Equity Transfer Agreement September 16, 2008 Beijing
Exhibit
10.1
Equity
Transfer Agreement
September
16, 2008
Beijing
This
Equity Transfer Agreement (the “Agreement”) is made and entered into on
September 16, 2008 in Beijing by and among:
Transferee:
Beijing
Zhangcheng Culture and Media Co., Ltd., a
company
duly incorporated and existing under the laws of the People's Republic of China
( “Party A” or the “Transferee”), having its legal domicile at Room 717, Tower
B, E-wing Center, ▇▇. ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇.
And
Transferors:
▇▇▇
▇▇▇▇
(Current Shareholder of Dalian Dajian Zhitong Information Service Co., Ltd.);
Xin
Yibo
(Current Shareholder of Dalian Dajian Zhitong Information Service Co., Ltd.);
and
▇▇▇
▇▇▇▇▇▇ (Current Shareholder of Dalian Dajian Zhitong Information Service Co.,
Ltd.)
(collectively
“Party B” or the “Transferors”)
Recitals
1.
WHEREAS the Transferors jointly formed Dalian Dajian Zhitong Information Service
Co., Ltd. (the “Target Company”), a company duly incorporated and existing under
the laws of the People’s Republic of China, engages in the businesses including,
but not limited to, computer network consultation; computer hardware and
software technology development, transfer, support and consultation; sales,
installation and maintenance of electronic products; and call center within
Dalian City.
2.
WHEREAS the registered capital of the Target Company is RMB one million (RMB
1,000,000.00), and the Transferors are the all shareholders of the Target
Company (their respective contribution amount and share proportion in the Equity
Transfer are indentified on Exhibit 1 hereto) holding one hundred percent (100%)
of the equity interests (of which ▇▇▇ ▇▇▇▇ is holding 60%, Xin Yibo 35% and
▇▇▇
▇▇▇▇▇▇ 5%) in the Target Company as of the date herein. The Transferors agree
to
transfer to the Transferee eighty-five percent (85%) of the equity interests
they hold in the Target Company, with the consideration specified in Section
2.3
and in accordance with other terms and conditions herein, and the Transferee
agrees to purchase all equity interests pursuant to the terms and conditions
herein.
3.
Additional conditions of the Share Transfer. The Transferors shall enter into
the Cooperation Agreement of Dalian Taxi GPS Project with Dalian Taxi
Association and shall satisfy the conditions set forth in Section .1 before
the
date of this Agreement.
NOW,
THEREFORE, the Parties to this Agreement, through friendly consultation based
on
the principle of equality, willingness and mutual benefit, hereby agree as
the
follows in accordance with the terms and conditions herein:
Article
1 Definitions
1.1
In
this Agreement, unless the context otherwise states, the following terms shall
have the following meanings:
(1)
“China” shall mean the People's Republic of China (excluding Hong Kong SAR,
Macau SAR and Taiwan);
(2)
“RMB”
shall mean the statutory currency of the People's Republic of
China;
(3)
“Shares” shall mean the shareholder's equity right enjoyed by the current
shareholders in proportion to their respective paid-up and actually invested
registered capital pursuant to relevant legal documents as percentage of the
registered capital in the Target Company;
(4)
“Equity Transfer” shall mean the Transferors' transfer of the eighty-five
percent (85%) of the equity interests they hold in the Target Company in
accordance with the terms and conditions herein;
(5)
“Transfer Price” shall mean the transfer price as specified in Section
2.3;
(6)
“Transfer Completion Date” shall mean the definition as given in Section
5.1;
(7)
“Current shareholders” shall mean the shareholders of the Target Company as
specified in the Commercial Registration and the Articles of Association of
the
Target Company, which shall be all the current shareholders of the Target
Company, before the Agreement is executed and becomes effective; and
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(8)
“Cooperation Agreement of Dalian Taxi GPS Project” shall refer to Exhibit 8
attached hereto
1.2
The
“Agreement” shall mean the operative part of this Agreement, all exhibits and
other documents agreed by both parties to be attached hereto as
exhibits.
1.3
Articles, sections, subsections and exhibits shall respectively refer to the
articles, sections, subsections and exhibits contained herein;
1.4
The
headings contained herein are made for convenience and shall in no case affect
the interpretation and understanding of the Agreement.
