Exhibit 4.64
XINHUA FINANCE MEDIA LIMITED
and
PARIYA HOLDINGS LIMITED
and
GOOD SPEED HOLDINGS LIMITED
AND
▇▇▇▇ ▇▇▇ WA
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PURCHASE AGREEMENT
IN RESPECT OF
CONVEY ADVERTISING GROUP
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JUNE 29, 2007
(K&L | GATES COMPANY LOGO)
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇.▇▇▇
THIS PURCHASE AGREEMENT (this "AGREEMENT") is made on the _____ day of _____,
2007
BETWEEN
1. XINHUA FINANCE MEDIA LIMITED, a company incorporated under the laws of the
Cayman Islands with registration number 157511 and its registered address
located at Century Yard, Cricket Square, ▇▇▇▇▇▇▇▇ Drive, P.O. Box 2681GT,
▇▇▇▇▇▇ Town, Grand Cayman, Cayman Islands, British West Indies, as
purchaser ("XFM");
2. PARIYA HOLDINGS LIMITED, a company incorporated under the laws of the
British Virgin Islands with incorporation number 1383207 and its registered
address located at P.O. Box 957, Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands (the "VENDOR");
3. GOOD SPEED HOLDINGS LIMITED, a company incorporated under the laws of the
British Virgin Islands with registration number 1409292 and a registered
address at P.O. Box 957, Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands (the "COMPANY");
4. ▇▇▇▇ ▇▇▇ WA, holder of Hong Kong identity card number ▇▇▇▇▇▇▇(▇), as
covenantor (the "COVENANTOR").
WHEREAS
A. The Vendor holds all of the legal and beneficial interest in the Company.
B. XFM desires to purchase and the Vendor wishes to sell to XFM all of the
Company Shares it owns subject to the terms and conditions set forth in
this Agreement.
C. The Covenantor will benefit from and receive part of the proceeds from the
sale of the Company Shares and agrees to be bound by the covenants
contained herein and in the agreement contemplated herein to entice XFM to
enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants set
forth herein, the sufficiency, adequacy and receipt of which are hereby
acknowledged, XFM, the Company, the Vendor and the Covenantor hereby agree as
follows:
1. DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the following
meanings:
"ACCOUNTS RECEIVABLES" means (a) any right to payment for goods sold,
leased or licensed or for services rendered, whether or not it has been
earned by performance,
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whether billed or unbilled, and whether or not it is evidenced by any
contract or agreement or otherwise; (b) any note receivable; or (c) any
other receivable or right to payment of any nature;
"ADRS" means American Depositary Receipts;
"AFFILIATES" of a specified Person means any other Person that, directly or
indirectly, through one or more intermediaries, Controls, is Controlled by,
or is under common Control with, such specified Person or, in the case of a
natural Person, such Person's spouse, parents and descendants (whether by
blood or adoption and including stepchildren);
"ANCILLARY AGREEMENTS" means, collectively, the Group Structure Agreements,
Convey Nominee Agreements, Management Contracts, the Principals' Covenants,
leases or licenses of the Mak Properties, the Operating Facilities and any
other agreements contemplated in this Agreement;
"ASSETS" means any real, personal, mixed, tangible, intangible or other
property of any nature, including, but not limited to, cash or cash
equivalents, inventory, prepayments, deposits, escrows, Accounts
Receivables, Tangible Property, Intellectual Property, Real Property,
software, Contract Rights and goodwill, and claims, causes of action and
other legal rights and remedies of any nature whatsoever;
"BEIJING AD CO" means Beijing ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ Advertising Co., Ltd., a
company incorporated under the laws of the People's Republic of China with
incorporation number 1101052280408 and its registered address located at
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇, ▇▇. ▇, ▇▇▇▇ An ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ Men
Wai Avenue, Chaoyang District, Beijing, the PRC;
"BUSINESS DAY" means any Monday, Tuesday, Wednesday, Thursday and Friday on
which banks in Hong Kong are required or permitted by laws to be open;
"CLIENT" means any individual or entity to whom any member of the Group or
eConvey has provided any services or products within two years prior to the
commencement of or at any time during the Non-Compete Period;
"CLOSING" has the meaning ascribed to it in Clause 2.3;
"CLOSING DATE" has the meaning ascribed to it in Clause 2.3;
"CLOSING DELIVERABLE AGREEMENTS" means all the agreements or documents
required to be delivered by the Vendor or the Covenantor under this
Agreement as conditions to Closing;
"COMPANY CHARTER DOCUMENTS" has the meaning ascribed to it in Clause
6.1(a);
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"COMPANY SHARES" means all of the share capital of the Company being
ordinary shares each with a par value of US$1.00 in the capital of the
Company, further particulars are set out under Schedule A;
"CONSENT" means any consent, approval, permit, license, order, or
authorization of or registration, declaration, or filing with or exemption
by Governmental Entity;
"CONTROL", "CONTROLS", "CONTROLLED" (or any correlative term) means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management of a Person, whether through the ownership of
voting securities, by contract, credit arrangement or proxy, as trustee,
executor, agent or otherwise. For the purpose of this definition, a Person
shall be deemed to Control another Person if such first Person, directly or
indirectly, owns or holds more than 50% of the voting equity interests in
such other Person;
"CONVEY ADVERTISING" means Convey Advertising Company Limited, a company
incorporated under the laws of Hong Kong with incorporation number 0179692
and its registered address located at Suite 203, Haiphong Mansion, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇;
"CONVEY HOLDINGS" means G Whale Holdings Limited, a company incorporated
under the laws of Hong Kong, with incorporation number 1019982 and its
registered address located at ▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇-▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇;
"CONVEY NOMINEE" means ▇▇ ▇▇▇▇▇▇▇, a PRC national and holder of PRC
identity card number 432301196610291514;
"CONVEY NOMINEE AGREEMENTS" has the meaning ascribed to it in Clause
3.5(g);
"DISCLOSING PARTY" has the meaning ascribed to it in Clause 13.4;
"EARNOUT PAYMENTS" means the amount payable by XFM in accordance with
Clause 4;
"ECONVEY" means ▇▇▇▇▇▇▇.▇▇▇ Limited, a company incorporated under the laws
of Hong Kong with incorporation number 0342131 and its registered address
located at Suite 203, Haiphong Mansion, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇;
"ENCUMBRANCE" means and includes any interest or equity of any Person
(including, without prejudice to the generality of the foregoing, any right
to acquire, option or right of pre-emption) or any mortgage, charge,
pledge, lien or assignment or any other encumbrance, priority or security
interest or arrangement of whatsoever nature over or in the relevant
property;
"EQUIPMENT FINANCE" means the financing by Citic Ka Wah and Wing Lung in
favour of Convey Advertising set out in Schedule W;
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"EQUITY INTERESTS" means all of the equity interest in Beijing Ad Co as at
the date hereof, particulars of which are set forth under Schedule C;
"EQUITY TRANSFER DOCUMENTS" means all the documents, agreements and
instruments as set forth under Schedule M;
"EQUITY TRANSFER" has the meaning ascribed to it in Clause 3.2;
"FINAL DETERMINATION DATE" has the meaning ascribed to it in Clause 4.5;
"GOVERNMENTAL ENTITY" means any court, regulatory body, administrative
agency or commission or other governmental authority or instrumentality,
whether domestic or foreign;
"GOVERNMENTAL NOTICE" has the meaning ascribed to it in Clause 10.1(e);
"GROUP" means, collectively, the Company, Convey Advertising, Convey
Holdings and the PRC Group;
"GROUP STRUCTURE AGREEMENTS" means contracts, agreements and documents set
forth in Schedule B;
"HOLDBACK AMOUNT" has the meaning ascribed to it in Clause 10.6(a);
"HONG KONG" means the Hong Kong Special Administrative Region of the PRC;
"HONG KONG DOLLARS" and "HK$" means the lawful currency of Hong Kong;
"IFRS" means the International Financial Reporting Standards issued by the
International Accounting Standards Board from time to time;
"INDEMNIFICATION CERTIFICATE" has the meaning ascribed to it in Clause
10.6.
"INDEMNIFIED PARTY" has the meaning ascribed to it in Clause 10.4;
"INDEMNIFYING PARTY" has the meaning ascribed to it in Clause 10.4;
"INITIAL PAYMENT" has the meaning ascribed to it in Clause 2.2;
"INTELLECTUAL PROPERTY" means, collectively, the Owned Intellectual
Property and the Licensed Intellectual Property;
"K&L GATES" means ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, a Hong Kong
solicitors firm;
"LEASE" has the meaning ascribed to it in Clause 6.1(n) and the particulars
of which are set forth in Schedule F;
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"LEASED REAL PROPERTIES" has meaning ascribed to it in Clause 6.1(n);
"LICENSED INTELLECTUAL PROPERTY" means any and all license rights granted
to any member of the Group in any third party intellectual property or
other proprietary or personal rights, including any and all of the
following that are licensed to any member of the Group anywhere in the
world: (1) trademarks, trade names, service marks and trade dress, and all
goodwill associated with trademarks, trade names, service marks and trade
dress; (2) patents; (3) mask works; (4) utility models; (5) domain names;
(6) copyrights and copyrightable works; (7) databases; (8) graphics; (9)
schematics; (10) marketing, sales and user data; (11) technology; (12)
trade secrets, including confidential know-how, inventions, specifications
and processes; (13) computer software programs of any kind (in both source
and object code form); (14) application programming interfaces; (15)
protocols; and (16) any renewal, extension, reissue, continuation or
division rights, applications and/or registrations for any of the
foregoing;
"LICENSES" means all the licenses set forth under Schedule N;
"MAK PRINCIPAL" means any one of, and "MAK PRINCIPALS" means all of, the
following collectively:
(1) MAK ▇▇▇ ▇▇▇▇, holder of Hong Kong identity card number
▇▇▇▇▇▇▇(▇) ("ST MAK");
(2) MAK Wing Sze, holder of Hong Kong identity card number
▇▇▇▇▇▇▇(▇) ("▇▇ ▇▇▇");
(3) ▇▇▇▇▇▇▇ MAK, holder of Hong Kong identity card number
▇▇▇▇▇▇▇(▇) ("▇▇▇▇▇▇▇"); and
(4) ▇▇▇▇▇▇▇ ▇▇▇, holder of Hong Kong identity card number
▇▇▇▇▇▇▇(▇) ("▇▇▇▇▇▇▇");
"MAK PROPERTIES" means those properties set forth in Schedule V;
"MANAGEMENT CONTRACTS" means the management contract in the form set forth
in Schedule I and executed and delivered by each of the Persons set forth
in Schedule J;
"MARKET VALUE" shall mean, with respect to XFM Shares, the average of the
closing price of XFM Shares or their equivalent in ADRs on NASDAQ for the
fifteen (15) trading days up to and including the third trading day prior
to the applicable date (adjusted to give effect to any splits,
consolidations, dividends or other recapitalizations occurring during such
fifteen-day period);
"MATERIAL ADVERSE CHANGE" means any event or circumstance that occurs which
might reasonably be expected to have a material adverse effect on the
prospects, business, operations or financial condition of the Group taken
as a whole or that would materially affect the ability of any of the
companies in the Group;
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"MATERIAL CONTRACTS" means the material contracts the particulars of which
are set forth in Schedule G;
"MAY 31 STATEMENTS" means the Financial Statements of Convey Advertising
and Convey Holdings both as of May 31, 2007 provided by the Vendor attached
hereto as Schedule O;
"NASDAQ" means the National Association of Securities Dealers Automated
Quotations;
"NOMINEE" means Ma Rui, a PRC national and holder of PRC identity card
number 140303197509170028;
"NON-COMPETE PERIOD" shall have the meaning ascribed to it in Clause 11.1;
"NON-DISCLOSING PARTIES" has the meaning ascribed to it in Clause 13.4;
"OPERATING FACILITIES" means, collectively:
(1) the demand credit facility set out in the facility letter dated
30/04/2007 in relation to credit facility by Citibank, N.A., Hong
Kong Branch in favour of Convey Advertising up to the principal
amount of Eight Million Five Hundred Thousand Hong Kong Dollars
(HK$8,500,000) and
(2) credit facility set out in the banking facilities letter dated
26/01/2007 in relation to credit facilities (including revolving
facilities to be increased from HK$7,100,000 to HK$9,100,000 for
O/D and L/G and instalment loans (i) No.335-51-02411-4; (ii)
No.335-61-02226-9; and (iii) No. 335-61-01359-6 by Shanghai
Commercial Bank Limited in favour of Convey Advertising.
"OWNED INTELLECTUAL PROPERTY" means any and all of the following that are
owned (including joint ownership) or held by any member of the Group
anywhere in the world: (1) trademarks, trade names, service marks and trade
dress, and all goodwill associated with trademarks, trade names, service
marks and trade dress; (2) patents; (3) mask works; (4) utility models; (5)
domain names; (6) copyrights and copyrightable works; (7) databases; (8)
graphics; (9) schematics; (10) marketing, sales and user data; (11)
technology; (12) trade secrets, including confidential know-how,
inventions, specifications and processes; (13) computer software programs
of any kind (in both source and object code form); (14) application
programming interfaces; (15) protocols; and (16) any renewal, extension,
reissue, continuation or division rights, applications and/or registrations
for any of the foregoing;
"OWNED REAL PROPERTY" means Real Property that are owned (including joint
ownership) or held by the Company or any member of the Group anywhere in
the world and the particulars of which are set out in Schedule P and the
Mak Properties;
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"PAYMENT DATE" has the meaning ascribed to it in Clause 4.5;
"PARTY" means any one of the parties to this Agreement and "PARTIES" mean
all of them collectively;
"PERSON" or "PERSONS" means any natural Person, corporation, company,
association, partnership, organization, business, firm, joint venture,
trust, unincorporated organization or any other entity or organization, and
shall include any governmental authority;
"POST COMPLETION COVENANTS" means the post completion convenants described
herein as set forth in Clause 4A;
"PRC" means the People's Republic of China;
"PRC CHARTER DOCUMENTS" has the meaning ascribed to it in Clause 6.2(a);
"PRC GROUP" means, collectively, Beijing Ad Co, the WFOE and their
respective subsidiaries or branches;
"PRC LEASES" has the meaning ascribed to it in Clause 6.2(l);
"PRC MATERIAL CONTRACTS" means the material contracts relating to the PRC
Group and the particulars of which are set out in Schedule G;
"PRC PAYMENT" has the meaning ascribed to it in Clause 3.1(a);
"PRC RETURNS" has the meaning ascribed to it in Clause 6.2(j)(i);
"PRC RETURN PERIODS" has the meaning ascribed to it in Clause 6.2(j)(i);
"PRE-CLOSING TAX PERIOD" has the meaning ascribed to it in Clause 10.7;
"PRINCIPALS' COVENANTS" means the Covenantor's Agreement in the form set
forth in Schedule K and executed and delivered by each of the Persons set
forth in Schedule L;
"PURCHASE PRICE" means the Initial Payment;
"REAL PROPERTY" means any real estate, land, building, condominium, town
house, structure or other real property of any nature, all shares of stock
or other ownership interests in cooperative or condominium associations or
other forms of ownership interest through which interests in real estate
may be held, and all appurtenant and ancillary rights thereto, including,
but not limited to, easements, covenants, water rights, sewer rights and
utility rights.
