EXHIBIT 10.1
AGREEMENT AMONG
1. PACIFICNET STRATEGIC INVESTMENT HOLDINGS LIMITED ("Purchaser")
2. SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD. ("Company")
(Chinese Company Name)
3. LION ZONE HOLDINGS LIMITED ( "Holding Company")
4. Xx. Xxxx Wenming ("Seller" or "Warrantor")
FOR THE SALE AND PURCHASE 51% SHARES OF
LION ZONE HOLDINGS LIMITED
THIS AGREEMENT is made on December 14, 2005 and signed by Xx. Xxxxxx Xxxx, Xx.
Xxxx Wenming and above parties in HongKong.
THIS AGREEMENT IS AMONG:
1. PacificNet Strategic Investment Holdings Limited (Chinese Company Name), a
company existing under the laws of the British Virgin Islands whose
principal place of business is at Room 601, New Bright Building, 11 Xxxxxx
Xxxx Road, Kowloon Bay, Kowloon, Hong Kong. (hereinafter referred as the
"PURCHASER"). The Purchaser is a wholly owned subsidiary of PacificNet Inc.
("PACT"), a company incorporated under the laws of the State of Delaware in
the United States of America whose principal office is situated at 000 Xxxx
Xxxxxxx Xxxx, Xxxxx 000, Xxxxx, XX 00000-0000, the United States of
America, the shares of which are listed on the NASDAQ stock exchange in the
United States of America under the trading symbol of "PACT".
2. SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD. (Chinese Company
Name), a Wholly Owned Foreign Enterprise (WOFE) incorporated in Xxxx 0000,
Xxxxx 00 Xxxxx X Jiangsu Building, Yitian Road, Futian district, Shenzhen,
China (Chinese Address); (hereinafter referred to as the "COMPANY", or
"GHGC") Business Description of Company: GHGC operates one of the leading
Direct Response Television (DRTV) infomercial marketing companies for
financial advisory services in China, and offers a wide range of financial
advisory services including DRTV infomercials through satellite and cable
TV broadcasting, web portals, and subscription-based video streaming via
the Internet. The company also offers interactive voice response (IVR)
services via fixed and mobile phones. Holding Company rents 30-minute TV
programming time slots from the leading satellite and cable TV channels in
China to air its infomercials which advertise its DRTV hotline phone number
for viewers to contact. Calls are then routed to its large call centers for
product inquiry and order placement. Holding Company typically produces its
infomercials at its own studio production facility with a direct satellite
upload broadcast link provided by four leading satellite TV broadcasters in
China.
3. LION ZONE HOLDINGS LIMITED, a company existing under the laws of the
British Virgin Islands whose principal place of business is investment
consulting service; (hereinafter referred to as the "HOLDING COMPANY"),
which is the sole shareholder of the Company and owns 100% ownership of the
Company.
4. Xx. Xxxx WenMing (Chinese Name), a PRC citizen holding identity card ID:
440301620507419, residing at Xxxx 000, Xxxxxxxx 00, Xxxxxxxxxxxxx, Xxxxxx
xxxxxxxx, Xxxxxxxx, Xxxxx); (hereinafter referred to as the "SELLER"), who
is the sole shareholder of the Holding Company owing 30,000 shares which
represents 100% shareholder of the Holding Company;
5. Xx. Xxxx WenMing (Chinese Name), a PRC citizen holding identity card ID:
440301620507419, residing at Xxxx 000, Xxxxxxxx 00, Xxxxxxxxxxxxx, Xxxxxx
xxxxxxxx, Xxxxxxxx, Xxxxx; (hereinafter referred to as the "WARRANTOR");
WHEREAS:
1. The Company is a Wholly Owned Foreign Enterprise (WOFE) incorporated under
the laws of the People's Republic of China whose principal place of
business is at Xxxxx 00 Xxxxx X Xxxxxxx Xxxxxxxx, Xxxxxx Xxxx, Xxxxxx
xxxxxxxx, Xxxxxxxx, Xxxxx (Chinese Address). The Company is 100% wholly
owned by the Holding Company.
2. The Company has a paid-in capital of RMB 6,000,000 representing the entire
capital of the Company (the "Shares"), and is beneficially owned by the
shareholder as set out in Part III of Schedule 1 (hereinafter referred as
the "Existing Shareholders of the Company").
3. The Seller owns 30,000 ordinary shares of the Holding Company which
representing 100% outstanding shares of the Holding Company.
4. The Seller wishes to sell to the Purchaser, and the Purchaser wishes to
purchase from the Seller, 12,850 existing ordinary shares of Holding
Company (the "SALE SHARES"); and, in addition, the Holding Company agrees
to issue to the Purchaser, and the Purchaser agrees to subscribe from the
Holding Company, 5,000 ordinary shares of the Holding Company (the
"SUBSCRIPTION SHARES") (details of which are set out in Part II of Schedule
1, which in total represent 51% of the 35,000 final shares of the Holding
Company on enlarge basis, all upon the terms and subject to the conditions
set forth herein.
5. The Purchaser requires the Warrantor, jointly and severally, to give such
representations, warranties, covenants and undertakings as set out herein
as conditions to the Purchaser's entering into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual agreements and
covenants hereinafter set forth, and intending to be legally bound hereby, the
parties to this Agreement hereby agree as follows:
1 INTERPRETATION
o Restricted shares: the Escrow shares may be qualified for resale one year
after the release date subject to Rule 144 as defined by the SEC.
o The Recitals and 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 Recitals and
Schedules.
o In this Agreement except where the context otherwise requires the following
words and expressions shall have the following meanings:
"AUDITORS" Certified Public Accountant (CPA), independent auditors
approved and designated by the Purchaser;
"BVI" The British Virgin Islands;
"COMPLETION" completion of the sale and purchase of the Sale Shares and
the issuance and allotment of the Subscription Shares to the
Purchaser in accordance with Clause 5 of this Agreement;
"COMPLETION DATE" Within 45 days of the signing of this document, before 6
p.m. Beijing Time (or such later date as the parties shall
agree in writing);
"CONDITIONS" the conditions contained or referred to in Clause 4;
"CONSIDERATION" the consideration payable for the sale and purchase of the
Sale Shares and the subscription of the Subscription Shares
of the Holding Company pursuant to Clause 3, as adjusted by
clause 6;
"HONG KONG" Hong Kong Special Administrative Region of the PRC;
"HK$" Hong Kong dollars
"INTELLECTUAL PROPERTY": patents, trade marks, service marks, registered
designs, utility models, applications for any of the
foregoing and the right to apply for any of the foregoing in
any part of the world, copyright, inventions, confidential
information, know-how and business names and any similar
rights situated in any country; and the benefit (subject to
the burden) of any and all licenses in connection with any
of the foregoing;
"MATERIAL ADVERSE CHANGE": means a material adverse change in the assets,
business, prospects, financial conditions or results or
operations of the Company or any of its Subsidiaries,
including, but not limited to:
i. Pending claim against the Company or its Subsidiaries that shall
render the Company becoming insolvent;
ii. Deficiency in Cash Flow Amount or material losses generated from
operations rendering the Company or its Subsidiaries its
inability to continue as a going concern;
iii. deficiency in shareholders' equity.