Article
2 Equity Transfer
2.1
Content of Equity Transfer
2.1.1
Equity Interest: one-time transfer, and all the shareholders waiver their right
of first refusal. The Transferors shall make one-time Equity Transfer to the
Transferee subject to the terms and manners set forth herein. All the
shareholders of the Target Company have agreed to waiver their rights of first
refusal in respect of such Equity Transfer.
2.1.2
Content of transferred equity: equity and relevant rights, upon the Equity
Transfer by the Transferors , the Transferee shall have all the rights
pertaining to such equity transferred in accordance with the Company Law and
the
articles of association of the Target Company. Such shareholder's rights shall
mean all existing and prospective rights as pertaining to the equity
transferred, including all rights as represented by eighty-five percent (85%)
of
all movable property and fixed assets, tangible and intangible assets owned
by
the Target Company as of the date of execution of the Agreement.
2.1.3
The
Transferee’s warranty to increase capital. The Transferee shall increase the
registered capital of the Target Company by RMB9,000,000 upon the performance
of
the provisions as set forth in Section 4.1 hereunder. As a result, the
registered capital of the Target Company will reach RMB10,000,000.
2.2
Authorization and approval of the Equity Transfer
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2.2.1
Adopted by the Board of Directors of the Target Company and approved at the
shareholders meeting of the Target Company. Such Equity Transfer shall be
approved by the Board of Directors and the shareholders of the Target Company.
2.2.2
Approval by the Board of Directors of the Transferee. The Transferee hereby
warrants that such Equity Transfer has been approved by its Board of
Directors.
2.3
Price. The consideration of the eighty-five percent (85%) shares to be
transferred hereunder by the Transferors to the Transferee is RMB 1,980,000.00
(the “Transfer Price”).
2.4
The
Transferors hereby warrant that (a) all liabilities as of and before the date
of
the Agreement shall be borne by the shareholders of the Target Company and
such
liability shall include the subsequent costs and expenses for the 360 sets
of
equipments purchased by Party B; (b) the liabilities incurred before the date
of
this Agreement shall be paid off to the original shareholders, other enterprises
and individuals by the Target Company. Such original shareholders, enterprises
and individuals shall provide liabilities releasing documents issued by local
competent notaries; and (c) the Transferors shall furnish the Transferee with
the details of all creditor rights and their liabilities as of the date of
the
Agreement.
2.5
In
case of any undisclosed liabilities, the Transferors shall assume the liability
by paying such liabilities to the extent of one hundred percent (100%) of the
amount in debt.
2.6
The
Transferors agree to cause the Target Company to register with competent
authorities the amended agreements and articles of association of the Target
Company, submit to competent Administration for Industry and Commerce all
necessary documents for alternation of ownership of the Target Company, and
complete such alternation, thus making the Transferee as the majority
shareholder of the Target Company.
Article
3 Payment
3.1
The
Transferee shall pay RMB594,000.00, which is 30% of the Transfer Price to
the
Transferors within seven (7) days following the date of this Agreement. In
the
meanwhile, the Transferors shall complete the related registration procedure
with competent administration of industry and commerce.
3.2
The
Transferee shall pay RMB1,089,000, which is 55% of the Transfer Price to The
Transferors within seven (7) days following the performance of the pre-closing
conditions as set forth in Section 4.1. In addition, the Transferee shall
deposit the remaining 15% of the Transfer Price to an escrow account designated
by both Parties, which is RMB 297,000 in order to pay any undisclosed liability.
The escrow period is one year. The Transferors shall be responsible for the
part
of liability which is over the deposit amount if there is any undisclosed
liability exists, and if there is no such liability, the 15% escrow fund shall
be released to the Transferors in a timely manner.
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3.3
The
Transferee shall increase the registered capital of the Target Company by
RMB9,000,000 upon the performance of the provisions as set forth in Section
4.1
hereunder. As a result, the registered capital of the Target Company will reach
RMB10,000,000.
3.4
After
the transaction, the share structure of the Target Company would be: Beijing
Zhangcheng Culture and Media Co., Ltd. holds 85% of the Target Company, ▇▇▇
▇▇▇▇
holds 9%, Xin Yibo holds 5% and ▇▇▇ ▇▇▇▇▇▇ holds 1%.
3.5
Relevant taxes in respect of the Equity Transfer herein shall be paid by the
Parties respectively in accordance with the laws.
Article
4 Preconditions for Equity Transfer
4.1
The
Transferee shall perform its obligation of the payment of all Transfer Price
subject to relevant provisions in the Agreement, provided that the following
preconditions are all satisfied within three days from the effective date of
the
Agreement.
