EQUITYHOLDERS AGREEMENT
Exhibit 4.31
This EQUITYHOLDERS AGREEMENT (this “Agreement”) is made as of [January 6, 2010 ], by and
among:
(1) Shanghai Weilan Computer Co., Ltd., a company organized and existing under the laws of the
People’s Republic of China (the “PRC”) with its registered office at Xx. 000, Xxxx Xxxxx Xxxx, Xxxx
Xxxx, Xxxxxxx Xxxxxxxx, Xxxxxxxx, PRC (“Party A” or the “Investor”);
(2) Hefei Baofeng Cartoon Information Technology Co., Ltd., a company organized and existing under
the laws of the PRC with its registered office at Xxxx 000, Xxxxx X, Xxxxx Xxxxxxxx, 34 Guangming
Road, Yaohai District, Hefei City, PRC (“Party B” or the “Original Equityholder” and collectively
with the Investor, the “Equityholders”); and
(3) Hefei Letang Cartoon Information Technology Co., Ltd., a company organized and existing under
the laws of the PRC with its registered office at Xxxx 000, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx
Xxxx, XXX (“Party C” or the “Company”).
The Investor, the Original Equityholder and the Company are referred to collectively herein as
the “parties” and each individually as a “party.”
WHEREAS, the parties have entered into that certain Equity Interest Purchase and Capital
Increase Agreement dated on or about the date of this Agreement (the “Purchase Agreement”),
providing, among other things, the purchase of 50.01% the equity interest of the Company by the
Investor from the Original Equityholder and the increase of registered capital of the Company;
WHEREAS, immediately prior to the Closing (as defined in the Purchase Agreement), the Original
Equityholder owns 100% of the equity interest of the Company;
WHEREAS, immediately after the Closing (as defined in the Purchase Agreement), the Investor and
the Original Equityholder will own 50.01% and 49.99% of the equity interest of the Company,
respectively; and
WHEREAS, as a condition precedent to the Closing (as defined in the Purchase Agreement), the
parties desire to enter into this Agreement to provide for certain matters relating to, among other
things, the management and operation of the Company and the transfer of equity interest of the
Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual agreements and covenants
set forth herein, the parties hereby agree as follows:
| 1. | Business of the Company and Obligations of the Equityholders. |
| 1.1. | Business of the Company. The business of the Company shall be, directly or
indirectly, to engage in the development of mobile phone game and to possess intellectual
property rights (the field of game business generally refers to mobile phone games, i.e.
single phone games and mobile phone network games, including WAP and clients, personal
computer games, personal computer network games, games based on other terminals and handheld
terminals, such as TV, Xbox and PSP, like Iphone, Itouch, BlackBerry and MTK, and the new
platforms of handheld terminals that may appear in the future). |
| 1.2. | Equityholder Obligations. Each Equityholder shall comply with the provisions of this
Agreement in relation to its investment in the Company and in transacting business with the
Company and shall exercise its rights and powers in accordance with, and so as to give effect
to, this Agreement, the Purchase Agreement and the Restated Articles (as defined below). |
| 1.3. | Articles. The Restated Articles shall be consistent with this Agreement as far as
practicable. In the event of any conflict between the provisions of this Agreement and the
Restated Articles, the terms of this Agreement shall prevail as among the Equityholders so as
to regulate the way in which they exercise their rights as equityholders of the Company. The
Equityholders further agree that, in case of such conflict, the Restated Articles shall be
amended, to the extent permitted by the relevant law, to reflect the agreement of the
Equityholders hereunder. |
| 1.4. | Objectives. Each of the Equityholders shall from time to time take such steps as are
open to it, including but not limited to exercising its voting rights in the Company, to
ensure that any action taken by the Company is consistent with the purposes, objectives and
provisions of this Agreement. |
| 1.5. | Funding. Unless otherwise provided for in this Agreement or agreed by the parties
hereto, the Purchase Agreement and the Restated Articles, no Equityholder shall be obliged to
provide any financial assistance, including but not limited to, loans, guarantees, bonds,
debentures and/or other debt securities, to the Company. |
| 2. | Restrictions on Transfer of Equity Interest. |
| 2.1. | Transfer. No Equityholder shall assign, sell, pledge or otherwise transfer
(“Transfer”) any equity interest (or the then ordinary shares of the Company after the closing
of a Qualified IPO (as defined below), as applicable) of the Company except (i) to an
affiliate of such Equityholder which agrees in writing to be bound by the terms of this
Agreement as though named as a party hereto; (ii) with the prior written consent of all the
other Equityholders; (iii) pursuant to Section 8.1.8 of the Purchase Agreement; or (iii)
otherwise pursuant to this Section 2. Any attempt to make a transfer of any equity interest
(or the then ordinary shares of the Company after the closing of a Qualified IPO, as
applicable) of the Company in violation of this Section 2 shall be null and void ab initio. |
| 2.2. | Transfer in Compliance with Law. No Transfer of any equity interest (or the then
ordinary shares of the Company after the closing of a Qualified IPO, as applicable) of the
Company may be made pursuant to this Section 2 unless (i) the transferee has agreed in writing
to be bound by the terms and conditions of this Agreement, and (ii) the transfer of such
equity interest (or the then ordinary shares of the Company after the closing of a Qualified
IPO, as applicable) of the Company complies in all respect with applicable laws (including any
applicable securities laws). |
| 2.3. | Right of First Refusal; Notice. Unless with the prior written consent of the
Investor, when (i) the Original Equityholder proposes to make a Transfer of the then ordinary
shares of the Company pursuant to Section 5.4.4, (ii) the Original Equityholder proposes to
make a Transfer of the then ordinary shares of the Company pursuant to Section 5.4.5, or (iii)
the Original Equityholder proposes to make a Transfer of the equity interest of the Company
pursuant to Section 5.4.7 then the Original Equityholder shall first offer such ordinary
shares to the Investor (or its affiliates) by notifying the Investor in writing (the “Transfer
Notice”), which notice shall describe fully the proposed Transfer, including the number of
ordinary shares proposed to be Transferred and the proposed Transfer price and inquire whether
the Investor excises its the Right of First Refusal. |
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The Investor (or its affiliates) shall then have the right to purchase all or any of such
ordinary shares subject to the Transfer Notice at a price per share equal to the proposed
per share Transfer price, by delivery to the Company of a notice of exercise of its Right of
First Refusal within thirty (30) days after the date the Transfer Notice is deemed delivered
to the Investor pursuant to Section 9.2. Upon receipt of any such notices of exercise the
Company shall promptly transmit the same to the Original Equityholder at its registered
address (or such other address as it may designate for such purpose). Charges for such
transmittal shall be for the account of the Original Equityholder, who will be required to
indicate the method of transmission to be used by the Company in this regard (e.g., regular
post, express courier, etc.). The Company may require advance payment of funds from the
Original Equityholder to cover the costs of transmitting such notices. |
| 2.4. | Subsequent Transfer. If any ordinary shares subject to the Transfer Notice is not
purchased by the Investor (or its affiliates) pursuant to Section 2.3, the Original
Equityholder may, within thirty (30) days thereafter, conclude a Transfer (the “Subsequent