"NET ASSETS" all the assets of the Company and the Subsidiaries including
intangible assets, intellectual property and goodwill less
all the liabilities of the Company and the Subsidiaries
including all contingent liabilities) at Completion as shown
by the Completion Accounts;
"RMB" Chinese Currency Renminbi Yuan
"PACT SHARES" Common shares of PacificNet Inc., traded on NASDAQ under the
symbol "PACT";
"PRC" People's Republic of China;
"SALE SHARES" the 12,850 ordinary shares of US$0.01 each in the capital of
the Holding Company ,such shares being beneficially owned by
and registered in the name of the Seller in the proportions
inter se set out in Part I
"SUBSCRIPTION SHARES" the 5,000 new ordinary shares of US$0.01 each in the
capital of the Holding Company (which together with the Sale
Shares, being 17,850 /35,000= 51% of entire issued share
capital of the Holding Company enlarged by the allotment and
issue of the Subscription Shares) to be issued to the
Purchaser;
"SUBSIDIARIES" the subsidiaries of the Holding Company.
"TAX" AND "TAXATION" includes all forms of tax, levy, duty, charge, fee,
contribution, impost or withholding of any nature now or
hereafter imposed, levied, collected, withheld or assessed
by a local, municipal, governmental, state, federal or other
body or authority in Hong Kong or elsewhere (including any
fine, penalty, surcharge or interest in relation thereto);
"US$" OR "USD" United States dollars;
"UNITED STATES" United States of America;
o Words and phrases (not otherwise defined in this Agreement) the definitions
of which are contained or referred to in the Companies Ordinance of
HongKong (Cap. 32) shall be construed as having the meanings thereby
attributed to them.
o References in this Agreement to ordinances and to statutory provisions
shall be construed as references to those ordinances or statutory
provisions as respectively as modified (on or before the date hereof) or
re-enacted (whether before or after the date hereof) from time to time and
to any orders, regulations, instruments or subordinate legislation made
under the relevant ordinances or provisions thereof and shall include
references to any repealed ordinance or provisions thereof which has been
so re-enacted (with or without modifications).
o The headings are for convenience only and shall not affect the construction
of this Agreement.
o All representations, undertakings, warranties, indemnities, covenants,
agreements and obligations given or entered into by more than one person
are given or entered into jointly and severally.
o Except where the context otherwise requires words denoting the singular
include the plural and vice versa; words denoting any one gender include
all genders; words denoting persons include incorporations and firms and
vice versa.
o Reference to clauses, sub-clauses, paragraphs and schedules are (unless the
context requires otherwise) to clauses, sub-clauses, paragraphs and
schedules of this Agreement.
o The expressions the "Holding Company", the "Company", the "Seller" and the
"Purchaser" unless the context requires otherwise shall include their
successors, personal representatives and permitted assigns.
o The schedules and appendices form part of this Agreement.
2 SALE OF SHARES AND SUBSCRIPTION OF THE SUBSCRIPTION SHARES
2.1 Subject to the terms of this Agreement, the Seller shall sell as
beneficial owner and the Purchaser (relying on the representations,
warranties, agreements, covenants, undertakings and indemnities
hereinafter referred to) shall purchase the Sale Shares free from all
options, liens, charges, pledges, claims, agreements, encumbrances,
equities and other third party rights of any nature whatsoever and
together with all rights of any nature whatsoever now or hereafter
attaching or accruing to it including all rights to any dividends or
other distribution declared paid or made in respect of them after the
date of this Agreement.
2.2 Subject to and upon the terms and conditions of this Agreement, the
Purchaser shall subscribe for and the Holding Company shall allot and
issue the Subscription Shares free from all options, liens, charges,
pledges, claims, agreements, encumbrances, equities and other third
parties rights of any nature whatsoever subject to and upon the terms
and conditions of this Agreement.
2.3 The Subscription Shares shall be allotted and issued fully paid, and
shall rank pari passu in all respects among themselves and with the
Shares in issue on the date of allotment and issue, including the
right to receive all dividends, distributions and other payments made
or to be made the record date for which falls on or after the date of
such allotment and issue.
3 CONSIDERATION
3.1 Valuation Basis: The purchase consideration for 51% of the equity
interest of Holding Company is USD$10,200,000, valued at five times of
51% of the anticipated future annual net profit of Holding Company
whereas Holding Company guarantees to generate annual net profit of
USD$4,000,000, and provides for an adjustment to the purchase price in
the event that Holding Company does not achieve an annual net profit
of $4,000,000 during fiscal year 2006. The purchase consideration is
payable 35% in cash and 65% in restricted shares of PACT, equivalent
to 825,000 restricted PACT shares valued at USD$8 per share. The
purchase price is payable upon achievement of certain quarterly
earn-out targets based on net profits as set out in Table 1.
3.1.1 Cash Payment for the Purchaser to purchase the Sale Shares (the "Sale
Shares", defined as 12,850 ordinary shares) from the Seller:
USD$2,100,000 payable to the Seller via company check or wire transfer
according to the following payment schedule: (i) USD$775,000 within 15
days after the completion as defined in Clause 5 of this agreement.
(ii) USD$ 700,000 within 30 days after the success completion of the
US GAAP Audited Financial Report for Fiscal Year ended December 31,
2005 by an independent US CPA designated by the Purchaser, (iii)
USD$625,000 within 30 days after the success completion of the US GAAP
Audited Financial Report for First Quarter ended March 31, 2006 by an
independent US CPA designated by the Purchaser.
3.1.2 Stock Payment: USD$6,600,000 payable in PACT Shares, equivalent to
825,000 Restricted PACT Shares (the "Escrow Shares") based on a
valuation of USD$8 per PACT share, payable to Seller or their
nominee(s) in accordance with the following:
o Within 30 days of the signing of this agreement, PURCHASER shall
deliver to the Escrow Agent (designated by the Purchaser) the
Escrow Shares, to be held under the terms of an escrow agreement
to be entered into with the Escrow Agent. The Share Release
schedule for Stock Payment for Sales Shares is illustrated in
Table 1.
o In exchange, Seller will transfer to the Purchaser 12,850
ordinary shares (the "Sale Shares") of the Holding Company, the
Holding Company will issue 5,000 new ordinary subscription shares
to the Purchaser.
3.1.3 Cash Payment: USD$1,500,000 (approximately RMB 12,060,000 using
exchange rate of 1USD= 8.04 RMB) payable to the Holding Company for
the Subscription Shares after the Completion as defined in Clause 5 of
this Agreement, according to the following schedule:USD$750,000
payable within 45 days and USD$387,000 payable within 90 days, the
remaining USD363,000 payable within 135 days after the Completion as
defined in Clause 5 of this Agreement, and;
3.2 In the event that:
3.2.1 the Purchaser fails to receive any required regulatory approvals by
the US SEC, NASDAQ, or fails to receive the approval of the
Shareholders of PACT if required; or
3.2.2 the conditions set out in Clause 4 shall not have been fulfilled by
the Completion Date or such other date as the parties hereto may agree
in writing; or
3.2.3 the transaction is not completed for any reason by January 31, 2006;
3.2.4 the Escrow Agreement shall provide that the Escrow Shares shall be
returned to the Purchaser within ten (10) days following the date on
which the Purchaser provides that such conditions have not been met;
3.3 Escrow Arrangement for Escrow Shares
Warrantor hereby agrees and acknowledges that the total Consideration
payable by the Purchaser is based on Warrantor's warranty in respect of the
Net Income of the Company as described in this section. In this regard
Warrantor hereby agrees to allow the Purchaser to appoint the Escrow Agent
upon the terms of the Escrow Agreement in the agreed terms to hold all the
Escrow Shares to be issued in accordance with the Escrow Agreement and this
Agreement on Completion and Warrantor undertakes that it shall not either
sell, transfer, charge, encumber, grant options over or otherwise dispose
of, or of any legal or beneficial interest in any of the Escrow Shares
until such part of the Escrow Shares are released by the Escrow Agent to
Warrantor in accordance with the following schedule (Table 1) upon receipt
by PACT Auditors of certification that the auditor's review relating to the
Holding Company, the Company, any Variable Interest Entities (VIEs) and its
business is acceptable and can be consolidated into PACT's audited
accounts, balance sheet and financial statements, in accordance with the US
GAAP.:
TABLE 1:
------------------------------------- ------------------------------ -----------------------------------------
Release Date Number of Shares to be Release Criteria based on Accumulated Net
Released Income
------------------------------------- ------------------------------------------------------------------------
(Upon receipt by PACT Auditors of certification that the auditor's
review relating to the Holding Company, the Company, and its business
is acceptable and can be consolidated into PACT's audited accounts,
balance sheet and financial statements, in accordance with the US
GAAP.)
