\n 12.01. Termination………………………………………………………………….. 43
\n 12.02. Effect of Termination…………………………………………………………. 43<\/p>\nARTICLE XIII DEFINITIONS………………………………………………………………….. 44
\n 13.01. Definitions………………………………………………………………….. 44<\/p>\n
ARTICLE XIV MISCELLANEOUS………………………………………………………………… 52
\n 14.01. Notices……………………………………………………………………… 52
\n 14.02. Entire Agreement……………………………………………………………… 53
\n 14.03. Expenses…………………………………………………………………….. 53
\n 14.04. Public Announcements………………………………………………………….. 53
\n 14.05. Confidentiality………………………………………………………………. 53
\n 14.06. Further Assurances; Post-Closing Cooperation…………………………………….. 54
\n 14.07. Waiver………………………………………………………………………. 54
\n 14.08. Amendment……………………………………………………………………. 54
\n 14.09. No Third Party Beneficiary…………………………………………………….. 55
\n 14.10. No Assignment; Binding Effect………………………………………………….. 55
\n 14.11. Headings…………………………………………………………………….. 55
\n 14.12. Arbitration………………………………………………………………….. 55
\n 14.13. Waiver of Immunity……………………………………………………………. 55
\n 14.14. Invalid Provisions……………………………………………………………. 56
\n 14.15. Governing Law………………………………………………………………… 56
\n 14.16 Execution of Counterparts……………………………………………………… 56
\n<\/c><\/s><\/table>\n
-iv-<\/p>\n
SCHEDULES<\/p>\n
SCHEDULE 1.01 Schedule of Sellers<\/p>\n
SCHEDULE 7.05* Schedule of Third Party Consents<\/p>\n
EXHIBITS*<\/p>\n
EXHIBIT A Escrow Agreement<\/p>\n
EXHIBIT B Lock-Up Agreement<\/p>\n
EXHIBIT C1 Registration Rights Agreement for Founders and
\n Management Shareholders<\/p>\n
EXHIBIT C2 Registration Rights Agreement for Remaining
\n Shareholders<\/p>\n
EXHIBIT D Officer’s Certificate of the Company<\/p>\n
EXHIBIT E Sellers’ U.S. Opinion to Purchaser<\/p>\n
EXHIBIT F Sellers’ PRC Opinion to Purchaser<\/p>\n
EXHIBIT G Sellers’ BVI Opinion to Purchaser<\/p>\n
EXHIBIT H Sellers’ Cayman Islands Opinion to Purchaser<\/p>\n
EXHIBIT I Purchaser’s U.S. Opinion to Sellers<\/p>\n
EXHIBIT J Employment Agreements<\/p>\n
* Certain Schedules and Exhibits are omitted from this filing. The Company
\nagrees to furnish supplementally a copy of any Schedule or Exhibit to the
\nSecurities and Exchange Commission upon request.<\/p>\n
-v-<\/p>\n
This SHARE PURCHASE AGREEMENT (this “Agreement”), dated as of
\n ———
\nJanuary 20, 2002, is made and entered into by and among AsiaInfo Holdings, Inc.
\na Delaware corporation (“Purchaser”), Bonson Information Technology Holdings
\n ———
\nLimited, a Cayman Islands company (the “Company”), and the Persons set forth on
\n ——-
\nSchedule 1.01 hereto (each a “Seller” and collectively, the “Sellers”).
\n————- —— ——-
\nCapitalized terms not otherwise defined herein have the meanings set forth in
\nSection 13.01.<\/p>\n
WHEREAS, each Seller, as indicated on Schedule 1.01, is either a
\n ————-
\nholder of record (a “Record Holder”), a beneficial owner (a “Beneficial Owner”)
\n ————- —————-
\nor both a Record Holder and a Beneficial Owner of the number of Ordinary Shares
\nor Preferred Shares of the Company set forth opposite such Seller’s name on
\nSchedule 1.01, which together constitute all issued and outstanding capital
\n————-
\nshares of the Company (such Ordinary Shares and Preferred Shares being referred
\nto herein, collectively, as the “Shares”); and
\n ——<\/p>\n
WHEREAS, the Sellers desire to sell, and Purchaser desires to
\npurchase, the Shares on the terms and subject to the conditions set forth in
\nthis Agreement;<\/p>\n
NOW, THEREFORE, in consideration of the mutual covenants and
\nagreements set forth in this Agreement, and for other good and valuable
\nconsideration, the receipt and sufficiency of which are hereby acknowledged, the
\nparties hereto agree as follows:<\/p>\n
ARTICLE I<\/p>\n
SALE OF SHARES AND CLOSING<\/p>\n
1.01. Sale and Purchase of Shares. At the Closing, subject to the
\n —————————
\nterms and conditions herein and in reliance on the representations and
\nwarranties of Purchaser contained herein, and in the manner herein provided,
\neach Seller shall sell and deliver to the Purchaser all of the Shares of the
\nCompany owned beneficially or of record by such Seller as set forth in Schedule
\n ——–
\n1.01, and subject to the terms and conditions herein and in reliance on the
\n—-
\nrepresentations and warranties of the Sellers contained herein, Purchaser shall
\npurchase such Shares from each such Seller on the terms and conditions set forth
\nherein.<\/p>\n
1.02. Purchase Price and Consideration. In consideration of the
\n ——————————–
\nsale, conveyance, transfer and delivery of the Shares and all the right, title
\nand interest therein, Purchaser agrees to pay the Record Holders a per share
\nprice for each Share equal to US$0.28481 (the “Purchase Price”), subject to the
\n ————–
\nfollowing adjustments and other provisions:<\/p>\n
(a) Exceptional Developments. On the Closing Date, Exceptional
\n ————————
\nDevelopments shall sell to Purchaser a total of 36,375,000 Shares, as set forth
\nin Schedule 1.01. In consideration of the sale by Exceptional Developments of
\n ————-
\nits Shares, Purchaser shall pay Exceptional Developments the Purchase Price in
\nrespect of all of such Shares, by wire transfer of immediately available funds
\non the Closing Date, to such account as Exceptional Developments may reasonably
\ndirect by written notice delivered to Purchaser at least two (2) Business Days
\nbefore the Closing Date.<\/p>\n
(b) Founders and Management Shareholders.
\n ————————————<\/p>\n
(i) On the Closing Date, the Record Holders that hold
\n Shares for the benefit of Founders or Management Shareholders
\n (including Maple Tree Group to the extent of the 77,482,038 Shares it
\n holds for the benefit of Founders and Management Shareholders) shall
\n sell to Purchaser a total of 94,533,146 Shares, in the respective
\n amounts set forth in Schedule 1.01. In consideration of the sale by
\n ————-
\n such Record Holders of their respective Shares, Purchaser shall,
\n within 30 days of the Company’s delivery to Purchaser of the 2001
\n Audited Financial Statements, <\/p>\n
pay to each such Record Holder an amount of cash and AsiaInfo Shares
\n determined in accordance with paragraph (ii) below (the “Base
\n —-
\n Performance Consideration”) and adjusted in accordance with paragraph
\n ————————-
\n (iii) below, (the “Adjusted Performance Consideration”), provided that
\n ———————————-
\n 10% of such cash and AsiaInfo Shares shall be delivered by Purchaser
\n (by wire transfer of immediately available funds in the case of cash,
\n and rounded up to the nearest whole number of AsiaInfo Shares in the
\n case of AsiaInfo Shares) to the Escrow Agent under the Escrow
\n Agreement to be entered into on the Closing Date in accordance with
\n Section 1.04.<\/p>\n
(ii) The Base Performance Consideration shall consist of
\n (x) cash equal to 100% of the aggregate Purchase Price payable in
\n respect of two thirds of the Shares sold in accordance with paragraph
\n (i) above and (y) AsiaInfo Shares having an aggregate Market Value
\n equal to 125% of the aggregate Purchase Price payable in respect of
\n one third of such Shares.<\/p>\n
(iii) The Adjusted Performance Consideration shall be
\n calculated in accordance with the following formula:<\/p>\n
Adjusted Performance Consideration = Base Performance Consideration x
\n [(50% x Net Income Index) + (50% x Net Sales Backlog Index)] x
\n Multiplier<\/p>\n
where:<\/p>\n
. Net Income Index = 0, if Actual Net Income
\n is less than 50% of
\n Projected Net Income;<\/p>\n
= Actual Net Income divided
\n by Projected Net Income,
\n if Actual Net Income is
\n equal to or greater than
\n 50% but less than 150% of
\n Projected Net Income; or<\/p>\n
= 1.5, if Actual Net Income
\n is equal to or greater
\n than 150% of Projected
\n Net Income.<\/p>\n
. Projected Net Income = US$3,500,000.<\/p>\n
. Net Sales Backlog Index = 0, if Actual Net Sales
\n Backlog is less than 50%
\n of Projected Net Sales
\n Backlog;<\/p>\n
= Actual Net Sales Backlog
\n divided by Projected Net
\n Sales Backlog, if Actual
\n Net Sales Backlog is
\n equal to or greater than
\n 50% but less than 150% of
\n Projected Net Sales
\n Backlog; or<\/p>\n
= 1.5, if Actual Net Sales
\n Backlog is equal to or
\n greater than 150% of
\n Projected Net Sales
\n Backlog.<\/p>\n
. Projected Net Sales Backlog = US$6,000,000.<\/p>\n
. Multiplier = 108%, if 50% of Net
\n Income Index plus 50% of<\/p>\n
-2-<\/p>\n
Net Sales Backlog Index
\n is greater than one, or<\/p>\n
= 100%, if 50% of Net
\n Income Index plus 50% of
\n Net Sales Backlog Index
\n is less than or equal to
\n one.<\/p>\n
(iv) Subject to the delivery of cash and AsiaInfo Shares
\n to the Escrow Agent in accordance with paragraph (i) above, the cash
\n portion of the Adjusted Performance Consideration shall be payable by
\n wire transfer of immediately available funds to such account as
\n directed by written notice to Purchaser delivered by each Record
\n Holder that holds Shares for the benefit of respective Founders or
\n Management Shareholders. The portion of the Adjusted Performance
\n Consideration consisting of AsiaInfo Shares shall be delivered to such
\n Sellers (rounded up to the nearest whole number of AsiaInfo Shares).<\/p>\n
(v) In addition to the other provisions of this Section
\n 1.02, the payment of the Adjusted Performance Consideration in respect
\n of the 8,325,000 Shares held of record by Inter-Connect Tech. Limited,
\n shall be made in accordance with the following provisions: (A) the
\n cash and AsiaInfo Shares constituting the Adjusted Performance
\n Consideration in respect of the 4,406,434 Shares that have been
\n allocated to the individuals set forth in Section 2.14(i) of the
\n ———————-
\n Disclosure Schedule (the “Allocated Inter-Connect Shares”) shall be
\n ——————- ——————————
\n paid and delivered to the trust established pursuant to Section 7.20;
\n (B) the AsiaInfo Shares constituting part of the Adjusted Performance
\n Consideration in respect of the 3,918,566 unallocated Shares set forth
\n in Section 2.14(i) of the Disclosure Schedule (the “Unallocated Inter-
\n —————————————— ——————
\n Connect Shares”) shall be delivered to Persons to be determined by the
\n ————–
\n Founders and Management Shareholders and identified in written
\n instructions to be delivered by the Founders and Management
\n Shareholders to Purchaser as soon as reasonably practicable after the
\n date of this Agreement; (C) 50% of the cash constituting part of the
\n Adjusted Performance Consideration for the Unallocated Inter-Connect
\n Shares shall be paid to Persons to be determined by the Founders and
\n Management Shareholders and identified in written instructions to be
\n delivered by the Founders and Management Shareholders to Purchaser as
\n soon as reasonably practicable after the date of this Agreement; (D)
\n 37.36% of the cash constituting part of the Adjusted Performance
\n Consideration for the Unallocated Inter-Connect Shares shall be paid
\n to the trust established pursuant to Section 7.20; and (E) 12.64% of
\n the cash constituting part of the Adjusted Performance Consideration
\n for the Unallocated Inter-Connect Shares shall be paid to Zhijie Lu.<\/p>\n
(vi) In order to facilitate payment of the Adjusted
\n Performance Consideration pursuant to this Section 1.02(b), Purchaser,
\n the Company and Sellers shall cause the Auditor to calculate Actual
\n Net Income and Actual Net Sales Backlog and provide certificates to
\n Purchaser, the Company and Sellers regarding such calculations as
\n promptly as practicable and in no event later than fifteen (15) days
\n following the Company’s delivery to Purchaser of the 2001 Audited
\n Financial Statements. Purchaser and Sellers shall cooperate with the
\n Auditor in providing any information reasonably required by the
\n Auditor for purposes of the foregoing, and the Founders, the
\n Management Shareholders and Remaining Shareholders shall pay all of
\n the fees and expenses of the Auditor in connection with such
\n calculations.<\/p>\n
(vii) Purchaser’s payment of the Adjusted Performance
\n Consideration will be subject to set-off for any obligations or
\n liabilities owed by Sellers to Purchaser arising out of or related to
\n this Agreement, including without limitation the indemnification
\n obligations set forth in Articles IX and XI.<\/p>\n
(c) Remaining Shareholders. On the Closing Date, the Record
\n ———————-
\nHolders that hold Shares for the benefit of Remaining Shareholders (including
\nMaple Tree to the extent of the 10,912,962 Shares it <\/p>\n
-3-<\/p>\n
holds for the benefit of Remaining Shareholders) shall sell to Purchaser a total
\nof 24,293,218 Shares, in the respective amounts set forth in Schedule 1.01. In
\n ————-
\nconsideration of the sale by such Record Holders of their respective Shares, the
\nPurchaser shall deliver to each such Record Holder, on the Closing Date or as
\nsoon as reasonably practicable thereafter, that number of AsiaInfo Shares having
\nan aggregate Market Value equal to 100% of the aggregate Purchase Price payable
\nin respect of all of the Shares sold by such Record Holder, provided that 10% of
\nsuch AsiaInfo Shares (rounded up to the nearest whole number of AsiaInfo Shares)
\nshall be delivered by Purchaser to the Escrow Agent under the Escrow Agreement
\nto be entered into on the Closing Date in accordance with Section 1.04.<\/p>\n
(d) AsiaInfo Share Cap. Notwithstanding the foregoing or
\n ——————
\nanything to the contrary herein, in the event that the aggregate number of
\nAsiaInfo Shares to be delivered to Record Holders in accordance with paragraphs
\n(b) and (c) above exceeds the Share Cap (as defined below), Purchaser shall have
\nthe right, in its sole discretion, to deliver cash in lieu of AsiaInfo Shares,
\nto such Record Holders, on a pro rata basis, for part or all of such portion of
\nthe aggregate Purchase Price that exceeds the Share Cap. For purposes of the
\nforegoing, “Share Cap” means the aggregate number of AsiaInfo Shares that would
\n ———
\nbe deliverable pursuant paragraph (b) and (c) if the Market Value of such
\nAsiaInfo Shares equals US$8.00 per share.<\/p>\n
(e) Delivery of AsiaInfo Shares. In the event that on the
\n —————————
\nClosing Date, Purchaser is unable to deliver AsiaInfo Shares to the Remaining
\nShareholders as a result of time delays associated with instructing its transfer
\nagent and registrar to issue appropriate certificates representing such AsiaInfo
\nShares, Purchaser shall deliver at the Closing a copy of an executed and
\nirrevocable instruction letter to its registrar and transfer agent regarding the
\nissuance of the AsiaInfo Shares, and an acknowledgement from such registrar and
\ntransfer agent of its receipt thereof confirming that conditions and approvals
\nfor registering and transferring such AsiaInfo Shares are complete and in order.<\/p>\n
1.03. Closing. The Closing will take place at the offices of
\n ——-
\nClifford Chance, 29th Floor, Jardine House, One Connaught Place, Central, Hong
\nKong, or at such other place as Purchaser and Sellers mutually agree, at 10:00
\nA.M. local time, on the Closing Date. At the Closing, the Sellers will assign
\nand transfer to Purchaser good and valid title in and to the Shares, free and
\nclear of all Liens, by delivering to Purchaser the certificates representing the
\nShares, in genuine and unaltered form, duly endorsed in blank or accompanied by
\nduly executed stock powers endorsed in blank, with requisite share transfer tax
\nstamps, if any, attached. At the Closing, Purchaser shall: (i) pay to
\nExceptional Developments by wire transfer of immediately available funds the
\naggregate Purchase Price payable in respect of the Shares sold by Exceptional
\nDevelopments; and (ii) subject to the Share Cap in Section 1.02(f) and the
\ndelivery of AsiaInfo Shares to the Escrow Agent in accordance with Section
\n1.02(c), issue to the Record Holders who are, or hold Shares for the benefit of,
\nRemaining Shareholders a number of AsiaInfo Shares having an aggregate Market
\nValue equal to 100% of the Purchase Price payable in respect of the Shares sold
\nby the Remaining Shareholders. If Purchaser elects under Section 1.02(f) to
\ndeliver cash in lieu of AsiaInfo Shares to the Record Holders who are, or hold
\nShares for the benefit of, the Remaining Shareholders for part or all of such
\nportion of the aggregate Purchase Price that exceeds the Share Cap, Purchaser
\nshall pay to such Record Holder by certified check or by wire transfer of
\nimmediately available funds such amount at Closing.<\/p>\n
1.04. Escrow. On the Closing Date, Purchaser, the Founders, the
\n ——
\nManagement Shareholders, the Remaining Shareholders and the Escrow Agent shall
\nenter into an escrow agreement substantially in the form of Exhibit A (the
\n ———
\n“Escrow Agreement”). In connection with the Closing and the payment of the
\n —————-
\nAdjusted Performance Consideration, Purchaser shall deliver to the Escrow Agent
\ncertain amounts of cash and AsiaInfo Shares described in Section 1.02
\n(collectively the “Escrow Amount”), as collateral for the indemnification
\n ————-
\nobligations of the Sellers hereunder. Release of the Escrow Amount will be
\npermitted only in accordance with the terms and conditions of the Escrow
\nAgreement. The Founders, the Management Shareholders, the Remaining Shareholders
\nand Purchaser shall issue joint written instructions to the Escrow Agent (i) to
\ndistribute the Escrow Amount, upon final resolution of all <\/p>\n
-4-<\/p>\n
claims by Purchaser for indemnification hereunder, to the Purchaser or such
\nSellers or both in accordance with such resolution or (ii) if no claims for
\nindemnification by the Purchaser shall be made on or before the first
\nanniversary of the Closing Date, to distribute the Escrow Amount to such Sellers
\nin accordance with their respective entitlements.<\/p>\n
1.05. Lock-Up Agreements. On the Closing Date, the Founders and
\n ——————
\nManagement Shareholders and the Remaining Shareholders shall enter into lock-up
\nagreements with Purchaser in respect of the AsiaInfo Shares, substantially in
\nthe form of Exhibit B (the “Lock-up Agreements”). The term of the applicable
\n ——— ——————
\nlock-up period shall be one year following the Closing Date for each of the
\nFounders and Management Shareholders and ninety (90) days following the Closing
\nDate for each of the Remaining Shareholders.<\/p>\n
1.06. Registration Rights Agreements. On the Closing Date, the
\n ——————————
\nRecord Holders that are, or hold Shares for the benefit of, Founders or
\nManagement Shareholders (including Maple Tree Group in respect of the Shares it
\nholds for the benefit of Founders or Management Shareholders), shall enter into
\na Registration Rights Agreement in the Form of Exhibit C1, and the Record
\n ———-
\nHolders that are, or hold Shares for the benefit of, Remaining Shareholders
\n(including Maple Tree Group in respect of the Shares it holds for the benefit of
\nRemaining Shareholders) shall enter into a Registration Rights Agreement in the
\nForm of Exhibit C2.
\n ———-<\/p>\n
ARTICLE II<\/p>\n
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY AND ITS SUBSIDIARIES<\/p>\n
The Company, each Founder, each Management Shareholder and each
\nRemaining Shareholder, jointly and severally, represents and warrants to
\nPurchaser as set forth below as of the date of this Agreement and as of the
\nClosing Date, subject to the exceptions set forth in the disclosure schedule
\nattached hereto (the “Disclosure Schedule”), the section numbers and letters of
\n ——————-
\nwhich correspond to the section numbers and letters of this Agreement.<\/p>\n
2.01. Authority. The execution and delivery of this Agreement and
\n ———
\nthe Operative Agreements to which the Company is a party, and the performance by
\nthe Company of its obligations hereunder and thereunder, have been duly and
\nvalidly authorized by the Board of Directors and the shareholders of the
\nCompany, no other corporate action on the part of the Company or its
\nshareholders being necessary. This Agreement has been duly and validly executed
\nand delivered by the Company and constitutes, and upon the execution and
\ndelivery by the Company of the Operative Agreements to which it is a party, such
\nOperative Agreements will constitute, legal, valid and binding obligations of
\nthe Company enforceable against the Company in accordance with their terms.<\/p>\n
2.02. Organization of the Company. The Company is a corporation
\n —————————
\nduly organized, validity existing and in good standing under the laws of the
\nCayman Islands. The Company has full corporate power and authority to conduct
\nits business as and to the extent now conducted and to own, use and lease its
\nAssets and Properties. Section 2.02 of the Disclosure Schedule lists all lines
\n —————————————
\nof business in which the Company is participating or engaged. The Company is
\nduly qualified, licensed or admitted to do business and is in good standing in
\nthose jurisdictions specified in Section 2.02 of the Disclosure Schedule, which
\n —————————————
\nare the only jurisdictions in which the ownership, use or leasing of its Assets
\nand Properties, or the conduct or nature of its business, makes such
\nqualification, licensing or admission necessary, except for those jurisdictions
\nin which the adverse effects of all such failures by the Company and the
\nSubsidiaries to be qualified, licensed or admitted and in good standing can in
\nthe aggregate be eliminated without material cost or expense by the Company or a
\nSubsidiary, as the case may be, becoming qualified or admitted and in good
\nstanding. The name of each director and officer of the <\/p>\n
-5-<\/p>\n
Company and its Subsidiaries on the date hereof, and the position held by each,
\nare listed in Section 2.02 of the Disclosure Schedule. The Company has, prior to
\n —————————————
\nthe execution of this Agreement, delivered to Purchaser true and complete copies
\nof the memorandum and articles of association of the Company as in effect on the
\ndate hereof.<\/p>\n
2.03. Share Capital. The authorized share capital of the Company
\n ————-
\nconsists of 1,000,000,000 Ordinary Shares, of which 113,625,000 Ordinary Shares
\nare issued and outstanding, as of the date of this Agreement, and 36,375,000
\nPreferred Shares, all of which are issued and outstanding. The Company has
\nissued 8,000,000 Employee Share Options, none of which have been exercised as of
\nthe date of this Agreement, but all of which shall be exercised in accordance
\nwith their terms prior to the Closing and in accordance with the Cashless
\nExercise procedures set forth in Section 7.13, increasing the total number of
\nOrdinary Shares issued and outstanding as of the Closing Date to 118,826,364.