"RETURN PERIODS" has the meaning ascribed to it in Clause 6.1(l);
"RETURNS" has the meaning ascribed to it in Clause 6.1(l);
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"STRADDLE PERIOD" has the meaning ascribed to it in Clause 10.7;
"TANGIBLE PROPERTY" means any furniture, fixtures, leasehold improvements,
vehicles, office equipment, computer equipment, other equipment, machinery,
tools, spare parts, forms, supplies or other tangible personal property of
any nature;
"TAX SETTLEMENT OPTION" has the meaning ascribed to it in Clause 10.7;
"US$" and "US DOLLARS" means the lawful currency of the United States of
America;
"WFOE" means Giant Whale Financial Advisory (Shenzhen) Co., Ltd., a wholly
foreign owned enterprise established in the PRC as a wholly-owned
subsidiary of the Company with a registered address at Room 503, Hua Run
Building, ▇▇▇▇ ▇▇▇ Road East, Luohu District, Shenzhen, the details of
which are set forth in Schedule C;
"XFM SHARES" means the Class A common shares in the share capital of XFM
with a par value of US$0.001 each;
"2007 AMOUNT" has the meaning ascribed to it in Clause 4.1(a);
"2007 FINANCIALS" means the audited financial statements for the Company
for the period from July 1, 2007 to June 30, 2008 prepared on a
consolidated basis in accordance with IFRS by an international firm of
accountants selected by XFM in accordance with Section 4.2;
"2007 NET INCOME" means the consolidated net income of the Company as set
forth in the 2007 Financials prepared in accordance with IFRS excluding:
(1) extraordinary items;
(2) any expenses or provision made or gain recognised relating to
amortization, written-off, impairment loss or adjustment of
goodwill which arises from acquisitions or disposal of companies
or business by the Company or incurred in the preparation of the
2007 Financials;
"2008 AMOUNT" has the meaning ascribed to it in Clause 4.1(b);
"2008 FINANCIALS" means the audited financial statements for the Company
for the period from July 1, 2008 to June 30, 2009 prepared on a
consolidated basis in accordance with IFRS by an international firm of
accountants selected by XFM in accordance with Section 4.2; and
"2008 NET INCOME" means the consolidated net income of the Company as set
forth in the 2008 Financials prepared in accordance with IFRS excluding:
(1) extraordinary items;
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(2) any expenses or provision made or gain recognised relating to
amortization, written-off, impairment loss or adjustment of
goodwill which arises from acquisitions or disposal of companies
or business by the Company or incurred in the preparation of the
2008 Financials.
1.2 Interpretation. In this Agreement:
(a) the headings are inserted for convenience only and shall not affect
the construction of this Agreement;
(b) references to statutory provisions shall be construed as references to
those provisions as amended or re-enacted or as their application is
modified by other statutory provisions (whether before or after the
date hereof) from time to time and shall include any provisions of
which they are re-enactments (whether with or without modification);
(c) all time and dates in this Agreement shall be Hong Kong time and dates
except where otherwise stated;
(d) unless the context requires otherwise, words incorporating the
singular shall include the plural and vice versa and words importing a
gender shall include every gender; and
(e) references herein to Clauses, Recitals and Schedules are to clauses
and recitals of and schedules to this Agreement.
1.3 Recitals, Schedules. All recitals and schedules form part of this Agreement
and shall have the same force and effect as if expressly set forth in the
body of this Agreement and any reference to this Agreement shall include
the recitals and schedules.
1.4 Joint Obligations. Warranties, covenants, indemnities or other obligations
expressed in this Agreement to be given by more than one party shall be
deemed to be given by such parties on a joint and several basis unless
otherwise expressly provided for.
2. SALE AND PURCHASE
2.1 Purchase and Sale of Company Shares. Subject to the terms and conditions
set forth in this Agreement, XFM (relying on the representations,
warranties, agreements, covenants, undertakings and indemnities hereinafter
referred to) agrees with the Vendor to purchase for the Purchase Price, and
the Vendor agrees to sell and the Covenantor agrees to procure the sale to
XFM or its nominee at Closing, all of the Company Shares with effect from
the Closing Date free from all options, liens, charges, pledges, claims,
agreements, encumbrances, equities and other third party rights of any
nature whatsoever and together with all rights of any nature whatsoever now
or hereafter attaching or accruing to them including all rights to any
dividends or other distribution declared, paid or made in respect of them
after the Closing Date.
2.2 Initial Payment.
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The purchase price for the Company Shares shall comprise of the Initial
Payment and the Earnout Payments. The "INITIAL PAYMENT" shall be
Thirty-three Million US Dollars (US$33,000,000) payable by the Purchaser
within five (5) Business Days of the Closing Date to such accounts as may
be directed in writing by the Vendor on or before the date of the signing
of this Agreement. The date of payment of the Initial Payment shall be the
"INITIAL PAYMENT DATE". The payment of the Initial Payment, by wire
transfer to the account designated by the Vendor shall be deemed to have
been paid to the Vendor on the Initial Payment Date. Upon payment of the
Initial Payment, XFM shall have no further rights, and/or claims against
the Vendor, the Covenantor or their respective agents in respect of the
Initial Payment.
2.3 Closing. The completion of the purchase and sale of the Company Shares
(the "CLOSING") shall take place at the offices of K&L Gates in Hong Kong
or at such other place as may be agreed upon by the Parties on the date
when the name of XFM is entered into the register of members of the
Company. The date and time of the Closing are herein referred to as the
"CLOSING DATE".
2.4 Vendor Delivery Obligations. As soon as practicable after receipt of
payment of the Initial Payment by the Vendor, the Vendor shall deliver and
the Covenantor shall procure the delivery to XFM of the following
documents:
(a) duly completed and executed undated instrument of transfer of the
Company Shares by the registered holder(s) hereof in favour of XFM
or any entity as it may direct together with the share certificates
representing the applicable Company Shares;
(b) duly completed and signed but undated letters of resignation from
the existing directors and company secretary of the Company and
instruction to the British Virgin Islands agent to appoint K&L Gates
as its sole principal in respect of the Company;
(c) shareholders' and directors' resolution of the Company approving the
resignation of the existing directors and company secretary, the
appointment of the Persons nominated by XFM to be new directors and
company secretary, the transfer of the Company Shares and change of
principal office of the Company;
(d) all books and records of the Company;
(e) written notice in the form to the satisfactory of XFM issued to the
British Virgin Islands agent of the Company notifying them of the
change in authorised contact Person;
(f) documents evidencing the transfers to the Company of all of the
shares in the capital of Convey Advertising and Convey Holdings and
all steps relating thereto including the payment of stamp duties
therefor;
(g) all books and records of Convey Advertising;
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(h) the undated resignation as directors of Convey Holdings by the
Covenantor and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and the resignation as company
secretary of Convey Holdings of Polar Universal (Secretarial)
Limited and the appointment of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as director and K&L
Gates as company secretary of Convey Holdings;
(i) duly completed and signed documents required for the resignation of
existing directors and appointment of new directors of Convey
Holdings consisting of the following:
(i) Form D2A;
(ii) undated letters of resignation from existing directors of
Convey Holdings; and
(iii) shareholders' and directors' resolution of Convey Holdings
approving the resignation of the existing directors and
company secretary, the appointment of the Persons as nominated
by XFM to be new directors and company secretary and the
change of the registered office of Holdings;
(l) all books and records of Convey Holdings;
3. COVENANTS OF THE VENDOR AND COVENANTOR
3.1 Equity Interests. The Vendor and the Covenantor shall jointly and
severally procure and guarantee each of the following as soon as
practicable following the execution and delivery of this Agreement:
(a) the sale and transfer of the Equity Interests by Convey Nominee to
the Nominee for the total consideration of One Million Renminbi
(RMB1,000,000) (the "PRC PAYMENT") and the performance of all
actions required or contemplated under this Agreement by Convey
Nominee;
(b) the resignation of ▇▇▇▇ ▇▇▇▇▇▇ as Manager and ▇▇ ▇▇▇▇▇▇▇ as
Supervisor and ▇▇▇▇ ▇▇▇▇▇▇ as executive director and legal
representative of Beijing Ad Co;
(c) the amendment of the articles of association of Beijing Ad Co to
provide for appointment of new director(s), a new legal
representative and bank account signatory of Beijing Ad Co nominated
by XFM and any other documents as may be required to effect the
foregoing;
(d) the registration of the ownership of the Equity Interests in the
name of the Nominee; and
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(e) the termination of all agreements between any of WFOE or Beijing Ad
Co and the Convey Nominee or ▇▇▇▇ ▇▇▇▇▇▇ and releases from Convey
Nominee and ▇▇▇▇ ▇▇▇▇▇▇ in relation to the Group in form
satisfactory to XFM.
3.2 Transfer of Equity Interests. As soon as practicable after Closing, the
Vendor and the Covenantor shall procure the execution and delivery of the
Equity Transfer Documents and, as soon as practicable after the execution
and delivery of this Agreement, the completion of the transfer of all of
the Equity Interests from the existing holder(s) thereof to the Nominee
(the "EQUITY TRANSFER").
3.3 Transfer Procedures. The Vendor and the Covenantor hereby jointly and
severally undertake to XFM that as soon as practicable after the execution
and delivery of this Agreement and/or Closing (with the reasonable
assistance from the Company and XFM) they shall:
(a) procure the due execution and delivery of all documents required to
be executed and delivered by Convey Nominee or any other party
necessary to vest in the Nominee his interest in all property and
rights in Beijing Ad Co and the Equity Interests as are intended to
be vested in him in consideration of the PRC Payment by or pursuant
to this Agreement and the Ancillary Agreements; and
(b) file and submit and procure the filing and submission of all
documents required to effect the Equity Transfer with the relevant
Governmental Entities in the form satisfactory to XFM.
3.4 Governance. Upon the completion of the Equity Transfer, the Vendor and the
Covenantor shall and shall procure the delivery to XFM or such parties
nominated by XFM with the reasonable assistance from the Company and XFM:
(a) written confirmation from the Vendor and the Covenantor that they
are not aware of any matter or thing which is in breach of or
inconsistent with any of the representations, warranties and
undertakings herein contained;
(b) shareholders' resolution of Beijing Ad Co approving the resignation
of Convey Nominee as the executive director, legal representative
and bank account signatory of Beijing Ad Co and the appointment of
new director(s), new legal representative and bank account signatory
of Beijing Ad Co and any other documents as may be required to
effect the foregoing;
(c) all books and records of Beijing Ad Co;
(d) all powers of attorney or other authorities under which the
transfers of the Equity Interests have been executed (if any);
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(e) such waivers, consents and other documents as XFM may require to
give to XFM or the Nominee good title to the Equity Interests and to
enable XFM or the Nominee to become the registered holders thereof;
(f) such other papers and documents as XFM may reasonably require; and
(g) termination agreements in respect of all agreements between any of
WFOE or Beijing Ad Co and the Convey Nominee and releases from
Convey Nominee in relation to the Group in form satisfactory to XFM
(collectively, the "CONVEY NOMINEE AGREEMENTS").
4. EARNOUT PAYMENTS
4.1 Earnout Payments. Subject to Clause 4.2 and Clause 4A, XFM shall pay the
following amounts to the Vendor or such other party designated by the
Vendor:
(a) an amount (the "2007 AMOUNT") calculated as the difference between:
(i) the product of: twelve (12} and the 2007 Net Income and sixty
per cent (60%)
and
(ii) Ten Million US Dollars (US$10,000,000)
(b) an aggregate amount (the "2008 AMOUNT") calculated as the difference
between:
(i) the product of: twelve (12} and the 2008 Net Income and forty
per cent (40%)
and
(ii) Ten Million US Dollars (US$10,000,000)
PROVIDED THAT
(c) the 2007 Amount and 2008 Amount shall not exceed Forty Million US
Dollars (US$40,000,000); and
(d) if the 2007 Amount or the 2008 Amount shall be negative, such amount
shall be deemed to be zero (0).
4.2 Preparation of 2007 and 2008 Financials. XFM shall instruct an
international firm of accountants as the auditors to:
(a) based on a scope of work determined by XFM acting reasonably,
prepare and issue the 2007 Financials and 2008 Financials within 180
days from the end of
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each of the financial years ended June 30, 2008 and June 30, 2009,
respectively; and
(b) provide a copy of the 2007 Financials and 2008 Financials to the
Vendor as soon as they are issued.
4.3 Calculation of the 2007 Amount and 2008 Amount. Within five (5) days of
the delivery to the Vendor of the 2007 and 2008 Financials, respectively,
XFM shall deliver to the Vendor its calculation of the 2007 Amount and
2008 Amount, respectively, which notice shall include reasonable detail of
the basis of such calculations to enable the parties and their advisors to
review the applicable calculations. If the Vendor does not dispute in a
written notice to XFM the calculation of the 2007 Amount or the 2008
Amount, as the case may be, within ten (10) days of receiving the same, or
if the Vendor advises XFM in writing that it accepts the calculation
within such ten (10) day period, then the 2007 Amount and 2008 Amount
shall for all purposes be considered final, accepted and approved by all
parties. If the Vendor shall raise any dispute regarding the calculation
of the 2007 Amount and 2008 Amount within such ten (10) day period, then
the parties shall endeavour to resolve such dispute amicably within an
additional period of ten (10) days. If successful, the 2007 Amount and
2008 Amount, as the case may be, as adjusted by the resolution of such
dispute, shall for all purposes be considered final, accepted and approved
by all parties. If the parties do not reach an agreement with respect to
the calculation within such ten (10)-day period, then the matter shall be
referred to arbitration in accordance with this Agreement for final
determination; provided, that upon resolution of such matter by
arbitration, the Party that was unsuccessful in the arbitration with
respect to such matter shall be solely responsible for all reasonable
fees, costs and expenses relating to the arbitration.
4.4 Payment. XFM shall pay the 2007 Amount and 2008 Amount in a combination of
(A) money in US Dollars in an amount equal to Fifty Per Cent (50%) of such
sum, and (B) delivery of XFM Shares, rounded up to the nearest whole
share, with an aggregate Market Value equal to Fifty Per Cent (50%) of
such sum. Notwithstanding the foregoing, XFM may, in its sole discretion,
deliver to the Vendor or any other Person(s) designated by the Vendor
money in US Dollars in lieu of all or a portion of the 2007 Amount or 2008
Amount otherwise deliverable to the Vendor in XFM Shares. Notwithstanding
the foregoing, if for any reason XFM Shares or the ADRs representing them
payable to the Vendor are not actively traded on NASDAQ or a comparable
public trading market or that the issuance of such XFM Shares and the ADRs
representing them are in any way prohibited or restricted under any
applicable laws and regulations, then XFM shall so notify the Vendor, and
the Vendor may, by written notice to XFM, elect to receive money in US
Dollars in lieu of the portion of the 2007 Amount or 2008 Amount otherwise
deliverable to the Vendor in XFM Shares.
4.5 Payment Date. XFM shall pay the cash portion of the 2007 Amount and 2008
Amount to the Vendor or any other Person designated by the Vendor within
five (5) Business Days following the final determination of the 2007
Amount and the 2008 Amount respectively (the "FINAL DETERMINATION DATE"),
and issue the XFM Shares portion of the 2007 Amount and 2008 Amount within
twenty (20) Business Days
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following Final Determination Date (each such cash payment or share
issuance date being a "PAYMENT DATE").
4.6 Manner of Payment. Notwithstanding any other provision contained herein,
at least five (5) Business Days in advance of each Payment Date, the
Vendor shall, in writing, advise XFM of the manner in which XFM shall pay
such 2007 Amount and 2008 Amount. Specifically, the Vendor shall advise
XFM of the Persons and necessary account information where such payments
shall be made and how such shares should be issued.
4.7 2007 Financials and 2008 Financials. Notwithstanding any other provision
herein and absent manifest error, the 2007 Financials and 2008 Financials
shall be final conclusive and binding on all parties and shall not be
subject to further dispute, arbitration or other reassessment or
calculation or determination.