(1)
The
Transferors have completed all procedures of laws and alternation of
registration with competent Administration for Industry and Commerce in respect
of the Equity Transfer to the Transferee;
(2)
The
Transferors have provided the shareholder resolution and the resolution of
Board
of Directors of the Target Company to approve the Equity Transfer;
(3)
The
Transferors have singed a declaration to release the Transferee of any
liabilities and undisclosed liabilities before the Transfer Completion
Date;
(4)
The
Transferors shall terminate the GPS Sales Contract(s) (including verbal
agreements) that the Target Company entered into before the date of this
Agreement, and shall be responsible for any damages incurred by such
termination.
(5)
The
Target Company has furnished all exhibits as set forth in this
Agreement;
(6)
The
Target Company and Dalian Taxi Management Department have entered into the
Cooperation Agreement of Dalian Taxi GPS Project, which shall include the
following major provisions:
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(a)
The
Target Company has obtained the exclusive advertising rights of “Taxi Media” in
Dalian, including but not limited to LED, LCD, roof light, rear window, guard
rail, seat cover, and advertising areas inside and outside the taxi;
(b)
The
Target Company has obtained the exclusive operating rights of real-time data
in
the on-line GPS system of Dalian taxis.
4.2
The
Transferee shall have the right in its discretion to waive any and all
preconditions as set forth in Section 4.1. Such decision of waiver shall be
made
in writing.
4.3
If
any of the preconditions set forth in Section 4.1 is not fulfilled within the
specified time and such precondition is waived by the Transferee, then the
Agreement shall be terminated automatically; and any right, obligation and
responsibility under the Agreement shall become invalid and no longer binding
on
both parties, and the Transferors shall not claim any Transfer Price against
the
Transferee under the Agreement, and shall, no later than 7 working days after
the termination of the Agreement, refund in full amount of the Transfer Price
the Transferee has already paid to the Transferors pursuant to this Agreement
,
together with any interest accrued from the payment during such
period.
4.4
If
the Agreement is terminated pursuant to Section 4.3 and the equity transfer
has
been registered, then the parties agree that they shall work together with
necessary efforts to cause such equity interest to be transferred from the
Transferee back to the Transferors.
Article
5
Equity Transfer Completion Date
5.1
The
Agreement shall come into force when signed by the authorized representatives
of
both Parties and the Transferee shall be entitled to the transferred equity
interest and become the majority shareholder of the Target Company upon
completion of all legal procedures for alteration and registration required
for
transferring the equity interest. However, the rights and obligations shall
not
be finally fulfilled until the preconditions set forth in Article 4are satisfied
during the specified time period under Section 4.1 and the Transfer Price is
fully paid to the Transferors by the Transferee.
Article
6
Structure of Corporate Governance
6.1
Upon
the execution of the Agreement, the Transferee has the right to appoint a
financial controller to the Target Company. The common seal, special seal for
contact, special financial seal and the private seal of the legal representative
shall be kept by the financial controller appointed by the
Transferee.
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6.2 Upon
the
completion of the equity transfer, the Board of Directors of the company shall
consist of 5 members who are respectively designated by each Party according
to
equity proportion.
6.3 Upon
the
completion of the equity transfer, the structure of corporate governance is
subject to relevant regulations of the Company Law .
Article
7
Representation and Warranties of the Transferee
7.1
Representation and Warranties of the Transferee shall be true, complete and
accurate.
7.2
The
Transferee has the full power, rights and capacities for execution, delivery
and
performance of the Agreement, and can act as the subject of litigation. The
Transferee's execution and performance of the Agreement shall not violate any
relevant laws and regulations or government order, nor breach any contract
or
agreement binding upon the Transferee or its assets thereof.
7.3
Legality of the Equity Transfer payments. The Transferee hereby warrants that
its Equity Transfer payments for subscription for the Transferors' equity
interest in the Target Company are legal, and it has full power and capacity
to
make the Equity Transfer payment to the Transferors in accordance with the
terms
and conditions of the Agreement.
Article
8
Representation and Warranties of The Transferors
8.1
The
Transferors hereby represent and warrant as follows to the
Transferee:
8.1.1
Authorization. Authorized representative of the Transferors has all the
necessary rights and authorization for execution and performance of the
Agreement and fulfillment of the transactions contemplated by the Agreement.
