Exhibit 4.2
CHINA FINANCE ONLINE CO., LTD.
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (the "Agreement") is made as of June 15, 2000, by
and among
(a) PTV-CHINA, INC., a company incorporated under the laws of the
State of Massachusetts of the United States of America with
its registered office at One Xxxxxx Xxxxx, Xxxxxxxxx Xxxxx,
Xxxxxx, XX 00000, the United States of America ("PTV");
(b) VERTEX TECHNOLOGY FUND (III) LTD., a company incorporated
under the laws of Singapore with its office at 00 Xxxxxxx Xxxx
Xxxxx, #00-00 Xxxxxxx XXX, Xxxxxxxxx Xxxxxxx Xxxx, Xxxxxxxxx
000000 ("Vertex"; each of PTV and Vertex or their respective
designees, an "Investor", and collectively, "Investors);
(c) CAST HOLDINGS, INC., a company incorporated under the laws of
British Virgin Islands with its office at Xxxx 0&0, 00xx
Xxxxx, Xxx Xxxxxxx House, 93-103 Wing Lok Street, Xxxxxx Xxx,
Hong Kong ("CAST");
(d) NORMART ENTERPRISES, INC., a company incorporated under the
laws of State of California, the United State of America with
its office at 000 Xxxxxxx Xxx., Xxxxx X, Xxxxxxxx Xxxx, XX
00000 U.S.A ("Normart");
(e) CHINA FINANCE ONLINE CO., LTD., a company incorporated under
the laws of Hong Kong SAR, the People's Republic of China (the
"PRC") with its office at Unit C, 8/F., East Wing, Sincere
Insurance Xxxxxxxx, 0-0 Xxxxxxxx Xxxx, Xxxx Xxxx (the
"Company");
(f) Mr. Cen Anbin, Xx. Xxx Qixiong, Xx. Xxx Gang, Xx. Xxxxx Libo,
Mr. Ning Jun, Xx. Xxxx Xinzheng and Mr. Fan Zhongkui
(collectively, the "Founders"); and
(g) Xx. Xxxxx Changqing.
Each of CAST, Normart, the Founders and Xx.Xxxxx Changqing is referred to as an
"Existing Shareholder" and collectively, the "Existing Shareholders". The
Existing Shareholders and the Investors are sometimes collectively referred to
as the "Shareholders".
RECITALS
WHEREAS, the parties to the Agreement entered into a Series B
Preference Shares Purchase Agreement on June 15, 2000 (the "Purchase
Agreement"), pursuant to which PTV has subscribed for 8,333,3333 shares of
Series B Preference Shares of the Company, par value HK$0.001 per share (the
"Series B Preference Shares") and Vertex has subscribed for 12,500,000
1
shares of Series B Preference Shares.
WHEREAS, subject to the adjustment of the purchase price as stipulated
in the Section 2.3 of the Purchase Agreement, immediately after the closing of
the transactions contemplated in the Purchase Agreement, the Founders own
17,784,900 shares of Ordinary Shares, representing 25.07% of the total
outstanding share capital of the Company; Xx. Xxxxx Changqing owns 1,672,100
shares of Series A Preference Shares, representing 2.36% of the total
outstanding share capital of the Company; PTV owns 18,643,000 shares of Series A
Preference Shares and 8,333,333 shares of Series B Preference Shares,
representing 26.28% and 11.75% of the total outstanding share capital of the
Company, respectively; CAST owns 6,000,000 shares of Series A Preference Shares,
representing 8.46% of the total outstanding share capital of the Company;
Normart owns 6,000,000 shares of Series A Preference Shares, representing 8.46%
of the total outstanding share capital of the Company; and Vertex owns
12,500,000 shares of Series B Preference Shares, representing 17.62% of the
total outstanding share capital of the Company, respectively; and
WHEREAS, in connection with the closing of the Purchase Agreement, the
Company, the Existing Shareholders and the Investors desire to set forth the
rights of the Shareholders with respect to the election of the directors, the
business of the Company Group, registration, participation, right of first
refusal, and right of co-sale, according to the terms of this Agreement.
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Certain Definitions. As used in this Agreement, the following terms have the
following respective meanings:
1.1. "Adjusted Pro Rata Share" with respect to any Non-transferring
Preference Shareholder, means the ratio of (a) the total number of
Ordinary Shares and Ordinary Shares warrants, rights, or options held
by that Non-transferring Preference Shareholder (including any Ordinary
Shares into which shares of the Convertible Securities, if any, held by
that Non-transferring Preference Shareholder are convertible) to (b)
the total number of Ordinary Shares and Ordinary Shares warrants,
rights, or options held by all Non-transferring Preference Shareholders
(including any Ordinary Shares into which all outstanding shares of
Convertible Securities are convertible).
1.2. "Affiliate" means, in respect of a corporation, a partnership or other
entities, any other corporation, partnership or entity if it directly,
or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the other specified
corporation, partnership or entity. For the purposes of this
definition, "control" means the ownership, directly or indirectly, of
shares possessing more than 50% of the voting power of the corporation,
or the partnership or other entity.
1.3. "Agreement" has the meaning set forth in the preamble to this
Agreement.
1.4. "Blue Sky" means the statutes of any state in the United States of
America regulating the sale of securities within that state.
2
1.5. "Commission" means the United States Securities and Exchange Commission
or any other federal agency at the time administering the Securities
Act.
1.6. "Ordinary Shares" means the ordinary shares of the Company, par value
HK$0.001 per share..
1.7. "Company" has the meaning set forth in the preamble to this Agreement.
1.8. "Company Group" means the Company and the WFOE, collectively.
1.9. "Convertible Securities" means the Preference Shares, of the Company,
which may be converted into the Ordinary Shares pursuant to the
provisions of the Memorandum of Association of the Company and this
Agreement.
1.10. "Co-Sale Right" has the meaning set forth in Section 5.2 of this
Agreement.
1.11. "Damages" has the meaning set forth in Section 13.1 of this Agreement.
1.12. "Exchange Act" means the United States Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder, all as from time to time in effect.
1.13. "Form F-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the Commission which permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the Commission.
1.14. "Existing Shareholders" has the meaning set forth in the preamble of
this Agreement.
1.15. "Holder" means any holder of outstanding Registrable Securities which
have not been sold to the public, but only if that holder is one of the
Shareholders or an assignee or transferee of registration rights as
permitted by Section 15 of this Agreement.
1.16. "Initiating Holders" means Investors who in the aggregate hold at least
25% of the Registrable Securities.
1.17. "Issuance Notice" has the meaning set forth in Section 4.2 of this
Agreement.
