EXHIBIT 10.24
===============================================================================
SAHRE PURCHASE AGREEMENT
AMONG
DALLSFIELD LTD.
FOCUS MEDIA HOLDING LIMITED
DOTAD MEDIA HOLDINGS LIMITED
AND
XU MAO DONG
DATED AS OF
MARCH 7 2006
================================================================================
SAHRE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement"), dated as of March 7, 2006,
among DALLSFIELD LTD., a company with limited liability incorporated and validly
existing under the laws of the British Virgin Islands (the "Seller"), FOCUS
MEDIA HOLDING LTD., a company with limited liability incorporated and validly
existing under the laws of the Cayman Islands (the "Buyer"), DOTAD MEDIA
HOLDINGS LTD., a company with limited liability incorporated and validly
existing under the laws of the British Virgin Islands (the "Company") and
together with Xx. XX XXX XXXX, the shareholder of DALLSFIELD LTD. (the "Seller's
Shareholder").
WHEREAS:
1. The Seller owns all issued shares of the Company (the "Shares").
2. The Seller's Shareholder and the board of directors of the
Seller, through resolutions duly passed in each case on March 5, 2006,
respectively, have approved the sale of the Shares to the Buyer;
3. The Seller desires to sell, and the Buyer desires to purchase,
the Shares, upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, further undertakings and agreements herein
contained and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. As used in this Agreement:
"2006 Audited Annual Net Income" means the Company and its
consolidated subsidiaries' audited net income as defined under U.S. GAAP for the
twelve-month period starting from April 1, 2006 and ending March 31, 2007 as set
forth in the financial auditing statements plus the sum of all amounts deducted
in arriving at such audited net income to make provision for the refund of the
goods, the goodwill impairment and the reserve fund (including all other items
which shall be withdrawn as defined under U.S. GAAP Income Confirmation
Principle).
1
"2007 Audited Annual Net Income" means the Company and its
consolidated subsidiaries' audited net income as defined under U.S. GAAP for the
twelve-month period starting from April 1, 2007 and ending March 31, 2008 as set
forth in the financial auditing statements plus the sum of all amounts deducted
in arriving at such audited net income to make provision for the refund of the
goods, the goodwill impairment and the reserve fund (including all other items
which shall be withdrawn as defined under U.S. GAAP Income Confirmation
Principle).
"2006 Business Plan" means the Company's 2006 business plan as set
forth in Schedule 5.11 hereto and approved by the Buyer plus all the amendments
agreed by the Seller and the Buyer from time to time.
"2007 Business Plan" means the Company's 2007 business plan as set
forth in Schedule 5.11 hereto and approved by the Buyer plus all the amendments
agreed by the Seller and the Buyer from time to time.
"ADRs" means the American depositary shares of Buyer as listed on
the NASDAQ National Market, Inc
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. In the former sentence, "Control" (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, by Contract or
otherwise, including the constitution of an actual control.
"Agreement" means this Share Purchase Agreement among the parties
hereto, as amended, modified or supplemented from time to time.
"Ancillary Documents" means those agreements, documents and
instruments as set forth in Schedule 1.6.
"Beijing Xxxxxx" means Beijing Xxxxxx Dotad Network Technology Co.,
Ltd., a company incorporated and validly existing under the laws of PRC.
"Business" means the value added telecommunication business of the
Group Companies, as currently operated.
"Business Day" means any day that is not a Saturday, a Sunday or
other day when banks are required or authorized by law to be closed in PRC or
USA.
"Claim" means any and all administrative, supervisory or judicial
litigation/arbitration, prosecution, application, appeal, request, payment
notice, compensation claim, lien, or any notice, investigation, litigation
procedure, consent order or consent agreement concerning the lawful or unlawful
activities.
"Closing" means any of the First Closing, the Earnout Closing.
"Closing Date" means any of the First Closing Date, the Earnout
Closing Date.
2
"Competitive Business" means the value added telecommunication
business which involves any party of this Agreement. The detailed scope of the
value added telecommunication business is set forth in Schedule 1.3 hereto.
"Contract" means any contract, agreement, arrangement or
understanding, whether written or oral and whether express or implied.
"Control" (including the terms "controlled by" and "under common
control with"), with respect to the relationship between or among two or more
parties, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a party, whether through the
ownership of voting securities, by Contract or otherwise, including the
ownership, directly or indirectly, of securities having the power to elect a
majority of the board of directors or similar body governing the affairs of such
party.
"Control Agreement" means, collectively, the agreements, contracts
and instruments, a list of which is attached hereto as Schedule 1.5, which
enable the Buyer to control and consolidate with its financial statements each
Group Company and the Acquired Businesses.
"Earnout" means the additional consideration paid by the Buyer to
the Seller in return of the Company's financial performance following the First
Closing. In other words, if the Company is able to fulfill certain financial
target, the Seller is entitled to be awarded an additional consideration.
"Earnout Closing Date" means the date when the Buyer duly sign and
deliver the Earnout Closing Notice to the Seller.
"Employee's Misconduct" means an employee's gross negligence in the
performance of his duties to the Group Companies; an employee's misappropriation
of assets of, or embezzlement from, the Group Companies; willful breach by an
employee of such employee's material obligations under the relevant Service
Agreement entered into by the employee; a material breach by the employee of
this Agreement, the Confidentiality Agreement, the Manager Non-Compete Agreement
and the Employee Non-Compete Agreement entered into by such employee; and
willful violation of Buyer's Code of Ethics or other written policy.
"Encumbrance" means any security interest, pledge, mortgage, lien,
charge, limitation, condition, equitable interest, option, easement,
encroachment, right of first refusal, adverse claim or restriction of any kind,
including any restriction on transfer or other assignment, as security or
otherwise, of or relating to use, quiet enjoyment, voting, receipt of income or
exercise of any other attribute of ownership.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"First Closing Date" means the date of (i) April 15, 2006, and (ii)
the day when all of the conditions set forth in Articles VI and VII hereof are
satisfied or waived, whichever is the earlier.
"FM Ordinary Shares" means the ordinary shares, $0.00005 par value
per share, of Buyer.
3
"Guaranty" means, as to any Person, any contract, agreement or
understanding of such Person pursuant to which such Person guarantees the
indebtedness, Liabilities or obligations of others, directly or indirectly, in
any manner, including agreements to purchase such indebtedness, Liabilities or
obligations, or to supply funds to or in any manner invest in others, or to
otherwise assure the holder of such indebtedness, Liabilities or obligations
against loss.
"Group Companies" means the Company, the Subsidiaries, any variable
interest entity controlled by and consolidated with the Company, the Acquired
Businesses, and any entities which is controlled by any of the aforesaid
companies, a list of which companies is set forth in Schedule 1.1 hereto.
"Governmental Authority" means Chinese government or any government
or governmental or regulatory departments thereof, or administrative subdivision
thereof, or any agency or committee thereof, or any court or arbitrator.
"Intellectual Property" means (a) all rights in inventions (whether
patentable or un-patentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, statutory invention registrations together with all re-issuances,
divisions, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof and all rights therein provided by Law or international
treaties and conventions; (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith; (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith; (d) all trade secrets and
confidential business information (including databases, ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals); (e) all computer programs and software
(including data and source and object codes and related documentation); (f) all
other property rights in connection with the foregoing; and (g) all copies and
tangible embodiments thereof (in whatever form or medium).
"Key Management" means Xx. Xx Xxx Xxxx [CHINESE CHARACTERS], Xx.
Xxxxx Fu Lian [CHINESE CHARACTERS], Xx. Xx Yu [CHINESE CHARACTERS] and Xx. Xxxx
Chang Hong [CHINESE CHARACTERS].
"Law" means any statute, code, law, ordinance, regulation or rule or
other legally binding requirement of any Governmental Authority.
"Litigations" means claims, law suit, prosecution or arbitration,
interpellation, legal procedure or investigation raised by or against any
Government Department.
"Liabilities" means any debts, liability or obligation (whether
known or unknown, claimed or not, absolute or probable, individually or in the
aggregate, liquidated or outstanding, due or overdue), and any or all law suits,
damages, tax variations, penalties fines, interests, tax assessments, judgments,
losses, taxes, court fees, costs (including but not limited in the attorney
fees, the expert consultant fees and the out-of-pocket fees).
"Material Adverse Effect" or "Material Adverse Change" means any
effect or change that would be materially adverse (i) to the business, assets,
condition (financial or
4
otherwise), operating results, or operations of the Group Companies, taken as a
whole, or (ii) to the ability of any of the Seller's Shareholder to timely
consummate the transactions contemplated by this Agreement or by any of the
Ancillary Documents.
"Person" means any natural person, corporation, limited liability
corporation, unincorporated organization, partnership, association, joint stock
company, joint venture, trust or government, or any agency or political
subdivision of any government, or any other entity.
"PRC" means the People's Republic of China, but solely for the
purposes of this Agreement excluding the Hong Kong Special Administrative
Region, Macau Special Administrative Region and the island of Taiwan.
"Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Shandong Xxxxxx" means Shandong Xxxxxx Digital Technology Co.,
Ltd., a company incorporated and validly existing under the laws of PRC.
ARTICLE II
PURCHASE AND SALE OF THE SHARES
2.01 Purchase and Sale of the Shares. Subject to the terms and
conditions set forth in this Agreement, on the First Closing Date, the Seller
shall sell to Buyer the Shares and Buyer shall purchase from the Seller the
Shares, on a fully converted and diluted basis, for total consideration
consisting of the terms and conditions, as set forth below.
2.02 Purchase Considerations. In consideration of purchasing the
Shares, the Buyer shall pay the Seller: (a) Cash Consideration with the amount
of USD 15 Million, and (b) the Share Consideration as the Earnout (i.e. the
Buyer's shares with the maximum value up to USD 15 Million).
2.03 Purchase Deposit. Within three (3) business days after the date
of this Agreement, the Buyer shall pay the Seller a Purchase Deposit with the
amount of USD 3 Million and the Seller shall provide the Buyer with a Purchase
Deposit Receipt immediately. When the Buyer pays the Cash Consideration to the
Seller on the Cash Payment Date, such Purchase Deposits, being treated as part
of the Cash Consideration, shall be deducted from the payment of total Cash
Consideration automatically.