Transfer”) of all or any portion of the ordinary shares not purchased by the Investor (or its
affiliates) on terms and conditions not more favorable to the transferee (the “Subsequent
Transferee”) than those described in the Transfer Notice. Any proposed Transfer on terms and
conditions more favorable to the Subsequent Transferee than those described in the Transfer
Notice, as well as any subsequent proposed Transfer of any ordinary shares by the Original
Equityholder, shall again be subject to the Right of First Refusal and shall require
compliance by the Original Equityholder with the procedures described in this Section 2. |
| 3. | Preemptive Rights. |
| 3.1. | Preemptive Rights. The Company grants to each Equityholder the right to purchase
only its Pro Rata Equity Interest of New Equity Interest which the Company may, from time to
time, propose to issue and sell. Each Equityholder may purchase its Pro Rata Equity Interest
of the New Equity Interest on the same terms and conditions and at the same price at which the
Company proposes to issue and sell the New Equity Interest. Any attempt to issue any New
Equity Interest in violation of this Section 3 shall be null and void ab initio. “Pro Rata
Equity Interest” with respect to any Equityholder, means its equity interest as a percentage
of the Company’s total equity interest on the date of determination. “New Equity Interest”
means any equity interest of the Company. |
| 3.2. | Exempted Issuance. Section 3.1 shall not apply to any issuance of the then ordinary
shares of the Company in connection with a Qualified IPO; provided that this Section 3.2 shall
not in any way prejudice the Equityholders’ rights under Section 5.4.3. |
| 3.3. | Notice. In the event the Company proposes to issue and sell New Equity Interest, it
shall give each Equityholder a written notice (the “Issuance Notice”) which shall describe the
type and the terms of the New Equity Interest, the price, and other terms and conditions upon
which the Company proposes to issue and sell the same, the amount of equity interest which
that Equityholder is entitled to purchase pursuant to Section 3.1, and a statement that such
Equityholder shall have fifteen (15) calendar days from the date of its receipt of the
Issuance Notice to respond to the Issuance Notice. Each such Equityholder may agree to
purchase its Pro Rata Equity Interest of the New Equity Interest at the price and upon the
terms and conditions specified in the Issuance Notice by giving written notice to the Company
within fifteen (15) calendar days after its receipt of the Issuance Notice from the Company
and the closing of such sale and purchase shall be at the time and place specified in the
Issuance Notice or otherwise agreed between the Company and such Equityholder. |
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| 3.4. | Sale of New Equity Interest. In the event such Equityholder fails to exercise its
right of participation within the 15-day period specified in Section 3.3, the Company shall
have ninety (90) days thereafter to issue and sell or enter into an agreement (pursuant to
which the sale of New Equity Interest covered by the Issuance Notice shall be closed, if at
all, within sixty (60) days after the date of that agreement) to issue and sell to one or more
purchasers, any or all of the New Equity Interest in respect of which the rights of
participation of such Equityholder were not exercised, at a price and upon terms and
conditions no more favorable to the purchaser than specified in the Issuance Notice. In the
event the Company has not issued and sold the New Equity Interest within this 90-day period
(or closed the sale of the New Equity Interest within sixty (60) days from the date of the
agreement), the Company shall not thereafter issue or sell such New Equity Interest without
first offering the New Equity Interest to each such Equityholder in the manner provided above. |
| 4. | Corporate Governance. |
| 4.1. | General. |
| 4.1.1. | The equityholders meeting consists of all the equityholders, which is supreme
authority of the Company.The equityholders meeting shall exercise its authority in
according with the Restated Articles, PRC Company Law and other relevant laws and
regulations |
| 4.1.2. | In accordance with the Restated Articles, the equityholders meeting shall be convened
at least once each year and the first meeting of equityholders shall be convened and
presided by the equityholder who has made biggest capital contribution to the Company.
The interim meeting of equityholder shall be convened by the Equityholders representing
more than 25% of voting rights, supervisor, or more than two thirds of directors. |
| 4.1.3. | Each equityholder shall vote its equity interest of the Company (subject to the
provisions of the Restated Articles) at any regular or special meeting of equityholders
on a pro rata basis according to the amount of equity held, , all matters to be
approved by the equityholders of the Company shall require the approval of
Equityholders who, being entitled to do so, voted in person or, where proxies are
allowed, by proxy at a general meeting representing a simple majority of the votes as
determined in accordance with the Restated Articles, or a written resolution signed by
all the Equityholders in order to be adopted by the Company. |
| 4.1.4. | Equityholders meeting shall take all other actions necessary, to give effect to the
provisions of this Agreement, the Purchase Agreement and the Restated Articles and
unless and until the closing of the Qualified IPO, to ensure the inclusion in the
Restated Articles of the rights and privileges of the Equityholders included in this
Agreement, the Purchase Agreement and the Restated Articles. |
| 4.2. | Board of Directors. |
| 4.2.1. | Number and Composition. |
| 4.2.1.1. | The number of directors constituting the entire Board initially
shall be four (4), of which two (2) directors (together with any other
directors to be nominated and appointed by the Investor from time to
time pursuant to the terms of this Agreement and the Restated Articles,
if any, the “Investor Directors”) shall be nominated and appointed by
the Investor, and two (2) directors shall be nominated and
appointed by the Original Equityholder (together with any other
directors to be nominated and appointed by the Original
Equityholder from time to time pursuant to the terms of this
Agreement and the Restated Articles, if any, the “Original
Equityholder Directors”). The term of office of director shall be 3
years, and may be extended if such director is re-appointed. |
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| 4.2.1.2. | The four directors shall initially be Hary Tanoesoedibjo (Xxxx Xxxx
Li), Xi Jun, Rui A Ji (“Mr. Rui”), and Fan Xiao Qing, with the chairman
of the Board initially be Hary Tanoesoedibjo (Xxxx Xxxx Li) and the
legal representative of the Company initially be Mr. Rui. In the event
the Chairman of the board is not able to perform the duty, he could
entrust his duty with other director by written. |
| 4.2.1.3. | Each of the Original Equityholder and the Investor shall cast all
of its votes at any Equityholders’ Meeting called for the purpose of
filling the positions on the Board or in any written consent executed
for such purpose to elect, and shall take all other actions necessary
to ensure the election to the Board of, the directors set forth in
Sections 4.2.1.1 and 4.2.1.2. The chairman of the Board shall have an
additional casting vote in case of deadlock. |
| 4.2.1.4. | Each of the parties hereby agrees to take all necessary actions to
ensure that the directors of the Company are appointed and removed only
pursuant to this Section 4.2. |
| 4.2.2. | Removal and Replacement of Directors. |
| 4.2.2.1. | A director shall be removed from the Board, with or without cause,
upon, and only upon, the affirmative vote of the Equityholders in
accordance with this Section 4.2.2. Each of the Original Equityholder
and the Investor shall cast all of its respective votes for the removal
of a director (i) upon the request of the Original Equityholder or the
