EXHIBIT 4.4
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LINKTONE LTD. SHAREHOLDERS AGREEMENT
Among
IP FUND ONE, L.P.
As Series B Preferred Shareholders
and
INTRINSIC TECHNOLOGY (HOLDINGS) LTD.
As Series C Preferred Shareholders
and
The Series A Preferred Shareholders,
and
XXX XX, XXX XXXXXXX, XXXX XXXXXX
and
LUNAR OCCIDENTAL GROUP LLC
As Founding Shareholders,
and
MITSUBISHI CORPORATION
AND
INDEX CORPORATION
As Series D Preferred Shareholders
And
HONG LIM INVESTMENTS PTE LTD
As Series E Preferred Shareholders
And
LINKTONE LTD.
AMENDED and RESTATED AS OF November 19, 2001
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS............................................................................................ 2
SECTION 1.1 DEFINITIONS................................................................................. 2
SECTION 1.2 INTERPRETATION.............................................................................. 7
ARTICLE II THE COMPANY........................................................................................... 8
SECTION 2.1 THE COMPANY................................................................................. 8
SECTION 2.2 PURPOSE..................................................................................... 8
SECTION 2.3 TERM........................................................................................ 8
ARTICLE III SHARE CAPITAL........................................................................................ 8
SECTION 3.1 CAPITALIZATION OF THE COMPANY............................................................... 8
SECTION 3.2 ADDITIONAL FUNDING; PRE-EMPTIVE RIGHTS...................................................... 9
SECTION 3.3 EMPLOYEE STOCK OPTIONS...................................................................... 10
ARTICLE IV CORPORATE GOVERNANCE.................................................................................. 10
SECTION 4.1 BOARD OF DIRECTORS.......................................................................... 10
SECTION 4.2 MEETINGS; NOTICE OF MEETINGS................................................................ 11
SECTION 4.3 GENERAL ACTIONS OF THE BOARD OF DIRECTORS; NOTICES OF BOARD MEETINGS........................ 12
SECTION 4.4 MINORITY PROTECTION......................................................................... 12
SECTION 4.5 SHAREHOLDERS ACTIONS........................................................................ 15
SECTION 4.6 WRITTEN RESOLUTIONS......................................................................... 16
SECTION 4.7 REMUNERATION................................................................................ 16
SECTION 4.8 MANAGEMENT APPOINTMENTS..................................................................... 16
ARTICLE V CERTAIN RIGHTS OF THE PREFERRED SHAREHOLDERS........................................................... 16
SECTION 5.1 LIQUIDATION PREFERENCE...................................................................... 16
SECTION 5.3 INFORMATION RIGHTS.......................................................................... 18
SECTION 5.4 TERMINATION OF CERTAIN SHAREHOLDERS' RIGHTS................................................. 18
SECTION 5.5 ACER AND INTRINSIC REDEMPTION RIGHTS........................................................ 18
SECTION 5.6 TEMASEK REDEMPTION RIGHTS................................................................... 19
SECTION 5.7 MITSUBISHI AND INDEX RATCHET-DOWN PROVISIONS................................................ 19
SECTION 5.8 TEMASEK RATCHET-DOWN PROVISIONS............................................................. 19
SECTION 5.9 MITSUBISHI AND INDEX AGENCY RIGHTS.......................................................... 19
ARTICLE VI TRANSFER OF SHARES.................................................................................... 20
SECTION 6.1 GENERAL RESTRICTIONS ON TRANSFER............................................................ 20
SECTION 6.2 RIGHT OF FIRST OFFER........................................................................ 20
SECTION 6.3 TAG ALONG RIGHT............................................................................. 21
SECTION 6.4 LEGEND ON CERTIFICATES...................................................................... 21
SECTION 6.5 REGISTRATION OF SHARE TRANSFERS............................................................. 21
SECTION 6.6 PROHIBITION OF ENCUMBRANCES OF SHARES....................................................... 22
ARTICLE VII REPRESENTATIONS, WARRANTIES AND COVENANTS............................................................ 22
SECTION 7.1 FOUNDING SHAREHOLDERS REPRESENTATIONS AND WARRANTIES........................................ 22
SECTION 7.2 MITSUBISHI, INDEX, TEMASEK, ACER, ICON, INTRINSIC AND LUNAR GROUP REPRESENTATIONS
AND WARRANTIES.............................................................................. 22
SECTION 7.4 CONFIDENTIALITY............................................................................. 23
ARTICLE VIII DISPUTE RESOLUTION.................................................................................. 24
SECTION 8.1 ARBITRATION................................................................................. 24
SECTION 8.2 COURT ACTION................................................................................ 24
SECTION 8.3 WAIVER OF IMMUNITY.......................................................................... 25
SECTION 8.4 CONTINUED PERFORMANCE....................................................................... 25
SECTION 8.5 SURVIVAL.................................................................................... 25
ARTICLE IX INITIAL PUBLIC OFFERING; REGISTRATION RIGHTS; TRADE SALE.............................................. 25
SECTION 9.1 INITIAL PUBLIC OFFERING..................................................................... 25
SECTION 9.2 DEMAND REGISTRATION......................................................................... 25
SECTION 9.3 PIGGY-BACK REGISTRATION..................................................................... 26
SECTION 9.4 ADJUSTMENTS TO REGISTRATION................................................................. 27
SECTION 9.5 REGISTRATION PROCEDURES..................................................................... 27
SECTION 9.6 EXPENSES; LIMITATIONS ON REGISTRATION....................................................... 29
SECTION 9.7 INDEMNIFICATION............................................................................. 30
ARTICLE X MISCELLANEOUS.......................................................................................... 31
SECTION 10.1 NOTICES..................................................................................... 31
SECTION 10.2 BINDING EFFECT.............................................................................. 33
SECTION 10.3 HEADINGS.................................................................................... 33
SECTION 10.4 ASSIGNMENT.................................................................................. 34
SECTION 10.5 NO THIRD PARTY BENEFICIARY.................................................................. 34
SECTION 10.6 FURTHER ASSURANCES.......................................................................... 34
SECTION 10.7 LANGUAGE.................................................................................... 34
SECTION 10.8 GOVERNING LAW............................................................................... 34
SECTION 10.9 ENTIRE AGREEMENT; TERMINATION OF ORIGINAL SHAREHOLDERS AGREEMENTS........................... 34
SECTION 10.10 AMENDMENT AND WAIVER........................................................................ 35
SECTION 10.11 REMEDIES.................................................................................... 35
SECTION 10.12 NON-RECOURSE................................................................................ 35
SECTION 10.13 SEVERABILITY................................................................................ 35
SECTION 10.14 COUNTERPARTS................................................................................ 35
SECTION 10.15 NO JOINT VENTURE............................................................................ 35
SECTION 10.16 AGGREGATION OF SHARES....................................................................... 35
SECTION 10.17 INDEMNIFICATION............................................................................. 36
SECTION 10.18 SUBMISSION TO JURISDICTION.................................................................. 36
SECTION 10.19 SIGNED ORIGINALS NOT NECESSARY.............................................................. 36
SECTION 10.20 QEF ELECTION; U.S. TAX ISSUES............................................................... 36
Exhibit A Memorandum and Articles of Association of the Company
Schedule 7.3 Investments of the Founding Shareholders
SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT (this "Agreement") as amended and restated
as of November 19, 2001 is made by and among:
(1) LINKTONE LTD., an exempted company with limited liability incorporated
and existing under the laws of the Cayman Islands, formally known as
Intrinsic Technology Ltd. ("Linktone" or the "Company");
(2) HONG LIM INVESTMENTS PTE LTD, a company with limited liability
incorporated and existing under the laws of Singapore ("Temasek");
(3) MITSUBISHI CORPORATION, an exempted company with limited liability
incorporated and existing under the laws of Japan ("Mitsubishi");
(4) INDEX CORP, an exempted company with limited liability incorporated
and existing under the laws of Japan ("Index");
(5) INTRINSIC TECHNOLOGY (HOLDINGS) LTD., an exempted company with limited
liability incorporated and existing under the laws of the Cayman
Islands ("Intrinsic");
(6) IP FUND ONE, L.P., a company incorporated under the laws of the Cayman
Islands ("Acer");
(7) ICON VENTURES ASIA LIMITED, a company formed under the laws of the
Cayman Islands ("Icon");
(8) XXX XX, a citizen of the United Kingdom of Great Britain and Northern
Ireland (the "U.K.");
(9) XXX XXXXXXX, a citizen of the U.K.;
(10) XXXX XXXXXX, a citizen of Singapore;
(11) LUNAR OCCIDENTAL GROUP LLC, a limited liability company organized and
existing under the laws of Delaware, the sole members of which are
XXXXX XXXXXX and XXXXXXX XXXXXX ("Lunar Group", together with Xxx Xx,
Xxx Xxxxxxx, and Xxxx Xxxxxx, the "Founding Shareholders"); and
(12) the Series A Preferred Shareholders whose names are set forth on the
signature pages hereto.
WITNESSETH:
WHEREAS, the Company holds ownership interests in Linktone Consulting
Co., Ltd. ("Shanghai Linktone"), a wholly owned foreign enterprise established
pursuant to the laws of the People's Republic of China ("PRC") and Shanghai
Huitong Information Company Ltd. ("Shanghai Huitong") a joint venture company
established pursuant to the laws of the PRC (together with Shanghai Linktone and
Shanghai Huitong, the "Linktone Entities"); and
WHEREAS, the Company and the Shareholders other than Intrinsic and
Index and Mitsubishi had entered into the Original Shareholders Agreements, and
desired to terminate such agreements and enter into this Agreement (in its prior
form to the November [ ], 2001 amendment and restatement) for the purpose of
restating the Shareholders rights and obligations with respect to the Company
and the terms on which the Company is to be managed; and
WHEREAS, Intrinsic and the Company have entered into that certain share
subscription agreement, dated as of April 11, 2001("the Series C Subscription
Agreement"), whereby Intrinsic agreed to purchase the Series C Preferred Shares
from the Company, and in connection with the execution of the Series C
Subscription Agreement, Intrinsic became a party to this Agreement; and
WHEREAS, Mitsubishi and Index and the Company have entered into that
certain share subscription agreement, dated as of July 19, 2001 ("the Series D
Subscription Agreement"), whereby Mitsubishi and Index agreed to purchase the
Series D Preferred Shares from the Company, and in connection with the execution
of the Series D Subscription Agreement, Mitsubishi and Index became a party to
this Agreement.
WHEREAS, Temasek and the Company have entered into that certain share
subscription agreement, dated as of the date hereof ("the Series E Subscription
Agreement"), whereby Temasek have agreed to purchase the Series E Preferred
Shares from the Company, and in connection with the execution of the Series E
Subscription Agreement, the parties desire Temasek to become a party to this
amended and restated Agreement.
NOW THEREFORE, in consideration of the promises, covenants and
agreements herein contained, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
The following capitalized terms when used in this Agreement shall have
the meanings set forth below for such terms.
"Acer" has the meaning set forth in the preamble.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls or is controlled by or is under common control
with such Person. "Control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agreement" has the meaning set forth in the preamble.
"Board of Directors" means the board of directors of the Company.
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"Business" has the meaning set forth in Section 2.2.
"Business Day" means any day which is not a Saturday, Sunday or a day
on which banks are authorized or required to close in the city of Beijing in the
People's Republic of China.
"Business Plan" has the meaning set forth in Section 4.1(b).
"Closing Date" means the date of this Agreement.
"Commission" has the meaning set forth in Section 9.2(a).
"Common Shareholders" means the holders of the Common Shares.
"Common Shares" means the voting ordinary shares, par value US$0.01 per
share, of the Company.
"Company" has the meaning set forth in the preamble.
"Controlling Person" has the meaning set forth in Section 9.7(a).
"Conversion Date" has the meaning set forth in Section 5.2(c).
"Employee Stock Option Plan" has the meaning set forth in Section 3.3.
"Equity Linked Securities" has the meaning set forth in Section 3.2(b).
"Fair Market Value" means, for purposes of the determination of the
exercise price of employee stock options granted by the Company pursuant to
Section 3.3 as at any date specified herein, the fair value of the Common Shares
calculated as follows: (i) if there is not a public market for the Common
Shares, the price for which all the outstanding Common Shares (on a fully
diluted basis, assuming receipt of applicable consideration for any conversion,
exchange or exercise of any outstanding warrants into Preferred Shares and
assuming the conversion into Common Shares of all Preferred Shares) could be
sold in an arm's length transaction to a third party which is not an Affiliate
in a sale conducted in an orderly manner with a reasonable time for conducting
the same, treating the Company and the Subsidiaries as a going concern (without
regard to the lack of liquidity of the Common Shares due to any restrictions
contained in this Agreement or otherwise or any discount for minority
interests), or (ii) if there shall be a public market for the Common Shares, the
average of the daily market prices for each day during the 30 consecutive
trading days commencing 45 Business Days before such date as of which such a
price can be established in a manner set forth below. The "market price" in the
preceding sentence refers to the last sale price on such day as reported in the
official reporting system, or, if none, a recognized reporting system for the
applicable public market, or is such last sale price is not available, the
average of the closing bid and asked prices as reported in such system or the
best alternative means available.
