Exhibit 10.51
THIS AGREEMENT is made on 12th September, 2001 (as amended by an Amendment
Agreement dated 28th September, 2001 between the parties hereto)
BETWEEN:
1. XXXX.XXX whose registered office is situated at 0000 Xxxxxx Xxxxx,
Xxxxxxxxx XX 00000, X.X.X. (the "PURCHASER")
AND
2. XXXX XXX of c/- Room 6001 The Center, 00 Xxxxx'x Xxxx Xxxxxxx, Xxxx Xxxx
(the "SELLER").
AND
3. WU XXXXX, XXXXX of c/- Room 6001 The Center, 00 Xxxxx'x Xxxx Xxxxxxx,
Xxxx Xxxx (the "COVENANTOR").
WHEREAS:
(A) Particulars of the Company (as defined in this agreement) are set out in
Schedule 3 (Basic Information about the Company).
(B) The Seller has agreed to sell and the Purchaser has agreed to purchase
the Shares (as defined in this agreement) in each case on the terms and
subject to the conditions of this agreement.
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this agreement and the Schedules to it:
"ACCOUNTS" means the audited consolidated financial statements of the
Group for the financial year ended on the Accounts Date which comprise a
balance sheet, profit and loss account, notes, auditors' and directors'
reports;
"ACCOUNTS DATE" means 31st March, 2001;
"ASSOCIATED COMPANIES" means at any relevant time any then body
corporate (not being a Subsidiary) in which the Company holds shares
of any class exceeding in nominal value one fifth of the nominal value
of the issued shares of that class;
"BUSINESS DAY" means a day (other than a Saturday or a Sunday) on which
banks are open for business in Hong Kong;
"COMPANIES ORDINANCE" means the Companies Ordinance, Chapter 32 of the
Laws of Hong Kong;
"COMPANY" means Sun Television Cybernetworks Holdings Limited, basic
information concerning which is set out in Schedule 3 (Basic Information
about the Company);
"COMPLETION" means completion of the sale and purchase of the Shares
under this agreement;
"COMPLETION DATE" means the date on which Completion takes place;
"COMPLETION PAYMENT" means the payment and the issue of the New Sina
Shares to the Seller to be made in accordance with sub-clause 4.2;
"CONFIDENTIAL BUSINESS INFORMATION" means information in respect of the
Purchaser or of any member of the Group which is confidential or not
generally known;
"GROUP" means the Company and all the Subsidiaries;
"HONG KONG" means the Hong Kong Special Administrative Region of the
People's Republic of China;
"HK$" means Hong Kong dollars, the lawful currency of Hong Kong;
"INTELLECTUAL PROPERTY" means patents, trade marks and service marks,
rights in designs, trade or business names, domain names and copyrights
(whether or not any of these is registered and including applications
for registration of any such thing) and rights under licences and
consents in relation to any such thing and all rights or forms of
protection of a similar nature or having equivalent or similar effect to
any of these which may subsist anywhere in the world;
"LISTING RULES" means the Rules Governing the Listing of Securities on
the Stock Exchange;
"MANAGEMENT ACCOUNTS" means the management accounts of the Group for the
period from 1st April, 2001 to 31st July, 2001;
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"MANAGEMENT ACCOUNTS DATE" means 31st July, 2001;
"NET INCOME" means, in respect of any period, the Company's consolidated
profit for that period, determined in accordance with International
Accounting Standards provided that account receivables more than 12
months old shall be expensed as a bad debt;
"NET INCOME TARGET" means the targets for Net Income set out in
sub-clause 5.4;
"NEW SINA SHARES" means any Sina Shares issued by the Purchaser pursuant
to this agreement;
"NORTH AMERICA" means the United States of America and Canada;
"PERFORMANCE PERIODS" means the six month periods set out in sub-clause
5.4;
"PERFORMANCE SHARES" means the New Sina Shares issued to the Seller in
accordance with clause 5 (Performance Shares);
"PRC" means the People's Republic of China;
"PROCEEDINGS" means any proceeding, suit or action arising out of or in
connection with this agreement;
"PROPERTY" OR "PROPERTIES" means any immovable property in any part of
the world;
"PURCHASER ACCOUNTS" means the audited, consolidated financial
statements of the Purchaser for the financial year ended on 30th June,
2001 which comprise a balance sheet, profit and loss account, notes,
auditors' and directors' reports;
"PURCHASER'S DISCLOSURE LETTER" means the letter dated the same date as
this agreement written by the Purchaser to the Seller (and countersigned
by the Seller) for the purposes of sub-clause 9.2 and delivered to the
Seller's Solicitors before the execution of this agreement;
"PURCHASER'S LOAN AGREEMENT" means the loan agreement to be entered into
between the Purchaser and the Company on Completion and referred to in
paragraph 3(B) of Schedule 1 (Completion Arrangements);
"PURCHASER'S SOLICITORS" means Xxxxxxxxx and May;
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"PURCHASER WARRANTIES" means the warranties set out in Part B of
Schedule 2 (Purchaser Warranties) given by the Purchaser and "PURCHASER
WARRANTY" shall be construed accordingly;
"RELEVANT PROPERTY" OR "RELEVANT PROPERTIES" means the Property or
Properties referred to in the Seller's Disclosure Letter;
"SELLER'S DISCLOSURE LETTER" means the letter dated the same date as
this agreement written by the Seller and the Covenantor to the Purchaser
(and countersigned by the Purchaser) for the purposes of sub-clause 9.2
and delivered to the Purchaser's Solicitors before the execution of this
agreement;
"SELLER'S LOAN AGREEMENT" means the loan agreement to be entered into
between the Seller and the Purchaser on Completion and referred to in
paragraph 2(A) of Schedule 1 (Completion Arrangements);
"SELLER'S SOLICITORS" means Xxxxxxx Xxxxx Xxxxx;
"SELLER WARRANTIES" means the warranties set out in Part A of Schedule 2
(Seller Warranties) given by the Seller and the Covenantor and "SELLER
WARRANTY" shall be construed accordingly;
"SERVICE DOCUMENT" means a claim form, order or judgment issued out of
the courts of Hong Kong or document relating to or in connection with
any Proceedings;
"SHARES" means the 2,028,122,000 issued ordinary shares of HK$0.02 each
in the capital of the Company held by the Seller and representing
approximately 29.06 per cent. of the Company's issued ordinary share
capital;
"SHARE PURCHASE DOCUMENTS" means this agreement, the Seller's Disclosure
Letter and the Purchaser's Disclosure Letter;
"SINA SHARES" means ordinary shares of US$0.133 par value each in the
capital of the Purchaser;
"STOCK EXCHANGE" means The Stock Exchange of Hong Kong Limited;
"SUBSIDIARY" means at any relevant time:
(i) any then subsidiary of the Company, as that term is defined in the
Companies Ordinance; and
(ii) any company incorporated in the PRC or Macau in which the Company
may exercise 40% or more of the voting rights in such company;
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"SUBSIDIARIES" has the meaning ascribed to such term in section 2 of the
Companies Ordinance;
"TAX/TAX" OR "TAXATION" means and includes all forms of taxation and
statutory, governmental, supra-governmental, state, principal, local
governmental or municipal impositions, duties contributions and levies,
in each case whether of Hong Kong or elsewhere and whenever imposed, and
all penalties, charges, costs and interest relating thereto and without
limitation all employment taxes and any deductions or withholdings of
any sort;
"US$" means the lawful currency of the United States of America;
"WARRANTIES" means the Seller Warranties and the Purchaser Warranties
and "WARRANTY" shall be construed accordingly;
"WORKING HOURS" means 9.30 a.m. to 5.30 p.m. on a Business Day; and
"XXXX XXX STUDIO" means the operation known as "Xxxx Xxx Studio"
[ ] and all assets owned, and material produced, thereby
or thereunder.
1.2 In this agreement, unless otherwise specified:
(A) references to clauses, sub-clauses, paragraphs and Schedules are
to clauses, sub-clauses, paragraphs and Schedules to, this
agreement;
(B) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or may
from time to time be, amended, modified or re-enacted;
(C) headings to clauses and Schedules are for convenience only and do
not affect the interpretation of this agreement;
(D) the Schedules form part of this agreement and shall have the same
force and effect as if expressly set out in the body of this
agreement, and any reference to this agreement shall include the
Schedules;
(E) references to a "PERSON" shall be construed so as to include any
individual, firm, company, government, state or agency of a state
or any joint venture, association or partnership (whether or not
having a separate legal personality);
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(F) references to the masculine form shall be deemed to include the
feminine equivalent and vice versa;
(G) references to a document being in "AGREED FORM" shall mean a
document in a form agreed by the Purchaser and the parties thereto
prior to the date of this agreement and initialled by each of them
(or their respective solicitors on their behalf) for the purpose
of identification;
(H) references to "INDEMNIFY" and "INDEMNIFYING" any person against
any circumstance include indemnifying and keeping him harmless
from all actions, claims and proceedings from time to time made
against that person and all loss or damage and all payments, costs
or expenses made or incurred by that person as a consequence of or
which would not have arisen but for that circumstance;
(I) references to the knowledge, information, belief or awareness of
any person shall be treated as including any knowledge,
information, belief or awareness which the person would have if
the person made all usual and reasonable enquiries;
(J) references to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
court, official, or any legal concept or thing shall in respect of
any jurisdiction other than England be deemed to include what most
nearly approximates in that jurisdiction to the English legal
term; and
(K) (i) the rule known as the ejusdem generis rule shall not apply and
accordingly general words introduced by the word "other" shall not
be given a restrictive meaning by reason of the fact that they are
preceded by words indicating a particular class of acts, matters
or things; and
(ii) general words shall not be given a restrictive meaning by
reason of the fact that they are followed by particular
examples intended to be embraced by the general words.
2. SALE AND PURCHASE
2.1 The Seller shall sell or procure the sale of and the Purchaser shall
purchase the Shares with all rights attached or accruing to them at
Completion.
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2.2 The Seller will have the right to transfer legal and beneficial title to
the Shares upon Completion.
2.3 The Shares shall be free from all charges and encumbrances and from all
other rights exercisable by or claims by third parties.
2.4 The Purchaser shall be entitled to exercise all rights attached or
accruing to the Shares including, without limitation, the right to
receive all dividends, distributions or any return of capital declared,
paid or made by the Company in respect of periods commencing on or after
Completion.
2.5 The Seller undertakes to take all reasonable steps necessary to ensure
that any rights of pre-emption over any of the Shares are waived at the
cost and expense of the Seller.
3. CONDITIONS
3.1 Completion is conditional upon the following (the "CONDITIONS"):
(A) the Purchaser obtaining all authorisations, consents or approvals
(whether governmental, regulatory, contractual or otherwise)
required by the Purchaser for or in connection with the execution,
validity and performance by the Purchaser of the Share Purchase
Documents and all other documents and transactions contemplated
hereunder;
(B) the Seller and the Covenantor obtaining all authorisations,
consents or approvals (whether governmental, regulatory,
contractual or otherwise) required by the Seller and the
Covenantor for or in connection with the execution, validity and
performance by them of the Share Purchase Documents and all other
documents and transactions contemplated hereunder;
(C) neither the Seller nor the Covenantor becoming subject to any
legal disability or bankruptcy; and
(D) no action being taken by any third party to prevent or hinder the
implementation of this agreement on the basis of any actual or
purported legal, equitable or contractual right to do the same.
3.2 The Purchaser may waive in writing in whole or in part all or any of the
Conditions in sub-clauses 3.1(B), (C) and (D). The Seller may waive in
writing in whole or in part all or any of the Condition in sub-clause
3.1(A). Unless so waived, each party (to the extent that it is able)
shall use all reasonable endeavours to procure the
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fulfilment of the Conditions by the date initially set for Completion
under sub-clause 6.1.
3.3 Each party undertakes to each other party to disclose in writing to the
other parties anything which will or may prevent any of the Conditions
from being satisfied on the date initially set for Completion
immediately it comes to its notice.
3.4 If:
(A) any fact which would prevent any of the Conditions from being
satisfied on the date initially set for Completion (whether it
does so because of any disclosure made under sub-clause 3.3 or
not) comes to the knowledge of the Purchaser; or
(B) any of the Conditions is not fulfilled or waived in accordance
with sub-clause 3.2 on or before the Completion Date
the Purchaser may terminate this agreement by notice to the Seller.
3.5 If:
(A) any fact which would prevent any of the Conditions from being
satisfied on the date initially set for Completion (whether it
does so because of any disclosure made under sub-clause 3.3 or
not) comes to the knowledge of the Seller; or
(B) any of the Conditions is not fulfilled or waived in accordance
with sub-clause 3.2 on or before the Completion Date
the Seller may terminate this agreement by notice to the Purchaser.