1.18. "New Securities" means any share of the Company, whether authorized or
not, and any rights, options, or warrants to purchase share of the
Company, and securities of any type whatsoever that are, or may become,
convertible into shares of the Company. "New Securities" does not
include: (a) Convertible Securities outstanding as of the date of this
Agreement or issued or issuable pursuant to the Purchase Agreement; (b)
Ordinary Shares issuable upon conversion of the Convertible Securities;
(c) securities offered to
3
third parties in connection with the acquisition of assets from such
third party or in connection with a joint venture merger or other
business combination with the third party; (d) securities offered to
the public pursuant to a Registration Statement; (e) up to a maximum
number of shares issued or issuable to the Company's employees,
consultants, and advisors pursuant to a plan or arrangement approved by
the Company's Board of Directors not exceeding 20% of the total issued
and outstanding share capital of the Company at any time;
1.19. "Non-transferring Preference Shareholder" has the meaning set forth in
Section 5.1.
1.20. "PRC" means the People's Republic of China, excluding Hong Kong Special
Administrative Region, Macao and Taiwan.
1.21. "Preference Shares" means both Series A Preference Shares and Series B
Preference Shares.
1.22. "Preference Shareholders" means the shareholders of Series A Preference
Shares and/or Shareholders of Series B Preference Shares.
1.23. "Prohibited Transfer" has the meaning set forth in Section 5.6 of this
Agreement.
1.24. "Pro Rata Share" with respect to any Shareholder, means the ratio of
(a) the total number of Ordinary Shares and Ordinary Shares warrants,
rights, or options held by that Shareholder (including any Ordinary
Shares into which shares of the Convertible Securities, if any, held by
that Shareholder are convertible) to (b) the total number of Ordinary
Shares and Ordinary Shares warrants, rights, or options outstanding at
the time the determination is made (including any Ordinary Shares into
which all outstanding shares of the Convertible Securities are
convertible).
1.25. "Purchase Agreement" has the meaning set forth in the recitals to this
Agreement.
1.26. "Register", "Registered", and "Registration" means a registration of
the Company as an issuer of securities or of securities issued by the
Company effected by preparing and filing a registration statement in
compliance with the Securities Act or the Exchange Act in the United
States or by a comparable process pursuant to other applicable laws or
regulations in connection with a registration in a jurisdiction other
than the United States (a "Registration Statement"), and the
declaration or ordering of the effectiveness of that Registration
Statement.
1.27. "Registrable Securities" means all Ordinary Shares not previously sold
to the public and issued or issuable to the Investors, including: (a)
Ordinary Shares issuable upon conversion or exercise of either (i) any
Convertible Securities, or (ii) any options or warrants to purchase
Ordinary Shares of the Company; and (b) Ordinary Shares issued pursuant
to bonus issue, subdivision, and similar distributions.
4
1.28. "Registration Expenses" means all expenses incurred by the Company in
complying with Sections 7, 8 and 9 of this Agreement, including,
without limitation, all federal and state Registration, qualification,
and filing fees, printing expenses, fees and disbursements of counsel
for the Company and one special counsel for all Holders (if different
from counsel to the Company), Blue Sky fees and expenses, and the
expense of any special audits incident to or required by any
Registration.
1.29. "Right of First Refusal" has the meaning set forth in Section 5.1 of
this Agreement.
1.30. "Securities Act" means the United States Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder, all as from time to time in effect.
1.31. "Selling Expenses" means all underwriting, discounts and selling,
commissions applicable to the sale of Registrable Securities pursuant
to this Agreement.
1.32. "Shareholders" has the meaning set forth in the preamble to this
Agreement.
1.33. "Shares" has the meaning set forth in Section 5.1 of this Agreement.
1.34. "Subsidiaries" means, with respect to any Person, any corporation,
partnership or limited liability company with respect to which more
than 50% of the outstanding shares of stock or ownership interests of
each class having ordinary voting power (other than, in the case of
corporation, stock having such power only by reason of the occurrence
of a contingency) is at the time owned by such Person, or by one or
more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person.
1.35. "Transfer Notice" has the meaning set forth in Section 5.1 of this
Agreement.
1.36. "Transferring Shareholder" has the meaning set forth in Section 5.1 of
this Agreement.
1.37. "Underwriter's Representative" has the meaning set forth in Section 7.5
of this Agreement.
1.38. "WFOE" has the meaning set forth in the recitals of this Agreement.
2. Election of Directors. So long as Vertex owns of record or beneficially not
less than 50% of Series B Preference Shares acquired by it pursuant to the
Purchase Agreement or Ordinary Shares issuable upon conversion of such
Preference Shares, each of the Existing Shareholders and PTV agrees that at each
meeting of the shareholders of each member of the Company Group called for the
purpose of electing the Board of Directors of such member of the Company Group,
he/it shall vote all of his/its shares or shares in the capital stock of such
member of the Company Group entitled to vote for the election to the Board of
Directors, and shall otherwise use his best efforts to cause the election to the
Board of Directors of one representative nominated by Vertex ("Investors
Representative").
5
2.1 Removal and Replacement. Only the Investors, by mutual consent, can
remove from office and replace any Investor Representative.
2.2 Board Size. Without the mutual consent of the Investors, the Board of
Directors of each member of the Company Group shall consist of not more
than Seven (7) members.
3. Business of the Company Group.
3.1 Without the prior consent of the Shareholders owing at least 50% of all
the outstanding Preference Shares, the Company shall not do any of the
following:
(a) Amend the provisions of the Company's Memorandum of
Association that would adversely affect the rights of any
series of Preference Shares or authorize for issuance of
shares with superior or equal rights to any of the then
outstanding Preference Shares;
(b) Liquidate or dissolve or terminate the operation or business
of the Company or the WFOE;
(c) Declare or pay a dividend on the Ordinary Shares;
(d) Transfer, sell or dispose of any equity interest owned by the
Company in the WFOE;
(e) Engage in sale and transfer of all or substantially all assets
and/or business of the Company or the WFOE, merger or change
in control of the Company, change of business and/or move into
new business, and other corporate reorganisation of the
Company or WFOE;
(f) Incur indebtedness in excess of US$100,000;
(g) Extend loans to any director, officer or employee in excess of
US$10,000 in aggregate;
(h) Purchase or lease any real property or any motor vehicle
valued in excess of US$100,000;
(i) Purchase any securities of any other company in excess of
US$100,000;
(j) Increase in compensation of any of the five (5) most highly
compensated employees of the Company by more than 25% in a
twelve (12) month period;
(k) Enter into any transaction or series of transactions between
the Company and any holder of Ordinary Shares, director,
office or employee of the Company and any director, officer or
employee that is not in the ordinary course of business or for
which the aggregate value exceeds US$10,000;
6
(l) Materially change the Company's business plan or the WFOE's
business plan;
(m) Set up, increase or decrease in the number of issue of new
shares under the employees stock option plan; or
(n) Change in the number of authorised directors of the Board of
Directors.