The
Agreement shall be binding upon the Transferors and the Target
Company.
8.1.2
No
Conflict. The execution and performance of the Agreement does not breach,
conflict with the articles of association or bylasws of the Target Company,
nor
violate any mandatory stipulations of China's laws and regulations; the
Transferors and the Target Company have acquired all necessary consent or
authorization from a third party in respect of the transactions
hereunder.
8.1.3
Duly existing. The Target Company is a limited liability company duly
incorporated and existing under relevant laws.
8.1.4
Investment. The Target Company does not as of the date of this Agreement, invest
in or operate, including but not limited to, any subsidiaries, branch companies,
representative offices or branches; or any other entity controlled directly
or
indirectly by the Company or any other entity in which the Company holds
shares.
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8.1.5
Financial statements. The financial statements (including balance sheet, profit
& loss statement and cash flow statement) for the period ended August 31,
2008 (“Balance Sheet Date”) in Exhibit 2 represent the real, complete and
accurate operation state and financial position of the Target Company in related
periods and on related base day. All the Target Company's audit accounts and
management accounts (including transfer accounts) have been kept in compliance
with China's relevant finance and accounting system in conjunction with the
real
condition of the Company, which represent the real and fair financial position
and operation state of the Company during the period of relevant accounts.
The
Target Company's financial records and data are in full compliance with China's
laws and regulations and the principles of Chinese Accounting
Standard.
8.1.6
Undisclosed liabilities. The normal liabilities of the Target Company shall
not
have any material and adverse effect on the Company or its shareholders. In
addition, the Target the Company does not have any other liabilities not
represented in the balance sheet nor has the Target Company ever furnished
other
parties with security of guaranty or any pledge, mortgage or any other security
interests with respect to any of its material assets.
8.1.7
Capital structure. The capital structure of registered capital of the Target
Company in its the articles of association and its amendment with filing and
registration with the Administration for Industry and Commerce is consistent
with that in the articles of association and its amendment provided by The
Transferors to The Transferee, which represents the complete and accurate
capital structure of the Target Company prior to the date of this Agreement.
Except as set forth above, , no shares of capital stock or other voting
securities of the Target Company are issued, reserved for issuance or
outstanding.
8.1.8
Absence of Certain Changes or Events. From the Balance Sheet Date to the date
of
this Agreement, , unless otherwise specified in the Agreement and approved
by
Party A in written form, during such period there has not been:
(a)
any
repayment of the liabilities in advance by the Target Company;
(b)
any
security of guaranty or any mortgage, pledge or any other security interest
created by the Target Company;
(c)
any
exemption of its creditor's rights upon others or waiver of its rights of
claim;
(d)
any
amendment to any existing contracts or agreements;
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(e)
any
bonus granted to any executive officers, directors, employees, sales
representatives, agents or advisors or any increase of their income in any
other
form, or the salaries of the five persons with the highest salary in the
Company, CEO, president, COO and CFO by an aggregate of 10% within any period
of
twelve months;
(f)
any
incurrence of loss (whether or not the insurance has bought), or deterioration
of relationship with the Target Company’s suppliers, customers or employees,
which may lead to materially adverse impact on the Target Company;
(g)
any
change of the method of accounting calculation, accounting policy or principles,
or rules and regulations of financial accounting of the Target
Company;
(h)
any
transfer, or any license granted to others for the use of the intellectual
property of the Target Company except for the process during the course of
the
Company's normal business;
(i)
any
material change with respect to conventional sales or accounting method,
employing policy, or related rules and regulations;
(j)
any
materially adverse change with respect to the Target Company's financial
position; or any other transactions rather than the regular business incurring
responsibilities;
(k)
any
resolutions at shareholders' meeting or board resolutions of the Target Company
which are different from those approved at annual general meeting with respect
to the Target Company’s routine businesses, except for those made particularly
for the performance of the Agreement;
(l)
(i)
any sale, mortgage, pledge, lease, transfer or disposition of assets out of
its
normal business scope of which the underlying transaction value reaches over
RMB
30,000, (ii) any disposition of any fixed asset or approval of the disposal
of
its fixed asset by others, giving up the control over the assets of the Target
Company, entry into any contract which may result in the fixed assets
expenditure, or incurrence of any other responsibilities, except for those
incurred in the ordinary course of business; (iii) any expenditure over RMB
30,000 that is out of the Target Company’s ordinary course of business, or
purchase of any tangible or intangible assets (including the equity interest
in
any company);
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(m)
any
transaction or action that is not within the ordinary course of the Target
Company’s business; or
(n)
any
action or inaction which may lead to the above events
8.1.9
Tax. The Target Company has filed all tax returns required by the laws and
regulations, and has paid all the tax payables.