4. CONSIDERATION
4.1 The total consideration for the sale of the Shares shall be the payment
of the Completion Payment and the issue of the Performance Shares.
4.2 The Completion Payment shall be paid at Completion and shall be
satisfied by (i) the payment by the Purchaser of US$7,900,000 (provided
that the Seller hereby directs that US$4,000,000 of such amount be
retained by the Purchaser in satisfaction of the Seller's obligation to
lend such amount to the Purchaser pursuant to, and in accordance with,
the provisions of the Seller's Loan Agreement) and (ii) the issue and
allotment of 4,592,944 New Sina Shares by the Purchaser to the Seller or
to any corporate body of which the Seller
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has majority control as the Seller may direct in accordance with the
provisions of this agreement.
4.3 The Performance Shares shall be issued in accordance with clause 5
(Performance Shares).
4.4 All New Sina Shares (including the Performance Shares) shall, upon
issue, be credited as fully paid, shall rank pari passu in all respects
with all Sina Shares then in issue, shall be free from all claims,
liens, charges, equities and encumbrances and third party rights of any
kind and together with all rights attaching thereto from the respective
dates of allotment, including the right to receive all dividends and
distributions declared, made or paid on or after the respective dates of
allotment. Subject to any applicable securities rules or regulations,
including but not limited to Rule 144 promulgated under the US
Securities Act of 1933, as amended, all New Sina Shares shall be
non-assessable and capable of being traded, assigned, transferred or
otherwise disposed of without restrictions.
5. PERFORMANCE SHARES
5.1 The Performance Shares shall consist of New Sina Shares and shall be
issued and allotted by the Purchaser to the Seller or to any corporate
body of which the Seller has majority control as the Seller may direct
in a maximum of three tranches, and in accordance with the provisions of
sub-clause 5.5.
5.2 In the first Performance Period, the number of Performance Shares to be
issued shall be equal to the Base Number of Performance Shares.
5.3 In the second and third Performance Periods, the relevant number of
Performance Shares to be issued shall be equal to:
(A) the Base Number of Performance Shares for the period;
or, if greater, and provided that the Performance Ratio for the
immediately preceding Performance Period is greater than 0.5,
(B) the Revised Number of Performance Shares
provided that in no event shall the number of Performance Shares issued
in each Performance Period exceed 1,093,558.
5.4 For the purposes of this clause 5, the three Performance Periods, and
corresponding Net Income Targets, shall be as follows:
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Performance Period Net Income Target
------------------ -----------------
1st October, 2001 - 31st March, 2002 HK$12,000,000
1st April, 2002 - 30th September, 2002 HK$20,000,000
1st October, 2002 - 31st March, 2003 HK$30,000,000
5.5 If Performance Shares are issuable in respect of a Performance Period in
accordance with this clause 5, such issue shall be made not later than
15 Business Days following the publication of the audited Net Income for
the relevant Performance Period. In making any such issue, the Purchaser
shall ensure that the allotment and issue of the Performance Shares will
be in accordance with all applicable laws and will have been validly
authorised by a resolution of the directors of the Purchaser, in each
case prior to the date of issue of the Performance Shares, and such
Performance Shares shall be credited as fully paid and rank pari passu
in all respects with the Sina Shares in issue at the date of allotment.
5.6 If the number of Performance Shares to be issued in respect of a
Performance Period in accordance with this clause 5 includes a fraction
of a Performance Share the Purchaser shall not be required to issue such
fractional entitlement but instead shall issue the whole number of
Performance Shares nearest to, but less than, such number.
5.7 For the purposes of this clause 5:
(A) "BASE NUMBER OF PERFORMANCE SHARES" means, in respect of a
Performance Period, 1,093,558 multiplied by the Performance Ratio
in respect of such Performance Period, provided that if the Base
Number of Performance Shares exceeds 1,093,558 the Base Number of
Performance Shares shall be deemed to be 1,093,558, and provided
further that if the Performance Ratio is less than 0.75, the Base
Number of Performance Shares shall be deemed to be nil;
(B) "PERFORMANCE RATIO" means, in respect of a Performance Period, the
Net Income for such Performance Period, divided by the Net Income
Target for such Performance Period;
(C) "REVISED NUMBER OF PERFORMANCE SHARES" means, in respect of a
Performance Period, the number of Performance Shares equal to:
(W x 1,653,460) - N
where
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W is the weighted average of the Performance Ratios for that
Performance Period and the immediately preceding Performance
Period; and
N is the number of Performance Shares issued in the immediately
preceding Performance Period
provided that if the Revised Number of Performance Shares exceeds
1,093,558 the Revised Number of Performance Shares shall be deemed
to be 1,093,558, and provided further that if W is less than 0.75
the Revised Number of Performance Shares shall be deemed to be
nil; and.
(D) For the avoidance of doubt, in paragraph (C) the weighting
referred to in the "weighted average of the Performance Ratios" in
each Performance Period is by reference to the Net Income Targets
for such Performance Periods.
6. COMPLETION
6.1 Completion shall take place at 2:00 p.m. on 21st September, 2001 at the
offices of the Purchaser's Solicitors at 00xx Xxxxx, Xxx Xxxxxxxx
Xxxxxx, Xxxx Xxxx (or at such other time and place as the parties may
agree).
6.2 At Completion the Seller and the Purchaser shall do those things listed
in Schedule 1 (Completion Arrangements).
6.3 Neither the Purchaser nor the Seller shall be obliged to complete this
agreement unless the Seller or, as the case may be, the Purchaser
complies with the requirements of sub-clause 6.2 and Schedule 1
(Completion Arrangements).
6.4 Neither the Purchaser nor the Seller shall be obliged to complete the
sale and purchase of any of the Shares unless the sale and purchase of
all the Shares is completed simultaneously. This sub-clause shall not
limit any other clause of this agreement and in particular clause 12
(Remedies and Waivers).
6.5 If the respective obligations of the Seller and the Purchaser under
sub-clause 6.2 and Schedule 1 (Completion Arrangements) are not complied
with on the Completion Date the Purchaser or, as the case may be, the
Seller may:
(A) defer Completion (so that the provisions of this clause 6 shall
apply to Completion as so deferred); or
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(B) proceed to Completion as far as practicable (without limiting its
rights under this agreement); or
(C) terminate this agreement by notice in writing to the other
parties.
6.6 If the agreement is terminated by either of the Purchaser or the Seller
in accordance with sub-clause 6.5 (and without limiting the right of the
party not in default to claim damages):
(A) the party in default will reimburse to the other on demand an
amount equal to all such costs and expenses incurred by the other
as are described in clause 19 (Costs and Expenses); and
(B) (subject to sub-clause 9.4) all obligations of the party not in
default under this agreement shall end except for those expressly
stated to continue without limit in time
but (for the avoidance of doubt) all rights and liabilities of parties
which have accrued before termination shall continue to exist.
6.7 (For the avoidance of doubt but without limiting clause 12 (Remedies and
Waivers)), the right of the Purchaser or the Seller to terminate this
agreement in accordance with sub-clause 6.5 is not exclusive of any
rights, powers and remedies provided by law.
6.8 In accordance with and without limitation to clause 12 (Remedies and
Waivers), the Seller and the Covenantor undertake to indemnify the
Purchaser, and the Purchaser undertakes to indemnify the Seller and the
Covenantor, against any loss, expense or damage which any of the others
may suffer as a result of any document delivered to it pursuant to this
clause 6 being unauthorised, invalid or for any other reason ineffective
for its purpose.
6.9 The:
(A) delivery of a bank draft for, or payment by telegraphic transfer
of, the US$3,900,000 (as the case may be) referred to in Schedule
1, paragraph 3; and
(B) the delivery (and acknowledged receipt) of the Allotment
Instruction for the New Sina Shares comprising the Completion
Payment in accordance with Schedule 1, paragraph 3 (Completion
Arrangements)
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shall constitute a discharge of the Purchaser's obligation to satisfy
the Completion Payment and the Purchaser shall not be concerned to see
that the moneys represented by the bank draft or transferred (as the
case may be) are applied in paying the Seller in accordance with her
entitlement.
6.10 For the purposes of clause 6.9 and Schedule 1 (Completion Arrangements),
the "ALLOTMENT INSTRUCTION" means an irrevocable written instruction
from the Purchaser to the Purchaser's share transfer agent instructing
the share transfer agent to issue to the Seller the New Sina Shares
forming part of the Completion Payment.
6.11 If any party defaults in the payment when due of any sum payable under
this agreement (whether determined by agreement or pursuant to an order
of a court or otherwise), its liability shall be increased to include
interest on such sum from the date when such payment is due until the
date of actual payment (as well after as before judgment) at a rate per
annum of four per cent. above the Hong Kong prime rate offered for Hong
Kong dollars from time to time by Hongkong and Shanghai Banking
Corporation Limited. Such interest shall accrue from day to day and
shall be compounded annually.
7. SELLER'S AND COVENANTOR'S WARRANTIES, COVENANTS AND INDEMNITY
7.1 Both the Seller and (in consideration of the Purchaser entering into
this agreement) the Covenantor represent and warrant to the Purchaser
that each of the Warranties is accurate in all respects and not
misleading at the date of this agreement and will continue to be
accurate in all respects and not misleading at the Completion Date as if
repeated on such date by reference to the facts and circumstances
subsisting at that date and on the basis that any reference in the
Seller Warranties, whether express or implied, to the date of this
agreement is substituted by a reference to that date.
7.2 The Seller and the Covenantor shall procure that no act shall be
performed or omission allowed, either by themselves or the Company or by
any other member of the Group which would result in any of the Seller
Warranties being breached or misleading in any respect at any time up to
and including the time of Completion.
7.3 Both the Seller and the Covenantor accepts that the Purchaser is
entering into this agreement in reliance upon representations in the
terms of the Seller Warranties made by the Seller and the Covenantor
with the intention of inducing the Purchaser to enter into this
agreement and that accordingly the Purchaser has been induced to enter
into this agreement.
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7.4 Both the Seller and (in consideration of the Purchaser entering into
this agreement) the Covenantor undertake to disclose in writing to the
Purchaser anything which is or may constitute a breach of or be
inconsistent with any of the Seller Warranties immediately it comes to
the notice of either of them before Completion.
7.5 Each of the Seller Warranties shall be construed as a separate and
independent warranty and (except where expressly provided to the
contrary) shall not be limited or restricted by reference to or
inference from the terms of any other Seller Warranty or any other term
of this agreement.
7.6 The Seller and Covenantor undertake (if any claim is made against either
of them in connection with the sale of the Shares to the Purchaser) not
to make any claim against any member of the Group or any director,
employee or adviser of any member of the Group on whom any of them may
have relied before agreeing to any term of this agreement or authorising
any statement in the Seller's Disclosure Letter.
7.7 Subject to the provisions of this agreement, the Seller and (in
consideration of the Purchaser entering into this agreement) the
Covenantor indemnify and will keep indemnified and save harmless the
Purchaser from and against any and all losses, claims, damages
(including lost profits, consequential damages, interest, penalties,
fines and monetary sanctions), liabilities and costs incurred or
suffered by the Purchaser by reason of, resulting from, in connection
with, or arising in any manner whatsoever out of the breach of any
Seller Warranty or covenant or the inaccuracy of any representation of
the Seller or Covenantor contained or referred to in this agreement or
in any agreement, instrument or document delivered by or on behalf of
the Seller in connection therewith provided that the indemnity contained
in this clause shall be without prejudice to any other rights and
remedies available to the Purchaser.
7.8 Both the Seller and (in consideration of the Purchaser entering into
this agreement) the Covenantor undertake that they will not, and will
not procure or permit any person on their behalf, for a period of 12
months following the date of this agreement, to acquire (either directly
or indirectly) or enter into any agreement, arrangement or understanding
to acquire any interest in any shares of the Company without the prior
consent of the Purchaser.