4.8 XFM Shares. Each of the Vendor and the Covenantor understands that the
certificates evidencing the XFM Shares or ADRs shall bear the following or
similar legend reflecting the restrictions on the transfer of such XFM
Shares or ADRs contained herein:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED,
ASSIGNED, OR OTHERWISE DISPOSED OF UNLESS (1) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY
RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF THE SECURITIES, THE
WARRANT OR SUCH SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY
SATISFACTORY TO THE COMPANY, THAT THE SECURITIES, THE WARRANT OR
SUCH SECURITIES, AS APPLICABLE, MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED, OR OTHERWISE DISPOSED OF IN THE MANNER CONTEMPLATED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR APPLICABLE STATE SECURITIES LAWS."
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4.9 Set Off Against Earnouts. If any of the Operating Facilities shall be
withdrawn or a demand is issued thereunder or the amount available
therefrom from time to time shall be insufficient for the working capital
of the Group, any excess cash needs funded by XFM shall be set off against
the next Earnout Amount payable.
4A. POST COMPLETION PAYMENT COVENANTS
The Vendor and the Covenantor shall fulfill the covenants below ("POST
COMPLETION COVENANTS") within thirty (30) days from the date hereof (the
"FULFILLMENT DATE"):
4A.1 Deliverables. All matters and transactions contemplated in Clauses 2 and 3
have been completed to the satisfaction of XFM and all documents
contemplated to be executed and delivered in Clauses 2.5, 3.1 and 3.4 have
been delivered in the forms required by XFM.
4A.2 Group Structure Agreements. All the Group Structure Agreements have been
duly executed and delivered by all parties thereto other than XFM, its
Affiliates or the Nominee.
4A.3 Board Composition. All documents required to change the directors of each
member of the Group to nominees of XFM shall have been duly completed and
signed and, where applicable, filed, submitted to or registered with the
relevant Governmental Entity.
4A.4 Licenses. All Licenses shall be valid and in full force and shall be
renewable solely by the member of the Group or its branch (where
applicable) throughout the period up to the Fulfillment Date.
4A.5 Working Capital. There shall be, in the bank accounts of Convey
Advertising, Convey Holdings, WFOE and Beijing Ad Co, aggregate working
capital of not less than Five Million Hong Kong Dollars (HK$5,000,000) and
no less than Twelve Million Hong Kong Dollars of accounts receivables of
Convey Advertising shall have been collected in June, 2007.
4A.6 Minimum Advertising Signs. Convey Advertising shall own, lease, license or
otherwise have the right to operate such numbers of billboards with the
advertising area and in such format and in each area as set forth in
Schedule R at the Fulfillment Date.
4A.7 Mak Properties. As soon as practicable, the Vendor and the Covenantor
shall procure the respective owners of the Mak Properties to enter into an
agreements with Convey Advertising or such other Person directed by XFM in
accordance with Clause 5.5.
4A.8 Convey Advertising Balance Sheet. As of the Fulfillment Date:
(a) no amount shall be:
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(i) due from related companies (noted as HK$29,262,000 on the May
31 Statements);
(ii) due to directors (noted as HK$5,472,000 on the May 31
Statements);
(iii) due to related companies (noted as HK$5,062,000 on the May 31
Statements);
(iv) obligations under finance leases (noted as HK$3,183,000 on the
May 31 Statements);
(v) secured term loans (noted as HK$1,000,000 on the May 31
Statements),
and the relevant waivers and releases of such amounts shall have
been received from the relevant parties;
(b) the amount of HK$18,000,000 shall be noted as a payable to the
Vendor; and
(c) the balance sheet of Convey Advertising as of the Fulfillment Date
shall be substantially in the form attached hereto as Schedule S.
4A.9 Convey Advertising Operating Facilities. The Operating Facilities shall be
in place and available to be drawn down and there has been no default
thereunder..
4A.10 Convey Holdings Balance Sheet. As of the Fulfillment Date:
(a) no amount shall be:
(i) due from directors (noted as HK$5,250,000 on the May 31
Statements)
(ii) due from related companies (noted as HK$2,676,000 on the May
31 Statements);
(ii) due to directors (noted as HK$13,354,000 on the May 31
Statements);
and the relevant waivers and releases of such amounts shall have
been received from the relevant parties; and
(b) the balance sheet of Convey Holdings as of the Fulfillment Date
shall be substantially in the form attached hereto as Schedule S.
4A.11 Convey Advertising Corporate Documents. The Vendor and Covenantor shall
procure the delivery to XFM of:
(a) the undated resignation as directors of Convey Advertising by ST
Mak, ▇▇ ▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and the resignation as company
secretary of Convey Advertising of ▇▇ ▇▇▇ and the appointment of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as director and K&L Gates as company secretary of
Convey Advertising;
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(b) duly completed and signed but undated documents required for the
resignation of existing directors and appointment of new directors
of Convey Advertising consisting of the following:
(i) Form D2A;
(ii) letters of resignation from existing directors of Convey
Advertising; and
(iii) shareholders' and directors' resolution of Convey Advertising
approving the resignation of the existing directors and
company secretary, the appointment of the Persons as nominated
by XFM to be new directors and company secretary and the
change of the registered office of the Company;
4A.12 PRC Group Corporate Documents. The Vendor and Covenantor shall procure the
delivery to XFM of:
(a) shareholders' and director's resolution of WFOE approving the
amendment of the articles of association of WFOE in a form
satisfactory to XFM, the resignation of ▇▇▇▇▇ Zaohong as the
executive director and legal representative of WFOE and appointment
of the Persons nominated by XFM to be the new executive director and
legal representative of WFOE and any other documents as may be
required to effect the foregoing;
(b) all books and records of WFOE;
(c) the Ancillary Agreements executed by the parties and in the forms
contemplated herein;
(d) all books and records of Beijing Ad Co;
(e) discharges of all obligations of Convey Advertising and any other
member of the Group under the Equipment Finance; and
(f) all other documents that may be required by XFM for the purposes
herein including, but not limited to, all documents required to be
signed, submitted to and/or registered with any Governmental Entity.
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4A.13 If all of the Post Completion Covenants set out above are not fulfilled on
or before the Fulfillment Date, the amount of One Thousand US Dollars
(US$1,000) for each day all of the Post Completion Conditions are not
fulfilled following the Fulfillment Date shall be deducted firstly from
the 2007 Amount and, should the 2007 Amount equal zero (0), the 2008
Amount under the Purchase Agreement. For greater certainty, the 2007
Amount or 2008 Amount shall not be less than zero (0).
5. COVENANTS
5.1 Further Covenants. The Vendor and the Covenantor hereby irrevocably
covenant and undertake to XFM to execute and deliver and procure the due
execution and delivery of all such further documents required to be signed
by the Vendor or members of the Group as are necessary to vest in XFM or
the Nominee all such property and rights as are intended to be vested in
them by or pursuant to this Agreement and the Group Structure Agreements.
Each of the signing parties shall bear the expenses incurred by it.
5.2 Directors. Each of the Vendor and the Covenantor shall do and shall
procure to be done all actions necessary to ensure that the directors of
the Company, Convey Advertising, Convey Holdings, WFOE and Beijing Ad Co
shall be such Persons nominated by XFM.
5.3 Limitation on Transfer of Interests. Prior to Closing Date, none of the
parties to this Agreement shall sell, give, assign, hypothecate, pledge,
encumber, grant a security interest in or otherwise dispose of (whether by
operation of law or otherwise) (each a "TRANSFER") any Company Shares,
Equity Interests or shares in the capital of any member of the Group or
any right, title or interest therein or thereto, except to XFM or its
Affiliate or in connection with fundraising activities of XFM and in
accordance with its memorandum and articles of association and any attempt
to transfer any Company Shares, Equity Interests or shares or any rights
under any of them in violation of the preceding sentence shall be null and
void ab initio.
5.4 Distributions. Prior to the Closing Date, none of Convey Advertising or
Convey Holdings shall declare, pay or otherwise make any distribution of
its capital or retained earnings except the aggregate amount of Eight
Million Eight Hundred Thousand Hong Kong Dollars (HK$8,800,000) from one
or more of Convey Advertising and Convey Holdings in the form of dividends
or other payments to related companies or directors.
5.5 Mak Properties. As soon as practicable, the Vendor and the Covenantor
shall procure the respective owners of the Mak Properties to enter into an
agreements with Convey Advertising or such other Person directed by XFM
which shall provide for the following:
(a) the Mak Properties shall be leased or, at the option of XFM,
licensed exclusively to Convey Advertising or such other party
designated by XFM for their use absolutely at the fixed monthly
rental charge equal to twenty per cent
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(20%) of the revenue from the properties set out in Schedule V
inclusive of all rates, management fees for the building and other
maintenance costs and expenses for an initial term of five (5) years
and renewable at the option of Convey Advertising for additional
five (5) year terms at the prevailing market rent;
(b) the owner thereof shall not sell the property within three (3) years
after the date of this Agreement without the prior written consent
of XFM which consent may be withheld for any reason;
(c) at the additional consideration of One Hundred Hong Kong Dollars,
(HK$100) grant to Convey Advertising or such other party designated
by XFM an option to purchase the property at market price determined
by a third party appraiser and a right of first offer for the
purchase of the property at a price and on terms no less favourable
than those offered to third parties; and
(d) the owner thereof shall notify Convey Advertising and XFM of any
notices from Governmental Entities or the incorporated owners of the
building or any other notice it receives in respect of the property.
5.6 eConvey. Prior to the Closing Date, eConvey shall have assigned to Convey
Advertising all agreements with Clients for the provision of sign display,
advertising and advertising services and shall have paid to Convey
Advertising all amounts paid, payable or otherwise outstanding from the
Clients thereunder and shall hold all additional payments it receives in
trust for and pay the same at the direction of Convey Advertising and hold
all rights benefits and interests in such agreements in trust for the
benefit of Convey Advertising.
5.7 Joint and Several Liability. All obligations and liabilities of the Vendor
and the Covenantor or any one of them hereunder, howsoever stated, shall
be the joint and several obligations and liabilities of each of the Vendor
and Covenantor.
5.8 Minimum Advertising Signs. The Vendor and Covenantor shall procure that
Convey Advertising will own, lease, license or otherwise have the right to
operate such numbers of signs and billboards with the advertising area and
in such format and in each area as set forth in Schedule R continuously
throughout the period of seven (7) years from the Closing Date PROVIDED
THAT if Convey Advertising shall not own, lease, license or otherwise have
the right to operate any of the signs and billboards set forth in Schedule
R (the "LOST BILLBOARD"), the Vendor and Covenantor shall immediately
replace the Lost Billboard with another one which generates monthly
revenues not less than 75% of that of the average generated by the Lost
Billboard in the prior 12 months and with a minimum gross profit margin of
25%.
5.9 Operating Facilities.
(a) The Vendor and Covenantor shall obtain consents from the lenders
under the Operating Facilities in respect of the sale and purchase
contemplated hereunder as soon as practicable.
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(b) The Vendor and Covenantor shall procure ST Mak, WS ▇▇▇, ▇▇▇▇▇▇▇,
Kincross Inc., King Glare Limited, Janocean Investment Limited,
Excel Kind Limited, Group World Limited, Freder Sign Centre Limited,
Ad-Prom Specialty Ltd. and any other Person controlled by any of
them to maintain the security required by the lenders under the
Operating Facilities for an aggregate minimum principal amount of
Ten Million Hong Kong Dollars (HK$10,000,000) for a period of not
less than six (6) months following the Closing.
(c) The Covenantor shall maintain sufficient security required by the
lenders under the Operating Facilities for an aggregate minimum
principal amount of Ten Million Hong Kong Dollars (HK$10,000,000)
for a period of not less than seven (7) years following the Closing.
5.10 Equipment Finance. As soon as practicable, the Company shall procure
Convey Advertising to repay all amounts outstanding and discharge all
obligations under the Equipment Finance.
5.11 Equity Transfer. The Vendor and Covenantor shall procure that the Equity
Transfer is duly completed and all documents required to be filed with or
delivered to Governmental Entities shall be so filed or delivered and
obtain and complete all approvals, registration and permits for the Equity
Transfer pursuant to Clause 3.
5.12 Payment to Vendor. The Company shall procure the payment of an amount up
to Eighteen Million Dollars (HK$18,000,000) noted as a payable to the
Vendor in the balance sheet of Convey Advertising. When receivables which
are due and payable as stated on the May 31 Statements are received by
Convey Advertising in any month, such amount shall be paid by Convey
Advertising to the Vendor in the following month until the total of such
payments equal Eighteen Million Dollars (HK$18,000,000).
5.13 "Convey" Name. As soon as practicable following the Closing, the Vendor
and Covenantor shall procure that all companies Controlled by any of them
or any of the Mak Principals bearing the name "Convey", "eConvey" or the
letters "convey" expressed in that order shall be changed so that there
shall be no reference to "convey" in their names.
5.14 Holdings Office. As soon as practicable, the Vendor and Covenantor shall
procure the execution and delivery by the tenant to Convey Holdings a
sublease of the office premises used by Convey Holdings from WT Finance
Limited of the office premises used by it for HK$60,000 per month
inclusive of all management fees, rates, utilities, etc. for the remainder
of the term under the lease from Artview Properties Limited.
5.15 Management Contracts. As soon as practicable, the Vendor and Covenantor
shall procure the execution and delivery of the Management Contracts by
the Mak Principals.
5.16 ST Mak's Covenants. As soon as practicable, the Vendor and Covenantor
shall procure the execution and delivery a deed or agreement in favour of
XFM and the
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Company making representations, covenants and indemnities in substantially
the same form as the Principal's Covenants.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE VENDOR AND THE COVENANTOR
The Vendor and the Covenantor hereby jointly and severally represent and
warrant and covenant to XFM that the following statements are and will be
true and correct as of the date hereof and the Closing Date:
6.1 The Company. In respect of each of the Company, Convey Advertising and
Convey Holdings:
(a) Organization, Standing, and Power. It is a company duly organized,
validly existing, and in good standing under the laws of British
Virgin Islands (in the case of the Company) and Hong Kong (in the
case of Convey Advertising and Convey Holdings), has all requisite
corporate power and authority to carry on its businesses, and is
duly qualified and in good standing to do business in each
jurisdiction in which it conducts business. It has made available to
XFM complete and correct copies of its articles of incorporation,
bylaws, registers and/or other organizational documents ("COMPANY
CHARTER DOCUMENTS") of it, in each case, as amended to the date
hereof.
(b) Corporate Records. Its minute books and corporate records, complete
and correct copies of which have been made available to XFM, contain
correct and complete records of all proceedings and actions taken at
all meetings of, or effected by written consent of its shareholders
and its board of directors and all original issuances and subsequent
transfers, repurchases, and cancellations of its shares.
(c) Capital Structure.
(i) Immediately prior to and following Closing Date its issued
share capital will be as set forth in Schedule C and Schedule
D, respectively.
(ii) There are no options, warrants, calls, conversion rights,
commitments, agreements, contracts, restrictions, or rights of
any character to which it is a party or by which it may be
bound obligating company to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares, or
obligating it to grant, extend or enter into any such option,
warrant, call, conversion right, commitment, agreement,
contract, understanding, restriction, arrangement or right. It
does not have outstanding any bonds, debentures, notes or
other indebtedness.
(iii) None of its shares are beneficial owned or controlled by any
Chinese nationals or residents.
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(d) Branches. It does not presently own or control, directly or
indirectly, any interest in any other corporation, association, or
other business entity, and is not a participant in any joint
venture, partnership, or similar arrangement, except as set forth in
Schedule C. Its particulars as set forth in Schedule C are true and
accurate in all respects and the percentage of its share capital
shown therein as owned or controlled by it is beneficially owned and
clear of all Encumbrances. There is no agreement or arrangement in
force which calls for the present or future issue or sale of, or
grant to any Person the right (whether conditional or otherwise) to
call for the issue, sale or transfer of any of its share or loan
capital (including any of its option, notes, warrants or other
securities or rights convertible or ultimately convertible into
shares or equity interests).