Fair Market Value shall initially be determined by the Board of
Directors 60 Business Days prior to the issuance of stock options pursuant to
the Employee Stock Option Plan. In the event two or more members of the Board of
Directors disagree with the determination made, the members shall endeavour to
reach a mutually acceptable determination of the Fair Market Value in question.
If agreement cannot be reached within a 21-day period, the chairman of the Board
of Directors shall designate three unaffiliated qualified investment banks of
international standing (not having any current material relationship with any of
the Shareholders) and the majority of the Board of Directors shall select and
appoint one of the three designated investment banks, and failing such written
designation within five Business Days after
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the end of the 21-day period, the Company shall have the right to designate by
written notice to the Board of Directors any qualified investment bank of
international standing (not having any current material relationship with any of
the Shareholders), to be the independent appraiser (acting as experts and not
arbitrators) to determine the Fair Market Value, which determination shall be
made within 20 days from the date of appointment. The costs and expenses of the
appraiser shall be borne by the Company.
"First Offer" has the meaning set forth in Section 6.2(a).
"First Offer Notice" has the meaning set forth in Section 6.2(a).
"Founding Shareholders" has the meaning set forth in the preamble.
"Funding Date" has the meaning set forth in Section 3.2(b).
"Funding Notice" has the meaning set forth in Section 3.2(b).
"ICC" has the meaning set forth in Section 8.1(a).
"Icon" has the meaning set forth in the preamble.
"Index" has the meaning set forth in the preamble
"Initial Public Offering" means the first Public Offering of equity
securities of the Company with a listing on the National Association of
Securities Dealers, Inc. Automated Quotation System's National Market or other
similar nationally or internationally recognized securities system or exchange
with a valuation of the Company of at least US$100,000,000 and aggregate net
proceeds to the Company and selling Shareholders, if any, of at least
US$10,000,000.
"Intrinsic" has the meaning set forth in the preamble.
"Linktone" has the meaning set forth in the preamble.
"Linktone Entity(ies)" has the meaning set forth in the recitals.
"Losses" has the meaning set forth in Section 10.17.
"Lunar Group" has the meaning set forth in the preamble.
"Memorandum and Articles of Association" means the Memorandum and
Articles of Association of the Company attached hereto as Exhibit A, as amended
from time to time.
"Mitsubishi" has the meaning set forth in the preamble.
"Non-Voting Ordinary Shareholders" means the holders of the Non-Voting
Ordinary Shares.
"Non-Voting Ordinary Shares" means non-voting ordinary shares, par
value US$0.01 per share, of the Company authorized and issued in connection with
the Employee Stock Option Plan.
"Offering Shareholder" has the meaning set forth in Section 6.2(a).
"Offered Shares" has the meaning set forth in Section 6.2(a).
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"Original Shareholders" means the Founding Shareholders, Acer, Icon and
the other Series A Preferred Shareholders.
"Original Shareholders Agreements" means, collectively, (1) the
Shareholders Agreement dated October 15, 1999 entered into by the Founding
Shareholders and Linktone, (2) the Class F Subscription Agreement dated March
15, 2000 entered into by the Original Shareholders and Linktone, (3) the Series
A Preferred Shares Subscription Agreement dated September 1, 2000 entered into
by the Shareholders party thereto and Linktone, (4) the Series A Preferred
Shares Subscription Agreement dated as of September 29, 2000 entered into by
Icon, the Founding Shareholders and Linktone, (5) the Investor Rights Agreement
dated September 29, 2000 entered into by Icon, the Founding Shareholders and
Linktone, (6) the Series B Preferred Stock Subscription Agreement dated
September 29, 2000 entered into by IP Fund One, L.P., the Founding Shareholders
and Linktone, and (7) the Investors' Rights Agreement dated September 29, 2000
entered into by IP Fund One, L.P., the Shareholders party thereto and Linktone
which Original Shareholders Agreements were terminated upon the execution and
delivery of this Agreement on April 27, 2001, prior to its July 19, 2001
restatement.
"Permitted Transfer" means (1) any Transfer of Shares or warrants by a
Shareholder to an Affiliate of such Shareholder and (2) cumulative Transfers of
Shares by an Original Shareholder (including, in the case of Lunar Group, Xxxxx
Xxxxxx and Xxxxxxx Xxxxxx) of up to 10% of such Original Shareholder's
Shareholding Percentage in the Company to an immediate family member (which, for
this purpose, shall be defined as a parent, sibling, spouse or child of the
Original Shareholder). For the avoidance of doubt, all prior Transfers of Shares
by an Original Shareholder to any immediate family member of such Original
Shareholder shall be counted toward the foregoing 10% amount.
"Person" means any individual, corporation, partnership, firm, joint
venture, investment fund, association, trust, unincorporated association or
organization, governmental body or other entity.
"Preemptive Right Holders" has the meaning set forth in Section 3.2(b).
"PRC" has the meaning set forth in the recitals.
"Preferred Shareholders" means the holders of the Preferred Shares,
including Series A Preferred Shareholders, Series B Preferred Shareholders,
Series C Preferred Shareholders, Series D Preferred Shareholders, the Series E
Preferred Shareholders and holders of other series of Preferred Shares as may be
issued by the Company, from time to time.
"Preferred Shares" means, collectively, Series A Preferred Shares,
Series B Preferred Shares, Series C Preferred Shares, Series D Preferred Shares,
Series E Preferred Shares and other series of Preferred Shares as may be issued
by the Company, from time to time.
"Public Offering" means, in the case of an offering in the United
States, an underwritten public offering of equity securities of the Company
pursuant to an effective registration statement under the U.S. Securities Act of
1933, as amended, and, in the case of an offering in any other jurisdiction, a
widely distributed underwritten offering of equity securities of the Company in
which both retail and institutional investors are eligible to buy in accordance
with the securities laws of such jurisdiction.
"Public Sale" means any sale by a Shareholder of Shares (i) in a Public
Offering or (ii) on any internationally recognized securities system or exchange
on which the Shares are listed following the Initial Public Offering, provided
that in either case such sale is not directed to a particular purchaser or group
of purchasers.
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"Registrable Securities" means the Preferred Shares or Common Shares
held by Temasek, Mitsubishi and Index, Intrinsic, Acer and Icon on the date
hereof and any securities (a) issued on registration of transfer of such
Preferred Shares or Common Shares, (b) issued or issuable upon any conversion,
exchange or exercise of such Preferred Shares or Common Shares or (c) issued or
issuable with respect to any such Preferred Shares or Common Shares by way of
stock dividend or stock split or in connection with a sale or issuance of
securities, a combination of securities, recapitalization, merger, consolidation
or other reorganization or otherwise. Registrable Securities shall cease to be
Registrable Securities when (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act,
and such securities shall have been disposed of pursuant to such registration
statement, (ii) such securities shall have been sold to the public pursuant to
Rule 144 under the Securities Act, (iii) such securities may be sold pursuant to
Rule 144(k) under the Securities Act, (iv) such securities have been sold on a
securities exchange outside the United States pursuant to Regulation S under the
Securities Act and may be resold in the United States without registration under
the Securities Act, or (v) such securities shall have ceased to be outstanding.
"Securities Act" has the meaning set forth in Section 9.2(a).
"Series A Preferred Shareholders" means holders of the Series A
Preferred Shares.
"Series A Preferred Shares" means the Series A preferred shares, par
value US$0.01 per share, of the Company.
"Series B Preferred Shareholders" means holders of the Series B
Preferred Shares.
"Series B Preferred Shares" means the Series B preferred shares, par
value US$0.01 per share, of the Company.
"Series C Preferred Shareholders" means holders of the Series C
Preferred Shares.
"Series C Preferred Shares" means the Series C preferred shares, par
value US$0.01 per share, of the Company.
"Series C Subscription Agreement" has the meaning set forth in the
recitals
"Series D Preferred Shareholders" means holders of the Series D
Preferred Shares.
"Series D Preferred Shares" means the Series D preferred shares, par
value US$0.01 per share, of the Company.
"Series D Subscription Agreement" has the meaning set forth in the
recitals
"Series E Preferred Shareholders" means holders of the Series E
Preferred Shares.
"Series E Preferred Shares" means the Series E preferred shares, par
value US$0.01 per share, of the Company.
"Series E Subscription Agreement" has the meaning set forth in the
recitals.
"Shanghai Linktone" has the meaning set forth in the recitals.
"Shanghai Huitong" has the meaning set forth in the recitals.
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"Shanghai Weilan" has the meaning set forth in the recitals.
"Shareholders" means, collectively, the Common Shareholders, the
Preferred Shareholders and the Non-Voting Ordinary Shareholders that are party
to this Agreement.
"Shareholding Percentage" means, for each Shareholder, the number of
Shares held by such Shareholder divided by the aggregate number of Shares then
issued and outstanding. Unless otherwise noted, the calculation shall take into
account all Common Shares, Preferred Shares (by converting such Preferred Shares
into Common Shares pursuant to the Memorandum and Articles of Association) and
Non-Voting Ordinary Shares.
"Shares" means the Common Shares, the Preferred Shares and the
Non-Voting Ordinary Shares.
"Subscription Date" has the meaning set forth in Section 3.2(b).
"Subsidiary" means any entity in which the Company, directly or
indirectly, owns more than 50% of the outstanding capital stock or holds an
equity or similar interest representing at least 50% of the outstanding equity
or similar interests of such entity.
"Tag Along Offer" has the meaning set forth in Section 6.3(a).
"Tag Along Seller" has the meanings set forth in Section 6.3(a).
"Tag Along Selling Shareholder" has the meanings set forth in Section
6.3(a).
"Temasek" has the meaning set forth in the preamble.
"Transfer" means, when used as a verb, to, directly or indirectly,
sell, assign, transfer, pledge or otherwise dispose of any Shares or warrants,
including the creation of derivative rights, such as any option or contract to
purchase and/or sell any economic interests or right to vote in respect of any
Shares or warrants.
"Transferee" has the meaning set forth in Section 6.1(b).
"U.K." has the meaning set forth in the preamble.
"US$" means the lawful currency of the United States of America.
"Voting Shareholding Percentage" means the Shareholding Percentage
calculated using only Common Shares and Preferred Shares (but not Non-Voting
Ordinary Shares) in the denominator.
Section 1.2 Interpretation.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular and
vice-versa;
(b) references to any gender include all others if applicable in
the context;
(c) the words "include", "includes" and "including" are not
limiting;
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(d) references to "Articles", "Sections", "recitals" and
"Exhibits" are to Articles, Sections, recitals and Exhibits of this Agreement
unless otherwise stated; and
(e) references to this Agreement and the words "herein", "hereof",
"hereto" and "hereunder" and other words of similar import refer to this
Agreement (but not including any Exhibits hereto) as a whole and not to any
particular Article, Section or other subdivision.
ARTICLE II
THE COMPANY
Section 2.1 The Company.
The name of the Company is "LINKTONE LTD." or such other name as the
Board of Directors may approve in accordance with Section 4.3, and as approved
by shareholder resolution. The Shareholders hereby agree that the rights and
obligations of the Shareholders of the Company shall be governed by the terms
and conditions set forth in this Agreement, subject to the provisions of
applicable law. In the event of a conflict between any provision of this
Agreement and any non-mandatory provision of applicable law, the provisions of
this Agreement shall control and take precedence, and the Shareholders agree to
amend within 30 days from the date hereof, as necessary, the Memorandum and
Articles of Association in a manner consistent with, and to give effect to, the
provisions of this Agreement and the Series C Subscription Agreement, the Series
D Subscription Agreement and the Series E Subscription Agreement, subject to
applicable law. The Memorandum and Articles of Association are attached hereto
as Exhibit A.
Section 2.2 Purpose.
The purpose of the Company is to, directly or indirectly through its
Subsidiaries, (i) operate a mobile service provider, Linktone; (ii) provide
mobile oriented applications, including messaging, entertainment and Internet
consultation and technology support; (iii) provide consulting and other services
to mobile telecommunications operators and wireless service providers; and (iv)
other related business as agreed from time to time by the Board of Directors
(the "Business").
Section 2.3 Term.
This Agreement shall terminate and be of no further force or effect
upon the completion of an Initial Public Offering. The parties' obligations
under Section 7.3, Article VIII, Article IX and Section 10.17 shall survive the
termination hereof.
ARTICLE III
SHARE CAPITAL
Section 3.1 Capitalization of the Company.
The authorized share capital of the Company consists of 5,000,000
shares, par value US$0.01 each. The Company's issued and outstanding shares
following the consummation of the transactions contemplated by this Agreement
are:
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(i) 973,900 Common Shares, (ii) zero Non-Voting Ordinary Shares, (iii)
389,473 Series A Preferred Shares, (iv) 176,459 Series B Preferred Shares (after
giving effect to the exercise by Acer of warrants to acquire 110,287 shares of
Series B Preferred Shares); (v) 245,203 Series C Preferred Shares, (vi) 101,570
Series D Preferred Shares and (vii) 101,570 Series E Preferred Shares. As of the
date hereof, prior to the consummation of the transactions contemplated by this
Agreement, the capitalization of the Company includes the Shares enumerated in
(i), (ii), (iii), (iv), (v), and (vi) but does not include the Series E
Preferred Shares.
