EXHIBIT 10.34
Dated the 11th day of December 2003
(1) NINETOWNS DIGITAL WORLD TRADE HOLDINGS LIMITED
(2) JITTER BUG HOLDINGS LIMITED
(3) THE SUBSCRIBER NAMED IN SCHEDULE 1
-----------------------------------
SUBSCRIPTION AGREEMENT
for 23,400 Shares in
NINETOWNS DIGITAL WORLD TRADE
HOLDINGS LIMITED
-----------------------------------
LI & PARTNERS
[Name in Chinese]
00/X., Xxxxx Xxxx Xxxxx, Xxxxxxx, Xxxx Xxxx
[Name in Chinese]
Tel\ [Name in Chinese]: (000)0000 0000 Fax\ [Name in Chinese]: (000)0000 0000
Email : xxxxxxx@xx-xxxxxxxx.xxx
Our Ref : RL/GS/1710(1)/03
TABLE OF CONTENTS
CLAUSE HEADINGS PAGE
1. DEFINITIONS AND INTERPRETATION......................... 1
2. SUBSCRIPTION........................................... 4
3. CONSIDERATION.......................................... 4
4. CONDITIONS PRECEDENT................................... 4
5. COMPLETION............................................. 5
6. QUALIFIED IPO.......................................... 6
7. REPRESENTATIONS AND WARRANTIES......................... 6
8. UNDERTAKINGS........................................... 6
9. SUBSCRIBER's RIGHTS.................................... 7
10. FURTHER ASSURANCE...................................... 8
11. RESTRICTIONS ON COMMUNICATION AND ANNOUNCEMENTS........ 8
12. SEVERABILITY........................................... 9
13. ASSIGNMENT............................................. 9
14. COSTS.................................................. 9
15. CONTINUING EFFECT OF AGREEMENT......................... 9
16. GENERAL................................................ 9
17. NOTICES................................................ 10
18. GOVERNING LAW.......................................... 11
20. COUNTERPARTS........................................... 12
Schedule 1....................................................... 14
Limited Schedule 2............................................... 14
Schedule 2....................................................... 15
Particulars of the PRC Subsidiaries.............................. 15
Beijing Ninetowns Digital Technology Co., Ltd.................... 17
Shanghai New Take Digital Technology Co., Ltd.................... 18
Beijing Ninetowns Ports Software and Technology Co., Ltd......... 19
Schedule 3....................................................... 20
SHAREHOLDERS' AGREEMENT.......................................... 20
Schedule 4....................................................... 21
Warranties, Representation and Undertakings...................... 21
THIS AGREEMENT is made on the 29th day of November 2003
(1) NINETOWNS DIGITAL WORLD TRADE HOLDINGS LIMITED, a company incorporated in
the Cayman Islands with limited liability, having its registered office at
Century Yard, Cricket Square, Xxxxxxxx Drive, P.O. Box 2681 GT, Xxxxxx
Town, Grand Cayman, British West Indies, and its principal place of
business in Hong Kong at Units 0000-0 Xxxxxxxxx Xxxxx, 00 Xxx Xxxxx Xxxx
Xxxxxxx, Xxxx Xxxx (the "Company").
(2) JITTER BUG HOLDINGS LIMITED, a company incorporated in the British Virgin
Islands, having its registered office at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the
"Initial Shareholder").
(3) THE SUBSCRIBER NAMED IN SCHEDULE 1 (the "Subscriber").
WHEREAS:
(A) The Company has on the date of this Agreement an authorised share capital
of HK$200,000,000 divided into 2,000,000,000 Shares of HK$0.10 each.
(B) The Company has agreed to issue and allot to the Subscriber and the
Subscriber has agreed to subscribe (or procure its nominee to subscribe)
for the Subscription Shares upon the terms and conditions set out in this
Agreement.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement (including the Recitals), the following expressions
shall, unless the context otherwise requires, have the following meanings:
"ACCOUNTS" The audited balance sheets and profit and loss
accounts of the Company on a consolidated
basis as at and for the period ending on the
Accounts Date and all notes annexed thereto;
"ACCOUNTS DATE" 31 December 2002;
"AGREEMENT" This conditional subscription agreement
(including its Recitals and Schedules), as may
be amended or supplemented from time to time;
"ARTICLES" The articles of association of the Company as
the same may be amended from time to time;
"BOARD" The board of directors of the Company;
"COMPANIES ORDINANCE" The Companies Ordinance, Chapter 32 of the
Laws of Hong Kong;
"COMPLETION" Completion of the subscription of the
Subscription Shares pursuant to Clause 4;
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"COMPLETION DATE" 5 December 2003 or such other date as the
parties hereto may agree in writing;
"GROUP" the Company and its subsidiaries and "Group
Company" shall mean either the Company or any
of its subsidiaries;
"HK$" The lawful currency of Hong Kong;
"HONG KONG" the Hong Kong Special Administrative Region of
the PRC;
"INTELLECTUAL PROPERTY all rights in and relating to trade marks,
RIGHTS" copyright, patents, software and designs, and
any other intellectual property rights of
whatever nature, which are owned or registered
in the name of and developed by any Group
Company;
"LISTING RULES" the Rules Governing the Listing of Securities
on the Stock Exchange;
"MANAGEMENT ACCOUNTS DATE" 31 August 2003
"MEMORANDUM" The memorandum of association of the Company
as the same may be amended from time to time;
"PRC" the People's Republic of China;
"PRC SUBSIDIARIES" The subsidiaries of the Company in the PRC as
at the date hereof, namely Beijing New Take
Electronic Commerce Limited ([Name in
Chinese]), Beijing Ninetowns Times Electronic
Commerce Limited ([Name in Chinese]), Beijing
Ninetowns Digital Technology Limited ([Name in
Chinese]), Beijing Ninetowns Ports Software
Co. Ltd. ([Name in Chinese]) and Shanghai New
Take Digital Technology Limited ([Name in
Chinese]), particulars of which are set out in
Schedule 2;
"QUALIFIED IPO" an initial public offering of the Company's
Shares on the Main Board of the Stock
Exchange, which is expected to take place on
or before 31 December 2004 at a price that
will generate an internal rate of return of at
least 35% (net of withholding tax) per annum
(including dividend received) on the initial
investment amount from the date of issuance of
the Subscription Shares;
"SHAREHOLDERS" the holders of Shares;
"SHAREHOLDERS' the shareholders' agreement substantially in
AGREEMENT" the form set out in Schedule 3 to be entered
into between the Shareholders;
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"SHARES" ordinary shares of HK$0.10 each in the capital
of the Company;
"STOCK EXCHANGE" The Stock Exchange of Hong Kong Limited;
"SUBSCRIPTION" Subscription of 23,400 new Shares pursuant to
this Agreement;
"SUBSCRIPTION PRICE" HK$100 per Subscription Share;
"SUBSCRIPTION SHARES" the 23,400 new Shares to be allotted and
issued by the Company to the Subscriber at the
Subscription Price;
"US$" The lawful currency of the United States of
America;
"WARRANTIES" the representations, warranties and
undertakings on the part of the Warrantors
given pursuant to Clause 7 and Schedule 4;
"WARRANTORS" The Company and the Initial Shareholder.