------------------------------------- ------------------------------ -----------------------------------------
3.3.1. Within 45 days after 137,500 restricted Deposit shares
closing. PACT Shares
------------------------------------- ------------------------------ -----------------------------------------
3.3.2. Within 30 days of the 137,500 restricted PACT Company has achieved Cumulative Net
receipt of the Auditors Shares Profit for the 3 months ending on
certification of the Net Profit December 31, 2005 not less than USD
ending on December 31, 2005. 500,000.
------------------------------------- ------------------------------ -----------------------------------------
3.3.3. Within 30 days of the 137,500 restricted PACT Company has achieved Cumulative Net
receipt of the Auditors Shares plus any shortfall of Profit for the 3 months ending on
certification of the Net Profit for unreleased restricted PACT March 31, 2006 not less than
the 3 months ending on March 31, Shares in 3.3.2 USD$1,000,000.
2006.
------------------------------------- ------------------------------ -----------------------------------------
3.3.4. Within 30 days of the 137,500 restricted PACT Company has achieved Cumulative Net
receipt of the Auditors Shares plus any shortfall of Profit for the 6 months ending on June
certification of the Net Profit for unreleased restricted PACT March 30, 2006 not less than
the 6 months ending on June 30, Shares in 3.3.2 and 3.3.2 USD$1,000,000.
2006.
------------------------------------- ------------------------------ -----------------------------------------
3.3.5. Within 30 days of the 137,500 restricted PACT Company has achieved Cumulative Net
receipt of the Auditors Shares plus any shortfall of Profit for the 9 months ending on
certification of the Net Profit for unreleased restricted PACT September 30, 2006 not less than
the 9 months ending on Shares in 3.3.2, 3.3.3 and USD$3,000,000.
September 30, 2006. 3.3.4
------------------------------------- ------------------------------ -----------------------------------------
3.3.6 Within 30 days of the receipt 137,500 restricted PACT Company has achieved Cumulative Net
of the Auditors certification of the Shares plus any shortfall of Profit for the 12 months ending on
Net Profit for the 12 months unreleased restricted PACT December 31, 2006 not less than
ending on December 31, 2006. Shares in 3.3.2, 3.3.3, 3.3.4 USD$4,000,000.
and 3.3.5
------------------------------------- ------------------------------ -----------------------------------------
TOTAL NUMBER of PACT Shares to 825,000 restricted Company will be entitled to the entire
be released from the Escrow PACT Shares escrow shares if it has achieved
Cumulative Net Profit for the 12
months ending on December 31, 2006
not less than USD$4,000,000 and
Cumulative Net Profit for the 3 months
ending on December 31, 2005 not less
than USD 500,000
------------------------------------- ------------------------------ -----------------------------------------
Purchaser agrees that on the relevant release date (as referred to in the above
schedule) the Seller or its nominee(s) will collect the relevant portion of the
Escrow Shares from the Escrow Agent
Seller will not play any role in PACT management and will not participate into
business operation of PACT as well.
3.4 Net Profit Warranty by Warrantor, Bonus Shares
3.4.1 Warrantor warrants, represents and undertakes that:
1) The total Net Profit of the Company for the 12 months ending on, December
31, 2006 ("First Term") will not be less than USD$4,000,000.
2) The total Net Profit of the Company for the 12 months ending on, December
31, 2007 ("Second Term") will not be less than USD$4,800,000.
Purchaser maybe entitle to require Seller repurchasing entire or part of
"Sale Shares" and "Subscription Shares" received by Purchaser from Seller
base upon 5 times of valuation basis defined in Clause 3.1 of this
agreement if Company failed to reach the profit target guaranteed by
Seller.
3.4.2 Bonus Shares for Achieving Net Profit Exceeding the Profit Guarantee:
(a) Subject to Completion having occurred and the terms of this Agreement,
after the end of First Term, within 30 days of the Auditors
certification that the audited financial statements relating to
Company and its business is acceptable and can be consolidated into
PACT's audited accounts, balance sheet and financial statements, in
accordance with the US GAAP, the Warrantor shall be entitled to
subscribe for and be issued and allotted the following number of Bonus
Shares at par value based on the Net Income of the Company, according
to the following formula: Number of Bonus Shares to be issued for
First Term = ( Net Profit Amount in USD for First Term in excess of
USD$4,000,000) x 51% / ( 30-Day Volume Weighted Average Price of the
common stock of PACT beginning from the day after the end of the First
Term).
(b) The Number of Bonus Shares must not exceed 700,000 shares of the
common stock of PACT.
(c) The Purchaser shall procure PACT to issue the relevant number of Bonus
Shares to the Warrantor within 30 days after the Announcement of the
First Term Result.
3.4.3 Purchaser agrees that Purchaser will issue restricted PACT shares to
Seller and Seller will be able to loan from Purchaser base upon the Net
Cash Asset of the Company immediately prior to Completion ("Cash Asset") in
accordance to the following Calculation Formula and terms if the Net Cash
Asset of the Company ended December 31, 2005 not less than USD$7,000,000
(equal to RMB 56,000,000) which has been audited under the US GAAP by an
independent US CPA designated by the Purchaser and can be consolidated into
PACT's audited accounts, balance sheet and financial statements.
1) The Net Cash Asset of the Company shall be audited and certified by an
independent US CPA.(The audit shall be completed before the loan
release date otherwise the audit shall be undertook by the Chinese
auditor who nominated by both Purchaser and Seller.)
2) To Compensate Seller for Purchaser's taking control of 51% of net Cash
Asset, Purchaser shall issue restricted PACT shares to Seller with the
stock value that equals 51% of Cash Asset at the price of the
60-calendar-day Volume Weighted Average Price (VWAP) of PACT before
the each of the loan dates. which shall be among USD$7 to USD$9.
3) Seller will pledge all of above restricted PACT shares to Purchaser
for the purpose of loaning from Purchaser. Loan Amount = (Cash Asset)
x 51%. Schedule of loan: 30% in Feb, 30% in March, and 40% in April of
2006.
4) Concurrent to the same schedule of each of the 3 loans in (3), the
Company agrees to loan the same amounts, with equivalent value in RMB,
to Purchaser's Chinese subsidiary companies with the same terms.
5) Each of the 6 loans carries a 1-year term without interest, no monthly
repayment, and 1 lump sum final payment. In addition, Purchaser will
return all of the pledge restricted PACT shares to Seller after the
repayment of the loan to the Purchaser before the due date.
3.5 Goodwill Impairment Protection Warranties by the Warrantor
3.5.1 The Warrantor and Seller, jointly and severally, hereby agree to provide
from time to time on as needed basis an independent Goodwill Valuation
Appraisal of the business operation, including but not limited to profit,
projection model, discounted cash flow projection, and net assets of the
Holding Company and the Company, in format to the reasonable satisfaction
of the Purchaser and by an independent auditor or valuation appraiser
designated by PacificNet to determine if any Goodwill Impairment of the
Holding Company and the Company.