Section 3.2 Additional Funding; Pre-emptive Rights.
(a) The Board of Directors may determine in accordance with
Article IV that the Company requires additional funds. Such additional funding
shall be used for the purposes of the Company set forth in Section 2.2 and shall
be funded in accordance with this Article III. No parties hereto shall be
obliged to provide any financial assistance including, but not limited to,
loans, guarantees, bonds, debentures and/or other debt securities unless
otherwise agreed by the parties hereto.
(b) If the Board of Directors, acting in accordance with this
Agreement, decides that the Company requires funding by the issuance of
additional Shares (other than in connection with (i) any conversion of Preferred
Shares into Common Shares at the option of a Preferred Shareholder, (ii) any
Non-Voting Ordinary Shares issued in connection with the Employee Stock Option
Plan or (iii) any Public Offering), other equity securities or securities
convertible into equity securities, including without limitation, ordinary and
preferred shares, options, warrants or other similar instruments of the Company,
but excluding stock options issued to employees pursuant to the Employee Stock
Option Plan ("Equity Linked Securities"), the Board of Directors shall first
provide a notice (each such notice, a "Funding Notice") to each of the Founding
Shareholders, Acer, Icon, Mitsubishi, Index, Temasek and Intrinsic
(collectively, the "Preemptive Right Holders") of the issuance of such Equity
Linked Securities and the issue price thereof. Each of the Preemptive Right
Holders shall have the right but not the obligation to purchase for cash a
portion of the Equity Linked Securities to be issued corresponding to its then
current respective Shareholding Percentage at the same price and on the same
terms and conditions as such Equity Linked Securities are offered or sold. The
Funding Notice shall set forth the amount of additional contribution from each
of the Preemptive Right Holders for the pro rata amount of Equity Linked
Securities to be issued and the intended subscription date specified by the
Board of Directors (the "Subscription Date"). Each of the Preemptive Right
Holders shall have the right but not the obligation to make such additional
funds available to the Company not later than the date specified in the Funding
Notice (the "Funding Date"), which shall be at least 15 days after the Funding
Notice is delivered to the Shareholders and no later than five Business Days
before the Subscription Date. Such pre-emptive rights shall be assignable by
each of the Preemptive Right Holders to any of its Affiliates. If any Preemptive
Right Holder does not make full payment of the additional contribution set forth
in the Funding Notice on or before the Funding Date, the Board of Directors may
accept additional capital contributions in the amount of the deficiency from the
other Preemptive Right Holders (or their Affiliates) in proportion to such
Preemptive Right Holder's subscription to the offered Equity Linked Securities,
but no Preemptive Right Holder shall be obligated to make up any such
deficiency. To the extent that such deficiency is not made up, the Company may
proceed to offer the Equity Linked Securities represented by such deficiency to
third parties at no less than the issue price stated in the Funding Notice
within 60 days from the Funding Date. In the event the Company has not sold all
offered Equity Linked Securities within such period, the Company shall not
thereafter issue or sell any Equity Linked Securities without first offering
them to the Preemptive Rights Holders in the manner provided above.
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Section 3.3 Employee Stock Options.
From time to time, the Company may grant stock options to its employees
as part of their compensation. The Company is authorized to issue up to 138,949
Non-Voting Ordinary Shares of the Company for the exercise of stock options
granted to employees of the Company and its Subsidiaries pursuant to the
employee stock option plan in effect prior to the Closing Date (the "Employee
Stock Option Plan"). Stock options granted after the Closing Date shall have an
exercise price of no less than 100% of the Fair Market Value at such time, shall
vest over a period of not less than four years and no more quickly than 25%
after the first year and evenly thereafter over the remainder of the vesting
period. Options issued pursuant to the Employee Stock Option Plan may only be
exercised into Non-Voting Ordinary Shares. The Company may award stock options
under the Employee Stock Option Plan providing for the issue of additional
Non-Voting Ordinary Shares in excess of the number of shares authorized under
the Employee Stock Option Plan on the Closing Date only when such action has
been approved by the Board of Directors in accordance with Section 4.4 below.
ARTICLE IV
CORPORATE GOVERNANCE
Section 4.1 Board of Directors.
(a) The business and affairs of the Company shall be managed by
the Board of Directors of the Company in a manner consistent with this Agreement
and the Memorandum and Articles of Association.
(b) The Board of Directors shall cause the senior management of
the Company to prepare an annual business plan setting forth the annual budget
and the financing and operating plan of the Company and for each of the
Subsidiaries for each upcoming fiscal year (the "Business Plan") which will be
presented to the Board of Directors at least 30 days prior to the commencement
of any fiscal year. Such Business Plan shall be subject to the approval of the
Board of Directors pursuant to Section 4.4 prior to the commencement of each
fiscal year.
(c) The Board of Directors shall consist of eight (8) directors
appointed as follows:
(i) Founding Shareholders Directors:
The Founding Shareholders shall be entitled collectively to
appoint the number of directors set forth below opposite the
corresponding Voting Shareholding Percentage during the periods they
hold in the aggregate such Voting Shareholding Percentage. During such
time, the Founding Shareholders shall agree among themselves as to the
appointment of their directors:
Voting Shareholding
Percentage Number of Directors
---------- -------------------
Less than 54% but at least 40% 4
Less than 40% but at least 25% 3
Less than 25% but at least 10% 2
Less than 10% but at least 3% 1
(ii) Temasek Director: Temasek shall be entitled
to appoint one director until such time as
Temasek has sold or otherwise disposed of
more than 50% of the Shares owned by it as
of the Closing Date; provided,
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however, that Temasek own in the aggregate
Voting Shareholding Percentage in excess of
1%.
(iii) Mitsubishi and Index Director: Mitsubishi
and Index together shall be entitled to
occupy 1 non-voting Board Observer Seat but
can exchange the non-voting Board Observer
Seat and appoint one director at any time
until such time as Mitsubishi and/or Index
has sold or otherwise disposed in aggregate
more than 50% of total shares owned by
Mitsubishi and Index as of the Closing Date
provided however that Mitsubishi and Index
own in the aggregate Voting Shareholding
Percentage in excess of 1%.
(iv) Acer Director: Acer shall be entitled to
appoint one director until such time as Acer
has sold or otherwise disposed of more than
50% of the Shares owned by it as of the
Closing Date
(v) Intrinsic Director: Intrinsic shall be
entitled to appoint one director until such
time as Intrinsic has sold or otherwise
disposed of more than 50% of the Shares
owned by it as of the Closing Date.
(vi) Vacated director seats resulting from any
decline in the number of directors which the
Founding Shareholders, Acer or Intrinsic are
entitled to appoint shall be filled by
nominees selected by a majority of the
directors on the Board of Directors
(excluding the departing director) and
elected by holders of a majority of the then
outstanding voting Shares.
(d) Icon shall have the right to appoint one observer at Board of
Directors meetings until such time as Icon has sold or otherwise disposed of
more than 50% of the Shares owned by it as of the Closing Date. In addition, the
Board of Directors may vote to appoint an additional observer or observers at
Board of Directors meetings from time to time. Each observer shall have the
right to attend all meetings of the Board of Directors and all committees
thereof (whether in person, by telephone or otherwise) and shall receive notices
of such meetings and copies of all materials provided to members of the Board of
Directors concurrently and in the same manner, provided that such observer shall
execute and deliver to the Company a confidentiality agreement reasonably
satisfactory to the Company.
(e) Any director appointed by Shareholder(s) may at any time be
removed or replaced by the appointing Shareholder(s) with or without cause. In
addition, any director may resign at any time by giving written notice to the
Shareholder(s) that appointed such director and to the secretary of the Company.
Such resignation shall take effect on the date shown on or specified in such
notice or, if such notice is not dated, at the date of the receipt of such
notice by the secretary of the Company. No acceptance of such resignation shall
be necessary to make it effective. If at any time a vacancy is created on the
Board of Directors by reason of death, removal or resignation of any director
other than as provided in Section 4.1(c), the Shareholder(s) who appointed such
director shall appoint a replacement director as soon as practicable.
(f) The composition of the board of directors of any Subsidiaries
shall be appointed on the same basis as the Board of Directors of the Company as
set forth in this Section 4.1.
Section 4.2 Meetings; Notice of Meetings.
The Board of Directors shall have at least four meetings approximately
equally spaced during each year. Any two directors may call a meeting of the
Board of Directors at any time. Written notice of the date, time and place of
each meeting shall be given to all directors at least 10 Business Days prior to
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such meeting, specifying the purpose and providing the agenda of such meeting
and the conference call telephone number for those directors desiring to
participate telephonically; provided, however, that subject to applicable law,
such 10-Business Day notice requirement may be waived by a unanimous vote in a
particular case. Notice and agenda of the meeting shall be given by the
directors calling the meeting. Intrinsic shall have a right to make proposals
to, or to offer amendments to, the agenda of any meeting of the Board of
Directors and the Board of Directors shall consider in good faith placing
Intrinsic's proposals on the final agenda. Any director may participate in a
meeting of the Board of Directors by means of telephone conference or similar
communication equipment whereby all persons participating in such meeting can
hear each other. Participation in a meeting in such manner shall be deemed to
constitute presence in person at such meeting, including for purposes of a
quorum and voting. Written minutes of each meeting shall be provided to each
director within 10 Business Days after each meeting.
Section 4.3 General Actions of the Board of Directors; Notices of
Board Meetings.
(a) The quorum necessary for the transaction of the business of
the Board of Directors shall be five directors and shall include (i) at least
two directors appointed by the Founding Shareholders, if the Founding
Shareholders are then entitled to appoint directors; (ii) one director appointed
by Acer, if Acer is then entitled to appoint a director; (iii) one director
appointed by Intrinsic, if Intrinsic is then entitled to appoint a director; and
(iv) one director appointed by Temasek, if Temasek is then entitled to appoint a
director. If a quorum cannot be achieved within the first hour after any
scheduled Board of Directors meeting, the meeting shall be adjourned and the
parties shall reschedule the next meeting within 30 days in good faith pursuant
to Section 4.2 above and the directors shall be obligated to participate in such
rescheduled meeting in good faith.
(b) Except as set forth in this Agreement and the Memorandum and
Articles of Association, decisions and resolutions of the Board of Directors
shall be made or adopted by the affirmative vote of a majority of the directors
of the Board of Directors.
(c) If any Preferred Shareholder shall have exercised its rights
to convert any portion of the Preferred Shares held by it into Common Shares
pursuant to Section 5.2, the Board of Directors shall, to the extent necessary,
promptly pass a resolution to authorize such conversion and cause the necessary
corporate actions to be taken in order to effectuate such conversion.
Section 4.4 Minority Protection.
(a) The Company shall not, and shall cause the Linktone Entities
not to, take any action in connection with any of the following transactions,
unless such transaction shall have been approved by a majority of the directors
of the Board of Directors (such approval not to be unreasonably withheld by any
director), including (i) the affirmative vote of the Acer director, if Acer is
then entitled to appoint a director; and (ii) the affirmative vote of the
Intrinsic director, if Intrinsic is then entitled to appoint a director; and
(iii) the affirmative vote of the Temasek director, if Temasek is then entitled
to appoint a director; and (iv) the affirmative vote of at least two of the
Founding Shareholder directors, if the Founding Shareholders are then entitled
to appoint directors:
(i) any authorization or issuance of any Equity Linked
Securities of, or any call for capital contribution by, the Company or
any Subsidiary, other than in connection with (1) any conversion of
Preferred Shares into Common Shares at the option of a Preferred
Shareholder, (2) any issuance of stock options in connection with the
Employee Stock Option Plan or any issuance of Non-Voting Ordinary
Shares upon exercise thereof or (3) the Initial Public Offering.