1.2 In this Agreement:
(a) references to costs, charges, remuneration or expenses shall include
any value added tax, turnover tax or similar tax charged in respect
thereof;
(b) references to Hong Kong dollars and HK$ shall be construed as
references to the lawful currency for the time being of Hong Kong;
(c) references to any action, remedy or method of judicial proceedings
for the enforcement of rights of creditors shall include, in respect
of any jurisdiction other than Hong Kong, references to such action,
remedy or method of judicial proceedings for the enforcement of
rights or creditors available or appropriate in such jurisdiction as
shall most nearly approximate thereto;
(d) words denoting the singular number only shall include the plural
number also and vice versa;
(e) words denoting one gender only shall include the other genders and
the neuter and vice versa;
(f) words denoting persons only shall include firms and corporations and
vice versa;
(g) references to any provision of any statute (including the Listing
Rules) shall be deemed also to refer to any modification or
re-enactment thereof or any instrument, order or regulation made
thereunder or under such modification or re-enactment; and
(h) references to any document in the agreed form is to such document
which has been initialed by the parties for identification.
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1.3 Headings shall be ignored in construing this Agreement.
1.4 The Schedules are part of this Agreement and shall have effect
accordingly.
2. SUBSCRIPTION
The Company hereby agrees to allot and issue to the Subscriber and each
Subscriber, relying on the Warranties, agrees to subscribe or procure its
nominee to subscribe for the Subscription Shares in the amount stated in
the third column in Schedule 1.
3. CONSIDERATION
The consideration for the subscription for the Subscription Shares shall
be HK$2,340,000.
4. CONDITIONS PRECEDENT
4.1 Notwithstanding any other provisions of this Agreement, the obligation of
the Subscriber to make payment for the Subscription Shares referred to in
Clause 5.2 shall be conditional upon:
(a) the obtaining by all parties concerned of all necessary consents,
approvals or waivers to effect the signing and completion of this
Agreement, including without limitation the consents to and
approvals of the signing and completion of this Agreement and the
transactions contemplated hereunder by all the existing Shareholders
of the Company by way of their affirmative votes or the affirmative
vote of the director nominated by AIG Asian Opportunity Fund, L.P.
at the relevant general meeting of the Shareholders or the meeting
of the Board pursuant to the terms of the Shareholders' Agreement
and the grant of waivers by the existing Shareholders of their
respective rights (if any) in respect of the Pre-emptive Securities
(as defined in the Shareholders' Agreement) in relation to this
Agreement and the transactions contemplated hereunder;
(b) satisfactory completion of business, financial and legal due
diligence on the Group by the Subscriber with assistance from the
Company;
(c) the obtaining of all relevant consents and approvals for the
Subscription and related transactions contemplated under this
Agreement, including all internal approvals of the Company, the
respective Subscriber, any third parties' approval (if applicable)
and all relevant regulatory bodies and government approvals (if
applicable);
(d) completion and execution of all relevant investment documentation in
form and substance mutually acceptable to the Subscriber and the
Company;
(e) no adverse material changes in the Company;
(f) full approval from the Subscriber's internal investment committee
members;
(g) other reasonable conditions to be required to be fulfilled based on
due diligence results, if any.
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4.2 The Initial Shareholder shall use its best endeavours to procure the
fulfillment of the conditions precedent in this Clause and shall furnish
such information, supply such documents and do such acts and things as may
be required to enable the Subscriber to carry out the Subscriber's
investigations described herein, provided, however that notwithstanding
the conditions precedent set out in this Clause, the Subscriber may at its
sole and absolute discretion waive the fulfillment of any one or more of
the same or required that any one or more of the same be fulfilled after
payment of the Subscription Price or any part thereof as referred to in
Clause 3.
5. COMPLETION
5.1 Subject to fulfillment of the conditions set out in Clause 4.1, Completion
shall take place at the office of the Company at Xxxxx 0000-0, Xxxxxxxxx
Xxxxx, 19 Des Voeux Road Central, Hong Kong (or at such other place as the
parties hereto may agree) on the Completion Date.
5.2 At Completion :
(a) the Subscriber shall effect payment to the Company of an amount
equal to the relevant number of Subscription Shares being subscribed
by it under this Agreement, multiplied by the Subscription Price,
representing in aggregate the sum of HK$2,340,000, such payment to
be made in such means and manner as the Company may direct; and
(b) the Company shall allot and issue to the Subscriber (or its
nominees) the Subscription Shares, being 23,400 new Shares, and
shall register without registration fee the Subscriber (or his
nominees) as members and deliver or cause to be delivered to the
Subscriber the following documents :
(i) definitive document of title in respect of the Subscription
Shares in favour of the Subscriber (or its nominees);
(ii) evidence reasonably satisfactory to the Subscriber that the
conditions set out in Clause 4.1 have been fulfilled (or
waived if capable of being waived).