\nThe Shares outstanding as of the date of this Agreement are, and the Shares to
\nbe issued upon exercise of the aforementioned 8,000,000 Employee Share Options
\nwill be, duly authorized, validly issued, fully paid and nonassessable. Except
\nfor this Agreement, the aforementioned 8,000,000 Employee Share Options, and as
\ndisclosed in Section 2.03 of the Disclosure Schedule, there are no outstanding
\n —————————————
\nOptions with respect to the Company. The delivery of a certificate or
\ncertificates at the Closing representing the Shares in the manner provided in
\nSection 1.03 will transfer to Purchaser good and valid title to the Shares, free
\nand clear of all Liens.<\/p>\n
2.04. Subsidiaries. Section 2.04 of the Disclosure Schedule lists
\n ———— —————————————
\nthe name of each Subsidiary and all lines of business in which each Subsidiary
\nis participating or engaged. Each Subsidiary is a corporation duly organized,
\nvalidly existing and in good standing under the Laws of its jurisdiction of
\nincorporation identified in Section 2.04 of the Disclosure Schedule, and has
\n —————————————
\nfull corporate power and authority to conduct its business as and to the extent
\nnow conducted and to own, use and lease its Assets and Properties. Each
\nSubsidiary is duly qualified, licensed or admitted to do business and is in good
\nstanding in those jurisdictions specified in Section 2.04 of the Disclosure
\n ——————————
\nSchedule, which are the only jurisdictions in which the ownership, use or
\n——–
\nleasing of such Subsidiary’s Assets and Properties, or the conduct or nature of
\nits business, makes such qualification, licensing or admission necessary, except
\nfor those jurisdictions in which the adverse effects of all such failures by the
\nCompany and the Subsidiaries to be qualified, licensed or admitted and in good
\nstanding can in the aggregate be eliminated without material cost or expense by
\nthe Company or a Subsidiary, as the case may be, becoming qualified, licensed or
\nadmitted and in good standing. Section 2.04 of the Disclosure Schedule lists for
\n —————————————
\neach Subsidiary the amount of its authorized share capital, the amount of its
\noutstanding share capital and the record owners of such outstanding share
\ncapital. Except as disclosed in Section 2.04 of the Disclosure Schedule, all of
\n —————————————
\nthe outstanding capital shares of each Subsidiary have been duly authorized and
\nvalidly issued, are fully paid and nonassessable, and are owned, beneficially
\nand of record, by the Company or Subsidiaries wholly owned by the Company free
\nand clear of all Liens. Except as disclosed in Section 2.02 of the Disclosure
\n ——————————
\nSchedule, there are no outstanding Options with respect to any Subsidiary. The
\n——–
\nname of each director and officer of each Subsidiary on the date hereof, and the
\nposition with such Subsidiary held by each, are listed in Section 2.04 of the
\n ——————-
\nDisclosure Schedule. Sellers have, prior to the execution of this Agreement,
\n——————-
\ndelivered to Purchaser true and complete copies of the memorandum and articles
\nof association, by-laws, or other comparable corporate charter documents, of
\neach of the Subsidiaries as in effect on the date hereof.<\/p>\n
2.05. No Conflicts. The execution and delivery by the Company of
\n ————
\nthis Agreement do not, and the execution and delivery by the Company of the
\nOperative Agreements to which it is a party, the performance by the Company of
\nits obligations under this Agreement and such Operative Agreements and the
\nconsummation of the transactions contemplated hereby and thereby will not:<\/p>\n
(a) conflict with or result in a violation or breach of any of
\nthe terms, conditions or provisions of the memorandum and articles of
\nassociation (or other comparable corporate charter documents) of the Company or
\nany Subsidiary;<\/p>\n
-6-<\/p>\n
(b) subject to obtaining the consents, approvals and actions,
\nmaking the filings and giving the notices disclosed in Section 2.06 of the
\n ——————-
\nDisclosure Schedule, conflict with or result in a violation or breach of any
\n——————-
\nterm or provision of any Law or Order applicable to the Company or any
\nSubsidiary or any of their respective Assets and Properties; or<\/p>\n
(c) except as disclosed in Section 2.05 of the Disclosure
\n ——————————
\nSchedule, (i) conflict with or result in a violation or breach of, (ii)
\n——–
\nconstitute (with or without notice or lapse of time or both) a default under,
\n(iii) require the Company or any Subsidiary to obtain any consent, approval or
\naction of, make any filing with or give any notice to any Person as a result or
\nunder the terms of, (iv) result in or give to any Person any right of
\ntermination, cancellation, acceleration or modification in or with respect to,
\n(v) result in or give to any Person any additional rights or entitlement to
\nincreased, additional, accelerated or guaranteed payments under, or (vi) result
\nin the creation or imposition of any Lien upon the Company or any Subsidiary or
\nany of their respective Assets and Properties under, any Contract or License to
\nwhich the Company or any Subsidiary is a party or by which any of their
\nrespective Assets and Properties is bound.<\/p>\n
2.06. Governmental Approvals and Filings. Except as disclosed in
\n ———————————-
\nSection 2.06 of the Disclosure Schedule, no consent, approval or action of,
\n—————————————
\nfiling with or notice to any Governmental or Regulatory Authority on the part of
\nthe Company or any Subsidiary is required in connection with the execution,
\ndelivery and performance of this Agreement or any of the Operative Agreements to
\nwhich it is a party or the consummation of the transactions contemplated hereby
\nor thereby.<\/p>\n
2.07. Books and Records. The minute books and other similar
\n —————–
\nrecords of the Company and the Subsidiaries as made available to Purchaser prior
\nto the execution of this Agreement contain a true and complete record, in all
\nmaterial respects, of all action taken at all meetings and by all written
\nconsents in lieu of meetings of the shareholders, the boards of directors and
\ncommittees of the boards of directors of the Company and the Subsidiaries. The
\nshare transfer ledgers and other similar records of the Company and the
\nSubsidiaries as made available to Purchaser prior to the execution of this
\nAgreement accurately reflect all record transfers prior to the execution of this
\nAgreement in the share capital of the Company and the Subsidiaries. Except as
\nset forth in Section 2.07 of the Disclosure Schedule, neither the Company nor
\n —————————————
\nany Subsidiary has any of its Books and Records recorded, stored, maintained,
\noperated or otherwise wholly or partly dependent upon or held by any means
\n(including any electronic, mechanical or photographic process, whether
\ncomputerized or not) which (including all means of access thereto and therefrom)
\nare not under the exclusive ownership and direct control of the Company or a
\nSubsidiary.<\/p>\n
2.08. Financial Statements. Prior to the execution of this
\n ——————–
\nAgreement, the Company has delivered to Purchaser true and complete copies of
\nthe following financial statements:<\/p>\n
(a) the audited balance sheets of the Company and its
\nconsolidated subsidiaries as of December 31, 1998 and 1999 and the related
\naudited consolidated statements of operations, shareholders’ equity and cash
\nflows for each of the fiscal years then ended, together with a true and correct
\ncopy of the report on such audited information by the Auditor, and all letters
\nfrom such Auditor with respect to the results of such audits; and<\/p>\n
(b) the unaudited balance sheets of the Company and its
\nconsolidated subsidiaries as of December 31, 2000 and September 30, 2001, and
\nthe related unaudited consolidated statements of operations, shareholders’
\nequity and cash flows for the periods then ended.<\/p>\n
Except as set forth in the notes thereto, all such financial
\nstatements were prepared in accordance with GAAP and fairly present the
\nconsolidated financial condition and results of operations of the Company and
\nits consolidated subsidiaries as of the respective dates thereof and for the
\nrespective periods covered thereby. Except for those Subsidiaries listed in
\nSection 2.08 of the Disclosure Schedule,
\n—————————————<\/p>\n
-7-<\/p>\n
the financial condition and results of operations of each Subsidiary are, and
\nfor all periods referred to in this Section 2.08 have been, consolidated with
\nthose of the Company.<\/p>\n
2.09. Absence of Changes. Except for the execution and delivery
\n ——————
\nof this Agreement and the transactions to take place pursuant hereto on the
\nClosing Date, since the Audited Financial Statement Date there has not been any
\nmaterial adverse change, or any event or development which, individually or
\ntogether with other such events, could reasonably be expected to result in a
\nmaterial adverse change in the Business or Condition of the Company. Without
\nlimiting the foregoing, except as disclosed in Section 2.09 of the Disclosure
\n ——————————
\nSchedule, there has not occurred between the Audited Financial Statement Date
\n——–
\nand the date hereof:<\/p>\n
(a) any declaration, setting aside or payment of any dividend or
\nother distribution in respect of any capital shares of the Company or any
\nSubsidiary not wholly owned by the Company, or any direct or indirect
\nredemption, purchase or other acquisition by the Company or any Subsidiary of
\nany such capital shares of the Company or any Subsidiary not wholly owned by the
\nCompany;<\/p>\n
(b) any authorization, issuance, sale or other disposition by
\nthe Company or any Subsidiary of any capital shares of the Company or any
\nSubsidiary, or any modification or amendment of any right of any holder of any
\noutstanding capital shares of the Company or any Subsidiary;<\/p>\n
(c) (i) any increase in the salary, wages or other compensation
\nof any officer, employee or consultant of the Company or any Subsidiary; (ii)
\nany establishment or modification of (A) targets, goals, pools or similar
\nprovisions in respect of any fiscal year under any Benefit Plan, employment
\nContract or other employee compensation arrangement or (B) salary ranges,
\nincrease guidelines or similar provisions in respect of any Benefit Plan,
\nemployment Contract or other employee compensation arrangement; or (iii) any
\nadoption, entering into, amendment, modification or termination (partial or
\ncomplete) of any Benefit Plan except to the extent required by applicable Law
\nand, in the event compliance with legal requirements presented options, only to
\nthe extent the option which the Company or Subsidiary reasonably believed to be
\nthe least costly was chosen;<\/p>\n
(d) (i) incurrences by the Company or any of the Subsidiaries of
\nany Indebtedness other than under the Bridge Loan, or (ii) any voluntary
\npurchase, cancellation, prepayment or complete or partial discharge in advance
\nof a scheduled payment date with respect to, or waiver of any right of the
\nCompany or any Subsidiary under, any Indebtedness of or owing to the Company or
\nany Subsidiary (in either case other than any Indebtedness of the Company or a
\nSubsidiary owing to the Company or a wholly-owned Subsidiary);<\/p>\n
(e) any physical damage, destruction or other casualty loss
\n(whether or not covered by insurance) affecting any of the plant, real or
\npersonal property or equipment of the Company or any Subsidiary;<\/p>\n
(f) any material change in (i) any pricing, investment,
\naccounting, financial reporting, inventory, credit, allowance or Tax practice or
\npolicy of the Company or any Subsidiary, (ii) any method of calculating any bad
\ndebt, contingency or other reserve of the Company or any Subsidiary for
\naccounting, financial reporting or Tax purposes or (iii) the fiscal year of the
\nCompany or any Subsidiary;<\/p>\n
(g) any write-off or write-down of or any determination to write
\noff or down any of the Assets and Properties of the Company or any Subsidiary;<\/p>\n
(h) any acquisition or disposition of, or incurrence of a Lien
\n(other than a Permitted Lien) on, any Assets and Properties of the Company or
\nany Subsidiary, other than in the ordinary course of business consistent with
\npast practice;<\/p>\n
-8-<\/p>\n
(i) any (i) amendment of the memorandum and articles of
\nassociation (or other comparable corporate charter documents) of the Company or
\nany Subsidiary, (ii) reorganization, liquidation or dissolution of the Company
\nor any Subsidiary or (iii) Business Combination involving the Company or any
\nSubsidiary and any other Person;<\/p>\n
(j) any entering into, amendment, modification, termination
\n(partial or complete) or granting of a waiver under or giving any consent with
\nrespect to (i) any Contract which is required (or had it been in effect on the
\ndate hereof would have been required) to be disclosed in the Disclosure Schedule
\npursuant to Section 2.18(a) or (ii) any material License held by the Company or
\nany Subsidiary;<\/p>\n
(k) capital expenditures or commitments for additions to
\nproperty, plant or equipment of the Company and the Subsidiaries constituting
\ncapital assets in an aggregate amount exceeding US$100,000;<\/p>\n
(l) any commencement or termination by the Company or any
\nSubsidiary of any line of business;<\/p>\n
(m) any transaction by the Company or any Subsidiary with any
\nSeller, any officer, director, Affiliate or Associate of any Seller or any
\nAssociate of any such officer, director or Affiliate (other than the Company or
\nany Subsidiary) (i) outside the ordinary course of business consistent with past
\npractice or (ii) other than on an arm’s-length basis pursuant to a Contract in
\neffect on the Audited Financial Statement Date and disclosed to Purchaser
\npursuant to Section 2.18(a)(vii);<\/p>\n
(n) any entering into of an agreement to do or engage in any of
\nthe foregoing after the date hereof; or<\/p>\n
(o) any other transaction involving or development affecting the
\nCompany or any Subsidiary outside the ordinary course of business consistent
\nwith past practice.<\/p>\n
2.10. No Undisclosed Liabilities. Except as reflected or reserved
\n ————————–
\nagainst in the balance sheet included in the Audited Financial Statements or in
\nthe notes thereto or as disclosed in Section 2.10 of the Disclosure Schedule,
\n —————————————
\nthere are no Liabilities against, relating to or affecting the Company or any
\nSubsidiary or any of their respective Assets and Properties, other than
\nLiabilities incurred in the ordinary course of business consistent with past
\npractice which in the aggregate are not material to the Business or Condition of
\nthe Company.<\/p>\n
2.11. Taxes.
\n —–<\/p>\n
(a) Except as set forth in Section 2.11 of the Disclosure
\n ——————————
\nSchedule, all Tax Returns, reports and other filings in respect of Taxes
\n——–
\nrequired to be filed in respect of the Company and each of its Subsidiaries on
\nor prior to the Closing Date have been duly and timely filed, have been prepared
\nin compliance with all applicable laws, rules and regulations, and are true,
\ncorrect and complete. All Taxes due and payable by the Company and each of its
\nSubsidiaries on or prior to the Closing Date, whether or not shown as due on
\nsuch Tax Returns, reports or other filings, have been fully paid when due. The
\nCompany and each of its Subsidiaries has established adequate reserves on their
\nrespective books of account for all Taxes and for the liability for deferred
\nincome Taxes payable in respect of the Company or its relevant Subsidiary.<\/p>\n
(b) Except as set forth in Section 2.11 of the Disclosure
\n ——————————
\nSchedule, there are no agreements or applications by the Company for an
\n——–
\nextension of time for the assessment or payment of any Pre-Closing Taxes as
\ndefined in Article 9.02(a) below and no waivers of the statute of limitations in
\nrespect of such Taxes. There are no Tax liens on any of the assets of the
\nCompany, except for liens for Taxes not yet due. The Company has not received
\nany claim from any taxing authority in a jurisdiction in<\/p>\n
-9-<\/p>\n
which the Company is or may be subject to taxation and in which the Company has
\nfailed to file Tax Returns required by that jurisdiction.<\/p>\n
(c) Other than pursuant to this Agreement, neither the Company
\nnor any of its Subsidiaries has ever been a party to or bound by any Tax
\nindemnity, Tax sharing or similar agreement and neither the Company nor any of
\nits Subsidiaries has any material liability for any Taxes of any other person.
\nThe Company and each of its Subsidiaries has withheld or deducted all Taxes or
\nother amounts from payments to employees or other persons required to be
\ndeducted or withheld, and has timely paid over such Taxes or other amounts to
\nthe appropriate governmental authorities to the extent due and payable.<\/p>\n
(d) There is no material dispute or claim concerning any Tax
\nLiability of any of the Company and its Subsidiaries either (i) claimed or
\nraised by any authority in writing or (ii) as to which any of the Sellers and
\nthe directors and officers (and employees responsible for Tax matters) of the
\nCompany and its Subsidiaries has any knowledge based upon personal contact with
\nany agent of such authority. Section 2.11 (d) of the Disclosure Schedule lists
\n ——————————————-
\nall jurisdictions in which Tax Returns are filed with respect to any of the
\nCompany and its Subsidiaries and indicates those Tax Returns that have been
\naudited or that are currently the subject of audit. The Sellers have delivered
\nto the Purchaser correct and complete copies of all Tax Returns, examination
\nreports, and statements of deficiencies assessed against or agreed to by any of
\nthe Company and its Subsidiaries since December 31, 1995.<\/p>\n
(e) None of the Company or any of its Subsidiaries (i) is
\nengaged in the conduct of a trade or business within the United States; (ii) is
\na corporation or other entity organized or incorporated in the United States;
\n(iii) has a branch or other permanent establishment in any country outside its
\ncountry of incorporation or organization; (iv) has United States real property
\ninterests described in Code Section 897; or (v) has a material item of income or
\ngain reported for financial accounting purposes in a pre-Closing period which is
\nrequired to be included in taxable income for a post-Closing period.<\/p>\n
(f) The aggregate tax basis of the assets held in each of the
\nCompany and its Subsidiaries does not exceed the fair market value of the share
\ncapital of the Company or the relevant Subsidiary.<\/p>\n
(g) None of the Company or any of its Subsidiaries is a (i)
\npassive foreign investment company as described in Code Section 1297; (ii)
\nforeign investment company described in Code Section 1246 (iii) controlled
\nforeign corporation described in Code Section 957 or (iv) foreign personal
\nholding company described in Code Section 552.<\/p>\n
(h) None of the shareholders of the Company or any of its
\nSubsidiaries has personal liability under local law for the debts and claims of
\nthe relevant entity. None of the Company or any of its Subsidiaries, or any
\nshareholder of the Company or any of its Subsidiaries has made an election under
\nUS law to classify the Company or any of its Subsidiaries as something other
\nthan an entity taxable as a corporation.<\/p>\n
(i) Without limiting the generality of any of the foregoing, the
\nCompany is a “production-oriented enterprise” within the meaning of Guo Shui Fa
\n(1994) No. 209, issued by the PRC State Administration of Taxation and, as such,
\nis entitled to a two-year income tax exemption in the PRC, followed by a three-
\nyear 50% income tax reduction, beginning with the tax year ended December 31,
\n2000.<\/p>\n
2.12. Legal Proceedings. Except as disclosed in Section 2.12 of
\n —————– —————
\nthe Disclosure Schedule (with paragraph references corresponding to those set
\n———————–
\nforth below):<\/p>\n
(a) there are no Actions or Proceedings pending or, to the
\nknowledge of the Company and the Subsidiaries, threatened against, relating to
\nor affecting the Company or any Subsidiary or any of<\/p>\n
-10-<\/p>\n
their respective Assets and Properties which (i) could reasonably be expected to
\nresult in the issuance of an Order restraining, enjoining or otherwise
\nprohibiting or making illegal the consummation of any of the transactions
\ncontemplated by this Agreement or any of the Operative Agreements or otherwise
\nresult in a material diminution of the benefits contemplated by this Agreement
\nor any of the Operative Agreements to Purchaser, or (ii) if determined adversely
\nto the Company or a Subsidiary, could reasonably be expected to result in (A)
\nany injunction or other equitable relief against the Company or any Subsidiary
\nthat would interfere in any material respect with its business or operations or
\n(B) Losses by the Company or any Subsidiary, individually or in the aggregate
\nwith Losses in respect of other such Actions or Proceedings, exceeding
\nUS$100,000;<\/p>\n
(b) there are no facts or circumstances known to the Company or
\nany Subsidiary that could reasonably be expected to give rise to any Action or
\nProceeding that would be required to be disclosed pursuant to clause (a) above;
\nand<\/p>\n
(c) there are no Orders outstanding against the Company or any
\nSubsidiary.<\/p>\n
Prior to the execution of this Agreement, the Company has
\ndelivered to Purchaser all responses of counsel for the Company and the
\nSubsidiaries to auditors’ requests for information delivered in connection with
\nthe Audited Financial Statements (together with any updates provided by such
\ncounsel) regarding Actions or Proceedings pending or threatened against,
\nrelating to or affecting the Company or any Subsidiary.<\/p>\n
2.13. Compliance With Laws and Orders. Except as disclosed in
\n ——————————-
\nSection 2.13 of the Disclosure Schedule, neither the Company nor any Subsidiary
\n—————————————
\nis or has at any time within the last five years been, or has received any
\nnotice that it is or has at any time within the last five years been, in
\nviolation of or in default under, in any material respect, any Law or Order
\napplicable to the Company or any Subsidiary or any of their respective Assets
\nand Properties.<\/p>\n
2.14. Benefit Plans.
\n ————-<\/p>\n
(a) Section 2.14(a) of the Disclosure Schedule contains a true
\n ——————————————
\nand complete list and description of each of the Benefit Plans. The Company has
\ndelivered copies of all Benefit Plan documents maintained by the Company and its
\nSubsidiaries. Neither the Company nor any Subsidiary has scheduled or agreed
\nupon future increases of benefit levels (or creations of new benefits) with
\nrespect to any Plan, and no such increases or creation of benefits have been
\nproposed, made the subject of representations to employees or requested or
\ndemanded by employees under circumstances which make it reasonable to expect
\nthat such increases will be granted. Except as disclosed in Section 2.14(a) of
\n ——————
\nthe Disclosure Schedule, no loan is outstanding between the Company or any
\n———————–
\nSubsidiary and any employee.<\/p>\n
(b) Each of the Benefit Plans is, and its administration
\n(including without limitation, with respect to reporting and disclosure) is and
\nhas been, in compliance with, its terms and with applicable law (including,
\nwithout limitation, all tax rules compliance with which is required for any
\nintended favorable tax treatment).<\/p>\n
(c) No benefit under any Benefit Plan, including, without
\nlimitation, any severance or parachute payment plan or agreement, will be
\nestablished or become accelerated, vested or payable by reason of any
\ntransaction contemplated under this Agreement.<\/p>\n
(d) To the knowledge of the Company and the Subsidiaries, there
\nare no pending or threatened claims by or on behalf of any Benefit Plan, by any
\nperson covered thereby, or otherwise, which allege violations of Law which could
\nreasonably be expected to result in liability on the part of Purchaser, the
\nCompany, any Subsidiary or any fiduciary of any such Benefit Plan, nor is there
\nany basis for such a claim.<\/p>\n
-11-<\/p>\n
(e) All contributions, premiums and other payments required by
\nlaw or any Benefit Plan or other agreement to have been made under any such Plan
\nhave been made by the due date thereof, and any and all contributions, premiums
\nand other payments with respect to compensation or service before and through
\nthe Closing, or otherwise with respect to periods before and through the
\nClosing, due from any of the Company or its Affiliates to, under or on account
\nof each Benefit Plan shall have been paid prior to Closing or shall have been
\nfully reserved and provided for in the Audited Financial Statements.<\/p>\n
(f) None of the Company or any of its Subsidiaries is in default
\nin performing any of its contractual obligations under any of the Benefit Plans.<\/p>\n
(g) Without limiting the generality of any other provision of
\nthis Section 2.14, no event has occurred and no condition exists, with respect
\nto any Plan, that has subjected or could subject the Purchaser, the Company or
\nany Subsidiary, or any Benefit Plan or any successor thereto, to any tax, fine,
\npenalty or other liability (other than a liability arising in the normal course
\nto make contributions or payments, as applicable, when ordinarily due under the
\nBenefit Plans with respect to employees of the Company and its Subsidiaries).<\/p>\n
(h) Neither the Company, any Subsidiary nor any Affiliate has
\never maintained, contributed or to had any liability with respect to any Plan
\nthat is or was ever subject to any Federal, State or local law in the United
\nStates.<\/p>\n
(i) Inter-Connect Tech. Limited is a corporation duly organized,
\nvalidly existing and in good standing under the Laws of the British Virgin
\nIslands, and is the Record Holder of 8,325,000 Shares. The individuals set forth
\nin Section 2.14(i) of the Disclosure Schedule are the Beneficial Owners of the
\n ——————————————
\nAllocated Inter-Connect Shares in the respective amounts set forth opposite
\ntheir names, and the record holder of the issued and outstanding share capital
\nof Inter-Connect Tech. Limited holds such share capital for the benefit of such
\nindividuals. The Unallocated Inter-Connect Shares are not beneficially owned by
\nany of the individuals set forth in Section 2.14(i) of the Disclosure Schedule
\n ——————————————
\nand such individuals have no claims or other rights in respect of the
\nUnallocated Inter-Connect Shares.<\/p>\n
2.15. Real Property.
\n ————- <\/p>\n
(a) Section 2.15(a) of the Disclosure Schedule contains a true
\n ——————————————
\nand correct list of (i) each parcel of real property owned by the Company or any
\nSubsidiary, (ii) each parcel of real property leased by the Company or any
\nSubsidiary (as lessor or lessee) and (iii) all Liens (other than Permitted
\nLiens) relating to or affecting any such parcel of real property referred to in
\nclause (i) of this paragraph (a).<\/p>\n
(b) The Company or a Subsidiary has good and marketable fee
\nsimple title to and, except for the real property leased to others referred to
\nin clause (ii) of paragraph (a) above, the Company or a Subsidiary is in
\npossession of each parcel of real property, together with all buildings,
\nstructures, facilities, fixtures and other improvements thereon, listed in
\nSection 2.15(a) of the Disclosure Schedule, and in each case such parcel is,
\n——————————————
\nexcept as listed in Section 2.15(a) of the Disclosure Schedule, free and clear
\n ——————————————
\nof all Liens other than Permitted Liens. The Company and the Subsidiaries have
\nadequate rights of ingress and egress with respect to such real property,
\nbuildings, structures, facilities, fixtures and other improvements. None of such
\nreal property, buildings, structures, facilities, fixtures or other
\nimprovements, or the use thereof, contravenes or violates any building, zoning,
\nadministrative, occupational safety and health or other applicable Law in any
\nmaterial respect (whether or not permitted on the basis of prior nonconforming
\nuse, waiver or variance).<\/p>\n
(c) The Company or a Subsidiary has a valid and subsisting
\nleasehold estate in and the right to quiet enjoyment of the real properties
\nleased by it for the full term of the lease thereof. Each lease referred to in
\nclause (ii) of paragraph (a) above is a legal, valid and binding agreement,
\nenforceable in accordance with its terms, of the Company or a Subsidiary and of
\neach other Person that is a party thereto,<\/p>\n
-12-<\/p>\n
and except as set forth in Section 2.15(c) of the Disclosure Schedule, there is
\n ——————————————
\nno, and neither the Company nor any Subsidiary has received notice of any,
\ndefault (or any condition or event which, after notice or lapse of time or both,
\nwould constitute a default) thereunder. Neither the Company nor any Subsidiary
\nowes any brokerage commissions with respect to any such leased space.<\/p>\n
(d) The Company has delivered to Purchaser prior to the
\nexecution of this Agreement true and complete copies of (i) all deeds, leases,
\nmortgages, deeds of trust, certificates of occupancy, title insurance policies,
\ntitle reports, surveys and similar documents, and all amendments thereof, with
\nrespect to the real property listed in Section 2.15(a) of the Disclosure
\n ———————————
\nSchedule pursuant to clause (i) of paragraph (a) above and (ii) all leases
\n——–
\n(including any amendments and renewal letters) and, to the extent reasonably
\navailable, all other documents referred to in clause (i) of this paragraph (d)
\nwith respect to the real property listed in Section 2.15(a) of the Disclosure
\n ———————————
\nSchedule pursuant to clause (ii) of paragraph (a) above.