(ii) decisions in connection with the timing and
structuring of the Initial Public Offering, including the selection of
advisors and managing underwriter or underwriters;
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(iii) material changes in the Company's or any Subsidiary's
business plan or change in the nature of their business as the same is
conducted as of the date hereof;
(iv) appointing auditors for the Company or any change in
financial controls;
(v) material changes to any management regime of
intangible assets (including product specification documents, product
development documents, program source codes and registration of
trademarks);
(vi) material changes to any profit allocation plan;
(vii) all decisions in connection with the Employee Stock
Option Plan;
(viii) unbudgeted capital expenditure in an amount exceeding
the lower of US$100,000 or 5 percent of net assets of the Company;
(ix) any investment, merger or acquisition for
technicians, technology or products, whose amounts exceed the lower of
US$200,000 or 10 percent of net assets of the Company or, in any case,
if the accumulated amounts from and after the Closing Date exceed 20
percent of current net asset value of the Company;
(x) any investment, merger or acquisition for other
objectives, whose amounts exceed the lower of US$100,000 or 5 percent
of net asset value of the Company or, in any case, where the
accumulated amounts from and after the Closing Date exceed 10 percent
of current net asset value of the Company;
(xi) the Transfer of all or substantially all the
Company's assets, the Transfer of any interest in any Subsidiary or
joint venture or the exclusive licensing of all or substantially all of
the Company's or any Subsidiary's intellectual property where the
amount exceeds the lower of US$100,000 or 5 percent of net asset value
of the Company;
(xii) the borrowing of any money or obtaining of any
advance or credit in any form (other than normal trade credit) in
excess of US$100,000 or the variation of the terms and conditions of
any existing loans or lines of credit;
(xiii) the formation, reorganization or dissolution of any
Subsidiary;
(xiv) any merger or consolidation of the Company or any
Subsidiary with or into any other Person;
(xv) any amendment of the Company's memorandum and
articles of association or the constituent documents of any Subsidiary;
(xvi) the provision of any guarantee, indemnity, or
security in favor of any third party in excess of US$100,000;
(xvii) the entry by the Company or any Subsidiary into any
line of business other than as set forth in Section 2.2;
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(xviii) any reorganization, recapitalization or similar
transaction, or the making of any petition for or the passing of any
resolution for the liquidation, dissolution or winding up of the
Company or any Subsidiary under any applicable bankruptcy, insolvency
or other similar law;
(xix) the approval of the annual Business Plan of the
Company and that of any Subsidiary, and any interim material revisions
thereto or deviations therefrom;
(xx) any related party dealings of the Company or any
Subsidiary, including transactions between the Company and any
Subsidiary, as well as transactions between the Company or any
Subsidiary and any of the following entities: (1) Shareholders; (2)
senior management or directors of the Company or any Subsidiary, (3)
family members of any of the foregoing individuals and (4) any entities
controlled by the foregoing Persons, except as may be required in
connection with any of the transactions in Sections 4.4(a)(i)(1) and
(2);
(xxi) the authorization or payment of, or assumption of
obligation to pay or make, any dividends or distributions by the
Company or any Subsidiary; or
(xxii) any purchase, redemption or acquisition of any Equity
Linked Securities of the Company or the Subsidiaries;
except to the extent that any of the foregoing items (i) through (xxii) has
already been expressly identified and approved pursuant to (xix) above in the
Business Plan of the Company or any Subsidiary or any interim material revisions
thereto or deviations therefrom provided in (xix);
(b) The Company shall not, and shall cause the Linktone Entities not
to, take any action in connection with any of the following transactions, unless
such transaction shall have been approved by the affirmative vote of the
Mitsubishi and Index director, should Mitsubishi and Index have executed their
right to exchange their non-voting Board Observer Seat for the appointment of
one director, and if Mitsubishi and Index is then entitled to appoint a
director:
(i) any authorization or issuance of any Equity Linked
Securities of, or any call for capital contribution
by, the Company or any Subsidiary, other than in
connection with (1) any conversion of Preferred
Shares into Common Shares at the option of a
Preferred Shareholder, (2) any issuance of stock
options in connection with the Employee Stock Option
Plan or any issuance of Non-Voting Ordinary Shares
upon exercise thereof or (3) the Initial Public
Offering.
(ii) decisions in connection with the timing and
structuring of the Initial Public Offering, including
the selection of advisors and managing underwriter or
underwriters;
(iii) material changes in the Company's or any Subsidiary's
business plan or change in the nature of their
business as the same is conducted as of the date
hereof;
(iv) material changes to any profit allocation plan;
(v) all decisions in connection with the Employee Stock
Option Plan;
(vi) any investment, merger or acquisition for
technicians, technology or products, whose amounts
exceed the lower of US$200,000 or 10 percent of net
assets of
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the Company or, in any case, if the accumulated
amounts from and after the Closing Date exceed 20
percent of current net asset value of the Company;
(vii) any investment, merger or acquisition for other
objectives, whose amounts exceed the lower of
US$100,000 or 5 percent of net asset value of the
Company or, in any case, where the accumulated
amounts from and after the Closing Date exceed 10
percent of current net asset value of the Company;
(viii) the Transfer of all or substantially all the
Company's assets, the Transfer of any interest in any
Subsidiary or joint venture or the exclusive
licensing of all or substantially all of the
Company's or any Subsidiary's intellectual property
where the amount exceeds the lower of US$100,000 or 5
percent of net asset value of the Company;
(ix) the formation, reorganization or dissolution of any
Subsidiary;
(x) any merger or consolidation of the Company or any
Subsidiary with or into any other Person;
(xi) any amendment of the Company's memorandum and
articles of association or the constituent documents
of any Subsidiary;
(xii) the entry by the Company or any Subsidiary into any
line of business other than as set forth in Section
2.2;
(xiii) any reorganization, recapitalization or similar
transaction, or the making of any petition for or the
passing of any resolution for the liquidation,
dissolution or winding up of the Company or any
Subsidiary under any applicable bankruptcy,
insolvency or other similar law;
(xiv) the approval of the annual Business Plan of the
Company and that of any Subsidiary, and any interim
material revisions thereto or deviations therefrom;
or
(xv) the authorization or payment of, or assumption of
obligation to pay or make, any dividends or
distributions by the Company or any Subsidiary;
(xvi) any purchase, redemption or acquisition of any Equity
Linked Securities of the Company or the Subsidiaries;
except to the extent that any of the foregoing items (i)
through (xvi) has already been expressly identified and approved
pursuant to (xiv) above in the Business Plan of the Company or any
Subsidiary or any interim material revisions thereto or deviations
therefrom provided in (xiv);
Section 4.5 Shareholders Actions.
(a) Any Shareholder or group of Shareholders (except Non-Voting
Ordinary Shareholders) with a Voting Shareholding Percentage of 10% or more, or
a quorum of the Board of Directors of the Company, may call a meeting of the
Shareholders at any time. Written notice of the date, time and place of each
meeting shall be given to each director of the Company and Shareholder at least
10 Business
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Days prior to such meeting, specifying the purpose of such meeting; provided,
however, that subject to applicable law, such 10-Business Day notice requirement
may be waived by a unanimous vote in a particular case. Notice of the meeting
shall be given by the Shareholders calling the meeting or the Board of
Directors. Subject to Section 4.6 below, any Shareholder or representative of a
Shareholder may participate in a meeting of the Shareholders by means of
telephone conference or similar communication equipment whereby all persons
participating in such meeting can hear each other. Participation in a meeting in
such manner shall be deemed to constitute presence in person at such meeting,
including for purposes of a quorum and voting.
(b) The Non-Voting Ordinary Shareholders shall not have the right
to vote on their Non-Voting Ordinary Shares on any matters put forward in any
Shareholders meeting, including the annual general meeting. The Non-Voting
Ordinary Shares shall not be considered in the determination of quorum and any
casting of votes in any Shareholders meeting.
Section 4.6 Written Resolutions.
The Board of Directors and Shareholders (except Non-Voting Ordinary
Shareholders) may take any action by written resolutions signed by the number of
directors or Shareholders required for any action in lieu of holding a meeting.
A copy of any written resolutions shall be provided to each director and each
Shareholder at least two Business Days prior to the date such written
resolutions are proposed to take effect.
Section 4.7 Remuneration.
No director on the Board of Directors shall be entitled to any
remuneration except for reimbursement of out-of-pocket expenses in connection
with the performance of his or her duties as director and, if such director is
otherwise an employee of the Company, remuneration received in his or her
capacity as an employee, and subject to the terms of any employment letter or
employment agreement with the Company or the Subsidiaries.
Section 4.8 Management Appointments.
The Founding Shareholders shall have the right to appoint and remove
the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer,
Chief Technology Officer and officers at similar levels of the Company or any
Subsidiary after consultation with the Board of Directors and approval by the
director appointed by Temasek, provided that the Founding Shareholders have not
transferred more than 50% of the Shares owned by them (in the aggregate) as of
the Closing Date.
ARTICLE V
CERTAIN RIGHTS OF THE PREFERRED SHAREHOLDERS
Section 5.1 Liquidation Preference.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, or sale of all substantially all of
its assets, Preferred Shareholders shall be entitled to receive
-16-
liquidation proceeds of the Company or any Subsidiary available for distribution
to the Shareholders in the following order and amounts:
(i) first, to each of the Series A, Series B, Series C,
Series D and Series E Preferred Shareholders up to 100% of the issue
price of each such Preferred Share held by it, pro rata in accordance
with the respective Shareholding Percentage calculated with respect to
Preferred Shares only, treated as one class; provided, however, that
the parties to this Agreement hereby agree that the Series E Preferred
Shareholders, Series D Preferred Shareholders, Series C Preferred
Shareholders, Series B Preferred Shareholders and Icon shall receive up
to 100% of the issue price of each Preferred Share held by them prior
to the distribution of any of the remaining preference amount to the
other Series A Preferred Shareholders, which remaining Series A
preference amount, if any, shall not be paid to the remaining Series A
Preferred Shareholders, but, rather, shall be made available to all of
the Shareholders in accordance with Section 5.1(b).
(b) After the payment in full of the preference amount in Section
5.1(a), the remaining liquidated proceeds shall be distributed pro rata among
all the Shareholders in accordance with the respective Shareholding Percentages,
with each Preferred Share being deemed for such purpose to be equal to the
number of Common Shares into which such Preferred Share is convertible pursuant
to Section 5.2.
Section 5.2 Conversion Rights.
(a) Each Preferred Shareholder shall have the right to convert at
any time any or all of the Preferred Shares held by it into Common Shares in
accordance with the conversion provisions in the Memorandum and Articles of
Association.
(b) All Preferred Shares shall be automatically converted into
Common Shares in accordance with the conversion provisions in the Memorandum and
Articles of Association immediately prior to the closing of an Initial Public
Offering.
(c) If a Preferred Shareholder exercises its right to convert
Preferred Shares into Common Shares, such Preferred Shareholder shall surrender
the certificate or certificates for such Preferred Share at the office of the
transfer agent (or at the principal office of the Company if the Company serves
as its own transfer agent), together with written notice that such holder elects
to convert all or any number of the shares represented by such certificate or
certificates. Such notice shall state the name of the Preferred Shareholder and
the names in which the Preferred Shareholder wishes the certificate or
certificates for Common Shares to be issued. If required by the Company,
certificates surrendered for conversion shall be endorsed or accompanied by a
written instrument or instruments of transfer, in form satisfactory to the
Company, duly executed by the registered holder or its attorney duly authorized
in writing. The date of receipt of such certificates and notice by the transfer
agent or the Company shall be the conversion date (the "Conversion Date"). The
Company shall, as soon as practicable after the Conversion Date, issue and
deliver at such office to such holder or to his nominees, a certificate or
certificates for the number of Common Shares to which such holder shall be
entitled. If the conversion is in connection with an Initial Public Offering,
the conversion may, at the option the Preferred Shareholder, be conditioned upon
the closing with the underwriters of the sale of securities pursuant to such
offering, such that the Person entitled to receive the Common Shares upon
conversion of the Preferred Shares shall not be deemed to have converted such
Preferred Shares until immediately prior to the closing of such sale of
securities.
(d) The Company shall, at all times during which any Preferred
Shares shall be outstanding, keep available such number of its duly authorized
Common Shares as shall from time to time be sufficient to effect the conversion
of all outstanding Preferred Shares.
-17-
Section 5.3 Information Rights.
The Company shall furnish to Temasek, Mitsubishi and Index, Acer,
Intrinsic, the Founding Shareholders and Icon the following reports, so long as
each such Shareholder shall not have sold or otherwise disposed of more than 50%
of such Shareholder's Shares owned by such Shareholder as of the Closing Date:
(i) annual Business Plans prepared pursuant to Section
4.1(b);
(ii) audited annual financial statements on a consolidated
basis (including management letters issued by the auditors to the Board
of Directors in connection therewith) prepared in accordance with
generally accepted accounting principles in the United States of
America, no later than 90 days after the end of each fiscal year;
(iii) quarterly management accounts, budgets (including
capital expenditures) and unaudited quarterly financial statements of
the Company and each Subsidiary and supporting accounting data, no
later than 45 days after the end of each fiscal quarter;
(iv) monthly summary of operating results of the Company
and each Subsidiary no later than 20 Business Days after the end of
each month; and
(v) all material financial, business, management, sales,
marketing, and operating information of the Company and each Subsidiary
as shall be reasonably required by such Shareholders to assess the
financial and operating condition thereof and the value of such
Shareholders' investment in the Company and the Shares.
The Company shall provide to any Shareholder with a Voting Shareholding
Percentage of at least 3% and their advisors and accountants, upon reasonable
written notice, periodic access to inspect the financial books and records of
the Company or any of the Subsidiaries.
Section 5.4 Termination of Certain Shareholders' Rights.
The rights granted to Shareholders in this Article V shall terminate
upon the consummation of the Initial Public Offering.
Section 5.5 Acer and Intrinsic Redemption Rights.