3.2 Business of the WFOE. Subject to the provisions of Section 3.1 above,
the business and operations of the WFOE shall be determined by the
Board of Directors of the Company.
4. Right of Participation.
4.1. Right of Participation. The Company grants to each Preference
Shareholder the right of participation to purchase its Pro Rata Share
of New Securities which the Company may, from time to time, propose to
sell and issue (other than in a public offering of securities of the
Company). The Preference Shareholders may purchase New Securities on
the same terms and at the same price at which the Company proposes to
sell the New Securities to third parties.
4.2. Notice. In the event the Company proposes to issue New Securities, it
shall give each Preference Shareholder written notice (the "Issuance
Notice") of its intention, describing the type of New Securities, the
price, the terms upon which the Company proposes to issue the same, the
number of shares which each Preference Shareholder is entitled to
purchase pursuant to Section 4.1 of this Agreement, and a statement
that each Preference Shareholder shall have 15 days to respond to the
Issuance Notice. Each Preference Shareholder shall have 15 days from
the date of receipt of the Issuance Notice to agree to purchase its Pro
Rata Share of the New Securities for the price and upon the terms
specified in the Issuance Notice by: (a) giving a written notice to the
Company and (b) making the payment of the purchase price to the Company
for its Pro Rata Share of New Securities if immediate payment is
required by the terms of the Issuance Notice.
4.3 Sale of New Securities. In the event any Preference Shareholder fails
to exercise its right of participation within the 15 day period
specified in Section 4.2, the Company shall have 90 days thereafter to
sell or enter into an agreement (pursuant to which the sale of New
Securities covered by the Issuance Notice shall be closed, if at all,
within 60 days after the date of that agreement) to sell the New
Securities respecting which the Preference Shareholders' rights were
not exercised, at a price and upon the terms as to those specified in
the Issuance Notice. In the event the Company has not sold the New
Securities within this 90 day period (or sold and issued New Securities
in accordance with the foregoing within 60 days from the date of the
agreement), the Company shall not thereafter issue or sell any New
Securities without first offering the New Securities to the Preference
Shareholders in the manner provided in Sections 4.1 and 4.2.
4.4 Notwithstanding the foregoing, the Company shall not be required to
offer or sell such New Securities to any Preference Shareholder if such
sale would cause the Company to
7
be in violation of applicable securities law, by virtue of such offer
or sale.
5. Right of First Refusal; Co-Sale Right
5.1. Right of First Refusal. Subject to Section 5.5 of this Agreement, if
any Shareholder proposes to sell, pledge, or otherwise transfer (a
"Transferring Shareholder") any shares of the Company now owned or
subsequently acquired by the Shareholder (the "Shares") or any interest
therein to any person or entity, including another Shareholder, then
each of the Preference Shareholders, other than an Preference
Shareholder who is a Transferring Shareholder (the "Non-transferring
Preference Shareholder") shall have a right of first refusal (the
"Right of First Refusal") to purchase some or all of the Shares
proposed to be sold or transferred. The Transferring Shareholder shall
give a written notice (the "Transfer Notice") to the Non-transferring
Preference Shareholders describing fully the proposed transfer,
including the number of shares proposed to be transferred, the proposed
transfer price, and the name and address of the proposed transferee.
The Transfer Notice shall be signed both by the Transferring
Shareholder and by the proposed transferee, and shall constitute a
binding commitment of both parties for the transfer of the Shares. Each
Non-transferring Preference Shareholder shall then have the right to
purchase its Adjusted Pro Rata Share of the Shares subject to the
Transfer Notice at a price per share equal to the proposed per share
transfer price, by delivery of a written notice of exercise of its
Right of First Refusal within 20 days after the date the Transfer
Notice is delivered to the Non-transferring Preference Shareholder. To
the extent the Non-transferring Preference Shareholders exercise their
Right of First Refusal in accordance with the terms and conditions set
forth in this Section 5, the number of Shares that the Transferring
Shareholder may sell to the proposed transferee in the transaction
shall be correspondingly reduced. Notwithstanding the foregoing, each
of the Preference Shareholders shall be entitled to transfer all or any
portion of the preference Shares now owned or subsequently acquired by
it to any its Subsidiary or Affiliate.
5.2. Co-Sale Right. Subject to the provisions of Section 5.1 above, if the
Transferring Shareholder proposes to sell, pledge, or otherwise
transfer Shares or any interest therein representing 50% or more of the
Shares to any person or entity, including another Shareholder, and the
Non-Transferring Preference Shareholder(s) have not elected to exercise
their Right of First Refusal under Section 5.1 in full, then each
Non-transferring Preference Shareholder that did not exercise his Right
of First Refusal shall have the right (the "Co-Sale Right"),
exercisable upon written notice to the Transferring Shareholder within
20 days after the date the Transfer Notice is delivered to such
Non-transferring Preference Shareholder, to participate in the sale on
the same terms and conditions as the Transferring Shareholder up to a
maximum number of Shares calculated according to the following formula
(the "Maximum Co-Sale Shares"):
S = Adjusted Pro Rata Share x T, where:
"S" means the number of Shares for which such Non-transferring
Preference Shareholder has a Co-Sale Right, and
8
"T" means the number of Shares covered by the Transfer Notice.
Notice of exercise of a Co-Sale Right shall indicate the number of
Shares an Non-transferring Preference Shareholder wishes to sell under
its Co-Sale Right. Any Non-transferring Preference Shareholder that did
not exercise his Right of First Refusal may elect to sell all or some
of the Shares then held by that Non-transferring Preference Shareholder
(or issuable upon conversion or exercise of any convertible debt,
warrants, or similar securities then held by the Non-transferring
Preference Shareholders) up to that Non-transferring Preference
Shareholder's Maximum Co-Sale Shares. To the extent a Non-transferring
Preference Shareholder exercises his Co-Sale Right in accordance with
the terms and conditions set forth in this Section 5.2, the number of
Shares that the Transferring Shareholder may sell in the transaction
shall be correspondingly reduced.
(a) Delivery of Certificates. The Non-transferring Preference Shareholders
shall effect their participation in the sale by promptly delivering to
the Transferring Shareholder for transfer to the prospective purchaser
one or more certificates, properly endorsed for transfer, which
represent the type and number of Shares which the Non-transferring
Preference Shareholders elect to sell.
(b) Sales Proceeds. The share certificate or certificates that the
Non-transferring Preference Shareholders deliver to the Transferring
Shareholder pursuant to Section 5.2(a) shall be transferred to the
prospective purchaser in consummation of the sale of the Shares
pursuant to the terms and conditions specified in the Transfer Notice,
and the Transferring Shareholder shall use commercially reasonable
efforts to cause the purchaser to remit to each Non-transferring
Preference Shareholder that portion of the sale proceeds to which that
Non-transferring Preference Shareholder is entitled by reason of its
participation in the sale. To the extent that any prospective purchaser
or purchasers prohibits assignment or otherwise refuses to purchase
shares or other securities from the Non-transferring Preference
Shareholders, the Transferring Shareholder shall not sell to the
prospective purchaser or purchasers any Shares unless and until,
simultaneously with the sale, the Transferring Shareholder purchases
those shares or other securities from the Non-transferring Preference
Shareholders.