Investor that nominated such director; and (ii) upon the request of any
party that has appointed a director in accordance with this Agreement
if such director does not vote as directed by the party that appointed
him/her in accordance with the provisions of this Agreement. Except as
provided in the preceding sentence, none of the parties hereto shall
cast any vote for the removal of a director. |
| 4.2.2.2. | In the event any director resigns or is removed in accordance with
Section 4.2.2.1, the party that nominated such director will have the
right to nominate such director’s successor or replacement, and such
successor or replacement director shall be nominated and elected on or
as soon as practicable after the date of such resignation or removal. |
| 4.2.3. | Directors’ Access. Upon prior written notice to the Company and during
normal business hours, each director shall be entitled to examine the books and
accounts of the Company and shall have access to any and all properties and assets of
the Company; provided that
such examination and access shall not unduly disrupt the day-to-day operations of
the Company. |
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| 4.2.4. | Chairman of the Board. The chairman of the Board shall be nominated and
appointed by Investor. The chairman of the Board shall have an additional casting vote
in case of deadlock. |
| 4.2.5. | Audit Committee; Compensation Committee. The Board shall at all times
maintain an audit committee and a compensation committee. The audit committee shall be
comprised of [three (3) directors], of which [2] member shall be Investor Directors and
[1] member shall be an Original Equityholder Director. The compensation committee
shall at all times consist of at least [three (3) directors], of which [2] member shall
be Investor Directors and [1] member shall be an Original Equityholder Director. |
| 4.2.6. | Board Meetings. |
| 4.2.6.1. | Frequency and Location. Meetings of the Board shall take
place at least once every calendar quarter per year. Meetings shall be
held in a location approved by a majority of the directors. |
| 4.2.6.2. | Notice. A meeting may be called by any one of the
directors giving notice in writing to the Board specifying the date,
time and agenda for such meeting. The Board shall upon receipt of such
notice give a copy of such notice to all directors of such meeting,
accompanied by a written agenda specifying the business of such meeting
and copies of all papers relevant for such meeting. Not less than
three (3) Business Days’ notice shall be given to all directors;
provided, however, that such notice period (i) shall not apply in the
case of an adjourned meeting pursuant to Section 4.2.6.3, and (ii) may
be reduced with the written consent of all of the directors. |
| 4.2.6.3. | Quorum. The quorum necessary for the transaction of the
business of the Board shall be two (2) directors, which must include at
least one (1) of the Investor Directors and one (1) Original
Equityholder Director. If a quorum cannot be achieved within the first
hour after any scheduled Board meeting, the meeting shall be adjourned
and the parties shall reschedule the next meeting within 30 days in
good faith pursuant to Section 4.2.6.2 and the directors shall be
obligated to participate in such rescheduled meeting in good faith.
Neither the Original Equityholder nor the Investor will cause or
instruct any director appointed by it to fail to attend Board meetings
for the purpose of obstructing the due operation of the Board. |
| 4.2.6.4. | Voting. Subject to Section 4.2.4, at any Board meeting,
each director may exercise one vote. Any director may, by written
notice to the Board, authorize any other person to attend and vote as
his/her alternate at any Board meeting. Subject to Section 4.2.7, the
adoption of any resolution of the Board shall require the affirmative
vote of a simple majority of the directors present at a duly
constituted meeting of the Board. The Board shall not at any meeting
adopt any resolution covering any matter that is not specified on the
agenda for such
meeting unless all directors are present at such meeting and vote
in favor of such resolution. The chairman of the Board shall have
an additional casting vote in case of deadlock. |
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| 4.2.6.5. | Telephonic Participation. Directors may participate in
Board meetings by telephone or video conference; provided that each
director can hear and be heard by all the other directors throughout
the meetings, and such participation shall constitute presence for
purposes of the quorum provisions of Section 4.2.6.3. |
| 4.2.6.6. | Expenses. The Company shall reimburse the directors’ for
their reasonable costs of attendance at Board meetings within ten (10)
Business Days after a director has submitted to the Company reasonable
evidence of all such costs of attendance. |
| 4.2.6.7. | Action by Written Consent. Any action that may be taken by
the directors at a meeting may be taken by a written resolution signed
by all of the directors. |
| 4.2.7. | Matters Requiring Board Approval. The Company shall not take any action in
connection with any of the transactions as set forth in Appendix I (Restated Articles
of Association of Company) attached hereto (the “Reserved Matters”), unless such
transaction shall have been approved by a majority of the directors of the Board (such
approval not to be unreasonably withheld by any director). |
| 4.2.8. | Remuneration. No director of the Board shall be entitled to any remuneration
except for reimbursement of out-of-pocket expenses in connection with the performance
of his or her duties as director and as set forth in Section 4.2.6.6 and, if such
director is otherwise an employee of the Company, remuneration received in his or her
capacity as an employee are subject to the terms of any employment letter or employment
agreement with the Company. |
| 4.3. | Supervisor. |
| 4.3.1. | There shall be a supervisor in the Company, who shall be nominated, appointed and
removed by the Investor. The director, manager or other senior management shall not
serve currently as the supervisor. The term of supervisor shall be 3 years and a
supervisor can successively serve as the supervisor if he/she is re-appointed. The
Investor shall have the right to remove or replace the supervisor from time to time. |
| 4.3.2. | The supervisor shall exercise it authority according to Restated Articles, the PRC
laws and regulations. |
4.4. Management Appointment
| 4.4.1. | Senior Management. The Board shall appoint all executive officers and
members of senior management of the Company; provided however that all managers of the
Company shall be nominated by the Original Equityholder and the chief financial officer
and all other financial controllers and officers of the Company shall be nominated by
the Investor. |
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| 4.4.2. | Mr. Rui. |
| 4.4.2.1. | The Investor shall use its commercially reasonable efforts to cause
the employment by the Investor or Investor’s affiliate of Mr. Rui as
the manager of the Company and the vice president and executive
director of the games department of the Investor for a term of five (5)
years (the “Term”), at the end of each year , Investor or Investor’s
Affiliate will review his annually performance and decide whether
extend his employment. |
| 4.4.2.2. | Subject to the terms and provisions of the employment agreement to
be entered into by and between the Investor or Investor’s affiliate
and Mr. Rui, during the Term, Mr. Rui shall receive from the Investor
or Investor’s affiliate (i) a monthly salary of RMB20,000, (ii) a
monthly performance allowance of RMB5,000 based on the evaluation of
the performance of Mr. Rui by the Investor and details of payment to be
determined by the Investor or Investor’s affiliate, and (iii) options
to purchase the American depositary shares (listed on the NASDAQ Global
Market) (“ADSs”) of Linktone Ltd. (“Linktone”), an affiliate of the
Investor, subject to the terms and conditions of Linktone’s 2003 Stock
Incentive Plan. The aggregate number of options to be granted to Mr.