2.04 First Closing.
Unless this Agreement being terminated pursuant to Article VIII
before the First Closing Date, subject to the terms and conditions set forth in
this Agreement, the sale and purchase of the Shares shall be accomplished within
three (3) business days after the First Closing (the "Cash Payment Date").
5
(a) On the Cash Payment Date, the Buyer shall pay the Seller in
cash in the amount of USD 12 Million. Such USD12 Million plus
the Purchase Deposit (i.e. USD 3 Million payment pursuant to
Article 2.3) will constitute the whole cash consideration ("Cash
Consideration"); and
(b) On the First Closing Date, the Seller shall
deliver/accomplish or cause to be delivered/accomplished the
following items:
(1) all previously undelivered documents and the
Ancillary Documents required under Article VII
hereto;
(2) in respect of Company, the business license,
common seal (if exists), registered certificates
of share or share certificate book (including the
registered certificates of those un-issued share)
and all minute books and other statutory books or
equivalent items which shall be kept by relevant
shareholders, in accordance with the Law of the
jurisdiction where Company is registered ; and
(3) any other procedures which are necessary for the
legal transfer of the Share to the Buyer on the
First Closing Date.
(c) Unless otherwise agreed by the parties to this Agreement,
should the terms set forth in the Article VI cannot be fulfilled
by April 15, 2006 due to the Buyer's intentionally breach or
failure to perform its obligations as specified by this
Agreement, this Agreement shall be automatically terminated.
Under such circumstances, the Seller shall not refund to the
Buyer the Purchase Deposit.
2.05 Earnout Closing.
(a) First Earnout Closing
(1) On or prior to May 31, 2007 (or any later day as
may be mutually agreed by Buyer and Seller if the
Company shall demonstrate to Buyer that the May
31, 2007 deadline is not attainable upon
reasonable efforts of the Company due to
unforeseen difficulties or obstacles), the Company
shall provide the Buyer with audited financial
statements of the Company and its consolidated
entities for the year ending March 31, 2007,
prepared in accordance with U.S. GAAP, including a
statement setting forth the 2006 Audited Annual
Net Income (the "2006 Audited Annual Financial
Statements").
(2) The Calculation method and the Adjustment system
of the Initial Earnout Value Amount shall be made
as follows:
6
(i) If the Company's 2006 Audited Annual Net
Income exceeds USD 5 Million (including USD
5 Million), the Buyer shall pay the Seller
the Initial Earnout with the amount of USD
7.5 Million in the form of the Buyer's
shares.
(ii) If the Company's 2006 Audited Annual Net
Income exceeds USD 2.5 Million (including
USD 2.5 Million) but less than USD 5
Million, the Buyer shall pay the Seller the
Initial Earnout in the form of the Buyer's
shares. The formula for the calculation of
such Initial Earnout shall be the quotient
of (x) USD 7.5 Million times (2006 Audited
Annual Net Income less USD 2.5 Million)
divided by (y) USD 2.5 Million. Such 2006
Audited Annual Net Income shall be
calculated in USD (below as the same).
(iii) If the Company's 2006 Audited Annual Net
Income is less than USD 2.5 Million, the
Buyer shall not pay the Seller the Initial
Earnout, while the Seller shall refund
part/whole of the Cash Consideration to the
Buyer in the amount calculated by the
formula that: the quotient of (x) USD 15
Million times (USD 2.5 Million less 2006
Audited Annual Net Income) divided by (y)
USD 2.5 Million. The Cash Consideration
refunded by the Seller to the Buyer shall
not exceed the Cash Consideration actually
obtained by the Seller from the Buyer.
(iv) If the Company's 2006 Audited Annual Net
Income exceeds USD 5 Million, the exceeded
amount shall be credited to Company's 2007
Audited Annual Net Income for its
calculation.
(3) Unless otherwise agreed in this Agreement, the
Initial Earnout Closing Notice shall be delivered
by the Buyer to the Seller within fifteen (15)
business days following the ate of the delivery of
the 2006 Audited Annual Financial Statements. If
the above clause (a) (2) (iii) applies, the Buyer
shall deliver to the Seller the Notice of
Non-delivery of the Earnout together with the
Notice of Refund of the Cash Consideration.
(4) Within fifteen (15) business days following the
date of the delivery of the Earnout Closing Notice
("Earnout Closing Date") to the Seller, the Buyer
shall issue its shares to the Seller as the
Earnout. The number of the share to be issued
shall be calculated by the formula that: the
quotient of the Initial Earnout value amount
divided by Unit Price of Buyer's Shares (Unit:
USD).
7
"Unit Price of Buyer's Shares" shall mean the
closing price of the Buyer's shares on the date of
this Agreement or USD50/ADRs, whichever is the
lower, provided, however, that, from the date of
the Buyer's announcement of earning for 4th
quarter to the date of this Agreement, the average
price of ADRs exceeds USD 60, the "Unit Price of
Buyer's Shares" shall mean the closing price on
the date of this Agreement or USD52/ADRs,
whichever is the lower.
(b) Second Earnout Closing
(1) On or prior to May 31, 2008 (or any later day as
may be mutually agreed by Buyer and Seller if the
Company shall demonstrate to Buyer that the May
31, 2008 deadline is not attainable upon
reasonable efforts of the Company due to
unforeseen difficulties or obstacles), the Company
shall deliver audited financial statements of the
Company and its consolidated entities for the year
ending March 31, 2008, prepared in accordance with
U.S. GAAP, including a statement setting forth the
2007 Audited Annual Net Income (the "2007 Audited
Annual Financial Statements").
(2) The Calculation method and the Adjustment system
of the Second Earnout Value Amount shall be made
as follows:
(i) If the Company's 2007 Audited Annual Net
Income exceeds USD 8 Million (including USD
8 Million), the Buyer shall pay the Seller
the Second Earnout with the amount of USD
7.5 Million in the form of the Buyer's
shares.
(ii) If the Company's 2007 Audited Annual Net
Income exceeds USD 5 Million (including USD
5 Million) but less than USD 8 Million, the
Buyer shall pay the Seller the Second
Earnout in the form of the Buyer's shares.
The formula for the calculation of such
Second Earnout shall be the quotient of (x)
USD 7.5 Million times (2007 Audited Annual
Net Income less USD 5 Million) divided by
(y) USD 3 Million. Such 2007 Audited Annual
Net Income shall be calculated in USD (below
as the same).
(iii) If the Company's 2007 Audited Annual Net
Income is less than USD 5 Million, the Buyer
shall not deliver to the Seller the Second
Earnout.
(iv) If the Initial Earnout Value Amount obtained
by the Seller is less than USD 7.5 million
while the Company's 2007 Audited Annual Net
Income exceeds USD 8 Million, such exceeded
amount shall be retrospectively credited to
Company's 2006 Audited
8
Annual Net Income to reach a New Annual Net
Income. The Initial Earnout Value Amount
shall be re-calculated based on such New
Annual Net Income with the formula for the
Initial Earnout so as to reach a New Earnout
Value Amount. When the Buyer deliver to the
Seller the Second Earnout, the Seller may
require the Buyer to pay the balance between
the Initial Earnout Value Amount and the New
Earnout Value Amount, provided, however,
that the sum of the said balance together
with the Initial Earnout Value Amount shall
be in no event higher than USD 7.5 Million.
(3) Unless otherwise agreed in this Agreement, the
Second Earnout Closing Notice shall be delivered
by the Buyer to the Seller within fifteen (15)
business days following the date of the delivery
of the 2007 Audited Annual Financial Statements.
If the above clause (b) (2) (iii) applies, the
Buyer shall deliver to the Seller the Notice of
Non-delivery of the Earnout.
(4) Within fifteen (15) business days following the
date of the delivery to the Seller the Earnout
Closing Notice ("Earnout Closing Date"), the Buyer
shall issue its shares to the Seller as the
Earnout, The number of the share to be issued
shall be calculated by the formula that: the
quotient of the Second Earnout value amount times
Unit Price of Buyer's Shares (Unit: USD).
"Unit Price of Buyer's Shares" shall mean the
closing price of the Buyer's shares on the date of
this Agreement or USD50/ADRs, whichever is the
lower, provided, however, that, from the date of
the Buyer's announcement of earning for 4th
quarter to the date of this Agreement, the average
price of ADRs exceeds USD60, the "Unit Price of
Buyer's Shares" shall mean the closing price on
the date of this Agreement or USD52/ADRs,
whichever is the lower.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller and the Seller's Shareholder, jointly and severally,
represent and warrant to the Buyer as follows as of the date hereof:
3.01 Due Organization, Good Standing and Power The Seller is a
company duly incorporated, validly existing and in good standing under the laws
of the British Virgin Islands with independent juristic personality. The Seller
has the requisite power and authority (corporate and other) to own, lease and
operate its assets and to conduct the business now being conducted by it. The
Seller has all requisite power and authority to enter into this
9
Agreement and the Ancillary Documents to which it is a party and to perform its
obligations hereunder and thereunder.
3.02 The Company is a holding company duly incorporated, validly
existing and in good standing under the laws of the British Virgin Islands which
has no business activities. The Company has no Liabilities or obligations and is
not party to any Contract, other than (i) this Agreement, the Ancillary
Documents to which it is a party and such Contracts as are described in Schedule
3.02, and (ii) any Liabilities or obligations relating solely to the
transactions contemplated by this Agreement, the Ancillary Documents or the
Contracts described in Schedule 3.02.
3.03 Authorization, Enforceability. The execution and delivery of
this Agreement and the Ancillary Documents to which the Seller has been duly
authorized by all necessary corporate action on the part of each such party.
Subject to the public policies, each of this Agreement and the Ancillary
Documents constitutes a valid and binding agreement of the Seller, enforceable
against each of them in accordance with its terms.
3.04 Capitalization; Ownership and Transfer of Shares; Valid
Issuance
(a) The Shares set forth in Schedule 3.04 hereto constitute the only
equity capital of the Company. All of the Shares were duly authorized for
issuance and are validly issued, fully paid and non-assessable.
(b) The Seller is the only record and beneficial owner of the said
Shares and has good and marketable title to such Shares, free and clear of any
and all Encumbrances. The Seller has the corporate or other applicable
organizational power and authority to sell, transfer, assign and deliver the
Shares as provided in this Agreement, and such delivery will convey to the Buyer
good and valid title to the Shares, free and clear of any and all Encumbrances.
