Exhibit 10.18
[Translation of Chinese original]
LOAN AGREEMENT
The Loan Agreement (the "Agreement") is entered into as of September 26,
2003 by and between the following two parties.
(1) Advanced Internet Services Limited (the "Lender") Legal Address: 48/F
the Center, 00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx
(2) Xxxxx Xxxx (the "Borrower")
Gender: Male
PRC ID Number: 000000000000000000
Address: Xxxx 0 Xxxx 0 Xxxxx Xxxxxxxxx, 0 Xxxxxxxxxxxxx Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxxx
The Lender and the Borrower are respectively referred to as a "Party" and
collectively as the "Both Parties" hereinafter.
WHEREAS, the Borrower holds a 30% equity interest in Shenzhen Freenet
Information Technology Company Limited (the "Borrower's Company"), a limited
liability company incorporated in the People's Republic of China (the "PRC").
WHEREAS, the Lender is a company incorporated in Hong Kong and the Lender
desires to provide a loan to the Borrower.
NOW THEREFORE, Both Parties agree as follows:
1. Loan
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1.1 The Lender agrees to provide a loan to the Borrower with a principal
of RMB 6,900,000 in accordance with the terms and conditions set forth
in this Agreement. The term for such loan will be ten (10) years and
shall be extended upon the agreement of Both Parties. During the term
or extended term of such loan, the Borrower shall immediately repay
the loan to the Lender, if any of the following events occurs:
(1) the Borrower dies or becomes a person with no or limited capacity
to perform civil acts;
(2) Xxxx Xxx Lei terminates his employment with or is dismissed by
the Lender or its affiliates;
(3) the Borrower commits a crime or becomes involved in a crime;
(4) any third party claims more than Renminbi 500,000 against the
Borrower;
(5) foreign investors are permitted to invest in the business of
value-added telecommunication and the relevant authorities begin
to approve the
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establishment of such business in accordance with the applicable
laws of the PRC.
1.2 The Lender agrees to remit the amount of such loan to the account
designated by the Borrower within seven (7) days after receiving the
Borrower's written notification to use the loan, provided that all of
the preconditions set forth in Section 2 of this Agreement are
satisfied. The Borrower shall issue a confirmation notice to the
Lender on the day he receives the amount of the loan. The commitments
of the Lender under this section are effective only against the
Borrower himself, but not the Borrower's successor or transferee.
1.3 The Borrower agrees to accept such loan provided by the Lender and
hereby agrees and warrants that such loan shall be used only for the
investment in the Borrower's Company for the business development of
the Company. Without the Lender's prior written consent, the Borrower
shall not use the amount of such loan for any other purpose or
transfer or pledge its equity interest in the Borrower's Company to
any other third party.
1.4 The Lender and the Borrower jointly agree and confirm that the
Borrower shall repay the loan only by transferring all of the
Borrower's equity in the Borrower's Company to the Lender or to any
other person (legal person or natural person) designated by the
Lender.
1.5 The Lender and the Borrower hereby jointly agree and confirm that any
proceeds raised from the transfer of Borrower's equity in the
Borrower's Company shall be used to repay the Lender, for the
consideration of the loan provided by the Lender, in such manner as
designated by the Lender in accordance with this Agreement and the
Agreement shall terminate thereupon.
1.6 The Lender and the Borrower hereby jointly agree and confirm that the
Lender is entitled to, but is not obliged to, at any time, purchase or
designate any other person (legal person or natural person) to
purchase all or part of Borrower's equity in the Borrower's Company at
any price determined by Both Parties, subject to the permission of the
law.
The Borrower warrants to issue an irrevocable power of attorney to
confer all its rights as a shareholder of the Borrower's Company to a
person designated by the Lender.
1.7 Interest of the Loan. In the event that the Borrower transfers its
equity in the Borrower's Company to the Lender or the person
designated by the Lender, the loan hereunder shall be deemed to be an
interest-free loan, if the transfer price of such equity is equivalent
to or is less than the principal amount of the loan under this
Agreement. However, if the transfer price shall exceed the principal
amount of the loan hereunder, the amount in excess of the principal
amount of the loan shall be deemed the interest payable on such loan
under this Agreement, which shall be paid to the Lender by the
Borrower.
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2. Conditions Precedent
--------------------
The Lender's obligation to extend the Loan to the Borrower pursuant to
Clause 1.1 shall be conditional upon the fulfillment of all of the following
conditions or any of them being waived by the Lender in writing.