3.5.2 The Warrantor and Seller, jointly and severally, hereby agree to give
Goodwill Impairment Protection Warranties to the Purchaser as stated in the
following:
(I) GOODWILL OF THE COMPANY [the carrying value of the goodwill arose at
the time of inception: = [the Acquisition Price plus contingent
consideration earned subject to clauses 3.1 and 3.4.2, if any] (MINUS)
[the Fair Value of the Net Asset of the Company at the time of the
Acquisition
(II) GOODWILL IMPAIRMENT (only if positive) = Goodwill of the Company
(MINUS) [the on-going assessment of the Fair Value of Company
recognized and accepted by the auditor of PacificNet Seller and
Warrantor from time to time]
(III) For the next 3 years, there should not be any goodwill impairment as
defined above.
(IV) At any year during the three Years Term ending December 31, 2008
(herein referred as "Three Years Term"), a calculation of annual
Goodwill Impairment will be calculated by an independent auditor or
appraiser designated by Purchaser. If during the Three-Years Term, any
annual Goodwill Impairments is larger than zero (USD$0), Warrantors
shall compensate the Purchaser by transferring the equity of the
Holding Company that the Purchaser does not already own to the
Purchaser with the same value as the Goodwill Impairment for that year
(herein referred as "Compensated Shares" based on the following
formula:
(V) Such transfer of any portion of the remaining equity of the Holding
Company and the Company based on this Section shall continue on an
annual basis until the end of the three Years Term upon the occurrence
of goodwill impairment ; provided that there is a goodwill impairment
to be compensated for any given year and that the remaining equity has
not all been transferred to PacificNet as a result of this Section
(VI) The Maximum Number of Penalty Shares must not exceed 800,000 PACT.
3.6 Seller and Holding Company shall return to Purchaser all the cash and PACT
shares they obtained from Purchaser under this agreement if:
3.6.1 The Company or Holding Company is banned or in any way restricted from
conducting business under the existing or new PRC laws or legislation from
the State Administration of Foreign Exchange ("SAFE"), the State
Administration for Industry and Commerce ("SAIC"), Ministry of Commerce
("MOFCOM"), China Securities Regulatory Commission ("CSRC"), and / or other
PRC Government agencies, during the period from the signing of this
agreement to July 1, 2006 and the Company fails to change the business
model in good faith to adapt to the new regulations, which results to any
shortcoming of the accumulated Net Profit in the schedule in 3.3.
3.6.2 The existing shareholders of the Company and Holding Company fail to
transfer the shares they hold to Holding Company or to the Purchaser
respectively based upon this agreement.
3.7 In case of any stock split or reverse stock split by PACT, the number of
PACT shares to be issued, awarded, or returned will be adjusted according
to the stock split ratio.
3.8 Use of Proceeds: USD$1,500,000 of the cash from Purchaser to the Holding
Company will be used for general operation mainly to acquire hardware
components and for market development.
3.9 Force Majeure: If shortfall of Net Income is caused by natural disasters,
any major changes of governmental rulings, or other force majeure factors
the Purchaser shall waiver the Warrantor's liabilities. If purchaser cannot
fulfill the cash payment obligation in 3.1 due to natural disasters, any
major changes of governmental rulings and other force majeure factors, the
seller, Warrantor, company, and holding company shall waiver the
purchaser's liabilities.
4 CONDITIONS
4.1 Any of the obligations of Purchaser hereunder is conditional upon:
4.1.1 the Purchaser being satisfied in its sole and absolute discretion with the
results of a legal and financial due diligence review to be conducted by it
on the Holding Company and the Company;
4.1.2 if required, the relevant stock exchange, government and securities
authority and regulator in the United States granting listing of the PACT
Shares to be issued herein;
4.1.3 if required, a resolution at a meeting of the Directors of PACT approving
this Agreement, the purchase of the Sale Shares and the Subscription of the
Subscription Shares, creating and giving authority for the issue of the
Escrow Shares, the implementation of the transactions contemplated
hereunder and all other matters incidental hereto in accordance with the
provisions of PACT's articles of incorporation and Bylaws and such rules,
regulations and laws in force from time to time in the United States and
which apply to PACT;
4.1.4 if required, the shareholders of PACT at a meeting of shareholders
approving this Agreement, the purchase of the Sale Shares, creating and
giving authority for the issue of the Escrow Shares, the implementation of
the transactions contemplated hereunder and all other matters incidental
hereto in accordance with the provisions of PACT's articles of
incorporation and Bylaws and such rules, regulations and laws in force from
time to time in the United States and which apply to PACT;
4.1.5 all amounts outstanding to the Seller by the Company have been either
repaid or otherwise waived; and
4.1.6 the Purchaser being satisfied at its sole and absolute discretion that the
accounts of the Company can be consolidated into PACT's audited financial
statement, including balance sheet and income statements in accordance with
the US GAAP.
4.2 The Company undertake to disclose in writing to the Purchaser anything
which will or may prevent any of the conditions from being satisfied at or
prior to Completion, as applicable, immediately upon the Warrantor and/or
the Company becoming aware of such a situation.
4.3 From the date of this Agreement until Completion, except for the
transactions described herein or otherwise with the prior written consent
of the Purchaser:
4.3.1 The Warrantor warrants and undertakes that they will cause the Company to:
1 conduct its Business in the ordinary course and consistent with past
practices;
2 use its best efforts to maintain in full force and effect the
existence of the Company;
3 promptly and timely prepare and file any financial reports and
franchise tax returns and pay all taxes and assessments, if any,
required to maintain the existence of the Company;
4 keep records in which true and correct entries will be made of all
material transactions by and with the Company;
5 duly observe all material requirements of governmental authorities
unless contested in good faith by appropriate proceedings with the
consent of the Purchaser;
6 promptly pay and discharge, or cause to be paid and discharged, when
due and payable, all lawful taxes, assessments and governmental
charges or levies imposed upon the income, profits, property or
business of the Company unless contested in good faith by appropriate
proceedings with the consent of the Purchaser;
7 at all times comply with the provisions of all contracts, agreements
and leases to which the Company is a party, unless contested in good
faith by appropriate proceedings with the consent of the Purchaser;
and
8 to use best endeavors to procure that the management officers of the
Company at the date of this Agreement remain and continue as officers
after completion;
4.3.2 The Warrantor warrants and undertakes to cause the Company not to:
1 modify its Memorandum or Articles of Incorporation or Bylaws;
2 cause or permit its liquidation or dissolution;
3 institute, or permit to be instituted against it, any proceeding,
which remains undismissed for a period of 30 days after the filing
thereof, seeking to adjudicate it as bankrupt or insolvent, or seeking
liquidation, winding-up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of any order or relief or the
appointment of receiver, trustee or other similar official for it or
for any substantial part of its property;
4 make a general assignment for the benefit of its creditors;
5 except as agreed in this Agreement, declare or pay any dividend or
make any distribution to any of its shareholders;
6 issue, redeem, sell or dispose of, or create any obligation to issue,
redeem, sell or dispose of, any shares of its capital stock (whether
authorized but unissued or held in treasury);
7 effect any stock split, reclassification or combination;
8 modify its agreements and other obligations with respect to its
long-term indebtedness, including but not limited to its loan
agreements, indentures, mortgages, debentures, notes and security
agreements.
9 Negotiate or enter into an agreement with another party related to the
sale of the Company.
4.4 Until Completion, the Warrantor, the Company shall use its best efforts to
ensure that the Purchaser, its agents and representatives are given
reasonable access to such documents relating to the Company, as the
Purchaser shall request. The Company will assist the Purchaser's auditor to
complete the audit report of the Company in accordance with the US GAAP
4.5 The Warrantor warrants, represents and undertakes that there shall have
been no Material Adverse Change in the assets or the business, prospects,
financial condition or results of operations of the Company.