5.3. Sale by Transferring Shareholder. If the Non-transferring Preference
Shareholders do not exercise their Right of First Refusal or their
Co-Sale Right with respect to the sale of the Shares subject to the
Transfer Notice, the Transferring Shareholder may, not later than 60
days following delivery to the Company and the Non-transferring
Preference Shareholders of the Transfer Notice, conclude a transfer of
all of the Shares covered by the Transfer Notice on terms and
conditions not more favorable to the transferee than those described in
the Transfer Notice. Any proposed transfer on terms and conditions more
favorable to the transferee than those described in the Transfer
Notice, as well as any subsequent proposed transfer of any Shares by
the Transferring Shareholder, shall again be subject to the Right of
First Refusal and Co-Sale Right of the Non-transferring Preference
Shareholders and shall require compliance by the Transferring
Shareholder with the procedures described in this Section 5.
9
5.4. No Adverse Effect. The Non-transferring Preference Shareholders'
exercise or non-exercise of the Right of First Refusal or the Co-Sale
Right shall not adversely affect their rights to participate in
subsequent transfers of Shares by the Transferring Shareholder subject
to the provisions of this Section 5.
5.5. Exempt Transfers. Notwithstanding the foregoing, the Right of First
Refusal and the Co-Sale Right shall not apply to: (a) any transfer of
Shares to the ancestors, descendants, or spouse of the Transferring
Shareholder, or to trusts for the benefit of such persons or the
Transferring-Shareholder; (b) any transfer to an Affiliate or a
Subsidiary of the Transferring Shareholder; or (c) any distribution to
a partner of or member in the Transferring Shareholder; provided, that,
in any of the above cases: (x) the transferring party shall inform the
parties of the transfer prior to effecting it; and (y) the transferee
shall furnish the parties with a written agreement to be bound by and
comply with all provisions of this Section 5. Subject to Section 15
regarding the transfer or non-transfer of certain rights, the
transferred shares shall remain "Shares", and the transferee shall be
treated as a "Shareholder" for purposes of this Agreement.
5.6 Commitment to the Company by the Founders. Notwithstanding the
foregoing, each of the Founders may not reduce his ownership interest
in the Company to below [90%] of the total shares of the Company owned
by it immediately after the closing of the transactions contemplated in
the Purchase Agreement, either by way of selling, assigning,
transferring, pledging or any other means, voluntarily or
involuntarily, without prior written consent from each of the
Preference Shareholders.
5.7. Prohibited Transfer. In the event the Transferring Shareholder sells
any Share in contravention of the Right of First Refusal or the Co-Sale
Right set forth in this Section 5 (a "Prohibited Transfer"), such
transfer shall be null and void and the Company shall not recognize
such transfer and will not effect the transfer on the Company's shares
records.
6. Termination of Covenants. The covenants set forth in Sections 2, 3, 4, and 5
of this Agreement shall terminate and be of no further force or effect upon the
earlier of (a) the closing of the first public offering of the Ordinary Shares
of the Company that is effected pursuant to a Registration Statement filed with,
and declared effective by, either the Commission under the Securities Act or any
comparable regulatory agency for a Registration in a jurisdiction other than the
United States (other than either a public offering limited solely to employees
of the Company or an offering pursuant to Rule 145 under the Securities Act);
(b) the date the Company Registers any securities under the Exchange Act or
other applicable law in a jurisdiction other than the United States; or (c) as
to any Preference Shareholder, as of the date that Preference Shareholder holds
less than 2% of the total outstanding shares of the Company.
7. Demand Registration.
7.1. The Company and the Shareholders currently contemplate making an
initial public offering of its securities in the United States in due
course. The registration rights of Holders set forth in Sections 7 and
8 relate primarily to registration of securities in the United Sates.
In the event that the Company makes an initial public offering of its
10
securities in a jurisdiction outside of the United States, the
Shareholders agree for themselves and their transferees that the
Company shall not be required to register the Registrable Securities
under the Securities Act or the Exchange Act, but shall provide instead
comparable Registration rights in the jurisdiction in which it made its
initial public offering.
7.2. Request for Registration on Form Other Than Form F-3. Subject to the
terms of this Agreement, in the event that the Company receives from
the Initiating Holders at any time six months after the closing of the
Company's initial public offering of shares of Ordinary Shares under a
Registration Statement, a written request that the Company effect any
Registration with respect to all or a part of the Registrable
Securities on a form other than Form F-3 for an offering of at least
25% of the then outstanding Registrable Securities, the Company shall
(i) promptly give written notice of the proposed Registration to all
other Holders, and (ii) as soon as practicable, use its best efforts to
effect Registration of the Registrable Securities specified in the
request, together with any Registrable Securities of any Holder in that
request as are specified in a written request given within 20 days
after written notice from the Company. The Company shall not be
obligated to take any action to effect any Registration pursuant to
this Section 7.2. after the Company has effected two Registrations at
the request of the Preference Shareholders pursuant to this Section
7.2. and the Registration has been declared effective. The substantive
provisions of Section 7.6 shall be applicable to the Registration
initiated under this Section 7.2. The Company shall not be required to
effect more than one Registration pursuant to this Section 7.2 in any
ninety-day period.
7.3. Request for Registration on Form F-3. If Holders who in the aggregate
hold at least 15% of the Registrable Securities request that the
Company file a Registration Statement on Form F-3 (or any successor
form to Form F-3, or any comparable form for a Registration in a
jurisdiction other than the United States) for a public offering of
shares of Registrable Securities, the reasonably anticipated aggregate
price to the public of which, net of Selling Expenses, would not be
less than US$ 1,000,000, and the Company is a registrant entitled to
use Form F-3 or comparable form to Register the Registrable Securities
for an offering, the Company shall use all reasonable efforts to cause
those Registrable Securities to be Registered for the offering on that
form and to cause those Registrable Securities to be qualified in
jurisdictions as the Holder or Holders may reasonably request. The
Company shall not be required to effect more than two Registrations
pursuant to this Section 7.3 in any twelve-month period.
7.4. Registration of Other Securities in Demand Registration. Any
Registration Statement filed pursuant to the request of the Initiating
Holders under this Section 7 may, subject to the provisions of Section
7.5, include securities of the Company other than Registrable
Securities.