5.3 The Company or the Subscriber shall not be obliged to complete the
transactions hereunder unless the other party or parties complies or
comply fully with its/their obligations under Clause 5.2.
5.4 If the documents required to be delivered to the Subscriber as aforesaid
are not forthcoming for any reason or if in any other respect the
foregoing provisions of this Clause are not fully complied with, the
parties hereto shall be entitled (in addition to and without prejudice to
all other rights or remedies available to them) to effect Completion so
far as practicable having regard to the defaults which have occurred or to
fix a new day for Completion (not being more than 10 days after the
original Completion Date, in which case the foregoing provisions of this
Clause shall apply to Completion as so deferred).
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5.5 The Subscriber shall enter into the Shareholders' Agreement upon
Completion for the purposes of regulating the business, affairs and
management of the Group as from the date thereof.
6. QUALIFIED IPO
6.1 It is the parties' intention that, subject to the prevailing economic and
stock market conditions, the Company will procure the Qualified IPO on or
before 31 December 2004.
6.2 For the avoidance of doubt, the parties hereto agree to terminate this
Agreement on the receipt by the Company of an in-principle approval for
listing or, conditional upon the listing occurring as envisaged, on such
date prior to a listing as may be required by the relevant regulatory body
in order to achieve the listing, by executing a termination agreement
conditional upon the occurrence of the listing and to take effect from the
date of the listing of the Company, and in the event of the listing not
taking place by 31 December 2004, the termination agreement shall lapse
and this Agreement and all the rights, obligation and provisions hereto
shall continue to apply to the parties with full force and effect.
7. REPRESENTATIONS AND WARRANTIES
7.1. The Warrantors represent, warrant and undertake to the Subscriber in the
terms set out in this Clause 7 and Schedule 4.
7.2. The Warrantors agree and acknowledge that the Subscriber is entering into
this Agreement in reliance on the Warranties.
7.3. All Warranties are deemed to be made on the date of this Agreement and are
repeated every day until Completion and on Completion.
7.4. None of the Warranties shall be limited or restricted by reference to or
inference from the terms of any other Warranties or any other term of this
Agreement.
7.5. No claim by the Subscriber shall be prejudiced in consequence of any
information relating to the Group which may have at any time come to the
knowledge of the Subscriber, or any investigation made by it and it shall
not be a defence to any claim against the Company that the Subscriber knew
or ought to have known or had constructive knowledge of any information
relating to the circumstances giving rise to the claim.
8. UNDERTAKINGS
8.1. Prior to the Qualified IPO, the Company undertakes to the Subscriber that:
(i) it will not reduce its shareholding in each of the PRC Subsidiaries
to below 90%;
(ii) it will procure that Xx. Xxxx Shuang and Xx. Xxxx Min not to reduce
their aggregate shareholdings in the PRC Subsidiaries to below 10%
(unless any one of them has shareholding in the Company); and
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(iii) it will use the proceeds arising out of the Subscription for the
purposes set out in Schedule 6.
8.2. The Company will procure that the directors of the Company appointed
before the Completion Date will not sell or transfer their initial
holdings of the Shares (if any) in the first 12 months period after the
date of the Qualified IPO.
8.3. The Company will ensure that any new projects will not be taken up or
injected into any member of the Group on terms more favourable than those
offered to the Company, provided that the Company decides to reject such
projects.
8.4. The Company will procure that Xx. Xxxx Shuang and Xx. Xxxx Min undertake
not to engage or invest in any other business that directly competes with
the business of the Company during their employment with the Group and at
any time thereafter.
8.5. The Initial Shareholder undertakes not to sell or transfer its initial
holding of the Shares of the Company for the period commencing from the
Completion Date up to and until one year after the Qualified IPO, unless
such transfer of Shares is effected to the senior management of the
Company and made in full compliance with all applicable regulatory
requirements (including without limitation the Listing Rules).
8.6. The Company will procure that Xx. Xxxx Shuang and Xx. Xxxx Min not to sell
or transfer their initial shareholdings in the PRC Subsidiaries and their
holdings of the Shares of the Company (if any) for the period commencing
from the Completion Date up to and until one year after the Qualified IPO.
8.7. In consideration of the Subscriber participating in the Subscription
contemplated under this Agreement, the Company agrees that any future
investment by any third party investors in the Company after the
Completion Date will not have terms which are more favorable than the
terms offered to the Subscriber unless the Shares are subscribed by any of
Xx. Xxxx Shuang and/or Xx. Xxxx Min. In addition, the Company agrees that
any such future investments (including the terms thereof) by the new
investors other than Xx. Xxxx Shuang and/or Xx. Xxxx Min will require the
consent of the Subscriber and such consent shall not be unreasonably
withheld.
9. SUBSCRIBER'S RIGHTS
9.1 The Subscriber shall have the Shareholder's rights as stipulated in the
Shareholders' Agreement.
9.2 The Subscriber shall have the rights to adjust the entry price which is
based on a fully diluted post-money valuation of HK$643,600,000 which is
equal to the profit/earning ratio of 7.4 multiplied by the pro forma
earnings of the Group for the year ending 31 December 2003. If the Group's
earning before tax and minority interests and extraordinary items for the
financial year ending 31 December 2003 falls short of HK$100 million, the
Subscriber's entry valuation will be adjusted in accordance with the
following formula:
adjusted entry valuation = original entry valuation x
(actual earning before tax and minority interests and extraordinary
items / projected earning before tax and minority interests)
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The Group's projected earning before tax and minority interests and
extraordinary items for the financial year ending 31 December 2003 is
approximately RMB113.626 million. The difference between the original
entry valuation and the adjusted entry valuation, if any, will be refunded
to the Subscriber in cash pro rata on his respective shareholdings in the
Company as soon as practicable upon release of the audited results of the
Group for the financial year ending 31 December 2003.
9.3 Subject to the relevant regulatory requirements including, but not limited
to, the Listing Rules, the Subscriber shall be free to transfer the Shares
in whole or in part after six months from the date of the Qualified IPO.