8.1.10
Asset. The Company has the full power and right to own and use all their assets.
Details about this are set out in Exhibit 5 of Disclosure List.
8.1.11
Fixed assets. The Target Company has clear and lawful property rights over
its
fixed assets, and has furnished the Transferee with relevant supporting
documents in respect of the title and use right of the Target Company’s fixed
assets. There is no mortgage, security of guaranty or any third party’s claim
over such fixed assets.
8.1.12
The Transferors hereby warrant that all the duplicated documents of the
existing, effective written contracts of the Target Company have been furnished
to the Transferee, which are true copies of the originals, and that such
contracts are valid and duly operative. In addition, the Target Company does
not
have any of the following contracts, agreements or documents binding upon the
Target Company or to which the Target Company is a party, or violation of the
terms and conditions or obligations of such contracts, agreements or documents,
which:
(a)
are
not made in the ordinary course of business;
(b)
are
not made on a fair base;
(c)
result in the Target Company's loss or prejudice to the Company's
interests;
(d)
can
not be implemented with reasonably adequate efforts and expenditure;
or
(e)
limit
the Target Company's free operation.
8.1.13
Intellectual property. Unless otherwise disclosed in the Disclosure List, the
Target Company has the legal title of or rights to use all the intellectual
properties being used by the Company (including but not limited to patent,
trademark, copyright, know-how, domain name and business secret), and the Target
Company has acquired all the necessary authorization or license of the
intellectual property with regard to a third party's intellectual property
during its operation (including but not limited to the intellectual property
license for the services with regard to providing value-added services). The
Target Company does not infringe upon any others' intellectual property rights,
business secret, know-how or similar rights, and is not involved in any claim,
dispute or proceedings, which remain unresolved or may occur, against the Target
Company due to the infringement upon any third party's intellectual property
rights, business secret, know-how or similar rights. The Company has officially
registered its trademark, patent, software copyright and domain name with
relevant authorities.
9
8.1.14
Litigation. There is no any of the following events which may have materially
adverse impact on the Target Company, or have adverse impact on the execution,
validity and enforceability of the Agreement and the Equity Transfer thereof,
whether it is implemented, remain unresolved or may occur:
(a)
penalty, ban or order against the Target Company from government
authorities;
(b)
proceedings or dispute against the Target Company such as civil, criminal and
administrative actions and arbitration, etc.
8.1.15
Compliance. The Target Company's current operation is in full compliance with
the existing laws and regulations, rules and other provisions issued by relevant
administrations of China, and the code of telecom operators (collectively “Laws
and Regulations”), and the Target Company does not violate any of such Laws and
Regulations which may lead to material and adverse impact on the Target
Company's operation or its assets.
8.1.16
Employees.
(a)
All
the employees of the Target Company abide by relevant applicable labor
laws;
(b)
There
are not any labor disputes or potential labor disputes between the Target
Company and its employees and former employees;
(c)
The
Target Company does not have any economic compensation, payable but not paid,
to
pay due to terminating the labor contracts, or similar obligation to pay the
indemnity or compensation costs with regard to employment;
(d)
The
Target Company has fully paid and/or withheld employees' social insurance fund
or welfares in accordance with relevant laws and regulations, including
endowment insurance, housing fund, medical insurance, unemployment insurance
and
other payable insurance or welfare as per relevant laws and the agreements,
and
therefore does not have any existing or potential disputes concerning such
social insurance and welfares.