7.5. Underwriting in Demand Registration.
(a) Notice of Underwriting. If the Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the
11
Company as a part of their request made pursuant to this Section 7, and
the Company shall include that information in the written notice
referred to in Section 7.2 or 7.3 of this Agreement. The right of any
Holder to Registration pursuant to this Section 7 shall be conditioned
upon that Holder's agreement to participate in the underwriting and the
inclusion of that Holder's Registrable Securities in the underwriting.
(b) Inclusion of Other Holders in Demand Registration. If the Company,
officers or directors of the Company holding Ordinary Shares other than
Registrable Securities, or holders of securities other than Registrable
Securities, request inclusion in the Registration, the Initiating
Holders, to the extent they deem advisable and consistent with the
goals of that Registration, may, in their sole discretion, on behalf of
all Holders, offer to any or all of the Company, those officers or
directors, and the holders of securities other than Registrable
Securities that their securities be included in the underwriting and
may condition that offer on the acceptance by those persons of the
terms of this Section 7. If, however, the number of shares so included
exceeds the number of shares of Registrable Securities included by all
Holders, the Registration shall be treated as governed by Section 8 of
this Agreement rather than this Section 7, and it shall not count as a
Registration for purposes of this Section 7.
(c) Selection of Underwriter in Demand Registration. The Company shall
(together with all Holders proposing to distribute their securities
through the underwriting) enter into an underwriting agreement with the
representative ("Underwriter's Representative") of the underwriter or
underwriters selected for the underwriting by the Holders of a majority
of the Registrable Securities being Registered by the Initiating
Holders and agreed to by the Company.
(d) Marketing Limitation in Demand Registration. In the event the
Underwriter's Representative advises the Initiating Holders in writing
that market factors (including, without limitation, the aggregate
number of shares of Ordinary Shares requested to be Registered, the
general condition of the market, and the status of the persons
proposing to sell securities pursuant to the Registration) require a
limitation of the number of shares to be underwritten, the number of
shares to be included in the Registration shall be allocated as
follows. The Registrable Securities held by officers and directors of
the Company and the Existing Shareholders shall be excluded, pro rata,
from the Registration and underwriting to the extent required by the
limitation. If a limitation of the number of shares is still required
after this exclusion, the number of shares that may be included in the
Registration and underwriting by selling shareholders shall be
allocated among all other Holders and other holders of securities
(other than Registrable Securities) requesting and legally entitled to
include securities in that Registration, in proportion, as nearly as
practicable, to the respective amounts of securities (including
Registrable Securities) which the other Holders and the other holders
would otherwise be entitled to include in the Registration.
(e) Right of Withdrawal in Demand Registration. If any Holder of
Registrable Securities, or a holder of other securities entitled (upon
request) to be included in that Registration, disapproves of the terms
of the underwriting, that person may elect to withdraw
12
therefrom by written notice to the Company, the Underwriter's
Representative, and the Initiating Holders delivered at least three
days prior to the effective date of the Registration Statement. The
securities so withdrawn shall also be withdrawn from the Registration
Statement. If securities are so withdrawn from the Registration, and if
the number of securities to be included in such Registration was
previously reduced as a result of marketing factors pursuant to Section
7.5(d), the Company shall offer to all holders who, but for the
limitation under Section 7.5(d), have retained rights to include
securities in the Registration the right to include additional
securities in the Registration in an aggregate amount equal to the
number so withdrawn, with such securities to be allocated among such
holders requesting additional inclusion in proportion to the respective
amounts of securities (including Registrable Securities) entitled to
inclusion in such Registration held by those holders at the time of
filing of the Registration Statement.
7.6. Other Securities Laws in Demand Registration. In the event of any
Registration pursuant to this Section 7, the Company shall exercise its
best efforts to Register and qualify the securities covered by the
Registration Statement under the securities laws of any other
jurisdictions as shall be reasonably appropriate for the distribution
of the securities; provided, however, that: (a) the Company shall not
be required to do business or to file a general consent to service of
process in any such state or jurisdiction; and (b) notwithstanding
anything in this Agreement to the contrary, in the event any
jurisdiction in which the securities shall be qualified imposes a
non-waivable requirement that expenses incurred in connection with the
qualification of the securities be borne by selling shareholders, the
expenses shall be payable pro rata by the selling shareholders.
8. Piggyback Registration.
8.1. Notice of Piggyback Registration and Inclusion of Registrable
Securities. Subject to the terms of this Agreement, if the Company
decides to Register any of its Ordinary Shares (either for its own
account or the account of a security holder or holders exercising their
respective demand registration rights) on a form that would be suitable
for a Registration involving solely Registrable Securities, the Company
shall: (a) promptly give each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends
to attempt to qualify those securities under the applicable Blue Sky or
other securities laws); and (b) include in that Registration (and any
related qualification under Blue Sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities
specified in a written request delivered to the Company by any Holder
within 20 days after delivery of the written notice from the Company.
8.2. Underwriting in Piggyback Registration.
(a) Notice of Underwriting in Piggyback Registration. If the Registration
of which the Company gives notice is for a Registered public offering,
involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 8. In this event,
the right of any Holder to Registration shall be conditioned upon the
underwriting and the inclusion of that Holder's Registrable Securities
in the underwriting, to the extent provided in this Section 8. All
Holders proposing to distribute
13
their securities through the underwriting shall (together with the
Company and the other holders distributing their securities through the
underwriting) enter into an underwriting agreement with the
Underwriter's Representative for that offering. The Holders shall have
no right to participate in the selection of the underwriters for an
offering pursuant to this Section 8.
(b) Marketing Limitation in Piggyback Registration. In the event the
Underwriter's Representative advises the Holders seeking Registration
of Registrable Securities pursuant to this Section 8 in writing that
market factors (including, without limitation, the aggregate number of
shares of Ordinary Shares requested to be Registered, the general
condition of the market, and the status of the persons proposing to
sell securities pursuant to the Registration) require a limitation of
the number of shares to be underwritten, the Underwriter's
Representative (subject to the allocation priority set forth in Section
8.2(c)) may:
(i) In the case of the Company's initial Registered public
offering, exclude some or all Registrable Securities from the
Registration and underwriting; and
(ii) In the case of any Registered public offering subsequent to
the initial public offering, exclude some or all Registrable
Securities held by the Existing Shareholders from Registration
and underwriting and limit the number of shares of Registrable
Securities to be included in the Registration and
underwriting, to not more than 25% of the securities included
in the Registration.