7.9 Both the Seller and (in consideration of the Purchaser entering into
this agreement) the Covenantor undertake that they will not, either
alone or in conjunction with or on behalf of any other person, do any of
the following things:
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(A) neither pending nor within three years after the Completion Date,
be engaged or (except as the holder of shares in a listed company
which confer not more than two per cent. of the votes which could
normally be cast at a general meeting of the company) be directly
or indirectly interested in carrying on within Hong Kong, the PRC,
Taiwan or North America any business which competes with the
business of any member of the Group or of the Purchaser as it is
carried on at the date of Completion (including, but not limited
to, newspaper and magazine publishing, video or audio products
distribution, satellite channel, internet broadband or narrowband
portal);
(B) disclose to any other person or (in any way which may be
detrimental to the business of the Purchaser or any member of the
Group as carried on at the Completion Date) use any information
which is Confidential Business Information for so long as that
information remains Confidential Business Information;
(C) without limitation to the provisions of this sub-clause 7.9, in
relation to a business which is competitive or likely to be
competitive with the business of any member of the Group or of the
Purchaser as carried on at the Completion Date, knowingly use any
trade or business name or distinctive xxxx, style or logo used by
or in the business of any member of the Group or of the Purchaser
at any time during the two years before Completion or anything
intended or likely to be confused with it;
(D) neither pending nor within three years after Completion, knowingly
solicit the custom, in relation to goods or services sold to any
person by any member of the Group or by the Purchaser in the
course of their business during the two years before the
Completion Date, of that person in respect of similar goods or
services;
(E) neither pending nor within two years after Completion, solicit or
entice away from the employment of any member of the Group or of
the Purchaser any person at present an employee of any member of
the Group or of the Purchaser; nor
(F) assist any other person to do any of the foregoing things.
7.10 Each undertaking contained in sub-clause 7.9 shall be construed as a
separate undertaking and if one or more of the undertakings is held to
be against the public interest or unlawful or in any way an
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unreasonable restraint of trade, the remaining undertakings shall
continue to bind the Seller and the Covenantor.
7.11 If in respect of or in connection with any breach of any of the Seller
Warranties or any facts or matters warranted not being true and being
misleading any amount payable to the Purchaser by the Seller is subject
to Taxation, such additional amounts shall be paid to the Purchaser by
the Seller or, failing whom, the Covenantor so as to ensure that the net
amount received by the Purchaser is equal to the full amount payable to
the Purchaser under this agreement.
7.12 The obligations of the Seller and Covenantor under this agreement are
joint and several.
7.13 The Seller and the Covenantor undertake to indemnify the Purchaser
against all costs, expenses or other liabilities which the Purchaser may
reasonably incur either before or after the commencement of any action
in connection with:
(A) any legal proceedings in which the Purchaser claims that any of
the Seller Warranties are untrue or misleading or have been
breached and in which judgment is given for the Purchaser; or
(B) the enforcement of any such settlement or judgment.
7.14 For the avoidance of doubt, the Seller agrees that absolute title to,
and all rights and interests in, Xxxx Xxx Studio and all material
already produced, or to be produced during the Employment Period, by or
under the name, Xxxx Xxx Studio are and will be legally and beneficially
owned by the Company save that the Purchaser acknowledges that the
Seller shall have full title to the brand name "Xxxx Xxx Studio" upon
the expiration of the Employment Period and that nothing in this
sub-clause 7.14 shall prevent the Seller, upon and following expiration
of the Employment Period, from using the name "Xxxx Xxx Studio". For the
purposes of this sub-clause 7.14, the "EMPLOYMENT PERIOD" means the
period of time in which the Seller remains an employee of the Company.
8. PURCHASER'S WARRANTIES AND UNDERTAKINGS
8.1 The Purchaser (in consideration of the Seller and the Covenantor
entering into this agreement) represents and warrants to each of them
that each of the Purchaser Warranties is accurate in all respects and
not misleading at the date of this agreement and will be accurate in all
respects and not misleading at the Completion Date as if repeated on
such date by reference to the facts and circumstances subsisting at that
date and on the basis that any reference in the Purchaser
16
Warranties, whether express or implied, to the date of this agreement is
substituted by a reference to that date.
8.2 The Purchaser shall procure that no act shall be performed or omission
allowed, either by itself or by any of its subsidiaries which would
result in any of the Purchaser Warranties being breached or misleading
at any time up to and including the time of Completion.
8.3 The Purchaser accepts that both the Seller and the Covenantor are
entering into this agreement in reliance upon representations in the
terms of the Purchaser Warranties made by the Purchaser with the
intention of inducing the Seller and the Covenantor to enter into this
agreement and that accordingly they have been induced to enter into this
agreement.
8.4 The Purchaser (in consideration of the Seller and the Covenantor
entering into this agreement) undertakes to disclose in writing to the
Seller and the Covenantor anything which is or may constitute a breach
of or be inconsistent with any of the Purchaser Warranties immediately
it comes to the notice of it before Completion.
8.5 Each of the Purchaser Warranties shall be construed as a separate and
independent warranty and (except where expressly provided to the
contrary) shall not be limited or restricted by reference to or
inference from the terms of any other Purchaser Warranty or any other
term of this agreement.
8.6 Subject to the provisions of this agreement, the Purchaser (in
consideration of the Seller and the Covenantor entering into this
agreement) shall indemnify and will keep indemnified and save harmless
the Seller and the Covenantor from and against any and all losses,
claims, damages (including lost profits, consequential damages,
interest, penalties, fines and monetary sanctions), liabilities and
costs incurred or suffered by either of them by reason of, resulting
from, in connection with, or arising in any manner whatsoever out of the
breach of any Purchaser Warranty or covenant or the inaccuracy of any
representation of the Purchaser contained or referred to in this
agreement or in any agreement, instrument or document delivered by or on
behalf of the Purchaser in connection therewith provided that the
indemnity contained in this clause shall be without prejudice to any
other rights and remedies available to the Seller or the Covenantor.
8.7 The Purchaser undertakes to indemnify each of the Seller and the
Covenantor against all costs, expenses or other liabilities which he/she
may reasonably and properly incur either before or after the
commencement of any action in connection with:
17
(A) any legal proceedings in which either or both of them claims that
any of the Purchaser Warranties are untrue or misleading or have
been breached and in which judgment is given for either or both of
the Seller and the Covenantor; or
(B) the enforcement of any such settlement or judgment.
8.8 The Purchaser shall within ten Business Days following the Completion
Date procure the delivery to the Seller of the share certificates for
the New Sina Shares to be issued as part of the Completion Price.
8.9 The Purchaser agrees and undertakes with each of the Seller and the
Covenantor that:
(A) it will procure so far as it is able that the Seller remains as
Chairman of the Company during the Performance Periods; and
(B) it will procure the appointment of the Covenantor as Co-Chairman
of the Purchaser.
8.10 The Purchaser agrees and undertakes to provide to the Seller
registration rights in respect of the New Sina Shares in accordance with
the provisions of Schedule 4 (Registration Rights).
9. PURCHASER'S REMEDIES
9.1 Subject to sub-clause 9.2, the Purchaser on the one hand and the Seller
and the Covenantor on the other shall be entitled to claim both before
and after Completion that any of the Warranties for which the other is
liable has or had been breached and (in accordance with clause 11
(Effect of Completion), Completion shall not in any way constitute a
waiver of any of their respective rights.
9.2 Except in the event of fraud or dishonesty on the part of the Seller or
the Covenantor or, as the case may be, the Purchaser, none of the
parties shall be entitled to claim that any fact causes any of the
Warranties to be breached if fully and fairly disclosed in the Seller's
Disclosure Letter or, as the case may be, the Purchaser's Disclosure
Letter or in any document referred to in, and delivered to the Purchaser
or, as the case may be, the Seller with either of such Disclosure
Letters.
9.3 If, between the date of this agreement and Completion, any party (the
"INNOCENT party") becomes aware (whether it does so by reason of any
disclosure made under clause 7 (Seller's and Covenantor's Warranties,
Covenants and Indemnity) or clause 8 (Purchaser's Warranties and
Undertakings) or not) that there has been any breach of any of the
18
Warranties or any other term of this agreement by the other party or
parties, the innocent party may not terminate this agreement, but,
following Completion, shall be entitled to make a claim for damages in
respect of such breach and, without limiting clause 12 (Remedies and
Waivers), nothing in this clause 9.3 shall limit any rights, powers and
remedies provided to the innocent party by law.
9.4 Each of the parties to this agreement acknowledges that the restrictions
contained in clause 17 (Announcements) and clause 18 (Confidentiality)
shall continue to apply after the termination of the sale and purchase
of the Shares under this agreement without limit in time.
9.5 Except as stated expressly in this clause, this clause shall not limit
any other clause of this agreement and in particular clause 12 (Remedies
and Waivers).
9.6 Notwithstanding anything contained herein:
(A) no liability of the Seller or the Covenantor or the Purchaser (as
the case may be) shall in any event arise in respect of any claim
under any Seller Warranty or Purchaser Warranty (as the case may
be) or this agreement unless:
(i) the amount of a single claim exceeds one per cent. of the
Completion Payment; or
(ii) the amount of a single claim (when aggregated with the
amount of any claim then or previously made hereunder)
exceeds one per cent. of the Completion Payment in which
event the whole of such claim and all previous claims may be
recoverable in full;
(B) the aggregate liability of the Seller and the Covenantor in
respect of all breaches under the Seller Warranties and this
agreement shall not exceed the aggregate of US$7,900,000 and any
Performance Shares issued to the Seller from time to time;
(C) the aggregate liability of the Purchaser in respect of all
breaches under the Purchaser Warranties and this agreement shall
not exceed US$7,900,000;
(D) no claim in respect of any breach of any Seller Warranty or
Purchaser Warranty or this agreement shall be made against the
Seller and/or the Covenantor or Purchaser (as the case may be) to
the extent that provision or allowance therefor has been
19
made in the Accounts or the Purchaser Accounts (as the case may
be);
(E) neither the Seller nor the Covenantor shall be liable for any
breach of any Seller Warranty and the Purchaser shall not be
liable for any breach of any Purchaser Warranty unless written
notice of such breach (so far as reasonably practicable specifying
in reasonable detail the event, matter or default which gives rise
to the breach and an estimate of the amount claimed) has been
given to the Seller and/or the Covenantor or the Purchaser (as the
case may be):
(i) in the case of a claim in respect of Taxation, before 12th
September, 2008;
(ii) in any other case before 12th September, 2004.
(F) neither of the Seller or the Covenantor nor the Purchaser shall be
liable in respect of any breach of any of the Seller Warranties or
Purchaser Warranties (as the case may be) or this agreement;
(i) if a claim relating thereto would not have arisen but for a
change in legislation made after the date hereof which takes
effect retrospectively (whether relating to Taxation, rates
of Taxation or otherwise) or the withdrawal after the date
of this agreement of any extra-statutory concession
previously made by the relevant tax authority; or
(ii) to the extent that a claim relating thereto arises as a
result only of any voluntary changes in the accounting
reference date of any member of the Group or the Purchaser
(as the case may be) or in the accounting bases upon which
any member of the Group or the Purchaser (as the case may
be) values its assets introduced and having effect after
Completion with retrospective effect; or
(iii) to the extent that such liability is contingent unless and
until such liability ceases to be contingent or becomes an
actual liability and is deemed payable but provided that
this sub-clause 9.6(F)(iii) shall not operate to avoid a
claim of which notice is given within the applicable time
limits specified in sub-clause 9.6(E); and
20
(G) neither of the Seller or the Covenantor nor the Purchaser shall be
liable in respect of any claim for a breach of any Seller Warranty
or Purchaser Warranty (as the case may be) to the extent that the
claim arises by reason of a voluntary act or transaction carried
out (other than pursuant to a legally binding obligation of the
Company or the Purchaser (as the case may be) entered into prior
to the date of Completion) by the Company or the Purchaser (as the
case may be) after Completion otherwise than in the ordinary
course of the Company's or Purchaser's business (as the case may
be).
10. CONDUCT OF BUSINESS BEFORE COMPLETION
(A) The Seller and the Covenantor will procure that, between the date
of this agreement and Completion, each member of the Group will
carry on business in the normal course and not do anything which
is not of a routine unimportant nature without the consent in
writing of the Purchaser.
(B) The Purchaser will procure that, between the date of this
agreement and Completion, the Purchaser and each of its
subsidiaries will carry on business in the normal course and not
do anything which is not of a routine unimportant nature without
the consent in writing of the Seller.
11. EFFECT OF COMPLETION
Any provision of this agreement and any other documents referred to in
it which is capable of being performed after but which has not been
performed at or before Completion and all Warranties and covenants and
other undertakings contained in or entered into pursuant to this
agreement shall remain in full force and effect notwithstanding
Completion.
12. REMEDIES AND WAIVERS
12.1 No delay or omission by any party to this agreement in exercising any
right, power or remedy provided by law or under this agreement or any
other documents referred to in it shall:
(A) affect that right, power or remedy; or
(B) operate as a waiver thereof.
12.2 The single or partial exercise of any right, power or remedy provided by
law or under this agreement shall not preclude any other or
21
further exercise thereof or the exercise of any other right, power or
remedy.
12.3 The rights, powers and remedies provided in this agreement are
cumulative and not exclusive of any rights, powers and remedies provided
by law unless stated expressly.
13. ASSIGNMENT
This agreement shall be binding upon and enure for the benefit of the
successors of the parties and shall not be assignable.