\n——–<\/p>\n
(e) Except as set forth in Section 2.15(e) of the Disclosure
\n ———————————
\nSchedule, no tenant or other party in possession of any of the real properties
\n——–
\nidentified in Section 2.15(a) of the Disclosure Schedule has any right to
\n ——————————————
\npurchase, or holds any right of first refusal to purchase, such properties.<\/p>\n
2.16. Tangible Personal Property. The Company or a Subsidiary is
\n ————————–
\nin possession of and has good title to, or has valid leasehold interests in or
\nvalid rights under Contract to use, all tangible personal property used in the
\nconduct of their business, including all tangible personal property reflected on
\nthe balance sheet included in the Audited Financial Statements and tangible
\npersonal property acquired since the Audited Financial Statement Date other than
\nproperty disposed of since such date in the ordinary course of business
\nconsistent with past practice. All such tangible personal property is free and
\nclear of all Liens, other than Permitted Liens and Liens disclosed in Section
\n ——-
\n2.16 of the Disclosure Schedule, and is in good working order and condition,
\n——————————-
\nordinary wear and tear excepted, and its use complies in all material respects
\nwith all applicable Laws.<\/p>\n
2.17. Intellectual Property Rights. The Company and the
\n —————————-
\nSubsidiaries have interests in or use only the Intellectual Property disclosed
\nin Section 2.17 of the Disclosure Schedule, each of which the Company or a
\n —————————————
\nSubsidiary either has all right, title and interest in or a valid and binding
\nlicense to use. No other Intellectual Property is used or necessary in the
\nconduct of the business of the Company or any Subsidiary. Except as disclosed in
\nSection 2.17 of the Disclosure Schedule, (i) the Company or a Subsidiary has the
\n—————————————
\nexclusive right to use the Intellectual Property disclosed in Section 2.17 of
\n —————
\nthe Disclosure Schedule, (ii) all registrations with and applications to
\n———————–
\nGovernmental or Regulatory Authorities in respect of such Intellectual Property
\nare valid and in full force and effect and are not subject to the payment of any
\nTaxes or maintenance fees or the taking of any other actions by the Company or a
\nSubsidiary to maintain their validity or effectiveness, (iii) there are no
\nrestrictions on the direct or indirect transfer of any license, or any interest
\ntherein, held by the Company or any Subsidiary in respect of such Intellectual
\nProperty, (iv) the Company has delivered to Purchaser prior to the execution of
\nthis Agreement documentation with respect to any invention, process, design,
\ncomputer program or other know-how or trade secret included in such Intellectual
\nProperty, which documentation is accurate in all material respects and
\nreasonably sufficient in detail and content to identify and explain such
\ninvention, process, design, computer program or other know-how or trade secret
\nand to facilitate its full and proper use without reliance on the special
\nknowledge or memory of any Person, (v) the Company and the Subsidiaries have
\ntaken reasonable security measures to protect the secrecy, confidentiality and
\nvalue of their trade secrets, (vi) neither the Company nor any Subsidiary is, or
\nhas received any notice that it is, in default (or with the giving of notice or
\nlapse of time or both, would be in default) under any license to use such
\nIntellectual Property and (vii) neither the Company nor any Subsidiary has any
\nknowledge that such Intellectual Property is being infringed by any other
\nPerson. Neither the Company nor any Subsidiary has received notice that the
\nCompany or any Subsidiary is infringing any Intellectual Property of any other
\nPerson, no claim is pending or, to the knowledge of the Company and the
\nSubsidiaries, has been made to<\/p>\n
-13-<\/p>\n
such effect that has not been resolved and, to the knowledge of the Company and
\nthe Subsidiaries, neither the Company nor any Subsidiary is infringing any
\nIntellectual Property Rights of any other Person.<\/p>\n
2.18. Contracts. (a) Section 2.18(a) of the Disclosure Schedule
\n ——— ——————————————
\n(with paragraph references corresponding to those set forth below) contains a
\ntrue and complete list of each of the following Contracts or other arrangements
\n(true and complete copies or, if none, reasonably complete and accurate written
\ndescriptions of which, together with all amendments and supplements thereto and
\nall waivers of any terms thereof, have been delivered to Purchaser prior to the
\nexecution of this Agreement), to which the Company or any Subsidiary is a party
\nor by which any of their respective Assets and Properties is bound:<\/p>\n
(i) (A) all Contracts (excluding Benefit Plans) providing
\n for a commitment of employment or consultation services for a
\n specified or unspecified term, the name, position and rate of
\n compensation of each Person party to such a Contract and the
\n expiration date of each such Contract; and (B) any written or
\n unwritten representations, commitments, promises, communications or
\n courses of conduct (excluding Benefit Plans and not embodied in a
\n Contract) involving an obligation of the Company or any Subsidiary to
\n make payments in any year, other than with respect to salary or
\n incentive compensation payments in the ordinary course of business;<\/p>\n
(ii) all Contracts with any Person containing any
\n provision or covenant prohibiting or limiting the ability of the
\n Company or any Subsidiary to engage in any business activity or
\n compete with any Person or, except as provided in Section 5.10,
\n prohibiting or limiting the ability of any Person to compete with the
\n Company or any Subsidiary;<\/p>\n
(iii) all partnership, joint venture, shareholders’ or
\n other similar Contracts with any Person;<\/p>\n
(iv) all Contracts relating to Indebtedness of the Company
\n or any Subsidiary or to Preferred Shares issued by the Company or any
\n Subsidiary (other than Indebtedness owing to or Preferred Shares owned
\n by the Company or any wholly-owned Subsidiary);<\/p>\n
(v) all Contracts with distributors, dealers,
\n manufacturer’s representatives, sales agencies or franchisees;<\/p>\n
(vi) all Contracts relating to (A) the future disposition
\n or acquisition of any Assets and Properties, other than dispositions
\n or acquisitions in the ordinary course of business consistent with
\n past practice, and (B) any Business Combination;<\/p>\n
(vii) all Contracts between or among the Company or any
\n Subsidiary, on the one hand, and any Seller, or officer, director,
\n Affiliate or Associate of such Seller or any Associate of any such
\n officer, director or Affiliate (other than the Company or any
\n Subsidiary), on the other hand;<\/p>\n
(viii) all collective bargaining or similar labor Contracts;<\/p>\n
(ix) all Contracts that (A) limit or contain restrictions
\n on the ability of the Company or any Subsidiary to declare or pay
\n dividends on, to make any other distribution in respect of or to issue
\n or purchase, redeem or otherwise acquire its capital shares, to incur
\n Indebtedness, to incur or suffer to exist any Lien, to purchase or
\n sell any Assets and Properties, to change the lines of business in
\n which it participates or engages or to engage in any Business
\n Combination or (B) require the Company or any Subsidiary to maintain
\n specified financial ratios or levels of net worth or other indicia of
\n financial condition; and<\/p>\n
-14-<\/p>\n
(x) all other Contracts that involve the payment or
\n potential payment, pursuant to the terms of any such Contract, by or
\n to the Company or any Subsidiary of more than US$50,000.<\/p>\n
(b) Each Contract required to be disclosed in Section 2.18(a) of
\n ——————
\nthe Disclosure Schedule is in full force and effect and constitutes a legal,
\n———————–
\nvalid and binding agreement, enforceable in accordance with its terms, of each
\nparty thereto; and except as disclosed in Section 2.18(b) of the Disclosure
\n ———————————
\nSchedule neither the Company, any Subsidiary nor, to the knowledge of the
\n——–
\nSellers, the Company and the Subsidiaries, any other party to such Contract is,
\nor has received notice that it is, in violation or breach of or default under
\nany such Contract (or with notice or lapse of time or both, would be in
\nviolation or breach of or default under any such Contract).<\/p>\n
(c) Except as disclosed in Section 2.18(c) of the Disclosure
\n ———————————
\nSchedule, neither the Company nor any Subsidiary is a party to or bound by any
\n——–
\nContract that has been or could reasonably be expected to be, individually or in
\nthe aggregate with any other such Contracts, materially adverse to the Business
\nor Condition of the Company or any of its Subsidiaries.<\/p>\n
2.19. Licenses.
\n ——–<\/p>\n
(a) Section 2.19 of the Disclosure Schedule contains a true and
\n —————————————
\ncomplete list of all Licenses used in and material to the business or operations
\nof the Company or any Subsidiary, setting forth the owner, the function and the
\nexpiration and renewal date of each. Prior to the execution of this Agreement,
\nthe Company has delivered to Purchaser true and complete copies of all such
\nLicenses. Except as disclosed in Section 2.19 of the Disclosure Schedule:
\n —————————————<\/p>\n
(i) The Company and each Subsidiary owns or validly
\n holds all Licenses that are material to its business or operations;<\/p>\n
(ii) each License listed in Section 2.19 of the
\n ——————-
\n Disclosure Schedule is valid, binding and in full force and effect;
\n ——————-
\n and<\/p>\n
(iii) neither the Company nor any Subsidiary is, or has
\n received any notice that it is, in default (or with the giving of
\n notice or lapse of time or both, would be in default) under any such
\n License.<\/p>\n
(b) Without limiting the generality of paragraph (a) above, all
\nLicenses required under PRC law for the due and proper establishment and
\noperation of Bonson Guangzhou and for the conduct of the business of Bonson
\nGuangzhou have been duly obtained from the relevant PRC authorities and are in
\nfull force and effect. All filings and registrations with the relevant PRC
\nauthorities required in respect of Bonson Guangzhou and its operations,
\nincluding but not limited to registration with the Ministry of Foreign Trade and
\nEconomic Cooperation, the State Administration of Industry and Commerce, the
\nState Administration of Foreign Exchange, and the relevant tax bureau, customs
\nauthorities and product registration authorities, have been duly completed in
\naccordance with the relevant PRC rules and regulations.<\/p>\n
2.20. Insurance. Section 2.20 of the Disclosure Schedule contains
\n ——— —————————————
\na true and complete list (including the names and addresses of the insurers, the
\nexpiration dates thereof, the annual premiums and payment terms thereof and a
\nbrief description of the interests insured thereby) of all liability, property,
\nworkers’ compensation, directors’ and officers’ liability and other insurance
\npolicies currently in effect that insure the business, operations or employees
\nof the Company or any Subsidiary or affect or relate to the ownership, use or
\noperation of any of the Assets and Properties of the Company or any Subsidiary
\nand that (i) have been issued to the Company or any Subsidiary or (ii) have been
\nissued to any Person (other than the Company or any Subsidiary) for the benefit
\nof the Company or any Subsidiary.<\/p>\n
-15-<\/p>\n
The insurance coverage provided by the policies described in clause (i) above
\nwill not terminate or lapse by reason of the transactions contemplated by this
\nAgreement. Each policy listed in Section 2.20 of the Disclosure Schedule is
\n —————————————
\nvalid and binding and in full force and effect, no premiums due thereunder have
\nnot been paid and neither the Company, any Subsidiary nor the Person to whom
\nsuch policy has been issued has received any notice of cancellation or
\ntermination in respect of any such policy or is in default thereunder. The
\ninsurance policies listed in Section 2.20 of the Disclosure Schedule are placed
\n —————————————
\nwith financially sound and reputable insurers and, in light of the respective
\nbusiness, operations and Assets and Properties of the Company and the
\nSubsidiaries, are in amounts and have coverages that are reasonable and
\ncustomary for Persons engaged in such businesses and operations and having such
\nAssets and Properties. Neither the Company nor any Subsidiary has received
\nnotice that any insurer under any policy referred to in this Section is denying
\nliability with respect to a claim thereunder or defending under a reservation of
\nrights clause.<\/p>\n
2.21. Affiliate Transactions. Except as disclosed in Section
\n ———————- ——-
\n2.21(a) of the Disclosure Schedule, as of the date of this Agreement, (i) there
\n———————————-
\nare no intercompany Liabilities between the Company or any Subsidiary, on the
\none hand, and any Seller, or officer, director, Affiliate or Associate of such
\nSeller or any Associate of any such officer, director or Affiliate (other than
\nthe Company or any Subsidiary), on the other, (ii) neither any such Seller nor
\nany such officer, director, Affiliate or Associate provides or causes to be
\nprovided any assets, services or facilities to the Company or any Subsidiary,
\n(iii) neither the Company nor any Subsidiary provides or causes to be provided
\nany assets, services or facilities to any Seller or any officer, director,
\nAffiliate or Associate of any Seller and (iv) neither the Company nor any
\nSubsidiary beneficially owns, directly or indirectly, any Investment Assets of
\nany Seller or any such officer, director, Affiliate or Associate of any Seller.
\nExcept as disclosed in Section 2.21(b) of the Disclosure Schedule, each of the
\n ——————————————
\nLiabilities and transactions listed in Section 2.21(a) of the Disclosure
\n ———————————
\nSchedule was incurred or engaged in, as the case may be, on an arm’s-length
\n——–
\nbasis. Except as disclosed in Section 2.21(c) of the Disclosure Schedule, since
\n ——————————————
\nthe Audited Financial Statement Date, all settlements of intercompany
\nLiabilities between the Company or any Subsidiary, on the one hand, and any
\nSeller or any officer, director, Affiliate or Associate of any Seller, on the
\nother, have been made, and all allocations of intercompany expenses have been
\napplied, in the ordinary course of business consistent with past practice.<\/p>\n
2.22. Employees; Labor Relations. (a) Section 2.22 of the
\n ————————– ——————-
\nDisclosure Schedule contains a list of the name of each officer and full-time
\n——————-
\nemployee of the Company and the Subsidiaries at the date hereof, together with
\neach such person’s position or function, annual base salary or wages and any
\nincentive or bonus arrangement with respect to such person in effect on such
\ndate. The Company has not received any information that would lead it to believe
\nthat a material number of such persons will or may cease to be employees, or
\nwill refuse offers of employment from Purchaser, because of the consummation of
\nthe transactions contemplated by this Agreement.<\/p>\n
(b) Except as disclosed in Section 2.22 of the Disclosure
\n ——————————
\nSchedule, (i) no employee of the Company or any Subsidiary is presently a member
\n——–
\nof a collective bargaining unit and, to the knowledge of Sellers, the Company
\nand the Subsidiaries, there are no threatened or contemplated attempts to
\norganize for collective bargaining purposes any of the employees of the Company
\nor any Subsidiary, and (ii) no unfair labor practice complaint or sex or age
\ndiscrimination claim has been brought during the last five years against the
\nCompany or any of the Subsidiaries before any Governmental or Regulatory
\nAuthority. During the past five years, there has been no work stoppage, strike
\nor other concerted action by employees of the Company or any Subsidiary. During
\nthat period, the Company and the Subsidiaries have complied in all material
\nrespects with all applicable Laws relating to the employment of labor, including
\nwithout limitation those relating to wages, hours and collective bargaining.<\/p>\n
2.23. Environmental Matters. Each of the Company and the
\n ———————
\nSubsidiaries has obtained all Licenses that are required in respect of its
\nbusiness, operations or Assets and Properties under<\/p>\n
-16-<\/p>\n
applicable Environmental Laws. Each of the Company and the Subsidiaries is in
\ncompliance in all material respects with the terms and conditions of all such
\nLicenses and with any applicable Environmental Law. Except as set forth in
\nSection 2.23 of the Disclosure Schedule (with paragraph references corresponding
\n—————————————
\nto those set forth below):<\/p>\n
(a) No Order has been issued, no complaint has been filed, no
\npenalty has been assessed and no investigation or review is pending or, to the
\nknowledge of the Company or the Subsidiaries, threatened by any Governmental or
\nRegulatory Authority with respect to any alleged failure by the Company or any
\nSubsidiary to have any License required in connection with the conduct of the
\nbusiness or operations of the Company or any of the Subsidiaries or with respect
\nto any treatment, storage, recycling, transportation, disposal or release, of
\nany Hazardous Material, and neither the Company nor any Subsidiary is aware of
\nany facts or circumstances which could reasonably be expected to form the basis
\nfor any such Order, complaint, penalty or investigation.<\/p>\n
(b) Neither the Company, any Subsidiary nor, to the knowledge of
\nthe Company or the Subsidiaries, any prior owner or lessee of any property now
\nor previously owned or leased by the Company or any Subsidiary, has handled any
\nHazardous Material on any property now or previously owned or leased by the
\nCompany or any Subsidiary; and, without limiting the foregoing, (i) no
\npolychlorinated biphenyl is or has been present, (ii) no asbestos is or has been
\npresent, (iii) there are no underground storage tanks, active or abandoned, and
\n(iv) no Hazardous Material has been released in a quantity reportable under, or
\nin violation of, any Environmental Law, at, on or under any property now or
\npreviously owned or leased by the Company or any Subsidiary, during any period
\nthat the Company or a Subsidiary owned or leased such property or, to the
\nknowledge of the Company or the Subsidiaries, prior thereto.<\/p>\n
(c) Neither the Company nor any Subsidiary has transported or
\narranged for the transportation of any Hazardous Material to any location which
\nis the subject of any Action or Proceeding that could lead to claims against
\nPurchaser, the Company or any Subsidiary for clean-up costs, remedial work,
\ndamages to natural resources or personal injury claims.<\/p>\n
(d) There are no Liens (other than Permitted Liens) arising
\nunder or pursuant to any Environmental Law or Order on any real property owned
\nor leased by the Company or any Subsidiary, and no action of any Governmental or
\nRegulatory Authority has been taken or, to the knowledge of the Company or the
\nSubsidiaries, is in process which could subject any of such properties to such
\nLiens, and neither the Company nor any Subsidiary would be required to place any
\nnotice or restriction relating to the presence of Hazardous Material at any
\nproperty owned by it in any deed to such property.<\/p>\n
(e) There have been no environmental investigations, studies,
\naudits, tests, reviews or other analyses conducted by, or which are in the
\npossession of, the Company or any Subsidiary in relation to any property or
\nfacility now or previously owned or leased by the Company or any Subsidiary
\nwhich have not been delivered to Purchaser prior to the execution of this
\nAgreement.<\/p>\n
2.24. Substantial Customers and Suppliers. Section 2.24(a) of the
\n ———————————– ———————-
\nDisclosure Schedule lists, as of the date hereof, the customers of the Company
\n——————-
\nand the Subsidiaries, on the basis of revenues for goods to be sold or services
\nto be provided under existing Contracts. Section 2.24(b) of the Disclosure
\n ———————————
\nSchedule lists the primary suppliers of the Company and the Subsidiaries, on the
\n——–
\nbasis of cost of goods or services to be purchased under existing Contracts.
\nExcept as disclosed in Section 2.24(c) of the Disclosure Schedule, no such
\n ——————————————
\ncustomer or supplier has ceased or materially reduced its purchases from or
\nsales or provision of services to the Company and the Subsidiaries since the
\nAudited Financial Statement Date, or to the knowledge of the Company or the
\nSubsidiaries, has threatened to cease or materially reduce such purchases or
\nsales or provision of services after the date hereof. Except as disclosed in
\nSection 2.24(d) of the Disclosure Schedule, to the knowledge of the Company and
\n——————————————
\nthe Subsidiaries, no such customer or supplier is threatened with bankruptcy or
\ninsolvency.<\/p>\n
-17-<\/p>\n
2.25. Bank and Brokerage Accounts; Investment Assets. Section
\n ———————————————- ——-
\n2.25 of the Disclosure Schedule sets forth (a) a true and complete list of the
\n——————————-
\nnames and locations of all banks, trust companies, securities brokers and other
\nfinancial institutions at which the Company or any Subsidiary has an account or
\nsafe deposit box or maintains a banking, custodial, trading or other similar
\nrelationship; (b) a true and complete list and description of each such account,
\nbox and relationship, indicating in each case the account number and the names
\nof the respective officers, employees, agents or other similar representatives
\nof the Company or any Subsidiary having signatory power with respect thereto;
\nand (c) a list of each Investment Asset held through or in each such account,
\nbox and relationship, including the name of the record and beneficial owner
\nthereof, the location of the certificates, if any, therefor, the maturity date,
\nif any, and any stock or bond powers or other authority for transfer granted
\nwith respect thereto.<\/p>\n
2.26. No Powers of Attorney. Except as set forth in Section 2.26
\n ——————— ————
\nof the Disclosure Schedule, neither the Company nor any Subsidiary has any
\n————————–
\npowers of attorney or comparable delegations of authority outstanding.<\/p>\n
2.27. Accounts Receivable. Except as set forth in Section 2.27 of
\n ——————- —————
\nthe Disclosure Schedule, the accounts and notes receivable of the Company and
\n———————–
\nthe Subsidiaries reflected on the balance sheet included in the Audited
\nFinancial Statements, and all accounts and notes receivable arising subsequent
\nto the Audited Financial Statement Date, (i) arose from bona fide sales
\n —- —-
\ntransactions in the ordinary course of business and are payable on ordinary
\ntrade terms, (ii) are legal, valid and binding obligations of the respective
\ndebtors enforceable in accordance with their terms, (iii) are not subject to any
\nvalid set-off or counterclaim, (iv) do not represent obligations for goods sold
\non consignment, on approval or on a sale-or-return basis or subject to any other
\nrepurchase or return arrangement, (v) are collectible in the ordinary course of
\nbusiness consistent with past practice in the aggregate recorded amounts
\nthereof, net of any applicable reserve reflected in the balance sheet included
\nin the Audited Financial Statements, and (vi) are not the subject of any Actions
\nor Proceedings brought by or on behalf of the Company or any Subsidiary. Section
\n ——-
\n2.27 of the Disclosure Schedule sets forth a description of any security
\n——————————-
\narrangements and collateral securing the repayment or other satisfaction of
\nreceivables of the Company and the Subsidiaries. All steps necessary to render
\nall such security arrangements legal, valid, binding and enforceable, and to
\ngive and maintain for the Company or a Subsidiary, as the case may be, a
\nperfected security interest in the related collateral, have been taken.<\/p>\n
2.28. Inventory. All inventory of the Company and the
\n ———
\nSubsidiaries reflected on the balance sheet included in the Audited Financial
\nStatements consisted, and all such inventory acquired since the Audited
\nFinancial Statement Date consists, of a quality and quantity usable and salable
\nin the ordinary course of business consistent with past practice, subject to
\nnormal and customary allowances in the industry for spoilage, damage and
\noutdated items. Except as disclosed in the notes to the Audited Financial
\nStatements, all items included in the inventory of the Company and the
\nSubsidiaries are the property of the Company and the Subsidiaries, free and
\nclear of any Lien other than Permitted Liens, have not been pledged as
\ncollateral, are not held by the Company or any Subsidiary on consignment from
\nothers and conform in all material respects to all standards applicable to such
\ninventory or its use or sale imposed by Governmental or Regulatory Authorities.<\/p>\n
2.29. Investment Company. The Company is not an “investment
\n ——————
\ncompany” within the meaning of the United States Investment Company Act of 1940,
\nas amended.<\/p>\n
2.30. Super Action Group Limited. Super Action Group Limited is a
\n ————————–
\ncorporation duly organized, validly existing and in good standing under the Laws
\nof the British Virgin Islands, and is the Record Holder of 10,905,000 Shares.
\nJuntang Zou is the Beneficial Owner of such Shares, and the record holders of
\nthe issued and outstanding share capital of Super Action Group Limited hold such
\nshare capital for the benefit of Juntang Zou.<\/p>\n
-18-<\/p>\n
2.31. Brokers. All negotiations relative to this Agreement and
\n ——-
\nthe transactions contemplated hereby have been carried out by Sellers directly
\nwith Purchaser without the intervention of any Person on behalf of Sellers in
\nsuch manner as to give rise to any valid claim by any Person against Purchaser,
\nthe Company or any Subsidiary for a finder’s fee, brokerage commission or
\nsimilar payment.<\/p>\n
2.32. Disclosure. All material facts relating to the Business or
\n ———-
\nCondition of the Company have been disclosed to Purchaser in or in connection
\nwith this Agreement. No representation or warranty contained in this Agreement,
\nand no statement contained in the Disclosure Schedule or in any certificate,
\nlist or other writing furnished to Purchaser pursuant to any provision of this
\nAgreement (including without limitation the Financial Statements), contains any
\nuntrue statement of a material fact or omits to state a material fact necessary
\nin order to make the statements herein or therein, in the light of the
\ncircumstances under which they were made, not misleading.<\/p>\n
ARTICLE III<\/p>\n
REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS<\/p>\n
3.01. Authorization. Each of the Sellers severally and not
\n ————-
\njointly, represents and warrants to Purchaser as set forth below, as of the date
\nof this Agreement and as of the Closing Date, subject to the exceptions set
\nforth in the Disclosure Schedule.<\/p>\n
(a) Each Seller that is a Record Holder is the sole and
\nexclusive record owner, and each Seller that is a Beneficial Owner is the sole
\nand exclusive beneficial owner, of the Shares set forth opposite its name in
\nSchedule 1.01, free and clear of all Liens, and, except as set forth Section
\n————- ——-
\n3.01(a) of the Disclosure Schedule, there are no agreements, arrangements or
\n———————————-
\nunderstandings to which such Seller is a party (other than this Agreement)
\ninvolving the purchase, sale or other acquisition or disposition of the Shares
\nowned by such Seller or any interest therein.<\/p>\n
(b) Such Seller shall deliver or cause to be delivered to
\nPurchaser certificates representing all Shares owned by such Seller in the
\namounts contemplated by Section 1.02, each such certificate to be duly endorsed
\nfor transfer and free and clear of all Liens. The delivery of such certificates
\nto Purchaser duly endorsed for transfer will transfer to Purchaser good and
\nvalid title to such Shares, free and clear of all Liens.<\/p>\n
(c) Each Corporate Seller is a corporation duly organized,
\nvalidly existing and in good standing under the laws of its jurisdiction of
\nincorporation and has all corporate power and authority to carry on its business
\nas now being conducted and to own its properties. Each Corporate Seller has full
\ncorporate power and authority to enter into this Agreement and the Operative
\nAgreements to which it is a party, to perform its obligations hereunder and
\nthereunder and to consummate the transactions contemplated hereby and thereby.