(e) Authority. The execution, delivery, and performance of this
Agreement by the Company have been duly authorized by all necessary
action of its board of directors. Certified copies of the
resolutions adopted by the Company's board of directors approving
this Agreement and transactions contemplated hereby and thereby have
been provided to XFM.
(f) Execution. The Company's execution and delivery of this Agreement
shall constitute valid, binding, and enforceable obligations of it
in accordance with their terms, except to the extent that
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the
enforcement of creditors' rights generally and by general principles
of equity, regardless of whether such enforceability is considered
in a proceeding at law or in equity.
(g) Compliance with Laws and Other Instruments. It holds, and at all
times has held, all licenses, permits, and authorizations from all
governmental entities necessary for the lawful conduct of its
business pursuant to all applicable statutes, laws, ordinances,
rules, and regulations of all such authorities having jurisdiction
over it or any part of its operations. Except as disclosed in the
Disclosure Schedule, there are no violations or claimed violations
of any such license, permit, or authorization, or any such statute,
law, ordinance, rule or regulation.
(h) Corporate Governance. Neither the execution and delivery of nor the
performance by it of its obligations under this Agreement will (i)
conflict with or result in any breach of its Company Charter
Documents; (ii) require any Consent, (iii) conflict with, result in
a breach or default of, or give rise to any right of termination,
cancellation or acceleration or result in the creation of any lien,
charge, encumbrance, or restriction upon any of the properties or
assets of it or its shares under, any law, statute, rule,
regulation, judgment, decree, order, government permit, license or
order or any mortgage, indenture, note, license, trust, agreement or
other agreement, instrument or obligation to which it is a party.
- 23 -
(i) Technology and Intellectual Property Rights.
(i) Schedule E contains a list of the Intellectual Property
which includes the following:
(A) all patents, domain names, trademarks, trade names,
trade dress and service marks, and any applications
and registrations for any of the foregoing, that is
included in the Owned Intellectual Property;
(B) all registered copyrights, and applications for
registered copyrights for any Owned Intellectual
Property;
(C) all material products and services that currently
are published and/or offered by the company, or that
are currently under development by the company and
scheduled to be commercially released or offered
within six (6) months of the Closing Date;
(D) all material licenses and sublicenses of Owned
Intellectual Property;
(E) all Licensed Intellectual Property (other than
license agreements for standard "shrink wrapped, off
the shelf," commercially available, third party
products used by the company) and any sublicenses
thereto; and
(F) any material obligation of exclusivity,
non-competition, non-solicitation, first negotiation
or "most favoured nation" or "equally favoured
nation" (e.g. obligating the company to provide
terms as favourable or more favourable as granted to
others) to which the company is subject under any
agreement that does not fall within the ambit of (D)
or (E) in this paragraph.
(ii) The company owns or has the right to use all Intellectual
Property used or held for use in the conduct of its
business without any conflict with the rights of others.
All products and technology that have been or currently are
published and/or offered by the company or are under
development by the company, and all products and/or
technology underlying any and all services that have been
or currently are offered by the company or are under
development by the company is either: (1) owned by the
company, (2) in the public domain, or (3) rightfully used
by the company pursuant to a valid written license or other
agreement.
(iii) The company is not, as a result of the execution or
delivery of this Agreement, nor performance of the Parties'
obligations under this Agreements will the company be in
violation of any license, sublicense or other agreement
relating to the Intellectual Property or of any
non-disclosure agreement to which the company is a party or
otherwise bound.
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(iv) The company is not obligated to provide any financial
consideration or other consideration to any third party,
nor is any third party otherwise entitled to any financial
consideration or other consideration, with respect to any
exercise of rights by the company or its successors in the
Intellectual Property.
(v) The company's use, reproduction, modification,
distribution, licensing, sublicensing, sale, or any other
exercise of rights in any Owned Intellectual Property by
the company or its licensees does not infringe,
misappropriate or violate any copyright, patent, trade
secret, trademark, service ▇▇▇▇, trade name, firm name,
logo, trade dress, database right, moral rights, rights to
use likeness, other intellectual property rights, right of
privacy, right of publicity or right in personal or other
data of any Person. Further, except as set forth in the
Disclosure Schedule, the use, reproduction, modification,
distribution, licensing, sublicensing, sale, or any other
exercise of rights in any Licensed Intellectual Property or
any other authorized exercise of rights in or to Licensed
Intellectual Property by the company or their licensees
does not infringe, misappropriate or violate any copyright,
patent, trade secret, trademark, service ▇▇▇▇, trade name,
firm name, logo, trade dress, moral right, database right,
other intellectual property right, right of privacy, right
of publicity or right in personal or other data of any
Person. Further, the distribution, licensing, sublicensing,
sale, or other provision of products and services by the
company or its resellers or licensees does not infringe,
misappropriate or violate any copyright, patent, trade
secret, trademark, service ▇▇▇▇, trade name, firm name,
logo, trade dress, moral right, database right, other
intellectual property right, right of privacy, right of
publicity or right in personal or other data of any Person.
(vi) No action, suit or proceeding (i) challenging the validity,
enforceability, or ownership by the company of any of Owned
Intellectual Property or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution,
licensing, sublicensing, sale or any other exercise of
rights in any Owned Intellectual Property by the company or
its licensees infringes, misappropriate or violates any
intellectual property or other proprietary or personal
right of any Person is pending or is threatened by any
Person. Further, no claim to the effect that the
distribution, licensing, sublicensing, sale or other
provision of products and services by the company or its
resellers or licensees infringes, misappropriates or
violates any intellectual property or other proprietary or
personal right of any Person is pending or is threatened by
any Person. There is no unauthorized use, infringement or
misappropriation of any of Owned Intellectual Property by
any third party, employee or former employee.
(vii) No other party has any security interests in any
Intellectual Property.
- 25 -
(viii) The company has secured from all parties who have created
any portion of, or otherwise have any rights in or to,
Owned Intellectual Property, other than employees of the
company whose work product was created by them entirely
within the scope of their employment by the company and
constitutes work made for hire owned by the company, valid
written assignments or licenses of any such work or other
rights to the company that are enforceable by the company
and has made available true and complete copies of such
assignments or licenses to XFM.
(ix) The company owns all right, title and interest in and to
all data the company collect from or discloses about users
of its products and services. The company's practices
regarding the collection and use of consumer personal
information are in accordance in all respects with
applicable laws and regulations of all jurisdictions in
which the company operates.
(x) No officer, director, stockholder or employee of the
company, nor any spouse, or relative thereof, owns directly
or indirectly, in whole or in part, any Intellectual
Property.
(xi) The Company has not transferred, assigned, disposed in any
manner of any Intellectual Property.
(j) Financial Statements. There are no liabilities, claims or
obligations against the company of any nature in excess of
US$5,000, whether absolute, contingent, anticipated or otherwise,
whether due or to become due, that are not shown in the May 31
Statements. The latest audited accounts for each of Convey
Advertising and Convey Holdings are attached as Schedule S.
(k) Accounts Receivable. All of the accounts receivable shown in the
May 31 Statements as of the Closing Date will have arisen out of
bona fide transactions of the company in the ordinary course of
business and have been collected or are good and collectible in
the aggregate recorded amounts thereof (less the allowance for
doubtful accounts also appearing in such May 31 Statements and net
of returns and payment discounts allowable by the company's
policies) and can reasonably be anticipated to be paid in full
without outside collection efforts within ninety (90) days of the
due date.
(l) Taxes.
(i) The company has timely filed (or caused to be filed) all
tax returns ("RETURNS") required to be filed by it. All
taxes required to be paid (whether or not shown on any
Return) in respect of the periods covered by such Returns
("RETURN PERIODS") have been paid or fully accrued up until
Closing Date. The company has not requested or been granted
any extension of time to file any Return. The Vendor has
made available to XFM true and correct copies of all
Returns, and all material correspondence with any taxing
authority.
- 26 -
(ii) No deficiencies or adjustments for any tax of the company
has been claimed, proposed or assessed or threatened in
writing and not paid. There is currently no claim
outstanding by an authority in a jurisdiction where the
company does not file Returns that the company is or may be
subject to taxation by that jurisdiction. The company is
not subject to any pending or threatened tax audit or
examination. The company has not entered into any
agreements, waivers or other arrangements in respect of the
statute of limitations in respect of its taxes or Returns.
(iii) For the purposes of this Agreement, the terms "tax" and
"taxes" shall include all taxes, assessments, duties,
tariffs, registration fees, and other governmental charges
in the nature of taxes including, all income, franchise,
property, production, sales, use, payroll, license,
windfall profits, value added, severance, withholding,
excise, gross receipts and other taxes, as well as any
interest, additions or penalties relating thereto and any
interest in respect of such additions or penalties.
(iv) There are no liens for taxes upon the assets of the company
except for taxes that are not yet payable. The company has
withheld all taxes required to be withheld in respect of
wages, salaries and other payments to all employees,
officers and directors and any taxes required to be
withheld from any other Person and has timely paid all such
amounts withheld to the proper taxing authority.
(m) Absence of Certain Changes and Events. Since the May 31 Statements
and except as expressly provided herein, there has not been:
(i) any transaction involving more than US$5,000 for a single
transaction entered into by the company other than in the
ordinary course of business;
(ii) any declaration, payment, or setting aside of any dividend
or other distribution to or for any of the holders of any
equity interest;
(iii) any termination, modification, or rescission of, or waiver
by the company of rights under, any contract having or
reasonably likely to have a Material Adverse Change on the
business of the company;
(iv) any discharge or satisfaction by the company of any lien or
encumbrance, or any payment of any obligation or liability
(absolute or contingent) other than liabilities shown on
the May 31 Statements and liabilities incurred since the
date of the May 31 Statements in the ordinary course of
business;
(v) any mortgage, pledge, imposition of any security interest,
claim, encumbrance, or other restriction created on any of
the assets, tangible or intangible, of the company having
or reasonably likely to have a Material Adverse Change on
the business of the company;
- 27 -
(vi) any settlement amount of any claim, dispute, suit,
proceeding or investigation regarding the company; or
(vii) any event or condition resulting in a Material Adverse
Change on the business of the company.
(n) Leases in Effect; Real Estate.
(i) All real property leases and subleases to which the company
is a party and any amendments or modifications thereof are
listed in Schedule F (each a "LEASE" and, collectively, the
"LEASES"). The company has a valid leasehold interest under
such Leases. There are no existing defaults, and the
company has not received or given any written notice of
default or claimed default with respect to or received any
order, notice, or other notification from any Governmental
Entity in respect of any Lease or property related thereto
and there is no event that with notice or lapse of time, or
both, would constitute a default thereunder. All real
property occupied by the company is subject to a written
lease. The company holds no interest in real property other
than the Leases and the Mak Property. All covenants
stipulations and conditions affecting the properties under
the Leases have been observed and performed and there are
no known circumstances which will entitle or require any
landlord to exercise any powers of entry or to take
possession or which would otherwise restrict or terminate
the continued possession or occupation of any of the said
properties. The properties which are the subject matters of
the Leases and the Mak Properties comprise all the land and
premises used or occupied by the Group and all the rights
vested in the Group relating to any land and premises at
the date hereof and the Group does not require any other
real property to carry on all of the business currently
carried on by it.
(ii) Each counterparty to the Leases is the registered owner of
the property to which the Lease relates (the collectively
the "LEASED REAL PROPERTIES") and there are appurtenant to
each Leased Real Property all rights and easements
necessary for its exclusive use and enjoyment and Convey
Advertising has the absolute right to the use, occupation
and enjoyment of the Leased Real Properties.
(iii) There is no defect in title to any of the Leased Real
Properties and, if required by XFM, the Vendor shall, at
its sole expense, procure Convey Advertising to deduce good
title to XFM in respect of all or any of the Leased Real
Properties.
(iv) The Leased Real Properties and the Owned Real Properties
comprise all the land and premises leased, used or occupied
by the Group and all the rights vested in the Group
relating to any land and premises at the date hereof.
(v) There are no rights, interests, conditions, reservations,
licences, options,
- 28 -
encumbrances, exceptions, covenants restrictions
stipulations easements or quasi easements, privileges or
any other matters or things known to the Vendor and the
Covenantor which may adversely affect the company's use of
the Leased Real Properties or any part thereof for the
purposes of the business and use now being carried on at or
in connection with the Leased Real Properties or which are
of an onerous or unusual nature or which conflict with the
present user and use thereof or any part thereof.
(vi) There are no disputes or outstanding or expected notices
(whether given by the lessor, the incorporated owners,
management company, a Governmental Entity or any other
Person) affecting the Leased Real Property in all material
respects;
(vii) There are no proposals, orders, acts or things made and
done or intended to be made or done by any Governmental
Entity or any other competent authority concerning all or
any part of any Leased Real Property or which would
adversely affect the use or value of the same or any part
thereof.
(o) Owned Real Property.
(i) The particulars of the Owned Real Properties shown in
Schedule P and Schedule W are true and correct and the
parties set out on Schedule P and Schedule W opposite each
property is the registered owner of and has good and
marketable title to each Owned Real Property which it owns
free from any encumbrance with no adverse rights thereon
and there are appurtenant to each Owned Real Property all
rights and easements necessary for its exclusive use and
enjoyment and Convey Advertising has the absolute right to
the use, occupation and enjoyment of the Owned Real
Property.
(ii) There is no defect in title to any of the Owned Real
Property and, if required by XFM, the Vendor shall, at its
sole expense, procure the Convey Advertising to deduce good
title to XFM in respect of all or any of the Owned Real
Property.
(iii) There are no rights, interests, conditions, reservations,
licences, mortgages, charges, options, encumbrances,
exceptions, covenants restrictions stipulations easements
or quasi easements, privileges or any other matters or
things which may adversely affect the company's use of the
Owned Real Property or any part thereof for the purposes of
the business now being carried on at or in connection with
the Owned Real Property or which are of an onerous or
unusual nature or which conflict with the present user
thereof or any part thereof or materially affect the value
of such Owned Real Property or any part thereof.
(iv) There are no disputes or outstanding or expected notices
(whether given by a lessor, a licensor, a Governmental
Entity or any other
- 29 -
Person) affecting the Owned Real Property;
(v) There are no proposals, orders, acts or things made and
done or intended to be made or done by any Governmental
Entity or any other competent authority concerning all or
any part of any Owned Real Property or which would
adversely affect the use or value of the same or any part
thereof.
(p) personal Property. The company has valid title, free and clear of
all title defects, security interests, pledges, options, claims,
liens, and encumbrances of any nature whatsoever to all inventory,
receivables, furniture, machinery, equipment, and other personal
property, tangible or otherwise, reflected on the May 31
Statements, except for acquisitions and dispositions since the
date of the May 31 Statements in the ordinary course of business
and not exceeding US$1,000.
(q) Litigation and Other Proceedings. Except as set forth in Schedule
Q, none of the company nor any of its past or present officers,
directors, or employees, is a party to any pending or, threatened
action, suit, labour dispute (including any union representation
proceeding), proceeding, investigation, or discrimination claim in
or by any court or governmental board, commission, agency,
department, or officer, or any arbitrator, arising from the
actions or omissions of the company or affecting any properties,
assets or capital of the company, nor is there any reasonable
basis for any such action, suit, labour dispute, proceeding,
investigation or discrimination claim, or, in the case of an
individual, from acts in his or her capacity as an officer,
director, employee, agent or contractor of the company. Except as
set forth in Schedule Q, the company is not a named party to any
order, writ, judgment, decree, or injunction.