9.4 Without prejudice to the generality of the foregoing, in consideration of
the investment made by the Subscriber in the Company and in consideration
of the payment of HK$1 by the Subscriber to the Company (receipt of which
is hereby acknowledged), the Company hereby grants to the Subscriber an
option (the "Put Option") of selling all its Shares to the Company at a
price (denominated in US$) equal to the investment amount with a yield of
10% internal return rate (denominated in US$), subject to full compliance
with all applicable laws, rules and regulations, if the Company is not
successful in implementing the Qualified IPO by 31 December 2004. Such Put
Option will be exercisable by written notice in respect of all Shares (but
not any part thereof) served by the Subscriber upon the Company during the
period from 1 January 2005 to 30 June 2005 (both days inclusive).
10. FURTHER ASSURANCE
The Company undertakes to the Subscriber to execute or procure to be
executed all such documents and to do or procure to be done all such other
acts and things as may be reasonable and necessary to give all parties the
full benefit of this Agreement.
11. RESTRICTIONS ON COMMUNICATION AND ANNOUNCEMENTS
11.1 Each of the parties hereto undertakes to the other that it shall not at
any time after the date of this Agreement divulge or communicate any
confidential information concerning the business, accounts, finance or
contractual arrangements or other dealings, transactions or affairs of the
Company which may be within or may come to its knowledge in connection
with the transactions contemplated by this Agreement and it shall use its
best endeavours to prevent the publication or disclosure of any such
confidential information concerning such matters. This restriction shall
not apply to information or knowledge which is or which properly comes
into the public domain, through no fault of any of the parties to this
Agreement or to information or knowledge which is already known to the
Subscriber at the time of its receipt.
11.2 Each of the parties hereto undertakes that it shall not at any time (save
as required by law or any rule of any relevant stock exchange or
regulatory body) make any announcement in connection with this Agreement
unless the other party hereto shall have given its consent to such
announcement (which consent may not be unreasonably withhold or delayed
and may be given either generally or in a specific case or cases and may
be subject to conditions). If any party is required by law or any rule of
any relevant stock exchange or regulatory body to make any announcement in
connection with this Agreement, the other party agrees to supply all
relevant
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information relating to itself that is within its knowledge or in its
possession as may be reasonably necessary or as may be required by any
exchange and regulatory body to be included in the announcement.
12. SEVERABILITY
If, at any time, any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect in any jurisdiction, the legality,
validity and enforceability in other jurisdictions or of the remaining
provisions of this Agreement shall not be affected or impaired thereby.
13. ASSIGNMENT
Each party may not assign any of its rights or obligations under this
Agreement without the consent of the other parties.
14. COSTS
The Company will be responsible for all pre-approved legal costs
(including the arrangement fee) reasonably and properly incurred and other
pre-approved expenses in connection with or incidental to the negotiation,
finalization and execution of this Agreement and the issue of the
Subscription Shares.
15. CONTINUING EFFECT OF AGREEMENT
Any provision of this Agreement which is capable of being performed after
Completion but which has not been performed at or before Completion and
all Warranties and other representations and warranties and other
undertakings contained in or entered into pursuant to this Agreement shall
remain in full force and effect notwithstanding Completion.
16. GENERAL
16.1 This Agreement supersedes all and any previous agreements, arrangements or
understanding between the parties relating to the matters referred to in
this Agreement and all such previous agreements, understanding or
arrangements (if any) shall cease and determine with effect from the date
hereof and neither party shall have any claim in connection therewith.
16.2 This Agreement constitutes the entire agreement between the parties with
respect to its subject matter (no party having relied on any
representation or warranty made by any other party which is not contained
in this Agreement) and no variation of this Agreement shall be effective
unless made in writing and signed by all of the parties.
16.3 Time shall be of the essence of this Agreement but no failure by any party
to exercise, and no delay on its part in exercising any right hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise of it or the exercise of any right or prejudice or affect any
right against the other. The rights and remedies provided in this
Agreement are cumulative and not exclusive of any rights or remedies
provided by law.
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16.4 No delay or failure by a party to exercise or enforce (in whole or in
party) any right provided by this Agreement or by law shall operate as a
release or waiver, or in any way limit that party's ability to further
exercise or enforce that, or any other, right. A waiver of any breach of
any provision of this Agreement shall not be effective, or implied, unless
that waiver is in writing and is signed by the party against whom that
waiver is claimed. In the event of a default by either party in the
performance of their respective obligations under this Agreement, the
non-defaulting party shall have the right to obtain specific performance
of the defaulting party's obligations. Such remedy shall be in addition to
any other remedies provided under this Agreement or at law.
16.5 No amendment to this Agreement will be effective unless it is in writing
and signed by all the parties. No consent or approval to be given pursuant
to this Agreement will be effective unless it is in writing and signed by
the relevant party.
17. NOTICES
17.1 Any notice, claim, demand, court process, document or other communication
to be given under this Agreement (collectively "COMMUNICATION" in this
Clause) shall be in writing in the English or Chinese language and may be
served or given personally or sent to the telex or facsimile numbers (if
any) of the relevant party and marked for the attention and/or copied to
such other person as specified in Clause 17.4.
17.2 A change of address or telex or facsimile number of the person to whom a
communication is to be addressed or copied pursuant to this Agreement
shall not be effective until five days after a written notice of change
has been served in accordance with the provisions of this Clause 17.2 on
all other parties to this Agreement with specific reference in such notice
that such change is for the purposes of this Agreement.