(a) Subject to any applicable legal restrictions on the Company's
redemption of shares, all of the outstanding Series B Preferred Shares owned by
Acer (the "Acer Series B Shares"), and all of the outstanding Series C Preferred
Shares owned by Intrinsic (the "Intrinsic Series C Shares") shall automatically
be redeemed upon delivery by Acer or Intrinsic, as the case may be, of a written
notice requiring the Company to redeem all of the outstanding Acer Series B
Preferred Shares, and the Intrinsic Series C Shares, respectively, provided,
however, that delivery of any such notice by either Acer, or Intrinsic, or both,
may not be made before April 30, 2007. Such written notice specifying (i) the
number of Acer Series B Shares or Intrinsic Series C Shares to be redeemed, as
the case may be, (ii) the redemption price per share and (iii) the redemption
date shall be sent to the Company and the other party being entitled to the
redemption right hereunder.
(b) The redemption price for each Series B Preferred Share, or
Series C Preferred Share, as the case may be, shall be the amount per share (as
adjusted for stock splits, reclassifications, stock dividends, and the like)
actually paid by Acer or Intrinsic to the Company plus all declared but unpaid
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dividends thereon to the date of redemption (the "Redemption Price"). If on any
redemption date the number of shares that may then be legally redeemed by the
Company is less than the number of such shares to be redeemed, then the shares
to be redeemed shall be allocated to Acer and Intrinsic pro rata in accordance
with each of its Shareholding Percentage at such time, and the remaining shares
that may not legally be redeemed shall be carried forward and redeemed as soon
as the Company has legally available funds for such redemption.
Section 5.6 Temasek Redemption Rights.
(a) Subject to any applicable legal restrictions on the Company's
redemption of shares, all of the outstanding Series E Preferred Shares owned by
Temasek (the "Temasek Series E Shares"), shall automatically be redeemed upon
delivery by Temasek, as the case may be, of a written notice requiring the
Company to redeem all of the outstanding Temasek Series E Preferred Shares,
provided, however, that delivery of any such notice by Temasek may not be made
before September [3], 2007. Such written notice specifying (i) the number of
Temasek Series E Shares to be redeemed, (ii) the redemption price per share and
(iii) the redemption date shall be sent to the Company. (b) The redemption price
for each Series E Preferred Share shall be the amount per share (as adjusted for
stock splits, reclassifications, stock dividends, and the like) actually paid by
Temasek to the Company plus all declared but unpaid dividends thereon to the
date of redemption (the "Redemption Price"). If on any redemption date the
number of shares that may then be legally redeemed by the Company is less than
the number of such shares to be redeemed, then the remaining shares that may not
legally be redeemed shall be carried forward and redeemed as soon as the Company
has legally available funds for such redemption.
Section 5.7 Mitsubishi and Index Ratchet-down Provisions
Should future investors invest in Linktone at a lower share price than
Mitsubishi and Index (adjusted for stock splits, reclassifications, stock
dividends, and the like), Mitsubishi and Index will be issued additional shares
to adjust for the difference. This adjustment shall be the difference between
the number of shares that Mitsubishi and Index actually received and the number
of shares they would have received had they invested at the lower share price.
The adjustment shall be made when such issuance is made, and shall become
effective immediately after such issuance.
Section 5.8 Temasek Ratchet-down Provisions
Should future additional equity (including, but not limited to, options,
warrants or convertible securities) be issued at a consideration price per share
lower than US$9.8454 (the "lower price"), the conversion price in relation to
the Series E Preferred Shares held by Temasek shall be adjusted to reflect the
lower price (including adjustments for stock splits, reclassifications, stock
dividends and the like), such that Temasek holds the same relative ownership
position thereafter as it had immediately prior thereto. The adjustment shall be
made when such issuance is made, and shall become effective immediately upon
such issuance.
Section 5.9 Mitsubishi and Index Agency Rights
(a) Provided that the aggregate Voting Shareholding Percentage of
Mitsubishi and Index is in excess of 1%, Mitsubishi will be Linktone's exclusive
agent for Japanese content for one year which is to be extended year by year
subject to a mutual agreement to be agreed upon by both parties. In exchange for
Mitsubishi's exclusive agency rights, Linktone will be granted right of first
refusal to any Index
-19-
content to be introduced to the Chinese market (excluding Hong Kong and Taiwan)
for one year which is to be extended year by year subject to a mutual agreement
to be agreed upon by both parties.
ARTICLE VI
TRANSFER OF SHARES
Section 6.1 General Restrictions on Transfer.
(a) No Shareholder shall Transfer any Shares or warrants now owned
or subsequently acquired by the Shareholder to any Persons, unless such Transfer
is in accordance with the terms of this Agreement and the Articles of
Association.
(b) Each Shareholder agrees that no Transfer of any Shares
(including any Permitted Transfers) shall be valid and effective until the
transferee of such Shares (the "Transferee") shall have executed and delivered
to the Company and each other Shareholder, as a condition precedent to any
acquisition of Shares or warrants, an instrument in form and substance
reasonably satisfactory to the Company confirming that such Transferee agrees to
become a party to this Agreement and to be bound by all the terms and conditions
hereof. The Shareholders further agree to take any action, or cause any action
to be taken, that is necessary or reasonably desirable to effect all the
restrictions on the Transfer of Shares or warrants set forth herein in order
that the same may bind third parties who are not parties to this Agreement.
(c) Shareholders may effectuate any Permitted Transfer or Public
Sale without compliance with Sections 6.2 and 6.3.
Section 6.2 Right of First Offer.
(a) If any Shareholder (an "Offering Shareholder") desires to
Transfer all or part of its Shares (the "Offered Shares"), it shall, by a notice
in writing (a "First Offer Notice") to all the other Shareholders, first offer
(a "First Offer") to the other Shareholders the opportunity to purchase all of
such Offered Shares on the same terms and conditions as those offered by the
Offering Shareholder. Such First Offer shall (i) specify the number of such
Offered Shares, (ii) specify the proposed purchase price which shall be on an
all cash basis, and (iii) contain an irrevocable offer to sell such Offered
Shares at such price to the other Shareholders. The other Shareholders, at their
sole election, may accept, in whole but not in part, the First Offer by written
notice to the Offering Shareholder not later than 10 Business Days after receipt
of the First Offer. If more than one other Shareholder accepts the First Offer,
the Offering Shareholder shall be deemed to have offered each such accepting
Shareholder that number of the Offered Shares equal to the aggregate number of
all the Offered Shares multiplied by a fraction the numerator of which is each
such accepting Shareholder's Shareholding Percentage and the denominator of
which is the aggregate Shareholding Percentage of all such other Shareholders
accepting the first offer, and each such accepting Shareholder will be deemed to
have accepted such proportionate share of the Offered Shares. The accepting
Shareholder(s) shall purchase and pay for all of the Offered Shares no later
than 20 Business Days from acceptance of the First Offer. The Offering
Shareholder shall deliver such Offered Shares, free and clear of any liens and
encumbrances, to the accepting Shareholder(s) against delivery of the purchase
price therefor. If no other Shareholders accept the First Offer within the
prescribed time period, then the Offering Shareholder shall have the right to
sell the Offered Shares to third party purchaser(s) on the terms set forth in
the First Offer. If the Offering Shareholder fails to consummate the sale within
90 days following the date of the expiration of the First Offer, then any
subsequent Transfer of the Offered Shares shall again be subject to compliance
with this Section 6.2. The
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Company shall not give effect to any Transfer of Shares subject to this Section
6.2 that is not made in compliance herewith.
(b) The provisions in (a) above shall not apply to (i) Permitted
Transfers and (ii) Public Sales.
Section 6.3 Tag Along Right.
(a) If any Founding Shareholder (the "Tag Along Selling
Shareholder") intends to sell all or a portion of its Shares other than in
connection with an Initial Public Offering, Public Sale or a Permitted Transfer,
the Tag Along Selling Shareholder shall use its best efforts to procure that the
purchaser of such Shares shall also offer (the "Tag Along Offer") to purchase
from each of Intrinsic, Acer, Icon, Mitsubishi, Index, and Temasek (the "Tag
Along Seller") a number of Shares (including Common Shares issuable on
conversion of Preferred Shares) that represents the same ratio of the Shares
then held by each Tag Along Seller as the percentage of the Shares to be
purchased by such purchaser from the Tag Along Selling Shareholder to the total
number of Shares then held by the Tag Along Selling Shareholder. The purchase
price per Share and the terms of sale of the Shares in the Tag Along Offer shall
be the same as the proposed sale by the Tag Along Selling Shareholders to the
proposed purchaser. Any such Tag Along Offer to the each Tag Along Seller shall
be open for at least 20 days.
(b) If the proposed purchaser in (a) above does not agree to
increase the amount of Shares it proposes to purchase by making a Tag Along
Offer to the Tag Along Sellers, the amount of Shares to be sold by the Tag Along
Selling Shareholder shall be reduced accordingly and the proposed purchaser will
purchase such portion from the Tag Along Sellers instead. If in the case where
one or more of the Tag Along Sellers can not sell its Shares to the proposed
purchaser together with the Tag Along Selling Shareholder's Shares due to an
inability of the proposed purchaser, Tag Along Selling Shareholder shall not
sell any of its Shares to the proposed purchaser.
Section 6.4 Legend on Certificates.
Each party hereto understands and acknowledges that the Company's Share
transfer records will be noted to reflect the restrictions on transferability of
the shares contained herein and that certificates evidencing the Shares will
bear the following legends:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE SALE, ASSIGNMENT, TRANSFER, CONVEYANCE, EXCHANGE, MORTGAGE, GRANT OF A
SECURITY INTEREST IN, GIFT, ENCUMBRANCE, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE OR ANY INTEREST
THEREIN IS RESTRICTED BY AND SUBJECT TO A SHAREHOLDERS' AGREEMENT, INCLUDING THE
LIEN PROVISIONS THEREIN. A COPY OF SAID AGREEMENT IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY."
Section 6.5 Registration of Share Transfers.
The Company shall promptly register any Transfer of Shares or warrants
made in accordance with the provisions of this Agreement and the Memorandum and
Articles of Association.
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Section 6.6 Prohibition of Encumbrances of Shares.
Except as othewise permitted by this Agreement, a Shareholder other
than Intrinsic, Acer, Mitsubishi,Index and Temasek shall not permit any
encumbrance to be placed on any of its Shares at any time without the prior
consent of the other Shareholders.
ARTICLE VII
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 7.1 Founding Shareholders Representations and Warranties.
Each of the Founding Shareholders except Lunar Group represents and warrants to
the other parties hereto that:
(i) this Agreement constitutes a valid, legal and binding
obligation on him enforceable against him in accordance with its terms,
except as limited by bankruptcy and other similar laws affecting
creditors' rights generally and limitations on the availability of
equitable remedies;
(ii) the execution, delivery and performance of this
Agreement by him will not conflict with, violate, result in a breach of
or default under, or result in the imposition or creation of any
encumbrance pursuant to, any provisions of any agreement or instrument
to which he is a party or by which any of his properties or assets are
bound; and
(iii) the execution, delivery and performance of this
Agreement by him will not violate any applicable law, rule, regulation,
order, injunction or decree presently in effect.
Section 7.2 Mitsubishi, Index, Temasek, Acer, Icon, Intrinsic and
Lunar Group Representations and Warranties.
Each of Mitsubishi, Index, Temasek, Acer, Icon, Intrinsic and Lunar
Group severally represents and warrants to the other parties hereto that:
(i) it is an entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization and
has all requisite corporate power and authority to enter into this
Agreement and to carry out the transactions contemplated by this
Agreement;
(ii) all actions required to be taken by it to authorize
the execution, delivery and performance of this Agreement by it have
been properly taken, and this Agreement constitutes its valid, legal
and binding obligation, enforceable against it in accordance with its
terms, except as limited by bankruptcy and other similar laws affecting
creditors' rights generally and limitations on the availability of
equitable remedies;
(iii) the execution, delivery and performance of this
Agreement by it will not conflict with, violate, result in a breach of
or default under, or result in the imposition or creation of any
encumbrance pursuant to, any provisions of its charter or by-laws, or
any other similar governing instruments, or any agreement or instrument
to which it is a party or by which it or any of its properties or
assets are bound; and
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(iv) the execution, delivery and performance of this
Agreement by it will not violate any applicable law, rule, regulation,
order, injunction or decree presently in effect.
Section 7.3 Founding Shareholders Undertaking.
Each of the Founding Shareholders (including Xxxxx Xxxxxx and Xxxxxxx Xxxxxx)
covenants that from the date hereof until the earlier to occur of the
consummation of the Initial Public Offering or the termination of this
Agreement:
(i) subject to Section 7.3 (iv) below, for so long as he
is a director or serves in a similar capacity with the Company or its
Subsidiaries, he shall devote substantially all of his professional
time to Intrinsic and its Subsidiaries and shall not participate in any
manner in the management or operation of any business other than that
of Intrinsic or any of its Subsidiaries or serving on the Board of
Directors of the Company and its Subsidiaries; if he is no longer a
director of the Company or its Subsidiaries, he shall not be employed
by or participate in any manner in the management or operation of any
business or entity that is or may reasonably become a competitor of the
Company or its Subsidiaries, other than his employment with Intrinsic
or any of its Subsidiaries, until the later to occur of (A) 24 months
from the Closing Date or (B) 12 months after the date of termination of
service as a director of the Company or any Subsidiary;
(ii) subject to Section 7.3 (iv) below, he shall conduct
all his business activities relating to the purposes set forth in
Section 2.2 through the Company and its Subsidiaries or through
Intrinsic and its subsidiaries; and
(iii) he shall not beneficially own, directly or
indirectly, any business or entity that is or may reasonably become a
competitor of the Company or its Subsidiaries; except that the
foregoing restriction will not apply to passive investment in up to 3%
of any publicly listed company and the existing investments of the
Founding Shareholders as of the Closing Date listed on Schedule 7.3
attached hereto.