(r) No Defaults. Except as set forth in Schedule Q, the company is and
has not received written notice that it would be with the passage
of time, in default or violation of any term, condition, or
provision of (i) its Company Charter Documents; (ii) any judgment,
decree, or order to which the company is a named party; or (iii)
any loan or credit agreement, note, bond, mortgage, indenture,
contract, agreement, lease, license, or other instrument to which
the company is now a party or by which it or any of its properties
or assets is bound, except for defaults and violations which have
been cured or, individually or in the aggregate, would not have a
Material Adverse Change on the business of the company.
(s) Material Contracts. Except for the agreements set forth in
Schedule G (the "MATERIAL CONTRACTS") the company is not a party
to or bound by:
(i) Any employment contract or arrangement providing for annual
salary in excess of US$20,000 with any officer or employee
or with any consultant or director providing for annual
compensation in excess of US$20,000;
- 30 -
(ii) Any plan or contract or arrangement, written or oral,
providing for bonuses, pensions, deferred compensation,
retirement payments, profit-sharing, severance,
acceleration of vesting of benefits, payments upon change
of control events, or the like;
(iii) Any joint venture contract or arrangement or any other
agreement that has involved or is expected to involve a
sharing of profits;
(iv) Advertising, marketing or distribution agreement, agency
agreement, license, sales or service agreement, management
or sign display, printing, production, construction,
installation or use agreement, reproduction or replication
agreement or manufacturing agreement in which the amount
involved exceeds annually, US$50,000 or pursuant to which
the company has granted or received manufacturing rights,
most favoured nation pricing provisions, or exclusive
marketing, reproduction, publishing or distribution rights
related to any product, group of products or territory;
(v) Any agreement, franchise, or indenture where the amount of
consideration payable thereunder is greater than US$50,000
in any year during the term of such agreement, franchise or
indenture and which has not been terminated or performed in
its entirety and not renewed which may be, by its terms,
terminated, impaired, or adversely affected by reason of
the execution of this Agreement, Closing Date, or the
consummation of the transactions contemplated;
(vi) Any license, permit, or authorization which has not been
terminated or performed in its entirety and not renewed
which may be, by its terms, terminated, impaired, or
adversely affected by reason of the execution of this
Agreement, the Closing Date or the consummation of the
transactions contemplated;
(vii) Except for trade indebtedness incurred in the ordinary
course of business, any instrument evidencing or related in
any way to indebtedness incurred in the acquisition of
companies or other entities or indebtedness for borrowed
money by way of direct loan, sale of debt securities,
purchase money obligation, conditional sale, guarantee, or
otherwise which individually is in the amount of US$5,000
or more; or
(viii) Any contract containing covenants purporting to limit the
company's freedom to compete in any line of business in any
geographic area.
All Material Contracts are valid and in full force and effect and
the company has not, nor has any other party thereto, breached any
material provisions of, or entered into default in any material
respect under the terms thereof other than such beaches or
defaults that have been cured or that would not cause a Material
Adverse Change to the assets or business of the company. The
Vendor and the Covenantor have made available to XFM a copy of
each Material Contract specified in Schedule G together with all
amendments,
- 31 -
material written waivers or other material written changes
thereto. All the material contracts as set forth under Schedule G
are valid and in full force and effect and the Vendor and
Covenantor are not aware of any facts or events which may result
in any of the Material Contracts to be terminated or nonrenewable
prior to expiry by the relevant parties.
(t) Assets. The company has legal and beneficial ownership of all
assets owned, possessed or used by the company as indicated in the
May 31 Statements free and clear of any Encumbrances. No other
Person owns any such property and assets which are being used by
the company except for the leased property and personal property
leased by the company pursuant to the Material Contracts.
(u) Material Relations. None of the parties to any of the Material
Contracts have in any way expressed to the company or the Vendor
any intent to reduce the amount of or terminate its business with
the company in the future.
(v) Insurance and Banking Facilities. The company has in place valid
and enforceable contracts of insurance to cover third party
liability for all signs and billboards with loss payable for any
single event not less than HK$20,000,000. Schedule H contains a
complete and correct list of (i) all contracts of insurance or
indemnity of the company in force at the date of this Agreement
(including name of insurer or indemnitor, agent, annual premium,
coverage, deductible amounts, and expiration date) and (ii) the
names and locations of all banks in which the company has accounts
or safe deposit boxes, the designation of each such account and
safe deposit box, and the names of all Persons authorized to draw
on or have access to each such account and safe deposit box. All
premiums and other payments due from the company with respect to
any such contracts of insurance or indemnity have been paid, and
there are no act, or failures to act that has or might cause any
such contract to be cancelled or terminated. All known claims for
insurance or indemnity have been presented. The company has
complied with the terms of all insurance contracts or policies.
(w) Employees. The company has no written or oral contract of
employment or other employment agreement with any of its employees
(including any contracts relating to the temporary use or loaning
of employees) that are not terminable at will by the company
without payment of severance or termination payments or benefits.
The company is not a party to any pending or threatened labour
dispute concerning the company's business or employment practices
or the subject of any organizing drive, labour grievance or
petition to certify a labour union. The company has complied with
in all material aspects all applicable laws, treaties, ordinances,
rules, and regulations and requirements relating to the employment
of labour. There are no claims pending or threatened to be brought
against the company, in any court or administrative agency by any
former or current employees of the company. The company has made
all required contributions under the applicable laws in respect of
wages, salaries, provident and pension funds and other payments
and entitlements to all employees, officers and directors and has
timely paid all such amounts to the proper Governmental Entity or
authority.
- 32 -
(x) Certain Agreements. Neither the execution and delivery of this
Agreement nor the performance of its obligations contained in them
will: (i) result in any payment by the company (including severance,
unemployment compensation, parachute payment, bonus or otherwise)
becoming due to any director, employee, or independent contractor of
the company under any employee benefit plan, agreement, or
otherwise, (ii) increase any benefits otherwise payable under any
employee benefit plan or agreement, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(y) Guarantees and Suretyships. The company has no powers of attorney
outstanding and the company has no obligations or liabilities
(absolute or contingent) as guarantor, surety, co-signer, endorser,
co-maker, or otherwise respecting the obligations or liabilities of
any Person, corporation, partnership, joint venture, association,
organization, or other entity other than as an endorser of
negotiable instruments in the ordinary course of business.
(z) Absence of Questionable Payments. None of the company nor any of its
respective Affiliates, directors, officers, agents, employees or
other Persons acting on its behalf, has used any corporate or other
funds for unlawful contributions, payments, gifts, or entertainment,
or made any unlawful expenditures relating to political activity to
government officials or others or established or maintained any
unlawful or unrecorded funds. None of the company nor any of its
respective Affiliates, directors, officers, agents, employees or
other Persons acting on their behalf, has accepted or received any
unlawful contributions, payments, gifts, or expenditures.
(aa) Minimum Advertising Signs. Convey Advertising owns, leases, licenses
or otherwise has the right to operate such numbers of billboards
with the advertising area and in such format and in each area as set
forth in Schedule R.
(ab) Mak Properties. Convey Advertising has valid and subsisting
exclusive leases or, at the option of Convey Advertising, licenses
for no charge as contemplated under this Agreement to occupy and use
the Mak Properties for the erection of signs, billboards, antennas,
transmission towers and other fixtures, affix other equipment,
display, electrical or electronic apparatus or for any other use
whatsoever and the necessary easements and rights of way to access
the Mak Properties.
6.2 PRC Group. In respect of the WFOE and Beijing Ad Co (in each case,
referred to as the "company" in this Clause 6.2):
(a) Organization, Standing, and Power. It is a wholly foreign owned
enterprise (in the case of the WFOE) and a domestic company (in the
case of Beijing Ad Co and its branches) duly organized, validly
existing, and in good standing under the laws of the PRC, have all
requisite corporate power and authority to carry on its businesses,
and is duly qualified and in good standing to do business in each
jurisdiction in which it conducts business. The company has made
available to XFM complete and correct copies of the company's
articles of
- 33 -
incorporation ("PRC CHARTER DOCUMENTS"), in each case, as amended to
the date hereof.
(b) Corporate Records. The complete and correct copies of the minute
books and corporate records of the company which has been filed with
the local authorities including, but not limited to, the Industry
and Commerce have been made available to XFM and are materially
complete, correct and accurate.
(c) Capital Structure.
(i) Immediately prior to Closing Date, the capital structure of
each of the members of the PRC Group shall be as set forth in
Schedule C.
(ii) There are no options, warrants, calls, conversion rights,
commitments, agreements, contracts, restrictions, or rights of
any character to which the company is a party or by which the
company may be bound obligating to issue, deliver or sell, or
cause to be issued, delivered or sold, additional equity
interest, or obligating the company to grant, extend or enter
into any such option, warrant, call, conversion right,
commitment, agreement, contract, understanding, restriction,
arrangement or right. The company has no outstanding bonds,
debentures, notes or any indebtedness.
(iii) Convey Nominee is the sole owner of all interests in and to
Beijing Ad Co free and clear of all Encumbrances and, except
any rights in favour of XFM in this Agreement, no other party
has any rights, now existing or contingent, whether or not
exercised or claimed and whether or not by exercise of the
power of any Governmental Entity, to any interest in the
company.
(iv) the Vendor and the Covenantor do not presently own or control,
directly or indirectly, any interest in any other corporation,
association, or other business entity, and is not a
participant in any joint venture, partnership, or similar
arrangement which carries on businesses in competition with
the Group.
(v) The Company does not require the direct or indirect ownership
or control of any entity in the PRC other than the WFOE and
Convey Nominee and his ownership of Beijing Ad Co to carry on
the business of the Group in the PRC as currently carried on
by it.
(d) Branches. Beijing Ad Co does not presently own or control, directly
or indirectly, any interest in any other corporation, association,
or other business entity, and is not a participant in any joint
venture, partnership, or similar arrangement. The particulars of the
company set forth in Schedule C are true and accurate in all
respects and the percentage of the equity interest shown therein as
owned or controlled by any party is beneficially owned free from any
Encumbrance, save as contained in the Group Structure Agreements.
Save as expressly provided in the Group Structure Agreements, there
is no
- 34 -
agreement or arrangement in force which calls for the present or
future issue or sale of, or grant to any Person the right (whether
conditional or otherwise) to call for the issue, sale or transfer of
any share or loan capital of the company (including any option,
notes, warrants or other securities or rights convertible or
ultimately convertible into shares or equity interests in the
company).
(e) Compliance with Laws and Other Instruments. The company holds all
material licenses, permits, and authorizations from all governmental
entities necessary for the lawful conduct of its business pursuant
to all applicable statutes, laws, ordinances, rules, and regulations
of all such authorities having jurisdiction over it or any part of
its operations including without limitation the Licences as set
forth under Schedule N or the failure to obtain such licenses shall
have a Material Adverse Change on the business or assets of the
company. Except as set forth in the Disclosure Schedule, The company
has duly and promptly performed all requisite inspections including,
but not limited to, annual inspections by any Governmental Entity
for the lawful conduct of its business and its operation and for it
to validly and legally hold all its licenses, permits and
authorizations.
(f) Corporate Governance. Neither the execution and delivery of this
Agreement nor the performance by the company of its obligations
under this Agreement will (i) conflict with or result in any breach
of the PRC Charter Documents; (ii) require any Consent by any
Governmental Entity, (iii) conflict with, result in a breach or
default of, or give rise to any right of termination, cancellation
or acceleration or result in the creation of any lien, charge,
encumbrance, or restriction upon any of the properties or assets of
the company or equity interest in the company under any law,
statute, rule, regulation, judgment, decree, order, government
permit, license or order or any mortgage, indenture, note, license,
trust, agreement or other agreement, instrument or obligation to
which the company is a party.
(g) Technology and Intellectual Property Rights.
(i) Schedule E contains a list of the Intellectual Property which
includes the following:
(A) all patents, domain names, trademarks, trade names,
trade dress and service marks, and any applications and
registrations for any of the foregoing, that is included
in the Owned Intellectual Property;
(B) all registered copyrights, and applications for
registered copyrights for any Owned Intellectual
Property;
(C) all material products and services that currently are
published and/or offered by the company, or that are
currently under development by the company and scheduled
to be commercially released or offered within six (6)
months of the Closing Date;
- 35 -
(D) all material licenses and sublicenses of Owned
Intellectual Property;
(E) all Licensed Intellectual Property (other than license
agreements for standard "shrink wrapped, off the shelf,"
commercially available, third party products used by the
company) and any sublicenses thereto; and
(F) any material obligation of exclusivity, non-competition,
non-solicitation, first negotiation or "most favoured
nation" or "equally favoured nation" (e.g. obligating
the company to provide terms as favourable or more
favourable as granted to others) to which the company is
subject under any agreement that does not fall within
the ambit of (D) or (E) in this paragraph.
(ii) The company owns or has the right to use all Intellectual
Property used or held for use in the conduct of its business
without any conflict with the rights of others. All products
and technology that have been or currently are published
and/or offered by the company or are under development by the
company, and all products and/or technology underlying any and
all services that have been or currently are offered by the
company or are under development by the company is either: (1)
owned by the company, (2) in the public domain, or (3)
rightfully used by the company pursuant to a valid written
license or other agreement.
(iii) The company is not obligated to provide any financial
consideration or other consideration to any third party, nor
is any third party otherwise entitled to any financial
consideration or other consideration, with respect to any
exercise of rights by the company or its successors in the
Intellectual Property.
(iv) The company's use, reproduction, modification, distribution,
licensing, sublicensing, sale, or any other exercise of rights
in any Owned Intellectual Property by the company or its
licensees does not infringe, misappropriate or violate any
copyright, patent, trade secret, trademark, service ▇▇▇▇,
trade name, firm name, logo, trade dress, database right,
moral rights, rights to use likeness, other intellectual
property rights, right of privacy, right of publicity or right
in personal or other data of any Person. Further, except as
set forth in the Disclosure Schedule, the use, reproduction,
modification, distribution, licensing, sublicensing, sale, or
any other exercise of rights in any Licensed Intellectual
Property or any other authorized exercise of rights in or to
Licensed Intellectual Property by the company or their
licensees does not infringe, misappropriate or violate any
copyright, patent, trade secret, trademark, service ▇▇▇▇,
trade name, firm name, logo, trade dress, moral right,
database right, other intellectual property right, right of
privacy, right of publicity or right in personal or other data
of any Person. Further, the
- 36 -
distribution, licensing, sublicensing, sale, or other
provision of products and services by the company or its
resellers or licensees does not infringe, misappropriate or
violate any copyright, patent, trade secret, trademark,
service ▇▇▇▇, trade name, firm name, logo, trade dress, moral
right, database right, other intellectual property right,
right of privacy, right of publicity or right in personal or
other data of any Person.
(v) No action, suit or proceeding (i) challenging the validity,
enforceability, or ownership by the company of any of Owned
Intellectual Property or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution,
licensing, sublicensing, sale or any other exercise of rights
in any Owned Intellectual Property by the company or its
licensees infringes, misappropriate or violates any
intellectual property or other proprietary or personal right
of any Person is pending or is threatened by any Person.
Further, no claim to the effect that the distribution,
licensing, sublicensing, sale or other provision of products
and services by the company or its resellers or licensees
infringes, misappropriates or violates any intellectual
property or other proprietary or personal right of any Person
is pending or is threatened by any Person. There is no
unauthorized use, infringement or misappropriation of any of
Owned Intellectual Property by any third party, employee or
former employee.
(vi) No other party has any security interests in any Intellectual
Property.
(vii) The company has secured from all parties who have created any
portion of, or otherwise have any rights in or to, Owned
Intellectual Property, other than employees of the company
whose work product was created by them entirely within the
scope of their employment by the company and constitutes work
made for hire owned by the company, valid written assignments
or licenses of any such work or other rights to the company
that are enforceable by the company and has made available
true and complete copies of such assignments or licenses to
XFM.