17.3 All communications shall be served by the following means and the
addressee of a communication shall be deemed to have received the same
within the time stated adjacent to the relevant means of despatch:
MEANS OF DESPATCH TIME OF DEEMED RECEIPT
----------------- ----------------------
Local mail or courier 24 hours
Telex on despatch
Facsimile on despatch
Air courier/Speedpost 3 days
Airmail 7 days
17.4 The initial addresses and facsimile numbers of the parties for the service
of communications, the person for whose attention such communications are
to be marked and the person to whom a communication is to be copied are as
follows:
IF TO THE COMPANY :
Address: Units 2502-3
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Xxxxxxxxx Xxxxx
00 Xxx Xxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile no.: (000) 0000-0000
Attention: The Company Secretary
IF TO THE INITIAL SHAREHOLDER :
Address: Units 0000-0
Xxxxxxxxx Xxxxx
00 Xxx Xxxxx Xxxx Xxxxxxx
Xxxx Xxxx
Facsimile no.: (000) 0000-0000
Attention: The Company Secretary
IF TO THE SUBSCRIBER :
FERNDALE ASSOCIATES LIMITED
Address: 00/X, 0 Xxx Xxx X. Xxxx
Xxxxxx, Xxxxxx
Facsimile no.: (000-0) 0000-0000
Attention: Xx. Xxxxxx Xx / Xx. Xxxxx Xxx / Xx. Xxxxxx Xxxx
17.5 A communication served in accordance with this Clause 17 shall be deemed
sufficiently served and in proving service and/or receipt of a
communication it shall be sufficient to prove that such communication was
left at the addressee's address or that the envelope containing such
communication was properly addressed and posted or despatched to the
addressee's address or that the communication was properly transmitted by
telex, facsimile or cable to the addressee. In the case of communication
by telex, such communication shall be deemed properly transmitted upon the
receipt by the machine sending the telex answerback of the addressee; in
the case of facsimile transmission, such transmission shall be deemed
properly transmitted on receipt of a report of satisfactory transmission
printed out by the sending machine.
17.6 Nothing in this Clause shall preclude the service of communication or the
proof of such service by any mode permitted by law.
18. GOVERNING LAW
18.1 This Agreement is governed by and shall be construed in accordance with
the laws of Hong Kong.
18.2 In relation to any legal action or proceedings arising out of or in
connection with this Agreement, the parties hereto hereby irrevocably
submit to the non-exclusive jurisdiction of the Courts of Hong Kong.
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20. COUNTERPARTS
This Agreement may be executed by the parties hereto in any number of
counterparts and on separate counterparts, each of which when so executed
shall be deemed an original but all of which shall constitute one and the
same instrument and is binding on all parties.
AS WITNESS where of this Agreement has been duly executed on the date first
above written.
SIGNED by )
) Ninetowns Digital World
for and on behalf of ) Trade Holdings Limited
NINETOWNS DIGITAL WORLD TRADE ) /s/ Xxxx Xxxxxx
HOLDINGS LIMITED )
in the presence of : )
SIGNED by )
) Jitter Bug Holdings Limited
for and on behalf of ) /s/ Ng Kin Fai
JITTER BUG HOLDINGS LIMITED )
in the presence of : )
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SIGNED by )
) Ferndale Associates Limited
for and on behalf of ) /s/ Xxxxx Xxxxx
FERNDALE ASSOCIATES LIMITED )
in the presence of : )
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SCHEDULE 1
number of Shares subscription
Name subscribed amount
---- ---------------- ------------
Ferndale Associates 23,400 HK$2,340,000
Limited
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SCHEDULE 2
PARTICULARS OF THE PRC SUBSIDIARIES
BEIJING NEW TAKE ELECTRONIC E-COMMERCE LIMITED
([Name in Chinese])
1. Business Licence No. : [Name in Chinese]
2. Date of Incorporation : 22 May 2000
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development of network technology;
research, development and sales of internet
application softwares, e-commerce softwares,
foreign trade system application softwares;
provision of technical service for
self-developed products; sales of
self-developed products.
5. Registered Capital : US$3,500,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : Xx. Xxxx Shuang
8. Directors : 1. Mr. Wai Ka Xxxxxx, Xxxxx
2. Mr. Ko Xxx Xxxx
3. Xx. Xx Kin Fai
4. Xx. Xxxx Shuang
5. Mr. Ren Xiaoguang
6. Xx. Xxxx Min
9. Shareholders and their US$350,000 (10%) contributed by Beijing
respective Shareholdings: Ninetowns Yadi Wall Paper Co., Ltd.
US$3,150,000 (90%) contributed by New Take
Limited
10. Financial Year End : 31st December
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BEIJING NINETOWNS TIMES ELECTRONIC E-COMMERCE LIMITED
([Name in Chinese])
1. Business Licence No. : [Name in Chinese]
2. Date of Incorporation : 2 June 2000
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development of network technology;
research, development and sales of internet
application softwares, e-commerce softwares,
foreign trade system application softwares;
provision of technical service for
self-developed products; sales of
self-developed products.
5. Registered Capital : US$250,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : Xx. Xxxx Shuang
8. Directors : 1. Xx. Xxx Xxx Xx, Xxxxxxx
2. Xx. Xxxx Shuang
3. Mr. Ren Xiaoguang
4. Xx. Xxxx Min
9. Shareholders and their US$25,000 (10%) contributed by Beijing
respective Shareholdings: Ninetowns Yadi Wall Paper Co., Ltd. US$225,000
(90%) contributed by Shielder Limited
10. Financial Year End : 31st December
- 16 -
BEIJING NINETOWNS DIGITAL TECHNOLOGY CO., LTD.
([Name in Chinese])
1. Business Licence No. : 1101061304729
2. Date of Incorporation : 25 July 2000
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development, transfer and
provision of consultancy service for
technology; provision of technological
services; sales of certified and passed
technological products; household decorations;
leasing of electronic equipment; organization
of domestic cultural interflow; provision of
business information consulting service.
5. Registered Capital : RMB2,250,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : Xx. Xxxx Shuang
8. Directors : 1. Xx. Xxxx Shuang
2. Mr. Ren Xiaoguang
3. Xx. Xxxx Min
9. Shareholders and their RMB1,800,000 (80%) contributed by Beijing
respective Shareholdings: New Take e-Commerce Limited RMB450,000 (20%)
contributed by Beijing Ninetowns Times
e-Commerce Limited
10. Financial Year End : 31 December
- 17 -
SHANGHAI NEW TAKE DIGITAL TECHNOLOGY CO., LTD.