(iv) in respect of Xxxx Xxxxxx, he shall not be subject to
Sections 7.3(i) and (ii) above for as long as he (1) shall be employed
by Schlumberger Limited, or any of its Subsidiaries or Affiliates
(collectively, "Schlumberger"), (2) resigns as a director of the
Company within 30 days after the Closing Date, and does not act as an
officer, employee, consultant or in similar capacities, of the Company
after the Closing Date, and (3) executes a confidentiality agreement,
reasonably satisfactory to Intrinsic with the Company by the Closing
Date. If Shao Xiaoli's employment with Schlumberger shall terminate, he
shall not be employed by or participate in any manner in the management
or operation of any business or entity that is or may reasonably become
a competitor of the Company or its Subsidiaries (other than entering
into employment with or being a consultant for Intrinsic or any of its
Subsidiaries) until 12 months from the later of Shao Xiaoli's
termination of employment with Schlumberger and date of resignation as
a director of the Company. If Xxxx Xxxxxx shall begin employment, enter
into a consultancy or similar relationships with the Company, then the
provisions in Section 7.3(i) and (ii) shall be applicable to and
binding on him, notwithstanding the foregoing provisions.
Section 7.4 Confidentiality.
No Shareholder nor any of its Affiliates, agents or employees shall
reveal to any third party any confidential information concerning the Company,
the Linktone Entities, any Subsidiary, the other Shareholders, their Affiliates
or this Agreement and they shall use such information only to evaluate their
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investment in the Company, and shall not use any such information in any manner
which may directly or indirectly adversely affect the Company, Linktone
Entities, any Subsidiary, the other Shareholders and their respective
Affiliates; provided that such information may be disclosed to third parties (i)
to the extent reasonably required to accomplish any Transfer permitted by
Article VI, if the Transferee agrees in writing to the reasonable satisfaction
of the Company to keep such information confidential (ii) as necessary in
connection with the sale or offering of Shares by the Shareholders in accordance
with Article IX, if the Transferee agrees in writing to the reasonable
satisfaction of the Company to keep such information confidential, (iii) as
required by law or pursuant to any legal proceedings or order of any court
binding on such Shareholder, or the rules of any recognized stock exchange or
other regulatory body, or (iv) who are the professional or legal advisors of a
Shareholder or any of its Affiliates. This restriction shall cease to be binding
in respect of information which has become available as a matter of public
record through no act or omission of such Shareholder or its Affiliates, agents
and employees, or to the extent such information was in the possession of such
Shareholder or its Affiliates prior to its earliest receipt from another
Shareholder, the Company, the Linktone Entity or any Subsidiary. The
confidentiality provisions in this Section 7.4 shall survive the expiration or
termination of this Agreement by three years.
ARTICLE VIII
DISPUTE RESOLUTION
Section 8.1 Arbitration.
(a) Except as otherwise provided in this Agreement, any dispute,
controversy or claim arising out of or in connection with this Agreement, or the
breach, termination or validity thereof, shall be finally settled by an
arbitrator under the rules of the International Chamber of Commerce (the "ICC").
The place of arbitration shall be in Hong Kong, and the language used in the
arbitral proceedings shall be English.
(b) The arbitrator shall be appointed by mutual consent of the
parties in accordance with the ICC rules regarding the appointment of
arbitrators. If the parties shall fail to reach mutual consent in appointing the
arbitrator, the disputing parties shall each appoint one arbitrator from the ICC
roster of arbitrators, and those arbitrators shall jointly appoint an additional
arbitrator from the ICC roster of arbitrators.
(c) The arbitral proceeding shall accord to each of the parties
the right of cross-examination of witnesses, the right to provide witnesses,
including expert witnesses, and the right to make both written and oral
submissions.
(d) The arbitral award made and granted by the arbitrator shall be
final, binding and incontestable and may be used as a basis for judgement
thereon in any court having jurisdiction. All costs of arbitration (including,
without limitation, those incurred in the appointment of arbitrator) shall be
apportioned in the arbitral award.
(e) No person who is, or has been, an employee or agent of, or
consultant or counsel to, any Shareholder or any Affiliate thereof shall be
eligible to act as an arbitrator at any time.
Section 8.2 Court Action.
None of the Shareholders shall be entitled to commence or maintain any
action in a court of law (including any appeal against or review of the arbitral
award) upon any matter in dispute arising out of or
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relating to or in connection with this Agreement, except for the enforcement of
an arbitral award granted pursuant to this Agreement.
Section 8.3 Waiver of Immunity.
To the extent that any Shareholder (including assignees of any such
party's rights or obligations hereunder) may be entitled, in any jurisdiction,
to claim for itself or its revenues, assets or properties, immunity from service
of process, suit, the jurisdiction of any court, an interlocutory order or
injunction or the enforcement of the same against its property in such court,
attachment prior to judgement, attachment in aid of execution of an arbitral
award or judgement (interlocutory or final) or any other legal process, and to
the extent that, in any such jurisdiction there may be attributed such immunity
(whether claimed or not), each party hereto hereby irrevocably waives, such
immunity.
Section 8.4 Continued Performance.
This Agreement and the rights and obligations of the parties shall
remain in full force and effect pending the award in any arbitration proceeding
hereunder.
Section 8.5 Survival.
The provisions contained in this Article VIII shall survive the
expiration or termination of this Agreement.
ARTICLE IX
INITIAL PUBLIC OFFERING; REGISTRATION RIGHTS; TRADE SALE
Section 9.1 Initial Public Offering.
The Company, the Founding Shareholders, the Series B Preferred
Shareholders, the Series C Preferred Shareholders, the Series D
Preferred Shareholders, the Series E Shareholders and Icon undertake to
use commercially reasonable efforts to complete an Initial Public
Offering as soon as commercially appropriate. The Shareholders agree to
cooperate in good faith and take measures reasonably required to effect
such Initial Public Offering, including procuring its appointed
directors and managers to assist the lead managers and underwriters and
to take all necessary action at the reasonably appropriate time,
including without limitation the conversion of Preferred Shares into
Common Shares upon the request of Acer, Icon, Intrinsic, Temasek,
Mitsubishi and Index amendments to corporate documents, financing and
operating arrangements, and obtaining any necessary consents from third
parties, all in accordance with the provisions of this Article IX.
Section 9.2 Demand Registration.
(a) Subject to the provisions of Section 9.2(c) and 9.4, at any
time after earlier of (i) two years after the Closing Date, or (ii) nine months
after the Initial Public Offering, any of Intrinsic, Acer, Mitsubishi, Index,
Temasek and Icon may give written notice to the Company requesting the
registration of the Registrable Securities held by them, including Common Shares
issued or issuable upon conversion of Preferred Shares at the option of any
Preferred Shareholder (provided that the aggregate offering price of such
Registrable Securities is expected to be at least US$10 million) pursuant to the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the "Securities Act"), and thereupon, the Company shall promptly (1)
provide written notice to all other holders of Registrable Securities who have
not so requested registration, and allow such holders the opportunity (but not
the right if they do not otherwise have such right) to participate in such
registration, (2) provide written notice
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to all Common Shareholders to allow them the opportunity (but not the right if
they do not otherwise have such right) to participate in such registration, and
(3) use commercially reasonable efforts to effect the registration of all such
Registrable Securities under the Securities Act no later than 120 days from the
date of the demand made pursuant to this Section 9.2. The Company and
Shareholders shall use commercially reasonable efforts to cause each
registration statement filed with the U.S. Securities and Exchange Commission
(the "Commission") pursuant to this Section 9.2 to remain effective until the
first to occur of (x) the sale of all of the Registrable Securities registered
under the Securities Act pursuant to such registration statement or (y) the date
that is 180 days following the date such registration statement was declared
effective by the Commission, excluding any periods during which the Commission
shall have issued any stop order with respect to such registration statement.
The Company and Shareholders shall select the advisors, managing underwriter or
underwriters for any offering of Shares under this Section 9.2, subject to the
provisions of Section 4.4.
(b) If and to the extent requested by the managing underwriter of
any underwritten offering, the Company agrees (i) not to effect any public or
private sale or distribution of its Equity Linked Securities, including a sale
pursuant to Regulation D under the Securities Act, during the period specified
by such managing underwriter and (ii) to use commercially reasonable efforts to
cause each holder of its privately placed Equity Linked Securities purchased
from the Company at any time on or after the date of this Agreement to agree not
to effect any public sale or distribution of any such securities during the ten
Business Day period prior to and the 120-day period beginning on the effective
date of the registration statement filed pursuant to this Section 9.2, including
a sale pursuant to Rule 144 under the Securities Act (except as part of such
underwritten registration, if permitted).
(c) If the Company shall furnish to the holders of Registrable
Securities a certificate of the President of the Company that majority of the
members of the Board of Directors has concluded in good faith that a demand
registration of Registrable Securities by the Company pursuant to this Section
9.2 would (i) adversely affect the Company's plans for an Initial Public
Offering or (ii) adversely affect the Company for any other reason, the Company
may delay any such demand registration for up to three months, but in no case
may the Company invoke the provisions of this Section 9.2(c) more than once in
any 12 month period.
(d) Intrinsic shall be entitled to two effective registrations
pursuant to requests made at least nine months apart under this Section 9.2.
Each of Acer, Mitsubishi, Index, Temasek and Icon shall be entitled to one
effective registration under this Section 9.2.
(e) If and to the extent requested by the managing underwriter of
any underwritten offering, except pursuant to a registration statement filed
pursuant to this Section 9.2, each Shareholder agrees not to effect any sale or
distribution (other than private sales of Shares, subject to Article VI, to a
purchaser or assignee who agrees to be bound by the terms of this Section 9.2)
of any Shares during the ten Business Day period prior to, and during the
120-day period beginning on, the effective date of the registration statement
filed pursuant to this Section 9.2.
(f) Notwithstanding the foregoing, no Shareholder shall be
entitled to initiate a demand registration under Section 9.2 if the total number
of Registrable Securities to be sold by such Shareholder (and any affiliate of
the Shareholder with whom such Shareholder must aggregate its sales under Rule
144) can be presently sold in any 90-day period without registration in
compliance with Rule 144; provided that nothing in this sentence shall prevent
such Shareholder from exercising its rights under Section 9.3.
Section 9.3 Piggy-Back Registration.
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(a) Subject to the provisions of Section 9.4, if the Company at
any time (other than pursuant to Section 9.2) proposes to register for sale any
Equity Linked Security issued by the Company under the Securities Act (other
than pursuant to a registration statement on Form S-4, F-4 or S-8 or any
successor forms thereto) or, in any jurisdiction other than the United States,
it shall each such time give written notice (the "Company Registration Notice")
to the holders of Registrable Securities of its intention to do so no later than
30 days prior to the filing of such registration statement or listing
application. The Company shall notify each of the holders of Registrable
Securities in writing if the Company grants to any other Person, other than
Acer, Intrinsic, Mitsubishi, Index, Temasek or Icon, the right to require the
Company to register, under the Securities Act or any other applicable law, any
Equity Linked Securities issued by the Company.
(b) Upon the written request of any holder of Registrable
Securities given within 25 days after receipt of any Company Registration
Notice, the Company shall, subject to the provisions of Section 9.4, cause all
Registrable Securities designated by such holder to be included in such
registration statement or listing application; provided, however, if the Company
elects to withdraw or delay any registration statement or listing application
contemplated by the Company Registration Notice at any time prior to the
effective date thereof, the Company shall be relieved of its obligations to
register or list the Registrable Securities hereunder (but not of its obligation
to pay the registration expenses associated therewith). Notwithstanding the
foregoing, the demand registration rights of Intrinsic, Acer, Mitsubishi, Index,
Temasek and Icon set out under Section 9.2 shall not be prejudiced and each of
Intrinsic, Acer, Mitsubishi, Index, Temasek or Icon are entitled to request to
effect the registration of the Registration Securities pursuant to Section 9.2
(assuming the conditions thereof are complied with). No registration or Initial
Public Offering effected under this Section 9.3 shall relieve the Company of its
obligation to effect any registration under Section 9.2.
Section 9.4 Adjustments to Registration.
If for any offering pursuant to Section 9.2 or Section 9.3 the managing
underwriter, if any, advises that marketing factors require that the total
number of securities to be registered of the Company or such requesting
Shareholder plus the number of securities sought to be registered by any other
Person be limited, and (i) such registration is a registration effected pursuant
to a demand made under Section 9.2, then the securities included in such
registration shall include: first, the Registrable Securities sought to be
registered by the initiating holders thereof exercising such demand right, on a
pro rata basis, and second, to the extent that such securities may be included
in such registration, all other securities of the Company duly requested to be
included in such registration statement, on a pro rata basis, or (ii) such
registration is a registration effected pursuant to Section 9.3, then the
securities included in such registration shall include: first, all securities of
the Company proposed to be sold by the Company for its own account, second, the
securities of the Company proposed to be sold by Acer, Icon, Mitsubishi, Index,
Temasek and Intrinsic, on a pro rata basis, and third, to the extent such
securities may be included in such registration, all other securities of the
Company duly requested to be included in such registration, on a pro rata basis.