(viii)The company owns all right, title and interest in and to all
data the company collect from or discloses about users of its
products and services. The company's practices regarding the
collection and use of consumer personal information are in
accordance in all respects with applicable laws and
regulations of all jurisdictions in which the company
operates.
(ix) No officer, director, stockholder or employee of the company,
nor any spouse, or relative thereof, owns directly or
indirectly, in whole or in part, any Intellectual Property.
(x) The company has not transferred, assigned, disposed in any
manner of any Intellectual Property.
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(h) Financial Statements. There are no liabilities, claims or
obligations against the company of any nature in excess of US$5,000,
whether absolute, contingent, anticipated or otherwise, whether due
or to become due, that are not shown in the May 31 Statements.
(i) Accounts Receivable. All of the accounts receivable shown in the May
31 Statements as of the Closing Date will have arisen out of bona
fide transactions of the company in the ordinary course of business
and have been collected or are good and collectible in the aggregate
recorded amounts thereof (less the allowance for doubtful accounts
also appearing in such May 31 Statements and net of returns and
payment discounts allowable by the company's policies) and can
reasonably be anticipated to be paid in full without outside
collection efforts within two hundred seventy (270) days of the due
date.
(j) Taxes.
(i) The company has timely filed (or caused to be filed) all tax
returns ("PRC RETURNS") required to be filed by it. All taxes
required to be paid (whether or not shown on any Return) in
respect of the periods covered by such PRC Returns ("PRC
RETURN PERIODS") have been paid or fully accrued up until
Closing Date. The company has not requested or been granted
any extension of time to file any PRC Return. The Vendor and
the Covenantor have made available to XFM true and correct
copies of all PRC Returns, and all material correspondence
with any taxing authority.
(ii) No deficiencies or adjustments for any tax of the company has
been claimed, proposed or assessed or threatened in writing
and not paid. There is currently no claim outstanding by an
authority in a jurisdiction where the company does not file
PRC Returns that the company is or may be subject to taxation
by that jurisdiction. The company is not subject to any
pending or threatened tax audit or examination. The company
has not entered into any agreements, waivers or other
arrangements in respect of the statute of limitations in
respect of its taxes or PRC Returns.
(iii) For the purposes of this Agreement, the terms "tax" and
"taxes" shall include all taxes, assessments, duties, tariffs,
registration fees, and other governmental charges in the
nature of taxes including, all income, franchise, property,
production, sales, use, payroll, license, windfall profits,
value added, severance, withholding, excise, gross receipts
and other taxes, as well as any interest, additions or
penalties relating thereto and any interest in respect of such
additions or penalties.
(iv) There are no liens for taxes upon the assets of the company
except for taxes that are not yet payable. The company has
withheld all taxes required to be withheld in respect of
wages, salaries and other payments to all employees, officers
and directors and any taxes required to be
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withheld from any other Person and has timely paid all such
amounts withheld to the proper taxing authority.
(k) Absence of Certain Changes and Events. Since the May 31 Statements,
there has not been:
(i) Any transaction involving more than US$5,000 for a single
transaction entered into by the company other than in the
ordinary course of business;
(ii) Any declaration, payment, or setting aside of any dividend or
other distribution to or for any of the holders of any equity
interest;
(iii) Any termination, modification, or rescission of, or waiver by
the company of rights under, any contract having or reasonably
likely to have a Material Adverse Change on the business of
the company;
(iv) Any discharge or satisfaction by the company of any lien or
encumbrance, or any payment of any obligation or liability
(absolute or contingent) other than liabilities shown on the
May 31 Statements and liabilities incurred since the date of
the May 31 Statements in the ordinary course of business;
(v) Any mortgage, pledge, imposition of any security interest,
claim, encumbrance, or other restriction created on any of the
assets, tangible or intangible, of the company having or
reasonably likely to have a Material Adverse Change on the
business of the company;
(vi) Any settlement amount of any claim, dispute, suit, proceeding
or investigation regarding the company; or
(vii) Any event or condition resulting in a Material Adverse Change
on the business of the company.
(l) Leases in Effect; Real Estate. All real property leases and
subleases to which the company is a party and any amendments or
modifications thereof are listed in Schedule F (each a "PRC LEASE"
and, collectively, the "PRC LEASES"). The company has a valid
leasehold interest under such Leases. There are no existing
defaults, and the company has not received or given any written
notice of default or claimed default with respect to any PRC Lease
and there is no event that with notice or lapse of time, or both,
would constitute a default thereunder. All real property occupied by
the company is subject to a written lease. The company holds no
interest in real property other than the PRC Leases.
(m) Personal Property. The company has valid title, free and clear of
all title defects, security interests, pledges, options, claims,
liens, and encumbrances of any nature whatsoever to all inventory,
receivables, furniture, machinery, equipment, and other personal
property, tangible or otherwise, reflected on the
- 39 -
May 31 Statements, except for acquisitions and dispositions since
the date of the May 31 Statements in the ordinary course of business
and not exceeding US$1,000.
(n) Litigation and Other Proceedings. None of the company nor any of its
past or present officers, directors, or employees, is a party to any
pending or, threatened action, suit, labour dispute (including any
union representation proceeding), proceeding, investigation, or
discrimination claim in or by any court or governmental board,
commission, agency, department, or officer, or any arbitrator,
arising from the actions or omissions of the company or affecting
any properties, assets or capital of the company, nor is there any
reasonable basis for any such action, suit, labour dispute,
proceeding, investigation or discrimination claim, or, in the case
of an individual, from acts in his or her capacity as an officer,
director, employee, agent or contractor of the company. The company
is not a named party to any order, writ, judgment, decree, or
injunction.
(o) No Defaults. The company is and has not received written notice that
it would be with the passage of time, in default or violation of any
term, condition, or provision of (i) its PRC Charter Documents; (ii)
any judgment, decree, or order to which the company is a named
party; or (iii) any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license, or other instrument
to which the company is now a party or by which it or any of its
properties or assets is bound, except for defaults and violations
which have been cured or, individually or in the aggregate, would
not have a Material Adverse Change on the business of the company.
(p) Material Contracts. Except for the agreements set forth in Schedule
G (the "PRC MATERIAL CONTRACTS") the company is not a party to or
bound by:
(i) Any employment contract or arrangement providing for annual
salary in excess of US$10,000 with any officer or employee or
with any consultant or director providing for annual
compensation in excess of US$10,000;
(ii) Any plan or contract or arrangement, written or oral,
providing for bonuses, pensions, deferred compensation,
retirement payments, profit-sharing, severance, acceleration
of vesting of benefits, payments upon change of control
events, or the like;
(iii) Any joint venture contract or arrangement or any other
agreement that has involved or is expected to involve a
sharing of profits;
(iv) Advertising, marketing or distribution agreement, agency
agreement, license, sales or service agreement, management or
sign display, printing, production, construction, installation
or use agreement, reproduction or replication agreement or
manufacturing agreement in which the amount involved exceeds
annually, US$50,000 or pursuant to which the company has
granted or received manufacturing rights,
- 40 -
most favoured nation pricing provisions, or exclusive
marketing, reproduction, publishing or distribution rights
related to any product, group of products or territory;
(vi) Any agreement, franchise, or indenture where the amount of
consideration payable thereunder is greater than US$50,000 in
any year during the term of such agreement, franchise or
indenture and which has not been terminated or performed in
its entirety and not renewed which may be, by its terms,
terminated, impaired, or adversely affected by reason of the
execution of this Agreement, Closing Date, or the consummation
of the transactions contemplated;
(vi) Any license, permit, or authorization which has not been
terminated or performed in its entirety and not renewed which
may be, by its terms, terminated, impaired, or adversely
affected by reason of the execution of this Agreement, the
Closing Date or the consummation of the transactions
contemplated;
(vii) Except for trade indebtedness incurred in the ordinary course
of business, any instrument evidencing or related in any way
to indebtedness incurred in the acquisition of companies or
other entities or indebtedness for borrowed money by way of
direct loan, sale of debt securities, purchase money
obligation, conditional sale, guarantee, or otherwise which
individually is in the amount of US$5,000 or more; or
(viii) Any contract containing covenants purporting to limit the
company's freedom to compete in any line of business in any
geographic area.
All PRC Material Contracts are valid and in full force and effect
and the company has not, nor has any other party thereto, breached
any material provisions of, or entered into default in any material
respect under the terms thereof other than such beaches or defaults
that have been cured or that would not cause a Material Adverse
Change to the assets or business of the company. The Vendor and the
Covenantor have made available to XFM a copy of each PRC Material
Contract specified in Schedule G together with all amendments,
material written waivers or other material written changes thereto.
All the PRC Material Contracts are valid and in full force and
effect and the Vendor and Covenantor are not aware of any facts or
events which may result in any of the PRC Material Contracts to be
terminated or not renewable prior to expiry by the relevant parties.
(q) Assets. The company has legal and beneficial ownership of all assets
owned, possessed or used by the company as indicated in the May 31
Statements free and clear of any Encumbrances. No other Person owns
any such property and assets which are being used by the company
except for the leased property and personal property leased by the
company pursuant to the PRC Material Contracts.
- 41 -
(r) Material Relations. None of the parties to any of the PRC Material
Contracts have in any way expressed to any of the company, the
Vendor or the Covenantor any intent to reduce the amount of or
terminate its business with the company in the future.
(s) Insurance and Banking Facilities. Schedule H contains a complete and
correct list of (i) all contracts of insurance or indemnity of the
company in force at the date of this Agreement (including name of
insurer or indemnitor, agent, annual premium, coverage, deductible
amounts, and expiration date) and (ii) the names and locations of
all banks in which the company has accounts or safe deposit boxes,
the designation of each such account and safe deposit box, and the
names of all Persons authorized to draw on or have access to each
such account and safe deposit box. All premiums and other payments
due from the company with respect to any such contracts of insurance
or indemnity have been paid, and there are no act, or failures to
act that has or might cause any such contract to be cancelled or
terminated. All known claims for insurance or indemnity have been
presented.
(t) Employees. The company has no written or oral contract of employment
or other employment agreement with any of its employees (including
any contracts relating to the temporary use or loaning of employees)
that are not terminable at will by the company without payment of
severance or termination payments or benefits. The company is not a
party to any pending or threatened labour dispute concerning the
company's business or employment practices or the subject of any
organizing drive, labour grievance or petition to certify a labour
union. The company has complied with in all material aspects all
applicable laws, treaties, ordinances, rules, and regulations and
requirements relating to the employment of labour. There are no
claims pending or threatened to be brought against the company, in
any court or administrative agency by any former or current
employees of the company. The company has made all required
contributions under the laws of the PRC in respect of wages,
salaries and other payments to all employees, officers and directors
and has timely paid all such amounts to the proper PRC authority.
(u) Certain Agreements. Neither the execution and delivery of this
Agreement nor the performance of its obligations contained in them
will: (i) result in any payment by the company (including severance,
unemployment compensation, parachute payment, bonus or otherwise)
becoming due to any director, employee, or independent contractor of
the company under any employee benefit plan, agreement, or
otherwise, (ii) increase any benefits otherwise payable under any
employee benefit plan or agreement, or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.
(v) Guarantees and Suretyships. The company has no powers of attorney
outstanding and the company has no obligations or liabilities
(absolute or contingent) as guarantor, surety, co-signer, endorser,
co-maker, or otherwise respecting the obligations or liabilities of
any Person, corporation, partnership, joint venture, association,
organization, or other entity other than as an endorser of
negotiable instruments in the ordinary course of business.
- 42 -
(w) Absence of Questionable Payments. None of the company nor any of its
respective Affiliates, directors, officers, agents, employees or
other Persons acting on its behalf, has used any corporate or other
funds for unlawful contributions, payments, gifts, or entertainment,
or made any unlawful expenditures relating to political activity to
government officials or others or established or maintained any
unlawful or unrecorded funds. None of the company nor any of its
respective Affiliates, directors, officers, agents, employees or
other Persons acting on their behalf, has accepted or received any
unlawful contributions, payments, gifts, or expenditures.
6.3 General.
(a) The Group Structure Agreements. In respect of the parties or Persons
under the Control of the Vendor, the Covenantor or both of them:
(i) each of the Group Structure Agreements has been duly executed
by the parties thereto, are in full force and effect and
constitutes the valid and legally binding obligation of the
parties thereto, enforceable in accordance with its terms,
except (1) as limited by applicable bankruptcy, insolvency,
reorganisation, moratorium, and other laws of general
application affecting enforcement of creditors' rights
generally, and (2) as limited by laws relating to the
availability of specific performance, injunctive relief, or
other equitable principles;
(ii) the execution, delivery and performance of each of the Group
Structure Agreements by the parties thereto do not conflict
with or violate any existing and publicized law, regulation or
governmental order in the PRC;
(iii) the execution, delivery and performance of each of the Group
Structure Agreements by the parties thereto do not and will
not require any other consent, approval, authorization or
other order of, action by, filing with or notification to, any
governmental authority in the PRC or, if any such consent,
approval, authorization, order, action, filing or notification
is required, they have been obtained or made or will be
obtained or made prior to the Closing Date.
(b) The Closing Deliverable Agreements. On or before Closing Date, each
of the Closing Deliverable Agreements will have been duly executed
by the parties thereto and, as at Closing Date, will be in full
force and effect and will constitute the valid and legally binding
obligations of the parties thereto enforceable in accordance with
their terms at Closing Date.
(c) Full Disclosure.
(i) The Vendor and the Covenantor are not aware of any facts which
could materially adversely affect it, any member of the Group,
or which are likely in the future to materially adversely
affect any of them and which
- 43 -
have not been disclosed by or on behalf of the Vendor or the
Covenantor in connection with or pursuant to this Agreement.
(ii) No representation or warranty in this Agreement, nor any
statement or certificate furnished or to be furnished to XFM
pursuant to or in connection with this Agreement contains or
will contain any untrue statement of material fact, or omits
or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.
(d) Reliance. The representations and warranties are made by the Vendor
and Covenantor with the knowledge and expectation that XFM are
placing reliance thereon.
6.4 Vendor. In respect of the Vendor:
(a) Organisation and Qualification. It is a company duly organised and
validly existing under the laws of the British Virgin Islands.
(b) Authorisation and Authority. It has taken all corporate or other
action required to authorise, and has duly authorised, the
execution, delivery and performance of this Agreement and upon due
execution and delivery the same will constitute its legal, valid and
binding obligations enforceable in accordance with its terms.
(c) Power and Authority. It has full power and authority to make the
covenants and representations referred to herein and to sell the
Company Shares and to execute, deliver and perform this Agreement.
(d) Compliance with Laws and Other Instruments. It holds, and at all
times has held all licenses, permits, and authorizations from all
governmental entities necessary for the lawful conduct of its
business pursuant to all applicable statutes, laws, ordinances,
rules, and regulations of all such authorities having jurisdiction
over it or any part of its operations. There are no violations or
claimed violations of any such license, permit, or authorization, or
any such statute, law, ordinance, rule or regulation, except for
those violations which will not cause Material Adverse Change to the
business or assets of the Group.
(e) Corporate Governance. Neither the execution and delivery of this
Agreement nor the performance by it of its obligations under this
Agreement will (i) conflict with or result in any breach of its
charter documents; (ii) require any Consents by Governmental Entity,
(iii) conflict with, result in a breach or default of, or give rise
to any right of termination, cancellation or acceleration or result
in the creation of any lien, charge, encumbrance, or restriction
upon any of the properties or assets of it or its shares under, any
law, statute, rule, regulation, judgment, decree, order, government
permit, license or order or any mortgage, indenture, note, license,
trust, agreement or other agreement, instrument or obligation to
which it is a party.