8.2
Special representations and warranties. In addition to the general
representation and warranties set forth above, the Transferors and the Target
Company further represent and warrant as follows:
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8.2.1
all
the documents including account books, records of equity changes, financial
statements and other records of the Target Company have been kept subject to
business rules and controlled by the Target Company, and all the principal
transactions in connection with the Target Company's operation have been
recorded in an accurate and regular way;
8.2.2
as
of the date of this Agreement, , all the documents of the Target Company
including the minutes of board meetings and shareholders' meetings and
shareholder list have been kept safely, in which all necessary events required
by such documents are recorded well and truly;
8.2.3
ever since the Balance Sheet Date, (1) except for the normal operation, there
are not any events giving rise to advanced debt maturity; (2) except for the
normal operation, there are not any assets of the Target Company disposed or
out
of the Target Company's control, and the Target Company has not reached any
agreement which might give rise to additional financial expenditure, nor have
any responsibility thereof;
8.2.4
the
Target Company has submitted to tax authorities all required information; and
up
to the date of the Agreement, the Company does not have any disputes with tax
authorities regarding tax responsibility or potential tax responsibility or
tax
incentives;
8.2.5
the
Target Company has the financial documents for normal taxing and tax payment,
and all the necessary supporting documents for tax incentives with the approval
by relevant government departments;
8.2.6
except for the employee benefit, social and endowment insurance in accordance
with the Labor Law of the People's Republic of China and relevant provisions,
the Target Company does not provide any other incumbent, retire or elderly
welfares or insurance.
8.3
Good
Title. The Transferors are the record owners of the equity interest of the
Target Company, and upon the execution of the Agreement, there is no mortgage,
pledge, security interest , lien, impediment or other limits in any form on
such
equity interest, and the Transferors hold the equity interest only for its
own
account rather than proxy holding for any other third party.
8.4
Information disclosure. All the documents, material facts and information,
provided to the Transferee by the Transferors and the Target Company prior
and
after the execution of the Agreement, are true, accurate, without omission
and
not misleading.
8.5
Further Promises of the Target Company and The Transferors.
8.5.1
Company operation. During the period from the execution of the Agreement up
to
the alternation registration with Administration for Industry and Commerce
accepted by the Parties, unless as is specified in the Agreement and the
Exhibits to the Agreement or approved by the Transferee in written form, the
Transferors and the Target Company promise that they shall:
11
(a)be
operating in a normal way. They will continue to develop its relationship with
customers so that the Target Company's reputation and operation will not suffer
materially adverse impact after the transfer of equity;
(b)
pay
the due payables and other liabilities in the ordinary course of business,
and
shall not make any unusual transactions thus incurring unusual liabilities.
Except for the ordinary course of business, the Target Company shall not repay
the loan, or disburse trade payables in advance or delay;
(c)
perform the contracts, agreements, or other documents in respect of the Target
Company's assets and business in a timely manner;
(d)
not
reconcile or waive, alter its request or other rights without the written
approval by the Transferee, except for the ordinary course of
business;
(e)
make
their best efforts to maintain the legal operation of the Target Company, and
shall not separate, nor merger with any third party or acquire the assets or
business of a third party;
(f)
not
breach the representations and warranties set forth in the Agreement through
action or inaction;
(g)
inform the Transferee in writing of relevant events, facts, conditions, changes
or other cases which have had or might have materially adverse impact on the
Target Company in a timely manner; and
(h)
handle the tax affairs of the Target Company as usual in full compliance with
relevant laws and regulations.
8.5.2
Information collection. During the period from the execution of the Agreement
up
to the alternation registration with Administration for Industry and Commerce,
the Transferors shall provide, at the reasonable request of the Transferee
and
its representatives, all relevant documents of the Target Company to the
Transferee and its representatives during office hours, including but not
limited to all necessary accounts, records, contracts, technical documentation,
personnel information, management situation and other documents to the lawyer,
accountant and other representatives designated by the Transferee; in order
to
assist the Transferee in reviewing the documents in respect of the Target
Company's properties, assets and business and those mentioned in the Agreement,
The Transferors shall permit the Transferee to meet or contact the customers
and
creditors of the Target Company. The Transferors agree that the Transferee
have
the full rights to conduct detailed due diligence investigations in respect
of
the Target Company's financial position, asset conditions and operation status
at any time prior to the Equity Transfer.
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Article
9
Liability for Breach of Agreement
9.1
Any
breach of or failure to perform its representation, warranties, obligations
or
responsibilities by one party shall constitute a default. The breaching party
shall take effective measures to rectify the breaches within no more than 5
working days following the day when the breach of contract takes place and
shall
indemnify the non-breaching party for any of its loss in relation to the breach
of contract. A liquidated damage equivalent to 50% of the Transfer Price is
payable by the breaching party to the non breaching party.
9.2
Unless otherwise specified in the Agreement, in case of any other additional
expenses, responsibilities or loss incurred to the other party due to the
default of one party, the defaulting party shall indemnify the innocent party
for such expenses, responsibilities or losses (including but not limited to
interests and counsel fees, paid or lost due to the default). The total amount
of the indemnification the defaulting party has to pay to the innocent party
shall be equal to the loss due to such default activity.