(c) Allocation of Shares in Piggyback Registration. In the event that the
Underwriter's Representative limits the number of shares to be included
in a Registration pursuant to Section 8.2(b), the number of shares to
be included in the Registration shall be allocated (subject to Section
8.2(b)) as set forth in this Section 8.2(c). The Registrable Securities
held by officers and directors of the Company and the Existing
Shareholders shall be excluded from the Registration and underwriting
to the extent required by the limitation. If a limitation of the number
of shares is still required after this exclusion, the number of shares
that may be included in the Registration and underwriting by selling
shareholders shall be allocated among all other Holders and other
holders of securities (other than Registrable Securities) requesting
and legally entitled to include securities in that Registration, in
proportion, as nearly as practicable, to the respective amounts of
securities (including Registrable Securities) which the Holders and the
other holders would otherwise be entitled to include in the
Registration. For any Registration subsequent to an initial public
offering, the number of Registrable Securities that may be included in
the Registration and underwriting under Section 8.2(c) shall not be
reduced to less than 10% of the aggregate securities included in the
Registration without the prior consent of at least a majority of the
Holders who have requested their shares be included in the Registration
and underwriting. No Registrable Securities or other securities
excluded from the underwriting by reason of this Section 8.2(c) shall
be included in the Registration Statement.
(d) Withdrawal in Piggyback Registration. If any Holder disapproves of the
terms of any
14
underwriting, the Holder may elect to withdraw therefrom by written
notice to the Company and the Underwriter's Representative delivered at
least three days prior to the effective date of the Registration
Statement. Any Registrable Securities or other securities excluded or
withdrawn from the underwriting shall be withdrawn from the
Registration.
9. Expenses of Registration. All Registration Expenses incurred in connection
with one Registration pursuant to Section 7.2 and unlimited Registrations
pursuant to Sections 7.3 and 8, shall be borne by the Company, and the Company
shall bear the reasonable fees of a single counsel for the selling Holders in
the Registrations. All Registration Expenses incurred in connection with any
other Registration, qualification, or compliance, shall be apportioned among the
Holders and other holders, including the Company, of the securities so
Registered on the basis of the number of shares Registered.
10. Termination of Registration Rights. The rights to cause the Company to
Register securities granted under Sections 7 and 8 of this Agreement and to
receive notices pursuant to Section 8 of this Agreement, shall terminate, with
respect to each Holder, on the earliest of: (a) the date five years after the
closing date of the Company's initial public offering of securities pursuant to
a Registration Statement; (b) after the Company's initial public offering of
securities pursuant to a Registration Statement, upon that Holder holding less
than 1% of the total outstanding Ordinary Shares of the Company; and (c) if that
Holder is eligible to sell all of that Holder's Registrable Securities either
(i) under Rule 144 of the Securities Act within any three month period without
volume limitations, or (ii) under Rule 144(k) of the Securities Act, or (iii)
for a Registration in a jurisdiction other than the United States, under a
comparable provision of that jurisdiction's securities laws.
11. Registration Procedures and Obligations. Whenever required under this
Agreement to effect the Registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission (or comparable regulatory agency
for a Registration in a jurisdiction other than the United States) a
Registration Statement with respect to those Registrable Securities and
use its reasonable best efforts to cause that Registration Statement to
become effective, and, upon the request of the Holders of a majority of
the Registrable Securities Registered thereunder, keep the Registration
Statement effective for up to 120 days;
(b) Prepare and file with the Commission (or comparable regulatory agency
for a Registration in a jurisdiction other than the United States),
amendments and supplements to that Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act (or other
applicable law in a jurisdiction other than the United States) with
respect to the disposition of all securities covered by the
Registration Statement;
(c) Furnish to the Holders the number of copies of a prospectus, including
a preliminary prospectus, required by the Securities Act (or other
applicable law in a jurisdiction other than the United States), and any
other documents as they may reasonably request in order
15
to facilitate the disposition of Registrable Securities owned by them;
(d) Use its reasonable best efforts to Register and qualify the securities
covered by the Registration Statement under the securities or Blue Sky
laws of any other jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required to qualify to
do business or file a general consent to service of process in any such
states or jurisdictions, and provided further that in the event any
jurisdiction in which the securities shall be qualified imposes a
non-waivable requirement that expenses incurred in connection with the
qualification of the securities be borne by selling shareholders, those
expenses shall be payable pro rata by selling shareholders;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of the offering. Each
Holder participating in the underwriting shall also enter into and
perform its obligations under such an agreement;
(f) Notify each Holder of Registrable Securities covered by the
Registration Statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act of the happening
of any event as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(g) Provide a transfer agent and registrar for all Registrable Securities
Registered pursuant to the Registration Statement and a CUSIP number
for all those Registrable Securities, in each case not later than the
effective date of the Registration;
(h) Furnish, at the request of any Holder requesting Registration of
Registrable Securities pursuant to this Agreement, on the date that
Registrable Securities are delivered for sale in connection with a
Registration pursuant to this Agreement, (i) an opinion, dated the date
of the sale, of the counsel representing the Company for the purposes
of the Registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, and (ii) a letter
dated the date of the sale, from the independent certified public
accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters; and
(i) Take all reasonable action necessary to list the Registrable Securities
on the primary exchange upon which the Company's securities are then
traded.
12. Information Furnished by Holder. It shall be a condition precedent of the
Company's obligations under this Agreement that each Holder of Registrable
Securities included in any Registration furnish to the Company information
regarding the Holder and the distribution proposed by the Holder as the Company
may reasonably request.
13. Indemnification.
16
13.1. Company's Indemnification of Holders. To the extent permitted by law,
the Company shall indemnify each Holder, each of its officers,
directors, and constituent partners, legal counsel for the Holders, and
each person controlling that Holder, with respect to which
Registration, qualification, or compliance of Registrable Securities
has been effected pursuant to this Agreement, and each underwriter, if
any, and each person who controls any underwriter against all claims,
losses, damages, liabilities, or actions in respect thereof
(collectively, "Damages") to the extent the Damages arise out of or are
based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus or other document (including
any related Registration Statement) incident to any Registration,
qualification, or compliance, or are based on any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
any violation by the Company of any rule or regulation promulgated
under the Securities Act, Exchange Act, applicable Blue Sky laws, or
any other applicable laws in the jurisdiction other than the United
States in which the Registration occurred, applicable to the Company
and relating to action or inaction required of the Company in
connection with such Registration, qualification, or compliance, and
the Company shall reimburse each Holder, each underwriter, and each
person who controls any Holder or underwriter, for any legal and any
other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability, or action; provided,
however, that the indemnity contained in this Section 13.1 shall not
apply to amounts paid in settlement of any Damages if such settlement
is effected without the consent of the Company (which consent shall not
unreasonably be withheld); and provided, further, that the Company will
not be liable in any case to the extent that any Damages arise out of
or are based upon any untrue statement or omission based upon written
information furnished to the Company by a Holder, underwriter, or
control person of a Holder or underwriter and stated to be for use in
connection with the offering of securities of the Company.