3.05 Group Companies
a) Schedule 3.05 sets forth for each of the Group Companies (i) its
jurisdiction of incorporation, formation or organization, as applicable, and
(ii) the number of authorized, issued and outstanding shares of each class of
its capital stock or other authorized, issued and outstanding equity interests,
as applicable, the names of the holders thereof, and the number of shares or
percentage interests, as applicable, held by each such holder. Except as set
forth in Schedule 3.05, each of the Group Companies is duly incorporated or
formed, as applicable, validly existing and, in good standing under the Laws of
its jurisdiction of incorporation or formation, as applicable, has the requisite
corporate or similar power and authority (corporate and other) to own, lease and
operate its assets and to carry on its business now being conducted by it. All
the issued and outstanding shares of capital stock or other equity interests of
the Group Companies are owned of record, free and clear of any Encumbrances
except as set forth in Schedule 3.05.
b) No shares of capital stock or other equity or ownership interests
of any Group Company have been issued in violation of any rights, agreements,
arrangements or commitments under any provision of applicable Law, the
certificate of incorporation or bylaws or comparable organizational documents of
any Group Company or any Contract to which the Group Company is a party or by
which the Group Company is bound.
10
3.06 Corporate Records. The Seller has made available to the Buyer
true, correct and complete copies of the certificates of incorporation, by-laws
or comparable organizational documents and business licenses of each Group
Company. Such certificates of incorporation, by-laws, or comparable
organizational documents and business licenses are in full force and effect.
None of the Group Companies is in violation of any of the provisions of its
certificate of incorporation, bylaws or comparable organizational documents. The
transfer books and minute books of each Group Company that have been made
available for inspection by Buyer prior to the date hereof are true and
complete.
3.07 No Approvals or Conflicts. The execution, delivery and
performance by the Seller of this Agreement and the Ancillary Documents to which
it is a party do not and will not (i) violate, conflict with or result in a
breach by any of the Seller Parties of the organizational documents of any of
the Seller, (ii) violate, or conflict with any Governmental Order or Law
applicable to the Seller, and require any order, consent, approval or
authorization of, or notice to, or declaration, filing, application,
qualification or registration by the Seller with, any Governmental Authority,
except in the cases such violation, conflict, breach, default, termination,
acceleration, cancellation or failure to give notice, register or obtain
approval would not reasonably be expected to have a Material Adverse Effect. No
Governmental Authorizations are required for the execution and performance by
the Seller of this Agreement and the Ancillary Documents and the consummation by
the Seller of the transactions contemplated hereby and thereby
3.08 Compliance with Law; Governmental Authorizations. None of the
Group Companies is in violation of any Governmental Order or Law applicable to
them or any of their respective properties, except where any such violation
would not reasonably be expected to have a Material Adverse Effect.
3.09 Licenses. Except otherwise agreed in Schedule 3.09, each of the
Group Companies has obtained all material licenses, consents, authorizations,
approvals, and permits of and from, and has made all declarations and filings
with, all Governmental Authorities necessary for the conduct of the Business and
such licenses, consents, authorizations, approvals or permits contain no
materially burdensome restrictions or conditions. To the Knowledge of the
Seller, no government department is considering modifying, suspending or
revoking any such licenses, consents, authorizations or approvals and each of
the Group Companies is in compliance with the provisions of all such licenses,
consents, authorizations, approvals, orders, certificates or permits.
3.10 Litigation. There are no suits, actions, arbitrations,
proceedings or investigations pending or, to the Knowledge of the Seller,
threatened against any of the Seller and the Group Companies.
3.11 Tax Matters
(a) (i) All income Tax Returns required to be filed by or on behalf
of the Seller has been accurately prepared in all material respects and filed in
a timely manner (within any applicable extension periods) and are true, correct
and complete in all material respects, (ii) all Taxes shown to be due on such
Tax Returns have been timely paid in full or will be timely paid in full by the
due date thereof, and the Group Companies have adequately provided for all Taxes
for which they are required to provide, except where any failure to pay or
underpayment would not reasonably be expected to have a Material Adverse Effect,
(iii) no material claims being asserted in writing with respect to any Taxes of
any of the Group
11
Companies; and, (iv) no material probable claim for compensation being asserted
with respect to any Taxes of any of the Group Companies.
(b) Each of the Group Companies is and has been in compliance with
all applicable Laws relating to the payment, withholding and exemptions of Taxes
and has duly and timely withheld from employee salaries, wages and other
compensation and has paid over to the appropriate taxing authorities all amounts
required to be so withheld and paid over for all periods under all applicable
Laws, except where any such noncompliance would not reasonably be expected to
have a Material Adverse Effect;
(c) The Seller has made available to the Buyer complete copies of
all approval documents with respect of any Tax exemption or all statements to
qualify for Tax exemptions;
(d) There are no audits or investigations or penalties by any taxing
authority of any of the Group Companies in progress nor, to the Knowledge of the
Seller is there any pending or threatened audit or investigation or penalties by
any Government Authority;
(e) No Group Company is a party to any tax indemnity, tax allocation
or tax sharing or similar agreement or arrangement (whether or not written)
pursuant to which it will have any obligation to make any payments after the
First Closing.
3.12 Officers, Employees and Labor
(a) Each of the Group Companies has complied in all material aspects
with all applicable Laws relating to the employment of labor, including
provisions thereof relating to wages, hours, social welfare, equal opportunity
and collective bargaining. There is no organized labor strike, dispute, slowdown
or claim pending, or to the Knowledge of the Seller, threatened, against or
affecting any of the Group Companies. None of the Group Companies has any
Contract with any labor union.
(b) None of the employees of the Group Companies is subject to any
Governmental Order that would interfere with the use of his or her best efforts
to promote the interests of the Group Companies. Any of such employees is now
obligated: (i) the execution, delivery and performance of any of this Agreement
and the Ancillary Documents; (ii) the conduct of the Business of any Group
Company as currently conducted or as proposed to be conducted.
(c) Except otherwise agreed in the Schedule 3.12(c), none of the
execution, delivery and performance of any of this Agreement and the Ancillary
Documents will constitute an event under any benefit plan or individual
agreement that will or may result in any payment, acceleration, vesting or
increase in material benefits with respect to any employee, former employee,
consultant, agent or director of the Group Companies.
(d) Except as required by applicable laws and regulations, none of
the Group Companies has any obligation to provide retirement, death or
disability benefits to any of the present or past employees of the Group
Companies, or to any other person.
(e) None of the Seller and the businesses or entities operated or
owned by the Seller, nor, to the Knowledge of the Seller, any of their
respective officers, directors,
12
supervisors, managers or employees have, directly or indirectly, owned any
interest, in any entity, or have entered into any transactions, that may compete
with the Group Companies, or are otherwise involved in the Business.
(f) (i) no material labor dispute, work stoppage, slow down, strike
or other conflict with the employees of any of the Group Companies exists; (ii)
none of the Group Companies is engaged in any unfair labor practice (iii) there
is no unfair labor practice complaint pending or, to the Knowledge of the
Seller, threatened against any of the Group Companies before any competent
Governmental Agency, and no grievance or arbitration proceeding arising out of.
3.13 Loans
Except as described in this Agreement and the Ancillary Documents,
none of the Group Companies has, directly or indirectly: (A) extended credit,
arranged to extend credit, or renewed any extension of credit, to or for any
director or executive officer of the Seller and the Group Companies, or (B) made
any material modification to any term of any of the above mentioned individuals.
3.14 Prohibited Payments
To the Knowledge of the Seller, none of the Group Companies, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Group Companies, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to a
political activity, made any direct or indirect unlawful payment to any
government official or employee from corporate funds; or made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
3.15 Share Option and Other Plans
None of the Group Companies has any pension, profit sharing, stock
option, employee stock purchase or other plan providing for incentives or other
compensation to employees (aside from any salary, bonus payable and social
insurance arrangements provided by Laws).
3.16 Intellectual Property
(a) The Group Companies have rights to acquire from its management
and employees all Intellectual Property material to the Business, including any
job-related inventions as Intellectual Property held by any management or
employees of the Group Companies (including the Intellectual Property holding by
the senior management of the Group Companies).
(b) Each Group Company has taken all reasonable steps in accordance
with standard industry practices to protect its rights in its Intellectual
Property and at all times has maintained the confidentiality of all information
that constitutes or constituted a trade secret of each Group Company.
(c) No Group Company is a party to any pending legal proceedings
which involve a claim of infringement, unauthorized use, or violation of any
intellectual property
13
right by any Person against such Group Company or challenging the ownership,
use, validity or enforceability of, any material Intellectual Property owned by
or exclusively licensed to such Group Company.
(d) To the Knowledge of Seller, no Person is infringing, violating,
misusing or misappropriating any material Intellectual Property owned by any
Group Company, and no written claims have been made against any Person by any
Group Company.
3.17 Contracts
(a) Except as set forth on Schedule 3.17, on the First Closing Date,
none of the Group Companies is a party to or is bound by:
(i) any Contract which contains restrictions with respect to
payment of dividends or any other distribution in respect of
its capital stock, partnership interests or membership
interests;
(ii) any Contract requiring the applicable Group Company to make
future capital expenditures in excess of RMB 500,000 (either
individually or in the aggregate);
(iii) any Contract applicable to Group Company, which lead to
indebtedness with an amount in excess of RMB500,000;
(iv) any loan or advance by a Group Company to, or investment by a
Group Company in, any Person, in each case, which involves an
amount in excess of RMB500,000, or any agreement, contract or
commitment relating to the making of any such loan, advance or
investment;
(v) any Contract with a Group Company, or any management, service,
consulting or any other similar type of Contract requiring
payment of fees in excess of RMB500,000 per year;
(vi) any material warranty, guaranty Contract;
(vii) any material Contract that cannot be terminated by a Group
Company without liability upon less than ninety (90) days'
notice;
(viii) any collective bargaining agreement with any labor union or
other representative of employees;
(ix) any Contract that governs any joint venture, partnership or
other cooperative arrangement or any other relationship
involving a sharing of profits and risks;
(x) any Contract that would result in the merger with or into or
consolidation into another Person;
14
(xi) any Contract for the sale of any of the assets of any Group
Company or for the grant to any Person of any preferential
rights to purchase any of its assets;
(xii) any Contract with any Governmental Authority; or
any material amendment, modification or supplement in respect of any
of the foregoing made other than in the ordinary course of business
consistent with past practice (each of (i)-(xii), a "Material
Contract").