\nThe execution, delivery and performance by each Corporate Seller of this
\nAgreement and the Operative Agreements to which it is a party have been duly
\nauthorized by all requisite corporate action. This Agreement has been, and the
\nOperative Agreements to which it is a party will be as of the Closing Date, duly
\nexecuted and delivered by each Seller, and (assuming due execution and delivery
\nby Purchaser) this Agreement constitutes, and each of the Operative Agreements
\nto which it is a party when executed and delivered will constitute, a valid and
\nbinding obligation of each Seller, enforceable in accordance with its terms.<\/p>\n
(d) The execution and delivery of this Agreement and the
\nOperative Agreements by such Seller and the consummation of the transactions
\ncontemplated hereby and thereby will not (i) except as disclosed Section 3.01(d)
\n —————
\nof the Disclosure Schedule, breach, violate or constitute an event of default
\n————————–
\n(or an event which with the lapse of time or the giving of notice or both would
\nconstitute an event of default) under, give rise to any right of termination,
\ncancellation, modification or acceleration under or require any <\/p>\n
-19-<\/p>\n
consent or the giving of any notice under, any articles or certificate of
\nincorporation or other constituting document, by-laws, or other documents
\nproviding for the governance of a Corporate Seller, note, bond, indenture,
\nmortgage, security agreement, lease, license, franchise, permit, agreement or
\nother instrument or obligation to which such Seller is a party, or by which such
\nSeller or the Shares held by such Seller may be bound, or result in the creation
\nof any Lien upon the properties or assets of such Seller pursuant to the terms
\nof any such instrument or obligation, or (ii) violate or conflict with any law,
\nstatute, ordinance, code, rule, regulation, judgment, order, writ, injunction,
\ndecree or other instrument of any court or governmental or regulatory body,
\nagency or authority applicable to such Seller or by which the Shares held by
\nsuch Seller may be bound.<\/p>\n
3.02. AsiaInfo Shares. Each Seller receiving AsiaInfo Shares in
\n —————
\nconsideration of part or all of its Shares, severally and not jointly,
\nacknowledges, represents and warrants to Purchaser as set forth below, as of the
\ndate of this Agreement and as of the Closing Date.<\/p>\n
(a) Such Seller understands that the AsiaInfo Shares to be
\nissued to such Seller pursuant to this Agreement will not have been registered
\nunder the United States Securities Act of 1933, as amended (the “Securities
\n ———-
\nAct”), or any state securities law by reason of specific exemptions under the
\n—
\nprovisions thereof which depend in part upon the other representations and
\nwarranties made by the Seller in this Agreement. Such Seller understands that
\nPurchaser is relying, in part, upon the Seller’s representations and warranties
\ncontained in this Section 3.02(a) for the purpose of determining whether this
\ntransaction meets the requirements for such exemptions.<\/p>\n
(b) Either (i) such Seller is an “accredited investor” (as
\ndefined in Rule 501(a) under the Securities Act) or (ii) such Seller is a Person
\nthat, at the time the buy order (within the meaning of Regulation S promulgated
\nunder the Securities Act) for the AsiaInfo Shares was originated, was outside
\nthe United States and was not a U.S. person (and was not purchasing for the
\naccount or benefit of a U.S. person) within the meaning of Regulation S and no
\noffer, within the meaning of Regulation S, was made to such Seller (or any other
\nperson on its behalf) in the United States.<\/p>\n
(c) Such Seller understands that the AsiaInfo Shares to be
\nreceived by such Seller in the transactions contemplated hereby will be
\n“restricted securities” under applicable federal securities laws and that the
\nSecurities Act and the rules of the United States Securities and Exchange
\nCommission (the “SEC”) promulgated thereunder provide in substance that such
\n —
\nSeller may dispose of such shares only pursuant to an effective registration
\nstatement under the Securities Act or an exemption from registration if
\navailable. Such Seller further understands that Purchaser has no obligation or
\nintention to register the sale of any of the AsiaInfo Shares to be received by
\nsuch Seller in the transactions contemplated hereby, or take any other action so
\nas to permit sales pursuant to, the Securities Act, except as specifically
\nprovided in the Registration Rights Agreements. Such Seller further understands
\nthat applicable state securities laws may impose additional constraints upon the
\nsale of securities. As a consequence, such Seller understands that such Seller
\nmay have to bear the economic risk of an investment in AsiaInfo Shares to be
\nreceived by such Seller pursuant to the transactions contemplated hereby for an
\nindefinite period of time.<\/p>\n
(d) Such Seller is acquiring AsiaInfo Shares pursuant to the
\ntransactions contemplated hereby for investment only and not with a view to or
\nintention of or in connection with any resale or distribution of such shares or
\nany interest therein.<\/p>\n
(e) Such Seller understands and acknowledges that the
\ncertificate(s) evidencing the AsiaInfo Shares to be issued pursuant to the
\ntransactions contemplated hereby shall bear the following legends:<\/p>\n
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
\n REGISTERED UNDER THE SECURITIES ACT OF 1933, AS<\/p>\n
-20-<\/p>\n
AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
\n TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
\n THEREFROM UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
\n STATE SECURITIES LAWS.”<\/p>\n
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
\n RESTRICTIONS ON TRANSFER AND OTHER DISPOSITION PURSUANT TO A LOCK-UP
\n AGREEMENT DATED AS OF [DATE]. A COPY OF SUCH LOCK-UP AGREEMENT IS
\n MAINTAINED AT THE OFFICES OF THE CORPORATION BY THE SECRETARY OF THE
\n CORPORATION.”<\/p>\n
3.03. Tax Matters. Each Seller, severally and not jointly, represents
\n ———–
\nand warrants that such Seller has had an opportunity to review with its own tax
\nadvisors the tax consequences to such Seller of the sale of the Shares and the
\nother transactions contemplated by this Agreement. Such Seller understands that
\nit must rely solely on its advisors and not on any statements or representations
\nby Purchaser, the Company or any of their agents. Such Seller understands that
\nit (and not the Purchaser or the Company) shall be responsible for its own tax
\nliability that may arise from the sale of the Shares and the other transactions
\ncontemplated by this Agreement.<\/p>\n
3.04. Shareholders Agreement and Other Rights. Each Seller, severally
\n —————————————
\nand not jointly, represents and warrants that the Shareholders Agreement dated
\nas of September 21, 2000, as amended from time to time, by and among the Company
\nand certain Sellers (the “Shareholders Agreement”) shall terminate automatically
\n ———————-
\nas to all parties thereto in connection with the Closing. Other than pursuant to
\nthe Shareholders Agreement, such Seller does not have any pre-emptive rights,
\nrights of first refusal, tag-along rights or similar rights in respect of the
\nCompany or the Shares. In furtherance and not in limitation of the foregoing,
\nSellers hereby waive any and all pre-emptive rights, rights of first refusal,
\ntag-along rights or similar rights, as well as any entitlements to liquidation
\npreferences or other preferences contemplated under the memorandum and articles
\nof association of the Company or otherwise, to the extent that any such rights
\nor preferences would be inconsistent with the transactions set forth in this
\nAgreement or the Operative Agreements<\/p>\n
ARTICLE IV<\/p>\n
REPRESENTATIONS AND WARRANTIES OF PURCHASER<\/p>\n
Purchaser hereby represents and warrants to Sellers as follows:<\/p>\n
4.01. Organization. Purchaser is a corporation duly organized, validly
\n ————
\nexisting and in good standing under the Laws of the State of Delaware. Purchaser
\nhas full corporate power and authority to execute and deliver this Agreement and
\nthe Operative Agreements to which it is a party, to perform its obligations
\nhereunder and thereunder and to consummate the transactions contemplated hereby
\nand thereby. Purchaser is duly qualified, licensed or admitted to do business
\nand is in good standing in all jurisdictions in which the ownership, use or
\nleasing of its Assets and Properties, or the conduct or nature of its business,
\nmakes such qualification, licensing or admission necessary and in which the
\nfailure to be so qualified, licensed or admitted and in good standing could
\nreasonably be expected to have an adverse effect on the validity or
\nenforceability of this Agreement or any of the Operative Agreements to which it
\nis a party or on the ability of Purchaser to perform its obligations hereunder
\nor thereunder.<\/p>\n
4.02. Authorization. The execution and delivery by Purchaser of this
\n ————-
\nAgreement and the Operative Agreements to which it is a party, and the
\nperformance by Purchaser of its obligations hereunder and thereunder, have been
\nduly and validly authorized by the board of directors of Purchaser,<\/p>\n
-21-<\/p>\n
no other corporate action on the part of Purchaser or its stockholders being
\nnecessary. This Agreement has been duly and validly executed and delivered by
\nPurchaser and constitutes, and upon the execution and delivery by Purchaser of
\nthe Operative Agreements to which it is a party, such Operative Agreements will
\nconstitute, legal, valid and binding obligations of Purchaser enforceable
\nagainst Purchaser in accordance with their terms.<\/p>\n
4.03. No Conflicts. The execution and delivery by Purchaser of this
\n ————
\nAgreement do not, and the execution and delivery by Purchaser of the Operative
\nAgreements to which it is a party, the performance by Purchaser of its
\nobligations under this Agreement and such Operative Agreements and the
\nconsummation of the transactions contemplated hereby and thereby will not:<\/p>\n
(a) conflict with or result in a violation or breach of any of the
\nterms, conditions or provisions of the articles of incorporation or by-laws of
\nPurchaser;<\/p>\n
(b) subject to obtaining the consents, approvals and actions, making
\nthe filings and giving the notices disclosed in Schedule 4.05, conflict with or
\n ————-
\nresult in a violation or breach of any term or provision of any Law or Order
\napplicable to Purchaser or any of its Assets and Properties; or<\/p>\n
(c) except as disclosed in Schedule 4.03, (i) conflict with or
\n ————-
\nresult in a violation or breach of, (ii) constitute (with or without notice or
\nlapse of time or both) a default under, (iii) require Purchaser to obtain any
\nconsent, approval or action of, make any filing with or give any notice to any
\nPerson as a result or under the terms of, or (iv) result in the creation or
\nimposition of any Lien upon Purchaser or any of its Assets or Properties under,
\nany Contract or License to which Purchaser is a party or by which any of its
\nAssets and Properties is bound.<\/p>\n
4.04. AsiaInfo Shares. The AsiaInfo Shares to be issued and delivered
\n —————
\nto the Founders, Management Shareholders and the Remaining Shareholders have
\nbeen duly authorized and, when issued pursuant to this Agreement, will be
\nvalidly issued, fully paid and nonassessable. The delivery of certificates at
\nthe Closing representing the AsiaInfo Shares in the manner provided in Section
\n1.03 will transfer to the Founders, the Management Shareholders and the
\nRemaining Shareholders good and valid title to the AsiaInfo Shares, free and
\nclear of all Liens.<\/p>\n
4.05. Governmental Approvals and Filings. Except as disclosed in
\n ———————————-
\nSchedule 4.05, no consent, approval or action of, filing with or notice to any
\n————-
\nGovernmental or Regulatory Authority on the part of Purchaser is required in
\nconnection with the execution, delivery and performance of this Agreement or the
\nOperative Agreements to which it is a party or the consummation of the
\ntransactions contemplated hereby or thereby.<\/p>\n
4.06. Legal Proceedings. There are no Actions or Proceedings pending
\n —————–
\nor, to the knowledge of Purchaser, threatened against, relating to or affecting
\nPurchaser or any of its Assets and Properties which could reasonably be expected
\nto result in the issuance of an Order restraining, enjoining or otherwise
\nprohibiting or making illegal the consummation of any of the transactions
\ncontemplated by this Agreement or any of the Operative Agreements.<\/p>\n
4.07. SEC Documents; Financial Statements. As of their respective
\n ———————————–
\nfiling dates, the Purchaser SEC Documents complied in all material respects with
\nthe applicable requirements of the Securities Exchange Act of 1934, as amended
\n(the “Exchange Act”) and the Securities Act, and none of the Purchaser SEC
\n ————
\nDocuments contained any untrue statement of a material fact or omitted to state
\na material fact required to be stated therein or necessary to make the
\nstatements made therein, in light of the circumstances in which they were made,
\nnot misleading, except to the extent corrected or supplemented by a subsequently
\nfiled Purchaser SEC Document. The financial statements of Purchaser, including
\nthe notes thereto, included in the Purchaser SEC Documents (the “Purchaser
\n ———
\nFinancial Statements”) complied with applicable accounting requirements and with
\n——————–
\nthe published rules and regulations of the SEC with<\/p>\n
-22-<\/p>\n
respect thereto as of their respective dates, and have been prepared in
\naccordance with GAAP applied on a basis consistent throughout the periods
\nindicated and consistent with each other (except as may be indicated in the
\nnotes thereto or, in the case of unaudited statements included in Quarterly
\nReports on Forms 10-Q, as permitted by Form 10-Q of the SEC). The Purchaser
\nFinancial Statements fairly present and accurately reflect the consolidated
\nfinancial condition and operating results of Purchaser at the dates and during
\nthe periods indicated therein (subject, in the case of unaudited statements, to
\nnormal year-end adjustments).<\/p>\n
4.08. Brokers. All negotiations relative to this Agreement and the
\n ——-
\ntransactions contemplated hereby have been carried out by Purchaser directly
\nwith Sellers without the intervention of any Person on behalf of Purchaser in
\nsuch manner as to give rise to any valid claim by any Person against Sellers,
\nthe Company or any Subsidiary for a finder’s fee, brokerage commission or
\nsimilar payment.<\/p>\n
4.09. Investment Company. Purchaser is not an “investment company”
\n ——————
\nwithin the meaning of the United States Investment Company Act of 1940, as
\namended (the “Investment Company Act”). Provided that the Company is not an
\n“investment company” within the meaning of the Investment Company Act, Purchaser
\nwill not be an “investment company” upon consummation of the transactions
\ncontemplated in the Operative Agreements.<\/p>\n
4.10. Shares. Purchaser acknowledges, represents and warrants to
\n ——
\nSellers as set forth below, as of the date of this Agreement and as of the
\nClosing Date.<\/p>\n
(a) Purchaser understands that the Shares to be sold to Purchaser
\npursuant to this Agreement will not have been registered under the Securities
\nAct, or any state securities law by reason of specific exemptions under the
\nprovisions thereof which depend in part upon the other representations and
\nwarranties made by Purchaser in this Agreement. Purchaser understands that the
\nSellers are relying, in part, upon the Purchaser’s representations and
\nwarranties contained in this Section 4.10 for the purpose of determining whether
\nthis transaction meets the requirements for such exemptions.<\/p>\n
(b) Purchaser is an “accredited investor” (as defined in Rule 501(a)
\nunder the Securities Act).<\/p>\n
(c) Purchaser understands that the Shares to be received by
\nPurchaser in the transactions contemplated hereby will be “restricted
\nsecurities” under applicable federal securities laws and that the Securities Act
\nand the rules of the SEC promulgated thereunder provide in substance that
\nPurchaser may dispose of such Shares only pursuant to an effective registration
\nstatement under the Securities Act or an exemption from registration, if
\navailable. Purchaser further understands that applicable state securities laws
\nmay impose additional constraints upon the sale of securities. As a consequence,
\nPurchaser understands that Purchaser may have to bear the economic risk of an
\ninvestment in the Shares to be received by Purchaser pursuant to the
\ntransactions contemplated hereby for an indefinite period of time.<\/p>\n
(d) Purchaser is acquiring Shares pursuant to the transactions
\ncontemplated hereby for investment only and not with a view to or intention of
\nor in connection with any resale or distribution of such Shares or any interest
\ntherein.<\/p>\n
ARTICLE V<\/p>\n
COVENANTS OF SELLERS<\/p>\n
Sellers covenant and agree with Purchaser that, at all times from and
\nafter the date hereof until the Closing and, with respect to any covenant or
\nagreement by its terms to be performed in whole or in part after the Closing,
\nfor the period specified herein or, if no period is specified herein, for a
\nperiod of<\/p>\n
-23-<\/p>\n
six months following the Closing Date, Sellers will comply with all covenants
\nand provisions of this Article V, except to the extent Purchaser may otherwise
\nconsent in writing. For purposes of this Article V, the parties understand and
\n ———
\nagree that in all cases where the Sellers covenant to cause the Company to take,
\nor refrain from taking a particular action, each Seller agrees to exercise all
\ncontrol and power over the Company available to such Seller (whether by virtue
\nof office, directorship, shareholder status, contract or otherwise) in order to
\ncause the Company to take, or refrain from taking, the specified action,
\nprovided that no Seller shall be obligated to exercise any control or power not
\navailable to them by virtue of office, directorship, shareholder status,
\ncontract or otherwise.<\/p>\n
5.01. Regulatory and Other Approvals. Sellers will, and will cause the
\n ——————————
\nCompany and the Subsidiaries to, (a) take all commercially reasonable steps
\nnecessary or desirable, and proceed diligently and in good faith and use all
\ncommercially reasonable efforts, as promptly as practicable to obtain all
\nconsents, approvals or actions of, to make all filings with and to give all
\nnotices to Governmental or Regulatory Authorities or any other Person required
\nof Sellers, the Company or any Subsidiary to consummate the transactions
\ncontemplated hereby and by the Operative Agreements, including without
\nlimitation those described in Sections 2.05 and 2.06 of the Disclosure Schedule,
\n ————————————————-
\n(b) provide such other information and communications to such Governmental or
\nRegulatory Authorities or other Persons as Purchaser or such Governmental or
\nRegulatory Authorities or other Persons may reasonably request and (c) cooperate
\nwith Purchaser as promptly as practicable in obtaining all consents, approvals
\nor actions of, making all filings with and giving all notices to Governmental or
\nRegulatory Authorities or other Persons required of Purchaser to consummate the
\ntransactions contemplated hereby and by the Operative Agreements. Sellers will
\nprovide prompt notification to Purchaser when any such consent, approval,
\naction, filing or notice referred to in clause (a) above is obtained, taken,
\nmade or given, as applicable, and will advise Purchaser of any communications
\n(and, unless precluded by Law, provide copies of any such communications that
\nare in writing) with any Governmental or Regulatory Authority or other Person
\nregarding any of the transactions contemplated by this Agreement or any of the
\nOperative Agreements.<\/p>\n
5.02. Investigation by Purchaser. Sellers will, and will cause the
\n ————————–
\nCompany and the Subsidiaries to, (a) provide Purchaser and its officers,
\ndirectors, employees, agents, counsel, accountants, financial advisors,
\nconsultants and other representatives (together “Representatives”) with full
\n —————
\naccess, upon reasonable prior notice and during normal business hours, to all
\nofficers, employees, agents and accountants of the Company and the Subsidiaries
\nand their Assets and Properties and Books and Records, and (b) furnish Purchaser
\nand such other Persons with all such information and data (including without
\nlimitation copies of Contracts, Benefit Plans and other Books and Records)
\nconcerning the business and operations of the Company and the Subsidiaries as
\nPurchaser or any of such other Persons reasonably may request in connection with
\nsuch investigation.<\/p>\n
5.03. No Solicitations. Sellers will not take, nor will it permit the
\n —————-
\nCompany, the Subsidiaries or any Affiliate of Sellers (or authorize or permit
\nany investment banker, financial advisor, attorney, accountant or other Person
\nretained by or acting for or on behalf of Sellers, the Company, the Subsidiaries
\nor any such Affiliate) to take, directly or indirectly, any action to initiate,
\nassist, solicit, receive, negotiate, encourage or accept any offer or inquiry
\nfrom any Person (a) to engage in any Business Combination with the Company or
\nany Subsidiary, (b) to reach any agreement or understanding (whether or not such
\nagreement or understanding is absolute, revocable, contingent or conditional)
\nfor, or otherwise attempt to consummate, any Business Combination with the
\nCompany or any Subsidiary or (c) to furnish or cause to be furnished any
\ninformation with respect to the Company or any Subsidiary to any Person (other
\nthan as contemplated by Section 5.02) who Sellers, the Company, any Subsidiary
\nor such Affiliate (or any such Person acting for or on their behalf) knows or
\nhas reason to believe is in the process of considering any Business Combination
\nwith the Company or any Subsidiary. If Sellers, the Company, any Subsidiary or
\nany such Affiliate (or any such Person acting for or on their behalf) receives
\nfrom any Person (other than Purchaser or any other Person referred to in Section
\n5.02) any offer, inquiry or informational request referred to above, Sellers
\nwill promptly advise such Person, by written notice, of the <\/p>\n
-24-<\/p>\n
terms of this Section 5.03 and will promptly, orally and in writing, advise
\nPurchaser of such offer, inquiry or request and deliver a copy of such notice to
\nPurchaser.<\/p>\n
5.04. Conduct of Business. Sellers will cause the Company and the
\n ——————-
\nSubsidiaries to conduct business only in the ordinary course consistent with
\npast practice. Without limiting the generality of the foregoing, Sellers will:<\/p>\n
(a) cause the Company and the Subsidiaries to use commercially
\nreasonable efforts to (i) preserve intact the present business organization and
\nreputation of the Company and the Subsidiaries, (ii) keep available (subject to
\ndismissals and retirements in the ordinary course of business consistent with
\npast practice) the services of the present officers, employees and consultants
\nof the Company and the Subsidiaries, (iii) maintain the Assets and Properties of
\nthe Company and the Subsidiaries in good working order and condition, ordinary
\nwear and tear excepted, (iv) maintain the good will of customers, suppliers,
\nlenders and other Persons to whom the Company or any Subsidiary sells goods or
\nprovides services or with whom the Company or any Subsidiary otherwise has
\nsignificant business relationships and (v) continue all current sales, marketing
\nand promotional activities relating to the business and operations of the
\nCompany and the Subsidiaries;<\/p>\n
(b) except to the extent required by applicable Law, (i) cause the
\nBooks and Records to be maintained in the usual, regular and ordinary manner and
\n(ii) not permit any material change in (A) any pricing, investment, accounting,
\nfinancial reporting, inventory, credit, allowance or Tax practice or policy of
\nthe Company or any Subsidiary, (B) any method of calculating any bad debt,
\ncontingency or other reserve of the Company or any Subsidiary for accounting,
\nfinancial reporting or Tax purposes or (C) the fiscal year of the Company or any
\nSubsidiary;<\/p>\n
(c) (i) use, and will cause the Company and the Subsidiaries to use,
\ncommercially reasonable efforts to maintain in full force and effect until the
\nClosing substantially the same levels of coverage as the insurance afforded
\nunder the Contracts listed in Section 2.20 of the Disclosure Schedule, (ii) to
\n —————————————
\nthe extent requested by Purchaser prior to the Closing Date, use all
\ncommercially reasonable efforts to cause such insurance coverage held by any
\nPerson (other than the Company or any Subsidiary) for the benefit of the Company
\nor any Subsidiary to continue to be provided at the expense of the Company and
\nthe Subsidiaries for at least sixty (60) calendar days after the Closing on
\nsubstantially the same terms and conditions as provided on the date of this
\nAgreement and (iii) cause any and all benefits under such Contracts paid or
\npayable (whether before or after the date of this Agreement) with respect to the
\nbusiness, operations, employees or Assets and Properties of the Company and the
\nSubsidiaries to be paid to the Company and the Subsidiaries; and<\/p>\n
(d) cause the Company and the Subsidiaries to comply, in all
\nmaterial respects, with all Laws and Orders applicable to the business and
\noperations of the Company and the Subsidiaries, and promptly following receipt
\nthereof to give Purchaser copies of any notice received from any Governmental or
\nRegulatory Authority or other Person alleging any violation of any such Law or
\nOrder.<\/p>\n
(e) cause the Company and its Subsidiaries to prepare and file on or
\nbefore the due date therefor all Tax Returns required to be filed by them
\n(except for any Tax Return for which an extension has been granted as permitted
\nhereunder) on or before the Closing Date, and shall pay, or cause the Company
\nand its Subsidiaries to pay, all Taxes (including estimated Taxes) due on such
\nTax Return (or due with respect to Tax Returns for which an extension has been
\ngranted as permitted hereunder) or which are otherwise required to be paid at
\nany time prior to or during such period. Such Tax Returns shall be prepared in
\naccordance with the most recent Tax practices as to elections and accounting
\nmethods except for new elections that may be made therein that were not
\npreviously available, subject to Purchaser’s consent (not to be unreasonably
\nwithheld or delayed).<\/p>\n
-25-<\/p>\n
(f) to the extent any Seller has knowledge of the commencement or
\nscheduling of any Tax audit, the assessment of any Tax, the issuance of any
\nnotice of Tax due or any bill for collection of any Tax due or the commencement
\nor scheduling of any other administrative or judicial proceeding with respect to
\nthe determination, assessment or collection of any Tax of the Company or its
\nSubsidiaries, notify Purchaser of such matter, setting forth information (to the
\nextent known) describing any asserted Tax liability in reasonable detail and
\nincluding copies of any notice or other documentation received from the
\napplicable Tax authority with respect to such matter.<\/p>\n
(g) not, and shall cause the Company not to, take any of the
\nfollowing actions with respect to the Company or its Subsidiaries without the
\nPurchaser’s consent, (i) make, revoke or amend any Tax election, (ii) execute
\nany waiver of restrictions on assessment or collection of any Tax or (iii) enter
\ninto or amend any agreement or settlement with any Tax authority.<\/p>\n
(h) terminate all tax-sharing agreements or similar arrangements
\nwith respect to or involving the Company or its Subsidiaries prior to the
\nClosing Date, such that after the Closing Date, none of the Company or its
\nSubsidiaries shall be bound thereby or have any liability thereunder to the
\nother party for amounts due in respect of such agreements and arrangements.<\/p>\n
5.05. Financial Statements and Reports.
\n ——————————–<\/p>\n
(a) As promptly as practicable and in any event no later than forty
\nfive (45) days after the end of each fiscal quarter ending after the date hereof
\nand before the Closing Date (other than the fourth quarter) or ninety (90) days
\nafter the end of each fiscal year ending after the date hereof and before the
\nClosing Date, as the case may be, Sellers will deliver to Purchaser true and
\ncomplete copies of, in the case of any such fiscal year, the audited and, in the
\ncase of any such fiscal quarter, the unaudited consolidated balance sheet, and
\nthe related audited or unaudited consolidated statements of operations,
\nshareholders’ equity and cash flows, of the Company and its consolidated
\nsubsidiaries, in each case as of and for the fiscal year then ended or as of and
\nfor each such fiscal quarter and the portion of the fiscal year then ended, as
\nthe case may be, together with the notes, if any, relating thereto, which
\nfinancial statements shall be prepared on a basis consistent with the Audited
\nFinancial Statements.<\/p>\n
(b) As promptly as practicable, Sellers will deliver to Purchaser
\ntrue and complete copies of such other financial statements, reports and
\nanalyses as may be prepared or received by Sellers, the Company or any
\nSubsidiary relating to the business or operations of the Company or any
\nSubsidiary or as Purchaser may otherwise reasonably request.<\/p>\n
5.06. Employee Matters. Except as may be required by Law, Sellers will
\n —————-
\nrefrain, and will cause the Company and the Subsidiaries to refrain, from
\ndirectly or indirectly:<\/p>\n
(a) making any representation or promise, oral or written, to any
\nofficer, employee or consultant of the Company or any Subsidiary concerning any
\nBenefit Plan, except for statements as to the rights or accrued benefits of any
\nofficer, employee or consultant under the terms of any Benefit Plan;<\/p>\n
(b) making any increase in the salary, wages or other compensation
\nof any officer, employee or consultant of the Company or any Subsidiary;<\/p>\n
(c) adopting, entering into, amending, modifying or terminating
\n(partially or completely) any Benefit Plan except to the extent required by
\napplicable Law and, in the event compliance with legal requirements presents
\noptions, only to the extent that the option which the Company or Subsidiary
\nreasonably believes to be the least costly is chosen;<\/p>\n
(d) establishing or modifying any (i) targets, goals, pools or
\nsimilar provisions in respect of any fiscal year under any Benefit Plan,
\nemployment Contract or other employee compensation<\/p>\n
-26-<\/p>\n
arrangement or (ii) salary ranges, increase guidelines or similar provisions in
\nrespect of any Benefit Plan, employment Contract or other employee compensation
\narrangement; or<\/p>\n
(e) entering into, amending, modifying or terminating (partially or
\ncompletely), any Contract that is, or had it been in existence on the date of
\nthis Agreement would have been required to be, disclosed in Section 2.18(a)(i)
\n ——————
\nof the Disclosure Schedule.
\n————————–<\/p>\n
Sellers will cause the Company and the Subsidiaries to administer each
\nBenefit Plan, or cause the same to be so administered, in all material respects
\nin accordance with applicable Laws. Sellers will promptly notify Purchaser in
\nwriting of each receipt by Sellers, the Company or any Subsidiary (and furnish
\nPurchaser with copies) of any notice of investigation or administrative
\nproceeding involving any Benefit Plan.<\/p>\n
5.07. Certain Restrictions. Sellers will cause the Company and the
\n ——————–
\nSubsidiaries to refrain from:<\/p>\n
(a) except in connection with the liquidation and dissolution of
\nBonson BVI pursuant to Section 7.18, amending their memorandum and articles of
\nassociation or by-laws (or other comparable corporate charter documents) or
\ntaking any action with respect to any such amendment or any reorganization,
\nliquidation or dissolution of any such corporation;<\/p>\n
(b) except in connection with the exercise pursuant to Section 7.13
\nof the 8,000,000 Employee Share Options outstanding on the date hereof and
\ndisclosed pursuant to Section 2.03, authorizing, issuing, selling or otherwise
\ndisposing of any capital shares with respect to the Company or any Subsidiary,
\nor effecting any share split or other change in the capitalization of the
\nCompany or any Subsidiary, or modifying or amending any right of any holder of
\noutstanding capital shares with respect to the Company or any Subsidiary;<\/p>\n
(c) granting, conferring or awarding any Employee Share Option or
\nother Option not outstanding on the date hereof;<\/p>\n
(d) except in connection with the liquidation and dissolution of
\nBonson BVI pursuant to Section 7.18, declaring, setting aside or paying any
\ndividend or other distribution in respect of the capital shares of the Company
\nor any Subsidiary not wholly owned by the Company, or directly or indirectly
\nredeeming, purchasing or otherwise acquiring any capital shares with respect to
\nthe Company or any Subsidiary not wholly owned by the Company;<\/p>\n
(e) acquiring or disposing of, or incurring any Lien (other than a
\nPermitted Lien) on, any Assets and Properties, other than in the ordinary course
\nof business consistent with past practice;<\/p>\n
(f) (i) entering into, amending, modifying, terminating (partially
\nor completely), granting any waiver under or giving any consent with respect to
\n(A) any Contract that would, if in existence on the date of this Agreement, be
\nrequired to be disclosed in the Disclosure Schedule pursuant to Section 2.18(a),
\nor (B) any material License or (ii) granting any irrevocable powers of attorney;<\/p>\n
(g) violating, breaching or defaulting under in any material
\nrespect, or taking or failing to take any action that (with or without notice or
\nlapse of time or both) would constitute a material violation or breach of, or
\ndefault under, any term or provision of any License held or used by the Company
\nor any Subsidiary or any Contract to which the Company or any Subsidiary is a
\nparty or by which any of their respective Assets and Properties is bound;<\/p>\n
(h) (i) incurring any additional Indebtedness, or (ii) voluntarily
\npurchasing, canceling, prepaying or otherwise providing for a complete or
\npartial discharge in advance of a scheduled payment <\/p>\n
-27-<\/p>\n
date with respect to, or waiving any right of the Company or any Subsidiary
\nunder, any Indebtedness of or owing to the Company or any Subsidiary (in either
\ncase other than Indebtedness of the Company or a Subsidiary owing to the Company
\nor a wholly-owned Subsidiary);<\/p>\n
(i) engaging with any Person in any Business Combination;<\/p>\n
(j) making capital expenditures or commitments for additions to
\nproperty, plant or equipment constituting capital assets in an aggregate amount
\nexceeding US$100,000;<\/p>\n
(k) making any change in the lines of business in which they
\nparticipate or are engaged;<\/p>\n
(l) writing off or writing down any of their Assets and Properties
\noutside the ordinary course of business consistent with past practice; or<\/p>\n
(m) entering into any agreement to do or engage in any of the
\nforegoing.<\/p>\n
5.08. Affiliate Transactions. Except as set forth in Section 5.08 of
\n ———————- —————
\nthe Disclosure Schedule, all Indebtedness and other amounts owing under
\n———————–
\nContracts between any Seller, any officer, director, Affiliate or Associate of
\nany Seller or any Associate of any such officer, director or Affiliate (other
\nthan the Company or any Subsidiary), on the one hand, and the Company or any of
\nthe Subsidiaries, on the other, will be paid in full prior to the Closing or
\ndeducted from the proceeds due to such Seller at Closing, and such Seller will
\nterminate and will cause any such officer, director, Affiliate or Associate to
\nterminate each Contract with the Company or any Subsidiary. Prior to the
\nClosing, neither the Company nor any Subsidiary will enter into any Contract or
\namend or modify any existing Contract, and will not engage in any transaction
\noutside the ordinary course of business consistent with past practice or not on
\nan arm’s-length basis (other than pursuant to Contracts disclosed pursuant to
\nSection 2.18(a)(vii)), with any Seller or any such officer, director, Affiliate
\nor Associate.<\/p>\n
5.09. Books and Records. On the Closing Date, Sellers will deliver or
\n —————–
\nmake available to Purchaser at the offices of the Company and the Subsidiaries
\nall of the Books and Records, and if at any time after the Closing Sellers
\ndiscover in its possession or under its control any other Books and Records, it