9.3
The
original shareholders of the Transferor shall assume the joint and several
liabilities for any debt occurred prior to the Purchasing Date which causes
subsequent disputes.
9.4
In
case the defaulting party refuses to rectify its breaching within 3 months
after
the occurrence, the non defaulting party has the right to terminate this
Agreement and such termination does not waive any liability of the defaulting
party for its breach of contract.
Article
10 Information Disclosure and Confidentiality
10.1
Unless otherwise specified in the Agreement, the terms and conditions hereunder
in respect of Equity Transfer (including all terms and conditions hereunder,
the
Exhibits and any other relevant documents) are confidential and shall not be
disclosed to any third party. If required by relevant laws, the disclosing
party
shall discuss with the other party the disclosure and submission of relevant
information within reasonable time prior to the disclosure and
submission.
10.2
Unless otherwise specified in the Agreement, the Parties shall make their best
efforts to keep secret any business information, material facts and relevant
documents in any form, which are related to the Parties hereto due to the
performance of the Agreement.
10.3
The
Parties shall cause their respective directors, executive officers and other
employees, and the directors, executive officers and other employees of
affiliated companies to perform the confidentiality obligation set forth in
this
Article.
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10.4
In
case the Agreement is terminated for any reason, the provisions in this Article
shall maintain their original validity.
Article
11 Supplement, Modification, Amendment and Termination
11.1
After the execution of the Agreement, supplemental agreements may be entered
into in writing upon mutual consultation, which shall take effect upon the
due
execution of the Parties hereto.
11.2
The
Agreement may be modified or amended upon mutual consultation. Any modification
or amendment to the Agreement shall be in writing, which shall take effect
upon
due execution of the Parties hereto.
11.3
Termination. The Agreement may be terminated as follows:
11.3.1
The Parties make written agreements to terminate the Agreement and define the
effective date of termination;
11.3.2
One party shall inform the other party in writing of the termination of the
Agreement within ten (10) working days prior to the effective date of
termination which shall be contained in the notification, in the event that:
(a)
the
other party's representation or warranties are found not true or have material
omission when made or on the Execution Date; or
(b)
the
other party fails to perform the terms, promises and obligations in accordance
with the Agreement, and fails to take effective remedial actions within ten
(10)
days upon receipt of written notification from the party.
11.3.3
Where the Equity Transfer set forth in Article 3 hereunder can not be closed
within one (1) month following the effective date of this Agreement, the
Transferee shall have the right to terminate the Agreement.
11.4
Validity of termination.
11.4.1
In
the event that the Agreement is terminated as per any clause aforementioned,
the
Agreement shall be null and void;
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11.4.2
Upon the termination of the Agreement, the Parties shall adhere to the
principles of equity, fairness and credit and return to the other party the
considerations obtained pursuant to the Agreement, making their best efforts
to
seek restitution in integrum;
11.4.3
Upon the termination of the Agreement, all rights and obligations of the Parties
under the Agreement shall be terminated, and either party shall not demand
any
claim against the other party in respect of the Agreement and its termination,
except for the responsibilities set forth in Article 9 of the
Agreement.
Article
12 Force Majeure
12.1
Any
delay in or failure of performance by either party of all or any of their
obligations under this Agreement shall not constitute a breach hereunder if,
and
to the extent that such delays or failures are caused by Force Majeure, provided
that necessary remedial measures shall be taken to reduce the damage under
proper condition.
12.2
The
affected party shall inform the other party(ies) of the occurrence of Force
Majeure in writing within three (3) work days after the occurrence of Force
Majeure, and furnish the other party(ies) with descriptions of Force Majeure
and
proving documents issued by local competent notaries for such failure of or
delay in performance of all or any of its obligations within fifteen (15) work
days after the occurrence of the Force Majeure. The Parties may determine
whether to terminate the Agreement, or partially exempt the performance of
the
Agreement, or prolong the performance of the Agreement. In the event that the
Parties can not reach an agreement within sixty (60) days after the occurrence
of Force Majeure or events, the party affected by Force Majeure or events has
the full right to terminate the Agreement, and any party shall not be liable
for
the loss caused to other party(ies) thereof.
