant month for each day of
delay. If XFL is overdue in making payment for over 60 day, XFM shall have
the right to terminate such administrative services by written notice; if
XFL still fails to provide the relevant administrative services 30 days
after the receipt of the said written notice, XFM may terminate this
Agreement. However, the termination of the relevant administrative services
or this Agreement shall have no impact on the rights or obligations of the
two parties occurred or arising under this Agreement prior to the date of
termination.
ARTICLE 8. NOTICES
8.1 All communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if (i) delivered
personally with receipt acknowledged, (ii) sent by registered or certified
mail, return receipt requested, (iii) sent by telecopy with confirmation or
(iv) sent by recognized commercial overnight courier for next business day
delivery, addressed to the Parties at the following addresses and facsimile
numbers or to such other addresses or facsimile numbers as any Party shall
hereafter specify by communication to the other Parties in the manner
provided herein:
If to XFM: Xinhua Finance Media Limited
Unit 3905-3909, 1 Grand Gateway, 1 Hongqiao Road,
Shanghai 200030, PRC
Attention: Chief Financial Officer
Telephone: (8621) 6113-5900
Facsimile: (8621) 6448-4955
If to XFL: Xinhua Finance Limited
2003-4 Vicwood Plaza, 199 Des Voeux Road Central,
Hong Kong, PRC
Attention: General Counsel
Telephone: (852) 3102-3939
Facsimile: (852) 2541-8266
Notice of change of address shall be deemed given when actually received or
upon refusal to accept delivery thereof; all other communications shall be
deemed to have been given, received and dated on the earlier of: (i) when
actually received or upon refusal to accept delivery thereof, (ii) on the
date when delivered personally or via telecopy, (iii) one (1) business day
after
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being sent by overnight courier and (iv) four (4) business days after
mailing, as aforesaid.
ARTICLE 9. ASSIGNMENT
9.1 No Party hereto shall assign or otherwise transfer this Agreement or any
interest or right hereunder or delegate the performance of any of its
obligations hereunder to any third Party other than an Affiliate without
the prior written consent of the other affected Party which consent may be
withheld in such other Party's sole discretion. Any such attempted
assignment, transfer or delegation without the other Party's prior written
consent will be deemed null and void and result in the immediate
termination of this Agreement without necessity of any notice.
ARTICLE 10. GOVERNING LAW
10.1 This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong.
10.2 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
resolved by arbitration in Hong Kong conducted in English by a single
arbitrator 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.
ARTICLE 11. PREVAILING PARTY ATTORNEYS' FEES
11.1 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.
ARTICLE 12. NO MODIFICATION EXCEPT IN WRITING
12.1 This Agreement shall not be changed, modified, or amended except by a
writing signed by the Parties hereto. No terms of any purchase order,
invoice, or similar document will amend or supplement this Agreement, even
if it is accepted or signed by the receiving Party.
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ARTICLE 13. WAIVER
13.1 A Party's failure to enforce at any time any provision of this Agreement,
or any right in respect thereto, or to exercise any election hereunder,
shall not be considered to be a waiver of such provision, right, or
election or to affect the validity of this Agreement. No waiver shall be
effective unless given in writing signed by the Party making such waiver. A
waiver at one time shall not constitute a subsequent waiver of the same
condition, breach, default or occurrence at any other time unless such
waiver so explicitly provides.
ARTICLE 14. SEVERABILITY
14.1 If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provision shall be excluded from this Agreement
and the balance of the Agreement shall be interpreted as if such provision
was so excluded and shall be enforceable in accordance with its terms.
ARTICLE 15. HEADINGS
15.1 The headings used in this Agreement are used for convenience only and are
not to be considered in construing or interpreting this Agreement.
ARTICLE 16. CUMULATIVE REMEDIES
16.1 No remedy or election hereunder shall be deemed exclusive, but shall,
wherever possible, be cumulative with all other remedies at law or in
equity. Any specific right or remedy provided in this Agreement shall not
be exclusive but will be cumulative of all rights and remedies set forth
herein and allowed at law.