\nwill forthwith deliver such Books and Records to Purchaser.<\/p>\n
5.10. Noncompetition.
\n ————–<\/p>\n
(a) The Founders and the Management Shareholders will, for a period
\nof twelve months from the Closing Date, refrain from, either alone or in
\nconjunction with any other Person, or directly or indirectly through its present
\nor future Affiliates:<\/p>\n
(i) employing, engaging or seeking to employ or engage any
\n Person who within the prior eighteen months had been an officer or
\n employee of the Company or a Subsidiary, unless such officer or
\n employee is terminated by the Company or any Subsidiary after the
\n Closing Date without cause;<\/p>\n
(ii) causing or attempting to cause (A) any client, customer or
\n supplier of the Company or any Subsidiary to terminate or materially
\n reduce its business with the Company and the Subsidiaries or (B) any
\n officer, employee or consultant of the Company or any Subsidiary to
\n resign or sever a relationship with the Company or a Subsidiary;<\/p>\n
(iii) disclosing (unless compelled by judicial or administrative
\n process) or using any confidential or secret information relating to
\n the Company or any of the Subsidiaries or any of their respective
\n clients, customers or suppliers; or<\/p>\n
-28-<\/p>\n
(iv) participating or engaging in, or otherwise lending
\n assistance (financial or otherwise) to any Person participating or
\n engaged in, any of the lines of business in which the Company or any
\n of the Subsidiaries is participating or engaged on the Closing Date in
\n the PRC, the Hong Kong Special Administrative Region of the PRC, or
\n Taiwan.<\/p>\n
(b) The parties hereto recognize that the Laws and public policies
\nof the various jurisdictions may differ as to the validity and enforceability of
\ncovenants similar to those set forth in this Section. It is the intention of the
\nparties that the provisions of this Section be enforced to the fullest extent
\npermissible under the Laws and policies of each jurisdiction in which
\nenforcement may be sought, and that the unenforceability (or the modification to
\nconform to such Laws or policies) of any provisions of this Section shall not
\nrender unenforceable, or impair, the remainder of the provisions of this
\nSection. Accordingly, if any provision of this Section shall be determined to be
\ninvalid or unenforceable, such invalidity or unenforceability shall be deemed to
\napply only with respect to the operation of such provision in the particular
\njurisdiction in which such determination is made and not with respect to any
\nother provision or jurisdiction.<\/p>\n
(c) The parties hereto acknowledge and agree that any remedy at Law
\nfor any breach of the provisions of this Section would be inadequate, and the
\nFounders and Management Shareholders hereby consent to the granting by any court
\nof an injunction or other equitable relief, without the necessity of actual
\nmonetary loss being proved, in order that the breach or threatened breach of
\nsuch provisions may be effectively restrained.<\/p>\n
5.11. Notice and Cure. Sellers will notify Purchaser promptly in
\n —————
\nwriting of, and contemporaneously will provide Purchaser with true and complete
\ncopies of any and all information or documents relating to, and will use all
\ncommercially reasonable efforts to cure before the Closing, any event,
\ntransaction or circumstance occurring after the date of this Agreement that
\ncauses or will cause any covenant or agreement of Sellers under this Agreement
\nto be breached or that renders or will render untrue any representation or
\nwarranty of Sellers contained in this Agreement as if the same were made on or
\nas of the date of such event, transaction or circumstance. Sellers also will
\nnotify Purchaser promptly in writing of, and will use all commercially
\nreasonable efforts to cure, before the Closing, any violation or breach of any
\nrepresentation, warranty, covenant or agreement made by Sellers in this
\nAgreement, whether occurring or arising before, on or after the date of this
\nAgreement. No notice given pursuant to this Section shall have any effect on the
\nrepresentations, warranties, covenants or agreements contained in this Agreement
\nfor purposes of determining satisfaction of any condition contained herein or
\nshall in any way limit Purchaser’s right to seek indemnity under Article XI.<\/p>\n
5.12. Fulfillment of Conditions. Sellers will execute and deliver at
\n ————————-
\nthe Closing each Operative Agreement that Sellers are required hereby to execute
\nand deliver as a condition to the Closing, will take all commercially reasonable
\nsteps necessary or desirable and proceed diligently and in good faith to satisfy
\neach other condition to the obligations of Purchaser contained in this Agreement
\nand will not, and will not permit the Company or any Subsidiary to, take or fail
\nto take any action that could reasonably be expected to result in the
\nnonfulfillment of any such condition.<\/p>\n
ARTICLE VI<\/p>\n
COVENANTS OF PURCHASER<\/p>\n
Purchaser covenants and agrees with Sellers that, at all times from
\nand after the date hereof until the Closing and, with respect to any covenant or
\nagreement by its terms to be performed in whole or in part after the Closing,
\nfor the period specified herein or, if no period is specified herein, for a
\nperiod of six months following the Closing Date, Purchaser will comply with all
\ncovenants and provisions of this Article VI, except to the extent Sellers may
\notherwise consent in writing.<\/p>\n
-29-<\/p>\n
6.01. Regulatory and Other Approvals. Purchaser will (a) take all
\n ——————————
\ncommercially reasonable steps necessary or desirable, and proceed diligently and
\nin good faith and use all commercially reasonable efforts, as promptly as
\npracticable to obtain all consents, approvals or actions of, to make all filings
\nwith and to give all notices to Governmental or Regulatory Authorities or any
\nother Person required of Purchaser to consummate the transactions contemplated
\nhereby and by the Operative Agreements, including without limitation those
\ndescribed in Schedules 4.03 and 4.05, (b) provide such other information and
\ncommunications to such Governmental or Regulatory Authorities or other Persons
\nas Sellers or such Governmental or Regulatory Authorities or other Persons may
\nreasonably request and (c) cooperate with Sellers, the Company and the
\nSubsidiaries as promptly as practicable in obtaining all consents, approvals or
\nactions of, making all filings with and giving all notices to Governmental or
\nRegulatory Authorities or other Persons required of Sellers, the Company or any
\nSubsidiary to consummate the transactions contemplated hereby and by the
\nOperative Agreements. Purchaser will provide prompt notification to Sellers when
\nany such consent, approval, action, filing or notice referred to in clause (a)
\nabove is obtained, taken, made or given, as applicable, and will advise Sellers
\nof any communications (and, unless precluded by Law, provide copies of any such
\ncommunications that are in writing) with any Governmental or Regulatory
\nAuthority or other Person regarding any of the transactions contemplated by this
\nAgreement or any of the Operative Agreements.<\/p>\n
6.02. Notice and Cure. Purchaser will notify Sellers promptly in
\n —————
\nwriting of, and contemporaneously will provide Sellers with true and complete
\ncopies of any and all information or documents relating to, and will use all
\ncommercially reasonable efforts to cure before the Closing, any event,
\ntransaction or circumstance occurring after the date of this Agreement that
\ncauses or will cause any covenant or agreement of Purchaser under this Agreement
\nto be breached or that renders or will render untrue any representation or
\nwarranty of Purchaser contained in this Agreement as if the same were made on or
\nas of the date of such event, transaction or circumstance. Purchaser also will
\nnotify Sellers promptly in writing of, and will use all commercially reasonable
\nefforts to cure, before the Closing, any violation or breach of any
\nrepresentation, warranty, covenant or agreement made by Purchaser in this
\nAgreement, whether occurring or arising before, on or after the date of this
\nAgreement. No notice given pursuant to this Section shall have any effect on the
\nrepresentations, warranties, covenants or agreements contained in this Agreement
\nfor purposes of determining satisfaction of any condition contained herein or
\nshall in any way limit Sellers’ right to seek indemnity under Article XI.<\/p>\n
6.03. Fulfillment of Conditions. Purchaser will execute and deliver at
\n ————————-
\nthe Closing each Operative Agreement that Purchaser is hereby required to
\nexecute and deliver as a condition to the Closing, will take all commercially
\nreasonable steps necessary or desirable and proceed diligently and in good faith
\nto satisfy each other condition to the obligations of Sellers contained in this
\nAgreement and will not take or fail to take any action that could reasonably be
\nexpected to result in the nonfulfillment of any such condition.<\/p>\n
ARTICLE VII<\/p>\n
CONDITIONS TO OBLIGATIONS OF PURCHASER<\/p>\n
The obligations of Purchaser hereunder are subject to the fulfillment,
\nat or before the Closing, of each of the following conditions (all or any of
\nwhich may be waived in whole or in part by Purchaser in its sole discretion):<\/p>\n
7.01. Representations and Warranties. Each of the representations and
\n ——————————
\nwarranties made by Sellers in this Agreement (other than those made as of a
\nspecified date earlier than the Closing Date) shall be true and correct in all
\nmaterial respects on and as of the Closing Date as though such representation or
\nwarranty was made on and as of the Closing Date, and any representation or
\nwarranty made as of a specified date earlier than the Closing Date shall have
\nbeen true and correct in all material<\/p>\n
-30-<\/p>\n
respects on and as of such earlier date, and the Company shall have delivered a
\ncertificate to that effect, executed by its chief executive officer, in the form
\nof Exhibit D hereto.
\n ———<\/p>\n
7.02. Performance. Sellers shall have performed and complied with, in
\n ———–
\nall material respects, each agreement, covenant and obligation required by this
\nAgreement to be so performed or complied with by Sellers at or before the
\nClosing.<\/p>\n
7.03. Orders and Laws. There shall not be in effect on the Closing
\n —————
\nDate any Order or Law restraining, enjoining or otherwise prohibiting or making
\nillegal the consummation of any of the transactions contemplated by this
\nAgreement or any of the Operative Agreements or which could reasonably be
\nexpected to otherwise result in a material diminution of the benefits of the
\ntransactions contemplated by this Agreement or any of the Operative Agreements
\nto Purchaser, and there shall not be pending or threatened on the Closing Date
\nany Action or Proceeding or any other action in, before or by any Governmental
\nor Regulatory Authority which could reasonably be expected to result in the
\nissuance of any such Order or the enactment, promulgation or deemed
\napplicability to Purchaser, the Company, any Subsidiary or the transactions
\ncontemplated by this Agreement or any of the Operative Agreements of any such
\nLaw.<\/p>\n
7.04. Regulatory Consents and Approvals. All consents, approvals and
\n ———————————
\nactions of, filings with and notices to any Governmental or Regulatory Authority
\nnecessary to permit Purchaser and Sellers to perform their obligations under
\nthis Agreement and the Operative Agreements and to consummate the transactions
\ncontemplated hereby and thereby (a) shall have been duly obtained, made or
\ngiven, (b) shall be in form and substance reasonably satisfactory to Purchaser,
\n(c) shall not be subject to the satisfaction of any condition that has not been
\nsatisfied or waived and (d) shall be in full force and effect, and all
\nterminations or expirations of waiting periods imposed by any Governmental or
\nRegulatory Authority necessary for the consummation of the transactions
\ncontemplated by this Agreement and the Operative Agreements shall have occurred.<\/p>\n
7.05. Third Party Consents. The consents (or in lieu thereof waivers)
\n ——————–
\nlisted in Schedule 7.05 hereto, and all other consents (or in lieu thereof
\n ————-
\nwaivers) to the performance by Purchaser and Sellers of their obligations under
\nthis Agreement and the Operative Agreements or to the consummation of the
\ntransactions contemplated hereby and thereby as are required under any Contract
\nto which Purchaser, Sellers, the Company or any Subsidiary is a party or by
\nwhich any of their respective Assets and Properties are bound and where the
\nfailure to obtain any such consent (or in lieu thereof waiver) could reasonably
\nbe expected, individually or in the aggregate with other such failures, to
\nmaterially adversely affect Purchaser or the Business or Condition of the
\nCompany or otherwise result in a material diminution of the benefits of the
\ntransactions contemplated by this Agreement and the Operative Agreements to
\nPurchaser, (a) shall have been obtained, (b) shall be in form and substance
\nreasonably satisfactory to Purchaser, (c) shall not be subject to the
\nsatisfaction of any condition that has not been satisfied or waived and (d)
\nshall be in full force and effect.<\/p>\n
7.06. Opinions of Counsel. Purchaser shall have received the opinions
\n ——————-
\nof Sidley Austin Brown & Wood, Guang Xin Lawyers, and Conyers Dill & Pearman,
\nU.S., PRC and British Virgin Islands and Cayman Islands counsel, respectively,
\nto Sellers and the Company, dated the Closing Date, substantially in the forms
\nand to the effect of Exhibit E, Exhibit F; Exhibit G and Exhibit H,
\n ——— ——— ——— ———
\nrespectively, and to such further effect as Purchaser may reasonably request.<\/p>\n
7.07. Good Standing Certificates. Sellers shall have delivered to
\n ————————–
\nPurchaser (a) copies of the certificates or articles of association (or other
\ncomparable corporate charter documents), including all amendments thereto, of
\nthe Company and each Subsidiary certified by the appropriate official of the
\njurisdiction of incorporation, (b) current business licenses or certificates, as
\napplicable, from the appropriate official of the respective jurisdictions of
\nincorporation to the effect that each of the Company and the Subsidiaries is in
\ngood standing or subsisting in such jurisdiction, listing all charter documents
\nof <\/p>\n
-31-<\/p>\n
the Company and such Subsidiaries on file and attesting to its payment of all
\nfranchise or similar Taxes, and (c) a current business license or certificate,
\nas applicable, from the appropriate official in each jurisdiction in which the
\nCompany and the Subsidiaries are qualified or admitted to do business to the
\neffect that the Company or the applicable Subsidiary is duly qualified or
\nadmitted and in good standing (or in comparable status) in such jurisdiction.<\/p>\n
7.08. Resignations of Directors and Officers. Such members of the
\n ————————————–
\nboards of directors and such officers of the Company and the Subsidiaries as are
\ndesignated in a written notice delivered at least two (2) Business Days prior to
\nthe Closing Date by Purchaser to Sellers shall have tendered, effective at the
\nClosing, their resignations as such directors and officers.<\/p>\n
7.09. Escrow Agreement. Sellers and the Escrow Agent shall have
\n —————-
\nentered into the Escrow Agreement substantially in the form and to the effect of
\nExhibit A.
\n———<\/p>\n
7.10. Proceedings. All proceedings to be taken on the part of Sellers
\n ———–
\nin connection with the transactions contemplated by this Agreement and all
\ndocuments incident thereto shall be reasonably satisfactory in form and
\nsubstance to Purchaser, and Purchaser shall have received copies of all such
\ndocuments and other evidences as Purchaser may reasonably request in order to
\nestablish the consummation of such transactions and the taking of all
\nproceedings in connection therewith.<\/p>\n
7.11. Employment Agreements. Certain of the Founders and Management
\n ———————
\nShareholders, to be determined by Purchaser in its sole discretion, shall have
\nexecuted employment agreements, substantially in the form attached hereto as
\nExhibit J, or in such other form acceptable to Purchaser.
\n———<\/p>\n
7.12. Lock-up Agreements. Each of the Founders, Management
\n ——————
\nShareholders and Remaining Shareholders shall have entered into a Lock-up
\nAgreement with respect to the AsiaInfo Shares they will receive as consideration
\nfor the sale of the Shares, substantially in the form attached hereto as Exhibit
\n ——-
\nB, or in such other form acceptable to Purchaser.
\n–<\/p>\n
7.13. Employee Share Options. All employee share option plans of the
\n ———————-
\nCompany shall have been terminated and all Employee Share Options issued
\nthereunder shall have been duly accelerated (if necessary) and exercised through
\nCashless Exercises, and Sellers shall have provided to Purchaser written
\nevidence, in form and substance reasonably satisfactory to Purchaser, that such
\nEmployee Share Options have been so exercised. For purposes of this Section 7.13
\nand elsewhere in this Agreement, “Cashless Exercise” shall mean the exercise of
\n —————–
\nan Employee Share Option whereby, rather than pay the applicable exercise price
\nof the Employee Share Option in cash to the Company in consideration of the full
\nnumber of Shares underlying such Employee Share Option, the holder thereof
\ntenders such Employee Share Option to the Company in consideration of the number
\nof Shares (rounded upwards to the nearest whole number of Shares) having a fair
\nmarket value (determined by reference to the Purchase Price) equal to the
\ndifference between (a) the fair market value (determined by reference to the
\nPurchase Price) of the Shares underlying such Employee Share Option and (b) the
\naggregate exercise price of such Employee Share Option. The Board of Directors
\nof the Company shall cause all of the granted Employee Share Options to be
\naccelerated by the holders of such options. Sellers shall have provided to
\nPurchaser (i) written evidence, in form and substance reasonably satisfactory to
\nPurchaser, that all individual income tax payable in the PRC in connection with
\nthe exercise of such Employee Share Options has been duly paid or (ii) an
\nopinion of counsel in form and substance reasonably satisfactory to Purchaser to
\nthe effect that no such taxes are payable, along with representation and
\nindemnification letters from the relevant Sellers in form and substance
\nreasonably satisfactory to the Purchaser to the effect that no such taxes are
\npayable.<\/p>\n
7.14. Audited Financial Statements and Management Accounts. Sellers
\n —————————————————-
\nand the Company shall have provided to Purchaser the audited balance sheets of
\nthe Company and its<\/p>\n
-32-<\/p>\n
consolidated subsidiaries as of December 31, 2000 and September 30, 2001, and
\nthe related consolidated statements of operations, shareholders’ equity and cash
\nflows for the periods then ended, and such audited financial statements shall
\nnot differ in any material respect from the unaudited financial statements
\nreferred to in Section 2.08(b). Sellers and the Company shall have provided to
\nPurchaser the unaudited monthly management accounts of the Company for October,
\nNovember and December of 2001, which accounts shall have been prepared in
\naccordance with GAAP and reviewed by the Auditor in accordance with SAS 71, and
\nsuch accounts shall be reasonably satisfactory to Purchaser in form and
\nsubstance.<\/p>\n
7.15. Affiliate Transactions. Sellers shall have provided to
\n ———————-
\nPurchaser written evidence, in form and substance reasonably satisfactory to
\nPurchaser, that in accordance with Section 5.08, all Indebtedness and other
\namounts owing under Contracts between any Seller, any officer, director,
\nAffiliate or Associate of any Seller or any Associate of any such officer,
\ndirector or Affiliate (other than the Company or any Subsidiary), on the one
\nhand, and the Company or any of the Subsidiaries, on the other, has been paid in
\nfull, and that all Contracts providing for such Indebtedness or other payments
\nhave been terminated.<\/p>\n
7.16. No Material Adverse Change. There shall have been no material
\n ————————–
\nadverse change in the Business or Condition of the Company, nor shall there have
\nbeen any damage, destruction or loss to any Assets or Properties of the Company
\nthat could reasonably be expected to result in a material adverse effect on the
\nBusiness or Condition of the Company, whether or not covered by insurance.<\/p>\n
7.17. Waivers.
\n ——-<\/p>\n
(a) Sellers shall have provided to Purchaser written evidence, in form
\nand substance reasonably satisfactory to Purchaser, that Sellers have waived or
\nabolished any and all rights that they may otherwise have been entitled to,
\nincluding preemptive rights, rights of first refusal, repurchase rights or the
\nlike, relating to the Shares.<\/p>\n
(b) Sellers shall have provided to Purchaser written evidence, in form
\nand substance reasonably satisfactory to Purchaser, that any and all rights
\nexisting under the Beijing Agreement to subscribe for Shares of the Company or
\nequity of any of the Company’s Subsidiaries have been waived or abolished and
\nthat the Company and its Subsidiaries have been released from any and all
\nliability relating thereto.<\/p>\n
(c) Sellers shall have provided to Purchaser written evidence, in form
\nand substance reasonably satisfactory to Purchaser, that any and all rights and
\nobligations of Guangzhou Bonson and Guangzhou Technology Venture Capital
\nInvestment Ltd existing under the Co-operation Agreement and the Counter
\nGuaranty Agreement have been waived or abolished in all respects and the Company
\nand its Subsidiaries shall have been released from any and all liability
\nrelating thereto.<\/p>\n
(d) Sellers shall have provided to Purchaser written evidence, in form
\nand substance reasonably satisfactory to Purchaser, that any and all obligations
\nof the Company or its Subsidiaries existing under the consulting agreement by
\nand between Bonson Guangzhou and Ascend Venture Management Ltd., dated as of
\nOctober 23, 2000, have been waived or abolished in all respects and the Company
\nand its Subsidiaries shall have been released from any and all liability
\nrelating thereto.<\/p>\n
7.18. Liquidation of Bonson BVI.
\n ————————-<\/p>\n
(a) The Sellers shall have liquidated and dissolved, or caused to be
\nliquidated and dissolved, Bonson BVI in accordance with applicable laws and
\nshall have provided to Purchaser written evidence thereof, in form and substance
\nreasonably satisfactory to Purchaser.<\/p>\n
-33-<\/p>\n
(b) The Sellers shall have paid, or caused to be paid, all stamp duty
\nand other taxes in connection with such liquidation and dissolution referred to
\nin Section 7.18(a) above, and shall have provided to Purchaser written evidence
\nthereof, in form and substance reasonably satisfactory to Purchaser.<\/p>\n
7.19. PRC Matters.
\n ———–<\/p>\n
(a) The Sellers shall have provided to Purchaser written evidence from
\nthe relevant PRC Governmental or Regulatory Authority to the effect that the
\nregistered capital of Bonson Guangzhou has been increased to US$4,300,000, and
\nthat all required capital contributions in respect thereof have been made.<\/p>\n
(b) Bonson Guangzhou shall have initiated the process of amending its
\ncertificate recognizing it as a “high-tech” company in the PRC, indicating that
\nsuch certificate is applicable to Bonson Guangzhou notwithstanding Bonson
\nGuangzhou’s conversion to a wholly foreign-owned enterprise under the Laws of
\nthe PRC.<\/p>\n
(c) Bonson Guangzhou shall have initiated the process of amending its
\nPRC tax certificate recognizing the increase of the registered capital of Bonson
\nGuangzhou to US$4,300,000.<\/p>\n
(d) Bonson Guangzhou shall have initiated the process of registering
\nwith the Real Property Administration or other relevant authorities in the PRC,
\nthe lease agreement dated June 25, 2001, between Bonson Guangzhou (Beijing
\nBranch) and Beijing Yin Yu Property Management for the property located at
\nNo.12B04-12B06, 12B floor, Jin Yu Mansion, Beijing.<\/p>\n
(e) Bonson Guangzhou shall have initiated the process of registering
\nwith the State Administration of Industry and Commerce or other relevant
\nauthorities in the PRC, the “Bonson Tech.” name and logo.<\/p>\n
7.20. Inter-Connect Tech. Limited.
\n —————————<\/p>\n
Sellers and Purchaser shall have established, or caused to have been
\nestablished, a trust to hold certain of the proceeds of the sale pursuant hereto
\nof the 8,325,000 Shares held of record by Inter-Connect Tech. Limited, as
\ndescribed in Section 1.02(b)(v). The terms of the trust agreement governing such
\ntrust shall be reasonably satisfactory to Purchaser and shall provide, among
\nother things, the following:<\/p>\n
(a) the Purchaser or its nominee shall be appointed trustee of the
\ntrust;<\/p>\n
(b) the proceeds of the sale pursuant hereto of the Allocated Inter-
\nConnect Shares shall be held in trust for the benefit of the individuals to whom
\nsuch Shares have been allocated, in accordance with their respective
\nallocations, pending distribution of such proceeds in such manner as Purchaser
\nshall determine in its reasonable discretion; and<\/p>\n
(c) the portion of the cash proceeds of the sale pursuant hereto of
\nthe Unallocated Inter-Connect Shares described in Section 1.02(b)(v)(D) shall be
\nheld in trust for the benefit of certain current or future employees of the
\nCompany, as determined by the Purchaser in its sole discretion, pending
\ndistribution to such current or future employees in such manner as Purchaser
\nshall determine in its reasonable discretion.<\/p>\n
-34-<\/p>\n
ARTICLE VIII<\/p>\n
CONDITIONS TO OBLIGATIONS OF SELLERS<\/p>\n
The obligations of Sellers hereunder are subject to the fulfillment,
\nat or before the Closing, of each of the following conditions (all or any of
\nwhich may be waived in whole or in part by Sellers in their sole discretion):<\/p>\n
8.01. Representations and Warranties. Each of the representations and
\n ——————————
\nwarranties made by Purchaser in this Agreement shall be true and correct in all
\nmaterial respects on and as of the Closing Date as though such representation or
\nwarranty was made on and as of the Closing Date, except that representations and
\nwarranties made only as of a specified earlier date shall be true and correct in
\nall material respects as of such earlier date.<\/p>\n
8.02. Performance. Purchaser shall have performed and complied with,
\n ———–
\nin all material respects, each agreement, covenant and obligation required by
\nthis Agreement to be so performed or complied with by Purchaser at or before the
\nClosing.<\/p>\n
8.03. Orders and Laws. There shall not be in effect on the Closing
\n —————
\nDate any Order or Law that became effective after the date of this Agreement
\nrestraining, enjoining or otherwise prohibiting or making illegal the
\nconsummation of any of the transactions contemplated by this Agreement or any of
\nthe Operative Agreements or which could reasonably be expected to otherwise
\nresult in a material diminution of the benefits of the transactions contemplated
\nby this Agreement or any of the Operative Agreements to the Sellers, or there
\nshall not be pending or threatened on the Closing Date any Action or Proceeding
\nor any other action in, before or by any Governmental or Regulatory Authority
\nwhich could reasonably be expected to result in the issuance of any such Order
\nor the enactment, promulgation or deemed applicability to the Sellers or the
\ntransactions contemplated by this Agreement or any of the Operative Agreements
\nof any such Law.<\/p>\n
8.04. Regulatory Consents and Approvals. All consents, approvals and
\n ———————————
\nactions of, filings with and notices to any Governmental or Regulatory Authority
\nnecessary to permit Sellers and Purchaser to perform their obligations under
\nthis Agreement and the Operative Agreements and to consummate the transactions
\ncontemplated hereby and thereby (a) shall have been duly obtained, made or
\ngiven, (b) shall not be subject to the satisfaction of any condition that has
\nnot been satisfied or waived and (c) shall be in full force and effect, and all
\nterminations or expirations of waiting periods imposed by any Governmental or
\nRegulatory Authority necessary for the consummation of the transactions
\ncontemplated by this Agreement and the Operative Agreements shall have occurred.<\/p>\n
8.05. Third Party Consents. All consents (or in lieu thereof waivers)
\n ——————–
\nto the performance by Purchaser and Sellers of their obligations under this
\nAgreement and the Operative Agreements or to the consummation of the
\ntransactions contemplated hereby and thereby as are required under any Contracts
\nto which Purchaser, Sellers, the Company or any Subsidiary is a party or by
\nwhich any of their respective Assets and Properties are bound and where the
\nfailure to obtain any such consent (on in lieu thereof waiver) could reasonably
\nbe expected, individually or in the aggregate with other such failures, to
\nmaterially adversely affect Sellers or otherwise result in a material diminution
\nof the benefits of the transactions contemplated by this Agreement and the
\nOperative Agreements to Sellers (a) shall have been obtained, (b) shall be in a
\nform and substance reasonably satisfactory to Sellers, (c) shall not be subject
\nto the satisfaction of any condition that has not been satisfied or waived and
\n(d) shall be in full force and effect.<\/p>\n
8.06. Proceedings. All proceedings to be taken on the part of
\n ———–
\nPurchaser in connection with the transactions contemplated by this Agreement and
\nall documents incident thereto shall be reasonably satisfactory in form and
\nsubstance to Sellers, and Sellers shall have received copies of all such<\/p>\n
-35-<\/p>\n
documents and other evidences as Sellers may reasonably request in order to
\nestablish the consummation of such transactions and the taking of all
\nproceedings in connection therewith.<\/p>\n
8.07. Registration Rights Agreement. Purchaser shall have entered
\n —————————–
\ninto the Registration Rights Agreements with respect to the AsiaInfo Shares,
\nsubstantially in the forms attached hereto as Exhibit C1 and Exhibit C2.