4.6 The Purchaser shall be entitled to rescind this Agreement by notice in
writing to the Seller, if prior to Completion it appears that any of the
Warranties is not or was not true and accurate in all respects or if any
act or event occurs which, had it occurred on or before the date of this
Agreement, would have constituted a breach of any of the Warranties or if
there is any material non fulfillment of any of the Warranties which (being
capable of remedy) is not remedied prior to Completion.
5 COMPLETION
5.1 Subject to the terms of this Agreement and subject to the approval of
the board of directors of the Purchaser, Completion shall take place
pursuant to this clause at the offices of the Purchaser 's Legal
Counsel on the Completion Date.
5.2 Upon Completion the Seller and the Holding Company shall deliver to the
Purchaser:
a) duly completed and signed transfers of the Sale Shares by the
registered holders thereof in favor of the Purchaser or as it may
direct together with the relative bought/sold notes and share
certificates;
b) duly completed, executed and validly issued share certificates of the
Sale Shares and the Subscription Shares in favor of the Purchaser or
as it may direct;
c) certified true copies of the minutes of meetings of the Holding
Company's board of directors and shareholders approving the transfer,
assignment and allotment of the Sale Shares to the Purchaser;
d) certified true copies of the minutes of meetings of the Holding
Company's board of directors and shareholders approving this Agreement
and all matters herein contemplated and the transfer and assignment of
its Sale Shares and the issuance and allotment of the Subscription
Shares to the Purchaser.
e) Holding Company will transfer to Purchaser its Company Kit including
shareholders registry, director list, company seal and chop, by-laws,
etc.
5.3 Upon Completion the Purchaser shall deliver to the Seller and the Holding
Company:
a) a copy of resolutions of the board of directors of the Purchaser
approving this Agreement and other documents necessary for the purpose
of effecting this transaction and authorizing a person or persons to
execute the same (with seal, where appropriate) for and on its behalf.
b) an application letter duly signed by the Purchaser for the
Subscription of the Subscription Share.
6 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 The Company, the Seller, and the Warrantor, jointly and severally,
represent, warrant and undertake to the Purchaser (to the intent that the
provisions of this clause shall continue to have full force and effect
notwithstanding completion) that:
6.2 The Warranties is true and accurate in all respects and not misleading at
the date of this Agreement and will continue to be true and accurate in all
respects and not misleading up to and including the Completion Date;
6.3 the Company and the Seller have and will have full power and authority to
enter into and perform this Agreement and the Deed of Indemnity which
constitute or when executed will constitute binding obligations on them in
accordance with their respective terms;
6.4 the Sale Shares and the Subscription Shares will constitute 51 percent of
the entire issued and allotted capital of the Holding Company, enlarged by
the allotment and issuance of the Subscription Shares, on a fully diluted
basis,
6.5 the Holding Company owns 100 percent of the entire issued and allotted
capital of the Company on a fully diluted basis.
6.6 there have been no options, warrants, pledges, bonds or any instrument or
agreement of the like whatsoever granted to any third party by any of the
Seller in favor of any third party in respect of any shares in the Holding
Company;
6.7 there is and at completion will be no pledge, lien or other encumbrance on,
over or affecting the Sale Shares and there is and at completion will be no
agreement or arrangement to give or create any such encumbrance and no
claim has been or will be made by any person to be entitled to any of the
foregoing;
6.8 the Seller will be entitled to transfer the full legal and beneficial
ownership of the Sale Shares to the Purchaser on the terms of this
Agreement without the consent of any third party and the Holding Company
will be entitled to issue the Subscription Shares without any further
consent or approval when issued, the subscription shares shall be dully
issued and authorized;
6.9 The Seller acknowledges that the Escrow Shares have not been registered and
are "Restricted Securities";
6.10 The information in Schedule 2 relating to the Company is true and accurate
in all respects;
6.11 The Holding Company is the 100% beneficial owner of the shares of the
Company free from any encumbrance, and the Seller is the 100% beneficial
owner of the shares in the Holding Company free from any encumbrance;
6.12 The contents of the Disclosure Letter and of all accompanying documents are
true and accurate in all respects and fully, clearly and accurately
disclose every matter to which they relate;
6.13 The Company are duly incorporated and validly existing in its relevant
jurisdiction of incorporation;
6.14 The Holding Company or Company will implement all the necessary financial
control procedures, certification and representation letters, as required
by PacificNet's management, audit committee, independent auditor, the US
SEC, and the USA, Hong Kong and China governments.
6.15 Force Majeure: If Corporate Goodwill Impairment is caused by natural
disasters, changes of governmental rulings and other force majeure factors,
the Purchaser shall waiver liabilities of the Seller, Warrantor, the
Company and any other related parties.
6.16 The Purchaser represents warrants and undertakes to the Seller Warrantor
and Company (to the intent that the provisions of this clause shall
continue to have full force and effect notwithstanding completion) that:
6.17 The Purchaser is true and accurate in all respects and not misleading at
the date of this Agreement and will continue to be true and accurate in all
respects and not misleading up to and including the Completion Date
6.18 The Purchaser has and will have full power and authority to enter into and
perform this Agreement and the Deed of Indemnity which constitute or when
executed will constitute binding obligations on them in accordance with its
respective terms;
6.19 there have been no options, warrants, pledges, bonds or any instrument or
agreement of the like whatsoever granted to any third party by the
Purchaser in favor of any third party in respect of any PACT restricted
shares;
6.20 the Purchaser will be entitled to transfer the full legal and beneficial
ownership of the PACT restricted Shares to the Seller on the terms of this
Agreement without the consent of any third party.
6.21 The contents of the Disclosure Letter and of all accompanying documents are
true and accurate in all respects and fully, clearly and accurately
disclose every matter to which they relate;
6.22 The consideration promised by Purchaser shall be lawful and be paid to
Seller;
6.23 Force Majeure: If delay payment by Purchaser is caused by natural
disasters, changes of governmental rulings and other force majeure factors,
the Seller, Warrantor, the Company and any other related parties shall
waiver liabilities of Purchaser.
7 RESTRICTIONS
7.1 The Company, the Seller, and the Warrantor undertakes to the Purchaser that
they shall not without the prior written consent of the Purchaser for a
period of 2 years after Completion either solely or jointly with or on
behalf of any other person, firm, company, trust or otherwise whether as
director, shareholder, employee, partner, agent or otherwise (The Purchaser
shall permit and agree the continuing existence of the Seller's
directorships and shareholdings in any other company which have been
established before the date on which this agreement is signed no matter
whether those company' business is in competition with the Company or
not.):
7.1.1 carry on or be engaged or interested directly or indirectly in any
capacity (except as the owner of shares or securities listed or dealt
in on a stock exchange in Hong Kong, PRC, and USA or elsewhere held by
way of investment only) in any business which shall be in competition
within Greater China and USA with the Company or its subsidiaries in
the current Business of the Company;
7.1.2 solicit or entice or endeavor to solicit or entice away from the
Company or its subsidiaries any employee, officer, manager, consultant
(including employees who are directors) of the Company or its
subsidiaries or any persons whose services are otherwise made
available to the Company or its subsidiaries;
7.2 The Company, the Seller, and the Warrantor further undertake to the
Purchaser that:
7.2.1 they will not at any time hereafter make use of or disclose or
divulge to any person other than to officers or employees of the
Company whose province is to know the same any information relating to
the Company or the subsidiaries other than any information properly
available to the public or disclosed or divulged pursuant to an order
of a court of competent jurisdiction;
7.2.2 they will not at any time hereafter in relation to any trade,
business or company use a name, trademark, brand name, or internet
domain name including the word or symbol, or logo design
GuHaiGuanChao (Chinese Name) and XXXX.xx, XxxxxXxXx.xx, or any similar
word [or symbol] in such a way as to be capable of or likely to damage
the benefit of the Company or any subsidiary and shall use all
reasonable endeavors to procure that no such name shall be used by any
person, firm or company with which they are connected;
7.2.3 they will procure that its subsidiaries, holding company and any
other affiliated companies and its employees will observe the
restrictions contained in this Clause 7;
7.2.4 they shall not do anything which might prejudice the goodwill of the
Company or its subsidiaries.