([Name in Chinese])
1. Business Licence No. : 3101011022735
2. Date of Incorporation : 13 September 2001
3. Place of Incorporation : Shanghai, The People's Republic of China
4. Business Scope : Design and installation of computer network;
research, development and sales of computer
hardware and software and provision of related
service; sales of construction materials,
decoration materials, machinery, household
electrical appliance, textile products;
provision of business information consulting
service.
5. Registered Capital : RMB500,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : Liu Xxxx Xxxx ([Name in Chinese])
8. Directors : Xx. Xxxx Shuang
9. Shareholders and their RMB450,000 (90%) contributed by Beijing
respective Shareholdings: Ninetowns Digital Technology Co., Ltd.
RMB50,000 (10%) contributed by Beijing
Ninetowns Import & Export e-Commerce Co., Ltd.
10. Financial Year End : 31 December
- 18 -
BEIJING NINETOWNS PORTS SOFTWARE AND TECHNOLOGY CO., LTD.
([Name in Chinese])
1. Business Licence No. : 1101061588135
2. Date of Incorporation : 1 August 2003
3. Place of Incorporation : Beijing, The People's Republic of China
4. Business Scope : Research and development of computer softwares,
network technology; provision of technological
services for computer softwares and network;
sales of certified and passed new products;
manufacturing of computer softwares.
5. Registered Capital : RMB20,000,000
6. Registered Office : [Name in Chinese]
7. Legal Representative : Xx. Xxxx Shuang
8. Directors : 1. Xx. Xxxx Shuang
2. Xx. Xxxx Min
3. Mr. Ren Xiaoguang
9. Shareholders and their RMB4,000,000 (20%) contributed by Beijing New
respective Shareholdings: Take e-Commerce Limited RMB16,000,000 (80%)
contributed by Beijing Ninetowns Times
e-Commerce Limited
10. Financial Year End : 31 December
- 19 -
SCHEDULE 3
SHAREHOLDERS' AGREEMENT
- 20 -
SCHEDULE 4
WARRANTIES, REPRESENTATION AND UNDERTAKINGS
Each of the Warrantors hereby jointly and severally represent, warrant and
undertake to each of the Subscriber that all representations and statements of
fact set out in this Schedule or otherwise contained in the Agreement are and
will be true and accurate as at the date hereof and at all times up to and
including Completion with reference to the facts and circumstances subsisting at
such time.
1. GENERAL INFORMATION
1.1 Each of the Warrantors has full power to enter into this Agreement and to
exercise its rights and perform its obligations hereunder and (where
relevant) all corporate and other actions required to authorize its
execution of this Agreement and its performance of its obligations
hereunder have been duly taken and this Agreement shall, when executed be
a legal, valid and binding agreement on it, enforceable in accordance with
the terms hereof.
1.2 The obligations of the Warrantors under this Agreement shall at all times
constitute direct, unconditional, unsecured, unsubordinated and general
obligations of, and shall rank at least pari passu with, all other present
and future outstanding unsecured obligations, issued, created or assumed
by the Warrantors.
1.3 The execution, delivery and performance of this Agreement by the
Warrantors does not and shall not violate in any respect any provision of:
(a) any law or regulation or any order or decree of any governmental
authority, agency or court of Hong Kong;
(b) (where relevant) the laws and documents incorporating and
constituting any Warrantor; or
(c) any agreement or other undertaking to which any Warrantor or any
Group Company is a party or which is binding upon it or any of its
assets, and does not and shall not result in the creation or
imposition of any encumbrance on any of its assets pursuant to the
provisions of any such agreement or other undertaking.
1.4 The information and particulars in respect of the Company and the
subsidiaries set out in this Agreement are true and accurate and all
shares held by any Group Company in any other Group Company are legally
and beneficially held fully paid up free from any liens, charges,
encumbrances and other third party right. All of the issued Shares in the
Company are legally and beneficially held by the Initial Shareholder (save
for the Subscription Shares) and are credited as fully paid up free from
any liens, charges, encumbrances or other third party rights.
1.5 All issued shares in the capital of the Company have been duly issued and
allotted credited as fully paid up.
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1.6 All written information given by or on behalf of the Warrantors to the
Subscriber or any of their representatives was when given and is now true,
complete and accurate in all respects and not misleading in any respect.
1.7 All information which may have a material adverse effect on the Group has
been fully disclosed to each Subscriber in writing prior to the date of
this Agreement.
1.8 The minute books of directors' meetings and of shareholders' meetings
respectively contain full and accurate records of all resolutions passed
by the directors and the shareholders respectively of each Group Company.
2. REGULATORY COMPLIANCE
2.1 Each Group Company has been validly incorporated or established pursuant
to the laws of its country of incorporation or establishment, all legal
and procedural requirements and all other formalities concerning the said
incorporation or establishment have been duly and properly complied with,
and each Group Company is in good standing.
2.2 All corporate or other documents required to be filed or registered in
respect of each Group Company with the authorities in the relevant place
of incorporation of such Group Company have been duly filed.
2.3 The statutory books and minute books of each Group Company have been
properly written up and no Group Company has received any application or
request for rectification of its register of shareholders and compliance
has been made with all other applicable regulatory requirements concerning
each Group Company and all issues of shares, debentures or other
securities of each Group Company.
2.4 Each Group Company has complied with all legislation and obtained all
necessary licences, consents and other permissions and approvals relevant
to the business of the Group Company whether in the country, territory or
state in which it is incorporated or operated and each Group Company has
complied with all applicable regulatory requirements in relation to any
transactions to which it has been a party prior to Completion.
2.5 All licences, consents and other permissions and approvals required for or
in connection with the carrying on of the business now being carried on by
each Group Company are in full force and effect and have been duly
complied with and there is no circumstance which might invalidate any
licence, consent, permission or approval or render it liable to forfeiture
or modification or affect its renewal.