14. FURTHER ASSURANCE
Each party shall from time to time, on being required to do so by
another party to this agreement now or at any time in the future, do or
procure the doing of all such acts and/or execute or procure the
execution of such documents in a form satisfactory to that other party
as it may reasonably consider necessary for giving full effect to this
agreement and securing to them the full benefit of the rights, powers
and remedies conferred upon them in this agreement.
15. ENTIRE AGREEMENT
15.1 The Share Purchase Documents constitute the whole and only agreement
between the parties relating to the sale and purchase of the Shares.
15.2 Subject to sub-clauses 7.7 and 8.6, and except in the case of fraud, no
party shall have any right of action against any other party to this
agreement arising out of or in connection with any draft, agreement,
undertaking, representation, warranty, promise, assurance or arrangement
of any nature whatsoever, whether or not in writing, relating to the
subject matter of the Share Purchase Documents made or given by any
person at any time prior to the date of this agreement except to the
extent that it is repeated in the Share Purchase Documents.
15.3 This agreement may only be varied in writing signed by each of the
parties to this agreement.
16. NOTICES
16.1 Any notice or other communication given or made under this agreement
shall be by letter or facsimile transmission only.
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16.2 Notices under this agreement shall be sent to a party at its address or
number and for the attention of the individual set out below:
Party and title of individual Address Facsimile no.
----------------------------- ------- -------------
Purchaser 0000 Xxxxxx Xxxxx (0) 000 000 0000
Xxxxxxxxx, Xxxxxxxxxx
00000, X.X.X.
Attention: Xxxxxxx Xxxx, Esq.
Seller c/- Room 6001 The (000) 0000 0000
Center, 00 Xxxxx'x Xxxx
Xxxxxxx, Xxxx Xxxx
Xxxxxxxxxx c/- Room 6001 The (000) 0000 0000
Center, 00 Xxxxx'x Xxxx
Xxxxxxx, Xxxx Xxxx
provided that a party may change its notice details on giving notice to
the other parties of the change. That notice shall only be effective on
the day falling five clear Business Days after the notification has been
received or such later date as may be specified in the notice.
16.3 Any notice given under this agreement shall, in the absence of earlier
receipt, be deemed to have been duly given as follows:
(A) if delivered personally, on delivery at the address of the
relevant party;
(B) if sent by post in Hong Kong to an address in Hong Kong, two clear
Business Days after the date of posting;
(C) if sent by post to an address abroad, five clear Business Days
after the date of posting; and
(D) if sent by facsimile when despatched (provided that the sender
retains a mechanical or electronically generated confirmation of
the successful transmission of such facsimile).
16.4 Any notice given under this agreement outside Working Hours in the place
to which it is addressed shall be deemed not to have been given until
the start of the next period of Working Hours in such place.
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16.5 The provisions of this clause shall not apply in relation to the service
of Service Documents.
17. ANNOUNCEMENTS
17.1 Unless otherwise provided in sub-clause 17.2, no announcement concerning
the sale of the Shares or any ancillary matter shall be made by any
party without the prior written approval of the other parties, such
approval not to be unreasonably withheld or delayed.
17.2 Each party may, after consultation with the other parties, make an
announcement concerning the sale of the Shares or any ancillary matter
if required by:
(A) law;
(B) existing contractual obligations; or
(C) any securities exchange or regulatory or governmental body to
which that party is subject or submits, wherever situated, whether
or not the requirement has the force of law,
in which case the party concerned shall take all such steps as may be
reasonable and practicable in the circumstances to agree the contents of
such announcement with the other parties before making such announcement
and provided that any such announcement shall be made only after
consultation with the other parties.
17.3 The restrictions contained in this clause 17 shall apply after
Completion without limit in time.
18. CONFIDENTIALITY
18.1 Each party shall treat as confidential all information received or
obtained as a result of entering into or performing this agreement which
relates to:
(A) the provisions of this agreement;
(B) the negotiations relating to this agreement;
(C) the subject matter of this agreement; or
(D) the other parties to this agreement.
24
18.2 Notwithstanding the other provisions of this clause 18, each party may
disclose confidential information:
(A) if and to the extent required by the law of any relevant
jurisdiction;
(B) if and to the extent required by existing contractual obligations;
(C) if and to the extent required by any securities exchange or
regulatory or governmental body to which that party is subject or
submits, wherever situated, whether or not the requirement for
information has the force of law;
(D) if and to the extent required to vest the full benefit of this
agreement in that party;
(E) to those of its professional advisers, auditors and bankers
connected with this agreement;
(F) if and to the extent the information has come into the public
domain through no fault of that party; or
(G) if and to the extent the other parties have given prior written
consent to the disclosure, such consent not to be unreasonably
withheld or delayed.
Any information to be disclosed pursuant to paragraphs (A), (B) or (C)
shall be disclosed only after consultation with the other parties.
18.3 The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
19. COSTS AND EXPENSES
19.1 Except as otherwise stated in this agreement, each party shall pay its
own costs and expenses in relation to the negotiations leading up to the
sale and purchase of the Shares and the preparation, execution and
carrying into effect of this agreement and all other documents relating
thereto and the Seller and Covenantor confirm that no expense of
whatever nature relating to the sale of the Shares has been or is to be
borne by any member of the Group.
19.2 The stamp duty arising from the sale and purchase of the Shares
contemplated in this agreement shall be paid by the Xxxxxxxxx.
00
00. COUNTERPARTS
20.1 This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
20.2 Each counterpart shall constitute an original of this agreement, but all
the counterparts shall together constitute but one and the same
instrument.
21. INVALIDITY
If at any time any provision of this agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any
jurisdiction, that shall not affect or impair:
(A) the legality, validity or enforceability in that jurisdiction of
any other provision of this agreement; or
(B) the legality, validity or enforceability under the law of any
other jurisdiction of that or any other provision of this
agreement.
22. CHOICE OF GOVERNING LAW
Save in respect of Schedule 4 (Registration Rights), this agreement is
governed by and shall be construed in accordance with the laws of Hong
Kong.
23. JURISDICTION
23.1 The courts of Hong Kong are to have jurisdiction to settle any dispute
arising out of or in connection with this agreement. Any Proceedings may
therefore be brought in the Hong Kong courts. Each party agrees that
this jurisdiction agreement is irrevocable and that it is for the
benefit of each party to this agreement. Nothing contained in this
clause shall limit the right of each party to take Proceedings against
any other party in any other court or in the courts of more than one
jurisdiction at the same time.
23.2 The Purchaser irrevocably appoints Xxxxxxxxx and May of 00xx Xxxxx, Xxx
Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxx Xxxx as its process agent to receive on
its behalf service of any writ, summons, order, judgment or other notice
of legal process in Hong Kong. Such service shall be deemed completed on
delivery to such process agent (whether or not it is forwarded to and
received by the Purchaser). If for any reason such process agent ceases
to be able to act as process agent, or no
26
longer has an address in Hong Kong, the Purchaser irrevocably agrees to
appoint a substitute process agent acceptable to the Seller and to
deliver to the Seller a copy of the new process agent's acceptance of
that appointment within thirty (30) days.
23.3 Each of the Seller and Covenantor irrevocably appoint Xxxxxxx Xxxxx
Xxxxx (Ref. NKA/VTSO) of 00xx Xxxxx, Xxxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxx,
Xxxxxxx, Xxxx Xxxx as his/her process agent to receive on his/her behalf
service of any writ, summons, order, judgment or other notice of legal
process in Hong Kong. Such service shall be deemed completed on delivery
to such process agent (whether or not it is forwarded to and received by
the Seller or Covenantor (as the case may be)). If for any reason such
process agent ceases to be able to act as process agent, or no longer
has an address in Hong Kong, the Seller and Covenantor irrevocably agree
to appoint a substitute process agent acceptable to the Purchaser and to
deliver to the Purchaser a copy of the new process agent's acceptance of
that appointment within thirty (30) days.
27
SCHEDULE 1
(COMPLETION ARRANGEMENTS)
At Completion:
1. the Seller shall deliver to the Purchaser or the Purchaser's Solicitors:
(A) duly executed sold notes and instruments of transfer in respect of
the Shares in favour of the Purchaser or such person as the
Purchaser may nominate;
(B) share certificates for the Shares in the name of the Seller; and
(C) a power of attorney in agreed form.
2. the Seller shall deliver to the Purchaser (or to any person whom the
Purchaser may nominate):
(A) a copy of a duly executed loan agreement between the Seller and
the Purchaser in an agreed form pursuant to which the Seller
agrees to lend US$4,000,000 to the Purchaser on an unsecured basis
for a term of no less than 3 years and with interest payable upon
completion of the term at an annualised rate of no more than LIBOR
+ 1 per cent. and such other commercial terms as are satisfactory
to the Purchaser;
(B) a copy of a duly executed employment contract between the Company
and the Seller in agreed form and a copy of a duly executed
consultancy agreement between the Purchaser and the Covenantor in
agreed form;
(C) a copy of a duly executed legal opinion from the Seller's
Solicitors in a form satisfactory to the Purchaser;
(D) duly executed resignation letters of existing directors of the
Company and letters of appointment of new directors to the Company
in a form satisfactory to the Purchaser such that directors
nominated by the Purchaser shall constitute at least 75 per cent.
of the Company's directors at or promptly following Completion;
and
28
(E) a certificate dated the Completion Date of the Seller and
Covenantor certifying that the Seller has obtained all
governmental, regulatory and other third party consents, rulings,
confirmations and waivers considered by the Purchaser to be
necessary or desirable in connection with this agreement and the
transaction contemplated herein, (including, but not limited to,
that of the Bermuda Monetary Authority if so required).
3. the Purchaser shall:
(A) pay to the Seller in immediately available US$ funds US$3,900,000;
(B) (i) deliver to the Seller or as she may direct a copy of a duly
executed loan agreement between the Purchaser and the Company in
agreed form pursuant to which the Purchaser agrees to lend
US$4,000,000 to the Company on terms substantially similar to
those described in paragraph 2(A) of this Schedule; and (ii)
deduct an amount of US$4,000,000 from the cash portion of the
Completion Payment in accordance with sub-clause 4.2 and the
Seller's Loan Agreement and pay to the Company in immediately
available US$ funds such amount in satisfaction of the Purchaser's
obligations under the Purchaser's Loan Agreement;
(C) allot and issue to the Seller or to any corporate body of which
the Seller has majority control as the Seller may direct 4,592,944
New Sina Shares credited as fully paid and ranking pari passu in
all respects with the Sina Shares in issue at the date of
allotment and deliver to the Seller the Allotment Instruction
along with an acknowledgement of receipt from the Purchaser's
share transfer agent;
(D) deliver to the Seller a copy (certified by the secretary of the
Purchaser to be a true copy of a resolution in force at
Completion) of the resolutions of the directors of the Purchaser
authorising the purchase of the Shares for the consideration and
upon the terms set out in this agreement, and approving the
allotment and issue of the New Sina Shares to the Seller;
(E) procure the appointment of the Covenantor as Co-Chairman of the
Purchaser;
(F) deliver to the Seller or the Seller's Solicitors a duly executed
legal opinion, in form and substance satisfactory to the Seller,
from Venture Law Group covering such matters of
00
Xxxxxx Xxxxxx xx Xxxxxxx law as the Seller may reasonably request;
and
(G) deliver to the Seller a certificate dated the Completion Date of
the Company Secretary or a director of the Purchaser certifying
that the Purchaser has obtained all governmental, regulatory and
other third party consents, rulings, confirmations and waivers
considered by the Seller to be necessary or desirable in
connection with this agreement and the transaction contemplated
herein.
30
SCHEDULE 2
(WARRANTIES)
PART A
(SELLER WARRANTIES)
Except where the context otherwise provides, references to the Company in this
Schedule 2, Part A shall be deemed to be references to the Company and the
Subsidiaries. The Seller and the Covenantor represent and warrant to the
Purchaser as follows:
1. OWNERSHIP OF THE SHARES
The Seller will be the sole beneficial owner of the Shares at or prior
to Completion and will be entitled at Completion to sell and transfer
the full legal and beneficial ownership of the same to the Purchaser or
its nominees. The Shares at Completion will be the only shares in the
capital of the Company in which the Seller and the Covenantor will have
any direct or indirect beneficial interest.
2. CAPACITY OF THE SELLER AND THE COVENANTOR
2.1 The Seller and (where applicable) the Covenantor have the requisite
power and authority to enter into and perform the Share Purchase
Documents.
2.2 This agreement constitutes and the documents executed by the Seller and
(where applicable) the Covenantor which are to be delivered at
Completion will, when executed, constitute binding obligations of the
Seller and (where applicable) the Covenantor in accordance with their
respective terms.