ARTICLE 17. FURTHER ASSURANCES
17.1 Each of the Parties hereto agrees to execute such documents, and take such
actions, as may reasonably be required to effectuate the terms and
conditions of this Agreement.
ARTICLE 18. FORCE MAJEURE
18.1 No Party shall be liable for any failure to perform any obligation
hereunder, or from any delay in the performance thereof, due to causes
beyond its control, including industrial disputes of whatever nature, acts
of God, public enemy, acts of government, failure of telecommunications,
system malfunctions, fire or other casualty.
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ARTICLE 19. NO THIRD PARTY BENEFICIARIES
19.1 Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person other than the Parties hereto
and their respective successors and permitted assigns, any rights or
remedies under or by reason of this Agreement.
ARTICLE 20. CONTROLLING LANGUAGE
20.1 This Agreement has been executed in English, and the English language
version shall control notwithstanding any translations of this Agreement.
ARTICLE 21. TIME OF THE ESSENCE
21.1 The times established in accordance with this Agreement for the performance
of the obligations set out in this Agreement are of the essence.
ARTICLE 22. COUNTERPARTS
22.1 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same instrument.
ARTICLE 23. ENTIRE AGREEMENT
23.1 This Agreement supersedes, terminates and otherwise renders null and void
certain prior written and/or oral agreements between the Parties with
respect to the matters hereinabove expressly set forth. This Agreement,
together with the Intellectual Property Rights Agreements, represents and
incorporates the entire understanding of the Parties hereto with respect to
the matters herein expressly set forth and each Party acknowledges that
there are no warranties, representations, covenants or understandings of
any kind, nature or description whatsoever made by any Party to any other
Party, except as are herein and therein expressly set forth.
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THIS GROUP SERVICES AGREEMENT HAS BEEN SIGNED THIS 13 DAY OF SEPTEMBER, 2006.
XINHUA FINANCE LIMITED
By: /s/ Gordon Lau
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Name: Gordon Lau
Title: Chief Financial Officer
XINHUA FINANCE MEDIA LIMITED
By: /s/ Fredy Bush
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Name: Fredy Bush
Title: Director
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EXHIBIT 1
THE GROUP SERVICES
EXECUTIVE MANAGEMENT. INCLUDING BUT NOT LIMITED TO:
- Group Executive Management
- Strategy
- Financing
- Public, Investor, Media and Analyst relations.
FINANCE. INCLUDING BUT NOT LIMITED TO:
- Financial and Management Accounting including consolidated monthly and
annual reporting, budgeting and forecasting.
- Treasury Management
- Corporate Finance
- Internal Audit of XFM to ensure compliance with Group policy and
procedures
- Management and maintenance of accounting and related systems.
BUSINESS AND FINANCE INTEGRATION. INCLUDING BUT NOT LIMITED TO:
- Integration projects relating to and benefiting all subsidiaries of
the Group.
HUMAN RESOURCES. INCLUDING BUT NOT LIMITED TO:
- Employee policies and procedures
- Remuneration and incentives policy, procedures and administration
- Employee annual review and ongoing performance measures and appraisal.
- Training.
- Benefits.
- HR database management.
- Staff and Management counseling and disputes.
LEGAL. INCLUDING BUT NOT LIMITED TO:
- Mergers and Acquisitions. General advice and assistance on M&A
activity undertaken that direct or indirectly benefit the existing
Subsidiaries.
- Share, Debt or other capital issues and adjustments, and structured
financing.
- Sales Contracts
- Employment Contracts
- Leases
- Stock Exchange filings and compliance.
INFORMATION TECHNOLOGY. INCLUDING BUT NOT LIMITED TO:
- Group and subsidiary network operations.
- Group and subsidiary internal systems.
- Group and subsidiary internal and external websites.
CORPORATE COMMUNICATIONS. INCLUDING BUT NOT LIMITED TO:
- Group and subsidiary corporate events and conferences
- Group and subsidiary press Releases
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- Group and subsidiary internal and external websites
- Group and subsidiary corporate branding, trade and service marks etc.