3. ACCOUNTS
3.1 Each of the Accounts:
(a) were prepared in accordance with applicable laws (including without
limitation the Companies Ordinance) and with generally accepted
accounting principles, standards and practices in Hong Kong
(including all applicable Statements of Standard
- 22 -
Accounting Practice) at the time they were prepared and on a
consistent basis with the financial statements of the Group for the
immediately preceding financial year;
(b) are true and accurate;
(c) correctly make or include full provision for any bad and doubtful
debts and all established liabilities, make proper and adequate
provision for (or contain a note in accordance with good accounting
practice respecting) all deferred, disputed or contingent
liabilities (whether liquidated or unliquidated) and all capital
commitments of the Group as at the relevant date to which they were
prepared (the "Relevant Date") and the reserves and provisions (if
any) made therein for all Taxation relating to any period on or
before the Relevant Date are proper and adequate;
(d) give a true and fair view of the state of affairs and financial and
trading positions of the Group at the Relevant Date and of the
Group's results for the financial period ended on that date;
(e) correctly include all the assets of the Group as at the Relevant
Date and the rate of depreciation adopted therein is sufficient for
each of the fixed assets of the Group to be written down to nil by
the end of their estimated lives;
(f) the method of valuing development costs and work in progress adopted
in the Accounts and the basis of depreciation adopted in respect of
fixed assets are the same in each of the Accounts;
(g) are not adversely affected by any unusual, exceptional,
extraordinary or non-recurring items which are not disclosed in the
Accounts; and
(h) contain full provision for the diminution in value of the Group's
properties and assets.
3.2 The accounting and other books and records of each Group Company are in
its possession, have been properly written up and accurately present and
reflect in accordance with generally accepted accounting principles and
standards of Hong Kong all the transactions entered into by each such
Group Company or to which each such Group Company has been a party and
there are at the date hereof no material inaccuracies or discrepancies of
any kind contained or reflected in any of the said books and records, and
that at the date hereof they give and reflect a true and fair view of the
financial, trading and contractual position of each such Group Company and
of its fixed and current assets and its actual or contingent liabilities
and its debtors and creditors.
3.3 The Company has no present intention to discontinue or write down
investments in any other business other than those disclosed in the
Accounts nor is any such write down, in the reasonable opinion of the
Directors, required.
3.4 The accounting books and records of each Group Company have been properly
written up and present a true and fair view of all the transactions to
which that Group Company has been a party and there are at the date hereof
no material inaccuracies or discrepancies of any kind contained or
reflected in the said books and records.
- 23 -
3.5 No Group Company owes any money to, or is owned any money by, the Initial
Shareholder.
3.6 Having regard to the existing facilities available to it, each Group
Company has sufficient working capital with which to carry on its
business, in its present form and at its present level of turnover, for
the period of twelve months following Completion and for the purposes of
performing all orders and obligations placed with or undertaken by it
before Completion.
4. ASSETS
4.1 All assets of the Group used or owned by or in the possession of any Group
Company (including, without limitation all assets referred to in the
Accounts):
(a) are legally and beneficially owned free from any mortgage, charge,
lien other encumbrance by the relevant Group Company;
(b) are in the possession or under the control of the relevant Group
Company which has good and marketable title thereto; and
(c) are not subject to any hire purchase, leasing arrangements or other
arrangements of a similar nature.
4.2 All assets owned or used by the Group are in good repair and capable of
being used for the purposes for which they were designed, acquired or used
by the Group and have throughout their period of ownership by the Group
been maintained and serviced.
4.3 All title deeds and all other documents necessary to prove title or
contractual rights relating to the assets or contractual rights of the
Group are in the possession of the Group.
5. TAXATION
5.1 Each Group Company has complied with all other relevant legal requirements
relating to registration or notification for taxation purposes.
5.2 Each Group Company has:
(a) paid or accounted for all taxation (if any) due to be paid or
accounted for by it before the date of this Agreement; and
(b) taken all reasonable steps to obtain any repayment of or relief from
taxation available to it.
5.3 The returns which ought to have been made by or in respect of each Group
Company for any taxation purposes have been made and all such returns have
been prepared on a correct and proper basis.
5.4 The provisions (if any) included in the Accounts are sufficient to cover
all taxation in respect of all periods ending on or before the Relevant
Date for which any Group Company was then or might at any time thereafter
become or have become liable.
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6. LITIGATION
No Group Company is a party to any material litigation, arbitration,
prosecutions, disputes, investigations or to any other material legal or
contractual proceedings (together "Proceedings") and there are no facts or
circumstances subsisting which might give rise to such Proceedings and
there are no unfulfilled or unsatisfied judgments or court orders against
any Group Company.
7. TRANSACTIONS AFTER MANAGEMENT ACCOUNTS DATE
Since the Management Accounts Date, each Group Company has carried on its
business in the ordinary course so as to maintain the same as a going
concern and has not:
(a) issued or repaid or agreed to issue or repay any share or loan
capital, except as provided under this Agreement;
(b) declared, made or paid any dividends or made any other distribution
out of profits, reserves or capital and no loans or loan capital has
been repaid in whole or in part;
(c) engaged in, or entered into, any business activities or transactions
which are either outside its ordinary course of day-to-day trading
operations or which have not been entered into for full value, on
normal commercial terms and on an arms length basis;
(d) committed any breach which would entitle any third party (with or
without the giving of notice) to call for the repayment of
indebtedness prior to its normal maturity date;
(e) increased, or agreed to increase, the remuneration (including
bonuses) payable to any director or employee except for their normal
salary increment; or
(f) realized any book debts for less than their face amount, and no
indication has been received that any debt now owing to any of the
members of the Group is bad or doubtful;
(g) defaulted in any of its contractual obligations which in aggregate
may result in claims of more than HK$1,000,000; or
(h) suffered any material adverse change in its turnover or financial
positions.