2.3 The execution and delivery of, and the performance by the Seller and
(where applicable) the Covenantor of their respective obligations under,
the Share Purchase Documents will not:
(A) result in a breach of or constitute default or give rise to any
modification of rights or privileges under any provision of the
memorandum or bye-laws (or equivalent constitutional documents) of
any member of the Group;
(B) result in a breach of, or constitute a default under, any
instrument to which the Seller, the Covenantor or any member of
the Group is a party or by which the Seller, the Covenantor or any
member of the Group is bound;
31
(C) result in a breach of any order, judgment or decree of any court
or governmental agency to which the Seller, the Covenantor or any
member of the Group is a party or by which the Seller, the
Covenantor or any member of the Group is bound; or
(D) require the approval or consent of any member of the Group or of
any other person.
2.4 The Seller and Covenantor have obtained all governmental, regulatory and
other third party consents, rulings, confirmations and waivers
(including those in respect of the Listing Rules) necessary for the
execution and performance of the Share Purchase Documents by the Seller
and Covenantor. Such consents, rulings, confirmations and waivers are in
unconditional form.
2.5 Each of the Seller, Covenantor and Company have complied at all times
and are in compliance with all governmental, regulatory or other third
party requirements (including those in respect of the Listing Rules)
whether relating to this agreement or otherwise and there are no
governmental, regulatory and other third party consents, rulings,
confirmations and waivers in relation to any of the Seller, Covenantor,
or Company which are outstanding or which, to the best knowledge of the
Seller and Covenantor, will be, or are likely to be, required.
3. ARRANGEMENTS BETWEEN THE GROUP AND THE SELLER AND COVENANTOR
No indebtedness (actual or contingent) and no contract or arrangement,
other than indebtedness and contracts which are at arm's length or will
be terminated on Completion, is outstanding between any member of the
Group and the Seller or the Covenantor or any person connected with the
Seller or the Covenantor.
4. OTHER INTERESTS OF THE SELLER AND COVENANTOR
Neither the Seller nor the Covenantor nor any person connected with the
Seller or Covenantor has any interest, direct or indirect in any
business which competes or is likely to compete with any business now
carried on by the Purchaser, any member of the Group or any Associated
Company or intends to acquire any such interest.
5. GROUP STRUCTURE
5.1 Schedule 3 (Basic Information about the Company) sets out true, accurate
and complete details of the Company's authorised and issued share
capital.
32
5.2 The Shares comprise approximately 29.06 per cent. of the issued and
allotted share capital of the Company and all of them are fully paid up.
5.3 There is no agreement or commitment outstanding which calls for the
allotment, issue or transfer of, or accords to any person the right to
call for the allotment or issue of, any shares (including the Shares) or
debentures in or securities of any member of the Group.
5.4 The Seller and the Covenantor have provided to the Purchaser true,
accurate and complete details of all Subsidiaries of the Company and no
member of the Group has any interest in the share capital of any other
body, corporate or undertaking which is not a member of the Group and
which has not been otherwise disclosed in writing to the Purchaser.
5.5 No member of the Group acts or carries on business in partnership with
any other person or is a member (otherwise than through the holding of
share capital) of any corporate or unincorporated body, undertaking or
association or holds or is liable on any share or security which is not
fully paid up or which carries any liability.
6. OPTIONS, MORTGAGES AND OTHER ENCUMBRANCES
6.1 There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting
the Shares or any of them and there is no agreement or commitment to
give or create any and no claim has been made by any person to be
entitled to any.
6.2 No option, right to acquire, mortgage, charge, pledge, lien (other than
a lien arising by operation of law in the ordinary course of trading) or
other form of security or encumbrance or equity on, over or affecting
the whole or any part of the undertaking or assets of any member of the
Group (including any investment in any other member of the Group) is
outstanding and there is no agreement or commitment to give or create
any and no claim has been made by any person to be entitled to any.
7. ACCURACY AND ADEQUACY OF INFORMATION
7.1 All information which has been given by the Seller, Covenantor,
auditors, financial advisers, solicitors or officials of the Seller,
Covenantor, or the Company, to the Purchaser or to the solicitors,
accountants or agents of the Purchaser in the course of the negotiations
leading to this agreement is true and accurate and not misleading in all
material respects.
33
7.2 The information given in Schedule 3 (Basic Information about the
Company) is true, accurate and complete in all respects.
7.3 The copies of the memorandum and bye-laws (or equivalent constitutional
documents) of each member of the Group which have been supplied to the
Purchaser or the Purchaser's Solicitors are complete and accurate in all
respects, have attached to them copies of all resolutions and other
documents required by law to be so attached and fully set out the rights
and restrictions attaching to each class of share capital of the members
of the Group to which they relate.
7.4 The statutory books (including all registers and minute books) of each
member of the Group have been properly kept and contain an accurate and
complete record of the matters which should be dealt with in those books
and, to the knowledge of the Seller and the Covenantor, no notice or
allegation that any of them is incorrect or should be rectified has been
received.
7.5 All documents which should have been delivered by any member of the
Group to the Registrar of Companies in Hong Kong or the equivalent body
in any other jurisdiction have been properly so delivered.
7.6 All other information contained in any written document or communication
supplied to the Purchaser or any of its advisers by or on behalf of the
Seller, the Covenantor or any member of the Group or any Associated
Company after the Purchaser indicated its interest in acquiring the
Shares is true and accurate in all material respects and there is no
fact or matter not disclosed in writing to the Purchaser or any of its
advisers which renders any such information untrue or misleading in any
material respect because of any omission or ambiguity or for any other
reason.
7.7 So far as the Seller and Covenantor are aware (having made due and
careful inquiry), there is no fact or circumstance relating to the
affairs of any member of the Group or any Associated Company which has
not been disclosed to the Purchaser or any of its advisers and which if
disclosed might reasonably have been expected to influence the decision
of the Purchaser to purchase the Shares on the terms contained in this
agreement.
8. ACCOUNTS
8.1 The Accounts:
(A) were prepared in accordance with accountancy practices generally
accepted in Hong Kong at the time they were audited and commonly
adopted by companies carrying on businesses
34
similar to those carried on by the respective members of the
Group; and
(B) are complete and accurate in all material respects and in
particular include full provision for bad and doubtful debts, for
old depreciated and unsaleable stock and for all forms of Taxation
to which the Group may be subject relating to any period ending on
or before the date to which they are made up;
(C) show a true and fair view of the state of affairs of the members
of the Group to which they relate, and of the Group as a whole, at
each accounting reference date to which the Accounts relate; and
(D) except as the Accounts expressly disclose, are not affected by any
unusual or non-recurring items.
8.2 The accounting records of each member of the Group have been kept on a
proper and consistent basis (no change in the methods or bases of
valuation or accountancy treatment having been made for at least three
years prior to the Accounts Date or since), are up-to-date and in all
material respects contain complete and accurate details of the business
activities of the member of the Group concerned.
8.3 The Management Accounts have been prepared, in all material respects, on
a consistent basis with the Accounts.
8.4 Each member of the Group maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorisations or delegations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles, in the case of the
Company, in Hong Kong, and in the case of each other member of the
Group, in the relevant jurisdiction of that member, and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorisations or
delegations; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action
is taken with respect to any difference.
9. EVENTS SINCE THE ACCOUNTS DATE
9.1 Since the Accounts Date:
35
(A) There had been no material adverse change in the financial
position or prospects of any member of the Group as at the
Management Accounts Date and since the Accounts Date there has
been no termination or substantial modification of a relationship
(through contract or otherwise) with a material customer or
supplier of any member of the Group;
(B) the business of each member of the Group has been carried on in
the ordinary and usual course and in the same manner (including
nature and scope) as in the past and no unusual or onerous
contract differing from the routine contracts necessitated by the
nature of its trade has been entered into by any member of the
Group, nor has any material contract (including contracts of
employment with senior management of members of the Group) been
amended or terminated;
(C) none of the amounts secured by mortgages, charges, liens or
encumbrances disclosed in the Accounts has been increased beyond
the amount shown in the Accounts and no mortgage, charge, lien or
encumbrance has been created since the Accounts Date; and
(D) no distribution of capital or income has been declared made or
paid in respect of any share capital of the Company and (excluding
fluctuations in overdrawn current accounts with bankers) no loan
or loan capital of the Company has been repaid in whole or in part
nor has become liable to be repaid.
10. CONTRACTS AND COMMITMENTS
10.1 All:
(i) material contracts; and/or
(ii) contracts (whether oral or written) involving actual or contingent
payment obligations of any member of the Group in excess of
US$250,000
are listed in the Seller's Disclosure Letter.
36
10.2 All subsisting contracts have been entered into in the normal course of
business. No member of the Group is under any obligation, nor is it a
party to any contract, which cannot readily be fulfilled or performed by
it on time and without undue or unusual expenditure of money or effort.
10.3 No member of the Group is a party to or has any liability (present or
future) under any guarantee or indemnity or letter of credit or any
leasing, hiring, hire purchase, credit sale or conditional sale
agreement or has entered into any contract or commitment involving, or
likely to involve, obligations or expenditure in excess of US$250,000.
10.4 No member of the Group is a party to any contract or arrangement which
restricts its freedom to carry on its business in any part of the world
in such manner as it may think fit, or to any agency, distributorship or
management agreement.
10.5 Neither the Seller nor the Covenantor is aware (having made due and
careful enquiry) of any breach of, or any invalidity, or grounds for
determination, rescission, avoidance or repudiation of, any material
contract to which any member of the Group is a party or of any
allegation of such a thing.
10.6 There are no contractual arrangements or obligations binding upon any
member of the Group which will or may be legally terminated or breached
as a result of the execution of this agreement or Completion.
10.7 There are no agreements or arrangements entered into by any member of
the Group otherwise than by way of bargain at arm's length.
10.8 No person has given any guarantee of or any security for any overdraft
loan or loan facility granted to any member of the Group which is
outstanding.
10.9 No member of the Group is a party to any contract:
(A) which is of six years or greater duration; or
(B) involves the grant on an exclusive basis (whether in relation to
geography and/or product content or otherwise) of any distribution
rights or any material tangible or intangible assets.
10.10 No actual or proposed contract or arrangement to which any member of the
Group is or is proposed to be a party results
37
in or would result in a breach of, or constitutes or would constitute a
default under, any program licence agreement or arrangement to which any
member of the Group is a party and all waivers, consents, rulings and
confirmations required by any such program licence agreement or
arrangement have been obtained unconditionally and are currently
existing.
11. INSIDER CONTRACTS
There is not, and there has not to the best of the Seller's and
Covenantor's knowledge at any time during the last twelve months been,
any contract or arrangement to which any member of the Group is, or was,
a party and in which the Seller, the Covenantor or any person
beneficially interested in any part of the share capital of any member
of the Group, or any director of any member of the Group or any person
connected with any of the foregoing is, or has been, interested, either
directly or indirectly, and no member of the Group is a party to, nor
have its profits or financial position during that period been affected
by, any contract or arrangement which was not of an entirely arm's
length nature; in particular, without limitation, no member of the Group
has transferred any assets to another such member except at market
value.
12. POWERS OF ATTORNEY
No member of the Group has given any power of attorney or other
authority (express, implied or ostensible) which is still outstanding or
effective to any person to enter into any contract or commitment on its
behalf other than to its respective employees to enter into routine
trading contracts in the normal course of their duties.
13. LICENCES
All licences, consents and other permissions and approvals required for
or in connection with the carrying on of the business now being carried
on by each member of the Group are listed in the Seller's Disclosure
Letter, are not limited in duration or subject to onerous conditions and
are in full force and effect and all reports, returns and information
required by law or as a condition of any licence, consent, permit or
approval to be made or given to any person or authority in connection
with the business of any member of the Group have been made or given to
the appropriate person or authority and there is no circumstance
(including, without limitation, the receipt of any notice (whether oral
or written) or commencement of any proceedings) which indicates that any
licence, consent, permission or approval is likely to be revoked or
which may confer a right of revocation.
38
14. INSOLVENCY
14.1 No order has been made and no resolution has been passed for the winding
up of any member of the Group or for a provisional liquidator to be
appointed in respect of any member of the Group and no petition has been
presented and no meeting has been convened for the purpose of winding up
any member of the Group.
14.2 No receiver (which expression shall include an administrative receiver)
has been appointed in respect of any member of the Group or all or any
of its assets.
14.3 No member of the Group is insolvent or has stopped paying its debts as
they fall due.
14.4 No guarantee, loan capital, borrowed money or interest of any member of
the Group is overdue for payment and no other obligation or indebtedness
of any member of the Group is outstanding which is substantially overdue
for performance or payment.
14.5 No administration order has been made and no petition for such an order
has been presented in respect of any member of the Group.
