FRAMEWORK AGREEMENT BY AND AMONG Jingwei International Limited， Shenzhen Xinguochuang Information Technology Limited, AND Shanghai Haicom Limited DATED AS OF October 8, 2010 FRAMEWORK AGREEMENT
BY AND
AMONG
Jingwei
International Limited，
Shenzhen
Xinguochuang Information Technology Limited,
AND
Shanghai
Haicom Limited
DATED AS
OF October 8, 2010
THIS
FRAMEWORK AGREEMENT (this "Agreement") is entered into as of October 8,
2010，by and
among Jingwei International Limited, a Nevada corporation (the "Company" ),
Shenzhen Xinguochuang Information Technology Limited, a corporation
registered in Shenzhen, China, and a wholly owned subsidiary of the Company
(“Acquistion Sub”), and Shanghai Haicom Limited, a corporation registered in
Shanghai, China (“Haicom”).
RECITALS
A. The
Boards of Directors of the Company, Acquisition Sub and Haicom deem it advisable
and in the best interests of each corporation and their respective shareholders
that the Acquistion Sub acquire all of the outstanding equity interests in
Haicom ( “Haicom Shares”) in order to advance the long-term business interests
of the Company, the Acquisition Sub and Haicom;
B. The
acquisition of Haicom’s equity interests shall be effected through a purchase of
Haicom Shares by the Acquisition Sub in accordance with the terms of this
Agreement and the related Chinese corporation laws, as a result of which Haicom
shall become a wholly owned subsidiary of the Acquisition Sub (the
“Transaction”);
C. The
respective Boards of Directors of the Company, the Acquisition Sub and Haicom
deem it advisable and in the best interests of their respective shareholders to
consummate the Transaction and hereby acknowledge that the Company, the
Acquisition Sub and Haicom shall work towards the consummation of the
Transaction and expect to enter into a Share Purchase Agreement (an “SPA”) which
shall set forth the definitive terms and conditions of the
Transaction.
NOW,
THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the Company, the
Acquisition Sub and Haicom agree as follows:
ARTICLE I
THE
TRANSACTION
1.1 Purchase
and Sale. Upon the terms and subject to the conditions of an SPA and
this Agreement, at the closing date set forth in an SPA (the “Closing Date”),
Haicom Shareholders shall sell, convey, transfer, assign and deliver to
Acquisition Sub, and Acquisition Sub shall purchase from Haicom Shareholders,
Haicom Shares free and clear of all liens.
1.2 Purchase Price.
The Company, the Acquisition Sub and Haicom hereby agree to the following terms
and conditions with respect to the Transaction:
(a) Acquisition
Sub and the Company shall purchase all of Haicom Shares from the shareholders of
Haicom at a purchase price of XXX 00 million, i.e. $ 8.2 million as of October
8, 2010 (the “Purchase Price”), the payment of which shall be made in accordance
with the following schedule:
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i.
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RMB
10 million in cash will be paid to Haicom Shareholders within one week
after the signoff of this Agreement as a
deposit.
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ii.
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XXX
00 million in cash will be paid to Haicom Shareholders within one week
after the completion of transfer of Haicom Shares and other required
registration legalities.
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iii.
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After
the completion of the Company’s 2010 fiscal year, the Company will pay RMB
5 million in cash on 04/22/2011 to Haicom
Shareholders.
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iv.
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After
the completion of the Company’s 2011 fiscal year, the Company will issue
additional 667,802 Common Shares (“Contingent Shares”), worth of XXX 00
million to Haicom Shareholders on 01/31/2012, (based on the
average closing price of the Company’s common stock on the NASDAQ National
Market for the fifteen trading days immediately preceding the effective
date of this Agreement), contingent
upon the achievement of a minimum level of revenue and earnings targets by
the acquired business for the fiscal year ending December 31,
2011. The schedule of granting of the Company shares to Haicom
is as follows.
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·
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If
the revenue achieved by the acquired business is higher than XXX 00
million and the net income is higher than XXX 00 xxxxxxx xx 0000 (xxx
“Minimum Guarantee”), the Contingent Shares will be granted in
full.
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·
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If
either revenue or net income completed is less than 50% of the Minimum
Guarantee, then no Contingent Shares will be
granted.
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·
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If
either revenue or net income completed is equal to or less than 70% but
equal to or more than 50% of the Minimum Guarantee, then half of the
Contingent Shares will be granted.
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·
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If
either revenue or net income completed is equal to or less than 100% but
more than 70% of the Minimum Guarantee, then a revenue completion rate or
a net income completion rate will be calculated by dividing the actual
results by the Minimum Guarantee. The lower completion rate between the
two will be used to multiply by the Contingent Shares to decide on the
actual payout.
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v.
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Haicom
Shareholders will return the deposit fully, if the share transfer is not
completed by November 30, 2010. In addition, the party that has caused the
delay will have to pay the other party RMB 2 million as a
penalty.