Rui shall be determined by the Investor’s Compensation Committee in the
of 2010 and shall be granted in 2010 according to Linktone’s 2003 Stock
Incentive Plan. The options to be granted in 2010 shall have an
exercise price of the official closing price of the ADSs as quoted on
the NASDAQ Global Market on the date hereof. Notwithstanding anything
contrary herein, any and all of the salary, allowance and options
entitled to Mr. Rui hereunder shall only take effect after the Board of
Director of Linktone Ltd. approve the same. |
| 4.4.2.3. | Subject to the terms and conditions of the employment agreement to
be entered into by and between the Investor or Investor’s affiliate and
Mr. Rui, Mr. Rui shall be subject to the non-competition provisions as
set forth in Section 6.5. |
| 4.4.3. | Investor Covenants. |
| 4.4.3.1. | Except for the management of finance and finance-risk-related
business and subject to the rights of the Board of the Company as set
forth in this Agreement, the Investor shall not directly intervene the
day-to-day operations, market promotion and research and development
management of the Company in order to ensure that the Company could
conduct its business at its sole discretion as long as Xxxx is employed
by the Company. |
| 4.4.3.2. | Notwithstanding anything contrary in this Agreement, the Investor
shall use its commercially reasonable efforts to provide the Company
with resources (subject to Section 5.9, at cost or lowest market price
that can enhance the performance of the Company, including but not
limited to, channels, SP qualifications and maintenance of relations
with local operators; provided however, that the Company shall be
fully responsible for its performance and the Investor shall have
no liability whatever for the performance of the Company. |
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| 4.5. | Indemnity. To the fullest extent permitted by law, the parties hereto agree to cause
the Company to indemnify and hold harmless the directors and executive officers of the Company
from and against any and all damages, liabilities, losses, costs, expenses, liabilities, and
attorney’s fees incurred by them arising out of, or in connection with, the performance of
their duties or the operation of the Company’s business; provided, however, that such
indemnity shall not include those damages, losses, costs, expenses, liabilities, and
attorney’s fees resulting from their gross negligence or willful misconduct. |
| 4.6. | Appendix I. Other corporate governance terms and provisions, including but not
limited to, the rights and obligations of the Board, the procedures of Board meetings and
others are set forth in Appendix I attached hereto. |
| 5. | General Affairs of the Company. |
| 5.1. | Books and Records. |
| 5.1.1. | The Company shall, and the Original Equityholder shall procure the Company to, keep
proper, complete and accurate books of account, in RMB and in accordance with the
generally accepted accounting principles in the PRC (“PRC GAAP”) “RMB” means the
renminbi yuan, the lawful currency of the PRC. |
| 5.1.2. | The accounts of the Company shall be audited annually in accordance with US GAAP
internally by persons designated and appointed by the Investor and externally by a
Designated Accounting Firm. The Company and the Original Equityholder shall cooperate
with the Investor and its representatives with regard to the audit of the Company’s
accounts. “Designated Accounting Firm” means any one of the following accounting firms
appointed by the Investor: Deloitte Touche Tohmatsu, Ernst & Young, KPMG or
PricewaterhouseCoopers, or any other accounting firm designated by the Investor. |
| 5.1.3. | The Company shall, and the Original Equityholder shall procure the Company to, make
and keep books, records, and accounts which, in reasonable detail, accurately and
fairly reflect its transactions and dispositions of assets and provide a sufficient
basis for the preparation of the Company’s consolidated financial statements and notes
thereto in accordance with US GAAP. |
| 5.1.4. | The Company shall, and the Original Equityholder shall procure the Company to, devise
and maintain a system of internal accounting controls sufficient to provide reasonable
assurance that: |
| 5.1.4.1. | transactions are executed and access to assets is permitted only in
accordance with management’s general or specific authorization; |
| 5.1.4.2. | transactions are recorded as necessary to permit preparation of
periodic financial statements and to maintain accountability for
assets; |
| 5.1.4.3. | access to assets is permitted only in accordance with management’s
general or specific authorization; and |
| 5.1.4.4. | the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences. |
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| 5.1.5. | The Company shall, and the Original Equityholder shall procure the Company to, design
and maintain such internal controls and procedures to ensure that material information
relating to the Company is made know in a timely manner to the chief executive officer,
chief financial officer, and the Board of the Company by others within the Company.
“Internal controls and procedures” means controls and other procedures of the Company
that are designed to ensure that information required to be disclosed by the Company,
including without limitation, in reports that it files or submits under any applicable
law, is recorded, processed, summarized and reported, in a timely manner and in any
event within the time period required by applicable law. Internal controls and
procedures include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by the Company is accumulated and communicated to
the Company’s management, including its chief executive officer, chief financial
officer and the Board, as appropriate, to allow timely decisions regarding required
disclosure. |
| 5.1.6. | Each Equityholder shall, upon reasonable notice, have the right to review the books
and records of the Company and, at its own expense, to audit such books and records. |
| 5.2. | Office. The Company shall remain at its existing location. |
| 5.3. | Information Rights. |
| 5.3.1. | The Company shall, and the Original Equityholder shall cause the Company to, provide
to the Investor, within ninety (90) days after the end of each of its financial year,
the audited annual consolidated financial statements of the Company for such financial
year prepared in accordance with US GAAP and audited by a Designated Accounting Firm. |
| 5.3.2. | In addition, the Company shall, and the Original Equityholder shall cause the Company
to, provide to the Investor (i) unaudited consolidated quarterly (within thirty (30)
days after the end of the relevant calendar quarter) and monthly (within twenty (20)
days after the end of the relevant calendar month) financial statements for the
Company, (ii) quarterly business update report which shall include, without limitation,
the income statement and the cash flow statement for the concerned quarter and the
balance sheet as of the end of such quarter, accounts receivable aging analysis for the
relevant quarter, research and development reports including updates on ongoing
projects and plans, reports on any significant market developments, major customer
orders, potential merger and acquisition situations and government policy updates,
profit and loss projections with respect to the following quarter and human resources
planning on key hires; (iii) notices of meetings of the Board, committees of the Board,
and equityholders of the Company (on the same date such notices are dispatched to such
directors or equityholders, as the case may be); (iv) copies of all resolutions
(including any written resolutions) passed by the equityholders and/or Board of the
Company within ten (10) days after the date of each such resolutions being passed; (v)
copies of all minutes of meetings of the Board, committees of the Board, and
equityholders of the Company within ten (10) days after the date of each such meeting;
and (vi) such other reports, financial and other information relating to the business
and finances of the Company as the Investor may request. The Company will arrange
monthly management meetings among the relevant senior
managers and representatives of the Investor to discuss the Company’s operating
performance. |
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| 5.3.3. | The Original Equityholder and the Company shall, and shall cause the Company’s
accountants and other representatives to, provide to the Investor all information that
the Investor shall reasonably require (i) to allow the Investor or its affiliates to
claim tax credits under applicable tax laws and (ii) to prepare any tax returns
required to be filed by the Investor or its affiliates under applicable tax laws. |
| 5.4. | Qualified IPO. |
| 5.4.1. | Subject to applicable laws and in the event the expectations for listing are
achieved, the Investor shall use its commercially reasonable efforts to facilitate the
Company’s commencement of a Qualified IPO in 2011 or 2012; provided, however, that the
Company shall be fully responsible for the completion of such Qualified IPO and the
Investor shall have no liability whatever if any such Qualified IPO is not completed
for whatever reason. “Qualified IPO” means a firm commitment underwritten initial
public offering of the then ordinary shares of the Company on a Qualified Exchange.