\n ———- ———- <\/p>\n
8.08. Opinion of Counsel. Sellers shall have received the opinion of
\n ——————
\nClifford Chance, counsel to Purchaser, dated the Closing Date, substantially in
\nthe form and to the effect of Exhibit I, and to such further effect as Sellers
\nmay reasonably request.<\/p>\n
ARTICLE IX<\/p>\n
TAX MATTERS AND POST-CLOSING TAXES<\/p>\n
9.01. Termination of Prior Tax Settlement Agreements. Any tax
\n ———————————————-
\nsettlement agreement, arrangement, policy or guideline, formal or informal,
\nexpress or implied that may exist between the Company or its Subsidiaries, on
\nthe one hand, and any Seller or any Affiliate of any Seller, on the other hand
\n(a “Settlement Agreement”), shall terminate as of the Closing Date.
\n ——————–<\/p>\n
9.02. Certain Tax Matters.
\n ——————-<\/p>\n
(a) Pre-Closing Taxes.
\n ——————<\/p>\n
(i) Sellers shall prepare, or cause to be prepared, and
\n file or cause to be filed, all Tax Returns of the Company and each of its
\n Subsidiaries for all taxable periods of the Company and each of its
\n Subsidiaries which are required to be filed on or prior to the Closing Date
\n (“Pre-Closing Period Tax Returns”). Sellers shall prepare the Pre-Closing
\n ——————————
\n Period Tax Returns in a manner consistent with past practice. With respect
\n to any Tax Returns of the Company or its Subsidiaries which are not due on
\n or prior to the Closing Date but which relate back to a tax period prior to
\n the Closing Date, Purchaser shall prepare, or cause to be prepared, and
\n file or cause to be filed all such Tax Returns, and shall remit or cause
\n the Company to remit any Taxes due in respect of such Tax Returns.<\/p>\n
(ii) Sellers shall reimburse Purchaser and the Company
\n and each of its Subsidiaries for all Taxes payable under the Pre-Closing
\n Period Tax Returns or Taxes which relate back to a tax period prior to the
\n Closing Date (“Pre-Closing Taxes”) within fifteen (15) days after Purchaser
\n —————–
\n or the Company and its Subsidiaries have paid such Taxes to the extent such
\n Taxes are not reflected in the reserve for Taxes on the books of account of
\n the Company or any of its Subsidiaries.<\/p>\n
(iii) None of Purchaser or any Affiliate of Purchaser
\n shall (or shall cause or permit the Company or any Subsidiary to) amend,
\n refile or otherwise modify (or grant an extension of any statute of
\n limitation with respect to) any Tax Return relating in whole or in part to
\n the Company or any Subsidiary with respect to any taxable year or period
\n ending on or before the Closing Date without the prior written consent of
\n the Sellers, which consent may not be unreasonably withheld.<\/p>\n
(b) Transfer and Similar Taxes. Sellers shall pay all sales, use,
\n ————————–
\nvalue added, transfer, real property transfer, recording, gains, stamp stock
\ntransfer and other similar Taxes and fees (“Transfer Taxes”) arising out of or
\n ————–
\nin connection with the transactions effected pursuant to this Agreement, and
\nshall indemnify, defend, and hold harmless the Company and each of its
\nSubsidiaries and the Purchaser <\/p>\n
-36-<\/p>\n
on an after-tax basis with respect to such Transfer Taxes. Sellers shall timely
\nfile all necessary documentation and Tax Returns with respect to such Transfer
\nTaxes.<\/p>\n
(c) Post-Closing Taxes.
\n ——————<\/p>\n
(i) Purchaser shall timely prepare and file (or cause to
\n be prepared and filed) all Tax Returns required by law for all Taxes of the
\n Company and each of its Subsidiaries for all taxable periods of the Company
\n and each of its Subsidiaries ending after the Closing Date, including
\n periods which include a taxable period beginning prior to the Closing Date
\n but ending after the Closing Date (“Post-Closing Tax Returns”). Purchaser
\n ————————
\n will independently determine, subject to subparagraph (iii) below, the
\n basis on which all Post-Closing Tax Returns are to be filed. Purchaser
\n shall timely pay or cause to be paid all Taxes relating to Post-Closing Tax
\n Returns (“Post-Closing Taxes”).
\n —————— <\/p>\n
(ii) Sellers shall be liable to Purchaser for a portion
\n of Post-Closing Taxes of the Company and each of its Subsidiaries
\n (“Sellers’ Post-Closing Taxes”) as defined below, unless the Company or its
\n —————————
\n Subsidiaries have made adequate reserve for such Taxes on their books of
\n account. Sellers’ Post-Closing Taxes shall be:<\/p>\n
(A) in the case of any real or personal property
\n Tax, an amount equal to the Tax for the entire taxable
\n period multiplied by a fraction the numerator of which is
\n the number of days in the portion of the period ending on
\n the Closing Date and the denominator of which is the number
\n of days in the entire taxable period;<\/p>\n
(B) in the case of any other Tax, the amount that
\n would be payable by the Company and each of its Subsidiaries
\n if its taxable year ended on the Closing Date.<\/p>\n
(iii) At least fifteen (15) Business Days prior to the
\n filing of any Post-Closing Tax Return which includes any Sellers’ Post-
\n Closing Taxes, Purchaser shall provide Sellers with a copy of the Tax
\n Return prepared in a manner consistent with past practice in such regard,
\n along with Purchaser’s calculation of Sellers’ Post-Closing Taxes related
\n thereto for the Sellers’ review and comment. The Purchaser agrees to
\n consider any comments submitted by the Sellers in respect of such Post-
\n Closing Tax Return in good faith. Within ten (10) Business Days of
\n Purchaser providing Sellers with a copy of Purchaser’s calculation of
\n Sellers’ Post-Closing Taxes, Sellers shall pay to Purchaser the amount of
\n Sellers’ Post-Closing Taxes shown thereon; provided, however, that such
\n payment shall not prejudice Sellers’ right to dispute the amount of
\n Sellers’ Post-Closing Taxes.<\/p>\n
(d) Indemnification. After the Closing Date, Sellers will be
\n —————
\nresponsible for, will pay or cause to be paid, and will indemnify and hold
\nharmless the Purchaser and the Company and each of its Subsidiaries from and
\nagainst any and all claims, actions, causes of action, liabilities, losses,
\ndamages and reasonable out-of-pocket expenses and costs resulting from, arising
\nout of or relating to (i) Pre-Closing Taxes, (ii) Sellers’ Post-Closing Taxes
\n(to the extent that adequate reserve was not made for such Taxes on the books of
\naccounts of the Company and its Subsidiaries), (iii) the Taxes of any other
\nPerson claimed against the Company or its Subsidiaries arising out of matters
\nprior to the Closing or agreements or arrangements entered into prior to
\nClosing; and (iv) the Transfer Taxes (i, ii, iii and iv collectively, the
\n“Seller’s Tax Costs”).
\n ——————<\/p>\n
(e) Notice. Purchaser shall promptly notify Sellers in writing upon
\n ——
\nreceipt by Purchaser of notice of any pending or threatened federal, state,
\nlocal or foreign Tax audits or assessments of the <\/p>\n
-37-<\/p>\n
Purchaser, the Company or any of its Subsidiaries which may affect the liability
\nof the Sellers for Taxes hereunder.<\/p>\n
(f) Cooperation and Exchange of Information. The Sellers, the
\n —————————————
\nPurchaser and the Company and its Subsidiaries will provide each other with such
\ncooperation and information as any of them reasonably may request of another in
\nfiling any Tax Return, amended Tax Return or claim for refund, determining a Tax
\nliability or a right to a refund of Taxes or participating in or conducting any
\naudit or other proceeding in respect of Taxes. Each such party shall make its
\nemployees available on a mutually convenient basis to provide explanations of
\nany documents or information provided hereunder. Each such party will make
\navailable and retain all Tax Returns, schedules and work papers and all material
\nrecords or other documents relating to Tax matters of the Company and its
\nSubsidiaries, including without limitation audit reports received from any Tax
\nauthority relating to any Tax Return of the Company or its Subsidiaries and any
\nclosing agreements entered into by the Company or its Subsidiaries, until the
\nexpiration of the statute of limitations of the respective Tax periods to which
\nsuch Tax Returns and other documents relate, including, to the extent notified
\nby another party in writing, extensions thereof. Any information obtained under
\nthis Section 9.02(f) shall be kept confidential, except as may be otherwise
\nnecessary in connection with the filing of Tax Returns, amended Tax Returns,
\nclaims for refund or in conducting an audit or other proceeding.<\/p>\n
(g) Agreed Tax Treatment. Any payments made to Sellers, the Company or
\n ——————–
\nits Subsidiaries or Purchaser pursuant to this Section 9.02 and Section 11.01
\nshall constitute an adjustment of the Purchase Price for Tax purposes and shall
\nbe treated as such by Purchaser and Sellers on their Tax Returns to the extent
\npermitted by law.<\/p>\n
(h) Refunds and Tax Benefits.
\n ————————<\/p>\n
(i) Except as provided in (ii) below, any refund or
\n credit of Taxes (including any interest paid or credited with respect
\n thereto) received by Purchaser, the Company or any Subsidiary in respect of
\n the Pre-Closing Period Tax Returns that are the responsibility of the
\n Sellers pursuant to Section 9.02 shall be for the benefit of Sellers;
\n provided, however, that the amount of such refund shall be reduced to the
\n extent that such refund causes the Company or any Subsidiary to pay or owe
\n additional Taxes as a result of recognizing additional income in the Tax
\n year such refund is received for which the Company or any Subsidiary is not
\n entitled to a corresponding deduction or credit in such Tax year or a
\n payment from Sellers under this Section 9.02 in connection with the
\n additional income recognized. Purchaser shall cause any such refund or
\n credit to be paid to Sellers within ten (10) Business Days after Purchaser
\n or the Company or its Subsidiaries receives such Tax refund or actually
\n realizes the benefit of such Tax credit.<\/p>\n
(ii) Purchaser or the Company or its Subsidiaries may, to
\n the extent permitted by the applicable tax law and regulations, carry back
\n at their own expense a loss or credit (“Purchaser’s Tax Attribute”) of the
\n ————————-
\n Company or its Subsidiaries arising in any period ending after the Closing
\n Date (a “Carryback Period”) that is available to the Company or its
\n —————-
\n Subsidiaries, if any, as a carryback to periods ending on or before the
\n Closing Date. Any refund or credit received by the Purchaser in respect of
\n such application for a carryback (including any statutory interest paid or
\n credited with respect thereto) attributable to the filing of such carryback
\n to a Carryback Period that includes a taxable period that is the
\n responsibility of the Sellers pursuant to Section 9.02 shall be for the
\n benefit of Purchaser.<\/p>\n
9.03. Contests.
\n ——–<\/p>\n
(a) Notice. In the event that Purchaser or the Company or its
\n ——
\nSubsidiaries receives notice, whether orally or in writing, of any demand, claim
\nor liability relating to Purchaser, the Company, its Subsidiaries or the Sellers
\nfor any Taxes for which Sellers may be liable, Purchaser shall notify Sellers <\/p>\n
-38-<\/p>\n
in writing within ten (10) Business Days of receipt thereof. Such notice shall
\ncontain factual information (to the extent known) describing the asserted Tax
\ndemand, claim or liability in reasonable detail and shall include copies of any
\nnotice or other document received from any Tax authority in respect of any such
\nasserted Tax demand, claim or liability. If Purchaser fails to give Sellers such
\nnotice as required by this Section 9.03, then any amount that Sellers would
\notherwise be required to pay pursuant to Section 9.02 shall be reduced to the
\nextent that, by such failure, Sellers are precluded from or otherwise prejudiced
\nin contesting or defending against the asserted Tax liability in whole or in
\npart. Purchaser may at any time, in its sole discretion, assume sole
\nresponsibility for any asserted Tax liability and waive all rights to and claims
\nfor indemnification from Sellers under Section 9.02 with respect to such
\nasserted Tax liability, and, in such event, Sellers shall be deemed to have
\nwaived their right to participate in or object to the settlement or compromise
\nof such Tax claim or Tax liability as contained in this Section 9.03; provided
\n ——–
\nthat any such settlement or compromise does not adversely affect Sellers.
\n—-<\/p>\n
(b) Contests Relating to Pre-Closing Taxes and Transfer Taxes. Except
\n ———————————————————
\nas provided in Section 9.03(a), in the case of any audit or administrative or
\njudicial proceeding (any such audit or proceeding is referred to herein as a
\n“Contest”) that relates to any Pre-Closing Taxes or Transfer Taxes as defined in
\n ——-
\nSection 9.02, Sellers shall have the right at their own expense to participate
\nin and control such Contest; provided, however, that Sellers shall consult in
\ngood faith with the Purchaser with regard to such Contest. If Sellers elect not
\nto control or defend such Contest, Purchaser may participate and control the
\nsame in such manner as it may deem appropriate, including settling such Contest
\nafter giving fifteen (15) Business Days’ prior written notice to Sellers setting
\nforth the terms and conditions of settlement.<\/p>\n
(c) Other Contests. Except as provided in Section 9.03(a), in the case
\n ————–
\nof any Contest that relates to any Taxes for which Sellers could be liable and
\nthat is not described in paragraph (b) above, (i) Sellers and Purchaser may
\nparticipate at their own expense in the Contest, and (ii) the Contest shall be
\ncontrolled by that party which would bear the burden of the greater portion of
\nthe asserted Tax liability.<\/p>\n
(d) Settlements. Neither Purchaser nor Sellers shall enter into any
\n ———–
\ncompromise or agree to settle any claim pursuant to any Tax audit or proceeding
\nor assign any return which would adversely affect the other party for such year
\nor a subsequent year without the written consent of the other party, which
\nconsent may not be unreasonably withheld. Purchaser and Sellers agree to
\ncooperate, and Purchaser agrees to cause the Company and its Subsidiaries to
\ncooperate, in the defense against, compromise or settlement of any Contest.<\/p>\n
9.04. Miscellaneous. Except as otherwise expressly provided and
\n ————-
\nexcept for the Tax representations contained in Section 2.11, this Article IX
\nshall be the sole provision governing Tax matters and indemnities thereof under
\nthis Agreement.<\/p>\n
9.05. Potential Tax Election. At Purchaser’s option, Purchaser may
\n ———————-
\nmake an election under Code Section 338 with respect to the acquisition of one
\nor more of the Company or its Subsidiaries. Sellers shall, without additional
\ncosts or with additional costs duly indemnified, cooperate with, and take all
\nnecessary actions requested by Purchaser, regarding any such election including
\nreporting the transactions for tax purposes in a manner consistent with such
\nelections.<\/p>\n
ARTICLE X<\/p>\n
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
\n COVENANTS AND AGREEMENTS<\/p>\n
10.01. Survival of Representations, Warranties, Covenants and
\n ——————————————————
\nAgreements. Notwithstanding any right of Purchaser (whether or not exercised) to
\n———-
\ninvestigate the affairs of the Company and the Subsidiaries or any right of any
\nparty (whether or not exercised) to investigate the<\/p>\n
-39-<\/p>\n
accuracy of the representations and warranties of the other party contained in
\nthis Agreement, Sellers and Purchaser have the right to rely fully upon the
\nrepresentations, warranties, covenants and agreements of the other contained in
\nthis Agreement. The representations, warranties, covenants and agreements of
\nSellers and Purchaser contained in this Agreement will survive the Closing (a)
\nindefinitely with respect to Article IX and the representations and warranties
\ncontained in Sections 2.01, 2.03, 2.04 (but only insofar as it relates to the
\nshare capital of the Subsidiaries), 2.31, 2.32, 3.01(a) and (b), 4.02 and 4.07,
\n(b) until sixty (60) calendar days after the expiration of all applicable
\nstatutes of limitation (including all periods of extension, whether automatic or
\npermissive) with respect to matters covered by Section 2.11 and 2.14 and Article
\nIX, (c) until the first anniversary of the Closing Date in the case of all other
\nrepresentations and warranties and any covenant or agreement to be performed in
\nwhole or in part on or prior to the Closing, or (d) with respect to each other
\ncovenant or agreement contained in this Agreement, until the first anniversary
\nfollowing the last date on which such covenant or agreement is to be performed
\nor, if no such date is specified, indefinitely, except that any representation,
\nwarranty, covenant or agreement that would otherwise terminate in accordance
\nwith clause (b) (c) or (d) above will continue to survive if a Claim Notice or
\nIndemnity Notice (as applicable) shall have been timely given under Article XI
\non or prior to such termination date, until the related claim for
\nindemnification has been satisfied or otherwise resolved as provided in Article
\nXI.<\/p>\n
ARTICLE XI<\/p>\n
INDEMNIFICATION<\/p>\n
11.01. Indemnification.
\n —————<\/p>\n
(a) The Founders, Management Shareholders and Remaining Shareholders
\nshall jointly and severally indemnify Purchaser and its officers, directors,
\nemployees, agents and Affiliates in respect of, and hold each of them harmless
\nfrom and against, any and all Losses suffered, incurred or sustained by any of
\nthem or to which any of them becomes subject, resulting from, arising out of or
\nrelating to any misrepresentation, breach of warranty or nonfulfillment of or
\nfailure to perform any covenant or agreement on the part of any of the Sellers
\ncontained in this Agreement.<\/p>\n
(b) Purchaser shall indemnify the Founders, Management Shareholders
\nand Remaining Shareholders, and their respective officers, directors, employees,
\nagents and Affiliates in respect of, and hold each of them harmless from and
\nagainst, any and all Losses suffered, incurred or sustained by any of them or to
\nwhich any of them becomes subject, resulting from, arising out of or relating to
\nany misrepresentation, breach of warranty or nonfulfillment of or failure to
\nperform any covenant or agreement on the part of Purchaser contained in this
\nAgreement.<\/p>\n
(c) No amounts of indemnity shall be payable as a result of any claim
\narising under Section 11.01(a) in respect of a misrepresentation or breach of
\nwarranty by Sellers unless and until the Indemnified Parties thereunder have
\nsuffered, incurred, sustained or become subject to Losses referred to in such
\nSection in excess of US$50,000 in the aggregate, in which event the Indemnified
\nParties shall be entitled to seek indemnity from the Founders, Management
\nShareholders and Remaining Shareholders for the full amount of such Losses,
\nprovided that the foregoing shall not apply to a misrepresentation or breach of
\n——–
\nwarranty by Sellers contained in Sections 2.01, 2.03, 2.05, 2.06 or 2.31. No
\namounts of indemnity shall be payable as a result of any claim arising under
\nSection 11.01(a) in respect of a misrepresentation or breach of warranty by
\nSellers if the aggregate amount of indemnity that has been duly paid in full in
\nrespect of all claims under Section 11.01(a) equals 10% of the aggregate
\nPurchase Price paid by Purchaser to Sellers pursuant to Section 1.02, provided
\n ——–
\nthat the foregoing limitation shall not apply to a misrepresentation or breach
\nof warranty by Sellers contained in Sections 2.01, 2.03, 2.05, 2.06 or 2.31.<\/p>\n
-40-<\/p>\n
11.02. Method of Asserting Claims. All claims for indemnification by
\n ————————–
\nany Indemnified Party under Section 11.01 will be asserted and resolved as
\nfollows:<\/p>\n
(a) In the event any claim or demand in respect of which an
\nIndemnifying Party might seek indemnity under Section 11.01 is asserted against
\nor sought to be collected from such Indemnified Party by a Person other than
\nSellers, the Company, any Subsidiary, Purchaser or any Affiliate of any Seller
\nor Purchaser (a “Third Party Claim”), the Indemnified Party shall deliver a
\n —————–
\nClaim Notice with reasonable promptness to the Indemnifying Party. If the
\nIndemnified Party fails to provide the Claim Notice with reasonable promptness
\nafter the Indemnified Party receives notice of such Third Party Claim, the
\nIndemnifying Party will not be obligated to indemnify the Indemnified Party with
\nrespect to such Third Party Claim to the extent that the Indemnifying Party’s
\nability to defend has been irreparably prejudiced by such failure of the
\nIndemnified Party. The Indemnifying Party will notify the Indemnified Party as
\nsoon as practicable within the Dispute Period whether the Indemnifying Party
\ndisputes its liability to the Indemnified Party under Section 11.01 and whether
\nthe Indemnifying Party desires, at its sole cost and expense, to defend the
\nIndemnified Party against such Third Party Claim.<\/p>\n
(i) If the Indemnifying Party notifies the Indemnified
\n Party within the Dispute Period that the Indemnifying Party desires to
\n defend the Indemnified Party with respect to the Third Party Claim pursuant
\n to this Section 11.02(a), then the Indemnifying Party will have the right
\n to defend, with counsel reasonably satisfactory to the Indemnified Party,
\n at the sole cost and expense of the Indemnifying Party, such Third Party
\n Claim by all appropriate proceedings, which proceedings will be vigorously
\n and diligently prosecuted by the Indemnifying Party to a final conclusion
\n or will be settled at the discretion of the Indemnifying Party (but only
\n with the consent of the Indemnified Party in the case of any settlement
\n that provides for any relief other than the payment of monetary damages or
\n that provides for the payment of monetary damages as to which the
\n Indemnified Party will not be indemnified in full pursuant to Section
\n 11.01). The Indemnifying Party will have full control of such defense and
\n proceedings, including any compromise or settlement thereof; provided,
\n ——–
\n however, that the Indemnified Party may, at the sole cost and expense of
\n ——-
\n the Indemnified Party, at any time prior to the Indemnifying Party’s
\n delivery of the notice referred to in the first sentence of this clause
\n (i), file any motion, answer or other pleadings or take any other action
\n that the Indemnified Party reasonably believes to be necessary or
\n appropriate to protect its interests; and provided further, that if
\n ——– ——-
\n requested by the Indemnifying Party, the Indemnified Party will, at the
\n sole cost and expense of the Indemnifying Party, provide reasonable
\n cooperation to the Indemnifying Party in contesting any Third Party Claim
\n that the Indemnifying Party elects to contest. The Indemnified Party may
\n participate in, but not control, any defense or settlement of any Third
\n Party Claim controlled by the Indemnifying Party pursuant to this clause
\n (i), and except as provided in the preceding sentence, the Indemnified
\n Party will bear its own costs and expenses with respect to such
\n participation. Notwithstanding the foregoing, the Indemnified Party may
\n take over the control of the defense or settlement of a Third Party Claim
\n at any time if it irrevocably waives its right to indemnity under Section
\n 11.01 with respect to such Third Party Claim.<\/p>\n
(ii) If the Indemnifying Party fails to notify the
\n Indemnified Party within the Dispute Period that the Indemnifying Party
\n desires to defend the Third Party Claim pursuant to Section 11.02(a), or if
\n the Indemnifying Party gives such notice but fails to prosecute vigorously
\n and diligently or settle the Third Party Claim, or if the Indemnifying
\n Party fails to give any notice whatsoever within the Dispute Period, then
\n the Indemnified Party will have the right to defend, at the sole cost and
\n expense of the Indemnifying Party, the Third Party Claim by all appropriate
\n proceedings, which proceedings will be prosecuted by the Indemnified Party
\n in a reasonable manner and in good faith or will be settled at the
\n discretion of the Indemnified Party (with the consent of the Indemnifying
\n Party, which consent will not be unreasonably withheld). The Indemnified
\n Party will have full control of such defense and proceedings, including any
\n compromise or settlement thereof; provided, however, that if requested by
\n ——– ——-
\n the Indemnified Party,<\/p>\n
-41-<\/p>\n
the Indemnifying Party will, at the sole cost and expense of the
\n Indemnifying Party, provide reasonable cooperation to the Indemnified
\n Party and its counsel in contesting any Third Party Claim which the
\n Indemnified Party is contesting. Notwithstanding the foregoing
\n provisions of this clause (ii), if the Indemnifying Party has notified
\n the Indemnified Party within the Dispute Period that the Indemnifying
\n Party disputes its liability hereunder to the Indemnified Party with
\n respect to such Third Party Claim and if such dispute is resolved in
\n favor of the Indemnifying Party in the manner provided in clause (iii)
\n below, the Indemnifying Party will not be required to bear the costs
\n and expenses of the Indemnified Party’s defense pursuant to this clause
\n (ii) or of the Indemnifying Party’s participation therein at the
\n Indemnified Party’s request, and the Indemnified Party will reimburse
\n the Indemnifying Party in full for all reasonable costs and expenses
\n incurred by the Indemnifying Party in connection with such litigation.