- 44 -
(f) Investor Representation. The Vendor would be acquiring XFM Shares or
ADRs thereof for its own account, not as a nominee or agent and for
investment only and not with a view toward or for sale in the United
States connection with any distribution thereof, or with any present
intention of distributing or selling the XFM Shares or ADRs thereof in
the United States. The Vendor understands and acknowledges that the
XFM Shares or ADRs thereof are not being registered under the U.S.
securities laws, any U.S. state securities laws or otherwise. The
Vendor understands that the XFM Shares or ADRs thereof cannot be sold
in the United States unless they are subsequently registered under the
U.S. securities laws and applicable state securities laws or an
exemption from such registration is available. For the avoidance of
doubt, the foregoing representations are limited to sales and
distributions of XFM Shares or ADRs thereof in the United States and
shall not be construed as a representation or restrictive covenants in
connection with sales or distributions by the Vendor of XFM Shares or
ADRs thereof outside the United States.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF XFM
XFM hereby represents, warrants and covenants to the Vendor that each of
the following statements is true and correct and will be true and correct
as of the date hereof and the Closing Date:
7.1 Organisation and Qualification. It is a Person or a legal entity duly
organised and validly existing under the laws of the Cayman Islands.
7.2 Authorisation. It has taken all corporate or other action required to
authorise, and has duly authorised, the execution, delivery and performance
of this Agreement and upon due execution and delivery the same will
constitute its legal, valid and binding obligations enforceable in
accordance with its terms.
7.3 Power and Authority. It has full power and authority to make the covenants
and representations referred to herein and to purchase the Company Shares
and to execute, deliver and perform this Agreement. It has the capacity to
pay the Initial Payment and other payment as provided in this Agreement to
the Vendor.
7.4 Compliance with Laws and Other Instruments. It holds, and at all times has
held all licenses, permits, and authorizations from all governmental
entities necessary for the lawful conduct of its business pursuant to all
applicable statutes, laws, ordinances, rules, and regulations of all such
authorities having jurisdiction over it or any part of its operations.
There are no violations or claimed violations of any such license, permit,
or authorization, or any such statute, law, ordinance, rule or regulation.
7.5 Corporate Governance. Neither the execution and delivery of this Agreement
and Ancillary Agreements nor the performance by it of its obligations under
this Agreement and Ancillary Agreements will (i) conflict with or result in
any breach of its charter documents; (ii) require any Consents by
Governmental Entity, (iii) conflict with, result in a breach or default of,
or give rise to any right of termination,
- 45 -
cancellation or acceleration or result in the creation of any lien, charge,
encumbrance, or restriction upon any of the properties or assets of it or
its shares under, any law, statute, rule, regulation, judgment, decree,
order, government permit, license or order or any mortgage, indenture,
note, license, trust, agreement or other agreement, instrument or
obligation to which it is a party.
8. INTENTIONALLY DELETED.
9. CONDITIONS OF XFM'S OBLIGATIONS TO MAKE THE EARNOUT PAYMENT
The obligations of XFM under this Agreement to pay the Earnout Payments are
subject to the satisfaction or waiver of each of the following:
9.1 Representations and Warranties. All representations and warranties shall be
true on and as of the date of payment of the relevant Earnout Payments with
the same effect as though such representations and warranties had been made
on and at such date.
9.2 Performance. Each of the Vendor and the Covenantor shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement, the Ancillary Agreements that are required to be performed or
complied with by it.
9.3 No Material Adverse Change. There has not occurred any Material Adverse
Change in the Group's business, financial condition, assets or operations
since the Closing Date.
9.4 Minimum Advertising Signs. The members of the Group own, lease or otherwise
have the right to operate such numbers of billboards with such advertising
area and in such format in each area as set forth in Schedule R
continuously throughout the period of seven (7) years from the Closing Date
PROVIDED THAT if Convey Advertising shall not own, lease, license or
otherwise have the right to operate any of the signs and billboards set
forth in Schedule R (the "LOST BILLBOARD"), the Vendor and Covenantor shall
immediately replace the Lost Billboard with another one which generates
monthly revenues not less than 75% of that of the average generated by the
Lost Billboard in the prior 12 months and with a minimum gross profit
margin of 25%.
9.5 Management Contracts and Principals' Covenants. The Persons, particulars of
which are set out in Schedule J and Schedule L, respectively, have entered
into the Management Agreements and Principals' Covenants with XFM and have
not breached any of their obligations specified under the Management
Agreements and Principals' Covenants, respectively and the Management
Agreements and Principals' Covenants have not been terminated.
9.6 Equity Transfer. The Equity Transfer shall be duly completed and all
documents required to be filed with or delivered to Governmental Entities
shall be so filed or delivered and obtained and completed all approvals,
registration and permits for the Equity Transfer pursuant to Clause 3.
- 46 -
9.7 "Convey" Name. All companies Controlled by any of the Vendor, the
Covenantor or any of the Mak Principals bearing the name "Convey",
"eConvey" or the letters "convey" expressed in that order shall be changed
so that there shall be no reference to "convey" in their names.
9.8 Holdings Office. Convey Holdings shall have entered into a valid
enforceable sublease from WT Finance Limited of the office premises used by
it for HK$60,000 per month inclusive of all management fees, rates,
utilities, etc. for the remainder of the term under the lease from Artview
Properties Limited.
9.9 ST Mak's Covenants. ST Mak shall have executed and delivered a deed or
agreement in favour of XFM and the Company making representations,
covenants and indemnities in substantially the same form as the Principal's
Covenants.
10. INDEMNITY
10.1 Indemnity of XFM. The Vendor and the Covenantor shall jointly and severally
indemnify and shall keep indemnified and save harmless XFM, the Nominee or
any of their Affiliates from and against any and all losses, claims,
damages (including damages, interest, penalties, fines and monetary
sanctions) liabilities and costs incurred or suffered by XFM, the Company,
the Nominee or any of their Affiliates by reason of, resulting from, in
connection with, or arising in any manner whatsoever from the following
(collectively, the "LOSSES"):
(a) the breach by any Person of any warranty, representation or covenant
under this Agreement or the Ancillary Agreements or the inaccuracy of
any representation given under and subject to this Agreement or the
Ancillary Agreements contained or referred to in this Agreement or any
Ancillary Agreement provided that the indemnity contained in this
Clause shall be without prejudice to any other rights and remedies
available to XFM;
(b) the non-fulfilment or breach by any Person of any covenant,
undertaking, agreement or other obligation of any member of the Group,
any Covenantor or eConvey of the Group Structure Agreements prior to
Closing Date;
(c) save as disclosed in the May 31 Statements and subject to the
provisions herein providing for adjustments to Closing, any and all
losses, claims, damages liabilities and costs incurred or suffered by
any member of the Group by reason of, resulting from, in connection
with, or arising in any manner whatsoever out of or from any action,
inaction or omission prior to Closing Date including, but not limited
to, any diminution in the value of the assets of any of the member of
the Group and any payment made or required to be made by the member of
the Group and any costs and expenses incurred as a result of such
breach provided that the indemnity contained in this Clause shall be
without prejudice to any other rights and remedies available to XFM;
or
- 47 -
(d) any of the matters disclosed to XFM notwithstanding that such matter
has been disclosed to XFM hereunder or otherwise;
(e) the enforcement of any orders, requests, demands or other notices of
any Governmental Entity (a "GOVERNMENTAL NOTICE") whether or not such
Governmental Notice was issued before or after the Closing Date and
whether or not such Governmental Notice is issued in respect of acts
or omissions of any member of the Group before or after the Closing
Date;
(f) any litigation by or against any member of the Group, a Mak Principal,
any Covenantor or eConvey whether or not such litigation commenced
before or after the Closing Date and whether or not the subject matter
of such litigation arises from acts or omissions of any member of the
Group, any Covenantor or eConvey before or after the Closing Date;
(g) (i) any Equipment Finance whether or not such Loss was incurred before
or after the Closing Date and whether or not the Loss arose from acts
or omissions of any member of the Group, any Covenantor or eConvey
before or after the Closing Date; or
(ii) any breach of the Operating Facilities whether such breach
occurred before or after the Closing Date and whether or not such
breach arose from acts or omissions of any member of the Group, any
Covenantor or eConvey before or after the Closing Date.
10.2 Costs. For the purposes of this Clause, "costs" includes reasonable
lawyers' and accountants' fees and expenses, court costs and all other
out-of-pocket expenses.
10.3 Survival of Warranties and Indemnity. The representations and warranties of
the Covenantor and the Vendor in this Agreement and the rights of XFM to
indemnification under this Agreement with respect to them shall remain in
force and effect for a period of five (5) years following the Payment.
10.4 Third Party Claims. A party entitled to indemnification hereunder (an
"INDEMNIFIED PARTY") shall notify promptly the indemnifying party (the
"INDEMNIFYING PARTY") in writing of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Agreement. In case any claim, action or proceeding is
brought against an Indemnified Party and the Indemnified Party notifies the
Indemnifying Party in writing of the commencement thereof, the Indemnifying
Party shall be entitled to participate therein and to assume the defense
thereof, to the extent that it chooses, with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the
Indemnifying Party to such Indemnified Party that it so chooses, the
Indemnifying Party shall not be liable to such Indemnified Party for any
legal or other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that (i) if the Indemnifying Party fails
to take reasonable steps necessary to defend diligently the action or
proceeding within thirty (30) calendar days after receiving notice from
such Indemnified Party that the Indemnified Party reasonably believes it
has failed to do so; or (ii) if such Indemnified Party who is a
- 48 -
defendant in any claim or proceeding which is also brought against the
Indemnifying Party reasonably shall have concluded that there may be one or
more legal defenses available to such Indemnified Party which are not
available to the Indemnifying Party; or (iii) if representation of both
parties by the same counsel is otherwise inappropriate under applicable
standards of professional conduct, then, in any such case, the Indemnified
Party shall have the right to assume or continue its own defense as set
forth above (but with no more than one firm of counsel for all Indemnified
Parties in each jurisdiction), and the Indemnifying Party shall be liable
for any expenses therefor.
10.5 Settlement of Claims.
(a) No Indemnifying Party shall, without the written consent of the
Indemnified Party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification may be
sought hereunder (whether or not the Indemnified Party is an actual or
potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
Indemnified Party from all liability arising out of such action or
claim, (ii) does not include a statement as to or an admission of
fault, culpability or a failure to act, by or on behalf of any
Indemnified Party and (iii) does not include any injunctive or other
non-monetary relief.
10.6 Hold back.
(a) Upon the timely receipt by the Indemnifying Party of a certificate
signed by an officer of the Indemnified Party (an "INDEMNIFICATION
CERTIFICATE"): (a) stating (i) that the Indemnified Party has paid,
properly accrued or otherwise sustained, a Loss; (ii) or made a
reasonable determination in good faith that it will sustain, have to
pay, or accrue Loss(es), and (b) specifying in reasonable detail the
individual items of Loss(es) included in the amount so stated, the
date each such item was sustained, paid, accrued, or the basis for
such anticipated Loss, and the nature of the breach of representation,
warranty or covenant to which such item is related, the Indemnifying
Party shall, subject to the provisions hereof (including, without
limitation, Clause 10.6(b), (c), (d) hereof), deliver to the
Indemnified Party, in cash, an amount equal to such Loss(es). In case
the Indemnified Party is XFM, XFM shall be entitled to holdback and
set off the same amount from the 2007 Amount or 2008 Amount ("HOLDBACK
AMOUNT").
(b) If the Indemnifying Party objects in writing to any claim made in an
Indemnification Certificate within ten (10) Business Days after
delivery of the Indemnification Certificate, both Parties shall
attempt in good faith for ten (10) Business Days after delivery of the
Indemnifying Party's written objection to agree to the settlement of
such claims. If the Parties should so agree, a memorandum setting
forth such agreement shall be prepared and signed by all such Parties.
(c) If no such agreement can be reached during such ten (10)-Business
Days, either Party may submit the dispute to arbitration under this
Agreement.
- 49 -
10.7 Certain Tax Matters. The Vendor and the Covenantor shall jointly and
severally indemnify XFM and hold it harmless from and against any loss,
claim, liability, expense, or other damage attributable to (i) any and all
taxes (or the non-payment thereof) of any member of the Group or the
Company or any subsidiary of the Company for all taxable periods ending on
or before the Closing Date ("PRE-CLOSING TAX PERIOD"), (ii) all taxes of
any member of an affiliated, consolidated, combined or unitary group of
which any member of the Group (or any predecessor of any of the foregoing)
is or was a member on or prior to the Closing Date, and (iii) any and all
taxes of any Person (other than any member of the Group) imposed on any
member of the Group as a transferee or successor, by contract or pursuant
to any law, rule, or regulation, which taxes relate to an event or
transaction occurring before the Closing. Payment in full of any amount due
from the Vendor and/or Covenantor under this Clause 10.7 shall be made to
XFM in immediately available funds at least two Business Days before the
date payment of the taxes to which such payment relates is due, or, if no
tax is payable, within fifteen days after written demand is made for such
payment. Notwithstanding the foregoing, (i) XFM shall provide the Vendor
and the Covenantor with reasonably prompt written notice of any proposed
tax adjustment that may give rise to the Vendor and Covenantor's
indemnification obligation hereunder, shall cooperate with the Vendor and
Covenantor and permit the Vendor and/or the Covenantor to participate, at
their own expense, in the audit or other proceeding. Notwithstanding the
preceding sentence, in the event that Vendor and/or Covenantor want to
accept a proposed settlement of a tax claim for which they have an
indemnity obligation pursuant to this Clause 10.7 (the "TAX SETTLEMENT
OPTION") and XFM determines that it prefers to pursue the tax claim
further, XFM may pursue the tax claim without the participation of Vendor
or the Covenantor PROVIDED THAT in such case the maximum amount of
liability of the Vendor and the Covenantor under such tax claim shall not
exceed the amount for which they would have been liable if the Tax
Settlement Option were accepted.
In the case of any taxable period that ends on or before the Closing Date
(a "STRADDLE PERIOD"), the amount of any taxes based on or measured by
income or receipts of the Group or any member thereof for the Pre-Closing
Tax Period shall be determined based on an interim closing of the books as
of the close of business on the Closing Date, and the amount of other taxes
of the Group for a Straddle Period which relate to the Pre-Closing Tax
Period shall be deemed to be the amount of such tax for the entire taxable
period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator
of which is the number of days in such Straddle Period.
11. NON-COMPETITION
11.1 Non Competition. The Vendor and the Covenantor hereby jointly and severally
agrees that it, he or she and their respective Affiliates shall not
(without the written consent of XFM) during the period from the Closing and
until the fifth (5th) anniversary hereof in accordance with the terms
thereof (the "NON-COMPETE PERIOD"):
- 50 -
(a) either on its, his or her own account or through any of their
Affiliates, or in conjunction with or on behalf of any other Person,
will on or be engaged, concerned or interested directly or
indirectly whether as shareholder, director, employee, partner,
agent or otherwise carry on any business in competition with the
businesses carried on by the Group during the Non-Compete Period;
and
(b) either on its, his or her own account or through any of their
Affiliates or in conjunction with or on behalf of any other Person,
employ, solicit or entice away or attempt to employ, solicit or
entice away from the Group any Person for the purpose of carrying on
any business in competition with the business carried on by the
Group during the Non-Compete Period who is or shall have been at the
date of or within twelve (12) months prior to the cessation of
employment with the Group a director, officer, legal representative,
manager or employee of the Group whether or not such Person would
commit a breach of contract by reason of leaving such employment.