15. LITIGATION
15.1 No member of the Group is engaged in any litigation, arbitration or
mediation, administrative or criminal proceedings, whether as claimant,
plaintiff, defendant or otherwise, and, to the knowledge of the Seller
and the Covenantor, no material litigation, arbitration or mediation,
administrative or criminal proceedings by or against any member of the
Group is pending, threatened or expected and there is no fact or
circumstance likely to give rise to any such litigation, arbitration or
mediation, administrative or criminal proceedings or to any proceedings
against any director or employee (past or present) of any member of the
Group in respect of any act or default for which that member might be
vicariously liable.
15.2 Each member of the Group has:
(A) conducted its business and corporate affairs in accordance with
all applicable laws and regulations; and
(B) has not done or omitted to do anything in contravention or breach
of any law or regulation applicable to it or the business of that
member.
39
16. DELINQUENT AND WRONGFUL ACTS
16.1 No member of the Group has committed or is liable for any criminal,
illegal, unlawful or unauthorised act or breach of any obligation or
duty whether imposed by or pursuant to statute, contract or otherwise,
and no claim that it has or is remains outstanding against any such
member.
16.2 So far as the Seller and Covenantor are aware no member of the Group has
received notification that any investigation or inquiry is being or has
been conducted by any governmental or other body in respect of the
affairs of any member of the Group and the Seller and Covenantor are not
aware of any circumstances which would give rise to such investigation
or inquiry.
16.3 To the best knowledge of the Seller and Covenantor, no member of the
Group, nor any director, officer, agent, employee or other person acting
on behalf of any such member has, in the course of his actions for, or
on behalf of, any member of the Group, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from
corporate funds; or made any bribe, unlawful rebate, payoff, influence
payment, kickback or other unlawful payment to any person or entity.
17. OWNERSHIP AND CONDITION OF ASSETS
17.1 All assets used by any member of the Group in the course of its business
or which are necessary or desirable for the continuation of that
business as it is now carried on are both legally and beneficially owned
by a member of the Group free from any third party rights and all such
assets are included in the Accounts.
17.2 Each of the assets included in the Accounts or acquired by any member of
the Group since the Accounts Date (other than current assets sold,
realised or applied in the normal course of trading) is owned both
legally and beneficially by a member of the Group free from any third
party rights, and each of those assets capable of possession is in the
possession of a member of the Group.
17.3 All plant and machinery (including fixed plant and machinery), vehicles
and office equipment used by any member of the Group in connection with
its business are in good repair and condition.
40
18. PROPERTY
18.1 The Relevant Properties referred to in the Seller's Disclosure Letter
are the only Properties used or occupied by members of the Group or in
respect of which they have any estate, interest, right or liability.
18.2 The relevant members of the Group are in physical possession and actual
occupation of the Relevant Properties on an exclusive basis and no right
of occupation or enjoyment has been acquired or is in the course of
being acquired by any third party or has been granted or agreed to be
granted to any third party, save in all cases the interests and rights
of the respective landlords to such properties.
18.3 The Relevant Properties are held under the tenancy agreements (the
"TENANCY AGREEMENTS"), the particulars of which are set out in the
Seller's Disclosure Letter.
18.4 In relation to the Relevant Properties:
(A) the relevant member of the Group has a good and valid tenancy or
demise of each of the Relevant Properties;
(B) no right, easement, licence or informal arrangement, public or
private, is enjoyed or in the course of being acquired by or
against any of the Relevant Properties; and
(C) the use of the Relevant Properties in connection with the
businesses of the relevant members of the Group is permitted under
the terms of the Tenancy Agreements.
19. INTELLECTUAL PROPERTY
19.1 No member of the Group has any rights to any trademarks which are
registered or are the subject of any application for registration in any
jurisdiction other than those set out in the Seller's Disclosure Letter.
19.2 To the best knowledge of the Seller and the Covenantor, no third party
is infringing or making unauthorised use, or has infringed or made
unauthorised use of any Intellectual Property or Confidential Business
Information owned or used by any member of the Group.
19.3 The activities of all members of the Group do not infringe or make
unauthorised use of or have infringed or made unauthorised use of the
Intellectual Property rights or Confidential Business Information of any
third party.
41
19.4 The members of the Group either legally and beneficially own or have a
licence to use all Intellectual Property necessary to carry on the
business conducted by the Group in the manner currently carried on and
to fulfil any existing plans or proposals.
20. INSURANCES
20.1 Each member of the Group has maintained all insurance required by
statute.
21. EMPLOYMENT
21.1 Any contract of employment with any employee to which any member of the
Group is a party can be terminated by the employing company without
damages or compensation (other than that payable by statute) by giving
at any time not more than three months' notice.
21.2 There is no dispute between any member of the Group and any trade union
or other organisation formed for a similar purpose existing, pending or
threatened and there is no collective bargaining agreement or other
arrangement (whether binding or not) to which any member of the Group is
a party.
21.3 No member of the Group has any outstanding undischarged liability to pay
to any governmental or regulatory authority in any jurisdiction any
contribution, Taxation or other impost arising in connection with the
employment or engagement of personnel by any member of the Group.
21.4 Each member of the Group has at all relevant times complied with all its
obligations under statute and otherwise concerning the health and safety
at work of its employees, and there are no claims capable of arising or
threatened or pending by any employee or third party in respect of any
accident or injury which are not fully covered by insurance.
21.5 No member of the Group has or is proposing to introduce a share
incentive, share option, profit sharing, bonus or other incentive for
any of its directors, other officers or employees.
21.6 A list of the names, jobs and short details of the terms of employment
of every employee or officer earning annual compensation, including
salary and all non-cash benefits, in excess of US$100,000 of each member
of the Group are set out in the Seller's Disclosure Letter.
42
22. TAXATION
22.1 Each member of the Group has made or filed all tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless, and only to the extent that, the Company or any other member of
the Group has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set
aside on its books provision reasonably adequate for the payment of all
taxes for periods subsequent to the periods to which such returns,
reports or declarations apply.
22.2 There is no dispute or disagreement outstanding nor is any contemplated
at the date of this agreement with any revenue authority regarding
liability or potential liability to any tax or duty (including in each
case penalties or interest) recoverable from any member of the Group or
regarding the availability of any relief from tax or duty to any member
of the Group and there are no circumstances which make it likely that
any such dispute or disagreement will commence.
22.3 Each member of the Group has sufficient records relating to past events,
including any elections made, to calculate the tax liability or relief
which would arise on any disposal or on the realisation of any asset
owned at the Accounts Date by any member of the Group or acquired by any
such member of the Group since that date but before Completion.
22.4 Each member of the Group has duly submitted all claims and disclaimers
or withdrawals of claims which have been assumed to have been made for
the purposes of the Accounts.
22.5 All documents which are required to be stamped, which are in the
possession of any member of the Group and by virtue of which such member
of the Group has any rights have been properly stamped.
22.6 No member of the Group is liable to pay any interest or other penalty or
any unpaid taxation.
23. COMMISSIONS
Except for any fee payable pursuant to arrangements between FB Gemini
Capital Limited (or its affiliate) and the Purchaser, no person has
received or will receive any commission or finder's fee in connection
with the transactions contemplated by this agreement.
43
PART B
(PURCHASER WARRANTIES)
Except where the context otherwise provides, references to the Purchaser in this
Schedule 2, Part B shall be deemed to be references to the Purchaser and its
subsidiaries. The Purchaser represent and warrant to the Seller and the
Covenantor as follows:
1. ISSUE AND ALLOTMENT OF THE NEW SINA SHARES
1.1 All New Sina Shares (including the Performance Shares) shall, upon
issue, be credited as fully paid, shall rank pari passu in all respects
with all Sina Shares then in issue, shall be free from all claims,
liens, charges, equities and encumbrances and third party rights of any
kind and together with all rights attaching thereto from the respective
dates of allotment, including the right to receive all dividends and
distributions declared, made or paid on or after the respective dates of
allotment. Subject to any applicable securities rules or regulations,
including but not limited to Rule 144 promulgated under the US
Securities Act of 1933, as amended, all New Sina Shares shall be
non-assessable and capable of being traded, assigned, transferred or
otherwise disposed of without restrictions.
1.2 The allotment and issue of the New Sina Shares to the Seller will be in
accordance with all applicable laws and will have been validly
authorised by resolution of the directors of the Purchaser, in each case
prior to the date of issue of the New Sina Shares, and such New Sina
Shares shall be credited as fully paid and rank pari passu in all
respects with the Sina Shares in issue at the date of allotment and,
subject to any applicable securities rules or regulations, including but
not limited to Rule 144 promulgated under the US Securities Act of 1933,
as amended, will be non-assessable and capable of being traded,
transferred or otherwise disposed of without restriction.
1.3 The New Sina Shares to be issued pursuant to sub-clause 4.2 will, upon
issue, constitute not less than ten per cent. of the issued share
capital of the Purchaser as enlarged by such issue.
2. CAPACITY OF THE PURCHASER
2.1 The Purchaser has the requisite power and authority to enter into and
perform the Share Purchase Documents.
2.2 This agreement constitutes and the documents executed by the Purchaser
which are to be delivered at Completion will, when
44
executed, constitute binding obligations of the Purchaser in accordance
with their respective terms.
2.3 The execution and delivery of, and the performance by the Purchaser of
its respective obligations under, the Share Purchase Documents will not:
(A) result in a breach of or constitute default or give rise to any
modification of rights or privileges under any provision of the
memorandum or bye-laws (or equivalent constitutional documents) of
the Purchaser;
(B) result in a breach of, or constitute a default under, any
instrument to which the Purchaser is a party or by which the
Purchaser is bound;
(C) result in a breach of any order, judgment or decree of any court
or governmental agency to which the Purchaser is a party or by
which the Purchaser is bound; or
(D) require any approval or consent of any person which has not been
obtained.
2.4 The Purchaser has obtained all governmental, regulatory and other third
party consents, rulings, confirmations and waivers necessary for the
execution and performance of the Share Purchase Documents by the
Purchaser. Such consents, rulings, confirmations and waivers are in
unconditional form.
2.5 Neither the execution of this agreement by the Purchaser nor the
consummation of the transaction as contemplated by this agreement will
violate, conflict with or result in the breach of any term, limitation
in or provision of, or constitute a default (or an event that, with the
giving of notice or the lapse of time or both, would constitute a
default) under the terms, provisions or conditions of the constitutional
documents of the Purchaser or violate any order, writ, claim form,
injunction, decree, statute, rule or regulation applicable to the
Purchaser.
2.6 No consent or approval by, notice to or registration with any
governmental or other authority is required on the part of the Purchaser
in connection with the execution of this agreement or the consummation
of the transaction as contemplated in it.
45
3. CORPORATE DETAILS
The Purchaser does not act or carry on business in partnership with any
other person and is not a member (otherwise than through the holding of
share capital) of any corporate or unincorporated body, undertaking or
association and does not hold and is not liable on any share or security
which is not fully paid up or which carries any liability.
4. OPTIONS, MORTGAGES AND OTHER ENCUMBRANCES
There is no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity on, over or affecting
the New Sina Shares or any of them and save in respect of this agreement
there is no agreement or commitment to give or create any and no claim
has been made by any person to be entitled to any.
5. ACCURACY AND ADEQUACY OF INFORMATION
5.1 All information which has been given by the Purchaser, to the Seller and
the Covenantor or to the solicitors, accountants or agents of the Seller
and the Covenantor in the course of the negotiations leading to this
agreement is true and accurate and not misleading in all material
respects.
5.2 The copies of the latest publicly filed memorandum and bye-laws (or
equivalent constitutional documents) of the Purchaser are complete and
accurate in all respects, and copies of all resolutions and other
documents required by law to be publicly filed have been properly so
filed and fully set out the rights and restrictions attaching to each
class of share capital of the Purchaser to which they relate.
5.3 The statutory books (including all registers and minute books) of the
Purchaser have been properly kept and contain an accurate and complete
record of the matters which should be dealt with in those books and to
the knowledge of the Purchaser no notice or allegation that any of them
is incorrect or should be rectified has been received.
5.4 All documents which should have been delivered by the Purchaser to the
US Securities Exchange Commission (the "SEC") or the equivalent body in
any other jurisdiction have been properly so delivered.
5.5 All other information contained in any written document or communication
supplied to the Seller and the Covenantor or any of its advisers by or
on behalf of the Purchaser after the Purchaser indicated its interest in
acquiring the Shares is true and accurate
46
in all material respects and there is no fact or matter not disclosed in
writing to the Seller or Covenantor or any of its advisers which renders
any such information untrue or misleading in any material respect
because of any omission or ambiguity or for any other reason.