13.2. Holder's Indemnification of Company. To the extent permitted by law,
each Holder shall, if Registrable Securities held by that Holder are
included in the securities as to which Registration, qualification or,
compliance is being effected pursuant to this Agreement, indemnify the
Company, each of its directors and officers, each legal counsel and
independent accountant of the Company, each underwriter, if any, of the
Company's securities covered by the Registration Statement, each person
who controls the Company or underwriter within the meaning of the
Securities Act, and each other Holder, each of its officers, directors,
and constituent partners, and each person controlling the other Holder,
against all Damages arising out of or based upon any untrue statement
(or alleged untrue statement) of a material fact contained in any
Registration Statement, prospectus, offering circular, or other
document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Holder of
any rule or regulation promulgated under the Securities Act, Exchange
Act, applicable Blue Sky laws, or any other applicable laws in the
jurisdiction other than the United States in which the Registration
occurred, applicable to the Holder and relating to action or inaction
required of the Holder in connection with such Registration,
qualification, or compliance, and
17
shall reimburse the Company, other Holders, directors, officers,
partners, persons, law and accounting firms, underwriters or each of
their control persons for any legal and any other expenses reasonably
incurred in connection with investigating or defending any claim, loss,
damage, liability, or action, in each case to the extent, but only to
the extent, that the untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in that Registration Statement,
prospectus, offering circular, or other document in reliance upon and
in conformity with written information furnished to the Company by that
Holder and stated to be specifically for use in connection with the
offering of securities of the Company, provided, however, that the
indemnity contained in this Section 13.2 shall not apply to amounts
paid in settlement of any Damages if such settlement is effected
without the consent of that Holder (which consent shall not be
unreasonably withheld) and provided, further, that each Holder's
liability under this Section 13.2 shall not exceed the proceeds (less
underwriting discounts and selling commissions) received by such Holder
from the offering of securities made in connection with that
Registration.
13.3. Indemnification Procedure. Promptly after receipt by an indemnified
party under this Section 13 of notice of the commencement of any
action, the indemnified party shall, if a claim is to be made against
an indemnifying party under this Section 13, notify the indemnifying
party in writing, of the commencement thereof and generally summarize
the action. The indemnifying party shall have the right to participate
in and to assume the defense of that claim; provided, however, that the
indemnifying party shall be entitled to select counsel for the defense
of the claim with the approval of any parties entitled to
indemnification, which approval shall not be unreasonably withheld;
provided further, however, that if either party reasonably determines
that there may be a conflict between the position of the Company and
the Shareholders in conducting the defense of the action, suit, or
proceeding, then counsel for that party shall be entitled to conduct
the defense to the extent reasonably determined by counsel to be
necessary to protect the interests of that party. The failure to notify
an indemnifying party promptly of the commencement of any action, if
prejudicial to the ability of the indemnifying party to defend the
action, shall relieve the indemnifying party, to the extent so
prejudiced, of any liability to the indemnified party under this
Section 13, but the omission to notify the indemnifying party shall not
relieve the party of any liability that the party may have to any
indemnified party otherwise than under this Section 13.
13.4. Contribution. If the indemnification provided for in this Section 13 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Damages, then the indemnifying
party, in lieu of indemnifying the indemnified party hereunder, shall
contribute to the amount paid or payable by the indemnified party as a
result of those Damages in such proportion as is appropriate to reflect
the relative fault of the indemnifying party, on one hand, and of the
indemnified party, on the other hand, in connection with the statements
or omissions that resulted in Damages as well as any other relevant
equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying or the indemnified party and
the
18
parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent the statement or omission.
13.5. Conflicts. Notwithstanding the foregoing, to the extent that provisions
on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
13.6 Each Holder hereby agrees that, if requested by the Company and the
Underwriter's Representative (if any) in connection with the Company's
initial public offering, the Holder shall not sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise transfer
or dispose of any Registrable Securities or other securities of the
Company without the prior written consent of the Company and the
Underwriter's Representative for such period of time (not to exceed 180
days) following the effective date of a Registration Statement of the
Company filed under the Securities Act (or other applicable law in a
jurisdiction other than the United States in which a Registration
occurred) as may be requested by the Underwriter's Representative. The
obligations of Holders under this Section 13.6 shall be conditioned
upon similar agreements being in effect with each other shareholder who
is an officer, director, or 5% shareholder of the Company.
13.7. Survival of Obligations. The obligations of the Company and Holders
under this Section 13 shall survive the completion of any offering of
Registrable Securities in a Registration Statement under this Agreement
or otherwise.
14. Reports Under the Exchange Act. With a view to making available to Holders
the benefits of Rule 144 promulgated under the Securities Act and any other rule
or regulation of the Commission that may at any time permit a Holder to sell
securities of the Company to the public without Registration or pursuant to a
Registration on Form F-3, the Company agrees to:
(a) use its reasonable efforts to make and keep public information
available, as those terms are understood and defined in Rule 144, at
all times after 90 days after the effective date of the first
Registration Statement filed by the Company for the offering of its
securities to the public;
(b) take all reasonable action, including the voluntary Registration of its
Ordinary Shares under Section 12 of the Exchange Act, necessary to
enable the Holders to utilize Form F-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable
after the end of the fiscal year in which the first Registration
Statement filed by the Company for the offering of its securities to
the general public is declared effective;
(c) use its reasonable efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act;
19
(d) use its reasonable efforts to furnish to any Holder, so long as the
Holder owns any Registrable Securities, promptly upon request (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144 (at any time after 90 days after the
effective date of the first Registration Statement filed by the
Company) or of the Securities Act and the Exchange Act (at any time
after it has become subject to those reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to
Form F-3 (at any time after it so qualifies); (ii) a copy of the most
recent annual or quarterly report of the Company and any other reports
and documents filed by the Company; and (iii) any other information as
may be reasonably requested in availing any Holder of any rule or
regulation of the Commission which permits the selling of any
securities without Registration or pursuant to that form; and
(e) use its reasonable efforts for a Registration in a jurisdiction other
than the United States, take actions similar to those set forth in
paragraphs (a), (b), (c) and (d) of this Section 14 with a view to
making available to Holders the benefits of the corresponding provision
or provisions of that jurisdiction's securities laws.
15. Transfer of Rights. The rights under Sections 3, 4, 5, 7 and 8 may be
assigned by any Holder to a transferee or assignee of any Convertible Securities
or Registrable Securities not sold to the public, which acquires at least 25% of
the total shares of the Holder's Registrable Securities, provided that such
assignee or transferee agrees in writing to be bound by Section 13.6 as if it
were a Holder for purposes of that section. Notwithstanding the limitation set
forth in the foregoing sentence respecting the minimum number of shares which
must be transferred, (i) any Holder which is a partnership may transfer that
Holder's Registration rights to that Holder's constituent partners without
restriction as to the number or percentage of shares acquired by any constituent
partner; and (ii) any Preference Shareholder may transfer its Registration
rights to its Affiliate or Subsidiaries.