\n The Indemnifying Party may participate in, but not control, any defense
\n or settlement controlled by the Indemnified Party pursuant to this
\n clause (ii), and the Indemnifying Party will bear its own costs and
\n expenses with respect to such participation.<\/p>\n
(iii) If the Indemnifying Party notifies the Indemnified
\n Party that it does not dispute its liability to the Indemnified Party
\n with respect to the Third Party Claim under Section 11.01 or fails to
\n notify the Indemnified Party within the Dispute Period whether the
\n Indemnifying Party disputes its liability to the Indemnified Party with
\n respect to such Third Party Claim, the Loss in the amount specified in
\n the Claim Notice will be conclusively deemed a liability of the
\n Indemnifying Party under Section 11.01 and the Indemnifying Party shall
\n pay the amount of such Loss to the Indemnified Party on demand. If the
\n Indemnifying Party has timely disputed its liability with respect to
\n such claim, the Indemnifying Party and the Indemnified Party will
\n proceed in good faith to negotiate a resolution of such dispute, and if
\n not resolved through negotiations within the Resolution Period, such
\n dispute shall be resolved by arbitration in accordance with paragraph
\n (c) of this Section 11.02.<\/p>\n
(b) In the event any Indemnified Party should have a claim under
\nSection 11.01 against any Indemnifying Party that does not involve a Third Party
\nClaim, the Indemnified Party shall deliver an Indemnity Notice with reasonable
\npromptness to the Indemnifying Party. The failure by any Indemnified Party to
\ngive the Indemnity Notice shall not impair such party’s rights hereunder except
\nto the extent that an Indemnifying Party demonstrates that it has been
\nirreparably prejudiced thereby. If the Indemnifying Party notifies the
\nIndemnified Party that it does not dispute the claim described in such Indemnity
\nNotice or fails to notify the Indemnified Party within the Dispute Period
\nwhether the Indemnifying Party disputes the claim described in such Indemnity
\nNotice, the Loss in the amount specified in the Indemnity Notice will be
\nconclusively deemed a liability of the Indemnifying Party under Section 11.01
\nand the Indemnifying Party shall pay the amount of such Loss to the Indemnified
\nParty on demand. If the Indemnifying Party has timely disputed its liability
\nwith respect to such claim, the Indemnifying Party and the Indemnified Party
\nwill proceed in good faith to negotiate a resolution of such dispute, and if not
\nresolved through negotiations within the Resolution Period, such dispute shall
\nbe resolved by arbitration in accordance with paragraph (c) of this Section
\n11.02.<\/p>\n
(c) Any dispute submitted to arbitration pursuant to this Section
\n11.02 shall be finally and conclusively determined by the decision of a board of
\narbitration consisting of three (3) members (hereinafter sometimes called the
\n“Board of Arbitration”) selected as hereinafter provided. Each of the
\n ——————–
\nIndemnified Party and the Indemnifying Party shall select one (1) member and the
\nthird member shall be selected by mutual agreement of the other members, or if
\nthe other members fail to reach agreement on a third member within twenty (20)
\ndays after their selection, such third member shall thereafter be selected by
\nthe ICC (as defined in Section 14.12) upon application made to it for such
\npurpose by the Indemnified Party. The Board of Arbitration shall meet in Hong
\nKong or such other place as a majority of the members of the Board of
\nArbitration determines more appropriate, and shall reach and render a decision
\nin writing (concurred in by a majority of the members of the Board of
\nArbitration) with respect to the amount, if any, which the Indemnifying Party is
\nrequired to pay to the Indemnified Party in respect of a<\/p>\n
-42-<\/p>\n
claim filed by the Indemnified Party. In connection with rendering its
\ndecisions, the Board of Arbitration shall adopt and follow such rules and
\nprocedures as a majority of the members of the Board of Arbitration deems
\nnecessary or appropriate. To the extent practical, decisions of the Board of
\nArbitration shall be rendered no more than thirty (30) calendar days following
\ncommencement of proceedings with respect thereto. The Board of Arbitration shall
\ncause its written decision to be delivered to the Indemnified Party and the
\nIndemnifying Party. Any decision made by the Board of Arbitration (either prior
\nto or after the expiration of such thirty (30) calendar day period) shall be
\nfinal, binding and conclusive on the Indemnified Party and the Indemnifying
\nParty and entitled to be enforced to the fullest extent permitted by law and
\nentered in any court of competent jurisdiction. Each party to any arbitration
\nshall bear its own expense in relation thereto, including but not limited to
\nsuch party’s attorneys’ fees, if any, and the expenses and fees of the member of
\nthe Board of Arbitration appointed by such party, provided, however, that the
\n ——– ——-
\nexpenses and fees of the third member of the Board of Arbitration and any other
\nexpenses of the Board of Arbitration not capable of being attributed to any one
\nmember shall be borne in equal parts by the Indemnifying Party and the
\nIndemnified Party.<\/p>\n
ARTICLE XII<\/p>\n
TERMINATION<\/p>\n
12.01. Termination. This Agreement may be terminated, and the
\n ———–
\ntransactions contemplated hereby may be abandoned:<\/p>\n
(a) at any time before the Closing, by mutual written agreement of
\nSellers holding a majority of the outstanding Shares and Purchaser;<\/p>\n
(b) at any time before the Closing, by Sellers holding a majority of
\nthe outstanding Shares (with such majority to include the Shares held by
\nExceptional Developments) or Purchaser, in the event (i) of a material breach
\nhereof by the non-terminating party if such non-terminating party fails to cure
\nsuch breach within five (5) Business Days following notification thereof by the
\nterminating party or (ii) upon notification of the non-terminating party by the
\nterminating party that the satisfaction of any condition to the terminating
\nparty’s obligations under this Agreement becomes impossible or impracticable
\nwith the use of commercially reasonable efforts if the failure of such condition
\nto be satisfied is not caused by a breach hereof by the terminating party; or<\/p>\n
(c) at any time after March 31, 2002 by Sellers holdings a majority
\nof the outstanding Shares (with such majority to include the Shares held by
\nExceptional Developments) or Purchaser upon notification of the non-terminating
\nparty by the terminating party if the Closing shall not have occurred on or
\nbefore such date and such failure to consummate is not caused by a breach of
\nthis Agreement by the terminating party.<\/p>\n
12.02. Effect of Termination. If this Agreement is validly
\n ———————
\nterminated pursuant to Section 12.01, this Agreement will forthwith become null
\nand void, and there will be no liability or obligation on the part of Sellers or
\nPurchaser (or any of their respective officers, directors, employees, agents or
\nother representatives or Affiliates), except as provided in the next succeeding
\nsentence and except that the provisions with respect to expenses in Section
\n14.03 and confidentiality in Section 14.05 will continue to apply following any
\nsuch termination. Notwithstanding any other provision in this Agreement to the
\ncontrary, upon termination of this Agreement pursuant to Section 12.01(b) or
\n(c), Sellers will remain liable to Purchaser for any breach of this Agreement by
\nSellers existing at the time of such termination, and Purchaser will remain
\nliable to Sellers for any breach of this Agreement by Purchaser existing at the
\ntime of such termination, and Sellers or Purchaser may seek such remedies,
\nincluding damages and fees of attorneys, against the other with respect to any
\nsuch breach as are provided in this Agreement or as are otherwise available at
\nLaw or in equity.<\/p>\n
-43-<\/p>\n
ARTICLE XIII<\/p>\n
DEFINITIONS<\/p>\n
13.01. Definitions.
\n ———– <\/p>\n
(a) As used in this Agreement, the following defined terms shall have
\nthe meanings indicated below:<\/p>\n
“2001 Audited Financials” means the financial statements of the
\n ———————–
\nCompany for the fiscal year ending December 31, 2001, prepared in accordance
\nwith GAAP and audited by the Auditor.<\/p>\n
“Actions or Proceedings” means any action, suit, proceeding,
\n ———————-
\narbitration or Governmental or Regulatory Authority investigation or audit.<\/p>\n
“Actual Net Income” means net income of the Company, as calculated by
\n —————–
\nthe Auditor based upon the 2001 Audited Financials.<\/p>\n
“Actual Net Sales Backlog” means the aggregate dollar amount
\n ————————
\n(excluding all hardware pass-through costs and after deduction of VAT and
\nBusiness Tax) of all contracts signed by the Company, Bonson BVI or Bonson
\nGuangzhou with customers as of December 31, 2001, minus the amount of such
\ncontracts previously recognized as net revenues (excluding all hardware pass-
\nthrough costs and after deduction of VAT and Business Tax) in the Audited
\nFinancials Statements, as calculated by the Auditor.<\/p>\n
“Adjusted Performance Consideration” has the meaning ascribed to it in
\n ———————————-
\nSection 1.02(b).<\/p>\n
“Affiliate” means any Person that directly, or indirectly through one
\n ———
\nor more intermediaries, controls or is controlled by or is under common control
\nwith the Person specified. For purposes of this definition, control of a Person
\nmeans the power, direct or indirect, to direct or cause the direction of the
\nmanagement and policies of such Person whether by Contract or otherwise and, in
\nany event and without limitation of the previous sentence, any Person owning ten
\npercent (10%) or more of the voting securities of a second Person shall be
\ndeemed to control that second Person.<\/p>\n
“Agreement” means this Share Purchase Agreement and the Exhibits, the
\n ———
\nDisclosure Schedule and the Schedules hereto and the certificate delivered in
\naccordance with Section 7.01, as the same shall be amended from time to time.<\/p>\n
“Allocated Inter-Connect Shares” has the meaning ascribed to it in
\n ——————————
\nSection 1.02(b).<\/p>\n
“AsiaInfo Shares” means shares of common stock, par value US$0.01 per
\n —————
\nshare, of the Purchaser.<\/p>\n
“Assets and Properties” of any Person means all assets and properties
\n ———————
\nof every kind, nature, character and description (whether real, personal or
\nmixed, whether tangible or intangible, whether absolute, accrued, contingent,
\nfixed or otherwise and wherever situated), including the goodwill related
\nthereto, operated, owned or leased by such Person, including without limitation
\ncash, cash equivalents, Investment Assets, accounts and notes receivable,
\nchattel paper, documents, instruments, general intangibles, real estate,
\nequipment, inventory, goods and Intellectual Property.<\/p>\n
“Associate” means, with respect to any Person, any corporation or
\n ———
\nother business organization of which such Person is an officer or partner or is
\nthe beneficial owner, directly or indirectly, of ten percent (10%) or more of
\nany class of equity securities, any trust or estate in which such Person has<\/p>\n
-44-<\/p>\n
a substantial beneficial interest or as to which such Person serves as a trustee
\nor in a similar capacity and any relative or spouse of such Person, or any
\nrelative of such spouse, who has the same home as such Person.<\/p>\n
“Audited Financial Statement Date” means the last day of the most
\n ——————————–
\nrecent fiscal period of the Company for which Financial Statements are delivered
\nto Purchaser pursuant to Section 2.08.<\/p>\n
“Audited Financial Statements” means the audited Financial Statements
\n —————————-
\nof the Company delivered to Purchaser pursuant to Section 2.08.<\/p>\n
“Auditor” means Deloitte Touche Tohmatsu, or one of the other “Big
\n ——
\nFive” accounting firms acceptable to the Purchaser.<\/p>\n
“Base Performance Consideration” has the meaning ascribed to it in
\n ——————————
\nSection 1.02(b).<\/p>\n
“Beijing Agreement” means the co-operation agreement, dated June 4,
\n —————–
\n2000 by and among Bonson Guangzhou, Beijing Xing Kang Technology Limited, and
\nthe other Persons named therein, to establish a data network management division
\nin Beijing, PRC.<\/p>\n
“Beneficial Owner” has the meaning ascribed to it in the forepart of
\n —————-
\nthis Agreement.<\/p>\n
“Benefit Plan” means any Plan established by the Company or any
\n ————
\nSubsidiary, or any predecessor or Affiliate of any of the foregoing, existing at
\nthe Closing Date or prior thereto, to which the Company or any Subsidiary
\ncontributes or has contributed, or under which any employee, former employee or
\ndirector of the Company or any Subsidiary or any beneficiary thereof is covered,
\nis eligible for coverage or has benefit rights whether provided by the Company
\nor any Subsidiary or pursuant to any governmental program, or otherwise.<\/p>\n
“Board of Arbitration” has the meaning ascribed to it in Section
\n ——————–
\n11.02(d).<\/p>\n
“Bonson BVI” means Bonson Information Technology Company Limited, a
\n ———-
\nBritish Virgin Islands company, and a wholly-owned Subsidiary.<\/p>\n
“Bonson Guangzhou” means Guangzhou Bonson Technology Limited, a wholly
\n —————-
\nforeign-owned entity formed pursuant to the laws of the PRC, and a wholly-owned
\nSubsidiary.<\/p>\n
“Books and Records” means all files, documents, instruments, papers,
\n —————–
\nbooks and records relating to the Business or Condition of the Company,
\nincluding without limitation financial statements, Tax Returns and related work
\npapers and letters from accountants, budgets, pricing guidelines, ledgers,
\njournals, deeds, title policies, minute books, stock certificates and books,
\nstock transfer ledgers, Contracts, Licenses, customer lists, computer files and
\nprograms, retrieval programs, operating data and plans and environmental studies
\nand plans.<\/p>\n
“Bridge Loan” means the US$10,000,000 loan provided by the Purchaser
\n ———–
\nfor the benefit of the Company, evidenced by the Loan Agreement dated as of
\nSeptember 30, 2001, by and between the Purchaser and the Company.<\/p>\n
“Business Combination” means with respect to any Person any merger,
\n ——————–
\nconsolidation or combination to which such Person is a party, any sale,
\ndividend, split or other disposition of capital stock or other equity interests
\nof such Person, or any sale, dividend or other disposition of all or
\nsubstantially all of the Assets and Properties of such Person.<\/p>\n
-45-<\/p>\n
“Business Day” means a day other than Saturday, Sunday or any day on
\n ————
\nwhich banks located in the PRC are authorized or obligated to close.<\/p>\n
“Business or Condition of the Company” means the business, condition
\n ————————————
\n(financial or otherwise), results of operations, Assets and Properties and
\nprospects of the Company and the Subsidiaries taken as a whole.<\/p>\n
“Business Tax” means all business taxes applicable to services
\n ————
\nrendered by the Company in the PRC or elsewhere.<\/p>\n
“Carryback Period” has the meaning ascribed to it in Section 9.02(h).
\n —————- <\/p>\n
“Cashless Exercise” shall have the meaning ascribed to it in Section
\n —————–
\n7.13.<\/p>\n
“Claim Notice” means written notification pursuant to Section 11.02(a)
\n ————
\nof a Third Party Claim as to which indemnity under Section 11.01 is sought by an
\nIndemnified Party, enclosing a copy of all papers served, if any, and specifying
\nthe nature of and basis for such Third Party Claim and for the Indemnified
\nParty’s claim against the Indemnifying Party under Section 11.01, together with
\nthe amount or, if not then reasonably ascertainable, the estimated amount,
\ndetermined in good faith, of such Third Party Claim.<\/p>\n
“Closing” means the closing of the transactions contemplated by
\n ——-
\nSection 1.03.<\/p>\n
“Closing Date” means (a) the Business Day immediately following the
\n ————
\ndate on which all conditions precedent under Articles VII and VIII have been
\nsatisfied or otherwise waived, or (b) such other date as Purchaser and Sellers
\nmutually agree upon in writing.<\/p>\n
“Closing Price” shall mean, with respect to each AsiaInfo Share, for
\n ————-
\nany day, the last reported sale price or, in case no such sale takes place on
\nsuch day, the average of the closing bid and asked prices, in either case as
\nreported on the Nasdaq National Market, or a similar service if Nasdaq is no
\nlonger reporting such information.<\/p>\n
“Code” means the United States Internal Revenue Code of 1986, as
\n —-
\namended and the rules and regulations promulgated thereunder.<\/p>\n
“Company” has the meaning ascribed to it in the forepart of this
\n ——-
\nAgreement.<\/p>\n
“Contest” has the meaning ascribed to it in Section 9.03(b).
\n ——- <\/p>\n
“Contract” means any agreement, lease, evidence of Indebtedness,
\n ——–
\nmortgage, indenture, security agreement or other contract (whether written or
\noral).<\/p>\n
“Co-operation Agreement” means the co-operation agreement dated March
\n ———————-
\n12, 2001 between Bonson Guangzhou and Guangzhou Technology Venture Capital
\nInvestment Ltd.<\/p>\n
“Corporate Seller” means each of the entities, not the individuals,
\n —————-
\nlisted in Section 1.01 of the Disclosure Schedule.
\n —————————————<\/p>\n
“Counter-Guaranty Agreement” means the counter-guaranty agreement
\n ————————–
\ndated March 12, 2001 between Bonson Guangzhou and Guangzhou Technology Venture
\nCapital Investment Ltd.<\/p>\n
“Disclosure Schedule” means the record delivered to Purchaser by
\n ——————-
\nSellers and the Company herewith and dated as of the date hereof, containing all
\nlists, descriptions, exceptions and other <\/p>\n
-46-<\/p>\n
information and materials as are required to be included therein by Sellers and
\nthe Company pursuant to this Agreement.<\/p>\n
“Dispute Period” means the period ending thirty (30) calendar days
\n ————–
\nfollowing receipt by an Indemnifying Party of either a Claim Notice or an
\nIndemnity Notice.<\/p>\n
“Employee Share Options” means Options to purchase Ordinary Shares,
\n ———————-
\nissued under, and in accordance with, the Company’s 2000 Stock Incentive Plan.<\/p>\n
“Environmental Law” means any Law relating to human health, safety or
\n —————–
\nprotection of the environment or to emissions, discharges, releases or
\nthreatened releases of pollutants, contaminants or Hazardous Materials in the
\nenvironment (including, without limitation, ambient air, surface water, ground
\nwater, land surface or subsurface strata), or otherwise relating to the
\ntreatment, storage, disposal, transport or handling of any Hazardous Material.<\/p>\n
“Escrow Agent” means an internationally recognized banking institution
\n ————
\nto be agreed upon by the parties hereto.<\/p>\n
“Escrow Agreement” has the meaning ascribed to it in Section 1.04.
\n —————- <\/p>\n
“Escrow Amount” has the meaning ascribed to it in Section 1.04.
\n ————-<\/p>\n
“Escrow Shares” means the AsiaInfo Shares delivered to the Escrow
\n ————-
\nAgent pursuant to the Escrow Agreement.<\/p>\n
“Exceptional Developments” means Exceptional Developments Limited, a
\n ————————
\nBritish Virgin Islands company and one of the Sellers, as set forth in Schedule
\n ——–
\n1.01.
\n—-<\/p>\n
“Exchange Act” has the meaning ascribed to it in Section 4.07.
\n ————<\/p>\n
“Financial Statements” means the consolidated financial statements of
\n ——————–
\nthe Company and its consolidated Subsidiaries delivered to Purchaser pursuant to
\nSection 2.08 or 5.05.<\/p>\n
“Founders” means Zhijie Lu, Guoqiang Huang, Xisheng Jin, Yiqiang Lai
\n ——–
\nand Ren Chen.<\/p>\n
“FPHC” has the meaning ascribed to it in Section 2.29.
\n —-<\/p>\n
“GAAP” means generally accepted accounting principles in the United
\n —-
\nStates, consistently applied throughout the specified period and in the
\nimmediately prior comparable period.<\/p>\n
“Governmental or Regulatory Authority” means any court, tribunal,
\n ————————————
\narbitrator, authority, agency, commission, official or other instrumentality of
\nthe United States, any foreign country or any domestic or foreign state, county,
\ncity or other political subdivision.<\/p>\n
“Hazardous Material” means (i) any petroleum or petroleum products,
\n ——————
\nradioactive materials, asbestos in any form that is or could become friable,
\nurea formaldehyde foam insulation and transformers or other equipment that
\ncontain dielectric fluid containing levels of polychlorinated biphenyls (PCBs);
\n(ii) any chemicals, materials, substances or wastes which are now or hereafter
\nbecome defined as or included in the definition of “hazardous substances,”
\n“hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,”
\n“restricted hazardous wastes,” “toxic substances,” “toxic pollutants” or words
\nof similar import, under any Environmental Law; and (iii) any other chemical,
\nmaterial, substance or waste, exposure to which is now or hereafter prohibited,
\nlimited or regulated by any Governmental or Regulatory Authority.<\/p>\n
-47-<\/p>\n
“ICC” has the meaning ascribed to it in Section 14.12(a).
\n — <\/p>\n
“Indebtedness” of any Person means all obligations of such Person (i)
\n ————
\nfor borrowed money, (ii) evidenced by notes, bonds, debentures or similar
\ninstruments, (iii) for the deferred purchase price of goods or services (other
\nthan trade payables or accruals incurred in the ordinary course of business),
\n(iv) under capital leases, or (v) in the nature of guarantees of the obligations
\ndescribed in clauses (i) through (iv) above of any other Person.<\/p>\n
“Indemnified Party” means any Person claiming indemnification under
\n —————–
\nany provision of Article XI, including without limitation a Person asserting a
\nclaim pursuant to paragraph (c) of Section 11.02.<\/p>\n
“Indemnifying Party” means any Person against whom a claim for
\n ——————
\nindemnification are being asserted under any provision of Article XI, including
\nwithout limitation a Person against whom a claim is asserted pursuant to
\nparagraph (c) of Section 11.02.<\/p>\n
“Indemnity Notice” means written notification pursuant to Section
\n —————-
\n11.02(b) of a claim for indemnity under Article XI by an Indemnified Party,
\nspecifying the nature of and basis for such claim, together with the amount or,
\nif not then reasonably ascertainable, the estimated amount, determined in good
\nfaith, of such claim.<\/p>\n
“Intellectual Property” means all patents and patent rights,
\n ———————
\ntrademarks and trademark rights, trade names and trade name rights, service
\nmarks and service mark rights, service names and service name rights, brand
\nnames, inventions, processes, formulae, copyrights and copyright rights, trade
\ndress, business and product names, domain names, logos, slogans, trade secrets,
\nindustrial models, processes, designs, methodologies, computer programs
\n(including all source codes) and related documentation, technical information,
\nmanufacturing, engineering and technical drawings, know-how and all pending
\napplications for and registrations of patents, trademarks, service marks and
\ncopyrights.<\/p>\n
“Investment Assets” means all debentures, notes and other evidences of
\n —————–
\nIndebtedness, stocks, securities (including rights to purchase and securities
\nconvertible into or exchangeable for other securities), interests in joint
\nventures and general and limited partnerships, mortgage loans and other
\ninvestment or portfolio assets owned of record or beneficially by the Company or
\nany Subsidiary (other than securities issued by any Subsidiary).<\/p>\n
“Investment Company Act” has the meaning ascribed to it in Section
\n ———————-
\n4.09.<\/p>\n
“Laws” means all laws, statutes, rules, regulations, ordinances and
\n —-
\nother pronouncements having the effect of law in the PRC, the United States, the
\nCayman Islands, the British Virgin Islands or any other country, or any domestic
\nor foreign state, county, city or other political subdivision or of any
\nGovernmental or Regulatory Authority.<\/p>\n
“Liabilities” means all Indebtedness, obligations and other
\n ———–
\nliabilities of a Person (whether absolute, accrued, contingent, fixed or
\notherwise, or whether due or to become due).<\/p>\n
“Licenses” means all licenses, permits, certificates of authority,
\n ——–
\nauthorizations, approvals, registrations, franchises and similar consents
\ngranted or issued by any Governmental or Regulatory Authority.<\/p>\n
“Liens” means any mortgage, pledge, assessment, security interest,
\n —–
\nlease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
\nany conditional sale Contract, title retention Contract or other Contract to
\ngive any of the foregoing.<\/p>\n
-48-<\/p>\n
“Lock-Up Agreement” has the meaning ascribed to it in Section 1.05.
\n —————–<\/p>\n
“Loss” means any and all damages, fines, fees, penalties,
\n —-
\ndeficiencies, losses and expenses (including without limitation interest, court
\ncosts, fees of attorneys, accountants and other experts or other expenses of
\nlitigation or other proceedings or of any claim, default or assessment).<\/p>\n
“Management Shareholders” means Jian Li, Gang Wang, Jih Tsae Jiunn and
\n ———————–
\nthe individuals set forth in Section 2.14(i) of the Disclosure Schedule
\n ——————————————
\n(although such individuals set forth in Section 2.14(i) of the Disclosure
\n ———————————
\nSchedule are not parties to this Agreement).
\n——–<\/p>\n
“Maple Tree Group” means Maple Tree Group Limited, a British Virgin
\n —————-
\nIslands company and one of the Sellers, as set forth in Schedule 1.01.
\n ————-<\/p>\n
“Market Value” shall mean, with respect to the AsiaInfo Shares, the
\n ————
\naverage of the daily Closing Prices per AsiaInfo Share for the twenty (20)
\nconsecutive trading days immediately preceding the date of this Agreement. If on
\nany such date the AsiaInfo Shares are not listed or admitted for trading on any
\nnational securities exchange or quoted on the Nasdaq National Market System or a
\nsimilar service, the Market Value for such shares shall be the fair market value
\nof such shares on such date as determined by an independent investment bank of
\ninternationally recognized stature selected by the Purchaser.<\/p>\n
“Multiplier” has the meaning ascribed to it in Section 1.02(b).
\n ———-<\/p>\n
“Net Income Index” has the meaning ascribed to it in Section 1.02(b).
\n —————-<\/p>\n
“Net Sales Backlog Index” has the meaning ascribed to it in Section
\n ———————–
\n1.02(b).<\/p>\n
“Operative Agreements” means the Escrow Agreement, the Lock-Up
\n ——————–
\nAgreements, the Registration Rights Agreements and any other agreements to be
\nentered into in connection with the transaction.<\/p>\n
“Option” with respect to any Person means any security, right,
\n ——
\nsubscription, warrant, option, “phantom” stock right or other Contract that
\ngives the right to (i) purchase or otherwise receive or be issued any shares of
\ncapital stock of such Person or any security of any kind convertible into or
\nexchangeable or exercisable for any shares of capital stock of such Person or
\n(ii) receive any benefits or rights similar to any rights enjoyed by or accruing
\nto the holder of shares of capital stock of such Person, including any rights to
\nparticipate in the equity, income or election of directors or officers of such
\nPerson.<\/p>\n
“Order” means any writ, judgment, decree, injunction or similar order
\n —–
\nof any Governmental or Regulatory Authority (in each such case whether
\npreliminary or final).<\/p>\n
“Ordinary Shares” means the Company’s ordinary shares, par value
\n —————
\nUS$0.01 per share.<\/p>\n
“Permitted Lien” means (i) any Lien for Taxes not yet due or
\n ————–
\ndelinquent or being contested in good faith by appropriate proceedings for which
\nadequate reserves have been established in accordance with GAAP, (ii) any
\nstatutory Lien arising in the ordinary course of business by operation of Law
\nwith respect to a Liability that is not yet due or delinquent and (iii) any
\nminor imperfection of title or similar Lien which individually or in the
\naggregate with other such Liens does not materially impair the value of the
\nproperty subject to such Lien or the use of such property in the conduct of the
\nbusiness of the Company or any Subsidiary.<\/p>\n
“Person” means any natural person, corporation, general partnership,
\n ——
\nlimited partnership, proprietorship, other business organization, trust, union,
\nassociation or Governmental or Regulatory Authority.<\/p>\n
-49-<\/p>\n
“Plan” means any bonus, incentive compensation, deferred compensation,
\n —-
\npension, profit sharing, retirement, stock purchase, stock option, stock
\nownership, stock appreciation rights, phantom stock, leave of absence, layoff,
\nvacation, day or dependent care, legal services, cafeteria, life, health,
\naccident, disability, workmen’s compensation or other insurance, severance,
\nseparation or other employee benefit plan, practice, policy or arrangement of
\nany kind, whether written or oral, and whether or not required by applicable
\nlaw.<\/p>\n
“Post-Closing Tax Returns” has the meaning ascribed to it in Section
\n ————————
\n9.02(c).<\/p>\n
“PRC” means the People’s Republic of China.
\n —<\/p>\n
“Pre-Closing Period Tax Returns” has the meaning ascribed to it in
\n ——————————
\nSection 9.02(a).<\/p>\n
“Pre-Closing Taxes” has the meaning ascribed to it in Section 9.02(a).