(b) True and correct copies (or, if oral, written summaries) of each
of the Material Contracts have been made available to the Buyer.
(c) Except as set forth in Schedule 3.17, no condition exists or
event has occurred that would constitute a default by (x) any of the Group
Companies under any Material Contract or (y) any other party to any Material
Contract.
3.18 Compliance with Laws. Each of the Group Companies is, and at
all times has been, in full compliance with all applicable Laws in all material
aspects.
(a) No event has occurred or circumstance exists that (i) may
constitute or result in a violation by any of the Group Companies of any
applicable Law where any such violation or failure would reasonably expected to
have a Material Adverse Effect, or (ii) may give rise to any obligation on the
part of any of the Group Companies to undertake, or to bear all or any portion
of the cost of, any remedial action of any nature and any such obligation would
reasonably be expected to have a Material Adverse Effect. None of the Group
Companies has received any notice or other communication (whether oral or
written) of illegal behavior or probable illegal behavior from any Governmental
Authority
(b) To the Knowledge of Seller, none of the Group Companies or any
director, officer, agent, employee, or any other Person associated with or
acting for or on behalf of the foregoing, has offered, paid, and promised to pay
any money to any Government department or its Official for the benefits or
interests of the Group Company.
(c) To the Knowledge of Seller Parties, none of the beneficial
owners of any interest in any Group Company is a Government Official.
3.19 None of the assets of the Group Companies constitute
state-owned assets.
3.20 The Seller and the Group Companies have fully provided Buyer
with all the information known to the Seller and Group Companies that Buyer has
requested. None of this Agreement, the Ancillary Documents or any other
statements or certificates or other materials made or delivered, or to be made
or delivered to Buyer in connection herewith or therewith, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
3.21 No other Representations or Warranties. Except for the
representations and the warranties made in Article III herein, no other
representations or warranty is expressed or implied by the Seller or the
Seller's Shareholder to the Buyer.
15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller on the date of
this agreement as follows:
4.01 Organization. Buyer is a corporation duly incorporated, validly
existing and in good standing under the Laws of the Cayman Islands. Buyer has
all requisite corporate power and authority to own its assets and to carry on
its business as now being conducted by it and is duly qualified or licensed to
do business and is in good standing, except where the failure to be so qualified
or licensed would not reasonably be expected, individually or in the aggregate,
to have a material adverse effect on the ability of the Buyer to consummate the
transactions contemplated by this Agreement and by the Ancillary Documents to
which it is a party.
4.02 Authorization, Enforceability. Buyer has the corporate power
and authority to execute and deliver this Agreement and the Ancillary Documents.
The execution and delivery of this Agreement and the Ancillary Documents have
been duly authorized by all necessary corporate action on the part of Buyer and
no other corporate or stockholder proceedings or actions are required to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Buyer and constitutes a valid, enforceable and
binding agreement of the Buyer.
4.03 No Approvals or Conflicts. The execution, delivery and
performance by the Buyer of this Agreement and the Ancillary Documents and the
consummation by the Buyer of the transactions contemplated hereby and thereby do
not and will not (i) violate, conflict with or result in a breach by the Buyer
of the certificates of incorporation, by-laws or equivalent documents of the
Buyer, (ii) violate, conflict with or result in a breach of, or constitute a
default by the Buyer, or give rise to any right of termination, cancellation or
acceleration under, or result in the creation of any Encumbrance upon any of the
properties of the Buyer under, any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, lease, contract, agreement or other
instrument to which the Buyer or any of its properties may be bound, (iii)
violate or result in a breach of any Governmental Order or Law applicable to the
Buyer or any of its properties or (iv) require any order, consent, approval or
authorization of, or notice to, or declaration, filing, application,
qualification or registration with, any Governmental Authority, except, with
respect to the foregoing clauses (ii), (iii) and (iv) above, as would not,
individually or in the aggregate, reasonably be likely to have a material
adverse effect on the ability of the Buyer to consummate the transactions
contemplated by this Agreement and by the Ancillary Documents to which it is a
party.
4.04 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, neither the Buyer
nor any other Person makes any other express or implied representation or
warranty to the Seller.
16
ARTICLE V
FURTHER UNDERTAKINGS AND AGREEMENTS OF THE PARTIES
5.01 Conduct of Business Prior to a Closing.
(a) Without the prior consent of the Buyer, except as contemplated
by this Agreement and the Ancillary Documents, from and after the date of this
Agreement and until the Closing Date, (1) the Company shall cause the Group
Companies to (i) conduct the Business in all material respects in the ordinary
course of business consistent with past practice, (ii) not change the scope of
the Business and (iii) use their commercially reasonable efforts to maintain
satisfactory relationships with suppliers, customers and others having material
business relationships with them. (2)Except as contemplated by this Agreement
and except as set forth on section 5.01, the Company shall cause the Group
Companies to not do any of the following without the prior written consent of
the Buyer:
(i) except for purchases and sales by a Group Company to or from
another Group Company, purchase, sell or issue any of their
capital stock or other equity interests or grant or make any
option, subscription, warrant, call, commitment or agreement
of any character in respect of their capital stock or other
equity interests;
(ii) issue or pay any dividends other than to any of the Group
Companies;
(iii) conduct any split, recombination or reclassification or
issuance of capital stock;
(iv) sell or otherwise dispose of assets with value in the
aggregate in excess of RMB 1,000,000, including sales of
assets in the ordinary course of business;
(v) other than the acquisitions, merge or consolidate with any
Person;
(vi) acquire assets having an aggregate value exceeding RMB
1,000,000, including (A) acquisitions in the ordinary course
of business and (B) capital expenditures permitted by clause
(vii) below;
(vii) prior to the First Closing Date, make capital expenditures in
excess of RMB1,000,000 in aggregate;
(viii) guarantee any indebtedness for borrowed money from the Seller
or its subsidiaries in the ordinary course of business;
(ix) incur any Encumbrance of material assets, other than Permitted
Encumbrances;
(x) increase the compensation of employees of the Group Companies
other
17
than (A) in the ordinary course of business or (B) as required
by any agreement in effect as of the date hereof or as
required by Law;
(xi) make any material change in the accounting methods or
practices followed by any of the Group Companies (other than
such changes that have been required by Law or U.S. GAAP);
(xii) enter into any contract that restricts the Group Companies
from engaging in any line of business in any geographic area
or competing with any Person that materially impairs the
operation of the business of the Group Companies, individually
or taken as a whole;
(xiii) enter into any partnership, limited liability company or
joint venture agreement;
(xiv) terminate or make any material amendment to a material
contract;
(xv) other than (A) in the ordinary course of business, (B) as
required by any agreement in effect as of the date hereof or
(C) as required by Law, enter into, adopt or amend any
employment agreement or employee benefit plan with or for the
benefit of any of its employees;
(xvi) enter into any collective bargaining agreements except for
renewals for expired agreements;
(xvii) purchase, cancel or terminate any insurance policy naming any
of the Group Companies as a beneficiary or a loss payee;
(xviii) subject to the written consent of the Buyer, amend any of
its organizational documents; or
(xix) agree or commit to do any of the foregoing.
(b) During the period commencing on the date hereof and ending on
the First Closing Date, the Seller and the Seller's shareholder will cause the
Group Companies to afford Buyer and its counsel, accountants and other
authorized representatives, during normal business hours, upon reasonable
advance notice to the officers, directors, employees, accountants and other
advisors and agents, properties, books, records and contracts of the Group
Companies, provided that such access does not interfere with normal business
operations. The parties hereto agree that the provisions of the Confidentiality
Agreement shall continue in full force and effect following the execution and
delivery of this Agreement. All information obtained by the Buyer and its
counsel, accountants and representatives pursuant to this Section 5.1(b) shall
be kept confidential in accordance with the Confidentiality Agreements. Unless
otherwise required by applicable Law, the Seller's Shareholder hereby agrees and
the Seller shall cause each of the Acquired Business Shareholders agree that the
Seller's Shareholder and each of the Acquired Business Shareholders shall, and
shall cause its and the Acquired Business Shareholders' respective officers,
directors, employees, auditors and agents to, hold in confidence all non-public
information acquired from Buyer pursuant to this Section 5.1.
18
5.02 Filing and Consents. Each of the Seller, the Seller's
Shareholder and the Group Companies, on the one hand, and the Buyer, on the
other hand, shall use all commercially reasonable efforts to obtain and to
cooperate in obtaining any consent, approval, authorization or order of, and in
making any registration or filing with, any Governmental Authority or other
Person required in connection with the execution, delivery or performance of
this Agreement, including any filings pursuant to (i) the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended; or any other antitrust
regulation, (ii) the Securities Act and Exchange Act, and (iii) any other
applicable filings or consents. To the extent feasible under applicable PRC laws
and regulations, the Seller's Shareholder (including the Chinese resident who
obtains the shares of the Seller after the execution of this Agreement) shall
complete all necessary filings or registrations, or obtain all necessary
approvals, as required by the State Administration for Foreign Exchange ("SAFE")
after the Closing Date. The Seller and the Seller's Shareholder hereby agree
that, with respect to the Acquired Business Shareholder that is a PRC resident
and the Seller's Shareholder (including the Chinese resident who obtains the
shares of the Seller after the execution of this Agreement) (each a "SAFE
Registrant"), unless and until Buyer has received sufficient documentation to
its satisfaction that such SAFE Registrant has completed all necessary filings
or registrations required to comply with the rules and regulations of SAFE, the
Seller shall not release any FM Ordinary Shares to any such SAFE Registrant or
to dispose of any FM Ordinary Shares by any methods.