12.3
The
Force Majeure means objective events or circumstances, unpredictable,
unavoidable and uncontrollable, which includes earthquake, typhoon, flood,
fire,
war and other unpredictable, unavoidable and uncontrollable Acts of Gods, and
change of any laws, rules and regulations, promulgation of new laws, rules
and
regulations, or any government act leading to direct influence on the
performance of the Agreement or failure to perform the terms and conditions
hereunder.
Article
13 Applicable Laws and Dispute Settlement
13.1
The
execution, validity, interpretation, performance and dispute settlement
hereunder shall be governed by and construed in accordance with the laws of
China. In case of certain items in respect of the Agreement not stipulated
in
promulgated laws and regulations of China, such items shall be construed and
performed as per generally accepted international business practice complying
within the laws and regulations of China.
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13.2
Any
disputes arising out of the performance of the Agreement or in connection with
the Agreement shall be settled via friendly consultation; either party may
submit any dispute failing friendly settlement to competent courts of China
for
judgment.
Article
14 Notice and Delivery
14.1
Any
effective notice or other communications relating to the Agreement between
the
Parties (“Notice”) shall be in writing (including fax and e-mail) and posted,
sent by a courier or addressed to that notified party at the address or
telephone number hereunder with the name of attention on the
Notice.
To
the
Transferee:
Attn.:
Xia Shudong
Addr:
Room 717, Tower B, E-wing Center, ▇▇. ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇
Post
code: 10086
Tel:
▇▇▇-▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
The
Transferors:
Attn.:
Addr:
Post
code:
Tel:
14.2
The
service time for the Notice shall be determined by the following:
14.2.1
The Notice shall be deemed to have been received if it is personally delivered
or sent by a courier and the notified party issues the receipt; those without
the notified party's receipt shall not be deemed to have been duly served
on;
14.2.2
Notices, which can be sent by post and shall be delivered through registered
express or EMS, shall be deemed to have been received by the notified party
on
the seventh day after the date of dispatch;
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14.2.3
The Notice sent by fax or e-mail is deemed as given upon the date on the receipt
of fax notice or e-mail, and the confirmation date by the notified party is
the
delivery date.
14.3
In
case of any change of the above address or telephone number of either party
(as
the “Change Party”), the Change Party shall notify other parties within seven
(7) days after the change. Where the Change Party fails to notify other parties
of such change in a timely way, it shall bear any loss or damages incurred
to
other parties thereof.
Article
15 Miscellaneous
15.1
The
supplementary Exhibits to the Agreement are integral part of the Agreement,
and
shall have the same legal binding force with the Agreement; in case of
discrepancy between the Exhibits and the text of the Agreement, the text of
the
Agreement shall prevail.
15.2
In
case any provision under the Agreement and the Exhibits is found invalid or
not
enforceable in accordance with applicable laws, such provision shall be deemed
as non-existence from the beginning and the remaining provisions maintain
effective; the Parties may define new provisions through consultation to bring
about the original intention of such provision to the great extent.
15.3
The
Agreement shall also be binding upon the successors and transferees of the
Parties, and such successors and transferees may have and hold the shares
hereunder.
15.4
The
Transferee may assign and transfer its rights, shares and obligations hereunder
to its affiliated companies, wholly-owned subsidiaries and its holding company's
wholly-owned subsidiaries.
15.5
Except for the aforesaid provisions in Sections 15.3 and 15.4, any party shall
not assign or transfer any of its rights or obligations hereunder.
15.6
Unless otherwise specified in the Agreement, the failure of one party to
exercise its performance of its rights, power and privilege does not constitute
its waiver of such rights, power and privilege, and single or partial exercise
of such rights, power and privilege shall not prevent its exercise of any other
rights, power and privilege.
15.7
The
Agreement shall be effective with the official seals and the signature by the
legal representative or duly authorized representative of the
Parties.
17
15.8
The
Agreement is made into six (6) copies of equal validity with the Transferee
holding two (2) copies, the other Parties one (1) copy each and one (1) copy
for
competent Administration for Industry and Commerce.
[Signature
page follows]
18
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by
duly authorized representatives of the Parties on the date first written
above.
The
Transferee: Beijing
Zhangcheng Culture and Media Co., Ltd
Co.,
Ltd. (seal)
Authorized
representative:/s/
▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
▇▇▇
Execution
date: September
16, 2008
The
Transferors: (seal):
Authorized
representative: /s/
Xin Yibo
Xin
Yibo
Execution
date: September
16, 2008
19