7.3 Each and every obligation under this clause shall be treated as a separate
obligation and shall be severally enforceable as such and in the event of
any obligation or obligations being or becoming unenforceable in whole or
in part such part or parts as are unenforceable shall be deleted from this
clause and any such deletion shall not affect the enforceability of all
such parts of this clause as remain not so deleted.
7.4 The restrictions contained in this clause 7 are considered reasonable by
the parties but in the event that any such restriction shall be found to be
void but would be valid if some part thereof were deleted or the area of
operation or the period of application reduced such restriction shall apply
with such modification as may be necessary to make it valid and effective.
7.5 Nothing in this Clause 7 shall apply to:
7.5.1 the direct or indirect holding of any securities listed on a
recognized stock exchange by the Company, the Seller, and the
Warrantor; or
7.5.2 the holding by the Company, the Seller, and the Warrantor of any
securities of any member of the Group; or
7.5.3 the use or disclosure of any information which can be shown by Seller
to be in the public domain (otherwise than in consequence of any
breach by any of the Company, the Seller, and the Warrantor of any
provisions of this Agreement).
8 RIGHT OF FIRST REFUSAL
8.1 Before any shares in the Holding Company may be sold or otherwise
transferred or disposed of by any of the Shareholders of the Company
("Selling Shareholder", including but not limited to the Seller), the
Purchaser shall have a right of first refusal ("Right of First Refusal") to
purchase such shares ("Offered Securities") in accordance with Clauses
(8.2) and (8.3) below.
8.2 Before the transfer or disposal of any Offered Securities, the Selling
Shareholder shall deliver to the Purchaser and the Company a written notice
("Transfer Notice") stating:
8.2.1 the Selling Shareholder's intention to sell or otherwise dispose of
such Offered Securities;
8.2.2 the name of each proposed purchaser or other transferee (a "Proposed
Transferee");
8.2.3 the number of Offered Securities to be transferred to each Proposed
Transferee; and
8.2.4 the cash price and/or other consideration for which the Selling
Shareholder proposes to transfer the Offered Securities to the
Proposed Transferee ("Offered Price").
8.3 The Transfer Notice shall certify that the Selling Shareholder has received
a firm offer from the Proposed Transferee(s) and in good faith believes a
binding agreement for the Disposal is obtainable on the terms set forth in
the Transfer Notice. The Transfer Notice shall also include a copy of any
written proposal, term sheet or letter of intent or other agreement
relating to the proposed disposal.
8.4 The Purchaser is entitled to purchase the Offered Securities at the same
Offered Price and upon the same terms that the Selling Shareholder is
proposing or is to dispose of such Offered Securities within 45 calendar
days after delivery of the Transfer Notice ("Purchase Right Period"). If
any of the Offered Securities proposed in the Transfer Notice to be
transferred are not purchased by the Purchaser, then after expiry of the
Purchase Right Period, the Selling Shareholder may sell or otherwise
transfer or dispose of such Offered Securities which have not been
purchased by the Purchaser at the Offered Price or at a higher price,
provided that such sale or other transfer shall be completed and
consummated within 45 days after the expiry of Purchase Right Period, and
provided further that the Proposed Transferee agrees in writing that the
provisions of this Agreement and any shareholder's agreement between the
Purchaser and the Seller regulating their respective rights within the
Company (if any) shall continue to apply to the Offered Securities that are
transferred to the Proposed Transferee. If the Offered Securities described
in the Transfer Notice are not transferred to the Proposed Transferee
within such 45 day period, such Selling Shareholder will not transfer or
dispose of any Offered Securities unless such securities are first
re-offered to the Purchaser in accordance with Clauses (8.2) and (8.3)
above.
8.5 Notwithstanding the procedures set forth above, if one Party wishes to
transfer its ownership shares to its affiliate, the other Party shall
promptly give consent to such proposed transfer and waive the right of
first refusal. "Affiliate" shall mean any company which, through ownership
of voting stock or otherwise, is controlled by, under common control with,
or in control of, a Party; "control" shall mean ownership, directly or
indirectly, of more than fifty percent (50%) of the securities having the
right to vote for the election of directors in the case of a corporation,
and more than fifty percent (50%) of the beneficial interests in the
capital in the case of a business entity other than a corporation.
9 BOARD OF DIRECTORS, OPERATION AND MANAGEMENT
9.1 The board of directors of the Holding Company and Company shall be the
highest authority of their respective Company and shall determine all major
issues of the respective Company, subjected to applicable laws.
9.2 The board of directors of the Holding Company and Company shall consist of
Seven (7) directors nominated by their respective shareholders. The
Purchaser shall nominate 4 directors, the Company Legal Representative, and
the Company Financial Officer (CFO) and Financial Controller. The Warrantor
shall nominate 3 directors.
9.3 The boards of directors shall meet at least once every quarter. A Board
meeting may be called by any director with 3 days notice.
9.4 The Company shall establish an operation and management structure to be
responsible for the daily operation and management of the respective
Company. The officers of the Company shall include one (1) General Manager,
one (1) Vice General Manager, and one Chief Financial Officer.
9.5 The task of the General Manager shall be to carry out the various
resolutions of the board of directors of the respective company and
organize and direct the daily operation and management of the respective
company. The operation and management structure may consist of certain
departments, the managers for which shall be responsible for the work of
the relevant departments, handle matters delegated by the General Manager
and the Vice General Manager, and report to the General Manager and the
Vice General Manager.
9.6 In the event of graft or serious dereliction of duty, the General Manager,
the Vice General Manager, and the Legal Representative of Holding Company
or Company may be removed and replaced by the board of directors of the
respective company with a resolution at any time.
9.7 The Warrantor and Seller jointly warrant that the PAICIFCNET COMPANY-WIDE
ACCOUNTING, FINANCIAL AND INTERNAL CONTROL POLICIES AND STANDARD PROCEDURES
(Schedule 5) and any related or additional SEC regulations on Internal
Control (eg. SEC's Xxxxxxxx-Xxxxx Act) will be followed and implemented:
The Company, Warrantor and Seller, hereby jointly agree to and accept the
following PacificNet Member Company Financial Accounting Monthly Reporting
And Internal Control Requirements, and agree to all the PacificNet
financial accounting and internal control requirements in accordance with
the terms and conditions outlined in the PacificNet Accounting Policy, Code
of Conducts and Code of Ethics. Furthermore, Warrantor and Seller agree to
certify that all the information we provide to PacificNet shall be true and
accurate to our best knowledge and may be subject to verification.
Warrantor and Seller agree to perform my best capability to fulfill all the
job duties for as listed in the above requirement list. Warrantor and
Seller agree to abide by PacificNet's monthly reporting requirements, and
Warrantor and Seller agree to provide all the required information
according to PacificNet's Member Company Financial Accounting Monthly
Reporting And Internal Control Requirements, as outlined below: PacificNet
Member Company Financial Accounting Monthly Reporting And Internal Control
Requirements, and Standard Operation Procedures:
1. Balance Sheet, including detailed list of assets (*Required monthly,
within 15 days after the end of each month)
2. Detailed Profit & Loss Account (P&L)for the month, and year-to-date.
Must include the MD&A section (MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION). (*Required monthly, within 15 days after the end
of each month) Management must discuss and analyze the financial
results. You need to tell us, in this MD&A section, how you are
performing compared to last quarter, tax issues, etc. Must include
Related party transactions (RPT), and Management's Discussion and
Analysis.