PUBLIC RELATIONS. INCLUDING BUT NOT LIMITED TO:
- Group and subsidiary corporate events and conferences
- Group and subsidiary press and other media relations
ADMINISTRATION. INCLUDING BUT NOT LIMITED TO:
- All other administrative and sundry services provided for the benefit
of the Group and its subsidiaries
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EXHIBIT 2
GROUP SERVICE CHARGE. CALCULATION METHOD AND ALLOCATION BASIS.
GROUP SERVICES ALLOCATION BASE CALCULATED AS
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Head Office Cost Pro rata weighted average Revenue %
HR and Administration Cost Pro rata weighted average Headcount %
Finance Cost Pro rata weighted ave. Revenue and Operating Cost %
Legal Cost pro rata weighted average Revenue %
IT Cost Pro rata weighted ave. Revenue and Operating Cost %
The Group Services description above is as commonly used within the Group's
accounting, management accounting systems and reports.
Operating Cost means all costs incurred in operations but excluding interest
charges, depreciation amortization and taxes. (Operating Costs incurred in
arriving at EBITDA).
For the avoidance of doubt the calculation will be as follows for illustration
purposes:
HEAD OFFICE COSTS.
Total Head Office costs for the period.
Multiplied by the following fraction:
XFM revenue for the period divided by total Group revenue for the period.
Equals the Head Office costs allocated to XFM for the period.
Weighted average means weighted according to the number of months for which XFM
had been a subsidiary of the XFL Group.
For the avoidance of doubt "Cost" to be allocated includes all direct and
indirect costs incurred by the relevant departments and functions in providing
the Group Services including salaries and all related costs, all related
overheads, and all relevant depreciation and amortization.
The Cost will be subject to a reasonable mark-up as described in Section 2.2. It
is initially agreed that this mark-up shall be 5%.
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THIS AMENDING AGREEMENT is dated as of 25th day of January 2007.
BETWEEN:
(1) XINHUA FINANCE LIMITED, a limited liability company duly incorporated and
existing under the laws of the Cayman Islands and having its registered
address at Century Yard, Cricket Square, Hutchins Drive, PO Box 2681,
George Town, Grand Cayman, British West Indies ("XFL"); and
(3) XINHUA FINANCE MEDIA LIMITED, a limited liability company duly incorporated
and existing under the laws of the Cayman Islands and having its business
address at Unit 3905-3909, 1 Grand Gateway, 1 Hongqiao Road, Shanghai
200030, PRC ("XFM")
WHEREAS:
(A) The parties entered into a Group Services Agreement on 13 September 2006
pursuant to which XFM pays a Group Service Fee to XFL in consideration for
the provision by XFL to XFM of the Group Services. All capitalized terms
contained herein shall have the same meaning ascribed to it in the Group
Services Agreement unless otherwise expressly provided.
(B) The parties hereby agree to enter into this Amending Agreement to amend the
terms of the Group Services Agreement in the manner hereinafter provided.
NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained in this Amending Agreement (the receipt and adequacy of
which consideration with respect of each of the parties hereto are hereby
acknowledged), the parties agree as follows:
1. The Group Services Agreement shall be amended by adding the following
clause as the penultimate sentence of Article 2.2:
"Notwithstanding the foregoing, the Group Service Charge for 2006 shall not
exceed US$ 700,000, and for subsequent years, shall not exceed
US$1,000,000."
3. Save as aforementioned, the remaining provisions of the Purchase Agreement
remain unamended and in full force and effect.
4. This Amending Agreement may be executed by the Parties in counterparts
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument and
shall be read together with and deemed to be part of the Group Service
Agreement.
5. The provisions of Articles 5 (Governing Law), 6 (Representations and
Warranties) and 10 (Assignment) are incorporated mutatis mutandis into this
Amending Agreement.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF this Amending Agreement was made as of the day and year first
above written.
XINHUA FINANCE LIMITED
By: /s/
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Name:
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Title:
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XINHUA FINANCE MEDIA LIMITED
By: /s/
---------------------------------
Name:
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Title:
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