5.03 Tax Matters; Cooperation; Preparation of Returns; Tax Elections
(a) The Seller and the Seller's Shareholder agree to furnish or
cause to be furnished to each other, as promptly as practicable, such
information and assistance relating to any of the Group Companies (including
access to books and records, employees, contractors and representatives) as is
reasonably necessary for the filing of all Tax Returns, the making of any
election related to Taxes, the preparation for any audit by any Taxing
Authority, and the prosecution or defense of any claim, suit or proceeding
relating to any Tax Return. The Seller shall retain all books and records with
respect to Taxes pertaining to the Group Companies until the expiration of all
relevant statutes of limitations. At the end of such period, each party shall
provide the other with at least ten days prior written notice before destroying
any such books and records, during which period the party receiving such notice
can elect to take possession, at its own expense, of such books and records.
(b) The Company shall prepare, or cause to be prepared, all Tax
Returns in respect of any of the Group Companies for any taxable year ending on
or before the First Closing Date. The Seller shall timely pay to the relevant
Taxing Authority all Taxes due in connection with any such Tax Returns.
(c) The Group Companies shall pay all transfer, documentary, sales,
use, registration and other such Taxes (including all applicable real estate
transfer Taxes, but excluding any Taxes based on or attributable to income or
gains) and related fees incurred in connection with this Agreement and the
Ancillary Documents and the transactions contemplated hereby and thereby.
5.04 Non-Competition.
(a) the Seller and the Seller's Shareholder agree that for a period
of (i) four (4) years following the First Closing Date and (ii) two (2) year
following the
19
termination or expiration of the Service Agreement entered into between any of
the Seller and Buyer (or a Person designated by Buyer), whichever is later, the
Seller and the Seller's Shareholder will not directly or indirectly engage or
invest (other than investments of less than 2% of the equity securities of any
company listed on a domestic or foreign securities exchange) in any Competitive
Business.
(b) the Seller and the Seller's Shareholder agree that for a period
of (i) four (4) years following the First Closing Date and (ii) two (2) year
following the termination or expiration of the Service Agreement entered into
between the Seller and Buyer (or a Person designated by Buyer), whichever is
later, the Seller and the Seller's Shareholder shall not, and shall cause its
Affiliates not to, solicit, recruit or hire any person who at any time on or
after the date of this Agreement is an employee of the Group Companies.
(c) Each of the parties hereto acknowledges and agrees that the
remedy at Law for any breach of the requirements of this Section 5.04 would be
inadequate, and agrees and consents that without intending to limit any
additional remedies that may be available, temporary and permanent injunctive
and other equitable relief may be granted without proof of actual damage or
inadequacy of legal remedy.
5.05 Transfer of the Cooperation Agreement. The Seller and the
Seller's Shareholder hereby undertake that: prior to the First Closing Date, the
Seller and the Seller's Shareholder will cause Shandong Xxxxxx to transfer to
Beijing Xxxxxx at least 40% of all the Cooperation Agreements (the list of which
is set for the in Schedule 5.05) among Shandong Xxxxxx and Mobile Operators, and
Beijing Xxxxxx will accordingly undertake all the rights and obligations
undertaken by Shandong Xxxxxx in those 40% agreements transferred. The transfer
of the Cooperation Agreements shall be approved by Mobile Operators with written
consent, or, Beijing Xxxxxx shall execute new Cooperation Agreements with Mobile
Operators, so as to replace the Cooperation Agreements among Shandong Xxxxxx and
Mobile Operators, the content of which is subject to the written consent of the
Buyer. In addition, prior to the First Closing Date, the Cooperation Agreements
other than the Cooperation Agreements transferred shall be transferred to
Beijing Xxxxxx prior to June 31 2006, and Beijing Xxxxxx will accordingly take
all the rights and obligations undertaken by Shandong Xxxxxx in those agreements
transferred. The transfer of the such Cooperation Agreements shall be agreed by
Mobile Operators with written consent, or Beijing Xxxxxx shall, prior to June 31
2006, execute new Cooperation Agreements with Mobile Operators so as to replace
the such Cooperation Agreements between and among Shandong Xxxxxx and Mobile
Operators, the content of which is subject to the written consent of the Buyer.
5.06 Establishment of the Wholly-Foreign Owned Enterprise.
The Seller and the Seller's Shareholder undertake that prior to the
First Closing Date: (1) cause the Company to establish a wholly-foreign owned
enterprise in Beijing (the issuance of the Business License shall be deemed to
be the completion of the establishment), in which the Company holds all the
equity of interest; (2) such wholly-foreign owned enterprise and Beijing Xxxxxx
shall entered into a series of Controlling Agreements in accordance with the
form set forth in Exhibit 5.06, which is valid, bind and enforceable.
20
5.07 Assets and Business Transfer Agreement. The Seller and the
Seller's Shareholder undertake that, prior to the First Closing Date, the Seller
and the Seller's Shareholder will cause Beijing Xxxxxx and Shandong Xxxxxx to
enter into Assets and Business Transfer Agreement in accordance with the form
set forth in Exhibit 5.07. Shandong Xxxxxx shall, pursuant to such agreement,
unconditionally transfer to Beijing Xxxxxx all of its registered trademarks,
copyrights of the computer software, patent and know-how, domain name, figures
data, client information and other fixed assets/intangible
assets/information/documents ("related assets") which are relevant to the wap
push business. In addition, Shandong Xxxxxx shall, pursuant to such agreement,
unconditionally transfer to Beijing Xxxxxx all of its business cooperative
relationship and all the executed Cooperation Agreement among (i) Shandong
Xxxxxx and Mobile Operators, and among (ii) Shandong Xxxxxx and Mobile
Value-Added Business Information Content Service Providers ("SP"). The
formalities of the transfer of the above assets shall be completed prior to the
First Closing Date, while the formality of the transfer of the registered
trademark shall be deemed to be completed upon the issuance of the Notice of the
Acceptance of the Transfer Application by the Trademark Office of State
Administration of Industry and Commerce. If such formalities of transfer fail to
complete prior to the First Closing Date, it shall be completed within
reasonable time, provided, however, that the prior written consent of the Buyer
is given.
5.08 Execution of the SP Cooperation Agreement. The Seller and the
Seller's Shareholder hereby undertake that, prior to the First Closing Date, the
Seller and the Seller's Shareholder will cause Beijing Xxxxxx and SP to enter
into new Cooperation Agreement so as to replace all the Cooperation Agreements
among Shandong Xxxxxx and SP (the list of which are set forth in Schedule 5.08).
The contents and terms of the Cooperation Agreement shall be subject to the
prior written consent of the Buyer. Seller, the Seller's Shareholder and
Shandong Xxxxxx shall use their commercial reasonable efforts to cause the
execution of such agreements. If Beijing Xxxxxx still fails to execute the
relevant Cooperation Agreements with all SP prior to the First Closing Date, the
non-executed Cooperation Agreements shall be executed by and among Beijing
Xxxxxx and SP prior to June 31 2006.
5.09 Share Transfer Agreement The Seller and the Seller's
Shareholder hereby undertake to, on or prior to the First Closing Date, cause
all the shareholders of Beijing Xxxxxx (Xx. Xx Xxx Xxxx and Mrs. Xxxx Xxxx) to
enter into Share Transfer Agreement with the company or person designated by the
Buyer in accordance with the form set forth in 5.09, which stipulates that Xx.
Xx Xxx Xxxx and Mrs. Xxxx Xxxx shall once in a time transfer all the equity
interest they held in Beijing Xxxxxx to the company or person designated by the
Buyer. The formalities of the alteration of registration of the above share
shall be completed with 15 days of the First Closing Date.
5.10 Non-Competition and Confidentiality of Shandong Xxxxxx The
Seller and the Seller's Shareholder hereby undertake that, after the date of
this Agreement, Shandong Xxxxxx shall not engage in any competitive business or
invest any competitive business, and shall not: (1) provide, to other party
other than Beijing Xxxxxx, the Buyer or the Principal Party designated by the
Buyer, the property intellectuals, figures data, client information and other
information/documents it currently owned; (2) retain the photocopies of any
figures data, client information and other information, document, data, files,
records ("client information") , or retain any reports, analysis, collection,
records or
21
other documents(regardless in writing or by oral, image, electronic or other
ways of illustration), which contains the client information.
5.11 Key Management Independence
(a) Buyer agrees that it shall, during the period commencing from
the First Closing Date and ending on December 31, 2008, take all actions
necessary and appropriate to enable the Key Management (means Xx. Xx Xxx Xxxx,
Xx. Xxxxx Fu Lian, Xx. Xx Yu and Xx. Xxxx Xxxxx Xxxx) to continue to run the
Group Companies as an independent business unit of the Buyer, provided that the
Key Management's ability to operate the Group Companies as an independent
business unit shall be subject to (i) the terms of the 2006 Business Plan and
2007 Business Plan as set forth in Schedule 5.11 (the material amendment of
which shall be subject to the written consent of the Buyer) ; (ii) the
compliance with Buyer's code of ethics; (iii) any relevant requirements of the
Xxxxxxxx-Xxxxx Act and other U.S. securities laws and regulations; and (iv) no
Employee's Misconduct on the part of Key Management. In addition, Group Company
is entitled to dismiss any member of Key Management in case of Employee's
Misconduct.
(b) If the Buyer fails to comply with 5.11(a), i.e. it dismiss the
member of Key Management under the condition that the provisions stipulated in
5.11(a)are fully complied, the audited net profit of the Company shall be deem
to be reached USD 500million for the year of 2007 and USD 800million for the
year of 2008 respectively. The Buyer shall, accordingly, pay the Seller USD 1.5
million as Earnout in accordance with the time and method as set forth in
Article 2.
(c) If there is any Employee's Misconduct on the part of the member
of Key Management, the Buyer shall immediately cause the Company to dismiss such
member of Key Management and the Company shall act in accordance with the
request. Under this condition, sub-section (b) hereof shall not apply.
5.12 The Seller and the Seller's Shareholder undertake that: on or
prior to First Closing Date, the Seller's Shareholder (Xx. Xx Xxx Xxxx) shall
transfer to the Key Management the share of the Seller it holds in accordance
with the former agreement among the Key Management and it. However, upon the
completion of such transfer, Xx. Xx Mao Dong shall still be the biggest
shareholder of the Seller and the share structure of the Seller shall be
consistent with the post order of the Key Management in the Group Company. In
addition, the relevant documents evidencing the completion of the above share
transfer shall deliver to the Buyer on or prior to the First Closing Date.