8. CONTRACTS AND COMMITMENTS
8.1 No Group Company is a party to:
(a) any agreement (whether by way of guarantee indemnity warranty
representation or otherwise) under which the Group Company is under
any actual or contingent liability in respect of (i) any disposal by
any Group Company of its assets or business or any part thereof
(except such as are usual in the ordinary and proper
- 25 -
course of its normal day to day trading as carried on at the date
hereof) or (ii) the obligations of any other person other than
another Group Company;
(b) any contracts which were not entered into in the ordinary course of
business and which are of material value to, or impose material
obligations on the relevant Group Company;
(c) any agreement entered into otherwise than by way of bargain at arm's
length;
(d) any contract with any director of the Company or any shareholder of
the Company;
(e) any management, joint venture, partnership or similar agreements;
(f) any contract or commitment involving, or likely to involve,
obligations or expenditure of an unusual or exceptional nature or
magnitude;
(g) contractual arrangements which may be legally terminated as a result
of the execution or completion of this Agreement; or
(h) powers of attorney or other authorities (express or implied) which
are still outstanding or effective to or in favour of any person,
other than an existing director or employee of a Group Company, to
enter into any contract or commitment or to do anything on its
behalf.
8.2 In relation to all material outstanding agreements to which any Group
Company is a party (the "Business Agreement"):
(a) each Business Agreement is valid, binding and legally enforeceable
against the parties thereto in accordance with its terms;
(b) no party to any Business Agreement is in breach of any of the terms
thereof;
(c) all approvals, consents and/or confirmations from the appropriate
national, provincial, municipal or local governmental or regulatory
authorities, bodies or bureau and/or any third parties which are
required for or in connection the Business Agreements have been
properly, unconditionally and irrevocably obtained, and no further
action on the part of either of the parties to the Business
Agreements nor any further approval, authorization or consent from
any governmental or regulatory authority or from any third party is
required for the transaction contemplated under the Business
Agreements to be properly and validly implemented; and
(d) the Warrantors are not aware of the invalidity, or of any grounds
for determination, recession, avoidance or repudiation, of any
Business Agreement.
9. EMPLOYEES
9.1 All contracts of service to which each Group Company is a party can be
terminated by it without payment of compensation (save as provided by
legislation) by not more than 90 days' notice.
9.2 No Group Company is a party to:
- 26 -
(a) any agreement, arrangement or scheme (whether or not legally
enforceable) for profit sharing or for the payment to employees of
bonuses or incentive payments or the like, other than agreements
providing for the payment of a bonus or incentive payment at the
discretion of the Company;
(b) any loan to, or guarantee in respect of the obligations of, any past
or present employee, officer or director of the Group Company;
(c) any collective bargaining or procedural or other agreement with any
trades union or similar association; or
(d) any obligations (save as required under any applicable legislation)
or ex-gratia arrangements to pay pensions, gratuities, retirement
annuities, benefits, periodical sums or any compensation (for any
reason whatsoever including unfair or wrongful dismissal) to any
past or present employee or any other person.
9.3 The Company is not under any material obligation (whether actual or
contingent) to any former employee whether for breach of any contract of
service, for compensation for wrongful dismissal or for unfair dismissal
or for payment of any salaries, wages, pensions, gratuities, bonuses or
otherwise howsoever or whatsoever and not tax, levy, contribution or
payment in respect of any former employee whether to any governmental
authority, pension funds, scheme or trust or otherwise howsoever or
whatsoever shall be outstanding or disputed.
9.4 No director or employee of any Group Company is in material breach of any
contract he or she has with any Group Company and no director of any Group
Company is involved or has invested in any business which competes with
any Group Company.
10. INSOLVENCY
10.1 No order has been made or petition presented or resolution passed for the
winding up of the any Group Company, nor has any distress, execution or
other process been levied against any Group Company or action taken to
repossess goods in the possession of any Group Company.
10.2 No steps have been taken for the appointment of an administrator or
receiver of any part of any Group Company's property.
10.3 No floating charge created by Group Company has crystallised and there are
no circumstances likely to cause such a floating charge to crystallise.
10.4 No Group Company is a party to any transaction which could be avoided in a
winding up.
10.5 No Group Company has made or proposed any arrangement or composition with
its creditors or any class of its creditors.
- 27 -
11. INSURANCE
All premiums due in respect of all policies of insurance taken out by the
Group have been paid in full and all the other material conditions of the
said policies have been performed and observed in full. Nothing has been
done or omitted to be done whereby any of the said policies has or may
become void or voidable.
12. PROPERTIES
12.1 With respect to each of the leased properties:
(a) the relevant Group Company has the legal right to occupy the
property upon the terms set out in the relevant tenancy or lease
agreement (each, a "Tenancy Agreement") and the property is being
used for lawful purposes, which are permitted by the relevant
Tenancy Agreement;
(b) all the rent and other payments payable by the Group have been paid
up to date, and the user of the property occupied by the Group is in
accordance with that provided for in the relevant Tenancy Agreement,
and the terms of the relevant Tenancy Agreement have been duly
complied with and the tenancy/leased is not subject to avoidance or
revocation or early termination due to default of the Group.
13. INTELLECTUAL PROPERTY
13.1 The Group Company is the sole and exclusive proprietor of the Intellectual
Property Rights and has not previously transferred, assigned or granted
exclusive licences in respect of any Intellectual Property Rights
whatsoever anywhere in the world or otherwise encumbered any of them.
13.2 In respect of all agreements and licences (the "IP Licences") for the use
by any Group Company of intellectual property rights not owned by the
relevant Group Company:
(a) the IP Licences are valid and subsisting;
(b) the relevant Group Company is not in breach of any of the provisions
of the IP Licences; and
(c) all of the IP Licenses contain statements to the effect that the
licensor or grantor of the rights to the Group Company under the IP
Licences has the power to licence or grant such rights.
13.3 The use by the Group of the intellectual property rights referred to in
Clauses 13.1 and 13.2 above and the operation of each Group Company's
business generally does not infringe the intellectual property rights of
any third party.
14. MISCELLANEOUS
No Group Company has:
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(a) committed any breach of any statutory provision, order, bye-law or
regulation binding upon it or any provision of its memorandum of
association or articles of association or of any trust deed,
agreement or licence to which it is a party or of any covenant,
mortgage, charge or debenture given by it;
(b) omitted to do anything required or permitted to be done by it
necessary for the protection of its respective title to or for the
enforcement or the preservation of any order or priority of any
properties or rights owned by it.
- 29 -