Inclusion of securities of the Company in a registration on a pro rata basis
shall be determined based on such ratio that the number or value of securities
sought to be registered by such holder exercising a demand right or other holder
bears to the total number or value of securities held by all such holders
exercising a demand right or other such holders seeking registration,
respectively.
Section 9.5 Registration Procedures.
(a) If and whenever the Company is required by the provisions of
this Article IX to cause or to use commercially reasonable efforts to effect the
registration of any Registrable Securities pursuant to the Securities Act, the
Company shall use commercially reasonable efforts to comply with all applicable
rules and regulations of the Commission and, except as otherwise provided in
this Agreement, promptly:
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(i) cooperate with the sellers of Registrable Securities
and their underwriters and enter into a usual and customary
underwriting agreement with respect thereto and take all such other
reasonable actions as are necessary or advisable to permit, expedite
and facilitate the disposition of such shares in the manner
contemplated by the related registration statement in each case to the
same extent as if all the securities then being offered were for the
account of the Company;
(ii) provide to any seller of Registrable Securities, any
underwriter participating in any distribution thereof pursuant to a
registration statement, and any attorney, accountant or other agent
retained by any such seller or underwriter, reasonable access upon
reasonable prior notice to appropriate Company officers and employees
to answer questions and to supply information reasonably requested by
any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement; provided that each such
Person shall have executed a confidentiality agreement in form and
substance reasonably satisfactory to the Company that restricts
disclosure of such information unless required by applicable law;
(iii) if the registration statement relates to an
underwritten offering, furnish or cause to be furnished to each such
seller of Registrable Securities, a copy of the opinion of counsel for
the Company, and a copy of the "comfort" letter signed by the
independent public accountants who have certified the Company's
financial statements included in the registration statement, delivered
on the closing date to the underwriters of such shares;
(iv) prepare and file with the Commission a registration
statement with respect to such securities and use commercially
reasonable efforts to cause such registration statement to become and
remain effective for 180 days; and prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of
all securities covered by such registration statement whenever the
seller or sellers of Registrable Securities shall desire to sell or
otherwise dispose of the same; provided that no such registration
statement will be filed by the Company until counsel for the sellers of
Registrable Securities shall have had a reasonable opportunity to
review the same and approve any portion of such registration statement
describing or referring to such sellers, and no amendment to any such
registration statement initially naming such sellers as selling
shareholders shall be filed with any governmental authority (including
the Commission) until such sellers shall have had at least five
Business Days to review such registration statement as originally filed
and theretofore amended and to exercise their right to review the same
and approve any portion of such registration statement describing or
referring to such sellers;
(v) furnish to each seller of Registrable Securities such
numbers of copies of a prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such
other documents, as such seller may reasonably request in order to
facilitate the public sale or other disposition of such seller's
securities;
(vi) use commercially reasonable efforts to register or
qualify the securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as each
seller of Registrable Securities shall reasonably request, and do any
and all other acts which may be necessary or advisable to enable such
seller to consummate the public sale or other disposition of the
securities owned by such seller in such jurisdictions, except that the
Company shall not for any such purpose be required to qualify to do
business as a foreign corporation in any jurisdiction wherein it is not
so qualified or to file therein any general consent to service;
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(vii) in the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any
order suspending or preventing the use of any prospectus or suspending
the qualification of any shares for sale in any jurisdiction, use
commercially reasonable efforts promptly to obtain its withdrawal;
(viii) make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least 12 months, beginning with the first fiscal quarter beginning
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act; and
(ix) list such Registrable Securities on any securities
exchange on which any securities of the Company are then listed, if the
listing of such securities is then permitted under the rules of such
exchange.
(b) The Shareholders agree that, upon receipt of any written
notice from the Company of (i) any request by the Commission for amendments or
supplements to a registration statement or related prospectus, (ii) the issuance
by the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceeding for that purpose,
(iii) receipt by the Company of any notification with respect to the suspension
or qualification of any shares for sale in any jurisdiction or the initiation of
any proceeding for such purpose, and (iv) the occurrence of any event which
requires the making of any changes in a registration statement or related
prospectus so that such documents will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, the Shareholders
will forthwith discontinue disposition of securities covered by such
registration statement or prospectus (which discontinuance as to the
circumstance described in clause (iii) shall be limited to the particular
jurisdiction involved and shall be subject to the Company's use of commercially
reasonable efforts to promptly cause such suspension or qualification to be
terminated) until the Shareholders shall have received copies of a supplemented
or amended prospectus or written notice by the Company that the use of the
applicable prospectus may be resumed, and any additional or supplemental filings
which are incorporated by reference in such prospectus. At the request of the
Company, the Shareholders will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in the Shareholders'
possession, of the prospectus covering such securities current at the time of
receipt of such notice.
Section 9.6 Expenses; Limitations on Registration.
(a) All expenses incident to the Company's performance of its
obligations in connection with any registration of the Registrable Securities
under this Agreement including, without limitation, printing expenses, fees and
disbursements of counsel for the Company, fees of the National Association of
Securities Dealers, Inc. and the Commission in connection with their review of
any offering contemplated in any registration statement, and expenses of any
special audits and independent consultant reports which shall be necessary to
comply with the Securities Act and other applicable law in connection with any
such registration shall be paid by the Company. In connection with each
registration, the Company shall pay (i) all registration and filing fees for the
Registrable Securities and (ii) expenses of complying with the securities or
blue sky laws of any jurisdictions pursuant to Section 9.5(a)(vi), and (iii)
reasonable fees and expenses of one law firm that acts as special counsel for
the Shareholders.
(b) It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Article IX in respect of the
Registrable Securities which are to be registered at the request of any
Shareholder that (i) subject to the immediately preceding paragraph, the Company
shall have received an undertaking satisfactory to it from such Shareholder to
pay, or have deducted from the proceeds from the sale of securities pursuant to
a registration, all underwriters' discounts, selling
-29-
commissions, stock transfer taxes and other similar selling expenses to be
incurred in respect of the sale of Registrable Securities by such Shareholder,
and (ii) such Shareholder shall furnish to the Company such information
regarding the securities held by such Shareholder and the intended method of
disposition of the Registrable Securities as the Company shall reasonably
request and as shall be required in connection with the action to be taken by
the Company.
Section 9.7 Indemnification.
(a) In the event of any registration of any Registrable Securities
pursuant to this Article IX, the Company shall indemnify and hold harmless the
seller of such Registrable Securities, such seller's directors, partners,
employees, agents and officers, and each other Person, if any, who controls,
within the meaning of the Securities Act (a "Controlling Person"), such seller
against any Losses to which such seller or any such director or officer or
Controlling Person may become subject under the Securities Act or any other U.S.
or foreign statute or rule or at common law, insofar as such Losses (or actions
in respect thereof) arise out of or are based upon (i) any alleged untrue
statement of any material fact contained, on the effective date thereof, in any
registration statement under which such securities were registered under the
Securities Act, or in any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (ii) any alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and shall reimburse such seller or such
director, officer, partner, employee, agent or Controlling Person for any legal
or any other expenses reasonably incurred, as incurred, by such seller or such
director, officer, partner, employees, agent or Controlling Person in connection
with investigating or defending any such Loss; provided, however, that the
Company shall not be liable in any such case to the extent that any such Loss
arises out of or is based upon any alleged untrue statement or alleged omission
made in such registration statement, preliminary prospectus, prospectus, or
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such seller specifically for use
therein; provided, further, that the foregoing indemnity agreement shall not
inure to the benefit of any seller of Registrable Securities from whom the
Person asserting any such Losses purchased Registrable Securities, or any
Controlling Person, if a copy of the prospectus (as then amended or
supplemented) was provided by the Company to such seller and was not sent or
given by or on behalf of such seller of Registrable Securities to such Person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Registrable Securities to such Person, and if
such prospectus (as so amended or supplemented) would have cured the defect
giving rise to such Losses.
(b) Each holder of any Registrable Securities shall, by acceptance
thereof, indemnify and hold harmless the Company, its directors and officers and
each other Person, if any, who controls the Company against any Losses to which
the Company or any such director or officer or any other Person controlling the
Company may become subject under the Securities Act or under any other U.S. or
foreign statute or rule or at common law, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon (i) any alleged untrue statement
of any material fact contained, on the effective date thereof, in any
registration statement under which securities were registered, or in any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent that such
alleged untrue statement or alleged omission was contained in written
information furnished to the Company by such holder specifically for use
therein, and shall reimburse the Company or such director, officer or other
Controlling Person for any legal or any other expenses reasonably incurred, as
incurred, in connection with investigating or defending any such Loss, provided
that in no event shall any such holder be required to indemnify for Losses in
excess of the proceeds received by such holder from the disposition of
Registrable Securities pursuant to such registration statement.
-30-
(c) The indemnity obligations provided in this Section 9.7 shall
remain in full force and effect regardless of any investigation made by or on
behalf of any seller or such director, officer, partner, employee, agent or
Controlling Person, or by or on behalf of the Company, its officers or directors
or any other Person controlling the Company and shall survive the transfer of
such Registrable Securities by such seller and the expiration or termination of
this Agreement.
(d) Indemnification similar to that specified in Sections 9.7(a)
and 9.7(b) shall be given by the Company and each holder of any Registrable
Securities (with such modifications as shall be appropriate) to any underwriter
and indemnification that is customarily given by underwriters in public
offerings in the applicable place of registration or qualification shall be
given by the underwriter to the Company and each holder of any Registrable
Securities, in each case with respect to any required registration or other
qualification of any Registrable Securities under any applicable law. The
indemnity and expense reimbursements obligations of the Company and the holders
provided in this Section 9.7 shall be in addition to any liability the Company
and the holders may otherwise have.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices.
All notices and other communications provided for hereunder shall be in
writing and in English and shall be deemed to have been duly given if mailed, by
prepaid first class registered letter, or if sent by facsimile, telex or
telegram, or if delivered by hand or international express courier, when
confirmation is received, in each case as follows:
Linktone Ltd.
x/x Xxxxxxx Xxxx Xxxxx, Xxxxx 0000
Xxxxxxxx 000000 PRC
Telephone: x00 00 0000 0000
Facsimile x00 00 0000 0000
Attention: Xxxxxx Xxxx
Intrinsic Technology (Holdings) Ltd.
x/x Xxxxxxx Xxxx Xxxxx, 0xx Xxxxx
Xxxxxxxx 000000 PRC
Telephone: x00 00 0000 0000
Facsimile: x00 00 0000 0000
Attention: Xxxxx Xxxxxx
and copied (in each case) to
Thacher, Xxxxxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
[between Fifth Avenue
and (Sixth) Avenue of the Americas]
XXX XXXX XX 00000, XXX
Telephone: x0 000 000 0000
Facsimile: x0 000 000 0000
Attention: Xxxx X. Xxxxxxx
-31-
IP Fund One, X.X.
Xxxxxx House
P.O. Box 309
Xxxxxx Town
Grand Cayman, Cayman Islands
British West Indies
x/x 0X-X
000 Xxx Xxx X. Xxxx
Xxxxxx 000, Xxxxxx
Telephone: 000-0-0000-0000
Facsimile: 886-2-8712-9091
Attention: Xxxxxxx Xxxxx
and copied to
Acer Technology Ventures Asia Pacific Ltd.
x/x Xxxx Xxxx Xxxxx
Xxxx 000
000 Xxxx Xxx Xxxx Xxxx
Xxxxxxxx 000000
Xxxxx
Telephone: 00 00 0000 0000
Facsimile: 86 21 6431 1731
Attention: York Chen
Xxx Xx
c/o Xxxxxxx Xxxxxxxx and Wood
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx
XX 00000, XXX
Telephone: 000 000 0000
Facsimile: 000 000 0000
Attention: Xxxx X. Xxxxxxx
Xxx Xxxxxxx
c/o Xxxxxxx Xxxxxxxx and Xxxx
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx
XX 00000, XXX
Telephone: 000 000 0000
Facsimile: 000 000 0000
Attention: Xxxx X. Xxxxxxx
Xxxxxx Xxxx
x/x Xxxxxxxxxx xxx Xxxxxxxx
Xxxxxxx, Xxxx Xxxx
Telephone: (852)
Facsimile: (852)
Attention: Xxxxxx Xxxx, Senior Partner
-32-
Lunar Occidental Group LLC
c/o Xxxxxxx Xxxxxxxx and Xxxx
0 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx
XX 00000, XXX
Telephone: 000 000 0000
Facsimile: 000 000 0000
Attention: Xxxx X. Xxxxxxx
Mitsubishi Corporation
Mitsubishi Corporation Building
96 Xxxx Xxxx Xx, Xxxxxx Xxx Xxxx
Xxxxxxxx 000000
Email: xxxx.xxxx@xx.xxxxxxxxxxxxxx.xxx
Attention: Xxxx Xxxx
Index Corporation
Carrot Tower 00xx Xxxxx 0-0-0
Xxxxxxxx, Xxxxxxxx-xx
Xxxxx, Xxxxx 154-0004
Email: xxxx@xxxxxxxx.xx.xx
Attention: Chen Xxx Xxxx
Hong Lim Investments Pte Ltd
0, Xxxxxxx Xxx #00-00
Xxxxxxx Xxxxx
Xxxxxxxxx 000000
Telephone: x00 0000 000
Facsimile: x00 000 0000
Email: xxxxxxx@xxxxxxx.xxx.xx
(cc. xxxxxxxx@xxxxxxx.xxx.xx)
Attention: Company Secretary
[Names and contact information of Series A Preferred
Shareholders as set forth on signature pages]
Section 10.2 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Section 10.3 Headings.