5.13 Management Accounts
Commencing from the First Closing Date until the Second Earnout
Closing Date:
(a) The Buyer, the Seller and the Seller's Shareholder agree to
cause the Company to provide the management accounts of the Company with respect
to each calendar month, which shall be prepared in accordance with U.S. GAAP or
in accordance with the accounting methods satisfactory to the Buyer. The Company
shall provide to the
22
Buyer and the Seller the monthly management accounts for the period by the First
Closing Date and such management accounts shall be provided no later than ten
days from the close of the previous calendar month.
(b) The Buyer, the Seller and the Seller's Shareholder agree to
cause the Company to provide the management accounts of the Company with respect
to each calendar quarter. The Company shall provide the quarterly management
accounts for the period by the First Closing Date to the Buyer and the Seller
and such management accounts shall be provided no later than fifteen days from
the close of the previous calendar quarter.
(c) Company shall appoint Deloitte Touche Tohmatsu to review the
quarterly management accounts described in paragraph (b) above.
(d) If the Buyer or the Seller disagrees with the audited quarterly
management accounts, the disagreed party shall give notice to the other party
within 5 business day upon the acceptance of such quarterly management accounts.
The Parties shall consult with each other with respect to the quarterly
management accounts. If no consensus with respect to the quarterly management
accounts can be reached within 10 days upon the issuance of the notice for the
disagreement, the two parties shall jointly appoint another international
accounting firm to review the quarterly management. The result of its review
shall be final and binding to each party. The auditing fees shall be equally
born by the two parties. For the avoidance of doubt, the auditing of such
accounting firm shall be only for the purpose of confirming the net income of
the Company as stipulated in Article II, and shall have no relation to the
figures in the management accounts publicly announced by the Buyer.
5.14 Appointment of Management
The Seller agrees to authorize Buyer to appoint a deputy financial
controller for the Company on or following the First Closing Date.
5.15 Confidentiality
Each party hereto shall keep confidential, and shall cause its
officers, directors, and employees to keep confidential, the terms and
conditions hereof, of any predecessor agreement and of any Ancillary Document
(collectively, the "Confidential Information") except as Buyer and Seller
mutually agree otherwise; provided that any party may disclose Confidential
Information (i) to the extent advised by competent legal advisors that such
disclosure is required by applicable Law and so long as, where such disclosure
is to a Governmental Authority, such party shall use all reasonable efforts to
obtain confidential treatment of the Confidential Information so disclosed, (ii)
to the extent required by the rules of any stock exchange, (iii) to its
officers, directors, employees and professional advisors as necessary to the
performance of its obligations in connection herewith and with the Ancillary
Documents so long as such party advises each Person to whom the Confidential
Information is so disclosed as to the confidential nature thereof, and (iv) to
its investors and any Person otherwise providing substantial debt or equity
financing to such party so long as the party advises each Person to whom the
Confidential Information is so disclosed as to the confidential nature thereof.
23
5.16 Tax Exempt Status
Seller shall make its best efforts to provide to Buyer documents or
certificates satisfactory to Buyer evidencing that the Group Companies have been
approved for exemption from enterprise income tax or other preferential tax
treatment from April 1 2006 to March 31 2008 by relevant PRC tax authority
pursuant to relevant PRC laws and regulations; provided that should Seller be
unable to secure tax exempt status for the Group Companies on or prior to March
31, 2008, the Seller agree that in connection with the calculation of the
relevant Audited Net Income the rate of tax used in such calculation shall be
33% or the then-effective rate under relevant PRC tax laws and regulations.
5.17 Supports for Company.
Buyer undertakes that, following the First Closing Date until March
31 2008, it will provide the Group Company with fund, personnel, brand, market
which are necessary for the business development of Group Company, including but
not limited to:
(a) Following the date of this Agreement, upon the application of
Beijing Xxxxxx, Buyer or the Person designated by the Buyer shall enter into a
Floating Fund Loan Agreement with Beijing Xxxxxx and release such floating fund
with annual interest of 5% to Beijing Xxxxxx as soon as possible;
(b) Allow Beijing Xxxxxx to use the name of "Focus Wireless"
following the First Closing Date;
(c) Other reasonable support for the completion for 2006 Business
Plan and 2007 Business Plan.
5.18 Announcement
Without the violation of the law applicable to the Buyer, the
commencing time for the announcement with respect to the transaction under this
Agreement shall be the date of this Agreement. The announcement shall be
arranged by the Buyer.
ARTICLE VI
CONDITIONS TO THE SELLER' OBLIGATIONS
The obligation of the Seller to effect a Closing under this
Agreement as specified below is subject to the satisfaction, at or prior to the
First Closing Date, of each of the following conditions, unless validly waived
in writing by Seller.
6.01 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall be true and correct (in all
material respects, in the case of those representations and warranties which are
not by their express terms qualified by reference to materiality) as of the date
of this Agreement and as of the First Closing Date, except for changes permitted
or contemplated by this Agreement.
6.02 Performance. Buyer shall have performed and complied in all
material
24
respects with all agreements and obligations required by this Agreement and the
Ancillary Documents to be so performed or complied with by it prior to the First
Closing Date.
6.03 No Material Adverse Change. Since the date hereof until the
First Closing Date, there shall not have been any effect or change that would be
materially adverse to the business, assets, condition (financial or otherwise),
operating results, or operations of Buyer and its subsidiaries, taken as a
whole, or to the ability of Buyer to timely consummate the transaction
contemplated by this Agreement or by any of the Ancillary Documents.
6.04 Injunction. At the First Closing Date, there shall not be in
effect any Law or Governmental Order directing that the transactions provided
for herein not be consummated as provided herein or which has the effect of
rendering it impossible to consummate such transactions.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligation of the Buyer to effect a Closing under this Agreement
as specified below is subject to the satisfaction, at or prior to the First
Closing Date, of each of the following conditions, unless validly waived in
writing by Buyer.
7.01 The representations and warranties made by Seller in this
Agreement shall be true and correct (in all material respects, in the case of
those representations and warranties which are not by their express terms
qualified by reference to materiality) as of the date of this Agreement and as
of the First Closing Date.
7.02 Seller shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement and the
Ancillary Documents to be so performed or complied with by it prior to the First
Closing Date.
7.03 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the First Closing Date, and
all documents incident thereto, shall be in form and substance reasonably
satisfactory to Buyer, and Buyer shall have received all such counterpart
original and certified or other copies of such documents as Buyer may reasonably
request.
7.04 The consents, waivers, approvals or other authorizations listed
on Schedule 7.04 shall have been obtained by Seller or otherwise satisfied and
shall continue to be in effect, including all consents of any competent
Governmental Authority or, under any of the Ancillary Documents or under other
agreements to be entered into in connection herewith.
7.05 No Material Adverse Change. From the date of this Agreement
until the First Closing Date, there shall not have been any Material Adverse
Change to the
25
financial condition and the assets of the Company.
7.06 No Indebtedness. As of the First Closing Date, the Seller will
have taken such action, or caused the Group Companies to take such action, and
provided to Buyer documentation satisfactory to Buyer, evidencing that none of
the Group Companies has any outstanding indebtedness of any kind, including
without limitation, any loan to Seller or Seller's Shareholder, bank loan or
credits or unpaid liability relating to the Acquisitions.
7.07 Seller shall, through its officers, deliver to Buyer the
evidence for the satisfaction of conditions as set for the in Schedule 7.07
prior to the First Closing Date.
7.08 Prior to the First Closing Date, Seller and each of the manager
of the Group Company(name list see Schedule 7.08, including but not limited to
Key Management) shall have executed a Manager Non-Compete Agreement and Service
Agreement in accordance with the form as set forth in Exhibit 7.08, which
agreement is in full force and effect.
7.09 As of the First Closing Date, each of the employees of the
Group Companies (except for the managers) shall execute an Employee Non-Compete
Agreement with Buyer in accordance with the form as set forth in Exhibit 7.09,
which agreement is in full force and effect.
7.10 Share Transfer Agreement. On the First Closing Date, all the
shareholders of Beijing Xxxxxx (Xx. Xx Xxx Xxxx and Mrs. Xxxx Xxxx) shall enter
into Share Transfer Agreement with the company or person designated by the Buyer
in accordance with the form set forth in 5.09, which stipulates that Xx. Xx Xxx
Xxxx and Mrs. Xxxx Xxxx shall once in a time transfer all the shares they held
in Beijing Xxxxxx to the company or person designated by the Buyer.
7.11 Assets and Business Transfer Agreement. Prior to the First
Closing Date, the Seller and the Seller's Shareholder will cause Beijing Xxxxxx
and Shandong Xxxxxx to enter into Assets and Business Transfer Agreement in
accordance with the form set forth in Exhibit 5.07. Shandong Xxxxxx shall,
pursuant to such agreement, unconditionally transfer to Beijing Xxxxxx all of
its registered trademarks, copyrights of the computer software, patent and
know-how, domain name, figures data, client information and other fixed
assets/intangible assets/information/documents ("related assets") which are
relevant to the wap push business. In addition, Shandong Xxxxxx shall, pursuant
to such agreement, unconditionally transfer to Beijing Xxxxxx all of its
business cooperative relationship and all the executed Cooperation Agreement
among (i) Shandong Xxxxxx and Mobile Operators, and among (ii) Shandong Xxxxxx
and Mobile Value-Added Business Information Content Service Providers ("SP").
The formalities of the transfer of the above assets shall be completed prior to
the First Closing Date, while the formality of the transfer of the registered
trademark shall be deemed to be completed upon the issuance of the Notice of the
Acceptance of the Transfer Application by the Trademark Office of State
Administration of Industry and Commerce. If such formalities of transfer fail to
complete prior to the First Closing Date, it shall be completed within
reasonable time, provided, however, that the prior written consent of the Buyer
is given.