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1.3 Delivery of
Company
Shares.
(a) At
or prior to the Closing, the Company, Acquisition Sub and Haicom shall jointly
prepare and cause to be filed with the State Administration for Industry &
Commerce of the People's Republic of China applications for registration changes
in Articles of Incorporation, legal representative and business license of
Haicom, in such form in accordance with the relevant Chinese corporate laws. The
Transaction shall become effective upon the approval of the above mentioned
registration changes.
(b) Upon
the approval of the registration changes described in Section 1.3(a) (the
“Effective Time”), Haicom shall become a wholly owned subsidiary of Acquisition
Sub, and continue its operation.
1.4
Articles of
Incorporation.
At
the Effective Time, the Articles of Incorporation of Haicom, as in effect
immediately prior to the Effective Time, shall be amended and restated to read
in their entirety so as to conform to the Articles of Incorporation of the
Acquisition Sub.
At
the Effective Time, the By-laws of Haicom, as in effect immediately prior to the
Effective Time, shall be amended and restated to read in their entirety so as to
conform to the By-laws of the Acquisition Sub,
1.5 Directors and Officers of
Acquisition Sub.
(a) The
directors of the Acquisition Sub immediately prior to the Effective Time shall
be the initial directors of Haicom after the Transaction, each to hold office in
accordance with the Articles of Incorporation and By-laws of the Acquisition
Sub. The Company shall thereafter be entitled to designate all
directors on Haicom’s Board.
(b) The
officers of Haicom immediately prior to the Effective Time shall be the initial
officers of Haicom after merger, each to hold office in accordance with the
Articles of Incorporation and By-laws of the Acquisition Sub.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF HAICOM
Haicom
represents and warrants to the Company and the Acquisition Sub as
follows:
2.1
Management
Team
Haicom
shareholders promise to help retain the core management team in the next twenty
four months after the merger.
2.2
No Undisclosed
Liabilities.
Except as
disclosed in Haicom financial statements provided prior to the date of this
Agreement or in the consolidated unaudited balance sheet of Haicom as of
August 31, 2010, Haicom and its Subsidiaries do not have any liabilities
(whether accrued, absolute, contingent or otherwise) of a type that would be
required by GAAP to be reflected on a consolidated balance sheet of Haicom and
its Subsidiaries (including the notes thereto), except for liabilities that,
individually or in the aggregate, would not result in above RMB 100,000, or USD
14,925 as of October 8, 2010.
2.3 Guarantee
Haicom
has made no guarantee for another’s obligation, including business entity as
well as individuals.
2.4 Litigation.
There
is no action, suit, proceeding, claim, arbitration or investigation pending or,
to the knowledge of Haicom, threatened against Haicom, or any of its assets,
properties or rights. There are no judgments, orders, settlements or decrees
outstanding against Haicom. As of the date of this Agreement, no officer or
director of Haicom is a defendant in any action or, to the knowledge of Haicom,
the subject of any investigation commenced by any Governmental Entity with
respect to the performance of his or her duties as an officer and/or director of
Haicom.
2.5 The Other Representations and
Warranties will be made in the SPA.
ARTICLE
III
EXPENSES
3.1 Expenses.
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(a)
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All
out-of-pocket expenses related to an independent accountant and a business
appraiser in connection with or related to the investigation, due
diligence examination, authorization, preparation, negotiation, execution
and performance of this Agreement and the transactions contemplated
hereby, and the closing thereof, shall be paid by the
Company.
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(b)
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All
the other expenses shall be paid by the party incurring such expenses,
whether or not the Transaction is
consummated.
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ARTICLE
IV
MISCELLANEOUS
4.1
Governing
Law
This
Agreement shall be construed in accordance with and governed by the laws of the
People’s Republic of China without giving effect to the conflict of laws
principles thereof. In case of disputes between Haicom Shareholders and the
Acquisition Sub, both sides should try to negotiate their own settlement first.
If the disputes have not been resolved after 30 days, either side has the right
to file a law suit against the other to its local court.
4.2 Amendment
This
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after receipt
of the Required Company Shareholder Vote in favor of the adoption of Haicom
Voting Proposal, but, after receipt of any such Required Company Shareholder
Vote, no amendment shall be made which by law requires further approval by
such shareholders without such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
4.3 Others
In case
of discrepancy between the English translation and the original Chinese text,
the Chinese edition of this Agreement shall prevail. In the event of any
discrepancy with the SPA in key terms, the key terms of this Agreement shall
control. All the other matters related to this share purchase will be stipulated
in the SPA.
IN
WITNESS WHEREOF, the Company, the Acquisition Sub and Haicom have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
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JINGWEI
INTERNATIONAL LIMITED
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By:
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Name:
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Title:
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SHENZHEN
XINGUOCHUAN INFORMATION TECHNOLOGY LTD.
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By:
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Name:
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Title:
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SHANGHAI
HAICOM LIMITED
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By:
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Name:
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Title:
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