11.2. Non-solicitation of Clients. During the Non-Compete Period, the Vendor and
the Covenantor shall not other than in connection with his or her
employment with and for the benefit of the Group, directly or indirectly,
either individually or as a principal, partner, member, manager, agent,
employee, employer, consultant, independent contractor, stockholder, joint
venturer or investor, or as a director or officer of any corporation,
limited liability company, partnership or other entity, or in any other
manner or capacity whatsoever,
(a) solicit or divert or attempt to solicit or divert from the Group any
business with any Client;
(b) solicit or divert or attempt to solicit or divert from the Group any
business with any Person or entity who was being solicited as a
Client by the Group;
(c) induce or cause, or attempt to induce or cause, any salesperson,
supplier, vendor, representative, independent contractor, broker,
agent or other Person transacting business with the Group to
terminate or modify such relationship or association or to
represent, distribute or sell services or products in competition
with services or products of the Group; or
(d) otherwise provide any services or products to any Client that are or
have been provided by the Group.
11.3. Consideration. The covenants of the Vendor and Covenantor in this Clause
11 are entered into in the course of and required for the acquisition of
the Group and the payment of the Purchase Price and Earnout and the
Covenantor agrees and acknowledges that he has an interest in the purchase
and sale contemplated herein.
11.4. Separate Obligations. Each and every obligation under Clauses 11.1 and
11.2 shall be treated as a separate obligation and shall be severally
enforceable as such and in the event of any obligation or obligations
being or becoming unenforceable in whole or in part such part or parts as
are unenforceable shall be deleted from Clauses 11.1 or 11.2
- 51 -
and any such deletion shall not affect the enforceability of all such
parts of Clauses 11.1 and 11.2 as remain not so deleted.
11.5. Reasonableness. While the restrictions contained in Clauses 11.1 and 11.2
are considered by the parties to be reasonable in all the circumstances,
all of the parties to this Agreement recognized that restrictions of the
nature in question may fail and, accordingly, each party hereby agree and
declare that if any of such restrictions shall be adjudged to be void as
going beyond what is reasonable in all the circumstances for the
protection of the interests of the Group and XFM but would be valid if
part of the wording thereof were deleted or the periods thereof reduced or
the range of activities or area dealt with thereby reduced in scope the
said restriction shall apply with such modifications as may be necessary
to make it valid and effective. Each party hereto further acknowledges
that the consideration contained in Clause 11.3 is reasonable and
adequate.
11.6. Equitable Relief. Each of the Vendor and the Covenantor agrees that XFM's
rights under this Clause are special and unique, and that any violation
thereof by it, him or her would not be adequately compensated by money
damages and there is not an adequate remedy at law for any such violation,
and each of the Vendor and the Covenantor hereby grants to any relevant
Person the right to specifically enforce (including injunctive relief or
analogous proceedings) the terms of this Clause. In any proceeding, in
equity or law, the Vendor and the Covenantor specifically waive any
defence that there is an adequate remedy at law for any violations of the
terms of this Agreement.
12. INTENTIONALLY DELETED
13. CONFIDENTIALITY AND ▇▇▇-▇▇▇▇▇▇▇▇▇▇
▇▇.▇ ▇▇▇-▇▇▇▇▇▇▇▇▇▇ of Terms. The terms and conditions of this Agreement and
the Ancillary Agreements, including their existence, shall be considered
confidential information and shall not be disclosed by any party hereto to
any third party except in accordance with the provisions set forth below;
provided that such confidential information shall not include any
information that is in the public domain other than by the breach of the
confidentiality obligations hereunder.
13.2 Press Releases, Etc. Any press release issued by any party hereto or any
member of the Group in relation to this Agreement shall be approved in
advance in writing by the each Party to this Agreement, whose consent
shall not be unreasonably withheld. No other announcement regarding any of
the terms set forth in this Agreement in a press release, conference,
advertisement, announcement, professional or trade publication, mass
marketing materials or otherwise to the general public may be made without
the prior written consent of each Party to this Agreement, whose consent
shall not be unreasonably withheld.
- 52 -
13.3 Permitted Disclosures. Notwithstanding the foregoing, any party may
disclose any of the terms set forth in this Agreement to its current or
bona fide, employees, bankers, lenders, partners, accountants and attorneys
and other professional advisers, in each case only where such Persons or
entities are under appropriate non-disclosure obligations.
13.4 Legally Compelled Disclosure. In the event that any party is requested or
becomes legally compelled (including without limitation, pursuant to
securities laws and regulations) to disclose the existence or terms of this
Agreement or the Ancillary Agreements in contravention of the provisions of
this Clause, such party (the "DISCLOSING PARTY") shall provide the other
parties (the "NON-DISCLOSING PARTIES") with prompt written notice of that
fact and use all reasonable efforts to seek (with the cooperation and
reasonable efforts of the other parties) a protective order, confidential
treatment or other appropriate remedy. In such event, the Disclosing Party
shall furnish only that portion of the information which is legally
required and shall exercise reasonable efforts to keep confidential such
information to the extent reasonably requested by any Non-Disclosing Party.
If disclosure is required then to the extent that disclosure of the
Ancillary Agreements complies such disclosure requirement then this
Agreement shall remain confidential.
13.5 Other Information. The provisions of this Clause shall be in addition to,
and not in substitution for, the provisions of any separate nondisclosure
agreement executed by any of the parties hereto with respect to the
transactions contemplated hereby.
14. MISCELLANEOUS
14.1 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
14.2 Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of Hong Kong.
14.3 Arbitration. Any dispute, controversy or claim arising out of or relating
to this Agreement, or the breach, termination or invalidity thereof, shall
be settled by binding arbitration in accordance with the UNCITRAL
Arbitration Rules as present in force in the manner set forth in this
Clause 14.3:
(a) The procedures of this Clause 13.3(b) may be initiated by a written
notice (a "DISPUTE NOTICE") given by one party (a "CLAIMANT") to the
other, but not before thirty (30) days have passed during which the
parties have been unable to reach a resolution. The Dispute Notice
shall be accompanied by (i) a statement of the Claimant describing the
dispute in reasonable detail and (ii) documentation, if any,
supporting the Claimant's position on the dispute.
- 53 -
Within twenty (20) days after the other party's (the "RESPONDENT")
receipt of the Dispute Notice and accompanying materials, the dispute
shall be resolved by binding arbitration in Hong Kong under the
UNCITRAL Arbitration Rules. All arbitration procedures pursuant to
this paragraph (a) shall be confidential and treated as compromise and
settlement negotiations and shall not be admissible in any arbitration
or other proceeding.
(b) The parties shall agree on a single arbitrator to resolve the dispute.
If the Parties fail to agree on the designation of an arbitrator
within a twenty (20)-day period the Hong Kong International
Arbitration Centre shall be requested to designate the single
arbitrator. If the arbitrator becomes disabled, resigns or is
otherwise unable to discharge the arbitrator's duties, the
arbitrator's successor shall be appointed in the same manner as the
arbitrator was appointed.
(c) Any award arising out of arbitration (i) shall be binding and
conclusive upon the parties; (ii) shall be limited to a holding for or
against a party, and affording such monetary remedy as is deemed
equitable, just and within the scope of this Agreement; (iii) may not
include special, indirect, incidental, consequential, special,
punitive or exemplary damages or diminution in value; (iv) may in
appropriate circumstances include injunctive relief; and (v) may be
entered in a court.
(d) Arbitration shall not be deemed a waiver of any right of termination
under this Agreement, and the arbitrator is not empowered to act or
make any award other than based solely on the rights and obligations
of the parties prior to termination in accordance with this Agreement.
(e) The arbitrator may not limit, expand or otherwise modify the terms of
this Agreement.
(f) Each party shall bear its own expenses incurred in any arbitration or
litigation, but any expenses related to the compensation and the costs
of the arbitrator shall be borne equally by the parties to the
dispute.
(g) If any action or proceeding is commenced to construe or enforce this
Agreement or the rights and duties of the parties hereunder, then the
party prevailing in that action, and any appeal thereof, shall be
entitled to recover its attorney's fees and costs in that action or
proceeding, as well as all costs and fees of any appeal or action to
enforce any judgment entered in connection therewith.
14.4 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14.5 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
- 54 -
14.6 Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon postal
service delivery, by registered or certified mail, postage prepaid and
addressed to the party to be notified at the address indicated for such
party on the signature page hereof or by facsimile at the facsimile number
set forth on the signature page hereof, or at such other address or
facsimile number as such party may designate by ten (10) days' advance
written notice to the other parties.
14.7 Expenses. Each of the parties hereto shall be responsible for its own costs
and expenses incurred in the preparation, negotiation and execution of this
Agreement.
14.8 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if
such provision was so excluded and shall be enforceable in accordance with
its terms.
14.9 Language. This Agreement shall be executed in English.
NEXT PAGE IS THE FIRST EXECUTION PAGE
- 55 -
EXECUTION
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written
THE PURCHASER
For and on behalf of XINHUA FINANCE MEDIA LIMITED
By:
/s/ ▇▇▇▇▇ ▇▇▇▇
----------------------------------------------------
Name : ▇▇▇▇▇ ▇▇▇▇
Title : Chief Executive Officer
Address of XFM : Suite ▇▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
Telephone :
Facsimile : ▇▇▇-▇▇▇▇-▇▇▇▇
THE VENDOR
For and on behalf of PARIYA HOLDINGS LIMITED
By:
/s/ ▇▇▇▇ ▇▇▇ Wa
Name : ▇▇▇▇ ▇▇▇ WA
Title : Director
Address : ▇▇▇▇ ▇▇▇-▇▇▇, ▇/▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Building,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Telephone : (▇▇▇) ▇▇▇▇-▇▇▇▇ / (▇▇) ▇▇▇-▇▇▇▇-▇▇▇▇
Facsimile : (▇▇▇) ▇▇▇▇-▇▇▇▇
THE COMPANY
For and on behalf of GOOD SPEED HOLDINGS LIMITED
By:
/s/ ▇▇▇▇ ▇▇▇ Wa
Name : ▇▇▇▇ ▇▇▇ WA
Title : Director
Address : ▇▇▇▇ ▇▇▇-▇▇▇, ▇/▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Building,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Telephone : (▇▇▇) ▇▇▇▇-▇▇▇▇ / (▇▇) ▇▇▇-▇▇▇▇-▇▇▇▇
Facsimile : (▇▇▇) ▇▇▇▇-▇▇▇▇
THE COVENANTOR
By ▇▇▇▇ ▇▇▇ WA
/s/ ▇▇▇▇ ▇▇▇ Wa
▇▇▇▇ ▇▇▇ WA
Address : ▇▇▇▇ ▇▇▇-▇▇▇, ▇/▇., ▇▇▇▇▇▇ ▇▇▇▇▇▇ Building,
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇
Telephone : (▇▇▇) ▇▇▇▇-▇▇▇▇ / (▇▇) ▇▇▇-▇▇▇▇-▇▇▇▇
Facsimile : (▇▇▇) ▇▇▇▇-▇▇▇▇
SCHEDULE A
DETAILS OF COMPANY SHARES
PURCHASER VENDOR NO. OF COMPANY SHARES
XFM Pariya Holdings Limited 1
SCHEDULE B
GROUP STRUCTURE AGREEMENTS
1. Loan Agreement to be signed by Nominee and WFOE.
2. Equity Pledge Agreement to be entered into amongst Nominee, Beijing Ad Co
and WFOE and representing pledge of 100% of equity interest in Beijing Ad
Co by Nominee in favour of WFOE.
3. Capital Contribution Certificate and Shareholders' Registry to be issued
to Nominee.
4. Exclusive Equity Purchase Option Agreement to be entered into by and
among Nominee, Beijing Ad Co and WFOE.
5. Equity transfer agreement signed in blank by Nominee.
6. Authorisation letter signed in blank by Nominee.
7. Subrogation Agreement to be entered into amongst Nominee, WFOE and
Beijing Ad Co.
8. Authorisation letter signed in blank by Nominee approving appointment of
attorney.
9. Letter of resignation to be signed in blank by Nominee for acting as
executive director of Beijing Ad Co.
10. Appointment Letter to be signed in blank by Nominee designed by XFM.
SCHEDULE C
CORPORATE DETAILS OF THE GROUP AS AT THE DATE OF SIGNING OF THIS AGREEMENT
SCHEDULE D
CORPORATE DETAILS OF THE GROUP IMMEDIATELY FOLLOWING CLOSING DATE
SCHEDULE E
INTELLECTUAL PROPERTY
PATENTS
NAME OF TITLE OF INVENTION PLACE OF PATENT APPLICATION TERM OF SHORT
------- ------------------ -------- ------ ----------- -------------
PROPRIETOR REGISTRATION NUMBER NUMBER TERM PATENT
---------- ------------ ------ ------ -----------
Convey A Device for Hong Kong HK 1033631 01101867.7 Eight years
Advertising Handling Cloth commencing on
Company (Paper) 15 March 2001
Limited
TRADEMARKS
REGISTERED TRADEMARK PLACE OF CLASS REGISTRATION DURATION OF
---------- --------- -------- ----- ------------ -----------
OWNER REGISTRATION NUMBER VALIDITY
----- ------------ ------ --------
Convey CONVEY GROUP Hong Kong 35 2003B10724 22-05-2002 to
Advertising [Logo of 21-05-2009
Company CONVEY
Limited GROUP]
Convey econvey Hong Kong 35 2003B10724 22-05-2002 to
Advertising [Logo of 21-05-2009
Company econvey]
Limited
SCHEDULE F
LEASES
This is a list of leases.
SCHEDULE G
MATERIAL CONTRACTS
This is a list of material contracts.
SCHEDULE H
INSURANCE AND BANK
SCHEDULE I
FORM OF MANAGEMENT CONTRACT
SCHEDULE J
LIST OF MANAGEMENT ENTERING INTO MANAGEMENT CONTRACT
(1) ▇▇▇▇ ▇▇▇ Wa
(2) MAK ▇▇▇ ▇▇▇▇
(3) MAK ▇▇▇▇▇▇▇
(4) MAK Wing Sze
(5) ▇▇▇ ▇▇▇▇▇▇▇
(6) MA Wing Kui
SCHEDULE K
FORM OF COVENANTOR'S AGREEMENT
SCHEDULE L
LIST OF PERSONNEL ENTERING INTO COVENANTOR'S AGREEMENT
(1) ▇▇▇▇ ▇▇▇ Wa
(2) MAK ▇▇▇ ▇▇▇▇
(3) MAK ▇▇▇▇▇▇▇
(4) MAK Wing Sze
(5) ▇▇▇ ▇▇▇▇▇▇▇
(6) MA Wing Kui
SCHEDULE M
EQUITY TRANSFER DOCUMENTS
1. Shareholders' Resolution of Beijing Ad Co approving the transfer of Equity
Interests in Beijing Ad Co, change of executive director and legal
representative and amendment to the Articles of Association;
2. Agreement on Transfer of Equity Interests in Beijing Ad from Convey Nominee
to Nominee;
3. Shareholders' Resolution of Beijing Ad Co approving the new executive
director and legal representative, the amendment of the Articles of
Association and the registration of the same, etc;
4. Acknowledgement of receipt of RMB1,000,000 from Convey Nominee to Nominee;
and
5. Amended Articles of Association of Beijing Ad Co.
SCHEDULE N
LICENSES/ CONSENTS
NIL
SCHEDULE O
MAY 31 STATEMENTS
SCHEDULE P
OWNED REAL PROPERTY
NIL
SCHEDULE Q
LITIGATION
SCHEDULE R
SIGNS
Refer to Hong Kong Sign Leases under Schedule F.
SCHEDULE S
AUDITED ACCOUNTS OF CONVEY ADVERTISING AND CONVEY HOLDINGS
SCHEDULE T
LIST OF CLIENTS
SCHEDULE U
PROFORMA CLOSING BALANCE SHEET
SCHEDULE V
MAK'S PROPERTIES & FIXED MONTHLY RENTAL CHARGE