“Qualified Exchange” means (i) the New York Stock Exchange or the NASDAQ Stock Market’s
Global Market System, (ii) the Shanghai Stock Exchange or the Shenzhen Stock Exchange,
(iii) the Stock Exchange of Hong Kong Limited, or (iv) any other exchange of recognized
international reputation and standing duly approved by the Company’s Board. |
| 5.4.2. | For the avoidance of doubt, in connection with any potential Qualified IPO, the
Company and the Original Equityholder will, prior to the selection of the underwriter
for such Qualified IPO and the selection of the Qualified Exchange, consult with the
Investor concerning the selection of such underwriter and exchange. |
| 5.4.3. | Immediately prior to the closing of a Qualified IPO, each Equityholder shall have the
right to subscribe for such number of the then ordinary shares of the Company at the
price per share set in the Qualified IPO, such that following the Qualified IPO
dilution, each Equityholder would maintain the same fully diluted ownership position in
the Company as immediately after the Closing (as defined in the Purchase Agreement) or
as contemplated in Section 8.1.8 of the Purchase Agreement, as applicable. This
provision shall be subject to applicable stock exchange rules and securities laws as
well as underwriters’ exercise of the over-allotment option. |
| 5.4.4. | Subject to Sections 2 and 5.4.5, after the closing of a Qualified IPO, the Original
Equityholder shall have the right to sell not more than fifteen percent (15%) of the
then outstanding ordinary shares of the Company held by it on a priority basis ahead of
the Investor. |
| 5.4.5. | Subject to Sections 2 and 5.4.4, after the closing of a Qualified IPO, the Original
Equityholder shall have the right to sell annually not more than twenty percent (20%)
of the then ordinary shares of the Company held by it. |
| 5.4.6. | Within five (5) years after the closing of a Qualified IPO, the Original Equityholder
shall hold at least twenty percent (20%) of the then ordinary shares of the Company (as
determined upon the closing of such Qualified IPO). |
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| 5.4.7. | In the event when the expectations for listing are achieved but the closing of a
Qualified IPO does not take place within five (5) years after the date hereof as a
result of a force majeure event, the Equityholders shall discuss in good faith any
other plans for withdrawing their respective investments from the Company; provided,
however, that and subject to Section 2, the Investor and Original Equityholder shall
have the right to sell any and all of its equity interest of the Company. |
| 5.5. | Securities Filing. The Company shall provide, and the Original Equityholder shall
cause the Company to provide, to the Investor, promptly within three (3) Business Days after
the filing thereof, copies of any registration statement, preliminary prospectus, final
prospectus, application for listing or other document filed with any securities regulatory
authority or securities exchange in any jurisdiction. |
| 5.6. | Budgets and Business Plans. The Company shall, and the Original Equityholder shall
cause the Company to, prepare proposed annual operating and capital budgets and business plans
for the Company for each financial year including details of anticipated revenues, operating
expenses, capital expenditure debt, working capital requirements and cash flow forecasts on a
month-to-month basis for the forthcoming financial year (the “Proposed Annual Budget”), which
shall be submitted to the Board not less than thirty (30) days prior to the commencement of
each financial year. The Board shall convene as soon as practicable thereafter to consider
and approve the Proposed Annual Budget. |
| 5.7. | Intellectual Property Protection. The Company shall, and the Original Equityholder
shall ensure that the Company shall, (i) take all reasonable and prudent steps promptly to
protect its Intellectual Property rights, including registering all its trademarks, brand
names, domain names and copyrights and wherever prudent applying for patents on its technology
and (ii) ensure that neither the Company nor any of its employee takes any action that
constitutes, or could reasonably be expected to constitute, a violation or infringement of any
intellectual property rights held by any other person. “Intellectual Property” means any and
all (a) registered and unregistered copyrights, copyright registrations and applications,
author’s rights and works of authorship, (b) know-how, trade secrets and patents (including
symbolic patents and designs), (c) proprietary processes and operational procedures, (d) trade
names, trade dress, trademarks, and service marks, and registrations and applications
therefor, (e) the goodwill of the business symbolized or represented by the foregoing,
customer lists and other proprietary information and common-law rights; and (f) all actions
and rights to xxx at law or in equity for any past or future infringement or other impairment
of any of the foregoing, including the right to receive all proceeds and damages therefrom,
and all rights to obtain renewal, continuations, divisions or other extensions of legal
protections pertaining thereto. |
| 5.8. | Profit Distribution. Commencing with financial year 2010, the Company shall declare
and distribute annually (if and to the extent approved by the Board pursuant to the provisions
of this Agreement and the Restated Articles and subject to applicable laws, and accomplished
within fifteen (15) Business Days after the completion of the Company’s audit by the
Designated Accounting Firm for such financial year) dividends to the Equityholders pursuant to
the proportion of equity interest of the Company held by each of the Equityholder. |
| 5.9. | Cooperation between the Equityholders and the Company. Subject to the provisions of
this Agreement, the Company may enter into any agreement or transaction with any Equityholder
(or its affiliate) provided that such agreement or transaction is in the ordinary course of
business of the Company and such Equityholder (or its affiliate) and contains customary
commercial terms negotiated on an arm’s length basis. |
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| 5.10. | Ethical Business Practices. |
| 5.10.1. | The Company shall, and the Original Equityholder shall procure the Company to, adopt
and implement policies and compliance procedures on ethical business practices. |
| 5.10.2. | The Company shall, itself and shall procure its officers, directors, employees, and
agents to, and the Original Equityholder shall procure the Company and its officers,
directors, employees, and agents to, use only legitimate business and ethical practices
in commercial operations and in promoting the position of the Company on issues before
any Governmental Authorities. “Governmental Authority” means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of the
PRC, any foreign country or any domestic or foreign state, county, city or other
political subdivision. |
| 5.10.3. | In connection with the business of the Company, the Company and the Original
Equityholder shall ensure that no payments or transfers of value shall be made which
have the purpose or effect of public or commercial bribery, or acceptance of or
acquiescence in kickbacks or other unlawful or improper means of obtaining business. |
| 5.10.4. | In connection with the business of the Company, each of the Company and the Original
Equityholder warrants and covenants, on behalf of itself, all entities that it
controls, and its owners, directors, officers, and employees, that it has not and will
not offer, pay, promise to pay, or authorize the payment of any money or anything else
of value, whether directly or through another person or entity, to any government
official or political party in order to (i) influence any act or decision of such
official or party or (ii) induce such official or party to use his or its influence
with a government or instrumentality thereof, in order to obtain or retain business for
or with, or to direct business to, the Company, or to secure any improper advantage for
the benefit of the Company. |
| 5.11. | Use of Sales Agents and Representatives. In connection with the business of the
Company, the Company shall not, and the Original Equityholder shall procure the Company not
to, use any sales agent or representative unless the agent or representative has been screened
to ensure that it has a good business reputation and conducts its business in an ethical
fashion. |
| 5.12. | Financial and Money Laundering Compliance. The Company and the Original
Equityholder shall ensure that the business of the Company shall be conducted at all times in
compliance with applicable financial record keeping and reporting requirements and money
laundering statutes in the PRC, the United States and all other jurisdictions in which the
Company conduct its business, the rules and regulations hereunder and any related or similar
rules, regulations or guidelines issued, administered, or enforced by any governmental agency,
authority or body. |
| 5.13. | Compliance with Laws. The Company shall ensure that, and the Original Equityholder
shall cause the Company to ensure that, the Company will conduct its business strictly in
accordance with applicable laws. |
| 5.14. | Taxes. The Company shall, and the Original Equityholder shall procure the Company
to: |
| 5.14.1. | meet all payment, withholding, and all other tax compliance obligations (including
with respect to transfer pricing and evidentiary requirements for transfer pricing) as
required under the laws of the jurisdictions where the Company operates; |
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| 5.14.2. | retain a Designated Accounting Firm to handle all of its tax compliance matters in
all jurisdictions where the Company operates; |
| 5.14.3. | refrain from entering into tax sharing agreements or otherwise guarantee another
person’s liability with respect to taxes; |
| 5.14.4. | refrain from entering into any transactions primarily motivated for the purpose of
evading taxes; and |
| 5.14.5. | conduct its business in such a way as to ensure that it is not treated as a resident
for tax purposes of, or is otherwise subject to income tax in, a jurisdiction other
than the PRC |
| 5.15. | Development of Overseas Markets; Long-term Development. |
| 5.15.1. | The Equityholders will discuss in good faith making additional investments in the
Company for the purposes of assisting the Company develop overseas markets, which
investments will be in such amounts and at such times as the Investor and Equityholders
shall mutually agree. |
| 5.15.2. | The Equityholders will discuss in good faith making additional investments in the
Company for the purposes of assisting the Company’s long-term development, which
investments will be in such amounts and at such times as the Investor and Equityholders
shall mutually agree. |
| 6. | Representations and Warranties; Covenants. |
Each of the parties, severally and not jointly, represents and warrants to each other party, that:
| 6.1. | Organization; Good Standing; Corporate Power. Such party has the full power and
authority to enter into, execute and deliver this Agreement and to perform the transactions
contemplated hereby, and such party is duly incorporated, validly existing and in good
standing under the laws of the PRC. |
| 6.2. | Authorization. The execution and delivery by such party of this Agreement and the
performance by such party of the transactions contemplated hereby have been duly authorized by
all necessary corporate or other action of such party. |
| 6.3. | Enforceability. Assuming the due authorization, execution and delivery hereof by the
other parties, this Agreement constitutes the legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors’ rights generally. |
| 6.4. | No Violation. The execution, delivery and performance of this Agreement by such
party and the consummation of the transactions contemplated hereby will not (i) violate any
provision of the organizational or governance documents of such party to the extent relevant;
(ii) require such party to obtain any consent, approval or action of, or make any filing with
or give any notice to, any Governmental Authority or any other person pursuant to any
instrument, contract or other agreement to which such party is a party or by which such party
is bound, other than any such consent, approval, action or filing that has already been duly
obtained or made or otherwise explicitly required hereunder; (iii) conflict with or result in
any material breach or violation of
any of the terms and conditions of, or
constitute (or with notice or lapse of
time or both constitute) a default under,
any instrument, contract or other
agreement to which such party is a party
or by which such party is bound or (iv)
violate any applicable law. |
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| 6.5. | Non-Competition. |
| 6.5.1. | The Original Equityholder covenants to the Company and the Investor that since the
execution of this Agreement until five (5) years from the time when the Original
Equityholder (or its successors, permitted transferees and assignees, and designated
affiliate(s)) no longer directly or indirectly own any equity interest of the Company
(or any interest therein)( the “Non-competition Period”), the Original Equityholder
will not, and will ensure that Mr. Rui and any other person that the Original
Equityholder directly or indirectly controls or holds equity interests in (other than
the Company) will not, without the prior written consent of the Investor: |
| 6.5.1.1. | enter, directly or indirectly, into any business that competes
directly or indirectly with the business of the Company as currently
conducted and as proposed to be conducted, including holding the shares
of a company which is engaged in such business, participating the
management or control of such business, providing finance service,
employment, consulting service or other service ; |
| 6.5.1.2. | solicit for itself or any entity other than the Company the
business or a customer, client, supplier or franchiser of the Company,
or |
| 6.5.1.3. | persuade, solicit or encourage any employee or consultant of the
Company to leave the Company’s employ or terminate any employment
agreement or consulting arrangement. |
| 6.5.2. | Each and every obligation under Section 6.5.1 shall be treated as a separate
obligation and shall be severally enforceable as such and in the event of any
obligation or obligations being or becoming unenforceable in whole or in part such part
or parts which are unenforceable shall be deleted from such Section and any such
deletion shall not affect the enforceability of the remainder parts of such Section. |
| 6.5.3. | The parties agree that the restrictive covenants contained in Section 6.5.1 are
reasonable and necessary for the protection of the Company and the Investor, and
further agree that the said covenants are not excessive or unduly onerous upon the
Original Equityholder. However, it is recognized that restrictions of the nature in
question may fail for technical reasons currently unforeseen and accordingly it is
hereby agreed and declared that if any of such restrictions shall be adjudged to be
void as going beyond what is reasonable in all the circumstances for the protection of
the Company or the Investor, but would be valid if part of the wording thereof were
deleted or the periods thereof reduced or the range of activities or area dealt with
thereby reduced in scope, the said restriction shall apply with such modification as
may be necessary to make it valid and effective. |
| 6.5.4. | In the event that the Original Equityholder is in violation of this Section 6.5, all
income generated in connection therewith shall become the property of the Company. In
the event that such income is not sufficient to compensate the losses incurred by the
Company and the Investor, the Original Equityholder shall indemnify and reimburse such
losses incurred by the Company and the Investor. In addition, the Non-competition
Period will be extended accordingly for each day that Original Equityholder is in
violation of this Section 6.5. |
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| 6.6. | Restated Articles. Within [seven (7) Business Days] after the Closing (as defined
the Purchase Agreement), the Company shall complete, or shall cause the completion of, (i) the
amendment and restatement of its existing Articles of Association in the form and substance as
set forth in Exhibit A attached hereto (the “Restated Articles”) to reflect the
transactions contemplated herein, and (ii) the changes to the industrial and commercial
registration to reflect the transactions contemplated herein. |
| 7. | Confidentiality. |
| 7.1. | Confidentiality. No Equityholder shall divulge or communicate to any person (other
than (i) as required by law, stock exchange rule, or by any regulatory or Governmental
Authority or (ii) to its, officers, employees or advisors on a need-to-know basis for the
purposes of reporting, evaluating, reviewing or assessing the performance, acquisition,
holding, management, divestment of its interest in the Company or any other purposes
substantially similar therewith) or use or exploit for any purpose whatsoever the identity of
any Equityholder of the Company or any confidential and/or proprietary knowledge or
information of the Company or any of the other Equityholder which the first-mentioned
Equityholder may receive or obtain as a result of entering into this Agreement, and each
Equityholder shall use its reasonable endeavors to prevent its officers, employees or advisors
from so doing. This restriction shall apply to each Equityholder until three years from the
date this Agreement is terminated with respect to such Equityholder, but shall not apply to:
(a) information or knowledge which may properly come into the public domain through no fault
of the relevant Equityholder; or (b) a disclosure for a specific purpose which is approved by
resolution of the Board prior to such disclosure being made (which approval shall not be
unreasonably withheld). |
| 7.2. | Exceptions. Notwithstanding the foregoing, Section 7.1 shall not apply to: (i)
information which an Equityholder learns from a third party having the right to make the
disclosure, provided the Equityholder complies with any restrictions imposed by the third
party; (ii) information which is in the Equityholder’s possession prior to the time of
disclosure by the Company and not acquired by the Shareholder under a confidentiality
obligation; (iii) information which the Equityholder or its affiliate is required to disclose
by law or a governmental or regulatory authority (which, for the purposes of this Agreement,
shall be deemed to include disclosure by an Equityholder or its affiliate of the nature of
such Equityholder’s or its affiliate’s investment in filings and submissions with the United
States Securities and Exchange Commission and the securities regulatory agencies of other
applicable jurisdictions); or (iv) information which the Equityholder is required to disclose
by court order or other legal process. With respect to a disclosure required by law, any
governmental or regulatory authority or pursuant to a court order or other legal process,
prior to making such disclosure, an Equityholder shall (a) use all reasonable efforts to limit
the scope of such disclosure and to request and pursue confidential treatment of such
disclosure to the extent available and (b) unless prohibited or restricted by law, a
governmental or regulatory authority or pursuant to a court order or other legal process,
notify the Company of the pending disclosure as soon as practicable so that the Company may
seek appropriate redress. If the Company reasonably believes that an Equityholder has not
satisfied clause (a) of the preceding sentence, and the Company notifies the Equityholder in
writing of such belief, the Equityholder shall take such action(s) requested by the Company in
writing, subject to the following conditions: (A) the action requested by the Company is
contemplated by clause (a) of the preceding sentence; (B) between the Company and the
Equityholder, the Equityholder is the only party that is in the position to take the actions
requested by the Company under the
applicable laws, rules or regulations; (C) at the request of the Equityholder, the Company
shall provide an indemnity reasonably satisfactory to the Equityholder; and (D) the taking
of the actions requested by the Company will not subject the Equityholder, if acting in good
faith, to any known sanctions from any legal, government or regulatory authority or court of
law, or under applicable law, whether arising from or as a result of the Equityholder taking
such actions. Nothing contained herein is intended to limit or restrict the ability of the
Investor and its affiliates with respect to their filings with the United States Securities
and Exchange Commission or to make required disclosure therein. |
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| 7.3. | Press Release. None of the Company and the Original Equityholder shall issue a press
release or make any public announcement or other public disclosure with respect to the
relationship or involvement of the parties without obtaining the prior written consent of the
Investor or use the name of the Investor or its affiliate without obtaining in each instance
the prior written consent of the Investor. |
| 8. | Term and Termination. |
| 8.1. | Effective Date; Termination. This Agreement shall become effective from the
Effective Date (as defined below) and shall terminate: (i) with respect to any Equityholder,
on the date on which such Equityholder no longer holds any equity interest of the Company, and
(ii) with respect to all parties, on the date agreed upon in writing by all of the parties,
provided that the following provisions shall automatically terminate upon the closing of a
Qualified IPO (except as otherwise expressly provided herein): Section 2 (Restrictions on
Transfer of Equity Interest), Section 3 (Preemptive Rights), Section 4 (Corporate Governance)
and Section 5.3 (Information Rights). |
| 8.2. | Consequences of Termination. If this Agreement is terminated pursuant to Section
8.1, this Agreement shall become null and void and of no further force and effect, except that
the parties shall continue to be bound by the provisions which are intended, expressly or
implicitly, to survive the termination of this Agreement. Nothing in this Section 8.2 shall
be deemed to release any party from any liability for any breach of this Agreement prior to
the effective date of such termination. |
| 9. | Miscellaneous. |
| 9.1. | Administrative Fees and Other Expenses. Each party shall pay its own fees and
expenses in connection with the transactions contemplated by this Agreement, and the
negotiation, preparation, execution, delivery, and performance thereof, including attorney’s
fees. |
| 9.2. | Notices. All notices or other communications required or permitted to be given
hereunder shall be in writing in Chinese and shall be deemed to have been duly given and
received on the date delivered by hand or by a generally recognized national courier service
(with relevant fees prepaid), or by other messenger (or, if delivery is refused, upon
presentment) or upon receipt by facsimile transmission (provided that a copy of such facsimile
and transmission confirmation is delivered by hand or a generally recognized national courier
service to the addressee of the facsimile within five (5) Business Days), or upon delivery by
registered or certified mail (return receipt requested), postage prepaid, to the parties as
follows: |
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If to the Investor:
Address: [Unit C and D, 10th Floor, Longfeng Tower, 1566 West Yanan
Road, Changning District, Shanghai]
Facsimile: [021-61671740]
Attention: [MR. Jun Xi]
Road, Changning District, Shanghai]
Facsimile: [021-61671740]
Attention: [MR. Jun Xi]
If to the Original Equityholder:
Address: [Room 601, Tower B, Dushi Building, 34 Guangming Road,
Yaohai District, Hefei City, PRC]
Facsimile: [•]
Attention: [MR. Rui A Ji]
Yaohai District, Hefei City, PRC]
Facsimile: [•]
Attention: [MR. Rui A Ji]
If to the Company:
Address: [Room 000, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxx Xxxx, PRC]
Facsimile: [•]
Attention: [MR. Rui A Ji
Facsimile: [•]
Attention: [MR. Rui A Ji
or to such other persons or addresses as the person to whom notice is given may have
previously furnished in writing to the party giving such notice in the manner set
forth above (provided that notice of any change of address shall be effective only
upon receipt thereof). |
9.3. Successors and Assigns.
| 9.3.1. | This Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer upon any person other than the parties hereto
or their respective successors or permitted assigns, any rights or remedies under or by
reason of this Agreement. |
| 9.3.2. | Unless otherwise expressly provided in this Agreement, no party to this Agreement may
assign any of its rights or obligations under this Agreement without the prior written
consent of the other parties to this Agreement. Any attempted delegation or assignment
without the required consent shall be void and of no effect. |
| 9.4. | Amendments and Waivers. Any provision of this Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of an amendment,
by all the parties hereto, or, in the case of a waiver, by the party against whom the waiver
is to be effective. No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. |
| 9.5. | Good Faith. All matters not specifically provided for in this Agreement which
related to the subject matters hereof and require decision shall be discussed by the parties
hereto in good faith. |
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| 9.6. | Further Assurance. Each of the parties hereto shall give such further assurance,
provide such further information, take such further actions and execute and deliver such
further documents and instruments as are, in each case, within its power to give, provide and
take so as to give full effect to the provision of this Agreement. |
| 9.7. | No Agency. No Equityholder, acting solely in its capacity as an Equityholder of the
Company, shall act as an agent of the Company or have any authority to act for or to bind the
Company, except as authorized by the Board. Any Equityholder that takes any action or binds
the Company in violation of this Section 9.7 shall be solely responsible for, and shall
indemnify the Company and the other Equityholder against, any losses, claims, damages,
liabilities, judgments, fines, obligations, expenses and liabilities of any kind or nature
whatsoever (including but not limited to any investigative, legal and other expenses
reasonably incurred in connection with, and any amounts paid in settlement of, any pending or
threatened legal action or proceeding) that the Company, or such other Equityholder, as the
case may be, may at any time and from time to time become subject to or liable for by reason
of such violation. The provisions of this Section 9.7 shall survive the termination of this
Agreement. |
| 9.8. | No Partnership. The Equityholders expressly do not intend hereby to form a
partnership, either general or limited, under any jurisdiction’s partnership law. The
Equityholders do not intend to be partners to each other, or partners as to any third party,
or to create any fiduciary relationship among themselves, solely by virtue of their status as
Equityholders. To the extent that any Equityholder, by word or action, represents to another
person that any Equityholder is a partner or that the Company is a partnership, the
Equityholders making such representation shall be liable to the other Equityholder that incurs
any losses, claims, damages, liabilities, judgments, fines, obligations, expenses and
liabilities of any kind or nature whatsoever (including any investigative, legal or other
expenses reasonably incurred in connection with, and any amount paid in settlement of, any
pending or threatened legal action or proceeding) arising out of or relating to such
representation. The provisions of this Section 9.8 shall survive the termination of this
Agreement. |
| 9.9. | Additional Equityholders; Additional Equity Interest. |
| 9.9.1. | If, as a result of any transaction, any person acquires any equity interest of the
Company, it shall be a condition precedent to such acquisition that such person shall,
and the Company and the Equityholders shall cause such person to, execute and deliver
to each of the parties hereto a letter agreement in the form and substance satisfactory
to the parties hereto, pursuant to which such person agrees to be bound by the
provisions of this Agreement as an Equityholder. |
| 9.9.2. | In the event any Equityholder acquires additional equity interest, such equity
interest shall automatically be subject to the terms of this Agreement. |
| 9.10. | Severability. If one or more provisions of this Agreement are held to be
unenforceable, in whole or in part, under any applicable law, such provision shall to that
extent be deemed not to form part of this Agreement and the enforceability of the remainder of
this Agreement shall not be affected. This Agreement shall, however, thereafter be amended by
the parties in such reasonable manner so as to achieve, without illegality, the intention of
the parties with respect to that severed provision. |
| 9.11. | Titles and Subtitles. The titles and subtitles used in this Agreement are used for
convenience only and are not being considered in construing or interpreting this Agreement. |
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| 9.12. | References to Documents. References to this Agreement include the Appendices and
Exhibits, which form an integral part hereof. A reference to any Section, Appendix or Exhibit
is, unless otherwise specified, to such Section of, or Appendix or Exhibit to this Agreement.
The words “hereof,” “hereunder” and “hereto,” and words of like import, unless the context
requires otherwise, refer to this Agreement as a whole and not to any particular Section
hereof or Appendix or Exhibit hereto. A reference to any document (including this Agreement)
is to that document as amended, consolidated, supplemented, novated or replaced from time to
time. |
| 9.13. | Entire Agreement. This Agreement and the documents referred to herein, together
with all schedules and exhibits hereto and thereto, constitute the entire agreement among the
parties and no party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth herein or therein. |
| 9.14. | Effective Date. This Agreement shall come into effect on the Closing Date (as
defined in the Purchase Agreement) (the “Effective Date”). |
| 9.15. | Counterparts. |
| 9.15.1. | The parties shall execute six (6) originals of this Agreement and each party shall
keep two (2) originals of this Agreement, each with identical legal force and effect. |
| 9.16. | Governing Law and Dispute Resolution. |
| 9.16.1. | This Agreement shall be governed and construed by the laws of PRC (for the purpose
of this Agreement excluding the laws of Hong Kong, Macao and Taiwan). |
| 9.16.2. | Any dispute, controversy or difference arising out of, in connection with or
relating to, this Agreement shall first be resolved among the parties through friendly
negotiation. Such negotiation shall commence within 5 days after a Party send a
negotiation letter, and if no agreement is reached within 30 days after the negotiation
commenced, any Party may submit such dispute to the competent court in Shanghai. |
| 9.17. | Execution Language. |
|
This Agreement shall be executed in both Chinese and English version. |
[The remainder of this page has been intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written
above.
PARTY A / THE INVESTOR
SHANGHAI WEILAN COMPUTER CO., LTD
SHANGHAI WEILAN COMPUTER CO., LTD
Signature: /s/ Hary Tanoesoedibjo
Seal:
Date:
Seal:
Date:
PARTY B / THE ORIGINAL EQUITYHOLDER
HEFEI BAOFENG CARTOON INFORMATION TECHNOLOGY CO. LTD.
HEFEI BAOFENG CARTOON INFORMATION TECHNOLOGY CO. LTD.
Signature: /s/ Rui Aji
Seal:
Date:
Seal:
Date:
PARTY C / THE COMPANY
HEFEI LETANG CARTOON INFORMATION TECHNOLOGY CO., LTD.
HEFEI LETANG CARTOON INFORMATION TECHNOLOGY CO., LTD.
Signature: /s/ Rui Aji
Seal:
Date:
Seal:
Date:
[SIGNATURE PAGE TO EQUITYHOLDERS AGREEMENT]
APPENDIX I
FORM OF AMENDED AND RESTATED ARTICLES OF ASSOCIATION OF THE COMPANY