3. Cash Flow Statement for the month, and year-to-date (*Required
monthly, within 15 days after the end of each month)
4. Bank statements as for the month, and corresponding bank
reconciliation statements (*Required monthly, within 15 days after the
end of each month) (* Must provide certified true copy of original
statements)
5. Detailed breakdown of Accounts Receivable (AR) and Accounts Payable
(AP), AR aging reports and net of allowance for doubtful accounts, and
consider whether any provision required. (*Required monthly, within 15
days after the end of each month)
6. Material Contracts, Sales Agreements, Invoices, Purchase Orders, Legal
Disputes or Lawsuits, Tenancy agreements, Labor Issues, Tax Issues.
Any necessary schedules and documents. (*Required monthly, within 15
days after the end of each month) (* Must provide certified true copy
of original documents)
7. Updated Company Group Chart, including all subsidiaries, affiliates,
joint ventures, and related party companies, % ownership, list of
shareholders, directors and officers. Report of equity movement
(number of shares, options, warrants, any new issuance and transfer)
for each member company. (*Required monthly, within 15 days after the
end of each month)
8. Minutes of shareholders' and directors' meeting for each subsidiary
and affiliated companies. Each company must hold a minimum of one
Board of Directors meeting per quarter to review the quarterly
financial reports before submitting to PacificNet Inc. for
consolidation and auditors reviews. (*Required quarterly, within 15
days after the end of each quarter)
9. Revenue/Profit forecast for the current and next quarter, and for the
whole year. (*Required quarterly, within 15 days after the end of each
quarter. Must provide immediate update, revision if you see an
important change in your forecast.)
10. Human Resources (HR) report: must provide complete staff directory
(including consultants, contractors and part-time employees) , name,
title, job function/description, compensation (including salary,
bonus, benefits, reimbursement, stock and options), telephone, mobile,
instant message (MSN, SkypeID), job function, etc. Updated Employee
Directory and HR Company Organization Chart. (*Required monthly,
within 15 days after the end of each month)
11. Important Business Development News, Press Releases, Events
Announcements, Media Coverage, etc.
12. Implementation of PacificNet Company-wide Standard Financial
Accounting Software: we agree to implement PACT company wide, standard
financial accounting software, intranet, VPN, and office automation
(OA) systems as required by PacificNet.
13. Adoption and proper display of PacificNet corporate identity, standard
trade name, brand name, company name, symbol and signage, domain name,
logo and trademark, on all company facilities, printed materials,
media coverage, press releases, business cards, web sites, as required
by PacificNet.
10 INDEMNITY
The Seller and the Warrantor will indemnify and will keep indemnified and
save harmless the Purchaser (for itself and as trustee for the Company 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 Warranties or covenants or the inaccuracy of any
representation of the Seller or the Warrantor contained or referred to in
this Agreement or in any agreement, instrument or document delivered by or
on behalf of the Seller or the Warrantor in connection therewith including,
but not limited to, any diminution in the value of the assets of and any
payment made or required to be made by the Purchaser or the Company or any
Subsidiary and any costs and expenses incurred as a result of such breach
provided that the indemnity contained in this clause 9 shall be without
prejudice to any other rights and remedies available to the Purchaser;
11 COSTS
The Purchaser shall pay for all the due diligence costs, including auditing and
valuation appraisal costs, fairness opinion letter, legal costs, and expenses
and other incidental costs and disbursements in relation to the negotiations
leading up to the purchase of the Sale Shares and to the preparation, execution
and carrying into effect of this Agreement and all the related supplementary
agreements and attachments.
12 SEVERABILITY
In the event that any provision of this Agreement is held to be unenforceable,
illegal or invalid by any court of competent jurisdiction, the validity,
legality or enforceability of the remaining provisions shall not be affected nor
shall any subsequent application of such provisions be affected. In lieu of any
such invalid, illegal or unenforceable provision, the parties hereto intend that
there shall be added as part of this Agreement a provision as similar in terms
to such invalid, illegal or unenforceable provision as may be possible and be
valid, legal and enforceable.
13 COUNTERPARTS AND COMPLETE AGREEMENT
This Agreement may be executed in counterparts with the same force and effect as
if executed on a single document and all such counterparts shall constitute one
and the same instrument.
COMPLETE AGREEMENT
This Agreement represents the entire and complete agreement between the parties
in relation to the subject matter hereof and supersedes any previous agreement
whether written or oral in relation thereto. No variations to this Agreement
shall be effective unless made or confirmed in writing and signed by all the
parties hereto.
14 NOTICES
Any notice required to be given under this Agreement shall be sufficiently given
if delivered in person, forwarded by registered post or sent by overnight
international couriers or facsimile transmission to the relevant party at its
address, or fax number set out below (or such other address as the addressee has
by five days prior written notice specified to the other parties) :
To the Purchaser:
Attn: Xxxxxx Xxxx, President
PacificNet Strategic Investment Holdings Limited and PacificNet Inc.
000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx, XX 00000, XXX
To Company: SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD.
(Chinese Company Name)
Address: Room 2704,Level 00 Xxxxx X Xxxxxxx Xxxxxxxx, Xxxxxx Xxxx, Xxxxxx
xxxxxxxx, Xxxxxxxx, Xxxxx
Attn: Xx. Xxxx Wenming, Chairman of the Board
To the Holding Company, Lion Zone Holdings Limited
Address: X.X.Xxx 957, Offshore Incorporations Centre, Road Town, Tortola,
British Virgin Islands
Xx. Xxxx Wenming, Chairman of the Board
To the Seller and Warrantor, and Xx. Xxxx Wenming
Address: Xxxx 000, Xxxxxxxx 00, Xxxxxxxxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxxx,
Xxxxx
15 SETTLEMENT OF DISPUTES
The formation of this Agreement and its Appendices and related agreements, and
the validity, interpretation, performance and settlement of disputes thereof
shall be governed by the laws of the Hong Kong SAR. Any disputes arising out of
or in connection with this Agreement shall be resolved through friendly
consultations by the Parties; if no agreement can be reached through
consultations within thirty (30) days after the occurrence of such dispute,
either Party shall have the right to submit such dispute to the International
Economic and Trade Arbitration Commission Hong Kong Branch for arbitration in
Hong Kong in accordance with its procedures of arbitration. The arbitral award
shall be final and binding upon both Parties.
16 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the Hong Kong SAR.
IN WITNESS WHEREOF, the Purchaser, the Holding Company, the Company, the
Seller and the Warrantor have duly executed, or have caused to be duly executed
by their respective officers thereunto duly authorized, this Agreement as of the
date first written above.
SIGNATURE PAGE
--------------
THE PURCHASER: PACIFICNET STRATEGIC INVESTMENT HOLDING LIMITED AND PACIFICNET
INC.
By: /s/ Xxxxxx Xxxx
------------------------------------------
Name: Xxxxxx Xxxx
Title: President
COMPANY: SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD.