2.1 The Lender shall have received on time the drawdown notice duly
executed by the Borrower as provided in Clause 1.2.
2.2 The Borrower and Beijing Super Channel Network Limited ("Super
Channel") have executed a share pledge agreement (the "Share Pledge
Agreement"), by virtue of which the Borrower agrees to pledge all its
shares in the Borrower's Company to Super Channel.
2.3 The Borrower, Lender and Borrower's Company have executed a share
option agreement (the "Share Option Agreement"), pursuant to which the
Borrower shall grant the Lender an exclusive option to purchase all of
the Borrower's equity in the Borrower's Company, provided that it is
permitted by the laws of the PRC.
2.4 The above-mentioned Share Pledge Agreement and Share Option Agreement
are in full effect, of which there is no default event and all
relevant filing procedures, approvals, authorizations, registrations
and governmental proceedings have been obtained or completed (if
needed).
2.5 All the representations and warranties provided by the Borrower in
Clause 3.2 shall be accurate, correct, complete and not misleading,
and shall remain accurate, correct, complete and not misleading on the
date of the drawdown notice and the drawdown date, as though they are
provided on such dates.
2.6 The Borrower shall not have breached any of its undertakings provided
by it in Section 4, and no event, which may affect the performance of
the Borrower's obligations hereunder shall have occurred or is likely
to occur.
3. Representations and Warranties
------------------------------
3.1 The Lender makes the following representations and warranties to the
Borrower, which shall remain valid up to the expiration or termination
of this Agreement:
(a) The Lender is a company registered and validly existing under the
laws of Hong Kong;
(b) The Lender has the power to enter into and perform this
Agreement. The execution and performance of this Agreement by the
Lender is in compliance with the business scope of the Lender and
the provisions of the articles of association or other
constitutional documents of the Lender. The
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Lender has duly obtained all the necessary approvals or
authorizations for the execution and performance of this
Agreement;
(c) The execution and performance of this Agreement by the Lender
will neither result in a breach of the laws and regulations or
any government approvals, authorizations, notices or other
government documents binding or affecting the Lender, nor will
result in a breach of any agreement entered into with any third
party or any undertaking provided to any third party by the
Lender; and
(d) This Agreement shall constitute the legal, valid and binding
obligations of the Lender, which is enforceable against the
Lender in accordance with its terms upon its execution.
3.2 The Borrower makes the following representations and warranties, which
shall remain valid up to the expiration or termination of this
Agreement:
(a) The Borrower's Company is a company with limited liability
lawfully and is validly incorporated and existing under the laws
of the PRC, and the Borrower is the legal owner of the Borrower's
Interest;
(b) The Borrower has the power to enter into and perform this
Agreement. The execution and performance of this Agreement by the
Borrower is in compliance with the business scope of the Borrower
and the provisions of the articles of association or other
constitutional documents of the Borrower. The Borrower has duly
obtained all the necessary approvals or authorizations for the
execution and performance of this Agreement;
(c) The execution and performance of this Agreement by the Borrower
will neither result in a breach of the laws and regulations or
any governmental approval, authorization, notice or other
government documents binding or affecting the Borrower nor result
in a breach of any agreement entered into with any third party or
any undertaking provided to any third party by the Borrower;
(d) this Agreement shall constitute the legal and valid obligations
of the Borrower, which is enforceable against the Borrower in
accordance with its terms upon its execution;
(e) The Borrower has contributed all the share capital required to be
paid for the Borrower's Interest in accordance with the laws, and
has obtained the verification report issued by a qualified
accountant regarding the capital contribution;
(f) Except for the provisions in the Share Pledge Agreement, the
Borrower has not created any pledge, charge or any other security
over the Borrower's
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Interest; or offered to transfer the Borrower's Interest to any
third party; nor undertaken to any third party regarding any
offer to purchase the Borrower's Interest; or entered into any
agreement to transfer the Borrower's Interest with any third
party;
(g) No dispute, action, arbitration, administrative procedure or
other legal proceeding regarding the Borrower and/or the
Borrower's Interest is in existence, and no potential dispute,
action, arbitration, administrative procedure or other legal
proceeding regarding the Borrower and/or the Borrower's Interest
is pending; and
(h) The Borrower's Company has obtained or completed all the
necessary government approvals, authorizations, licenses,
registrations and filing procedures to engage in the businesses
within the operation scope under its business license and to own
its assets.
4. Commitments of Borrower
-----------------------
4.1 The Borrower undertakes, in the capacity of the majority shareholder
of the Borrower's Company, to procure the Borrower's Company to
observe the following terms during the term of this Agreement:
(a) It shall not supplement, change or modify in any way its articles
of association, increase or reduce its registered capital or
alter its shareholding structure without the prior written
consent of the Lender;
(b) It shall maintain the continuance of the company and operate its
business and handle its affairs in a prudent and effective manner
according to proper financial and commercial codes and practices;
(c) It shall not sell, transfer, pledge or otherwise dispose of any
asset, business and legal or beneficial interest of income, or
permit the creation of any other security interest over the same
without the prior written consent of the Lender;
(d) It shall not incur, inherit, warrant or permit the existence of
any debt without the prior written consent of the Lender, save as
those (i) incurred in the ordinary or daily course of business
without borrowing; and (ii) already disclosed to the Lender, who
has given its written consent thereof;
(e) It shall conduct all of its operations in the ordinary course of
business and maintain its asset value;
(f) It shall not enter into any material contracts without the prior
written consent of the Lender, except those entered into in the
ordinary course of
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business (for the purpose of this paragraph, any contract with a
value exceeding RMB 100,000 shall be deemed to be a material
contract);
(g) It shall not extend any loan or credit to any party without the
prior written consent of the Lender;
(h) It shall provide all information and details relating to all of
its operations and financial affairs to the Lender upon request
by the Lender;
(i) It shall obtain and maintain insurance with insurers acceptable
to the Lender, and the sum insured and class of insurance shall
be comparable to the sum insured and class of insurance
maintained by those companies engaging in similar business with
similar assets or properties;
(j) It shall not merge or consolidate with any party, or acquire or
invest in any party without the prior written consent of the
Lender;
(k) It shall notify the Lender immediately when any legal action,
arbitration or administrative procedure relating to its assets,
operations and incomes occurs or is likely to occur;
(l) It shall execute all the necessary or appropriate documents, take
all the necessary or appropriate actions, file all the necessary
or appropriate actions and make all the necessary or appropriate
defenses for the purpose of maintaining all rights and
proprietorship in respect of all of its assets;
(m) It shall not pay dividends of any kind to its shareholders
without the prior written consent of the Lender; however, it
shall distribute all its of distributable profits to its
shareholders upon the request of the Lender;
(n) It shall appoint any person nominated by the Lender as a director
of the Borrower's Company upon the request of the Lender;
(o) It shall strictly observe all of the provisions under the Share
Option Agreement and shall not cause any action/omission which
may impair the validity and enforceability of the Share Option
Agreement;
4.2 The Borrower undertakes that, during the term of this Agreement,
(a) It shall not sell, transfer, pledge or otherwise dispose of the
legal or beneficial interest of the Borrower's Interest, or
permit the creation of any other security interest over the same
without the prior written consent of the Lender, without offering
the same to the Lender;
(b) It shall procure the members in the board of directors appointed
by it not to approve any sale, transfer, pledge or otherwise
dispose of the legal or beneficial interest of the Borrower's
Interest, or permit the creation of any
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other security interest over the same without the prior written
consent of the Lender, without offering the same to the Lender;
(c) It shall procure the members in the board of directors appointed
by it not to approve any merger or consolidation with any party,
or any acquisition of or investment into any party without the
prior written consent of the Lender;
(d) It shall notify the Lender immediately when any legal action,
arbitration or administrative procedure relating to the
Borrower's Interest occurs or is likely to occur;
(e) It shall enter into all the necessary or appropriate documents,
take all the necessary or appropriate actions, file all the
necessary or appropriate actions and make all the necessary or
appropriate defenses for the purpose of maintaining all rights
and proprietorship of the Borrower's Interest;
(f) It shall not cause any action and/or omission which may
materially, adversely affect the assets, operations and
liabilities of the Borrower's Company without the prior written
consent of the Lender;
(g) It shall appoint any person nominated by the Lender as a director
of the Borrower's Company upon the request of the Lender;
(h) Upon the request made from time to time by the then parent
holding company of the Lender, it shall transfer unconditionally
and forthwith the entire interest owned by it in the Borrower's
Company to the Lender or its designated representative at any
time. It shall also procure the other shareholder of the
Borrower's Company to waive its right of first refusal over the
interest transfer as provided herein;
(i) It shall procure the other shareholder of the Borrower's Company,
upon the request made from time to time by the then parent
holding company of the Lender, to transfer unconditionally and
forthwith the entire interest owned by that other shareholder in
the Borrower's Company to the designated representative of the
Lender at any time. The Borrower hereby waives its right of first
refusal over the interest transfer as provided herein;
(j) In the event that the Lender purchases the Borrower's Interest
pursuant to the Share Option Agreement, the Borrower shall first
apply the proceeds therefrom to repay the Loan to the Lender; and
(k) It shall strictly observe all the provisions under this
Agreement, the Share Pledge Agreement and the Share Option
Agreement, and perform all of its obligations under this
Agreement, the Share Pledge Agreement and the Share Option
Agreement. It shall not cause any action/omission which may
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impair the validity and enforceability of this Agreement, the
Share Pledge Agreement and the Share Option Agreement.