The headings of the several sections and paragraphs of this Agreement
are inserted for reference only and shall not limit or otherwise affect the
meaning thereof.
-33-
Section 10.4 Assignment.
No party shall Transfer all or any part of its rights or obligations
under this Agreement, except (i) in connection with a Transfer of Shares
effected in accordance with the terms of this Agreement or (ii) with the prior
written consent of all other parties, which consent shall not be unreasonably
withheld or delayed. No assignment in connection with a Permitted Transfer shall
relieve, release or discharge the assigning party of its obligations under this
Agreement, except as expressly provided in the written consent. No rights and
obligations under this Agreement shall be assigned unless such assignment is in
accordance with this Article. The rights in respect of each of the Shareholders
herein are assignable, except that:
(i) the information rights provided under Section 5.3
shall not be assignable to any Transferee if 75% of the Company's
directors appointed by the Shareholders other than the Shareholder
assigning such rights determine, in good faith, that the Transferee is
a competitor of the Company;
(ii) in respect of Icon, other than in a Permitted
Transfer, none of the rights provided under Sections 4.1 or 9.2(d)
shall be assignable to any Transferee.
Section 10.5 No Third Party Beneficiary.
Nothing in this Agreement shall confer any rights upon any person or
entity which is not a party to this Agreement, except as expressly set forth
herein.
Section 10.6 Further Assurances.
Each of the parties hereto shall give such further assurance, provide
such further information, take such further actions and execute and deliver such
further documents and instruments, as are, in each case, within its power to
give, provide and take so as to give full effect to the provisions of this
Agreement. Without limitation of the foregoing, each Shareholder shall, subject
to applicable law, vote its Shares, take all actions necessary and procure that
its appointed directors take all action necessary, to (a) implement the
provisions of this Agreement, including without limitation the minority
protection rights in Section 4.4 and the Memorandum and Articles of Association,
and (b) ensure that the Memorandum and Articles of Association and the
respective memorandum and articles of association of each of the Company's
Subsidiaries do not at any time conflict with any provision of this Agreement.
Section 10.7 Language.
This Agreement shall be executed in the English language and such
English version shall prevail over any other translation. All documents
delivered or executed in connection herewith shall be in English.
Section 10.8 Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
Section 10.9 Entire Agreement; Termination of Original Shareholders
Agreements.
This Agreement and the Series E Share Subscription Agreement (with
respect to Temasek) constitute the entire agreement among the parties hereto and
supersede all prior negotiations, statements
-34-
and agreements of the parties hereto with respect to the subject matter hereof.
The Original Shareholders hereby agree that the Original Shareholders Agreements
shall be terminated and be of no further force or effect upon the execution and
delivery of this Agreement.
Section 10.10 Amendment and Waiver.
No amendment or waiver hereto shall be effective or binding on any of
the parties hereto unless in writing and signed by each of the parties, except
with respect to Series A Preferred Shareholders, any amendment or waiver shall
be effective and binding on all Series A Preferred Shareholders if agreed to by
the holders of a majority of the Series A Preferred Shares. Any waiver by any of
the parties hereto of any right hereunder or any breach hereof by another party
shall not constitute a waiver of any other right or any other breach by such
other party, whether of a similar or different nature thereto.
Section 10.11 Remedies.
In the event of any breach or threatened breach of this Agreement by
any party hereto, the other parties shall be entitled to equitable relief in
addition to any other rights and remedies available to them. Subject to Article
VIII, each party hereby acknowledges that the remedies at law of the other
parties for a breach or threatened breach of this Agreement would be inadequate
and, in recognition of this fact, any party to this Agreement, without posting
any bond, and in addition to all other remedies which may be available, shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
Section 10.12 Non-Recourse.
The obligations of the Shareholders under this Agreement are
obligations of such Shareholders only and no recourse shall be available against
any officer, director or shareholder of any Shareholder.
Section 10.13 Severability.
In the event that any one or more of the provisions contained herein or
the application thereof in any circumstance is held invalid, illegal or
unenforceable in one jurisdiction or in any respect for any reason, the
validity, legality and enforceability of any such provision in other
jurisdictions or in every other respect and of the remaining provisions
contained herein shall not be in any way impaired thereby, it being intended
that all of the rights and privileges of the parties hereto shall be enforceable
to the fullest extent permitted by law.
Section 10.14 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
Section 10.15 No Joint Venture.
The parties to this Agreement hereby acknowledge that it is their
intention and understanding that the transactions contemplated hereby do not in
any way constitute or imply the formation of a joint venture or partnership
between the parties for tax purposes, nor confer upon any party the right or
power to act as agent for, or the responsibility for the acts or commitments of,
any other party hereto.
Section 10.16 Aggregation of Shares.
-35-
All Shares held or acquired by Affiliates of any Person shall be
aggregated together for the purpose of determining the availability of rights
under this Agreement.
Section 10.17 Indemnification.
To the fullest extent permitted by law, each Shareholder shall
(severally, and not jointly) indemnify the Company and the other Shareholders
and hold them harmless from and against any and all losses, costs, liabilities,
damages and expenses (including reasonable attorney's fees and disbursements)
("Losses") they may incur on account of any breach of any provision of this
Agreement by such breaching Shareholder. The provisions contained in this
Section 10.17 shall survive the expiration or termination of this Agreement.
Section 10.18 Submission to Jurisdiction.
Each of the parties hereto irrevocably (i) agrees that any legal suit,
action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in any state or federal court
located in the Southern District of New York , (ii) waives, to the fullest
extent it may effectively do so, any objection which it may now or hereafter
have to the laying of venue of any such proceeding and (iii) submits to the
non-exclusive personal jurisdiction of such courts in any such suit, action or
proceeding.
Section 10.19 Signed Originals Not Necessary.
A facsimile transmission of a manually executed counterpart signature
page of this Agreement, and an image of a manually executed counterpart
signature page sent via e-mail to an authorized representative of the Company
will constitute an original executed signature page of this Agreement.
Section 10.20 QEF Election; U.S. Tax Issues.
The parties hereto understand and agree that, if the Company becomes a
passive foreign investment company for United States federal income tax
purposes, Shareholders that are deemed United States entities may elect to treat
the Company as a qualified electing fund ("QEF") within the meaning of section
1295 of the Internal Revenue Code. The Company agrees to take such action and
provide such information as may be necessary (including providing a PFIC Annual
Information Statement) within the meaning of Treasury Regulations section
1.1295-1(f) to permit such Shareholders and their Affiliates to make such an
election.
The Company and the Shareholders hereby agree that they will cooperate
in good faith with the reasonable requests of Shareholders and their Affiliates
who are United States taxpayers on all matters relating to their particular
United States tax issues, including, without limitation, having the Company or
any Subsidiaries make any "check the box" elections in order that the Company or
any Subsidiaries be treated as other than corporations for United States federal
tax purposes, such election to be made effective on or prior to the date of this
Agreement.
-36-
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered as of the date and year first set forth above.
LINKTONE LTD.
By: /s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx
Chief Executive Officer
Series B Preferred Shareholders: IP FUND ONE, L.P.
By: /s/ York Chen
-----------------------------------
York Chen
Series C Preferred Shareholders: INTRINSIC TECHNOLOGY (HOLDINGS) LTD.
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx
Chief Financial Officer
Series D Preferred Shareholders: MITSUBISHI CORPORATION
By: /s/ Hajume Kimura
-----------------------------------
Division COO
eCommerce Division
INDEX CORPORATION
By: /s/ Xxxxxxxx Miura
-----------------------------------
Series E Preferred Shareholders: HONG LIM INVESTMENTS PTE LTD
By: /s/ Xxxx Xxx Xxxx Xxxx
-----------------------------------
Xxxx Xxx Xxxx Xxxx
Director
Linktone Ltd. Shareholders Agreement
Signature Page
Founding Shareholders: XXX XX
/s/ Xxx Xx
--------------------------------------
XXX XXXXXXX
/s/ Xxx Xxxxxxx
--------------------------------------
XXXX XXXXXX
/s/ Xxxx Xxxxxx
--------------------------------------
LUNAR OCCIDENTAL GROUP LLC
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Name:
Title:
Linktone Ltd. Shareholders Agreement
Signature Page
Series A Preferred Shareholders: ICON VENTURES ASIA LIMITED
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title: CEO
Xxxx Xxxxxx
Xxxxx Xxx
Xxx Xxxxx
Xxxxx Xxxxx
Xxx Xxxxx
Hiking Corporation Ltd.
Greenacre Ventures Ltd.
Orford Finance
Xxxxxx, Xxxx
Naqi, Zain
Simev Ltd.
Xxx, Xxxxxxxx H(aifeng)
Attali and Associates Venture
Bouaoudia, Xxxxx
Xxxx, Xxxxxx
Xxxxxxxx, Per
Satrap, Alrieza
Hu, An Xxx
Xxxxxxx, Xxxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxxxxx
Xxxxxx, Xxxxxx
Xxxxx, Xxx
Xxxxxxx, Xxxxxx
Xxxxxx, Xxxx
Xxxx, Xxxxxx
Xxxxxx, Xxxxx
Xx, Xxxx
Xxxxxx, Xxxx
Xxx, Xxxxxx
Xxxxxxxx, Xxxxxx
Icon Ventures Asia Ltd.
Xxx, Xxxxx
Xxxx, Xxxxx
Xxxxxx, Xxxxx
Xxxxxxxxxx, Xxxxxx
Xxxxx, Xxxxx
Xxxxxxxxx, Xxxx
Lunar Occidental LLC
Xxxxxx, Xxxx
Xxxxx, Xxxxxx
Linktone Ltd. Shareholders Agreement
Signature Page
Chalkstripe Consultants Ltd.
XxXxxxxxxx, Xxxx
Xxxxx, Xxxxxx
Xxxxxx, Xxxxxx
Atlantic Portfolio Management
Xxxxx, Xxxxxx
Xxxxxxxxx, Xxxxxx
Xxxxxx, Xxxx
WPP Global ESOP (HSBC Trustee CI Ltd)
Xxxxxx, Xxxxxxx
Langmuir, Xxxxx
Xxxxxxxxx, Xxxxxxxxxxx
Xxxxxx, Xxxxxx
XxXxxx, Xxxxxxx
Xxx Xxxxxx, Lieven
Xxxxxxxx, Xxxxxxx X
Xxxxxx, Xxxxx
Rosebud Securities Ltd.
Hu, Xxxx
Xxxxxx, Xxxxxx
Xxxxxxx, Xxxxx
Klammers, Xxxx
Xxxxxxxx, Xxxxxxx
Xxxxxx Xx, Xxxxxx X.
Xxxxxx, Xxxxxxx
Xxxxxxxx, Xxxxx
Xxxxxx, Xxxxxxx
Xxxxxx Xx, Xxxxxx
Gennotte, Xxxxxx
Xxxxx, Xxxxxxx
Xxxxxx, Xxx
Xxxx, Xxxx
Xxxx, Xxxxxx
Xxxxx, Xxxxx
Xxxxxxxx, Xxxx
Xxxxxxxx, Xxxxxxx
Xxxx, Xxxxxxx X.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx or Xxxxxxx Xxxxxx
Attorney-in-Fact
Linktone Ltd. Shareholders Agreement
Signature Page
Exhibit A
MEMORANDUM AND ARTICLES OF ASSOCIATION
OF
LINKTONE LTD.
SCHEDULE 7.3
OTHER EXISTING INVESTMENTS OF THE FOUNDING SHAREHOLDERS
Name Investments
---- -----------
1. Xxx Xx 360,200 Ordinary Shares of Intrinsic Technology (Holdings) Ltd.
2. Xxx Xxxxxxx 146,700 Ordinary Shares of Intrinsic Technology (Holdings) Ltd.
3. Xxxx Xxxxxx 155,000 Ordinary Shares of Intrinsic Technology (Holdings) Ltd.
4. Lunar Occidental, LLC 312,000 Ordinary Shares of Intrinsic Technology (Holdings) Ltd.
5. Xxxxxxx Xxxxxx 50% equity interest in Lunar Occidental, LLC
6. Xxxxx Xxxxxx 50% equity interest in Lunar Occidental, LLC