\n —————–<\/p>\n
“Preferred Shares” means the Company’s Series A Preferred Shares, par
\n —————-
\nvalue US$0.01 per share.<\/p>\n
“Projected Net Income” has the meaning ascribed to it in Section
\n ——————–
\n1.02(b).<\/p>\n
“Projected Net Sales Backlog” has the meaning ascribed to it in
\n —————————
\nSection 1.02(b).<\/p>\n
“Purchase Price” has the meaning ascribed to it in Section 1.02.
\n ————–<\/p>\n
“Purchaser” has the meaning ascribed to it in the forepart of this
\n ———
\nAgreement.<\/p>\n
“Purchaser Financial Statements” has the meaning ascribed to it in
\n ——————————
\nSection 4.07.<\/p>\n
“Purchaser SEC Documents” means each statement, report, registration
\n ———————–
\nstatement, definitive proxy statement, and other filings filed with the SEC by
\nthe Purchaser.<\/p>\n
“Purchaser’s Tax Attribute” has the meaning ascribed to it in Section
\n ————————-
\n9.02(b).<\/p>\n
“Record Holder” has the meaning ascribed to it in the forepart of this
\n ————-
\nAgreement.<\/p>\n
“Registration Rights Agreements” means the agreements substantially in
\n ——————————
\nthe form of Exhibit C1 and Exhibit C2.
\n ———- ———-<\/p>\n
“Remaining Shareholders” means Earl Yen, Juntang Zou, Jianhua Li,
\n ———————-
\nYuchi Zhang and Wang Shiyuan.<\/p>\n
“Representatives” has the meaning ascribed to it in Section 5.02.
\n —————<\/p>\n
“Resolution Period” means the period ending thirty (30) calendar days
\n —————–
\nfollowing receipt by an Indemnified Party of a Dispute Notice.<\/p>\n
“SEC” has the meaning ascribed to it in Section 3.02(e).
\n — <\/p>\n
“Securities Act” has the meaning ascribed to it in Section 3.02(a).
\n ————–<\/p>\n
“Seller” and “Sellers” have the meanings ascribed to them in the
\n —— ——-
\nforepart of this Agreement.<\/p>\n
“Seller’s Post-Closing Taxes” has the meaning ascribed to it in
\n —————————
\nSection 9.02(c).<\/p>\n
-50-<\/p>\n
“Seller’s Tax Costs” has the meaning ascribed to it in Section
\n ——————
\n9.02(d).<\/p>\n
“Settlement Agreement” has the meaning ascribed to it in
\n ——————–
\nSection 9.01.<\/p>\n
“Share Cap” has the meaning ascribed to it in Section 1.02(d).
\n ——— <\/p>\n
“Shareholders Agreement” has the meaning ascribed to it in
\n ———————-
\nSection 3.04.<\/p>\n
“Shares” has the meaning ascribed to it in the forepart of
\n ——
\nthis Agreement.<\/p>\n
“Subsidiary” means any Person in which the Company, directly
\n ———-
\nor indirectly through Subsidiaries or otherwise, beneficially owns more than
\nfifty percent (50%) of either the equity interests in, or the voting control of,
\nsuch Person.<\/p>\n
“Tax” and “Taxes” means and includes any and all taxes
\n — —–
\n(including, without limitation, any and all income, franchise, sales, use,
\nexcise, withholding, employment, payroll, social security or property taxes) and
\nsimilar assessments, customs, duties, charges and fees (including interest,
\npenalties and additions to such taxes, assessments, customs, duties, charges and
\nfees, penalties for failure to file or late filing of any return, report or
\nother filing, and any interest in respect of such penalties and additions)
\nimposed or assessed by any federal, state or local taxing authority, including
\nwithout limitation, Cayman Islands, the British Virgin Islands, the PRC or the
\nUnited States (or any political subdivision thereof or therein).<\/p>\n
“Tax Return” means any declaration, statement, report or
\n ———-
\nreturn relating to Taxes (including information required to be supplied to a
\ngovernmental entity in respect of such report or return) including, if
\napplicable, combined or consolidated returns for any group of entities that
\nincludes the Company and each of its Subsidiaries.<\/p>\n
“Third Party Claim” has the meaning ascribed to it in Section
\n —————–
\n11.02(a).<\/p>\n
“Transfer Taxes” has the meaning ascribed to it in Section
\n ————–
\n9.02(b).<\/p>\n
“U.S.” means the United States of America.
\n —-<\/p>\n
“Unallocated Inter-Connect Shares” has the meaning ascribed to
\n ——————————–
\nit in Section 1.02(b).<\/p>\n
“VAT” means all value added taxes applicable to goods sold by
\n —
\nthe Company in the PRC or elsewhere.<\/p>\n
(b) Unless the context of this Agreement otherwise requires,
\n(i) words of any gender include each other gender; (ii) words using the singular
\nor plural number also include the plural or singular number, respectively; (iii)
\nthe terms “hereof,” “herein,” “hereby” and derivative or similar words refer to
\nthis entire Agreement; (iv) the terms “Article” or “Section” refer to the
\nspecified Article or Section of this Agreement; and (v) the phrases “ordinary
\ncourse of business” and “ordinary course of business consistent with past
\npractice” refer to the business and practice of the Company or a Subsidiary. All
\naccounting terms used herein and not expressly defined herein shall have the
\nmeanings given to them under GAAP.<\/p>\n
-51-<\/p>\n
ARTICLE XIV<\/p>\n
MISCELLANEOUS<\/p>\n
14.01. Notices. All notices, demands or other communications given
\n ——-
\nhereunder (a) shall be deemed to have been duly given and received (i) upon
\npersonal delivery, (ii) if by telecopy, upon receipt, (iii) in the case of
\nnotices sent within, and for delivery within, the United States, as of the date
\nshown on the return receipt after mailing by registered or certified mail,
\nreturn receipt requested, postage prepaid, or (iv) the second succeeding
\nbusiness day after deposit with DHL or other equivalent air courier delivery
\nservice, unless the notice is held or retained by the customs service, in which
\ncase the date shall be the fifth succeeding business day after such deposit and
\n(b) must be in writing and delivered personally, by a recognized courier
\nservice, by a recognized overnight delivery service, by telecopy or by
\nregistered or certified mail, postage prepaid, at the following addresses (or to
\nthe attention of such other person or such other address as any party may
\nprovide to the other parties by notice in accordance with this Section 14.01):<\/p>\n
If to Purchaser, to:<\/p>\n
AsiaInfo Holdings, Inc.
\n 4\/th\/ Floor, Zhongdian Information Tower
\n 6 Zhongguancun South Street
\n Haidian District
\n Beijing 100086
\n PRC
\n Facsimile No.: +8610-6250-1893
\n Attn: Fan Bao, Senior Vice President and Chief Strategy Officer<\/p>\n
with a copy to:<\/p>\n
Clifford Chance
\n 29\/th\/ Floor, Jardine House
\n One Connaught Place, Central
\n Hong Kong
\n Facsimile No.: +852-2825-8800
\n Attn: Jon R. Lewis
\n Matthew D. Adler<\/p>\n
If to Sellers, to:<\/p>\n
c\/o Bonson Information Technology Holdings Limited
\n 4\/F, Building B
\n No.89-95 Zhongshan Avenue
\n Guangzhou 510630
\n PRC
\n Facsimile No.: +8620-8556-4522
\n Attn: Jian Li, Chief Executive Officer<\/p>\n
-52-<\/p>\n
with a copy to:<\/p>\n
Sidley Austin Brown & Wood
\n 49\/F, Bank of China Tower
\n One Garden Road, Central
\n Hong Kong
\n Facsimile No.: +852-2509-3110
\n Attn: Huanting Timothy Li<\/p>\n
14.02. Entire Agreement. This Agreement and the Operative Agreements
\n —————-
\nconstitutes the sole and entire agreement among the parties hereto with respect
\nto the subject matter hereof and supersedes and renders of no force and effect
\nall prior oral or written agreements, commitments and undertakings among the
\nparties with respect to the subject matter hereof, including without limitation
\nthat certain Letter of Intent between the parties dated September 26, 2001.<\/p>\n
14.03. Expenses. Except as otherwise expressly provided in this
\n ——–
\nAgreement (including without limitation as provided in Section 12.02), whether
\nor not the transactions contemplated hereby are consummated, each party will pay
\nits own costs and expenses. Notwithstanding the foregoing, Sellers shall pay the
\ncosts and expenses of the Purchaser, incurred in connection with the
\nnegotiation, execution and closing of this Agreement and the Operative
\nAgreements and the transactions contemplated, hereby and thereby, up to
\nUS$150,000, on the Closing Date.<\/p>\n
14.04. Public Announcements. At all times at or before the Closing,
\n ——————–
\nSellers and Purchaser will not issue or make any reports, statements or releases
\nto the public or generally to the employees, customers, suppliers or other
\nPersons to whom the Company and the Subsidiaries sell goods or provide services
\nor with whom the Company and the Subsidiaries otherwise have significant
\nbusiness relationships with respect to this Agreement or the transactions
\ncontemplated hereby without the consent of the other, which consent shall not be
\nunreasonably withheld. If either party is unable to obtain the approval of its
\npublic report, statement or release from the other party and such report,
\nstatement or release is, in the opinion of legal counsel to such party, required
\nby Law in order to discharge such party’s disclosure obligations, then such
\nparty may make or issue the legally required report, statement or release and
\npromptly furnish the other party with a copy thereof. Sellers and Purchaser will
\nalso obtain the other party’s prior approval of any press release to be issued
\nimmediately following the Closing announcing the consummation of the
\ntransactions contemplated by this Agreement.<\/p>\n
14.05. Confidentiality. Each party hereto will hold, and will use its
\n —————
\nbest efforts to cause its Affiliates, and their respective Representatives to
\nhold, in strict confidence from any Person (other than any such Affiliate or
\nRepresentative), unless (i) compelled to disclose by judicial or administrative
\nprocess (including without limitation in connection with obtaining the necessary
\napprovals of this Agreement and the transactions contemplated hereby of
\nGovernmental or Regulatory Authorities) or by other requirements of Law or (ii)
\ndisclosed in an Action or Proceeding brought by a party hereto in pursuit of its
\nrights or in the exercise of its remedies hereunder, all documents and
\ninformation concerning the other party or any of its Affiliates furnished to it
\nby the other party or such other party’s Representatives in connection with this
\nAgreement or the transactions contemplated hereby, except to the extent that
\nsuch documents or information can be shown to have been (a) previously known by
\nthe party receiving such documents or information, (b) in the public domain
\n(either prior to or after the furnishing of such documents or information
\nhereunder) through no fault of such receiving party or (c) later acquired by the
\nreceiving party from another source if the receiving party is not aware that
\nsuch source is under an obligation to another party hereto to keep such
\ndocuments and information confidential; provided that following the Closing the
\n ——–
\nforegoing restrictions will not apply to Purchaser’s use of documents and
\ninformation concerning the Company and the Subsidiaries furnished by Sellers
\nhereunder. In the event <\/p>\n
-53-<\/p>\n
the transactions contemplated hereby are not consummated, upon the request of
\nthe other party, each party hereto will, and will cause its Affiliates and their
\nrespective Representatives to, promptly (and in no event later than five (5)
\ndays after such request) redeliver or cause to be redelivered all copies of
\ndocuments and information furnished by the other party in connection with this
\nAgreement or the transactions contemplated hereby.<\/p>\n
14.06. Further Assurances; Post-Closing Cooperation. (a) At any time
\n ——————————————–
\nor from time to time after the Closing, Sellers shall execute and deliver to
\nPurchaser such other documents and instruments, provide such materials and
\ninformation and take such other actions as Purchaser may reasonably request more
\neffectively to vest title to the Shares in Purchaser and, to the full extent
\npermitted by Law, to put Purchaser in actual possession and operating control of
\nthe Company and the Subsidiaries and their Assets and Properties and Books and
\nRecords, and otherwise to cause Sellers to fulfill its obligations under this
\nAgreement and the Operative Agreements to which it is a party.<\/p>\n
(b) Following the Closing, each party will afford the other party, its
\ncounsel and its accountants, during normal business hours, reasonable access to
\nthe books, records and other data relating to the Business or Condition of the
\nCompany in its possession with respect to periods prior to the Closing and the
\nright to make copies and extracts therefrom, to the extent that such access may
\nbe reasonably required by the requesting party in connection with (i) the
\npreparation of Tax returns, (ii) the determination or enforcement of rights and
\nobligations under this Agreement, (iii) compliance with the requirements of any
\nGovernmental or Regulatory Authority, (iv) the determination or enforcement of
\nthe rights and obligations of any Indemnified Party or (v) in connection with
\nany actual or threatened Action or Proceeding. Further, each party agrees for a
\nperiod extending six (6) years after the Closing Date not to destroy or
\notherwise dispose of any such books, records and other data unless such party
\nshall first offer in writing to surrender such books, records and other data to
\nthe other party and such other party shall not agree in writing to take
\npossession thereof during the ten (10) day period after such offer is made.<\/p>\n
(c) If, in order properly to prepare its Tax returns, other documents
\nor reports required to be filed with Governmental or Regulatory Authorities or
\nits financial statements or to fulfill its obligations hereunder, it is
\nnecessary that a party be furnished with additional information, documents or
\nrecords relating to the Business or Condition of the Company not referred to in
\nparagraph (b) above, and such information, documents or records are in the
\npossession or control of the other party, such other party shall use its best
\nefforts to furnish or make available such information, documents or records (or
\ncopies thereof) at the recipient’s request, cost and expense. Any information
\nobtained by Sellers in accordance with this paragraph shall be held confidential
\nby Sellers in accordance with Section 14.05.<\/p>\n
(d) Notwithstanding anything to the contrary contained in this
\nSection, if the parties are in an adversarial relationship in litigation or
\narbitration, the furnishing of information, documents or records in accordance
\nwith any provision of this Section shall be subject to applicable rules relating
\nto discovery.<\/p>\n
14.07. Waiver. Any term or condition of this Agreement may be waived
\n ——
\nat any time by the party that is entitled to the benefit thereof, but no such
\nwaiver shall be effective unless set forth in a written instrument duly executed
\nby or on behalf of the party waiving such term or condition. No waiver by any
\nparty of any term or condition of this Agreement, in any one or more instances,
\nshall be deemed to be or construed as a waiver of the same or any other term or
\ncondition of this Agreement on any future occasion. All remedies, either under
\nthis Agreement or by Law or otherwise afforded, will be cumulative and not
\nalternative.<\/p>\n
14.08. Amendment. This Agreement may be amended, supplemented or
\n ———
\nmodified only by a written instrument duly executed by or on behalf of the
\nPurchaser and Sellers holding a majority of the outstanding Shares (with such
\nmajority to include the Shares held by Exceptional Developments).<\/p>\n
-54-<\/p>\n
14.09. No Third Party Beneficiary. The terms and provisions of this
\n ————————–
\nAgreement are intended solely for the benefit of each party hereto and their
\nrespective successors or permitted assigns, and it is not the intention of the
\nparties to confer third-party beneficiary rights upon any other Person other
\nthan any Person entitled to indemnity under Article XI.<\/p>\n
14.10. No Assignment; Binding Effect. Neither this Agreement nor any
\n —————————–
\nright, interest or obligation hereunder may be assigned by any party hereto
\nwithout the prior written consent of the other party hereto and any attempt to
\ndo so will be void, except (a) for assignments and transfers by operation of Law
\nand (b) that Purchaser may assign any or all of its rights, interests and
\nobligations hereunder (including without limitation its rights under Article XI)
\nto (i) a wholly-owned subsidiary, provided that any such subsidiary agrees in
\nwriting to be bound by all of the terms, conditions and provisions contained
\nherein, (ii) any post-Closing purchaser of all of the issued and outstanding
\nstock of the Company or a substantial part of its assets, provided that prior to
\nsuch assignment Purchaser has paid any and all of the Purchase Price set forth
\nin Section 1.02, or (iii) any financial institution providing purchase money or
\nother financing to Purchaser or the Company from time to time as collateral
\nsecurity for such financing, but no such assignment referred to in clause (i) or
\n(ii) shall relieve Purchaser of its obligations hereunder. Subject to the
\npreceding sentence, this Agreement is binding upon, inures to the benefit of and
\nis enforceable by the parties hereto and their respective successors and
\nassigns.<\/p>\n
14.11. Headings. The headings used in this Agreement have been
\n ——–
\ninserted for convenience of reference only and do not define or limit the
\nprovisions hereof.<\/p>\n
14.12. Arbitration.
\n ———– <\/p>\n
(a) Except as otherwise provided in this Agreement, any dispute,
\ncontroversy or claim arising out of or in connection with this Agreement, or the
\nbreach, termination or validity thereof, shall be finally settled by a board of
\narbitration consisting of three (3) members (hereinafter referred to as the
\n“Board of Arbitration”) under the rules of the International Chamber of Commerce
\n ——————–
\n(the “ICC”). The place of arbitration shall be in Hong Kong, and the language
\n —
\nused in the arbitral proceedings shall be English.<\/p>\n
(b) Sellers (acting collectively as a group) and Purchaser shall each
\nselect one (1) member to the Board of Arbitration and the third member shall be
\nselected by mutual agreement of the other members, or if the other members fail
\nto reach agreement on a third member within twenty (20) days after their
\nselection, such third member shall thereafter be selected by the ICC upon
\napplication made to it for such purpose by the members.<\/p>\n
(c) The arbitral proceeding shall accord to Purchaser and Sellers the
\nright of cross-examination of witnesses, the right to provide witnesses,
\nincluding expert witnesses, and the right to make both written and oral
\nsubmissions.<\/p>\n
(d) The arbitral award made and granted by the Board of Arbitration
\nshall be final, binding and incontestable and may be used as a basis for
\njudgment thereon in any court having jurisdiction. All costs of arbitration
\n(including, without limitation, those incurred in the appointment of arbitrator)
\nshall be apportioned in the arbitral award.<\/p>\n
(e) No person who is, or has been, an employee or agent of, or
\nconsultant or counsel to, Purchaser, Sellers or any of their respective
\nAffiliates shall be eligible to act as an arbitrator at any time.<\/p>\n
(f) This Agreement and the rights and obligations of Purchaser and
\nSellers shall remain in full force and effect pending the award in any
\narbitration proceeding hereunder.<\/p>\n
14.13. Waiver of Immunity. To the extent that Purchaser or Sellers
\n ——————
\n(including assignees of any such rights or obligations hereunder) may be
\nentitled, in any jurisdiction, to claim for itself or its <\/p>\n
-55-<\/p>\n
revenues, assets or properties, immunity from service of process, suit, the
\njurisdiction of any court, an interlocutory order or injunction or the
\nenforcement of the same against its property in such court, attachment prior to
\njudgment, attachment in aid of execution of an arbitral award or judgment
\n(interlocutory or final) or any other legal process, and to the extent that, in
\nany such jurisdiction there may be attributed such immunity (whether claimed or
\nnot), Purchaser and Sellers hereby irrevocably waive such immunity.<\/p>\n
14.14. Invalid Provisions. If any provision of this Agreement is held
\n ——————
\nto be illegal, invalid or unenforceable under any present or future Law, and if
\nthe rights or obligations of any party hereto under this Agreement will not be
\nmaterially and adversely affected thereby, (a) such provision will be fully
\nseverable, (b) this Agreement will be construed and enforced as if such illegal,
\ninvalid or unenforceable provision had never comprised a part hereof, (c) the
\nremaining provisions of this Agreement will remain in full force and effect and
\nwill not be affected by the illegal, invalid or unenforceable provision or by
\nits severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
\nprovision, there will be added automatically as a part of this Agreement a
\nlegal, valid and enforceable provision as similar in terms to such illegal,
\ninvalid or unenforceable provision as may be possible.<\/p>\n
14.15. Governing Law. This Agreement, the rights and obligations of
\n ————-
\nthe parties hereto, and any claims or disputes relating thereto, shall be
\ngoverned by and construed in accordance with the laws of the State of New York,
\nwithout giving effect to the choice of law rules thereof.<\/p>\n
14.16. Execution of Counterparts. This Agreement may be executed in
\n ————————–
\nany number of counterparts, each of which will be deemed an original, but all of
\nwhich together will constitute one and the same instrument.<\/p>\n
[SIGNATURE PAGES FOLLOW]<\/p>\n
-56-<\/p>\n
IN WITNESS WHEREOF, each of the parties hereto has caused this
\nAgreement to be duly executed on its behalf as of the date first above written.<\/p>\n
PURCHASER:<\/p>\n
ASIAINFO HOLDINGS, INC.<\/p>\n
By: \/s\/ James Ding
\n ——————————————–
\n Name: James Ding
\n Title: President and Chief Executive Officer<\/p>\n
THE COMPANY:<\/p>\n
BONSON INFORMATION TECHNOLOGY HOLDINGS LIMITED<\/p>\n
By: \/s\/ Jian Li
\n ——————————————–
\n Name: Jian Li
\n Title: Chief Executive Officer<\/p>\n
SELLERS:<\/p>\n
MAPLE TREE GROUP LIMITED<\/p>\n
By: \/s\/ Lu Zhijie
\n ——————————————–
\n Name: Lu Zhijie
\n Title: Director<\/p>\n
GUOQIANG HUANG<\/p>\n
\/s\/ Guoqiang Huang
\n ——————————————–<\/p>\n
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]<\/p>\n
XISHENG JIN<\/p>\n
\/s\/ Xisheng Jin
\n ——————————————–<\/p>\n
YIQIANG LAI<\/p>\n
\/s\/ Yiqiang Li
\n ——————————————–<\/p>\n
JIANHUA LI<\/p>\n
\/s\/ Jianhua Li
\n ——————————————–<\/p>\n
YUCHI ZHANG<\/p>\n
\/s\/ Yuchi Zhang
\n ——————————————–<\/p>\n
REN CHEN<\/p>\n
\/s\/ Ren Chen
\n ——————————————–<\/p>\n
EXCEPTIONAL DEVELOPMENTS LIMITED<\/p>\n
By: \/s\/ Shu Wang
\n —————————————–
\n Name: Shu Wang
\n Title: Director<\/p>\n
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]<\/p>\n
INTER-CONNECT TECH. LIMITED<\/p>\n
By: \/s\/ Zhao Dangxi
\n ———————————-
\n Name: Zhao Dangxi
\n Title: Director<\/p>\n
SHIYUAN WANG<\/p>\n
\/s\/ Shiyuan Wang
\n ————————————-<\/p>\n
SMARTACTION TECHNOLOGY LIMITED<\/p>\n
By: \/s\/ Li Jian
\n ———————————-
\n Name: Li Jian
\n Title: Director<\/p>\n
JIAN LI<\/p>\n
\/s\/ Jian Li
\n ————————————-<\/p>\n
GLOBAL BEYOND INTERNATIONAL LIMITED<\/p>\n
By: \/s\/ Gang Wang
\n ———————————-
\n Name: Gang Wang
\n Title: Director<\/p>\n
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]<\/p>\n
GANG WANG<\/p>\n
\/s\/ Gang Wang
\n —————————————-<\/p>\n
JIH TSAE JIUNN<\/p>\n
\/s\/ Jih Tsae Jiunn
\n —————————————-<\/p>\n
EARL YEN<\/p>\n
\/s\/ Earl Yen
\n —————————————-<\/p>\n
ZHIJIE LU<\/p>\n
\/s\/ Zhijie Lu
\n —————————————-<\/p>\n
SUPER ACTION GROUP LIMITED<\/p>\n
By: \/s\/ Chau Tak Shun, Dominic
\n —————————————-
\n Name: Chau Tak Shun, Dominic
\n Title: Director<\/p>\n
JUNTANG ZOU<\/p>\n
\/s\/ Juntang Zou
\n —————————————-<\/p>\n
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]<\/p>\n
ACTION CONSULTANTS LIMITED<\/p>\n
By: \/s\/ Earl Yen
\n ————————————-
\n Name: Earl Yen
\n Title: Authorized Signatory<\/p>\n
[SIGNATURE PAGE TO SHARE PURCHASE AGREEMENT]<\/p>\n
SCHEDULE 1.01
\n ————-<\/p>\n
Schedule of Sellers<\/p>\n
Bonson Information Technology Holdings Limited<\/p>\n
\n\n Record Holder Beneficial Owner Number of Shares
\n —————————— ——————– ———————-
\n
\n ORDINARY SHARES:<\/p>\n Maple Tree Group Limited Zhijie Lu 25,099,815
\n Guoqiang Huang 18,552,037
\n Xisheng Jin 18,552,037
\n Yiqiang Lai 13,095,556
\n Jianhua Li 5,456,481
\n Yuchi Zhang 5,456,481
\n Ren Chen 2,182,593<\/p>\n
Super Action Group Limited Juntang Zou 10,905,000<\/p>\n
Inter-Connect Tech. Limited \/(1)\/ 8,325,000<\/p>\n
Shiyuan Wang Shiyuan Wang 1,500,000<\/p>\n
Smartaction Technology Limited Jian Li 7,425,767\/(2)\/<\/p>\n
Global Beyond International Gang Wang 975,256\/(3)\/
\n Limited
\n Jih Tsae Jiunn 325,085\/(4)\/
\n Action Consultants Limited Earl Yen 975,256\/(5)\/<\/p>\n
PREFERRED SHARES:
\n IDG Technology Venture
\n Exceptional Developments Limited Investments, Inc.\/(6)\/ 36,375,000
\n —————-
\n TOTAL: 155,201,364
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n
————————
\n(1) The individuals set forth in Section 2.14(i) of the Disclosure Schedule are
\n ——————————————
\n the Beneficial Owners of the Allocated Inter-Connect Shares, but are not
\n parties to this Agreement. The proceeds of the sale of the Unallocated
\n Inter-Connect Shares shall be distributed in accordance with Section
\n 1.02(b)(v) of this Agreement.
\n(2) Represents 4,500,000 Shares outstanding as of the date of this Agreement and
\n 4,500,000 Employee Share Options, which upon Cashless Exercise at the
\n applicable exercise price of US$0.099635 per Share in accordance with
\n Section 7.13 of this Agreement entitles the holder to 2,925,767 Shares.
\n(3) Represents 1,500,000 Employee Share Options, which upon Cashless Exercise at
\n the applicable exercise price of US$0.099635 per share in accordance with
\n Section 7.13 of this Agreement entitles the holder to 975,256 Shares.
\n(4) Represents 500,000 Employee Share Options, which upon Cashless Exercise at
\n the applicable exercise price of US$0.099635 per share in accordance with
\n Section 7.13 of this Agreement entitles the holder to 325,085 Shares.
\n(5) Represents 1,500,000 Employee Share Options, which upon Cashless Exercise at
\n the applicable exercise price of US$0.099635 per share in accordance with
\n Section 7.13 of this Agreement entitles the holder to 975,256 Shares.
\n(6) IDG Technology Venture Investments, Inc. is not a party to this Agreement.<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[6771],"corporate_contracts_industries":[],"corporate_contracts_types":[9622,9627],"class_list":["post-43608","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-asiainfo-holdings-inc","corporate_contracts_types-planning","corporate_contracts_types-planning__purchase"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43608","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43608"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43608"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43608"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43608"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}