6. THE PURCHASER ACCOUNTS
6.1 The Purchaser Accounts:
(A) were prepared in accordance with accountancy practices generally
accepted in the United States of America at the time they were
audited and commonly adopted by companies carrying on businesses
similar to those carried on by the Purchaser; and
(B) are complete and accurate in all material respects and in
particular include full provision for bad and doubtful debts, for
old depreciated and unsaleable stock and for all forms of Taxation
to which the Purchaser may be subject relating to any period
ending on or before the date to which they are made up;
(C) show a true and fair view of the state of affairs of the Purchaser
to which they relate at each accounting reference date to which
the Purchaser Accounts relate; and
(D) except as the Purchaser Accounts expressly disclose, are not
affected by any unusual or non-recurring items.
6.2 The accounting records of the Purchaser have been kept on a proper and
consistent basis (no change in the methods or bases of valuation or
accountancy treatment having been made for at least three years prior to
30th June, 2001 or since), are up-to-date and in all material respects
contain complete and accurate details of the business activities of the
Purchaser.
6.3 The unaudited management accounts of the Purchaser for the period since
30th June, 2001 to 31st July, 2001 supplied to the Seller and the
Covenantor have been prepared, in all material respects, on a consistent
basis with the Accounts.
6.4 The Purchaser maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorisations or delegations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles in the United States of
America and to maintain asset accountability; (iii) access to assets is
permitted only in accordance with management's general or specific
47
authorisations or delegations; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any difference.
7. EVENTS SINCE 30TH JUNE, 2001
7.1 Since 30th June, 2001:
(A) there had been no material adverse change in the financial
position or prospects of the Purchaser as at 31st July, 2001;
(B) the business of the Purchaser has been carried on in the ordinary
and usual course and in the same manner (including nature and
scope) as in the past and no unusual or onerous contract differing
from the routine contracts necessitated by the nature of its trade
has been entered into by the Purchaser nor has any material
contract (excluding contracts of employment with senior
management) been amended or terminated;
(C) none of the amounts secured by mortgages, charges, liens or
encumbrances disclosed in the Purchaser Accounts has been
increased beyond the amount shown in the Purchaser Accounts and no
mortgage, charge, lien or encumbrance has been created since 30th
June, 2001; and
(D) no distribution of capital or income has been declared made or
paid in respect of any share capital of the Purchaser and
(excluding fluctuations in overdrawn current accounts with
bankers) no loan or loan capital of the Purchaser has been repaid
in whole or in part nor has become liable to be repaid.
8. CONTRACTS AND COMMITMENTS
8.1 All subsisting contracts have been entered into in the normal course of
business. The Purchaser is under no obligation, nor is it a party to any
contract, which cannot readily be fulfilled or performed by it on time
and without undue or unusual expenditure of money or effort.
8.2 The Purchaser is not aware (having made due and careful enquiry) of any
breach of, or any invalidity, or grounds for determination, rescission,
avoidance or repudiation of, any material contract to which it is a
party or of any allegation of such a thing.
8.3 There are no contractual arrangements or obligations binding upon the
Purchaser which will or may be legally terminated or breached as a
result of the execution of this agreement or Completion.
48
8.4 There are no agreements or arrangements entered into by the Purchaser
otherwise than by way of bargain at arm's length.
8.5 No person has given any guarantee of or any security for any overdraft
loan or loan facility granted to the Purchaser which is outstanding.
8.6 The Purchaser is not a party to any contract:
(A) which is of six years or greater duration; or
(B) involves the grant on an exclusive basis (whether in relation to
geography and/or product content or otherwise) of any distribution
rights or any material tangible or intangible assets.
9. INSIDER CONTRACTS
There is not, and there has not to be best of the Purchaser's knowledge
at any time during the last twelve months been, any contract or
arrangement to which the Purchaser is, or was, a party and in which the
Purchaser or any person beneficially interested in any part of the share
capital of the Purchaser, or any director of any member of the Purchaser
or any person connected with any of the foregoing is, or has been,
interested, either directly or indirectly, and the Purchaser is not a
party to, nor have its profits or financial position during that period
been affected by, any contract or arrangement which was not of an
entirely arm's length nature; in particular, without limitation, the
Purchaser has transferred any assets to another such member except at
market value.
10. POWERS OF ATTORNEY
The Purchaser has not given any power of attorney or other authority
(express, implied or ostensible) which is still outstanding or effective
to any person to enter into any contract or commitment on its behalf
other than to its respective employees to enter into routine trading
contracts in the normal course of their duties.
11. LICENCES
All licences, consents and other permissions and approvals required for
or in connection with the carrying on of the business now being carried
on by each member of the Group are listed in the Purchaser's latest
Forms 10K and 10Q filings with the SEC, are not limited in duration or
subject to onerous conditions and are in full force and effect and all
reports, returns and information required by law or as a
49
condition of any licence, consent, permit or approval to be made or
given to any person or authority in connection with the business of the
Purchaser have been made or given to the appropriate person or authority
and there is no circumstance (including, without limitation, the receipt
of any notice (whether oral or written) or commencement of any
proceedings) which indicates that any licence, consent, permission or
approval is likely to be revoked or which may confer a right of
revocation.
12. INSOLVENCY
12.1 No order has been made and no resolution has been passed for the winding
up of the Purchaser or for a provisional liquidator to be appointed in
respect of the Purchaser and no petition has been presented and no
meeting has been convened for the purpose of winding up the Purchaser.
12.2 No receiver (which expression shall include an administrative receiver)
has been appointed in respect of the Purchaser or all or any of its
assets.
12.3 The Purchaser is not insolvent nor has it stopped paying its debts as
they fall due.
12.4 No guarantee, loan capital, borrowed money or interest of the Purchaser
is overdue for payment and no other obligation or indebtedness of the
Purchaser is outstanding which is substantially overdue for performance
or payment.
12.5 No administration order has been made and no petition for such an order
has been presented in respect of the Purchaser.
13. LITIGATION
13.1 The Purchaser is not engaged in any material litigation, arbitration or
mediation, administrative or criminal proceedings, whether as claimant,
plaintiff, defendant or otherwise, and, to the knowledge of the
Purchaser no material litigation, arbitration or mediation,
administrative or criminal proceedings by or against the Purchaser is
pending, threatened or expected and, to the knowledge of the Purchaser,
there is no fact or circumstance likely to give rise to any such
litigation, arbitration or mediation, administrative or criminal
proceedings or to any proceedings against any director or employee (past
or present) of the Purchaser in respect of any act or default for which
that member might be vicariously liable.
13.2 The Purchaser has:
50
(A) conducted its business and corporate affairs in accordance with
all applicable laws and regulations; and
(B) has not done or omitted to do anything in contravention or breach
of any law or regulation applicable to it or the business of that
member.
14. DELINQUENT AND WRONGFUL ACTS
14.1 The Purchase has not committed and is not liable for any criminal,
illegal, unlawful or unauthorised act or breach of any obligation or
duty whether imposed by or pursuant to statute, contract or otherwise,
and no claim that it has or is remains outstanding against the
Purchaser.
14.2 So far as the Purchaser is aware it has not received notification that
any investigation or inquiry is being or has been conducted by any
governmental or other body in respect of its affairs and the Purchaser
is not aware of any circumstances which would give rise to such
investigation or inquiry.
14.3 To the best knowledge of the Purchaser, neither the Purchaser, nor any
director, officer, agent, employee or other person acting on behalf of
the Purchaser has, in the course of his actions for, or on behalf of,
the Purchaser, used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; or made
any bribe, unlawful rebate, payoff, influence payment, kickback or other
unlawful payment to any person or entity.
15. OWNERSHIP AND CONDITION OF ASSETS
15.1 All assets used by the Purchaser in the course of its business or which
are necessary or desirable for the continuation of that business as it
is now carried on are both legally and beneficially owned by the
Purchaser free from any third party rights and all such assets are
included in the Purchaser Accounts.
15.2 Each of the assets included in the Purchaser Accounts or acquired by the
Purchaser since 30th June, 2001 (other than current assets sold,
realised or applied in the normal course of trading) is owned both
legally and beneficially by the Purchaser free from any third party
rights, and each of those assets capable of possession is in the
possession of the Purchaser.
51
15.3 All plant and machinery (including fixed plant and machinery), vehicles
and office equipment used by the Purchaser in connection with its
business are in good repair and condition.
16. PROPERTY
16.1 The Purchaser is in physical possession and actual occupation of the
properties where its business is based (the "PURCHASER PROPERTIES") on
an exclusive basis and no right of occupation or enjoyment has been
acquired or is in the course of being acquired by any third party or has
been granted or agreed to be granted to any third party save in all
cases the interests and rights of the respective landlords to such
properties.
16.2 In relation to the Purchaser Properties:
(A) the Purchaser has a good and valid tenancy or demise of each of
the Purchaser Properties;
(B) no right, easement, licence or informal arrangement, public or
private, is enjoyed or in the course of being acquired by or
against any of the Purchaser Properties; and
(C) the use of the Purchaser Properties in connection with the
business of the Purchaser is permitted under the terms of the
relevant tenancy agreements to which they are subject.
17. INTELLECTUAL PROPERTY
17.1 To the best knowledge of the Purchaser, no third party is infringing or
making unauthorised material use, or has infringed or made unauthorised
material use of any Intellectual Property or Business Information owned
or used by the Purchaser.
17.2 As far as the Purchaser is aware, the activities of the Purchaser do not
infringe or make unauthorised use of or have infringed or made
unauthorised use of the Intellectual Property rights or Confidential
Business Information of any third party.
17.3 The Purchaser either legally and beneficially owns or has a licence to
use all Intellectual Property necessary to carry on the business
conducted by the Purchaser in the manner currently carried on and to
fulfil any existing plans or proposals.
18. INSURANCES
18.1 The Purchaser has maintained all insurance required by statute.
52
19. EMPLOYMENT
19.1 Any contract of employment with any employee to which the Purchaser is a
party can be terminated by the Purchaser without damages or compensation
(other than that payable by statute) by giving at any time not more than
three months' notice.
19.2 There is no dispute between the Purchaser and any trade union or other
organisation formed for a similar purpose existing, pending or
threatened and there is no collective bargaining agreement or other
arrangement (whether binding or not) to which the Purchaser is a party.
19.3 The Purchaser has no outstanding undischarged liability to pay to any
governmental or regulatory authority in any jurisdiction any
contribution, Taxation or other impost arising in connection with the
employment or engagement of personnel by the Purchaser.
19.4 The Purchaser has at all relevant times complied with all its
obligations under statute and otherwise concerning the health and safety
at work of its employees, and there are no claims capable of arising or
threatened or pending by any employee or third party in respect of any
accident or injury which are not fully covered by insurance.
19.5 The Purchaser has or is proposing to introduce a share incentive, share
option, profit sharing, bonus or other incentive for any of its
directors, other officers or employees.
20. TAXATION
20.1 The Purchaser has made or filed all tax returns, reports and
declarations required by any jurisdiction to which it is subject
(unless, and only to the extent that, the Purchaser has set aside on its
books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined
to be due on such returns, reports and declarations, except those being
contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent
to the periods to which such returns, reports or declarations apply.
20.2 There is no dispute or disagreement outstanding nor is any contemplated
at the date of this agreement with any revenue authority regarding
liability or potential liability to any tax or duty (including in each
case penalties or interest) recoverable from the
53
Purchaser or regarding the availability of any relief from tax or duty
to the Purchaser and there are no circumstances which make it likely
that any such dispute or disagreement will commence.
20.3 The Purchaser has sufficient records relating to past events, including
any elections made, to calculate the tax liability or relief which would
arise on any disposal or on the realisation of any asset owned at 30th
June, 2001 by the Purchaser or acquired by the Purchaser since that date
but before Completion.
20.4 The Purchaser has duly submitted all claims and disclaimers or
withdrawals of claims which have been assumed to have been made for the
purposes of the Purchaser Accounts.
20.5 All documents which are required to be stamped, which are in the
possession of the Purchaser and by virtue of which the Purchaser has any
rights have been properly stamped.
20.6 The Purchaser is not liable to pay any interest or other penalty or any
unpaid taxation.
21. COMMISSIONS
Except for any fee payable pursuant to arrangements between FB Gemini
Capital Limited (or its affiliate) and the Purchaser, no person has
received or will receive any commission or finder's fee in connection
with the transactions contemplated by this agreement.
54
SCHEDULE 3
(BASIC INFORMATION ABOUT THE COMPANY)
1. Company name Sun Television Cybernetworks
Holdings Limited
2. Company number (Hong Kong Register of F-5777
Companies)
3. Date of incorporation 30th October, 1992
4. Date of Registration as an Oversea 22nd December, 1992
Company in Hong Kong
5. Place of incorporation Bermuda
6. Address of registered office Xxxxx Xxxxx
00 Xxxxx Xxxxxx
Xxxxxxxx XX00
Xxxxxxx
0. Address of principal office in Hong Kong Xxxx 0000, Xxx Xxxxxx
00 Xxxxx'x Xxxx Xxxxxxx
Xxxx Xxxx
8. Authorised share capital HK$660,000,000 ordinary share
capital consisting of ordinary
shares of HK$0.02 each.