(Chinese Company Name)
By: /s/ Xxxx Xxxxxxx
------------------------------------------
Name: Xx. Xxxx Wenming
Title: Legal Representative and Chairman of the Board
THE HOLDING COMPANY: LION ZONE HOLDINGS LIMITED
By: /s/ Xxxx Xxxxxxx
------------------------------------------
Name: Xx. Xxxx Wenming
Title: Legal Representative and Chairman of the Board
THE SELLER XXXX XXXXXXX, SIGNATURE: /s/ Xxxx Xxxxxxx
THE WARRANTOR: XXXX XXXXXXX, SIGNATURE: /s/ Xxxx Xxxxxxx
SCHEDULE 1
PART I
THE HOLDING COMPANY SHAREHOLDERS AND SHARES
Company Name: LION ZONE HOLDINGS LIMITED
--------------------------------------------------------------------------------
Name of Shareholder Number of Shares held by the Shareholder
--------------------------------------------------------------------------------
Xx. Xxxx Wenming 100% ordinary shares (30,000 shares)
--------------------------------------------------------------------------------
PART II
The Sale Shares
12,850 ordinary shares of US$1 each of LION ZONE HOLDINGS LIMITED
The Subscription Shares
5,000 ordinary shares of US$1 each of LION ZONE HOLDINGS LIMITED
PART III
THE COMPANY SHAREHOLDERS AND SHARES
Company Name: SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD.
(Chinese Company Name)
--------------------------------------------------------------------------------
Name of Shareholders (1) Percentage of Shares held by the Shareholder
--------------------------------------------------------------------------------
LION ZONE HOLDINGS LIMITED 100%
--------------------------------------------------------------------------------
SCHEDULE 2
THE HOLDING COMPANY
NAME: LION ZONE HOLDINGS LIMITED
INCORPORATED IN: British Virgin Islands
NO. ISSUED SHARES: 30,000 ordinary shares
US$ 1 per share
NOMINAL SHARE VALUE: US$1
ISSUED SHARE CAPITAL: US$1
REGISTERED OFFICE: X.X.Xxx 957,Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands
Xx. Xxxx Wenming, Chairman of the Board Lion Zone Holdings Limited (B.V.I.)
REGISTERED SHAREHOLDERS:
Xxxx Xxxxxxx--ordinary shares (30,000 shares)
Directors: Xxxx Xxxxxxx
Xxx XXxxx
SCHEDULE 3
CONFIDENTIALITY, NON-COMPETITION, AND NON-CIRCUMVENTION AGREEMENT
Dated ________________________, 2005
Company Name: SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD.
(Chinese Company Name)
Company Address: Xxxxx 00 Xxxxx X Xxxxxxx Xxxxxxxx, Xxxxxx Xxxx, Xxxxxx
xxxxxxxx, Xxxxxxxx, Xxxxx
This Confidentiality, Non-Competition and Non-Circumvent Agreement (hereby
referred to as the Agreement) is made effective on the abovementioned date (the
Effective Date) between the abovementioned Company and PacificNet Inc., with an
office located at 000 Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx, XX 00000 (hereby know
as the Parties).
Confidentiality
---------------
It is Agreed and Understood that each party owns certain confidential and
proprietary information that the other party from time to time, may need or may
have acquired in order to explore business or investment opportunity of mutual
interest.
Confidential Information means any information and/or material which is
proprietary to one party, whether or not owned or developed by itself, which is
not generally known other than by itself, and which either Party may obtain
through any direct or indirect contact with the other Party. Confidential
Information will be conspicuously identified when, or soon after, it is
originally disclosed, as "Confidential" or "Proprietary".
Confidential Information includes without limitation, business records and
plans, customer and partner lists, investor and investee lists, bank and lending
lists, trade secrets, pricing structures, business sources, computer programs,
names and expertise of employees and consultant and other technical, business,
financial, customer and product development plans, forecasts, strategies and
information. Confidential information does not include: matters of public
knowledge; information rightfully received by the Company from a third Party
without a duty of confidentiality; information independently developed by either
Party; information disclosed by operation of law; information disclosed by one
party with the prior written consent of the other party; and any other
information that the Parties agree in writing is not confidential.
The Parties understand and acknowledge that Confidential Information of
each party has been developed or obtained by such party by the investment of
significant time, effort and expense, and that the Confidential Information is a
valuable, special and unique asset of the respective Parties. Therefore, the
Parties agree to hold in confidence and not to disclose the Confidential
Information to any person, employee or entity including their affiliates,
subsidiaries, stockholders, partners, trading partners and other associated
organizations (herein referred to as affiliates) without the prior written
consent of the other Party that owns the Confidential Information for a period
of three (3) years from the Effective Date hereof unless Parties enter into a
Relationship, in which case, this Agreement remains in effect for the term of
the partnering agreement and one (1) year after the termination of said
partnering agreement or when all Confidential Information has been returned to
its owner, whichever occur first.
Immediately upon the earlier of (i) the written request of the disclosing
party or (ii) the termination of this Agreement, the receiving party will return
to the disclosing party all Confidential Information of the disclosing party and
all documents or media containing any such Confidential Information and any and
all copies or extracts thereof, which remain the property of the disclosing
party at all times.
Non-Circumvention
-----------------
Both Parties agree that neither Party shall circumvent the other Party with
regards to any transaction resulting from the disclosure of Confidential
Information from one Party to the other Party. Specifically, but without
limitation, the Company will not approach PacificNet's business partner(s),
potential investor(s) and investee(s) in circumvention of PacificNet. Each Party
undertake not to directly contact deal with transact Business with or otherwise
be involved with any Corporation, Partnership, Proprietorship, Trust,
Individual, Affiliate, or other Entity introduced by either Party without the
specific written permission of the Introducing Party. In the event of
circumvention of this agreement by either party, directly or indirectly, the
circumvented party shall be entitled to legal monetary penalty equal to the
maximum potential investment return and service it should realize from such a
transaction plus any and all expenses, including, but nut limited to, all legal
costs and expenses to recover the lost revenue.
General Provisions
------------------
This Agreement sets forth the entire understanding of the Parties regarding
confidentiality and non-circumvention. Any amendments must be in writing and
signed by both Parties. Each Party shall take reasonable steps to ensure that
their Employees, Agents, Representatives, Officers, Independent Contractors
Shareholders, Principals, Affiliates, and other Third Parties- also - abide by
the provisions of this Agreement. This Agreement shall not be assignable by
either Party, and neither Party may delegate its duties under this Agreement,
without prior written consent of the other Party. This Agreement shall remain in
effect until canceled in writing by both Parties. This agreement creates no
obligation to purchase, sell, develop, research or disclose anything. It grants
no license or right to use proprietary technology. It creates no agency or
partnership. This agreement is governed by the laws of the place that the
agreement is executed. Injunctive relief can be granted for any breach of the
agreement, as money damages would not cure the harm from the breach. It
supersedes all prior nondisclosure or similar agreements between the parties as
to the Proprietary Information disclosed after the Effective Date. It binds the
parties, their heirs, successors, subsidiaries, associates, affiliates, and
assignees. Any controversy or claim arising out of this Agreement, which could
not be settled amicably between the Parties themselves, shall be decided by
arbitration in accordance with the International Chamber of Commerce (ICC) Rules
of Arbitration and the Non-Circumvention and Non-Disclosure Laws and Provisions,
in the nearest Regional ICC Court of Administration. In any proceedings to
interpret or enforce the agreement, the prevailing party shall receive from the
other party costs and reasonable attorney fees, including costs and fees
incurred in preparation therefore and on appeal therefrom.
AGREED and ACCEPTED, by
Signature: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: President
Company: PacificNet Inc.
SHENZHEN GUHAIGUANCHAO INVESTMENT CONSULTANT CO., LTD. (Chinese Company Name)
Signature: /s/ Xxxx Xxx Ming
Name: Xxxx Xxx Ming
Title: Legal Representative and Chairman of the Board
SCHEDULE 4
[In Chinese]
SCHEDULE 5
[In Chinese]
EXAMPLE 1
[In Chinese]
EXAMPLE 2
[In Chinese]
SCHEDULE 6
Trade Marks:
Service Marks:
Copyrights:
Patents:
Software List of Functions:
