Exhibit 10.16
AGREEMENT AMONG
(1) PACIFICNET STRATEGIC INVESTMENT HOLDINGS LIMITED, AND PACIFICNET INC.
(2) GUANGZHOU SunRoom INFORMATION INDUSTRIAL CO., LTD.
(3) GUANGZHOU 3G INFORMATION TECHNOLOGY CO., LTD
(4) PACIFIC 3G INFORMATION & TECHNOLOGY LIMITED
(5) ASIAFAME INTERNATIONAL LIMITED
(6) STARGAIN INTERNATIONAL LIMITED
(7) TRILOGIC INVESTMENTS LIMITED
for the Sale and Purchase of Shares in
PACIFIC 3G INFORMATION & TECHNOLOGY LIMITED
THIS AGREEMENT is made on March 28, 2005.
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 Xxxx 0000, Xxxx Xxxx Xxxxx, 000
Xxxxxxxxx Xxxx Xxxx, Xxxx Xxxx. (hereafter 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 situate 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) Guangzhou Sunroom Information Industrial Co., Ltd. (Chinese Company
Name), a company incorporated in Guangzhou, China whose principal place
of business is 00/X, Xxxxxxx Xxxxxxxx. Xx. 000, Xxxxxx Xxxx. Tianhe
Guangzhou 510630, China (Chinese Address (hereinafter referred to as the
"Guangzhou SunRoom");
(3) Guangzhou 3G Information Technology Co., Ltd. (Chinese Company Name), a
company incorporated in Guangzhou, China whose principal place of
business is 11 Caipin Road, Science City, High & New Technology
Industrial Development Zone, Guangzhou, 510730, China (Chinese Address
(hereinafter referred to as the "Company" or "Guangzhou 3G");
(4) Pacific 3G Information & Technology Limited, a company existing under the
laws of the British Virgin Islands whose principal place of business is
00/X, Xxxxxxx Xxxxxxxx. Xx. 000, Xxxxxx Xxxx. Tianhe Guangzhou 510630,
China (Chinese Address)" (hereinafter referred to as the "Holding
Company");
(5) Sun, Zhengquan "Sun Zhengquan"((PRC ID: 420111196801105655), (PRC ID:
432503197202144812), and("Xxxx Xxxxxxxx")(PRC ID: 440823197306096917)
residents of PRC, located at Room 201, Xx. 00 Xxxxxxxxxx Xxxx, Xxxxxx,
Xxxxxxxxx, Xxxxx. at Suntek New Technology Research & Design Co, Ltd.,
Nanda Road, Shipai Tianhe, Guangzhou, Guangdong, China O-D(1)u(1)aP. and
Suntek New Technology Research & Design Co, Ltd., Nanda Road, Shipai
Tianhe, Guangzhou, Guangdong, China, respectively (hereinafter jointly
referred to as the "Warrantor"); and
(6) ASIAFAME INTERNATIONAL LIMITED, STARGAIN INTERNATIONAL LIMITED, and
TRILOGIC INVESTMENTS LIMITED Registered at OMC Xxxxxxxx, P.O. Box, 3152,
Road Town, Tortola, British Virgin Islands, respectively (hereinafter
jointly referred to as the "Seller").
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WHEREAS:
A. The Company is a private company incorporated under the laws of the
People's Republic of China whose principal place of business is Guangzhou
3G Information Technology Co., Ltd. (Chinese Name) at 11 Caipin Road,
Science City, High & New Technology Industrial Development Zone,
Guangzhou, 510730, China (Chinese Address).
B. The Company has a paid-in capital of HK$1,000,000 representing the entire
capital of the Company (the "Shares"), and is beneficially owned by
shareholder as set out in Part I of Schedule 1.
C. The Company, directly and through its various contractual arrangements
and service/consulting agreements with Guangzhou SunRoom Information
Industrial Co., Ltd. (Chinese Company Name: , a People's Republic of
China limited liability corporation ("Guangzhou SunRoom") located at , is
engaged in the business of providing value-added telecom services (VAS),
internet and mobile entertainment application development, mobile game
software design and development, mobile customer relationship management
(CRM) services for China's telecom operators, mobile marketing and
promotion services, management and consulting services, mobile internet
information technology, mobile payment and mobile point of sale (POS)
solutions, mobile consumer analytics, mobile data-mining, internet
e-commerce and mobile commerce, mobile applications based on WAP, KJava,
IVR, MS, MFLASH, short messaging services (SMS), multimedia messaging
services (MMS), outsourced game development, and other mobile value-added
services (VAS) in the PRC, and operates the following internet and mobile
gaming web sites: xxx.xx000.xxx (the "Business");
D. The Holding Company owns 100% of the Company. Therefore, the Company is a
Wholly Owned Foreign Enterprise (WOFE) of the Holding Company. ASIAFAME
INTERNATIONAL LIMITED, STARGAIN INTERNATIONAL LIMITED, and TRILOGIC
INVESTMENTS LIMITED own 27.6(=13800/50000), 41.4%(=20700/50000),
31%(=15500/50000) of the Holding Company, respectively.
E. The Seller wishes to sell to the Purchaser, and the Purchaser wishes to
purchase from the Seller, 23050 ordinary shares of the 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, 5000 ordinary shares of the Holding Company (the
"Subscription Shares") (details of which are set out in Part III of
Schedule 1), which in total represent 51% of the 55000 final shares
amount of the Holding Company, all upon the terms and subject to the
conditions set forth herein.
F. The Purchaser requires the Warrantor, jointly and severally, to give such
representations, warranties, covenants and undertakings as are set out
herein as a condition to the Purchaser's entry 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
1.1 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.
1.2 In this Agreement except where the context otherwise requires the
following words and expressions shall have the following meanings:
"BVI" The British Virgin Islands;
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"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" APRIL 30, 2005 on or 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
"RMB" Chinese Renminbi
"PACT Shares" Ordinary shares of PACT;
"PRC" People's Republic of China;
"Sale Shares" the 23050 ordinary shares of US$1.00 each in
the capital of the Holding Company (being 23050/50000
of the Holding Company that represents 46.1%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 II of Schedule 1;
"Subscription Shares" the 5000 new ordinary shares of US$1.00 each in
the capital of the Holding Company (being 5000/55000
which together with the Sale Shares, being 28050/55000
= 51% of entire issued share capital of the Holding
Company enlarged by the allotment and issue of the
Subscription Shares) to be issued to the Purchaser;
"US$" United States dollars;
"United States" United States of America;
1.3 Words and phrases (not otherwise defined in this Agreement) the
definitions of which are contained or referred to in the Companies
Ordinance (Cap. 32) shall be construed as having the meanings thereby
attributed to them.
1.4 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).
1.5 The headings are for convenience only and shall not affect the
construction of this Agreement.
1.6 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.
1.7 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.
1.8 Reference to clauses, sub-clauses, paragraphs and schedules are (unless
the context requires otherwise) to clauses, sub-clauses, paragraphs and
schedules of this Agreement.
1.9 The expressions the "Holding Company", the "Company", the "Seller" and
the "Purchaser" shall unless the context requires otherwise shall include
their successors, personal representatives and permitted assigns.
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1.10 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 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 The Consideration below for the Sale Shares and Subscription Shares of
the Holding Company shall be settled in accordance with the following
provisions that the Purchaser will pay the Seller or the Holding Company
as the case may be:
a) USD1,183,000 payable to the Seller in cash or wire transfer within
30 days after the successful Completion as defined in Clause 5 of
this Agreement, and ;
b) USD 4,182,000 payable in PACT Shares, equivalent to 522,750
Restricted PACT Shares (the "Escrow Shares") based on a valuation
of USD 8 per PACT share, payable to SELLER OR THEIR NOMINEE(S) for
the Sale Shares (23050 ordinary shares out of a total of 55000
shares of Holding Company), 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, being all the purchase consideration.
o A Common Stock Purchase Warrant to purchase 100,000 shares
("Warrant Shares") of PACT Common Stock, par value
USD0.0001 per share. The exercise price of one share of
Common Stock (the "Exercise Price") under this Warrant
shall be the 5-Day Volume Weighted Average Price of the
common stock of PACT before the signing date of this
Agreement, exercisable within 3 years from the date of
issuance.
In exchange, Seller will transfer to the Purchaser 23050 out of a
total of 55000 outstanding shares of the Holding Company;
c) USD 500,000 (approximately RMB 4,135,000 using exchange rate of
1USD= 8.27 RMB) payable to the Holding Company for the
Subscription Shares within 45 days after the Completion as defined
in Clause 5 of this Agreement, and;
3.2 In the event that:
(a) 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
(b) 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
(c) the transaction is not completed for any reason by APRIL 30, 2005;
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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;
and the Purchaser shall return the Seller 28050 shares of the Holding
Company within ten (10) days following April 30,2005.
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 :
----------------------------------- ---------------------------- ------------------------------------------------
Number of Shares to be Release Criteria based on Accumulated Net
Release Date Released Income
----------------------------------- -----------------------------------------------------------------------------
(Assuming 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. 45 days after closing. 130,050 restricted
PACT Shares
----------------------------------- ---------------------------------- ------------------------------------------
3.3.2. Within 30 days from the 98,175 restricte Company has achieved Cumulative Net
receipt of the Auditors PACT Shares Income for the 3 months ending on March
certification of the Net Income 31, 2005 not less than USD 225,000.
for the 3 months ending on March
31, 2005.
----------------------------------- ---------------------------------- ------------------------------------------
3.3.3. Within 30 days from the 98,175 restricted Company has achieved Cumulative Net
receipt of the Auditors PACT Shares plus any shortfall Income for the 6 months ending on June
certification of the Net Income of unreleased restricted PACT 30, 2005 not less than USD 648,000.
for the 6 months ending on June Shares in 3.3.2
30, 2005.
----------------------------------- ---------------------------------- ------------------------------------------
3.3.4. Within 30 days from the 98,175 restricted Company has achieved Cumulative Net
receipt of the Auditors PACT Shares plus any shortfall Income for the 9 months ending on
certification of the Net Income of unreleased restricted PACT September 30, 2005 not less than USD
for the 9 months ending on Shares in 3.3.2 and 3.3.3 1,229,000.
September 30, 2005.
----------------------------------- ---------------------------------- ------------------------------------------
3.3.5. Within 30 days from the 98,175 restricted Company has achieved Cumulative Net
receipt of the Auditors PACT Shares plus any shortfall Income for the 12 months ending on
certification of the Net Income unreleased restricted PACT December 31, 2005 not less than USD
for the 12 months ending on of Shares in 3.3.2, 3.3.3 and 3.3.4 2,000,000.
December 31, 2005.
----------------------------------- ---------------------------------- ------------------------------------------
Total Number of PACT Shares to be 522,750 restricted Company will be entitled to the entire
released from the Escrow PACT Shares escrow shares if it has achieved Cumulative
Net Income for the 12 months ending on
December 31, 2005 not less than USD
2,000,000.
----------------------------------- ---------------------------------- ------------------------------------------
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 (if the
respective Release Criteria has been fully met).
The Seller hereby appoints Xxxx Xxxx and Xxxxxx Xxxx the proxy of the
Seller for the period commencing on the date hereof and continuing for
ten (10) years (the "Proxy Term"), with full power to vote all the PACT
Shares owned by Sellers on any and all proposals brought before a
meeting of the stockholders of PACT in such manner as they, in their
sole discretion, deem proper. This proxy is irrevocable and coupled
with an interest. At any time and from time to time during the Proxy
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Term, the Seller shall execute and deliver to Xxxx Xxxx and Xxxxxx Xxxx
such additional proxies or instruments as may be deemed by them
necessary or desirable to effectuate the purposes of the proxy or
further to evidence the right and powers granted hereby.
3.4 Net Income Warranty by Warrantor, Bonus Shares, and Penalty
3.4.1 Warrantor warrants, represents and undertakes that:
(i) the total Net Income of the Company for the 12 months
ending on December 31, 2005 ("First Term") will not be less
than USD 2,000,000.
(ii) the total Net Income of the Company for the 12 months
ending on December 31, 2006 ("Second Term") will not be
less than USD 2,600,000.
3.4.2 Bonus Shares for Achieving Net Income Exceeding the Profit
Guarantee:
(i) 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 Income Amount in USD for First Term in excess of
USD 2,000,000) 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).
(ii) The Number of Bonus Shares must not exceed 100,000 shares
of the common stock of PACT.
(iii) Upon the Warrantor being entitled to subscribe for the
relevant number of Bonus Shares pursuant to the above
formula and payment of the par value on each Bonus Share to
PACT, the Purchaser shall procure PACT to issue the
relevant number of Bonus Shares to the Warrantor within 30
days of the Announcement of the First Term Result.
3.4.3 Penalty in case of Shortfall of Net Income below USD 2,600,000 for
the Second Term: In the event that the Company produces only a
portion of the annual Net Income warranted by Warrantor for the
Second Term, then Seller shall return to Purchaser the number of
PACT shares equivalent to the dollar amount of the shortfall of
the Net Income divided by USD 8 (the original per share price of
the PACT stock at the closing).
3.5 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.
3.6 Use of Proceeds: USD 500,000 of the cash from Purchaser to the Company
will be used for general operation mainly to acquire hardware components
and for market development. Purchaser will appoint financial controller
to Company.
3.7 Preemptive Right for the Purchaser to Maintain 51% Ownership: All parties
hereby agree that upon Completion, the Company shall have preemptive
rights indefinitely to purchase additional shares at a price per share
calculated at a net earning ratio of three, including new shares and
preemptive shares, in order for the Purchaser to maintain a 51% ownership
in the Company after the issuance of the new shares.
3.8 Repurchase Right of the Seller. The Purchaser has the right to subscribe
for the other 49% equity interest of the Company at the price of USD 8
per share of the common stock of PACT within two years upon completion.
The purchase consideration for the remaining 49% of the Company:
= [Profit of the Company in the last fiscal year] x 5.5 x 49% , where
5.5 = Price over Earning (PE) ratio.
. The maximum purchase consideration will be less than 10% of the total
outstanding shares of PACT. The Seller has the right to repurchase 2% out
of the 51% of total shares of the Holding Company transferred to the
Purchaser as contemplated in this Agreement at the price of USD 8 per
share of the common stock of PACT if the purchaser decides not to
subscribe for this part of equity interest of the Company two years
later.
3.9 Realization value warranty by Purchaser
(i) The Escrow Shares (the 522,750 restricted PACT shares issued by
PACT to the Seller) are subject to a one year holding period
during which the Seller may not publicly dispose of the Shares,
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which holding period shall commence on the date of release of the
Escrow Shares. After the expiration of the applicable one year
holding period, the PACT shares may be publicly disposed of by the
Seller, subject to such sales of the PACT shares meeting the
requirements for sale as set forth in Rule 144 of the Securities
Act of 1933, as amended. The Seller may, at their discretion,
subject to receiving an opinion from counsel reasonably
satisfactory to the Purchaser that the PACT shares may be sold and
subject to the volume limitations set forth in Rule 144, dispose
of their PACT Shares. The Purchaser hereby acknowledges and
agrees, that if the average price of the PACT shares sold by the
Seller during the sixty calendar day period commencing immediately
after the expiration of the one year holding period is less than
USD$7.00, Purchaser shall issue up to a maximum of 400,000 PACT
Shares to the Seller as compensation for the total amount of the
shortfall from USD$7.00. Seller acknowledges and agrees that the
Purchaser's obligation to compensate Seller for the shortfall
shall only be in effect for the above mentioned sixty day period,
and that after such period, Purchaser shall have no further
obligation to compensate Seller for any such shortfall.
(ii) Seller acknowledges and agrees that in the event the sale price of
any PACT Shares sold by Seller is more than USD$9.00 during such
sixty-day period and beyond, Purchaser and Seller will share on an
equal basis (50%/50%) the cash proceeds of such sale of PACT
Shares by the Seller that is in excess of USD$9.00. Seller will
repay the Purchaser the 50% cash proceeds within one month from
the sale date
(iii) If there shall be any legal expenses, claims, liens, and
liabilities related to the Representations, Warranties, and
Undertakings described in Section 6 of this Agreement
("Liabilities"), the Seller agrees to return and the Purchaser
will forfeit the value of the Escrow Shares equal to the amount of
the 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, the Company, and
Guangzhou SunRoom(the "Companies");
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 Companies have been
either repaid to the Companies or otherwise waived; and
4.1.6 the Purchaser being satisfied at its sole and absolute discretion
that the accounts of the Companies can be consolidated into PACT's
audited financial statement, including balance sheet and income
statements in accordance with the US GAAP.
4.2 The Warrantor and the Companies 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 Companies 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:
(a) The Warrantor warrants and undertakes that they will cause the
Companies to:
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(i) conduct its Business in the ordinary course and consistent
with past practices;
(ii) use its best efforts to maintain in full force and effect
the existence of the Companies;
(iii) 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 Companies;
(iv) keep records in which true and correct entries will be made
of all material transactions by and with the Companies;
(v) duly observe all material requirements of governmental
authorities unless contested in good faith by appropriate
proceedings with the consent of the Purchaser;
(vi) 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 Companies
unless contested in good faith by appropriate proceedings
with the consent of the Purchaser;
(vii) at all times comply with the provisions of all contracts,
agreements and leases to which the Companies is a party,
unless contested in good faith by appropriate proceedings
with the consent of the Purchaser; and
(viii) to use best endeavors to procure that the employees of the
Companies at the date of this Agreement remain and continue
as employees after completion;
(b) The Warrantor warrants and undertakes to cause the Companies not
to:
(i) modify its [Memorandum or Articles of Incorporation or]
[Bylaws];
(ii) cause or permit its liquidation or dissolution;
(iii) 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;
(iv) make a general assignment for the benefit of its creditors;
(v) except as agreed in this Agreement, declare or pay any
dividend or make any distribution to any of its
shareholders;
(vi) 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);
(vii) effect any stock split, reclassification or combination;
(viii) 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.
(ix) Negotiate or enter into an agreement with another party
related to the sale of the Companies.
4.4 Until Completion, the Warrantor, the Companies shall procure that the
Purchaser, its agents and representatives are given reasonable access to
such documents relating to the Companies, as the Purchaser shall request.
The Companies will assist the Purchaser's auditor to complete the audit
report of the Companies in accordance with the US GAAP by March 31, 2005.
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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 Companies.
4.6 The Purchaser shall be entitled to rescind this Agreement by notice in
writing to the Seller, the Companies 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:
(i) 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;
(ii) 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;
(iii) 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;
(iv) 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.
5.3 Upon Completion the Purchaser shall deliver to the Seller and the Holding
Company:
(i) 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.
(ii) an application letter duly signed by the Purchaser for the
Subscription of the Subscription Share.
(iii) cheques in installments drawn for USD1,183,000 and made
payable to the Holding Company within 30 days of Completion.
6 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
6.1 The Companies, 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:
6.1.1 each of 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;
6.1.2 the Companies 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;
9
6.1.3 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,
6.1.4 the Holding Company owns 100 PERCENT of the entire issued and
allotted capital of the Company on a fully diluted basis;
6.1.5 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;
6.1.6 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;
6.1.7 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;
6.1.8 the Seller is an "accredited investor" as defined pursuant to
Regulation D of the Securities Act of 1933, as amended. The Seller
acknowledges that the Escrow Shares have not been registered and
are "restricted securities";
6.1.9 the Company listed in Part I of Schedule 2 are all the present
subsidiaries of the Holding Company;
6.1.10 the information in Schedule 2 relating to the Companies is true
and accurate in all respects;
6.1.11 the Holding Company is the 100% beneficial owner the shares in the
Company free from any encumbrance, and the Seller is the 100%
beneficial owner the shares in the Holding Company free from any
encumbrance;
6.1.12 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;
6.1.13 each of the Companies are duly incorporated and validly existing
in its relevant jurisdiction of incorporation;
6.1.14 each of the Companies 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.
7 RESTRICTIONS
7.1 The Companies, 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 companies which have been
established before the date on which this agreement is signed no matter
whether those companies' business is in competition with the Company or
not.) :
(a) 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;
10
(b) 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;
(c) deal with, canvass, solicit or approach or cause to be dealt with,
canvassed or solicited or approached for business in respect of any
trade or business carried on or service provided by the Company or
its subsidiaries any person, firm or company who at Completion or
within two years prior to Completion was a customer, supplier,
client, representative, agent of or in the habit of dealing under
contract with the Company or the Subsidiaries;
7.2 The Companies, the Seller, and the Warrantor further undertake to the
Purchaser that:
(a) 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
Companies whose province it is to know the same any information
relating to the Companies 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;
(b) they will not at any time hereafter in relation to any trade,
business or company use a name, or internet domain name including
the word [or symbol, or logo design] SunRoom and VS366, or
any similar word [or symbol] in such a way as to be capable of or
likely to be confused with the name of the Companies [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 [it is/they are] connected;
(c) 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;
(d) they shall not do anything which might prejudice the goodwill of
the Companies 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:
(a) the direct or indirect holding of any securities listed on a
recognized stock exchange where the total voting rights exercisable
at general meetings of the company concerned as represented by such
holding do not exceed 10 per cent of the total voting rights
attaching to the securities of the same class as that held by the
Companies, the Seller, and the Warrantor; or
(b) the holding by the Companies, the Seller, and the Warrantor of any
securities of any member of the Group; or
(c) 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 Companies, the Seller, and the Warrantor
of any provisions of this Agreement).
11
8 RIGHT OF FIRST REFUSAL
8.1 Before any shares in the Companies may be sold or otherwise transferred
or disposed of by any of the Shareholders of the Companies ("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:
(a) the Selling Shareholder's intention to sell or otherwise dispose
of such Offered Securities;
(b) the name of each proposed purchaser or other transferee (a
"Proposed Transferee");
(c) the number of Offered Securities to be transferred to each
Proposed Transferee; and
(d) the cash price and/or other consideration for which the Selling
Shareholder proposes to transfer the Offered Securities to the
Proposed Transferee ("Offered Price").
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. The Transfer Notice shall
constitute an irrevocable offer by the Selling Shareholder to sell the
Offered Securities to the Purchaser.
8.3 The Purchaser shall have a right, upon notice to the Selling Shareholder
at any time within 15 calendar days after receipt of the Transfer Notice,
to purchase all, any or a portion of such Offered Securities at (a) such
price per share of the Offered Securities as (i) determined by an
independent international appraiser experienced in the valuation of such
shares and business of the Company as chosen by the Purchaser or (ii) the
Offered Price, which ever shall be lower ("Purchaser Offer Price"); and
(b) upon the same terms (or as similar as reasonably possible), upon
which the Selling Shareholder is proposing or is to dispose of such
Offered Securities, save the sale/purchase price shall be the Purchaser
Offer Price, and the Selling Shareholder shall, upon receipt of the
notice of purchase from the Purchaser, sell such Offered Securities to
the Purchaser pursuant to such terms, with such closing to take place
within 45 calendar days after delivery of the Transfer Notice ("Purchase
Right Period").
8.4 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.
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 each of the Companies shall be the highest
authority of their respective Companies and shall determine all major
issues of the respective Companies, subjected to applicable law.
12
9.2 The board of directors of each of the Companies shall be nominated by
their respective shareholders and composed of SEVEN (7) directors, 4
directors, the Company Legal Representative, and the Company Financial
Controller to be nominated by Purchaser and 3 directors to be nominated
by the Warrantor.
9.3 The boards of directors shall meet at least once every quarter. A Board
meeting may be called by any director.
9.4 Each of the Companies shall establish an operation and management
structure to be responsible for the daily operation and management of the
respective Companies. The officers of each of the Companies 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 Companies 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 Company Legal Representative
may be removed and replaced by the board of directors of the respective
Companies with a resolution at any time.
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 Companies 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 dimunition in the value of the assets of and any payment made or
required to be made by the Purchaser or the Companies 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, not exceeding USD
5,000, 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.
The costs exceeding the amount of USD 5,000 shall be borne equally by the Seller
and the Purchaser.
12 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.
13 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.
14 COUNTERPARTS
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.
13
15 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 the Company and Guangzhou SunRoom:
Attn: Xx. Xxxx, Yongchao, Chairman of the Board
Guangzhou Sunroom Informaiton Industrial Co., Ltd
15/F, Huajian Building. Xx. 000, Xxxxxx Xxxx. Xxxxxx Xxxxxxxxx
000000, Xxxxx (Chinese Address)
To the Holding Company, the Seller, and the Warrantor:
Attn: Mr. Sun Zhengquan,
00/X, Xxxxxxx Xxxxxxxx. Xx. 000, Xxxxxx Xxxx. Tianhe Guangzhou
510630, China (Chinese Address)
Xx. Xxxx, Mengjiang
15/F, Huajian Building. Xx. 000, Xxxxxx Xxxx. Xxxxxx Xxxxxxxxx
000000, Xxxxx (Chinese Address)and
Xx. Xxxx, Yongchao
15/F, Huajian Building. Xx. 000, Xxxxxx Xxxx. Xxxxxx Xxxxxxxxx
000000, Xxxxx (Chinese Address)
14
16 SETTLEMENT OF DISPUTES
16.1 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.
16.2 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.
17 GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the laws of
Hong Kong. The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of the courts of Hong Kong.
IN WITNESS WHEREOF, each of the Purchaser, the Holding Company, the
Company, Guangzhou SunRoom, the Seller, and the Warrantor has duly executed, or
has caused to be duly executed by their respective officers thereunto duly
authorized, this Agreement as of the date first written above.
THE PURCHASER: PacificNet Strategic Investment Holdings Limited and PacificNet
Inc.
By:
------------------------------------------
Name: Xxxxxx Xxxx
Title: President
GUANGZHOU SunRoom: Guangzhou Sunroom Information Industrial Co., Ltd.
By:
------------------------------------------
Name: Xx. Xxxx, Yongchao
Title: General Manager
THE COMPANY: Guangzhou 3G Information Technology Co., Ltd
By:
------------------------------------------
Name: Xx. Xxxx, Mengjiang(1)u(C)s|?
Title: Director
THE HOLDING COMPANY (Pacific 3G Information & Technology Limited), THE SELLER,
AND THE WARRANTOR:
By:
-------------------------------------------
Name: Mr. Sun Zhengquan Xx. Xxxx, Mengjiang
By:
-------------------------------------------
Name: Xx. Xxxx, Yongchao
-------------------------------------------
By:
---------------------------------------------------------------
Name: ASIAFAME INTERNATIONAL LIMITED STARGAIN INTERNATIONAL LIMITED
---------------------------------------------------------------
By:
---------------------------------------------------------------
Name: TRILOGIC INVESTMENTS LIMITED
15
SCHEDULE 1
PART I
THE COMPANY SHAREHOLDERS AND SHARES
Company Name: Guangzhou 3G Information Technology Co., Ltd
NAME OF SHAREHOLDER (1) PERCENTAGE OF SHARES HELD BY THE SHAREHOLDER
----------------------- --------------------------------------------
Pacific 3G Information & Technology Limited 100%
PART II
THE HOLDING COMPANY SHAREHOLDERS AND SHARES
Company Name: Pacific 3G Information & Technology Limited
NUMBER OF SHARES HELD BY THE
NAME OF SHAREHOLDER (3) ADDRESS SHAREHOLDER (50000)
----------------------- ------- -------------------
XXX Xxxxxxxx, X.X. Xxx, 0000, Xxxx Xxxx, Xxxxxxx,
ASIAFAME INTERNATIONAL LIMITED British Virgin Islands 13800
OMC Xxxxxxxx, P.O. Box, 3152, Road Town, Tortola,
STARGAIN INTERNATIONAL LIMITED British Virgin Islands 20700
OMC Xxxxxxxx, X.X. Xxx, 0000, Xxxx Xxxx, Xxxxxxx,
TRILOGIC INVESTMENTS LIMITED British Virgin Islands 15500
PART III
The Sale Shares
23050ordinary shares of US$1.00 each of Pacific 3G Information & Technology Limited
The Subscription Shares
5000 ordinary shares of US$1.00 each of Pacific 3G Information & Technology Limited
16
SCHEDULE 2
PART I
THE COMPANY
Name : Guangzhou 3G Information Technology Co., Ltd
Incorporated in : People's Republic of China
Registered capital : HK$1,000,000
Paid-in Capital : HK$1,000,000
Registered Office : 00 Xxxxxx Xxxx, Science City, High & New
Technology Xxxxxxxxxx Xxxxxxxxxxx Xxxx,
Xxxxxxxxx, 000000, Xxxxx
Phone/Fax : +86-20-8561 3455
Web Site : xxx.xx000.xxx
Beneficial Shareholders : Pacific 3G Information & Technology Limited
Registered Shareholders : Pacific 3G Information & Technology Limited
Legal Representative : Sun ,Zhengquan
Directors : Sun ,Xxxxxxxxx
Xxxx Mengjiang
Xxxx Xxxxxxxx
17
PART II
THE HOLDING COMPANY
Name : Pacific 3G Information & Technology Limited
Incorporated in : British Virgin Islands
Authorized Share Capital : US$50,000
No. Issued Shares : 50,000 Shares
Nominal Share Value : US$1
Issued Share Capital : US$50,000
Registered Office : 00/X, Xxxxxxx Xxxxxxxx. Xx. 000, Xxxxxx Road.
Tianhe Xxxxxxxxx 000000, Xxxxx
Beneficial Shareholders : ASIAFAME INTERNATIONAL LIMITED
STARGAIN INTERNATIONAL LIMITED
TRILOGIC INVESTMENTS LIMITED
Registered Shareholders : ASIAFAME INTERNATIONAL LIMITED
STARGAIN INTERNATIONAL LIMITED
TRILOGIC INVESTMENTS LIMITED
Directors : Sun ,Xxxxxxxxx
Xxxx, Mengjiang
Wang, Yongchao
18
PART III
Guangzhou SunRoom
Name : Guangzhou SunRoom Information Industrial Co.,
Ltd.
Incorporated in : GuangZhou , People's Republic of China
Authorized Share Capital : RMB(pound)* 32,000,000
No. Issued Shares : 32,000,000 Shares Nominal Share Value : RMB
(pound)*1.00
Issued Share Capital : RMB (pound)*32,000,000
Registered Office : 00/X, Xxxxxxx Xxxxxxxx. Xx. 000, Xxxxxx Road.
Tianhe Guangzhou 510630, China
Beneficial Shareholders : Sun ,Xxxxxxxxx
Xxxx, Mengjiang
Wang, Yongchao
Registered Shareholders : Sun ,Xxxxxxxxx
Xxxx, Mengjiang
Wang, Yongchao
Directors : Sun ,Xxxxxxxxx
Xxxx, Mengjiang
Wang, Yongchao
Legal Representative : Sun, Zhengquan
19
SCHEDULE 3
CONFIDENTIALITY, NON-COMPETITION, AND NON-CIRCUMVENTION AGREEMENT
Dated this 28 day of March, 2005
Company Name: GUANGZHOU 3G INFORMATION TECHNOLOGY CO., LTD
Company Address:11 Caipin Road, Science City, High & New Technology Xxxxxxxxxx
Xxxxxxxxxxx Xxxx, Xxxxxxxxx, 000000, Xxxxx
This Confidentiality 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 PacificNet own certain confidential and
proprietary information that the Company, 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 PacificNet, whether or not owned or developed by PacificNet,
which is not generally know other than by PacificNet, 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
PacificNet with the prior written consent of the Company; and any other
information that PacificNet agrees in writing is not confidential.
The Company understands and acknowledges that Confidential Information has
been developed or obtained by PacificNet 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 Company 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
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.
20
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 Minnesota and the US law. 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: ____________________
Name: XXXXXX XXXX, PRESIDENT
Company: PACIFICNET INC.
Pacific 3G Information & Technology Limited and
Guangzhou 3G Information Technology Co., Ltd
Signature: ____________________ Signature:__________________________
Name: Sun, Zhengquan Name: Liao, Mengjiang
Title: GENERAL MANAGER Title: DIRECTOR
SIGNATURE:_____________________
Director: Wang, Yongchao
Title: Director
21