7.12 Transfer of the Cooperation Agreement. Prior to the First
Closing Date, the Seller and the Seller's Shareholder will cause Shandong Xxxxxx
to transfer to Beijing
26
Xxxxxx at least 40% of all the Cooperation Agreements (the list of which is set
for the in Schedule 5.05) among Shandong Xxxxxx and Mobile Operators, and
Beijing Xxxxxx will accordingly undertake all the rights and obligations
undertaken by Shandong Xxxxxx in those 40% agreements transferred. The transfer
of the Cooperation Agreements shall be approved by Mobile Operators with written
consent, or, Beijing Xxxxxx shall execute new Cooperation Agreements with Mobile
Operators, so as to replace the Cooperation Agreements among Shandong Xxxxxx and
Mobile Operators, the content of which is subject to the written consent of the
Buyer. In addition, prior to the First Closing Date, the Cooperation Agreements
other than the Cooperation Agreements transferred shall be transferred to
Beijing Xxxxxx prior to June 31 2006, and Beijing Xxxxxx will accordingly take
all the rights and obligations undertaken by Shandong Xxxxxx in those agreements
transferred. The transfer of the such Cooperation Agreements shall be agreed by
Mobile Operators with written consent, or Beijing Xxxxxx shall, prior to June 31
2006, execute new Cooperation Agreements with Mobile Operators so as to replace
the such Cooperation Agreements between and among Shandong Xxxxxx and Mobile
Operators, the content of which is subject to the written consent of the Buyer.
7.13 Establishment of the Wholly-Foreign Owned Enterprise.
Prior to the First Closing Date: (1) cause the Company to establish
a wholly-foreign owned enterprise in Beijing (the issuance of the Business
License shall be deemed to be the completion of the establishment), in which the
Company holds all the equity of interest; (2) such wholly-foreign owned
enterprise and Beijing Xxxxxx shall entered into a series of Controlling
Agreements in accordance with the form set forth in Exhibit 5.06, which is
valid, bind and enforceable.
7.14 Execution of the SP Cooperation Agreement. Prior to the First
Closing Date, the Seller and the Seller's Shareholder will cause Beijing Xxxxxx
and SP to enter into new Cooperation Agreement so as to replace all the
Cooperation Agreements among Shandong Xxxxxx and SP (the list of which are set
forth in Schedule 5.08). The contents and terms of the Cooperation Agreement
shall be subject to the prior written consent of the Buyer. Seller, the Seller's
Shareholder and Shandong Xxxxxx shall use their commercial reasonable efforts to
cause the execution of such agreements. If Beijing Xxxxxx still fails to execute
the relevant Cooperation Agreements with all SP prior to the First Closing Date,
the Cooperation Agreements not executed shall be executed by and among Beijing
Xxxxxx and SP prior to June 31 2006.
7.15 Financial Statement. On or prior to the First Closing Date,
Buyer shall have received the consolidated financial statements of the Company
as of February 2006, which shall be substantially complete in all material
respects and contain key financial data reasonably acceptable to Buyer; it being
understood that the specific figures and data contained therein will not form
the basis for calculating any of the Consideration
7.16 Seller's Corporate Documents. On or prior to the First Closing
Date, each of the Seller Corporate Documents, a list of which is attached hereto
as Schedule 7.16, shall have been entered into and consummated by the Seller and
Seller's Shareholder and is in full force and effect.
7.17 Management Appointment. Seller shall have authorized Buyer to
27
appoint the deputy financial controller for the Company .
7.18 Intellectual Property Transfer. All the intellectual property
set forth in Schedule 7.18 hereto, which is held in the name or for the benefit
of Xx. Xx Mao Dong shall have been transferred to Beijing Xxxxxx prior to the
First Closing Date without any cost to Buyer.
7.19 Corporate Matters; Memorandum and Articles of Association. On
or prior to the First Closing Date, Seller shall have provided documentation to
Buyer's reasonable satisfaction evidencing that (i) all shares of Company are
ordinary shares, (ii) all outstanding options (if any) of Company have been
cancelled, (iii) the memorandum and articles of association of Company has been
converted to a standard British Virgin Islands form (using the standard form of
Offshore Incorporations Limited) which has no preferred shares or protective
provisions for investors provided therein and filed and registered with the
British Virgin Islands Companies Registry.
7.20 Opinions of Counsel. As of the First Closing Date, Buyer shall
have received from PRC counsel written opinions in form and substance
satisfactory to Buyer.
7. 21 Material Adverse Change. On or after the date hereof and prior
to the First Closing Date, there shall not have occurred any of the following:
(A) a suspension or material limitation in trading in securities generally on
the NASDAQ National Market, (B) a suspension or material limitation in trading
in Buyer's securities on the NASDAQ National Market, (C) a general moratorium on
commercial banking activities in New York, the PRC or the British Virgin Islands
declared by the relevant authorities, or a material disruption in commercial
banking or securities settlement or clearance services in the United States, the
PRC or the British Virgin Islands, (D) the outbreak or escalation of hostilities
involving the United States, the PRC or the British Virgin Islands or the
declaration by the United States, the PRC or the British Virgin Islands of a
national emergency or war or (E) the occurrence of any other calamity or crisis
or any change in financial, political or economic conditions or currency
exchange rates or controls in the United States, the PRC, the British Virgin
Islands or elsewhere, if the effect of any such event specified in clause (D) or
(E) in the judgment of Buyer makes it impracticable or inadvisable to proceed
with the transaction contemplated in this Agreement and the Ancillary Documents.
7.22 Injunction. On the First Closing Date, there shall not be in
effect any Law or Governmental Order directing that the transactions provided
for herein not be consummated as provided herein or which has the effect of
rendering it impossible to consummate such transactions.
7.23 Distribution of Shares. On or prior to the First Closing Date,
Seller's Shareholder (Xx. Xx Mao Dong) shall transfer to the Key Management the
share of the Seller it holds in accordance with the former agreement among the
Key Management and it. However, upon the completion of such transfer, Xx. Xx Xxx
Xxxx shall be the biggest shareholder of the Seller and the share structure of
the Seller shall be consistent with the post order of the Key Management in the
Group Company. In addition, the relevant documents evidencing the completion of
the above share transfer shall deliver to the Buyer on or prior to the First
Closing Date.
28
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated at any time prior
to the First Closing Date:
(a) by the mutual written consent of the Seller and the Buyer;
(b) by either the Seller or the Buyer if any Governmental
Authority of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree or ruling or other
action shall have become final and non-appealable;
(c) by Buyer, if Seller breach or fail to perform in any respect
any of their representations, warranties or covenants
contained in this Agreement or any Ancillary Document and such
breach or failure to perform (A) would give rise to the
failure of a condition set forth in Article VII, (B) cannot be
or has not been cured within 15 business days following
written notice of such breach or failure to perform and (C)
has not been waived by Buyer.
(d) by Seller, if Buyer breaches or fails to perform in any
respect any of its representation, warranties or covenants
contained in this Agreement or any Ancillary Document and such
breach or failure to perform (A) would give rise to the
failure of a condition set forth in Article VI, (B) cannot be
or has not been cured within 15 business days following
written notice of such breach or failure to perform and (C)
has not been waived by Seller.
(e) by either Seller or Buyer, subject to Section 2.04(c) of this
Agreement.
8.02 Procedure and Effect of Termination.
In the event of the termination of this Agreement and the
abandonment of the transactions contemplated hereby pursuant to Section 8.01
hereof, written notice thereof shall forthwith be given to all other parties. If
this Agreement is terminated and the transactions contemplated by this Agreement
are abandoned as provided herein:
(a) The Buyer will redeliver to the Seller all documents, work
papers and other material of any the Seller relating to the
transactions contemplated hereby, whether so obtained before
or after the execution hereof;
(b) The provisions of the Confidentiality Agreements shall
continue in full
29
force and effect; and,
(c) No party to this Agreement will have any liability under this
Agreement to any other except (i) that nothing herein shall
relieve any party from any liability for any willful breach of
any of the representations, warranties, covenants and
agreements set forth in this Agreement, and (ii) as
contemplated by paragraph (b) above.
8.03 Liquidated Damages.
During the period from the date of this Agreement to the First
Closing Date, either the Seller or the Buyer terminating this Agreement
unilaterally with no reasonable excuse, or delaying the performance of its
obligations under this Agreement, which cause this Agreement unenforceable,
shall be responsible for paying the other party an amount of liquidated damages
as for USD15million. Such liquidated damages shall be paid in the form of cash
or the shares of the listed company.
8.04 Force Majeure.
(a) If Force Majeure occurs in the period from the date of this
Agreement to the First Closing Date, either party is entitled to terminate this
Agreement unilaterally without any liability of breach. The Force Majeure
expressed in this article shall cover all the events which lead to the
non-enforcement of this Agreement by either party. Such events, which cannot be
imputed to any party and are unforeseeable, unavoidable and insurmountable,
shall include but not limit to any strike, shutdown of the factory, explosion,
shipwrech, natural disasters or hostility, fire, flood, destruction, incidental
affairs, war, insurgence, rebellion, interruption of traffic or other similar
affairs and the promulgation of the relevant regulations regarding the
telecommunication business, the circular by the telecommunication
authorities(include but not limit to Ministry of Information Industry and local
communication administrations) or the policies adopted by telecommunication
operators, which render the initial business purpose of the Group Company
unrealizable or the daily business of the Group Company not being normally
operative.
(b) If Force Majeure occurs during the First Closing Date and March
31 2008, and the Force Majeure renders the business of Group Company being
non-operative, the calculation of the Net Incomes of the relevant year shall
deduct the costs and the profits generated during the period of the Force
Majeure; at the same time, the deadline of the relevant accounting year shall be
accordingly extended. The period extended shall be as long as the period of the
Force Majeure. The Force Majeure expressed in this article shall refer to
strike, shutdown of the factory, explosion, shipwrech, natural disasters or
hostility, fire, flood, destruction, incidental affairs, war, insurgence,
rebellion, interruption of traffic or infective viral affairs.
30
ARTICLE IX
INDEMNIFICATION
9.01 Indemnification
(a) Indemnification by the Seller and Seller's Shareholder
(i) Subject to the limits set forth in this Section 9.01, after
the First Closing Date, the Seller agree to indemnify the Buyer, its Affiliates
(including, after the First Closing Date, the Group Companies) and its
respective officers, directors, stockholders, employees, agents and
representatives (the "Buyer Indemnified Persons") harmless from and in respect
of any and all losses, damages, costs and reasonable expenses (collectively,
"Losses"). The Seller's aggregate liability for such Losses shall not exceed
USD1million, provided, however, that where such Losses are the result of the
gross negligence or willful misconduct of any of the Key Management, the
aggregate liability of the such Losses shall not exceed the Value of the
Aggregate Consideration paid by the Buyer. The representations and warranties of
the Seller set forth in Article III of this Agreement shall survive for a period
of two (2) years immediately following the First Closing Date (the "Indemnity
Period").
(ii) Subject to the limits set forth in this Section 9.1, after
the First Closing Date, the Seller's Shareholders agree to indemnify the Buyer
Indemnified Persons harmless from and in respect of any and all Losses that they
may incur arising out of or due to any breach any of the representations or
warranties of Article III, provided, however that Seller's Shareholder liability
for such Losses shall in no event exceed USD 1 million. The representations and
warranties of the Seller's Shareholders set forth in Article III of this
Agreement shall survive for the Indemnity Period.
(b) Indemnification by the Buyer.
Subject to the limits set forth in this Section 9.01, after the
First Closing Date, Buyer agrees to indemnify the Seller and its Affiliates and
its respective officers, directors, stockholders, employees, agents and
representatives (the "Seller Indemnified Persons") harmless from and in respect
of any and all losses, damages, costs and reasonable expenses (collectively,
"Losses"), provided, however, that the Losses that Seller may obtain in
accordance with the section hereof shall not exceed USD 1million, unless
otherwise agreed in this Agreement. The representations and warranties of the
Buyer set forth in Article IV of this Agreement shall survive for a period of
six (6) months immediately following the First Closing Date.
(c) Indemnification as Exclusive Remedy
The indemnification provided in this Article IX, subject to the
limitations set forth herein, shall be the exclusive remedy available to any
party in connection with any Losses arising out of or resulting from this
Agreement, the transactions contemplated hereby, any property owned, based or
subleased by any of the Group Companies or otherwise regarding any of the Group
Companies.
(d) Notice and Opportunity to Defend
If there occurs an event which a party asserts is an indemnifiable
event pursuant to Section 9.01, the party or parties seeking indemnification
shall notify the
31
other party or parties obligated to provide indemnification (the "Indemnifying
Party") promptly. If such event involves any claim or the commencement of any
action or proceeding by a third person, the party seeking indemnification will
give such Indemnifying Party prompt written notice of such claim or the
commencement of such action or proceeding; provided, however, that the failure
to provide prompt notice as provided herein will relieve the Indemnifying Party
of its obligations hereunder only to the extent that such failure prejudices the
Indemnifying Party hereunder. In case any such action shall be brought against
any party seeking indemnification and it shall notify the Indemnifying Party of
the commencement thereof, the Indemnifying Party shall be entitled to assume the
defense thereof, with counsel selected by the Indemnifying Party and, after
notice from the Indemnifying Party to such party or parties seeking
indemnification of such election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the party or parties seeking
indemnification hereunder for any legal expenses of other counsel or any other
expenses subsequently incurred by such party or parties in connection with the
defense thereof. The Indemnifying Party and the party seeking indemnification
agree to cooperate fully with each other and their respective counsel in
connection with the defense, negotiation or settlement of any such action or
asserted liability. In no event shall an Indemnifying Party be liable for any
settlement effected without its written consent.
ARTICLE X
MISCELLANEOUS
10.01 Notices. Any notice, demand, or communication required or
permitted to be given by any provision of this Agreement shall be deemed to have
been sufficiently given or served for all purposes if (i) personally delivered,
(ii) sent by a nationally recognized overnight courier service to the recipient
at the address below indicated or (iii) delivered by facsimile which is
confirmed in writing by sending a copy of such facsimile to the recipient
thereof pursuant to clause (i) or (ii) above:
If to the Seller:
DALLSFIELD LTD.
503, HuiZhong Science Technology Building
1 ShangDiQi Street, Hai Xxxx District
Beijing
Attn: Xu Mao Dong
Tax: x00 00 0000 0000, 13963335555
Fax: x00 00 00000000(fax)
32
If to the Buyer:
FOCUS MEDIA HOLDING LIMITED
Add:
Attn:
Tel:
Fax:
If to the Company:
DOTAD MEDIA HOLDINGS LIMITED
503,HuiZhong Science Technology Building
1 ShangDiQi Street, Hai Xxxx District
Beijing
Attn: Xu Mao Dong
Tel: x00 00 0000 0000, 13963335555
Fax: x00 00 00000000
If to any of the Seller's Shareholder:
503,HuiZhong Science Technology Building
1 ShangDiQi Street, Hai Xxxx District
Beijing
Attn: Xu Mao Dong
Tel: x00 00 0000 0000, 13963335555
Fax: x00 00 00000000(fax)
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner.
10.02 Fees and Expenses. Except as otherwise provided in this
Agreement, each party shall bear its own expenses in connection with the
preparation and negotiation of this Agreement and the Ancillary Documents and
the consummation of the transactions contemplated hereby and thereby.
10.03 Governing Law. This Agreement shall be construed under and
governed by the Laws of Hong Kong Special Administration Region.
10.04 Dispute Resolution
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement, or the interpretation, breach, termination or validity hereof,
shall be resolved through consultation. Such consultation shall begin
immediately after one party hereto has delivered to any other party hereto a
written request for such consultation.
33
(b) If within 90 days following the date on which such notice is
given the dispute cannot be resolved, the dispute shall be submitted to
arbitration upon the request of either party with notice to the other. The
arbitration shall be conducted in Hong Kong under the auspices of the Hong Kong
International Arbitration Centre (the " HKIAC").
(c) The arbitration tribunal shall consist of three arbitrators.
Each opposing party to a dispute shall be entitled to appoint one arbitrator,
and the third arbitrator shall be jointly appointed by the disputing parties.
The third arbitrator shall be the chief arbitrator.
(d) The arbitration proceedings shall be conducted in English and
Chinese. The award of the arbitration tribunal shall be final and binding upon
the disputing parties. Either party shall be entitled to seek preliminary
injunctive relief from any court of competent jurisdiction pending the
constitution of the arbitral tribunal. And the prevailing party may apply to the
arbitration tribunal for recovering all the expenses (including reasonable
attorney fees and other arbitration costs).
10.05 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
10.06 Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
10.07 Waiver. Any of the terms or conditions of this Agreement which
may be lawfully waived may be waived in writing at any time by each party which
is entitled to the benefits thereof. Any waiver of any of the provisions of this
Agreement by any party hereto shall be binding only if set forth in an
instrument in writing signed on behalf of such party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
10.08 Assignment. No Party may assign its rights or obligations
under this Agreement without the prior written consent of each other party and
any purported assignment without such consent shall be void and without effect.
10.09 Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof and
thereof and supersedes all prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and thereof.
10.10 Further Assurances. Each Party shall execute all such
documents and do all such Other things within its power as may be required to
give full effect to the terms of this Agreement or to vest in any other Party
its full rights and entitlements hereunder.
10.11 Provisions Severable. If any provision of this Agreement is
held to be illegal, invalid Or unenforceable under any present or future law,
(i) such provision will be fully severable, (ii) this Agreement will be
construed and enforced as if such illegal, invalid or enforceable provision had
never comprised a part hereof, and (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the
illegal,
34
invalid and unenforceable provision or by its severance herefrom, it being
intended that the rights of the Parties hereunder shall be enforceable to the
fullest extent permitted by law.
10.12 Provisions Modifiable. If any restriction on any Party
hereunder shall be adjudged to be void or unenforceable because it exceeds what
is reasonable in all the circumstances for the protection of the interests of
the Parties or any of them but would be valid if part of the wording thereof
were deleted or the periods thereof reduced or range of activities or area dealt
with thereby reduced in scope, such restriction shall apply with such
modifications as may be necessary to make it valid and effective.
10.13 Headings. The headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
10.14 Language. This Agreement was written in Chinese.
35
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in Shanghai, in each case as of the date first above
written.
DALLSFIELD LTD. FOCUS MEDIA HOLDING LIMITED
Sign: Sign: /s/ Xxxxx Xxxxxxx Xxxxx
/s/ Xu MaoDong
-------------------------- ------------------------------
Name: Xu Mao Dong Name:
Post: Authorized Representative Post: Authorized Representative
DOTAD MEDIA HOLDINGS LIMITED SELLER'S SHAREHOLDER
Sign: Sign: /s/ Xu Mao Dong
/s/ Xu MaoDong
-------------------------- ----------------------
Name: Xu Mao Dong Name: Xu Mao Dong
Post: Authorized Representative
36
SCHEDULES
Schedule 1.1 List of the Member of Group Company
Schedule 1.3 Scope of the Value Added Telecommunication Business which
Involves any Party of this Agreement
Schedule 1.4 List of Acquired Enterprises
Schedule 1.5 Controlling Agreements
Schedule 1.6 Ancillary Document
Schedule 3.02 Company Liabilities
Schedule 3.04 Share Capital of Company
Schedule 3.05 Group Companies Information
Schedule 3.09 List of Group Companies' Licenses, Consents, Authorizations,
Approvals, and Permits
Schedule 3.12(c) Benefit plan, salary or other material benefits with respect
to the employee, former employee, consultant, agent or
director of the Group Companies
Schedule 3.17 Material Contracts
Schedule 5.05 Cooperation Agreement among Shandong Xxxxxx and Mobile
Operators
Schedule 5.08 Cooperation Agreement among Shandong Xxxxxx and Mobile
Value-Added Business Information Content Service Providers
(SP)
Schedule 5.11 2006 Business Plan and 2007 Business Plan
Schedule 7.04 List of Consents, Waivers, Approvals or Other Authorizations
Obtained by Seller
Schedule 7.07 List of Conditions to Satisfied by Seller Prior to First
Closing Date
Schedule 7.08 Manager of the Group Company and Seller
Schedule 7.16 Seller's Corporate Documents
Schedule 7.18 Transferred Intellectual Property
EXHIBITS
Exhibit 5.06 Form of Controlling Agreement
Exhibit 5.07 Form of Assets and Business Transfer Agreement
Exhibit 5.09 Form of Share Transfer Agreement
Exhibit 7.08 Form of Manager Non-Compete Agreement and Service Agreement
Exhibit 7.09 Form of Employee Non-Compete Agreement