16. Miscellaneous.
16.1. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the Hong Kong SAR, excluding those laws
that direct the application of the laws of another jurisdiction.
16.2. Counterparts and Facsimile Execution. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
Any counterpart or other signature delivered by facsimile shall be
deemed for all purposes as being a good and valid execution and
delivery of this Agreement by that party.
16.3. Headings. The headings of the Sections of this Agreement are for
convenience and shall not by themselves determine the interpretation of
this Agreement.
16.4. Notices. Any notice required or permitted by this Agreement shall be
given in writing and shall be conclusively deemed effectively given
upon personal delivery or delivery by courier, or on the first business
day after transmission if sent by confirmed facsimile
20
transmission, or 15 days after deposit in the official mails of the
jurisdiction of mailing, by registered or certified mail, postage
prepaid, addressed: (a) if to the Company, as set forth below the
Company's name on the signature page of this Agreement; (b) if to a
Shareholder, at that Shareholder's address (and any additional
addresses) as set forth on Exhibit A to this Agreement; or (c) at such
other address as the Company or that Shareholder may designate by 15
days' advance written notice to all other parties to this Agreement.
16.5. Amendment of Agreement. Any provision of this Agreement may be amended
only by a written instrument signed by the Company and by persons
holding at least two-thirds of the Registrable Securities (calculated
on an as-converted basis).
16.6. Severability. In case any provision of this Agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or
impaired thereby.
16.7. Entire Agreement; Successors and Assigns. This Agreement constitutes
the entire contract among the Company and the Shareholders relative to
the subject matter of this Agreement, and shall supersede any previous
agreement between the Company and any Shareholder concerning the
subject matter of this Agreement. Subject to the exceptions
specifically set forth in this Agreement, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective executors, administrators, heirs, successor, and assigns of
the parties.
16.8 Each Shareholder agrees not to make any disposition of all or any
portion of the Convertible Securities and unregistered Ordinary Shares
except (i) pursuant to an effective registration statement under the
Securities Act or (ii) in a transaction exempt from such registration
requirements, in each case in compliance with other applicable
securities laws, and unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this Section 17.8
as if it were a Shareholder. Such Shareholder shall advise the Company
of any proposed disposition and, if requested by the Company, such
Shareholder shall furnish the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not
require registration of such securities under the Securities Act or
other applicable securities regulations prior to the completion of the
disposition.
16.9 Lock-Up. Each Shareholder hereby agrees for itself and its transferees
that, if requested by the Company and the Underwriter's Representative
(if any) in connection with the Company's initial public offering,
neither it nor its transferees will sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise transfer or dispose
of any Registrable Securities or other securities of the Company
without the prior written consent of the Company and the Underwriter's
Representative for such period of time (not to exceed 180 days)
following the effective date of a Registration Statement of the Company
filed under the Securities Act (or other applicable law in a
jurisdiction other than the United States in which a Registration
occurred) as may be requested by the Underwriter's Representative. The
obligations of Holders under this Section 17.9 shall
21
be conditioned upon similar agreements being in effect with each other
shareholder who is an officer, director of the Company or Existing
Shareholders.
16.10 Non-Competition. The Founders shall not, and shall cause their
Affiliates and Subsidiaries not to, manage or involve in the business
or operations, either directly or indirectly, of any Person engaged in
any business which is similar or competes with the business or
operations of the Company or the WFOE.
16.11 Assignment. The Preference Shareholders shall be entitled to transfer
all or any portion of the Preference Shares to any of its Affiliates
and Subsidiaries. Such Preference Shareholders shall provide notice of
such transfer to the Company and other Shareholders stating the name
and the address of the assignee and identifying the securities of the
Company being transferred.
22
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the day and year first above written.
PTV-CHINA, INC.
by: /s/ Gongquan Wang
__________________________________
Address: XXXXX Xxxxx, Xxxxx X, Xxxx 000
Xx. 0 Jianguomentnei Dajie
Beijing 100005
P. R. China
VERTEX TECHNOLOGY FUND (III) LTD.
by: /s/ Xxx Xxxxx Nam
__________________________________
Address: 00 Xxxxxxx Xxxx Xxxxx
#00-00 Xxxxxxx XXX
Xxxxxxxxx Science Park
Xxxxxxxxx 000000
CAST HOLDINGS, INC.
BY: /s/ Xxxxxxxx Xxxxx
__________________________________
ADDRESS: Xxxx 0&0, 00xx Xxxxx,
Xxx Xxxxxxx House,
00-000 Xxxx Xxx Xxxxxx,
Xxxxxx Xxx, Xxxx Xxxx
NORMART ENTERPRISES, INC.
BY: /s/ Xxxx Xxxx
__________________________________
ADDRESS: 000 Xxxxxxx Xxx.,
Xxxxx X,
Xxxxxxxx Xxxx, XX 00000
U.S.A
23
CHINA FINANCE ONLINE CO., LTD.
BY: /s/ Xxxxxxxx Xxxx
__________________________________
ADDRESS: Unit C, 8/F., East Wing,
Sincere Insurance Xxxxxxxx,
0-0 Xxxxxxxx Xxxx, Xxxx Xxxx
FOUNDERS OF THE COMPANY
BY: /s/ Xxxxxxxx Xxxx
__________________________________
FOR AND ON BEHALF OF
MR. CEN ANBIN
ADDRESS: 22# - 0 Xxxxx Xxxxx,
Xxxxxxx, Xxxxx 00000
XX. XXX QIXIONG
ADDRESS: 2nd Floor, Wuyang New City Plaza,
Siyou New Rd., Guangzhou
P.R.China
XX. XXX GANG
ADDRESS: 2nd Floor, Wuyang New City Plaza,
Siyou New Rd., Guangzhou
P.R.China
XX. XXXXX LIBO
ADDRESS: Rm.201 2/F Ping'an Mansion,
Xx.00 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx, Xxxxxxx
X.X.Xxxxx 000000
MR. NING JUN
ADDRESS: Rm.201 2/F Ping'an Mansion,
Xx.00 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx, Xxxxxxx
P.R.China 100032
24
XX. XXXX XINZHENG
ADDRESS: Rm.201 2/F Ping'an Mansion,
Xx.00 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx, Xxxxxxx
P.R.China 100032
MR. FAN ZHONGKUI
ADDRESS: Rm.201 2/F Ping'an Mansion,
Xx.00 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxxxxxx, Xxxxxxx
P.R.China 100032
XX. XXXXX CHANGQING
BY: /s/ Xxxxx Xxxxxxxxx
__________________________________
ADDRESS: Rm 2101 - 2, Arion Comm Center,
0 - 00 Xxxxx'x Xx Xxxx, Xxxx Xxxx
25