HK$40,000,000 5% convertible
non-voting preference share
capital.
9. Issued share capital* HK$148,396,794 ordinary share
capital consisting of ordinary
shares of HK$0.02 each.
HK$6,800,000 5% convertible
non-voting preference share
capital.
-----------
* All issued shares are fully paid.
55
10. Directors Xxx Xxx (Chairman)
Wu Xxxxx, Xxxxx (Executive
Chairman, Chief Executive
Officer and Alternate Director
to Xxxx Xxx Yuan)
Xxxx Xxx Yuan
Pao Wan Lung
Yan Tat Wah, Joseph+
Xxxx Xxx Ming, Jason+
11. Secretary Xxxx Xxx Shing
56
SCHEDULE 4
(REGISTRATION RIGHTS)
1. DEFINITIONS
For the purpose of this Schedule 4:
(A) "EXCHANGE ACT" means the United States Securities Exchange Act of
1934, as amended;
(B) "HOLDER" means the Seller and any corporate body of which the
Seller has majority control owning of record Registrable
Securities that have not been sold to the public or any transferee
of record of such Registrable Securities in accordance with
paragraph 7 hereof;
(C) "REGISTER", "REGISTERED" AND "REGISTRATION" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration
statement or document;
(D) "REGISTRABLE SECURITIES" means the New Sina Shares and any Sina
Shares issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of the New Sina Shares;
(E) "SEC" or "COMMISSION" means the United States Securities and
Exchange Commission; and
(F) "SECURITIES ACT" shall mean the United States Securities Act of
1933, as amended.
2. PIGGYBACK REGISTRATIONS
The Purchaser shall notify the Holder of Registrable Securities in
writing at least fifteen (15) Business Days prior to the filing of any
registration statement under the Securities Act for purposes of a public
offering of securities of the Purchaser (including, but not limited to,
registration statements relating to secondary offerings of securities of
the Purchaser, but excluding registration statements relating to any
employee benefit plan or with respect to any corporate reorganization or
other transaction under Rule 145 of the Securities Act) and will afford
the Holder an opportunity to include in such registration statement all
or part of such Registrable Securities held by the Holder. If the Holder
desires to include in any such registration statement all or any part of
the Registrable Securities held by it the Holder shall, within ten (10)
Business Days
57
after the above-described notice from the Purchaser, so notify the
Purchaser in writing. Such notice shall state the intended method of
disposition of the Registrable Securities by the Holder. If the Holder
decides not to include all of its Registrable Securities in any
registration statement thereafter filed by the Purchaser, the Holder
shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration
statements as may be filed by the Purchaser with respect to offerings of
its securities, all upon the terms and conditions set forth herein.
3. If the registration statement under which the Purchaser gives notice
under paragraph 2 is for an underwritten offering, the Purchaser shall
so advise the Holder as part of such notice. In such event, the right of
the Holder to be included in a registration pursuant to paragraph 2
shall be conditioned upon the Holder's participation in such
underwriting and the inclusion of the Holder's Registrable Securities in
the underwriting to the extent provided herein. If the Holder proposes
to distribute its Registrable Securities through such underwriting the
Holder shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the
Purchaser. Notwithstanding any other provision of this agreement, if the
underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated as
follows: first, to the Purchaser; second, to the Holder and any other
holders of piggyback registration rights on a pro rata basis based on
the total number of registrable securities held by such holders; and
third, to any other shareholder of the Purchaser on a pro rata basis,
provided that, no such reduction shall (i) reduce the securities being
offered by the Purchaser for its own account to be included in the
registration and underwriting, or (ii) reduce the amount of securities
of the selling holders included in the registration below twenty-five
percent (25%) of the total amount of securities included (or initially
requested to be included) in such registration. If the Holder
disapproves of the terms of any such underwriting, the Holder may elect
to withdraw therefrom by written notice to the Purchaser and the
underwriter, delivered at least ten (10) Business Days prior to the
effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the registration. If the Holder is a limited liability
company, members, retired members, shareholders and other equity owners
of the Holder, or the estates and family members of, and any trusts for
the benefit of, any of the foregoing persons shall be deemed to be a
single "Holder", and any pro rata reduction with respect to such
"Holder" shall be based upon the aggregate amount of shares carrying
58
registration rights owned by all such persons included in such "Holder",
as defined in this sentence.
4. EXPENSES OF REGISTRATION
All expenses incurred by the Purchaser in complying with paragraph 2, 3
and 5 hereof shall be borne by the Purchaser, including, without
limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Purchaser, reasonable fees and
disbursements of a single special counsel for all selling holders, blue
sky fees and expenses and the expense of any special audits incident to
or required by such registration. All underwriting discounts and selling
commissions incurred in connection with the sale of securities hereunder
shall be borne by the holders of the securities so registered pro rata
on the basis of the number of shares so registered.
5. OBLIGATIONS OF THE PURCHASER
Whenever required to effect the registration of any Registrable
Securities, the Purchaser shall, as expeditiously as reasonably
possible:
(A) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable and
diligent efforts to cause such registration statement to become
effective, and, upon the request of the Holder of a majority of
the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred twenty
(120) Business Days or, if earlier, until the Holder has completed
the distribution related thereto;
(B) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement for the period set forth in paragraph (A) above;
(C) furnish to the Holder such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as
the Holder may reasonably request in order to facilitate the
disposition of Registrable Securities owned by the Holder;
(D) use its reasonable and diligent efforts to register and qualify
the securities covered by such registration statement under such
59
other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holder; provided that the Purchaser
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(E) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such
offering. The Holder participating in such underwriting, shall
also enter into and perform its obligations under such an
agreement; and
(F) notify the Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of
the occurrence of any event as a result of which the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the
circumstances then existing. The Purchaser will use reasonable and
diligent efforts to amend or supplement such prospectus in order
to cause such prospectus not to include any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
6. INDEMNIFICATION
In the event any Registrable Securities are included in a registration
statement under paragraph 2:
(A) to the extent permitted by law, the Purchaser will indemnify and
hold harmless the Holder, the shareholders, members, other equity
owners, managers, officers and directors of the Holder, any
underwriter (as defined in the Securities Act) for the Holder and
each person, if any, who controls the Holder or underwriter within
the meaning of the Securities Act or the Exchange Act (each, a
"HOLDER INDEMNITEE"), against any losses, claims, damages, or
liabilities (joint or several) to which any such Holder Indemnitee
may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or
violations (each, a "VIOLATION") by the Purchaser: (i) any untrue
statement or alleged untrue statement of a material fact contained
60
in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments
or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii)
any other violation or alleged violation by the Purchaser of the
Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the
Exchange Act or any state securities law in connection with the
offering covered by such registration statement; and the Purchaser
will pay as incurred to each such Holder Indemnitee for any legal
or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability
or action; provided, however, that the indemnity agreement
contained in this paragraph 6(A) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the
Purchaser, which consent shall not be unreasonably withheld, or
which contains an admission of fault, nor shall the Purchaser be
liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by such Holder Indemnitee;
(B) to the extent permitted by law, the Holder will, if Registrable
Securities held by the Holder are included in the securities as to
which such registration qualifications or compliance is being
effected, indemnify and hold harmless the Purchaser, each of its
directors, its officers and each person, if any, who controls the
Purchaser within the meaning of the Securities Act, any
underwriter and any other holder selling securities under such
registration statement or any of such other holder's partners,
directors or officers or any person who controls such holder,
against any losses, claims, damages or liabilities (joint or
several) to which the Purchaser or any such director, officer,
controlling person, underwriter or other such holder, or partner,
director, officer or controlling person of such other holder may
become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise solely out of
and are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by the Holder
expressly for use in connection with such registration; and the
Holder will pay as incurred any legal or other expenses reasonably
incurred by the Purchaser or any such director, officer,
61
controlling person, underwriter or other holder, or partner,
officer, director or controlling person of such other holder in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this paragraph 6(B) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably
withheld: provided further, that in no event shall any indemnity
under this paragraph 6 exceed the net proceeds from the offering
received by the Holder, except in the case of willful fraud by the
Holder;
(C) promptly after receipt by an indemnified party under this
paragraph 6 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim
in respect thereof is to be made against any indemnifying party
under this paragraph 6, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right
to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing, interests
between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying
party of any liability to the indemnified party under this
paragraph 6 only to the extent of such prejudice, but the omission
so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified
party otherwise than under this paragraph 6;
(D) if the indemnification provided for in this paragraph 6 is held by
a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the
extent permitted by applicable law contribute to the amount paid
or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to
62
reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with
the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying
party or by the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; provided, that in
no event shall any contribution by the Holder hereunder exceed the
net proceeds from the offering received by the Holder, except in
the case of willful fraud by the Holder; and
(E) the obligations of the Purchaser and Holder under this paragraph 6
shall remain in full force and effect regardless of any
investigation made by the indemnified party, and shall survive
completion of any offering of Registrable Securities in a
registration statement, any transfer of any such securities and
the termination of this agreement. No indemnifying party, in the
defence of any such claim or litigation shall, except with the
consent of each indemnified party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in
respect to such claim or litigation.
7. ASSIGNMENT OF REGISTRATION RIGHTS
Notwithstanding any other provision of this agreement, the rights to
cause the Purchaser to register Registrable Securities pursuant to this
Schedule 4 may be assigned by the Holder to a transferee of at least
150,000 shares of Registrable Securities, provided that the Purchaser is
furnished with the name and address of the transferees and provided,
further, that such assignment is effecting only if further disposition
of such securities by the transferee is restricted by the Securities
Act.
8. GOVERNING LAW
Notwithstanding any other provision of this agreement, the rights and
duties described in this Schedule 4 shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
63
In witness whereof this agreement has been entered into the day and year first
above written.
SIGNED by XXXXXX XXX ) XXXXXX XXX
for and on behalf of )
XXXX.XXX )
SIGNED by ) XXXX XXX
XXXX XXX )
SIGNED by ) WU ZHENG, XXXXX
XX XXXXX, XXXXX )
64
CONFORMED COPY
DATED 12TH SEPTEMBER, 2001
XXXX.XXX
and
XXXX XXX
and
WU XXXXX, XXXXX
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SHARE PURCHASE AGREEMENT
RELATING TO 2,028,122,000
ORDINARY SHARES OF HK$0.02 EACH IN
SUN TELEVISION CYBERNETWORKS HOLDINGS LIMITED
(AS AMENDED BY AN AMENDMENT AGREEMENT DATED
28TH SEPTEMBER, 2001 BETWEEN THE PARTIES HERETO)
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Xxxxxxxxx and May
00xx Xxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxx Xxxx
(RPTJ/JPW)
CONTENTS
PAGE
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1. INTERPRETATION..................................................................1
2. SALE AND PURCHASE...............................................................6
3. CONDITIONS......................................................................7
4. CONSIDERATION...................................................................8
5. PERFORMANCE SHARES..............................................................9
6. COMPLETION.....................................................................11
7. SELLER'S AND COVENANTOR'S WARRANTIES, COVENANTS AND INDEMNITY..................13
8. PURCHASER'S WARRANTIES AND UNDERTAKINGS........................................16
9. PURCHASER'S REMEDIES...........................................................18
10. CONDUCT OF BUSINESS BEFORE COMPLETION........................................21
11. EFFECT OF COMPLETION.........................................................21
12. REMEDIES AND WAIVERS.........................................................21
13. ASSIGNMENT...................................................................22
14. FURTHER ASSURANCE............................................................22
15. ENTIRE AGREEMENT.............................................................22
16. NOTICES......................................................................22
17. ANNOUNCEMENTS................................................................24
18. CONFIDENTIALITY..............................................................24
19. COSTS AND EXPENSES...........................................................25
20. COUNTERPARTS.................................................................26
21. INVALIDITY...................................................................26
22. CHOICE OF GOVERNING LAW......................................................26
23. JURISDICTION.................................................................26
SCHEDULE 1 (COMPLETION ARRANGEMENTS)...............................................28
SCHEDULE 2 (WARRANTIES)............................................................31
PART A (SELLER WARRANTIES).........................................................31
PART B (PURCHASER WARRANTIES)......................................................45
SCHEDULE 3 (BASIC INFORMATION ABOUT THE COMPANY)...................................56
SCHEDULE 4 (REGISTRATION RIGHTS)...................................................58