5. Default
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If the Borrower fails to perform its repayment obligation pursuant to this
Agreement, an overdue interest at the rate of 0.01% per day upon the outstanding
amount of the loan shall be payable from the date on which such amount becomes
due and payable until the date on which the total amount of the loan overdue,
overdue interest and other moneys payable Lender shall be fully settled.
6. Notices
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Unless a written notice of change of address is issued, all correspondence
relating to this Agreement shall be delivered in person or by facsimile or
registered mail to the following addresses. Any notice given by registered mail
shall be deemed delivered on the date stated on the receipt of the registered
mail. Any notice given in person or by facsimile shall be deemed delivered on
the date of delivery or transmission. The original copies of all facsimile
transmitted notices shall be delivered forthwith to the following addresses by
registered mail or in person.
Lender: Advanced Internet Services Limited
48/F the Center 00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx
Attention:
Telephone No.: 00000-00000000
Facsimile No.: 00852-21897446
Borrower: Xxxxx Xxxx
Xxxx 0 Xxxx 0 Xxxxx Xxxxxxxxxxx, 0 Xxxxxxxxxxxxx Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxxx
Attention:
Telephone No.:
Facsimile No.:
7. Confidentiality
---------------
The Parties acknowledge and confirm that all information exchanged orally
or in written form in relation to this Agreement are confidential. The Parties
shall keep confidential all such information and shall not disclose the same to
any third party without the prior written consent of the other Party, except in
the following situations: (a) Such information is or becomes publicly known
(without any unauthorized disclosure by any party hereto); (b) Such information
is required to be disclosed pursuant to applicable laws or the rules of the
Stock Exchange; or (c) Such information is required to be disclosed to either
Party's legal or financial advisers in relation to the transactions hereunder.
In case (c), such legal or financial advisers shall observe the duty of
confidentiality as provided in this clause. Any breach of confidentiality by the
employees
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or agents of either Party shall be deemed as the breach of confidentiality by
such Party, who shall be held responsible for all consequences of breach
pursuant to this Agreement. This clause shall survive the termination of this
Agreement.
8. Governing Law and Dispute Settlement
------------------------------------
8.1 The execution, validity, interpretation, performance, implementation,
termination and settlement of disputes of this Agreement shall be
governed by the laws of PRC.
8.2 All disputes arising from the interpretation and performance of this
Agreement shall initially be resolved by amicable negotiations. Should
the dispute remain unsettled after the expiration of thirty (30) days
after the date on which the notice of negotiation is given by a Party
to the other Party, either Party shall have right to submit the
dispute to China International Economic and Trade Arbitration
Commission (the "CIETAC"). The arbitration shall follow the current
rules of CIETAC, and the arbitration proceedings shall take place in
Beijing. The arbitration award shall be final and binding upon the
Both Parties and shall be enforceable in accordance with its terms.
8.3 In case of any disputes arising out of the interpretation and
performance of this Agreement or any pending arbitration of such
dispute, Both Parties shall continue to perform their rights and
obligations under this Agreement, except for the maters involved in
the disputes.
9. Miscellaneous
-------------
9.1 This Agreement shall become effective from the date of execution by
the Parties, and shall expire upon the completion of obligations by
the Parties under this Agreement.
9.2 This Agreement is executed in duplicate and each of the said executed
Agreement has the same legal force and effect. Each of the Parties
hereto shall have one executed Agreement.
9.3 This Agreement may be amended and supplemented by the Parties by
written agreements. All amendments and/or supplementary agreements to
this Agreement shall form integral parts hereof and are as equally
enforceable as this Agreement.
9.4 The invalidity of any provision herein shall not impair the legal
effects of the remaining provisions.
9.5 Any Appendices referred to in this Agreement are an integral part of
this Agreement and have the same legal effect as this Agreement.
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Lender: Advanced Internet Services Limited
Representative:_______________________
Borrower: Xxxxx Xxxx
Signature:__________________________
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